AIA Reports 2004 Kansas Legislative Session a Success

May 17, 2004

The Kansas legislature passed several bills sought by the Kansas Insurance Department and defeated or amended virtually all bills viewed as onerous by insurers before adjourning on May 8, the American Insurance Association (AIA) reported.

The 2004 legislative session was a “carry-over” year, meaning that bills that had not become law or that had not been stricken from the legislative calendar in 2003 could be acted upon during this year’s session.

“More than 80 bills related to insurance were heard this year in Kansas, and the outcome on virtually all of them was positive, which will continue to encourage a competitive insurance market in the state,” said John Marlow, assistant vice president, Southwest Region, AIA. “No major legislation was passed that adversely impacts insurers. Fortunately, several bills were defeated that could have caused harm to the marketplace.”

Several bills expected to have a positive impact on the insurance market were passed and have been sent to Gov. Kathleen Sebelius (D) for her signature, including the following:

• ΗΒ 2545 – authorizes the Kansas Insurance Department to adopt rules and regulations for the electronic verification of auto insurance coverage by insurers. This provision was included in HB 2852 and also amended into SB 342.
• HB 2563 – increased the threshold amount for reporting accidents from the current $500 per accident to $1000 per accident. Current requirements that accident reports be provided in all cases involving injury remain unchanged.
• HB 2597 – includes an amendment abolishing the requirement that agents carry errors and omissions (E&O) coverage. Insurance carriers are free to continue requiring E&O coverage as a contractual condition with their agents. The bill also allows carriers to issue policies in foreign languages. Finally, the bill includes language authorizing the Committee on Surety Bonds and Insurance to negotiate and enter into contracts for the purpose of purchasing insurance, surety coverage and similar coverage for any state agency authorized by law to make such a purchase.
• HB 2764 – adopts language providing for the interlocutory appeal of class certification lawsuits. This bill was already signed by the governor on March 29.

AIA lobbied against and ultimately defeated several onerous measures, including the following:

• SB 339 – would have prevented cancellation or non-renewal of homeowners insurance policies for a single storm-related claim. This bill was defeated in the Senate Financial Institutions & Insurance Committee.
• SB 347 – would have imposed severe restrictions on the use of loss history reports related to inquiries for homeowners insurance. This measure also was defeated in the Senate Financial Institutions & Insurance Committee.
• HB 2894 – would have imposed an additional tax on insurance companies doing business in Kansas by applying the franchise tax at a rate of one percent of corporate equity of the company attributable to Kansas. Under current law, banks and insurers are exempt from the franchise tax and filing obligations because they pay a privilege tax or premium tax. This bill was defeated in the House Taxation Committee.

Several measures supported by AIA and other insurers focusing on workers’ compensation reform were defeated this year. Despite momentum early in the Kansas Senate session for passing reform, the Kansas Trial Bar Association, organized Labor and the state’s nursing association and chiropractors were reportedly very effective at countering the arguments of the business community.

While the proactive reform bills were not passed, AIA was successful from a defensive perspective in helping to defeat adverse measures such as proposals to convert from an “employer choice of physician” system to an “employee choice of physician” system, and to reduce the voting requirements on the Workers’ Compensation Advisory Council.

The legislature reconvenes for sine die on May 27, at which time bills can be vetoed and/or become the subject of a veto override effort.

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