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Minutes for SB17 - Committee on Insurance
Short Title
Enacting the fair access to insurance requirements plan act.
Minutes Content for Thu, Feb 16, 2017
Chairperson Vickrey opened the hearing on SB 17.
Jason Thompson, Senior Assistant Revisor of Statues, briefly explained the bill. He said the purpose of the bill was to make basic property and casualty insurance available to individuals unable to procure such coverage through the voluntary market. It provided for the equitable distribution and placement of risk for the participating member insured. The bill superseded a previous FAIR plan statute (Attachment 1)
Cark Shultz testified in favor of the bill. He said the bill related to a previous statute enacted in 1951. It made sure property owners unable obtain insurance through the voluntary market could obtain coverage.He said it was a valuable program for Kansas residents who could not find insurance and SB 17 updated the current statute (Attachment 2)
Chairperson Vickrey opened the discussion.
Representative Neighbor asked if there was already a statute in place.
Mr. Shultz confirmed there was. He said the bill provided a framework to approve forms, and updated the language for clarity.
Mr. Representative Neighbor asked why a real estate owner could not obtain insurance through the voluntary market.
Mr. Schultz explained normally the properties were run down or were located in a blighted neighborhood. The property owner may not have the funds to, for example, replace a roof or install siding. The owner would not be able to sell the house without insurance, unless to a cash buyer. Under the FAIR plan several insurance companies joined to combine the risk and provide coverage.
Representative Neighbor asked if the owner could purchase insurance through the voluntary market if they brought the property into compliance.
Mr. Shultz said that was correct and would be better because FAIR plan coverage was more expensive.
Representative Kelly added he used FAIR insurance for a foreclosed property he owned until he could install a new roof, and that it worked well.
Representative Bishop asked for clarification of a FAIR pool and how they shared risk. She asked if the Department of Insurance issued the policy.
Mr. Shultz said in the past Company A would issue a policy and the other companies in the pool agreed to share risk. What the bill clarified was the policy was issued from a FAIR plan itself after the group brought the policy to the department for approval.
Representative Smith asked if insurance company participation was voluntary.
Mr. Shultz confirmed it was voluntary, the insurers saw the value of coverage but needed a way to share the risk.
Chairperson Vickrey asked if they were any proponents to the bill. There were none. He closed the hearing on SB 17.
