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30th Legislature(2017-2018)

Bill Text 30th Legislature


00 Enrolled HB 403                                                                                                         
01 Relating to the Alaska Life and Health Insurance Guaranty Association; and providing for an                             
02 effective date.                                                                                                         
03                           _______________                                                                               
04    * Section 1. AS 21.79.010 is amended to read:                                                                        
05 Sec. 21.79.010. Purpose. The purpose of this chapter is to protect, subject to                                          
06 certain limitations, the persons specified in AS 21.79.020(a) against failure in the                                    
07 performance of contractual obligations under life, [INSURANCE AND] health,                                          
08 [INSURANCE POLICIES] and annuity policies, plans, or contracts specified in                                           
09 AS 21.79.020(b) because of the impairment or insolvency of the member insurer that                                      
10 issued the policies, plans, or contracts. To provide this protection, an association of                               
11 member insurers is created under AS 21.79.040 to pay benefits and continue                                            
12 coverages as limited by this chapter, and members of the association are subject to                                     
13       assessment to provide funds to carry out the purpose of this chapter.                                             
14    * Sec. 2. AS 21.79.020(a) is amended to read:                                                                        
01            (a)  This chapter applies to a policy and contract specified in (b) of this section                          
02       and to a person who                                                                                               
03 (1)  except for a nonresident certificate holder under a group policy or                                                
04 contract, is the beneficiary, assignee, or payee, including health care providers                                     
05 rendering services covered under health insurance policies or certificates, of a                                      
06       person described in (2) of this subsection; and                                                                   
07                 (2)  except in the case of an unallocated annuity contract or a structured                              
08       settlement annuity, is the owner of, or a certificate holder or enrollee under, the policy                      
09       or contract, and who                                                                                              
10                      (A)  is a resident; or                                                                             
11                      (B)  is not a resident, if the following conditions are satisfied:                                 
12 (i)  the member insurer that issued the policy or contract                                                            
13                 is domiciled in this state;                                                                             
14 (ii)  the state in which the person resides has an                                                                      
15                 association similar to the association created by this chapter; and                                     
16 (iii)  the person is not eligible for coverage by an association in any other state                                     
17 due to the fact that the insurer, hospital or medical service corporation, or health                                  
18 maintenance organization was not licensed at the time specified in the guaranty                                     
19       association [AS REQUIRED BY] law of [IN] that state.                                                          
20    * Sec. 3. AS 21.79.020(b) is amended to read:                                                                        
21 (b)  This chapter applies to a person specified in (a) of this section for a policy                                   
22 or contract of [AND TO A] direct, nongroup life insurance, health insurance,                                      
23 annuity, and supplemental policy or contract, to a certificate under a direct group life,                               
24 health, annuity, or supplemental policy or contract, to a subscriber's contract issued                                
25 by a hospital or medical service corporation under AS 21.87, to a subscriber's                                        
26 contract issued by a health maintenance organization under AS 21.86, and to an                                        
27 unallocated annuity contract issued by a member insurer, except as otherwise limited                                    
28 by this chapter. In this subsection, "annuity policy or contract" or "certificate                                     
29 under a direct group life, health, annuity, or supplemental policy or contract"                                       
30 includes a guaranteed investment contract, a deposit administration contract, an                                      
31 unallocated funding agreement, an allocated funding agreement, a structured                                           
01       settlement annuity, an annuity issued to or in connection with a government                                     
02       lottery, and an immediate or deferred annuity contract.                                                         
03    * Sec. 4. AS 21.79.020(c) is amended to read:                                                                        
04            (c)  This chapter does not apply to                                                                          
05                 (1)  that part of a policy or contract that is not guaranteed by the                                    
06       member insurer;                                                                                                 
07                 (2)  that part of the risk borne by the policy or contract owner                                      
08       [HOLDER];                                                                                                         
09                 (3)  a policy or contract of reinsurance, unless an assumption certificate                              
10       has been issued;                                                                                                  
11 (4)  that part of a policy or contract, except for part of a policy or                                                
12 contract, including a rider, that provides long-term care or other health                                             
13 insurance benefits, to the extent that the rate of interest on which it is based, or the                              
14 interest rate, crediting rate, or similar factor determined by use of an index or other                                 
15 external reference stated in the policy or contract employed in calculating returns or                                  
16       changes in value,                                                                                                 
17 (A)  averaged over the period of four years before the date on                                                          
18 which the member insurer becomes an impaired or insolvent insurer under this                                            
19 chapter, whichever occurs first, exceeds the rate of interest determined by                                             
20 subtracting two percentage points from the published monthly average for that                                           
21 same four-year period or for a lesser period if the policy or contract was issued                                       
22 less than four years before the member insurer becomes an impaired or                                                   
23            insolvent insurer under this chapter, whichever occurs first; and                                            
24 (B)  on and after the date on which the member insurer becomes                                                          
25 an impaired or insolvent insurer under this chapter, whichever occurs first,                                            
26 exceeds the rate of interest determined by subtracting three percentage points                                          
27            from the most recent published monthly average;                                                              
28 (5)  a portion of a policy or contract issued to a plan or program of                                                 
29 an employer, association, or similar entity to provide life, health, or an annuity benefit                              
30 to an employee, [OR] member, or other person, to the extent that the plan or program                                
31 is self-funded or uninsured, including a benefit payable by the employer, association,                                  
01       or similar entity under                                                                                           
02                      (A)  a multiple employer welfare arrangement as defined in 29                                      
03            U.S.C. 1002 (Employee Retirement Income Security Act of 1974);                                               
04                      (B)  a minimum premium group insurance plan;                                                       
05                      (C)  a stop-loss group insurance plan; or                                                          
06                      (D)  an administrative services only contract;                                                     
07 (6)  that part of a policy or contract that provides a dividend or                                                      
08 experience rating credit or voting rights, or provides that a fee or allowance be paid to                               
09 a person, including the policy or contract owner [HOLDER], in connection with the                                     
10       service to or administration of the policy or contract;                                                           
11 (7)  a policy or contract issued in this state by a member insurer at a                                                 
12 time when it was not licensed or did not have a certificate of authority to issue the                                   
13       policy or contract in this state;                                                                                 
14 (8)  a person who is a payee or beneficiary of a contract owner                                                       
15 [HOLDER] who is a resident of this state if the payee or beneficiary is provided                                        
16       coverage by the association of another state;                                                                     
17 (9)  a person covered under (d) [(e)] of this section if any coverage is                                              
18       provided by the association of another state to that person;                                                      
19 (10)  an unallocated annuity contract issued to or in connection with a                                                 
20 benefit plan protected under the United States Pension Benefit Guaranty Corporation,                                  
21 regardless of whether the United States Pension Benefit Guaranty Corporation has                                        
22       become liable to make any payments with respect to the benefit plan;                                              
23 (11)  that part of an unallocated annuity contract that is not issued to or                                             
24 in connection with a specific employee, union, or association of natural persons                                        
25       benefit plan or a government lottery;                                                                             
26 (12)  that part of a policy or contract to the extent that assessments                                                  
27       required by AS 21.79.070 with respect to the policy or contract are preempted by law;                             
28 (13)  an obligation that does not arise under the express written terms of                                              
29 the policy or contract issued by the member insurer to the enrollee, certificate                                    
30       holder, contract owner, or policy owner, including, without limitation,                                       
31                      (A)  a claim based on marketing materials;                                                         
01                      (B)  a claim based on a side letter or other document that was                                     
02            issued by the member insurer without meeting applicable policy or contract                               
03            form filing or approval requirements;                                                                        
04                      (C)  a misrepresentation of or regarding policy or contract                                      
05            benefits;                                                                                                    
06                      (D)  an extra contractual claim; or                                                                
07                      (E)  a claim for penalties or consequential or incidental                                          
08            damages;                                                                                                     
09                 (14)  a contractual agreement that establishes the member insurer's                                     
10 obligations to provide a book value accounting guaranty for defined contribution                                        
11 benefit plan participants by reference to a portfolio of assets that is owned by the                                    
12 benefit plan or its trustee, which, in each case, is not an affiliate of the member                                     
13       insurer; [OR]                                                                                                     
14 (15)  that part of a policy or contract to the extent the part of the policy                                            
15 or contract provides for interest or other changes in value to be determined by the use                                 
16 of an index or other external reference stated in the policy or contract, but that have                                 
17 not been credited to the policy or contract, or as to which the policy or contract                                      
18 owner's rights are subject to forfeiture, as of the date the member insurer becomes an                                  
19 impaired or insolvent insurer under this chapter, whichever is earlier; if a policy's or                                
20 contract's interest or changes in value are credited less frequently than annually, then,                               
21 for purposes of determining the values that have been credited and are not subject to                                   
22 forfeiture under this paragraph, the interest or change in value determined by using the                                
23 procedures defined in the policy or contract shall be credited as if the contractual date                               
24 of crediting interest or changing values was the date of impairment or insolvency,                                      
25       whichever is earlier, and will not be subject to forfeiture;                                                    
26 (16)  a policy or contract providing a hospital, medical,                                                             
27 prescription drug, or other health care benefit in accordance with 42 U.S.C.                                          
28       1395w-21 - 1395w-154 or federal regulations adopted under those sections;                                       
29 (17)  a person who acquires rights to receive payments through a                                                      
30 structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A),                                    
31 regardless of whether the transaction occurred before, on, or after 26 U.S.C.                                         
01       5891(c)(3)(A) became effective; or                                                                              
02 (18)  structured settlement annuity benefits to which a payee or                                                      
03 beneficiary has transferred the payee's or beneficiary's rights in a structured                                       
04 settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless                                    
05 of whether the transaction occurred before, on, or after 26 U.S.C. 5891(c)(3)(A)                                      
06       became effective.                                                                                               
07    * Sec. 5. AS 21.79.020(d) is amended to read:                                                                        
08            (d)  This chapter, except for (a) of this section, applies to an unallocated                                 
09       annuity contract [SPECIFIED UNDER (b) OF THIS SECTION,] and shall provide                                         
10       coverage to a person who is the owner of                                                                          
11 (1)  the unallocated annuity contract if the contract is issued to or in                                                
12 connection with a specific benefit plan whose plan sponsor has its principal place of                                   
13       business in this state; and                                                                                       
14 (2)  an unallocated annuity contract issued to or in connection with a                                                  
15       government lottery if the owner is a resident.                                                                    
16    * Sec. 6. AS 21.79.020(e) is amended to read:                                                                        
17 (e)  This chapter, except for (a) of this section, applies to a structured                                              
18 settlement annuity [SPECIFIED UNDER (b) OF THIS SECTION,] and shall provide                                             
19 coverage to a person who is a payee under a structured settlement annuity, or the                                       
20       beneficiary of a payee if the payee is deceased, if the payee is                                                  
21                 (1)  a resident, regardless of where the contract owner resides; or                                     
22 (2)  not a resident, but only if both of the following conditions exist                                               
23       [EXISTS]:                                                                                                         
24                      (A)  the contract owner of the structured settlement annuity is                                    
25                           (i)  a resident; or                                                                           
26 (ii)  not a resident, but the insurer that issued the                                                                   
27 structured settlement annuity is domiciled in this state, and the state in                                              
28 which the contract owner resides has an association similar to the                                                      
29                 association created by this chapter; and                                                                
30 (B)  the payee, or the payee's beneficiary, and the contract                                                            
31 owner are not eligible for coverage by the association of the state in which the                                        
01            payee or contract owner resides.                                                                             
02    * Sec. 7. AS 21.79.025(a) is amended to read:                                                                        
03            (a)  The benefits for which the association may become liable may not exceed                                 
04       the lesser of                                                                                                     
05                 (1)  the contractual obligations for which the member insurer is liable                               
06       or would have been liable if it were not an impaired or insolvent insurer;                                        
07                 (2)  with respect to any one life, regardless of the number of policies or                              
08       contracts,                                                                                                        
09                      (A)  $300,000 in life insurance death benefits, but not more than                                  
10 $100,000 in net cash surrender and net cash withdrawal values for life                                                  
11            insurance;                                                                                                   
12                      (B)  for [IN] health insurance benefits,                                                         
13 (i)  $100,000 for coverage not defined as disability                                                                    
14 income insurance, health benefit plans, or long-term care insurance,                                                
15 [OR BASIC HOSPITAL, MEDICAL, AND SURGICAL                                                                               
16 INSURANCE OR MAJOR MEDICAL INSURANCE,] including any                                                                    
17                 net cash surrender and net cash withdrawal values;                                                      
18 (ii)  $300,000 for disability income insurance as defined                                                             
19 in AS 21.12.052 and $300,000 for long-term care insurance as defined                                                  
20                 in AS 21.53.200;                                                                                        
21 (iii)  $500,000 for health benefit plans [BASIC                                                                       
22 HOSPITAL, MEDICAL, AND SURGICAL INSURANCE OR                                                                            
23                 MAJOR MEDICAL INSURANCE];                                                                               
24 (C)  $250,000 in the present value of annuity benefits, including                                                       
25            net cash surrender and net cash withdrawal values;                                                           
26 (3)  with respect to either [ANY] one contract owner provided                                                       
27 coverage under AS 21.79.020(d)(2) [HOLDER] or one plan sponsor whose plan                                           
28 owns directly or in trust one or more unallocated annuity contracts not included in (4)                                 
29 of this subsection, $5,000,000 in unallocated annuity contract benefits, irrespective of                                
30 the number of contracts held by that contract owner [HOLDER] or plan sponsor                                          
31 except that, in the case of one or more unallocated annuity contracts that are covered                                  
01 under this chapter and that are owned by a trust or other entity for the benefit of two or                              
02 more plan sponsors, coverage shall be provided by the association if the largest                                        
03 interest in the trust or entity owning the contract is held by a plan sponsor whose                                     
04 principal place of business is in this state; however, the association is not liable to                                 
05 cover more than $5,000,000 in benefits, regardless of the number of policies and                                      
06 contracts held by the owner [WITH RESPECT TO AN UNALLOCATED                                                           
07       ANNUITY CONTRACT NOT INCLUDED IN (4) OF THIS SUBSECTION];                                                         
08 (4)  with respect to an individual participating in a governmental                                                      
09 retirement benefit plan established under 26 U.S.C. 401, 26 U.S.C. 403(b), or 26                                        
10 U.S.C. 457 and covered by an unallocated annuity contract, or to a beneficiary of the                                   
11 individual if the individual is deceased, in the aggregate, $250,000 [$100,000] in                                    
12 present-value annuity benefits, including net cash surrender and net cash withdrawal                                    
13       values; or                                                                                                        
14 (5)  with respect to each payee of a structured settlement annuity, or                                                  
15 beneficiary of the payee if the payee is deceased, $250,000 [$100,000] in present-                                    
16 value annuity benefits in the aggregate, including net cash surrender and net cash                                      
17       withdrawal values, if any.                                                                                        
18    * Sec. 8. AS 21.79.025(c) is amended to read:                                                                        
19 (c)  In providing coverage required under AS 21.79.060, the association may                                             
20 not be required to guarantee, assume, reissue, reinsure, or perform, or cause to be                                   
21 guaranteed, assumed, reissued, reinsured, or performed, the contractual obligations of                                
22 an insolvent or impaired insurer under a covered policy or contract when the                                            
23 obligations do not materially affect the economic values or economic benefits of the                                    
24       covered policy or contract.                                                                                       
25    * Sec. 9. AS 21.79.025(d) is amended to read:                                                                        
26            (d)  The association may not be required to cover more than                                                  
27 (1)  an aggregate of $300,000 in benefits with respect to any one life                                                  
28 under (a)(2), (4), and (5) of this section, except that, with respect to benefits for health                          
29 benefit plans [BASIC HOSPITAL, MEDICAL, AND SURGICAL INSURANCE OR                                                     
30 MAJOR MEDICAL INSURANCE] under (a)(2)(B) of this section, the aggregate                                                 
31       liability of the association may not exceed $500,000 for any one individual; or                                   
01 (2)  $5,000,000 in benefits with respect to one owner of [OR] multiple                                                
02 nongroup policies of life insurance, whether the policy or contract owner is an                                       
03 individual, firm, corporation, or other person, and whether the persons insured are                                     
04 officers, managers, employees, or other persons, regardless of the number of policies                                   
05       and contracts held by the owner.                                                                                  
06    * Sec. 10. AS 21.79.025 is amended by adding a new subsection to read:                                               
07            (e)  For purposes of this chapter, benefits provided by a long-term care rider to                            
08       a life insurance policy or annuity contract will be considered the same type of benefits                          
09       as the base life insurance policy or annuity contract to which the rider relates.                                 
10    * Sec. 11. AS 21.79.040(a) is amended to read:                                                                       
11 (a)  There is established as a nonprofit legal entity the Alaska Life and Health                                        
12 Insurance Guaranty Association. Each member insurer shall be a member of the                                            
13 association as a condition of the insurer's authority to transact insurance, a hospital or                            
14 medical service corporation business, or a health maintenance organization                                            
15 business in this state. The association shall perform its functions under a plan of                                   
16 operation established and approved under AS 21.79.080 and shall exercise its powers                                     
17 through the Board of Governors established under AS 21.79.050. For purposes of                                          
18       administration and assessment, the association shall maintain the following accounts:                             
19                 (1)  the health [INSURANCE] account; and                                                                
20 (2)  the life insurance and annuity account, including the following                                                    
21       subaccounts:                                                                                                      
22                      (A)  life insurance account;                                                                       
23 (B)  annuity account that must include annuity contracts owned                                                          
24 by a governmental retirement benefit plan, or its trustee, qualified under 26                                           
25 U.S.C. 401, 26 U.S.C. 403(b), or 26 U.S.C. 457 (Internal Revenue Code), but                                             
26            that otherwise excludes unallocated annuities; and                                                           
27 (C)  unallocated annuity account that must exclude contracts                                                            
28 owned by a governmental retirement benefit plan, or its trustee, qualified under                                        
29            26 U.S.C. 401, 26 U.S.C. 403(b), or 26 U.S.C. 457 (Internal Revenue Code).                                   
30    * Sec. 12. AS 21.79.050(a) is amended to read:                                                                       
31 (a)  The Board of Governors of the association consists of not less than seven                                        
01 [FIVE] nor more than 11 [NINE] representatives of member insurers. The director                                       
02 may appoint two individuals as members of the board to represent the public. Terms of                                   
03 office for board members shall be established in the plan of operation submitted under                                  
04 AS 21.79.080. Member insurers shall select the insurer board members, subject to the                                    
05 approval of the director. A vacancy in a board membership held by an insurer member                                     
06 shall be filled for the unexpired term by a majority vote of the remaining board                                        
07 members, subject to the approval of the director. A vacancy in a board membership                                       
08 held by a representative of the public shall be filled by the director. A board member                                  
09 who represents the public may not be an officer, director, or employee of an insurer,                                 
10 hospital or medical service corporation, or health maintenance organization and                                       
11       may not be engaged in the business of insurance.                                                                  
12    * Sec. 13. AS 21.79.060(a) is amended to read:                                                                       
13 (a)  If a member insurer becomes impaired, the association may, with the                                                
14 approval of the director and subject to any conditions imposed by the association that                                  
15       do not impair the contractual obligations of the impaired insurer,                                                
16 (1)  guarantee, assume, reissue, reinsure, or provide for the guarantee,                                              
17 assumption, reissuance, or reinsurance of the policies or contracts of the impaired                                   
18       insurer; and [OR]                                                                                               
19 (2)  provide money, pledges, loans, notes, guarantees, or other means                                                 
20 that are necessary to act under (1) of this subsection and to assure payment of the                                     
21 contractual obligations of the impaired insurer until those obligations are guaranteed,                                 
22       reinsured, or assumed.                                                                                            
23    * Sec. 14. AS 21.79.060(d) is amended to read:                                                                       
24 (d)  If a member insurer becomes insolvent, the association shall, in its                                               
25       discretion and with the approval of the director,                                                                 
26 (1)  guarantee, assume, reissue, reinsure, or provide for the guarantee,                                              
27 assumption, reissuance, or reinsurance of the covered policies or contracts of the                                  
28 insolvent insurer, or otherwise assure payment of the contractual obligations of                                      
29 the insolvent insurer; and provide money, pledges, loans, notes, guarantees, or                                       
30 other means that are necessary to discharge the association's duties under this                                       
31       section; or                                                                                                     
01 (2)  provide benefits and coverage in accordance with the following                                                   
02       provisions:                                                                                                     
03 (A)  with respect to policies and contracts, assure payment                                                           
04 of benefits that would have been payable under a policy or contract of the                                            
05            insolvent insurer for claims incurred with respect to                                                      
06 (i)  a group policy or contract, not later than the                                                                   
07 earlier of the next renewal date under the policy or contract or 45                                                   
08 days, but in no event less than 30 days, after the date on which the                                                  
09 association becomes obligated with respect to the policy or                                                           
10                 contract;                                                                                             
11 (ii)  an individual policy, contract, or annuity, not                                                                 
12 later than the earlier of the next renewal date, if any, under the                                                    
13 policy or contract or one year, but in no event less than 30 days,                                                    
14 after the date on which the association becomes obligated with                                                        
15                 respect to the policy or contract;                                                                    
16 (B)  with respect to an individual or group policy or                                                                 
17 contract, make a diligent effort to provide a known insured, an enrollee,                                             
18 an annuitant, or a group policy owner or group contract owner 30 days'                                                
19            notice of the termination of the benefits provided;                                                        
20 (C)  with respect to an individual policy or contract, make                                                           
21 available to each known insured, enrollee, or annuitant, or owner if other                                            
22 than an insured, enrollee, or annuitant, and with respect to an individual                                            
23 who was formerly an insured, enrollee, or annuitant under a group policy                                              
24 or contract who is not eligible for replacement group coverage, make                                                  
25 available substitute coverage on an individual basis under (D) of this                                                
26 paragraph, if the insured, enrollee, or annuitant had a right under law or                                            
27 under the terminated policy or contract to convert coverage to individual                                             
28 coverage or to continue an individual policy or contract in force until a                                             
29 specified age, or for a specific time during which the insurer, hospital or                                           
30 medical service corporation, or health maintenance organization did not                                               
31 have the unilateral right to make changes in any provision of the policy or                                           
01            contract or had a right only to make changes in premium by class;                                          
02                      (D)  in providing the substitute coverage under (C) of this                                      
03            paragraph, the association                                                                                 
04                           (i)  shall offer either to reissue the terminated                                           
05                 coverage or to issue an alternate policy or contract at actuarially                                   
06                 justified rates;                                                                                      
07 (ii)  shall offer an alternative or reissued policy or                                                                
08 contract without requiring evidence of insurability and may not                                                       
09 provide for a waiting period or exclusion that would not have                                                         
10                 applied under the terminated policy or contract; and                                                  
11 (iii)  may reinsure an alternative or reissued policy or                                                              
12                 contract;                                                                                             
13                      (E)  an alternative policy or contract must                                                      
14 (i)  if adopted by the association, be subject to the                                                                 
15 approval of the director; the association may adopt alternative                                                       
16 policies or contracts of various types for future issuance without                                                    
17                 regard to a particular impairment or insolvency;                                                      
18 (ii)  contain at least the minimum statutory                                                                          
19 provisions required in the state and provide benefits that may not                                                    
20 be unreasonable in relation to the premium charged; the                                                               
21 association shall set the premium under a table of rates that it shall                                                
22 adopt; the premium must reflect the amount of insurance to be                                                         
23 provided and the age and class of risk of each insured, but may not                                                   
24 reflect changes in the health of the insured after the original policy                                                
25                 or contract was last underwritten;                                                                    
26 (iii)  if issued by the association, provide coverage of                                                              
27 a type similar to that of the policy or contract issued by the                                                        
28                 impaired or insolvent insurer, as determined by the association;                                      
29 (F)  if the association elects to reissue terminated coverage                                                         
30 at a premium rate different from that charged under the terminated                                                    
31 policy or contract, the premium shall be actuarially justified and set by                                             
01 the association according to the amount of insurance or coverage provided                                             
02            and the age and class of risk;                                                                             
03 (G)  the association's obligations with respect to coverage                                                           
04 under a policy or contract of an impaired or insolvent insurer or under a                                             
05 reissued or alternative policy or contract stop on the date the coverage,                                             
06 policy, or contract is replaced by another similar policy or contract by the                                          
07            policy or contract owner, the insured, the enrollee, or the association;                                   
08 (H)  when proceeding under this subsection with respect to a                                                          
09 policy or contract carrying guaranteed minimum interest rates, the                                                    
10 association shall assure the payment or crediting of a rate of interest                                               
11            consistent with AS 21.79.020(c)(4) [HELD BY RESIDENTS;                                                     
12 (2)  ASSURE PAYMENT TO RESIDENTS OF THE                                                                                 
13       CONTRACTUAL OBLIGATIONS OF THE INSOLVENT INSURER;                                                                 
14 (3)  PROVIDE MONEY, PLEDGES, NOTES, GUARANTEES, OR                                                                      
15 OTHER MEANS NECESSARY TO DISCHARGE THE ASSOCIATION'S DUTIES                                                             
16       UNDER THIS SUBSECTION; OR                                                                                         
17 (4)  WITH RESPECT ONLY TO LIFE AND HEALTH INSURANCE                                                                     
18 POLICIES AND ANNUITIES, PROVIDE BENEFITS AND COVERAGES                                                                  
19       REQUIRED UNDER (e) OF THIS SECTION].                                                                              
20    * Sec. 15. AS 21.79.060(k) is amended to read:                                                                       
21 (k)  Nonpayment of a premium within 31 days after the date required under the                                           
22 terms of a guaranteed, assumed, alternative or reissued policy or contract or substitute                                
23 coverage terminates the obligations of the association under the policy, contract, or                                 
24 coverage except with respect to the claims incurred or the net cash surrender value that                                
25       may be due under the provisions of this chapter.                                                                  
26    * Sec. 16. AS 21.79.060(l) is amended to read:                                                                       
27 (l)  A premium due for coverage after entry of an order of liquidation of an                                            
28 insolvent insurer belongs to and is payable at the direction of the association. Upon                                 
29 request of a liquidator of an insolvent insurer, the association shall provide a                                      
30 report to the liquidator regarding the premium collected by the association. The                                      
31 [, AND THE] association is liable for unearned premiums due to a policy or contract                                     
01       owner arising after the entry of the order.                                                                       
02    * Sec. 17. AS 21.79.060(n) is amended to read:                                                                       
03 (n)  In carrying out its duties under [(a), (c), AND] (d) of this section, the                                          
04 association may impose a permanent policy or contract lien under a guarantee,                                           
05 assumption, or reinsurance agreement if the policy or contract lien is approved by a                                    
06       court and the association finds that                                                                              
07 (1)  the amount that may be assessed under this chapter is less than the                                                
08 amount needed to assure full and prompt performance of the association's duties                                       
09 under this chapter [INSOLVENT INSURER'S CONTRACTUAL OBLIGATIONS];                                                     
10       or                                                                                                                
11 (2)  the economic or financial condition that affects member insurers is                                                
12 sufficiently adverse that the imposition of a policy or contract lien is in the public                                  
13       interest.                                                                                                         
14    * Sec. 18. AS 21.79.060(o) is amended to read:                                                                       
15 (o)  In carrying out its duties [BEFORE TAKING ACTION] under (d) [(a) -                                             
16 (e)] of this section, the association may request the superior court to impose an                                       
17 injunction against the payment of a cash value and policy loan, or the exercise of                                      
18 another right to withdraw funds held in connection with a policy or contract, in                                        
19 addition to a contractual provision for deferral of a cash or policy loan value. In                                     
20 addition, if the receivership court imposes an injunction on payment of cash values or                                  
21 policy loans or on any other right to withdraw funds of an impaired or insolvent                                        
22 insurer held in conjunction with a policy or contract, the association may defer                                        
23 payment of cash values, policy loans, or other rights for the period of the injunction,                                 
24 except for claims covered by the association to be paid as required by a hardship                                       
25 procedure established by the liquidator or rehabilitator and approved by the                                            
26       receivership court.                                                                                               
27    * Sec. 19. AS 21.79.060(p) is amended to read:                                                                       
28 (p)  If the association fails to take action under (d) [(a) - (e)] of this section                                    
29 within a reasonable period of time after a member insurer becomes insolvent, the                                        
30       director shall assume the powers of the association under (d) [(a) - (e)] of this section.                      
31    * Sec. 20. AS 21.79.060(s) is amended to read:                                                                       
01 (s)  A person who receives benefits under this chapter is considered to have                                            
02 assigned the rights under, and any cause of action against a person for losses arising                                  
03 under, resulting from, or otherwise relating to, the covered policy to the association to                               
04 the extent of the benefits received under this chapter, whether the benefits are payment                                
05 of or on account of contractual obligations, continuations of coverage, or provisions of                                
06 substitute or alternative policies, contracts, or coverages [COVERAGE]. The                                           
07 association may require an assignment to the association of those rights by the                                         
08 enrollee, payee [PAYEES], policy or contract owner, beneficiary, insured, or                                          
09 annuitant before a person receives the rights or benefits conferred by this chapter. The                                
10 priority of the association's subrogation right to the assets of the insolvent insurer is                               
11 the same as the priority of the person entitled to benefits under this chapter. In addition                             
12 to the rights described in this subsection, the association has common law rights of                                    
13 subrogation and any other equitable or legal remedy that would have been available to                                   
14 the impaired or insolvent insurer or owner, beneficiary, enrollee, or payee of a policy                               
15 or contract with respect to the policy or contract. These rights include, in the case of                            
16 a structured settlement annuity, the rights of the enrollee, owner, beneficiary, or payee                             
17 of the annuity, to the extent of benefits received under this chapter, against a person                                 
18 originally or by succession responsible for the losses arising from the personal injury                                 
19 relating to the annuity or annuity payment, except for a person responsible solely by                                   
20 reason of being an assignee in respect to a qualified assignment under 26 U.S.C. 130                                    
21 (Internal Revenue Code). If the provisions of this subsection are invalid with respect                                  
22 to a person or claim, the amount payable by the association with respect to the related                                 
23 coverage obligation shall be reduced by the amount realized by another person from                                      
24 the person or claim covered by the association. If the association has provided benefits                                
25 with respect to a covered obligation and a person recovers amounts to which the                                         
26 association has rights as described in this subsection, the person recovering the                                       
27 amounts shall pay to the association the portion of the recovery attributable to the                                    
28       policies or contracts [POLICY] covered by the association.                                                      
29    * Sec. 21. AS 21.79.060(t) is amended to read:                                                                       
30 (t)  In addition to the rights and powers otherwise established in this chapter,                                        
31       the association may                                                                                               
01                 (1)  enter into contracts that are necessary or proper to carry out the                                 
02       provisions of this chapter;                                                                                       
03                 (2)  sue or be sued, and take legal action necessary or proper for                                      
04       recovery of an unpaid assessment under AS 21.79.070 or settlement of a claim or                                   
05       potential claim;                                                                                                  
06                 (3)  borrow money to carry out the purposes of this chapter; notes or                                   
07       other evidence of indebtedness of the association not in default are legal investments                            
08       for domestic member insurers and may be carried as admitted assets;                                             
09                 (4)  employ or retain those persons necessary to handle the financial                                   
10       transactions of the association and other functions under this chapter;                                           
11 (5)  negotiate and contract with a liquidator, rehabilitator, conservator,                                              
12       or ancillary receiver to carry out the powers and duties of the association;                                      
13 (6)  exercise, for the purposes of this chapter and to the extent approved                                              
14 by the director, the powers of a domestic life insurer, [OR] health insurer, hospital or                            
15 medical service corporation, or health maintenance organization; however, the                                         
16 association may not issue [INSURANCE] policies or [ANNUITY] contracts other                                             
17 than those issued to perform its obligations under this chapter [THE                                                  
18 CONTRACTUAL OBLIGATIONS OF AN IMPAIRED OR INSOLVENT                                                                     
19       INSURER];                                                                                                         
20 (7)  take legal action to prevent or recover the payment of improper                                                  
21       claims;                                                                                                           
22 (8)  join an organization of one or more other state associations with                                                  
23       similar purposes;                                                                                                 
24 (9)  determine, using reasonable business judgment, the means by                                                        
25 which the association is to provide the benefits of this chapter in an economical and                                   
26       efficient manner;                                                                                                 
27 (10)  request information from a person seeking coverage from the                                                       
28 association in order to determine the obligations of the association under this chapter;                                
29 a person receiving a request under this paragraph shall promptly comply with the                                        
30       request;                                                                                                          
31 (11)  request information from a member insurer in order to aid in the                                                  
01       exercise of a power under this section; a member insurer receiving a request under this                           
02       paragraph shall promptly comply with the request; [AND]                                                           
03                 (12)  unless prohibited by law, in accordance with the terms of the                                   
04       policy or contract, file for actuarially justified rates or premium increases for a                             
05       policy or contract for which it provides coverage under this chapter; and                                       
06                 (13)  perform all other acts necessary or proper to implement this                                    
07       chapter.                                                                                                          
08    * Sec. 22. AS 21.79.060 is amended by adding a new subsection to read:                                               
09            (aa)  The rights and obligations of the association, reinsurers of an insolvent                              
10 insurer, and the receiver of an insolvent insurer are governed by the following                                         
11       provisions:                                                                                                       
12 (1)  not later than 180 days after the date of the order of liquidation, the                                            
13 association may elect to succeed to the rights and obligations of the ceding member                                     
14 insurer that relate to policies, contracts, or annuities covered, in whole or in part, by                               
15 the association, in each case under any one or more reinsurance contracts entered into                                  
16 by the insolvent insurer and its reinsurers and selected by the association; an                                         
17 assumption is effective as of the date of the order of liquidation; the election shall be                               
18 effected by the association or the National Organization of Life and Health Insurance                                   
19 Guaranty Associations on the association's behalf by written notice, return receipt                                     
20 requested, to the affected reinsurers; to facilitate the earliest practicable decision about                            
21 whether to assume any of the contracts of reinsurance and to protect the financial                                      
22 position of the estate, as soon as possible after commencement of formal delinquency                                    
23 proceedings, the receiver and each reinsurer of the ceding member insurer shall make                                    
24 available, upon request, to the association or the National Organization of Life and                                    
25       Health Insurance Guaranty Associations on the association's behalf                                                
26 (A)  copies of in-force contracts of reinsurance and all related                                                        
27 files and records relevant to the determination of whether those contracts                                              
28            should be assumed; and                                                                                       
29 (B)  notices of any defaults under the reinsurance contracts or                                                         
30 any known event or condition that, with the passage of time, could become a                                             
31            default under the reinsurance contracts;                                                                     
01 (2)  as to reinsurance contracts assumed by the association under this                                                  
02       subsection,                                                                                                       
03 (A)  the association is responsible for all unpaid premiums due                                                         
04 under the reinsurance contracts for periods before, on, and after the date of the                                       
05 order of liquidation and is responsible for the performance of all other                                                
06 obligations to be performed on and after the date of the order of liquidation in                                        
07 each case that relates to policies, contracts, or annuities covered, in whole or in                                     
08 part, by the association; the association may charge policies, contracts, or                                            
09 annuities covered in part by the association, through reasonable allocation                                             
10 methods, the costs for reinsurance in excess of the obligations of the                                                  
11 association and shall provide notice and an accounting of those charges to the                                          
12            liquidator;                                                                                                  
13 (B)  the association is entitled to any amounts payable by the                                                          
14 reinsurer under the reinsurance contracts with respect to losses or events that                                         
15 occur in periods on and after the date of the order of liquidation and that relate                                      
16 to policies, contracts, or annuities covered, in whole or in part, by the                                               
17 association, if, upon receiving those amounts, the association is obliged to pay                                        
18 to the beneficiary, under the policy, contract, or annuity for which the amounts                                        
19            were paid, a portion of the amount equal to the lesser of the amount                                         
20                           (i)  received by the association; and                                                         
21 (ii)  by which the amount received by the association                                                                   
22 exceeds the amount equal to the benefits paid by the association under                                                  
23 the policy, contract, or annuity, less the amount retained by the insurer                                               
24                 applicable to the loss or event;                                                                        
25 (C)  not later than 30 days after the association's election, the                                                       
26 association and each reinsurer under contracts assumed by the association shall                                         
27 calculate the net balance due to or from the association under each reinsurance                                         
28 contract as of the election date with respect to policies, contracts, or annuities                                      
29 covered, in whole or in part, by the association; in making the calculation, the                                        
30 association and reinsurer shall give full credit to all items paid by either the                                        
31 member insurer or its receiver or the reinsurer before the election date; the                                           
01 reinsurer shall pay the receiver any amounts due for losses or events before the                                        
02 date of the order of liquidation, subject to any set-off for premiums unpaid for                                        
03 periods before the date, and the association or reinsurer shall pay any                                                 
04 remaining balance due the other, in each case, not later than five days after the                                       
05 completion of the calculation; a dispute over the amount due to the association                                         
06 or reinsurer shall be resolved by arbitration under the terms of the affected                                           
07 reinsurance contract or, if the contract does not contain an arbitration clause, as                                     
08 otherwise provided by law; if the receiver has received an amount due to the                                            
09 association under (B) of this paragraph, the receiver shall remit the amount to                                         
10            the association as promptly as practicable;                                                                  
11 (D)  if the association or receiver on the association's behalf, not                                                    
12 later than 60 days after the election date, pays the unpaid premiums due for                                            
13 periods both before and after the election date that relate to policies, contracts,                                     
14 or annuities covered, in whole or in part, by the association, the reinsurer may                                        
15 not terminate the reinsurance contracts for failure to pay premium insofar as                                           
16 the reinsurance contracts relate to policies, contracts, or annuities covered, in                                       
17 whole or in part, by the association, and may not set off an unpaid amount due                                          
18 under another contract or an unpaid amount due from a party other than the                                              
19            association against amounts due to the association;                                                          
20 (3)  during the period from the date of the order of liquidation until the                                              
21 election date, or, if the election date does not occur, until 180 days after the date of the                            
22       order of liquidation,                                                                                             
23 (A)  neither the association nor the reinsurer shall have any                                                           
24 rights or obligations under reinsurance contracts that the association has the                                          
25 right to assume, whether for periods before, on, or after the date of the order of                                      
26            liquidation; and                                                                                             
27 (B)  the reinsurer, the receiver, and the association shall, to the                                                     
28 extent practicable, provide to each other data and records reasonably requested,                                        
29 if, once the association has elected to assume a reinsurance contract, the                                              
30            parties' rights and obligations are governed by this subsection;                                             
31 (4)  if the association does not elect to assume a reinsurance contract by                                              
01 the election date, the association does not have rights or obligations, in each case for                                
02 periods before, on, and after the date of the order of liquidation, with respect to the                                 
03       reinsurance contract;                                                                                             
04 (5)  when policies, contracts, annuities, or covered obligations with                                                   
05 respect to policies or annuities are transferred to an assuming insurer, the association                                
06 may also transfer reinsurance on the policies, contracts, or annuities, in the case of                                  
07       contracts assumed by the association, subject to the following:                                                   
08 (A)  unless the reinsurer and the assuming insurer agree                                                                
09 otherwise, the reinsurance contract transferred may not cover any new policies                                          
10            or insurance, contracts, or annuities in addition to those transferred;                                      
11 (B)  the obligations described in (1) of this subsection do not                                                         
12 apply with respect to matters arising on and after the effective date of the                                            
13            transfer; and                                                                                                
14 (C)  notice shall be given in writing, return receipt requested, by                                                     
15 the transferring party to the affected reinsurer not less than 30 days before the                                       
16            effective date of the transfer;                                                                              
17 (6)  the provisions of this subsection supersede the provisions of any                                                  
18 state law or of any affected reinsurance contract that provides for or requires any                                     
19 payment of reinsurance proceeds, on account of losses or events that occur in periods                                   
20 on and after the date of the order of liquidation, to the receiver of the insolvent insurer                             
21 or another person; the receiver shall remain entitled to any amounts payable by the                                     
22 reinsurer under the reinsurance contracts with respect to losses or events that occur in                                
23       periods before the date of the liquidation, subject to applicable set-off provisions;                             
24 (7)  except as otherwise provided in this section, nothing in this                                                      
25       subsection                                                                                                        
26 (A)  alters or modifies the terms and conditions of a reinsurance                                                       
27            contract;                                                                                                    
28 (B)  abrogates or limits the right of a reinsurer to claim that the                                                     
29            reinsurer is entitled to rescind a reinsurance contract;                                                     
30 (C)  gives a policy or contract owner, enrollee, certificate                                                            
31 holder, or beneficiary an independent cause of action against a reinsurer that is                                       
01            not otherwise set out in the reinsurance contract;                                                           
02                      (D)  limits or affects the association's rights as a creditor of the                               
03            estate against the assets of the estate; and                                                                 
04                      (E)  applies to a reinsurance agreement covering property or                                       
05            casualty risks.                                                                                              
06    * Sec. 23. AS 21.79.070(a) is amended to read:                                                                       
07 (a)  For the purpose of providing funds necessary to carry out the powers and                                           
08 duties of the association, the Board of Governors shall by resolution assess the                                      
09 member insurers, separately for each account, at a time and for an amount that the                                      
10 board finds necessary. Assessments are authorized when a resolution is passed and                                     
11 are due not less than 30 days after prior written notice to the member insurers and                                   
12 accrue interest at 10 percent a year from the date payment is due. Authorized                                         
13 assessments become called when notice is mailed by the association to member                                          
14       insurers.                                                                                                       
15    * Sec. 24. AS 21.79.070(c) is amended to read:                                                                       
16 (c)  The amount of a class A assessment shall be determined by the board and                                            
17 may be made on a pro rata or non pro rata basis. If a pro rata assessment is made, the                                  
18 board may provide that it be credited against future class B assessments. [A NON                                        
19 PRO RATA ASSESSMENT MAY NOT EXCEED $250 PER MEMBER INSURER                                                              
20 IN A CALENDAR YEAR.] The amount of a class B assessment, except for                                                   
21 assessments related to long-term care insurance, shall be allocated for assessment                                    
22 purposes between [AMONG] the accounts and among the subaccounts of the life                                         
23 insurance and annuity account under an allocation formula that may be based on the                                    
24 premiums or reserves of the impaired or insolvent insurer or by another standard                                        
25 determined by the board in its sole discretion as being fair and reasonable under the                                   
26 circumstances. The amount of the class B assessment for long-term care insurance                                      
27 written by the impaired or insolvent insurer shall be allocated according to a                                        
28 methodology included in the association's plan of operation approved by the                                           
29 director. The methodology must provide for 50 percent of the assessment to be                                         
30 allocated to accident and health member insurers and 50 percent to be allocated                                       
31       to life and annuity member insurers.                                                                            
01    * Sec. 25. AS 21.79.070(f) is amended to read:                                                                       
02 (f)  Except as provided in this subsection, the total of all assessments on a                                           
03 member insurer for each subaccount of the life and annuity account and for the health                                   
04 account may not in any one calendar year exceed two percent of the member insurer's                                   
05 average annual premiums received in this state on policies or contracts covered by the                                  
06 account or subaccount during the three calendar years preceding the year in which the                                   
07 member insurer became an impaired or insolvent insurer. If two or more assessments                                    
08 are authorized in one calendar year with respect to member insurers that become                                       
09 impaired or insolvent in different calendar years, the average annual premiums for                                      
10 purposes of the aggregate assessment percentage limitation imposed under this                                           
11 subsection shall be limited to the highest of the average annual premiums during the                                    
12 preceding three calendar years for the applicable subaccount or account as calculated                                   
13 under this section. If the maximum assessment, together with the other assets of the                                    
14 association in an account, does not provide in any one year in either account an                                        
15 amount sufficient to carry out the responsibilities of the association, the necessary                                   
16       additional funds shall be assessed as soon as permitted by this chapter.                                          
17    * Sec. 26. AS 21.79.070(j) is amended to read:                                                                       
18 (j)  The board may, by an equitable method as established in the plan of                                                
19 operation, refund to member insurers, in proportion to the contribution of each                                         
20 member insurer to that account, the amount by which the assets of the account exceed                                  
21 the amount the board finds is necessary to carry out during the coming year the                                         
22 obligations of the association with regard to that account, including assets accruing                                   
23 from assignment, subrogation, net realized gains, and income from investments. A                                        
24 reasonable amount may be retained in any account to provide funds for the continuing                                    
25       expenses of the association and for future losses claims.                                                         
26    * Sec. 27. AS 21.79.070(k) is amended to read:                                                                       
27 (k)  A member insurer may, in determining its premium rates and policy owner                                            
28 dividends as to any kind of insurance, hospital or medical service corporation                                        
29 business, or health maintenance organization business within the scope of this                                        
30 chapter, consider the amount reasonably necessary to meet its assessment obligations                                    
31       under this chapter.                                                                                               
01    * Sec. 28. AS 21.79.070(l) is amended to read:                                                                       
02 (l)  A member insurer that wishes to protest all or part of an assessment shall                                         
03 pay when due the full amount of the assessment as set out in the notice provided by                                     
04 the association. The payment shall be available to meet association obligations during                                  
05 the pendency of the protest or any subsequent appeal. If a payment is made under                                        
06 protest, payment must be accompanied by a statement in writing that the payment is                                      
07 made under protest and setting out a brief statement of the grounds for the protest.                                    
08 Within 60 days following the payment of an assessment under protest by a member                                         
09 insurer, the association shall notify the member insurer in writing of its determination                                
10 with respect to the protest unless the association notifies the member insurer that                                     
11 additional time is required to resolve the issues raised by the protest. Within 30 days                                 
12 after a final decision has been made, the association shall notify the protesting member                                
13 insurer in writing of that final decision. Within 60 days after [OF] receipt of notice of                             
14 the final decision, the protesting member insurer may appeal that final action to the                                   
15 director. In the alternative to rendering a final decision with respect to a protest based                              
16 on a question regarding the assessment base, the association may refer protests to the                                  
17 director for a final decision with or without recommendation from the association. If a                                 
18 protest or appeal on an assessment is upheld, the amount paid in error or excess shall                                  
19 be returned to the member insurer [COMPANY]. Interest on a refund due a protesting                                    
20       member insurer shall be paid at the rate actually earned by the association.                                    
21    * Sec. 29. AS 21.79.080(c) is amended to read:                                                                       
22 (c)  A member insurer shall comply with the plan of operation. The plan of                                              
23       operation must                                                                                                    
24                 (1)  establish procedures for handling assets of the association;                                       
25 (2)  establish the amount and method of reimbursing members of the                                                      
26       board under AS 21.79.050(c);                                                                                      
27 (3)  establish regular places and times for meetings of the board in the                                                
28       state; the board may conduct meetings telephonically;                                                             
29 (4)  establish procedures for keeping records of all financial                                                          
30       transactions of the association, its agents, and the board;                                                       
31 (5)  establish terms of office for members of the board, and establish                                                  
01       procedures for the selection of the members of the board and for the director's                                   
02       approval of the members selected;                                                                                 
03                 (6)  establish additional procedures for assessments under                                              
04       AS 21.79.070; [AND]                                                                                               
05                 (7)  establish procedures for removing a member of the board for                                      
06       cause, including procedures for removing a member of the board who becomes                                      
07       an impaired or insolvent insurer;                                                                               
08                 (8)  establish policy and procedures for addressing conflicts of                                      
09       interest; and                                                                                                   
10 (9)  contain additional provisions necessary or proper for the                                                        
11       association to exercise its powers and duties.                                                                    
12    * Sec. 30. AS 21.79.090(b) is amended to read:                                                                       
13            (b)  The director may                                                                                        
14 (1)  after notice and hearing as provided in AS 21.06.180 - 21.06.230,                                                  
15 suspend or revoke the certificate of authority to transact business [INSURANCE] in                                    
16 this state of a member insurer that fails to pay an assessment when due or fails to                                     
17       comply with the plan of operation;                                                                                
18 (2)  levy a penalty on a member insurer that fails to comply with the                                                   
19       plan of operation; or                                                                                             
20 (3)  levy a penalty on a member insurer that fails to pay an assessment                                                 
21 when due; if the unpaid assessment is more than $2,000, the penalty may not exceed                                      
22 five percent of the unpaid assessment a [PER] month or be less than $100 a [PER]                                    
23       month; if the unpaid assessment is $2,000 or less, the penalty is $100 a [PER] month.                           
24    * Sec. 31. AS 21.79.090(c) is amended to read:                                                                       
25 (c)  A final [AN] action of the board or the association may be appealed to the                                       
26 director by a member insurer if the appeal is taken not later than 60 [WITHIN 30]                                     
27 days after the date the notice of the action is mailed. Final action or order of the                                    
28       director may be reviewed by the superior court.                                                                   
29    * Sec. 32. AS 21.79.090(d) is amended to read:                                                                       
30 (d)  The liquidator, rehabilitator, or conservator of an impaired or insolvent                                        
31       insurer may notify all interested persons of the effect of this chapter.                                          
01    * Sec. 33. AS 21.79.100(a) is amended to read:                                                                       
02 (a)  The director shall notify, by mail, the commissioner, director, or                                                 
03 superintendent of insurance of the other states, territories of the United States, and the                              
04 District of Columbia within 30 days after the date on which the following actions are                                   
05       taken against a member insurer:                                                                                   
06                 (1)  revocation of a license;                                                                           
07                 (2)  suspension of a license; or                                                                        
08                 (3)  a formal order that a member insurer restrict its premium writing,                                 
09       obtain additional contributions to surplus, withdraw from the state, reinsure all or any                          
10 part of its business, or increase capital, surplus, or any other account for the security of                            
11       policyholders, contract owners, certificate holders, or creditors.                                              
12    * Sec. 34. AS 21.79.100(e) is amended to read:                                                                       
13 (e)  The director may seek the board's advice and recommendations concerning                                            
14 the financial condition of member insurers, [AND] insurers, hospital and medical                                    
15 service corporations, and health maintenance organizations who apply for                                              
16       admission to transact insurance business in the state.                                                            
17    * Sec. 35. AS 21.79.100(f) is amended to read:                                                                       
18            (f)  The board may                                                                                           
19 (1)  make reports and recommendations to the director relating to the                                                   
20 solvency, liquidation, rehabilitation, or conservation of a member insurer or the                                       
21 solvency of an insurer, hospital or medical service corporation, or health                                            
22 maintenance organization that applies [INSURERS WHO APPLY] to transact                                                
23 insurance business in the state; the director and the board shall keep the reports and                                  
24       recommendations confidential;                                                                                     
25 (2)  notify the director of any information that indicates that a member                                                
26       insurer may be impaired or insolvent.                                                                             
27    * Sec. 36. AS 21.79.100(h) is amended to read:                                                                       
28 (h)  The board may make recommendations to the director for detecting and                                               
29       preventing member insurer insolvencies.                                                                         
30    * Sec. 37. AS 21.79.110(c) is amended to read:                                                                       
31 (c)  The association is considered to be a creditor of the impaired or insolvent                                        
01 insurer to the extent of assets attributable to covered policies that are reduced by an                                 
02 amount to which the association is entitled under AS 21.79.060(s). Assets of the                                        
03 impaired or insolvent insurer that are attributable to covered policies shall be used to                                
04 continue all covered policies and pay all contractual obligations of the impaired or                                    
05 insolvent insurer as required by this chapter. Assets attributable to covered policies or                             
06 contracts include those assets that should have been established as reserves for the                                  
07 covered policies or contracts. These assets are determined by multiplying the total                                   
08 assets of the impaired or insolvent insurer by a fraction, the numerator of which is the                                
09 amount that should have been established as reserves for the covered policies or                                      
10 contracts of the impaired or insolvent insurer, and the denominator of which is the                                   
11 amount that should have been established as reserves for all policies or contracts of                                 
12 insurance issued in all states by that insurer. As a creditor of the impaired or insolvent                              
13 insurer, the association and other similar entities in other states are entitled to receive a                           
14 disbursement of assets out of the marshaled assets as a credit against contractual                                      
15 obligations under this chapter from time to time as the assets become available. If the                                 
16 liquidator has not, within 120 days after [OF] the date of a final determination of                                   
17 insolvency of a member [AN] insurer by the court, made an application to the court                                    
18 for the approval of a proposal to disburse assets, the association may make application                                 
19       to the court for the approval of the association's proposal to disburse assets.                                   
20    * Sec. 38. AS 21.79.110(d) is amended to read:                                                                       
21 (d)  Before the termination of a liquidation, rehabilitation, or conservation                                           
22 proceeding, the court may consider the contributions of the respective parties,                                         
23 including the association, [THE] shareholders, contract owners, certificate holders,                                  
24 enrollees, and policyholders of the impaired or insolvent insurer, and any other party                                
25 with a bona fide interest, in distributing the ownership rights of the impaired or                                      
26 insolvent insurer. The court shall consider the welfare of policyholders, contract                                    
27 owners, certificate holders, and enrollees of the continuing or successor member                                    
28 insurer [INSURERS]. A distribution to stockholders of an impaired or insolvent                                        
29 insurer may not be made until the total amount of valid claims of the association for                                   
30 money spent in carrying out its powers and duties under AS 21.79.060, with respect to                                   
31       the impaired or insolvent insurer, has been fully recovered by the association.                                 
01    * Sec. 39. AS 21.79.110(f) is amended to read:                                                                       
02 (f)  A deposit in this state, held by law or required by the director for the                                           
03 benefit of creditors, including policy or contract owners, not turned over to the                                     
04 domiciliary liquidator upon the entry of a final order of liquidation or order approving                                
05 a rehabilitation plan of a member [AN] insurer domiciled in this state or in a                                        
06       reciprocal state shall be promptly paid to the association. The association                                       
07 (1)  is entitled to retain a portion of any amount paid to it equal to the                                              
08 percentage determined by dividing the aggregate amount of policy or contract                                          
09 owners' claims related to that insolvency for which the association has provided                                        
10 statutory benefits by the aggregate amount of all policy or contract owners' claims in                                
11       this state related to that insolvency; and                                                                        
12 (2)  shall remit to the domiciliary receiver the amount paid to the                                                     
13 association and retained under (1) of this subsection; any amount paid to the                                           
14 association not retained by it under (1) of this subsection shall be treated as a                                       
15 distribution of state assets under AS 21.78.294 or a similar provision of the state of                                  
16       domicile of the impaired or insolvent insurer.                                                                    
17    * Sec. 40. AS 21.79.140 is amended to read:                                                                          
18 Sec. 21.79.140. Civil immunity. The association and its agents and                                                      
19 employees, members of the Board of Governors, member insurers, and agents and                                           
20 employees of member insurers, and the director and the director's representatives are                                   
21 not civilly liable, and a cause of action of any nature may not arise, for an action or                               
22 omission in performing duties under this chapter. The immunity extends to the                                         
23 participation in an organization of one or more other state associations of similar                                   
24 purposes and to that organization and its agents or employees [IN THIS                                                
25 SECTION, "DUTIES" INCLUDES PARTICIPATION IN AN ORGANIZATION OF                                                          
26       ONE OR MORE STATE ASSOCIATIONS OF LIFE OR HEALTH INSURERS].                                                       
27    * Sec. 41. AS 21.79.150 is amended to read:                                                                          
28 Sec. 21.79.150. Stay of proceedings; default judgment. Proceedings                                                      
29 involving an insolvent insurer shall be stayed at least 180 [60] days after the date of a                             
30 final order of liquidation, rehabilitation, or conservation in order to allow the                                       
31 association to exercise a power or duty authorized under this chapter. If a default                                     
01 judgment is entered against an insolvent insurer, the association may apply to have the                                 
02       judgment set aside or may defend against the action on its merits.                                                
03    * Sec. 42. AS 21.79.160(a) is amended to read:                                                                       
04 (a)  A person, including a member [AN] insurer, agent, or affiliate of a                                            
05 member [AN] insurer, may not make, publish, disseminate, circulate, or place before                                   
06 the public, or cause, directly or indirectly, to be made, published, disseminated,                                      
07 circulated, or placed before the public, in any newspaper, magazine, or other                                           
08 publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any                             
09 radio station or television station, or in any other way, an advertisement,                                             
10 announcement, or statement, written or oral, that uses the existence of the association                                 
11 for the purpose of sales, solicitation, or inducement to purchase any form of insurance                                 
12 or other coverage covered by the association. However, this section does not apply to                                 
13 the association or any other entity that does not sell or solicit insurance, coverage by a                            
14 hospital or medical service corporation, or coverage by a health maintenance                                          
15       organization.                                                                                                   
16    * Sec. 43. AS 21.79.160(b) is amended to read:                                                                       
17 (b)  The association shall prepare a summary document describing the general                                            
18 purposes and current limitations of this chapter and complying with (c) of this section.                                
19 This document shall be submitted to the director for approval. Beginning 60 days after                                  
20 the date on which the director approves the document, a member [AN] insurer may                                       
21 not deliver a policy or contract to a policy or contract owner, certificate holder, or                                
22 enrollee [POLICY OR CONTRACT OWNER] unless the summary document is                                                    
23 delivered to the policy or contract owner, certificate holder, or enrollee [POLICY                                    
24 OR CONTRACT OWNER] at the time of delivery of the policy or contract. The                                               
25 document shall also be available upon request by a policy or contract owner,                                          
26 certificate holder, or enrollee [OWNER]. The distribution, delivery, contents, or                                     
27 interpretation of this document does not guarantee that either the policy or the                                        
28 contract, or the policy or contract owner, certificate holder, or enrollee [OWNER                                     
29 OF THE POLICY OR CONTRACT,] is covered in the event of the impairment or                                                
30 insolvency of a member insurer. The description document shall be revised by the                                        
31 association as amendments to this chapter may require. Failure to receive this                                          
01       document does not give the policy or [OWNER,] contract owner, certificate holder,                               
02       enrollee, or insured any greater rights than those stated in this chapter.                                      
03    * Sec. 44. AS 21.79.160(c) is amended to read:                                                                       
04            (c)  The document prepared under (b) of this section must contain a clear and                                
05       conspicuous disclaimer on its face. The director shall establish the form and content of                          
06       the disclaimer. The disclaimer must                                                                               
07                 (1)  state the name and address of the association and the division of                                  
08       insurance;                                                                                                        
09                 (2)  prominently warn the policy or contract owner, certificate holder,                               
10 or enrollee that the association may not cover the policy or, if coverage is available,                               
11 that the policy will be subject to substantial limitations and exclusions and conditioned                               
12       on continued residence in this state;                                                                             
13 (3)  state the types of policies or contracts for which guaranty funds                                                
14       will provide coverage;                                                                                            
15 (4)  state that the member insurer and its agents are prohibited by law                                               
16 from using the existence of the association for the purpose of sales, solicitation, or                                  
17 inducement to purchase any form of insurance, hospital or medical service                                             
18       corporation coverage, or health maintenance organization coverage;                                              
19 (5)  state that the policy or contract owner, certificate holder, or                                                  
20 enrollee should not rely on coverage under the association when selecting an [AND]                                  
21       insurer;                                                                                                          
22 (6)  explain rights available and procedures for filing a complaint to                                                  
23       allege a violation of a provision of this chapter; and                                                            
24 (7)  provide other information as required by the director, including                                                   
25 sources for information about the financial condition of insurers if the information is                                 
26       not proprietary and is subject by law to disclosure.                                                              
27    * Sec. 45. AS 21.79.900(5) is amended to read:                                                                       
28 (5)  "called" means that a notice has been mailed [ISSUED] by the                                                     
29 association to member insurers requiring that an authorized assessment be paid within                                   
30       the time set out in the notice;                                                                                   
31    * Sec. 46. AS 21.79.900(6) is amended to read:                                                                       
01                 (6)  "contractual obligation" means an obligation under a policy,                                       
02       contract, or certificate under a group policy or contract, or a portion of one for which                        
03       coverage is provided under AS 21.79.020(a), (b), (d), or (e);                                                   
04    * Sec. 47. AS 21.79.900(7) is amended to read:                                                                       
05                 (7)  "covered contract" or "covered policy" means a policy or                                         
06       contract or a portion of a policy or contract for which coverage is provided under                              
07       [DESCRIBED IN] AS 21.79.020(a), [AND] (b), (d), or (e);                                                       
08    * Sec. 48. AS 21.79.900(10) is amended to read:                                                                      
09                 (10)  "member insurer" means an insurer licensed to transact insurance                                  
10 in the state, a hospital or medical service corporation licensed under AS 21.87, or                                   
11 a health maintenance organization licensed under AS 21.86, for which coverage is                                      
12 provided in AS 21.79.020 [, OR A SUBSCRIBER CONTRACT PROVIDING                                                          
13 BENEFITS DESCRIBED IN AS 21.87.120(a)(2) - (4) OR 21.87.130(a)(2) AND (3),]                                             
14 and includes an insurer, a hospital or medical service corporation licensed under                                     
15 AS 21.87, or a health maintenance organization licensed under AS 21.86, whose                                         
16 license or certificate of authority in this state may have been suspended, revoked, not                                 
17       renewed, or voluntarily withdrawn; "member insurer" does not include                                              
18 (A)  [A HEALTH MAINTENANCE ORGANIZATION                                                                                 
19            LICENSED UNDER AS 21.86;                                                                                     
20                      (B)]  a fraternal benefit society licensed under AS 21.84;                                         
21                      (B) [(C)]  a mandatory state pooling plan;                                                       
22 (C) [(D)]  a mutual assessment company or an entity that                                                              
23            operates on an assessment basis;                                                                             
24                      (D) [(E)]  an insurance exchange licensed under AS 21.75;                                        
25 (E) [(F)  A HOSPITAL OR MEDICAL SERVICE                                                                               
26            ORGANIZATION LICENSED UNDER AS 21.87;                                                                        
27 (G)]  an organization that has a license or certificate limited to                                                      
28            the issuance of charitable gift annuities; or                                                                
29 (F) [(H)]  an entity similar to one described under (A) - (E) [(A)                                                  
30            - (G)] of this paragraph;                                                                                    
31    * Sec. 49. AS 21.79.900(12) is amended to read:                                                                      
01                 (12)  "owner," when used with respect to [IN RELATION TO] a                                           
02       policy or contract, "policyholder," "policy owner," and "contract owner"                                        
03 (A)  mean [MEANS] the person who is identified as the legal                                                           
04 owner under the terms of the policy or contract, or who is otherwise vested                                             
05 with legal title to the policy or contract through a valid assignment completed                                         
06 under the terms of the policy or contract and who is properly recorded as the                                           
07            owner on the records of the member insurer;                                                                
08                      (B)  do [DOES] not include a person with a mere beneficial                                       
09            interest in a policy or contract;                                                                            
10    * Sec. 50. AS 21.79.900(13) is amended to read:                                                                      
11 (13)  "plan sponsor" means, in the case of a benefit plan established or                                                
12       maintained by                                                                                                     
13                      (A)  a single employer, the employer;                                                              
14                      (B)  an employee organization, the employee organization; or                                       
15 (C)  two or more employers or jointly by one or more                                                                    
16 employers and one or more employee organizations, the association,                                                      
17 committee, joint board of trustees, or other similar group of representatives of                                      
18            the parties who establish or maintain the benefit plan;                                                      
19    * Sec. 51. AS 21.79.900(14) is amended to read:                                                                      
20 (14)  "premium" means the amounts or considerations, by whichever                                                     
21 name called, [AMOUNT] received on a covered policy or contract less a premium,                                        
22 consideration, and deposit returned, and less a dividend and experience credit;                                         
23       "premium" does not include                                                                                        
24 (A)  amounts or considerations [AN AMOUNT] charged for                                                                
25 an assessment or an amount received for a policy or contract or for the portions                                        
26 of a policy or contract for which coverage is not provided under                                                        
27 AS 21.79.020(b) and (c), except that assessable premium may not be                                                    
28 reduced on account of AS 21.79.020(c)(4) relating to interest limitations                                             
29 and AS 21.79.025(a)(2) - (5), (b), and (d) relating to limitations with                                               
30 respect to one individual, one participant, and one policy or contract                                                
31            owner;                                                                                                     
01 (B)  premiums in excess of $5,000,000 on an unallocated                                                               
02 annuity contract not issued under a governmental retirement benefit plan                                              
03 or its trustee established under 26 U.S.C. 401, 26 U.S.C. 403(b), or 26                                               
04            U.S.C. 457; or                                                                                             
05 (C)  with respect to multiple nongroup policies of life                                                               
06 insurance owned by one owner, whether the policy or contract owner is an                                              
07 individual, firm, corporation, or other person, and whether the persons                                               
08 insured are officers, managers, employees, or other persons, premiums in                                              
09 excess of $5,000,000 with respect to those policies or contracts, regardless                                          
10            of the number of policies or contracts held by the owner;                                                  
11    * Sec. 52. AS 21.79.900(15) is amended to read:                                                                      
12 (15)  "receivership court" means the court in the insolvent or impaired                                                 
13 insurer's state having jurisdiction over the conservation, rehabilitation, or liquidation                               
14       of the member insurer;                                                                                          
15    * Sec. 53. AS 21.79.900(16) is amended to read:                                                                      
16 (16)  "resident" means a person to whom a contractual obligation is                                                     
17 owed under this chapter and who resides in this state on the date of entry of a court                                   
18 order that determines a member insurer to be an impaired or insolvent insurer [,                                        
19 WHICHEVER OCCURS FIRST]; a person may be a resident of only one state,                                                  
20 which, in the case of a person other than a natural person, shall be the principal place                                
21       of business;                                                                                                      
22    * Sec. 54. AS 21.79.900(19) is amended to read:                                                                      
23 (19)  "supplemental contract" means a written [AN] agreement entered                                                  
24 into for the distribution of proceeds under life, health, or annuity policy or contract                               
25       benefits;                                                                                                         
26    * Sec. 55. AS 21.79.900 is amended by adding new paragraphs to read:                                                 
27 (21)  "benefit plan" means a specific employee, union, or association of                                                
28       natural persons benefit plan;                                                                                     
29 (22)  "election date" means the date of the association's election under                                                
30       AS 21.79.060(aa);                                                                                                 
31 (23)  "extra contractual claim" includes a claim related to bad faith in                                                
01       payment of a claim, punitive or exemplary damages, and attorney fees and costs;                                   
02 (24)  "health benefit plan" means a hospital or medical expense policy                                                  
03 or certificate, a hospital or medical service corporation subscriber contract, or a health                              
04 maintenance organization subscriber contract or any other similar health contract;                                      
05       "health benefit plan" does not include                                                                            
06                      (A)  accident only insurance;                                                                      
07                      (B)  credit insurance;                                                                             
08                      (C)  dental only insurance;                                                                        
09                      (D)  vision only insurance;                                                                        
10                      (E)  Medicare supplement insurance;                                                                
11 (F)  benefits for long-term care, home health care, community-                                                          
12            based care, or any combination thereof;                                                                      
13                      (G)  disability income insurance;                                                                  
14                      (H)  coverage for on-site medical clinics; or                                                      
15 (I)  specified disease, hospital confinement indemnity, or                                                              
16 limited benefit health insurance if the types of coverage do not provide                                                
17 coordination of benefits and are provided under separate policies or                                                    
18            certificates;                                                                                                
19 (25)  "published monthly average" means the monthly average of                                                          
20 corporate bond yields, as published by Moody's Investors Service, Inc., or its                                          
21 successor or, if Moody's average of corporate bond yields is not published, a                                           
22       substantially similar average established by regulation adopted by the director.                                  
23    * Sec. 56. AS 21.86.260(a) is amended to read:                                                                       
24 (a)  Except as provided in AS 21.36, AS 21.42, AS 21.54, AS 21.56, AS 21.79,                                          
25 and in this chapter, this title does not apply to a health maintenance organization that                                
26 obtains a certificate of authority under this chapter. This subsection does not apply to                                
27 an insurer licensed under AS 21.09 or a hospital or medical service corporation                                         
28 licensed under AS 21.87 except with respect to its health maintenance organization                                      
29       activities authorized by and regulated under this chapter.                                                        
30    * Sec. 57. AS 21.87.340 is amended to read:                                                                          
31 Sec. 21.87.340. Other provisions applicable. In addition to the provisions                                              
01 contained or referred to previously in this chapter, the following chapters and                                         
02 provisions of this title also apply with respect to service corporations to the extent                                  
03 applicable and not in conflict with the express provisions of this chapter and the                                      
04 reasonable implications of the express provisions, and, for the purposes of the                                         
05       application, the corporations shall be considered to be mutual "insurers":                                        
06 (1)  AS 21.03;                                                                                                          
07 (2)  AS 21.06;                                                                                                          
08 (3)  AS 21.07;                                                                                                          
09                 (4)  AS 21.09, except AS 21.09.090;                                                                     
10 (5)  AS 21.18.010;                                                                                                      
11 (6)  AS 21.18.030;                                                                                                      
12 (7)  AS 21.18.040;                                                                                                      
13                 (8)  AS 21.18.080 - 21.18.086;                                                                          
14                 (9)  AS 21.36;                                                                                          
15                 (10)  AS 21.42.110, 21.42.345 - 21.42.395;                                                              
16                 (11)  AS 21.51.120 and 21.51.400;                                                                       
17                 (12)  AS 21.51.405;                                                                                     
18 (13)  AS 21.53;                                                                                                         
19 (14)  AS 21.54;                                                                                                         
20 (15)  AS 21.56;                                                                                                         
21                 (16)  AS 21.69.400;                                                                                     
22                 (17)  AS 21.69.520;                                                                                     
23                 (18)  AS 21.69.600, 21.69.620, and 21.69.630;                                                           
24                 (19)  AS 21.78;                                                                                         
25                 (20)  AS 21.79;                                                                                       
26                 (21)  AS 21.96.060;                                                                                   
27                 (22) [(21)]  AS 21.97.                                                                                
28    * Sec. 58. AS 21.79.020(f), 21.79.060(c), 21.79.060(e), 21.79.060(f), 21.79.060(g),                                  
29 21.79.060(h), 21.79.060(i), 21.79.060(j), 21.79.060(u), 21.79.060(v), 21.79.060(w),                                     
30 21.79.060(x), 21.79.110(b)(2), and 21.79.110(e) are repealed.                                                           
31    * Sec. 59. The uncodified law of the State of Alaska is amended by adding a new section to                           
01 read:                                                                                                                   
02 TRANSITION: REGULATIONS. The director of the division of insurance may adopt                                            
03 regulations necessary to implement the changes made by this Act. The regulations take effect                            
04 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the law                             
05 implemented by the regulation.                                                                                          
06    * Sec. 60. Section 59 of this Act takes effect immediately under AS 01.10.070(c).                                    
07    * Sec. 61. Except as provided in sec. 60 of this Act, this Act takes effect July 1, 2018.                            
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