HB 527: "An Act relating to insurance for wrap-up construction projects."
00HOUSE BILL NO. 527 01 "An Act relating to insurance for wrap-up construction projects." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. PURPOSE. The purpose of this Act is to establish minimum standards for 04 an insurer who issues wrap-up construction insurance to ensure that the rating system applied 05 to wrap-up construction insurance is not unfairly discriminatory, and to ensure the integrity 06 of wrap-up construction insurance statistical reporting in this state. 07 * Sec. 2. AS 21.39 is amended by adding new sections to read: 08 Sec. 21.39.185. WRAP-UP CONSTRUCTION INSURANCE RATE FILINGS. 09 An insurer who proposes to provide coverage for a wrap-up construction project shall, 10 for each project, file with the director the policy form, endorsements, and safety plan 11 for the rating system that it proposes to use for that project, and receive approval from 12 the director before binding coverage for the project. The filing must satisfy 13 requirements established by the director by regulation and must document compliance 14 with the standards under AS 21.39.190 - 21.39.210.
01 Sec. 21.39.190. REQUIRED PROVISIONS. (a) An insurer may only provide 02 a wrap-up construction policy 03 (1) for a construction project that has a written contract identifying the 04 scope of the project, the project's specific beginning and completion points, and 05 providing that the general contractor shall indemnify and hold harmless any 06 subcontractor for losses in excess of the general contractor's applicable liability 07 insurance; 08 (2) if the construction project is insured by one or more insurers under 09 the same management; 10 (3) if the policy insures two or more legal entities engaged in a 11 construction project; 12 (4) if the policy insures only the general contractor and subcontractors 13 performing work under a written contract that does not reflect the cost of insuring the 14 construction project, except the policy may provide coverage for a person who 15 contracts with a general contractor, if the contract between the person and the general 16 contractor does not reflect the cost of insuring the construction project; 17 (5) for a construction project that insures all subcontractors on the job 18 site, except that the policy may exclude commercial liability coverage for 19 subcontractors engaged in environmental cleanup operations; and 20 (6) for a construction project that has a written safety plan acceptable 21 to the director. 22 (b) An insurance policy written for a wrap-up construction project must 23 (1) limit coverage to the wrap-up construction project's job site; 24 (2) make the wrap-up construction coverage primary over any other 25 coverage available to the subcontractor; and 26 (3) make the person procuring the insurance solely responsible for the 27 payment of premiums or loss reimbursement amounts, the sole beneficiary of return 28 premiums or dividends, and the person with the authority to change or cancel the 29 policy. 30 (c) Workers' compensation coverage written as part of a wrap-up construction 31 policy must be either
01 (1) retroactively rated using a plan filed by the National Council of 02 Compensation Insurance and approved by the division under AS 21.39.040 as of the 03 effective date of the program's coverage; or 04 (2) written on a loss reimbursement basis using a form and rating 05 system approved by the division under AS 21.39.040 as of the effective date of the 06 coverage. 07 (d) An insurer that issues a wrap-up construction policy that includes workers' 08 compensation coverage must issue to each subcontractor an individual workers' 09 compensation policy that 10 (1) uses standard National Council of Compensation Insurance 11 classifications; 12 (2) uses each individual subcontractor's 13 (A) claim experience; 14 (B) experience rating date; 15 (C) anniversary rating date; and 16 (D) actual payroll to calculate the final premium. 17 (e) An insurer issuing a policy described under (d) of this section shall report 18 to the National Council on Compensation Insurance, as the state's designated statistical 19 agent, each subcontractor's actual payroll, premium, and losses. 20 (f) A wrap-up construction policy that includes workers' compensation 21 coverage or commercial liability coverage must be written on an occurrence basis and 22 have per claim, per occurrence, and aggregate limits adequate to protect each 23 subcontractor from any foreseeable claim that could arise out of the wrap-up 24 construction project. 25 Sec. 21.39.200. PROHIBITED PROVISIONS. (a) Schedule rating or 26 individual risk modifications may not be used for workers' compensation coverage 27 written as part of a wrap-up construction policy. 28 (b) A wrap-up construction policy may not 29 (1) provide open-ended coverage; 30 (2) exclude coverage for particular subcontractors except as provided 31 under AS 21.39.190(a)(5);
01 (3) provide coverage for maintenance or other nonconstruction work 02 except as incidental to the construction project. 03 Sec. 21.39.210. OPTIONAL PROVISIONS. A wrap-up construction policy 04 may 05 (1) cover multiple locations if the construction work among the 06 locations is similar; or 07 (2) combine retroactive premium calculations for workers' 08 compensation coverage and commercial liability coverage issued by an admitted 09 insurer. 10 Sec. 21.39.220. DEFINITIONS. In AS 21.39.185 - 21.39.220, 11 (1) "construction project" means a project involving construction, 12 erection, or demolition and having a definable completion point; 13 (2) "contractor controlled insurance" means a wrap-up construction 14 policy procured by the general contractor of a construction project; 15 (3) "general contractor" has the meaning given in AS 08.18.171 and 16 includes an owner or principal acting as a general contractor; 17 (4) "owner controlled insurance" means a wrap-up construction policy 18 procured by the owner of a construction project; 19 (5) "schedule rating" means application of judgment credits and debits 20 to the risk rate or premium charge that has been developed through the use of a base 21 rate or class rate; 22 (6) "wrap-up construction policy" means a policy that provides 23 coverage for a person involved in a construction project and includes owner controlled 24 insurance and contractor controlled insurance; 25 (7) "wrap-up construction project" means a construction project for 26 which a wrap-up construction policy is written or proposed to be written.