AIA Applauds Enactment of Kan. Self-Audit Bill

The American Insurance Association (AIA) on Monday commended
Gov. Kathleen Sebelius (D) and the Kansas legislature for enacting HB 2357 into law. This measure, which creates a self-audit privilege for insurers, was signed by Gov. Sebelius last Friday.

“The purpose of the self-audit privilege, like the judicially created attorney/client privilege, is to allow insurers, in effect, to undertake their own internal market conduct examinations without penalizing them for doing so. It will permit full and frank internal discussions about compliance with laws and regulations, and encourage companies to remedy violations discovered during the audit process,” said John Marlow, AIA assistant vice president, southwest region.

“This new law will encourage insurers to self-police their own compliance with laws and regulations without subjecting auditing documents to discovery and without subjecting individuals involved in the auditing process to deposition, interrogatory, or other examination in litigation,” Marlow explained. “Enactment of this law will ultimately benefit all the interested parties, including consumers, insurance companies and insurance regulators.

“The self-audit privilege will essentially serve as a supplement to the limited resources of the Kansas Insurance Department by enabling insurers to conduct full and complete audits without fear of retribution. In turn, increased compliance vigilance by insurers and regulators benefits consumers by making sure that insurance products purchased meet the letter of the law.

“AIA has been promoting and supporting this legislation for several years now, and is very pleased that it has been enacted into law,” Marlow concluded.