CSSB 191(JUD) am H: "An Act relating to insurance pooling by air carriers; amending the definition of group health insurance, and allowing the Department of Administration to obtain a policy or policies of group health care insurance for employers that are small businesses, nonprofit organizations, special services organizations, or small associations for insurance purposes; and providing for an effective date."
00 CS FOR SENATE BILL NO. 191(JUD) am H 01 "An Act relating to insurance pooling by air carriers; amending the definition of group 02 health insurance, and allowing the Department of Administration to obtain a policy or 03 policies of group health care insurance for employers that are small businesses, 04 nonprofit organizations, special services organizations, or small associations for 05 insurance purposes; and providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 08 to read: 09 FINDINGS AND INTENT. (a) Concerning secs. 2, 4, and 5 of this Act, the 10 legislature has made the following findings regarding the facts that support a group insurance 11 policy for qualified entities: 12 (1) the latest United States Census data indicate that 19 percent of Alaskans 13 are uninsured;
01 (2) in 2000, about 700 companies were licensed to offer health insurance in 02 the state, about 250 companies wrote some form of health insurance in the state, and fewer 03 than 114,000 Alaskans were covered under individual and group comprehensive health 04 insurance policies written in the state; 05 (3) in 2000, 18 insurers wrote small employer health insurance in the state; 80 06 percent of small group policies are written by three health insurers; 07 (4) small businesses are having problems finding and keeping adequate 08 insurance coverage for employees; 09 (5) nonprofit and special services organizations are having problems finding 10 and keeping adequate insurance coverage for employees; 11 (6) nonprofit and special services organizations provide many services that 12 government cannot supply; and 13 (7) adequate and stable health insurance is important to Alaskans; 14 (b) It is the intent of the legislature that secs. 2, 4, and 5 of this Act assist in providing 15 access to adequate and stable health insurance for small businesses, nonprofit organizations, 16 and special services organizations. 17 (c) The Department of Administration, in procuring the policy or policies permitted 18 by secs. 2, 4, and 5 of this Act, should explore all options, including preferred provider 19 organizations and lower cost options such as limited benefit and high deductible coverage. 20 * Sec. 2. AS 21.54.060 is amended by adding a new paragraph to read: 21 (7) under a policy or policies issued under AS 39.30.097. 22 * Sec. 3. AS 21 is amended by adding a new chapter to read: 23 Chapter 77. Joint Aviation Insurance Arrangements. 24 Sec. 21.77.010. Authority to establish joint aviation insurance 25 arrangements. (a) Air carriers may enter into cooperative agreements with each 26 other for the purpose of establishing, operating, or participating in joint aviation 27 insurance arrangements through which the participating members agree to pool 28 contributions in order to either assume risks from losses to the participants on a group 29 basis or purchase coverage for the participants on a group basis. 30 (b) A joint aviation insurance arrangement 31 (1) may be for any kind of insurance defined by this title except for
01 health insurance, life insurance, and title insurance; and 02 (2) shall be considered an alternative or supplement to any other policy 03 or contract of insurance authorized or required by law, including insurance under 04 AS 21.75. 05 (c) For purposes of AS 23.30.075, a joint aviation insurance arrangement is 06 considered to be an association duly authorized to transact workers' compensation 07 insurance in the state. 08 Sec. 21.77.020. Regulation by division of insurance, notice, and annual 09 report. (a) A joint aviation insurance arrangement may not be considered insurance 10 for the purpose of any other law of the state and is not subject to regulations adopted 11 by the director. 12 (b) Before an air carrier signs a cooperative agreement, the joint aviation 13 insurance arrangement shall notify the air carrier in writing that the joint aviation 14 insurance arrangement is not licensed in this state, is not subject to this state's 15 supervision, and, in the event of the insolvency of the joint aviation insurance 16 arrangement, losses will not be covered under AS 21.80 (Alaska Insurance Guaranty 17 Association Act). 18 (c) By October 1 of each year, the administrator of a joint aviation insurance 19 arrangement shall prepare and deliver to the Legislative Budget and Audit Committee 20 and the director a report showing the true and correct financial condition of the joint 21 aviation insurance arrangement. The report must 22 (1) be attested to by the administrator and the board of directors; 23 (2) include an analysis, certified by a member of the American 24 Academy of Actuaries, of the sufficiency of the loss reserves; and 25 (3) be certified by a certified public accountant. 26 Sec. 21.77.030. General provisions of cooperative agreements. (a) A 27 cooperative agreement must provide for the proper operation of the joint aviation 28 insurance arrangement and include provisions for 29 (1) administration of the arrangement by a board of directors, 30 specifying the number of members of the board and other requirements necessary for 31 the proper functioning of the board;
01 (2) appointment of an administrator and other persons as necessary for 02 the proper functioning of the arrangement; 03 (3) organization of the arrangement, including a roster of participating 04 members and the names of the members of the board of directors; 05 (4) procedures to establish and promote an aggressive risk 06 management program among the members of the arrangement, including procedures 07 for identifying and reducing the risks that can be reduced through implementing better 08 safety technologies and improved work techniques and procedures; 09 (5) enforcing the collection of contributions or payments in default 10 from members of the arrangement; 11 (6) the addition of new members to the arrangement or the withdrawal 12 of members from the arrangement; 13 (7) the method of apportioning costs and disposition of excess 14 contributions; 15 (8) transmission of financial statements and audit reports of the 16 arrangement to participating members; 17 (9) terminating the arrangement and disposing of its assets; and 18 (10) establishing and administering a joint aviation insurance fund. 19 (b) A cooperative agreement may 20 (1) authorize the board of directors to enter into contracts for services 21 necessary to perform the functions of a joint aviation insurance arrangement; a person 22 contracting to perform functions under this paragraph is subject to the licensing 23 requirements of this title; 24 (2) delegate to the board of directors, or authorize delegation by the 25 board to another person or group, the power to compromise, arbitrate, or otherwise 26 settle claims on behalf of the arrangement; 27 (3) authorize the board of directors to adopt rules not inconsistent with 28 law for the fair and equitable administration of the joint aviation insurance 29 arrangement and the joint aviation insurance fund. 30 (c) The board of directors shall file a copy of the cooperative agreement with 31 the director at least 60 days before the effective date of the agreement. The agreement
01 shall be available for public inspection. 02 Sec. 21.77.040. Financial provisions of agreements. (a) A joint aviation 03 insurance arrangement formed in accordance with the provisions of this chapter shall 04 (1) have and maintain a surplus no less than an amount equal to the 05 total of the capital and one-half of the surplus that would be required of a domestic 06 stock insurer writing the same lines as the joint aviation insurance arrangement; or 07 (2) post a bond for an amount equal to the capital that would be 08 required of a domestic stock insurer writing the same lines of insurance as the joint 09 aviation insurance arrangement and maintain a surplus of $500,000 in admitted assets 10 or a surplus sufficient to operate the joint aviation insurance arrangement for one year, 11 whichever is greater. 12 (b) A cooperative agreement must include a provision requiring an annual 13 determination by a casualty actuary who is a member of the American Academy of 14 Actuaries that procedures for establishing reserves for losses of the joint aviation 15 insurance arrangement are actuarially sound. 16 (c) A joint aviation insurance arrangement shall be subject to an annual 17 independent audit. The audit shall be conducted in accordance with generally 18 accepted auditing standards and must include a review of the actuarial assumptions 19 used for establishing the reserves under (b) of this section. The audit report must 20 include certification from a casualty actuary who is a member of the American 21 Academy of Actuaries that the actuarial assumptions continue to be sound and the 22 level of the reserves is adequate. 23 (d) A cooperative agreement may authorize the board of directors to purchase 24 excess or catastrophic insurance on behalf of the joint aviation insurance arrangement. 25 The cost of the insurance shall be apportioned in the manner specified in the joint 26 aviation insurance agreement. The board may purchase insurance under this 27 subsection only from an insurer authorized to do business in the state, except 28 insurance under this subsection may be purchased from a risk-sharing pool established 29 by a national association of similar entities if the risk-sharing pool meets the 30 qualifications for an unauthorized insurer under AS 21.34.040(b) and (d) and 31 21.34.220 and has capital and policyholders surplus in an amount at least as great as
01 would be required if the association were a domestic multiple line insurer. An 02 arrangement may purchase insurance under this subsection for property and liability 03 risks from unauthorized insurers allowed for use by licensed Alaska surplus lines 04 brokers. 05 Sec. 21.77.050. Joint aviation insurance fund. (a) A joint aviation 06 insurance arrangement shall establish a joint aviation insurance fund. The fund 07 consists of money 08 (1) contributed by members of the joint aviation insurance 09 arrangement through budgetary appropriations or transfers from a self-insurance 10 reserve; 11 (2) contributed by officers and employees of members of the joint 12 aviation insurance arrangement under an employee benefit plan; and 13 (3) collected by the joint aviation insurance arrangement through 14 subrogation of a claim paid from the fund to a member of the arrangement. 15 (b) An expenditure may be made from a joint aviation insurance fund only to 16 (1) pay claims, losses, or benefits, including interest on claims, losses, 17 or benefits, and the administrative and adjustment expenses incurred in connection 18 with claims, losses, or benefits, involving the types of protection for which the fund 19 provides coverage as specified in the joint aviation insurance agreement; and 20 (2) purchase insurance coverage for members of a joint aviation 21 insurance arrangement on a group basis. 22 (c) The administrator shall keep the fund separate from other funds of a 23 member of a joint aviation insurance arrangement. 24 (d) For each type of protection offered by the joint aviation insurance 25 arrangement, the method of accounting must show the order, source, date, and amount 26 of each payment from the fund. 27 (e) Within 150 days of the end of the fiscal year, the administrator shall 28 furnish a detailed report of the operation and condition of the fund to the board of 29 directors and the director. 30 (f) Money held by a fund as reserves and money not needed for daily 31 operations may be invested by the board of directors.
01 (g) A fund may not be terminated unless the administrator certifies that an 02 amount of money sufficient to pay accrued and contingent expenditures has been 03 placed in a fully collateralized escrow account. 04 Sec. 21.77.250. Definitions. In this chapter, 05 (1) "adjustment expenses" means expenses for investigative, 06 processing, legal, actuarial, arbitration, and settlement services incurred in the 07 adjustment of losses, claims, or benefits; 08 (2) "administrator" means a person or group appointed by the board of 09 directors to administer a joint aviation insurance arrangement or a joint aviation 10 insurance fund; 11 (3) "board" or "board of directors" means the board of directors 12 provided for in a cooperative agreement; 13 (4) "cooperative agreement" means a written agreement entered into 14 by two or more air carriers described in AS 21.77.010 for the purpose of establishing, 15 operating, or participating in a joint aviation insurance arrangement; 16 (5) "fund" or "joint aviation insurance fund" means a fund established 17 under AS 21.77.050; 18 (6) "joint aviation insurance arrangement" means a joint aviation 19 insurance arrangement authorized under AS 21.77.010. 20 * Sec. 4. AS 39.30 is amended by adding a new section to read: 21 Sec. 39.30.097. Procurement of group health care insurance policies for 22 qualified entities. (a) The department may obtain a health care insurance policy or 23 policies to cover a group of qualified entities. 24 (b) In procuring a health care insurance policy or policies under this section, 25 the commissioner of administration shall comply with the procedure for obtaining 26 policies of insurance under AS 39.30.090(a)(4) and (5). 27 (c) A qualified entity is eligible for coverage under (a) of this section if the 28 qualified entity 29 (1) submits a written request for registration to the department; and 30 (2) receives written confirmation from the commissioner of 31 administration that the qualified entity is registered to participate.
01 (d) The request for registration submitted by a qualified entity under (c) of this 02 section must contain a statement certifying that the entity meets the definition of a 03 qualified entity under this section and that the entity agrees to pay the required 04 premiums to the insurance company. The owner, a principal, or another legally 05 qualified representative of the entity shall sign the statement under penalty of unsworn 06 falsification and fraud. The department shall register an entity that submits a request 07 for registration and meets the requirements of this subsection. The department shall 08 maintain a list of entities registered to participate under this section and shall make the 09 list available for public inspection. 10 (e) The department may not procure benefits under this section by means of 11 self-insurance. 12 (f) In this section, 13 (1) "association for insurance purposes" means an association 14 (A) composed of businesses or nonprofit organizations or both; 15 and 16 (B) organized and operating in Alaska; 17 (2) "business" means a business 18 (A) located in Alaska; 19 (B) organized under the relevant provisions of the Alaska 20 Statutes; if the form of business is not required to be organized under a statute, 21 then the sole proprietor or joint venturers who own the business must be 22 Alaska residents; and 23 (C) that employed an average of at least two but not more than 24 50 eligible employees on the business days during the preceding calendar year 25 and employs at least two eligible employees on the first day of a health benefit 26 plan; 27 (3) "department" means the Department of Administration; 28 (4) "employee" has the meaning given in AS 21.54.500; 29 (5) "health care insurance" has the meaning given in AS 21.12.050; 30 (6) "nonprofit organization" means a nonprofit corporation, 31 association, club, or society organized and operating in Alaska exclusively for
01 charitable, religious, scientific, or educational purposes or for the promotion of social 02 welfare and that has received an exemption from the payment of federal income tax; 03 (7) "policy" has the meaning given in AS 21.90.900; 04 (8) "qualified entity" means a business, nonprofit organization, 05 association for insurance purposes, or special services organization; 06 (9) "special services organization" means an entity, corporation, or 07 nonprofit organization organized and operating in Alaska that is 08 (A) an entity, including a sole proprietorship and a corporation 09 solely owned by one person, 10 (i) operating a child care facility that is licensed under 11 AS 14.37; 12 (ii) operating a residential child care facility, child 13 placement agency, foster home, or maternity home that is licensed 14 under AS 47.35; 15 (iii) operating an assisted living home that is licensed 16 under AS 47.33; 17 (iv) operating a community-based center for adult day 18 care as that term is defined in AS 47.65.290; or 19 (v) providing home care services as defined in 20 AS 47.65.290; 21 (B) a corporation incorporated under AS 10.20 that 22 (i) receives state grants to provide services; or 23 (ii) makes grants to other corporations incorporated 24 under AS 10.20 that receive state grants to provide services; or 25 (C) a nonprofit organization, regardless of whether 26 incorporated, whose primary purpose is to provide assistance to disadvantaged 27 classes or groups; 28 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 29 read: 30 INITIAL COST RECOVERY. The commissioner of administration shall recover the 31 initial administrative costs of procuring group health care insurance policies as provided in
01 AS 39.30.097, added by sec. 4 of this Act, over a period of five years. The commissioner 02 shall fairly allocate the administrative costs among the qualified entities seeking coverage 03 under AS 39.30.097 based on the numbers of persons covered. The commissioner shall 04 distribute the administrative costs recovered pro rata to the funds from which initial funding 05 was made. 06 * Sec. 6. This Act takes effect July 1, 2002.