What Are The Requirements For Notice Of Cancellation, Expiration, Non-Renewal Or Other Termination Of Basic Professional Liability Insurance Coverage?
Insurers must comply with the following statutory requirements:
From K.S.A. 40-3402(a)(2): "In the event of termination of basic coverage by cancellation, nonrenewal, expiration or otherwise by either the insurer or named insured, notice of such termination shall be furnished by the insurer to the board of governors, the state agency which licenses, registers or certifies the named insured and the named insured. Such notice shall be provided no less than 30 days prior to the effective date of any termination initiated by the insurer or within 10 days after the date coverage is terminated at the request of the named insured and shall include the name and address of the health care provider or providers for whom basic coverage is terminated and the date basic coverage will cease to be in effect. No basic coverage shall be terminated by cancellation or failure to renew by the insurer unless such insurer provides a notice of termination as required by this subsection." These are statutory requirements without any provision for administrative modifications. Insurers should carefully read the last sentence.
Further Explanations
(These explanations do not modify any statutory requirements of the Fund law.)
Basic professional liability insurance policies issued to Kansas health care providers may be terminated by cancellation, non-renewal, expiration or otherwise only by compliance with the statutory requirements. These requirements are:
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Termination by the named insured health care provider: Provide written notice of such termination to the named insured, the Fund Board of Governors, the Kansas state agency which licenses, registers or certifies the named insured within ten days after the date the basic coverage is terminated. Non-payment of the basic coverage policy premium is considered to be termination at the request of the named insured; however, the required notices of termination must be given within ten days
after the date the coverage is terminated. (The wording of this
item was changed April 20, 2004.)
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Termination by the basic professional liability insurer: Provide written notice of such termination to the named insured, the Fund Board of Governors, the Kansas state agency which licenses, registers or certifies the named insured thirty days prior to the effective date the coverage is being terminated.
Insurers who are tardy in meeting these statutory cancellation requirements will be responsible for continuing the basic coverage policy until such time as the insurer complies with statutory requirements.
A Few Examples
(These examples do not modify any statutory requirements of the Fund law.)
Why Are These Requirements Of The Fund Law So Specific And So Important?
It is necessary for health care providers, their licensing agencies and the Fund to be assured that once a Kansas health care provider obtains the required basic coverage it will remain in effect until the insurer provides the required notification that such coverage has expired, been non-renewed, canceled or otherwise terminated.
For the Fund, this notice provision is especially important when the basic coverage is renewed but the insurer has not yet submitted the required Notice of Basic Coverage form and surcharge payment. Unless the applicable termination notice is received by the Fund (within the prescribed number of days), then Kansas law requires that the basic professional liability insurance coverage will continue to be in effect. These requirements are extremely helpful when the Fund receives a suit or claim naming a health care provider after the expiration date of the provider's most recent basic coverage policy for which no notice of termination has been received. In that instance, based upon the statute, the insurer must provide the basic coverage for the suit or claim. The insurer is responsible for any surcharge payment which is due and owing to the Fund for the period of time the basic professional liability insurance coverage is continued because the insurer failed to provide the required notices of cancellation, non-renewal, expiration or other termination of the basic coverage.
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