Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
91A.080,
91A.0804,
91A.0810,
304.3-150
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
91A.0810 requires an insurance company to
disclose the amount of local government premium taxes charged to an insured and
identify the taxing jurisdiction.
KRS
91A.080 provides the Department of Insurance
with general oversight over the local government premium tax system and express
authority to promulgate administrative regulations providing for a reasonable
collection fee and the accounting and reporting procedures related to the
collection and reporting of the license fees, taxes, and collection fees. HB
524 of the 2008 Regular Session, which included new sections of Chapter 91A and
required disclosures, reinforced the Department's authority by providing a two
year period for assessments to pay for the Department's costs in administering
the various local government premium tax requirements. This administrative
regulation sets minimum standards for the disclosure of local government taxes
and collection fees to policyholders.
Section
1. Definitions.
(1) "Collection
fee" means the fee established in
KRS
91A.080(4).
(2) "Insurance company" means:
(a) An entity holding a certificate of
authority in accordance with
KRS
304.3-150; and
(b) A surplus lines broker licensed in
accordance with
KRS
304.10-120.
(3) "Local government tax" or "tax" means the
license fee or tax imposed by a local government in accordance with
KRS
91A.080, except the collection fee.
Section 2. Disclosure of Local
Government Tax.
(1) An insurance company shall
disclose to the policyholder the amount of local government tax being charged
to the policyholder and the taxing jurisdiction to which the tax is
due.
(2) Disclosure of a local
government tax shall not be required if the insurance company does not charge
the tax to the policyholder.
(3)
The disclosure shall:
(a) Itemize:
1. The amount of tax and any collection fee
charged to the policyholder for each taxing jurisdiction; and
2. The name or abbreviation clearly
identifying each corresponding taxing jurisdiction to which the tax is due;
and
(b) Be provided to
the policyholder:
1. For newly issued
policies, on the:
a. Policy;
b. Declaration sheet; or
c. Initial billing; and
2. For renewed policies, on the:
a. Renewal certificate upon renewal of the
policy; or
b. Billing for each
period for which premium or additional premium is charged to a policy-holder by
the insurance company.
(4)
(a) If
local government tax is owed to multiple taxing jurisdictions, the disclosure
required in subsection (3) of this section shall list separately each taxing
jurisdiction to which tax is owed.
(b) If a credit of a city tax is applied to a
county tax pursuant to
KRS
91A.080(12), and the result
is that no tax is owed to the county, the disclosure may include the county in
the itemization of taxing jurisdictions required in subsection (3) of this
section.
(5) If a
collection fee is included in the amount charged to the policyholder, the
disclosure shall state that the amount includes the tax and a collection
fee.
(6)
(a) An insurance company may provide the
disclosure on a notice separate from either the renewal certificate or billing
if providing the disclosure on the renewal certificate or billing would cause
the disclosure to be illegible due to type size or other space
considerations.
(b) If the
disclosure is provided on a separate notice, the insurance company shall
provide the disclosure to the policyholder at the same time and in the same
manner as the insurance company provides the renewal certificate or
billing.
Section
3. Collection Fee.
(1) An
insurance company may charge to and collect from an insured a collection fee in
addition to a local government tax.
(2) An insurer may charge up to the maximum
collection fee established in
KRS
91A.080(4).
(3) If an insurance company is owed a refund
or credit on the local government premium tax charged to a policyholder, any
collection fee received by the insurance company shall be returned to the
policyholder on a pro rata basis.
STATUTORY AUTHORITY:
KRS
91A.080,
91A.0810
