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Senate committee advances SB21 requiring separate fiduciary accounts, clarifies bankruptcy notice timing
Summary
The Kansas Senate committee voted to pass Senate Bill 21 with an amendment that defines when third‑party administrators must notify the insurance commissioner of bankruptcy filings; the committee also discussed separation of employer funds held by administrators.
The Senate Committee on Financial Institutions and Insurance on an unspecified date voted to pass favorably Senate Bill 21 as amended, a bill that requires third‑party administrators to maintain separate fiduciary accounts for individual payers and to disclose certain bankruptcy filings to the insurance commissioner.
Eileen, the committee reviser, told the panel: "Senate Bill 21 is the bill that required third party administrators maintain separate fiduciary accounts for individual payers and not commingle funds that they hold on behalf of multiple payers." That provision, the reviser said, is intended to keep funds that belong to one employer distinct from funds that belong to another when administrators manage claims for self‑funded or level‑funded employers.
The committee adopted an amendment from Senator Warren that replaced the word "immediately" in a notice requirement with a defined phrase. Senator Warren described the change: the bill as amended would require an administrator to "disclose to the commissioner any bankruptcy petition at the time such filing is made." The amendment was moved by Senator Warren and seconded by Senator Fagg and was approved by voice vote.
Senator Gossage moved that the committee pass SB21 favorably as amended, noting the policy rationale: "it's very important to keep those separate" so that one employer's funds are not intermingled with another's. The motion to report the bill favorably as amended was seconded by Senator Arderbright and approved by voice vote. The committee did not record a roll‑call tally in the transcript.
Why it matters: Supporters said separate fiduciary accounts protect employers and plan participants by preventing commingling of funds. The bankruptcy‑related notice requirement gives the insurance commissioner a prompt opportunity to evaluate administrator insolvency risks.
What the amendment does: The Warren amendment replaces an undefined timetable for notice with specific statutory language — "at the time such filing is made" — clarifying when an administrator must notify the commissioner of a Chapter 9 or Chapter 11 bankruptcy filing by or on behalf of the administrator.
What the transcript shows and does not show: The committee transcript records voice votes for the amendment and for final passage; it does not include a roll‑call vote or numeric tallies. The reviser referenced "chapter 9 and chapter 11 of the bankruptcy code"; the bill text as described would require disclosure to the commissioner when those bankruptcy petitions are filed.
The committee set SB21 aside after the vote and moved on to other business.
