The House unanimously passed on Tuesday a KLC initiative designed to offer liability and workers’ compensation self-insurance groups more options. House Bill 307 modernizes guidelines, diversifies risks, provides the opportunity for enhanced yields, stabilizes future rates, and strengthens the Department of Insurance in regulating the entities.
Representative Bart Rowland (R-Tompkinsville) sponsored the bill that expands the number of recognized rating agencies to include nine currently acknowledged by the U.S. Securities and Exchange Commission. It also allows the Department of Insurance to require insurance pools to sell downgraded assets.
“The changes in the bill would allow group self-insurance funds in Kentucky to better diversify and expand options and hopefully allow them to get better returns. As a result, they would fare better in future benchmarking exercises,” Rowland explained.
House Bill 307 addresses supply issues and risks. The bill sets a 50% minimum requirement for Kentucky-based municipal bonds.
Allowing other bonds should increase investment returns because U.S. Treasuries are the default purchase when a sufficient supply of Kentucky-based bonds is unavailable. Investment managers have reported a supply shortage of available Kentucky bonds, so they typically turn to U.S. Treasuries with lower yields.
House Bill 307 moves to the Senate for consideration.