Kansas Senate Bill SB240

Kansas 2025-2026 Regular Session

• Introduced: 2/6/25
• Refer: 2/7/25

Caption

Establishing procedures for a civil action instituted by the commissioner of insurance related to fraudulent insurance acts, providing that expunged criminal records will be disclosed in any application for licensure as an insurance producer or public adjuster if the arrest, conviction or diversion is for a fraudulent insurance act and including automobile assigned claims plans in provisions related to fraudulent insurance acts.

Summary

SB 240 expands Kansas law governing fraudulent insurance acts in several ways. First, it authorizes the insurance commissioner to bring a civil action in district court when the commissioner believes a fraudulent insurance act has occurred, with the commissioner bearing the burden of proof by a preponderance of the evidence. If the court finds a violation, it may impose civil penalties of up to $10,000 per fraudulent act, order restitution to an insurer or automobile assigned claims plan, require reimbursement of the department’s investigation expenses, and grant other appropriate relief. The bill also expressly includes automobile assigned claims plans in the fraudulent insurance act statutes and clarifies that insurers and plans are not required to pay claims involving fraud. The bill also amends Kansas expungement law to create a specific disclosure exception for insurance licensing. A person seeking licensure as an insurance producer or public adjuster must disclose an expunged arrest, conviction, or diversion if it involved one or more fraudulent insurance acts. Related changes to the expungement statute also allow the Kansas insurance commissioner to access expunged records for that licensing purpose. In addition, the bill updates the criminal classification of fraudulent insurance acts based on the amount involved, preserves restitution requirements, and maintains existing immunity provisions for reporting suspected fraud in good faith. Overall, the bill appears aimed at strengthening anti-fraud enforcement in the insurance market and improving the commissioner’s ability to pursue civil remedies without relying solely on criminal prosecution. It also broadens the regulatory tools available to the insurance department by making expunged records available in a narrow licensing context and by explicitly covering automobile assigned claims plans under the fraud statutes. The bill would amend K.S.A. 21-6614, 40-2,118, and 40-2,119 and repeal the existing versions of those statutes. The general sentiment reflected by the bill text and available context is supportive of tougher fraud enforcement and consumer/protective regulation, with no recorded committee transcript or vote history indicating opposition or debate. The main policy choice embedded in the bill is the balance between rehabilitation and public protection: it preserves expungement generally, but creates a targeted exception for insurance producer and public adjuster licensing when the underlying record involves fraudulent insurance conduct. Another point of potential contention is the new civil enforcement authority and penalty structure, including compelled testimony protections and the exclusion of aggrieved insurers or plans as parties, which may be viewed as either efficient enforcement tools or as expanding state power over alleged fraud cases.

Impact

SB 240 would expand the Kansas Insurance Department’s enforcement authority by creating a civil cause of action for fraudulent insurance acts and by authorizing civil penalties, restitution, and recovery of investigation costs. It would also amend the state’s expungement statute to require disclosure of expunged records in insurance producer and public adjuster licensing applications when the underlying record involves fraudulent insurance acts, and it would allow the insurance commissioner access to those records for that purpose. The bill further updates the fraudulent insurance act statutes to expressly include automobile assigned claims plans and to clarify penalties, reporting, and immunity provisions affecting insurers, the department, and related parties.

Sentiment

The available context suggests the bill is generally favorable and enforcement-oriented, with no recorded votes or committee testimony showing organized opposition. The measure appears designed to close perceived gaps in insurance fraud enforcement and licensing oversight, so the likely sentiment is support from regulators and anti-fraud advocates. At the same time, the bill’s targeted expungement disclosure requirement and expanded civil enforcement powers could draw concern from privacy, rehabilitation, or due-process advocates, though no specific objections are documented in the provided materials.

Contention

The main area of contention is the bill’s exception to expungement confidentiality for insurance licensing: applicants for insurance producer or public adjuster licenses would have to disclose expunged records if the underlying matter involved fraudulent insurance acts. That change may concern people who favor broader second-chance protections, while supporters would likely argue it is necessary to protect consumers and the integrity of the insurance market. A second point is the new civil enforcement framework, including the commissioner’s authority to sue, compel testimony, and seek penalties and restitution; insurers, regulated persons, or civil-liberties advocates could view those provisions as broad, while regulators would likely see them as essential anti-fraud tools.