Free Kansas Property practice questions

Answer: D. No, because a rate difference alone is not grounds when an admitted insurer would accept it

The Kansas excess coverage statute states that a mere rate differential is not grounds for placing a risk with a nonadmitted insurer when an admitted insurer would accept that risk at a different rate. Because an admitted insurer here will take the risk, the cheaper nonadmitted quote does not justify the placement. The insured's written consent is a separate requirement, due before placement, and the statute does not make it an exception to the rate-differential rule. This subsection also does not make advance approval from the commissioner the test for the placement.

Answer: A. A risk retention group organized in Kansas and licensed in Kansas

K.S.A. 40-2c01(c) defines a domestic insurer as any insurance company or risk retention group that is both licensed and organized in Kansas, so a risk retention group organized and licensed in Kansas qualifies. A Missouri-organized insurer licensed in Kansas is described in the same section as a foreign insurer instead. An entity organized in Kansas but unlicensed fails the licensing half of the definition, and a Kansas license without Kansas organization fails the other half.

Answer: A. Every class of insurance described in K.S.A. 40-901

K.S.A. 40-952(b) defines the terms used in the rating act: fire insurance is read to take in the classes of insurance described in K.S.A. 40-901, the statute listing the kinds of business a stock fire company may write. That list reaches well beyond fire and lightning (it includes windstorm, hail, flood and other perils), so a definition limited to those two perils is too narrow. The classes drawn from specified subsections of K.S.A. 40-1102 are what the same subsection assigns to casualty insurance, not fire insurance. Accident and health insurance is carved out of the act altogether by 40-952(a).

Answer: B. $2,000 for each act or violation

Kan. Stat. Ann. Sec. 40-2,125(a)(1) caps the monetary penalty at $1,000 for each act or violation, but raises the cap to $2,000 for each act or violation when the person knew or reasonably should have known it was violating the insurance statutes. Because the company here knew, the cap is $2,000. The $1,000 figure is the cap for a violation the person neither knew of nor reasonably should have known of. Neither $5,000 nor $10,000 appears in this section as a per-violation cap. Besides a monetary penalty, the same subsection lets the Commissioner order suspension or revocation of a license or certificate for a knowing violation, or order the person to cease and desist.

Answer: A. An order by the commissioner specifying the corrective actions the commissioner has determined an RBC level event requires

Under K.S.A. 40-2c01(b), a corrective order is an order the commissioner issues that specifies the corrective actions the commissioner has found are needed to address an RBC level event. A plan the insurer prepares is the RBC plan, defined separately in 40-2c01(l). A report the commissioner has adjusted is an adjusted RBC report under 40-2c01(a). The authorized control level is a number determined under the risk-based capital formula in accordance with the RBC instructions, not an order of any kind.

Answer: C. The certificate cannot change the policy, and its form must be approved before use

Under K.S.A. 40-955(b), certificate of insurance forms must be filed with and approved by the commissioner before they are used, and a certificate cannot be used to change, alter or amend the policy it describes. The statute makes that limit apply even where the large-risk filing exemption covers the policy, so the exemption does not let a certificate override the policy. Nothing in the provision lets a countersignature turn a certificate into an amendment. Calling certificates purely informational is half right, but it misses that their forms need prior approval.

Answer: D. Announcing an appeal policy to pressure claimants into accepting less than their awards

Kansas treats it as an unfair claim settlement practice for an insurer to make known to insureds or claimants a policy of appealing arbitration awards in their favor, when the purpose is to push them into settlements or compromises below the amount awarded. The wrong is the announced policy and the purpose behind it, committed flagrantly and in conscious disregard of the law or often enough to indicate a general business practice, as the routine statements here are. The provision does not depend on whether an appeal was ever filed, on whether the claimants had counsel, or on how the offers compare with the policy limits.

Answer: B. The commissioner of insurance, for all FAIR plan policies

K.S.A. 40-2142(c) requires every FAIR plan policy to be issued on forms, and under reasonable rates and rating procedures, that the commissioner of insurance has approved. Participating member insurers share in the placement of risks through the plan, but subsection (c) does not give them the approval role, and it names the commissioner rather than a rating organization or the legislature as the approving authority.

Answer: D. It is an unfair practice, because compliance must come within the time that section prescribes

K.S.A. 40-2404(14) defines as an unfair practice failing to comply with K.S.A. 40-2,112, the statute on disclosure of information relating to adverse underwriting decisions and refund of premiums, within the time that section prescribes. Late compliance is still a failure to comply within the prescribed time, so eventual disclosure does not cure it. The requirement of flagrant or frequent conduct attaches to the claim settlement practices in paragraph (9), not to paragraph (14), and paragraph (14) sets no condition about the applicant contacting the department.

Answer: B. It is an unfair practice, because the section reaches untrue insurance statements put before the public in any way.

The section defines as an unfair and deceptive practice putting before the public an advertisement or statement about the business of insurance that is untrue, deceptive, or misleading. The section names familiar media and then adds a catchall for any other way of reaching the public, so a social media video is covered and the list is not a closed set of media. The section attaches to whoever makes the statement or causes it to be made, directly or indirectly, and its text says nothing about the insurer authorizing it. Its text also contains no requirement that a consumer rely on the statement or buy a policy.