00 HOUSE CS FOR CS FOR SENATE BILL NO. 132(FIN) am H 01 "An Act relating to insurance; and providing for an effective date." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03  * Section 1. AS 12.10.020 is amended by adding a new subsection to read: 04 (d) Even if the general time limitation has expired, a prosecution for any 05 offense related to life insurance may be commenced within one year after discovery of 06 the offense by an aggrieved party or by a person who has legal capacity to represent an 07 aggrieved party or a legal duty to report the offense and who is not a party to the 08 offense, but in no case shall this provision extend the period of limitation otherwise 09 applicable by more than 20 years. 10  * Sec. 2. AS 21.06.120(a) is amended to read: 11 (a) The director may examine the affairs, transactions, accounts, records, and 12 assets of each authorized and formerly authorized insurer and each licensed and 13 formerly licensed managing general agent, reinsurance intermediary broker, 14 reinsurance intermediary manager, surplus lines broker, pharmacy benefits manager,  15 and surplus lines association as often as the director considers advisable. In scheduling 01 and determining the nature, scope, and frequency of examinations, the director may 02 consider any factor or material that the director determines is appropriate, including 03 the results of financial statement analysis and ratios, competency of management or 04 change of ownership, actuarial opinions, reports of independent certified public 05 accountants, number and nature of consumer complaints, results of prior examinations, 06 frequency of prior violations of statute and regulation, and criteria set out in the most 07 recent edition of the Financial Condition Examiners Handbook and the Market 08 Regulation Handbook approved by the National Association of Insurance 09 Commissioners and in effect when the director conducts an examination. Examination 10 of an alien insurer may be limited to its insurance transactions and affairs in the United 11 States. Examination of a reciprocal insurer may also include examination of its 12 attorney-in-fact to the extent that the transactions of the attorney-in-fact relate to the 13 insurer. 14  * Sec. 3. AS 21.06.120(d) is amended to read: 15 (d) The director may examine insurers, third-party administrators, and  16 pharmacy benefits managers in participation with the National Association of 17 Insurance Commissioners. 18  * Sec. 4. AS 21.06.120 is amended by adding a new subsection to read: 19 (h) The director may examine a third-party administrator or pharmacy benefits 20 manager any time the director determines that an examination or investigation is 21 necessary. 22  * Sec. 5. AS 21.06.160(a) is amended to read: 23 (a) Each person examined, other than examinations under AS 21.06.130 and 24 examinations of managing general agents, [THIRD-PARTY ADMINISTRATORS,] 25 reinsurance intermediary managers, motor vehicle service contract providers, or 26 surplus lines brokers, shall pay a reasonable rate calculated on salary, benefit costs, 27 and estimated division overhead for time spent directly or indirectly related to the 28 examination. Each person examined, other than examinations under AS 21.06.130, 29 shall pay actual out-of-pocket business expenses, including travel expenses, incurred 30 by division staff examiners and shall pay the compensation of a contract examiner, to 31 be set at a reasonable customary rate, for conducting the examination upon 01 presentation of a detailed account of the charges and expenses by the director or under 02 an order of the director. The director may waive payment of all or part of the actual 03 out-of-pocket business expenses incurred by division staff examiners, or the 04 compensation of a contract examiner, if the director determines that payment of the 05 expenses or compensation creates a financial hardship for a managing general agent, 06 third-party administrator, reinsurance intermediary manager, motor vehicle service 07 contract provider, or surplus lines broker. The accounting may either be presented 08 periodically during the course of the examination or at the termination of the 09 examination. A person may not pay and an examiner may not accept additional 10 compensation for an examination. A person shall pay examination expenses to the 11 division under this subsection using an electronic payment method specified by the 12 director. 13  * Sec. 6. AS 21.07.030(a) is amended to read: 14 (a) If a health care insurer offers a health care insurance policy that provides 15 for coverage of medical care services only if the services are furnished through a 16 network of health care providers that have entered into a contract with the health care 17 insurer, the health care insurer shall also offer a non-network option to covered 18 persons at initial enrollment, as provided under (c) of this section. The non-network 19 option may require that a covered person pay a higher deductible, copayment, or 20 premium for the plan if the higher deductible, copayment, or premium results from 21 increased costs caused by the use of a non-network provider. This subsection does not 22 apply to 23 (1) a covered person who is offered non-network coverage through 24 another health care insurance policy or through another health care insurer; or  25 (2) a health maintenance organization licensed under AS 21.86. 26  * Sec. 7. AS 21.07.030 is amended by adding a new subsection to read: 27 (i) A health care insurer that offers a health care insurance policy that provides 28 different levels of coverage for health care services based on network status and 29 performs utilization review shall include details on a prior authorization request form 30 on how a health care provider or covered person may request a benefit-level 31 exception. If the health care insurer approves the prior authorization, the insurer shall 01 detail whether the claim will be processed as a network or non-network claim. If the 02 benefit will be paid based on a non-network reimbursement level and a benefit-level 03 exception requires an application process separate from the prior authorization 04 process, the prior authorization must include instructions for requesting the benefit- 05 level exception. In this subsection, a "benefit-level exception" means an exception to 06 medical care coverage where a health care insurer applies network health care benefit 07 levels to services received from an out-of-network health care provider or facility. 08  * Sec. 8. AS 21.09.200(g) is amended to read: 09 (g) An insurer shall file with the director or the director's designee an annual 10 audited financial report for the previous year by June 1 of each year [UNLESS, 11 UNDER A REGULATION ADOPTED BY THE DIRECTOR, THE DIRECTOR 12 GRANTS AN EXEMPTION BASED ON A FINDING THAT FILING AN 13 ANNUAL AUDITED FINANCIAL REPORT WOULD CONSTITUTE A 14 FINANCIAL OR ORGANIZATIONAL HARDSHIP ON THE INSURER. THE 15 FILING DATE FOR THE ANNUAL AUDITED FINANCIAL REPORT MAY BE 16 EXTENDED BY THE DIRECTOR UPON SHOWING THAT THE STANDARDS 17 ESTABLISHED BY REGULATION HAVE BEEN MET]. If the director gives the 18 insurer 90 days' advance notice, and for good cause, the director may require an 19 insurer to file an audited financial report earlier than June 1 of each year. The annual 20 audited financial report must be prepared by a qualified independent certified public 21 accountant. An insurer shall notify the director of the certified public accountant 22 engaged to conduct the audit and issue the annual audited financial report. 23  * Sec. 9. AS 21.09.200 is amended by adding a new subsection to read: 24 (m) An insurer may apply to the director for an exemption from compliance 25 with a requirement of this section if compliance would cause the insurer to suffer a 26 financial or organizational hardship. The director may, in the director's discretion, 27 approve an exemption. If the director denies an insurer's application for exemption, the 28 insurer may, within 15 days after the date of the denial, submit a request in writing to 29 the director for a hearing as provided under AS 21.06.180 - 21.06.240. 30  * Sec. 10. AS 21.09.210(b) is amended to read: 31 (b) Each insurer, and each formerly authorized insurer with respect to 01 premiums written while an authorized insurer in this state, shall pay a tax on the total 02 direct premium written during the year ending on the preceding December 31 and paid 03 for the insurance of property or risks resident or located in the state [, OTHER THAN 04 WET MARINE AND TRANSPORTATION INSURANCE,] after deducting from the 05 total direct premium income the applicable cancellations, returned premiums, the 06 unabsorbed portion of any deposit premium, all policy dividends, unabsorbed 07 premiums refunded to policyholders, refunds, savings, savings coupons, and other 08 similar returns paid or credited to policyholders with respect to their policies. 09 Deductions may not be made of cash surrender value of policies. Considerations 10 received on annuity contracts are not included in the direct premium income and are 11 not subject to tax. The tax shall be paid to the director at least annually but not more 12 often than once each quarter on the dates specified by the director. The method of 13 payment must be by the electronic or other payment method specified by the director. 14 Except as provided under (m) of this section, the tax is computed at the rate of 15 (1) for domestic and foreign insurers, except hospital and medical 16 service corporations, 2.7 percent; 17 (2) for hospital and medical service corporations, six percent of their 18 gross premiums less claims paid;  19 (3) for wet marine and transportation insurance, three-quarters of  20 one percent. 21  * Sec. 11. AS 21.09.242(a) is amended to read: 22 (a) Each [AN] insurer and [, INCLUDING A] pharmacy benefits manager 23 shall, with respect to a medical assistance program [PROGRAMS] under AS 47.07, 24 [SHALL] cooperate with the Department of Health to 25 (1) provide, with respect to an individual who is eligible for or is 26 provided medical assistance under AS 47.07, at [ON] the request of the department, 27 information to determine during what period the individual or the individual's spouse 28 or dependents may be or may have been covered by the insurer and the nature of the 29 coverage that is or was provided by the insurer, including the name and address of the 30 insurer and the identifying number of the health care insurance plan; 31 (2) accept the department's right of recovery and the assignment to the 01 department of any right of an individual or other entity to payment from the party for 02 an item or service for which payment has been made under AS 47.07; 03 (3) respond within 60 days to any inquiry by the department regarding 04 a claim for payment for any health care item or service that is submitted not later than 05 three years after the date of the provision of the health care item or service; and 06 (4) agree not to deny a claim submitted by the department solely on the 07 basis of the date of submission of the claim, the type or format of the claim form, a  08 failure to obtain prior authorization, or a failure to present proper documentation at 09 the point-of-sale that is the basis of the claim if 10 (A) the claim is submitted by the department within the three- 11 year period beginning on the date on which the item or service was furnished; 12 and 13 (B) any action by the department to enforce its rights with 14 respect to the claim is commenced within six years after the department's 15 submission of the claim. 16  * Sec. 12. AS 21.12.020(h) is amended to read: 17 (h) The director shall consider the list of reciprocal jurisdictions published 18 through the National Association of Insurance Commissioners committee process in 19 determining a reciprocal jurisdiction and has the discretion to defer to the list. The 20 director may approve a jurisdiction not on the list in accordance with criteria 21 developed under regulations adopted by the director. The director may remove a 22 jurisdiction from the list of reciprocal jurisdictions upon determination that the 23 jurisdiction no longer meets the requirements of a reciprocal jurisdiction in accordance 24 with a process set out in regulation by the director. Upon removal of a reciprocal 25 jurisdiction from the list, credit for reinsurance ceded to an assuming insurer that has a 26 home office or is domiciled in that jurisdiction shall be allowed if otherwise allowed 27 under this section. The director shall timely create and publish a list of assuming 28 insurers that have satisfied the conditions set out in this subsection and to which 29 cessions shall be granted credit in accordance with (a) of this section. The director 30 may add an assuming insurer to a list if a National Association of Insurance 31 Commissioners accredited jurisdiction has added the assuming insurer to a list of 01 assuming insurers or, if upon initial eligibility, the assuming insurer submits the 02 information to the director as required under (a)(6)(D) of this section and complies 03 with any additional requirements the director may impose by regulation. If the director 04 determines that an assuming insurer no longer meets one or more of the requirements 05 of (a)(6) of this section, the director may revoke or suspend the eligibility of the 06 assuming insurer under (a)(6) of this section in accordance with procedures set out in 07 regulation. While an assuming insurer's eligibility is suspended, a reinsurance 08 agreement issued, amended, or renewed after the effective date of the suspension does 09 not qualify for credit except to the extent that the assuming insurer's obligations under 10 the contract are secured in accordance with (c) of this section. If an assuming insurer's 11 eligibility is revoked, a credit for reinsurance may not be granted after the effective 12 date of the revocation with respect to any reinsurance agreement entered into by the 13 assuming insurer, including a reinsurance agreement entered into before the date of 14 revocation, except to the extent that the assuming insurer's obligations under the 15 contract are secured in a form acceptable to the director and consistent with (c) of this 16 section. Upon entry of an order of rehabilitation, liquidation, or conservation against 17 the ceding insurer, the supervising court may [SHALL] require an assuming insurer 18 under (a)(6) of this section to post 100 percent security for the benefit of the ceding 19 insurer or its estate. Nothing in this subsection shall limit or in any way alter the 20 capacity of parties to a reinsurance agreement to agree on requirements for security or 21 other terms in that reinsurance agreement consistent with this section. Credit under 22 (a)(6) of this section may be taken only for reinsurance agreements entered into, 23 renewed, or amended on or after the date the director has determined that the assuming 24 insurer is eligible for credit, and may not be taken for reinsurance of losses incurred or 25 reserves reported before that date. Credit under (a)(6) of this section may not apply to 26 reinsurance agreements entered into, to losses incurred, or to reserves posted before 27 application under (a)(6) of this section. 28  * Sec. 13. AS 21.12.020(i)(2) is amended to read: 29 (2) "reciprocal jurisdiction" means a jurisdiction that 30 (A) is not a United States jurisdiction that is subject to an in- 31 force covered agreement with the United States, each within its legal authority, 01 or in the case of a covered agreement between the United States and the 02 European Union, is a member state of the European Union; in this 03 subparagraph, "covered agreement" is an agreement entered into under 31 04 U.S.C. 313 - 314 (Dodd-Frank Wall Street Reform and Consumer Protection 05 Act) that is currently in effect or in a period of provisional application and 06 addresses the elimination, under specified conditions, of collateral 07 requirements as a condition for entering into any reinsurance agreement with a 08 ceding insurer domiciled in this state or for allowing the ceding insurer to 09 recognize credit for reinsurance; 10 (B) is a United States jurisdiction that meets the requirements 11 for accreditation under the National Association of Insurance Commissioners 12 financial standards and accreditation program; or 13 (C) is a qualified jurisdiction, as determined by the director 14 under (a)(5)(C) of this section, that is not otherwise described in (A) and (B) of 15 this paragraph and that meets certain additional requirements, consistent with 16 the terms and conditions of in-force covered agreements, as specified by the 17 director in regulation; 18  * Sec. 14. AS 21.18.112(e) is amended to read: 19 (e) An insurer shall establish reserves using a principle-based valuation that 20 meets the following conditions for policies or contracts as specified in the valuation 21 manual: 22 (1) quantify the benefits, guarantees, and funding associated with the 23 contracts and their risks at a level of conservatism that reflects conditions that include 24 unfavorable events that have a reasonable probability of occurring during the lifetime 25 of the contracts and, for policies or contracts with significant tail risk, that reflect 26 conditions appropriately adverse to quantify the tail risk; 27 (2) incorporate assumptions, risk analysis methods, and financial 28 models and management techniques that are consistent with, but not necessarily 29 identical to, those used in the insurer's overall risk assessment process while 30 recognizing potential differences in financial reporting structures and prescribed 31 assumptions or methods; 01 (3) incorporate assumptions that are derived in one of the following 02 manners: 03 (A) the assumptions are prescribed in the valuation manual; 04 (B) for assumptions that are not prescribed, the assumptions 05 shall be established using the insurer's available experience, to the extent it is 06 relevant and statistically credible; to the extent that data is not available, 07 relevant, or statistically credible, the assumptions shall be established using 08 other relevant or statistically credible experience; 09 (4) provide margins for uncertainty, including adverse deviation and 10 estimation error, so that the greater the uncertainty the larger the margin and resulting 11 reserve; 12 (5) for an insurer using a principle-based valuation for one or more 13 policies or contracts subject to this subsection as specified in the valuation manual, 14 (A) establish procedures for corporate governance and 15 oversight of the actuarial valuation function consistent with those described in 16 the valuation manual and a process for appropriate waiver or modification  17 of the established procedures; 18 (B) provide to the director an annual certification of the 19 effectiveness of the internal controls with respect to the principle-based 20 valuation; the controls shall be designed to ensure that all material risks 21 inherent in the liabilities and associated assets subject to the valuation are 22 included in the valuation and that valuations are made in accordance with the 23 valuation manual; the certification shall be based on the controls in place as of 24 the end of the preceding calendar year; 25 (C) develop and file with the director upon request a principle- 26 based valuation report that complies with standards prescribed in the valuation 27 manual; 28 (6) a principle-based valuation may include a prescribed formulaic 29 reserve component. 30  * Sec. 15. AS 21.18.900(12) is amended to read: 31 (12) "policyholder behavior" means a lapse, withdrawal, transfer,  01 deposit, premium payment, loan, annuitization, or election of a policy benefit by  02 the terms of a policy or contract, or another [AN] action of a policyholder, contract 03 holder, or another person with the right to elect options; "policyholder behavior"  04 does not include events of mortality or morbidity that result in a benefit  05 prescribed by the terms of a policy or contract; 06  * Sec. 16. AS 21.27.010(a) is amended to read: 07 (a) Except as provided otherwise in this chapter, a person may not act as or 08 represent to be an insurance producer, managing general agent, reinsurance 09 intermediary broker, reinsurance intermediary manager, surplus lines broker, third- 10 party administrator, pharmacy benefits manager, or independent adjuster in this 11 state or relative to a subject resident, located, or to be performed in this state unless 12 licensed under this chapter. A person may not act as or represent to be a managing 13 general agent, reinsurance intermediary broker, third-party administrator,  14 pharmacy benefits manager, or reinsurance intermediary manager representing an 15 insurer domiciled in this state regarding a risk located outside this state unless licensed 16 by this state. 17  * Sec. 17. AS 21.27.010(c) is amended to read: 18 (c) A third-party administrator is not required to be licensed as a managing 19 general agent if the third-party administrator 20 (1) is licensed [REGISTERED] under this chapter [AS 21.27.630 - 21 21.27.660]; or 22 (2) only investigates and adjusts claims and is licensed under this 23 chapter as an independent adjuster. 24  * Sec. 18. AS 21.27.010 is amended by adding a new subsection to read: 25 (l) In addition to the requirements under AS 21.27.010 - 21.27.460, a 26 (1) third-party administrator is subject to the licensing requirements 27 under AS 21.27.630 - 21.27.660; and 28 (2) pharmacy benefits manager is subject to the licensing requirements 29 under AS 21.27.901 - 21.27.955. 30  * Sec. 19. AS 21.27.020(c) is amended to read: 31 (c) To qualify for issuance or renewal of a license as a firm insurance 01 producer, a firm managing general agent, a firm reinsurance intermediary broker, a 02 firm reinsurance intermediary manager, a firm surplus lines broker, or a firm 03 independent adjuster, an applicant or licensee shall 04 (1) comply with (b)(4) and (5) of this section; 05 (2) maintain a lawfully established place of business in this state, 06 except when licensed as a nonresident under AS 21.27.270; 07 (3) designate one or more compliance officers for the firm, except that 08 not more than one compliance officer may be designated for each line [CLASS] of 09 authority under AS 21.27.115; 10 (4) provide to the director documents necessary to verify the 11 information contained in or made in connection with the application; and 12 (5) notify the director, in writing, not later than 30 days after a change 13 in the firm's compliance officer. 14  * Sec. 20. AS 21.27.020(f) is amended to read: 15 (f) The director may adopt regulations establishing additional education or 16 experience requirements for applicants, licensees, and continuing education providers 17 under this chapter upon due consideration of the availability and accessibility of 18 education and training opportunities in rural areas of the state. Regulations adopted 19 under this subsection are subject to the following provisions: 20 (1) additional educational or experience requirements may not apply to 21 a licensee who has been licensed by the division of insurance before January 1, 1980; 22 (2) a licensee shall complete at least 24 credit hours of approved 23 continuing education courses during each two-year license period; 24 (3) if a licensee has accumulated more credit hours than required under 25 (2) of this subsection by the end of the license period, a maximum of eight hours may 26 be carried over to meet the requirements of (2) of this subsection in the next license 27 period; 28 (4) a program or seminar may not be approved as an acceptable 29 continuing education program unless it is a formal program of learning that 30 contributes to the professional competence of the licensee; individual study programs 31 or correspondence courses may be used to fulfill continuing education requirements if 01 approved by the director; 02 (5) a nonresident licensee is exempt from the requirements of this 03 subsection, except for a nonresident independent adjuster who designates this  04 state as the adjuster's home state. 05  * Sec. 21. AS 21.27.025(a) is amended to read: 06 (a) A licensee shall notify the director in writing not later than 30 days after a 07 change in residence, place of business, legal name, fictitious name or alias, mailing 08 address, electronic mailing address, telephone number, or compliance officer. A 09 licensee shall report to the director in writing any administrative action taken against 10 the licensee by a governmental agency [OF ANOTHER STATE, BY A 11 GOVERNMENTAL AGENCY OF ANOTHER JURISDICTION,] or by a financial 12 industry regulatory authority sanction or arbitration proceeding not later than 30 days 13 after the final disposition of the action. A licensee shall submit to the director the final 14 order and other relevant legal documents in the action. A licensee shall report to the 15 director in writing any criminal prosecution of the licensee in this or another state or 16 jurisdiction not later than 30 days after the date of filing of the criminal complaint, 17 indictment, information, or citation in the prosecution. The licensee shall submit to the 18 director a copy of the criminal complaint, calendaring order, and other relevant legal 19 documents in the prosecution. 20  * Sec. 22. AS 21.27.060(d) is amended to read: 21 (d) This section does not apply to an applicant 22 (1) for a limited license under AS 21.27.150(a)(1), (4), (5), or (8); 23 [OR] 24 (2) who, at any time within the one-year period immediately preceding 25 the date the current pending application is received by the division, had been licensed 26 in good standing in this state under a license requiring substantially similar 27 qualifications as required by the license applied for; or  28 (3) who is a compliance officer for a third-party administrator or  29 pharmacy benefits manager. 30  * Sec. 23. AS 21.27.115 is amended to read: 31 Sec. 21.27.115. Lines of authority. If a person has met the applicable 01 requirements of AS 21.27.020 and 21.27.270, the director shall issue a license for one 02 or more of the following lines of authority: 03 (1) life insurance coverage on natural persons; in this paragraph, "life 04 insurance coverage" 05 (A) includes benefits of endowment and annuities; and 06 (B) may include benefits in the event of death or 07 dismemberment by accident and benefits for disability income; 08 (2) accidental and health or sickness insurance coverage for sickness, 09 bodily injury, or accidental death; in this paragraph, "accidental and health or  10 sickness insurance coverage" includes health insurance, as defined in  11 AS 21.12.050(a), and may include benefits for disability income; 12 (3) property insurance coverage for the direct or consequential loss for 13 damage to property of every kind; 14 (4) casualty insurance coverage against legal liability, including that 15 for death, injury, or disability or damage to real or personal property; in this 16 paragraph, "casualty insurance" includes surety insurance as defined in AS 21.12.080; 17 (5) variable life and variable annuity products insurance coverage; 18 (6) personal lines property and casualty insurance coverage sold to 19 individuals and families for primarily noncommercial purposes; 20 (7) limited lines credit insurance; 21 (8) [REPEALED 22 (9) REPEALED 23 (10)] any insurance for which a limited lines license may be issued 24 under AS 21.27.150. 25  * Sec. 24. AS 21.27.270(b) is amended to read: 26 (b) Unless the director denies or refuses to renew a license under 27 AS 21.27.410, the director shall issue a nonresident producer, limited lines, surplus 28 lines broker, managing general agent, reinsurance intermediary broker, independent  29 adjuster, or reinsurance intermediary manager license to a person who is not a 30 resident of this state if 31 (1) the person is currently licensed and is in good standing in the 01 person's home state; the director may verify the person's licensing status through the 02 producer licensing database records maintained by the National Association of 03 Insurance Commissioners or its affiliates or subsidiaries; 04 (2) the person has paid the fees required under AS 21.06.250 and has 05 submitted to the director 06 (A) the license application the person submitted to the person's 07 home state; or 08 (B) if the person is not a firm, a completed uniform application 09 or, if a firm, the uniform business entity application; and 10 (3) the person's home state awards nonresident producer, limited lines, 11 surplus lines broker, managing general agent, reinsurance intermediary broker, 12 independent adjuster, and reinsurance intermediary manager licenses to residents of 13 this state on the same basis as does this state. 14  * Sec. 25. AS 21.27.270(h) is amended to read: 15 (h) A nonresident applicant for an independent adjuster license who [ONLY 16 ADJUSTS CLAIMS RELATED TO PORTABLE ELECTRONICS INSURANCE 17 UNDER AS 21.36.515 AND WHO] is licensed as an independent adjuster and in 18 good standing in the applicant's home state does not have to meet the requirements of 19 AS 21.27.060 or 21.27.830 to be licensed under this section. [A RESIDENT OF 20 CANADA MAY NOT BE LICENSED AS AN INDEPENDENT ADJUSTER 21 UNDER THIS SECTION UNLESS THE APPLICANT HAS OBTAINED A 22 RESIDENT INDEPENDENT ADJUSTER LICENSE IN ANOTHER STATE OR 23 DECLARED ANOTHER STATE THE APPLICANT'S HOME STATE AND 24 OBTAINED AN INDEPENDENT ADJUSTER LICENSE IN THAT STATE.] 25  * Sec. 26. AS 21.27.270(i) is amended to read: 26 (i) If a nonresident independent [PORTABLE ELECTRONICS] adjuster 27 applicant's home state does not license independent adjusters, the independent 28 [PORTABLE ELECTRONICS] adjuster applicant may designate the applicant's home 29 state as any state in which the applicant is licensed in good standing. 30  * Sec. 27. AS 21.27.270 is amended by adding a new subsection to read: 31 (j) A nonresident applicant for issuance or renewal of an independent adjuster 01 license or firm independent adjuster license who designates this state as the applicant's 02 home state must qualify for licensure under AS 21.27.020 and apply for the issuance 03 or renewal of the license in accordance with AS 21.27.040. 04  * Sec. 28. AS 21.27.380(b) is amended to read: 05 (b) If a license is not renewed on or before the renewal date set by the director, 06 the license expires. A licensee may not act as or represent to be an insurance producer, 07 managing general agent, reinsurance intermediary broker, third-party administrator,  08 pharmacy benefits manager, reinsurance intermediary manager, surplus lines broker, 09 or independent adjuster during the time a license has expired. The director may 10 reinstate an expired license if the person continues to qualify for the license and pays 11 renewal license fees and a delayed renewal penalty. Reinstatement does not exempt a 12 person from a penalty provided by law for transacting business while unlicensed. A 13 license may not be renewed if it has expired for two years or longer. 14  * Sec. 29. AS 21.27.380(d) is amended to read: 15 (d) The director shall send [MAIL] a notice of license expiration stating the 16 reason for the expiration to a licensee at the licensee's most current electronic mail  17 address or mailing [LAST] address on record with the director. [THE DIRECTOR 18 SHALL OBTAIN A CERTIFICATE OF MAILING FROM THE UNITED STATES 19 POSTAL SERVICE.] 20  * Sec. 30. AS 21.27.630(a) is amended to read: 21 (a) A person may not act as or represent to be a third-party administrator in 22 this state or relative to a subject resident, located, or to be performed in this state, 23 unless licensed [REGISTERED] under this chapter or in another jurisdiction under 24 AS 21.27.650. A person may not act as or represent to be a third-party administrator 25 representing an insurer domiciled in this state regarding a risk located outside this state 26 unless licensed [REGISTERED] by this state under the provisions of this chapter. 27  * Sec. 31. AS 21.27.630(b) is amended to read: 28 (b) A third-party administrator may not transact business for a kind or class of 29 authority for which the person is not licensed [REGISTERED]. 30  * Sec. 32. AS 21.27.630(c) is amended to read: 31 (c) Except as otherwise provided in this chapter, a third-party administrator 01 shall be licensed [REGISTERED] under this chapter [AS 21.27.630 - 21.27.660] 02 unless the third-party administrator only investigates and adjusts claims and is licensed 03 under this chapter as an independent adjuster. 04  * Sec. 33. AS 21.27.630(d) is amended to read: 05 (d) A third-party administrator may not use a fictitious name or alias unless 06 the third-party administrator's [LICENSEE'S] legal name and fictitious name or 07 alias are on the license [REGISTRATION]. 08  * Sec. 34. AS 21.27.630(e) is amended to read: 09 (e) A person who is an employee of an admitted insurer, who acts within the 10 course and scope of that employment, and within the scope of the insurer's certificate 11 of authority is not required to be licensed [REGISTERED] under this chapter 12 [SECTION]. 13  * Sec. 35. AS 21.27.630(g) is amended to read: 14 (g) A credit union or a financial institution subject to supervision or 15 examination by federal or state banking authorities, or a mortgage lender, that 16 performs no functions other than advancing premiums to the insurer and collecting a 17 debt from the insured is not required to be licensed [REGISTERED] as a third-party 18 administrator. 19  * Sec. 36. AS 21.27.630(h) is amended to read: 20 (h) A credit card issuing company that performs no functions, including 21 adjustment or settlement of claims, other than advancing and collecting premiums 22 from its credit card holders who have authorized collection is not required to be 23 licensed [REGISTERED] as a third-party administrator. 24  * Sec. 37. AS 21.27.630(i) is amended to read: 25 (i) A person who only provides services to bona fide employee benefit plans 26 that are established by an employer or an employee organization, or both, for which 27 the insurance laws of this state are preempted under the Employee Retirement Income 28 Security Act of 1974, is not required to be additionally licensed [REGISTERED] as a 29 third-party administrator if the person certifies to the director on or before February 1 30 of each year its exempt status. 31  * Sec. 38. AS 21.27.630(j) is amended to read: 01 (j) A third-party administrator 02 [(1) SHALL APPLY FOR REGISTRATION UNDER THE 03 PROCEDURES OF AS 21.27.040; 04 (2) SHALL RENEW ITS REGISTRATION UNDER THE 05 PROCEDURES OF AS 21.27.380; AND 06 (3)] is subject to hearings and orders on violations; denial, nonrenewal, 07 suspension, or revocation of license [REGISTRATION]; penalties; and surrender of 08 license [REGISTRATION] under the procedures set out in AS 21.27.405 - 21.27.460. 09  * Sec. 39. AS 21.27.630(k) is amended to read: 10 (k) An insurer that holds a certificate of authority issued by the director and is 11 in good standing under this title is not required to be licensed [REGISTERED] as a 12 third-party administrator in this state. 13  * Sec. 40. AS 21.27.630(l) is amended to read: 14 (l) A person that is not required to be licensed [REGISTERED] as a third- 15 party administrator under (e) - (k) of this section must file an annual [A] certification 16 with the director that the person meets the requirements for exemption on or before  17 February 1 of each year. 18  * Sec. 41. AS 21.27.630(m) is amended to read: 19 (m) A person who is an employee of a third-party administrator and who acts 20 within the course and scope of that employment and within the scope of the written 21 contract required under AS 21.27.650(a)(4) is not required to be licensed  22 [REGISTERED] as a third-party administrator under this section unless that person  23 is the designated compliance officer under AS 21.27.640(b)(6). The third-party 24 administrator is responsible for the acts of its employees regulated under this title. 25  * Sec. 42. AS 21.27.640(a) is amended to read: 26 (a) The director may not issue or renew a license [REGISTRATION] except 27 in compliance with this chapter and may not issue a license [REGISTRATION] to a 28 person, or to be exercised by a person, found by the director to be untrustworthy, 29 incompetent, financially irresponsible, or who has not established to the satisfaction of 30 the director that the person is qualified under this chapter. 31  * Sec. 43. AS 21.27.640(b) is amended to read: 01 (b) To qualify for issuance or renewal of a license [REGISTRATION], an 02 applicant or licensee [REGISTRANT] shall comply with this title, regulations adopted 03 under AS 21.06.090, and 04 (1) be a trustworthy person; 05 (2) have active working experience in administrative functions that, in 06 the director's opinion, exhibits the ability to competently perform the administrative 07 functions of a third-party administrator; 08 (3) not have committed an act that is a cause for denial, nonrenewal, 09 suspension, or revocation of a registration or license in this state or another 10 jurisdiction; 11 (4) maintain a lawfully established place of business [AS 12 DESCRIBED IN AS 21.27.330] in this state, unless licensed as a nonresident under 13 AS 21.27.270; 14 (5) disclose to the director all owners, officers, directors, or partners, if 15 any; 16 (6) designate a compliance officer for the firm; 17 (7) provide in or with its application 18 (A) all basic organizational documents of the third-party 19 administrator, including articles of incorporation, articles of association, 20 partnership agreement, trade name certificate, trust agreement, shareholder 21 agreement, and other applicable documents and all endorsements to the 22 required documents; 23 (B) the bylaws, rules, regulations, or similar documents 24 regulating the internal affairs of the administrator; 25 (C) the names, mailing addresses, physical addresses, official 26 positions, and professional qualifications of persons who are responsible for 27 the conduct of affairs of the third-party administrator, including the members 28 of the board of directors, board of trustees, executive committee, or other 29 governing board or committee; the principal officers in the case of a 30 corporation, or the partners or members in the case of a partnership, limited 31 liability company, limited liability partnership, or association; shareholders 01 holding directly or indirectly 10 percent or more of the voting securities of the 02 third-party administrator; and any other person who exercises control or 03 influence over the affairs of the third-party administrator; 04 (D) certified financial statements for the preceding two years, 05 or for each year and partial year that the applicant has been in business if less 06 than two years, prepared by an independent certified public accountant 07 establishing that the applicant is solvent, that the applicant's system of 08 accounting, internal control, and procedure is operating effectively to provide 09 reasonable assurance that money is promptly accounted for and paid to the 10 person entitled to the money, and any other information that the director may 11 require to review the current financial condition of the applicant; and 12 (E) a statement describing the business plan, including 13 information on staffing levels and activities proposed in this state and in other 14 jurisdictions and providing details establishing the third-party administrator's 15 capability for providing a sufficient number of experienced and qualified 16 personnel in the areas of claims handling, underwriting, and record keeping; 17 (8) provide to the director documents necessary to verify the 18 statements contained in or in connection with the application; and 19 (9) notify the director, in writing, not later than 30 days after 20 (A) a change in compliance officer, residence, place of 21 business, mailing address, or phone number; 22 (B) the final disposition of an administrative action taken 23 against the licensee [REGISTRANT] by a governmental agency [OF 24 ANOTHER STATE, BY A GOVERNMENTAL AGENCY OF ANOTHER 25 JURISDICTION,] or by a financial industry regulatory authority sanction or 26 arbitration proceeding; in addition, a licensee [REGISTRANT] shall submit to 27 the director documents relating to the final disposition on, including the final 28 order and other relevant legal documents in, the action; or 29 (C) a conviction of a misdemeanor or felony of the third-party 30 administrator, its officers, directors, partners, owners, or employees. 31  * Sec. 44. AS 21.27.640(d) is amended to read: 01 (d) If the director finds that the applicant or licensee [REGISTRANT] is 02 qualified and that application, license [REGISTRATION], or renewal fees have been 03 paid, the director may issue or renew the license [REGISTRATION]. 04  * Sec. 45. AS 21.27.640 is amended by adding a new subsection to read: 05 (e) The fee for an initial license is $2,000. The fee to renew a license is 06 $2,000, and the license must be renewed every two years. 07  * Sec. 46. AS 21.27.650(a) is amended to read: 08 (a) An insurer may not transact business with a third-party administrator 09 unless 10 (1) the insurer holds a certificate of authority in this state if required 11 under this title; 12 (2) the third-party administrator is licensed [REGISTERED] under 13 this chapter [OR THE THIRD-PARTY ADMINISTRATOR HAS FILED A 14 CERTIFICATION WITH THE DIRECTOR CERTIFYING THAT THE THIRD- 15 PARTY ADMINISTRATOR IS OPERATING ONLY FOR A FOREIGN INSURER 16 OTHER THAN A SELF-FUNDED MULTIPLE EMPLOYER WELFARE 17 ARRANGEMENT REGULATED UNDER AS 21.85 AND IS REGISTERED AS A 18 THIRD-PARTY ADMINISTRATOR BY THE THIRD-PARTY 19 ADMINISTRATOR'S RESIDENT INSURANCE REGULATOR IN A STATE 20 THAT THE DIRECTOR HAS DETERMINED HAS ENACTED PROVISIONS 21 SUBSTANTIALLY SIMILAR TO THOSE CONTAINED IN AS 21.27.630 - 22 21.27.650 AND THAT IS ACCREDITED BY THE NATIONAL ASSOCIATION OF 23 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 persons who supervise or have responsibility over 27 personnel performing administrative functions, including claims administration 28 and payment, marketing administrative functions, premium accounting, 29 premium billing, coverage verification, underwriting, or certificate issuance 30 upon a subject resident, located, or to be performed in this state; 31 (B) a list of current insurers under contract; and 01 (C) other information the director may require; 02 (4) a written contract is in effect between the parties that establishes 03 the responsibilities of each party, indicates both parties' share of responsibility for a 04 particular function, and specifies the division of responsibilities; 05 (5) there is in effect a written contract between the insurer and third- 06 party administrator that contains the following provisions: 07 (A) the insurer may terminate the contract for cause upon 08 written notice sent by certified mail to the third-party administrator and may 09 suspend the underwriting authority of the third-party administrator during a 10 dispute regarding the cause for termination; but the insurer must fulfill all 11 lawful obligations with respect to policies affected by the written agreement, 12 regardless of any dispute between the insurer and the third-party administrator; 13 (B) the third-party administrator shall render accounts to the 14 insurer detailing all transactions and remit all money due under the contract to 15 the insurer at least monthly; 16 (C) all money collected for the account of an insurer shall be 17 held by the third-party administrator as a fiduciary; 18 (D) all payments on behalf of the insurer shall be held by the 19 third-party administrator as a fiduciary; 20 (E) the third-party administrator may not retain more than three 21 months' estimated claims payments and allocated loss adjustment expenses; 22 (F) the third-party administrator shall maintain separate records 23 for each insurer in a form usable by the insurer; the insurer or its authorized 24 representative shall have the right to audit and the right to copy all accounts 25 and records related to the insurer's business; the director, in addition to other 26 authority granted in this title, shall have access to all books, bank accounts, and 27 records of the third-party administrator in a form usable to the director; any 28 trade secrets contained in books and records reviewed by the director, 29 including the identity and addresses of policyholders and certificate holders, 30 shall be kept confidential, except that the director may use the information in a 31 proceeding instituted against the third-party administrator or the insurer; 01 (G) the contract may not be assigned in whole or in part by the 02 third-party administrator; 03 (H) if the contract permits the third-party administrator to do 04 underwriting, the contract must include the following: 05 (i) the third-party administrator's maximum annual 06 premium volume; 07 (ii) the rating system and basis of the rates to be 08 charged; 09 (iii) the types of risks that may be written; 10 (iv) maximum limits of liability; 11 (v) applicable exclusions; 12 (vi) territorial limitations; 13 (vii) policy cancellation provisions; 14 (viii) the maximum policy term; and 15 (ix) that the insurer shall have the right to cancel or not 16 renew a policy of insurance subject to applicable state law; 17 (I) if the contract permits the third-party administrator to 18 administer claims on behalf of the insurer, the contract must include the 19 following: 20 (i) written settlement authority must be provided by the 21 insurer and may be terminated for cause upon the insurer's written 22 notice sent by certified mail to the third-party administrator or upon the 23 termination of the contract, but the insurer may suspend the settlement 24 authority during a dispute regarding the cause of termination; 25 (ii) claims shall be reported to the insurer within 30 26 days; 27 (iii) a copy of the claim file shall be sent to the insurer 28 upon request or as soon as it becomes known that the claim has the 29 potential to exceed an amount determined by the director or exceeds the 30 limit set by the insurer, whichever is less, involves a coverage dispute, 31 may exceed the third-party administrator's claims settlement authority, 01 is open for more than six months, involves extra contractual 02 allegations, or is closed by payment in excess of an amount set by the 03 director or an amount set by the insurer, whichever is less; 04 (iv) each party to the contract shall comply with unfair 05 claims settlement statutes and regulations; 06 (v) transmission of electronic data must occur at least 07 monthly if electronic claim files are in existence; and 08 (vi) claim files shall be the sole property of the insurer; 09 upon an order of liquidation of the insurer, the third-party administrator 10 shall have reasonable access to and the right to copy the files on a 11 timely basis; and 12 (J) the contract may not provide for commissions, fees, or 13 charges contingent upon savings obtained in the adjustment, settlement, and 14 payment of losses covered by the insurer's obligations; but a third-party 15 administrator may receive performance-based compensation for providing 16 hospital or other auditing services or may receive compensation based on 17 premiums or charges collected or the number of claims paid or processed. 18  * Sec. 47. AS 21.27.650(q) is amended to read: 19 (q) The director may, without advance notice or hearing, immediately suspend 20 by order the license [REGISTRATION] of a third-party administrator if the director 21 finds that one or more of the following circumstances exist: 22 (1) the third-party administrator is insolvent or impaired; 23 (2) a proceeding for bankruptcy, receivership, conservatorship, or 24 rehabilitation, or another delinquency proceeding regarding the third-party 25 administrator has been commenced in any state or by a governmental agency of 26 another jurisdiction; 27 (3) the third-party administrator is in an unsound condition, or is in a 28 condition or using methods or practices that render its further transaction of insurance 29 injurious to policy holders or the public. 30  * Sec. 48. AS 21.27.901 is amended to read: 31 Sec. 21.27.901. Licensure [REGISTRATION] of pharmacy benefits  01 managers; scope of business practice. (a) A person may not conduct business in the 02 state as a pharmacy benefits manager unless the person is licensed [REGISTERED] 03 with the director.  04 (b) A pharmacy benefits manager licensed [REGISTERED] under this section 05 may 06 (1) contract with an insurer to administer or manage pharmacy benefits 07 provided by an insurer for a covered person, including claims processing services for 08 and audits of payments for prescription drugs and medical devices and supplies; and  09 (2) contract with network pharmacies. 10 (c) A pharmacy benefits manager 11 (1) shall apply for license [REGISTRATION] following the same 12 procedures for licensure set out in AS 21.27.040; 13 (2) is subject to hearings and orders on violations; denial, nonrenewal, 14 suspension, or revocation of license [REGISTRATION]; penalties; and surrender of 15 license [REGISTRATION] under the procedures set out in AS 21.27.405 - 21.27.460. 16 (d) Each day that a pharmacy benefits manager conducts business in the state 17 as a pharmacy benefits manager without being licensed [REGISTERED] is a separate 18 violation of this section, and each separate violation is subject to the maximum civil 19 penalty under AS 21.97.020.  20  * Sec. 49. AS 21.27 is amended by adding new sections to read: 21 Sec. 21.27.903. Pharmacy benefit manager qualifications. (a) An 22 application for a pharmacy benefits manager license must be in a form prescribed by 23 the director. 24 (b) The director may only issue or renew a license if the director is satisfied 25 that the applicant is a trustworthy person. The director may not issue a license to an 26 applicant who has committed an act that is a cause for denial, nonrenewal, suspension, 27 or revocation of a registration or license in this state or another jurisdiction. 28 (c) An application must disclose 29 (1) information concerning the identity, professional history, 30 professional experience, and background history of all owners, officers, directors, or 31 partners; 01 (2) any administrative action taken against the owners, officers, 02 directors, or partners by a governmental agency of this or another jurisdiction and any 03 sanction imposed by a financial industry regulatory authority or arbitration 04 proceeding; 05 (3) any criminal prosecution in this state or another state or jurisdiction 06 of an owner, officer, director, or partner; the application must include the criminal 07 complaint, calendaring order, and other relevant legal documents. 08 (d) An application must designate a compliance officer for the pharmacy 09 benefits manager and include the name, business address, telephone number, 10 electronic mailing address, professional experience, and information concerning the 11 background history of the officer. 12 (e) An application must include 13 (1) the required application fee; 14 (2) the organizational documents of the pharmacy benefits manager, 15 including articles of incorporation, articles of association, partnership agreement, trade 16 name certificate, trust agreement, shareholder agreement, and other applicable 17 documents, as well as the endorsements to the required documents; 18 (3) the name and address of the pharmacy benefits manager's agent for 19 service of process in the state; 20 (4) the bylaws, rules, regulations, or similar documents regulating the 21 internal affairs of the pharmacy benefits manager; 22 (5) the name, electronic mailing address, physical address, official 23 position, and professional qualifications of each person who is responsible for the 24 conduct of affairs of the pharmacy benefits manager, including the board of directors, 25 board of trustees, executive committee, or other governing board or committee; the 26 principal officers in the case of a corporation, or the partners or members in the case of 27 a partnership, limited liability company, limited liability partnership, or association; 28 shareholders holding directly or indirectly 10 percent or more of the voting securities 29 of the pharmacy benefits manager; and any other person who exercises control or 30 influence over the affairs of the pharmacy benefits manager; 31 (6) certified financial statements for the preceding two years, or for 01 each year and partial year that the applicant has been in business if less than two years, 02 prepared by an independent certified public accountant establishing that the applicant 03 is solvent, that the applicant's system of accounting, internal control, and procedure is 04 operating effectively to provide reasonable assurance that money is promptly 05 accounted for and paid to the person entitled to the money, and any other information 06 that the director may require to review the current financial condition of the applicant. 07 Sec. 21.27.904. Pharmacy benefit manager required notifications. (a) A 08 licensed pharmacy benefit manager shall notify the director in writing, not later than 09 30 days after 10 (1) a change in the information contained within the licensee's license, 11 place of business, electronic mailing address, physical mailing address, or telephone 12 number; 13 (2) a change in compliance officer, residence, place of business, 14 mailing address, or telephone number; 15 (3) the final disposition of an administrative action taken against the 16 licensee by a governmental agency of another state, by a governmental agency of 17 another jurisdiction, or by a financial industry regulatory authority sanction or 18 arbitration proceeding; in addition, a licensee shall submit to the director documents 19 relating to the final disposition on, including the final order and other relevant legal 20 documents in, the action; or 21 (4) a conviction of a misdemeanor or felony of the pharmacy benefits 22 manager, its officers, designated compliance officer, directors, partners, or owners. 23 (b) Failure to provide the information required under this section within 30 24 days is cause for denial, revocation, or suspension of license. 25  * Sec. 50. AS 21.27.905(a) is amended to read: 26 (a) A pharmacy benefits manager shall biennially renew a license 27 [REGISTRATION] with the director following the procedures for license renewal in 28 AS 21.27.380. The fee for an initial license is $20,000, and the fee to renew a  29 license is $20,000. 30  * Sec. 51. AS 21.27.975(15) is amended to read: 31 (15) "pharmacy benefits manager" means a person that contracts with a 01 pharmacy on behalf of an insurer to process claims or pay pharmacies for prescription 02 drugs or medical devices and supplies or provide network management for pharmacies 03 regardless of ownership of the pharmacy benefits manager; 04  * Sec. 52. AS 21.27.990(8) is amended to read: 05 (8) "compliance officer" means a licensee designated for a specific line 06 [AND CLASS] of authority under AS 21.27.115 [THIS CHAPTER] who is 07 responsible for a firm's compliance with the insurance statutes and regulations of this 08 state; 09  * Sec. 53. AS 21.27.990(12) is amended to read: 10 (12) "home state," with respect to 11 (A) an insurance producer, means the District of Columbia or a 12 state or territory of the United States in which an insurance producer maintains 13 the producer's principal place of residence or principal place of business and is 14 licensed to act as an insurance producer; 15 (B) an independent [PORTABLE ELECTRONICS] adjuster, 16 means the District of Columbia or a state or territory of the United States in 17 which an independent [PORTABLE ELECTRONICS] adjuster maintains the 18 independent [PORTABLE ELECTRONICS] adjuster's principal place of 19 residence or principal place of business and is licensed to act as an independent 20 adjuster or, if the state or territory of the United States of the independent 21 [PORTABLE ELECTRONICS] adjuster's principal place of residence or 22 principal place of business does not license independent adjusters, the state or 23 territory of the United States designated by the independent [PORTABLE 24 ELECTRONICS] adjuster where the independent [PORTABLE 25 ELECTRONICS] adjuster is licensed; 26  * Sec. 54. AS 21.27.990(13) is amended to read: 27 (13) "independent [PORTABLE ELECTRONICS] adjuster" means a  28 person [AN INDEPENDENT ADJUSTER] who investigates, negotiates, or settles  29 property, casualty, or workers' compensation claims for insurers or self-insurers 30 [COLLECTS, FURNISHES, OR ENTERS CLAIM INFORMATION FOR 31 PORTABLE ELECTRONICS INSURANCE ISSUED UNDER AS 21.36.515]; 01  * Sec. 55. AS 21.27.990(20) is amended to read: 02 (20) "limited lines" means those lines of insurance defined in 03 AS 21.27.150 [OR ANY OTHER LINE OF INSURANCE THAT THE DIRECTOR 04 DESIGNATES BY ORDER AS A LIMITED LINE]; 05  * Sec. 56. AS 21.33.055(d) is amended to read: 06 (d) On default of a nonadmitted insurer in the payment of the tax, the insured 07 shall pay the tax within 30 days after written notice from the director of the default by 08 the nonadmitted insurer. For wet marine and transportation insurance, a surplus  09 lines broker may pay the tax on behalf of the nonadmitted insurer or the insured. 10 If the tax prescribed by this section is not paid [BY THE NONADMITTED 11 INSURER] within the time stated [OR BY THE INSURED WITHIN THE TIME 12 STATED] after notice of default from the director [BY THE NONADMITTED 13 INSURER], the tax may be increased by 14 (1) a late payment fee of $1,000 or 10 percent of the tax due, 15 whichever is greater; 16 (2) interest at the rate of one percent a month or part of a month from 17 the date the payment was originally due to the date paid; and 18 (3) a penalty not to exceed $100 a day or 25 percent of the tax due, 19 whichever is greater, from the date the payment was due to the date paid. 20  * Sec. 57. AS 21.34.035 is amended to read: 21 Sec. 21.34.035. Health care insurance and disability insurance. (a) Except 22 for a multiple employer welfare arrangement, health care insurance and disability  23 insurance may be placed in and written by a nonadmitted insurer if 24 (1) the director finds it is in the best interest of the public and issues an 25 order to that effect; and 26 (2) the insurance is in compliance with this chapter. 27 (b) The rates and rating methods for health care insurance and disability  28 insurance placed and written under this section are subject to AS 21.51.405 and 29 AS 21.54.015. The surplus lines broker shall make the filings required under 30 AS 21.51.405 and AS 21.54.015 and maintain the records and accounts as required 31 under AS 21.87.230. 01 (c) Health care insurance and disability insurance may not be procured under 02 this chapter 03 (1) for the purpose of obtaining a lower premium rate than acceptable 04 by an authorized insurer; or 05 (2) for obtaining a competitive advantage. 06 (d) Health care insurance and disability insurance [INSURANCE] placed 07 in or written by a nonadmitted insurer and the activities of the surplus lines broker 08 relating to that transaction are subject to this title. 09 (e) In this section, 10 (1) "disability insurance" means disability insurance as defined in  11 AS 21.12.052 that is excess insurance or for individuals unable to obtain disability  12 insurance with any admitted insurer; 13 (2) "health care insurance" has the meaning given in AS 21.12.050(b). 14  * Sec. 58. AS 21.34.040(d) is amended to read: 15 (d) An insurer, including a nonadmitted insurer, not domiciled in a state  16 or territory of the United States and not listed on the Quarterly Listing of Alien  17 Insurers maintained by the National Association of Insurance Commissioners  18 International Insurers Department [A NONADMITTED INSURER] may be 19 eligible to provide coverage in this state if it files with the director or the director's 20 designee a copy of its current annual financial statement that has been certified by the 21 insurer. The financial statement must be filed with and approved by the regulatory 22 authority in the domicile of the [NONADMITTED] insurer [,] or certified by an 23 accounting or auditing firm licensed in the jurisdiction of the insurer's domicile. The 24 [A FOREIGN] insurer shall file [PROVIDE] the approved or certified financial 25 statement with the director or director's designee not more than nine [SIX] months 26 after the close of the reporting period. [AN ALIEN INSURER SHALL PROVIDE 27 THE APPROVED OR CERTIFIED FINANCIAL STATEMENT NOT MORE THAN 28 NINE MONTHS AFTER THE CLOSE OF THE REPORTING PERIOD. IN THE 29 CASE OF AN INSURANCE EXCHANGE, THE STATEMENT MAY BE AN 30 AGGREGATE COMBINED STATEMENT OF ALL UNDERWRITING 31 SYNDICATES OPERATING DURING THE PERIOD REPORTED UPON.] 01  * Sec. 59. AS 21.34.170(a) is amended to read: 02 (a) A surplus lines broker shall file with the director, on forms prescribed by 03 the director, a report of all surplus lines insurance, by type of insurance as required to 04 be reported in the annual statement that must be filed with the director by admitted 05 insurers. The report must include all surplus lines insurance transactions during the 06 preceding period showing the aggregate gross premiums written, the aggregate return 07 premiums, and the amount of aggregate tax remitted to this state [, AND THE 08 AMOUNT OF AGGREGATE TAX REMITTED TO EACH OTHER STATE FOR 09 WHICH AN ALLOCATION IS MADE UNDER AS 21.34.180]. The surplus lines  10 broker [FORMS] shall file the report [BE FILED] quarterly on March 1, June 1, 11 September 1, and December 1 of each year. 12  * Sec. 60. AS 21.34.190 is amended to read: 13 Sec. 21.34.190. Filing fee. (a) The fee for filing the statement under 14 AS 21.34.180(e) is an amount equal to one percent on gross premium charged less any 15 return premiums as reported on the statement. The surplus lines broker shall pay the 16 fee at the time of filing [OF] the statement and in a form and manner required by  17 the director. 18 (b) If the surplus lines broker does not pay the filing fee [IS NOT PAID] 19 when due, the surplus lines broker shall pay an additional late payment fee of $50 a  20 month [$250] plus two percent of the fee due per month, or part of a month, during  21 which the surplus lines broker fails to pay the full amount of the filing fee. The  22 late payment fee may not exceed $250 plus 10 percent of the filing fee due. If the  23 surplus lines broker does not pay the filing fee in the form or manner required by  24 the director, a penalty fee will be assessed equal to 25 percent of the filing fee due,  25 not to exceed $1,000, with a minimum penalty of $50. In addition to any other  26 penalty provided by law, the director may assess a penalty of not more than  27 $10,000 for a violation of this section. The director may suspend or revoke the  28 license of a surplus lines broker that fails to pay a fee under this section [SHALL 29 BECOME DUE AND PAYABLE BY THE SURPLUS LINES BROKER]. 30  * Sec. 61. AS 21.34.900(8) is amended to read: 31 (8) "home state," for purposes of determining the home state of an 01 insured in a multistate or multinational placement of nonadmitted insurance, is 02 defined as follows: 03 (A) except as provided in (B) or (C) of this paragraph, "home 04 state" means, with respect to an insured, 05 (i) the state in which an insured maintains its principal 06 place of business or, in the case of an individual, the individual's 07 principal residence; or 08 (ii) if 100 percent of the insured risk is located out of 09 the state referred to in (i) of this subparagraph, the state to which the 10 greatest percentage of the insured's taxable premium for that insurance 11 contract is allocated; 12 (B) if two or more insureds from an affiliated group are named 13 insureds on a single policy, "home state" under (A) of this paragraph is based 14 on the member of the affiliated group that has the largest percentage of 15 premium attributed to it under the insurance contract; 16 (C) if two or more insureds are named insureds on a  17 nonaffiliated group policy, "home state" under (A) of this paragraph  18 (i) is based on the group policyholder if the group  19 policyholder pays 100 percent of the premium; or  20 (ii) is based on the named insured of the group  21 policy if the group policyholder does not pay 100 percent of the  22 premium from the policyholder's own funds;  23 (D) for purposes of (A) of this paragraph, the principal place of 24 business of an insured is 25 (i) the state where the insured maintains its headquarters 26 and where the insured's high-level officers direct, control, and 27 coordinate the business activities of the insured; or  28 (ii) if an insured's high-level officers direct, control,  29 and coordinate the business activities of the insured in more than  30 one state or if the insured maintains its headquarters in a  31 jurisdiction outside the United States, the state where the greatest  01 percentage of the insured's taxable premium for the insurance  02 contract is allocated;  03 (E) for purposes of (A) of this paragraph, the principal  04 residence of an insured is  05 (i) the state where the insured resides for the  06 greatest number of days in a calendar year; or  07 (ii) if the insured resides for the greatest number of  08 days in a calendar year in a jurisdiction outside the United States,  09 the state where the greatest percentage of the insured's taxable  10 premium for the insurance contract is allocated; 11  * Sec. 62. AS 21.34.900(15) is amended to read: 12 (15) "wet marine and transportation insurance" has the meaning given  13 in AS 21.12.090(b) [MEANS ONE OR MORE OF THE FOLLOWING: 14 (A) INSURANCE UPON, OF INTEREST IN, OR RELATING 15 TO VESSELS, CRAFTS, HULLS, EXCEPT VESSELS OF 50 16 DISPLACEMENT TONS OR LESS; 17 (B) INSURANCE OF MARINE BUILDERS RISKS, 18 MARINE WAR RISKS, AND CONTRACTS OF MARINE PROTECTION 19 AND INDEMNITY INSURANCE; 20 (C) INSURANCE OF FREIGHT AND DISBURSEMENTS 21 PERTAINING TO A SUBJECT OF INSURANCE COMING WITHIN THIS 22 PARAGRAPH; OR 23 (D) INSURANCE OF PERSONAL PROPERTY AND 24 INTERESTS IN PERSONAL PROPERTY, IN COURSE OF 25 EXPORTATION FROM OR IMPORTATION INTO A COUNTRY OR IN 26 THE COURSE OF COASTAL OR INLAND WATER TRANSPORTATION, 27 INCLUDING TRANSPORTATION BY LAND, WATER, OR AIR FROM 28 POINT OF ORIGIN TO FINAL DESTINATION IN CONNECTION WITH 29 ANY AND ALL RISKS OR PERILS OF NAVIGATION, TRANSIT, OR 30 TRANSPORTATION, AND WHILE BEING REPAIRED FOR AND WHILE 31 AWAITING SHIPMENT, AND DURING ANY DELAYS, 01 TRANSSHIPMENT, OR RESHIPMENT INCIDENT TO THEM]. 02  * Sec. 63. AS 21.36.125(a) is amended to read: 03 (a) A person may not commit any of the following acts or practices: 04 (1) misrepresent facts or policy provisions relating to coverage of an 05 insurance policy; 06 (2) fail to acknowledge and act promptly upon communications 07 regarding a claim arising under an insurance policy; 08 (3) fail to adopt and implement reasonable standards for prompt 09 investigation of claims; 10 (4) refuse to pay a claim without a reasonable investigation of all of 11 the available information and an explanation of the basis for denial of the claim or for 12 an offer of compromise settlement; 13 (5) fail to affirm or deny coverage of claims within a reasonable time 14 of the completion of proof-of-loss statements; 15 (6) fail to attempt in good faith to make prompt and equitable 16 settlement of claims in which liability is reasonably clear; 17 (7) engage in a pattern or practice of compelling insureds to litigate for 18 recovery of amounts due under insurance policies by offering substantially less than 19 the amounts ultimately recovered in actions brought by those insureds; 20 (8) compel an insured or third-party claimant in a case in which 21 liability is clear to litigate for recovery of an amount due under an insurance policy by 22 offering an amount that does not have an objectively reasonable basis in law and fact 23 and that has not been documented in the insurer's file; 24 (9) attempt to make an unreasonably low settlement by reference to 25 printed advertising matter accompanying or included in an application; 26 (10) attempt to settle a claim on the basis of an application that has 27 been altered without the consent of the insured; 28 (11) make a claims payment without including a statement of the 29 coverage under which the payment is made; 30 (12) make known to an insured or third-party claimant a policy of 31 appealing from an arbitration award in favor of an insured or third-party claimant for 01 the purpose of compelling the insured or third-party claimant to accept a settlement or 02 compromise less than the amount awarded in arbitration; 03 (13) delay investigation or payment of claims by requiring submission 04 of unnecessary or substantially repetitive claims reports and proof-of-loss forms; 05 (14) fail to promptly settle claims under one portion of a policy for the 06 purpose of influencing settlements under other portions of the policy; 07 (15) fail to promptly provide a reasonable explanation of the basis in 08 the insurance policy in relation to the facts or applicable law for denial of a claim or 09 for the offer of a compromise settlement; [OR] 10 (16) offer a form of settlement or pay a judgment in any manner 11 prohibited by AS 21.96.030; 12 (17) violate a provision contained in AS 21.07; or 13 (18) offer a valuation that depreciates the expense of labor in  14 violation of AS 21.60.030. 15  * Sec. 64. AS 21.36.225(a) is amended to read: 16 (a) An [EXCEPT FOR A HEALTH CARE INSURANCE POLICY 17 SUBJECT TO AS 21.51.400 OR AS 21.54.130, AN] insurer may not cancel a health 18 insurance policy unless the insurer provides written notice to a policyholder at least 45 19 days before the effective date of the cancellation. 20  * Sec. 65. AS 21.36.235(a) is amended to read: 21 (a) Except as provided in AS 21.36.305, if the renewal premium is increased 22 more than 10 percent for a reason other than an increase in coverage or exposure base, 23 or if after renewal there will be a material restriction or reduction in coverage not 24 specifically requested by the insured, written notice shall be mailed to the insured and 25 to the agent or broker of record as required by AS 21.36.260 26 [(1) AT LEAST 20 DAYS BEFORE EXPIRATION OF A 27 PERSONAL INSURANCE POLICY; OR 28 (2)] at least 45 days before expiration of the [A BUSINESS OR 29 COMMERCIAL] policy. 30  * Sec. 66. AS 21.36.240(a) is amended to read: 31 (a) An insurer may only fail to renew a personal insurance policy on the 01 policy's annual anniversary. An insurer may not fail to renew a policy unless a written 02 notice of nonrenewal is mailed to the named insured under AS 21.36.260 at least [20 03 DAYS FOR A PERSONAL INSURANCE POLICY, AND AT LEAST] 45 days 04 [FOR A BUSINESS OR COMMERCIAL INSURANCE POLICY,] before the date 05 the policy expires or the anniversary date of a policy written for a term longer than one 06 year or with no fixed expiration date. 07  * Sec. 67. AS 21.36.240 is amended by adding a new subsection to read: 08 (e) For purposes of this section, an offer of placement with an affiliate insurer 09 does not constitute a failure by an insurer to renew coverage. 10  * Sec. 68. AS 21.36 is amended by adding a new section to Article 4 to read: 11 Sec. 21.36.245. Cancellation of and failure to renew property and casualty  12 insurance. An insurer may not cancel or fail to renew a property insurance policy, or a 13 casualty insurance policy insuring a business or commercial property, as a result of a 14 claim to an insurer made solely to meet a local, state, or federal aid requirement where 15 the insurer does not apply coverage and does not pay a benefit. 16  * Sec. 69. AS 21.36.475(a) is amended to read: 17 (a) An owner controlled insurance program or a contractor controlled 18 insurance program is subject to both AS 21.39 and AS 21.42, must be approved by the 19 director, and shall be allowed only for a major construction project or a major multi- 20 owner residential construction project. Owner controlled and contractor controlled 21 insurance programs are limited to property insurance as defined in AS 21.12.060 and 22 casualty insurance as defined in AS 21.12.070. 23  * Sec. 70. AS 21.36.475(b) is amended to read: 24 (b) In this section, an owner controlled or contractor controlled insurance 25 [INSURED] program does not include 26 (1) builder's risk or course of construction insurance; 27 (2) insurance relating to the transportation of cargo or other property; 28 or  29 (3) insurance covering one or more affiliates, subsidiaries, partners, or 30 joint venture partners of a person [; OR 31 (4) INSURANCE POLICIES ENDORSED TO NAME ONE OR 01 MORE PERSONS AS ADDITIONAL INSUREDS]. 02  * Sec. 71. AS 21.36.475(c) is amended by adding a new paragraph to read: 03 (7) "major multi-owner residential construction project" means a 04 construction project for condominiums, townhouses, cooperative housing 05 developments, or other residential housing involving at least 40 units and three or 06 more property owners with a total cost of $20,000,000 or more. 07  * Sec. 72. AS 21.36.505(a) is amended to read: 08 (a) A person may not sell, market, promote, advertise, or otherwise distribute a 09 health discount plan unless 10 (1) each advertisement, policy, document, information, statement, or 11 other communication regarding the health discount plan and the plan itself contain a 12 statement, in bold and prominent type, that the health discount plan is not insurance; 13 (2) [THE DISCOUNTS OFFERED UNDER THE HEALTH 14 DISCOUNT PLAN ARE SPECIFICALLY AUTHORIZED BY A CONTRACT 15 WITH EACH PROVIDER OF THE SERVICES OR SUPPLIES LISTED IN 16 CONJUNCTION WITH THE PLAN; 17 (3)] the health discount plan states the name, address, and telephone 18 number of the administrator of the plan; 19 (3) [(4)] the person makes readily available to the consumer a 20 complete, accurate, and up-to-date list of providers participating in the plan that offer 21 discounted health care services or supplies in the consumer's local area and the 22 discounts offered by the providers; 23 (4) [(5)] the person provides the consumer the right to cancel the health 24 discount plan within 30 days after purchase of the plan; 25 (5) [AND (6)] the person provides the consumer with a full refund of 26 all payments made, except for a nominal processing fee, within 30 days after 27 notification of cancellation of the plan under (5) of this subsection;  28 (6) the person registers the health discount plan in accordance  29 with regulations adopted by the director; and  30 (7) the person renews the health discount plan when required  31 under regulations adopted by the director. 01  * Sec. 73. AS 21.36.520(a) is amended to read: 02 (a) An insurer providing a health care insurance policy or its pharmacy 03 benefits manager may not 04 (1) interfere with a covered person's right to choose a pharmacy or 05 provider; 06 (2) interfere with a covered person's right of access to a clinician- 07 administered drug; 08 (3) interfere with the right of a pharmacy or pharmacist to participate 09 as a network pharmacy; 10 (4) reimburse a pharmacy or pharmacist an amount less than the 11 amount the pharmacy benefits manager reimburses an affiliate for providing the same 12 pharmacy services, calculated on a per-unit basis using the same generic product 13 identifier or generic code number; 14 (5) impose a reduction in reimbursement for pharmacy services 15 because of the person's choice among pharmacies that have agreed to participate in the 16 plan according to the terms offered by the insurer or its pharmacy benefits manager; 17 (6) use a covered person's pharmacy services data collected under the 18 provision of claims processing services for the purpose of soliciting, marketing, or 19 referring the person to an affiliate of the pharmacy benefits manager; 20 (7) prohibit or limit a pharmacy from mailing, shipping, or delivering 21 drugs to a patient as an ancillary service; however, the insurer or its pharmacy benefits 22 manager 23 (A) is not required to reimburse a delivery fee charged by a 24 pharmacy unless the fee is specified in the contract between the pharmacy 25 benefits manager and the pharmacy; 26 (B) may not require a patient signature as proof of delivery of a 27 mailed or shipped drug if the pharmacy 28 (i) maintains a mailing or shipping log signed by a 29 representative of the pharmacy or keeps a record of each notification of 30 delivery provided by the United States mail or a package delivery 31 service; and 01 (ii) is responsible for the cost of mailing, shipping, or 02 delivering a replacement for a drug that was mailed or shipped but not 03 received by the covered person; 04 (8) prohibit or limit a network pharmacy from informing an insured 05 person of the difference between the out-of-pocket cost to the covered person to 06 purchase a drug, medical device, or supply using the covered person's pharmacy 07 benefits and the pharmacy's usual and customary charge for the drug, medical device, 08 or supply; 09 (9) conduct or participate in spread pricing in the state; 10 (10) assess, charge, or collect a form of remuneration that passes from 11 a pharmacy or a pharmacist in a pharmacy network to the pharmacy benefits manager, 12 including claim processing fees, performance-based fees, network participation fees, 13 or accreditation fees; 14 (11) reverse and resubmit the claim of a pharmacy more than 90 days 15 after the date the claim was first adjudicated, and may not reverse and resubmit the 16 claim of a pharmacy unless the insurer or pharmacy benefits manager 17 (A) provides prior written notification to the pharmacy; 18 (B) has just cause; 19 (C) first attempts to reconcile the claim with the pharmacy; and 20 (D) provides to the pharmacy, at the time of the reversal and 21 resubmittal, a written description that includes details of and justification for 22 the reversal and resubmittal;  23 (12) prohibit or limit a pharmacy from collecting a fee from a  24 covered person for a service or product not covered by the covered person's  25 health care insurance policy. 26  * Sec. 74. AS 21.36 is amended by adding a new section to article 5 to read: 27 Sec. 21.36.525. Decisions based on elected official status. (a) A person 28 transacting insurance in this state may not, solely because of a person's status as an 29 elected official, 30 (1) refuse to issue or renew insurance coverage; 31 (2) limit the scope of insurance coverage; 01 (3) cancel an existing policy of insurance; 02 (4) deny a covered claim; or 03 (5) increase the premium, policy fees, or rates charged on an insurance 04 policy.  05 (b) The provisions of (a) of this section do not apply if the refusal, limitation, 06 cancellation, denial, or increase is 07 (1) based on sound underwriting or actuarial principles reasonably 08 related to actual or anticipated loss experience; or 09 (2) required or authorized by law or regulation. 10 (c) In this section, "elected official" means a member of the legislature, the 11 governor, the lieutenant governor, a member of the state's congressional delegation, a 12 constitutional convention delegate, a borough or city mayor, a member of a borough or 13 city assembly, council, or school board, or a member of a regional school board for a 14 regional educational attendance area. 15  * Sec. 75. AS 21.36.910(d) is amended to read: 16 (d) In addition to an order issued under (c) of this section, the director may, 17 after a hearing, order restitution, assess a penalty of not more than $2,500 for each 18 violation or $25,000 for engaging in a general business practice in violation of this 19 chapter. The director may include interest calculated under AS 09.30.070 in an  20 order for restitution entered under this subsection. 21  * Sec. 76. AS 21.39.155(c) is amended to read: 22 (c) An insurer may impose a surcharge not to exceed 25 percent of the 23 premium for assigned risk pool insurance, except that a surcharge may not be applied 24 to the first $6,000 [$3,000] in premium in any policy year. 25  * Sec. 77. AS 21.42.250(a) is amended to read: 26 (a) An insurer shall provide a policy or endorsement to the insured or to the 27 person entitled to it by mail or electronic mail [DELIVERY] or by posting on the 28 insurer's Internet website under (c) of this section within a reasonable period of time 29 after its issuance. The insurer is not required to mail, deliver, or post the policy or 30 endorsement until all conditions required by the insurer have been met by the insured. 31  * Sec. 78. AS 21.42.375(e) is amended to read: 01 (e) Except as necessary to qualify a plan as a high deductible health plan 02 eligible for a health savings account tax deduction under 26 U.S.C. 223 (Internal 03 Revenue Code), a health care insurer that offers, issues, delivers, or renews a health 04 care insurance plan in the individual or group market in the state that provides 05 coverage for mammography screening, diagnostic breast examinations, and 06 supplemental breast examinations may not impose cost sharing, a deductible, 07 coinsurance, a copayment obligation, or another similar out-of-pocket expense on an 08 insured for coverage of a low-dose mammography screening, diagnostic breast 09 examination, [OR] supplemental breast examination, biopsy, or consultation. 10  * Sec. 79. AS 21.42.375(f) is amended by adding new paragraphs to read: 11 (4) "biopsy" means a medical procedure involving the removal of 12 tissue to determine the presence of cancer cells; 13 (5) "consultation" means a medical consultation with a health care 14 provider to discuss the results of a diagnostic breast examination and whether further 15 biopsies or other diagnostic procedures are needed. 16  * Sec. 80. AS 21.42.377(a) is amended to read: 17 (a) Except for a fraternal benefit society, a health care insurer that offers, 18 issues for delivery, delivers, or renews in this state a health care insurance plan shall 19 provide coverage for the costs of colorectal cancer screening examinations and 20 laboratory tests under the schedule described in (b) of this section. [THE COVERAGE 21 REQUIRED BY THIS SECTION IS SUBJECT TO STANDARD POLICY 22 PROVISIONS APPLICABLE TO OTHER BENEFITS, INCLUDING 23 DEDUCTIBLE OR COPAYMENT PROVISIONS.] 24  * Sec. 81. AS 21.42.377(b) is amended to read: 25 (b) The minimum coverage required under (a) of this section for colorectal 26 cancer screening includes coverage for colorectal cancer examinations and laboratory 27 tests as recommended by the most recent [SPECIFIED IN] American Cancer 28 Society guidelines for colorectal cancer screening of [ASYMPTOMATIC] individuals 29 considered at average risk for colorectal cancer. Coverage shall be provided for all 30 colorectal screening examinations and tests, including a colonoscopy performed as a  31 result of a positive result on a non-colonoscopy preventive screening test, that are 01 administered at a frequency identified in the most recent American Cancer Society 02 guidelines for colorectal cancer. 03  * Sec. 82. AS 21.42.377(e) is amended to read: 04 (e) For individuals considered at 05 (1) average risk for colorectal cancer, coverage or benefits shall be 06 provided for the choice of screening, so long as it is conducted in accordance with the 07 specified frequency; coverage required by this paragraph is not subject to cost  08 sharing, including deductible, coinsurance, or copayment provisions;  09 (2) [. FOR INDIVIDUALS CONSIDERED AT] high risk for 10 colorectal cancer, screening shall be provided at a frequency determined necessary by 11 a health care provider. 12  * Sec. 83. AS 21.45.305(c)(2) is amended to read: 13 (2) The interest rate used in determining minimum nonforfeiture 14 amounts shall be an annual rate of interest determined as the lesser of three percent a 15 year or the following, which shall be specified in the contract if the interest rate will be 16 reset: (A) the five-year constant maturity treasury rate reported by the federal reserve 17 as of a date, or average over a period, rounded to the nearest 1/ 20 of one percent, 18 specified in the contract not more than 15 months before the contract issue date or 19 redetermination date under (D) of this paragraph; (B) reduced by 125 basis points; (C) 20 where the resulting interest rate is not less than 0.15 [ONE] percent; and (D) the 21 interest rate must apply for an initial period and may be redetermined for additional 22 periods; the redetermination date, basis, and period, if any, must be stated in the 23 contract; the basis is the date or average over a specified period that produces the 24 value of the five-year constant maturity treasury rate to be used at each 25 redetermination date. 26  * Sec. 84. AS 21.48.010(f) is amended to read: 27 (f) An insurer shall submit to the director information demonstrating 28 [SATISFACTORY TO THE DIRECTOR] that the group meets the requirements of 29 (a) or (e) of this section. If the director finds the information to be satisfactory, the  30 director shall [, AND THE DIRECTOR MUST AFFIRMATIVELY] approve [OF] 31 the [GROUP BEFORE AN] insurer to [MAY] issue a group life policy to a group 01 under (a) or (e) of this section. The director's approval is not required for a single  02 employer group, labor union group, or multiple employer welfare arrangement  03 authorized under AS 21.85.  04  * Sec. 85. AS 21.51.060(b) is amended to read: 05 (b) A policy in which the insurer reserves the right to refuse renewal shall 06 have, at the beginning of the provision in (a) of this section, 07 "Unless not less than 45 [30] days before the premium due date the insurer has 08 delivered to the insured or has mailed to the last address of the insured as shown by the 09 records of the insurer written notice of its intention not to renew this policy beyond the period 10 for which the premium has been accepted." 11  * Sec. 86. AS 21.57.160(1) is amended to read: 12 (1) "agricultural [AGRICULTURE] credit transaction commitment" 13 means a binding agreement to loan money up to a fixed amount as needed for 14 agricultural purposes; 15  * Sec. 87. AS 21.59 is amended by adding a new section to read: 16 Sec. 21.59.125. Motor vehicle service contract approval. (a) A provider may 17 not deliver or issue for delivery a motor vehicle service contract unless the provider 18 files the contract with the division and receives approval from the director for the 19 contract. 20 (b) If a change is made to a motor vehicle service contract after it has been 21 approved, the provider shall file and receive approval for the changed contract in 22 accordance with (a) of this section. 23  * Sec. 88. AS 21.59.140(c) is amended to read: 24 (c) A licensee shall report to the director in writing any administrative action 25 taken against the licensee by a governmental agency [OF ANOTHER STATE OR BY 26 A GOVERNMENTAL AGENCY OF ANOTHER JURISDICTION] within 30 days 27 after the final disposition of the action. A licensee shall submit to the director the final 28 order and other relevant legal documents in the action. A licensee shall report to the 29 director any criminal prosecution of the licensee within 30 days after the date of filing 30 of the criminal complaint, indictment, or citation in the prosecution. The licensee shall 31 submit to the director a copy of the criminal complaint, calendaring order, and other 01 relevant legal documents in the prosecution. 02  * Sec. 89. AS 21.60 is amended by adding a new section to read: 03 Sec. 21.60.030. Depreciation of labor. In a residential property policy, the 04 valuation of the expense of labor may not be depreciated, except where offered as a 05 stand-alone endorsement that specifically identifies the nontangible items subject to 06 depreciation. An endorsement offered under this section must be an optional coverage 07 and provide a proportionate reduction in premium. 08 * Sec. 90. AS 21.76.070 is amended to read: 09 Sec. 21.76.070. Excess insurance. A cooperative agreement may authorize the 10 board of directors to purchase excess or catastrophic insurance on behalf of the joint 11 insurance arrangement. The cost of the insurance shall be apportioned in the manner 12 specified in the joint insurance agreement. The board may purchase insurance under 13 this section only from an insurer authorized to do business in the state, except that an 14 arrangement formed by municipalities or school districts may purchase insurance 15 under this section from a risk-sharing pool established by a national association of 16 similar entities if the risk-sharing pool meets the qualifications for a nonadmitted 17 [AN UNAUTHORIZED] insurer under AS 21.34.040(d) [AS 21.34.040(b) AND (d) 18 AND 21.34.220] and has capital and policyholders surplus in an amount at least as 19 great as would be required if the association were a domestic multiple line insurer. An 20 arrangement may purchase insurance under this section for property and liability risks 21 from unauthorized insurers allowed for use by licensed Alaska surplus lines brokers. 22  * Sec. 91. AS 21.79.020(c) is amended to read: 23 (c) This chapter does not apply to 24 (1) that part of a policy or contract that is not guaranteed by the 25 member insurer; 26 (2) that part of the risk borne by the policy or contract owner; 27 (3) a policy or contract of reinsurance, unless an assumption certificate 28 has been issued; 29 (4) that part of a policy or contract, except for part of a policy or 30 contract, including a rider, that provides long-term care or other health insurance 31 benefits, to the extent that the rate of interest on which it is based, or the interest rate, 01 crediting rate, or similar factor determined by use of an index or other external 02 reference stated in the policy or contract employed in calculating returns or changes in 03 value, 04 (A) averaged over the period of four years before the date on 05 which the member insurer becomes an impaired or insolvent insurer under this 06 chapter, whichever occurs first, exceeds the rate of interest determined by 07 subtracting two percentage points from the published monthly average for that 08 same four-year period or for a lesser period if the policy or contract was issued 09 less than four years before the member insurer becomes an impaired or 10 insolvent insurer under this chapter, whichever occurs first; and 11 (B) on and after the date on which the member insurer becomes 12 an impaired or insolvent insurer under this chapter, whichever occurs first, 13 exceeds the rate of interest determined by subtracting three percentage points 14 from the most recent published monthly average; 15 (5) a portion of a policy or contract issued to a plan or program of an 16 employer, association, or similar entity to provide life, health, or an annuity benefit to 17 an employee, member, or other person, to the extent that the plan or program is self- 18 funded or uninsured, including a benefit payable by the employer, association, or 19 similar entity under 20 (A) a multiple employer welfare arrangement as defined in 29 21 U.S.C. 1002 (Employee Retirement Income Security Act of 1974); 22 (B) a minimum premium group insurance plan; 23 (C) a stop-loss group insurance plan; or 24 (D) an administrative services only contract; 25 (6) that part of a policy or contract that provides a dividend or 26 experience rating credit or voting rights, or provides that a fee or allowance be paid to 27 a person, including the policy or contract owner, in connection with the service to or 28 administration of the policy or contract; 29 (7) a policy or contract issued in this state by a member insurer at a 30 time when it was not licensed or did not have a certificate of authority to issue the 31 policy or contract in this state; 01 (8) a person who is a payee or beneficiary of a contract owner who is a 02 resident of this state if the payee or beneficiary is provided coverage by the association 03 of another state; 04 (9) a person covered under (d) of this section if any coverage is 05 provided by the association of another state to that person; 06 (10) an unallocated annuity contract issued to or in connection with a 07 benefit plan protected under the United States Pension Benefit Guaranty Corporation, 08 regardless of whether the United States Pension Benefit Guaranty Corporation has 09 become liable to make any payments with respect to the benefit plan; 10 (11) that part of an unallocated annuity contract that is not issued to or 11 in connection with a specific employee, union, or association of natural persons 12 benefit plan or a government lottery; 13 (12) that part of a policy or contract to the extent that assessments 14 required by AS 21.79.070 with respect to the policy or contract are preempted by law; 15 (13) an obligation that does not arise under the express written terms of 16 the policy or contract issued by the member insurer to the enrollee, certificate holder, 17 contract owner, or policy owner, including, without limitation, 18 (A) a claim based on marketing materials; 19 (B) a claim based on a side letter or other document that was 20 issued by the member insurer without meeting applicable policy or contract 21 form filing or approval requirements; 22 (C) a misrepresentation of or regarding policy or contract 23 benefits; 24 (D) an extra contractual claim; or 25 (E) a claim for penalties or consequential or incidental 26 damages; 27 (14) a contractual agreement that establishes the member insurer's 28 obligations to provide a book value accounting guaranty for defined contribution 29 benefit plan participants by reference to a portfolio of assets that is owned by the 30 benefit plan or its trustee, which, in each case, is not an affiliate of the member 31 insurer; 01 (15) that part of a policy or contract to the extent the part of the policy 02 or contract provides for interest or other changes in value to be determined by the use 03 of an index or other external reference stated in the policy or contract, but that have 04 not been credited to the policy or contract, or as to which the policy or contract 05 owner's rights are subject to forfeiture, as of the date the member insurer becomes an 06 impaired or insolvent insurer under this chapter, whichever is earlier; if a policy's or 07 contract's interest or changes in value are credited less frequently than annually, then, 08 for purposes of determining the values that have been credited and are not subject to 09 forfeiture under this paragraph, the interest or change in value determined by using the 10 procedures defined in the policy or contract shall be credited as if the contractual date 11 of crediting interest or changing values was the date of impairment or insolvency, 12 whichever is earlier, and will not be subject to forfeiture; 13 (16) a policy or contract providing a hospital, medical, prescription 14 drug, or other health care benefit in accordance with 42 U.S.C. 1395w-21 - 42 U.S.C.  15 1395w-28, 42 U.S.C. 1395w-101 - 42 U.S.C. 1395w-154, 42 U.S.C. 1396 - 42 U.S.C.  16 1396w-8, [42 U.S.C. 1395w-21 - 1395w-154] or federal regulations adopted under 17 those sections; 18 (17) a person who acquires rights to receive payments through a 19 structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), 20 regardless of whether the transaction occurred before, on, or after 26 U.S.C. 21 5891(c)(3)(A) became effective; or 22 (18) structured settlement annuity benefits to which a payee or 23 beneficiary has transferred the payee's or beneficiary's rights in a structured settlement 24 factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the 25 transaction occurred before, on, or after 26 U.S.C. 5891(c)(3)(A) became effective. 26  * Sec. 92. AS 21.86.040(a) is amended to read: 27 (a) The governing body of a health maintenance organization may include 28 providers, or other individuals, or both. At least one-quarter [ONE-THIRD] of the 29 governing body must consist of consumers who are substantially representative of 30 enrollees. 31  * Sec. 93. AS 21.86.060(b) is amended to read: 01 (b) In addition to basic health care services, a health maintenance organization 02 may provide, or arrange for, other health care services on a prepayment, fixed fee, or 03 other financial basis. 04  * Sec. 94. AS 21.86.060 is amended by adding new subsections to read: 05 (d) A health maintenance organization shall provide coverage for emergency 06 services, as that term is defined in AS 21.07.250, that are necessary to screen and 07 stabilize a covered person at the health maintenance organization provider employee 08 or contracted provider level of cost sharing when the services are not provided by a 09 health maintenance organization provider. The health maintenance organization may 10 require the transfer of a hospitalized covered person upon stabilization. 11 (e) A health maintenance organization shall provide coverage at the health 12 maintenance organization provider employee or contracted provider level of cost 13 sharing upon referral from a health maintenance organization provider that states the 14 covered person requires medically necessary services from a provider that is not a 15 health maintenance organization provider. The health maintenance organization may 16 deny the referral when an in-network provider is available to provide the medically 17 necessary services. 18  * Sec. 95. AS 21.96.090 is amended by adding a new subsection to read: 19 (g) A risk retention group shall file a report in accordance with 20 AS 21.09.210(a) and pay the tax required for a domestic and foreign insurer under 21 AS 21.09.210(b). 22  * Sec. 96. AS 21.96.120 is amended to read: 23 Sec. 21.96.120. Waiver for state innovation. The director may apply to a  24 federal agency for a waiver of federal law that relates to a health insurance  25 requirement, including applying to the United States Secretary of Health and 26 Human Services under 42 U.S.C. 18052, as amended, for a waiver of applicable 27 provisions of P.L. 111-148 (Patient Protection and Affordable Care Act), as amended, 28 with respect to health insurance [COVERAGE] in the state for a plan year beginning 29 on or after January 1, 2017. The director may implement a state plan meeting the 30 waiver requirements in a manner consistent with state and federal law and as approved 31 by the United States Secretary of Health and Human Services. 01  * Sec. 97. AS 21.97.900 is amended by adding a new paragraph to read: 02 (48) "motor vehicle" means a motor vehicle subject to registration 03 under AS 28.10.011. 04  * Sec. 98. AS 21.09.210(d); AS 21.27.020(g), 21.27.330(a), 21.27.630(f), 21.27.905(b);  05 AS 21.34.030(d); AS 21.39.020(b)(4); AS 21.42.377(c); AS 21.59.290(2); and AS 21.86.078 06 are repealed. 07  * Sec. 99. The uncodified law of the State of Alaska is amended by adding a new section to 08 read: 09 APPLICABILITY. (a) AS 21.36.475(b), as amended by sec. 70 of this Act, applies to 10 contracts entered into on or after the effective date of this Act. 11 (b) AS 21.36.525, added by sec. 74 of this Act, applies to an insurance policy or 12 contract issued, delivered, or renewed on or after the effective date of this Act. 13  * Sec. 100. Sections 69 - 71 of this Act take effect immediately under AS 01.10.070(c). 14  * Sec. 101. Except as provided in sec. 100 of this Act, this Act takes effect January 1, 2026.