Kentucky

The 1996 law requires registration and proof of financial assurance with the Department of Insurance. One of the few states to have regulations or rules adopted pursuant to the law. The Kentucky regulation principally deals with the details of the filing requirements. There are three options for financial assurance (somewhat similar to NAIC model).  One is $100M net worth; the second is  proof of (re)insurance; the third is a performance bond. The bond may be a flat $50,000.00 or 25% of "revenues" (note: fairly left open to assume gross or net), whichever is greater. The issue would be if a provider chose or needs to rely upon the 25% bond.  The regulation then requires advance filing of revenues for the previous year as well as projected for the current year (as opposed to being subject to later examination under a confidential disclosure). This registration information would be open to public access and members may not wish to disclose. In 1998, Department legal counsel agreed it presents a bona fide legal question whether the regulation goes beyond the authority granted in the statute. The status has not been updated. One option may be to  simply file the bond without supplying revenue information and wait for DOI to request and supply only as confidential information.

304.5-070 Casualty insurance defined.
(1) "Casualty insurance" includes:

(a) Vehicle insurance. Insurance against loss of or damage to any land vehicles or aircraft or any draft or riding animal or to property while contained therein or
thereon or being loaded or unloaded therein or therefrom, from any hazard or
cause, and against any loss, liability, or expense resulting from or incidental to
ownership, maintenance, or use of any such vehicle, aircraft, or animal;
together with insurance against accidental injury to individuals, irrespective of
legal liability of the insured, including the named insured, while in, entering,
alighting from, adjusting, repairing, cranking, or caused by being struck by a
vehicle, aircraft, or draft or riding animal, if the insurance is issued as an
incidental part of insurance on the vehicle, aircraft, or draft or riding animal;
(b) Liability insurance. Insurance against legal liability for the death, injury, or
disability of any human being, or for damage to property; and provision of
medical, hospital, surgical, disability benefits to injured persons and funeral and
death benefits to dependents, beneficiaries, or personal representatives of
persons killed, irrespective of legal liability of the insured, when issued as an
incidental coverage with or supplemental to liability insurance;
(c) Workers' compensation and employer's liability. Insurance of the obligations
accepted by, imposed upon, or assumed by employers under law for death,
disablement, or injury of employees;
(d) Burglary and theft. Insurance against loss or damage by burglary, theft,
larceny, robbery, forgery, fraud, vandalism, malicious mischief, confiscation, or
wrongful conversion, disposal or concealment, or from any attempt at any of
the foregoing; including supplemental coverage for medical, hospital, surgical,
and funeral expense incurred by the named insured or any other person as a
result of bodily injury during the commission of a burglary, robbery, or theft by
another; also insurance against loss of or damage to moneys, coins, bullion,
securities, notes, drafts, acceptances, or any other valuable papers and
documents, resulting from any cause;
(e) Personal property floater. Insurance upon personal effects against loss or
damage from any cause;
(f) Glass. Insurance against loss or damage to glass, including its lettering,
ornamentation, and fittings;
(g) Boiler and machinery. Insurance against any liability and loss or damage to
property or interest resulting from accidents to or explosions of boilers, pipes,
pressure containers, machinery, or apparatus, and the inspection of and
issuance of certificates of inspection upon boilers, machinery, and apparatus of
any kind, whether or not insured;
(h) Leakage and fire extinguishing equipment. Insurance against loss or damage to any property or interest caused by the breakage or leakage of sprinklers, hoses, pumps and other fire extinguishing equipment or apparatus, water pipes or containers, or by water entering through leaks or openings in buildings, and
insurance against loss or damage to sprinklers, hoses, pumps, and other fire
extinguishing equipment or apparatus;
(i) Credit. Insurance, other than mortgage guaranty insurance, against loss or
damage resulting from failure of debtors to pay their obligations to the insured;
(j) Malpractice. Insurance against legal liability of the insured, and against loss,
damage, or expense incidental to a claim of such liability, and including
medical, hospital, surgical, and funeral benefits to injured persons, irrespective
of legal liability of the insured, arising out of the death, injury, or disablement
of any person, or arising out of damage to the economic interest of any person,
as the result of negligence in rendering expert, fiduciary, or professional
service;
(k) Elevator. Insurance against loss of or damage to any property of the insured, resulting from the ownership, maintenance, or use of elevators, except loss or damage by fire, and the inspection of and issuance of certificates of inspection upon, elevators;
(l) Congenital defects. Insurance against congenital defects in human beings;
(m) Livestock. Insurance against loss of or damage to livestock from any cause;
(n) Entertainments. Insurance indemnifying the producer of any motion picture,
television, radio, theatrical, sport, spectacle, entertainment, or similar
production, event, or exhibition against loss from interruption, postponement,
or cancellation thereof due to death, accidental injury, or sickness of
performers, participants, directors, or other principals;
(o) Failure of certain institutions to record documents. Insurance indemnifying
against loss from failure or omission to record as public records, liens of any
kind upon personal property, given, held, delivered, or possessed as security or
collateral for loans, advances, debts, or obligations of all kinds;
(p) Automobile guaranty. Insurance of the mechanical condition or freedom from defective or worn parts of motor vehicles, other than as provided by manufacturer's warranty. Provided, however, the making of a contract covering only defects in material and workmanship in exchange for a
separately stated charge where it is merely incidental to the business of selling
or leasing motor vehicles, shall not be deemed insurance, provided, that the
maker of the contract has an insurance policy with an authorized motor vehicle
insurer as defined in KRS 304.1-100 to assure the performance of the duties of
the maker created by each on all of the contracts made by the maker. In the
event that the maker of the contract is unable to perform the duties imposed
thereby, the purchaser of the contract shall then be considered a policyholder
of the insurer. The policy shall include a loss payee endorsement that provides
coverage to any lending institution as its interest may appear. In addition, the
contract shall conspicuously state the name and address of the licensed
underwriting insurer and contain a statement that the holder shall be entitled to
make a direct claim against that insurer upon the failure of the maker to pay
any claim within sixty (60) days after proof of loss has been filed with the
maker. The requirements that the maker of the contract have an insurance
policy with an authorized motor vehicle insurer as defined in KRS 304.1-100
shall not apply where the maker is a manufacturer, distributor, or importer of
motor vehicles. As used in this paragraph, the term "maker" shall include a
warranty service company which issues automobile guaranties through a motor
vehicle dealer, in which the motor vehicle dealer is not an obligor under the
contract. The commissioner is authorized to promulgate regulations to
interpret this paragraph; and

(q) Miscellaneous. Insurance against any other kind of loss, damage, or liability properly a subject of insurance and not within any other kind of insurance as defined in this subtitle, if the insurance is not disapproved by the commissioner as being contrary to law or public policy. A service contract to repair, replace, or maintain consumer products shall not be insurance, if the maker of the service contract registers with the commissioner and provides:

1. Evidence of a sufficient net worth, as determined by the commissioner, to
assure the performance of the duties of the maker created by all of the
contracts made by the maker; or

2. Evidence of an insurance policy or performance bond with an authorized
insurer as defined in KRS 304.1-100, to assure the performance of the
duties of the maker created by all of the service contracts made by the
maker.

As set forth in subparagraph 2. of this paragraph, if the maker of the service
contract is unable to perform the duties imposed thereby, the purchaser of the
service contract shall then be considered a policyholder of the insurer. The
service contract shall conspicuously state the name and address of the licensed
underwriting insurer and contain a statement that the holder shall be entitled to
make a direct claim against the insurer upon the failure of the maker to pay any
claim within sixty (60) days after the claim has been filed with the maker. The
requirements of this paragraph shall not apply where the maker is a
manufacturer of consumer products. If the maker of the service contract
registers with the commissioner and subsequently determines that the
information submitted pursuant to subparagraph 1. of this paragraph no longer
reflects a sufficient net worth as determined by the commissioner, to assure the performance of the duties of the maker created by all of the contracts made by the maker, the maker shall notify the commissioner of the change in
circumstances. Each registration filing with the commissioner shall be filed
within thirty (30) calendar days in advance of the selling of service contracts to
repair, replace, or maintain consumer goods. The commissioner is authorized
to promulgate administrative regulations pursuant to KRS Chapter 13A to
effectuate this paragraph.

(2) Provision of medical, hospital, surgical, and funeral benefits and of coverage against accidental death or injury, as incidental to and part of other insurance as stated under paragraphs (a) (vehicle), (b) (liability), (d) (burglary), (g) (boiler machinery), (j) (malpractice), and (k) (elevator) of subsection (1) of this section shall for all purposes be deemed to be the same kind of insurance to which it is so incidental, and shall not be subject to provisions of this code applicable to life and health insurances.

Effective: July 15, 1996
History: Amended 1996 Ky. Acts ch. 291, sec. 1, effective July 15, 1996. – Amended 1994 Ky. Acts ch. 375, sec. 1, effective July 15, 1994. -- Amended 1986 Ky. Acts ch. 146, sec. 1, effective July 15, 1986. -- Created 1970 Ky. Acts ch. 301, subtit. 5, sec. 7, effective June 18, 1970.

None at this time

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