HB 175: "An Act relating to insurance, including treating as confidential certain information submitted to the director of insurance by the National Association of Insurance Commissioners; clarifying conditions for the release of insurer deposits; defining travel insurance that may be sold under a travel insurance limited producer license; establishing criteria for licensing of nonresident independent adjusters as resident adjusters; exempting rewards under a wellness program from treatment as insurance discrimination or rebating; making certain insurance required of the Comprehensive Health Insurance Association permissive rather than mandatory; providing for the administration of loss reimbursement policies and payments to guaranty associations during insolvency proceedings; making certain provisions relating to statements on applications and guaranteed renewability for individual health insurance applicable to hospital and medical service corporations; making public certain forms and related documents filed for approval by a hospital or medical service corporation after the filing becomes effective; relating to deposits of self-funded multiple employer welfare arrangements; repealing reasons that the director of insurance may use to deny or revoke a license; and providing for an effective date."
00 HOUSE BILL NO. 175 01 "An Act relating to insurance, including treating as confidential certain information 02 submitted to the director of insurance by the National Association of Insurance 03 Commissioners; clarifying conditions for the release of insurer deposits; defining travel 04 insurance that may be sold under a travel insurance limited producer license; 05 establishing criteria for licensing of nonresident independent adjusters as resident 06 adjusters; exempting rewards under a wellness program from treatment as insurance 07 discrimination or rebating; making certain insurance required of the Comprehensive 08 Health Insurance Association permissive rather than mandatory; providing for the 09 administration of loss reimbursement policies and payments to guaranty associations 10 during insolvency proceedings; making certain provisions relating to statements on 11 applications and guaranteed renewability for individual health insurance applicable to 12 hospital and medical service corporations; making public certain forms and related
01 documents filed for approval by a hospital or medical service corporation after the filing 02 becomes effective; relating to deposits of self-funded multiple employer welfare 03 arrangements; repealing reasons that the director of insurance may use to deny or 04 revoke a license; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 21.06.060(f) is amended to read: 07 (f) The following information or records submitted to or obtained by the 08 director are confidential: 09 (1) personally identifiable consumer information; however, the director 10 may disclose the information or records for the purpose of attempting to resolve a 11 consumer complaint; 12 (2) information or records established by a showing satisfactory to the 13 director to be a trade secret or proprietary business information, including 14 (A) detailed health insurance claim cost data; and 15 (B) justification for usual, customary, and reasonable charge 16 determinations; 17 (3) information or records provided by a person not subject to this title 18 at the request of the director if the information or records are identified as confidential 19 by the director; and 20 (4) [FINANCIAL] analysis ratios and examination synopses 21 concerning insurance companies that are submitted to the director by the National 22 Association of Insurance Commissioners. 23 * Sec. 2. AS 21.06.180(b) is amended to read: 24 (b) The office of administrative hearings (AS 44.64.010) shall conduct a 25 hearing on behalf of the director if required under AS 44.64.030. Otherwise, the 26 director shall conduct a hearing if required by a provision of this title, or upon written 27 demand to the director by a person aggrieved by an act, threatened act, or failure of the 28 director to act, or by a report, regulation, or order of the director (other than an order 29 for the holding of a hearing, or an order on hearing or under it). A demand must
01 specify the grounds to be relied upon at the hearing as a basis for the relief. Except as 02 provided under AS 21.27.420(d), unless [UNLESS] postponed by mutual consent or 03 for good cause shown, the hearing shall be held within 30 days after receipt by the 04 director of the written demand. 05 * Sec. 3. AS 21.06.180(c) is amended to read: 06 (c) Except as provided under AS 21.27.420(d), if, [IF] within the 30-day 07 period, the director does not either (1) grant the hearing, or (2) issue an order refusing 08 the hearing, as to the previous report, regulation, or order as to which the person so 09 claims to be aggrieved, the hearing shall be considered to have been refused. 10 * Sec. 4. AS 21.06.190(a) is amended to read: 11 (a) Except as provided in AS 21.27.420(d), a [A] demand for a hearing 12 received by the director before the effective date of an order issued or within 10 days 13 after an order is delivered stays the effectiveness of the order pending the hearing and 14 an order made thereon, except as to action taken or proposed under an order 15 (1) on hearing; 16 (2) under and supplemental to an order on hearing; or 17 (3) based upon impairment of assets or unsound financial condition of 18 an insurer. 19 * Sec. 5. AS 21.24.130(d) is amended to read: 20 (d) If a domestic [THE] insurer is subject to delinquency proceedings under 21 [AS DEFINED IN] AS 21.78, [UPON THE ORDER OF A COURT OF 22 COMPETENT JURISDICTION,] the director shall yield the assets and securities held 23 on deposit under AS 21.09.090(b) to the receiver, conservator, rehabilitator, or 24 liquidator of the domestic insurer [, OR TO ANY OTHER PROPERLY 25 DESIGNATED OFFICIAL OR OFFICIALS WHO SUCCEED TO THE 26 MANAGEMENT AND CONTROL OF THE INSURER'S ASSETS]. The director 27 may release the deposit directly to the guaranty fund of which the insurer is a member 28 if the right to receive all or a portion of the deposit is assigned to the guaranty fund. 29 * Sec. 6. AS 21.24.130(f) is amended to read: 30 (f) If a foreign [AN] insurer that is a member of the Alaska Life and 31 Health Insurance Guaranty Association (AS 21.79) or the Alaska Insurance
01 Guaranty Association (AS 21.80) is found to be insolvent by a proceeding under 02 AS 21.78 or by a court of competent jurisdiction in another state, the director shall 03 take control of the insurer's deposit made under AS 21.09.090(b). The deposit assets 04 shall be released [, AT THE DISCRETION OF THE DIRECTOR,] to the applicable 05 guaranty association upon a showing to the director that the association paid 06 [ALASKA INSURANCE GUARANTY ASSOCIATION (AS 21.80) TO 07 REIMBURSE FOR] a valid loss, [AND] loss expense, or contractual obligation 08 [CLAIM PAYMENT MADE BY THE ASSOCIATION] that is within the purpose of 09 the deposit. After the director determines that all losses, loss expense liabilities, or 10 contractual obligations that were incurred on the insurer's policies written in this 11 state for which the deposit was required have been paid, the [THE] director shall 12 pay the remaining deposit assets to the receiver, conservator, rehabilitator, or 13 liquidator of the insurer, or to another properly designated official who succeeds to the 14 management and control of the insurer's assets [, AFTER THE DIRECTOR 15 DETERMINES THAT ALL LOSS AND LOSS EXPENSE LIABILITIES HAVE 16 BEEN PAID THAT WERE INCURRED ON THE INSURER'S POLICIES 17 WRITTEN IN THIS STATE FOR WHICH THE DEPOSIT WAS REQUIRED]. 18 * Sec. 7. AS 21.24.130 is amended by adding a new subsection to read: 19 (g) If an insurer is not a member of the Alaska Life and Health Guaranty 20 Association established by AS 21.79 or the Alaska Insurance Guaranty Association 21 established by AS 21.80, the director shall take control of the insurer's deposit made 22 under AS 21.09.090(b) if the insurer is found to be insolvent by a proceeding under 23 AS 21.78 or by a court of competent jurisdiction in another state. The director shall 24 release the deposit assets to the receiver, conservator, rehabilitator, or liquidator of the 25 insurer, or to any other properly designated official who succeeds to the management 26 and control of the insurer's assets. 27 * Sec. 8. AS 21.27.140(b) is amended to read: 28 (b) A firm may not be licensed as an insurance producer, managing general 29 agent, reinsurance intermediary broker, reinsurance intermediary manager, surplus 30 lines broker, or independent adjuster, or transact insurance unless each individual 31 employed as an insurance producer, managing general agent, surplus lines broker,
01 trainee independent adjuster, or independent adjuster by the firm is licensed as an 02 individual in the firm. [EACH COMPLIANCE OFFICER OF THE FIRM SHALL BE 03 LICENSED AS AN INDIVIDUAL IN THE FIRM FOR A SPECIFIC LINE AND 04 CLASS OF AUTHORITY. IF THERE IS MORE THAN ONE COMPLIANCE 05 OFFICER, THE COMBINED AUTHORITY OF ALL COMPLIANCE OFFICERS 06 SHALL COVER ALL THE POWERS CONFERRED BY THE FIRM'S LICENSE.] 07 * Sec. 9. AS 21.27.150(a) is amended to read: 08 (a) The director may issue a 09 (1) travel insurance limited producer license to a person who is 10 appointed under AS 21.27.100 and who sells insurance connected with 11 transportation provided by a common carrier, and limited to a specific trip, that 12 covers 13 (A) trip cancellation; 14 (B) trip interruption; or 15 (C) life, health, disability, or personal effects 16 [TRANSPORTATION TICKETS OF A COMMON CARRIER OF PERSONS 17 OR PROPERTY, WHO IS APPOINTED UNDER AS 21.27.100 FOR 18 TRANSPORTATION TICKET POLICIES OF HEALTH INSURANCE, 19 BAGGAGE INSURANCE ON PERSONAL EFFECTS, AND TRIP 20 CANCELLATION OR TRIP INTERRUPTION INSURANCE]; 21 (2) title insurance limited producer license to a person whose place of 22 business is located in this state and whose sole purpose is to be appointed by and act 23 on behalf of a title insurer; 24 (3) bail bond limited producer license to a person who is appointed by 25 and acts on behalf of a surety insurer pertaining to bail bonds; 26 (4) motor vehicle rental agency limited producer license to a person 27 and, subject to the approval of the director, to employees of the person licensed that 28 the licensee authorizes to transact the business of insurance on the licensee's behalf if, 29 as to an employee, the licensee complies with (D) of this paragraph and if the licensee 30 (A) rents to others, without operators, 31 (i) private passenger motor vehicles, including
01 passenger vans, minivans, and sport utility vehicles; or 02 (ii) cargo motor vehicles, including cargo vans, pickup 03 trucks, and trucks with a gross vehicle weight of less than 26,000 04 pounds that do not require the operator to possess a commercial driver's 05 license; 06 (B) rents motor vehicles only to persons under rental 07 agreements that do not exceed a term of 90 days; 08 (C) transacts only the following kinds of insurance: 09 (i) motor vehicle liability insurance with respect to 10 liability arising out of the use of a vehicle rented from the licensee 11 during the term of the rental agreement; 12 (ii) uninsured or underinsured motorist coverage, with 13 minimum limits described in AS 21.89.020(c) and (d) arising from 14 [OUT OF] the use of a vehicle rented from the licensee during the term 15 of the rental agreement; 16 (iii) insurance against medical, hospital, surgical, and 17 disability benefits to an injured person and funeral and death benefits to 18 dependents, beneficiaries, or personal representatives of a deceased 19 person if the insurance is issued as incidental coverage with or 20 supplemental to liability insurance and arises out of the use of a vehicle 21 rented from the licensee during the term of the rental agreement; 22 (iv) personal effects insurance, including loss of use, 23 with respect to damage to or loss of personal property of a person 24 renting the vehicle and other vehicle occupants while that property is 25 being loaded into, transported by, or unloaded from a vehicle rented 26 from the licensee during the term of the rental agreement; 27 (v) towing and roadside assistance with respect to 28 vehicles rented from the licensee during the term of the rental 29 agreement; and 30 (vi) other insurance as may be authorized by regulation 31 by the director;
01 (D) notifies the director in writing, within 30 days of 02 employment, of the name, date of birth, social security number, location of 03 employment, and home address of an employee authorized by the licensee to 04 transact insurance on the licensee's behalf; and 05 (E) provides other information as required by the director; 06 (5) nonresident limited producer license to a person; a license that the 07 director issues under this paragraph grants the same scope of authority as a limited 08 lines producer license issued to the person by the person's home state; 09 (6) credit insurance limited producer license to a person who sells 10 limited lines credit insurance; 11 (7) miscellaneous limited producer license to a person who transacts 12 insurance in this state that restricts the person's authority to less than the total authority 13 for a line of authority described in AS 21.27.115(1) - (6), (8), and (9). 14 * Sec. 10. AS 21.27.270(b) is amended to read: 15 (b) Unless the director denies or refuses to renew a license under 16 AS 21.27.410, the director shall issue a nonresident producer, limited lines, 17 independent adjuster, surplus lines broker, managing general agent, reinsurance 18 intermediary broker, or reinsurance intermediary manager license to a person who is 19 not a resident of this state if 20 (1) the person is currently licensed and is in good standing in the 21 person's home state; the director may verify the person's licensing status through the 22 producer licensing database records maintained by the National Association of 23 Insurance Commissioners or its affiliates or subsidiaries or, if an independent 24 adjuster's home state does not license independent adjusters, the independent 25 adjuster qualifies under AS 21.27.020; 26 (2) the person has paid the fees required under AS 21.06.250 and has 27 submitted to the director 28 (A) the license application the person submitted to the person's 29 home state; or 30 (B) if the person is not a firm, a completed uniform application 31 or, if a firm, the uniform business entity application; and
01 (3) the person's home state awards nonresident producer, limited lines, 02 independent adjuster, surplus lines, managing general agent, reinsurance 03 intermediary broker, and reinsurance intermediary manager licenses to residents of 04 this state on the same basis as does this state. 05 * Sec. 11. AS 21.27.420 is amended by adding a new subsection to read: 06 (d) Without prior hearing, the director may order summary suspension of a 07 license if the director finds that protection of the public requires emergency action and 08 incorporates that finding in an order. The suspension is effective on the date specified 09 in the order or on the date of mailing by first class mail to the licensee's business 10 address on record with the division, whichever is later. If the licensee requests a 11 hearing, the director shall conduct a hearing on the suspension within a reasonable 12 time but not later than 20 days after the effective date of the summary suspension 13 unless the person whose license is suspended requests a later date. At the hearing, the 14 director shall determine if the suspension should be continued or withdrawn and, if 15 proper notice is given, may determine if the license should be revoked. The director 16 shall issue a decision within 30 days after the conclusion of the hearing. If the director 17 decides to continue the suspension or revoke the license, the suspension or revocation 18 must be based on one or more grounds in AS 21.27.410. The summary suspension 19 continues until the decision is issued. AS 21.06.190 and AS 44.64.030 are not 20 applicable to a hearing under this subsection. 21 * Sec. 12. AS 21.27.630 is amended by adding a new subsection to read: 22 (m) A person who is an employee of a third-party administrator and who acts 23 within the course and scope of that employment and within the scope of the written 24 contract required under AS 21.27.650(a)(4) is not required to be registered as a third- 25 party administrator under this section. The third-party administrator is responsible for 26 the acts of its employees regulated under this title. 27 * Sec. 13. AS 21.27.900(11) is amended to read: 28 (11) "home state" means the District of Columbia or a state or territory 29 of the United States in which an insurance producer or an independent adjuster 30 maintains the producer's or adjuster's principal place of residence or principal place 31 of business and is licensed to act as an insurance producer or independent adjuster;
01 * Sec. 14. AS 21.34.020 is amended by adding a new subsection to read: 02 (c) If a policy holder meets the standards of an exempt commercial 03 policyholder under this title and regulations adopted by the director, insurance may be 04 procured from a surplus lines broker without complying with (a)(2), (3), and (4) of this 05 section. 06 * Sec. 15. AS 21.34.040(d) is amended to read: 07 (d) A nonadmitted insurer may be eligible to provide coverage in this state if it 08 files with [FURNISHES TO] the director or the director's designee a copy of its 09 current annual financial statement that has been certified by the insurer. The financial 10 statement must be [EXCEPT IN THE CASE OF AN ALIEN INSURER, THE 11 STATEMENT SHALL BE PROVIDED NOT MORE THAN SIX MONTHS AFTER 12 THE CLOSE OF THE PERIOD REPORTED UPON AND THAT IS EITHER] filed 13 with and approved by the regulatory authority in the domicile of the nonadmitted 14 insurer, or certified by an accounting or auditing firm licensed in the jurisdiction of the 15 insurer's domicile. A foreign insurer shall provide the approved or certified 16 financial statement not more than six months after the close of the reporting 17 period. An alien insurer shall provide the approved or certified financial statement 18 not more [LATER] than nine months after the close of the reporting period. In the 19 case of an insurance exchange, the statement may be an aggregate combined statement 20 of all underwriting syndicates operating during the period reported upon. 21 * Sec. 16. AS 21.34.080(a) is amended to read: 22 (a) A surplus lines broker shall execute and file with the monthly report 23 required by AS 21.34.170 a written report, which shall be kept confidential, regarding 24 each surplus lines insurance transaction occurring in the preceding calendar month. 25 The report must include 26 (1) the name and address of the insured; 27 (2) the identity of each insurer including the National Association of 28 Insurance Commissioners [GROUP AND] company [INSURER] number and the 29 percentage of coverage provided by each; 30 (3) a complete description of the subject and location of the risk; 31 (4) the amount of gross premium written [CHARGED] for the
01 insurance; and 02 (5) other information required by the director. 03 * Sec. 17. AS 21.36.110 is amended to read: 04 Sec. 21.36.110. Exceptions to discrimination and rebates. Nothing in 05 AS 21.36.090, [AND] 21.36.100, and AS 21.54.100 may be construed as including 06 within the definition of discrimination or rebates any of the following practices: 07 (1) in the case of a contract of life insurance or life annuity, paying 08 bonuses to policyholders or otherwise abating their premiums in whole or in part out 09 of surplus accumulated from nonparticipating insurance, if the bonuses [,] or 10 abatement of premiums are fair and equitable to policyholders and for the best 11 interests of the insurer; 12 (2) in the case of a life insurance policy [POLICIES] issued on [THE] 13 industrial debit, preauthorized check, bank draft, or similar plans, making allowance to 14 policyholders who have [CONTINUOUSLY FOR A SPECIFIED PERIOD] made 15 premium payments directly to an office of the insurer or by preauthorized debit, 16 check, bank draft, or similar plan, in an amount that fairly represents the saving in 17 collection expense; 18 (3) readjustment of the rate of premium for a group insurance policy 19 based on the loss or expense experience thereunder, at the end of the first or a 20 subsequent policy year of insurance thereunder, which may be made retroactive only 21 for that policy year; 22 (4) issuance of life or health insurance policies or annuity contracts at 23 rates less than the usual rates of premiums for the policies or contracts, or modification 24 of premium or rate based on amount of insurance; but the issuance or modification 25 may [SHALL] not result in reduction in premium or rate in excess of savings in 26 administration and issuance expenses reasonably attributable to the policies or 27 contracts; 28 (5) a reward under a wellness program established under a health 29 care plan that favors an individual if the wellness program meets the following 30 requirements: 31 (A) the wellness program is reasonably designed to promote
01 health or prevent disease; 02 (B) an individual has an opportunity to qualify for the 03 reward at least once a year; 04 (C) the reward is available for all similarly situated 05 individuals; 06 (D) the wellness program has alternative standards for 07 individuals who are unable to obtain the reward because of a health 08 factor; 09 (E) alternate standards are available for an individual who 10 is unable to participate in a reward program because of a health 11 condition; 12 (F) the insurer provides information explaining the 13 standard for achieving the reward and discloses the alternate standards; 14 and 15 (G) the total rewards for all wellness programs under the 16 health insurance policy do not exceed 20 percent of the cost of coverage. 17 * Sec. 18. AS 21.36.355(a) is amended to read: 18 (a) A person who has a conviction for a felony involving dishonesty or a 19 breach of trust may not engage or participate in the business of insurance without 20 receiving prior written consent by the director or by the insurance regulatory 21 official of the person's home state as required under 18 U.S.C. 1033 and 1034 22 (Violent Crime Control and Law Enforcement Act of 1994). 23 * Sec. 19. AS 21.42.120(d) is amended to read: 24 (d) The director may, by order, require that a form or document be filed for 25 informational purposes or may exempt a form or document from the requirements 26 of this section for a time determined by the director when, [AN INSURANCE 27 DOCUMENT OR FORM OR TYPE THEREOF AS SPECIFIED IN THE ORDER, 28 TO WHICH,] in the opinion of the director, this section may not practicably be 29 applied, or the filing or [AND] approval of the form or document is [WHICH ARE], 30 in the opinion of the director, not desirable or necessary for the protection of the 31 public. [THE DIRECTOR SHALL, BY JULY 1, 2002, ADOPT REGULATIONS
01 CONSISTENT WITH THE NATIONAL ASSOCIATION OF INSURANCE 02 COMMISSIONERS PROPERTY AND CASUALTY MODEL RATE AND POLICY 03 FORM ACT AUTHORIZING A POLICY OF COMMERCIAL INSURANCE TO BE 04 FILED ON OR BEFORE THE DATE OF USE AND TO BE NOT SUBJECT TO 05 THE PRIOR APPROVAL OF THE DIRECTOR.] 06 * Sec. 20. AS 21.42.160(d) is amended to read: 07 (d) Each policy and annuity contract issued by an [A DOMESTIC] insurer, 08 and the forms thereof filed with the director, must have printed on them an appropriate 09 designating letter or figure, or combination of letters or figures, or terms identifying 10 the respective forms of policies or contracts, together with the year of adoption of the 11 form. When a change is made in the form, the designating letters, figures, or terms and 12 year of adoption must [SHALL] be correspondingly changed. 13 * Sec. 21. AS 21.42.385(b) is amended to read: 14 (b) The minimum coverage required under (a) of this section [MAY] 15 (1) may be provided under contract with another health care insurer; 16 [AND] 17 (2) may not be less than the dental, vision, and hearing coverage 18 provided on July 1, 2009 [JANUARY 1, 1992], to an individual entitled to medical 19 benefits under AS 39.35.535 (public employees' retirement system of Alaska); and 20 (3) shall be adjusted by the director on July 1, 2012, and every 21 three years thereafter to correspond to changes in coverage provided to 22 individuals entitled to medical benefits under AS 39.35.535. 23 * Sec. 22. AS 21.55.100(b) is amended to read: 24 (b) The association may [SHALL] make available to residents who are high 25 risks, eligible for and covered by Medicare, 65 years of age or older, and eligible 26 under this chapter [AT LEAST] one or more Medicare supplement plans [PLAN] 27 that meet [MEETS] the minimum policy standards and minimum benefit standards 28 established by regulations adopted by the director under AS 21.89.060. 29 * Sec. 23. AS 21.55.500(19) is repealed and reenacted to read: 30 (19) "resident" means 31 (A) except for a federally defined eligible individual or TAA
01 eligible individual, an individual who meets the eligibility requirements in 02 AS 43.23.005; or 03 (B) for a federally defined eligible individual or TAA eligible 04 individual, an individual who is legally domiciled in this state. 05 * Sec. 24. AS 21.78.010(b) is amended to read: 06 (b) Except as provided under AS 21.24, delinquency [DELINQUENCY] 07 proceedings under this chapter constitute the sole and exclusive method of liquidating, 08 rehabilitating, reorganizing, or conserving an insurer, and a court may not entertain a 09 petition for the commencement of the proceedings unless it has been filed in the name 10 of the state on the relation of the director. 11 * Sec. 25. AS 21.78.260 is amended to read: 12 Sec. 21.78.260. Priority of distribution. Except as provided under 13 AS 21.78.327(a), the [THE] priority of distribution of claims from an insurer's estate 14 is in accordance with the order in which each class of claims is set out in this section. 15 Every claim in each class must be paid in full, or adequate money retained for 16 payment, before the members of the next class may receive payment. A subclass may 17 not be established within a class. The order of distribution of claims is 18 (1) class 1: the costs and expenses of administration during 19 rehabilitation and liquidation, including 20 (A) the actual and necessary costs preserving or recovering the 21 assets of the insurer; 22 (B) compensation for all services rendered in the rehabilitation 23 and liquidation; 24 (C) any necessary filing fees; 25 (D) the fees and mileage payable to witnesses; 26 (E) reasonable attorney [ATTORNEY'S] fees and other 27 professional services rendered in the rehabilitation and liquidation; 28 (F) the reasonable expenses of a guaranty association or foreign 29 guaranty association that is handling claims; 30 (2) class 2: reasonable compensation to employees for services 31 performed, to the extent that the claim does not exceed two months of monetary
01 compensation and represents payment for services performed within one year before 02 the filing of the petition for liquidation or, if rehabilitation preceded liquidation, within 03 one year before the filing of the petition for rehabilitation; principal officers and 04 directors of the insurer are not entitled to the benefit of this priority except as 05 otherwise approved by the receiver and the court; the priority in this paragraph is in 06 place of any other similar priority that might be authorized by law as to wages or 07 compensation of employees; 08 (3) class 3: all claims under policies, including claims of the federal or 09 a state or local government, for losses incurred, including third-party claims, and all 10 claims of a guaranty association or foreign guaranty association; all claims under life 11 insurance and annuity policies, whether for death proceeds, annuity proceeds, or 12 investment values, shall be treated as loss claims; that portion of a loss for which 13 indemnification is provided by other benefits or advantages recovered by the claimant, 14 may not be included in this class, other than benefits or advantages recovered or 15 recoverable in discharge of familial obligations or support, or by way of succession at 16 death, or as proceeds of life insurance, or as gratuities; payment by an employer to an 17 employee may not be treated as a gratuity; 18 (4) class 4: claims under nonassessable policies for unearned premium 19 or other premium refunds and claims of general creditors, including claims of ceding 20 and assuming companies under contracts of reinsurance; 21 (5) class 5: claims of the federal or a state or local government, other 22 than claims under (3) of this section; claims, including those of a government body for 23 a penalty or forfeiture, shall be allowed in this class only to the extent of the pecuniary 24 loss sustained from the act, transaction, or proceeding out of which the penalty or 25 forfeiture arose, along with reasonable and actual costs attributable to it; the remaining 26 portion of the claims are in the class of claims set out in (7) of this section; 27 (6) class 6: claims filed late, or any other claims other than claims 28 under (7) and (8) of this section; 29 (7) class 7: surplus or contribution notes, or similar obligations, and 30 premium refunds on assessable policies; payments to members of domestic mutual 31 insurance companies shall be limited in accordance with law;
01 (8) class 8: the claims of shareholders or other owners, in their 02 capacity as shareholders. 03 * Sec. 26. AS 21.78 is amended by adding new sections to read: 04 Sec. 21.78.327. Administration of loss reimbursement policies. (a) Unless 05 otherwise prohibited by law, under the authority given in AS 21.78.130 to administer 06 assets, the receiver may enter into an agreement allowing an insured to fund or pay a 07 loss reimbursement claim directly or through a third-party administrator. A payment 08 made under those agreements is not considered a claim subject to priority of 09 distribution under AS 21.78.260. 10 (b) Unless otherwise prohibited by law, if an insurer subject to a delinquency 11 proceeding under this chapter entered into an agreement allowing the insured to fund 12 or pay a loss reimbursement claim directly or through a third-party administrator, the 13 insured shall continue to fulfill its obligations under the agreement, and the receiver 14 may enforce the agreement. 15 (c) An agreement entered into or reaffirmed under (a) and (b) of this section 16 may be terminated in the manner specified in the agreement. 17 (d) An insured's payment of a loss reimbursement claim in whole or in part, 18 including a payment made by a third-party administrator on behalf of the insured, 19 extinguishes the obligation, if any, of the receiver or guaranty association to pay that 20 claim or a portion of that claim in a delinquency proceeding under this chapter. A 21 third-party claimant's acceptance of the insured's payment of a loss reimbursement 22 claim in full or final settlement of the claim bars recovery for that claim in a 23 delinquency proceeding. 24 (e) For loss reimbursements owed by an insured, 25 (1) the receiver shall bill an insured for reimbursement of a loss 26 reimbursement claim when 27 (A) the insurer paid the claim before the commencement of a 28 delinquency proceeding; 29 (B) the receiver is notified that a guaranty association has paid 30 a loss reimbursement claim; 31 (C) the receiver has paid a loss reimbursement claim; or
01 (D) a loss reimbursement claim is allowed in a liquidation 02 proceeding; 03 (2) a loss reimbursement paid to the receiver is a general asset of the 04 estate of an insurer subject to a delinquency proceeding under this chapter; 05 (3) the receiver shall, without court approval, distribute to a guaranty 06 association, as an early access payment under AS 21.78.328, a loss reimbursement 07 received by the receiver that is allocable to a claim paid by the guaranty association; 08 (4) if an insured does not pay a loss reimbursement within the time 09 specified in the loss reimbursement policy, or within 60 days after receipt of the 10 billing, the receiver may take all commercially reasonable actions necessary to collect 11 a loss reimbursement owed; and 12 (5) the insolvency of an insurer, the receiver's inability to perform an 13 insurer's obligations under a loss reimbursement policy, or an allegation of improper 14 handling or payment of a loss reimbursement claim by the receiver or a guaranty 15 association is not a defense to the insured's reimbursement obligation under the loss 16 reimbursement policy. 17 (f) For collateral held under a loss reimbursement policy issued by an insurer 18 subject to a delinquency proceeding under this chapter, the receiver shall 19 (1) maintain and administer the collateral in accordance with the loss 20 reimbursement policy except where the loss reimbursement policy conflicts with this 21 section; 22 (2) apply the collateral first to meet all early access distributions to a 23 guaranty association under (e)(3) of this section if the loss reimbursement collateral, 24 when combined with loss reimbursement payments that have been made by an 25 insured, is insufficient to 26 (A) reimburse loss reimbursement claims already paid by the 27 insurer, the receiver and guaranty associations; and 28 (B) discharge all currently due and past due loss reimbursement 29 claims and other secured obligations. 30 (g) If the receiver does not seek or is unsuccessful in obtaining reimbursement 31 from the insured for a loss reimbursement claim and collateral is not available,
01 (1) a guaranty association may, after notice to the receiver, seek to 02 collect reimbursement owed from the insured on the same basis as the receiver and 03 with the same rights and remedies, including the right to recover reasonable costs of 04 collection from the insured; 05 (2) the guaranty association shall report to the receiver the 06 reimbursements collected from each insured; 07 (3) the receiver shall provide the guaranty association with available 08 information needed to collect a reimbursement owed from the insured; 09 (4) a guaranty association shall notify all other guaranty associations 10 that have paid loss reimbursement claims on behalf of the same insured whenever it 11 undertakes to collect reimbursements from an insured; 12 (5) the guaranty association shall treat the amounts collected as an 13 early access payment subject to AS 21.78.328(h); 14 (6) the expenses incurred by a guaranty association in pursuing 15 reimbursement may not be allowed as a claim in the delinquency proceeding; 16 however, a guaranty association may deduct the expenses incurred in collecting 17 reimbursement against a loss reimbursement recovered from an insured. 18 (h) The receiver may recover from the insured or from loss reimbursement 19 collateral all reasonable expenses that the receiver incurs in fulfilling its 20 responsibilities under this section. Those expenses are in addition to the insured's 21 obligation to reimburse claims and related claims expenses and do not diminish the 22 rights of third-party claimants. 23 (i) In this section, 24 (1) "loss reimbursement" 25 (A) means a payment made by an insured to or on behalf of an 26 insurer for loss or loss adjustment expense under the terms of a loss 27 reimbursement policy, and the insurer is responsible for payment regardless of 28 whether the insured has met its obligations; 29 (B) includes a voluntary or involuntary application of loss 30 reimbursement collateral to the obligations of the insured; 31 (C) does not include
01 (i) payments made by an insured under a deductible 02 arrangement under which an insurer does not have an obligation to pay 03 or advance the amount of the deductible on behalf of the insured; 04 (ii) payments made by an insured under a self-insurance 05 arrangement under which the insurer does not have a payment 06 obligation for the obligation of the self-insured; 07 (iii) retrospectively rated premium payments; or 08 (iv) reinsurance claim payments made by a captive 09 reinsurer or other reinsurer affiliated with or funded by the insured or 10 affiliated with the insurer; 11 (2) "loss reimbursement claim" 12 (A) means a claim that is reimbursable by the insured under the 13 terms of a loss reimbursement policy; 14 (B) includes loss adjustment expenses that are subject to 15 reimbursement by the terms of a loss reimbursement policy; 16 (3) "loss reimbursement collateral" means cash, a letter of credit, a 17 surety bond, or any other form of security provided by an insured to secure its loss 18 reimbursement obligations, regardless of whether the collateral is held by, for the 19 benefit of, or assigned to an insurer, and regardless of whether the collateral also 20 secures other obligations of the insured; 21 (4) "loss reimbursement policy" means a combination of one or more 22 policies, endorsements, contracts, or security agreements that may provide for a 23 specific dollar amount of loss reimbursement applicable to each claim, an aggregate 24 dollar amount applicable to all claims under the policy, or both and where the insured 25 (A) has agreed with the insurer to 26 (i) pay directly a portion of a loss or loss adjustment 27 expense owed by the insurer under the policy up to a specified dollar 28 amount; or 29 (ii) reimburse the insurer for its payment of loss and 30 loss adjustment expense under the policy up to a specified dollar 31 amount; and
01 (B) remains liable for payment of loss and loss adjustment 02 expense under the policy, regardless of whether the insured has met its 03 obligations; 04 (5) "other secured obligations" means an obligation, such as a 05 reinsurance or retrospective premium obligation, that is payable by an insured to an 06 insurer and that is secured by collateral that also secures a loss reimbursement 07 obligation. 08 Sec. 21.78.328. Early access disbursements. (a) Within 120 days after the 09 entry of an order of liquidation, and at least annually thereafter, the receiver shall 10 apply to the court for approval to make early access payments out of the general assets 11 of the insurer, in an amount consistent with the requirements of this section, to a 12 guaranty association having obligations arising in connection with the liquidation or 13 report to the court that the receiver has determined that there are no distributable assets 14 at that time. The receiver may apply to the court for approval to make early access 15 payments more frequently than annually based on additional information or the 16 recovery of material assets. 17 (b) An amount advanced to a guaranty association under this section must be 18 accounted for as an advance against a distribution to be made under AS 21.78.294. 19 (c) For purposes of (a) of this section, the distributable assets are the general 20 assets of the liquidation estate less amounts reserved, to the extent necessary and 21 appropriate, for 22 (1) costs, expenses, or compensation under AS 21.78.260(1), not 23 including the expenses of a guaranty association, and under AS 21.78.260(2) through 24 and after closure of the liquidation proceeding; and 25 (2) the class of claims under AS 21.78.260(3) other than a claim of a 26 guaranty association. 27 (d) If sufficient distributable assets are available, the amounts advanced need 28 not be limited to the claims and expenses paid to date by the guaranty associations; 29 however, the receiver may not distribute distributable assets to a guaranty association 30 in excess of the entire anticipated claims of a guaranty association falling within the 31 class of claims under AS 21.78.260(3).
01 (e) Within 60 days after the court's approval of an application filed under (a) 02 of this section, the receiver shall make early access payments to the affected guaranty 03 associations as indicated in the approved application. 04 (f) For each application for early access payments or any report to the court 05 required under this section, the receiver shall give notice of the application or report to 06 a guaranty association that may have obligations arising from a liquidation. The 07 receiver shall provide the guaranty association with at least 30 days' actual notice of 08 the filing of an application with a complete copy of the application before any action 09 by the court. A guaranty association that may have obligations arising in connection 10 with the liquidation shall have the right to 11 (1) request additional information from the receiver, who may not 12 unreasonably deny the request; and 13 (2) file an objection with the court to any part of each application or to 14 any report filed by the receiver under this section. 15 (g) In each application regarding early access payments, the receiver shall, 16 based on the best information available to the receiver at the time, provide, at a 17 minimum, 18 (1) to the extent necessary and appropriate, the amount reserved for the 19 entire expenses of the liquidation through and after its closure and for distributions 20 related to the class of claims under AS 21.78.260(2) and (3); 21 (2) the calculation of distributable assets and the amount and method 22 of equitable allocation of early access payments to each guaranty association; and 23 (3) the most recent financial information of the insurer in liquidation. 24 (h) A guaranty association that receives payments under this section agrees, 25 upon depositing the payment in an account to its benefit, to return to the receiver any 26 amount of the payment that may be required to pay claims of secured creditors and 27 claims falling within the class of claims under AS 21.78.260(1), (2), and (3). A 28 guaranty association is not required to secure its obligations under this section with a 29 bond. 30 (i) Without the consent of an affected guaranty association or an order of the 31 receivership court, the receiver may not offset the amount to be disbursed to a
01 guaranty association by the amount of a special deposit or other statutory deposit or 02 asset of the insolvent insurer held in a state unless the association has actually received 03 the deposit or asset. 04 * Sec. 27. AS 21.84.465(b) is amended to read: 05 (b) A society transacting business in this state shall annually, [ON OR] before 06 March 2, unless the time has been extended by the director for cause shown, file with 07 the director a true statement of the society's financial conditions, transactions, and 08 affairs for the preceding calendar year and pay the applicable fee under AS 21.06.250. 09 The statement shall be in the general form and content approved by the National 10 Association of Insurance Commissioners for fraternal benefit societies and 11 supplemented by additional information required by the director. 12 * Sec. 28. AS 21.85.100 is amended to read: 13 Sec. 21.85.100. Applicability of other provisions. In addition to the 14 provisions contained or referred to in this chapter, the following chapters and 15 provisions of this title also apply with respect to self-funded multiple employer 16 welfare arrangements to the extent applicable and not in conflict with the express 17 provisions of this chapter and the reasonable implications of the express provisions, 18 and, for the purposes of the application, the arrangements shall be considered to be a 19 mutual insurer: 20 (1) AS 21.03; 21 (2) AS 21.06; 22 (3) AS 21.07; 23 (4) AS 21.09.100, 21.09.120, 21.09.130, 21.09.140 - 21.09.200, 24 21.09.210, 21.09.245 - 21.09.270, 21.09.300, and 21.09.320; 25 (5) AS 21.18.010 - 21.18.050, 21.18.080 - 21.18.086, and 21.18.100; 26 (6) AS 21.24; 27 (7) AS 21.33; 28 (8) [(7)] AS 21.36; 29 (9) [(8)] AS 21.42.120, 21.42.130, 21.42.345 - 21.42.365, and 30 21.42.375 - 21.42.500; 31 (10) [(9)] AS 21.48;
01 (11) [(10)] AS 21.54; 02 (12) [(11)] AS 21.55; 03 (13) [(12)] AS 21.56; 04 (14) [(13)] AS 21.78; 05 (15) [(14)] AS 21.89.060; 06 (16) [(15)] AS 21.90. 07 * Sec. 29. AS 21.87.180 is amended by adding a new subsection to read: 08 (e) A filing under this section is open to public inspection after the date the 09 filing becomes effective. 10 * Sec. 30. AS 21.87.340 is amended to read: 11 Sec. 21.87.340. Other provisions applicable. In addition to the provisions 12 contained or referred to previously in this chapter, the following chapters and 13 provisions of this title also apply with respect to service corporations to the extent 14 applicable and not in conflict with the express provisions of this chapter and the 15 reasonable implications of the express provisions, and, for the purposes of the 16 application, the corporations shall be considered to be mutual "insurers": 17 (1) AS 21.03; 18 (2) AS 21.06; 19 (3) AS 21.07; 20 (4) AS 21.09, except AS 21.09.090; 21 (5) AS 21.18.010; 22 (6) AS 21.18.030; 23 (7) AS 21.18.040; 24 (8) AS 21.18.080 - 21.18.086; 25 (9) AS 21.36; 26 (10) AS 21.42.110, 21.42.345 - 21.42.365, [AS 21.42.345 - 21.42.365] 27 and 21.42.375 - 21.42.395; 28 (11) AS 21.51.120 and 21.51.400; 29 (12) AS 21.53; 30 (13) AS 21.54; 31 (14) AS 21.56;
01 (15) AS 21.69.400; 02 (16) AS 21.69.520; 03 (17) AS 21.69.600, 21.69.620, and 21.69.630; 04 (18) AS 21.78; 05 (19) AS 21.89.060; 06 (20) AS 21.90. 07 * Sec. 31. AS 21.90.900 is amended by adding a new paragraph to read: 08 (46) "working day" means a calendar day other than Saturday, Sunday, 09 an official federal holiday, or an official holiday of this state. 10 * Sec. 32. AS 44.64.030(a)(17) is amended to read: 11 (17) AS 21.09, AS 21.22.190, AS 21.27, except under 12 AS 21.27.420(d), AS 21.34, AS 21.36, AS 21.69, AS 21.86.200, AS 21.87, and 13 AS 21.89 (insurance); 14 * Sec. 33. AS 21.07.250(19); AS 21.27.410(a)(10), 21.27.410(a)(11), 21.27.410(a)(12); and 15 AS 21.55.220(b) are repealed. 16 * Sec. 34. This Act takes effect July 1, 2009.