"Purchasing Group Notice and Registration" - Kansas

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Kansas Statutes - Insurance Laws
CHAPTER 40-- INSURANCE
Article 41 -- RISK RETENTION AND PURCHASING GROUPS
40-4101 Definitions
As used in this act:
(a) “Commissioner” means the insurance commissioner of this state or the commissioner, director or
superintendent of insurance in any other state.
(b) “Completed operations liability” means liability arising out of the installation, maintenance or repair of any
product at a site which is not owned or controlled by any person who: (1) Performs that work; or (2) hires
an independent contractor to perform that work; but shall include liability for activities which are
completed or abandoned before the date of the occurrence giving rise to the liability.
(c) “Domicile,” for purposes of determining the state in which a purchasing group is domiciled, means: (1) For
a corporation, the state in which the purchasing group is incorporated; and (2) for an unincorporated
entity, the state of its principal place of business.
(d) “Hazardous financial condition” means that, based on its present or reasonably anticipated financial
condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able
to: (1) Meet obligations to policyholders with respect to known claims and reasonably anticipated claims;
or (2) pay other obligations in the normal course of business.
(e) “Insurance” means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any
other arrangement for shifting and distributing risk which is determined to be insurance under the laws of
this state.
(f) “Liability” means legal liability for damages (including costs of defense, legal costs and fees, and other
claims expenses) because of injuries to other persons, damage to their property, or other damage or loss
to such other persons resulting from or arising out of: (1) Any business (whether profit or nonprofit),
trade, product, services (including professional services), premises or operations; or (2) any activity of
any state or local government, or any agency or political subdivision thereof; and (3) does not include
personal risk liability and an employer’s liability with respect to its employees other than legal liability
under the federal employers’ liability act.
(g) “Personal risk liability” means liability for damages because of injury to any person, damage to property,
or other loss or damage, resulting from any personal, familial, or household responsibilities or activities,
rather than from responsibilities or activities referred to in subsection (f).
(h) “Plan of operation or a feasibility study” means an analysis which presents the expected activities and
results of a risk retention group including, at a minimum:
(1) The coverages, deductibles, coverage limits, rates and rating classification systems for each line of
insurance the group intends to offer;
(2) historical and expected loss experience of the proposed members and national experience of similar
exposures;
(3) pro forma financial statements and projections;
(4) appropriate opinions by a qualified, independent casualty actuary, including a determination of
minimum premium or participation levels required to commence operations and to prevent a hazardous
financial condition;
(5) identification of management, underwriting procedures, managerial oversight methods, investment
policies; and
(6) such other matters as may be prescribed by the commissioner for liability insurance companies
authorized by the insurance laws of the state.
(i) “Product liability” means liability for damages because of any personal injury, death, emotional harm,
consequential economic damage, or property damage (including damages resulting from the loss of use of
property) arising out of the manufacture, design, importation, distribution, packaging, labeling, lease or
sale of a product, but does not include the liability of any person for those damages if the product
involved was in the possession of such a person when the incident giving rise to the claim occurred.
(j) “Purchasing group” means any group which:
(1) Has as one of its purposes the purchase of liability insurance on a group basis;
(2) purchases such insurance only for its group members and only to cover their similar or related liability
exposure, as described in subparagraph (3);
Kansas Statutes - Insurance Laws
CHAPTER 40-- INSURANCE
Article 41 -- RISK RETENTION AND PURCHASING GROUPS
40-4101 Definitions
As used in this act:
(a) “Commissioner” means the insurance commissioner of this state or the commissioner, director or
superintendent of insurance in any other state.
(b) “Completed operations liability” means liability arising out of the installation, maintenance or repair of any
product at a site which is not owned or controlled by any person who: (1) Performs that work; or (2) hires
an independent contractor to perform that work; but shall include liability for activities which are
completed or abandoned before the date of the occurrence giving rise to the liability.
(c) “Domicile,” for purposes of determining the state in which a purchasing group is domiciled, means: (1) For
a corporation, the state in which the purchasing group is incorporated; and (2) for an unincorporated
entity, the state of its principal place of business.
(d) “Hazardous financial condition” means that, based on its present or reasonably anticipated financial
condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able
to: (1) Meet obligations to policyholders with respect to known claims and reasonably anticipated claims;
or (2) pay other obligations in the normal course of business.
(e) “Insurance” means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any
other arrangement for shifting and distributing risk which is determined to be insurance under the laws of
this state.
(f) “Liability” means legal liability for damages (including costs of defense, legal costs and fees, and other
claims expenses) because of injuries to other persons, damage to their property, or other damage or loss
to such other persons resulting from or arising out of: (1) Any business (whether profit or nonprofit),
trade, product, services (including professional services), premises or operations; or (2) any activity of
any state or local government, or any agency or political subdivision thereof; and (3) does not include
personal risk liability and an employer’s liability with respect to its employees other than legal liability
under the federal employers’ liability act.
(g) “Personal risk liability” means liability for damages because of injury to any person, damage to property,
or other loss or damage, resulting from any personal, familial, or household responsibilities or activities,
rather than from responsibilities or activities referred to in subsection (f).
(h) “Plan of operation or a feasibility study” means an analysis which presents the expected activities and
results of a risk retention group including, at a minimum:
(1) The coverages, deductibles, coverage limits, rates and rating classification systems for each line of
insurance the group intends to offer;
(2) historical and expected loss experience of the proposed members and national experience of similar
exposures;
(3) pro forma financial statements and projections;
(4) appropriate opinions by a qualified, independent casualty actuary, including a determination of
minimum premium or participation levels required to commence operations and to prevent a hazardous
financial condition;
(5) identification of management, underwriting procedures, managerial oversight methods, investment
policies; and
(6) such other matters as may be prescribed by the commissioner for liability insurance companies
authorized by the insurance laws of the state.
(i) “Product liability” means liability for damages because of any personal injury, death, emotional harm,
consequential economic damage, or property damage (including damages resulting from the loss of use of
property) arising out of the manufacture, design, importation, distribution, packaging, labeling, lease or
sale of a product, but does not include the liability of any person for those damages if the product
involved was in the possession of such a person when the incident giving rise to the claim occurred.
(j) “Purchasing group” means any group which:
(1) Has as one of its purposes the purchase of liability insurance on a group basis;
(2) purchases such insurance only for its group members and only to cover their similar or related liability
exposure, as described in subparagraph (3);
(3) is composed of members whose businesses or activities are similar or related with respect to the liability
to which members are exposed by virtue of any related, similar, or common business, trade, product,
services, premises, or operations; and
(4) is domiciled in any state.
(k) “Risk retention group” means any corporation or other limited liability association formed under the laws
of any state, Bermuda, or the Cayman Islands:
(1) Whose primary activity consists of assuming and spreading all, or any portion, of the liability exposure
of its group’s members;
(2) which is organized for the primary purpose of conducting the activity described in subparagraph (1);
(3) which is chartered and licensed as a liability insurance company and authorized to engage in the
business of insurance under the laws of any state; or before January 1, 1985 was chartered or licensed
and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman
Islands and, before such date, had certified to the insurance commissioner of at least one state that it
satisfied the capitalization requirements of such state, except that any such group shall be considered
to be a risk retention group only if it has been engaged in business continuously since such date and
only for the operations liability (as such terms were defined in the product liability risk retention act of
1981 before the date of the enactment of the risk retention act of 1986);
(4) which does not exclude any person from membership in the group solely to provide for members of such
a group a competitive advantage over such a person;
(5) which has as its members only persons who have an ownership interest in the group and which has as
its owners only persons who are members who are provided insurance by the risk retention group; or
has as its sole member and sole owner in organization which is owned by persons who are provided
insurance by the risk retention group;
(6) whose members are engaged in business or activities similar or related with respect to the liability of
which such members are exposed by virtue of any related, similar, or common business trade, product,
services, premises, or operations;
(7) whose activities do not include the provisions of insurance other than liability insurance for assuming
and spreading all or any portion of the liability of its group members; and reinsurance with respect to
the liability of any other risk retention group (or any members of such other group) which is engaged in
business or activities so that such group or member meets the requirement described in subparagraph
(6) from membership in the risk retention group which provides such reinsurance; and
(8) the name of which includes the phrase “risk retention group.”
(l) “State” means any state of the United States and the District of Columbia.
40-4115 Purchasing groups; exemptions
Any purchasing group meeting the criteria established under the provisions of the federal liability risk
retention act of 1986 shall be exempt from any law of this state relating to the creation of groups for the
purchase of insurance, prohibition of group purchasing or any law that would discriminate against a
purchasing group or its members. In addition, an insurer shall be exempt from any law of this state which
prohibits providing, or offering to provide, to a purchasing group or its members advantages based on their
loss and expense experience not afforded to other persons with respect to rates, policy forms, coverage or
other matters. A purchasing group shall be subject to all other applicable laws of this state.
40-4116 Filing and registration requirements
(a) A purchasing group which intends to do business in this state shall furnish notice to the commissioner
which shall:
(1) Identify the state in which the group is domiciled;
(2) specify the lines and classifications of liability insurance which the purchasing group intends to
purchase;
(3) identify the insurance company from which the group intends to purchase its insurance and the
domicile of such company;
(4) identify the principal place of business of the group; and
(5) provide such other information as may be required by the commissioner to verify that the purchasing group is
qualified under subsection (j) of K.S.A. 40-4101 and amendments thereto.
The notice submitted to the commissioner shall be accompanied by a notification fee of $250.
(b) The purchasing group shall file with the insurance department its written consent, irrevocable, that any action or
garnishment proceeding may be commenced against such group in the proper court of any county in this state in
which the cause of action shall arise or in which the plaintiff may reside by the service of process on the
commissioner of insurance of this state and stipulating and agreeing that such service shall be taken and held in all
courts to be as valid and binding as if due service had been made upon the president or chief officer of such
corporation. Such consent shall be executed by the president of the company and shall be accompanied by a certified
copy of the order or resolution of the board of directors, trustees or managers authorizing the president to execute the
same. The summons, accompanied by a fee of $25 shall be directed to the commissioner of insurance and shall require
the defendant to answer not less than 40 days from its date. Such summons, and a certified copy of the petition shall
be forthwith forwarded by the clerk of the court to the commissioner of insurance, who shall immediately forward a
copy of the summons and the certified copy of the petition, to the president of the group sued and thereupon the
commissioner of insurance shall make return of the summons to the court from which it issued, showing the date of
the receipt by the commissioner, the date of forwarding of such copies and the name and address of the person to
whom the commissioner forwarded the copy. Such return shall be made under the commissioner’s hand and seal of
office, and shall have the same force and effect as a due and sufficient return made by the sheriff on process directed
to the sheriff. The foregoing shall not apply in the case of a purchasing group which:
(1)(A) Was domiciled before April 2, 1986; and
(B) is domiciled on and after October 27, 1986 in any state of the United States;
(2)(A) before October 27, 1986 purchased insurance from an insurance carrier licensed in any state; and
(B) since October 27, 1986 purchased its insurance from an insurance carrier licensed in any state;
(3) was a purchasing group under the requirements of the product liability retention act of 1981 before October 27,
1986; and
(4) does not purchase insurance that was not authorized for purposes of an exemption under that act, as in effect
before October 27, 1986.
40-4117 Insurance purchase restrictions
A purchasing group may not purchase insurance from a risk retention group that is not chartered in a state or from an
insurer not admitted in the state in which the purchasing group is located, unless the purchase is effected through a
licensed agent or broker acting pursuant to the surplus lines laws and regulations of such state.
40-4118 Enforcement authority
The commissioner is authorized to make use of any of the powers established under the insurance code of this state to
enforce the laws of this state so long as those powers are not specifically preempted by the product liability risk
retention act of 1981, as amended by the risk retention amendments of 1986. Such authorization includes, but is not
limited to, the commissioner’s administrative authority to investigate, issue subpoenas, conduct depositions and
hearings, issue orders and impose penalties. With regard to any investigation, administrative proceeding, or litigation, the
commissioner can rely on the procedural law and regulations of the state. The injunctive authority of the commissioner in
regard to risk retention groups is restricted by the requirement that any injunction be issued by a court of competent
jurisdiction.
40-4119 License requirements
Any person acting, or offering to act, as an agent or broker for a risk retention group, which solicits members, sells
insurance coverage, purchases coverage for its members located within the state or otherwise does business in this state
shall, before commencing any such activity, obtain a license from the commissioner.
40-4120 Enforcement of court orders
An order issued by any district court of the United States enjoining a risk retention group from soliciting or selling
insurance, or operating, in any state (or in all states or in any territory or possession of the United States) upon a finding
that such a group is in a hazardous financial condition, shall be enforceable in the courts of the state.
CHECK LIST FOR PURCHASING GROUPS
REGISTERING
IN THE STATE OF KANSAS
Properly completed NAIC or State of Kansas Purchasing Group Notice &
Registration Form
Properly completed Appointment Of Attorney To Accept Service and
Designation
$250 Non Refundable filing fee
Other Information Department Requires
:
Confirmation letter from the group’s state of domicile stating that the group
is domiciled and in good standing. (Copies of Articles of Incorporation are
not acceptable.) Not applicable if group domiciled in Kansas. See example.
Documentation that the appropriate rate and form filings have been or are
being filed by the admitted company with the insurance commissioner of the
state of Kansas.
Designated Agent (An agent must be designated.)
Admitted Company - - - -Resident or Non Resident agent appointed by
the company.
Excess Lines Company - Resident or Nonresident agent must hold an
excess lines license.
Acknowledgment letter with original signature from designated agent
accepting responsibility as agent for the RPG. See example.
E-Mail address if available
Date
Insurance Department
Name of Regulator
Street Address
City, State Zip
Re: XYZ Purchasing Group
Dear Sir or Madame:
XYZ Purchasing Group, a State Name domiciled purchasing group, is seeking to become
registered in the state of Kansas as a foreign purchasing group. As part of the registration
process, the Kansas Insurance Department requires an original letter of certification from
your Department verifying that
XYZ Purchasing Group is, in fact domiciled and in good standing in your state.
On behalf of XYZ Purchasing Group, we respectfully request that you forward such a letter
directly to the Kansas Insurance Department as follows:
Marcia Kramer
Property & Casualty Policy Examiner
Kansas Insurance Department
420 SW 9th St
Topeka KS 66612-1678
We appreciate your attention to this matter. Please do not hesitate to contact me if you
should have any questions.
Very truly yours,
RPG Responsible Person
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