UNOFFICIAL COPY AS OF 02/07/12 12 REG. SESS. 12 RS HB 295/GA
AN ACT relating to insurance.
Be it enacted by the General Assembly of the Commonwealth of Kentucky:
âSection 1. KRS 304.3-180 is amended to read as follows:
(1) A certificate of authority shall continue in force as long as the insurer is entitled thereto under this code, and until suspended or revoked by the commissioner or terminated at the insurer's request; subject, however, to continuance of the certificate by the insurer each year by:
(a) Payment of the continuation fee provided in Subtitle 4 by March 1, or, if paid by mail, postmarked no later than March 1;
(b) Due filing by the insurer of its annual statement for the next preceding calendar year as required by KRS 304.3-240;
(c) Payment by the insurer of premium taxes with respect to the preceding calendar year; and
(d) Due filing by domestic companies of quarterly statements as ordered by the commissioner.
(2) If not so continued by the insurer, its certificate of authority shall expire at midnight on the April 30[June 30] next following the failure of the insurer to continue it in force, unless earlier revoked for failure to pay taxes as provided in KRS 304.4-040. The commissioner shall promptly notify the insurer of the occurrence of any failure resulting in impending expiration of its certificate of authority.
(3) The commissioner may, in his or her discretion, upon the insurer's request made within three (3) months after expiration, reinstate a certificate of authority which the insurer has inadvertently permitted to expire, after the insurer has fully cured all its failures which resulted in the expiration and paid the fine as set forth in Section 21 of this Act. Otherwise the insurer shall be granted another certificate of authority only after filing application therefor and meeting all other requirements as for an original certificate of authority in this state.
(4) Beginning with the statutory audits for the year 2010, an insurer shall not use the same lead or coordinating partner of an accounting firm responsible for preparing the audited financial statement for more than five (5) consecutive years.
âSection 2. KRS 304.9-105 is amended to read as follows:
(1) An individual applying for an agent license shall make application to the commissioner on the uniform individual application or other application prescribed by the commissioner. Before approving the application, the commissioner shall find that the applicant:
(a) Is at least eighteen (18) years of age;
(b) Has fulfilled the residence requirements as set forth in KRS 304.9-120 or is a nonresident who is not eligible to be issued a license in accordance with KRS 304.9-140;
(c) Has not committed any act that is a ground for denial, suspension, or revocation set forth in KRS 304.9-440;
(d) Is trustworthy, reliable, and of good reputation, evidence of which shall be determined through an investigation by the commissioner;
(e) Is competent to exercise the license and has:
1. Except for variable life and variable annuities line of authority and limited lines of authority identified in KRS 304.9-230, completed a prelicensing course of study consisting of forty (40) hours for life and health, forty (40) hours for property and casualty, or twenty (20) hours for each line of authority, as applicable, for which the individual has applied. The commissioner shall promulgate administrative regulations to carry out the purpose of this section;
2. Except for variable life and variable annuities line of authority and limited lines of authority identified in accordance with KRS 304.9-230, successfully passed the examinations required by the commissioner for the lines of authority for which the individual has applied; and
3. Paid the fees set forth in KRS 304.4-010; and
(f) Is financially responsible to exercise the license and has maintained in effect while so licensed:
1. [a. Filed with the commissioner ]The certificate of an insurer authorized to write legal liability insurance in this state, that the insurer has and will keep in effect on behalf of the person a policy of insurance covering the legal liability of the licensed person as the result of erroneous acts or failure to act in his or her capacity as an insurance agent, and enuring to the benefit of any aggrieved party as the result of any single occurrence in the sum of not less than twenty thousand dollars ($20,000) and one hundred thousand dollars ($100,000) in the aggregate for all occurrences within one (1) year[, and that the policy shall not be terminated unless at least thirty (30) days' prior written notice will have been given to the commissioner];[ or]
2.[b.] [Deposited with the commissioner cash, or ]A cash surety bond executed by an insurer authorized to write business in this Commonwealth, in the sum of twenty thousand dollars ($20,000), which shall be subject to lawful levy of execution by any party to whom the licensee has been found to be legally liable as the result of erroneous acts or failure to act in his or her capacity as an agent; or
3.[c.] [Filed with the commissioner on his or her behalf, by an authorized insurer or group of affiliated insurers for which he or she is or is to become an exclusive agent, ]An agreement by an authorized insurer or group of affiliated insurers for which he or she is or is to become an exclusive agent whereby the insurer or group of affiliated insurers agrees to assume responsibility, to the benefit of any aggrieved party, for legal liability of the licensed person as the result of erroneous acts or failure to act in his or her capacity as an insurance agent on behalf of the insurer or group of affiliated insurers in the sum of twenty thousand dollars ($20,000) for any single occurrence and that the agreement shall not be terminated until the license is surrendered to the commissioner[ or at least thirty (30) days' prior written notice will have been given to the commissioner, whichever shall first occur; and
2. Agreed with the commissioner that if at any time notice is given to the commissioner that any policy filed in accordance with subparagraph 1.a. of this paragraph, or agreement filed in accordance with subparagraph 1.c. of this paragraph, is to be terminated and has not been replaced by another policy or agreement within the time established by regulations of the commissioner, or if any deposit in accordance with subparagraph 1.b. of this paragraph be reduced through levy of execution and not replaced by any necessary additional deposit within the time established by administrative regulations of the commissioner, any and all licenses held by the licensee are terminated and shall be promptly surrendered to the commissioner without demand].
(2) The commissioner may require additional information or submissions from applicants and may obtain any documents or information reasonably necessary to verify the information contained in an application.
âSection 3. KRS 304.9-320 is amended to read as follows:
For the protection of the people of this Commonwealth the commissioner shall not issue, continue, or permit to exist any license as consultant except in compliance with this subtitle, or as to any person not qualified therefor as follows:
(1) If an individual, the applicant:
(a) Must be eighteen (18) or more years of age;
(b) Must have had not less than five (5) years of actual experience as a licensed agent with respect to the kinds of insurance and contracts to be covered by the license[, or other special experience, education or training, all of sufficient content and duration reasonably necessary for competence in fulfilling the responsibilities of a consultant];
(c) Must have a thorough knowledge of insurance and annuity contracts of the kinds proposed to be covered under the license;
(d) Must satisfy the commissioner by written examination; and
(e) Must be competent, trustworthy under highest fiduciary standards, financially responsible, and of good personal and business reputation[; and
(f) Must have filed the bond required by KRS 304.9-330].
(2) If a business entity, the applicant:
(a) Must complete and submit a National Association of Insurance Commissioners uniform license application;
(b) Must pay applicable fees as set forth in KRS 304.4-010;
(c) Must be competent, trustworthy under the highest fiduciary standards, financially responsible, and of good business reputation; and
(d) Must designate each individual authorized to act for the business entity under its consultant license in accordance with KRS 304.9-133.
(3) A consultant license shall cover either or both of the following categories, as selected by the licensee:
(a) Property and casualty; or
(b) Life and health.
A consultant licensed in both categories shall qualify separately for, and be licensed in, each category.
âSection 4. KRS 304.9-330 is amended to read as follows:
(1) To the extent the Gramm-Leach-Bliley Act, 15 U.S.C. sec. 6751(f), provides that evidence of financial responsibility may be required for licensing, every licensed consultant[applicant for license as a consultant shall file with the commissioner with his or her application for license, and] shall maintain in effect while so licensed:
(a) The certificate of an insurer authorized to write legal liability insurance in this state, that the insurer has and will keep in effect on behalf of the consultant a policy of insurance covering the legal liability of the consultant as the result of erroneous acts or failure to act in his or her capacity as an insurance consultant, and inuring to the benefit of any aggrieved party as the result of any single occurrence in the sum of not less than twenty thousand dollars ($20,000) and one hundred thousand dollars ($100,000) in the aggregate for all occurrences within one (1) year[, and that the policy shall not be terminated unless at least thirty (30) days prior written notice will have been given to the commissioner]; or
(b) A [deposit with the commissioner of cash, or a ]cash surety bond executed by an insurer authorized to write this business in this Commonwealth, in the sum of twenty thousand dollars ($20,000) which shall be subject to lawful levy of execution by any party to whom the consultant has been found to be legally liable as the result of erroneous acts or failure to act in his or her capacity as a consultant.
(2) The bond shall indemnify any person damaged by any fraudulent or unlawful act or conduct of the licensee in transactions under the license, and shall likewise be conditioned upon faithful accounting and application of all moneys coming into the licensee's possession in connection with his or her activities as the licensee.
(3) The bond shall remain in force until[ released by the commissioner, or until] canceled by the surety. Without prejudice to any liability previously incurred thereunder, the surety may cancel the bond upon thirty (30) days advance written notice to the licensee[ and the commissioner].
âSection 5. KRS 304.9-430 is amended to read as follows:
(1) No person shall in this state act as or hold himself, herself, or itself out to be an independent, staff, or public adjuster unless then licensed by the Kentucky Department of Insurance as an independent, staff, or public adjuster.
(2) An individual applying for a resident independent, staff, or public adjuster license shall make application to the commissioner on the appropriate uniform individual application and in a format prescribed by the commissioner. The applicant shall declare under penalty of suspension, revocation, or refusal of the license that the statements made in the application are true, correct, and complete to the best of the individual's knowledge and belief. Before approving the application, the commissioner shall find that the individual to be licensed:
(a) Is at least eighteen (18) years of age;
(b) Is eligible to designate Kentucky as his or her home state;
(c) Is trustworthy, reliable, and of good reputation, evidence of which shall be determined through an investigation by the commissioner;
(d) Has not committed any act that is a ground for probation or suspension, revocation, or refusal of a license as set forth in KRS 304.9-440;
(e) Has successfully passed the examination for the adjuster license and the applicable line of authority for which the individual has applied;
(f) Has paid the fees established by the commissioner pursuant to KRS 304.4-010; and
(g) Is financially responsible to exercise the license.
(3) (a) To demonstrate financial responsibility, a person applying for a public adjuster license shall obtain a bond or irrevocable letter of credit prior to issuance of a license and shall maintain the bond or letter of credit for the duration of the license[. The applicant shall provide evidence of financial responsibility in a format prescribed by the commissioner] with the following limits:
1. A surety bond executed and issued by an insurer authorized to issue surety bonds in Kentucky, which bond shall:
a. Be in the minimum amount of twenty thousand dollars ($20,000);
b. Be in favor of the state of Kentucky and shall specifically authorize recovery[ by the commissioner on behalf] of any person in Kentucky who sustained damages as the result of erroneous acts, failure to act, conviction of fraud, or conviction for unfair trade practices in his or her capacity as a public adjuster; and
c. Not be terminated unless written notice is[ filed with the commissioner and] given to the licensee at least thirty (30) days prior to the termination; or
2. An irrevocable letter of credit issued by a qualified financial institution, which letter of credit shall:
a. Be in the minimum amount of twenty thousand dollars ($20,000);
b. Be[ to an account of the commissioner and] subject to lawful levy of execution on behalf of any person to whom the public adjuster has been found to be legally liable as the result of erroneous acts, failure to act, conviction of fraud, or conviction for unfair practices in his or her capacity as a public adjuster; and
c. Not be terminated unless written notice is[ filed with the commissioner and] given to the licensee at least thirty (30) days prior to the termination.
(b) [The issuer of the evidence of financial responsibility shall notify the commissioner upon termination of the bond or letter of credit, unless otherwise directed by the commissioner.