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