SB 11: "An Act relating to flood insurance; relating to property insurance; establishing the Alaska Flood Authority and the Alaska flood insurance fund; and providing for an effective date."
00 SENATE BILL NO. 11 01 "An Act relating to flood insurance; relating to property insurance; establishing the 02 Alaska Flood Authority and the Alaska flood insurance fund; and providing for an 03 effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 21.39.030(a) is amended to read: 06 (a) Rates, including loss costs under AS 21.39.043 or any other provision of 07 law, shall be made in accordance with the following provisions: 08 (1) rates may [SHALL] not be excessive, inadequate, or unfairly 09 discriminatory; 10 (2) consideration shall be given to past and prospective loss experience 11 inside and outside this state; to the conflagration and catastrophe hazards; to a 12 reasonable margin for underwriting profit and contingencies; to dividends, savings, or 13 unabsorbed premium deposits allowed or returned by insurers to their policyholders, 14 members, or subscribers; to past and prospective expenses both countrywide and those
01 specially applicable to this state; and to all other relevant factors inside and outside 02 this state; 03 (3) the systems of expense provisions included in the rates for use by 04 an insurer or group of insurers may differ from those of other insurers or groups 05 [GROUP] of insurers to reflect the requirements of the operating methods of the 06 insurer or group of insurers with respect to any kind of insurance, or with respect to a 07 subdivision or combination thereof for which subdivision or combination separate 08 expense provisions are applicable; 09 (4) risks may be grouped by classifications for the establishment of 10 rates and minimum premiums; classification rates may be modified to produce rates 11 for individual risks in accordance with rating plans that establish standards for 12 measuring variations in hazards or expense provisions, or both; the standards may 13 measure any differences among risks that can be demonstrated to have a probable 14 effect on [UPON] losses or expenses; 15 (5) in the case of fire insurance rates, consideration may be given to 16 the experience of the fire insurance business during a period of not more than the most 17 recent five-year period for which experience is available; 18 (6) when there is an established program to inspect new and existing 19 dwellings and the program has been certified by the director as likely to reduce the 20 incidence of fires in inspected dwellings, then in any rate plan used in this state, 21 dwellings that have been found by the inspection to meet the standards established by 22 the program shall have credits applied to the rate in amounts approved by the director; 23 (7) in the case of flood insurance rates, primary consideration shall 24 be given to actual historical flood and damage data on the real and personal 25 property proposed to be insured. 26 * Sec. 2. AS 21.39.030(c) is amended to read: 27 (c) In this section, 28 (1) "dwelling" means a residential structure containing not more than 29 four family living units; 30 (2) "flood" means 31 (A) a general and temporary condition of partial or
01 complete inundation of normally dry land area from 02 (i) overflow of inland or tidal water; 03 (ii) unusual and rapid accumulation or runoff of 04 surface water from any source; 05 (iii) snow or ice melt; 06 (iv) an atmospheric river; or 07 (v) mudflow; or 08 (B) the collapse or subsidence of land along the shore of a 09 lake or similar body of water because of erosion or undermining caused 10 by waves or currents of water exceeding anticipated cyclical levels that 11 results in a condition described in (A) of this paragraph. 12 * Sec. 3. AS 21.60 is amended by adding new sections to read: 13 Article 2. Alaska Flood Authority. 14 Sec. 21.60.100. Creation; membership; information from members. The 15 Alaska Flood Authority is created to increase the availability of flood insurance in the 16 state. The authority is a nonprofit incorporated legal entity. The membership of the 17 authority consists of all insurers licensed to transact property insurance business in the 18 state. As a condition of transacting property insurance business in the state, an insurer 19 shall 20 (1) maintain membership in the authority; 21 (2) submit reports and provide information required by the board or the 22 director to implement AS 21.60.100 - 21.60.300. 23 Sec. 21.60.110. Board; organization; report. (a) The board of the authority 24 consists of 25 (1) three members, selected by authority members, who represent 26 insurers licensed to transact property insurance business in the state, subject to 27 approval by the director; 28 (2) two members, selected by the director, who represent consumers of 29 property insurance required by the federal government to obtain flood insurance in a 30 special flood hazard area; 31 (3) one member, selected by the director, who represents the private
01 banking and mortgage industry in the state; and 02 (4) one member, selected by the director, who represents the Alaska 03 Housing Finance Corporation. 04 (b) The director is a nonvoting ex officio member of the board. In approving 05 members of the board under (a)(1) of this section, the director shall consider, among 06 other things, whether all types of authority members are fairly represented. 07 (c) A member of the board serves for a term of three years and may be 08 reappointed to an unlimited number of terms. The term of a board member shall 09 continue until a successor is appointed. 10 (d) At authority meetings, an authority member is entitled to one vote in 11 person or by proxy. At board meetings, a board member is entitled to one vote in 12 person or by proxy. 13 (e) The authority may reimburse a member of the board for expenses incurred 14 as a result of board activities but may not otherwise compensate a member of the 15 board for services. The costs of conducting meetings of the authority and the board are 16 the responsibility of the members of the authority. 17 (f) On or before September 1 of each year, the board shall prepare a report 18 reviewing the operations of the previous year and deliver the report to the state's 19 congressional delegation, the governor, the senate secretary, and the chief clerk of the 20 house of representatives and notify the legislature that the report is available. In the 21 report, the board shall 22 (1) analyze the effectiveness of the operations of the authority and 23 insurance program under AS 21.60.100 - 21.60.300; 24 (2) evaluate the benefits of the insurance program under AS 21.60.100 25 - 21.60.300 as compared to 42 U.S.C. 4001 - 4131 (National Flood Insurance Act) for 26 property owners and communities in the state; and 27 (3) identify penalties or sanctions imposed or potentially imposed on 28 individuals and communities in the state by the federal government under 42 U.S.C. 29 4001 - 4131 (National Flood Insurance Act). 30 Sec. 21.60.120. Powers of the authority. The authority may 31 (1) exercise the powers granted to insurers under the laws of the state;
01 (2) sue or be sued; 02 (3) enter into contracts with insurers, similar authorities in other states, 03 or other persons for the performance of administrative functions; 04 (4) establish administrative and accounting procedures for the 05 operation of the authority; and 06 (5) receive funds from sources other than members of the authority. 07 Sec. 21.60.130. Plan of operation. (a) The authority shall submit to the 08 director a plan of operation to ensure the fair, reasonable, and equitable administration 09 of the authority. The authority may submit amendments to the plan of operation to the 10 director. The plan of operation and amendments become effective upon approval in 11 writing by the director. 12 (b) Each member of the authority shall comply with the plan of operation. 13 (c) The plan of operation must contain the following: 14 (1) procedures for the performance of all the powers and duties of the 15 authority under AS 21.60.100 - 21.60.300; 16 (2) procedures for handling assets of the authority; 17 (3) the amount of reimbursement and method for reimbursing 18 members of the board under AS 21.60.110(e); 19 (4) the regular places and times at which meetings of the board will 20 take place; 21 (5) record-keeping procedures for all financial transactions of the 22 authority, agents of the authority, and the board; 23 (6) a provision stating that a member of the authority aggrieved by a 24 final action or decision of the authority may appeal to the director within 30 days after 25 the action or decision is made; 26 (7) procedures for submitting board member selections to the director 27 for approval; 28 (8) additional provisions necessary or proper for the execution of the 29 powers and duties of the authority. 30 Sec. 21.60.140. Administrative Procedure Act. The authority is exempt from 31 AS 44.62 (Administrative Procedure Act).
01 Sec. 21.60.150. Tax exemption. The authority is exempt from the payment of 02 fees and taxes levied by the state or any of its political subdivisions except taxes levied 03 on real or personal property or under AS 21.09.210. 04 Sec. 21.60.160. Types of insurance plans. The authority shall make available 05 to a person who is eligible for coverage under AS 21.60.100 - 21.60.300 at least one 06 state plan of flood insurance. The authority may not refuse coverage under a state plan 07 to a person who is eligible under AS 21.60.100 - 21.60.300, applies for coverage, and 08 pays the required premium. 09 Sec. 21.60.170. Coverage and terms of state flood insurance plan. (a) 10 Except as provided in (b) of this section, the coverage of a flood insurance plan 11 offered under AS 21.60.160 shall be the same as the coverage provided under a 12 standard flood insurance policy offered by the National Flood Insurance Program 13 established by 42 U.S.C. 4001 - 4131 (National Flood Insurance Act), including 14 minimum amounts of coverage, deductibles, exclusions, and conditions. 15 (b) A flood insurance plan must set the maximum amount of coverage for a 16 residential property at $1,000,000 and the maximum amount of coverage for a 17 commercial property at $2,000,000. A flood insurance plan may not include a 18 requirement that a flood must inundate a certain amount of normally dry land area or 19 properties to be covered. 20 (c) The terms of a plan offered under AS 21.60.160 must contain 21 (1) a requirement to provide the notice of cancellation or nonrenewal 22 required by AS 21.36.220 and 21.36.240 to 23 (A) the insured; and 24 (B) the regulated lending institution or federal agency lender; 25 (2) a mortgage interest clause similar to the clause contained in a 26 standard flood insurance policy under the National Flood Insurance Program; 27 (3) notwithstanding AS 09.10.053, a provision requiring an insured to 28 file suit not later than one year after the date of a written denial of all or part of a claim 29 under the policy; and 30 (4) cancellation provisions that are as restrictive as the provisions 31 contained in a standard flood insurance policy under the National Flood Insurance
01 Program. 02 Sec. 21.60.180. State plan premiums. (a) The authority may not charge a rate 03 for flood insurance coverage that is excessive, inadequate, or unfairly discriminatory. 04 (b) The board shall determine flood insurance premium rates by primarily 05 considering the actual historical flood and damage data on the real and personal 06 property proposed to be insured. The board shall submit premium rates to the director 07 for approval before use. 08 (c) The board may retain an actuary or other consultant as may be necessary to 09 determine flood insurance premium rates and to perform other assigned duties. 10 Sec. 21.60.190. Duties of authority. (a) The authority shall perform the 11 administrative and claims payment functions required by this section. 12 (b) The authority shall provide to all eligible persons enrolled in a state plan a 13 policy setting out a statement of the insurance protection to which the person is 14 entitled, with whom claims are to be filed, and to whom benefits are payable. The 15 policy must indicate that coverage was obtained through the authority. 16 (c) The authority shall submit to the director on a semiannual basis a report on 17 the plan of operation. The director shall determine the specific information the report 18 must contain. 19 (d) The authority shall pay claims and shall indicate when a claim is paid 20 under a state plan. A claim payment must include a telephone number that can be used 21 for inquiries regarding the claim. 22 Sec. 21.60.200. Funding for authority and insurance program; penalties. 23 (a) Each member of the authority shall share the losses of the insurance program 24 established under AS 21.60.100 - 21.60.300 insuring real and personal property and 25 improvements to real property within a special flood hazard area in the state. Each 26 member of the authority shall pay member dues. Dues under this section must be 27 sufficient to cover the operating and administrative expenses of the authority. The 28 board shall determine member dues under this section. 29 (b) In addition to the member dues collected under (a) of this section, the 30 board shall make an annual determination of each member's liability under (a) of this 31 section, if any, and may make an annual fiscal year end assessment if necessary to
01 operate the insurance program. The board may also provide for interim assessments 02 against the members as may be necessary to ensure the financial capability of the 03 authority to pay claims and operate the insurance program until the authority's next 04 annual fiscal year end assessment. The board may make assessments under this section 05 that are sufficient to operate the insurance program. The board may decline to levy an 06 assessment against a member if the assessment would be minimal. 07 (c) Payment of an assessment is due within 30 days after a member receives 08 written notice of a fiscal year end or interim assessment. A member that no longer 09 does business in the state remains liable for assessments until the board determines 10 under (b) of this section that no assessment is due. Assessments paid by a member are 11 a general expense of the member. If a member fails to pay a fiscal year end or interim 12 assessment as required in this subsection, 13 (1) the member shall pay a civil penalty to the director in the amount 14 of $100 for each day the member fails to pay the required assessment; and 15 (2) the director may revoke the member's certificate of authority. 16 (d) If the total amount of member liability calculated under (b) of this section 17 is insufficient to satisfy a legally authorized claim against the insurance program under 18 AS 21.60.100 - 21.60.300, the legislature may appropriate up to a total of $5,000,000 19 from cash reserves of the Alaska Housing Finance Corporation to the Department of 20 Commerce, Community, and Economic Development to satisfy the unpaid claim. 21 Sec. 21.60.210. Eligibility for state flood insurance. A person determined by 22 the authority to have an insurable interest in insurable property is eligible to enroll in a 23 state plan described in AS 21.60.160. Additional eligibility requirements for 24 enrollment in a state plan may be imposed if approved by the director. 25 Sec. 21.60.220. Enrollment by an eligible person. A person may apply to 26 enroll in a state plan by applying to the authority. The application must include 27 (1) the name, address, and age of the applicant; 28 (2) a description of the property to be insured sufficient for the 29 authority to investigate and determine its insurability; 30 (3) a designation of the plan desired; and 31 (4) any other information requested by the authority.
01 Sec. 21.60.230. Response by the authority. Within 30 days after receiving the 02 application described in AS 21.60.220, the authority shall provide the applicant with 03 either a notice of rejection for failing to comply with the requirements of 04 AS 21.60.210 and 21.60.220 or a notice of acceptance. 05 Sec. 21.60.240. Effective date of insurance under a state plan. Insurance 06 under a state plan takes effect immediately upon receipt of the first premium if the 07 applicant otherwise complies with the requirements of AS 21.60.100 - 21.60.300. 08 Sec. 21.60.250. Solicitation of eligible persons. (a) The authority, under a 09 plan approved by the director, shall communicate to persons who reside or own 10 property in a special flood hazard area the existence of the state plan and the means of 11 enrollment. Means of communication may include electronic mail, use of the Internet, 12 press, radio, and television, as well as publication through appropriate state offices, 13 state publications, and Internet websites. 14 (b) A person may not sell or market a qualified state plan unless the person is 15 acting within the scope of a license issued in this state. 16 (c) An insurer that rejects or applies underwriting restrictions to an applicant 17 for a flood insurance policy in the state shall notify the applicant of the existence of 18 the state plan, the requirements for being accepted, and the procedure for applying. 19 Sec. 21.60.260. Duties of director; insurance program. The director shall 20 formulate general policy and, after notice and hearing, adopt regulations that are 21 reasonably necessary to administer AS 21.60.100 - 21.60.300. 22 Sec. 21.60.270. State not liable. The state is not liable for acts or omissions of 23 the authority under AS 21.60.100 - 21.60.300. 24 Sec. 21.60.280. Board member civil and criminal immunity. A member of 25 the board may not be held civilly or criminally liable for an act or omission if the act 26 or omission was in good faith and within the scope of the board member's duties under 27 AS 21.60.100 - 21.60.300. 28 Sec. 21.60.290. Alaska flood insurance fund. (a) The Alaska flood insurance 29 fund is established as a separate fund in the state treasury. Premiums, dues, and 30 assessments collected shall be separately accounted for and deposited into the fund. 31 Investment earnings and interest earned on the fund shall be retained in the fund.
01 (b) The legislature may appropriate the annual estimated balance in the fund to 02 the Department of Commerce, Community, and Economic Development to operate the 03 authority and fund the insurance program under AS 21.60.100 - 21.60.300. 04 (c) Payment for claims under the insurance program under AS 21.60.100 - 05 21.60.300 is subject to appropriation. 06 (d) Money in the fund does not lapse. 07 (e) Nothing in this section creates a dedicated fund. 08 (f) Money in the fund may be invested in the same manner and on the same 09 conditions as permitted for investment of money belonging to the state or held in the 10 treasury under AS 37.10.070. 11 Sec. 21.60.300. Definitions. In AS 21.60.100 - 21.60.300, 12 (1) "authority" means the Alaska Flood Authority; 13 (2) "board" means the board of the Alaska Flood Authority; 14 (3) "flood" means 15 (A) a general and temporary condition of partial or complete 16 inundation of normally dry land area from 17 (i) overflow of inland or tidal water; 18 (ii) unusual and rapid accumulation or runoff of surface 19 water from any source; 20 (iii) snow or ice melt; 21 (iv) an atmospheric river; or 22 (v) mudflow; or 23 (B) the collapse or subsidence of land along the shore of a lake 24 or similar body of water because of erosion or undermining caused by waves 25 or currents of water exceeding anticipated cyclical levels that results in a 26 condition described in (A) of this paragraph; 27 (4) "insurable interest" has the meaning given in AS 21.42.030; 28 (5) "insurable property" means real property located in a special flood 29 hazard area in the state and the personal property located on the real property; 30 (6) "property insurance" has the meaning given in AS 21.12.060; 31 (7) "special flood hazard area" means the land in a flood plain in a
01 community subject to a chance of flooding in any given year of one percent or greater 02 where federally mandated purchase of flood insurance applies. 03 * Sec. 4. AS 37.05.146(c) is amended by adding a new paragraph to read: 04 (88) assessments and civil penalties collected under AS 21.60.200. 05 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 06 read: 07 APPLICABILITY. Section 1 of this Act applies to an insurance policy or contract 08 entered into or renewed on or after the effective date of sec. 1 of this Act. 09 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 TRANSITION: PLAN OF OPERATION. If the Alaska Flood Authority fails to 12 submit a suitable plan of operation by January 1, 2027, the director of the division of 13 insurance may adopt regulations to carry out the provisions of this Act. The director shall 14 repeal regulations superseded by a plan submitted by the authority and approved by the 15 director. 16 * Sec. 7. This Act takes effect July 1, 2026.