Kansas Insurance Commissioner outlines fee cuts, consumer recoveries during budget review

Commissioner Vicki Schmidt and department staff summarized the Kansas Department of Insurance budget and several policy items to the Committee on General Government Budget, stressing the department is fee-funded and describing recent and proposed reductions to licensing and other fees.

The department’s budget presentation, delivered by Arianna Waddell of the Legislative Research Department and comptroller Charlotte Dawbert, showed the agency’s FY2025 revised estimate at about $44,000,000, all from special revenue funds, and 135 FTE positions. Waddell told the committee the FY2025 revised request is an increase of about $3.9 million (9.8 percent) over the FY2024 legislatively approved amount, driven largely by increased distributions from the State Firefighters Relief Fund and higher contractual spending related to building rent and consulting services.

Why it matters: the department is 100 percent fee-funded in the presented budgets, and the commissioner and staff said past and proposed legislative reductions to fees have substantially reduced department revenue while the agency continues regulatory and consumer-protection work.

Key details and context: the department said the State Firefighters Relief Fund payments are a primary driver of year-to-year changes; statute requires insurers that write fire and lightning insurance to pay 2 percent of annual premiums to the Kansas Department of Insurance for that fund, and the agency estimates distribution to 553 Firefighter Relief Associations in FY2025. Dawbert said contractual-service increases include one-time building improvements (notably repaving a parking lot and landscaping) and higher rent beginning January 1, 2025. The revised estimate also included a reduction of roughly $166,000 in salaries and benefits due to restructuring and vacancies and a net decline of about 0.3 FTE driven by reorganization of examination fees.

Commissioner Schmidt described the department’s consumer-assistance work and recent recoveries: she said consumer assistance recovered approximately $11.8 million in one recent year and that the department’s use of the NAIC life-insurance policy locator led to about $25 million in recovered benefits in the most recent year cited; Schmidt said total recoveries since she took office amount to roughly $144 million. Schmidt and Dawbert also discussed recruitment challenges for technical staff, noting the department has increased starting salaries and used contractors where necessary.

Legislation and proposals described: Schmidt and Dawbert identified several pieces of legislation that would reduce revenue to the department if enacted, which the department supports as a way to reduce the fund balance. They named: - Senate Bill 37 (2021) — cited as the previous overhaul to producer licensing that reduced department revenues; referenced during the presentation as background for revenue declines. - Proposed reductions including elimination of producer appointment renewal fees (estimated revenue loss cited at about $6.5 million) and a proposal to reduce retained premium taxes to 1.8 percent (to be considered by the Tax Committee). - Senate Bill 24 (identified in testimony) — described as anticipated to reduce revenue by nearly $6,000,000. - Senate Bill 32 (identified in testimony) — described as reducing the portion of premium tax retained by the department by about $1,600,000. - House Bill 2047 (identified in testimony) — would establish an online real‑time auto insurance verification system and was estimated in testimony to cost up to $1,000,000 per year.

Commissioner Schmidt also previewed an insurance savings account (ISA) concept for tax-deductible savings to pay premiums or deductibles that she said is modeled on child-adoption savings accounts; she described suggested maximum annual contributions (for individuals $6,000; married filing jointly $12,000; businesses $25,000) but framed the item as a legislative proposal that would be referred to the appropriate committees.

Committee action: later in the meeting the committee voted to concur with the Legislative Budget Committee recommendation on the Kansas Department of Insurance budget for FY2025 and FY2026. The committee recorded no amendment to the insurance budget during the meeting.

Ending: department staff said they would return to answer further budget questions as needed and reiterated the agency’s emphasis on efficiencies while continuing consumer assistance.