SB 108: "An Act relating to the regulation of insurance, insurance licensing, surplus lines, insurer deposits, motor vehicle service contracts, guaranteed automobile protection products, health discount plans, third-party administrators, self-funded multiple employer welfare arrangements, and self-funded governmental plans; and providing for an effective date."
00 SENATE BILL NO. 108 01 "An Act relating to the regulation of insurance, insurance licensing, surplus lines, 02 insurer deposits, motor vehicle service contracts, guaranteed automobile protection 03 products, health discount plans, third-party administrators, self-funded multiple 04 employer welfare arrangements, and self-funded governmental plans; and providing for 05 an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. AS 21.09.160 is amended to read: 08 Sec. 21.09.160. Notice of suspension or revocation and effect upon agent's 09 authority. (a) Upon suspending or revoking an insurer's certificate of authority the 10 director shall immediately give notice to the insurer and [TO ITS AGENTS OF 11 RECORD IN THIS STATE IN THE DIRECTOR'S OFFICE. THE DIRECTOR] shall 12 also publish notice of the revocation in one or more newspapers of general circulation 13 in this state.
01 (b) The suspension or revocation shall automatically suspend or revoke, as the 02 case may be, the authority of all its agents and managing general agents to act as 03 agents or managing general agents of the insurer in this state, and the insurer 04 [DIRECTOR] shall so state in the notice to agents and managing general agents 05 provided for in (c) [(a)] of this section. 06 * Sec. 2. AS 21.09.160 is amended by adding a new subsection to read: 07 (c) Upon notification of suspension or revocation of an insurer's certificate of 08 authority, the insurer shall immediately give notice of the suspension or revocation to 09 its agents and managing general agents operating in this state. 10 * Sec. 3. AS 21.24.040(a) is amended to read: 11 (a) Deposits made in this state under this title shall be made through the office 12 of the director [IN SAFE DEPOSIT OR] under custodial arrangements as required or 13 approved by the director consistent with the purposes of the deposit, with an 14 established safe deposit institution, bank, or trust company located in this state 15 selected by the insurer with the director's approval. 16 * Sec. 4. AS 21.24.040(c) is amended to read: 17 (c) If of convenience to the insurer in the buying, selling, and exchange of 18 securities comprising its deposit, and in the collection of interest and other income 19 currently accruing thereon, the insurer may, with the director's advance written 20 approval, deposit a portion of the securities under custodial arrangements with an 21 established bank or trust company located outside this state, if receipts representing all 22 the securities are issued by the custodial bank or trust company and are held in [SAFE 23 DEPOSIT OR] custody subject to the requirements of (a) [AND (b)] of this section. 24 * Sec. 5. AS 21.24.130(d) is amended to read: 25 (d) If the insurer is subject to delinquency proceedings as defined in AS 21.78, 26 upon the order of a court of competent jurisdiction the director shall yield the assets 27 and securities held on deposit under AS 21.09.090(b) to the receiver, conservator, 28 rehabilitator, or liquidator of the insurer, or to any other properly designated official or 29 officials who succeed to the management and control of the insurer's assets. The 30 director may release the deposit directly to the guaranty fund of which the 31 insurer is a member if the right to receive all or a portion of the deposit is
01 assigned to the guaranty fund. 02 * Sec. 6. AS 21.27.010(c) is amended to read: 03 (c) A third-party administrator [PERSON WHO FOR A RESIDENT OF 04 THIS STATE, OR FOR A RESIDENT OF ANOTHER JURISDICTION FROM A 05 PLACE OF BUSINESS IN THIS STATE, PERFORMS ADMINISTRATIVE 06 FUNCTIONS, INCLUDING CLAIMS ADMINISTRATION AND PAYMENT, 07 MARKETING ADMINISTRATIVE FUNCTIONS, PREMIUM ACCOUNTING, 08 PREMIUM BILLING, COVERAGE VERIFICATION, UNDERWRITING 09 AUTHORITY, OR CERTIFICATE ISSUANCE ONLY IN REGARD TO LIFE 10 INSURANCE, HEALTH INSURANCE, OR ANNUITIES] is not required to be 11 licensed as a managing general agent if the third-party administrator [PERSON] 12 (1) is registered under AS 21.27.630 - 21.27.660 [THIS CHAPTER 13 AS A THIRD-PARTY ADMINISTRATOR]; or 14 (2) only investigates and adjusts claims and is licensed under this 15 chapter as an independent adjuster. 16 * Sec. 7. AS 21.27.100 is repealed and reenacted to read: 17 Sec. 21.27.100. Appointment of insurance producer, managing general 18 agent, and reinsurance intermediary manager; acts of agent. (a) An appointment 19 is required to be made in accordance with this section when one or more of the 20 following has occurred: 21 (1) an admitted insurer appoints a managing general agent in this state 22 or relative to a subject resident, located, or to be performed in this state; 23 (2) a managing general agent appoints an insurance producer as its 24 subagent in this state or relative to subjects resident, located, or to be performed in this 25 state; 26 (3) a domestic reinsurer appoints a reinsurance intermediary manager; 27 (4) a reinsurance intermediary manager appoints an insurance producer 28 as its subagent in this state. 29 (b) An admitted insurer shall appoint an insurance producer as its agent in this 30 state or relative to a subject resident, located, or to be performed in this state not later 31 than 30 days after the date that a written agency contract is executed or the first
01 insurance application is submitted to the admitted insurer by the licensed insurance 02 producer. 03 (c) An individual in a firm who acts solely on behalf of a firm that is 04 appointed as an agent or a managing general agent on behalf of an admitted insurer 05 under this section may not be required to also have an appointment under this section 06 if the individual in the firm is licensed with that firm for a specific class of authority. 07 (d) The authorized or apparently authorized acts on behalf of an appointing 08 insurer of an insurance producer appointed under this section are considered the acts 09 of that insurer. 10 (e) An insurer and managing general agent shall maintain a current list of all 11 appointments made or required to be made under this section that identifies the 12 licensee's name, licensee's mailing address, license number, and effective date of 13 appointment. 14 (f) An insurance producer shall maintain a list of all appointments made or 15 required to be made under this section that identifies the insurer's name, insurer's 16 mailing address, and effective date of appointment. 17 (g) An insurer, managing general agent, or insurance producer shall reply in 18 writing within three business working days to an inquiry of the director regarding an 19 appointment. 20 * Sec. 8. AS 21.27.110 is repealed and reenacted to read: 21 Sec. 21.27.110. Term of appointment. (a) An appointment under 22 AS 21.27.100 continues in force until the appointment is terminated in writing. 23 (b) If an insurer, reinsurer, or authorized representative discovers information 24 showing that the appointee whose appointment was terminated has engaged in an 25 activity identified in AS 21.27.410 during the period of the appointment, the insurer, 26 reinsurer, or authorized representative shall, on a form or in a format prescribed by the 27 director, promptly notify the director. 28 (c) Within 15 days after providing notification in accordance with (b) of this 29 section, the insurer, reinsurer, or authorized representative shall mail a copy of the 30 notification to the appointee at the last address on record with the insurer, reinsurer, or 31 authorized representative. The notice must be provided by certified mail, return
01 receipt requested, postage prepaid, or by overnight delivery using a nationally 02 recognized mail carrier. 03 (d) Within 30 days after the appointee receives notification in accordance with 04 (c) of this section, the appointee may file written comments concerning the substance 05 of the notification with the director and must provide a copy of the written comments 06 to the insurer, reinsurer, or authorized representative. The written comments filed 07 with the director must be included with each report distributed or disclosed concerning 08 a reason about the termination of the appointment. 09 (e) If requested by the director, an insurer, a reinsurer, or an authorized 10 representative shall provide to the director additional information, documents, records, 11 or other data pertaining to a termination or activity of a licensee under this title. 12 (f) A notice of termination submitted to the director under this section must 13 include a statement of the reasons for the termination. A statement of the reasons for 14 termination is confidential and not subject to inspection and copying under 15 AS 40.25.110. A statement of reasons for the termination may not be admitted as 16 evidence in a civil action or an administrative proceeding against an insurer, reinsurer, 17 or authorized representative by or on behalf of a person affected by the termination, 18 except when the action or proceeding involves perjury, unsworn falsification, fraud, or 19 failure to comply with this subsection. 20 (g) If an insurer, a reinsurer, or an authorized representative fails to report as 21 required under this section or is found by a court to have knowingly or intentionally 22 falsely made that report, the director may, after notice and hearing, suspend or revoke 23 the license or certificate of authority of the insurer, reinsurer, or authorized 24 representative and may impose a penalty in accordance with AS 21.27.440. 25 * Sec. 9. AS 21.27.380(a) is amended to read: 26 (a) Except as provided in this title, the director may renew a license biennially 27 on a date set by the director if the licensee continues to be qualified under this chapter 28 and on or before the close of business of the renewal date, meets all renewal 29 requirements established by regulation and pays the renewal license fees set under 30 AS 21.06.250 for each license to the director. A licensee is responsible for knowing 31 the date that a license lapses and for renewing a license before expiration. The
01 director shall notify the licensee of the license renewal [MAIL A RENEWAL 02 NOTICE TO THE LICENSEE'S CURRENT ADDRESS ON FILE WITH THE 03 DIRECTOR] 30 days before the renewal date. 04 * Sec. 10. AS 21.27.630(b) is amended to read: 05 (b) A third-party administrator may not transact business for a kind or class of 06 authority [INSURANCE] for which the person is not registered. 07 * Sec. 11. AS 21.27.630(c) is amended to read: 08 (c) Except as otherwise provided in this chapter, a third-party 09 administrator [A PERSON WHO PERFORMS ADMINISTRATIVE FUNCTIONS, 10 INCLUDING CLAIMS ADMINISTRATION AND PAYMENT, MARKETING 11 ADMINISTRATIVE FUNCTIONS, PREMIUM ACCOUNTING, PREMIUM 12 BILLING, COVERAGE VERIFICATION, UNDERWRITING AUTHORITY, OR 13 CERTIFICATE ISSUANCE IN REGARD TO INSURANCE AS A THIRD-PARTY 14 ADMINISTRATOR] shall be registered under AS 21.27.630 - 21.27.660 [AS A 15 THIRD-PARTY ADMINISTRATOR] unless the third-party administrator 16 [PERSON] only investigates and adjusts claims and is licensed under this chapter as 17 an independent adjuster. 18 * Sec. 12. AS 21.27.630 is amended by adding new subsections to read: 19 (k) An insurer that holds a certificate of authority issued by the director and is 20 in good standing under this title is not required to be registered as a third-party 21 administrator in this state. 22 (l) A person that is not required to be registered as a third-party administrator 23 under (e) - (k) of this section must file a certification with the director that the person 24 meets the requirements for exemption. 25 * Sec. 13. AS 21.27.650(a) is amended to read: 26 (a) An insurer may not transact business with a third-party administrator 27 unless 28 (1) the insurer holds a certificate of authority in this state, if required 29 under this title; 30 (2) the third-party administrator is registered under this chapter or the 31 third-party administrator has filed a certification with the director certifying that
01 [, WHEN] the third-party administrator is operating only for a foreign insurer other 02 than a self-funded employer plan regulated under AS 21.85, and [,] is registered as 03 a third-party administrator by the third-party administrator's resident insurance 04 regulator in a state that the director has determined has enacted provisions 05 substantially similar to those contained in AS 21.27.630 - 21.27.650 and that is 06 accredited by the National Association of Insurance Commissioners; 07 (3) the third-party administrator provides the director on January 1, 08 April 1, July 1, and October 1 of each year 09 (A) a list of current employees, identifying those transacting 10 business in this state or upon a subject resident, located or to be performed in 11 this state; 12 (B) a list of current insurers under contract; and 13 (C) other information the director may require; 14 (4) a written contract is in effect between the parties that establishes 15 the responsibilities of each party, indicates both parties' share of responsibility for a 16 particular function, and specifies the division of responsibilities; 17 (5) there is in effect a written contract between the insurer and third- 18 party administrator that contains the following provisions: 19 (A) the insurer may terminate the contract for cause upon 20 written notice sent by certified mail to the third-party administrator and may 21 suspend the underwriting authority of the third-party administrator during a 22 dispute regarding the cause for termination; but the insurer must fulfill all 23 lawful obligations with respect to policies affected by the written agreement, 24 regardless of any dispute between the insurer and the third-party administrator; 25 (B) the third-party administrator shall render accounts to the 26 insurer detailing all transactions and remit all money due under the contract to 27 the insurer at least monthly; 28 (C) all money collected for the account of an insurer shall be 29 held by the third-party administrator as a fiduciary; 30 (D) all payments on behalf of the insurer shall be held by the 31 third-party administrator as a fiduciary;
01 (E) the third-party administrator may not retain more than three 02 months estimated claims payments and allocated loss adjustment expenses; 03 (F) the third-party administrator shall maintain separate records 04 for each insurer in a form usable by the insurer; the insurer or its authorized 05 representative shall have the right to audit and the right to copy all accounts 06 and records related to the insurer's business; the director, in addition to other 07 authority granted in this title, shall have access to all books, bank accounts, and 08 records of the third-party administrator in a form usable to the director; any 09 trade secrets contained in books and records reviewed by the director, 10 including the identity and addresses of policyholders and certificate holders, 11 shall be kept confidential, except that the director may use the information in a 12 proceeding instituted against the third-party administrator or the insurer; 13 (G) the contract may not be assigned in whole or in part by the 14 third-party administrator; 15 (H) if the contract permits the third-party administrator to do 16 underwriting, the contract must include the following: 17 (i) the third-party administrator's maximum annual 18 premium volume; 19 (ii) the rating system and basis of the rates to be 20 charged; 21 (iii) the types of risks that may be written; 22 (iv) maximum limits of liability; 23 (v) applicable exclusions; 24 (vi) territorial limitations; 25 (vii) policy cancellation provisions; 26 (viii) the maximum policy term; and 27 (ix) that the insurer shall have the right to cancel or not 28 renew a policy of insurance subject to applicable state law; 29 (I) if the contract permits the third-party administrator to 30 administer claims on behalf of the insurer, the contract must include the 31 following:
01 (i) written settlement authority must be provided by the 02 insurer and may be terminated for cause upon the insurer's written 03 notice sent by certified mail to the third-party administrator or upon the 04 termination of the contract, but the insurer may suspend the settlement 05 authority during a dispute regarding the cause of termination; 06 (ii) claims shall be reported to the insurer within 30 07 days; 08 (iii) a copy of the claim file shall be sent to the insurer 09 upon request or as soon as it becomes known that the claim has the 10 potential to exceed an amount determined by the director or exceeds the 11 limit set by the insurer, whichever is less, involves a coverage dispute, 12 may exceed the third-party administrator's claims settlement authority, 13 is open for more than six months, involves extra contractual 14 allegations, or is closed by payment in excess of an amount set by the 15 director or an amount set by the insurer, whichever is less; 16 (iv) each party to the contract shall comply with unfair 17 claims settlement statutes and regulations; 18 (v) transmission of electronic data must occur at least 19 monthly if electronic claim files are in existence; and 20 (vi) claim files shall be the sole property of the insurer; 21 upon an order of liquidation of the insurer, the third-party administrator 22 shall have reasonable access to and the right to copy the files on a 23 timely basis; and 24 (J) the contract may not provide for commissions, fees, or 25 charges contingent upon savings obtained in the adjustment, settlement, and 26 payment of losses covered by the insurer's obligations; but a third-party 27 administrator may receive performance-based compensation for providing 28 hospital or other auditing services or may receive compensation based on 29 premiums or charges collected or the number of claims paid or processed. 30 * Sec. 14. AS 21.27 is amended by adding a new section to article 4 to read: 31 Sec. 21.27.660. Definitions. In AS 21.27.630 - 21.27.660,
01 (1) "insurer" includes the Comprehensive Health Insurance 02 Association created under AS 21.55.010 and a self-funded employer plan regulated 03 under AS 21.85; 04 (2) "transact" has the meaning given in AS 21.90.900. 05 * Sec. 15. AS 21.27.650 is amended by adding a new subsection to read: 06 (q) The director may, without advance notice or hearing, immediately suspend 07 by order the registration of a third-party administrator if the director finds that one or 08 more of the following circumstances exist: 09 (1) the third-party administrator is insolvent or impaired; 10 (2) a proceeding for bankruptcy, receivership, conservatorship, 11 rehabilitation, or other delinquency proceeding regarding the third-party administrator 12 has been commenced in any state or by a governmental agency of another jurisdiction; 13 (3) the third-party administrator is in an unsound condition, or is in a 14 condition or using methods or practices that render its further transaction of insurance 15 injurious to policy holders or the public. 16 * Sec. 16. AS 21.27.900 is amended by adding a new paragraph to read: 17 (33) "appointment" means an act by a person evidencing a grant of 18 authority to another to act on the grantor's behalf. 19 * Sec. 17. AS 21.34.040(d) is amended to read: 20 (d) A nonadmitted insurer may be eligible to provide coverage in this state if it 21 furnishes to the director a copy of its current annual statement that has been certified 22 by the insurer. Except in the case of an alien insurer, the [The] statement shall be 23 provided no more than six months after the close of the period reported upon and that 24 is either filed with and approved by the regulatory authority in the domicile of the 25 nonadmitted insurer, or certified by an accounting or auditing firm licensed in the 26 jurisdiction of the insurer's domicile. An alien insurer shall provide the statement 27 no later than nine months after the close of the reporting period. In the case of an 28 insurance exchange, the statement may be an aggregate combined statement of all 29 underwriting syndicates operating during the period reported upon. 30 * Sec. 18. AS 21.34.100(a) is amended to read: 31 (a) When surplus lines insurance is placed, the surplus lines broker shall
01 promptly deliver to the named insured or the producing broker the policy or, if the 02 policy is not then available, a [CERTIFICATE,] cover note, binder, or other evidence 03 of insurance. The [CERTIFICATE,] cover note, binder, or other evidence of 04 insurance for the named insured shall be executed by the surplus lines broker and must 05 contain a summary of all material facts that would regularly be included in the policy, 06 the description and location of the subject of insurance, a general description of the 07 coverages of the insurance, the premium and rate charged and taxes to be collected 08 from the insured, the name and address of the insured, the name of each surplus lines 09 insurer and the percentage of the entire risk assumed by each, the name of the surplus 10 lines broker, and the license number of the surplus lines broker. 11 * Sec. 19. AS 21.34.100(f) is amended to read: 12 (f) A producing broker or other licensee may issue to a person, other than 13 the named insured, a certificate [EVERY CERTIFICATE ISSUED BY THE 14 PRODUCING BROKER OR OTHER LICENSEE] as evidence of insurance 15 negotiated, placed, or procured under this chapter. The certificate must bear the 16 name of the surplus lines broker, which may not be covered, concealed, or obscured 17 by the producing broker, and the following legend in at least 10-point type: "This is 18 evidence of insurance procured and developed under the Alaska Surplus Lines Law, 19 AS 21.34. It is not covered by the Alaska Insurance Guaranty Association Act, 20 AS 21.80." 21 * Sec. 20. AS 21.36.030(a) is amended to read: 22 (a) A person may not make, issue, circulate, broadcast, or have made, issued, 23 circulated, or broadcast an estimate, circular, statement, illustration, comparison, 24 assertion, or other written, electronic, or oral presentation that 25 (1) misrepresents the benefits, advantages, conditions, sponsorship, 26 source, or terms of an insurance policy; 27 (2) misrepresents the dividends or share of the surplus to be received 28 on an insurance policy; 29 (3) misrepresents an insurance policy as being a share or shares of 30 stock; 31 (4) makes a false or misleading statement as to the dividends or shares
01 of the surplus previously paid on an insurance policy; 02 (5) misrepresents or makes a misleading statement as to the financial 03 condition of an insurer or as to the legal reserve system upon which a life insurer 04 operates; 05 (6) uses a name or title of an insurance policy or class of insurance 06 policies misrepresenting its true nature; 07 (7) is a misrepresentation for the purpose of inducing, or that tends to 08 induce the lapse, forfeiture, exchange, conversion, or surrender of an insurance policy; 09 (8) is a misrepresentation for the purpose of effecting or tending to 10 effect a pledge or assignment of or loan against an insurance policy; 11 (9) appears to be an actual policy for a named individual when it is 12 merely an advertisement; 13 (10) does not clearly designate the name of the insurer providing the 14 coverage or about which the statements are made; or 15 (11) is in any other way misleading, false, or deceptive. 16 * Sec. 21. AS 21.36.030(a) is amended to read: 17 (a) A person may not make, issue, circulate, broadcast, or have made, issued, 18 circulated, or broadcast an estimate, circular, statement, illustration, comparison, 19 assertion, or other written, electronic, or oral presentation that 20 (1) misrepresents the benefits, advantages, conditions, sponsorship, 21 source, or terms of an insurance policy or a health discount plan; 22 (2) misrepresents the dividends or share of the surplus to be received 23 on an insurance policy; 24 (3) misrepresents an insurance policy as being a share or shares of 25 stock; 26 (4) makes a false or misleading statement as to the dividends or shares 27 of the surplus previously paid on an insurance policy; 28 (5) misrepresents or makes a misleading statement as to the financial 29 condition of an insurer or as to the legal reserve system upon which a life insurer 30 operates; 31 (6) uses a name or title of an insurance policy or class of insurance
01 policies misrepresenting its true nature; 02 (7) is a misrepresentation for the purpose of inducing, or that tends to 03 induce the lapse, forfeiture, exchange, conversion, or surrender of an insurance policy; 04 (8) is a misrepresentation for the purpose of effecting or tending to 05 effect a pledge or assignment of or loan against an insurance policy; 06 (9) appears to be an actual policy for a named individual when it is 07 merely an advertisement; 08 (10) does not clearly designate the name of the insurer providing the 09 coverage or about which the statements are made; [OR] 10 (11) is in any other way misleading, false, or deceptive; 11 (12) misrepresents a health discount plan as a form or type of 12 insurance; 13 (13) describes a health discount plan using common insurance 14 terminology; or 15 (14) states or implies that a health discount plan is underwritten 16 by or associated with an insurer. 17 * Sec. 22. AS 21.36 is amended by adding a new section to read: 18 Sec. 21.36.155. Health discount plans. (a) A person may not sell, market, 19 promote, advertise, or otherwise distribute a health discount plan unless 20 (1) each advertisement, policy, document, information, statement, or 21 other communication regarding the health discount plan and the plan itself contain a 22 statement in bold and prominent type that the health discount plan is not insurance; 23 (2) the discounts offered under the health discount plan are specifically 24 authorized by a contract with each provider of the services or supplies listed in 25 conjunction with the plan; 26 (3) the health discount plan states the name, address, and telephone 27 number of the administrator of the plan; 28 (4) the person makes readily available to the consumer a complete, 29 accurate, and up-to-date list of providers participating in the plan that offer discounted 30 health care services or supplies in the consumer's local area and the discounts offered 31 by the providers;
01 (5) the person provides the consumer the right to cancel the health 02 discount plan within 30 days after purchase of the plan; and 03 (6) the person provides the consumer with a full refund of all payments 04 made within 30 days after notification of cancellation of the plan under (5) of this 05 subsection. 06 (b) The director may adopt regulations to implement this section and to 07 establish additional requirements intended to prohibit unfair or deceptive practices 08 relating to health discount plans. 09 * Sec. 23. AS 21.36.195 is amended to read: 10 Sec. 21.36.195. Surplus lines brokers and insurance producers; prohibited 11 acts. A surplus lines broker or an insurance producer may not fail to provide evidence 12 of insurance, [AFFIDAVITS,] filings, or reports, or fail to maintain the records, or fail 13 to pay the taxes and fees, required under AS 21.34. 14 * Sec. 24. AS 21.51 is amended by adding a new section to read: 15 Sec. 21.51.405. Rate requirements. Rates charged for a health insurance 16 policy may not be excessive, inadequate, or unfairly discriminatory. 17 * Sec. 25. AS 21.55.500(16) is amended to read: 18 (16) "plan administrator" means an [THE] eligible entity that is 19 licensed as a third-party administrator under AS 21.27 and is selected by the 20 board and approved by the director to administer a state plan; 21 * Sec. 26. AS 21.66.080(a) is amended to read: 22 (a) Every company, on or before March 1 of each year, shall furnish the 23 director or the director's designee a sworn statement of assets and liabilities, and of 24 all title premiums received by it during the preceding calendar year, setting out among 25 other things the amounts that have been set aside and held by it in an account required 26 under AS 21.18.073. The reporting format for a given year is the most recently 27 approved National Association of Insurance Commissioners Annual Financial 28 Statement blank form and instructions, supplemented for additional information as 29 required by the director. The director may require the statement to be filed on 30 electronic media. The statement must also show all unpaid losses and claims upon 31 title insurance policies of which the title insurance company has received due notice in
01 writing from or on behalf of the insured. With the filing of the statement the title 02 insurance company shall pay a filing fee set under AS 21.06.250. 03 * Sec. 27. AS 21.66.085(b) is amended to read: 04 (b) A quarterly financial statement, if required, is due 45 [60] days after the 05 end of the quarter to which it applies. 06 * Sec. 28. AS 21.85 is amended by adding new sections to read: 07 Article 2. Self-Funded Governmental Plans. 08 Sec. 21.85.205. Applicability. A self-funded governmental plan that is 09 exempt from coverage under a group policy covering state employees and their 10 dependents under AS 39.30.090 and regulations adopted under that statute shall 11 comply with the provisions of AS 21.85.210 - 21.85.230. 12 Sec. 21.85.210. Filing requirements. (a) A self-funded governmental plan 13 shall annually file 14 (1) at least 60 days before the end of the plan year 15 (A) the contribution rates and an actuarial opinion of the 16 adequacy of the contribution rates for the next plan year; 17 (B) the summary plan description for the next plan year, 18 highlighting any changes to plan benefits from the preceding year; and 19 (C) the name and contact information of each person providing 20 administrative services to the plan; 21 (2) within 120 days after the end of the plan's fiscal year 22 (A) a certification signed by a trustee of the plan that the plan 23 complies with the requirements of AS 21.85.205 - 21.85.230; 24 (B) an audited statement of financial condition and a statement 25 of change in financial condition for the plan's fiscal year, affirmed by a trustee 26 of the plan; 27 (C) an actuarial memorandum that 28 (i) certifies to the adequacy of reserves and stop-loss 29 insurance coverage; 30 (ii) describes the financial condition of the plan, 31 including any recommended actions the plan should take to improve
01 the financial condition of the plan; and 02 (D) a report showing the number of employees and number of 03 dependents covered under the plan. 04 (b) Within 60 days after the end of each quarter, a self-funded governmental 05 plan shall file a statement of financial condition and a statement of change in financial 06 condition for the preceding quarter. 07 (c) A self-funded governmental plan shall file additional information as 08 requested by the director relating to the financial condition, transactions, and affairs of 09 the plan. 10 Sec. 21.85.215. Minimum standards. A self-funded governmental plan shall 11 (1) operate in accordance with a trust agreement under the governance 12 of a board of trustees that is responsible for all operations of the plan; a trustee may 13 not be an owner, officer, or employee of the administrator of the plan; 14 (2) maintain a fidelity bond covering each trustee of the plan in an 15 amount not less than 10 percent of the benefits paid during the preceding plan year and 16 issued by an authorized insurance company; 17 (3) establish and maintain a plan of operation that ensures that the plan 18 will remain financially solvent as certified to by a qualified actuary; 19 (4) maintain stop-loss insurance coverage as recommended by a 20 qualified actuary; 21 (5) establish and maintain reserves in an amount at least as great as the 22 amount recommended and certified by a qualified actuary and in compliance with 23 AS 21.18.080 - 21.18.086; 24 (6) establish and maintain contribution rates at a level recommended 25 and certified to by a qualified actuary for the plan to remain financially solvent; 26 (7) maintain adequate facilities and competent personnel, as 27 determined by the director, to service the plan or contract with a third-party 28 administrator registered under AS 21.27 to service the plan; 29 (8) provide each participant a summary plan description that is 30 consistent with the disclosure requirements in 29 U.S.C. 1022 (Employment 31 Retirement Income Security Act of 1974) and 29 C.F.R. 2520.102-2, 29 C.F.R.
01 2520.102-3, and 29 C.F.R. 2520.102-4 to the extent applicable and not in conflict with 02 requirements of this title. 03 Sec. 21.85.225. Additional standards. In addition to the provisions 04 contained or referred to in AS 21.85.205 - 21.85.230, the following chapters and 05 provisions of this title also apply with respect to a self-funded governmental plan to 06 the extent applicable and not in conflict with the express provisions of AS 21.85.205 - 07 21.85.230 and the reasonable implications of the following chapters and provisions, 08 and, for the purposes of the application, the plan shall be considered to be a mutual 09 insurer: 10 (1) AS 21.03; 11 (2) AS 21.06; 12 (3) AS 21.07; 13 (4) AS 21.09.100, 21.09.300, and 21.09.320; 14 (5) AS 21.18.080 - 21.18.086, and 21.18.100; 15 (6) AS 21.36; 16 (7) AS 21.48; 17 (8) AS 21.42.345 - 21.42.365, and 21.42.375 - 21.42.500; 18 (9) AS 21.54; 19 (10) AS 21.78; 20 (11) AS 21.90. 21 Sec. 21.85.230. Regulations. The director may adopt regulations to 22 implement AS 21.85.205 - 21.85.225, including a requirement that a self-funded 23 governmental plan include coverages and standards that are required under this title 24 for insurance policies of the same type of risk or risks that the self-funded 25 governmental plan is intended to cover. 26 * Sec. 29. AS 21.85.500 is amended by adding a new paragraph to read: 27 (9) "self-funded governmental plan" means a governmental plan as 28 defined under 29 U.S.C. 1002(32) (Employee Retirement Income Security Act of 29 1974), that 30 (A) is not a federal governmental plan as defined in 31 AS 21.54.500; and
01 (B) does not provide for payment of benefits under the plan 02 solely through a policy of insurance issued by one or more authorized 03 insurance companies. 04 * Sec. 30. AS 21.89 is amended by adding a new section to read: 05 Sec. 21.89.120. Motor vehicle service contracts and guaranteed 06 automobile protection products. (a) The director may adopt regulations to define, 07 implement, and enforce the regulation of motor vehicle service contracts and 08 guaranteed automobile protection products. The regulations may include standards for 09 (1) licensing or registration of persons not exempt from licensing 10 under AS 21.27 who issue, sell, administer, provide, or offer to sell or who are 11 contractually obligated to provide service under a motor vehicle service contract or a 12 guaranteed automobile protection product; 13 (2) contract provisions, advertising material, and filing requirements; 14 (3) financial accountability of administrators and obligors; 15 (4) assessment of fees under AS 21.06.250; and 16 (5) record retention. 17 (b) A violation of a regulation adopted under this section is an unfair trade 18 practice and subject to penalty under AS 21.36. 19 (c) This section does not apply to a motor vehicle service contact issued by the 20 manufacturer of the motor vehicle covered by the service contract. 21 * Sec. 31. AS 21.90.900(42) is amended to read: 22 (42) "third-party administrator" means a person who for residents of 23 this state, or for residents of another jurisdiction from a place of business in this state, 24 performs administrative functions including claims administration and payment, 25 marketing administrative functions, premium accounting, premium billing, coverage 26 verification, underwriting authority, or certificate issuance in connection with life 27 insurance, annuities, or health insurance offered or provided by an insurer, or in 28 connection with coverage offered or provided by a self-funded employer plan 29 regulated under AS 21.85 or the Comprehensive Health Insurance Association 30 created under AS 21.55 [REGARD TO LIFE INSURANCE, HEALTH 31 INSURANCE, OR ANNUITIES];
01 * Sec. 32. AS 21.90.900(43) is amended to read: 02 (43) "transact" with respect to insurance or the provision of coverage 03 for medical care includes 04 (A) solicitation and inducement; 05 (B) preliminary negotiations; 06 (C) effectuation of a contract of insurance or the provision of 07 coverage for medical care; 08 (D) transaction of matters subsequent to effectuation of the 09 contract of insurance or the provision of coverage for medical care and 10 arising out of it; 11 * Sec. 33. AS 21.90.900 is amended by adding new paragraphs to read: 12 (45) "guaranteed automobile protection product" means insurance 13 offered in connection with an extension of credit that pays or waives the difference in 14 amount between the insurance settlement and the balance of the loan if the insured 15 automobile is a total loss; 16 (46) "health discount plan" means a card, program, device, 17 arrangement, contract, or mechanism that purports to offer discounts or access to 18 discounts on health care services or supplies and that is not insurance or that does not 19 provide coverage for services or benefits regulated under AS 21.86 or AS 21.87; 20 (47) "motor vehicle service contract" means a contract or an agreement 21 for a separately stated consideration over and above the lease or purchase price of a 22 new or used motor vehicle subject to registration under AS 28.10.011 under which a 23 person, other than the manufacturer of the motor vehicle, undertakes to perform or 24 provide repair or replacement service, or indemnification for that service, for the 25 operational or structural failure of a motor vehicle due to a defect in materials or skill 26 of work or normal wear and tear; "motor vehicle service contract" does not include 27 mechanical breakdown insurance or maintenance agreements providing scheduled 28 repair and maintenance services for leased vehicles. 29 * Sec. 34. AS 21.24.040(b); AS 21.27.330(b), and 21.27.650(p) are repealed. 30 * Sec. 35. The uncodified law of the State of Alaska is amended to read: 31 TRANSITION: REGULATIONS. The director of insurance may proceed to adopt
01 regulations to implement the changes made by secs. 21, 22, 30, and 33 of this Act. The 02 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the 03 effective date of secs. 21, 22, 30, and 33 of this Act. 04 * Sec. 36. The uncodified law of the State of Alaska is amended by adding a new section to 05 read: 06 REVISOR'S INSTRUCTIONS. (a) The revisor of statutes is instructed to change the 07 heading of AS 21.85 from "Regulation of Multiple Employer Welfare Arrangements" to 08 "Regulation of Self-Funded Employer Plans." 09 (b) The revisor of statutes is instructed to designate AS 21.85.010 - 21.85.100 as 10 "Article 1. Self-Funded Multiple Employer Welfare Arrangements" and to designate 11 AS 21.85.500 as "Article 3. General Provisions." 12 * Sec. 37. Sections 21, 22, 30, and 33 of this Act take effect July 1, 2005. 13 * Sec. 38. Except as provided in sec. 37 of this Act, this Act takes effect immediately under 14 AS 01.10.070(c).