{"data":{"id":"us-ky/krs-304.40-050","jurisdiction":"us-ky","citation":"KRS 304.40-050","heading":"Policies issued by association -- Cancellation -- Rate -- Nonprofit group","body":"retrospective rating plan -- Deficit -- Contributions by members.\n(1) All policies issued by the association shall be written for the term of one (1) year.\nThe directors of the association may elect to issue policies on an occurrence basis or\na claims made basis. No policy form shall be used by the association unless it has\nbeen filed with the commissioner and either (a) the commissioner has approved it,\nor (b) thirty (30) days  has lapsed and the commissioner has not disapproved it in\naccordance with KRS Chapter 304, Subtitle 14.\n(2) Cancellation of the association's policies shall be governed by the laws and\nregulations governing the cancellation of other policies of casualty i nsurance,\nexcept that the association may also cancel any of its policies in the event of\nnonpayment of any stabilization reserve fund charged, by mailing or delivering to\nthe insured at the address shown on the policy, written notice stating when not less\nthan ten (10) days thereafter cancellation shall be effective.\n(3) The rates, rating plans, rating rules, rating classifications and territories applicable\nto the insurance written by the association and statistics relating thereto shall be\nsubject to Cha pter 304, Subtitle 13 of the Kentucky Revised Statutes, giving due\nconsideration to the past and prospective loss and expense experience for medical\nmalpractice insurance written and to be written in this state, trends in the frequency\nand severity of loss es, the investment income of the association, and such other\ninformation as the commissioner may require. All rates shall be on an actuarially\nsound basis, giving due consideration to the group retrospective rating plan and the\nstabilization reserve fund, and shall be calculated to be self -supporting. The\ncommissioner shall make available to the association the loss and expense\nexperience of insurers previously writing medical malpractice insurance in this\nstate.\n(4) All policies issued by the association s hall be subject to a nonprofit group\nretrospective rating plan to be approved by the commissioner, under which the final\npremium for all policyholders of the association as a group will be equal to the\nadministrative expenses, loss and loss adjustment expe nses and taxes, plus a\nreasonable allowance for contingencies and servicing. Policyholders shall be given\nfull credit for all investment income, net of expenses and a reasonable management\nfee on policyholder supplied funds. The standard premium before ret rospective\nadjustment for each policy issued by the association shall be established on the basis\nof the association's rates, rating plans, rating rules, rating classifications, and\nterritories then in effect. The maximum final premium for all policyholder s of the\nassociation as a group shall be limited as provided in KRS 304.40 -060(4). Since the\nbusiness of the association is subject to the nonprofit group retrospective rating plan\nrequired by this subsection, there shall be a presumption that the rates fi led and\npremiums for the business of the association are not excessive.\n(5) The commissioner shall examine the business of the association as often as he or\nshe deems appropriate to assure that the group retrospective rating plan is being\noperated in a man ner consistent with this section. If he or she finds that it is not\nbeing so operated, he or she shall issue an order to the association, specifying in\nwhat respects its operation is deficient and stating what corrective action shall be\ntaken.\n(6) The asso ciation shall certify to the commissioner the estimated amount of any\ndeficit remaining after the stabilization reserve fund has been exhausted in payment\nof the maximum final premium for all policyholders of the association. Within sixty\n(60) days after s uch certification, the commissioner shall authorize the members of\nthe association to commence recoupment of their respective shares of the deficit by\napplying a surcharge to be determined by the association at a rate not to exceed two\npercent (2%) of the annual premiums on future policies affording those kinds of\ninsurance which form the basis for their participation in the association under\nprocedures established by the association. The association shall amend the amount\nof its certification of deficit to  the commissioner as the values of its incurred losses\nbecome finalized, and the members of the association shall amend their recoupment\nprocedure accordingly.\n(7) In the event that sufficient funds are not available for the sound financial operation\nof the association, pending recoupment as provided in subsection (6) of this section,\nall members shall, on a temporary basis, contribute to the financial requirements of\nthe association in the manner provided for in KRS 304.40 -080. Any such\ncontribution shall be reimbursed to the members by recoupment as provided in\nsubsection (6) of this section.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=30071","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:57Z","sha256":"d9844ea26db459802b3870fecbe3198b88ef41a6b96bc9ae1718a32151ef8a16","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.40-040","next":"us-ky/krs-304.40-060"},"notice":"GroundRules: Original legal text. Not legal advice."}