Session Law

Identifying Information:L. 2001 ch. 091
Other Identifying Information:2001 Substitute for Senate Bill 123
Tax Type:Other
Brief Description:An Act concerning insurance; relating to the licensure of insurance agents; repealing K.S.A. 40-240, 40-240f, 40-241a, 40-241b, 40-241c, 40-241d, 40-241e, 40-241f, 40-241g, 40- 241i, 40-242, 40-245, 40-246, 40-3701, 40-3702, 40-3703, 40-3704, 40-3705, 40-3706, 40-3707, 40-3708, 40-3709, 40-3710, 40-3711, 40-3712, 40-3713 and 40-3714.
Keywords:


Body:

CHAPTER 91

Substitute for SENATE BILL No. 123


An Act concerning insurance; relating to the licensure of insurance agents; repealing K.S.A.

40-240, 40-240f, 40-241a, 40-241b, 40-241c, 40-241d, 40-241e, 40-241f, 40-241g, 40-

241i, 40-242, 40-245, 40-246, 40-3701, 40-3702, 40-3703, 40-3704, 40-3705, 40-3706,

40-3707, 40-3708, 40-3709, 40-3710, 40-3711, 40-3712, 40-3713 and 40-3714.




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

Section 1. (a) Sections 1 through 18, and amendments thereto, shall

constitute and be known as the uniform insurance agents licensing act.

(b) Except as provided in section 6 and subsection (b) of section 14,

and amendments thereto, this act shall not apply to any excess and surplus

lines agents and brokers licensed pursuant to K.S.A. 40-246b and amend-

ments thereto.

Sec. 2. As used in this act: (a) ``Approved subject'' or ``approved

course'' means any educational presentation involving insurance funda-

mentals, insurance law, insurance policies and coverage, insurance needs,

insurance risk management, insurance agency management or other ar-

eas, which is offered in a class, seminar, computer based training, inter-

active internet training or other similar form of instruction, and which

has been approved by the commissioner under this act as expanding skills

and knowledge obtained prior to initial licensure under this act or devel-

oping new and relevant skills and knowledge in preparation for such li-

censure.

(b) ``Biennial due date'' means the date of birth of any licensed in-

surance agent who is required to complete C.E.C.'s and report the com-

pletion of such C.E.C.'s to the commissioner pursuant to this act, except

that such due date shall not be earlier than two years from the date of

the insurance agent's initial licensure under this act. The biennial due

date for a registered business entity shall be the date of initial licensure

under this act.

(c) ``Biennium'' means the period starting with the insurance agent's

biennial due date in 2001 and each two-year period thereafter for any

insurance agent who was born in an odd-numbered year. For any insur-

ance agent who was born in an even-numbered year, the term shall mean

the period starting with the insurance agent's biennial due date in 2002

and each two-year period thereafter. The biennium for a registered busi-

ness entity shall be the two-year period following such business entity's

initial licensure or renewal of such license.

(d) ``Broker'' means any individual who acts or aids in any manner in

negotiating contracts of insurance, or in placing risks or in soliciting or

effecting contracts of insurance as an agent for an insured other than such

individual and not as an agent of an insurance company or any other type

of insurance carrier. The term ``broker'' shall not include a person working

as an officer for an insurance carrier, or in a clerical, administrative or

service capacity for an insurance carrier, licensed agent or broker, pro-

vided that such person does not solicit contracts of insurance. The term

``broker'' shall not include an attorney-at-law in the performance of such

attorney's duties, an insured who places or negotiates the placement of

such insured's own insurance, or any employee of an insured engaged in

placing or negotiating for placement of insurance for such employee's

employer.

(e) ``Business entity'' means any corporation, association, partnership,

limited liability company, limited liability partnership or other legal entity.

(f) ``C.E.C.'' means continuing education credit containing at least 50

minutes of instruction in each clock hour. The term C.E.C. also includes

any value, expressed in a whole number of units, assigned by the com-

missioner to an approved subject.

(g) ``Commissioner'' means the commissioner of insurance as defined

in K.S.A. 40-102 and amendments thereto. The term commissioner shall

also include any authorized representative or designee of the commis-

sioner.

(h) ``Department'' means the insurance department established by

K.S.A. 40-102 and amendments thereto.

(i) ``Home state'' means the District of Columbia and any state or

territory of the United States in which an insurance agent maintains such

agent's principal place of residence or principal place of business and is

licensed to act as an insurance agent.

(j) ``Inactive agent'' means any licensed agent who presents evidence

satisfactory to the commissioner which demonstrates that such agent will

not do any act toward transacting the business of insurance for not less

than two but not more than four years from the date such evidence is

received by the commissioner.

(k) ``Insurance agent'' and ``agent'' means any person required to be

licensed under the provisions of chapter 40 of the Kansas Statutes An-

notated, and amendments thereto, to sell, solicit or negotiate insurance.

For the purposes of this act, whenever the terms ``agent'' or ``broker''

appear in chapter 40 of the Kansas Statutes Annotated, and amendments

thereto, each term shall mean insurance agent unless the context requires

otherwise. Insurance agent also includes the terms ``insurance producer''

or ``producer''.

(l) ``Insurance'' means any of the lines of authority specified in sub-

section (a) of section 3 and amendments thereto.

(m) ``Insurance producer'' or ``producer'' means any person licensed

under the laws of another state to sell, solicit, or negotiate insurance. For

the purposes of this act, the terms ``insurance agent'' and ``agent'' shall

include an insurance producer or producer when the context so requires.

In the context of a producer database maintained by this state, another

state or the NAIC, the term producer shall include agent.

(n) ``Insurer'' and ``insurance company'' shall have the meaning as-

cribed to the term insurance company by K.S.A. 40-222c and amend-

ments thereto.

(o) ``License'' means a document issued by this state's insurance com-

missioner authorizing a person to act as an insurance agent for the lines

of authority specified in such document.

(p) ``Limited line credit insurance'' includes credit life, credit disa-

bility, credit property, credit unemployment, involuntary unemployment,

mortgage life, mortgage guaranty, mortgage disability, automobile dealer

gap insurance and any other form of insurance offered in connection with

an extension of credit that is limited to partially or wholly extinguishing

that credit obligation that the insurance commissioner determines should

be designated a form of limited line credit insurance.

(q) ``Limited line credit insurance agent'' means a person who sells,

solicits or negotiates one or more forms of limited line credit insurance

coverage to individuals through a master, corporate, group or individual

policy.

(r) ``NAIC'' means the national association of insurance commission-

ers.

(s) ``Negotiate'' means the act of conferring directly with or offering

advice directly to any purchaser or prospective purchaser of a particular

contract of insurance concerning any of the substantive benefits, terms or

conditions of such contract, provided that the person engaged in such act

either sells insurance or obtains insurance from insurers for purchasers.

(t) ``Person'' means an individual or a business entity.

(u) ``Sell'' means to exchange a contract of insurance by any means,

for money or its equivalent, on behalf of an insurance company.

(v) ``Solicit'' shall include any attempt to sell insurance or asking or

urging a person to apply for any particular kind of insurance from any

particular insurance company.

Sec. 3. (a) Unless denied licensure pursuant to section 9 and amend-

ments thereto, any person who meets the requirements of section 5, and

amendments thereto, shall be issued an insurance agent license. An in-

surance agent may receive qualifications for a license in one or more of

the following lines of authority:

(1) Life--insurance coverage on human lives including benefits of

endowment and annuities, and may include benefits in the event of death

or dismemberment by accident and benefits for disability income.

(2) Accident and health or sickness--insurance coverage for sickness,

bodily injury or accidental death and may include benefits for disability

income.

(3) Property--insurance coverage for the direct or consequential loss

or damage to property of every kind.

(4) Casualty--insurance coverage against legal liability, including that

for death, injury or disability or damage to real or personal property.

(5) Variable life and variable annuity products--insurance coverage

provided under variable life insurance contracts, variable annuities or any

other life insurance or annuity product that reflects the investment ex-

perience of a separate account.

(6) Personal lines--property and casualty insurance coverage sold pri-

marily to an individual or family for noncommercial purposes.

(7) Credit--limited line credit insurance.

(8) Any other line of insurance permitted under the provisions of

chapter 40 of the Kansas Statutes Annotated, and amendments thereto,

and any rules and regulations promulgated thereunder.

(b) Unless suspended, revoked or refused renewal pursuant to sec-

tion 9, and amendments thereto, an insurance agent license shall remain

in effect as long as education requirements for resident individual agents

are met by such insurance agent's biennial due date.

(c) On and after the effective date of this act: (1) Each licensed in-

surance agent who is an individual and holds a property or casualty qual-

ification, or both, or a personal lines qualification shall biennially obtain

a minimum of 12 C.E.C.'s in courses certified as property and casualty

which shall include at least one hour of instruction in insurance ethics.

No more than three of the required C.E.C.'s shall be in insurance agency

management.

(2) Each licensed insurance agent who is an individual and holds a

life, accident and health, or variable contracts qualification, or any com-

bination thereof, shall biennially complete 12 C.E.C.'s in courses certified

as life, accident and health, or variable contracts which shall include at

least one hour of instruction in insurance ethics. No more than three of

the required C.E.C.'s shall be in insurance agency management.

(3) Each licensed insurance agent who is an individual and holds a

crop only qualification shall biennially obtain a minimum of two C.E.C.'s

in courses certified as crop under the property and casualty category.

(4) Each licensed insurance agent who is an individual and is licensed

only for title insurance shall biennially obtain a minimum of four C.E.C.'s

in courses certified by the board of abstract examiners as title under the

property and casualty category.

(5) Each licensed insurance agent who is an individual and holds a

life insurance license solely for the purpose of selling life insurance or

annuity products used to fund a prearranged funeral program and whose

report of compliance required by subsection (g) is accompanied by a

certification from an officer of each insurance company represented by

such agent certifying that such agent transacted no other insurance busi-

ness during the period covered by the report shall biennially obtain a

minimum of two C.E.C.'s in courses certified as life or variable contracts

under the life, accident and health or variable contracts category.

(d) On and after the effective date of this act, each individual insur-

ance agent who holds a license with both a property or casualty qualifi-

cation, or both, and a life, accident and health or variable contracts qual-

ification, or any combination thereof, and who earn C.E.C.'s from courses

certified by the commissioner as qualifying for credit in any class, may

apply, at such insurance agent's option, such C.E.C.'s toward either the

property or casualty continuing education requirement or to the life, ac-

cident and health or variable contracts continuing education requirement.

However, no C.E.C. shall be applied to satisfy both the biennial property

or casualty requirement, or both, and the biennial requirement for life,

accident and health or variable contracts, or any combination thereof.

(e) An instructor of an approved subject shall be entitled to the same

C.E.C. as a student completing the study.

(f) (1) An individual insurance agent who has been licensed for more

than one year, on or before such insurance agent's biennial due date, shall

file a report with the commissioner certifying that such insurance agent has

met the continuing education requirements for the previous biennium end-

ing on such insurance agent's biennial due date. Each individual insurance

agent shall maintain a record of all courses attended together with a certif-

icate of attendance for the remainder of the biennium in which the courses

were attended and the entire next succeeding biennium.

(2) If the required report showing proof of continuing education

completion is not received by the commissioner by the individual insur-

ance agent's biennial due date, such individual insurance agent's qualifi-

cation and each and every corresponding license shall be suspended au-

tomatically for a period of 90 calendar days or until such time as the

producer satisfactorily demonstrates completion of the continuing edu-

cation requirement whichever is sooner. In addition the commissioner

shall assess a penalty of $100 for each license suspended. If such insurance

agent fails to furnish to the commissioner the required proof of continuing

education completion and the monetary penalty within 90 calendar days

of such insurance agent's biennial due date, such individual insurance

agent's qualification and each and every corresponding license shall expire

on such insurance agent's biennial due date. If after more than three but

less than 12 months from the date the license expired, the insurance agent

wants to reinstate such insurance agent's license, such individual shall

provide the required proof of continuing education completion and pay

a reinstatement fee in the amount of $100 for each license suspended. If

after more than 12 months from the date an insurance agent's license has

expired, such insurance agent wants to reinstate such insurance agent's

license, such individual shall apply for an insurance agent's license, pro-

vide the required proof of continuing education completion and pay a

reinstatement fee in the amount of $100 for each license suspended.

Upon receipt of a written application from such insurance agent claiming

extreme hardship, the commissioner may waive any penalty imposed un-

der this subsection.

(3) On and after the effective date of this act, any applicant for an

individual insurance agent's license who previously held a license which

expires on or after June 30, 2001, because of failure to meet continuing

education requirements and who seeks to be relicensed shall provide

evidence that appropriate C.E.C.'s have been completed for the prior

biennium.

(4) Upon receipt of a written application from an individual insurance

agent, the commissioner, in cases involving medical hardship or military

service, may extend the time within which to fulfill the minimum contin-

uing educational requirements for a period of not to exceed 180 days.

(5) This section shall not apply to any inactive insurance agent during

the period of such inactivity. For the purposes of this paragraph, ``inactive

period'' or ``period of inactivity'' shall mean a continuous period of time

of not less than two years and not more than four years starting from the

date inactive status is granted by the commissioner. Before returning to

active status, such inactive insurance agent shall:

(A) File a report with the commissioner certifying that such agent has

met the continuing education requirement; and

(B) pay the renewal fee. If the required proof of continuing education

completion and the renewal fee is not furnished at the end of the inactive

period, such individual insurance agent's qualification and each and every

corresponding license shall expire at the end of the period of inactivity.

For issuance of a new license, the individual shall apply for a license and

pass the required examination.

(6) Any individual who allows such individual's insurance agent li-

cense in this state and all other states in which such individual is licensed

as an insurance agent to expire for a period of four or more consecutive

years, shall apply for a new insurance agent license and pass the required

examination.

(g) (1) Each course, program of study, or subject shall be submitted

to and certified by the commissioner in order to qualify for purposes of

continuing education.

(2) Each request for certification of any course, program of study or

subject shall contain the following information:

(A) The name of provider or provider organization;

(B) the title of such course, program of study or subject;

(C) the date the course, program of study or subject will be offered;

(D) the location where the course, program of study or subject will

be offered;

(E) an outline of each course, program of study or subject including

a schedule of times when such material will be presented;

(F) the names and qualifications of instructors;

(G) the number of C.E.C.'s requested; and

(H) a nonrefundable C.E.C. qualification fee in the amount of $50

per course, program of study or subject or $250 per year for all courses,

programs of study or subjects submitted by a specific provider or provider

organization; and

(I) a nonrefundable annual provider fee of $100.

(3) Upon receipt of such information, the commissioner shall grant

or deny certification of any submitted course, program of study or subject

as an approved subject, program of study or course and indicate the num-

ber of C.E.C.'s that will be recognized for each approved course, program

of study or subject. Each approved course, program of study or subject

shall be assigned by the commissioner to one or both of the following

classes:

(A) Property and casualty; or

(B) life insurance (including annuity and variable contracts) and ac-

cident and health insurance.

(4) Each course, program of study or subject shall have a value of at

least one C.E.C.

(5) Each provider seeking approval of a course, program of study or

subject for continuing education credit shall issue or cause to be issued

to each person who attends a course, program of study or subject offered

by such provider a certificate of attendance. The certificate shall be signed

by either the instructor who presents the course, program of study or

course or such provider's authorized representative. Each provider shall

maintain a list of all individuals who attend courses offered by such pro-

vider for continuing education credit for the remainder of the biennium

in which the courses are offered and the entire next succeeding biennium.

The commissioner shall accept, without substantive review, any course,

program of study or subject submitted by a provider which has been

approved by the insurance supervisory authority of any other state or

territory accredited by the NAIC. The commissioner may disapprove any

individual instructor or provider who has been the subject of disciplinary

proceedings or who has otherwise failed to comply with any other state's

or territory's laws or regulations.

(6) The commissioner may grant or approve any specific course, pro-

gram of study or course that has appropriate merit, such as any course,

programs of study or course with broad national or regional recognition,

without receiving any request for certification. The fee prescribed by

paragraph (2) of subsection (g) shall not apply to any approval granted

pursuant to this provision.

(7) The C.E.C. value assigned to any course, program of study or

subject, other than a correspondence course, computer based training,

interactive internet study training or other course pursued by independ-

ent study, shall in no way be contingent upon passage or satisfactory

completion of any examination given in connection with such course,

program of study or subject. The commissioner shall establish, by rules

and regulations criteria for determining acceptability of any method used

for verification of the completion of each stage of any computer based or

interactive internet study training. Completion of any computer based

training or interactive internet study training shall be verified in accord-

ance with a method approved by the commissioner.

(h) Upon request, the commissioner shall provide a list of all ap-

proved continuing education courses currently available to the public.

(i) An individual insurance agent who independently studies an in-

surance course, program of study or subject which is not a agent's ex-

amination approved by the commissioner and who passes an indepen-

dently monitored examination, shall receive credit for the C.E.C.'s

assigned by the commissioner as recognition for the approved subject.

No other credit shall be given for independent study.

(j) Any licensed individual insurance agent who is unable to comply

with license renewal procedures due to military service or some other

extenuating circumstances may request a waiver of those procedures from

the commissioner. Such agent may also request from the commissioner

a waiver of any examination requirement or any other fine or sanction

imposed for failure to comply with renewal procedures.

Sec. 4. (a) No provision of this act shall be construed to require an

insurer to obtain an insurance agent license. For the purposes of this

section, the term ``insurer'' shall not include any officer, director, em-

ployee, subsidiary or affiliate of an insurer.

(b) The provisions of this act shall not apply to:

(1) Any officer, director or employee of an insurer or an insurance

agent who does not receive any commission on any policy written or sold

to insure any risk residing, located or to be performed in this state and:

(A) Such officer's, director's or employee's activities are executive,

administrative, managerial, clerical, or any combination thereof, and not

directly related to the sale, solicitation or negotiation of insurance;

(B) such officer's, director's or employee's assigned duty relates to

underwriting, loss control, inspection or the processing, adjusting, inves-

tigating or settling of any claim on a contract of insurance; or

(C) such officer, director or employee:

(i) Acts as a special agent or agency supervisor assisting insurance

agents;

(ii) limits such person's activities to providing technical advice and

assistance to licensed insurance agents; and

(iii) does not sell, solicit or negotiate insurance.

(2) Any person who performs one or more of the services listed below

but who receives no commission for the performance of such service:

(A) Secures and furnishes information for the purpose of group life

insurance, group property and casualty insurance, group annuities, group

or blanket accident and health insurance;

(B) secures and furnishes information for the purpose of enrolling

individuals under such insurance plan; issuing certificates under such in-

surance plan or otherwise assisting in administering such insurance plan;

or

(C) performs administrative services related to mass marketed prop-

erty and casualty insurance where no commission is paid to such person

for such service.

(3) Any employer or business entity, any officer, director, employee

of such business entity, or the trustee of an employee trust plan, engaged

in the administration or operation of a program of employee benefits for

the employees of such employer or business entity, which involves the

use of insurance issued by an insurer, so long as any person involved with

such program of employee benefits is not compensated in any manner,

directly or indirectly, by the company issuing the insurance contract.

(4) Any employee of an insurer, or any organization employed by an

insurer, who does not participate individually in the sale, solicitation or

negotiation of insurance that:

(A) Engages in the inspection, rating or classification of risks; or

(B) engages in the supervision of the training of insurance agents.

(5) Any person who does not sell, solicit or negotiate insurance that

would insure any risk residing, located or to be performed in this state

and who limits such person's activities in this state to advertising through

any communication in any printed publication or any form of electronic

mass media.

(6) Any person who is not a resident of this state who sells, solicits or

negotiates a contract of insurance for commercial property and casualty

risks to an insured having risks insured under that contract located in

more than one state, whenever:

(A) Such person is licensed as an insurance agent to sell, solicit or

negotiate such insurance in the state where the insured maintains such

insured's principal place of business; and

(B) the contract of insurance insures risks located in that state.

(7) Any salaried full-time employee who:

(A) Advises such employee's employer regarding the insurance inter-

ests of such employer or such employer's subsidiaries or business affili-

ates; and

(B) does not sell or solicit insurance or receive a commission from

the sale or solicitation of such insurance.

(8) Any person who arranges for the inclusion of insurance in a credit

transaction under the applicable provisions of the uniform consumer

credit code, K.S.A. 16a-1-101 et seq. and amendments thereto.

(9) Any bank or officer or employee thereof who collects and remits

a premium by charging such premium against the account of a depositor

on the order of such depositor.

(10) Any agent selling credit life, health and accident insurance issued

exclusively in connection with a commercial loan.

(11) Any person who arranges for the inclusion of insurance in con-

sumer credit transactions as defined in the uniform consumer credit code,

K.S.A. 16a-1-101 et seq. and amendments thereto.

(12) Any person who arranges for the inclusion of insurance in any

real estate mortgage transaction.

(13) Any full-time student who is enrolled in an accredited high

school in this state while such student participates in an insurance project

sponsored by a bona fide junior achievement program.

Sec. 5. (a) Subject to the provisions of section 4, and amendments

thereto, it shall be unlawful for any person to sell, solicit or negotiate any

insurance within this state unless such person has been issued a license

as an insurance agent in accordance with this act.

(b) Any person applying for a resident insurance agent license shall

make application on a form prescribed by the commissioner. The appli-

cant shall declare under penalty of perjury that the statements made in

the application are true, correct and complete to the best of the appli-

cant's knowledge and belief. Before approving the application, the com-

missioner shall determine that the applicant:

(1) Is at least 18 years of age;

(2) has not committed any act that is grounds for denial pursuant to

this section or suspension or revocation pursuant to section 9 and amend-

ments thereto;

(3) has paid a nonrefundable fee in the amount of $30; and

(4) has successfully passed the examination for each line of authority

for which the applicant has applied.

(c) If the applicant is a business entity, then the commissioner shall

make the following additional determinations in addition to those re-

quired by subsection (a):

(1) The name and address of a licensed agent who shall be respon-

sible for the business entity's compliance with the insurance laws of this

state and the rules and regulations promulgated thereunder;

(2) that each officer, director, partner and employee of the business

entity who acts as an insurance agent is licensed as an insurance agent;

(3) that the business entity has disclosed to the department all of its

officers, directors and partners whether or not such officers, directors,

partners and employees are licensed as insurance agents; and

(4) that the business entity has disclosed to the department each of-

ficer, director, partner and employee who is licensed as an insurance

agent.

(d) Any business entity which acts as an insurance agent and holds a

direct agency appointment from an insurance company shall be required

to obtain an insurance agent license.

(e) The commissioner may require the applicant to furnish any doc-

ument or other material reasonably necessary to verify the information

contained in an application.

(f) Each insurer that sells, solicits or negotiates any form of limited

line credit insurance shall provide a program of instruction that may be

approved by the commissioner to each individual employed by or acting

on behalf of such insurer to sell, solicit or negotiate limited line credit

insurance.

(g) (1) Each licensed insurance agent shall notify the commissioner

of any officer, director, partner or employee of such insurance agent who:

(A) Is licensed as an individual insurance agent; and

(B) was not disclosed in such insurance agent's application for a li-

cense or any renewal thereof.

(2) Each licensed insurance agent shall notify the commissioner of

any of its officers, directors, partners or employees who:

(A) Have terminated such relationship as an officer, director, partner

or employee of such insurance agent; and

(B) has been previously disclosed in such insurance agent's applica-

tion for a license or any renewal thereof.

(3) Each licensed insurance agent shall notify the commissioner

within 30 working days of occurrence of any event required to be reported

under paragraphs (1) or (2) of this subsection. Failure to provide the

commissioner with the information required by this subsection shall sub-

ject the licensee to a monetary penalty of $10 per day for each working

day the required information is late subject to a maximum of $50 per

person per licensing year.

(h) Any applicant whose application for a license, is denied shall be

given an opportunity for a hearing in accordance with the provisions of

the Kansas administrative procedure act.

Sec. 6. (a) Unless denied licensure pursuant to section 9, and amend-

ments thereto, a nonresident person shall receive a nonresident agent

license if:

(1) Such person is currently licensed as a resident and in good stand-

ing in such person's home state;

(2) such person has submitted the proper request for licensure and

has paid to the commissioner a nonrefundable application fee of $30 and

a biennial fee of $50;

(3) such person has submitted or transmitted to the commissioner of

insurance a copy of the application for licensure that such person sub-

mitted to such person's home state, or in lieu of the same, a completed

application on a form prescribed by the commissioner; and

(4) such person's home state awards a nonresident agent license to

residents of this state on the same basis.

(b) The commissioner may verify the insurance agent's licensing

status through the producer database maintained by the NAIC, its affil-

iates or subsidiaries.

(c) (1) Any nonresident agent who is licensed in this state and who

moves from one state to another state or a resident agent who moves

from this state to another state shall file with the commissioner within 30

days a change of address and provide certification from the new resident

state.

(2) Any insurance agent who resides in this state and who moves from

this state to another state shall file with the commissioner within 30 days

a change of address and provide certification from the new resident state.

(3) No fee or license application shall be required for any filing re-

quired by this subsection.

(d) Subject to the provisions of subsection (a), any person licensed as

a surplus lines agent in such person's home state shall receive a nonres-

ident surplus lines agent license. Except as provided in subsection (a),

nothing in this section shall be construed to amend or supersede any

provision of K.S.A. 40-246b and amendments thereto.

(e) Subject to the provisions of subsection (a), any person licensed as

a limited line credit insurance or other type of limited lines agent in such

person's home state shall receive a nonresident limited lines agent license

in this state granting the same scope of authority as granted under the

license issued by the such insurance agent's home state.

Sec. 7. (a) Except as provided in subsection (c), the commissioner

may issue a temporary insurance agent license for a period not to exceed

180 days without requiring the applicant to pass a written examination.

A temporary insurance agent license may be issued to:

(1) The surviving spouse or court-appointed personal representative

of a licensed insurance agent who dies or becomes mentally or physically

disabled to allow adequate time:

(A) For the sale of the insurance business owned by such insurance

agent;

(B) for the recovery or return of such insurance agent to the business;

or

(C) to provide for the training and licensing of new personnel to op-

erate such insurance agent's business.

Any insurance agent license issued to a surviving spouse shall lapse

upon issuance of an insurance agent license or a temporary insurance

agent license to a court-appointed personal representative of such de-

ceased person.

(2) Any member or employee of a business entity licensed as an in-

surance agent, upon the death or disability of an individual designated in

such business entity's application or the insurance agent's license.

(3) The designee of an individual licensed as an insurance agent who

is entering active service in the armed forces of the United States of

America.

(4) Any other person under such other circumstance where the com-

missioner deems that the public interest will be best served by the issu-

ance of such license.

(b) The commissioner may issue any order deemed necessary by the

commissioner to limit the authority of any temporary licensee to protect

insureds and the public. The commissioner may require the temporary

licensee to have a suitable sponsor. Such sponsor shall:

(1) Be a licensed insurance agent or insurer; and

(2) assume responsibility for all acts of the temporary licensee.

The commissioner may impose other similar requirements designed to

protect insureds and the public. If the interests of the insureds or the

public are endangered, the commissioner may by order revoke a tem-

porary license. No temporary license shall continue after the owner or

the personal representative disposes of the business.

(c) (1) Except as provided in paragraph (2) the commissioner may

extend a temporary insurance agent license for one additional period of

up to 180 days.

(2) Any temporary insurance agent license issued pursuant to para-

graph (3) of subsection (a) may be renewed for such period of time as in

the commissioner's opinion may be necessary for the continuation of the

business of such licensed individual.

Sec. 8. (a) The commissioner shall waive examinations for an indi-

vidual who applies for an insurance agent license in this state who was

previously licensed for the same lines of authority in another state when

the applicant establishes that:

(1) (A) The applicant is currently licensed in such other state; or

(B) if the application is received within 90 days of the cancellation of

the applicant's previous license issued by such other state and if such

other state certifies that, at the time of cancellation, the applicant was in

good standing in such other state. In lieu of issuance of a certification by

such other state that the applicant was in good standing, the commissioner

may accept evidence from such other state's producer database records,

maintained by the NAIC, its affiliates or subsidiaries, which indicate that

the applicant is or was licensed in good standing for the line of authority

requested.

(2) The applicant seeks a license as travel insurance agent to persons

selling transportation tickets of common carriers, who shall act as such

agent only as to transportation ticket policies, or health or accident in-

surance, or baggage insurance on personal effects in connection with such

transportation tickets of common carriers.

(3) The applicant has been licensed in Kansas for the class of insur-

ance the applicant is applying for and where the license has been vol-

untarily surrendered for not more than two years prior to the date of the

application with all educational requirements satisfied for the current

licensing period and where the commissioner is satisfied that the appli-

cant is trustworthy and competent.

(4) The applicant is an applicant for a license to write insurance on

growing crops in this state and has been continuously licensed to write

such coverage in this state on and after April 30, 1986.

(5) The applicant has qualified by examination, but due to clerical

error by an insurance company, the applicant was not certified pursuant

to section 12, and amendments thereto. Such insurance company shall

pay all appointment fees that would have been paid had the applicant

been properly appointed plus the penalty prescribed by section 12, and

amendments thereto, for each violation.

(b) Any person licensed as an insurance agent pursuant to section 6,

and amendments thereto, in another state who moves to this state shall

make application to become a resident licensee within 90 days after such

person establishes legal residence in this state. Except as required by the

commissioner by rule and regulation, no person who has been previously

authorized for any line of authority shall be required to be examined in

this state for the same line of authority.

Sec. 9. (a) The commissioner may suspend, revoke or refuse renewal

of any license issued under this act if the commissioner finds that the

applicant or license holder has:

(1) Provided incorrect, misleading, incomplete or untrue information

in the license application.

(2) Violated:

(A) Any provision of chapter 40 of the Kansas Statutes Annotated, and

amendments thereto, or any rule and regulation promulgated thereunder;

(B) any subpoena or order of the commissioner;

(C) any insurance law or regulation of another state; or

(D) any subpoena or order issued by the regulatory official for insur-

ance in another state.

(3) Obtained or attempted to obtain a license under this act through

misrepresentation or fraud.

(4) Improperly withheld, misappropriated or converted any moneys

or properties received in the course of doing insurance business.

(5) Intentionally misrepresented the provisions, terms and conditions

of an actual or proposed insurance contract or application for insurance.

(6) Been convicted of a misdemeanor or felony.

(7) Admitted to or been found to have committed any insurance un-

fair trade practice or fraud in violation of K.S.A. 40-2404 and amendments

thereto.

(8) Used any fraudulent, coercive, or dishonest practice, or demon-

strated any incompetence, untrustworthiness or financial irresponsibility

in the conduct of business in this state or elsewhere.

(9) Had an insurance agent license, or its equivalent, denied, sus-

pended or revoked in any other state, district or territory.

(10) Forged another person's name to an application for insurance or

to any document related to an insurance transaction.

(11) Improperly used notes or any other reference material to com-

plete an examination for an insurance license issued under this act.

(12) Knowingly accepted insurance business from an individual who

is not licensed.

(13) Failed to comply with any administrative or court order imposing

a child support obligation upon the applicant or license holder.

(14) Failed to pay any state income tax or comply with any adminis-

trative or court order directing payment of state income tax.

(15) Rebated the whole or any part of any insurance premium or

offered in connection with the presentation of any contract of insurance

any other inducement not contained in the contract of insurance.

(16) Made any misleading representation or incomplete comparison

of policies to any person for the purposes of inducing or tending to induce

such person to lapse, forfeit or surrender such person's insurance then in

force.

(b) In addition, the commissioner may suspend, revoke or refuse re-

newal of any license issued under this act if the commissioner finds that

the interests of the insurer or the insurable interests of the public are not

properly served under such license.

(c) Any action taken under this section which affects any license or

imposes any administrative penalty shall be taken only after notice and

an opportunity for a hearing conducted in accordance with the provisions

of the Kansas administrative procedures act.

(d) The license of any business entity may be suspended, revoked or

refused renewal if the insurance commissioner finds that any violation

committed by an individual licensee employed by or acting on behalf of

such business entity was known by or should have been known by one or

more of the partners, officers or managers acting on behalf of the business

entity and:

(1) Such violation was not reported to the insurance commissioner

by such business entity; or

(2) such business entity failed to take any corrective action.

(e) None of the following actions shall deprive the commissioner of

any jurisdiction or right to institute or proceed with any disciplinary pro-

ceeding against such license, to render a decision suspending, revoking

or refusing to renew such license, or to establish and make a record of

the facts of any violation of law for any lawful purpose:

(1) The imposition of an administrative penalty under this section;

(2) the lapse or suspension of any license issued under this act by

operation of law;

(3) the licensee's failure to renew any license issued under this act;

or

(4) the licensee's voluntary surrender of any license issued under this

act. No such disciplinary proceeding shall be instituted against any li-

censee after the expiration of two years from the termination of the li-

cense.

(f) Whenever the commissioner imposes any administrative penalty

or denies, suspends, revokes or refuses renewal of any license pursuant

to subsection (a), any costs incurred as a result of conducting an admin-

istrative hearing authorized under the provisions of this section shall be

assessed against the person who is the subject of the hearing or any busi-

ness entity represented by such person who is the party to the matters

giving rise to the hearing. As used in this subsection, ``costs'' shall include

witness fees, mileage allowances, any costs associated with the reproduc-

tion of documents which become a part of the hearing record and the

expense of making a record of the hearing.

(g) No person whose license as an agent or broker had been sus-

pended or revoked shall be employed by any insurance company doing

business in this state either directly, indirectly, as an independent con-

tractor or otherwise to negotiate or effect contracts of insurance, sure-

tyship or indemnity or perform any act toward the solicitation of or trans-

action of any business of insurance during the period of such suspension

or revocation.

(h) In lieu of taking any action under subsection (a), the commis-

sioner may:

(1) Censure the person; or

(2) issue an order imposing an administrative penalty up to a maxi-

mum of $500 for each violation but not to exceed $2,500 for the same

violation occurring within any six consecutive calendar months from the

date of the original violation unless such person knew or should have

known that the violative act could give rise to disciplinary action under

subsection (a). If such person knew or reasonably should have known the

violative act could give rise to any disciplinary proceeding authorized by

subsection (a), the commissioner may impose a penalty up to a maximum

of $1,000 for each violation but not to exceed $5,000 for the same violation

occurring within any six consecutive calendar months from the date of

the imposition of the original administrative penalty.

Sec. 10. (a) No insurance company or insurance agent shall pay a

commission, service fee, brokerage or other valuable consideration to a

person for selling, soliciting or negotiating insurance in this state if that

person is required to be licensed under this act and is not so licensed.

(b) No person shall accept a commission, service fee, brokerage or

other valuable consideration for selling, soliciting or negotiating insurance

in this state if that person is required to be licensed under this act and is

not so licensed.

(c) Renewal or other deferred commissions may be paid to a person

for selling, soliciting or negotiating insurance in this state if:

(1) Such person was required to be licensed under this act at the time

the sale, solicitation or negotiation of insurance occurred; and

(2) such person was licensed as required by this act when the sale,

solicitation or negotiation of insurance occurred.

(d) An insurance agent may place a kind or kinds of business, for

which such insurance agent is licensed pursuant to this act, with an insurer

for which such insurance agent is not an agent, by placing such business

through an agent of such insurer.

(e) An insurance agent may divide or share in commissions with other

agents licensed to write the same kind or kinds of insurance provided the

solicitation of such business shall be subject to subsection (d).

(f) Any insurance agent may pay or assign a commission, service fee,

brokerage or any other valuable consideration to an insurance agency or

any financial holding company which does not sell, solicit or negotiate

insurance in this state unless such payment or assignment violates any

provision of K.S.A. 40-2404 and amendments thereto.

Sec. 11. A licensed insurance agent may receive compensation for or

on account of negotiating contracts of insurance or placing or soliciting

or effecting contracts of insurance. Nothing in this chapter shall abridge

or restrict freedom of contract of insurance carriers or agents or brokers

with reference to the amount of commissions or fees to be paid to such

insurance agents and such payments are expressly authorized. Insurance

agents shall have the right to compensation other than commissions from

any insured or prospective insured on account of negotiation or procure-

ment of or other services in connection with contracts of insurance pol-

icies including adjustment of claims if such compensation is based upon

a written agreement between the insurance agent and insured specifying

the amount of such compensation. Nothing herein contained shall affect

the right of any insurance agent to recover from the insured the amount

of any premium or premiums for insurance placed by or through the

insurance agent.

Sec. 12. (a) Any company authorized to transact business in this state

may, upon determining that the insurance agent is of good business rep-

utation and, if an individual, has had experience in insurance or will im-

mediately receive a course of instruction in insurance and on the policies

and policy forms of such company, appoint such insurance agent as the

insurance agent of the company under the license in effect for the insur-

ance agent. The appointment shall be made on a form prescribed by the

commissioner. Such form shall be sent to the commissioner within 30

days of the date the company appoints such insurance agent. A nonre-

fundable appointment or certification fee set forth in K.S.A. 40-252, and

amendments thereto, shall be paid in accordance with the billing proce-

dures established by the commissioner. Such procedures shall require

payment of the fees annually, based on the number of insurance agents

appointed during the calendar year preceding the return. The certifica-

tion fees required by K.S.A. 40-252, and amendments thereto, shall be

due for all insurance agents appointed by the company during the pre-

ceding calendar year, irrespective of the number of months the insurance

agent was appointed for that year. The certification fee shall not be re-

turned for any reason, and failure of the company to certify an insurance

agent within 30 working days of such insurance agent's appointment shall

subject the company to a penalty of not more than $25 per calendar day

from the date the appropriate return was required from the date of ap-

pointment to the date proper certification is recorded by the insurance

department.

(b) Certification of other than an individual insurance agent will au-

tomatically include each licensed insurance agent who is an officer, di-

rector, partner, employee or otherwise legally associated with the cor-

poration, association, partnership or other legal entity appointed by the

company. The required annual certification fee shall be paid for each

licensed insurance agent certified by the company and the prescribed

reporting form shall be returned at the same time the company files its

tax returns as required by K.S.A. 40-252, and amendments thereto.

(c) With respect to insurance on growing crops, evidence satisfactory

to the commissioner that the insurance agent is qualified to transact in-

surance in accordance with standards or procedures established by any

branch of the federal government shall be deemed to be the equivalent

of certification by a company.

(d) Duly licensed insurance agents transacting business in accordance

with the provisions of article 41 of chapter 40 of the Kansas Statutes

Annotated, and amendments thereto, shall be deemed to be certified by

a company for the kinds of insurance permitted under the license in effect

for the insurance agent.

Sec. 13. (a) (1) Each insurer shall notify the commissioner whenever

such insurer terminates a business relationship with an insurance agent

if:

(A) The termination is for cause;

(B) such insurance agent has committed any act which would be in

violation of any provision of subsection (a) of section 9, and amendments

thereto; or

(C) such insurer has knowledge that such insurance agent is engaged

in any activity which would be in violation of any provision of subsection

(a) of section 9, and amendments thereto.

(2) The notification shall:

(A) Be made in a format prescribed by the commissioner;

(B) be submitted to the commissioner within 30 days of the date of

the termination of the business relationship; and

(C) contain:

(i) The name of the insurance agent; and

(ii) the reason for the termination of the business relationship with

such insurer.

(3) Upon receipt of a written request from the commissioner, each

insurer shall provide to the commissioner any additional data, documents,

records or other information concerning the termination of the insurer's

business relationship with such agent.

(4) Whenever an insurer discovers or obtains additional information

which would have been reportable under paragraph (1) of this subsection,

the insurer shall forward such additional information to the commissioner

within 30 days of its discovery.

(b) (1) Each insurer shall notify the commissioner whenever such

insurer terminates a business relationship with an insurance agent for any

reason not listed in subsection (a).

(2) The notification shall:

(A) Be made in a format prescribed by the commissioner;

(B) be submitted to the commissioner within 30 days of the date of

the termination of the business relationship.

(3) Upon receipt of a written request from the commissioner, each

insurer shall provide to the commissioner any additional data, documents,

records or other information concerning the termination of the insurer's

business relationship with such agent.

(4) Whenever an insurer discovers or obtains additional information

which would have been reportable under paragraph (1) of this subsection,

the insurer shall forward such additional information to the commissioner

within 30 days of its discovery.

(c) For the purposes of this section, the term ``business relationship''

shall include any appointment, employment, contract or other relation-

ship under which such insurance agent represents the insurer.

(d) (1) No insurance entity, or any agent or employee thereof acting

on behalf of such insurance entity, regulatory official, law enforcement

official or the insurance regulatory official of another state who provides

information to the commissioner in good faith pursuant to this section

shall be subject to a civil action for damages as a result of reporting such

information to the commissioner. For the purposes of this section, insur-

ance entity shall mean any insurer, insurance agent or organization to

which the commissioner belongs by virtue of the commissioner's office.

(2) Any document, material or other information in the control or

possession of the department that is furnished by an insurance entity or

an employee or agent thereof acting on behalf of such insurance entity,

or obtained by the insurance commissioner in an investigation pursuant

to this section shall be kept confidential by the commissioner. Such in-

formation shall not be made public or subject to subpoena, other than by

the commissioner and then only for the purpose of enforcement actions

taken by the commissioner pursuant to this act or any other provision of

the insurance laws of this state.

(3) Neither the commissioner nor any person who received docu-

ments, materials or other information while acting under the authority of

the commissioner shall be required to testify in any private civil action

concerning any confidential documents, materials or information subject

to paragraph (2).

(4) The commissioner may share or exchange any documents, ma-

terials or other information, including confidential and privileged docu-

ments referred to in paragraph (2) of subsection (d), received in the per-

formance of the commissioner's duties under this act, with:

(A) The NAIC;

(B) other state, federal or international regulatory agencies; and

(C) other state, federal or international law enforcement authorities.

(5) (A) The sharing or exchanging of documents, materials or other

information under this subsection shall be conditioned upon the recipi-

ent's authority and agreement to maintain the confidential and privileged

status, if any, of the documents, materials or other information being

shared or exchanged.

(B) No waiver of an existing privilege or claim of confidentiality in

the documents, materials or information shall occur as a result of disclo-

sure to the commissioner under this section or as a result of sharing as

authorized by paragraph (1) of subsection (d).

(6) The commissioner of insurance is hereby authorized to adopt such

rules and regulations establishing protocols governing the exchange of

information as may be necessary to implement and carry out the provi-

sions of this act.

(e) The provisions of paragraph (2) of subsection (d) shall expire on

July 1, 2006, unless the legislature acts to reenact such provision. The

provisions of paragraph (2) of subsection (d) shall be reviewed by the

legislature prior to July 1, 2006.

(f) For the purposes of this section, insurance entity shall mean any

insurer, insurance agent or organization to which the commissioner be-

longs by virtue of the commissioner's office.

(g) Any insurance entity, including any authorized representative of

such insurance entity, that fails to report to the commissioner as required

under the provisions of this section or that is found by a court of com-

petent jurisdiction to have failed to report in good faith, after notice and

hearing, may have its license or certificate of authority suspended or re-

voked and may be fined in accordance with section 9 and amendments

thereto.

Sec. 14. (a) Subject to the provisions of section 8, and amendments

thereto, the commissioner shall waive any license application require-

ments for a nonresident insurance agent license if:

(1) The applicant has a valid current license issued by such applicant's

home state; and

(2) the applicant's home state awards nonresident licenses to resi-

dents of this state on the same basis.

(b) A nonresident agent's satisfaction of such insurance agent's home

state's continuing education requirements for licensed insurance agents

shall constitute satisfaction of this state's continuing education require-

ments if the nonresident agent's home state accepts satisfaction of its

continuing education requirements imposed upon agents from this state

as satisfying the continuing education requirements imposed by the non-

resident insurance agent's home state on the same basis.

Sec. 15. (a) Notwithstanding the provisions of sections 3 and 6, and

amendments thereto, any person who is currently licensed as an insurance

agent on the day before the effective date of this act and whose biennial

due date occurred during the 24 calendar months immediately preceding

the effective date of this act shall be deemed to be licensed as an insur-

ance agent under this act unless such person's license has been sus-

pended, revoked or refused renewal prior to the effective date of this act.

(b) Any person licensed as an insurance agent under the provisions

of subsection (a) shall renew such license in accordance with the provi-

sions of this act on or before the first occurrence of such person's biennial

due date after the effective date of this act.

Sec. 16. In accordance with the provisions of the rules and regulations

filing act, K.S.A. 77-415 et seq. and amendments thereto, the commissioner

may adopt, amend and revoke rules and regulations governing the admin-

istration and enforcement of this act, including but not limited to:

(a) Criteria for approval of continuing education materials and as-

signing C.E.C. values for such materials;

(b) any form required to implement this act, subject to the condition

that any application form shall substantially comply with any requirements

imposed by the NAIC;

(c) any application for examination or licensure under this act;

(d) any examination for licensing under this act;

(e) any report which may be required by this act; and

(f) such other rules and regulations as the commissioner may deem

necessary to carry out the provisions of this act.

Sec. 17. The commissioner shall remit all moneys received by or for

the commissioner under the provisions of this act to the state treasurer

at least monthly. Upon receipt of each such remittance, the state treasurer

shall deposit the entire amount thereof in the state treasury and such

amount shall be credited to the insurance department service regulation

fund.

Sec. 18. The commissioner may enter into any contracts or purchase

any services necessary to implement the provisions of this act.

Sec. 19. K.S.A. 40-240, 40-240f, 40-241a, 40-241b, 40-241c, 40-

241d, 40-241e, 40-241f, 40-241g, 40-241i, 40-242, 40-245, 40-246, 40-

3701, 40-3702, 40-3703, 40-3704, 40-3705, 40-3706, 40-3707, 40-3708,

40-3709, 40-3710, 40-3711, 40-3712, 40-3713 and 40-3714 are hereby

repealed.

Sec. 20. This act shall take effect and be in force from and after its

publication in the statute book.

Approved April 4, 2000.


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Date Composed: 09/25/2001 Date Modified: 09/25/2001