Kentucky lawmakers adopted insurance legislation during the 2008 regular legislative session that will affect agents and carriers working in the state.
The Insurance Producer Modernization bill (HB 334) allows an agent to receive compensation from an insurer or client for the placement of insurance and services provided. The compensation arrangement must be specified in a written disclosure agreement.
In regard to property and casualty insurance lines, the client is defined as having total assets of at least $25 million or total sales or revenue of at least $25 million. In order for the compensation to be legal, the client must have at least 100 employees and at least $400,000 in annual property and casualty premium.
In addition the bill prevents an individual or business entity, licensed as both a consultant and an agent, from acting as an agent with respect to a specific insurance transaction for which they have a written consulting contract.
The prohibition against acting as an agent for that specific risk is in effect during the term of the written consulting contract and for 12 months after the expiration of the contract but no less than 24 months from the inception of the contract. The prohibition also applies to an agent who has a financial or business ownership interest or affiliations with the consultant.
Kentucky Gov. Steve Beshear also signed legislation this year amending a workers’ compensation self-insured groups law passed in the 2005 regular session. Among a list of “housekeeping changes,” the bill adds latitude to insurers’ investment practices.
The bill disallows investments in corporate bonds to exceed 25 percent (was 15 percent) of the total market value of investment portfolio, allowing more corporate bonds in time of a declining or unstable economy. HB 758 also requires 50 percent (was 75 percent) of entire investment to be in cash and cash equivalents, allowing a more diversified portfolio with the potential of earning higher investment yields. It also requires groups to hold 5 percent (was 15 percent) in cash and cash equivalents that mature in one year or less.
The legislation requires a self-insured group to make its statement of financial condition available to a group member upon request. The 2005 law is also amended to incorporate a standard for waiving the purchase of aggregate excess insurance for self-insured groups if the group’s fund balance is 30 percent or more of earned premiums.
Source: Kentucky Office of Insurance
Topics Agencies Legislation Talent Kentucky
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