| PRESIDENT ’ S PAGE |
Kansas Self-Insured Pools
Not a Level Playing Field
M ost agencies have competed or will compete with pools for business . It seems to be difficult to do this effectively . The reason is simple : Consumers do not understand the differences between an admitted insurance company and a pool . Without this knowledge , the consumer cannot make an informed decision . Our challenge is to provide them with the education to make the correct decisions for the business or entity they represent .
I do want to make a disclaimer regarding my experience with pools . I have only dealt with public entity pools . I have not competed against pools in the private sector .
There are major differences between an admitted insurance company and a pool . Municipal pools can assess their members if they do not have the funds to pay their claims . Also , the first two points below do not apply to Workers Compensation .
1 . The ability to assess has no limit or time frame . Pools can make multiple assessments for the same year , if necessary .
2 . Very limited regulation . The Kansas Insurance Department regulates by statute . Pools were formed under Chapter 12 which contains 15 statutes . Admitted insurance companies operate under Chapter 40 which contains more than 1,600 statutes . Approximately 50 of these statutes also apply to pools . One significant difference is that admitted insurance companies must have their policy language approved by the Kansas Insurance Department . Where as the Kansas Insurance Department is not required by statute to approve
SCOTT STRONG KAIA President
the policy language of a Pool issued policy . This means that if there is a coverage dispute with a Pool issued policy , the Insurance Department will not help the member of a pool .
3 . The Kansas Guaranty Fund does not apply to any Pool issued policies . The Guaranty Fund does apply to admitted insurance companies .
We are not given much time to make commissions or boards understand the differences between insurance from an admitted carrier or coverage offered by a pool . The discussion needs to be basic and broader than just a premium or coverage comparison . We all know the attention span in these meetings is very short and the point must be made quickly . The three points above are just a start . Our association has a white paper with much more information than this article can provide .
Pools are an option for most public entities , but they are not a perfect solution . Our job is make sure our customers or potential clients understand the difference .
The playing field is not level . It is not intended to be . The number of applicable statutes tells that story , but one of those statutes in Chapter 12 simply states , “ Pools are not Insurance .”
Contact Scott at sstrong @ strongsinsurance . com , or call KAIA at ( 800 ) 229-7048 .
2 KANSAS INSURANCE AGENT & BROKER | May - June 2018 |