AN ACT relating to insurance regulatory requirements and declaring an emergency.

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AN ACT relating to insurance regulatory requirements and declaring an emergency. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 304.1-050 is amended to read as follows: 3
As used in this chapter, unless the context requires otherwise: 4
(1) "Commissioner" means the commissioner of the Department of Insurance of this 5
state; and[.] 6
(2) "Department" means the Department of Insurance of this state [, unless context 7
otherwise requires]. 8
Section 2. KRS 304.1-110 is amended to read as follows: 9
As used in this chapter, unless the context requires otherwise: 10
(1) [A ] "Certificate of authority" means a certificate [is one] issued by the 11
commissioner evidencing the authority of an insurer to transact insurance in this 12
state; and[.] 13
(2) [A ]"License" means a license or other authorization [is authority] granted by the 14
commissioner pursuant to this chapter that authorizes [code authorizing] the 15
licensee to engage in a business or operation of insurance in this state other than as 16
an insurer[, and the certificate by which such authority is evidenced]. 17
Section 3. KRS 304.2-160 is amended to read as follows: 18
(1) As used in this section, "licensee" means an individual or entity that holds a 19
license issued by the commissioner or department. 20
(2) Each written and signed complaint received by the department [ of Insurance] shall 21
be recorded by the depart ment, including the subsequent disposition thereof, and 22
maintained for a period of not less than five (5) years. 23
(3) The records of [ such] complaints received by the department shall be indexed 24
whenever applicable both by the name of the insurer and by the name of the 25
licensee[, including agent, surplus lines broker, adjuster, administrator, reinsurance 26
intermediary broker or manager, rental vehicle agent or managing employee, 27
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specialty credit producer or managing employee, life settlement broker or provide r, 1
or consultant] involved. 2
(4) The commissioner shall consider [ such] complaints received by the department 3
before issuing or renewing any certificate of authority or license. 4
Section 4. KRS 304.2-220 is amended to read as follows: 5
For the purpose of ascertaining compliance with law, or relationships and transactions 6
between any person and any insurer or proposed insurer, the commissioner may as often 7
as reasonably necessary examine th e accounts, records, documents, and transactions 8
pertaining to or affecting the insurance affairs or proposed insurance affairs and 9
transactions of any: 10
(1) [Any ]Insurance holding company;[ or ] 11
(2) Person holding the shares of voting stock or policyholde r proxies of an insurer as 12
voting trustee or otherwise, for the purpose of controlling the management thereof; 13
(3)[(2)] [Any ] Insurance agent, managing general agent, surplus lines broker, 14
adjuster, consultant, administrator, reinsurance intermediary broke r or manager, 15
rental vehicle agent ,[ or] rental vehicle agent managing employee, pharmacy 16
benefit manager, portable electronics retailer [specialty credit producer or 17
managing employee] , or any person holding himself or herself out as any of the 18
foregoing; 19
(4)[(3)] [Any ]Person having a contract under which he or she enjoys by terms or in 20
fact the exclusive or dominant right to manage or control an[the] insurer, as voting 21
trustee[,] or otherwise; and 22
(5)[(4)] [Any ]Person in this state engaged in, [ or] proposing to be engaged in [ this 23
state in] ,[ or] holding himself or herself out [ in this state] as so engaging or 24
proposing, or[ in this state] assisting in the promotion, formation, or financing of: 25
(a) An insurer;[ or] 26
(b) An insurance holding company;[corporation,] or 27
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(c) A corporation or other group to finance an insurer or the production of its 1
business. 2
Section 5. KRS 304.2-450 is amended to read as follows: 3
(1) As used in this section: 4
(a) "Insurable dwelling": 5
1. Means a dwelling located or situated on, or affixed to, residential real 6
estate; and 7
2. Includes a single -family or multifamily dwelling, including a modular 8
home;[ and] 9
(b) "SKH approved contractor" means a person that has bee n determined by 10
the commissioner pursuant to an administrative regulation promulgated in 11
accordance with subsection (5) of this section to be eligible and approved to 12
mitigate insurable dwellings under the Strengthen Kentucky Homes 13
Program; 14
(c) "SKH online portal" means an online portal through which a person 15
seeking to become an SKH approved contractor is required to submit 16
documents to the department pursuant to an administrative regulation 17
promulgated in accordance with subsection (5) of this section; and 18
(d) "Strengthen Kentucky Homes Program" or "program" means the Strengthen 19
Kentucky Homes Program created in this section. 20
(2) The Strengthen Kentucky Homes Program is hereby created for the purpose of 21
providing financial grants to real property owners, SKH approved [building] 22
contractors, and nonprofit organizations to assist and promote the mitigation of 23
insurable dwellings to re sist losses due to catastrophic wind and hail events in 24
accordance with FORTIFIED construction standards published by the Insurance 25
Institute for Business and Home Safety or a successor entity. 26
(3) To the extent funding is available under subsection (4) of this section, the 27
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commissioner shall implement and administer the program in accordance with this 1
section. 2
(4) (a) The Strengthen Kentucky Homes Program fund is hereby created in the State 3
Treasury. 4
(b) The following shall be deposited into the fund: 5
1. All grants and funds received or raised by the commissioner under 6
paragraph (e) of this subsection; and 7
2. Any appropriations made to the fund by the General Assembly. 8
(c) Notwithstanding KRS 45.229: 9
1. Moneys in the fund not expended at the close of a fisc al year shall not 10
lapse but shall be carried forward to the next fiscal year; and 11
2. Any interest earnings of the fund shall become part of the fund and shall 12
not lapse. 13
(d) Moneys in the fund are hereby appropriated by the General Assembly and 14
shall be av ailable to the commissioner for use in implementing and 15
administering the program , except the commissioner shall not make 16
financial grants under subsection (7) of this section that exceed, in 17
aggregate, fifteen thousand dollars ($15,000). 18
(e) The commissioner shall use his or her best efforts to seek and obtain grants or 19
funds from the federal government or other funding sources for deposit into 20
the fund to supplement any appropriations to the fund made by the General 21
Assembly. 22
(5) (a) Except as provided in subsection (7) of this section, the commissioner shall 23
promulgate administrative regulations in accordance with KRS Chapter 13A 24
to create and establish: 25
1. Application forms and procedures for seeking a financial grant; 26
2. The eligibility criteria, requir ements, and procedures for obtaining a 27
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financial grant, which may include but are not limited to providing 1
financial grants to: 2
a. Real property owners to mitigate owner -occupied insurable 3
dwellings; and 4
b. [Building contractors to become certified as FORT IFIED Trained 5
Service Providers by the Insurance Institute for Business and 6
Home Safety or a successor entity; and 7
c. ]Nonprofit organizations to improve the wind and hail resilience of 8
single-family insurable dwellings occupied or owned by low -9
income and moderate-income individuals; 10
3. If the commissioner provides financial grants to mitigate insurable 11
dwellings: 12
a. i. The building standards or techniques that are required for the 13
mitigation, which shall include but are not limited to 14
compliance with the m ost recent version of any applicable 15
FORTIFIED Home or FORTIFIED Multifamily construction 16
standards published by the Insurance Institute for Business 17
and Home Safety or a successor entity. 18
ii. The commissioner shall determine through the promulgation 19
of an administrative regulation under this subsection the 20
specific standards and designations that are required for any 21
insurable dwelling; and 22
b. Eligibility criteria for building contractors and evaluators that are 23
eligible to mitigate and inspect the insurab le dwellings, 24
respectively, which shall include a preference for Kentucky 25
building contractors and evaluators; and 26
4. The procedures and requirements for distributing financial grants. 27
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(b) The commissioner may promulgate administrative regulations in accor dance 1
with KRS Chapter 13A to establish any additional rules and eligibility 2
requirements that are necessary for the proper implementation and 3
administration of this section, including but not limited to the collection of 4
documentation necessary to allow f or any auditing of the program that is 5
required under the terms of a grant or other funds received by the program. 6
(6) Any financial grant provided under the program to mitigate an insurable dwelling 7
shall be contingent upon the real property owner securin g all required permits and 8
applicable inspections in accordance with local building codes. 9
(7) (a) The commissioner shall make one (1) time financial grants in accordance 10
with this subsection to SKH approved contractors to reimburse each 11
contractor for the cost of an initial certification by the Insurance Institute 12
for Business and Home Safety or a succ essor entity to act as a CERTIFIED 13
Roofing contractor. 14
(b) In order to receive reimbursement under this subsection, an SKH approved 15
contractor shall upload the following documents through the SKH online 16
portal: 17
1. A request for reimbursement under this subsection; and 18
2. A receipt or other documentation from the Insurance Institute for 19
Business and Home Safety or a successor entity that states: 20
a. The contractor's name and address, which shall match the name 21
and address that is on file with the department; 22
b. That the contractor is certified to act as a CERTIFIED Roofing 23
contractor; 24
c. The date the receipt or other documentation was issued; and 25
d. The cost paid for the certification referenced in subdivision b. of 26
this subparagraph. 27
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(c) Upon compliance with paragraph (b) of this subsection by an SKH 1
approved contractor, the commissioner shall, to the extent funding is 2
available under subsection (4) of this section, make a one (1) time financial 3
grant to the contractor in the amount of the cost paid for the certification. 4
(d) Financial grants made under this subsection shall be made to SKH 5
approved contractors in the order that the contractors satisfy the 6
requirements of paragraph (b) of this subsection. 7
(e) Checks shall be mailed to the address of the contractor's choice. 8
(f) The commissioner shall not be required to establish additional forms, 9
procedures, or requirements, by administrative regulation or otherwise, in 10
order to implement, or distribute financial grants under, this subsection. 11
(8) Nothing in this section shall be construed to create an entitlement for property 12
owners, SKH approved[building] contractors, or nonprofit organizations to obtain 13
funds for, or obligate the state in any way to fund, or maintain funding for, any 14
activity for which a financial grant is permitted or provided under this section. 15
Section 6. KRS 304.4-040 is amended to read as follows: 16
(1) As used in this section, "licensee" means an individual or entity that holds a 17
license issued by the commissioner or department. 18
(2) The commissioner may revoke the certificate of authority of any insurer which fails 19
to pay when due any taxes, fees, licenses, and other charges owing to this state. The 20
commissioner may likewise revoke the license of any licensee[agent, surplus lines 21
broker, adjuster, administrator, reinsurance intermediary broker or manager, rental 22
vehicle agent or managing employee, specialty credit producer or managing 23
employee, life settlement broker or provider, or consultant,] as to whom a ny tax or 24
fee required under this chapter[code] has not been paid when due. 25
Section 7. KRS 304.5-080 is amended to read as follows: 26
(1) As used in this chapter, "inland marine insurance" means marine and 27
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transportation insurance that may cover or include ["Marine and transportation 1
insurance" includes]: 2
(a) 1. Imports, wherever the property may be and without restriction as to 3
time, if the coverage includes hazards of transportation. 4
2. An import, as a proper subject of marine and transportation 5
insurance, shall be deemed to: 6
a. Maintain its character if the property: 7
i. Remains segregated in such a way that it can be identified; 8
and 9
ii. Has not become incorporated and mixed with the general 10
mass of property in the United States; and 11
b. Have been completed when the property has been: 12
i. Sold and delivered by the importer, factor, or consignee; 13
ii. Removed from place of storage and placed on sale as part 14
of an importer's stock in trade at a point of sale or 15
distribution; or 16
iii. Delivered for manufacture, processing, or change in form 17
to premises of the importer or of another used for any such 18
purposes;[Insurance against any kinds of loss or damage to: 19
1. Vessels, craft, aircraft, goods, freights, cargoes, merchandise, effects, 20
disbursements, profits, moneys, bullion, precious stones, sec urities, 21
choses in action, evidences of debt, valuable papers, bottomry and 22
respondentia interests and all other kinds of property and interests 23
therein, in respect to, appertaining to, or in connection with any and all 24
risks or perils of navigation, trans it, or transportation, including war 25
risks, on or under any seas or other waters, on land or in the air, or while 26
being assembled, packed, crated, baled, compressed or similarly 27
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prepared for shipment or while awaiting the same or during any delays, 1
storage, transshipment, or reshipment incident thereto, including marine 2
builder's risks and all personal property floater risks, and 3
2. Person or to property in connection with or appertaining to a marine, 4
inland marine, transit or transportation insurance, inc luding liability for 5
loss of or damage to either, arising out of or in connection with the 6
construction, repair, operation, maintenance or use of the subject matter 7
of such insurance (but not including life insurance or surety bonds nor 8
insurance against l oss by reason of bodily injury to the person arising 9
out of the ownership, maintenance or use of automobiles), and 10
3. Precious stones, jewels, jewelry, gold, silver and other precious metals, 11
whether used in business or trade or otherwise and whether the same be 12
in course of transportation or otherwise, and 13
4. Bridges, tunnels and other instrumentalities of transportation and 14
communication (excluding buildings, their furniture and furnishings, 15
fixed contents and supplies held in storage), unless fire, tor nado, 16
sprinkler leakage, hail, explosion, earthquake, riot and/or civil 17
commotion are the only hazards to be covered; piers, wharves, docks 18
and slips, excluding the risks of fire, tornado, sprinkler leakage, hail, 19
explosion, earthquake, riot and/or civil c ommotion; other aids to 20
navigation and transportation, including dry docks and marine railways, 21
against all risks. ] 22
(b) 1. Exports, wherever the property may be and without restriction as to 23
time, if the coverage includes hazards of transportation. 24
2. An export, as a proper subject of marine and transportation 25
insurance, shall be deemed to acquire its character as such when 26
designated or while being prepared for export and retain that 27
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character unless diverted for domestic trade, and when so diverted, the 1
provisions of paragraph (c) of this subsection shall apply. 2
3. This paragraph shall not apply to long -established methods of 3
insuring certain commodities; ["Marine protection and indemnity 4
insurance" meaning insurance against, or against legal liability of the 5
insured for, loss, damage or expense arising out of, or incident to, the 6
ownership, operation, chartering, maintenance, use, repair or 7
construction of any vessel, craft or instrumentality in use in ocean or 8
inland waterways, including liability of the insured for personal injury, 9
illness or death or for loss of or damage to the property of another 10
person. ] 11
(c) 1. Domestic shipments on consignment, for sale or distribution, exhibit, 12
trial, approval, or auction, while in transit, while in the custody of 13
others, and while being returned, except in no event shall the 14
insurance cover on premises owned, leased, or operated by the 15
consignor; and 16
2. Domestic shipments not on consignment, if the coverage includes 17
hazards of transportation, beginning and ending w ithin the United 18
States, but the shipments shall not be covered: 19
a. At the manufacturing premises; or 20
b. After arrival at premises owned, leased, or operated by an 21
insured or purchaser; 22
(d) Bridges, tunnels, and other instrumentalities of transportation an d 23
communication, which: 24
1. Include: 25
a. Bridges, tunnels, and other similar instrumentalities, including 26
auxiliary facilities and equipment attendant thereto; 27
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b. Piers, wharves, docks, slips, dry docks, and marine railways; 1
c. Pipelines, including on -line p ropulsion, regulating, and other 2
equipment appurtenant to the pipelines, but excluding all 3
property at the manufacturing, producing, refining, converting, 4
treating, or conditioning plant; 5
d. Power transmission, telephone, and telegraph lines, but 6
excluding all property at generating, converting, or transforming 7
stations, substations, or exchanges; 8
e. Radio and television communication equipment in use, as such, 9
including towers, antennae with auxiliary equipment, and 10
appurtenant electrical operating and control apparatus; and 11
f. Outdoor cranes, loading bridges, and similar equipment used to 12
load, unload, or transport; and 13
2. Exclude buildings, improvements and betterments to buildings, 14
furniture and furnishings, fixed contents, and supplies held in 15
storage; 16
(e) Personal property floater risks covering an individual, or generally, 17
including: 18
1. Personal effects floaters; 19
2. Personal property floaters; 20
3. Government service floaters; 21
4. Personal fur floaters; 22
5. Personal jewelry floaters; 23
6. Wedding present floaters that do not exceed ninety (90) days after the 24
date of the ceremony; 25
7. Silverware floaters; 26
8. Fine art floaters that cover paintings, etchings, pictures, tapestries, art 27
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glass windows, and other bona fide works of art that are of rarity, 1
historical value, or artistic merit; 2
9. Stamp and coin floaters; 3
10. a. Musical instrument floaters. 4
b. As used in this subparagraph, "musical instrument" does not 5
include radios, televisions, record players, or a comb ination 6
thereof; 7
11. Mobile article, machinery, and equipment floaters that: 8
a. Cover identified property of a mobile or floating nature 9
pertaining to or usual to a household; and 10
b. Exclude: 11
i. Motor vehicles designed for highway use; 12
ii. Auto homes, trailers, and semi-trailers, except when hauled 13
by a tractor not designed for highway use; and 14
iii. Furniture and fixtures not customarily used away from 15
premises where the property is usually kept; 16
12. a. Installment sales and leased property insurance that: 17
i. Covers property pertaining to a household and sold under a 18
conditional contract of sale, partial payment contract, 19
installment sales contract, or lease; and 20
ii. Excludes motor vehicles designed for highway use. 21
b. Installment sales and leased property i nsurance shall cover in 22
transit, but shall not extend beyond the termination of the seller's 23
or lessor's interest; and 24
13. Live animal floaters; and 25
(f) Commercial property floater risks that cover property pertaining to a 26
business, profession, or occupation, including: 27
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1. Radium floaters; 1
2. Physician's and surgeons' instrument floaters, which may include 2
coverage of furniture, fixtures, and a tenant insured's interest in 3
improvements and betterments of buildings located in that portion of 4
the premises occ upied by the insured in the practice of his or her 5
profession; 6
3. Pattern and die floaters; 7
4. Theatrical floaters that exclude: 8
a. Buildings; 9
b. Improvements and betterments to buildings; and 10
c. Furniture and fixtures that do not travel about with theatrical 11
troupes; 12
5. Film floaters, including: 13
a. Builders' risk during the production; and 14
b. Coverage on the completed negatives and positives and sound 15
records; 16
6. Salesmen's samples floaters; 17
7. Exhibition insurance on property while on exhibition and in transit to 18
or from an exhibition; 19
8. Live animal floaters; 20
9. Builders risks or installation risks insurance that: 21
a. Covers the interest of an owner, seller, or contractor against loss 22
or damage to machinery, equipment, or building materials or 23
supplies being used with and during the course of installation, 24
testing, building, renovating, or repairing; 25
b. May cover: 26
i. At points or places where work is being performed; 27
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ii. While in transit; and 1
iii. During temporary storage or deposit of property designated 2
for and awaiting specific installation, building, renovating, 3
or repairing; 4
c. Is limited to builders risks or installation risks where perils in 5
addition to fire and extended coverage are to be insured; and 6
d. i. If written for an owner, ceases upon completion and 7
acceptance thereof; or 8
ii. If written for a seller or contractor, terminates when the 9
interest of the seller or contractor ceases; 10
10. Mobile article, machinery, and equipment floaters that: 11
a. Cover identified property of a mobile or floating nature, not on 12
sale or consignment, or in the course of manufacture, which has 13
come into the custody or control of parties who intend to use the 14
property for which it was manufactured or created; and 15
b. Exclude: 16
i. Motor vehicles designed for highway use; 17
ii. Auto homes, trailers, and semi -trailers except when hauled 18
by a tractor not designed for highway use; 19
iii. Snow plows constructed exclusively for highway use; and 20
iv. Furniture and fixtures not customarily used away from 21
premises where the property is usually kept; 22
11. Insurance that: 23
a. Covers property: 24
i. In transit to, or from and in, the custody of a bailee; and 25
ii. That is not owned, controlled, or operated by the bailor; 26
and 27
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b. Excludes the property of the bailee at his or her premises; 1
12. a. Installment sales and leased property insurance that: 2
i. Covers property sold under a conditional contract of sale, 3
partial payment contract, installment sales contract, or 4
lease; and 5
ii. Excludes motor vehicles designed for highway use and 6
machinery and equipment under a certain "lease -back" 7
contract. 8
b. Installment sales and leased property insurance shall cover in 9
transit, but shall not extend beyond the termination of the seller's 10
or lessor's interest; 11
13. Garment contractor floaters; 12
14. Furriers or fur storer customer insurance: 13
a. Under which certificates or receipts are issued by furriers or fur 14
storers; and 15
b. That covers specified articles of a customer's property; 16
15. Accounts receivable insurance; 17
16. Valuable papers and records insurance; 18
17. Floor plan insurance that: 19
a. Covers property for sale while in possession of a dealer under a 20
floor plan or any similar plan under which the dealer may 21
borrow money from a ban k or lending institution with which to 22
pay the manufacturer, if: 23
i. The merchandise is specifically identifiable as encumbered 24
to the bank or lending institution; 25
ii. The dealer's right to sell or otherwise dispose of the 26
merchandise is conditioned upon th e merchandise being 27
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released from encumbrance by the bank or lending 1
institution; and 2
iii. The insurance covers in transit and does not extend beyond 3
the termination of the dealer's interest; and 4
b. Excludes: 5
i. Automobiles or motor vehicles; and 6
ii. Merchandise for which the dealer's collateral is the stock 7
or inventory as distinguished from merchandise specifically 8
identifiable as encumbered to the lending institution; 9
18. Sign and street clock insurance, which includes coverage for neon 10
signs, automatic or mechanical signs, and street clocks, while is use as 11
such; 12
19. Fine arts insurance that covers paintings, etchings, pictures, 13
tapestries, art glass windows, and other bona fide works of art of 14
rarity, historical value, or artistic merit for a museum, ga llery, 15
university, business, municipality, or other similar interest; 16
20. a. Insurance that covers personal property which, when sold to the 17
ultimate purchaser, may be covered specifically by the owner 18
under an inland marine policy, certificate, or contract, 19
including: 20
i. Musical instrument dealers insurance that covers property 21
consisting principally of musical instruments and their 22
accessories. As used in this subpart, "musical instrument" 23
does not include radios, televisions, record players, or a 24
combination thereof; 25
ii. Camera dealers insurance that covers property consisting 26
principally of cameras and their accessories; 27
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iii. Furrier dealers insurance that covers property consisting 1
principally of furs and fur garments; 2
iv. Equipment dealers insurance that covers mobile equipment 3
consisting of binders, reapers, tractors, harveste rs, 4
harrows, tedders, and other similar agricultural equipment 5
and accessories and construction equipment consisting of 6
bulldozers, road scrapers, tractors, compressors, pneumatic 7
tools, and other similar equipment and accessories. 8
Equipment dealers insura nce shall exclude motor vehicles 9
designed for highway use; 10
v. Stamp and coin dealers insurance that covers property of 11
philatelic and numismatic nature; 12
vi. Jewelers block insurance; and 13
vii. Fine art dealers insurance. 14
b. For any insurance referenced in s ubdivision a. of this 15
subparagraph, the insurance may include coverage of: 16
i. Money in locked safes or vaults on the insured's premises; 17
and 18
ii. Furniture, fixtures, tools, machinery, patterns, molds, dies, 19
and tenant insureds' interests in building improvements; 20
21. Wool growers floaters; 21
22. Domestic bulk liquid insurance that covers tanks and domestic bulk 22
liquids stored therein; 23
23. Difference in condition coverage that excludes fire and extended 24
coverage perils; and 25
24. Electronic data processing insurance. 26
(2) Subsection (1) of this section shall not be construed to permit coverage under an 27
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inland marine policy, certificate, or contract for the following, unless the 1
coverage is otherwise permitted under that subsection or this chapter: 2
(a) Storage of the insured's merchandise; 3
(b) Merchandise in the course of manufacture, including the property of, and 4
on the premises of, the manufacturer; 5
(c) Furniture and fixtures; 6
(d) Improvements and betterments to buildings; or 7
(e) Moneys or securities held in safe s, vaults, safety deposit vaults, or banks, or 8
on the premises of an insured, except while in the course of transportation. 9
(3)[(2)] (a) As used in this chapter [For the purposes of this code] , "wet marine and 10
transportation insurance" means[is that part of ] marine and transportation 11
insurance that may cover or include[which includes only]: 12
1.[(a)] [Insurance upon ] Vessels, crafts, hulls, and of interests therein or 13
with relation thereto; 14
2.[(b)] [Insurance of ] Marine builders' risks, marine war risks , and 15
contracts of marine protection and indemnity insurance; 16
3.[(c)] [Insurance of ] Freights and disbursements pertaining to a subject 17
of insurance coming within this definition; and 18
4.[(d)] [Insurance of ]Personal property and interests therein, in course of 19
exportation from or importation into any country, or in course of 20
transportation coastwise or on inland waters, including transportation by 21
land, water, or air from point of origin to final destination, in respect to, 22
appertaining to , or in connection with, any and all risks or perils of 23
navigation, transit, or transportation, and wh ile being prepared for and 24
while awaiting shipment, and during any delays, storage, transshipment , 25
or reshipment incident thereto. 26
(b) As used in this subsection, "marine protection and indemnity insurance": 27
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1. Means insurance against, or against legal li ability of the insured for, 1
loss, damage, or expense arising out of, or incident to, the ownership, 2
operation, chartering, maintenance, use, repair, or construction of any 3
vessel, craft, or instrumentality in use in ocean or inland waterways; 4
and 5
2. Includes liability of the insured for personal injury, illness, or death or 6
loss of or damage to the property of another person. 7
Section 8. KRS 304.9-035 is amended to read as follows: 8
(1) Any insurer shall be liable for the a cts of its agents and adjusters when the agents 9
or adjusters are acting: 10
(a) In their capacity as representatives of the insurer; and[ are acting ] 11
(b) Within the scope of their authority. 12
(2) Licensed individuals designated by a business entity to exercise the business 13
entity's: 14
(a) Agent license shall be deemed agents of an[the] insurer if the business entity 15
holds an appointment from the insurer; and 16
(b) Adjuster license on behalf of an insur er shall be deemed an adjuster of the 17
insurer. 18
Section 9. KRS 304.9-051 is amended to read as follows: 19
As used in KRS 304.9-052 and 304.9-371 to 304.9-377: 20
(1) (a) An "administrator" is an individual or business entity that[who] collects 21
charges or premiums from, or that[who] adjusts or settles claims on, residents 22
of this state in connection with life insurance, health insurance, annuities, 23
nonprofit hospital, medical -surgical, dental, and health service corporation 24
contracts, health maintenance organization contracts, or other life, health, or 25
annuity benefit plans. 26
(b) The following are not considered to be acting as an administrator: 27
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1.[(a)] An employer acting on behalf of its employees or the employees 1
of one (1) or more subsidiary or affiliated corporations of the employer; 2
2.[(b)] A union on behalf of its members; 3
3.[(c)] An insurer, which is acting as the insurer with respect to the 4
contract if the insurer is authorized or permitted to transact business in 5
Kentucky or if the contract is lawfully delivered or issued for delivery 6
by it in and pursuant to the laws of a state in which it was authorized or 7
permitted to do business; 8
4.[(d)] A life or health insurance agent licensed in Kentucky whose 9
activities are limited exclusively to the sale of insurance; 10
5.[(e)] A creditor on behalf of its debtors with respect to insurance 11
covering a debt between the creditor and its debtors; 12
6.[(f)] A trust, its trustees, agents, and employees acting thereunder, 13
established in conformity with 29 U.S.C. sec. 186; 14
7.[(g)] A trust exempt from taxation under 26 U.S.C. sec. 501(a), its 15
trustees, and employees acting thereunder, or a custodian, its agents, and 16
employees acting pursuant to a custodian account which meets the 17
requirements of 26 U.S.C. sec. 401(f); 18
8.[(h)] A bank, credit union, or other financial institution which is subject 19
to supervision or examination by federal or state banking authorities; 20
9.[(i)] A credit card issuing company which advances for and collects 21
premiums or charges from its credit card hold ers who have authorized it 22
to do so, if the [ provided such] company does not adjust or settle 23
claims;[ or] 24
10.[(j)] An individual who: 25
a. Adjusts or settles claims in the normal course of practice or 26
employment as an attorney-at-law;[,] and[ who ] 27
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b. Does not collect charges or premiums in connection with 1
coverages issued by insurers; or 2
11. An individual working for a business entity that i s licensed as an 3
administrator to the extent that the individual's job responsibilities are 4
subject to the supervision and control of the business entity. 5
(2) An "insured" is a person covered under an insurance contract, nonprofit hospital, 6
medical-surgical, dental, and health service corporation contract, health 7
maintenance organization contract, or other source of benefits. 8
Section 10. KRS 304.9-085 is amended to read as follows: 9
(1) A "managing general agent" is an ind ividual or business entity appointed by an 10
insurer to solicit applications from agents for insurance contracts or to negotiate 11
insurance contracts on behalf of an insurer and, if authorized to do so by an insurer, 12
to effectuate and countersign insurance contracts. 13
(2) (a) An[No] individual or business entity [shall ]in this state shall not be, act as, or 14
hold himself, herself, or itself out as a managing general agent unless then 15
licensed as a managing general agent. In order to qualify for a managing 16
general agent license, an individual shall: 17
1.[(a)] Hold an agent license with property and casualty lines of authority 18
and be appointed by each authorized insurer the licensee holds the 19
contract to represent; 20
2.[(b)] If a nonresident, hold a nonresident agent license with property 21
and casualty lines of authority and be appointed by each authorized 22
insurer the licensee holds a contract to represent in Kentucky; and 23
3.[(c)] Hold a surplus lines broker license if any unauthorized insurers are 24
represented or used. 25
(b) In order for a business entity to qualify for a managing general agent license, 26
all individuals acting on behalf of the business entity under its license shall 27
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be: 1
1. Licensed agents with property and casualty lines of authority ; and[ shall 2
be ] 3
2. Designated with the commissioner as to the license in accordance with 4
all provisions of KRS 304.9-133[ except for subsection (2)(a)]. 5
(3) As used in this chapter, "agent" includes managing general agent unless the context 6
requires otherwise. 7
(4) (a) A managing general agent is a representative of the insurers which the 8
managing general agent holds a contract to represent. 9
(b) Each insurer is liable for the acts of the managing general agent in 10
representing that insurer. 11
(5) The commissioner shall rene w managing general agent licenses in accordance with 12
KRS 304.9-260. 13
Section 11. KRS 304.9-105 is amended to read as follows: 14
(1) An individual applying for an agent license shall make application to the 15
commissioner on the uniform individual application or other application prescribed 16
by the commissioner. Before approving the application, the commissioner shall find 17
that the applicant: 18
(a) Is at least eighteen (18) years of age; 19
(b) Has fulfilled the residence requirement s as set forth in KRS 304.9 -120 or is a 20
nonresident who is not eligible to be issued a license in accordance with KRS 21
304.9-140; 22
(c) Has not committed any act that is a ground for denial, suspension, or 23
revocation set forth in KRS 304.9-440; 24
(d) Is trustwo rthy, reliable, and of good reputation, evidence of which shall be 25
determined through an investigation by the commissioner; 26
(e) 1. Is competent to exercise the license and has: 27
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a.[1.] Except for variable life and variable annuities line of authority and 1
limited lines of authority identified in KRS 304.9-230:[, ] 2
i. Completed a prelicensing course of study consisting of forty 3
(40) hours for life and health, forty (40) hours for property 4
and casualty, or twenty (20) hours for each line of authority, 5
as applicable, for which the individual has applied [. The 6
commissioner shall promulgate administrative regulations to 7
carry out the purpose of this section]; and 8
ii.[2.] [Except for variable li fe and variable annuities line of 9
authority and limited lines of authority identified in 10
accordance with KRS 304.9 -230, ] Successfully passed the 11
examinations required by the commissioner for the lines of 12
authority for which the individual has applied; and 13
b.[3.] Paid the fees set forth in KRS 304.4-010.[; and] 14
2. The commissioner shall promulgate administrative regulations in 15
accordance with KRS Chapter 13A to implement this paragraph; and 16
(f) Is financially responsible to exercise the license and has maint ained in effect 17
while so licensed: 18
1. The certificate of an insurer, which states that the insurer has and will 19
keep in effect on behalf of the person a policy of insurance covering the 20
legal liability of the licensed person as the result of erroneous acts or 21
failure to act in his or her capacity as an insurance agent, and enuring to 22
the benefit of any aggrieved party as the result of any single occurrence 23
in the sum of not less than twenty thousand dollars ($20,000) and one 24
hundred thousand dollars ($100,000) in the aggregate for all occurrences 25
within one (1) year; 26
2. A cash surety bond executed by an insurer, in the sum of twenty 27
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thousand dollars ($20,000), which shall be subject to lawful levy of 1
execution by any party to whom the licensee has been found to be 2
legally liable as the result of erroneous acts or failure to act in his or her 3
capacity as an agent; or 4
3. An agreement by an insurer or group of affiliated insurers for which he 5
or she is or is to become an exclusive agent whereby the insurer or 6
group of affiliated insurers agrees to assume responsibility, to the 7
benefit of any aggrieved party, for legal liability of the licensed person 8
as the result of erroneous acts or failure to act in his or her capacity as an 9
insurance agent on behalf of the in surer or group of affiliated insurers in 10
the sum of twenty thousand dollars ($20,000) for any single occurrence 11
and that the agreement shall not be terminated until the insurer 12
appointment is terminated[license is surrendered to the commissioner]. 13
(2) The commissioner may: 14
(a) Require additional information or submissions from applicants; and[ may ] 15
(b) Obtain any documents or information reasonably necessary to verify the 16
information contained in an application. 17
Section 12. KRS 304.9-133 is amended to read as follows: 18
(1) As used in this section, "licensed business entity" means a business entity issued 19
a: 20
(a) License under[in accordance with] this subtitle;[,] or[ issued a ] 21
(b) Life settlement broker ,[ or] life settlement provider , or surplus lines broker 22
license.[, ] 23
(2) (a) Except as provided in this subsection: 24
1. A licensed business entity shall designate[ only] individuals to act under 25
the business entity license; and 26
2. Each individual designated to act under the license of a business entity 27
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referenced in subparagraph 1. of this paragraph shall hold the same 1
kind of license as the business entity. 2
(b) A portable electronics retailer issued a license shall designate a busines s 3
entity to act under the license. 4
(c) A managing general agent issued a license shall designate individuals 5
licensed as agents with property and casualty lines of authority to act under 6
the license. 7
(d) A pharmacy benefit manager issued a license shall de signate individuals 8
licensed as administrators to act under the license. 9
(3)[(2)] (a) The first individual designated by a licensed business entity to act 10
under the business entity license[Each designated individual] shall[: 11
(a) Hold the same kind of license as the business entity; 12
(b) If the business entity license has lines of authority,] have one (1) or more of 13
the same lines of authority as the business entity.[; and] 14
(b)[(c)] An individual designated to act under the business entity license who 15
is in addition to the first designee referenced in paragraph (a) of this 16
subsection shall[If the individual is designated under an agent license,] have 17
at least one (1) appointment with an insurer. 18
(4)[(3)] A[The] licensed business entity shall file with the commissioner: 19
(a) Notice of the designation of an individual within thirty (30) days of the 20
designation; and 21
(b) Notice of termination of designation of an individual within thirty (30) days of 22
the termination of designation. 23
(5)[(4)] (a) Except as provided in subsection (2)(b) of this section, a licensed 24
business entity shall exercise its license only through one (1) or more [a] 25
designated individual licensees[licensee]. 26
(b)[(a)] 1. The business entity shall have for each of its licenses and active 27
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lines of authority at least one (1) licensed individual [ with the same line 1
of authority] designated with the commissioner at all times. 2
2. If the business entity fails to have at least one (1) licensed individual 3
designated with the commiss ioner for a line of authority, that line of 4
authority shall become inactive[; and 5
(b) The business entity shall have at least one (1) licensed individual designated 6
with the commissioner at all times]. 7
3. If the business entity fails to have at least one ( 1) licensed individual 8
designated with the commissioner, the business entity license shall 9
terminate[ and shall be promptly surrendered to the commissioner 10
without demand]. 11
(6)[(5)] An insurer that has appointed the business entity licensee shall be respon sible 12
for the acts of each designated individual performed under the business entity's 13
license as if the insurer had appointed the individual licensee. 14
Section 13. KRS 304.9-135 is amended to read as follows: 15
(1) As used in this section: 16
(a) "Financial institution" means: 17
1. A bank or bank holding company , as defined in the Bank Holding 18
Company Act of 1956, [as amended,] codified at 12 U.S.C. sec. 1841, 19
as amended; 20
2. A savings bank, savings and loan association, trust company, or any 21
depository institution as defined in[by] the Federal Deposit Insurance 22
Act, codified at[ in] 12 U.S.C. sec. 1813(c)(1), as amended; and 23
3. Any other individual, corporation, partners hip, or association authorized 24
to take deposits and make loans in this[the] Commonwealth, and any 25
affiliate or subsidiary of any of the above; 26
(b) "Insurance agency activities" means any activity relating to insurance , other 27
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than title insurance, for which a license as agent, reinsurance intermediary 1
broker or manager,[ specialty credit producer or managing employee,] surplus 2
lines broker, or consultant is required under this chapter; and 3
(c) "Insurance information" means any information concerning premiums , terms, 4
and conditions of insurance coverage, including: 5
1. Expiration dates and rates;[,] and 6
2. Claims maintained in the records of the financial institution or affiliate. 7
(2) A financial institution authorized by law to engage in insurance agency activ ities in 8
this state shall, in addition to any other applicable requirements, comply with the 9
following requirements: 10
(a) The financial institution or officer, agent, representative, or employee thereof 11
shall qualify for licensure under all applicable provi sions of this chapter and 12
abide by all applicable provisions of this chapter and applicable administrative 13
regulations; 14
(b) A financial institution shall provide a written statement to a consumer 15
regarding the consumer's free choice of agent and insurer according to KRS 16
304.12-150, when the consumer's application for a loan or other extension of 17
credit from the financial instit ution is pending and when insurance is offered 18
to the consumer, sold to the consumer, or required in connection with the loan 19
or extension of credit by the financial institution or affiliate; 20
(c) A financial institution shall not release a consumer's insur ance information to 21
any person or entity for the solicitation or selling of insurance, other than an 22
officer, director, employee, agent, or affiliate of a financial institution, without 23
prior disclosure to the consumer and the opportunity for the consumer to 24
prevent the disclosure; 25
(d) A financial institution shall not release or use health information obtained 26
from the insurance records of a consumer for any purpose, other than 27
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activities of a licensed agent, administrator, reinsurance intermediary broker 1
or manager,[ specialty credit producer or managing employee,] surplus lines 2
broker, or consultant, without the written consent of the consumer; 3
(e) A financial institution licensed by the department to engage in insurance 4
agency activities shall: 5
1. Not violate the anti-tying provisions of the Bank Holding Company Act 6
Amendments of 1970 , codified at 12 U.S.C. sec.[secs.] 1971 et seq., in 7
effect as of December 31, 1997; and 8
2. Notify the department in writing within ten (10) days of any final 9
judgment or any final administrative action, by a federal agency 10
authorized to enforce the anti -tying provision, that finds that the 11
financial institution or any of its employees committed a violation of the 12
Bank Holding Company Act. Any such final and unappealable judgment 13
or final and unappealable administrative action shall be deemed a 14
violation of this chapter; 15
(f) Prior to the sale of any policy of insurance to a consumer, a financial 16
institution shall, when practicable, provide to the consumer a written 17
statement that: 18
1. The insurance offered by the financial institution is not a deposit; 19
2. The insurance offered by the financial institution is not insured by the 20
Federal Deposit Insurance Corporation or other government agency that 21
insures deposits; 22
3. The insurance offered by the financial institution is not guaranteed by 23
the financial institution or any affiliate; 24
4. The insurance may involve investment risk, including potential loss of 25
principal; and 26
(g) The commissioner shall promulgate administrative regulations in accordance 27
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with KRS Chapter 13A that specify the disclosure forms required by 1
subsections (b), (c), and (f) of this section. 2
(3) An officer or employee of a financial institution shall not directly or indirectly 3
delay or impede the completion of a loan transaction or any other transaction with a 4
financial institution for the purpose of influencing a consumer's selection or 5
purchase of any insurance. 6
(4) A financial institution shall not use any advertisement or promotional material 7
causing a reasonable person to mistakenly believe that: 8
(a) The federal government or any state guarantees the insurance sales activities 9
of financial institutions or guarantees the credit of the financial institution; or 10
(b) Any state or federal government guarantees any retu rn on insurance products 11
or is a source of payment on any insurance product sold by the financial 12
institution. 13
(5) A financial institution shall use separate documentation for all credit and insurance 14
transactions when a consumer obtains insurance and cred it, other than credit 15
insurance, from a financial institution or any individual or business entity soliciting 16
or selling insurance on the premises of a financial institution. 17
(6) A financial institution shall not include an expense of insurance premiums in a 18
credit transaction when a consumer obtains insurance and credit, other than credit 19
insurance, from a financial institution or any individual or business entity soliciting 20
or selling insurance on the premises of a financial institution, without the writt en 21
consent of the consumer. 22
(7) (a) A financial institution shall maintain separate and distinct books and records 23
relating to insurance transactions conducted through the financial institution, 24
including files relating to consumer complaints. 25
(b) The books, records, and files shall be made available to the commissioner for 26
inspection in accordance with KRS 304.2-220. 27
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Section 14. KRS 304.9-140 is amended to read as follows: 1
(1) [Unless denied a license in accordance with KRS 304.9 -440, ] A nonresident 2
individual or business entity shall receive the applicable insurance producer license 3
if: 4
(a) The applicant is currently licensed as a resident and in good standing in his or 5
her home state; 6
(b) The applicant has submitted the proper request for license and has paid the 7
fees required by KRS 304.4-010 and administrative regulations; 8
(c) The applican t has submitted or transmitted to the commissioner the 9
application for a license that the applicant submitted to his or her home state 10
or a completed uniform individual application or uniform business entity 11
application;[ and] 12
(d) The applicant's home state awards nonresident licenses to residents of this 13
state on the same basis; and 14
(e) The applicant is not denied a license in accordance with KRS 304.9-440. 15
(2) The commissioner may verify the applicant's license status through the database 16
maintained by the National Association of Insurance Commissioners, its affiliates, 17
or subsidiaries. 18
(3) A nonresident licensee who changes his or her home state to a state other than 19
Kentucky shall file a change of address and provide certificatio n from the new 20
home state within thirty (30) days of the change of home state. No fee or license 21
application is required. 22
(4) Notwithstanding any other provisions of this chapter, [ on or after July 1, 2002,] an 23
individual licensed as a surplus lines broker in his or her home state shall receive a 24
nonresident surplus lines broker license by meeting the requirements of subsection 25
(1) of this section. Except as provided in[to] subsection (1) of this section, nothing 26
in this section otherwise amends or supersed es any provision of Subtitle 10 of this 27
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chapter. 1
(5) Notwithstanding any other provision of this subtitle, an individual licensed as a 2
limited lines agent in his or her home state shall receive a nonresident limited lines 3
agent license in accordance with s ubsection (1) of this section, granting the same 4
scope of authority as granted under the license issued by the agent's home state. 5
(6) Notwithstanding any other provision of this subtitle, an individual licensed as an 6
agent with a limited line of authority in his or her home state shall: 7
(a) Receive a nonresident major line of authority in accordance with subsection 8
(1) of this section if the limited line of authority in the individual's home 9
state is not offered in this state; and 10
(b) Only have authority t o place business under the nonresident license with a 11
major line of authority in this state to the extent permitted, and as limited, 12
for an individual agent in the individual's home state with the limited line of 13
authority. 14
(7) The commissioner shall waive any requirements for a nonresident insurance 15
producer license applicant with a valid license from his or her home state, except 16
the requirements imposed by subsection (1) of this section, if the applicant's home 17
state awards nonresident insurance producer licenses to residents of Kentucky on 18
the same basis. 19
(8)[(7)] (a) As a condition to or in connection with the continuation of an insurance 20
producer license issued under this section, the licensee must maintain the 21
applicable license in his or her home state. 22
(b) The insurance producer license issued under this section shall terminate [ and 23
be surrendered to the commissioner] if and when the licensee's applicable 24
home state license terminates for any reason. 25
Section 15. KRS 304.9-170 is amended to read as follows: 26
[No ]Prelicensing education or examination shall not be required of: 27
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(1) (a) An individual licensee who allows his or her license to lapse if the license 1
renewal fee is paid within twelve (12) months from the due date of the license 2
renewal fee, except[. However,] a penalty in the amount of double the unpaid 3
renewal fee shall be imposed. 4
(b) The department shall issue a license with the same lines of authority as the 5
lapsed license;[.] 6
(2)[(b)] Any applicant for a license covering any line of authority to which the 7
applicant was licensed under a similar license in Kentucky, other than a temporary 8
license, within the twelve (12) months next preceding the date of application , 9
except[.] the applicant is not eligible fo r this exemption if the previous license was 10
revoked or suspended by the commissioner for reasons other than failure to [ 11
maintain financial responsibility or to] meet continuing education requirements as 12
required by KRS[ 304.9-105 and] 304.9-295;[.] 13
(3)[(c)] A licensed insurance agent operating as a life settlement broker pursuant to 14
KRS 304.15-700(2)(b);[.] 15
(4)[(2)] (a) An individual who applies for an insurance producer license in 16
Kentucky who was previously licensed for the same lines of authority in 17
another state[ shall not be required to complete any prelicensing education or 18
examination]. 19
(b) This exemption is only available if: 20
1. The applicant is currently licensed in the other state; or[ if ] 21
2. a. The application is received within ninety (90) days of the 22
cancellation of the applicant's previous license; and[ if ] 23
b. The prior state issues a certification that, at the time of 24
cancellation:[, ] 25
i. The applicant was in good standing in that state; or 26
ii. The state's database records, maintained by the National 27
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Association of Insurance Commissioners, its affiliates, or 1
subsidiaries, indicate that the insurance producer is or was 2
licensed in good standing for the line of authority 3
requested;[.] 4
(5)[(3)] Except as otherwise established by the commissioner in an administrative 5
regulation, an individual who: 6
(a) Was licensed as a resident[an] insurance producer in another state within the 7
last twelve (12) months;[ who ] 8
(b) Moves to Kentucky; and[ shall make ] 9
(c) Makes an application within ninety (90) days of establishing legal residence 10
in Kentucky to become a resident licensee in accordance with KRS 304.9 -11
105[. No prelicensing education or examination shall be required of that 12
applicant to obtain a license] for any line of authority previously held in the 13
prior home state within the last twelve (12) months; [except where the 14
commissioner determines otherwise by administrative regulation.] 15
(6)[(4)] An applicant for an insurance producer's license who is currentl y licensed in 16
Kentucky as a consultant as to the same line of authority, or has been so licensed 17
within twelve (12) months next preceding the date of application for the license, 18
unless the previous license was revoked or suspended or continuation thereof 19
refused by the commissioner for reasons other than failure to maintain financial 20
responsibility as required by KRS 304.9-330; or[.] 21
(7)[(5)] Any applicant for a license covering the same line of authority as to which 22
that applicant [ shall have] held a vali d license issued in accordance with this 23
subtitle or other applicable Kentucky law which was surrendered, in accordance 24
with KRS 304.2 -080 or other applicable law, in order to accept employment with 25
the Department of Insurance, except[provided, however, th at] the applicant shall 26
apply for relicensing within twelve (12) months of the date of termination of his or 27
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her employment with the Department of Insurance. 1
Section 16. KRS 304.9-200 is amended to read as follows: 2
For licenses[(1) The license] issued under this subtitle or to a surplus lines broker, life 3
settlement broker, or life settlement provider: 4
(1) The license shall contain the licensee's name, city and state o f principal place of 5
business address, personal identification number, and the date of issuance, the lines 6
of authority, and any other information the commissioner deems necessary;[.] 7
(2) The licensee shall inform the commissioner in writing in a format ac ceptable to the 8
commissioner of a change of address or change of legal name within thirty (30) 9
days of the change;[.] 10
(3) (a) After completion of application for a license, completion of any prelicensing 11
education required under this chapter, payment of ap plicable fees, and the 12
taking and passing of any examination required under this chapter, the 13
commissioner shall promptly consider the application. 14
(b) If the commissioner finds that the applicant has fully met the requirements for 15
licensure, the commissio ner shall promptly issue the license to the applicant; 16
otherwise, the commissioner shall refuse to issue the license and promptly 17
notify the applicant of the refusal, stating the grounds thereof;[.] 18
(4) [If a license is refused, the commissioner shall prom ptly refund any appointment 19
fee tendered with the license application. ] All application and examination [other] 20
fees[ for application for license or examination] shall be deemed earned when paid 21
and shall not be refundable if a license is refused; and[.] 22
(5) In order to assist in the performance of the commissioner's duties, the commissioner 23
may contract with nongovernmental entities, including the National Association of 24
Insurance Commissioners or its affiliate or subsidiary, to perform ministerial 25
functions, including the collection of fees or data related to licensing. 26
Section 17. KRS 304.9-230 is amended to read as follows: 27
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(1) The commissioner may issue, in accordance with KRS 304.9-080, an agent's license 1
with the limited line of authority as follows: 2
(a) Preneed funeral[Surety]; 3
(b) Travel; 4
(c) Limited line credit; 5
(d) Crop; 6
(e) Rental vehicle; 7
(f) Self-service storage space; or 8
(g) Other limited lines, as specified by the commissioner through the 9
promulgation of administrative regulations. 10
(2) The commissioner shall promulgate administrative regulations to establish the 11
requirements, if any, for prelicensing courses of instruction and examination for 12
each limited line of authority. 13
(3) [On and after July 15, 2002, ] The commissioner shall not iss ue an agent license 14
with a limited line of authority for motor vehicle physical damage or for mechanical 15
breakdown insurance. However, an agent license with a limited line of authority for 16
motor vehicle physical damage or for mechanical breakdown insurance in effect on 17
July 15, 2002, shall continue in effect until surrendered or otherwise terminated in 18
accordance with this subtitle. 19
Section 18. KRS 304.9-260 is amended to read as follows: 20
(1) (a) As used in this subsection, "license" means a: 21
1. [Each ]License issued under this subtitle;[,] 22
2. Surplus lines broker license;[,] 23
3. Life settlement broker license; or[, and ] 24
4. Life settlement provider license. 25
(b) Each license shall continue in force until expired, suspended, revoked, or 26
otherwise terminated. 27
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(c) License renewal fees shall be received on or before the applicable due date for 1
the license as stated in KRS 304.4-010. 2
(d) [Beginning January 1, 2003, ]A request for license renewal shall be on a form 3
or in a format prescribed by the commissioner.[ and made as follows:] 4
(e)[(a)] At least thirty (30) days before the license renewal request and fees are 5
due from each respective[the] licensee, the department shall make available to 6
the[each respective] licensee a list of his or her licenses to be renewed during 7
that calendar year. [ With the licensee's written consent, an insurer or the 8
licensee's employer may request that the department send the renewal list to 9
the insurer or to the employer. The department may distribute the renewal list 10
to the requesting insurer or employer instead of to the licensee;] 11
(f)[(b)] In conjunction with license renewal, the following individuals shall 12
show proof of compliance with continuing ed ucation requirements 13
established in Section 20 of this Act:[an individual holding a ] 14
1. Resident:[ license for agent, independent or public adjuster, and life 15
settlement broker shall show proof of compliance with continuing 16
education pursuant to KRS 304.9-295] 17
a. Agents; 18
b. Independent adjusters; 19
c. Public adjusters; and 20
d. Life settlement brokers; and 21
2. Nonresident: 22
a. Independent adjusters; and 23
b. Public adjusters; 24
that designate Kentucky as their home state. 25
(g) 1. An individual licensee whose birth d ate is in an even -numbered year 26
shall submit the license renewal request, continuing education course 27
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completion documentation pursuant to KRS 304.9 -295, and fees to the 1
commissioner by the last day of the licensee's birth month in the next 2
even-numbered y ear after the date the license is issued, and each 3
subsequent even-numbered year thereafter; 4
2.[(c)] [In conjunction with license renewal, an individual holding a 5
resident license for agent, independent or public adjuster, and life 6
settlement broker shall show proof of compliance with continuing 7
education pursuant to KRS 304.9 -295. ] An individual licensee whose 8
birth date is in an odd -numbered year shall submit the license renewal 9
request, continuing education course completion documentation 10
pursuant to KRS 304.9-295, and fees to the commissioner by the last 11
day of the licensee's birth month in the next odd-numbered year after the 12
date the license is issued, and each subsequent odd -numbered year 13
thereafter; 14
3.[(d)] A business entity that is issued a license in an even -numbered year 15
shall submit the license renewal request and fees to the commissioner by 16
March 31 of the next even -numbered year, and each subsequent even -17
numbered year thereafter; and 18
4.[(e)] A business entity that is issued a license in an odd -numbered year 19
shall submit the license renewal request and fees to the commissioner by 20
March 31 of the next odd -numbered year, and each subsequent odd -21
numbered year thereafter. 22
(2) (a) Any license referred to in su bsection (1) of this section for which the request 23
for renewal, any required continuing education course completion 24
documentation, if applicable, and fee are not received by the commissioner 25
shall be deemed to have expired at midnight on the last day of th e birth month 26
for individuals and on March 31 for business entities.[;] 27
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(b) Any renewal request and fees received by the commissioner within sixty (60) 1
days after the date of expiration [,] may be accepted with no interruption in 2
license if accompanied by a penalty as provided in Section 33 of this 3
Act.[Subtitle 99 of this chapter; and] 4
(c) 1. Completion of the required continuing education course, if applicable, 5
shall be on or before the expiration date, which is deemed as the last day 6
of the birth month of the licensee during the applicable odd or even year 7
on a biennial basis. 8
2. Proof of compliance shall be received by the commissioner within sixty 9
(60) days after the expiration date. 10
(3) A licensee who is unable to comply with the license renewal procedu res of this 11
section due to military service, long -term medical disability, or some other 12
extenuating circumstance may make a written request for a waiver of those 13
procedures. The licensee may also make a written request for a waiver of any 14
examination requirement, fine, or other sanction imposed for failure to comply with 15
these renewal procedures. 16
(4) As a condition to or in connection with the continuation of any insurance producer 17
license, the commissioner may require the licensee to file with him or her 18
information relative to use made of the license during the next preceding calendar 19
year and especially as to whether the license has been used principally for the 20
writing of controlled business, as defined in KRS 304.9-100. 21
(5) As a condition to or in conn ection with the continuation of any license referred to 22
in subsection (1) of this section , the commissioner shall require continuous 23
demonstration of continuing education course completion to sustain the license, and 24
any license shall terminate [ and be sur rendered to the commissioner] if and when 25
the demonstration becomes impaired. 26
(6) This section does not apply to temporary licenses issued under KRS 304.9 -300, and 27
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licensees not licensed for one (1) full year prior to the end of the applicable biennial 1
renewal year. 2
Section 19. KRS 304.9-270 is amended to read as follows: 3
(1) (a) Each insurer appointing an agent [, including managing general agent, rental 4
vehicle agent, rental vehicle managing employee, specialty credit producer, 5
and specialty credit managing employee,] in this state shall obtain approval of 6
the appointment from the commissioner by: 7
1. Filing with the commissioner the notice of appointment, specifying the 8
lines of authority to be transacted by the agent for the insurer;[,] and 9
2. Submitting[submit] the appointment fee, as specified in KRS 304.4-010. 10
(b) Each insurer shall notify the commissioner of additional lines of authority for 11
which an agent[a licensee] is deemed authorized to transact business, after the 12
initial appointment, in a format prescribed by the commissioner. 13
(2) Prior to appointment of an agent , the insurer shall satisfy itself through 14
investigation that the named applicant has not been convicted of any felony offense 15
involving dishonesty or a breach of trust and has not been convicted of a fraudulent 16
insurance act under S ubtitle 47 of this chapter, unless the named applicant has 17
received written consent from the commissioner that specifically refers to KRS 18
304.47-025(3). 19
(3) No agent shall claim to be an agent or representative of, or in any way imply a 20
contractual relatio nship with, a particular insurer, or place applications for 21
insurance with an insurer unless: 22
(a) The agent becomes an appointed agent of the insurer; and 23
(b) The agent's appointment has been approved by the commissioner. 24
(4) (a) An agent may act as a repr esentative of and place insurance with an insurer 25
without first obtaining approval of the appointment by the commissioner for a 26
period of fifteen (15) days from the date the first insurance application is 27
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executed by the agent. 1
(b) If the agent does not ob tain confirmation that the agent's appointment has 2
been approved by the commissioner within fifteen (15) days from the date the 3
first insurance application is executed, the agent shall immediately 4
discontinue acting as an agent on behalf of the insurer unt il confirmation is 5
received. 6
(5) (a) The insurer shall, no later than fifteen (15) days from the date the agent 7
contract is executed or the first insurance application is submitted by an agent, 8
whichever is earlier, file with the commissioner a notice of a ppointment on a 9
form or in a format prescribed by the commissioner. 10
(b) If there is no executed agent contract, the insurer shall also mail to the agent, 11
within the same fifteen (15) day period specified in paragraph (a) of this 12
subsection, a copy of the n otice of appointment form filed with the 13
commissioner. 14
(6) (a) Within fifteen (15) days of receipt of the notice of appointment of an agent , 15
the commissioner shall determine and notify the insurer whether the agent is 16
eligible for appointment. 17
(b) If the agent's license is in good standing and no other grounds exist to deny 18
the appointment, the commissioner shall approve the appointment. 19
(7) Subject to renewal by the insurer as provided in subsection (8) of this section, each 20
appointment of an agent shall remain in effect until the earliest of the following: 21
(a) The commissioner revokes or otherwise terminates the agent's[insurance 22
producer's] license; 23
(b) The commissioner suspends, revokes, or otherwise terminates the 24
appointment; or 25
(c) The insurer terminates the appointment as provided in KRS 304.9-280. 26
(8) (a) Biennially, before January 31, the department shall distribute to each insurer a 27
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listing of the names and individual identification numbers of that insurer's 1
agents whose appointments were i n effect during the preceding calendar year 2
and who were not terminated on or prior to December 31 of that calendar 3
year. 4
(b) Any appointment not expressly terminated shall remain in effect as to the 5
lines of authority thereof for which the respective agen ts are currently 6
appointed, and subject to the fees specified under KRS 304.4-010. 7
(c) On or before March 31, each insurer shall submit the renewal of appointment 8
fee as specified in KRS 304.4 -010 for each appointment not terminated on or 9
prior to December 31 of the preceding calendar year. 10
(9) (a) Any appointment as to which the request for renewal and fees are not received 11
by the commissioner by March 31 shall be deemed to have expired at 12
midnight on March 31. 13
(b) Any appointment renewal request and fees received by the commissioner after 14
March 31 and prior to the next following June 30 may be accepted by the 15
commissioner, in his or her discretion, and the expired appointment may be 16
reinstated as of March 31 if the late request and fees are accompanied by a 17
penalty as provided in KRS 304.99-100. 18
(10) As used in this section, "agent" includes a managing general agent, a rental 19
vehicle agent, and a rental vehicle agent managing employee. 20
Section 20. KRS 304.9-295 is amended to read as follows: 21
(1) This section shall apply to individuals who hold licenses or lines of authority 22
requiring continuing education each biennium. 23
(2) The continuing education biennial compliance date for an individual resid ent 24
licensee shall be as follows: 25
(a) A licensee whose birth date is in an even -numbered year shall satisfy 26
continuing education requirements on or before the last day of the licensee's 27
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birth month in the even -numbered year. A licensee shall show proof of 1
compliance to the commissioner within sixty (60) days after the continuing 2
education biennial compliance date. If the licensee has not held the license for 3
one (1) year, the compliance date is adjusted to the next even -numbered year 4
and each subsequent eve n-numbered year thereafter. If the license becomes 5
inactive and reissued within a twelve (12) month period, the compliance date 6
shall remain the same; and 7
(b) A licensee whose birth date is in an odd -numbered year shall satisfy 8
continuing education require ments and show proof of compliance to the 9
commissioner on or before the last day of the licensee's birth month in the 10
odd-numbered year. A licensee shall show proof of compliance to the 11
commissioner within sixty (60) days after the continuing education bie nnial 12
compliance date. If the licensee has not held the license for one (1) year, the 13
compliance date is adjusted to the next odd -numbered year and each 14
subsequent odd-numbered year thereafter. If the license becomes inactive and 15
reissued within a twelve ( 12) month period, the compliance date shall remain 16
the same. 17
(3) This section shall not apply to: 18
(a) Limited lines of authority under agent licenses, as exempted by the 19
commissioner in accordance with KRS 304.9-230; 20
(b) Licensees not licensed for one (1) full year prior to the end of the applicable 21
continuing education biennium; 22
(c) Licensees holding nonresident licenses who have met the continuing 23
education requirements of their home state and whose home state gives credit 24
to Kentucky resident licensees on the same basis; or 25
(d) Licensees maintaining their licenses for the sole purpose of receiving 26
renewals or deferred commissions and providing the department with a 27
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supporting affidavit. 1
(4) A licensee, who holds an agent license and who is not exempt unde r subsection (3) 2
of this section, shall satisfactorily complete a minimum of twenty-four (24) hours of 3
continuing education courses, of which three (3) hours shall have a course 4
concentration in ethics, during each continuing education biennium. 5
(5) (a) [Beginning July 31, 2012, ] An individual who holds an independent or public 6
adjuster license, including a nonresident independent or public adjuster that 7
designates Kentucky as his or her home state, and who is not exempt under 8
KRS 304.9 -430(10) or (11), sha ll satisfactorily complete a minimum of 9
twenty-four (24) hours of continuing education courses, of which three (3) 10
hours shall have a course concentration in ethics in accordance with 11
subsection (4) of this section. 12
(b) Continuing education hours shall be reported to the commissioner on a 13
biennial basis in conjunction with the licensee's renewal in accordance with 14
subsection (10) of this section. 15
(6) (a) Only continuing education courses approved by the commissioner shall be 16
used to satisfy the continuing education requirements[requirement] of[ 17
subsection (4) of] this section and any other continuing education requirement 18
of this chapter. 19
(b)[(a)] The continuing education courses which meet the commissioner's 20
standards for continuing education requirements are: 21
1. Any part of the Life Underwriter Training Council life course 22
curriculum; 23
2. Any part of the Health Underwriter Training Council health course 24
curriculum; 25
3. Any part of the American College Chartered Life Underwriter diploma 26
curriculum; 27
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4. Any part of the American Institute for Property and Liability 1
Underwriters' chartered property and casualty underwriter profession 2
designation program; 3
5. Any part of the Insurance Institute of America's programs; 4
6. Any part of the certified insurance counselor program; 5
7. Any insurance related course taught at an accredited college or 6
university, if the course is approved by the commissioner; 7
8. Any course of instruction or seminar developed or sponsored by any 8
authorized insurer, recognized agent association, recognized insurance 9
trade association, or any independent program of instruction, if 10
approved by the commissioner; 11
9. Any correspondence course approved by the commissioner; and 12
10. Any course in accordance with provisions of reciprocal agreements the 13
commissioner enters with other states. 14
(c)[(b)] 1. The commissioner shall prescribe the number of hours of 15
continuing education credit for each continuing education cours e 16
approved in accordance with this subsection. 17
2. Continuing education courses submitted in accordance with a reciprocal 18
agreement shall be approved according to the provisions of the 19
reciprocal agreement. 20
(d)[(c)] If a continuing education course requires successful completion of a 21
written examination, no continuing education credit shall be given to licensees 22
who do not successfully complete the written examination. 23
(e)[(d)] The fee for filing continuing education courses for approval by the 24
commissioner shall be as specified in Subtitle 4 of KRS Chapter 304. 25
(f)[(e)] For continuing education courses of reciprocal states, continuing 26
education providers shall be approved in accordance with the provisions of 27
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the reciprocal agreements. 1
(7) An individual teach ing any [ approved] continuing education course approved by 2
the commissioner shall qualify for the same number of hours of continuing 3
education credit as would be granted to a licensee taking and satisfactorily 4
completing the course. 5
(8) Excess credit hours accumulated during any continuing education biennium may be 6
carried forward. The commissioner may, by administrative regulation, limit the 7
number of hours carried forward. 8
(9) (a) For good cause shown, the commissioner may grant an extension of time 9
during which the continuing education requirement of subsection (2) of this 10
section may be completed, but the extension of time shall not exceed two (2) 11
years. 12
(b) What constitutes good cause for the extension of time rests within the 13
discretion of the commissioner. 14
(10) (a) Every licensee subject to this section shall furnish to the commissioner written 15
certification as to the continuing education courses satisfactorily completed by 16
the licensee. 17
(b) The certification shall: 18
1. Be signed by or on behalf of the provider sponsoring the continuing 19
education course; and 20
2. Contain an attestation signed by the licensee. 21
(c) The certification shall be on a form prescribed by the commissioner. 22
(d) A licensee is responsible for ensuring that a certification submitted by the 23
licensee under this subsection: 24
1. Contains the correct license identification number; and 25
2. Is applied to the licensee's license record. 26
(11) (a) The provider shall furnish to the commissioner certification as to the 27
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continuing education courses satisfactorily completed by each licensee. 1
(b) The certification shall be signed or authenticated by or on behalf of the 2
provider sponsoring the continuing education course. 3
(c) The certification shall be on a form or in a format prescribed by the 4
commissioner. 5
(12) The license or line of authority requiring continuing education shall expire if the 6
individual holding the license or line of authority: 7
(a) Fails to comply with the continuing education requirement; and 8
(b) Has not been granted an extension of time to comply in accordance with 9
subsection (9) of this section. [ If the license has expired, the license shall be 10
promptly surrendered to the commissioner without demand. If the line of 11
authority has terminated but another line of authority not requiring continuing 12
education is still in effect, the license shall be promptly delivered to the 13
commissioner for reissuance as to the line of authority still in effect.] 14
(13) [The license of any individual subject to the continuing education requirement shall 15
be suspended or revoked, a civil penalty imposed, or both, in accordance with KRS 16
304.9-440, ]If an[the] individual submits to the commissioner a false or frau dulent 17
certification[certificate] of compliance with a[the] continuing education 18
requirement, the commissioner shall, in accordance with KRS 304.9 -440, suspend 19
or revoke the license of the individual, impose a civil penalty, or both. 20
(14) (a) The commissio ner may withdraw approval of a continuing education 21
provider, course, or instructor for good and just cause. 22
(b) In addition to or in lieu of withdrawal of approval, the commissioner may 23
impose a civil penalty of not more than one thousand dollars ($1,000) per 24
violation of this chapter by a provider or an instructor. 25
SECTION 21. KRS 304.9-436 IS REPEALED AND REENACTED TO READ 26
AS FOLLOWS: 27
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An authorized insurer shall not do business in Kentucky with a person that is 1
unlicensed in violation of this subtitle. 2
Section 22. KRS 304.13-346 is amended to read as follows: 3
(1) As used in this section: 4
(a) "Cost to upgrade the single -family dwelling" means the cost required to 5
upgrade the roof structure of the single-family dwelling to meet or exceed [ 6
the construction standards required for the dwelling to comply with] the most 7
recent version of the[any applicable] FORTIFIED Home roof structure 8
construction standards published by the Insurance Instit ute for Business and 9
Home Safety or a successor entity; and 10
(b) "Non-FORTIFIED dwelling" means a dwelling whose roof structure [that] 11
does not comply with the most recent version of the[any applicable] 12
FORTIFIED Home roof structure construction standards pu blished by the 13
Insurance Institute for Business and Home Safety or a successor entity. 14
(2) All insurance companies writing property insurance for personal risks that provides 15
coverage of any single -family dwelling located in Kentucky that is a non -16
FORTIFIED dwelling shall offer an optional rider, endorsement, or supplemental 17
policy provision that provides the insured a right to receive claim payments for the 18
cost to upgrade the single-family dwelling for any claim that: 19
(a) Is covered under the insurance policy or contract; and 20
(b) Requires replacement of the covered dwelling's roof as defined by the 21
insurance policy or contract. 22
Section 23. KRS 304.14-120 is amended to read as follows: 23
(1) (a) Except as otherwise provided in this section, a basic insurance policy or 24
annuity contract form, or application form where written application is 25
required and is to be made a part of the policy or c ontract, or printed rider or 26
indorsement form or form of renewal certificate, shall not be delivered, or 27
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issued for delivery in this state, unless the form has been filed with and 1
approved by the commissioner. 2
(b) This subsection shall not apply to: 3
1. Any rates filed under Subtitle 17A of this chapter; 4
2. Surety bonds; 5
3. Specially rated inland marine risks; or 6
4. Policies, riders, indorsements, or forms of unique character: 7
a. Designed for and used with relation to insurance upon a particular 8
subject; or 9
b. Which relate to the manner or distribution of benefits or to the 10
reservation of rights and benefits under life or health insurance 11
policies and are used at the request of the individual policyholder, 12
contract holder, or certificate holder. 13
(c) As to group insurance policies issued and delivered to an association outside 14
this state but covering persons resident in this state, all or substantially all of 15
the premiums for which a re payable by the insured members, the group 16
certificates to be delivered or issued for delivery in this state shall be filed 17
with and approved by the commissioner. 18
(d) 1. As to forms for use in property, inland marine[ (other than wet marine 19
and transportation insurance)], casualty, and surety insurance coverages 20
(other than accident and health), the filing required by this subsection 21
may be made by advisory organizations or form providers on behalf of 22
their members and subscribers. 23
2. This paragraph shall not be construed to prohibit any member or 24
subscriber of an advisory organization or form provider from filing any 25
forms on its own behalf. 26
(e) Every advisory organization and form provider shall file with the 27
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commissioner for approval every property and casualty policy form and 1
endorsement before distribution to members, subscribers, customers, or 2
others. 3
(f) Every property and casualty insurer shall file with the commissioner notice of 4
adoption before use of any approved form filed by an advisory organization or 5
form provider or filed by the insurer pursuant to paragraph (d) of this 6
subsection. 7
(2) (a) Every filing required under this section shall be made not less than sixty (60) 8
days in advance of any delivery of the form in this state. 9
(b) At the expir ation of sixty (60) days, the form so filed shall be deemed 10
approved unless prior thereto it has been affirmatively approved or 11
disapproved by order of the commissioner. 12
(c) Approval of any filing by the commissioner under this section shall constitute 13
a waiver of any unexpired portion of the waiting period established under this 14
subsection. 15
(d) The commissioner may extend the waiting period established under paragraph 16
(a) of this subsection by not more than a thirty (30) day period, within which 17
time he or she may affirmatively approve or disapprove any filing, by giving 18
notice to the insurer of the extension before expiration of the initial sixty (60) 19
day period. 20
(e) At the expiration of any period extended under paragraph (d) of this 21
subsection, and in th e absence of a prior affirmative approval or disapproval, 22
the filing shall be deemed approved. 23
(f) The commissioner may at any time, after notice and for cause shown, 24
withdraw approval of any filing. 25
(3) (a) Any order of the commissioner disapproving any f iling, or any notice of the 26
commissioner withdrawing a previous approval, shall state the grounds 27
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therefor and the particulars thereof in such detail as reasonably to inform the 1
insurer. 2
(b) Any withdrawal of a previously approved filing shall be effective not less than 3
thirty (30) days after the insurer receives notice of the withdrawal, as the 4
commissioner shall in such notice prescribe. 5
(4) Except as provided in subsection (6) of this section, the commissioner may, by 6
order, exempt from the requirements of this section, for so long as he or she deems 7
proper, any insurance document or form or type thereof, as specified in the 8
commissioner's order, to which, in his or her opinion: 9
(a) This section may not practicably be applied; or 10
(b) The filing and approv al of are not desirable or necessary for the protection of 11
the public. 12
(5) Appeals from orders of the commissioner disapproving any filing or withdrawing a 13
previous approval shall be taken as provided in Subtitle 2 of this chapter. 14
(6) The commissioner shall: 15
(a) Review every filing relating to a health plan, as defined in KRS 304.17A -591, 16
for compliance with KRS 304.17A-591 to 304.17A-599; and 17
(b) Not approve any filing referenced in paragraph (a) of this subsection that does 18
not comply with KRS 304.17-591 to 304.17A-599. 19
(7) As used in this section, unless the context requires otherwise: 20
(a) "Advisory organization" has the same meaning as in KRS 304.13-011; and 21
(b) "Form provider" has the same meaning as in KRS 304.13-011. 22
Section 24. KRS 304.15-365 is amended to read as follows: 23
(1) This section shall be known as the "Standard Nonforfeiture Law for Individual 24
Deferred Annuities of 2005." 25
(2) (a) This section shall not apply to any reinsurance group annuity purchased under 26
a retirement plan or plan of deferred compensation established or maintained 27
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by an employer, including a partnership or sole proprietorship, or by an 1
employee org anization, or by both, other than a plan providing individual 2
retirement accounts or individual retirement annuities under Section 408 of 3
the Internal Revenue Code, as now or hereafter amended, premium deposit 4
fund, variable annuity, investment annuity, im mediate annuity, any deferred 5
annuity contract after annuity payments have commenced, or reversionary 6
annuity, nor to any contract which shall be delivered outside this state through 7
an agent or other representative of the insurer issuing the contract. 8
(b) However, to the extent that a variable annuity contract provides benefits that 9
do not, before the maturity date, vary in accordance with the investment 10
performance of any separate account or accounts maintained by the insurer as 11
to such contract, as provi ded for in KRS 304.15 -390, the contract shall 12
contain provisions that satisfy the requirements of this section and shall not 13
otherwise be subject to this section. 14
(3) (a) In the case of contracts issued on or after July 1, 2006, no contract of annuity, 15
except as provided in subsection (2) of this section, shall be delivered or 16
issued for delivery in this state unless it contains in substance the following 17
provisions, or corresponding provisions which in the opinion of the 18
commissioner are at least as favora ble to the contract holder, upon cessation 19
of payment of considerations under the contract: 20
1.[(a)] That upon cessation of payment of considerations under a contract, 21
or upon the written request of the contract owner, the insurer shall grant 22
a paid -up annu ity benefit on a plan stipulated in the contract of such 23
value as is specified in subsections (8), (9), (10), (11), and (13) of this 24
section; 25
2.[(b)] If a contract provides for a lump sum settlement at maturity, or at 26
any other time, that upon surrender of the contract at or prior to the 27
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commencement of any annuity payments, the insurer shall pay, in lieu of 1
any paid-up annuity benefit, a cash surrender benefit of such amount as 2
is specified in subsections (8), (9), (10), (11), and (13) of this section. 3
The insurer may reserve the right to defer the payment of this cash 4
surrender benefit for a period not to exceed six (6) months after demand 5
therefor with surrender of the contract after making written request and 6
receiving written approval of the commissione r. The request shall 7
address the necessity and equitability to all policyholders of the deferral; 8
3.[(c)] A statement of the mortality table, if any, and interest rates used in 9
calculating any minimum paid -up annuity, cash surrender or death 10
benefits that are guaranteed under the contract, together with sufficient 11
information to determine the amounts of such benefits; and 12
4.[(d)] A statement that any paid -up annuity, cash surrender or death 13
benefits that may be available under the contract are not less than the 14
minimum benefits required by any statute of the state in which the 15
contract is delivered and an explanation of the manner in which these 16
benefits are altered by the existence of any additional amounts credited 17
by the insurer to the contract, any indeb tedness to the insurer on the 18
contract, or any prior withdrawals from or partial surrenders of the 19
contract. 20
(b) Notwithstanding the requirements of this subsection, any deferred annuity 21
contract may provide that if no considerations have been received und er a 22
contract for a period of two (2) full years and the portion of the paid -up 23
annuity benefit at maturity on the plan stipulated in the contract arising from 24
considerations paid prior to that period would be less than twenty dollars 25
($20) monthly, the insurer may at its option terminate the contract by payment 26
in cash of the then -present value of such portion of the paid -up annuity 27
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benefit, calculated on the basis of the mortality table, if any, and interest rate 1
specified in the contract for determining the paid-up annuity benefit, and by 2
this payment shall be relieved of any further obligation under such contract. 3
(4) (a) The minimum values as specified in subsections (8), (9), (10), (11), and (13) 4
of this section of any paid -up annuity, cash surrender, or death benefits 5
available under an annuity contract shall be based upon minimum 6
nonforfeiture amounts as defined in this section. 7
(b)[(a)] The minimum nonforfeiture amount at any time at or prior to the 8
commencement of any annuity payments shall be equal to an accumulation up 9
to that time at rates of interest as indicated in subsection (5) of this section of 10
the net considerations, as defined in paragraph (c)[(b)] of this subsection, paid 11
prior to that time, decreased by the sum of: 12
1. Any prior withdrawa ls from or partial surrenders of the contract 13
accumulated at a rate of interest as indicated in subsection (5) of this 14
section; 15
2. An annual contract charge of fifty dollars ($50) accumulated at rates of 16
interest as indicated in subsection (5) of this section; and 17
3. The amount of any indebtedness to the insurer on the contract, including 18
interest due and accrued. 19
(c)[(b)] The net considerations for a given contract year used to define the 20
minimum nonforfeiture amount shall be an amount equal to eighty -seven and 21
one-half percent (87.5%) of gross considerations credited to the contract 22
during that contract year. 23
(5) The interest rate used in determining minimum nonforfeiture amounts shall be an 24
annual rate of interest determined as the lesser of three percent (3%) per annum and 25
the following, which shall be specified in the contract if the interest rate will be 26
reset: 27
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(a) The five (5) year Constant Maturity Treasury Rate reported by the Federal 1
Reserve as of a date or average over a period rounded to the neare st one -2
twentieth of one percent (0.05%), specified in the contract no longer than 3
fifteen (15) months prior to the contract issue date or redetermination date 4
under paragraph (d) of this subsection; 5
(b) Reduced by one hundred twenty-five (125) basis points; 6
(c) Where the resulting interest rate is not less than one percent (1%); and 7
(d) The interest rate shall apply for an initial period and may be redetermined for 8
additional periods. The redetermination date basis and period, if any, shall be 9
stated in the contract. The basis is the date or average over a specified period 10
that produces the value of the five (5) year Constant Maturity Treasury Rate 11
to be used at each redetermination date. 12
(6) (a) During the period or term that a contract provides substantive participation in 13
an equity indexed benefit, it may increase the reduction described in 14
subsection (5)(b) of this section up to an additional one hundred (100) basis 15
points to reflect the value of the equity index benefit. 16
(b) The present value at the contract issue date and at each redetermination date 17
thereafter of the additional reduction shall not exceed the market value of the 18
benefit. 19
(c) The commissioner may require a demonstration that the present value of the 20
additional reduction does not exceed the market value of the benefit. 21
(d) Lacking such demonstration that is acceptable to the commissioner, the 22
commissioner may disallow or limit the additional reduction. 23
(7) The commissioner may promulgate administrative regulatio ns in accordance with 24
KRS Chapter 13A that: 25
(a) Implement[Implementing] the provisions of subsection (6) of this section ; 26
and 27
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(b) [To ] Provide for further adjustments to the calculation of minimum 1
nonforfeiture amounts for: 2
1. Contracts that provide substantive participation in an equity index 3
benefit; and[ for ] 4
2. Other contracts for which the commissioner determines adjustments are 5
justified. 6
(8) (a) Any paid-up annuity benefit available under a contract shall be such that it s 7
present value on the date annuity payments are to commence is at least equal 8
to the minimum nonforfeiture amount on that date. 9
(b) This present value shall be computed using the mortality table, if any, and the 10
interest rates specified in the contract fo r determining the minimum paid -up 11
annuity benefits guaranteed in the contract. 12
(9) (a) For contracts which provide cash surrender benefits, the cash surrender 13
benefits available prior to maturity shall not be less than the present value as 14
of the date of s urrender of that portion of the maturity value of the paid -up 15
annuity benefit which would be provided under the contract at maturity 16
arising from considerations paid prior to the time of cash surrender reduced by 17
the amount appropriate to reflect any prior withdrawals from or partial 18
surrenders of the contract, the present value being calculated on the basis of 19
an interest rate not more than one percent (1%) higher than the interest rate 20
specified in the contract for accumulating the net considerations to d etermine 21
the maturity value, decreased by the amount of any indebtedness to the insurer 22
on the contract, including interest due and accrued, and increased by any 23
existing additional amounts credited by the insurer to the contract. 24
(b) In no event shall any cash surrender benefit be less than the minimum 25
nonforfeiture amount at that time. 26
(c) The death benefit under the contracts shall be at least equal to the cash 27
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surrender benefit. 1
(10) (a) For contracts which do not provide cash surrender benefits, the pr esent value 2
of any paid-up annuity benefit available as a nonforfeiture option at any time 3
prior to maturity shall not be less than the present value of that portion of the 4
maturity value of the paid -up annuity benefit provided under the contract 5
arising from considerations paid prior to the time the contract is surrendered 6
in exchange for, or changed to, a deferred paid -up annuity, the present value 7
being calculated for the period prior to the maturity date on the basis of the 8
interest rate specified in th e contract for accumulating the net considerations 9
to determine the maturity value, and increased by any existing additional 10
amounts credited by the insurer to the contract. 11
(b) For contracts which do not provide any death benefits prior to the 12
commencement of any annuity payments, the present values shall be 13
calculated on the basis of the interest rate and the mortality table specified in 14
the contract for determining the maturity value of the paid-up annuity benefit. 15
(c) However, in no event shall the pres ent value of a paid -up annuity benefit be 16
less than the minimum nonforfeiture amount at that time. 17
(11) For the purpose of determining the benefits calculated under subsections (9) and 18
(10) of this section, in the case of annuity contracts under which an e lection may be 19
made to have annuity payments commence at optional maturity dates, the maturity 20
date shall be deemed to be the latest date for which election shall be permitted by 21
the contract, but shall not be deemed to be later than the anniversary of the contract 22
next following the annuitant's seventieth birthday or the tenth anniversary of the 23
contract, whichever is later. 24
(12) Any contract which does not provide cash surrender benefits or does not provide 25
death benefits at least equal to the minimum non forfeiture amount prior to the 26
commencement of any annuity payments shall include a statement in a prominent 27
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place in the contract that such benefits are not provided. 1
(13) Any paid-up annuity, cash surrender or death benefits available at any time, other 2
than on the contract anniversary under any contract with fixed scheduled 3
considerations, shall be calculated with allowance for the lapse of time and the 4
payment of any scheduled considerations beyond the beginning of the contract year 5
in which cessation of payment of considerations under the contract occurs. 6
(14) (a) For any contract which provides, within the same contract by rider or 7
supplemental contract provision, both annuity benefits and life insurance 8
benefits that are in excess of the greater of ca sh surrender benefits or a return 9
of the gross considerations with interest, the minimum nonforfeiture benefits 10
shall be equal to the sum of the minimum nonforfeiture benefits for the 11
annuity portion and the minimum nonforfeiture benefits, if any, for the life 12
insurance portion computed as if each portion were a separate contract. 13
(b) Notwithstanding the provisions of subsections (8), (9), (10), (11), and (13) of 14
this section, additional benefits payable: 15
1.[(a)] In the event of total and permanent disability; 16
2.[(b)] As reversionary annuity or deferred reversionary annuity benefits; 17
or 18
3.[(c)] As other policy benefits additional to life insurance, endowment 19
and annuity benefits, and considerations for all such additional benefits; 20
shall be disregarded in ascertaining the minimum nonforfeiture amounts, paid-21
up annuity, cash surrender and death benefits that may be required by this 22
section. The inclusion of these additional benefits shall not be required in any 23
paid-up benefits, unless these additional benefi ts separately would require 24
minimum nonforfeiture amounts, paid -up annuity, cash surrender and death 25
benefits. 26
(15) Any optional maturity date offered for an annuity contract issued pursuant to this 27
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section shall: 1
(a) Not impose a surrender charge that is longer than ten (10) years beyond the 2
optional maturity date agreed to by the annuitant and the insurer; and 3
(b) Be offered to an annuitant before the annuitant attains seventy (70) years of 4
age. 5
(16)[(15)] (a) After A ugust 1, 2005, any insurer may file with the commissioner a 6
written notice of its election to apply the provisions of this section on a 7
contract-form by contract-form basis to annuity contracts issued by the insurer 8
during the period from the date of the election through June 30, 2006. 9
(b) Insurers shall apply the provisions of this section to annuity contracts issued 10
on or after July 1, 2006. 11
Section 25. KRS 304.17A-600 is amended to read as follows: 12
As used in KRS 304.17A-600 to 304.17A-633: 13
(1) [(a) ]"Adverse benefit determination": 14
(a) Has the same meaning as in 29 C.F.R. sec. 2560.503-1, as amended; and 15
(b) Includes: 16
1. [means ] A determination by an insurer or its designee that the health 17
care services furnished or pr oposed to be furnished to a covered person 18
are: 19
a.[1.] Not medically necessary, as determined by the insurer [,] or its 20
designee; or 21
b. Experimental or investigational, as determined by the insurer [,] or 22
its designee; and 23
2. A coverage denial [Benefit coverage is therefore denied, reduced, or 24
terminated. 25
(b) "Adverse determination" does not mean a determination by an insurer or its 26
designee that the health care services furnished or proposed to be furnished to 27
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a covered person are specifically limited or excluded in the covered person's 1
health benefit plan]; 2
(2) "Authorized person" means a parent, guardian, or other person authorized to act on 3
behalf of a covered person with respect to health care decisions; 4
(3) "Concurrent review" means utilization review conducted during a covered person's 5
course of treatment or hospital stay; 6
(4) "Coverage denial" means a determination that a service, procedure, treatment, 7
drug, supply, or device is specifically limited or excluded under a cov ered 8
person's health benefit plan; 9
(5)[(4)] "Covered person" means a person covered under a health benefit plan; 10
(6)[(5)] "External review" means a review that is conducted by an independent review 11
entity which meets specified criteria as established in Section 29 of this Act and 12
KRS 304.17A-623, 304.17A-625, and 304.17A-627; 13
(7)[(6)] "Health benefit plan" has the same meaning as in KRS 304.17A -005, except 14
that for purposes of KRS 304.17A -600 to 304.17A -633, the term includes short -15
term coverage policies; 16
(8)[(7)] "Independent review entity" means an individual or organization certified by 17
the department to perform external reviews under Section 29 of this Act and KRS 18
304.17A-623, 304.17A-625, and 304.17A-627; 19
(9)[(8)] "Insurer" means any of the following en tities that[authorized to] issue or 20
provide health benefit plans[ as defined in subsection (6) of this section]: 21
(a) An insurance company;[,] 22
(b) Health maintenance organization; 23
(c) Self-insurer or multiple employer welfare arrangement not exempt from state 24
regulation by ERISA; 25
(d) Provider-sponsored integrated health delivery network; 26
(e) Self-insured employer-organized association; 27
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(f) Nonprofit hospital, medical-surgical, or health service corporation; or 1
(g) Any other entity authorized to transact health insurance business in Kentucky; 2
(10)[(9)] "Internal appeals process" means a formal appeals process, as set forth in 3
KRS 304.17A -617, established and maintained by the insurer, its designee, or 4
private review agent[ whereby the covered person, an authorized person, or a 5
provider may contest an adverse determination rendered by the insurer, its designee, 6
or private review agent]; 7
(11)[(10)] "Nationally recognized accreditation organization": 8
(a) Means a private nonprofit entity that: 9
1. Sets national utilization review and internal appeal standards; and 10
2. Conducts review of insurers, agents, or independent review entities for 11
the purpose of accreditation or certification; and 12
(b) Shall include the Accreditation Association for Ambulatory Health Care 13
(AAAHC), the National Committee for Quality Assurance (NCQA), the 14
American Accreditation Health Care Commission (URAC), the Joint 15
Commission, or any other organization identified by the department; 16
(12)[(11)] "Private review agent" or "agent": 17
(a) Means a person or entity performing utilization review that is either affiliated 18
with, under contract with, or acting on behalf of any insurer or other person 19
providing or administering health benefits to citiz ens of this Commonwealth; 20
and 21
(b) Does not include an independent review entity that[which] performs external 22
reviews[review of adverse determinations]; 23
(13)[(12)] "Prospective review": 24
(a) Means a utilization review that is conducted prior to the provisio n of health 25
care services; and[. "Prospective review" also ] 26
(b) Includes any insurer's or agent's requirement that a covered person or provider 27
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notify the insurer or agent prior to providing a health care service, including 1
but not limited to prior author ization, step therapy protocol, preadmission 2
review, pretreatment review, utilization, and case management; 3
(14)[(13)] "Qualified personnel" means licensed physician, registered nurse, licensed 4
practical nurse, medical records technician, or other licensed medical personnel 5
who through training and experience shall render consistent decisions based on the 6
review criteria; 7
(15)[(14)] "Registration" means an authorization issued by the department to an insurer 8
or a private review agent to conduct utilization review; 9
(16)[(15)] "Retrospective review": 10
(a) Means utilization review that is conducted after health care services have been 11
provided to a covered person; and 12
(b) Does not include the review of a claim that is limited to an evaluation of 13
reimbursement levels, or adjudication of payment; 14
(17)[(16)] [(a) ]"Urgent health care services": 15
(a) Means health care or treatment with respect to which the application of the 16
time periods for making a nonurgent determination: 17
1. Could seriously jeopardize the life or health of the covered person or the 18
ability of the covered person to regain maximum function; or 19
2. In the opinion of a physician with knowledge of the covered person's 20
medical condition, would subject the covered person to severe pain that 21
cannot be adequately managed without the care or treatment that is the 22
subject of the utilization review; and[.] 23
(b) Includes[Urgent health care services include] all requests for hospitalization 24
and outpatient surgery; 25
(18)[(17)] "Utilization review" means a review of the medical necessity and 26
appropriateness of hospital resources and medical services given or proposed to be 27
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given to a covered person for purposes of determining the availability of payment. 1
Areas of review include concurrent, prospective, and retrospective review; and 2
(19)[(18)] "Utilization review plan" means a description of the procedures governing 3
utilization review activities performed by an insurer or a private review agent. 4
Section 26. KRS 304.17A-607 is amended to read as follows: 5
(1) An insurer or private review agent shall not provide or perform utilization reviews 6
without being registered with the department. 7
(2) A registered insurer or private review agent shall: 8
(a) Have available the services of sufficient numbers of registered nurses, 9
medical records technicians, or similarly qualified persons supported by 10
licensed physicians with access to consultation with other appropriate 11
physicians to carry out its utilization review activities; 12
(b) Ensure that[, for any contract entered into on or after January 1, 2020,] for the 13
provision of utilization review services, only licensed physicians, who are of 14
the same or similar specialty and subspecialty, when possible, as the order ing 15
provider, shall: 16
1. Make a utilization review decision to: 17
a. Deny, reduce, limit, or terminate a health care benefit; or[ to ] 18
b. Deny, or reduce payment for , a health care service because that 19
service is not medically necessary, experimental, or 20
investigational; 21
except in the case of a health care service rendered by a chiropractor or 22
optometrist where the denial shall be made respectively by a 23
chiropractor or optometrist duly licensed in Kentucky; and 24
2. Supervise qualified personnel conducting case reviews; 25
(c) Have available the services of sufficient numbers of practicing physicians in 26
appropriate specialty areas to assure the adequate review of medical and 27
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surgical specialty and subspecialty cases; 1
(d) Not disclose or publish individual medical r ecords or any other confidential 2
medical information in the performance of utilization review activities except 3
as provided in the Health Insurance Portability and Accountability Act, 4
Subtitle F, secs. 261 to 264 and 45 C.F.R. pts.[secs.] 160 to 164 and ot her 5
applicable laws and administrative regulations; 6
(e) Provide a toll-free telephone line for covered persons, authorized persons, and 7
providers to contact the insurer or private review agent and be accessible to 8
covered persons, authorized persons, and p roviders for forty (40) hours a 9
week during normal business hours in this state; 10
(f) Where an insurer, its agent, or private review agent provides or performs 11
utilization review, be available to conduct utilization review during normal 12
business hours and extended hours in this state on Monday and Friday through 13
6:00 p.m., including federal holidays; 14
(g) Provide decisions to covered persons, authorized persons, and all providers on 15
appeals of adverse benefit determinations[ and coverage denials] of the 16
insurer or private review agent, in accordance with this section and 17
administrative regulations promulgated in accordance with KRS 304.17A -18
609; 19
(h) Except for retrospective review of an emergency admission where the covered 20
person remains hospitalized at the ti me the review request is made, which 21
shall be considered a concurrent review, or as otherwise provided in this 22
subtitle, provide a utilization review decision in accordance with the 23
timeframes in paragraph (i) of this subsection and 29 C.F.R. pt.[Part] 2560, 24
including written notice of the decision; 25
(i) 1. Render a utilization review decision concerning urgent health care 26
services, and notify the covered person, authorized person, or provider 27
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of that decision no later than twenty -four (24) hours after obtai ning all 1
necessary information to make the utilization review decision; and 2
2. If the insurer or agent requires a utilization review decision of nonurgent 3
health care services, render a utilization review decision and notify the 4
covered person, authorized person, or provider of the decision within 5
five (5) days of obtaining all necessary information to make the 6
utilization review decision. 7
For purposes of this paragraph, "necessary information" is limited to: 8
a. The results of any face-to-face clinical evaluation; 9
b. Any second opinion that may be required; and 10
c. Any other information determined by the department to be 11
necessary to making a utilization review determination; 12
(j) 1. Provide written notice of review decisions to the covered person, 13
authorized person, and providers. 14
2. The written notice may be provided in an electronic format, including 15
email or facsimile, if the covered person, authorized person, or provider 16
has agreed in advance in writing to receive the notices electronically. 17
3. An insurer or agent that denies a ste p therapy exception, as defined in 18
KRS 304.17A -163, or denies coverage or reduces payment for a 19
treatment, procedure, drug that requires prior approval, or device shall 20
include in the written notice: 21
a.[1.] A statement of the specific medical and scientifi c reasons for 22
denial or reduction of payment or identifying that provision of the 23
schedule of benefits or exclusions that demonstrates that coverage 24
is not available; 25
b.[2.] The title of the reviewer making the decision, except that a written 26
notice provided to a provider shall also include , if applicable, the 27
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medical license number of the reviewer making the decision; 1
c.[3.] Except for retrospective review, a description of a lternative 2
benefits, services, or supplies covered by the health benefit plan, if 3
any; and 4
d.[4.] Instructions for initiating or complying with the insurer's internal 5
appeal procedure, as set forth in KRS 304.17A -617, stating, at a 6
minimum:[, ] 7
i. Whether the appeal shall be in writing;[, and ] 8
ii. Any specific filing procedures, including any applicable time 9
limitations or schedules;[,] and 10
iii. The position and phone number of a contact person who can 11
provide additional information; 12
(k) Afford participating physicians an opportunity to review and comment on all 13
medical and surgical and emergency room protocols, respectively, of the 14
insurer and afford other participating providers an opportunity to review and 15
comment on all of the insurer's protocols that a re within the provider's legally 16
authorized scope of practice; and 17
(l) Comply with its own policies and procedures on file with the department or, if 18
accredited or certified by a nationally recognized accrediting entity, comply 19
with the utilization review standards of that accrediting entity where they are 20
comparable and do not conflict with state law. 21
(3)[(2)] (a) The insurer's or private review agent's failure to make a determination 22
and provide written notice within the time frames set forth in this sect ion shall 23
be deemed to be a prior authorization for the health care services or benefits 24
subject to the review. 25
(b) This subsection[provision] shall not apply where the failure to make the 26
determination or provide the notice results from circumstances whic h are 27
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documented to be beyond the insurer's control. 1
(4)[(3)] (a) An insurer or private review agent shall submit a copy of any changes to 2
its utilization review policies or procedures to the department. 3
(b) No change to utilization review policies and pro cedures shall be effective or 4
used until after it has been filed with and approved by the commissioner. 5
(5)[(4)] (a) A private review agent shall provide to the department the names of the 6
entities for which the private review agent is performing utilizati on review in 7
this state. 8
(b) Notice shall be provided to the department within thirty (30) days of any 9
change. 10
Section 27. KRS 304.17A-617 is amended to read as follows: 11
(1) (a) Every insurer shall have an internal appea l process for adverse benefit 12
determinations that is: 13
1. [to be ] Utilized by the insurer or its designee, consistent with this 14
section and KRS 304.17A-619; and[ which shall be ] 15
2. Disclosed to covered persons in accordance with KRS 304.17A -16
505(1)(g). 17
(b) An insurer shall disclose the availability of the internal appeal process to the 18
covered person in the insured's timely notice of an adverse benefit 19
determination[ or notice of a co verage denial] which meets the requirements 20
in KRS 304.17A-607(2)[(1)](j). 21
(c) [For purposes of this section, "coverage denial" means an insurer's 22
determination that a service, treatment, drug, or device is specifically limited 23
or excluded under the covered person's health benefit plan. 24
(d) ]Where a coverage denial is involved, in addition to stating the reason for the 25
coverage denial, the required notice shall contain instructions for filing a 26
request for internal appeal. 27
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(2) The internal appeals process may be initiated by the covered person, an authorized 1
person, or a provider acting on behalf of the covered person. 2
(3) The internal appeals process shall include adequate and reasonable procedures for 3
review and resolution of appeals concerning adverse benefit determinations[ made 4
under utilization review and of coverage denials] , including procedures for 5
reviewing appeals from covered persons whose medical conditions require 6
expedited review. 7
(4) At a minimum, the[these] procedures required under subsection (3) of this section 8
shall include the following: 9
(a) Except as provided in KRS 304.17A-163,[: 10
1. ] insurers or their designees shall provide decisions to covered persons, 11
authorized persons, and providers on internal appeals :[ of adverse 12
determinations or coverage denials] 13
1. Within thirty (30) days of receipt of the request for internal appeal , 14
except as provided in subparagraph 2. of this paragraph; or[and] 15
2. [Insurers or their designees shall render a decision ] Not later than three 16
(3) business days after receipt of a[the] request for an expedited appeal 17
of[ either] an adverse benefit determination[ or a coverage denial] . An 18
expedited appeal is deemed necessary when a covered person is 19
hospitalized or, in the opinion of th e treating provider, review under a 20
standard time frame could, in the absence of immediate medical 21
attention, result in any of the following: 22
a. Placing the health of the covered person or, with respect to a 23
pregnant woman, the health of the covered person or the unborn 24
child in serious jeopardy; 25
b. Serious impairment to bodily functions; or 26
c. Serious dysfunction of a bodily organ or part; 27
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(b) Internal appeal of an adverse benefit determination, other than a coverage 1
denial, shall only be conducted by a li censed physician who did not 2
participate in the initial review and denial , except[. However,] in the case of a 3
review involving a medical or surgical specialty or subspecialty, the insurer or 4
agent shall, upon request by a covered person, authorized person , or provider, 5
utilize a board -eligible or certified physician in the appropriate specialty or 6
subspecialty area to conduct the internal appeal; 7
(c) Those portions of the medical record that are relevant to the internal appeal, if 8
authorized by the covered person and in accordance with state or federal law, 9
shall be considered and providers given the opportunity to present additional 10
information; and 11
(d) In addition to any previous notice required under KRS 304.17A -12
607(2)[(1)](j), and to facilitate expediti ous handling of a request for external 13
review[ of an adverse determination] or review of a coverage denial under 14
subsection (5) of this section , an insurer or agent that denies, limits, reduces, 15
or terminates coverage for a service, treatment, procedure, d rug, supply, or 16
device for a covered person shall provide the covered person, authorized 17
person, or provider acting on behalf of the covered person with an internal 18
appeal determination letter that includes[shall include]: 19
1. A statement of the specific me dical and scientific reasons for denying 20
coverage or identifying that provision of the schedule of benefits or 21
exclusions that demonstrates that coverage is not available; 22
2. As applicable, the state of licensure and the title of the person making 23
the decision, except that an internal appeal determination letter provided 24
to a provider acting on behalf of the covered person shall also include 25
the medical license number of the person making the decision; 26
3. Except for retrospective review, a description of al ternative benefits, 27
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services, or supplies covered by the health benefit plan, if any; and 1
4. Instructions for: 2
a. Initiating an external review;[ of an adverse determination,] or 3
b. For coverage denials, filing a request for review with the 4
department under subsection (5) of this section [ if a coverage 5
denial is upheld by the insurer on internal appeal]. 6
(5)[(4)] (a) The department shall establish and maintain a system for receiving and 7
reviewing requests for review of coverage denials from covered persons , 8
authorized persons, and providers. 9
(b) For purposes of this subsection, "coverage denials" shall not include [ an 10
adverse determination as defined in KRS 304.17A -600 or] subsequent denials 11
arising from an adverse benefit determination that is not a coverage denial. 12
(c) On receipt of a written request for review of a coverage denial from a covered 13
person, authorized person, or provider, the department shall: 14
1. Notify the insurer that[which] issued the denial of the request for 15
review; and[ shall ] 16
2. Call for the insurer to respond to the department regarding the request 17
for review within ten (10) business days of receipt of notice to the 18
insurer. 19
(d) Within ten (10) business days of receiving the notice of the request for review 20
from the department, the insurer shall provide to the department the following 21
information: 22
1. Confirmation as to whether the person who received or sought the [ 23
health] service, procedure, treatment, drug, supply, or device for which 24
coverage was denied was a covered person under a health benefit plan 25
issued by the insurer on the date the service , p rocedure, treatment, 26
drug, supply, or device was sought or denied; 27
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2. Confirmation as to whether the covered person, authorized person, or 1
provider has exhausted his or her rights under the insurer's internal 2
appeal process under this section; and 3
3. The reason for the coverage denial, including the specific limitation or 4
exclusion of the health benefit plan demonstrating that coverage is not 5
available. 6
(e) In addition to the information described in paragraph (d) of this subsection, 7
the insurer and the cov ered person, authorized person, or provider shall 8
provide to the department any information requested by the department that is 9
germane to its review. 10
(f) 1. On the receipt of the information described in paragraphs (d) and (e) of 11
this subsection, unless t he department is not able to do so because 12
making a determination requires resolution of a medical issue, it shall 13
determine whether the service, procedure, treatment, drug, supply, or 14
device is specifically limited or excluded under the terms of the cover ed 15
person's health benefit plan. 16
2. If the department determines that the service, procedure, treatment, 17
[service, ]drug, supply, or device is not specifically limited or excluded, 18
it shall so notify the insurer, and the insurer shall either cover the 19
service, procedure, treatment, drug, supply, or device or afford the 20
covered person an opportunity for external review[ under KRS 304.17A-21
621, 304.17A-623, and 304.17A-625], where the conditions precedent to 22
the review are present. 23
3. If the department notifie s the insurer that the service, procedure, 24
treatment,[ service,] drug, supply, or device is specifically limited or 25
excluded in the health benefit plan, the insurer is not required to cover 26
the service, procedure, treatment, drug, supply, or device or afford the 27
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covered person an external review. 1
(g) An insurer shall be required to cover the service, procedure, treatment,[ 2
service,] drug, supply, or device that was denied or provide notification of the 3
right to external review in accordance with paragraph ( f) of this subsection 4
whether the covered person has disenrolled or remains enrolled with the 5
insurer. 6
(h) If the covered person has disenrolled with the insurer, the insurer shall only be 7
required to provide the service, procedure, treatment,[ service,] drug, supply, 8
or device that was denied for a period not to exceed thirty (30) days or 9
provide the covered person the opportunity for external review. 10
Section 28. KRS 304.17A-619 is amended to read as follows: 11
(1) (a) If the covered person, authorized person, or provider has new clinical 12
information regarding the covered person's internal appeal , he or she shall 13
provide that information to the insurer prior to the initiation of the external 14
review process. 15
(b) The insurer shall have five (5) business days from the date of the receipt of 16
the information to render a decision based on the new information. 17
(c) If new information is provided in accordance with this subsection[section], 18
the sixty (60) day time frame for commen cing an external review as set forth 19
in KRS 304.17A -623(4), shall not begin to run, until the insurer or its 20
designee renders a decision regarding the new information. 21
(2) The insurer's failure to make a determination or provide a written notice within the 22
time frames set forth in KRS 304.17A-617 shall be deemed to be an adverse benefit 23
determination, other than a coverage denial, by the insurer for the purpose of 24
initiating an external review as set forth in KRS 304.17A-623. 25
Section 29. KRS 304.17A-621 is amended to read as follows: 26
The Independent External Review Program is hereby established in the department. The 27
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program shall provide covered persons with a formal, independent review to address 1
disagreements between the covered person and the covered person's insurer [ regarding an 2
adverse determination made by the insurer, its designee, or a private review agent] . This 3
section and KRS 304.17A -623,[ and] 304.17A-625, and 304.17A -627 establish 4
requirements and procedures governing external review and independent review entities. 5
Section 30. KRS 304.17A-623 is amended to read as follows: 6
(1) (a) Every insurer shall have an external review process to be utilized by the 7
insurer or its desig nee, consistent with this section and which shall be 8
disclosed to covered persons in accordance with KRS 304.17A-505(1)(g). 9
(b) An insurer, its designee, or agent shall disclose the availability of the external 10
review process to the covered person in the i nsured's timely notice of an 11
adverse benefit determination, other than[ or notice of] a coverage denial, as 12
set forth in KRS 304.17A -607(2)[(1)](j) and in the denial letter required in 13
KRS 304.17A-617(1) and (4)[(3)](d).[ 14
(c) For purposes of this section, "coverage denial" means an insurer's 15
determination that a service, treatment, drug, or device is specifically limited 16
or excluded under the covered person's health benefit plan.] 17
(2) A covered person, an authorized person, or a provider acting on behalf of and with 18
the consent of the covered person, may request an external review of an adverse 19
benefit determination, other than a coverage denial, rendered by an insurer, its 20
designee, or agent. 21
(3) Except as provided in KRS 304.17A -163, the insurer shall provide[ for] an external 22
review[ of an adverse determination] if the following criteria are met: 23
(a) The insurer, its designee, or agent has rendered an adverse benefit 24
determination, other than a coverage denial; 25
(b) The covered person has completed the insu rer's internal appeal process [,] or 26
the insurer has failed to make a timely determination or notification as set 27
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forth in KRS 304.17A -619(2). The insurer and the covered person may, 1
however, jointly agree to waive the internal appeal requirement; 2
(c) The covered person was enrolled in the health benefit plan on the date of 3
service or, if a prospective denial, the covered person was enrolled and 4
eligible to receive covered benefits under the health benefit plan on the date 5
the proposed health care service was requested; and 6
(d) The entire course of treatment or service will cost the covered person at least 7
one hundred dollars ($100) if the covered person had no insurance. 8
(4) (a) The covered person, an authorized person, or a provider with consent of the 9
covered person shall submit a request for external review to the insurer within 10
sixty (60) days, except as set forth in KRS 304.17A -619(1), of receiving 11
notice that an adverse benefit determination, other than a coverage denial, 12
has been timely rendered under the insurer's internal appeal process. 13
(b) As part of the request, the covered person shall provide to the insurer or its 14
designee written consent authorizing the independent review entity to obtain 15
all necessary medical records from both the insurer and any provider utilized 16
for review purposes regarding the determination[decision to deny, limit, 17
reduce or terminate coverage]. 18
(5) (a) The covered person shall be assessed a one (1) time filing fee of twenty -five 19
dollars ($25) that: 20
1. Shall[to] be paid to the independent review entity; and[ which ] 21
2. May be waived if the independent review entity determines that the fee 22
creates a financial hardship on the covered person. 23
(b) The fee shall be refunded if the independent review entity finds in favor of the 24
covered person. 25
(6) A covered person shall not be afforded an external review [ of an adverse 26
determination] if: 27
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(a) The subject of the covered person's external review request [adverse 1
determination] has previously gone through the external review proces s and 2
the independent review entity found in favor of the insurer; and 3
(b) No relevant new clinical information has been submitted to the insurer since 4
the independent review entity found in favor of the insurer. 5
(7) (a) The department shall establish a sy stem for each insurer to be assigned an 6
independent review entity for external reviews. 7
(b) The system established by the department shall: 8
1. Be prospective; and[ shall ] 9
2. Require insurers to utilize independent review entities on a rotating basis 10
so that an insurer does not have the same independent review entity for 11
two (2) consecutive external reviews. 12
(c) The department shall contract with no less than two (2) independent review 13
entities. 14
(8) (a) If a dispute arises between an insurer and a covered p erson regarding the 15
covered person's right to an external review, the covered person may file a 16
complaint with the department. 17
(b) Within five (5) days of receipt of the complaint, the department: 18
1. Shall render a decision; and 19
2. May direct the insurer t o submit the dispute to an independent review 20
entity for an external review if it finds[: 21
1. The dispute involves denial of coverage based on medical necessity or 22
the service being experimental or investigational; and 23
2. ] all of the requirements of subsection (3) of this section have been met. 24
(c)[(b)] The complaint process established in this section shall: 25
1. Be separate and distinct from, and [ shall] in no way limit , other 26
grievance or complaint processes available to consumers under other 27
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provisions of the Kentucky Revised Statutes[KRS] or duly promulgated 1
administrative regulations; and[. This complaint process shall ] 2
2. Not limit, alter, or supplant the mechanisms for appealing coverage 3
denials established in KRS 304.17A-617. 4
(9) The external review process shall be confidential and shall not be subject to KRS 5
61.805 to 61.850 and KRS 61.870 to 61.884. 6
(10) External reviews shall be conducted in an expedited manner by the independent 7
review entity if: 8
(a) The covered person is hospitalized;[,] or[ if, ] 9
(b) In the opinion of the treating provider, review under the standard time frame 10
could, in the absence of immediate medical attention, result in any of the 11
following: 12
1.[(a)] Placing the health of the covered person or, with respect to a 13
pregnant woman, the health of the covered person or her unborn child in 14
serious jeopardy; 15
2.[(b)] Serious impairment to bodily functions; or 16
3.[(c)] Serious dysfunction of a bodily organ or part. 17
(11) Requests for expedited external review [,] shall be forwarded by the insurer to the 18
independent review entity within twenty-four (24) hours of receipt by the insurer. 19
(12) (a) For expedited external review, a determination shall be made by the 20
independent review entity within twenty -four (24) hours from the receipt of 21
all information required from the insurer. 22
(b) An extension of up to twenty -four (24) hours may be allowed if the covered 23
person and the insurer or its designee agree. 24
(c) The insurer or its desig nee shall provide notice to the independent review 25
entity and to the covered person, by same -day communication, that the 26
external review request [adverse determination] has been assigned to an 27
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independent review entity for expedited review. 1
(13) (a) External reviews which are not expedited shall be conducted by the 2
independent review entity and a determination made within twenty -one (21) 3
calendar days from the receipt of all information required from the insurer. 4
(b) An extension of up to fourteen (14) calen dar days may be allowed if the 5
covered person and the insurer are in agreement. 6
Section 31. KRS 304.17A-625 is amended to read as follows: 7
(1) In making its decision, an independent review entity conducting the external review 8
shall take into account all of the following: 9
(a) Information submitted by the insurer, the covered person, the authorized 10
person, and the covered person's provider, including the following: 11
1. The covered person's medical records; 12
2. The standards, criteria, and clinical rationale used by the insurer to make 13
its decision; and 14
3. The insurer's health benefit plan; 15
(b) Findings, studies, research, and other relevant documents of government 16
agencies and nationally recognized organizations, including th e National 17
Institutes of Health, or any board recognized by the National Institutes of 18
Health, the National Cancer Institute, the National Academy of Sciences, and 19
the United States Food and Drug Administration, the Centers for Medicare & 20
Medicaid Services of the United States Department of Health and Human 21
Services, and the Agency for Health Care Research and Quality; and 22
(c) Relevant findings in peer -reviewed medical or scientific literature, published 23
opinions of nationally recognized medical specialists , and clinical guidelines 24
adopted by relevant national medical societies. 25
(2) (a) The independent review entity shall base its decision on the information 26
submitted under subsection (1) of this section. 27
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(b) In making its decision, the independent review en tity shall consider safety, 1
appropriateness, and cost effectiveness. 2
(3) (a) The insurer shall provide any coverage determined by the independent review 3
entity to be medically necessary. 4
(b) The independent review entity shall not be permitted to allow cov erage for a 5
service, procedure, treatment, drug, supply, or device that is [services] 6
specifically limited or excluded by the insurer in its health benefit plan. 7
(c) The decision shall apply only to the individual covered person's external 8
review. 9
(4) Nothing in this section shall be construed as requiring an insurer to provide 10
coverage for out of network services, procedures, or tests, except as set forth in 11
KRS 304.17A-515(1)(c) and 304.17A-550. 12
(5) The insurer shall be responsible for the cost of the external review. 13
(6) The independent review entity shall provide to the covered person, treating 14
provider, insurer, and the department a decision which shall include: 15
(a) The findings for either the insurer or covered person regarding each issue 16
under review; 17
(b) The proposed service, procedure, treatment, drug, device, or supply for which 18
the review was performed; 19
(c) The relevant provisions in the insurer's health benefit plan and how applied; 20
and 21
(d) The relevant provisions of any nationally recognized and peer -reviewed 22
medical or scientific documents used in the external review. 23
(7) The decision of the independent review entity shall not be made solely for the 24
convenience of the insurer, the covered person, or the provider. 25
(8) (a) Consistent with the r ules of evidence, a written decision prepared by an 26
independent review entity shall be admissible in any civil action related to the 27
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insurer's[adverse] determination. 1
(b) The independent review entity's decision shall be presumed to be a 2
scientifically valid and accurate description of the state of medical knowledge 3
at the time it was written. 4
(9) (a) The decision of the independent review entity shall be binding on the insurer 5
with respect to that covered person. 6
(b) Failure of the insurer to provide cover age as required by the independent 7
review entity shall: 8
1.[(a)] Be a violation of the insurance code of a nature sufficient to 9
warrant the commissioner revoking or suspending the insurer's license 10
or certificate of authority; and 11
2.[(b)] Constitute an unfair claims settlement practice as set forth in KRS 12
304.12-230. 13
(10) (a) Failure to provide coverage as required by the independent review entity shall 14
also: 15
1. Subject the insurer to the provisions of KRS 304.99 -010 and 304.99 -16
020; and 17
2. Require the insurer to pay the claim that was the subject of the external 18
review, without need for the covered person or authorized person to 19
further establish a right as to the payment amount. 20
(b) Reasonable attorney's[attorney] fees associated with the actions of the insured 21
necessary to collect amounts owed the covered person shall be assessed 22
against and borne by the insurer. 23
(11) The insurer shall implement the decision of t he independent review entity whether 24
the covered person has disenrolled or remains enrolled with the insurer. 25
(12) If the covered person has been disenrolled with the insurer, the insurer shall only be 26
required to provide the treatment, procedure, service, drug, supply, or device that 27
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was previously denied by the insurer, its agent, or designee and later approved by 1
the independent review entity for a period not to exceed thirty (30) days. 2
(13) Within thirty (30) days of the decision in favor of the covered person by the 3
independent review entity, the insurer shall provide written notification to the 4
department that the decision has been implemented in accordance with this section. 5
(14) (a) An independent review entity and any medical specialist the entity u tilizes in 6
conducting an external review shall not be liable in damages in a civil action 7
for injury, death, or loss to person or property and is not subject to 8
professional disciplinary action for making, in good faith, any finding, 9
conclusion, or determination required to complete the external review. 10
(b) This subsection does not grant immunity from civil liability or professional 11
disciplinary action to an independent review entity or medical specialist for an 12
action that is outside the scope of authority granted in KRS 304.17A -621, 13
304.17A-623, and 304.17A-625. 14
(15) Nothing in KRS 304.17A -600 to 304.17A -633 shall be construed to create a cause 15
of action against any of the following: 16
(a) An employer that provides health care benefits to employees through a health 17
benefit plan; 18
(b) A medical expert, private review agent, or independent review entity that 19
participates in the utilization review, internal appeal, or external review 20
addressed in KRS 304.17A-600 to 304.17A-633; or 21
(c) An insurer or provider acting in good faith and in accordance with any 22
finding, conclusion, or determination of an Independent Review Entity acting 23
within the scope of authority set forth in KRS 304.17A -621, 304.17A -623, 24
and 304.17A-625. 25
(16) (a) The cover ed person, insurer, or provider in the external review may submit 26
written complaints to the department regarding any independent review 27
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entity's actions believed to be an inappropriate application of the requirements 1
set forth in KRS 304.17A-621, 304.17A-623, and 304.17A-625. 2
(b) The department shall promptly review the complaint, and if the department 3
determines that the actions of the independent review entity were 4
inappropriate, the department shall take corrective measures, including 5
decertification or suspension of the independent review entity from further 6
participation in external reviews. 7
(c) The department's actions shall be subject to the powers and administrative 8
procedures set forth in Subtitle 17A of KRS Chapter 304. 9
Section 32. KRS 304.99-020 is amended to read as follows: 10
(1) For any violation of this code where the commissioner has the power to revoke or 11
suspend a license or certificate of authority, the commissioner may in lieu thereof or 12
in addition to suc h revocation or suspension impose a civil penalty against the 13
violator of not more than the following: 14
(a) In the case of an insurer, a fraternal benefit society, nonprofit hospital, 15
medical-surgical, dental, and health service corporation, or health 16
maintenance organization,[ of not more than] ten thousand dollars ($10,000) 17
per violation; 18
(b) In the case of an agent, surplus lines broker, rental vehicle agent ,[ or] rental 19
vehicle agent managing employee, [ specialty credit producer or managing 20
employee,] or reinsurance intermediary broker or manager,[ of not more than] 21
one thousand dollars ($1,000) per violation; and 22
(c) In the case of an adjuster, administrator, life settlement broker, life settlement 23
provider, or consultant ,[ of not more than] two thousand dollars ($2,000) per 24
violation. 25
(2) The civil penalties authorized under subsection (1) of this section [Such civil 26
penalty] may be recovered in an action brought [ thereon] in the name of the 27
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Commonwealth of Kentucky in any court of appropriate jurisdiction. 1
(3) In any court action with respect to a civil penalty, the court may review the penalty 2
as to both liability and reasonableness of amount. 3
Section 33. KRS 304.99-100 is amended to read as follows: 4
(1) The appointment of an agent, including a rental vehicle agent and[,] rental vehicle 5
agent managing employee, [ specialty credit producer, and specialty credit 6
managing employee,] may be renewed by an insurer under KRS 304.9-270(9) if the 7
request and late payment for renewal is accompanied by a penalty equal to the 8
amount of the biennial renewal fee specified in Subtitle 4 of this chapter. 9
(2) A license issued under Subtitle 9 of this chapt er, surplus lines broker license, life 10
settlement broker license, and life settlement provider license may be reissued 11
under KRS 304.9 -260(2) if the request and late payment for reissue are 12
accompanied by a penalty equal to the amount of the biennial renew al fee specified 13
in Subtitle 4 of this chapter. 14
Section 34. Whereas the availability of certified and approved building 15
contractors is crucial to ensuring that Kentucky homes are mitigated to resist future losses 16
due to catastrophic wind and hail events, an emergency is declared to exist, and Section 5 17
of this Act takes effect upon its passage and approval by the Governor or upon its 18
otherwise becoming a law. 19