Industry Issues | Surplus Lines Reform

Kansas Insurance Department Seeks Non-admitted Carrier Declaration of Compliance

March 6, 2019

Regulatory Update - Kansas

Non-admitted Carrier Declaration of Compliance

APCIA has received a member inquiry regarding a notice received from the Kansas Insurance Department that states "Pursuant to K.S.A. 40-3402(b)(1), every insurance company authorized to transact business in Kansas shall file with the Commissioner the Declaration of Compliance with the Kansas Health Care Provider Insurance Availability Act. Additionally, pursuant to K.S.A. 40-3413, every insurer shall cooperate in the Kansas Health Care Provider Insurance Availability Plan. The healthcare forms are required if your company has Malpractice Liability or Workers' Compensation on its Certificate of Authority."

The notice further goes on to say, "Excess Lines companies: You are required to have these forms on file if you are writing auto or health coverage. If you are writing in none of these lines, then please notify us and we will not send any follow-up letters."

If your company has received this notice and has any comment, question or concern, please email

Kansas Enacts HB 2352 Impacting Surplus Lines 

Kansas has enacted House Bill 2352, an omnibus measure, with provisions pertaining to notice of cancellation for motor vehicle liability insurance, financial examination, surplus lines insurance and gross premium taxes.

Sections 5-8 of HB 2352 create new definitions and amend existing requirements in the Insurance Code pertaining to the regulation of excess or surplus lines insurance. In addition, the measure repeals the 2011 law authorizing the state to join the Surplus Lines Insurance Multi-State Compliance Compact (SLIMPACT).

Section 5 adds defined terms for exempt commercial purchaser, home state, nonadmitted insurer, principal place of business, and surplus lines insurance (this section takes effect January 1, 2016);

Section 6 amends KS 40-246(c), to simplify the computation method of surplus lines premium by specifying that licensed agents must collect and pay to the Commissioner a tax of 6 percent on the total gross premiums charged, less any return premiums, for surplus lines insurance transacted by the licensee pursuant to the license for insureds whose home state is Kansas (this section takes effect January 1, 2016);

Section 7 adds a new section to the Insurance Code and exempts a surplus lines producer seeking to place non-admitted insurance for an exempt commercial purchaser from filing a sworn affidavit or statement with the Kansas Insurance Department, if the surplus lines producer has disclosed to the exempt commercial purchaser that such insurance may or may not be available from the admitted market and the exempt commercial purchaser has subsequently requested in writing that the surplus lines producer procure or place such insurance from a non-admitted insurer (this section takes effect January 1, 2016); and

Section 8 authorizes the Commissioner to adopt rules and regulations necessary for the enforcement and administration of the provisions governing excess or surplus lines insurance. Any such rules and regulations must be adopted no later than January 1, 2017 (this section takes effect January 1, 2016).

Pursuant to this Act, on January 1, 2016,  K.S.A. 2014 Supp. 40-5701, 40-5702 and 40-5703 are repealed. This repeals the 2011 law authorizing the state to join the Surplus Lines Insurance Multi-State Compliance Compact. Kansas joins Tennessee and North Dakota to take such a measure, leaving six SLIMPACT states (AL, IN, KY, NM, RI, and VT) still to respond to the failed fate of the Compact and to redress conforming their respective surplus lines laws to the federal NRRA.

Reference the Enacted Law Bulletin related to HB 2352 for additional details on this omnibus act.

Kansas Legislative Bills to Affect Surplus Lines 

Recent introduced Kansas legislative bills are impacting surplus lines insurance. The bills include Senate Bill 155 and Senate Bill 145.

SB 155 repeals K.S.A. 2014 Supp.40-5701, provisions for the establishment of SLIMPACT; adds new defined terms, including exempt commercial purchaser, home state, nonadmitted insurer, principal place of business, and surplus lines insurance; amends provisions relating to tax on gross premiums charged, eliminating allocation procedure of premium for multistate risks.

SB145 amends K.S.A. 2014 Supp. 40-246b related to insurer eligibility to write excess coverage; amends K.S.A. 2014 Supp. 40-246e to conform insurer eligibility requirements to the NRRA, and to eliminate the mandatory eligibility list, but allow for a voluntary list.

PCI has raised discussion related to the definition of "nonadmitted insurer" to exclude RRGs as provided in the NRRA, and "surplus lines insurance" to exclude placement with a nonadmitted insurer that is not an eligible surplus lines insurer.

Kansas Enacts SLIMPACT Surplus Lines Reform 

Kansas enacted House Bill 2076 , approved by Gov. Sam Brownback on May 12, 2011 and becomes effective upon publication in the statutes. This law enacts the Surplus Lines Insurance Multi-State Compliance Compact (SLIMPACT).

NCOIL leader Sen. Ruth Teichman successfully advocated for the legislation which enacts SLIMPACT and make amendments to the current law governing the allocation of surplus lines' premium tax revenue and is intended to comply with requirements of the Nonadmitted and Reinsurance Reform Act of 2010 (NRRA) legislation enacted in Title V, Subtitle B of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

PCI testified and actively lobbied in support of the legislation (initially introduced as Senate Bill 206 ).

NCOIL Executive Committee member Sen. Teichman stated: "We are confident in SLIMPACT, as it is more fully fleshed-out and vetted than other existing proposals. It was built using the framework of the successful 38-member Interstate Insurance Product Regulation Compact (IIPRC), and developed over the course of several years with input from all interested stakeholders—including legislators and regulators. SLIMPACT also enjoys broad legislative and industry support that will be crucial to its nationwide success."

Bill Summary :
  • Enactment of this Act would authorize Kansas to join the Compact as a Compacting State.

  • The Compact would become effective and binding upon legislative enactment of the Compact by two Compacting States. The Commission becomes effective for purposes of adopting Rules and creating the Clearinghouse when there are a total of ten Compacting and Contracting States or when the Compacting and Contracting States represent greater than 40 percent of the Surplus Lines Insurance premium volume (Article 13).

  • NRRA requirements, Purposes of the Compact (Preamble, Article 1): To implement the express provisions of the NRRA; To protect the Premium Tax revenues of the Compacting States through facilitating the payment and collection of Premium Tax on Non-admitted Insurance; and to protect the interests of the Compacting States by supporting the continued availability of such insurance to consumers; and to provide for allocation of Premium Tax for Non-Admitted Insurance of Multi-State risks among the States in accordance with uniform Allocation Formulas to be developed, adopted, and implemented by the Commission.

  • To establish a Clearinghouse for receipt and dissemination of Premium Tax and Clearinghouse Transaction Data related to Non-Admitted Insurance of Multi-State Risks, in accordance with Rules to be adopted by the Commission.

  • To adopt uniform Rules to provide for Premium Tax payment, reporting, allocation, data collection and dissemination for Non-Admitted Insurance of Multi-State Risks and Single-State Risks, in accordance with Rules to be adopted by the Commission, thereby promoting the overall efficiency of the Non-Admitted Insurance market.

  • To establish the Surplus Lines Multi-State Compliance Compact Commission.

  • To establish definitions under the Compact in compliance with definitions and provisions established under the NRRA.

  • Adopt amendments to current law, permitting the Insurance Commissioner, upon receipt of an application, to issue an excess lines coverage license to any licensed property and casualty agent (Kansas or any other state) and those agents would be allowed to negotiate for insureds whose home state is Kansas; amend the collection method and allocation of premium taxes for surplus lines insurance in current law to conform to the requirements of the NRRA; further, provide that in instances where a state failed to enter into a compact or reciprocal allocation procedure, the net premium tax collected would be retained by the State (Kansas).

  • The SLIMPACT provisions and the amendments to surplus lines insurance provisions in current law would become effective upon publication in the Kansas Register. All other provisions will become effective on and after July 1, 2011.
NCOI Press Release

Momentum Builds for Surplus Lines Compact: Kansas Joins SLIMPACT | May 16, 2011