HB 530: "An Act relating to insurance obtained from or provided by nonadmitted insurers; and providing for an effective date."
00HOUSE BILL NO. 530 01 "An Act relating to insurance obtained from or provided by nonadmitted insurers; 02 and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 21.09.020 is amended to read: 05 Sec. 21.09.020. EXCEPTIONS TO [,] CERTIFICATE OF AUTHORITY 06 REQUIREMENT. A certificate of authority is not required of an insurer, not 07 otherwise authorized in this state, in regard to 08 (1) transactions relative to its policies lawfully written in the state, or 09 liquidation of assets and liabilities of the insurer, [(] other than collection of new 10 premiums [)], all as resulting from its former authorized operations in the state; 11 (2) related transactions subsequent to issuance of a policy covering 12 only subjects of insurance not resident, located, or expressly to be performed in the 13 state at time of issuance, and which coverage was lawfully solicited, written, and 14 delivered outside the state;
01 (3) transactions under surplus lines coverages and wet marine and 02 transportation insurance lawfully written under AS 21.35 [AS 21.34]; or 03 (4) reinsurance, except as to domestic reinsurers. 04 * Sec. 2. AS 21.09.150(b) is amended to read: 05 (b) The director shall, after a hearing, suspend or revoke an insurer's certificate 06 of authority if the director finds that the insurer 07 (1) is in unsound condition, or in a condition, or using methods or 08 practices in the conduct of its business, which render its further transaction of 09 insurance in this state injurious or hazardous to its policyholders or to the public; 10 (2) has refused to be examined or to produce its accounts, records, and 11 files for examination, or that any of its officers have refused to give information with 12 respect to its affairs, when required by the director; 13 (3) has failed to pay a final judgment rendered against it in this state 14 within 30 days after the judgment became final; a judgment appealed from is not final 15 until determined by the appellate court; 16 (4) with a frequency that indicates its general business practice in this 17 state, has without just cause refused to pay proper claims arising under its policies, 18 whether the claim is in favor of an insured or is in favor of a third person, or without 19 just cause delays adjustment of claims, or compels the insured or claimant to accept 20 less than the amount due them or to employ attorneys or to bring suit against the 21 insurer or an insured to secure full payment or settlement of claims; 22 (5) is affiliated with and under the same general management or 23 interlocking directorate or ownership as another insurer that transacts direct insurance 24 in this state without having a certificate of authority, except as permitted for surplus 25 line insurance under AS 21.35 [AS 21.33]; 26 (6) has failed, after written request by the director, to remove or 27 discharge an officer or director who has been convicted of a felony involving fraud, 28 dishonesty, or moral turpitude. 29 * Sec. 3. AS 21.12.090(b) is amended to read: 30 (b) For the purposes of this title, "wet marine and transportation" insurance is 31 that part of marine insurance that includes only
01 (1) insurance upon vessels, crafts, hulls and of interests in or with 02 relation to vessels, crafts, and hulls; 03 (2) insurance of marine builder's risks, marine war risks and contracts 04 of marine protection and indemnity insurance; 05 (3) insurance of freights and disbursements pertaining to a subject of 06 insurance coming within this subsection [SECTION]; and 07 (4) insurance of personal property and interests in personal property, 08 in the course of exportation from or importation into any country, and in the course 09 of transportation coastwise or on inland waters, including transportation by land, water, 10 or air from point of origin to final destination, in respect to, appertaining to, or in 11 connection with, any and all risks or perils of navigation, transit, or transportation, and 12 while being prepared for and while awaiting shipment, and during delays, storage, 13 transshipment, or reshipment incident thereto; "wet marine and transportation 14 insurance" does not include insurance of personal property and interests in 15 personal property if the 16 (A) property has been transported solely by land; 17 (B) property has reached its final destination as specified in 18 the bill of lading or other shipping document; or 19 (C) insured no longer has an insurable interest in the 20 property. 21 * Sec. 4. AS 21.14.100(b) is amended to read: 22 (b) If a report, plan, or revised plan has not been filed in conformance with 23 the requirements of this chapter, the director may, as provided 24 (1) under AS 21.09.150, suspend the authority of an insurer to enter 25 into new obligations or issue a new or renewal policy of insurance in this state; or 26 (2) under AS 21.35.180(f) [AS 21.34.070], declare a surplus lines 27 insurer ineligible to transact business in this state. 28 * Sec. 5. AS 21.27.550(h) is amended to read: 29 (h) Except as provided under AS 21.27.560, an agency appointment may not 30 extend, directly or indirectly, to a client for whom the insurance producer is a 31 producing broker or for whom insurance is exported to nonadmitted insurers under
01 AS 21.35 [AS 21.34]. 02 * Sec. 6. AS 21.27.810 is amended to read: 03 Sec. 21.27.810. SURPLUS LINES BROKER RECORDS. In addition to any 04 other records requirements under this chapter, a surplus lines broker shall maintain in 05 organized form a complete record including 06 (1) the amount of insurance and perils insured; 07 (2) a complete description of property insured and the location of the 08 property; 09 (3) gross premium charged; 10 (4) a return premium paid; 11 (5) the rate of premium charged upon the several items of property; 12 (6) the effective date of the contract and the terms of the contract; 13 (7) the name and address of the insured; 14 (8) the name and address of the insurer; 15 (9) the amount of tax and other sums to be collected from the insured; 16 (10) the allocation of taxes by state under AS 21.35.200 17 [AS 21.34.180]; 18 (11) evidence of insurance issued in compliance with AS 21.35.240 19 [AS 21.34.100]; 20 (12) the identity and license number of the producing broker; 21 (13) any confirming correspondence from the insurer or the 22 representative of the insurer; and 23 (14) the application. 24 * Sec. 7. AS 21.27.860(b) is amended to read: 25 (b) A nonresident independent adjuster may be sued upon a cause of action 26 arising in this state arising from an adjustment under this section under the procedure 27 provided in AS 21.35 [AS 21.33]. 28 * Sec. 8. AS 21 is amended by adding a new chapter to read: 29 CHAPTER 35. NONADMITTED INSURERS; SURPLUS LINES; 30 SURPLUS WET MARINE AND TRANSPORTATION. 31 ARTICLE 1. NONADMITTED INSURERS.
01 Sec. 21.35.010. PURPOSE. (a) The legislature declares there is a significant 02 public interest in insurance transactions with nonadmitted insurers and these insurance 03 transactions require regulation, taxation, supervision, and control as provided in this 04 chapter in order to 05 (1) protect persons seeking insurance in this state; 06 (2) protect the insureds and claimants of this state in transactions 07 involving the purchase of insurance from nonadmitted insurers; 08 (3) avoid the obstacle of resorting to distant forums for the purpose of 09 asserting legal rights under policies issued by nonadmitted insurers; 10 (4) permit surplus lines insurance and surplus wet marine and 11 transportation insurance to be placed with reputable and financially sound nonadmitted 12 insurers, and to be exported from this state under this chapter; 13 (5) establish a system of regulations that 14 (A) permits orderly access to surplus lines insurance and surplus 15 wet marine and transportation insurance in this state; 16 (B) encourages admitted insurers to provide new and innovative 17 types of insurance to consumers in this state; 18 (C) protects regulated, admitted insurers from unregulated and 19 unfair competition by nonadmitted insurers; and 20 (D) maintains reliable insurance markets; 21 (6) provide a system through which persons may purchase insurance 22 from nonadmitted insurers under this chapter; 23 (7) protect the revenue of this state; 24 (8) provide a system that subjects nonadmitted insurance activities in 25 this state to the jurisdiction of the director and state or federal courts in suits by or on 26 behalf of the state. 27 (b) This chapter shall be liberally construed and applied to promote its 28 underlying purposes. 29 Sec. 21.35.020. APPLICABILITY TO INSURERS. A nonadmitted insurer 30 assuming insurance in this state, or relative to property, risks, or exposures located or 31 to be performed in this state, is subject to this chapter.
01 Sec. 21.35.030. PLACEMENT OF INSURANCE. (a) A nonadmitted insurer 02 may not transact insurance unless authorized by a license issued under this title or 03 exempted from licensure by a provision of this title. 04 (b) A person may not directly or indirectly, act as agent for, or otherwise 05 represent or aid on behalf of another, any nonadmitted insurer in the solicitation, 06 negotiation, procurement, effectuation, or renewal of insurance, forwarding of 07 applications, delivery of policies or contracts, inspection of risks, fixing of rates, 08 investigation or adjustment of claims or losses, collection or forwarding of premiums, 09 or in any other manner represent or assist a nonadmitted insurer in the transaction of 10 insurance. 11 (c) A person who represents or aids a nonadmitted insurer in violation of this 12 section is subject to the penalties provided under AS 21.35.440. If an insurance 13 contract is entered into in violation of this section, this section does not preclude the 14 insured from enforcing the insured's rights under the contract according to the terms 15 and provisions of the contract of insurance and the laws of this state to the same 16 degree those rights would have been enforceable if the contract had been lawfully 17 procured. 18 (d) If a nonadmitted insurer fails to pay a claim or loss within the provisions 19 of the insurance contract and the laws of this state, a person who assisted or in any 20 manner aided directly or indirectly in the procurement of the insurance contract is 21 liable to the insured for the full amount of the claim or loss under the provisions of 22 the insurance contract. 23 (e) Subsections (b) and (d) of this section do not apply to a person in regard 24 to an insured who independently procures insurance as provided under AS 21.35.050. 25 (f) This section does not apply to a person properly licensed as an insurance 26 producer under AS 21.27 who, for a fee and under a written agreement, is engaged 27 solely to offer to the insured advice, counsel, opinion, or service with respect to the 28 benefits, advantages, or disadvantages promised under a proposed or in-force policy 29 of insurance if the person does not, directly or indirectly, participate in the solicitation, 30 negotiation, or procurement of insurance on behalf of the insured. 31 (g) This section does not apply to
01 (1) a person acting in material compliance with the insurance laws of 02 this state, including a licensee under as 21.27, in the placement of 03 (A) surplus lines insurance under AS 21.35.140 - 21.35.300, or 04 surplus wet marine and transportation insurance under AS 21.35.300 - 05 21.35.420; 06 (B) a transaction for which a certificate of authority to do 07 business is not required of an insurer under the insurance laws of this state; 08 (C) insurance offered by a nonprofit educational insurer to a 09 nonprofit educational institution and employees of the institution if the prior 10 written approval of the director is obtained and no other insurance is offered; 11 (D) reinsurance if the assuming insurer 12 (i) is authorized by its domiciliary jurisdiction to do 13 insurance or reinsurance business and is authorized to write the type of 14 reinsurance in its domiciliary jurisdiction; and 15 (ii) satisfies all legal requirements for the reinsurance in 16 the state of domicile of the ceding insurer; 17 (2) the property and operation of railroads or aircraft engaged in 18 interstate or foreign commerce; 19 (3) ocean marine insurance; or 20 (4) transactions subsequent to issuance of a policy not covering 21 properties, risks, or exposures located or to be performed in this state at the time of 22 issuance, and lawfully solicited, written, or delivered outside this state. 23 Sec. 21.35.040. NONADMITTED INSURANCE PREMIUM TAX. (a) 24 Except as to premiums on lawfully procured surplus lines insurance exported under 25 AS 21.35.140 - 21.35.290, surplus wet marine and transportation insurance exported 26 under AS 21.35.300 - 21.35.420, and premiums on independently procured insurance 27 on which a tax has been paid under this section, every nonadmitted insurer shall pay 28 to the director on or before March 1 following the calendar year in which the 29 insurance was procured, continued, or renewed a premium receipts tax of three percent 30 of gross premiums charged for the insurance on subjects resident, located, or to be 31 performed in this state. The insurance on subjects resident, located, or to be performed
01 in this state procured through negotiations or an application, in whole or in part 02 occurring or made in or from inside or outside of this state, or for which premiums in 03 whole or in part are remitted directly or indirectly from inside or outside of this state, 04 shall be considered to be insurance procured, continued, or renewed in this state. The 05 tax is in lieu of all taxes and fire department dues. On default of a nonadmitted 06 insurer in the payment of the tax, the insured shall pay the tax within 30 days of 07 written notice from the director of the default by the nonadmitted insurer. If the tax 08 prescribed by this section is not paid by the nonadmitted insurer within the time stated 09 or by the insured within the time stated after the director provides notice of default, 10 the tax may by increased by 11 (1) a late payment fee of $1,000 or 10 percent of the tax due, 12 whichever is greater; 13 (2) interest at the rate of one percent a month or part of a month from 14 the date the payment was originally due to the date paid; and 15 (3) a penalty not to exceed $100 a day or 25 percent of the tax due, 16 whichever is greater, from the date the payment was due to the date paid. 17 (b) In determining the amount of premiums taxable in this state, all premiums 18 written, procured, or received in this state shall be considered written on property or 19 a subject located or resident in this state, except premiums that are properly allocated 20 or apportioned and reported as taxable premiums of another state. In determining the 21 amount of gross premiums taxable in this state covering a subject resident, located, or 22 to be performed both inside and outside the state, the tax due shall be computed on 23 that portion of the policy premium that is attributable to the subject resident, located, 24 or to be performed in this state and that relates to the type of insurance being placed 25 as determined by reference to the allocation schedule set out in AS 21.35.200(f). 26 (c) A person licensed under AS 21.27 who maintains a fiduciary account under 27 AS 21.27.360 or a deposit or surety bond under AS 21.27.365 may collect and transmit 28 to the director on behalf of the nonadmitted insurer or the insured the premium receipts 29 tax due and owing under this section. 30 (d) This section does not apply to insurance of risks of the state, a political 31 subdivision of the state, a nonprofit educational insurer insuring only nonprofit
01 educational institutions and their employees as permitted under AS 21.35.030(g), 02 railroads or aircraft regularly engaged in interstate or foreign commerce, life insurance, 03 disability insurance, or annuity contracts. 04 Sec. 21.35.050. PREMIUM TAX ON INDEPENDENTLY PROCURED 05 INSURANCE. (a) Except for lawfully procured surplus lines insurance exported 06 under AS 21.35.140 - 21.35.290 or surplus wet marine and transportation insurance 07 exported under AS 21.35.300 - 21.35.420, an insured in this state who procures, causes 08 to be procured, continues, or renews insurance with a nonadmitted insurer, or an 09 insured or self-insured who procures or continues excess loss, catastrophe, or other 10 insurance, on properties, risks, or exposures located or to be performed in whole or in 11 part in this state shall, within 30 days after the date the insurance was procured, 12 continued, or renewed, file a written report with the director in a form prescribed by 13 the director. The report must show the name and address of the insured, name and 14 address of the insurer, the subject of the insurance, a general description of the 15 coverage, the amount of premium currently charged, and additional information 16 required by the director. 17 (b) For the purposes of this section, properties, risks, or exposures only 18 partially located or to be performed in this state that are covered under a multi-state 19 policy placed by a surplus lines licensee in another state shall be considered to be 20 insurance independently procured unless the insurer is an admitted insurer. 21 (c) Insurance in a nonadmitted insurer of a subject of insurance resident, 22 located, or to be performed in this state procured through negotiation or an application, 23 in whole or in part occurring or made in or from inside or outside of this state, or for 24 which premiums in whole or in part are remitted directly or indirectly from inside or 25 outside of this state, is considered to be insurance procured, continued, or renewed in 26 this state within the intent of (a) of this section. 27 (d) There is levied upon the obligation or right represented by the premium 28 charged for the insurance a premium receipts tax of three percent of gross premiums 29 charged for the insurance. The tax is in lieu of all taxes and fire department dues. 30 The insured shall, on or before March 1 following the calendar year in which the 31 insurance was procured, continued, or renewed, pay the amount of the tax to the
01 director. In event of cancellation and rewriting of the insurance contract, the additional 02 premium for premium receipts tax purposes is the premium in excess of the unearned 03 premium of the cancelled insurance contract. If the tax prescribed by this section is 04 not paid within the time stated, the tax may be increased by 05 (1) a late payment fee of $1,000 or 10 percent of the tax due, 06 whichever is greater; 07 (2) interest at the rate of one percent a month or part of a month from 08 the date the payment was due to the date paid; and 09 (3) a penalty not to exceed $100 a day or 25 percent of the tax due, 10 whichever is greater, from the date the payment was due to the date paid. 11 (e) In determining the amount of premiums taxable in this state, all premiums 12 written, procured, or received in this state shall be considered written on property or 13 a subject located or resident in this state, except premiums that are properly allocated 14 or apportioned and reported as taxable premiums of another state. In determining the 15 amount of gross premiums taxable in this state, the tax due shall be computed on that 16 portion of the policy premium that is attributable to a subject resident, located, or to 17 be performed in this state and that relates to the type of insurance being placed as 18 determined by reference to the allocation schedule set out in AS 21.35.200(f). 19 (f) The attorney general, upon request of the director, shall proceed in the 20 courts of this or another state or in a federal court or agency to recover the tax not 21 paid within the time prescribed in this section. 22 (g) This section does not apply to insurance of risks of the state, a political 23 subdivision of the state, a nonprofit educational insurer insuring only nonprofit 24 educational institutions and their employees as permitted under AS 21.35.030(g), 25 railroads or aircraft regularly engaged in interstate or foreign commerce, life insurance, 26 disability insurance, or annuity contracts. 27 Sec. 21.35.060. INVESTIGATION AND DISCLOSURE OF INSURANCE 28 CONTRACTS; PENALTY. (a) When the director has reason to believe that 29 insurance has been procured by or for a person in this state with a nonadmitted insurer, 30 the director may in writing order the person to produce for examination all insurance 31 contracts and other documents evidencing the insurance and to disclose to the director
01 the amount of insurance, name and address of each insurer, gross amount of premium 02 paid or to be paid, the name and address of the person assisting or aiding in the 03 solicitation, negotiation, or procurement of the insurance, and other information 04 required by the director. 05 (b) If a person fails to comply with the director's order under (a) of this 06 section, on application of the director, the superior court may issue an order requiring 07 the production of the records and information sought by the director. 08 (c) For each refusal to obey an order issued under (a) of this section, in 09 addition to any other penalty provided by law, the person is subject to a civil penalty 10 of not more than $25,000 following a hearing under AS 21.06.170 - 21.06.240. 11 Sec. 21.35.070. SERVICE OF CIVIL PROCESS ON DIRECTOR. (a) The 12 transaction of insurance by an unauthorized person or nonadmitted insurer is equivalent 13 to and constitutes an irrevocable appointment by that person or insurer, binding upon 14 the person or insurer, the executor, administrator, or personal representative of the 15 person or insurer, or its successor in interest if a corporation, of the director to be the 16 lawful attorney of that person or insurer upon whom may be served all legal process 17 in an action, suit, or proceeding in a court arising out of a transaction of insurance in 18 this state or relative to a subject resident, located, or to be performed in this state by 19 that person or nonadmitted insurer, except in an action, suit, or proceeding by the 20 director or by the state. The transaction of insurance by an unauthorized person or 21 nonadmitted insurer is acceptance by that person or insurer that legal process served 22 upon the director has the same legal force and validity as personal service of process 23 in this state upon the person or insurer, or upon the executor, administrator, or personal 24 representative of the person or insurer, or its successor in interest if a corporation. 25 (b) Service of process shall be made by leaving two copies in the office of the 26 director and paying to the director, for the use of the state, a fee established under 27 AS 21.06.250. A certificate by the director showing the service is sufficient evidence 28 of service of process. The certificate shall be attached to the original or third copy of 29 the process presented to the director. Service upon the director as attorney shall be 30 considered service upon the principal. 31 (c) The director shall immediately mail one copy of the process to the
01 defendant at the last known principal place of business and shall keep a record of all 02 process served upon the director, including the day and hour of service. Service of 03 process allowed under this subsection is sufficient, provided notice of the service and 04 a copy of the process are also sent within 10 days by registered mail by the plaintiff 05 or the attorney of the plaintiff to the defendant at the last known principal place of 06 business of the defendant. The defendant's receipt, or receipt issued by the post office 07 with which the letter is registered, showing the name of the sender of the letter and the 08 name and address of the person or insurer to whom the letter is addressed, and the 09 affidavit of the plaintiff or the attorney of the plaintiff showing compliance with this 10 subsection, must be filed with the clerk of the court in which the action is pending on 11 or before the date the defendant is required to appear, or within additional time that 12 the court may allow. 13 (d) Service of process in an action, suit, or proceeding described in (a) of this 14 section, in addition to the service provided in (b) and (c) of this section, is valid if 15 served upon a person in this state who on behalf of an unauthorized person or 16 nonadmitted insurer is doing any insurance transaction and if a copy of the process is 17 sent within 10 days by registered mail by the plaintiff or the attorney of the plaintiff 18 to the defendant at the last known principal place of business of the defendant. The 19 defendant's receipt, or receipt issued by the post office with which the letter is 20 registered, showing the name of the sender of the letter and the name and address of 21 the person or insurer to whom the letter is addressed, and the affidavit of the plaintiff 22 or the attorney of the plaintiff showing compliance with this subsection, must be filed 23 with the clerk of the court in which the action is pending on or before the date the 24 defendant is required to appear, or within additional time that the court may allow. 25 (e) A plaintiff or complainant is not entitled to a judgment by default in an 26 action, suit, or proceeding in which the process is served under this section unless the 27 default judgment complies with the Alaska Rules of Civil Procedure. 28 (f) This section does not limit or abridge the right to serve a process, notice, 29 or demand upon a person or insurer in any other manner permitted by law. 30 Sec. 21.35.080. SERVICE OF PROCESS ON LIEUTENANT GOVERNOR. 31 (a) The transaction of insurance by an unauthorized person or nonadmitted insurer
01 constitutes an irrevocable appointment of the lieutenant governor to be the lawful 02 attorney of that person or insurer. The lieutenant governor may be served all legal 03 process in any action or proceeding in any court by the director or by the state and 04 may be served any notice, order, pleading, or process in a proceeding before the 05 director that arises out of the transaction of insurance in this state or relative to a 06 subject resident, located, or to be performed in this state by that person or insurer. 07 The transaction of insurance by an unauthorized person or nonadmitted insurer is 08 acceptance by that person or insurer that legal process in the court action, suit, or 09 proceeding and any notice, order, pleading, or process served in an administrative 10 proceeding before the director has the same legal force and validity as personal service 11 of process in this state upon the person or insurer, or upon the executor, administrator, 12 or personal representative of that person or insurer. 13 (b) The service of process in the action, suit, or proceeding in any court or the 14 notice, order, pleading, or process in the administrative proceeding authorized by (a) 15 of this section shall be made by leaving an original and two copies in the office of the 16 lieutenant governor. A certificate by the lieutenant governor showing the service is 17 sufficient evidence of service. The certificate shall be attached to the original or third 18 copy of the process presented to the lieutenant governor. Service upon the lieutenant 19 governor as attorney shall be considered service upon the principal. 20 (c) The lieutenant governor shall immediately mail one copy of the process to 21 the defendant at the last known principal place of business of the defendant and shall 22 keep a record of all process served, including the day and hour of service. The service 23 is sufficient, provided notice of the service and a copy of the court process or the 24 notice, order, pleading, or process in the administrative proceeding are sent within 10 25 days after service by registered mail by the plaintiff or the attorney of the plaintiff in 26 the court proceeding or by the director in the administrative proceeding to the 27 defendant in the court proceeding or by whom the notice, order, pleading, or process 28 in the administrative proceeding is addressed or directed at the last known principal 29 place of business of the defendant. The defendant's receipt, or receipt issued by the 30 post office with which the letter is registered, showing the name of the sender of the 31 letter and the name and address of the person or insurer to whom the letter is
01 addressed, and the affidavit of the plaintiff or the attorney of the plaintiff in a court 02 proceeding or of the director in an administrative proceeding, showing compliance 03 must be filed with the clerk of the court in which the action, suit, or proceeding is 04 pending, or with the director in administrative proceedings, on or before the date the 05 defendant in the court or administrative proceedings is required to appear or respond, 06 or within additional time that the court or director may allow. 07 (d) A plaintiff or complainant may not obtain a judgment by default in a court 08 or administrative proceeding in which court process or notice, order, pleading, or 09 process in proceedings before the director is served under this section unless the 10 default judgment complies with the Alaska Rules of Civil Procedure. 11 (e) This section does not limit or abridge the right to serve a process, notice, 12 order, pleading, or demand upon a person or insurer in any other manner permitted by 13 law. 14 (f) The attorney general, upon request of the director, shall proceed in the 15 courts of this or another state or in a federal court or agency to enforce an order or 16 decision in a court proceeding or in an administrative proceeding before the director. 17 Sec. 21.35.090. VALIDITY OF NONCOMPLYING POLICY PROVISIONS. 18 (a) Notwithstanding conditions or stipulations in the policy or contract, a nonadmitted 19 insurer may be sued upon any cause of action arising in this state or relative to 20 property, risks, or exposures located or to be performed in this state under any 21 insurance contract made by the nonadmitted insurer. 22 (b) Notwithstanding conditions or stipulations in the policy or contract, a 23 nonadmitted insurer subject under a policy or contract made by it to arbitration or 24 another alternative dispute resolution mechanism on a matter arising in this state or 25 relative to property, risks, or exposures located or to be performed in this state shall 26 conduct the arbitration or other alternative dispute resolution mechanism in this state. 27 (c) A policy or contract issued or delivered by a nonadmitted insurer or 28 otherwise valid that contains a condition or provision not in compliance with the 29 requirements of this chapter is not rendered invalid by the noncompliance, but shall 30 be construed and applied in the manner that the conditions and provisions would have 31 been applied had the policy or contract been in full compliance with this chapter.
01 Sec. 21.35.100. DEFENDANT'S DUTIES AND RIGHTS. (a) Before an 02 unauthorized person or nonadmitted insurer files a pleading in court or a notice, order, 03 pleading, or process in an administrative proceeding before the director, the person or 04 insurer shall either 05 (1) deposit with the clerk of the court in which the action is pending, 06 or with the director in administrative proceedings before the director, cash or securities 07 or bond with an admitted insurer to be approved by the court, or the director, in an 08 amount to be fixed by the court or the director sufficient to secure the payment of a 09 final judgment that may be rendered in the court proceeding or in the administrative 10 proceeding before the director; however, the court, or the director in administrative 11 proceedings before the director, may in its or the director's discretion issue an order 12 waiving the deposit or bond if the insurer makes a showing satisfactory to the court 13 or the director that it maintains in a state of the United States funds or securities, in 14 trust or otherwise, sufficient and available to satisfy a final judgment that may be 15 entered in the court action, suit, or proceeding or in an administrative proceeding 16 before the director; or 17 (2) obtain admission to transact insurance in this state through a 18 certificate of authority issued under this title; in considering the application of an 19 insurer for a certificate of authority, for the purposes of this paragraph, the director is 20 not required to enforce the provisions of AS 21.09.270 against the insurer with respect 21 to its application if the director determines that the company would otherwise comply 22 with the requirements for a certificate of authority. 23 (b) The court in an action, suit, or proceeding in which service of process is 24 made as provided in AS 21.35.070 or 21.35.080, or the director, in the director's 25 discretion, in an administrative proceeding before the director in which service is made 26 as provided in AS 21.35.080, may order postponement that may be necessary to afford 27 the defendant reasonable opportunity to comply with (a) of this section and to offer 28 a defense in the court action or administrative proceeding. 29 (c) Nothing in (a) of this section may be construed to prevent an unauthorized 30 person or nonadmitted insurer from filing a motion to quash a writ or to set aside 31 service made as provided in AS 21.35.070 or 21.35.080 on the ground that the
01 unauthorized person or insurer has not transacted insurance in this state or relative to 02 a subject resident, located, or to be performed in this state or that the person on whom 03 service was made under AS 21.35.070(d) was not transacting insurance in this state, 04 or relative to a subject resident, located, or to be performed in this state. 05 Sec. 21.35.110. ATTORNEY FEES. In an action against an unauthorized 06 person or nonadmitted insurer upon an insurance contract issued or delivered in this 07 state to a resident or to a corporation authorized to do business in this state, if the 08 person or insurer has failed for 30 days after demand and before the commencement 09 of the action to make payment required by the terms of the contract, and it appears to 10 the court that the refusal was without reasonable cause, the court may allow to the 11 plaintiff a reasonable attorney fee and may include the fee in the judgment that may 12 be rendered in the action. Failure of the person or insurer to defend the action shall 13 be considered prima facie evidence that its failure to make payment was without 14 reasonable cause. 15 Sec. 21.35.120. ENFORCEMENT. (a) The director may proceed in the 16 appropriate court to enforce an order or decision made by the director. 17 (b) A copy of any foreign decree authenticated as required by law in this state 18 may be filed in the appropriate court of this state. The clerk, upon verifying with the 19 director that the decree or order qualifies as a foreign decree, shall treat the foreign 20 decree in the same manner as a decree issued by a court of this state. A foreign 21 decree filed under this subsection has the same effect and shall be considered a decree 22 of a court of this state, and is subject to the same procedures, defenses, and 23 proceedings for reopening, vacating, or staying as a decree of a court of this state and 24 may be enforced or satisfied as required by law and court rules. 25 (c) At the time of the filing of the foreign decree, the plaintiff shall file with 26 the clerk of the court an affidavit setting out the name and last known mailing address 27 of the defendant. 28 (d) Promptly upon the filing of a foreign decree and the affidavit required 29 under (c) of this section, the clerk shall mail notice of the filing of the foreign decree 30 to the defendant and to the director and shall make a note of the mailing in the docket. 31 In addition, the plaintiff may mail a notice of the filing of the foreign decree to the
01 defendant and to the director of this state and may file proof of mailing with the clerk. 02 Lack of mailing notice of filing by the clerk does not affect the enforcement 03 proceedings if proof of mailing by the plaintiff has been filed with the court. 04 (e) Execution or other process for enforcement of a foreign decree may not be 05 filed until 30 days after the date the decree is filed with the court. 06 (f) If the defendant shows the court that an appeal from the foreign decree is 07 pending or will be taken or that a stay of execution has been granted, the court shall 08 stay enforcement of the foreign decree until the appeal is concluded, the time for 09 appeal expires, or the stay of execution expires or is vacated, upon proof that the 10 defendant has furnished the security for the satisfaction of the decree required by the 11 state in which it was rendered. 12 (g) If the defendant shows the court any ground upon which enforcement of 13 a decree of any court of this state would be stayed, the court shall stay enforcement 14 of the foreign decree for an appropriate period upon requiring the same security for 15 satisfaction of the decree that is required in this state. 16 (h) The director shall cooperate with regulatory officials in other United States 17 jurisdictions to the greatest degree reasonably practicable in enforcing lawfully issued 18 orders of other officials provided the order does not violate the laws of this state. 19 Sec. 21.35.130. ACTIONS BY NONADMITTED INSURERS. A nonadmitted 20 insurer may not commence or maintain an action, including arbitration or any other 21 dispute resolution mechanism, in this state to enforce any right arising out of an 22 insurance transaction, except with respect to 23 (1) claims under policies lawfully written in this state; 24 (2) liquidation of assets and liabilities of the insurer, other than 25 collection of new premiums, resulting from its former authorized operations in this 26 state; 27 (3) transactions subsequent to issuance of a policy not covering 28 domestic risks at the time of issuance, and lawfully procured under the laws of the 29 jurisdiction where the transaction took place; 30 (4) surplus lines insurance exported under AS 21.35.140 - 21.35.290 31 or surplus wet marine and transportation insurance exported under AS 21.35.300 -
01 21.35.420; 02 (5) reinsurance placed by reinsurance intermediaries under the authority 03 of AS 21.27 by reinsurance intermediaries or placed as authorized by other provisions 04 of this title; 05 (6) the continuation and servicing of life insurance, health insurance 06 policies, or annuity contracts remaining in force as to residents of this state where the 07 formerly authorized insurer has withdrawn from the state and is not transacting new 08 insurance; 09 (7) servicing of policies written by an admitted insurer in a state to 10 which the insured has moved but in which the company does not have a certificate of 11 authority until the term of the policy expires; 12 (8) claims under policies covering ocean marine insurance; 13 (9) placements of insurance that were lawful in the jurisdiction in 14 which the transaction took place and that were not unlawful placements under the laws 15 of this state. 16 ARTICLE 2. SURPLUS LINES INSURANCE. 17 Sec. 21.35.140. PLACEMENT OF SURPLUS LINES INSURANCE. (a) 18 Except as provided in (b) of this section, insurance other than reinsurance, wet marine 19 and transportation insurance, insurance independently procured, life insurance, 20 disability insurance, and annuity contracts may be procured from nonadmitted insurers 21 through a surplus lines broker licensed under AS 21.27 if 22 (1) each insurer is an eligible surplus lines insurer; 23 (2) each insurer is authorized to write the type of insurance in its 24 domiciliary jurisdiction; 25 (3) the full amount or type of insurance cannot be obtained from 26 insurers who are admitted to do business in this state; 27 (4) the producing broker has conducted and documented a diligent 28 search among insurers who are admitted to transact business in this state and are 29 actually writing the particular kind or class of insurance required by the client in this 30 state; 31 (5) the director authorizes an exception to (2) of this subsection by
01 regulation or by written authorization for an individual placement upon written request 02 by the broker; and 03 (6) all other requirements of this chapter are met. 04 (b) Liability insurance may be procured through a surplus lines broker licensed 05 in this state from a risk retention group that does not hold a certificate of authority 06 from this state only if the risk retention group is currently and validly registered with 07 the division. 08 Sec. 21.35.150. SUBSCRIPTION POLICIES OR JOINT UNDERWRITING 09 IN COMBINATION WITH ADMITTED INSURERS. Subscription policies or joint 10 underwriting of insurance other than reinsurance, wet marine and transportation 11 insurance, insurance independently procured, life insurance, disability insurance, and 12 annuity contracts by a combination of authorized insurers and nonadmitted insurers is 13 a surplus lines insurance placement in its entirety, is subject to this chapter, is not 14 subject to AS 21.39 or AS 21.42.120 - 21.42.130, and losses or claims are not covered 15 by AS 21.80 (Alaska Insurance Guaranty Association Act). 16 Sec. 21.35.160. WORKERS' COMPENSATION INSURANCE. (a) Workers' 17 compensation insurance may be placed in and written by a nonadmitted insurer if 18 (1) the director considers it in the best interest of the public and issues 19 a written order to that effect; 20 (2) the insurance is written as required by this chapter; and 21 (3) all conditions established for writing workers' compensation 22 insurance in a nonadmitted market are met. 23 (b) The rates and rating plans for workers' compensation insurance are subject 24 to AS 21.39. The surplus lines broker is responsible for making the filings required 25 under AS 21.39 and for maintaining the records required under that chapter. 26 (c) Insurance placed with or written by a nonadmitted insurer and the activities 27 of the surplus lines broker relating to that transaction are subject to the applicable 28 provisions of this title. 29 (d) The minimum capital and surplus required of a nonadmitted insurer who 30 places or writes workers' compensation insurance is two times that required under 31 AS 21.35.180(a)(1).
01 Sec. 21.35.170. RESTRICTIONS ON SURPLUS LINES BROKERS. A 02 surplus lines broker may not place coverage with a nonadmitted insurer, unless the 03 surplus lines broker is licensed under AS 21.27 and, at the time of placement, the 04 surplus lines broker has determined that the nonadmitted insurer 05 (1) has established satisfactory evidence of good repute and financial 06 integrity; 07 (2) has provided to the director a copy of its current annual statement 08 certified by the insurer and an actuarial opinion as to the adequacy of, and 09 methodology used to determine, the insurer's loss reserves; the statement shall be 10 provided at the same time it is provided to the regulatory authority of the insurer's 11 domicile, but in no event more than eight months after the close of the period reported 12 on, and shall be certified as a true and correct copy by an accounting or auditing firm 13 licensed in the jurisdiction of the insurer's domicile and certified by a senior officer 14 of the nonadmitted insurer as a true and correct copy of the statement filed with the 15 regulatory authority in the domicile of the nonadmitted insurer; in the case of an 16 insurance exchange qualifying under AS 21.35.180(a)(2), the statement may be an 17 aggregate combined statement of all underwriting syndicates operating during the 18 period reported; and 19 (3) qualifies under AS 21.35.180(a). 20 Sec. 21.35.180. NONADMITTED INSURER CAPITAL AND SURPLUS 21 REQUIREMENTS. (a) A nonadmitted insurer may be eligible to provide coverage 22 in this state if it qualifies under one of the following: 23 (1) a foreign but nonalien insurer, reciprocal insurer, or mutual 24 protection and indemnity association may qualify under this subsection if it has the 25 minimum unimpaired basic surplus and additional surplus equal to that required in its 26 domiciliary jurisdiction or in the amount of $15,000,000, whichever is greater; 27 (2) an individual syndicate of an insurance exchange created by the 28 laws of a state other than this state may qualify under this subsection if 29 (A) the syndicates of the exchange maintain under terms 30 acceptable to the director capital and surplus, or its equivalent under the laws 31 of its domiciliary jurisdiction, of at least $75,000,000 in the aggregate;
01 (B) the exchange must maintain under terms acceptable to the 02 director at least 50 percent of the policyholder surplus of each syndicate in a 03 custodial account accessible to the exchange or its domiciliary regulator in the 04 event of insolvency or impairment of the individual syndicate; and 05 (C) in addition, each individual syndicate to be eligible to 06 accept surplus lines insurance placements from this state meets either of the 07 following requirements: 08 (i) for insurance exchanges that maintain funds in an 09 amount of at least $15,000,000 for the protection of all exchange 10 policyholders, the syndicate shall maintain under terms acceptable to the 11 director minimum capital and surplus, or its equivalent under the laws 12 of the domicility jurisdiction, of at least $5,000,000; or 13 (ii) for insurance exchanges that do not maintain funds 14 in an amount of at least $15,000,000 for the protection of all exchange 15 policyholders, the syndicate shall maintain under terms acceptable to the 16 director minimum capital and surplus, or its equivalent under the laws 17 of its domiciliary jurisdiction, of at least the minimum capital and 18 surplus requirements under the laws of its domiciliary jurisdiction or 19 $15,000,000, whichever is greater; 20 (3) in the case of a Lloyd's plan or other similar group of insurers that 21 consists of unincorporated individual insurers or a combination of both unincorporated 22 and incorporated insurers, 23 (A) each sponsoring syndicate maintains a trust fund that shall 24 consist of a trusteed account representing at least 100 percent of the sponsoring 25 syndicate's gross liabilities attributable to the surplus lines business written in 26 the United States; 27 (B) in addition, the group shall establish and maintain in trust 28 a surplus in the amount of at least $100,000,000 that must be available for the 29 benefit of United States surplus lines policyholders of any member of the 30 group; 31 (C) the incorporated members of the group may not be engaged
01 in a business other than underwriting as a member of the group and shall be 02 subject to the same level of solvency regulation and control by the group's 03 domiciliary regulator as are the unincorporated members; and 04 (D) the trust funds required under this paragraph shall be 05 maintained in an irrevocable trust account in the United States in a qualified 06 financial institution, consisting of cash, securities, letters of credit, or 07 investments of substantially the same character and quality as those that are 08 eligible investments for the capital and statutory reserves of admitted insurers 09 to write like kinds of insurance in this state and, in addition, the trust required 10 under this paragraph shall satisfy the requirements of the standard trust 11 agreement required for listing with the National Association of Insurance 12 Commissioners International Insurers Department; 13 (4) in the case of a group of incorporated insurers under common 14 administration that has continuously transacted an insurance business outside the 15 United States for at least three years immediately before January 1, 1996, and that 16 submits to this state's authority to examine its books and records and bears the expense 17 of the examination, 18 (A) the group must maintain an aggregate policyholders' surplus 19 of $10,000,000,000; 20 (B) the group must maintain in trust a surplus in the amount of 21 $100,000,000; the surplus shall be available for the benefit of United States 22 surplus lines policyholders of any member of the group; 23 (C) each insurer must individually maintain capital and surplus 24 of at least $25,000,000 per company; 25 (D) the trust funds required by this paragraph shall be 26 maintained in an irrevocable trust account in the United States in a qualified 27 financial institution, consisting of cash, securities, letters of credit, or 28 investments of substantially the same character and quality as those that are 29 eligible investments for the capital and statutory reserves of admitted insurers 30 to write like kinds of insurance in this state and, in addition, the trust required 31 under this paragraph shall satisfy the requirements of the standard trust
01 agreement required for listing with the National Association of Insurance 02 Commissioners International Insurers Department; 03 (E) additionally, each member of the group shall make available 04 to the director an annual certification of the member's solvency by the 05 member's domiciliary regulator and its independent public accountant; or 06 (5) except for an exchange or plan complying with (3) or (4) of this 07 subsection, an alien insurer must satisfy the capital and surplus requirements of (2) of 08 this subsection and must have in force a trust fund of not less than the greater of 09 (A) $2,500,000; or 10 (B) 50 percent of its United States surplus lines gross liabilities, 11 subject, at the discretion of the director, to a cap of $100,000,000, to be 12 determined annually on the basis of accounting practices and procedures 13 substantially equivalent to those enacted by this state, as of December 31 next 14 preceding the date of determination, where 15 (i) at least 50 percent of surplus lines gross liabilities, 16 but not less than $2,500,000, is maintained in an irrevocable trust 17 account in the United States in a qualified financial institution, on 18 behalf of United States policyholders consisting of cash, securities, 19 letters of credit, or investments of substantially the same character and 20 quality as those that are eligible investments under AS 21.21 for the 21 capital and statutory reserves of admitted insurers to write like kinds of 22 insurance in this state; the trust account, which shall be included in any 23 calculation of capital and surplus or its equivalent, shall satisfy the 24 requirements of the standard trust agreement required for listing with 25 the National Association of Insurance Commissioners International 26 Insurers Department; 27 (ii) the insurer may request approval from the director 28 to use the trust fund to pay valid surplus lines claims, provided that the 29 balance of the trust fund is never less than $2,500,000 or 50 percent of 30 the insurer's current gross United States surplus lines liabilities, 31 whichever is greater;
01 (iii) in calculating the trust fund amount required by this 02 paragraph, trust fund amounts in excess of $2,500,000 shall be given 03 credit for surplus lines deposits separately required and maintained for 04 a particular state or United States territory, not to exceed the amount of 05 the insurer's loss and loss adjustment reserves in the particular state or 06 territory; and 07 (iv) the remaining required amount of surplus lines gross 08 liabilities shall be maintained in a trust account, for the exclusive 09 benefit of United States policyholders, in a financial institution in the 10 insurer's country of domicile, provided that the financial institution has 11 a United States office and the trust account and its corpus satisfy all of 12 the requirements of the standard trust agreement required for listing 13 with the National Association of Insurance Commissioners International 14 Insurers Department, except, if acceptable to the director, investments 15 in a foreign country or in a possession of the United States of 16 substantially the same kinds, classes, and investment grades as those 17 that are eligible investments for the capital and statutory reserves of 18 admitted insurers to write like kinds of insurance in this state, or a 19 clean, unconditional, irrevocable letter of credit confirmed by a 20 qualified United States financial institution. 21 (b) Except as provided in (c) of this section, and in addition to all of the other 22 requirements of this section, to be eligible, an alien nonadmitted insurer must be listed 23 by the National Association of Insurance Commissioners International Insurers 24 Department. 25 (c) The trust requirement for an alien insurer under (a)(5)(B) of this section 26 may be satisfied by an insurer's possessing less than the trust fund amount specified 27 upon a written affirmative finding of acceptability by the director if the director is 28 satisfied that the placement of insurance with the insurer is necessary and will not be 29 detrimental to the public and the policyholder. In determining whether business may 30 be placed with the insurer, the director shall consider the following factors: 31 (1) the interests of the public and policyholders;
01 (2) the length of time the insurer has been authorized in its domiciliary 02 jurisdiction and elsewhere; 03 (3) unavailability of particular coverages from authorized insurers or 04 unauthorized insurers meeting the requirements of this section; 05 (4) the size of the company as measured by its assets, capital and 06 surplus, reserves, premium writings, insurance in force, or other appropriate criteria; 07 (5) the kinds of business the company writes, its net exposure, and the 08 extent to which the company's business is diversified among several lines of insurance 09 and geographic locations; and 10 (6) the past and projected trend in the size of the company's capital and 11 surplus considering such factors as premium growth, operating history, loss and 12 expense ratios, or other appropriate criteria. 13 (d) Except as provided in (e) of this section, and in addition to meeting all 14 other requirements of this section, an insurer is an eligible surplus lines insurer if it 15 appears on the most recent list of eligible surplus lines insurers published by the 16 director or by the surplus lines association when approved by the director. The list 17 shall be published at least semiannually. This section does not require the director or 18 the surplus lines association to place or maintain the name of any nonadmitted insurer 19 on the list of eligible surplus lines insurers. 20 (e) Only that portion of any risk eligible for export for which the full amount 21 of coverage is not procurable from eligible surplus lines insurers listed under (d) of 22 this section may be placed with another nonadmitted insurer that does not appear on 23 the most recent list of eligible surplus lines insurers published by the director under 24 (d) of this section if the nonadmitted insurer meets all other requirements of this 25 section and regulations adopted under this chapter. The surplus lines broker seeking 26 to provide coverage through an unlisted nonadmitted insurer shall, within 30 days, 27 notify the director in writing on a form prescribed by the director of the amount and 28 percentage of each risk to be placed and name each unlisted nonadmitted insurer with 29 which placement is intended. Within 30 days after placing the coverage, the surplus 30 lines broker shall also send written notice to the insured and the producing broker that 31 the insurance, or a portion of the insurance, has been placed with the unlisted
01 nonadmitted insurer. 02 (f) If, after a review of a nonadmitted insurer and consideration of factors 03 including quality of management, capital and surplus of a parent company, 04 underwriting profit, investment income trends, trade practices, reserving practices, 05 company record, and reputation within the industry, the director finds the insurer to 06 be unacceptable, the director may declare the nonadmitted insurer to be ineligible. The 07 director may issue an order declaring a nonadmitted insurer ineligible and shall 08 promptly mail notice of a declaration to each surplus lines broker licensed under 09 AS 21.27 if at any time the director has reason to believe that the nonadmitted insurer 10 (1) is in unsound financial condition; 11 (2) has acted in an untrustworthy manner; 12 (3) is no longer eligible under this chapter; 13 (4) has wilfully violated the laws of this state or another jurisdiction; 14 or 15 (5) does not reasonably investigate and make prompt payment of just 16 losses and claims in this state or another jurisdiction. 17 Sec. 21.35.190. VALIDITY OF SURPLUS LINES CONTRACTS. Insurance 18 procured under AS 21.35.140 - 21.35.290 shall be valid and enforceable as to all 19 parties. 20 Sec. 21.35.200. SURPLUS LINES TAX. (a) Gross premiums charged, less 21 any return premium, for surplus lines insurance are subject to a premium receipts tax 22 of 2.7 percent that shall be collected by the surplus lines broker in addition to the full 23 amount of the gross premium charged by the insurer for the insurance. The tax on any 24 portion of the premium unearned at termination of the insurance that is credited by the 25 state to the surplus lines broker shall be returned to the policyholder directly by the 26 surplus broker or through the producing broker, if any. If a surplus lines policy 27 procured through a surplus lines broker covers property or a subject resident, located, 28 or to be performed both inside and outside of this state, the tax payable shall be 29 computed on that portion of the gross premiums properly allocated to this state. The 30 surplus lines broker may not absorb the tax or a part of the tax and may not rebate the 31 tax or a part of the tax.
01 (b) The surplus lines tax is due and shall be paid to the director on or before 02 March 1 following the calendar year in which the premium is written. The tax shall 03 be reported on forms prescribed by the director or, upon the director's order, paid to 04 and reported on forms prescribed by the surplus lines association. 05 (c) If the tax is not paid when due, an additional late payment fee of $250 plus 06 two percent of the tax due per month, or part of a month, shall become due and 07 payable by the surplus lines broker. 08 (d) If a surplus lines policy procured through a licensed surplus lines broker 09 covers property or a subject only partially resident, located, or to be performed in this 10 state, the tax payable shall be computed on the portions of the premium that are 11 attributable to the property or subject resident, located, or to be performed in this state. 12 In determining the amount of a premium taxable in this state, all premiums written, 13 procured, or received in this state shall be considered written on property or a subject 14 located, resident, or to be performed in this state, except premiums that are properly 15 allocated or apportioned and reported as taxable premiums of a reciprocal state. The 16 tax payable to this state may not be less than the tax due under this section. 17 (e) The director or a surplus lines association shall, at least annually, furnish 18 to the insurance regulatory official of a reciprocal state a copy of all filings reporting 19 an allocation of tax as required by (d) of this section. 20 (f) In determining the amount of gross premiums taxable in this state for a 21 placement of surplus lines insurance covering property or a subject resident, located, 22 or to be performed both inside and outside this state, the tax due shall be computed 23 on that portion of the policy premium that is attributable to property or a subject 24 resident, located, or to be performed in this state and that relates to the kind of 25 insurance being placed as determined by reference to an allocation schedule as follows: 26 (1) if a policy covers more than one classification, 27 (A) for any portion of the coverage identified by a classification 28 on the allocation schedule, the tax shall be computed by using the allocation 29 schedule for the corresponding portion of the premium; 30 (B) for any portion of the coverage not identified by a 31 classification on the allocation schedule, the tax shall be computed by using an
01 alternative equitable method of allocation for the property or subject; 02 (C) for any portion of the coverage where the premium is 03 indivisible, the tax shall be computed by using the method of allocation that 04 pertains to the classification describing the predominant coverage; 05 (2) if the information provided by the surplus lines broker is 06 insufficient to substantiate the method of allocation used by the surplus lines broker 07 or if the director determines that the surplus lines broker's method is incorrect, the 08 director shall determine the equitable and appropriate amount of tax due to this state 09 as follows: 10 (A) by use of the allocation schedule where the subject is 11 appropriately identified in the schedule; 12 (B) where the allocation schedule does not identify a 13 classification appropriate to the coverage, the director may give significant 14 weight to documented evidence of the underwriting bases and other criteria 15 used by the insurer or may give consideration to other available information to 16 the extent sufficient and relevant, including the percentage of the insured's 17 physical assets in this state, the percentage of the insured's sales in this state, 18 the percentage of income or resources derived from this state, and the amount 19 of premium tax paid to another jurisdiction for the policy. 20 (g) This section does not apply to insurance of risks of the state, a political 21 subdivision of the state, or railroads or aircraft regularly engaged in interstate or 22 foreign commerce if an exemption on a form prescribed by the director is filed with 23 the report required by (b) of this section. 24 Sec. 21.35.210. SURPLUS LINES FILING FEE. (a) The fee for filing the 25 forms under AS 21.35.200(b) is an amount equal to one percent on gross premiums 26 charged less any return premiums during the preceding calendar year whether the 27 premiums are subject to tax or exempt. The surplus lines broker shall pay the fee at 28 the time of filing of the statement. 29 (b) If the filing fee is not paid when due, an additional late payment fee of 30 $250 plus two percent of the fee due per month, or part of a month, shall become due 31 and payable by the surplus lines broker.
01 Sec. 21.35.220. COLLECTION OF SURPLUS LINES TAXES AND FEES. 02 (a) If the tax collectible under AS 21.35.200 or the fee collectible under AS 21.35.210 03 by a surplus lines broker is not paid within the time prescribed, the tax, fee, or both, 04 and late payment fees, along with appropriate penalties, may be collected by an action 05 in court against the surplus lines licensee and the surety on the bond filed under 06 AS 21.27.790. 07 (b) In addition to penalties provided in this chapter, failure to pay tax within 08 the time prescribed is subject to penalties provided in AS 21.35.440. 09 Sec. 21.35.230. CIVIL ACTIONS AGAINST ELIGIBLE SURPLUS LINES 10 INSURERS. (a) A person may bring a civil action against a surplus lines insurer 11 under a surplus lines insurance contract made by it or under other evidence of 12 insurance issued or delivered by the surplus lines licensee. A policy issued by a 13 surplus lines insurer shall contain a provision stating the substance of this section and 14 designating the person to whom the director shall mail service of process. 15 (b) The remedies provided in this section are in addition to any other methods 16 provided by law for service of process upon insurers. 17 Sec. 21.35.240. DUTY TO FILE SURPLUS LINES EVIDENCE OF 18 INSURANCE TRANSACTIONS AND AFFIDAVITS. (a) A surplus lines broker 19 shall execute and file with the monthly report required by AS 21.35.250 a written 20 report, that shall be kept confidential, regarding each surplus lines insurance transaction 21 occurring in the preceding calendar month. The report must include 22 (1) the name and address of the insured; 23 (2) the identity of each insurer including the National Association of 24 Insurance Commissioners group and company insurer number and the percentage of 25 coverage provided by each; 26 (3) a complete description of the subject and location of the risk; 27 (4) the amount of premium charged for the insurance; and 28 (5) other information required by the director. 29 (b) Instead of the report required in (a) of this section, the director may order 30 that evidence of insurance be filed with the surplus lines association and that the 31 surplus lines association provide periodic reports regarding insurance transactions to
01 the director. 02 (c) A producing broker shall execute and deliver to the surplus lines broker not 03 later than the end of each month on a form prescribed by the director, and a surplus 04 lines broker shall file with the director with the report required by (a) of this section 05 or with the surplus lines association with the evidence of insurance required by (b) of 06 this section, for surplus lines insurance first placed or renewed in the preceding 07 calendar month, an affidavit that shall be open to public inspection, as to the diligent 08 efforts to place the coverage with admitted insurers, and the results of those efforts. 09 The affidavit must contain a statement by the broker that the insured was expressly 10 informed in writing before placement of the surplus lines insurance that the surplus 11 lines insurer with whom the insurance was to be placed is not licensed in this state, 12 is not subject to this state's supervision, and, in the event of the insolvency of the 13 surplus lines insurer, losses will not be covered under AS 21.80 (Alaska Insurance 14 Guaranty Association Act). 15 (d) A report, evidence of insurance, or affidavit required by this section that 16 is filed late, incomplete, or incorrect is subject to a $50 late filing fee. 17 Sec. 21.35.250. MONTHLY REPORTS; SUMMARY OF EXPORTED 18 SURPLUS LINES BUSINESS. (a) A surplus lines broker shall file with the director 19 on or before the end of each month, on forms prescribed by the director, a verified 20 report in duplicate of all surplus lines insurance by type of insurance as required to be 21 reported in the annual statement that must be filed with the director by admitted 22 insurers. The report must include all surplus lines insurance transactions during the 23 preceding calendar month, whether taxable or tax exempt, showing the 24 (1) aggregate gross premiums written; 25 (2) aggregate return premiums; 26 (3) amount of aggregate tax remitted to this state; and 27 (4) amount of aggregate tax remitted to each other state for which an 28 allocation is made under AS 21.35.200(f). 29 (b) Instead of the report required under (a) of this section, the director may 30 order that evidence of insurance be filed with the surplus lines association and that the 31 association file periodic reports regarding insurance transactions to the director.
01 (c) A report or evidence of insurance required by this section that is filed late, 02 incomplete, or incorrect is subject to a $50 late filing fee. 03 Sec. 21.35.260. DUTY TO DELIVER EVIDENCE OF SURPLUS LINES 04 INSURANCE AND SUBSEQUENT CHANGES TO INSURANCE. (a) When surplus 05 lines insurance is placed, the surplus lines broker shall within 30 days after placing the 06 coverage deliver to the insured or the producing broker the policy, or, if the policy is 07 not then available, a certificate, cover note, binder, or other evidence of insurance. 08 The certificate, cover note, binder, or other evidence of insurance shall be executed by 09 the surplus lines broker and must contain a complete record of all policy insuring 10 agreements, conditions, exclusions, clauses, endorsements, other material facts that 11 would regularly be included in the policy, description, and location of the subject of 12 insurance, a general description of the coverages of the insurance, the premium and 13 rate charged and taxes to be collected from the insured, the name and address of the 14 insured, and the name of each surplus lines insurer and the percentage of the entire 15 risk assumed by each insurer. The policy, certificate, cover note, binder, or other 16 evidence of insurance must contain the name, address, phone number, and the license 17 number of the surplus lines broker. 18 (b) A surplus lines broker may not issue or deliver evidence of insurance or 19 purport to insure or represent that insurance will be or has been written by an eligible 20 surplus lines insurer unless the surplus lines broker has authority from the insurer to 21 insure the risk or has received information from the insurer in the regular course of 22 business that the insurance has been granted. 23 (c) If after delivery of evidence of insurance there is a change in the identity 24 of the insurers, or the percentage of the risk assumed by an insurer, or another material 25 change in coverage from that stated in the surplus lines broker's original evidence of 26 insurance, the surplus lines broker shall promptly issue and deliver to the insured or 27 the producing broker an appropriate substitute for, or endorsement of, the original 28 document accurately showing the current status of the coverage and the insurer's 29 responsibility. 30 (d) The surplus lines broker shall deliver a copy of the policy or cover note 31 issued by the insurer as soon as reasonably possible after placement of the insurance
01 coverage. A certificate or policy of insurance shall contain or have attached a 02 complete record of all policy insuring agreements, conditions, exclusions, clauses, 03 endorsements, or other material facts that would regularly be included in the policy. 04 (e) A policy, certificate, cover note, binder, or other evidence of insurance 05 negotiated, placed, or procured under the provisions of this chapter issued by a surplus 06 lines broker shall bear the name, address, phone number, and the license number of 07 the surplus lines broker, and the following statement in at least 10-point type: "This 08 is evidence of insurance procured and developed under AS 21.35 (Alaska Surplus 09 Lines Law). It is not covered by AS 21.80 (Alaska Insurance Guaranty Association 10 Act)." Information required under this subsection may not be covered, concealed, or 11 obscured by the producing broker. 12 Sec. 21.35.270. EFFECT OF PAYMENT TO SURPLUS LINES BROKER. 13 A payment of premium to a surplus lines broker acting for a person other than itself 14 in negotiating, continuing, or reviewing a policy of insurance under this chapter is 15 considered to be payment to the insurer, notwithstanding conditions or stipulations in 16 the policy or contract to the contrary. 17 Sec. 21.35.280. SURPLUS LINES BROKERS MAY ACCEPT BUSINESS 18 FROM OTHER BROKERS. A surplus lines broker licensed by this state may 19 originate surplus lines insurance or accept surplus lines insurance from another surplus 20 lines broker licensed by this state or a producing broker licensed by this state as to the 21 kind and class of insurance involved. The surplus lines broker may compensate the 22 producing broker or surplus lines broker for the insurance. 23 Sec. 21.35.290. SURPLUS LINES ADVISORY ORGANIZATIONS. (a) A 24 nonprofit association of surplus lines brokers may be created and known as the Alaska 25 Surplus Lines Association. The director may, by order, require that all surplus lines 26 brokers, as a condition of continued licensure under this chapter, join the association. 27 The association shall perform its functions under the plan or operation established 28 under (c) of this section and exercise its powers through a board of directors 29 established under (b) of this section. The association shall be supervised by the 30 director and shall 31 (1) receive, record, and, subject to (2) of this subsection, stamp all
01 surplus lines insurance documents that surplus lines brokers are required to file with 02 the association under the plan of operation; 03 (2) refuse to stamp submitted insurance documents, if the association 04 determines that a nonadmitted insurer does not meet minimum state financial standards 05 of eligibility, the producing broker or surplus lines broker is not licensed by this state, 06 or the director orders the association not to stamp insurance documents under (j) of 07 this subsection; the association shall notify the director and provide an explanation for 08 a refusal to stamp submitted insurance documents other than a refusal based upon the 09 order of the director; 10 (3) in addition to other reports required by this chapter, annually on or 11 before February 1 prepare and deliver to each licensee and to the director a report 12 regarding surplus lines business; the report must include a delineation of the classes 13 of business procured during the preceding calendar year in a form that the board of 14 directors may prescribe; 15 (4) encourage compliance by its members with the surplus lines law of 16 this state and the orders, bulletins, and regulations of the director relative to surplus 17 lines insurance; 18 (5) communicate with organizations of insurance producers and 19 admitted insurers with respect to the proper use of the surplus lines market; 20 (6) attend National Association of Insurance Commissioners meetings 21 and participate in technical advisory groups; 22 (7) employ and retain persons as necessary to carry out the duties of 23 the association; 24 (8) borrow money as necessary to carry out the purposes of the 25 association; 26 (9) enter contracts as necessary to carry out the purposes of the 27 association; and 28 (10) provide other services to its members that are incidental or related 29 to the purposes of the association. 30 (b) The association shall function through a board of directors consisting of 31 seven members appointed by the director. A member of the board serves at the
01 pleasure of the director for a term of three years and may be reappointed to an 02 unlimited number of terms. In appointing directors to the board, the director shall 03 consider, among other things, whether members of the association are fairly 04 represented. No more than one board member may be from the same firm licensee or 05 other entity. Membership of the board shall include 06 (1) three principals or managers of surplus lines broker firms or 07 individual surplus lines brokers consistently writing the most surplus lines premium 08 in this state; and 09 (2) not less than four resident principals or managers of surplus lines 10 broker firms or individual surplus lines brokers. 11 (c) The association shall establish a plan of operation. The plan of operation 12 shall provide for the formation, election of officers by the board of directors, operation, 13 and governance of the association. The plan and any amendments to it shall be 14 effective upon written approval by the director. The director may not unreasonably 15 withhold or delay approval. All association members must comply with the plan of 16 operation and any amendments to it. Failure to comply with the plan of operation or 17 any amendments to it constitutes a violation of this chapter. 18 (d) The association shall file with the director 19 (1) a copy of its plan of operation and any amendments to it; 20 (2) a copy of its constitution, articles of agreement of association, 21 certificates of incorporation, bylaws, and regulations, if any; 22 (3) a current list of its members revised at least annually; 23 (4) the name and address of a resident of this state upon whom notices 24 or orders of the director or processes issued at the direction of the director may be 25 served; 26 (5) an agreement that the director may examine the association; and 27 (6) a schedule of its membership fees and assessments. 28 (e) The director shall, at least once every three years, make or cause to be 29 made an examination of the association under AS 21.06.120. 30 (f) The association, its directors, officers, agents, or employees are not civilly 31 liable for any action taken or omitted by them in the performance of their powers and
01 duties under this section, except for a civil action based on gross negligence or wilful 02 misconduct. 03 (g) Within 30 days after a surplus lines coverage is procured, a licensee shall 04 submit to the association for recording and stamping all documents that surplus lines 05 brokers are required to file with the association. Each insurance document submitted 06 to the association under this subsection shall include the 07 (1) name and address of the insured; 08 (2) gross premium charged; 09 (3) name and address of the nonadmitted insurer; 10 (4) class of insurance procured; and 11 (5) name, address, phone number, and Alaska surplus lines license 12 number of the surplus lines broker. 13 (h) It is unlawful for an insurance producer or surplus lines broker to deliver 14 in this state an insurance document that surplus lines brokers are required to file with 15 the association unless the insurance document is stamped by the association or is 16 exempt from stamping requirements; provided, however, that a licensee's failure to 17 comply with this subsection does not affect the validity of the coverage. 18 (i) The services performed by the association on behalf of the director shall 19 be funded under written contract with the director. 20 (j) The director may declare a nonadmitted insurer ineligible and order the 21 association not to stamp insurance documents issued by the nonadmitted insurer and 22 issue any other appropriate order. 23 ARTICLE 3. SURPLUS WET MARINE AND 24 TRANSPORTATION INSURANCE. 25 Sec. 21.35.300. PLACEMENT OF SURPLUS WET MARINE AND 26 TRANSPORTATION INSURANCE. (a) Surplus wet marine and transportation 27 insurance, other than ocean marine insurance, may be procured from nonadmitted 28 insurers through an insurance producer or a surplus lines broker that satisfies the 29 requirements of (b) of this section if 30 (1) each insurer is an eligible surplus wet marine and transportation 31 insurer;
01 (2) each insurer is authorized to write the type of insurance in its 02 domiciliary jurisdiction; 03 (3) the full amount or type of insurance cannot be obtained from 04 insurers who are admitted to do business in this state; 05 (4) the insurance producer or a surplus lines broker has conducted and 06 documented a diligent search among insurers who are admitted to transact marine 07 business in this state and are actually writing the particular kind or class of insurance 08 required by the client in this state; 09 (5) the director authorizes an exception to (2) of this subsection by 10 regulation or by written authorization for an individual placement upon written request 11 by the insurance producer or a surplus lines broker; and 12 (6) all other requirements of this chapter are met. 13 (b) To qualify to place surplus wet marine and transportation insurance under 14 this section, an insurance producer or a surplus lines broker must 15 (1) be licensed under AS 21.27; 16 (2) have and maintain while transacting surplus wet marine and 17 transportation insurance a bond under AS 21.27.190 in the sum of not less than 18 $100,000 aggregate liability and with the conditions that the insurance producer or 19 surplus lines broker conduct business under the provisions of this title, promptly remit 20 the taxes and fees provided by law, return premiums promptly when due, and pay 21 proper losses promptly; a surplus lines broker may satisfy this requirement if its bond 22 under AS 21.27.790(2) also covers surplus wet marine and transportation insurance; 23 and 24 (3) if the director requires, maintain an errors and omissions insurance 25 policy acceptable to the director. 26 Sec. 21.35.310. SUBSCRIPTION POLICIES OR JOINT UNDERWRITING 27 IN COMBINATION WITH ADMITTED INSURERS. Subscription policies or joint 28 underwriting of insurance other than reinsurance, ocean marine insurance, surplus lines 29 insurance, insurance independently procured, life insurance, disability insurance, and 30 annuity contracts by a combination of authorized insurers and nonadmitted insurers is 31 a surplus wet marine and transportation insurance placement in its entirety, is subject
01 to this chapter, is not subject to AS 21.39 or AS 21.42.120 - 21.42.130, and losses or 02 claims are not covered by AS 21.80 (Alaska Insurance Guaranty Association Act). 03 Sec. 21.35.320. RESTRICTIONS ON SURPLUS WET MARINE AND 04 TRANSPORTATION BROKERS. An insurance producer or a surplus lines broker 05 may not place surplus wet marine and transportation coverage with a nonadmitted 06 insurer, unless the insurance producer or surplus lines broker is licensed under 07 AS 21.27 and, at the time of placement, the insurance producer or surplus lines broker 08 has determined that the nonadmitted insurer 09 (1) is qualified to provide coverage under AS 21.35.180; and, if an 10 alien insurer subject to AS 21.35.180, includes surplus wet marine and transportation 11 gross liabilities in this state in its United States surplus lines gross liabilities; or 12 (2) has 13 (A) established satisfactory evidence of good repute and 14 financial integrity; 15 (B) provided to the director a copy of its current annual 16 statement certified by the insurer and an actuarial opinion as to the adequacy 17 of, and methodology used to determine, the insurer's loss reserves; the 18 statement shall be provided at the same time it is provided to the regulatory 19 authority of the insurer's domicile, but in no event more than eight months 20 after the close of the period reported on, and shall be certified as a true and 21 correct copy by an accounting or auditing firm licensed in the jurisdiction of 22 the insurer's domicile and certified by a senior officer of the nonadmitted 23 insurer as a true and correct copy of the statement filed with the regulatory 24 authority in the domicile of the nonadmitted insurer; in the case of an insurance 25 exchange qualifying under AS 21.35.330(a)(2), the statement may be an 26 aggregate combined statement of all underwriting syndicates operating during 27 the period reported; and 28 (3) qualifies under AS 21.35.330(a). 29 Sec. 21.35.330. RESTRICTIONS ON SURPLUS WET MARINE AND 30 TRANSPORTATION COVERAGE. (a) A nonadmitted insurer may be eligible to 31 provide surplus wet marine and transportation coverage in this state if it qualifies under
01 one of the following: 02 (1) a foreign but nonalien insurer, reciprocal insurer, or mutual 03 protection and indemnity association may qualify under this subsection if it has the 04 minimum unimpaired basic surplus and additional surplus equal to that required in its 05 domiciliary jurisdiction or in the amount of $15,000,000, whichever is greater; 06 (2) an individual syndicate of an insurance exchange created by the 07 laws of a state other than this state may qualify under this subsection if 08 (A) the syndicates of the exchange maintain under terms 09 acceptable to the director capital and surplus, or its equivalent under the laws 10 of its domiciliary jurisdiction, of at least $75,000,000 in the aggregate; 11 (B) the exchange must maintain under terms acceptable to the 12 director at least 50 percent of the policyholder surplus of each syndicate in a 13 custodial account accessible to the exchange or its domiciliary regulator in the 14 event of insolvency or impairment of the individual syndicate; and 15 (C) in addition, each individual syndicate to be eligible to 16 accept surplus wet marine and transportation insurance placements from this 17 state meets either of the following requirements: 18 (i) for insurance exchanges that maintain funds in an 19 amount of at least $15,000,000 for the protection of all exchange 20 policyholders, the syndicate shall maintain under terms acceptable to the 21 director minimum capital and surplus, or its equivalent under the laws 22 of the domiciliary jurisdiction, of at least $5,000,000; or 23 (ii) for insurance exchanges that do not maintain funds 24 in an amount of at least $15,000,000 for the protection of all exchange 25 policyholders, the syndicate shall maintain under terms acceptable to the 26 director minimum capital and surplus, or its equivalent under the laws 27 of its domiciliary jurisdiction, of at least the minimum capital and 28 surplus requirements under the laws of its domiciliary jurisdiction or 29 $15,000,000, whichever is greater; 30 (3) in the case of a Lloyd's plan or other similar group of insurers that 31 consists of unincorporated individual insurers or a combination of both unincorporated
01 and incorporated insurers, 02 (A) each sponsoring syndicate maintains a trust fund that shall 03 consist of a trusteed account representing at least 100 percent of the sponsoring 04 syndicate's gross liabilities attributable to the surplus wet marine and 05 transportation business in this state; 06 (B) in addition, the group shall establish and maintain in trust 07 a surplus in the amount of $100,000,000 that must be available for the benefit 08 of surplus wet marine and transportation policyholders in this state who are 09 policyholders of any member of the group; 10 (C) the incorporated members of the group may not be engaged 11 in a business other than underwriting as a member of the group and shall be 12 subject to the same level of solvency regulation and control by the group's 13 domiciliary regulator as are the unincorporated members; 14 (D) the trust funds required under this paragraph shall be 15 maintained in an irrevocable trust account in this state in a qualified financial 16 institution, consisting of cash, securities, letters of credit, or investments of 17 substantially the same character and quality as those that are eligible 18 investments for the capital and statutory reserves of admitted insurers to write 19 like kinds of insurance in this state and, in addition, shall satisfy the 20 requirements of the standard trust agreement required for listing with the 21 National Association of Insurance Commissioners International Insurers 22 Department; 23 (4) in the case of a group of incorporated insurers under common 24 administration that has continuously transacted an insurance business outside the 25 United States for at least three years immediately before January 1, 1996, and that 26 submits to this state's authority to examine its books and records and bears the expense 27 of the examination, 28 (A) the group must maintain an aggregate policyholders' surplus 29 of $10,000,000,000; 30 (B) the group must maintain in trust a surplus in the amount of 31 $100,000,000; the surplus shall be available for the benefit of surplus wet
01 marine and transportation policyholders in this state who are policyholders of 02 any member of the group; 03 (C) each insurer must individually maintain capital and surplus 04 of not less than $25,000,000 per company; 05 (D) the trust funds required by this paragraph shall be 06 maintained in an irrevocable trust account in this state in a qualified financial 07 institution, consisting of cash, securities, letters of credit, or investments of 08 substantially the same character and quality as those that are eligible 09 investments for the capital and statutory reserves of admitted insurers to write 10 like kinds of insurance in this state and, in addition, shall satisfy the 11 requirements of the standard trust agreement required for listing with the 12 National Association of Insurance Commissioners International Insurers 13 Department; and 14 (E) each member of the group shall make available to the 15 director an annual certification of the member's solvency by the member's 16 domiciliary regulator and its independent public accountant; or 17 (5) except for an exchange or plan complying with (3) or (4) of this 18 subsection, an alien insurer must satisfy the capital and surplus requirements of (2) of 19 this subsection, must have in force a trust fund of not less than the greater of 20 (A) $2,500,000; or 21 (B) 50 percent of its surplus wet marine and transportation gross 22 liabilities in this state, subject, at the discretion of the director, to a cap of 23 $10,000,000, to be determined annually on the basis of accounting practices 24 and procedures substantially equivalent to those enacted by this state, as of 25 December 31 next preceding the date of determination, where 26 (i) at least 50 percent of surplus lines gross liabilities, 27 but not less than $2,500,000, is maintained in an irrevocable trust 28 account in this state in a qualified financial institution, on behalf of 29 United States policyholders consisting of cash, securities, letters of 30 credit, or other investments of substantially the same character and 31 quality as those that are eligible investments under AS 21.21 for the
01 capital and statutory reserves of admitted insurers to write like kinds of 02 insurance in this state; the trust account that shall be included in any 03 calculation of capital and surplus or its equivalent, shall satisfy the 04 requirements of the standard trust agreement required for listing with 05 the National Association of Insurance Commissioners International 06 Insurers Department; the insurer may request approval from the director 07 to use the trust fund to pay valid surplus wet marine and transportation 08 claims, provided, however, that the balance of the trust fund may not 09 be less than $2,500,000 or 35 percent of the insurer's current gross 10 United States surplus wet marine and transportation liabilities, 11 whichever is greater; 12 (ii) the remaining required amount of surplus lines gross 13 liabilities shall be maintained in a trust account, for the exclusive 14 benefit of policyholders in this state, in a financial institution in the 15 insurer's country of domicile, provided that the financial institution has 16 a United States office and the trust account and its corpus satisfy all of 17 the requirements of the standard trust agreement required for listing 18 with the National Association of Insurance Commissioners International 19 Insurers Department, except, if acceptable to the director, investments 20 in a foreign country or in a possession of the United States of 21 substantially the same kinds, classes, and investment grades as those 22 that are eligible investments for the capital and statutory reserves of 23 admitted insurers to write like kinds of insurance in this state, or a 24 clean, unconditional, irrevocable letter of credit confirmed by a 25 qualified United States financial institution. 26 (b) The trust requirement for an alien insurer under (a) of this section may be 27 satisfied by an insurer's possessing less than the trust fund amount specified upon a 28 written affirmative finding of acceptability by the director if the director is satisfied 29 that the placement of insurance with the insurer is necessary and will not be 30 detrimental to the public and the policyholder. In determining whether business may 31 be placed with the insurer, the director shall consider the following factors:
01 (1) the interests of the public and policyholders; 02 (2) the length of time the insurer has been authorized in its domiciliary 03 jurisdiction and elsewhere; 04 (3) unavailability of particular coverages from authorized insurers or 05 unauthorized insurers meeting the requirements of this section; 06 (4) the size of the company as measured by its assets, capital and 07 surplus, reserves, premium writings, insurance in force, or other appropriate criteria; 08 (5) the kinds of business the company writes, its net exposure, and the 09 extent to which the company's business is diversified among several lines of insurance 10 and geographic locations; and 11 (6) the past and projected trend in the size of the company's capital and 12 surplus considering such factors as premium growth, operating history, loss and 13 expense ratios, or other appropriate criteria. 14 (c) If after a review of a nonadmitted insurer providing or attempting to 15 provide wet marine and transportation coverage and consideration of factors including 16 quality of management, capital and surplus of a parent company, underwriting profit, 17 investment income trends, trade practices, reserving practices, company record, and 18 reputation within the industry, the director finds the insurer to be unacceptable, the 19 director may declare the nonadmitted insurer to be ineligible. The director may issue 20 an order declaring a nonadmitted insurer ineligible and shall promptly mail notice of 21 a declaration to each insurance producer surplus lines broker licensed under AS 21.27 22 if at any time the director has reason to believe that the nonadmitted insurer 23 (1) is in unsound financial condition; 24 (2) has acted in an untrustworthy manner; 25 (3) is no longer eligible under this chapter; 26 (4) has wilfully violated the laws of this state or another jurisdiction; 27 or 28 (5) does not reasonably investigate and make prompt payment of just 29 losses and claims in this state or another jurisdiction. 30 Sec. 21.35.340. VALIDITY OF SURPLUS WET MARINE AND 31 TRANSPORTATION CONTRACTS. Insurance procured under AS 21.35.300 -
01 21.35.420 shall be valid and enforceable as to all parties. 02 Sec. 21.35.350. SURPLUS WET MARINE AND TRANSPORTATION TAX. 03 (a) Gross premiums charged, less any return premium, for surplus wet marine and 04 transportation insurance are subject to a premium receipts tax of 2.7 percent that shall 05 be collected by the insurance producer or surplus lines broker in addition to the full 06 amount of the gross premium charged by the insurer for the insurance. The tax on any 07 portion of the premium unearned at termination of the insurance that is credited by the 08 state to the insurance producer or surplus lines broker shall be returned to the 09 policyholder directly by the insurance producer or surplus lines broker, if any. If a 10 surplus wet marine and transportation policy procured through an insurance producer 11 or surplus lines broker covers property or a subject resident, located, or to be 12 performed both inside and outside of this state, this tax payable shall be computed on 13 that portion of the gross premiums properly allocated to this state. The insurance 14 producer or surplus lines broker may not absorb the tax or any part of it and may not 15 rebate the tax or a part of the tax. 16 (b) This surplus wet marine and transportation tax is due and shall be paid to 17 the director on or before March 1 following the calendar year in which the premium 18 is written. The tax shall be reported on forms prescribed by the director or, upon the 19 director's order, paid to and reported on forms prescribed by the surplus lines 20 association. 21 (c) If the tax is not paid when due, an additional late payment fee of $250 plus 22 two percent of the tax due per month, or part of a month, shall become due and 23 payable by the insurance producer or surplus lines broker. 24 (d) If a surplus wet marine and transportation policy procured through a 25 licensed insurance producer or surplus lines broker covers property or a subject only 26 partially resident, located, or to be performed in this state, the tax payable shall be 27 computed on the portions of the premium that are attributable to the property or a 28 subject resident, located, or to be performed in this state. In determining the amount 29 of a premium taxable in this state, all premiums written, procured, or received in this 30 state shall be considered written on property or a subject resident, located, or to be 31 performed in this state, except premiums that are properly allocated or apportioned and
01 reported as taxable premiums of a reciprocal state. The tax payable to this state may 02 not be less than the tax due under this section. 03 (e) The director or a surplus lines association shall, at least annually, furnish 04 to the insurance regulatory official of a reciprocal state a copy of all filings reporting 05 an allocation of tax as required by (d) of this section. 06 (f) In determining the amount of gross premiums taxable in this state for a 07 placement of surplus wet marine and transportation insurance covering property or a 08 subject resident, located, or to be performed both inside and outside this state, the tax 09 due shall be computed on that portion of the policy premium that is attributable to 10 property or a subject resident, located, or to be performed in this state and that relates 11 to the type of insurance being placed as determined by reference to an allocation 12 schedule as set out in AS 21.35.200(f). 13 (g) This section does not apply to insurance of risks of the state or a political 14 subdivision of the state if an exemption on a form prescribed by the director is filed 15 with the report required by (b) of this section. 16 Sec. 21.35.360. SURPLUS WET MARINE AND TRANSPORTATION 17 FILING FEE. (a) The fee for filing the forms required under AS 21.35.350(b) is an 18 amount equal to one percent on gross premium charged less any return premiums 19 during the preceding calendar year, whether the premium is subject to tax or exempt. 20 The insurance producer or surplus lines broker shall pay the fee at the time of filing 21 of the statement. 22 (b) If the filing fee is not paid when due, an additional late payment fee of 23 $250 plus two percent of the fee due per month, or part of a month, shall become due 24 and payable by the surplus wet marine and transportation broker. 25 Sec. 21.35.370. COLLECTION OF SURPLUS WET MARINE AND 26 TRANSPORTATION TAXES AND FEES. (a) If the tax collectible under 27 AS 21.35.350 or the fee collectible under AS 21.35.360 by an insurance producer or 28 surplus lines broker is not paid within the time prescribed, the tax, fee, or both, and 29 late payment fees, along with appropriate penalties may be collected by distraint or by 30 an action in court, against the insurance producer or surplus lines broker and the surety 31 on the bond filed under AS 21.35.310(b)(2).
01 (b) In addition to penalties provided in this chapter, failure to pay tax within 02 the time prescribed is subject to penalties provided in AS 21.35.440. 03 Sec. 21.35.380. CIVIL ACTIONS AGAINST ELIGIBLE SURPLUS WET 04 MARINE AND TRANSPORTATION INSURERS. (a) A person may bring a civil 05 action against an eligible surplus wet marine and transportation insurer under any 06 surplus wet marine and transportation insurance contract made by it or evidence of 07 insurance issued or delivered by the surplus wet marine and transportation licensee. 08 A policy issued by an eligible surplus wet marine and transportation insurer shall 09 contain a provision stating the substance of this section and designating the person to 10 whom the director shall mail service of process. 11 (b) The remedies provided in this section are in addition to any other methods 12 provided by law for service of process upon insurers. 13 Sec. 21.35.390. DUTY TO FILE EVIDENCE OF INSURANCE 14 TRANSACTIONS AND AFFIDAVITS. (a) An insurance producer or surplus lines 15 broker shall execute and file with the monthly report required by AS 21.35.400 a 16 written report that shall be kept confidential regarding each surplus wet marine and 17 transportation insurance transaction occurring in the preceding calendar month. The 18 report must include 19 (1) the name and address of the insured; 20 (2) the identity of each insurer including the National Association of 21 Insurance Commissioners group and company insurer number and the percentage of 22 coverage provided by each insurer; 23 (3) a complete description of the subject and location of the risk 24 insured; 25 (4) the amount of premium charged for the insurance; and 26 (5) other information required by the director. 27 (b) Instead of the report required in (a) of this section, the director may order 28 that evidence of insurance be filed with the surplus lines association and that the 29 surplus lines association provide periodic reports regarding insurance transactions to 30 the director. 31 (c) An insurance producer or surplus lines broker shall execute and deliver
01 with the report required by (a) of this section to the director or with the evidence of 02 insurance required by (b) of this section to the surplus lines association, for surplus 03 wet marine and transportation insurance first placed or renewed in the preceding 04 calendar month, an affidavit that shall be open to public inspection as to the diligent 05 efforts to place the coverage with admitted insurers and the results of those efforts. 06 The affidavit must contain a statement by the insurance producer or surplus lines 07 broker that the insured was expressly informed in writing before placement of the 08 surplus wet marine and transportation insurance that the surplus wet marine and 09 transportation insurer with whom the insurance was to be placed is not licensed in this 10 state and is not subject to this state's supervision, and, in the event of the insolvency 11 of the surplus wet marine and transportation insurance, losses will not be covered 12 under AS 21.80 (Alaska Insurance Guaranty Association Act). 13 (d) A report, evidence of insurance, or affidavit required by this section that 14 is filed late, incomplete, or incorrect is subject to a $50 late filing fee. 15 Sec. 21.35.400. MONTHLY REPORTS; SUMMARY OF EXPORTED 16 SURPLUS WET MARINE AND TRANSPORTATION BUSINESS. (a) An insurance 17 producer or surplus lines broker shall file with the director on or before the end of 18 each month, on forms prescribed by the director, a verified report in duplicate of all 19 surplus wet marine and transportation insurance. The report must include all surplus 20 wet marine and transportation insurance transactions during the preceding calendar 21 month, showing the aggregate gross premiums written, the aggregate return premiums, 22 the amount of aggregate tax remitted to this state, and the amount of aggregate tax 23 remitted to each other state for which an allocation is made under AS 21.35.350(d). 24 (b) Instead of the report required under (a) of this section, the director may 25 order that evidence of insurance be filed with the surplus lines association and that the 26 association file periodic reports regarding insurance transactions to the director. 27 (c) A report or evidence of insurance required by this section that is filed late, 28 incomplete, or incorrect is subject to a $50 late filing fee. 29 Sec. 21.35.410. DUTY TO DELIVER EVIDENCE OF SURPLUS WET 30 MARINE AND TRANSPORTATION INSURANCE AND SUBSEQUENT CHANGES 31 TO INSURANCE. (a) When surplus wet marine and transportation insurance is
01 placed, the insurance producer or surplus lines broker shall, within 30 days after 02 placing the coverage, deliver to the insured or the producing broker the policy, or if 03 the policy is not then available, a certificate, cover note, binder, or other evidence of 04 insurance. The certificate, cover note, binder, or other evidence of insurance shall be 05 executed by the insurance producer or surplus lines broker and must contain a 06 complete record of all policy insuring agreements, conditions, exclusions, clauses, 07 endorsements, other material facts that would regularly be included in the policy, 08 description, and location of the subject of insurance, a general description of the 09 coverages of the insurance, the premium and rate charged and taxes to be collected 10 from the insured, the name and address of the insured, and the name of each surplus 11 wet marine and transportation insurer and the percentage of the entire risk assumed by 12 each insurer. The policy, certificate, cover note, binder, or other evidence of insurance 13 must contain the name, address, phone number, and license number of the insurance 14 producer or surplus lines broker. 15 (b) An insurance producer or surplus lines broker may not issue or deliver 16 evidence of insurance or purport to insure or represent that insurance will be or has 17 been written by an eligible surplus wet marine and transportation insurer unless the 18 insurance producer or surplus lines broker has authority from the insurer to insure the 19 risk or has received information from the insurer in the regular course of business that 20 the insurance has been granted. 21 (c) If after delivery of evidence of insurance there is a change in the identity 22 of the insurers, or the percentage of the risk assumed by an insurer, or another material 23 change in coverage from that stated in the surplus wet marine and transportation 24 broker's original evidence of insurance, the insurance producer or surplus lines broker 25 shall promptly issue and deliver to the insured an appropriate substitute for, or 26 endorsement of, the original document accurately showing the current status of the 27 coverage and the insurer's responsibility. 28 (d) The insurance producer or surplus lines broker shall deliver a copy of the 29 policy or cover note issued by the insurer as soon as reasonably possible after 30 placement of the insurance coverage. A certificate or policy of insurance must contain 31 or have attached a complete record of all policy insuring agreements, conditions,
01 exclusions, clauses, endorsements, or other material facts that would regularly be 02 included in the policy. 03 (e) A policy, certificate, cover note, binder, or other evidence of insurance 04 negotiated, placed, or procured under the provisions of this chapter issued by a surplus 05 wet marine and transportation broker shall bear the name, address, phone number, 06 license number of the insurance producer or surplus lines broker, and the following 07 legend in at least 10-point type: 08 This is evidence of insurance procured and developed 09 under AS 21.35 (Alaska Surplus Wet Marine and Transportation 10 Law). It is not covered by AS 21.80 (Alaska Insurance 11 Guaranty Association Act). 12 Sec. 21.35.420. EFFECT OF PAYMENT TO INSURANCE PRODUCER OR 13 SURPLUS LINES BROKER. A payment of premium for surplus wet marine and 14 transportation insurance to an insurance producer or surplus lines broker, acting for a 15 person other than itself in negotiating, continuing, or reviewing a policy of insurance 16 under this chapter, is considered to be payment to the insurer, notwithstanding 17 conditions or stipulations in the policy or contract to the contrary. 18 ARTICLE 4. GENERAL PROVISIONS. 19 Sec. 21.35.430. LICENSEE'S DUTY TO NOTIFY INSURED. (a) Except as 20 provided in (b) of this section, a contract of insurance placed by an insurance producer 21 or surplus lines broker under this chapter is not binding upon the insured, and a 22 premium charged is not due and payable until the producing broker has notified the 23 insured in writing that the insurer with which the surplus lines broker places the 24 insurance does not hold a certificate of authority issued by this state and is not subject 25 to state supervision, and, in the event of the insolvency of the surplus lines insurer, 26 losses will not be covered under AS 21.80 (Alaska Insurance Guaranty Association 27 Act). Nothing in this subsection shall nullify an agreement by an insurer to provide 28 insurance. A copy of the notice required under this subsection shall be maintained by 29 the licensee with the records of the contract and shall be available for examination. 30 (b) A contract of insurance placed by a surplus lines broker under this chapter 31 with a risk retention group is not binding upon the insured, and a premium charged is
01 not due and payable until the producing broker has provided the insured with the 02 following federally mandated language in 10-point type: 03 This policy is issued by your risk retention group. Your 04 risk retention group may not be subject to all of the insurance 05 laws and regulations of your state. State insurance insolvency 06 funds are not available for your risk retention group. 07 Sec. 21.35.440. PENALTIES. In addition to any other penalty provided by 08 law, a person other than an insured that the director determines under AS 21.06.170 - 09 21.06.240 has violated the provisions of this chapter, is subject to 10 (1) a civil penalty equal to the premium or compensation promised, 11 paid, or to be paid, directly or indirectly, to the person; 12 (2) a civil penalty of not more than $25,000 for each violation or a 13 civil penalty of not more than $100,000 for each violation if the director determines 14 that the person wilfully violated the provisions of this chapter; and 15 (3) denial, nonrenewal, suspension, or revocation of the person's license 16 or certificate of authority. 17 Sec. 21.35.450. HEARING AND ORDER ON VIOLATION. (a) On the 18 complaint of a person or on the motion of the director, the director may conduct an 19 investigation to determine whether a person has violated this chapter. 20 (b) If the director determines that a person has violated this chapter, the 21 director shall serve an order upon the person charged requiring that person to cease 22 and desist from engaging in the act or practice. Service required under this subsection 23 shall be by mail with a certificate of mailing from the United States Postal Service. 24 A person aggrieved by the cease and desist order may request the hearing under 25 AS 21.06.170 - 21.06.240. 26 (c) If the director believes that a person has violated a cease and desist order 27 issued under (b) of this section, the director may certify the relevant facts to the court 28 for proceedings under AS 44.62.590. In addition to the penalties and remedies 29 provided for in AS 44.62.590, the court, upon finding that the cease and desist order 30 has been violated, may order the violator to comply with the order, pay a penalty of 31 not more than $100,000 for each violation, revoke or suspend the violator's license or
01 certificate of authority, and bar the violator from transacting the business of insurance 02 in the future. 03 (d) If the director determines that a person is violating or about to violate the 04 provisions of this chapter, the director may cause a complaint to be filed in the court 05 for restitution. The court shall have jurisdiction of the proceeding and shall have the 06 power to make and enter judgment awarding restitution. 07 Sec. 21.35.460. EXCEPTION FOR CERTAIN INSURANCE 08 TRANSACTIONS. The provisions of this chapter may not operate to prohibit 09 employees, officers, directors, or partners of a commercial insured from acting in the 10 capacity of an insurance manager or buyer in placing insurance on behalf of the 11 employer, provided that the person's compensation is not based on buying insurance. 12 Sec. 21.35.470. VENUE FOR CERTAIN INSURANCE TRANSACTIONS. 13 The venue of an insurance transaction committed by mail, electronic transmission, or 14 otherwise is at the point where the matter transmitted by mail, electronic transmission, 15 or otherwise is delivered, issued for delivery, or takes effect. 16 Sec. 21.35.900. DEFINITIONS. In this chapter, 17 (1) "capital" means funds paid in for stock or other evidence of 18 ownership; 19 (2) "eligible surplus lines insurer" means a nonadmitted insurer with 20 which a surplus lines broker may place surplus lines insurance under AS 21.35.140 - 21 21.35.290; 22 (3) "eligible surplus wet marine and transportation insurer" means a 23 nonadmitted insurer with which an insurance producer or surplus lines broker may 24 place surplus wet marine and transportation insurance under AS 21.35.300 - 21.35.420; 25 (4) "export" means to place surplus lines insurance or surplus wet 26 marine and transportation insurance with a nonadmitted insurer; 27 (5) "foreign decree" means any decree or order in equity of a court 28 located in any United States jurisdiction, including a federal court of the United States, 29 against any person engaging in the transaction of insurance in this state; 30 (6) "ocean marine insurance" means that portion of wet marine and 31 transportation insurance that covers vessels
01 (A) solely engaged in interstate or foreign commerce; 02 (B) with a hull at the water line longer than 100 feet; or 03 (C) in excess of 100 gross registered tons; 04 (7) "producing broker" means the insurance producer or surplus lines 05 broker licensed under AS 21.27 dealing directly with the client seeking insurance; 06 (8) "reciprocal state" means a state that the director has determined has 07 enacted provisions substantially similar to AS 21.35.040, 21.35.050, 21.35.200, or 08 21.35.350; 09 (9) "surplus" means funds over and above liabilities and capital of the 10 company for the protection of policyholders; 11 (10) "transaction of insurance" means 12 (A) the solicitation, negotiation, procurement, effectuation, or 13 renewal of insurance; forwarding of applications; delivery of policies or 14 contracts; inspection of risks; fixing of rates; investigation or adjustment of 15 claims or losses; collection or forwarding of premiums; or transaction of 16 matters subsequent to effectuation of the contract of insurance and arising out 17 of it; and 18 (B) for purposes of this chapter, any of the following acts in 19 this state effected by mail, electronic transmission, or otherwise by a 20 nonadmitted insurer or by any person acting with the actual or apparent 21 authority of the insurer, on behalf of the insurer, constitutes the transaction of 22 an insurance business in or from this state: 23 (i) the making of or proposing to make, as an insurer, 24 an insurance contract; 25 (ii) the making of or proposing to make, as guarantor or 26 surety, any contract of guaranty or suretyship as a vocation and not 27 merely incidental to any other legitimate business or activity of the 28 guarantor or surety; 29 (iii) the taking or receiving of any application for 30 insurance; 31 (iv) the receiving or collection of a premium,
01 commission, membership fee, assessment, dues, or other consideration 02 for any insurance or any part of it; 03 (v) the issuance or delivery in this state of contracts of 04 insurance to residents of this state or to persons authorized to do 05 business in this state; 06 (vi) the solicitation, negotiation, procurement, or 07 effectuation of insurance or renewals of it; 08 (vii) the dissemination of information as to coverage or 09 rates, forwarding of applications, delivery of policies or contracts, 10 inspection of risks, the fixing of rates or investigation or adjustment of 11 claims or losses, the transaction of matters subsequent to effectuation 12 of the contract and arising out of it, or any other manner of representing 13 or assisting a person or insurer in the transaction of insurance with 14 respect to properties, risks, or exposures, located or to be performed in 15 this state; 16 (viii) the transaction of any kind of insurance business 17 specifically recognized as transacting an insurance business within the 18 meaning of the statutes relating to insurance; 19 (ix) the offering of any insurance or the transacting of 20 any insurance business; or 21 (x) offering any agreement or contract that alters, 22 amends, or voids coverage of an insurance contract; 23 (11) "type of insurance" means coverage provided under the particular 24 policy that is being placed; 25 (12) "unauthorized person" means a person 26 (A) not licensed under AS 21.27 as an insurance producer or a 27 surplus lines broker; or 28 (B) who is not an employee, officer, director, or partner of a 29 commercial insured acting in the capacity of an insurance manager or buyer in 30 placing insurance on behalf of the employer, provided that the person's 31 compensation is not based on buying insurance.
01 * Sec. 9. AS 21.36.195 is amended to read: 02 Sec. 21.36.195. SURPLUS LINES BROKERS AND INSURANCE 03 PRODUCERS; PROHIBITED ACTS. A surplus lines broker or an insurance producer 04 may not fail to provide evidence of insurance, affidavits, filings, or reports, or fail to 05 maintain the records, or fail to pay the taxes and fees, required under AS 21.35 06 [AS 21.34]. 07 * Sec. 10. AS 21.36.235(c) is amended to read: 08 (c) This section does not apply to workers' compensation insurance, surplus 09 lines insurance, or surplus wet marine and transportation insurance under 10 AS 21.35. 11 * Sec. 11. AS 21.36.240 is amended by adding a new subsection to read: 12 (b) This section does not apply to surplus lines insurance or surplus wet 13 marine and transportation insurance under AS 21.35. 14 * Sec. 12. AS 21.36.370 is amended to read: 15 Sec. 21.36.370. EXCEPTION FOR COLLECTION OF CERTAIN CHARGES. 16 For the purpose of AS 21.36.360, the charging and collection by surplus line brokers 17 licensed under AS 21.27 of the amount of applicable state and federal taxes and filing 18 fees under AS 21.35 [AS 21.34] is not considered a premium or charge for insurance. 19 * Sec. 13. AS 21.39.040(i) is amended to read: 20 (i) An insurer may use a rate less than that provided by a filing otherwise 21 applicable on a specific risk the insurance for which would otherwise be exported 22 under AS 21.35 [AS 21.34]. Within 30 days of this action the insurer shall file a 23 report detailing the information required by the director on a form prescribed by the 24 director. 25 * Sec. 14. AS 21.76.070 is amended to read: 26 Sec. 21.76.070. EXCESS INSURANCE. A cooperative agreement may 27 authorize the board of directors to purchase excess or catastrophic insurance on behalf 28 of the joint insurance arrangement. The cost of the insurance shall be apportioned in 29 the manner specified in the joint insurance agreement. The board may purchase 30 insurance under this section only from an insurer authorized to do business in the state, 31 except that an arrangement formed by municipalities or school districts may purchase
01 insurance under this section from a risk-sharing pool established by a national 02 association of similar entities if the risk-sharing pool meets the qualifications for an 03 unauthorized insurer under AS 21.35.170 [AS 21.34.040(b) AND (d) AND 21.34.220] 04 and has capital and policyholders surplus in an amount at least as great as would be 05 required if the association were a domestic multiple line insurer. An arrangement may 06 purchase insurance under this section for property and liability risks from unauthorized 07 insurers allowed for use by licensed Alaska surplus lines brokers. 08 * Sec. 15. AS 21.84.590(8) is amended to read: 09 (8) AS 21.35 [AS 21.33]; 10 * Sec. 16. AS 21.90.900(19) is amended to read: 11 (19) "independently procured insurance" means insurance procured 12 directly from a nonadmitted insurer directly by an insured, but does not include 13 insurance lawfully procured through a surplus lines broker under AS 21.35 [AS 21.34]; 14 * Sec. 17. AS 21.90.900(36) is amended to read: 15 (36) "surplus lines broker" means a person licensed under AS 21.27 to 16 place insurance in this state or relative to a subject resident, located, or to be 17 performed in this state with eligible surplus lines insurers under AS 21.35 [AS 21.34]; 18 * Sec. 18. AS 21.90.900(37) is amended to read: 19 (37) "surplus lines insurance" means any insurance in this state or 20 relative to a subject resident, located, or to be performed in this state that is permitted 21 under AS 21.35.140 - 21.35.290 [AS 21.34] to be placed through a surplus lines broker 22 licensed under AS 21.27 with nonadmitted insurers eligible to accept insurance other 23 than reinsurance, wet marine and transportation insurance, insurance independently 24 procured, life insurance, and an annuity contract; 25 * Sec. 19. AS 21.33 and AS 21.34 are repealed. 26 * Sec. 20. Notwithstanding AS 21.35.180(a)(5), enacted in sec. 8 of this Act, an alien 27 insurer meeting the requirements to do a surplus lines business in this state on July 1, 1996, 28 shall, subject to a minimum of $2,500,000 maintained in the United States, maintain a trust 29 fund as follows: 30 (1) as of January 1, 1997, a trust fund not less than 10 percent of its gross 31 United States surplus lines liabilities, not less than 50 percent of this amount maintained in
01 the United States, subject, at the discretion of the director, to a cap of $20,000,000; 02 (2) as of January 1, 1998, a trust fund not less than 20 percent of its gross 03 United States surplus lines liabilities, not less than 50 percent of this amount maintained in 04 the United States, subject, at the discretion of the director, to a cap of $40,000,000; 05 (3) as of January 1, 1999, a trust fund not less than 30 percent of its gross 06 United States surplus lines liabilities, not less than 50 percent of this amount maintained in 07 the United States, subject, at the discretion of the director, to a cap of $60,000,000; 08 (4) as of January 1, 2000, a trust fund not less than 40 percent of its gross 09 United States surplus lines liabilities, not less than 50 percent of this amount maintained in 10 the United States, subject, at the discretion of the director, to a cap of $80,000,000; 11 (5) as of January 1, 2001, a trust fund not less than 50 percent of its gross 12 United States surplus lines liabilities, not less than 50 percent of this amount maintained in 13 the United States, subject, at the discretion of the director, to a cap of $100,000,000. 14 * Sec. 21. Notwithstanding AS 21.35.340(a)(5), enacted in sec. 8 of this Act, an insurer 15 meeting the requirements to do a surplus wet marine and transportation business in this state 16 on July 1, 1996, shall, subject to a minimum of $2,500,000 maintained in the United States, 17 maintain a trust fund as follows: 18 (1) as of January 1, 1997, a trust fund not less than 10 percent of its gross 19 surplus wet marine and transportation liabilities in this state, not less than 50 percent of this 20 amount maintained in this state; 21 (2) as of January 1, 1998, a trust fund not less than 20 percent of its gross 22 surplus wet marine and transportation liabilities in this state, not less than 50 percent of this 23 amount maintained in this state; 24 (3) as of January 1, 1999, a trust fund not less than 30 percent of its gross 25 surplus wet marine and transportation liabilities in this state, not less than 50 percent of this 26 amount maintained in this state; 27 (4) as of January 1, 2000, a trust fund not less than 40 percent of its gross 28 surplus wet marine and transportation liabilities in this state, not less than 50 percent of this 29 amount maintained in this state; 30 (5) as of January 1, 2001, a trust fund not less than 50 percent of its gross 31 surplus wet marine and transportation liabilities in this state, not less than 50 percent of this
01 amount maintained in this state. 02 * Sec. 22. APPLICABILITY. This Act applies to a policy of insurance entered into or 03 renewed on or after the effective date of this Act. 04 * Sec. 23. This Act takes effect July 1, 1996.