CSHB 403(L&C): "An Act relating to the Alaska Life and Health Insurance Guaranty Association; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 403(L&C) 01 "An Act relating to the Alaska Life and Health Insurance Guaranty Association; and 02 providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 21.79.010 is amended to read: 05 Sec. 21.79.010. Purpose. The purpose of this chapter is to protect, subject to 06 certain limitations, the persons specified in AS 21.79.020(a) against failure in the 07 performance of contractual obligations under life, [INSURANCE AND] health, 08 [INSURANCE POLICIES] and annuity policies, plans, or contracts specified in 09 AS 21.79.020(b) because of the impairment or insolvency of the member insurer that 10 issued the policies, plans, or contracts. To provide this protection, an association of 11 member insurers is created under AS 21.79.040 to pay benefits and continue 12 coverages as limited by this chapter, and members of the association are subject to 13 assessment to provide funds to carry out the purpose of this chapter. 14 * Sec. 2. AS 21.79.020(a) is amended to read:
01 (a) This chapter applies to a policy and contract specified in (b) of this section 02 and to a person who 03 (1) except for a nonresident certificate holder under a group policy or 04 contract, is the beneficiary, assignee, or payee, including health care providers 05 rendering services covered under health insurance policies or certificates, of a 06 person described in (2) of this subsection; and 07 (2) except in the case of an unallocated annuity contract or a structured 08 settlement annuity, is the owner of, or a certificate holder or enrollee under, the policy 09 or contract, and who 10 (A) is a resident; or 11 (B) is not a resident, if the following conditions are satisfied: 12 (i) the member insurer that issued the policy or contract 13 is domiciled in this state; 14 (ii) the state in which the person resides has an 15 association similar to the association created by this chapter; and 16 (iii) the person is not eligible for coverage by an 17 association in any other state due to the fact that the insurer, hospital 18 or medical service corporation, or health maintenance organization 19 was not licensed at the time specified in the guaranty association 20 [AS REQUIRED BY] law of [IN] that state. 21 * Sec. 3. AS 21.79.020(b) is amended to read: 22 (b) This chapter applies to a person specified in (a) of this section for a policy 23 or contract of [AND TO A] direct, nongroup life insurance, health insurance, 24 annuity, and supplemental policy or contract, to a certificate under a direct group life, 25 health, annuity, or supplemental policy or contract, to a subscriber's contract issued 26 by a hospital or medical service corporation under AS 21.87, to a subscriber's 27 contract issued by a health maintenance organization under AS 21.86, and to an 28 unallocated annuity contract issued by a member insurer, except as otherwise limited 29 by this chapter. In this subsection, "annuity policy or contract" or "certificate 30 under a direct group life, health, annuity, or supplemental policy or contract" 31 includes a guaranteed investment contract, a deposit administration contract, an
01 unallocated funding agreement, an allocated funding agreement, a structured 02 settlement annuity, an annuity issued to or in connection with a government 03 lottery, and an immediate or deferred annuity contract. 04 * Sec. 4. AS 21.79.020(c) is amended to read: 05 (c) This chapter does not apply to 06 (1) that part of a policy or contract that is not guaranteed by the 07 member insurer; 08 (2) that part of the risk borne by the policy or contract owner 09 [HOLDER]; 10 (3) a policy or contract of reinsurance, unless an assumption certificate 11 has been issued; 12 (4) that part of a policy or contract, except for part of a policy or 13 contract, including a rider, that provides long-term care or other health 14 insurance benefits, to the extent that the rate of interest on which it is based, or the 15 interest rate, crediting rate, or similar factor determined by use of an index or other 16 external reference stated in the policy or contract employed in calculating returns or 17 changes in value, 18 (A) averaged over the period of four years before the date on 19 which the member insurer becomes an impaired or insolvent insurer under this 20 chapter, whichever occurs first, exceeds the rate of interest determined by 21 subtracting two percentage points from the published monthly average for that 22 same four-year period or for a lesser period if the policy or contract was issued 23 less than four years before the member insurer becomes an impaired or 24 insolvent insurer under this chapter, whichever occurs first; and 25 (B) on and after the date on which the member insurer becomes 26 an impaired or insolvent insurer under this chapter, whichever occurs first, 27 exceeds the rate of interest determined by subtracting three percentage points 28 from the most recent published monthly average; 29 (5) a portion of a policy or contract issued to a plan or program of 30 an employer, association, or similar entity to provide life, health, or an annuity benefit 31 to an employee, [OR] member, or other person, to the extent that the plan or program
01 is self-funded or uninsured, including a benefit payable by the employer, association, 02 or similar entity under 03 (A) a multiple employer welfare arrangement as defined in 29 04 U.S.C. 1002 (Employee Retirement Income Security Act of 1974); 05 (B) a minimum premium group insurance plan; 06 (C) a stop-loss group insurance plan; or 07 (D) an administrative services only contract; 08 (6) that part of a policy or contract that provides a dividend or 09 experience rating credit or voting rights, or provides that a fee or allowance be paid to 10 a person, including the policy or contract owner [HOLDER], in connection with the 11 service to or administration of the policy or contract; 12 (7) a policy or contract issued in this state by a member insurer at a 13 time when it was not licensed or did not have a certificate of authority to issue the 14 policy or contract in this state; 15 (8) a person who is a payee or beneficiary of a contract owner 16 [HOLDER] who is a resident of this state if the payee or beneficiary is provided 17 coverage by the association of another state; 18 (9) a person covered under (d) [(e)] of this section if any coverage is 19 provided by the association of another state to that person; 20 (10) an unallocated annuity contract issued to or in connection with a 21 benefit plan protected under the United States Pension Benefit Guaranty Corporation, 22 regardless of whether the United States Pension Benefit Guaranty Corporation has 23 become liable to make any payments with respect to the benefit plan; 24 (11) that part of an unallocated annuity contract that is not issued to or 25 in connection with a specific employee, union, or association of natural persons 26 benefit plan or a government lottery; 27 (12) that part of a policy or contract to the extent that assessments 28 required by AS 21.79.070 with respect to the policy or contract are preempted by law; 29 (13) an obligation that does not arise under the express written terms of 30 the policy or contract issued by the member insurer to the enrollee, certificate 31 holder, contract owner, or policy owner, including, without limitation,
01 (A) a claim based on marketing materials; 02 (B) a claim based on a side letter or other document that was 03 issued by the member insurer without meeting applicable policy or contract 04 form filing or approval requirements; 05 (C) a misrepresentation of or regarding policy or contract 06 benefits; 07 (D) an extra contractual claim; or 08 (E) a claim for penalties or consequential or incidental 09 damages; 10 (14) a contractual agreement that establishes the member insurer's 11 obligations to provide a book value accounting guaranty for defined contribution 12 benefit plan participants by reference to a portfolio of assets that is owned by the 13 benefit plan or its trustee, which, in each case, is not an affiliate of the member 14 insurer; [OR] 15 (15) that part of a policy or contract to the extent the part of the policy 16 or contract provides for interest or other changes in value to be determined by the use 17 of an index or other external reference stated in the policy or contract, but that have 18 not been credited to the policy or contract, or as to which the policy or contract 19 owner's rights are subject to forfeiture, as of the date the member insurer becomes an 20 impaired or insolvent insurer under this chapter, whichever is earlier; if a policy's or 21 contract's interest or changes in value are credited less frequently than annually, then, 22 for purposes of determining the values that have been credited and are not subject to 23 forfeiture under this paragraph, the interest or change in value determined by using the 24 procedures defined in the policy or contract shall be credited as if the contractual date 25 of crediting interest or changing values was the date of impairment or insolvency, 26 whichever is earlier, and will not be subject to forfeiture; 27 (16) a policy or contract providing a hospital, medical, 28 prescription drug, or other health care benefit in accordance with 42 U.S.C. 29 1395w-21 - 1395w-154 or federal regulations adopted under those sections; 30 (17) a person who acquires rights to receive payments through a 31 structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A),
01 regardless of whether the transaction occurred before, on, or after 26 U.S.C. 02 5891(c)(3)(A) became effective; or 03 (18) structured settlement annuity benefits to which a payee or 04 beneficiary has transferred the payee's or beneficiary's rights in a structured 05 settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless 06 of whether the transaction occurred before, on, or after 26 U.S.C. 5891(c)(3)(A) 07 became effective. 08 * Sec. 5. AS 21.79.020(d) is amended to read: 09 (d) This chapter, except for (a) of this section, applies to an unallocated 10 annuity contract [SPECIFIED UNDER (b) OF THIS SECTION,] and shall provide 11 coverage to a person who is the owner of 12 (1) the unallocated annuity contract if the contract is issued to or in 13 connection with a specific benefit plan whose plan sponsor has its principal place of 14 business in this state; and 15 (2) an unallocated annuity contract issued to or in connection with a 16 government lottery if the owner is a resident. 17 * Sec. 6. AS 21.79.020(e) is amended to read: 18 (e) This chapter, except for (a) of this section, applies to a structured 19 settlement annuity [SPECIFIED UNDER (b) OF THIS SECTION,] and shall provide 20 coverage to a person who is a payee under a structured settlement annuity, or the 21 beneficiary of a payee if the payee is deceased, if the payee is 22 (1) a resident, regardless of where the contract owner resides; or 23 (2) not a resident, but only if both of the following conditions exist 24 [EXISTS]: 25 (A) the contract owner of the structured settlement annuity is 26 (i) a resident; or 27 (ii) not a resident, but the insurer that issued the 28 structured settlement annuity is domiciled in this state, and the state in 29 which the contract owner resides has an association similar to the 30 association created by this chapter; and 31 (B) the payee, or the payee's beneficiary, and the contract
01 owner are not eligible for coverage by the association of the state in which the 02 payee or contract owner resides. 03 * Sec. 7. AS 21.79.025(a) is amended to read: 04 (a) The benefits for which the association may become liable may not exceed 05 the lesser of 06 (1) the contractual obligations for which the member insurer is liable 07 or would have been liable if it were not an impaired or insolvent insurer; 08 (2) with respect to any one life, regardless of the number of policies or 09 contracts, 10 (A) $300,000 in life insurance death benefits, but not more than 11 $100,000 in net cash surrender and net cash withdrawal values for life 12 insurance; 13 (B) for [IN] health insurance benefits, 14 (i) $100,000 for coverage not defined as disability 15 income insurance, health benefit plans, or long-term care insurance, 16 [OR BASIC HOSPITAL, MEDICAL, AND SURGICAL 17 INSURANCE OR MAJOR MEDICAL INSURANCE,] including any 18 net cash surrender and net cash withdrawal values; 19 (ii) $300,000 for disability income insurance as defined 20 in AS 21.12.052 and $300,000 for long-term care insurance as defined 21 in AS 21.53.200; 22 (iii) $500,000 for health benefit plans [BASIC 23 HOSPITAL, MEDICAL, AND SURGICAL INSURANCE OR 24 MAJOR MEDICAL INSURANCE]; 25 (C) $250,000 in the present value of annuity benefits, including 26 net cash surrender and net cash withdrawal values; 27 (3) with respect to either [ANY] one contract owner provided 28 coverage under AS 21.79.020(d)(2) [HOLDER] or one plan sponsor whose plan 29 owns directly or in trust one or more unallocated annuity contracts not included in (4) 30 of this subsection, $5,000,000 in unallocated annuity contract benefits, irrespective of 31 the number of contracts held by that contract owner [HOLDER] or plan sponsor
01 except that, in the case of one or more unallocated annuity contracts that are covered 02 under this chapter and that are owned by a trust or other entity for the benefit of two or 03 more plan sponsors, coverage shall be provided by the association if the largest 04 interest in the trust or entity owning the contract is held by a plan sponsor whose 05 principal place of business is in this state; however, the association is not liable to 06 cover more than $5,000,000 in benefits, regardless of the number of policies and 07 contracts held by the owner [WITH RESPECT TO AN UNALLOCATED 08 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 the 12 individual if the individual is deceased, in the aggregate, $250,000 [$100,000] in 13 present-value annuity benefits, including net cash surrender and net cash withdrawal 14 values; or 15 (5) with respect to each payee of a structured settlement annuity, or 16 beneficiary of the payee if the payee is deceased, $250,000 [$100,000] in present- 17 value annuity benefits in the aggregate, including net cash surrender and net cash 18 withdrawal values, if any. 19 * Sec. 8. AS 21.79.025(c) is amended to read: 20 (c) In providing coverage required under AS 21.79.060, the association may 21 not be required to guarantee, assume, reissue, reinsure, or perform, or cause to be 22 guaranteed, assumed, reissued, reinsured, or performed, the contractual obligations of 23 an insolvent or impaired insurer under a covered policy or contract when the 24 obligations do not materially affect the economic values or economic benefits of the 25 covered policy or contract. 26 * Sec. 9. AS 21.79.025(d) is amended to read: 27 (d) The association may not be required to cover more than 28 (1) an aggregate of $300,000 in benefits with respect to any one life 29 under (a)(2), (4), and (5) of this section, except that, with respect to benefits for health 30 benefit plans [BASIC HOSPITAL, MEDICAL, AND SURGICAL INSURANCE OR 31 MAJOR MEDICAL INSURANCE] under (a)(2)(B) of this section, the aggregate
01 liability of the association may not exceed $500,000 for any one individual; or 02 (2) $5,000,000 in benefits with respect to one owner of [OR] multiple 03 nongroup policies of life insurance, whether the policy or contract owner is an 04 individual, firm, corporation, or other person, and whether the persons insured are 05 officers, managers, employees, or other persons, regardless of the number of policies 06 and contracts held by the owner. 07 * Sec. 10. AS 21.79.025 is amended by adding a new subsection to read: 08 (e) For purposes of this chapter, benefits provided by a long-term care rider to 09 a life insurance policy or annuity contract will be considered the same type of benefits 10 as the base life insurance policy or annuity contract to which the rider relates. 11 * Sec. 11. AS 21.79.040(a) is amended to read: 12 (a) There is established as a nonprofit legal entity the Alaska Life and Health 13 Insurance Guaranty Association. Each member insurer shall be a member of the 14 association as a condition of the insurer's authority to transact insurance, a hospital or 15 medical service corporation business, or a health maintenance organization 16 business in this state. The association shall perform its functions under a plan of 17 operation established and approved under AS 21.79.080 and shall exercise its powers 18 through the Board of Governors established under AS 21.79.050. For purposes of 19 administration and assessment, the association shall maintain the following accounts: 20 (1) the health [INSURANCE] account; and 21 (2) the life insurance and annuity account, including the following 22 subaccounts: 23 (A) life insurance account; 24 (B) annuity account that must include annuity contracts owned 25 by a governmental retirement benefit plan, or its trustee, qualified under 26 26 U.S.C. 401, 26 U.S.C. 403(b), or 26 U.S.C. 457 (Internal Revenue Code), but 27 that otherwise excludes unallocated annuities; and 28 (C) unallocated annuity account that must exclude contracts 29 owned by a governmental retirement benefit plan, or its trustee, qualified under 30 26 U.S.C. 401, 26 U.S.C. 403(b), or 26 U.S.C. 457 (Internal Revenue Code). 31 * Sec. 12. AS 21.79.050(a) is amended to read:
01 (a) The Board of Governors of the association consists of not less than seven 02 [FIVE] nor more than 11 [NINE] representatives of member insurers. The director 03 may appoint two individuals as members of the board to represent the public. Terms of 04 office for board members shall be established in the plan of operation submitted under 05 AS 21.79.080. Member insurers shall select the insurer board members, subject to the 06 approval of the director. A vacancy in a board membership held by an insurer member 07 shall be filled for the unexpired term by a majority vote of the remaining board 08 members, subject to the approval of the director. A vacancy in a board membership 09 held by a representative of the public shall be filled by the director. A board member 10 who represents the public may not be an officer, director, or employee of an insurer, 11 hospital or medical service corporation, or a health maintenance organization 12 and may not be engaged in the business of insurance. 13 * Sec. 13. AS 21.79.060(a) is amended to read: 14 (a) If a member insurer becomes impaired, the association may, with the 15 approval of the director and subject to any conditions imposed by the association that 16 do not impair the contractual obligations of the impaired insurer, 17 (1) guarantee, assume, reissue, reinsure, or provide for the guarantee, 18 assumption, reissuance, or reinsurance of the policies or contracts of the impaired 19 insurer; and [OR] 20 (2) provide money, pledges, loans, notes, guarantees, or other means 21 that are necessary to act under (1) of this subsection and to assure payment of the 22 contractual obligations of the impaired insurer until those obligations are guaranteed, 23 reinsured, or assumed. 24 * Sec. 14. AS 21.79.060(d) is amended to read: 25 (d) If a member insurer becomes insolvent, the association shall, in its 26 discretion and with the approval of the director, 27 (1) guarantee, assume, reissue, reinsure, or provide for the guarantee, 28 assumption, reissuance, or reinsurance of the covered policies or contracts of the 29 insolvent insurer, or otherwise assure payment of the contractual obligations of 30 the insolvent insurer; and provide money, pledges, loans, notes, guarantees, or 31 other means that are necessary to discharge the association's duties under this
01 section; or 02 (2) provide benefits and coverage in accordance with the following 03 provisions: 04 (A) with respect to policies and contracts, assure payment 05 of benefits that would have been payable under a policy or contract of the 06 insolvent insurer for claims incurred with respect to 07 (i) a group policy or contract, not later than the 08 earlier of the next renewal date under the policy or contract or 45 09 days, but in no event less than 30 days, after the date on which the 10 association becomes obligated with respect to the policy or 11 contract; 12 (ii) an individual policy, contract, or annuity, not 13 later than the earlier of the next renewal date, if any, under the 14 policy or contract or one year, but in no event less than 30 days, 15 after the date on which the association becomes obligated with 16 respect to the policy or contract; 17 (B) with respect to an individual or group policy or 18 contract, make a diligent effort to provide a known insured, an enrollee, 19 an annuitant, or a group policy owner or group contract owner 30 days' 20 notice of the termination of the benefits provided; 21 (C) with respect to an individual policy or contract, make 22 available to each known insured, enrollee, or annuitant, or owner if other 23 than an insured, enrollee, or annuitant, and with respect to an individual 24 who was formerly an insured, enrollee, or annuitant under a group policy 25 or contract who is not eligible for replacement group coverage, make 26 available substitute coverage on an individual basis under (D) of this 27 paragraph, if the insured, enrollee, or annuitant had a right under law or 28 under the terminated policy or contract to convert coverage to individual 29 coverage or to continue an individual policy or contract in force until a 30 specified age, or for a specific time during which the insurer, hospital or 31 medical service corporation, or health maintenance organization did not
01 have the unilateral right to make changes in any provision of the policy or 02 contract or had a right only to make changes in premium by class; 03 (D) in providing the substitute coverage under (C) of this 04 paragraph, the association 05 (i) shall offer either to reissue the terminated 06 coverage or to issue an alternate policy or contract at actuarially 07 justified rates; 08 (ii) shall offer an alternative or reissued policy or 09 contract without requiring evidence of insurability and may not 10 provide for a waiting period or exclusion that would not have 11 applied under the terminated policy or contract; and 12 (iii) may reinsure an alternative or reissued policy or 13 contract; 14 (E) an alternative policy or contract must 15 (i) if adopted by the association, be subject to the 16 approval of the director; the association may adopt alternative 17 policies or contracts of various types for future issuance without 18 regard to a particular impairment or insolvency; 19 (ii) contain at least the minimum statutory 20 provisions required in the state and provide benefits that may not 21 be unreasonable in relation to the premium charged; the 22 association shall set the premium under a table of rates that it shall 23 adopt; the premium must reflect the amount of insurance to be 24 provided and the age and class of risk of each insured, but may not 25 reflect changes in the health of the insured after the original policy 26 or contract was last underwritten; 27 (iii) if issued by the association, provide coverage of 28 a type similar to that of the policy or contract issued by the 29 impaired or insolvent insurer, as determined by the association; 30 (F) if the association elects to reissue terminated coverage 31 at a premium rate different from that charged under the terminated
01 policy or contract, the premium shall be actuarially justified and set by 02 the association according to the amount of insurance or coverage provided 03 and the age and class of risk; 04 (G) the association's obligations with respect to coverage 05 under a policy or contract of an impaired or insolvent insurer or under a 06 reissued or alternative policy or contract stop on the date the coverage, 07 policy, or contract is replaced by another similar policy or contract by the 08 policy or contract owner, the insured, the enrollee, or the association; 09 (H) when proceeding under this subsection with respect to a 10 policy or contract carrying guaranteed minimum interest rates, the 11 association shall assure the payment or crediting of a rate of interest 12 consistent with AS 21.79.020(c)(4) [HELD BY RESIDENTS; 13 (2) ASSURE PAYMENT TO RESIDENTS OF THE 14 CONTRACTUAL OBLIGATIONS OF THE INSOLVENT INSURER; 15 (3) PROVIDE MONEY, PLEDGES, NOTES, GUARANTEES, OR 16 OTHER MEANS NECESSARY TO DISCHARGE THE ASSOCIATION'S DUTIES 17 UNDER THIS SUBSECTION; OR 18 (4) WITH RESPECT ONLY TO LIFE AND HEALTH INSURANCE 19 POLICIES AND ANNUITIES, PROVIDE BENEFITS AND COVERAGES 20 REQUIRED UNDER (e) OF THIS SECTION]. 21 * Sec. 15. AS 21.79.060(k) is amended to read: 22 (k) Nonpayment of a premium within 31 days after the date required under the 23 terms of a guaranteed, assumed, alternative or reissued policy or contract or substitute 24 coverage terminates the obligations of the association under the policy, contract, or 25 coverage except with respect to the claims incurred or the net cash surrender value that 26 may be due under the provisions of this chapter. 27 * Sec. 16. AS 21.79.060(l) is amended to read: 28 (l) A premium due for coverage after entry of an order of liquidation of an 29 insolvent insurer belongs to and is payable at the direction of the association. Upon 30 request of a liquidator of an insolvent insurer, the association shall provide a 31 report to the liquidator regarding the premium collected by the association. The
01 [, AND THE] association is liable for unearned premiums due to a policy or contract 02 owner arising after the entry of the order. 03 * Sec. 17. AS 21.79.060(n) is amended to read: 04 (n) In carrying out its duties under [(a), (c), AND] (d) of this section, the 05 association may impose a permanent policy or contract lien under a guarantee, 06 assumption, or reinsurance agreement if the policy or contract lien is approved by a 07 court and the association finds that 08 (1) the amount that may be assessed under this chapter is less than the 09 amount needed to assure full and prompt performance of the association's duties 10 under this chapter [INSOLVENT INSURER'S CONTRACTUAL OBLIGATIONS]; 11 or 12 (2) the economic or financial condition that affects member insurers is 13 sufficiently adverse that the imposition of a policy or contract lien is in the public 14 interest. 15 * Sec. 18. AS 21.79.060(o) is amended to read: 16 (o) In carrying out its duties [BEFORE TAKING ACTION] under (d) [(a) - 17 (e)] of this section, the association may request the superior court to impose an 18 injunction against the payment of a cash value and policy loan, or the exercise of 19 another right to withdraw funds held in connection with a policy or contract, in 20 addition to a contractual provision for deferral of a cash or policy loan value. In 21 addition, if the receivership court imposes an injunction on payment of cash values or 22 policy loans or on any other right to withdraw funds of an impaired or insolvent 23 insurer held in conjunction with a policy or contract, the association may defer 24 payment of cash values, policy loans, or other rights for the period of the injunction, 25 except for claims covered by the association to be paid as required by a hardship 26 procedure established by the liquidator or rehabilitator and approved by the 27 receivership court. 28 * Sec. 19. AS 21.79.060(p) is amended to read: 29 (p) If the association fails to take action under (d) [(a) - (e)] of this section 30 within a reasonable period of time after a member insurer becomes insolvent, the 31 director shall assume the powers of the association under (d) [(a) - (e)] of this section.
01 * Sec. 20. AS 21.79.060(s) is amended to read: 02 (s) A person who receives benefits under this chapter is considered to have 03 assigned the rights under, and any cause of action against a person for losses arising 04 under, resulting from, or otherwise relating to, the covered policy to the association to 05 the extent of the benefits received under this chapter, whether the benefits are payment 06 of or on account of contractual obligations, continuations of coverage, or provisions of 07 substitute or alternative policies, contracts, or coverages [COVERAGE]. The 08 association may require an assignment to the association of those rights by the 09 enrollee, payee [PAYEES], policy or contract owner, beneficiary, insured, or 10 annuitant before a person receives the rights or benefits conferred by this chapter. 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 addition 13 to the rights described in this subsection, the association has common law rights of 14 subrogation and any other equitable or legal remedy that would have been available to 15 the impaired or insolvent insurer or owner, beneficiary, enrollee, or payee of a policy 16 or contract with respect to the policy or contract. These rights include, in the case of 17 a structured settlement annuity, the rights of the enrollee, owner, beneficiary, or payee 18 of the 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 injury 20 relating to the annuity or annuity payment, except for a person responsible solely by 21 reason of being an assignee in respect to a qualified assignment under 26 U.S.C. 130 22 (Internal Revenue Code). If the provisions of this subsection are invalid with respect 23 to a person or claim, the amount payable by the association with respect to the related 24 coverage obligation shall be reduced by the amount realized by another person from 25 the person or claim covered by the association. If the association has provided benefits 26 with respect to a covered obligation and a person recovers amounts to which the 27 association has rights as described in this subsection, the person recovering the 28 amounts shall pay to the association the portion of the recovery attributable to the 29 policies or contracts [POLICY] covered by the association. 30 * Sec. 21. AS 21.79.060(t) is amended to read: 31 (t) In addition to the rights and powers otherwise established in this chapter,
01 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 investments 09 for domestic member 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 insurer, [OR] health insurer, hospital or 16 medical service corporation, or health maintenance organization; however, the 17 association may not issue [INSURANCE] policies or [ANNUITY] contracts other 18 than those issued to perform its obligations under this chapter [THE 19 CONTRACTUAL OBLIGATIONS OF AN IMPAIRED OR INSOLVENT 20 INSURER]; 21 (7) take legal action to prevent or recover the payment of improper 22 claims; 23 (8) join an organization of one or more other state associations with 24 similar purposes; 25 (9) determine, using reasonable business judgment, the means by 26 which the association is to provide the benefits of this chapter in an economical and 27 efficient manner; 28 (10) request information from a person seeking coverage from the 29 association in order to determine the obligations of the association under this chapter; 30 a person receiving a request under this paragraph shall promptly comply with the 31 request;
01 (11) request information from a member insurer in order to aid in the 02 exercise of a power under this section; a member insurer receiving a request under this 03 paragraph shall promptly comply with the request; [AND] 04 (12) unless prohibited by law, in accordance with the terms of the 05 policy or contract, file for actuarially justified rates or premium increases for a 06 policy or contract for which it provides coverage under this chapter; and 07 (13) perform all other acts necessary or proper to implement this 08 chapter. 09 * Sec. 22. AS 21.79.060 is amended by adding a new subsection to read: 10 (aa) The rights and obligations of the association, reinsurers of an insolvent 11 insurer, and the receiver of an insolvent insurer are governed by the following 12 provisions: 13 (1) not later than 180 days after the date of the order of liquidation, the 14 association may elect to succeed to the rights and obligations of the ceding member 15 insurer that relate to policies, contracts, or annuities covered, in whole or in part, by 16 the association, in each case under any one or more reinsurance contracts entered into 17 by the insolvent insurer and its reinsurers and selected by the association; an 18 assumption is effective as of the date of the order of liquidation; the election shall be 19 effected by the association or the National Organization of Life and Health Insurance 20 Guaranty Associations on the association's behalf by written notice, return receipt 21 requested, to the affected reinsurers; to facilitate the earliest practicable decision about 22 whether to assume any of the contracts of reinsurance and to protect the financial 23 position of the estate, as soon as possible after commencement of formal delinquency 24 proceedings, the receiver and each reinsurer of the ceding member insurer shall make 25 available, upon request, to the association or the National Organization of Life and 26 Health Insurance Guaranty Associations on the association's behalf 27 (A) copies of in-force contracts of reinsurance and all related 28 files and records relevant to the determination of whether those contracts 29 should be assumed; and 30 (B) notices of any defaults under the reinsurance contracts or 31 any known event or condition that, with the passage of time, could become a
01 default under the reinsurance contracts; 02 (2) as to reinsurance contracts assumed by the association under this 03 subsection, 04 (A) the association is responsible for all unpaid premiums due 05 under the reinsurance contracts for periods before, on, and after the date of the 06 order of liquidation and is responsible for the performance of all other 07 obligations to be performed on and after the date of the order of liquidation in 08 each case that relates to policies, contracts, or annuities covered, in whole or in 09 part, by the association; the association may charge policies, contracts, or 10 annuities covered in part by the association, through reasonable allocation 11 methods, the costs for reinsurance in excess of the obligations of the 12 association and shall provide notice and an accounting of those charges to the 13 liquidator; 14 (B) the association is entitled to any amounts payable by the 15 reinsurer under the reinsurance contracts with respect to losses or events that 16 occur in periods on and after the date of the order of liquidation and that relate 17 to policies, contracts, or annuities covered, in whole or in part, by the 18 association, if, upon receiving those amounts, the association is obliged to pay 19 to the beneficiary, under the policy, contract, or annuity for which the amounts 20 were paid, a portion of the amount equal to the lesser of the 21 (i) amount received by the association; and 22 (ii) amount by which the amount received by the 23 association exceeds the amount equal to the benefits paid by the 24 association under the policy, contract, or annuity, less the amount 25 retained by the insurer applicable to the loss or event; 26 (C) not later than 30 days after the association's election, the 27 association and each reinsurer under contracts assumed by the association shall 28 calculate the net balance due to or from the association under each reinsurance 29 contract as of the election date with respect to policies, contracts, or annuities 30 covered, in whole or in part, by the association; in making the calculation, the 31 association and reinsurer shall give full credit to all items paid by either the
01 member insurer or its receiver or the reinsurer before the election date; the 02 reinsurer shall pay the receiver any amounts due for losses or events before the 03 date of the order of liquidation, subject to any set-off for premiums unpaid for 04 periods before the date, and the association or reinsurer shall pay any 05 remaining balance due the other, in each case, not later than five days after the 06 completion of the calculation; a dispute over the amount due to the association 07 or reinsurer shall be resolved by arbitration under the terms of the affected 08 reinsurance contract or, if the contract does not contain an arbitration clause, as 09 otherwise provided by law; if the receiver has received an amount due to the 10 association under (B) of this paragraph, the receiver shall remit the amount to 11 the association as promptly as practicable; 12 (D) if the association or receiver on the association's behalf, not 13 later than 60 days after the election date, pays the unpaid premiums due for 14 periods both before and after the election date that relate to policies, contracts, 15 or annuities covered, in whole or in part, by the association, the reinsurer may 16 not terminate the reinsurance contracts for failure to pay premium insofar as 17 the reinsurance contracts relate to policies, contracts, or annuities covered, in 18 whole or in part, by the association, and may not set off an unpaid amount due 19 under another contract or an unpaid amount due from a party other than the 20 association against amounts due to the association; 21 (3) during the period from the date of the order of liquidation until the 22 election date, or, if the election date does not occur, until 180 days after the date of the 23 order of liquidation, 24 (A) neither the association nor the reinsurer shall have any 25 rights or obligations under reinsurance contracts that the association has the 26 right to assume, whether for periods before, on, or after the date of the order of 27 liquidation; and 28 (B) the reinsurer, the receiver, and the association shall, to the 29 extent practicable, provide to each other data and records reasonably requested, 30 if, once the association has elected to assume a reinsurance contract, the 31 parties' rights and obligations are governed by this subsection;
01 (4) if the association does not elect to assume a reinsurance contract by 02 the election date, the association does not have rights or obligations, in each case for 03 periods before, on, and after the date of the order of liquidation, with respect to the 04 reinsurance contract; 05 (5) when policies, contracts, annuities, or covered obligations with 06 respect to policies or annuities are transferred to an assuming insurer, the association 07 may also transfer reinsurance on the policies, contracts, or annuities, in the case of 08 contracts assumed by the association, subject to the following: 09 (A) unless the reinsurer and the assuming insurer agree 10 otherwise, the reinsurance contract transferred may not cover any new policies 11 or insurance, contracts, or annuities in addition to those transferred; 12 (B) the obligations described in (1) of this subsection do not 13 apply with respect to matters arising on and after the effective date of the 14 transfer; and 15 (C) notice shall be given in writing, return receipt requested, by 16 the transferring party to the affected reinsurer not less than 30 days before the 17 effective date of the transfer; 18 (6) the provisions of this subsection supersede the provisions of any 19 state law or of any affected reinsurance contract that provides for or requires any 20 payment of reinsurance proceeds, on account of losses or events that occur in periods 21 on and after the date of the order of liquidation, to the receiver of the insolvent insurer 22 or another person; the receiver shall remain entitled to any amounts payable by the 23 reinsurer under the reinsurance contracts with respect to losses or events that occur in 24 periods before the date of the liquidation, subject to applicable set-off provisions; 25 (7) except as otherwise provided in this section, nothing in this 26 subsection 27 (A) alters or modifies the terms and conditions of a reinsurance 28 contract; 29 (B) abrogates or limits the right of a reinsurer to claim that the 30 reinsurer is entitled to rescind a reinsurance contract; 31 (C) gives a policy or contract owner, enrollee, certificate
01 holder, or beneficiary an independent cause of action against a reinsurer that is 02 not otherwise set out in the reinsurance contract; 03 (D) limits or affects the association's rights as a creditor of the 04 estate against the assets of the estate; and 05 (E) applies to a reinsurance agreement covering property or 06 casualty risks. 07 * Sec. 23. AS 21.79.070(a) is amended to read: 08 (a) For the purpose of providing funds necessary to carry out the powers and 09 duties of the association, the Board of Governors shall by resolution assess the 10 member insurers, separately for each account, at a time and for an amount that the 11 board finds necessary. Assessments are authorized when a resolution is passed and 12 are due not less than 30 days after prior written notice to the member insurers and 13 accrue interest at 10 percent a year from the date payment is due. Authorized 14 assessments become called when notice is mailed by the association to member 15 insurers. 16 * Sec. 24. 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 rata basis. If a pro rata assessment is made, the 19 board may provide that it be credited against future class B assessments. [A NON 20 PRO RATA ASSESSMENT MAY NOT EXCEED $250 PER MEMBER INSURER 21 IN A CALENDAR YEAR.] The amount of a class B assessment, except for 22 assessments related to long-term care insurance, shall be allocated for assessment 23 purposes between [AMONG] the accounts and among the subaccounts of the life 24 insurance and annuity account under an allocation formula that may be based on the 25 premiums or reserves of the impaired or insolvent insurer or by another standard 26 determined by the board in its sole discretion as being fair and reasonable under the 27 circumstances. The amount of the class B assessment for long-term care insurance 28 written by the impaired or insolvent insurer shall be allocated according to a 29 methodology included in the association's plan of operation approved by the 30 director. The methodology must provide for 50 percent of the assessment to be 31 allocated to accident and health member insurers and 50 percent allocated to life
01 and annuity member insurers. 02 * Sec. 25. AS 21.79.070(f) is amended to read: 03 (f) Except as provided in this subsection, the total of all assessments on a 04 member insurer for each subaccount of the life and annuity account and for the health 05 account may not in any one calendar year exceed two percent of the member insurer's 06 average annual premiums received in this state on policies or contracts covered by the 07 account or subaccount during the three calendar years preceding the year in which the 08 member insurer became an impaired or insolvent insurer. If two or more assessments 09 are authorized in one calendar year with respect to member insurers that become 10 impaired or insolvent in different calendar years, the average annual premiums for 11 purposes of the aggregate assessment percentage limitation imposed under this 12 subsection shall be limited to the highest of the average annual premiums during the 13 preceding three calendar years for the applicable subaccount or account as calculated 14 under this section. If the maximum assessment, together with the other assets of the 15 association in an account, does not provide in any one year in either account an 16 amount sufficient to carry out the responsibilities of the association, the necessary 17 additional funds shall be assessed as soon as permitted by this chapter. 18 * Sec. 26. AS 21.79.070(j) is amended to read: 19 (j) The board may, by an equitable method as established in the plan of 20 operation, refund to member insurers, in proportion to the contribution of each 21 member insurer to that account, the amount by which the assets of the account exceed 22 the amount the board finds is necessary to carry out during the coming year the 23 obligations of the association with regard to that account, including assets accruing 24 from assignment, subrogation, net realized gains, and income from investments. A 25 reasonable amount may be retained in any account to provide funds for the continuing 26 expenses of the association and for future losses claims. 27 * Sec. 27. AS 21.79.070(k) is amended to read: 28 (k) A member insurer may, in determining its premium rates and policy owner 29 dividends as to any kind of insurance, hospital or medical service corporation 30 business, or health maintenance organization business within the scope of this 31 chapter, consider the amount reasonably necessary to meet its assessment obligations
01 under this chapter. 02 * Sec. 28. AS 21.79.070(l) is amended to read: 03 (l) A member insurer that wishes to protest all or part of an assessment shall 04 pay when due the full amount of the assessment as set out in the notice provided by 05 the association. The payment shall be available to meet association obligations during 06 the pendency of the protest or any subsequent appeal. If a payment is made under 07 protest, payment must be accompanied by a statement in writing that the payment is 08 made under protest and setting out a brief statement of the grounds for the protest. 09 Within 60 days following the payment of an assessment under protest by a member 10 insurer, the association shall notify the member insurer in writing of its determination 11 with respect to the protest unless the association notifies the member insurer that 12 additional time is required to resolve the issues raised by the protest. Within 30 days 13 after a final decision has been made, the association shall notify the protesting member 14 insurer in writing of that final decision. Within 60 days after [OF] receipt of notice of 15 the final decision, the protesting member insurer may appeal that final action to the 16 director. In the alternative to rendering a final decision with respect to a protest based 17 on a question regarding the assessment base, the association may refer protests to the 18 director for a final decision with or without recommendation from the association. If a 19 protest or appeal on an assessment is upheld, the amount paid in error or excess shall 20 be returned to the member insurer [COMPANY]. Interest on a refund due a protesting 21 member insurer shall be paid at the rate actually earned by the association. 22 * Sec. 29. AS 21.79.080(c) is amended to read: 23 (c) A member insurer shall comply with the plan of operation. The plan of 24 operation must 25 (1) establish procedures for handling assets of the association; 26 (2) establish the amount and method of reimbursing members of the 27 board under AS 21.79.050(c); 28 (3) establish regular places and times for meetings of the board in the 29 state; the board may conduct meetings telephonically; 30 (4) establish procedures for keeping records of all financial 31 transactions of the association, its agents, and the board;
01 (5) establish terms of office for members of the board, and establish 02 procedures for the selection of the members of the board and for the director's 03 approval of the members selected; 04 (6) establish additional procedures for assessments under 05 AS 21.79.070; [AND] 06 (7) establish procedures for removing a member of the board for 07 cause, including procedures for removing a member of the board who becomes 08 an impaired or insolvent insurer; 09 (8) establish policy and procedures for addressing conflicts of 10 interest; and 11 (9) contain additional provisions necessary or proper for the 12 association to exercise its powers and duties. 13 * Sec. 30. AS 21.79.090(b) is amended to read: 14 (b) The director may 15 (1) after notice and hearing as provided in AS 21.06.180 - 21.06.230, 16 suspend or revoke the certificate of authority to transact business [INSURANCE] in 17 this state of a member insurer that fails to pay an assessment when due or fails to 18 comply with the plan of operation; 19 (2) levy a penalty on a member insurer that fails to comply with the 20 plan of operation; or 21 (3) levy a penalty on a member insurer that fails to pay an assessment 22 when due; if the unpaid assessment is more than $2,000, the penalty may not exceed 23 five percent of the unpaid assessment a [PER] month or be less than $100 a [PER] 24 month; if the unpaid assessment is $2,000 or less, the penalty is $100 a [PER] month. 25 * Sec. 31. AS 21.79.090(c) is amended to read: 26 (c) A final [AN] action of the board or the association may be appealed to the 27 director by a member insurer if the appeal is taken not later than 60 [WITHIN 30] 28 days after the date the notice of the action is mailed. Final action or order of the 29 director may be reviewed by the superior court. 30 * Sec. 32. AS 21.79.090(d) is amended to read: 31 (d) The liquidator, rehabilitator, or conservator of an impaired or insolvent
01 insurer may notify all interested persons of the effect of this chapter. 02 * Sec. 33. AS 21.79.100(a) is amended to read: 03 (a) The director shall notify, by mail, the commissioner, director, or 04 superintendent of insurance of the other states, territories of the United States, and the 05 District of Columbia within 30 days after the date on which the following actions are 06 taken against a member insurer: 07 (1) revocation of a license; 08 (2) suspension of a license; or 09 (3) a formal order that a member insurer restrict its premium writing, 10 obtain additional contributions to surplus, withdraw from the state, reinsure all or any 11 part of its business, or increase capital, surplus, or any other account for the security of 12 policyholders, contract owners, certificate holders, or creditors. 13 * Sec. 34. AS 21.79.100(e) is amended to read: 14 (e) The director may seek the board's advice and recommendations concerning 15 the financial condition of member insurers, [AND] insurers, hospital and medical 16 service corporations, and health maintenance organizations who apply for 17 admission to transact insurance business in the state. 18 * Sec. 35. AS 21.79.100(f) is amended to read: 19 (f) The board may 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 an insurer, hospital or medical service corporation, or health 23 maintenance organization that applies [INSURERS WHO APPLY] to transact 24 insurance business in the state; the director and the board shall keep the reports and 25 recommendations confidential; 26 (2) notify the director of any information that indicates that a member 27 insurer may be impaired or insolvent. 28 * Sec. 36. AS 21.79.100(h) is amended to read: 29 (h) The board may make recommendations to the director for detecting and 30 preventing member insurer insolvencies. 31 * Sec. 37. AS 21.79.110(c) is amended to read:
01 (c) The association is considered to be a creditor of the impaired or insolvent 02 insurer to the extent of assets attributable to covered policies that are reduced by an 03 amount to which the association is entitled under AS 21.79.060(s). Assets of the 04 impaired or insolvent insurer that are attributable to covered policies shall be used to 05 continue all covered policies and pay all contractual obligations of the impaired or 06 insolvent insurer as required by this chapter. Assets attributable to covered policies or 07 contracts include those assets that should have been established as reserves for the 08 covered policies or contracts. These assets are determined by multiplying the total 09 assets of the impaired or insolvent insurer by a fraction, the numerator of which is the 10 amount that should have been established as reserves for the covered policies or 11 contracts of the impaired or insolvent insurer, and the denominator of which is the 12 amount that should have been established as reserves for all policies or contracts of 13 insurance issued in all states by that insurer. As a creditor of the impaired or insolvent 14 insurer, the association and other similar entities in other states are entitled to receive a 15 disbursement of assets out of the marshaled assets as a credit against contractual 16 obligations under this chapter from time to time as the assets become available. If the 17 liquidator has not, within 120 days after [OF] the date of a final determination of 18 insolvency of a member [AN] insurer by the court, made an application to the court 19 for the approval of a proposal to disburse assets, the association may make application 20 to the court for the approval of the association's proposal to disburse assets. 21 * Sec. 38. AS 21.79.110(d) is amended to read: 22 (d) Before the termination of a liquidation, rehabilitation, or conservation 23 proceeding, the court may consider the contributions of the respective parties, 24 including the association, [THE] shareholders, contract owners, certificate holders, 25 enrollees, and policyholders of the impaired or insolvent insurer, and any other party 26 with a bona fide interest, in distributing the ownership rights of the impaired or 27 insolvent insurer. The court shall consider the welfare of policyholders, contract 28 owners, certificate holders, and enrollees of the continuing or successor member 29 insurer [INSURERS]. A distribution to stockholders of an impaired or insolvent 30 insurer may not be made until the total amount of valid claims of the association for 31 money spent in carrying out its powers and duties under AS 21.79.060, with respect to
01 the impaired or insolvent insurer, has been fully recovered by the association. 02 * Sec. 39. AS 21.79.110(e) is amended to read: 03 (e) The receiver appointed under an order for liquidation or rehabilitation of a 04 domestic member insurer may recover the amount distributed, other than stock 05 dividends paid by the member insurer on its capital stock, to a controlling affiliate, as 06 defined in AS 21.22.200, during the five years preceding the petition for liquidation or 07 rehabilitation. However, if the member insurer shows that, when paid, the distribution 08 was lawful and reasonable, and that the distribution might adversely affect the ability 09 of the member insurer to fulfill the member insurer's contractual obligations, the 10 receiver may not recover the amount distributed to the controlling affiliate. The 11 following provisions apply to recovery of amounts distributed: 12 (1) a controlling affiliate of the member insurer at the time the 13 distribution was paid is liable for a distribution received; a controlling affiliate at the 14 time the distribution was declared is liable for a distribution that would have been 15 received if the distribution had been paid at that time; if two or more persons are liable 16 with respect to the same distribution, they are jointly and severally liable; 17 (2) if an affiliate liable under (1) of this subsection is insolvent, all its 18 controlling affiliates at the time the dividend was paid are jointly and severally liable 19 for any amount that is not recovered from the insolvent affiliate; 20 (3) the amount needed to pay the contractual obligations of the 21 insolvent insurer that exceeds the available assets of the insolvent insurer is the 22 greatest amount that may be recovered under this subsection. 23 * Sec. 40. AS 21.79.110(f) is amended to read: 24 (f) A deposit in this state, held by law or required by the director for the 25 benefit of creditors, including policy or contract owners, not turned over to the 26 domiciliary liquidator upon the entry of a final order of liquidation or order approving 27 a rehabilitation plan of a member [AN] insurer domiciled in this state or in a 28 reciprocal state shall be promptly paid to the association. The association 29 (1) is entitled to retain a portion of any amount paid to it equal to the 30 percentage determined by dividing the aggregate amount of policy or contract 31 owners' claims related to that insolvency for which the association has provided
01 statutory benefits by the aggregate amount of all policy or contract owners' claims in 02 this state related to that insolvency; and 03 (2) shall remit to the domiciliary receiver the amount paid to the 04 association and retained under (1) of this subsection; any amount paid to the 05 association not retained by it under (1) of this subsection shall be treated as a 06 distribution of state assets under AS 21.78.294 or a similar provision of the state of 07 domicile of the impaired or insolvent insurer. 08 * Sec. 41. AS 21.79.140 is amended to read: 09 Sec. 21.79.140. Civil immunity. The association and its agents and 10 employees, members of the Board of Governors, member insurers, and agents and 11 employees of member insurers, and the director and the director's representatives are 12 not civilly liable, and a cause of action of any nature may not arise, for an action or 13 omission in performing duties under this chapter. The immunity extends to the 14 participation in an organization of one or more other state associations of similar 15 purposes and to that organization and its agents or employees [IN THIS 16 SECTION, "DUTIES" INCLUDES PARTICIPATION IN AN ORGANIZATION OF 17 ONE OR MORE STATE ASSOCIATIONS OF LIFE OR HEALTH INSURERS]. 18 * Sec. 42. AS 21.79.150 is amended to read: 19 Sec. 21.79.150. Stay of proceedings; default judgment. Proceedings 20 involving an insolvent insurer shall be stayed at least 180 [60] days after the date of a 21 final order of liquidation, rehabilitation, or conservation in order to allow the 22 association to exercise a power or duty authorized under this chapter. If a default 23 judgment is entered against an insolvent insurer, the association may apply to have the 24 judgment set aside or may defend against the action on its merits. 25 * Sec. 43. AS 21.79.160(a) is amended to read: 26 (a) A person, including a member [AN] insurer, agent, or affiliate of a 27 member [AN] insurer, may not make, publish, disseminate, circulate, or place before 28 the public, or cause, directly or indirectly, to be made, published, disseminated, 29 circulated, or placed before the public, in any newspaper, magazine, or other 30 publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any 31 radio station or television station, or in any other way, an advertisement,
01 announcement, or statement, written or oral, that uses the existence of the association 02 for the purpose of sales, solicitation, or inducement to purchase any form of insurance 03 or other coverage covered by the association. However, this section does not apply to 04 the association or any other entity that does not sell or solicit insurance, coverage by a 05 hospital or medical service corporation, or coverage by a health maintenance 06 organization. 07 * Sec. 44. AS 21.79.160(b) is amended to read: 08 (b) The association shall prepare a summary document describing the general 09 purposes and current limitations of this chapter and complying with (c) of this section. 10 This document shall be submitted to the director for approval. Beginning 60 days after 11 the date on which the director approves the document, a member [AN] insurer may 12 not deliver a policy or contract to a policy or contract owner, certificate holder, or 13 enrollee [POLICY OR CONTRACT OWNER] unless the summary document is 14 delivered to the policy or contract owner, certificate holder, or enrollee [POLICY 15 OR CONTRACT OWNER] at the time of delivery of the policy or contract. The 16 document shall also be available upon request by a policy or contract owner, 17 certificate holder, or enrollee [OWNER]. The distribution, delivery, contents, or 18 interpretation of this document does not guarantee that either the policy or the 19 contract, or the policy or contract owner, certificate holder, or enrollee [OWNER 20 OF THE POLICY OR CONTRACT,] is covered in the event of the impairment or 21 insolvency of a member insurer. The description document shall be revised by the 22 association as amendments to this chapter may require. Failure to receive this 23 document does not give the policy or [OWNER,] contract owner, certificate holder, 24 enrollee, or insured any greater rights than those stated in this chapter. 25 * Sec. 45. AS 21.79.160(c) is amended to read: 26 (c) The document prepared under (b) of this section must contain a clear and 27 conspicuous disclaimer on its face. The director shall establish the form and content of 28 the disclaimer. The disclaimer must 29 (1) state the name and address of the association and the division of 30 insurance; 31 (2) prominently warn the policy or contract owner, certificate holder,
01 or enrollee that the association may not cover the policy or, if coverage is available, 02 that the policy will be subject to substantial limitations and exclusions and conditioned 03 on continued residence in this state; 04 (3) state the types of policies or contracts for which guaranty funds 05 will provide coverage; 06 (4) state that the member insurer and its agents are prohibited by law 07 from using the existence of the association for the purpose of sales, solicitation, or 08 inducement to purchase any form of insurance, hospital or medical service 09 corporation coverage, or health maintenance organization coverage; 10 (5) state that the policy or contract owner, certificate holder, or 11 enrollee should not rely on coverage 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 * Sec. 46. AS 21.79.900(5) is amended to read: 18 (5) "called" means that a notice has been mailed [ISSUED] by the 19 association to member insurers requiring that an authorized assessment be paid within 20 the time set out in the notice; 21 * Sec. 47. AS 21.79.900(6) is amended to read: 22 (6) "contractual obligation" means an obligation under a policy, 23 contract, or certificate under a group policy or contract, or a portion of one for which 24 coverage is provided under AS 21.79.020(a), (b), (d), or (e); 25 * Sec. 48. AS 21.79.900(7) is amended to read: 26 (7) "covered contract" or "covered policy" means a policy or 27 contract or a portion of a policy or contract for which coverage is provided under 28 [DESCRIBED IN] AS 21.79.020(a), [AND] (b), (d), or (e); 29 * Sec. 49. AS 21.79.900(10) is amended to read: 30 (10) "member insurer" means an insurer licensed to transact insurance 31 in the state, a hospital or medical service corporation licensed under AS 21.87, or
01 a health maintenance organization licensed under AS 21.86, for which coverage is 02 provided in AS 21.79.020 [, OR A SUBSCRIBER CONTRACT PROVIDING 03 BENEFITS DESCRIBED IN AS 21.87.120(a)(2) - (4) OR 21.87.130(a)(2) AND (3),] 04 and includes an insurer, a hospital or medical service corporation licensed under 05 AS 21.87, or a health maintenance organization licensed under AS 21.86, whose 06 license or certificate of authority in this state may have been suspended, revoked, not 07 renewed, or voluntarily withdrawn; "member insurer" does not include 08 (A) [A HEALTH MAINTENANCE ORGANIZATION 09 LICENSED UNDER AS 21.86; 10 (B)] a fraternal benefit society licensed under AS 21.84; 11 (B) [(C)] a mandatory state pooling plan; 12 (C) [(D)] a mutual assessment company or an entity that 13 operates on an assessment basis; 14 (D) [(E)] an insurance exchange licensed under AS 21.75; 15 (E) [(F) A HOSPITAL OR MEDICAL SERVICE 16 ORGANIZATION LICENSED UNDER AS 21.87; 17 (G)] an organization that has a license or certificate limited to 18 the issuance of charitable gift annuities; or 19 (F) [(H)] an entity similar to one described under (A) - (E) [(A) 20 - (G)] of this paragraph; 21 * Sec. 50. AS 21.79.900(12) is amended to read: 22 (12) "owner," when used with respect to [IN RELATION TO] a 23 policy or contract, "policyholder," "policy owner," and "contract owner" 24 (A) mean [MEANS] the person who is identified as the legal 25 owner under the terms of the policy or contract, or who is otherwise vested 26 with legal title to the policy or contract through a valid assignment completed 27 under the terms of the policy or contract and who is properly recorded as the 28 owner on the records of the member insurer; 29 (B) do [DOES] not include a person with a mere beneficial 30 interest in a policy or contract; 31 * Sec. 51. AS 21.79.900(13) is amended to read:
01 (13) "plan sponsor" means, in the case of a benefit plan established or 02 maintained by 03 (A) a single employer, the employer; 04 (B) an employee organization, the employee organization; or 05 (C) two or more employers or jointly by one or more 06 employers and one or more employee organizations, the association, 07 committee, joint board of trustees, or other similar group of representatives of 08 the parties who establish or maintain the benefit plan; 09 * Sec. 52. AS 21.79.900(14) is amended to read: 10 (14) "premium" means the amounts or considerations, by whichever 11 name called, [AMOUNT] received on a covered policy or contract less a premium, 12 consideration, and deposit returned, and less a dividend and experience credit; 13 "premium" does not include amounts or considerations [AN AMOUNT] charged for 14 an assessment or an amount received for a policy or contract or for the portions of a 15 policy or contract for which coverage is not provided under AS 21.79.020(b) and (c), 16 except that assessable premium may not be reduced on account of 17 AS 21.79.020(c)(4) relating to interest limitations and AS 21.79.025(a)(2) - (5), (b), 18 and (d) relating to limitations with respect to one individual, one participant, and 19 one policy or contract owner; "premium" does not include 20 (A) premiums in excess of $5,000,000 on an unallocated 21 annuity contract not issued under a governmental retirement benefit plan 22 or its trustee established under 26 U.S.C. 401, 26 U.S.C. 403(b), or 26 23 U.S.C. 457; or 24 (B) with respect to multiple nongroup policies of life 25 insurance owned by one owner, whether the policy or contract owner is an 26 individual, firm, corporation, or other person, and whether the persons 27 insured are officers, managers, employees, or other persons, premiums in 28 excess of $5,000,000 with respect to those policies or contracts, regardless 29 of the number of policies or contracts held by the owner; 30 * Sec. 53. AS 21.79.900(15) is amended to read: 31 (15) "receivership court" means the court in the insolvent or impaired
01 insurer's state having jurisdiction over the conservation, rehabilitation, or liquidation 02 of the member insurer; 03 * Sec. 54. AS 21.79.900(16) is amended to read: 04 (16) "resident" means a person to whom a contractual obligation is 05 owed under this chapter and who resides in this state on the date of entry of a court 06 order that determines a member insurer to be an impaired or insolvent insurer [, 07 WHICHEVER OCCURS FIRST]; a person may be a resident of only one state, 08 which, in the case of a person other than a natural person, shall be the principal place 09 of business; 10 * Sec. 55. AS 21.79.900(19) is amended to read: 11 (19) "supplemental contract" means a written [AN] agreement entered 12 into for the distribution of proceeds under life, health, or annuity policy or contract 13 benefits; 14 * Sec. 56. AS 21.79.900 is amended by adding new paragraphs to read: 15 (21) "benefit plan" means a specific employee, union, or association of 16 natural persons benefit plan; 17 (22) "election date" means the date of the association's election under 18 AS 21.79.060(aa); 19 (23) "extra contractual claim" includes a claim related to bad faith in 20 payment of a claim, punitive or exemplary damages, and attorney fees and costs; 21 (24) "health benefit plan" means a hospital or medical expense policy 22 or certificate, a hospital or medical service corporation subscriber contract, or health 23 maintenance organization subscriber contract or any other similar health contract; 24 "health benefit plan" does not include 25 (A) accident only insurance; 26 (B) credit insurance; 27 (C) dental only insurance; 28 (D) vision only insurance; 29 (E) Medicare supplement insurance; 30 (F) benefits for long-term care, home health care, community- 31 based care, or any combination thereof;
01 (G) disability income insurance; 02 (H) coverage for on-site medical clinics; or 03 (I) specified disease, hospital confinement indemnity, or limited 04 benefit health insurance if the types of coverage do not provide coordination of 05 benefits and are provided under separate policies or certificates; 06 (25) "published monthly average" means the monthly average of 07 corporate bond yields, as published by Moody's Investors Service, Inc., or its 08 successor or, if Moody's average of corporate bond yields is not published, a 09 substantially similar average established by regulation adopted by the director. 10 * Sec. 57. AS 21.86.260(a) is amended to read: 11 (a) Except as provided in AS 21.36, AS 21.42, AS 21.54, AS 21.56, AS 21.79, 12 and in this chapter, this title does not apply to a health maintenance organization that 13 obtains a certificate of authority under this chapter. This subsection does not apply to 14 an insurer licensed under AS 21.09 or a hospital or medical service corporation 15 licensed under AS 21.87 except with respect to its health maintenance organization 16 activities authorized by and regulated under this chapter. 17 * Sec. 58. AS 21.87.340 is amended to read: 18 Sec. 21.87.340. Other provisions applicable. In addition to the provisions 19 contained or referred to previously in this chapter, the following chapters and 20 provisions of this title also apply with respect to service corporations to the extent 21 applicable and not in conflict with the express provisions of this chapter and the 22 reasonable implications of the express provisions, and, for the purposes of the 23 application, the corporations shall be considered to be mutual "insurers": 24 (1) AS 21.03; 25 (2) AS 21.06; 26 (3) AS 21.07; 27 (4) AS 21.09, except AS 21.09.090; 28 (5) AS 21.18.010; 29 (6) AS 21.18.030; 30 (7) AS 21.18.040; 31 (8) AS 21.18.080 - 21.18.086;
01 (9) AS 21.36; 02 (10) AS 21.42.110, 21.42.345 - 21.42.395; 03 (11) AS 21.51.120 and 21.51.400; 04 (12) AS 21.51.405; 05 (13) AS 21.53; 06 (14) AS 21.54; 07 (15) AS 21.56; 08 (16) AS 21.69.400; 09 (17) AS 21.69.520; 10 (18) AS 21.69.600, 21.69.620, and 21.69.630; 11 (19) AS 21.78; 12 (20) AS 21.79; 13 (21) AS 21.96.060; 14 (22) [(21)] AS 21.97. 15 * Sec. 59. AS 21.79.020(f), 21.79.060(c), 21.79.060(e), 21.79.060(f), 21.79.060(g), 16 21.79.060(h), 21.79.060(i), 21.79.060(j), 21.79.060(u), 21.79.060(v), 21.79.060(w), 17 21.79.060(x), 21.79.110(b)(2), and 21.79.110(e) are repealed. 18 * Sec. 60. The uncodified law of the State of Alaska is amended by adding a new section to 19 read: 20 TRANSITION: REGULATIONS. The director of the division of insurance may adopt 21 regulations necessary to implement the changes made by this Act. The regulations take effect 22 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the law 23 implemented by the regulation. 24 * Sec. 61. Section 60 of this Act takes effect immediately under AS 01.10.070(c). 25 * Sec. 62. Except as provided in sec. 61 of this Act, this Act takes effect July 1, 2018.