The legislature of the state of Kansas has passed Senate Bill 377 to authorise and provide for technology-enabled fiduciary financial institution (TEFFI) insurance companies within the Captive Insurance Act.
The bill, which was referred to the Committee on Financial Institutions and Insurance on 25 January, passed with 36 votes to three.
Under the amended legislation, TEFFI insurance companies are authorised to provide contracts of suretyship or credit insurance to any affiliated TEFFI, affiliated fidfin trust, or any other affiliated company against liability, loss or damage resulting from fraud, theft or indemnification.
Essentially, this allows these insurance companies to operate as a captive insurance company, with chapter 40 section 4301 of the Kansas Statutes (which establishes the definitions and operations of captive insurance companies in the state) amended to include any affiliated fidfin trust and any affiliated TEFFI under the scope of the definition of an “affiliated company”.
The bill reads: “‘TEFFI insurance company’ means a pure captive insurance company that: is related to a TEFFI by common ownership; or owns, directly, indirectly or beneficially at least five per cent of the equity interests of a TEFFI, including any equity interests in such TEFFI’s holding company.”
TEFFI insurance companies are subjected to the same coverage restrictions as pure and association captive insurance companies, for example, they are prohibited from insuring risks other than those of its parent and affiliated companies.
They are also excluded from providing coverages for personal lines of insurance, workers’ compensation, accident and health, employers’ liability, long-term care and critical care
The TEFFI Act was introduced in Kansas’ 2021 legislative session to define and authorise the activities and services of such institutions.
