SESSION OF 2023
SUPPLEMENTAL NOTE ON SENATE BILL NO. 25
As Amended by House Committee on Insurance

Brief*
SB 25, as amended, would amend a provision in the
Insurance Code pertaining to the premium tax assessed for
surplus lines business that is transacted on behalf of insureds
(policyholders) whose home state is Kansas. The bill would
reduce the prescribed tax rate from 6.0 percent to 2.0
percent.
Under current law, on March 1 of each year, licensed
agents are required to collect and pay to the Commissioner of
Insurance a tax of 6.0 percent on the total gross premiums
charged, less any return premiums. The bill would amend this
rate to 2.0 percent, commencing with the tax year beginning
January 1, 2024.
The bill would be in effect upon publication in the
Kansas Register.

Background
The bill was introduced by the Senate Committee on
Financial Institutions and Insurance at the request of the
Kansas Association of Insurance Agents (KAIA).


____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org
Senate Committee on Financial Institutions and
Insurance
In the Senate Committee hearing, a representative of
the KAIA provided proponent testimony, stating the bill would
reduce the current rate of 6.0 percent, which presents an
unnecessary burden on Kansas small businesses and
consumers. The present rate is tied for the highest in the
nation and in discussion, the average tax rate among states
was an estimated 3.59 percent. The representative noted the
reasons insurance must be placed with non-admitted carriers,
including the flexibility to adjust policy terms and pricing for
non-standard risks because of their size, operations type,
complexity, loss history, or line of business.
Written-only proponent testimony was submitted by
representatives of the Fee Insurance Agency, SPS
Companies, and the Wholesale & Specialty Insurance
Association.
The Senate Committee amended the bill to change the
premium tax rate from 3.0 percent to 4.0 percent.

Senate Committee of the Whole
The Senate Committee of the Whole amended the bill to
update the title to reflect the tax rate specified in the Senate
Committee on Financial Institutions and Insurance
amendment (4.0 percent).

House Committee on Insurance
In the House Committee hearing, a representative of the
KAIA provided proponent testimony. Written-only proponent
testimony was submitted by representatives of the Fee
Insurance Agency, the Kansas Association of Property and
Casualty Insurance Companies (KAPCIC), SPS Companies,
and the Wholesale & Specialty Insurance Association. In

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addition to the testimony previously presented, testimony
submitted by KAPCIC noted the reduction in this tax rate
would reduce the cost for many insured consumers in the
state.
The House Committee amended the bill to change the
premium tax rate from 4.0 percent to 2.0 percent.
Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, the Kansas Insurance
Department states that in FY 2024 it expects to collect $33.5
million in surplus lines tax revenues, which would then be
deposited into the State General Fund (SGF). The
Department estimates that surplus lines insurance tax
collections would increase 10.0 percent in FY 2025, totaling
$36.9 million. The bill, as introduced, would decrease the tax
from 6.0 percent to 3.0 percent; therefore, the Department
estimates it would collect $18.4 million ($36.9 million X 0.5).
This would decrease SGF revenues by $18.4 million in FY
2025.
The bill, as amended by the House Committee, using
the methodology provided in the original fiscal note, would
reduce surplus lines tax collections by $24.6 million at the 2.0
percent rate; therefore, the Department would collect $12.3
million ($36.9 million collection estimate at 6.0 percent) in FY
2025. Any fiscal effect associated with the bill is not reflected
in The FY 2024 Governor’s Budget Report.
Insurance; surplus lines; premium tax receipts


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Statutes affected:
As introduced: 40-246c
As Amended by Senate Committee: 40-246c
{As Amended by Senate Committee of the Whole}: 40-246c
As Amended by House Committee: 40-246c
Enrolled: 75-2263, 75-6707