Kansas Insurance Department
Commissioner of Insurance
To: All Property and Casualty Insurance Companies Licensed in Kansas
Subject: Year 2000 Exclusion Endorsements
Date: September 23, 1998
The following rules will apply to the use of the ISO Year 2000 Coverage Endorsements approved by this Department and any such liability exclusion endorsements filed by companies or other rating organizations:
The Department will closely monitor the industry’s use of this endorsement, to include use of market conduct exams in appropriate cases. Examples of inappropriate activity, which the Department believes would violate the Kansas Unfair Trade Practices Act or rating laws are: using these endorsements on a blanket basis without individual underwriting to insure they are used only on risks that warrant; canceling or non-renewing policies, as a general business practice, due to Y2K problems; increased consumer complaints prompted by company actions based on Y2K concerns; and, excessive use of Y2K endorsements or arbitrary underwriting actions based on Y2K concerns that cause disruptions in the marketplace. The Department is particularly concerned that companies take appropriate steps to educate insureds and agents about the Y2K problem, what the company is covering or excluding in that regard and the steps an insured can take to insure against or prevent losses due to Y2K problems.
The Department will monitor in particular whether companies offer "buy backs" of limited Y2K coverage. Widespread unavailability of this coverage may prompt the Commissioner to take further action. The use of excessive premiums or other tactics designed to discourage purchase of this coverage will prompt a market conduct exam and department action, if appropriate.
The Department is concerned exclusions and coverage options offered to insureds be consistent and will review closely any filing of exclusions similar to the ISO endorsement or member company exceptions from the approved ISO endorsement. Those filings will be reviewed closely to be sure exclusions or "buy backs" do not vary significantly from "standard" advisory or rating organization filings. To encourage consistency, it is our intent to use the ISO endorsements as the benchmark or standard. While no company or rating organization is expected or required to adopt or incorporate the ISO filing into its filing, such filings will be reviewed to determine whether the exclusion is broader than the ISO filing, which will be discouraged, or whether the exclusion is narrower, which will be favored.
If you have any questions in this regard, please contact the Fire and Casualty Division at 785-296-7844.