CSHB 170(FIN): "An Act relating to annual audit reports by insurers, to custodians of insurer assets, to writing workers' compensation insurance by surplus lines insurers, to reports by surplus lines insurers, to the definition of 'wet marine and transportation insurance,' to false or misleading financial statements concerning insurance audits, to high deductible health plans, to retaliation for obligations, prohibitions, or restrictions imposed on Alaska insurers by other states or countries, and to the membership of the Alaska Life and Health Insurance Guaranty Association; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 170(FIN) 01 "An Act relating to annual audit reports by insurers, to custodians of insurer assets, to 02 writing workers' compensation insurance by surplus lines insurers, to reports by surplus 03 lines insurers, to the definition of 'wet marine and transportation insurance,' to false or 04 misleading financial statements concerning insurance audits, to high deductible health 05 plans, to retaliation for obligations, prohibitions, or restrictions imposed on Alaska 06 insurers by other states or countries, and to the membership of the Alaska Life and 07 Health Insurance Guaranty Association; and providing for an effective date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09 * Section 1. AS 21.09.200 is amended by adding new subsections to read: 10 (g) An insurer shall file with the director or the director's designee an annual 11 audited financial report for the previous year by June 1 of each year unless, under a 12 regulation adopted by the director, the director grants an exemption based on a finding
01 that filing an annual audited financial report would constitute a financial or 02 organizational hardship on the insurer. The filing date for the annual audited financial 03 report may be extended by the director upon showing that the standards established by 04 regulation have been met. If the director gives the insurer 90 days' advance notice, and 05 for good cause, the director may require an insurer to file an audited financial report 06 earlier than June 1 of each year. The annual audited financial report must be prepared 07 by a qualified independent certified public accountant. An insurer shall notify the 08 director of the certified public accountant engaged to conduct the audit and issue the 09 annual audited financial report. 10 (h) Within 60 days after filing the annual audited financial report under (g) of 11 this section, the insurer shall file a written report on any unremediated material 12 weakness in internal control over financial reporting noted during the audit. 13 (i) The director may adopt regulations that require the insurer to file a report 14 from management describing internal control over financial reporting. An insurer shall 15 file the report on internal control by the date specified by the director. 16 (j) If the director requires the submission of additional information, the insurer 17 shall supplement the reports required by (h) and (i) of this section by the date specified 18 by the director. The reports on internal control filed with the director under (h) and (i) 19 of this section are confidential and subject to the provisions of AS 21.06.060. 20 (k) In accordance with regulations adopted by the director, an insurer shall 21 designate an audit committee to engage a qualified independent certified public 22 accountant to conduct the annual audit. The audit committee shall oversee services 23 performed by the certified public accountant. If an insurer does not designate an audit 24 committee, the entire governing board of the insurer is considered to be the audit 25 committee for purposes of this subsection. 26 (l) The certified public accountant conducting the annual audit required by (g) 27 of this section shall notify the governing board of the insurer or the audit committee in 28 writing of a determination by the certified public accountant that the insurer has 29 materially misstated its financial condition as reported to the director or that the 30 insurer does not meet the minimum capital requirements and surplus requirements of 31 this title as of the date of the balance sheet currently under audit. An insurer that has
01 received a report under this subsection shall forward a copy to the director. The 02 certified public accountant shall also forward the report to the director unless the 03 insurer provides evidence satisfactory to the certified public accountant that the report 04 has been forwarded to the director. 05 * Sec. 2. AS 21.09.270(f) is amended to read: 06 (f) For purposes of the application of (a) of this section, a health care insurer, 07 as defined in AS 21.54.500, may not include taxes, assessments, or other similar 08 obligations on health care insurance premiums received from the state, a municipality, 09 a city or borough school district, a regional educational attendance area, the University 10 of Alaska, or a community college operated by the University of Alaska. [IN THIS 11 SUBSECTION, "HEALTH CARE INSURER" HAS THE MEANING GIVEN IN 12 AS 21.54.500.] 13 * Sec. 3. AS 21.21.410 is repealed and reenacted to read: 14 Sec. 21.21.410. Custodian of insurer assets. (a) The custodian for assets, 15 securities, or investments of the insurer may be only a bank, trust company, securities 16 firm, or clearing corporation that is properly authorized by the insurer and approved 17 by the director. 18 (b) When securities are deposited with a clearing corporation, certificates 19 representing securities of the same class of the same issuer may be merged and held in 20 bulk in the name of the nominee of the clearing corporation with any other securities 21 deposited with the clearing corporation by any person, regardless of the ownership of 22 the securities, and certificates representing securities of small denominations may be 23 merged into one or more certificates of larger denominations. The records of any 24 custodian through which an insurer holds securities in a clearing corporation must 25 show that the securities are held for the insurer and for which accounts of the insurer. 26 Ownership of, and other interest in, the securities may be transferred by bookkeeping 27 entry on the books of the clearing corporation without physical delivery of certificates 28 representing the securities. 29 (c) A custodial agreement between an insurer and an institution holding the 30 assets, securities, or investments of the insurer must be in writing and must be 31 authorized by a resolution of the board of directors of the insurance company or of an
01 authorized committee of the board. The terms of the custodial agreement must comply 02 with the requirements of the director. 03 * Sec. 4. AS 21.34.030(a) is amended to read: 04 (a) Workers' compensation insurance may be placed in and written by a 05 nonadmitted insurer if 06 (1) the director considers it in the best interest of the public and issues 07 an order [A DIRECTIVE] to that effect; 08 (2) the insurance is written in accordance with this chapter; and 09 (3) all conditions established for writing workers' compensation 10 insurance in a nonadmitted market receive compliance. 11 * Sec. 5. AS 21.34.170(a) is amended to read: 12 (a) A surplus lines broker shall file with the director on or before the end of 13 each month, on forms prescribed by the director, a [VERIFIED] report of all surplus 14 lines insurance, by type of insurance as required to be reported in the annual statement 15 that must be filed with the director by admitted insurers. The report must include all 16 surplus lines insurance transactions during the preceding calendar month showing the 17 aggregate gross premiums written, the aggregate return premiums, the amount of 18 aggregate tax remitted to this state, and the amount of aggregate tax remitted to each 19 other state for which an allocation is made under AS 21.34.180. 20 * Sec. 6. AS 21.34.900(9) is amended to read: 21 (9) "wet marine and transportation insurance" means one or more of 22 the following: 23 (A) insurance upon, of interest in, or relating to vessels, crafts, 24 hulls, except vessels of 50 displacement tons or less; 25 (B) insurance of marine builders risks, marine war risks, and 26 contracts of marine protection and indemnity insurance; 27 (C) insurance of freight and disbursements pertaining to a 28 subject of insurance coming within this paragraph; or [AND] 29 (D) insurance of personal property and interests in personal 30 property, in course of exportation from or importation into a country or in the 31 course of coastal or inland water transportation, including transportation by
01 land, water, or air from point of origin to final destination in connection with 02 any and all risks or perils of navigation, transit, or transportation, and while 03 being repaired for and while awaiting shipment, and during any delays, 04 transshipment, or reshipment incident to them. 05 * Sec. 7. AS 21.36.060 is amended by adding new subsections to read: 06 (c) A person may not, directly or indirectly, in connection with an audit, 07 review, or communication required under AS 21.09.200 08 (1) make or cause to be made a materially false or misleading 09 statement to an accountant; or 10 (2) omit to state or cause another person to omit to state any material 11 fact necessary in order to make other statements made not misleading to an 12 accountant. 13 (d) A person may not, directly or indirectly, take any action to coerce, 14 manipulate, mislead, or fraudulently influence any accountant engaged in the 15 performance of an audit under AS 21.09.200 if that person knew or should have 16 known that the action, if successful, could result in rendering the insurer's financial 17 statement materially misleading. 18 * Sec. 8. AS 21.42 is amended by adding a new section to read: 19 Sec. 21.42.405. High deductible health plan. (a) A health care insurer that 20 offers, issues, delivers, or renews a health care insurance plan in this state may apply 21 deductible or copayment requirements to health care benefits and services that qualify 22 the health care insurance plan as a high deductible health plan. 23 (b) In this section, "high deductible health plan" has the meaning given in 26 24 U.S.C. 223 (Internal Revenue Code). 25 * Sec. 9. AS 21.55.220(f) is amended to read: 26 (f) A member may offset 50 percent of the amount of the assessment under 27 this section as a premium tax credit reducing the premium tax payable by the member 28 under AS 21.09.210. The offset shall apply to the tax levied for the calendar year 29 following an annual determination of each member's liability under (d) of this section. 30 The offset may not reduce the premium tax payable by a member to less than zero or 31 create a premium tax credit for the member. An unused offset may be carried over to
01 the immediately following calendar year. An offset made under this subsection is 02 not subject to AS 21.09.270. 03 * Sec. 10. AS 21.79.040(a) is amended to read: 04 (a) There is established as a nonprofit legal entity the Alaska Life and Health 05 Insurance Guaranty Association. Each member insurer [AN INSURER THAT 06 ISSUES AN INSURANCE POLICY DESCRIBED IN AS 21.79.020(b)] shall be a 07 member of the association as a condition of the insurer's authority to transact 08 insurance in this state. The association shall perform its functions under a plan of 09 operation established and approved under AS 21.79.080 and shall exercise its powers 10 through the Board of Governors established under AS 21.79.050. For purposes of 11 administration and assessment, the association shall maintain the following accounts: 12 (1) the health insurance account; and 13 (2) the life insurance and annuity account, including the following 14 subaccounts: 15 (A) life insurance account; 16 (B) annuity account that must include annuity contracts owned 17 by a governmental retirement benefit plan, or its trustee, qualified under 26 18 U.S.C. 401, 26 U.S.C. 403(b), or 26 U.S.C. 457 (Internal Revenue Code), but 19 that otherwise excludes unallocated annuities; and 20 (C) unallocated annuity account that must exclude contracts 21 owned by a governmental retirement benefit plan, or its trustee, qualified under 22 26 U.S.C. 401, 26 U.S.C. 403(b), or 26 U.S.C. 457 (Internal Revenue Code). 23 * Sec. 11. AS 21.79.900(10) is amended to read: 24 (10) "member insurer" means an insurer licensed to transact insurance 25 in the state for which coverage is provided [THAT ISSUES A POLICY 26 DESCRIBED] in AS 21.79.020 [AS 21.79.020(a) AND (b)], or a subscriber contract 27 providing benefits described in AS 21.87.120(a)(2) - (4) or 21.87.130(a)(2) and (3), 28 and includes an insurer whose license or certificate of authority in this state may have 29 been suspended, revoked, not renewed, or voluntarily withdrawn; "member insurer" 30 does not include 31 (A) a health maintenance organization licensed under
01 AS 21.86; 02 (B) a fraternal benefit society licensed under AS 21.84; 03 (C) a mandatory state pooling plan; 04 (D) a mutual assessment company or an entity that operates on 05 an assessment basis; 06 (E) an insurance exchange licensed under AS 21.75; 07 (F) a hospital or medical service organization licensed under 08 AS 21.87; 09 (G) an organization that has a license or certificate limited to 10 the issuance of charitable gift annuities; or 11 (H) an entity similar to one described under (A) - (G) of this 12 paragraph; 13 * Sec. 12. AS 21.89.070 is amended by adding a new subsection to read: 14 (d) A contribution allowed as a tax credit under this section is not subject to 15 AS 21.09.270. 16 * Sec. 13. AS 21.89.075 is amended by adding a new subsection to read: 17 (e) A contribution allowed as a tax credit under this section is not subject to 18 AS 21.09.270. 19 * Sec. 14. The uncodified law of the State of Alaska is amended by adding a new section to 20 read: 21 TRANSITION: REGULATIONS. The director of insurance may immediately proceed 22 to adopt regulations under AS 21.06.090 necessary to implement this Act. The regulations 23 take effect under AS 44.62 (Administrative Procedure Act), but not before the effective date 24 of the statutory changes. 25 * Sec. 15. Sections 1 and 3 of this Act take effect January 1, 2008, except that 26 AS 21.09.200(i), enacted by sec. 1 of this Act, takes effect on December 31, 2010, and 27 AS 21.09.200(k), enacted by sec. 1 of this Act, takes effect on January 1, 2010. 28 * Sec. 16. Section 14 of this Act takes effect immediately under AS 01.10.070(c). 29 * Sec. 17. Except as provided in secs. 15 and 16 of this Act, this Act takes effect July 1, 30 2007.