Kentucky P&C Study Guide

Sitting both P&C exams means meeting the same regulatory material twice, so the efficient place to start is what neither line owns on its own: the guaranty association that pays when a carrier fails, the regulator that supervises the market, and the conduct rules that govern how you sell. All three appear on both exams, and Kentucky writes each of them slightly against type.

The guaranty association: know which section you are in

The Kentucky Insurance Guaranty Association stands behind property and casualty policies when a member insurer becomes insolvent. Kentucky splits its rules across two sections that look interchangeable and are not:

• KRS 304.36-050 defines what a covered claim is, and carries the net-worth exclusion
• KRS 304.36-080 says what the association pays, and carries every dollar cap

A question asking where the $300,000 figure comes from is testing that distinction, and “304.36-050” is the designed wrong answer.

The limits themselves:

| Obligation | Kentucky limit | | Covered claims generally | $300,000 per claimant | | Cybersecurity insurance | $500,000 per insured event | | Return of unearned premium | $10,000 per policy | | Workers’ compensation | Uncapped — the full amount | | Aggregate per insolvent insurer | $10,000,000, workers’ compensation aside |

Two of these run against the grain. Workers’ compensation is the one obligation Kentucky does not cap — every other covered claim is limited, and comp is paid in full. And the high-net-worth exclusion moved down, not up: a first-party claim is excluded where the insured’s net worth exceeds $10,000,000, computed on a consolidated basis including subsidiaries, reduced from $25,000,000 in 2023. Guaranty amendments usually widen protection. This one narrowed it, so more large policyholders are excluded than before.

One more clock: a claim filed with the association is barred at the earlier of twelve months after the order of liquidation, or the final date the court sets for filing claims.

The regulator: a Commissioner, appointed

Kentucky’s insurance regulator is the Department of Insurance, sitting inside the Public Protection Cabinet. It is headed by a Commissioner — not a Director, not a Superintendent — who is appointed by the Governor with the consent of the Senate for a term not to exceed four years. Kentucky does not elect its insurance commissioner. Any answer choice describing an elected official is describing a different state.

The law lives in KRS Chapter 304, the Kentucky Insurance Code, with regulations in Title 806 of the Kentucky Administrative Regulations.

The Commissioner’s powers are worth two specifics. Domestic insurers must be examined “not less frequently than every five (5) years” — read that as a floor on frequency, not a ceiling. And the subpoena power under KRS 304.2-340 is real: subpoenas have “the same force and effect as if issued from a court of record,” non-compliance is enforceable by Circuit Court order and punishable as contempt, and false testimony is perjury.

Civil penalties are tiered by licensee class and are ceilings, imposable in lieu of or in addition to suspension or revocation: not more than $1,000 per violation for an agent, $2,000 for an adjuster or consultant, $10,000 for an insurer. There is no aggregate cap and no distinction between knowing and unknowing violations.

Rebating: the $25 rule you may have learned is repealed

This is the single most likely place for out-of-date study material to cost you a mark.

Kentucky deleted the clause in KRS 304.12-110 that prohibited gifts of “prizes, goods, wares, merchandise, or property of an aggregate value in excess of twenty-five dollars.” That happened in 2022. Any prep material citing “$25 in Kentucky” is teaching repealed law — and so, awkwardly, is a 2004 advisory opinion still published on the Department’s own website.

What replaced it is KRS 304.12-092, “Gifts, sweepstakes, and drawings — When permitted,” effective July 14, 2022. It permits:

• Non-cash gifts up to $250 per person per year, where receipt is not contingent on the purchase or renewal of a policy
• Sweepstakes with no cost to enter, where prizes do not exceed $500 in value, or the combined value of all prizes divided by the number of entrants is less than $10
• Free or discounted products or services that educate about, assess, monitor, control, mitigate or prevent risk, or enhance the value of the insurance benefits
• Charitable contributions not connected to a purchase or renewal transaction

Note that KRS 304.12-100 is not the discrimination prohibition — it is the exceptions section. The prohibition itself is at -080, and it has three limbs: non-life and non-health risks; life, “between individuals of the same class and equal expectation of life”; and health, “between individuals of the same class involving essentially the same hazards.”

The local premium tax, and the fee you may keep

Kentucky’s local government premium tax under KRS 91A.080 has no direct national analogue, and it reaches producers rather than only insurers. Cities, counties and urban-county governments may tax premiums on risks located within their limits, and the statute fixes no maximum rate — rates vary by jurisdiction.

Two numbers are tested. The insurer or agent may retain a collection fee of not more than fifteen percent (15%) of the tax collected or two percent (2%) of the premium subject to the tax, whichever is less — they are alternatives, not additives, and the lesser controls. Remittance is due 30 days after the end of each calendar quarter.

The compliance failure in practice is geographic: the tax is keyed to the actual physical address of the risk, not a mailing address and not a ZIP code. Individual health policies and workers’ compensation are exempt.