SESSION OF 2019
SUPPLEMENTAL NOTE ON SENATE BILL NO. 66
As Amended by House Committee on Insurance

Brief*
SB 66, as amended, would amend registration
requirements in the Insurance Holding Company Act related
to a filing exemption for enterprise risk reports. The bill would
also amend the effective date specified in the Insurance Code
for risk-based capital (RBC) instructions.

Enterprise Risk Reports [Section 2]
The bill would require an enterprise risk report filed by
the ultimate controlling person of every insurer subject to
registration to be appropriate to the nature, scale, and
complexity of the insurer.
The bill would exempt the ultimate controlling person of
a domestic insurer from submitting an enterprise risk report if
the domestic insurer is authorized, admitted, or eligible to
engage in the business of insurance only in Kansas with total
direct and assumed annual premiums of less than $300.0
million, unless the ultimate controlling person of the domestic
insurer also controls other insurers not meeting the
requirements of the section. The bill would specify an insurer
is not considered to be authorized, admitted, or eligible to
engage in the business of insurance only in Kansas if the
insurer directly or indirectly writes or assumes insurance in
any other manner in another state.
The bill would make technical amendments.
____________________
*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
Risk-based Capital Instructions [Section 1]
The bill would also amend the effective date specified in
the Insurance Code for the RBC instructions promulgated by
the National Association of Insurance Commissioners (NAIC)
for property and casualty companies and for life insurance
companies. The instructions currently specified became
effective on December 31, 2017. The bill would update the
effective date on the RBC instructions to December 31, 2018.

Background
The bill contains provisions of SB 66 and SB 28.

SB 66 (Enterprise Risk Reports)
SB 66 was introduced by the Senate Committee on
Financial Institutions and Insurance at the request of the
Kansas Insurance Department (Department).
In the Senate Committee on Financial Institutions and
Insurance and House Committee on Insurance hearings, a
representative of the Department testified in favor of the bill,
noting its purpose is to repeal the small group exemption
currently in statute. The representative stated Kansas is the
only state that maintains an exemption for small groups and,
absent repeal of this provision, the Department would be out
of compliance with the NAIC accreditation standards. The
representative noted repeal of this provision would impact ten
companies. The representative also provided a letter from the
NAIC outlining the history of the enterprise risk report filing
requirements. No neutral or opponent testimony was
provided.
The House Committee on Insurance amended SB 66 to
add the provisions of SB 28 (RBC instructions).


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 According to the fiscal note prepared by the Division of
the Budget, the Department indicates enactment of SB 66, as
introduced, would result in additional expenditures from the
increased processing time required for submissions of Form
F-Enterprise Risk Report. However, the Department indicates
the additional expenditures would be negligible and could be
absorbed within existing resources. Any fiscal effect
associated with enactment of SB 66, as introduced, is not
reflected in The FY 2020 Governor’s Budget Report.

SB 28 (RBC Instructions)
SB 28 was introduced by the Senate Committee on
Financial Institutions and Insurance. In the Senate Committee
on Financial Institutions and Insurance and House Committee
on Insurance hearings, a representative of the Department
provided written-only proponent testimony that noted the goal
of the RBC law is to ensure each Kansas domestic company
has the required amount of capital needed to support its
overall business operations in consideration of its size and
risk profile. The representative also noted amendments to the
effective date of the instructions have been made each year
since 2009. [Note: In 2009, a legislative oversight process for
updating the annual RBC instructions was established. This
process allows the Department to update the requirements by
rules and regulations, unless one of two statutory triggers has
been met.] No neutral or opponent testimony was provided.
The House Committee on Insurance amended SB 28 by
removing its contents and placing the contents in SB 66.
[Note: The contents of HB 2213, relating to fraudulent
insurance acts, were placed in SB 28. See the supplemental
note on SB 28 for more information.]
According to the fiscal note prepared by the Division of
the Budget, the Department indicates enactment of SB 28, as
introduced, would have no fiscal effect.


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Statutes affected:
As introduced: 40-3305
As Amended by House Committee: 40-2c01, 40-3305
Enrolled - Law effective March 27, 2020: 2-223, 12-1775a, 12-5256, 55-193, 65-180, 74-50, 74-99b34, 75-2263, 75-6707, 76-775, 76-7, 79-2959, 79-2964, 79-3425i, 79-34, 79-4804