Insurance Committee advances three bills, including a cut to the premium tax to 1.98%

The House Committee on Insurance on an undisclosed date voted to advance three Senate bills: SB 20 (changes to board appointments), SB 24 (fee-setting and publication changes) and SB 32 (a small reduction in the insurance company premium tax).

SB 32 drew the most sustained discussion. The bill would lower the statutory premium tax on insurance companies from 2% to 1.98% and would discontinue the current statutory requirement that 1% of taxes collected be transferred to the Insurance Department Service Regulation Fund. The bill also adds a record-retention provision requiring returns and reports to be preserved for three years and thereafter until the commissioner orders destruction.

Why it matters: The change would reduce the amount of money the Kansas Department of Insurance (KDI) retains in its fee fund each year. Committee testimony from the department estimated the immediate annual reduction in department receipts at about $1,770,000. The department said its ending balance in the Insurance Department Service Regulation Fund was roughly $72,000,000 at the time of the hearing, and that other recent or pending changes (including fee reductions enacted earlier and provisions in SB 24) are intended to reduce that fund balance over time.

Bill details and evidence

SB 32: Premium tax and service-regulation fund Eileen (the legislative reviser's staff member who summarized the bills) told the committee that Section 1 of SB 32 would amend K.S.A. 41-12 (Insurance Department Service Regulation Fund) to strike the requirement that 1% of taxes be transferred to that fund, and Section 2 would amend K.S.A. 42-52 to lower the premium tax rate from 2% to 1.98%.

Eric Turk of the Kansas Department of Insurance, testifying as a proponent, summarized the department's view: "It's a very simple bill. It lowers the premium tax rate in Kansas from 2% to 1.98." Turk explained that because the department currently retains 1% of the 2% under statute, eliminating that retention while reducing the statutory rate to 1.98% would leave General Fund receipts largely unchanged while reducing the department's own fee fund receipts by about $1,770,000 annually.

Committee members asked for more fiscal detail. Representative Weicker raised a calculation question, noting that a $1,770,000 reduction implied very large gross collections; Turk replied that the department would provide a breakdown and projections, and said the department's ending balance was about $72 million and that the commissioner had been taking steps to reduce that balance.

The committee accepted an amendment (moved by Representative Neighbour and seconded by Representative Haskins) that changes publication language from "statute book" to the Kansas Register and then voted to pass SB 32 out of committee as amended.

SB 24: Fee ceilings and commissioner authority Eileen summarized SB 24 as authorizing the commissioner to set certain fees up to the statutory ceiling and requiring publication of the fees in the Kansas Register by December 1 each year. The bill converts statutorily set flat fees into maximum amounts (ceilings) and lets the commissioner set the actual charge up to that ceiling, then publish the amounts.

Representative Wagner asked whether the change would allow the department to raise fees up to the ceiling; Eileen and others clarified that the statute would set the ceiling and the commissioner could set amounts up to that ceiling (the committee discussion noted both downward and potential upward movement within the statutory maximum). Representative Naber moved SB 24 out of committee as amended after the committee adopted a similar publication-date amendment (move to Kansas Register).

SB 20: Board composition and meeting frequency Eileen explained SB 20 (the Senate counterpart to House Bill 2045), which would allow the commissioner to reduce the number of members appointed to certain boards, set term transition dates for existing committee members, and remove the requirement that the Committee on Surety Bonds and Insurance meet monthly by changing that to "on the call of the chair." The committee adopted the same Kansas Register publication amendment and moved SB 20 out as amended.

Votes at a glance - Approval of minutes (Feb. 10, Feb. 14 and Feb. 17): Motion to approve moved by Representative Naber; seconded by Representative Miller; voice vote, minutes approved. - Amendment (publication change to Kansas Register) for SB 20: Mover: Representative Neighbour; Second: Representative Chauncey; voice vote, amendment adopted. Final motion to pass SB 20 as amended: Mover: Representative Neighbour; Second: Representative James; voice vote, SB 20 passed out as amended. - Amendment (publication change to Kansas Register) for SB 24: Mover: Representative Neighbour; Second: Representative Chauncey; voice vote, amendment adopted. Final motion to pass SB 24 as amended: Mover: Representative Naber; Second: Representative Bergkamp; voice vote, SB 24 passed out as amended. - Amendment (publication change to Kansas Register) for SB 32: Mover: Representative Neighbour; Second: Representative Haskins; voice vote, amendment adopted. Final motion to pass SB 32 as amended: Mover: Representative Neighbour; Second: Representative Williams; voice vote, SB 32 passed out as amended.

Discussion vs. decision Committee discussion for SB 32 included fiscal questions and requests for a projection of how the fee fund balance would look in future years; the department agreed to provide further breakdowns and projections. The committee's actions on all three bills were formal: each bill was amended (publication language) and passed out of committee as amended. The committee did not make final law; the bills next proceed to conference or floor processes as applicable.

Context and next steps Committee members and the department said recent and proposed fee changes (including SB 24 and prior legislative action) have been designed to reduce the department's fee fund balance. Committee leadership indicated several similar bills would be considered at the committee's next meeting.

Ending The committee closed the hearing on SB 32 and said it would take up additional bills at its next scheduled meeting; committee members asked the department for more detailed fiscal projections on fee revenues and fund balances to inform future decisions.