KRS 304.3-725: Completion and review of beta test -- Issuance of extended no -action

letter or notice declining to issue extended letter -- Safe harbor of extended

letter -- Use of innovation and conduct permitted -- Hearing -- Publication of

extended letter on department's Web site.

(1) (a) Within sixty (60) days of completion of the beta test, unless the time period is

extended up to thirty (30) days upon notice from the commissioner, the

commissioner shall issue an extended no -action letter or a notice dec lining to

issue an extended no-action letter.

(b) The participant may continue to employ the insurance innovation pursuant to

the terms and conditions of the limited letter during the period between the

completion of the beta test and the issuance of eithe r an extended no -action

letter or a notice declining to issue an extended no-action letter.

(2) The commissioner shall review the results of the beta test to determine whether the

innovation satisfies the following requirements:

(a) The data presented demo nstrates that the innovation's utility was meritorious

of an extension;

(b) Regulatory and statutory barriers prevent continued use of the innovation

within this Commonwealth;

(c) The innovation provided a benefit to Kentucky consumers; and

(d) The issuance of an extended no-action letter:

1. Presents no risk of unreasonable harm to consumers or the marketplace;

and

2. Serves the public interest.

(3) Upon review of the results of the beta test, the commissioner shall, in his or her

discretion, issue one (1) of the following:

(a) If the commissioner determines that the innovation fails to satisfy any of the

requirements under subsection (2) of this section, he or she shall:

1. Issue a notice declining to issue an extended no-action letter;

2. Describe in the notice the reasons for the declination;

3. Notify the participant for the innovation of the notice; and

4. Publish the notice on the department's Web site; or

(b) If the commissioner determines that the innovation satisfies the requirements

under subsection (2) of this section, he or she shall issue an extended no -

action letter. An extended no -action letter issued by the commissioner shall

include:

1. A description of the insurance innovation and the specific conduct

permitted by the extended letter in sufficient detail to enable any person

to use the innovation or a product, process, method, or procedure not

substantially different from the innovation within the safe harbor of the

extended letter;

2. Notice of any certificate of authority, l icense, or permit the

commissioner determines is necessary to use, sell, or license the

innovation, or make the innovation available, in this Commonwealth;

3. An expiration date not greater than three (3) years following the date of

issuance;

4. Notice that the extended no-action letter may:

a. Only be modified by:

i. Promulgation of an administrative regulation, if the safe

harbor addresses a requirement established by administrative

regulation; or

ii. An act of the General Assembly; and

b. Be rescinded pr ior to its expiration if the commissioner receives

complaints and determines continued activity poses a risk of harm

to consumers;

5. Clarification of required procedures related to the issuance and

cancellation of any policies of insurance, if applicable, due to the

expiration period; and

6. Notice that, upon expiration, all persons relying on the extended no -

action letter shall cease and desist operations related to the innovation

unless changes have been made to Kentucky law to permit the

innovation by:

a. The promulgation of an administrative regulation, if the safe

harbor address a requirement established by administrative

regulation; or

b. An act of the General Assembly.

(4) A hearing on a notice of declination may be requested in accordance with KRS

304.2-310.

(5) An extended no -action letter issued by the commissioner pursuant to this section

shall be:

(a) Exempt from the application of KRS 13A.130; and

(b) Published on the department's Web site.