AN ACT relating to regulatory authorizations by the commissioner of insurance.

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AN ACT relating to regulatory authorizations by the commissioner of insurance. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF KRS CHAPTER 299 IS CREATED TO 3
READ AS FOLLOWS: 4
(1) As used in this section, "company": 5
(a) Means an entity organized under: 6
1. This chapter; or 7
2. Any law of this state for the purpose of transacting the business of 8
insurance upon the cooperative or assessment plan, as set forth in 9
KRS 299.020; and 10
(b) Includes a company as defined in KRS 299.010(3) or (4). 11
(2) A solvent company that is not the subje ct of a delinquency proceeding under 12
Subtitle 33 of KRS Chapter 304 may voluntarily dissolve in accordance with the 13
requirements of this section. 14
(3) (a) A company seeking to voluntarily dissolve under this section shall dissolve 15
under a dissolution plan that: 16
1. Is in writing; 17
2. Provides for: 18
a. The disposition, by bulk reinsurance or other lawful procedure, 19
of all insurance in force with the company; and 20
b. Full discharge of all obligations of the company; 21
3. Designates or provides for one (1) or more tr ustees to conduct and 22
administer the settlement of the company's affairs; 23
4. Is authorized by its board of directors; 24
5. Is approved or adopted by policyholders or members by vote of not less 25
than two-third (2/3) of the policyholders or members voting ther eon at 26
a special meeting of the policyholders or members called and held 27
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pursuant to any reasonable notice and information as the 1
commissioner approves; and 2
6. Is filed with and approved by the commissioner. 3
(b) The commissioner shall approve a dissolution plan that complies with 4
paragraph (a) of this subsection unless the commissioner determines the 5
plan is: 6
1. Unlawful; 7
2. Unfair; 8
3. Inequitable; or 9
4. Prejudicial to the interests of members, policyholders, or creditors. 10
(4) The trustee or trustees design ated in a dissolution plan filed by a company under 11
subsection (3) of this section shall: 12
(a) Upon approval of the plan by the commissioner, execute the plan; and 13
(b) Certify, under oath and in writing, in articles of dissolution prepared in 14
accordance with state law and filed with the commissioner, the date when 15
all liabilities of the company have been discharged or otherwise adequately 16
provided for, and all assets of the company have been liquidated and 17
distributed, in accordance with the plan. 18
(5) (a) The commissioner shall make an examination, in a manner the 19
commissioner deems advisable, of the affairs and liquidation of a company 20
that voluntarily dissolves under this section. 21
(b) If, upon examination, the commissioner finds that the facts set forth in, and 22
form of, the articles of dissolution filed by the trustee or trustees under 23
subsection (4)(b) of this section are accurate and in compliance with state 24
law, the commissioner shall: 25
1. Inscribe his or her approval on the articles; and 26
2. Provide the approved articles to the company. 27
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(c) The company shall: 1
1. Deliver the articles of dissolution approved by the commissioner under 2
paragraph (b) of this subsection to the Secretary of State for filing; 3
and 4
2. Submit proof of the filing made under subparagraph 1. of this 5
paragraph to: 6
a. The commissioner; and 7
b. The trustee or trustees. 8
(d) The trustee or trustees that receive proof under paragraph (c)2. of this 9
subsection of a filing made under paragraph (c)1. of this subsection shall: 10
1. File, for recording, a copy of the articles of dissolution filed with the 11
Secretary of State in the office of the county clerk of the county in 12
which the company's principal place of business is or was located; and 13
2. Retain a copy, including proof of filing, of the articles of dissolution 14
filed with the Secretary of State under par agraph (c)1. of this 15
subsection for the company's records. 16
(6) The corporate existence of a company dissolved under this section shall forever 17
be terminated upon the effective date of the articles of dissolution filed with the 18
Secretary of State under subsection (5)(c)1. of this section. 19
Section 2. KRS 304.50-010 is amended to read as follows: 20
(1) (a) [The commissioner may authorize twenty (20) or more employers with 21
common interests or membership in a bona fide trade ass ociation, or two (2) 22
or more governmental entities, to enter into agreements to pool their liabilities 23
under KRS Chapter 342 for the purpose of qualifying as ] A workers' 24
compensation self -insured group authorized by the commissioner prior to 25
July 15, 2027, may continue to operate in accordance with the authorization 26
and this subtitle [under this subtitle and KRS 342.350] . Any heterogeneous 27
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self-insured group so authorized may contract and may sue and be sued in the 1
name adopted by the group. 2
(b) On and after July 15, 2027, additional workers' compensation self -insured 3
groups shall not be authorized by the commissioner for the purpose of 4
qualifying as a self -insured group under this subtitle or Section 3 of this 5
Act. 6
(2) The commissioner shall: 7
(a) Promulgate administrative regulations as necessary to govern [ admission, 8
certification, and] regulation of workers' compensation self -insured groups as 9
authorized by this section and KRS 342.350;[. The commissioner shall ] 10
(b) Take any and all action necessary to eff ectuate the provisions of this subtitle ; 11
and[. The commissioner shall ] 12
(c) Be responsible for maintaining records obtained or prepared in association 13
with this oversight. 14
(3) The Governor may assign the regulatory authority under this subtitle to another 15
board or agency pursuant to KRS 12.028. 16
(4) Except as specifically provided in this subtitle, no other provision of this chapter 17
shall apply to a workers' compensation self-insured group. 18
Section 3. KRS 342.350 is amended to read as follows: 19
(1) In order to comply with KRS 342.340, groups of employers may form, either 20
among themselves or with employers in other states, mutual insurance associations, 21
or reciprocal or interinsurance exchanges subject to the insurance laws o f this state 22
and any reasonable conditions and restrictions not inconsistent therewith fixed by 23
the commissioner. Membership in these mutual insurance associations or reciprocal 24
or interinsurance exchanges so approved, together with evidence of the payment of 25
premiums due, shall be evidence of compliance with KRS 342.340. 26
(2) The commissioner may, except as provided in subsection (3), require any mutual 27
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insurance association or reciprocal or interinsurance exchange to purchase an 1
annuity or to effect reinsu rance with a company authorized to transact insurance in 2
this state or to make a deposit with a bank or trust company of this state that shall in 3
either case be approved by the commissioner for the purpose of fully securing the 4
payment of all deferred installments upon any claim for compensation. 5
(3) Any mutual insurance association or reciprocal or interinsurance exchange 6
possessing a surplus of at least one hundred thousand dollars ($100,000) and not 7
less in amount than the capital required of a domestic stock insurance company 8
transacting the same kind of insurance shall not be required to purchase an annuity 9
or effect reinsurance with a company authorized to transact insurance in this state or 10
to make a deposit with a bank or trust company of this state for the purpose of fully 11
securing the payment of all deferred installments upon any claim for compensation. 12
(4) In addition, self-insured groups may be authorized under the provisions of KRS 13
304.50-010 and administrative regulations promulgated by the comm issioner of the 14
Department of Insurance[, twenty (20) or more employers with common interests or 15
membership in a bona fide trade association or two (2) or more city, county, charter 16
county, urban-county, or consolidated local government employers or their agencies 17
may enter into agreements to pool their liabilities under this chapter for the purpose 18
of qualifying as self -insured groups] . Any heterogeneous self -insured group so 19
authorized may contract and may sue and be sued in the name adopted by the 20
group. 21
Section 4. Sections 2 and 3 of this Act take effect July 15, 2027. 22