CSHB 184(L&C): "An Act relating to insurance; amending Rule 402, Alaska Rules of Evidence; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 184(L&C) 01 "An Act relating to insurance; amending Rule 402, Alaska Rules of Evidence; and 02 providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 05 to read: 06 PURPOSE. The primary purpose of this Act is to implement insurance reforms in 07 AS 21 as required by P.L. 106-102 (Gramm-Leach-Bliley Act) to modernize financial 08 services related to the business of insurance and to further this state as an attractive place for 09 investment and other commerce involving the insurance industry. 10 * Sec. 2. AS 21.27.010(e) is repealed and reenacted to read: 11 (e) An employee of an insurer who responds to requests from existing 12 policyholders on existing policies is not required to be licensed under this section if 13 the employee 14 (1) is not directly compensated based on volume of premiums that may
01 result from those services; and 02 (2) does not transact insurance. 03 * Sec. 3. AS 21.27.010(j) is amended to read 04 (j) This section does not apply to a person who 05 (1) is employed on salary or hourly wage by a person licensed under 06 this section solely for the performance of accounting, clerical, stenographic, and 07 similar office duties; 08 (2) only secures and forwards information required for the purposes of, 09 and does not receive a commission for, any of the following services: 10 (A) performing administrative services related to 11 (i) group life insurance; 12 (ii) group property and casualty insurance; 13 (iii) group annuities; 14 (iv) group or blanket accident and health insurance; 15 (B) enrolling individuals under plans for the types of 16 insurance or annuities specified in (A) of this paragraph; 17 (C) issuing certificates under plans for the types of 18 insurance or annuities specified in (A) of this paragraph, or otherwise 19 assisting in administering those plans; 20 (D) performing administrative services related to mass- 21 marketed property and casualty insurance [COVERING THE UNPAID 22 BALANCE, OR REMAINING PAYMENTS PROPOSED TO BE MADE, IN 23 CONNECTION WITH THE PURCHASE OF MERCHANDISE OR 24 SERVICES, IF THE PERSON RECEIVES NO COMPENSATION, 25 DIRECTLY OR INDIRECTLY, ARISING OUT OF OR IN ANY WAY 26 RELATING TO THE INSURANCE TRANSACTIONS]; [OR] 27 (3) is employed on salary by a licensee at the licensee's place of 28 business, is supervised by and reports directly to a licensee in the firm, and who, after 29 explaining that the matter must be reviewed by a licensee, may 30 (A) furnish premium estimates from published or printed lists 31 of standard rates if the person does not advise, counsel, or suggest what
01 coverage may be needed, or otherwise solicit insurance coverage; 02 (B) arrange appointments for a licensee if the person does not 03 solicit insurance coverage; 04 (C) record information from an applicant or policyholder and 05 complete for the licensee's personal review and signature, a certificate of 06 insurance that is not a contract of insurance; the licensee's signature may be by 07 facsimile; 08 (D) inform a policyholder of the type of coverage shown in the 09 licensee's policy record if the person does not advise that an event or 10 hypothetical event is or is not covered; or 11 (E) in the physical presence of the licensee, record information 12 from an applicant or policyholder and complete for a licensee's personal 13 review and personal signature, applications, binders, endorsements, or 14 identification cards if the person discloses to the applicant or policyholder that 15 the applicant or policyholder may review the matter with a licensee; 16 (4) is an employee of an insurer or an organization employed by an 17 insurer and is engaged in the inspection, rating, or classification of risks, or in the 18 supervision of the training of insurance producers and is not individually 19 engaged in the sale, solicitation, or negotiation of insurance; 20 (5) advertises in this state through printed publications or 21 electronic mass media, the distribution of which is not limited to residents of this 22 state, if the person 23 (A) performs no other insurance-related activities in this 24 state; 25 (B) does not intend to solicit in this state; and 26 (C) does not sell, solicit, or negotiate insurance of risks 27 resident, located, or to be performed in this state; 28 (6) is not a resident of this state, but sells, solicits, or negotiates 29 commercial property and casualty insurance for an insured with risks located in 30 more than one state if the person is licensed as an insurance producer in the state 31 where the insured maintains its principal place of business and the contract of
01 insurance covers risks located in that state; 02 (7) is a salaried full-time employee who counsels or advises the 03 person's employer regarding the insurance interests of the employer or of the 04 subsidiaries or business affiliates of the employer, if the employee does not sell or 05 solicit insurance or receive a commission from the sale or solicitation of 06 insurance; 07 (8) is an employer or association or the employer's or association's 08 officer, director, employee, or the trustee of an employee trust plan, if the person 09 is not compensated, directly or indirectly, for transacting insurance and is 10 engaged in the administration or operation of a plan offering employee benefits 11 for the employer's or association's own employees, or the employees of its 12 subsidiaries or affiliates; to qualify under this paragraph, the plan must include 13 insurance for employees; or 14 (9) is an officer, director, or employee of an admitted insurer who 15 does not receive a commission on policies written or sold to risks resident, 16 located, or to be performed in this state if the officer's, director's, or employee's 17 functions are executive, administrative, managerial, clerical, or a combination of 18 these and are only indirectly related to the transaction of insurance; relates to 19 underwriting or loss control; or are in the capacity of an agency supervisor 20 where the activities are limited to providing technical assistance to insurance 21 producers and whose activities do not include transacting insurance. 22 * Sec. 4. AS 21.27.020(b) is amended to read: 23 (b) To qualify for issuance or renewal of an individual or individual in the 24 firm license, an applicant or licensee shall comply with this title and [,] regulations 25 adopted under AS 21.06.090 [,] and 26 (1) shall be 18 [19] years of age or older [WITH A HIGH SCHOOL 27 OR GENERAL EDUCATION DEVELOPMENT DIPLOMA OR EQUIVALENT]; 28 (2) if for a resident license, shall be a bona fide resident before 29 issuance of the license and actually reside in the state; 30 (3) shall successfully pass an examination required under 31 AS 21.27.060;
01 (4) shall be a trustworthy person; 02 (5) may not use or intend to use the license for the purpose principally 03 of writing controlled business, as defined in AS 21.27.030; 04 (6) may not have committed an act that is a cause for denial, 05 nonrenewal, suspension, or revocation of a license in this state or another jurisdiction. 06 * Sec. 5. AS 21.27.020(c) is repealed and reenacted to read: 07 (c) To qualify for issuance or renewal of a license as a firm insurance 08 producer, a firm managing general agent, a firm reinsurance intermediary broker, a 09 firm reinsurance intermediary manager, a firm surplus lines broker, or a firm 10 independent adjuster, an applicant or licensee shall 11 (1) comply with (b)(4) and (5) of this section; 12 (2) maintain a lawfully established place of business in this state, 13 except when licensed as a nonresident under AS 21.27.270; 14 (3) disclose to the director all owners, officers, directors, or partners of 15 the firm; 16 (4) designate a compliance officer for the firm; 17 (5) provide to the director documents necessary to verify the 18 information contained in or made in connection with the application; and 19 (6) notify the director, in writing, within 30 days of a change in the 20 firm's compliance officer or of the termination of employment of an individual in the 21 firm licensee. 22 * Sec. 6. AS 21.27.020(f) is amended to read: 23 (f) The director may adopt regulations establishing additional education or 24 experience requirements for applicants or licensees under this chapter upon due 25 consideration of the availability and accessibility of education and training 26 opportunities in rural areas of the state. Regulations adopted under this subsection are 27 subject to the following provisions: 28 (1) additional educational or experience requirements may not apply to 29 a licensee who has been licensed by the division of insurance before January 1, 1980; 30 (2) a licensee shall complete at least 24 credit hours of approved 31 continuing education courses during each two-year license period;
01 (3) if a licensee has accumulated more credit hours than required under 02 (2) of this subsection by the end of the license period, a maximum of eight hours may 03 be carried over to meet the requirements of (2) of this subsection in the next license 04 period; 05 (4) a program or seminar may not be approved as an acceptable 06 continuing education program unless it is a formal program of learning that 07 contributes to the professional competence of the licensee; individual study programs 08 or correspondence courses may be used to fulfill continuing education requirements if 09 approved by the director; 10 (5) a nonresident licensee is exempt from the requirements of this 11 subsection [IF THE LICENSEE SUBMITS EVIDENCE SATISFACTORY TO THE 12 DIRECTOR THAT THE LICENSEE HAS SATISFIED ANY CONTINUING 13 EDUCATION REQUIREMENTS OF THE LICENSEE'S DOMICILIARY STATE]. 14 * Sec. 7. AS 21.27.025(a) is amended to read: 15 (a) A licensee shall notify the director within 30 days in writing [BY 16 CERTIFIED MAIL] of a change in residence, employment that is licensed under this 17 chapter, place of business, legal name, fictitious name or alias, mailing address, or 18 phone number. A licensee shall report in writing to the director any 19 administrative action taken against the licensee by a governmental agency of 20 another state or by a governmental agency of another jurisdiction within 30 days 21 after the final disposition of the action. A licensee shall submit to the director the 22 final order and other relevant legal documents in the action. A licensee shall 23 report to the director any criminal prosecution of the licensee in this or another 24 state or jurisdiction within 30 days after the date of filing of the criminal 25 complaint, indictment, information, or citation in the prosecution. The licensee 26 shall submit to the director a copy of the criminal complaint, calendaring order, 27 and other relevant legal documents in the prosecution [; A SUSPENSION, 28 REVOCATION, OR DISCIPLINARY ACTION OF A LICENSE BY ANOTHER 29 STATE OR JURISDICTION; OR A CONVICTION OF A MISDEMEANOR OR 30 FELONY]. 31 * Sec. 8. AS 21.27.025(b) is amended to read:
01 (b) A compliance officer [PRINCIPAL OR MANAGER] shall notify the 02 director in writing within 30 days of a termination of employment of a licensed 03 individual in the firm. Notice required under this subsection must include 04 (1) the licensee's name; 05 (2) the firm's name and address; 06 (3) the date of hire, self-employment, or termination of the licensee; 07 and 08 (4) other information required by the director. 09 * Sec. 9. AS 21.27.040(a) is amended to read: 10 (a) Application for a license shall be made to the director upon forms 11 prescribed by the director. As a part of or in connection with the application, the 12 applicant shall furnish information concerning the applicant's identity, personal 13 history, experience, business record, purposes, and other pertinent facts that the 14 director may reasonably require. The applicant shall declare, [UNDER OATH AND] 15 subject to penalty of denial, nonrenewal, suspension, or revocation of a license issued 16 by the director that the statements made in or in connection with the application are 17 true, correct, and complete to the best of the applicant's knowledge and belief. 18 Payment of an application fee established under AS 21.06.250 must be submitted with 19 the application. 20 * Sec. 10. AS 21.27.040 is amended by adding a new subsection to read: 21 (e) As part of the application required by (a) of this section, an applicant shall 22 furnish to the director a full set of fingerprints so that the director may obtain criminal 23 justice information as provided under AS 12.62 about the applicant. The director shall 24 submit the completed fingerprint card to the Department of Public Safety. The 25 Department of Public Safety is authorized to submit the fingerprints to the Federal 26 Bureau of Investigation for a national criminal history record check. 27 * Sec. 11. AS 21.27.060(a) is amended to read: 28 (a) Except as provided in this chapter, an applicant for an individual license 29 and a compliance officer [PRINCIPAL OR MANAGER] applicant for a firm license 30 shall, before the issuance of the license, personally take and pass, to the satisfaction of 31 the director, an examination that tests the knowledge and competence of the applicant
01 as to the applicant's duties and responsibilities as a licensee and the insurance statutes 02 [LAWS] and regulations of the state. 03 * Sec. 12. AS 21.27.060(c) is repealed and reenacted to read: 04 (c) An individual who applies for an insurance producer license in this state 05 who was previously licensed for the same lines of authority in that individual's prior 06 home state is not required to pass the examination required by (a) of this section in 07 order to secure the same authority in this state. The exemption available under this 08 subsection applies only if the application is received within 90 days after the 09 cancellation of the applicant's previous license in the applicant's prior home state and 10 (1) the applicant's prior home state verifies that, at the time of 11 cancellation, the applicant held an insurance producer license that was in good 12 standing in that state; or 13 (2) the insurance producer licensing database records for the prior 14 home state that are maintained by the National Association of Insurance 15 Commissioners or its affiliates or subsidiaries indicate that the applicant is or was 16 licensed in good standing for the kind of license requested. 17 * Sec. 13. AS 21.27.060(d) is amended to read: 18 (d) This section does not apply to an applicant 19 (1) for a limited license under AS 21.27.150(a)(1), (5), or (6) 20 [AS 21.27.150(a)(1), (2), (6), OR (7)]; or 21 (2) who, at any time within the one-year [TWO-YEAR] period 22 immediately preceding the date the current pending application is received by the 23 division, had been licensed in good standing in this state under a license requiring 24 substantially similar qualifications as required by the license applied for [; OR 25 (3) WHOSE LICENSE IN ITS RESIDENT JURISDICTION 26 REQUIRES THE SAME QUALIFICATIONS AS THE LICENSE APPLIED FOR IN 27 THIS STATE IF THE LICENSE IN ALL JURISDICTIONS IS IN GOOD 28 STANDING]. 29 * Sec. 14. AS 21.27.100 is amended by adding new subsections to read: 30 (f) An insurer may appoint an insurance producer to all or some insurers 31 within the insurer's holding company system or group by the filing of a single
01 appointment under this subsection. 02 (g) The authorized or apparently authorized acts on behalf of an appointing 03 insurer of an insurance producer appointed under this section are considered the acts 04 of that insurer. 05 * Sec. 15. AS 21.27.110 is repealed and reenacted to read: 06 Sec. 21.27.110. Term of appointment. (a) An appointment under 07 AS 21.27.100 continues in force until the appointment is terminated in accordance 08 with this section. 09 (b) If an appointment is terminated by an insurer, reinsurer, or authorized 10 representative, the insurer, reinsurer, or authorized representative shall, on a form or in 11 a format prescribed by the director, notify the director within 30 days after the date of 12 termination of the appointment. 13 (c) If an appointment is terminated by the director, a written or an electronic 14 notice of termination shall be given to the appointee, to the person that made the 15 appointment, and, if different from the person making the appointment, to the insurer 16 or reinsurer, at least 10 days before the effective date of the termination. The director 17 shall send notification under this subsection to the latest address on record with the 18 director. 19 (d) If, after termination and notice under (b) of this section, an insurer, 20 reinsurer, or authorized representative discovers additional information showing that 21 the appointee whose appointment was terminated has engaged in an activity identified 22 in AS 21.27.410 during the period of the appointment, the insurer, reinsurer, or 23 authorized representative shall, on a form or in a format prescribed by the director, 24 promptly notify the director. 25 (e) Within 15 days after providing notification in accordance with (b) and (d) 26 of this section, the insurer, reinsurer, or authorized representative shall mail a copy of 27 the notification to the appointee at the last address on record with the director. The 28 notice must be provided by certified mail, return receipt requested, postage prepaid, or 29 by overnight delivery using a nationally recognized mail carrier, if the appointment 30 was terminated for an activity identified in AS 21.27.410. 31 (f) Within 30 days after the appointee receives notification in accordance with
01 (c) of this section, the appointee may file written comments concerning the substance 02 of the notification with the director and must provide a copy of the written comments 03 to the insurer, reinsurer, or authorized representative. The written comments filed 04 with the director must be included with each report distributed or disclosed concerning 05 a reason about the termination of the appointment. 06 (g) If requested by the director, an insurer, reinsurer, or authorized 07 representative shall provide to the director additional information, documents, records, 08 or other data pertaining to a termination or activity of a licensee under this title. 09 (h) A notice of termination submitted to the director under this section must 10 include a statement of the reasons for the termination. A statement of the reasons for 11 termination is confidential and not subject to inspection and copying under 12 AS 40.25.110. A statement of reasons for the termination may not be admitted as 13 evidence in a civil action or an administrative proceeding against an insurer, reinsurer, 14 or authorized representative by or on behalf of a person affected by the termination, 15 except when the action or proceeding involves perjury, unsworn falsification, fraud, or 16 failure to comply with this subsection. 17 (i) If an insurer, reinsurer, or authorized representative fails to report as 18 required under this section or is found by a court to have knowingly or intentionally 19 falsely made that report, the director may, after notice and hearing, suspend or revoke 20 the license or certificate of authority of the insurer, reinsurer, or authorized 21 representative and may impose a penalty in accordance with AS 21.27.440. 22 (j) The director may require that an insurer renew an appointment annually 23 and may require payment of a renewal fee under AS 21.06.250 for an appointment in 24 effect on December 31 of the current year. If the director requires that an appointment 25 be renewed or a renewal fee be paid, the director shall terminate the appointment if the 26 renewal fees have not been received by the director on or before the close of business 27 on March 1 of the renewal year. 28 * Sec. 16. AS 21.27 is amended by adding a new section to read: 29 Sec. 21.27.115. Lines of authority. If a person has met the applicable 30 requirements of AS 21.27.020 and 21.27.270, the director shall issue a license for one 31 or more of the following lines of authority:
01 (1) life insurance coverage on natural persons; in this paragraph, "life 02 insurance coverage" 03 (A) includes benefits of endowment and annuities; and 04 (B) may include benefits in the event of death or 05 dismemberment by accident and benefits for disability income; 06 (2) health insurance coverage for sickness, bodily injury, or accidental 07 death; in this paragraph, "health insurance coverage" may include benefits for 08 disability income; 09 (3) property insurance coverage for the direct or consequential loss for 10 damage to property of every kind; 11 (4) casualty insurance coverage against legal liability, including that 12 for death, injury, or disability or damage to real or personal property; in this 13 paragraph, "casualty insurance" includes surety insurance as defined in AS 21.12.080; 14 (5) variable life and variable annuity products insurance coverage; 15 (6) personal lines property and casualty insurance coverage sold to 16 individuals and families for primarily noncommercial purposes; 17 (7) limited lines credit insurance; 18 (8) any insurance for which a limited lines license may be issued under 19 AS 21.27.150. 20 * Sec. 17. AS 21.27.130 is amended to read: 21 Sec. 21.27.130. Form and content of licenses. A license must be in the form 22 the director prescribes and must set out 23 (1) the name and address of the licensee [,] and, if the licensee is 24 required to have a place of business, the physical address of the place of business; 25 (2) [IF FOR A FIRM, THE NAME OF THE PRINCIPAL OR 26 MANAGER OF THE FIRM; 27 (3)] the type, [KIND OR] class, and lines of authority [OF 28 INSURANCE] the licensee is licensed to handle; 29 (3) [(4)] the effective date and expiration date of the license; 30 (4) each condition, if any, [(5) THE CONDITION] under which the 31 license is granted;
01 (5) [(6)] the date of issuance of the license; 02 (6) [(7)] each fictitious name and alias under which the licensee may 03 do business; and 04 (7) [(8)] other information required by the director. 05 * Sec. 18. AS 21.27.130 is amended by adding a new subsection to read: 06 (b) A license issued by the director does not in itself create any authority, 07 actual, apparent, or inherent, in the holder of the license to represent or commit an 08 insurer. 09 * Sec. 19. AS 21.27.140(b) is amended to read: 10 (b) A firm may not be licensed as an insurance producer, managing general 11 agent, reinsurance intermediary broker, reinsurance intermediary manager, surplus 12 lines broker, or independent adjuster, or transact insurance unless each individual 13 employed as an insurance producer, managing general agent, surplus lines broker, 14 trainee insurance producer, trainee independent adjuster, or independent adjuster by 15 the firm is licensed as an individual in the firm and the compliance officer 16 [PRINCIPAL OR MANAGER] of the firm is licensed as an individual in the firm to 17 exercise all the powers conferred by the firm's license. 18 * Sec. 20. AS 21.27.140(c) is amended to read: 19 (c) If the director determines under AS 21.06.170 - 21.06.240 that a firm knew 20 or should have known of an act or representation made on the firm's behalf by a 21 person not licensed as required by this chapter, the firm and the firm's compliance 22 officer [PRINCIPAL OR MANAGER] are subject to the penalties provided under 23 AS 21.27.440. 24 * Sec. 21. AS 21.27.150(a) is amended to read: 25 (a) The director may issue a 26 (1) travel insurance limited producer license to a person [WHOSE 27 PLACE OF BUSINESS IS LOCATED IN THIS STATE,] who sells transportation 28 tickets of a common carrier of persons or property, who is appointed under 29 AS 21.27.100, and whose sole purpose is to be appointed by and act as an agent for 30 transportation ticket policies of health insurance, baggage insurance on personal 31 effects, and trip cancellation or trip interruption insurance;
01 (2) [HEALTH INSURANCE LIMITED PRODUCER LICENSE TO 02 A RESIDENT OF THIS STATE WHOSE SOLE PURPOSE IS TO BE APPOINTED 03 BY AND ACT AS AN AGENT FOR HEALTH INSURANCE PERTAINING TO 04 SPORTS AND RECREATION; 05 (3)] title insurance limited producer license to a person whose place of 06 business is located in this state and whose sole purpose is to be appointed by and act 07 on behalf of a title insurer; 08 (3) [(4)] bail bond limited producer license to a person [WHOSE 09 PLACE OF BUSINESS IS LOCATED IN THIS STATE AND] whose sole purpose is 10 to be appointed by and act on behalf of a surety insurer pertaining to bail bonds; 11 (4) [(5)] fraternal benefit society limited producer license to a person 12 whose sole purpose is to be appointed by and act on behalf of a fraternal benefit 13 society licensed under AS 21.84; 14 (5) [(6) RETIRED INSURANCE PRODUCER LICENSE TO A 15 RESIDENT WHO IS RETIRED OR RETIRING FROM THE BUSINESS OF 16 INSURANCE AND SURRENDERS ALL IN-FORCE LICENSES TO ALLOW THE 17 PERSON TO RECEIVE A CONTINUING COMMISSION IN REGARD TO 18 INSURANCE TRANSACTED BEFORE RETIREMENT; A RETIRED 19 INSURANCE PRODUCER LICENSEE MAY NOT SOLICIT, INDUCE, 20 NEGOTIATE, OR EFFECTUATE CONTRACTS OF INSURANCE; THE 21 DIRECTOR MAY RENEW A RETIRED INSURANCE PRODUCER LICENSE IF 22 THE LICENSEE CEASES TO BE A RESIDENT OF THIS STATE; 23 (7)] motor vehicle rental agency limited producer license to a person 24 and, subject to the approval of the director, to employees of the person licensed that 25 the licensee authorizes to transact the business of insurance on the licensee's behalf if, 26 as to an employee, the licensee complies with (D) of this paragraph and if the licensee 27 (A) rents to others, without operators, 28 (i) private passenger motor vehicles, including 29 passenger vans, minivans, and sport utility vehicles; or 30 (ii) cargo motor vehicles, including cargo vans, pickup 31 trucks, and trucks with a gross vehicle weight of less than 26,000
01 pounds that do not require the operator to possess a commercial driver's 02 license; 03 (B) rents motor vehicles only to persons under rental 04 agreements that do not exceed a term of 90 days; 05 (C) transacts only the following kinds of insurance: 06 (i) motor vehicle liability insurance with respect to 07 liability arising out of the use of a vehicle rented from the licensee 08 during the term of the rental agreement; 09 (ii) uninsured or underinsured motorist coverage, with 10 minimum limits described in AS 21.89.020(c) and (d) arising out of the 11 use of a vehicle rented from the licensee during the term of the rental 12 agreement; 13 (iii) insurance against medical, hospital, surgical, and 14 disability benefits to an injured person and funeral and death benefits to 15 dependents, beneficiaries, or personal representatives of a deceased 16 person if the insurance is issued as incidental coverage with or 17 supplemental to liability insurance and arises out of the use of a vehicle 18 rented from the licensee during the term of the rental agreement; 19 (iv) personal effects insurance, including loss of use, 20 with respect to damage to or loss of personal property of a person 21 renting the vehicle and other vehicle occupants while that property is 22 being loaded into, transported by, or unloaded from a vehicle rented 23 from the licensee during the term of the rental agreement; 24 (v) towing and roadside assistance with respect to 25 vehicles rented from the licensee during the term of the rental 26 agreement; and 27 (vi) other insurance as may be authorized by regulation 28 by the director; 29 (D) notifies the director in writing, within 30 days of 30 employment, of the name, date of birth, social security number, location of 31 employment, and home address of an employee authorized by the licensee to
01 transact insurance on the licensee's behalf; and 02 (E) provides other information as required by the director; 03 (6) nonresident limited producer license to a person; a license that 04 the director issues under this paragraph grants the same scope of authority as a 05 limited lines producer license issued to the person by the person's home state; 06 (7) credit insurance limited producer license to a person who sells 07 limited lines credit insurance; 08 (8) miscellaneous limited producer license to a person who 09 transacts insurance in this state that restricts the person's authority to less than 10 the total authority for a line of authority described in AS 21.27.115(1) - (6). 11 * Sec. 22. AS 21.27.270 is repealed and reenacted to read: 12 Sec. 21.27.270. Licensing of nonresidents. (a) In accordance with P.L. 106- 13 102 (Gramm-Leach-Bliley Act), the director shall issue a license to a nonresident 14 license applicant on terms that are reciprocal with those of the applicant's home state. 15 Notwithstanding any contrary provision of this chapter, the director may by order 16 waive any license application requirement in this chapter to achieve reciprocity to 17 license a nonresident in accordance with P.L. 106-102 (Gramm-Leach-Bliley Act). 18 (b) Unless the director denies or refuses to renew a license under 19 AS 21.27.410, the director shall issue a nonresident producer, limited lines, surplus 20 lines broker, managing general agent, reinsurance intermediary broker, or reinsurance 21 intermediary manager license to a person who is not a resident of this state if 22 (1) the person is currently licensed and is in good standing in the 23 person's home state; the director may verify the person's licensing status through the 24 producer licensing database records maintained by the National Association of 25 Insurance Commissioners or its affiliates or subsidiaries; 26 (2) the person has paid the fees required under AS 21.06.250 and has 27 submitted to the director 28 (A) the license application the person submitted to the person's 29 home state; or 30 (B) if the person is not a firm, a completed uniform application 31 or, if a firm, the uniform business entity application; and
01 (3) the person's home state awards nonresident producer, limited lines, 02 surplus lines, managing general agent, reinsurance intermediary broker, and 03 reinsurance intermediary manager licenses to residents of this state on the same basis 04 as does this state. 05 (c) Notwithstanding (b) of this section, the director may require a person 06 applying for a 07 (1) nonresident license to furnish the person's fingerprints as required 08 of a person applying for a license under AS 21.27.040(e); 09 (2) surplus lines broker license under this section to have, and maintain 10 while licensed in this state, the bond required of a person applying for a license under 11 AS 21.27.790(2); and 12 (3) nonresident license to comply with the premium fiduciary account 13 requirements of AS 21.27.360 and the regulations adopted under that statute. 14 (d) A person licensed as a limited lines producer in the person's home state 15 shall receive a nonresident limited lines producer license granting the same scope of 16 authority as the license issued by the producer's home state. 17 (e) In addition to the other requirements of this chapter, a person may not be 18 licensed as a nonresident licensee until the person files a power of attorney as follows: 19 (1) an applicant shall appoint the director as attorney to receive service 20 of legal process issued against the licensee in this state upon a cause of action arising 21 in this state or relative to a subject resident, located, or to be performed in this state; 22 service upon the director as attorney shall constitute effective legal service upon the 23 licensee; and 24 (2) the appointment shall be irrevocable for as long as there could be a 25 cause of action against the licensee arising out of an insurance transaction in this state 26 or relative to a subject resident, located, or to be performed in this state. 27 (f) Duplicate copies of legal process against a licensed or formerly licensed 28 nonresident licensee shall be served upon the director either by a peace officer or 29 through certified mail with return receipt requested. At the time of service, the 30 plaintiff shall pay to the director a fee set under AS 21.06.250. 31 (g) Upon receiving a service of process, the director shall immediately send
01 one of the copies of the process by certified mail, return receipt requested, to the 02 licensed or formerly licensed nonresident licensee at the last address of record filed 03 with the director. 04 * Sec. 23. AS 21.27 is amended by adding a new section to read: 05 Sec. 21.27.275. Alien licensees. The director may issue a license authorized 06 by this chapter to a nonresident of this state who does not have a home state if that 07 person meets all the requirements of this chapter for that license applicable to a 08 resident of this state applying for the same license. 09 * Sec. 24. AS 21.27.330 is repealed and reenacted to read: 10 Sec. 21.27.330. Place of business. (a) A person licensed under this chapter 11 shall have and maintain at least one place of business that is physically accessible to 12 the public in this state unless the person holds a nonresident license and principally 13 conducts transactions in another state. However, the nonresident licensee must have at 14 least one physically accessible place in the nonresident licensee's home state. The 15 requirements of this subsection do not apply to a licensee who only conducts business 16 in life or health insurance or annuities. 17 (b) If a licensee that is a firm transacts business at more than one place of 18 business in this state, the licensee shall pay a license fee for each place of business. 19 * Sec. 25. AS 21.27.350(c) is amended to read: 20 (c) The records of a particular transaction shall be retained and kept open for 21 examination and inspection by the director at any business time during the five years 22 immediately after the date of the completion of the transaction or 10 years for 23 reinsurance transactions, unless the director orders a longer period of retention. If a 24 licensee assumes the business of another licensee or former licensee by merger, 25 purchase, or otherwise, the compliance officer [PRINCIPAL OR MANAGER] of the 26 assuming licensee firm shall provide to the director in writing each location where the 27 assumed licensee's records are maintained by the assuming licensee during the period 28 in which the records must be kept available and open to the inspection of the director. 29 A formerly licensed person shall provide to the director in writing each location where 30 records shall be maintained during the period in which the records of a particular 31 transaction must be kept available and open to the examination and inspection of the
01 director. A formerly licensed person may, with the permission of the director, arrange 02 to have a current licensee or the home office of the last known insurer of each 03 policyholder [,] maintain the records open to the examination and inspection of the 04 director during the period in which the records must be maintained. 05 * Sec. 26. AS 21.27.360(b) is amended to read: 06 (b) All money, except that made payable to the insurer, representing premium 07 taxes and fees, premiums, or return premiums received by the licensee [,] shall be 08 received by the licensee as a [IN THE] fiduciary [ACCOUNT OF THE LICENSEE] 09 and shall be promptly accounted for and paid to the person entitled to the money. 10 [THE FIDUCIARY ACCOUNT SHALL BE LOCATED IN THIS STATE UNLESS 11 THE LICENSEE IS LICENSED AS A NONRESIDENT UNDER AS 21.27.270. 12 FOR PURPOSES OF THIS SECTION, THE FIDUCIARY ACCOUNT OF THE 13 FIRM SHALL BE CONSIDERED THE FIDUCIARY ACCOUNT OF AN 14 INDIVIDUAL LICENSEE ACTING ON BEHALF OF THE FIRM AND SHALL BE 15 THE RESPONSIBILITY OF THE FIRM]. Money held by the licensee as a 16 fiduciary [DEPOSITED INTO A FIDUCIARY ACCOUNT] may not be commingled 17 or otherwise combined with other money not held by the licensee as a fiduciary [, 18 EXCEPT AS ALLOWED UNDER (d) OF THIS SECTION AND AS 21.27.365]. 19 * Sec. 27. AS 21.27.360(c) is amended to read: 20 (c) In addition to any other penalty provided by law, a person who the director 21 has determined has acted to divert or appropriate money held as a fiduciary 22 [ACCOUNT MONEY] for personal use shall be ordered to make restitution and shall 23 be subject to suspension or revocation under AS 21.27.420 - 21.27.430 of all licenses 24 and a civil penalty not to exceed $50,000 for each violation. 25 * Sec. 28. AS 21.27.360(d) is amended to read: 26 (d) A licensee may only commingle premium taxes and fees, premiums, and 27 return premiums with additional money for the purpose of advancing premiums, 28 establishing reserves for the payment of return premiums, or reserves for receiving and 29 transmitting premium or return premium money [. MONEY COLLECTED FOR THE 30 PAYMENT OF PREMIUM TAXES, POLICY OR FILING FEES, LATE PAYMENT 31 CHARGES, AND INTEREST FROM FIDUCIARY MONEY ON DEPOSIT, MAY
01 BE COMMINGLED IN A FIDUCIARY ACCOUNT, BUT SHALL BE 02 SEPARATELY ACCOUNTED FOR AND PERIODICALLY REMOVED FROM 03 THE FIDUCIARY ACCOUNT]. 04 * Sec. 29. AS 21.27.360(e) is amended to read: 05 (e) Money held by a licensee as a fiduciary may not be treated [A 06 LICENSEE MAY NOT TREAT MONEY REQUIRED TO BE IN A FIDUCIARY 07 ACCOUNT] as a personal asset, as collateral for a personal or business loan, or as a 08 personal asset or income on a financial statement, except that money held by the 09 licensee as a [IN A] fiduciary [ACCOUNT] may be included in a financial statement 10 of the licensee if clearly identified as assets held by the licensee as a fiduciary 11 [ACCOUNT ASSETS AND LIABILITIES]. 12 * Sec. 30. AS 21.27.360(f) is amended to read: 13 (f) This section does not apply to an individual in the firm who acts solely on 14 behalf of a firm that maintains compliance with this section [AND DEPOSITS ALL 15 MONEY INTO THE FIRM'S FIDUCIARY ACCOUNT]. 16 * Sec. 31. AS 21.27 is amended by adding a new subsection to read: 17 (h) The director of insurance may adopt regulations to implement, define, and 18 enforce this section. 19 * Sec. 32. AS 21.27.370 is repealed and reenacted to read: 20 Sec. 21.27.370. Sharing compensation. (a) Except as provided in (c) and (d) 21 of this section, a licensee may not compensate a person, other than a licensee who is 22 acting within the scope of the person's license, for transacting insurance in this state or 23 relative to a risk resident, located, or to be performed in this state. 24 (b) Except as provided in (c) and (d) of this section, a person may not be 25 promised or paid, directly or indirectly, compensation for transacting a kind or class of 26 insurance for which the person is not then licensed to transact or for insurance that the 27 person is prohibited by this title from transacting. 28 (c) An unlicensed person who refers a customer or potential customer to a 29 licensee and who does not discuss specific terms and conditions of a policy, or who 30 gives opinions or advice regarding insurance, may be compensated for the referral, if 31 the compensation
01 (1) for each referral is 02 (A) nominal; 03 (B) on a one-time basis; and 04 (C) fixed in amount by referral; 05 (2) does not depend on whether the customer or potential customer 06 purchases the insurance; and 07 (3) is not contingent on the volume of insurance transacted. 08 (d) An insurer or insurance producer may compensate an insurance agency or 09 another person if that person does not transact the business of insurance in this state 10 and the payment does not violate AS 21.36.100 or 21.36.120. 11 (e) A person who is no longer licensed in this state may be paid renewal or 12 other deferred compensation for selling, soliciting, or negotiating insurance in this 13 state if the person 14 (1) was required to be licensed under this chapter at the time of the 15 sale, solicitation, or negotiation; and 16 (2) held that required license. 17 (f) In addition to any other penalty provided by law, the director may suspend 18 or revoke the license of a licensee participating in a violation of this section. The 19 director may order a licensee who violates this section to pay a penalty of not more 20 than three times the compensation promised or paid. 21 * Sec. 33. AS 21.27.390(a) is amended to read: 22 (a) The director may issue a temporary license only to a person who, except 23 for experience, training, or the taking of an examination, meets all qualifications for a 24 permanent license and if the person is 25 (1) the surviving spouse, next of kin, or the administrator or executor 26 of a deceased licensed insurance producer or managing general agent; 27 (2) the spouse, next of kin, employee, or legal guardian of a licensed 28 insurance producer or managing general agent who is disabled from transacting 29 insurance because of sickness, mental illness [INSANITY], or injury; 30 (3) a surviving member, officer, or employee of a firm licensed as 31 insurance producer or managing general agent upon the death of the compliance
01 officer [PRINCIPAL OR MANAGER] of the firm holding the same licenses as the 02 firm; or 03 (4) the designee of a licensed insurance producer who enters active 04 service in the armed forces of the United States, but only for insurance relating to 05 insurers for whom the licensee was acting as an agent. 06 * Sec. 34. AS 21.27.410(b) is amended to read: 07 (b) The license of a firm and its compliance officer [PRINCIPAL OR 08 MANAGER] may be denied, nonrenewed, suspended, or revoked for a violation or 09 cause that relates to a person representing or acting on behalf of the firm. 10 * Sec. 35. AS 21.27.460(c) is amended to read: 11 (c) Upon a change in the state of residence, a place of business, a mailing 12 address, or in the compliance officer [PRINCIPAL OR MANAGER] of a firm, a 13 license subject to the change shall be surrendered to the director within 10 days either 14 personally or by certified mail and the division shall reissue the license reflecting the 15 changes if the licensee continues to satisfy the qualifications under this chapter. 16 * Sec. 36. AS 21.27.540(g) is amended to read: 17 (g) In addition to any other penalty provided by law, if the director determines 18 under AS 21.06.170 - 21.06.240 that the employing licensed insurance producer knew 19 of or should have known that a trainee insurance producer violated this section, the 20 employing licensed insurance producer and firm, and the compliance officer 21 [PRINCIPAL AND MANAGER], if any, are subject to the penalties provided under 22 AS 21.27.440. 23 * Sec. 37. AS 21.27.550(c) is amended to read: 24 (c) All money collected for the account of an insurer shall be held by the 25 insurance producer as [IN] a fiduciary [ACCOUNT AS DESCRIBED UNDER 26 AS 21.27.360, AND THE INSURANCE PRODUCER SHALL COMPLY WITH 27 ALL APPLICABLE FIDUCIARY ACCOUNT STATUTES AND REGULATIONS]. 28 * Sec. 38. AS 21.27.550(i) is amended to read: 29 (i) A reinsurance intermediary manager may not enter into an agency 30 agreement with an insurance producer unless both parties are licensed under this 31 chapter and there is in effect a written agency agreement that specifically sets out the
01 duties, functions, powers, authority, and compensation of all parties to the agreement. 02 The written agreement shall be kept in the permanent records of the reinsurance 03 intermediary manager, the reinsurer, and the insurance producer, and be open to 04 inspection by the director. A written agreement must contain the following minimum 05 provisions: 06 (1) money collected for the account of a reinsurer must be held by the 07 insurance producer as [IN] a fiduciary [ACCOUNT AS DESCRIBED UNDER 08 AS 21.27.360; THE INSURANCE PRODUCER SHALL COMPLY WITH ALL 09 APPLICABLE FIDUCIARY ACCOUNT STATUTES AND REGULATIONS]; 10 (2) the agreement may not be assigned in whole or in part by the 11 insurance producer; 12 (3) the agreement may not permit the insurance producer to settle 13 claims on behalf of the reinsurer or reinsurance intermediary manager; and 14 (4) the insurance producer may not 15 (A) jointly employ an individual who is employed with the 16 reinsurer or reinsurance intermediary manager; or 17 (B) delegate insurance producer authority to another person. 18 * Sec. 39. AS 21.27.560(a) is amended to read: 19 (a) A client who appoints an insurance producer as its broker in this state or 20 relative to a subject resident, located, or to be performed in this state shall execute a 21 written contract that specifically sets out the duties, functions, powers, authority, and 22 compensation of the insurance producer, if the broker is compensated by a fee paid by 23 the client or by a combination of a fee paid by a client and a commission paid by an 24 insurer with which coverage has been placed. The written contract shall be kept in the 25 permanent records of the insurance producer and be open to inspection by the director. 26 * Sec. 40. AS 21.27.560(g) is amended to read: 27 (g) Money paid by a client to an insurance producer for insurance premiums 28 shall be held by the insurance producer as [IN] a fiduciary [ACCOUNT AS 29 DESCRIBED UNDER AS 21.27.360, AND THE INSURANCE PRODUCER 30 SHALL COMPLY WITH APPLICABLE FIDUCIARY ACCOUNT STATUTES 31 AND REGULATIONS].
01 * Sec. 41. AS 21.27.570(a) is amended to read: 02 (a) If the aggregate amount of gross written premium on business placed by a 03 controlling insurance producer exceeds five percent of the admitted assets of the 04 controlled insurer for a calendar year as reported in the insurer's most recent financial 05 statement filed with the director, the controlling insurance producer may not place 06 business with the controlled insurer and the controlled insurer may not accept business 07 from the controlling insurance producer unless a written contract is in effect between 08 the parties that 09 (1) establishes the responsibilities of each party, indicates each party's 10 share of responsibility for each particular function, and specifies the division of 11 responsibilities; 12 (2) has been approved by the board of directors of the controlled 13 insurer; 14 (3) contains the following minimum provisions: 15 (A) the controlled insurer may terminate the contract for cause 16 upon written notice sent by certified mail to the controlling producer and shall 17 suspend the authority of the controlling insurance producer to write business 18 during a dispute regarding the cause for termination; 19 (B) the controlling insurance producer shall render accounts to 20 the controlled insurer detailing all transactions, including information in the 21 accounts necessary to support compensation, commissions, charges, and other 22 fees received by, or owing to, the controlling producer; 23 (C) the controlling insurance producer shall remit money due 24 under the contract to the controlled insurer at least monthly; 25 (D) premiums or installments collected shall be due not later 26 than 90 days after the effective date of coverage placed with the controlled 27 insurer; 28 (E) money collected for the account of a controlled insurer 29 shall be held by the controlling insurance producer as [IN] a fiduciary 30 [ACCOUNT AS DESCRIBED UNDER AS 21.27.360], except a controlling 31 insurance producer not required to be licensed under this chapter shall act as a
01 [MAINTAIN ITS] fiduciary [ACCOUNT] in compliance with the 02 requirements of its domiciliary jurisdiction; 03 (F) [A LICENSED CONTROLLING INSURANCE 04 PRODUCER SHALL COMPLY WITH ALL APPLICABLE FIDUCIARY 05 ACCOUNT STATUTES AND REGULATIONS; 06 (G) A FIDUCIARY ACCOUNT MUST BE USED FOR] all 07 payments on behalf of the controlled insurer shall be held by the controlling 08 insurance producer as a fiduciary; 09 (G) [(H)] the controlling insurance producer shall maintain 10 separate records for each controlled insurer in a form usable by the controlled 11 insurer; the controlled insurer or its authorized representative shall have the 12 right to audit and the right to copy all accounts and records related to the 13 controlled insurer's business; the director, in addition to authority granted in 14 this title, shall have access to all books, bank accounts, and records of the 15 controlling insurance producer in a form usable to the director; 16 (H) [(I)] the contract may not be assigned in whole or in part 17 by the controlling insurance producer; 18 (I) [(J)] the controlled insurer shall provide, and the controlling 19 producer shall follow, written underwriting standards, rules, procedures, and 20 manuals that must include the conditions for acceptance or rejection of risks, 21 including types of risks that may be written, maximum limits of liability, 22 applicable exclusions, territorial limitations, policy cancellation provisions, the 23 maximum policy term, the rating system, and basis of the rates to be charged; 24 (J) [(K)] the underwriting standards, rules, procedures, and 25 manuals shall be the same as those applicable to comparable business placed 26 with the controlled insurer by licensees other than the controlling licensee; 27 (K) [(L)] the rates and terms of the controlling insurance 28 producer's compensation including commissions, charges, and other fees may 29 not be greater than those applicable to comparable business placed with the 30 controlled insurer by licensees other than the controlling licensee; 31 (L) [(M)] the controlled insurer shall establish a limit, that may
01 be different for each kind or class of business, on the amount of premium that 02 the controlling insurance producer may place with the controlled insurer in 03 relation to the controlled insurer's surplus and total writings; 04 (M) [(N)] the controlled insurer shall notify the controlling 05 insurance producer if an applicable limit is approached and the controlling 06 insurance producer may not place and the controlled insurer may not accept 07 business if the limit under (L) [(M)] of this paragraph has been reached; 08 (N) [(O)] if the contract provides that the controlling insurance 09 producer, on insurance placed with the controlled insurer, is to be compensated 10 contingent upon the controlling insurer's profits on the placed insurance, the 11 contingent compensation may not be determined or paid until 12 (i) at least five years after the premiums are earned on 13 casualty business and at least one year after the premiums are earned on 14 any other insurance; 15 (ii) a later period established by the director for 16 specified kinds or classes of insurance; and 17 (iii) not until the profits have been verified under (b) of 18 this section; 19 (O) [(P)] the controlling insurance producer may negotiate but 20 may not bind reinsurance on behalf of the controlled insurer on insurance that 21 the controlling insurance producer places with the controlled insurer, except 22 that the controlling insurance producer may bind facultative reinsurance 23 contracts under obligatory agreements if the contract with the controlled 24 insurer contains reinsurance underwriting guidelines including, for both 25 reinsurance assumed and ceded, a list of reinsurers with which automatic 26 agreements are in effect, the coverage and amounts or percentages that may be 27 reinsured, and commission schedules; and 28 (4) provides that the controlled insurer has an audit committee 29 composed of independent members of the board of directors that meet at least annually 30 with management, the insurer's independent certified public accountants, and an 31 independent actuary specialist acceptable to the director to review the adequacy of the
01 insurer's reserves for losses incurred and outstanding. 02 * Sec. 42. AS 21.27.600(g) is amended to read: 03 (g) In addition to any other penalty provided by law 04 (1) the director shall revoke the trainee license of a trainee managing 05 general agent who the director determines has violated the provisions of this section; a 06 licensee or other person having possession or custody of the license shall immediately 07 surrender the license to the director either personally or by certified mail; 08 (2) if the director determines under AS 21.06.170 - 21.06.240 that the 09 employing managing general agent knew of or should have known that a trainee 10 managing general agent violated this section, the employing managing general agent 11 and firm, and the compliance officer [PRINCIPAL, AND MANAGER], if any, are 12 subject to the penalties provided under AS 21.27.440. 13 * Sec. 43. AS 21.27.620(a) is amended to read: 14 (a) An insurer may not transact business with a managing general agent unless 15 (1) the insurer holds a certificate of authority in this state; 16 (2) the managing general agent is licensed under this chapter or, when 17 the managing general agent is operating only for a foreign insurer, is licensed by its 18 resident insurance regulator in a state that the director has determined has enacted 19 provisions substantially similar to those contained in this chapter and the state is 20 accredited by the National Association of Insurance Commissioners; 21 (3) a written contract is in effect between the parties that establishes 22 the responsibilities of each party, indicates both party's share of responsibility for a 23 particular function, and specifies the division of responsibilities; 24 (4) a written contract between an insurer and a managing general agent 25 contains the following provisions: 26 (A) the insurer may terminate the contract for cause upon 27 written notice sent by certified mail to the managing general agent and may 28 suspend the underwriting authority of the managing general agent during a 29 dispute regarding the cause for termination; 30 (B) the managing general agent shall render accounts to the 31 insurer detailing all transactions and remit all money due under the contract to
01 the insurer at least monthly; 02 (C) all money collected for the account of an insurer shall be 03 held by the managing general agent as [IN] a fiduciary [ACCOUNT AS 04 DESCRIBED UNDER AS 21.27.360]; 05 (D) [THE MANAGING GENERAL AGENT SHALL 06 COMPLY WITH ALL APPLICABLE FIDUCIARY ACCOUNT STATUTES 07 AND REGULATIONS; 08 (E) A FIDUCIARY ACCOUNT SHALL BE USED FOR] all 09 payments on behalf of the insurer shall be held by the managing general 10 agent as a fiduciary; 11 (E) [(F)] the managing general agent may not retain more than 12 three months estimated claims payments and allocated loss adjustment 13 expenses; 14 (F) [(G)] the managing general agent shall maintain separate 15 records for each insurer in a form usable by the insurer; the insurer or its 16 authorized representative shall have the right to audit and the right to copy all 17 accounts and records related to the insurer's business; the director, in addition 18 to authority granted in this title, shall have access to all books, bank accounts, 19 and records of the managing general agent in a form usable to the director; 20 (G) [(H)] the contract may not be assigned in whole or in part 21 by the managing general agent; 22 (H) [(I)] if the contract permits the managing general agent to 23 do underwriting, the contract must include the following: 24 (i) the managing general agent's maximum annual 25 premium volume; 26 (ii) the rating system and basis of the rates to be 27 charged; 28 (iii) the types of risks that may be written; 29 (iv) maximum limits of liability; 30 (v) applicable exclusions; 31 (vi) territorial limitations;
01 (vii) policy cancellation provisions; 02 (viii) the maximum policy term; and 03 (ix) that the insurer shall have the right to cancel or not 04 renew a policy of insurance subject to applicable state law; 05 (I) [(J)] if the contract permits the managing general agent to 06 settle claims on behalf of the insurer, the contract must include the following: 07 (i) written settlement authority must be provided by the 08 insurer and may be terminated for cause upon the insurer's written 09 notice sent by certified mail to the managing general agent or upon the 10 termination of the contract, but the insurer may suspend the settlement 11 authority during a dispute regarding the cause of termination; 12 (ii) claims shall be reported to the insurer within 30 13 days; 14 (iii) a copy of the claim file shall be sent to the insurer 15 upon request or as soon as it becomes known that the claim has the 16 potential to exceed an amount determined by the director or exceeds the 17 limit set by the insurer, whichever is less, involves a coverage dispute, 18 may exceed the managing general agent's claims settlement authority, 19 is open for more than six months, involves extra contractual 20 allegations, or is closed by payment in excess of an amount set by the 21 director or an amount set by the insurer, whichever is less; 22 (iv) each party shall comply with unfair claims 23 settlement statutes and regulations; 24 (v) transmission of electronic data at least monthly if 25 electronic claim files are in existence; and 26 (vi) claim files shall be the property of both the insurer 27 and managing general agent; upon an order of liquidation of the 28 insurer, the files shall become the sole property of the insurer or the 29 insurer's estate; the managing general agent shall have reasonable 30 access to and the right to copy the files on a timely basis; 31 (J) [(K)] if the contract provides for sharing of interim profits
01 by the managing general agent and the managing general agent has the 02 authority to determine the amount of the interim profits by establishing loss 03 reserves, by controlling claim payments, or in any other manner, interim 04 profits may not be paid to the managing general agent until 05 (i) one year after they are earned for property insurance 06 business and five years after they are earned on casualty business; 07 (ii) a later period established by the director for 08 specified kinds or classes of insurance; and 09 (iii) not until the profits have been verified under (d) of 10 this section; 11 (K) [(L)] if the insurer is domiciled in this state or the 12 managing general agent has a place of business in this state, a copy of the 13 contract must be filed with and approved by the director at least 30 days before 14 the managing general agent transacts business on behalf of the insurer; if the 15 insurer is not domiciled in this state or the managing general agent transacts 16 business relative to a subject resident, located, or to be performed in this state 17 from a place of business not physically located in this state, a copy of the 18 contract required in this section must be filed with and approved by the 19 director at least 30 days before the managing general agent transacts business 20 on behalf of the insurer in this state or relative to a subject resident, located, or 21 to be performed in this state if the insurer or the managing general agent are 22 domiciled in a state not accredited by the National Association of Insurance 23 Commissioners; and 24 (L) [(M)] if the contract is not required to be approved in 25 advance by the director, the insurer shall provide written notification to the 26 director within 30 days of the entry into or termination of a contract with a 27 managing general agent; the notice must include a statement of duties to be 28 performed by the managing general agent on behalf of the insurer, the kinds 29 and classes of insurance for which the managing general agent has 30 authorization to act, and other information required by the director. 31 * Sec. 44. AS 21.27.620 is amended by adding a new subsection to read:
01 (l) In this section, "transact" has the meaning given in AS 21.90.900. 02 * Sec. 45. AS 21.27.640(b) is repealed and reenacted to read: 03 (b) To qualify for issuance or renewal of a registration, an applicant or 04 registrant shall comply with this title, regulations adopted under AS 21.06.090, and 05 (1) be a trustworthy person; 06 (2) have active working experience in administrative functions that, in 07 the director's opinion, exhibits the ability to competently perform the administrative 08 functions of a third-party administrator; 09 (3) not have committed an act that is a cause for denial, nonrenewal, 10 suspension, or revocation of a registration or license in this state or another 11 jurisdiction; 12 (4) maintain a lawfully established place of business as described in 13 AS 21.27.330 in this state, unless licensed as a nonresident under AS 21.27.270; 14 (5) disclose to the director all owners, officers, directors, or partners, if 15 any; 16 (6) designate a compliance officer for the firm; 17 (7) provide in or with its application 18 (A) all basic organizational documents of the third-party 19 administrator, including articles of incorporation, articles of association, 20 partnership agreement, trade name certificate, trust agreement, shareholder 21 agreement, and other applicable documents and all endorsements to the 22 required documents; 23 (B) the bylaws, rules, regulations, or similar documents 24 regulating the internal affairs of the administrator; 25 (C) the names, mailing addresses, physical addresses, official 26 positions, and professional qualifications of persons who are responsible for 27 the conduct of affairs of the third-party administrator, including the members 28 of the board of directors, board of trustees, executive committee, or other 29 governing board or committee; the principal officers in the case of a 30 corporation, or the partners or members in the case of a partnership, limited 31 liability company, limited liability partnership, or association; shareholders
01 holding directly or indirectly 10 percent or more of the voting securities of the 02 third-party administrator; and any other person who exercises control or 03 influence over the affairs of the third-party administrator; 04 (D) certified financial statements for the preceding two years, 05 or for each year and partial year that the applicant has been in business if less 06 than two years, prepared by an independent certified public accountant 07 establishing that the applicant is solvent, that the applicant's system of 08 accounting, internal control, and procedure is operating effectively to provide 09 reasonable assurance that money is promptly accounted for and paid to the 10 person entitled to the money, and any other information that the director may 11 require to review the current financial condition of the applicant; and 12 (E) a statement describing the business plan, including 13 information on staffing levels and activities proposed in this state and in other 14 jurisdictions and providing details establishing the third-party administrator's 15 capability for providing a sufficient number of experienced and qualified 16 personnel in the areas of claims handling, underwriting, and record keeping; 17 (8) provide to the director documents necessary to verify the 18 statements contained in or in connection with the application; and 19 (9) notify the director, in writing, within 30 days of 20 (A) a change in compliance officer, residence, place of 21 business, mailing address, or phone number; 22 (B) the suspension or revocation of an insurance license or 23 registration by another state or jurisdiction; or 24 (C) a conviction of a misdemeanor or felony of the third-party 25 administrator, its officers, directors, partners, owners, or employees. 26 * Sec. 46. AS 21.27.650(a) is amended to read: 27 (a) An insurer may not transact business with a third-party administrator 28 unless 29 (1) the insurer holds a certificate of authority in this state; 30 (2) the third-party administrator is registered under this chapter or, 31 when the third-party administrator is operating only for a foreign insurer, is registered
01 as a third-party administrator by the third-party administrator's resident insurance 02 regulator in a state that the director has determined has enacted provisions 03 substantially similar to those contained in AS 21.27.630 - 21.27.650 and that is 04 accredited by the National Association of Insurance Commissioners; 05 (3) the third-party administrator provides the director on January 1, 06 April 1, July 1, and October 1 of each year 07 (A) a list of current employees, identifying those transacting 08 business in this state or upon a subject resident, located or to be performed in 09 this state; 10 (B) a list of current insurers under contract; and 11 (C) other information the director may require; 12 (4) a written contract is in effect between the parties that establishes 13 the responsibilities of each party, indicates both parties' share of responsibility for a 14 particular function, and specifies the division of responsibilities; 15 (5) there is in effect a written contract between the insurer and third- 16 party administrator that contains the following provisions: 17 (A) the insurer may terminate the contract for cause upon 18 written notice sent by certified mail to the third-party administrator and may 19 suspend the underwriting authority of the third-party administrator during a 20 dispute regarding the cause for termination; but the insurer must fulfill all 21 lawful obligations with respect to policies affected by the written agreement, 22 regardless of any dispute between the insurer and the third-party administrator; 23 (B) the third-party administrator shall render accounts to the 24 insurer detailing all transactions and remit all money due under the contract to 25 the insurer at least monthly; 26 (C) all money collected for the account of an insurer shall be 27 held by the third-party administrator as [IN] a fiduciary [ACCOUNT AS 28 DESCRIBED UNDER AS 21.27.360]; 29 [(D) THE THIRD-PARTY ADMINISTRATOR SHALL 30 COMPLY WITH ALL APPLICABLE FIDUCIARY ACCOUNT STATUTES 31 AND REGULATIONS;
01 (E) A FIDUCIARY ACCOUNT SHALL BE USED FOR] all 02 payments on behalf of the insurer shall be held by the third-party 03 administrator as a fiduciary; 04 (E) [(F)] the third-party administrator may not retain more than 05 three months estimated claims payments and allocated loss adjustment 06 expenses; 07 (F) [(G)] the third-party administrator shall maintain separate 08 records for each insurer in a form usable by the insurer; the insurer or its 09 authorized representative shall have the right to audit and the right to copy all 10 accounts and records related to the insurer's business; the director, in addition 11 to other authority granted in this title, shall have access to all books, bank 12 accounts, and records of the third-party administrator in a form usable to the 13 director; any trade secrets contained in books and records reviewed by the 14 director, including the identity and addresses of policyholders and certificate 15 holders, shall be kept confidential, except that the director may use the 16 information in a proceeding instituted against the third-party administrator or 17 the insurer; 18 (G) [(H)] the contract may not be assigned in whole or in part 19 by the third-party administrator; 20 (H) [(I)] if the contract permits the third-party administrator to 21 do underwriting, the contract must include the following: 22 (i) the third-party administrator's maximum annual 23 premium volume; 24 (ii) the rating system and basis of the rates to be 25 charged; 26 (iii) the types of risks that may be written; 27 (iv) maximum limits of liability; 28 (v) applicable exclusions; 29 (vi) territorial limitations; 30 (vii) policy cancellation provisions; 31 (viii) the maximum policy term; and
01 (ix) that the insurer shall have the right to cancel or not 02 renew a policy of insurance subject to applicable state law; 03 (I) [(J)] if the contract permits the third-party administrator to 04 administer claims on behalf of the insurer, the contract must include the 05 following: 06 (i) written settlement authority must be provided by the 07 insurer and may be terminated for cause upon the insurer's written 08 notice sent by certified mail to the third-party administrator or upon the 09 termination of the contract, but the insurer may suspend the settlement 10 authority during a dispute regarding the cause of termination; 11 (ii) claims shall be reported to the insurer within 30 12 days; 13 (iii) a copy of the claim file shall be sent to the insurer 14 upon request or as soon as it becomes known that the claim has the 15 potential to exceed an amount determined by the director or exceeds the 16 limit set by the insurer, whichever is less, involves a coverage dispute, 17 may exceed the third-party administrator's claims settlement authority, 18 is open for more than six months, involves extra contractual 19 allegations, or is closed by payment in excess of an amount set by the 20 director or an amount set by the insurer, whichever is less; 21 (iv) each party to the contract shall comply with unfair 22 claims settlement statutes and regulations; 23 (v) transmission of electronic data must occur at least 24 monthly if electronic claim files are in existence; and 25 (vi) claim files shall be the sole property of the insurer; 26 upon an order of liquidation of the insurer, the third-party administrator 27 shall have reasonable access to and the right to copy the files on a 28 timely basis; and 29 (J) [(K)] the contract may not provide for commissions, fees, or 30 charges contingent upon savings obtained in the adjustment, settlement, and 31 payment of losses covered by the insurer's obligations; but a third-party
01 administrator may receive performance-based compensation for providing 02 hospital or other auditing services or may receive compensation based on 03 premiums or charges collected or the number of claims paid or processed. 04 * Sec. 47. AS 21.27.650 is amended by adding a new subsection to read: 05 (p) In this section, "transact" has the meaning given in AS 21.90.900. 06 * Sec. 48. AS 21.27.680(g) is amended to read: 07 (g) In addition to any other penalty provided by law, 08 (1) the director shall revoke the license of a trainee reinsurance 09 intermediary broker who the director determines has violated the provisions of this 10 section; a licensee or other person having possession or custody of the license shall 11 immediately surrender the license to the director either personally or by certified mail; 12 (2) if the director determines under AS 21.06.170 - 21.06.240 that the 13 employing reinsurance intermediary broker knew of or should have known that a 14 trainee reinsurance intermediary broker violated this section, the employing 15 reinsurance intermediary broker and firm and compliance officer [, PRINCIPAL 16 AND MANAGER], if any, are subject to the penalties provided under AS 21.27.440. 17 * Sec. 49. AS 21.27.690(a) is amended to read: 18 (a) Except as provided in (b) of this section, an insurer may not transact 19 business with a reinsurance intermediary broker unless the insurer holds a certificate 20 of authority in this state, the reinsurance intermediary broker is licensed in this state, 21 and there is in effect a written contract between the parties that establishes the 22 responsibilities of each party, indicates each party's share of responsibility for each 23 particular function, and specifies the division of responsibilities. The written contract 24 shall be kept in the permanent records of the insurer and the reinsurance intermediary 25 broker, be open to inspection by the director, and must contain the following minimum 26 provisions: 27 (1) the insurer may terminate the reinsurance intermediary broker's 28 authority at any time by written notice sent by certified mail; 29 (2) the reinsurance intermediary broker shall render accounts to the 30 insurer detailing all transactions including information necessary to support all 31 commissions, charges, and other fees received by or owing to the reinsurance
01 intermediary broker and remit the money due under the contract to the insurer within 02 30 days of receipt; 03 (3) money collected for the account of an insurer shall be held by the 04 reinsurance intermediary broker as [IN] a fiduciary [ACCOUNT REQUIRED 05 UNDER AS 21.27.360; THE REINSURANCE INTERMEDIARY BROKER SHALL 06 COMPLY WITH APPLICABLE FIDUCIARY ACCOUNT STATUTES AND 07 REGULATIONS]; 08 (4) the reinsurance intermediary broker shall maintain separate 09 accounts and records for each insurer and maintain the records in a form usable by the 10 insurer; the insurer or the authorized representative of the insurer shall have access and 11 the right to audit and the right to copy all accounts and records related to the insurer's 12 business; the director, in addition to the other authority granted in this title, shall have 13 access to all books, bank accounts, and records of the insurance intermediary broker in 14 a form usable to the director; 15 (5) the insurer shall establish written standards for the cession or 16 retrocession of all risks, and the reinsurance intermediary broker shall comply with 17 those standards; 18 (6) the reinsurance intermediary broker shall disclose to the insurer all 19 its relationships with insurers and reinsurers to whom risks are ceded or retroceded; 20 and 21 (7) the contract may not be assigned in whole or in part by the 22 reinsurance intermediary broker. 23 * Sec. 50. AS 21.27.690 is amended by adding a new subsection to read: 24 (g) In this section, "transact" has the meaning given in AS 21.90.900. 25 * Sec. 51. AS 21.27.760(b) is amended to read: 26 (b) The contract required under (a) of this section must include the following 27 provisions: 28 (1) the reinsurer may terminate the contract for cause upon written 29 notice sent by certified mail to the reinsurance intermediary manager and may suspend 30 the underwriting authority of the reinsurance intermediary manager during a dispute 31 regarding the cause for termination;
01 (2) the reinsurance intermediary manager shall render accounts to the 02 reinsurer detailing all transactions including information necessary to support all 03 commissions, charges, and other fees received by or owing to the reinsurance 04 intermediary manager and remit all money due under the contract to the insurer at 05 least monthly; 06 (3) money collected for the account of a reinsurer shall be held by the 07 reinsurance intermediary manager as [IN] a fiduciary [ACCOUNT AS DESCRIBED 08 UNDER AS 21.27.360]; 09 (4) [THE REINSURANCE INTERMEDIARY MANAGER SHALL 10 COMPLY WITH APPLICABLE FIDUCIARY ACCOUNT STATUTES AND 11 REGULATIONS; 12 (5)] the reinsurance intermediary manager shall maintain a separate 13 bank account for each reinsurer that it represents; 14 (5) [(6) A FIDUCIARY ACCOUNT MUST BE USED FOR] all 15 payments on behalf of the reinsurer shall be held by the reinsurance intermediary 16 manager as a fiduciary; 17 (6) [(7)] the reinsurance intermediary manager may retain not more 18 than three months estimated claims payments and allocated loss adjustment expenses; 19 (7) [(8)] the reinsurance intermediary manager shall maintain separate 20 accounts and records for each reinsurer and maintain the records in a form usable by 21 the reinsurer; the reinsurer or its authorized representative shall have access and the 22 right to audit and the right to copy all accounts and records related to the reinsurer's 23 business; the director, in addition to the other authority granted in this title, shall have 24 access to all books, bank accounts, and records of the reinsurance intermediary 25 manager in a form usable to the director; 26 (8) [(9)] the contract may not be assigned in whole or in part by the 27 reinsurance intermediary manager; 28 (9) [(10)] the reinsurer shall establish written underwriting and rating 29 standards for the acceptance, rejection, or cession of all risks and the reinsurance 30 intermediary manager shall comply with the standards; 31 (10) [(11)] compensation including rates, terms, purposes of
01 commissions, charges, and other fees that the reinsurance intermediary manager may 02 levy against the reinsurer; 03 (11) [(12)] if the contract permits the reinsurance intermediary 04 manager to settle claims on behalf of the reinsurer, 05 (A) written settlement authority must be provided by the 06 reinsurer and may be terminated for cause upon the insurer's written notice by 07 certified mail to the reinsurance intermediary manager or upon the termination 08 of the contract; the reinsurer may suspend the settlement authority during a 09 dispute regarding the cause of termination; 10 (B) claims shall be reported to the reinsurer within 30 days; 11 (C) a copy of the claim file shall be sent to the reinsurer upon 12 request or as soon as it becomes known that the claim 13 (i) has the potential to exceed an amount determined by 14 the director or exceeds the limit set by the insurer, whichever is less; 15 (ii) involves a coverage dispute; 16 (iii) may exceed the reinsurance intermediary manager's 17 claims settlement authority; 18 (iv) is open for more than six months; 19 (v) involves extra contractual allegations; or 20 (vi) is closed by payment in excess of an amount set by 21 the director or an amount set by the insurer, whichever is less; 22 (D) the reinsurance intermediary manager shall comply with 23 unfair claims settlement statutes and regulations; 24 (E) transmission of electronic data at least once a month if 25 electronic claims files are in existence; 26 (F) claim files shall be the property of both the reinsurer and 27 reinsurance intermediary manager, but upon an order of liquidation of the 28 reinsurer, the files shall become the sole property of the reinsurer or the 29 reinsurer's estate; the reinsurance intermediary manager shall have reasonable 30 access to and the right to copy the files on a timely basis; 31 (12) [(13)] if the contract provides for sharing of interim profits by the
01 reinsurance intermediary manager, the interim profits may not be paid until 02 (A) one calendar year after the end of each underwriting period 03 for property risks and five years after the end of each underwriting period for 04 casualty risks; 05 (B) a later period established by the director for specified kinds 06 or classes of insurance; and 07 (C) the profits have been verified under (e)(2) of this section; 08 (13) [(14)] the reinsurance intermediary manager may not 09 (A) cede retrocessions on behalf of the reinsurer, except that 10 the reinsurance intermediary manager may cede facultative retrocessions under 11 obligatory agreements if the contract with the reinsurer contains reinsurance 12 underwriting guidelines including a list of reinsurers with which automatic 13 agreements are in effect, and, for each reinsurer, the coverage and amounts or 14 percentages that may be reinsured, and commission schedules; 15 (B) commit the reinsurer to participate in reinsurance 16 syndicates; 17 (C) appoint a subagent unless the scope of the subagent's 18 license as an insurance producer includes the kinds and classes of insurance for 19 which the subagent is appointed; 20 (D) pay or commit the reinsurer to pay a claim, net of 21 retrocessions, the amount of which exceeds one percent of the reinsurer's 22 policyholder's surplus as of December 31 of the last completed calendar year 23 without the prior written approval of the reinsurer for the settlement and the 24 approval is received after the reinsurer has been notified in writing that the 25 claim settlement will exceed one percent of the reinsurer's policyholder's 26 surplus as of December 31 of the last completed calendar year; 27 (E) collect payment from a retrocessionaire or commit the 28 reinsurer to a claim settlement with a retrocessionaire without prior written 29 approval of the reinsurer, but if prior written approval is given, a complete 30 report shall be forwarded to the reinsurer within 30 days; 31 (F) jointly employ an individual who is employed with the
01 reinsurer; or 02 (G) delegate reinsurance intermediary manager authority to 03 another person; 04 (14) [(15)] if the insurer is domiciled in this state or the reinsurance 05 intermediary manager has a place of business in this state, a copy of the contract must 06 be filed with and approved by the director at least 30 days before the reinsurance 07 intermediary manager transacts business on behalf of the reinsurer; if the reinsurer is 08 not domiciled in this state or the reinsurance intermediary manager transacts business 09 relative to a subject resident, located, or to be performed in this state from a place of 10 business not physically located in this state, a copy of the contract required in this 11 section must be filed with and approved by the director at least 30 days before the 12 reinsurance intermediary manager transacts business on behalf of the insurer in this 13 state or relative to a subject resident, located, or to be performed in this state if the 14 insurer or the reinsurance intermediary manager are domiciled in a state not accredited 15 by the National Association of Insurance Commissioners; and 16 (15) [(16)] if the contract is not required to be approved in advance by 17 the director, the insurer shall provide written notification to the director within 30 days 18 of the entry into or termination of a contract with a reinsurance intermediary manager; 19 the notice must include a statement of duties to be performed by the reinsurance 20 intermediary manager on behalf of the reinsurer, the kinds and classes of insurance for 21 which the reinsurance intermediary manager has authorization to act, and other 22 information required by the director. 23 * Sec. 52. AS 21.27.760 is amended by adding a new subsection to read: 24 (l) In this section, "transact" has the meaning given in AS 21.90.900. 25 * Sec. 53. AS 21.27.790(2) is amended to read: 26 (2) if required by the director by regulation maintain a bond as 27 described in AS 21.27.190 in an amount acceptable to the director [HAVE AND 28 MAINTAIN WHILE LICENSED, A BOND IN THE SUM OF NOT LESS THAN 29 $200,000 AGGREGATE LIABILITY AND] with the conditions that the surplus lines 30 broker conduct business under the provisions of this title, promptly remit the taxes and 31 fees provided by law, return premiums promptly when due, and pay proper losses
01 promptly; 02 * Sec. 54. AS 21.27.800(g) is amended to read: 03 (g) In addition to any other penalty provided by law, 04 (1) the director shall revoke the license of a trainee surplus lines broker 05 who the director determines has violated the provisions of this section; a licensee or 06 other person having possession or custody of the license shall immediately surrender 07 the license to the director either personally or by certified mail; 08 (2) if the director determines under AS 21.06.170 - 21.06.240 that the 09 employing surplus lines broker knew of or should have known that a trainee licensed 10 under this section violated this section, the employing surplus lines broker and firm, 11 and the compliance officer [PRINCIPAL, AND MANAGER], if any, are subject to 12 the penalties provided under AS 21.27.440. 13 * Sec. 55. AS 21.27.840(f) is amended to read: 14 (f) A trainee independent adjuster shall at all times be working at the direction 15 and under the supervision of the employing licensed independent adjuster, and the file 16 and record documentation shall reflect the direction and supervision. The employing 17 licensed independent adjuster and its firm, and the compliance officer [MANAGER, 18 AND PRINCIPAL], if any, are responsible for all insurance actions of the trainee 19 independent adjuster. 20 * Sec. 56. AS 21.27.840(i) is amended to read: 21 (i) In addition to any other penalty provided by law, 22 (1) a trainee independent adjuster who the director determines has 23 violated the provisions of this section shall have its license terminated; a licensee or 24 other person having possession or custody of the license shall within 30 days surrender 25 the license to the director either personally or by certified mail; 26 (2) if the director determines under AS 21.06.170 - 21.06.240 that the 27 employing licensed independent adjuster knew of or should have known that a trainee 28 independent adjuster violated this section, the employing licensed independent 29 adjuster and firm, and the compliance officer [PRINCIPAL AND MANAGER], if 30 any, are subject to the penalties provided under AS 21.27.440. 31 * Sec. 57. AS 21.27.900(10) is amended to read:
01 (10) "individual" means a natural person required to be licensed under 02 AS 21.27.010 [WHO IS NOT ACTING IN ASSOCIATION WITH TWO OR MORE 03 LICENSEES, EITHER IN PARTNERSHIP, CORPORATION, OR OTHERWISE, 04 OR AN ORGANIZATION IN WHICH A SINGLE LICENSEE HAS 50 PERCENT 05 OR MORE OWNERSHIP INTEREST IN THE ORGANIZATION]; 06 * Sec. 58. AS 21.27.900 is amended by adding new paragraphs to read: 07 (23) "compliance officer" means a licensee under this chapter that is 08 responsible for a firm's compliance with the insurance statutes and regulations of this 09 state; 10 (24) "home state" means the District of Columbia or a state or territory 11 of the United States in which an insurance producer maintains the producer's principal 12 place of residence or principal place of business and is licensed to act as an insurance 13 producer; 14 (25) "insurance producer" means a person who sells, solicits, or 15 negotiates insurance or insurance products; 16 (26) "license" means, unless the context requires otherwise, a 17 document issued by the director of insurance authorizing a person to act for the type, 18 class, and lines of authority specified in the document; 19 (27) "limited lines credit insurance" includes credit life, credit 20 disability, credit property, credit unemployment, involuntary unemployment, mortgage 21 life, mortgage guaranty, mortgage disability, guaranteed automobile protection 22 insurance, and any other form of insurance offered in connection with an extension of 23 credit that is limited to partially or wholly extinguishing that credit obligation that the 24 director of insurance determines must be designated a form of limited lines credit 25 insurance; 26 (28) "limited lines" means those lines of insurance defined in 27 AS 21.27.150 or any other line of insurance that the director of insurance designates 28 by order as a limited line; 29 (29) "negotiate" means the act of conferring directly with or offering 30 advice directly to a purchaser or prospective purchaser of a particular contract of 31 insurance concerning any of the substantive benefits, terms, or conditions of the
01 contract if the person engaged in that act either sells insurance or obtains insurance 02 from insurers for purchasers; 03 (30) "sells" means to exchange a contract of insurance by any means, 04 for money or its equivalent, on behalf of an insurance company; 05 (31) "solicit" means attempting to sell insurance or asking or urging a 06 person to apply for a particular kind of insurance from a particular company; 07 (32) "transact" or "transact business" means sell, solicit, or negotiate 08 insurance or insurance products; 09 (33) "uniform application" means the most recent version of the 10 uniform application of the National Association of Insurance Commissioners; 11 (34) "uniform business entity application" means the most recent 12 version of the uniform business entity application of the National Association of 13 Insurance Commissioners. 14 * Sec. 59. AS 21.36 is amended by adding new sections to read: 15 Sec. 21.36.162. Nondisclosure of an individual's personal financial and 16 personal health information. (a) A person may not disclose personal financial or 17 personal health information regarding an individual who seeks to obtain, obtains, or 18 has obtained an insurance product or service, except when and only to the extent that 19 the disclosure is 20 (1) authorized in writing by the individual whose personal financial or 21 personal health information is sought to be disclosed; 22 (2) required by federal or state law or federal or state regulation; 23 (3) compelled by a subpoena, search warrant, or other order issued by 24 a court or administrative agency of competent jurisdiction; 25 (4) for the performance of any of the following insurance functions: 26 claims administration; claims adjustment and management; detection, investigation, or 27 reporting of actual or potential fraud, misrepresentation, or criminal activity; 28 underwriting; policy placement or issuance; loss control; rate making and guaranty 29 fund functions; reinsurance and excess loss insurance; risk management; case 30 management; disease management; quality assurance; quality improvement; 31 performance evaluation; provider credentialing verification; utilization review; peer
01 review activities; actuarial, scientific, medical, or public policy research; grievance 02 procedures; internal administration of compliance, managerial, and information 03 systems; policyholder service functions; auditing; reporting; database security; 04 administration of consumer disputes and inquiries; external accreditation standards; 05 the replacement of a group benefit plan or workers' compensation policy or program; 06 activities in connection with a sale, merger, transfer, or exchange of all or part of a 07 business or operating unit; or other functions that the director may approve as 08 necessary for the performance of the above functions and that are fair and reasonable 09 to the interest of the insurance consumer; 10 (5) permitted without requiring authorization under federal privacy 11 rules adopted under 42 U.S.C. 300gg-92 (Health Insurance Portability and 12 Accountability Act of 1996) by the United States Department of Health and Human 13 Services; or 14 (6) required to enforce the person's rights or the rights of other persons 15 engaged in carrying out an insurance transaction or providing an insurance product or 16 service that an individual requests or authorizes. 17 (b) The director may adopt regulations to implement this section that provide 18 not less than the protection of an individual's personal financial and personal health 19 information provided in this section. 20 (c) This section does not restrict disclosure of publicly available information. 21 (d) This section does not prohibit a person from disclosing personal financial 22 information if 23 (1) the disclosure is necessary to market a financial product or service 24 of the person, including a financial product or service that is jointly offered, endorsed, 25 or sponsored by another person under a written contract; 26 (2) the person receiving the information agrees in writing not to 27 disclose or use the information other than to carry out the purposes for which the 28 person disclosed the information; and 29 (3) before disclosing the information, the person seeking to disclose 30 the information provides a clear and conspicuous written notice to the individual who 31 is the subject of the information that includes
01 (A) the categories of information that the person collects; 02 (B) the categories of information that will be disclosed; 03 (C) the categories of people to whom the information will be 04 disclosed; and 05 (D) an explanation of the individual's right to opt out of 06 disclosure and a reply form for the individual to use to opt out; and 07 (4) the individual who is the subject of the information does not opt 08 out. 09 (e) For purposes of this section, 10 (1) "opt out" means to choose not the disclose information to another 11 person; 12 (2) "personal financial information" means any information or data 13 about a person that is not personal health information; 14 (3) "personal health information" means any information or data 15 except age or gender, whether oral or recorded in any form or medium, created by or 16 derived from a health care provider or other person that relates to 17 (A) the past, present, or future physical, mental, or behavioral 18 health or condition of an individual; 19 (B) the provision of health care to an individual; or 20 (C) payment for the provision of health care to an individual; 21 (4) "publicly available information" means any information that a 22 person has reasonable basis to believe is lawfully made available to the general public 23 from 24 (A) federal, state, or local government records; 25 (B) widely distributed media; or 26 (C) disclosures to the general public that are required to be 27 made by federal, state, or municipal law. 28 Sec. 21.36.164. Licensing of persons in a financial institution. A financial 29 institution may not allow a person to transact insurance in an office of the institution 30 or on behalf of the institution, unless the person is licensed as required under 31 AS 21.27.
01 * Sec. 60. AS 21.36.165 is amended to read: 02 Sec. 21.36.165. Anticoercion and antitying [FAVORED AGENT OR 03 INSURER; COERCION OF DEBTORS]. A person may not 04 (1) require, as a condition to the lending of money or extension of 05 credit, or a renewal of the loan or extension of credit, that the obligee of the money or 06 credit negotiate a policy or contract of insurance through any particular person or 07 group of persons; 08 (2) disapprove the insurance policy provided by a borrower for the 09 protection of property securing credit or a loan [LIEN] if disapproval is based on other 10 than reasonable standards uniformly applied and relating to the extent of coverage 11 required and the financial soundness and the services of the insurer; the standards may 12 not discriminate against a particular type of insurer [,] or call for the disapproval of a 13 policy containing coverage in addition to that required; 14 (3) unless charges are required when the person handling the 15 insurance transaction is a licensee, require a consumer [BORROWER, 16 MORTGAGOR, PURCHASER], insurer, broker, or agent to pay a separate charge for 17 handling an insurance policy required as security for a loan on real property, or to pay 18 a separate charge to substitute the insurance policy of one insurer for that of another, 19 except that interest may be charged on premium loans or [OF] premium advancements 20 in accordance with the security instrument [; 21 (4) USE OR DISCLOSE INFORMATION RESULTING FROM A 22 REQUIREMENT THAT A BORROWER, MORTGAGOR, OR PURCHASER 23 FURNISH INSURANCE OF ANY KIND ON REAL PROPERTY BEING 24 CONVEYED OR USED AS COLLATERAL SECURITY TO A LOAN, WHEN THE 25 INFORMATION IS TO THE ADVANTAGE OF THE MORTGAGEE, VENDOR, 26 OR LENDER, OR IS TO THE DETRIMENT OF THE BORROWER, 27 MORTGAGOR, PURCHASER, INSURER, AGENT, OR BROKER COMPLYING 28 WITH THE REQUIREMENT]. 29 * Sec. 61. AS 21.36.165 is amended by adding new subsections to read: 30 (b) A person shall 31 (1) use separate documents for an insurance transaction, other than
01 credit insurance or flood insurance, and for a credit transaction; and 02 (2) maintain separate and distinct records relating to insurance 03 transactions, including consumer complaint information, and make the records 04 available to the director for inspection upon notice. 05 (c) A person may not include insurance premiums in a primary credit 06 transaction without the consent of the consumer. 07 (d) Nothing in this section prohibits a person from informing a consumer or 08 prospective consumer that insurance is required in order to obtain a loan or credit, that 09 loan or credit approval is contingent on the procurement of acceptable insurance by 10 the consumer, or that insurance is available from the person. 11 * Sec. 62. AS 21.36 is amended by adding new sections to read: 12 Sec. 21.36.167. Misrepresentation in financial institution sales. In the sale 13 of insurance by a financial institution, a person may not engage in any practice or use 14 an advertisement that may tend to mislead or deceive a consumer or cause a consumer 15 to erroneously believe that 16 (1) the insurance is backed by or a return on the insurance is 17 guaranteed by the state, the federal government, the person, or the Federal Deposit 18 Insurance Corporation; 19 (2) the state or federal government 20 (A) will pay a claim under an insurance contract that is an 21 obligation of or was sold by the person; 22 (B) is responsible for the insurance sales activities of the 23 person; or 24 (C) guarantees the credit of the person; 25 (3) for insurance that contains investment risk, the insurance does not 26 contain investment risk, the principal may not be lost, or the value of the insurance 27 may not decline; 28 (4) the lending of money, extension of credit, or a renewal of a loan is 29 conditioned on the purchase of insurance from the person and that insurance may not 30 be purchased from another source. 31 Sec. 21.36.168. Disclosures required in financial institution sales. (a) In
01 the sale of insurance by a financial institution, a person shall disclose both orally and 02 in writing to a consumer before the initial purchase of insurance that 03 (1) the insurance is not a deposit or other obligation of the person; 04 (2) the insurance is not guaranteed by the person or the person 05 soliciting insurance; 06 (3) the insurance is not insured by the Federal Deposit Insurance 07 Corporation or other agency of the United States, the financial institution, or the 08 person; 09 (4) if the insurance contains risk, the insurance contains investment 10 risk and the insurance may lose value; 11 (5) the consumer is not required to negotiate a policy or contract of 12 insurance through any particular person or group of persons as a condition to the 13 lending of money or extension of credit, or a renewal of the loan or extension of 14 credit, except that the person may impose reasonable requirements uniformly applied 15 and relating to the extent of coverage required and the financial soundness and the 16 services of the insurer and that the standards may not discriminate against a particular 17 type of insurer or require disapproval of a policy containing coverage in addition to 18 that required. 19 (b) A person shall also provide the disclosures required in (a) of this section to 20 a consumer both orally and in writing at the time of application for an extension of 21 credit. 22 (c) If an application for insurance is made by telephone, written disclosure as 23 required in (a) of this section must be mailed to the consumer within three working 24 days. 25 (d) A person may provide the disclosures required in (a) of this section 26 electronically, if 27 (1) the consumer affirmatively consents to electronic disclosure; and 28 (2) the disclosures are provided in a format that the consumer is able to 29 access at a later time by a method such as through printing or storing the disclosures 30 electronically. 31 (e) A person shall provide the disclosures required in (a) of this section in a
01 meaningful form and in a conspicuous, simple, direct, and understandable manner that 02 is designed to call attention to the information provided. 03 (f) A person shall obtain a written acknowledgment or, in the case of an 04 electronic disclosure provided in compliance with (d) of this section, a written or 05 electronic acknowledgment, by the consumer that the consumer received the 06 disclosures as required in this section. 07 (g) This section does not require that a person provide the disclosures required 08 in this section in advertisements that are of a general nature or that describe or list the 09 services or products offered by a financial institution or on behalf of a financial 10 institution. 11 (h) In this section, "meaningful form" means 12 (1) for other than an electronic form, a form of disclosure that is 13 provided to a consumer orally and in writing; 14 (2) for an electronic form, a disclosure that a consumer cannot 15 electronically bypass before purchasing insurance. 16 Sec. 21.36.169. Definitions for AS 21.36.164 - 21.36.169. In AS 21.36.164 - 17 21.36.169, unless the context otherwise requires, 18 (1) "consumer" means a person who obtains, applies to obtain, or is 19 solicited to obtain insurance from or on behalf of a financial institution; 20 (2) "financial institution" means a bank holding company under 21 12 U.S.C. 1841 (Bank Holding Company Act of 1956); a credit union under 12 U.S.C. 22 1752 (Federal Credit Union Act), a bank, savings bank, savings and loan association, 23 or trust company, or any depository institution under 12 U.S.C. 1813(c)(1); and any 24 other person authorized to take federally insured deposits and make loans in the state; 25 "financial institution" includes any employee or agent of a financial institution and any 26 nondepository affiliate or subsidiary of a financial institution but only in the instances 27 when the nondepository affiliate or subsidiary is soliciting the sale or purchase of 28 insurance recommended or sponsored by, on the premises of, or in connection with a 29 product offering of the financial institution; "financial institution" does not include an 30 insurer. 31 * Sec. 63. AS 21.36 is amended by adding a new section to read:
01 Sec. 21.36.355. Felony convictions involving dishonesty or breach of trust. 02 (a) A person who has a conviction for a felony involving dishonesty or a breach of 03 trust may not engage or participate in the business of insurance without receiving prior 04 written consent by the director as required under 18 U.S.C. 1033 and 1034 (Violent 05 Crime Control and Law Enforcement Act of 1994). 06 (b) A person who fails to seek prior written consent from the director under (a) 07 of this section is in violation of this chapter. 08 (c) A person who is engaged in the business of insurance may not knowingly 09 permit the participation in the business of insurance by a person who has been 10 convicted of a felony involving dishonesty or breach of trust except as allowed under 11 (a) of this section. 12 * Sec. 64. AS 21.36.360 is amended by adding a new subsection to read: 13 (r) The director of insurance may adopt regulations to implement, define, and 14 enforce this section. 15 * Sec. 65. AS 21.36.430(a) is amended to read: 16 (a) A person transacting [AN INSURER OFFERING] insurance in this state 17 may not (1) refuse to issue or renew insurance coverage; (2) limit the scope of 18 insurance coverage; (3) cancel an existing policy of insurance; (4) [(3)] deny a 19 covered claim; or (5) [(4)] increase the premium on an insurance policy if the refusal, 20 cancellation, denial, or increase results only from the fact that the person was a victim 21 of domestic violence or a provider of services to victims of domestic violence. 22 * Sec. 66. AS 21.36.430 is amended by adding a new subsection to read: 23 (c) In this section, "domestic violence" means the occurrence of one or more 24 of the following by a current or former family member, household member, intimate 25 partner, or caretaker: 26 (1) attempting to cause, causing, or threatening another person with 27 physical harm, severe emotional distress, psychological trauma, rape, or sexual 28 assault; 29 (2) engaging in a course of conduct or repeatedly committing acts 30 toward another person, including following the person without proper authority, under 31 circumstances that place the person in reasonable fear of bodily injury or physical
01 harm; 02 (3) subjecting another person to false imprisonment; or 03 (4) attempting to cause or causing damage to property so as to 04 intimidate or attempt to control the behavior of another person. 05 * Sec. 67. AS 21.89.080 is repealed and reenacted to read: 06 Sec. 21.89.080. Electronic submissions. The director may, by regulation or 07 by order, provide for the electronic submission of any information or written 08 submission required by this title and for an electronic confirmation of a required 09 submission. 10 * Sec. 68. AS 21.90.900(24) is repealed and reenacted to read: 11 (24) "insurance producer" has the meaning given in AS 21.27.900; 12 * Sec. 69. AS 21.27.150(b), 21.27.170, 21.27.405(c), 21.27.530(5), 21.27.900(14), and 13 21.27.900(16) are repealed. 14 * Sec. 70. AS 21.27.190(d), 21.27.365, and 21.27.900(7) are repealed. 15 * Sec. 71. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 INDIRECT COURT RULE AMENDMENT. (a) The provisions of AS 21.27.110(h), 18 as repealed and reenacted by sec. 15 of this Act, have the effect of amending Rule 402, 19 Alaska Rules of Evidence, by making inadmissible in court, except under certain 20 circumstances, the statement of reasons for termination of an appointment under 21 AS 21.27.110. 22 (b) The provisions of AS 21.27.110(h), as repealed and reenacted by sec. 15 of this 23 Act, that relate to admissibility of evidence in court take effect only if (a) of this section 24 receives the two-thirds majority vote of each house required by art. IV, sec. 15, Constitution 25 of the State of Alaska. 26 * Sec. 72. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 TRANSITION: REGULATIONS. The director of insurance may immediately 29 proceed to adopt regulations necessary to implement the changes made by this Act. The 30 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the 31 effective date of the statutory change.
01 * Sec. 73. Sections 1, 9, 10, 67, and 72 of this Act take effect immediately under 02 AS 01.10.070(c). 03 * Sec. 74. Sections 26 - 32, 37, 38, 40, 41, 43, 46, 49, 51, 63, and 70 of this Act take effect 04 July 1, 2002. 05 * Sec. 75. Sections 59 - 62, and 64 - 66 of this Act take effect July 1, 2001. 06 * Sec. 76. Except as provided in secs. 73 - 75 of this Act, this Act takes effect January 1, 07 2002.