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April 2017

  

Kansas Strengthens Third Party Administrator Laws

  

 
 

  

     

  

 
 

Third Party Administrators Professionals:

  

Steven L. Imber

913.234.7469

Email | Bio

  

Justin T. Liby

913.234.7427

Email | Bio

  

Jennifer Osborn Nix

913.234.7472

Email | Bio

  

  

To learn more about our Third Party Administrators practice, to contact one of our attorneys, or for more Third Party Administrators Intelligence, click here.

  

  


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Kansas Senate Bill No. 22, which became effective on March 9, 2017, amends the Kansas Third Party Administrator laws and appears designed to make them more robust by incorporating much of the language from the new National Association of Insurance Commissioners' Third Party Administrator Model Act.

One of the most significant provisions in Senate Bill 22 is that it implements a provision in Section 3(b) that an administrator is not eligible for a nonresident license in Kansas if its home state has not adopted laws that are substantially similar governing administrators.

Other items of interest regarding Kansas Senate Bill 22 include, but are not limited to, the following:

  • Requires submission of audited financial statements for the two most recent fiscal years, unless the applicant has not been in existence for two years. The Commissioner may grant a hardship exemption and permit applicants to file unaudited financial statements, but surety bonds will be required.
  • Requires the submission of business plan statements.
  • Specifies that applicants and licensees will be required to make available for the Department's inspection copies of all contracts with payors, as well as any other persons utilizing their services, and requires that they produce their accounts, records, and files for the Department's examination.
  • Sets forth filing requirements for annual reports, including financial statements, that must be submitted on or before July 1 of each year.
  • Allows the Commissioner to revoke a license under Section 5(b)(4) in the event that a TPA fails at any time to meet a qualification for which issuance of a license could have been refused.
  • Specifies conditions under which TPA license must or may be, denied, suspended, or revoked and details conditions under which the Department will be authorized to suspend a TPA's license without giving advance notice or an opportunity for a hearing. Authorizes the Department to impose other types of administrative penalties in accordance with the state's administrative procedure act.
  • Changes the requirements for written agreements between TPA and insurers, and the contractual provisions they must include. Adds provisions regarding the termination of agreements and disputes between insurers and TPAs. Requires that either the TPA or insurer notify the Department of the termination of an agreement.
  • Specifies that written agreements between TPAs and payors must require that TPAs render periodic accountings to payors, as further described. Expands record keeping requirements for TPAs who collect charges or premiums on behalf of multiple payors. Revises the scope of conditions under which withdrawals or payments may be made from fiduciary accounts.
  • Revises and clarifies scope of prohibited or permitted compensation arrangements for TPAs.

For questions regarding this information, please contact one of the authors, a member of Polsinelli's Insurance Business and Regulatory Group, or your Polsinelli attorney.

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