Request By:
The Honorable Gerta Bendl
State Representative - 34th District
2403 Newburg Road
Louisville, Kentucky 40205
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Victor Fox, Assistant Attorney General
You recently wrote our office for an opinion relating to the Kentucky Insurance Regulatory Board created by Executive Order 77-564. Specifically you ask:
(1) Does the new board have any control over the fire classification of cities and fire districts, which classifications ultimately determine insurance rates?
(2) What role did the Commissioner of Insurance have under KRS chapter 304 in regard to grouping such risks by classifications before the creation of the board? What is the commissioner's role now in regard to such classifications?
(3) What relationship, if any, does ISO have to the regulatory board?
Executive Order 77-564 contains several provisions, but the pertinent section insofar as your questions are concerned is Section 4 which reads as follows:
"It shall be the duty of the Board to administer the provisions of Kentucky Revised Statutes, Chapter 304, Subtitles 13 and 32, to the extent such provisions are applicable to the promulgation, filing, approval or use of rates. To facilitate the performance of this duty, such of the authority, powers, duties and functions heretofore vested in and exercised by the Commissioner under KRS 304, Subtitles 13 and 32, shall be transferred to and hereafter be vested in and performed by the Board to the extent such subtitles are applicable to rates."
This section transfers to the KIRB the power and functions of the Commissioner of Insurance as they existed under Chapter 304, Subtitles 13 and 32. It did not create any new power; therefore, it has only what the Commissioner previously had.
Applying this principle to your questions results in the following answers:
(1) The KIRB has no control over the fire classifications of cities and fire districts. This classification is done by the Insurance Service Organization (ISO). ISO is a completely independent organization and prior to the Executive Order was not controlled in any manner by either the Department or the Commissioner; consequently, it remains independent under the Executive Order.
(2) The Commissioner played no role either statutorily or otherwise in regard to grouping such risks and, of course, that role remains unchanged.
(3) ISO has no relationship to the KIRB.