What ’ s Old is New Again : Budget Woes Continue
2016 Legislative Wrap-up Report
What ’ s Old is New Again : Budget Woes Continue
F ollowing the longest Legislative Session in history last year , the 2016 edition was the shortest session in 42 years . While the last two session lengths were dramatically different , both shared one major thing in common : a massive state budget deficit . In the waning days of this session , the legislature had to address a nearly $ 400 million revenue shortfall . While there was discussion of imposing the state income tax on nonwage business income to increase revenues ( the full House even held a vote on the matter ), there was not sufficient support . Thus , in early May , the legislature passed a financial plan that balanced the books through account shuffling and cuts . The final budget bill redirects about $ 115 million in state sales tax intended for KDOT into the general fund , delayed payment of over $ 90 million to the state employees ’ pension fund , and allowed for Governor Brownback to make additional cuts to state government agencies . Facing a pending K-12 finance lawsuit before the Kansas Supreme Court , the legislature did include a provision that eliminated the potential for the Governor to make cuts to K-12 education through allotments . Ultimately , with his allotment authority , the governor made about $ 10 million in cuts to state agencies , slashed about $ 56 million to the state ’ s Medicaid program KanCare , and cut higher education by about $ 30 million .
2016 INSURANCE BILLS The requirement of K-12 schools to pool property & casualty insurance and change to minimum auto limits were the major pieces of legislation this Session . Here ’ s a recap of key insurance bills :
K-12 Pooling The House introduced a bill that established a school district-funded P & C pool and mandated participation by all school districts in the pool . The bill stemmed from the Alvarez & Marsal efficiency audit report . After an initial consideration of the recommendation , the House Education Budget Committee recommended that a bill be introduced . The bill was then referred to the House Insurance and Financial Institutions Committee but a hearing was never held .
Minimum Auto Limits A bill that increases from $ 10,000 to $ 25,000 the minimum motor vehicle liability insurance policy limit for property damage passed and was approved by the Governor . The bill calls for all limits to be reviewed again in 10 years . The increased minimum limit will be effective from and after January 1 , 2017 .
Where You Reside The KAIA introduced a bill to clarify the definition of “ residence premises .” The bill attempted to address a problem , arising from the definition on standard Insurance Services Office homeowner forms , that has popped up some courts which have held that there is no coverage if the named insured is not residing in the house at the time of the loss . There are many situations where the named insured may not actually be residing in the house at the time of the loss . For example where the named insured moves into a nursing home , where the named insured is on military duty , during the sale of a house where the named insured moves out before then new buyer assumes ownership , etc . The bill was met with concern by carriers which were unsure of possible unintended consequences . The KAIA will work with carriers over the interim to address their concerns .
Pool Audit Bill The full House rejected a motion to pass a bill to eliminate certain pool financial examinations / audits by the Kansas Insurance Department . The bill would have eliminated provisions directing the Insurance Commissioner to conduct an examination of the affairs and financial condition of municipal group-funded liability pools and group-funded workers compensation pools every five years . Instead , under the bill , the Commissioner would have been permitted to conduct these examinations as the Commissioner deems it necessary . Citing concerns with risks associated with pools , the KAIA opposed the bill and urged the legislature to retain the Commissioner ’ s independent oversight of the pools .
Affiliate Transfer of P & C Policies A bill enacting a new law to permit the transfer of insurance policies within a group of affiliated property and casualty insurance companies passed and was approved . The new law , effective July 1 , 2016 , would require , 30 days before the end of the existing insurance policy term , notice to the insured ’ s last known address and made available to the agent of record that the insurance policy
14 KANSAS INSURANCE AGENT & BROKER | MAY - JUNE 2016 |