Legal Professional Liability Joint Underwriting Association

KRS tit. XXV, ch. 304, subtit. 41

in effect

KRS 304.41-010 Legislative policy

304.41-010. Legislative policy The declaration of legislative policy of this subtitle is as follows: It is hereby declared by the general assembly of the Commonwealth of Kentucky that the availability of legal professional liability insurance for attorneys-at-law is a necessity; and without such insurance, legal services may be severely curtailed; and that while the need for such insurance is increasing, the supply is not adequate and is likely to become less adequate in the future; and that present plans to provide adequate legal professional liability insurance in Kentucky have not been sufficient to meet the needs of our citizens. It is further declared that the Commonwealth has an obligation to provide an equitable method whereby every insurer licensed to write personal liability insurance in Kentucky be required to meet this market demand. It is the purpose of this article to define this obligation and provide a mandatory program to assure an adequate supply of legal professional liability insurance coverage in the Commonwealth of Kentucky. Effective: June 17, 1978 History: Created 1978 Ky. Acts ch. 365, sec. 1, effective June 17, 1978.

KRS 304.41-020 Definitions

304.41-020. Definitions As used in this subtitle: (1) "Association" means the Joint Underwriting Association established pursuant to the provisions of this subtitle; (2) "Legal professional liability insurance" means insurance as defined in KRS 304.5- 070(1)(j); (3) "Commissioner" means the commissioner of the Department of Insurance; and (4) "Net direct premiums" means gross direct premiums written on the lines of insurance set forth in KRS 304.41-030(1) as computed by the commissioner of insurance, less return premiums for the unused or unabsorbed portions of premium deposits. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1548, effective July 15, 2010. -- Created 1978 Ky. Acts ch. 365, sec. 2, effective June 17, 1978.

KRS 304.41-030 Joint Underwriting Association -- Categories covered -- Termination -- Powers of association

304.41-030. Joint Underwriting Association -- Categories covered -- Termination -- Powers of association (1) A temporary Joint Underwriting Association is created, consisting of all insurers authorized to write and engage in writing in the Commonwealth on a direct basis the following lines of insurance, as reported in the companies' annual statements: (a) Workers' compensation; (b) Liability other than auto; (c) Private passenger auto liability; (d) Commercial auto liability; and (e) The liability portion of commercial multi-peril policies. Every such insurer shall remain a member of the Joint Underwriting Association as a condition of its authority to continue to transact such kinds of insurance in the Commonwealth. (2) The implementation of the operation of the Joint Underwriting Association shall become effective upon the order of the commissioner. The commissioner shall not order the association to commence underwriting operations until the commissioner, after due hearing and investigation, has determined that legal professional liability insurance cannot be made available in the voluntary market. The Joint Underwriting Association shall remain in effect for a period of no longer than two and one-half (2 1/2) years from the date that it commences underwriting operations. This subtitle shall not preclude any attorney at law from procuring legal professional liability insurance from the voluntary market. If the commissioner determines at any time that legal professional liability insurance is readily available in the voluntary market, the association shall thereby cease its underwriting operations. (3) The association shall, pursuant to the provisions of this subtitle and the plan of operation with respect to legal professional liability insurance, have the power on behalf of its members: (a) To issue, or to cause to be issued, policies of insurance to applicants, including incidental coverages and subject to limitations as specified in the plan of operation, but not to exceed five hundred thousand dollars ($500,000) for each claimant under one (1) policy and one million dollars ($1,000,000) for all claimants under one (1) policy in any one (1) year; (b) To underwrite such insurance and to adjust and pay losses with respect thereto, or to appoint service companies to perform those functions; (c) To assume reinsurance from its members; (d) To cede reinsurance; and (e) To negotiate and obtain in the voluntary market legal professional liability insurance with limits in excess of the foregoing limits for any attorney-at-law to whom the association has issued or caused to be issued a policy of legal professional liability insurance. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1549, effective July 15, 2010. -- Created 1978 Ky. Acts ch. 365, sec. 3, effective June 17, 1978.

KRS 304.41-040 Plan of operation

304.41-040. Plan of operation (1) Within forty-five (45) days following the order of the commissioner implementing the operation of the association, the directors of the association shall submit to the commissioner for his or her review a proposed plan of operation, consistent with the provisions of this subtitle. (2) The plan of operation shall provide for economic, fair, and nondiscriminatory administration and for the prompt and efficient provision of legal professional liability insurance; and shall contain other provisions including, but not limited to, preliminary assessment of all members for initial expenses necessary to commence operations, establishment of necessary facilities, management of the association, assessment of members to defray losses and expenses, commission arrangements, reasonable and objective underwriting standards, acceptance and cession of reinsurance, appointment of servicing carriers or other servicing arrangements and procedures for determining amounts of insurance to be provided by the association. (3) The plan of operation shall be subject to approval by the commissioner after consultation with the members of the association, representatives of the public, and other affected individuals and organizations. If the commissioner disapproves all or any part of the proposed plan of operation, the directors shall within fifteen (15) days submit for review an appropriate revised plan of operation or part thereof. If the directors fail to do so, the commissioner shall promulgate a plan of operation or part thereof, as the case may be. The plan of operation approved or promulgated by the commissioner shall become effective upon order of the commissioner. (4) Amendments to the plan of operation may be made by the directors of the association, subject to the approval of the commissioner, or shall be made at the direction of the commissioner. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1550, effective July 15, 2010. -- Created 1978 Ky. Acts ch. 365, sec. 4, effective June 17, 1978.

KRS 304.41-050 Policies -- Cancellation -- Rate -- Nonprofit group retrospective rating plan -- Deficit -- Contributions by members

304.41-050. Policies -- Cancellation -- Rate -- Nonprofit group retrospective rating plan -- Deficit -- Contributions by members (1) All policies issued by the association shall be written for the term of one (1) year. The directors of the association may elect to issue policies on an occurrence basis or a claims made basis. No policy form shall be used by the association unless it has been filed with the commissioner and either (a) the commissioner has approved it, or (b) thirty (30) days has lapsed and the commissioner has not disapproved it in accordance with KRS Chapter 304, Subtitle 14. (2) Cancellation of the association's policies shall be governed by the laws and regulations governing the cancellation of other policies of casualty insurance, except that the association may also cancel any of its policies in the event of nonpayment of any stabilization reserve fund charge, by mailing or delivering to the insured at the address shown on the policy, written notice stating when not less than ten (10) days thereafter cancellation shall be effective. (3) The rates, rating plan, rating rules, rating classifications and territories applicable to the insurance written by the association and statistics relating thereto shall be subject to KRS Chapter 304, Subtitle 13, giving due consideration to the past and prospective loss and expense experience for legal professional liability insurance written and to be written in this state, trends in the frequency and severity of losses, the investment income of the association, and such other information as the commissioner may require. All rates shall be on an actuarially sound basis, giving due consideration to the group retrospective rating plan and the stabilization reserve fund, and shall be calculated to be self-supporting. The commissioner shall make available to the association the loss and expense experience of insurers previously writing legal professional liability insurance in this state. (4) All policies issued by the association shall be subject to a nonprofit group retrospective rating plan to be approved by the commissioner, under which the final premium for all policyholders of the association as a group will be equal to the administrative expenses, loss and loss adjustment expenses and taxes, plus a reasonable allowance for contingencies and servicing. Policyholders shall be given full credit for all investment income, net of expenses and a reasonable management fee on policyholder supplied funds. The standard premium before retrospective adjustment for each policy issued by the association shall be established on the basis of the association's rates, rating plans, rating rules, rating classifications, and territories then in effect. The maximum final premium for all policyholders of the association as a group shall be limited as provided in KRS 304.41-060(4). Since the business of the association is subject to the nonprofit group retrospective rating plan required by this subsection, there shall be a presumption that the rates filed and premiums for the business of the association are not excessive. (5) The commissioner shall examine the business of the association as often as he or she deems appropriate to assure that the group retrospective rating plan is being operated in a manner consistent with this section. If the commissioner finds that it is not being so operated, he or she shall issue an order to the association, specifying in what respects its operation is deficient and stating what corrective action shall be taken. (6) The association shall certify to the commissioner the estimated amount of any deficit remaining after the stabilization reserve fund has been exhausted in payment of the maximum final premium for all policyholders of the association. Within sixty (60) days after such certification, the commissioner shall authorize the members of the association to commence recoupment of their respective shares of the deficit by applying a surcharge to be determined by the association at a rate not to exceed two percent (2%) of the annual premiums on future policies affording those kinds of insurance which form the basis for their participation in the association under procedures established by the association. The association shall amend the amount of its certification of deficit to the commissioner as the values of its incurred losses become finalized, and the members of the association shall amend their recoupment procedure accordingly. (7) In the event that sufficient funds are not available for the sound financial operation of the association, pending recoupment as provided in subsection (6) of this section, all members shall, on a temporary basis, contribute to the financial requirements of the association in the manner provided for in KRS 304.41-080. Any such contribution shall be reimbursed to the members by recoupment as provided in subsection (6) of this section. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1551, effective July 15, 2010. -- Created 1978 Ky. Acts ch. 365, sec. 5, effective June 17, 1978.

KRS 304.41-060 Stabilization reserve fund

304.41-060. Stabilization reserve fund (1) There is hereby created a stabilization reserve fund which shall be administered by three (3) directors, one (1) of whom shall be the commissioner or the commissioner's deputy. The remaining two (2) directors shall be appointed by the commissioner. One (1) shall be a representative of the association; the other a representative of its policyholders. The directors shall serve without salary, but shall be reimbursed for actual and necessary expenses incurred in the performance of their duties when approved by the commissioner. (2) Each policyholder shall pay to the association a stabilization reserve fund charge equal to one-third (1/3) of each premium payment due for insurance through the association. Such charge shall be separately stated in the policy. The association shall cancel the policy of any policyholder who fails to pay the stabilization reserve fund charge. (3) The association shall promptly pay to the trustee of the fund all stabilization reserve fund charges which it collects from its policyholders and any retrospective premium refunds payable under the group retrospective rating plan authorized by KRS 304.41-050(4). (4) All moneys received by the fund shall be held in trust by a corporate trustee selected by the directors. The trustee may invest the trust fund, subject to the approval of the directors. All investment income shall be credited to the fund. All expenses of administration of the fund shall be charged against the fund. The trust fund shall be used solely for the purpose of discharging when due any retrospective premium charges payable by policyholders of the association under the group retrospective rating plan authorized by KRS 304.41-050(4). Payment of retrospective premium charges shall be made by the directors upon certification to them by the association of the amount due. If the trust fund is finally exhausted in payment of retrospective premium charges, all liability and obligations of the association's policyholders with respect to the payment of retrospective premium charges shall thereupon terminate and shall be conclusively presumed to have been discharged. Any moneys remaining in the fund after all such retrospective premium charges have been paid shall be returned to policyholders under procedures authorized by the directors. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1552, effective July 15, 2010. -- Created 1978 Ky. Acts ch. 365, sec. 6, effective June 17, 1978.

KRS 304.41-070 Applications for, and issuance of, legal professional liability insurance coverage

304.41-070. Applications for, and issuance of, legal professional liability insurance coverage (1) Any attorney-at-law shall, on or after the effective date of the plan of operation, be entitled to apply to the association for legal professional liability insurance coverage. Such application may be made on behalf of an applicant by an agent authorized by the applicant. (2) If the association determines that the applicant meets the underwriting standards of the association as prescribed in the plan of operation and there is no unpaid, uncontested premium due from the applicant for prior insurance, then the association, upon receipt of the premium or such portion thereof as is prescribed in the plan of operation, shall cause to be issued a policy of legal professional liability insurance. Effective: June 17, 1978 History: Created 1978 Ky. Acts ch. 365, sec. 7, effective June 17, 1978.

KRS 304.41-080 Determination of insurer's participation in association

304.41-080. Determination of insurer's participation in association All insurers which are members of the association shall participate in its writings, expenses, servicing, allowance, management fees, and losses in the proportion that the net direct premiums of each such member, excluding that portion of premiums attributable to the operation of the association, written during the preceding calendar year, bears to the aggregate net direct premiums written in this state by all members of the association. Each insurer's participation in the association shall be determined annually on the basis of such net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the commissioner. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1553, effective July 15, 2010. -- Created 1978 Ky. Acts ch. 365, sec. 8, effective June 17, 1978.

KRS 304.41-090 Board of directors

304.41-090. Board of directors The association shall be governed by a board of thirteen (13) directors. Five (5) directors shall be elected by the insurance companies which are members of the association, at a meeting of the member companies at a time and place designated by the commissioner, by cumulative voting of the member companies, whose vote shall be weighted in accordance with each member's net direct premiums written during the preceding calendar year. One (1) of these five (5) directors shall be from a member company domiciled in Kentucky. The commissioner shall appoint seven (7) directors, one (1) named by the Kentucky Medical Association; one (1) named by the Kentucky Bar Association; one (1) named by the Kentucky Hospital Association; one (1) who is a licensed resident property and casualty agent in Kentucky; and three (3) knowledgeable members of the public at large, who have no interest in any of the foregoing categories. The commissioner or the commissioner's designee shall serve as a director. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1554, effective July 15, 2010. -- Created 1978 Ky. Acts ch. 365, sec. 9, effective June 17, 1978.

KRS 304.41-100 Appeal -- Administrative hearing

304.41-100. Appeal -- Administrative hearing (1) Any applicant to the association, any person insured pursuant to this subtitle, or their representatives, or any affected insurer, may appeal to the commissioner within thirty (30) days after any rule, action, or decision by or on behalf of the association, with respect to those items the plan of operation defines as appealable matters. Upon appeal, an administrative hearing shall be conducted in accordance with KRS Chapter 13B. (2) All final orders of the commissioner made pursuant to this subtitle are subject to appeal to the Franklin Circuit Court in accordance with KRS Chapter 13B. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1555, effective July 15, 2010. -- Amended 1996 Ky. Acts ch. 318, sec. 247, effective July 15, 1996. -- Created 1978 Ky. Acts ch. 365, sec. 10, effective June 17, 1978.

KRS 304.41-110 Annual statement

304.41-110. Annual statement The association shall file in the office of the commissioner annually, on or before the first day of each March, a statement containing information with respect to its transactions, condition, operations, and affairs during the preceding year. Such statement shall contain such matters and information as are prescribed and shall be in such form as is approved by the commissioner. The commissioner may at any time require the association to furnish additional information with respect to its transactions, condition, or any matter connected therewith considered to be material and of assistance in evaluating the scope, operation, and experience of the association. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1556, effective July 15, 2010. -- Created 1978 Ky. Acts ch. 365, sec. 11, effective June 17, 1978.

KRS 304.41-120 Annual examination

304.41-120. Annual examination The commissioner shall make an examination into the affairs of the association at least annually. Such examination shall be conducted and the report thereon filed in the manner prescribed in KRS Chapter 304, Subtitle 2. The expenses of such examinations shall be paid by the association in the manner prescribed by that said subtitle. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1557, effective July 15, 2010. -- Created 1978 Ky. Acts ch. 365, sec. 12, effective June 17, 1978.

KRS 304.41-130 Exemption from liability

304.41-130. Exemption from liability There shall be no liability on the part of, and no cause of action of any nature shall arise against the association, the commissioner or the commissioner's authorized representatives or any other person or organization, for any statements or actions made in good faith by them during any proceedings or concerning any matters within the scope of this subtitle. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1558, effective July 15, 2010. -- Created 1978 Ky. Acts ch. 365, sec. 13, effective June 17, 1978.

KRS 304.41-140 Effect of membership on board of stabilization reserve fund

304.41-140. Effect of membership on board of stabilization reserve fund No member of the board of directors of the stabilization reserve fund who is otherwise a public officer or employee shall suffer a forfeiture of his office or employment or any loss or diminution in the rights and privileges appertaining thereto, by reason of membership on the board of directors of the stabilization reserve fund. Effective: June 17, 1978 History: Created 1978 Ky. Acts ch. 365, sec. 14, effective June 17, 1978.

Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=38761Fetched: 10/20/2026