HB 249: "An Act relating to insurance obtained from or provided by nonadmitted insurers; and providing for an effective date."
00HOUSE BILL NO. 249 01 "An Act relating to insurance obtained from or provided by nonadmitted insurers; 02 and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 21.09.020 is amended to read: 05 Sec. 21.09.020. Exceptions to [,] certificate of authority requirement. A 06 certificate of authority is not required of an insurer, not otherwise authorized in this 07 state, in regard to 08 (1) transactions relative to its policies lawfully written in the state, or 09 liquidation of assets and liabilities of the insurer, [(] other than collection of new 10 premiums [)], all as resulting from its former authorized operations in the state; 11 (2) related transactions subsequent to issuance of a policy covering only 12 subjects of insurance not resident, located, or expressly to be performed in the state 13 at time of issuance, and which coverage was lawfully solicited, written, and delivered 14 outside the state;
01 (3) transactions under surplus lines coverages and wet marine and 02 transportation insurance lawfully written under AS 21.35 [AS 21.34]; or 03 (4) reinsurance, except as to domestic reinsurers. 04 * Sec. 2. AS 21.09.150(b) is amended to read: 05 (b) The director shall, after a hearing, suspend or revoke an insurer's certificate 06 of authority if the director finds that the insurer 07 (1) is in unsound condition, or in a condition, or using methods or 08 practices in the conduct of its business, which render its further transaction of 09 insurance in this state injurious or hazardous to its policyholders or to the public; 10 (2) has refused to be examined or to produce its accounts, records, and 11 files for examination, or that any of its officers have refused to give information with 12 respect to its affairs, when required by the director; 13 (3) has failed to pay a final judgment rendered against it in this state 14 within 30 days after the judgment became final; a judgment appealed from is not final 15 until determined by the appellate court; 16 (4) with a frequency that indicates its general business practice in this 17 state, has without just cause refused to pay proper claims arising under its policies, 18 whether the claim is in favor of an insured or is in favor of a third person, or without 19 just cause delays adjustment of claims, or compels the insured or claimant to accept 20 less than the amount due them or to employ attorneys or to bring suit against the 21 insurer or an insured to secure full payment or settlement of claims; 22 (5) is affiliated with and under the same general management or 23 interlocking directorate or ownership as another insurer that transacts direct insurance 24 in this state without having a certificate of authority, except as permitted for surplus 25 line insurance under AS 21.35 [AS 21.33]; 26 (6) has failed, after written request by the director, to remove or 27 discharge an officer or director who has been convicted of a felony involving fraud, 28 dishonesty, or moral turpitude. 29 * Sec. 3. AS 21.12.090(b) is amended to read: 30 (b) For the purposes of this title, "wet marine and transportation" insurance is 31 that part of marine insurance that includes only
01 (1) insurance upon vessels, crafts, hulls and of interests in or with 02 relation to vessels, crafts, and hulls; 03 (2) insurance of marine builder's risks, marine war risks and contracts 04 of marine protection and indemnity insurance; 05 (3) insurance of freights and disbursements pertaining to a subject of 06 insurance coming within this subsection [SECTION]; and 07 (4) insurance of personal property and interests in personal property, 08 in the course of exportation from or importation into any country, and in the course 09 of transportation coastwise or on inland waters, including transportation by land, water, 10 or air from point of origin to final destination, in respect to, appertaining to, or in 11 connection with, any and all risks or perils of navigation, transit, or transportation, and 12 while being prepared for and while awaiting shipment, and during delays, storage, 13 transshipment, or reshipment incident thereto; "wet marine and transportation 14 insurance" does not include insurance of personal property and interests in 15 personal property if the 16 (A) property has been transported solely by land; 17 (B) property has reached its final destination as specified in 18 the bill of lading or other shipping document; or 19 (C) insured no longer has an insurable interest in the 20 property. 21 * Sec. 4. AS 21.14.100(b) is amended to read: 22 (b) If a report, plan, or revised plan has not been filed in conformance with 23 the requirements of this chapter, the director may, as provided 24 (1) under AS 21.09.150, suspend the authority of an insurer to enter 25 into new obligations or issue a new or renewal policy of insurance in this state; or 26 (2) under AS 21.35.240(f) [AS 21.34.070], declare a surplus lines 27 insurer ineligible to transact business in this state. 28 * Sec. 5. AS 21.27.550(h) is amended to read: 29 (h) Except as provided under AS 21.27.560, an agency appointment may not 30 extend, directly or indirectly, to a client for whom the insurance producer is a 31 producing broker or for whom insurance is exported to nonadmitted insurers under
01 AS 21.35 [AS 21.34]. 02 * Sec. 6. AS 21.27.810 is amended to read: 03 Sec. 21.27.810. Surplus lines broker records. In addition to any other 04 records requirements under this chapter, a surplus lines broker shall maintain in 05 organized form a complete record including 06 (1) the amount of insurance and perils insured; 07 (2) a complete description of property insured and the location of the 08 property; 09 (3) gross premium charged; 10 (4) a return premium paid; 11 (5) the rate of premium charged upon the several items of property; 12 (6) the effective date of the contract and the terms of the contract; 13 (7) the name and address of the insured; 14 (8) the name and address of the insurer; 15 (9) the amount of tax and other sums to be collected from the insured; 16 (10) the allocation of taxes by state under AS 21.35.260 17 [AS 21.34.180]; 18 (11) evidence of insurance issued in compliance with AS 21.35.300 19 [AS 21.34.100]; 20 (12) the identity and license number of the producing broker; 21 (13) any confirming correspondence from the insurer or the 22 representative of the insurer; and 23 (14) the application. 24 * Sec. 7. AS 21.27.860(b) is amended to read: 25 (b) A nonresident independent adjuster may be sued upon a cause of action 26 arising in this state arising from an adjustment under this section under the procedure 27 provided in AS 21.35 [AS 21.33]. 28 * Sec. 8. AS 21 is amended by adding a new chapter to read: 29 Chapter 35. Nonadmitted Insurers; Surplus Lines; 30 Surplus Wet Marine and Transportation. 31 Article 1. Nonadmitted Insurers.
01 Sec. 21.35.010. Purpose. (a) The legislature declares there is a significant 02 public interest in insurance transactions with nonadmitted insurers and these insurance 03 transactions require regulation, taxation, supervision, and control as provided in this 04 chapter in order to 05 (1) protect persons seeking insurance in this state; 06 (2) protect the insureds and claimants of this state in transactions 07 involving the purchase of insurance from nonadmitted insurers; 08 (3) avoid the obstacle of resorting to distant forums for the purpose of 09 asserting legal rights under policies issued by nonadmitted insurers; 10 (4) permit surplus lines insurance and surplus wet marine and 11 transportation insurance to be placed with reputable and financially sound nonadmitted 12 insurers, and to be exported from this state under this chapter; 13 (5) establish a system of regulations that 14 (A) permits orderly access to surplus lines insurance and surplus 15 wet marine and transportation insurance in this state; 16 (B) encourages admitted insurers to provide new and innovative 17 types of insurance to consumers in this state; 18 (C) protects regulated, admitted insurers from unregulated and 19 unfair competition by nonadmitted insurers; and 20 (D) maintains reliable insurance markets; 21 (6) provide a system through which persons may purchase insurance 22 from nonadmitted insurers under this chapter; 23 (7) protect the revenue of this state; 24 (8) provide a system that subjects nonadmitted insurance activities in 25 this state to the jurisdiction of the director and state or federal courts in suits by or on 26 behalf of the state. 27 (b) This chapter shall be liberally construed and applied to promote its 28 underlying purposes. 29 Sec. 21.35.020. Applicability to insurers. A nonadmitted insurer assuming 30 insurance in this state, or relative to property, risks, or exposures located or to be 31 performed in this state, is subject to this chapter.
01 Sec. 21.35.030. Placement of insurance. (a) A nonadmitted insurer may not 02 transact insurance unless authorized by a license issued under this title or exempted 03 from licensure by a provision of this title. 04 (b) A person may not directly or indirectly, act as agent for, or otherwise 05 represent or aid on behalf of another, any nonadmitted insurer in the solicitation, 06 negotiation, procurement, effectuation, or renewal of insurance, forwarding of 07 applications, delivery of policies or contracts, inspection of risks, fixing of rates, 08 investigation or adjustment of claims or losses, collection or forwarding of premiums, 09 or in any other manner represent or assist a nonadmitted insurer in the transaction of 10 insurance. 11 (c) A person who represents or aids a nonadmitted insurer in violation of this 12 section is subject to the penalties provided under AS 21.35.610. If an insurance 13 contract is entered into in violation of this section, this section does not preclude the 14 insured from enforcing the insured's rights under the contract according to the terms 15 and provisions of the contract of insurance and the laws of this state to the same 16 degree those rights would have been enforceable if the contract had been lawfully 17 procured. 18 (d) If a nonadmitted insurer fails to pay a claim or loss within the provisions 19 of the insurance contract and the laws of this state, a person who assisted or in any 20 manner aided directly or indirectly in the procurement of the insurance contract is 21 liable to the insured for the full amount of the claim or loss under the provisions of 22 the insurance contract. 23 (e) Subsections (b) and (d) of this section do not apply to a person in regard 24 to an insured who independently procures insurance as provided under AS 21.35.050. 25 (f) This section does not apply to a person properly licensed as an insurance 26 producer under AS 21.27 who, for a fee and under a written agreement, is engaged 27 solely to offer to the insured advice, counsel, opinion, or service with respect to the 28 benefits, advantages, or disadvantages promised under a proposed or in-force policy 29 of insurance if the person does not, directly or indirectly, participate in the solicitation, 30 negotiation, or procurement of insurance on behalf of the insured. 31 (g) This section does not apply to
01 (1) a person acting in material compliance with the insurance laws of 02 this state, including a licensee under AS 21.27, in the placement of surplus lines 03 insurance under AS 21.35.200 - 21.35.350, or surplus wet marine and transportation 04 insurance under AS 21.35.400 - 21.35.520; in this paragraph, "material compliance" 05 means compliance with AS 21.35.170 and 21.35.180 if the person is a surplus lines 06 broker transacting surplus lines insurance, and compliance with AS 21.35.320 and 07 21.35.330 if the person is an insurance producer or surplus lines broker transacting 08 surplus wet marine and transportation insurance; 09 (2) a transaction for which a certificate of authority to do business is 10 not required of an insurer under the insurance laws of this state; 11 (3) insurance offered by a nonprofit educational insurer to a nonprofit 12 educational institution and employees of the institution if the prior written approval of 13 the director is obtained and no other insurance is offered; 14 (4) reinsurance if the assuming insurer 15 (A) is authorized by its domiciliary jurisdiction to do insurance 16 or reinsurance business and is authorized to write the type of reinsurance in its 17 domiciliary jurisdiction; and 18 (B) satisfies all legal requirements for the reinsurance in the 19 state of domicile of the ceding insurer; 20 (5) insurance on the property and operation of railroads or aircraft 21 engaged in interstate or foreign commerce; 22 (6) ocean marine insurance; or 23 (7) a person acting in material compliance with the insurance laws of 24 this state in regard to transactions subsequent to issuance of a policy not covering 25 properties, risks, or exposures located or to be performed in this state at the time of 26 issuance, and lawfully solicited, written, or delivered outside this state. 27 Sec. 21.35.040. Nonadmitted insurance premium tax. (a) Except as to 28 premiums on lawfully procured surplus lines insurance exported under AS 21.35.200 - 29 21.35.350, surplus wet marine and transportation insurance exported under 30 AS 21.35.400 - 21.35.520, and premiums on independently procured insurance on 31 which a tax has been paid under this section, every nonadmitted insurer shall pay to
01 the director on or before March 1 following the calendar year in which the insurance 02 was procured, continued, or renewed a premium receipts tax of three percent of gross 03 premiums charged for the insurance on subjects resident, located, or to be performed 04 in this state. The insurance on subjects resident, located, or to be performed in this 05 state procured through negotiations or an application, in whole or in part occurring or 06 made in or from inside or outside of this state, or for which premiums in whole or in 07 part are remitted directly or indirectly from inside or outside of this state, shall be 08 considered to be insurance procured, continued, or renewed in this state. The tax is 09 in lieu of all taxes and fire department dues. On default of a nonadmitted insurer in 10 the payment of the tax, the insured shall pay the tax within 30 days of written notice 11 from the director of the default by the nonadmitted insurer. If the tax prescribed by 12 this section is not paid by the nonadmitted insurer within the time stated or by the 13 insured within the time stated after the director provides notice of default, the tax may 14 by increased by 15 (1) a late payment fee of $1,000 or 10 percent of the tax due, 16 whichever is greater; 17 (2) interest at the rate of one percent a month or part of a month from 18 the date the payment was originally due to the date paid; and 19 (3) a penalty not to exceed $100 a day or 25 percent of the tax due, 20 whichever is greater, from the date the payment was due to the date paid. 21 (b) In determining the amount of premiums taxable in this state, all premiums 22 written, procured, or received in this state shall be considered written on property or 23 a subject located or resident in this state, except premiums that are properly allocated 24 or apportioned and reported as taxable premiums of another state. In determining the 25 amount of gross premiums taxable in this state covering a subject resident, located, or 26 to be performed both inside and outside the state, the tax due shall be computed on 27 that portion of the policy premium that is attributable to the subject resident, located, 28 or to be performed in this state and that relates to the type of insurance being placed 29 as determined by reference to the allocation schedule set out in AS 21.35.260(f). 30 (c) A person licensed under AS 21.27 who maintains a fiduciary account under 31 AS 21.27.360 or a deposit or surety bond under AS 21.27.365 may collect and transmit
01 to the director on behalf of the nonadmitted insurer or the insured the premium receipts 02 tax due and owing under this section. 03 (d) This section does not apply to insurance of risks of the state, a political 04 subdivision of the state, a nonprofit educational insurer insuring only nonprofit 05 educational institutions and their employees as permitted under AS 21.35.030(g), 06 railroads or aircraft regularly engaged in interstate or foreign commerce, life insurance, 07 health insurance, or annuity contracts. 08 Sec. 21.35.050. Premium tax on independently procured insurance. (a) 09 Except for lawfully procured surplus lines insurance exported under AS 21.35.200 - 10 21.35.350 or surplus wet marine and transportation insurance exported under 11 AS 21.35.400 - 21.35.520, an insured in this state who procures, causes to be procured, 12 continues, or renews insurance with a nonadmitted insurer, or an insured or self- 13 insured who procures or continues excess loss, catastrophe, or other insurance, on properties, 14 risks, or exposures located or to be performed in whole or in part in this state shall, within 15 30 days after the date the insurance was procured, continued, or renewed, file a written report 16 with the director in a form prescribed by the director. The report must show the name and 17 address of the insured, name and address of the insurer, the subject of the insurance, a general 18 description of the coverage, the amount of premium currently charged, and additional 19 information required by the director. 20 (b) For the purposes of this section, properties, risks, or exposures only 21 partially located or to be performed in this state that are covered under a multi-state 22 policy placed by a surplus lines licensee in another state shall be considered to be 23 insurance independently procured unless the insurer is an admitted insurer. 24 (c) Insurance in a nonadmitted insurer of a subject of insurance resident, 25 located, or to be performed in this state procured through negotiation or an application, 26 in whole or in part occurring or made in or from inside or outside of this state, or for 27 which premiums in whole or in part are remitted directly or indirectly from inside or 28 outside of this state, is considered to be insurance procured, continued, or renewed in 29 this state within the intent of (a) of this section. 30 (d) There is levied upon the obligation or right represented by the premium 31 charged for the insurance a premium receipts tax of three percent of gross premiums
01 charged for the insurance. The tax is in lieu of all taxes and fire department dues. 02 The insured shall, on or before March 1 following the calendar year in which the 03 insurance was procured, continued, or renewed, pay the amount of the tax to the 04 director. In event of cancellation and rewriting of the insurance contract, the additional 05 premium for premium receipts tax purposes is the premium in excess of the unearned 06 premium of the cancelled insurance contract. If the tax prescribed by this section is 07 not paid within the time stated, the tax may be increased by 08 (1) a late payment fee of $1,000 or 10 percent of the tax due, 09 whichever is greater; 10 (2) interest at the rate of one percent a month or part of a month from 11 the date the payment was due to the date paid; and 12 (3) a penalty not to exceed $100 a day or 25 percent of the tax due, 13 whichever is greater, from the date the payment was due to the date paid. 14 (e) In determining the amount of premiums taxable in this state, all premiums 15 written, procured, or received in this state shall be considered written on property or 16 a subject located or resident in this state, except premiums that are properly allocated 17 or apportioned and reported as taxable premiums of another state. In determining the 18 amount of gross premiums taxable in this state, the tax due shall be computed on that 19 portion of the policy premium that is attributable to a subject resident, located, or to 20 be performed in this state and that relates to the type of insurance being placed as 21 determined by reference to the allocation schedule set out in AS 21.35.260(f). 22 (f) The attorney general, upon request of the director, shall proceed in the 23 courts of this or another state or in a federal court or agency to recover the tax not 24 paid within the time prescribed in this section. 25 (g) This section does not apply to insurance of risks of the state, a political 26 subdivision of the state, a nonprofit educational insurer insuring only nonprofit 27 educational institutions and their employees as permitted under AS 21.35.030(g), 28 railroads or aircraft regularly engaged in interstate or foreign commerce, life insurance, 29 health insurance, or annuity contracts. 30 Sec. 21.35.060. Investigation and disclosure of insurance contracts; penalty. 31 (a) When the director has reason to believe that insurance has been procured by or for
01 a person in this state with a nonadmitted insurer, the director may in writing order the 02 person to produce for examination all insurance contracts and other documents 03 evidencing the insurance and to disclose to the director the amount of insurance, name 04 and address of each insurer, gross amount of premium paid or to be paid, the name 05 and address of the person assisting or aiding in the solicitation, negotiation, or 06 procurement of the insurance, and other information required by the director. 07 (b) If a person fails to comply with the director's order under (a) of this 08 section, on application of the director, the superior court may issue an order requiring 09 the production of the records and information sought by the director. 10 (c) For each refusal to obey an order issued under (a) of this section, in 11 addition to any other penalty provided by law, the person is subject to a civil penalty 12 of not more than $25,000 following a hearing under AS 21.06.170 - 21.06.240. 13 Sec. 21.35.070. Service of civil process on director. (a) The transaction of 14 insurance by an unauthorized person or nonadmitted insurer is equivalent to and 15 constitutes an irrevocable appointment by that person or insurer, binding upon the 16 person or insurer, the executor, administrator, or personal representative of the person 17 or insurer, or its successor in interest if a corporation, of the director to be the lawful 18 attorney of that person or insurer upon whom may be served all legal process in an 19 action, suit, or proceeding in a court arising out of a transaction of insurance in this 20 state or relative to a subject resident, located, or to be performed in this state by that 21 person or nonadmitted insurer, except in an action, suit, or proceeding by the director 22 or by the state. The transaction of insurance by an unauthorized person or 23 nonadmitted insurer is acceptance by that person or insurer that legal process served 24 upon the director has the same legal force and validity as personal service of process 25 in this state upon the person or insurer, or upon the executor, administrator, or personal 26 representative of the person or insurer, or its successor in interest if a corporation. 27 (b) Service of process shall be made by leaving two copies in the office of the 28 director and paying to the director, for the use of the state, a fee established under 29 AS 21.06.250. A certificate by the director showing the service is sufficient evidence 30 of service of process. The certificate shall be attached to the original or third copy of 31 the process presented to the director. Service upon the director as attorney shall be
01 considered service upon the principal. 02 (c) The director shall immediately mail one copy of the process to the 03 defendant at the last known principal place of business and shall keep a record of all 04 process served upon the director, including the day and hour of service. Service of 05 process allowed under this subsection is sufficient, provided notice of the service and 06 a copy of the process are also sent within 10 days by registered mail by the plaintiff 07 or the attorney of the plaintiff to the defendant at the last known principal place of 08 business of the defendant. The defendant's receipt, or receipt issued by the post office 09 with which the letter is registered, showing the name of the sender of the letter and the 10 name and address of the person or insurer to whom the letter is addressed, and the 11 affidavit of the plaintiff or the attorney of the plaintiff showing compliance with this 12 subsection, must be filed with the clerk of the court in which the action is pending on 13 or before the date the defendant is required to appear, or within additional time that 14 the court may allow. 15 (d) Service of process in an action, suit, or proceeding described in (a) of this 16 section, in addition to the service provided in (b) and (c) of this section, is valid if 17 served upon a person in this state who on behalf of an unauthorized person or 18 nonadmitted insurer is doing any insurance transaction and if a copy of the process is 19 sent within 10 days by registered mail by the plaintiff or the attorney of the plaintiff 20 to the defendant at the last known principal place of business of the defendant. The 21 defendant's receipt, or receipt issued by the post office with which the letter is 22 registered, showing the name of the sender of the letter and the name and address of 23 the person or insurer to whom the letter is addressed, and the affidavit of the plaintiff 24 or the attorney of the plaintiff showing compliance with this subsection, must be filed 25 with the clerk of the court in which the action is pending on or before the date the 26 defendant is required to appear, or within additional time that the court may allow. 27 (e) A plaintiff or complainant is not entitled to a judgment by default in an 28 action, suit, or proceeding in which the process is served under this section unless the 29 default judgment complies with the Alaska Rules of Civil Procedure. 30 (f) This section does not limit or abridge the right to serve a process, notice, 31 or demand upon a person or insurer in any other manner permitted by law.
01 Sec. 21.35.080. Appointment of attorney; service of process on lieutenant 02 governor. (a) The transaction of insurance by an unauthorized person or nonadmitted 03 insurer constitutes an irrevocable appointment of the lieutenant governor to be the 04 lawful attorney of that person or insurer and is binding on the person or insurer; the 05 executor, administrator, or personal representative of the person or insurer; or the 06 successor in interest if the person or insurer is a corporation. The lieutenant governor 07 may be served all legal process in any action or proceeding in any court by the 08 director or by the state and may be served any notice, order, pleading, or process in 09 a proceeding before the director that arises out of the transaction of insurance in this 10 state or relative to a subject resident, located, or to be performed in this state by that 11 person or insurer. The transaction of insurance by an unauthorized person or 12 nonadmitted insurer is acceptance by that person or insurer that legal process in the 13 court action, suit, or proceeding and any notice, order, pleading, or process served in 14 an administrative proceeding before the director has the same legal force and validity 15 as personal service of process in this state upon the person or insurer, or upon the 16 executor, administrator, or personal representative of that person or insurer. 17 (b) The service of process in the action, suit, or proceeding in any court or the 18 notice, order, pleading, or process in the administrative proceeding authorized by (a) 19 of this section shall be made by leaving an original and two copies in the office of the 20 lieutenant governor. A certificate by the lieutenant governor showing the service is 21 sufficient evidence of service. The certificate shall be attached to the original or third 22 copy of the process presented to the lieutenant governor. Service upon the lieutenant 23 governor as attorney shall be considered service upon the principal. 24 (c) The lieutenant governor shall immediately mail one copy of the process to 25 the defendant at the last known principal place of business of the defendant and shall 26 keep a record of all process served, including the day and hour of service. The service 27 is sufficient, provided notice of the service and a copy of the court process or the 28 notice, order, pleading, or process in the administrative proceeding are sent within 10 29 days after service by registered mail by the plaintiff or the attorney of the plaintiff in 30 the court proceeding or by the director in the administrative proceeding to the 31 defendant in the court proceeding or by whom the notice, order, pleading, or process
01 in the administrative proceeding is addressed or directed at the last known principal 02 place of business of the defendant. The defendant's receipt, or receipt issued by the 03 post office with which the letter is registered, showing the name of the sender of the 04 letter and the name and address of the person or insurer to whom the letter is 05 addressed, and the affidavit of the plaintiff or the attorney of the plaintiff in a court 06 proceeding or of the director in an administrative proceeding, showing compliance 07 must be filed with the clerk of the court in which the action, suit, or proceeding is 08 pending, or with the director in administrative proceedings, on or before the date the 09 defendant in the court or administrative proceedings is required to appear or respond, 10 or within additional time that the court or director may allow. 11 (d) A plaintiff or complainant may not obtain a judgment by default in a court 12 or administrative proceeding in which court process or notice, order, pleading, or 13 process in proceedings before the director is served under this section unless the 14 default judgment complies with the Alaska Rules of Civil Procedure. 15 (e) This section does not limit or abridge the right to serve a process, notice, 16 order, pleading, or demand upon a person or insurer in any other manner permitted by 17 law. 18 (f) The attorney general, upon request of the director, shall proceed in the 19 courts of this or another state or in a federal court or agency to enforce an order or 20 decision in a court proceeding or in an administrative proceeding before the director. 21 Sec. 21.35.090. Validity of noncomplying policy provisions. (a) 22 Notwithstanding conditions or stipulations in the policy or contract, a nonadmitted 23 insurer may be sued upon any cause of action arising in this state or relative to 24 property, risks, or exposures located or to be performed in this state under any 25 insurance contract made by the nonadmitted insurer. 26 (b) Notwithstanding conditions or stipulations in the policy or contract, a 27 nonadmitted insurer subject under a policy or contract made by it to arbitration or 28 another alternative dispute resolution mechanism on a matter arising in this state or 29 relative to property, risks, or exposures located or to be performed in this state shall 30 conduct the arbitration or other alternative dispute resolution mechanism in this state. 31 (c) A policy or contract issued or delivered by a nonadmitted insurer or
01 otherwise valid that contains a condition or provision not in compliance with the 02 requirements of this chapter is not rendered invalid by the noncompliance, but shall 03 be construed and applied in the manner that the conditions and provisions would have 04 been applied had the policy or contract been in full compliance with this chapter. 05 Sec. 21.35.100. Defendant's duties and rights. (a) Before an unauthorized 06 person or nonadmitted insurer files a pleading in court or a notice, order, pleading, or 07 process in an administrative proceeding before the director, the person or insurer shall 08 either 09 (1) deposit with the clerk of the court in which the action is pending, 10 or with the director in administrative proceedings before the director, cash or securities 11 or bond with an admitted insurer to be approved by the court, or the director, in an 12 amount to be fixed by the court or the director sufficient to secure the payment of a 13 final judgment that may be rendered in the court proceeding or in the administrative 14 proceeding before the director; however, the court, or the director in administrative 15 proceedings before the director, may in its or the director's discretion issue an order 16 waiving the deposit or bond if the insurer makes a showing satisfactory to the court 17 or the director that it maintains in a state of the United States funds or securities, in 18 trust or otherwise, sufficient and available to satisfy a final judgment that may be 19 entered in the court action, suit, or proceeding or in an administrative proceeding 20 before the director; or 21 (2) obtain admission to transact insurance in this state through a 22 certificate of authority issued under this title; in considering the application of an 23 insurer for a certificate of authority, for the purposes of this paragraph, the director is 24 not required to enforce the provisions of AS 21.09.270 against the insurer with respect 25 to its application if the director determines that the company would otherwise comply 26 with the requirements for a certificate of authority. 27 (b) The court in an action, suit, or proceeding in which service of process is 28 made as provided in AS 21.35.070 or 21.35.080, or the director, in the director's 29 discretion, in an administrative proceeding before the director in which service is made 30 as provided in AS 21.35.080, may order postponement that may be necessary to afford 31 the defendant reasonable opportunity to comply with (a) of this section and to offer
01 a defense in the court action or administrative proceeding. 02 (c) Nothing in (a) of this section may be construed to prevent an unauthorized 03 person or nonadmitted insurer from filing a motion to quash a writ or to set aside 04 service made as provided in AS 21.35.070 or 21.35.080 on the ground that the 05 unauthorized person or insurer has not transacted insurance in this state or relative to 06 a subject resident, located, or to be performed in this state or that the person on whom 07 service was made under AS 21.35.070(d) was not transacting insurance in this state, 08 or relative to a subject resident, located, or to be performed in this state. 09 Sec. 21.35.110. Attorney fees. In an action against an unauthorized person 10 or nonadmitted insurer upon an insurance contract issued or delivered in this state to 11 a resident or to a corporation authorized to do business in this state, if the person or 12 insurer has failed for 30 days after demand and before the commencement of the 13 action to make payment required by the terms of the contract, and it appears to the 14 court that the refusal was without reasonable cause, the court may allow to the plaintiff 15 a reasonable attorney fee and may include the fee in the judgment that may be 16 rendered in the action. Failure of the person or insurer to defend the action shall be 17 considered prima facie evidence that its failure to make payment was without 18 reasonable cause. 19 Sec. 21.35.120. Enforcement. (a) The director may proceed in the 20 appropriate court to enforce an order or decision made by the director. 21 (b) A copy of any foreign decree authenticated as required by law in this state 22 may be filed in the appropriate court of this state. The clerk, upon verifying with the 23 director that the decree or order qualifies as a foreign decree, shall treat the foreign 24 decree in the same manner as a decree issued by a court of this state. A foreign 25 decree filed under this subsection has the same effect and shall be considered a decree 26 of a court of this state, and is subject to the same procedures, defenses, and 27 proceedings for reopening, vacating, or staying as a decree of a court of this state and 28 may be enforced or satisfied as required by law and court rules. 29 (c) At the time of the filing of the foreign decree, the plaintiff shall file with 30 the clerk of the court an affidavit setting out the name and last known mailing address 31 of the defendant.
01 (d) Promptly upon the filing of a foreign decree and the affidavit required 02 under (c) of this section, the clerk shall mail notice of the filing of the foreign decree 03 to the defendant and to the director and shall make a note of the mailing in the docket. 04 In addition, the plaintiff may mail a notice of the filing of the foreign decree to the 05 defendant and to the director of this state and may file proof of mailing with the clerk. 06 Lack of mailing notice of filing by the clerk does not affect the enforcement 07 proceedings if proof of mailing by the plaintiff has been filed with the court. 08 (e) Execution or other process for enforcement of a foreign decree may not be 09 filed until 30 days after the date the decree is filed with the court. 10 (f) If the defendant shows the court that an appeal from the foreign decree is 11 pending or will be taken or that a stay of execution has been granted, the court shall 12 stay enforcement of the foreign decree until the appeal is concluded, the time for 13 appeal expires, or the stay of execution expires or is vacated, upon proof that the 14 defendant has furnished the security for the satisfaction of the decree required by the 15 state in which it was rendered. 16 (g) If the defendant shows the court any ground upon which enforcement of 17 a decree of any court of this state would be stayed, the court shall stay enforcement 18 of the foreign decree for an appropriate period upon requiring the same security for 19 satisfaction of the decree that is required in this state. 20 (h) The director shall cooperate with regulatory officials in other United States 21 jurisdictions to the greatest degree reasonably practicable in enforcing lawfully issued 22 orders of other officials provided the order does not violate the laws of this state. 23 Sec. 21.35.130. Actions by nonadmitted insurers. A nonadmitted insurer 24 may not commence or maintain an action, including arbitration or any other dispute 25 resolution mechanism, in this state to enforce any right arising out of an insurance 26 transaction, except with respect to 27 (1) claims under policies lawfully written in this state; 28 (2) liquidation of assets and liabilities of the insurer, other than 29 collection of new premiums, resulting from its former authorized operations in this 30 state; 31 (3) transactions subsequent to issuance of a policy not covering
01 domestic risks at the time of issuance, and lawfully procured under the laws of the 02 jurisdiction where the transaction took place; 03 (4) surplus lines insurance exported under AS 21.35.200 - 21.35.350 04 or surplus wet marine and transportation insurance exported under AS 21.35.400 - 05 21.35.520; 06 (5) reinsurance placed by reinsurance intermediaries under the authority 07 of AS 21.27 by reinsurance intermediaries or placed as authorized by other provisions 08 of this title; 09 (6) the continuation and servicing of life insurance, health insurance 10 policies, or annuity contracts remaining in force as to residents of this state where the 11 formerly authorized insurer has withdrawn from the state and is not transacting new 12 insurance; 13 (7) servicing of policies written by an admitted insurer in a state to 14 which the insured has moved but in which the company does not have a certificate of 15 authority until the term of the policy expires; 16 (8) claims under policies covering ocean marine insurance; 17 (9) placements of insurance that were lawful in the jurisdiction in 18 which the transaction took place and that were not unlawful placements under the laws 19 of this state. 20 Article 2. Surplus Lines Insurance. 21 Sec. 21.35.200. Placement of surplus lines insurance. (a) Except as 22 provided in (b) of this section, insurance other than reinsurance, wet marine and 23 transportation insurance, insurance independently procured, life insurance, health 24 insurance, and annuity contracts may be procured from nonadmitted insurers through 25 a surplus lines broker licensed under AS 21.27 if 26 (1) each insurer is an eligible surplus lines insurer; 27 (2) each insurer is authorized to write the type of insurance in its 28 domiciliary jurisdiction; 29 (3) the full amount or type of insurance cannot be obtained from 30 insurers who are admitted to do business in this state; 31 (4) the producing broker has conducted and documented a diligent
01 search among insurers who are admitted to transact business in this state and are 02 actually writing the particular kind or class of insurance required by the client in this 03 state; 04 (5) the director authorizes an exception to (3) of this subsection by 05 regulation or by written authorization for an individual placement upon written request 06 by the broker; and 07 (6) all other requirements of this chapter are met. 08 (b) Liability insurance may be procured through a surplus lines broker licensed 09 in this state from a risk retention group that does not hold a certificate of authority 10 from this state only if the risk retention group is currently and validly registered with 11 the division. 12 Sec. 21.35.210. Subscription policies or joint underwriting in combination 13 with admitted insurers. Subscription policies or joint underwriting of insurance other 14 than reinsurance, wet marine and transportation insurance, insurance independently 15 procured, life insurance, health insurance, and annuity contracts by a combination of 16 authorized insurers and nonadmitted insurers is a surplus lines insurance placement in 17 its entirety, is subject to this chapter, is not subject to AS 21.39 or AS 21.42.120 - 18 21.42.130, and losses or claims are not covered by AS 21.80 (Alaska Insurance 19 Guaranty Association Act). 20 Sec. 21.35.220. Workers' compensation insurance. (a) Workers' 21 compensation insurance may be placed in and written by a nonadmitted insurer if 22 (1) the director considers it in the best interest of the public and issues 23 a written order to that effect; 24 (2) the insurance is written as required by this chapter; and 25 (3) all conditions established for writing workers' compensation 26 insurance in a nonadmitted market are met. 27 (b) The rates and rating plans for workers' compensation insurance are subject 28 to AS 21.39. The surplus lines broker is responsible for making the filings required 29 under AS 21.39 and for maintaining the records required under that chapter. 30 (c) Insurance placed with or written by a nonadmitted insurer and the activities 31 of the surplus lines broker relating to that transaction are subject to the applicable
01 provisions of this title. 02 (d) The minimum capital and surplus required of a nonadmitted insurer who 03 places or writes workers' compensation insurance is two times that required under 04 AS 21.35.240(a)(1). 05 Sec. 21.35.230. Restrictions on surplus lines brokers. A surplus lines broker 06 may not place coverage with a nonadmitted insurer, unless the surplus lines broker is 07 licensed under AS 21.27 and, at the time of placement, the surplus lines broker has 08 determined that the nonadmitted insurer 09 (1) has established satisfactory evidence of good repute and financial 10 integrity; 11 (2) has provided to the director a copy of its current annual statement 12 certified by the insurer and an actuarial opinion as to the adequacy of, and 13 methodology used to determine, the insurer's loss reserves; the statement shall be 14 provided at the same time it is provided to the regulatory authority of the insurer's 15 domicile, but in no event more than eight months after the close of the period reported 16 on, and shall be certified as a true and correct copy by an accounting or auditing firm 17 licensed in the jurisdiction of the insurer's domicile and certified by a senior officer 18 of the nonadmitted insurer as a true and correct copy of the statement filed with the 19 regulatory authority in the domicile of the nonadmitted insurer; in the case of an 20 insurance exchange qualifying under AS 21.35.240(a)(2), the statement may be an 21 aggregate combined statement of all underwriting syndicates operating during the 22 period reported; and 23 (3) qualifies under AS 21.35.240(a). 24 Sec. 21.35.240. Surplus lines insurer capital and surplus requirements. (a) 25 A nonadmitted insurer may be eligible to provide surplus lines coverage in this state 26 if it qualifies under one of the following: 27 (1) a foreign but nonalien insurer, reciprocal insurer, or mutual 28 protection and indemnity association may qualify under this subsection if it has the 29 minimum unimpaired basic surplus and additional surplus equal to that required in its 30 domiciliary jurisdiction or in the amount of $15,000,000, whichever is greater; 31 (2) an individual syndicate of an insurance exchange created by the
01 laws of a state other than this state may qualify under this subsection if 02 (A) the syndicates of the exchange maintain under terms 03 acceptable to the director capital and surplus, or its equivalent under the laws 04 of its domiciliary jurisdiction, of at least $75,000,000 in the aggregate; 05 (B) the exchange must maintain under terms acceptable to the 06 director at least 50 percent of the policyholder surplus of each syndicate in a 07 custodial account accessible to the exchange or its domiciliary regulator in the 08 event of insolvency or impairment of the individual syndicate; and 09 (C) in addition, each individual syndicate to be eligible to 10 accept surplus lines insurance placements from this state meets either of the 11 following requirements: 12 (i) for insurance exchanges that maintain funds in an 13 amount of at least $15,000,000 for the protection of all exchange 14 policyholders, the syndicate shall maintain under terms acceptable to the 15 director minimum capital and surplus, or its equivalent under the laws 16 of the domicility jurisdiction, of at least $5,000,000; or 17 (ii) for insurance exchanges that do not maintain funds 18 in an amount of at least $15,000,000 for the protection of all exchange 19 policyholders, the syndicate shall maintain under terms acceptable to the 20 director minimum capital and surplus, or its equivalent under the laws 21 of its domiciliary jurisdiction, of at least the minimum capital and 22 surplus requirements under the laws of its domiciliary jurisdiction or 23 $15,000,000, whichever is greater; 24 (3) in the case of a Lloyd's plan or other similar group of insurers that 25 consists of unincorporated individual insurers or a combination of both unincorporated 26 and incorporated insurers 27 (A) the sponsoring syndicate maintains a trust fund consisting 28 of a trusteed account representing at least 100 percent of the sponsoring 29 syndicate's gross liabilities attributable to surplus lines business written in the 30 United States; compliance with this subparagraph must be determined annually 31 on the basis of accounting practices and procedures substantially equivalent to
01 those enacted by this state, as of December 31 next preceding the date of 02 determination; 03 (B) the group of insurers maintains in trust a surplus in the 04 amount of at least $100,000,000 that must be available for the benefit of United 05 States surplus lines policyholders of any member of the group; 06 (C) the incorporated members of the group are not engaged in 07 a business other than underwriting as a member of the group and are subject 08 to the same level of solvency regulation and control by the group's domiciliary 09 regulator as are the unincorporated members; and 10 (D) the trust funds required under this paragraph are maintained 11 in an irrevocable trust account in the United States in a qualified financial 12 institution, consisting of cash, securities, letters of credit, or investments of 13 substantially the same character and quality as those that are eligible 14 investments for the capital and statutory reserves of admitted insurers to write 15 like kinds of insurance in this state and, in addition, the trust required under 16 this paragraph satisfies the requirements of the standard trust agreement 17 required for listing with the National Association of Insurance Commissioners 18 International Insurers Department; 19 (4) in the case of a group of incorporated insurers under common 20 administration that has continuously transacted an insurance business outside the 21 United States for at least three years immediately before January 1, 1997, and that 22 submits to this state's authority to examine its books and records and bears the expense 23 of the examination, 24 (A) the group must maintain an aggregate policyholders' surplus 25 of $10,000,000,000; 26 (B) the group must maintain in trust a surplus in the amount of 27 $100,000,000; the surplus shall be available for the benefit of United States 28 surplus lines policyholders of any member of the group; 29 (C) each insurer must individually maintain capital and surplus 30 of at least $25,000,000 per company; 31 (D) the trust funds required by this paragraph shall be
01 maintained in an irrevocable trust account in the United States in a qualified 02 financial institution, consisting of cash, securities, letters of credit, or 03 investments of substantially the same character and quality as those that are 04 eligible investments for the capital and statutory reserves of admitted insurers 05 to write like kinds of insurance in this state and, in addition, the trust required 06 under this paragraph shall satisfy the requirements of the standard trust 07 agreement required for listing with the National Association of Insurance 08 Commissioners International Insurers Department; 09 (E) additionally, each member of the group shall make available 10 to the director an annual certification of the member's solvency by the 11 member's domiciliary regulator and its independent public accountant; or 12 (5) except for an exchange or plan complying with (3) or (4) of this 13 subsection, an alien insurer 14 (A) must satisfy the capital and surplus requirements of (2) of 15 this subsection; 16 (B) must have in force a trust fund of not less than the greater 17 of $5,400,000 or 30 percent of its United States surplus lines gross liabilities, 18 subject, at the discretion of the director, to a cap of $60,000,000; in order to 19 comply with this subparagraph, the insurer 20 (i) shall determine its United States surplus lines gross 21 liabilities annually on the basis of accounting practices and procedures 22 substantially equivalent to those enacted by this state, as of 23 December 31 next preceding the date of determination; 24 (ii) shall maintain surplus lines gross liabilities in an 25 irrevocable trust account in the United States and in a qualified 26 financial institution, on behalf of United States policyholders consisting 27 of cash, securities, letters of credit, or investments of substantially the 28 same character and quality as those that are eligible investments under 29 AS 21.21 for the capital and statutory reserves of admitted insurers to 30 write like kinds of insurance in this state; the trust account, which shall 31 be included in any calculation of capital and surplus or its equivalent,
01 shall satisfy the requirements of the standard trust agreement required 02 for listing with the National Association of Insurance Commissioners 03 International Insurers Department; 04 (iii) shall be given credit in the calculation of the trust 05 fund amount required by this paragraph for trust fund amounts in excess 06 of $5,400,000 for surplus lines deposits separately required and 07 maintained for a particular state or United States territory, not to exceed 08 the amount of the insurer's loss and loss adjustment reserves in the 09 particular state or territory; 10 (iv) may request approval from the director to use the 11 trust fund to pay valid surplus lines claims, provided that the balance 12 of the trust fund is never less than $5,400,000 or 30 percent of the 13 insurer's current gross United States surplus lines liabilities, whichever 14 is greater. 15 (b) Except as provided in (c) of this section, and in addition to all of the other 16 requirements of this section, to be eligible, an alien nonadmitted insurer must be listed 17 by the National Association of Insurance Commissioners International Insurers 18 Department. 19 (c) The trust requirement for an alien insurer under (a)(5)(B) of this section 20 may be satisfied by an insurer's possessing less than the trust fund amount specified 21 upon a written affirmative finding of acceptability by the director if the director is 22 satisfied that the placement of insurance with the insurer is necessary and will not be 23 detrimental to the public and the policyholder. In determining whether business may 24 be placed with the insurer, the director shall consider the following factors: 25 (1) the interests of the public and policyholders; 26 (2) the length of time the insurer has been authorized in its domiciliary 27 jurisdiction and elsewhere; 28 (3) unavailability of particular coverages from authorized insurers or 29 unauthorized insurers meeting the requirements of this section; 30 (4) the size of the company as measured by its assets, capital and 31 surplus, reserves, premium writings, insurance in force, or other appropriate criteria;
01 (5) the kinds of business the company writes, its net exposure, and the 02 extent to which the company's business is diversified among several lines of insurance 03 and geographic locations; and 04 (6) the past and projected trend in the size of the company's capital and 05 surplus considering such factors as premium growth, operating history, loss and 06 expense ratios, or other appropriate criteria. 07 (d) Except as provided in (e) of this section, and in addition to meeting all 08 other requirements of this section, an insurer is an eligible surplus lines insurer if it 09 appears on the most recent list of eligible surplus lines insurers published by the 10 director or by the surplus lines association when approved by the director. The list 11 shall be published at least semiannually. This section does not require the director or 12 the surplus lines association to place or maintain the name of any nonadmitted insurer 13 on the list of eligible surplus lines insurers. 14 (e) Only that portion of any risk eligible for export for which the full amount 15 of coverage is not procurable from eligible surplus lines insurers listed under (d) of 16 this section may be placed with another nonadmitted insurer that does not appear on 17 the most recent list of eligible surplus lines insurers published by the director under 18 (d) of this section if the nonadmitted insurer meets all other requirements of this 19 section and regulations adopted under this chapter. The surplus lines broker seeking 20 to provide coverage through an unlisted nonadmitted insurer shall, within 30 days, 21 notify the director in writing on a form prescribed by the director of the amount and 22 percentage of each risk to be placed and name each unlisted nonadmitted insurer with 23 which placement is intended. Within 30 days after placing the coverage, the surplus 24 lines broker shall also send written notice to the insured and the producing broker that 25 the insurance, or a portion of the insurance, has been placed with the unlisted 26 nonadmitted insurer. 27 (f) If, after a review of a nonadmitted insurer and consideration of factors 28 including quality of management, capital and surplus of a parent company, 29 underwriting profit, investment income trends, trade practices, reserving practices, 30 company record, and reputation within the industry, the director finds the insurer to 31 be unacceptable, the director may declare the nonadmitted insurer to be ineligible. The
01 director may issue an order declaring a nonadmitted insurer ineligible and shall 02 promptly mail notice of a declaration to each surplus lines broker licensed under 03 AS 21.27 if at any time the director has reason to believe that the nonadmitted insurer 04 (1) is in unsound financial condition; 05 (2) has acted in an untrustworthy manner; 06 (3) is no longer eligible under this chapter; 07 (4) has wilfully violated the laws of this state or another jurisdiction; 08 or 09 (5) does not reasonably investigate and make prompt payment of just 10 losses and claims in this state or another jurisdiction. 11 (g) In this section, "gross direct liabilities" does not include the property and 12 operation of a railroad or aircraft engaged in interstate or foreign commerce, or wet 13 marine and transportation insurance, except for that portion of the property or 14 operation of the railroad or aircraft, or wet marine and transportation insurance defined 15 as surplus lines liabilities by a particular state. 16 Sec. 21.35.250. Validity of surplus lines contracts. Insurance procured under 17 AS 21.35.200 - 21.35.350 shall be valid and enforceable as to all parties. 18 Sec. 21.35.260. Surplus lines tax. (a) Gross premiums charged, less any 19 return premium, for surplus lines insurance are subject to a premium receipts tax of 20 2.7 percent that shall be collected by the surplus lines broker in addition to the full 21 amount of the gross premium charged by the insurer for the insurance. The tax on any 22 portion of the premium unearned at termination of the insurance that is credited by the 23 state to the surplus lines broker shall be returned to the policyholder directly by the 24 surplus broker or through the producing broker, if any. If a surplus lines policy 25 procured through a surplus lines broker covers property or a subject resident, located, 26 or to be performed both inside and outside of this state, the tax payable shall be 27 computed on that portion of the gross premiums properly allocated to this state. The 28 surplus lines broker may not absorb the tax or a part of the tax and may not rebate the 29 tax or a part of the tax. 30 (b) The surplus lines tax is due and shall be paid to the director on or before 31 March 1 following the calendar year in which the premium is written. The tax shall
01 be reported on forms prescribed by the director or, upon the director's order, paid to 02 and reported on forms prescribed by the surplus lines association. 03 (c) If the tax is not paid when due, an additional late payment fee of $250 plus 04 two percent of the tax due per month, or part of a month, shall become due and 05 payable by the surplus lines broker. 06 (d) If a surplus lines policy procured through a licensed surplus lines broker 07 covers property or a subject only partially resident, located, or to be performed in this 08 state, the tax payable shall be computed on the portions of the premium that are 09 attributable to the property or subject resident, located, or to be performed in this state. 10 In determining the amount of a premium taxable in this state, all premiums written, 11 procured, or received in this state shall be considered written on property or a subject 12 located, resident, or to be performed in this state, except premiums that are properly 13 allocated or apportioned and reported as taxable premiums of a reciprocal state. The 14 tax payable to this state may not be less than the tax due under this section. 15 (e) The director or a surplus lines association shall, at least annually, furnish 16 to the insurance regulatory official of a reciprocal state a copy of all filings reporting 17 an allocation of tax as required by (d) of this section. 18 (f) In determining the amount of gross premiums taxable in this state for a 19 placement of surplus lines insurance covering property or a subject resident, located, 20 or to be performed both inside and outside this state, the tax due shall be computed 21 on that portion of the policy premium that is attributable to property or a subject 22 resident, located, or to be performed in this state and that relates to the kind of 23 insurance being placed as determined by reference to an allocation schedule as follows: 24 (1) if a policy covers more than one classification, 25 (A) for any portion of the coverage identified by a classification 26 on the allocation schedule, the tax shall be computed by using the allocation 27 schedule for the corresponding portion of the premium; 28 (B) for any portion of the coverage not identified by a 29 classification on the allocation schedule, the tax shall be computed by using an 30 alternative equitable method of allocation for the property or subject; 31 (C) for any portion of the coverage where the premium is
01 indivisible, the tax shall be computed by using the method of allocation that 02 pertains to the classification describing the predominant coverage; 03 (2) if the information provided by the surplus lines broker is 04 insufficient to substantiate the method of allocation used by the surplus lines broker 05 or if the director determines that the surplus lines broker's method is incorrect, the 06 director shall determine the equitable and appropriate amount of tax due to this state 07 as follows: 08 (A) by use of the allocation schedule where the subject is 09 appropriately identified in the schedule; 10 (B) where the allocation schedule does not identify a 11 classification appropriate to the coverage, the director may give significant 12 weight to documented evidence of the underwriting bases and other criteria 13 used by the insurer or may give consideration to other available information to 14 the extent sufficient and relevant, including the percentage of the insured's 15 physical assets in this state, the percentage of the insured's sales in this state, 16 the percentage of income or resources derived from this state, and the amount 17 of premium tax paid to another jurisdiction for the policy. 18 (g) This section does not apply to insurance of risks of the state, a political 19 subdivision of the state, or railroads or aircraft regularly engaged in interstate or 20 foreign commerce if an exemption on a form prescribed by the director is filed with 21 the report required by (b) of this section. 22 Sec. 21.35.270. Surplus lines filing fee. (a) The fee for filing the forms 23 under AS 21.35.260(b) is an amount equal to one percent on gross premiums charged 24 less any return premiums during the preceding calendar year whether the premiums are 25 subject to tax or exempt. The surplus lines broker shall pay the fee at the time of 26 filing of the statement. 27 (b) If the filing fee is not paid when due, an additional late payment fee of 28 $250 plus two percent of the fee due per month, or part of a month, shall become due 29 and payable by the surplus lines broker. 30 Sec. 21.35.280. Collection of surplus lines taxes and fees. (a) If the tax 31 collectible under AS 21.35.260 or the fee collectible under AS 21.35.270 by a surplus
01 lines broker is not paid within the time prescribed, the tax, fee, or both, and late 02 payment fees, along with appropriate penalties, may be collected by an action in court 03 against the surplus lines licensee and the surety on the bond filed under AS 21.27.790. 04 (b) In addition to penalties provided in this chapter, failure to pay tax within 05 the time prescribed is subject to penalties provided in AS 21.35.610. 06 Sec. 21.35.290. Civil actions against surplus lines insurers. (a) A person 07 may bring a civil action in this state upon a cause of action arising in this state against 08 a surplus lines insurer under a surplus lines insurance contract made by it or under 09 other evidence of insurance issued or delivered by the surplus lines licensee. A policy 10 issued by a surplus lines insurer shall contain a provision stating the substance of this 11 section and designating the person to whom the director shall mail service of process. 12 (b) The remedies provided in this section are in addition to any other methods 13 provided by law for service of process upon insurers. 14 Sec. 21.35.300. Duty to file surplus lines evidence of insurance transactions 15 and affidavits. (a) A surplus lines broker shall execute and file with the monthly 16 report required by AS 21.35.310 a written report, that shall be kept confidential, 17 regarding each surplus lines insurance transaction occurring in the preceding calendar 18 month. The report must include 19 (1) the name and address of the insured; 20 (2) the identity of each insurer including the National Association of 21 Insurance Commissioners group and company insurer number and the percentage of 22 coverage provided by each; 23 (3) a complete description of the subject and location of the risk; 24 (4) the amount of premium charged for the insurance; and 25 (5) other information required by the director. 26 (b) Instead of the report required in (a) of this section, the director may order 27 that evidence of insurance be filed with the surplus lines association and that the 28 surplus lines association provide periodic reports regarding insurance transactions to 29 the director. 30 (c) A producing broker shall execute and deliver to the surplus lines broker not 31 later than the end of each month on a form prescribed by the director, and a surplus
01 lines broker shall file with the director with the report required by (a) of this section 02 or with the surplus lines association with the evidence of insurance required by (b) of 03 this section, for surplus lines insurance first placed or renewed in the preceding 04 calendar month, an affidavit that shall be open to public inspection, as to the diligent 05 efforts to place the coverage with admitted insurers, and the results of those efforts. 06 The affidavit must contain a statement by the broker that the insured was expressly 07 informed in writing before placement of the surplus lines insurance that the surplus 08 lines insurer with whom the insurance was to be placed is not licensed in this state, 09 is not subject to this state's supervision, and, in the event of the insolvency of the 10 surplus lines insurer, losses will not be covered under AS 21.80 (Alaska Insurance 11 Guaranty Association Act). 12 (d) A report, evidence of insurance, or affidavit required by this section that 13 is filed late, incomplete, or incorrect is subject to a $50 late filing fee. 14 Sec. 21.35.310. Monthly reports; summary of exported surplus lines 15 business. (a) A surplus lines broker shall file with the director on or before the end 16 of each month, on forms prescribed by the director, a verified report in duplicate of 17 all surplus lines insurance by type of insurance as required to be reported in the annual 18 statement that must be filed with the director by admitted insurers. The report must 19 include all surplus lines insurance transactions during the preceding calendar month, 20 whether taxable or tax exempt, showing the 21 (1) aggregate gross premiums written; 22 (2) aggregate return premiums; 23 (3) amount of aggregate tax remitted to this state; and 24 (4) amount of aggregate tax remitted to each other state for which an 25 allocation is made under AS 21.35.260(f). 26 (b) Instead of the report required under (a) of this section, the director may 27 order that evidence of insurance be filed with the surplus lines association and that the 28 association file periodic reports regarding insurance transactions to the director. 29 (c) A report or evidence of insurance required by this section that is filed late, 30 incomplete, or incorrect is subject to a $50 late filing fee. 31 Sec. 21.35.320. Duty to deliver evidence of surplus lines insurance and
01 subsequent changes to insurance. (a) When surplus lines insurance is placed, the 02 surplus lines broker shall within 30 days after placing the coverage deliver to the 03 insured or the producing broker the policy, or, if the policy is not then available, a 04 certificate, cover note, binder, or other evidence of insurance. The certificate, cover 05 note, binder, or other evidence of insurance shall be executed by the surplus lines 06 broker and must contain a complete record of all policy insuring agreements, 07 conditions, exclusions, clauses, endorsements, other material facts that would regularly 08 be included in the policy, description, and location of the subject of insurance, a 09 general description of the coverages of the insurance, the premium and rate charged 10 and taxes to be collected from the insured, the name and address of the insured, and 11 the name of each surplus lines insurer and the percentage of the entire risk assumed 12 by each insurer. The policy, certificate, cover note, binder, or other evidence of 13 insurance must contain the name, address, phone number, and the license number of 14 the surplus lines broker. 15 (b) A surplus lines broker may not issue or deliver evidence of insurance or 16 purport to insure or represent that insurance will be or has been written by an eligible 17 surplus lines insurer unless the surplus lines broker has authority from the insurer to 18 insure the risk or has received information from the insurer in the regular course of 19 business that the insurance has been granted. 20 (c) If after delivery of evidence of insurance there is a change in the identity 21 of the insurers, or the percentage of the risk assumed by an insurer, or another material 22 change in coverage from that stated in the surplus lines broker's original evidence of 23 insurance, the surplus lines broker shall promptly issue and deliver to the insured or 24 the producing broker an appropriate substitute for, or endorsement of, the original 25 document accurately showing the current status of the coverage and the insurer's 26 responsibility. 27 (d) The surplus lines broker shall deliver a copy of the policy or cover note 28 issued by the insurer as soon as reasonably possible after placement of the insurance 29 coverage. A certificate or policy of insurance shall contain or have attached a 30 complete record of all policy insuring agreements, conditions, exclusions, clauses, 31 endorsements, or other material facts that would regularly be included in the policy.
01 (e) A policy, certificate, cover note, binder, or other evidence of insurance 02 negotiated, placed, or procured under the provisions of this chapter issued by a surplus 03 lines broker shall bear the name, address, phone number, and the license number of 04 the surplus lines broker, and the following statement in at least 10-point type: "This 05 is evidence of insurance procured and developed under AS 21.35 (Alaska Surplus 06 Lines Law). It is not covered by AS 21.80 (Alaska Insurance Guaranty Association 07 Act)." Information required under this subsection may not be covered, concealed, or 08 obscured by the producing broker. 09 Sec. 21.35.330. Effect of payment to surplus lines broker. A payment of 10 premium to a surplus lines broker acting for a person other than itself in negotiating, 11 continuing, or reviewing a policy of insurance under this chapter is considered to be 12 payment to the insurer, notwithstanding conditions or stipulations in the policy or 13 contract to the contrary. 14 Sec. 21.35.340. Surplus lines brokers may accept business from other 15 brokers. A surplus lines broker licensed by this state may originate surplus lines 16 insurance or accept surplus lines insurance from another surplus lines broker licensed 17 by this state or a producing broker licensed by this state as to the kind and class of 18 insurance involved. The surplus lines broker may compensate the producing broker 19 or surplus lines broker for the insurance. 20 Sec. 21.35.350. Surplus lines advisory organizations. (a) A nonprofit 21 association of surplus lines brokers may be created and known as the Alaska Surplus 22 Lines Association. The director may, by order, require that all surplus lines brokers, 23 as a condition of continued licensure under this title, join the association. The 24 association shall perform its functions under the plan or operation established under 25 (c) of this section and exercise its powers through a board of directors established 26 under (b) of this section. The association shall be supervised by the director and shall 27 (1) receive, record, and, subject to (2) of this subsection, stamp all 28 surplus lines insurance documents that surplus lines brokers are required to file with 29 the association under the plan of operation; 30 (2) refuse to stamp submitted insurance documents, if the association 31 determines that a nonadmitted insurer does not meet minimum state financial standards
01 of eligibility, the producing broker or surplus lines broker is not licensed by this state, 02 or the director orders the association not to stamp insurance documents under (j) of 03 this section; the association shall notify the director and provide an explanation for a 04 refusal to stamp submitted insurance documents other than a refusal based upon the 05 order of the director; 06 (3) in addition to other reports required by this chapter, annually on or 07 before February 1 prepare and deliver to each licensee and to the director a report 08 regarding surplus lines business; the report must include a delineation of the classes 09 of business procured during the preceding calendar year in a form that the board of 10 directors may prescribe; 11 (4) encourage compliance by its members with the surplus lines law of 12 this state and the orders, bulletins, and regulations of the director relative to surplus 13 lines insurance; 14 (5) communicate with organizations of insurance producers and 15 admitted insurers with respect to the proper use of the surplus lines market; 16 (6) attend National Association of Insurance Commissioners meetings 17 and participate in technical advisory groups; 18 (7) employ and retain persons as necessary to carry out the duties of 19 the association; 20 (8) borrow money as necessary to carry out the purposes of the 21 association; 22 (9) enter contracts as necessary to carry out the purposes of the 23 association; and 24 (10) provide other services to its members that are incidental or related 25 to the purposes of the association. 26 (b) The association shall function through a board of directors consisting of 27 seven members appointed by the director. A member of the board serves at the 28 pleasure of the director for a term of three years and may be reappointed to an 29 unlimited number of terms. In appointing directors to the board, the director shall 30 consider, among other things, whether members of the association are fairly 31 represented. No more than one board member may be from the same firm licensee or
01 other entity. Membership of the board shall include 02 (1) three principals or managers of surplus lines broker firms or 03 individual surplus lines brokers consistently writing the most surplus lines premium 04 in this state; and 05 (2) not less than four resident principals or managers of surplus lines 06 broker firms or individual surplus lines brokers. 07 (c) The association shall establish a plan of operation. The plan of operation 08 shall provide for the formation, election of officers by the board of directors, operation, 09 and governance of the association. The plan and any amendments to it shall be 10 effective upon written approval by the director. The director may not unreasonably 11 withhold or delay approval. All association members must comply with the plan of 12 operation and any amendments to it. Failure to comply with the plan of operation or 13 any amendments to it constitutes a violation of this chapter. 14 (d) The association shall file with the director 15 (1) a copy of its plan of operation and any amendments to it; 16 (2) a copy of its constitution, articles of agreement of association, 17 certificates of incorporation, bylaws, and regulations, if any; 18 (3) a current list of its members revised at least annually; 19 (4) the name and address of a resident of this state upon whom notices 20 or orders of the director or processes issued at the direction of the director may be 21 served; 22 (5) an agreement that the director may examine the association; and 23 (6) a schedule of its membership fees and assessments. 24 (e) The director shall, at least once every three years, make or cause to be 25 made an examination of the association under AS 21.06.120. 26 (f) The association, its directors, officers, agents, or employees are not civilly 27 liable for any action taken or omitted by them in the performance of their powers and 28 duties under this section, except for a civil action based on gross negligence or wilful 29 misconduct. 30 (g) Within 30 days after a surplus lines coverage is procured, a licensee shall 31 submit to the association for recording and stamping all documents that surplus lines
01 brokers are required to file with the association. Each insurance document submitted 02 to the association under this subsection shall include the 03 (1) name and address of the insured; 04 (2) gross premium charged; 05 (3) name and address of the nonadmitted insurer; 06 (4) class of insurance procured; and 07 (5) name, address, phone number, and Alaska surplus lines license 08 number of the surplus lines broker. 09 (h) It is unlawful for an insurance producer or surplus lines broker to deliver 10 in this state an insurance document that surplus lines brokers are required to file with 11 the association unless the insurance document is stamped by the association or is 12 exempt from stamping requirements; provided, however, that a licensee's failure to 13 comply with this subsection does not affect the validity of the coverage. 14 (i) The services performed by the association on behalf of the director shall 15 be funded under written contract with the director. 16 (j) The director may declare a nonadmitted insurer ineligible and order the 17 association not to stamp insurance documents issued by the nonadmitted insurer and 18 issue any other appropriate order. 19 Article 3. Surplus Wet Marine and Transportation Insurance. 20 Sec. 21.35.400. Placement of surplus wet marine and transportation 21 insurance. (a) Wet marine and transportation insurance, other than ocean marine 22 insurance, may be procured from nonadmitted insurers through an insurance producer 23 or a surplus lines broker that satisfies the requirements of (b) of this section if 24 (1) each insurer is an eligible surplus wet marine and transportation 25 insurer; 26 (2) each insurer is authorized to write the type of insurance in its 27 domiciliary jurisdiction; 28 (3) the full amount or type of insurance cannot be obtained from 29 insurers who are admitted to do business in this state; 30 (4) the insurance producer or a surplus lines broker has conducted and 31 documented a diligent search among insurers who are admitted to transact marine
01 business in this state and are actually writing the particular kind or class of insurance 02 required by the client in this state; 03 (5) the director authorizes an exception to (3) of this subsection by 04 regulation or by written authorization for an individual placement upon written request 05 by the insurance producer or a surplus lines broker; and 06 (6) all other requirements of this chapter are met. 07 (b) To qualify to place surplus wet marine and transportation insurance under 08 this section, an insurance producer or a surplus lines broker must 09 (1) be licensed under AS 21.27; 10 (2) have and maintain while transacting surplus wet marine and 11 transportation insurance a bond under AS 21.27.190 in the sum of not less than 12 $100,000 aggregate liability and with the conditions that the insurance producer or 13 surplus lines broker conduct business under the provisions of this title, promptly remit 14 the taxes and fees provided by law, return premiums promptly when due, and pay 15 proper losses promptly; a surplus lines broker may satisfy this requirement if its bond 16 under AS 21.27.790(2) also covers surplus wet marine and transportation insurance; 17 and 18 (3) if the director requires, maintain an errors and omissions insurance 19 policy acceptable to the director. 20 Sec. 21.35.410. Subscription policies or joint underwriting in combination 21 with admitted insurers. Subscription policies or joint underwriting of insurance other 22 than reinsurance, ocean marine insurance, surplus lines insurance, insurance 23 independently procured, life insurance, health insurance, and annuity contracts by a 24 combination of authorized insurers and nonadmitted insurers is a surplus wet marine 25 and transportation insurance placement in its entirety, is subject to this chapter, is not 26 subject to AS 21.39 or AS 21.42.120 - 21.42.130, and losses or claims are not covered 27 by AS 21.80 (Alaska Insurance Guaranty Association Act). 28 Sec. 21.35.420. Restrictions on surplus wet marine and transportation 29 brokers. An insurance producer or a surplus lines broker may not place surplus wet 30 marine and transportation coverage with a nonadmitted insurer, unless the insurance 31 producer or surplus lines broker is licensed under AS 21.27 and, at the time of
01 placement, the insurance producer or surplus lines broker has determined that the 02 nonadmitted insurer 03 (1) is qualified to provide coverage under AS 21.35.240; and, if an 04 alien insurer subject to AS 21.35.240, includes surplus wet marine and transportation 05 gross liabilities in this state in its United States gross direct liabilities; or 06 (2) has 07 (A) established satisfactory evidence of good repute and 08 financial integrity; 09 (B) provided to the director a copy of its current annual 10 statement certified by the insurer and an actuarial opinion as to the adequacy 11 of, and methodology used to determine, the insurer's loss reserves; the 12 statement shall be provided at the same time it is provided to the regulatory 13 authority of the insurer's domicile, but in no event more than eight months 14 after the close of the period reported on, and shall be certified as a true and 15 correct copy by an accounting or auditing firm licensed in the jurisdiction of 16 the insurer's domicile and certified by a senior officer of the nonadmitted 17 insurer as a true and correct copy of the statement filed with the regulatory 18 authority in the domicile of the nonadmitted insurer; in the case of an insurance 19 exchange qualifying under AS 21.35.430(a)(2), the statement may be an 20 aggregate combined statement of all underwriting syndicates operating during 21 the period reported; and 22 (3) qualifies under AS 21.35.430(a). 23 Sec. 21.35.430. Restrictions on surplus wet marine and transportation 24 coverage. (a) A nonadmitted insurer may be eligible to provide surplus wet marine 25 and transportation coverage in this state if it qualifies under one of the following: 26 (1) a foreign but nonalien insurer, reciprocal insurer, or mutual 27 protection and indemnity association may qualify under this subsection if it has the 28 minimum unimpaired basic surplus and additional surplus equal to that required in its 29 domiciliary jurisdiction or in the amount of $15,000,000, whichever is greater; 30 (2) an individual syndicate of an insurance exchange created by the 31 laws of a state other than this state may qualify under this subsection if
01 (A) the syndicates of the exchange maintain under terms 02 acceptable to the director capital and surplus, or its equivalent under the laws 03 of its domiciliary jurisdiction, of at least $75,000,000 in the aggregate; 04 (B) the exchange must maintain under terms acceptable to the 05 director at least 50 percent of the policyholder surplus of each syndicate in a 06 custodial account accessible to the exchange or its domiciliary regulator in the 07 event of insolvency or impairment of the individual syndicate; and 08 (C) in addition, each individual syndicate to be eligible to 09 accept surplus wet marine and transportation insurance placements from this 10 state meets either of the following requirements: 11 (i) for insurance exchanges that maintain funds in an 12 amount of at least $15,000,000 for the protection of all exchange 13 policyholders, the syndicate shall maintain under terms acceptable to the 14 director minimum capital and surplus, or its equivalent under the laws 15 of the domiciliary jurisdiction, of at least $5,000,000; or 16 (ii) for insurance exchanges that do not maintain funds 17 in an amount of at least $15,000,000 for the protection of all exchange 18 policyholders, the syndicate shall maintain under terms acceptable to the 19 director minimum capital and surplus, or its equivalent under the laws 20 of its domiciliary jurisdiction, of at least the minimum capital and 21 surplus requirements under the laws of its domiciliary jurisdiction or 22 $15,000,000, whichever is greater; 23 (3) in the case of a Lloyd's plan or other similar group of insurers that 24 consists of unincorporated individual insurers or a combination of both unincorporated 25 and incorporated insurers 26 (A) the sponsoring syndicate maintains a trust fund consisting 27 of a trusteed account representing at least 100 percent of the sponsoring 28 syndicate's gross liabilities attributable to the surplus wet marine and 29 transportation business in this state; compliance with this subparagraph must 30 be determined annually on the basis of accounting practices and procedures 31 substantially equivalent to those enacted by this state, as of December 31 next
01 preceding the date of determination; 02 (B) the group of insurers maintains in trust a surplus in the 03 amount of $100,000,000 that must be available for the benefit of surplus wet 04 marine and transportation policyholders in this state who are policyholders of 05 any member of the group; 06 (C) the incorporated members of the group are not engaged in 07 a business other than underwriting as a member of the group and are subject 08 to the same level of solvency regulation and control by the group's domiciliary 09 regulator as are the unincorporated members; and 10 (D) the trust funds required under this paragraph are maintained 11 in an irrevocable trust account in this state in a qualified financial institution, 12 consisting of cash, securities, letters of credit, or investments of substantially 13 the same character and quality as those that are eligible investments for the 14 capital and statutory reserves of admitted insurers to write like kinds of 15 insurance in this state and, in addition, the trust required under this paragraph 16 satisfies the requirements of the standard trust agreement required for listing 17 with the National Association of Insurance Commissioners International 18 Insurers Department; 19 (4) in the case of a group of incorporated insurers under common 20 administration that has continuously transacted an insurance business outside the 21 United States for at least three years immediately before January 1, 1997, and that 22 submits to this state's authority to examine its books and records and bears the expense 23 of the examination, 24 (A) the group must maintain an aggregate policyholders' surplus 25 of $10,000,000,000; 26 (B) the group must maintain in trust a surplus in the amount of 27 $100,000,000; the surplus shall be available for the benefit of surplus wet 28 marine and transportation policyholders in this state who are policyholders of 29 any member of the group; 30 (C) each insurer must individually maintain capital and surplus 31 of not less than $25,000,000 per company;
01 (D) the trust funds required by this paragraph shall be 02 maintained in an irrevocable trust account in this state in a qualified financial 03 institution, consisting of cash, securities, letters of credit, or investments of 04 substantially the same character and quality as those that are eligible 05 investments for the capital and statutory reserves of admitted insurers to write 06 like kinds of insurance in this state and, in addition, shall satisfy the 07 requirements of the standard trust agreement required for listing with the 08 National Association of Insurance Commissioners International Insurers 09 Department; and 10 (E) each member of the group shall make available to the 11 director an annual certification of the member's solvency by the member's 12 domiciliary regulator and its independent public accountant; or 13 (5) except for an exchange or plan complying with (3) or (4) of this 14 subsection, an alien insurer 15 (A) must satisfy the capital and surplus requirements of (2) of 16 this subsection; 17 (B) must have in force a trust fund of not less than the greater 18 of $5,400,000 or 30 percent of its surplus wet marine and transportation gross 19 liabilities in this state, subject, at the discretion of the director, to a cap of 20 $10,000,000; in order to comply with this subparagraph this insurer 21 (i) shall determine surplus wet marine and transportation 22 gross liabilities in this state annually on the basis of accounting 23 practices and procedures substantially equivalent to those enacted by 24 this state, as of December 31 next preceding the date of determination; 25 (ii) shall maintain the wet marine and transportation gross 26 liabilities in an irrevocable trust account in this state in a qualified 27 financial institution, on behalf of policyholders in this state consisting 28 of cash, securities, letters of credit, or other investments of substantially 29 the same character and quality as those that are eligible investments 30 under AS 21.21 for the capital and statutory reserves of admitted 31 insurers to write like kinds of insurance in this state; the trust account
01 shall be included in any calculation of capital and surplus or its 02 equivalent and shall satisfy the requirements of the standard trust 03 agreement required for listing with the National Association of 04 Insurance Commissioners International Insurers Department; 05 (iii) may request approval from the director to use the 06 trust fund to pay valid surplus lines claims, provided, however, that the 07 balance of the trust fund may never be less than $5,400,000 or 30 08 percent of the insurer's United States gross direct liabilities, whichever 09 is greater. 10 (b) The trust requirement for an alien insurer under (a) of this section may be 11 satisfied by an insurer's possessing less than the trust fund amount specified upon a 12 written affirmative finding of acceptability by the director if the director is satisfied 13 that the placement of insurance with the insurer is necessary and will not be 14 detrimental to the public and the policyholder. In determining whether business may 15 be placed with the insurer, the director shall consider the following factors: 16 (1) the interests of the public and policyholders; 17 (2) the length of time the insurer has been authorized in its domiciliary 18 jurisdiction and elsewhere; 19 (3) unavailability of particular coverages from authorized insurers or 20 unauthorized insurers meeting the requirements of this section; 21 (4) the size of the company as measured by its assets, capital and 22 surplus, reserves, premium writings, insurance in force, or other appropriate criteria; 23 (5) the kinds of business the company writes, its net exposure, and the 24 extent to which the company's business is diversified among several lines of insurance 25 and geographic locations; and 26 (6) the past and projected trend in the size of the company's capital and 27 surplus considering such factors as premium growth, operating history, loss and 28 expense ratios, or other appropriate criteria. 29 (c) If after a review of a nonadmitted insurer providing or attempting to 30 provide wet marine and transportation coverage and consideration of factors including 31 quality of management, capital and surplus of a parent company, underwriting profit,
01 investment income trends, trade practices, reserving practices, company record, and 02 reputation within the industry, the director finds the insurer to be unacceptable, the 03 director may declare the nonadmitted insurer to be ineligible. The director may issue 04 an order declaring a nonadmitted insurer ineligible and shall promptly mail notice of 05 a declaration to each insurance producer or surplus lines broker licensed under 06 AS 21.27 if at any time the director has reason to believe that the nonadmitted insurer 07 (1) is in unsound financial condition; 08 (2) has acted in an untrustworthy manner; 09 (3) is no longer eligible under this chapter; 10 (4) has wilfully violated the laws of this state or another jurisdiction; 11 or 12 (5) does not reasonably investigate and make prompt payment of just 13 losses and claims in this state or another jurisdiction. 14 Sec. 21.35.440. Validity of surplus wet marine and transportation 15 contracts. Insurance procured under AS 21.35.400 - 21.35.520 shall be valid and 16 enforceable as to all parties. 17 Sec. 21.35.450. Surplus wet marine and transportation tax. (a) Gross 18 premiums charged, less any return premium, for surplus wet marine and transportation 19 insurance are subject to a premium receipts tax of 2.7 percent that shall be collected 20 by the insurance producer or surplus lines broker in addition to the full amount of the 21 gross premium charged by the insurer for the insurance. The tax on any portion of the 22 premium unearned at termination of the insurance that is credited by the state to the 23 insurance producer or surplus lines broker shall be returned to the policyholder directly 24 by the insurance producer or surplus lines broker, if any. If a surplus wet marine and 25 transportation policy procured through an insurance producer or surplus lines broker 26 covers property or a subject resident, located, or to be performed both inside and 27 outside of this state, this tax payable shall be computed on that portion of the gross 28 premiums properly allocated to this state. The insurance producer or surplus lines 29 broker may not absorb the tax or any part of it and may not rebate the tax or a part 30 of the tax. 31 (b) This surplus wet marine and transportation tax is due and shall be paid to
01 the director on or before March 1 following the calendar year in which the premium 02 is written. The tax shall be reported on forms prescribed by the director or, upon the 03 director's order, paid to and reported on forms prescribed by the surplus lines 04 association. 05 (c) If the tax is not paid when due, an additional late payment fee of $250 plus 06 two percent of the tax due per month, or part of a month, shall become due and 07 payable by the insurance producer or surplus lines broker. 08 (d) If a surplus wet marine and transportation policy procured through a 09 licensed insurance producer or surplus lines broker covers property or a subject only 10 partially resident, located, or to be performed in this state, the tax payable shall be 11 computed on the portions of the premium that are attributable to the property or a 12 subject resident, located, or to be performed in this state. In determining the amount 13 of a premium taxable in this state, all premiums written, procured, or received in this 14 state shall be considered written on property or a subject resident, located, or to be 15 performed in this state, except premiums that are properly allocated or apportioned and 16 reported as taxable premiums of a reciprocal state. The tax payable to this state may 17 not be less than the tax due under this section. 18 (e) The director or a surplus lines association shall, at least annually, furnish 19 to the insurance regulatory official of a reciprocal state a copy of all filings reporting 20 an allocation of tax as required by (d) of this section. 21 (f) In determining the amount of gross premiums taxable in this state for a 22 placement of surplus wet marine and transportation insurance covering property or a 23 subject resident, located, or to be performed both inside and outside this state, the tax 24 due shall be computed on that portion of the policy premium that is attributable to 25 property or a subject resident, located, or to be performed in this state and that relates 26 to the type of insurance being placed as determined by reference to an allocation 27 schedule as set out in AS 21.35.260(f). 28 (g) This section does not apply to insurance of risks of the state or a political 29 subdivision of the state if an exemption on a form prescribed by the director is filed 30 with the report required by (b) of this section. 31 Sec. 21.35.460. Surplus wet marine and transportation filing fee. (a) The
01 fee for filing the forms required under AS 21.35.450(b) is an amount equal to one 02 percent on gross premium charged less any return premiums during the preceding 03 calendar year, whether the premium is subject to tax or exempt. The insurance 04 producer or surplus lines broker shall pay the fee at the time of filing of the statement. 05 (b) If the filing fee is not paid when due, an additional late payment fee of 06 $250 plus two percent of the fee due per month, or part of a month, shall become due 07 and payable by the insurance producer or surplus lines broker. 08 Sec. 21.35.470. Collection of surplus wet marine and transportation taxes 09 and fees. (a) If the tax collectible under AS 21.35.450 or the fee collectible under 10 AS 21.35.460 by an insurance producer or surplus lines broker is not paid within the 11 time prescribed, the tax, fee, or both, and late payment fees, along with appropriate 12 penalties may be collected by an action in court, against the insurance producer or 13 surplus lines broker and the surety on the bond filed under AS 21.35.410(b)(2). 14 (b) In addition to penalties provided in this chapter, failure to pay tax within 15 the time prescribed is subject to penalties provided in AS 21.35.610. 16 Sec. 21.35.480. Civil actions against eligible surplus wet marine and 17 transportation insurers. (a) A person may bring a civil action in this state upon a 18 cause of action arising in this state against a surplus wet marine and transportation 19 insurer under any surplus wet marine and transportation insurance contract made by 20 it or evidence of insurance issued or delivered by an insurance producer or surplus 21 lines licensee. A policy issued by an eligible surplus wet marine and transportation 22 insurer shall contain a provision stating the substance of this section and designating 23 the person to whom the director shall mail service of process. 24 (b) The remedies provided in this section are in addition to any other methods 25 provided by law for service of process upon insurers. 26 Sec. 21.35.490. Duty to file evidence of insurance transactions and 27 affidavits. (a) An insurance producer or surplus lines broker shall execute and file 28 with the monthly report required by AS 21.35.500 a written report that shall be kept 29 confidential regarding each surplus wet marine and transportation insurance transaction 30 occurring in the preceding calendar month. The report must include 31 (1) the name and address of the insured;
01 (2) the identity of each insurer including the National Association of 02 Insurance Commissioners group and company insurer number and the percentage of 03 coverage provided by each insurer; 04 (3) a complete description of the subject and location of the risk 05 insured; 06 (4) the amount of premium charged for the insurance; and 07 (5) other information required by the director. 08 (b) Instead of the report required in (a) of this section, the director may order 09 that evidence of insurance be filed with the surplus lines association and that the 10 surplus lines association provide periodic reports regarding insurance transactions to 11 the director. 12 (c) An insurance producer or surplus lines broker shall execute and deliver 13 with the report required by (a) of this section to the director or with the evidence of 14 insurance required by (b) of this section to the surplus lines association, for surplus 15 wet marine and transportation insurance first placed or renewed in the preceding 16 calendar month, an affidavit that shall be open to public inspection as to the diligent 17 efforts to place the coverage with admitted insurers and the results of those efforts. 18 The affidavit must contain a statement by the insurance producer or surplus lines 19 broker that the insured was expressly informed in writing before placement of the 20 surplus wet marine and transportation insurance that the surplus wet marine and 21 transportation insurer with whom the insurance was to be placed is not licensed in this 22 state and is not subject to this state's supervision, and, in the event of the insolvency 23 of the surplus wet marine and transportation insurance, losses will not be covered 24 under AS 21.80 (Alaska Insurance Guaranty Association Act). 25 (d) A report, evidence of insurance, or affidavit required by this section that 26 is filed late, incomplete, or incorrect is subject to a $50 late filing fee. 27 Sec. 21.35.500. Monthly reports; summary of exported surplus wet marine 28 and transportation business. (a) An insurance producer or surplus lines broker shall 29 file with the director on or before the end of each month, on forms prescribed by the 30 director, a verified report in duplicate of all surplus wet marine and transportation 31 insurance. The report must include all surplus wet marine and transportation insurance
01 transactions during the preceding calendar month, showing the aggregate gross 02 premiums written, the aggregate return premiums, the amount of aggregate tax remitted 03 to this state, and the amount of aggregate tax remitted to each other state for which an 04 allocation is made under AS 21.35.450(d). 05 (b) Instead of the report required under (a) of this section, the director may 06 order that evidence of insurance be filed with the surplus lines association and that the 07 association file periodic reports regarding insurance transactions to the director. 08 (c) A report or evidence of insurance required by this section that is filed late, 09 incomplete, or incorrect is subject to a $50 late filing fee. 10 Sec. 21.35.510. Duty to deliver evidence of surplus wet marine and 11 transportation insurance and subsequent changes to insurance. (a) When surplus 12 wet marine and transportation insurance is placed, the insurance producer or surplus 13 lines broker shall, within 30 days after placing the coverage, deliver to the insured or 14 the producing broker the policy, or if the policy is not then available, a certificate, 15 cover note, binder, or other evidence of insurance. The certificate, cover note, binder, 16 or other evidence of insurance shall be executed by the insurance producer or surplus 17 lines broker and must contain a complete record of all policy insuring agreements, 18 conditions, exclusions, clauses, endorsements, other material facts that would regularly 19 be included in the policy, description, and location of the subject of insurance, a 20 general description of the coverages of the insurance, the premium and rate charged 21 and taxes to be collected from the insured, the name and address of the insured, and 22 the name of each surplus wet marine and transportation insurer and the percentage of 23 the entire risk assumed by each insurer. The policy, certificate, cover note, binder, or 24 other evidence of insurance must contain the name, address, phone number, and license 25 number of the insurance producer or surplus lines broker. 26 (b) An insurance producer or surplus lines broker may not issue or deliver 27 evidence of insurance or purport to insure or represent that insurance will be or has 28 been written by an eligible surplus wet marine and transportation insurer unless the 29 insurance producer or surplus lines broker has authority from the insurer to insure the 30 risk or has received information from the insurer in the regular course of business that 31 the insurance has been granted.
01 (c) If after delivery of evidence of insurance there is a change in the identity 02 of the insurers, or the percentage of the risk assumed by an insurer, or another material 03 change in coverage from that stated in the insurance producer's or surplus lines 04 broker's original evidence of insurance, the insurance producer or surplus lines broker 05 shall promptly issue and deliver to the insured an appropriate substitute for, or 06 endorsement of, the original document accurately showing the current status of the 07 coverage and the insurer's responsibility. 08 (d) The insurance producer or surplus lines broker shall deliver a copy of the 09 policy or cover note issued by the insurer as soon as reasonably possible after 10 placement of the insurance coverage. A certificate or policy of insurance must contain 11 or have attached a complete record of all policy insuring agreements, conditions, 12 exclusions, clauses, endorsements, or other material facts that would regularly be 13 included in the policy. 14 (e) A policy, certificate, cover note, binder, or other evidence of insurance 15 negotiated, placed, or procured under the provisions of this chapter issued by an 16 insurance producer or surplus lines broker shall bear the name, address, phone number, 17 license number of the insurance producer or surplus lines broker, and the following 18 legend in at least 10-point type: 19 This is evidence of insurance procured and developed 20 under AS 21.35 (Alaska Surplus Wet Marine and Transportation 21 Law). It is not covered by AS 21.80 (Alaska Insurance 22 Guaranty Association Act). 23 Sec. 21.35.520. Effect of payment to insurance producer or surplus lines 24 broker. A payment of premium for surplus wet marine and transportation insurance 25 to an insurance producer or surplus lines broker, acting for a person other than itself 26 in negotiating, continuing, or reviewing a policy of insurance under this chapter, is 27 considered to be payment to the insurer, notwithstanding conditions or stipulations in 28 the policy or contract to the contrary. 29 Article 4. General Provisions. 30 Sec. 21.35.600. Licensee's duty to notify insured. (a) Except as provided 31 in (b) of this section, a contract of insurance placed by an insurance producer or
01 surplus lines broker under this chapter is not binding upon the insured, and a premium 02 charged is not due and payable until the producing broker has notified the insured in 03 writing that the insurer with which the insurance producer or surplus lines broker 04 places the insurance does not hold a certificate of authority issued by this state and is 05 not subject to state supervision, and, in the event of the insolvency of the surplus wet 06 marine and transportation insurer, losses will not be covered under AS 21.80 (Alaska 07 Insurance Guaranty Association Act). Nothing in this subsection shall nullify an 08 agreement by an insurer to provide insurance. A copy of the notice required under this 09 subsection shall be maintained by the licensee with the records of the contract and 10 shall be available for examination. 11 (b) A contract of insurance placed by a surplus lines broker under this chapter 12 with a risk retention group is not binding upon the insured, and a premium charged is 13 not due and payable until the producing broker has provided the insured with the 14 following federally mandated language in 10-point type: 15 This policy is issued by your risk retention group. Your 16 risk retention group may not be subject to all of the insurance 17 laws and regulations of your state. State insurance insolvency 18 funds are not available for your risk retention group. 19 Sec. 21.35.610. Penalties. In addition to any other penalty provided by law, 20 a person other than an insured that the director determines under AS 21.06.170 - 21 21.06.240 has violated the provisions of this chapter, is subject to 22 (1) a civil penalty equal to the premium or compensation promised, 23 paid, or to be paid, directly or indirectly, to the person; 24 (2) a civil penalty of not more than $25,000 for each violation or a 25 civil penalty of not more than $100,000 for each violation if the director determines 26 that the person wilfully violated the provisions of this chapter; and 27 (3) denial, nonrenewal, suspension, or revocation of the person's license 28 or certificate of authority. 29 Sec. 21.35.620. Hearing and order on violation. (a) On the complaint of 30 a person or on the motion of the director, the director may conduct an investigation 31 to determine whether a person has violated this chapter.
01 (b) If the director determines that a person has violated this chapter, the 02 director shall serve an order upon the person charged requiring that person to cease 03 and desist from engaging in the act or practice. Service required under this subsection 04 shall be by mail with a certificate of mailing from the United States Postal Service. 05 A person aggrieved by the cease and desist order may request the hearing under 06 AS 21.06.170 - 21.06.240. 07 (c) If the director believes that a person has violated a cease and desist order 08 issued under (b) of this section, the director may certify the relevant facts to the court 09 for proceedings under AS 44.62.590. In addition to the penalties and remedies 10 provided for in AS 44.62.590, the court, upon finding that the cease and desist order 11 has been violated, may order the violator to comply with the order, pay a penalty of 12 not more than $100,000 for each violation, revoke or suspend the violator's license or 13 certificate of authority, and bar the violator from transacting the business of insurance 14 in the future. 15 (d) If the director determines that a person is violating or about to violate the 16 provisions of this chapter, the director may cause a complaint to be filed in the court 17 for restitution. The court shall have jurisdiction of the proceeding and shall have the 18 power to make and enter judgment awarding restitution. 19 Sec. 21.35.630. Exception for certain insurance transactions. The 20 provisions of this chapter may not operate to prohibit employees, officers, directors, 21 or partners of a commercial insured from acting in the capacity of an insurance 22 manager or buyer in placing insurance on behalf of the employer, provided that the 23 person's compensation is not based on buying insurance. 24 Sec. 21.35.640. Venue for certain insurance transactions. The venue of an 25 insurance transaction committed by mail, electronic transmission, or otherwise is at the 26 point where the matter transmitted by mail, electronic transmission, or otherwise is 27 delivered, issued for delivery, or takes effect. 28 Sec. 21.35.900. Definitions. In this chapter, 29 (1) "capital" means funds paid in for stock or other evidence of 30 ownership; 31 (2) "eligible surplus lines insurer" means a nonadmitted insurer with
01 which a surplus lines broker may place surplus lines insurance under AS 21.35.200 - 02 21.35.350; 03 (3) "eligible surplus wet marine and transportation insurer" means a 04 nonadmitted insurer with which an insurance producer or surplus lines broker may 05 place surplus wet marine and transportation insurance under AS 21.35.400 - 21.35.520; 06 (4) "export" means to place surplus lines insurance or surplus wet 07 marine and transportation insurance with a nonadmitted insurer; 08 (5) "foreign decree" means any decree or order in equity of a court 09 located in any United States jurisdiction, including a federal court of the United States, 10 against any person engaging in the transaction of insurance in this state; 11 (6) "ocean marine insurance" means that portion of wet marine and 12 transportation insurance that covers vessels 13 (A) solely engaged in interstate or foreign commerce; 14 (B) with a hull at the water line longer than 100 feet; or 15 (C) in excess of 100 gross registered tons; 16 (7) "producing broker" means the insurance producer or surplus lines 17 broker licensed under AS 21.27 dealing directly with the client seeking insurance; 18 (8) "reciprocal state" means a state that the director has determined has 19 enacted provisions substantially similar to AS 21.35.040, 21.35.050, 21.35.260, and 20 21.35.450; 21 (9) "surplus" means funds over and above liabilities and capital of the 22 company for the protection of policyholders; 23 (10) "transaction of insurance" means 24 (A) the solicitation, negotiation, procurement, effectuation, or 25 renewal of insurance; forwarding of applications; delivery of policies or 26 contracts; inspection of risks; fixing of rates; investigation or adjustment of 27 claims or losses; collection or forwarding of premiums; or transaction of 28 matters subsequent to effectuation of the contract of insurance and arising out 29 of it; and 30 (B) for purposes of this chapter, any of the following acts in 31 this state effected by mail, electronic transmission, or otherwise by a
01 nonadmitted insurer or by any person acting with the actual or apparent 02 authority of the insurer, on behalf of the insurer, constitutes the transaction of 03 an insurance business in or from this state: 04 (i) the making of or proposing to make, as an insurer, 05 an insurance contract; 06 (ii) the making of or proposing to make, as guarantor or 07 surety, any contract of guaranty or suretyship as a vocation and not 08 merely incidental to any other legitimate business or activity of the 09 guarantor or surety; 10 (iii) the taking or receiving of any application for 11 insurance; 12 (iv) the receiving or collection of a premium, 13 commission, membership fee, assessment, dues, or other consideration 14 for any insurance or any part of it; 15 (v) the issuance or delivery in this state of contracts of 16 insurance to residents of this state or to persons authorized to do 17 business in this state; 18 (vi) the solicitation, negotiation, procurement, or 19 effectuation of insurance or renewals of it; 20 (vii) the dissemination of information as to coverage or 21 rates, forwarding of applications, delivery of policies or contracts, 22 inspection of risks, the fixing of rates or investigation or adjustment of 23 claims or losses, the transaction of matters subsequent to effectuation 24 of the contract and arising out of it, or any other manner of representing 25 or assisting a person or insurer in the transaction of insurance with 26 respect to properties, risks, or exposures, located or to be performed in 27 this state; 28 (viii) the transaction of any kind of insurance business 29 specifically recognized as transacting an insurance business within the 30 meaning of the statutes relating to insurance; 31 (ix) the offering of any insurance or the transacting of
01 any insurance business; or 02 (x) offering any agreement or contract that alters, 03 amends, or voids coverage of an insurance contract; 04 (11) "type of insurance" means coverage provided under the particular 05 policy that is being placed; 06 (12) "unauthorized person" means a person 07 (A) not licensed under AS 21.27 as an insurance producer or a 08 surplus lines broker; or 09 (B) who is not an employee, officer, director, or partner of a 10 commercial insured acting in the capacity of an insurance manager or buyer in 11 placing insurance on behalf of the employer, provided that the person's 12 compensation is not based on buying insurance. 13 * Sec. 9. AS 21.36.195 is amended to read: 14 Sec. 21.36.195. Surplus lines brokers and insurance producers; prohibited 15 acts. A surplus lines broker or an insurance producer may not fail to provide evidence 16 of insurance, affidavits, filings, or reports, or fail to maintain the records, or fail to pay 17 the taxes and fees, required under AS 21.35 [AS 21.34]. 18 * Sec. 10. AS 21.36.235(c) is amended to read: 19 (c) This section does not apply to workers' compensation insurance, surplus 20 lines insurance, or surplus wet marine and transportation insurance under 21 AS 21.35. 22 * Sec. 11. AS 21.36.240 is amended by adding a new subsection to read: 23 (b) This section does not apply to surplus lines insurance or surplus wet 24 marine and transportation insurance under AS 21.35. 25 * Sec. 12. AS 21.36.370 is amended to read: 26 Sec. 21.36.370. Exception for collection of certain charges. For the purpose 27 of AS 21.36.360, if authorized under AS 21.35, the charging and collection by 28 insurance producers and surplus line brokers licensed under AS 21.27 of the amount 29 of applicable state and federal taxes and filing fees under AS 21.35 [AS 21.34] is not 30 considered a premium or charge for insurance. 31 * Sec. 13. AS 21.39.040(i) is amended to read:
01 (i) An insurer may use a rate less than that provided by a filing otherwise 02 applicable on a specific risk the insurance for which would otherwise be exported 03 under AS 21.35 [AS 21.34]. Within 30 days of this action the insurer shall file a 04 report detailing the information required by the director on a form prescribed by the 05 director. 06 * Sec. 14. AS 21.76.070 is amended to read: 07 Sec. 21.76.070. Excess insurance. A cooperative agreement may authorize 08 the board of directors to purchase excess or catastrophic insurance on behalf of the 09 joint insurance arrangement. The cost of the insurance shall be apportioned in the 10 manner specified in the joint insurance agreement. The board may purchase insurance 11 under this section only from an insurer authorized to do business in the state, except 12 that an arrangement formed by municipalities or school districts may purchase 13 insurance under this section from a risk-sharing pool established by a national 14 association of similar entities if the risk-sharing pool meets the qualifications for an 15 unauthorized insurer under AS 21.35.230 [AS 21.34.040(b) AND (d) AND 21.34.220] 16 and has capital and policyholders surplus in an amount at least as great as would be 17 required if the association were a domestic multiple line insurer. An arrangement may 18 purchase insurance under this section for property and liability risks from unauthorized 19 insurers allowed for use by licensed Alaska surplus lines brokers. 20 * Sec. 15. AS 21.84.590(8) is amended to read: 21 (8) AS 21.35 [AS 21.33]; 22 * Sec. 16. AS 21.90.900(19) is amended to read: 23 (19) "independently procured insurance" means insurance procured 24 directly from a nonadmitted insurer directly by an insured, but does not include 25 insurance lawfully procured through a surplus lines broker under AS 21.35 [AS 21.34]; 26 * Sec. 17. AS 21.90.900(36) is amended to read: 27 (36) "surplus lines broker" means a person licensed under AS 21.27 to 28 place insurance in this state or relative to a subject resident, located, or to be 29 performed in this state with eligible surplus lines insurers under AS 21.35 [AS 21.34]; 30 * Sec. 18. AS 21.90.900(37) is amended to read: 31 (37) "surplus lines insurance" means any insurance in this state or
01 relative to a subject resident, located, or to be performed in this state that is permitted 02 under AS 21.35.200 - 21.35.350 [AS 21.34] to be placed through a surplus lines broker 03 licensed under AS 21.27 with nonadmitted insurers eligible to accept insurance other 04 than reinsurance, wet marine and transportation insurance, insurance independently 05 procured, life insurance, and an annuity contract; 06 * Sec. 19. AS 21.33 and AS 21.34 are repealed. 07 * Sec. 20. Notwithstanding AS 21.35.240(a)(5), enacted in sec. 8 of this Act, an alien 08 insurer meeting the requirements to do a surplus lines business in this state on July 1, 1997, 09 shall, subject to a minimum of $5,400,000 maintained in the United States, maintain a trust 10 fund as follows: 11 (1) as of January 1, 1998, a trust fund not less than 15 percent of its gross 12 United States surplus lines liabilities, subject, at the discretion of the director, to a cap of 13 $30,000,000; 14 (2) as of January 1, 1999, a trust fund not less than 30 percent of its gross 15 United States surplus lines liabilities, subject, at the discretion of the director, to a cap of 16 $60,000,000. 17 * Sec. 21. Notwithstanding AS 21.35.440(a)(5), enacted in sec. 8 of this Act, an insurer 18 meeting the requirements to do a surplus wet marine and transportation business in this state 19 on July 1, 1997, shall, subject to a minimum of $5,400,000 maintained in the United States, 20 maintain a trust fund as follows: 21 (1) as of January 1, 1998, a trust fund not less than 15 percent of its gross 22 surplus wet marine and transportation liabilities in this state, subject, at the discretion of the 23 director, to a cap of $5,000,000; 24 (2) as of January 1, 1999, a trust fund not less than 30 percent of its gross 25 surplus wet marine and transportation liabilities in this state, subject, at the discretion of the 26 director, to a cap of $10,000,000. 27 * Sec. 22. APPLICABILITY. This Act applies to a policy of insurance entered into or 28 renewed on or after the effective date of this Act. 29 * Sec. 23. This Act takes effect July 1, 1997.