Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
304.3-050,
304.12-010,
304.12-080-304.12-110,
304.13-031,
304.13-051,
304.13-053,
304.13-057,
304.13-058,
304.13-061,
304.13-071,
304.13-075,
304.13-169,
304.14-120,
304.15-380,
304.24-250,
304.24-310,
304.24-320,
304.24-330
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
304.2-110 authorizes the Commissioner of
Insurance to promulgate administrative regulations necessary for or as an aid
to the effectuation of any provision of the Kentucky Insurance Code, as defined
in
KRS
304.1-010. This administrative regulation
permits the participation by insureds in dividend premium plans under
"participating" policies and requires a filing of the dividend plans with the
commissioner.
Section 1. To encourage
savings in the net cost of insurance protection, insurers authorized to
transact insurance in this state may, issue a policy allowing the insured to
participate in the dividend earning of the insurer. This administrative
regulation shall not apply to dividends to shareholders in a stock company or
to general dividends to policyholders in a mutual company.
Section 2.
(1) An insurer shall file or refile with the
commissioner, in the same manner as a rate filing, every proposed dividend plan
and every modification of a dividend plan, including discontinuance, which it
intends to use, accompanied by the information that supports the
filing.
(2)
(a) A filing shall not propose both a
participating and nonparticipating policy for the same class of risk. Any
classification by the insurer of its participating policy and of risks assumed
under that policy which the insurer may make shall be reasonable and
nondiscriminatory. In determining the proposed eligibility requirements for a
dividend plan, the underlying standard shall be the demonstrated or
demonstrable success in savings in expenses or in losses above levels
anticipated in previously filed rates.
(b) Any proposed dividend plan shall be made
available to all insureds meeting the eligibility requirements set forth in the
dividend plan.
(c) An agent
appointed by one (1) or more companies of a group of affiliated insurers shall
also be appointed by the company within the group authorized to write
participating insurance policies. Notice and details of the availability of the
program in Kentucky shall be given to all licensed agents within the authorized
group.
(3) If the filing
is an initial filing or the facts or the laws have changed since a prior filing
has been used, the filing shall contain either satisfactory evidence of proper
specific charter as defined in
KRS
304.3-050, authority to issue a participating
policy, or satisfactory evidence that unless otherwise provided by its charter,
the laws of its domicile provide that it may issue a policy entitled to
participate in the earnings of the insurer through dividends.
(4) The filing shall also contain proposed
policy provisions or proposed policy endorsement forms for the payment of
dividends which shall further provide that all dividends be paid by the insurer
directly to the insured, and that no dividends may be assigned to associations
or others, except upon assignment of the policy for value. If the provision for
the payment of dividends is made by separate endorsement rather than
incorporated in the policy form, the endorsement shall be attached to each
policy issued.
Section 3.
(1) Dividends to participating policies shall
be paid only out of that part of surplus funds that derives from any realized
net profits from the insurer's business. An insurer or its agents shall not
guarantee or promise to a policyholder or prospective policyholder the amount
of percentage of dividends to be paid. A dividend, otherwise earned, shall not
be made contingent upon payment of renewal premium on any policy, or membership
in, or affiliation with, any association.
(2) All brochures and advertising material
shall affirmatively and clearly set forth that dividends are not guaranteed and
that all policyholders are eligible for the dividend program whether or not
they are members of, or affiliated with, any association.
STATUTORY AUTHORITY:
KRS
304.2-110
