Article 42.--PREPAID LEGAL AND DENTAL SERVICE PLANS
40-4211.Deposit of securities with commissioner to guaranteeperformance; surety bond or irrevocable letter of credit in lieu of securities deposit.(a) Each prepaid service plan shall deposit and maintain withthe commissioner of insurance securities of the type eligible for depositby insurers. Such securities shall have at all times a market value in accordancewith the following:
(1) A prepaid service plan which has transacted no business in this stateprior to the effective date of this act, shall deposit an initial amountof $50,000 with the commissioner of insurance, prior to the issuance ofits certificate of registration and before receiving any membership fees;
(2) a prepaid service plan transacting business in this state prior tothe effective date of this act and having in force in this state less than$300,000 of annual membership fees shall deposit with the commissioner of insurancea sum equal to 50% of the membership fees in force or $50,000, whichever is less;
(3) a prepaid service plan transacting business in this state prior tothe effective date of this act and having in force in this state more than$300,000 but less than $750,000 of annual membership fees, shall deposit with thecommissioner of insurance an amount of not less than $75,000; and
(4) a prepaid service plan transacting business in this state prior tothe effective date of this act and having in force in this state $750,000or more of annual membership fees, shall deposit with the commissioner of insurancean amount of not less than $100,000.
(b) In lieu of any deposit of securities required under subsection (a), a prepaidservice plan may file with the commissioner of insurance a surety bond insuch form, amount and conditions as prescribed by the commissioner orpresent the commissioner with an irrevocable letter of credit issued by astate or federally chartered bank domiciled in Kansas.Any such surety bond or irrevocable letter of credit issued or written fora specific term shall be renewed or replaced not less than 90 days prior toexpiration. In the event satisfactory evidence of such renewal orreplacement is not received by the commissioner at least 60 days prior toexpiration, the commissioner is hereby authorized to draw upon the letterof credit or surety bond to the extent possible and necessary to assurethat the obligations of the prepaid service plan to its members areprovided for in accordance with subsection (e).The surety bond or irrevocable letter of credit shall be for the samepurpose as the deposit of securitiesfor which it is in lieu thereof. The commissioner of insurance shall notapprove any surety bond under the terms of which the protection affordedagainst insolvency is not equivalent to the protection afforded by thosesecurities provided for in subsection (a).
(c) Securities or surety bonds deposited with or irrevocable lettersof credit presented to the commissioner of insurancepursuant to this section shall be for the benefit of any person or personssustaining an actionable injury due to the failure of the prepaid serviceplan to faithfully perform its obligations to its members or thoseproviders with whom they have contracted, and such securities, surety bonds orirrevocable letters of credit shall be subject toaction thereon by any such person orpersons for such purposes in the event of insolvency or impairment of theprepaid service plan.
(d) The commissioner of insurance shall be responsible for the safekeepingof all securities deposited with the commissioner under this section. Suchsecurities shall not be subject to taxation on account of being in thisstate, but shall be held exclusively and solely to guarantee the prepaidservice plan's performance of its obligations to its members.
(e) The deposit of securities or surety bond or the irrevocable letter ofcreditrequired under this sectionshall be maintained unimpaired as long as the prepaid service plan continuesin business in this state. When a prepaid service plan ceases to do businessin this state and furnishes the commissioner of insurance proof satisfactorythat such prepaid service plan has discharged or otherwise adequately providedfor all its obligations to its members in this state, the commissioner ofinsurance shall release the deposited securities to the parties entitledthereto on presentation of receipts for such securities, shallrelease any surety bond filed in lieu of such deposit or shall consent torevocation of any letter of credit presented in lieu of such deposit.
(f) The commissioner of insurance, at any time, may enter an order increasingthe amount of the deposit of securities, surety bond or irrevocable letterof credit specified under this section if the commissioner of insurancefinds that there has been a substantialchange in the facts, including an increase in the amounts of membershipfees in force in this state on which the original determination was based.The prepaid service plan may request a hearing on any such increase within30 days of the issuance of the commissioner's order. A hearing shall beheld within 30 days of such a request by the prepaid service plan. Failureby a prepaid service plan to meet the new requirements ordered under thissubsection within 30 days after a final decision by the commissioner ofinsurance or 30 days after the period for submitting a request for a hearingon the matter constitutes a ground for revocation of the certificate ofregistration of the prepaid service plan.
History: L. 1987, ch. 157, § 11;L. 1989, ch. 145, § 1; July 1.
Article 42.--PREPAID LEGAL AND DENTAL SERVICE PLANS
40-4211.Deposit of securities with commissioner to guaranteeperformance; surety bond or irrevocable letter of credit in lieu of securities deposit.(a) Each prepaid service plan shall deposit and maintain withthe commissioner of insurance securities of the type eligible for depositby insurers. Such securities shall have at all times a market value in accordancewith the following:
(1) A prepaid service plan which has transacted no business in this stateprior to the effective date of this act, shall deposit an initial amountof $50,000 with the commissioner of insurance, prior to the issuance ofits certificate of registration and before receiving any membership fees;
(2) a prepaid service plan transacting business in this state prior tothe effective date of this act and having in force in this state less than$300,000 of annual membership fees shall deposit with the commissioner of insurancea sum equal to 50% of the membership fees in force or $50,000, whichever is less;
(3) a prepaid service plan transacting business in this state prior tothe effective date of this act and having in force in this state more than$300,000 but less than $750,000 of annual membership fees, shall deposit with thecommissioner of insurance an amount of not less than $75,000; and
(4) a prepaid service plan transacting business in this state prior tothe effective date of this act and having in force in this state $750,000or more of annual membership fees, shall deposit with the commissioner of insurancean amount of not less than $100,000.
(b) In lieu of any deposit of securities required under subsection (a), a prepaidservice plan may file with the commissioner of insurance a surety bond insuch form, amount and conditions as prescribed by the commissioner orpresent the commissioner with an irrevocable letter of credit issued by astate or federally chartered bank domiciled in Kansas.Any such surety bond or irrevocable letter of credit issued or written fora specific term shall be renewed or replaced not less than 90 days prior toexpiration. In the event satisfactory evidence of such renewal orreplacement is not received by the commissioner at least 60 days prior toexpiration, the commissioner is hereby authorized to draw upon the letterof credit or surety bond to the extent possible and necessary to assurethat the obligations of the prepaid service plan to its members areprovided for in accordance with subsection (e).The surety bond or irrevocable letter of credit shall be for the samepurpose as the deposit of securitiesfor which it is in lieu thereof. The commissioner of insurance shall notapprove any surety bond under the terms of which the protection affordedagainst insolvency is not equivalent to the protection afforded by thosesecurities provided for in subsection (a).
(c) Securities or surety bonds deposited with or irrevocable lettersof credit presented to the commissioner of insurancepursuant to this section shall be for the benefit of any person or personssustaining an actionable injury due to the failure of the prepaid serviceplan to faithfully perform its obligations to its members or thoseproviders with whom they have contracted, and such securities, surety bonds orirrevocable letters of credit shall be subject toaction thereon by any such person orpersons for such purposes in the event of insolvency or impairment of theprepaid service plan.
(d) The commissioner of insurance shall be responsible for the safekeepingof all securities deposited with the commissioner under this section. Suchsecurities shall not be subject to taxation on account of being in thisstate, but shall be held exclusively and solely to guarantee the prepaidservice plan's performance of its obligations to its members.
(e) The deposit of securities or surety bond or the irrevocable letter ofcreditrequired under this sectionshall be maintained unimpaired as long as the prepaid service plan continuesin business in this state. When a prepaid service plan ceases to do businessin this state and furnishes the commissioner of insurance proof satisfactorythat such prepaid service plan has discharged or otherwise adequately providedfor all its obligations to its members in this state, the commissioner ofinsurance shall release the deposited securities to the parties entitledthereto on presentation of receipts for such securities, shallrelease any surety bond filed in lieu of such deposit or shall consent torevocation of any letter of credit presented in lieu of such deposit.
(f) The commissioner of insurance, at any time, may enter an order increasingthe amount of the deposit of securities, surety bond or irrevocable letterof credit specified under this section if the commissioner of insurancefinds that there has been a substantialchange in the facts, including an increase in the amounts of membershipfees in force in this state on which the original determination was based.The prepaid service plan may request a hearing on any such increase within30 days of the issuance of the commissioner's order. A hearing shall beheld within 30 days of such a request by the prepaid service plan. Failureby a prepaid service plan to meet the new requirements ordered under thissubsection within 30 days after a final decision by the commissioner ofinsurance or 30 days after the period for submitting a request for a hearingon the matter constitutes a ground for revocation of the certificate ofregistration of the prepaid service plan.
History: L. 1987, ch. 157, § 11;L. 1989, ch. 145, § 1; July 1.
Article 42.--PREPAID LEGAL AND DENTAL SERVICE PLANS
40-4211.Deposit of securities with commissioner to guaranteeperformance; surety bond or irrevocable letter of credit in lieu of securities deposit.(a) Each prepaid service plan shall deposit and maintain withthe commissioner of insurance securities of the type eligible for depositby insurers. Such securities shall have at all times a market value in accordancewith the following:
(1) A prepaid service plan which has transacted no business in this stateprior to the effective date of this act, shall deposit an initial amountof $50,000 with the commissioner of insurance, prior to the issuance ofits certificate of registration and before receiving any membership fees;
(2) a prepaid service plan transacting business in this state prior tothe effective date of this act and having in force in this state less than$300,000 of annual membership fees shall deposit with the commissioner of insurancea sum equal to 50% of the membership fees in force or $50,000, whichever is less;
(3) a prepaid service plan transacting business in this state prior tothe effective date of this act and having in force in this state more than$300,000 but less than $750,000 of annual membership fees, shall deposit with thecommissioner of insurance an amount of not less than $75,000; and
(4) a prepaid service plan transacting business in this state prior tothe effective date of this act and having in force in this state $750,000or more of annual membership fees, shall deposit with the commissioner of insurancean amount of not less than $100,000.
(b) In lieu of any deposit of securities required under subsection (a), a prepaidservice plan may file with the commissioner of insurance a surety bond insuch form, amount and conditions as prescribed by the commissioner orpresent the commissioner with an irrevocable letter of credit issued by astate or federally chartered bank domiciled in Kansas.Any such surety bond or irrevocable letter of credit issued or written fora specific term shall be renewed or replaced not less than 90 days prior toexpiration. In the event satisfactory evidence of such renewal orreplacement is not received by the commissioner at least 60 days prior toexpiration, the commissioner is hereby authorized to draw upon the letterof credit or surety bond to the extent possible and necessary to assurethat the obligations of the prepaid service plan to its members areprovided for in accordance with subsection (e).The surety bond or irrevocable letter of credit shall be for the samepurpose as the deposit of securitiesfor which it is in lieu thereof. The commissioner of insurance shall notapprove any surety bond under the terms of which the protection affordedagainst insolvency is not equivalent to the protection afforded by thosesecurities provided for in subsection (a).
(c) Securities or surety bonds deposited with or irrevocable lettersof credit presented to the commissioner of insurancepursuant to this section shall be for the benefit of any person or personssustaining an actionable injury due to the failure of the prepaid serviceplan to faithfully perform its obligations to its members or thoseproviders with whom they have contracted, and such securities, surety bonds orirrevocable letters of credit shall be subject toaction thereon by any such person orpersons for such purposes in the event of insolvency or impairment of theprepaid service plan.
(d) The commissioner of insurance shall be responsible for the safekeepingof all securities deposited with the commissioner under this section. Suchsecurities shall not be subject to taxation on account of being in thisstate, but shall be held exclusively and solely to guarantee the prepaidservice plan's performance of its obligations to its members.
(e) The deposit of securities or surety bond or the irrevocable letter ofcreditrequired under this sectionshall be maintained unimpaired as long as the prepaid service plan continuesin business in this state. When a prepaid service plan ceases to do businessin this state and furnishes the commissioner of insurance proof satisfactorythat such prepaid service plan has discharged or otherwise adequately providedfor all its obligations to its members in this state, the commissioner ofinsurance shall release the deposited securities to the parties entitledthereto on presentation of receipts for such securities, shallrelease any surety bond filed in lieu of such deposit or shall consent torevocation of any letter of credit presented in lieu of such deposit.
(f) The commissioner of insurance, at any time, may enter an order increasingthe amount of the deposit of securities, surety bond or irrevocable letterof credit specified under this section if the commissioner of insurancefinds that there has been a substantialchange in the facts, including an increase in the amounts of membershipfees in force in this state on which the original determination was based.The prepaid service plan may request a hearing on any such increase within30 days of the issuance of the commissioner's order. A hearing shall beheld within 30 days of such a request by the prepaid service plan. Failureby a prepaid service plan to meet the new requirements ordered under thissubsection within 30 days after a final decision by the commissioner ofinsurance or 30 days after the period for submitting a request for a hearingon the matter constitutes a ground for revocation of the certificate ofregistration of the prepaid service plan.
History: L. 1987, ch. 157, § 11;L. 1989, ch. 145, § 1; July 1.
