CSSB 160(L&C): "An Act relating to flood insurance; relating to property insurance; establishing the Alaska Flood Authority and the Alaska flood insurance fund; and providing for an effective date."
00 CS FOR SENATE BILL NO. 160(L&C) 01 "An Act relating to flood insurance; relating to property insurance; establishing the 02 Alaska Flood Authority and the Alaska flood insurance fund; and providing for an 03 effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 21.39.030(a) is amended to read: 06 (a) Rates, including loss costs under AS 21.39.043 or any other provision of 07 law, shall be made in accordance with the following provisions: 08 (1) rates may [SHALL] not be excessive, inadequate, or unfairly 09 discriminatory; 10 (2) consideration shall be given to past and prospective loss experience 11 inside and outside this state; to the conflagration and catastrophe hazards; to a 12 reasonable margin for underwriting profit and contingencies; to dividends, savings, or 13 unabsorbed premium deposits allowed or returned by insurers to their policyholders, 14 members, or subscribers; to past and prospective expenses both countrywide and those
01 specially applicable to this state; and to all other relevant factors inside and outside 02 this state; 03 (3) the systems of expense provisions included in the rates for use by 04 an insurer or group of insurers may differ from those of other insurers or groups 05 [GROUP] of insurers to reflect the requirements of the operating methods of the 06 insurer or group of insurers with respect to any kind of insurance, or with respect to a 07 subdivision or combination thereof for which subdivision or combination separate 08 expense provisions are applicable; 09 (4) risks may be grouped by classifications for the establishment of 10 rates and minimum premiums; classification rates may be modified to produce rates 11 for individual risks in accordance with rating plans that establish standards for 12 measuring variations in hazards or expense provisions, or both; the standards may 13 measure any differences among risks that can be demonstrated to have a probable 14 effect on [UPON] losses or expenses; 15 (5) in the case of fire insurance rates, consideration may be given to 16 the experience of the fire insurance business during a period of not more than the most 17 recent five-year period for which experience is available; 18 (6) when there is an established program to inspect new and existing 19 dwellings and the program has been certified by the director as likely to reduce the 20 incidence of fires in inspected dwellings, then in any rate plan used in this state, 21 dwellings that have been found by the inspection to meet the standards established by 22 the program shall have credits applied to the rate in amounts approved by the director; 23 (7) in the case of flood insurance rates, primary consideration shall 24 be given to actual historical flood and damage data on the real and personal 25 property proposed to be insured. 26 * Sec. 2. AS 21.39.030(c) is amended to read: 27 (c) In this section, 28 (1) "dwelling" means a residential structure containing not more than 29 four family living units; 30 (2) "flood" means a general and temporary condition of partial or 31 complete inundation of normally dry land area from
01 (A) overflow of inland or tidal water; 02 (B) unusual and rapid accumulation or runoff of surface 03 water from any source; or 04 (C) mudflow. 05 * Sec. 3. AS 21.60 is amended by adding new sections to read: 06 Article 2. Alaska Flood Authority. 07 Sec. 21.60.100. Creation; membership; information from members. The 08 Alaska Flood Authority is created to increase the availability of flood insurance in the 09 state. The authority is a nonprofit incorporated legal entity. The membership of the 10 authority consists of all insurers licensed to transact property insurance business in the 11 state. As a condition of transacting property insurance business in the state, a member 12 shall 13 (1) maintain membership in the authority; 14 (2) submit reports and provide information required by the board or the 15 director to implement AS 21.60.100 - 21.60.300. 16 Sec. 21.60.110. Board; organization; report. (a) The board of the authority 17 consists of 18 (1) three members, selected by authority members, who represent 19 insurers licensed to transact property insurance business in the state, subject to 20 approval by the director; 21 (2) two members, selected by the director, who represent consumers of 22 property insurance required by the federal government to obtain flood insurance in a 23 special flood hazard area; 24 (3) one member, selected by the director, who represents the private 25 banking and mortgage industry in the state; and 26 (4) one member, selected by the director, who represents the Alaska 27 Housing Finance Corporation. 28 (b) The director is a nonvoting ex officio member of the board. In approving 29 members of the board under (a)(1) of this section, the director shall consider, among 30 other things, whether all types of authority members are fairly represented. 31 (c) A member of the board serves for a term of three years and may be
01 reappointed to an unlimited number of terms. The term of a board member shall 02 continue until a successor is appointed. 03 (d) At authority meetings, an authority member is entitled to one vote in 04 person or by proxy. At board meetings, a board member is entitled to one vote in 05 person or by proxy. 06 (e) The authority may reimburse a member of the board for expenses incurred 07 as a result of board activities but may not otherwise compensate a member of the 08 board for services. The costs of conducting meetings of the authority and the board are 09 the responsibility of the members of the authority. 10 (f) On or before September 1 of each year, the board shall prepare a report 11 reviewing the operations of the previous year and deliver the report to the state's 12 congressional delegation, the governor, the senate secretary, and the chief clerk of the 13 house of representatives and notify the legislature that the report is available. In the 14 report, the board shall 15 (1) analyze the effectiveness of the operations of the authority and 16 insurance program under AS 21.60.100 - 21.60.300; 17 (2) evaluate the benefits of the insurance program under AS 21.60.100 18 - 21.60.300 as compared to 42 U.S.C. 4001 - 4129 (National Flood Insurance Act) for 19 property owners and communities in the state; and 20 (3) identify penalties or sanctions imposed or potentially imposed on 21 individuals and communities in the state by the federal government under 42 U.S.C. 22 4001 - 4129 (National Flood Insurance Act). 23 Sec. 21.60.120. Powers of the authority. The authority may 24 (1) exercise the powers granted to insurers under the laws of the state; 25 (2) sue or be sued; 26 (3) enter into contracts with insurers, similar authorities in other states, 27 or other persons for the performance of administrative functions; 28 (4) establish administrative and accounting procedures for the 29 operation of the authority; and 30 (5) receive funds from sources other than members of the authority. 31 Sec. 21.60.130. Plan of operation. (a) The authority shall submit to the
01 director a plan of operation to ensure the fair, reasonable, and equitable administration 02 of the authority. The director may, after notice and hearing, adopt reasonable 03 regulations necessary or advisable to carry out the provisions of AS 21.60.100 - 04 21.60.300, including amendment to the plan of operation. The plan of operation and 05 amendments become effective upon approval in writing by the director. 06 (b) Each member of the authority shall comply with the plan of operation. 07 (c) The plan of operation must contain the following: 08 (1) procedures for the performance of all the powers and duties of the 09 authority under AS 21.60.100 - 21.60.300; 10 (2) procedures for handling assets of the authority; 11 (3) the amount of reimbursement and method for reimbursing 12 members of the board under AS 21.60.110(e); 13 (4) the regular places and times at which meetings of the board will 14 take place; 15 (5) record-keeping procedures for all financial transactions of the 16 authority, agents of the authority, and the board; 17 (6) a provision stating that a member of the authority aggrieved by a 18 final action or decision of the authority may appeal to the director within 30 days after 19 the action or decision is made; 20 (7) procedures for submitting board member selections to the director 21 for approval; 22 (8) additional provisions necessary or proper for the execution of the 23 powers and duties of the authority. 24 Sec. 21.60.140. Administrative Procedure Act. The authority is exempt from 25 AS 44.62 (Administrative Procedure Act). 26 Sec. 21.60.150. Tax exemption. The authority is exempt from the payment of 27 fees and taxes levied by the state or any of its political subdivisions except taxes levied 28 on real or personal property. 29 Sec. 21.60.160. Types of insurance plans. The authority shall make available 30 to a person who is eligible for coverage under AS 21.60.100 - 21.60.300 at least one 31 state plan of flood insurance. The authority may not refuse coverage under a state plan
01 to a person who is eligible under AS 21.60.100 - 21.60.300, applies for coverage, and 02 pays the required premium. 03 Sec. 21.60.170. Coverage and terms of state flood insurance plan. (a) The 04 coverage of a flood insurance plan offered under AS 21.60.160 shall be the same as 05 the coverage provided under a standard flood insurance policy offered by the National 06 Flood Insurance Program established by 42 U.S.C. 4001 - 4129 (National Flood 07 Insurance Act), including minimum and maximum amounts of coverage, deductibles, 08 exclusions, conditions, and the requirement that a flood must partially or completely 09 inundate two or more acres of normally dry land area or two or more properties, at 10 least one of which is the flood insurance policyholder's property, to be covered. 11 (b) The terms of a plan offered under AS 21.60.160 must contain 12 (1) a requirement to give 45 days' written notice of cancellation or 13 nonrenewal of flood insurance coverage to 14 (A) the insured; and 15 (B) the regulated lending institution or federal agency lender; 16 (2) information about the availability of flood insurance coverage 17 under the National Flood Insurance Program; 18 (3) a mortgage interest clause similar to the clause contained in a 19 standard flood insurance policy under the National Flood Insurance Program; 20 (4) a provision requiring an insured to file suit not later than one year 21 after the date of a written denial of all or part of a claim under the policy; and 22 (5) cancellation provisions that are as restrictive as the provisions 23 contained in a standard flood insurance policy under the National Flood Insurance 24 Program. 25 Sec. 21.60.180. State plan premiums. (a) The authority may not charge a rate 26 for flood insurance coverage that is unfairly discriminatory. 27 (b) The board shall determine flood insurance premium rates by primarily 28 considering the actual historical flood and damage data on the real and personal 29 property proposed to be insured. The board shall submit premium rates to the director 30 for approval before use. 31 (c) The board may retain an actuary or other consultant as may be necessary to
01 determine flood insurance premium rates and to perform other assigned duties. 02 Sec. 21.60.190. Duties of authority. (a) The authority shall perform the 03 administrative and claims payment functions required by this section. 04 (b) The authority shall provide to all eligible persons enrolled in a state plan a 05 policy setting out a statement of the insurance protection to which the person is 06 entitled, with whom claims are to be filed, and to whom benefits are payable. The 07 policy must indicate that coverage was obtained through the authority. 08 (c) The authority shall submit to the director on a semiannual basis a report on 09 the plan of operation. The board shall determine the specific information the report 10 must contain. 11 (d) The authority shall pay claims and shall indicate when a claim is paid 12 under a state plan. A claim payment must include a telephone number that can be used 13 for inquiries regarding the claim. 14 Sec. 21.60.200. Funding for authority and insurance program; penalties. 15 (a) Each member of the authority shall share the losses of the insurance program 16 established under AS 21.60.100 - 21.60.300 insuring real and personal property and 17 improvements to real property within a special flood hazard area in the state. Each 18 member of the authority shall pay member dues and share in the operating and 19 administrative expenses incurred or estimated to be incurred by the authority incident 20 to the conduct of its affairs. 21 (b) A member's liability under this section is an amount equal to a member's 22 dues, as determined by the director, plus 2.7 percent of the total direct premium 23 written during the year ending on the preceding December 31 and paid for the 24 insurance of property located in the state after deducting from the total direct premium 25 income applicable cancellations, returned premiums, unabsorbed portions of any 26 deposit premium, all policy dividends, unabsorbed premiums refunded to 27 policyholders, refunds, savings, savings coupons, and other similar returns paid or 28 credited to policyholders with respect to their policies. Deductions may not be made of 29 cash surrender value of policies. 30 (c) The board shall make an annual determination of each member's liability 31 under (b) of this section, if any, and may make an annual fiscal year end assessment if
01 necessary to operate the authority and insurance program. The board may also provide 02 for interim assessments against the members as may be necessary to ensure the 03 financial capability of the authority in meeting the incurred or estimated operating and 04 administrative expenses of the authority until the authority's next annual fiscal year 05 end assessment. The board may not make an assessment that exceeds the calculation 06 under (b) of this section unless the total amount of member liability calculated under 07 this section is insufficient to operate the authority and insurance program. The board 08 may decline to levy an assessment against a member if the assessment would be 09 minimal. 10 (d) Payment of an assessment is due within 30 days after a member receives 11 written notice of a fiscal year end or interim assessment. A member that no longer 12 does business in the state remains liable for assessments until the board determines 13 under (c) of this section that no assessment is due. Assessments paid by a member are 14 a general expense of the member. If a member fails to pay a fiscal year end or interim 15 assessment as required in this subsection, 16 (1) the member shall pay a civil penalty to the director in the amount 17 of $100 for each day the member fails to pay the required assessment; and 18 (2) the director may revoke the member's certificate of authority. 19 (e) If the total amount of member liability calculated under (c) of this section 20 is insufficient to satisfy a duly authorized claim against the insurance program under 21 AS 21.60.100 - 21.60.300, the legislature may appropriate up to a total of $5,000,000 22 from cash reserves of the Alaska Housing Finance Corporation to the Department of 23 Commerce, Community, and Economic Development to satisfy the unpaid claim. 24 Sec. 21.60.210. Eligibility for state flood insurance. A person determined by 25 the authority to have an insurable interest in insurable property is eligible to enroll in a 26 state plan described in AS 21.60.160. Additional eligibility requirements for 27 enrollment in a state plan may be imposed if approved by the director. 28 Sec. 21.60.220. Enrollment by an eligible person. A person may apply to 29 enroll in a state plan by applying to the authority. The application must include 30 (1) the name, address, and age of the applicant; 31 (2) a description of the property to be insured sufficient for the
01 authority to investigate and determine its insurability; and 02 (3) a designation of the plan desired. 03 Sec. 21.60.230. Response by the authority. (a) Within 90 days after receiving 04 the application described in AS 21.60.220, the authority shall provide the applicant 05 with either a notice of rejection for failing to comply with the requirements of 06 AS 21.60.210 and 21.60.220 or a notice of acceptance. 07 (b) Upon receiving a notice of acceptance under this section, a person may 08 enroll in a state plan by paying the appropriate premium to the authority. 09 Sec. 21.60.240. Effective date of insurance under a state plan. Insurance 10 under a state plan takes effect immediately upon receipt of the first premium if the 11 applicant otherwise complies with the requirements of AS 21.60.100 - 21.60.300. 12 Sec. 21.60.250. Solicitation of eligible persons. (a) The authority, under a 13 plan approved by the director, shall communicate to persons who reside or own 14 property in a special flood hazard area the existence of the state plan and the means of 15 enrollment. Means of communication may include use of the Internet, press, radio, and 16 television, as well as publication through appropriate state offices, state publications, 17 and Internet websites. 18 (b) A person may not sell or market a qualified state plan unless the person is 19 acting within the scope of a license issued in this state. 20 (c) An insurer that rejects or applies underwriting restrictions to an applicant 21 for a flood insurance policy in the state shall notify the applicant of the existence of 22 the state plan, the requirements for being accepted, and the procedure for applying. 23 Sec. 21.60.260. Duties of director; insurance program. The director shall 24 formulate general policy and adopt regulations that are reasonably necessary to 25 administer AS 21.60.100 - 21.60.300. The regulations must 26 (1) establish a reserve for payment of flood claims; and 27 (2) require the amount held in reserve for payment of flood claims to 28 be maintained in an amount required by a private insurer participating in the National 29 Flood Insurance Program based on a similar risk profile. 30 Sec. 21.60.270. State not liable. The state is not liable for acts or omissions of 31 the authority under AS 21.60.100 - 21.60.300.
01 Sec. 21.60.280. Board member civil and criminal immunity. A member of 02 the board may not be held civilly or criminally liable for an act or omission if the act 03 or omission was in good faith and within the scope of the board member's duties under 04 AS 21.60.100 - 21.60.300. 05 Sec. 21.60.290. Alaska flood insurance fund. (a) The Alaska flood insurance 06 fund is established in the general fund. Revenue collected shall be separately 07 accounted for and deposited into the fund. Investment earnings and interest earned on 08 the fund shall be retained in the fund. 09 (b) The legislature may appropriate the annual estimated balance in the fund to 10 the Department of Commerce, Community, and Economic Development to operate the 11 authority and fund the insurance program under AS 21.60.100 - 21.60.300. 12 (c) Payment for claims under the insurance program under AS 21.60.100 - 13 21.60.300 is subject to appropriation. 14 (d) Money in the fund does not lapse. 15 (e) Nothing in this section creates a dedicated fund. 16 (f) Money in the fund may be invested in the same manner and on the same 17 conditions as permitted for investment of money belonging to the state or held in the 18 treasury under AS 37.10.070. 19 Sec. 21.60.300. Definitions. In AS 21.60.100 - 21.60.300, 20 (1) "authority" means the Alaska Flood Authority; 21 (2) "board" means the board of the Alaska Flood Authority; 22 (3) "flood" means a general and temporary condition of partial or 23 complete inundation of normally dry land area from 24 (A) overflow of inland or tidal water; 25 (B) unusual and rapid accumulation or runoff of surface water 26 from any source; or 27 (C) mudflow; 28 (4) "insurable interest" has the meaning given in AS 21.42.030; 29 (5) "insurable property" means real property located in a special flood 30 hazard area in the state and the personal property located on the real property; 31 (6) "property insurance" has the meaning given in AS 21.12.060;
01 (7) "special flood hazard area" means the land in a flood plain in a 02 community subject to a chance of flooding in any given year of one percent or greater 03 where federally mandated purchase of flood insurance applies. 04 * Sec. 4. AS 37.05.146(c) is amended by adding a new paragraph to read: 05 (80) assessments and civil penalties collected under AS 21.60.200. 06 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 07 read: 08 APPLICABILITY. Section 1 of this Act applies to an insurance policy or contract 09 entered into or renewed on or after the effective date of sec. 1 of this Act. 10 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 11 read: 12 TRANSITION: PLAN OF OPERATION. If the Alaska Flood Authority fails to 13 submit a suitable plan of operation by January 1, 2024, the director of the division of 14 insurance may adopt reasonable regulations necessary or advisable to carry out the provisions 15 of this Act. The regulations continue in force until modified by the director or superseded by a 16 plan submitted by the authority and approved by the director. 17 * Sec. 7. Section 6 of this Act takes effect immediately under AS 01.10.070(c). 18 * Sec. 8. Except as provided in sec. 7 of this Act, this Act takes effect July 1, 2023.