Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
91A.0804,
91A.0806,
304.2-100,
304.2-310,
304.3,
304.10-030,
304.10-160
NECESSITY, FUNCTION, AND CONFORMITY: EO 2008-507, signed June
6, 2008, and effective June 16, 2008, created the Department of Insurance,
headed by the Commissioner of Insurance.
KRS
91A.0806(1) requires the
Department of Insurance to promulgate administrative regulations establishing
criteria for the verification of risk location systems and programs. This
administrative regulation establishes the risk location verification criteria,
sets forth the process to obtain and renew verification, and sets forth the
process for revocation of verification. This administrative regulation also
establishes the process for an insurer with limited risks to request an order
allowing an alternative form of risk location.
Section 1. Definitions.
(1) "Broker" is defined in
KRS
304.10-030.
(2) "Department" means the Department of
Insurance.
(3) "Insurance company"
means an entity holding a certificate of authority in accordance with KRS
Chapter 304.03.
(4) "Risk location
system or program" is defined in
KRS
91A.0802(2).
(5) "Verified entity" means a vendor,
insurance company or surplus lines broker that has received an order of
verification from the Department of Insurance.
(6) "Verified risk location system" means a
risk location system or program that is the subject of an effective order of
verification issued by the department that has not expired or otherwise been
revoked.
Section 2.
Application for Verification.
(1) A vendor,
insurance company, or broker seeking verification of a risk location system or
program shall submit:
(a) A complete
Application for Verification of Risk Location System or Program;
(b) An application fee in accordance with
KRS
91A.0806(2);
(c) A complete copy of the risk location
address data set provided in accordance with the Verification Data
Manual;
(d) A written explanation
of how the risk location system or program is updated and the frequency with
which the system or program is updated; and
(e) A written certification that the risk
location system or program uses the municipal and county boundary data
available from the Commonwealth Office of Technology that is based upon
municipal and other filings with the Secretary of State as its sole source of
boundary data.
(2) Upon
receipt of the information required in subsection (1) of this section, the
department shall:
(a) Review the application
and documents submitted;
(b) Test
the accuracy of the risk location system or program's address data set by
identifying a random sampling of address data to determine if the data
accurately falls within or outside of a Kentucky taxing entity; and
(c) Issue a preliminary report to the
applicant of the results of the test.
(3) Within twenty (20) days from the date of
issuance of the preliminary report, the applicant shall:
(a) Review the preliminary report;
(b) Provide the department with a written
response to a contested finding; and
(c) Provide the department with documentation
to support the response to a contested finding.
(4) The department shall issue a final report
of the results of the test within:
(a) Thirty
(30) days from the date of receipt of a written response from the applicant;
or
(b) Thirty (30) days from the
date of issuance of the preliminary report if a response is not received in
accordance with subsection (3) of this section.
(5)
(a) The
department shall issue an order verifying the risk location software or program
if:
1. The results of the test demonstrate
that the risk location system or program achieved an overall level of accuracy
of at least ninety (90) percent in identifying the city or county within which
an address is located; and
2. The
risk location system or program is updated at least quarterly with regard to
changes in municipal and county boundary data, street addresses and zip
codes.
(b) The order
shall expire automatically three (3) years from its effective date unless
otherwise revoked.
Section
3. Continuation of Verification. A verified entity seeking to
continue an order of verification of a risk location system or program shall,
at least six (6) months prior to the date the order of verification is
scheduled to expire, submit an application and comply with the application
process set forth in Section 2 of this administrative regulation.
Section 4. Alternative Option for Insurers
and Brokers with Limited Risk Locations.
(1)
An insurance company or surplus lines broker seeking an order from the
commissioner allowing for an alternative means of determining risk location
pursuant to
KRS
91A.0806 shall submit the following to the
department:
(a) Documentation demonstrating
that the insurance company or surplus lines broker has 200 or less risk
locations in Kentucky;
(b) A
written explanation of the method that will be used to determine risk location;
and
(c) A risk location address
data set including:
1. Street
number;
2. Street name;
3. City;
4. State;
5. Zip code;
6. Notation indicating if the address is
inside or outside of an incorporated city boundary; and
7. If inside an incorporated city boundary,
identification of the taxing entity.
(2) Upon receipt of the information required
in subsection (1) of this section, the department shall:
(a) Review the information provided;
and
(b) Test the accuracy of the
risk location address data set by identifying a random sampling of address data
to determine if the data accurately falls within or outside of a Kentucky
taxing entity.
(3) The
department shall issue an order permitting the use of an alternative method of
determining risk location if the results of the review determine:
(a) The insurance company or surplus lines
broker has a limited number of risk locations, not exceeding 200 in Kentucky;
and
(b) The method of determining
risk location will achieve an overall level of accuracy of at least ninety (90)
percent in identifying the city or county within which an address is
located.
(4) The order
issued pursuant to subsection (3) of this section shall expire automatically
three (3) years from its effective date unless otherwise revoked.
(5)
(a) On
or before January 31 of each year, an insurance company or surplus lines broker
that has been issued an order pursuant to subsection (3) of this section, shall
certify to the department that it has 200 or less risk locations in
Kentucky.
(b) Notwithstanding
subsection (4) of this section, an order issued pursuant to subsection (3) of
this section shall be revoked if:
1. An
insurance company or surplus lines broker fails to certify that it has 200 or
less risk locations in Kentucky in accordance with paragraph (a) of this
subsection; or
2. An insurance
company or surplus lines broker has more than 200 risk locations in
Kentucky.
Section 5. Revocation of Order of
Verification or Order of Alternative Risk Methodology.
(1) If the department has reason to believe
after an investigation pursuant to 304.2-100, audit or investigation under
KRS
91A.0804, examination of an insurer through
304.2-310 or examination of a surplus lines broker pursuant to 304.10-160, that
a verified risk location system or program no longer meets the requirements for
verification set forth in Section 2(5) of this administrative regulation, the
department shall request that the verified entity, insurance company or surplus
lines broker provide a risk location address data set as set forth in Section
2(1)(c) within thirty (30) days of the request.
(2) If the department has reason to believe
after an investigation pursuant to 304.2-100, audit or investigation under
KRS
91A.0804, examination of an insurer through
304.2-310 or examination of a surplus lines broker pursuant to 304.10-160, that
an insurance company or surplus lines broker no longer meets the requirements
for an alternative risk methodology set forth in Section 4 of this
administrative regulation, the department shall request that the insurance
company or surplus lines broker provide a risk location address data set as set
forth in Section 4(1)(c) within thirty (30) days of the request.
(3) Upon receipt of a risk location address
data set in accordance with subsections (1) and (2) of this section, the
department shall test the accuracy of the data received to determine the
accuracy in identifying the city or county within which an address is located.
If the test results demonstrate an overall level of accuracy of less than
ninety (90) percent, the department shall issue a notice of deficiency to the
verified entity.
(4)
(a) Within ten (10) days from the date of the
notice of deficiency, the verified entity shall provide the department with the
names and addresses of all insurance companies and surplus lines brokers in
Kentucky utilizing the verified risk location system.
(b) The department shall provide a copy of
the notice of deficiency to all insurance companies and surplus lines brokers
identified by the verified entity in accordance with paragraph (a) of this
subsection.
(5) A
verified entity, insurance company or surplus lines broker shall have sixty
(60) days from the date of a notice of deficiency to:
(a) Correct the deficiency; and
(b) Submit a risk location address data set
to the department demonstrating that the deficiency has been
corrected.
(6) The
department shall issue an order revoking its order of verification if:
(a) The verified entity, insurance company or
surplus lines broker fails to provide the information requested in accordance
with subsection (1) of this section; or
(b) The verified entity, insurance company or
surplus lines broker fails to demonstrate that the deficiency has been
corrected in accordance with subsection (5) of this section.
Section 6. Listing of
Verified Risk Location Systems. The department shall post a listing of verified
risk location systems on its Web site. The listing shall include:
(1) The name of the verified risk location
system;
(2) The effective date of
the order of verification;
(3) The
expiration date of the order of verification; and
(4) The date the order of verification was
revoked, if applicable.
Section
7. Incorporated by Reference.
(1)
The following material is incorporated by reference:
(a) "Application for Verification of Risk
Location System or Program", 11/2008; and
(b) "Verification Data Manual",
1/2009.
(2) This
material may be inspected, copied, or obtained, subject to applicable copyright
law, at the Department of Insurance, 215 West Main Street, Frankfort, Kentucky
40601, Monday through Friday, 8 a.m. to 4:30 p.m. This material is also
available on the department's internet Web site at:
http://insurance.ky.gov.
STATUTORY AUTHORITY:
KRS
91A.0806(1), EO
2008-507