CSSB 276(FIN): "An Act relating to the Alaska Insurance Guaranty Association; relating to the powers of the Alaska Industrial Development and Export Authority concerning the association; and providing for an effective date."
00 CS FOR SENATE BILL NO. 276(FIN) 01 "An Act relating to the Alaska Insurance Guaranty Association; relating to the powers 02 of the Alaska Industrial Development and Export Authority concerning the association; 03 and providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 21.80.060(a) is amended to read: 06 (a) The association 07 (1) is obligated to pay covered claims existing before the order of 08 liquidation and arising within 30 days after the order of liquidation, or before the 09 policy expiration date if less than 30 days after the order of liquidation, or before the 10 insured replaces the policy or causes its cancellation if the insured does so within 30 11 days after the order of liquidation, but this obligation includes only that amount of 12 each covered claim that is less than $500,000, except that a covered claim for return of 13 unearned premium may not exceed $10,000 for each policy, and except that the 14 association shall pay the full amount of any covered claim arising out of a workers'
01 compensation policy; the association is not obligated 02 (A) to a policyholder or claimant in an amount in excess of the 03 obligation of the insolvent insurer under the policy from which the claim 04 arises; or 05 (B) to pay a claim filed with the association after the final date 06 set by the court for the filing of claims against the liquidator or receiver of an 07 insolvent insurer; 08 (2) is considered the insurer to the extent of its obligation on the 09 covered claims and to that extent has all rights, duties, and obligations of the insolvent 10 insurer as if the insurer had not become insolvent; 11 (3) shall allocate claims paid and expenses incurred among the three 12 accounts separately, and assess member insurers separately for each account amounts 13 necessary to pay the obligation of the association under (1) of this subsection 14 subsequent to an insolvency, the expenses of handling covered claims subsequent to 15 an insolvency, and other expenses authorized by this chapter; under this paragraph, 16 (A) the assessments of each member insurer must initially be 17 based on a uniform percentage, as determined by the association, of the net 18 direct written premiums of each member insurer for the last year for which 19 annual statements have been filed on the kinds of insurance in the account; this 20 initial assessment shall be adjusted by applying the same uniform percentage 21 as initially used to each member insurer's net direct written premiums for the 22 calendar year following the year in which the initial assessment was issued; 23 any difference between the initial assessment amount and the adjusted 24 assessment amount allocated to a member insurer shall be levied against or 25 credited back to the member insurer, as appropriate, by the association; the 26 association shall calculate and issue all appropriate levies and credits as soon 27 as practical after all member insurers have filed their annual statements for the 28 calendar year following the year in which the initial assessment was issued; 29 (B) on an annual basis, the association shall determine if 30 funding is required for any of the three accounts; based on this determination, 31 the association shall, during November of each year, issue initial assessments
01 as may be necessary to cover the projected reasonable costs of claims and 02 expenses to administer the association for the following year; under this 03 subparagraph, 04 (i) the association shall use the services of an 05 independent actuary to assist the association to evaluate and make the 06 projection; 07 (ii) an initial assessment may be made at any other time 08 if the association determines funding is necessary, except that a 09 member insurer may not be assessed initial assessments on any account 10 in an amount greater than four [TWO] percent of the member insurer's 11 net direct written premiums for the applicable calendar year; and 12 (iii) if an account has insufficient funds to pay 13 covered claims under this section, the association shall assess each 14 member insurer subject to assessment in the other two accounts an 15 additional amount not to exceed two percent of the member 16 insurer's net direct written premiums for the applicable calendar 17 year; 18 (C) the association may pay claims in any order that it 19 determines reasonable, including the payment of claims as they are received 20 from claimants or in groups or categories of claims; however, if the maximum 21 of all assessments made under this section [ASSESSMENT], together with 22 the other assets of the association in any account, does not provide, in any one 23 year, in any account, an amount sufficient to make all necessary payments 24 from that account, the funds available shall be prorated, and the unpaid portion 25 shall be paid as soon thereafter as funds become available; 26 (D) the association may defer, in whole or in part, an 27 assessment of any member insurer if the assessment would endanger the ability 28 of the member insurer to fulfill the insurer's contractual obligations or cause 29 the member insurer's financial statement to reflect amounts of capital or 30 surplus less than the minimum amounts required for a certificate of authority 31 by any jurisdiction in which the member insurer is authorized to transact
01 insurance; however, during the period of deferment, the member insurer may 02 not pay dividends to shareholders or policyholders; a deferred assessment may 03 only be paid when the payment does not reduce capital or surplus below 04 minimums required by law; a member insurer who pays a larger assessment as 05 a result of a deferment given to another member insurer shall receive a refund 06 when the deferment ends or, at the election of the member insurer, receive a 07 credit against future assessments; 08 (E) each member insurer may set off against an assessment 09 authorized payments made on covered claims and expenses incurred in the 10 payment of these claims by the member insurer if they are chargeable to the 11 account for which the assessment is made; 12 (4) shall investigate claims brought against the association, adjust, 13 compromise, settle, and pay covered claims to the extent of the association's 14 obligation, and deny all other claims, and may review settlements, releases, and 15 judgments to which the insolvent insurer or its insureds were parties to determine the 16 extent to which settlements, releases, and judgments may be properly contested; 17 (5) may, subject to AS 21.89.100, appoint, substitute, or direct legal 18 counsel retained under an insurance policy for the defense of a covered claim; 19 (6) shall handle claims through its employees or through one or more 20 insurers or other persons designated as servicing facilities; a servicing facility shall 21 operate and maintain its principal office in this state unless the use of a servicing 22 facility located outside of the state would result in operating cost savings of at least 10 23 percent and would not result in material delay in claim payments; designation of a 24 servicing facility is subject to the approval of the director, but designation may be 25 declined by a member insurer; 26 (7) shall reimburse each servicing facility for obligations of the 27 association paid by the facility and for expenses incurred by the facility while handling 28 claims on behalf of the association and shall pay the other expenses of the association 29 authorized by this chapter. 30 * Sec. 2. AS 21.80.060(b) is amended to read: 31 (b) The association may
01 (1) employ or retain those persons necessary to handle claims and 02 perform other duties of the association; 03 (2) borrow funds necessary to effect the purposes of this chapter in 04 accord with the plan of operation and secure guarantees from the Alaska Industrial 05 Development and Export Authority for association loans that are necessary to 06 make the association financially able to meet cash flow needs; 07 (3) sue or be sued; 08 (4) negotiate and become a party to those contracts that are necessary 09 to carry out the purposes of this chapter; 10 (5) perform all other acts necessary or proper to carry out the purposes 11 of this chapter; 12 (6) retain amounts excess of claims, expenses, credits, and other 13 liabilities in any account to be applied to reduce future assessments in that account, 14 except that, if, in any year, the association determines that significant funds in excess 15 of projected claims, expenses, credits, and other liabilities exist in an account, the 16 association shall return amounts to policyholders, through procedures established by 17 the association, whereby the association reimburses member insurers for providing 18 uniform credits against rates and premiums charged for all policies applicable to the 19 account issued during the next calendar year. 20 * Sec. 3. AS 44.88.080 is amended by adding a new paragraph to read: 21 (27) to guarantee loans made to the Alaska Insurance Guaranty 22 Association (AS 21.80.040), with these guarantees limited to loans necessary to make 23 the association financially able to meet cash flow needs up to a maximum outstanding 24 principal balance at any time of $30,000,000. 25 * Sec. 4. This Act takes effect immediately under AS 01.10.070(c).