CSHB 184(JUD) am: "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(JUD) am 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 secs. 9 - 73, 75 - 78, 80, 81, 83 - 85, and 87 of 07 this Act is to implement insurance reforms in AS 21 as required by P.L. 106-102 (Gramm- 08 Leach-Bliley Act) to modernize financial services related to the business of insurance and to 09 further this state as an attractive place for investment and other commerce involving the 10 insurance industry. 11 * Sec. 2. AS 21.18 is amended by adding a new section to read: 12 Sec. 21.18.170. Valuation of investments. For the purposes of this chapter, 13 the value or amount of an investment acquired, held, or invested in or an investment 14 practice engaged in under this title, unless otherwise specified in this title, must be the
01 value at which assets of an insurer are required to be reported for accounting purposes 02 under this title and as required under procedures prescribed in published accounting 03 and valuation standards of the National Association of Insurance Commissioners, 04 including the purposes and procedures manual of the securities valuation office, the 05 valuation of securities manual, the accounting practices and procedures manual, and 06 the annual statement instructions or valuation procedures officially adopted by the 07 National Association of Insurance Commissioners. 08 * Sec. 3. AS 21.21.010 is repealed and reenacted to read: 09 Sec. 21.21.010. Scope. This chapter applies only to an investment and 10 investment practice of a domestic insurer and a United States branch of an alien 11 insurer entered through this state. This chapter does not apply to separate accounts of 12 a life insurer. 13 * Sec. 4. AS 21.21.020(d) is amended to read: 14 (d) An investment limitation based upon the amount of the insurer's assets or 15 particular funds shall relate to the assets or funds shown by the insurer's annual 16 statement most recently required to be [AS OF THE PRECEDING DECEMBER 31, 17 DATE OF ACQUISITION OF THE INVESTMENT BY THE INSURER, OR 18 SHOWN BY A CURRENT FINANCIAL STATEMENT] filed with the director. 19 * Sec. 5. AS 21.21.020 is amended by adding a new subsection to read: 20 (e) For purposes of determining compliance with investment limitations 21 imposed under this chapter, the director or an insurer shall use admitted asset values. 22 * Sec. 6. AS 21.21.255 is amended to read: 23 Sec. 21.21.255. Regulation of securities held by insurers. As provided 24 under 15 U.S.C. 77r-1(b) and (c) (Secondary Mortgage Market Enhancement Act of 25 1984), securities that are purchased, held, or invested in by an insurer are subject to 26 regulations adopted under AS 21.18.160 [SHALL BE REGULATED UNDER 27 AS 21.18.150, AS 21.21.050, 21.21.260, 21.21.270], and other applicable provisions 28 of this title. 29 * Sec. 7. AS 21.21 is amended by adding a new section to read: 30 Sec. 21.21.420. Regulations. The director shall adopt regulations regarding 31 insurance company investments that are consistent with the defined limits standards
01 for investments of the National Association of Insurance Commissioners. 02 * Sec. 8. AS 21.24.030(a) is amended to read: 03 (a) All deposits required under AS 21.09.090 for authority to transact 04 insurance in this state shall consist of certificates of deposit [,] or any combination of 05 rated credit instruments of the United States, Canada, or a state of the United 06 States [SECURITIES OF THE KINDS DESCRIBED IN AS 21.21.060, 21.21.080, 07 AND 21.21.090]. 08 * Sec. 9. AS 21.27.010(e) is repealed and reenacted to read: 09 (e) An employee of an insurer who responds to requests from existing 10 policyholders on existing policies is not required to be licensed under this section if 11 the employee 12 (1) is not directly compensated based on volume of premiums that may 13 result from those services; and 14 (2) does not transact insurance. 15 * Sec. 10. AS 21.27.010(j) is amended to read 16 (j) This section does not apply to a person who 17 (1) is employed on salary or hourly wage by a person licensed under 18 this section solely for the performance of accounting, clerical, stenographic, and 19 similar office duties; 20 (2) only secures and forwards information required for the purposes of, 21 and does not receive a commission for, any of the following services: 22 (A) performing administrative services related to 23 (i) group life insurance; 24 (ii) group property and casualty insurance; 25 (iii) group annuities; 26 (iv) group or blanket accident and health insurance; 27 (B) enrolling individuals under plans for the types of 28 insurance or annuities specified in (A) of this paragraph; 29 (C) issuing certificates under plans for the types of 30 insurance or annuities specified in (A) of this paragraph, or otherwise 31 assisting in administering those plans;
01 (D) performing administrative services related to mass- 02 marketed property and casualty insurance [COVERING THE UNPAID 03 BALANCE, OR REMAINING PAYMENTS PROPOSED TO BE MADE, IN 04 CONNECTION WITH THE PURCHASE OF MERCHANDISE OR 05 SERVICES, IF THE PERSON RECEIVES NO COMPENSATION, 06 DIRECTLY OR INDIRECTLY, ARISING OUT OF OR IN ANY WAY 07 RELATING TO THE INSURANCE TRANSACTIONS]; [OR] 08 (3) is employed on salary by a licensee at the licensee's place of 09 business, is supervised by and reports directly to a licensee in the firm, and who, after 10 explaining that the matter must be reviewed by a licensee, may 11 (A) furnish premium estimates from published or printed lists 12 of standard rates if the person does not advise, counsel, or suggest what 13 coverage may be needed, or otherwise solicit insurance coverage; 14 (B) arrange appointments for a licensee if the person does not 15 solicit insurance coverage; 16 (C) record information from an applicant or policyholder and 17 complete for the licensee's personal review and signature, a certificate of 18 insurance that is not a contract of insurance; the licensee's signature may be by 19 facsimile; 20 (D) inform a policyholder of the type of coverage shown in the 21 licensee's policy record if the person does not advise that an event or 22 hypothetical event is or is not covered; or 23 (E) in the physical presence of the licensee, record information 24 from an applicant or policyholder and complete for a licensee's personal 25 review and personal signature, applications, binders, endorsements, or 26 identification cards if the person discloses to the applicant or policyholder that 27 the applicant or policyholder may review the matter with a licensee; 28 (4) is an employee of an insurer or an organization employed by an 29 insurer and is engaged in the inspection, rating, or classification of risks, or in the 30 supervision of the training of insurance producers and is not individually 31 engaged in the sale, solicitation, or negotiation of insurance;
01 (5) advertises in this state through printed publications or 02 electronic mass media, the distribution of which is not limited to residents of this 03 state, if the person 04 (A) performs no other insurance-related activities in this 05 state; 06 (B) does not intend to solicit in this state; and 07 (C) does not sell, solicit, or negotiate insurance of risks 08 resident, located, or to be performed in this state; 09 (6) is not a resident of this state, but sells, solicits, or negotiates 10 commercial property and casualty insurance for an insured with risks located in 11 more than one state if the person is licensed as an insurance producer in the state 12 where the insured maintains its principal place of business and the contract of 13 insurance covers risks located in that state; 14 (7) is a salaried full-time employee who counsels or advises the 15 person's employer regarding the insurance interests of the employer or of the 16 subsidiaries or business affiliates of the employer, if the employee does not sell or 17 solicit insurance or receive a commission from the sale or solicitation of 18 insurance; 19 (8) is an employer or association or the employer's or association's 20 officer, director, employee, or the trustee of an employee trust plan, if the person 21 is not compensated, directly or indirectly, for transacting insurance and is 22 engaged in the administration or operation of a plan offering employee benefits 23 for the employer's or association's own employees, or the employees of its 24 subsidiaries or affiliates; to qualify under this paragraph, the plan must include 25 insurance for employees; or 26 (9) is an officer, director, or employee of an admitted insurer who 27 does not receive a commission on policies written or sold to risks resident, 28 located, or to be performed in this state if the officer's, director's, or employee's 29 functions are executive, administrative, managerial, clerical, or a combination of 30 these and are only indirectly related to the transaction of insurance; relates to 31 underwriting or loss control; or are in the capacity of an agency supervisor
01 where the activities are limited to providing technical assistance to insurance 02 producers and whose activities do not include transacting insurance. 03 * Sec. 11. AS 21.27.020(b) is amended to read: 04 (b) To qualify for issuance or renewal of an individual or individual in the 05 firm license, an applicant or licensee shall comply with this title and [,] regulations 06 adopted under AS 21.06.090 [,] and 07 (1) shall be 18 [19] years of age or older [WITH A HIGH SCHOOL 08 OR GENERAL EDUCATION DEVELOPMENT DIPLOMA OR EQUIVALENT]; 09 (2) if for a resident license, shall be a bona fide resident before 10 issuance of the license and actually reside in the state; 11 (3) shall successfully pass an examination required under 12 AS 21.27.060; 13 (4) shall be a trustworthy person; 14 (5) may not use or intend to use the license for the purpose principally 15 of writing controlled business, as defined in AS 21.27.030; 16 (6) may not have committed an act that is a cause for denial, 17 nonrenewal, suspension, or revocation of a license in this state or another jurisdiction. 18 * Sec. 12. AS 21.27.020(c) is repealed and reenacted to read: 19 (c) To qualify for issuance or renewal of a license as a firm insurance 20 producer, a firm managing general agent, a firm reinsurance intermediary broker, a 21 firm reinsurance intermediary manager, a firm surplus lines broker, or a firm 22 independent adjuster, an applicant or licensee shall 23 (1) comply with (b)(4) and (5) of this section; 24 (2) maintain a lawfully established place of business in this state, 25 except when licensed as a nonresident under AS 21.27.270; 26 (3) disclose to the director all owners, officers, directors, or partners of 27 the firm; 28 (4) designate a compliance officer for the firm; 29 (5) provide to the director documents necessary to verify the 30 information contained in or made in connection with the application; and 31 (6) notify the director, in writing, within 30 days of a change in the
01 firm's compliance officer or of the termination of employment of an individual in the 02 firm licensee. 03 * Sec. 13. AS 21.27.020(f) is amended to read: 04 (f) The director may adopt regulations establishing additional education or 05 experience requirements for applicants or licensees under this chapter upon due 06 consideration of the availability and accessibility of education and training 07 opportunities in rural areas of the state. Regulations adopted under this subsection are 08 subject to the following provisions: 09 (1) additional educational or experience requirements may not apply to 10 a licensee who has been licensed by the division of insurance before January 1, 1980; 11 (2) a licensee shall complete at least 24 credit hours of approved 12 continuing education courses during each two-year license period; 13 (3) if a licensee has accumulated more credit hours than required under 14 (2) of this subsection by the end of the license period, a maximum of eight hours may 15 be carried over to meet the requirements of (2) of this subsection in the next license 16 period; 17 (4) a program or seminar may not be approved as an acceptable 18 continuing education program unless it is a formal program of learning that 19 contributes to the professional competence of the licensee; individual study programs 20 or correspondence courses may be used to fulfill continuing education requirements if 21 approved by the director; 22 (5) a nonresident licensee is exempt from the requirements of this 23 subsection [IF THE LICENSEE SUBMITS EVIDENCE SATISFACTORY TO THE 24 DIRECTOR THAT THE LICENSEE HAS SATISFIED ANY CONTINUING 25 EDUCATION REQUIREMENTS OF THE LICENSEE'S DOMICILIARY STATE]. 26 * Sec. 14. AS 21.27.025(a) is amended to read: 27 (a) A licensee shall notify the director within 30 days in writing [BY 28 CERTIFIED MAIL] of a change in residence, employment that is licensed under this 29 chapter, place of business, legal name, fictitious name or alias, mailing address, or 30 phone number. A licensee shall report in writing to the director any 31 administrative action taken against the licensee by a governmental agency of
01 another state or by a governmental agency of another jurisdiction within 30 days 02 after the final disposition of the action. A licensee shall submit to the director the 03 final order and other relevant legal documents in the action. A licensee shall 04 report to the director any criminal prosecution of the licensee in this or another 05 state or jurisdiction within 30 days after the date of filing of the criminal 06 complaint, indictment, information, or citation in the prosecution. The licensee 07 shall submit to the director a copy of the criminal complaint, calendaring order, 08 and other relevant legal documents in the prosecution [; A SUSPENSION, 09 REVOCATION, OR DISCIPLINARY ACTION OF A LICENSE BY ANOTHER 10 STATE OR JURISDICTION; OR A CONVICTION OF A MISDEMEANOR OR 11 FELONY]. 12 * Sec. 15. AS 21.27.025(b) is amended to read: 13 (b) A compliance officer [PRINCIPAL OR MANAGER] shall notify the 14 director in writing within 30 days of a termination of employment of a licensed 15 individual in the firm. Notice required under this subsection must include 16 (1) the licensee's name; 17 (2) the firm's name and address; 18 (3) the date of hire, self-employment, or termination of the licensee; 19 and 20 (4) other information required by the director. 21 * Sec. 16. AS 21.27.040(a) is amended to read: 22 (a) Application for a license shall be made to the director upon forms 23 prescribed by the director. As a part of or in connection with the application, the 24 applicant shall furnish information concerning the applicant's identity, personal 25 history, experience, business record, purposes, and other pertinent facts that the 26 director may reasonably require. The applicant shall declare, [UNDER OATH AND] 27 subject to penalty of denial, nonrenewal, suspension, or revocation of a license issued 28 by the director that the statements made in or in connection with the application are 29 true, correct, and complete to the best of the applicant's knowledge and belief. 30 Payment of an application fee established under AS 21.06.250 must be submitted with 31 the application.
01 * Sec. 17. AS 21.27.040 is amended by adding a new subsection to read: 02 (e) As part of the application required by (a) of this section, an applicant shall 03 furnish to the director a full set of fingerprints so that the director may obtain criminal 04 justice information as provided under AS 12.62 about the applicant. The director shall 05 submit the completed fingerprint card to the Department of Public Safety. The 06 Department of Public Safety is authorized to submit the fingerprints to the Federal 07 Bureau of Investigation for a national criminal history record check. 08 * Sec. 18. AS 21.27.060(a) is amended to read: 09 (a) Except as provided in this chapter, an applicant for an individual license 10 and a compliance officer [PRINCIPAL OR MANAGER] applicant for a firm license 11 shall, before the issuance of the license, personally take and pass, to the satisfaction of 12 the director, an examination that tests the knowledge and competence of the applicant 13 as to the applicant's duties and responsibilities as a licensee and the insurance statutes 14 [LAWS] and regulations of the state. 15 * Sec. 19. AS 21.27.060(c) is repealed and reenacted to read: 16 (c) An individual who applies for an insurance producer license in this state 17 who was previously licensed for the same lines of authority in that individual's prior 18 home state is not required to pass the examination required by (a) of this section in 19 order to secure the same authority in this state. The exemption available under this 20 subsection applies only if the application is received within 90 days after the 21 cancellation of the applicant's previous license in the applicant's prior home state and 22 (1) the applicant's prior home state verifies that, at the time of 23 cancellation, the applicant held an insurance producer license that was in good 24 standing in that state; or 25 (2) the insurance producer licensing database records for the prior 26 home state that are maintained by the National Association of Insurance 27 Commissioners or its affiliates or subsidiaries indicate that the applicant is or was 28 licensed in good standing for the kind of license requested. 29 * Sec. 20. AS 21.27.060(d) is amended to read: 30 (d) This section does not apply to an applicant 31 (1) for a limited license under AS 21.27.150(a)(1), (5), or (6)
01 [AS 21.27.150(a)(1), (2), (6), OR (7)]; or 02 (2) who, at any time within the one-year [TWO-YEAR] period 03 immediately preceding the date the current pending application is received by the 04 division, had been licensed in good standing in this state under a license requiring 05 substantially similar qualifications as required by the license applied for [; OR 06 (3) WHOSE LICENSE IN ITS RESIDENT JURISDICTION 07 REQUIRES THE SAME QUALIFICATIONS AS THE LICENSE APPLIED FOR IN 08 THIS STATE IF THE LICENSE IN ALL JURISDICTIONS IS IN GOOD 09 STANDING]. 10 * Sec. 21. AS 21.27.100 is amended by adding new subsections to read: 11 (f) An insurer may appoint an insurance producer to all or some insurers 12 within the insurer's holding company system or group by the filing of a single 13 appointment under this subsection. 14 (g) The authorized or apparently authorized acts on behalf of an appointing 15 insurer of an insurance producer appointed under this section are considered the acts 16 of that insurer. 17 * Sec. 22. AS 21.27.110 is repealed and reenacted to read: 18 Sec. 21.27.110. Term of appointment. (a) An appointment under 19 AS 21.27.100 continues in force until the appointment is terminated in accordance 20 with this section. 21 (b) If an appointment is terminated by an insurer, reinsurer, or authorized 22 representative, the insurer, reinsurer, or authorized representative shall, on a form or in 23 a format prescribed by the director, notify the director within 30 days after the date of 24 termination of the appointment. 25 (c) If an appointment is terminated by the director, a written or an electronic 26 notice of termination shall be given to the appointee, to the person that made the 27 appointment, and, if different from the person making the appointment, to the insurer 28 or reinsurer, at least 10 days before the effective date of the termination. The director 29 shall send notification under this subsection to the latest address on record with the 30 director. 31 (d) If, after termination and notice under (b) of this section, an insurer,
01 reinsurer, or authorized representative discovers additional information showing that 02 the appointee whose appointment was terminated has engaged in an activity identified 03 in AS 21.27.410 during the period of the appointment, the insurer, reinsurer, or 04 authorized representative shall, on a form or in a format prescribed by the director, 05 promptly notify the director. 06 (e) Within 15 days after providing notification in accordance with (b) and (d) 07 of this section, the insurer, reinsurer, or authorized representative shall mail a copy of 08 the notification to the appointee at the last address on record with the director. The 09 notice must be provided by certified mail, return receipt requested, postage prepaid, or 10 by overnight delivery using a nationally recognized mail carrier, if the appointment 11 was terminated for an activity identified in AS 21.27.410. 12 (f) Within 30 days after the appointee receives notification in accordance with 13 (c) of this section, the appointee may file written comments concerning the substance 14 of the notification with the director and must provide a copy of the written comments 15 to the insurer, reinsurer, or authorized representative. The written comments filed 16 with the director must be included with each report distributed or disclosed concerning 17 a reason about the termination of the appointment. 18 (g) If requested by the director, an insurer, reinsurer, or authorized 19 representative shall provide to the director additional information, documents, records, 20 or other data pertaining to a termination or activity of a licensee under this title. 21 (h) A notice of termination submitted to the director under this section must 22 include a statement of the reasons for the termination. A statement of the reasons for 23 termination is confidential and not subject to inspection and copying under 24 AS 40.25.110. A statement of reasons for the termination may not be admitted as 25 evidence in a civil action or an administrative proceeding against an insurer, reinsurer, 26 or authorized representative by or on behalf of a person affected by the termination, 27 except when the action or proceeding involves perjury, unsworn falsification, fraud, or 28 failure to comply with this subsection. 29 (i) If an insurer, reinsurer, or authorized representative fails to report as 30 required under this section or is found by a court to have knowingly or intentionally 31 falsely made that report, the director may, after notice and hearing, suspend or revoke
01 the license or certificate of authority of the insurer, reinsurer, or authorized 02 representative and may impose a penalty in accordance with AS 21.27.440. 03 (j) The director may require that an insurer renew an appointment annually 04 and may require payment of a renewal fee under AS 21.06.250 for an appointment in 05 effect on December 31 of the current year. If the director requires that an appointment 06 be renewed or a renewal fee be paid, the director shall terminate the appointment if the 07 renewal fees have not been received by the director on or before the close of business 08 on March 1 of the renewal year. 09 * Sec. 23. AS 21.27 is amended by adding a new section to read: 10 Sec. 21.27.115. Lines of authority. If a person has met the applicable 11 requirements of AS 21.27.020 and 21.27.270, the director shall issue a license for one 12 or more of the following lines of authority: 13 (1) life insurance coverage on natural persons; in this paragraph, "life 14 insurance coverage" 15 (A) includes benefits of endowment and annuities; and 16 (B) may include benefits in the event of death or 17 dismemberment by accident and benefits for disability income; 18 (2) health insurance coverage for sickness, bodily injury, or accidental 19 death; in this paragraph, "health insurance coverage" may include benefits for 20 disability income; 21 (3) property insurance coverage for the direct or consequential loss for 22 damage to property of every kind; 23 (4) casualty insurance coverage against legal liability, including that 24 for death, injury, or disability or damage to real or personal property; in this 25 paragraph, "casualty insurance" includes surety insurance as defined in AS 21.12.080; 26 (5) variable life and variable annuity products insurance coverage; 27 (6) personal lines property and casualty insurance coverage sold to 28 individuals and families for primarily noncommercial purposes; 29 (7) limited lines credit insurance; 30 (8) any insurance for which a limited lines license may be issued under 31 AS 21.27.150.
01 * Sec. 24. AS 21.27.130 is amended to read: 02 Sec. 21.27.130. Form and content of licenses. A license must be in the form 03 the director prescribes and must set out 04 (1) the name and address of the licensee [,] and, if the licensee is 05 required to have a place of business, the physical address of the place of business; 06 (2) [IF FOR A FIRM, THE NAME OF THE PRINCIPAL OR 07 MANAGER OF THE FIRM; 08 (3)] the type, [KIND OR] class, and lines of authority [OF 09 INSURANCE] the licensee is licensed to handle; 10 (3) [(4)] the effective date and expiration date of the license; 11 (4) each condition, if any, [(5) THE CONDITION] under which the 12 license is granted; 13 (5) [(6)] the date of issuance of the license; 14 (6) [(7)] each fictitious name and alias under which the licensee may 15 do business; and 16 (7) [(8)] other information required by the director. 17 * Sec. 25. AS 21.27.130 is amended by adding a new subsection to read: 18 (b) A license issued by the director does not in itself create any authority, 19 actual, apparent, or inherent, in the holder of the license to represent or commit an 20 insurer. 21 * Sec. 26. AS 21.27.140(b) is amended to read: 22 (b) A firm may not be licensed as an insurance producer, managing general 23 agent, reinsurance intermediary broker, reinsurance intermediary manager, surplus 24 lines broker, or independent adjuster, or transact insurance unless each individual 25 employed as an insurance producer, managing general agent, surplus lines broker, 26 trainee insurance producer, trainee independent adjuster, or independent adjuster by 27 the firm is licensed as an individual in the firm and the compliance officer 28 [PRINCIPAL OR MANAGER] of the firm is licensed as an individual in the firm to 29 exercise all the powers conferred by the firm's license. 30 * Sec. 27. AS 21.27.140(c) is amended to read: 31 (c) If the director determines under AS 21.06.170 - 21.06.240 that a firm knew
01 or should have known of an act or representation made on the firm's behalf by a 02 person not licensed as required by this chapter, the firm and the firm's compliance 03 officer [PRINCIPAL OR MANAGER] are subject to the penalties provided under 04 AS 21.27.440. 05 * Sec. 28. AS 21.27.150(a) is amended to read: 06 (a) The director may issue a 07 (1) travel insurance limited producer license to a person [WHOSE 08 PLACE OF BUSINESS IS LOCATED IN THIS STATE,] who sells transportation 09 tickets of a common carrier of persons or property, who is appointed under 10 AS 21.27.100, and whose sole purpose is to be appointed by and act as an agent for 11 transportation ticket policies of health insurance, baggage insurance on personal 12 effects, and trip cancellation or trip interruption insurance; 13 (2) [HEALTH INSURANCE LIMITED PRODUCER LICENSE TO 14 A RESIDENT OF THIS STATE WHOSE SOLE PURPOSE IS TO BE APPOINTED 15 BY AND ACT AS AN AGENT FOR HEALTH INSURANCE PERTAINING TO 16 SPORTS AND RECREATION; 17 (3)] title insurance limited producer license to a person whose place of 18 business is located in this state and whose sole purpose is to be appointed by and act 19 on behalf of a title insurer; 20 (3) [(4)] bail bond limited producer license to a person [WHOSE 21 PLACE OF BUSINESS IS LOCATED IN THIS STATE AND] whose sole purpose is 22 to be appointed by and act on behalf of a surety insurer pertaining to bail bonds; 23 (4) [(5)] fraternal benefit society limited producer license to a person 24 whose sole purpose is to be appointed by and act on behalf of a fraternal benefit 25 society licensed under AS 21.84; 26 (5) [(6) RETIRED INSURANCE PRODUCER LICENSE TO A 27 RESIDENT WHO IS RETIRED OR RETIRING FROM THE BUSINESS OF 28 INSURANCE AND SURRENDERS ALL IN-FORCE LICENSES TO ALLOW THE 29 PERSON TO RECEIVE A CONTINUING COMMISSION IN REGARD TO 30 INSURANCE TRANSACTED BEFORE RETIREMENT; A RETIRED 31 INSURANCE PRODUCER LICENSEE MAY NOT SOLICIT, INDUCE,
01 NEGOTIATE, OR EFFECTUATE CONTRACTS OF INSURANCE; THE 02 DIRECTOR MAY RENEW A RETIRED INSURANCE PRODUCER LICENSE IF 03 THE LICENSEE CEASES TO BE A RESIDENT OF THIS STATE; 04 (7)] motor vehicle rental agency limited producer license to a person 05 and, subject to the approval of the director, to employees of the person licensed that 06 the licensee authorizes to transact the business of insurance on the licensee's behalf if, 07 as to an employee, the licensee complies with (D) of this paragraph and if the licensee 08 (A) rents to others, without operators, 09 (i) private passenger motor vehicles, including 10 passenger vans, minivans, and sport utility vehicles; or 11 (ii) cargo motor vehicles, including cargo vans, pickup 12 trucks, and trucks with a gross vehicle weight of less than 26,000 13 pounds that do not require the operator to possess a commercial driver's 14 license; 15 (B) rents motor vehicles only to persons under rental 16 agreements that do not exceed a term of 90 days; 17 (C) transacts only the following kinds of insurance: 18 (i) motor vehicle liability insurance with respect to 19 liability arising out of the use of a vehicle rented from the licensee 20 during the term of the rental agreement; 21 (ii) uninsured or underinsured motorist coverage, with 22 minimum limits described in AS 21.89.020(c) and (d) arising out of the 23 use of a vehicle rented from the licensee during the term of the rental 24 agreement; 25 (iii) insurance against medical, hospital, surgical, and 26 disability benefits to an injured person and funeral and death benefits to 27 dependents, beneficiaries, or personal representatives of a deceased 28 person if the insurance is issued as incidental coverage with or 29 supplemental to liability insurance and arises out of the use of a vehicle 30 rented from the licensee during the term of the rental agreement; 31 (iv) personal effects insurance, including loss of use,
01 with respect to damage to or loss of personal property of a person 02 renting the vehicle and other vehicle occupants while that property is 03 being loaded into, transported by, or unloaded from a vehicle rented 04 from the licensee during the term of the rental agreement; 05 (v) towing and roadside assistance with respect to 06 vehicles rented from the licensee during the term of the rental 07 agreement; and 08 (vi) other insurance as may be authorized by regulation 09 by the director; 10 (D) notifies the director in writing, within 30 days of 11 employment, of the name, date of birth, social security number, location of 12 employment, and home address of an employee authorized by the licensee to 13 transact insurance on the licensee's behalf; and 14 (E) provides other information as required by the director; 15 (6) nonresident limited producer license to a person; a license that 16 the director issues under this paragraph grants the same scope of authority as a 17 limited lines producer license issued to the person by the person's home state; 18 (7) credit insurance limited producer license to a person who sells 19 limited lines credit insurance; 20 (8) miscellaneous limited producer license to a person who 21 transacts insurance in this state that restricts the person's authority to less than 22 the total authority for a line of authority described in AS 21.27.115(1) - (6). 23 * Sec. 29. AS 21.27.270 is repealed and reenacted to read: 24 Sec. 21.27.270. Licensing of nonresidents. (a) In accordance with P.L. 106- 25 102 (Gramm-Leach-Bliley Act), the director shall issue a license to a nonresident 26 license applicant on terms that are reciprocal with those of the applicant's home state. 27 Notwithstanding any contrary provision of this chapter, the director may by order 28 waive any license application requirement in this chapter to achieve reciprocity to 29 license a nonresident in accordance with P.L. 106-102 (Gramm-Leach-Bliley Act). 30 (b) Unless the director denies or refuses to renew a license under 31 AS 21.27.410, the director shall issue a nonresident producer, limited lines, surplus
01 lines broker, managing general agent, reinsurance intermediary broker, or reinsurance 02 intermediary manager license to a person who is not a resident of this state if 03 (1) the person is currently licensed and is in good standing in the 04 person's home state; the director may verify the person's licensing status through the 05 producer licensing database records maintained by the National Association of 06 Insurance Commissioners or its affiliates or subsidiaries; 07 (2) the person has paid the fees required under AS 21.06.250 and has 08 submitted to the director 09 (A) the license application the person submitted to the person's 10 home state; or 11 (B) if the person is not a firm, a completed uniform application 12 or, if a firm, the uniform business entity application; and 13 (3) the person's home state awards nonresident producer, limited lines, 14 surplus lines, managing general agent, reinsurance intermediary broker, and 15 reinsurance intermediary manager licenses to residents of this state on the same basis 16 as does this state. 17 (c) Notwithstanding (b) of this section, the director may require a person 18 applying for a 19 (1) nonresident license to furnish the person's fingerprints as required 20 of a person applying for a license under AS 21.27.040(e); 21 (2) surplus lines broker license under this section to have, and maintain 22 while licensed in this state, the bond required of a person applying for a license under 23 AS 21.27.790(2); and 24 (3) nonresident license to comply with the premium fiduciary account 25 requirements of AS 21.27.360 and the regulations adopted under that statute. 26 (d) A person licensed as a limited lines producer in the person's home state 27 shall receive a nonresident limited lines producer license granting the same scope of 28 authority as the license issued by the producer's home state. 29 (e) In addition to the other requirements of this chapter, a person may not be 30 licensed as a nonresident licensee until the person files a power of attorney as follows: 31 (1) an applicant shall appoint the director as attorney to receive service
01 of legal process issued against the licensee in this state upon a cause of action arising 02 in this state or relative to a subject resident, located, or to be performed in this state; 03 service upon the director as attorney shall constitute effective legal service upon the 04 licensee; and 05 (2) the appointment shall be irrevocable for as long as there could be a 06 cause of action against the licensee arising out of an insurance transaction in this state 07 or relative to a subject resident, located, or to be performed in this state. 08 (f) Duplicate copies of legal process against a licensed or formerly licensed 09 nonresident licensee shall be served upon the director either by a peace officer or 10 through certified mail with return receipt requested. At the time of service, the 11 plaintiff shall pay to the director a fee set under AS 21.06.250. 12 (g) Upon receiving a service of process, the director shall immediately send 13 one of the copies of the process by certified mail, return receipt requested, to the 14 licensed or formerly licensed nonresident licensee at the last address of record filed 15 with the director. 16 * Sec. 30. AS 21.27 is amended by adding a new section to read: 17 Sec. 21.27.275. Alien licensees. The director may issue a license authorized 18 by this chapter to a nonresident of this state who does not have a home state if that 19 person meets all the requirements of this chapter for that license applicable to a 20 resident of this state applying for the same license. 21 * Sec. 31. AS 21.27.330 is repealed and reenacted to read: 22 Sec. 21.27.330. Place of business. (a) A person licensed under this chapter 23 shall have and maintain at least one place of business that is physically accessible to 24 the public in this state unless the person holds a nonresident license and principally 25 conducts transactions in another state. However, the nonresident licensee must have at 26 least one physically accessible place in the nonresident licensee's home state. The 27 requirements of this subsection do not apply to a licensee who only conducts business 28 in life or health insurance or annuities. 29 (b) If a licensee that is a firm transacts business at more than one place of 30 business in this state, the licensee shall pay a license fee for each place of business. 31 * Sec. 32. AS 21.27.350(c) is amended to read:
01 (c) The records of a particular transaction shall be retained and kept open for 02 examination and inspection by the director at any business time during the five years 03 immediately after the date of the completion of the transaction or 10 years for 04 reinsurance transactions, unless the director orders a longer period of retention. If a 05 licensee assumes the business of another licensee or former licensee by merger, 06 purchase, or otherwise, the compliance officer [PRINCIPAL OR MANAGER] of the 07 assuming licensee firm shall provide to the director in writing each location where the 08 assumed licensee's records are maintained by the assuming licensee during the period 09 in which the records must be kept available and open to the inspection of the director. 10 A formerly licensed person shall provide to the director in writing each location where 11 records shall be maintained during the period in which the records of a particular 12 transaction must be kept available and open to the examination and inspection of the 13 director. A formerly licensed person may, with the permission of the director, arrange 14 to have a current licensee or the home office of the last known insurer of each 15 policyholder [,] maintain the records open to the examination and inspection of the 16 director during the period in which the records must be maintained. 17 * Sec. 33. AS 21.27.360(b) is amended to read: 18 (b) All money, except that made payable to the insurer, representing premium 19 taxes and fees, premiums, or return premiums received by the licensee [,] shall be 20 received by the licensee as a [IN THE] fiduciary [ACCOUNT OF THE LICENSEE] 21 and shall be promptly accounted for and paid to the person entitled to the money. 22 [THE FIDUCIARY ACCOUNT SHALL BE LOCATED IN THIS STATE UNLESS 23 THE LICENSEE IS LICENSED AS A NONRESIDENT UNDER AS 21.27.270. 24 FOR PURPOSES OF THIS SECTION, THE FIDUCIARY ACCOUNT OF THE 25 FIRM SHALL BE CONSIDERED THE FIDUCIARY ACCOUNT OF AN 26 INDIVIDUAL LICENSEE ACTING ON BEHALF OF THE FIRM AND SHALL BE 27 THE RESPONSIBILITY OF THE FIRM]. Money held by the licensee as a 28 fiduciary [DEPOSITED INTO A FIDUCIARY ACCOUNT] may not be commingled 29 or otherwise combined with other money not held by the licensee as a fiduciary [, 30 EXCEPT AS ALLOWED UNDER (d) OF THIS SECTION AND AS 21.27.365]. 31 * Sec. 34. AS 21.27.360(c) is amended to read:
01 (c) In addition to any other penalty provided by law, a person who the director 02 has determined has acted to divert or appropriate money held as a fiduciary 03 [ACCOUNT MONEY] for personal use shall be ordered to make restitution and shall 04 be subject to suspension or revocation under AS 21.27.420 - 21.27.430 of all licenses 05 and a civil penalty not to exceed $50,000 for each violation. 06 * Sec. 35. AS 21.27.360(d) is amended to read: 07 (d) A licensee may only commingle premium taxes and fees, premiums, and 08 return premiums with additional money for the purpose of advancing premiums, 09 establishing reserves for the payment of return premiums, or reserves for receiving and 10 transmitting premium or return premium money [. MONEY COLLECTED FOR THE 11 PAYMENT OF PREMIUM TAXES, POLICY OR FILING FEES, LATE PAYMENT 12 CHARGES, AND INTEREST FROM FIDUCIARY MONEY ON DEPOSIT, MAY 13 BE COMMINGLED IN A FIDUCIARY ACCOUNT, BUT SHALL BE 14 SEPARATELY ACCOUNTED FOR AND PERIODICALLY REMOVED FROM 15 THE FIDUCIARY ACCOUNT]. 16 * Sec. 36. AS 21.27.360(e) is amended to read: 17 (e) Money held by a licensee as a fiduciary may not be treated [A 18 LICENSEE MAY NOT TREAT MONEY REQUIRED TO BE IN A FIDUCIARY 19 ACCOUNT] as a personal asset, as collateral for a personal or business loan, or as a 20 personal asset or income on a financial statement, except that money held by the 21 licensee as a [IN A] fiduciary [ACCOUNT] may be included in a financial statement 22 of the licensee if clearly identified as assets held by the licensee as a fiduciary 23 [ACCOUNT ASSETS AND LIABILITIES]. 24 * Sec. 37. AS 21.27.360(f) is amended to read: 25 (f) This section does not apply to an individual in the firm who acts solely on 26 behalf of a firm that maintains compliance with this section [AND DEPOSITS ALL 27 MONEY INTO THE FIRM'S FIDUCIARY ACCOUNT]. 28 * Sec. 38. AS 21.27 is amended by adding a new subsection to read: 29 (h) The director of insurance may adopt regulations to implement, define, and 30 enforce this section. 31 * Sec. 39. AS 21.27.370 is repealed and reenacted to read:
01 Sec. 21.27.370. Sharing compensation. (a) Except as provided in (c) and (d) 02 of this section, a licensee may not compensate a person, other than a licensee who is 03 acting within the scope of the person's license, for transacting insurance in this state or 04 relative to a risk resident, located, or to be performed in this state. 05 (b) Except as provided in (c) and (d) of this section, a person may not be 06 promised or paid, directly or indirectly, compensation for transacting a kind or class of 07 insurance for which the person is not then licensed to transact or for insurance that the 08 person is prohibited by this title from transacting. 09 (c) An unlicensed person who refers a customer or potential customer to a 10 licensee and who does not discuss specific terms and conditions of a policy, or who 11 gives opinions or advice regarding insurance, may be compensated for the referral, if 12 the compensation 13 (1) for each referral is 14 (A) nominal; 15 (B) on a one-time basis; and 16 (C) fixed in amount by referral; 17 (2) does not depend on whether the customer or potential customer 18 purchases the insurance; and 19 (3) is not contingent on the volume of insurance transacted. 20 (d) An insurer or insurance producer may compensate an insurance agency or 21 another person if that person does not transact the business of insurance in this state 22 and the payment does not violate AS 21.36.100 or 21.36.120. 23 (e) A person who is no longer licensed in this state may be paid renewal or 24 other deferred compensation for selling, soliciting, or negotiating insurance in this 25 state if the person 26 (1) was required to be licensed under this chapter at the time of the 27 sale, solicitation, or negotiation; and 28 (2) held that required license. 29 (f) In addition to any other penalty provided by law, the director may suspend 30 or revoke the license of a licensee participating in a violation of this section. The 31 director may order a licensee who violates this section to pay a penalty of not more
01 than three times the compensation promised or paid. 02 * Sec. 40. AS 21.27.390(a) is amended to read: 03 (a) The director may issue a temporary license only to a person who, except 04 for experience, training, or the taking of an examination, meets all qualifications for a 05 permanent license and if the person is 06 (1) the surviving spouse, next of kin, or the administrator or executor 07 of a deceased licensed insurance producer or managing general agent; 08 (2) the spouse, next of kin, employee, or legal guardian of a licensed 09 insurance producer or managing general agent who is disabled from transacting 10 insurance because of sickness, mental illness [INSANITY], or injury; 11 (3) a surviving member, officer, or employee of a firm licensed as 12 insurance producer or managing general agent upon the death of the compliance 13 officer [PRINCIPAL OR MANAGER] of the firm holding the same licenses as the 14 firm; or 15 (4) the designee of a licensed insurance producer who enters active 16 service in the armed forces of the United States, but only for insurance relating to 17 insurers for whom the licensee was acting as an agent. 18 * Sec. 41. AS 21.27.410(b) is amended to read: 19 (b) The license of a firm and its compliance officer [PRINCIPAL OR 20 MANAGER] may be denied, nonrenewed, suspended, or revoked for a violation or 21 cause that relates to a person representing or acting on behalf of the firm. 22 * Sec. 42. AS 21.27.460(c) is amended to read: 23 (c) Upon a change in the state of residence, a place of business, a mailing 24 address, or in the compliance officer [PRINCIPAL OR MANAGER] of a firm, a 25 license subject to the change shall be surrendered to the director within 10 days either 26 personally or by certified mail and the division shall reissue the license reflecting the 27 changes if the licensee continues to satisfy the qualifications under this chapter. 28 * Sec. 43. AS 21.27.540(g) is amended to read: 29 (g) In addition to any other penalty provided by law, if the director determines 30 under AS 21.06.170 - 21.06.240 that the employing licensed insurance producer knew 31 of or should have known that a trainee insurance producer violated this section, the
01 employing licensed insurance producer and firm, and the compliance officer 02 [PRINCIPAL AND MANAGER], if any, are subject to the penalties provided under 03 AS 21.27.440. 04 * Sec. 44. AS 21.27.550(c) is amended to read: 05 (c) All money collected for the account of an insurer shall be held by the 06 insurance producer as [IN] a fiduciary [ACCOUNT AS DESCRIBED UNDER 07 AS 21.27.360, AND THE INSURANCE PRODUCER SHALL COMPLY WITH 08 ALL APPLICABLE FIDUCIARY ACCOUNT STATUTES AND REGULATIONS]. 09 * Sec. 45. AS 21.27.550(i) is amended to read: 10 (i) A reinsurance intermediary manager may not enter into an agency 11 agreement with an insurance producer unless both parties are licensed under this 12 chapter and there is in effect a written agency agreement that specifically sets out the 13 duties, functions, powers, authority, and compensation of all parties to the agreement. 14 The written agreement shall be kept in the permanent records of the reinsurance 15 intermediary manager, the reinsurer, and the insurance producer, and be open to 16 inspection by the director. A written agreement must contain the following minimum 17 provisions: 18 (1) money collected for the account of a reinsurer must be held by the 19 insurance producer as [IN] a fiduciary [ACCOUNT AS DESCRIBED UNDER 20 AS 21.27.360; THE INSURANCE PRODUCER SHALL COMPLY WITH ALL 21 APPLICABLE FIDUCIARY ACCOUNT STATUTES AND REGULATIONS]; 22 (2) the agreement may not be assigned in whole or in part by the 23 insurance producer; 24 (3) the agreement may not permit the insurance producer to settle 25 claims on behalf of the reinsurer or reinsurance intermediary manager; and 26 (4) the insurance producer may not 27 (A) jointly employ an individual who is employed with the 28 reinsurer or reinsurance intermediary manager; or 29 (B) delegate insurance producer authority to another person. 30 * Sec. 46. AS 21.27.560(a) is amended to read: 31 (a) A client who appoints an insurance producer as its broker in this state or
01 relative to a subject resident, located, or to be performed in this state shall execute a 02 written contract that specifically sets out the duties, functions, powers, authority, and 03 compensation of the insurance producer, if the broker is compensated by a fee paid by 04 the client or by a combination of a fee paid by a client and a commission paid by an 05 insurer with which coverage has been placed. The written contract shall be kept in the 06 permanent records of the insurance producer and be open to inspection by the director. 07 * Sec. 47. AS 21.27.560(g) is amended to read: 08 (g) Money paid by a client to an insurance producer for insurance premiums 09 shall be held by the insurance producer as [IN] a fiduciary [ACCOUNT AS 10 DESCRIBED UNDER AS 21.27.360, AND THE INSURANCE PRODUCER 11 SHALL COMPLY WITH APPLICABLE FIDUCIARY ACCOUNT STATUTES 12 AND REGULATIONS]. 13 * Sec. 48. AS 21.27.570(a) is amended to read: 14 (a) If the aggregate amount of gross written premium on business placed by a 15 controlling insurance producer exceeds five percent of the admitted assets of the 16 controlled insurer for a calendar year as reported in the insurer's most recent financial 17 statement filed with the director, the controlling insurance producer may not place 18 business with the controlled insurer and the controlled insurer may not accept business 19 from the controlling insurance producer unless a written contract is in effect between 20 the parties that 21 (1) establishes the responsibilities of each party, indicates each party's 22 share of responsibility for each particular function, and specifies the division of 23 responsibilities; 24 (2) has been approved by the board of directors of the controlled 25 insurer; 26 (3) contains the following minimum provisions: 27 (A) the controlled insurer may terminate the contract for cause 28 upon written notice sent by certified mail to the controlling producer and shall 29 suspend the authority of the controlling insurance producer to write business 30 during a dispute regarding the cause for termination; 31 (B) the controlling insurance producer shall render accounts to
01 the controlled insurer detailing all transactions, including information in the 02 accounts necessary to support compensation, commissions, charges, and other 03 fees received by, or owing to, the controlling producer; 04 (C) the controlling insurance producer shall remit money due 05 under the contract to the controlled insurer at least monthly; 06 (D) premiums or installments collected shall be due not later 07 than 90 days after the effective date of coverage placed with the controlled 08 insurer; 09 (E) money collected for the account of a controlled insurer 10 shall be held by the controlling insurance producer as [IN] a fiduciary 11 [ACCOUNT AS DESCRIBED UNDER AS 21.27.360], except a controlling 12 insurance producer not required to be licensed under this chapter shall act as a 13 [MAINTAIN ITS] fiduciary [ACCOUNT] in compliance with the 14 requirements of its domiciliary jurisdiction; 15 (F) [A LICENSED CONTROLLING INSURANCE 16 PRODUCER SHALL COMPLY WITH ALL APPLICABLE FIDUCIARY 17 ACCOUNT STATUTES AND REGULATIONS; 18 (G) A FIDUCIARY ACCOUNT MUST BE USED FOR] all 19 payments on behalf of the controlled insurer shall be held by the controlling 20 insurance producer as a fiduciary; 21 (G) [(H)] the controlling insurance producer shall maintain 22 separate records for each controlled insurer in a form usable by the controlled 23 insurer; the controlled insurer or its authorized representative shall have the 24 right to audit and the right to copy all accounts and records related to the 25 controlled insurer's business; the director, in addition to authority granted in 26 this title, shall have access to all books, bank accounts, and records of the 27 controlling insurance producer in a form usable to the director; 28 (H) [(I)] the contract may not be assigned in whole or in part 29 by the controlling insurance producer; 30 (I) [(J)] the controlled insurer shall provide, and the controlling 31 producer shall follow, written underwriting standards, rules, procedures, and
01 manuals that must include the conditions for acceptance or rejection of risks, 02 including types of risks that may be written, maximum limits of liability, 03 applicable exclusions, territorial limitations, policy cancellation provisions, the 04 maximum policy term, the rating system, and basis of the rates to be charged; 05 (J) [(K)] the underwriting standards, rules, procedures, and 06 manuals shall be the same as those applicable to comparable business placed 07 with the controlled insurer by licensees other than the controlling licensee; 08 (K) [(L)] the rates and terms of the controlling insurance 09 producer's compensation including commissions, charges, and other fees may 10 not be greater than those applicable to comparable business placed with the 11 controlled insurer by licensees other than the controlling licensee; 12 (L) [(M)] the controlled insurer shall establish a limit, that may 13 be different for each kind or class of business, on the amount of premium that 14 the controlling insurance producer may place with the controlled insurer in 15 relation to the controlled insurer's surplus and total writings; 16 (M) [(N)] the controlled insurer shall notify the controlling 17 insurance producer if an applicable limit is approached and the controlling 18 insurance producer may not place and the controlled insurer may not accept 19 business if the limit under (L) [(M)] of this paragraph has been reached; 20 (N) [(O)] if the contract provides that the controlling insurance 21 producer, on insurance placed with the controlled insurer, is to be compensated 22 contingent upon the controlling insurer's profits on the placed insurance, the 23 contingent compensation may not be determined or paid until 24 (i) at least five years after the premiums are earned on 25 casualty business and at least one year after the premiums are earned on 26 any other insurance; 27 (ii) a later period established by the director for 28 specified kinds or classes of insurance; and 29 (iii) not until the profits have been verified under (b) of 30 this section; 31 (O) [(P)] the controlling insurance producer may negotiate but
01 may not bind reinsurance on behalf of the controlled insurer on insurance that 02 the controlling insurance producer places with the controlled insurer, except 03 that the controlling insurance producer may bind facultative reinsurance 04 contracts under obligatory agreements if the contract with the controlled 05 insurer contains reinsurance underwriting guidelines including, for both 06 reinsurance assumed and ceded, a list of reinsurers with which automatic 07 agreements are in effect, the coverage and amounts or percentages that may be 08 reinsured, and commission schedules; and 09 (4) provides that the controlled insurer has an audit committee 10 composed of independent members of the board of directors that meet at least annually 11 with management, the insurer's independent certified public accountants, and an 12 independent actuary specialist acceptable to the director to review the adequacy of the 13 insurer's reserves for losses incurred and outstanding. 14 * Sec. 49. AS 21.27.600(g) is amended to read: 15 (g) In addition to any other penalty provided by law 16 (1) the director shall revoke the trainee license of a trainee managing 17 general agent who the director determines has violated the provisions of this section; a 18 licensee or other person having possession or custody of the license shall immediately 19 surrender the license to the director either personally or by certified mail; 20 (2) if the director determines under AS 21.06.170 - 21.06.240 that the 21 employing managing general agent knew of or should have known that a trainee 22 managing general agent violated this section, the employing managing general agent 23 and firm, and the compliance officer [PRINCIPAL, AND MANAGER], if any, are 24 subject to the penalties provided under AS 21.27.440. 25 * Sec. 50. AS 21.27.620(a) is amended to read: 26 (a) An insurer may not transact business with a managing general agent unless 27 (1) the insurer holds a certificate of authority in this state; 28 (2) the managing general agent is licensed under this chapter or, when 29 the managing general agent is operating only for a foreign insurer, is licensed by its 30 resident insurance regulator in a state that the director has determined has enacted 31 provisions substantially similar to those contained in this chapter and the state is
01 accredited by the National Association of Insurance Commissioners; 02 (3) a written contract is in effect between the parties that establishes 03 the responsibilities of each party, indicates both party's share of responsibility for a 04 particular function, and specifies the division of responsibilities; 05 (4) a written contract between an insurer and a managing general agent 06 contains the following provisions: 07 (A) the insurer may terminate the contract for cause upon 08 written notice sent by certified mail to the managing general agent and may 09 suspend the underwriting authority of the managing general agent during a 10 dispute regarding the cause for termination; 11 (B) the managing general agent shall render accounts to the 12 insurer detailing all transactions and remit all money due under the contract to 13 the insurer at least monthly; 14 (C) all money collected for the account of an insurer shall be 15 held by the managing general agent as [IN] a fiduciary [ACCOUNT AS 16 DESCRIBED UNDER AS 21.27.360]; 17 (D) [THE MANAGING GENERAL AGENT SHALL 18 COMPLY WITH ALL APPLICABLE FIDUCIARY ACCOUNT STATUTES 19 AND REGULATIONS; 20 (E) A FIDUCIARY ACCOUNT SHALL BE USED FOR] all 21 payments on behalf of the insurer shall be held by the managing general 22 agent as a fiduciary; 23 (E) [(F)] the managing general agent may not retain more than 24 three months estimated claims payments and allocated loss adjustment 25 expenses; 26 (F) [(G)] the managing general agent shall maintain separate 27 records for each insurer in a form usable by the insurer; the insurer or its 28 authorized representative shall have the right to audit and the right to copy all 29 accounts and records related to the insurer's business; the director, in addition 30 to authority granted in this title, shall have access to all books, bank accounts, 31 and records of the managing general agent in a form usable to the director;
01 (G) [(H)] the contract may not be assigned in whole or in part 02 by the managing general agent; 03 (H) [(I)] if the contract permits the managing general agent to 04 do underwriting, the contract must include the following: 05 (i) the managing general agent's maximum annual 06 premium volume; 07 (ii) the rating system and basis of the rates to be 08 charged; 09 (iii) the types of risks that may be written; 10 (iv) maximum limits of liability; 11 (v) applicable exclusions; 12 (vi) territorial limitations; 13 (vii) policy cancellation provisions; 14 (viii) the maximum policy term; and 15 (ix) that the insurer shall have the right to cancel or not 16 renew a policy of insurance subject to applicable state law; 17 (I) [(J)] if the contract permits the managing general agent to 18 settle claims on behalf of the insurer, the contract must include the following: 19 (i) written settlement authority must be provided by the 20 insurer and may be terminated for cause upon the insurer's written 21 notice sent by certified mail to the managing general agent or upon the 22 termination of the contract, but the insurer may suspend the settlement 23 authority during a dispute regarding the cause of termination; 24 (ii) claims shall be reported to the insurer within 30 25 days; 26 (iii) a copy of the claim file shall be sent to the insurer 27 upon request or as soon as it becomes known that the claim has the 28 potential to exceed an amount determined by the director or exceeds the 29 limit set by the insurer, whichever is less, involves a coverage dispute, 30 may exceed the managing general agent's claims settlement authority, 31 is open for more than six months, involves extra contractual
01 allegations, or is closed by payment in excess of an amount set by the 02 director or an amount set by the insurer, whichever is less; 03 (iv) each party shall comply with unfair claims 04 settlement statutes and regulations; 05 (v) transmission of electronic data at least monthly if 06 electronic claim files are in existence; and 07 (vi) claim files shall be the property of both the insurer 08 and managing general agent; upon an order of liquidation of the 09 insurer, the files shall become the sole property of the insurer or the 10 insurer's estate; the managing general agent shall have reasonable 11 access to and the right to copy the files on a timely basis; 12 (J) [(K)] if the contract provides for sharing of interim profits 13 by the managing general agent and the managing general agent has the 14 authority to determine the amount of the interim profits by establishing loss 15 reserves, by controlling claim payments, or in any other manner, interim 16 profits may not be paid to the managing general agent until 17 (i) one year after they are earned for property insurance 18 business and five years after they are earned on casualty business; 19 (ii) a later period established by the director for 20 specified kinds or classes of insurance; and 21 (iii) not until the profits have been verified under (d) of 22 this section; 23 (K) [(L)] if the insurer is domiciled in this state or the 24 managing general agent has a place of business in this state, a copy of the 25 contract must be filed with and approved by the director at least 30 days before 26 the managing general agent transacts business on behalf of the insurer; if the 27 insurer is not domiciled in this state or the managing general agent transacts 28 business relative to a subject resident, located, or to be performed in this state 29 from a place of business not physically located in this state, a copy of the 30 contract required in this section must be filed with and approved by the 31 director at least 30 days before the managing general agent transacts business
01 on behalf of the insurer in this state or relative to a subject resident, located, or 02 to be performed in this state if the insurer or the managing general agent are 03 domiciled in a state not accredited by the National Association of Insurance 04 Commissioners; and 05 (L) [(M)] if the contract is not required to be approved in 06 advance by the director, the insurer shall provide written notification to the 07 director within 30 days of the entry into or termination of a contract with a 08 managing general agent; the notice must include a statement of duties to be 09 performed by the managing general agent on behalf of the insurer, the kinds 10 and classes of insurance for which the managing general agent has 11 authorization to act, and other information required by the director. 12 * Sec. 51. AS 21.27.620 is amended by adding a new subsection to read: 13 (l) In this section, "transact" has the meaning given in AS 21.90.900. 14 * Sec. 52. AS 21.27.640(b) is repealed and reenacted to read: 15 (b) To qualify for issuance or renewal of a registration, an applicant or 16 registrant shall comply with this title, regulations adopted under AS 21.06.090, and 17 (1) be a trustworthy person; 18 (2) have active working experience in administrative functions that, in 19 the director's opinion, exhibits the ability to competently perform the administrative 20 functions of a third-party administrator; 21 (3) not have committed an act that is a cause for denial, nonrenewal, 22 suspension, or revocation of a registration or license in this state or another 23 jurisdiction; 24 (4) maintain a lawfully established place of business as described in 25 AS 21.27.330 in this state, unless licensed as a nonresident under AS 21.27.270; 26 (5) disclose to the director all owners, officers, directors, or partners, if 27 any; 28 (6) designate a compliance officer for the firm; 29 (7) provide in or with its application 30 (A) all basic organizational documents of the third-party 31 administrator, including articles of incorporation, articles of association,
01 partnership agreement, trade name certificate, trust agreement, shareholder 02 agreement, and other applicable documents and all endorsements to the 03 required documents; 04 (B) the bylaws, rules, regulations, or similar documents 05 regulating the internal affairs of the administrator; 06 (C) the names, mailing addresses, physical addresses, official 07 positions, and professional qualifications of persons who are responsible for 08 the conduct of affairs of the third-party administrator, including the members 09 of the board of directors, board of trustees, executive committee, or other 10 governing board or committee; the principal officers in the case of a 11 corporation, or the partners or members in the case of a partnership, limited 12 liability company, limited liability partnership, or association; shareholders 13 holding directly or indirectly 10 percent or more of the voting securities of the 14 third-party administrator; and any other person who exercises control or 15 influence over the affairs of the third-party administrator; 16 (D) certified financial statements for the preceding two years, 17 or for each year and partial year that the applicant has been in business if less 18 than two years, prepared by an independent certified public accountant 19 establishing that the applicant is solvent, that the applicant's system of 20 accounting, internal control, and procedure is operating effectively to provide 21 reasonable assurance that money is promptly accounted for and paid to the 22 person entitled to the money, and any other information that the director may 23 require to review the current financial condition of the applicant; and 24 (E) a statement describing the business plan, including 25 information on staffing levels and activities proposed in this state and in other 26 jurisdictions and providing details establishing the third-party administrator's 27 capability for providing a sufficient number of experienced and qualified 28 personnel in the areas of claims handling, underwriting, and record keeping; 29 (8) provide to the director documents necessary to verify the 30 statements contained in or in connection with the application; and 31 (9) notify the director, in writing, within 30 days of
01 (A) a change in compliance officer, residence, place of 02 business, mailing address, or phone number; 03 (B) the suspension or revocation of an insurance license or 04 registration by another state or jurisdiction; or 05 (C) a conviction of a misdemeanor or felony of the third-party 06 administrator, its officers, directors, partners, owners, or employees. 07 * Sec. 53. AS 21.27.650(a) is amended to read: 08 (a) An insurer may not transact business with a third-party administrator 09 unless 10 (1) the insurer holds a certificate of authority in this state; 11 (2) the third-party administrator is registered under this chapter or, 12 when the third-party administrator is operating only for a foreign insurer, is registered 13 as a third-party administrator by the third-party administrator's resident insurance 14 regulator in a state that the director has determined has enacted provisions 15 substantially similar to those contained in AS 21.27.630 - 21.27.650 and that is 16 accredited by the National Association of Insurance Commissioners; 17 (3) the third-party administrator provides the director on January 1, 18 April 1, July 1, and October 1 of each year 19 (A) a list of current employees, identifying those transacting 20 business in this state or upon a subject resident, located or to be performed in 21 this state; 22 (B) a list of current insurers under contract; and 23 (C) other information the director may require; 24 (4) a written contract is in effect between the parties that establishes 25 the responsibilities of each party, indicates both parties' share of responsibility for a 26 particular function, and specifies the division of responsibilities; 27 (5) there is in effect a written contract between the insurer and third- 28 party administrator that contains the following provisions: 29 (A) the insurer may terminate the contract for cause upon 30 written notice sent by certified mail to the third-party administrator and may 31 suspend the underwriting authority of the third-party administrator during a
01 dispute regarding the cause for termination; but the insurer must fulfill all 02 lawful obligations with respect to policies affected by the written agreement, 03 regardless of any dispute between the insurer and the third-party administrator; 04 (B) the third-party administrator shall render accounts to the 05 insurer detailing all transactions and remit all money due under the contract to 06 the insurer at least monthly; 07 (C) all money collected for the account of an insurer shall be 08 held by the third-party administrator as [IN] a fiduciary [ACCOUNT AS 09 DESCRIBED UNDER AS 21.27.360]; 10 [(D) THE THIRD-PARTY ADMINISTRATOR SHALL 11 COMPLY WITH ALL APPLICABLE FIDUCIARY ACCOUNT STATUTES 12 AND REGULATIONS; 13 (E) A FIDUCIARY ACCOUNT SHALL BE USED FOR] all 14 payments on behalf of the insurer shall be held by the third-party 15 administrator as a fiduciary; 16 (E) [(F)] the third-party administrator may not retain more than 17 three months estimated claims payments and allocated loss adjustment 18 expenses; 19 (F) [(G)] the third-party administrator shall maintain separate 20 records for each insurer in a form usable by the insurer; the insurer or its 21 authorized representative shall have the right to audit and the right to copy all 22 accounts and records related to the insurer's business; the director, in addition 23 to other authority granted in this title, shall have access to all books, bank 24 accounts, and records of the third-party administrator in a form usable to the 25 director; any trade secrets contained in books and records reviewed by the 26 director, including the identity and addresses of policyholders and certificate 27 holders, shall be kept confidential, except that the director may use the 28 information in a proceeding instituted against the third-party administrator or 29 the insurer; 30 (G) [(H)] the contract may not be assigned in whole or in part 31 by the third-party administrator;
01 (H) [(I)] if the contract permits the third-party administrator to 02 do underwriting, the contract must include the following: 03 (i) the third-party administrator's maximum annual 04 premium volume; 05 (ii) the rating system and basis of the rates to be 06 charged; 07 (iii) the types of risks that may be written; 08 (iv) maximum limits of liability; 09 (v) applicable exclusions; 10 (vi) territorial limitations; 11 (vii) policy cancellation provisions; 12 (viii) the maximum policy term; and 13 (ix) that the insurer shall have the right to cancel or not 14 renew a policy of insurance subject to applicable state law; 15 (I) [(J)] if the contract permits the third-party administrator to 16 administer claims on behalf of the insurer, the contract must include the 17 following: 18 (i) written settlement authority must be provided by the 19 insurer and may be terminated for cause upon the insurer's written 20 notice sent by certified mail to the third-party administrator or upon the 21 termination of the contract, but the insurer may suspend the settlement 22 authority during a dispute regarding the cause of termination; 23 (ii) claims shall be reported to the insurer within 30 24 days; 25 (iii) a copy of the claim file shall be sent to the insurer 26 upon request or as soon as it becomes known that the claim has the 27 potential to exceed an amount determined by the director or exceeds the 28 limit set by the insurer, whichever is less, involves a coverage dispute, 29 may exceed the third-party administrator's claims settlement authority, 30 is open for more than six months, involves extra contractual 31 allegations, or is closed by payment in excess of an amount set by the
01 director or an amount set by the insurer, whichever is less; 02 (iv) each party to the contract shall comply with unfair 03 claims settlement statutes and regulations; 04 (v) transmission of electronic data must occur at least 05 monthly if electronic claim files are in existence; and 06 (vi) claim files shall be the sole property of the insurer; 07 upon an order of liquidation of the insurer, the third-party administrator 08 shall have reasonable access to and the right to copy the files on a 09 timely basis; and 10 (J) [(K)] the contract may not provide for commissions, fees, or 11 charges contingent upon savings obtained in the adjustment, settlement, and 12 payment of losses covered by the insurer's obligations; but a third-party 13 administrator may receive performance-based compensation for providing 14 hospital or other auditing services or may receive compensation based on 15 premiums or charges collected or the number of claims paid or processed. 16 * Sec. 54. AS 21.27.650 is amended by adding a new subsection to read: 17 (p) In this section, "transact" has the meaning given in AS 21.90.900. 18 * Sec. 55. AS 21.27.680(g) is amended to read: 19 (g) In addition to any other penalty provided by law, 20 (1) the director shall revoke the license of a trainee reinsurance 21 intermediary broker who the director determines has violated the provisions of this 22 section; a licensee or other person having possession or custody of the license shall 23 immediately surrender the license to the director either personally or by certified mail; 24 (2) if the director determines under AS 21.06.170 - 21.06.240 that the 25 employing reinsurance intermediary broker knew of or should have known that a 26 trainee reinsurance intermediary broker violated this section, the employing 27 reinsurance intermediary broker and firm and compliance officer [, PRINCIPAL 28 AND MANAGER], if any, are subject to the penalties provided under AS 21.27.440. 29 * Sec. 56. AS 21.27.690(a) is amended to read: 30 (a) Except as provided in (b) of this section, an insurer may not transact 31 business with a reinsurance intermediary broker unless the insurer holds a certificate
01 of authority in this state, the reinsurance intermediary broker is licensed in this state, 02 and there is in effect a written contract between the parties that establishes the 03 responsibilities of each party, indicates each party's share of responsibility for each 04 particular function, and specifies the division of responsibilities. The written contract 05 shall be kept in the permanent records of the insurer and the reinsurance intermediary 06 broker, be open to inspection by the director, and must contain the following minimum 07 provisions: 08 (1) the insurer may terminate the reinsurance intermediary broker's 09 authority at any time by written notice sent by certified mail; 10 (2) the reinsurance intermediary broker shall render accounts to the 11 insurer detailing all transactions including information necessary to support all 12 commissions, charges, and other fees received by or owing to the reinsurance 13 intermediary broker and remit the money due under the contract to the insurer within 14 30 days of receipt; 15 (3) money collected for the account of an insurer shall be held by the 16 reinsurance intermediary broker as [IN] a fiduciary [ACCOUNT REQUIRED 17 UNDER AS 21.27.360; THE REINSURANCE INTERMEDIARY BROKER SHALL 18 COMPLY WITH APPLICABLE FIDUCIARY ACCOUNT STATUTES AND 19 REGULATIONS]; 20 (4) the reinsurance intermediary broker shall maintain separate 21 accounts and records for each insurer and maintain the records in a form usable by the 22 insurer; the insurer or the authorized representative of the insurer shall have access and 23 the right to audit and the right to copy all accounts and records related to the insurer's 24 business; the director, in addition to the other authority granted in this title, shall have 25 access to all books, bank accounts, and records of the insurance intermediary broker in 26 a form usable to the director; 27 (5) the insurer shall establish written standards for the cession or 28 retrocession of all risks, and the reinsurance intermediary broker shall comply with 29 those standards; 30 (6) the reinsurance intermediary broker shall disclose to the insurer all 31 its relationships with insurers and reinsurers to whom risks are ceded or retroceded;
01 and 02 (7) the contract may not be assigned in whole or in part by the 03 reinsurance intermediary broker. 04 * Sec. 57. AS 21.27.690 is amended by adding a new subsection to read: 05 (g) In this section, "transact" has the meaning given in AS 21.90.900. 06 * Sec. 58. AS 21.27.760(b) is amended to read: 07 (b) The contract required under (a) of this section must include the following 08 provisions: 09 (1) the reinsurer may terminate the contract for cause upon written 10 notice sent by certified mail to the reinsurance intermediary manager and may suspend 11 the underwriting authority of the reinsurance intermediary manager during a dispute 12 regarding the cause for termination; 13 (2) the reinsurance intermediary manager shall render accounts to the 14 reinsurer detailing all transactions including information necessary to support all 15 commissions, charges, and other fees received by or owing to the reinsurance 16 intermediary manager and remit all money due under the contract to the insurer at 17 least monthly; 18 (3) money collected for the account of a reinsurer shall be held by the 19 reinsurance intermediary manager as [IN] a fiduciary [ACCOUNT AS DESCRIBED 20 UNDER AS 21.27.360]; 21 (4) [THE REINSURANCE INTERMEDIARY MANAGER SHALL 22 COMPLY WITH APPLICABLE FIDUCIARY ACCOUNT STATUTES AND 23 REGULATIONS; 24 (5)] the reinsurance intermediary manager shall maintain a separate 25 bank account for each reinsurer that it represents; 26 (5) [(6) A FIDUCIARY ACCOUNT MUST BE USED FOR] all 27 payments on behalf of the reinsurer shall be held by the reinsurance intermediary 28 manager as a fiduciary; 29 (6) [(7)] the reinsurance intermediary manager may retain not more 30 than three months estimated claims payments and allocated loss adjustment expenses; 31 (7) [(8)] the reinsurance intermediary manager shall maintain separate
01 accounts and records for each reinsurer and maintain the records in a form usable by 02 the reinsurer; the reinsurer or its authorized representative shall have access and the 03 right to audit and the right to copy all accounts and records related to the reinsurer's 04 business; the director, in addition to the other authority granted in this title, shall have 05 access to all books, bank accounts, and records of the reinsurance intermediary 06 manager in a form usable to the director; 07 (8) [(9)] the contract may not be assigned in whole or in part by the 08 reinsurance intermediary manager; 09 (9) [(10)] the reinsurer shall establish written underwriting and rating 10 standards for the acceptance, rejection, or cession of all risks and the reinsurance 11 intermediary manager shall comply with the standards; 12 (10) [(11)] compensation including rates, terms, purposes of 13 commissions, charges, and other fees that the reinsurance intermediary manager may 14 levy against the reinsurer; 15 (11) [(12)] if the contract permits the reinsurance intermediary 16 manager to settle claims on behalf of the reinsurer, 17 (A) written settlement authority must be provided by the 18 reinsurer and may be terminated for cause upon the insurer's written notice by 19 certified mail to the reinsurance intermediary manager or upon the termination 20 of the contract; the reinsurer may suspend the settlement authority during a 21 dispute regarding the cause of termination; 22 (B) claims shall be reported to the reinsurer within 30 days; 23 (C) a copy of the claim file shall be sent to the reinsurer upon 24 request or as soon as it becomes known that the claim 25 (i) has the potential to exceed an amount determined by 26 the director or exceeds the limit set by the insurer, whichever is less; 27 (ii) involves a coverage dispute; 28 (iii) may exceed the reinsurance intermediary manager's 29 claims settlement authority; 30 (iv) is open for more than six months; 31 (v) involves extra contractual allegations; or
01 (vi) is closed by payment in excess of an amount set by 02 the director or an amount set by the insurer, whichever is less; 03 (D) the reinsurance intermediary manager shall comply with 04 unfair claims settlement statutes and regulations; 05 (E) transmission of electronic data at least once a month if 06 electronic claims files are in existence; 07 (F) claim files shall be the property of both the reinsurer and 08 reinsurance intermediary manager, but upon an order of liquidation of the 09 reinsurer, the files shall become the sole property of the reinsurer or the 10 reinsurer's estate; the reinsurance intermediary manager shall have reasonable 11 access to and the right to copy the files on a timely basis; 12 (12) [(13)] if the contract provides for sharing of interim profits by the 13 reinsurance intermediary manager, the interim profits may not be paid until 14 (A) one calendar year after the end of each underwriting period 15 for property risks and five years after the end of each underwriting period for 16 casualty risks; 17 (B) a later period established by the director for specified kinds 18 or classes of insurance; and 19 (C) the profits have been verified under (e)(2) of this section; 20 (13) [(14)] the reinsurance intermediary manager may not 21 (A) cede retrocessions on behalf of the reinsurer, except that 22 the reinsurance intermediary manager may cede facultative retrocessions under 23 obligatory agreements if the contract with the reinsurer contains reinsurance 24 underwriting guidelines including a list of reinsurers with which automatic 25 agreements are in effect, and, for each reinsurer, the coverage and amounts or 26 percentages that may be reinsured, and commission schedules; 27 (B) commit the reinsurer to participate in reinsurance 28 syndicates; 29 (C) appoint a subagent unless the scope of the subagent's 30 license as an insurance producer includes the kinds and classes of insurance for 31 which the subagent is appointed;
01 (D) pay or commit the reinsurer to pay a claim, net of 02 retrocessions, the amount of which exceeds one percent of the reinsurer's 03 policyholder's surplus as of December 31 of the last completed calendar year 04 without the prior written approval of the reinsurer for the settlement and the 05 approval is received after the reinsurer has been notified in writing that the 06 claim settlement will exceed one percent of the reinsurer's policyholder's 07 surplus as of December 31 of the last completed calendar year; 08 (E) collect payment from a retrocessionaire or commit the 09 reinsurer to a claim settlement with a retrocessionaire without prior written 10 approval of the reinsurer, but if prior written approval is given, a complete 11 report shall be forwarded to the reinsurer within 30 days; 12 (F) jointly employ an individual who is employed with the 13 reinsurer; or 14 (G) delegate reinsurance intermediary manager authority to 15 another person; 16 (14) [(15)] if the insurer is domiciled in this state or the reinsurance 17 intermediary manager has a place of business in this state, a copy of the contract must 18 be filed with and approved by the director at least 30 days before the reinsurance 19 intermediary manager transacts business on behalf of the reinsurer; if the reinsurer is 20 not domiciled in this state or the reinsurance intermediary manager transacts business 21 relative to a subject resident, located, or to be performed in this state from a place of 22 business not physically located in this state, a copy of the contract required in this 23 section must be filed with and approved by the director at least 30 days before the 24 reinsurance intermediary manager transacts business on behalf of the insurer in this 25 state or relative to a subject resident, located, or to be performed in this state if the 26 insurer or the reinsurance intermediary manager are domiciled in a state not accredited 27 by the National Association of Insurance Commissioners; and 28 (15) [(16)] if the contract is not required to be approved in advance by 29 the director, the insurer shall provide written notification to the director within 30 days 30 of the entry into or termination of a contract with a reinsurance intermediary manager; 31 the notice must include a statement of duties to be performed by the reinsurance
01 intermediary manager on behalf of the reinsurer, the kinds and classes of insurance for 02 which the reinsurance intermediary manager has authorization to act, and other 03 information required by the director. 04 * Sec. 59. AS 21.27.760 is amended by adding a new subsection to read: 05 (l) In this section, "transact" has the meaning given in AS 21.90.900. 06 * Sec. 60. AS 21.27.790(2) is amended to read: 07 (2) if required by the director by regulation maintain a bond as 08 described in AS 21.27.190 in an amount acceptable to the director [HAVE AND 09 MAINTAIN WHILE LICENSED, A BOND IN THE SUM OF NOT LESS THAN 10 $200,000 AGGREGATE LIABILITY AND] with the conditions that the surplus lines 11 broker conduct business under the provisions of this title, promptly remit the taxes and 12 fees provided by law, return premiums promptly when due, and pay proper losses 13 promptly; 14 * Sec. 61. AS 21.27.800(g) is amended to read: 15 (g) In addition to any other penalty provided by law, 16 (1) the director shall revoke the license of a trainee surplus lines broker 17 who the director determines has violated the provisions of this section; a licensee or 18 other person having possession or custody of the license shall immediately surrender 19 the license to the director either personally or by certified mail; 20 (2) if the director determines under AS 21.06.170 - 21.06.240 that the 21 employing surplus lines broker knew of or should have known that a trainee licensed 22 under this section violated this section, the employing surplus lines broker and firm, 23 and the compliance officer [PRINCIPAL, AND MANAGER], if any, are subject to 24 the penalties provided under AS 21.27.440. 25 * Sec. 62. AS 21.27.840(f) is amended to read: 26 (f) A trainee independent adjuster shall at all times be working at the direction 27 and under the supervision of the employing licensed independent adjuster, and the file 28 and record documentation shall reflect the direction and supervision. The employing 29 licensed independent adjuster and its firm, and the compliance officer [MANAGER, 30 AND PRINCIPAL], if any, are responsible for all insurance actions of the trainee 31 independent adjuster.
01 * Sec. 63. AS 21.27.840(i) is amended to read: 02 (i) In addition to any other penalty provided by law, 03 (1) a trainee independent adjuster who the director determines has 04 violated the provisions of this section shall have its license terminated; a licensee or 05 other person having possession or custody of the license shall within 30 days surrender 06 the license to the director either personally or by certified mail; 07 (2) if the director determines under AS 21.06.170 - 21.06.240 that the 08 employing licensed independent adjuster knew of or should have known that a trainee 09 independent adjuster violated this section, the employing licensed independent 10 adjuster and firm, and the compliance officer [PRINCIPAL AND MANAGER], if 11 any, are subject to the penalties provided under AS 21.27.440. 12 * Sec. 64. AS 21.27.900(10) is amended to read: 13 (10) "individual" means a natural person required to be licensed under 14 AS 21.27.010 [WHO IS NOT ACTING IN ASSOCIATION WITH TWO OR MORE 15 LICENSEES, EITHER IN PARTNERSHIP, CORPORATION, OR OTHERWISE, 16 OR AN ORGANIZATION IN WHICH A SINGLE LICENSEE HAS 50 PERCENT 17 OR MORE OWNERSHIP INTEREST IN THE ORGANIZATION]; 18 * Sec. 65. AS 21.27.900 is amended by adding new paragraphs to read: 19 (23) "compliance officer" means a licensee under this chapter that is 20 responsible for a firm's compliance with the insurance statutes and regulations of this 21 state; 22 (24) "home state" means the District of Columbia or a state or territory 23 of the United States in which an insurance producer maintains the producer's principal 24 place of residence or principal place of business and is licensed to act as an insurance 25 producer; 26 (25) "insurance producer" means a person who sells, solicits, or 27 negotiates insurance or insurance products; 28 (26) "license" means, unless the context requires otherwise, a 29 document issued by the director of insurance authorizing a person to act for the type, 30 class, and lines of authority specified in the document; 31 (27) "limited lines credit insurance" includes credit life, credit
01 disability, credit property, credit unemployment, involuntary unemployment, mortgage 02 life, mortgage guaranty, mortgage disability, guaranteed automobile protection 03 insurance, and any other form of insurance offered in connection with an extension of 04 credit that is limited to partially or wholly extinguishing that credit obligation that the 05 director of insurance determines must be designated a form of limited lines credit 06 insurance; 07 (28) "limited lines" means those lines of insurance defined in 08 AS 21.27.150 or any other line of insurance that the director of insurance designates 09 by order as a limited line; 10 (29) "negotiate" means the act of conferring directly with or offering 11 advice directly to a purchaser or prospective purchaser of a particular contract of 12 insurance concerning any of the substantive benefits, terms, or conditions of the 13 contract if the person engaged in that act either sells insurance or obtains insurance 14 from insurers for purchasers; 15 (30) "sells" means to exchange a contract of insurance by any means, 16 for money or its equivalent, on behalf of an insurance company; 17 (31) "solicit" means attempting to sell insurance or asking or urging a 18 person to apply for a particular kind of insurance from a particular company; 19 (32) "transact" or "transact business" means sell, solicit, or negotiate 20 insurance or insurance products; 21 (33) "uniform application" means the most recent version of the 22 uniform application of the National Association of Insurance Commissioners; 23 (34) "uniform business entity application" means the most recent 24 version of the uniform business entity application of the National Association of 25 Insurance Commissioners. 26 * Sec. 66. AS 21.36 is amended by adding new sections to read: 27 Sec. 21.36.162. Nondisclosure of personal financial and personal health 28 information. The director shall adopt regulations regarding the release of financial 29 and health information regarding an individual who seeks to obtain, obtains, or has 30 obtained an insurance product or service from a licensee that is to be used primarily 31 for personal, family, or household purposes. The regulations must be at least as
01 restrictive as the model regulations adopted under the National Conference of 02 Insurance Legislators Financial Information Privacy Protection Model Act, adopted by 03 the National Conference of Insurance Legislators Executive Committee on 04 November 17, 2000, and amended on March 2, 2001. 05 Sec. 21.36.164. Licensing of persons in a financial institution. A financial 06 institution may not allow a person to transact insurance in an office of the institution 07 or on behalf of the institution, unless the person is licensed as required under 08 AS 21.27. 09 * Sec. 67. AS 21.36.165 is amended to read: 10 Sec. 21.36.165. Anticoercion and antitying [FAVORED AGENT OR 11 INSURER; COERCION OF DEBTORS]. A person may not 12 (1) require, as a condition to the lending of money or extension of 13 credit, or a renewal of the loan or extension of credit, that the obligee of the money or 14 credit negotiate a policy or contract of insurance through any particular person or 15 group of persons; 16 (2) disapprove the insurance policy provided by a borrower for the 17 protection of property securing credit or a loan [LIEN] if disapproval is based on other 18 than reasonable standards uniformly applied and relating to the extent of coverage 19 required and the financial soundness and the services of the insurer; the standards may 20 not discriminate against a particular type of insurer [,] or call for the disapproval of a 21 policy containing coverage in addition to that required; 22 (3) unless charges are required when the person handling the 23 insurance transaction is a licensee, require a consumer [BORROWER, 24 MORTGAGOR, PURCHASER], insurer, broker, or agent to pay a separate charge for 25 handling an insurance policy required as security for a loan on real property, or to pay 26 a separate charge to substitute the insurance policy of one insurer for that of another, 27 except that interest may be charged on premium loans or [OF] premium advancements 28 in accordance with the security instrument [; 29 (4) USE OR DISCLOSE INFORMATION RESULTING FROM A 30 REQUIREMENT THAT A BORROWER, MORTGAGOR, OR PURCHASER 31 FURNISH INSURANCE OF ANY KIND ON REAL PROPERTY BEING
01 CONVEYED OR USED AS COLLATERAL SECURITY TO A LOAN, WHEN THE 02 INFORMATION IS TO THE ADVANTAGE OF THE MORTGAGEE, VENDOR, 03 OR LENDER, OR IS TO THE DETRIMENT OF THE BORROWER, 04 MORTGAGOR, PURCHASER, INSURER, AGENT, OR BROKER COMPLYING 05 WITH THE REQUIREMENT]. 06 * Sec. 68. AS 21.36.165 is amended by adding new subsections to read: 07 (b) A person shall 08 (1) use separate documents for an insurance transaction, other than 09 credit insurance or flood insurance, and for a credit transaction; and 10 (2) maintain separate and distinct records relating to insurance 11 transactions, including consumer complaint information, and make the records 12 available to the director for inspection upon notice. 13 (c) A person may not include insurance premiums in a primary credit 14 transaction without the consent of the consumer. 15 (d) Nothing in this section prohibits a person from informing a consumer or 16 prospective consumer that insurance is required in order to obtain a loan or credit, that 17 loan or credit approval is contingent on the procurement of acceptable insurance by 18 the consumer, or that insurance is available from the person. 19 * Sec. 69. AS 21.36 is amended by adding new sections to read: 20 Sec. 21.36.167. Misrepresentation in financial institution sales. In the sale 21 of insurance by a financial institution, a person may not engage in any practice or use 22 an advertisement that may tend to mislead or deceive a consumer or cause a consumer 23 to erroneously believe that 24 (1) the insurance is backed by or a return on the insurance is 25 guaranteed by the state, the federal government, the person, or the Federal Deposit 26 Insurance Corporation; 27 (2) the state or federal government 28 (A) will pay a claim under an insurance contract that is an 29 obligation of or was sold by the person; 30 (B) is responsible for the insurance sales activities of the 31 person; or
01 (C) guarantees the credit of the person; 02 (3) for insurance that contains investment risk, the insurance does not 03 contain investment risk, the principal may not be lost, or the value of the insurance 04 may not decline; 05 (4) the lending of money, extension of credit, or a renewal of a loan is 06 conditioned on the purchase of insurance from the person and that insurance may not 07 be purchased from another source. 08 Sec. 21.36.168. Disclosures required in financial institution sales. (a) In 09 the sale of insurance by a financial institution, a person shall disclose both orally and 10 in writing to a consumer before the initial purchase of insurance that 11 (1) the insurance is not a deposit or other obligation of the person; 12 (2) the insurance is not guaranteed by the person or the person 13 soliciting insurance; 14 (3) the insurance is not insured by the Federal Deposit Insurance 15 Corporation or other agency of the United States, the financial institution, or the 16 person; 17 (4) if the insurance contains risk, the insurance contains investment 18 risk and the insurance may lose value; 19 (5) the consumer is not required to negotiate a policy or contract of 20 insurance through any particular person or group of persons as a condition to the 21 lending of money or extension of credit, or a renewal of the loan or extension of 22 credit, except that the person may impose reasonable requirements uniformly applied 23 and relating to the extent of coverage required and the financial soundness and the 24 services of the insurer and that the standards may not discriminate against a particular 25 type of insurer or require disapproval of a policy containing coverage in addition to 26 that required. 27 (b) A person shall also provide the disclosures required in (a) of this section to 28 a consumer both orally and in writing at the time of application for an extension of 29 credit. 30 (c) If an application for insurance is made by telephone, written disclosure as 31 required in (a) of this section must be mailed to the consumer within three working
01 days. 02 (d) A person may provide the disclosures required in (a) of this section 03 electronically, if 04 (1) the consumer affirmatively consents to electronic disclosure; and 05 (2) the disclosures are provided in a format that the consumer is able to 06 access at a later time by a method such as through printing or storing the disclosures 07 electronically. 08 (e) A person shall provide the disclosures required in (a) of this section in a 09 meaningful form and in a conspicuous, simple, direct, and understandable manner that 10 is designed to call attention to the information provided. 11 (f) A person shall obtain a written acknowledgment or, in the case of an 12 electronic disclosure provided in compliance with (d) of this section, a written or 13 electronic acknowledgment, by the consumer that the consumer received the 14 disclosures as required in this section. 15 (g) This section does not require that a person provide the disclosures required 16 in this section in advertisements that are of a general nature or that describe or list the 17 services or products offered by a financial institution or on behalf of a financial 18 institution. 19 (h) In this section, "meaningful form" means 20 (1) for other than an electronic form, a form of disclosure that is 21 provided to a consumer orally and in writing; 22 (2) for an electronic form, a disclosure that a consumer cannot 23 electronically bypass before purchasing insurance. 24 Sec. 21.36.169. Definitions for AS 21.36.164 - 21.36.169. In AS 21.36.164 - 25 21.36.169, unless the context otherwise requires, 26 (1) "consumer" means a person who obtains, applies to obtain, or is 27 solicited to obtain insurance from or on behalf of a financial institution; 28 (2) "financial institution" means a bank holding company under 29 12 U.S.C. 1841 (Bank Holding Company Act of 1956); a credit union under 12 U.S.C. 30 1752 (Federal Credit Union Act), a bank, savings bank, savings and loan association, 31 or trust company, or any depository institution under 12 U.S.C. 1813(c)(1); and any
01 other person authorized to take federally insured deposits and make loans in the state; 02 "financial institution" includes any employee or agent of a financial institution and any 03 nondepository affiliate or subsidiary of a financial institution but only in the instances 04 when the nondepository affiliate or subsidiary is soliciting the sale or purchase of 05 insurance recommended or sponsored by, on the premises of, or in connection with a 06 product offering of the financial institution; "financial institution" does not include an 07 insurer. 08 * Sec. 70. AS 21.36 is amended by adding a new section to read: 09 Sec. 21.36.355. Felony convictions involving dishonesty or breach of trust. 10 (a) A person who has a conviction for a felony involving dishonesty or a breach of 11 trust may not engage or participate in the business of insurance without receiving prior 12 written consent by the director as required under 18 U.S.C. 1033 and 1034 (Violent 13 Crime Control and Law Enforcement Act of 1994). 14 (b) A person who fails to seek prior written consent from the director under (a) 15 of this section is in violation of this chapter. 16 (c) A person who is engaged in the business of insurance may not knowingly 17 permit the participation in the business of insurance by a person who has been 18 convicted of a felony involving dishonesty or breach of trust except as allowed under 19 (a) of this section. 20 * Sec. 71. AS 21.36.360 is amended by adding a new subsection to read: 21 (r) The director of insurance may adopt regulations to implement, define, and 22 enforce this section. 23 * Sec. 72. AS 21.36.430(a) is amended to read: 24 (a) A person transacting [AN INSURER OFFERING] insurance in this state 25 may not (1) refuse to issue or renew insurance coverage; (2) limit the scope of 26 insurance coverage; (3) cancel an existing policy of insurance; (4) [(3)] deny a 27 covered claim; or (5) [(4)] increase the premium on an insurance policy if the refusal, 28 cancellation, denial, or increase results only from the fact that the person was a victim 29 of domestic violence or a provider of services to victims of domestic violence. 30 * Sec. 73. AS 21.36.430 is amended by adding a new subsection to read: 31 (c) In this section, "domestic violence" means the occurrence of one or more
01 of the following by a current or former family member, household member, intimate 02 partner, or caretaker: 03 (1) attempting to cause, causing, or threatening another person with 04 physical harm, severe emotional distress, psychological trauma, rape, or sexual 05 assault; 06 (2) engaging in a course of conduct or repeatedly committing acts 07 toward another person, including following the person without proper authority, under 08 circumstances that place the person in reasonable fear of bodily injury or physical 09 harm; 10 (3) subjecting another person to false imprisonment; or 11 (4) attempting to cause or causing damage to property so as to intimidate or 12 attempt to control the behavior of another person. 13 * Sec. 74. AS 21.87.220(b) is amended to read: 14 (b) AS 21.21 shall [THE FOLLOWING SECTIONS] apply to the investments 15 of service corporations, to the extent applicable, and for the purposes of the 16 application a service corporation shall be considered to be an insurer [: AS 21.21.020 - 17 21.21.050, 21.21.290, AND 21.21.300]. 18 * Sec. 75. AS 21.89.080 is repealed and reenacted to read: 19 Sec. 21.89.080. Electronic submissions. The director may, by regulation or 20 by order, provide for the electronic submission of any information or written 21 submission required by this title and for an electronic confirmation of a required 22 submission. 23 * Sec. 76. AS 21.90.900(24) is repealed and reenacted to read: 24 (24) "insurance producer" has the meaning given in AS 21.27.900; 25 * Sec. 77. AS 21.27.150(b), 21.27.170, 21.27.405(c), 21.27.530(5), 21.27.900(14), and 26 21.27.900(16) are repealed. 27 * Sec. 78. AS 21.27.190(d), 21.27.365, and 21.27.900(7) are repealed. 28 * Sec. 79. AS 21.18.120, 21.18.130, 21.18.140, 21.18.150; AS 21.21.030, 21.21.040, 29 21.21.050, 21.21.060, 21.21.070, 21.21.080, 21.21.090, 21.21.100, 21.21.110, 21.21.120, 30 21.21.130, 21.21.140, 21.21.150, 21.21.160, 21.21.170, 21.21.180, 21.21.190, 21.21.200, 31 21.21.210, 21.21.220, 21.21.225, 21.21.230, 21.21.240, 21.21.245, 21.21.250, 21.21.260,
01 21.21.270, 21.21.280, 21.21.290, 21.21.300, 21.21.310, 21.21.321, 21.21.330, 21.21.350, 02 21.21.355, 21.21.360, 21.21.370, 21.21.380, 21.21.390, 21.21.400, 21.21.600; 03 AS 21.87.340(7), and 21.87.340(8) are repealed. 04 * Sec. 80. The uncodified law of the State of Alaska is amended by adding a new section to 05 read: 06 INDIRECT COURT RULE AMENDMENT. (a) The provisions of AS 21.27.110(h), 07 as repealed and reenacted by sec. 22 of this Act, have the effect of amending Rule 402, 08 Alaska Rules of Evidence, by making inadmissible in court, except under certain 09 circumstances, the statement of reasons for termination of an appointment under 10 AS 21.27.110. 11 (b) The provisions of AS 21.27.110(h), as repealed and reenacted by sec. 22 of this 12 Act, that relate to admissibility of evidence in court take effect only if (a) of this section 13 receives the two-thirds majority vote of each house required by art. IV, sec. 15, Constitution 14 of the State of Alaska. 15 * Sec. 81. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 TRANSITION: REGULATIONS. The director of insurance may immediately 18 proceed to adopt regulations necessary to implement the changes made by this Act. The 19 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the 20 effective date of the statutory change. 21 * Sec. 82. The uncodified law of the State of Alaska is amended by adding a new section to 22 read: 23 CERTIFICATION OF EFFECTIVE DATE OF REGULATIONS. The lieutenant 24 governor shall certify to the revisor of statutes the effective date of the regulations initially 25 adopted by the director of insurance under AS 21.21.420, enacted by sec. 7 of this Act, to 26 implement the provisions of secs. 2 - 8, and 74 of this Act regarding investments by insurers. 27 * Sec. 83. Sections 1, 16, 17, 75, and 81 of this Act take effect immediately under 28 AS 01.10.070(c). 29 * Sec. 84. Sections 33 - 39, 44, 45, 47, 48, 50, 53, 56, 58, 70, and 78 of this Act take effect 30 July 1, 2002. 31 * Sec. 85. Sections 66 - 69, and 71 - 73 of this Act take effect July 1, 2001.
01 * Sec. 86. Sections 2 - 8, 74, and 79 of this Act take effect 30 days after the revisor of 02 statutes receives notice from the lieutenant governor under sec. 82 of this Act. 03 * Sec. 87. Except as provided in secs. 83 - 86 of this Act, this Act takes effect January 1, 04 2002.