00 CS FOR SENATE BILL NO. 108(L&C) 01 "An Act relating to the regulation of insurance, insurance licensing, surplus lines, 02 insurer deposits, owner-controlled and contractor-controlled insurance programs, 03 health discount plans, third-party administrators, and self-funded multiple employer 04 welfare arrangements and self-funded governmental plans; and providing for an 05 effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. AS 21.06.130(a) is amended to read: 08 (a) To determine compliance with this title, the director may, as often as the 09 director has reasonable cause, [CONSIDERS ADVISABLE] examine or require a 10 written report from a person of the accounts, records, documents, and transactions 11 pertaining to or affecting the insurance affairs or proposed insurance affairs of 12 (1) an insurance producer or independent adjuster; or 13 (2) a person engaged in or proposing to be engaged in or assisting in 01 the promotion or formation of a domestic insurer or insurance holding corporation, or 02 corporation to finance a domestic insurer or the production of its business. 03 * Sec. 2. AS 21.09.160 is amended to read: 04 Sec. 21.09.160. Notice of suspension or revocation and effect upon agent's 05 authority. (a) Upon suspending or revoking an insurer's certificate of authority, the 06 director shall immediately give notice to the insurer and [TO ITS AGENTS OF 07 RECORD IN THIS STATE IN THE DIRECTOR'S OFFICE. THE DIRECTOR] shall 08 also publish notice of the revocation in one or more newspapers of general circulation 09 in this state. 10 (b) The suspension or revocation shall automatically suspend or revoke, as the 11 case may be, the authority of all its agents and managing general agents to act as 12 agents or managing general agents of the insurer in this state, and the insurer 13 [DIRECTOR] shall so state in the notice to agents and managing general agents 14 provided for in (c) [(a)] of this section. 15 * Sec. 3. AS 21.09.160 is amended by adding a new subsection to read: 16 (c) Upon notification of suspension or revocation of an insurer's certificate of 17 authority, the insurer shall immediately give notice of the suspension or revocation to 18 its agents and managing general agents operating in this state. 19 * Sec. 4. AS 21.24.040(a) is amended to read: 20 (a) Deposits made in this state under this title shall be made through the office 21 of the director [IN SAFE DEPOSIT OR] under custodial arrangements as required or 22 approved by the director consistent with the purposes of the deposit, with an 23 established safe deposit institution, bank, or trust company located in this state 24 selected by the insurer with the director's approval. 25 * Sec. 5. AS 21.24.040(c) is amended to read: 26 (c) If of convenience to the insurer in the buying, selling, and exchange of 27 securities making up [COMPRISING] its deposit, and in the collection of interest and 28 other income currently accruing on the securities [THEREON], the insurer may, with 29 the director's advance written approval, deposit a portion of the securities under 30 custodial arrangements with an established bank or trust company located outside this 31 state, if receipts representing all the securities are issued by the custodial bank or trust 01 company and are held in [SAFE DEPOSIT OR] custody subject to the requirements of 02 (a) [AND (b)] of this section. 03 * Sec. 6. AS 21.24.130(d) is amended to read: 04 (d) If the insurer is subject to delinquency proceedings as defined in AS 21.78, 05 upon the order of a court of competent jurisdiction, the director shall yield the assets 06 and securities held on deposit under AS 21.09.090(b) to the receiver, conservator, 07 rehabilitator, or liquidator of the insurer, or to any other properly designated official or 08 officials who succeed to the management and control of the insurer's assets. The 09 director may release the deposit directly to the guaranty fund of which the 10 insurer is a member if the right to receive all or a portion of the deposit is 11 assigned to the guaranty fund. 12 * Sec. 7. AS 21.27.010(c) is amended to read: 13 (c) A third-party administrator [PERSON WHO FOR A RESIDENT OF 14 THIS STATE, OR FOR A RESIDENT OF ANOTHER JURISDICTION FROM A 15 PLACE OF BUSINESS IN THIS STATE, PERFORMS ADMINISTRATIVE 16 FUNCTIONS, INCLUDING CLAIMS ADMINISTRATION AND PAYMENT, 17 MARKETING ADMINISTRATIVE FUNCTIONS, PREMIUM ACCOUNTING, 18 PREMIUM BILLING, COVERAGE VERIFICATION, UNDERWRITING 19 AUTHORITY, OR CERTIFICATE ISSUANCE ONLY IN REGARD TO LIFE 20 INSURANCE, HEALTH INSURANCE, OR ANNUITIES] is not required to be 21 licensed as a managing general agent if the third-party administrator [PERSON] 22 (1) is registered under AS 21.27.630 - 21.27.660 [THIS CHAPTER 23 AS A THIRD-PARTY ADMINISTRATOR]; or 24 (2) only investigates and adjusts claims and is licensed under this 25 chapter as an independent adjuster. 26 * Sec. 8. AS 21.27.100 is repealed and reenacted to read: 27 Sec. 21.27.100. Appointment of insurance producer, managing general 28 agent, and reinsurance intermediary manager; acts of agent. (a) An appointment 29 is required to be made in accordance with this section when one or more of the 30 following has occurred: 31 (1) an admitted insurer appoints a managing general agent in this state 01 or relative to a subject resident, located, or to be performed in this state; 02 (2) a managing general agent appoints an insurance producer as its 03 subagent in this state or relative to subjects resident, located, or to be performed in this 04 state; 05 (3) a domestic reinsurer appoints a reinsurance intermediary manager; 06 (4) a reinsurance intermediary manager appoints an insurance producer 07 as its subagent in this state. 08 (b) An admitted insurer shall appoint an insurance producer as its agent in this 09 state or relative to a subject resident, located, or to be performed in this state not later 10 than 30 days after the date that a written agency contract is executed or the first 11 insurance application is submitted to the admitted insurer by the licensed insurance 12 producer. 13 (c) An individual in a firm who acts solely on behalf of a firm that is 14 appointed as an agent or a managing general agent on behalf of an admitted insurer 15 under this section may not be required to also have an appointment under this section 16 if the individual in the firm is licensed with that firm for a specific class of authority. 17 (d) The authorized or apparently authorized acts on behalf of an appointing 18 insurer of an insurance producer appointed under this section are considered the acts 19 of that insurer. 20 (e) An insurer and managing general agent shall maintain a current list of all 21 appointments made or required to be made under this section that identifies the 22 licensee's name, licensee's mailing address, license number, and effective date of 23 appointment. 24 (f) An insurance producer shall maintain a list of all appointments made or 25 required to be made under this section that identifies the insurer's name, insurer's 26 mailing address, and effective date of appointment. 27 (g) An insurer, managing general agent, or insurance producer shall reply in 28 writing within three working days to an inquiry of the director regarding an 29 appointment. 30 * Sec. 9. AS 21.27.110 is repealed and reenacted to read: 31 Sec. 21.27.110. Term of appointment. (a) An appointment under 01 AS 21.27.100 continues in force until the appointment is terminated in writing. 02 (b) If an insurer, reinsurer, or authorized representative discovers information 03 showing that the appointee whose appointment was terminated has engaged in an 04 activity identified in AS 21.27.410 during the period of the appointment, the insurer, 05 reinsurer, or authorized representative shall, on a form or in a format prescribed by the 06 director, promptly notify the director. 07 (c) Within 15 days after providing notification in accordance with (b) of this 08 section, the insurer, reinsurer, or authorized representative shall mail a copy of the 09 notification to the appointee at the last address on record with the insurer, reinsurer, or 10 authorized representative. The notice must be provided by certified mail, return 11 receipt requested, postage prepaid, or by overnight delivery using a nationally 12 recognized mail carrier. 13 (d) Within 30 days after the appointee receives notification in accordance with 14 (c) of this section, the appointee shall file written comments concerning the substance 15 of the notification with the director and shall provide a copy of the written comments 16 to the insurer, reinsurer, or authorized representative. The written comments filed 17 with the director must be included with each report distributed or disclosed concerning 18 a reason about the termination of the appointment. 19 (e) If requested by the director, an insurer, a reinsurer, or an authorized 20 representative shall provide to the director additional information, documents, records, 21 or other data pertaining to a termination or activity of a licensee under this title. 22 (f) A notice of termination submitted to the director under this section must 23 include a statement of the reasons for the termination. A statement of the reasons for 24 termination is confidential and not subject to inspection and copying under 25 AS 40.25.110. A statement of reasons for the termination may not be admitted as 26 evidence in a civil action or an administrative proceeding against an insurer, reinsurer, 27 or authorized representative by or on behalf of a person affected by the termination, 28 except when the action or proceeding involves perjury, unsworn falsification, fraud, or 29 failure to comply with this subsection. 30 (g) If an insurer, a reinsurer, or an authorized representative fails to report as 31 required under this section or is found by a court to have knowingly or intentionally 01 falsely made that report, the director may, after notice and hearing, suspend or revoke 02 the license or certificate of authority of the insurer, reinsurer, or authorized 03 representative and may impose a penalty in accordance with AS 21.27.440. 04 * Sec. 10. AS 21.27.380(a) is amended to read: 05 (a) Except as provided in this title, the director may renew a license biennially 06 on a date set by the director if the licensee continues to be qualified under this chapter 07 and, on or before the close of business of the renewal date, meets all renewal 08 requirements established by regulation and pays the renewal license fees set under 09 AS 21.06.250 for each license to the director. A licensee is responsible for knowing 10 the date that a license lapses and for renewing a license before expiration. The director 11 shall notify the licensee of the license renewal [MAIL A RENEWAL NOTICE TO 12 THE LICENSEE'S CURRENT ADDRESS ON FILE WITH THE DIRECTOR] 30 13 days before the renewal date. 14 * Sec. 11. AS 21.27.630(b) is amended to read: 15 (b) A third-party administrator may not transact business for a kind or class of 16 authority [INSURANCE] for which the person is not registered. 17 * Sec. 12. AS 21.27.630(c) is amended to read: 18 (c) Except as otherwise provided in this chapter, a third-party 19 administrator [A PERSON WHO PERFORMS ADMINISTRATIVE FUNCTIONS, 20 INCLUDING CLAIMS ADMINISTRATION AND PAYMENT, MARKETING 21 ADMINISTRATIVE FUNCTIONS, PREMIUM ACCOUNTING, PREMIUM 22 BILLING, COVERAGE VERIFICATION, UNDERWRITING AUTHORITY, OR 23 CERTIFICATE ISSUANCE IN REGARD TO INSURANCE AS A THIRD-PARTY 24 ADMINISTRATOR] shall be registered under AS 21.27.630 - 21.27.660 [AS A 25 THIRD-PARTY ADMINISTRATOR] unless the third-party administrator 26 [PERSON] only investigates and adjusts claims and is licensed under this chapter as 27 an independent adjuster. 28 * Sec. 13. AS 21.27.630 is amended by adding new subsections to read: 29 (k) An insurer that holds a certificate of authority issued by the director and is 30 in good standing under this title is not required to be registered as a third-party 31 administrator in this state. 01 (l) A person that is not required to be registered as a third-party administrator 02 under (e) - (k) of this section shall file a certification with the director that the person 03 meets the requirements for exemption. 04 * Sec. 14. AS 21.27.650(a) is amended to read: 05 (a) An insurer may not transact business with a third-party administrator 06 unless 07 (1) the insurer holds a certificate of authority in this state if required 08 under this title; 09 (2) the third-party administrator is registered under this chapter or the 10 third-party administrator has filed a certification with the director certifying that 11 [, WHEN] the third-party administrator is operating only for a foreign insurer other 12 than a self-funded multiple employer welfare arrangement or self-funded 13 governmental plan regulated under AS 21.85, and [,] is registered as a third-party 14 administrator by the third-party administrator's resident insurance regulator in a state 15 that the director has determined has enacted provisions substantially similar to those 16 contained in AS 21.27.630 - 21.27.650 and that is accredited by the National 17 Association of Insurance Commissioners; 18 (3) the third-party administrator provides the director on January 1, 19 April 1, July 1, and October 1 of each year 20 (A) a list of current employees, identifying those transacting 21 business in this state or upon a subject resident, located or to be performed in 22 this state; 23 (B) a list of current insurers under contract; and 24 (C) other information the director may require; 25 (4) a written contract is in effect between the parties that establishes 26 the responsibilities of each party, indicates both parties' share of responsibility for a 27 particular function, and specifies the division of responsibilities; 28 (5) there is in effect a written contract between the insurer and third- 29 party administrator that contains the following provisions: 30 (A) the insurer may terminate the contract for cause upon 31 written notice sent by certified mail to the third-party administrator and may 01 suspend the underwriting authority of the third-party administrator during a 02 dispute regarding the cause for termination; but the insurer must fulfill all 03 lawful obligations with respect to policies affected by the written agreement, 04 regardless of any dispute between the insurer and the third-party administrator; 05 (B) the third-party administrator shall render accounts to the 06 insurer detailing all transactions and remit all money due under the contract to 07 the insurer at least monthly; 08 (C) all money collected for the account of an insurer shall be 09 held by the third-party administrator as a fiduciary; 10 (D) all payments on behalf of the insurer shall be held by the 11 third-party administrator as a fiduciary; 12 (E) the third-party administrator may not retain more than three 13 months estimated claims payments and allocated loss adjustment expenses; 14 (F) the third-party administrator shall maintain separate records 15 for each insurer in a form usable by the insurer; the insurer or its authorized 16 representative shall have the right to audit and the right to copy all accounts 17 and records related to the insurer's business; the director, in addition to other 18 authority granted in this title, shall have access to all books, bank accounts, and 19 records of the third-party administrator in a form usable to the director; any 20 trade secrets contained in books and records reviewed by the director, 21 including the identity and addresses of policyholders and certificate holders, 22 shall be kept confidential, except that the director may use the information in a 23 proceeding instituted against the third-party administrator or the insurer; 24 (G) the contract may not be assigned in whole or in part by the 25 third-party administrator; 26 (H) if the contract permits the third-party administrator to do 27 underwriting, the contract must include the following: 28 (i) the third-party administrator's maximum annual 29 premium volume; 30 (ii) the rating system and basis of the rates to be 31 charged; 01 (iii) the types of risks that may be written; 02 (iv) maximum limits of liability; 03 (v) applicable exclusions; 04 (vi) territorial limitations; 05 (vii) policy cancellation provisions; 06 (viii) the maximum policy term; and 07 (ix) that the insurer shall have the right to cancel or not 08 renew a policy of insurance subject to applicable state law; 09 (I) if the contract permits the third-party administrator to 10 administer claims on behalf of the insurer, the contract must include the 11 following: 12 (i) written settlement authority must be provided by the 13 insurer and may be terminated for cause upon the insurer's written 14 notice sent by certified mail to the third-party administrator or upon the 15 termination of the contract, but the insurer may suspend the settlement 16 authority during a dispute regarding the cause of termination; 17 (ii) claims shall be reported to the insurer within 30 18 days; 19 (iii) a copy of the claim file shall be sent to the insurer 20 upon request or as soon as it becomes known that the claim has the 21 potential to exceed an amount determined by the director or exceeds the 22 limit set by the insurer, whichever is less, involves a coverage dispute, 23 may exceed the third-party administrator's claims settlement authority, 24 is open for more than six months, involves extra contractual 25 allegations, or is closed by payment in excess of an amount set by the 26 director or an amount set by the insurer, whichever is less; 27 (iv) each party to the contract shall comply with unfair 28 claims settlement statutes and regulations; 29 (v) transmission of electronic data must occur at least 30 monthly if electronic claim files are in existence; and 31 (vi) claim files shall be the sole property of the insurer; 01 upon an order of liquidation of the insurer, the third-party administrator 02 shall have reasonable access to and the right to copy the files on a 03 timely basis; and 04 (J) the contract may not provide for commissions, fees, or 05 charges contingent upon savings obtained in the adjustment, settlement, and 06 payment of losses covered by the insurer's obligations; but a third-party 07 administrator may receive performance-based compensation for providing 08 hospital or other auditing services or may receive compensation based on 09 premiums or charges collected or the number of claims paid or processed. 10 * Sec. 15. AS 21.27.650 is amended by adding a new subsection to read: 11 (q) The director may, without advance notice or hearing, immediately suspend 12 by order the registration of a third-party administrator if the director finds that one or 13 more of the following circumstances exist: 14 (1) the third-party administrator is insolvent or impaired; 15 (2) a proceeding for bankruptcy, receivership, conservatorship, or 16 rehabilitation, or another delinquency proceeding regarding the third-party 17 administrator has been commenced in any state or by a governmental agency of 18 another jurisdiction; 19 (3) the third-party administrator is in an unsound condition, or is in a 20 condition or using methods or practices that render its further transaction of insurance 21 injurious to policy holders or the public. 22 * Sec. 16. AS 21.27 is amended by adding a new section to article 4 to read: 23 Sec. 21.27.660. Definitions. In AS 21.27.630 - 21.27.660, 24 (1) "insurer" includes the Comprehensive Health Insurance 25 Association created under AS 21.55.010 and a self-funded multiple employer welfare 26 arrangement or self-funded governmental plan regulated under AS 21.85; 27 (2) "transact" has the meaning given in AS 21.90.900. 28 * Sec. 17. AS 21.27.900 is amended by adding a new paragraph to read: 29 (33) "appointment" means an act by a person evidencing a grant of 30 authority to another to act on the grantor's behalf. 31 * Sec. 18. AS 21.34.040(d) is amended to read: 01 (d) A nonadmitted insurer may be eligible to provide coverage in this state if it 02 furnishes to the director a copy of its current annual statement that has been certified 03 by the insurer. Except in the case of an alien insurer, the [THE] statement shall be 04 provided not [NO] more than six months after the close of the period reported upon 05 and that is either filed with and approved by the regulatory authority in the domicile of 06 the nonadmitted insurer, or certified by an accounting or auditing firm licensed in the 07 jurisdiction of the insurer's domicile. An alien insurer shall provide the statement 08 not later than nine months after the close of the reporting period. In the case of 09 an insurance exchange, the statement may be an aggregate combined statement of all 10 underwriting syndicates operating during the period reported upon. 11 * Sec. 19. AS 21.34.100(a) is amended to read: 12 (a) When surplus lines insurance is placed, the surplus lines broker shall 13 promptly deliver to the named insured or the producing broker the policy or, if the 14 policy is not then available, [A CERTIFICATE,] cover note, binder, or other evidence 15 of insurance. The [CERTIFICATE,] cover note, binder, or other evidence of insurance 16 for the named insured shall be executed by the surplus lines broker and must contain a 17 summary of all material facts that would regularly be included in the policy, the 18 description and location of the subject of insurance, a general description of the 19 coverages of the insurance, the premium and rate charged and taxes to be collected 20 from the insured, the name and address of the insured, the name of each surplus lines 21 insurer and the percentage of the entire risk assumed by each, the name of the surplus 22 lines broker, and the license number of the surplus lines broker. 23 * Sec. 20. AS 21.34.100(f) is amended to read: 24 (f) A producing broker or other licensee may issue to a person, other than 25 the named insured, a certificate [EVERY CERTIFICATE ISSUED BY THE 26 PRODUCING BROKER OR OTHER LICENSEE] as evidence of insurance 27 negotiated, placed, or procured under this chapter. The certificate must bear the 28 name of the surplus lines broker, which may not be covered, concealed, or obscured 29 by the producing broker, and the following legend in at least 10-point type: "This is 30 evidence of insurance procured and developed under the Alaska Surplus Lines Law, 31 AS 21.34. It is not covered by the Alaska Insurance Guaranty Association Act, 01 AS 21.80." 02 * Sec. 21. AS 21.36.030(a) is amended to read: 03 (a) A person may not make, issue, circulate, broadcast, or have made, issued, 04 circulated, or broadcast an estimate, circular, statement, illustration, comparison, 05 assertion, or other written, electronic, or oral presentation that 06 (1) misrepresents the benefits, advantages, conditions, sponsorship, 07 source, or terms of an insurance policy; 08 (2) misrepresents the dividends or share of the surplus to be received 09 on an insurance policy; 10 (3) misrepresents an insurance policy as being a share or shares of 11 stock; 12 (4) makes a false or misleading statement as to the dividends or shares 13 of the surplus previously paid on an insurance policy; 14 (5) misrepresents or makes a misleading statement as to the financial 15 condition of an insurer or as to the legal reserve system upon which a life insurer 16 operates; 17 (6) uses a name or title of an insurance policy or class of insurance 18 policies misrepresenting its true nature; 19 (7) is a misrepresentation for the purpose of inducing, or that tends to 20 induce the lapse, forfeiture, exchange, conversion, or surrender of an insurance policy; 21 (8) is a misrepresentation for the purpose of effecting or tending to 22 effect a pledge or assignment of or loan against an insurance policy; 23 (9) appears to be an actual policy for a named individual when it is 24 merely an advertisement; 25 (10) does not clearly designate the name of the insurer providing the 26 coverage or about which the statements are made; or 27 (11) is in any other way misleading, false, or deceptive. 28 * Sec. 22. AS 21.36.030(a) is amended to read: 29 (a) A person may not make, issue, circulate, broadcast, or have made, issued, 30 circulated, or broadcast an estimate, circular, statement, illustration, comparison, 31 assertion, or other written, electronic, or oral presentation that 01 (1) misrepresents the benefits, advantages, conditions, sponsorship, 02 source, or terms of an insurance policy or a health discount plan; 03 (2) misrepresents the dividends or share of the surplus to be received 04 on an insurance policy; 05 (3) misrepresents an insurance policy as being a share or shares of 06 stock; 07 (4) makes a false or misleading statement as to the dividends or shares 08 of the surplus previously paid on an insurance policy; 09 (5) misrepresents or makes a misleading statement as to the financial 10 condition of an insurer or as to the legal reserve system upon which a life insurer 11 operates; 12 (6) uses a name or title of an insurance policy or class of insurance 13 policies misrepresenting its true nature; 14 (7) is a misrepresentation for the purpose of inducing, or that tends to 15 induce the lapse, forfeiture, exchange, conversion, or surrender of an insurance policy; 16 (8) is a misrepresentation for the purpose of effecting or tending to 17 effect a pledge or assignment of or loan against an insurance policy; 18 (9) appears to be an actual policy for a named individual when it is 19 merely an advertisement; 20 (10) does not clearly designate the name of the insurer providing the 21 coverage or about which the statements are made; [OR] 22 (11) is in any other way misleading, false, or deceptive; 23 (12) misrepresents a health discount plan as a form or type of 24 insurance; 25 (13) describes a health discount plan using common insurance 26 terminology; or 27 (14) states or implies that a health discount plan is underwritten 28 by or associated with an insurer. 29 * Sec. 23. AS 21.36 is amended by adding a new section to read: 30 Sec. 21.36.065. Limitation on owner controlled and contractor controlled 31 insurance programs. (a) An owner controlled insurance program or a contractor 01 controlled insurance program must be approved by the director and shall be allowed 02 only for a major construction project. Owner controlled and contractor controlled 03 insurance programs are limited to property insurance as defined in AS 21.12.060 and 04 casualty insurance as defined in AS 21.12.070. 05 (b) In this section, an owner controlled or contractor controlled insured 06 program does not include 07 (1) builder's risk or course of construction insurance; 08 (2) insurance relating to the transportation of cargo or other property; 09 (3) insurance covering one or more affiliates, subsidiaries, partners, or 10 joint venture partners of a person; or 11 (4) insurance policies endorsed to name one or more persons as 12 additional insureds. 13 (c) In this section, 14 (1) "contractor" means a person who meets the definition of 15 "contractor" in AS 08.18.171 and who undertakes the performance of a construction 16 project for a project owner, its agent, or its representative; 17 (2) "contractor controlled insurance program" means an insurance 18 program where one or more insurance policies are procured on behalf of a contractor, 19 its agent, or its representative, by its insurance producer, as defined in AS 21.27.900, 20 for the purpose of insuring the contractor and one or more of the following: 21 (A) the project owner; 22 (B) a subcontractor; 23 (C) an architect; 24 (D) an engineer; or 25 (E) a person performing professional services; 26 (3) "major construction project" means the process of constructing a 27 structure, building, facility, or roadway or major renovation of more than 50 percent of 28 an existing structure, building, facility, or roadway having a contract cost of more than 29 $50,000,000 of a definite term at a geographically defined project site; 30 (4) "owner controlled insurance program" means an insurance program 31 where one or more insurance policies are procured on behalf of a project owner, its 01 agent, or its representative, by its insurance producer, as defined in AS 21.27.900, for 02 the purpose of insuring the project owner and one or more of the following: 03 (A) the contractor; 04 (B) a subcontractor; 05 (C) an architect; 06 (D) an engineer; or 07 (E) a person performing professional services; 08 (5) "project owner" means a person who, in the course of the person's 09 business, engages the service of a contractor for the purpose of working on a 10 construction project; 11 (6) "subcontractor" means a person to whom a contractor sublets all or 12 part of a contractor's initial undertaking. 13 * Sec. 24. AS 21.36 is amended by adding a new section to read: 14 Sec. 21.36.155. Health discount plans. (a) A person may not sell, market, 15 promote, advertise, or otherwise distribute a health discount plan unless 16 (1) each advertisement, policy, document, information, statement, or 17 other communication regarding the health discount plan and the plan itself contain a 18 statement, in bold and prominent type, that the health discount plan is not insurance; 19 (2) the discounts offered under the health discount plan are specifically 20 authorized by a contract with each provider of the services or supplies listed in 21 conjunction with the plan; 22 (3) the health discount plan states the name, address, and telephone 23 number of the administrator of the plan; 24 (4) the person makes readily available to the consumer a complete, 25 accurate, and up-to-date list of providers participating in the plan that offer discounted 26 health care services or supplies in the consumer's local area and the discounts offered 27 by the providers; 28 (5) the person provides the consumer the right to cancel the health 29 discount plan within 30 days after purchase of the plan; and 30 (6) the person provides the consumer with a full refund of all payments 31 made within 30 days after notification of cancellation of the plan under (5) of this 01 subsection. 02 (b) The director may adopt regulations to implement this section and to 03 establish additional requirements intended to prohibit unfair or deceptive practices 04 relating to health discount plans. 05 * Sec. 25. AS 21.36.190 is amended by adding a new subsection to read: 06 (f) Except as provided in AS 21.36.065, an insurer, whether an authorized or 07 unauthorized insurer, may not underwrite an owner-controlled insurance program or 08 contractor-controlled insurance program. In this subsection, "owner-controlled 09 insurance program" and "contractor-controlled insurance program" have the meanings 10 given in AS 21.36.065. 11 * Sec. 26. AS 21.36.195 is amended to read: 12 Sec. 21.36.195. Surplus lines brokers and insurance producers; prohibited 13 acts. A surplus lines broker or an insurance producer may not fail to provide evidence 14 of insurance, [AFFIDAVITS,] filings, or reports, or fail to maintain the records, or fail 15 to pay the taxes and fees, required under AS 21.34. 16 * Sec. 27. AS 21.51 is amended by adding a new section to read: 17 Sec. 21.51.405. Rate requirements. Rates charged for a health insurance 18 policy may not be excessive, inadequate, or unfairly discriminatory. 19 * Sec. 28. AS 21.55.500(16) is amended to read: 20 (16) "plan administrator" means an [THE] eligible entity that is 21 licensed as a third-party administrator under AS 21.27 and is selected by the 22 board and approved by the director to administer a state plan; 23 * Sec. 29. AS 21.66.080(a) is amended to read: 24 (a) Every company, on or before March 1 of each year, shall furnish the 25 director or the director's designee a sworn statement of assets and liabilities, and of 26 all title premiums received by it during the preceding calendar year, setting out, among 27 other things, the amounts that have been set aside and held by it in an account required 28 under AS 21.18.073. The reporting format for a given year is the most recently 29 approved National Association of Insurance Commissioners Annual Financial 30 Statement blank form and instructions, supplemented for additional information as 31 required by the director. The director may require the statement to be filed on 01 electronic media. The statement must also show all unpaid losses and claims upon title 02 insurance policies of which the title insurance company has received due notice in 03 writing from or on behalf of the insured. With the filing of the statement, the title 04 insurance company shall pay a filing fee set under AS 21.06.250. 05 * Sec. 30. AS 21.66.085(b) is amended to read: 06 (b) A quarterly financial statement, if required, is due 45 [60] days after the 07 end of the quarter to which it applies. 08 * Sec. 31. AS 21.85 is amended by adding new sections to read: 09 Article 2. Self-Funded Governmental Plans. 10 Sec. 21.85.205. Applicability. A self-funded governmental plan that is 11 exempt from coverage under a group policy covering state employees and their 12 dependents under AS 39.30.090 and regulations adopted under that section must 13 comply with the provisions of AS 21.85.210 - 21.85.230. 14 Sec. 21.85.210. Filing requirements. (a) A self-funded governmental plan 15 shall annually file 16 (1) at least 60 days before the end of the plan year 17 (A) the contribution rates and an actuarial opinion of the 18 adequacy of the contribution rates for the next plan year; 19 (B) the summary plan description for the next plan year, 20 highlighting any changes to plan benefits from the preceding year; and 21 (C) the name of and contact information for each person 22 providing administrative services to the plan; 23 (2) within 120 days after the end of the plan's fiscal year 24 (A) a certification signed by a trustee of the plan that the plan 25 complies with the requirements of AS 21.85.205 - 21.85.230; 26 (B) an audited statement of financial condition and a statement 27 of change in financial condition for the plan's fiscal year, affirmed by a trustee 28 of the plan; 29 (C) an actuarial memorandum that 30 (i) certifies to the adequacy of reserves and stop-loss 31 insurance coverage; 01 (ii) describes the financial condition of the plan, 02 including any recommended actions the plan should take to improve 03 the financial condition of the plan; and 04 (D) a report showing the number of employees and number of 05 dependents covered under the plan. 06 (b) Within 60 days after the end of each quarter, a self-funded governmental 07 plan shall file a statement of financial condition and a statement of change in financial 08 condition for the preceding quarter. 09 (c) A self-funded governmental plan shall file additional information as 10 requested by the director relating to the financial condition, transactions, and affairs of 11 the plan. 12 Sec. 21.85.215. Minimum standards. A self-funded governmental plan shall 13 (1) operate in accordance with a trust agreement under the governance 14 of a board of trustees that is responsible for all operations of the plan; a trustee may 15 not be an owner, officer, or employee of the administrator of the plan; 16 (2) maintain a fidelity bond covering each trustee of the plan 17 (A) in an amount not less than 10 percent of the benefits paid 18 during the preceding plan year; 19 (B) and issued by an authorized insurance company; 20 (3) establish and maintain a plan of operation that ensures that the plan 21 will remain financially solvent as certified to by a qualified actuary; 22 (4) maintain stop-loss insurance coverage as recommended by a 23 qualified actuary; 24 (5) establish and maintain reserves in an amount at least as great as the 25 amount recommended and certified by a qualified actuary and in compliance with 26 AS 21.18.080 - 21.18.086; 27 (6) establish and maintain contribution rates at a level recommended 28 and certified to by a qualified actuary for the plan to remain financially solvent; 29 (7) maintain adequate facilities and competent personnel, as 30 determined by the director, to service the plan or contract with a third-party 31 administrator registered under AS 21.27 to service the plan; 01 (8) provide each participant a summary plan description that is 02 consistent with the disclosure requirements in 29 U.S.C. 1022 (Employment 03 Retirement Income Security Act of 1974) and 29 C.F.R. 2520.102-2, 29 C.F.R. 04 2520.102-3, and 29 C.F.R. 2520.102-4 to the extent applicable and not in conflict with 05 requirements of this title. 06 Sec. 21.85.225. Additional standards. In addition to the provisions 07 contained or referred to in AS 21.85.205 - 21.85.230, the following chapters and 08 provisions of this title also apply with respect to a self-funded governmental plan to 09 the extent applicable and not in conflict with the express provisions of AS 21.85.205 - 10 21.85.230 and the reasonable implications of the following chapters and provisions, 11 and, for the purposes of the application, the plan shall be considered to be a mutual 12 insurer: 13 (1) AS 21.03; 14 (2) AS 21.06; 15 (3) AS 21.07; 16 (4) AS 21.09.100, 21.09.300, and 21.09.320; 17 (5) AS 21.18.080 - 21.18.086 and 21.18.100; 18 (6) AS 21.36; 19 (7) AS 21.48; 20 (8) AS 21.42.345 - 21.42.365 and 21.42.375 - 21.42.500; 21 (9) AS 21.54; 22 (10) AS 21.78; 23 (11) AS 21.90. 24 Sec. 21.85.230. Regulations. The director may adopt regulations to 25 implement AS 21.85.205 - 21.85.225, including a requirement that a self-funded 26 governmental plan include coverages and standards that are required under this title 27 for insurance policies of the same type of risk or risks that the self-funded 28 governmental plan is intended to cover. 29 * Sec. 32. AS 21.85.500 is amended by adding a new paragraph to read: 30 (9) "self-funded governmental plan" means a governmental plan, as 31 defined under 29 U.S.C. 1002 (Employee Retirement Income Security Act of 1974), 01 that 02 (A) is not a federal governmental plan, as defined in 03 AS 21.54.500; and 04 (B) does not provide for payment of benefits under the plan 05 solely through a policy of insurance issued by one or more authorized 06 insurance companies. 07 * Sec. 33. AS 21.90.900(42) is amended to read: 08 (42) "third-party administrator" means a person who, for residents of 09 this state, or for residents of another jurisdiction from a place of business in this state, 10 performs administrative functions including claims administration and payment, 11 marketing administrative functions, premium accounting, premium billing, coverage 12 verification, underwriting authority, or certificate issuance in connection with life 13 insurance, annuities, or health insurance offered or provided by an insurer, or in 14 connection with coverage offered or provided by a multiple employer welfare 15 arrangement or self-funded governmental plan regulated under AS 21.85 or the 16 Comprehensive Health Insurance Association created under AS 21.55 [REGARD 17 TO LIFE INSURANCE, HEALTH INSURANCE, OR ANNUITIES]; 18 * Sec. 34. AS 21.90.900(43) is amended to read: 19 (43) "transact," with respect to insurance or the provision of coverage 20 for medical care, includes 21 (A) solicitation and inducement; 22 (B) preliminary negotiations; 23 (C) effectuation of a contract of insurance or the provision of 24 coverage for medical care; 25 (D) transaction of matters subsequent to effectuation of the 26 contract of insurance or the provision of coverage for medical care and 27 arising out of it; 28 * Sec. 35. AS 21.90.900 is amended by adding a new paragraph to read: 29 (45) "health discount plan" means a card, program, device, 30 arrangement, contract, or mechanism that purports to offer discounts or access to 31 discounts on health care services or supplies and that is not insurance or that does not 01 provide coverage for services or benefits regulated under AS 21.86 or AS 21.87. 02 * Sec. 36. AS 21.24.040(b); AS 21.27.330(b), and 21.27.650(p) are repealed. 03 * Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to 04 read: 05 TRANSITION: REGULATIONS. The director of insurance may proceed to adopt 06 regulations to implement the changes made by secs. 22, 24, and 35 of this Act. The 07 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the 08 effective date of secs. 22, 24, and 35 of this Act. 09 * Sec. 38. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 REVISOR'S INSTRUCTIONS. (a) The revisor of statutes is instructed to change the 12 heading of AS 21.85 from "Regulation of Multiple Employer Welfare Arrangements" to 13 "Regulation of Self-Funded Employer Plans." 14 (b) The revisor of statutes is instructed to designate AS 21.85.010 - 21.85.100 as 15 "Article 1. Self-funded Multiple Employer Welfare Arrangements" and to designate 16 AS 21.85.500 as "Article 3. General Provisions." 17 * Sec. 39. Sections 22, 24, and 35 of this Act take effect July 1, 2005. 18 * Sec. 40. Except as provided in sec. 39 of this Act, this Act takes effect immediately under 19 AS 01.10.070(c).