| 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 |