40-2d03. Determination of risk-based capital. - Kansas Statutes

40-2d03

Chapter 40.--INSURANCE Article 2d.--HEALTH ORGANIZATION RISK-BASED CAPITAL REQUIREMENTS

      40-2d03.   Determination of risk-basedcapital.(a) A health organization's RBC shall be determined inaccordance with the formula set forth in the RBC instructions. The formulashall take into account and may adjust for the covariance between:

      (1)   Asset risk;

      (2)   credit risk;

      (3)   underwriting risk; and

      (4)   all other business risks and such other relevant risks as are set forthin the RBC instructions; determined in each case by applying the factors in themanner set forth in the RBC instructions.

      (b)   An excess of capital over the amount produced by the risk-based capitalrequirements contained in this act and the formulas, schedules and instructionsreferenced in this act is desirable in the business of insurance. Accordingly,each health organization should seek to maintain capital above the RBC levelsrequired by this act. Additional capital is used and useful in the insurancebusiness and helps to secure a health organization against various risksinherent in, oraffecting, the business of insurance and not accounted for or only partiallymeasured by the risk-based capital requirements contained in this act.

      History:   L. 2000, ch. 147, § 4; July 1.