State agency faces a troublesome financial issue that could cause regulatory problems
The Kansas Insurance Department has encountered a serious financial problem. A trend in which state legislators would waive the fees that insurance companies must pay the Insurance Department has left the agency’s regulatory fund empty. Now, the agency is seeking approval from the Kansas Legislature to increase the fees that insurers must pay to operate in the state. Senate Bill 322 has been introduced in order to provide the agency with the power to increase these fees when necessary.
Agency seeks to raise the fees that insurance companies must pay
The Kansas Insurance Department has expressed concern over its long-term financial situation. According to agency officials, the regulatory fund will have only $200,000 left by December of this year. While not all insurance companies managed to avoid paying regulatory fees, the agency is no longer in a place financial where it can rely on the potential for companies possibly paying these fees. As such, raising rates may be necessary in order to ensure that the Insurance Department can continue regulating the market as it is intended to do so.
_________________________Random Quotes to Remember ~ “The best investment is in the tools of one’s own trade.” – Benjamin Franklin
Regulatory fund is diminished as lawmakers divert funds to cover state budget problems
The Insurance Department had $24 million in its regulatory fund last year, but legislators diverted the majority of these funds to other purposes. Another $5 million of the agency’s funds are meant to be diverted again in 2014, with another $3 million being diverted in 2015. Much of this money was diverted in order to reduce the financial strain of the state’s budget. In 2012, income tax cuts were approved in Kansas, shrinking the state’s budget considerably.
Insurance companies may have to pay higher fees to Insurance Department
Currently, state law limits the fees that insurance companies must pay the Kansas Insurance Department to $25,000. If Senate Bill 322 is successful, the agency would be able to raise the fees that insurers must pay, but a single fee increase will not be able to exceed 125% of the fees that have been approved by the state Legislature.