HB 164: "An Act relating to insurance; relating to health care insurance, exemption of certain insurers, reporting, notice, and record-keeping requirements for insurers, biographical affidavits, qualifications of alien insurers assuming ceded insurance, risk-based capital for insurers, insurance holding companies, licensing, federal requirements for nonadmitted insurers, surplus lines insurance, insurance fraud, life insurance policies and annuity contracts, rate filings by health care insurers, long-term care insurance, automobile service corporations, guaranty fund deposits of a title insurer, joint title plants, delinquency proceedings, fraternal benefit societies, multiple employer welfare arrangements, hospital and medical service corporations, and health maintenance organizations; and providing for an effective date."
00 HOUSE BILL NO. 164 01 "An Act relating to insurance; relating to health care insurance, exemption of certain 02 insurers, reporting, notice, and record-keeping requirements for insurers, biographical 03 affidavits, qualifications of alien insurers assuming ceded insurance, risk-based capital 04 for insurers, insurance holding companies, licensing, federal requirements for 05 nonadmitted insurers, surplus lines insurance, insurance fraud, life insurance policies 06 and annuity contracts, rate filings by health care insurers, long-term care insurance, 07 automobile service corporations, guaranty fund deposits of a title insurer, joint title 08 plants, delinquency proceedings, fraternal benefit societies, multiple employer welfare 09 arrangements, hospital and medical service corporations, and health maintenance 10 organizations; and providing for an effective date." 11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 12 * Section 1. AS 21.03.021 is amended by adding a new subsection to read:
01 (f) If an insurer is not required to obtain a certificate of authority in this state 02 under AS 21.09.020(5), the provisions of the title do not apply to policies or contracts 03 issued by the insurer. 04 * Sec. 2. AS 21.07.010 is amended to read: 05 Sec. 21.07.010. Patient and health care provider protection. (a) A contract 06 between a participating health care provider and a health care insurer [MANAGED 07 CARE ENTITY THAT OFFERS A MANAGED CARE PLAN] must contain a 08 provision that 09 (1) provides for a reasonable mechanism to identify all medical care 10 services to be provided by the health care insurer [MANAGED CARE ENTITY]; 11 (2) clearly states or references an attachment that states the health care 12 provider's rate of compensation; 13 (3) clearly states all ways in which the contract between the health care 14 provider and health care insurer [MANAGED CARE ENTITY] may be terminated; 15 a provision that provides for discretionary termination by either party must apply 16 equitably to both parties; 17 (4) provides that, in the event of a dispute between the parties to the 18 contract, a fair, prompt, and mutual dispute resolution process must be used; at a 19 minimum, the process must provide 20 (A) for an initial meeting at which all parties are present or 21 represented by individuals with authority regarding the matters in dispute; the 22 meeting shall be held within 10 working days after the health care insurer 23 [PLAN] receives written notice of the dispute or gives written notice to the 24 provider, unless the parties otherwise agree in writing to a different schedule; 25 (B) that if, within 30 days following the initial meeting, the 26 parties have not resolved the dispute, the dispute shall be submitted to 27 mediation directed by a mediator who is mutually agreeable to the parties and 28 who is not regularly under contract to or employed by either of the parties; 29 each party shall bear its proportionate share of the cost of mediation, including 30 the mediator fees; 31 (C) that if, after a period of 60 days following commencement
01 of mediation, the parties are unable to resolve the dispute, either party may 02 seek other relief allowed by law; 03 (D) that the parties shall agree to negotiate in good faith in the 04 initial meeting and in mediation; 05 (5) states that a health care provider may not be penalized or the health 06 care provider's contract terminated by the health care insurer [MANAGED CARE 07 ENTITY] because the health care provider acts as an advocate for a covered person in 08 seeking appropriate, medically necessary medical care services; 09 (6) protects the ability of a health care provider to communicate openly 10 with a covered person about all appropriate diagnostic testing and treatment options; 11 and 12 (7) defines words in a clear and concise manner. 13 (b) A contract between a participating health care provider and a health care 14 insurer [MANAGED CARE ENTITY] that offers a managed care plan may not 15 contain a provision that 16 (1) has as its predominant purpose the creation of direct financial 17 incentives to the health care provider for withholding covered medical care services 18 that are medically necessary; nothing in this paragraph shall be construed to prohibit a 19 contract between a participating health care provider and a health care insurer 20 [MANAGED CARE ENTITY] from containing incentives for efficient management 21 of the utilization and cost of covered medical care services; 22 (2) requires the provider to contract for all products that are currently 23 offered or that may be offered in the future by the health care insurer [MANAGED 24 CARE ENTITY]; or 25 (3) requires the health care provider to be compensated for medical 26 care services performed at the same rate as the health care provider has contracted 27 with another health care insurer [MANAGED CARE ENTITY]. 28 (c) A health care insurer [MANAGED CARE ENTITY] may not enter into a 29 contract with a health care provider that requires the provider to indemnify or hold 30 harmless the managed care entity for the acts or conduct of the health care insurer 31 [MANAGED CARE ENTITY]. An indemnification or hold harmless clause entered
01 into in violation of this subsection is void. 02 * Sec. 3. AS 21.07.020 is amended to read: 03 Sec. 21.07.020. Required contract provisions for health care insurance 04 policy [MANAGED CARE PLANS]. A health care insurance policy [MANAGED 05 CARE PLAN] must contain 06 (1) a provision that preauthorization for a covered medical procedure 07 on the basis of medical necessity may not be retroactively denied unless the 08 preauthorization is based on materially incomplete or inaccurate information provided 09 by or on behalf of the provider; 10 (2) a provision for emergency room services if any coverage is 11 provided for treatment of a medical emergency; 12 (3) a provision that covered medical care services be reasonably 13 available in the community in which a covered person resides or that, if referrals are 14 required by the policy [PLAN], adequate referrals outside the community be available 15 if the medical care service is not available in the community; 16 (4) a provision that any utilization review decision 17 (A) must be made within 72 hours after receiving the request 18 for preapproval for nonemergency situations; for emergency situations, 19 utilization review decisions for care following emergency services must be 20 made as soon as is practicable but in any event not later than 24 hours after 21 receiving the request for preapproval or for coverage determination; and 22 (B) to deny, reduce, or terminate a health care benefit or to 23 deny payment for a medical care service because that service is not medically 24 necessary shall be made by an employee or agent of the health care insurer 25 [MANAGED CARE ENTITY] who is a licensed health care provider; 26 (5) a provision that provides for an internal appeal mechanism for a 27 covered person who disagrees with a utilization review decision made by a health 28 care insurer [MANAGED CARE ENTITY]; except as provided under (6) of this 29 section, this appeal mechanism must provide for a written decision 30 (A) from the health care insurer [MANAGED CARE 31 ENTITY] within 18 working days after the date written notice of an appeal is
01 received; and 02 (B) on the appeal by an employee or agent of the health care 03 insurer [MANAGED CARE ENTITY] who holds the same professional 04 license as the health care provider who is treating the covered person; 05 (6) a provision that provides for an internal appeal mechanism for a 06 covered person who disagrees with a utilization review decision made by a health 07 care insurer [MANAGED CARE ENTITY] in any case in which delay would, in the 08 written opinion of the treating provider, jeopardize the covered person's life or 09 materially jeopardize the covered person's health; the health care insurer 10 [MANAGED CARE ENTITY] shall 11 (A) decide an appeal described in this paragraph within 72 12 hours after receiving the appeal; and 13 (B) provide for a written decision on the appeal by an 14 employee or agent of the health care insurer [MANAGED CARE ENTITY] 15 who holds the same professional license as the health care provider who is 16 treating the covered person; 17 (7) a provision that discloses the existence of the right to an external 18 appeal of a utilization review decision made by a health care insurer [MANAGED 19 CARE ENTITY]; the external appeal shall be [AS] conducted in accordance with 20 AS 21.07.050; 21 (8) a provision that discloses covered benefits, optional supplemental 22 benefits, and benefits relating to and restrictions on nonparticipating provider services; 23 (9) a provision that describes the preapproval requirements and 24 whether clinical trials or experimental or investigational treatment are covered; 25 (10) a provision describing a mechanism for assignment of benefits for 26 health care providers and payment of benefits; 27 (11) a provision describing availability of prescription medications or a 28 formulary guide, and whether medications not listed are excluded; if a formulary guide 29 is made available, the guide must be updated annually; and 30 (12) a provision describing available translation or interpreter services, 31 including audiotape or braille information.
01 * Sec. 4. AS 21.07.030(a) is amended to read: 02 (a) If a health care insurer [MANAGED CARE ENTITY] offers a health 03 care insurance policy [MANAGED CARE PLAN] that provides for coverage of 04 medical care services only if the services are furnished through a network of health 05 care providers that have entered into a contract with the health care insurer 06 [MANAGED CARE ENTITY], the health care insurer [MANAGED CARE 07 ENTITY] shall also offer a non-network option to covered persons at initial 08 enrollment, as provided under (c) of this section. The non-network option may require 09 that a covered person pay a higher deductible, copayment, or premium for the plan if 10 the higher deductible, copayment, or premium results from increased costs caused by 11 the use of a non-network provider. [THE MANAGED CARE ENTITY SHALL 12 PROVIDE AN ACTUARIAL DEMONSTRATION OF THE INCREASED COSTS 13 TO THE DIRECTOR AT THE DIRECTOR'S REQUEST. IF THE INCREASED 14 COSTS ARE NOT JUSTIFIED, THE DIRECTOR SHALL REQUIRE THE 15 MANAGED CARE ENTITY TO RECALCULATE THE APPROPRIATE COSTS 16 ALLOWED AND RESUBMIT THE APPROPRIATE DEDUCTIBLE, 17 COPAYMENT, OR PREMIUM TO THE DIRECTOR.] This subsection does not 18 apply to a covered person who is offered non-network coverage through another 19 health care insurance policy [MANAGED CARE PLAN] or through another health 20 care insurer [MANAGED CARE ENTITY]. 21 * Sec. 5. AS 21.07.030(b) is amended to read: 22 (b) The amount of any additional premium charged by the health care 23 insurer [MANAGED CARE ENTITY] for the additional cost of the creation and 24 maintenance of the option described in (a) of this section and the amount of any 25 additional cost sharing imposed under this option shall be paid by the covered person 26 unless it is paid by an employer or other person through agreement with the health 27 care insurer [MANAGED CARE ENTITY]. 28 * Sec. 6. AS 21.07.030(c) is amended to read: 29 (c) A covered person may make a change to the medical care coverage option 30 provided under this section only during a time period determined by the health care 31 insurer [MANAGED CARE ENTITY]. The time period described in this subsection
01 must occur at least annually and last for at least 15 working days. 02 * Sec. 7. AS 21.07.030(d) is amended to read: 03 (d) If a health care insurer [MANAGED CARE ENTITY] that offers a 04 health care insurance policy [MANAGED CARE PLAN] requires or provides for a 05 designation by a covered person of a participating primary care provider, the health 06 care insurer [MANAGED CARE ENTITY] shall permit the covered person to 07 designate any participating primary care provider that is available to accept the 08 covered person. 09 * Sec. 8. AS 21.07.030(e) is amended to read: 10 (e) Except as provided in this subsection, a health care insurer [MANAGED 11 CARE ENTITY] that offers a health care insurance policy [MANAGED CARE 12 PLAN] shall permit a covered person to receive medically necessary or appropriate 13 specialty care, subject to appropriate referral procedures, from any qualified 14 participating health care provider that is available to accept the individual for medical 15 care. This subsection does not apply to specialty care if the health care insurer 16 [MANAGED CARE ENTITY] clearly informs covered persons of the limitations on 17 choice of participating health care providers with respect to medical care. In this 18 subsection, 19 (1) "appropriate referral procedures" means procedures for referring 20 patients to other health care providers as set out in the applicable member contract and 21 as described under (a) of this section; 22 (2) "specialty care" means care provided by a health care provider with 23 training and experience in treating a particular injury, illness, or condition. 24 * Sec. 9. AS 21.07.030(f) is amended to read: 25 (f) If a contract between a health care provider and a health care insurer 26 [MANAGED CARE ENTITY] is terminated, a covered person may continue to be 27 treated by that health care provider as provided in this subsection. If a covered person 28 is pregnant or being actively treated by a provider on the date of the termination of the 29 contract between that provider and the health care insurer [MANAGED CARE 30 ENTITY], the covered person may continue to receive medical care services from that 31 provider as provided in this subsection, and the contract between the health care
01 insurer [MANAGED CARE ENTITY] and the provider shall remain in force with 02 respect to the continuing treatment. The covered person shall be treated for the 03 purposes of benefit determination or claim payment as if the provider were still under 04 contract with the health care insurer [MANAGED CARE ENTITY]. However, 05 treatment is required to continue only while the health care insurance policy 06 [MANAGED CARE PLAN] remains in effect and 07 (1) for the period that is the longest of the following: 08 (A) the end of the current policy or plan year; 09 (B) up to 90 days after the termination date, if the event 10 triggering the right to continuing treatment is part of an ongoing course of 11 treatment; 12 (C) through completion of postpartum care, if the covered 13 person is pregnant on the date of termination; or 14 (2) until the end of the medically necessary treatment for the condition, 15 disease, illness, or injury if the person has a terminal condition, disease, illness, or 16 injury; in this paragraph, "terminal" means a life expectancy of less than one year. 17 * Sec. 10. AS 21.07.050(a) is amended to read: 18 (a) A health care insurer [MANAGED CARE ENTITY] offering a health 19 care insurance policy [MANAGED CARE PLAN] shall provide for an external 20 appeal process that meets the requirements of this section in the case of an externally 21 appealable decision for which a timely appeal is made in writing either by the health 22 care insurer [MANAGED CARE ENTITY] or by the covered person. 23 * Sec. 11. AS 21.07.050(b) is amended to read: 24 (b) A health care insurer [MANAGED CARE ENTITY] may condition the 25 use of an external appeal process in the case of an externally appealable decision upon 26 a final decision in an internal appeal under AS 21.07.020, but only if the decision is 27 made in a timely basis consistent with the deadlines provided under this chapter. 28 * Sec. 12. AS 21.07.050(c) is amended to read: 29 (c) Except as provided in this subsection, the external appeal process shall be 30 conducted under a contract between the health care insurer [MANAGED CARE 31 ENTITY] and one or more external appeal agencies that are [HAVE] qualified under
01 AS 21.07.060. The health care insurer [MANAGED CARE ENTITY] shall provide 02 (1) that the selection process among external appeal agencies 03 qualifying under AS 21.07.060 does not create any incentives for external appeal 04 agencies to make a decision in a biased manner; 05 (2) for auditing a sample of decisions by external appeal agencies to 06 ensure that decisions are not made in a biased manner; and 07 (3) that all costs of the process, except those incurred by the covered 08 person or treating professional in support of the appeal, shall be paid by the health 09 care insurer [MANAGED CARE ENTITY] and not by the covered person. 10 * Sec. 13. AS 21.07.050(d) is amended to read: 11 (d) An external appeal process must include at least the following: 12 (1) a fair, de novo determination based on coverage provided by the 13 policy [PLAN] and by applying terms as defined by the policy [PLAN]; however, 14 nothing in this paragraph may be construed as providing for coverage of items and 15 services for which benefits are excluded under the policy [PLAN] or coverage; 16 (2) an external appeal agency shall determine whether the health care 17 insurer's [MANAGED CARE ENTITY'S] decision is 18 (A) in accordance with the medical needs of the patient 19 involved, as determined by the health care insurer [MANAGED CARE 20 ENTITY], taking into account, as of the time of the health care insurer's 21 [MANAGED CARE ENTITY'S] decision, the patient's medical needs and any 22 relevant and reliable evidence the agency obtains under (3) of this subsection; 23 [,] and 24 (B) in accordance with the scope of the covered benefits under 25 the policy [PLAN]; if the agency determines the decision complies with this 26 paragraph, the agency shall affirm the decision, and, to the extent that the 27 agency determines the decision is not in accordance with this paragraph, the 28 agency shall reverse or modify the decision; 29 (3) the external appeal agency shall include among the evidence taken 30 into consideration 31 (A) the decision made by the health care insurer
01 [MANAGED CARE ENTITY] upon internal appeal under AS 21.07.020 and 02 any guidelines or standards used by the health care insurer [MANAGED 03 CARE ENTITY] in reaching a decision; 04 (B) any personal health and medical information supplied with 05 respect to the individual whose denial of claim for benefits has been appealed; 06 (C) the opinion of the individual's treating physician or health 07 care provider; and 08 (D) the health care insurance policy [MANAGED CARE 09 PLAN]; 10 (4) the external appeal agency may also take into consideration the 11 following evidence: 12 (A) the results of studies that meet professionally recognized 13 standards of validity and replicability or that have been published in peer- 14 reviewed journals; 15 (B) the results of professional consensus conferences 16 conducted or financed in whole or in part by one or more government 17 agencies; 18 (C) practice and treatment guidelines prepared or financed in 19 whole or in part by government agencies; 20 (D) government-issued coverage and treatment policies; 21 (E) generally accepted principles of professional medical 22 practice; 23 (F) to the extent that the agency determines them [IT] to be 24 free of any conflict of interest, the opinions of individuals who are qualified as 25 experts in one or more fields of health care that are directly related to the 26 matters under appeal; 27 (G) to the extent that the agency determines them [IT] to be 28 free of any conflict of interest, the results of peer reviews conducted by the 29 health care insurer [MANAGED CARE ENTITY] involved; 30 (H) the community standard of care; and 31 (I) anomalous utilization patterns;
01 (5) an external appeal agency shall determine 02 (A) whether a denial of a claim for benefits is an externally 03 appealable decision; 04 (B) whether an externally appealable decision involves an 05 expedited appeal; and 06 (C) for purposes of initiating an external review, whether the 07 internal appeal process has been completed; 08 (6) a party to an externally appealable decision may submit evidence 09 related to the issues in dispute; 10 (7) the health care insurer [MANAGED CARE ENTITY] involved 11 shall provide the external appeal agency with access to information and to provisions 12 of the policy [PLAN] or health insurance coverage relating to the matter of the 13 externally appealable decision, as determined by the external appeal agency; and 14 (8) a determination by the external appeal agency on the decision must 15 (A) be made orally or in writing and, if it is made orally, shall 16 be supplied to the parties in writing as soon as possible; 17 (B) be made in accordance with the medical exigencies of the 18 case involved, but in no event later than 21 working days after the appeal is 19 filed, or, in the case of an expedited appeal, 72 hours after the time of 20 requesting an external appeal of the health care insurer's [MANAGED 21 CARE ENTITY'S] decision; 22 (C) state, in layperson's language, the basis for the 23 determination, including, if relevant, any basis in the terms or conditions of the 24 policy [PLAN] or coverage; and 25 (D) inform the covered person of the individual's rights, 26 including any time limits, to seek further review by the courts of the external 27 appeal determination. 28 * Sec. 14. AS 21.07.050(e) is amended to read: 29 (e) If the external appeal agency reverses or modifies the denial of a claim for 30 benefits, the health care insurer [MANAGED CARE ENTITY] shall 31 (1) upon receipt of the determination, authorize benefits in accordance
01 with that determination; 02 (2) take action as may be necessary to provide benefits, including 03 items or services, in a timely manner consistent with the determination; and 04 (3) submit information to the external appeal agency documenting 05 compliance with the agency's determination. 06 * Sec. 15. AS 21.07.050(h) is amended to read: 07 (h) In this section, "externally appealable decision" 08 (1) means 09 (A) a denial of a claim for benefits that is based in whole or in 10 part on a decision that the item or service is not medically necessary or 11 appropriate or is investigational or experimental, or in which the decision as to 12 whether a benefit is covered involves a medical judgment; or 13 (B) a denial that is based on a failure to meet an applicable 14 deadline for internal appeal under AS 21.07.020; 15 (2) does not include a decision based on specific exclusions or express 16 limitations on the amount, duration, or scope of coverage that do not involve medical 17 judgment, or a decision regarding whether an individual is a participant, beneficiary, 18 or other covered person under the policy [PLAN] or coverage. 19 * Sec. 16. AS 21.07.060 is amended to read: 20 Sec. 21.07.060. Qualifications of external appeal agencies. (a) An external 21 appeal agency qualifies to consider external appeals if, with respect to a health care 22 insurance policy [MANAGED CARE PLAN], the agency is certified by a qualified 23 private standard-setting organization approved by the director or by a health insurer 24 operating in this state as meeting the requirements imposed under (b) of this section. 25 (b) An external appeal agency is qualified to consider appeals of health care 26 insurance policy [MANAGED CARE PLAN] health care decisions if the agency 27 meets the following requirements: 28 (1) the agency meets the independence requirements of this section; 29 (2) the agency conducts external appeal activities through a panel of 30 two clinical peers, unless otherwise agreed to by both parties; and 31 (3) the agency has sufficient medical, legal, and other expertise and
01 sufficient staffing to conduct external appeal activities for the health care insurer 02 [MANAGED CARE ENTITY] on a timely basis consistent with this chapter. 03 (c) A clinical peer or other entity meets the independence requirements of this 04 section if 05 (1) the peer or entity does not have a familial, financial, or professional 06 relationship with a related party; 07 (2) compensation received by a peer or entity in connection with the 08 external review is reasonable and not contingent on any decision rendered by the peer 09 or entity; 10 (3) the health care insurer has [PLAN AND THE ISSUER HAVE] 11 no recourse against the peer or entity in connection with the external review; and 12 (4) the peer or entity does not otherwise have a conflict of interest with 13 a related party. 14 (d) In this section, "related party" means 15 (1) a health care insurer or, with respect to group health care 16 insurance, a plan sponsor, including any officer, director, management employee, 17 or fiduciary of the health care insurer or the plan sponsor [WITH RESPECT TO 18 (A) A MANAGED CARE PLAN, THE PLAN OR THE 19 INSURER OFFERING THE COVERAGE; OR 20 (B) INDIVIDUAL HEALTH INSURANCE COVERAGE, 21 THE INSURER OFFERING THE COVERAGE, OR ANY PLAN SPONSOR, 22 FIDUCIARY, OFFICER, DIRECTOR, OR MANAGEMENT EMPLOYEE 23 OF THE PLAN OR ISSUER]; 24 (2) the health care professional that provided the health care involved 25 in the coverage decision; 26 (3) the institution at which the health care involved in the coverage 27 decision is provided; 28 (4) the manufacturer of any drug or other item that was included in the 29 health care involved in the coverage decision; 30 (5) the covered person; or 31 (6) any other party that, under the regulations that the director may
01 prescribe, is determined by the director to have a substantial interest in the coverage 02 decision. 03 * Sec. 17. AS 21.07.070 is amended to read: 04 Sec. 21.07.070. Limitation on liability of reviewers. An external appeal 05 agency qualifying under AS 21.07.060 and having a contract with a health care 06 insurer [MANAGED CARE ENTITY], and a person who is employed by the agency 07 or who furnishes professional services to the agency, may not be held by reason of the 08 performance of any duty, function, or activity required or authorized under this 09 chapter to have violated any criminal law, or to be civilly liable if due care was 10 exercised in the performance of the duty, function, or activity and there was no actual 11 malice or gross misconduct in the performance of the duty, function, or activity. 12 * Sec. 18. AS 21.07.080 is amended to read: 13 Sec. 21.07.080. Religious nonmedical providers. This chapter may not be 14 construed to 15 (1) restrict or limit the right of a health care insurer [MANAGED 16 CARE ENTITY] to include services provided by a religious nonmedical provider as 17 medical care services covered by the health care insurance policy [MANAGED 18 CARE PLAN]; 19 (2) require a health care insurer [MANAGED CARE ENTITY], 20 when determining coverage for services provided by a religious nonmedical provider, 21 to 22 (A) apply medically based eligibility standards; 23 (B) use health care providers to determine access by a covered 24 person; 25 (C) use health care providers in making a decision on an 26 internal or external appeal; or 27 (D) require a covered person to be examined by a health care 28 provider as a condition of coverage; or 29 (3) require a health care insurance policy [MANAGED CARE 30 PLAN] to exclude coverage for services provided by a religious nonmedical provider 31 because the religious nonmedical provider is not providing medical or other data
01 required from a health care provider if the medical or other data is inconsistent with 02 the religious nonmedical treatment or nursing care being provided. 03 * Sec. 19. AS 21.07.250(12) is amended to read: 04 (12) "participating health care provider" means a health care provider 05 who has entered into an agreement with a health care insurer [MANAGED CARE 06 ENTITY] to provide services or supplies to a patient covered by a health care 07 insurance policy [MANAGED CARE PLAN]; 08 * Sec. 20. AS 21.07.250(16) is amended to read: 09 (16) "utilization review" means a system of reviewing the medical 10 necessity, appropriateness, or quality of medical care services and supplies provided 11 under a health care insurance policy [MANAGED CARE PLAN] using specified 12 guidelines, including preadmission certification, the application of practice guidelines, 13 continued stay review, discharge planning, preauthorization of ambulatory procedures, 14 and retrospective review. 15 * Sec. 21. AS 21.07.250 is amended by adding a new paragraph to read: 16 (17) "health care insurer" has the meaning given in AS 21.54.500. 17 * Sec. 22. AS 21.09.020 is amended to read: 18 Sec. 21.09.020. Exception from [EXCEPTIONS,] certificate of authority 19 requirement. A certificate of authority is not required of an insurer, not otherwise 20 authorized in this state, with [IN] regard to 21 (1) transactions relative to its policies lawfully written in the state, or 22 liquidation of assets and liabilities of the insurer, [(] other than collection of new 23 premiums, [), ALL AS] resulting from its former authorized operations in the state; 24 (2) related transactions subsequent to issuance of a policy covering 25 only subjects of insurance not resident, located, or expressly to be performed in the 26 state at time of issuance, and which coverage was lawfully solicited, written, and 27 delivered outside the state; 28 (3) transactions under surplus lines coverages lawfully written under 29 AS 21.34; [OR] 30 (4) reinsurance, except as to domestic reinsurers; or 31 (5) transactions relative to policies issued in another state, but only
01 if 02 (A) the insurer does not market insurance in this state; 03 (B) the laws of the state of issue apply to this state's 04 residents covered under the policies; and 05 (C) the insurer complies with other requirements the 06 director adopts by regulation to qualify for an exception under this 07 paragraph. 08 * Sec. 23. AS 21.09.200(e) is amended to read: 09 (e) An insurer shall pay to the division $100 for each day the insurer fails to 10 file a [THE ANNUAL] statement or report in the form and location required and 11 within the time established in [(a) OF] this section. The authority of the insurer to 12 enter into new obligations or issue new or renewal policies of insurance in this state 13 may be suspended by the director if a statement or report required by this section 14 [THE ANNUAL STATEMENT] has not been filed by the due date [MARCH 1]. 15 * Sec. 24. AS 21.09.245(b) is amended to read: 16 (b) If an insurer changes the insurer's articles of incorporation, bylaws, 17 business address, phone number, electronic mailing address, or other information 18 maintained by the director, the insurer shall file a notice of the change with the 19 director not later than 90 days after the effective date of the change. 20 * Sec. 25. AS 21.09 is amended by adding a new section to read: 21 Sec. 21.09.247. Biographical affidavits. A domestic insurer shall file with the 22 director a complete affidavit of biographical information not later than 30 days after 23 the appointment of an officer or director of the insurer. If requested by the director, a 24 foreign insurer shall file with the director an affidavit of biographical information for 25 the appointment of an officer or director of the insurer. A filing under this section 26 must be on a form approved by the director. A filing is not required if a biographical 27 affidavit of the officer or director has been submitted to the director within one year 28 before the date of appointment. A biographical affidavit filed under this section is 29 confidential and not subject to public inspection. 30 * Sec. 26. AS 21.09.320 is amended to read: 31 Sec. 21.09.320. Maintenance of records. (a) A foreign [AN] insurer
01 [DOMICILED IN A JURISDICTION OTHER THAN THIS STATE] shall keep at its 02 principal place of business a complete record of its assets, transactions, and affairs in 03 accordance with the methods and systems that are customary or suitable to the kind of 04 business [INSURANCE] transacted. 05 (b) To meet the requirements of (a) of this section, the insurer shall keep the 06 records as required [SPECIFIED] in AS 21.69.390(d) [FOR FIVE YEARS FROM 07 THE DATE THE RECORD WAS CREATED] or as required by the record 08 maintenance requirements of the insurer's domicile jurisdiction, whichever is longer. 09 * Sec. 27. AS 21.12.020(a) is amended to read: 10 (a) Credit for reinsurance transactions shall be allowed a domestic ceding 11 insurer as either an asset or a deduction from liability on account of reinsurance ceded 12 only with respect to cessions of a kind or class of business that the assuming insurer is 13 licensed or permitted to write or assume in its state of domicile or, in the case of a 14 United States branch of an alien assuming insurer, in the state through which it is 15 entered and licensed to transact insurance or reinsurance and only if the reinsurance is 16 ceded to an 17 (1) assuming insurer that is licensed to transact insurance or 18 reinsurance in this state; 19 (2) assuming insurer that is accredited as a reinsurer in this state; an 20 accredited reinsurer is one that 21 (A) files evidence of submission to this state's jurisdiction, 22 submits to this state's authority to examine its books and records under 23 AS 21.06.120, is licensed to transact insurance or reinsurance in at least one 24 state that is accredited by the National Association of Insurance 25 Commissioners, or, in the case of a United States branch of an alien admitted 26 insurer, is entered through and licensed to transact insurance or reinsurance in 27 at least one state that is accredited by the National Association of Insurance 28 Commissioners; 29 (B) maintains at least $20,000,000 in policyholder surplus and 30 whose accreditation has not been denied by the director within 90 days after 31 application to the director, or maintains less than $20,000,000 in policyholder
01 surplus and whose application for accreditation has been approved by the 02 director; and 03 (C) files annually with the director a copy of the reinsurer's 04 annual financial statement filed with the insurance department of the 05 reinsurer's state of domicile or state of entry and a copy of the reinsurer's most 06 recent audited financial statement; 07 (3) assuming insurer that is domiciled in a state, or, in the case of a 08 United States branch of an alien assuming insurer, is entered through a state accredited 09 by the National Association of Insurance Commissioners that employs standards 10 regarding credit for reinsurance ceded substantially similar to those applicable under 11 (1) and (2) of this subsection, the assuming insurer maintains a policyholder surplus of 12 at least $20,000,000, and the assuming insurer submits to the authority of this state to 13 examine its books and records; the surplus requirements in this paragraph do not apply 14 to reinsurance ceded and assumed under a pooling arrangement among insurers in the 15 same holding company system; 16 (4) assuming alien insurer that 17 (A) maintains a trust fund in a qualified United States financial 18 institution for the payment of the valid claims of its United States domiciled 19 [POLICYHOLDERS AND] ceding insurers, and their assigns and successors 20 in interest, that conforms to the following requirements: 21 (i) the trust and each amendment to the trust shall be 22 established in a form approved by the insurance supervisory official of 23 the state where the trust is domiciled or the insurance supervisory 24 official of another state who, under the terms of the trust instrument, 25 has accepted responsibility for regulatory oversight of the trust; the 26 form of the trust and each trust amendment shall be filed with the 27 insurance supervisory official of every state in which the beneficiaries 28 of the trust are domiciled; the trust instrument must provide that 29 contested claims are valid and enforceable upon the final order of any 30 court of competent jurisdiction in the United States; the trust shall vest 31 legal title to its assets in the trustees of the trust for its United States
01 policyholders and ceding insurers, their assigns, and successors in 02 interest; the trust and the assuming insurer are subject to examination as 03 determined by the director, and the assuming insurer shall submit to 04 examination of its books and records by the director and bear the 05 expense of examination; the trust must remain in effect for so long as 06 the assuming insurer has outstanding liabilities due under the 07 reinsurance agreements subject to the trust; 08 (ii) on or before March 1 of each year, the trustees shall 09 report in writing to the director on the balance of the trust and list the 10 trust's investments at the end of the preceding year, and shall certify the 11 date of termination of the trust, if so planned, or certify that the trust 12 does not expire before the following December 31; 13 (iii) in the case of a single assuming insurer, the trust 14 shall consist of trust assets not less than [MONEY REPRESENTING] 15 the assuming insurer's liabilities attributable to reinsurance ceded by 16 [BUSINESS WRITTEN IN] the United States domiciled ceding 17 insurers and, in addition, include a trust surplus of not less than 18 $20,000,000 for the benefit of the United States domiciled ceding 19 insurers as additional security for the liabilities covered by the 20 trust; the single assuming insurer shall make available to the director 21 an annual certification of the insurer's solvency by an independent 22 certified public accountant or an accountant holding a substantially 23 equivalent designation as determined by the director; 24 (iv) in the case of a group, including incorporated and 25 individual unincorporated insurers, the trust shall consist of trust assets 26 [MONEY] representing the group's liabilities attributable to business 27 ceded by [THE] United States domiciled ceding insurers and, in 28 addition, include a trust surplus not less than $100,000,000 held jointly 29 for the benefit of the United States domiciled ceding insurers of [OR] 30 any member of the group for all years of account as additional 31 security for the group's liabilities covered by the trust; the
01 incorporated members of the group may not be engaged in any business 02 other than underwriting as a member of the group and are subject to the 03 same level of solvency regulation and control by the group's 04 domiciliary regulator as are the unincorporated members; within 90 05 days after its financial statements are due to be filed with the group's 06 domiciliary regulator, the group shall make available to the director an 07 annual certification of the solvency of each insurer by the group's 08 domiciliary regulator or, if the certification is unavailable, financial 09 statements, prepared by an independent certified public accountant, or 10 an accountant holding a substantially equivalent designation as 11 determined by the director, for each underwriter member of the group; 12 (v) in the case of a group of incorporated insurers under 13 common administration that complies with the reporting requirements 14 contained in (ii) of this subparagraph, that has continuously transacted 15 an insurance business outside the United States for at least three years 16 immediately before making application for accreditation, that submits 17 to this state's authority to examine its books and records and bears the 18 expense of the examination, and that has aggregate policyholders' 19 surplus of $10,000,000,000, the trust shall consist of trust assets [BE] 20 in an amount not less than [EQUAL TO] the group's several liabilities 21 attributable to business ceded by United States domiciled ceding 22 insurers to a member of the group under reinsurance contracts issued in 23 the name of the group, and the group shall maintain a joint trustee 24 surplus, of which $100,000,000 shall be held jointly for the benefit of 25 United States domiciled ceding insurers of a member of the group as 26 additional security for the group's liabilities covered by the trust, and, 27 within 90 days after its financial statements are due to be filed with the 28 group's domiciliary regulator, each member of the group shall make 29 available to the director an annual certification of the underwriter 30 member's solvency by the member's domiciliary regulator and financial 31 statement of each underwriter member prepared by its independent
01 certified public accountant, or an accountant holding a substantially 02 equivalent designation as determined by the director; and 03 (B) reports annually to the director information substantially 04 the same as that required to be reported on the National Association of 05 Insurance Commissioners' annual statement form by licensed insurers to 06 enable the director to determine the sufficiency of the trust fund; 07 (5) assuming insurer that does not meet the requirements of (1) - (4) of 08 this subsection, but only with respect to the insurance of risks located in jurisdictions 09 where the reinsurance is required by applicable law or regulation of that jurisdiction. 10 * Sec. 28. AS 21.12.050(b) is amended to read: 11 (b) Health care insurance means that part of health insurance that provides, 12 delivers, arranges for, pays for, or reimburses any of the costs of [BENEFITS 13 FOR] medical care [WHETHER PROVIDED DIRECTLY, THROUGH 14 REIMBURSEMENT, OR OTHER METHOD]. 15 * Sec. 29. AS 21.14.200(4) is amended to read: 16 (4) "company action level event" means a report, an adjusted report 17 that has not been challenged, or an adjusted report for which a challenge has been 18 rejected [,] that is filed under AS 21.14.010 and that indicates that 19 (A) an insurer's total adjusted capital is greater than or equal to 20 its regulatory action level risk based capital but is less than its company action 21 level risk based capital; [OR] 22 (B) if a life and health insurer, the insurer has total adjusted 23 capital that is greater than or equal to the insurer's company action level risk 24 based capital but is less than 250 percent of the insurer's authorized control 25 level risk based capital and that has a negative trend; or 26 (C) if a property and casualty insurer or health 27 organization, the insurer or organization has total adjusted capital that is 28 greater than or equal to the company action level risk based capital but is 29 less than 300 percent of its authorized control level risk based capital and 30 that has a negative trend; 31 * Sec. 30. AS 21.14.200(9) is amended to read:
01 (9) "life and health insurer" 02 (A) means an insurer who transacts life insurance as defined in 03 AS 21.12.040 or health insurance as defined in AS 21.12.050 and who filed 04 with the director the National Association of Insurance Commissioners 05 Life Risk-Based Capital Report; 06 (B) does not include a benevolent association under AS 21.72, 07 a fraternal benefit society under AS 21.84, a health maintenance organization 08 under AS 21.86, or a hospital or medical service corporation under AS 21.87; 09 * Sec. 31. AS 21.14.200(12) is amended to read: 10 (12) "negative trend" for a life and health insurer, a property and 11 casualty insurer, and a health organization means a negative trend over a period of 12 time, as determined by the "trend test calculation" in the risk based capital 13 instructions; 14 * Sec. 32. AS 21.14.200(13) is amended to read: 15 (13) "property and casualty insurer" means an insurer who transacts 16 health insurance as defined in AS 21.12.050, property insurance as defined in 17 AS 21.12.060, casualty insurance as defined in AS 21.12.070, surety insurance as 18 defined in AS 21.12.080, marine or wet marine and transportation insurance as defined 19 in AS 21.12.090, or mortgage guaranty insurance as defined in AS 21.12.110 and who 20 filed with the director the National Association of Insurance Commissioners 21 Property and Casualty Risk-Based Capital Report; 22 * Sec. 33. AS 21.14.200 is amended by adding a new paragraph to read: 23 (21) "health organization" means a health maintenance organization, 24 limited health service organization, dental or vision plan, hospital, medical and dental 25 indemnity or service corporation, or other managed care organization holding a 26 certificate of authority under AS 21.86 or AS 21.87, or a company that writes 27 primarily health insurance as defined in AS 21.12.050 and filed with the director the 28 National Association of Insurance Commissioners Health Risk-Based Capital Report. 29 * Sec. 34. AS 21.22.060(k) is amended to read: 30 (k) An insurer subject to registration under (a) of this section shall register 31 annually by May 1 [APRIL 1] of each year for the previous calendar year unless, for
01 good cause shown, the director extends the time for registration. The director may 02 require an insurer that is allowed to register as provided under (c) of this section [,] to 03 furnish a copy of 04 (1) the registration statement; 05 (2) the summary specified in (l) of this section; or 06 (3) other information filed by the insurer with the insurance regulatory 07 authority of the insurer's state of domicile. 08 * Sec. 35. AS 21.27.020(b) is amended to read: 09 (b) To qualify for issuance or renewal of an individual [OR INDIVIDUAL IN 10 THE FIRM] license, an applicant or licensee shall comply with this title and 11 regulations adopted under AS 21.06.090 and 12 (1) shall be 18 years of age or older; 13 (2) if for a resident license, shall be a bona fide resident before 14 issuance of the license and actually reside in the state; 15 (3) shall successfully pass an examination required under 16 AS 21.27.060; 17 (4) shall be a trustworthy person; 18 (5) may not use or intend to use the license for the purpose principally 19 of writing controlled business, as defined in AS 21.27.030; 20 (6) may not have committed an act that is a cause for denial, 21 nonrenewal, suspension, or revocation of a license in this state or another jurisdiction. 22 * Sec. 36. AS 21.27.020(c) is amended to read: 23 (c) To qualify for issuance or renewal of a license as a firm insurance 24 producer, a firm managing general agent, a firm reinsurance intermediary broker, a 25 firm reinsurance intermediary manager, a firm surplus lines broker, or a firm 26 independent adjuster, an applicant or licensee shall 27 (1) comply with (b)(4) and (5) of this section; 28 (2) maintain a lawfully established place of business in this state, 29 except when licensed as a nonresident under AS 21.27.270; 30 (3) designate one or more compliance officers for the firm; 31 (4) provide to the director documents necessary to verify the
01 information contained in or made in connection with the application; and 02 (5) notify the director, in writing, within 30 days of a change in the 03 firm's compliance officer [OR OF THE TERMINATION OF EMPLOYMENT OF 04 AN INDIVIDUAL IN THE FIRM LICENSEE]. 05 * Sec. 37. AS 21.27.025 is repealed and reenacted to read: 06 Sec. 21.27.025. Required notice of licensee. (a) A licensee shall notify the 07 director in writing within 30 days after a change in residence, place of business, legal 08 name, fictitious name or alias, mailing address, electronic mailing address, or 09 telephone number. A licensee shall report to the director in writing any administrative 10 action taken against the licensee by a governmental agency of another state or by a 11 governmental agency of another jurisdiction within 30 days after the final disposition 12 of the action. A licensee shall submit to the director the final order and other relevant 13 legal documents in the action. A licensee shall report to the director any criminal 14 prosecution of the licensee in this or another state or jurisdiction within 30 days after 15 the date of filing of the criminal complaint, indictment, information, or citation in the 16 prosecution. The licensee shall submit to the director a copy of the criminal complaint, 17 calendaring order, and other relevant legal documents in the prosecution. 18 (b) In addition to any other penalty provided by law, a failure to notify the 19 director as required by this section is cause for denial, nonrenewal, suspension, or 20 revocation of a license. 21 * Sec. 38. AS 21.27.040(e) is amended to read: 22 (e) As part of the application required by (a) of this section, a resident [AN] 23 applicant shall furnish to the director a full set of fingerprints and the fees required by 24 the Department of Public Safety under AS 12.62.160 for criminal justice information 25 and a national criminal history record check so that the director may obtain criminal 26 justice information as provided under AS 12.62 about the applicant. The director shall 27 submit the completed fingerprint card and fees to the Department of Public Safety for 28 a report of criminal justice information under AS 12.62 and a national criminal history 29 record check under AS 12.62.400. 30 * Sec. 39. AS 21.27.100(c) is amended to read: 31 (c) An individual who has entered into an employment contract with a
01 licensed [IN A FIRM WHO ACTS SOLELY ON BEHALF OF A] firm that is 02 appointed as an agent or a managing general agent on behalf of an admitted insurer 03 under this section may not be required to also have an appointment under this section 04 if the individual has entered into an employment contract [IN THE FIRM IS 05 LICENSED] with that firm for a specific class of authority. 06 * Sec. 40. AS 21.27.140(b) is amended to read: 07 (b) A firm may not be licensed as an insurance producer, managing general 08 agent, reinsurance intermediary broker, reinsurance intermediary manager, surplus 09 lines broker, or independent adjuster, or transact insurance unless each individual 10 employed by the firm as an insurance producer, managing general agent, surplus lines 11 broker, trainee independent adjuster, or independent adjuster [BY THE FIRM] is 12 licensed and has entered into an employment contract with the firm [AS AN 13 INDIVIDUAL IN THE FIRM]. 14 * Sec. 41. AS 21.27 is amended by adding a new section to read: 15 Sec. 21.27.215. Employment contracts. (a) A firm may enter into an 16 employment contract with a licensed individual to conduct business under the 17 supervision of and in the name of the firm. The employment contract must be in 18 writing and must specify the lines and classes of authorities of the individual and the 19 firm. The individual and the firm shall retain a copy of the contract and shall reply in 20 writing within three working days to an inquiry of the director regarding any business 21 transacted by the individual and the firm. 22 (b) The firm shall examine the credentials of the individual to determine that 23 the individual is licensed to conduct the kinds of business described in the contract. 24 (c) A licensed individual may, if authorized by the firm and an insurer for 25 which the firm is an agent, issue on the firm's behalf contracts of insurance in 26 accordance with a written agency contract. 27 (d) A firm shall be responsible for the actions of an individual transacting 28 insurance under the firm's contracts. In any disciplinary proceeding under this title, the 29 existence of the employment contract shall be prima facie evidence that the firm knew 30 of the activities of the individual. 31 (e) The individual and the firm shall maintain a current list of all of their
01 respective contracts that identifies, for each contract, the parties to the contract, the 02 parties' mailing addresses, electronic mailing addresses, and telephone numbers, and 03 the parties' license numbers, and the effective and termination dates of employment. 04 (f) A licensee shall retain the records of an employment contract and make the 05 records available for examination and inspection by the director, at any business time 06 during the five years immediately following the date of the termination of the 07 employment contract unless the director orders a longer period of retention. If the 08 licensee assumes the business of another licensee or former licensee by merger, 09 purchase, or otherwise, the requirements of AS 21.27.350(c) apply. 10 * Sec. 42. AS 21.27.350(e) is amended to read: 11 (e) A licensee shall reply in writing within 10 working days to a records 12 inquiry of the director. The director may inspect or request summary or detailed copies 13 of records for examination by the division. Accounting and financial records inspected 14 or examined under this section are confidential when in the possession of the division, 15 but may be used by the director in a proceeding against the licensee. For purposes of 16 this section, the records of a firm shall include and be considered the records of an 17 individual licensee who has entered into an employment contract with the firm 18 [ACTING ON BEHALF OF THE FIRM]. 19 * Sec. 43. AS 21.27.360(f) is amended to read: 20 (f) This section does not apply to an individual licensee who has entered into 21 an employment contract with a [IN THE] firm and who acts solely on behalf of a 22 firm that maintains compliance with this section. 23 * Sec. 44. AS 21.27.790 is amended to read: 24 Sec. 21.27.790. Surplus lines broker qualifications. In addition to the general 25 qualifications under AS 21.27.020, to qualify for issuance or for renewal of a resident 26 surplus lines broker license, an applicant or licensee shall 27 (1) be licensed as either an insurance producer or managing general 28 agent for property and casualty lines of authority; 29 (2) if required by the director by regulation, maintain a bond as 30 described in AS 21.27.190 in an amount acceptable to the director that requires the 31 surplus lines broker to conduct business under this title, promptly remit the taxes and
01 fees required by law, return premiums promptly when due, and pay proper losses 02 promptly; 03 (3) if the director requires, maintain an errors and omissions insurance 04 policy acceptable to the director. 05 * Sec. 45. AS 21.27.900(22) is amended to read: 06 (22) "resident" means 07 (A) for an individual [OR AN INDIVIDUAL IN THE FIRM], 08 a natural person who is domiciled in this state, whose principal place of 09 business is in this state, who has a present intent to remain in this state while 10 licensed, and who manifests that intent by establishing an ongoing physical 11 presence in this state; 12 (B) for a firm, a person whose principal place of business is in 13 this state; 14 * Sec. 46. AS 21.33.055(a) is repealed and reenacted to read: 15 (a) Except as to premiums on lawfully procured surplus lines insurance 16 exported under AS 21.34 and premiums on independently procured insurance on 17 which a tax has been paid under AS 21.33.061, every nonadmitted insurer shall pay to 18 the director, on or before March 1 following the calendar year in which the insurance 19 was procured, continued, or renewed, a premium-receipts tax of 3.7 percent of gross 20 premiums written for the insurance other than wet marine and transportation insurance 21 and a premium-receipts tax of three-fourths of one percent of gross premiums charged 22 for the wet marine and transportation insurance if the insured's home state is this state. 23 If the insurance covers properties, risks, or exposures located or to be performed both 24 in and out of this state, the tax payable shall be computed based on an amount equal to 25 3.7 percent on that portion of the gross premiums allocated under (b) of this section to 26 this state, plus an amount equal to the portion of the premiums allocated under (b) of 27 this section to other properties, risks, or exposures located or to be performed outside 28 of this state. The insurance on subjects resident, located, or to be performed in this 29 state procured through negotiations or an application, in whole or in part occurring or 30 made in or from in or out of this state, or for which premiums in whole or in part are 31 remitted directly or indirectly from in or out of this state, shall be considered to be
01 insurance procured or continued or renewed in this state. The tax paid by the insurer 02 under this section is in lieu of all insurer taxes and fire department dues. In this 03 subsection, "premium" includes all premiums, membership fees, assessments, dues, 04 and any other consideration for insurance. 05 * Sec. 47. AS 21.33.055 is amended by adding a new subsection to read: 06 (d) On default of a nonadmitted insurer in the payment of the tax, the insured 07 shall pay the tax within 30 days after written notice from the director of the default by 08 the nonadmitted insurer. If the tax prescribed by this section is not paid by the 09 nonadmitted insurer within the time stated or by the insured within the time stated 10 after notice of default by the nonadmitted insurer, the tax may be increased by 11 (1) a late payment fee of $1,000 or 10 percent of the tax due, 12 whichever is greater; 13 (2) interest at the rate of one percent a month or part of a month from 14 the date the payment was originally due to the date paid; and 15 (3) a penalty not to exceed $100 a day or 25 percent of the tax due, 16 whichever is greater, from the date the payment was due to the date paid. 17 * Sec. 48. AS 21.33.061(c) is repealed and reenacted to read: 18 (c) If the insured's home state is this state, the insured shall pay to the director, 19 on or before March 1 following the calendar year in which the insurance was 20 procured, continued, or renewed, a tax of 3.7 percent of the gross premiums paid for 21 the insurance other than wet marine and transportation insurance, less any return 22 premiums. For wet marine and transportation insurance, the insured shall pay to the 23 director a tax of three-fourths of one percent of the gross premiums paid for the wet 24 marine transportation insurance. If the insurance covers properties, risks, or exposures 25 located or to be performed both in and out of this state, the tax payable shall be 26 computed based on an amount equal to 3.7 percent on that portion of the gross 27 premiums allocated under (d) of this section to this state, plus an amount equal to the 28 portion of the premiums allocated under (d) of this section to other properties, risks, or 29 exposures located or to be performed outside of this state. In the event of cancellation 30 and rewriting of the insurance contract, the additional premium for tax purposes is the 31 premium in excess of the unearned premium of the cancelled insurance contract. In
01 this subsection, "premium" includes all premiums, membership fees, assessments, 02 dues, and any other consideration for insurance. 03 * Sec. 49. AS 21.33.061 is amended by adding a new subsection to read: 04 (j) If the tax payable under (c) of this section is not paid within the time stated, 05 the tax may be increased by 06 (1) a late payment fee of $1,000 or 10 percent of the tax due, 07 whichever is greater; 08 (2) interest at the rate of one percent a month or part of a month from 09 the date the payment was due to the date paid; and 10 (3) a penalty not to exceed $100 a day or 25 percent of the tax due, 11 whichever is greater, from the date the payment was due to the date paid. 12 * Sec. 50. AS 21.33 is amended by adding a new section to read: 13 Sec. 21.33.063. Agreements with other states. The director is authorized to 14 participate in an agreement with another state for the purposes of collecting and 15 disbursing to the other state any premium tax collected under this chapter and payable 16 to the other state and for receiving from the other state premium tax it has collected 17 and is owed to this state. To the extent that another state where a portion of the 18 properties, risks, or exposures reside has failed to enter into an agreement with this 19 state, the director shall retain all of the net premium tax collected by this state. 20 * Sec. 51. AS 21.34.020(b) is repealed and reenacted to read: 21 (b) If a policyholder meets the standards of an exempt commercial purchaser 22 under this title and regulations adopted by the director, insurance may be procured 23 from a surplus lines broker without complying with (a)(2), (3), and (4) of this section 24 if 25 (1) the broker procuring or placing the surplus lines insurance has 26 disclosed to the exempt commercial purchaser that the insurance may or may not be 27 available from the admitted market that may provide greater protection with more 28 regulatory oversight; and 29 (2) the exempt commercial purchaser has subsequently requested in 30 writing that the broker procure or place the insurance from a nonadmitted insurer. 31 * Sec. 52. AS 21.34.040(c) is amended to read:
01 (c) A nonadmitted insurer may be eligible to provide coverage in this state if it 02 qualifies under one of the following: 03 (1) a foreign but nonalien stock insurer may qualify under this 04 subsection if it has the minimum unimpaired basic capital and additional surplus equal 05 to that required in its domiciliary jurisdiction, or maintains [$10,000,000 AS OF 06 DECEMBER 31, 1991, $12,500,000 AS OF DECEMBER 31, 1992, AND] 07 $15,000,000 [AS OF DECEMBER 31, 1993], whichever is greater; 08 (2) a foreign but nonalien mutual insurer, a reciprocal insurer, or a 09 mutual protection and indemnity association may qualify under this subsection if it has 10 the minimum unimpaired basic surplus and additional surplus equal to that required in 11 its domiciliary jurisdiction or maintains [$10,000,000 AS OF DECEMBER 31, 1991, 12 $12,500,000 AS OF DECEMBER 31, 1992, AND] $15,000,000 [AS OF 13 DECEMBER 31, 1993], whichever is greater; 14 (3) an alien insurer other than an alien mutual protection and 15 indemnity association may qualify under this subsection if it meets the minimum 16 requirements in (1) or (2) of this subsection and maintains in the United States an 17 irrevocable trust fund in an amount not less than $2,500,000 in a solvent federally 18 insured bank acceptable to the director, as security to the full amount, for the 19 protection of all its policyholders and creditors of each member of the mutual insurer, 20 reciprocal insurer, or mutual protection and indemnity association in the United States; 21 the trust fund must consist of instruments of substantially the same character and 22 quality as those that are eligible investments for the capital and statutory reserves of 23 admitted insurers authorized to write like kinds of insurance in this state or of 24 irrevocable, clean, and unconditional letters of credit; the trust fund must have an 25 expiration date that at no time is less than five years; 26 (4) a Lloyd's syndicate or an insurer belonging to a similar group, 27 including incorporated and individual unincorporated insurers, may qualify if it 28 maintains a trust fund jointly and severally with the other members of the group in an 29 amount not less than $50,000,000, as security to the full amount, for the protection of 30 all policyholders and creditors of each member of the group in the United States; the 31 incorporated members may not be engaged in any business other than underwriting as
01 a member of the group and shall be subject to the same level of solvency regulation 02 and control by the group's domiciliary regulator as are the unincorporated members; 03 the trust fund must consist of instruments of substantially the same character and 04 quality as those that are eligible investments for the capital and statutory reserves of 05 admitted insurers authorized to write like kinds of insurance in this state or of 06 irrevocable, clean, and unconditional letters of credit; the trust fund must have an 07 expiration date that at no time is less than five years; 08 (5) each syndicate or insurer belonging to an insurance exchange 09 created by the laws of individual states may qualify if the insurance exchange 10 maintains capital and surplus, or the substantial equivalent, of not less than 11 $50,000,000 in the aggregate; for insurance exchanges that maintain funds for the 12 protection of all insurance exchange policyholders, each individual syndicate shall 13 maintain minimum capital and surplus, or the substantial equivalent, of not less than 14 $3,000,000; in the event the insurance exchange does not maintain funds for the 15 protection of all its policyholders, each individual syndicate shall meet the minimum 16 requirements of (1) or (2) of this subsection; 17 (6) an alien mutual protection and indemnity association may qualify 18 under this subsection if it has the minimum unimpaired basic capital and additional 19 surplus equal to that required in its domiciliary jurisdiction or $10,000,000, whichever 20 is greater, and maintains in the United States an irrevocable trust fund in an amount 21 not less than $1,000,000 in a federally insured bank acceptable to the director, as 22 security to the full amount, for the protection of all its policyholders and creditors or 23 each member of the mutual protection and indemnity association in the United States; 24 the trust fund must consist of instruments of substantially the same character and 25 quality as those that are eligible investments for the capital and statutory reserves of 26 admitted insurers authorized to write wet marine and transportation insurance in this 27 state or of irrevocable, clean, and unconditional letters of credit; the trust fund must 28 have an expiration date that at no time is less than five years; 29 (7) an insurer not domiciled in the United States or its territories 30 may qualify under this subsection if it is listed on the Quarterly Listing of Alien 31 Insurers maintained by the National Association of Insurance Commissioners
01 International Insurers Department. 02 * Sec. 53. AS 21.34.040 is amended by adding new subsections to read: 03 (f) If an insurer has less than the minimum capital and surplus required in (c) 04 of this section, the insurer may satisfy the requirements of this section upon an 05 affirmative finding of acceptability by the director. The director's finding must be 06 based on factors including quality of management, capital and surplus of any parent 07 company, company underwriting profit and investment income trends, market 08 availability, and company record and reputation within the industry. The director may 09 not make an affirmative finding of acceptability when the nonadmitted insurer's 10 capital and surplus is less than $4,500,000. 11 (g) The director may participate in interstate agreements formed for the 12 purpose of developing additional and alternative nationwide uniform eligibility 13 requirements that are applicable to nonadmitted insurers domiciled in another state or 14 territory of the United States. 15 * Sec. 54. AS 21.34.080(a) is amended to read: 16 (a) A surplus lines broker shall execute and file with the [MONTHLY] report 17 required by AS 21.34.170 a written report, which shall be kept confidential, regarding 18 each surplus lines insurance transaction occurring in the preceding period 19 [CALENDAR MONTH]. The report must include 20 (1) the name and address of the insured; 21 (2) the identity of each insurer including the National Association of 22 Insurance Commissioners company number and the percentage of coverage provided 23 by each; 24 (3) a complete description of the subject and location of the risk; 25 (4) the amount of gross premium written for the insurance; and 26 (5) other information required by the director. 27 * Sec. 55. AS 21.34.170(a) is amended to read: 28 (a) A surplus lines broker shall file with the director [ON OR BEFORE THE 29 END OF EACH MONTH], on forms prescribed by the director, a report of all surplus 30 lines insurance, by type of insurance as required to be reported in the annual statement 31 that must be filed with the director by admitted insurers. The report must include all
01 surplus lines insurance transactions during the preceding period [CALENDAR 02 MONTH] showing the aggregate gross premiums written, the aggregate return 03 premiums, the amount of aggregate tax remitted to this state, and the amount of 04 aggregate tax remitted to each other state for which an allocation is made under 05 AS 21.34.180. The forms shall be filed quarterly on March 1, June 1, 06 September 1, and December 1 of each year. 07 * Sec. 56. AS 21.34.180 is repealed and reenacted to read: 08 Sec. 21.34.180. Surplus lines tax. (a) In addition to collecting the full amount 09 of gross premiums written by an insurer for surplus lines insurance, the surplus lines 10 broker shall collect and pay to the director a tax of 2.7 percent on the net premium, 11 which is the total gross premiums written, less any return premiums, for the insurance. 12 Where the insurance covers properties, risks, or exposures located or to be performed 13 both in and out of this state, the tax payable shall be computed based on an amount 14 equal to 2.7 percent on that portion of the net premiums allocated under (f) of this 15 section to this state, plus an amount equal to the portion of the premiums allocated 16 under (f) of this section to other states or territories based on the tax rates and fees 17 applicable to other properties, risks, or exposures located or to be performed outside of 18 this state. 19 (b) The surplus lines broker may not absorb the tax or any part of it and may 20 not rebate, for any reason, any part of the tax. 21 (c) If, under AS 21.09.210, an admitted insurer is required to collect and pay 22 premium tax on a portion of a subscription policy, the surplus lines broker is not 23 required to collect any amount that would constitute double taxation of that portion of 24 the insurance. 25 (d) The director may participate in an agreement with another state formed for 26 the purpose of collecting and disbursing to a remitting state any funds collected under 27 (a) of this section applicable to other properties, risks, or exposures located or to be 28 performed outside of this state. To the extent that another state where a portion of the 29 properties, risks, or exposures resides has failed to enter into an agreement with this 30 state, the director shall retain all of the net premium tax collected by this state. 31 (e) At the time of filing the quarterly report as set out in AS 21.34.170, each
01 surplus lines broker shall pay the premium tax due for transactions occurring during 02 the period covered by the report. The tax must be paid by electronic or other means as 03 specified by the director. 04 (f) In determining the amount of premiums taxable in this state, all premiums 05 written, procured, or received in this state shall be considered written on properties, 06 risks, or exposures located or to be performed in this state except premiums that are 07 properly allocated or apportioned and reported as taxable premiums of a remitting 08 state. Allocation of the amount of premiums taxable for surplus lines insurance 09 covering properties, risks, or exposures only partially located or to be performed in 10 this state shall be determined by reference to an allocation schedule established by 11 regulation adopted by the director subject to the following: 12 (1) if a policy covers more than one classification, the following apply: 13 (A) for any portion of the coverage identified by a 14 classification on the allocation schedule, the tax shall be computed by using the 15 allocation schedule for the corresponding portion of the premium; 16 (B) for any portion of the coverage not identified by a 17 classification on the allocation schedule, the tax shall be computed by using an 18 alternative equitable method of allocation for the property or risk; 19 (C) for any portion of the coverage where the premium is 20 indivisible, the tax shall be computed by using the method of allocation that 21 pertains to the classification describing the predominant coverage; 22 (2) if the information provided by the surplus lines broker is 23 insufficient to substantiate the method of allocation used by the surplus lines broker, 24 or if the director determines that the broker's method is incorrect, the director shall 25 determine the equitable and appropriate amount of tax due to this state as follows: 26 (A) by use of the allocation schedule if the risk is appropriately 27 identified in the schedule; 28 (B) if the allocation schedule does not identify a classification 29 appropriate to the coverage, the director may give significant weight to 30 documented evidence of the underwriting bases and other rating criteria used 31 by the insurer; the director may also consider other available information to the
01 extent sufficient and relevant, including the percentage of the insured's 02 physical assets in this state, the percentage of the insured's sales in this state, 03 the percentage of income or resources derived from this state, and the amount 04 of premium tax paid to another jurisdiction for the policy. 05 (g) If the amount of tax due under (a) of this section is less than $50 in any 06 jurisdiction, the tax must be paid in the jurisdiction in which the reports and summary 07 of exported business are filed. 08 (h) The director shall, at least annually, furnish to the commissioner of a 09 remitting state a copy of all filings reporting an allocation of taxes required by this 10 section. 11 (i) This section does not apply to insurance of risks of state government or its 12 political subdivisions, to an agency of state government or its political subdivisions, or 13 to insurance of aircraft primarily engaged in interstate or foreign commerce. 14 (j) A surplus lines broker shall pay to the division a late payment fee of $50 a 15 month plus five percent of the tax due each calendar month or part of a month during 16 which the broker fails to pay the full amount of the tax or a portion of the tax and 17 interest at the rate of one percent of the tax due each calendar month or part of a 18 month for the period the broker fails to pay the tax. The late payment fee, not 19 including interest, may not exceed $250 plus 25 percent of the tax due. The tax 20 payment shall be made in the form required by the director, or a penalty shall be added 21 to the tax equal to 25 percent of the tax due, not to exceed $2,000, with a minimum 22 penalty of $100. In addition to any other penalty provided by law, if the provisions of 23 this section are wilfully violated, a civil penalty may be assessed of not more than 24 $10,000. The director may suspend or revoke the license of a broker that fails to pay 25 its taxes, a penalty, or a late payment fee required under this section. 26 * Sec. 57. AS 21.34.900 is amended by adding new paragraphs to read: 27 (10) "affiliate" or "affiliated" means, with respect to an insured, any 28 entity that controls, is controlled by, or is under common control with the insured; 29 (11) "affiliated group" means any group of entities that are all 30 affiliated; 31 (12) "control" means for purposes of an entity having "control" over
01 another entity 02 (A) the entity directly or indirectly or acting through 1 or more 03 other persons owns, controls, or has the power to vote 25 percent or more of 04 any class of voting securities of the other entity; or 05 (B) the entity controls in any manner the election of a majority 06 of the directors or trustees of the other entity; 07 (13) "exempt commercial purchaser" has the meaning given under 15 08 U.S.C. 8206 (Nonadmitted and Reinsurance Reform Act of 2010); 09 (14) "home state" means, for purposes of determining the home state 10 of an insured in a multistate placement of nonadmitted insurance, 11 (A) except as provided in (B) of this paragraph, "home state" 12 means, with respect to an insured: 13 (i) the state in which an insured maintains its principal 14 place of business or, in the case of an individual, the individual's 15 principal residence; or 16 (ii) if 100 percent of the insured risk is located out of 17 the state referred to in (i) of this subparagraph, the state to which the 18 greatest percentage of the insured's taxable premium for that insurance 19 contract is allocated; 20 (B) if more than one insured from an affiliated group is a 21 named insured on a single nonadmitted insurance policy, "home state" under 22 (A) of this paragraph is based on the member of the affiliated group that has 23 the largest percentage of premium attributed to it under the insurance contract; 24 (C) for purposes of (A) of this paragraph, the principal place of 25 business of an insured is the state where the insured maintains its headquarters 26 and where the insured's high-level officers direct control and coordinate the 27 business activities of the insured; 28 (15) "remitting state" means a state that has entered into an agreement 29 with this state for remitting to this state any premium tax collected by the other state 30 on premiums allocated to properties, risks, or exposures located in this state. 31 * Sec. 58. AS 21.36 is amended by adding a new section to read:
01 Sec. 21.36.225. Notice of health insurance coverage cancellation, coverage 02 change, or premium change. (a) Except for a health care insurance policy subject to 03 AS 21.51.400 or AS 21.54.130, an insurer may not cancel a health insurance policy 04 unless the insurer provides written notice to a covered individual at least 45 days 05 before the effective date of the cancellation. 06 (b) An insurer shall provide written notice to a covered individual of changes 07 in coverage or premium at least 45 days before the effective date of the change in 08 coverage or premium. 09 * Sec. 59. AS 21.36.360(q) is amended to read: 10 (q) A fraudulent or criminal insurance act described in 11 (1) (b) of this section that is committed to obtain $10,000 or more is a 12 class B felony; 13 (2) (c), (d), or (p)(4) [(c) OR (d)] of this section is a class B felony; 14 (3) (b) of this section that is committed to obtain $500 or more but less 15 than $10,000 is a class C felony; 16 (4) (e), (f), (g), or (h), of this section is a class C felony; 17 (5) (b) of this section that is committed to obtain less than $500 is a 18 class A misdemeanor; 19 (6) (i), (j), (k), (l), (m), or (n) of this section is a class A misdemeanor; 20 (7) (o) of this section is a class B misdemeanor; 21 (8) (p)(1) of this section is a class B misdemeanor unless another 22 specific penalty is provided for the violation of the provision; and 23 (9) (p)(2) and (3) [(p)(2) - (4)] of this section may be prosecuted under 24 AS 11.46. 25 * Sec. 60. AS 21.45.020 is amended by adding new subsections to read: 26 (c) A life insurance policy or annuity contract delivered or issued for delivery 27 in this state and each life insurance policy or annuity contract application must contain 28 a notice prominently printed on or attached to the first page stating 29 (1) on written request, an insurer is required to provide, within a 30 reasonable time, reasonable factual information regarding the benefits and provisions 31 of the policy or contract to the policy or contract holder; and
01 (2) if, for any reason, the policy or contract holder is not satisfied with 02 the policy or contract, the policy or contract holder may return the policy or contract 03 within 10 days after the policy or contract is delivered and, except as provided in (d) 04 of this section, receive a refund of all money paid. 05 (d) For a variable life insurance policy or variable annuity contract, the refund 06 under (c) of this section must equal the difference between the premiums paid, 07 including any policy or contract fees or other charges, and the amounts allocated to 08 any separate accounts under the policy or contract on the date the returned policy is 09 received by the insurer or its insurance producer. 10 * Sec. 61. AS 21.51.405 is amended by adding new subsections to read: 11 (b) An insurer shall file with the director annually for approval the premium 12 rates charged for an individual health care insurance plan. A premium rate or premium 13 rate change must be filed with the director at least 60 days before the anticipated 14 effective date of the premium rate. 15 (c) The director 16 (1) shall adopt regulations 17 (A) establishing procedures for filing and approval of rates; and 18 (B) specifying information that must be submitted in a filing 19 required under (b) of this section; and 20 (2) may adopt regulations specifying minimum loss ratio and refund 21 requirements. 22 * Sec. 62. AS 21.53.020 is amended to read: 23 Sec. 21.53.020. Disclosure and performance standards. An insurer, hospital 24 or medical service corporation, or [A] fraternal benefit society that delivers or issues 25 for delivery a long-term care insurance policy may not 26 (1) cancel, fail to renew, or otherwise terminate the policy on the 27 grounds of age or deterioration of the mental or physical health of the insured [OR 28 CERTIFICATE HOLDER]; 29 (2) include a provision requiring a new waiting period in the event 30 existing coverage is converted to or replaced by a new or another form of health 31 insurance within the same company, unless there is an increase in benefits voluntarily
01 selected by the insured or group policyholder; or 02 (3) provide coverage only for skilled nursing care [,] or provide 03 significantly more coverage for skilled care in a facility than is provided for coverage 04 for lower levels of care [; EVALUATION OF THE COVERAGE PROVIDED 05 UNDER THIS PARAGRAPH MUST BE BASED ON THE NUMBER OF DAYS OF 06 COVERAGE PROVIDED FOR LOWER LEVELS OF CARE, WHEN COMPARED 07 TO THE NUMBER OF DAYS OF COVERAGE PROVIDED FOR SKILLED 08 CARE]. 09 * Sec. 63. AS 21.53.030(a) is amended to read: 10 (a) An insurer, hospital or medical service corporation, or [A] fraternal benefit 11 society may not include, in a long-term care insurance policy or certificate, a 12 definition of "preexisting condition" that is more restrictive than the following: 13 preexisting condition means [THE EXISTENCE OF SYMPTOMS THAT WOULD 14 CAUSE AN ORDINARILY PRUDENT PERSON TO SEEK DIAGNOSIS, CARE, 15 OR TREATMENT, OR] a condition for which medical advice or treatment was 16 recommended by, or received from, a provider of health care services [,] within six 17 months preceding the effective date of coverage of an insured person. 18 * Sec. 64. AS 21.53.030(b) is amended to read: 19 (b) In a long-term care insurance policy, [OR CERTIFICATE] an insurer, 20 hospital or medical service corporation, or [A] fraternal benefit society may not 21 exclude coverage for a loss or confinement that is the result of a preexisting condition, 22 unless the loss or confinement begins within six months following the effective date of 23 coverage of an insured person. 24 * Sec. 65. AS 21.53.030(d) is amended to read: 25 (d) This section does not prohibit an insurer, hospital or medical service 26 corporation, or [A] fraternal benefit society from using an application form designed 27 to elicit the complete health history of an applicant, and, on the basis of the answers on 28 the application, from applying that insurer's, hospital or medical service corporation's, 29 or fraternal benefit society's established underwriting standards. Unless otherwise 30 provided in the policy [OR CERTIFICATE], a preexisting condition, regardless of 31 whether it is disclosed on the application, need not be covered until the waiting period
01 described in (b) of this section expires. A long-term care insurance policy [OR 02 CERTIFICATE] may not exclude, limit, or reduce, or use waivers or riders of any 03 kind to exclude, limit, or reduce coverage or benefits for specifically named or 04 described preexisting diseases or physical conditions after the waiting period 05 described in (b) of this section, unless the waiver or rider has been specifically 06 approved by the director. 07 * Sec. 66. AS 21.53.040 is amended to read: 08 Sec. 21.53.040. Prior hospital or institutional care conditions prohibited. 09 (a) A long-term care insurance policy may not be delivered or issued for delivery in 10 this state if the policy conditions eligibility 11 (1) on a prior hospitalization requirement; 12 (2) on the receipt of a higher level of institutional care, when care is 13 provided in an institutional setting; 14 (3) for noninstitutional benefits on a prior institutional stay of more 15 than 30 days for which benefits are paid; [OR] 16 (4) on admission to an institutional care facility for the same or a 17 related condition within a period of less than 30 days after discharge from the 18 institution, if the policy provides benefits only following institutionalization; or 19 (5) for a benefit, other than a waiver of premium, 20 postconfinement, postacute care, or recuperative benefit, on a prior 21 institutionalization. 22 (b) A long-term care insurance policy containing a postconfinement, 23 postacute care, or recuperative benefit must clearly label the limitations or 24 conditions, including any required number of days of confinement, "Limitations 25 or Conditions on Eligibility for Benefits" [MAY CONTAIN A LIMITATION OR 26 CONDITION ON ELIGIBILITY FOR BENEFITS, NOT PROHIBITED IN (a) OF 27 THIS SECTION, IF THE LIMITATION OR CONDITION IS CLEARLY SET OUT] 28 in a separate paragraph of the policy [OR CERTIFICATE]. 29 * Sec. 67. AS 21.53.050(a) is amended to read: 30 (a) A long-term care insurance applicant may return a policy within 30 days 31 after delivery and have the premium refunded if, after examination of the policy, the
01 applicant is not satisfied with the policy. A long-term care insurance policy must have 02 a notice prominently printed on the first page of the policy or separately attached 03 stating that the applicant has the right to return the policy within 30 days of its 04 delivery and to have the premium refunded if, after examination of the policy, the 05 applicant is not satisfied with the policy for any reason. This subsection also applies 06 to application denials, and any refund must be made within 30 days after return 07 or denial. 08 * Sec. 68. AS 21.53.050(b) is amended to read: 09 (b) An insurer, hospital or medical service corporation, or [A] fraternal benefit 10 society shall deliver an outline of coverage to a prospective applicant for long-term 11 care insurance at the time of initial solicitation by a means that prominently directs the 12 attention of the recipient to the document and its purpose. In the case of agent 13 solicitations, an agent shall deliver the outline of coverage before the presentation of 14 an application or enrollment form. In the case of direct response solicitations, the 15 outline of coverage must be presented in conjunction with an application or enrollment 16 form. The outline of coverage must include 17 (1) a description of the principal benefits and coverage provided in the 18 policy; 19 (2) a statement of the principal exclusions, reductions, and limitations 20 contained in the policy; 21 (3) a statement of the terms under which the policy [OR 22 CERTIFICATE, OR BOTH,] may be continued in force or discontinued, including a 23 reservation in the policy of a right to change the premium; continuation or conversion 24 provisions of group coverage must be specifically described; 25 (4) a statement that the outline of coverage is a summary only, not a 26 contract of insurance, and that the policy or group master policy contains governing 27 contractual provisions; 28 (5) a description of the terms under which the policy [OR 29 CERTIFICATE] may be returned and premium refunded; [AND] 30 (6) a brief description of the relationship between the cost of care and 31 benefits; and
01 (7) a statement that discloses to the policyholder whether the 02 policy is intended to be a federal qualified long-term care insurance contract 03 under 26 U.S.C. 7702B(b) (Internal Revenue Code). 04 * Sec. 69. AS 21.53.050 is amended by adding new subsections to read: 05 (d) For a policy issued to a group defined in AS 21.53.200(3)(A), an insurer, 06 hospital or medical service corporation, or fraternal benefit society is not required to 07 provide an outline of coverage if the information required on the outline of coverage 08 under (b) of this section is contained in other enrollment materials. An insurer, 09 hospital or medical service corporation, and fraternal benefit society shall provide the 10 enrollment materials to the director on request. 11 (e) If an application for a long-term care insurance policy is approved, the 12 insurer shall deliver the policy to the applicant not later than 30 days after the date of 13 approval. 14 * Sec. 70. AS 21.53.060(a) is amended to read: 15 (a) In addition to the requirements of AS 21.45, at the time of policy delivery, 16 a policy summary shall be included with an individual life insurance policy if the 17 policy or policy rider provides long-term care benefits. In the case of direct response 18 solicitations, the insurer shall deliver the policy summary upon the applicant's request 19 [,] but, regardless of request, shall deliver a policy summary not later than the time of 20 policy delivery. The summary must include 21 (1) an explanation of how the long-term care benefits interact with 22 other components of the policy, including deductions from death benefits; 23 (2) an illustration of the amount and length of benefits, and guaranteed 24 lifetime benefits, if any, for each covered person; 25 (3) an explanation of each exclusion, reduction, and limitation on long- 26 term care benefits; [AND] 27 (4) if applicable to the policy type, 28 (A) disclosure of the effects of exercising other rights under the 29 policy; 30 (B) disclosure of guarantees related to the long-term care costs 31 of insurance charges; and
01 (C) current and projected maximum lifetime benefits; and 02 (5) a statement that a long-term care inflation protection option 03 that is adopted by the director by regulation is not available under the policy. 04 * Sec. 71. AS 21.53.060 is amended by adding a new subsection to read: 05 (c) If a claim under a long-term care insurance policy is denied by an insurer, 06 the insurer shall, within 60 days after the date of a written request by a policyholder or 07 a representative of a policyholder, 08 (1) provide a written explanation of the reasons for the denial; and 09 (2) make available all information directly related to the denial. 10 * Sec. 72. AS 21.53 is amended by adding new sections to read: 11 Sec. 21.53.062. Incontestability period. (a) If a long-term care insurance 12 policy has been in force for less than six months, an insurer may rescind the policy or 13 deny an otherwise valid long-term care claim under the policy on a showing of 14 misrepresentation that is material to the acceptance for coverage. 15 (b) If a long-term care insurance policy has been in force for at least six 16 months but less than two years, an insurer may rescind the policy or deny an otherwise 17 valid long-term care claim under the policy on a showing of misrepresentation that is 18 both material to the acceptance for coverage and pertains to the condition for which 19 benefits are sought. 20 (c) If a long-term care insurance policy has been in force for two years or 21 more, the policy is not contestable on the grounds of misrepresentation alone and may 22 only be contested on a showing that the insured knowingly and intentionally 23 misrepresented relevant facts relating to the insured's health. 24 (d) An insurer may not field issue a long-term care insurance policy if the 25 compensation to the field issuer is not based on the number of policies issued. In this 26 subsection, "field issue" means a policy issued by a producer or a third-party 27 administrator under the underwriting authority granted by an insurer to the producer or 28 third-party administrator and using the insurer's underwriting guidelines. 29 (e) If an insurer has paid benefits under a long-term care insurance policy, the 30 insurer may not recover the benefit payments if the policy is rescinded. 31 (f) This section applies to a life insurance policy that accelerates benefits for
01 long-term care. However, if an insured dies, this section does not apply to the 02 remaining death benefit of a life insurance policy that accelerates benefits for long- 03 term care, and the remaining death benefit under the policy is subject to AS 21.45.040. 04 Sec. 21.53.064. Nonforfeiture benefits. (a) Except as provided in (b) of this 05 section, a long-term care insurance policy may not be delivered or issued for delivery 06 in this state unless the policyholder has been offered the option of purchasing a policy 07 including a nonforfeiture benefit. The insurer may offer a nonforfeiture benefit in the 08 form of a rider to the policy. If a policyholder declines the nonforfeiture benefit, the 09 insurer shall provide a contingent benefit upon lapse that is available for a specified 10 period of time following a substantial increase in premium rates. 11 (b) With respect to group long-term care insurance, an insurer shall make the 12 offer required in (a) of this section to the group policyholder. For a policy issued as 13 group long-term care insurance, other than a continuing care retirement community or 14 other similar entity, the insurer shall make the offer required in (a) of this section to 15 each proposed certificate holder. 16 Sec. 21.53.066. Producer training requirements. (a) A person may not sell, 17 solicit, or negotiate long-term care insurance unless the person is licensed as an 18 insurance producer for health or life insurance lines of authority and has completed a 19 one-time training course that meets the requirements in (d) of this section. 20 (b) A person currently licensed and selling, soliciting, or negotiating long-term 21 care insurance may not continue to sell, solicit, or negotiate long-term care insurance 22 unless the person has completed a one-time training course that meets the 23 requirements in (d) of this section. 24 (c) A person who sells, solicits, or negotiates long-term care insurance shall 25 complete ongoing training that meets the requirements in (e) of this section. 26 (d) The one-time training course required under this section 27 (1) must be at least eight credit hours; 28 (2) may not include training that is insurer or company product 29 specific or that includes any sales or marketing information, materials, or training, 30 other than those required by state or federal law; 31 (3) must consist of topics related to long-term care insurance, long-
01 term care services, and, if applicable, qualified long-term care insurance partnership 02 programs, including 03 (A) state and federal requirements and the relationship between 04 qualified state long-term care insurance partnership programs and other public 05 and private coverage of long-term care services; 06 (B) available long-term care services and providers; 07 (C) changes or improvements in long-term care services or 08 providers; 09 (D) alternatives to the purchase of private long-term care 10 insurance; 11 (E) the effect of inflation on benefits and the importance of 12 inflation protections; and 13 (F) consumer suitability standards and guidelines. 14 (e) The ongoing training course required under (c) of this section must be at 15 least four credit hours every 24 months and must comply with the requirements in 16 (d)(2) and (3) of this section. 17 (f) The director may approve the training requirements in (d) and (e) of this 18 section as continuing education courses under AS 21.27.020. 19 (g) An insurer shall 20 (1) obtain verification that a producer received the training required 21 under this section before a producer is permitted to sell, solicit, or negotiate the 22 insurer's long-term care insurance products; 23 (2) maintain records of required training subject to the state's record 24 retention requirements; 25 (3) make the verification required under (1) of this subsection available 26 to the director on request. 27 (h) An insurer shall maintain 28 (1) records with respect to the training of its producers concerning the 29 distribution of its partnership policies that allows the director to provide assurance to 30 the medical assistance program under AS 47.07 that producers have received the 31 training described in (d)(3) of this section and that producers have demonstrated an
01 understanding of the partnership policies and their relationship to public and private 02 coverage of long-term care in this state; and 03 (2) the records described under (1) of this subsection in accordance 04 with the record requirements under AS 21.09.320 and shall make the records available 05 to the director on request. 06 Sec. 21.53.068. Limitations related to producers and third-party 07 administrators. An insurer that authorizes issuance of a long-term care insurance 08 policy by a producer or a third-party administrator under the underwriting authority of 09 the insurer granted to the producer or a third-party administrator using the insurer's 10 underwriting guidelines may issue a long-term care insurance policy through the 11 producer or a third-party administrator only if the insurer compensates the issuer based 12 on the number of policies issued. 13 * Sec. 73. AS 21.53.090 is amended to read: 14 Sec. 21.53.090. Required regulations. The director shall adopt regulations 15 regarding 16 (1) the sale of long-term care insurance that provide minimum 17 standards for 18 (A) terms of renewability; 19 (B) initial and subsequent conditions of eligibility; 20 (C) nonduplication of coverage provisions; 21 (D) coverage of dependents; 22 (E) benefit triggers; 23 (F) preexisting conditions and recurrent conditions; 24 (G) termination of insurance, including incontestability 25 periods; 26 (H) continuation or conversion; 27 (I) probationary periods, limitations, exceptions, reductions, 28 and elimination periods; [AND] 29 (J) requirements for replacement; 30 (K) producer training, education, compensation, and 31 testing;
01 (L) marketing practices; 02 (M) independent review of benefit determinations; 03 (N) penalties and reporting practices; and 04 (O) premium rates, including rate filing requirements; 05 (2) standard definitions of long-term care insurance terms; 06 (3) nonforfeiture or minimum value requirements; [AND] 07 (4) consumer protection standards, including standards for full and fair 08 disclosure setting out the manner and content of required disclosures; and 09 (5) the standard format and content of the outline of coverage 10 required under AS 21.53.050. 11 * Sec. 74. AS 21.53.200(3) is amended to read: 12 (3) "group long-term care insurance" means a long-term care insurance 13 policy, subscriber's contract, or fraternal benefit society certificate that is delivered or 14 issued for delivery in this state and issued to 15 (A) one or more employers or labor organizations, or to a trust 16 or to the trustees of a fund established by one or more employers or labor 17 organizations, or a combination of them, for employees or former employees 18 or a combination of them, or for members or former members or a combination 19 of them, of the labor organization; 20 (B) a professional, trade, or occupational association for its 21 members or former or retired members, or combination of them, if the 22 association is composed of individuals all of whom are or were actively 23 engaged in the same profession, trade, or occupation, and has been maintained 24 in good faith for purposes other than obtaining insurance; 25 (C) an association or a trust or the trustee of a fund established, 26 created, or maintained for the benefit of members of one or more associations 27 that meets the requirements in AS 21.53.080; 28 (D) a group other than described in this paragraph if the 29 director determines that the issuance of the group policy is not contrary to the 30 best interest of the public, would result in economies of acquisition or 31 administration, and the benefits are reasonable in relation to the premiums
01 charged; 02 * Sec. 75. AS 21.53.200(4) is amended to read: 03 (4) "long-term care insurance" 04 (A) means an individual or group insurance policy, including 05 group and individual life insurance or annuities, a subscriber's contract, 06 fraternal benefit society certificate, or rider advertised, marketed, offered, or 07 designed to provide coverage for not less than 12 consecutive months for each 08 covered person on an expense incurred, indemnity, prepaid, or other basis, for 09 one or more necessary or medically necessary diagnostic, preventive, 10 therapeutic, rehabilitative, maintenance, or personal care services that are 11 provided in a setting other than an acute care unit of a hospital, and includes a 12 policy or rider that provides for payment of benefits based on cognitive 13 impairment or loss of functional capacity; 14 (B) ["LONG-TERM CARE INSURANCE"] does not include 15 (i) an insurance policy, subscriber's contract, or 16 fraternal benefit society certificate that is offered primarily to provide 17 basic Medicare supplement coverage, basic hospital expense coverage, 18 basic medical-surgical expense coverage, hospital confinement 19 indemnity coverage, major medical expense coverage, disability 20 insurance and related asset protection coverage, catastrophic coverage, 21 comprehensive coverage, accident only coverage, specified disease or 22 specified accident coverage, or limited benefit health coverage; or 23 (ii) a life insurance policy that accelerates the death 24 benefit specifically for one or more of the qualifying events of 25 terminal illness, medical conditions requiring extraordinary 26 medical intervention, or permanent institutional confinement and 27 that provides the option of a lump-sum payment for that benefit if 28 the benefit and the eligibility for the benefit under the life 29 insurance policy are not conditioned on the receipt of long-term 30 care; 31 * Sec. 76. AS 21.54.015 is amended by adding new subsections to read:
01 (c) An insurer shall file annually with the director for approval the premium 02 rates charged for each health care insurance plan. A premium rate or premium rate 03 change must be filed with the director at least 60 days before the anticipated effective 04 date of the premium rates. 05 (d) The director 06 (1) shall adopt regulations 07 (A) establishing procedures for the filing and approval of rates; 08 and 09 (B) specifying information that must be submitted in a filing 10 required under (c) of this section; and 11 (2) may adopt regulations specifying minimum loss ratio and refund 12 requirements. 13 * Sec. 77. AS 21.54.020(a) is amended to read: 14 (a) On the written request of a covered person, a health care insurer shall pay 15 amounts due under a health insurance policy directly to the provider of medical care 16 services. A health insurance policy may not contain a provision that requires services 17 be provided by a particular hospital or person, except as applicable to a [MANAGED 18 CARE PLAN UNDER AS 21.07 OR A] health maintenance organization under 19 AS 21.86. If a health care insurer makes a claim payment to the covered person after 20 the covered person has given written notice electing direct payment to the provider of 21 the service, the health care insurer shall also pay that amount to the provider of the 22 service. 23 * Sec. 78. AS 21.54 is amended by adding a new section to article 2 to read: 24 Sec. 21.54.180. Individual health care insurance policies offered in the 25 group market. (a) Except as provided in (b) of this section, a person may not sell, 26 solicit, or negotiate an individual health care insurance policy to an employer or 27 employee of an employer, and an insurer may not issue an individual health care 28 insurance policy to an employee of an employer. 29 (b) A person may sell, solicit, or negotiate an individual health care insurance 30 policy to an employer or employee of an employer, and an insurer may issue an 31 individual health care insurance policy to an employee of an employer, only if
01 (1) the employee is not an eligible employee as defined in 02 AS 21.56.250; or 03 (2) the employer does not offer a health benefit plan and has not 04 offered a health benefit plan in the last six months. 05 (c) An individual health care insurance policy offered under (b) of this section 06 is health care insurance offered in the individual market and subject to the 07 requirements of AS 21.51. In this subsection, "individual market" means the market 08 for health care insurance that does not include coverage under a health care insurance 09 plan as defined in AS 21.54.500. 10 * Sec. 79. AS 21.54.500(16) is amended to read: 11 (16) "health care insurance plan" means a health care insurance policy 12 or contract [PROVIDED BY A HEALTH CARE INSURER] but does not include an 13 excepted benefits policy or contract; 14 * Sec. 80. AS 21.59.070 is amended to read: 15 Sec. 21.59.070. Other provisions applicable. In addition to the provisions of 16 this chapter, the following provisions of this title shall apply to automobile service 17 corporations, to the extent applicable and not in conflict with the express provisions of 18 this chapter and the reasonable implications of the express provisions, and, for the 19 purposes of the application, the corporations shall be considered to be stock insurers: 20 (1) AS 21.03; 21 (2) AS 21.06; 22 (3) AS 21.09.050; 23 (4) AS 21.09.100; 24 (5) AS 21.09.120 - 21.09.210; 25 (6) AS 21.09.245; 26 (7) AS 21.09.247; 27 (8) AS 21.12; 28 (9) [(7)] AS 21.36; 29 (10) [(8)] AS 21.69; 30 (11) [(9)] AS 21.78; 31 (12) [(10)] AS 21.97.
01 * Sec. 81. AS 21.66.020 is amended by adding new subsections to read: 02 (b) When a title insurance company holding a certificate of authority under 03 this chapter is found to be insolvent by a proceeding in a court of competent 04 jurisdiction, the director shall take control of deposits made by the title insurance 05 company and held in this state. If the finding of insolvency is from a court in another 06 state, the director shall file for an ancillary receivership under AS 21.78 to administer 07 the deposits and other assets in this state and pay claims in this state. Any funds 08 remaining after payment of all claims under policies in this state shall be forwarded to 09 the receiver. 10 (c) On request of a title insurance company, the director shall return the assets 11 held on deposit when the company is no longer authorized to write insurance in this 12 state, the director is satisfied that there are no risks in the state covered by contracts of 13 the company, and the assets are no longer required to be held by any provision of law. 14 (d) In addition to the provisions of this section, the following provisions of 15 this title also apply with respect to deposits under this section to the extent applicable 16 and not in conflict with the express provisions of this chapter and the reasonable 17 implications of the express provisions: 18 (1) AS 21.24.040(a), (d), and (e); 19 (2) AS 21.24.060. 20 * Sec. 82. AS 21.66.210(a) is amended to read: 21 (a) Two or more title insurance companies or two or more title insurance 22 limited producers, or a combination of title insurance companies and title insurance 23 limited producers, may apply to the director of insurance to form an association, 24 corporation, or other legal entity, for the purpose of engaging in the business of 25 preparing abstracts of title searches from public records or from records to be owned 26 by the entity, upon the basis of which a title insurance limited producer or a title 27 insurance company will issue title policies. The owners or participants are considered 28 to be in compliance with the provisions of this section and AS 21.66.200 if the title 29 plant of the association, corporation, or other legal entity complies with the provisions 30 of this section. The application must contain 31 (1) a copy of the proposed articles of incorporation or association and
01 the bylaws or agreement governing the operation of the entity; 02 (2) a list of the owners or participants; 03 (3) the names and addresses of the persons who will operate the entity, 04 with a description of their experience and qualifications; 05 (4) the conditions under which ownership or participation in the entity 06 may be sold or acquired; 07 (5) a statement of whether or not title information will be compiled and 08 sold to persons other than owners of or participants in the entity; 09 (6) a pro forma balance sheet and other financial information to 10 indicate the sufficiency of financing the entity; and 11 (7) basic information, including the joint title plan name, the 12 physical address, the mailing address, the electronic mailing address, and 13 telephone numbers. 14 * Sec. 83. AS 21.69.390(d) is amended to read: 15 (d) To meet the requirements of (a) of this section, a domestic insurer shall 16 keep at its principal place of business in the state the following records of assets, 17 transactions, and affairs: 18 (1) a general ledger; 19 (2) copies of reports prepared to comply with AS 21.09.200 - 20 21.09.210; 21 (3) if prepared in the normal course of business, financial statements 22 prepared under generally accepted accounting principles on which a licensed certified 23 public accountant has expressed an opinion; 24 (4) filings made by a domestic insurer or affiliates of the domestic 25 insurer with a government agency with which a domestic insurer or affiliates of the 26 domestic insurer's securities may be registered; 27 (5) a state certificate of authority; 28 (6) filings made under AS 21.21; 29 (7) original contract [POLICY] and claim files for insurance and 30 other products sold to consumers [OF PROPERTY OR A RISK RESIDENT OR 31 LOCATED IN THE STATE];
01 (8) a corporate minutes book; 02 (9) articles of incorporation; 03 (10) corporate bylaws; 04 (11) administrative management contracts; and 05 (12) other records required by the director by regulation. 06 * Sec. 84. AS 21.72.170 is amended to read: 07 Sec. 21.72.170. Other provisions applicable. In addition to the provisions 08 contained in the chapter, other chapters and provisions of this title shall apply to 09 benevolent associations, to the extent applicable, as follows: 10 (1) AS 21.03; 11 (2) AS 21.06; 12 (3) AS 21.09.010, 21.09.050, 21.09.100, and 21.09.130 - 21.09.190; 13 (4) AS 21.09.247; 14 (5) AS 21.18.010 and 21.18.030; 15 (6) [(5)] AS 21.36; 16 (7) [(6)] AS 21.42; 17 (8) [(7)] AS 21.69.370, 21.69.390, 21.69.400, 21.69.630, and 18 21.69.640; 19 (9) [(8)] AS 21.78. 20 * Sec. 85. AS 21.75.060(b) is amended to read: 21 (b) The proposed attorney-in-fact shall fulfill the requirements of and shall 22 execute and file with the director when applying for a certificate of authority, a 23 declaration setting out 24 (1) the name of the insurer; 25 (2) the location of the insurer's principal office, which shall be the 26 same as that of the attorney-in-fact and shall be maintained in this state, and the 27 mailing address, electronic mailing address, and telephone numbers; 28 (3) the kinds of insurance proposed to be transacted; 29 (4) the names and addresses of the original subscribers; 30 (5) the designation and appointment of the proposed attorney-in-fact 31 and a copy of the power of attorney;
01 (6) the names and addresses of the officers and directors of the 02 attorney-in-fact, if a corporation, or its members, if a firm; 03 (7) the powers of the subscribers' advisory committee, and the names 04 and terms of office of the members; 05 (8) that all money paid to the reciprocal insurer shall, after deducting 06 any sum payable to the attorney-in-fact, be held in the name of the insurer and for the 07 purposes specified in the subscribers' agreement; 08 (9) a copy of the subscribers' agreement; 09 (10) a statement that each of the original subscribers has in good faith 10 applied for insurance of a kind proposed to be transacted and that the insurer has 11 received from each subscriber the full premium or premium deposit required for the 12 policy applied for, for a term of not less than six months at an adequate rate filed with 13 and approved by the director; 14 (11) a statement of the financial condition of the insurer, a schedule of 15 its assets, and a statement that the surplus as required by AS 21.75.050 is on hand; 16 (12) a copy of each policy, endorsement, and application form it then 17 proposes to issue or use. 18 * Sec. 86. AS 21.78.260 is amended to read: 19 Sec. 21.78.260. Priority of distribution. Except as provided under 20 AS 21.78.327 and 21.78.328, the [THE] priority of distribution of claims from an 21 insurer's estate is in accordance with the order in which each class of claims is set out 22 in this section. Every claim in each class must be paid in full, or adequate money 23 retained for payment, before the members of the next class may receive payment. A 24 subclass may not be established within a class. The order of distribution of claims is 25 (1) class 1: the costs and expenses of administration during 26 rehabilitation and liquidation, including 27 (A) the actual and necessary costs preserving or recovering the 28 assets of the insurer; 29 (B) compensation for all services rendered in the rehabilitation 30 and liquidation; 31 (C) any necessary filing fees;
01 (D) the fees and mileage payable to witnesses; 02 (E) reasonable attorney [ATTORNEY'S] fees and other 03 professional services rendered in the rehabilitation and liquidation; 04 (F) the reasonable expenses of a guaranty association or foreign 05 guaranty association that is handling claims; 06 (2) class 2: reasonable compensation to employees for services 07 performed, to the extent that the claim does not exceed two months of monetary 08 compensation and represents payment for services performed within one year before 09 the filing of the petition for liquidation or, if rehabilitation preceded liquidation, within 10 one year before the filing of the petition for rehabilitation; principal officers and 11 directors of the insurer are not entitled to the benefit of this priority except as 12 otherwise approved by the receiver and the court; the priority in this paragraph is in 13 place of any other similar priority that might be authorized by law as to wages or 14 compensation of employees; 15 (3) class 3: all claims under policies, including claims of the federal or 16 a state or local government, for losses incurred, including third-party claims, and all 17 claims of a guaranty association or foreign guaranty association; all claims under life 18 insurance and annuity policies, whether for death proceeds, annuity proceeds, or 19 investment values, shall be treated as loss claims; that portion of a loss for which 20 indemnification is provided by other benefits or advantages recovered by the claimant, 21 may not be included in this class, other than benefits or advantages recovered or 22 recoverable in discharge of familial obligations or support, or by way of succession at 23 death, or as proceeds of life insurance, or as gratuities; payment by an employer to an 24 employee may not be treated as a gratuity; 25 (4) class 4: claims under nonassessable policies for unearned premium 26 or other premium refunds and claims of general creditors, including claims of ceding 27 and assuming companies under contracts of reinsurance; 28 (5) class 5: claims of the federal or a state or local government, other 29 than claims under (3) of this section; claims, including those of a government body for 30 a penalty or forfeiture, shall be allowed in this class only to the extent of the pecuniary 31 loss sustained from the act, transaction, or proceeding out of which the penalty or
01 forfeiture arose, along with reasonable and actual costs attributable to it; the remaining 02 portion of the claims are in the class of claims set out in (7) of this section; 03 (6) class 6: claims filed late, or any other claims other than claims 04 under (7) and (8) of this section; 05 (7) class 7: surplus or contribution notes, or similar obligations, and 06 premium refunds on assessable policies; payments to members of domestic mutual 07 insurance companies shall be limited in accordance with law; 08 (8) class 8: the claims of shareholders or other owners, in their 09 capacity as shareholders. 10 * Sec. 87. AS 21.78 is amended by adding new sections to read: 11 Sec. 21.78.327. Administration of loss reimbursement policies. (a) Under 12 the authority given in AS 21.78.130 to administer assets, the receiver may enter into 13 an agreement allowing an insured to fund or pay a loss reimbursement claim directly 14 or through a third-party administrator. A payment made under that agreement is not 15 considered a claim subject to priority of distribution under AS 21.78.260. 16 (b) If an insurer subject to a delinquency proceeding under this chapter entered 17 into an agreement allowing the insured to fund or pay a loss reimbursement claim 18 directly or through a third-party administrator, the insured shall continue to fulfill its 19 obligations under the agreement, and the receiver may enforce the agreement. 20 (c) An agreement entered into or reaffirmed under (a) and (b) of this section 21 may be terminated in the manner specified in the agreement. 22 (d) An insured's payment of a loss reimbursement claim in whole or in part, 23 including a payment made by a third-party administrator on behalf of the insured, 24 extinguishes the obligation, if any, of the receiver or guaranty association to pay that 25 claim or a portion of that claim in a delinquency proceeding under this chapter. A 26 third-party claimant's acceptance of the insured's payment of a loss reimbursement 27 claim in full or final settlement of the claim bars recovery for that claim in a 28 delinquency proceeding. 29 (e) For a loss reimbursement owed by an insured, 30 (1) the receiver shall bill an insured for reimbursement of a loss 31 reimbursement claim when
01 (A) the insurer paid the claim before the commencement of a 02 delinquency proceeding; 03 (B) the receiver is notified that a guaranty association has paid 04 a loss reimbursement claim; 05 (C) the receiver has paid a loss reimbursement claim; or 06 (D) a loss reimbursement claim is allowed in a liquidation 07 proceeding; 08 (2) a loss reimbursement paid to the receiver is a general asset of the 09 estate of an insurer subject to a delinquency proceeding under this chapter; 10 (3) the receiver shall, without court approval, distribute to a guaranty 11 association, as an early access payment under AS 21.78.328, a loss reimbursement 12 received by the receiver that is allocable to a claim paid by the guaranty association; 13 (4) if an insured does not pay a loss reimbursement within the time 14 specified in the loss reimbursement policy or within 60 days after receipt of the 15 billing, the receiver may take all commercially reasonable actions necessary to collect 16 a loss reimbursement owed; and 17 (5) the insolvency of an insurer, the receiver's inability to perform an 18 insurer's obligations under a loss reimbursement policy, or an allegation of improper 19 handling or payment of a loss reimbursement claim by the receiver or a guaranty 20 association is not a defense to the insured's reimbursement obligation under the loss 21 reimbursement policy. 22 (f) For collateral held under a loss reimbursement policy issued by an insurer 23 subject to a delinquency proceeding under this chapter, the receiver shall 24 (1) maintain and administer the collateral in accordance with the loss 25 reimbursement policy except where the loss reimbursement policy conflicts with this 26 section; 27 (2) apply the collateral first to meet all early access distributions to a 28 guaranty association under (e)(3) of this section if the loss reimbursement collateral, 29 when combined with loss reimbursement payments that have been made by an 30 insured, is insufficient to 31 (A) reimburse loss reimbursement claims already paid by the
01 insurer, the receiver, and guaranty associations; and 02 (B) discharge all currently due and past due loss reimbursement 03 claims and other secured obligations. 04 (g) If the receiver does not seek or is unsuccessful in obtaining reimbursement 05 from the insured for a loss reimbursement claim and collateral is not available, 06 (1) a guaranty association may, after notice to the receiver, seek to 07 collect reimbursement owed from the insured on the same basis as the receiver and 08 with the same rights and remedies, including the right to recover reasonable costs of 09 collection from the insured; 10 (2) the guaranty association shall report to the receiver the 11 reimbursements collected from each insured; 12 (3) the receiver shall provide the guaranty association with available 13 information needed to collect a reimbursement owed from the insured; 14 (4) a guaranty association shall notify all other guaranty associations 15 that have paid loss reimbursement claims on behalf of the same insured whenever it 16 undertakes to collect reimbursements from an insured; 17 (5) the guaranty association shall treat the amounts collected as an 18 early access payment subject to AS 21.78.328(h); 19 (6) the expenses incurred by a guaranty association in pursuing 20 reimbursement may not be allowed as a claim in the delinquency proceeding; 21 however, a guaranty association may deduct the expenses incurred in collecting 22 reimbursement against a loss reimbursement recovered from an insured. 23 (h) The receiver may recover from the insured or from loss reimbursement 24 collateral all reasonable expenses that the receiver incurs in fulfilling its 25 responsibilities under this section. Those expenses are in addition to the insured's 26 obligation to reimburse claims and related claims expenses and do not diminish the 27 rights of third-party claimants. 28 (i) In this section, 29 (1) "loss reimbursement" 30 (A) means a 31 (i) payment made by an insured to or on behalf of an
01 insurer for loss or loss adjustment expense under the terms of a loss 02 reimbursement policy, and the insurer is responsible for payment 03 regardless of whether the insured has met its obligations; or 04 (ii) voluntary or involuntary application of loss 05 reimbursement collateral to the obligations of the insured; 06 (B) does not include 07 (i) payments made by an insured under a deductible 08 arrangement under which an insurer does not have an obligation to pay 09 or advance the amount of the deductible on behalf of the insured; 10 (ii) payments made by an insured under a self-insurance 11 arrangement under which the insurer does not have a payment 12 obligation for the obligation of the self-insured; 13 (iii) retrospectively rated premium payments; or 14 (iv) reinsurance claim payments made by a captive 15 reinsurer or other reinsurer affiliated with or funded by the insurer or 16 affiliated with the insurer; 17 (2) "loss reimbursement claim" means 18 (A) a claim that is reimbursable by the insured under the terms 19 of a loss reimbursement policy; or 20 (B) loss adjustment expenses that are subject to reimbursement 21 by the terms of a loss reimbursement policy; 22 (3) "loss reimbursement collateral" means cash, a letter of credit, a 23 surety bond, or any other form of security provided by an insured to secure its loss 24 reimbursement obligations, regardless of whether the collateral also secures other 25 obligations of the insured; 26 (4) "loss reimbursement policy" means a combination of one or more 27 policies, endorsements, contracts, or security agreements that may provide for a 28 specific dollar amount of loss reimbursement applicable to each claim, an aggregate 29 dollar amount applicable to all claims under the policy, or both, if the insured 30 (A) has agreed with the insurer to 31 (i) pay directly a portion of a loss or loss adjustment
01 expense owed by the insurer under the policy up to a specified dollar 02 amount; or 03 (ii) reimburse the insurer for its payment of loss and 04 loss adjustment expense under the policy up to a specified dollar 05 amount; and 06 (B) remains liable for payment of loss and loss adjustment 07 expense under the policy, regardless of whether the insured has met its 08 obligations; 09 (5) "other secured obligation" means an obligation, such as a 10 reinsurance or retrospective premium obligation, that is payable by an insured to an 11 insurer and that is secured by collateral that also secures a loss reimbursement 12 obligation. 13 Sec. 21.78.328. Early access disbursements. (a) Within 120 days after the 14 entry of an order of liquidation and at least annually thereafter, the receiver shall apply 15 to the court for approval to make early access payments out of the general assets of the 16 insurer, in an amount consistent with the requirements of this section, to a guaranty 17 association having obligations arising in connection with the liquidation or report to 18 the court that the receiver has determined that there are no distributable assets at that 19 time. The receiver may apply to the court for approval to make early access payments 20 more frequently than annually based on additional information or the recovery of 21 material assets. 22 (b) An amount advanced to a guaranty association under this section must be 23 accounted for as an advance against a distribution to be made under AS 21.78.294. 24 (c) For purposes of (a) of this section, the distributable assets are the general 25 assets of the liquidation estate less amounts reserved, to the extent necessary and 26 appropriate, for 27 (1) costs, expenses, or compensation under AS 21.78.260(1), not 28 including the expenses of a guaranty association, and under AS 21.78.260(2) through 29 and after closure of the liquidation proceeding; and 30 (2) the class of claims under AS 21.78.260(3) other than a claim of a 31 guaranty association.
01 (d) If sufficient distributable assets are available, the amounts advanced need 02 not be limited to the claims and expenses paid to date by the guaranty associations; 03 however, the receiver may not distribute distributable assets to a guaranty association 04 in excess of the entire anticipated claims of a guaranty association falling within the 05 class of claims under AS 21.78.260(3). 06 (e) Within 60 days after the court's approval of an application filed under (a) 07 of this section, the receiver shall make early access payments to the affected guaranty 08 associations as indicated in the approved application. 09 (f) For each application for early access payments or any report to the court 10 required under this section, the receiver shall give notice of the application or report to 11 a guaranty association that may have obligations arising from a liquidation. The 12 receiver shall provide the guaranty association with at least 30 days' actual notice of 13 the filing of an application with a complete copy of the application before any action 14 by the court. A guaranty association that may have obligations arising in connection 15 with the liquidation shall have the right to 16 (1) request additional information from the receiver, who may not 17 unreasonably deny the request; and 18 (2) file an objection with the court to any part of each application or to 19 any report filed by the receiver under this section. 20 (g) In each application regarding early access payments, the receiver shall, 21 based on the best information available to the receiver at the time, provide, at a 22 minimum, 23 (1) to the extent necessary and appropriate, the amount reserved for the 24 entire expenses of the liquidation through and after its closure and for distributions 25 related to the class of claims under AS 21.78.260(2) and (3); 26 (2) the calculation of distributable assets and the amount and method 27 of equitable allocation of early access payments to each guaranty association; and 28 (3) the most recent financial information of the insurer in liquidation. 29 (h) A guaranty association that receives payments under this section agrees, on 30 depositing the payment in an account to its benefit, to return to the receiver any 31 amount of the payment that may be required to pay claims of secured creditors and
01 claims falling within the class of claims under AS 21.78.260(1) - (3). A guaranty 02 association is not required to secure its obligations under this section with a bond. 03 (i) Without the consent of an affected guaranty association or an order of the 04 receivership court, the receiver may not offset the amount to be disbursed to a 05 guaranty association by the amount of a special deposit or other statutory deposit or 06 asset of the insolvent insurer held in a state unless the association has actually received 07 the deposit or asset. 08 * Sec. 88. AS 21.79.025(a) is amended to read: 09 (a) The benefits for which the association may become liable may not exceed 10 the lesser of 11 (1) the contractual obligations for which the insurer is liable or would 12 have been liable if it were not an impaired or insolvent insurer; 13 (2) with respect to any one life, regardless of the number of policies or 14 contracts, 15 (A) $300,000 in life insurance death benefits, but not more than 16 $100,000 in net cash surrender and net cash withdrawal values for life 17 insurance; 18 (B) in health insurance benefits, 19 (i) $100,000 for coverage not defined as disability 20 insurance long-term care insurance, or basic hospital, medical, and 21 surgical insurance or major medical insurance, including any net cash 22 surrender and net cash withdrawal values; 23 (ii) $300,000 for disability insurance as defined in 24 AS 21.12.052 and long-term care insurance as defined in 25 AS 21.53.200; 26 (iii) $500,000 for basic hospital, medical, and surgical 27 insurance or major medical insurance; 28 (C) $250,000 [$100,000] in the present value of annuity 29 benefits, including net cash surrender and net cash withdrawal values; 30 (3) with respect to any one contract holder or plan sponsor whose plan 31 owns directly or in trust one or more unallocated annuity contracts not included in (4)
01 of this subsection, $5,000,000 in unallocated annuity contract benefits, irrespective of 02 the number of contracts held by that contract holder or plan sponsor except that, in the 03 case of one or more unallocated annuity contracts that are covered under this chapter 04 and that are owned by a trust or other entity for the benefit of two or more plan 05 sponsors, coverage shall be provided by the association if the largest interest in the 06 trust or entity owning the contract is held by a plan sponsor whose principal place of 07 business is in this state; however, the association is not liable to cover more than 08 $5,000,000 in benefits with respect to an unallocated annuity contract not included in 09 (4) of this subsection; 10 (4) with respect to an individual participating in a governmental 11 retirement benefit plan established under 26 U.S.C. 401, 26 U.S.C. 403(b), or 26 12 U.S.C. 457 and covered by an unallocated annuity contract, or to a beneficiary of the 13 individual if the individual is deceased, in the aggregate, $100,000 in present-value 14 annuity benefits, including net cash surrender and net cash withdrawal values; or 15 (5) with respect to each payee of a structured settlement annuity, or 16 beneficiary of the payee if the payee is deceased, $100,000 in present-value annuity 17 benefits in the aggregate, including net cash surrender and net cash withdrawal values, 18 if any. 19 * Sec. 89. AS 21.84.335(b) is amended to read: 20 (b) In addition to the provisions of this chapter, the following provisions of 21 this title apply to fraternal benefit societies to the extent applicable and not in conflict 22 with the express provisions of this chapter and the reasonable implications of this 23 chapter: 24 (1) AS 21.03; 25 (2) AS 21.06; 26 (3) AS 21.09.050; 27 (4) AS 21.09.100; 28 (5) AS 21.09.200; 29 (6) AS 21.09.205; 30 (7) AS 21.09.245; 31 (8) AS 21.09.247;
01 (9) AS 21.18; 02 (10) [(8)] AS 21.21; 03 (11) [(9)] AS 21.27; 04 (12) [(10)] AS 21.33; 05 (13) [(11)] AS 21.36; 06 (14) [(12)] AS 21.42.290; 07 (15) [(13)] AS 21.42.355; 08 (16) [(14)] AS 21.53; 09 (17) [(15)] AS 21.54; 10 (18) [(16)] AS 21.56; 11 (19) [(17)] AS 21.69.370; 12 (20) [(18)] AS 21.69.640; 13 (21) [(19)] AS 21.78; and 14 (22) [(20)] AS 21.96.060. 15 * Sec. 90. AS 21.85.030(a) is amended to read: 16 (a) The director may not issue a certificate of authority to a self-funded 17 multiple employer welfare arrangement unless the arrangement establishes to the 18 satisfaction of the director that 19 (1) employers participating in the arrangement are members of a bona 20 fide association or group of two or more businesses in the same or a closely related 21 trade, profession, or industry that provide support, services, or supplies primarily to 22 that trade, profession, or industry; 23 (2) employers or employees participating in the arrangement exercise 24 direct control over the arrangement; as described in this paragraph, 25 (A) subject to (B) of this paragraph, direct control exists if the 26 employers or employees participating in the arrangement have the right to elect 27 at least 75 percent of the individuals designated in the arrangement's 28 organizational documents as having control over the operations of the 29 arrangement and the individuals designated in the arrangement's organizational 30 documents in fact exercise control over the operation of the arrangement; 31 (B) use of a third-party administrator to process claims and to
01 assist in the administration of the arrangement is not evidence of the lack of 02 exercise of control over the operations of the arrangement; 03 (3) the arrangement is a nonprofit organization; 04 (4) the arrangement provides only allowable benefits, except the 05 arrangement may also provide 06 (A) life or disability insurance coverage to its participants if 07 the life or disability insurance coverage is provided under contracts that 08 comply with this title; or 09 (B) limited short-term disability insurance coverage, if 10 approved by the director; 11 (5) the arrangement has adequate facilities and competent personnel, as 12 determined by the director, to service the health benefit plan or has contracted with a 13 third-party administrator licensed under AS 21.27 to service the health benefit plan; 14 (6) the arrangement provides allowable benefits to not less than two 15 employers and not less than 75 employees; 16 (7) the arrangement does not solicit participation in the arrangement 17 from the general public, except the arrangement may employ or independently 18 contract with a licensed insurance producer who may be paid a commission or other 19 remuneration to enroll employers in the arrangement; 20 (8) the arrangement is not organized or maintained solely as a conduit 21 for the collection of premiums and the forwarding of premiums to an insurance 22 company, except that the arrangement may act as a conduit for the collection and 23 forwarding of premiums for life insurance coverage under (4) of this subsection; 24 (9) the arrangement 25 (A) has deposited $200,000 with the director to be used for the 26 payment of claims in the event the arrangement becomes insolvent and has 27 submitted to the director a written plan of operation that, in the discretion of 28 the director, ensures the financial integrity of the arrangement; and 29 (B) is able to remain financially solvent; the director may 30 consider the following in determining the ability of the arrangement to remain 31 financially solvent:
01 (i) pro forma financial statements; 02 (ii) types and levels of stop-loss insurance coverage, 03 including attachment points of the coverage; 04 (iii) whether a deposit is required for each employee 05 covered under the arrangement equal to at least one month's cost of 06 providing benefits under the arrangement; 07 (iv) the experience of the individuals who will be 08 involved in the management of the arrangement, including employees, 09 independent contractors, and consultants; and 10 (v) other factors the director considers relevant to 11 determining the ability of the arrangement to remain financially 12 solvent. 13 * Sec. 91. AS 21.85.040 is amended to read: 14 Sec. 21.85.040. Application for a certificate of authority. To apply for an 15 original certificate of authority, a self-funded multiple employer welfare arrangement 16 shall file with the director its application, accompanied by the applicable fees set 17 under AS 21.06.250, showing its name, the location of its home office, its date of 18 organization, its state of domicile, and additional information that the director may 19 reasonably require. The application shall be submitted together with 20 (1) a copy of all articles, bylaws, agreements, trusts, or other 21 documents or instruments describing the rights and obligations of the employers, 22 employees, and beneficiaries of the arrangement; 23 (2) a copy of each summary plan description of the arrangement filed 24 or required to be filed with the United States Department of Labor, including any 25 amendments to each description; 26 (3) evidence of coverage of or letter of intent to participate executed by 27 at least two employers providing allowable benefits to at least 75 employees; 28 (4) a copy of the arrangement's most recent financial statement in 29 compliance with AS 21.85.080 or, if the arrangement has been in existence for less 30 than one year, pro forma financial statements, including a balance sheet, an income 31 statement, a statement of changes in financial condition, and an actuarial opinion that
01 the unpaid claim liability of the arrangement satisfies the standards in AS 21.18.080 - 02 21.18.086; 03 (5) proof that the arrangement maintains and will continue to maintain 04 fidelity bonds required by the United States Department of Labor under 29 U.S.C. 05 1001 - 1461 (Employee Retirement Income Security Act of 1974); 06 (6) a copy of any stop-loss insurance policies maintained or proposed 07 to be maintained by the arrangement; 08 (7) biographical reports, on forms prescribed by the National 09 Association of Insurance Commissioners, evidencing the general trustworthiness and 10 competence of each individual who is serving or who will serve as a managing 11 employee or fiduciary of the arrangement; 12 (8) a notarized statement executed by an officer of the arrangement 13 certifying, to the best knowledge and belief of the officer, that the information 14 provided in the application is true and correct and that the arrangement is in 15 compliance with the requirements in 16 (A) AS 21.85.020; 17 (B) 29 U.S.C. 1001 - 1461 (Employee Retirement Income 18 Security Act of 1974) or a statement of any requirements with which the 19 arrangement is not in compliance and a statement of proposed corrective 20 action; and 21 (C) AS 21.85.050; 22 (9) base contribution rates for participation under the arrangement for 23 its initial year of operations; and 24 (10) for a foreign or alien multiple employer welfare arrangement, 25 (A) a certificate of the public official having supervision of 26 insurance in its state or country of domicile or state of entry into the 27 United States, showing that it is authorized to transact the kinds of 28 insurance proposed to be transacted in this state or an affidavit attesting 29 to the reasons why a certificate is not available; 30 (B) a copy of the arrangement's most recent financial 31 statement filed with its state of domicile, if any, with an actuarial opinion
01 on reported unpaid claims; 02 (C) a copy of a management discussion and analysis filed 03 with its state of domicile, if any; and 04 (D) a copy of the report of last examination, if any, made of 05 the insurer, issued by the insurance supervisory official of its state of 06 domicile or state of entry into the United States. 07 * Sec. 92. AS 21.86 is amended by adding a new section to read: 08 Sec. 21.86.045. Biographical affidavits. A domestic health maintenance 09 organization shall file with the director a complete affidavit of biographical 10 information not later than 30 days after the appointment of an officer or member of the 11 governing body of the organization. If requested by the director, a foreign health 12 maintenance organization shall file with the director an affidavit of biographical 13 information for the appointment of an officer or member of the governing body of that 14 organization. A filing under this section must be on a form approved by the director. A 15 filing is not required if a biographical affidavit of the officer or director has been 16 submitted to the director within one year before the date of appointment. A 17 biographical affidavit filed under this section is confidential and not subject to public 18 inspection. 19 * Sec. 93. AS 21.87.340 is amended to read: 20 Sec. 21.87.340. Other provisions applicable. In addition to the provisions 21 contained or referred to previously in this chapter, the following chapters and 22 provisions of this title also apply with respect to service corporations to the extent 23 applicable and not in conflict with the express provisions of this chapter and the 24 reasonable implications of the express provisions, and, for the purposes of the 25 application, the corporations shall be considered to be mutual "insurers": 26 (1) AS 21.03; 27 (2) AS 21.06; 28 (3) AS 21.07; 29 (4) AS 21.09, except AS 21.09.090; 30 (5) AS 21.18.010; 31 (6) AS 21.18.030;
01 (7) AS 21.18.040; 02 (8) AS 21.18.080 - 21.18.086; 03 (9) AS 21.36; 04 (10) AS 21.42.110, 21.42.345 - 21.42.395 [AS 21.42.345 - 21.42.395]; 05 (11) AS 21.51.120 and 21.51.400; 06 (12) AS 21.51.405; 07 (13) AS 21.53; 08 (14) [(13)] AS 21.54; 09 (15) [(14)] AS 21.56; 10 (16) [(15)] AS 21.69.400; 11 (17) [(16)] AS 21.69.520; 12 (18) [(17)] AS 21.69.600, 21.69.620, and 21.69.630; 13 (19) [(18)] AS 21.78; 14 (20) [(19)] AS 21.96.060; 15 (21) [(20)] AS 21.97. 16 * Sec. 94. AS 21.07.040, 21.07.250(7), 21.07.250(8), 21.07.250(9); AS 21.27.020(e), 17 21.27.025(b), 21.27.340, 21.27.900(14); AS 21.53.200(5); and AS 21.87.190(b) are repealed. 18 * Sec. 95. The uncodified law of the State of Alaska is amended by adding a new section to 19 read: 20 TRANSITION: LONG-TERM CARE INSURANCE LICENSEES COURSE 21 REQUIREMENT. A person licensed and selling, soliciting, or negotiating long-term care 22 insurance on the effective date of this section may not continue to sell, solicit, or negotiate 23 long-term care insurance beginning one year after the effective date of this section unless the 24 person has successfully completed a one-time course, as required by AS 21.53.066, enacted 25 by sec. 72 of this Act. 26 * Sec. 96. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 TRANSITION: REGULATION ADOPTION. The director of insurance may adopt 29 regulations necessary to implement the changes made by this Act. The regulations take effect 30 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the law 31 implemented by the regulation.
01 * Sec. 97. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 REVISOR'S INSTRUCTIONS. The revisor of statutes is instructed to change the 04 following: 05 (1) the chapter heading of AS 21.07 from "Regulation of Managed Care 06 Insurance Plans" to "Patient Protections Under Health Care Insurance Policies"; 07 (2) the catch line of AS 21.34.170 from "Monthly reports, summary of 08 exported business" to "Quarterly reports, summary of exported business." 09 * Sec. 98. Section 96 of this Act takes effect immediately under AS 01.10.070(c). 10 * Sec. 99. Sections 46 - 57 of this Act take effect July 21, 2011. 11 * Sec. 100. Except as provided in secs. 98 and 99 of this Act, this Act takes effect July 1, 12 2011.