KRS 91A.0806: Verification of risk location systems and programs -- Administrative

regulations.

(1) Before January 1, 2009, the Department of Insurance shall by administrative

regulation establish criteria for the verification of risk location systems and

programs. The criteria for verification shall include but not be limited to a

requirement that the municipal and county boundary information of a risk location

system or program uses the municipal and county boundary data available from the

Commonwealth Office of Technology that is based upon municipal and other filings

with the Secretary of State.

(2) Upon application of a vendor or insurance company for verification and payment of

a two thousand five hundred dollar ($2,500) application fee to the Department of

Insurance, the department shall test the risk location system or program to

determine whether the program shall be verified as meeting the criteria promulgated

in the administrative regulation required by subsection (1) of this section. The

Department of Ins urance shall maintain a list of verified risk location systems or

programs and shall make the list available to insurance companies and the public.

The verification of a risk location system or program shall remain valid for a period

of three (3) years unless revoked by the Department of Insurance.

(3) The Department of Insurance shall, by administrative regulation, provide an option

for an insurance company to apply for a written order by the commissioner of the

Department of Insurance that the insurance c ompany has a limited number of risk

locations, not exceeding two hundred (200), in the Commonwealth that may be

located by other means with an equivalent level of accuracy. Such an order shall

remain valid for a period of three (3) years and as long as the insured risk of the

insurance company does not exceed two hundred (200) in any calendar year.

(4) An insurance company shall be deemed to perform due diligence in the location of

risks if the insurance company employs a verified risk location system or pr ogram

in its collection of a tax or fee imposed pursuant to KRS 91A.080 and:

(a) Expends reasonable resources to accurately and reliably implement such

method to collect and to remit the proper tax or fee due to the local

government that has imposed a tax or fee pursuant to KRS 91A.080;

(b) Maintains adequate internal controls to correctly include in its database of

policyholders the location of the risk insured, in the proper address format, so

that matching with the database is accurate;

(c) Corrects erro rs in the assignment of addresses to local taxing jurisdictions

within the next renewal period after the insurance company discovers the

errors, and, if applicable, reports such errors to the provider of the risk

location system or program; and

(d) In the case of insurance companies that issue policies covering multiple

locations, maintains adequate internal controls and employs an accurate and

consistent methodology to correctly prorate multilocation policies to assign

risks to appropriate addresses or, if a street address in unavailable, through

another appropriate identifier of physical location, and tax jurisdictions.

(5) Upon the presentation of proof that an insurance company has complied with the

provisions of subsection (4) of this section or has rec eived an order of the

Department of Insurance under the administrative regulation promulgated pursuant

to subsection (3) of this section, the insurance company:

(a) Shall not be subject to penalties for failure to comply with KRS 91A.080 that

may otherwise be imposed pursuant to KRS Chapter 304 or KRS 91A.080(7)

for failure of a risk location system to properly locate risks;

(b) Shall be held harmless from any liability including but not limited to liability

for penalties, except for the tax that is due and interest on the tax that an

insurance company has failed to timely remit, that would otherwise be due

solely as a result of a failure to properly collect and remit the tax or fee levied

pursuant to KRS 91A.080 because of the failure of a risk location sys tem to

properly locate risks; and

(c) Shall not be subject to penalties under KRS 91A.0804(3)(c).

(6) On and after January 1, 2010, an insurance company shall use a verified risk

location system or program during the calendar year if the total policies iss ued and

renewed by the insurance company in Kentucky in the preceding calendar year is

more than two thousand (2,000).