HCS CSSB 362(RLS): "An Act relating to insurance, to the licensing, accreditation, examination, regulation, and solvency of persons engaged in the insurance business, including insurers, nonadmitted insurers, purchasing groups, risk retention groups, and United States branches of alien insurers; relating to the management of and the filing of reports by persons licensed or otherwise doing business under the insurance code; amending Alaska Rule of Civil Procedure 45; and providing for an effective date."
00HOUSE CS FOR CS FOR SENATE BILL NO. 362(RLS) 01 "An Act relating to insurance, to the licensing, accreditation, examination, 02 regulation, and solvency of persons engaged in the insurance business, including 03 insurers, nonadmitted insurers, purchasing groups, risk retention groups, and 04 United States branches of alien insurers; relating to the management of and the 05 filing of reports by persons licensed or otherwise doing business under the 06 insurance code; amending Alaska Rule of Civil Procedure 45; and providing for 07 an effective date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09 * Section 1. AS 06.20.260(a) is amended to read: 10 (a) A further or other charge or amount for an examination, service, brokerage 11 commission, expense, fee, bonus, or other thing may not be directly or indirectly 12 charged, contracted for, or received except 13 (1) lawful fees actually paid out by the licensee to a public officer for 14 filing, recording, or releasing any instrument securing the loan, or for transferring
01 certificate of title to a motor vehicle securing the lien or noting a lien on that 02 certificate; 03 (2) premiums actually paid out for insurance on any one or combination 04 of the following: pledged property of the borrower, or consumer credit [LIFE] 05 insurance; in this paragraph "consumer credit insurance" has the meaning given 06 in AS 21.57.160 [ON THE LIFE OF ONE OR MORE BORROWERS, CREDIT LOSS 07 OF INCOME INSURANCE, OR CREDIT DISABILITY INSURANCE TO PROVIDE 08 INDEMNITY FOR PAYMENTS BECOMING DUE ON THE INDEBTEDNESS]; 09 (3) taxable costs and expenses to which the licensee becomes entitled 10 under general law in any court proceedings to collect a loan or to realize on the 11 security after default; 12 (4) reasonable fees paid by a licensee for appraisals, surveys, and title 13 insurance or reports if the loan is secured by an interest in real estate; 14 (5) a late payment fee of not more than 10 percent of the payment that 15 is due or $15, whichever is less. 16 * Sec. 2. AS 06.20.287(a) is amended to read: 17 (a) A licensee may obtain consumer credit [LIFE, CREDIT DISABILITY,] 18 and property insurance on open-end loans under this chapter. The consumer credit 19 [LIFE AND CREDIT DISABILITY] insurance obtained by a licensee shall satisfy the 20 requirements of AS 21.57. The property insurance obtained by a licensee shall satisfy 21 the requirements of AS 21.39 and AS 21.42. The licensee shall comply with 22 AS 21.36.160 and 21.36.165 during all transactions with borrowers involving 23 consumer credit [LIFE, CREDIT DISABILITY] and property insurance. 24 * Sec. 3. AS 21.03.010 is amended by adding a new subsection to read: 25 (c) A person who transacts insurance in this state, or relative to a subject 26 resident, located, or to be performed in this state as or on behalf of a risk retention 27 group or purchasing group formed under and in compliance with 15 U.S.C. 3901 - 28 3906 (Liability Risk Retention Act), shall comply with the applicable provisions of this 29 title. 30 * Sec. 4. AS 21.06.080 is amended by adding a new subsection to read: 31 (e) If the director determines that a catastrophe has occurred in this state and
01 in good faith believes that the governor or the President of the United States has issued 02 or is about to issue a declaration of disaster, the director may take the action that the 03 director considers necessary to assure that a contract of insurance already issued will 04 be honored under the terms of the contract. Actions that the director may take include 05 emergency orders permitting the immediate licensing of adjusters to facilitate handling 06 of claims, permitting a licensee to open or close an office, permitting a licensee to 07 move or remove a record as required by the existence of the catastrophe, or permitting 08 the issuance by a carrier of checks or drafts drawn on an out-of-state bank in payment 09 of a claim. Until a declaration of the disaster has been lifted, the director may take 10 action to respond to a disaster without a hearing. An action taken under this 11 subsection may not remain in effect more than six months from the date that the 12 director determines that a catastrophe has occurred unless, after a hearing, the director 13 determines that the action is still necessary to respond to the disaster. 14 * Sec. 5. AS 21.06.150(g) is amended to read: 15 (g) The director may withhold a document, information, account, record, 16 examination, or report from the public inspection for as long as the director finds the 17 withholding is necessary to protect a person against unwarranted injury or is in the 18 public interest. The director may close an examination hearing to the public when 19 the director finds the closure is necessary to protect a person against unwarranted 20 injury or is in the public interest. The director may publish the examination report 21 or a summary of it in a newspaper in the state if the director determines that the 22 publication is in the public interest. 23 * Sec. 6. AS 21.09.110 is amended to read: 24 Sec. 21.09.110. APPLICATION FOR CERTIFICATE OF AUTHORITY. To 25 apply for an original certificate of authority an insurer shall file with the director its 26 application, [(] accompanied by the applicable fees set under AS 21.06.250, [)] 27 showing its name, location of its home office, or principal office in the United States 28 [(] if an alien insurer [)], kinds of insurance to be transacted, date of organization or 29 incorporation, form of organization, state or country of domicile, and additional 30 information that the director may reasonably require, together with the following 31 documents, as applicable:
01 (1) if a foreign insurer, a copy of its corporate charter or articles of 02 incorporation, with all amendments certified by the public officer with whom the 03 originals are on file in the state or country of domicile; 04 (2) if a reciprocal insurer, copies of the power of attorney of its 05 attorney-in-fact and of its subscribers' agreement, if any, certified by its 06 attorney-in-fact; 07 (3) a copy of its financial statement as of the preceding December 31, 08 and all subsequent quarterly financial statements, sworn to by at least two executive 09 officers of the insurer, or certified by the public insurance supervisory official of the 10 insurer's state of domicile or of entry into the United States; 11 (4) a copy of the report of last examination, if any, made of the insurer, 12 certified by the insurance supervisory official of its state of domicile or of entry into 13 the United States; 14 (5) appointment of the director under AS 21.09.180, as its attorney to 15 receive service of legal process; 16 (6) if a foreign or alien insurer, a certificate of the public official 17 having supervision of insurance in its state or country of domicile, or state of entry 18 into the United States, showing that it is authorized to transact the kinds of insurance 19 proposed to be transacted in this state; 20 (7) if an alien insurer, a copy of the appointment and authority of its 21 United States manager, certified by its officer having custody of its records; and 22 (8) if a foreign insurer, a certificate as to deposit if it is to be tendered 23 under AS 21.09.090 [; 24 (9) SPECIMEN COPIES OF POLICIES PROPOSED TO BE 25 OFFERED IN THIS STATE IF THEN AVAILABLE, TOGETHER WITH 26 PREMIUMS OR PREMIUM RATES APPLICABLE IF THEN KNOWN, OR A 27 DECLARATION THAT THE RATES AS APPLICABLE WILL BE THOSE 28 PROMULGATED BY DESIGNATED RATING ORGANIZATIONS AUTHORIZED 29 TO FILE RATES IN THIS STATE ON BEHALF OF THE INSURER OR BY THE 30 INSURER]. 31 * Sec. 7. AS 21.09.110 is amended by adding a new subsection to read:
01 (b) Policy forms and rates that require approval under AS 21.39 or AS 21.42 02 shall be submitted under AS 21.39.040(j) or AS 21.42.120(g) and may not be 03 submitted with the application for a certificate of authority. 04 * Sec. 8. AS 21.09.130(b) is amended to read: 05 (b) If not continued by the insurer, its certificate of authority shall be 06 suspended [EXPIRES] at midnight on June 30 following the failure of the insurer to 07 continue it in force. The certificate of authority shall expire on June 30 one year 08 following its suspension due to failure to continue the certificate of authority. The 09 director shall promptly notify the insurer of the occurrence of a failure that may result 10 in suspension [RESULTING IN IMPENDING EXPIRATION] of its certificate of 11 authority. 12 * Sec. 9. AS 21.09 is amended by adding a new section to read: 13 Sec. 21.09.135. VOLUNTARY SURRENDER OF CERTIFICATE OF 14 AUTHORITY. (a) A foreign admitted insurer may apply for voluntary surrender of 15 its certificate of authority and the director may accept the application, if the foreign 16 admitted insurer 17 (1) is in compliance with the applicable sections of this title, or the 18 director waives in writing each condition of noncompliance; 19 (2) provides written confirmation that obligations incurred before the 20 voluntary surrender of the certificate of authority shall be paid to guarantee funds or 21 insurance pools established by law; and 22 (3) is domiciled in a state that is 23 (A) accredited by the National Association of Insurance 24 Commissioners at the time of the request for voluntary surrender; or 25 (B) not accredited by the National Association of Insurance 26 Commissioners at the time of the request and agrees in writing to be subject 27 to 28 (i) AS 21.09.200 and 21.09.205 for a period of two 29 years, including payment of any fee related to filing information with 30 the director; and 31 (ii) any other provision of this title that may be required
01 in writing by the director and for the period of time the director may 02 specify. 03 (b) If a foreign admitted insurer who surrenders a certificate of authority 04 ceases to exist, all business written and in force relative to a risk resident, located, or 05 to be performed in this state shall be lawfully cancelled or reinsured. A reinsurance 06 agreement covering all or a part of a risk described in this subsection shall be 07 approved by the director before accepting the certificate of authority for surrender if 08 the agreement meets the following criteria: 09 (1) insurance coverage has not deteriorated from the policies existing 10 at the time of the transfer; 11 (2) the assuming insurer is of equal or better financial standing; and 12 (3) the assuming insurer is admitted to do business in this state, unless 13 this requirement is waived by the director. 14 * Sec. 10. AS 21.09.200(f) is amended to read: 15 (f) In addition to the requirements of (a) of this section, an authorized [A 16 DOMESTIC] insurer shall file its annual statement with the National Association of 17 Insurance Commissioners on electronic media acceptable to the association by the 18 due date established by the association, and shall pay the applicable filing fee. The 19 director may waive the filing requirement if the insurer only transacts business 20 in this state and only accepts risks relative to a subject resident, located, or to be 21 performed in this state. An insurer that fails to comply with this subsection is 22 subject to the penalties specified in (e) of this section, calculated from the filing and 23 fee due date established by the National Association of Insurance Commissioners. 24 * Sec. 11. AS 21.09.205 is amended by adding a new subsection to read: 25 (d) In addition to the requirements of (a) of this section, an authorized insurer 26 shall file its quarterly statement with the National Association of Insurance 27 Commissioners on electronic media acceptable to the association by the due date 28 established by the association, and shall pay the applicable filing fee. The director 29 may waive the filing requirement if the insurer only transacts business in this state and 30 only accepts risks relative to a subject resident, located, or to be performed in this 31 state. An insurer that fails to comply with this subsection is subject to the penalties
01 specified in (c) of this section, calculated from the filing and fee due date established 02 by the National Association of Insurance Commissioners. 03 * Sec. 12. AS 21.09.210 is amended by adding new subsections to read: 04 (j) If, within three years after the date the tax under this section was due, an 05 insurer discovers a mistake or misinterpretation that resulted in an overpayment of the 06 tax in an amount exceeding $250 in any one calendar year, the insurer may make a 07 written request to the director for a refund. If the director determines a valid mistake 08 or misinterpretation has occurred, the director shall refund to the insurer the amount 09 of the excess tax by granting, at the director's discretion, a monetary refund or 10 premium tax credit. A premium tax credit shall be used in the next calendar year to 11 the extent possible and any unused credit shall be paid as a monetary refund. A 12 premium tax credit may not reduce the payable tax, calculated without use of the 13 credit, to less than zero. 14 (k) A premium tax credit granted under (j) of this section may not carry over 15 as an attribute in a transaction under AS 21.69.610, 21.69.620, AS 21.78, or a similar 16 transaction entered into by a foreign insurer. 17 (l) In this section, "premium tax credit" means an amount that an insurer may 18 use as an offset against a premium tax payment. 19 * Sec. 13. AS 21.09 is amended by adding new sections to read: 20 Sec. 21.09.290. RISK RETENTION GROUPS. (a) A risk retention group 21 formed in this state shall 22 (1) comply with 15 U.S.C. 3901 - 3906 (Liability Risk Retention Act); 23 and 24 (2) qualify for and hold in good standing a certificate of authority under 25 this chapter, limited to liability insurance only. 26 (b) A risk retention group shall submit with its application for a certificate of 27 authority 28 (1) the identity of 29 (A) the initial members of the risk retention group; 30 (B) all persons who organized the risk retention group; 31 (C) all persons who will provide administrative services to the
01 risk retention group; 02 (D) all persons who will influence or control the activities of 03 the risk retention group; 04 (2) the amount and nature of initial capitalization; 05 (3) a plan of operation or a feasibility study that includes the coverage, 06 deductible, coverage limit, rate, and rating classification system for the type or class 07 of liability insurance the group intends to offer; and 08 (4) the states in which the risk retention group intends to operate. 09 (c) At least 30 days before a domestic risk retention group implements a 10 material change or revision to an approved plan of operation or feasibility study, the 11 material change or revision shall be filed with the director. A material change or 12 revision may not be implemented unless the domestic risk retention group receives the 13 director's written approval. In this subsection, "material change or revision" includes 14 an offering of an additional type or class of liability insurance. 15 (d) In this section, 16 (1) "liability" means legal liability for damages, including costs of 17 defense, legal costs and fees, and other claims expenses, because of injury to another 18 person, damage to property, or other damage or loss to a person resulting from or 19 arising out of a business, whether profit or nonprofit, trade, product, service, including 20 a professional service, or an activity of a state or local government, or an agency or 21 political subdivision of a state or local government; "liability" does not include 22 personal risk liability or employer's liability with respect to its employees other than 23 legal liability under 45 U.S.C. 51 (Federal Employers' Liability Act); 24 (2) "personal risk liability" means liability for damages because of 25 injury to a person, damage to property, or other loss or damage resulting from a 26 personal, familial, or household responsibility or activity and that is not a responsibility 27 or activity described under (1) of this subsection. 28 Sec. 21.09.300. DISCLOSURE OF MATERIAL TRANSACTIONS. (a) A 29 domestic insurer shall file a report with the director disclosing a material acquisition 30 and disposition of assets or a material nonrenewal, cancellation, or revision of ceded 31 reinsurance agreements unless the acquisition and disposition of assets or material
01 nonrenewal, cancellation, or revision of ceded reinsurance agreements have been 02 submitted to the director for review, approval, or information purposes as required by 03 this title. 04 (b) The report required under (a) of this section is due 15 days after the end 05 of the calendar month in which a reportable transaction occurs. 06 (c) Except as provided in this section, a report obtained by or disclosed to the 07 director under this section is confidential, is not subject to subpoena, and may not be 08 made public by the director, or another person, without the prior written consent of the 09 insurer submitting the report. A report under this section may be disclosed to an 10 insurance regulatory agency of another state or to the National Association of 11 Insurance Commissioners, with notice of the disclosure sent to the insurer. If the 12 director, after giving an insurer notice and an opportunity to be heard, determines that 13 the interest of policyholders, shareholders, or the public will be served by publication 14 of the report, the director may publish all or any part of the report in a manner the 15 director determines appropriate. 16 (d) A domestic insurer's report of an acquisition or disposition of an asset 17 (1) shall be made under (a) of this section if the acquisition or 18 disposition is material; for purposes of this subsection, an acquisition or disposition, 19 or the aggregate of a series of related acquisitions or related dispositions during any 20 30-day period is material if it is nonrecurring, not in the ordinary course of business, 21 and involves more than five percent of the reporting insurer's total admitted assets as 22 reported in its most recent financial statement required by law that is filed with the 23 division; 24 (2) shall be made on asset acquisition, including a purchase, lease, 25 exchange, merger, consolidation, succession, or other acquisition other than the 26 (A) construction or development of real property by or for the 27 reporting insurer; or 28 (B) acquisition of material for construction or development of 29 real property; 30 (3) shall be made on asset disposition including a sale, lease, exchange, 31 merger, consolidation, mortgage, hypothecation, assignment for the benefit of creditors,
01 or abandonment; 02 (4) must include information on the 03 (A) date of transaction; 04 (B) manner of acquisition or disposition; 05 (C) description of the assets involved; 06 (D) nature and amount of the consideration given or received; 07 (E) purpose of, or reason for, the transaction; 08 (F) manner by which the amount of consideration was 09 determined; 10 (G) gain or loss recognized or realized as a result of the 11 transaction; and 12 (H) names of persons from whom the assets were acquired or 13 to whom the assets were disposed. 14 (e) A domestic insurer's report of nonrenewal, cancellation, or revision of a 15 ceded reinsurance agreement 16 (1) shall be made under (a) of this section if the nonrenewal, 17 cancellation, or revision is material; for purposes of this subsection, a material 18 nonrenewal, cancellation, or revision is one that affects (A) for property and casualty 19 business, including accident and health business when written as property and casualty 20 business, more than 50 percent of an insurer's ceded written premium; or (B) for life, 21 annuity, and accident and health business, more than 50 percent of the total reserve 22 credit taken for business ceded, on an annualized basis as indicated in the insurer's 23 most recently filed statutory statement; however, a filing is not required if the insurer's 24 ceded written premium or the total reserve credit taken for business ceded represents, 25 on an annual basis, less than 10 percent of direct written premiums and assumed 26 written premiums or 10 percent of the statutory reserve requirement before a cession; 27 (2) shall be filed without regard to which party has initiated the 28 nonrenewal, cancellation, or revision of ceded reinsurance whenever any of the 29 following conditions exist: 30 (A) the entire cession has been cancelled, nonrenewed, or 31 revised and ceded indemnity and loss adjustment expense reserves after a
01 nonrenewal, cancellation, or revision represent less than 50 percent of the 02 comparable reserves that would have been ceded had the nonrenewal, 03 cancellation, or revision not occurred; 04 (B) an admitted or accredited reinsurer has been replaced on an 05 existing cession by an unauthorized reinsurer; however, a report shall be filed 06 only if the result of the revision affects more than 10 percent of the cession; 07 or 08 (C) collateral requirements previously established for 09 unauthorized reinsurers have been reduced; however, a report shall be filed 10 only if the result of the revision affects more than 10 percent of the cession; 11 and 12 (3) must include 13 (A) the effective date of the nonrenewal, cancellation, or 14 revision; 15 (B) a description of the transaction with an identification of the 16 initiator of the transaction; 17 (C) the purpose of, or reason for, the transaction; and 18 (D) if applicable, the identity of the replacement reinsurers. 19 (f) An insurer is required to report under (a) of this section on a 20 nonconsolidated basis unless the insurer is part of a consolidated group of insurers that 21 utilizes a pooling arrangement or 100 percent reinsurance agreement that affects the 22 solvency and integrity of the insurer's reserves and the insurer ceded substantially all 23 of its direct and assumed business to the pool. An insurer is presumed to have ceded 24 substantially all of its direct and assumed business to a pool if the insurer has less than 25 $1,000,000 total direct written premiums and assumed written premiums during a 26 calendar year that is not subject to a pooling arrangement and the net income of the 27 business not subject to the pooling arrangement represents less than five percent of the 28 insurer's capital and surplus. 29 Sec. 21.09.310. AUTHORIZATION OF UNITED STATES BRANCHES OF 30 ALIEN INSURERS AND GENERAL REQUIREMENTS. (a) This section applies 31 to all United States branches of alien insurers using this state as a state of entry to
01 transact the business of insurance in the United States. Except as provided elsewhere 02 in this title, a United States branch is subject to all state laws applicable to an insurer 03 domiciled in this state. 04 (b) An alien insurer may apply for a certificate of authority to use this state 05 as a state of entry to transact the business of insurance in the United States by 06 (1) qualifying as an insurer licensed to do business in this state; 07 (2) establishing a trust under a trust agreement approved in writing by 08 the director with a United States bank acceptable to the director in an amount not less 09 than the minimum basic capital or basic guarantee surplus and additional maintained 10 surplus required under AS 21.09.070; 11 (3) submitting a copy of its charter and bylaws, if any, currently in 12 force, and other materials necessary to show the kind of business it is authorized to 13 transact in its domiciliary jurisdiction; documents submitted under this paragraph must 14 be attested to as accurate and complete by the insurance supervisory official in the 15 domiciliary jurisdiction, and must include an English translation if in a language other 16 than English; 17 (4) submitting a full statement, subscribed and affirmed as true by two 18 officers or equivalent responsible representatives in a manner that the director 19 prescribes, of its financial condition as of the close of its latest fiscal year, showing 20 its assets, liabilities, income disbursements, business transacted, and other facts 21 required to be shown in its annual statement, as reported to the insurance supervisory 22 official in its domiciliary jurisdiction; all documents submitted under this paragraph 23 must include an English translation if in a language other than English; 24 (5) submitting to an examination under AS 21.06.120(b) at its principal 25 office within the United States, and elsewhere if necessary, unless the director accepts 26 a report of the insurer's last examination and the report has been certified by the 27 insurance supervisory official of the insurer's domiciliary jurisdiction; and 28 (6) payment of fees established under AS 21.06.250. 29 (c) Before issuing or renewing a certificate of authority for a United States 30 branch, the director may require satisfactory proof that the insurer does not intend to 31 transact insurance business in violation of the provisions of this title or that is not
01 authorized by its charter. Proof required under this subsection may include the alien 02 insurer's charter, an agreement evidenced by a duly certified resolution of its board of 03 directors, or other proof that the director may require. 04 (d) The director may renew a certificate of authority for a United States branch 05 if satisfied, by proof the director may require, that the insurer is not delinquent with 06 respect to a requirement or qualification imposed by this title and that its continuance 07 to transact the business of insurance in this state will not be hazardous or prejudicial 08 to the best interest of the people of this state. 09 (e) A United States branch may not receive or renew a certificate of authority 10 in this state 11 (1) to transact a kind of insurance or a combination of kinds of 12 insurance that are not permitted to be transacted by domestic insurers in this state; 13 (2) if it transacts business other than the business of insurance 14 anywhere else within the United States unless the business, in the opinion of the 15 director, is necessarily or properly incidental to the kind of insurance that it is 16 authorized to transact in this state; 17 (3) if it fails to keep full and correct entries of its transactions; records 18 of entries shall at all times be maintained in its principal office within this state; or 19 (4) if it fails to comply with a requirement or limitation of this title that 20 it is not exempted from by another provision of this title and that is applicable to 21 similar domestic insurers and if, in the judgment of the director, the requirement or 22 limitation is necessary to protect the interest of the policyholders. 23 (f) A United States branch that transacts a kind or combination of kinds of 24 insurance outside this state that is not permitted to be done in this state by similar 25 domestic insurers may not have a certificate of authority issued or renewed in this state 26 unless, in the judgment of the director, the transaction of that kind of insurance is not 27 prejudicial to the best interest of the people of this state. 28 (g) A United States branch shall maintain assets in a trust account in an 29 amount not less than the United States branch's reserves and other liabilities, plus the 30 minimum basic capital or basic guaranteed surplus and additional maintained surplus 31 required under AS 21.09.070.
01 (h) A written trust agreement must contain provisions that 02 (1) vest legal title to trusteed assets in the trustees, and their lawfully 03 appointed successors; 04 (2) require that all assets deposited in the trust be continuously kept 05 within the United States; 06 (3) provide for substitution of a new trustee in case of a vacancy by 07 death, resignation, or other reason, subject to the prior written approval of the director; 08 (4) require that the trustee continuously maintain a record sufficient to 09 identify the assets of the trust fund; 10 (5) require that trusteed assets consist only of cash, investments eligible 11 for investment of the funds of domestic insurers, and accrued interest on the assets, if 12 collectible by the trustee, subject to the limits on investment of funds by domestic 13 insurers under this title; 14 (6) require that the trust be for the exclusive benefit, security, and 15 protection of the policyholders, or policyholders and creditors, of the United States 16 branch in the United States and that the trust be maintained as long as there is an 17 outstanding liability of the alien insurer arising out of its transaction of insurance in 18 the United States; and 19 (7) provide that withdrawal of an asset may not be made or permitted 20 by a trustee without the prior written approval of the director except 21 (A) to make deposits required by law in a state for the security 22 or benefit of all policyholders, or policyholders and creditors, of the United 23 States branch in the United States; 24 (B) to withdraw funds deposited in another state under (A) of 25 this paragraph if 26 (i) the written trust agreement requires prior written 27 approval of the insurance supervising official of that other state; 28 (ii) written notice of the nature and extent of the 29 withdrawal is provided to the director within 30 days of the withdrawal; 30 and 31 (iii) the total trusteed assets remaining are in excess of
01 the total assets required to be maintained in trust under (g) of this 02 section; 03 (C) upon the specific written direction of the United States 04 manager, who is duly authorized and is acting under either general or specific 05 written authority previously given or delegated by the board of directors, to 06 substitute other assets as permitted by this title if the substituted assets are of 07 at least equal value and quality to those withdrawn; 08 (D) to transfer assets to an official liquidator or rehabilitator 09 under an order of a court of competent jurisdiction; or 10 (E) if provided under the terms of the written trust agreement, 11 to pay over to the United States manager of the United States branch, upon 12 request, income, dividends, or interest accumulations of the assets of the trust 13 fund that are in excess of the total assets required to be maintained in trust 14 under (g) of this section. 15 (i) A written trust agreement and all amendments to it shall be authenticated 16 in a form and manner that the director may prescribe and may not take effect until 17 approved by the director. The director may not approve a trust agreement unless the 18 director makes a written finding that 19 (1) the written trust agreement or its amendments are sufficient in form 20 and in conformity with law; 21 (2) a person designated as a trustee is eligible to act in that capacity; 22 and 23 (3) the written trust agreement is adequate to protect the interests of the 24 beneficiaries of the trust. 25 (j) The director may approve written modifications of, or variations in, a 26 written trust agreement upon a finding that the proposed changes are not prejudicial 27 to the interests of the people of this state or the United States policyholders and 28 creditors of the United States branch. 29 (k) The director may conduct examinations of the trusteed assets of an 30 authorized United States branch at the insurer's expense and may require the trustee 31 or trustees to file a statement, in a form as prescribed by the director, certifying the
01 assets and amounts of the trust fund. 02 (l) The director, upon finding that the requisites for the approval of the trust 03 agreement no longer exist, may issue an order that withdraws approval of a written 04 trust agreement and amendments to it. An order issued under this subsection takes 05 effect 10 days after being issued. 06 (m) In addition to all other actions permitted under this title, refusal or neglect 07 of a trustee to comply with the requirements of this title is a cause for suspension or 08 revocation of the United States branch's certificate of authority or the liquidation of 09 the alien insurer's United States branch. 10 (n) Annual statements under AS 21.09.200 and quarterly statements under 11 AS 21.09.205 (1) may only relate to insurance transactions and affairs within the 12 United States, assets held by or for the United States branch for the protection of 13 policyholders and creditors within the United States, and liabilities incurred against 14 those assets; and (2) may not contain a statement in regard to assets and business 15 transacted in a place not described in this subsection. The annual and quarterly 16 statements shall be signed and verified by the United States manager, attorney-in-fact, 17 or a duly empowered assistant United States manager of the United States branch. 18 (o) In a form prescribed by the director, an authorized United States branch 19 shall file with its annual and quarterly statements a statement of trusteed surplus 20 covering the same time period. The trusteed surplus shall consist of the aggregate 21 value of the United States branch's general state deposits and assets deposited with a 22 trustee under this section, plus accrued interest income if the interest were collected 23 by the states for the trustees, less the aggregate net amount of all its reserves and other 24 liabilities in the United States as determined under this subsection. The items of 25 securities and other property held under trust deeds shall be certified by the United 26 States trustee. To determine the net amount of the United States branch's liabilities 27 in the United States to be reported in the statement of trusteed surplus, the United 28 States branch shall adjust its total liabilities reported on its accompanying annual or 29 quarterly statement as follows: 30 (1) by adding back liabilities used to offset admitted assets reported in 31 the accompanying annual or quarterly statement; and
01 (2) by deducting 02 (A) unearned premiums on agent's balances or uncollected 03 premiums not more than 90 days past due; 04 (B) reinsurance on losses with authorized insurers, less unpaid 05 reinsurance premiums; 06 (C) reinsurance recoverables on paid losses from unauthorized 07 insurers that are included as an asset in the annual statement, but only to the 08 extent a liability for unauthorized recoverables as described in this paragraph 09 are included in the liabilities report in the trusteed surplus statement; 10 (D) special state deposits held for the exclusive benefit of 11 policyholders, or policyholders and creditors, of a particular state not exceeding 12 net liabilities reported for that state; 13 (E) secured accrued retrospective premiums; 14 (F) if a life insurer, 15 (i) the amount of its policy loans to policyholders within 16 the United States, not exceeding the amount of legal reserve required 17 on an affected policy; and 18 (ii) the net amount of uncollected and deferred 19 premiums; and 20 (G) other nontrusteed assets, upon a written finding by the 21 director that the other nontrusteed assets secure liabilities in a substantially 22 similar manner to those permitted under this subsection. 23 (p) In addition to the annual and quarterly statements and the statements of 24 trusteed surplus, the director may require additional information relating to total 25 business or assets, or any portion of them, of the alien insurer or its United States 26 branch. 27 (q) In addition to the general statement of the financial condition of the United 28 States branch, a report of examination must include a trusteed surplus statement as of 29 the date of the examination. 30 (r) In this section, 31 (1) "trusteed assets" are the assets maintained in a trust account under
01 (g) of this section; 02 (2) "United States branch" means the business unit through which 03 business is transacted within the United States by an alien insurer and the assets and 04 liabilities of the insurer within the United States applicable to that business. 05 * Sec. 14. AS 21.09.310(b) is repealed and reenacted to read: 06 (b) An alien insurer may apply for a certificate of authority to use this state 07 as a state of entry to transact the business of insurance in the United States by 08 (1) qualifying as an insurer licensed to do business in this state; and 09 (2) establishing a trust under a trust agreement approved in writing by 10 the director with a United States bank acceptable to the director in an amount not less 11 than the greater of 12 (A) the minimum basic capital or basic guarantee surplus and 13 additional maintained surplus required under AS 21.09.070; or 14 (B) the authorized control level risk based capital under 15 AS 21.14; 16 (3) submitting a copy of its charter and bylaws, if any, currently in 17 force, and other documents necessary to show the kind of business it is authorized to 18 transact in its domiciliary jurisdiction; documents submitted under this paragraph must 19 be attested to as accurate and complete by the insurance supervisory official in the 20 domiciliary jurisdiction, and must include an English translation, if in a language other 21 than English; 22 (4) submitting a full statement, subscribed and affirmed as true by two 23 officers or equivalent responsible representatives in a manner that the director 24 prescribes, of its financial condition as of the close of its latest fiscal year, showing 25 its assets, liabilities, income disbursements, business transacted, and other facts 26 required to be shown in its annual statement, as reported to the insurance supervisory 27 official in its domiciliary jurisdiction; all documents submitted under this paragraph 28 must include an English translation if in a language other than English; 29 (5) submitting to an examination under AS 21.06.120(b) at its principal 30 office within the United States, and elsewhere if necessary, unless the director accepts 31 a report of the insurer's recent examination and the report has been certified by the
01 insurance supervisory official of the insurer's domiciliary jurisdiction; and 02 (6) payment of fees established under AS 21.06.250. 03 * Sec. 15. AS 21.09.310(g) is repealed and reenacted to read: 04 (g) A United States branch shall maintain assets in a trust account in an 05 amount not less than the United States branch's reserves and other liabilities, plus the 06 greater of 07 (1) the minimum basic capital or basic guaranteed surplus and 08 additional maintained surplus required under AS 21.09.070; or 09 (2) the authorized control level risk based capital under AS 21.14. 10 * Sec. 16. AS 21.12.020(a) is amended to read: 11 (a) Credit for reinsurance transactions shall be allowed a domestic ceding 12 insurer as either an asset or a deduction from liability on account of reinsurance ceded 13 only if the reinsurance is ceded to an 14 (1) assuming insurer that is licensed to transact insurance or reinsurance 15 in this state; 16 (2) assuming insurer that is accredited as a reinsurer in this state; an 17 accredited reinsurer is one that 18 (A) files evidence of submission [SUBMITS] to this state's 19 jurisdiction, submits to this state's authority to examine its books and records 20 under AS 21.06.120, is licensed to transact insurance or reinsurance in at least 21 one state that is accredited by the National Association of Insurance 22 Commissioners, or, in the case of a United States branch of an alien 23 admitted insurer, is entered through and licensed to transact insurance or 24 reinsurance in at least one state that is accredited by the National 25 Association of Insurance Commissioners; [AND FILES ANNUALLY WITH 26 THE DIRECTOR A COPY OF THE REINSURER'S ANNUAL STATEMENT 27 FILED WITH THE INSURANCE DEPARTMENT OF THE REINSURER'S 28 STATE OF DOMICILE AND A COPY OF THE REINSURER'S MOST 29 RECENT AUDITED FINANCIAL STATEMENT; OR] 30 (B) [IN THE CASE OF A UNITED STATES BRANCH OF 31 AN ALIEN ASSUMING INSURER, IS ENTERED THROUGH, AND
01 LICENSED TO TRANSACT INSURANCE OR REINSURANCE IN, AT 02 LEAST ONE STATE ACCREDITED BY THE NATIONAL ASSOCIATION 03 OF INSURANCE COMMISSIONERS, FILES ANNUALLY WITH THE 04 DIRECTOR A COPY OF ITS ANNUAL FINANCIAL STATEMENT THAT 05 IS FILED WITH THE INSURANCE REGULATORY AGENCY OF ITS 06 STATE OF DOMICILE, AND] maintains at least $20,000,000 in policyholder 07 surplus and whose accreditation has not been denied by the director within 08 90 days of application to the director, or maintains less than $20,000,000 09 in policyholder surplus and whose application for accreditation has been 10 approved by the director; and 11 (C) files annually with the director a copy of the reinsurer's 12 annual financial statement filed with the insurance department of the 13 reinsurer's state of domicile or state of entry [THE SURPLUS 14 REQUIREMENTS IN THIS SUBPARAGRAPH DO NOT APPLY TO 15 REINSURANCE CEDED AND ASSUMED UNDER A POOLING 16 ARRANGEMENT AMONG INSURERS IN THE SAME HOLDING 17 COMPANY SYSTEM]; 18 (3) assuming insurer that is domiciled in a state, or in the case of a 19 United States branch of an alien assuming insurer, is entered through a state accredited 20 by the National Association of Insurance Commissioners that employs standards 21 regarding credit for reinsurance ceded substantially similar to those applicable under 22 (1) and (2) of this subsection, the assuming insurer maintains a policyholder surplus 23 of at least $20,000,000, and the assuming insurer submits to the authority of this state 24 to examine its books and records; the surplus requirements in this paragraph do not 25 apply to reinsurance ceded and assumed under a pooling arrangement among insurers 26 in the same holding company system; 27 (4) assuming alien insurer that 28 (A) maintains a trust fund in a qualified United States financial 29 institution for the payment of the valid claims of its United States policyholders 30 and ceding insurers, and their assigns and successors in interest, that conforms 31 to the following requirements:
01 (i) the trust shall be established in a form approved by 02 the director; the trust instrument must provide that contested claims are 03 valid and enforceable upon the final order of any court of competent 04 jurisdiction in the United States; the trust shall vest legal title to its 05 assets in the trustees of the trust for its United States policyholders and 06 ceding insurers, their assigns, and successors in interest; the trust and 07 the assuming insurer are subject to examination as determined by the 08 director; the trust must remain in effect for so long as the assuming 09 insurer has outstanding liabilities due under the reinsurance agreements 10 subject to the trust; 11 (ii) on or before March 1 of each year the trustees shall 12 report in writing to the director on the balance of the trust and list the 13 trust's investments at the end of the preceding year, and shall certify the 14 date of termination of the trust, if so planned, or certify that the trust 15 does not expire before the following December 31; 16 (iii) in the case of a single assuming insurer, the trust 17 shall consist of trust money representing the assuming insurer's 18 liabilities attributable to business written in the United States and, in 19 addition, include a trust surplus of not less than $20,000,000; the single 20 assuming insurer shall make available to the director an annual 21 certification of the insurer's solvency by the insurer's domiciliary 22 regulator and by an independent public accountant; 23 (iv) in the case of a group, including incorporated and 24 [OF] individual unincorporated insurers, the trust shall consist of trust 25 money representing the group's liabilities attributable to business 26 written in the United States and, in addition, include a trust surplus not 27 less than $100,000,000; the incorporated members of the group may 28 not be engaged in any business other than underwriting as a 29 member of the group and are subject to the same level of solvency 30 regulation and control by the group's domiciliary regulator as are 31 the unincorporated members; the group shall make available to the
01 director an annual certification of the solvency of each insurer [OF 02 THE INDIVIDUAL UNINCORPORATED INSURERS] by the group's 03 domiciliary regulator and by an independent certified public accountant, 04 or, for a Canadian or British insurer, an independent Canadian or 05 British chartered accountant; 06 (v) in the case of a group of incorporated insurers under 07 common administration that complies with the reporting requirements 08 contained in (ii) of this subparagraph, that has continuously transacted 09 an insurance business outside the United States for at least three years 10 immediately before making application for accreditation, that submits 11 to this state's authority to examine its books and records and bears the 12 expense of the examination, and that has aggregate policyholders' 13 surplus of $10,000,000,000, the trust shall be in an amount equal to the 14 group's several liabilities attributable to business ceded by United States 15 ceding insurers to a member of the group under reinsurance contracts 16 issued in the name of the group, and the group shall maintain a joint 17 trustee surplus, of which $100,000,000 shall be held jointly for the 18 benefit of United States ceding insurers of a member of the group as 19 additional security for the group's liabilities, and each member of the 20 group shall make available to the director an annual certification of the 21 member's solvency by the member's domiciliary regulator and the 22 member's independent certified public accountant, or, for a Canadian 23 or British insurer, the member's independent Canadian or British 24 chartered accountant; and 25 (B) reports annually to the director information substantially the 26 same as that required to be reported on the National Association of Insurance 27 Commissioners' annual statement form by licensed insurers to enable the 28 director to determine the sufficiency of the trust fund; 29 (5) assuming insurer that does not meet the requirements of (1) - (4) 30 of this subsection, but only with respect to the insurance of risks located in 31 jurisdictions where the reinsurance is required by applicable law or regulation of that
01 jurisdiction. 02 * Sec. 17. AS 21.18.060(b) is amended to read: 03 (b) The director may require that the reserves be equal to the unearned 04 portions of the gross premiums in force after deducting applicable reinsurance in 05 solvent insurers as computed on each respective risk from the policy's date of issue. 06 [EXCEPT AS REQUIRED BY THE DIRECTOR UNDER THIS SUBSECTION, THE 07 PORTIONS OF THE GROSS PREMIUM IN FORCE, LESS APPLICABLE 08 REINSURANCE IN SOLVENT INSURERS, TO BE HELD AS AN UNEARNED 09 PREMIUM RESERVE SHALL BE COMPUTED ACCORDING TO THE 10 FOLLOWING TABLE: 11 TERM FOR WHICH POLICY RESERVE FOR UNEARNED 12 WAS WRITTEN PREMIUM 13 1 YEAR OR LESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1/2 14 2 YEARS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1ST YEAR 3/4 15 2ND YEAR 1/4 16 3 YEARS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1ST YEAR 5/6 17 2ND YEAR 1/2 18 3RD YEAR 1/6 19 4 YEARS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1ST YEAR 7/8 20 2ND YEAR 5/8 21 3RD YEAR 3/8 22 4TH YEAR 1/8 23 5 YEARS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1ST YEAR 9/10 24 2ND YEAR 7/10 25 3RD YEAR 1/2 26 4TH YEAR 3/10 27 5TH YEAR 1/10 28 OVER 5 YEARS . . . . . . . . . . . . . . . . . . . . . . . . . . . .PRO RATA.] 29 * Sec. 18. AS 21.18.060(c) is amended to read: 30 (c) An [IN LIEU OF COMPUTATION ACCORDING TO THE TABLE IN 31 (b) OF THIS SECTION, THE] insurer shall [AT ITS OPTION MAY] compute all of
01 the reserves on a monthly or more frequent pro rata basis. 02 * Sec. 19. AS 21.18.090 is amended to read: 03 Sec. 21.18.090. LOSS RESERVES, LIABILITY INSURANCE, AND 04 WORKERS' COMPENSATION. Where required in the form of annual statement 05 required of the insurer, the reserve for outstanding losses under insurance against loss 06 or damage from accident to or injuries suffered by an employee or other person and 07 for which the insured is liable shall be computed as follows: 08 (1) for all liability claims under policies written more than three 09 years before the end of the calendar year covered by the annual statement, the 10 reserve shall be the undiscounted value of the determined and the estimated 11 future payments [SUITS BEING DEFENDED UNDER POLICIES WRITTEN MORE 12 THAN 13 (A) 10 YEARS BEFORE THE DATE THE STATEMENT IS 14 MADE, $1,500 FOR EACH SUIT; 15 (B) FIVE OR MORE AND LESS THAN 10 YEARS BEFORE 16 THE STATEMENT IS MADE, $1,000 FOR EACH SUIT; 17 (C) THREE OR MORE AND LESS THAN FIVE YEARS 18 BEFORE THE STATEMENT IS MADE, $850 FOR EACH SUIT]; 19 (2) for all liability policies written during the three years immediately 20 preceding the date the statement is made, the reserve shall be the greater of 60 21 percent of the earned liability premiums of each of the three years less all losses and 22 expense payments made under liability policies written in the corresponding years or 23 the undiscounted value of the known and unknown claims; [BUT THE RESERVE, 24 FOR THE FIRST OF THE THREE YEARS, SHALL BE NOT LESS THAN $750 25 FOR EACH OUTSTANDING LIABILITY SUIT ON THE YEAR'S POLICIES]; 26 (3) for all workers' compensation claims under policies written more 27 than three years before the end of the calendar year covered by the annual 28 statement [IS MADE], the reserve may not [SHALL] be less than the present value 29 at four per cent interest of the determined and the estimated future payments; 30 (4) for all workers' compensation claims under policies written in the 31 three years immediately preceding the end of the calendar year covered by [DATE]
01 the annual statement [IS MADE], the reserve may not [SHALL] be less than 65 02 percent of the earned workers' compensation premiums of each of the three years, less 03 all loss and loss expense payments made in connection with the claims under policies 04 written in the corresponding years; [BUT IN THE FIRST YEAR OF THE 05 THREE-YEAR PERIOD,] the reserve may not [SHALL] be [NOT] less than the 06 present value at four [4] percent interest of the determined and the estimated unpaid 07 compensation claims under policies written during the three-year period [YEAR]. 08 * Sec. 20. AS 21.21.250(a) is amended to read: 09 (a) An insurer may make loans or investments not otherwise expressly 10 permitted under this chapter, in aggregate amount not over five percent of the insurer's 11 assets and not over one percent of the insurer's assets for [OF] any one loan or 12 investment, if the loan or investment fulfills the requirements of AS 21.21.030, and 13 otherwise qualifies as a sound investment. However, a loan or investment may not be 14 represented by 15 (1) an item described in AS 21.18.030, or a loan or investment 16 otherwise expressly prohibited; 17 (2) agents' balances, or amounts advanced to or owing by agents or 18 former agents of the insurer, whether or not secured; except policy loans, mortgage 19 loans, and collateral loans otherwise authorized under this chapter; 20 (3) a category of loans or investments eligible under other provisions 21 of this chapter; or 22 (4) an asset theretofore acquired or held by the insurer under any other 23 category of loans or investments eligible under this chapter. 24 * Sec. 21. AS 21.21.370(a) is amended to read: 25 (a) A domestic insurer may [NOT] acquire, directly or indirectly, a medium 26 grade or lower grade obligation of an institution if, after giving effect to the 27 acquisition, 28 (1) the aggregate amount of all medium grade and lower grade 29 obligations held by the domestic insurer does not exceed [EXCEEDS] 20 percent of 30 its admitted assets and if not more than 31 (A) 10 percent of its admitted assets consist of obligations rated
01 four, five, or six by the securities valuation office; 02 (B) three percent of its admitted assets consist of obligations 03 rated five or six by the securities valuation office; and 04 (C) one percent of its admitted assets consist of obligations 05 rated six by the securities valuation office; and [OR] 06 (2) the aggregate amount of all medium grade and [OR] lower grade 07 obligations held by the domestic insurer does not exceed [EXCEEDS] 30 percent of 08 its policyholders' surplus account as shown by the insurer's most recent report filed 09 under AS 21.06.150, AS 21.09.200, or 21.09.205. 10 * Sec. 22. AS 21.22.010(g) is amended to read: 11 (g) The provisions of this section do not apply to 12 (1) an offer of, request for, invitation for, or agreement regarding [, 13 OR] acquisition of a voting security that, immediately before the consummation of the 14 offer, request, invitation, agreement, or acquisition, was not issued and outstanding; or 15 (2) an offer, request, invitation, agreement, or acquisition that the 16 director by order may exempt as not having been made or entered into for the purpose 17 and not having the effect of changing or influencing the control of the domestic 18 insurer. 19 * Sec. 23. AS 21.22.030 is amended by adding a new subsection to read: 20 (d) The director may retain at the acquiring person's expense an attorney, 21 actuary, accountant, or other expert not otherwise a part of the director's staff, if 22 reasonably necessary to assist the director in reviewing the proposed acquisition of 23 control. 24 * Sec. 24. AS 21.22.060(b) is amended to read: 25 (b) Every insurer subject to registration shall file a registration statement on 26 a form provided by the director, that must contain current information about 27 (1) the capital structure, general financial condition, ownership, and 28 management of the insurer and any person controlling the insurer; 29 (2) the identity of every member of the insurance holding company 30 system; 31 (3) the following agreements in force, relationships subsisting, and
01 transactions currently outstanding between the insurer and its affiliates: 02 (A) loans, other investments, or purchases, sales, or exchanges 03 of securities of the affiliates by the insurer or of the insurer by its affiliates; 04 (B) purchases, sales, or exchanges of assets; 05 (C) transactions not in the ordinary course of business; 06 (D) guarantees or undertakings for the benefit of an affiliate that 07 result in an actual contingent exposure of the insurer's assets to liability, other 08 than insurance contracts entered into in the ordinary course of the insurer's 09 business; 10 (E) all management and service contracts and all cost-sharing 11 arrangements [, OTHER THAN COST ALLOCATION ARRANGEMENTS 12 BASED UPON GENERALLY ACCEPTED ACCOUNTING PRINCIPLES]; 13 and 14 (F) reinsurance agreements [COVERING ALL OR 15 SUBSTANTIALLY ALL OF ONE OR MORE LINES OF INSURANCE OF 16 THE CEDING COMPANY]; and 17 (4) other matters concerning transactions between registered insurers 18 and any affiliates that may be included from time to time in a registration form 19 adopted or approved by the director. 20 * Sec. 25. AS 21.22.060(c) is amended to read: 21 (c) The director may permit an authorized insurer that is a member of a 22 holding company system subject to registration under the laws or regulations of its 23 state of domicile that are in the opinion of the director substantially similar to those 24 contained in this chapter to satisfy the requirements of (a) of this section by filing a 25 statement in accordance with the laws of its state of domicile [EXCEPT THAT THE 26 DIRECTOR MAY AT ANY TIME REQUIRE A COPY OF THAT STATEMENT BE 27 FILED WITH THE DIRECTOR]. 28 * Sec. 26. AS 21.22.060(d) is amended to read: 29 (d) Information [NO INFORMATION] need not be disclosed on the 30 registration statement filed under (b) of this section if that information is not material 31 for the purposes of this section. Unless the director by regulation or order provides
01 otherwise, sales, purchases, exchanges, loans or extensions of credit, or investments, 02 involving one-half of one percent or less of an insurer's admitted assets or five percent 03 or less of the policyholder's surplus as of the 31st day of December of the calendar 04 year in which the transaction took place are not considered material for purposes of 05 this section. 06 * Sec. 27. AS 21.22.060(k) is amended to read: 07 (k) An insurer subject to registration under (a) of this section shall register 08 annually by April 1 of each year for the previous calendar year unless, for good cause 09 shown, the director extends the time for registration. The director may require an 10 insurer [AUTHORIZED TO DO BUSINESS IN THE STATE, THAT IS A MEMBER 11 OF A HOLDING COMPANY SYSTEM AND] that is allowed to register as 12 provided [NOT SUBJECT TO REGISTRATION] under (c) [(a)] of this section, to 13 furnish a copy of 14 (1) the registration statement; 15 (2) [,] the summary specified in (l) of this section; [,] or 16 (3) other information filed by the insurer with the insurance regulatory 17 authority of the insurer's state of domicile. 18 * Sec. 28. AS 21.27.010(a) is amended to read: 19 (a) Except as provided otherwise in this chapter, a [A] person may not act 20 as or represent to be an insurance producer, managing general agent, reinsurance 21 intermediary broker, reinsurance intermediary manager, surplus lines broker, or 22 independent adjuster in this state or relative to a subject resident, located, or to be 23 performed in this state unless licensed under this chapter. A person may not act as or 24 represent to be a managing general agent, reinsurance intermediary broker, or 25 reinsurance intermediary manager representing an insurer domiciled in this state 26 regarding a risk located outside this state unless licensed by this state. 27 * Sec. 29. AS 21.27.020 is amended by adding a new subsection to read: 28 (f) The director may 29 (1) adopt regulations establishing additional education or experience 30 requirements for applicants or licensees under this chapter upon due consideration of 31 the availability and accessibility of education and training opportunities in rural areas
01 of the state; and 02 (2) make arrangements, including contracting with an outside agency, 03 for administrative services. 04 * Sec. 30. AS 21.27.025(a) is amended to read: 05 (a) A licensee shall notify the director within 30 days in writing by certified 06 mail of a change in residence, employment that is licensed under this chapter, place 07 of business, legal name, fictitious name or alias, mailing address, or phone number; 08 a suspension, [OR] revocation, or disciplinary action of a license by another state or 09 jurisdiction; or a conviction of a misdemeanor or felony. 10 * Sec. 31. AS 21.27.060(d) is amended to read: 11 (d) This section does not apply to an applicant 12 (1) for a limited license under AS 21.27.150(1), (2), or (6); 13 (2) who, at any time within the two-year period immediately preceding 14 the date the current pending application is received by the division, had been licensed 15 in good standing in this state under a license requiring substantially similar 16 qualifications as required by the license applied for; or 17 (3) whose license in its [THE] resident jurisdiction requires the same 18 qualifications as the license applied for in this state if the license in all jurisdictions 19 is in good standing [AND ITS RESIDENT JURISDICTION IS ACCREDITED BY 20 THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS]. 21 * Sec. 32. AS 21.27.100 is amended by adding a new subsection to read: 22 (e) An individual in a firm who acts solely on behalf of a firm that is 23 appointed as an agent on behalf of an admitted insurer under this section, may not be 24 required to also have an appointment if the individual in the firm is licensed with that 25 firm. 26 * Sec. 33. AS 21.27.130 is amended to read: 27 Sec. 21.27.130. FORM AND CONTENT OF LICENSES. A license shall be 28 in the form the director prescribes and must set out 29 (1) the name and [MAILING] address of the licensee, and, if the 30 licensee is required to have a place of business, the physical address of the place of 31 business;
01 (2) if for a firm, the name of the principal or manager of the firm; 02 (3) the kind or class of insurance the licensee is licensed to handle; 03 (4) the effective date and expiration date of the license; 04 (5) the condition under which the license is granted; 05 (6) the date of issuance of the license; 06 (7) each fictitious name and alias under which the licensee may do 07 business; and 08 (8) other information required by the director. 09 * Sec. 34. AS 21.27.360(b) is amended to read: 10 (b) All money, except that made payable to the insurer, representing premium 11 taxes and fees, premiums or return premiums received by the licensee, shall be 12 received in the fiduciary account of the licensee and shall be promptly accounted for 13 and paid to the person entitled to the money. The fiduciary account shall be located 14 in this state unless the licensee is licensed as a nonresident under AS 21.27.270. 15 For purposes of this section, the fiduciary account of the firm shall be considered the 16 fiduciary account of an individual licensee acting on behalf of the firm and shall be 17 the responsibility of the firm. Money deposited into a fiduciary account may not be 18 commingled or otherwise combined with other money, except as allowed under (d) of 19 this section and AS 21.27.365. 20 * Sec. 35. AS 21.27.380(a) is amended to read: 21 (a) Except as provided in this title, the director may renew a license biennially 22 on a date set by the director if the licensee continues to be qualified under this chapter 23 and on or before the close of business of the renewal date, meets all renewal 24 requirements established by regulation and pays the [IF] renewal license fees set 25 under AS 21.06.250 for each license to [ARE RECEIVED BY] the director [ON OR 26 BEFORE THE CLOSE OF BUSINESS OF THE RENEWAL DATE]. A licensee is 27 responsible for knowing the date that a license lapses and for renewing a license before 28 expiration. The director shall mail a renewal notice to the licensee's current address 29 on file with the director 30 days before the renewal date. 30 * Sec. 36. AS 21.27.420 is amended by adding a new subsection to read: 31 (c) With the consent of an applicant or licensee, the director may issue or
01 renew a license with restrictions upon the scope of the person's license or may 02 otherwise restrict or condition the activities of the licensee if the director determines 03 that the person has violated the provisions of this title or to protect the public from 04 injury or potential injury. 05 * Sec. 37. AS 21.27.530 is amended to read: 06 Sec. 21.27.530. INSURANCE PRODUCER QUALIFICATIONS. In addition 07 to the general qualifications under AS 21.27.020, to qualify for issuance or renewal of 08 an insurance producer license, an applicant or licensee 09 (1) must possess the competence necessary to fulfill the responsibilities 10 of an insurance producer; 11 (2) if previously licensed in good standing in this state as an insurance 12 producer, must not have had a license suspended or revoked within the previous four 13 calendar years; 14 (3) for a fraternal society limited insurance producer license, shall file 15 with the application a statement by an officer or director of the appointing fraternal 16 society that affirms that the society has satisfied itself that the applicant is trustworthy 17 and competent to act as its insurance agent; 18 (4) for a license with a scope that includes variable contracts, must 19 either be currently registered with the federal Securities and Exchange Commission as 20 a broker-dealer or personally take and pass, to the satisfaction of the director, tests of 21 the knowledge and competence of the applicant concerning securities; and 22 (5) except for an applicant or licensee who represents to be and acts 23 solely on behalf of admitted insurers as an agent and who does not receive money 24 required to be received in the fiduciary account of the licensee, shall file with the 25 application and maintain in force while licensed a bond in the amount of $10,000, 26 unless a greater amount is required by another provision of this title; a licensee who 27 maintains more than one place of business may satisfy the bond requirement with 28 a single bond. 29 * Sec. 38. AS 21.27.570(a)(3)(B) is amended to read: 30 (B) the controlling insurance producer shall render accounts to 31 the controlled insurer detailing all transactions, including information in the
01 accounts necessary to support compensation, commissions, charges, and other 02 fees received by, or owing to, the controlling producer; 03 * Sec. 39. AS 21.27.620(j) is amended to read: 04 (j) If the director determines after a hearing under AS 21.06.170 - 21.06.240 05 that a managing general agent caused loss or damage arising out of a violation of 06 AS 21.27.590 - 21.27.630 to an insurer, the director may order the managing general 07 agent to make restitution to the insurer, receiver, [THE] rehabilitator, or [THE] 08 liquidator of the insurer for the loss. Restitution ordered under this subsection is in 09 addition to any other liability of the managing general agent and does not affect the 10 rights of a policy holder, claimant, creditor, or third party. The director may, at the 11 request of the insurer, maintain or bring a civil action brought by or on behalf 12 of the insurer and its policyholders and creditors for recovery of compensatory 13 damages for the benefit of the insurer and its policyholders and creditors or seek 14 other appropriate relief. If an order of rehabilitation or liquidation of the insurer 15 has been entered under AS 21.78, the receiver appointed under the order 16 determines that a person has not materially complied with AS 21.27.590 - 17 21.27.630 or an order of the director, and the insurer suffers loss or damage from 18 the noncompliance, the receiver may bring a civil action for the recovery of 19 damages or other appropriate sanctions for the benefit of the insurer. 20 * Sec. 40. AS 21.27.690(b) is amended to read: 21 (b) An [A DOMESTIC] insurer may use a nonresident reinsurance 22 intermediary broker who is not licensed under this chapter if the person is licensed in 23 good standing as a resident reinsurance intermediary broker by an insurance regulator 24 of another state that is accredited by the National Association of Insurance 25 Commissioners. Upon written request, the director may grant written permission for 26 a domestic insurer to use an alien reinsurance intermediary broker not licensed by and 27 without a place of business in a jurisdiction subject to accreditation by the National 28 Association of Insurance Commissioners if the alien reinsurance intermediary broker 29 is licensed in good standing by its domiciliary insurance regulator. The domestic 30 insurer and unlicensed reinsurance intermediary broker are subject to all other 31 requirements of this section.
01 * Sec. 41. AS 21.27.690(e) is amended to read: 02 (e) If the director determines after a hearing under AS 21.06.170 - 21.06.240 03 that a reinsurance intermediary broker caused losses or damage arising out of a 04 violation of AS 21.27.670 - 21.27.700 to an insurer or reinsurer, the director may order 05 the reinsurance intermediary broker to make restitution to the insurer, reinsurer, 06 receiver, rehabilitator, or liquidator of the insurer or reinsurer for the net losses 07 incurred by the insurer or reinsurer. Restitution ordered under this subsection is in 08 addition to any other liability of the reinsurance intermediary broker and does not 09 affect the rights of a policyholder, claimant, creditor, or third party. The director 10 may, at the request of the insurer, maintain or bring a civil action brought by or 11 on behalf of the reinsurer or insurer and its policyholders and creditors for 12 recovery of compensatory damages for the benefit of the reinsurer or insurer and 13 its policyholders and creditors or seek other appropriate relief. If an order of 14 rehabilitation or liquidation of the insurer has been entered under AS 21.78, the 15 receiver appointed under the order determines that a person has not materially 16 complied with AS 21.27.670 - 21.27.700 or an order of the director, and the 17 insurer suffers loss or damage from the noncompliance, the receiver may bring 18 a civil action for the recovery of damages or other appropriate sanctions for the 19 benefit of the insurer. 20 * Sec. 42. AS 21.27.760(j) is amended to read: 21 (j) If the director determines after a hearing under AS 21.06.170 - 21.06.240 22 that a reinsurance intermediary manager caused losses or damage arising out of a 23 violation of AS 21.27.730 - 21.27.770 to an insurer or reinsurer, the director may order 24 the reinsurance intermediary manager to make restitution to the insurer, reinsurer, 25 receiver, rehabilitator, or liquidator of the insurer or reinsurer for the net losses 26 incurred by the insurer or reinsurer. Restitution ordered under this subsection is in 27 addition to any other liability of the reinsurance intermediary manager and does not 28 affect the rights of a policyholder, claimant, creditor, or third party. The director 29 may, at the request of the insurer, maintain or bring a civil action brought by or 30 on behalf of the reinsurer or insurer and its policyholders and creditors for 31 recovery of compensatory damages for the benefit of the reinsurer or insurer and
01 its policyholders and creditors or seek other appropriate relief. If an order of 02 rehabilitation or liquidation of the insurer has been entered under AS 21.78, the 03 receiver appointed under the order determines that a person has not materially 04 complied with AS 21.27.730 - 21.27.770 or an order of the director, and the 05 insurer suffers loss or damage from the noncompliance, the receiver may bring 06 a civil action for the recovery of damages or other appropriate sanctions for the 07 benefit of the insurer. 08 * Sec. 43. AS 21.34.040(c)(4) is amended to read: 09 (4) a Lloyd's or other similar group including incorporated and 10 individual unincorporated underwriters, [GROUP OF ALIEN INDIVIDUAL 11 INSURERS] may qualify if it maintains a trust fund in an amount not less than 12 $50,000,000, as security to the full amount, for the protection of all its policy holders 13 and creditors of each member of the group in the United States; the incorporated 14 members may not be engaged in any business other than underwriting as a 15 member of the group and shall be subject to the same level of solvency regulation 16 and control by the group's domiciliary regulator as are the unincorporated 17 members; the trust fund must consist of instruments of substantially the same 18 character and quality as those that are eligible investments for the capital and statutory 19 reserves of admitted insurers authorized to write like kinds of insurance in this state 20 or of irrevocable, clean, and unconditional letters of credit; the trust fund must have 21 an expiration date that at no time is less than five years; 22 * Sec. 44. AS 21.34.080(c) is amended to read: 23 (c) A producing broker shall execute and deliver to the surplus lines broker not 24 later than the end of each month on a form prescribed by the director, and a surplus 25 lines broker shall file with the director with the report required by (a) of this section 26 or with the surplus lines association with the evidence of insurance required by (b) of 27 this section, for surplus lines insurance first placed or renewed in the preceding 28 calendar month, an affidavit that shall be open to public inspection, as to the diligent 29 efforts to place the coverage with admitted insurers, and the results of those efforts. 30 The affidavit must contain a statement by the producing broker that the insured was 31 expressly informed in writing before the [PLACEMENT OF THE SURPLUS LINES]
01 insurance contract or coverage was bound that the surplus lines insurer with whom 02 the insurance was to be placed is not licensed in this state, is not subject to this state's 03 supervision, and, in the event of the insolvency of the surplus lines insurer, losses will 04 not be covered under AS 21.80 (Alaska Insurance Guaranty Association Act). 05 * Sec. 45. AS 21.34.110 is amended to read: 06 Sec. 21.34.110. SURPLUS LINES BROKER'S DUTY TO NOTIFY 07 INSURED. (a) A contract of insurance placed by a surplus lines broker under this 08 chapter is not binding upon the insured and a premium charged is not due and payable 09 until 10 (1) the surplus lines broker has notified the insured in writing, a copy 11 of which shall be maintained by the licensee with the records of the contract, available 12 for examination, that the insurer with which the surplus lines broker places the 13 insurance does not hold a certificate of authority issued by this state and is not subject 14 to its supervision, and in the event of the insolvency of the surplus lines insurer, losses 15 will not be covered under AS 21.80 (Alaska Insurance Guaranty Association Act); or 16 (2) the surplus lines broker has obtained the affidavit of the 17 producing broker that the notice required under AS 21.34.080(c) has been given 18 to the insured; a licensee shall maintain a copy of the affidavit with the record of 19 the contract available for examination. 20 (b) Nothing in this section may be construed as nullifying [SHALL 21 NULLIFY] an agreement by an insurer to provide insurance. 22 * Sec. 46. AS 21.34.190(a) is amended to read: 23 (a) The fee for filing the statement under AS 21.34.180(b) is an amount equal 24 to one percent on gross premium charged less any return premiums during the 25 preceding calendar year [QUARTER]. The surplus lines broker shall pay the fee at 26 the time of filing of the statement. 27 * Sec. 47. AS 21.36.120(d) is amended to read: 28 (d) Nothing in this section may be construed as prohibiting the payment of 29 commissions or other compensation to persons duly transacting business under 30 AS 21.27 [LICENSED AGENTS OR SOLICITORS], or as prohibiting an insurer from 31 allowing or returning to its participating policyholders, members, or subscribers, lawful
01 dividends, savings, or unabsorbed premium deposits. 02 * Sec. 48. AS 21.36.195 is amended to read: 03 Sec. 21.36.195. SURPLUS LINES BROKERS AND INSURANCE 04 PRODUCERS; PROHIBITED ACTS. A surplus lines broker or an insurance 05 producer may not fail to provide evidence [THE EVIDENCES] of insurance, 06 affidavits, filings, or reports, or fail to maintain the records, or fail to pay the taxes and 07 fees, required under AS 21.34. 08 * Sec. 49. AS 21.36.235(a) is amended to read: 09 (a) Except as provided in AS 21.36.305 [AS 21.36.420], if the renewal 10 premium is increased more than 10 percent for a reason other than an increase in 11 coverage or exposure base, or if after renewal there will be a material restriction or 12 reduction in coverage not specifically requested by the insured, written notice shall be 13 mailed to the insured and to the agent or broker of record as required by AS 21.36.260 14 (1) at least 20 days before expiration of a personal insurance policy; 15 or 16 (2) at least 45 days before expiration of a business or commercial 17 policy. 18 * Sec. 50. AS 21.36.290 is amended to read: 19 Sec. 21.36.290. POLICY PERIOD. Except as described in (b) of this 20 section, a [A] policy with a policy period or term of less than 12 months shall, for the 21 purposes of AS 21.36.210 - 21.36.310, be considered to be written for a policy period 22 or term of 12 months except in case of cancellation under any of the circumstances 23 specified in AS 21.36.210, and a policy written for a term longer than one year or a 24 policy with no fixed expiration date shall be considered to be written for successive 25 policy periods or terms of one year and termination by an insurer effective on an 26 anniversary date of the policy shall be considered a failure to renew. 27 * Sec. 51. AS 21.36.290 is amended by adding a new subsection to read: 28 (b) For determining the appropriate rate or premium, a personal automobile 29 insurance policy with a policy period or term of less than six months shall, for the 30 purposes of AS 21.36.210 - 21.36.310, be considered to be written for a policy period 31 or term of six months.
01 * Sec. 52. AS 21.36 is amended by adding a new section to read: 02 Sec. 21.36.305. PREMIUM INCREASES ON PERSONAL AUTOMOBILE 03 INSURANCE POLICIES. (a) An insurer may not increase the premium on a personal 04 automobile insurance policy unless the increase applies to all insureds of the same 05 class. 06 (b) An insurer may not increase the premium or add a surcharge to a personal 07 automobile insurance policy because of the issuance of a citation for a moving traffic 08 violation unless the insured or another person who resides in the insured's household 09 and is covered by the policy has been convicted of the violation or has entered a plea 10 of no contest to the violation. 11 (c) The director shall adopt regulations to determine circumstances under 12 which an insurer may increase the premium or add a surcharge to a personal 13 automobile insurance policy. 14 (d) An insurer that increases the premium or adds a surcharge to a personal 15 automobile insurance policy may only make the increase or surcharge effective on the 16 renewal date of the policy. 17 (e) An insurer that increases the premium or adds a surcharge to a personal 18 automobile insurance policy shall give written notice of the increase or surcharge at 19 least 20 days before it takes effect, stating the reason for the change and the right of 20 appeal under AS 21.39.090. This subsection does not apply to 21 (1) premium increase resulting from a change requested by an insured, 22 if the insured is notified at the time the request is made that the amount of the 23 insured's premium will change as a result of the requested policy change; or 24 (2) rate approved by the director if the insurer gives written notice of 25 a premium increase to the insured at least 20 days before the renewal date of the 26 affected policy. 27 * Sec. 53. AS 21.36.360(i) is amended to read: 28 (i) A criminal insurance act is committed by a person [AN INSURER] doing 29 business in this state or relative to a subject resident, located, or to be performed 30 in this state who knowingly 31 (1) writes, places, or causes to be written or placed in this state or
01 relative to a subject resident, located, or to be performed in this state a policy, 02 duplicate policy, or contract of insurance of any kind or character, or general or 03 floating policy upon persons or property resident, situated, or located in this state, from 04 or through a person not authorized to transact business under AS 21.27 or a risk 05 retention group or purchasing group not registered under AS 21.89.070 06 [BROKER, AGENT, SURPLUS LINE BROKER, OR PERSON WHO HAS NOT 07 SECURED A GENERAL AGENT LICENSE IN THIS STATE]; or 08 (2) pays a commission or other form of remuneration to a person, firm, 09 or organization for the writing or placing of insurance coverage in this state or relative 10 to a subject resident, located, or to be performed in this state unless that person, 11 firm, or organization is authorized under AS 21.27 to transact [HOLDS A LICENSE 12 ISSUED BY THE DIRECTOR FOR] the kind or class of insurance written or placed, 13 or, in the case of a risk retention group or purchasing group, is registered under 14 AS 21.89.070. 15 * Sec. 54. AS 21.36.360(j) is amended to read: 16 (j) A criminal insurance act is committed by a person in this state or relative 17 to a subject resident, located, or to be performed in this state who acts as an 18 insurance producer, managing general agent, third-party administrator, 19 reinsurance intermediary broker, reinsurance intermediary manager, surplus lines 20 broker [SOLICITOR], or independent adjuster without being licensed by the director 21 as required under this title or as a risk retention group or purchasing group 22 without being registered as required under AS 21.89.070. A criminal insurance act 23 is committed by an insurance producer, managing general agent, third-party 24 administrator, reinsurance intermediary broker, reinsurance intermediary 25 manager, or surplus lines broker [OR SOLICITOR] who solicits or takes application 26 for, procures, or places for others any insurance for which the person is not licensed 27 as required under AS 21.27 or for which the license of the person has been 28 suspended or revoked. A criminal insurance act is committed by a person in this 29 state or relative to a subject resident, located, or to be performed in this state who 30 acts as or on behalf of a risk retention group or a purchasing group that is not 31 registered under AS 21.89.070 [THIS SUBSECTION DOES NOT APPLY TO A
01 PERSON DESCRIBED IN AS 21.90.910 OR TO A PERSON SECURING AND 02 FORWARDING INFORMATION REQUIRED FOR THE PURPOSE OF A GROUP 03 INSURANCE COVERING THE UNPAID BALANCE OR REMAINING PAYMENTS 04 PROPOSED TO BE MADE IN CONNECTION WITH THE PURCHASE OF 05 MERCHANDISE OR SERVICES IF NO COMMISSION OR OTHER 06 COMPENSATION IS PAYABLE ON ACCOUNT OF THE INSURANCE TO THE 07 PERSON]. 08 * Sec. 55. AS 21.36.360(k) is amended to read: 09 (k) A criminal insurance act is committed by an insurance producer, 10 managing general agent, [GENERAL AGENT,] third-party administrator, 11 reinsurance intermediary broker, reinsurance intermediary manager, or surplus 12 lines broker [OR SOLICITOR] who knowingly compensates or offers to compensate 13 in any manner a person other than an insurance producer, managing [AGENT,] 14 general agent, third-party administrator, reinsurance intermediary broker, 15 reinsurance intermediary manager, or surplus lines broker [OR SOLICITOR] 16 licensed as required under this title in this or another jurisdiction [STATE OR 17 PROVINCE], for procuring or in any manner helping to procure applications for or to 18 place insurance in this state. A criminal insurance act is committed by a person in 19 this state or relative to a subject resident, located, or to be performed in this state 20 who acts as or on behalf of a risk retention group or a purchasing group that is 21 not registered under AS 21.89.070. This subsection does not apply to the payment 22 of compensation that is not contingent upon volume of business transacted in the form 23 of salaries to the regular employees of the agent, general agent, broker, or solicitor. 24 * Sec. 56. AS 21.36.360(n) is amended to read: 25 (n) A criminal insurance act is committed by an agent, managing general 26 agent, third-party administrator, reinsurance intermediary broker, reinsurance 27 intermediary manager, or other representative of an insurer involved in the procuring 28 or issuance of an insurance contract who intentionally fails to report to the insurer the 29 exact amount of consideration charged as premium for the contract and to maintain 30 records showing that information. 31 * Sec. 57. AS 21.36.380 is amended to read:
01 Sec. 21.36.380. NOTICE ON CLAIM FORM. A claim form must contain a 02 statement that states in substance the following: "A person who knowingly and with 03 intent to injure, defraud, or deceive an insurance company files a claim containing 04 false, incomplete, or misleading information may be prosecuted under state law [IS 05 GUILTY OF A FELONY]." A lack of the statement on a claim form does not 06 constitute a defense to prosecution under this title. 07 * Sec. 58. AS 21.39.040 is amended by adding new subsections to read: 08 (j) An insurer who has submitted an application for a certificate of authority 09 under AS 21.09.110 and a filing of policy forms under AS 21.42.120 may file a 10 proposed rating system as described in this section. The director's approval of the 11 rating system is contingent upon the issuance of a certificate of authority under 12 AS 21.09.120. 13 (k) The director may adopt regulations detailing the format and content of a 14 rating system filing under this section. 15 * Sec. 59. AS 21.39 is amended by adding a new section to read: 16 Sec. 21.39.055. CANCELLATION OF APPROVED FILING. The voluntary 17 surrender of a certificate of authority or the failure of the surrendering admitted foreign 18 insurer to continue a certificate of authority in force has the effect of cancelling an 19 approval that the insurer may have received under this chapter, unless the approval has 20 been affirmed by the director at the time of the surrender or noncontinuation of the 21 certificate of authority. 22 * Sec. 60. AS 21.42.120 is amended by adding new subsections to read: 23 (f) This section does not apply to a type of insurance subject to AS 21.57. 24 (g) An insurer who has submitted an application for a certificate of authority 25 under AS 21.09.110 may file a proposed policy form as described in this section. The 26 director's approval of the policy form is contingent upon the issuance of a certificate 27 of authority under AS 21.09.120. 28 (h) The director may adopt regulations detailing the format and content of the 29 filing of a policy form under this section. 30 * Sec. 61. AS 21.42.345 is amended by adding a new subsection to read: 31 (b) An insurer authorized under AS 21.09 to offer, issue for delivery, deliver,
01 or renew an individual or group disability insurance policy for medical coverage on 02 an expense incurred basis in the state, or a hospital or medical service corporation 03 authorized under AS 21.87 to offer or renew an individual or group subscriber's 04 contract for medical coverage in the state, shall offer coverage for family members, 05 including newly born children, adopted children, or children placed for adoption and 06 is subject to the conditions in (a) of this section, regardless of the marital status of the 07 covered person. 08 * Sec. 62. AS 21.57.010 is amended to read: 09 Sec. 21.57.010. PURPOSE. The purpose of this chapter is to promote the 10 public welfare by regulating consumer credit [LIFE INSURANCE AND CREDIT 11 DISABILITY] insurance. Nothing in this chapter is intended to prohibit or discourage 12 reasonable competition. The provisions of this chapter shall be liberally construed. 13 * Sec. 63. AS 21.57.020 is repealed and reenacted to read: 14 Sec. 21.57.020. APPLICABILITY. Consumer credit insurance transacted in 15 connection with a credit transaction for a personal, household, or family purpose is 16 subject to the provisions of this chapter except 17 (1) insurance written in connection with a credit transaction that is 18 (A) secured by a first mortgage or first deed of trust; and 19 (B) made to finance the purchase of real property, the 20 construction of a dwelling, or to refinance a prior credit transaction made for 21 that purpose; 22 (2) an isolated insurance transaction by the insurer not related to an 23 agreement or a plan for insuring debtors of the creditor; 24 (3) insurance for which no identifiable charge is made to the debtor; 25 or 26 (4) a loan or other credit transaction that exceeds $30,000. 27 * Sec. 64. AS 21.57.030 is repealed and reenacted to read: 28 Sec. 21.57.030. AUTHORIZED TYPES OF CONSUMER CREDIT 29 INSURANCE. A type of consumer credit insurance defined in AS 21.57.160 may be 30 written separately or in combination with other types of consumer credit insurance on 31 an individual or group basis.
01 * Sec. 65. AS 21.57.040 is repealed and reenacted to read: 02 Sec. 21.57.040. AMOUNT OF CONSUMER CREDIT INSURANCE. (a) The 03 amount of coverage for credit life insurance payable at the time of loss 04 (1) may not exceed the greater of the actual net debt or the scheduled 05 net debt, except insurance on an 06 (A) agricultural credit transaction commitment, not exceeding 07 one year in duration, may be written up to the amount of the loan commitment 08 on a nondecreasing or level term plan; and 09 (B) educational credit transaction commitment may be written 10 for the net outstanding balance plus any unused commitment; 11 (2) may not be less than the actual net debt less any payments more 12 than two months overdue if the coverage is written on the actual outstanding net debt; 13 (3) may not exceed the following if the coverage is written on the 14 scheduled outstanding net debt: 15 (A) the scheduled net debt if the actual net debt is less than or 16 equal to the scheduled net debt; 17 (B) the actual net debt if the actual net debt is greater than the 18 scheduled net debt but less than or equal to the scheduled net debt plus two 19 months of payments; or 20 (C) the scheduled net debt plus two months of payments if the 21 actual net debt is greater than the scheduled net debt plus two months of 22 payments; 23 (4) must equal the actual net debt on the date of death if a premium is 24 assessed to the debtor on a monthly basis and is based on the actual net debt; and 25 (5) may be less than the net debt when the partial coverage is 26 calculated using one of the following: 27 (A) the amount of insurance is the lesser of a stated amount and 28 the amount is determined by (2) of this subsection; 29 (B) the amount of insurance is the lesser of a stated amount and 30 the amount is determined by (3) of this subsection; 31 (C) the amount of insurance is a constant percentage of the
01 amount determined by (2) or (3) of this subsection; or 02 (D) in the absence of any preexisting condition exclusion, the 03 amount of insurance payable in the event of death due to natural causes is 04 limited to the balance as it existed six months before the date of death if 05 (i) there has been at least one increase in the outstanding 06 balance during that six-month period, other than an increase due to the 07 accrual of interest or late charges; and 08 (ii) evidence of individual insurability has not been 09 required during that six-month period. 10 (b) The director may provide for other patterns of insurance consistent with 11 (a) of this section by regulation. 12 (c) The total amount of periodic indemnity payable in the event of disability 13 or unemployment, as defined in the policy, may not exceed the sum of the periodic 14 scheduled unpaid installments of the gross debt. The amount of a periodic indemnity 15 payment may not exceed the original gross debt divided by the number of periodic 16 installments. 17 (d) If credit disability insurance or credit unemployment insurance is written 18 in connection with an open-end consumer credit agreement, the amount of insurance 19 may not exceed the gross debt that would accrue on the amount using the creditor's 20 minimum repayment schedule. The periodic indemnity need not relate to the creditor's 21 minimum repayment schedule. 22 * Sec. 66. AS 21.57.050 is repealed and reenacted to read: 23 Sec. 21.57.050. DURATION OF COVERAGE. (a) The effective date of 24 coverage for 25 (1) consumer credit insurance that is elected by the debtor before or 26 contemporaneous with a credit transaction is the date when the debtor becomes 27 obligated to the creditor, except that when evidence of individual insurability is 28 required and the evidence is furnished more than 30 days after the date when the 29 debtor becomes obligated to the creditor, the effective date may be the date on which 30 the insurance company determines the evidence to be satisfactory; 31 (2) insurance coverage that is elected by the debtor on a date
01 subsequent to the date of the credit transaction is, subject to acceptance by the insurer, 02 a date not earlier than the date the election is made by the debtor or later than 30 days 03 following the date on which the insurer accepts the risk for coverage; an insurer shall 04 determine if a risk is acceptable by an objective method, including one related to a 05 particular date within a billing or repayment cycle or a calendar month; and 06 (3) a group policy that provides coverage with respect to a debt existing 07 on the policy effective date, must be on or after the effective date of the group policy. 08 (b) A charge for insurance may not be made to the debtor and retained by the 09 creditor or insurer for a time before commencement of the consumer credit insurance 10 to which the charge is related. 11 (c) The duration of coverage for consumer credit insurance may not extend 12 (1) beyond the termination date specified in the policy; the termination 13 date of insurance may precede, coincide with, or follow the scheduled maturity date 14 of the debt to which it relates, subject to any other requirements and restrictions of this 15 chapter; and 16 (2) more than 15 days beyond the scheduled maturity date of the debt 17 except when extended 18 (A) without additional cost to the debtor; or 19 (B) under a written agreement signed by the debtor, in 20 connection with a variable interest rate credit transaction or a deferral, renewal, 21 refinancing, or consolidation of debt. 22 (d) If the debt is discharged due to renewal, refinancing, or consolidation 23 before the scheduled termination date of the insurance, insurance in force must be 24 terminated before new insurance may be written in connection with the renewed, 25 refinanced, or consolidated debt. 26 (e) If insurance coverage terminates before the scheduled termination of the 27 insurance, the insurer shall make an appropriate refund or credit to the debtor. The 28 refund or credit must consist of the unearned insurance charge paid by the debtor for 29 insurance after the date of the termination, except that a refund is not required of a 30 charge made for insurance if the insurance is terminated by performance of the 31 insurer's obligation with respect to the insurance.
01 (f) An insured debtor may terminate consumer credit insurance at any time by 02 providing advance notice to the insurer. The individual policy or group certificate may 03 require that the notice be in writing or that the debtor surrender the individual policy 04 or group certificate, or both. The debtor's right to terminate coverage may also be 05 subject to the terms of the credit transaction contract. 06 * Sec. 67. AS 21.57 is amended by adding a new section to read: 07 Sec. 21.57.055. DISCLOSURE TO DEBTORS. (a) Before a debtor elects to 08 purchase consumer credit insurance in connection with a credit transaction, the insurer 09 shall disclose the following in writing to the debtor: 10 (1) the purchase of consumer credit insurance is optional and not a 11 condition of obtaining credit approval; 12 (2) if more than one kind of consumer credit insurance is being made 13 available to the debtor, whether the debtor can purchase the insurance separately or the 14 multiple coverage only as a package; 15 (3) the conditions of eligibility; 16 (4) if the debtor has other insurance that covers the risk, the debtor may 17 not want or need credit insurance; 18 (5) if the creditor requires consumer credit insurance as additional 19 security for a debt, the debtor has the option of furnishing the required amount of 20 insurance through existing policies owned or procured by the debtor or of procuring 21 and furnishing the required insurance through an insurer authorized to transact 22 insurance business in this state; 23 (6) the effective date of the coverage; 24 (7) the debtor may cancel the coverage within the first 30 days after 25 receiving the individual policy or group certificate and have a premium paid by the 26 debtor refunded or credited; thereafter, the debtor may cancel the policy at any time 27 during the term of the loan and receive a refund of unearned premium; 28 (8) a brief description of the coverage, including 29 (A) the amount; 30 (B) the term; 31 (C) any exceptions, limitations, or exclusions;
01 (D) the insured event; 02 (E) any waiting or elimination period; 03 (F) any deductible; 04 (G) any applicable waiver of premium provision; 05 (H) to whom the benefits would be paid; and 06 (I) the premium rate for a coverage or for multiple coverage in 07 a package; 08 (9) if the premium or insurance charge is financed, it is subject to 09 finance charges at the rate applicable to the credit transaction or at another specified 10 rate; and 11 (10) whether or not the benefits provided are sufficient to pay off the 12 debt in full, including finance charges unearned at the time of the claim. 13 (b) The disclosure required in (a) of this section shall be provided in the 14 following manner: 15 (1) in connection with consumer credit insurance offered 16 contemporaneously with the extension of credit or offered through direct mail 17 advertisements, the disclosure shall be presented to the consumer in a clear and 18 conspicuous manner; or 19 (2) in conjunction with the offer of credit insurance subsequent to the 20 extension of credit by other than direct mail advertisements, the initial disclosure may 21 be provided orally as long as written disclosure is provided to the debtor not later than 22 10 days after the offer or the date any other written material is provided to the debtor, 23 whichever occurs first. 24 (c) If the debtor elects to purchase coverage, the delivery of the disclosure 25 required in (b) of this section shall be acknowledged by the debtor at the time of 26 delivery, and the insurer shall maintain the debtor's written acknowledgement for at 27 least five years. 28 * Sec. 68. AS 21.57.060 is repealed and reenacted to read: 29 Sec. 21.57.060. PROVISIONS OF POLICIES AND CERTIFICATES OF 30 INSURANCE. (a) Consumer credit insurance shall be evidenced by an individual 31 policy or a group certificate of insurance.
01 (b) The individual policy or group certificate must, in addition to other 02 requirements of law, set out 03 (1) the name and home office address of the insurer; 04 (2) the name of the debtor; 05 (3) the premium to be paid by the debtor disclosed separately for each 06 kind of coverage or for all coverage in a package, except that for open-ended loans, 07 the premium rate and the basis of premium calculation must be specified; 08 (4) a full description of the coverage including the amount, the term, 09 and any exceptions, limitations, or exclusions; 10 (5) a statement that the benefits shall be paid to the creditor to reduce 11 or extinguish the unpaid debt and that, whenever the amount of insurance benefit 12 exceeds the unpaid debt, the excess is payable to the debtor, a beneficiary other than 13 the creditor named by the debtor, or the debtor's estate; 14 (6) an explanation of how refunds are calculated in the event of policy 15 termination; and 16 (7) if the benefit is not adequate to completely pay off the debt existing 17 on the date of death or disability, a statement to that effect on the face of the 18 individual policy or group certificate in not smaller than 10 point, bold face type. 19 * Sec. 69. AS 21.57.070 is repealed and reenacted to read: 20 Sec. 21.57.070. REQUIREMENTS FOR EVIDENCE OF INSURANCE. (a) 21 Unless the individual policy or group certificate of insurance is delivered to the debtor 22 at the time the debt is incurred or when the debtor elects to purchase coverage, a copy 23 of the application for the policy or a notice of proposed insurance, signed by the 24 debtor and setting out (1) the name and home office address of the insurer, (2) the 25 name of the debtor, (3) the premium rate to be paid by the debtor for the insurance, 26 and (4) the amount, term, and a brief description of the coverage provided, shall be 27 delivered to the debtor at the time the debt is incurred or the election to purchase 28 coverage is made. The copy of the application for or notice of proposed insurance 29 must refer exclusively to insurance coverage and must be separate and apart from the 30 loan, sale, other credit statement of account, instrument, or agreement, unless the 31 information required by this subsection is prominently set out in it. Upon acceptance
01 of the insurance by the insurer and within 30 days of the date upon which the debt is 02 incurred or the election to purchase coverage is made, the insurer shall deliver the 03 individual policy or group certificate of insurance to the debtor. The application or 04 notice of proposed insurance must state that upon acceptance by the insurer, the 05 insurance shall become effective as provided in AS 21.57.050(a). 06 (b) The application or notice of proposed insurance may be used to fulfill all 07 of the requirements of AS 21.57.055(a) and 21.57.060(b) if it contains all of the 08 information required by those subsections. 09 (c) A debtor has 30 days from the date the debtor receives the individual 10 policy or the group certificate to review the coverage purchased. At any time within 11 the 30-day period, the debtor may contact the creditor or insurer issuing the policy or 12 certificate and request that the coverage be cancelled. An individual policy or group 13 certificate may require the request be in writing, that the policy or certificate be 14 returned to the insurer, or both. If a policy is cancelled, the insurer shall return a full 15 refund or credit of all premiums or insurance charges to the debtor within 30 days. 16 (d) If the named insurer does not accept the risk, the debtor shall receive a 17 policy or certificate of insurance listing the name and home office address of the 18 substituted insurer and the amount of the premium to be charged. If the amount of 19 premium is less than the amount in the notice of proposed insurance, the insurer shall 20 issue an appropriate refund within 30 days. If the risk is not accepted by an insurer, 21 a premium paid by the debtor shall be refunded or credited to the debtor within 30 22 days of the date of application. 23 (e) For the purposes of (a) of this section, an individual policy or group 24 certificate delivered in conjunction with an open-end consumer credit agreement or 25 consumer credit insurance requested by the debtor after the date of the debt is 26 considered to be delivered at the time the debt is incurred or election to purchase 27 coverage is made if the delivery occurs within 30 days of the date the insurance is 28 effective. 29 (f) An individual policy or group certificate delivered in conjunction with an 30 open-end consumer credit agreement shall continue from its effective date through the 31 term of the agreement unless the individual policy or group certificate is terminated
01 under its terms at an earlier date. 02 * Sec. 70. AS 21.57.080 is repealed and reenacted to read: 03 Sec. 21.57.080. FILING OF FORMS AND RATES. (a) An insurance policy, 04 certificate of insurance, notice of proposed insurance, insurance disclosure notice, 05 insurance advertisement, application for insurance, endorsement, and rider delivered 06 or issued for delivery in this state, and the applicable schedules of premium rates shall 07 be filed with the director before being used. 08 (b) A document required to be filed under (a) of this section must be on file 09 for a waiting period of 30 days before it is used or becomes effective, unless the 10 director gives prior written approval. This period may be extended for an additional 11 30 days if the director gives written notice within the waiting period to the insurer 12 making the filing. The director shall disapprove a filing if the premium rate charged 13 is not reasonable in relation to benefits or if it contains provisions that are unjust, 14 unfair, inequitable, misleading, deceptive, encourage misrepresentation of the policy, 15 or are contrary to a provision of this title or a regulation adopted under this title. A 16 filing is considered to be approved unless it is disapproved by the director within the 17 waiting period. 18 (c) If the director notifies the insurer that a document required to be filed 19 under (a) of this section is disapproved, the insurer may not issue or use any part of 20 the document. In providing notice of disapproval to the insurer, the director shall 21 specify the reason for disapproval and indicate that the insurer is entitled to a hearing. 22 (d) The director may, at any time after a hearing, withdraw approval of a filing 23 on the grounds specified under (b) of this section. The director shall provide the 24 insurer at least 20 days' prior written notice of a hearing scheduled by the director, and 25 the notice of the hearing must state the reason for the proposed withdrawal. 26 (e) An insurer may not issue or use a document required to be filed under (a) 27 of this section after the effective date of a withdrawal of approval under (d) of this 28 section. 29 (f) If a group policy of consumer credit insurance (1) has been delivered in 30 this state before July 1, 1994, or (2) has been or is delivered in another state before 31 or after July 1, 1994, the insurer shall be required to file only the group certificate and
01 notice of proposed insurance delivered or issued for delivery in this state as specified 02 in AS 21.57.060(b) and 21.57.070(a). 03 (g) Consumer credit insurance forms used for insurance described under (f) of 04 this section shall be approved by the director if they conform with the requirements 05 specified in this section and if the schedules of premium rates applicable to the 06 insurance evidenced by the certificate or notice are in accordance with the insurer's 07 schedules of premium rates filed with the director. An item required to be filed under 08 (a) of this section shall also be filed as specified in this chapter unless the item relates 09 to a group policy that is delivered in another state and the director has determined that 10 the other state has substantially similar statutes or regulations to this chapter. Upon 11 this determination, the items required to be filed under (a) of this section shall be filed 12 for informational purposes. If the director subsequently determines that the 13 informational filing is not in compliance with the requirements of this chapter, the 14 insurer may not use the insurance policy, form, certificate, notice of proposed 15 insurance, disclosure notice, advertisement, application for insurance, endorsement, or 16 rider. 17 * Sec. 71. AS 21.57.090 is amended to read: 18 Sec. 21.57.090. PREMIUMS AND REFUNDS. (a) An insurer may revise its 19 schedules of premium rates from time to time, and file the revised schedules with the 20 director. An insurer may not issue a consumer credit [LIFE INSURANCE POLICY 21 OR CREDIT DISABILITY] insurance policy for which the premium rate differs from 22 [EXCEEDS] that determined by the schedules of the insurer then approved by [ON 23 FILE WITH] the director. 24 (b) An [EACH] individual policy or group certificate must provide for a 25 refund in the event of termination of [THAT IF] the insurance [IS TERMINATED] 26 before the scheduled maturity date of the insurance and upon notice to the insurer. 27 The [INDEBTEDNESS, ANY] refund of an amount paid by the debtor for insurance 28 shall be paid or credited promptly to the person entitled to it; provided, however, that 29 the director shall prescribe a minimum refund and a [NO] refund that would be less 30 than the minimum need not be made. A refund formula that an insurer desires to 31 use must provide refunds that are at least as favorable to the debtor as refunds
01 based on the rule of anticipation. The formula to be used in computing refunds shall 02 be filed with and approved by the director. 03 (c) If a creditor requires a debtor to make a payment for consumer credit 04 [LIFE INSURANCE OR CREDIT DISABILITY] insurance and an individual policy 05 or group certificate of insurance is not issued, the creditor shall immediately give 06 written notice to the debtor and shall promptly make an appropriate credit to the 07 account or issue a refund. 08 (d) The amount charged to a debtor for consumer credit [LIFE OR CREDIT 09 DISABILITY] insurance may not exceed the premium charged by the insurer, as 10 computed at the time the charge to the debtor is determined. 11 * Sec. 72. AS 21.57.090 is amended by adding a new subsection to read: 12 (e) Nothing in this chapter may be construed to authorize a payment for 13 insurance prohibited under other provisions of law governing credit transactions. 14 * Sec. 73. AS 21.57.120 is amended to read: 15 Sec. 21.57.120. SELECTION RIGHTS OF INSURED [EXISTING 16 INSURANCE]. When consumer credit [LIFE INSURANCE OR CREDIT 17 DISABILITY] insurance is required as additional security for a debt [AN 18 INDEBTEDNESS], the debtor shall, upon request to the creditor, have the option of 19 furnishing the required amount of insurance through existing policies of insurance 20 owned or controlled by the debtor or of procuring and furnishing the required coverage 21 through an insurer authorized to transact an insurance business in this state. 22 * Sec. 74. AS 21.57 is amended by adding a new section to read: 23 Sec. 21.57.125. DUTIES OF AN INSURER. Except as otherwise prohibited 24 by law, duties imposed upon an insurer by this chapter may be carried out by a 25 creditor if the creditor is licensed under AS 21.27 as an insurance producer, a 26 managing general agent, or a third-party administrator, and transacts business within 27 the scope of its license on behalf of the insurer. 28 * Sec. 75. AS 21.57.150 is repealed and reenacted to read: 29 Sec. 21.57.150. PENALTIES. (a) In addition to any other penalty provided 30 by law, a person licensed under AS 21.27 that the director determines under 31 AS 21.06.170 - 21.06.240 has violated the provisions of this chapter is subject to
01 (1) a civil penalty equal to the compensation promised, paid, or to be 02 paid, directly or indirectly, to the licensee in regard to a violation; 03 (2) either a civil penalty of not more than $10,000 for a violation or, 04 if the director determines that the person wilfully violated the provisions of this 05 chapter, a civil penalty of not more than $25,000 for a violation; and 06 (3) denial, nonrenewal, suspension, or revocation of a license. 07 (b) In addition to any other penalty provided by law, an insurer that the 08 director determines under AS 21.06.170 - 21.06.240 has violated the provisions of this 09 chapter is subject to 10 (1) a civil penalty equal to the premium earned, directly or indirectly, 11 by the insurer in regard to a violation; 12 (2) either a civil penalty of not more than $10,000 for a violation or, 13 if the director determines that the insurer wilfully violated the provisions of this 14 chapter, a civil penalty of not more than $25,000 for a violation; and 15 (3) denial, suspension, or revocation of a certificate of authority. 16 (c) In addition to any other penalty provided by law, any person that the 17 director determines under AS 21.06.170 - 21.06.240 has violated the provisions of this 18 chapter is subject to 19 (1) either a civil penalty of not more than $10,000 for a violation or, 20 if the director determines that the person wilfully violated the provisions of this 21 chapter, a civil penalty of not more than $25,000 for a violation; and 22 (2) denial of a license. 23 * Sec. 76. AS 21.57.160 is repealed and reenacted to read: 24 Sec. 21.57.160. DEFINITIONS. In this chapter, 25 (1) "agriculture credit transaction commitment" means a binding 26 agreement to loan money up to a fixed amount as needed for agricultural purposes; 27 (2) "compensation" means commissions, dividends, retrospective rate 28 credits, service fees, expense allowances or reimbursements, gifts, furnishing 29 equipment, facilities, goods, or services, or any other form of remuneration resulting 30 directly from the sale of consumer credit insurance; 31 (3) "consumer credit insurance" means credit life insurance, credit
01 disability insurance, or credit unemployment insurance; 02 (4) "credit disability insurance" means insurance on a debtor to provide 03 indemnity for payments or debt becoming due on a specific loan or other credit 04 transaction while the debtor is disabled; 05 (5) "credit life insurance" means insurance on the life of a debtor under 06 or in connection with all or a part of a specific loan or other credit transaction; 07 (6) "credit unemployment insurance" means insurance on a debtor to 08 provide indemnity for payments or debt becoming due on a specific loan or other 09 credit transaction while the debtor is involuntarily unemployed; 10 (7) "credit transaction" means a transaction by which the repayment for 11 money loaned or a loan commitment made or payment for goods, services, or 12 properties sold or leased is made at a future date; 13 (8) "creditor" means a person who lends money or who sells or leases 14 goods, services, property, rights, or privileges, for which payment is arranged through 15 a credit transaction, and includes a person who is a successor to the right, title, or 16 interest of the lender, seller, or lessor; 17 (9) "debtor" means a person who borrows money, or purchases or 18 leases goods, services, property, rights, or privileges for which payment is arranged 19 through a credit transaction; 20 (10) "educational credit transaction commitment" means a binding 21 agreement to loan money up to a fixed amount as needed for educational purposes; 22 (11) "gross debt" means the total of the remaining payments owed to 23 the creditor by the debtor; 24 (12) "identifiable charge" means a charge for consumer credit insurance 25 that is made to a debtor having the benefit of the insurance, including a charge for 26 insurance that is disclosed in the consumer credit agreement or other instrument 27 furnished to the debtor, and any difference in the finance, interest, service, or other 28 similar charge made to a debtor in a like circumstance, except for their insured or 29 noninsured status; 30 (13) "net debt" means the amount necessary to liquidate the remaining 31 debt in a single lump sum payment, excluding all unearned finance charges;
01 (14) "open-end consumer credit" means consumer credit extended by 02 a creditor under an agreement in which 03 (A) the creditor reasonably contemplates repeated transactions; 04 (B) the creditor imposes a periodic finance charge on an 05 outstanding unpaid balance; and 06 (C) the amount of consumer credit that may be extended to the 07 debtor during the term of the agreement, up to any limit set by the creditor, is 08 generally made available to the extent that any outstanding balance is repaid; 09 (15) "rule of anticipation" means a refund method that results in 10 refunds equal to the premium cost of scheduled benefits subsequent to the date of 11 cancellation or termination, computed at the schedule of premium rates in effect on the 12 date of issue. 13 * Sec. 77. AS 21.69 is amended by adding new sections to read: 14 Sec. 21.69.645. REDOMESTICATION. (a) An insurer organized under the 15 laws of another state and admitted to do business in this state may become a domestic 16 insurer of this state by complying with the requirements of this title relative to the 17 organization and licensing of a domestic insurer and by designating its principal place 18 of business at a place in this state. 19 (b) A domestic insurer may, upon approval of the director, transfer its domicile 20 to another state in which it is admitted to transact the business of insurance. Upon a 21 transfer as described in this subsection, the insurer shall cease to be a domestic insurer 22 of this state, but shall be considered admitted to this state. The insurer shall meet the 23 qualifications to remain admitted to this state for a period of three years or, if ordered 24 by the director, a longer period. The director may approve a proposed transfer unless 25 the transfer is not in the interest of the policyholders of the insurer or the insurance 26 marketplace of this state. 27 (c) Upon transfer of domestic status to or from this state, the certificate of 28 authority, appointments under AS 21.27.100, rates, and other items that the director 29 allows, and that are in existence at the time the insurer is licensed to transact the 30 business of insurance in this state, shall continue in full force and effect and the 31 insurer shall remain duly qualified to transact the business of insurance in this state.
01 Outstanding policies of a transferring insurer shall remain in full force and effect and 02 shall be endorsed with the new name of the company, its new location, and any other 03 information the director may require. A transferring insurer shall notify the director 04 of the details of the proposed transfer 30 days before the effective date of the transfer 05 and shall promptly file any resulting amendments to corporate documents filed or 06 required to be filed with the director. 07 (d) A transfer of domestic status by merger, consolidation, or any other lawful 08 method of combination must meet the requirements of AS 21.69.590 or 21.69.600. 09 The certificate of authority, appointments under AS 21.27.100, rates, and other items 10 that the director allows, and that are in existence at the time the insurer is licensed to 11 transact the business of insurance in this state, shall continue in full force and effect 12 and the insurer shall remain duly qualified to transact the business of insurance in this 13 state. Outstanding policies of a domestic insurer being merged, consolidated, or 14 otherwise combined shall remain in full force and effect and shall be endorsed with 15 the new name of the company, its new location, and any other information the director 16 may require. 17 (e) An insurer that is transferring its domicile to this state shall file its revised 18 policy forms for approval under AS 21.42. 19 (f) A domestic insurer that is transferring its domicile to another state is not 20 required to file policy forms at the time of transfer if the forms have already been 21 approved under AS 21.42. 22 Sec. 21.69.648. VOLUNTARY SURRENDER OF CERTIFICATE OF 23 AUTHORITY. To voluntarily surrender the certificate of authority of a domestic 24 insurer, a request shall be made to the director to extinguish the certificate of authority 25 six months before the planned effective date of the extinguishment of the charter. 26 Before the request is granted, the director shall conduct an examination under 27 AS 21.06.120. The examination shall be completed within 12 months before the 28 effective date of an extinguishment and all issues contained in the examination report 29 must be resolved to the satisfaction of the director. Insurance business of the domestic 30 insurer shall be cancelled or reinsured as required under AS 21.69.610 or 21.69.620. 31 * Sec. 78. AS 21.72 is amended by adding a new section to read:
01 Sec. 21.72.125. QUARTERLY STATEMENTS. The director may require a 02 benevolent association to file quarterly financial statements as provided in 03 AS 21.09.205. The statements must exhibit the items and facts required under 04 AS 21.72.120(a). 05 * Sec. 79. AS 21.75 is amended by adding a new section to read: 06 Sec. 21.75.135. QUARTERLY STATEMENTS. (a) The director may require 07 a reciprocal insurer's attorney-in-fact to file a quarterly financial statement as provided 08 in AS 21.09.205. 09 (b) A statement required under (a) of this section shall be supplemented by 10 information that may be required by the director relative to the affairs and transactions 11 of the attorney-in-fact that relate to the reciprocal insurer. 12 * Sec. 80. AS 21.75.170(e) is amended to read: 13 (e) Special meetings of the committee may be called by the attorney-in-fact, 14 the chair of the committee, three members of the committee, or a signed petition of 15 at least one percent of the subscribers or three individual subscribers, whichever is 16 greater, as of the most recent annual report of the reciprocal insurer. 17 * Sec. 81. AS 21.75.170 is amended by adding a new subsection to read: 18 (g) Notwithstanding (a) of this section, a domestic reciprocal insurer 19 transacting all of its insurance activities on a subject resident, located, and to be 20 performed in this state may, with the prior written approval of the director, have a 21 subscriber's advisory committee that consists of not less than five individuals who are 22 elected by the subscribers, and who otherwise meet the requirements of (a) of this 23 section. 24 * Sec. 82. AS 21.79.900(6) is amended to read: 25 (6) "member insurer" means an insurer licensed to transact insurance 26 in the state that issues a policy described in AS 21.79.020(a) and (b), or a subscriber 27 contract providing benefits described in AS 21.87.120(a)(2) - (4) or 21.87.130(a)(2) 28 and (3), and includes an insurer whose license or certificate of authority in this state 29 may have been suspended, revoked, not renewed, or voluntarily withdrawn; "member 30 insurer" does not include 31 (A) a health maintenance organization licensed under
01 AS 21.86; 02 (B) a fraternal benefit society licensed under AS 21.84; 03 (C) a mandatory state pooling plan; 04 (D) a mutual assessment company or an entity that operates on 05 an assessment basis; 06 (E) an insurance exchange licensed under AS 21.75; or 07 (F) a nonprofit hospital or medical service organization 08 licensed under AS 21.87; 09 * Sec. 83. AS 21.80.020 is amended by adding a new subsection to read: 10 (b) This chapter does not apply to a risk retention group formed under 15 11 U.S.C. 3901 - 3906 (Liability Risk Retention Act). 12 * Sec. 84. AS 21.84.340 is amended by adding a new subsection to read: 13 (d) The director may require a society to file quarterly financial statements. 14 If quarterly financial statements are required, the statements must follow for a given 15 quarter the reporting specified in the quarterly financial statement blank form and 16 instructions most recently approved by the National Association of Insurance 17 Commissioners. 18 * Sec. 85. AS 21.86.080 is amended by adding new subsections to read: 19 (b) The director may require a health maintenance organization to file quarterly 20 financial statements. If quarterly financial statements are required, the statements must 21 follow for a given quarter the reporting specified in the quarterly financial statement 22 blank form and instructions most recently approved by the National Association of 23 Insurance Commissioners. 24 (c) A filing under this section is subject to AS 21.09.200 and 21.09.205. 25 * Sec. 86. AS 21.87 is amended by adding a new section to read: 26 Sec. 21.87.135. PREFERRED PROVIDER PROGRAMS. A hospital or 27 medical service corporation may offer a preferred provider service agreement to a 28 provider or hospital licensed in this state. A provider or hospital willing to meet the 29 terms and conditions of the preferred provider service agreement may not be excluded 30 from treatment as a preferred provider. A subscriber's contract containing a preferred 31 provider program must provide for payment for a service provided by a nonpreferred
01 provider or hospital. 02 * Sec. 87. AS 21.89.030 is amended to read: 03 Sec. 21.89.030. PAYMENT. An insurance company doing business in this 04 state may not pay a judgment or settlement of a claim in this state for a loss incurred 05 in this state with an instrument other than a negotiable bank check payable on demand 06 and bearing even date with the date of writing or by electronic funds transfer. 07 * Sec. 88. AS 21.89 is amended by adding new sections to read: 08 Sec. 21.89.070. ELECTRONIC DATA TRANSFER. The director may adopt 09 regulations to facilitate electronic data transfer. Electronic data transferred under 10 regulations may, at the discretion of the director, be in place of another method of 11 filing or communication otherwise required under this title. 12 Sec. 21.89.080. RISK RETENTION GROUPS AND PURCHASING GROUPS. 13 (a) A risk retention group or a purchasing group formed under and in compliance with 14 15 U.S.C. 3901 - 3906 (Liability Risk Retention Act) shall register with the director 15 and shall at all times transact business in compliance with federal law and the laws of 16 this state. 17 (b) A risk retention group or a purchasing group shall apply for initial 18 registration on forms prescribed by the director. Payment of a registration fee 19 established under AS 21.06.250 shall be submitted with the application. 20 (c) A risk retention group or a purchasing group may continue its registration 21 if it is in compliance with federal law and the laws of this state. Payment of an annual 22 continuation fee established under AS 21.06.250 shall be submitted with the 23 continuation application. 24 (d) A risk retention group holding a valid certificate of authority as a domestic 25 insurer or a purchasing group duly licensed under AS 21.27 as a resident license is not 26 required to be additionally registered under this section. 27 (e) A risk retention group or purchasing group that is not in compliance with 28 15 U.S.C. 3901 - 3906 (Liability Risk Retention Act) is not eligible for registration or 29 annual continuation of its registration. 30 (f) Failure to comply with 15 U.S.C. 3901 - 3906 (Liability Risk Retention 31 Act) is a violation of this title.
01 (g) In addition to any other penalty provided by law, a person that the director 02 determines under AS 21.06.170 - 21.06.240 has violated a provision of this title 03 relative to a risk retention group or a purchasing group is subject to 04 (1) a civil penalty of not more than $10,000 for a violation or, if the 05 director determines that the person wilfully violated a provision of this title, a civil 06 penalty of not more than $25,000 for a violation; and 07 (2) denial, noncontinuation, or revocation of a registration. 08 (h) The director may adopt regulations on the operation and reporting 09 requirements of a risk retention group that are not in conflict with 15 U.S.C 3901 - 10 3906 (Liability Risk Retention Act). 11 Sec. 21.89.090. APPOINTMENT OF INDEPENDENT COUNSEL; 12 CONFLICTS OF INTEREST. (a) If an insurer has a duty to defend an insured under 13 a policy of insurance and a conflict of interest arises that imposes a duty on the insurer 14 to provide independent counsel to the insured, the insurer shall provide independent 15 counsel to the insured unless the insured in writing waives the right to independent 16 counsel. An insurance policy may contain a provision that provides a method of 17 selecting independent counsel if the provision complies with this section. 18 (b) For purposes of this section, the following do not constitute a conflict of 19 interest: 20 (1) a claim of punitive damages; 21 (2) a claim of damages in excess of the policy limits; 22 (3) claims or facts in a civil action for which the insurer denies 23 coverage; however, this paragraph does not apply if the insurer reserves the insurer's 24 rights on the issue for which coverage is denied and the outcome of that coverage 25 issue can be controlled by counsel initially retained by the insurer for the defense of 26 the claim. 27 (c) If the insured selects independent counsel at the insurer's expense, the 28 insurer may require that the independent counsel have at least five years of experience 29 in civil litigation, including substantial defense experience in the subject at issue in the 30 civil action, and malpractice insurance. Unless otherwise provided in the insurance 31 policy, the obligation of the insurer to pay the fee charged by the independent counsel
01 is limited to the rate that would actually be paid by the insurer to an attorney in the 02 ordinary course of business in the defense of a similar civil action in the community 03 in which the claim arose or is being defended. A dispute between the insurer and 04 insured regarding attorney fees that is not resolved by the insurance policy or this 05 section shall be resolved by arbitration under AS 09.43. 06 (d) If the insured selects independent counsel at the insurer's expense, the 07 independent counsel and the insured shall consult with the insurer on all matters 08 relating to the civil action and shall disclose to the insurer in a timely manner all 09 information relevant to the civil action, except information that is privileged and 10 relevant to disputed coverage. A claim of privilege is subject to review in the 11 appropriate court. Information disclosed by the independent counsel or the insured 12 does not waive another party's right to assert privilege. 13 (e) An insured may waive the right to select independent counsel by signing 14 a statement that reads substantially as follows: 15 I have been advised of my right to select independent counsel 16 to represent me in this lawsuit. I have considered this matter 17 fully and at this time I am waiving my right to select 18 independent counsel. I have authorized my insurer to select a 19 defense counsel to represent me in this lawsuit. 20 (f) If an insured selects independent counsel under this section, both the 21 counsel representing the insurer and independent counsel representing the insured shall 22 be allowed to participate in all aspects of the civil action. Counsel for the insurer and 23 insured shall cooperate fully in exchanging information that is consistent with ethical 24 and legal obligations to the insured. Nothing in this section relieves the insured of the 25 duty to cooperate fully with the insurer as required by the terms of the insurance 26 policy. 27 * Sec. 89. AS 21.90.900(26) is amended to read: 28 (26) "managing general agent" means a person, firm, or corporation that 29 (A) has authority to exercise general supervision over the 30 business, or any part of the business, of one or more admitted insurers; and 31 (B) performs administrative functions normally performed by
01 the insurer including claims administration and payment, marketing 02 administration, agent appointment, premium accounting, premium billing, 03 coverage verification, final underwriting authority, or [AND] certificate 04 issuance; 05 * Sec. 90. AS 21.27.650(f)(3) and AS 21.36.420 are repealed. 06 * Sec. 91. AS 21.57.110 and 21.57.170 are repealed. 07 * Sec. 92. AS 21.09.300(c), enacted in sec. 13 of this Act, has the effect of amending 08 Alaska Rule of Civil Procedure 45, by providing that certain insurer reports of material 09 transactions are not subject to subpoena. 10 * Sec. 93. TRANSITION. This Act applies to a policy of insurance that is entered into 11 or renewed on or after the effective date of the relevant provision of this Act. 12 * Sec. 94. Sections 14 and 15 of this Act take effect only if legislation is passed by the 13 Eighteenth Alaska State Legislature and becomes law that establishes risk based capital 14 requirements for insurers. 15 * Sec. 95. If secs. 14 and 15 of this Act take effect, they take effect on the effective date 16 of the legislation described in sec. 94 of this Act. 17 * Sec. 96. Sections 62 - 76 and 91 of this Act take effect October 1, 1994. 18 * Sec. 97. Except as provided in secs. 95 and 96 of this Act, this Act takes effect July 1, 19 1994.