Request By:
Mr. Donald Campbell
Attorney
Department of Insurance
Capital Plaza Tower
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Victor Fox, Assistant Attorney General
You have requested from this office an opinion concerning your department's interpretation of certain Kentucky Revised Statutes. Your basic question is:
"Do the provisions of KRS 304.16-085 and 304.16-100 apply where the group life insurance contract is delivered outside the State of Kentucky but where the individual certificate is delivered in Kentucky?"
Several statutes, as pointed out in your request, deal with the situation. KRS 304.14-010 reads:
"This subtitle applies as to all insurance contracts and annuity contracts, other than:
(1) Reinsurance.
(2) Policies or contracts not issued for delivery in this state nor delivered in this state.
(3) Wet marine and transportation insurance."
This statute applies only to insurance contracts which are not delivered or issued in this state and does not apply to where the group certificate is delivered or issued for delivery in this state. However, KRS 304.14-120 in part reads:
"As to group insurance policies issued and delivered to an association outside this state but covering persons resident in this state, all or substantially all of the premiums for which are payable by the insured members, the group certificates to be delivered or issued for delivery in this state shall be filed with and approved by the commissioner."
Reading both statutes together and applying the rule giving validity to both, it would appear, therefore, that it would be necessary for group certificates to be approved by the commissioner even though the original contract is issued or delivered outside the state.
KRS 304.16-100 reads as follows:
"No policy of group life insurance may be issued to an employer or employers, or a labor union or to the trustees of a fund established in whole or in part by an employer or employers, or a labor union, which provides term insurance on any person which, together with any other term insurance under any group life insurance policy or policies issued to the same employer or employers, or to the same labor union, or to the trustees of such fund or funds, exceeds $25,000, unless 200 percent of the annual compensation of such person from his employer or employers exceeds $25,000, in which event all such term insurance shall not exceed 200 percent of such annual compensation. " (emphasis added)
This statute applies only to groups authorized under KRS 304.16-030, 304.16-050, 304.16-060. It does not apply to any other groups set out in Subchapter 16, such as public employee groups, association groups or credit union groups. Although you do not state what type of group is involved in your current corresponddence with Firemen's Fund Insurance Company, it appears from the name, National Pilots Association Group Insurance, that it is an association group and therefore would not be subject to KRS 304.16-100. KRS 304.16-085 contains its own limitations and does refer to associations as well as the other groups listed in KRS 304.16-100.
It is therefore the opinion of this office that forms for group certificates must be approved by the commissioner under the provisions of KRS 304.14-120 even though the contract is issued and delivered out of the state but that the provisions of KRS 304.16-100 apply only to those three groups specifically set forth in that statute, and further, that the limitation provisions of KRS 304.16-085 are applicable only to those groups set forth within that statute.