SB 53: "An Act relating to insurance, to the licensing, accreditation, examination, regulation, and solvency of persons engaged in the insurance business, including insurers, nonadmitted insurers, purchasing groups, risk retention groups, and United States branches of alien insurers; relating to the management of and the filing of reports by persons licensed or otherwise doing business under the insurance code; amending Alaska Rule of Civil Procedure 45; and providing for an effective date."
00SENATE BILL NO. 53 01 "An Act relating to insurance, to the licensing, accreditation, examination, 02 regulation, and solvency of persons engaged in the insurance business, including 03 insurers, nonadmitted insurers, purchasing groups, risk retention groups, and 04 United States branches of alien insurers; relating to the management of and the 05 filing of reports by persons licensed or otherwise doing business under the 06 insurance code; amending Alaska Rule of Civil Procedure 45; and providing for 07 an effective date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09 * Section 1. AS 06.20.260(a) is amended to read: 10 (a) A further or other charge or amount for an examination, service, brokerage 11 commission, expense, fee, bonus, or other thing may not be directly or indirectly 12 charged, contracted for, or received except 13 (1) lawful fees actually paid out by the licensee to a public officer for 14 filing, recording, or releasing any instrument securing the loan, or for transferring
01 certificate of title to a motor vehicle securing the lien or noting a lien on that 02 certificate; 03 (2) premiums actually paid out for insurance on any one or combination 04 of the following: pledged property of the borrower, or consumer credit [LIFE] 05 insurance; in this paragraph "consumer credit insurance" has the meaning given 06 in AS 21.57.160 [ON THE LIFE OF ONE OR MORE BORROWERS, CREDIT LOSS 07 OF INCOME INSURANCE, OR CREDIT DISABILITY INSURANCE TO PROVIDE 08 INDEMNITY FOR PAYMENTS BECOMING DUE ON THE INDEBTEDNESS]; 09 (3) taxable costs and expenses to which the licensee becomes entitled 10 under general law in any court proceedings to collect a loan or to realize on the 11 security after default; 12 (4) reasonable fees paid by a licensee for appraisals, surveys, and title 13 insurance or reports if the loan is secured by an interest in real estate; 14 (5) a late payment fee of not more than 10 percent of the payment that 15 is due or $15, whichever is less. 16 * Sec. 2. AS 06.20.287(a) is amended to read: 17 (a) A licensee may obtain consumer credit [LIFE, CREDIT DISABILITY,] 18 and property insurance on open-end loans under this chapter. The consumer credit 19 [LIFE AND CREDIT DISABILITY] insurance obtained by a licensee shall satisfy the 20 requirements of AS 21.57. The property insurance obtained by a licensee shall satisfy 21 the requirements of AS 21.39 and AS 21.42. The licensee shall comply with 22 AS 21.36.160 and 21.36.165 during all transactions with borrowers involving 23 consumer credit [LIFE, CREDIT DISABILITY] and property insurance. 24 * Sec. 3. AS 21.03.010 is amended by adding a new subsection to read: 25 (c) A person who transacts insurance in this state, or relative to a subject 26 resident, located, or to be performed in this state as or on behalf of a risk retention 27 group or purchasing group formed under and in compliance with 15 U.S.C. 3901 - 28 3906 (Liability Risk Retention Act), shall comply with the applicable provisions of this 29 title. 30 * Sec. 4. AS 21.03.060 is amended to read: 31 Sec. 21.03.060. PRE-EMPTION. The state hereby pre-empts the field of
01 regulating insurers and their managing general agents, insurance producers 02 [AGENTS], and representatives. All political subdivisions of the state, including home 03 rule boroughs or cities, are prohibited from requiring of an insurer, managing general 04 agent, insurance producer [AGENT], or representative regulated under this title an 05 authorization, permit, or registration of any kind for conducting transactions lawful 06 under the authority granted by the state under this title. 07 * Sec. 5. AS 21.06.080 is amended by adding a new subsection to read: 08 (e) If the director determines that a catastrophe has occurred in this state and 09 in good faith believes that the governor or the President of the United States has issued 10 or is about to issue a declaration of disaster, the director may take the action that the 11 director considers necessary to assure that a contract of insurance already issued will 12 be honored under the terms of the contract. Actions that the director may take include 13 emergency orders permitting the immediate licensing of adjusters to facilitate handling 14 of claims, permitting a licensee to open or close an office, permitting a licensee to 15 move or remove a record as required by the existence of the catastrophe, or permitting 16 the issuance by an insurer of checks or drafts drawn on an out-of-state bank in 17 payment of a claim. Until a declaration of the disaster has been lifted, the director 18 may take action to respond to a disaster without a hearing. An action taken under this 19 subsection may not remain in effect more than six months from the date that the 20 director determines that a catastrophe has occurred unless, after a hearing, the director 21 determines that the action is still necessary to respond to the disaster. 22 * Sec. 6. AS 21.06.150(g) is amended to read: 23 (g) The director may withhold a document, information, account, record, 24 examination, or report from the public inspection for as long as the director finds the 25 withholding is necessary to protect a person against unwarranted injury or is in the 26 public interest. The director may close an examination hearing to the public when 27 the director finds the closure is necessary to protect a person against unwarranted 28 injury or is in the public interest. The director may publish the examination report 29 or a summary of it in a newspaper in the state if the director determines that the 30 publication is in the public interest. 31 * Sec. 7. AS 21.09.110 is amended to read:
01 Sec. 21.09.110. APPLICATION FOR CERTIFICATE OF AUTHORITY. To 02 apply for an original certificate of authority an insurer shall file with the director its 03 application, [(] accompanied by the applicable fees set under AS 21.06.250, [)] 04 showing its name, location of its home office, or principal office in the United States 05 [(] if an alien insurer [)], kinds of insurance to be transacted, date of organization or 06 incorporation, form of organization, state or country of domicile, and additional 07 information that the director may reasonably require, together with the following 08 documents, as applicable: 09 (1) if a foreign insurer, a copy of its corporate charter or articles of 10 incorporation, with all amendments certified by the public officer with whom the 11 originals are on file in the state or country of domicile; 12 (2) if a reciprocal insurer, copies of the power of attorney of its 13 attorney-in-fact and of its subscribers' agreement, if any, certified by its 14 attorney-in-fact; 15 (3) a copy of its financial statement as of the preceding December 31, 16 and all subsequent quarterly financial statements, sworn to by at least two executive 17 officers of the insurer, or certified by the public insurance supervisory official of the 18 insurer's state of domicile or of entry into the United States; 19 (4) a copy of the report of last examination, if any, made of the insurer, 20 certified by the insurance supervisory official of its state of domicile or of entry into 21 the United States; 22 (5) appointment of the director under AS 21.09.180, as its attorney to 23 receive service of legal process; 24 (6) if a foreign or alien insurer, a certificate of the public official 25 having supervision of insurance in its state or country of domicile, or state of entry 26 into the United States, showing that it is authorized to transact the kinds of insurance 27 proposed to be transacted in this state; 28 (7) if an alien insurer, a copy of the appointment and authority of its 29 United States manager, certified by its officer having custody of its records; and 30 (8) if a foreign insurer, a certificate as to deposit if it is to be tendered 31 under AS 21.09.090 [;
01 (9) SPECIMEN COPIES OF POLICIES PROPOSED TO BE 02 OFFERED IN THIS STATE IF THEN AVAILABLE, TOGETHER WITH 03 PREMIUMS OR PREMIUM RATES APPLICABLE IF THEN KNOWN, OR A 04 DECLARATION THAT THE RATES AS APPLICABLE WILL BE THOSE 05 PROMULGATED BY DESIGNATED RATING ORGANIZATIONS AUTHORIZED 06 TO FILE RATES IN THIS STATE ON BEHALF OF THE INSURER OR BY THE 07 INSURER]. 08 * Sec. 8. AS 21.09.110 is amended by adding a new subsection to read: 09 (b) Policy forms and rates that require approval under AS 21.39 or AS 21.42 10 shall be submitted under AS 21.39.040(j) or AS 21.42.120(g) and may not be 11 submitted with the application for a certificate of authority. 12 * Sec. 9. AS 21.09.130(b) is amended to read: 13 (b) If not continued by the insurer, its certificate of authority shall be 14 suspended [EXPIRES] at midnight on June 30 following the failure of the insurer to 15 continue it in force. The certificate of authority shall expire on June 30 one year 16 following its suspension due to failure to continue the certificate of authority. The 17 director shall promptly notify the insurer of the occurrence of a failure that may result 18 in suspension [RESULTING IN IMPENDING EXPIRATION] of its certificate of 19 authority. 20 * Sec. 10. AS 21.09 is amended by adding a new section to read: 21 Sec. 21.09.135. VOLUNTARY SURRENDER OF CERTIFICATE OF 22 AUTHORITY. (a) A foreign admitted insurer may apply for voluntary surrender of 23 its certificate of authority and the director may accept the application, if the foreign 24 admitted insurer 25 (1) is in compliance with the applicable sections of this title, or the 26 director waives in writing each condition of noncompliance; 27 (2) provides written confirmation that obligations incurred before the 28 voluntary surrender of the certificate of authority shall be paid to guarantee funds or 29 insurance pools established by law; and 30 (3) is domiciled in a state that is 31 (A) accredited by the National Association of Insurance
01 Commissioners at the time of the request for voluntary surrender; or 02 (B) not accredited by the National Association of Insurance 03 Commissioners at the time of the request and agrees in writing to be subject 04 to 05 (i) AS 21.09.200 and 21.09.205 for a period of two 06 years, including payment of any fee related to filing information with 07 the director; and 08 (ii) any other provision of this title that may be required 09 in writing by the director and for the period of time the director may 10 specify. 11 (b) If a foreign admitted insurer who surrenders a certificate of authority 12 ceases to exist, all business written and in force relative to a risk resident, located, or 13 to be performed in this state shall be lawfully cancelled or reinsured. A reinsurance 14 agreement covering all or a part of a risk described in this subsection shall be 15 approved by the director before accepting the certificate of authority for surrender if 16 the agreement meets the following criteria: 17 (1) insurance coverage has not deteriorated from the policies existing 18 at the time of the transfer; 19 (2) the assuming insurer is of equal or better financial standing; and 20 (3) the assuming insurer is admitted to do business in this state, unless 21 this requirement is waived by the director. 22 * Sec. 11. AS 21.09.200(f) is amended to read: 23 (f) In addition to the requirements of (a) of this section, an authorized [A 24 DOMESTIC] insurer shall file its annual statement with the National Association of 25 Insurance Commissioners on electronic media acceptable to the association by the 26 due date established by the association, and shall pay the applicable filing fee. The 27 director may waive the filing requirement if the insurer only transacts business 28 in this state and only accepts risks relative to a subject resident, located, or to be 29 performed in this state. An insurer that fails to comply with this subsection is 30 subject to the penalties specified in (e) of this section, calculated from the filing and 31 fee due date established by the National Association of Insurance Commissioners.
01 * Sec. 12. AS 21.09.205 is amended by adding a new subsection to read: 02 (d) In addition to the requirements of (a) of this section, an authorized insurer 03 shall file its quarterly statement with the National Association of Insurance 04 Commissioners on electronic media acceptable to the association by the due date 05 established by the association, and shall pay the applicable filing fee. The director 06 may waive the filing requirement if the insurer only transacts business in this state and 07 only accepts risks relative to a subject resident, located, or to be performed in this 08 state. An insurer that fails to comply with this subsection is subject to the penalties 09 specified in (c) of this section, calculated from the filing and fee due date established 10 by the National Association of Insurance Commissioners. 11 * Sec. 13. AS 21.09.210 is amended by adding new subsections to read: 12 (k) If, within three years after the date the tax under this section was due, an 13 insurer discovers a mistake or misinterpretation that resulted in an overpayment of the 14 tax in an amount exceeding $250 in any one calendar year, the insurer may make a 15 written request to the director for a refund. If the director determines a valid mistake 16 or misinterpretation has occurred, the director shall refund to the insurer the amount 17 of the excess tax by granting, at the director's discretion, a monetary refund or 18 premium tax credit. A premium tax credit shall be used in the next calendar year to 19 the extent possible and any unused credit shall be paid as a monetary refund. A 20 premium tax credit may not reduce the payable tax, calculated without use of the 21 credit, to less than zero. 22 (l) A premium tax credit granted under (k) of this section may not carry over 23 as an attribute in a transaction under AS 21.69.610, 21.69.620, AS 21.78, or a similar 24 transaction entered into by a foreign insurer. 25 (m) In this section, "premium tax credit" means an amount that an insurer may 26 use as an offset against a premium tax payment. 27 * Sec. 14. AS 21.09.250 is amended to read: 28 Sec. 21.09.250. PROHIBITED ACTS. An insurer doing business in this state 29 may not make, write, place, or cause to be made, written, or placed in this state a 30 policy, duplicate policy, or contract of insurance of any kind or character, or general 31 or floating policy upon persons or property resident, situated, or located in this state,
01 from or through an insurance producer [A BROKER, AGENT], managing general 02 agent, surplus line broker, or person who has not secured a license in this state. An 03 insurer may not pay a commission or any form of remuneration to a person, firm, or 04 organization for the writing or placing of insurance coverage in this state unless that 05 person, firm, or organization holds a license issued by the director. 06 * Sec. 15. AS 21.09 is amended by adding new sections to read: 07 Sec. 21.09.290. RISK RETENTION GROUPS. (a) A risk retention group 08 formed in this state shall 09 (1) comply with 15 U.S.C. 3901 - 3906 (Liability Risk Retention Act); 10 and 11 (2) qualify for and hold in good standing a certificate of authority under 12 this chapter, limited to liability insurance only. 13 (b) A risk retention group shall submit with its application for a certificate of 14 authority 15 (1) the identity of 16 (A) the initial members of the risk retention group; 17 (B) all persons who organized the risk retention group; 18 (C) all persons who will provide administrative services to the 19 risk retention group; 20 (D) all persons who will influence or control the activities of 21 the risk retention group; 22 (2) the amount and nature of initial capitalization; 23 (3) a plan of operation or a feasibility study that includes the coverage, 24 deductible, coverage limit, rate, and rating classification system for the type or class 25 of liability insurance the group intends to offer; and 26 (4) the states in which the risk retention group intends to operate. 27 (c) At least 30 days before a domestic risk retention group implements a 28 material change or revision to an approved plan of operation or feasibility study, the 29 material change or revision shall be filed with the director. A material change or 30 revision may not be implemented unless the domestic risk retention group receives the 31 director's written approval. In this subsection, "material change or revision" includes
01 an offering of an additional type or class of liability insurance. 02 (d) In this section, 03 (1) "liability" means legal liability for damages, including costs of 04 defense, legal costs and fees, and other claims expenses, because of injury to another 05 person, damage to property, or other damage or loss to a person resulting from or 06 arising out of a business, whether profit or nonprofit, trade, product, service, including 07 a professional service, or an activity of a state or local government, or an agency or 08 political subdivision of a state or local government; "liability" does not include 09 personal risk liability or employer's liability with respect to its employees other than 10 legal liability under 45 U.S.C. 51 (Federal Employers' Liability Act); 11 (2) "personal risk liability" means liability for damages because of 12 injury to a person, damage to property, or other loss or damage resulting from a 13 personal, familial, or household responsibility or activity and that is not a responsibility 14 or activity described under (1) of this subsection. 15 Sec. 21.09.300. DISCLOSURE OF MATERIAL TRANSACTIONS. (a) A 16 domestic insurer shall file a report with the director disclosing a material acquisition 17 and disposition of assets or a material nonrenewal, cancellation, or revision of ceded 18 reinsurance agreements unless the acquisition and disposition of assets or material 19 nonrenewal, cancellation, or revision of ceded reinsurance agreements have been 20 submitted to the director for review, approval, or information purposes as required by 21 this title. 22 (b) The report required under (a) of this section is due 15 days after the end 23 of the calendar month in which a reportable transaction occurs. 24 (c) Except as provided in this section, a report obtained by or disclosed to the 25 director under this section is confidential, is not subject to subpoena, and may not be 26 made public by the director, or another person, without the prior written consent of the 27 insurer submitting the report. A report under this section may be disclosed to an 28 insurance regulatory agency of another state or to the National Association of 29 Insurance Commissioners, with notice of the disclosure sent to the insurer. If the 30 director, after giving an insurer notice and an opportunity to be heard, determines that 31 the interest of policyholders, shareholders, or the public will be served by publication
01 of the report, the director may publish all or any part of the report in a manner the 02 director determines appropriate. 03 (d) A domestic insurer's report of an acquisition or disposition of an asset 04 (1) shall be made under (a) of this section if the acquisition or 05 disposition is material; for purposes of this subsection, an acquisition or disposition, 06 or the aggregate of a series of related acquisitions or related dispositions during any 07 30-day period is material if it is nonrecurring, not in the ordinary course of business, 08 and involves more than five percent of the reporting insurer's total admitted assets as 09 reported in its most recent financial statement required by law that is filed with the 10 division; 11 (2) shall be made on asset acquisition, including a purchase, lease, 12 exchange, merger, consolidation, succession, or other acquisition other than the 13 (A) construction or development of real property by or for the 14 reporting insurer; or 15 (B) acquisition of material for construction or development of 16 real property; 17 (3) shall be made on asset disposition including a sale, lease, exchange, 18 merger, consolidation, mortgage, hypothecation, assignment for the benefit of creditors, 19 or abandonment; 20 (4) must include information on the 21 (A) date of transaction; 22 (B) manner of acquisition or disposition; 23 (C) description of the assets involved; 24 (D) nature and amount of the consideration given or received; 25 (E) purpose of, or reason for, the transaction; 26 (F) manner by which the amount of consideration was 27 determined; 28 (G) gain or loss recognized or realized as a result of the 29 transaction; and 30 (H) names of persons from whom the assets were acquired or 31 to whom the assets were disposed.
01 (e) A domestic insurer's report of nonrenewal, cancellation, or revision of a 02 ceded reinsurance agreement 03 (1) shall be made under (a) of this section if the nonrenewal, 04 cancellation, or revision is material; for purposes of this subsection, a material 05 nonrenewal, cancellation, or revision is one that affects (A) for property and casualty 06 business, including accident and health business when written as property and casualty 07 business, more than 50 percent of an insurer's ceded written premium; or (B) for life, 08 annuity, and accident and health business, more than 50 percent of the total reserve 09 credit taken for business ceded, on an annualized basis as indicated in the insurer's 10 most recently filed statutory statement; however, a filing is not required if the insurer's 11 ceded written premium or the total reserve credit taken for business ceded represents, 12 on an annual basis, less than 10 percent of direct written premiums and assumed 13 written premiums or 10 percent of the statutory reserve requirement before a cession; 14 (2) shall be filed without regard to which party has initiated the 15 nonrenewal, cancellation, or revision of ceded reinsurance whenever any of the 16 following conditions exist: 17 (A) the entire cession has been cancelled, nonrenewed, or 18 revised and ceded indemnity and loss adjustment expense reserves after a 19 nonrenewal, cancellation, or revision represent less than 50 percent of the 20 comparable reserves that would have been ceded had the nonrenewal, 21 cancellation, or revision not occurred; 22 (B) an admitted or accredited reinsurer has been replaced on an 23 existing cession by an unauthorized reinsurer; however, a report shall be filed 24 only if the result of the revision affects more than 10 percent of the cession; 25 or 26 (C) collateral requirements previously established for 27 unauthorized reinsurers have been reduced; however, a report shall be filed 28 only if the result of the revision affects more than 10 percent of the cession; 29 and 30 (3) must include 31 (A) the effective date of the nonrenewal, cancellation, or
01 revision; 02 (B) a description of the transaction with an identification of the 03 initiator of the transaction; 04 (C) the purpose of, or reason for, the transaction; and 05 (D) if applicable, the identity of the replacement reinsurers. 06 (f) An insurer is required to report under (a) of this section on a 07 nonconsolidated basis unless the insurer is part of a consolidated group of insurers that 08 utilizes a pooling arrangement or 100 percent reinsurance agreement that affects the 09 solvency and integrity of the insurer's reserves and the insurer ceded substantially all 10 of its direct and assumed business to the pool. An insurer is presumed to have ceded 11 substantially all of its direct and assumed business to a pool if the insurer has less than 12 $1,000,000 total direct written premiums and assumed written premiums during a 13 calendar year that is not subject to a pooling arrangement and the net income of the 14 business not subject to the pooling arrangement represents less than five percent of the 15 insurer's capital and surplus. 16 Sec. 21.09.310. AUTHORIZATION OF UNITED STATES BRANCHES OF 17 ALIEN INSURERS AND GENERAL REQUIREMENTS. (a) This section applies 18 to all United States branches of alien insurers using this state as a state of entry to 19 transact the business of insurance in the United States. Except as provided elsewhere 20 in this title, a United States branch is subject to all state laws applicable to an insurer 21 domiciled in this state. 22 (b) An alien insurer may apply for a certificate of authority to use this state 23 as a state of entry to transact the business of insurance in the United States by 24 (1) qualifying as an insurer licensed to do business in this state; and 25 (2) establishing a trust under a trust agreement approved in writing by 26 the director with a United States bank acceptable to the director in an amount not less 27 than the greater of 28 (A) the minimum basic capital or basic guarantee surplus and 29 additional maintained surplus required under AS 21.09.070; or 30 (B) the authorized control level risk based capital under 31 AS 21.14;
01 (3) submitting a copy of its charter and bylaws, if any, currently in 02 force, and other documents necessary to show the kind of business it is authorized to 03 transact in its domiciliary jurisdiction; documents submitted under this paragraph must 04 be attested to as accurate and complete by the insurance supervisory official in the 05 domiciliary jurisdiction, and must include an English translation, if in a language other 06 than English; 07 (4) submitting a full statement, subscribed and affirmed as true by two 08 officers or equivalent responsible representatives in a manner that the director 09 prescribes, of its financial condition as of the close of its latest fiscal year, showing 10 its assets, liabilities, income disbursements, business transacted, and other facts 11 required to be shown in its annual statement, as reported to the insurance supervisory 12 official in its domiciliary jurisdiction; all documents submitted under this paragraph 13 must include an English translation if in a language other than English; 14 (5) submitting to an examination under AS 21.06.120(b) at its principal 15 office within the United States, and elsewhere if necessary, unless the director accepts 16 a report of the insurer's recent examination and the report has been certified by the 17 insurance supervisory official of the insurer's domiciliary jurisdiction; and 18 (6) payment of fees established under AS 21.06.250. 19 (c) Before issuing or renewing a certificate of authority for a United States 20 branch, the director may require satisfactory proof that the insurer does not intend to 21 transact insurance business in violation of the provisions of this title or that is not 22 authorized by its charter. Proof required under this subsection may include the alien 23 insurer's charter, an agreement evidenced by a duly certified resolution of its board of 24 directors, or other proof that the director may require. 25 (d) The director may renew a certificate of authority for a United States branch 26 if satisfied, by proof the director may require, that the insurer is not delinquent with 27 respect to a requirement or qualification imposed by this title and that its continuance 28 to transact the business of insurance in this state will not be hazardous or prejudicial 29 to the best interest of the people of this state. 30 (e) A United States branch may not receive or renew a certificate of authority 31 in this state
01 (1) to transact a kind of insurance or a combination of kinds of 02 insurance that are not permitted to be transacted by domestic insurers in this state; 03 (2) if it transacts business other than the business of insurance 04 anywhere else within the United States unless the business, in the opinion of the 05 director, is necessarily or properly incidental to the kind of insurance that it is 06 authorized to transact in this state; 07 (3) if it fails to keep full and correct entries of its transactions; records 08 of entries shall at all times be maintained in its principal office within this state; or 09 (4) if it fails to comply with a requirement or limitation of this title that 10 it is not exempted from by another provision of this title and that is applicable to 11 similar domestic insurers and if, in the judgment of the director, the requirement or 12 limitation is necessary to protect the interest of the policyholders. 13 (f) A United States branch that transacts a kind or combination of kinds of 14 insurance outside this state that is not permitted to be done in this state by similar 15 domestic insurers may not have a certificate of authority issued or renewed in this state 16 unless, in the judgment of the director, the transaction of that kind of insurance is not 17 prejudicial to the best interest of the people of this state. 18 (g) A United States branch shall maintain assets in a trust account in an 19 amount not less than the United States branch's reserves and other liabilities, plus the 20 greater of 21 (1) the minimum basic capital or basic guaranteed surplus and 22 additional maintained surplus required under AS 21.09.070; or 23 (2) the authorized control level risk based capital under AS 21.14. 24 (h) A written trust agreement must contain provisions that 25 (1) vest legal title to trusteed assets in the trustees, and their lawfully 26 appointed successors; 27 (2) require that all assets deposited in the trust be continuously kept 28 within the United States; 29 (3) provide for substitution of a new trustee in case of a vacancy by 30 death, resignation, or other reason, subject to the prior written approval of the director; 31 (4) require that the trustee continuously maintain a record sufficient to
01 identify the assets of the trust fund; 02 (5) require that trusteed assets consist only of cash, investments eligible 03 for investment of the funds of domestic insurers, and accrued interest on the assets, if 04 collectible by the trustee, subject to the limits on investment of funds by domestic 05 insurers under this title; 06 (6) require that the trust be for the exclusive benefit, security, and 07 protection of the policyholders, or policyholders and creditors, of the United States 08 branch in the United States and that the trust be maintained as long as there is an 09 outstanding liability of the alien insurer arising out of its transaction of insurance in 10 the United States; and 11 (7) provide that withdrawal of an asset may not be made or permitted 12 by a trustee without the prior written approval of the director except 13 (A) to make deposits required by law in a state for the security 14 or benefit of all policyholders, or policyholders and creditors, of the United 15 States branch in the United States; 16 (B) to withdraw funds deposited in another state under (A) of 17 this paragraph if 18 (i) the written trust agreement requires prior written 19 approval of the insurance supervising official of that other state; 20 (ii) written notice of the nature and extent of the 21 withdrawal is provided to the director within 30 days of the withdrawal; 22 and 23 (iii) the total trusteed assets remaining are in excess of 24 the total assets required to be maintained in trust under (g) of this 25 section; 26 (C) upon the specific written direction of the United States 27 manager, who is duly authorized and is acting under either general or specific 28 written authority previously given or delegated by the board of directors, to 29 substitute other assets as permitted by this title if the substituted assets are of 30 at least equal value and quality to those withdrawn; 31 (D) to transfer assets to an official liquidator or rehabilitator
01 under an order of a court of competent jurisdiction; or 02 (E) if provided under the terms of the written trust agreement, 03 to pay over to the United States manager of the United States branch, upon 04 request, income, dividends, or interest accumulations of the assets of the trust 05 fund that are in excess of the total assets required to be maintained in trust 06 under (g) of this section. 07 (i) A written trust agreement and all amendments to it shall be authenticated 08 in a form and manner that the director may prescribe and may not take effect until 09 approved by the director. The director may not approve a trust agreement unless the 10 director makes a written finding that 11 (1) the written trust agreement or its amendments are sufficient in form 12 and in conformity with law; 13 (2) a person designated as a trustee is eligible to act in that capacity; 14 and 15 (3) the written trust agreement is adequate to protect the interests of the 16 beneficiaries of the trust. 17 (j) The director may approve written modifications of, or variations in, a 18 written trust agreement upon a finding that the proposed changes are not prejudicial 19 to the interests of the people of this state or the United States policyholders and 20 creditors of the United States branch. 21 (k) The director may conduct examinations of the trusteed assets of an 22 authorized United States branch at the insurer's expense and may require the trustee 23 or trustees to file a statement, in a form as prescribed by the director, certifying the 24 assets and amounts of the trust fund. 25 (l) The director, upon finding that the requisites for the approval of the trust 26 agreement no longer exist, may issue an order that withdraws approval of a written 27 trust agreement and amendments to it. An order issued under this subsection takes 28 effect 10 days after being issued. 29 (m) In addition to all other actions permitted under this title, refusal or neglect 30 of a trustee to comply with the requirements of this title is a cause for suspension or 31 revocation of the United States branch's certificate of authority or the liquidation of
01 the alien insurer's United States branch. 02 (n) Annual statements under AS 21.09.200 and quarterly statements under 03 AS 21.09.205 (1) may only relate to insurance transactions and affairs within the 04 United States, assets held by or for the United States branch for the protection of 05 policyholders and creditors within the United States, and liabilities incurred against 06 those assets; and (2) may not contain a statement in regard to assets and business 07 transacted in a place not described in this subsection. The annual and quarterly 08 statements shall be signed and verified by the United States manager, attorney-in-fact, 09 or a duly empowered assistant United States manager of the United States branch. 10 (o) In a form prescribed by the director, an authorized United States branch 11 shall file with its annual and quarterly statements a statement of trusteed surplus 12 covering the same time period. The trusteed surplus shall consist of the aggregate 13 value of the United States branch's general state deposits and assets deposited with a 14 trustee under this section, plus accrued interest income if the interest were collected 15 by the states for the trustees, less the aggregate net amount of all its reserves and other 16 liabilities in the United States as determined under this subsection. The items of 17 securities and other property held under trust deeds shall be certified by the United 18 States trustee. To determine the net amount of the United States branch's liabilities 19 in the United States to be reported in the statement of trusteed surplus, the United 20 States branch shall adjust its total liabilities reported on its accompanying annual or 21 quarterly statement as follows: 22 (1) by adding back liabilities used to offset admitted assets reported in 23 the accompanying annual or quarterly statement; and 24 (2) by deducting 25 (A) unearned premiums on agent's balances or uncollected 26 premiums not more than 90 days past due; 27 (B) reinsurance on losses with authorized insurers, less unpaid 28 reinsurance premiums; 29 (C) reinsurance recoverables on paid losses from unauthorized 30 insurers that are included as an asset in the annual statement, but only to the 31 extent a liability for unauthorized recoverables as described in this paragraph
01 are included in the liabilities report in the trusteed surplus statement; 02 (D) special state deposits held for the exclusive benefit of 03 policyholders, or policyholders and creditors, of a particular state not exceeding 04 net liabilities reported for that state; 05 (E) secured accrued retrospective premiums; 06 (F) if a life insurer, 07 (i) the amount of its policy loans to policyholders within 08 the United States, not exceeding the amount of legal reserve required 09 on an affected policy; and 10 (ii) the net amount of uncollected and deferred 11 premiums; and 12 (G) other nontrusteed assets, upon a written finding by the 13 director that the other nontrusteed assets secure liabilities in a substantially 14 similar manner to those permitted under this subsection. 15 (p) In addition to the annual and quarterly statements and the statements of 16 trusteed surplus, the director may require additional information relating to total 17 business or assets, or any portion of them, of the alien insurer or its United States 18 branch. 19 (q) In addition to the general statement of the financial condition of the United 20 States branch, a report of examination must include a trusteed surplus statement as of 21 the date of the examination. 22 (r) In this section, 23 (1) "trusteed assets" are the assets maintained in a trust account under 24 (g) of this section; 25 (2) "United States branch" means the business unit through which 26 business is transacted within the United States by an alien insurer and the assets and 27 liabilities of the insurer within the United States applicable to that business. 28 * Sec. 16. AS 21.12.020(a) is amended to read: 29 (a) Credit for reinsurance transactions shall be allowed a domestic ceding 30 insurer as either an asset or a deduction from liability on account of reinsurance ceded 31 only if the reinsurance is ceded to an
01 (1) assuming insurer that is licensed to transact insurance or reinsurance 02 in this state; 03 (2) assuming insurer that is accredited as a reinsurer in this state; an 04 accredited reinsurer is one that 05 (A) files evidence of submission [SUBMITS] to this state's 06 jurisdiction, submits to this state's authority to examine its books and records 07 under AS 21.06.120, is licensed to transact insurance or reinsurance in at least 08 one state that is accredited by the National Association of Insurance 09 Commissioners, or, in the case of a United States branch of an alien 10 admitted insurer, is entered through and licensed to transact insurance or 11 reinsurance in at least one state that is accredited by the National 12 Association of Insurance Commissioners; [AND FILES ANNUALLY WITH 13 THE DIRECTOR A COPY OF THE REINSURER'S ANNUAL STATEMENT 14 FILED WITH THE INSURANCE DEPARTMENT OF THE REINSURER'S 15 STATE OF DOMICILE AND A COPY OF THE REINSURER'S MOST 16 RECENT AUDITED FINANCIAL STATEMENT; OR] 17 (B) [IN THE CASE OF A UNITED STATES BRANCH OF 18 AN ALIEN ASSUMING INSURER, IS ENTERED THROUGH, AND 19 LICENSED TO TRANSACT INSURANCE OR REINSURANCE IN, AT 20 LEAST ONE STATE ACCREDITED BY THE NATIONAL ASSOCIATION 21 OF INSURANCE COMMISSIONERS, FILES ANNUALLY WITH THE 22 DIRECTOR A COPY OF ITS ANNUAL FINANCIAL STATEMENT THAT 23 IS FILED WITH THE INSURANCE REGULATORY AGENCY OF ITS 24 STATE OF DOMICILE, AND] maintains at least $20,000,000 in policyholder 25 surplus and whose accreditation has not been denied by the director within 26 90 days of application to the director, or maintains less than $20,000,000 27 in policyholder surplus and whose application for accreditation has been 28 approved by the director; and 29 (C) files annually with the director a copy of the reinsurer's 30 annual financial statement filed with the insurance department of the 31 reinsurer's state of domicile or state of entry and a copy of the reinsurer's
01 most recent audited financial statement [THE SURPLUS REQUIREMENTS 02 IN THIS SUBPARAGRAPH DO NOT APPLY TO REINSURANCE CEDED 03 AND ASSUMED UNDER A POOLING ARRANGEMENT AMONG 04 INSURERS IN THE SAME HOLDING COMPANY SYSTEM]; 05 (3) assuming insurer that is domiciled in a state, or in the case of a 06 United States branch of an alien assuming insurer, is entered through a state accredited 07 by the National Association of Insurance Commissioners that employs standards 08 regarding credit for reinsurance ceded substantially similar to those applicable under 09 (1) and (2) of this subsection, the assuming insurer maintains a policyholder surplus 10 of at least $20,000,000, and the assuming insurer submits to the authority of this state 11 to examine its books and records; the surplus requirements in this paragraph do not 12 apply to reinsurance ceded and assumed under a pooling arrangement among insurers 13 in the same holding company system; 14 (4) assuming alien insurer that 15 (A) maintains a trust fund in a qualified United States financial 16 institution for the payment of the valid claims of its United States policyholders 17 and ceding insurers, and their assigns and successors in interest, that conforms 18 to the following requirements: 19 (i) the trust shall be established in a form approved by 20 the director; the trust instrument must provide that contested claims are 21 valid and enforceable upon the final order of any court of competent 22 jurisdiction in the United States; the trust shall vest legal title to its 23 assets in the trustees of the trust for its United States policyholders and 24 ceding insurers, their assigns, and successors in interest; the trust and 25 the assuming insurer are subject to examination as determined by the 26 director; the trust must remain in effect for so long as the assuming 27 insurer has outstanding liabilities due under the reinsurance agreements 28 subject to the trust; 29 (ii) on or before March 1 of each year the trustees shall 30 report in writing to the director on the balance of the trust and list the 31 trust's investments at the end of the preceding year, and shall certify the
01 date of termination of the trust, if so planned, or certify that the trust 02 does not expire before the following December 31; 03 (iii) in the case of a single assuming insurer, the trust 04 shall consist of trust money representing the assuming insurer's 05 liabilities attributable to business written in the United States and, in 06 addition, include a trust surplus of not less than $20,000,000; the single 07 assuming insurer shall make available to the director an annual 08 certification of the insurer's solvency by the insurer's domiciliary 09 regulator and by an independent public accountant; 10 (iv) in the case of a group, including incorporated and 11 [OF] individual unincorporated insurers, the trust shall consist of trust 12 money representing the group's liabilities attributable to business 13 written in the United States and, in addition, include a trust surplus not 14 less than $100,000,000; the incorporated members of the group may 15 not be engaged in any business other than underwriting as a 16 member of the group and are subject to the same level of solvency 17 regulation and control by the group's domiciliary regulator as are 18 the unincorporated members; the group shall make available to the 19 director an annual certification of the solvency of each insurer [OF 20 THE INDIVIDUAL UNINCORPORATED INSURERS] by the group's 21 domiciliary regulator and by an independent certified public accountant, 22 or, for a Canadian or British insurer, an independent Canadian or 23 British chartered accountant; 24 (v) in the case of a group of incorporated insurers under 25 common administration that complies with the reporting requirements 26 contained in (ii) of this subparagraph, that has continuously transacted 27 an insurance business outside the United States for at least three years 28 immediately before making application for accreditation, that submits 29 to this state's authority to examine its books and records and bears the 30 expense of the examination, and that has aggregate policyholders' 31 surplus of $10,000,000,000, the trust shall be in an amount equal to the
01 group's several liabilities attributable to business ceded by United States 02 ceding insurers to a member of the group under reinsurance contracts 03 issued in the name of the group, and the group shall maintain a joint 04 trustee surplus, of which $100,000,000 shall be held jointly for the 05 benefit of United States ceding insurers of a member of the group as 06 additional security for the group's liabilities, and each member of the 07 group shall make available to the director an annual certification of the 08 member's solvency by the member's domiciliary regulator and the 09 member's independent certified public accountant, or, for a Canadian 10 or British insurer, the member's independent Canadian or British 11 chartered accountant; and 12 (B) reports annually to the director information substantially the 13 same as that required to be reported on the National Association of Insurance 14 Commissioners' annual statement form by licensed insurers to enable the 15 director to determine the sufficiency of the trust fund; 16 (5) assuming insurer that does not meet the requirements of (1) - (4) 17 of this subsection, but only with respect to the insurance of risks located in 18 jurisdictions where the reinsurance is required by applicable law or regulation of that 19 jurisdiction. 20 * Sec. 17. AS 21.12.020(g) is amended to read: 21 (g) An [A LIFE] insurer may receive credit for reinsurance transactions if the 22 reinsurance agreement meets all applicable requirements established by the director. 23 * Sec. 18. AS 21.14.040 is amended to read: 24 Sec. 21.14.040. AUTHORIZED CONTROL LEVEL EVENT. If an authorized 25 control level event occurs, the director shall take the action necessary 26 (1) under AS 21.14.030(a) [AS 21.14.030(b)] against the insurer; or 27 (2) to place the insurer under regulatory control under AS 21.78 if, 28 after a hearing under AS 21.06.180 - 21.06.240, the director determines it to be in the 29 best interest of the policyholders and creditors of the insurer, and of the public. 30 * Sec. 19. AS 21.18.060(b) is amended to read: 31 (b) The director may require that the reserves be equal to the unearned
01 portions of the gross premiums in force after deducting applicable reinsurance in 02 solvent insurers as computed on each respective risk from the policy's date of issue. 03 [EXCEPT AS REQUIRED BY THE DIRECTOR UNDER THIS SUBSECTION, THE 04 PORTIONS OF THE GROSS PREMIUM IN FORCE, LESS APPLICABLE 05 REINSURANCE IN SOLVENT INSURERS, TO BE HELD AS AN UNEARNED 06 PREMIUM RESERVE SHALL BE COMPUTED ACCORDING TO THE 07 FOLLOWING TABLE: 08 TERM FOR WHICH POLICY RESERVE FOR UNEARNED 09 WAS WRITTEN PREMIUM 10 1 YEAR OR LESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1/2 11 2 YEARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1ST YEAR 3/4 12 2ND YEAR 1/4 13 3 YEARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1ST YEAR 5/6 14 2ND YEAR 1/2 15 3RD YEAR 1/6 16 4 YEARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1ST YEAR 7/8 17 2ND YEAR 5/8 18 3RD YEAR 3/8 19 4TH YEAR 1/8 20 5 YEARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1ST YEAR 9/10 21 2ND YEAR 7/10 22 3RD YEAR 1/2 23 4TH YEAR 3/10 24 5TH YEAR 1/10 25 OVER 5 YEARS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PRO RATA.] 26 * Sec. 20. AS 21.18.060(c) is amended to read: 27 (c) An [IN LIEU OF COMPUTATION ACCORDING TO THE TABLE IN 28 (b) OF THIS SECTION, THE] insurer shall [AT ITS OPTION MAY] compute all of 29 the reserves on a monthly or more frequent pro rata basis. 30 * Sec. 21. AS 21.18.090 is amended to read: 31 Sec. 21.18.090. LOSS RESERVES, LIABILITY INSURANCE, AND
01 WORKERS' COMPENSATION. Where required in the form of annual statement 02 required of the insurer, the reserve for outstanding losses under insurance against loss 03 or damage from accident to or injuries suffered by an employee or other person and 04 for which the insured is liable shall be computed as follows: 05 (1) for all liability claims under policies written more than three 06 years before the end of the calendar year covered by the annual statement, the 07 reserve shall be the undiscounted value of the determined and the estimated 08 future payments [SUITS BEING DEFENDED UNDER POLICIES WRITTEN MORE 09 THAN 10 (A) 10 YEARS BEFORE THE DATE THE STATEMENT IS 11 MADE, $1,500 FOR EACH SUIT; 12 (B) FIVE OR MORE AND LESS THAN 10 YEARS BEFORE 13 THE STATEMENT IS MADE, $1,000 FOR EACH SUIT; 14 (C) THREE OR MORE AND LESS THAN FIVE YEARS 15 BEFORE THE STATEMENT IS MADE, $850 FOR EACH SUIT]; 16 (2) for all liability policies written during the three years immediately 17 preceding the date the statement is made, the reserve shall be the greater of 60 18 percent of the earned liability premiums of each of the three years less all losses and 19 expense payments made under liability policies written in the corresponding years or 20 the undiscounted value of the known and unknown claims; [BUT THE RESERVE, 21 FOR THE FIRST OF THE THREE YEARS, SHALL BE NOT LESS THAN $750 22 FOR EACH OUTSTANDING LIABILITY SUIT ON THE YEAR'S POLICIES]; 23 (3) for all workers' compensation claims under policies written more 24 than three years before the end of the calendar year covered by the annual 25 statement [IS MADE], the reserve may not [SHALL] be less than the present value 26 at four percent interest of the determined and the estimated future payments; 27 (4) for all workers' compensation claims under policies written in the 28 three years immediately preceding the end of the calendar year covered by [DATE] 29 the annual statement [IS MADE], the reserve may not [SHALL] be less than 65 30 percent of the earned workers' compensation premiums of each of the three years, less 31 all loss and loss expense payments made in connection with the claims under policies
01 written in the corresponding years; [BUT IN THE FIRST YEAR OF THE 02 THREE-YEAR PERIOD,] the reserve may not [SHALL] be [NOT] less than the 03 present value at four  percent interest of the determined and the estimated unpaid 04 compensation claims under policies written during the three-year period [YEAR]. 05 * Sec. 22. AS 21.18.110(a) is amended to read: 06 (a) The director shall annually value, or cause to be valued, the reserve 07 liabilities (hereinafter called reserves) for all outstanding life insurance policies and 08 annuity and pure endowment contracts of every life insurer doing business in this state, 09 and may certify the amount of the reserves, specifying the mortality table or tables, 10 rate or rates of interest, and methods (net level premium method or other) used in the 11 calculation of the reserves. In calculating the reserves, the director may use group 12 methods and approximate averages for fractions of a year or otherwise. For an alien 13 insurer, the valuation shall be limited to its insurance transactions in the United States. 14 For the purpose of making the valuation the director may employ a competent actuary 15 who shall be paid by the insurer for which the service is rendered [; BUT A 16 DOMESTIC INSURER MAY MAKE THE VALUATION AND IT MAY BE 17 RECEIVED BY THE DIRECTOR UPON SATISFACTORY PROOF OF ITS 18 CORRECTNESS]. For a foreign or alien insurer, the director may accept, in [IN] 19 lieu of the valuation of the reserves required of a foreign or alien insurer, [THE 20 DIRECTOR MAY ACCEPT] a valuation made, or caused to be made, by the 21 insurance supervisory official of a state or other jurisdiction if the valuation complies 22 with the minimum standard provided in this section and if the official of the state or 23 jurisdiction accepts as sufficient and valid for all legal purposes the certificate of 24 valuation of the director when the certificate states the valuation was made in a 25 specified manner in which the aggregate reserves would be at least as large as if they 26 had been computed in the manner prescribed by the law of that state or jurisdiction. 27 An insurer that at any time adopted a standard of valuation producing greater aggregate 28 reserves than those calculated according to the minimum standard provided in this 29 section may, with the approval of the director, adopt a lower standard of valuation, but 30 not lower than the minimum provided in this section. 31 * Sec. 23. AS 21.18.110(n) is amended to read:
01 (n) The actuarial opinion must 02 (1) be submitted with the annual statement reflecting the valuation of 03 the reserve liabilities; 04 (2) apply to all business in force, including individual and group health 05 insurance plans; 06 (3) be based on standards adopted by the Actuarial Standards Board; 07 and 08 (4) unless exempted by regulation, include an assessment as to 09 whether the reserves and related actuarial items held in support of the policies and 10 contracts, when considered in light of the assets held by an insurer with respect to the 11 reserves and related actuarial items, including investment earnings on the assets and 12 considerations anticipated to be received and retained under policies and contracts, 13 make adequate provision for an insurer's obligations under a policy or contract 14 including the benefits under and expenses associated with a policy or contract. 15 * Sec. 24. AS 21.18.110(q) is amended to read: 16 (q) A qualified actuary who submits an opinion under (m) of this section 17 (1) is not liable for damages to a person, other than the insurance 18 company and the director, for an act, error, omission, decision, or conduct with respect 19 to the actuary's opinion except in a case of fraud or wilful misconduct; 20 (2) is subject to disciplinary action by the director; and 21 (3) shall prepare [INCLUDE] a memorandum, in form and substance 22 acceptable to the director, to support the actuarial opinion. 23 * Sec. 25. AS 21.18.110(r) is amended to read: 24 (r) If the insurer fails to provide a supporting memorandum as requested by 25 the director [REQUIRED BY (q)(3) OF THIS SECTION] within a period specified 26 by regulation or the director determines that the supporting memorandum fails to meet 27 the standards adopted by regulation or is otherwise unacceptable to the director, the 28 director may engage a qualified actuary, at the expense of the insurer, to review the 29 opinion and the basis for the opinion and to prepare a supporting memorandum as 30 required under (q) of this section. 31 * Sec. 26. AS 21.21.230 is amended to read:
01 Sec. 21.21.230. SAVINGS AND LOAN. To the extent that the account is 02 insured by the Federal Deposit [SAVINGS AND LOAN] Insurance Corporation, an 03 insurer may invest in share or savings accounts of savings and loan and building and 04 loan associations. 05 * Sec. 27. AS 21.21.250(a) is amended to read: 06 (a) An insurer may make loans or investments not otherwise expressly 07 permitted under this chapter, in aggregate amount not over five percent of the insurer's 08 assets and not over one percent of the insurer's assets for [OF] any one loan or 09 investment, if the loan or investment fulfills the requirements of AS 21.21.030, and 10 otherwise qualifies as a sound investment. However, a loan or investment may not be 11 represented by 12 (1) an item described in AS 21.18.030, or a loan or investment 13 otherwise expressly prohibited; 14 (2) agents' balances, or amounts advanced to or owing by agents or 15 former agents of the insurer, whether or not secured; except policy loans, mortgage 16 loans, and collateral loans otherwise authorized under this chapter; 17 (3) a category of loans or investments eligible under other provisions 18 of this chapter; or 19 (4) an asset theretofore acquired or held by the insurer under any other 20 category of loans or investments eligible under this chapter. 21 * Sec. 28. AS 21.21.370(a) is amended to read: 22 (a) A domestic insurer may [NOT] acquire, directly or indirectly, a medium 23 grade or lower grade obligation of an institution if, after giving effect to the 24 acquisition, 25 (1) the aggregate amount of all medium grade and lower grade 26 obligations held by the domestic insurer does not exceed [EXCEEDS] 20 percent of 27 its admitted assets and if not more than 28 (A) 10 percent of its admitted assets consist of obligations rated 29 four, five, or six by the securities valuation office; 30 (B) three percent of its admitted assets consist of obligations 31 rated five or six by the securities valuation office; and
01 (C) one percent of its admitted assets consist of obligations 02 rated six by the securities valuation office; and [OR] 03 (2) the aggregate amount of all medium grade and [OR] lower grade 04 obligations held by the domestic insurer does not exceed [EXCEEDS] 30 percent of 05 its policyholders' surplus account as shown by the insurer's most recent report filed 06 under AS 21.06.150, AS 21.09.200, or 21.09.205. 07 * Sec. 29. AS 21.22.010(g) is amended to read: 08 (g) The provisions of this section do not apply to 09 (1) an offer of, request for, invitation for, or agreement regarding [, 10 OR] acquisition of a voting security that, immediately before the consummation of the 11 offer, request, invitation, agreement, or acquisition, was not issued and outstanding; or 12 (2) an offer, request, invitation, agreement, or acquisition that the 13 director by order may exempt as not having been made or entered into for the purpose 14 and not having the effect of changing or influencing the control of the domestic 15 insurer. 16 * Sec. 30. AS 21.22.030 is amended by adding a new subsection to read: 17 (d) The director may retain at the acquiring person's expense an attorney, 18 actuary, accountant, or other expert not otherwise a part of the director's staff, if 19 reasonably necessary to assist the director in reviewing the proposed acquisition of 20 control. 21 * Sec. 31. AS 21.22.060(b) is amended to read: 22 (b) Every insurer subject to registration shall file a registration statement on 23 a form provided by the director, that must contain current information about 24 (1) the capital structure, general financial condition, ownership, and 25 management of the insurer and any person controlling the insurer; 26 (2) the identity of every member of the insurance holding company 27 system; 28 (3) the following agreements in force, relationships subsisting, and 29 transactions currently outstanding between the insurer and its affiliates: 30 (A) loans, other investments, or purchases, sales, or exchanges 31 of securities of the affiliates by the insurer or of the insurer by its affiliates;
01 (B) purchases, sales, or exchanges of assets; 02 (C) transactions not in the ordinary course of business; 03 (D) guarantees or undertakings for the benefit of an affiliate that 04 result in an actual contingent exposure of the insurer's assets to liability, other 05 than insurance contracts entered into in the ordinary course of the insurer's 06 business; 07 (E) all management and service contracts and all cost-sharing 08 arrangements [, OTHER THAN COST ALLOCATION ARRANGEMENTS 09 BASED UPON GENERALLY ACCEPTED ACCOUNTING PRINCIPLES]; 10 and 11 (F) reinsurance agreements [COVERING ALL OR 12 SUBSTANTIALLY ALL OF ONE OR MORE LINES OF INSURANCE OF 13 THE CEDING COMPANY]; and 14 (4) other matters concerning transactions between registered insurers 15 and any affiliates that may be included from time to time in a registration form 16 adopted or approved by the director. 17 * Sec. 32. AS 21.22.060(c) is amended to read: 18 (c) The director may permit an authorized insurer that is a member of a 19 holding company system subject to registration under the laws or regulations of its 20 state of domicile that are in the opinion of the director substantially similar to those 21 contained in this chapter to satisfy the requirements of (a) of this section by filing a 22 statement in accordance with the laws of its state of domicile [EXCEPT THAT THE 23 DIRECTOR MAY AT ANY TIME REQUIRE A COPY OF THAT STATEMENT BE 24 FILED WITH THE DIRECTOR]. 25 * Sec. 33. AS 21.22.060(d) is amended to read: 26 (d) Information [NO INFORMATION] need not be disclosed on the 27 registration statement filed under (b) of this section if that information is not material 28 for the purposes of this section. Unless the director by regulation or order provides 29 otherwise, sales, purchases, exchanges, loans or extensions of credit, or investments, 30 involving one-half of one percent or less of an insurer's admitted assets or five percent 31 or less of the policyholder's surplus as of the 31st day of December of the calendar
01 year in which the transaction took place are not considered material for purposes of 02 this section. 03 * Sec. 34. AS 21.22.060(k) is amended to read: 04 (k) An insurer subject to registration under (a) of this section shall register 05 annually by April 1 of each year for the previous calendar year unless, for good cause 06 shown, the director extends the time for registration. The director may require an 07 insurer [AUTHORIZED TO DO BUSINESS IN THE STATE, THAT IS A MEMBER 08 OF A HOLDING COMPANY SYSTEM AND] that is allowed to register as 09 provided [NOT SUBJECT TO REGISTRATION] under (c) [(a)] of this section, to 10 furnish a copy of 11 (1) the registration statement; 12 (2) [,] the summary specified in (l) of this section; [,] or 13 (3) other information filed by the insurer with the insurance regulatory 14 authority of the insurer's state of domicile. 15 * Sec. 35. AS 21.27.010(a) is amended to read: 16 (a) Except as provided otherwise in this chapter, a [A] person may not act 17 as or represent to be an insurance producer, managing general agent, reinsurance 18 intermediary broker, reinsurance intermediary manager, surplus lines broker, or 19 independent adjuster in this state or relative to a subject resident, located, or to be 20 performed in this state unless licensed under this chapter. A person may not act as or 21 represent to be a managing general agent, reinsurance intermediary broker, or 22 reinsurance intermediary manager representing an insurer domiciled in this state 23 regarding a risk located outside this state unless licensed by this state. 24 * Sec. 36. AS 21.27.020 is amended by adding a new subsection to read: 25 (f) The director may 26 (1) adopt regulations establishing additional education or experience 27 requirements for applicants or licensees under this chapter upon due consideration of 28 the availability and accessibility of education and training opportunities in rural areas 29 of the state; and 30 (2) make arrangements, including contracting with an outside agency, 31 for administrative services.
01 * Sec. 37. AS 21.27.025(a) is amended to read: 02 (a) A licensee shall notify the director within 30 days in writing by certified 03 mail of a change in residence, employment that is licensed under this chapter, place 04 of business, legal name, fictitious name or alias, mailing address, or phone number; 05 a suspension, [OR] revocation, or disciplinary action of a license by another state or 06 jurisdiction; or a conviction of a misdemeanor or felony. 07 * Sec. 38. AS 21.27.060(d) is amended to read: 08 (d) This section does not apply to an applicant 09 (1) for a limited license under AS 21.27.150(1), (2), or (6); 10 (2) who, at any time within the two-year period immediately preceding 11 the date the current pending application is received by the division, had been licensed 12 in good standing in this state under a license requiring substantially similar 13 qualifications as required by the license applied for; or 14 (3) whose license in its [THE] resident jurisdiction requires the same 15 qualifications as the license applied for in this state if the license in all jurisdictions 16 is in good standing [AND ITS RESIDENT JURISDICTION IS ACCREDITED BY 17 THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS]. 18 * Sec. 39. AS 21.27.100 is amended by adding a new subsection to read: 19 (e) An individual in a firm who acts solely on behalf of a firm that is 20 appointed as an agent on behalf of an admitted insurer under this section, may not be 21 required to also have an appointment if the individual in the firm is licensed with that 22 firm. 23 * Sec. 40. AS 21.27.130 is amended to read: 24 Sec. 21.27.130. FORM AND CONTENT OF LICENSES. A license shall be 25 in the form the director prescribes and must set out 26 (1) the name and [MAILING] address of the licensee, and, if the 27 licensee is required to have a place of business, the physical address of the place of 28 business; 29 (2) if for a firm, the name of the principal or manager of the firm; 30 (3) the kind or class of insurance the licensee is licensed to handle; 31 (4) the effective date and expiration date of the license;
01 (5) the condition under which the license is granted; 02 (6) the date of issuance of the license; 03 (7) each fictitious name and alias under which the licensee may do 04 business; and 05 (8) other information required by the director. 06 * Sec. 41. AS 21.27.360(b) is amended to read: 07 (b) All money, except that made payable to the insurer, representing premium 08 taxes and fees, premiums or return premiums received by the licensee, shall be 09 received in the fiduciary account of the licensee and shall be promptly accounted for 10 and paid to the person entitled to the money. The fiduciary account shall be located 11 in this state unless the licensee is licensed as a nonresident under AS 21.27.270. 12 For purposes of this section, the fiduciary account of the firm shall be considered the 13 fiduciary account of an individual licensee acting on behalf of the firm and shall be 14 the responsibility of the firm. Money deposited into a fiduciary account may not be 15 commingled or otherwise combined with other money, except as allowed under (d) of 16 this section and AS 21.27.365. 17 * Sec. 42. AS 21.27.380(a) is amended to read: 18 (a) Except as provided in this title, the director may renew a license biennially 19 on a date set by the director if the licensee continues to be qualified under this chapter 20 and on or before the close of business of the renewal date, meets all renewal 21 requirements established by regulation and pays the [IF] renewal license fees set 22 under AS 21.06.250 for each license to [ARE RECEIVED BY] the director [ON OR 23 BEFORE THE CLOSE OF BUSINESS OF THE RENEWAL DATE]. A licensee is 24 responsible for knowing the date that a license lapses and for renewing a license before 25 expiration. The director shall mail a renewal notice to the licensee's current address 26 on file with the director 30 days before the renewal date. 27 * Sec. 43. AS 21.27.420 is amended by adding a new subsection to read: 28 (c) With the consent of an applicant or licensee, the director may issue or 29 renew a license with restrictions upon the scope of the person's license or may 30 otherwise restrict or condition the activities of the licensee if the director determines 31 that the person has violated the provisions of this title or to protect the public from
01 injury or potential injury. 02 * Sec. 44. AS 21.27.530 is amended to read: 03 Sec. 21.27.530. INSURANCE PRODUCER QUALIFICATIONS. In addition 04 to the general qualifications under AS 21.27.020, to qualify for issuance or renewal of 05 an insurance producer license, an applicant or licensee 06 (1) must possess the competence necessary to fulfill the responsibilities 07 of an insurance producer; 08 (2) if previously licensed in good standing in this state as an insurance 09 producer, must not have had a license suspended or revoked within the previous four 10 calendar years; 11 (3) for a fraternal society limited insurance producer license, shall file 12 with the application a statement by an officer or director of the appointing fraternal 13 society that affirms that the society has satisfied itself that the applicant is trustworthy 14 and competent to act as its insurance agent; 15 (4) for a license with a scope that includes variable contracts, must 16 either be currently registered with the federal Securities and Exchange Commission as 17 a broker-dealer or personally take and pass, to the satisfaction of the director, tests of 18 the knowledge and competence of the applicant concerning securities; and 19 (5) except for an applicant or licensee who represents to be and acts 20 solely on behalf of admitted insurers as an agent and who does not receive money 21 required to be received in the fiduciary account of the licensee, shall file with the 22 application and maintain in force while licensed a bond in the amount of $10,000, 23 unless a greater amount is required by another provision of this title; a licensee who 24 maintains more than one place of business may satisfy the bond requirement with 25 a single bond. 26 * Sec. 45. AS 21.27.570(a)(3)(B) is amended to read: 27 (B) the controlling insurance producer shall render accounts to 28 the controlled insurer detailing all transactions, including information in the 29 accounts necessary to support compensation, commissions, charges, and other 30 fees received by, or owing to, the controlling producer; 31 * Sec. 46. AS 21.27.620(j) is amended to read:
01 (j) If the director determines after a hearing under AS 21.06.170 - 21.06.240 02 that a managing general agent caused loss or damage arising out of a violation of 03 AS 21.27.590 - 21.27.630 to an insurer, the director may order the managing general 04 agent to make restitution to the insurer, receiver, [THE] rehabilitator, or [THE] 05 liquidator of the insurer for the loss. Restitution ordered under this subsection is in 06 addition to any other liability of the managing general agent and does not affect the 07 rights of a policy holder, claimant, creditor, or third party. The director may, at the 08 request of the insurer, maintain or bring a civil action brought by or on behalf 09 of the insurer and its policyholders and creditors for recovery of compensatory 10 damages for the benefit of the insurer and its policyholders and creditors or seek 11 other appropriate relief. If an order of rehabilitation or liquidation of the insurer 12 has been entered under AS 21.78, the receiver appointed under the order 13 determines that a person has not materially complied with AS 21.27.590 - 14 21.27.630 or an order of the director, and the insurer suffers loss or damage from 15 the noncompliance, the receiver may bring a civil action for the recovery of 16 damages or other appropriate sanctions for the benefit of the insurer. 17 * Sec. 47. AS 21.27.690(b) is amended to read: 18 (b) An [A DOMESTIC] insurer may use a nonresident reinsurance 19 intermediary broker who is not licensed under this chapter if the person is licensed in 20 good standing as a resident reinsurance intermediary broker by an insurance regulator 21 of another state that is accredited by the National Association of Insurance 22 Commissioners. Upon written request, the director may grant written permission for 23 a domestic insurer to use an alien reinsurance intermediary broker not licensed by and 24 without a place of business in a jurisdiction subject to accreditation by the National 25 Association of Insurance Commissioners if the alien reinsurance intermediary broker 26 is licensed in good standing by its domiciliary insurance regulator. The domestic 27 insurer and unlicensed reinsurance intermediary broker are subject to all other 28 requirements of this section. 29 * Sec. 48. AS 21.27.690(e) is amended to read: 30 (e) If the director determines after a hearing under AS 21.06.170 - 21.06.240 31 that a reinsurance intermediary broker caused losses or damage arising out of a
01 violation of AS 21.27.670 - 21.27.700 to an insurer or reinsurer, the director may order 02 the reinsurance intermediary broker to make restitution to the insurer, reinsurer, 03 receiver, rehabilitator, or liquidator of the insurer or reinsurer for the net losses 04 incurred by the insurer or reinsurer. Restitution ordered under this subsection is in 05 addition to any other liability of the reinsurance intermediary broker and does not 06 affect the rights of a policyholder, claimant, creditor, or third party. The director 07 may, at the request of the insurer, maintain or bring a civil action brought by or 08 on behalf of the reinsurer or insurer and its policyholders and creditors for 09 recovery of compensatory damages for the benefit of the reinsurer or insurer and 10 its policyholders and creditors or seek other appropriate relief. If an order of 11 rehabilitation or liquidation of the insurer has been entered under AS 21.78, the 12 receiver appointed under the order determines that a person has not materially 13 complied with AS 21.27.670 - 21.27.700 or an order of the director, and the 14 insurer suffers loss or damage from the noncompliance, the receiver may bring 15 a civil action for the recovery of damages or other appropriate sanctions for the 16 benefit of the insurer. 17 * Sec. 49. AS 21.27.760(j) is amended to read: 18 (j) If the director determines after a hearing under AS 21.06.170 - 21.06.240 19 that a reinsurance intermediary manager caused losses or damage arising out of a 20 violation of AS 21.27.730 - 21.27.770 to an insurer or reinsurer, the director may order 21 the reinsurance intermediary manager to make restitution to the insurer, reinsurer, 22 receiver, rehabilitator, or liquidator of the insurer or reinsurer for the net losses 23 incurred by the insurer or reinsurer. Restitution ordered under this subsection is in 24 addition to any other liability of the reinsurance intermediary manager and does not 25 affect the rights of a policyholder, claimant, creditor, or third party. The director 26 may, at the request of the insurer, maintain or bring a civil action brought by or 27 on behalf of the reinsurer or insurer and its policyholders and creditors for 28 recovery of compensatory damages for the benefit of the reinsurer or insurer and 29 its policyholders and creditors or seek other appropriate relief. If an order of 30 rehabilitation or liquidation of the insurer has been entered under AS 21.78, the 31 receiver appointed under the order determines that a person has not materially
01 complied with AS 21.27.730 - 21.27.770 or an order of the director, and the 02 insurer suffers loss or damage from the noncompliance, the receiver may bring 03 a civil action for the recovery of damages or other appropriate sanctions for the 04 benefit of the insurer. 05 * Sec. 50. AS 21.34.040(c)(4) is amended to read: 06 (4) a Lloyd's or other similar group including incorporated and 07 individual unincorporated underwriters, [GROUP OF ALIEN INDIVIDUAL 08 INSURERS] may qualify if it maintains a trust fund in an amount not less than 09 $50,000,000, as security to the full amount, for the protection of all its policy holders 10 and creditors of each member of the group in the United States; the incorporated 11 members may not be engaged in any business other than underwriting as a 12 member of the group and shall be subject to the same level of solvency regulation 13 and control by the group's domiciliary regulator as are the unincorporated 14 members; the trust fund must consist of instruments of substantially the same 15 character and quality as those that are eligible investments for the capital and statutory 16 reserves of admitted insurers authorized to write like kinds of insurance in this state 17 or of irrevocable, clean, and unconditional letters of credit; the trust fund must have 18 an expiration date that at no time is less than five years; 19 * Sec. 51. AS 21.34.080(c) is amended to read: 20 (c) A producing broker shall execute and deliver to the surplus lines broker not 21 later than the end of each month on a form prescribed by the director, and a surplus 22 lines broker shall file with the director with the report required by (a) of this section 23 or with the surplus lines association with the evidence of insurance required by (b) of 24 this section, for surplus lines insurance first placed or renewed in the preceding 25 calendar month, an affidavit that shall be open to public inspection, as to the diligent 26 efforts to place the coverage with admitted insurers, and the results of those efforts. 27 The affidavit must contain a statement by the producing broker that the insured was 28 expressly informed in writing before the [PLACEMENT OF THE SURPLUS LINES] 29 insurance contract or coverage was bound that the surplus lines insurer with whom 30 the insurance was to be placed is not licensed in this state, is not subject to this state's 31 supervision, and, in the event of the insolvency of the surplus lines insurer, losses will
01 not be covered under AS 21.80 (Alaska Insurance Guaranty Association Act). 02 * Sec. 52. AS 21.34.110 is amended to read: 03 Sec. 21.34.110. SURPLUS LINES BROKER'S DUTY TO NOTIFY 04 INSURED. (a) A contract of insurance placed by a surplus lines broker under this 05 chapter is not binding upon the insured and a premium charged is not due and payable 06 until 07 (1) the surplus lines broker has notified the insured in writing, a copy 08 of which shall be maintained by the licensee with the records of the contract, available 09 for examination, that the insurer with which the surplus lines broker places the 10 insurance does not hold a certificate of authority issued by this state and is not subject 11 to its supervision, and in the event of the insolvency of the surplus lines insurer, losses 12 will not be covered under AS 21.80 (Alaska Insurance Guaranty Association Act); or 13 (2) the surplus lines broker has obtained the affidavit of the 14 producing broker that the notice required under AS 21.34.080(c) has been given 15 to the insured; a licensee shall maintain a copy of the affidavit with the record of 16 the contract available for examination. 17 (b) Nothing in this section may be construed as nullifying [SHALL 18 NULLIFY] an agreement by an insurer to provide insurance. 19 * Sec. 53. AS 21.34.190(a) is amended to read: 20 (a) The fee for filing the statement under AS 21.34.180(b) is an amount equal 21 to one percent on gross premium charged less any return premiums during the 22 preceding calendar year [QUARTER]. The surplus lines broker shall pay the fee at 23 the time of filing of the statement. 24 * Sec. 54. AS 21.36.120(d) is amended to read: 25 (d) Nothing in this section may be construed as prohibiting the payment of 26 commissions or other compensation to persons duly transacting business under 27 AS 21.27 [LICENSED AGENTS OR SOLICITORS], or as prohibiting an insurer from 28 allowing or returning to its participating policyholders, members, or subscribers, lawful 29 dividends, savings, or unabsorbed premium deposits. 30 * Sec. 55. AS 21.36.160 is amended to read: 31 Sec. 21.36.160. RIGHT OF DEBTOR OR BORROWER TO SELECT
01 INSURANCE PRODUCER [AGENT, BROKER,] AND INSURER. If property 02 insurance is required in connection with a debt or loan, the debtor or borrower has the 03 reasonable right to select the insurance producer [AGENT, BROKER,] and insurer 04 through whom the insurance is to be placed if (1) the insurance is provided for the 05 protection of the creditor's or lender's interest in the property at the commencement 06 of the risk; or (2) in the case of renewal of insurance, the renewal policy is delivered 07 to the creditor or lender no later than 30 days before the renewal date. 08 * Sec. 56. AS 21.36.195 is amended to read: 09 Sec. 21.36.195. SURPLUS LINES BROKERS AND INSURANCE 10 PRODUCERS; PROHIBITED ACTS. A surplus lines broker or an insurance 11 producer may not fail to provide evidence [THE EVIDENCES] of insurance, 12 affidavits, filings, or reports, or fail to maintain the records, or fail to pay the taxes and 13 fees, required under AS 21.34. 14 * Sec. 57. AS 21.36.235(a) is amended to read: 15 (a) Except as provided in AS 21.36.305 [AS 21.36.420], if the renewal 16 premium is increased more than 10 percent for a reason other than an increase in 17 coverage or exposure base, or if after renewal there will be a material restriction or 18 reduction in coverage not specifically requested by the insured, written notice shall be 19 mailed to the insured and to the agent or broker of record as required by AS 21.36.260 20 (1) at least 20 days before expiration of a personal insurance policy; 21 or 22 (2) at least 45 days before expiration of a business or commercial 23 policy. 24 * Sec. 58. AS 21.36.290 is amended to read: 25 Sec. 21.36.290. POLICY PERIOD. Except as described in (b) of this 26 section, a [A] policy with a policy period or term of less than 12 months shall, for the 27 purposes of AS 21.36.210 - 21.36.310, be considered to be written for a policy period 28 or term of 12 months except in case of cancellation under any of the circumstances 29 specified in AS 21.36.210, and a policy written for a term longer than one year or a 30 policy with no fixed expiration date shall be considered to be written for successive 31 policy periods or terms of one year and termination by an insurer effective on an
01 anniversary date of the policy shall be considered a failure to renew. 02 * Sec. 59. AS 21.36.290 is amended by adding a new subsection to read: 03 (b) For determining the appropriate rate or premium, a personal automobile 04 insurance policy with a policy period or term of less than six months shall, for the 05 purposes of AS 21.36.210 - 21.36.310, be considered to be written for a policy period 06 or term of six months. 07 * Sec. 60. AS 21.36 is amended by adding a new section to read: 08 Sec. 21.36.305. PREMIUM INCREASES ON PERSONAL AUTOMOBILE 09 INSURANCE POLICIES. (a) An insurer may not increase the premium on a personal 10 automobile insurance policy unless the increase applies to all insureds of the same 11 class. 12 (b) An insurer may not increase the premium or add a surcharge to a personal 13 automobile insurance policy because of the issuance of a citation for a moving traffic 14 violation unless the insured or another person who resides in the insured's household 15 and is covered by the policy has been convicted of the violation or has entered a plea 16 of no contest to the violation. 17 (c) The director shall adopt regulations to determine circumstances under 18 which an insurer may increase the premium or add a surcharge to a personal 19 automobile insurance policy. 20 (d) An insurer that increases the premium or adds a surcharge to a personal 21 automobile insurance policy may only make the increase or surcharge effective on the 22 renewal date of the policy. 23 (e) An insurer that increases the premium or adds a surcharge to a personal 24 automobile insurance policy shall give written notice of the increase or surcharge at 25 least 20 days before it takes effect, stating the reason for the change and the right of 26 appeal under AS 21.39.090. This subsection does not apply to 27 (1) premium increase resulting from a change requested by an insured, 28 if the insured is notified at the time the request is made that the amount of the 29 insured's premium will change as a result of the requested policy change; or 30 (2) rate approved by the director if the insurer gives written notice of 31 a premium increase to the insured at least 20 days before the renewal date of the
01 affected policy. 02 * Sec. 61. AS 21.36.360(i) is amended to read: 03 (i) A criminal insurance act is committed by a person [AN INSURER] doing 04 business in this state or relative to a subject resident, located, or to be performed 05 in this state who knowingly 06 (1) writes, places, or causes to be written or placed in this state or 07 relative to a subject resident, located, or to be performed in this state a policy, 08 duplicate policy, or contract of insurance of any kind or character, or general or 09 floating policy upon persons or property resident, situated, or located in this state, from 10 or through a person not authorized to transact business under AS 21.27 or a risk 11 retention group or purchasing group not registered under AS 21.89.070 12 [BROKER, AGENT, SURPLUS LINE BROKER, OR PERSON WHO HAS NOT 13 SECURED A GENERAL AGENT LICENSE IN THIS STATE]; or 14 (2) pays a commission or other form of remuneration to a person, firm, 15 or organization for the writing or placing of insurance coverage in this state or relative 16 to a subject resident, located, or to be performed in this state unless that person, 17 firm, or organization is authorized under AS 21.27 to transact [HOLDS A LICENSE 18 ISSUED BY THE DIRECTOR FOR] the kind or class of insurance written or placed, 19 or, in the case of a risk retention group or purchasing group, is registered under 20 AS 21.89.070. 21 * Sec. 62. AS 21.36.360(j) is amended to read: 22 (j) A criminal insurance act is committed by a person in this state or relative 23 to a subject resident, located, or to be performed in this state who acts as an 24 insurance producer, managing general agent, third-party administrator, 25 reinsurance intermediary broker, reinsurance intermediary manager, surplus lines 26 broker [SOLICITOR], or independent adjuster without being licensed by the director 27 as required under this title or as a risk retention group or purchasing group 28 without being registered as required under AS 21.89.070. A criminal insurance act 29 is committed by an insurance producer, managing general agent, third-party 30 administrator, reinsurance intermediary broker, reinsurance intermediary 31 manager, or surplus lines broker [OR SOLICITOR] who solicits or takes application
01 for, procures, or places for others any insurance for which the person is not licensed 02 as required under AS 21.27 or for which the license of the person has been 03 suspended or revoked. A criminal insurance act is committed by a person in this 04 state or relative to a subject resident, located, or to be performed in this state who 05 acts as or on behalf of a risk retention group or a purchasing group that is not 06 registered under AS 21.89.070 [THIS SUBSECTION DOES NOT APPLY TO A 07 PERSON DESCRIBED IN AS 21.90.910 OR TO A PERSON SECURING AND 08 FORWARDING INFORMATION REQUIRED FOR THE PURPOSE OF A GROUP 09 INSURANCE COVERING THE UNPAID BALANCE OR REMAINING PAYMENTS 10 PROPOSED TO BE MADE IN CONNECTION WITH THE PURCHASE OF 11 MERCHANDISE OR SERVICES IF NO COMMISSION OR OTHER 12 COMPENSATION IS PAYABLE ON ACCOUNT OF THE INSURANCE TO THE 13 PERSON]. 14 * Sec. 63. AS 21.36.360(k) is amended to read: 15 (k) A criminal insurance act is committed by an insurance producer, 16 managing general agent, [GENERAL AGENT,] third-party administrator, 17 reinsurance intermediary broker, reinsurance intermediary manager, or surplus 18 lines broker [OR SOLICITOR] who knowingly compensates or offers to compensate 19 in any manner a person other than an insurance producer, managing [AGENT,] 20 general agent, third-party administrator, reinsurance intermediary broker, 21 reinsurance intermediary manager, or surplus lines broker [OR SOLICITOR] 22 licensed as required under this title in this or another jurisdiction [STATE OR 23 PROVINCE], for procuring or in any manner helping to procure applications for or to 24 place insurance in this state. A criminal insurance act is committed by a person in 25 this state or relative to a subject resident, located, or to be performed in this state 26 who acts as or on behalf of a risk retention group or a purchasing group that is 27 not registered under AS 21.89.070. This subsection does not apply to the payment 28 of compensation that is not contingent upon volume of business transacted in the form 29 of salaries to the regular employees of the insurance producer, managing general 30 agent, third-party administrator, reinsurance intermediary [GENERAL AGENT,] 31 broker, reinsurance intermediary manager, or surplus lines broker [OR
01 SOLICITOR]. 02 * Sec. 64. AS 21.36.360(n) is amended to read: 03 (n) A criminal insurance act is committed by an agent, managing general 04 agent, third-party administrator, reinsurance intermediary broker, reinsurance 05 intermediary manager, or other representative of an insurer involved in the procuring 06 or issuance of an insurance contract who intentionally fails to report to the insurer the 07 exact amount of consideration charged as premium for the contract and to maintain 08 records showing that information. 09 * Sec. 65. AS 21.36.360(p) is amended to read: 10 (p) A fraudulent insurance act is committed by a person who 11 (1) violates a provision of this title or a regulation issued under it; 12 (2) falsely makes, completes, or alters a certificate of insurance or 13 other document relating to insurance; 14 (3) knowingly possesses a forged certificate of insurance or other 15 document relating to insurance; or 16 (4) knowingly issues a forged certificate of insurance or other 17 document relating to insurance. 18 * Sec. 66. AS 21.36.360(q) is amended to read: 19 (q) A fraudulent or criminal insurance act described in 20 (1) (b) of this section that is committed to obtain $10,000 or more is 21 a class B felony; 22 (2) (c) or (d) of this section is a class B felony; 23 (3) (b) of this section that is committed to obtain $500 or more but less 24 than $10,000 is a class C felony; 25 (4) (e), (f), (g), [OR] (h), or (p)(2) - (4) of this section is a class C 26 felony; 27 (5) (b) of this section that is committed to obtain less than $500 is a 28 class A misdemeanor; 29 (6) (i), (j), (k), (l), (m), or (n) of this section is a class A misdemeanor; 30 (7) (o) of this section is a class B misdemeanor; and 31 (8) (p)(1) [(p)] of this section is a class B misdemeanor unless another
01 specific penalty is provided for the violation of the provision. 02 * Sec. 67. AS 21.36.380 is amended to read: 03 Sec. 21.36.380. NOTICE ON CLAIM FORM. A claim form must contain a 04 statement that states in substance the following: "A person who knowingly and with 05 intent to injure, defraud, or deceive an insurance company files a claim containing 06 false, incomplete, or misleading information may be prosecuted under state law [IS 07 GUILTY OF A FELONY]." A lack of the statement on a claim form does not 08 constitute a defense to prosecution under this title. 09 * Sec. 68. AS 21.39.040 is amended by adding new subsections to read: 10 (j) An insurer who has submitted an application for a certificate of authority 11 under AS 21.09.110 and a filing of policy forms under AS 21.42.120 may file a 12 proposed rating system as described in this section. The director's approval of the 13 rating system is contingent upon the issuance of a certificate of authority under 14 AS 21.09.120. 15 (k) The director may adopt regulations detailing the format and content of a 16 rating system filing under this section. 17 * Sec. 69. AS 21.39 is amended by adding a new section to read: 18 Sec. 21.39.055. CANCELLATION OF APPROVED FILING. The voluntary 19 surrender of a certificate of authority or the failure of the surrendering admitted foreign 20 insurer to continue a certificate of authority in force has the effect of cancelling an 21 approval that the insurer may have received under this chapter, unless the approval has 22 been affirmed by the director at the time of the surrender or noncontinuation of the 23 certificate of authority. 24 * Sec. 70. AS 21.39.155(a) is amended to read: 25 (a) The director may require insurers [CARRIERS], except a reciprocal 26 insurer formed by and insuring only a group of municipalities or nonprofit public 27 utilities under AS 21.75 or a reciprocal insurer formed under AS 21.75 to provide 28 marine insurance, [OR A JOINT INSURANCE ARRANGEMENT FORMED UNDER 29 AS 21.76,] as a condition of writing a line of insurance dealing with medical 30 malpractice or workers' compensation, to participate in an assigned risk pool if the 31 director finds that mandatory carrier participation is in the public interest.
01 * Sec. 71. AS 21.42.120 is amended by adding new subsections to read: 02 (f) This section does not apply to a type of insurance subject to AS 21.57. 03 (g) An insurer who has submitted an application for a certificate of authority 04 under AS 21.09.110 may file a proposed policy form as described in this section. The 05 director's approval of the policy form is contingent upon the issuance of a certificate 06 of authority under AS 21.09.120. 07 (h) The director may adopt regulations detailing the format and content of the 08 filing of a policy form under this section. 09 * Sec. 72. AS 21.42.345 is amended by adding a new subsection to read: 10 (b) An insurer authorized under AS 21.09 to offer, issue for delivery, deliver, 11 or renew an individual or group disability insurance policy for medical coverage on 12 an expense incurred basis in the state, or a hospital or medical service corporation 13 authorized under AS 21.87 to offer or renew an individual or group subscriber's 14 contract for medical coverage in the state, shall offer coverage for family members, 15 including newly born children, adopted children, or children placed for adoption and 16 is subject to the conditions in (a) of this section, regardless of the marital status of the 17 covered person. 18 * Sec. 73. AS 21.56.180(c) is amended to read: 19 (c) Except as provided in this subsection, a small employer insurer may not, 20 directly or indirectly, enter into a contract, agreement, or arrangement with an 21 insurance producer [AGENT, BROKER], managing general agent, or third-party 22 administrator that provides for or results in the compensation paid to an insurance 23 producer [AGENT OR BROKER] for the sale of a health benefit plan to be varied 24 because of the health status, claims experience, industry, occupation, or geographic 25 location of the small employer. This subsection does not apply to a compensation 26 arrangement that provides compensation to an insurance producer [AGENT, 27 BROKER], managing general agent, or third-party administrator on the basis of a 28 percentage of premium, provided that the percentage does not vary because of the 29 health status, claims experience, industry, occupation, or geographic area of the small 30 employer. 31 * Sec. 74. AS 21.56.180(d) is amended to read:
01 (d) A small employer insurer 02 (1) shall provide reasonable compensation, as provided under the plan 03 of operation of the program, to an insurance producer [AGENT, BROKER], 04 managing general agent, or third-party administrator, if any, for the sale of a basic or 05 standard health benefit plan; 06 (2) or insurance producer [AGENT, BROKER], managing general 07 agent, or third-party administrator may not induce or otherwise encourage a small 08 employer to separate or otherwise exclude an employee from health coverage or 09 benefits provided in connection with the employee's employment; 10 (3) may only deny an application for coverage from a small employer 11 in writing and if the reasons for the denial are stated. 12 * Sec. 75. AS 21.57.010 is amended to read: 13 Sec. 21.57.010. PURPOSE. The purpose of this chapter is to promote the 14 public welfare by regulating consumer credit [LIFE INSURANCE AND CREDIT 15 DISABILITY] insurance. Nothing in this chapter is intended to prohibit or discourage 16 reasonable competition. The provisions of this chapter shall be liberally construed. 17 * Sec. 76. AS 21.57.020 is repealed and reenacted to read: 18 Sec. 21.57.020. APPLICABILITY. Consumer credit insurance transacted in 19 connection with a credit transaction for a personal, household, or family purpose is 20 subject to the provisions of this chapter except 21 (1) insurance written in connection with a credit transaction that is 22 (A) secured by a first mortgage or first deed of trust; and 23 (B) made to finance the purchase of real property, the 24 construction of a dwelling, or to refinance a prior credit transaction made for 25 that purpose; 26 (2) an isolated insurance transaction by the insurer not related to an 27 agreement or a plan for insuring debtors of the creditor; 28 (3) insurance for which no identifiable charge is made to the debtor; 29 or 30 (4) a loan or other credit transaction that exceeds $30,000. 31 * Sec. 77. AS 21.57.030 is repealed and reenacted to read:
01 Sec. 21.57.030. AUTHORIZED TYPES OF CONSUMER CREDIT 02 INSURANCE. A type of consumer credit insurance defined in AS 21.57.160 may be 03 written separately or in combination with other types of consumer credit insurance on 04 an individual or group basis. 05 * Sec. 78. AS 21.57.040 is repealed and reenacted to read: 06 Sec. 21.57.040. AMOUNT OF CONSUMER CREDIT INSURANCE. (a) The 07 amount of coverage for credit life insurance payable at the time of loss 08 (1) may not exceed the greater of the actual net debt or the scheduled 09 net debt, except insurance on an 10 (A) agricultural credit transaction commitment, not exceeding 11 one year in duration, may be written up to the amount of the loan commitment 12 on a nondecreasing or level term plan; and 13 (B) educational credit transaction commitment may be written 14 for the net outstanding balance plus any unused commitment; 15 (2) may not be less than the actual net debt less any payments more 16 than two months overdue if the coverage is written on the actual outstanding net debt; 17 (3) may not exceed the following if the coverage is written on the 18 scheduled outstanding net debt: 19 (A) the scheduled net debt if the actual net debt is less than or 20 equal to the scheduled net debt; 21 (B) the actual net debt if the actual net debt is greater than the 22 scheduled net debt but less than or equal to the scheduled net debt plus two 23 months of payments; or 24 (C) the scheduled net debt plus two months of payments if the 25 actual net debt is greater than the scheduled net debt plus two months of 26 payments; 27 (4) must equal the actual net debt on the date of death if a premium is 28 assessed to the debtor on a monthly basis and is based on the actual net debt; and 29 (5) may be less than the net debt when the partial coverage is 30 calculated using one of the following: 31 (A) the amount of insurance is the lesser of a stated amount and
01 the amount is determined by (2) of this subsection; 02 (B) the amount of insurance is the lesser of a stated amount and 03 the amount is determined by (3) of this subsection; 04 (C) the amount of insurance is a constant percentage of the 05 amount determined by (2) or (3) of this subsection; or 06 (D) in the absence of any preexisting condition exclusion, the 07 amount of insurance payable in the event of death due to natural causes is 08 limited to the balance as it existed six months before the date of death if 09 (i) there has been at least one increase in the outstanding 10 balance during that six-month period, other than an increase due to the 11 accrual of interest or late charges; and 12 (ii) evidence of individual insurability has not been 13 required during that six-month period. 14 (b) The director may provide for other patterns of insurance consistent with 15 (a) of this section by regulation. 16 (c) The total amount of periodic indemnity payable in the event of disability 17 or unemployment, as defined in the policy, may not exceed the sum of the periodic 18 scheduled unpaid installments of the gross debt. The amount of a periodic indemnity 19 payment may not exceed the original gross debt divided by the number of periodic 20 installments. 21 (d) If credit disability insurance or credit unemployment insurance is written 22 in connection with an open-end consumer credit agreement, the amount of insurance 23 may not exceed the gross debt that would accrue on the amount using the creditor's 24 minimum repayment schedule. The periodic indemnity need not relate to the creditor's 25 minimum repayment schedule. 26 * Sec. 79. AS 21.57.050 is repealed and reenacted to read: 27 Sec. 21.57.050. DURATION OF COVERAGE. (a) The effective date of 28 coverage for 29 (1) consumer credit insurance that is elected by the debtor before or 30 contemporaneous with a credit transaction is the date when the debtor becomes 31 obligated to the creditor, except that when evidence of individual insurability is
01 required and the evidence is furnished more than 30 days after the date when the 02 debtor becomes obligated to the creditor, the effective date may be the date on which 03 the insurance company determines the evidence to be satisfactory; 04 (2) insurance coverage that is elected by the debtor on a date 05 subsequent to the date of the credit transaction is, subject to acceptance by the insurer, 06 a date not earlier than the date the election is made by the debtor or later than 30 days 07 following the date on which the insurer accepts the risk for coverage; an insurer shall 08 determine if a risk is acceptable by an objective method, including one related to a 09 particular date within a billing or repayment cycle or a calendar month; and 10 (3) a group policy that provides coverage with respect to a debt existing 11 on the policy effective date, must be on or after the effective date of the group policy. 12 (b) A charge for insurance may not be made to the debtor and retained by the 13 creditor or insurer for a time before commencement of the consumer credit insurance 14 to which the charge is related. 15 (c) The duration of coverage for consumer credit insurance may not extend 16 (1) beyond the termination date specified in the policy; the termination 17 date of insurance may precede, coincide with, or follow the scheduled maturity date 18 of the debt to which it relates, subject to any other requirements and restrictions of this 19 chapter; and 20 (2) more than 15 days beyond the scheduled maturity date of the debt 21 except when extended 22 (A) without additional cost to the debtor; or 23 (B) under a written agreement signed by the debtor, in 24 connection with a variable interest rate credit transaction or a deferral, renewal, 25 refinancing, or consolidation of debt. 26 (d) If the debt is discharged due to renewal, refinancing, or consolidation 27 before the scheduled termination date of the insurance, insurance in force must be 28 terminated before new insurance may be written in connection with the renewed, 29 refinanced, or consolidated debt. 30 (e) If insurance coverage terminates before the scheduled termination of the 31 insurance, the insurer shall make an appropriate refund or credit to the debtor. The
01 refund or credit must consist of the unearned insurance charge paid by the debtor for 02 insurance after the date of the termination, except that a refund is not required of a 03 charge made for insurance if the insurance is terminated by performance of the 04 insurer's obligation with respect to the insurance. 05 (f) An insured debtor may terminate consumer credit insurance at any time by 06 providing advance notice to the insurer. The individual policy or group certificate may 07 require that the notice be in writing or that the debtor surrender the individual policy 08 or group certificate, or both. The debtor's right to terminate coverage may also be 09 subject to the terms of the credit transaction contract. 10 * Sec. 80. AS 21.57 is amended by adding a new section to read: 11 Sec. 21.57.055. DISCLOSURE TO DEBTORS. (a) Before a debtor elects to 12 purchase consumer credit insurance in connection with a credit transaction, the insurer 13 shall disclose the following in writing to the debtor: 14 (1) the purchase of consumer credit insurance is optional and not a 15 condition of obtaining credit approval; 16 (2) if more than one kind of consumer credit insurance is being made 17 available to the debtor, whether the debtor can purchase the insurance separately or the 18 multiple coverage only as a package; 19 (3) the conditions of eligibility; 20 (4) if the debtor has other insurance that covers the risk, the debtor may 21 not want or need credit insurance; 22 (5) if the creditor requires consumer credit insurance as additional 23 security for a debt, the debtor has the option of furnishing the required amount of 24 insurance through existing policies owned or procured by the debtor or of procuring 25 and furnishing the required insurance through an insurer authorized to transact 26 insurance business in this state; 27 (6) the effective date of the coverage; 28 (7) the debtor may cancel the coverage within the first 30 days after 29 receiving the individual policy or group certificate and have a premium paid by the 30 debtor refunded or credited; thereafter, the debtor may cancel the policy at any time 31 during the term of the loan and receive a refund of unearned premium;
01 (8) a brief description of the coverage, including 02 (A) the amount; 03 (B) the term; 04 (C) any exceptions, limitations, or exclusions; 05 (D) the insured event; 06 (E) any waiting or elimination period; 07 (F) any deductible; 08 (G) any applicable waiver of premium provision; 09 (H) to whom the benefits would be paid; and 10 (I) the premium rate for a coverage or for multiple coverage in 11 a package; 12 (9) if the premium or insurance charge is financed, it is subject to 13 finance charges at the rate applicable to the credit transaction or at another specified 14 rate; and 15 (10) whether or not the benefits provided are sufficient to pay off the 16 debt in full, including finance charges unearned at the time of the claim. 17 (b) The disclosure required in (a) of this section shall be provided in the 18 following manner: 19 (1) in connection with consumer credit insurance offered 20 contemporaneously with the extension of credit or offered through direct mail 21 advertisements, the disclosure shall be presented to the consumer in a clear and 22 conspicuous manner; or 23 (2) in conjunction with the offer of credit insurance subsequent to the 24 extension of credit by other than direct mail advertisements, the initial disclosure may 25 be provided orally as long as written disclosure is provided to the debtor not later than 26 10 days after the offer or the date any other written material is provided to the debtor, 27 whichever occurs first. 28 (c) If the debtor elects to purchase coverage, the delivery of the disclosure 29 required in (b) of this section shall be acknowledged by the debtor at the time of 30 delivery, and the insurer shall maintain the debtor's written acknowledgement for at 31 least five years.
01 * Sec. 81. AS 21.57.060 is repealed and reenacted to read: 02 Sec. 21.57.060. PROVISIONS OF POLICIES AND CERTIFICATES OF 03 INSURANCE. (a) Consumer credit insurance shall be evidenced by an individual 04 policy or a group certificate of insurance. 05 (b) The individual policy or group certificate must, in addition to other 06 requirements of law, set out 07 (1) the name and home office address of the insurer; 08 (2) the name of the debtor; 09 (3) the premium to be paid by the debtor disclosed separately for each 10 kind of coverage or for all coverage in a package, except that for open-ended loans, 11 the premium rate and the basis of premium calculation must be specified; 12 (4) a full description of the coverage including the amount, the term, 13 and any exceptions, limitations, or exclusions; 14 (5) a statement that the benefits shall be paid to the creditor to reduce 15 or extinguish the unpaid debt and that, whenever the amount of insurance benefit 16 exceeds the unpaid debt, the excess is payable to the debtor, a beneficiary other than 17 the creditor named by the debtor, or the debtor's estate; 18 (6) an explanation of how refunds are calculated in the event of policy 19 termination; and 20 (7) if the benefit is not adequate to completely pay off the debt existing 21 on the date of death or disability, a statement to that effect on the face of the 22 individual policy or group certificate in not smaller than 10 point, bold face type. 23 * Sec. 82. AS 21.57.070 is repealed and reenacted to read: 24 Sec. 21.57.070. REQUIREMENTS FOR EVIDENCE OF INSURANCE. (a) 25 Unless the individual policy or group certificate of insurance is delivered to the debtor 26 at the time the debt is incurred or when the debtor elects to purchase coverage, a copy 27 of the application for the policy or a notice of proposed insurance, signed by the 28 debtor and setting out (1) the name and home office address of the insurer, (2) the 29 name of the debtor, (3) the premium rate to be paid by the debtor for the insurance, 30 and (4) the amount, term, and a brief description of the coverage provided, shall be 31 delivered to the debtor at the time the debt is incurred or the election to purchase
01 coverage is made. The copy of the application for or notice of proposed insurance 02 must refer exclusively to insurance coverage and must be separate and apart from the 03 loan, sale, other credit statement of account, instrument, or agreement, unless the 04 information required by this subsection is prominently set out in it. Upon acceptance 05 of the insurance by the insurer and within 30 days of the date upon which the debt is 06 incurred or the election to purchase coverage is made, the insurer shall deliver the 07 individual policy or group certificate of insurance to the debtor. The application or 08 notice of proposed insurance must state that upon acceptance by the insurer, the 09 insurance shall become effective as provided in AS 21.57.050(a). 10 (b) The application or notice of proposed insurance may be used to fulfill all 11 of the requirements of AS 21.57.055(a) and 21.57.060(b) if it contains all of the 12 information required by those subsections. 13 (c) A debtor has 30 days from the date the debtor receives the individual 14 policy or the group certificate to review the coverage purchased. At any time within 15 the 30-day period, the debtor may contact the creditor or insurer issuing the policy or 16 certificate and request that the coverage be cancelled. An individual policy or group 17 certificate may require the request be in writing, that the policy or certificate be 18 returned to the insurer, or both. If a policy is cancelled, the insurer shall return a full 19 refund or credit of all premiums or insurance charges to the debtor within 30 days. 20 (d) If the named insurer does not accept the risk, the debtor shall receive a 21 policy or certificate of insurance listing the name and home office address of the 22 substituted insurer and the amount of the premium to be charged. If the amount of 23 premium is less than the amount in the notice of proposed insurance, the insurer shall 24 issue an appropriate refund within 30 days. If the risk is not accepted by an insurer, 25 a premium paid by the debtor shall be refunded or credited to the debtor within 30 26 days of the date of application. 27 (e) For the purposes of (a) of this section, an individual policy or group 28 certificate delivered in conjunction with an open-end consumer credit agreement or 29 consumer credit insurance requested by the debtor after the date of the debt is 30 considered to be delivered at the time the debt is incurred or election to purchase 31 coverage is made if the delivery occurs within 30 days of the date the insurance is
01 effective. 02 (f) An individual policy or group certificate delivered in conjunction with an 03 open-end consumer credit agreement shall continue from its effective date through the 04 term of the agreement unless the individual policy or group certificate is terminated 05 under its terms at an earlier date. 06 * Sec. 83. AS 21.57.080 is repealed and reenacted to read: 07 Sec. 21.57.080. FILING OF FORMS AND RATES. (a) An insurance policy, 08 certificate of insurance, notice of proposed insurance, insurance disclosure notice, 09 insurance advertisement, application for insurance, endorsement, and rider delivered 10 or issued for delivery in this state, and the applicable schedules of premium rates shall 11 be filed with the director before being used. 12 (b) A document required to be filed under (a) of this section must be on file 13 for a waiting period of 30 days before it is used or becomes effective, unless the 14 director gives prior written approval. This period may be extended for an additional 15 30 days if the director gives written notice within the waiting period to the insurer 16 making the filing. The director shall disapprove a filing if the premium rate charged 17 is not reasonable in relation to benefits or if it contains provisions that are unjust, 18 unfair, inequitable, misleading, deceptive, encourage misrepresentation of the policy, 19 or are contrary to a provision of this title or a regulation adopted under this title. A 20 filing is considered to be approved unless it is disapproved by the director within the 21 waiting period. 22 (c) If the director notifies the insurer that a document required to be filed 23 under (a) of this section is disapproved, the insurer may not issue or use any part of 24 the document. In providing notice of disapproval to the insurer, the director shall 25 specify the reason for disapproval and indicate that the insurer is entitled to a hearing. 26 (d) The director may, at any time after a hearing, withdraw approval of a filing 27 on the grounds specified under (b) of this section. The director shall provide the 28 insurer at least 20 days' prior written notice of a hearing scheduled by the director, and 29 the notice of the hearing must state the reason for the proposed withdrawal. 30 (e) An insurer may not issue or use a document required to be filed under (a) 31 of this section after the effective date of a withdrawal of approval under (d) of this
01 section. 02 (f) If a group policy of consumer credit insurance (1) has been delivered in 03 this state before July 1, 1995, or (2) has been or is delivered in another state before 04 or after July 1, 1995, the insurer shall be required to file only the group certificate and 05 notice of proposed insurance delivered or issued for delivery in this state as specified 06 in AS 21.57.060(b) and 21.57.070(a). 07 (g) Consumer credit insurance forms used for insurance described under (f) of 08 this section shall be approved by the director if they conform with the requirements 09 specified in this section and if the schedules of premium rates applicable to the 10 insurance evidenced by the certificate or notice are in accordance with the insurer's 11 schedules of premium rates filed with the director. An item required to be filed under 12 (a) of this section shall also be filed as specified in this chapter unless the item relates 13 to a group policy that is delivered in another state and the director has determined that 14 the other state has substantially similar statutes or regulations to this chapter. Upon 15 this determination, the items required to be filed under (a) of this section shall be filed 16 for informational purposes. If the director subsequently determines that the 17 informational filing is not in compliance with the requirements of this chapter, the 18 insurer may not use the insurance policy, form, certificate, notice of proposed 19 insurance, disclosure notice, advertisement, application for insurance, endorsement, or 20 rider. 21 * Sec. 84. AS 21.57.090 is amended to read: 22 Sec. 21.57.090. PREMIUMS AND REFUNDS. (a) An insurer may revise its 23 schedules of premium rates from time to time, and file the revised schedules with the 24 director. An insurer may not issue a consumer credit [LIFE INSURANCE POLICY 25 OR CREDIT DISABILITY] insurance policy for which the premium rate differs from 26 [EXCEEDS] that determined by the schedules of the insurer then approved by [ON 27 FILE WITH] the director. 28 (b) An [EACH] individual policy or group certificate must provide for a 29 refund in the event of termination of [THAT IF] the insurance [IS TERMINATED] 30 before the scheduled maturity date of the insurance and upon notice to the insurer. 31 The [INDEBTEDNESS, ANY] refund of an amount paid by the debtor for insurance
01 shall be paid or credited promptly to the person entitled to it; provided, however, that 02 the director shall prescribe a minimum refund and a [NO] refund that would be less 03 than the minimum need not be made. A refund formula that an insurer desires to 04 use must provide refunds that are at least as favorable to the debtor as refunds 05 based on the rule of anticipation. The formula to be used in computing refunds shall 06 be filed with and approved by the director. 07 (c) If a creditor requires a debtor to make a payment for consumer credit 08 [LIFE INSURANCE OR CREDIT DISABILITY] insurance and an individual policy 09 or group certificate of insurance is not issued, the creditor shall immediately give 10 written notice to the debtor and shall promptly make an appropriate credit to the 11 account or issue a refund. 12 (d) The amount charged to a debtor for consumer credit [LIFE OR CREDIT 13 DISABILITY] insurance may not exceed the premium charged by the insurer, as 14 computed at the time the charge to the debtor is determined. 15 * Sec. 85. AS 21.57.090 is amended by adding a new subsection to read: 16 (e) Nothing in this chapter may be construed to authorize a payment for 17 insurance prohibited under other provisions of law governing credit transactions. 18 * Sec. 86. AS 21.57.120 is amended to read: 19 Sec. 21.57.120. SELECTION RIGHTS OF INSURED [EXISTING 20 INSURANCE]. When consumer credit [LIFE INSURANCE OR CREDIT 21 DISABILITY] insurance is required as additional security for a debt [AN 22 INDEBTEDNESS], the debtor shall, upon request to the creditor, have the option of 23 furnishing the required amount of insurance through existing policies of insurance 24 owned or controlled by the debtor or of procuring and furnishing the required coverage 25 through an insurer authorized to transact an insurance business in this state. 26 * Sec. 87. AS 21.57 is amended by adding a new section to read: 27 Sec. 21.57.125. DUTIES OF AN INSURER. Except as otherwise prohibited 28 by law, duties imposed upon an insurer by this chapter may be carried out by a 29 creditor if the creditor is licensed under AS 21.27 as an insurance producer, a 30 managing general agent, or a third-party administrator, and transacts business within 31 the scope of its license on behalf of the insurer.
01 * Sec. 88. AS 21.57.150 is repealed and reenacted to read: 02 Sec. 21.57.150. PENALTIES. (a) In addition to any other penalty provided 03 by law, a person licensed under AS 21.27 that the director determines under 04 AS 21.06.170 - 21.06.240 has violated the provisions of this chapter is subject to 05 (1) a civil penalty equal to the compensation promised, paid, or to be 06 paid, directly or indirectly, to the licensee in regard to a violation; 07 (2) either a civil penalty of not more than $10,000 for a violation or, 08 if the director determines that the person wilfully violated the provisions of this 09 chapter, a civil penalty of not more than $25,000 for a violation; and 10 (3) denial, nonrenewal, suspension, or revocation of a license. 11 (b) In addition to any other penalty provided by law, an insurer that the 12 director determines under AS 21.06.170 - 21.06.240 has violated the provisions of this 13 chapter is subject to 14 (1) a civil penalty equal to the premium earned, directly or indirectly, 15 by the insurer in regard to a violation; 16 (2) either a civil penalty of not more than $10,000 for a violation or, 17 if the director determines that the insurer wilfully violated the provisions of this 18 chapter, a civil penalty of not more than $25,000 for a violation; and 19 (3) denial, suspension, or revocation of a certificate of authority. 20 (c) In addition to any other penalty provided by law, any person that the 21 director determines under AS 21.06.170 - 21.06.240 has violated the provisions of this 22 chapter is subject to 23 (1) either a civil penalty of not more than $10,000 for a violation or, 24 if the director determines that the person wilfully violated the provisions of this 25 chapter, a civil penalty of not more than $25,000 for a violation; and 26 (2) denial of a license. 27 * Sec. 89. AS 21.57.160 is repealed and reenacted to read: 28 Sec. 21.57.160. DEFINITIONS. In this chapter, 29 (1) "agriculture credit transaction commitment" means a binding 30 agreement to loan money up to a fixed amount as needed for agricultural purposes; 31 (2) "compensation" means commissions, dividends, retrospective rate
01 credits, service fees, expense allowances or reimbursements, gifts, furnishing 02 equipment, facilities, goods, or services, or any other form of remuneration resulting 03 directly from the sale of consumer credit insurance; 04 (3) "consumer credit insurance" means credit life insurance, credit 05 disability insurance, or credit unemployment insurance; 06 (4) "credit disability insurance" means insurance on a debtor to provide 07 indemnity for payments or debt becoming due on a specific loan or other credit 08 transaction while the debtor is disabled; 09 (5) "credit life insurance" means insurance on the life of a debtor under 10 or in connection with all or a part of a specific loan or other credit transaction; 11 (6) "credit unemployment insurance" means insurance on a debtor to 12 provide indemnity for payments or debt becoming due on a specific loan or other 13 credit transaction while the debtor is involuntarily unemployed; 14 (7) "credit transaction" means a transaction by which the repayment for 15 money loaned or a loan commitment made or payment for goods, services, or 16 properties sold or leased is made at a future date; 17 (8) "creditor" means a person who lends money or who sells or leases 18 goods, services, property, rights, or privileges, for which payment is arranged through 19 a credit transaction, and includes a person who is a successor to the right, title, or 20 interest of the lender, seller, or lessor; 21 (9) "debtor" means a person who borrows money, or purchases or 22 leases goods, services, property, rights, or privileges for which payment is arranged 23 through a credit transaction; 24 (10) "educational credit transaction commitment" means a binding 25 agreement to loan money up to a fixed amount as needed for educational purposes; 26 (11) "gross debt" means the total of the remaining payments owed to 27 the creditor by the debtor; 28 (12) "identifiable charge" means a charge for consumer credit insurance 29 that is made to a debtor having the benefit of the insurance, including a charge for 30 insurance that is disclosed in the consumer credit agreement or other instrument 31 furnished to the debtor, and any difference in the finance, interest, service, or other
01 similar charge made to a debtor in a like circumstance, except for their insured or 02 noninsured status; 03 (13) "net debt" means the amount necessary to liquidate the remaining 04 debt in a single lump sum payment, excluding all unearned finance charges; 05 (14) "open-end consumer credit" means consumer credit extended by 06 a creditor under an agreement in which 07 (A) the creditor reasonably contemplates repeated transactions; 08 (B) the creditor imposes a periodic finance charge on an 09 outstanding unpaid balance; and 10 (C) the amount of consumer credit that may be extended to the 11 debtor during the term of the agreement, up to any limit set by the creditor, is 12 generally made available to the extent that any outstanding balance is repaid; 13 (15) "rule of anticipation" means a refund method that results in 14 refunds equal to the premium cost of scheduled benefits subsequent to the date of 15 cancellation or termination, computed at the schedule of premium rates in effect on the 16 date of issue. 17 * Sec. 90. AS 21.69 is amended by adding new sections to read: 18 Sec. 21.69.645. REDOMESTICATION. (a) An insurer organized under the 19 laws of another state and admitted to do business in this state may become a domestic 20 insurer of this state by complying with the requirements of this title relative to the 21 organization and licensing of a domestic insurer and by designating its principal place 22 of business at a place in this state. 23 (b) A domestic insurer may, upon approval of the director, transfer its domicile 24 to another state in which it is admitted to transact the business of insurance. Upon a 25 transfer as described in this subsection, the insurer shall cease to be a domestic insurer 26 of this state, but shall be considered admitted to this state. The insurer shall meet the 27 qualifications to remain admitted to this state for a period of three years or, if ordered 28 by the director, a longer period. The director may approve a proposed transfer unless 29 the transfer is not in the interest of the policyholders of the insurer or the insurance 30 marketplace of this state. 31 (c) Upon transfer of domestic status to or from this state, the certificate of
01 authority, appointments under AS 21.27.100, rates, and other items that the director 02 allows, and that are in existence at the time the insurer is licensed to transact the 03 business of insurance in this state, shall continue in full force and effect and the 04 insurer shall remain duly qualified to transact the business of insurance in this state. 05 Outstanding policies of a transferring insurer shall remain in full force and effect and 06 shall be endorsed with the new name of the company, its new location, and any other 07 information the director may require. A transferring insurer shall notify the director 08 of the details of the proposed transfer 30 days before the effective date of the transfer 09 and shall promptly file any resulting amendments to corporate documents filed or 10 required to be filed with the director. 11 (d) A transfer of domestic status by merger, consolidation, or any other lawful 12 method of combination must meet the requirements of AS 21.69.590 or 21.69.600. 13 The certificate of authority, appointments under AS 21.27.100, rates, and other items 14 that the director allows, and that are in existence at the time the insurer is licensed to 15 transact the business of insurance in this state, shall continue in full force and effect 16 and the insurer shall remain duly qualified to transact the business of insurance in this 17 state. Outstanding policies of a domestic insurer being merged, consolidated, or 18 otherwise combined shall remain in full force and effect and shall be endorsed with 19 the new name of the company, its new location, and any other information the director 20 may require. 21 (e) An insurer that is transferring its domicile to this state shall file its revised 22 policy forms for approval under AS 21.42. 23 (f) A domestic insurer that is transferring its domicile to another state is not 24 required to file policy forms at the time of transfer if the forms have already been 25 approved under AS 21.42. 26 Sec. 21.69.648. VOLUNTARY SURRENDER OF CERTIFICATE OF 27 AUTHORITY. To voluntarily surrender the certificate of authority of a domestic 28 insurer, a request shall be made to the director to extinguish the certificate of authority 29 six months before the planned effective date of the extinguishment of the charter. 30 Before the request is granted, the director shall conduct an examination under 31 AS 21.06.120. The examination shall be completed within 12 months before the
01 effective date of an extinguishment and all issues contained in the examination report 02 must be resolved to the satisfaction of the director. Insurance business of the domestic 03 insurer shall be cancelled or reinsured as required under AS 21.69.610 or 21.69.620. 04 * Sec. 91. AS 21.72 is amended by adding a new section to read: 05 Sec. 21.72.125. QUARTERLY STATEMENTS. The director may require a 06 benevolent association to file quarterly financial statements as provided in 07 AS 21.09.205. The statements must exhibit the items and facts required under 08 AS 21.72.120(a). 09 * Sec. 92. AS 21.75 is amended by adding a new section to read: 10 Sec. 21.75.135. QUARTERLY STATEMENTS. (a) The director may require 11 a reciprocal insurer's attorney-in-fact to file a quarterly financial statement as provided 12 in AS 21.09.205. 13 (b) A statement required under (a) of this section shall be supplemented by 14 information that may be required by the director relative to the affairs and transactions 15 of the attorney-in-fact that relate to the reciprocal insurer. 16 * Sec. 93. AS 21.75.170(e) is amended to read: 17 (e) Special meetings of the committee may be called by the attorney-in-fact, 18 the chair of the committee, three members of the committee, or a signed petition of 19 at least one percent of the subscribers or three individual subscribers, whichever is 20 greater, as of the most recent annual report of the reciprocal insurer. 21 * Sec. 94. AS 21.75.170 is amended by adding a new subsection to read: 22 (g) Notwithstanding (a) of this section, a domestic reciprocal insurer 23 transacting all of its insurance activities on a subject resident, located, and to be 24 performed in this state may, with the prior written approval of the director, have a 25 subscriber's advisory committee that consists of not less than five individuals who are 26 elected by the subscribers, and who otherwise meet the requirements of (a) of this 27 section. 28 * Sec. 95. AS 21.78.130(g) is amended to read: 29 (g) If it appears to the receiver that there has been a violation of civil or 30 criminal law, or breach of a contractual or fiduciary obligation detrimental to the 31 insurer by an officer, manager, insurance producer [AGENT, BROKER], employee,
01 or other person, the receiver may pursue all appropriate legal remedies on behalf of 02 the insurer. 03 * Sec. 96. AS 21.78.271(a) is amended to read: 04 (a) An 05 (1) insurance producer [AGENT, BROKER], premium finance 06 company, or any other person, other than the insured, responsible for the payment of 07 a premium is obligated to pay an unpaid earned premium due the insurer at the time 08 of the declaration of insolvency, as shown on the records of the insurer; neither a 09 credit nor a setoff is allowed to an insurance producer [AGENT, BROKER,] or 10 premium finance company for an amount advanced to the insurer by the insurance 11 producer [AGENT, BROKER,] or premium finance company on behalf of, but in the 12 absence of a payment by, the insured; 13 (2) insured is obligated to pay an unpaid earned premium due the 14 insurer at the time of the declaration of insolvency, as shown on the records of the 15 insurer. 16 * Sec. 97. AS 21.79.900(6) is amended to read: 17 (6) "member insurer" means an insurer licensed to transact insurance 18 in the state that issues a policy described in AS 21.79.020(a) and (b), or a subscriber 19 contract providing benefits described in AS 21.87.120(a)(2) - (4) or 21.87.130(a)(2) 20 and (3), and includes an insurer whose license or certificate of authority in this state 21 may have been suspended, revoked, not renewed, or voluntarily withdrawn; "member 22 insurer" does not include 23 (A) a health maintenance organization licensed under 24 AS 21.86; 25 (B) a fraternal benefit society licensed under AS 21.84; 26 (C) a mandatory state pooling plan; 27 (D) a mutual assessment company or an entity that operates on 28 an assessment basis; 29 (E) an insurance exchange licensed under AS 21.75; or 30 (F) a nonprofit hospital or medical service organization 31 licensed under AS 21.87;
01 * Sec. 98. AS 21.80.020 is amended by adding a new subsection to read: 02 (b) This chapter does not apply to a risk retention group formed under 15 03 U.S.C. 3901 - 3906 (Liability Risk Retention Act). 04 * Sec. 99. AS 21.84.340 is amended by adding a new subsection to read: 05 (d) The director may require a society to file quarterly financial statements. 06 If quarterly financial statements are required, the statements must follow for a given 07 quarter the reporting specified in the quarterly financial statement blank form and 08 instructions most recently approved by the National Association of Insurance 09 Commissioners. 10 * Sec. 100. AS 21.86.080 is amended by adding new subsections to read: 11 (b) The director may require a health maintenance organization to file quarterly 12 financial statements. If quarterly financial statements are required, the statements must 13 follow for a given quarter the reporting specified in the quarterly financial statement 14 blank form and instructions most recently approved by the National Association of 15 Insurance Commissioners. 16 (c) A filing under this section is subject to AS 21.09.200 and 21.09.205. 17 * Sec. 101. AS 21.89.030 is amended to read: 18 Sec. 21.89.030. PAYMENT. An insurance company doing business in this 19 state may not pay a judgment or settlement of a claim in this state for a loss incurred 20 in this state with an instrument other than a negotiable bank check payable on demand 21 and bearing even date with the date of writing or by electronic funds transfer. 22 * Sec. 102. AS 21.89 is amended by adding new sections to read: 23 Sec. 21.89.080. ELECTRONIC DATA TRANSFER. The director may adopt 24 regulations to facilitate electronic data transfer. Electronic data transferred under 25 regulations may, at the discretion of the director, be in place of another method of 26 filing or communication otherwise required under this title. 27 Sec. 21.89.090. RISK RETENTION GROUPS AND PURCHASING GROUPS. 28 (a) A risk retention group or a purchasing group formed under and in compliance with 29 15 U.S.C. 3901 - 3906 (Liability Risk Retention Act) shall register with the director 30 and shall at all times transact business in compliance with federal law and the laws of 31 this state.
01 (b) A risk retention group or a purchasing group shall apply for initial 02 registration on forms prescribed by the director. Payment of a registration fee 03 established under AS 21.06.250 shall be submitted with the application. 04 (c) A risk retention group or a purchasing group may continue its registration 05 if it is in compliance with federal law and the laws of this state. Payment of an annual 06 continuation fee established under AS 21.06.250 shall be submitted with the 07 continuation application. 08 (d) A risk retention group holding a valid certificate of authority as a domestic 09 insurer or a purchasing group duly licensed under AS 21.27 as a resident license is not 10 required to be additionally registered under this section. 11 (e) A risk retention group or purchasing group that is not in compliance with 12 15 U.S.C. 3901 - 3906 (Liability Risk Retention Act) is not eligible for registration or 13 annual continuation of its registration. 14 (f) Failure to comply with 15 U.S.C. 3901 - 3906 (Liability Risk Retention 15 Act) is a violation of this title. 16 (g) In addition to any other penalty provided by law, a person that the director 17 determines under AS 21.06.170 - 21.06.240 has violated a provision of this title 18 relative to a risk retention group or a purchasing group is subject to 19 (1) a civil penalty of not more than $10,000 for a violation or, if the 20 director determines that the person wilfully violated a provision of this title, a civil 21 penalty of not more than $25,000 for a violation; and 22 (2) denial, noncontinuation, or revocation of a registration. 23 (h) The director may adopt regulations on the operation and reporting 24 requirements of a risk retention group that are not in conflict with 15 U.S.C. 3901 - 25 3906 (Liability Risk Retention Act). 26 Sec. 21.89.100. APPOINTMENT OF INDEPENDENT COUNSEL; 27 CONFLICTS OF INTEREST. (a) If an insurer has a duty to defend an insured under 28 a policy of insurance and a conflict of interest arises that imposes a duty on the insurer 29 to provide independent counsel to the insured, the insurer shall provide independent 30 counsel to the insured unless the insured in writing waives the right to independent 31 counsel. An insurance policy may contain a provision that provides a method of
01 selecting independent counsel if the provision complies with this section. 02 (b) For purposes of this section, the following do not constitute a conflict of 03 interest: 04 (1) a claim of punitive damages; 05 (2) a claim of damages in excess of the policy limits; 06 (3) claims or facts in a civil action for which the insurer denies 07 coverage; however, this paragraph does not apply if the insurer reserves the insurer's 08 rights on the issue for which coverage is denied and the outcome of that coverage 09 issue can be controlled by counsel initially retained by the insurer for the defense of 10 the claim. 11 (c) If the insured selects independent counsel at the insurer's expense, the 12 insurer may require that the independent counsel have at least five years of experience 13 in civil litigation, including substantial defense experience in the subject at issue in the 14 civil action, and malpractice insurance. Unless otherwise provided in the insurance 15 policy, the obligation of the insurer to pay the fee charged by the independent counsel 16 is limited to the rate that would actually be paid by the insurer to an attorney in the 17 ordinary course of business in the defense of a similar civil action in the community 18 in which the claim arose or is being defended. A dispute between the insurer and 19 insured regarding attorney fees that is not resolved by the insurance policy or this 20 section shall be resolved by arbitration under AS 09.43. 21 (d) If the insured selects independent counsel at the insurer's expense, the 22 independent counsel and the insured shall consult with the insurer on all matters 23 relating to the civil action and shall disclose to the insurer in a timely manner all 24 information relevant to the civil action, except information that is privileged and 25 relevant to disputed coverage. A claim of privilege is subject to review in the 26 appropriate court. Information disclosed by the independent counsel or the insured 27 does not waive another party's right to assert privilege. 28 (e) An insured may waive the right to select independent counsel by signing 29 a statement that reads substantially as follows: 30 I have been advised of my right to select independent counsel 31 to represent me in this lawsuit. I have considered this matter
01 fully and at this time I am waiving my right to select 02 independent counsel. I have authorized my insurer to select a 03 defense counsel to represent me in this lawsuit. 04 (f) If an insured selects independent counsel under this section, both the 05 counsel representing the insurer and independent counsel representing the insured shall 06 be allowed to participate in all aspects of the civil action. Counsel for the insurer and 07 insured shall cooperate fully in exchanging information that is consistent with ethical 08 and legal obligations to the insured. Nothing in this section relieves the insured of the 09 duty to cooperate fully with the insurer as required by the terms of the insurance 10 policy. 11 * Sec. 103. AS 21.90.900(26) is amended to read: 12 (26) "managing general agent" means a person, firm, or corporation that 13 (A) has authority to exercise general supervision over the 14 business, or any part of the business, of one or more admitted insurers; and 15 (B) performs administrative functions normally performed by 16 the insurer including claims administration and payment, marketing 17 administration, agent appointment, premium accounting, premium billing, 18 coverage verification, final underwriting authority, or [AND] certificate 19 issuance; 20 * Sec. 104. AS 21.90.900(28) is amended to read: 21 (28) "person" has the meaning given in AS 01.10.060 and includes an 22 insurer, Lloyd's, fraternal benefit society, medical service, or hospital service plan as 23 defined in AS 21.87, reciprocal or interinsurance exchange, syndicate, and any other 24 legal entity engaged in the business of transacting insurance [, INCLUDING AGENTS, 25 BROKERS, AND CLAIMS ADJUSTERS]; 26 * Sec. 105. AS 28.20.580 is amended to read: 27 Sec. 28.20.580. ASSIGNED RISK PLANS. After consultation with the 28 insurance companies authorized to issue motor vehicle liability policies in this state, 29 the director of the division of insurance shall approve a reasonable plan, fair to the 30 insurers and equitable to their policyholders, for the apportionment among these 31 companies of applicants for motor vehicle policies and other vehicle coverages who
01 are in good faith entitled to but are unable to procure policies through ordinary 02 methods. When a plan is approved, all the insurance companies shall subscribe to it 03 and participate in it, except a reciprocal insurer formed by and only insuring a 04 group of municipalities or nonprofit utilities under AS 21.75, or a reciprocal 05 insurer formed under AS 21.75 to provide marine insurance. An applicant for an 06 assigned risk policy, a person insured under an assigned risk plan, and an insurance 07 company affected may appeal to the commissioner of commerce and economic 08 development from a ruling or decision of the authority designated to operate the plan. 09 Failure to adopt an assigned risk plan does not relieve any person from responsibility 10 under this chapter. 11 * Sec. 106. AS 39.25.110 is amended by adding a new paragraph to read: 12 (30) a person employed as an actuary or assistant actuary by the 13 division of insurance in the Department of Commerce and Economic Development. 14 * Sec. 107. AS 21.18.110(b)(3); AS 21.27.650(f)(3); and AS 21.36.420 are repealed. 15 * Sec. 108. AS 21.57.110 and 21.57.170 are repealed. 16 * Sec. 109. AS 21.09.300(c), enacted in sec. 15 of this Act, has the effect of amending 17 Alaska Rule of Civil Procedure 45, by providing that certain insurer reports of material 18 transactions are not subject to subpoena. 19 * Sec. 110. TRANSITION. This Act applies to a policy of insurance that is entered into 20 or renewed on or after the effective date of the relevant provision of this Act. 21 * Sec. 111. Sections 70 and 105 of this Act are retroactive to January 1, 1983. 22 * Sec. 112. Sections 75 - 89 and 108 of this Act take effect October 1, 1995. 23 * Sec. 113. Except as provided in secs. 111 and 112 of this Act, this Act takes effect 24 July 1, 1995.