00 SENATE CS FOR CS FOR HOUSE BILL NO. 184(JUD) 01 "An Act relating to insurance; amending Rule 402, Alaska Rules of Evidence; and 02 providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 05 to read: 06 PURPOSE. The primary purpose of secs. 10 - 74, 80 - 83, 85, 86, 88 - 90, and 92 of 07 this Act is to implement insurance reforms in AS 21 as required by P.L. 106-102 (Gramm- 08 Leach-Bliley Act) to modernize financial services related to the business of insurance and to 09 further this state as an attractive place for investment and other commerce involving the 10 insurance industry. 11  * Sec. 2. AS 21.12 is amended by adding a new section to read: 12 Sec. 21.12.130. Commercial insurance defined. Commercial insurance is 13 any line of property insurance, as defined in AS 21.12.060, or casualty insurance, as 14 defined in AS 21.12.070, that is for business and professional interests, whether for 01 profit, nonprofit, or public in nature. For purposes of filing rates under AS 21.39.040 02 and forms under AS 21.42.120, commercial insurance does not include workers' 03 compensation insurance. 04  * Sec. 3. AS 21.18 is amended by adding a new section to read: 05 Sec. 21.18.170. Valuation of investments. For the purposes of this chapter, 06 the value or amount of an investment acquired, held, or invested in or an investment 07 practice engaged in under this title, unless otherwise specified in this title, must be the 08 value at which assets of an insurer are required to be reported for accounting purposes 09 under this title and as required under procedures prescribed in published accounting 10 and valuation standards of the National Association of Insurance Commissioners, 11 including the purposes and procedures manual of the securities valuation office, the 12 valuation of securities manual, the accounting practices and procedures manual, and 13 the annual statement instructions or valuation procedures officially adopted by the 14 National Association of Insurance Commissioners. 15  * Sec. 4. AS 21.21.010 is repealed and reenacted to read: 16 Sec. 21.21.010. Scope. This chapter applies only to an investment and 17 investment practice of a domestic insurer and a United States branch of an alien 18 insurer entered through this state. This chapter does not apply to separate accounts of 19 a life insurer. 20  * Sec. 5. AS 21.21.020(d) is amended to read: 21 (d) An investment limitation based upon the amount of the insurer's assets or 22 particular funds shall relate to the assets or funds shown by the insurer's annual 23 statement most recently required to be [AS OF THE PRECEDING DECEMBER 31, 24 DATE OF ACQUISITION OF THE INVESTMENT BY THE INSURER, OR 25 SHOWN BY A CURRENT FINANCIAL STATEMENT] filed with the director. 26  * Sec. 6. AS 21.21.020 is amended by adding a new subsection to read: 27 (e) For purposes of determining compliance with investment limitations 28 imposed under this chapter, the director or an insurer shall use admitted asset values. 29  * Sec. 7. AS 21.21.255 is amended to read: 30 Sec. 21.21.255. Regulation of securities held by insurers. As provided 31 under 15 U.S.C. 77r-1(b) and (c) (Secondary Mortgage Market Enhancement Act of 01 1984), securities that are purchased, held, or invested in by an insurer are subject to  02 AS 21.18.170 and regulations adopted under AS 21.21.420 [SHALL BE 03 REGULATED UNDER AS 21.18.150, AS 21.21.050, 21.21.260, 21.21.270], and 04 other applicable provisions of this title. 05  * Sec. 8. AS 21.21 is amended by adding a new section to read: 06 Sec. 21.21.420. Regulations. The director shall adopt regulations regarding 07 insurance company investments that are consistent with the defined limits standards 08 for investments of the National Association of Insurance Commissioners. 09  * Sec. 9. AS 21.24.030(a) is amended to read: 10 (a) All deposits required under AS 21.09.090 for authority to transact 11 insurance in this state shall consist of certificates of deposit [,] or any combination of 12 rated credit instruments of the United States, Canada, or a state of the United  13 States [SECURITIES OF THE KINDS DESCRIBED IN AS 21.21.060, 21.21.080, 14 AND 21.21.090]. 15  * Sec. 10. AS 21.27.010(e) is repealed and reenacted to read: 16 (e) An employee of an insurer who responds to requests from existing 17 policyholders on existing policies is not required to be licensed under this section if 18 the employee 19 (1) is not directly compensated based on volume of premiums that may 20 result from those services; and 21 (2) does not transact insurance. 22  * Sec. 11. AS 21.27.010(j) is amended to read 23 (j) This section does not apply to a person who 24 (1) is employed on salary or hourly wage by a person licensed under 25 this section solely for the performance of accounting, clerical, stenographic, and 26 similar office duties; 27 (2) only secures and forwards information required for the purposes of,  28 and does not receive a commission for, any of the following services: 29 (A) performing administrative services related to 30 (i) group life insurance; 31 (ii) group property and casualty insurance; 01 (iii) group annuities; 02 (iv) group or blanket accident and health insurance; 03 (B) enrolling individuals under plans for the types of  04 insurance or annuities specified in (A) of this paragraph; 05 (C) issuing certificates under plans for the types of  06 insurance or annuities specified in (A) of this paragraph, or otherwise  07 assisting in administering those plans; 08 (D) performing administrative services related to mass- 09 marketed property and casualty insurance [COVERING THE UNPAID 10 BALANCE, OR REMAINING PAYMENTS PROPOSED TO BE MADE, IN 11 CONNECTION WITH THE PURCHASE OF MERCHANDISE OR 12 SERVICES, IF THE PERSON RECEIVES NO COMPENSATION, 13 DIRECTLY OR INDIRECTLY, ARISING OUT OF OR IN ANY WAY 14 RELATING TO THE INSURANCE TRANSACTIONS]; [OR] 15 (3) is employed on salary by a licensee at the licensee's place of 16 business, is supervised by and reports directly to a licensee in the firm, and who, after 17 explaining that the matter must be reviewed by a licensee, may 18 (A) furnish premium estimates from published or printed lists 19 of standard rates if the person does not advise, counsel, or suggest what 20 coverage may be needed, or otherwise solicit insurance coverage; 21 (B) arrange appointments for a licensee if the person does not 22 solicit insurance coverage; 23 (C) record information from an applicant or policyholder and 24 complete for the licensee's personal review and signature, a certificate of 25 insurance that is not a contract of insurance; the licensee's signature may be by 26 facsimile; 27 (D) inform a policyholder of the type of coverage shown in the 28 licensee's policy record if the person does not advise that an event or 29 hypothetical event is or is not covered; or 30 (E) in the physical presence of the licensee, record information 31 from an applicant or policyholder and complete for a licensee's personal 01 review and personal signature, applications, binders, endorsements, or 02 identification cards if the person discloses to the applicant or policyholder that 03 the applicant or policyholder may review the matter with a licensee; 04 (4) is an employee of an insurer or an organization employed by an  05 insurer and is engaged in the inspection, rating, or classification of risks, or in the  06 supervision of the training of insurance producers and is not individually  07 engaged in the sale, solicitation, or negotiation of insurance;  08 (5) advertises in this state through printed publications or  09 electronic mass media, the distribution of which is not limited to residents of this  10 state, if the person 11 (A) performs no other insurance-related activities in this  12 state; 13 (B) does not intend to solicit in this state; and 14 (C) does not sell, solicit, or negotiate insurance of risks  15 resident, located, or to be performed in this state;  16 (6) is not a resident of this state, but sells, solicits, or negotiates  17 commercial property and casualty insurance for an insured with risks located in  18 more than one state if the person is licensed as an insurance producer in the state  19 where the insured maintains its principal place of business and the contract of  20 insurance covers risks located in that state;  21 (7) is a salaried full-time employee who counsels or advises the  22 person's employer regarding the insurance interests of the employer or of the  23 subsidiaries or business affiliates of the employer, if the employee does not sell or  24 solicit insurance or receive a commission from the sale or solicitation of  25 insurance;  26 (8) is an employer or association or the employer's or association's  27 officer, director, employee, or the trustee of an employee trust plan, if the person  28 is not compensated, directly or indirectly, for transacting insurance and is  29 engaged in the administration or operation of a plan offering employee benefits  30 for the employer's or association's own employees, or the employees of its  31 subsidiaries or affiliates; to qualify under this paragraph, the plan must include  01 insurance for employees; or  02 (9) is an officer, director, or employee of an admitted insurer who  03 does not receive a commission on policies written or sold to risks resident,  04 located, or to be performed in this state if the officer's, director's, or employee's  05 functions are executive, administrative, managerial, clerical, or a combination of  06 these and are only indirectly related to the transaction of insurance; relates to  07 underwriting or loss control; or are in the capacity of an agency supervisor  08 where the activities are limited to providing technical assistance to insurance  09 producers and whose activities do not include transacting insurance. 10  * Sec. 12. AS 21.27.020(b) is amended to read: 11 (b) To qualify for issuance or renewal of an individual or individual in the 12 firm license, an applicant or licensee shall comply with this title and [,] regulations 13 adopted under AS 21.06.090 [,] and 14 (1) shall be 18 [19] years of age or older [WITH A HIGH SCHOOL 15 OR GENERAL EDUCATION DEVELOPMENT DIPLOMA OR EQUIVALENT]; 16 (2) if for a resident license, shall be a bona fide resident before 17 issuance of the license and actually reside in the state; 18 (3) shall successfully pass an examination required under 19 AS 21.27.060; 20 (4) shall be a trustworthy person; 21 (5) may not use or intend to use the license for the purpose principally 22 of writing controlled business, as defined in AS 21.27.030; 23 (6) may not have committed an act that is a cause for denial, 24 nonrenewal, suspension, or revocation of a license in this state or another jurisdiction. 25 * Sec. 13. AS 21.27.020(c) is repealed and reenacted to read: 26 (c) To qualify for issuance or renewal of a license as a firm insurance 27 producer, a firm managing general agent, a firm reinsurance intermediary broker, a 28 firm reinsurance intermediary manager, a firm surplus lines broker, or a firm 29 independent adjuster, an applicant or licensee shall 30 (1) comply with (b)(4) and (5) of this section; 31 (2) maintain a lawfully established place of business in this state, 01 except when licensed as a nonresident under AS 21.27.270; 02 (3) disclose to the director all owners, officers, directors, or partners of 03 the firm; 04 (4) designate a compliance officer for the firm; 05 (5) provide to the director documents necessary to verify the 06 information contained in or made in connection with the application; and 07 (6) notify the director, in writing, within 30 days of a change in the 08 firm's compliance officer or of the termination of employment of an individual in the 09 firm licensee. 10 * Sec. 14. AS 21.27.020(f) is amended to read: 11 (f) The director may adopt regulations establishing additional education or 12 experience requirements for applicants or licensees under this chapter upon due 13 consideration of the availability and accessibility of education and training 14 opportunities in rural areas of the state. Regulations adopted under this subsection are 15 subject to the following provisions: 16 (1) additional educational or experience requirements may not apply to 17 a licensee who has been licensed by the division of insurance before January 1, 1980; 18 (2) a licensee shall complete at least 24 credit hours of approved 19 continuing education courses during each two-year license period; 20 (3) if a licensee has accumulated more credit hours than required under 21 (2) of this subsection by the end of the license period, a maximum of eight hours may 22 be carried over to meet the requirements of (2) of this subsection in the next license 23 period; 24 (4) a program or seminar may not be approved as an acceptable 25 continuing education program unless it is a formal program of learning that 26 contributes to the professional competence of the licensee; individual study programs 27 or correspondence courses may be used to fulfill continuing education requirements if 28 approved by the director; 29 (5) a nonresident licensee is exempt from the requirements of this 30 subsection [IF THE LICENSEE SUBMITS EVIDENCE SATISFACTORY TO THE 31 DIRECTOR THAT THE LICENSEE HAS SATISFIED ANY CONTINUING 01 EDUCATION REQUIREMENTS OF THE LICENSEE'S DOMICILIARY STATE]. 02 * Sec. 15. AS 21.27.025(a) is amended to read: 03 (a) A licensee shall notify the director within 30 days in writing [BY 04 CERTIFIED MAIL] of a change in residence, employment that is licensed under this 05 chapter, place of business, legal name, fictitious name or alias, mailing address, or 06 phone number. A licensee shall report in writing to the director any  07 administrative action taken against the licensee by a governmental agency of  08 another state or by a governmental agency of another jurisdiction within 30 days  09 after the final disposition of the action. A licensee shall submit to the director the  10 final order and other relevant legal documents in the action. A licensee shall  11 report to the director any criminal prosecution of the licensee in this or another  12 state or jurisdiction within 30 days after the date of filing of the criminal  13 complaint, indictment, information, or citation in the prosecution. The licensee  14 shall submit to the director a copy of the criminal complaint, calendaring order,  15 and other relevant legal documents in the prosecution [; A SUSPENSION, 16 REVOCATION, OR DISCIPLINARY ACTION OF A LICENSE BY ANOTHER 17 STATE OR JURISDICTION; OR A CONVICTION OF A MISDEMEANOR OR 18 FELONY]. 19 * Sec. 16. AS 21.27.025(b) is amended to read: 20 (b) A compliance officer [PRINCIPAL OR MANAGER] shall notify the 21 director in writing within 30 days of a termination of employment of a licensed 22 individual in the firm. Notice required under this subsection must include 23 (1) the licensee's name; 24 (2) the firm's name and address; 25 (3) the date of hire, self-employment, or termination of the licensee; 26 and 27 (4) other information required by the director. 28 * Sec. 17. AS 21.27.040(a) is amended to read: 29 (a) Application for a license shall be made to the director upon forms 30 prescribed by the director. As a part of or in connection with the application, the 31 applicant shall furnish information concerning the applicant's identity, personal 01 history, experience, business record, purposes, and other pertinent facts that the 02 director may reasonably require. The applicant shall declare, [UNDER OATH AND] 03 subject to penalty of denial, nonrenewal, suspension, or revocation of a license issued 04 by the director that the statements made in or in connection with the application are 05 true, correct, and complete to the best of the applicant's knowledge and belief. 06 Payment of an application fee established under AS 21.06.250 must be submitted with 07 the application. 08  * Sec. 18. AS 21.27.040 is amended by adding a new subsection to read: 09 (e) As part of the application required by (a) of this section, an applicant shall 10 furnish to the director a full set of fingerprints so that the director may obtain criminal 11 justice information as provided under AS 12.62 about the applicant. The director shall 12 submit the completed fingerprint card to the Department of Public Safety. The 13 Department of Public Safety is authorized to submit the fingerprints to the Federal 14 Bureau of Investigation for a national criminal history record check. 15 * Sec. 19. AS 21.27.060(a) is amended to read: 16 (a) Except as provided in this chapter, an applicant for an individual license 17 and a compliance officer [PRINCIPAL OR MANAGER] applicant for a firm license 18 shall, before the issuance of the license, personally take and pass, to the satisfaction of 19 the director, an examination that tests the knowledge and competence of the applicant 20 as to the applicant's duties and responsibilities as a licensee and the insurance statutes 21 [LAWS] and regulations of the state. 22  * Sec. 20. AS 21.27.060(c) is repealed and reenacted to read: 23 (c) An individual who applies for an insurance producer license in this state 24 who was previously licensed for the same lines of authority in that individual's prior 25 home state is not required to pass the examination required by (a) of this section in 26 order to secure the same authority in this state. The exemption available under this 27 subsection applies only if the application is received within 90 days after the 28 cancellation of the applicant's previous license in the applicant's prior home state and 29 (1) the applicant's prior home state verifies that, at the time of 30 cancellation, the applicant held an insurance producer license that was in good 31 standing in that state; or 01 (2) the insurance producer licensing database records for the prior 02 home state that are maintained by the National Association of Insurance 03 Commissioners or its affiliates or subsidiaries indicate that the applicant is or was 04 licensed in good standing for the kind of license requested. 05  * Sec. 21. AS 21.27.060(d) is amended to read: 06 (d) This section does not apply to an applicant 07 (1) for a limited license under AS 21.27.150(a)(1), (5), or (6) 08 [AS 21.27.150(a)(1), (2), (6), OR (7)]; or  09 (2) who, at any time within the one-year [TWO-YEAR] period 10 immediately preceding the date the current pending application is received by the 11 division, had been licensed in good standing in this state under a license requiring 12 substantially similar qualifications as required by the license applied for [; OR 13 (3) WHOSE LICENSE IN ITS RESIDENT JURISDICTION 14 REQUIRES THE SAME QUALIFICATIONS AS THE LICENSE APPLIED FOR IN 15 THIS STATE IF THE LICENSE IN ALL JURISDICTIONS IS IN GOOD 16 STANDING]. 17  * Sec. 22. AS 21.27.100 is amended by adding new subsections to read: 18 (f) An insurer may appoint an insurance producer to all or some insurers 19 within the insurer's holding company system or group by the filing of a single 20 appointment under this subsection. 21 (g) The authorized or apparently authorized acts on behalf of an appointing 22 insurer of an insurance producer appointed under this section are considered the acts 23 of that insurer. 24  * Sec. 23. AS 21.27.110 is repealed and reenacted to read: 25 Sec. 21.27.110. Term of appointment. (a) An appointment under 26 AS 21.27.100 continues in force until the appointment is terminated in accordance 27 with this section. 28 (b) If an appointment is terminated by an insurer, reinsurer, or authorized 29 representative, the insurer, reinsurer, or authorized representative shall, on a form or in 30 a format prescribed by the director, notify the director within 30 days after the date of 31 termination of the appointment. 01 (c) If an appointment is terminated by the director, a written or an electronic 02 notice of termination shall be given to the appointee, to the person that made the 03 appointment, and, if different from the person making the appointment, to the insurer 04 or reinsurer, at least 10 days before the effective date of the termination. The director 05 shall send notification under this subsection to the latest address on record with the 06 director. 07 (d) If, after termination and notice under (b) of this section, an insurer, 08 reinsurer, or authorized representative discovers additional information showing that 09 the appointee whose appointment was terminated has engaged in an activity identified 10 in AS 21.27.410 during the period of the appointment, the insurer, reinsurer, or 11 authorized representative shall, on a form or in a format prescribed by the director, 12 promptly notify the director. 13 (e) Within 15 days after providing notification in accordance with (b) and (d) 14 of this section, the insurer, reinsurer, or authorized representative shall mail a copy of 15 the notification to the appointee at the last address on record with the director. The 16 notice must be provided by certified mail, return receipt requested, postage prepaid, or 17 by overnight delivery using a nationally recognized mail carrier, if the appointment 18 was terminated for an activity identified in AS 21.27.410. 19 (f) Within 30 days after the appointee receives notification in accordance with 20 (c) of this section, the appointee may file written comments concerning the substance 21 of the notification with the director and must provide a copy of the written comments 22 to the insurer, reinsurer, or authorized representative. The written comments filed 23 with the director must be included with each report distributed or disclosed concerning 24 a reason about the termination of the appointment. 25 (g) If requested by the director, an insurer, reinsurer, or authorized 26 representative shall provide to the director additional information, documents, records, 27 or other data pertaining to a termination or activity of a licensee under this title. 28 (h) A notice of termination submitted to the director under this section must 29 include a statement of the reasons for the termination. A statement of the reasons for 30 termination is confidential and not subject to inspection and copying under 31 AS 40.25.110. A statement of reasons for the termination may not be admitted as 01 evidence in a civil action or an administrative proceeding against an insurer, reinsurer, 02 or authorized representative by or on behalf of a person affected by the termination, 03 except when the action or proceeding involves perjury, unsworn falsification, fraud, or 04 failure to comply with this subsection. 05 (i) If an insurer, reinsurer, or authorized representative fails to report as 06 required under this section or is found by a court to have knowingly or intentionally 07 falsely made that report, the director may, after notice and hearing, suspend or revoke 08 the license or certificate of authority of the insurer, reinsurer, or authorized 09 representative and may impose a penalty in accordance with AS 21.27.440. 10 (j) The director may require that an insurer renew an appointment annually 11 and may require payment of a renewal fee under AS 21.06.250 for an appointment in 12 effect on December 31 of the current year. If the director requires that an appointment 13 be renewed or a renewal fee be paid, the director shall terminate the appointment if the 14 renewal fees have not been received by the director on or before the close of business 15 on March 1 of the renewal year. 16  * Sec. 24. AS 21.27 is amended by adding a new section to read: 17 Sec. 21.27.115. Lines of authority. If a person has met the applicable 18 requirements of AS 21.27.020 and 21.27.270, the director shall issue a license for one 19 or more of the following lines of authority: 20 (1) life insurance coverage on natural persons; in this paragraph, "life 21 insurance coverage" 22 (A) includes benefits of endowment and annuities; and 23 (B) may include benefits in the event of death or 24 dismemberment by accident and benefits for disability income; 25 (2) health insurance coverage for sickness, bodily injury, or accidental 26 death; in this paragraph, "health insurance coverage" may include benefits for 27 disability income; 28 (3) property insurance coverage for the direct or consequential loss for 29 damage to property of every kind; 30 (4) casualty insurance coverage against legal liability, including that 31 for death, injury, or disability or damage to real or personal property; in this 01 paragraph, "casualty insurance" includes surety insurance as defined in AS 21.12.080; 02 (5) variable life and variable annuity products insurance coverage; 03 (6) personal lines property and casualty insurance coverage sold to 04 individuals and families for primarily noncommercial purposes; 05 (7) limited lines credit insurance; 06 (8) any insurance for which a limited lines license may be issued under 07 AS 21.27.150. 08  * Sec. 25. AS 21.27.130 is amended to read: 09 Sec. 21.27.130. Form and content of licenses. A license must be in the form 10 the director prescribes and must set out 11 (1) the name and address of the licensee [,] and, if the licensee is 12 required to have a place of business, the physical address of the place of business; 13 (2) [IF FOR A FIRM, THE NAME OF THE PRINCIPAL OR 14 MANAGER OF THE FIRM; 15 (3)] the type, [KIND OR] class, and lines of authority [OF 16 INSURANCE] the licensee is licensed to handle; 17 (3) [(4)] the effective date and expiration date of the license; 18 (4) each condition, if any, [(5) THE CONDITION] under which the 19 license is granted; 20 (5) [(6)] the date of issuance of the license; 21 (6) [(7)] each fictitious name and alias under which the licensee may 22 do business; and 23 (7) [(8)] other information required by the director. 24  * Sec. 26. AS 21.27.130 is amended by adding a new subsection to read: 25 (b) A license issued by the director does not in itself create any authority, 26 actual, apparent, or inherent, in the holder of the license to represent or commit an 27 insurer. 28  * Sec. 27. AS 21.27.140(b) is amended to read: 29 (b) A firm may not be licensed as an insurance producer, managing general 30 agent, reinsurance intermediary broker, reinsurance intermediary manager, surplus 31 lines broker, or independent adjuster, or transact insurance unless each individual 01 employed as an insurance producer, managing general agent, surplus lines broker, 02 trainee insurance producer, trainee independent adjuster, or independent adjuster by 03 the firm is licensed as an individual in the firm and the compliance officer 04 [PRINCIPAL OR MANAGER] of the firm is licensed as an individual in the firm to 05 exercise all the powers conferred by the firm's license. 06  * Sec. 28. AS 21.27.140(c) is amended to read: 07 (c) If the director determines under AS 21.06.170 - 21.06.240 that a firm knew 08 or should have known of an act or representation made on the firm's behalf by a 09 person not licensed as required by this chapter, the firm and the firm's compliance  10 officer [PRINCIPAL OR MANAGER] are subject to the penalties provided under 11 AS 21.27.440. 12  * Sec. 29. AS 21.27.150(a) is amended to read: 13 (a) The director may issue a 14 (1) travel insurance limited producer license to a person [WHOSE 15 PLACE OF BUSINESS IS LOCATED IN THIS STATE,] who sells transportation 16 tickets of a common carrier of persons or property, who is appointed under 17 AS 21.27.100, and whose sole purpose is to be appointed by and act as an agent for 18 transportation ticket policies of health insurance, baggage insurance on personal 19 effects, and trip cancellation or trip interruption insurance; 20 (2) [HEALTH INSURANCE LIMITED PRODUCER LICENSE TO 21 A RESIDENT OF THIS STATE WHOSE SOLE PURPOSE IS TO BE APPOINTED 22 BY AND ACT AS AN AGENT FOR HEALTH INSURANCE PERTAINING TO 23 SPORTS AND RECREATION; 24 (3)] title insurance limited producer license to a person whose place of 25 business is located in this state and whose sole purpose is to be appointed by and act 26 on behalf of a title insurer; 27 (3) [(4)] bail bond limited producer license to a person [WHOSE 28 PLACE OF BUSINESS IS LOCATED IN THIS STATE AND] whose sole purpose is 29 to be appointed by and act on behalf of a surety insurer pertaining to bail bonds; 30 (4) [(5)] fraternal benefit society limited producer license to a person 31 whose sole purpose is to be appointed by and act on behalf of a fraternal benefit 01 society licensed under AS 21.84; 02 (5) [(6) RETIRED INSURANCE PRODUCER LICENSE TO A 03 RESIDENT WHO IS RETIRED OR RETIRING FROM THE BUSINESS OF 04 INSURANCE AND SURRENDERS ALL IN-FORCE LICENSES TO ALLOW THE 05 PERSON TO RECEIVE A CONTINUING COMMISSION IN REGARD TO 06 INSURANCE TRANSACTED BEFORE RETIREMENT; A RETIRED 07 INSURANCE PRODUCER LICENSEE MAY NOT SOLICIT, INDUCE, 08 NEGOTIATE, OR EFFECTUATE CONTRACTS OF INSURANCE; THE 09 DIRECTOR MAY RENEW A RETIRED INSURANCE PRODUCER LICENSE IF 10 THE LICENSEE CEASES TO BE A RESIDENT OF THIS STATE; 11 (7)] motor vehicle rental agency limited producer license to a person 12 and, subject to the approval of the director, to employees of the person licensed that 13 the licensee authorizes to transact the business of insurance on the licensee's behalf if, 14 as to an employee, the licensee complies with (D) of this paragraph and if the licensee 15 (A) rents to others, without operators, 16 (i) private passenger motor vehicles, including 17 passenger vans, minivans, and sport utility vehicles; or 18 (ii) cargo motor vehicles, including cargo vans, pickup 19 trucks, and trucks with a gross vehicle weight of less than 26,000 20 pounds that do not require the operator to possess a commercial driver's 21 license; 22 (B) rents motor vehicles only to persons under rental 23 agreements that do not exceed a term of 90 days; 24 (C) transacts only the following kinds of insurance: 25 (i) motor vehicle liability insurance with respect to 26 liability arising out of the use of a vehicle rented from the licensee 27 during the term of the rental agreement; 28 (ii) uninsured or underinsured motorist coverage, with 29 minimum limits described in AS 21.89.020(c) and (d) arising out of the 30 use of a vehicle rented from the licensee during the term of the rental 31 agreement; 01 (iii) insurance against medical, hospital, surgical, and 02 disability benefits to an injured person and funeral and death benefits to 03 dependents, beneficiaries, or personal representatives of a deceased 04 person if the insurance is issued as incidental coverage with or 05 supplemental to liability insurance and arises out of the use of a vehicle 06 rented from the licensee during the term of the rental agreement; 07 (iv) personal effects insurance, including loss of use, 08 with respect to damage to or loss of personal property of a person 09 renting the vehicle and other vehicle occupants while that property is 10 being loaded into, transported by, or unloaded from a vehicle rented 11 from the licensee during the term of the rental agreement; 12 (v) towing and roadside assistance with respect to 13 vehicles rented from the licensee during the term of the rental 14 agreement; and 15 (vi) other insurance as may be authorized by regulation 16 by the director; 17 (D) notifies the director in writing, within 30 days of 18 employment, of the name, date of birth, social security number, location of 19 employment, and home address of an employee authorized by the licensee to 20 transact insurance on the licensee's behalf; and 21 (E) provides other information as required by the director; 22 (6) nonresident limited producer license to a person; a license that  23 the director issues under this paragraph grants the same scope of authority as a  24 limited lines producer license issued to the person by the person's home state; 25 (7) credit insurance limited producer license to a person who sells  26 limited lines credit insurance;  27 (8) miscellaneous limited producer license to a person who  28 transacts insurance in this state that restricts the person's authority to less than  29 the total authority for a line of authority described in AS 21.27.115(1) - (6). 30  * Sec. 30. AS 21.27.270 is repealed and reenacted to read: 31 Sec. 21.27.270. Licensing of nonresidents. (a) In accordance with P.L. 106- 01 102 (Gramm-Leach-Bliley Act), the director shall issue a license to a nonresident 02 license applicant on terms that are reciprocal with those of the applicant's home state. 03 Notwithstanding any contrary provision of this chapter, the director may by order 04 waive any license application requirement in this chapter to achieve reciprocity to 05 license a nonresident in accordance with P.L. 106-102 (Gramm-Leach-Bliley Act). 06 (b) Unless the director denies or refuses to renew a license under 07 AS 21.27.410, the director shall issue a nonresident producer, limited lines, surplus 08 lines broker, managing general agent, reinsurance intermediary broker, or reinsurance 09 intermediary manager license to a person who is not a resident of this state if 10 (1) the person is currently licensed and is in good standing in the 11 person's home state; the director may verify the person's licensing status through the 12 producer licensing database records maintained by the National Association of 13 Insurance Commissioners or its affiliates or subsidiaries; 14 (2) the person has paid the fees required under AS 21.06.250 and has 15 submitted to the director 16 (A) the license application the person submitted to the person's 17 home state; or 18 (B) if the person is not a firm, a completed uniform application 19 or, if a firm, the uniform business entity application; and 20 (3) the person's home state awards nonresident producer, limited lines, 21 surplus lines, managing general agent, reinsurance intermediary broker, and 22 reinsurance intermediary manager licenses to residents of this state on the same basis 23 as does this state. 24 (c) Notwithstanding (b) of this section, the director may require a person 25 applying for a 26 (1) nonresident license to furnish the person's fingerprints as required 27 of a person applying for a license under AS 21.27.040(e); 28 (2) surplus lines broker license under this section to have, and maintain 29 while licensed in this state, the bond required of a person applying for a license under 30 AS 21.27.790(2); and 31 (3) nonresident license to comply with the premium fiduciary account 01 requirements of AS 21.27.360 and the regulations adopted under that statute. 02 (d) A person licensed as a limited lines producer in the person's home state 03 shall receive a nonresident limited lines producer license granting the same scope of 04 authority as the license issued by the producer's home state. 05 (e) In addition to the other requirements of this chapter, a person may not be 06 licensed as a nonresident licensee until the person files a power of attorney as follows: 07 (1) an applicant shall appoint the director as attorney to receive service 08 of legal process issued against the licensee in this state upon a cause of action arising 09 in this state or relative to a subject resident, located, or to be performed in this state; 10 service upon the director as attorney shall constitute effective legal service upon the 11 licensee; and 12 (2) the appointment shall be irrevocable for as long as there could be a 13 cause of action against the licensee arising out of an insurance transaction in this state 14 or relative to a subject resident, located, or to be performed in this state. 15 (f) Duplicate copies of legal process against a licensed or formerly licensed 16 nonresident licensee shall be served upon the director either by a peace officer or 17 through certified mail with return receipt requested. At the time of service, the 18 plaintiff shall pay to the director a fee set under AS 21.06.250. 19 (g) Upon receiving a service of process, the director shall immediately send 20 one of the copies of the process by certified mail, return receipt requested, to the 21 licensed or formerly licensed nonresident licensee at the last address of record filed 22 with the director. 23  * Sec. 31. AS 21.27 is amended by adding a new section to read: 24 Sec. 21.27.275. Alien licensees. The director may issue a license authorized 25 by this chapter to a nonresident of this state who does not have a home state if that 26 person meets all the requirements of this chapter for that license applicable to a 27 resident of this state applying for the same license. 28  * Sec. 32. AS 21.27.330 is repealed and reenacted to read: 29 Sec. 21.27.330. Place of business.  (a) A person licensed under this chapter 30 shall have and maintain at least one place of business that is physically accessible to 31 the public in this state unless the person holds a nonresident license and principally 01 conducts transactions in another state. However, the nonresident licensee must have at 02 least one physically accessible place in the nonresident licensee's home state. The 03 requirements of this subsection do not apply to a licensee who only conducts business 04 in life or health insurance or annuities.  05 (b) If a licensee that is a firm transacts business at more than one place of 06 business in this state, the licensee shall pay a license fee for each place of business. 07  * Sec. 33. AS 21.27.350(c) is amended to read: 08 (c) The records of a particular transaction shall be retained and kept open for 09 examination and inspection by the director at any business time during the five years 10 immediately after the date of the completion of the transaction or 10 years for 11 reinsurance transactions, unless the director orders a longer period of retention. If a 12 licensee assumes the business of another licensee or former licensee by merger, 13 purchase, or otherwise, the compliance officer [PRINCIPAL OR MANAGER] of the 14 assuming licensee firm shall provide to the director in writing each location where the 15 assumed licensee's records are maintained by the assuming licensee during the period 16 in which the records must be kept available and open to the inspection of the director. 17 A formerly licensed person shall provide to the director in writing each location where 18 records shall be maintained during the period in which the records of a particular 19 transaction must be kept available and open to the examination and inspection of the 20 director. A formerly licensed person may, with the permission of the director, arrange 21 to have a current licensee or the home office of the last known insurer of each 22 policyholder [,] maintain the records open to the examination and inspection of the 23 director during the period in which the records must be maintained. 24  * Sec. 34. AS 21.27.360(b) is amended to read: 25 (b) All money, except that made payable to the insurer, representing premium 26 taxes and fees, premiums, or return premiums received by the licensee [,] shall be 27 received by the licensee as a [IN THE] fiduciary [ACCOUNT OF THE LICENSEE] 28 and shall be promptly accounted for and paid to the person entitled to the money. 29 [THE FIDUCIARY ACCOUNT SHALL BE LOCATED IN THIS STATE UNLESS 30 THE LICENSEE IS LICENSED AS A NONRESIDENT UNDER AS 21.27.270. 31 FOR PURPOSES OF THIS SECTION, THE FIDUCIARY ACCOUNT OF THE 01 FIRM SHALL BE CONSIDERED THE FIDUCIARY ACCOUNT OF AN 02 INDIVIDUAL LICENSEE ACTING ON BEHALF OF THE FIRM AND SHALL BE 03 THE RESPONSIBILITY OF THE FIRM]. Money held by the licensee as a  04 fiduciary [DEPOSITED INTO A FIDUCIARY ACCOUNT] may not be commingled 05 or otherwise combined with other money not held by the licensee as a fiduciary [, 06 EXCEPT AS ALLOWED UNDER (d) OF THIS SECTION AND AS 21.27.365]. 07  * Sec. 35. AS 21.27.360(c) is amended to read: 08 (c) In addition to any other penalty provided by law, a person who the director 09 has determined has acted to divert or appropriate money held as a fiduciary 10 [ACCOUNT MONEY] for personal use shall be ordered to make restitution and shall 11 be subject to suspension or revocation under AS 21.27.420 - 21.27.430 of all licenses 12 and a civil penalty not to exceed $50,000 for each violation. 13  * Sec. 36. AS 21.27.360(d) is amended to read: 14 (d) A licensee may only commingle premium taxes and fees, premiums, and 15 return premiums with additional money for the purpose of advancing premiums, 16 establishing reserves for the payment of return premiums, or reserves for receiving and 17 transmitting premium or return premium money [. MONEY COLLECTED FOR THE 18 PAYMENT OF PREMIUM TAXES, POLICY OR FILING FEES, LATE PAYMENT 19 CHARGES, AND INTEREST FROM FIDUCIARY MONEY ON DEPOSIT, MAY 20 BE COMMINGLED IN A FIDUCIARY ACCOUNT, BUT SHALL BE 21 SEPARATELY ACCOUNTED FOR AND PERIODICALLY REMOVED FROM 22 THE FIDUCIARY ACCOUNT]. 23  * Sec. 37. AS 21.27.360(e) is amended to read: 24 (e) Money held by a licensee as a fiduciary may not be treated [A 25 LICENSEE MAY NOT TREAT MONEY REQUIRED TO BE IN A FIDUCIARY 26 ACCOUNT] as a personal asset, as collateral for a personal or business loan, or as a 27 personal asset or income on a financial statement, except that money held by the  28 licensee as a [IN A] fiduciary [ACCOUNT] may be included in a financial statement 29 of the licensee if clearly identified as assets held by the licensee as a fiduciary 30 [ACCOUNT ASSETS AND LIABILITIES]. 31  * Sec. 38. AS 21.27.360(f) is amended to read: 01 (f) This section does not apply to an individual in the firm who acts solely on 02 behalf of a firm that maintains compliance with this section [AND DEPOSITS ALL 03 MONEY INTO THE FIRM'S FIDUCIARY ACCOUNT]. 04  * Sec. 39. AS 21.27.360 is amended by adding a new subsection to read: 05 (h) The director of insurance may adopt regulations to implement, define, and 06 enforce this section. 07  * Sec. 40. AS 21.27.370 is repealed and reenacted to read: 08 Sec. 21.27.370. Sharing compensation. (a) Except as provided in (c) and (d) 09 of this section, a licensee may not compensate a person, other than a licensee who is 10 acting within the scope of the person's license, for transacting insurance in this state or 11 relative to a risk resident, located, or to be performed in this state. 12 (b) Except as provided in (c) and (d) of this section, a person may not be 13 promised or paid, directly or indirectly, compensation for transacting a kind or class of 14 insurance for which the person is not then licensed to transact or for insurance that the 15 person is prohibited by this title from transacting. 16 (c) An unlicensed person who refers a customer or potential customer to a 17 licensee and who does not discuss specific terms and conditions of a policy, or who 18 gives opinions or advice regarding insurance, may be compensated for the referral, if 19 the compensation 20 (1) for each referral is 21 (A) nominal; 22 (B) on a one-time basis; and 23 (C) fixed in amount by referral; 24 (2) does not depend on whether the customer or potential customer 25 purchases the insurance; and 26 (3) is not contingent on the volume of insurance transacted. 27 (d) An insurer or insurance producer may compensate an insurance agency or 28 another person if that person does not transact the business of insurance in this state 29 and the payment does not violate AS 21.36.100 or 21.36.120. 30 (e) A person who is no longer licensed in this state may be paid renewal or 31 other deferred compensation for selling, soliciting, or negotiating insurance in this 01 state if the person 02 (1) was required to be licensed under this chapter at the time of the 03 sale, solicitation, or negotiation; and 04 (2) held that required license. 05 (f) In addition to any other penalty provided by law, the director may suspend 06 or revoke the license of a licensee participating in a violation of this section. The 07 director may order a licensee who violates this section to pay a penalty of not more 08 than three times the compensation promised or paid. 09  * Sec. 41. AS 21.27.390(a) is amended to read: 10 (a) The director may issue a temporary license only to a person who, except 11 for experience, training, or the taking of an examination, meets all qualifications for a 12 permanent license and if the person is 13 (1) the surviving spouse, next of kin, or the administrator or executor 14 of a deceased licensed insurance producer or managing general agent; 15 (2) the spouse, next of kin, employee, or legal guardian of a licensed 16 insurance producer or managing general agent who is disabled from transacting 17 insurance because of sickness, mental illness [INSANITY], or injury; 18 (3) a surviving member, officer, or employee of a firm licensed as 19 insurance producer or managing general agent upon the death of the compliance  20 officer [PRINCIPAL OR MANAGER] of the firm holding the same licenses as the 21 firm; or 22 (4) the designee of a licensed insurance producer who enters active 23 service in the armed forces of the United States, but only for insurance relating to 24 insurers for whom the licensee was acting as an agent. 25  * Sec. 42. AS 21.27.410(b) is amended to read: 26 (b) The license of a firm and its compliance officer [PRINCIPAL OR 27 MANAGER] may be denied, nonrenewed, suspended, or revoked for a violation or 28 cause that relates to a person representing or acting on behalf of the firm. 29  * Sec. 43. AS 21.27.460(c) is amended to read: 30 (c) Upon a change in the state of residence, a place of business, a mailing 31 address, or in the compliance officer [PRINCIPAL OR MANAGER] of a firm, a 01 license subject to the change shall be surrendered to the director within 10 days either 02 personally or by certified mail and the division shall reissue the license reflecting the 03 changes if the licensee continues to satisfy the qualifications under this chapter. 04  * Sec. 44. AS 21.27.540(g) is amended to read: 05 (g) In addition to any other penalty provided by law, if the director determines 06 under AS 21.06.170 - 21.06.240 that the employing licensed insurance producer knew 07 of or should have known that a trainee insurance producer violated this section, the 08 employing licensed insurance producer and firm, and the compliance officer 09 [PRINCIPAL AND MANAGER], if any, are subject to the penalties provided under 10 AS 21.27.440. 11  * Sec. 45. AS 21.27.550(c) is amended to read: 12 (c) All money collected for the account of an insurer shall be held by the 13 insurance producer as [IN] a fiduciary [ACCOUNT AS DESCRIBED UNDER 14 AS 21.27.360, AND THE INSURANCE PRODUCER SHALL COMPLY WITH 15 ALL APPLICABLE FIDUCIARY ACCOUNT STATUTES AND REGULATIONS]. 16  * Sec. 46. AS 21.27.550(i) is amended to read: 17 (i) A reinsurance intermediary manager may not enter into an agency 18 agreement with an insurance producer unless both parties are licensed under this 19 chapter and there is in effect a written agency agreement that specifically sets out the 20 duties, functions, powers, authority, and compensation of all parties to the agreement. 21 The written agreement shall be kept in the permanent records of the reinsurance 22 intermediary manager, the reinsurer, and the insurance producer, and be open to 23 inspection by the director. A written agreement must contain the following minimum 24 provisions: 25 (1) money collected for the account of a reinsurer must be held by the 26 insurance producer as [IN] a fiduciary [ACCOUNT AS DESCRIBED UNDER 27 AS 21.27.360; THE INSURANCE PRODUCER SHALL COMPLY WITH ALL 28 APPLICABLE FIDUCIARY ACCOUNT STATUTES AND REGULATIONS]; 29 (2) the agreement may not be assigned in whole or in part by the 30 insurance producer; 31 (3) the agreement may not permit the insurance producer to settle 01 claims on behalf of the reinsurer or reinsurance intermediary manager; and 02 (4) the insurance producer may not 03 (A) jointly employ an individual who is employed with the 04 reinsurer or reinsurance intermediary manager; or 05 (B) delegate insurance producer authority to another person. 06  * Sec. 47. AS 21.27.560(a) is amended to read: 07 (a) A client who appoints an insurance producer as its broker in this state or 08 relative to a subject resident, located, or to be performed in this state shall execute a 09 written contract that specifically sets out the duties, functions, powers, authority, and 10 compensation of the insurance producer, if the broker is compensated by a fee paid by 11 the client or by a combination of a fee paid by a client and a commission paid by an 12 insurer with which coverage has been placed. The written contract shall be kept in the 13 permanent records of the insurance producer and be open to inspection by the director. 14  * Sec. 48. AS 21.27.560(g) is amended to read: 15 (g) Money paid by a client to an insurance producer for insurance premiums 16 shall be held by the insurance producer as [IN] a fiduciary [ACCOUNT AS 17 DESCRIBED UNDER AS 21.27.360, AND THE INSURANCE PRODUCER 18 SHALL COMPLY WITH APPLICABLE FIDUCIARY ACCOUNT STATUTES 19 AND REGULATIONS]. 20  * Sec. 49. AS 21.27.570(a) is amended to read: 21 (a) If the aggregate amount of gross written premium on business placed by a 22 controlling insurance producer exceeds five percent of the admitted assets of the 23 controlled insurer for a calendar year as reported in the insurer's most recent financial 24 statement filed with the director, the controlling insurance producer may not place 25 business with the controlled insurer and the controlled insurer may not accept business 26 from the controlling insurance producer unless a written contract is in effect between 27 the parties that 28 (1) establishes the responsibilities of each party, indicates each party's 29 share of responsibility for each particular function, and specifies the division of 30 responsibilities; 31 (2) has been approved by the board of directors of the controlled 01 insurer; 02 (3) contains the following minimum provisions: 03 (A) the controlled insurer may terminate the contract for cause 04 upon written notice sent by certified mail to the controlling producer and shall 05 suspend the authority of the controlling insurance producer to write business 06 during a dispute regarding the cause for termination; 07 (B) the controlling insurance producer shall render accounts to 08 the controlled insurer detailing all transactions, including information in the 09 accounts necessary to support compensation, commissions, charges, and other 10 fees received by, or owing to, the controlling producer; 11 (C) the controlling insurance producer shall remit money due 12 under the contract to the controlled insurer at least monthly; 13 (D) premiums or installments collected shall be due not later 14 than 90 days after the effective date of coverage placed with the controlled 15 insurer; 16 (E) money collected for the account of a controlled insurer 17 shall be held by the controlling insurance producer as [IN] a fiduciary 18 [ACCOUNT AS DESCRIBED UNDER AS 21.27.360], except a controlling 19 insurance producer not required to be licensed under this chapter shall act as a 20 [MAINTAIN ITS] fiduciary [ACCOUNT] in compliance with the 21 requirements of its domiciliary jurisdiction; 22 (F) [A LICENSED CONTROLLING INSURANCE 23 PRODUCER SHALL COMPLY WITH ALL APPLICABLE FIDUCIARY 24 ACCOUNT STATUTES AND REGULATIONS; 25 (G) A FIDUCIARY ACCOUNT MUST BE USED FOR] all 26 payments on behalf of the controlled insurer shall be held by the controlling  27 insurance producer as a fiduciary; 28 (G) [(H)] the controlling insurance producer shall maintain 29 separate records for each controlled insurer in a form usable by the controlled 30 insurer; the controlled insurer or its authorized representative shall have the 31 right to audit and the right to copy all accounts and records related to the 01 controlled insurer's business; the director, in addition to authority granted in 02 this title, shall have access to all books, bank accounts, and records of the 03 controlling insurance producer in a form usable to the director; 04 (H) [(I)] the contract may not be assigned in whole or in part 05 by the controlling insurance producer; 06 (I) [(J)] the controlled insurer shall provide, and the controlling 07 producer shall follow, written underwriting standards, rules, procedures, and 08 manuals that must include the conditions for acceptance or rejection of risks, 09 including types of risks that may be written, maximum limits of liability, 10 applicable exclusions, territorial limitations, policy cancellation provisions, the 11 maximum policy term, the rating system, and basis of the rates to be charged; 12 (J) [(K)] the underwriting standards, rules, procedures, and 13 manuals shall be the same as those applicable to comparable business placed 14 with the controlled insurer by licensees other than the controlling licensee; 15 (K) [(L)] the rates and terms of the controlling insurance 16 producer's compensation including commissions, charges, and other fees may 17 not be greater than those applicable to comparable business placed with the 18 controlled insurer by licensees other than the controlling licensee; 19 (L) [(M)] the controlled insurer shall establish a limit, that may 20 be different for each kind or class of business, on the amount of premium that 21 the controlling insurance producer may place with the controlled insurer in 22 relation to the controlled insurer's surplus and total writings; 23 (M) [(N)] the controlled insurer shall notify the controlling 24 insurance producer if an applicable limit is approached and the controlling 25 insurance producer may not place and the controlled insurer may not accept 26 business if the limit under (L) [(M)] of this paragraph has been reached; 27 (N) [(O)] if the contract provides that the controlling insurance 28 producer, on insurance placed with the controlled insurer, is to be compensated 29 contingent upon the controlling insurer's profits on the placed insurance, the 30 contingent compensation may not be determined or paid until 31 (i) at least five years after the premiums are earned on 01 casualty business and at least one year after the premiums are earned on 02 any other insurance; 03 (ii) a later period established by the director for 04 specified kinds or classes of insurance; and 05 (iii) not until the profits have been verified under (b) of 06 this section; 07 (O) [(P)] the controlling insurance producer may negotiate but 08 may not bind reinsurance on behalf of the controlled insurer on insurance that 09 the controlling insurance producer places with the controlled insurer, except 10 that the controlling insurance producer may bind facultative reinsurance 11 contracts under obligatory agreements if the contract with the controlled 12 insurer contains reinsurance underwriting guidelines including, for both 13 reinsurance assumed and ceded, a list of reinsurers with which automatic 14 agreements are in effect, the coverage and amounts or percentages that may be 15 reinsured, and commission schedules; and 16 (4) provides that the controlled insurer has an audit committee 17 composed of independent members of the board of directors that meet at least annually 18 with management, the insurer's independent certified public accountants, and an 19 independent actuary specialist acceptable to the director to review the adequacy of the 20 insurer's reserves for losses incurred and outstanding. 21  * Sec. 50. AS 21.27.600(g) is amended to read: 22 (g) In addition to any other penalty provided by law 23 (1) the director shall revoke the trainee license of a trainee managing 24 general agent who the director determines has violated the provisions of this section; a 25 licensee or other person having possession or custody of the license shall immediately 26 surrender the license to the director either personally or by certified mail; 27 (2) if the director determines under AS 21.06.170 - 21.06.240 that the 28 employing managing general agent knew of or should have known that a trainee 29 managing general agent violated this section, the employing managing general agent 30 and firm, and the compliance officer [PRINCIPAL, AND MANAGER], if any, are 31 subject to the penalties provided under AS 21.27.440. 01  * Sec. 51. AS 21.27.620(a) is amended to read: 02 (a) An insurer may not transact business with a managing general agent unless 03 (1) the insurer holds a certificate of authority in this state; 04 (2) the managing general agent is licensed under this chapter or, when 05 the managing general agent is operating only for a foreign insurer, is licensed by its 06 resident insurance regulator in a state that the director has determined has enacted 07 provisions substantially similar to those contained in this chapter and the state is 08 accredited by the National Association of Insurance Commissioners; 09 (3) a written contract is in effect between the parties that establishes 10 the responsibilities of each party, indicates both party's share of responsibility for a 11 particular function, and specifies the division of responsibilities; 12 (4) a written contract between an insurer and a managing general agent 13 contains the following provisions: 14 (A) the insurer may terminate the contract for cause upon 15 written notice sent by certified mail to the managing general agent and may 16 suspend the underwriting authority of the managing general agent during a 17 dispute regarding the cause for termination; 18 (B) the managing general agent shall render accounts to the 19 insurer detailing all transactions and remit all money due under the contract to 20 the insurer at least monthly; 21 (C) all money collected for the account of an insurer shall be 22 held by the managing general agent as [IN] a fiduciary [ACCOUNT AS 23 DESCRIBED UNDER AS 21.27.360]; 24 (D) [THE MANAGING GENERAL AGENT SHALL 25 COMPLY WITH ALL APPLICABLE FIDUCIARY ACCOUNT STATUTES 26 AND REGULATIONS; 27 (E) A FIDUCIARY ACCOUNT SHALL BE USED FOR] all 28 payments on behalf of the insurer shall be held by the managing general  29 agent as a fiduciary; 30 (E) [(F)] the managing general agent may not retain more than 31 three months estimated claims payments and allocated loss adjustment 01 expenses; 02 (F) [(G)] the managing general agent shall maintain separate 03 records for each insurer in a form usable by the insurer; the insurer or its 04 authorized representative shall have the right to audit and the right to copy all 05 accounts and records related to the insurer's business; the director, in addition 06 to authority granted in this title, shall have access to all books, bank accounts, 07 and records of the managing general agent in a form usable to the director; 08 (G) [(H)] the contract may not be assigned in whole or in part 09 by the managing general agent; 10 (H) [(I)] if the contract permits the managing general agent to 11 do underwriting, the contract must include the following: 12 (i) the managing general agent's maximum annual 13 premium volume; 14 (ii) the rating system and basis of the rates to be 15 charged; 16 (iii) the types of risks that may be written; 17 (iv) maximum limits of liability; 18 (v) applicable exclusions; 19 (vi) territorial limitations; 20 (vii) policy cancellation provisions; 21 (viii) the maximum policy term; and 22 (ix) that the insurer shall have the right to cancel or not 23 renew a policy of insurance subject to applicable state law; 24 (I) [(J)] if the contract permits the managing general agent to 25 settle claims on behalf of the insurer, the contract must include the following: 26 (i) written settlement authority must be provided by the 27 insurer and may be terminated for cause upon the insurer's written 28 notice sent by certified mail to the managing general agent or upon the 29 termination of the contract, but the insurer may suspend the settlement 30 authority during a dispute regarding the cause of termination; 31 (ii) claims shall be reported to the insurer within 30 01 days; 02 (iii) a copy of the claim file shall be sent to the insurer 03 upon request or as soon as it becomes known that the claim has the 04 potential to exceed an amount determined by the director or exceeds the 05 limit set by the insurer, whichever is less, involves a coverage dispute, 06 may exceed the managing general agent's claims settlement authority, 07 is open for more than six months, involves extra contractual 08 allegations, or is closed by payment in excess of an amount set by the 09 director or an amount set by the insurer, whichever is less; 10 (iv) each party shall comply with unfair claims 11 settlement statutes and regulations; 12 (v) transmission of electronic data at least monthly if 13 electronic claim files are in existence; and 14 (vi) claim files shall be the property of both the insurer 15 and managing general agent; upon an order of liquidation of the 16 insurer, the files shall become the sole property of the insurer or the 17 insurer's estate; the managing general agent shall have reasonable 18 access to and the right to copy the files on a timely basis; 19 (J) [(K)] if the contract provides for sharing of interim profits 20 by the managing general agent and the managing general agent has the 21 authority to determine the amount of the interim profits by establishing loss 22 reserves, by controlling claim payments, or in any other manner, interim 23 profits may not be paid to the managing general agent until 24 (i) one year after they are earned for property insurance 25 business and five years after they are earned on casualty business; 26 (ii) a later period established by the director for 27 specified kinds or classes of insurance; and 28 (iii) not until the profits have been verified under (d) of 29 this section; 30 (K) [(L)] if the insurer is domiciled in this state or the 31 managing general agent has a place of business in this state, a copy of the 01 contract must be filed with and approved by the director at least 30 days before 02 the managing general agent transacts business on behalf of the insurer; if the 03 insurer is not domiciled in this state or the managing general agent transacts 04 business relative to a subject resident, located, or to be performed in this state 05 from a place of business not physically located in this state, a copy of the 06 contract required in this section must be filed with and approved by the 07 director at least 30 days before the managing general agent transacts business 08 on behalf of the insurer in this state or relative to a subject resident, located, or 09 to be performed in this state if the insurer or the managing general agent are 10 domiciled in a state not accredited by the National Association of Insurance 11 Commissioners; and 12 (L) [(M)] if the contract is not required to be approved in 13 advance by the director, the insurer shall provide written notification to the 14 director within 30 days of the entry into or termination of a contract with a 15 managing general agent; the notice must include a statement of duties to be 16 performed by the managing general agent on behalf of the insurer, the kinds 17 and classes of insurance for which the managing general agent has 18 authorization to act, and other information required by the director. 19  * Sec. 52. AS 21.27.620 is amended by adding a new subsection to read: 20 (l) In this section, "transact" has the meaning given in AS 21.90.900. 21  * Sec. 53. AS 21.27.640(b) is repealed and reenacted to read: 22 (b) To qualify for issuance or renewal of a registration, an applicant or 23 registrant shall comply with this title, regulations adopted under AS 21.06.090, and 24 (1) be a trustworthy person; 25 (2) have active working experience in administrative functions that, in 26 the director's opinion, exhibits the ability to competently perform the administrative 27 functions of a third-party administrator; 28 (3) not have committed an act that is a cause for denial, nonrenewal, 29 suspension, or revocation of a registration or license in this state or another 30 jurisdiction; 31 (4) maintain a lawfully established place of business as described in 01 AS 21.27.330 in this state, unless licensed as a nonresident under AS 21.27.270; 02 (5) disclose to the director all owners, officers, directors, or partners, if 03 any; 04 (6) designate a compliance officer for the firm; 05 (7) provide in or with its application 06 (A) all basic organizational documents of the third-party 07 administrator, including articles of incorporation, articles of association, 08 partnership agreement, trade name certificate, trust agreement, shareholder 09 agreement, and other applicable documents and all endorsements to the 10 required documents; 11 (B) the bylaws, rules, regulations, or similar documents 12 regulating the internal affairs of the administrator; 13 (C) the names, mailing addresses, physical addresses, official 14 positions, and professional qualifications of persons who are responsible for 15 the conduct of affairs of the third-party administrator, including the members 16 of the board of directors, board of trustees, executive committee, or other 17 governing board or committee; the principal officers in the case of a 18 corporation, or the partners or members in the case of a partnership, limited 19 liability company, limited liability partnership, or association; shareholders 20 holding directly or indirectly 10 percent or more of the voting securities of the 21 third-party administrator; and any other person who exercises control or 22 influence over the affairs of the third-party administrator; 23 (D) certified financial statements for the preceding two years, 24 or for each year and partial year that the applicant has been in business if less 25 than two years, prepared by an independent certified public accountant 26 establishing that the applicant is solvent, that the applicant's system of 27 accounting, internal control, and procedure is operating effectively to provide 28 reasonable assurance that money is promptly accounted for and paid to the 29 person entitled to the money, and any other information that the director may 30 require to review the current financial condition of the applicant; and 31 (E) a statement describing the business plan, including 01 information on staffing levels and activities proposed in this state and in other 02 jurisdictions and providing details establishing the third-party administrator's 03 capability for providing a sufficient number of experienced and qualified 04 personnel in the areas of claims handling, underwriting, and record keeping; 05 (8) provide to the director documents necessary to verify the 06 statements contained in or in connection with the application; and 07 (9) notify the director, in writing, within 30 days of 08 (A) a change in compliance officer, residence, place of 09 business, mailing address, or phone number; 10 (B) the suspension or revocation of an insurance license or 11 registration by another state or jurisdiction; or 12 (C) a conviction of a misdemeanor or felony of the third-party 13 administrator, its officers, directors, partners, owners, or employees. 14  * Sec. 54. AS 21.27.650(a) is amended to read: 15 (a) An insurer may not transact business with a third-party administrator 16 unless 17 (1) the insurer holds a certificate of authority in this state; 18 (2) the third-party administrator is registered under this chapter or, 19 when the third-party administrator is operating only for a foreign insurer, is registered 20 as a third-party administrator by the third-party administrator's resident insurance 21 regulator in a state that the director has determined has enacted provisions 22 substantially similar to those contained in AS 21.27.630 - 21.27.650 and that is 23 accredited by the National Association of Insurance Commissioners; 24 (3) the third-party administrator provides the director on January 1, 25 April 1, July 1, and October 1 of each year 26 (A) a list of current employees, identifying those transacting 27 business in this state or upon a subject resident, located or to be performed in 28 this state; 29 (B) a list of current insurers under contract; and 30 (C) other information the director may require; 31 (4) a written contract is in effect between the parties that establishes 01 the responsibilities of each party, indicates both parties' share of responsibility for a 02 particular function, and specifies the division of responsibilities; 03 (5) there is in effect a written contract between the insurer and third- 04 party administrator that contains the following provisions: 05 (A) the insurer may terminate the contract for cause upon 06 written notice sent by certified mail to the third-party administrator and may 07 suspend the underwriting authority of the third-party administrator during a 08 dispute regarding the cause for termination; but the insurer must fulfill all 09 lawful obligations with respect to policies affected by the written agreement, 10 regardless of any dispute between the insurer and the third-party administrator; 11 (B) the third-party administrator shall render accounts to the 12 insurer detailing all transactions and remit all money due under the contract to 13 the insurer at least monthly; 14 (C) all money collected for the account of an insurer shall be 15 held by the third-party administrator as [IN] a fiduciary [ACCOUNT AS 16 DESCRIBED UNDER AS 21.27.360]; 17 [(D) THE THIRD-PARTY ADMINISTRATOR SHALL 18 COMPLY WITH ALL APPLICABLE FIDUCIARY ACCOUNT STATUTES 19 AND REGULATIONS; 20 (E) A FIDUCIARY ACCOUNT SHALL BE USED FOR] all 21 payments on behalf of the insurer shall be held by the third-party  22 administrator as a fiduciary; 23 (E) [(F)] the third-party administrator may not retain more than 24 three months estimated claims payments and allocated loss adjustment 25 expenses; 26 (F) [(G)] the third-party administrator shall maintain separate 27 records for each insurer in a form usable by the insurer; the insurer or its 28 authorized representative shall have the right to audit and the right to copy all 29 accounts and records related to the insurer's business; the director, in addition 30 to other authority granted in this title, shall have access to all books, bank 31 accounts, and records of the third-party administrator in a form usable to the 01 director; any trade secrets contained in books and records reviewed by the 02 director, including the identity and addresses of policyholders and certificate 03 holders, shall be kept confidential, except that the director may use the 04 information in a proceeding instituted against the third-party administrator or 05 the insurer; 06 (G) [(H)] the contract may not be assigned in whole or in part 07 by the third-party administrator; 08 (H) [(I)] if the contract permits the third-party administrator to 09 do underwriting, the contract must include the following: 10 (i) the third-party administrator's maximum annual 11 premium volume; 12 (ii) the rating system and basis of the rates to be 13 charged; 14 (iii) the types of risks that may be written; 15 (iv) maximum limits of liability; 16 (v) applicable exclusions; 17 (vi) territorial limitations; 18 (vii) policy cancellation provisions; 19 (viii) the maximum policy term; and 20 (ix) that the insurer shall have the right to cancel or not 21 renew a policy of insurance subject to applicable state law; 22 (I) [(J)] if the contract permits the third-party administrator to 23 administer claims on behalf of the insurer, the contract must include the 24 following: 25 (i) written settlement authority must be provided by the 26 insurer and may be terminated for cause upon the insurer's written 27 notice sent by certified mail to the third-party administrator or upon the 28 termination of the contract, but the insurer may suspend the settlement 29 authority during a dispute regarding the cause of termination; 30 (ii) claims shall be reported to the insurer within 30 31 days; 01 (iii) a copy of the claim file shall be sent to the insurer 02 upon request or as soon as it becomes known that the claim has the 03 potential to exceed an amount determined by the director or exceeds the 04 limit set by the insurer, whichever is less, involves a coverage dispute, 05 may exceed the third-party administrator's claims settlement authority, 06 is open for more than six months, involves extra contractual 07 allegations, or is closed by payment in excess of an amount set by the 08 director or an amount set by the insurer, whichever is less; 09 (iv) each party to the contract shall comply with unfair 10 claims settlement statutes and regulations; 11 (v) transmission of electronic data must occur at least 12 monthly if electronic claim files are in existence; and 13 (vi) claim files shall be the sole property of the insurer; 14 upon an order of liquidation of the insurer, the third-party administrator 15 shall have reasonable access to and the right to copy the files on a 16 timely basis; and 17 (J) [(K)] the contract may not provide for commissions, fees, or 18 charges contingent upon savings obtained in the adjustment, settlement, and 19 payment of losses covered by the insurer's obligations; but a third-party 20 administrator may receive performance-based compensation for providing 21 hospital or other auditing services or may receive compensation based on 22 premiums or charges collected or the number of claims paid or processed. 23  * Sec. 55. AS 21.27.650 is amended by adding a new subsection to read: 24 (p) In this section, "transact" has the meaning given in AS 21.90.900. 25  * Sec. 56. AS 21.27.680(g) is amended to read: 26 (g) In addition to any other penalty provided by law, 27 (1) the director shall revoke the license of a trainee reinsurance 28 intermediary broker who the director determines has violated the provisions of this 29 section; a licensee or other person having possession or custody of the license shall 30 immediately surrender the license to the director either personally or by certified mail; 31 (2) if the director determines under AS 21.06.170 - 21.06.240 that the 01 employing reinsurance intermediary broker knew of or should have known that a 02 trainee reinsurance intermediary broker violated this section, the employing 03 reinsurance intermediary broker and firm and compliance officer [, PRINCIPAL 04 AND MANAGER], if any, are subject to the penalties provided under AS 21.27.440. 05  * Sec. 57. AS 21.27.690(a) is amended to read: 06 (a) Except as provided in (b) of this section, an insurer may not transact 07 business with a reinsurance intermediary broker unless the insurer holds a certificate 08 of authority in this state, the reinsurance intermediary broker is licensed in this state, 09 and there is in effect a written contract between the parties that establishes the 10 responsibilities of each party, indicates each party's share of responsibility for each 11 particular function, and specifies the division of responsibilities. The written contract 12 shall be kept in the permanent records of the insurer and the reinsurance intermediary 13 broker, be open to inspection by the director, and must contain the following minimum 14 provisions: 15 (1) the insurer may terminate the reinsurance intermediary broker's 16 authority at any time by written notice sent by certified mail; 17 (2) the reinsurance intermediary broker shall render accounts to the 18 insurer detailing all transactions including information necessary to support all 19 commissions, charges, and other fees received by or owing to the reinsurance 20 intermediary broker and remit the money due under the contract to the insurer within 21 30 days of receipt; 22 (3) money collected for the account of an insurer shall be held by the 23 reinsurance intermediary broker as [IN] a fiduciary [ACCOUNT REQUIRED 24 UNDER AS 21.27.360; THE REINSURANCE INTERMEDIARY BROKER SHALL 25 COMPLY WITH APPLICABLE FIDUCIARY ACCOUNT STATUTES AND 26 REGULATIONS]; 27 (4) the reinsurance intermediary broker shall maintain separate 28 accounts and records for each insurer and maintain the records in a form usable by the 29 insurer; the insurer or the authorized representative of the insurer shall have access and 30 the right to audit and the right to copy all accounts and records related to the insurer's 31 business; the director, in addition to the other authority granted in this title, shall have 01 access to all books, bank accounts, and records of the insurance intermediary broker in 02 a form usable to the director; 03 (5) the insurer shall establish written standards for the cession or 04 retrocession of all risks, and the reinsurance intermediary broker shall comply with 05 those standards; 06 (6) the reinsurance intermediary broker shall disclose to the insurer all 07 its relationships with insurers and reinsurers to whom risks are ceded or retroceded; 08 and 09 (7) the contract may not be assigned in whole or in part by the 10 reinsurance intermediary broker. 11  * Sec. 58. AS 21.27.690 is amended by adding a new subsection to read: 12 (g) In this section, "transact" has the meaning given in AS 21.90.900. 13  * Sec. 59. AS 21.27.760(b) is amended to read: 14 (b) The contract required under (a) of this section must include the following 15 provisions: 16 (1) the reinsurer may terminate the contract for cause upon written 17 notice sent by certified mail to the reinsurance intermediary manager and may suspend 18 the underwriting authority of the reinsurance intermediary manager during a dispute 19 regarding the cause for termination; 20 (2) the reinsurance intermediary manager shall render accounts to the 21 reinsurer detailing all transactions including information necessary to support all 22 commissions, charges, and other fees received by or owing to the reinsurance 23 intermediary manager and remit all money due under the contract to the insurer at 24 least monthly; 25 (3) money collected for the account of a reinsurer shall be held by the 26 reinsurance intermediary manager as [IN] a fiduciary [ACCOUNT AS DESCRIBED 27 UNDER AS 21.27.360]; 28 (4) [THE REINSURANCE INTERMEDIARY MANAGER SHALL 29 COMPLY WITH APPLICABLE FIDUCIARY ACCOUNT STATUTES AND 30 REGULATIONS; 31 (5)] the reinsurance intermediary manager shall maintain a separate 01 bank account for each reinsurer that it represents; 02 (5) [(6) A FIDUCIARY ACCOUNT MUST BE USED FOR] all 03 payments on behalf of the reinsurer shall be held by the reinsurance intermediary  04 manager as a fiduciary; 05 (6) [(7)] the reinsurance intermediary manager may retain not more 06 than three months estimated claims payments and allocated loss adjustment expenses; 07 (7) [(8)] the reinsurance intermediary manager shall maintain separate 08 accounts and records for each reinsurer and maintain the records in a form usable by 09 the reinsurer; the reinsurer or its authorized representative shall have access and the 10 right to audit and the right to copy all accounts and records related to the reinsurer's 11 business; the director, in addition to the other authority granted in this title, shall have 12 access to all books, bank accounts, and records of the reinsurance intermediary 13 manager in a form usable to the director; 14 (8) [(9)] the contract may not be assigned in whole or in part by the 15 reinsurance intermediary manager; 16 (9) [(10)] the reinsurer shall establish written underwriting and rating 17 standards for the acceptance, rejection, or cession of all risks and the reinsurance 18 intermediary manager shall comply with the standards; 19 (10) [(11)] compensation including rates, terms, purposes of 20 commissions, charges, and other fees that the reinsurance intermediary manager may 21 levy against the reinsurer; 22 (11) [(12)] if the contract permits the reinsurance intermediary 23 manager to settle claims on behalf of the reinsurer, 24 (A) written settlement authority must be provided by the 25 reinsurer and may be terminated for cause upon the insurer's written notice by 26 certified mail to the reinsurance intermediary manager or upon the termination 27 of the contract; the reinsurer may suspend the settlement authority during a 28 dispute regarding the cause of termination; 29 (B) claims shall be reported to the reinsurer within 30 days; 30 (C) a copy of the claim file shall be sent to the reinsurer upon 31 request or as soon as it becomes known that the claim 01 (i) has the potential to exceed an amount determined by 02 the director or exceeds the limit set by the insurer, whichever is less; 03 (ii) involves a coverage dispute; 04 (iii) may exceed the reinsurance intermediary manager's 05 claims settlement authority; 06 (iv) is open for more than six months; 07 (v) involves extra contractual allegations; or 08 (vi) is closed by payment in excess of an amount set by 09 the director or an amount set by the insurer, whichever is less; 10 (D) the reinsurance intermediary manager shall comply with 11 unfair claims settlement statutes and regulations; 12 (E) transmission of electronic data at least once a month if 13 electronic claims files are in existence; 14 (F) claim files shall be the property of both the reinsurer and 15 reinsurance intermediary manager, but upon an order of liquidation of the 16 reinsurer, the files shall become the sole property of the reinsurer or the 17 reinsurer's estate; the reinsurance intermediary manager shall have reasonable 18 access to and the right to copy the files on a timely basis; 19 (12) [(13)] if the contract provides for sharing of interim profits by the 20 reinsurance intermediary manager, the interim profits may not be paid until 21 (A) one calendar year after the end of each underwriting period 22 for property risks and five years after the end of each underwriting period for 23 casualty risks; 24 (B) a later period established by the director for specified kinds 25 or classes of insurance; and 26 (C) the profits have been verified under (e)(2) of this section; 27 (13) [(14)] the reinsurance intermediary manager may not 28 (A) cede retrocessions on behalf of the reinsurer, except that 29 the reinsurance intermediary manager may cede facultative retrocessions under 30 obligatory agreements if the contract with the reinsurer contains reinsurance 31 underwriting guidelines including a list of reinsurers with which automatic 01 agreements are in effect, and, for each reinsurer, the coverage and amounts or 02 percentages that may be reinsured, and commission schedules; 03 (B) commit the reinsurer to participate in reinsurance 04 syndicates; 05 (C) appoint a subagent unless the scope of the subagent's 06 license as an insurance producer includes the kinds and classes of insurance for 07 which the subagent is appointed; 08 (D) pay or commit the reinsurer to pay a claim, net of 09 retrocessions, the amount of which exceeds one percent of the reinsurer's 10 policyholder's surplus as of December 31 of the last completed calendar year 11 without the prior written approval of the reinsurer for the settlement and the 12 approval is received after the reinsurer has been notified in writing that the 13 claim settlement will exceed one percent of the reinsurer's policyholder's 14 surplus as of December 31 of the last completed calendar year; 15 (E) collect payment from a retrocessionaire or commit the 16 reinsurer to a claim settlement with a retrocessionaire without prior written 17 approval of the reinsurer, but if prior written approval is given, a complete 18 report shall be forwarded to the reinsurer within 30 days; 19 (F) jointly employ an individual who is employed with the 20 reinsurer; or 21 (G) delegate reinsurance intermediary manager authority to 22 another person; 23 (14) [(15)] if the insurer is domiciled in this state or the reinsurance 24 intermediary manager has a place of business in this state, a copy of the contract must 25 be filed with and approved by the director at least 30 days before the reinsurance 26 intermediary manager transacts business on behalf of the reinsurer; if the reinsurer is 27 not domiciled in this state or the reinsurance intermediary manager transacts business 28 relative to a subject resident, located, or to be performed in this state from a place of 29 business not physically located in this state, a copy of the contract required in this 30 section must be filed with and approved by the director at least 30 days before the 31 reinsurance intermediary manager transacts business on behalf of the insurer in this 01 state or relative to a subject resident, located, or to be performed in this state if the 02 insurer or the reinsurance intermediary manager are domiciled in a state not accredited 03 by the National Association of Insurance Commissioners; and 04 (15) [(16)] if the contract is not required to be approved in advance by 05 the director, the insurer shall provide written notification to the director within 30 days 06 of the entry into or termination of a contract with a reinsurance intermediary manager; 07 the notice must include a statement of duties to be performed by the reinsurance 08 intermediary manager on behalf of the reinsurer, the kinds and classes of insurance for 09 which the reinsurance intermediary manager has authorization to act, and other 10 information required by the director. 11  * Sec. 60. AS 21.27.760 is amended by adding a new subsection to read: 12 (l) In this section, "transact" has the meaning given in AS 21.90.900. 13  * Sec. 61. AS 21.27.790(2) is amended to read: 14 (2) if required by the director by regulation maintain a bond as  15 described in AS 21.27.190 in an amount acceptable to the director [HAVE AND 16 MAINTAIN WHILE LICENSED, A BOND IN THE SUM OF NOT LESS THAN 17 $200,000 AGGREGATE LIABILITY AND] with the conditions that the surplus lines 18 broker conduct business under the provisions of this title, promptly remit the taxes and 19 fees provided by law, return premiums promptly when due, and pay proper losses 20 promptly; 21  * Sec. 62. AS 21.27.800(g) is amended to read: 22 (g) In addition to any other penalty provided by law, 23 (1) the director shall revoke the license of a trainee surplus lines broker 24 who the director determines has violated the provisions of this section; a licensee or 25 other person having possession or custody of the license shall immediately surrender 26 the license to the director either personally or by certified mail; 27 (2) if the director determines under AS 21.06.170 - 21.06.240 that the 28 employing surplus lines broker knew of or should have known that a trainee licensed 29 under this section violated this section, the employing surplus lines broker and firm, 30 and the compliance officer [PRINCIPAL, AND MANAGER], if any, are subject to 31 the penalties provided under AS 21.27.440. 01  * Sec. 63. AS 21.27.840(f) is amended to read: 02 (f) A trainee independent adjuster shall at all times be working at the direction 03 and under the supervision of the employing licensed independent adjuster, and the file 04 and record documentation shall reflect the direction and supervision. The employing 05 licensed independent adjuster and its firm, and the compliance officer [MANAGER, 06 AND PRINCIPAL], if any, are responsible for all insurance actions of the trainee 07 independent adjuster. 08  * Sec. 64. AS 21.27.840(i) is amended to read: 09 (i) In addition to any other penalty provided by law, 10 (1) a trainee independent adjuster who the director determines has 11 violated the provisions of this section shall have its license terminated; a licensee or 12 other person having possession or custody of the license shall within 30 days surrender 13 the license to the director either personally or by certified mail; 14 (2) if the director determines under AS 21.06.170 - 21.06.240 that the 15 employing licensed independent adjuster knew of or should have known that a trainee 16 independent adjuster violated this section, the employing licensed independent 17 adjuster and firm, and the compliance officer [PRINCIPAL AND MANAGER], if 18 any, are subject to the penalties provided under AS 21.27.440. 19  * Sec. 65. AS 21.27.900(10) is amended to read: 20 (10) "individual" means a natural person required to be licensed under 21 AS 21.27.010 [WHO IS NOT ACTING IN ASSOCIATION WITH TWO OR MORE 22 LICENSEES, EITHER IN PARTNERSHIP, CORPORATION, OR OTHERWISE, 23 OR AN ORGANIZATION IN WHICH A SINGLE LICENSEE HAS 50 PERCENT 24 OR MORE OWNERSHIP INTEREST IN THE ORGANIZATION]; 25  * Sec. 66. AS 21.27.900 is amended by adding new paragraphs to read: 26 (23) "compliance officer" means a licensee under this chapter that is 27 responsible for a firm's compliance with the insurance statutes and regulations of this 28 state; 29 (24) "home state" means the District of Columbia or a state or territory 30 of the United States in which an insurance producer maintains the producer's principal 31 place of residence or principal place of business and is licensed to act as an insurance 01 producer; 02 (25) "insurance producer" means a person who sells, solicits, or 03 negotiates insurance or insurance products; 04 (26) "license" means, unless the context requires otherwise, a 05 document issued by the director of insurance authorizing a person to act for the type, 06 class, and lines of authority specified in the document; 07 (27) "limited lines credit insurance" includes credit life, credit 08 disability, credit property, credit unemployment, involuntary unemployment, mortgage 09 life, mortgage guaranty, mortgage disability, guaranteed automobile protection 10 insurance, and any other form of insurance offered in connection with an extension of 11 credit that is limited to partially or wholly extinguishing that credit obligation that the 12 director of insurance determines must be designated a form of limited lines credit 13 insurance; 14 (28) "limited lines" means those lines of insurance defined in 15 AS 21.27.150 or any other line of insurance that the director of insurance designates 16 by order as a limited line; 17 (29) "negotiate" means the act of conferring directly with or offering 18 advice directly to a purchaser or prospective purchaser of a particular contract of 19 insurance concerning any of the substantive benefits, terms, or conditions of the 20 contract if the person engaged in that act either sells insurance or obtains insurance 21 from insurers for purchasers; 22 (30) "sells" means to exchange a contract of insurance by any means, 23 for money or its equivalent, on behalf of an insurance company; 24 (31) "solicit" means attempting to sell insurance or asking or urging a 25 person to apply for a particular kind of insurance from a particular company; 26 (32) "transact" or "transact business" means sell, solicit, or negotiate 27 insurance or insurance products; 28 (33) "uniform application" means the most recent version of the 29 uniform application of the National Association of Insurance Commissioners; 30 (34) "uniform business entity application" means the most recent 31 version of the uniform business entity application of the National Association of 01 Insurance Commissioners. 02  * Sec. 67. AS 21.36 is amended by adding new sections to read: 03 Sec. 21.36.162. Nondisclosure of personal financial and personal health  04 information. The director shall adopt regulations regarding the release of financial 05 and health information regarding an individual who seeks to obtain, obtains, or has 06 obtained an insurance product or service from a licensee that is to be used primarily 07 for personal, family, or household purposes. The regulations must be at least as 08 restrictive as the model regulations adopted under the National Conference of 09 Insurance Legislators Financial Information Privacy Protection Model Act, adopted by 10 the National Conference of Insurance Legislators Executive Committee on 11 November 17, 2000, and amended on March 2, 2001. 12 Sec. 21.36.164. Licensing of persons in a financial institution. A financial 13 institution may not allow a person to transact insurance in an office of the institution 14 or on behalf of the institution, unless the person is licensed as required under 15 AS 21.27. 16 * Sec. 68. AS 21.36.165 is amended to read: 17 Sec. 21.36.165. Anticoercion and antitying [FAVORED AGENT OR  18 INSURER; COERCION OF DEBTORS]. A person may not 19 (1) require, as a condition to the lending of money or extension of 20 credit, or a renewal of the loan or extension of credit, that the obligee of the money or 21 credit negotiate a policy or contract of insurance through any particular person or 22 group of persons; 23 (2) disapprove the insurance policy provided by a borrower for the 24 protection of property securing credit or a loan [LIEN] if disapproval is based on other 25 than reasonable standards uniformly applied and relating to the extent of coverage 26 required and the financial soundness and the services of the insurer; the standards may 27 not discriminate against a particular type of insurer [,] or call for the disapproval of a 28 policy containing coverage in addition to that required; 29 (3) unless charges are required when the person handling the  30 insurance transaction is a licensee, require a consumer [BORROWER, 31 MORTGAGOR, PURCHASER], insurer, broker, or agent to pay a separate charge for 01 handling an insurance policy required as security for a loan on real property, or to pay 02 a separate charge to substitute the insurance policy of one insurer for that of another, 03 except that interest may be charged on premium loans or [OF] premium advancements 04 in accordance with the security instrument [; 05 (4) USE OR DISCLOSE INFORMATION RESULTING FROM A 06 REQUIREMENT THAT A BORROWER, MORTGAGOR, OR PURCHASER 07 FURNISH INSURANCE OF ANY KIND ON REAL PROPERTY BEING 08 CONVEYED OR USED AS COLLATERAL SECURITY TO A LOAN, WHEN THE 09 INFORMATION IS TO THE ADVANTAGE OF THE MORTGAGEE, VENDOR, 10 OR LENDER, OR IS TO THE DETRIMENT OF THE BORROWER, 11 MORTGAGOR, PURCHASER, INSURER, AGENT, OR BROKER COMPLYING 12 WITH THE REQUIREMENT]. 13 * Sec. 69. AS 21.36.165 is amended by adding new subsections to read: 14 (b) A person shall 15 (1) use separate documents for an insurance transaction, other than 16 credit insurance or flood insurance, and for a credit transaction; and 17 (2) maintain separate and distinct records relating to insurance 18 transactions, including consumer complaint information, and make the records 19 available to the director for inspection upon notice. 20 (c) A person may not include insurance premiums in a primary credit 21 transaction without the consent of the consumer. 22 (d) Nothing in this section prohibits a person from informing a consumer or 23 prospective consumer that insurance is required in order to obtain a loan or credit, that 24 loan or credit approval is contingent on the procurement of acceptable insurance by 25 the consumer, or that insurance is available from the person. 26 * Sec. 70. AS 21.36 is amended by adding new sections to read: 27 Sec. 21.36.167. Misrepresentation in financial institution sales. In the sale 28 of insurance by a financial institution, a person may not engage in any practice or use 29 an advertisement that may tend to mislead or deceive a consumer or cause a consumer 30 to erroneously believe that 31 (1) the insurance is backed by or a return on the insurance is 01 guaranteed by the state, the federal government, the person, or the Federal Deposit 02 Insurance Corporation; 03 (2) the state or federal government 04 (A) will pay a claim under an insurance contract that is an 05 obligation of or was sold by the person; 06 (B) is responsible for the insurance sales activities of the 07 person; or 08 (C) guarantees the credit of the person; 09 (3) for insurance that contains investment risk, the insurance does not 10 contain investment risk, the principal may not be lost, or the value of the insurance 11 may not decline; 12 (4) the lending of money, extension of credit, or a renewal of a loan is 13 conditioned on the purchase of insurance from the person and that insurance may not 14 be purchased from another source. 15 Sec. 21.36.168. Disclosures required in financial institution sales. (a) In 16 the sale of insurance by a financial institution, a person shall disclose both orally and 17 in writing to a consumer before the initial purchase of insurance that 18 (1) the insurance is not a deposit or other obligation of the person; 19 (2) the insurance is not guaranteed by the person or the person 20 soliciting insurance; 21 (3) the insurance is not insured by the Federal Deposit Insurance 22 Corporation or other agency of the United States, the financial institution, or the 23 person; 24 (4) if the insurance contains risk, the insurance contains investment 25 risk and the insurance may lose value; 26 (5) the consumer is not required to negotiate a policy or contract of 27 insurance through any particular person or group of persons as a condition to the 28 lending of money or extension of credit, or a renewal of the loan or extension of 29 credit, except that the person may impose reasonable requirements uniformly applied 30 and relating to the extent of coverage required and the financial soundness and the 31 services of the insurer and that the standards may not discriminate against a particular 01 type of insurer or require disapproval of a policy containing coverage in addition to 02 that required. 03 (b) A person shall also provide the disclosures required in (a) of this section to 04 a consumer both orally and in writing at the time of application for an extension of 05 credit. 06 (c) If an application for insurance is made by telephone, written disclosure as 07 required in (a) of this section must be mailed to the consumer within three working 08 days. 09 (d) A person may provide the disclosures required in (a) of this section 10 electronically, if 11 (1) the consumer affirmatively consents to electronic disclosure; and 12 (2) the disclosures are provided in a format that the consumer is able to 13 access at a later time by a method such as through printing or storing the disclosures 14 electronically. 15 (e) A person shall provide the disclosures required in (a) of this section in a 16 meaningful form and in a conspicuous, simple, direct, and understandable manner that 17 is designed to call attention to the information provided. 18 (f) A person shall obtain a written acknowledgment or, in the case of an 19 electronic disclosure provided in compliance with (d) of this section, a written or 20 electronic acknowledgment, by the consumer that the consumer received the 21 disclosures as required in this section. 22 (g) This section does not require that a person provide the disclosures required 23 in this section in advertisements that are of a general nature or that describe or list the 24 services or products offered by a financial institution or on behalf of a financial 25 institution. 26 (h) In this section, "meaningful form" means 27 (1) for other than an electronic form, a form of disclosure that is 28 provided to a consumer orally and in writing; 29 (2) for an electronic form, a disclosure that a consumer cannot 30 electronically bypass before purchasing insurance. 31 Sec. 21.36.169. Definitions for AS 21.36.164 - 21.36.169. In AS 21.36.164 - 01 21.36.169, unless the context otherwise requires, 02 (1) "consumer" means a person who obtains, applies to obtain, or is 03 solicited to obtain insurance from or on behalf of a financial institution; 04 (2) "financial institution" means a bank holding company under 05 12 U.S.C. 1841 (Bank Holding Company Act of 1956); a credit union under 12 U.S.C. 06 1752 (Federal Credit Union Act), a bank, savings bank, savings and loan association, 07 or trust company, or any depository institution under 12 U.S.C. 1813(c)(1); and any 08 other person authorized to take federally insured deposits and make loans in the state; 09 "financial institution" includes any employee or agent of a financial institution and any 10 nondepository affiliate or subsidiary of a financial institution but only in the instances 11 when the nondepository affiliate or subsidiary is soliciting the sale or purchase of 12 insurance recommended or sponsored by, on the premises of, or in connection with a 13 product offering of the financial institution; "financial institution" does not include an 14 insurer. 15 * Sec. 71. AS 21.36 is amended by adding a new section to read: 16 Sec. 21.36.355. Felony convictions involving dishonesty or breach of trust. 17 (a) A person who has a conviction for a felony involving dishonesty or a breach of 18 trust may not engage or participate in the business of insurance without receiving prior 19 written consent by the director as required under 18 U.S.C. 1033 and 1034 (Violent 20 Crime Control and Law Enforcement Act of 1994). 21 (b) A person who fails to seek prior written consent from the director under (a) 22 of this section is in violation of this chapter. 23 (c) A person who is engaged in the business of insurance may not knowingly 24 permit the participation in the business of insurance by a person who has been 25 convicted of a felony involving dishonesty or breach of trust except as allowed under 26 (a) of this section. 27  * Sec. 72. AS 21.36.360 is amended by adding a new subsection to read: 28 (r) The director of insurance may adopt regulations to implement, define, and 29 enforce this section. 30 * Sec. 73. AS 21.36.430(a) is amended to read: 31 (a) A person transacting [AN INSURER OFFERING] insurance in this state 01 may not (1) refuse to issue or renew insurance coverage; (2) limit the scope of  02 insurance coverage; (3) cancel an existing policy of insurance; (4) [(3)] deny a 03 covered claim; or (5) [(4)] increase the premium on an insurance policy if the refusal, 04 cancellation, denial, or increase results only from the fact that the person was a victim 05 of domestic violence or a provider of services to victims of domestic violence. 06 * Sec. 74. AS 21.36.430 is amended by adding a new subsection to read: 07 (c) In this section, "domestic violence" means the occurrence of one or more 08 of the following by a current or former family member, household member, intimate 09 partner, or caretaker: 10 (1) attempting to cause, causing, or threatening another person with 11 physical harm, severe emotional distress, psychological trauma, rape, or sexual 12 assault; 13 (2) engaging in a course of conduct or repeatedly committing acts 14 toward another person, including following the person without proper authority, under 15 circumstances that place the person in reasonable fear of bodily injury or physical 16 harm; 17 (3) subjecting another person to false imprisonment; or 18 (4) attempting to cause or causing damage to property so as to intimidate or 19 attempt to control the behavior of another person. 20  * Sec. 75. AS 21.39.040(a) is amended to read: 21 (a) Each insurer shall file with the director, except as to inland marine risks, 22 which, by general custom of the business, are not written according to manual rates or 23 rating plans, and except for rates for commercial insurance for which the director,  24 by regulation, authorizes an informational filing as set out in (k) of this section, 25 every manual, minimum, class rate, rating schedule, or rating plan and every other 26 rating rule, and each modification of any of them that it proposes to use. Each filing 27 shall state the proposed effective date and shall indicate the character and extent of the 28 coverage contemplated. When a filing is not accompanied by the information upon 29 which the insurer supports the filing, and the director does not have sufficient 30 information to determine whether the filing meets the requirements of this chapter, the 31 director shall require the insurer to furnish the information upon which it supports the 01 filing, and, in that event, the waiting period shall commence as of the date the 02 information is furnished. The information furnished in support of a filing may include 03 (1) the experience or judgment of the insurer or rating organization making the filing; 04 (2) its interpretation of the statistical data it relies upon; (3) the experience of other 05 insurers or rating organizations; or (4) any other relevant factors. A filing and 06 supporting information shall be open to public inspection after the filing becomes 07 effective. Specific inland marine rates on risks specially rated, made by a rating 08 organization, shall be filed with the director. 09  * Sec. 76. AS 21.39.040(k) is amended to read:  10 (k) The director 11 (1) may adopt regulations detailing the format and content of a rating 12 system filing under this section;  13 (2) shall, by July 1, 2002, adopt regulations consistent with the  14 National Association of Insurance Commissioners Property and Casualty Model  15 Rate and Policy Form Act, including those provisions relating to the format and  16 content of informational filings for rates for commercial insurance; the  17 provisions of AS 21.39.030(a) apply to an informational filing authorized by the  18 director; in this paragraph, "informational filing" means a filing that the  19 director does not approve before its use and that meets the format and content  20 requirements of regulations adopted by the director. 21  * Sec. 77. AS 21.42.120(a) is amended to read: 22 (a) A basic insurance policy or annuity contract form, or application form 23 where written application is required and is to be made a part of the policy or contract, 24 or printed rider or endorsement form or form of renewal certificate, may not be 25 delivered, or issued for delivery in this state, unless the form has been filed with and 26 approved by the director. This provision does not apply to surety bonds or to specially 27 rated inland marine risks, nor to policies, riders, endorsements, or forms of unique 28 character designed for and used with relation to insurance upon a particular subject, or 29 that [WHICH] relate to the manner of distribution of benefits or to the reservation of 30 rights and benefits under life or health insurance policies and are used at the request of 31 the individual policyholder, contract holder, or certificate holder; or to policies of  01 commercial insurance that the director has authorized under (d) of this section to  02 be filed on or before the date of use and that are not subject to the prior approval  03 of the director. The filing required by this section of forms for use in property, 04 marine other than wet marine and transportation coverages, casualty, and surety 05 coverages may be made by a rating organization on behalf of its members and 06 subscribers; but this provision does not prohibit a member or subscriber from filing the 07 forms on its own behalf. 08  * Sec. 78. AS 21.42.120(d) is amended to read: 09 (d) The director may, by order, exempt from the requirements of this section 10 for a time determined by the director an insurance document or form or type thereof as 11 specified in the order, to which, in the opinion of the director, this section may not 12 practicably be applied, or the filing and approval of which are, in the opinion of the 13 director, not desirable or necessary for the protection of the public. The director  14 shall, by July 1, 2002, adopt regulations consistent with the National Association  15 of Insurance Commissioners Property and Casualty Model Rate and Policy Form  16 Act authorizing a policy of commercial insurance to be filed on or before the date  17 of use and to be not subject to the prior approval of the director. 18  * Sec. 79. AS 21.87.220(b) is amended to read: 19 (b) AS 21.21 shall [THE FOLLOWING SECTIONS] apply to the investments 20 of service corporations, to the extent applicable, and for the purposes of the 21 application a service corporation shall be considered to be an insurer [: AS 21.21.020 - 22 21.21.050, 21.21.290, AND 21.21.300]. 23  * Sec. 80. AS 21.89.080 is repealed and reenacted to read: 24 Sec. 21.89.080. Electronic submissions. The director may, by regulation or 25 by order, provide for the electronic submission of any information or written 26 submission required by this title and for an electronic confirmation of a required 27 submission. 28  * Sec. 81. AS 21.90.900(24) is repealed and reenacted to read: 29 (24) "insurance producer" has the meaning given in AS 21.27.900; 30  * Sec. 82. AS 21.27.150(b), 21.27.170, 21.27.530(5), 21.27.900(14), and 21.27.900(16) are 31 repealed. 01  * Sec. 83. AS 21.27.190(d), 21.27.365, and 21.27.900(7) are repealed. 02  * Sec. 84. AS 21.18.120, 21.18.130, 21.18.140, 21.18.150; AS 21.21.030, 21.21.040, 03 21.21.050, 21.21.060, 21.21.070, 21.21.080, 21.21.090, 21.21.100, 21.21.110, 21.21.120, 04 21.21.130, 21.21.140, 21.21.150, 21.21.160, 21.21.170, 21.21.180, 21.21.190, 21.21.200, 05 21.21.210, 21.21.220, 21.21.225, 21.21.230, 21.21.240, 21.21.245, 21.21.250, 21.21.260, 06 21.21.270, 21.21.280, 21.21.290, 21.21.300, 21.21.310, 21.21.321, 21.21.330, 21.21.350, 07 21.21.355, 21.21.360, 21.21.370, 21.21.380, 21.21.390, 21.21.400, 21.21.600; 08 AS 21.87.340(7), and 21.87.340(8) are repealed. 09  * Sec. 85. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 INDIRECT COURT RULE AMENDMENT. (a) The provisions of AS 21.27.110(h), 12 as repealed and reenacted by sec. 23 of this Act, have the effect of amending Rule 402, 13 Alaska Rules of Evidence, by making inadmissible in court, except under certain 14 circumstances, the statement of reasons for termination of an appointment under 15 AS 21.27.110. 16 (b) The provisions of AS 21.27.110(h), as repealed and reenacted by sec. 23 of this 17 Act, that relate to admissibility of evidence in court take effect only if (a) of this section 18 receives the two-thirds majority vote of each house required by art. IV, sec. 15, Constitution 19 of the State of Alaska. 20  * Sec. 86. The uncodified law of the State of Alaska is amended by adding a new section to 21 read: 22 TRANSITION: REGULATIONS. The director of insurance may immediately 23 proceed to adopt regulations necessary to implement the changes made by this Act. The 24 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the 25 effective date of the statutory change. 26  * Sec. 87. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 CERTIFICATION OF EFFECTIVE DATE OF REGULATIONS. The lieutenant 29 governor shall certify to the revisor of statutes the effective date of the regulations initially 30 adopted by the director of insurance under AS 21.21.420, enacted by sec. 8 of this Act, to 31 implement the provisions of secs. 3 - 9 and 79 of this Act regarding investments by insurers. 01 * Sec. 88. Sections 1, 17, 18, 80, and 86 of this Act take effect immediately under 02 AS 01.10.070(c). 03  * Sec. 89. Sections 2, 33 - 39, 45, 46, 48, 49, 51, 54, 57, 59, 71, 75 - 78, and 83 of this Act 04 take effect July 1, 2002. 05 * Sec. 90. Sections 67 - 70, 73, and 74 of this Act take effect July 1, 2001. 06  * Sec. 91. Sections 3 - 9, 79, and 84 of this Act take effect 30 days after the revisor of 07 statutes receives notice from the lieutenant governor under sec. 87 of this Act. 08  * Sec. 92. Except as provided in secs. 88 - 91 of this Act, this Act takes effect January 1, 09 2002.