CSHB 246(L&C): "An Act relating to regulation of a person providing insurance for the cost of medical care, to confidentiality of insurance records, to insurance hearings, to insurance fees, to annual and quarterly statements by insurers, to managed care insurance, to taxes on insurance, to insurer certificates of authority, to risk based capital for insurers, to unauthorized and nonadmitted insurers, to surplus lines insurance, to health insurance, to life insurance, to annuity insurance, to consumer credit insurance, to insurer liquidation, to multiple employer welfare arrangements, to the Alaska Insurance Guaranty Association, to hospital and medical service corporations, and to regulation of insurance producers, agents, brokers, managers, and adjusters; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 246(L&C) 01 "An Act relating to regulation of a person providing insurance for the cost of medical 02 care, to confidentiality of insurance records, to insurance hearings, to insurance fees, to 03 annual and quarterly statements by insurers, to managed care insurance, to taxes on 04 insurance, to insurer certificates of authority, to risk based capital for insurers, to 05 unauthorized and nonadmitted insurers, to surplus lines insurance, to health insurance, 06 to life insurance, to annuity insurance, to consumer credit insurance, to insurer 07 liquidation, to multiple employer welfare arrangements, to the Alaska Insurance 08 Guaranty Association, to hospital and medical service corporations, and to regulation of 09 insurance producers, agents, brokers, managers, and adjusters; and providing for an 10 effective date." 11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 12 * Section 1. AS 21.03.021 is amended by adding new subsections to read:
01 (b) Except as otherwise provided in this title, a person that provides coverage 02 for the cost of medical care in this state is subject to this title unless the person shows 03 that, while providing coverage for medical care, the person is subject to the 04 jurisdiction of another agency of this state or of the federal government by providing 05 the director with the appropriate certificate, license, or other document issued by the 06 other governmental agency that permits or qualifies the person to provide coverage for 07 medical care. 08 (c) A person described under (b) of this section who is unable to show that the 09 person is subject to the jurisdiction of another governmental agency under (b) of this 10 section and who has not received a certificate of authority under AS 21.85 11 (1) is subject to all appropriate provisions of this title regarding the 12 conduct of the person's business; and 13 (2) shall submit to an examination by the director to determine the 14 organization and solvency of the person and to determine whether the person complies 15 with this title. 16 (d) A person that advertises, administers, sells, or transacts the coverage of 17 medical care under (b) of this section and is required to submit to an examination by 18 the director under (c)(2) of this section shall advise every purchaser, prospective 19 purchaser, or covered person that the person's coverage may not be regulated under 20 Alaska insurance law and may not be covered by the Alaska Life and Health Insurance 21 Guaranty Association under AS 21.79. 22 * Sec. 2. AS 21.06.060 is amended to read: 23 Sec. 21.06.060. Records. The director shall enter in permanent form records 24 of official transactions, examinations, investigations, and proceedings and keep those 25 records in the office of the director. The records and insurance filings in the office of 26 the director are open to public inspection, except as otherwise provided in (b) - (g) of 27 this section or other provisions of this title with respect to particular records or 28 filings. 29 * Sec. 3. AS 21.06.060 is amended by adding new subsections to read: 30 (b) Information and records, including written documents and electronic data, 31 designated as confidential or not available for public inspection under this section or
01 other provisions of this title 02 (1) are not subject to inspection and copying under AS 40.25.110 - 03 40.25.220; 04 (2) may not be obtained from the director by subpoena, except for a 05 subpoena issued by a state or federal law enforcement agency or grand jury; 06 (3) may be used by the director in a regulatory or legal proceeding; and 07 (4) may be released for public inspection if the person who provided 08 the information or records to the director consents or releases incomplete or 09 misleading information on the same topic to the public. 10 (c) The director or a person acting under the authority of the director who 11 receives information or records designated in this title as confidential or not available 12 for public inspection may not be permitted or required to testify about the information 13 or records in a civil action not involving the state or a state agency, officer, or 14 employee. 15 (d) A person required or requested to provide information or records to the 16 director under this title does not waive a claim of privilege that the person may have 17 by providing the information or records to the director. 18 (e) In the performance of duties under this title, the director may 19 (1) disclose confidential information or records to the legislature, state, 20 federal, and international regulatory or law enforcement agencies, or the National 21 Association of Insurance Commissioners if the recipient will maintain the 22 confidentiality of the information or records; 23 (2) receive information or records from state, federal, and international 24 regulatory or law enforcement authorities or the National Association of Insurance 25 Commissioners and maintain the confidentiality of the information or records if 26 requested to do so or given notice that the information or records are confidential 27 under the law of the jurisdiction supplying them; and 28 (3) enter into agreements consistent with this section governing the 29 sharing of information or records that are confidential under this title with other state, 30 federal, and international regulatory or law enforcement agencies or the National 31 Association of Insurance Commissioners for the purpose of furthering any regulatory
01 or legal action that may be taken as part of the recipient's official duties. 02 (f) The following information or records submitted to or obtained by the 03 director are confidential: 04 (1) personally identifiable consumer information; however, the director 05 may disclose the information or records for the purpose of attempting to resolve a 06 consumer complaint; 07 (2) information or records established by a showing satisfactory to the 08 director to be a trade secret or proprietary business information, including 09 (A) detailed health insurance claim cost data; and 10 (B) justification for usual, customary, and reasonable charge 11 determinations; and 12 (3) information or records provided by a person not subject to this title 13 at the request of the director if the information or records are identified as confidential 14 by the director; and 15 (4) financial analysis ratios and examination synopses concerning 16 insurance companies that are submitted to the director by the National Association of 17 Insurance Commissioners. 18 (g) The director may withhold information or records from public inspection 19 for as long as the director finds the withholding is 20 (1) necessary to protect a person against unwarranted injury; or 21 (2) in the public interest. 22 * Sec. 4. AS 21.06.150(g) is repealed and reenacted to read: 23 (g) Information or records obtained by the director under AS 21.06.120 or 24 21.06.140 and any related work papers of an examination are confidential. The 25 director may publish an examination report or a summary of it in a newspaper or 26 electronic media in the state if the director determines that the publication is in the 27 public interest. 28 * Sec. 5. AS 21.06.210 is amended by adding a new subsection to read: 29 (h) The director may close a hearing to the public when the director finds the 30 closure is necessary to protect a person against unwarranted injury or is in the public 31 interest.
01 * Sec. 6. AS 21.07.040(c) is amended to read: 02 (c) Nothing in this section may be construed to prohibit the exchange of 03 medical information between and among health care providers of an applicant or a 04 person currently or formerly [A CURRENT OR FORMER PERSON] covered by a 05 managed care plan for purposes of providing health care services. 06 * Sec. 7. AS 21.09.120(a) is amended to read: 07 (a) If, upon completion of its application, the director finds that the insurer has 08 met the requirements for and is entitled to a certificate under this title, the director 09 shall issue to the insurer a proper certificate of authority; if the director does not so 10 find, the director shall issue an order refusing the certificate. The director shall act 11 upon an application for a certificate of authority within 60 [30] days after its 12 completion. 13 * Sec. 8. AS 21.09.130(a) is amended to read: 14 (a) A certificate of authority issued or renewed under this title continues in 15 force as long as the insurer is entitled to it under this title and until suspended or 16 revoked, or otherwise terminated, [;] subject, however, to continuance of the 17 certificate by the insurer each year by payment before June 30 of the continuation fee 18 set under AS 21.06.250. The method of payment must be by electronic or other 19 payment method specified by the director by regulation under AS 21.06.250. 20 * Sec. 9. AS 21.09.200(a) is amended to read: 21 (a) Each authorized insurer shall annually, before March 2, file with the 22 director or the director's designee a full and true statement of its financial condition, 23 transactions, and affairs as of the preceding December 31. The reporting format for a 24 given year is the most recently approved National Association of Insurance 25 Commissioners' annual financial statement blank form and instructions, supplemented 26 for additional information as required by the director. The director may require the 27 statement to be filed on electronic media. The statement shall be verified by the oath 28 of the insurer's president or vice-president, and secretary, or, if a reciprocal insurer, by 29 oath of the attorney-in-fact or its like officers if a corporation unless verification is 30 waived by the director of insurance. The filing locations must be published by the 31 director at least annually.
01 * Sec. 10. AS 21.09.200(d) is amended to read: 02 (d) At the time of filing, the insurer shall pay to the director a fee for filing its 03 statement, set under AS 21.06.250. The method of payment must be by electronic 04 or other payment method specified by the director by regulation under 05 AS 21.06.250. 06 * Sec. 11. AS 21.09.200(e) is amended to read: 07 (e) An insurer shall pay to the division $100 for each day the insurer fails to 08 file the annual statement in the form and location required and within the time 09 established in (a) of this section. The authority of the insurer to enter into new 10 obligations or issue new or renewal policies of insurance in this state may be 11 suspended by the director if the annual statement has not been filed by March 1. 12 * Sec. 12. AS 21.09.205(b) is amended to read: 13 (b) A quarterly financial statement, if required, is due 45 [60] days after the 14 end of the quarter to which it applies. 15 * Sec. 13. AS 21.09.210(g) is amended to read: 16 (g) An insurer shall pay to the division a late payment fee of $100 a day or 17 25 percent of the tax due, whichever is greater, from the date the payment was 18 due to the date paid, and interest at the rate of one percent a month or part of a 19 month from the date the payment was originally due to the date paid for the 20 period the insurer fails to pay the premium tax in this section or in AS 21.09.270 21 in the form required and within the time established. The director may suspend or 22 revoke the certificate of authority of an insurer that fails to pay its taxes as required 23 under this section. 24 * Sec. 14. AS 21.09.210(j) is amended to read: 25 (j) The provisions of AS 21.89.070 and 21.89.075 apply to a taxpayer who is 26 required to pay a tax due under this section. 27 * Sec. 15. AS 21.09.210(m) is amended to read: 28 (m) The tax imposed under this section for an individual policy of life 29 insurance shall be computed at the rate of 30 (1) 2.7 percent of [FOR A POLICY OF LIFE INSURANCE WITH A] 31 policy year premium up to $100,000; and
01 (2) one-tenth of one [A] percent of [FOR A POLICY OF LIFE 02 INSURANCE FOR THE] policy year premium exceeding $100,000. 03 * Sec. 16. AS 21.09.270(b) is amended to read: 04 (b) This section does not apply to 05 [(1)] personal income taxes, [OR] to ad valorem taxes on real or 06 personal property, or to special purpose obligations or assessments imposed by 07 another state in connection with particular kinds of insurance other than property 08 insurance; except that deductions from premium taxes or other taxes otherwise 09 payable allowed on accounts of real estate or personal property taxes paid shall be 10 taken into consideration by the director in determining the propriety and extent of 11 retaliatory action under this section [; OR 12 (2) A HEALTH CARE INSURER WHO ISSUES HEALTH CARE 13 INSURANCE TO THE STATE, A MUNICIPALITY, A CITY OR BOROUGH 14 SCHOOL DISTRICT, A REGIONAL EDUCATIONAL ATTENDANCE AREA, 15 THE UNIVERSITY OF ALASKA, OR A COMMUNITY COLLEGE OPERATED 16 BY THE UNIVERSITY OF ALASKA; IN THIS PARAGRAPH, "HEALTH CARE 17 INSURER" HAS THE MEANING GIVEN IN AS 21.54.500]. 18 * Sec. 17. AS 21.09.270 is amended by adding a new subsection to read: 19 (f) For purposes of calculation of the amounts in (a) of this section, an insurer 20 may not include taxes on health care insurance premiums received from the state, a 21 municipality, a city or borough school district, a regional educational attendance area, 22 the University of Alaska, or a community college operated by the University of 23 Alaska. 24 * Sec. 18. AS 21.09.310(n) is amended to read: 25 (n) Annual statements under AS 21.09.200 and quarterly statements under 26 AS 21.09.205 (1) may only relate to and must include all insurance transactions and 27 affairs within the United States, assets held by or for the United States branch for the 28 protection of policyholders and creditors within the United States, and liabilities 29 incurred against those assets; and (2) may not contain a statement in regard to assets 30 and business transacted in a place not described in this subsection. The annual and 31 quarterly statements shall be signed and verified by the United States manager,
01 attorney-in-fact, or a duly empowered assistant United States manager of the United 02 States branch. 03 * Sec. 19. AS 21.14.050(a) is amended to read: 04 (a) If a mandatory control level event occurs for a domestic insurer, the 05 director shall take the action necessary to place the insurer under regulatory control 06 under AS 21.78. 07 * Sec. 20. AS 21.27.020(c) is amended to read: 08 (c) To qualify for issuance or renewal of a license as a firm insurance 09 producer, a firm managing general agent, a firm reinsurance intermediary broker, a 10 firm reinsurance intermediary manager, a firm surplus lines broker, or a firm 11 independent adjuster, an applicant or licensee shall 12 (1) comply with (b)(4) and (5) of this section; 13 (2) maintain a lawfully established place of business in this state, 14 except when licensed as a nonresident under AS 21.27.270; 15 (3) disclose to the director all owners, officers, directors, or partners of 16 the firm; 17 (4) designate one or more [A] compliance officers [OFFICER] for the 18 firm; 19 (5) provide to the director documents necessary to verify the 20 information contained in or made in connection with the application; and 21 (6) notify the director, in writing, within 30 days of a change in the 22 firm's compliance officer or of the termination of employment of an individual in the 23 firm licensee. 24 * Sec. 21. AS 21.27.140(a) is repealed and reenacted to read: 25 (a) A firm shall have a firm license, the scope of which includes all lines and 26 classes of authority of each individual employee of the firm. 27 * Sec. 22. AS 21.27.140(b) is repealed and reenacted to read: 28 (b) A firm may not be licensed as an insurance producer, managing general 29 agent, reinsurance intermediary broker, reinsurance intermediary manager, surplus 30 lines broker, or independent adjuster, or transact insurance unless each individual 31 employed as an insurance producer, managing general agent, surplus lines broker,
01 trainee insurance producer, trainee independent adjuster, or independent adjuster by 02 the firm is licensed as an individual in the firm. Each compliance officer of the firm 03 shall be licensed as an individual in the firm for a specific line and class of authority. 04 If there is more than one compliance officer, the combined authority of all compliance 05 officers shall cover all the powers conferred by the firm's license. 06 * Sec. 23. AS 21.27.370(c) is amended to read: 07 (c) An unlicensed person who refers a customer or potential customer to a 08 licensee and who does not discuss specific terms and conditions of a policy [,] or give 09 [WHO GIVES] opinions or advice regarding insurance, may be compensated for the 10 referral, if the compensation 11 (1) for each referral is 12 (A) nominal; 13 (B) on a one-time basis; and 14 (C) fixed in amount by referral; 15 (2) does not depend on whether the customer or potential customer 16 purchases the insurance; and 17 (3) is not contingent on the volume of insurance transacted. 18 * Sec. 24. AS 21.27.900(4) is amended to read: 19 (4) "compliance officer" means a licensee designated for a specific 20 line and class of authority under this chapter who [THAT] is responsible for a firm's 21 compliance with the insurance statutes and regulations of this state; 22 * Sec. 25. AS 21.27.900 is amended by adding a new paragraph to read: 23 (32) "class of authority" means the authority held by a person under a 24 license as an insurance producer, managing general agent, reinsurance intermediary 25 broker, reinsurance intermediary manager, surplus lines broker, or independent 26 adjuster, or under registration as a third-party administrator. 27 * Sec. 26. AS 21.33.037(b) is amended to read: 28 (b) This section does not apply to 29 (1) matters authorized to be done by the director; 30 (2) surplus lines insurance effected and written under AS 21.34; 31 (3) transactions for which a certificate of authority is not required
01 under this title; 02 (4) reinsurance; 03 (5) the property and operations of railroads or aircraft primarily 04 engaged in interstate or foreign commerce and wet marine and transportation 05 insurance; 06 (6) life insurance, health insurance, and annuity contracts when 07 solicited solely by mail or when not solicited, negotiated, or procured in this state; 08 (7) transactions subsequent to issuance of a policy not covering a 09 subject resident, located, or to be performed in this state at time of issuance and 10 lawfully solicited, written, or delivered outside this state. 11 * Sec. 27. AS 21.33.055(a) is amended to read: 12 (a) Except as to premiums on lawfully procured surplus lines insurance 13 exported under AS 21.34 and premiums on independently procured insurance on 14 which a tax has been paid under AS 21.33.061, every nonadmitted insurer shall pay to 15 the director, on or before March 1 following the calendar year in which the insurance 16 was so effectuated, continued, or renewed, a premium-receipts tax of three percent of 17 gross premiums charged for the insurance other than wet marine and transportation 18 insurance and a premium-receipts tax of three-fourths of one percent of gross 19 premiums charged for the wet marine and transportation insurance on subjects 20 resident, located, or to be performed in this state. The insurance on subjects resident, 21 located, or to be performed in this state procured through negotiations or an 22 application, in whole or in part occurring or made in or from in or out of this state, or 23 for which premiums in whole or in part are remitted directly or indirectly from in or 24 out of this state, shall be considered to be insurance procured or continued or renewed 25 in this state. The term "premium" includes all premiums, membership fees, 26 assessments, dues, and any other consideration for insurance. The tax paid by the 27 insurer is in lieu of all insurer taxes and fire department dues. On default of a 28 nonadmitted insurer in the payment of the tax, the insured shall pay the tax within 30 29 days of written notice from the director of the default by the nonadmitted insurer. If 30 the tax prescribed by this section is not paid by the nonadmitted insurer within the 31 time stated or by the insured within the time stated after notice of default by the
01 nonadmitted insurer, the tax may be increased by 02 (1) a late payment fee of $1,000 or 10 percent of the tax due, 03 whichever is greater; 04 (2) interest at the rate of one percent a month or part of a month from 05 the date the payment was originally due to the date paid; and 06 (3) a penalty not to exceed $100 a day or 25 percent of the tax due, 07 whichever is greater, from the date the payment was due to the date paid. 08 * Sec. 28. AS 21.33.055(c) is amended to read: 09 (c) This section does not apply to insurance of risks of the state or [,] a 10 political subdivision of the state, or to insurance of aircraft primarily [REGULARLY] 11 engaged in interstate or foreign commerce. 12 * Sec. 29. AS 21.33.061(c) is amended to read: 13 (c) There is levied upon the obligation, chose in action, or right represented by 14 the premium charged for the insurance, a premium receipts tax of three per cent of 15 gross premiums charged for the insurance other than wet marine and transportation 16 insurance and a premium receipts tax of three-fourths of one percent of gross 17 premiums charged for the wet marine and transportation insurance. The term 18 "premium" includes all premiums, membership fees, assessments, dues, and any other 19 consideration for insurance. [THE TAX IS IN LIEU OF ALL TAXES AND FIRE 20 DEPARTMENT DUES.] The insured shall, on or before March 1 following the 21 calendar year in which the insurance was procured, continued, or renewed, pay the 22 amount of the tax to the director. In event of cancellation and rewriting of the 23 insurance contract, the additional premium for premium receipts tax purposes is the 24 premium in excess of the unearned premium of the cancelled insurance contract. If the 25 tax prescribed by this section is not paid within the time stated, the tax may be 26 increased by 27 (1) a late payment fee of $1,000 or 10 percent of the tax due, 28 whichever is greater; 29 (2) interest at the rate of one percent a month or part of a month from 30 the date the payment was due to the date paid; and 31 (3) a penalty not to exceed $100 a day or 25 percent of the tax due,
01 whichever is greater, from the date the payment was due to the date paid. 02 * Sec. 30. AS 21.33.061(g) is amended to read: 03 (g) This section does not apply to insurance of risks of the state or [,] a 04 political subdivision of the state, to insurance of aircraft primarily [REGULARLY] 05 engaged in interstate or foreign commerce, to life insurance, to health insurance, or to 06 annuity contracts. 07 * Sec. 31. AS 21.34.180(a) is amended to read: 08 (a) Gross premiums charged, less any return premium, for surplus lines 09 insurance are subject to a premium receipts tax as outlined in AS 21.09.210, which 10 shall be collected by the surplus lines broker as specified by the director, in addition to 11 the full amount of the gross premium charged by the insurer for the insurance. The tax 12 on any portion of the premium unearned at termination of insurance having been 13 credited by the state to the surplus lines broker shall be returned to the policy holder 14 directly by the surplus lines broker or through the producing broker, if any. The 15 surplus lines broker may not absorb the tax or any part of it, and may not rebate for 16 any reason the tax or any part of it. However, if, under AS 21.09.210, an admitted 17 insurer is required to collect and pay premium tax on a portion of a subscription 18 policy, the surplus lines broker is not required to collect any amount that would 19 constitute double taxation of that portion of the insurance. 20 * Sec. 32. AS 21.34.180(d) is amended to read: 21 (d) This section does not apply to insurance of risks of state government or its 22 political subdivision, to an agency of state government or its political subdivision, or 23 to insurance of aircraft primarily [REGULARLY] engaged in interstate or foreign 24 commerce. 25 * Sec. 33. AS 21.34.180 is amended by adding a new subsection to read: 26 (f) A surplus lines broker shall pay to the division a late payment fee of $100 a 27 day or 25 percent of the tax due, whichever is greater, from the date the payment was 28 due to the date paid and interest at the rate of one percent a month or part of a month 29 from the date the payment was originally due to the date paid for each day the insurer 30 fails to pay the tax in the form required and within the time established 31 * Sec. 34. AS 21.42.020(d) is amended to read:
01 (d) "Insurable interest," with reference to life, annuity, or health 02 [PERSONAL] insurance, includes only the following interests: 03 (1) in the case of persons related closely by blood or by law, a 04 substantial interest engendered by love and affection; 05 (2) in the case of persons other than those described in (1) of this 06 subsection, a lawful and substantial economic interest in having the life, health, or 07 bodily safety of the person insured continue, as distinguished from an interest that 08 [WHICH] would arise only by, or would be enhanced in value by, the death, 09 disablement, or injury of the individual insured; 10 (3) an individual party to a contract or option for the purchase or sale 11 of an interest in a business partnership or firm, or of shares of stock of a closed 12 corporation or of an interest in the shares, has an insurable interest in the life of each 13 individual party to the contract for the purposes of the contract only, in addition to an 14 insurable interest that may otherwise exist as to the life of the individual. 15 * Sec. 35. AS 21.42 is amended by adding a new section to read: 16 Sec. 21.42.145. Stop-loss insurance provisions. (a) An insurance company 17 licensed under AS 21.09, a hospital or medical service corporation licensed under 18 AS 21.87, a fraternal benefit society licensed under AS 21.84, a health maintenance 19 organization licensed under AS 21.86, or a multiple employer welfare arrangement 20 may not issue a stop-loss insurance policy that 21 (1) has an annual attachment point for claims incurred for each 22 individual that is lower than $10,000; 23 (2) has an annual aggregate attachment point for a small employer that 24 is lower than the greater of 25 (A) $4,000 times the number if individuals covered under the 26 health benefit plan; 27 (B) 120 percent of the expected claims for the health benefit 28 plan for the period covered by the stop-loss insurance policy; or 29 (C) $20,000; 30 (3) has an annual aggregate attachment point for a large employer that 31 is lower than 110 percent of expected claims for the health benefit plan for the period
01 covered by the stop-loss insurance policy; or 02 (4) provides direct coverage of health care expenses of an individual. 03 (b) The director may, by regulation, change the dollar amounts established 04 under (a) of this section to reflect medical costs in this state, including adjustments to 05 reflect changes in the medical care component of the Consumer Price Index for all 06 urban consumers for the Anchorage Metropolitan Area compiled by the Bureau of 07 Labor Statistics, United States Department of Labor. 08 (c) For the purposes of this section, 09 (1) "attachment point" means the claim amount incurred by an insured 10 group beyond which the insurer incurs a liability for payment; 11 (2) "expected claims" means the amount of claims that, in absence of a 12 stop-loss insurance policy or other insurance, are projected to be incurred by an 13 insured group through its health benefit plan; 14 (3) "health benefit plan" has the meaning given in AS 21.54.500; 15 (4) "large employer" has the meaning given in AS 21.54.500; 16 (5) "small employer" has the meaning given in AS 21.54.500. 17 * Sec. 36. AS 21.42 is amended by adding a new section to read: 18 Sec. 21.42.363. Eye care under health insurance. A policy, contract, or 19 prepaid plan for individual or group health insurance issued or delivered in the state 20 that provides reimbursement for a service within the lawful scope of practice of an 21 optometrist licensed under AS 08.72 must provide for reimbursement to a person 22 covered under the policy, contract, or plan who had the service performed by an 23 optometrist. 24 * Sec. 37. AS 21.42.365(b) is amended to read: 25 (b) The benefits described in (a) of this section shall be adjusted January 1, 26 1999, by the director and every three years thereafter to correspond with the change in 27 the medical care component of the consumer price index for all urban consumers for 28 the Anchorage Metropolitan Area compiled by the Bureau of Labor Statistics, United 29 States Department of Labor. [THE BASE YEAR FOR THE FIRST ADJUSTMENT 30 SHALL BE CALENDAR YEAR 1996.] 31 * Sec. 38. AS 21.42.390(b) is repealed and reenacted to read:
01 (b) A health care insurer shall provide coverage of not less than $1,500 for a 02 covered person in a year for the cost of diabetes outpatient self-management training 03 or education under (a) of this section. 04 * Sec. 39. AS 21.42.500(5) is amended to read: 05 (5) "health care insurance plan" has the meaning given in 06 AS 21.54.500; "health care insurance plan" does not include short-term limited- 07 duration insurance offered to individuals in the individual market; 08 * Sec. 40. AS 21.42.500 is amended by adding a new paragraph to read: 09 (8) "individual market" has the meaning given in AS 21.51.500; 10 * Sec. 41. AS 21.51.090 is amended to read: 11 Sec. 21.51.090. Claim forms. There shall be a provision as follows: 12 "Claim Forms: The insurer, within 10 working days after [UPON] 13 receipt of a notice of claim, will furnish to the claimant forms that 14 [WHICH] are usually furnished by it for filing proofs of loss. If the 15 forms are not furnished within 10 [15] days after the giving of notice, 16 the claimant shall be considered to have complied with the 17 requirements of this policy as to proof of loss upon submitting, within 18 the time fixed in the policy for filing proofs of loss, written proof 19 covering the occurrence, the character, and the extent of the loss for 20 which claim is made." 21 * Sec. 42. AS 21.51.110 is amended to read: 22 Sec. 21.51.110. Time of payment of claims. There shall be a provision as 23 follows: 24 "Time of Payment of Claims: Indemnities payable under this policy for 25 a loss other than loss for which this policy provides a periodic payment 26 [,] will be paid within 30 days after [IMMEDIATELY UPON] receipt 27 of due written proof of the loss. Subject to due written proof of loss, all 28 accrued indemnities for loss for which this policy provides periodic 29 payment will be paid (insert period for payment, which must not be less 30 frequently than monthly) and any balance remaining unpaid upon the 31 termination of liability will be paid beginning within 30 days after
01 [IMMEDIATELY UPON] receipt of due written proof." 02 * Sec. 43. AS 21.54.130(c) is amended to read: 03 (c) A health care insurer may discontinue offering and renewing all health care 04 insurance plans in the small group market, large group market, or both, [GROUP 05 MARKET] as permitted by this title if the insurer 06 (1) provides written notice of the decision to discontinue coverage to 07 all affected plan sponsors, participants, and beneficiaries and to the insurance 08 regulatory official in each state in which an affected covered employee or dependent is 09 known to reside; notice required under this paragraph must be given at least 180 days 10 before discontinuation of the plans; 11 (2) provides written notice of the decision to discontinue coverage to 12 the director and to the insurance regulatory official in each state in which the insurer is 13 licensed at least 30 days before the notice is given to the affected plan sponsors, 14 participants, and beneficiaries as described under (1) of this subsection; and 15 (3) does not issue a health care insurance plan in the group market in 16 this state for five years from the date the last group health care insurance plan was 17 discontinued. 18 * Sec. 44. AS 21.55.010 is amended to read: 19 Sec. 21.55.010. Creation; membership. There is established a nonprofit 20 incorporated legal entity to be known as the Comprehensive Health Insurance 21 Association. Membership consists of all licensed hospital or medical service 22 corporations in the state that offer subscriber contracts for major medical coverage, all 23 health maintenance organizations or other managed care arrangements approved by 24 the director, all licensed self-funded multiple employer welfare arrangements in 25 the state, and all insurers licensed to transact health insurance in the state that offer 26 policies for major medical coverage on an expense incurred basis. All members shall 27 maintain membership in the association as a condition of doing health insurance 28 business, or being able to offer subscriber contracts or enrollment in a health 29 maintenance organization, self-funded multiple employer welfare arrangement, or 30 managed care arrangement [,] in the state. 31 * Sec. 45. AS 21.56.120(c) is amended to read:
01 (c) A small employer insurer shall 02 (1) maintain at its principal place of business a complete and detailed 03 description of its rating practices and renewal underwriting practices, including 04 information and documentation that demonstrate that its rating methods and practices 05 are based upon commonly accepted actuarial assumptions and are in accordance with 06 sound actuarial principles; 07 (2) file with the director annually, on or before March 15, an actuarial 08 certification certifying that the insurer is in compliance with this chapter and 09 AS 21.54.100 - 21.54.500 and that the rating methods of the small employer insurer 10 are actuarially sound; the certification shall be in a form and manner, and must contain 11 information, as specified by the director; a copy of the certification shall be retained 12 by the small employer insurer at its principal place of business; 13 (3) make the information and documentation described in (1) of this 14 subsection available to the director upon request; the information is confidential and 15 not subject to disclosure, except 16 (A) as agreed to by the small employer insurer; 17 (B) as ordered by a court of competent jurisdiction; or 18 (C) the director may use the information or other discovered 19 information in a judicial or administrative proceeding. 20 * Sec. 46. AS 21.56.140(c) is amended to read: 21 (c) A small employer insurer may not increase a requirement for minimum 22 employee participation or for minimum employer contribution applicable to a small 23 employer at any time after the small employer has been accepted for coverage, except 24 that a small employer insurer may vary application of minimum participation and 25 employer contribution requirements by the size of the small employer group. In 26 applying minimum employee participation requirements, a small employer insurer 27 may not consider employees or dependents who have [SIMILAR] existing creditable 28 coverage in determining whether the minimum employee participation level is met. 29 * Sec. 47. AS 21.57.055(a) is amended to read: 30 (a) Before a debtor elects to purchase consumer credit insurance in connection 31 with a credit transaction, the insurer shall disclose the following in writing to the
01 debtor: 02 (1) the purchase of consumer credit insurance is optional and not a 03 condition of obtaining credit approval; 04 (2) if more than one kind of consumer credit insurance is being made 05 available to the debtor, whether the debtor can purchase the insurance separately or the 06 multiple coverage only as a package; 07 (3) the conditions of eligibility; 08 (4) if the debtor has other insurance that covers the risk, the debtor 09 may not want or need credit insurance; 10 (5) if the creditor requires [CONSUMER CREDIT] insurance as 11 additional security for a debt, the debtor has the option of furnishing the required 12 amount of insurance through existing policies owned or procured by the debtor or of 13 procuring and furnishing the required insurance through an insurer authorized to 14 transact insurance business in this state; 15 (6) the effective date of the coverage; 16 (7) the debtor may cancel the coverage within the first 30 days after 17 receiving the individual policy or group certificate and have a premium paid by the 18 debtor refunded or credited; thereafter, the debtor may cancel the policy at any time 19 during the term of the loan and receive a refund of unearned premium; 20 (8) a brief description of the coverage, including 21 (A) the amount; 22 (B) the term; 23 (C) any exceptions, limitations, or exclusions; 24 (D) the insured event; 25 (E) any waiting or elimination period; 26 (F) any deductible; 27 (G) any applicable waiver of premium provision; 28 (H) to whom the benefits would be paid; and 29 (I) the premium rate for a coverage or for multiple coverage in 30 a package; 31 (9) if the premium or insurance charge is financed, it is subject to
01 finance charges at the rate applicable to the credit transaction or at another specified 02 rate; and 03 (10) whether or not the benefits provided are sufficient to pay off the 04 debt existing on the date of death, disability, or unemployment [IN FULL, 05 INCLUDING FINANCE CHARGES UNEARNED AT THE TIME OF THE 06 CLAIM]. 07 * Sec. 48. AS 21.57.060(b) is amended to read: 08 (b) The individual policy or group certificate must, in addition to other 09 requirements of law, set out 10 (1) the name and home office address of the insurer; 11 (2) the name of the debtor; 12 (3) the premium to be paid by the debtor disclosed separately for each 13 kind of coverage or for all coverage in a package, except that, for open-ended loans, 14 the premium rate and the basis of premium calculation must be specified; 15 (4) a full description of the coverage, including the amount, the term, 16 and any exceptions, limitations, or exclusions; 17 (5) a statement that the benefits shall be paid to the creditor to reduce 18 or extinguish the unpaid debt and that, whenever the amount of insurance benefit 19 exceeds the unpaid debt, the excess is payable to the debtor, a beneficiary other than 20 the creditor named by the debtor, or the debtor's estate; 21 (6) an explanation of how refunds are calculated in the event of policy 22 termination; and 23 (7) if the benefit is not adequate to completely pay off the debt existing 24 on the date of death, [OR] disability, or unemployment, a statement to that effect on 25 the face of the individual policy or group certificate in not smaller than 10 point, bold 26 face type. 27 * Sec. 49. AS 21.66.110 is amended by adding a new subsection to read: 28 (c) A title insurance company shall pay to the division a late payment fee of 29 $100 a day or 25 percent of the tax due, whichever is greater, from the date the 30 payment was due to the date paid and interest at the rate of one percent a month or part 31 of a month from the date the payment was originally due to the date paid for each day
01 the insurer fails to pay the premium tax in the form required and within the time 02 established. 03 * Sec. 50. AS 21.66.380(b) is amended to read: 04 (b) The statement and justification provided for in this section shall be open to 05 public inspection; however, information that can be used to identify the 06 experience of a particular title insurance limited producer is confidential. 07 * Sec. 51. AS 21.76 is amended by adding a new section to read: 08 Sec 21.76.130. Fee. (a) An entity operating under the authority of this 09 chapter shall pay a fee adopted by regulation under AS 21.06.250. The fee shall be 10 paid on or before October 1 of each year. The director may require that the payment 11 of the fee be by electronic means. 12 (b) If the fee under (a) of this section is not paid within the time prescribed, 13 the fee and late payment fees, along with appropriate penalties, may be collected by an 14 action in court. 15 (c) A joint insurance arrangement shall pay the director $100 for each day the 16 joint insurance arrangement fails to pay the fee by the due date prescribed. In 17 addition, a penalty under AS 21.90.020 shall apply. 18 * Sec. 52. AS 21.78.260(5) is amended to read: 19 (5) class 5: claims of the federal or a state or local government, other 20 than claims under (3) of this section; claims, including those of a government body for 21 a penalty or forfeiture, shall be allowed in this class only to the extent of the pecuniary 22 loss sustained from the act, transaction, or proceeding out of which the penalty or 23 forfeiture arose, along with reasonable and actual costs attributable to it; the remaining 24 portion of the claims are in the class of claims set out in (7) [(8)] of this section; 25 * Sec. 53. AS 21.80.060 is amended to read: 26 Sec. 21.80.060. Powers and duties of the association. (a) The association 27 (1) is obligated to pay covered claims existing before the order of 28 liquidation and arising within 30 days after the order of liquidation, or before the 29 policy expiration date if less than 30 days after the order of liquidation, or before the 30 insured replaces the policy or causes its cancellation if the insured does so within 30 31 days after the order of liquidation, but this obligation includes only that amount of
01 each covered claim that is less than $500,000, except that a covered claim for return of 02 unearned premium may not exceed $10,000 for each policy, and except that the 03 association shall pay the full amount of any covered claim arising out of a workers' 04 compensation policy; the association is not obligated 05 (A) to a policyholder or claimant in an amount in excess of the 06 obligation of the insolvent insurer under the policy from which the claim 07 arises; or 08 (B) to pay a claim filed with the association after the final date 09 set by the court for the filing of claims against the liquidator or receiver of an 10 insolvent insurer; 11 (2) is considered the insurer to the extent of its obligation on the 12 covered claims and to that extent has all rights, duties, and obligations of the insolvent 13 insurer as if the insurer had not become insolvent; 14 (3) shall allocate claims paid and expenses incurred among the three 15 accounts separately, and assess member insurers separately for each account amounts 16 necessary to pay the obligation of the association under (1) of this subsection 17 subsequent to an insolvency, the expenses of handling covered claims subsequent to 18 an insolvency, and other expenses authorized by this chapter; under this paragraph, 19 (A) the assessments of each member insurer must initially be 20 based on a uniform percentage, as determined by the association, of [IN 21 THE PROPORTION THAT] the net direct written premiums of each [THE] 22 member insurer for the last year for which annual statements have been 23 filed [CALENDAR YEAR PRECEDING THE ASSESSMENT] on the kinds 24 of insurance in the account; this initial assessment shall be adjusted by 25 applying the same uniform percentage as initially used to each member 26 insurer's net direct written premiums for the calendar year following the 27 year in which the initial assessment was issued; any difference between the 28 initial assessment amount and the adjusted assessment amount allocated 29 to a member insurer shall be levied against or credited back to the 30 member insurer, as appropriate, by the association; the association shall 31 calculate and issue all appropriate levies and credits as soon as practical
01 after all member insurers have filed their annual statements for the 02 calendar year following the year in which the initial assessment was issued 03 [BEARS TO THE NET DIRECT WRITTEN PREMIUMS OF ALL 04 MEMBER INSURERS FOR THE CALENDAR YEAR PRECEDING THE 05 ASSESSMENT ON THE KINDS OF INSURANCE IN THE ACCOUNT; 06 EACH MEMBER INSURER SHALL BE NOTIFIED OF THE 07 ASSESSMENT NOT LATER THAN 30 DAYS BEFORE IT IS DUE]; 08 (B) on an annual basis, the association shall determine if 09 funding is required for any of the three accounts; based on this 10 determination, the association shall, during November of each year, issue 11 initial assessments as may be necessary to cover the projected reasonable 12 costs of claims and expenses to administer the association for the following 13 year; the association shall use the services of an independent actuary to 14 assist the association to evaluate and make the projection; an initial 15 assessment may be made at any other time if the association determines 16 funding is necessary, except that a member insurer may not be assessed 17 initial assessments [IN ANY YEAR] on any account in an amount greater 18 than two percent of the member insurer's net direct written premiums for the 19 applicable calendar year [PRECEDING THE ASSESSMENT ON THE 20 KINDS OF INSURANCE IN THE ACCOUNT]; 21 (C) the association may pay claims in any order that it 22 determines reasonable, including the payment of claims as they are received 23 from claimants or in groups or categories of claims; however, if the maximum 24 assessment, together with the other assets of the association in any account, 25 does not provide in any one year in any account an amount sufficient to make 26 all necessary payments from that account, the funds available shall be prorated, 27 and the unpaid portion shall be paid as soon thereafter as funds become 28 available; 29 (D) the association may defer, in whole or in part, an 30 assessment of any member insurer if the assessment would endanger the ability 31 of the member insurer to fulfill the insurer's contractual obligations or cause
01 the member insurer's financial statement to reflect amounts of capital or 02 surplus less than the minimum amounts required for a certificate of authority 03 by any jurisdiction in which the member insurer is authorized to transact 04 insurance; however, during the period of deferment, the member insurer may 05 not pay dividends to shareholders or policyholders; a deferred assessment may 06 only be paid when the payment does not reduce capital or surplus below 07 minimums required by law; a member insurer who pays a larger assessment as 08 a result of a deferment given to another member insurer shall receive a refund 09 when the deferment ends or, at the election of the member insurer, receive a 10 credit against future assessments; 11 (E) each member insurer may set off against an assessment 12 authorized payments made on covered claims and expenses incurred in the 13 payment of these claims by the member insurer if they are chargeable to the 14 account for which the assessment is made; 15 (4) shall investigate claims brought against the association, adjust, 16 compromise, settle, and pay covered claims to the extent of the association's 17 obligation, and deny all other claims, and may review settlements, releases, and 18 judgments to which the insolvent insurer or its insureds were parties to determine the 19 extent to which settlements, releases, and judgments may be properly contested; 20 (5) may, subject to AS 21.89.100, appoint, substitute, or direct legal 21 counsel retained under an insurance policy for the defense of a covered claim; 22 (6) shall handle claims through its employees or through one or more 23 insurers or other persons designated as servicing facilities; a servicing facility shall 24 operate and maintain its principal office in this state unless the use of a servicing 25 facility located outside of the state would result in operating cost savings of at least 10 26 percent and would not result in material delay in claim payments; designation of a 27 servicing facility is subject to the approval of the director, but designation may be 28 declined by a member insurer; 29 (7) shall reimburse each servicing facility for obligations of the 30 association paid by the facility and for expenses incurred by the facility while handling 31 claims on behalf of the association and shall pay the other expenses of the association
01 authorized by this chapter. 02 (b) The association may 03 (1) employ or retain those persons necessary to handle claims and 04 perform other duties of the association; 05 (2) borrow funds necessary to effect the purposes of this chapter in 06 accord with the plan of operation; 07 (3) sue or be sued; 08 (4) negotiate and become a party to those contracts that are necessary 09 to carry out the purposes of this chapter; 10 (5) perform all other acts necessary or proper to carry out the purposes 11 of this chapter; 12 (6) retain amounts excess of claims, expenses, credits, and other 13 liabilities in any account to be applied to reduce future assessments in that 14 account, except that, if, in any year, the association determines that significant 15 funds in excess of projected claims, expenses, credits, and other liabilities exist in 16 an account, the association shall return amounts to policyholders, through 17 procedures established by the association, whereby the association reimburses 18 member insurers for providing uniform credits against rates and premiums 19 charged for all policies applicable to the account issued during the next calendar 20 year [REFUND TO THE MEMBER INSURERS IN PROPORTION TO THE 21 CONTRIBUTION OF EACH MEMBER INSURER TO THAT ACCOUNT THAT 22 AMOUNT BY WHICH THE ASSETS OF THE ACCOUNT EXCEED THE 23 LIABILITIES IF, AT THE END OF ANY CALENDAR YEAR, THE BOARD OF 24 GOVERNORS FINDS THAT THE ASSETS OF THE ASSOCIATION IN ANY 25 ACCOUNT EXCEED THE LIABILITIES OF THAT ACCOUNT AS ESTIMATED 26 BY THE BOARD OF GOVERNORS FOR THE COMING YEAR]. 27 * Sec. 54. AS 21.80.070(c) is amended to read: 28 (c) The plan of operation must 29 (1) establish the procedures whereby all the powers and duties of the 30 association under AS 21.80.060 will be performed; 31 (2) establish procedures for handling assets of the association,
01 including procedures for handling assets received from the estate of an insolvent 02 insurer; 03 (3) establish the amount and method of reimbursing members of the 04 board of governors under AS 21.80.050; 05 (4) establish procedures by which claims may be filed with the 06 association and establish acceptable forms of proof of covered claims; notice of claims 07 to the receiver or liquidator of the insolvent insurer is considered notice to the 08 association or its agent, and a list of these claims shall be periodically submitted to the 09 association or similar organization in another state by the receiver or liquidator; 10 (5) establish regular places and times for meetings of the board of 11 governors; 12 (6) establish procedures for records to be kept of all financial 13 transactions of the association, its agents, and the board of governors; 14 (7) provide that any member insurer aggrieved by a final action or 15 decision of the association may appeal to the director within 30 days after the action or 16 decision; 17 (8) establish the procedures whereby selections of the board of 18 governors will be submitted to the director; 19 (9) provide for a member insurer serving on the board of governors to 20 appoint an individual to represent the member insurer on the board, including 21 appointment of an alternate or substitute representative for the appointed person; 22 (10) contain additional provisions necessary or proper for the 23 execution of the powers and duties of the association; 24 (11) establish procedures whereby the association shall, 25 concurrent with making any initial assessments for the following year under 26 AS 21.80.060(a)(3)(B), determine uniform surcharge percentages that may be 27 applied by member insurers to all policies related to an account; 28 (12) establish procedures whereby the association shall determine 29 surcharge percentages related to an account so that adjusted assessments match, 30 as closely as possible, the amounts that would be collected by member insurers, in 31 the aggregate, if the surcharge percentages were applied to all new and renewal
01 policies issued by member insurers during the applicable 12-month period; any 02 estimated or actual difference between the aggregate assessment and maximum 03 allowable surcharge amounts related to an account shall be taken into account by 04 the association in determining future surcharge percentages. 05 * Sec. 55. AS 21.80.140 is amended to read: 06 Sec. 21.80.140. Recognition of assessments in surcharge rates. The rates 07 and premiums charged for insurance policies to which this chapter applies may 08 include surcharge rates [AMOUNTS] sufficient to offset the adjusted assessments 09 [ASSESSMENT] made under this chapter and paid to the association by [THE] 10 member insurers [INSURER LESS AMOUNTS RETURNED TO THE MEMBER 11 INSURER BY THE ASSOCIATION], and these surcharge rates may not be 12 considered excessive because they contain an amount reasonably calculated to offset 13 the full amounted of adjusted assessments paid by [THE] member insurers. The 14 association shall notify the director of each surcharge percentage determined by 15 the association, and this surcharge percentage shall be the maximum surcharge 16 rate that may be applied by member insurers related to the assessment, except 17 that a member insurer may make application to the director to apply a higher 18 surcharge rate [INSURER]. The amount charged on a policy shall be shown 19 separate from the premium for coverage on the policy. [A RATING 20 ORGANIZATION MAY MAKE A PROVISION IN ITS RATE FILING TO 21 RECOVER AN ASSESSMENT UNDER THIS CHAPTER FOR THE 22 ORGANIZATION'S MEMBER AND SUBSCRIBER INSURERS.] The surcharge 23 rate [ASSESSMENT CHARGE] is not considered a premium and is not subject to the 24 premium tax imposed under AS 21.09.210. 25 * Sec. 56. AS 21 is amended by adding a new chapter to read: 26 Chapter 85. Regulation of Multiple Employer Welfare Arrangements. 27 Sec. 21.85.010. Certificate of authority required. (a) A person may not 28 establish or maintain a self-funded multiple employer welfare arrangement except as 29 authorized by a subsisting certificate of authority issued to the arrangement by the 30 director. 31 (b) A self-funded multiple employer welfare arrangement is established or
01 maintained in this state if 02 (1) one or more of the employer members participating in the 03 arrangement is domiciled or maintains its principal place of business in the state; or 04 (2) the multiple employer welfare arrangement solicits an employer 05 that is domiciled in this state or has its principal headquarters or principal 06 administrative offices in this state. 07 Sec 21.85.020. Name. A self-funded multiple employer welfare arrangement 08 may not use a name that includes the words "insurance," "casualty," "surety," "health 09 and accident," "mutual," or other terms descriptive of an insurer or insurance business. 10 A self-funded multiple employer welfare arrangement may not have or use a name that 11 is the same as or so similar to that of another self-funded multiple employer welfare 12 arrangement or insurer that the name is likely to mislead the public. 13 Sec. 21.85.030. Qualifications for a certificate of authority. (a) The 14 director may not issue a certificate of authority to a self-funded multiple employer 15 welfare arrangement unless the arrangement establishes to the satisfaction of the 16 director that 17 (1) employers participating in the arrangement are members of a bona 18 fide association or group of two or more businesses in the same or a closely related 19 trade, profession, or industry that provide support, services, or supplies primarily to 20 that trade, profession, or industry; 21 (2) employers or employees participating in the arrangement exercise 22 direct control over the arrangement; as described in this paragraph, 23 (A) subject to (B) of this paragraph, direct control exists if the 24 employers or employees participating in the arrangement have the right to elect 25 at least 75 percent of the individuals designated in the arrangement's 26 organizational documents as having control over the operations of the 27 arrangement and the individuals designated in the arrangement's organizational 28 documents in fact exercise control over the operation of the arrangement; 29 (B) use of a third-party administrator to process claims and to 30 assist in the administration of the arrangement is not evidence of the lack of 31 exercise of control over the operations of the arrangement;
01 (3) the arrangement is a nonprofit organization; 02 (4) the arrangement provides only allowable benefits, except the 03 arrangement may provide life insurance coverage to its participants if the life 04 insurance coverage is provided under contracts that comply with this title; 05 (5) the arrangement has adequate facilities and competent personnel, as 06 determined by the director, to service the health benefit plan or has contracted with a 07 third-party administrator licensed under AS 21.27 to service the health benefit plan; 08 (6) the arrangement provides allowable benefits to not less than two 09 employers and not less than 75 employees; 10 (7) the arrangement does not solicit participation in the arrangement 11 from the general public, except the arrangement may employ or independently 12 contract with a licensed insurance producer who may be paid a commission or other 13 remuneration to enroll employers in the arrangement; 14 (8) the arrangement is not organized or maintained solely as a conduit 15 for the collection of premiums and the forwarding of premiums to an insurance 16 company, except that the arrangement may act as a conduit for the collection and 17 forwarding of premiums for life insurance coverage under (4) of this subsection; 18 (9) the arrangement 19 (A) has deposited $200,000 with the director to be used for the 20 payment of claims in the event the arrangement becomes insolvent and has 21 submitted to the director a written plan of operation that, in the discretion of 22 the director, ensures the financial integrity of the arrangement; and 23 (B) is able to remain financially solvent; the director may 24 consider the following in determining the ability of the arrangement to remain 25 financially solvent: 26 (i) pro forma financial statements; 27 (ii) types and levels of stop-loss insurance coverage, 28 including attachment points of the coverage; 29 (iii) whether a deposit is required for each employee 30 covered under the arrangement equal to at least one month's cost of 31 providing benefits under the arrangement;
01 (iv) the experience of the individuals who will be 02 involved in the management of the arrangement, including employees, 03 independent contractors, and consultants; and 04 (v) other factors the director considers relevant to 05 determining the ability of the arrangement to remain financially 06 solvent. 07 (b) The director may require that the articles, bylaws, agreements, trusts, or 08 other documents or instruments describing the rights and obligations of the employers, 09 employees, and beneficiaries of the arrangement require that employers participating 10 in the arrangement are liable for a pro rata share of all liabilities of the arrangement 11 that are unpaid. 12 (c) The arrangement shall maintain stop-loss insurance coverage covering 100 13 percent of claims in excess of the attachment point recommended by a qualified 14 actuary. 15 Sec. 21.85.040. Application for a certificate of authority. To apply for an 16 original certificate of authority, a self-funded multiple employer welfare arrangement 17 shall file with the director its application, accompanied by the applicable fees set 18 under AS 21.06.250, showing its name, the location of its home office, its date of 19 organization, its state of domicile, and additional information that the director may 20 reasonably require. The application shall be submitted together with 21 (1) a copy of all articles, bylaws, agreements, trusts, or other 22 documents or instruments describing the rights and obligations of the employers, 23 employees, and beneficiaries of the arrangement; 24 (2) a copy of each summary plan description of the arrangement filed 25 or required to be filed with the United States Department of Labor, including any 26 amendments to each description; 27 (3) evidence of coverage of or letter of intent to participate executed by 28 at least two employers providing allowable benefits to at least 75 employees; 29 (4) a copy of the arrangement's most recent financial statement in 30 compliance with AS 21.85.080 or, if the arrangement has been in existence for less 31 than one year, pro forma financial statements, including a balance sheet, an income
01 statement, a statement of changes in financial condition, and an actuarial opinion that 02 the unpaid claim liability of the arrangement satisfies the standards in AS 21.18.080 - 03 21.18.086; 04 (5) proof that the arrangement maintains and will continue to maintain 05 fidelity bonds required by the United States Department of Labor under 29 U.S.C. 06 1001 - 1461 (Employee Retirement Income Security Act of 1974); 07 (6) a copy of any stop-loss insurance policies maintained or proposed 08 to be maintained by the arrangement; 09 (7) biographical reports, on forms prescribed by the National 10 Association of Insurance Commissioners, evidencing the general trustworthiness and 11 competence of each individual who is serving or who will serve as a managing 12 employee or fiduciary of the arrangement; 13 (8) a notarized statement executed by an officer of the arrangement 14 certifying, to the best knowledge and belief of the officer, that the information 15 provided in the application is true and correct and that the arrangement is in 16 compliance with the requirements in 17 (A) AS 21.85.020; 18 (B) 29 U.S.C. 1001 - 1461 (Employee Retirement Income 19 Security Act of 1974) or a statement of any requirements with which the 20 arrangement is not in compliance and a statement of proposed corrective 21 action; and 22 (C) AS 21.85.050; 23 (9) base contribution rates for participation under the arrangement for 24 its initial year of operations. 25 Sec. 21.85.050. Minimum reserves. A self-funded multiple employer 26 welfare arrangement shall establish and maintain reserves equal to the greater of 27 (1) 30 percent of the unpaid claim liability of the arrangement; or 28 (2) the amount recommended and certified by a qualified actuary. 29 Sec. 21.85.060. Investments. A multiple employer welfare arrangement shall 30 maintain an amount at least equal to 85 percent of net unpaid claim liability in 31 (1) cash and cash equivalents;
01 (2) the fully insured portion of a bank deposit when the insurance is 02 provided by a solvent agency of the United States government or by collateral; 03 (3) a bank certificate of deposit, subject to review by the director; if the 04 director determines that the amount of the certificate of deposit purchased by an 05 insurer in any one bank is not a sound investment, the director may require the insurer 06 to liquidate that portion found to be an unsound investment; 07 (4) a share or savings account of a savings and loan or building and 08 loan association, to the extent that an account is insured by the Federal Deposit 09 Insurance Corporation; or 10 (5) a rated credit instrument that is issued, assumed, guaranteed, or 11 insured by the United States or Canada or by a government-sponsored enterprise of the 12 United States or Canada if the instrument is assumed, guaranteed, or insured by the 13 United States or Canada or is otherwise backed or supported by the full faith and 14 credit of the United States or Canada. 15 Sec. 21.85.070. Contribution rates. (a) A self-funded multiple employer 16 welfare arrangement shall establish and maintain contribution rates that 17 (1) fund the greater of 18 (A) the amount recommended and certified by a qualified 19 actuary in order for the self-funded multiple employer welfare arrangement to 20 remain financially solvent; or 21 (B) the sum of projected claims liability for the year, plus all 22 projected costs of operation of the arrangement for the year, plus an amount 23 equal to any deficiency in the reserves of the arrangement for the prior year, 24 minus an amount equal to the reserves of the arrangement in excess of the 25 minimum required level of reserves; and 26 (2) are not excessive, inadequate, or unfairly discriminatory. 27 (b) A self-funded multiple employer welfare arrangement shall, before use, 28 file with the director 29 (1) a rate or fee of any kind to be charged a participating employer or 30 employee; 31 (2) every rating manual, schedule, plan, rule, or formula; and
01 (3) any modification to the rating manual, schedule, plan, rule or 02 formula. 03 (c) The director shall disapprove by order a contribution rate or fee submitted 04 under (b) of this section that does not meet the requirements of (a) of this section or is 05 in any respect not in compliance with or in violation of law. 06 (d) A filing under (b) of this section must state the effective date and must 07 provide a comprehensive description of the coverage. The director may withhold the 08 information provided under (b)(2) and (3) of this section from public inspection for as 09 long as the director determines that withholding the information is necessary to protect 10 the arrangement against unwarranted injury or is in the public interest. 11 Sec. 21.85.080. Reporting requirements. (a) A self-funded multiple 12 employer welfare arrangement shall annually, before March 2, file with the director on 13 forms prescribed by the director, a full and true statement of its financial condition, 14 transactions, and affairs as of the preceding December 31, including 15 (1) a statement of financial condition; 16 (2) a statement of change in financial condition for the year 17 accompanied by an actuarial opinion by a qualified actuary that includes 18 (A) a certification that the unpaid claim liability of the 19 arrangement meets the requirements of AS 21.18.080 - 21.18.086; 20 (B) the recommended level of specific and aggregate stop-loss 21 insurance the arrangement should maintain; 22 (C) a description of the actuarial soundness of the arrangement, 23 including any recommended actions the arrangement should take to improve 24 its actuarial soundness; 25 (3) a statement of the arrangement's contribution rates for the next 26 year; 27 (4) if the total payments to the arrangement for participation during the 28 prior year of operations exceeded the sum of $2,000,000, certified financial statements 29 for the prior two years, or for each year and partial year that the self-funded multiple 30 employer welfare arrangement has been in business if less than two years; 31 (5) a report showing the number of participating employers and
01 number of covered lives at the end of the year and contributions received during the 02 year in the state; 03 (6) additional information the director determines is necessary in order 04 to determine the financial integrity of the arrangement. 05 (b) A self-funded multiple employer welfare arrangement shall, within 60 06 days after the end of each quarter, file with the director, on forms prescribed by the 07 director, a full and true statement of its financial condition, transactions, and affairs as 08 of the preceding quarter, including 09 (1) a statement of financial condition; 10 (2) a statement of change in financial condition for the period since the 11 end of the prior year; 12 (3) a report showing the number of participating employers and 13 number of covered lives at the end of the quarter and contributions received during the 14 quarter in the state; 15 (4) additional information the director determines is necessary in order 16 to determine the financial integrity of the arrangement. 17 (c) A self-funded multiple employer welfare arrangement shall file with the 18 director a copy of the arrangement's Internal Revenue Service form 5500, including all 19 attachments to the form. 20 Sec. 21.85.090. Consumer information notice. A self-funded multiple 21 employer welfare arrangement must provide a written notice to each participating 22 employee at the time that coverage becomes effective. The notice must 23 (1) be clear and conspicuous; 24 (2) be in at least 10-point type; 25 (3) state that 26 (A) the coverage is issued by a self-funded multiple employer 27 welfare arrangement; 28 (B) coverage and benefits provided under a self-funded 29 multiple employer welfare arrangement are not protected by the Alaska Life 30 and Health Insurance Guaranty Association; and 31 (C) if the self-funded multiple employer welfare arrangement
01 does not pay expenses that are eligible for payment under the plan for any 02 reason, the employer or employee covered by the plan may be responsible for 03 the payment of those expenses. 04 Sec. 21.85.100. Applicability of other provisions. In addition to the 05 provisions contained or referred to in this chapter, the following chapters and 06 provisions of this title also apply with respect to self-funded multiple employer 07 welfare arrangements to the extent applicable and not in conflict with the express 08 provisions of this chapter and the reasonable implications of the express provisions, 09 and, for the purposes of the application, the arrangements shall be considered to be a 10 mutual insurer: 11 (1) AS 21.03; 12 (2) AS 21.06; 13 (3) AS 21.07; 14 (4) AS 21.09.100, 21.09.120, 21.09.130, 21.09.140 - 21.09.200, 15 21.09.210, 21.09.245 - 21.09.270, 21.09.300, and 21.09.320; 16 (5) AS 21.18.010 - 21.18.050, 21.18.080 - 21.18.086, and 21.18.100; 17 (6) AS 21.33; 18 (7) AS 21.36; 19 (8) AS 21.42.120, 21.42.130, 21.42.345 - 21.42.365, and 21.42.375 - 20 21.42.500; 21 (9) AS 21.48; 22 (10) AS 21.54; 23 (11) AS 21.55; 24 (12) AS 21.56; 25 (13) AS 21.78; 26 (14) AS 21.89.060; 27 (15) AS 21.90. 28 Sec. 21.85.500. Definitions. In this chapter, 29 (1) "allowable benefit" means a benefit for medical care; 30 (2) "bona fide association" has the meaning given in AS 21.54.500; 31 (3) "claims liability" means the total of all incurred and unpaid claims
01 for allowable benefits under a self-funded multiple employer welfare arrangement that 02 are not reimbursed or reimbursable by stop-loss insurance, subrogation, or other 03 sources; 04 (4) "health benefit plan" has the meaning given in AS 21.54.500; 05 (5) "multiple employer welfare arrangement" has the meaning given in 06 29 U.S.C. 1002; "multiple employer welfare arrangement" does not include a group 07 that the director designates under AS 21.54.060(5) as subject to issuance of a group 08 health insurance policy; 09 (6) "qualified actuary" means an individual who 10 (A) is a member in good standing of the American Academy of 11 Actuaries; 12 (B) meets the qualification standards of the American Academy 13 of Actuaries to sign statements of actuarial opinion; 14 (C) is familiar with the valuation requirements under AS 21.18; 15 and 16 (D) has not been disqualified by the director, after notice and 17 hearing under AS 21.06.180, for 18 (i) a violation of this title or other law pertinent to the 19 duties or responsibilities of a qualified actuary; 20 (ii) conviction of a fraudulent act; 21 (iii) conduct considered by the director to reflect 22 incompetence or untrustworthiness; 23 (iv) resignation or removal as an actuary with a 24 company or a consulting firm within the past five years due to acts or 25 omissions indicated in a report of examination or due to failure to 26 adhere to generally accepted actuarial standards; or 27 (v) failure to notify the director of an action taken 28 against the actuary by an insurance regulator of another state for 29 grounds that are substantially the same as a provision under this 30 paragraph; 31 (7) "reserves" means the excess of assets of a self-funded multiple
01 employer welfare arrangement minus the liabilities of the arrangement; 02 (8) "self-funded multiple employer welfare arrangement" or 03 "arrangement" means a multiple employer welfare arrangement that does not provide 04 for payment of benefits under the arrangement solely through a policy of insurance 05 issued by one or more authorized insurance companies. 06 * Sec. 57. AS 21.87.190(b) is amended to read: 07 (b) The service corporation shall, before use, file with the director (1) a 08 schedule of subscription rates, fees, or payments of any kind to be charged 09 subscribers; (2) every rating manual, schedule, plan, rule, or formula; and (3) 10 [BEFORE USE,] any modification to the rating manual, schedule, plan, rule, or 11 formula. Each filing must state the effective date and must provide a comprehensive 12 description of the coverage. A detailed rate justification, including a rate formula, 13 is confidential [THE DIRECTOR MAY WITHHOLD THE RATING FORMULA 14 FROM PUBLIC INSPECTION FOR AS LONG AS THE DIRECTOR 15 DETERMINES THAT WITHHOLDING THE RATING FORMULA IS 16 NECESSARY TO PROTECT THE SERVICE CORPORATION AGAINST 17 UNWARRANTED INJURY OR IS IN THE PUBLIC INTEREST]. 18 * Sec. 58. AS 21.87.340 is amended by adding new paragraphs to read: 19 (22) AS 21.07; 20 (23) AS 21.18.080 - 21.18.086. 21 * Sec. 59. AS 21.33.045(d); AS 21.87.340(17); and AS 21.89.040 are repealed. 22 * Sec. 60. The uncodified law of the State of Alaska is amended by adding a new section to 23 read: 24 REVISOR'S INSTRUCTION. The revisor of statutes is instructed to change the 25 catchline of AS 21.42.020 from "Insurable interest: personal insurance" to "Insurable interest: 26 life, annuity, or health." 27 * Sec. 61. This Act takes effect July 1, 2002.