CSHB 398(JUD): "An Act relating to the Alaska Life and Health Insurance Guaranty Association."
00CS FOR HOUSE BILL NO. 398(JUD) 01 "An Act relating to the Alaska Life and Health Insurance Guaranty Association." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 21.79.010 is repealed and reenacted to read: 04 Sec. 21.79.010. Purpose. The purpose of this chapter is to protect, subject to 05 certain limitations, the persons specified in AS 21.79.020(a) against failure in the 06 performance of contractual obligations under life insurance and health insurance 07 policies and annuity contracts specified in AS 21.79.020(b) because of the impairment 08 or insolvency of the member insurer that issued the policies or contracts. To provide 09 this protection, an association of insurers is created under AS 21.79.040 to pay benefits 10 and continue coverages as limited by this chapter, and members of the association are 11 subject to assessment to provide funds to carry out the purpose of this chapter. 12 * Sec. 2. AS 21.79.020(a) is amended to read: 13 (a) This chapter applies to a policy and contract specified in (b) of this section 14 and to a person who
01 (1) except for a nonresident certificate holder under a group policy or 02 contract, is the beneficiary, assignee, or payee of a person described in (2) of this 03 subsection; and 04 (2) except in the case of an unallocated annuity contract or a 05 structured settlement annuity, is the owner of, or a certificate holder under, the 06 policy or contract, [OR, IN THE CASE OF AN UNALLOCATED ANNUITY 07 CONTRACT, IS THE CONTRACT HOLDER,] and who 08 (A) is a resident ; [,] or 09 (B) is not a resident, if the following conditions are satisfied: 10 (i) the insurer that issued the policy or contract is 11 domiciled in this state; 12 (ii) [THE INSURER NEVER HELD A LICENSE OR 13 CERTIFICATE OF AUTHORITY IN THE STATE IN WHICH THE 14 PERSON RESIDES; 15 (iii)] the state in which the person resides has an 16 association similar to the association created by this chapter; and 17 (iii) [(iv)] the person is not eligible for coverage by an 18 association in any other state due to the fact that the insurer was 19 not licensed as required by law in that state [OF THE 20 ASSOCIATION OF THE STATE IN WHICH THE PERSON 21 RESIDES]. 22 * Sec. 3. AS 21.79.020(c) is amended to read: 23 (c) This chapter does not apply to 24 (1) that part of a policy or contract that is not guaranteed by the 25 insurer; 26 (2) that part of the risk borne by the policy or contract holder; 27 (3) a policy or contract of reinsurance, unless an assumption certificate 28 has been issued; 29 (4) that part of a policy or contract to the extent that [ON WHICH] 30 the rate of interest on which it is based, or the interest rate, crediting rate, or 31 similar factor determined by use of an index or other external reference stated in
01 the policy or contract employed in calculating returns or changes in value, 02 (A) averaged over the period of four years before the date on 03 which the member insurer becomes an impaired or insolvent insurer under 04 this chapter, whichever occurs first [ASSOCIATION BECOMES 05 OBLIGATED WITH RESPECT TO THE POLICY OR CONTRACT], exceeds 06 the [A] rate of interest determined by subtracting two percentage points from 07 the published monthly average for that same four-year period or for a lesser 08 period if the policy or contract was issued less than four years before the 09 member insurer becomes an impaired or insolvent insurer under this 10 chapter, whichever occurs first [ASSOCIATION BECAME OBLIGATED]; 11 and 12 (B) on and after the date on which the member insurer 13 becomes an impaired or insolvent insurer under this chapter, whichever 14 occurs first [ASSOCIATION BECOMES OBLIGATED WITH RESPECT TO 15 THE POLICY OR CONTRACT], exceeds the rate of interest determined by 16 subtracting three percentage points from the most recent published monthly 17 average; 18 (5) a plan or program of an employer, association, or similar entity to 19 provide life, health, or an annuity benefit to an employee or member, to the extent that 20 the plan or program is self-funded or uninsured, including a benefit payable by the 21 employer, association, or similar entity under 22 (A) a multiple employer welfare arrangement as defined in 29 23 U.S.C. 1002 [26 U.S.C. 414] (Employee Retirement Income Security Act of 24 1974); 25 (B) a minimum premium group insurance plan; 26 (C) a stop-loss group insurance plan; or 27 (D) an administrative services only contract; 28 (6) that part of a policy or contract that provides a dividend or 29 experience rating credit or voting rights , or provides that a fee or allowance be paid 30 to a person, including the policy or contract holder, in connection with the service to 31 or administration of the policy or contract; [AND]
01 (7) a policy or contract issued in this state by a member insurer at a 02 time when it was not licensed or did not have a certificate of authority to issue the 03 policy or contract in this state ; 04 (8) a person who is a payee or beneficiary of a contract holder who 05 is a resident of this state if the payee or beneficiary is provided coverage by the 06 association of another state; 07 (9) a person covered under (e) of this section if any coverage is 08 provided by the association of another state to that person; 09 (10) an unallocated annuity contract issued to or in connection with 10 a plan protected under the United States Pension Benefit Guaranty Corporation, 11 regardless of whether the United States Pension Benefit Guaranty Corporation 12 has become liable to make any payments with respect to the benefit plan; 13 (11) that part of an unallocated annuity contract that is not issued 14 to or in connection with a specific employee, union, or association of natural 15 persons benefit plan or a government lottery; 16 (12) that part of a policy or contract to the extent that assessments 17 required by AS 21.79.070 with respect to the policy or contract are preempted by 18 law; 19 (13) an obligation that does not arise under the express written 20 terms of the policy or contract issued by the insurer to the contract owner or 21 policy owner, including, without limitation, 22 (A) a claim based on marketing materials; 23 (B) a claim based on a side letter or other document that 24 was issued by the insurer without meeting applicable policy form filing or 25 approval requirements; 26 (C) a misrepresentation of or regarding policy benefits; 27 (D) an extra contractual claim; or 28 (E) a claim for penalties or consequential or incidental 29 damages; 30 (14) a contractual agreement that establishes the member insurer's 31 obligations to provide a book value accounting guaranty for defined contribution
01 benefit plan participants by reference to a portfolio of assets that is owned by the 02 benefit plan or its trustee, which, in each case, is not an affiliate of the member 03 insurer; or 04 (15) that part of a policy or contract to the extent the part of the 05 policy or contract provides for interest or other changes in value to be determined 06 by the use of an index or other external reference stated in the policy or contract, 07 but that have not been credited to the policy or contract, or as to which the policy 08 or contract owner's rights are subject to forfeiture, as of the date the member 09 insurer becomes an impaired or insolvent insurer under this chapter, whichever 10 is earlier; if a policy's or contract's interest or changes in value are credited less 11 frequently than annually, then, for purposes of determining the values that have 12 been credited and are not subject to forfeiture under this paragraph, the interest 13 or change in value determined by using the procedures defined in the policy or 14 contract shall be credited as if the contractual date of crediting interest or 15 changing values was the date of impairment or insolvency, whichever is earlier, 16 and will not be subject to forfeiture . 17 * Sec. 4. AS 21.79.020 is amended by adding new subsections to read: 18 (e) This chapter, except for (a) of this section, applies to an unallocated 19 annuity contract specified under (b) of this section, and shall provide coverage to a 20 person who is the owner of 21 (1) the unallocated annuity contract if the contract is issued to or in 22 connection with a specific benefit plan whose plan sponsor has its principal place of 23 business in this state; and 24 (2) an unallocated annuity contract issued to or in connection with a 25 government lottery if the owner is a resident. 26 (f) This chapter, except for (a) of this section, applies to a structured settlement 27 annuity specified under (b) of this section, and shall provide coverage to a person who 28 is a payee under a structured settlement annuity, or the beneficiary of a payee if the 29 payee is deceased, if the payee is 30 (1) a resident, regardless of where the contract owner resides; or 31 (2) not a resident, but only if both of the following conditions exists:
01 (A) the contract owner of the structured settlement annuity is 02 (i) a resident; or 03 (ii) not a resident, but the insurer that issued the 04 structured settlement annuity is domiciled in this state, and the state in 05 which the contract owner resides has an association similar to the 06 association created by this chapter; and 07 (B) the payee, or the payee's beneficiary, and the contract owner 08 are not eligible for coverage by the association of the state in which the payee 09 or contract owner resides. 10 * Sec. 5. AS 21.79.025 is amended to read: 11 Sec. 21.79.025. Liability limits. The benefits for which the association may 12 become liable may not exceed the lesser of 13 (1) the contractual obligations for which the insurer is liable or would 14 have been liable if it were not an impaired or insolvent insurer; 15 (2) with respect to any one life, regardless of the number of policies 16 or contracts, [AND SUBJECT TO AN AGGREGATE OF $300,000,] 17 (A) $300,000 in life insurance death benefits, but not more than 18 $100,000 in net cash surrender and net cash withdrawal values for life 19 insurance; 20 (B) [$100,000] in health insurance benefits, 21 (i) $100,000 for coverage not defined as disability 22 insurance or basic hospital, medical, and surgical insurance or 23 major medical insurance, including any net cash surrender and net 24 cash withdrawal values; 25 (ii) $300,000 for disability insurance; 26 (iii) $500,000 for basic hospital, medical, and surgical 27 insurance or major medical insurance; 28 (C) $100,000 in the present value of annuity benefits, including 29 net cash surrender and net cash withdrawal values; [OR] 30 (3) with respect to any one contract holder or plan sponsor whose 31 plan owns directly or in trust one or more unallocated annuity contracts not
01 included in (4) of this subsection , $5,000,000 in unallocated annuity contract benefits, 02 irrespective of the number of contracts held by that contract holder or plan sponsor 03 except that, in the case of one or more unallocated annuity contracts that are 04 covered under this chapter and that are owned by a trust or other entity for the 05 benefit of two or more plan sponsors, coverage shall be provided by the 06 association if the largest interest in the trust or entity owning the contract is held 07 by a plan sponsor whose principal place of business is in this state; however, the 08 association is not liable to cover more than $5,000,000 in benefits with respect to 09 an unallocated annuity contract not included in (4) of this subsection; 10 (4) with respect to an individual participating in a governmental 11 retirement benefit plan established under 26 U.S.C. 401, 26 U.S.C. 403(b), or 26 12 U.S.C. 457 and covered by an unallocated annuity contract, or to a beneficiary of 13 the individual if the individual is deceased, in the aggregate, $100,000 in present- 14 value annuity benefits, including net cash surrender and net cash withdrawal values; or 15 (5) with respect to each payee of a structured settlement annuity, 16 or beneficiary of the payee if the payee is deceased, $100,000 in present-value 17 annuity benefits in the aggregate, including net cash surrender and net cash 18 withdrawal values, if any . 19 * Sec. 6. AS 21.79.025 is amended by adding new subsections to read: 20 (b) The limitations imposed under this section are limitations on the benefits 21 for which the association is obligated before taking into account either its subrogation 22 and assignment rights or the extent to which those benefits could be provided out of 23 the assets of an impaired or insolvent insurer attributable to covered policies. The 24 costs of the association's obligations under this chapter may be met by the use of 25 assets attributable to covered policies or reimbursed to the association under its 26 subrogation and assignment rights. 27 (c) In providing coverage required under AS 21.79.060, the association may 28 not be required to guarantee, assume, reinsure, or perform, or cause to be guaranteed, 29 assumed, reinsured, or performed, the contractual obligations of an insolvent or 30 impaired insurer under a covered policy or contract when the obligations do not 31 materially affect the economic values or economic benefits of the covered policy or
01 contract. 02 (d) The association may not be required to cover more than 03 (1) an aggregate of $300,000 in benefits with respect to any one life 04 under (a)(2), (4), and (5) of this section, except that, with respect to benefits for basic 05 hospital, medical, and surgical insurance or major medical insurance under (a)(2)(B) 06 of this section, the aggregate liability of the association may not exceed $500,000 for 07 any one individual; or 08 (2) $5,000,000 in benefits with respect to one owner or multiple 09 nongroup policies of life insurance, whether the policy owner is an individual, firm, 10 corporation, or other person, and whether the persons insured are officers, managers, 11 employees, or other persons, regardless of the number of policies and contracts held 12 by the owner. 13 * Sec. 7. AS 21.79.030 is amended to read: 14 Sec. 21.79.030. Construction. This chapter shall be [LIBERALLY] construed 15 to achieve the purposes set out in AS 21.79.010. 16 * Sec. 8. AS 21.79.030 is amended by adding a new subsection to read: 17 (b) This chapter is intended to provide coverage to a person who is a resident 18 of this state and, in special circumstances, to a nonresident. In order to avoid duplicate 19 coverage, if a person who would otherwise receive coverage under this chapter is 20 provided coverage under the law of any other state, the person may not be provided 21 coverage under this chapter. In determining the application of the provisions of this 22 subsection, in situations where a person could be covered by the association of more 23 than one state, whether as an owner, payee, beneficiary, or assignee, this chapter shall 24 be construed in conjunction with other state laws to result in coverage by only one 25 association. 26 * Sec. 9. AS 21.79.040(a) is amended to read: 27 (a) There is established as a nonprofit legal entity the Alaska Life and Health 28 Insurance Guaranty Association. An insurer that issues an insurance policy described 29 in AS 21.79.020(b) shall be a member of the association as a condition of the insurer's 30 authority to transact insurance in this state. The association shall perform its functions 31 under a plan of operation established and approved under AS 21.79.080 and shall
01 exercise its powers through the Board of Governors established under AS 21.79.050. 02 For purposes of administration and assessment, the association shall maintain the 03 following accounts: 04 (1) the health insurance account; and 05 (2) the life insurance and annuity account, including the following 06 subaccounts: 07 (A) life insurance account; 08 (B) annuity account that must include annuity contracts 09 owned by a governmental retirement benefit plan, or its trustee, qualified 10 under 26 U.S.C. 401, 26 U.S.C. 403(b), or 26 U.S.C. 457 (Internal Revenue 11 Code), but that otherwise excludes unallocated annuities ; 12 (C) unallocated annuity account that must exclude [SHALL 13 INCLUDE] contracts owned by a governmental retirement benefit plan, or 14 its trustee, qualified under 26 U.S.C. 401, 26 U.S.C. 403(b) , or 26 U.S.C. 457 15 (Internal Revenue Code). 16 * Sec. 10. AS 21.79.050(a) is amended to read: 17 (a) The Board of Governors of the association consists of not less than five nor 18 more than nine representatives of member insurers. The director may appoint two 19 individuals as members of the board to represent the public. Terms of office for 20 board members shall be established in the plan of operation submitted under 21 AS 21.79.080. Member insurers shall select the insurer board members, subject to the 22 approval of the director. A vacancy in a board membership held by an insurer 23 member [ON THE BOARD] shall be filled for the unexpired term by a majority vote 24 of the remaining board members, subject to the approval of the director. A vacancy 25 in a board membership held by a representative of the public shall be filled by 26 the director. A board member who represents the public may not be an officer, 27 director, or employee of an insurer and may not be engaged in the business of 28 insurance. 29 * Sec. 11. AS 21.79.050(b) is amended to read: 30 (b) Before the director approves the selection of an insurer [A] board member 31 [OR APPOINTS A BOARD MEMBER], the director shall consider whether all
01 member insurers are fairly represented on the board. 02 * Sec. 12. AS 21.79.060(a) is amended to read: 03 (a) If a member [DOMESTIC] insurer becomes impaired, the association may, 04 with the approval of the director and subject to any conditions imposed by the 05 association that do not impair the contractual obligations of the impaired insurer , 06 (1) guarantee, assume, reinsure, or provide for the guarantee, 07 assumption, or reinsurance of the policies or contracts of the impaired insurer; or 08 (2) provide money, pledges, notes, guarantees, or other means that are 09 necessary to act under (1) of this subsection and to assure payment of the contractual 10 obligations of the impaired insurer until those obligations are guaranteed, reinsured, 11 or assumed [; OR 12 (3) LOAN MONEY TO THE IMPAIRED INSURER]. 13 * Sec. 13. AS 21.79.060(c) is amended to read: 14 (c) The actions specified in (a) [(b)] of this section may not be taken unless 15 (1) the law of the impaired insurer's state of domicile provides that until 16 all payments of or on account of a contractual obligation of the impaired insurer by 17 a guaranty association, along with all expenses and interest on all payments and 18 expenses, have been repaid to the guaranty association or a repayment plan by the 19 impaired insurer has been approved by a guaranty association, 20 (A) a delinquency proceeding may not be dismissed; 21 (B) neither the impaired insurer nor its assets may be returned 22 to the control of its shareholders or private management; and 23 (C) solicitation or acceptance of new business or restoration of 24 a suspended or revoked license may not be permitted; and 25 (2) if the impaired insurer is a 26 (A) domestic insurer, the insurer has been placed under an order 27 of rehabilitation by a superior court in this state; or 28 (B) foreign or alien insurer, 29 (i) the insurer has been prohibited from soliciting or 30 accepting new business in this state; 31 (ii) the insurer's certificate of authority has been
01 suspended or revoked in this state; and 02 (iii) a petition for rehabilitation or liquidation has been 03 filed in a court of competent jurisdiction in the insurer's state of domicile by 04 the insurance commissioner of that state. 05 * Sec. 14. AS 21.79.060(d) is amended to read: 06 (d) If a member insurer becomes insolvent, the association shall, in its 07 discretion and with the approval of the director, 08 (1) guarantee, assume, reinsure, or provide for the guarantee, 09 assumption, or reinsurance of the covered policies of the insolvent insurer held by 10 residents; 11 (2) assure payment to residents of the contractual obligations of the 12 insolvent insurer; 13 (3) provide money, pledges, notes, guarantees, or other means necessary 14 to discharge the association's [INSURER'S] duties under this subsection; or 15 (4) with respect only to life and health insurance policies and 16 annuities , provide benefits and coverages required under (e) of this section. 17 * Sec. 15. AS 21.79.060(e) is amended to read: 18 (e) When proceeding under [(b)(2) OR] (d)(4) of this section, the association 19 shall, with respect to a life or health insurance policy and an annuity , 20 (1) assure payment of benefits, other than terms of conversion and 21 renewability, for a premium identical to the premium that would have been payable 22 under a policy of the insolvent insurer for claims incurred with respect to 23 (A) a group policy, not later than the earlier of the next renewal 24 date under the policy or contract or 45 days, but in no event less than 30 days, 25 after the date on which the association becomes obligated with respect to the 26 policy; 27 (B) an individual policy or annuity , not later than the earlier 28 of the next renewal date, if any, under the policy or contract or one year, but 29 in no event less than 30 days, from the date on which the association becomes 30 obligated with respect to the policy or contract ; 31 (2) make a diligent effort to provide a known insured , an annuitant,
01 or a group policyholder or contract holder , with respect to a group policy or 02 contract , 30 days' [DAYS] notice of the termination of the benefits provided; 03 (3) with respect to an individual policy or annuity , make available to 04 each known insured or annuitant , or owner if other than the insured or annuitant , 05 and with respect to an individual formerly insured under a group policy or contract 06 who is not eligible for replacement group coverage, substitute coverage on an 07 individual basis under the provisions of (f) of this section, if the insured had a right 08 under law or the terminated policy or contract to convert coverage to individual 09 coverage, to continue an individual policy or contract in force until a specified age, 10 or for a specific time during which the insurer did not have the unilateral right to make 11 changes in any provision of the policy or contract or had a right only to make 12 changes in premium by class. 13 * Sec. 16. AS 21.79.060(h) is amended to read: 14 (h) If the association elects to reissue terminated coverage at a premium rate 15 different from that charged under the terminated policy, the premium shall be set by 16 the association according to the amount of insurance provided and [,] the age and class 17 of risk, and is subject to the approval of the director and the receivership [OR BY 18 A] court [OF COMPETENT JURISDICTION]. 19 * Sec. 17. AS 21.79.060(j) is amended to read: 20 (j) When proceeding under [(b)(2) OR] (d) of this section with respect to a 21 policy or contract carrying guaranteed minimum interest rates, the association shall 22 assure the payment or crediting of a rate of interest consistent with AS 21.79.020(c)(4). 23 * Sec. 18. AS 21.79.060(n) is amended to read: 24 (n) In carrying out its duties under (a) [(b)], (c), and (d) of this section, the 25 association may impose a permanent policy or contract lien under a guarantee, 26 assumption, or reinsurance agreement [,] if the policy or contract lien is approved by 27 a court [,] and the association [COURT] finds that 28 (1) the amount that may be assessed under this chapter is less than the 29 amount needed to assure full and prompt performance of the insolvent insurer's 30 contractual obligations; or 31 (2) the economic or financial condition that affects member insurers is
01 sufficiently adverse that the imposition of a policy or contract lien is in the public 02 interest. 03 * Sec. 19. AS 21.79.060(o) is amended to read: 04 (o) Before taking action under (a) - (e) [(b) - (e)] of this section, the 05 association may request the superior court to impose an injunction against the payment 06 of a cash value and policy loan, or the exercise of another right to withdraw funds held 07 in connection with a policy or contract, in addition to a contractual provision for 08 deferral of a cash or policy loan value. In addition, if the receivership court 09 imposes an injunction on payment of cash values or policy loans or on any other 10 right to withdraw funds of an impaired or insolvent insurer held in conjunction 11 with a policy or contract, the association may defer payment of cash values, policy 12 loans, or other rights for the period of the injunction, except for claims covered 13 by the association to be paid as required by a hardship procedure established by 14 the liquidator or rehabilitator and approved by the receivership court. 15 * Sec. 20. AS 21.79.060(p) is amended to read: 16 (p) If the association fails to take action under (a) - (e) [(b) - (e)] of this 17 section within a reasonable period of time after a member insurer becomes insolvent, 18 the director shall assume the powers of the association under (a) - (e) [(b) - (e)] of this 19 section. 20 * Sec. 21. AS 21.79.060(r) is amended to read: 21 (r) The association is entitled to appear or intervene in a court or agency 22 proceeding in this [THE] state involving an impaired or insolvent insurer that the 23 association is or may be obligated to or involving a person or property against 24 which the association may have rights . The standing conferred by this subsection 25 extends to all matters germane to the powers and duties of the association, including 26 proposals to reinsure or guarantee a covered policy of the impaired or insolvent insurer 27 and the determination of a covered policy and a contractual obligation. The 28 association also has the right to appear or intervene before a court or agency in 29 another state in a proceeding involving an impaired or insolvent insurer that the 30 association is or may be obligated to or involving a person or property against 31 which the association may have rights.
01 * Sec. 22. AS 21.79.060(s) is amended to read: 02 (s) A person who receives benefits under this chapter is considered to have 03 assigned the rights under , and any cause of action against a person for losses 04 arising under, resulting from, or otherwise relating to, the covered policy to the 05 association to the extent of the benefits received under this chapter , whether the 06 benefits are payment of or on account of contractual obligations, continuations of 07 coverage, or provisions of substitute or alternative coverage . The association may 08 require an assignment to the association of those rights by the payees, policy or 09 contract owner, beneficiary, insured, or annuitant before a person receives the rights 10 or benefits conferred by this chapter. [THE ASSOCIATION IS SUBROGATED TO 11 THESE RIGHTS AGAINST THE ASSETS OF AN INSOLVENT INSURER.] The 12 priority of the association's subrogation right to the assets of the insolvent insurer is 13 the same as the priority of the person entitled to benefits under this chapter. In 14 addition to the rights described in this subsection, the association has common law 15 rights of subrogation and any other equitable or legal remedy that would have 16 been available to the impaired or insolvent insurer or owner, beneficiary, or payee 17 of a policy with respect to the policy. These rights include, in the case of a 18 structured settlement annuity, the rights of the owner, beneficiary, or payee of the 19 annuity, to the extent of benefits received under this chapter, against a person 20 originally or by succession responsible for the losses arising from the personal 21 injury relating to the annuity or annuity payment, except for a person responsible 22 solely by reason of being an assignee in respect to a qualified assignment under 23 26 U.S.C. 130 (Internal Revenue Code). If the provisions of this subsection are 24 invalid with respect to a person or claim, the amount payable by the association 25 with respect to the related coverage obligation shall be reduced by the amount 26 realized by another person from the person or claim covered by the association. 27 If the association has provided benefits with respect to a covered obligation and 28 a person recovers amounts to which the association has rights as described in this 29 subsection, the person recovering the amounts shall pay to the association the 30 portion of the recovery attributable to the policy covered by the association. 31 * Sec. 23. AS 21.79.060(t) is amended to read:
01 (t) In addition to the rights and powers otherwise established in this 02 chapter, the [THE] association may 03 (1) enter into contracts that are necessary or proper to carry out the 04 provisions of this chapter; 05 (2) sue or be sued, and take legal action necessary or proper for 06 recovery of an unpaid assessment under AS 21.79.070 or settlement of a claim or 07 potential claim ; 08 (3) borrow money to carry out the purposes of this chapter; notes or 09 other evidence of indebtedness of the association not in default are legal 10 investments for domestic insurers and may be carried as admitted assets; 11 (4) employ or retain those persons necessary to handle the financial 12 transactions of the association and other functions under this chapter; 13 (5) negotiate and contract with a liquidator, rehabilitator, conservator, 14 or ancillary receiver to carry out the powers and duties of the association; 15 (6) exercise, for the purposes of this chapter and to the extent approved 16 by the director, the powers of a domestic life or health insurer; however, the 17 association may not issue insurance policies or annuity contracts other than those 18 issued to perform the contractual obligations of an impaired or insolvent insurer; 19 (7) take legal action to prevent the payment of improper claims; 20 (8) join an organization of one or more other state associations with 21 similar purposes; [AND] 22 (9) determine, using reasonable business judgment, the means by 23 which the association is to provide the benefits of this chapter in an economical 24 and efficient manner; 25 (10) request information from a person seeking coverage from the 26 association in order to determine the obligations of the association under this 27 chapter; a person receiving a request under this paragraph shall promptly comply 28 with the request; 29 (11) request information from a member insurer in order to aid in 30 the exercise of a power under this section; a member insurer receiving a request 31 under this paragraph shall promptly comply with the request; and
01 (12) perform all other acts necessary or proper to implement this 02 chapter. 03 * Sec. 24. AS 21.79.060 is amended by adding new subsections to read: 04 (u) At any time within one year after the date with the association becomes 05 responsible for the obligations of a member insurer, the association may elect to 06 succeed to the rights and obligations of the member insurer that accrue on or after that 07 date and that relate to contracts covered, in whole or in part, by the association, under 08 one or more indemnity reinsurance agreements entered into by the member insurer as 09 a ceding insurer and selected by the association. However, the association may not 10 exercise an election with respect to a reinsurance agreement if the receiver, 11 rehabilitator, or liquidator of the member insurer has previously and expressly 12 disaffirmed the reinsurance agreement. The election shall be made by a notice to the 13 receiver, rehabilitator, or liquidator and to the affected reinsurer. If the association 14 makes an election, the following paragraphs apply with respect to the agreement 15 selected by the association: 16 (1) the association is responsible for all unpaid premiums due under the 17 agreement for periods both before and after the coverage date, and shall be responsible 18 for the performance of all other obligations to be performed after the coverage date in 19 each case that relates to contracts covered, in whole or in part, by the association; the 20 association may, through reasonable allocation methods, charge contracts covered in 21 part by the association for the costs for reinsurance in excess of the obligations of the 22 association; 23 (2) the association is entitled to any amounts payable by the reinsurer 24 under the agreement with respect to losses or events that occur in periods after the 25 coverage date and that related to the contracts covered by the association, in whole or 26 in part, except that, upon receipt of any amounts, the association shall pay to the 27 beneficiary under the policy or contract on account of which the amounts were paid 28 a portion of the amount equal to the amount received by the association less 29 (A) the benefits paid by the association on account of the policy 30 or contract; and 31 (B) the retention of the impaired or insolvent member insurer
01 applicable to the loss or event; 02 (3) within 30 days after the association's election, the association and 03 each indemnity reinsurer shall calculate the net balance due to or from the association 04 under each reinsurance agreement as of the date of the association's election; the 05 calculation shall give full credit to all items paid by either the member insurer, its 06 receiver, rehabilitator, or liquidator, or the indemnity reinsurer during the period 07 between the coverage date and the date of the association's election; either the 08 association or the indemnity reinsurer shall pay the net balance due the other within 09 five days of the completion of the calculation described in this paragraph; if the 10 receiver, rehabilitator, or liquidator has received any amounts due to the association 11 under (2) of this subsection, the receiver, rehabilitator, or liquidator shall remit the 12 same to the association as promptly as practicable; and 13 (4) if the association, within 60 days of the election, pays the premiums 14 due for periods both before and after the coverage date that relate to the contracts 15 covered by the association, in whole or in part, the reinsurer may not terminate the 16 reinsurance agreement to the extent the agreement relates to contracts covered by the 17 association, in whole or in part, and may not set off any unpaid premium due for the 18 periods before the coverage date against amounts due to the association. 19 (v) In the event the association transfers its obligations to another insurer, and 20 if the association and the other insurer agree, the other insurer shall succeed to the 21 rights and obligations of the association under (u) of this section, effective as of the 22 date agreed upon by the association and the other insurer. The other insurer shall 23 succeed regardless of whether the association has made the election referred to in (u) 24 of this section if (1) the indemnity reinsurance agreement automatically terminates 25 former reinsurance unless the indemnity reinsurer and the other insurer agree to the 26 contrary, and (2) the obligations described in (u)(2) of this section no longer apply on 27 and after the date the indemnity reinsurance agreement is transferred to the third-party 28 insurer. This subsection does not apply if the association has previously expressly 29 determined in writing that it will not exercise the election referred to in (u) of this 30 section. 31 (w) The provisions of this section apply notwithstanding any other provisions
01 of law or any provisions of an affected reinsurance agreement that provide for or 02 require a payment of reinsurance proceeds, on account of losses or events that occur 03 in periods after the coverage date, to the receiver, liquidator, or rehabilitator of the 04 insolvent member insurer. The receiver, liquidator, or rehabilitator remains entitled to 05 any amounts payable by the reinsurer under the reinsurance agreement with respect to 06 losses or events that occur in periods before the coverage date, subject to applicable 07 setoff provisions. 08 (x) Except as otherwise expressly provided in this section, nothing in this 09 section alters or modifies the terms and conditions of indemnity reinsurance 10 agreements of an insolvent member insurer. Nothing in this section 11 (1) abrogates or limits the right of a reinsurer to claim that the reinsurer 12 is entitled to rescind a reinsurance agreement; or 13 (2) gives a policy owner or beneficiary an independent cause of action 14 against an indemnity reinsurer that is not otherwise established in the indemnity 15 reinsurance agreement. 16 (y) When the association has arranged or offered to provide the benefits of this 17 chapter to a covered person under a plan or arrangement that fulfills the association's 18 obligations under this chapter, the covered person is not entitled to benefits from the 19 association in addition to or other than those provided under the plan or arrangement. 20 (z) In carrying out its duties in connection with guaranteeing, assuming, or 21 reinsuring a policy or contract, the association may, subject to approval of the 22 receivership court, issue substitute coverage for a policy or contract that provides an 23 interest rate, crediting rate, or similar factor determined by use of an index or other 24 external reference stated in the policy or contract employed in calculating returns or 25 changes in value by issuing an alternative policy or contract under the following 26 provisions: 27 (1) in place of the index or other external reference provided for in the 28 original policy or contract, the alternative policy or contract provides for 29 (A) a fixed interest rate; 30 (B) payment of dividends with minimum guarantees; or 31 (C) a different method for calculating interest or changes in
01 value; 02 (2) there is no requirement for evidence of insurability, waiting period, 03 or other exclusion that would not have applied under the replaced policy or contract; 04 and 05 (3) the alternative policy or contract is substantially similar to the 06 replaced policy or contract in all other material terms. 07 * Sec. 25. AS 21.79.070(b) is amended to read: 08 (b) There shall be two assessments as follows: 09 (1) class A assessments shall be authorized and called [MADE] for 10 the purpose of meeting administrative and legal costs and other expenses and 11 examinations conducted under the authority of AS 21.79.060; class A assessments may 12 be authorized and called [MADE] whether or not related to a particular impaired or 13 insolvent insurer; 14 (2) class B assessments [ARE POST ASSESSMENT CHARGES AND] 15 shall be authorized and called [MADE] only as necessary to carry out the powers and 16 duties of the association with regard to an impaired or an insolvent insurer. 17 * Sec. 26. AS 21.79.070(c) is amended to read: 18 (c) The amount of a class A assessment shall be determined by the board and 19 may be made on a pro rata or non pro [NONPRO] rata basis. If a pro rata assessment 20 is made, the board may provide that it be credited against future class B assessments. 21 A non pro [NONPRO] rata assessment may not exceed $250 per member insurer in 22 a calendar year. The amount of a class B assessment shall be allocated for assessment 23 purposes among the accounts under an allocation formula that may be based on the 24 premiums or reserves of the impaired or insolvent insurer or by another standard 25 determined by the board in its sole discretion as being fair and reasonable under the 26 circumstances. 27 * Sec. 27. AS 21.79.070(d) is amended to read: 28 (d) Class B assessments shall be based on the premiums received on business 29 in this state by each assessed member insurer on [OR FOR] policies or contracts 30 covered by each account in proportion to the premiums received on business in this 31 state by all assessed member insurers during the three calendar years preceding the
01 year in which the insolvency or impairment occurred. 02 * Sec. 28. AS 21.79.070(e) is amended to read: 03 (e) The association may abate or defer, in whole or in part, the assessment of 04 a member insurer if , in the opinion of the board, a payment of the assessment would 05 endanger the ability of the member insurer to fulfill its contractual obligations. The 06 amount by which an assessment against a member insurer is abated or deferred may 07 be assessed against the other member insurers in a manner consistent with the basis 08 for assessments set forth in (c) of this section. Once the conditions that caused a 09 deferral are removed or rectified, the member insurer shall pay all assessments 10 that were deferred under a repayment plan approved by the association. 11 * Sec. 29. AS 21.79.070(f) is amended to read: 12 (f) Except as provided in this subsection, the [THE] total of all assessments 13 on a member insurer for each subaccount of the life and annuity account and for the 14 health account [EACH SUBACCOUNT] may not in any one calendar year exceed 15 two percent of the insurer's average annual premiums received in this state on 16 policies or contracts covered by the account or subaccount during the three 17 calendar years preceding the year in which the insurer became an impaired or 18 insolvent insurer. If two or more assessments are authorized in one calendar year 19 with respect to insurers that become impaired or insolvent in different calendar 20 years, the average annual premiums for purposes of the aggregate assessment 21 percentage limitation imposed under this subsection shall be limited to the highest 22 of the average annual premiums during the preceding three calendar years for the 23 applicable subaccount or account as calculated under this section . [THE TOTAL 24 OF ALL ASSESSMENTS ON A MEMBER INSURER FOR THE HEALTH 25 ACCOUNT MAY NOT IN ANY ONE CALENDAR YEAR EXCEED TWO 26 PERCENT OF THE INSURER'S AVERAGE PREMIUMS RECEIVED IN THIS 27 STATE ON A POLICY OR CONTRACT COVERED BY THE ACCOUNT DURING 28 THE THREE CALENDAR YEARS PRECEDING THE YEAR IN WHICH THE 29 INSURER BECAME AN IMPAIRED OR INSOLVENT INSURER.] If the maximum 30 assessment, together with the other assets of the association in an account, does not 31 provide in any one year in either account an amount sufficient to carry out the
01 responsibilities of the association, the necessary additional funds shall be assessed as 02 soon as permitted by this chapter. 03 * Sec. 30. AS 21.79.070(h) is amended to read: 04 (h) If the maximum [A ONE PERCENT] assessment for a subaccount of the 05 life and annuity account in any one year does not provide an amount sufficient to carry 06 out the responsibilities of the association, the board shall, as provided under (d) of this 07 section, access [ASSESS] all subaccounts of the life and annuity account for the 08 necessary additional amount, subject to the assessment limit provided in (f) of this 09 section. 10 * Sec. 31. AS 21.79.070 is amended by adding new subsections to read: 11 (i) Assessments for funds to meet the requirements of the association with 12 respect to an impaired or insolvent insurer may not be authorized or called until 13 necessary to implement the purposes of this chapter. Classification of assessments 14 under (b) of this section and computation of assessments under this section shall be 15 made with a reasonable degree of accuracy, recognizing that exact determinations may 16 not always be possible. The association shall notify each member insurer of its 17 anticipated pro rata share of an authorized assessment not yet called within 180 days 18 after the assessment is authorized. 19 (j) The board may, by an equitable method as established in the plan of 20 operation, refund to member insurers, in proportion to the contribution of each insurer 21 to that account, the amount by which the assets of the account exceed the amount the 22 board finds is necessary to carry out during the coming year the obligations of the 23 association with regard to that account, including assets accruing from assignment, 24 subrogation, net realized gains, and income from investments. A reasonable amount 25 may be retained in any account to provide funds for the continuing expenses of the 26 association and for future losses claims. 27 (k) A member insurer may, in determining its premium rates and policy owner 28 dividends as to any kind of insurance within the scope of this chapter, consider the 29 amount reasonably necessary to meet its assessment obligations under this chapter. 30 (l) A member insurer that wishes to protest all or part of an assessment shall 31 pay when due the full amount of the assessment as set out in the notice provided by
01 the association. The payment shall be available to meet association obligations during 02 the pendency of the protest or any subsequent appeal. If a payment is made under 03 protest, payment must be accompanied by a statement in writing that the payment is 04 made under protest and setting out a brief statement of the grounds for the protest. 05 Within 60 days following the payment of an assessment under protest by a member 06 insurer, the association shall notify the member insurer in writing of its determination 07 with respect to the protest unless the association notifies the member insurer that 08 additional time is required to resolve the issues raised by the protest. Within 30 days 09 after a final decision has been made, the association shall notify the protesting member 10 insurer in writing of that final decision. Within 60 days of receipt of notice of the 11 final decision, the protesting member insurer may appeal that final action to the 12 director. In the alternative to rendering a final decision with respect to a protest based 13 on a question regarding the assessment base, the association may refer protests to the 14 director for a final decision with or without recommendation from the association. If 15 a protest or appeal on an assessment is upheld, the amount paid in error or excess shall 16 be returned to the member company. Interest on a refund due a protesting member 17 shall be paid at the rate actually earned by the association. 18 * Sec. 32. AS 21.79.080(a) is amended to read: 19 (a) The association shall submit to the director a plan of operation and any 20 amendments to assure the fair, reasonable, and equitable administration of the 21 association. The plan of operation and any amendments take effect on the written 22 approval of the plan by the director or 30 days after receipt by the director if not 23 disapproved by the director . 24 * Sec. 33. AS 21.79.080(b) is amended to read: 25 (b) If [NOTWITHSTANDING (a) OF THIS SECTION, IF THE 26 ASSOCIATION FAILS TO SUBMIT A PLAN OF OPERATION ACCEPTABLE TO 27 THE DIRECTOR BY JULY 1, 1991, OR IF AT A LATER TIME] the association 28 fails to submit suitable amendments to the plan, the director shall, after notice and 29 hearing, adopt regulations to implement this chapter. These regulations remain in 30 effect until amended or repealed by the director [OR SUPERSEDED BY A PLAN 31 SUBMITTED BY THE ASSOCIATION THAT IS APPROVED BY THE
01 DIRECTOR]. 02 * Sec. 34. AS 21.79.080(c) is amended to read: 03 (c) A member insurer shall comply with the plan of operation. The plan of 04 operation must 05 (1) establish procedures for handling assets of the association; 06 (2) establish the amount and method of reimbursing members of the 07 board under AS 21.79.050(c); 08 (3) establish regular places and times for meetings of the board in the 09 state; the board may conduct meetings telephonically; 10 (4) establish procedures for keeping records of all financial transactions 11 of the association, its agents, and the board; 12 (5) establish terms of office for members of the board, and establish 13 procedures for the selection of the members of the board and for the director's approval 14 of the members selected; 15 (6) establish additional procedures for assessments under AS 21.79.070; 16 and 17 (7) contain additional provisions necessary or proper for the association 18 to exercise its powers and duties. 19 * Sec. 35. AS 21.79.100(f) is amended to read: 20 (f) The board may [SHALL] 21 (1) make reports and recommendations to the director relating to the 22 solvency, liquidation, rehabilitation, or conservation of a member insurer or the 23 solvency of insurers who apply to transact insurance business in the state; the director 24 and the board shall keep the reports and recommendations confidential; 25 (2) notify the director of any information that indicates that a member 26 insurer may be impaired or insolvent. 27 * Sec. 36. AS 21.79.110(b) is amended to read: 28 (b) The association shall keep records of [NEGOTIATIONS AND] meetings 29 relating to its activities. Records of [NEGOTIATIONS OR] meetings may only be 30 made public under AS 21.79.040(b) 31 (1) after the termination of a liquidation, rehabilitation, or conservation
01 proceeding that involves the impaired or insolvent insurer; 02 (2) after the insurer is no longer impaired or insolvent; or 03 (3) upon the order of a court of competent jurisdiction. 04 * Sec. 37. AS 21.79.110(c) is amended to read: 05 (c) The association is considered to be a creditor of the impaired or insolvent 06 insurer to the extent of assets attributable to covered policies that are reduced by an 07 amount to which the association is entitled under AS 21.79.060(s). Assets of the 08 impaired or insolvent insurer that are attributable to covered policies shall be used to 09 continue all covered policies and pay all contractual obligations of the impaired or 10 insolvent insurer as required by this chapter. Assets attributable to covered policies 11 include those assets that should have been established as reserves for the covered 12 policies. These assets are determined by multiplying the total assets of the impaired 13 or insolvent insurer by a fraction, the numerator of which is the amount that should 14 have been established as reserves for the covered policies of the impaired or insolvent 15 insurer, and the denominator of which is the amount that should have been established 16 as reserves for all policies of insurance issued in all states by that insurer. As a 17 creditor of the impaired or insolvent insurer, the association and other similar 18 entities in other states are entitled to receive a disbursement of assets out of the 19 marshaled assets as a credit against contractual obligations under this chapter 20 from time to time as the assets become available. If the liquidator has not, within 21 120 days of the date of a final determination of insolvency of an insurer by the 22 court, made an application to the court for the approval of a proposal to disburse 23 assets, the association may make application to the court for the approval of the 24 association's proposal to disburse assets. 25 * Sec. 38. AS 21.79.110 is amended by adding new subsections to read: 26 (f) A deposit in this state, held by law or required by the director for the 27 benefit of creditors, including policy owners, not turned over to the domiciliary 28 liquidator upon the entry of a final order of liquidation or order approving a 29 rehabilitation plan of an insurer domiciled in this state or in a reciprocal state shall 30 be promptly paid to the association. The association 31 (1) is entitled to retain a portion of any amount paid to it equal to the
01 percentage determined by dividing the aggregate amount of policy owners' claims 02 related to that insolvency for which the association has provided statutory benefits by 03 the aggregate amount of all policy owners' claims in this state related to that 04 insolvency; and 05 (2) shall remit to the domiciliary receiver the amount paid to the 06 association and retained under (1) of this subsection; any amount paid to the 07 association not retained by it under (1) of this subsection shall be treated as a 08 distribution of state assets under AS 21.78.294 or a similar provision of the state of 09 domicile of the impaired or insolvent insurer. 10 (g) The association may not be required to give an appeal bond in an appeal 11 of a civil action arising under this chapter. 12 * Sec. 39. AS 21.79.120 is amended to read: 13 Sec. 21.79.120. Examination of the association, annual report. The 14 association may be examined by the director. The board shall submit to the director, 15 not later than July [MAY] 1 of each year, a certified financial report for the preceding 16 calendar year in a form approved by the director and a report of its activities during 17 the preceding calendar year. Nothing in AS 21.79.110(b) limits the duty of the 18 association to report under this section. Upon request, the association shall provide 19 a copy of the report to a member insurer. 20 * Sec. 40. AS 21.79.140 is amended to read: 21 Sec. 21.79.140. Civil immunity. The association and its agents and 22 employees, members of the Board of Governors, member insurers, and agents and 23 employees of member insurers, and the director and the director's representatives are 24 not civilly liable for an action or omission in performing [TAKEN BY THEM TO 25 PERFORM] duties under this chapter. In this section, "duties" includes 26 participation in an organization of one or more state associations of life or health 27 insurers. 28 * Sec. 41. AS 21.79.150 is repealed and reenacted to read: 29 Sec. 21.79.150. Stay of proceedings; default judgment. Proceedings 30 involving an insolvent insurer shall be stayed at least 60 days after the date of a final 31 order of liquidation, rehabilitation, or conservation in order to allow the association to
01 exercise a power or duty authorized under this chapter. If a default judgment is 02 entered against an insolvent insurer, the association may apply to have the judgment 03 set aside or may defend against the action on its merits. 04 * Sec. 42. AS 21.79 is amended by adding new sections to read: 05 Sec. 21.79.160. Prohibited advertisement of insurance sales; required 06 notice. (a) A person, including an insurer, agent, or affiliate of an insurer, may not 07 make, publish, disseminate, circulate, or place before the public, or cause, directly or 08 indirectly, to be made, published, disseminated, circulated, or placed before the public, 09 in any newspaper, magazine, or other publication, or in the form of a notice, circular, 10 pamphlet, letter, or poster, or over any radio station or television station, or in any 11 other way, an advertisement, announcement, or statement, written or oral, that uses the 12 existence of the association for the purpose of sales, solicitation, or inducement to 13 purchase any form of insurance covered by the association. However, this section does 14 not apply to the association or any other entity that does not sell or solicit insurance. 15 (b) The association shall prepare a summary document describing the general 16 purposes and current limitations of this chapter and complying with (c) of this section. 17 This document shall be submitted to the director for approval. Beginning 60 days after 18 the date on which the director approves the document, an insurer may not deliver a 19 policy or contract to a policy or contract owner unless the summary document is 20 delivered to the policy or contract owner at the time of delivery of the policy or 21 contract. The document shall also be available upon request by a policy owner. The 22 distribution, delivery, contents, or interpretation of this document does not guarantee 23 that either the policy or the contract, or the owner of the policy or contract, is covered 24 in the event of the impairment or insolvency of a member insurer. The description 25 document shall be revised by the association as amendments to this chapter may 26 require. Failure to receive this document does not give the policy owner, contract 27 owner, certificate holder, or insured any greater rights than those stated in this chapter. 28 (c) The document prepared under (b) of this section must contain a clear and 29 conspicuous disclaimer on its face. The director shall establish the form and content 30 of the disclaimer. The disclaimer must 31 (1) state the name and address of the association and the division of
01 insurance; 02 (2) prominently warn the policy or contract owner that the association 03 may not cover the policy or, if coverage is available, that the policy will be subject to 04 substantial limitations and exclusions and conditioned on continued residence in this 05 state; 06 (3) state the types of policies for which guaranty funds will provide 07 coverage; 08 (4) state that the insurer and its agents are prohibited by law from using 09 the existence of the association for the purpose of sales, solicitation, or inducement to 10 purchase any form of insurance; 11 (5) state that the policy or contract owner should not rely on coverage 12 under the association when selecting and insurer; 13 (6) explain rights available and procedures for filing a complaint to 14 allege a violation of a provision of this chapter; and 15 (7) provide other information as required by the director, including 16 sources for information about the financial condition of insurers if the information is 17 not proprietary and is subject by law to disclosure. 18 (d) A member insurer shall retain evidence of compliance with (b) of this 19 section for so long as the policy or contract for which the notice is given remains in 20 effect. 21 Sec. 21.79.170. Determination of principal place of business. The principal 22 place of business of a plan sponsor consisting of 23 (1) a single employer or an employee organization is that state in which 24 the plan sponsor exercises the direction, control, and coordination of the operations of 25 the entity, as determined by the association in its reasonable judgment by considering 26 the following factors: (A) the state in which the primary executive and administrative 27 headquarters of the entity are located; (B) the state in which the principal office of the 28 chief executive officer of the entity is located; (C) the state in which the board of 29 directors or a similar governing body of the entity conducts the majority of its 30 meetings; (D) the state in which the executive or management committee of the board 31 of directors or a similar governing body of the entity conducts the majority of its
01 meetings; (E) the state from which the management of the overall operations of the 02 entity is directed; and (F) in the case of a benefit plan sponsored by affiliated 03 companies making up a consolidated corporation, the state in which the holding 04 company or controlling affiliate has its principal place of business as determined using 05 the factors described in (A) - (E) of this paragraph; however, if more than 50 percent 06 of the participants in the benefit plan are employed in a single state, that state is 07 considered to be the principal place of business of a plan sponsor that is a single 08 employer or an employee organization; 09 (2) two or more employers or employee organizations is that state in 10 which the employers or employee organizations have the largest investment in the 11 benefit plan. 12 Sec. 21.79.180. Determination of residency of certain individuals. A citizen 13 of the United States that is either a (1) resident of a foreign country, or (2) resident of 14 a United States possession, territory, or protectorate that does not have an association 15 similar to the association created by this chapter is, for purposes of this chapter, a 16 resident of the state of domicile of the insurer that issued the policy or contract. 17 * Sec. 43. AS 21.79.900(6) is amended to read: 18 (6) "member insurer" means an insurer licensed to transact insurance 19 in the state that issues a policy described in AS 21.79.020(a) and (b), or a subscriber 20 contract providing benefits described in AS 21.87.120(a)(2) - (4) or 21.87.130(a)(2) 21 and (3), and includes an insurer whose license or certificate of authority in this state 22 may have been suspended, revoked, not renewed, or voluntarily withdrawn; "member 23 insurer" does not include 24 (A) a health maintenance organization licensed under AS 21.86; 25 (B) a fraternal benefit society licensed under AS 21.84; 26 (C) a mandatory state pooling plan; 27 (D) a mutual assessment company or an entity that operates on 28 an assessment basis; 29 (E) an insurance exchange licensed under AS 21.75; [OR] 30 (F) a [NONPROFIT] hospital or medical service organization 31 licensed under AS 21.87;
01 (G) an organization that has a license or certificate limited 02 to the issuance of charitable gift annuities; or 03 (H) an entity similar to one described under (A) - (G) of this 04 paragraph; 05 * Sec. 44. AS 21.79.900(9) is amended to read: 06 (9) "resident" means a person to whom a contractual obligation is 07 owed under this chapter and who resides in this state on the date of entry of a 08 court order that determines a member insurer to be an impaired or insolvent 09 insurer, whichever occurs first [AT THE TIME A MEMBER INSURER IS 10 DETERMINED TO BE AN IMPAIRED OR INSOLVENT INSURER AND TO 11 WHICH A CONTRACTUAL OBLIGATION IS OWED]; a person may be a resident 12 of only one state, which , in the case of a person other than a natural person , shall be 13 the principal place of business; 14 * Sec. 45. AS 21.79.900 is amended by adding new paragraphs to read: 15 (12) "authorized assessment" means an assessment approved by a 16 resolution by the board that will be called immediately or in the future from member 17 insurers for a specified amount; 18 (13) "called" means that a notice has been issued by the association to 19 member insurers requiring that an authorized assessment be paid within the time set 20 out in the notice; 21 (14) "impaired insurer" means a member insurer that is not an insolvent 22 insurer and that is placed under an order of rehabilitation or conservation by a court 23 of competent jurisdiction; 24 (15) "insolvent insurer" means a member insurer that is placed under 25 an order of liquidation by a court of competent jurisdiction with a finding of 26 insolvency; 27 (16) "owner," in relation to a policy or contract, 28 (A) means the person who is identified as the legal owner under 29 the terms of the policy or contract, or who is otherwise vested with legal title 30 to the policy or contract through a valid assignment completed under the terms 31 of the policy or contract and who is properly recorded as the owner on the
01 records of the insurer; 02 (B) does not include a person with a mere beneficial interest in 03 a policy or contract; 04 (17) "plan sponsor" means, in the case of a benefit plan established or 05 maintained by 06 (A) a single employer, the employer; 07 (B) an employee organization, the employee organization; or 08 (C) two or more employers or jointly by one or more employers 09 and one or more employee organizations, the association, committee, joint 10 board of trustees, or other group of representatives of the parties who establish 11 or maintain the benefit plan; 12 (18) "receivership court" means the court in the insolvent or impaired 13 insurer's state having jurisdiction over the conservation, rehabilitation, or liquidation 14 of the insurer; 15 (19) "structured settlement annuity" means an annuity purchased in 16 order to fund periodic payments for a plaintiff or other claimant in payment for or with 17 respect to personal injury suffered by the plaintiff or other claimant; 18 (20) "state" means a state of the United States, the District of 19 Columbia, Puerto Rico, or a United States possession, territory, or protectorate. 20 * Sec. 46. AS 21.36.035, AS 21.79.060(b), 21.79.100(g), and 21.79.100(i) are repealed. 21 * Sec. 47. The uncodified law of the State of Alaska is amended by adding a new section 22 to read: 23 TRANSITIONAL PROVISIONS. The terms of the members of the board of governors 24 of the Alaska Life and Health Insurance Guaranty Association who are serving on the 25 effective date of this Act are not affected by this Act. Their terms expire as provided before 26 the enactment of this Act.