LEXINGTON, Ky. (AP) — The Kentucky Association of Counties insurance group has agreed to stop paying for most meals, trips or gifts for county officials, the organization said.
The Lexington Herald-Leader reports that KACo officials took the move in response to a threat of fines from the state Department of Insurance.
The action allows KACo, a nonprofit group that lobbies on behalf of Kentucky's 120 counties, to avoid violating state law prohibiting "illegal inducements" to prospective insurance customers. The newspaper says those serving on KACo's insurance boards can still travel to meetings regarding insurance using the programs' money.
According to correspondence obtained through an Open Records request, the Herald-Leader says KACo initially balked at the change.
"KACo, Inc. does not believe, or in any way admit, that it has ever offered or granted any illegal inducements to its members to purchase insurance through KACo Inc.'s various insurance programs," Lexington lawyer Brent L. Caldwell wrote in an Aug. 10 letter to state insurance officials on KACo's behalf. He also said no policy changes could be made before Nov. 30.
The paper reported the KACo officials' tone softened after the insurance department warned that penalties for breaking the inducement law include a $10,000 fine per violation.
"The commissioner is prepared to exercise the powers granted to her to identify violations," Sharon Burton, the insurance department's general counsel, wrote in reply.
Caldwell told the newspaper this week that he tried to convey in his first letter KACo's skepticism about the department's authority and request more time to make changes.
When the reply came, though, KACo's insurance board decided "it's better not to engage in any serious legal discussions if we can resolve the issues," he said.
Several letters later, they did. The department last week approved KACo's plan to establish a stronger firewall between its insurance operations and other services KACo provides.
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