KRS 304.11-040: Service of process on unauthorized persons doing acts of insurance

business in Kentucky -- Requirements for defense of action -- Reports to

commissioner required.

(1) No person or insurer shall directly or indirectly perform any of the acts of doin g an

insurance business as defined in KRS 304.11 -020 to 304.11 -050, inclusive, except

as provided by and in accordance with the specific authorization by statute.

However, should any unauthorized person or insurer perform any act of doing an

insurance business as set forth in KRS 304.11 -020 to 304.11-050, inclusive, it shall

be equivalent to and shall constitute an irrevocable appointment by such person or

insurer, binding upon the person or insurer, his or her executor or administrator, or

successor in interest if a corporation, of the Secretary of State or his or her successor

in office to be the true and lawful attorney upon whom may be served all lawful

process in any action, suit, administrative hearing or proceeding in any court arising

out of doing an insurance business in this state or instituted by or on behalf of an

insured or beneficiary arising out of any such acts of doing an insurance business.

Any act of doing an insurance business by any unauthorized person or insurer shall

be signification of its agreement that such service of process is of the same legal

force and validity as personal service of process in this state upon such person or

insurer.

(2) Service of process in any action may be made by service upon the Secretary of State

as provided in KRS 304.3-230.

(3) Service of process in any such action, suit, or proceeding shall in addition to the

manner as provided in KRS 304.11 -020 to 304.11-050, inclusive, be valid if served

upon any person within this state who, in this state on behalf of such insurer, is

soliciting insurance, making, issuing, or delivering any contract of insurance, or

collecting or receiving any premium, membership fee, assessment, or other

consideration for insurance, and if:

(a) A copy of such process is sent within ten (10) days thereafter by certified mail

by the plaintiff or plaintiff's attorney to the defendant at the last known

principal place of business of the defendant; and

(b) The defendant's receipt, or the receipt issued by the post office showing the

name of the sender of the letter and the name and address of the person to

whom the letter is addressed, and an affidavit of the plaintiff or plaintiff's

attorney showing a compliance herewith are filed with the clerk of the court in

which such action is pending on or before the date the defendant is required to

appear or within such further time as the court may allow.

(4) No plaintiff shall be entitled to a judgment by default under KRS 304.11 -020 to

304.11-050, inclusive, until the expiration of thirty (30) days from the date of the

filing of the affidavit of compliance.

(5) Nothing in subsections (1) to (5), inclusive, of this section shall limit or abridge the

right to serve any process, notice, or demand upon any insurer in any other manner

now or hereafter permitted by law.

(6) The Attorney General upon request of the commissioner may proceed in the courts

of this state or any other state or in any federal court or agency to enforce an order

or decision in any court proceeding or in any administrative proceedi ng before the

commissioner.

(7) Before any unauthorized person or insurer files or causes to be filed in any pleading

in any court action, suit or proceeding or in any notice, order, pleading, or process in

such administrative proceeding before the commiss ioner instituted against such

person or insurer, by services made as provided in subsections (1) to (5), inclusive,

of this section such person or insurer shall either:

(a) Deposit with the clerk of the court in which such action, suit, or proceeding is

pending, or with the commissioner in administrative proceedings before the

commissioner, cash or securities, or file with such clerk or commissioner a

bond with good and sufficient sureties, to be approved by the clerk or

commissioner in an amount to be fixe d by the court or commissioner

sufficient to secure the payment of any final judgment which may be rendered

in such action or administrative proceeding.

(b) Procure a certificate of authority to transact the business of insurance in this

state.

(8) The court in any action, suit, or proceeding in which service is made as provided in

subsections (1) to (5), inclusive, of this section may in its discretion, order such

postponement as may be necessary to afford the defendant reasonable opportunity to

comply wit h the provisions of subsection (7) of this section and to defend such

action.

(9) Nothing in subsection (7) of this section shall be construed to prevent an

unauthorized person or foreign or alien insurer from filing a motion to quash a writ

or to set aside service thereof made in the manner provided in subsections (1) to (5),

inclusive, of this section on the ground that such unauthorized person or insurer has

not done any of the acts enumerated in subsections (1) to (3), inclusive, of KRS

304.11-030.

(10) In an action against an unauthorized person or insurer upon a contract of insurance

issued or delivered in this state to a resident thereof or to a corporation authorized to

do business therein, if the person or insurer has failed for thirty (30) days aft er

demand prior to the commencement of the action to make payment in accordance

with the terms of the contract, and it appears to the court that such refusal was

without reasonable cause, the court may allow to the plaintiff a reasonable attorney

fee and i nclude such fee in any judgment that may be rendered in such action.

Failure of the person or insurer to defend any such action shall be deemed prima

facie evidence that its failure to make payment was without reasonable cause.

(11) Whenever the commissioner has reason to believe that insurance has been

effectuated by or for any person in this state with an unauthorized insurer the

commissioner shall in writing order such person to produce for examination all

insurance contracts and other documents evidencing insurance with both authorized

and unauthorized insurers and to disclose to the commissioner the amount of

insurance, name and address of each insurer, gross amount of premium paid or to be

paid and the name and address of the per son or persons assisting or aiding in the

solicitation, negotiation, or effectuation of such insurance.

(12) Every person investigating or adjusting any loss or claim on a subject of insurance

in this state shall immediately report to the commissioner ever y insurance policy or

contract which has been entered into by an insurer not authorized to transact such

insurance in this state.