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Exempt Policyholders

Industrial insureds, government entity insureds and exempt commercial policyholders are three classes of "exempt entities" created by KRS 304.11-020.  The statute sets out specific eligibility criteria for each class.  Entities seeking exempt status must register their qualifications prior to the effective date of the insurance transaction.

Policies issued to these three classes by admitted insurers are exempt from the rate and policy form review requirements. All such policies issued to "exempt entities" shall contain a disclaimer similar to "The rate provided for in this policy is exempt from the filing and approval requirements in KRS 304.13. The forms with make up this policy contract are exempt from the filing and approval requirements of KRS 304.14." The exemption shall not apply to sections of KRS 304.13 pertaining to workers' compensation, KRS 304.39 and KRS 342.

Policies issued to these three classes by non-admitted insurers are exempt from the diligent effort requirements if the procuring or placing broker has disclosed to the exempt entity that insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight, and the exempt entity has subsequently requested in writing that the broker procure or place insurance from a non-admitted insurer. (KRS 304.10-040(4).)

Industrial insured and government entity insureds are permitted to independently procure insurance without the involvement of an agent or broker. 

Exempt commercial policyholders are required to have the involvement of a licensed insurance agent or surplus lines broker in all insurance transactions. 

An insured's certification as an exempt entity does not exempt insurers from the provisions of KRS 304.12-230 (Unfair Claims Settlement Practices); sections in KRS 304.13 that pertain to workers' compensation rates and rating organizations; KRS 304.39 (Motor Vehicle Reparation Act), and KRS Chapter 342 (Workers' Compensation).

The exempt class of industrial insureds is closed.  Only qualifying entities that registered as industrial insureds prior to July 1, 1999, and have since maintained continuous eligibility and registration remain eligible for the industrial insured class.

The registration process for all classes is set out in 806 KAR 11:010.  The appropriate certification form must be completed and filed with the department&am p;nbsp;with the $100 filing fee.  This registration is valid for three years at which time it expires if not renewed.  The certification forms are provided below.