SB 276: "An Act relating to the Alaska Insurance Guaranty Association; relating to joint insurance arrangements and assessments to the association; relating to the powers of the Alaska Industrial Development and Export Authority concerning the association; and providing for an effective date."
00 SENATE BILL NO. 276 01 "An Act relating to the Alaska Insurance Guaranty Association; relating to joint 02 insurance arrangements and assessments to the association; relating to the powers of the 03 Alaska Industrial Development and Export Authority concerning the association; and 04 providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 21.76.020(a) is amended to read: 07 (a) A joint insurance arrangement may not be considered insurance for the 08 purpose of any other law of the state and is not subject to regulations adopted by the 09 director, except that a joint insurance arrangement may be subject to assessment 10 under AS 21.80 as provided in AS 21.80. 11 * Sec. 2. AS 21.80.060(a)(3) is amended to read: 12 (3) shall allocate claims paid and expenses incurred among the three 13 accounts separately, and assess member insurers separately for each account amounts 14 necessary to pay the obligation of the association under (1) of this subsection
01 subsequent to an insolvency, the expenses of handling covered claims subsequent to 02 an insolvency, and other expenses authorized by this chapter; under this paragraph, 03 (A) the assessments of each member insurer must initially be 04 based on a uniform percentage, as determined by the association, of the net 05 direct written premiums of each member insurer for the last year for which 06 annual statements have been filed on the kinds of insurance in the account; this 07 initial assessment shall be adjusted by applying the same uniform percentage 08 as initially used to each member insurer's net direct written premiums for the 09 calendar year following the year in which the initial assessment was issued; 10 any difference between the initial assessment amount and the adjusted 11 assessment amount allocated to a member insurer shall be levied against or 12 credited back to the member insurer, as appropriate, by the association; the 13 association shall calculate and issue all appropriate levies and credits as soon 14 as practical after all member insurers have filed their annual statements for the 15 calendar year following the year in which the initial assessment was issued; 16 (B) on an annual basis, the association shall determine if 17 funding is required for any of the three accounts; based on this determination, 18 the association shall, during November of each year, issue initial assessments 19 as may be necessary to cover the projected reasonable costs of claims and 20 expenses to administer the association for the following year; under this 21 paragraph, 22 (i) the association shall use the services of an 23 independent actuary to assist the association to evaluate and make the 24 projection; 25 (ii) an initial assessment may be made at any other time 26 if the association determines funding is necessary, except that a 27 member insurer may not be assessed initial assessments on any account 28 in an amount greater than four [TWO] percent of the member insurer's 29 net direct written premiums for the applicable calendar year; and 30 (iii) if an account has insufficient funds to pay 31 covered claims under this section, the association shall assess each
01 member insurer subject to assessment in the other two accounts an 02 additional amount not to exceed two percent of the member 03 insurer's net direct written premiums for the applicable calendar 04 year; 05 (C) the association may pay claims in any order that it 06 determines reasonable, including the payment of claims as they are received 07 from claimants or in groups or categories of claims; however, if the maximum 08 of all assessments made under this section [ASSESSMENT], together with 09 the other assets of the association in any account, does not provide in any one 10 year in any account an amount sufficient to make all necessary payments from 11 that account, the funds available shall be prorated, and the unpaid portion shall 12 be paid as soon thereafter as funds become available; 13 (D) the association may defer, in whole or in part, an 14 assessment of any member insurer if the assessment would endanger the ability 15 of the member insurer to fulfill the insurer's contractual obligations or cause 16 the member insurer's financial statement to reflect amounts of capital or 17 surplus less than the minimum amounts required for a certificate of authority 18 by any jurisdiction in which the member insurer is authorized to transact 19 insurance; however, during the period of deferment, the member insurer may 20 not pay dividends to shareholders or policyholders; a deferred assessment may 21 only be paid when the payment does not reduce capital or surplus below 22 minimums required by law; a member insurer who pays a larger assessment as 23 a result of a deferment given to another member insurer shall receive a refund 24 when the deferment ends or, at the election of the member insurer, receive a 25 credit against future assessments; 26 (E) each member insurer may set off against an assessment 27 authorized payments made on covered claims and expenses incurred in the 28 payment of these claims by the member insurer if they are chargeable to the 29 account for which the assessment is made; 30 * Sec. 3. AS 21.80.060(a) is amended by adding a new paragraph to read: 31 (8) shall assess an employer who is a self-insurer and assess a joint
01 insurance arrangement that insures an employer's workers' compensation liability 02 amounts necessary to pay workers' compensation claims under this section when the 03 maximum assessments for member insurers are not sufficient in any one year to cover 04 workers' compensation claims payments under this section; under this paragraph, 05 (A) the assessment on an employer or a joint insurance 06 arrangement may not exceed two percent of all payments reported to the 07 Alaska Workers' Compensation Board under AS 23.30.155(m) or (n), except 08 second injury fund payments; 09 (B) the association may defer, in whole or in part, an 10 assessment under this paragraph if an employer or a joint insurance 11 arrangement demonstrates to the association's satisfaction that the assessment 12 would endanger the ability of the employer or joint insurance arrangement to 13 fulfill contractual obligations or fulfill obligations under AS 23.30; the period 14 of deferment must last for as long as the circumstances that gave rise to the 15 deferment still exist. 16 * Sec. 4. AS 21.80.060(b) is amended to read: 17 (b) The association may 18 (1) employ or retain those persons necessary to handle claims and 19 perform other duties of the association; 20 (2) borrow funds necessary to effect the purposes of this chapter in 21 accord with the plan of operation and secure guarantees from the Alaska Industrial 22 Development and Export Authority for association loans that are necessary to 23 make the association financially able to meet cash flow needs; 24 (3) sue or be sued; 25 (4) negotiate and become a party to those contracts that are necessary 26 to carry out the purposes of this chapter; 27 (5) perform all other acts necessary or proper to carry out the purposes 28 of this chapter; 29 (6) retain amounts excess of claims, expenses, credits, and other 30 liabilities in any account to be applied to reduce future assessments in that account, 31 except that, if, in any year, the association determines that significant funds in excess
01 of projected claims, expenses, credits, and other liabilities exist in an account, the 02 association shall return amounts to policyholders, through procedures established by 03 the association, whereby the association reimburses member insurers for providing 04 uniform credits against rates and premiums charged for all policies applicable to the 05 account issued during the next calendar year. 06 * Sec. 5. AS 21.80.060 is amended by adding a new subsection to read: 07 (c) In this section, 08 (1) "joint insurance arrangement" has the meaning given in 09 AS 21.76.900; 10 (2) "self-insurer" has the meaning given in AS 23.30.395. 11 * Sec. 6. AS 23.30.075 is amended by adding new subsections to read: 12 (c) An employer who is a self-insurer and a joint insurance arrangement that 13 insures an employer's liability under this chapter are subject to an assessment by the 14 Alaska Insurance Guaranty Association under AS 21.80 when the maximum 15 assessment on the association's member insurers is not sufficient in any one year to 16 cover workers' compensation claims to be paid under AS 21.80.060. 17 (d) For purposes of this section, a joint insurance arrangement is considered to 18 be an association duly authorized to transact the business of workers' compensation 19 insurance in this state. 20 (e) In this section, "joint insurance arrangement" has the meaning given in 21 AS 21.76.900. 22 * Sec. 7. AS 44.88.080 is amended by adding a new paragraph to read: 23 (27) to guarantee loans made to the Alaska Insurance Guaranty 24 Association (AS 21.80.040), with these guarantees limited to loans necessary to make 25 the association financially able to meet cash flow needs up to a maximum outstanding 26 principal balance at any time of $30,000,000. 27 * Sec. 8. AS 21.76.010(d) is repealed. 28 * Sec. 9. This Act takes effect immediately under AS.01.10.010(c).