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CSHB 398(L&C): "An Act relating to the Alaska Life and Health Insurance Guaranty Association."

00CS FOR HOUSE BILL NO. 398(L&C) 01 "An Act relating to the Alaska Life and Health Insurance Guaranty Association." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 21.79.010 is repealed and reenacted to read: 04 Sec. 21.79.010. Purpose. The purpose of this chapter is to protect, subject to 05 certain limitations, the persons specified in AS 21.79.020(a) against failure in the 06 performance of contractual obligations under life insurance and health insurance 07 policies and annuity contracts specified in AS 21.79.020(b) because of the impairment 08 or insolvency of the member insurer that issued the policies or contracts. To provide 09 this protection, an association of insurers is created under AS 21.79.040 to pay benefits 10 and continue coverages as limited by this chapter, and members of the association are 11 subject to assessment to provide funds to carry out the purpose of this chapter. 12 * Sec. 2. AS 21.79.020(a) is amended to read: 13 (a) This chapter applies to a policy and contract specified in (b) of this section 14 and to a person who

01 (1) except for a nonresident certificate holder under a group policy or 02 contract, is the beneficiary, assignee, or payee of a person described in (2) of this 03 subsection; and 04 (2) except in the case of an unallocated annuity contract or a 05 structured settlement annuity, is the owner of, or a certificate holder under, the 06 policy or contract, [OR, IN THE CASE OF AN UNALLOCATED ANNUITY 07 CONTRACT, IS THE CONTRACT HOLDER,] and who 08 (A) is a resident ; [,] or 09 (B) is not a resident, if the following conditions are satisfied: 10 (i) the insurer that issued the policy or contract is 11 domiciled in this state; 12 (ii) [THE INSURER NEVER HELD A LICENSE OR 13 CERTIFICATE OF AUTHORITY IN THE STATE IN WHICH THE 14 PERSON RESIDES; 15 (iii)] the state in which the person resides has an 16 association similar to the association created by this chapter; and 17 (iii) [(iv)] the person is not eligible for coverage by an 18 association in any other state due to the fact that the insurer was 19 not licensed as required by law in that state [OF THE 20 ASSOCIATION OF THE STATE IN WHICH THE PERSON 21 RESIDES]. 22 * Sec. 3. 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 insurer; 26 (2) that part of the risk borne by the policy or contract holder; 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 to the extent that [ON WHICH] 30 the rate of interest on which it is based, or the interest rate, crediting rate, or 31 similar factor determined by use of an index or other external reference stated in

01 the policy or contract employed in calculating returns or changes in value, 02 (A) averaged over the period of four years before the date on 03 which the member insurer becomes an impaired or insolvent insurer under 04 this chapter, whichever occurs first [ASSOCIATION BECOMES 05 OBLIGATED WITH RESPECT TO THE POLICY OR CONTRACT], exceeds 06 the [A] rate of interest determined by subtracting two percentage points from 07 the published monthly average for that same four-year period or for a lesser 08 period if the policy or contract was issued less than four years before the 09 member insurer becomes an impaired or insolvent insurer under this 10 chapter [ASSOCIATION BECAME OBLIGATED]; and 11 (B) on and after the date on which the member insurer 12 becomes an impaired or insolvent insurer under this chapter, whichever 13 occurs first [ASSOCIATION BECOMES OBLIGATED WITH RESPECT TO 14 THE POLICY OR CONTRACT], exceeds the rate of interest determined by 15 subtracting three percentage points from the most recent published monthly 16 average; 17 (5) a plan or program of an employer, association, or similar entity to 18 provide life, health, or an annuity benefit to an employee or member, to the extent that 19 the plan or program is self-funded or uninsured, including a benefit payable by the 20 employer, association, or similar entity under 21 (A) a multiple employer welfare arrangement as defined in 29 22 U.S.C. 1002 [26 U.S.C. 414] (Employee Retirement Income Security Act of 23 1974); 24 (B) a minimum premium group insurance plan; 25 (C) a stop-loss group insurance plan; or 26 (D) an administrative services only contract; 27 (6) that part of a policy or contract that provides a dividend or 28 experience rating credit or voting rights , or provides that a fee or allowance be paid 29 to a person, including the policy or contract holder, in connection with the service to 30 or administration of the policy or contract; [AND] 31 (7) a policy or contract issued in this state by a member insurer at a

01 time when it was not licensed or did not have a certificate of authority to issue the 02 policy or contract in this state ; 03 (8) a person who is a payee or beneficiary of a contract holder who 04 is a resident of this state if the payee or beneficiary is provided coverage by the 05 association of another state; 06 (9) a person covered under (e) of this section if any coverage is 07 provided by the association of another state to that person; 08 (10) an unallocated annuity contract issued to or in connection with 09 a plan protected under the United States Pension Benefit Guaranty Corporation, 10 regardless of whether the United States Pension Benefit Guaranty Corporation 11 has become liable to make any payments with respect to the benefit plan; 12 (11) that part of an unallocated annuity contract that is not issued 13 to or in connection with a specific employee, union, or association of natural 14 persons benefit plan or a government lottery; 15 (12) that part of a policy or contract to the extent that assessments 16 required by AS 21.79.070 with respect to the policy or contract are preempted by 17 law; 18 (13) an obligation that does not arise under the express written 19 terms of the policy or contract issued by the insurer to the contract owner or 20 policy owner, including, without limitation, 21 (A) a claim based on marketing materials; 22 (B) a claim based on a side letter or other document that 23 was issued by the insurer without meeting applicable policy form filing or 24 approval requirements; 25 (C) a misrepresentation of or regarding policy benefits; 26 (D) an extra contractual claim; or 27 (E) a claim for penalties or consequential or incidental 28 damages; 29 (14) a contractual agreement that establishes the member insurer's 30 obligations to provide a book value accounting guaranty for defined contribution 31 benefit plan participants by reference to a portfolio of assets that is owned by the

01 benefit plan or its trustee, which, in each case, is not an affiliate of the member 02 insurer; or 03 (15) that part of a policy or contract to the extent the part of the 04 policy or contract provides for interest or other changes in value to be determined 05 by the use of an index or other external reference stated in the policy or contract, 06 but that have not been credited to the policy or contract, or as to which the policy 07 or contract owner's rights are subject to forfeiture, as of the date the member 08 insurer becomes an impaired or insolvent insurer under this chapter, whichever 09 is earlier; if a policy's or contract's interest or changes in value are credited less 10 frequently than annually, then, for purposes of determining the values that have 11 been credited and are not subject to forfeiture under this paragraph, the interest 12 or change in value determined by using the procedures defined in the policy or 13 contract shall be credited as if the contractual date of crediting interest or 14 changing values was the date of impairment or insolvency, whichever is earlier, 15 and will not be subject to forfeiture . 16 * Sec. 4. AS 21.79.020 is amended by adding new subsections to read: 17 (e) This chapter, except for (a) of this section, applies to an unallocated 18 annuity contract specified under (b) of this section, and shall provide coverage to a 19 person who is the owner of 20 (1) the unallocated annuity contract if the contract is issued to or in 21 connection with a specific benefit plan whose plan sponsor has its principal place of 22 business in this state; and 23 (2) an unallocated annuity contract issued to or in connection with a 24 government lottery if the owner is a resident. 25 (f) This chapter, except for (a) of this section, applies to a structured settlement 26 annuity specified under (b) of this section, and shall provide coverage to a person who 27 is a payee under a structured settlement annuity, or the beneficiary of a payee if the 28 payee is deceased, if the payee is 29 (1) a resident, regardless of where the contract owner resides; or 30 (2) not a resident, but only if both of the following conditions exists: 31 (A) the contract owner of the structured settlement annuity is

01 (i) a resident; or 02 (ii) not a resident, but the insurer that issued the 03 structured settlement annuity is domiciled in this state, and the state in 04 which the contract owner resides has an association similar to the 05 association created by this chapter; and 06 (B) the payee, or the payee's beneficiary, and the contract owner 07 are not eligible for coverage by the association of the state in which the payee 08 or contract owner resides. 09 * Sec. 5. AS 21.79.025 is amended to read: 10 Sec. 21.79.025. Liability limits. The benefits for which the association may 11 become liable may not exceed the lesser of 12 (1) the contractual obligations for which the insurer is liable or would 13 have been liable if it were not an impaired or insolvent insurer; 14 (2) with respect to any one life, regardless of the number of policies 15 or contracts, [AND SUBJECT TO AN AGGREGATE OF $300,000,] 16 (A) $300,000 in life insurance death benefits, but not more than 17 $100,000 in net cash surrender and net cash withdrawal values for life 18 insurance; 19 (B) [$100,000] in health insurance benefits, 20 (i) $100,000 for coverage not defined as disability 21 insurance or basic hospital, medical, and surgical insurance or 22 major medical insurance, including any net cash surrender and net 23 cash withdrawal values; 24 (ii) $300,000 for disability insurance; 25 (iii) $500,000 for basic hospital, medical, and surgical 26 insurance or major medical insurance; 27 (C) $100,000 in the present value of annuity benefits, including 28 net cash surrender and net cash withdrawal values; [OR] 29 (3) with respect to any one contract holder or plan sponsor whose 30 plan owns directly or in trust one or more unallocated annuity contracts not 31 included in (4) of this subsection , $5,000,000 in unallocated annuity contract benefits,

01 irrespective of the number of contracts held by that contract holder or plan sponsor 02 except that, in the case of one or more unallocated annuity contracts that are 03 covered under this chapter and that are owned by a trust or other entity for the 04 benefit of two or more plan sponsors, coverage shall be provided by the 05 association if the largest interest in the trust or entity owning the contract is held 06 by a plan sponsor whose principal place of business is in this state; however, the 07 association is not liable to cover more than $5,000,000 in benefits with respect to 08 an unallocated annuity contract not included in (4) of this subsection; 09 (4) with respect to an individual participating in a governmental 10 retirement benefit plan established under 26 U.S.C. 401, 26 U.S.C. 403(b), or 26 11 U.S.C. 457 and covered by an unallocated annuity contract, or to a beneficiary of 12 the individual if the individual is deceased, in the aggregate, $100,000 in present- 13 value annuity benefits, including net cash surrender and net cash withdrawal values; or 14 (5) with respect to each payee of a structured settlement annuity, 15 or beneficiary of the payee if the payee is deceased, $100,000 in present-value 16 annuity benefits in the aggregate, including net cash surrender and net cash 17 withdrawal values, if any . 18 * Sec. 6. AS 21.79.025 is amended by adding new subsections to read: 19 (b) The limitations imposed under this section are limitations on the benefits 20 for which the association is obligated before taking into account either its subrogation 21 and assignment rights or the extent to which those benefits could be provided out of 22 the assets of an impaired or insolvent insurer attributable to covered policies. The 23 costs of the association's obligations under this chapter may be met by the use of 24 assets attributable to covered policies or reimbursed to the association under its 25 subrogation and assignment rights. 26 (c) In providing coverage required under AS 21.79.060, the association may 27 not be required to guarantee, assume, reinsure, or perform, or cause to be guaranteed, 28 assumed, reinsured, or performed, the contractual obligations of an insolvent or 29 impaired insurer under a covered policy or contract when the obligations do not 30 materially affect the economic values or economic benefits of the covered policy or 31 contract.

01 (d) The association may not be required to cover more than 02 (1) an aggregate of $300,000 in benefits with respect to any one life 03 under (a)(2), (4), and (5) of this section, except that, with respect to benefits for basic 04 hospital, medical, and surgical insurance or major medical insurance under (a)(2)(B) 05 of this section, the aggregate liability of the association may not exceed $500,000 for 06 any one individual; or 07 (2) $5,000,000 in benefits with respect to one owner or multiple 08 nongroup policies of life insurance, whether the policy owner is an individual, firm, 09 corporation, or other person, and whether the persons insured are officers, managers, 10 employees, or other persons, regardless of the number of policies and contracts held 11 by the owner. 12 * Sec. 7. AS 21.79.030 is amended to read: 13 Sec. 21.79.030. Construction. This chapter shall be [LIBERALLY] construed 14 to achieve the purposes set out in AS 21.79.010. 15 * Sec. 8. AS 21.79.030 is amended by adding a new subsection to read: 16 (b) This chapter is intended to provide coverage to a person who is a resident 17 of this state and, in special circumstances, to a nonresident. In order to avoid duplicate 18 coverage, if a person who would otherwise receive coverage under this chapter is 19 provided coverage under the law of any other state, the person may not be provided 20 coverage under this chapter. In determining the application of the provisions of this 21 subsection, in situations where a person could be covered by the association of more 22 than one state, whether as an owner, payee, beneficiary, or assignee, this chapter shall 23 be construed in conjunction with other state laws to result in coverage by only one 24 association. 25 * Sec. 9. AS 21.79.040(a) is amended to read: 26 (a) There is established as a nonprofit legal entity the Alaska Life and Health 27 Insurance Guaranty Association. An insurer that issues an insurance policy described 28 in AS 21.79.020(b) shall be a member of the association as a condition of the insurer's 29 authority to transact insurance in this state. The association shall perform its functions 30 under a plan of operation established and approved under AS 21.79.080 and shall 31 exercise its powers through the Board of Governors established under AS 21.79.050.

01 For purposes of administration and assessment, the association shall maintain the 02 following accounts: 03 (1) the health insurance account; and 04 (2) the life insurance and annuity account, including the following 05 subaccounts: 06 (A) life insurance account; 07 (B) annuity account that must include annuity contracts 08 owned by a governmental retirement benefit plan, or its trustee, qualified 09 under 26 U.S.C. 401, 26 U.S.C. 403(b), or 26 U.S.C. 457 (Internal Revenue 10 Code), but that otherwise excludes unallocated annuities ; 11 (C) unallocated annuity account that must exclude [SHALL 12 INCLUDE] contracts owned by a governmental retirement benefit plan, or 13 its trustee, qualified under 26 U.S.C. 401, 26 U.S.C. 403(b) , or 26 U.S.C. 457 14 (Internal Revenue Code). 15 * Sec. 10. AS 21.79.050(a) is amended to read: 16 (a) The Board of Governors of the association consists of not less than five nor 17 more than nine representatives of member insurers. The director may appoint two 18 individuals as members of the board to represent the public. Terms of office for 19 board members shall be established in the plan of operation submitted under 20 AS 21.79.080. Member insurers shall select the insurer board members, subject to the 21 approval of the director. A vacancy in a board membership held by an insurer 22 member [ON THE BOARD] shall be filled for the unexpired term by a majority vote 23 of the remaining board members, subject to the approval of the director. A vacancy 24 in a board membership held by a representative of the public shall be filled by 25 the director. A board member who represents the public may not be an officer, 26 director, or employee of an insurer and may not be engaged in the business of 27 insurance. 28 * Sec. 11. AS 21.79.050(b) is amended to read: 29 (b) Before the director approves the selection of an insurer [A] board member 30 [OR APPOINTS A BOARD MEMBER], the director shall consider whether all 31 member insurers are fairly represented on the board.

01 * Sec. 12. AS 21.79.060(a) is amended to read: 02 (a) If a member [DOMESTIC] insurer becomes impaired, the association may, 03 with the approval of the director and subject to any conditions imposed by the 04 association that do not impair the contractual obligations of the impaired insurer , 05 (1) guarantee, assume, reinsure, or provide for the guarantee, 06 assumption, or reinsurance of the policies or contracts of the impaired insurer; or 07 (2) provide money, pledges, notes, guarantees, or other means that are 08 necessary to act under (1) of this subsection and to assure payment of the contractual 09 obligations of the impaired insurer until those obligations are guaranteed, reinsured, 10 or assumed [; OR 11 (3) LOAN MONEY TO THE IMPAIRED INSURER]. 12 * Sec. 13. AS 21.79.060(c) is amended to read: 13 (c) The actions specified in (a) [(b)] of this section may not be taken unless 14 (1) the law of the impaired insurer's state of domicile provides that until 15 all payments of or on account of a contractual obligation of the impaired insurer by 16 a guaranty association, along with all expenses and interest on all payments and 17 expenses, have been repaid to the guaranty association or a repayment plan by the 18 impaired insurer has been approved by a guaranty association, 19 (A) a delinquency proceeding may not be dismissed; 20 (B) neither the impaired insurer nor its assets may be returned 21 to the control of its shareholders or private management; and 22 (C) solicitation or acceptance of new business or restoration of 23 a suspended or revoked license may not be permitted; and 24 (2) if the impaired insurer is a 25 (A) domestic insurer, the insurer has been placed under an order 26 of rehabilitation by a superior court in this state; or 27 (B) foreign or alien insurer, 28 (i) the insurer has been prohibited from soliciting or 29 accepting new business in this state; 30 (ii) the insurer's certificate of authority has been 31 suspended or revoked in this state; and

01 (iii) a petition for rehabilitation or liquidation has been 02 filed in a court of competent jurisdiction in the insurer's state of domicile by 03 the insurance commissioner of that state. 04 * Sec. 14. AS 21.79.060(d) is amended to read: 05 (d) If a member insurer becomes insolvent, the association shall, in its 06 discretion and with the approval of the director, 07 (1) guarantee, assume, reinsure, or provide for the guarantee, 08 assumption, or reinsurance of the covered policies of the insolvent insurer held by 09 residents; 10 (2) assure payment to residents of the contractual obligations of the 11 insolvent insurer; 12 (3) provide money, pledges, notes, guarantees, or other means necessary 13 to discharge the association's [INSURER'S] duties under this subsection; or 14 (4) with respect only to life and health insurance policies and 15 annuities , provide benefits and coverages required under (e) of this section. 16 * Sec. 15. AS 21.79.060(e) is amended to read: 17 (e) When proceeding under [(b)(2) OR] (d)(4) of this section, the association 18 shall, with respect to a life or health insurance policy and an annuity , 19 (1) assure payment of benefits, other than terms of conversion and 20 renewability, for a premium identical to the premium that would have been payable 21 under a policy of the insolvent insurer for claims incurred with respect to 22 (A) a group policy, not later than the earlier of the next renewal 23 date under the policy or contract or 45 days, but in no event less than 30 days, 24 after the date on which the association becomes obligated with respect to the 25 policy; 26 (B) an individual policy or annuity , not later than the earlier 27 of the next renewal date, if any, under the policy or contract or one year, but 28 in no event less than 30 days, from the date on which the association becomes 29 obligated with respect to the policy or contract ; 30 (2) make a diligent effort to provide a known insured , an annuitant, 31 or a group policyholder or contract holder , with respect to a group policy or

01 contract , 30 days' [DAYS] notice of the termination of the benefits provided; 02 (3) with respect to an individual policy or annuity , make available to 03 each known insured or annuitant , or owner if other than the insured or annuitant , 04 and with respect to an individual formerly insured under a group policy or contract 05 who is not eligible for replacement group coverage, substitute coverage on an 06 individual basis under the provisions of (f) of this section, if the insured had a right 07 under law or the terminated policy or contract to convert coverage to individual 08 coverage, to continue an individual policy or contract in force until a specified age, 09 or for a specific time during which the insurer did not have the unilateral right to make 10 changes in any provision of the policy or contract or had a right only to make 11 changes in premium by class. 12 * Sec. 16. AS 21.79.060(h) is amended to read: 13 (h) If the association elects to reissue terminated coverage at a premium rate 14 different from that charged under the terminated policy, the premium shall be set by 15 the association according to the amount of insurance provided and [,] the age and class 16 of risk, and is subject to the approval of the director and the receivership [OR BY 17 A] court [OF COMPETENT JURISDICTION]. 18 * Sec. 17. AS 21.79.060(j) is amended to read: 19 (j) When proceeding under [(b)(2) OR] (d) of this section with respect to a 20 policy or contract carrying guaranteed minimum interest rates, the association shall 21 assure the payment or crediting of a rate of interest consistent with AS 21.79.020(c)(4). 22 * Sec. 18. AS 21.79.060(n) is amended to read: 23 (n) In carrying out its duties under (a) [(b)], (c), and (d) of this section, the 24 association may impose a permanent policy or contract lien under a guarantee, 25 assumption, or reinsurance agreement [,] if the policy or contract lien is approved by 26 a court [,] and the association [COURT] finds that 27 (1) the amount that may be assessed under this chapter is less than the 28 amount needed to assure full and prompt performance of the insolvent insurer's 29 contractual obligations; or 30 (2) the economic or financial condition that affects member insurers is 31 sufficiently adverse that the imposition of a policy or contract lien is in the public

01 interest. 02 * Sec. 19. AS 21.79.060(o) is amended to read: 03 (o) Before taking action under (a) - (e) [(b) - (e)] of this section, the 04 association may request the superior court to impose an injunction against the payment 05 of a cash value and policy loan, or the exercise of another right to withdraw funds held 06 in connection with a policy or contract, in addition to a contractual provision for 07 deferral of a cash or policy loan value. In addition, if the receivership court 08 imposes an injunction on payment of cash values or policy loans or on any other 09 right to withdraw funds of an impaired or insolvent insurer held in conjunction 10 with a policy or contract, the association may defer payment of cash values, policy 11 loans, or other rights for the period of the injunction, except for claims covered 12 by the association to be paid as required by a hardship procedure established by 13 the liquidator or rehabilitator and approved by the receivership court. 14 * Sec. 20. AS 21.79.060(p) is amended to read: 15 (p) If the association fails to take action under (a) - (e) [(b) - (e)] of this 16 section within a reasonable period of time after a member insurer becomes insolvent, 17 the director shall assume the powers of the association under (a) - (e) [(b) - (e)] of this 18 section. 19 * Sec. 21. AS 21.79.060(r) is amended to read: 20 (r) The association is entitled to appear or intervene in a court or agency 21 proceeding in this [THE] state involving an impaired or insolvent insurer that the 22 association is or may be obligated to or involving a person or property against 23 which the association may have rights . The standing conferred by this subsection 24 extends to all matters germane to the powers and duties of the association, including 25 proposals to reinsure or guarantee a covered policy of the impaired or insolvent insurer 26 and the determination of a covered policy and a contractual obligation. The 27 association also has the right to appear or intervene before a court or agency in 28 another state in a proceeding involving an impaired or insolvent insurer that the 29 association is or may be obligated to or involving a person or property against 30 which the association may have rights. 31 * Sec. 22. AS 21.79.060(s) is amended to read:

01 (s) A person who receives benefits under this chapter is considered to have 02 assigned the rights under , and any cause of action against a person for losses 03 arising under, resulting from, or otherwise relating to, the covered policy to the 04 association to the extent of the benefits received under this chapter , whether the 05 benefits are payment of or on account of contractual obligations, continuations of 06 coverage, or provisions of substitute or alternative coverage . The association may 07 require an assignment to the association of those rights by the payees, policy or 08 contract owner, beneficiary, insured, or annuitant before a person receives the rights 09 or benefits conferred by this chapter. [THE ASSOCIATION IS SUBROGATED TO 10 THESE RIGHTS AGAINST THE ASSETS OF AN INSOLVENT INSURER.] The 11 priority of the association's subrogation right to the assets of the insolvent insurer is 12 the same as the priority of the person entitled to benefits under this chapter. In 13 addition to the rights described in this subsection, the association has common law 14 rights of subrogation and any other equitable or legal remedy that would have 15 been available to the impaired or insolvent insurer or owner, beneficiary, or payee 16 of a policy with respect to the policy. These rights include, in the case of a 17 structured settlement annuity, the rights of the owner, beneficiary, or payee of the 18 annuity, to the extent of benefits received under this chapter, against a person 19 originally or by succession responsible for the losses arising from the personal 20 injury relating to the annuity or annuity payment, except for a person responsible 21 solely by reason of being an assignee in respect to a qualified assignment under 22 26 U.S.C. 130 (Internal Revenue Code). If the provisions of this subsection are 23 invalid with respect to a person or claim, the amount payable by the association 24 with respect to the related coverage obligation shall be reduced by the amount 25 realized by another person from the person or claim covered by the association. 26 If the association has provided benefits with respect to a covered obligation and 27 a person recovers amounts to which the association has rights as described in this 28 subsection, the person recovering the amounts shall pay to the association the 29 portion of the recovery attributable to the policy covered by the association. 30 * Sec. 23. AS 21.79.060(t) is amended to read: 31 (t) In addition to the rights and powers otherwise established in this

01 chapter, the [THE] association may 02 (1) enter into contracts that are necessary or proper to carry out the 03 provisions of this chapter; 04 (2) sue or be sued, and take legal action necessary or proper for 05 recovery of an unpaid assessment under AS 21.79.070 or settlement of a claim or 06 potential claim ; 07 (3) borrow money to carry out the purposes of this chapter; notes or 08 other evidence of indebtedness of the association not in default are legal 09 investments for domestic insurers and may be carried as admitted assets; 10 (4) employ or retain those persons necessary to handle the financial 11 transactions of the association and other functions under this chapter; 12 (5) negotiate and contract with a liquidator, rehabilitator, conservator, 13 or ancillary receiver to carry out the powers and duties of the association; 14 (6) exercise, for the purposes of this chapter and to the extent approved 15 by the director, the powers of a domestic life or health insurer; however, the 16 association may not issue insurance policies or annuity contracts other than those 17 issued to perform the contractual obligations of an impaired or insolvent insurer; 18 (7) take legal action to prevent the payment of improper claims; 19 (8) join an organization of one or more other state associations with 20 similar purposes; [AND] 21 (9) determine, using reasonable business judgment, the means by 22 which the association is to provide the benefits of this chapter in an economical 23 and efficient manner; 24 (10) request information from a person seeking coverage from the 25 association in order to determine the obligations of the association under this 26 chapter; a person receiving a request under this paragraph shall promptly comply 27 with the request; 28 (11) request information from a member insurer in order to aid in 29 the exercise of a power under this section; a member insurer receiving a request 30 under this paragraph shall promptly comply with the request; and 31 (12) perform all other acts necessary or proper to implement this

01 chapter. 02 * Sec. 24. AS 21.79.060 is amended by adding new subsections to read: 03 (u) At any time within one year after the date with the association becomes 04 responsible for the obligations of a member insurer, the association may elect to 05 succeed to the rights and obligations of the member insurer that accrue on or after that 06 date and that relate to contracts covered, in whole or in part, by the association, under 07 one or more indemnity reinsurance agreements entered into by the member insurer as 08 a ceding insurer and selected by the association. However, the association may not 09 exercise an election with respect to a reinsurance agreement if the receiver, 10 rehabilitator, or liquidator of the member insurer has previously and expressly 11 disaffirmed the reinsurance agreement. The election shall be made by a notice to the 12 receiver, rehabilitator, or liquidator and to the affected reinsurer. If the association 13 makes an election, the following paragraphs apply with respect to the agreement 14 selected by the association: 15 (1) the association is responsible for all unpaid premiums due under the 16 agreement for periods both before and after the coverage date, and shall be responsible 17 for the performance of all other obligations to be performed after the coverage date in 18 each case that relates to contracts covered, in whole or in part, by the association; the 19 association may, through reasonable allocation methods, charge contracts covered in 20 part by the association for the costs for reinsurance in excess of the obligations of the 21 association; 22 (2) the association is entitled to any amounts payable by the reinsurer 23 under the agreement with respect to losses or events that occur in periods after the 24 coverage date and that related to the contracts covered by the association, in whole or 25 in part, except that, upon receipt of any amounts, the association shall pay to the 26 beneficiary under the policy or contract on account of which the amounts were paid 27 a portion of the amount equal to the amount received by the association less 28 (A) the benefits paid by the association on account of the policy 29 or contract; and 30 (B) the retention of the impaired or insolvent member insurer 31 applicable to the loss or event;

01 (3) within 30 days after the association's election, the association and 02 each indemnity reinsurer shall calculate the net balance due to or from the association 03 under each reinsurance agreement as of the date of the association's election; the 04 calculation shall give full credit to all items paid by either the member insurer, its 05 receiver, rehabilitator, or liquidator, or the indemnity reinsurer during the period 06 between the coverage date and the date of the association's election; either the 07 association or the indemnity reinsurer shall pay the net balance due the other within 08 five days of the completion of the calculation described in this paragraph; if the 09 receiver, rehabilitator, or liquidator has received any amounts due to the association 10 under (2) of this subsection, the receiver, rehabilitator, or liquidator shall remit the 11 same to the association as promptly as practicable; and 12 (4) if the association, within 60 days of the election, pays the premiums 13 due for periods both before and after the coverage date that relate to the contracts 14 covered by the association, in whole or in part, the reinsurer may not terminate the 15 reinsurance agreement to the extent the agreement relates to contracts covered by the 16 association, in whole or in part, and may not set off any unpaid premium due for the 17 periods before the coverage date against amounts due to the association. 18 (v) In the event the association transfers its obligations to another insurer, and 19 if the association and the other insurer agree, the other insurer shall succeed to the 20 rights and obligations of the association under (u) of this section, effective as of the 21 date agreed upon by the association and the other insurer. The other insurer shall 22 succeed regardless of whether the association has made the election referred to in (u) 23 of this section if (1) the indemnity reinsurance agreement automatically terminates 24 former reinsurance unless the indemnity reinsurer and the other insurer agree to the 25 contrary, and (2) the obligations described in (u)(2) of this section no longer apply on 26 and after the date the indemnity reinsurance agreement is transferred to the third-party 27 insurer. This subsection does not apply if the association has previously expressly 28 determined in writing that it will not exercise the election referred to in (u) of this 29 section. 30 (w) The provisions of this section apply notwithstanding any other provisions 31 of law or any provisions of an affected reinsurance agreement that provide for or

01 require a payment of reinsurance proceeds, on account of losses or events that occur 02 in periods after the coverage date, to the receiver, liquidator, or rehabilitator of the 03 insolvent member insurer. The receiver, liquidator, or rehabilitator remains entitled to 04 any amounts payable by the reinsurer under the reinsurance agreement with respect to 05 losses or events that occur in periods before the coverage date, subject to applicable 06 setoff provisions. 07 (x) Except as otherwise expressly provided in this section, nothing in this 08 section alters or modifies the terms and conditions of indemnity reinsurance 09 agreements of an insolvent member insurer. Nothing in this section 10 (1) abrogates or limits the right of a reinsurer to claim that the reinsurer 11 is entitled to rescind a reinsurance agreement; or 12 (2) gives a policy owner or beneficiary an independent cause of action 13 against an indemnity reinsurer that is not otherwise established in the indemnity 14 reinsurance agreement. 15 (y) When the association has arranged or offered to provide the benefits of this 16 chapter to a covered person under a plan or arrangement that fulfills the association's 17 obligations under this chapter, the covered person is not entitled to benefits from the 18 association in addition to or other than those provided under the plan or arrangement. 19 (z) In carrying out its duties in connection with guaranteeing, assuming, or 20 reinsuring a policy or contract, the association may, subject to approval of the 21 receivership court, issue substitute coverage for a policy or contract that provides an 22 interest rate, crediting rate, or similar factor determined by use of an index or other 23 external reference stated in the policy or contract employed in calculating returns or 24 changes in value by issuing an alternative policy or contract under the following 25 provisions: 26 (1) in place of the index or other external reference provided for in the 27 original policy or contract, the alternative policy or contract provides for 28 (A) a fixed interest rate; 29 (B) payment of dividends with minimum guarantees; or 30 (C) a different method for calculating interest or changes in 31 value;

01 (2) there is no requirement for evidence of insurability, waiting period, 02 or other exclusion that would not have applied under the replaced policy or contract; 03 and 04 (3) the alternative policy or contract is substantially similar to the 05 replaced policy or contract in all other material terms. 06 * Sec. 25. AS 21.79.070(b) is amended to read: 07 (b) There shall be two assessments as follows: 08 (1) class A assessments shall be authorized and called [MADE] for 09 the purpose of meeting administrative and legal costs and other expenses and 10 examinations conducted under the authority of AS 21.79.060; class A assessments may 11 be authorized and called [MADE] whether or not related to a particular impaired or 12 insolvent insurer; 13 (2) class B assessments [ARE POST ASSESSMENT CHARGES AND] 14 shall be authorized and called [MADE] only as necessary to carry out the powers and 15 duties of the association with regard to an impaired or an insolvent insurer. 16 * Sec. 26. AS 21.79.070(c) is amended to read: 17 (c) The amount of a class A assessment shall be determined by the board and 18 may be made on a pro rata or non pro [NONPRO] rata basis. If a pro rata assessment 19 is made, the board may provide that it be credited against future class B assessments. 20 A non pro [NONPRO] rata assessment may not exceed $250 per member insurer in 21 a calendar year. The amount of a class B assessment shall be allocated for assessment 22 purposes among the accounts under an allocation formula that may be based on the 23 premiums or reserves of the impaired or insolvent insurer or by another standard 24 determined by the board in its sole discretion as being fair and reasonable under the 25 circumstances. 26 * Sec. 27. AS 21.79.070(d) is amended to read: 27 (d) Class B assessments shall be based on the premiums received on business 28 in this state by each assessed member insurer on [OR FOR] policies or contracts 29 covered by each account in proportion to the premiums received on business in this 30 state by all assessed member insurers during the three calendar years preceding the 31 year in which the insolvency or impairment occurred.

01 * Sec. 28. AS 21.79.070(e) is amended to read: 02 (e) The association may abate or defer, in whole or in part, the assessment of 03 a member insurer if , in the opinion of the board, a payment of the assessment would 04 endanger the ability of the member insurer to fulfill its contractual obligations. The 05 amount by which an assessment against a member insurer is abated or deferred may 06 be assessed against the other member insurers in a manner consistent with the basis 07 for assessments set forth in (c) of this section. Once the conditions that caused a 08 deferral are removed or rectified, the member insurer shall pay all assessments 09 that were deferred under a repayment plan approved by the association. 10 * Sec. 29. AS 21.79.070(f) is amended to read: 11 (f) Except as provided in this subsection, the [THE] total of all assessments 12 on a member insurer for each subaccount of the life and annuity account and for the 13 health account [EACH SUBACCOUNT] may not in any one calendar year exceed 14 two percent of the insurer's average annual premiums received in this state on 15 policies or contracts covered by the account or subaccount during the three 16 calendar years preceding the year in which the insurer became an impaired or 17 insolvent insurer. If two or more assessments are authorized in one calendar year 18 with respect to insurers that become impaired or insolvent in different calendar 19 years, the average annual premiums for purposes of the aggregate assessment 20 percentage limitation imposed under this subsection shall be limited to the highest 21 of the average annual premiums during the preceding three calendar years for the 22 applicable subaccount or account as calculated under this section . [THE TOTAL 23 OF ALL ASSESSMENTS ON A MEMBER INSURER FOR THE HEALTH 24 ACCOUNT MAY NOT IN ANY ONE CALENDAR YEAR EXCEED TWO 25 PERCENT OF THE INSURER'S AVERAGE PREMIUMS RECEIVED IN THIS 26 STATE ON A POLICY OR CONTRACT COVERED BY THE ACCOUNT DURING 27 THE THREE CALENDAR YEARS PRECEDING THE YEAR IN WHICH THE 28 INSURER BECAME AN IMPAIRED OR INSOLVENT INSURER.] If the maximum 29 assessment, together with the other assets of the association in an account, does not 30 provide in any one year in either account an amount sufficient to carry out the 31 responsibilities of the association, the necessary additional funds shall be assessed as

01 soon as permitted by this chapter. 02 * Sec. 30. AS 21.79.070(h) is amended to read: 03 (h) If the maximum [A ONE PERCENT] assessment for a subaccount of the 04 life and annuity account in any one year does not provide an amount sufficient to carry 05 out the responsibilities of the association, the board shall, as provided under (d) of this 06 section, access [ASSESS] all subaccounts of the life and annuity account for the 07 necessary additional amount, subject to the assessment limit provided in (f) of this 08 section. 09 * Sec. 31. AS 21.79.070 is amended by adding new subsections to read: 10 (i) Assessments for funds to meet the requirements of the association with 11 respect to an impaired or insolvent insurer may not be authorized or called until 12 necessary to implement the purposes of this chapter. Classification of assessments 13 under (b) of this section and computation of assessments under this section shall be 14 made with a reasonable degree of accuracy, recognizing that exact determinations may 15 not always be possible. The association shall notify each member insurer of its 16 anticipated pro rata share of an authorized assessment not yet called within 180 days 17 after the assessment is authorized. 18 (j) The board may, by an equitable method as established in the plan of 19 operation, refund to member insurers, in proportion to the contribution of each insurer 20 to that account, the amount by which the assets of the account exceed the amount the 21 board finds is necessary to carry out during the coming year the obligations of the 22 association with regard to that account, including assets accruing from assignment, 23 subrogation, net realized gains, and income from investments. A reasonable amount 24 may be retained in any account to provide funds for the continuing expenses of the 25 association and for future losses claims. 26 (k) A member insurer may, in determining its premium rates and policy owner 27 dividends as to any kind of insurance within the scope of this chapter, consider the 28 amount reasonably necessary to meet its assessment obligations under this chapter. 29 (l) A member insurer that wishes to protest all or part of an assessment shall 30 pay when due the full amount of the assessment as set out in the notice provided by 31 the association. The payment shall be available to meet association obligations during

01 the pendency of the protest or any subsequent appeal. If a payment is made under 02 protest, payment must be accompanied by a statement in writing that the payment is 03 made under protest and setting out a brief statement of the grounds for the protest. 04 Within 60 days following the payment of an assessment under protest by a member 05 insurer, the association shall notify the member insurer in writing of its determination 06 with respect to the protest unless the association notifies the member insurer that 07 additional time is required to resolve the issues raised by the protest. Within 30 days 08 after a final decision has been made, the association shall notify the protesting member 09 insurer in writing of that final decision. Within 60 days of receipt of notice of the 10 final decision, the protesting member insurer may appeal that final action to the 11 director. In the alternative to rendering a final decision with respect to a protest based 12 on a question regarding the assessment base, the association may refer protests to the 13 director for a final decision with or without recommendation from the association. If 14 a protest or appeal on an assessment is upheld, the amount paid in error or excess shall 15 be returned to the member company. Interest on a refund due a protesting member 16 shall be paid at the rate actually earned by the association. 17 * Sec. 32. AS 21.79.080(a) is amended to read: 18 (a) The association shall submit to the director a plan of operation and any 19 amendments to assure the fair, reasonable, and equitable administration of the 20 association. The plan of operation and any amendments take effect on the written 21 approval of the plan by the director or 30 days after receipt by the director if not 22 disapproved by the director . 23 * Sec. 33. AS 21.79.080(b) is amended to read: 24 (b) If [NOTWITHSTANDING (a) OF THIS SECTION, IF THE 25 ASSOCIATION FAILS TO SUBMIT A PLAN OF OPERATION ACCEPTABLE TO 26 THE DIRECTOR BY JULY 1, 1991, OR IF AT A LATER TIME] the association 27 fails to submit suitable amendments to the plan, the director shall, after notice and 28 hearing, adopt regulations to implement this chapter. These regulations remain in 29 effect until amended or repealed by the director [OR SUPERSEDED BY A PLAN 30 SUBMITTED BY THE ASSOCIATION THAT IS APPROVED BY THE 31 DIRECTOR].

01 * Sec. 34. AS 21.79.080(c) is amended to read: 02 (c) A member insurer shall comply with the plan of operation. The plan of 03 operation must 04 (1) establish procedures for handling assets of the association; 05 (2) establish the amount and method of reimbursing members of the 06 board under AS 21.79.050(c); 07 (3) establish regular places and times for meetings of the board in the 08 state; the board may conduct meetings telephonically; 09 (4) establish procedures for keeping records of all financial transactions 10 of the association, its agents, and the board; 11 (5) establish terms of office for members of the board, and establish 12 procedures for the selection of the members of the board and for the director's approval 13 of the members selected; 14 (6) establish additional procedures for assessments under AS 21.79.070; 15 and 16 (7) contain additional provisions necessary or proper for the association 17 to exercise its powers and duties. 18 * Sec. 35. AS 21.79.100(f) is amended to read: 19 (f) The board may [SHALL] 20 (1) make reports and recommendations to the director relating to the 21 solvency, liquidation, rehabilitation, or conservation of a member insurer or the 22 solvency of insurers who apply to transact insurance business in the state; the director 23 and the board shall keep the reports and recommendations confidential; 24 (2) notify the director of any information that indicates that a member 25 insurer may be impaired or insolvent. 26 * Sec. 36. AS 21.79.110(b) is amended to read: 27 (b) The association shall keep records of [NEGOTIATIONS AND] meetings 28 relating to its activities. Records of [NEGOTIATIONS OR] meetings may only be 29 made public under AS 21.79.040(b) 30 (1) after the termination of a liquidation, rehabilitation, or conservation 31 proceeding that involves the impaired or insolvent insurer;

01 (2) after the insurer is no longer impaired or insolvent; or 02 (3) upon the order of a court of competent jurisdiction. 03 * Sec. 37. AS 21.79.110(c) is amended to read: 04 (c) The association is considered to be a creditor of the impaired or insolvent 05 insurer to the extent of assets attributable to covered policies that are reduced by an 06 amount to which the association is entitled under AS 21.79.060(s). Assets of the 07 impaired or insolvent insurer that are attributable to covered policies shall be used to 08 continue all covered policies and pay all contractual obligations of the impaired or 09 insolvent insurer as required by this chapter. Assets attributable to covered policies 10 include those assets that should have been established as reserves for the covered 11 policies. These assets are determined by multiplying the total assets of the impaired 12 or insolvent insurer by a fraction, the numerator of which is the amount that should 13 have been established as reserves for the covered policies of the impaired or insolvent 14 insurer, and the denominator of which is the amount that should have been established 15 as reserves for all policies of insurance issued in all states by that insurer. As a 16 creditor of the impaired or insolvent insurer, the association and other similar 17 entities in other states are entitled to receive a disbursement of assets out of the 18 marshaled assets as a credit against contractual obligations under this chapter 19 from time to time as the assets become available. If the liquidator has not, within 20 120 days of the date of a final determination of insolvency of an insurer by the 21 court, made an application to the court for the approval of a proposal to disburse 22 assets, the association may make application to the court for the approval of the 23 association's proposal to disburse assets. 24 * Sec. 38. AS 21.79.110 is amended by adding new subsections to read: 25 (f) A deposit in this state, held by law or required by the director for the 26 benefit of creditors, including policy owners, not turned over to the domiciliary 27 liquidator upon the entry of a final order of liquidation or order approving a 28 rehabilitation plan of an insurer domiciled in this state or in a reciprocal state shall 29 be promptly paid to the association. The association 30 (1) is entitled to retain a portion of any amount paid to it equal to the 31 percentage determined by dividing the aggregate amount of policy owners' claims

01 related to that insolvency for which the association has provided statutory benefits by 02 the aggregate amount of all policy owners' claims in this state related to that 03 insolvency; and 04 (2) shall remit to the domiciliary receiver the amount paid to the 05 association and retained under (1) of this subsection; any amount paid to the 06 association not retained by it under (1) of this subsection shall be treated as a 07 distribution of state assets under AS 21.78.294 or a similar provision of the state of 08 domicile of the impaired or insolvent insurer. 09 (g) The association may not be required to give an appeal bond in an appeal 10 of a civil action arising under this chapter. 11 * Sec. 39. AS 21.79.120 is amended to read: 12 Sec. 21.79.120. Examination of the association, annual report. The 13 association may be examined by the director. The board shall submit to the director, 14 not later than July [MAY] 1 of each year, a certified financial report for the preceding 15 calendar year in a form approved by the director and a report of its activities during 16 the preceding calendar year. Nothing in AS 21.79.110(b) limits the duty of the 17 association to report under this section. Upon request, the association shall provide 18 a copy of the report to a member insurer. 19 * Sec. 40. AS 21.79.140 is amended to read: 20 Sec. 21.79.140. Civil immunity. The association and its agents and 21 employees, members of the Board of Governors, member insurers, and agents and 22 employees of member insurers, and the director and the director's representatives are 23 not civilly liable for an action or omission in performing [TAKEN BY THEM TO 24 PERFORM] duties under this chapter. In this section, "duties" includes 25 participation in an organization of one or more state associations of life or health 26 insurers. 27 * Sec. 41. AS 21.79.150 is repealed and reenacted to read: 28 Sec. 21.79.150. Stay of proceedings; default judgment. Proceedings 29 involving an insolvent insurer shall be stayed at least 60 days after the date of a final 30 order of liquidation, rehabilitation, or conservation in order to allow the association to 31 exercise a power or duty authorized under this chapter. If a default judgment is

01 entered against an insolvent insurer, the association may apply to have the judgment 02 set aside or may defend against the action on its merits. 03 * Sec. 42. AS 21.79 is amended by adding new sections to read: 04 Sec. 21.79.160. Prohibited advertisement of insurance sales; required 05 notice. (a) A person, including an insurer, agent, or affiliate of an insurer, may not 06 make, publish, disseminate, circulate, or place before the public, or cause, directly or 07 indirectly, to be made, published, disseminated, circulated, or placed before the public, 08 in any newspaper, magazine, or other publication, or in the form of a notice, circular, 09 pamphlet, letter, or poster, or over any radio station or television station, or in any 10 other way, an advertisement, announcement, or statement, written or oral, that uses the 11 existence of the association for the purpose of sales, solicitation, or inducement to 12 purchase any form of insurance covered by the association. However, this section does 13 not apply to the association or any other entity that does not sell or solicit insurance. 14 (b) The association shall prepare a summary document describing the general 15 purposes and current limitations of this chapter and complying with (c) of this section. 16 This document shall be submitted to the director for approval. Beginning 60 days after 17 the date on which the director approves the document, an insurer may not deliver a 18 policy or contract to a policy or contract owner unless the summary document is 19 delivered to the policy or contract owner at the time of delivery of the policy or 20 contract. The document shall also be available upon request by a policy owner. The 21 distribution, delivery, contents, or interpretation of this document does not guarantee 22 that either the policy or the contract, or the owner of the policy or contract, is covered 23 in the event of the impairment or insolvency of a member insurer. The description 24 document shall be revised by the association as amendments to this chapter may 25 require. Failure to receive this document does not give the policy owner, contract 26 owner, certificate holder, or insured any greater rights than those stated in this chapter. 27 (c) The document prepared under (b) of this section must contain a clear and 28 conspicuous disclaimer on its face. The director shall establish the form and content 29 of the disclaimer. The disclaimer must 30 (1) state the name and address of the association and the division of 31 insurance;

01 (2) prominently warn the policy or contract owner that the association 02 may not cover the policy or, if coverage is available, that the policy will be subject to 03 substantial limitations and exclusions and conditioned on continued residence in this 04 state; 05 (3) state the types of policies for which guaranty funds will provide 06 coverage; 07 (4) state that the insurer and its agents are prohibited by law from using 08 the existence of the association for the purpose of sales, solicitation, or inducement to 09 purchase any form of insurance; 10 (5) state that the policy or contract owner should not rely on coverage 11 under the association when selecting and insurer; 12 (6) explain rights available and procedures for filing a complaint to 13 allege a violation of a provision of this chapter; and 14 (7) provide other information as required by the director, including 15 sources for information about the financial condition of insurers if the information is 16 not proprietary and is subject by law to disclosure. 17 (d) A member insurer shall retain evidence of compliance with (b) of this 18 section for so long as the policy or contract for which the notice is given remains in 19 effect. 20 Sec. 21.79.170. Determination of principal place of business. (a) Except 21 as provided under (b) of this section, the principal place of business of a plan sponsor 22 or a person other than a natural person is that state in which the plan sponsor or person 23 exercises the direction, control, and coordination of the operations of the entity, as 24 determined by the association in its reasonable judgment by considering the following 25 factors: 26 (1) the state in which the primary executive and administrative 27 headquarters of the entity are located; 28 (2) the state in which the principal office of the chief executive officer 29 of the entity is located; 30 (3) the state in which the board of directors or a similar governing body 31 of the entity conducts the majority of its meetings;

01 (4) the state in which the executive or management committee of the 02 board of directors or a similar governing body of the entity conducts the majority of 03 its meetings; 04 (5) the state from which the management of the overall operations of 05 the entity is directed; and 06 (6) in the case of a benefit plan sponsored by affiliated companies 07 making up a consolidated corporation, the state in which the holding company or 08 controlling affiliate has its principal place of business as determined using the factors 09 described in this subsection. 10 (b) In the case of a plan sponsor, if more than 50 percent of the participants 11 in the benefit plan are employed in a single state, that state is the principal place of 12 business of the plan sponsor. 13 Sec. 21.79.180. Determination of residency of certain individuals. A citizen 14 of the United States that is either a (1) resident of a foreign country, or (2) resident of 15 a United States possession, territory, or protectorate that does not have an association 16 similar to the association created by this chapter is, for purposes of this chapter, a 17 resident of the state of domicile of the insurer that issued the policy or contract. 18 * Sec. 43. AS 21.79.900(6) is amended to read: 19 (6) "member insurer" means an insurer licensed to transact insurance 20 in the state that issues a policy described in AS 21.79.020(a) and (b), or a subscriber 21 contract providing benefits described in AS 21.87.120(a)(2) - (4) or 21.87.130(a)(2) 22 and (3), and includes an insurer whose license or certificate of authority in this state 23 may have been suspended, revoked, not renewed, or voluntarily withdrawn; "member 24 insurer" does not include 25 (A) a health maintenance organization licensed under AS 21.86; 26 (B) a fraternal benefit society licensed under AS 21.84; 27 (C) a mandatory state pooling plan; 28 (D) a mutual assessment company or an entity that operates on 29 an assessment basis; 30 (E) an insurance exchange licensed under AS 21.75; [OR] 31 (F) a [NONPROFIT] hospital or medical service organization

01 licensed under AS 21.87; 02 (G) an organization that has a license or certificate limited 03 to the issuance of charitable gift annuities; or 04 (H) an entity similar to one described under (A) - (G) of this 05 paragraph; 06 * Sec. 44. AS 21.79.900(9) is amended to read: 07 (9) "resident" means a person to whom a contractual obligation is 08 owed under this chapter and who resides in this state on the date of entry of a 09 court order that determines a member insurer to be an impaired or insolvent 10 insurer, whichever occurs first [AT THE TIME A MEMBER INSURER IS 11 DETERMINED TO BE AN IMPAIRED OR INSOLVENT INSURER AND TO 12 WHICH A CONTRACTUAL OBLIGATION IS OWED]; a person may be a resident 13 of only one state, which , in the case of a person other than a natural person , shall be 14 the principal place of business; 15 * Sec. 45. AS 21.79.900 is amended by adding new paragraphs to read: 16 (12) "authorized assessment" means an assessment approved by a 17 resolution by the board that will be called immediately or in the future from member 18 insurers for a specified amount; 19 (13) "called" means that a notice has been issued by the association to 20 member insurers requiring that an authorized assessment be paid within the time set 21 out in the notice; 22 (14) "impaired insurer" means a member insurer that is not an insolvent 23 insurer and that is placed under an order of rehabilitation or conservation by a court 24 of competent jurisdiction; 25 (15) "insolvent insurer" means a member insurer that is placed under 26 an order of liquidation by a court of competent jurisdiction with a finding of 27 insolvency; 28 (16) "owner," in relation to a policy or contract, 29 (A) means the person who is identified as the legal owner under 30 the terms of the policy or contract, or who is otherwise vested with legal title 31 to the policy or contract through a valid assignment completed under the terms

01 of the policy or contract and who is properly recorded as the owner on the 02 records of the insurer; 03 (B) does not include a person with a mere beneficial interest in 04 a policy or contract; 05 (17) "plan sponsor" means, in the case of a benefit plan established or 06 maintained by 07 (A) a single employer, the employer; 08 (B) an employee organization, the employee organization; or 09 (C) two or more employers or jointly by one or more employers 10 and one or more employee organizations, the association, committee, joint 11 board of trustees, or other group of representatives of the parties who establish 12 or maintain the benefit plan; 13 (18) "receivership court" means the court in the insolvent or impaired 14 insurer's state having jurisdiction over the conservation, rehabilitation, or liquidation 15 of the insurer; 16 (19) "structured settlement annuity" means an annuity purchased in 17 order to fund periodic payments for a plaintiff or other claimant in payment for or with 18 respect to personal injury suffered by the plaintiff or other claimant; 19 (20) "state" means a state of the United States, the District of 20 Columbia, Puerto Rico, or a United States possession, territory, or protectorate. 21 * Sec. 46. AS 21.36.035, AS 21.79.060(b), 21.79.100(g), and 21.79.100(i) are repealed. 22 * Sec. 47. The uncodified law of the State of Alaska is amended by adding a new section 23 to read: 24 TRANSITIONAL PROVISIONS. The terms of the members of the board of governors 25 of the Alaska Life and Health Insurance Guaranty Association who are serving on the 26 effective date of this Act are not affected by this Act. Their terms expire as provided before 27 the enactment of this Act.