Title 21. Insurance.

Chapter 03. Scope of Code.

Sec. 21.03.010. Insurance regulated.
 (a) All persons transacting a business of insurance in this state, or relative to a subject resident, located or to be performed in this state, shall comply with the applicable provisions of this title.

 (b) Foreign and alien insurers doing business as authorized insurers under this title are not subject to AS 10.06 (Alaska Corporations Code).

 (c) A person who transacts insurance in this state, or relative to a subject resident, located, or to be performed in this state as or on behalf of a risk retention group or purchasing group formed under and in compliance with 15 U.S.C. 3901 — 3906 (Liability Risk Retention Act), shall comply with the provisions of this title not preempted by federal law.




Sec. 21.03.020. Application of Code as to particular types of insurers. [Repealed, § 2 ch 234 SLA 1968.]
Sec. 21.03.021. Application of title.
 (a) In addition to the exclusion contained in AS 21.03.070, this title does not apply to a life insurance or annuity company organized and operated without profit to any private shareholder or individual exclusively for the purpose of aiding and strengthening educational institutions by issuing insurance and annuity contracts only to or for the benefit of the institutions and individuals engaged in the service of these institutions; however, all policies and contracts issued by such an organization must provide for acceptance of service of process within this state.

 (b) Except as otherwise provided in this title, a person that provides coverage for the cost of medical care in this state is subject to this title unless the person shows that, while providing coverage for medical care, the person is subject to the jurisdiction of another agency of this state or of the federal government by providing the director with the appropriate certificate, license, or other document issued by the other governmental agency that permits or qualifies the person to provide coverage for medical care.

 (c) A person described under (b) of this section who is unable to show that the person is subject to the jurisdiction of another governmental agency under (b) of this section and who has not received a certificate of authority under AS 21.85
     (1) is subject to all appropriate provisions of this title regarding the conduct of the person’s business; and

     (2) shall submit to an examination by the director to determine the organization and solvency of the person and to determine whether the person complies with this title.

 (d) A person that advertises, administers, sells, or transacts the coverage of medical care under (b) of this section and is required to submit to an examination by the director under (c)(2) of this section shall advise every purchaser, prospective purchaser, or covered person that the person’s coverage may not be regulated under Alaska insurance law and may not be covered by the Alaska Life and Health Insurance Guaranty Association under AS 21.79.

 (e) This title does not apply to a service contract offered, issued for delivery, delivered, or renewed in this state. In this subsection, “service contract”
     (1) means a service contract or agreement for a separate or additional consideration, for a specific duration, to
          (A) maintain, service, repair, or replace tangible personal property, or to indemnify for repair, replacement, or maintenance, for an operational or structural failure due to a defect in materials or workmanship or normal wear and tear, with or without additional provision for incidental indemnity payments when service, repair, or replacement is not reasonably or commercially feasible;

          (B) repair, replace, or maintain tangible personal property damaged as a result of power surges or as a result of accidental damage from the handling of property; or

          (C) repair, replace, or maintain household consumer goods, household appliances, and household systems, including damage resulting from operational or structural failure due to a defect in materials or workmanship or normal wear and tear;

     (2) does not include
          (A) mechanical breakdown insurance;

          (B) a contract that requires an indemnity payment for each incident, and the payment exceeds the purchase price of the property serviced;

          (C) a home warranty; in this subparagraph, “home warranty” means a warranty that covers the entire home and does not include a warranty limited to a household system or appliance; or

          (D) portable electronics insurance as defined in AS 21.36.515.

 (f) If an insurer is not required to obtain a certificate of authority in this state under AS 21.09.020(5), the provisions of this title do not apply to policies or contracts issued by the insurer.

 (g) This title does not apply to a portable electronics manufacturer’s warranty or extended warranty.

 (h) A motor vehicle service contract shall be governed by AS 21.61 except as expressly provided in this title.

 (i) A motor vehicle warranty, motor vehicle maintenance agreement, and motor vehicle service contract offered for sale or sold to a person other than a consumer are not insurance and do not have to comply with any provision of this title. In this subsection, “motor vehicle maintenance agreement” means a contract of limited duration that provides for regular maintenance only.

 (j) This title does not apply to the solicitation of an agreement or an agreement between a prospective recipient of ambulance, emergency, or fire protection services and a municipality or community-based nonprofit that provides ambulance, emergency, or fire protection services.

 (k) This title does not apply to a health care sharing ministry. In this subsection, “health care sharing ministry” means an organization that
     (1) is described in 26 U.S.C. 501(c)(3) and exempt from taxation under 26 U.S.C. 501(a);

     (2) is faith-based and whose participants share
          (A) a common set of ethical or religious beliefs; and

          (B) medical expenses among participants in accordance with the common set of ethical or religious beliefs;

     (3) coordinates financial sharing of medical expenses among willing participants in the organization according to criteria established by the organization;

     (4) provides assistance for the financial or medical needs of a participant through contributions from one participant to another;

     (5) provides the amounts of assistance that participants may contribute without an assumption of risk or promise to pay by the participants or the organization;

     (6) provides to all participants written monthly statements that list the total dollar amount of qualified needs submitted to the organization by participants for contribution;

     (7) provides for an annual audit by an independent certified public accountant in accordance with generally accepted accounting principles and makes the annual audit available to the public upon request; and

     (8) provides a written disclaimer on or accompanying all applications and guideline materials distributed by or on behalf of the organization that reads in substance: “Notice: The organization coordinating the sharing of medical expenses is not an insurance company, and neither its guidelines nor plan of operation is an insurance policy. Whether anyone chooses to assist you with your medical bills will be totally voluntary because no other participant will be compelled by law to contribute toward your medical bills. Participation in the organization or a subscription to any of its documents should never be considered to be insurance. Regardless of whether you receive a payment for medical expenses or whether this organization continues to operate, you are always personally responsible for the payment of your own medical bills.”




Secs. 21.03.030 — 21.03.050. Existing certificates of authority and licenses; existing forms and filings; existing domestic insurers. [Repealed, § 47 ch 29 SLA 1987.]
Sec. 21.03.060. Pre-emption.
The state hereby pre-empts the field of regulating insurers and their managing general agents, insurance producers, and representatives. All political subdivisions of the state, including home rule boroughs or cities, are prohibited from requiring of an insurer, managing general agent, insurance producer, or representative regulated under this title an authorization, permit, or registration of any kind for conducting transactions lawful under the authority granted by the state under this title.


Sec. 21.03.070. Exemption for qualified charitable gift annuities.
 (a) Notwithstanding any other provision of this title, the issuance of a qualified charitable gift annuity does not constitute engaging in the business of insurance in this state, and, except as provided by this section, is exempt from regulation by the division under this title.

 (b) When entering into an agreement for a qualified charitable gift annuity, the charitable organization shall set out in writing in the agreement that
     (1) a qualified charitable gift annuity is not an insurance policy in this state, is not subject to regulation by the division, and is not protected by the Alaska Life and Health Insurance Guaranty Association established under AS 21.79.040 or any other association that guarantees payment under a policy of insurance; and

     (2) the state does not in any way approve or endorse the annuity.

 (c) The notice required by (b) of this section must be in bold type and be contained in a separate paragraph, and the print size of the notice must be larger than the print size generally used in the annuity agreement.

 (d) A charitable organization that issues its first qualified charitable gift annuity on or after October 1, 2001 shall notify the division in writing within 90 days after the issuance. The notice
     (1) shall be signed by an officer or director of the charitable organization;

     (2) must provide the name and address of the charitable organization; and

     (3) must certify that
          (A) the charitable organization is a charitable organization; and

          (B) the charitable gift annuities issued by the charitable organization are qualified charitable gift annuities.

 (e) Except for the information required by (d) of this section, a charitable organization is not required to submit information to the division unless the division determines additional information is necessary to determine an appropriate fine under (g) of this section.

 (f) If a charitable organization fails to comply with the notice requirements under (b), (c), or (d) of this section, the qualified charitable gift annuity issued by the charitable organization still receives the exemption for a qualified charitable gift annuity provided by (a) of this section.

 (g) The division may enforce performance with the notice requirements under (b), (c), or (d) of this section by sending a letter by certified mail, return receipt requested, demanding that the charitable organization comply with the requirements. The division may impose a civil penalty on the charitable organization in an amount not to exceed $1,000 for each qualified charitable gift annuity issued by the charitable organization until the charitable organization complies with the requirements.

 (h) In this section,
     (1) “charitable gift annuity” means a transfer of money or other property by a person to a charitable organization in return for the charitable organization’s providing an annuity to the person that is payable over one or two lives and under which the
          (A) actuarial value of the annuity is less than the value of the money or other property transferred; and

          (B) difference in value constitutes a charitable deduction for federal income tax purposes;

     (2) “charitable organization” means a person identified
          (A) in the definition of “charitable contribution” in 26 U.S.C. 170(c) as a person to whom or for whose use a contribution or gift is made; or

          (B) as an exempt organization under 26 U.S.C. 501(c)(3);

     (3) “qualified charitable gift annuity” means an annuity described in 26 U.S.C. 501(m)(5) and 26 U.S.C. 514(c)(5), if the annuity is issued by a charitable organization that on the date of the issuance has
          (A) a minimum of
               (i) $300,000 in unrestricted cash, in cash equivalents, or in publicly traded securities, exclusive of the assets funding the annuity; and

               (ii) three years of continuous operation or is a successor or affiliate of a charitable organization that has been in continuous operation for at least three years; or

          (B) a guarantee that the obligations of the annuity contract will be met by a charitable organization that meets the requirements of (A) of this paragraph.




Chapter 05. Administration.

[Repealed, § 4 ch 120 SLA 1966.]

Chapter 06. The Director of Insurance.

Sec. 21.06.010. Appointment of director.
The commissioner of commerce, community, and economic development shall appoint the director, division of insurance, Department of Commerce, Community, and Economic Development. The director serves at the pleasure of the commissioner.


Sec. 21.06.020. Division of insurance.
 (a) There is created within the Department of Commerce, Community, and Economic Development a division of insurance, which shall be located in or convenient to the office occupied by the commissioner of commerce, community, and economic development.

 (b) The division of insurance shall be under the administrative control of the commissioner of commerce, community, and economic development and the supervision of the director of the division of insurance.




Sec. 21.06.030. Deputies and assistants; volunteers.
 (a) The director may appoint a chief deputy, who shall be in charge of the division of insurance under the direction and control of the director.

 (b) The director may appoint additional deputies for purposes designated by the director.

 (c) The director may employ a competent insurance actuary to perform actuarial duties, if any, of the division, to take charge of or assist in the examination of insurers, and to perform other assigned duties.

 (d) The director may appoint or employ examiners to conduct or assist in examinations provided for under this title as may be competent because of experience or special education or training to fulfill the responsibilities of an insurance examiner.

 (e) The director may appoint and employ a field investigator whose primary duty is to make investigations in this state of violations or claimed violations of this title.

 (f) The director may appoint a chief clerk for the division, and employ other assistants and clerks necessary to discharge the duties of the director under this title.

 (g) The director may contract for and procure, on a fee or part-time basis, or both, actuarial, technical, or other professional services required for the discharge of the director’s duties.

 (h) A volunteer member of an advisory committee who has been appointed by the director under a provision of this title to assist and advise the director on issues or matters concerning a specific area of insurance is not entitled to payment of per diem or travel expenses authorized under AS 39.20.180.




Sec. 21.06.040. Prohibited interests, rewards. [Repealed, § 47 ch 29 SLA 1987.]
Sec. 21.06.050. Delegation of authority.
 (a) The director may delegate to a deputy, assistant, examiner, or employee of the division the exercise or discharge in the director’s name of a power, duty, or function, whether ministerial or discretionary, vested by this title in the director.

 (b) The director is responsible for the official acts of a deputy, assistant, examiner, or employee of the director acting in the name of and by the authority of the director.




Sec. 21.06.060. Records.
 (a) The director shall enter in permanent form records of official transactions, examinations, investigations, and proceedings and keep those records in the office of the director. The records and insurance filings in the office of the director are open to public inspection, except as otherwise provided in (b) — (g) of this section or other provisions of this title with respect to particular records or filings.

 (b) Information and records, including written documents and electronic data, designated as confidential or not available for public inspection under this section or other provisions of this title
     (1) are not subject to inspection and copying under AS 40.25.110 — 40.25.220;

     (2) may not be obtained from the director by subpoena, except for a subpoena issued by a state or federal law enforcement agency or grand jury;

     (3) may be used by the director in a regulatory or legal proceeding; and

     (4) may be released for public inspection if the person who provided the information or records to the director consents or releases incomplete or misleading information on the same topic to the public.

 (c) The director or a person acting under the authority of the director who receives information or records designated in this title as confidential or not available for public inspection may not be permitted or required to testify about the information or records in a civil action not involving the state or a state agency, officer, or employee.

 (d) A person required or requested to provide information or records to the director under this title does not waive a claim of privilege that the person may have by providing the information or records to the director.

 (e) In the performance of duties under this title, the director may
     (1) disclose confidential information or records to the legislature, state, federal, and international regulatory or law enforcement agencies, or the National Association of Insurance Commissioners if the recipient will maintain the confidentiality of the information or records;

     (2) receive information or records from state, federal, and international regulatory or law enforcement authorities or the National Association of Insurance Commissioners and maintain the confidentiality of the information or records if requested to do so or given notice that the information or records are confidential under the law of the jurisdiction supplying them; and

     (3) enter into agreements consistent with this section governing the sharing of information or records that are confidential under this title with other state, federal, and international regulatory or law enforcement agencies or the National Association of Insurance Commissioners for the purpose of furthering any regulatory or legal action that may be taken as part of the recipient’s official duties.

 (f) The following information or records submitted to or obtained by the director are confidential:
     (1) personally identifiable consumer information; however, the director may disclose the information or records for the purpose of attempting to resolve a consumer complaint;

     (2) information or records established by a showing satisfactory to the director to be a trade secret or proprietary business information, including
          (A) detailed health insurance claim cost data; and

          (B) justification for usual, customary, and reasonable charge determinations;

     (3) information or records provided by a person not subject to this title at the request of the director if the information or records are identified as confidential by the director; and

     (4) analysis ratios and examination synopses concerning insurance companies that are submitted to the director by the National Association of Insurance Commissioners.

 (g) The director may withhold information or records from public inspection for as long as the director finds the withholding is
     (1) necessary to protect a person against unwarranted injury; or

     (2) in the public interest.




Sec. 21.06.070. Evidence.
 (a) A copy of a record or document in the office of the director that is certified as a true copy by the director shall be received in evidence in any court as if it were the original.

 (b) The director shall furnish upon request a certificate as to the authority of a person to transact insurance. The certificate is evidence of the facts set out in the certificate.




Sec. 21.06.080. General powers, duties; catastrophes.
 (a) The director shall enforce the provisions of this title, and shall execute the duties imposed by this title.

 (b) The director has the power and authority expressly conferred by or reasonably implied from the provisions of this title.

 (c) The director may conduct examinations and investigations of insurance matters, in addition to examinations and investigations expressly authorized, considered proper to determine whether any person has violated a provision of this title or to secure information useful in the lawful administration of its provisions.

 (d) If the director determines that a catastrophe has occurred in this state and in good faith believes that the governor or the President of the United States has issued or is about to issue a declaration of disaster, the director may take the action that the director considers necessary to assure that a contract of insurance already issued will be honored under the terms of the contract. Actions that the director may take include emergency orders permitting the immediate licensing of adjusters to facilitate handling of claims, permitting a licensee to open or close an office, permitting a licensee to move or remove a record as required by the existence of the catastrophe, or permitting the issuance by an insurer of checks or drafts drawn on an out-of-state bank in payment of a claim. Until a declaration of the disaster has been lifted, the director may take action to respond to a disaster without a hearing. An action taken under this subsection may not remain in effect more than six months from the date that the director determines that a catastrophe has occurred unless, after a hearing, the director determines that the action is still necessary to respond to the disaster.

 (e) The director has such additional powers and duties as may be provided by other laws of this state.




Sec. 21.06.085. Uniform data and procedures for health claims.
 (a) The director shall adopt by regulation uniform claims forms, uniform standards, and uniform procedures for the processing of data relating to billing for and payment of health care services provided to state residents. A health care insurer shall use the uniform claims forms and comply with the uniform standards and procedures established under this section.

 (b) In this section,
     (1) “health care insurer” has the meaning given in AS 21.54.500;

     (2) “health care services” has the meaning given in AS 21.86.900.




Sec. 21.06.087. Insurance report.

Sec. 21.06.090. Regulations.
 (a) The director may adopt reasonable regulations to effectuate this title. A regulation may not extend, modify, or conflict with any law of this state or the reasonable implications thereof. Except for regulations adopted under AS 21.06.250, a regulation affecting a person or matter other than the personnel or the internal affairs of the director’s office shall be adopted or amended only after a hearing, of which notice was given as required by AS 21.06.200. If reasonably possible the director shall set out the proposed regulation or amendment in or with the notice of hearing. A regulation or amendment as to which a hearing is required is not effective until it has been on file as a public record in the director’s office for at least 10 days.

 (b) In addition to any other penalty provided, wilful violation of a regulation subjects the violator to the administrative penalty prescribed for that violation.




Sec. 21.06.100. Orders, notices.
 (a) Orders and notices of the director are not effective unless in writing signed by or under the authority of the director.

 (b) Every order must state its effective date and must concisely state
     (1) its intent or purpose;

     (2) the grounds on which it is based;

     (3) the provisions of this title under which the action is taken or proposed to be taken; the failure of an order to designate a particular provision of this title does not deprive the director of the right to rely on the particular provision.

 (c) Except as may be provided in this title respecting particular procedures, an order or notice may be given by delivery to the person to be ordered or notified or by mailing it, postage prepaid, addressed to the person at the principal place of business as last of record in the director’s office. A mailed order or notice is considered given when mailed.




Sec. 21.06.110. Director’s annual report.
As early in each calendar year as is reasonably possible, the director shall prepare and deliver an annual report to the commissioner, who shall notify the legislature that the report is available, showing, with respect to the preceding calendar year,
     (1) a list of the authorized insurers transacting insurance in this state, with a summary of their financial statement as the director considers appropriate;

     (2) the name of each insurer whose certificate of authority was surrendered, suspended, or revoked during the year and the cause of surrender, suspension, or revocation;

     (3) the name of each insurer authorized to do business in this state against which delinquency or similar proceedings were instituted and, if against an insurer domiciled in this state, a concise statement of the facts with respect to each proceeding and its present status;

     (4) a statement in regard to examination of rating organizations, advisory organizations, joint underwriters, and joint reinsurers as required by AS 21.39.120;

     (5) the receipt and expenses of the division for the year;

     (6) recommendations of the director as to amendments or supplementation of laws affecting insurance or the office of director;

     (7) statistical information regarding health insurance, including the number of individual and group policies sold or terminated in the state; this paragraph does not authorize the director to require an insurer to release proprietary information;

     (8) the annual percentage of health claims paid in the state that meets the requirements of AS 21.36.495(a) and (d);

     (9) the total amount of contributions reported and the total amount of credit claimed under AS 21.96.070 and 21.96.075;

     (10) the total number of public comments received and the director’s efforts, to the extent allowable by law, to improve or maintain public access to information on individual health insurance rate filings before they become effective; and

     (11) other pertinent information and matters the director considers proper.




Sec. 21.06.115. Duty to inform public.
The director shall regularly inform the public of matters concerning the purchase, price, coverage, benefits, and rights of insurance marketed in this state and make available information on availability of the services of the division of insurance. The director shall prepare, publish, and revise as it becomes useful or necessary to do so, an information pamphlet on insurance and the rights of a consumer of insurance and on how to take advantage of the services of the division of insurance.


Sec. 21.06.120. Examination of insurers.
 (a) The director may examine the affairs, transactions, accounts, records, and assets of each authorized and formerly authorized insurer and each licensed and formerly licensed managing general agent, reinsurance intermediary broker, reinsurance intermediary manager, surplus lines broker, and surplus lines association as often as the director considers advisable. In scheduling and determining the nature, scope, and frequency of examinations, the director may consider any factor or material that the director determines is appropriate, including the results of financial statement analysis and ratios, competency of management or change of ownership, actuarial opinions, reports of independent certified public accountants, number and nature of consumer complaints, results of prior examinations, frequency of prior violations of statute and regulation, and criteria set out in the most recent edition of the Financial Condition Examiners Handbook and the Market Regulation Handbook approved by the National Association of Insurance Commissioners and in effect when the director conducts an examination. Examination of an alien insurer may be limited to its insurance transactions and affairs in the United States. Examination of a reciprocal insurer may also include examination of its attorney-in-fact to the extent that the transactions of the attorney-in-fact relate to the insurer.

 (b) The director shall in like manner examine each insurer applying for an initial certificate of authority to do business in this state.

 (c) In place of an examination by the director, the director may accept a full report of the last recent examination of a foreign or alien insurer, issued by the insurance supervisory official of another state, territory, commonwealth, or district of the United States. The director may require that the
     (1) insurance regulatory agency conducting the examination be, at the time of the examination, accredited by the National Association of Insurance Commissioners;

     (2) examination be performed under the supervision of an insurance regulatory agency accredited by the National Association of Insurance Commissioners; and the supervising examiner, after a review of the examination work papers and report, state under oath that the examination and report comply with the standards and procedures required by their accredited state insurance regulatory agency; or

     (3) examiner conducting the examination be employed by an insurance regulatory agency accredited at the time of the examination by the National Association of Insurance Commissioners and that the examiner, after review of the examination work papers and report, state under oath that the examination and report comply with the standards and procedures required by the accredited insurance regulatory agency.

 (d) The director may examine insurers in participation with the National Association of Insurance Commissioners.

 (e) The director may use a contract examiner to carry out the functions of this section. The selection of a contract examiner and the award of a contract is subject to AS 36.30 (State Procurement Code), except when the director makes a written determination that an emergency selection and contract award is necessary.

 (f) For the purpose of completing an examination of a person under this title, the director may examine or investigate any person, or the business of any person, if the director determines that the examination or investigation is necessary or material to the examination of the person.

 (g) The director shall examine a domestic insurer at least once every three years. The director may examine a domestic insurer at any time when the director determines that an examination or investigation is necessary. Unless the director determines an insurer is in danger of becoming impaired, when the director intends to conduct an interim examination of a domestic insurer covering the same subjects that were included in the scope of the last examination report, the director shall give at least 10 days prior written notice stating the scope and purpose of the examination. In this subsection, “interim examination” means an examination of a domestic insurer that occurs within three years after the start of the domestic insurer’s last examination.




Sec. 21.06.130. Examination of producers, adjusters, and promoters.
 (a) To determine compliance with this title, the director may, as often as the director has reasonable cause, examine or require a written report from a person of the accounts, records, documents, and transactions pertaining to or affecting the insurance affairs or proposed insurance affairs of
     (1) an insurance producer or independent adjuster; or

     (2) a person engaged in or proposing to be engaged in or assisting in the promotion or formation of a domestic insurer or insurance holding corporation, or corporation to finance a domestic insurer or the production of its business.

 (b) [Repealed, § 223 ch 67 SLA 1992.]




Sec. 21.06.140. Conduct of examination.
 (a) The director shall conduct the examination at the home office of a domestic, foreign, or Canadian insurer, or the United States branch office of an alien insurer, or in any of its branch or agency offices; or with respect to persons other than insurers, at the office or other place or places where the records are kept.

 (b) Every person being examined, or from whom information is sought, and its officers, employees, agents, and representatives shall provide to the director timely, convenient, and free access, at all reasonable hours at its office, the books, accounts, records, documents, files, information, assets, and matters in their possession or control relating to the subject of the examination, including all computer or other recordings relating to the property, assets, business, and affairs of the person being examined, and shall facilitate and aid the examination as far as it is in their power to do so, including providing to the director, at the expense of the person being examined, a copy of any document requested during the examination. The director may suspend, revoke, or refuse to issue or renew a license or authority of a person engaging in the business of insurance or other business under the jurisdiction of the director if the person or an officer, director, employee, or agent of the person refuses to submit to examination or to comply with a reasonable written request of an examiner.

 (c) If the director finds financial or other records to be inadequate or inadequately kept or posted or if an insurer’s financial records are not kept as required by the Accounting Practices and Procedures Manual currently approved by the National Association of Insurance Commissioners after the director has issued an order citing the inadequacy of the accounts and given a reasonable opportunity to complete or correct the accounting, the director may employ experts to rewrite, post, or balance them at the expense of the person being examined.

 (d) When conducting an examination under this section, the director may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners, the reasonable cost of which shall be paid by the person being examined under AS 21.06.160(a).

 (e) As far as practical the director shall conduct the examination of a foreign or alien insurer in cooperation with the insurance supervisory officials of other states in which the insurer transacts business, and for this purpose the director may participate in joint examinations of insurers or be represented at an examination by an examiner of another state.

 (f) In conducting an examination under this section, the examiner shall observe at a minimum those guidelines and procedures set out in the most recent edition of the Financial Condition Examiners Handbook and the Market Regulation Handbook approved by the National Association of Insurance Commissioners that are consistent with this title.

 (g) An examiner may not be appointed by the director if the examiner, either directly or indirectly, has a conflict of interest or is affiliated with the management of or owns a pecuniary interest in a person subject to examination under this title. This section may not be construed to automatically preclude an examiner from being, in the ordinary course of business,
     (1) a policyholder or claimant under an insurance policy;

     (2) a grantor of a mortgage or similar instrument on the examiner’s residence to a regulated entity if obtained under customary terms;

     (3) an investment owner in shares of regulated mutual fund companies; or

     (4) a settlor or beneficiary of a blind trust into which otherwise impermissible holdings have been placed.

 (h) The director may terminate or suspend an examination in order to pursue other legal or regulatory action under this title.

 (i) In a judicial or administrative proceeding a factual determination made in an examination report approved under AS 21.06.150(b)(1) is prima facie evidence of the fact.




Sec. 21.06.150. Examination reports.
 (a) An examination report may only consist of facts appearing upon the books, records, or other documents of the examined person, the person’s agents, or other persons examined, or facts determined from the testimony of officers, agents, or other persons examined concerning the person’s affairs, and the conclusions and recommendations that the examiners find reasonably warranted from the facts.

 (b) The examiner shall file with the division a written report of an examination, signed by the examiner under oath, not later than 60 days following the last day of examination field work. The period for filing the report may be extended for 60 additional days upon approval of the director. Upon receipt of the report, the division shall transmit the report to the person being examined, together with a notice that gives the person being examined a period of 30 days to make a written submission or rebuttal with respect to matters contained in the examination report. Within 30 days of the end of the period allowed for the receipt of written submissions or rebuttals, the director shall fully consider and review the report, together with any written submissions or rebuttals, and any relevant portions of the examiner’s work papers and enter an order
     (1) approving the examination report as filed or approving the examination report with modification or corrections;

     (2) rejecting the examination report with directions to the examiners to reopen the examination for the purpose of obtaining additional data, documentation, or information and refiling the report under this section; or

     (3) setting an investigatory hearing under the procedures of AS 21.06.200 and 21.06.210(a) — (d) for purposes of obtaining additional information and testimony.

 (c) In the event the director determines that regulatory action is appropriate as a result of an examination, the director may enter orders and initiate proceedings as provided by law. The director may use an examination report, work papers or other documents, the testimony of the examiners, or other information discovered or developed during the course of an examination in a judicial or administrative proceeding, whether or not a written report of the examination at the time has been made, transmitted, or approved by the director.

 (d) The director may disclose the content of an examination report, preliminary examination report or results, or a matter relating to it to the insurance division of this or another state or country and to law enforcement officers of this or another jurisdiction. Except as allowed by this section or other provision of law, the director may not disclose the contents of a preliminary examination report before the report is filed in the office of the director under AS 21.06.060.

 (e) An order entered under (b)(1) of this section must be accompanied by findings of fact and conclusions of law resulting from the director’s consideration and review of the examination report, relevant examiner work papers, and written submissions or rebuttals.

 (f) Within 30 days of the receipt of the approved report, the person examined shall file affidavits executed by each director and the chief executive officer or equivalent officer stating under oath that they have received and reviewed a copy of the approved report and related orders.

 (g) Information or records obtained by the director under AS 21.06.120 or 21.06.140 and any related work papers of an examination are confidential. The director may publish an examination report or a summary of it in a newspaper or electronic media in the state if the director determines that the publication is in the public interest.




Sec. 21.06.160. Examination expense.
 (a) Each person examined, other than examinations under AS 21.06.130 and examinations of managing general agents, third-party administrators, reinsurance intermediary managers, motor vehicle service contract providers, or surplus lines brokers, shall pay a reasonable rate calculated on salary, benefit costs, and estimated division overhead for time spent directly or indirectly related to the examination. Each person examined, other than examinations under AS 21.06.130, shall pay actual out-of-pocket business expenses, including travel expenses, incurred by division staff examiners and shall pay the compensation of a contract examiner, to be set at a reasonable customary rate, for conducting the examination upon presentation of a detailed account of the charges and expenses by the director or under an order of the director. The director may waive payment of all or part of the actual out-of-pocket business expenses incurred by division staff examiners, or the compensation of a contract examiner, if the director determines that payment of the expenses or compensation creates a financial hardship for a managing general agent, third-party administrator, reinsurance intermediary manager, motor vehicle service contract provider, or surplus lines broker. The accounting may either be presented periodically during the course of the examination or at the termination of the examination. A person may not pay and an examiner may not accept additional compensation for an examination. A person shall pay examination expenses to the division under this subsection using an electronic payment method specified by the director.

 (b) The director shall pay into the general fund of the state all money received under (a) of this section. Instead of charging and collecting the costs and expenses of the examination under (a) of this section, the director may give written authorization for the person examined to make direct payment to the contract examiner for all or part of the contract examiner’s compensation or expenses. The contract between the state and a contract examiner who will receive direct payment under this subsection must require that the examiner provide the director with a copy of each billing for the examination.

 (c) In addition to other penalties provided by this title, if the person fails to pay the charges and expenses prescribed in (a) of this section, the amount may be recovered by suit by the attorney general on behalf of the state and restored to the general fund. The amount due shall be a first lien upon all of the assets and property of the person in this state.




Sec. 21.06.165. Immunity for director and others.
 (a) The director, employees or agents of the division, and the National Association of Insurance Commissioners and its employees, are not liable for civil damages for an act or omission in the execution of their authorized activities or duties under this title, or for the publication or dissemination of a report or bulletin related to their authorized activities or duties.

 (b) A person may not bring a civil action if the civil action arises out of the act of communicating or delivering information to the director, a representative of the director, or an examiner who is performing an examination under this title.

 (c) This section does not abrogate or modify the common law or other statutory privilege or immunity.

 (d) This section does not preclude liability for civil damages as a result of reckless, wilful, or intentional misconduct.




Sec. 21.06.170. Witnesses, evidence, and contempt.
 (a) With respect to the subject of an examination, investigation, or hearing being conducted by the director or an examiner, if general written authority has been given the examiner by the director, the director or the examiner may subpoena witnesses and administer oaths or affirmations and examine any person under oath, and may compel the production of records, books, papers, contracts, and other documents by attachments, if necessary. If, in connection with an examination of an insurer, the director desires to examine an officer, director, or manager who is then outside this state, the director is authorized to conduct and to enforce by appropriate and available means an examination under oath in another state or a territory of the United States in which the officer, director, or manager may then presently be, to the full extent permitted by the laws of the other state or territory, this special authorization considered. An administrative law judge from the office of administrative hearings (AS 44.64.010) conducting a hearing under this title may, in the course of the hearing, exercise the powers granted to the director under this subsection.

 (b) Witness fees and mileage, if claimed, shall be allowed the same as for testimony in a court. Witness fees, mileage, and the actual expenses necessarily incurred in securing attendance of witnesses and their testimony shall be itemized, and shall be paid by the person being examined if the person is found to have violated the law regarding the matter for which the witness was subpoenaed, or shall be paid by the person, if other than the director, at whose request the hearing is held.

 (c) Subpoenas of witnesses shall be served in the same manner as if issued from a court.

 (d) If a person disobeys or resists a lawful order of the administrative law judge or director, refuses to respond to a subpoena, refuses to take oath or affirmation as a witness, refuses to be examined, or is guilty of misconduct at a hearing or so near the hearing as to obstruct the proceeding, the administrative law judge or director shall certify the facts to the superior court where the hearing is held, and, upon certification, the court shall issue an order directing the person to appear before the court and show cause why the person should not be punished for contempt.

 (e) [Repealed, § 22 ch 149 SLA 1984.]




Sec. 21.06.180. Hearings.
 (a) The director may hold hearings for any purpose within the scope of this title considered to be necessary.

 (b) The office of administrative hearings (AS 44.64.010) shall conduct a hearing on behalf of the director if required under AS 44.64.030. Otherwise, the director shall conduct a hearing if required by a provision of this title, or upon written demand to the director by a person aggrieved by an act, threatened act, or failure of the director to act, or by a report, regulation, or order of the director (other than an order for the holding of a hearing, or an order on hearing or under it). A demand must specify the grounds to be relied upon at the hearing as a basis for the relief. Except as provided under AS 21.27.420(d), unless postponed by mutual consent or for good cause shown, the hearing shall be held within 30 days after receipt by the director of the written demand.

 (c) Except as provided under AS 21.27.420(d), if, within the 30-day period, the director does not either (1) grant the hearing, or (2) issue an order refusing the hearing, as to the previous report, regulation, or order as to which the person so claims to be aggrieved, the hearing shall be considered to have been refused.




Sec. 21.06.190. Stay of action.
 (a) Except as provided in AS 21.27.420(d), a demand for a hearing received by the director before the effective date of an order issued or within 10 days after an order is delivered stays the effectiveness of the order pending the hearing and an order made thereon, except as to action taken or proposed under an order
     (1) on hearing;

     (2) under and supplemental to an order on hearing; or

     (3) based upon impairment of assets or unsound financial condition of an insurer.

 (b) If an automatic stay is not provided for and the director after receipt of a written request for a stay fails to grant it, the person aggrieved may apply to the superior court for a stay of the director’s proposed action.




Sec. 21.06.200. Notice of hearing.
Not less than 20 days in advance, the administrative law judge or director shall give notice of the time and place of the hearing, stating the matters to be considered at the hearing. If the persons to be given notice are not specified in the provision under which the hearing is held, the administrative law judge or director shall give notice to all persons whose pecuniary interests are to be directly and immediately affected by the hearing.


Sec. 21.06.210. Hearing procedure.
 (a) The administrative law judge or director shall allow a party to the hearing to appear in person and by counsel, to be present during the giving of all evidence, to have a reasonable opportunity to inspect all documentary evidence and to examine witnesses, to present evidence in support of the party’s interest, and to have subpoenas issued by the administrative law judge or director to compel attendance of witnesses and production of evidence in the party’s behalf.

 (b) The administrative law judge or director shall permit to become a party to the hearing by intervention, if timely, any person who was not an original party to the proceeding and whose pecuniary interests are to be directly and immediately affected by the director’s order made upon the hearing.

 (c) Formal rules of pleading or evidence need not be observed at a hearing.

 (d) Upon written request seasonably made by a party to the hearing and at that person’s expense, the administrative law judge or director shall cause a full stenographic record of the proceedings to be made by a competent reporter. If transcribed, a copy of the stenographic record shall be furnished to the director, without cost to the director or the state, and shall be a part of the director’s record of the hearing. If transcribed, a copy of the stenographic record shall be furnished to any other party to the hearing at the request and expense of the other party. If no stenographic record is made or transcribed, the administrative law judge or director shall prepare an adequate record of the evidence and of the proceedings.

 (e) Upon written request of a party to a hearing filed with the director within 30 days after an order made pursuant to a hearing has been mailed or delivered to the persons entitled to receive it, the director may grant a rehearing or reargument of the matters involved in the hearing. Notice of the rehearing or reargument must conform to the requirements of AS 21.06.200.

 (f) If the parties agree, the administrative law judge or director may conduct a hearing under this section by teleconference.

 (g) A witness at a hearing under this section may testify telephonically.

 (h) The administrative law judge or director may close a hearing to the public when the administrative law judge or director finds the closure is necessary to protect a person against unwarranted injury or is in the public interest.




Sec. 21.06.220. Order on hearing.
 (a) In conducting the hearing, the administrative law judge or director shall sit in a quasi-judicial capacity. Within 45 days after termination of the hearing, rehearing, or reargument, the director shall make an order on hearing, covering matters involved in the hearing, rehearing, or reargument, and shall give a copy of the order to the same persons given notice of the hearing.

 (b) The order must contain a concise statement of the facts found by the director, the conclusions of the director, and the matters required by AS 21.06.100.

 (c) The order may affirm, modify, or nullify a previous action or may constitute the taking of new action within the scope of the notice of hearing.




Sec. 21.06.230. Appeals from the director.
A person aggrieved by an order of the director may appeal the order to the superior court using procedures provided by court rule.


Sec. 21.06.240. Hearings inapplicable to rate making.
The hearing and appeal procedures provided for in AS 21.06.180 — 21.06.230 do not apply to matters covered by AS 21.39 (Rates and Rating Organizations).


Sec. 21.06.250. Fees and licenses.
The director shall collect in advance a fee for each license and for services performed by the division of insurance. Fees may be collected for but are not limited to applications, licenses and license renewals, certificates of authority, service of process, printed or photocopied material, and postage. The director shall adopt regulations setting the fees in an amount the director determines to be sufficient to reimburse the state for the actual expense incurred in providing a service. The director may require by regulation that an insurer or other licensee pay a fee by electronic means.


Sec. 21.06.255. Information for child support purposes.
Notwithstanding any other provision of this title, a natural person who applies for a license or requests renewal of a license issued by the director under this title shall provide the director with the person’s social security number. Upon request, the director shall provide a social security number provided under this section to the child support services agency created in AS 25.27.010, or the child support enforcement agency of another state, for child support purposes authorized under law.


Sec. 21.06.260. Accounting and disposition of fees. [Repealed, § 28 ch 90 SLA 1991.]

Chapter 07. Patient Protections Under Health Care Insurance Policies.

Sec. 21.07.005. Regulations relating to health care insurance policies.
 (a) The director shall adopt regulations to provide standards and criteria for
     (1) the structure and operation of utilization review and benefit determination processes;

     (2) the establishment and maintenance of procedures by health care insurers to ensure that a covered individual has the opportunity for appropriate resolution of grievances; and

     (3) an independent review of an adverse determination or final adverse determination.

 (b) The regulations under (a) of this section must be at least as restrictive as the Utilization Review and Benefit Determination Model Act adopted by the National Association of Insurance Commissioners on June 22, 2003, the Health Carrier Grievance Procedure Model Act adopted by the National Association of Insurance Commissioners on June 22, 2003, and the Uniform Health Carrier External Review Model Act adopted by the National Association of Insurance Commissioners on June 2, 2008.

 (c) The director may adopt regulations for the registration and regulation of independent review organizations, including the establishment of fees in an amount the director determines to be sufficient to reimburse the state for actual expenses incurred in providing a service.




Sec. 21.07.010. Patient and health care provider protection.
 (a) A contract between a participating health care provider and a health care insurer must contain a provision that
     (1) provides for a reasonable mechanism to identify all medical care services to be provided by the health care insurer;

     (2) clearly states or references an attachment that states the health care provider’s rate of compensation;

     (3) clearly states all ways in which the contract between the health care provider and health care insurer may be terminated; a provision that provides for discretionary termination by either party must apply equitably to both parties;

     (4) provides that, in the event of a dispute between the parties to the contract, a fair, prompt, and mutual dispute resolution process must be used; at a minimum, the process must provide
          (A) for an initial meeting at which all parties are present or represented by individuals with authority regarding the matters in dispute; the meeting shall be held within 10 working days after the health care insurer receives written notice of the dispute or gives written notice to the provider, unless the parties otherwise agree in writing to a different schedule;

          (B) that if, within 30 days following the initial meeting, the parties have not resolved the dispute, the dispute shall be submitted to mediation directed by a mediator who is mutually agreeable to the parties and who is not regularly under contract to or employed by either of the parties; each party shall bear its proportionate share of the cost of mediation, including the mediator fees;

          (C) that if, after a period of 60 days following commencement of mediation, the parties are unable to resolve the dispute, either party may seek other relief allowed by law;

          (D) that the parties shall agree to negotiate in good faith in the initial meeting and in mediation;

     (5) states that a health care provider may not be penalized or the health care provider’s contract terminated by the health care insurer because the health care provider acts as an advocate for a covered person in seeking appropriate, medically necessary medical care services;

     (6) protects the ability of a health care provider to communicate openly with a covered person about all appropriate diagnostic testing and treatment options; and

     (7) defines words in a clear and concise manner.

 (b) A contract between a participating health care provider and a health care insurer that offers a health care insurance policy may not contain a provision that
     (1) has as its predominant purpose the creation of direct financial incentives to the health care provider for withholding covered medical care services that are medically necessary; nothing in this paragraph shall be construed to prohibit a contract between a participating health care provider and a health care insurer from containing incentives for efficient management of the utilization and cost of covered medical care services;

     (2) requires the provider to contract for all products that are currently offered or that may be offered in the future by the health care insurer; or

     (3) requires the health care provider to be compensated for medical care services performed at the same rate as the health care provider has contracted with another health care insurer.

 (c) A health care insurer may not enter into a contract with a health care provider that requires the provider to indemnify or hold harmless the health care insurer for the acts or conduct of the health care insurer. An indemnification or hold harmless clause entered into in violation of this subsection is void.




Sec. 21.07.020. Required contract provisions for health care insurance policy.
A health care insurance policy must contain a provision
     (1) that preauthorization for a covered medical procedure on the basis of medical necessity may not be retroactively denied unless the preauthorization is based on materially incomplete or inaccurate information provided by or on behalf of the provider;

     (2) for emergency services that meet the requirements under 42 U.S.C. 300gg-19a(b) if any coverage is provided for treatment of an emergency medical condition;

     (3) that covered medical care services be reasonably available in the community in which a covered person resides or that, if referrals are required by the policy, adequate referrals outside the community be available if the medical care service is not available in the community;

     (4) that discloses covered benefits, optional supplemental benefits, and benefits relating to and restrictions on nonparticipating provider services;

     (5) describing a mechanism for assignment of benefits for health care providers and payment of benefits;

     (6) describing the availability of prescription medications or a formulary guide, and whether medications not listed are excluded; if a formulary guide is made available, the guide must be updated annually; and

     (7) describing available translation or interpreter services, including audiotape or braille information.




Sec. 21.07.030. Choice of health care provider.
 (a) If a health care insurer offers a health care insurance policy that provides for coverage of medical care services only if the services are furnished through a network of health care providers that have entered into a contract with the health care insurer, the health care insurer shall also offer a non-network option to covered persons at initial enrollment, as provided under (c) of this section. The non-network option may require that a covered person pay a higher deductible, copayment, or premium for the plan if the higher deductible, copayment, or premium results from increased costs caused by the use of a non-network provider. This subsection does not apply to a covered person who is offered non-network coverage through another health care insurance policy or through another health care insurer.

 (b) The amount of any additional premium charged by the health care insurer for the additional cost of the creation and maintenance of the option described in (a) of this section and the amount of any additional cost sharing imposed under this option shall be paid by the covered person unless it is paid by an employer or other person through agreement with the health care insurer.

 (c) A covered person may make a change to the medical care coverage option provided under this section only during a time period determined by the health care insurer. The time period described in this subsection must occur at least annually and last for at least 15 working days.

 (d) If a health care insurer that offers a health care insurance policy requires or provides for a designation by a covered person of a participating primary care provider, the health care insurer shall permit the covered person to designate any participating primary care provider, including a pediatrician, that is available to accept the covered person.

 (e) Except as provided in this subsection and (h) of this section, a health care insurer that offers a health care insurance policy shall permit a covered person to receive medically necessary or appropriate specialty care, subject to appropriate referral procedures, from any qualified participating health care provider that is available to accept the individual for medical care. This subsection does not apply to specialty care if the health care insurer clearly informs covered persons of the limitations on choice of participating health care providers with respect to medical care. In this subsection,
     (1) “appropriate referral procedures” means procedures for referring patients to other health care providers as set out in the applicable member policy and as described under (a) of this section;

     (2) “specialty care” means care provided by a health care provider with training and experience in treating a particular injury, illness, or condition.

 (f) If a contract between a health care provider and a health care insurer is terminated, a covered person may continue to be treated by that health care provider as provided in this subsection. If a covered person is pregnant or being actively treated by a provider on the date of the termination of the contract between that provider and the health care insurer, the covered person may continue to receive medical care services from that provider as provided in this subsection, and the contract between the health care insurer and the provider shall remain in force with respect to the continuing treatment. The covered person shall be treated for the purposes of benefit determination or claim payment as if the provider were still under contract with the health care insurer. However, treatment is required to continue only while the health care insurance policy remains in effect and
     (1) for the period that is the longest of the following:
          (A) the end of the current policy or plan year;

          (B) up to 90 days after the termination date, if the event triggering the right to continuing treatment is part of an ongoing course of treatment;

          (C) through completion of postpartum care, if the covered person is pregnant on the date of termination; or

     (2) until the end of the medically necessary treatment for the condition, disease, illness, or injury if the person has a terminal condition, disease, illness, or injury; in this paragraph, “terminal” means a life expectancy of less than one year.

 (g) The requirements of this section do not apply to medical care services covered by Medicaid.

 (h) A health care insurer that offers a health care insurance policy that provides coverage for obstetrical and gynecological care and that requires designation by a covered person of a participating primary care provider may not require authorization or referral by any person, including a primary care provider, for a female patient to receive obstetrical and gynecological care from a participating health care professional who specializes in obstetrics or gynecology. A participating health care professional who specializes in obstetrics or gynecology shall agree to adhere to the health care insurer’s policies and procedures, including procedures regarding referrals, obtaining prior authorization, and providing services under a treatment plan, if any, approved by the health care insurer. A health care insurer shall treat authorizations by a health care professional who specializes in obstetrical or gynecological care as the authorization of the primary care provider. This subsection may not be construed to
     (1) waive any exclusions of coverage under the terms and conditions of the health care insurance policy with respect to coverage of obstetrical and gynecological care; or

     (2) preclude a health care insurer from requiring that the health care provider who specializes in obstetrical or gynecological care to notify the primary care provider or the health care insurer of treatment decisions.




Sec. 21.07.040. Confidentiality of managed care information. [Repealed, § 94(a) ch 23 SLA 2011.]
Secs. 21.07.050 — 21.07.070. External health care appeals; qualifications of external appeal agencies; limitation on liability of reviewers.

Sec. 21.07.080. Religious nonmedical providers.
This chapter may not be construed to
     (1) restrict or limit the right of a health care insurer to include services provided by a religious nonmedical provider as medical care services covered by the health care insurance policy;

     (2) require a health care insurer, when determining coverage for services provided by a religious nonmedical provider, to
          (A) apply medically based eligibility standards;

          (B) use health care providers to determine access by a covered person;

          (C) use health care providers in making a decision on an internal or external appeal; or

          (D) require a covered person to be examined by a health care provider as a condition of coverage; or

     (3) require a health care insurance policy to exclude coverage for services provided by a religious nonmedical provider because the religious nonmedical provider is not providing medical or other data required from a health care provider if the medical or other data is inconsistent with the religious nonmedical treatment or nursing care being provided.




Sec. 21.07.090. Construction.
This chapter may not be construed to supersede or change the provisions of 29 U.S.C. 1001 — 1191 (Employee Retirement Income Security Act of 1974) as those provisions apply to self-insured employers.


Sec. 21.07.250. Definitions.
In this chapter,
     (1) [Repealed, § 65 ch 41 SLA 2016.]
     (2) [Repealed, § 65 ch 41 SLA 2016.]
     (3) “emergency medical condition” means a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, that a prudent person who possesses an average knowledge of health and medicine could reasonably expect that the absence of immediate medical attention would result in serious impairment of bodily functions, serious dysfunction of a bodily organ or part, or would place the person’s health or, with respect to a pregnant woman, the health of the woman or her unborn child, in serious jeopardy.

     (4) “emergency services” means medical care services or items furnished or required to evaluate and treat an emergency medical condition;

     (5) “health care insurer” has the meaning given in AS 21.54.500;

     (6) “health care provider” means a person licensed in this state or another state of the United States to provide medical care services;

     (7) “health insurance” has the meaning given in AS 21.12.050(a);

     (8) [Repealed, § 65 ch 41 SLA 2016.]
     (9) “medical care” has the meaning given in AS 21.97.900;

     (10) “participating health care provider” means a health care provider who has entered into an agreement with a health care insurer to provide services or supplies to a patient covered by a health care insurance policy;

     (11) “primary care provider” means a health care provider who provides general medical care services and does not specialize in treating a single injury, illness, or condition or who provides obstetrical, gynecological, or pediatric medical care services;

     (12) “provider” means a health care provider;

     (13) “religious nonmedical provider” means a person who provides only religious nonmedical treatment or nursing care for an illness or injury;

     (14) "utilization review" means a set of techniques designed to monitor the use of, or evaluate the clinical necessity, appropriateness, efficacy, or efficiency of, health care services, procedures, or settings; techniques may include ambulatory review, prospective review, second opinion certification, concurrent review, case management, discharge planning, or retrospective review.




Chapter 09. Authorization of Insurers and General Requirements.

Sec. 21.09.010. Certificate of authority required.
 (a) A person may not act as an insurer and an insurer may not transact insurance in this state except as authorized by a subsisting certificate of authority issued to it by the director, except as to transactions that are expressly otherwise provided for in this title.

 (b) An insurer may not have or maintain in this state an office, representative, or other facility for the solicitation or servicing of any kind of insurance in another state unless the insurer is authorized to transact the same kind of insurance in this state.




Sec. 21.09.020. Exception from certificate of authority requirement.
A certificate of authority is not required of an insurer, not otherwise authorized in this state, with regard to
     (1) transactions relative to its policies lawfully written in the state, or liquidation of assets and liabilities of the insurer, other than collection of new premiums, resulting from its former authorized operations in the state;

     (2) related transactions subsequent to issuance of a policy covering only subjects of insurance not resident, located, or expressly to be performed in the state at time of issuance, and which coverage was lawfully solicited, written, and delivered outside the state;

     (3) transactions under surplus lines coverages lawfully written under AS 21.34;

     (4) reinsurance, except as to domestic reinsurers; or

     (5) transactions relative to policies issued in another state, but only if
          (A) the insurer does not market insurance in this state;

          (B) the laws of the state of issue apply to this state’s residents covered under the policies; and

          (C) the insurer complies with other requirements the director adopts by regulation to qualify for an exception under this paragraph.




Sec. 21.09.030. Admission for investment only.
A foreign insurer may transact business in this state without a certificate of authority, for the purpose and to the extent only of investing its funds in real estate in this state or in securities secured thereby by complying with the applicable laws of this state other than this title. Such an insurer is not subject to any other provision of this title.


Sec. 21.09.040. General eligibility of insurers.
To qualify for and hold authority to transact insurance in this state an insurer shall comply with this title and with its charter powers and shall be an incorporated stock insurer, an incorporated mutual insurer, or a reciprocal insurer, all of the same general type as may be formed as a domestic insurer under this title, except that
     (1) a foreign insurer may not be authorized to transact insurance in this state that does not maintain reserves as required by AS 21.18 applicable to the kind or kinds of insurance transacted by the insurer, wherever transacted in the United States; or that transacts business anywhere in the United States on the assessment plan, or stipulated premium plan, or any similar plan;

     (2) a foreign insurer that is directly or indirectly owned or controlled in whole or in substantial part by a government or governmental agency may not be authorized to transact insurance in this state; membership or subscribership in a mutual or reciprocal insurer by virtue of being a policyholder thereof, or ownership of stock or other security that does not have voting rights with respect to the management of the insurer, or supervision of an insurer by public authority, is not considered to be an ownership or control of the insurer for the purposes of this provision.




Sec. 21.09.050. Name of insurer.
 (a) An insurer may not be authorized to transact insurance in this state that has or uses a name so similar to that of another authorized insurer that the name is likely to mislead the public.

 (b) A life insurer may not be authorized that has or uses a name deceptively similar to that of another insurer authorized to transact insurance in this state within the preceding 10 years if life insurance policies originally issued by the other insurer are still outstanding in this state.

 (c) An insurer may not be authorized that has or uses a name that tends to deceive or mislead the public as to the type of organization of the insurer.

 (d) In case of a conflict of names between two insurers, or a conflict otherwise prohibited under (a) — (c) of this section, the director may permit or require the more recently authorized insurer to use in this state a supplementation or modification of its name or a business name that may reasonably be necessary to avoid the conflict.




Sec. 21.09.060. Combinations of insuring powers in one insurer.
An insurer that otherwise qualifies may be authorized to transact any one kind or combination of kinds of insurance as defined in AS 21.12, except that
     (1) a life insurer may also grant annuities, but is not authorized to transact any other kind of insurance than health; except that if the insurer is otherwise qualified, the director shall continue to authorize a life insurer that, immediately before July 1, 1966, was lawfully authorized to transact in this state a kind or kinds of insurance in addition to life and health;

     (2) a reciprocal insurer may not transact life insurance;

     (3) a title insurer must be a stock insurer;

     (4) a property or casualty insurer may not transact life insurance and may not grant annuities.




Sec. 21.09.070. Capital funds required of foreign insurers and new domestic insurers.
 (a) To qualify for authority to transact any one kind of insurance as defined in AS 21.12, or combination of kinds of insurance as shown below, a foreign insurer, or a domestic insurer applying for its original certificate of authority in this state, after having withdrawn from this state for any cause, shall possess and after that maintain unimpaired basic paid-in capital stock if a stock insurer, or unimpaired basic surplus if a foreign mutual insurer or foreign reciprocal insurer, that is unavailable for dividends of any kind, and shall possess when first so authorized, and maintain after that, additional money in surplus, as follows:


Kind or Kinds of Insurance     Basic Capital or Basic Guarantee Surplus     Additional Surplus When First Authorized     Additional Maintained Surplus     Life     $1,000,000     $1,000,000     $750,000     Health     1,000,000     1,000,000     750,000     Life and Health     1,250,000     1,250,000     1,000,000     Property     1,000,000     1,000,000     750,000     Casualty excluding                    vehicle     1,000,000     1,000,000     750,000     Vehicle     1,000,000     1,000,000     750,000     Marine &                    transportation     1,000,000     1,000,000     750,000     Surety     1,000,000     1,000,000     750,000     Title     500,000     500,000     250,000     Any three or more of                    the following kinds of                    insurance: property, marine and transportation,                    vehicle, casualty                    excluding vehicle,                    surety, and health     3,000,000     3,000,000     2,250,000     Legal expenses     1,000,000     1,000,000     750,000     Mortgage Guarantee     1,000,000     1,000,000     750,000      (b) Capital and surplus requirements are based upon all the kinds of insurance transacted by the insurer in all areas in which it operates or proposes to operate, whether or not only a portion of the kinds of insurance are to be transacted in this state. After a hearing, the director may for the protection of the public require an insurer to maintain funds in excess of the amounts required under (a) of this section, due to the amount, kind, or combination of kinds of insurance transacted by the insurer. Failure of an insurer to maintain funds as ordered by the director is grounds for suspension or revocation of the insurer’s certificate of authority.

 (c) After January 1, 1992, an insurer may not renew and continue its certificate of authority unless the insurer possesses at least the basic capital or basic surplus, and additional surplus required under this section.

 (d) As to surplus required for qualification to transact one or more kinds of insurance and thereafter to be maintained, domestic mutual insurers formed after July 1, 1966, are governed by AS 21.69 and domestic reciprocal insurers formed after July 1, 1966, are governed by AS 21.75.

 (e) A life insurer may also grant annuities without additional capital or additional surplus.

 (f) On or after January 1, 1991, a domestic property or casualty insurer may assume reinsurance, either new or renewal, (1) only of the kinds of risks, and to retain risks, within the limits it is otherwise authorized to insure; and (2) only if, in the absence of prior written approval from the director, it maintains, notwithstanding (a) of this section, in policyholder surplus at least $10,000,000 as of December 31, 1990, $15,000,000 as of December 31, 1991, and $20,000,000 as of December 31, 1992. This subsection does not apply to reinsurance that is required to be assumed by applicable law or regulation or is assumed under an intracompany pooling arrangement between affiliated insurers.

 (g) Notwithstanding (a) of this section and AS 21.09.080(a), a domestic insurer admitted in this state before May 16, 1990, and that has not had an ownership change after May 15, 1990, shall maintain capital and surplus of at least $4,000,000 as of January 1, 1992; $4,250,000 as of January 1, 1993; $4,500,000 as of January 1, 1994; $4,750,000 as of January 1, 1995; $5,000,000 as of January 1, 1996; and $5,250,000 as of January 1, 1997, if the domestic insurer
     (1) is not affiliated with any other insurer or group of insurers;

     (2) has capital and surplus of less than $5,250,000 on December 31, 1991;

     (3) transacts any three or more of the following kinds of insurance: property, marine and transportation, vehicle; casualty, excluding vehicle; surety; and health; and

     (4) has obtained the prior written approval of the director.




Sec. 21.09.080. Capital funds required of old domestic insurers.
 (a) In order for a domestic insurer to renew and continue the insurer’s certificate of authority after January 1, 1992, the insurer must possess at least the basic capital, basic guarantee surplus, and additional maintained surplus required under AS 21.09.070(a).

 (b) [Repealed, § 85 ch 50 SLA 1990.]
 (c) [Repealed, § 85 ch 50 SLA 1990.]
 (d) Notwithstanding the provisions of this section, a domestic life insurer duly licensed and capitalized on December 31, 1984, shall have and maintain the capital and surplus required under the laws of this state on December 31, 1984, as if the laws had continued in force. This subsection does not apply to a domestic life insurer if the ownership of the insurer is changed, or the class, line, and volume of the business written is materially changed from that written on December 31, 1984.




Sec. 21.09.090. Deposit requirement.
 (a) This section applies to all insurers.

 (b) The director may not authorize an insurer to transact insurance in this state unless it makes and thereafter maintains in trust in this state through the director for the protection of all its policyholders or of all its policyholders and creditors, a deposit of cash or securities eligible for deposit under AS 21.24.030 in the amount of no less than $300,000, except that
     (1) from foreign insurers, in lieu of the deposit or part thereof in this state, the director may accept the certificate in proper form of the public official having supervision over insurers in any other state to the effect that a like deposit or part thereof by the insurer is being maintained in public custody or control under the law in that state in trust for the protection generally of the insurer’s policyholders or its policyholders and creditors, in the United States;

     (2) from alien insurers, in lieu of the deposit or part thereof in this state, the director may accept evidence satisfactory to the director that the insurer maintains within the United States by way of trust deposits with public depositaries, or in trust institutions acceptable to the director, assets available for discharge of its United States insurance obligations, which assets shall be in an amount not less than the outstanding liabilities of the insurer arising out of its insurance transactions in the United States together with a surplus equal to the larger of the following sums:
          (A) the largest deposit required by this title to be made by a foreign insurer transacting like kinds of insurance; or

          (B) $300,000; which surplus shall for all purposes under this title be considered to be the capital or surplus of the insurer.

 (c) Deposits of foreign insurers, or deposits of alien insurers under (b)(2)(A) or (B) of this section in another state shall be in cash or securities of substantially as high quality as those eligible for deposit in this state under AS 21.24.030.

 (d) All such deposits in this state are subject to the applicable provisions of AS 21.24.




Sec. 21.09.100. Management and affiliations.
The director may not grant or continue authority to transact insurance in this state to an insurer whose principal management personnel is found by the director for good cause shown to be untrustworthy or not of good character, or so lacking in insurance company managerial experience as to make the proposed operation hazardous to the insurance-buying public or to its stockholders; or that the director has good reason to believe is affiliated directly or indirectly through ownership, control, management, reinsurance transactions, or other insurance or business relations with a person or persons whose business operations, to the detriment of insurers, stockholders, or creditors, are or have been marked by manipulation of assets, of accounts, or of reinsurance, or by bad faith.


Sec. 21.09.110. Application for certificate of authority.
 (a) To apply for an original certificate of authority, an insurer shall file with the director its application, accompanied by the applicable fees set under AS 21.06.250, showing its name, location of its home office, or principal office in the United States if an alien insurer, kinds of insurance to be transacted, date of organization or incorporation, form of organization, state or country of domicile, and additional information that the director may reasonably require, together with the following documents, as applicable:
     (1) if a foreign insurer, a copy of its corporate charter or articles of incorporation, with all amendments certified by the public officer with whom the originals are on file in the state or country of domicile;

     (2) if a reciprocal insurer, copies of the power of attorney of its attorney-in-fact and of its subscribers’ agreement, if any, certified by its attorney-in-fact;

     (3) a copy of its financial statement as of the preceding December 31 and all subsequent quarterly financial statements, sworn to by at least two executive officers of the insurer or certified by the public insurance supervisory official of the insurer’s state of domicile or of entry into the United States;

     (4) a copy of the report of last examination, if any, made of the insurer, issued by the insurance supervisory official of its state of domicile or of entry into the United States;

     (5) appointment of the director under AS 21.09.180 as its attorney to receive service of legal process;

     (6) if a foreign or alien insurer, a certificate of the public official having supervision of insurance in its state or country of domicile, or state of entry into the United States, showing that it is authorized to transact the kinds of insurance proposed to be transacted in this state;

     (7) if an alien insurer, a copy of the appointment and authority of its United States manager, certified by its officer having custody of its records; and

     (8) if a foreign insurer, a certificate as to deposit if it is to be tendered under AS 21.09.090.

 (b) Policy forms and rates that require filing under AS 21.39 or AS 21.42 shall be submitted under AS 21.39.041, 21.39.220, or AS 21.42.120(b) and may not be submitted with the application for a certificate of authority.




Sec. 21.09.120. Issuance, refusal, and ownership of certificate.
 (a) If, upon completion of its application, the director finds that the insurer has met the requirements for and is entitled to a certificate under this title, the director shall issue to the insurer a proper certificate of authority; if the director does not so find, the director shall issue an order refusing the certificate. The director shall act upon an application for a certificate of authority within 60 days after its completion.

 (b) The certificate, if issued, shall specify the kind or kinds of insurance the insurer is authorized to transact in this state. At the insurer’s request, the director may issue a certificate of authority limited to particular types of insurance or insurance coverages within the scope of a kind of insurance defined in AS 21.12.

 (c) Although issued to the insurer, the certificate of authority is at all times the property of the state. Upon the expiration, suspension, or termination of the certificate of authority the insurer shall promptly deliver it to the director.




Sec. 21.09.130. Continuance, expiration, reinstatement, and amendment of certificate.
 (a) A certificate of authority issued or renewed under this title continues in force as long as the insurer is entitled to it under this title and until suspended or revoked, or otherwise terminated, subject, however, to continuance of the certificate by the insurer each year by payment before June 30 of the continuation fee set under AS 21.06.250. The method of payment must be by electronic or other payment method specified by the director by regulation under AS 21.06.250.

 (b) If not continued by the insurer, its certificate of authority shall be suspended at midnight on June 30 following the failure of the insurer to continue it in force. The certificate of authority shall expire on June 30 one year following its suspension due to failure to continue the certificate of authority. The director shall promptly notify the insurer of the occurrence of a failure that may result in suspension of its certificate of authority.

 (c) The director may reinstate a certificate of authority that the insurer has inadvertently permitted to expire, after the insurer has fully cured all its failures that resulted in the expiration and upon payment by the insurer of the fee for reinstatement in addition to the current continuation fee, set under AS 21.06.250. Otherwise, the insurer shall be granted another certificate of authority only after filing an application and meeting all other requirements as for an original certificate of authority in this state.

 (d) The director may amend a certificate of authority at any time to accord with changes in the insurer’s charter of insuring powers.




Sec. 21.09.135. Voluntary surrender of certificate of authority.
 (a) A foreign admitted insurer may apply for voluntary surrender of its certificate of authority and the director may accept the application, if the foreign admitted insurer
     (1) is in compliance with the applicable sections of this title, or the director waives in writing each condition of noncompliance;

     (2) provides written confirmation that obligations incurred before the voluntary surrender of the certificate of authority shall be paid to guarantee funds or insurance pools established by law; and

     (3) is domiciled in a state that is
          (A) accredited by the National Association of Insurance Commissioners at the time of the request for voluntary surrender; or

          (B) not accredited by the National Association of Insurance Commissioners at the time of the request and agrees in writing to be subject to
               (i) AS 21.09.200 and 21.09.205 for a period of two years, including payment of any fee related to filing information with the director; and

               (ii) any other provision of this title that may be required in writing by the director and for the period of time the director may specify.

 (b) If a foreign admitted insurer who surrenders a certificate of authority ceases to exist, all business written and in force relative to a risk resident, located, or to be performed in this state shall be lawfully cancelled or reinsured. A reinsurance agreement covering all or a part of a risk described in this subsection shall be approved by the director before accepting the certificate of authority for surrender if the agreement meets the following criteria:
     (1) insurance coverage has not deteriorated from the policies existing at the time of the transfer;

     (2) the assuming insurer is of equal or better financial standing; and

     (3) the assuming insurer is admitted to do business in this state unless this requirement is waived by the director.




Sec. 21.09.140. Mandatory revocation or suspension of certificate.
 (a) The director shall suspend or revoke an insurer’s certificate of authority
     (1) if the action is required by a provision of this title;

     (2) if the insurer no longer meets the requirements for the authority granted, on account of the insurer becoming impaired or insolvent or otherwise; or

     (3) if the insurer’s authority to transact insurance is suspended or revoked by its state of domicile, or state of entry into the United States if an alien insurer.

 (b) Except in cases of insolvency or impairment of required capital or surplus, or suspension or revocation by another state as referred to in (a)(3) of this section, the director shall give the insurer at least 15 days’ notice in advance of a suspension or revocation under this section.




Sec. 21.09.150. Suspension or revocation for violations and special grounds.
 (a) The director may suspend or revoke an insurer’s certificate of authority if, after a hearing, the director finds that the insurer has violated a lawful order of the director or a provision of this title other than those for which suspension or revocation is mandatory or has not paid any annual service fees assessed under AS 23.05.067.

 (b) The director shall, after a hearing, suspend or revoke an insurer’s certificate of authority if the director finds that the insurer
     (1) is in unsound condition, or in a condition, or using methods or practices in the conduct of its business, that render its further transaction of insurance in this state injurious or hazardous to its policyholders or to the public;

     (2) has refused to be examined or to produce its accounts, records, and files for examination or that any of its officers have refused to give information with respect to its affairs, when required by the director;

     (3) has failed to pay a final judgment rendered against it in this state within 30 days after the judgment became final; a judgment appealed from is not final until determined by the appellate court;

     (4) with a frequency that indicates its general business practice in this state, has without just cause refused to pay proper claims arising under its policies, whether the claim is in favor of an insured or is in favor of a third person, or without just cause delays adjustment of claims, or compels the insured or claimant to accept less than the amount due them or to employ attorneys or to bring suit against the insurer or an insured to secure full payment or settlement of claims;

     (5) is affiliated with and under the same general management or interlocking directorate or ownership as another insurer that transacts direct insurance in this state without having a certificate of authority, except as permitted for surplus line insurance under AS 21.34;

     (6) has failed, after written request by the director, to remove or discharge an officer or director who has been convicted of a felony involving fraud, dishonesty, or moral turpitude.

 (c) The director may, without advance notice or a hearing, immediately suspend the certificate of authority of an insurer against which proceedings for receivership, conservatorship, rehabilitation, or other delinquency proceedings, have been commenced in any state.




Sec. 21.09.160. Notice of suspension or revocation and effect upon agent’s authority.
 (a) Upon suspending or revoking an insurer’s certificate of authority, the director shall immediately give notice to the insurer and shall also publish notice of the revocation in one or more newspapers of general circulation in this state.

 (b) The suspension or revocation shall automatically suspend or revoke, as the case may be, the authority of all its agents and managing general agents to act as agents or managing general agents of the insurer in this state, and the insurer shall so state in the notice to agents and managing general agents provided for in (c) of this section.

 (c) Upon notification of suspension or revocation of an insurer’s certificate of authority, the insurer shall immediately give notice of the suspension or revocation to its agents and managing general agents operating in this state.




Sec. 21.09.170. Duration of suspension, insurer’s obligations, and reinstatements.
 (a) Suspension of an insurer’s certificate of authority shall be for a fixed period of time determined by the director, or until the occurrence of a specific event necessary for remedying the reasons for suspension. The director may modify, rescind, or reverse a suspension under this section.

 (b) During the period of suspension, the insurer
     (1) may not solicit or write any new business in this state;

     (2) shall file its annual statement and pay fees, licenses, and taxes required under this title; and

     (3) may service its outstanding business in force in this state as if the certificate had continued in full force.

 (c) If the suspension of the certificate of authority is for a fixed period of time and the certificate of authority has not been otherwise terminated, upon expiration of the suspension period, the insurer’s certificate of authority shall be reinstated unless the director finds that the insurer is not in compliance with the requirements of this title. The director shall promptly notify the insurer of any reinstatement, and the insurer may not consider its certificate of authority reinstated until notified by the director. If not reinstated, the certificate of authority expires at the end of the suspension period or at the time the insurer fails to continue the certificate during the suspension period under (b) of this section, whichever event occurs first.

 (d) If the suspension of the certificate of authority continues until the occurrence of a specific event and the certificate of authority has not been otherwise terminated, upon the presentation of evidence satisfactory to the director that the specific event has occurred, the insurer’s certificate of authority shall be reinstated unless the director finds that the insurer is not in compliance with the requirements of this title. The director shall promptly notify the insurer of any reinstatement, and the insurer may not consider its certificate of authority reinstated until notified by the director. If satisfactory evidence as to the occurrence of the specific event has not been presented to the director within five years after the date of suspension, the certificate of authority expires five years from the date of suspension or upon failure of the insurer to continue the certificate during the suspension period under (b) of this section, whichever occurs first.

 (e) The authority of the agents in this state to represent the insurer is reinstated upon reinstatement of the insurer’s certificate of authority.

 (f) The director shall promptly notify an insurer’s agents in this state, as shown by records of the director, of any reinstatement.




Sec. 21.09.175. Determination of impairment.
If the director determines that an insurer transacting business in this state is impaired or in imminent danger of becoming impaired, the director may order an insurer to limit or change the insurer’s business practices, increase the insurer’s capital and surplus, or file additional reports with the director. If an insurer is aggrieved by an order under this section, the insurer may request a hearing under AS 21.06.170 — 21.06.230.


Sec. 21.09.180. Director attorney for service of process.
 (a) Each insurer applying for authority to transact insurance in this state shall appoint the director as its attorney to receive service of legal process issued against it in this state. The appointment shall be made on a form designated and furnished by the director. The appointment shall be irrevocable, shall bind the insurer and any successor in interest to the assets or liabilities of the insurer, and shall remain in effect as long as there is in force in this state a contract made by the insurer or obligations arising from it.

 (b) Service of process against a foreign or alien insurer shall be made only by service of process upon the director or upon a deputy or other person in charge of the office during the absence of the director. Service of process against a domestic insurer may be made either upon the director or upon the insurer corporation in the manner provided by laws applying to corporations generally, or upon the insurer’s attorney-in-fact if a domestic reciprocal insurer.

 (c) Each insurer at the time of application for a certificate of authority shall file with the director the name and address of the person to whom process against it served upon the director is to be forwarded. The insurer may change the designation by a new filing.




Sec. 21.09.190. Service of process.
 (a) Duplicate copies of legal process against an insurer for whom the director is attorney under AS 21.09.180 shall be served upon the director, or upon a deputy of the director or other person in charge of the office during the absence of the director. At the time of service the plaintiff shall pay to the director a fee set under AS 21.06.250, taxable as costs in the action. Upon receiving service the director shall promptly forward a copy by certified mail with return receipt requested to the person last designated by the insurer to receive it.

 (b) Process served upon the director and the copy forwarded as provided in this section constitutes service upon the insurer.




Sec. 21.09.200. Annual statement; audited financial report.
 (a) Each authorized insurer shall annually, before March 2, file with the director or the director’s designee a full and true statement of its financial condition, transactions, and affairs as of the preceding December 31. The reporting format for a given year is the most recently approved National Association of Insurance Commissioners’ annual financial statement blank form and instructions, supplemented for additional information as required by the director. The director may require the statement to be filed on electronic media. The statement shall be verified by the oath of the insurer’s president or vice-president, and secretary, or, if a reciprocal insurer, by oath of the attorney-in-fact or its like officers if a corporation unless verification is waived by the director of insurance. The filing locations must be published by the director at least annually.

 (b) The statement of an alien insurer shall relate only to its transactions and affairs in the United States unless the director requires otherwise. If the director requires a statement concerning an alien insurer’s affairs throughout the world, the insurer shall file the statement with the director as soon as is reasonably possible. The statement shall be verified by the insurer’s United States manager or other authorized officer.

 (c) The director may refuse to accept a fee for continuance of the insurer’s certificate of authority, as provided in AS 21.09.130, or may suspend or revoke the certificate of authority of an insurer failing to file its annual statement when due.

 (d) At the time of filing, the insurer shall pay to the director a fee for filing its statement, set under AS 21.06.250. The method of payment must be by electronic or other payment method specified by the director by regulation under AS 21.06.250.

 (e) An insurer shall pay to the division $100 for each day the insurer fails to file a statement or report in the form and location required and within the time established in this section. The authority of the insurer to enter into new obligations or issue new or renewal policies of insurance in this state may be suspended by the director if a statement or report required by this section has not been filed by the due date.

 (f) In addition to the requirements of (a) of this section, an authorized insurer shall file its annual statement with the National Association of Insurance Commissioners on electronic media acceptable to the association by the due date established by the association and shall pay the applicable filing fee. The director may waive the filing requirement if the insurer only transacts business in this state and only accepts risks relative to a subject resident, located, or to be performed in this state. An insurer that fails to comply with this subsection is subject to the penalties specified in (e) of this section, calculated from the filing and fee due date established by the National Association of Insurance Commissioners.

 (g) An insurer shall file with the director or the director’s designee an annual audited financial report for the previous year by June 1 of each year unless, under a regulation adopted by the director, the director grants an exemption based on a finding that filing an annual audited financial report would constitute a financial or organizational hardship on the insurer. The filing date for the annual audited financial report may be extended by the director upon showing that the standards established by regulation have been met. If the director gives the insurer 90 days’ advance notice, and for good cause, the director may require an insurer to file an audited financial report earlier than June 1 of each year. The annual audited financial report must be prepared by a qualified independent certified public accountant. An insurer shall notify the director of the certified public accountant engaged to conduct the audit and issue the annual audited financial report.

 (h) Within 60 days after filing the annual audited financial report under (g) of this section, the insurer shall file a written report on any unremediated material weakness in internal control over financial reporting noted during the audit.

 (i) The director may adopt regulations that require the insurer to file a report from management describing internal control over financial reporting. An insurer shall file the report on internal control by the date specified by the director.

 (j) If the director requires the submission of additional information, the insurer shall supplement the reports required by (h) and (i) of this section by the date specified by the director. The reports on internal control filed with the director under (h) and (i) of this section are confidential and subject to the provisions of AS 21.06.060.

 (k) In accordance with regulations adopted by the director, an insurer shall designate an audit committee to engage a qualified independent certified public accountant to conduct the annual audit. The audit committee shall oversee services performed by the certified public accountant. If an insurer does not designate an audit committee, the entire governing board of the insurer is considered to be the audit committee for purposes of this subsection.

 (l) The certified public accountant conducting the annual audit required by (g) of this section shall notify the governing board of the insurer or the audit committee in writing of a determination by the certified public accountant that the insurer has materially misstated its financial condition as reported to the director or that the insurer does not meet the minimum capital requirements and surplus requirements of this title as of the date of the balance sheet currently under audit. An insurer that has received a report under this subsection shall forward a copy to the director. The certified public accountant shall also forward the report to the director unless the insurer provides evidence satisfactory to the certified public accountant that the report has been forwarded to the director.




Sec. 21.09.205. Quarterly statement.
 (a) The director may require an insurer to file quarterly financial statements. If required, the statements must follow for a given quarter the reporting format specified in the quarterly financial statement blank form and instructions most recently approved by the National Association of Insurance Commissioners.

 (b) A quarterly financial statement, if required, is due 45 days after the end of the quarter to which it applies.

 (c) An insurer shall pay to the division $100 for each day the insurer fails to file the quarterly statement in the form required or within the time established in (b) of this section.

 (d) In addition to the requirements of (a) of this section, an authorized insurer shall file its quarterly statement with the National Association of Insurance Commissioners on electronic media acceptable to the association by the due date established by the association, and shall pay the applicable filing fee. The director may waive the filing requirement if the insurer only transacts business in this state and only accepts risks relative to a subject resident, located, or to be performed in this state. An insurer that fails to comply with this subsection is subject to the penalties specified in (c) of this section, calculated from the filing and fee due date established by the National Association of Insurance Commissioners.




Sec. 21.09.207. Statement of actuarial opinion and supporting documentation.
 (a) An insurer authorized to write property, casualty, surety, marine, wet marine, transportation, or mortgage guaranty insurance shall file annually with the director a statement of actuarial opinion, unless the insurer is exempt or otherwise not required to file an opinion in the insurer’s state of domicile. The statement of actuarial opinion must
     (1) be issued by an actuary appointed by the insurer;

     (2) follow, for a given year, the reporting format and requirements specified in the annual financial statement instructions most recently approved by the National Association of Insurance Commissioners; and

     (3) be supplemented with additional information as may be required by the director.

 (b) A domestic insurer that is required to file a statement under (a) of this section shall file annually with the director an actuarial opinion summary written by the insurer’s appointed actuary. A foreign insurer that is required to file a statement under (a) of this section shall, on written request of the director, file an actuarial opinion summary with the director. The actuarial opinion summary must follow, for a given year, the reporting format and requirements specified in the annual financial statement instructions most recently approved by the National Association of Insurance Commissioners and must be supplemented with additional information as required by the director.

 (c) An insurer that is required to file a statement under (a) of this section shall prepare an actuarial report and work papers to support each statement of actuarial opinion as required by the annual financial statement instructions most recently approved by the National Association of Insurance Commissioners. If an insurer fails to provide a supporting actuarial report or work papers at the request of the director, or the director determines that the supporting actuarial report or work papers provided by the insurer are incomplete or otherwise unacceptable to the director, the director may engage a qualified actuary at the expense of the insurer to review the statement of actuarial opinion and the basis for the statement and to prepare the supporting actuarial report or work papers.

 (d) An actuarial report, actuarial opinion summary, or work paper provided in support of a statement of actuarial opinion and any other information provided by an insurer to the director in connection with the statement of actuarial opinion, the actuarial opinion summary, or the actuarial report issued under this section is confidential; however, nothing in this section limits the director’s authority to release the documents to a national professional organization that disciplines actuaries that is recognized by the director, as long as the material is required for the purpose of professional disciplinary proceedings and the national professional organization establishes procedures satisfactory to the director for preserving the confidentiality of the documents.

 (e) In this section,
     (1) “appointed actuary” means a qualified actuary who is appointed or retained by a company to provide a statement of actuarial opinion and the related actuarial opinion summary, actuarial report, and work papers;

     (2) “qualified actuary” means a member in good standing of the
          (A) Casualty Actuarial Society; or

          (B) American Academy of Actuaries who has been approved as qualified for signing casualty loss reserve opinions by the Casualty Practice Council of the American Academy of Actuaries.




Sec. 21.09.210. Tax on insurers.
 (a) Each authorized insurer, and each formerly authorized insurer with respect to premiums written while an authorized insurer in this state, shall file with the director, on or before March 1 in each year, a report of all insurance business written or contracted in the state, with proper proportionate allocation of premium for the property, subjects, or risks in the state insured under policies or contracts covering property, subjects, or risks located or resident in more than one state, during the preceding year ending December 31. The report must show
     (1) the amounts paid policyholders on losses;

     (2) the total direct premium income including policy membership and other fees, premiums paid by application of dividends, refunds, savings coupon, and similar returns or credits to payment of premiums for new or additional or extended or renewed insurance, charges for payment of premium in installments, and all other consideration for insurance from all kinds and classes of insurance whether designated a premium or otherwise;

     (3) the amounts paid policyholders as returned premiums;

     (4) the amounts paid policyholders as dividends.

 (b) Each insurer, and each formerly authorized insurer with respect to premiums written while an authorized insurer in this state, shall pay a tax on the total direct premium written during the year ending on the preceding December 31 and paid for the insurance of property or risks resident or located in the state, other than wet marine and transportation insurance, after deducting from the total direct premium income the applicable cancellations, returned premiums, the unabsorbed portion of any deposit premium, all policy dividends, unabsorbed premiums refunded to policyholders, refunds, savings, savings coupons, and other similar returns paid or credited to policyholders with respect to their policies. Deductions may not be made of cash surrender value of policies. Considerations received on annuity contracts are not included in the direct premium income and are not subject to tax. The tax shall be paid to the director at least annually but not more often than once each quarter on the dates specified by the director. The method of payment must be by the electronic or other payment method specified by the director. Except as provided under (m) of this section, the tax is computed at the rate of
     (1) for domestic and foreign insurers, except hospital and medical service corporations, 2.7 percent;

     (2) for hospital and medical service corporations, six percent of their gross premiums less claims paid.

 (c) [Repealed, § 48 ch 29 SLA 1987.]
 (d) An authorized insurer shall, with respect to all wet marine and transportation contracts written in this state during the preceding calendar year, pay to the director a tax of three-quarters of one percent on its gross underwriting profit. The director shall specify the dates that payment is due and the electronic or other method by which payment is to be made. The gross underwriting profit is computed by deducting, from the net premiums on wet marine and transportation insurance contracts, the net losses paid during the calendar year under the contracts. In the case of an insurer issuing participating contracts, the gross underwriting profit may not include, for computation of the tax prescribed by this section, the amounts refunded or paid as participation dividends by the insurers to the holders of the contracts. In this subsection,
     (1) “net losses” means gross losses less salvage and recoveries on reinsurance ceded;

     (2) “net premiums” means gross premiums less all return premiums and premiums for reinsurance.

 (e) Payment to the director by an insurer of the tax upon its premiums required by this section shall be in lieu of all other taxes imposed by the state upon premiums, franchise, privilege, or other taxes measured by income of the insurer.

 (f) The state hereby pre-empts the field of imposing excise, privilege, franchise, income, license, permit, registration, and similar taxes, licenses, and fees upon insurers and their general agents, agents, and representatives as such; and on the intangible property of insurers or agents; and all political subdivisions of agencies in the state, including home rule boroughs or cities, are prohibited from imposing or levying upon insurers, or upon their general agents, agents, and representatives as such, any tax, license, or fee. However, this subsection shall not be construed as prohibiting the imposition by political subdivisions of taxes upon real and tangible personal property of insurers and their general agents, agents, and representatives.

 (g) An insurer shall pay to the division a late payment fee of $50 a month plus five percent of the tax due each calendar month or part of a month during which the insurer fails to pay the full amount of the tax, or a portion of the tax, and interest at the rate of one percent of the tax due each calendar month or part of a month for the period the insurer fails to pay the premium tax in this section or in AS 21.09.270. The late payment fee, not including interest, may not exceed $250 plus 25 percent of the tax due. The tax payment shall be made in the form required by the director, or a penalty shall be added to the tax of 25 percent of the tax due, not to exceed $2,000, with a minimum penalty of $100. In addition to any other penalty provided by law, a civil penalty may be assessed of not more than $10,000 if an insurer wilfully violates this section. The director may suspend or revoke the certificate of authority of an insurer that fails to pay taxes, a penalty, or a late payment fee as required under this section.

 (h) The provisions of this section do not apply to title insurance companies. A premium tax on title insurance companies shall be levied in accordance with the provisions of AS 21.66.110.

 (i) Premiums paid by the state for insurance policies and contracts purchased under the provisions of AS 39.30 are exempt from taxation under this section. An insurer may not include the tax imposed under this section in a premium charged on an insurance policy or contract purchased by the state under the provisions of AS 39.30. An insurer may claim the exemption on forms provided by the division of insurance.

 (j) The provisions of AS 21.96.070 and 21.96.075 apply to a taxpayer who is required to pay a tax due under this section.

 (k) If, within three years after the date the tax under this section was due, an insurer discovers a mistake or misinterpretation that resulted in an overpayment of the tax in an amount exceeding $250 in any one calendar year, the insurer may make a written request to the director for a refund. If the director determines a valid mistake or misinterpretation has occurred, the director shall refund to the insurer the amount of the excess tax by granting, at the director’s discretion, a monetary refund or premium tax credit. A premium tax credit shall be used in the next calendar year to the extent possible and any unused credit shall be paid as a monetary refund. A premium tax credit may not reduce the payable tax, calculated without use of the credit, to less than zero.

 (l) A premium tax credit granted under (k) of this section may not carry over as an attribute in a transaction under AS 21.69.610, 21.69.620, AS 21.78, or a similar transaction entered into by a foreign insurer.

 (m) The tax imposed under this section for an individual life insurance policy shall be computed at the rate of
     (1) 2.7 percent of policy year premium up to $100,000; and

     (2) 0.08 percent of policy year premium exceeding $100,000.

 (n) Premiums on which taxes are paid under (m)(2) of this section are not subject to AS 21.09.270.

 (o) A qualified insurer is entitled to a premium tax credit under AS 21.55.220.

 (p) In this section, “premium tax credit” means an amount that an insurer may use as an offset against a premium tax payment.




Secs. 21.09.220 — 21.09.240. Resident agent’s counter signature; exception; affidavit requirement. [Repealed, § 2 ch 41 SLA 1984.]
Sec. 21.09.242. Cooperation with the Department of Health and Social Services.
 (a) An insurer, including a pharmacy benefits manager, with respect to medical assistance programs under AS 47.07, shall cooperate with the Department of Health and Social Services to
     (1) provide, with respect to an individual who is eligible for or is provided medical assistance under AS 47.07, on the request of the department, information to determine during what period the individual or the individual’s spouse or dependents may be or may have been covered by the insurer and the nature of the coverage that is or was provided by the insurer, including the name and address of the insurer and the identifying number of the health care insurance plan;

     (2) accept the department’s right of recovery and the assignment to the department of any right of an individual or other entity to payment from the party for an item or service for which payment has been made under AS 47.07;

     (3) respond to any inquiry by the department regarding a claim for payment for any health care item or service that is submitted not later than three years after the date of the provision of the health care item or service; and

     (4) agree not to deny a claim submitted by the department solely on the basis of the date of submission of the claim, the type or format of the claim form, or a failure to present proper documentation at the point-of-sale that is the basis of the claim if
          (A) the claim is submitted by the department within the three-year period beginning on the date on which the item or service was furnished; and

          (B) any action by the department to enforce its rights with respect to the claim is commenced within six years after the department’s submission of the claim.

 (b) An assessable entity, as defined in AS 18.09.990, shall provide information and assessments to the Department of Health and Social Services and the State Vaccine Assessment Council established under AS 18.09.210 as necessary for the statewide immunization program established under AS 18.09.200.




Sec. 21.09.245. Required notice.
 (a) If an insurer intends to change the insurer’s name, domicile, or other information provided on the certificate of authority, the insurer shall file a notice of the change with the director within 30 days before or after the intended change takes effect.

 (b) If an insurer changes the insurer’s articles of incorporation, bylaws, business address, phone number, electronic mailing address, or other information maintained by the director, the insurer shall file a notice of the change with the director not later than 90 days after the effective date of the change.

 (c) Failure by an insurer to provide notification required by this section may result in a civil penalty of up to $1,000 and, additionally, a civil penalty of up to $50 for each day that the information is withheld from the director.




Sec. 21.09.247. Biographical affidavits.
A domestic insurer shall file with the director a complete affidavit of biographical information not later than 30 days after the appointment of an officer or director of the insurer. If requested by the director, a foreign insurer shall file with the director an affidavit of biographical information for the appointment of an officer or director of the insurer. A filing under this section must be on a form approved by the director. A filing is not required if a biographical affidavit of the officer or director has been submitted to the director within one year before the date of appointment. A biographical affidavit filed under this section is confidential and not subject to public inspection.


Sec. 21.09.250. Prohibited acts.
An insurer doing business in this state may not make, write, place, or cause to be made, written, or placed in this state a policy, duplicate policy, or contract of insurance of any kind or character, or general or floating policy upon persons or property resident, situated, or located in this state, from or through a person required to be licensed who has not secured a license in this state. An insurer may not pay a commission or any form of remuneration to a person, firm, or organization for the writing or placing of insurance coverage in this state unless that person, firm, or organization holds a license issued by the director.


Sec. 21.09.260. Penalties.
An insurer that the director determines, following an appropriate hearing as provided in AS 21.06.170 — 21.06.230, has violated the provisions of AS 21.09.250 is subject to a civil penalty of not more than $2,500 for each violation. The director may suspend or revoke the license of the insurer for a violation of AS 21.09.250, but violation does not invalidate the insurance contract.


Sec. 21.09.270. Retaliation.
 (a) If, under the laws of another state or foreign country, taxes, licenses, and other fees, in the aggregate, and fines, penalties, deposit requirements, or other material obligations, prohibitions, or restrictions are or would be imposed upon Alaska insurers, or upon their agents or representatives, that are in excess of the taxes, licenses, and other fees, in the aggregate, or that are in excess of the fines, penalties, deposit requirements, or other obligations, prohibitions, or restrictions directly imposed upon similar insurers, or upon their agents or representatives, of another state or country under the statutes of this state, as long as the laws of the other state or country continue in force or are applied, the same taxes, licenses, and other fees, in the aggregate, or fines, penalties, or deposit requirements or other material obligations, prohibitions, or restrictions of whatever kinds shall be imposed by the director upon the insurers, or upon their agents or representatives, of the other state or country doing business or seeking to do business in this state. A tax, license or other fee or other obligation imposed by a city, county, or other political subdivision or agency of another state or country on Alaska insurers or their agents or representatives shall be considered to be imposed by the state or country within the meaning of this section.

 (b) This section does not apply to personal income taxes, to ad valorem taxes on real or personal property, or to special purpose obligations or assessments imposed by another state in connection with particular kinds of insurance other than property insurance; except that deductions from premium taxes or other taxes otherwise payable allowed on accounts of real estate or personal property taxes paid shall be taken into consideration by the director in determining the propriety and extent of retaliatory action under this section.

 (c) For the purposes of this section the domicile of an alien insurer, other than insurers formed under the laws of Canada or a province of Canada, shall be that state designated by the insurer in writing filed with the director at the time of admission to this state or within six months after July 1, 1966, whichever date is the later, and may be any one of the following states:
     (1) that in which the insurer was first authorized to transact insurance;

     (2) that in which is located the insurer’s principal place of business in the United States;

     (3) that in which is held the larger deposit of trusteed assets of the insurer for the protection of its policyholders and creditors in the United States.

 (d) If the insurer makes no designation, its domicile shall be considered to be that state in which its principal place of business in the United States is located.

 (e) If an insurer is formed under the laws of Canada or a province of Canada, its domicile is the province in which its head office is located.

 (f) For purposes of the application of (a) of this section, a health care insurer, as defined in AS 21.54.500, may not include taxes, assessments, or other similar obligations on health care insurance premiums received from the state, a municipality, a city or borough school district, a regional educational attendance area, the University of Alaska, or a community college operated by the University of Alaska.




Sec. 21.09.280. General agents. [Repealed, § 47 ch 51 SLA 1990.]
Sec. 21.09.290. Risk retention groups.
 (a) A risk retention group formed in this state shall
     (1) comply with 15 U.S.C. 3901 — 3906 (Liability Risk Retention Act); and

     (2) qualify for and hold in good standing a certificate of authority under this chapter, limited to liability insurance only.

 (b) A risk retention group shall submit with its application for a certificate of authority
     (1) the identity of
          (A) the initial members of the risk retention group;

          (B) all persons who organized the risk retention group;

          (C) all persons who will provide administrative services to the risk retention group;

          (D) all persons who will influence or control the activities of the risk retention group;

     (2) the amount and nature of initial capitalization;

     (3) a plan of operation or a feasibility study that includes the coverage, deductible, coverage limit, rate, and rating classification system for the type or class of liability insurance the group intends to offer; and

     (4) the states in which the risk retention group intends to operate.

 (c) At least 30 days before a domestic risk retention group implements a material change or revision to an approved plan of operation or feasibility study, the material change or revision shall be filed with the director. A material change or revision may not be implemented unless the domestic risk retention group receives the director’s written approval. In this subsection, “material change or revision” includes an offering of an additional type or class of liability insurance.

 (d) In this section,
     (1) “liability” means legal liability for damages, including costs of defense, legal costs and fees, and other claims expenses, because of injury to another person, damage to property, or other damage or loss to a person resulting from or arising out of a business, whether profit or nonprofit, trade, product, service, including a professional service, or an activity of a state or local government, or an agency or political subdivision of a state or local government; “liability” does not include personal risk liability or employer’s liability with respect to its employees other than legal liability under 45 U.S.C. 51 (Federal Employers’ Liability Act);

     (2) “personal risk liability” means liability for damages because of injury to a person, damage to property, or other loss or damage resulting from a personal, familial, or household responsibility or activity and that is not a responsibility or activity described under (1) of this subsection.




Sec. 21.09.300. Disclosure of material transactions.
 (a) A domestic insurer shall file a report with the director disclosing a material acquisition and disposition of assets or a material nonrenewal, cancellation, or revision of ceded reinsurance agreements unless the acquisition and disposition of assets or material nonrenewal, cancellation, or revision of ceded reinsurance agreements have been submitted to the director for review, approval, or information purposes as required by this title.

 (b) The report required under (a) of this section is due 15 days after the end of the calendar month in which a reportable transaction occurs.

 (c) Except as provided in this section, a report obtained by or disclosed to the director under this section is confidential, is not subject to subpoena, and may not be made public by the director, or another person, without the prior written consent of the insurer submitting the report. A report under this section may be disclosed to an insurance regulatory agency of another state or to the National Association of Insurance Commissioners, with notice of the disclosure sent to the insurer. If the director, after giving an insurer notice and an opportunity to be heard, determines that the interest of policyholders, shareholders, or the public will be served by publication of the report, the director may publish all or any part of the report in a manner the director determines appropriate.

 (d) A domestic insurer’s report of an acquisition or disposition of an asset
     (1) shall be made under (a) of this section if the acquisition or disposition is material; for purposes of this subsection, an acquisition or disposition, or the aggregate of a series of related acquisitions or related dispositions during any 30-day period is material if it is nonrecurring, not in the ordinary course of business, and involves more than five percent of the reporting insurer’s total admitted assets as reported in its most recent financial statement required by law that is filed with the division;

     (2) shall be made on asset acquisition, including a purchase, lease, exchange, merger, consolidation, succession, or other acquisition other than the
          (A) construction or development of real property by or for the reporting insurer; or

          (B) acquisition of material for construction or development of real property;

     (3) shall be made on asset disposition including a sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment for the benefit of creditors, or abandonment;

     (4) must include information on the
          (A) date of transaction;

          (B) manner of acquisition or disposition;

          (C) description of the assets involved;

          (D) nature and amount of the consideration given or received;

          (E) purpose of, or reason for, the transaction;

          (F) manner by which the amount of consideration was determined;

          (G) gain or loss recognized or realized as a result of the transaction; and

          (H) names of persons from whom the assets were acquired or to whom the assets were disposed.

 (e) A domestic insurer’s report of nonrenewal, cancellation, or revision of a ceded reinsurance agreement
     (1) shall be made under (a) of this section if the nonrenewal, cancellation, or revision is material; for purposes of this subsection, a material nonrenewal, cancellation, or revision is one that affects (A) for property and casualty business, including accident and health business when written as property and casualty business, more than 50 percent of an insurer’s ceded written premium; or (B) for life, annuity, and accident and health business, more than 50 percent of the total reserve credit taken for business ceded, on an annualized basis as indicated in the insurer’s most recently filed statutory statement; however, a filing is not required if the insurer’s ceded written premium or the total reserve credit taken for business ceded represents, on an annual basis, less than 10 percent of direct written premiums and assumed written premiums or 10 percent of the statutory reserve requirement before a cession;

     (2) shall be filed without regard to which party has initiated the nonrenewal, cancellation, or revision of ceded reinsurance whenever any of the following conditions exist:
          (A) the entire cession has been cancelled, nonrenewed, or revised and ceded indemnity and loss adjustment expense reserves after a nonrenewal, cancellation, or revision represent less than 50 percent of the comparable reserves that would have been ceded had the nonrenewal, cancellation, or revision not occurred;

          (B) an admitted or accredited reinsurer has been replaced on an existing cession by an unauthorized reinsurer; however, a report shall be filed only if the result of the revision affects more than 10 percent of the cession; or

          (C) collateral requirements previously established for unauthorized reinsurers have been reduced; however, a report shall be filed only if the result of the revision affects more than 10 percent of the cession; and

     (3) must include
          (A) the effective date of the nonrenewal, cancellation, or revision;

          (B) a description of the transaction with an identification of the initiator of the transaction;

          (C) the purpose of, or reason for, the transaction; and

          (D) if applicable, the identity of the replacement reinsurers.

 (f) An insurer is required to report under (a) of this section on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers that utilizes a pooling arrangement or 100 percent reinsurance agreement that affects the solvency and integrity of the insurer’s reserves and the insurer ceded substantially all of its direct and assumed business to the pool. An insurer is presumed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than $1,000,000 total direct written premiums and assumed written premiums during a calendar year that is not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than five percent of the insurer’s capital and surplus.




Sec. 21.09.310. Authorization of United States branches of alien insurers and general requirements.
 (a) This section applies to all United States branches of alien insurers using this state as a state of entry to transact the business of insurance in the United States. Except as provided elsewhere in this title, a United States branch is subject to all state laws applicable to an insurer domiciled in this state.

 (b) An alien insurer may apply for a certificate of authority to use this state as a state of entry to transact the business of insurance in the United States by
     (1) qualifying as an insurer licensed to do business in this state;

     (2) establishing a trust under a trust agreement approved in writing by the director with a United States bank acceptable to the director in an amount not less than the greater of
          (A) the minimum basic capital or basic guarantee surplus and additional maintained surplus required under AS 21.09.070; or

          (B) the authorized control level risk based capital under AS 21.14;

     (3) submitting a copy of its charter and bylaws, if any, currently in force, and other documents necessary to show the kind of business it is authorized to transact in its domiciliary jurisdiction; documents submitted under this paragraph must be attested to as accurate and complete by the insurance supervisory official in the domiciliary jurisdiction, and must include an English translation, if in a language other than English;

     (4) submitting a full statement, subscribed and affirmed as true by two officers or equivalent responsible representatives in a manner that the director prescribes, of its financial condition as of the close of its latest fiscal year, showing its assets, liabilities, income disbursements, business transacted, and other facts required to be shown in its annual statement, as reported to the insurance supervisory official in its domiciliary jurisdiction; all documents submitted under this paragraph must include an English translation if in a language other than English;

     (5) submitting to an examination under AS 21.06.120(b) at its principal office within the United States, and elsewhere if necessary, unless the director accepts a report of the insurer’s recent examination and the report has been issued by the insurance supervisory official of the insurer’s domiciliary jurisdiction; and

     (6) payment of fees established under AS 21.06.250.

 (c) Before issuing or renewing a certificate of authority for a United States branch, the director may require satisfactory proof that the insurer does not intend to transact insurance business in violation of the provisions of this title or that is not authorized by its charter. Proof required under this subsection may include the alien insurer’s charter, an agreement evidenced by a duly certified resolution of its board of directors, or other proof that the director may require.

 (d) The director may renew a certificate of authority for a United States branch if satisfied, by proof the director may require, that the insurer is not delinquent with respect to a requirement or qualification imposed by this title and that its continuance to transact the business of insurance in this state will not be hazardous or prejudicial to the best interest of the people of this state.

 (e) A United States branch may not receive or renew a certificate of authority in this state
     (1) to transact a kind of insurance or a combination of kinds of insurance that are not permitted to be transacted by domestic insurers in this state;

     (2) if it transacts business other than the business of insurance anywhere else within the United States unless the business, in the opinion of the director, is necessarily or properly incidental to the kind of insurance that it is authorized to transact in this state;

     (3) if it fails to keep full and correct entries of its transactions; records of entries shall at all times be maintained in its principal office within this state; or

     (4) if it fails to comply with a requirement or limitation of this title that it is not exempted from by another provision of this title and that is applicable to similar domestic insurers and if, in the judgment of the director, the requirement or limitation is necessary to protect the interest of the policyholders.

 (f) A United States branch that transacts a kind or combination of kinds of insurance outside this state that is not permitted to be done in this state by similar domestic insurers may not have a certificate of authority issued or renewed in this state unless, in the judgment of the director, the transaction of that kind of insurance is not prejudicial to the best interest of the people of this state.

 (g) A United States branch shall maintain assets in a trust account in an amount not less than the United States branch’s reserves and other liabilities, plus the greater of
     (1) the minimum basic capital or basic guaranteed surplus and additional maintained surplus required under AS 21.09.070; or

     (2) the authorized control level risk based capital under AS 21.14.

 (h) A written trust agreement must contain provisions that
     (1) vest legal title to trusteed assets in the trustees, and their lawfully appointed successors;

     (2) require that all assets deposited in the trust be continuously kept within the United States;

     (3) provide for substitution of a new trustee in case of a vacancy by death, resignation, or other reason, subject to the prior written approval of the director;

     (4) require that the trustee continuously maintain a record sufficient to identify the assets of the trust fund;

     (5) require that trusteed assets consist only of cash, investments eligible for investment of the funds of domestic insurers, and accrued interest on the assets, if collectible by the trustee, subject to the limits on investment of funds by domestic insurers under this title;

     (6) require that the trust be for the exclusive benefit, security, and protection of the policyholders, or policyholders and creditors, of the United States branch in the United States and that the trust be maintained as long as there is an outstanding liability of the alien insurer arising out of its transaction of insurance in the United States; and

     (7) provide that withdrawal of an asset may not be made or permitted by a trustee without the prior written approval of the director except
          (A) to make deposits required by law in a state for the security or benefit of all policyholders, or policyholders and creditors, of the United States branch in the United States;

          (B) to withdraw funds deposited in another state under (A) of this paragraph if
               (i) the written trust agreement requires prior written approval of the insurance supervising official of that other state;

               (ii) written notice of the nature and extent of the withdrawal is provided to the director within 30 days of the withdrawal; and

               (iii) the total trusteed assets remaining are in excess of the total assets required to be maintained in trust under (g) of this section;

          (C) upon the specific written direction of the United States manager, who is duly authorized and is acting under either general or specific written authority previously given or delegated by the board of directors, to substitute other assets as permitted by this title if the substituted assets are of at least equal value and quality to those withdrawn;

          (D) to transfer assets to an official liquidator or rehabilitator under an order of a court of competent jurisdiction; or

          (E) if provided under the terms of the written trust agreement, to pay over to the United States manager of the United States branch, upon request, income, dividends, or interest accumulations of the assets of the trust fund that are in excess of the total assets required to be maintained in trust under (g) of this section.

 (i) A written trust agreement and all amendments to it shall be authenticated in a form and manner that the director may prescribe and may not take effect until approved by the director. The director may not approve a trust agreement unless the director makes a written finding that
     (1) the written trust agreement or its amendments are sufficient in form and in conformity with law;

     (2) a person designated as a trustee is eligible to act in that capacity; and

     (3) the written trust agreement is adequate to protect the interests of the beneficiaries of the trust.

 (j) The director may approve written modifications of, or variations in, a written trust agreement upon a finding that the proposed changes are not prejudicial to the interests of the people of this state or the United States policyholders and creditors of the United States branch.

 (k) The director may conduct examinations of the trusteed assets of an authorized United States branch at the insurer’s expense and may require the trustee or trustees to file a statement, in a form as prescribed by the director, certifying the assets and amounts of the trust fund.

 (l) The director, upon finding that the requisites for the approval of the trust agreement no longer exist, may issue an order that withdraws approval of a written trust agreement and amendments to it. An order issued under this subsection takes effect 10 days after being issued.

 (m) In addition to all other actions permitted under this title, refusal or neglect of a trustee to comply with the requirements of this title is a cause for suspension or revocation of the United States branch’s certificate of authority or the liquidation of the alien insurer’s United States branch.

 (n) Annual statements under AS 21.09.200 and quarterly statements under AS 21.09.205 (1) may only relate to and must include all insurance transactions and affairs within the United States, assets held by or for the United States branch for the protection of policyholders and creditors within the United States, and liabilities incurred against those assets; and (2) may not contain a statement in regard to assets and business transacted in a place not described in this subsection. The annual and quarterly statements shall be signed and verified by the United States manager, attorney-in-fact, or a duly empowered assistant United States manager of the United States branch.

 (o) In a form prescribed by the director, an authorized United States branch shall file with its annual and quarterly statements a statement of trusteed surplus covering the same time period. The trusteed surplus shall consist of the aggregate value of the United States branch’s general state deposits and assets deposited with a trustee under this section, plus accrued interest income if the interest were collected by the states for the trustees, less the aggregate net amount of all its reserves and other liabilities in the United States as determined under this subsection. The items of securities and other property held under trust deeds shall be certified by the United States trustee. To determine the net amount of the United States branch’s liabilities in the United States to be reported in the statement of trusteed surplus, the United States branch shall adjust its total liabilities reported on its accompanying annual or quarterly statement as follows:
     (1) by adding back liabilities used to offset admitted assets reported in the accompanying annual or quarterly statement; and

     (2) by deducting
          (A) unearned premiums on agent’s balances or uncollected premiums not more than 90 days past due;

          (B) reinsurance on losses with authorized insurers, less unpaid reinsurance premiums;

          (C) reinsurance recoverables on paid losses from unauthorized insurers that are included as an asset in the annual statement, but only to the extent a liability for unauthorized recoverables as described in this paragraph are included in the liabilities report in the trusteed surplus statement;

          (D) special state deposits held for the exclusive benefit of policyholders, or policyholders and creditors, of a particular state not exceeding net liabilities reported for that state;

          (E) secured accrued retrospective premiums;

          (F) if a life insurer,
               (i) the amount of its policy loans to policyholders within the United States, not exceeding the amount of legal reserve required on an affected policy; and

               (ii) the net amount of uncollected and deferred premiums; and

          (G) other nontrusteed assets, upon a written finding by the director that the other nontrusteed assets secure liabilities in a substantially similar manner to those permitted under this subsection.

 (p) In addition to the annual and quarterly statements and the statements of trusteed surplus, the director may require additional information relating to total business or assets, or any portion of them, of the alien insurer or its United States branch.

 (q) In addition to the general statement of the financial condition of the United States branch, a report of examination must include a trusteed surplus statement as of the date of the examination.

 (r) In this section,
     (1) “trusteed assets” are the assets maintained in a trust account under (g) of this section;

     (2) “United States branch” means the business unit through which business is transacted within the United States by an alien insurer and the assets and liabilities of the insurer within the United States applicable to that business.




Sec. 21.09.320. Maintenance of records; production; civil penalty.
 (a) A foreign insurer shall keep at its principal place of business a complete record of its assets, transactions, and affairs in accordance with the methods and systems that are customary or suitable to the kind of business transacted.

 (b) To meet the requirements of (a) of this section, the insurer shall keep the records as required by the record maintenance requirements of the insurer’s domicile jurisdiction.

 (c) The director may make a request in writing to review records under (a) of this section. An insurer shall, not later than 10 business days after the date of the request, provide the requested records to the director or make the records available for inspection and copying. All records inspected or examined under this subsection are confidential, but may be used by the director in a proceeding against the insurer.

 (d) Failure by an insurer to provide information required in this section may result in a civil penalty of up to $1,000 for each violation and an additional civil penalty of up to $50 for each day the information requested is not provided.




Chapter 10. Transaction of Insurance Business.

[Repealed, § 4 ch 120 SLA 1966.]

Chapter 12. Kinds of Insurance, Limits of Risk, and Reinsurance.

Sec. 21.12.010. Limit of risk.
 (a) An insurer may not retain a risk on any one subject of insurance, whether located or to be performed in this state or elsewhere, in an amount exceeding 10 percent of its surplus to policyholders.

 (b) In this section a “subject of insurance” as to insurance against fire and hazards other than windstorm, earthquake, and other catastrophe hazards, includes all properties insured by the same insurer that are customarily considered by underwriters to be subject to loss or damage from the same fire or the same occurrence of the hazard insured against.

 (c) Reinsurance ceded as authorized by AS 21.12.020 shall be deducted in determining risk retained. As to surety risks, deduction shall also be made of the amount assumed by an established incorporated cosurety and the value of a security deposited, pledged or held subject to the surety’s consent and for the surety’s protection.

 (d) As to alien insurers, this section relates only to risks and surplus to policyholders of the insurer’s United States branch.

 (e) In this section “surplus to policyholders” in addition to the insurer’s capital and surplus includes any voluntary reserves that are not required under law, and are determined from the last sworn statement of the insurer on file with the director, or by the last report of examination of the insurer, whichever is more recent at time of assumption of risk.

 (f) This section does not apply to life or health insurance, annuities, title insurance, insurance of wet marine and transportation risks, workers’ compensation insurance, employer’s liability coverages, sprinklered risks, or to a policy or type of coverage in which the maximum possible loss to the insurer is not readily ascertainable on issuance of the policy.




Sec. 21.12.020. Reinsurance credit allowed a domestic ceding insurer.
 (a) Credit for reinsurance transactions shall be allowed a domestic ceding insurer as either an asset or a deduction from liability on account of reinsurance ceded only with respect to cessions of a kind or class of business that the assuming insurer is licensed or permitted to write or assume in its state of domicile or, in the case of a United States branch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance and only if the reinsurance is ceded to an
     (1) assuming insurer that is licensed to transact insurance or reinsurance in this state;

     (2) assuming insurer that is accredited as a reinsurer in this state; an accredited reinsurer is one that
          (A) files evidence of submission to this state’s jurisdiction, submits to this state’s authority to examine its books and records under AS 21.06.120, is licensed to transact insurance or reinsurance in at least one state that is accredited by the National Association of Insurance Commissioners, or, in the case of a United States branch of an alien admitted insurer, is entered through and licensed to transact insurance or reinsurance in at least one state that is accredited by the National Association of Insurance Commissioners;

          (B) maintains at least $20,000,000 in policyholder surplus and whose accreditation has not been denied by the director within 90 days after application to the director, or maintains less than $20,000,000 in policyholder surplus and whose application for accreditation has been approved by the director; and

          (C) files annually with the director a copy of the reinsurer’s annual financial statement filed with the insurance department of the reinsurer’s state of domicile or state of entry and a copy of the reinsurer’s most recent audited financial statement;

     (3) assuming insurer that is domiciled in a state, or, in the case of a United States branch of an alien assuming insurer, is entered through a state accredited by the National Association of Insurance Commissioners that employs standards regarding credit for reinsurance ceded substantially similar to those applicable under (1) and (2) of this subsection, the assuming insurer maintains a policyholder surplus of at least $20,000,000, and the assuming insurer submits to the authority of this state to examine its books and records; the surplus requirements in this paragraph do not apply to reinsurance ceded and assumed under a pooling arrangement among insurers in the same holding company system;

     (4) assuming alien insurer that
          (A) maintains a trust fund in a qualified United States financial institution for the payment of the valid claims of its United States domiciled ceding insurers, and their assigns and successors in interest, that conforms to the following requirements:
               (i) the trust and each amendment to the trust shall be established in a form approved by the insurance supervisory official of the state where the trust is domiciled or the insurance supervisory official of another state who, under the terms of the trust instrument, has accepted responsibility for regulatory oversight of the trust; the form of the trust and each trust amendment shall be filed with the insurance supervisory official of every state in which the beneficiaries of the trust are domiciled; the trust instrument must provide that contested claims are valid and enforceable upon the final order of any court of competent jurisdiction in the United States; the trust shall vest legal title to its assets in the trustees of the trust for its United States domiciled ceding insurers, their assigns, and successors in interest; the trust and the assuming insurer are subject to examination as determined by the director, and the assuming insurer shall submit to examination of its books and records by the director and bear the expense of examination; the trust must remain in effect for so long as the assuming insurer has outstanding liabilities due under the reinsurance agreements subject to the trust;

               (ii) on or before March 1 of each year, the trustees shall report in writing to the director on the balance of the trust and list the trust’s investments at the end of the preceding year, and shall certify the date of termination of the trust, if so planned, or certify that the trust does not expire before the following December 31;

               (iii) in the case of a single assuming insurer, the trust shall consist of trust assets not less than the assuming insurer’s liabilities attributable to reinsurance ceded by the United States domiciled ceding insurers and, in addition, include a trust surplus of not less than $20,000,000 for the benefit of the United States domiciled ceding insurers as additional security for the liabilities covered by the trust; the single assuming insurer shall make available to the director an annual certification of the insurer’s solvency by an independent certified public accountant or an accountant holding a substantially equivalent designation as determined by the director;

               (iv) in the case of a group, including incorporated and individual unincorporated insurers, the trust shall consist of trust assets representing the group’s liabilities attributable to business ceded by United States domiciled ceding insurers and, in addition, include a trust surplus not less than $100,000,000 held jointly for the benefit of the United States domiciled ceding insurers of any member of the group for all years of account as additional security for the group’s liabilities covered by the trust; the incorporated members of the group may not be engaged in any business other than underwriting as a member of the group and are subject to the same level of solvency regulation and control by the group’s domiciliary regulator as are the unincorporated members; within 90 days after its financial statements are due to be filed with the group’s domiciliary regulator, the group shall make available to the director an annual certification of the solvency of each insurer by the group’s domiciliary regulator or, if the certification is unavailable, financial statements, prepared by an independent certified public accountant, or an accountant holding a substantially equivalent designation as determined by the director, for each underwriter member of the group;

               (v) in the case of a group of incorporated insurers under common administration that complies with the reporting requirements contained in (ii) of this subparagraph, that has continuously transacted an insurance business outside the United States for at least three years immediately before making application for accreditation, that submits to this state’s authority to examine its books and records and bears the expense of the examination, and that has aggregate policyholders’ surplus of $10,000,000,000, the trust shall consist of trust assets in an amount not less than the group’s several liabilities attributable to business ceded by United States domiciled ceding insurers to a member of the group under reinsurance contracts issued in the name of the group, and the group shall maintain a joint trustee surplus, of which $100,000,000 shall be held jointly for the benefit of United States domiciled ceding insurers of a member of the group as additional security for the group’s liabilities covered by the trust, and, within 90 days after its financial statements are due to be filed with the group’s domiciliary regulator, each member of the group shall make available to the director an annual certification of the underwriter member’s solvency by the member’s domiciliary regulator and financial statement of each underwriter member prepared by its independent certified public accountant, or an accountant holding a substantially equivalent designation as determined by the director; and

          (B) reports annually to the director information substantially the same as that required to be reported on the National Association of Insurance Commissioners’ annual statement form by licensed insurers to enable the director to determine the sufficiency of the trust fund;

     (5) assuming insurer that does not meet the requirements of (1) — (4) of this subsection, but only with respect to the insurance of risks located in jurisdictions where the reinsurance is required by applicable law or regulation of that jurisdiction.

 (b) If the assuming insurer is not licensed or accredited to transact insurance or reinsurance in this state, the credit permitted by (a)(1) — (4) of this section may not be allowed unless the assuming insurer agrees in the reinsurance agreements
     (1) that in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, shall submit to the jurisdiction of a court of competent jurisdiction in any state of the United States, will comply with all requirements necessary to give the court jurisdiction and will abide by the final decision of the court or of an appellate court in the event of an appeal; this provision is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if such an obligation is created in the reinsurance agreement; and

     (2) to designate the director or an attorney resident in the United States as its true and lawful attorney upon whom may be served lawful process in an action, suit, or proceeding instituted by or on behalf of the ceding insurer.

 (c) A reduction from liability, for reinsurance ceded to an assuming insurer not meeting the requirements of (a) of this section, shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer. The reduction shall be equal to the amount of money held by or on behalf of the ceding insurer, including money held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations under it, if the security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer, or, in the case of a trust, held in a qualified United States financial institution. The security must be in the form of
     (1) cash;

     (2) securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners that qualify as admitted assets under AS 21.21;

     (3) clean, irrevocable, unconditional letters of credit that contain an evergreen clause issued or confirmed by a qualified United States financial institution not later than December 31 in the year for which filing is made, and in the possession of, or in trust for, the ceding insurer on or before the filing date of the ceding insurer’s annual statement; letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation shall, notwithstanding the issuing or confirming institution’s subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification, or amendment, whichever occurs first; or

     (4) other security acceptable to and approved in advance by the director.

 (d) Notwithstanding the other provisions of this section, credit may not be allowed a domestic ceding insurer unless the reinsurance contract provides for payment by the assuming insurer on the basis of the liability of the ceding domestic insurer under the insurance contracts reinsured without diminution because of the insolvency of the ceding domestic insurer.

 (e) Upon request of the director, an insurer shall promptly inform the director, in writing, of the cancellation or other material change in any of its reinsurance contracts or arrangements.

 (f) In this section, “qualified United States financial institution” means an institution that,
     (1) for the purposes of (c)(3) of this section,
          (A) is organized or, in the case of a United States office of a foreign banking organization, is licensed under the laws of the United States or a state of the United States;

          (B) is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks and trust companies; and

          (C) has been determined by either the director or the Securities Valuation Office of the National Association of Insurance Commissioners to meet the standards of financial condition and standing that are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit are acceptable to the director;

     (2) for the purposes of the provisions of this section other than (c)(3) of this section, an institution that
          (A) is organized or, in the case of a United States branch or agency office of a foreign banking organization, licensed under the laws of the United States or a state of the United States, and has been granted authority to operate with fiduciary powers; and

          (B) is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks and trust companies.

 (g) An insurer may receive credit for reinsurance transactions if the reinsurance agreement meets all applicable requirements established by the director.

 (h) A domestic ceding insurer may not be allowed credit if the assuming insurer’s accreditation has been revoked by the director.

 (i) In this section, a “reinsurance transaction” means a transaction stemming from a contract by which the assuming insurer agrees to indemnify the ceding insurer in whole or in part against liability or losses that the ceding insurer might incur under a separate contract of insurance with its insured.




Sec. 21.12.025. Assumption reinsurance.
 (a) A nondomestic admitted insurer may not carry out an agreement of assumption reinsurance with a nonadmitted insurer that would transfer Alaska policyholders unless
     (1) the nonadmitted insurer applies for and obtains a certificate of authority from the director; or

     (2) the admitted insurer files the assumption agreement with the director and obtains approval to apply the assumption agreement to Alaska policies or certificates.

 (b) The director shall approve an assumption agreement involving the assumption of Alaska insurance business by a nonadmitted insurer if
     (1) the ceding insurer is in supervision, conservation, or liquidation and the assuming insurer is in good standing in its state of domicile; or

     (2) approval would be in the public interest of the Alaska policyholders.




Sec. 21.12.030. Definitions not mutually exclusive.
It is intended that certain insurance coverages may come within the definitions of two or more kinds of insurance as defined in this chapter, and the inclusion of coverage within one definition does not exclude it from the definition of another kind of insurance coverage if the coverage may be reasonably included.


Sec. 21.12.040. Life insurance defined.
Life insurance is insurance on human lives. The transaction of life insurance includes also the granting of endowment benefits, additional benefits for death or dismemberment by accident or accidental means, additional benefits for the insured’s disability, and optional modes of settlement of proceeds of life insurance. Transaction of life insurance does not include workers’ compensation insurance.


Sec. 21.12.050. Health and health care insurance defined.
 (a) Health insurance is insurance of human beings (1) against bodily injury, disablement, or death by accident or accidental means; (2) against the resulting expenses of the injury, disablement, or death; (3) against disablement or expense resulting from sickness or childbirth; (4) against expense incurred in prevention of sickness; (5) for dental care; and (6) including every insurance that applies to injury, disablement, or death. Transaction of health insurance includes disability insurance and stop-loss insurance but does not include workers’ compensation insurance. Health care insurance described in (b) of this section is a type of health insurance under this subsection.

 (b) Health care insurance means that part of health insurance that provides, delivers, arranges for, pays for, or reimburses any of the costs of medical care.

 (c) In this section, “stop-loss insurance” means insurance purchased by a self-insured employer to cover benefits the employer incurs in excess of a preset limit.




Sec. 21.12.052. Disability insurance defined.
Disability insurance is insurance that provides periodic income payments when income is interrupted or terminated because of disability resulting from sickness, injury, or dismemberment, or a combination of sickness, injury, or dismemberment.


Sec. 21.12.055. Annuities and annuity contract defined.
 (a) Annuities means all agreements to make periodical payments if the making or continuance of all or some of a series of payments or the amount of a payment is dependent upon the continuance of human life, except payments made under AS 21.12.040. The business of annuities is considered to include additional benefits operating to safeguard the contract from lapse, or to provide a special surrender value, or special benefit, or annuity, in the event of the total and permanent disability of the holder.

 (b) Annuity contract means a contract providing for an annuity as defined in (a) of this section.




Sec. 21.12.060. Property insurance defined.
Property insurance is insurance on real or personal property of every kind and of every interest therein, whether on land, water, or in the air, against loss or damage from any and all hazard or cause, and against loss consequential upon the loss or damage, other than noncontractual legal liability for loss or damage. Property insurance does not include title insurance as defined in AS 21.66.480.


Sec. 21.12.070. Casualty insurance defined.
 (a) Casualty insurance includes
     (1) vehicle insurance: insurance against loss of or damage to a land vehicle or aircraft or a draft or riding animal or to property while contained therein or thereon or being loaded or unloaded therein or therefrom, from any hazard or cause, and against any loss, liability, or expense resulting from or incidental to ownership, maintenance, or use of the vehicle, aircraft, or animal; and provision for medical, hospital, surgical, disability benefits to injured persons and funeral and death benefits to dependents, beneficiaries, or personal representatives of persons killed, irrespective of legal liability to the insured, if issued as an incidental coverage with or supplemental to insurance on the vehicle, aircraft, or animal;

     (2) liability insurance: insurance against legal liability for the death, injury or disability of a human being, or for damage to property; and provision of medical, hospital, surgical, disability benefits to injured persons and funeral and death benefits to dependents, beneficiaries or personal representatives of persons killed, irrespective of legal liability of the insured, if issued as an incidental coverage with or supplemental to liability insurance;

     (3) workers’ compensation and employer’s liability: insurance of the obligations accepted by, imposed upon, or assumed by employers under law for death, disablement, or injury of employees;

     (4) burglary and theft: insurance against loss or damage by burglary, theft, larceny, robbery, forgery, fraud, vandalism, malicious mischief, confiscation, or wrongful conversion, disposal, or concealment, or from an attempt at any of the foregoing; including supplemental coverage for medical, hospital, surgical, and funeral expense incurred by the named insured or any other person as a result of bodily injury during the commission of a burglary, robbery, or theft by another; also insurance against loss of or damage to money, coins, bullion, securities, notes, drafts, acceptances, or other valuable papers and documents, resulting from any cause;

     (5) personal property floater: insurance upon personal effects against loss or damage from any cause under a personal property floater;

     (6) glass: insurance against loss or damage to glass, including its lettering, ornamentation, and fittings;

     (7) boiler and machinery: insurance against any liability and loss or damage to property or interest resulting from accident to or explosions of boilers, pipes, pressure containers, machinery, or apparatus, and to make inspection of and issue certificates of inspection upon boilers, machinery, and apparatus of any kind, whether or not insured;

     (8) leakage and fire extinguishing equipment: insurance against loss or damage to any property or interest caused by the breakage or leakage of sprinklers, hoses, pumps, and other fire extinguishing equipment or apparatus, water pipes or containers, or by water entering through leaks or openings in buildings, and insurance against loss or damage to the sprinklers, hoses, pumps, and other fire extinguishing equipment or apparatus;

     (9) credit: insurance against loss or damage resulting from failure of debtors to pay their obligations to the insured;

     (10) malpractice: insurance against legal liability of the insured, and against loss, damage, or expense incidental to a claim of liability, and including medical, hospital, surgical, and funeral benefits to injured persons, irrespective of legal liability of the insured, arising out of the death, injury or disablement of a person, or arising out of damage to the economic interest of a person, as the result of negligence in rendering expert, fiduciary, or professional service;

     (11) elevator: insurance against loss of or damage to any property of the insured, resulting from the ownership, maintenance, or use of elevators, except loss or damage by fire, and to make inspection of and issue certificates of inspection on elevators;

     (12) livestock: insurance against loss or damage to livestock, and services of a veterinary for the animals;

     (13) entertainments: insurance indemnifying the producer of a motion picture, television, radio, theatrical, sport, spectacle, entertainment, or similar production, event, or exhibition against loss from interruption, postponement, or cancellation due to death, accidental injury, or sickness of performers, participants, directors, or other principals;

     (14) miscellaneous: insurance against any other kind of loss, damage, or liability properly a subject of insurance and not within another kind of insurance as defined in this chapter, if the insurance is not disapproved by the director as being contrary to law or public policy.

 (b) The provision of medical, hospital, surgical, and funeral benefits, and of coverage against accidental death or injury, as incidental to and part of other insurance defined in (a)(1), (2), (4), and (10) of this section, shall for all purposes be considered to be the same kind of insurance to which it is incidental, and is not subject to provisions of this title applicable to life or health insurance.




Sec. 21.12.080. Surety insurance defined.
Surety insurance includes
     (1) fidelity insurance, which is insurance guaranteeing the fidelity of persons holding positions of public or private trust;

     (2) insurance guaranteeing the performance of contracts, other than insurance policies, and guaranteeing and executing bonds, undertakings, and contracts of suretyship;

     (3) insurance indemnifying banks, bankers, brokers, financial or moneyed corporations or associations against loss, resulting from any cause, of bills of exchange, notes, bonds, securities, evidences of debt, deeds, mortgages, warehouse receipts or other valuable papers, documents, money, precious metals and articles made therefrom, jewelry, watches, necklaces, bracelets, gems, precious and semiprecious stones, including loss while being transported in armored motor vehicles or by messenger, but not including any other risks of transportation or navigation; also insurance against loss or damage to an insured’s premises or to the furnishings, fixtures, equipment, safes, and vaults on an insured’s premises caused by burglary, robbery, theft, vandalism, or malicious mischief, or attempted burglary, robbery, theft, vandalism, or malicious mischief.




Sec. 21.12.090. Marine, wet marine, and transportation insurance defined.
 (a) “Marine insurance” includes
     (1) insurance against any and all kinds of loss or damage to
          (A) vessels, craft, aircraft, cars, automobiles, and vehicles of every kind, as well as all goods, freights, cargoes, merchandise, effects, disbursements, profits, money, bullion, precious stones, securities, choses in action, evidences of debt, valuable papers, bottomry and respondentia interests and all other kinds of property and interests therein, in respect to, appertaining to, or in connection with any and all risks or perils of navigation, transit, or transportation, including war risks, on or under any seas or other waters, on land or in the air, or while being assembled, packed, crated, baled, compressed, or similarly prepared for shipment or while awaiting shipment or during delays, storage, transshipment, or reshipment incident thereto, including marine builder’s risks and all personal property floater risks;

          (B) a person or to property in connection with or appertaining to a marine, inland marine, transit or transportation insurance, including liability for loss of or damage to either, arising out of or in connection with the construction, repair, operation, maintenance, or use of the subject matter of the insurance (but not including life insurance or surety bonds or insurance against loss by reason of bodily injury to the person arising out of the ownership, maintenance, or use of automobiles);

          (C) precious stones, jewels, jewelry, gold, silver, and other precious metals, whether used in business or trade or otherwise and whether in the course of transportation or otherwise;

          (D) bridges, tunnels, and other instrumentalities of transportation and communication (excluding buildings, their furniture and furnishings, fixed contents and supplies held in storage) unless fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and/or civil commotion are the only hazards to be covered; piers, wharves, docks and slips, excluding the risks of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and/or civil commotion; other aids to navigation and transportation, including dry docks and marine railways, against all risks;

     (2) “marine protection and indemnity insurance”, meaning insurance against, or against legal liability of the insured for loss, damage, or expense arising out of, or incident to, the ownership, operation, chartering, maintenance, use, repair, or construction of a vessel, craft, or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness, or death or for loss of or damage to the property of another person.

 (b) For the purposes of this title, “wet marine and transportation” insurance is that part of marine insurance that includes only
     (1) insurance on vessels, crafts, and hulls, and insurance of interests in or with relation to vessels, crafts, and hulls;

     (2) insurance of marine builder’s risks, marine war risks, and contracts of marine protection and indemnity insurance;

     (3) insurance of freights and disbursements pertaining to a subject of insurance coming within this section; or

     (4) insurance of personal property and interests in personal property, in the course of exportation from or importation into any country, and in the course of transportation coastwise or on inland waters, including transportation by land, water, or air from point of origin to final destination, in respect to, appertaining to, or in connection with, any and all risks or perils of navigation, transit, or transportation, and while being prepared for and while awaiting shipment, and during delays, storage, transshipment, or reshipment incident thereto.




Sec. 21.12.100. Title insurance defined. [Repealed, § 8 ch 120 SLA 1974. For current law see AS 21.66.480.]
Sec. 21.12.110. Mortgage guaranty insurance defined.
Mortgage guaranty insurance includes insurance against financial loss by reason of nonpayment of principal, interest, and other sums agreed to be paid under the terms of any note or bond or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument consisting of a lien or charge on real estate.


Sec. 21.12.120. [Renumbered as AS 21.12.020(g).]
Sec. 21.12.130. Commercial insurance defined.
Commercial insurance is any line of property insurance, as defined in AS 21.12.060, or casualty insurance, as defined in AS 21.12.070, that is for business and professional interests, whether for profit, nonprofit, or public in nature. For purposes of filing rates under AS 21.39.040 and forms under AS 21.42.120, commercial insurance does not include workers’ compensation insurance.


Chapter 14. Risk Based Capital for Insurers.

Sec. 21.14.010. Risk based capital reports.
 (a) A domestic insurer shall, on or before March 1, submit to the director a report of its risk based capital covering the previous calendar year. The report must be in a form and contain the information required by risk based capital instructions. A domestic insurer required to submit a report under this subsection shall file the report with
     (1) the National Association of Insurance Commissioners; and

     (2) the insurance regulatory agency in each state in which the insurer is authorized to transact business if the insurance regulatory agency has requested the report in writing from the insurer; a report requested under this paragraph must be delivered
          (A) not later than 15 days after the receipt of a request if the report has already been filed with the director; or

          (B) at the time the report is filed with the director, if the report has not yet been filed with the director.

 (b) An insurer’s risk based capital shall be determined under the formula contained in the risk based capital instructions.

 (c) If a domestic insurer files a report that the director determines to be inaccurate, the director may adjust the report to correct the inaccuracy. The director shall notify the insurer of an adjustment and the reason for it.

 (d) [Repealed, § 34 ch 52 SLA 2015.]

 (e) [Repealed, § 34 ch 52 SLA 2015.]




Sec. 21.14.015. Other powers and duties not limited.
The requirements of this chapter supplement other provisions of this title and do not preclude or limit other powers or duties of the director.


Sec. 21.14.020. Company action level event.
If a company action level event occurs, the affected insurer shall submit to the director a plan under AS 21.14.060.


Sec. 21.14.030. Regulatory action level event.
 (a) If a regulatory action level event occurs, the director shall
     (1) require the affected insurer to submit a plan or a revised plan under AS 21.14.060; if the level event is caused by the insurer’s failure to adhere to a previously filed plan or revised plan that has been accepted by the director, the director may exempt the insurer from this requirement;

     (2) perform whatever examination, analysis, or review of the assets, liabilities, and operations of the insurer that the director determines necessary; and

     (3) issue a corrective order specifying the action that the insurer is required to take to eliminate the level event.

 (b) The director may retain an actuary, investment expert, or other consultant as may be necessary to review the insurer’s risk based capital plan or revised risk based capital plan, to examine or analyze the assets, liabilities, and operations of the insurer, or to formulate a corrective order with respect to the insurer. The affected insurer or affiliated person shall pay the fees, reasonable costs, and expenses of a person retained by the director under this subsection as ordered by the director.




Sec. 21.14.040. Authorized control level event.
If an authorized control level event occurs, the director shall take the action necessary
     (1) under AS 21.14.030(a) against the insurer; or

     (2) to place the insurer under regulatory control under AS 21.78.




Sec. 21.14.050. Mandatory control level event.
 (a) If a mandatory control level event occurs for a domestic insurer, the director shall take the action necessary to place the insurer under regulatory control under AS 21.78 or, if a fraternal benefit society, under AS 21.84.

 (b) Notwithstanding (a) of this section, the director may delay taking action under AS 21.78 or, if a fraternal benefit society, under AS 21.84 for up to 90 days after the mandatory control level event occurs, if the director finds there is a reasonable expectation that the mandatory control level event may be eliminated within the 90-day period.

 (c) Notwithstanding (a) of this section, the director may allow a property and casualty insurer that is running off its business by writing no new business and by only renewing ongoing business to the extent required by law or by contract, but continuing to collect premiums and pay claims as they come due on existing business to continue the runoff under the director’s supervision without placing the insurer under regulatory control under AS 21.78.




Sec. 21.14.060. Risk based capital plan.
 (a) If a plan is required under this chapter or by order of the director in response to an event described under AS 21.14.020 — 21.14.050, the plan must be a financial plan that includes
     (1) identification of the conditions that contribute to the level event;

     (2) a proposal for corrective action that the insurer intends to take that would be expected to eliminate the level event;

     (3) projections of the insurer’s financial results for the current year and for at least the next four years or, if a health organization, for at least the next two years, with and without the proposed corrective action, including projections of statutory operating income, net income, and capital and surplus; the projections for new and renewal business must include separate projections for each major line of business and separately identify each significant income, expense, and benefit component;

     (4) identification of the key assumptions affecting the insurer’s projections and the sensitivity of the projections to the assumptions;

     (5) identification of the quality of, and problems associated with, the insurer’s business, including the insurer’s assets, anticipated business growth, associated surplus strain, extraordinary exposure to risk, mix of business, and use of reinsurance in each case; and

     (6) other information required by the director.

 (b) An insurer shall submit a plan within 45 days
     (1) of an event described in AS 21.14.020 — 21.14.050; or

     (2) after the insurer receives notification from the director that the director has rejected the insurer’s challenge, if the insurer has challenged an adjusted report under AS 21.14.080.

 (c) Not later than 60 days after an insurer has submitted a plan to the director, the director shall notify the insurer if the plan is satisfactory or unsatisfactory. If the director determines the plan to be satisfactory, the insurer shall implement the plan upon receiving notice from the director. If the director determines the plan is unsatisfactory, notification to the insurer must state the reasons for the determination and may propose revisions that, in the judgment of the director, will render the plan satisfactory. Upon receiving notice from the director that a plan is unsatisfactory, the insurer shall prepare a revised plan that may incorporate revisions proposed by the director and submit the revised plan to the director. A revised plan shall be submitted to the director within 45 days after the insurer receives notice that
     (1) the original plan is unsatisfactory; or

     (2) the director has rejected the insurer’s challenge, if the insurer challenges an unsatisfactory determination of the director under AS 21.14.080.

 (d) A domestic insurer that files a plan or revised plan with the director shall file a copy of the plan or revised plan with the insurance regulatory agency in each state in which the insurer transacts business, if
     (1) the state has a risk based capital provision substantially similar to AS 21.14.090, as determined by the director; and

     (2) the insurance regulatory agency of that state has made a request in writing to the insurer.

 (e) An insurer shall file the copy of the plan or revised plan required under (d) of this section (1) within 15 days of the insurer’s receipt of a request for the filing from a state; or (2) by the date on which the plan or revised plan is filed in this state under this section, whichever is later.

 (f) The director may specify in a notification under (c) of this section of an unsatisfactory plan or revised plan that the notification constitutes a regulatory action level event, subject to an insurer’s right to challenge the unsatisfactory determination under AS 21.14.080.




Sec. 21.14.070. Foreign insurers.
 (a) A foreign insurer shall, upon the written request of the director, submit to the director a report described under AS 21.14.010 not later than
     (1) 15 days from the receipt by the foreign insurer of a request, if the report has already been filed with the domiciliary state;

     (2) 60 days from the receipt by the foreign insurer of a request, if the report is not required to be filed with the domiciliary state; or

     (3) the date on which the report is filed with the domiciliary state or 60 days from receipt by the foreign insurer of the request, whichever is earlier, if the report is required to be filed but has not already been filed with the domiciliary state.

 (b) Within 15 days after receiving a written request from the director, a foreign insurer shall submit to the director a copy of a plan that is filed with an insurance regulatory agency of another state.

 (c) The director may require a foreign insurer to file a plan under AS 21.14.060, if
     (1) a company action level event, regulatory action level event, or authorized control level event occurs with respect to a foreign insurer as determined under
          (A) the risk based capital statute applicable in the domiciliary state of the insurer; or

          (B) this chapter, if a risk based capital statute is not in force in the domiciliary state that is substantially similar to this chapter; or

     (2) the insurance regulatory agency of the domiciliary state of the foreign insurer fails to require the foreign insurer to file a plan in the manner specified under that state’s risk based capital statute.

 (d) If a foreign insurer fails to file a plan with the director as required under this section, the director may order the insurer to stop writing new insurance business in this state.

 (e) If a mandatory control level event occurs that involves a foreign insurer, the director may apply to a court under AS 21.78 for the liquidation of property of the foreign insurer that is located in this state, unless a domiciliary receiver has been appointed for the foreign insurer under the rehabilitation and liquidation statute applicable in the foreign insurer’s domiciliary state.




Sec. 21.14.080. Hearings.
 (a) An insurer may request a hearing to challenge an action of the director or request a stay of the director’s action as provided under AS 21.06.180 — 21.06.240.

 (b) An insurer shall request a hearing under (a) of this section within 15 days after the director’s notice of
     (1) an adjusted risk based capital report under AS 21.14.010;

     (2) an unsatisfactory risk based capital plan or revised risk based capital plan;

     (3) a regulatory action level event based on an unsatisfactory risk based capital plan or revised risk based capital plan;

     (4) the insurer’s failure to adhere to its risk based capital plan or revised risk based capital plan and the failure has a substantial adverse effect on the insurer’s ability to eliminate the company action level event in accordance with its plan or revised plan; or

     (5) a corrective order applicable to the insurer.




Sec. 21.14.090. Confidentiality; restrictions on use.
 (a) Except as provided in AS 21.06.060 and this subsection, a report required under AS 21.14.010, a plan required under AS 21.14.060, the results or report of an examination or analysis of an insurer performed under this chapter, and a corrective order issued by the director are confidential and may not be made public by the director or another person. Information in a risk based capital report that is also set out in a publicly available annual statement schedule is not confidential.

 (b) The calculation of risk based capital for an insurer constitutes a regulatory tool that may indicate a need for corrective action, and the calculation may not be used as a means to rank insurers. Except as otherwise required in this chapter, a person may not directly or indirectly use information regarding the risk based capital of an insurer. If a materially false statement regarding an insurer’s risk based capital or an inappropriate comparison of any other amount to the insurer’s risk based capital is published and the insurer is able to demonstrate with substantial proof, as determined by the director, the falsity or inappropriateness of the statement, the insurer may publish an announcement exclusively to rebut the materially false statement or inappropriate comparison.

 (c) The director may use the risk based capital instructions, report, adjusted report, plan, and revised plan only for monitoring the solvency of an insurer or for determining the need for corrective action by an insurer. Notwithstanding AS 21.39, documents described in this subsection may not be considered or introduced as evidence in a rate proceeding or used by the director to calculate or derive any elements of an appropriate premium level or rate of return for a line of insurance that an insurer or an affiliate is authorized to write.




Sec. 21.14.100. Penalty for violation.
 (a) An insurer shall pay to the division $100 for each day the insurer fails to file a report, and $1,000 for each day the insurer fails to file a plan or revised plan in conformance with the requirements of this chapter.

 (b) If a report, plan, or revised plan has not been filed in conformance with the requirements of this chapter, the director may, as provided
     (1) under AS 21.09.150, AS 21.84.535, AS 21.86.190, or AS 21.87.110, as applicable to a particular insurer, suspend the authority of an insurer to enter into new obligations or issue a new or renewal policy of insurance in this state; or

     (2) under AS 21.34.070, declare a surplus lines insurer ineligible to transact business in this state.




Sec. 21.14.110. Exemptions.
 (a) The director may exempt from the application of this chapter a domestic property and casualty insurer that
     (1) writes direct business only in this state;

     (2) writes direct annual premiums of $2,000,000 or less; and

     (3) does not assume reinsurance in excess of five percent of direct premiums written.

 (b) The director may exempt from the application of this chapter a domestic health organization that
     (1) writes direct business only in this state;

     (2) does not assume reinsurance in excess of five percent of direct premiums written and
          (A) writes direct annual premiums for comprehensive medical care of $2,000,000 or less; or

          (B) is a limited health service organization that covers less than 2,000 lives.




Sec. 21.14.120. Notices.
All notices by the director to an insurer that may result in regulatory action under this chapter are effective upon mailing if mailed by registered or certified mail or, in the case of any other transmission, upon the director’s transmission of the notice.


Sec. 21.14.130. Regulations.
The director may adopt regulations to implement this chapter.


Sec. 21.14.200. Definitions.
In this chapter,
     (1) “adjusted report” means a risk based capital report that has been adjusted by the director under AS 21.14.010;

     (2) “authorized control level event” means
          (A) a report, an adjusted report that has not been challenged, or an adjusted report for which a challenge has been rejected, that is filed under AS 21.14.010 and that indicates that an insurer’s total adjusted capital is greater than or equal to its mandatory control level risk based capital but is less than its authorized control level risk based capital; or

          (B) an insurer fails to respond to a corrective order issued under AS 21.14.030 in a manner satisfactory to the director, if
               (i) the insurer does not challenge the corrective order as permitted under AS 21.14.080; or

               (ii) after a hearing under AS 21.06.180 — 21.06.240, a challenge to the corrective order by the insurer under AS 21.14.080 is rejected by the director;

     (3) “authorized control level risk based capital” means the number determined under the risk based capital formula in the risk based capital instructions;

     (4) “company action level event” means a report, an adjusted report that has not been challenged, or an adjusted report for which a challenge has been rejected that is filed under AS 21.14.010 and that indicates that
          (A) an insurer’s total adjusted capital is greater than or equal to its regulatory action level risk based capital but is less than its company action level risk based capital;

          (B) if a life and health insurer or a fraternal benefit society, the insurer or the fraternal benefit society has total adjusted capital that is greater than or equal to its company action level risk based capital but is less than the product obtained by multiplying the insurer’s authorized control level risk based capital by 3.0 and that has a negative trend; or

          (C) if a property and casualty insurer or health organization, the insurer or organization has total adjusted capital that is greater than or equal to the company action level risk based capital but is less than the product obtained by multiplying its authorized control level risk based capital by 3.0 and that triggers the trend test calculation in the risk based capital instructions applicable to the insurer or health organization;

     (5) “company action level risk based capital” means the product obtained by multiplying an insurer’s authorized control level risk based capital by 2.0;

     (6) “corrective order” means an order issued by the director specifying action that the director has determined is required under this chapter;

     (7) “foreign insurer” means a foreign insurer as defined in AS 21.97.900 but excludes an alien insurer;

     (8) “fraternal benefit society” has the meaning given in AS 21.84.900;

     (9) “health organization” means a health maintenance organization, limited health service organization, dental or vision plan, hospital, medical and dental indemnity or service corporation, or other managed care organization holding a certificate of authority under AS 21.86 or AS 21.87, or a company that writes primarily health insurance as defined in AS 21.12.050 and filed with the director the National Association of Insurance Commissioners Health Risk-Based Capital Report;

     (10) “insurer” means a property and casualty insurer, a life and health insurer, a health organization, and a fraternal benefit society;

     (11) “level event” means a company action level event, regulatory action level event, authorized control level action event, or mandatory control level event;

     (12) “life and health insurer”
          (A) means an insurer who transacts life insurance as defined in AS 21.12.040 or health insurance as defined in AS 21.12.050 and who filed with the director the National Association of Insurance Commissioners Life Risk-Based Capital Report;

          (B) does not include a benevolent association under AS 21.72, a fraternal benefit society under AS 21.84, a health maintenance organization under AS 21.86, or a hospital or medical service corporation under AS 21.87;

     (13) “limited health service organization” means a corporation, partnership, or other entity that undertakes to provide or arrange for the provision of one or more limited health services to enrollees;

     (14) “limited health services” means dental care services, vision care services, mental health services, substance abuse services, pharmaceutical services, podiatric care services, and other services as determined by order or regulation of the director; “limited health services” does not include hospital, medical, surgical, or emergency services except as provided incident to the limited health services as defined in this paragraph.

     (15) “mandatory control level event” means a report, an adjusted report that has not been challenged, or an adjusted report for which a challenge has been rejected, that is filed under AS 21.14.010, and that indicates that an insurer’s total adjusted capital is less than the insurer’s mandatory control level risk based capital;

     (16) “mandatory control level risk based capital” means the product obtained by multiplying an insurer’s authorized control level risk based capital by 0.70;

     (17) “negative trend” for a life and health insurer or a fraternal benefit society means a negative trend over a period of time, as determined by the “trend test calculation” in the risk based capital instructions applicable to the life and health insurer or fraternal benefit society;

     (18) “property and casualty insurer” means an insurer who transacts health insurance as defined in AS 21.12.050, property insurance as defined in AS 21.12.060, casualty insurance as defined in AS 21.12.070, surety insurance as defined in AS 21.12.080, marine or wet marine and transportation insurance as defined in AS 21.12.090, or mortgage guaranty insurance as defined in AS 21.12.110 and who filed with the director the National Association of Insurance Commissioners Property and Casualty Risk-Based Capital Report;

     (19) “regulatory action level event” means
          (A) a report, an adjusted report that has not been challenged, or an adjusted report for which a challenge has been rejected, that is filed under AS 21.14.010, and that indicates that an insurer’s total adjusted capital is greater than or equal to its authorized control level risk based capital but is less than the insurer’s regulatory action level risk based capital;

          (B) an insurer fails to file a report required under AS 21.14.010 by its due date, unless the insurer has provided a written explanation for the failure by the due date that is satisfactory to the director and the insurer has cured the failure not later than 10 days after the report is due;

          (C) an insurer fails to submit a plan to the director within the time period described in AS 21.14.060;

          (D) a notification by the director to an insurer that a plan or revised plan submitted by the insurer is determined by the director to be unsatisfactory, if
               (i) the insurer does not challenge the determination of the director; or

               (ii) after a hearing under AS 21.06.180 — 21.06.240, a challenge of the director’s determination by the insurer under AS 21.14.080 is rejected by the director; or

          (E) a notification by the director to an insurer that the insurer has failed to adhere to the insurer’s plan or revised plan, if the director determines that the failure has a substantially adverse effect on the ability of the insurer to accomplish the objectives of the plan or revised plan, if
               (i) the insurer does not challenge the determination of the director; or

               (ii) after a hearing under AS 21.06.180 — 21.06.240, a challenge of the director’s determination by the insurer under AS 21.14.080 is rejected by the director;

     (20) “regulatory action level risk based capital” means the product obtained by multiplying an insurer’s authorized control level risk based capital by 1.5;

     (21) “report” means the report of an insurer’s risk based capital for a calendar year as required under AS 21.14.010;

     (22) “revised plan” means a risk based capital plan revised by an insurer, after the director has found the original risk based capital plan unsatisfactory under AS 21.14.060;

     (23) “risk based capital” means the amount of risk based capital and surplus produced by the application of the risk based capital instructions, or other amount the director determines after examination to be sufficient to support the insurer’s asset risk, underwriting risk, and credit risk, including the minimum capital and surplus required under AS 21.09;

     (24) “risk based capital instructions” means risk based capital instructions most recently adopted by the National Association of Insurance Commissioners;

     (25) “total adjusted capital” means the total of
          (A) an insurer’s statutory capital and surplus as reported under AS 21.09.200 or 21.09.205; and

          (B) any other item required under the risk based capital instructions.




Chapter 15. The Insurance Contract.

[Repealed, § 4 ch 120 SLA 1966. For current law, see AS 21.42.]

Chapter 18. Assets and Liabilities.

Sec. 21.18.010. Allowable assets.
In a determination of the financial condition of an insurer, the following assets are allowed:
     (1) assets that are wholly and exclusively owned by the insurer and that are registered, recorded, or held under the insurer’s name;

     (2) premiums, not more than three months past due, excluding commissions payable on them, due from a controlling or controlled person, to the extent that
          (A) the premiums collected by the controlling or controlled person and not remitted to the insurer are held in a trust account with a bank or other depository approved by the division and may not be commingled with other money of the controlling or controlled person; a disbursement from the trust account may be made only to the insurer, the insured, or, for the purpose of returning a premium, an entity that is entitled to returned premiums on behalf of the insured; however, the investment income derived from the trust may be allocated as the parties consider proper; a controlling or controlled person shall deposit premiums collected into the trust account within five working days after collection; the director shall disapprove a trust agreement that, in the director’s judgment, does not assure the safety of the premiums collected;

          (B) the controlling or controlled person has provided to the insurer, and the insurer has maintained in its possession, an unexpired, clean, irrevocable, and unconditional letter of credit, payable to the insurer, for a term of not less than one year with automatic extension for one year, unless the beneficiary has received in writing notification of intention not to renew 30 days before the original expiration date; the letter of credit must be issued in conformity with the requirements set out in this subparagraph, and the amount of the letter of credit must equal or exceed the liability of the controlling or controlled person to the insurer, at all times during the period that the letter of credit is in effect, for premiums collected by the controlling or controlled person; a letter of credit must be issued under arrangements satisfactory to the division and the letter must be issued by a banking institution that is a member of the Federal Reserve System and that has a financial standing satisfactory to the department; the director shall disapprove a letter of credit that, in the director’s judgment, does not assure the safety of the premiums;

          (C) the controlling or controlled person has provided to the insurer, and the insurer has maintained in its possession, evidence that the controlling or controlled person has purchased and has currently in effect a financial guaranty bond, payable to the insurer, issued for a continuous term, cancelable only on 30-day written notice to the beneficiary of intention to terminate with the bond continuing in effect for acts committed before the date of termination, and that is in conformity with the requirements set out in (B) of this paragraph; the amount of the bond must equal or exceed the liability of the controlling or controlled person to the insurer, at all times during which the financial guaranty bond is in effect, for the premium collected by the controlling or controlled person; a financial guaranty bond must be issued under an arrangement satisfactory to the division, by an insurer that is authorized to transact business in the state, that has financial standing satisfactory to the division, and that is neither controlled nor controlling in relation to either the insurer or the person for whom the bond is purchased; and

          (D) a financial examination indicates that the controlling or controlled person is solvent and has the ability to pay the premiums as they become due; the financial examination, as scheduled by the director, shall be based on a review of the books and records of the controlling or controlled person;

     (3) other assets considered by the director to be available for the payment of losses and claims, at values to be determined by the director, with any excess valuation reported as nonadmitted; and

     (4) other assets that do not exceed limitations as given in AS 21.21; any excess shall be reported as nonadmitted assets.




Sec. 21.18.020. Assets as deductions from liabilities.
Assets may be allowed as deductions from corresponding liabilities, and liabilities may be charged as deductions from assets, and deductions from assets may be charged as liabilities, in accordance with the form of annual statement applicable to the insurer as prescribed by the director, or otherwise in the discretion of the director.


Sec. 21.18.030. Assets not allowed.
In addition to assets excluded by the application of AS 21.18.010, all nonadmitted assets and all other assets of doubtful value or character included as ledger or nonledger assets in a statement by an insurer to the director, or in an examiner’s report to the director, shall also be reported, to the extent of the value disallowed, as deductions from the gross assets of the insurer, unless the director permits a reserve to be carried among the liabilities of the insurer in place of a deduction.


Sec. 21.18.040. Disallowance of transactions; deceptions.
 (a) The director shall disallow as an asset or as a credit against liabilities any reinsurance found by the director, after a hearing, to have been arranged for the purpose principally of deception as to the ceding insurer’s financial condition as of the date of any financial statement of the insurer. Without limiting the general purport of this subsection, reinsurance of a substantial part of the insurer’s outstanding risks contracted for in fact within four months before the date of any financial statement and cancelled in fact within four months after the date of the statement, or reinsurance under which the reinsurer bears no substantial insurance risk or substantial risk of net loss to itself, shall prima facie be considered to have been arranged for the purpose principally of deception within the intent of this subsection.

 (b) The director shall disallow as an asset a deposit, fund, or other asset of the insurer determined after a hearing to be
     (1) not in good faith the property of the insurer;

     (2) not freely subject to withdrawal or liquidation by the insurer at any time for the payment or discharge of claims or other obligations arising under its policies;

     (3) the result of arrangements made principally for the purpose of deception as to the insurer’s financial condition as of the date of any financial statement of the insurer.

 (c) A disallowance of assets or credits is not valid unless made by the director after a hearing of which notice was given the insurer within six months after the date the financial statement of the insurer in which the deception is claimed was filed with the director.

 (d) The director may suspend or revoke the certificate of authority of an insurer that has knowingly been a party to a deception or an attempted deception.




Sec. 21.18.050. Reserves and liabilities, in general.
In a determination of the financial condition of an insurer, liabilities to be charged against its assets shall include
     (1) the amount, estimated consistent with the provisions of this title, necessary to pay all of its unpaid losses and claims incurred on or before the date of statement, whether reported or unreported, together with the expenses of adjustment or settlement;

     (2) with reference to life and health insurance and annuity contracts,
          (A) the amount of reserves on life insurance policies and annuity contracts in force, valued according to the tables of mortality, rates of interest, and methods adopted under this title that are applicable;

          (B) reserves for disability benefits, for both active and disabled lives;

          (C) reserves for accidental death benefits;

          (D) additional reserves that may be required by the director, consistent with practice formulated or approved by the National Association of Insurance Commissioners, on account of the insurance;

     (3) with reference to health insurance, the amount of reserves required under AS 21.18.080 — 21.18.086;

     (4) with reference to insurance other than specified in (2) and (3) of this section, and other than title insurance, the amount of reserves equal to the unearned portions of the gross premiums charged on policies in force, computed in accordance with this chapter;

     (5) expenses and other obligations due or accrued at the date of the statement.




Sec. 21.18.060. Unearned premium reserve.
 (a) Except as otherwise provided in AS 21.18.070, an insurer shall maintain an unearned premium reserve on all policies in force against loss or damage to property, including loss or damage under general casualty or surety insurance.

 (b) The director may require that the reserves be equal to the unearned portions of the gross premiums in force after deducting applicable reinsurance in solvent insurers as computed on each respective risk from the policy’s date of issue.

 (c) An insurer shall compute all of the reserves on a monthly or more frequent pro rata basis.

 (d) After adopting a method for computing the reserve, an insurer may not change methods without approval of the supervisory official of the insurer’s state of domicile.

 (e) This section does not apply to title insurance.




Sec. 21.18.070. Unearned premium reserve for marine and transportation insurance.
As to marine and transportation insurance, the entire amount of premiums on trip risks not terminated shall be considered unearned and the director may require the insurer to carry a reserve equal to 100 percent of premiums on trip risks written during the month ended as of the date of statement.


Sec. 21.18.073. Unearned premium reserve for title insurance.
In addition to an adequate reserve as to outstanding losses as required under AS 21.18.050, a title insurer shall establish, segregate, and maintain an unearned premium reserve as required by the director.


Sec. 21.18.075. Bail bond reserve.
In place of the unearned premium reserve required on surety bonds under AS 21.18.060, the department may require a surety insurer or limited surety insurer to set up and maintain a reserve on all bail bonds or other single premium bonds without a definite expiration date, furnished in judicial proceedings, equal to 25 percent of the total consideration charged for the bonds that are outstanding as of the date of a current financial statement of the insurer.


Sec. 21.18.080. Reserve standards for health insurance.
 (a) The adequacy of health insurance reserves must be determined based on the sum of policy reserves determined under AS 21.18.082, claim reserves determined under AS 21.18.084, and premium reserves determined under AS 21.18.086.

 (b) Reserve adequacy must be determined by a prospective gross premium valuation. For policies in force, in a claims status, or in a continuation of benefits status on the valuation date, the gross premium valuation must take into account the present value of all expected benefits unpaid, all expected expenses unpaid, and all unearned or expected premiums, including expected future premium increases.

 (c) A gross premium valuation must be performed whenever there is an indication that reserves and future premiums may be insufficient to cover future claims for a particular block of policies or for the entire health insurance block. If a reserve inadequacy is determined to exist, the loss must be immediately recognized and reserves increased to account for the inadequacy. The increased reserves will be considered minimum reserves.




Sec. 21.18.082. Policy reserves for health insurance.
 (a) Except as provided in (b) of this section, policy reserves are required for all individual and group health insurance policies or groups of policies
     (1) with level premiums or with a gross premium pricing structure at time of issue that results in future benefits exceeding the corresponding future valuation net premiums at any time; or

     (2) for which gross premiums are restricted by contract, regulation, or another reason that results in future gross premiums, reduced by expenses for administration, commissions, and taxes, being insufficient to cover future claims.

 (b) Policy reserves are not required for health insurance policies that cannot be continued after one year from the date of issue.

 (c) The structure of valuation net premiums used under a health insurance policy must be consistent with the structure of gross premiums on the date the policy is issued.

 (d) For return of premium benefits, deferred cash benefits, policies with premium rates that are not guaranteed, and where the effects of insurer underwriting by policy duration are specifically used in the valuation morbidity standard, termination rates that exceed the mortality rates in the tables required in (g)(2) of this section may be used but may not exceed the lesser of
     (1) 80 percent of the total termination rate used in the calculation of gross premiums; or

     (2) eight percent.

 (e) The methods and procedures used to determine health insurance policy reserves must be consistent with the methods and procedures used to determine claim reserves for a health insurance policy.

 (f) Negative reserves on a benefit may be offset against positive reserves for other benefits in the same policy, but the total policy reserve with respect to all benefits combined may not be less than zero.

 (g) Except as provided in (d) and (h) — (k) of this section, policy reserves for policies issued after July 1, 1997, must be determined based on
     (1) a maximum interest rate equal to the maximum interest rate allowed under AS 21.18.110 for the valuation of whole life insurance issued on the same date as the health insurance policy;

     (2) a termination assumption equal to the mortality table allowed under AS 21.18.110 for the valuation of whole life insurance issued on the same date as the health insurance policy or equal to a mortality table approved by the director for use in determining the policy reserves;

     (3) for long-term care policies issued after July 1, 1997,
          (A) a mortality assumption equal to the 1983 Group Annuity Mortality Table without projection;

          (B) a lapse assumption for policy durations one through four equal to the lesser of 80 percent of the voluntary lapse rate used in the calculation of gross premiums or eight percent; and

          (C) a lapse assumption for policy durations five and later of 100 percent of the voluntary lapse rate used in the calculation of the gross premiums or four percent;

     (4) a two-year full preliminary term method under which the terminal reserve is zero on the first and second policy anniversary dates;

     (5) a morbidity assumption for
          (A) individual disability income insurance issued (i) after December 31, 1997, equal to Tables A or B of the 1985 Commissioners’ Individual Disability Tables for policies; and (ii) before January 1, 1998, equal to the 1964 or 1985 Commissioners’ Individual Disability Tables; the insurer shall indicate which morbidity table the insurer will use for all individual disability income policies issued in a calendar year;

          (B) group disability income insurance issued
               (i) after December 31, 1997, equal to the 1987 Commissioners’ Group Disability Table; and

               (ii) before January 1, 1998, equal to the morbidity assumption in use by the insurer before January 1, 1998;

          (C) scheduled or fixed time period hospital, surgical, or maternity benefit policies issued
               (i) after December 31, 1997, equal to the 1974 Medical Expense Table A from the Transactions of the Society of Actuaries, Volume XXX; and

               (ii) before January 1, 1998, equal to the morbidity assumption in use by the insurer before January 1, 1998;

          (D) cancer expense benefits for policies issued
               (i) after December 31, 1997, equal to the 1985 National Association of Insurance Commissioners Cancer Claim Cost Tables; and

               (ii) before January 1, 1998, equal to the morbidity assumption in use by the insurer before January 1, 1998;

          (E) accidental death benefits for policies issued
               (i) after December 31, 1997, equal to the 1959 accidental death benefit table; and

               (ii) before January 1, 1998, equal to the morbidity assumption in use by the insurer before January 1, 1998; or

          (F) all other individual or group policy benefits equal to a morbidity table established for reserve determination by an actuary qualified to determine the morbidity table and approved by the director; the morbidity table must contain a pattern of incurred claims cost that reflects the underlying morbidity and may not be constructed for the primary purpose of minimizing reserves.

 (h) The reserve method for return of premium or other deferred cash benefits must be a preliminary term method that is applied only in relation to the issue date of the policy and is a
     (1) one-year preliminary term method if benefits are provided before the 20th policy anniversary; or

     (2) two-year preliminary term method if the benefits are provided only on or after the 20th policy anniversary.

 (i) The reserve method for long-term care insurance must be calculated on a
     (1) two-year full preliminary term method for a policy or certificate issued on or before July 1, 1997; and

     (2) one-year full preliminary term method for a policy or certificate issued after July 1, 1997.

 (j) Reserve adjustments due to rate changes, revised assumptions, or other reasons for return of premium or other deferred cash benefits must be applied on the effective date of the adoption of the reserve adjustment.

 (k) An alternative method or basis of determining policy reserves may be used if the aggregate policy reserve is not less than the aggregate policy reserves determined under (c) — (j) of this section.

 (l) An insurer shall annually review prospective policy liabilities on policies valued by tabular reserves to determine the continuing adequacy and reasonableness of the tabular reserves given future gross premiums. The insurer shall make adjustments to the tabular reserves if the tests indicate that the basis of the reserves is no longer adequate.

 (m) Policy reserves that are valued based on the 1964 or 1985 Commissioners Individual Disability Tables must include a provision for a waiver of premium benefit with the minimum reserve for the benefit equal to the valuation net premium to be waived.

 (n) Policy reserves for long-term care insurance may not be less than the net single premium for any nonforfeiture benefits provided by the policy or certificate.




Sec. 21.18.084. Claim reserves for health insurance.
 (a) Claim reserves are required for all incurred and unpaid claims on all health insurance policies.

 (b) Claim expense reserves are required for the estimated expense of settlement of all incurred and unpaid claims.

 (c) Claim reserves for prior valuation years must be tested for adequacy and reasonableness using claim runoff schedules in accordance with the statutory annual statement, including consideration of any residual unpaid liability. Claim reserve adequacy must be determined in the aggregate.

 (d) Claim reserves must be determined as follows:
     (1) for policies that require policy reserves under AS 21.18.082(a), based on a maximum interest rate equal to the maximum interest rate allowed under AS 21.18.110 for the valuation of whole life insurance issued on the same date as the date the claim was incurred;

     (2) for policies that do not require policy reserves under AS 21.18.082(b), based on a maximum interest rate equal to the maximum interest rate allowed under AS 21.18.110 for the valuation of single premium immediate annuities issued on the same date as the date the claim was incurred less 100 basis points;

     (3) except as provided in (4) and (5) of this subsection, a morbidity assumption for
          (A) individual disability income insurance must be equal to the morbidity assumption used in determining policy reserves under AS 21.18.082(g)(5);

          (B) group disability income insurance for policies issued
               (i) after December 31, 1997, must be equal to the 1987 Commissioners Group Disability Table; and

               (ii) before January 1, 1998, must be equal to the morbidity assumption in use by the insurer before January 1, 1998;

          (C) accidental death benefits must be equal to the actual amount of claims incurred; and

          (D) all other individual or group policy benefits must be equal to a morbidity table approved by the director and established for reserve determination by an actuary qualified to determine the morbidity table;

     (4) for individual or group disability claims with a duration from disablement of less than two years, morbidity assumptions may be based on the insurer’s experience if determined credible by the insurer or upon another basis designed to place a sound value on the liabilities as determined by the insurer;

     (5) if approved by the director, reserves for group disability income claims with a duration from disablement of more than two years but less than five years may be based on the insurer’s experience for which the insurer maintains control of underwriting and claim administration; request for approval to use this modified reserve basis must include
          (A) an analysis of the credibility of the experience;

          (B) a description of how all the insurer’s experience is proposed to be used in setting the reserves;

          (C) a description and quantification of the margins to be included;

          (D) a summary of the financial impact that the proposed plan of modification would have on the insurer’s last filed annual statement;

          (E) a copy of the approval from the state of domicile; and

          (F) all other information requested by the director;

     (6) any generally accepted actuarial reserving method or other reasonable method approved by the director may be used; the method used to estimate liabilities may be an aggregate method; approximations based on groupings and averages may also be used.

 (e) Claim reserves that are valued based on the 1964 or 1985 Commissioners’ Individual Disability Tables must include a provision for a waiver of premium benefit with the minimum reserve for the benefit equal to the valuation net premium to be waived.




Sec. 21.18.086. Premium reserves for health insurance.
 (a) Unearned premium reserves must be established for the period of coverage for which premiums, other than premiums paid in advance, have been paid beyond the date of valuation.

 (b) Due and unpaid premiums that are carried as an asset in the annual statement must be treated as premiums in force and are subject to the unearned premium reserve requirements of this section. Unpaid commissions, premium taxes, and costs of collection associated with due and unpaid premiums must be carried in the annual statement as an offsetting liability.

 (c) Gross premiums paid in advance for a period of coverage starting after the next premium due date following the valuation date may be discounted to the valuation date and must be held as a separate liability in the annual statement or as an addition to the unearned premium reserve established in this section.

 (d) The minimum unearned premium reserve for a policy is the pro rata unearned modal premium that applies to the valuation period beyond the date of valuation. If a policy reserve is required for a policy, the unearned modal premium is the valuation net modal premium on the policy reserve. If no policy reserve is required for a policy, the unearned modal premium is the gross modal premium for the policy.

 (e) The sum of the unearned premium and policy reserves for all policies may not be less than the gross modal unearned premium reserve on all policies as of the date of valuation. The total unearned premium and policy reserves may not be less than the expected claims for the period after the valuation date represented by the unearned premium reserve.

 (f) An insurer may use approximations and estimates in determining premium reserves, including groupings, averages, and aggregate estimates. The approximations or estimates must be tested periodically and not less frequently than triennially to determine adequacy.

 (g) Premium reserves based on the 1964 or 1985 Commissioners’ Individual Disability Tables must include policies on premium waiver as in-force contracts and establish a minimum reserve for a waiver of premium benefit equal to the unearned modal valuation net premium being waived.




Sec. 21.18.090. Loss reserves, liability insurance, and workers’ compensation. [Repealed, § 53 ch 96 SLA 2004.]
Sec. 21.18.100. Increase of reserves.
If loss experience shows that an insurer’s loss reserves or reserves for incurred but not reported losses, however computed or estimated, are inadequate, the director shall require the insurer to maintain loss reserves or reserves for incurred but not reported losses in the increased amount needed to make them adequate.


Sec. 21.18.110. Standard valuation law — Life insurance.
 (a) The director shall annually value, or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurer doing business in this state, and may certify the amount of the reserves, specifying the mortality table or tables, rate or rates of interest, and methods (net level premium method or other) used in the calculation of the reserves. In calculating the reserves, the director may use group methods and approximate averages for fractions of a year or otherwise. For an alien insurer, the valuation shall be limited to its insurance transactions in the United States. For the purpose of making the valuation the director may employ a competent actuary who shall be paid by the insurer for which the service is rendered. For a foreign or alien insurer, the director may accept, in lieu of the valuation of the reserves required of a foreign or alien insurer, a valuation made, or caused to be made, by the insurance supervisory official of a state or other jurisdiction if the valuation complies with the minimum standard provided in this section and if the official of the state or jurisdiction accepts as sufficient and valid for all legal purposes the certificate of valuation of the director when the certificate states the valuation was made in a specified manner in which the aggregate reserves would be at least as large as if they had been computed in the manner prescribed by the law of that state or jurisdiction. An insurer that at any time adopted a standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided in this section may, with the approval of the director, adopt a lower standard of valuation, but not lower than the minimum provided in this section.

 (b) This subsection applies to only those policies and contracts issued on or after the operative date of AS 21.45.300 except as otherwise provided in (c) of this section and (5) of this subsection for group annuity and pure endowment contracts issued before that operative date:
     (1) Except as otherwise provided in (c) of this section and (5) of this subsection, the minimum standard for the valuation of all these policies and contracts shall be the commissioner’s reserve evaluation methods defined in (2), (4) and (7) of this subsection, three and one-half percent interest, or in the case of policies and contracts, other than annuity and pure endowment contracts, issued on or after July 1, 1978, five and one-half percent interest for single premium life insurance policies and four and one-half percent interest for all other policies, and the following tables:
          (A) for all ordinary policies of life insurance issued on the standard basis, excluding disability and accidental death benefits in the policies — the Commissioner’s 1958 Standard Ordinary Mortality Table, for policies issued before the operative date of AS 21.45.300(w), of the Standard Nonforfeiture Law for Life Insurance as amended, except that for a category of policies issued on female risks, all modified net premiums and present values, referred to in (2) of this subsection may be calculated according to an age not more than six years younger than the actual age of the insured; and for policies issued on or after the operative date of AS 21.45.300(w) of the Standard Nonforfeiture Law for Life Insurance as amended
               (i) the Commissioner’s 1980 Standard Ordinary Mortality Table, or

               (ii) at the election of the insurer for any one or more specified plans of life insurance, the Commissioner’s 1980 Standard Ordinary Mortality Table with 10-year Select Mortality Factors, or

               (iii) any ordinary mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for the policies;

          (B) for all industrial life insurance policies issued on the standard basis, excluding disability and accidental death benefits in the policies — the 1941 Standard Industrial Mortality Table for the policies issued before the operative date of AS 21.45.300(l), of the Standard Nonforfeiture Law for Life Insurance as amended, and for the policies issued on or after April 7, 1984, the Commissioner’s 1961 Standard Industrial Mortality Table or any industrial mortality table, adopted after 1980 by the National Association of Insurance Commissioners that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for such policies;

          (C) for individual annuity and pure endowment contracts, excluding disability and accidental death benefits in the policies — the 1937 Standard Annuity Mortality Table, or, at the option of the insurer, the Annuity Mortality Table for 1949, ultimate, or any modification of either of these tables approved by the director;

          (D) for group annuity and pure endowment contracts, excluding disability and accidental death benefits in the policies — the Group Annuity Mortality Table for 1951, any modification of the table approved by the director, or, at the option of the insurer, any of the tables or modification of tables specified for individual annuity and pure endowment contracts;

          (E) for total and permanent disability benefits in or supplementary to ordinary policies or contracts — the tables of period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 disability study of the society of actuaries, with due regard to the type of benefit or any table of disablement and termination rates adopted after 1980 by the National Association of Insurance Commissioners that are approved by regulation adopted by the director for use in determining the minimum standard of valuation for the policies; the table shall, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance policies;

          (F) for accidental death benefits in or supplementary to policies — the 1959 Accidental Death Benefits Table or any accidental death benefits table adopted after 1980 by the National Association of Insurance Commissioners that is approved by regulation adopted by the director for use in determining the minimum standard of valuation for the policies combined with a mortality table permitted for calculating the reserves for life insurance policies;

          (G) for group life insurance, life insurance issued on the substandard basis and other special benefits — tables approved by the director.

     (2) Except as otherwise provided in (4) and (7) of this subsection, reserves according to the commissioner’s reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums, shall be the excess, if any, of the present value, at the date of valuation, of the future guaranteed benefits provided for by the policies, over the then present value of any future modified net premiums; the modified net premiums for the policy shall be the uniform percentage of the respective contract premiums for the benefits that the present value, at the date of issue of the policy, of all the modified net premiums shall be equal to the sum of the then present value of the benefits provided for by the policy and the excess of (A) over (B), as follows:
          (A) a net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue of an annuity of one a year payable on the first and each subsequent anniversary of the policy on which a premium falls due; however, the net level annual premium may not exceed the net level annual premium on the 19-year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of the policy;

          (B) a net one-year term premium for the benefits provided for in the first policy year; notwithstanding this paragraph, for a life insurance policy issued on or after January 1, 1987 for which the contract premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess premium and that provides an endowment benefit or a cash surrender value or a combination of these in an amount greater than the excess premium, the reserve according to the commissioner’s reserve valuation method as of a policy anniversary occurring on or before the assumed ending date, except as otherwise provided in (4) of this subsection, shall be the greater of the reserve as of the policy anniversary calculated as described in (2)(A) of this subsection and the reserve as of the policy anniversary; the reserve shall be calculated as described in (2)(A) of this subsection, except
               (i) the present value shall be reduced by 15 percent of the amount of the excess first year premium,

               (ii) all present values of benefits and premiums shall be determined without reference to premiums or benefits provided for by the policy after the assumed ending date,

               (iii) the policy shall be assumed to mature on the assumed ending date as an endowment, and

               (iv) the cash surrender value provided on the assumed date shall be considered as an endowment benefit; in making the comparison in this subparagraph the mortality and interest bases stated in paragraphs (4) and (6) of this subsection and subsection (c) shall be used; in this subparagraph the assumed ending date is the first policy anniversary on which the sum of the endowment benefit and cash surrender value then available is greater than the excess premium;

          (C) reserves according to the commissioner’s reserve valuation method for
               (i) life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums,

               (ii) group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under 26 U.S.C. 408 (Internal Revenue Code), as amended,

               (iii) disability and accidental death benefits in all policies and contracts,

               (iv) all other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts, shall be calculated by a method consistent with the principles of (2) of this subsection, except that any extra premiums charged because of impairments or special hazards shall be disregarded in the determination of modified net premiums;

     (3) Reserves for any category of policies, contracts or benefits as established by the director, may be calculated at the option of the insurer according to standards which produce greater aggregate reserves for the category than those calculated according to the minimum standard provided in this section, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, may not be higher than the corresponding rate or rates of interest used in calculating nonforfeiture benefits provided for in the policy or contract.

     (4) If in any contract year the gross premium charged by a life insurer on a policy or contract is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve on the policy or contract but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for that policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for the policy or contract, or the reserve calculated by the method actually used for the policy or contract but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. In this paragraph, the minimum valuation standards of mortality and rate of interest are those standards referred to in (b) and (c) of this section. Notwithstanding this paragraph, for a life insurance policy issued on or after January 1, 1987, for which the gross premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess premium and that provides an endowment benefit or a cash surrender value or a combination of these in an amount greater than the excess premium, the provisions of this paragraph shall be applied as if the method used in calculating the reserve for such a policy were based on a net one-year term premium for the benefits provided for in the first policy year. The minimum reserve at each policy anniversary of such a policy shall be the greater of the minimum reserve calculated under (2)(B) of this subsection, and the minimum reserve calculated under this paragraph.

     (5) Except as provided in (C) of this paragraph, the minimum standard for the valuation of all individual annuity and pure endowment contracts issued on or after the operative date of this paragraph as set out in (6) of this subsection and for all annuities and pure endowments purchased on or after that date under group annuity and pure endowment contracts, shall be the commissioner’s reserve valuation methods defined in (2) and (7) of this subsection and the following tables and interest rates:
          (A) for individual single premium immediate annuity contracts, excluding any disability and accidental death benefits in such contracts — the 1971 individual annuity mortality table or an individual annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation adopted by the director for use in determining the minimum standard of valuation for the contracts, or any modification of these tables approved by the director and seven and one-half percent interest;

          (B) for individual annuity and pure endowment contracts, other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in such contracts — the 1971 individual annuity mortality table or an individual annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation adopted by the director for use in determining the minimum standard of valuation for the contracts, or any modification of these tables approved by the director and five and one-half percent interest for single premium deferred annuity and pure endowment contracts and four and one-half percent interest for all other such individual annuity and pure endowment contracts;

          (C) for all annuities and pure endowments purchased under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts — 1971 group annuity mortality table or a group annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation adopted by the director for use in determining the minimum standard of valuation for the annuities and pure endowments, or any modification of these tables approved by the director, and seven and one-half percent interest.

     (6) After July 1, 1978, an insurer may file with the director a written notice of its election to comply with the provisions of (5) of this subsection after a specified date before January 1, 1979, which shall be the operative date of that requirement for the insurer; however, an insurer may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If an insurer makes no election, the operative date of (5) of this subsection for the insurer is January 1, 1979.

     (7) This paragraph applies to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement annuities under 26 U.S.C. 408 (Internal Revenue Code), as amended. Reserves according to the commissioner’s annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in those contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by those contracts at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of such contract, that become payable before the end of that respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in such contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of those contracts to determine nonforfeiture values.

 (c) The calendar year statutory valuation interest rates defined in (d) of this section shall be the interest rates used in determining the minimum standard for the valuation of
     (1) a life insurance policy issued in a particular calendar year, on or after the operative date of AS 21.45.300(w);

     (2) an individual annuity and pure endowment contract issued in a particular calendar year on or after January 1, 1984;

     (3) an annuity and pure endowment purchased in a particular calendar year on or after January 1, 1984 under a group annuity and pure endowment contract; and

     (4) the net increase, if any, in a particular calendar year after January 1, 1984, in an amount held under a guaranteed interest contract.

 (d) The calendar year statutory valuation interest rates, I, shall be determined as follows and the results rounded to the nearer one-quarter of one percent
     (1) for life insurance,I = .03 + W(R1 — .03) + W/2(R2 — .09);

     (2) for a single premium immediate annuity and for an annuity benefit involving a life contingency arising from another annuity with a cash settlement option and from a guaranteed interest contract with a cash settlement option,I = .03 + W(R — .03)
where R1 is the lesser of R and .09,
R2 is the greater of R and .09,
R is the reference interest rate defined in (j) of this section, and
W is the weighting factor defined in (f) of this section;

     (3) for other annuities with cash settlement options and other guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in (2) above, the formula for life insurance in (1) of this subsection shall apply to an annuity or guaranteed interest contract with a guarantee duration in excess of 10 years and the formula for a single premium immediate annuity in (2) of this subsection shall apply to an annuity or guaranteed interest contract with a guarantee duration of 10 years or less;

     (4) for other annuities with no cash settlement options and for other guaranteed interest contracts with no cash settlement options, the formula for a single premium immediate annuity in (2) of this subsection shall apply;

     (5) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for a single premium immediate annuity in (2) of this subsection shall apply.

 (e) Notwithstanding (d) of this section, if the calendar year statutory valuation interest rate for a life insurance policy differs from the corresponding actual rate for a similar policy issued in the immediately preceding calendar year by less than one-half of one percent, the calendar year statutory valuation interest rate for the life insurance policy shall be equal to the corresponding actual rate for the immediately preceding calendar year. For the purpose of this subsection, the calendar year statutory valuation interest rate shall be determined for 1980 using the reference interest rate defined for 1979 and shall be determined for each following calendar year regardless of the operative date under AS 21.45.300(w).

 (f) The weighting factors referred to in (c) of this section are as follows:
     (1) Weighting factors for Life Insurance:
     Guarantee               Duration:     Weighting          Years     Factors          10 or less     .50          more than 10, but not more than 20;     .45          more than 20;     .35     for life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guarantee in the policy or under an option to convert to a plan of life insurance with a premium rate or nonforfeiture value or both which are guaranteed in the original policy;

     (2) notwithstanding (3) of this subsection the weighting factor for a single premium immediate annuity and for an annuity benefit involving in life contingency arising from another annuity with a cash settlement option and a guaranteed interest contract with a cash settlement option — .80;

     (3) for annuities and guaranteed interest contracts valued on an issue year basis:
     Guarantee Duration: Years     Weighting Factor for Plan Type               A     B     C          5 or less;     .80     .60     .50          more than 5, but not                         more than 10;     .75     .60     .50          more than 10, but not                         more than 20;     .65     .50     .45          more than 20;     .45     .35     .35          (4) for annuities and guaranteed interest contracts valued on a change in fund basis, the weighting factors shown in (3) of this subsection are increased by .15 for plan type A, .25 for plan type B, and .05 for plan type C;

     (5) for annuities and guaranteed interest contracts valued on an issue year basis, other than those with no cash settlement options, which do not guarantee interest on considerations received more than one year after issue or purchase and for annuities and guaranteed interest contracts valued on a change in fund basis which do not guarantee interest rates on considerations received more than 12 months beyond the valuation date, the weighting factors shown in (3) of this subsection or derived in of this subsection are increased by .05.

 (g) The guarantee duration for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee duration in excess of 20 years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guarantee duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence.

 (h) In this section, “plan type” is defined as follows:
     (1) plan type A: at any time policyholder may withdraw funds only
          (A) with an adjustment to reflect a change in interest rates or asset values since receipt of the funds by the insurer;

          (B) without such adjustment but in installments over five years or more;

          (C) as an immediate life annuity; or

          (D) no withdrawal permitted;

     (2) plan type B: before expiration of the interest rate guarantee, policyholder may withdraw funds only
          (A) with adjustment to reflect a change in interest rates or asset values since receipt of the funds by the insurer;

          (B) without adjustment but in installments over five years or more; or

          (C) no withdrawal permitted; at the end of interest rate guarantee, funds may be withdrawn without adjustment in a single sum or installments over less than five years;

     (3) plan type C: policyholder may withdraw funds before expiration of an interest rate guarantee in a single sum or installments over less than five years either
          (A) without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer; or

          (B) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.

 (i) An insurer may elect to value a guaranteed interest contract with a cash settlement option and an annuity with a cash settlement option on either an issue year basis or on a change in fund basis. A guaranteed interest contract with no cash settlement option and an annuity with no cash settlement option must be valued on an issue year basis. In this subsection an issue year basis of valuation means a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract, and the change in fund basis of valuation means a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.

 (j) The reference interest rates referred to in (c) of this section are as follows:
     (1) for life insurance, the lesser of the average interest rate for a period of 36 months and the average interest rate for a period of 12 months, ending on June 30 of the calendar year next preceding the year of issue, of Moody’s Corporate Bond Yield Average — Monthly Average Corporates, as published by Moody’s Investors Service, Inc.;

     (2) for a single premium immediate annuity and for an annuity benefit involving a life contingency arising from another annuity with a cash settlement option and a guaranteed interest contract with a cash settlement option, the average interest rate for a period of 12 months, ending on June 30 of the calendar year of issue or year of purchase, of Moody’s Corporate Bond Yield Average — Monthly Average Corporates, as published by Moody’s Investors Service, Inc.;

     (3) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as provided in (2) of this subsection, with a guarantee duration in excess of 10 years, the lesser of the average interest rate for a period of 36 months and the average interest rate for a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody’s Corporate Bond Yield Average — Monthly Average Corporates, as published by Moody’s Investors Service, Inc.;

     (4) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as provided in (2) of this subsection, with a guarantee duration of 10 years or less, the average interest rate for a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody’s Corporate Bond Yield Average — Monthly Average Corporates, as published by Moody’s Investors Service, Inc.;

     (5) for other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the average interest rate for a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody’s Corporate Bond Yield Average — Monthly Average Corporates, as published by Moody’s Investors Service, Inc.;

     (6) for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, except as provided in (2) of this subsection, the average interest rate for a period of 12 months, ending on June 30 of the calendar year of the change in the fund, of Moody’s Corporate Bond Yield Average — Monthly Average Corporates, as published by Moody’s Investors Service, Inc.

 (k) In the event that Moody’s Corporate Bond Yield Average — Monthly Average Corporates is no longer published by Moody’s Investors Service, Inc., or in the event that the National Association of Insurance Commissioners determines that Moody’s Corporate Bond Yield Average — Monthly Average Corporates as published by Moody’s Investors Service, Inc. is no longer appropriate for the determination of the reference interest rate, an alternative method for determination of the reference interest rate, which is adopted by the National Association of Insurance Commissioners and approved by regulation adopted by the director, may be substituted.

 (l) If a plan of life insurance that provides for future premium determination, the amounts of which are to be determined by the insurer based on then estimates of future experience, or if a plan of life insurance or annuity is of a nature that the minimum reserves cannot be determined by the methods described in (b)(2), (4), and (7) of this section, the reserves that are held shall be appropriate in relation to the benefits and the pattern of premiums for that plan, and be computed by a method that is consistent with the principles of this Standard Valuation Law, as determined by regulations adopted by the director.

 (m) A life insurer doing business in the state shall annually submit to the director an opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of a policy or contract are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts, and comply with the applicable laws of this state.

 (n) The actuarial opinion must
     (1) be submitted with the annual statement reflecting the valuation of the reserve liabilities;

     (2) apply to all business in force, including individual and group health insurance plans;

     (3) be based on standards adopted by the Actuarial Standards Board; and

     (4) unless exempted by regulation, include an assessment as to whether the reserves and related actuarial items held in support of the policies and contracts, when considered in light of the assets held by an insurer with respect to the reserves and related actuarial items, including investment earnings on the assets and considerations anticipated to be received and retained under policies and contracts, make adequate provision for an insurer’s obligations under a policy or contract including the benefits under and expenses associated with a policy or contract.

 (o) In the case of an actuarial opinion submitted by a foreign or alien insurer, the director may accept an opinion filed by the insurer with the insurance supervisory official of another state that is accredited by the National Association of Insurance Commissioners if the director determines that the opinion meets the requirements applicable to an insurer domiciled in this state.

 (p) The director may adopt regulations to provide a transition period for establishing higher reserves that a qualified actuary may consider necessary in order to render the opinion required under (n) of this section.

 (q) A qualified actuary who submits an opinion under (m) of this section
     (1) is not liable for damages to a person, other than the insurance company and the director, for an act, error, omission, decision, or conduct with respect to the actuary’s opinion except in a case of fraud or wilful misconduct;

     (2) is subject to disciplinary action by the director; and

     (3) shall prepare a memorandum, in form and substance acceptable to the director, to support the actuarial opinion.

 (r) If the insurer fails to provide a supporting memorandum as requested by the director within a period specified by regulation or the director determines that the supporting memorandum fails to meet the standards adopted by regulation or is otherwise unacceptable to the director, the director may engage a qualified actuary, at the expense of the insurer, to review the opinion and the basis for the opinion and to prepare a supporting memorandum as required under (q) of this section.

 (s) A memorandum in support of an actuarial opinion and other supporting material provided by an insurer to the director is confidential and may not be made public by the director or another person and is not subject to a civil subpoena, except for the purpose of defending an action seeking damages from a person by reason of an action required by this section. The memorandum or other material may be released by the director with the written consent of the insurer or to the American Academy of Actuaries upon a request stating that the memorandum or other material is required for the purpose of a disciplinary proceeding and setting out procedures satisfactory to the director for preserving the confidentiality of the memorandum or other material. Once a portion of the memorandum or other material is cited by the insurer in its marketing, is cited before a governmental agency other than a state insurance department, or is released by the company to the news media, the remainder of the confidential memorandum or other material is no longer confidential.

 (t) An insurer’s aggregate reserves for
     (1) all life insurance policies, excluding disability and accidental death benefits, issued on or after July 1, 1992, may not be less than the aggregate reserves calculated under (b)(2), (4), (7), and (l) of this section, and the mortality table and rates of interest used in calculating nonforfeiture benefits for the policies; and

     (2) all policies, contracts, and benefits may not be less than the aggregate reserves determined by a qualified actuary to be necessary to render the opinion required under (m) of this section.

 (u) An insurer who submits an actuarial opinion that the insurer knew or should have known was not in compliance with this section is subject to suspension or revocation of the insurer’s certificate of authority under AS 21.09.150(a).




Secs. 21.18.120 — 21.18.150. Valuation of bonds; other securities, property, and purchase money mortgages. [Repealed, § 84 ch 81 SLA 2001.]
Sec. 21.18.160. Regulations.
The director may adopt regulations to implement this chapter.


Sec. 21.18.170. Valuation of investments.
For the purposes of this chapter, the value or amount of an investment acquired, held, or invested in or an investment practice engaged in under this title, unless otherwise specified in this title, must be the value at which assets of an insurer are required to be reported for accounting purposes under this title and as required under procedures prescribed in published accounting and valuation standards of the National Association of Insurance Commissioners, including the purposes and procedures manual of the securities valuation office, the valuation of securities manual, the accounting practices and procedures manual, and the annual statement instructions or valuation procedures officially adopted by the National Association of Insurance Commissioners.


Sec. 21.18.900. Definitions.
In this chapter,
     (1) “admitted asset” means an asset allowed by AS 21.18.010 to be included in the determination of the financial condition of a domestic or foreign insurer or the United States branch of an alien insurer;

     (2) “affiliate” has the meaning given in AS 21.22.200;

     (3) “controlling” or “controlled” has the meaning given in AS 21.22.200 and includes a person that individually, or in combination with other persons, owes to the insurer an amount that exceeds 50 percent of the insurer’s total premiums in the course of collection as stated on the insurer’s financial statement;

     (4) “ledger asset” means an asset recorded on the general ledger of an insurer;

     (5) “nonadmitted assets” means an asset recorded on the insurer’s ledger that is not allowed by AS 21.18.010 to be included in the determination of the financial condition of a domestic or foreign insurer or the United States branch of an alien insurer;

     (6) “nonledger asset” means an asset not recorded on the general ledger of an insurer;

     (7) “solvent” means able to satisfy all current and future obligations and operate as an ongoing entity.




Chapter 20. Classes of Insurers.

[Repealed, § 4 ch 120 SLA 1966.]

Chapter 21. Investments.

Sec. 21.21.010. Scope.
This chapter applies only to an investment and investment practice of a domestic insurer and a United States branch of an alien insurer entered through this state. This chapter does not apply to separate accounts of a life insurer.


Sec. 21.21.020. Eligible investments.
 (a) Insurers shall invest in or lend their funds on the security of, and shall hold as invested assets, only the eligible investments prescribed in this chapter.

 (b) [Repealed, § 85 ch 50 SLA 1990.]
 (c) Eligibility of an investment shall be determined as of the date of its making or acquisition.

 (d) An investment limitation based upon the amount of the insurer’s assets or particular funds shall relate to the assets or funds shown by the insurer’s annual statement most recently required to be filed with the director.

 (e) For purposes of determining compliance with investment limitations imposed under this chapter, the director or an insurer shall use admitted asset values.




Secs. 21.21.030 — 21.21.250. [Repealed, § 84 ch 81 SLA 2001.]
Sec. 21.21.255. Regulation of securities held by insurers.
As provided under 15 U.S.C. 77r-1(b) and (c) (Secondary Mortgage Market Enhancement Act of 1984), securities that are purchased, held, or invested in by an insurer are subject to AS 21.18.170 and regulations adopted under AS 21.21.420, and other applicable provisions of this title.


Secs. 21.21.260 — 21.21.310. [Repealed, § 84 ch 81 SLA 2001.]
Sec. 21.21.320. [Repealed, § 3 ch 69 SLA 1980.]
Secs. 21.21.321 — 21.21.400. [Repealed, § 84 ch 81 SLA 2001.]
Sec. 21.21.410. Custodian of insurer assets.
 (a) The custodian for assets, securities, or investments of the insurer may be only a bank, trust company, securities firm, or clearing corporation that is properly authorized by the insurer and approved by the director.

 (b) When securities are deposited with a clearing corporation, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of the clearing corporation with any other securities deposited with the clearing corporation by any person, regardless of the ownership of the securities, and certificates representing securities of small denominations may be merged into one or more certificates of larger denominations. The records of any custodian through which an insurer holds securities in a clearing corporation must show that the securities are held for the insurer and for which accounts of the insurer. Ownership of, and other interest in, the securities may be transferred by bookkeeping entry on the books of the clearing corporation without physical delivery of certificates representing the securities.

 (c) A custodial agreement between an insurer and an institution holding the assets, securities, or investments of the insurer must be in writing and must be authorized by a resolution of the board of directors of the insurance company or of an authorized committee of the board. The terms of the custodial agreement must comply with the requirements of the director.




Sec. 21.21.420. Regulations.
The director shall adopt regulations regarding insurance company investments that are consistent with the defined limits standards for investments of the National Association of Insurance Commissioners.


Sec. 21.21.600. Definitions. [Repealed, § 84 ch 81 SLA 2001.]

Chapter 22. Insurance Holding Companies.

Sec. 21.22.010. Filing requirements for acquisition of control of or merger with domestic insurer.
 (a) Until the provisions of (b) of this section have been fulfilled, a person may not
     (1) unless the person is an issuer, make a tender or an offer for or a request or an invitation for tenders of, or enter into any agreement to exchange securities for, seek to acquire, or acquire, in the open market or otherwise, any voting security of a domestic insurer if, after the purchase, the person would, directly or indirectly or by conversion or by exercise of any right to acquire, be in control of the insurer; or

     (2) enter into an agreement to merge with or otherwise to acquire control of a domestic insurer or a person controlling a domestic insurer.

 (b) A statement containing the information required by AS 21.22.020 shall be filed by the person making a proposal described in (a) of this section with the director before the time copies of the proposal are first published, sent, or given to security holders of the insurer. The insurer shall publish, send, or give copies of the statement to the insurer’s stockholders. The proposal is subject to approval by the director under AS 21.22.030.

 (c) If a proposal described in (a) of this section is to be made by means of a registration statement under 15 U.S.C. 77a — 77aa (Securities Act of 1933) or in circumstances requiring the disclosure of similar information under 15 U.S.C. 78a — 78mm (Securities Exchange Act of 1934), or under a state law requiring similar registration or disclosure, the person required to file the statement under (b) of this section may use those documents in furnishing the information called for by that statement.

 (d) If the person required to file the statement under (b) of this section is a partnership, limited partnership, syndicate, or other group, the director may require that the information be given with respect to each
     (1) partner of the partnership or limited partnership;

     (2) member of the syndicate or group; and

     (3) person who controls a partner or member.

 (e) If any person, partner, or member required to file the statement under (b) of this section is a corporation, the director may require that the information be given with respect to
     (1) that corporation;

     (2) each officer and director of that corporation; and

     (3) each person who is directly or indirectly the beneficial owner of more than 10 percent of the outstanding voting securities of that corporation.

 (f) If any material change occurs in the facts set out in the statement filed with the director and sent to the insurer under this section, an amendment setting out the change, together with copies of all documents and other material relevant to the change, shall be filed with the director and sent to the insurer within two business days after the person learns of the change. The insurer shall send the amendment to its shareholders.

 (g) The provisions of this section do not apply to an offer, request, invitation, agreement, or acquisition that the director by order may exempt as not having been made or entered into for the purpose and not having the effect of changing or influencing the control of the domestic insurer.

 (h) A person controlling a domestic insurer seeking to divest, in any manner, its controlling interest in the domestic insurer shall file with the director, and provide a copy to the insurer, confidential notice of the person’s proposed divestiture at least 30 days before the cessation of control. The director shall determine whether a party seeking to divest or to acquire a controlling interest in an insurer is required to file for and obtain approval of the transaction. The information is confidential until the conclusion of the transaction unless the director, in the director’s discretion, determines that confidential treatment will interfere with enforcement of this section. If a statement referred to in (b) of this section is otherwise filed, this subsection does not apply.

 (i) For a transaction subject to this section, an acquiring person also shall file a preacquisition notification with the director that contains the information set out in AS 21.22.065(c). A failure to file the notification may be subject to penalties specified in AS 21.22.065(i).

 (j) In this section, “domestic insurer” includes any person controlling a domestic insurer unless that person is either directly or through its affiliates primarily engaged in business other than the business of insurance. In this subsection, “person” includes a securities broker holding, in the usual and customary broker’s function, more than 20 percent of the voting securities of an insurer or of a person controlling an insurer.




Sec. 21.22.020. Content of statement for acquisition or merger filing.
 (a) The statement to be filed with the director under AS 21.22.010 shall be made under oath or affirmation and must contain the following information:
     (1) the name and address of each person by whom or on whose behalf the merger or other acquisition of control referred to in AS 21.22.010 is to be effected, who will be called the “acquiring party”, as follows:
          (A) if the person is an individual, the principal occupation of the person and all offices and positions held during the past five years, and all felony convictions and misdemeanor convictions involving moral turpitude during the past 10 years;

          (B) if the person is not an individual,
               (i) a report of the nature of its business operations during the past five years or for whatever lesser period the person and any of its predecessors have been in existence;

               (ii) an informative description of the business intended to be done by the person and the person’s subsidiaries; and

               (iii) a list of all individuals who are or who have been selected to become directors or executive officers of the person, or who perform or will perform functions appropriate to those positions; the list shall include for each such individual the information required by (A) of this paragraph;

     (2) a description of the consideration used or to be used in effecting the merger or other acquisition of control, including
          (A) the source, nature and amount;

          (B) a description of any transaction in which funds were or are to be obtained for any such purpose; and

          (C) the identity of persons furnishing the consideration; however, if a source of the consideration is a loan made in the lender’s ordinary course of business, the director shall keep the identity of the lender confidential, if the person filing the statement so requests;

     (3) fully audited financial information as to the earnings and financial condition of each acquiring party for the preceding five fiscal years or for whatever lesser period that an acquiring party and any predecessors of that acquiring party have been in existence, and similar unaudited information as of a date not earlier than 90 days before the filing of the statement;

     (4) any plans or proposals that each acquiring party may have to
          (A) liquidate the insurer;

          (B) sell its assets or merge or consolidate it with any person; or

          (C) make any other material change in its business or corporate structure or management;

     (5) the number of shares of any security referred to in AS 21.22.010 that each acquiring party proposes to acquire, and the terms of the offer, request, invitation, agreement, or acquisition referred to in this chapter, and a statement as to the method by which the fairness of the proposal was determined;

     (6) the amount of each class of any security referred to in AS 21.22.010 that is beneficially owned or concerning which there is a right to acquire beneficial ownership by each acquiring party;

     (7) a full description of any contracts, arrangements, or understandings with respect to any security referred to in AS 21.22.010 in which an acquiring party is involved, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies; this description must identify the persons with whom those contracts, arrangements, or understandings have been entered into;

     (8) a description of the purchase of any security referred to in AS 21.22.010 during the 12 calendar months preceding the filing of the statement, by any acquiring party, including the dates of purchase, names of the purchasers, and consideration paid or agreed to be paid;

     (9) a description of any recommendations to purchase a security referred to in AS 21.22.010 made during the 12 calendar months preceding the filing of the statement, by an acquiring party, or by anyone based upon interviews or at the suggestion of the acquiring party;

     (10) copies of all tender offers for, requests or invitations for tenders of exchange offers for, and agreements to acquire or exchange any securities referred to in AS 21.22.010, and, if distributed, of additional soliciting material;

     (11) the terms of any agreement, contract, or understanding made with a broker-dealer as to solicitation of securities referred to in AS 21.22.010 for tender, and the amount of any fees, commissions, or other compensation to be paid to a broker-dealer;

     (12) any additional information as the director may by order or regulation prescribe as necessary or appropriate for the protection of policyholders and securityholders of the insurer or in the public interest.

 (b) In addition to the other requirements in this section, a person required to file a statement under AS 21.22.010 shall provide
     (1) the annual enterprise risk statement specified in AS 21.22.060(n) for so long as control exists; and

     (2) an acknowledgment that the person and all subsidiaries within the person’s control in the insurance holding company system will provide information to the director upon request as necessary to evaluate enterprise risk to the insurer.

 (c) In this section, “consideration” includes a pledge of the stock of an insurer or the insurer’s subsidiary.




Sec. 21.22.030. Hearing, findings, and approval.
 (a) The director shall approve a merger or other acquisition of control referred to in AS 21.22.010 unless, after a public hearing, the director finds that
     (1) after the change of control, the domestic insurer referred to in AS 21.22.010 would not be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed;

     (2) the effect of the merger or other acquisitions of control would be substantially to lessen competition in insurance in this state or tend to create a monopoly in this state;

     (3) the financial condition of an acquiring party is such that it might jeopardize the financial stability of the insurer or prejudice the interest of its policyholders or the interests of any remaining securityholders who are unaffiliated with the acquiring party;

     (4) the terms of the offer, request, invitation, agreement, or acquisition referred to in AS 21.22.010 are unfair and unreasonable to the securityholders of the insurer;

     (5) the plans or proposals that the acquiring party has to liquidate the insurer, sell its assets, or consolidate or merge it with any person, or to make any other material change in its business or corporate structure or management, are unfair and unreasonable to policyholders of the insurer and not in the public interest;

     (6) the competence, experience, and integrity of those persons who would control the operation of the insurer are such that it would not be in the interest of policyholders of the insurer and of the public to permit the merger or other acquisition of control; or

     (7) the acquisition is likely to be hazardous or prejudicial to the insurance-buying public.

 (b) The public hearing referred to in (a) of this section must be held within 60 days after the statement required by AS 21.22.010 is filed and determined to be complete by the director. The director shall give notice of at least 20 days of the hearing to the person filing the statement. The person filing the statement shall give notice of at least seven days of the hearing to the insurer and to other persons as may be designated by the director. The director shall issue a decision within the 60-day period preceding the effective date of the proposed transaction. The procedure in AS 21.06.210 applies to a public hearing under this section.

 (c) In evaluating the effect of a merger or other acquisition under (a)(2) of this section, the
     (1) information requirements of AS 21.22.065(c)(1) and the standards of AS 21.22.065(d)(1), (2), and (e) apply;

     (2) merger or other acquisition may not be disapproved if the director finds that a situation meeting the criteria in AS 21.22.065(g) exists; and

     (3) director may condition the approval of the merger or other acquisition on the removal of a basis for disapproval within a specified period.

 (d) The director may retain at the acquiring person’s expense an attorney, actuary, accountant, or other expert not otherwise a part of the director’s staff, if reasonably necessary to assist the director in reviewing the proposed acquisition of control.

 (e) If the proposed acquisition of control would require the approval of more than one insurance regulator, the public hearing referred to under (a) and (b) of this section may be held on a consolidated basis upon request of the person filing the statement referred to in AS 21.22.010. That person shall file the statement referred to in AS 21.22.010 with the National Association of Insurance Commissioners within five days after making the request for a public hearing. The director may opt out of a consolidated hearing and shall provide notice to the applicant of the opt-out within 10 days after receipt of the statement referred to in AS 21.22.010. A hearing conducted on a consolidated basis must be public and must be held within the United States before the insurance regulators of the states in which the insurers are domiciled. The director may attend the hearing in person or telephonically.




Sec. 21.22.040. Mailings to shareholders and expenses.
All statements, amendments, or other material filed under AS 21.22.010, and all notices of public hearings held under AS 21.22.030, shall be mailed by the insurer to its shareholders within five business days after the insurer has received those statements, amendments, other materials, or notices. The expenses of mailing shall be borne by the person making the filing. As security for the payment of those expenses, the person making the filing shall file with the director an acceptable bond or other deposit in an amount to be determined by the director.


Sec. 21.22.050. Jurisdiction and consent to service.
The courts of this state are given jurisdiction over every person not resident, domiciled, or authorized to do business in this state who files a statement with the director under this chapter and over all actions involving that person arising out of violations of this chapter, and each person is considered to have performed acts equivalent to and constituting an appointment of the director to be the lawful attorney of the person upon whom may be served all lawful process in any action or proceeding arising out of a violation of this chapter. Copies of all lawful process shall be transmitted by registered or certified mail by the director to the person at the last known address of the person.


Sec. 21.22.060. Registration required.
 (a) Except as provided in (c) of this section, an insurer that is authorized to do business in this state and that is a member of an insurance holding company system shall register with the director. An insurer that is subject to registration under this section shall register not later than 15 days after the insurer becomes subject to registration, unless the director, for good cause shown, extends the time for registration; if the time is extended, the insurer shall register within the extended time.

 (b) An insurer subject to registration shall file a registration statement, on a form provided by the director, that must contain current information about
     (1) the capital structure, general financial condition, ownership, and management of the insurer and any person controlling the insurer;

     (2) the identity and relationship of every member of the insurance holding company system;

     (3) the following agreements in force and transactions currently outstanding or that have occurred in the last calendar year between the insurer and its affiliates:
          (A) loans, other investments, or purchases, sales, or exchanges of securities of the affiliates by the insurer or of the insurer by its affiliates;

          (B) purchases, sales, or exchanges of assets;

          (C) transactions not in the ordinary course of business;

          (D) guarantees or undertakings for the benefit of an affiliate that result in an actual contingent exposure of the insurer’s assets to liability, other than insurance contracts entered into in the ordinary course of the insurer’s business;

          (E) all management and service contracts and all cost-sharing arrangements;

          (F) reinsurance agreements;

          (G) dividends and other distributions to shareholders; and

          (H) consolidated tax allocation agreements;

     (4) other matters concerning transactions between registered insurers and any affiliates that may be included from time to time in a registration form adopted or approved by the director;

     (5) a pledge of the insurer’s stock, including stock of a subsidiary or controlling affiliate, for a loan made to a member of the insurance holding company system;

     (6) if requested by the director, the financial statements of or within an insurance holding company system, including all affiliates or the most recently filed parent corporation financial statements that have been filed with the United States Securities and Exchange Commission; financial statements may include annual audited financial statements filed with the United States Securities and Exchange Commission under 15 U.S.C. 77a — 77aa (Securities Act of 1933), as amended, or 15 U.S.C. 78a — 78pp (Securities Exchange Act of 1934), as amended;

     (7) statements that the insurer’s board of directors is responsible for and oversees corporate governance and internal controls and that the insurer’s officers or senior management have approved, implemented, and continue to maintain and monitor corporate governance and internal control procedures; and

     (8) other information required by the director by regulation.

 (c) An authorized insurer is not required to register under (a) of this section if the insurer is a member of a holding company system subject to registration requirements and standards under the laws or regulations of its state of domicile that are substantially similar to those contained in this chapter, except that the director may require the insurer to file a copy of the registration statement, the summary outline as described in (l) of this section, or other information filed in its state of domicile.

 (d) Information need not be disclosed on the registration statement filed under (b) of this section if that information is not material for the purposes of this section. Unless the director by regulation or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit, investments, or the aggregate of a series of related transactions, involving one-half of one percent or less of an insurer’s admitted assets or five percent or less of the policyholder’s surplus as of the 31st day of December of the calendar year in which the transaction took place are not considered material for purposes of this section.

 (e) Each registered insurer shall keep current the information required to be disclosed in its registration statement by reporting all material changes or additions on amendment forms provided by the director within 30 days after the end of the month in which it learns of each change or addition; however, subject to AS 21.22.100, each registered insurer shall report all dividends and other distributions to shareholders within 15 business days following their declaration.

 (f) The director shall terminate the registration of an insurer that demonstrates that it no longer is a member of an insurance holding company system.

 (g) The director may require or allow two or more affiliated insurers subject to registration under this section to file a consolidated registration statement or consolidated reports amending their consolidated registration statement or their individual registration statements.

 (h) The director may allow an insurer that is authorized to do business in this state and that is part of an insurance holding company system to register on behalf of an affiliated insurer that is required to register under (a) of this section and to file all information and material required to be filed under this section.

 (i) This section does not apply to any insurer, information, or transaction to the extent that the director by regulation or order exempts the insurer, information, or transaction from this section.

 (j) A person may file with the director a disclaimer of affiliation with an authorized insurer or the disclaimer may be filed by the insurer or a member of an insurance holding company system. The disclaimer must fully disclose all material relationships and bases for affiliation between that person and that insurer as well as the basis for disclaiming the affiliation. A disclaimer of affiliation is considered granted unless the director, within 30 days after receipt of a complete disclaimer, notifies the disclaiming party that the disclaimer is disallowed. If the disclaimer is disallowed, the disclaiming party may request a hearing under AS 21.06.180 — 21.06.240.

 (k) An insurer subject to registration under (a) of this section shall register annually by May 1 of each year for the previous calendar year unless, for good cause shown, the director extends the time for registration. The director may require an insurer that is allowed to register as provided under (c) of this section to furnish a copy of
     (1) the registration statement;

     (2) the summary specified in (l) of this section; or

     (3) other information filed by the insurer with the insurance regulatory authority of the insurer’s state of domicile.

 (l) An annual registration statement filed under (k) of this section must contain a summary outline of items in the current registration statement representing changes from the prior registration statement.

 (m) A person within an insurance holding company system subject to registration shall provide complete and accurate information to an insurer, where the information is reasonably necessary to enable the insurer to comply with the provisions of this chapter.

 (n) The ultimate controlling person of an insurer subject to registration shall file an annual enterprise risk report. The report must, to the best of the ultimate controlling person’s knowledge and belief, identify the material risks within the insurance holding company system that may pose enterprise risk to the insurer. The report shall be filed with the lead state insurance regulator of the insurance holding company system as determined by the procedures in the Financial Analysis Handbook adopted by the National Association of Insurance Commissioners.




Sec. 21.22.065. Acquisitions involving change of control.
 (a) Unless exempted in (j) of this section, this section applies to any acquisition in which there is a change in control of an insurer authorized to do business in this state.

 (b) If an acquisition violates the standards established in (d) and (f) of this section, the director may enter an order requiring an involved insurer to cease doing business in this state with respect to the line or lines of insurance involved in the violation or denying the application of an acquired or acquiring insurer for a license to do business in this state. Within 30 days of the issuance of the order, the involved insurer may submit a plan to remedy the anticompetitive effect of the acquisition within a reasonable time. Based upon a plan or other information submitted, the director shall specify the conditions, if any, under a time period during which the aspects of the acquisition causing a violation of the standards of this section would be remedied and the order vacated or modified. The order is stayed by the insurer’s submission of a plan and shall be rescinded if the acquisition is not consummated.

 (c) An acquisition that meets the requirements under (a) of this section is subject to an order under (b) of this section unless the acquiring person files a preacquisition notification and the waiting period has expired. The person to be acquired may file a preacquisition notification. A preacquisition notification by a person to be acquired may not be filed in place of a preacquisition filing by an acquiring person. The preacquisition notification
     (1) must be in a form and contain the information prescribed in regulations adopted by the director relating to insurance markets that, under (j)(5) of this section, cause the acquisition not to be exempt from the provisions of this section; the director may require additional material and information the director considers necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standards of this section;

     (2) may include an opinion of an economist regarding the competitive effect of the acquisition in this state accompanied by a summary of the education and experience indicating the economist’s ability to render an informed opinion; and

     (3) must be followed by a waiting period beginning on the date of receipt by the director of a preacquisition notification and ending on the earlier of the 30th day after the date of receipt or termination of the waiting period by the director unless, before the end of the waiting period, the director requires the submission of additional information relevant to the proposed acquisition, in which event the waiting period shall end on the 30th day after receipt of the additional information by the director or termination of the waiting period by the director, whichever is earlier.

 (d) The director may enter an order under (b) of this section regarding an acquisition if the insurer fails to file adequate information in compliance with (c) of this section or if there is substantial evidence that the acquisition may substantially lessen competition, create a monopoly in a line of insurance in this state or significantly increase an insurer’s market concentration. In determining whether an acquisition violates competitive standards under this subsection, the director shall consider the following:

 (1) an acquisition covered under (a) of this section involving two or more insurers competing in the same market is prima facie evidence of a violation of the competitive standards
     (A) if the market is highly concentrated and the involved insurers possess the following shares of the market:
     Insurer A     Insurer B          4 percent     4 percent or more          10 percent     2 percent or more          15 percent     1 percent or more;          (B) if the market is not highly concentrated and the involved insurers possess the following shares of the market:
     Insurer A     Insurer B          5 percent     5 percent or more          10 percent     4 percent or more          15 percent     3 percent or more          19 percent     1 percent or more.      (2) an acquisition covered under (a) of this section involving two or more insurers competing in the same market is prima facie evidence of violation of the competitive standard if
     (A) there is a significant trend toward increased concentration in the market, which occurs when the aggregate market share of any grouping of the largest insurers in the market, from the two largest to the eighth largest, has increased by seven percent or more of the market over a period extending from any base year five to 10 years before the acquisition up to the date of the acquisition;

     (B) one of the insurers involved is an insurer in a grouping of large insurers showing the requisite increase in market share; and

     (C) another involved insurer’s market share is two percent or more.

     (d) The director may enter an order under (b) of this section regarding an acquisition if

     (1) the insurer fails to file adequate information in compliance with (c) of this section;

     (2) there is substantial evidence that the acquisition may substantially lessen competition, create a monopoly in a line of insurance in this state or significantly increase an insurer’s market concentration;

     (3) there is substantial evidence when the aggregate market share of any grouping of the largest insurers in the market, from the two largest to the eighth largest, has increased by seven percent or more of the market over a period of time extending from any base year five to 10 years before the acquisition up to the time of the acquisition;

     (4) after considering an acquisition covered under (a) of this section involving two or more insurers competing in the same market there is evidence of a violation of the competitive standards contained in the following tables:
(A) if the market is highly concentrated, the involved insurers possess the following shares of the market:
     Insurer A      Insurer B          4 percent     4 percent or more          10 percent     2 percent or more          15 percent     1 percent or more;     
(B) if the market is not highly concentrated, the involved insurers possess the following shares of the market:
     Insurer A     Insurer B          5 percent     5 percent or more          10 percent     4 percent or more          15 percent     3 percent or more          19 percent     1 percent or more.      (e) A percentage not shown in the tables contained in (d) of this section may be interpolated proportionately to the percentage that is shown. The insurer with the largest share of the market shall be considered Insurer A. If more than two insurers are involved, a market share that exceeds the total of the two columns in the table by the insurers involved is prima facie evidence of a violation of the competitive standards contained in (d) of this section.

 (f) Even though an acquisition does not violate the competitive standard under (d) of this section, the director may establish the requisite anticompetitive effect based upon other substantial evidence. Even though an acquisition does violate the competitive standard under (d) of this section, a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination under (d) of this section include market shares, volatility of ranking of market leaders, number of competitors, concentration, trend of concentration in the industry, and ease of entry into and exit out of the market. The burden of showing substantial evidence of a violation of the competitive standards rests with the director.

 (g) An order may not be entered under (b) of this section if
     (1) the acquisition will yield substantial economy of scale or economy in resource utilization that cannot be achieved in another way and the public benefits that would arise from the economy exceed the public benefits that would arise from not lessening competition; or

     (2) the acquisition will substantially increase the availability of insurance and the public benefits of the increase exceed the public benefits that would arise from not lessening competition.

 (h) A person who violates a cease and desist order of the director under (b) of this section may, after hearing and on order of the director, be subject to the suspension or revocation of a license, a civil penalty not to exceed $10,000 for each day of violation, or both.

 (i) An insurer or other person who fails to make a preacquisition filing required by (c) of this section and who also fails to demonstrate a good faith effort to comply with filing requirements shall be subject to a fine of not more than $50,000.

 (j) This section does not apply to
     (1) an acquisition subject to approval or disapproval by the director under AS 21.22.010;

     (2) a purchase of securities solely for investment purposes if the securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in an insurance market in this state; if a purchase of securities for investment purposes results in a presumption of control under AS 21.22.200(3), it is not solely for investment purposes unless the insurance supervisory official of the insurer’s state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and the disclaimer action or affirmative finding is communicated by the domiciliary insurance supervisory official to the director;

     (3) the acquisition of a person by another person resulting in a change of control of an insurer when both persons are neither directly nor through affiliates primarily engaged in the business of insurance if preacquisition notification is filed with the director under (c) of this section 30 days before the proposed effective date of the acquisition; however, the preacquisition notification is not required for exclusion if the acquisition would otherwise be excluded under this subsection;

     (4) the acquisition of an already affiliated person;

     (5) an acquisition if, as an immediate result of the acquisition,
          (A) the combined market share of the involved insurers would not exceed five percent of a market;

          (B) there would not be an increase in a market share of the larger writer; or

          (C) the combined market share of the involved insurers would not exceed 12 percent of a market and the market share of the larger writer would not increase by more than two percent of a market;

     (6) an acquisition for which a preacquisition notification would be required under this section due solely to the resulting effect on the ocean marine insurance line of business; or

     (7) an acquisition of an insurer whose domiciliary supervisory insurance official affirmatively finds that the insurer is in a failing condition, there are no feasible alternatives to improving this condition, the public benefits of improving the insurer’s condition through the acquisition exceed the public benefits that would arise from not lessening competition, and these findings are communicated by the domiciliary supervisory insurance official to this state’s director.

 (k) AS 21.22.150, 21.22.160, and 21.22.180 do not apply to acquisitions covered under this section.




Sec. 21.22.070. Review by director.
If at any time the director determines that any material transaction entered into between an insurer and any of its affiliates does not meet the standards set out in AS 21.22.080, the director may, after hearings conducted in accordance with AS 21.06, require the insurer and the affiliate to terminate, set aside, or modify the transaction as considered appropriate by the director to make the transaction conform to those standards. An insurer may submit a proposed material transaction to the director for review and the director may issue an opinion that the transaction meets the standard set out in AS 21.22.080. The opinion creates a rebuttable presumption that neither the insurer, director, officer, employee, nor agent committed a wilful violation of this chapter by entering into the transaction. The opinion does not prohibit the director from subsequently exercising authority under this section.


Sec. 21.22.080. Transactions within an insurance holding company system.
Material transactions by registered insurers with their affiliates are subject to the following standards:
     (1) the terms shall be fair and reasonable;

     (2) charges or fees for services performed shall be reasonable;

     (3) expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied;

     (4) the books, accounts, and records of each party to the transactions shall be maintained so as to disclose clearly and accurately the nature and details of the transactions including accounting information that is necessary to support the reasonableness of the charges or fees to the respective parties;

     (5) the insurer’s surplus as regards policyholders following any dividends or distributions to shareholder affiliates or performance under a material transaction with an affiliate shall be reasonable in relation to the insurer’s outstanding liabilities and adequate to its financial needs; and

     (6) agreements for cost-sharing services and management must include the provisions required by regulations adopted by the director.




Sec. 21.22.085. Transactions involving a domestic insurer requiring director review.
 (a) Transactions involving a domestic insurer and a person in its insurance holding company system, including amendments or modifications of affiliate agreements previously filed under AS 21.22.080 that are subject to a materiality standard in (1) — (7) of this subsection, may not be entered into unless the insurer has notified the director in writing of the insurer’s intention to enter into the transaction at least 30 days before the transaction, or a shorter period if allowed by the director, and the director has not disapproved the transaction within the required notice period. The notice of amendments or modifications must include the reasons for the change and the financial effect on the domestic insurer. A domestic insurer shall provide to the director notice, within 30 days after a termination of a previously filed agreement, for determination of the type of filing required, if any. The requirements in this section apply to the following transactions:
     (1) a sale, purchase, exchange, loan or extension of credit, or investment, provided the transaction is equal to or exceeds
          (A) with respect to insurers other than life insurers, the lesser of three percent of the insurer’s admitted assets or 25 percent of surplus that pertains to policyholders, as of December 31 of the calendar year in which the transaction took place; or

          (B) with respect to life insurers, three percent of the insurer’s admitted assets as of December 31 of the calendar year in which the transaction took place;

     (2) a loan or extension of credit to a person who is not an affiliate, where the insurer makes loans or extensions of credit with the agreement or understanding that the proceeds of the transaction, in whole or in substantial part, are to be used to make a loan or extension of credit to, purchase an asset of, or make an investment in an affiliate of the insurer making the loan or extension of credit, provided the transaction is equal to or exceeds
          (A) with respect to insurers other than life insurers, the lesser of three percent of the insurer’s admitted assets or 25 percent of surplus that pertains to policyholder surplus, as of December 31 of the calendar year in which the transaction took place; or

          (B) with respect to life insurers, three percent of the insurer’s admitted assets as of December 31 of the calendar year in which the transaction took place;

     (3) a reinsurance agreement or modification, including
          (A) a reinsurance pooling agreement;

          (B) an agreement in which the reinsurance premium or change in the insurer’s liabilities, or the projected reinsurance premium or a change in the insurer’s liabilities in any of the three years after entering into the agreement or modification, equals or exceeds five percent of surplus that pertains to policyholders as of December 31 of the calendar year in which the transaction took place, including an agreement that may require as consideration the transfer of assets from an insurer to a nonaffiliate if an agreement or understanding exists between the insurer and nonaffiliate that a portion of the assets will be transferred to one or more affiliates of the insurer;

     (4) a management agreement, service contract, tax allocation agreement, guarantee, or cost-sharing arrangement;

     (5) a material transaction specified by regulation that the director determines may adversely affect the interests of the insurer’s policyholders;

     (6) a guarantee if made by a domestic insurer, except that a guarantee that is quantifiable as to amount is not subject to the notice requirements of this subsection unless it exceeds the lesser of one-half of one percent of the insurer’s admitted assets or 10 percent of surplus that pertains to policyholders as of December 31 of the calendar year in which the transaction took place; a guarantee that is not quantifiable as to amount is subject to the notice requirements of this subsection; and

     (7) a direct or an indirect acquisition or investment in a person that controls an insurer or in an affiliate of the insurer in an amount that, together with the person’s present holdings in the investment, exceeds two and one-half percent of surplus that pertains to policyholders; direct or indirect acquisitions or investments in subsidiaries authorized under this title or regulations adopted by the director or in nonsubsidiary insurance affiliates that are subject to the provisions of this chapter are exempt from this requirement.

 (b) Nothing in (a) of this section authorizes or permits a transaction that, in the case of an insurer not a member of the same holding company system, would violate a provision of law.

 (c) A domestic insurer may not enter into a transaction that is part of a plan or series of similar transactions with persons within the holding company system if the purpose of the separate transaction is to avoid the statutory threshold amount and avoid review that would otherwise occur. If the director determines that this separate transaction is entered into over a 12-month period for this purpose, the director may impose penalties under AS 21.22.065(i), 21.22.170, AS 21.36.360(a), and 21.36.910.

 (d) The director, in reviewing a transaction under this section, shall consider whether the transaction complies with the standards provided in AS 21.22.080 and whether the transaction may adversely affect the interests of policyholders.

 (e) A domestic insurer shall notify the director within 30 days of an investment of a domestic insurer in a corporation if, after the investment, the total investment by the insurance holding company system in a corporation exceeds 10 percent of the corporation’s voting securities.




Sec. 21.22.090. Adequacy of surplus.
For the purposes of this chapter, in determining whether an insurer’s surplus as regards policyholders is reasonable in relation to the insurer’s outstanding liabilities and adequate to its financial needs, the following factors, among others, shall be considered:
     (1) the size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force, and other appropriate criteria;

     (2) the extent to which the insurer’s business is diversified among the several lines of insurance;

     (3) the number and size of risks insured in each line of business;

     (4) the extent of the geographical dispersion of the insurer’s insured risk;

     (5) the nature and extent of the insurer’s reinsurance program;

     (6) the quality, diversification, and liquidity of the insurer’s investment portfolio;

     (7) the recent past and projected future trend in the value of the insurer’s investments;

     (8) the surplus as regards policyholders maintained by other comparable insurers;

     (9) the adequacy of the insurer’s reserves; and

     (10) the quality and liquidity of investments in affiliates made under AS 21.21; the director may treat any such investment as a disallowed asset for purposes of determining the adequacy of surplus as regards policyholders whenever the director determines the investment warrants it.




Sec. 21.22.100. Dividends and other distributions.
 (a) A domestic insurer may not pay any extraordinary dividend or make any other extraordinary distribution to its shareholders until
     (1) 30 days after the director has received notice of the declaration of the dividend or distribution and has not within that period disapproved its payment; or

     (2) the director has approved its payment within the 30-day period.

 (b) For purposes of this section, an extraordinary dividend or distribution includes a dividend or distribution of cash or other property, the fair market value of which together with that of other dividends or distributions made within the preceding 12 months exceeds the lesser of (1) 10 percent of the insurer’s surplus as regards policyholders as of December 31 of the preceding year; or (2) the net gain from operations of the insurer, if the insurer is a life insurer, or the net investment income, if the insurer is not a life insurer, for the 12-month period ending December 31 of the preceding year; but does not include pro rata distributions of any class of the insurer’s own securities. In determining whether a dividend or distribution is extraordinary, an insurer other than a life insurer may carry forward net income from the previous two calendar years that has not already been paid out as dividends. The carry forward provision shall be computed by taking the net income from the second and third preceding calendar years, not including realized capital gains, less dividends paid in the second and immediate preceding calendar years.

 (c) Notwithstanding AS 21.69.490, an insurer may declare an extraordinary dividend or distribution that is conditional upon the director’s approval. A declaration confers no rights upon shareholders until
     (1) the director has approved the payment of the dividend or distribution; or

     (2) the director has not disapproved the payment within the 30-day period referred to in (a) of this section.




Sec. 21.22.105. Management of domestic insurers subject to registration.
 (a) Notwithstanding the control of a domestic insurer by any person, the officers and directors of the insurer may not be relieved of an obligation or liability to which the officers and directors would otherwise be subject to by law, and the insurer shall be managed so as to assure the insurer’s separate operating identity consistent with this title.

 (b) This section does not preclude a domestic insurer from having or sharing a common management or cooperative or joint use of personnel, property, or services with one or more other persons under arrangements meeting the standards of AS 21.22.080.




Sec. 21.22.110. Examination.
 (a) In addition to the director’s authority to examine insurers under AS 21.06.120 — 21.06.170, the director may examine an insurer registered under AS 21.22.060 and its affiliates to ascertain the financial condition of the insurer, including the enterprise risk to the insurer by the ultimate controlling party, by any entity or combination of entities within the insurance holding company system, or by the insurance holding company system on a consolidated basis.

 (b) The director may
     (1) order an insurer registered under AS 21.22.060 to produce the records, books, or other information or papers in the possession of the insurer or its affiliates that are reasonably necessary to determine compliance with this chapter;

     (2) order an insurer registered under AS 21.22.060 to produce information not in the possession of the insurer if the insurer can obtain access to the information under contractual relationships, statutory obligations, or other method; in the event the insurer cannot obtain the information requested by the director, the insurer shall provide the director a detailed explanation of the reason that the insurer cannot obtain the information and the identity of the holder of information; if the director determines that the detailed explanation is without merit, the director may, after notice and hearing, require the insurer to pay a penalty of $250 for each day’s delay in providing the requested information, or may suspend or revoke the insurer’s license;

     (3) in the event the insurer fails to comply with an order under this subsection, examine or issue subpoenas to the insurer’s affiliates to obtain the information.

 (c) The director may retain, at the registered insurer’s expense, attorneys, actuaries, accountants, and other experts not otherwise a part of the director’s staff as may be necessary to assist in the conduct of an examination under (a) of this section. Any persons so retained are under the direction and control of the director and shall act in a purely advisory capacity.

 (d) Each registered insurer producing for examination records, books, and papers under (a) of this section is liable for and shall pay the expense of an examination in accordance with AS 21.06.160.




Sec. 21.22.115. Supervisory colleges.
 (a) With respect to an insurer registered under AS 21.22.060, and in accordance with (c) of this section, the director may participate in a supervisory college for a domestic insurer that is part of an insurance holding company system with international operations to determine the insurer’s compliance with this chapter. The director may
     (1) initiate the establishment of a supervisory college;

     (2) clarify the membership and participation of other supervisors in the supervisory college;

     (3) clarify the functions of the supervisory college and the role of other regulators, including the establishment of a group-wide supervisor;

     (4) coordinate the ongoing activities of the supervisory college, including planning meetings, supervisory activities, and processes for information sharing; and

     (5) establish a crisis management plan.

 (b) An insurer subject to this section is liable for and shall pay the reasonable expenses of the director’s participation in a supervisory college in accordance with (c) of this section, including reasonable travel expenses. Under this section, a supervisory college may be convened as either a temporary or permanent forum for communication and cooperation between the regulators charged with the supervision of the insurer or its affiliates, and the director may establish a regular assessment to the insurer for the payment of those expenses.

 (c) To assess the business strategy, financial position, legal and regulatory position, risk exposure, risk management, and governance processes, and as part of the examination of individual insurers in accordance with AS 21.22.110, the director may participate in a supervisory college with other regulators charged with supervision of the insurer or its affiliates, including other state, federal, and international regulatory agencies. The director may enter into agreements in accordance with AS 21.06.060 and AS 21.22.120 to share confidential information between the director and regulatory agencies or other members of the supervisory college.

 (d) Nothing in this section delegates to the supervisory college the director’s authority to regulate or supervise an insurer or its affiliates under this title.




Sec. 21.22.120. Confidentiality.
 (a) All information, documents, holding company analyses, insurer profile summaries, and copies of the information and documents obtained by or disclosed to the director or any other person in the course of an examination or investigation made under AS 21.22.110 and all information reported under AS 21.22.020(b), 21.22.060, and 21.22.085 — 21.22.105, and all preacquisition notification information received under AS 21.22.065 shall be given confidential treatment under AS 21.06.060. However, if the director, after giving the insurer and its affiliates who would be affected by publication of the information notice and opportunity to be heard, determines that the interests of policyholders, shareholders, or the public will be served by the publication of the information, the director may publish all or part of the information in the manner the director considers appropriate.

 (b) The director may
     (1) share documents, materials, or other information, including the confidential information under (a) of this section, with state, federal, and international regulatory agencies, the National Association of Insurance Commissioners and its affiliates and subsidiaries, and state, federal, and international law enforcement authorities, including members of a supervisory college described in AS 21.22.115, if the recipient agrees in writing to maintain the confidentiality of the document, material, or other information and has verified in writing the legal authority to maintain confidentiality;

     (2) not share confidential documents, material, or information reported under AS 21.22.060(n) with the insurance regulator of another state, unless the statutes or regulations of the other state are substantially similar to this section and the other state has agreed in writing not to disclose the information;

     (3) enter into a written agreement with the National Association of Insurance Commissioners governing sharing and use of information obtained under this chapter that must
          (A) specify procedures and protocols regarding the confidentiality and security of information shared with the National Association of Insurance Commissioners and its affiliates and subsidiaries under this chapter, including procedures and protocols for sharing by the National Association of Insurance Commissioners with state, federal, or international regulators;

          (B) specify that ownership of information shared with the National Association of Insurance Commissioners and its affiliates and subsidiaries under this chapter remains with the director and that the National Association of Insurance Commissioners’ use of the information is subject to the direction of the director;

          (C) require prompt notice to be given to an insurer whose confidential information in possession of the National Association of Insurance Commissioners under this chapter is subject to a request or subpoena to the National Association of Insurance Commissioners for disclosure or production; and

          (D) require the National Association of Insurance Commissioners and its affiliates and subsidiaries to consent to intervention by an insurer in a judicial or administrative action in which the National Association of Insurance Commissioners and its affiliates and subsidiaries may be required to disclose confidential information about the insurer shared with the National Association of Insurance Commissioners and its affiliates and subsidiaries under this chapter.




Sec. 21.22.130. Regulations.
The director may adopt regulations to carry out the provisions of this chapter.


Sec. 21.22.140. Injunctions.
If it appears to the director that an insurer or a director, officer, employee, or agent of an insurer has violated or is about to violate this chapter or a regulation adopted or an order issued by the director under this chapter, the director may apply to the superior court in the judicial district in which the principal office of the insurer is located or if the insurer has no office in this state then to the superior court in the first judicial district for an order enjoining the insurer or a director, officer, employee, or agent of the insurer from the violation, and for other relief as the nature of the case and the interests of the insurer’s policyholders, creditors and shareholders or the public may require.


Sec. 21.22.150. Voting of certain securities prohibited.
 (a) A security that is the subject of any agreement or arrangement regarding acquisition, or that is acquired or to be acquired, in contravention of this chapter or a regulation adopted or an order issued by the director under this chapter may not be voted at a shareholders’ meeting or be counted for quorum purposes, and any action of shareholders requiring the affirmative vote of a percentage of shares may be taken as though those securities were not issued and outstanding; but an action taken at such a meeting may not be invalidated by the voting of those securities, unless the action would materially affect control of the insurer or unless the courts of this state have so ordered.

 (b) If an insurer or the director has reason to believe that a security of the insurer has been or is about to be acquired in contravention of this chapter or a regulation adopted or an order issued by the director under this chapter, the insurer or the director may apply to the superior court in the first judicial district or the superior court in the judicial district in which the insurer has its principal place of business to enjoin any offer, request, invitation, agreement, or acquisition made in contravention of this chapter or a regulation adopted or an order issued by the director under this chapter, to enjoin the voting of any security so acquired, to void any vote of a security already cast at a meeting of shareholders, and for other relief as the nature of the case and the interests of the insurer’s policyholders, creditors and shareholders or the public may require.

 (c) This section does not apply to a security that constitutes an acquisition covered by AS 21.22.065.




Sec. 21.22.160. Sequestration of voting securities.
 (a) If a person has acquired or is proposing to acquire voting securities in violation of this chapter or a regulation adopted or an order issued by the director under this chapter, the insurer or the director may make an application in the superior court in the first judicial district or the superior court in the judicial district in which the insurer has its principal place of business to seize or sequester any voting securities of the insurer owned directly or indirectly by that person, and the court may issue an order with respect to those securities as may be appropriate to effectuate this chapter. For the purposes of this chapter the situs of the ownership of the securities of domestic insurers is considered to be in this state.

 (b) This section does not apply to a security that constitutes an acquisition covered by AS 21.22.065.




Sec. 21.22.170. Civil penalties for violations.
 (a) An insurer failing, without just cause, to file a registration statement required under this chapter shall be required, after notice and hearing under AS 21.06.170 — 21.06.240, to pay a $200 fine for each day the insurer fails to file the registration. The maximum penalty under this subsection is $50,000. The director may reduce the penalty if the insurer demonstrates to the director that the imposition of the penalty would be a financial hardship to the insurer.

 (b) A director or officer of an insurance holding company system who knowingly violates, participates in, assents to, or knowingly permits an officer or agent of an insurer to engage in transactions or make investments that have not been properly reported or submitted under AS 21.22.060, 21.22.085, or 21.22.100, or that violate this chapter, shall pay, in the director’s or officer’s individual capacity, a fine of not more than $50,000 for each violation, after notice and hearing under AS 21.06.170 — 21.06.240. In determining the amount of the fine, the director shall take into account the appropriateness of the fine with respect to the gravity of the violation, the history of previous violations, and other matters as justice may require.

 (c) If the director has reason to believe that an insurer subject to this chapter, or a director, officer, employee, or agent of the insurer, has engaged in a transaction or entered into a contract that is subject to AS 21.22.080 — 21.22.105, and that would not have been approved had the approval been requested, the director may order the insurer to cease and desist immediately any further activity under that transaction or contract. After notice and hearing under AS 21.06.170 — 21.06.240, the director may also order the insurer to void any contracts and restore the status quo if the action is in the best interest of the policyholders, creditors, or the public.

 (d) If the director has reason to believe that a person has committed a violation of AS 21.22.010 or 21.22.020 that prevents the full understanding of the enterprise risk to an insurer by its affiliates or by the insurance holding company system, the violation may serve as an independent basis for disapproving dividends or distributions and for placing the insurer under an order of rehabilitation in accordance with AS 21.78.090.




Sec. 21.22.175. Criminal penalties.
 (a) An insurer or a director, officer, employee, or agent of an insurer who knowingly violates this chapter is guilty of a class C felony.

 (b) A director, officer, or employee of an insurance holding company system who knowingly subscribes to or makes or causes to be made a false statement, false report, or false filing with the intent to deceive the director under this chapter is guilty of a class C felony.

 (c) An insurer may not pay a fine imposed by a court on a director, officer, employee, or agent that is sentenced under (a) or (b) of this section. The fine must be paid by the director, officer, employee, or agent in the director’s, officer’s, employee’s, or agent’s individual capacity.

 (d) In this section, “knowingly” has the meaning given in AS 11.81.900(a).




Sec. 21.22.180. Receivership.
 (a) If it appears to the director that a person has committed a violation of this chapter that so impairs the financial condition of a domestic insurer as to threaten insolvency or make the further transaction of business by it hazardous to its policyholders, creditors, shareholders, or the public, then the director may proceed as provided in AS 21.78 to take possession of the property of that domestic insurer and to conduct its business.

 (b) This section does not apply to a violation involving a security that constitutes an acquisition covered by AS 21.22.065.




Sec. 21.22.190. Revocation, suspension, or nonrenewal of insurer’s authority.
If the director finds, after giving notice and an opportunity to be heard, that a person has committed a violation of this chapter that makes the continued operation of an insurer contrary to the interests of its policyholders or the public, the director may suspend, revoke, or refuse to renew the insurer’s license or authority to do business in this state for a period that the director finds is required for the protection of policyholders or the public. Such a determination by the director must be accompanied by specific findings of fact and conclusions of law.


Sec. 21.22.200. Definitions.
In this chapter, unless the context requires otherwise,
     (1) “acquisition” means an agreement, arrangement, or activity the consummation of which results in a person acquiring directly or indirectly the control of another person, and includes the acquisition of voting securities, assets, bulk reinsurance, and mergers;

     (2) “affiliate” or “affiliated” means a person who directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the persons specified;

     (3) “control”, “controlling”, “controlled by”, and “under common control with” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or non-management services, or otherwise, unless the power is the result of an official position with or corporate office held by the person; “control” is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, 10 percent or more of the voting securities of any other person; this presumption may be rebutted by a showing made in the manner provided by AS 21.22.060(j) that control does not exist in fact; the director may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support that determination, that control exists in fact, notwithstanding the absence of a presumption to that effect;

     (4) “domestic insurer” has the meaning given in AS 21.97.900 and, in addition, for the purposes of this chapter, includes an insurer that has been authorized to do business in this state and that, during its three preceding fiscal years taken together, or during any lesser period of time if it has been licensed to transact its business in this state only for a lesser period of time, has written an average of more gross premiums in this state than it has written in its state of domicile during the same period, and the gross premiums written constitute 33 percent or more of its total gross premiums written everywhere in the United States for the three-year or lesser period, as reported in its three most recent annual statements;

     (5) “enterprise risk” means an activity, circumstance, event, or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect on the financial condition or liquidity of the insurer or its insurance holding company system as a whole including anything that would cause the insurer’s risk based capital to fall into company action level under AS 21.14.020 or would cause the insurer to be impaired or in imminent danger of becoming impaired, as defined in AS 21.97.900 and regulations adopted by the director;

     (6) “highly concentrated” means a market in which the share of the four largest insurers is 75 percent or more of the market;

     (7) “insurance holding company system” means a system consisting of two or more affiliated persons, one or more of which is an insurer;

     (8) “insurer” has the meaning given in AS 21.97.900 and includes a company or group of companies under common management, ownership, or control; it does not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, a state or political subdivision of a state;

     (9) “involved insurer” means an insurer that either acquires or is acquired, is affiliated with an acquirer or acquired, or is the result of a merger;

     (10) “market” or “insurance market” means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state; in determining the relevant product and geographical markets, the director shall give due consideration to, among other things, the definitions or guidelines adopted by the National Association of Insurance Commissioners and to information submitted by parties to the acquisition; in the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business, the line being that used in the annual statement required to be filed by insurers doing business in this state, and the relevant geographical market is assumed to be this state;

     (11) “person” means an individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of these entities acting in concert, but does not include a joint venture partnership exclusively engaged in owning, managing, leasing, or developing real or tangible personal property, or a securities broker performing not more than the usual and customary broker’s function;

     (12) “security holder” means one who owns any security of a specified person, including common stock, preferred stock, debt obligations, and any other security convertible into or evidencing the right to acquire any of them;

     (13) “statement value” means the value that an insurer is instructed by the securities valuation office of the National Association of Insurance Commissioners to carry on the insurer’s financial statement and that represents an investment;

     (14) “subsidiary” means an affiliate controlled by a specified person directly or indirectly through one or more intermediaries;

     (15) “supervisory college” means a forum for cooperation and communication among the involved state, federal, and international regulators established for the fundamental purpose of facilitating the effectiveness of supervision of entities that belong to an insurance holding company system.

     (16) “voting security” includes any security convertible into or evidencing a right to acquire the right to vote for management and the right to vote on other matters as provided in a corporation’s articles of incorporation.




Chapter 23. Risk Management; Own Risk and Solvency Assessment

Sec. 21.23.010. Risk management framework.
An insurer shall maintain a risk management framework to assist the insurer with identifying, assessing, monitoring, managing, and reporting on its material and relevant risks. This requirement may be satisfied if the insurance group of which the insurer is a member maintains a risk management framework applicable to the operations of the insurer.


Sec. 21.23.020. Own risk and solvency assessment requirement.
Unless exempted under AS 21.23.040, an insurer or the insurance group of which the insurer is a member shall conduct an own risk and solvency assessment consistent with the own risk and solvency assessment guidance manual
     (1) annually; and

     (2) when significant changes to the risk profile of the insurer or the insurance group of which the insurer is a member occur.




Sec. 21.23.030. Own risk and solvency assessment summary report.
 (a) If requested by the director, an insurer shall submit an own risk and solvency assessment summary report or any combination of reports that together contain the information described in the own risk and solvency assessment guidance manual that is applicable to the insurer or the insurance group of which the insurer is a member. The director may not request more than one report a year. The insurer shall submit the report to the director within 30 days after the request, unless the insurer requests an extension in writing and the director grants the request. If an insurer is a member of an insurance group, the insurer shall submit the report required by this subsection at least annually if the director is the lead state regulator of the insurance group as determined by the procedures in the Financial Analysis Handbook adopted by the National Association of Insurance Commissioners.

 (b) For a report submitted under this section, an insurer’s or insurance group’s chief risk officer or other executive having responsibility for the oversight of the insurer’s enterprise risk management process shall sign the report and attest, to the best of the officer’s or executive’s belief and knowledge, that the insurer applies the enterprise risk management process described in the report and that a copy of the report has been provided to the insurer’s board of directors or the appropriate committee of the board.

 (c) An insurer may comply with (a) of this section by providing the most recent and substantially similar report or reports provided by the insurer or another member of the insurance group of which the insurer is a member to the insurance regulator of another state or a foreign jurisdiction, if that report provides information that is comparable to the information described in the own risk and solvency assessment guidance manual. A report in a language other than English must be accompanied by a translation of that report into the English language.




Sec. 21.23.040. Exemption.
 (a) An insurer is exempt from the requirements of this chapter if
     (1) the insurer has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and the National Flood Insurance Program, of less than $500,000,000; and

     (2) the insurance group of which the insurer is a member has annual direct written and unaffiliated assumed premium, including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and the National Flood Insurance Program, of less than $1,000,000,000.

 (b) If an insurer qualifies for an exemption under (a)(1) of this section, but the insurance group of which the insurer is a member does not qualify for an exemption under (a)(2) of this section, then the own risk and solvency assessment summary report required under AS 21.23.030 must include every insurer in the insurance group. This requirement may be satisfied by the submission of more than one own risk and solvency assessment summary report for a combination of insurers provided the combination of reports includes every insurer within the insurance group.

 (c) If an insurer does not qualify for exemption under (a)(1) of this section, but the insurance group of which the insurer is a member qualifies for exemption under (a)(2) of this section, then the only own risk and solvency assessment summary report that may be required under AS 21.23.030 is the report applicable to that insurer.

 (d) An insurer that does not qualify for exemption under (a) of this section may apply to the director for a waiver from the requirements of this chapter based on unique circumstances. In deciding whether to grant a request for a waiver, the director may consider the type and volume of business written, ownership and organizational structure, and any other factor that the director considers relevant to the insurer or insurance group of which the insurer is a member. If the insurer is part of an insurance group with insurers domiciled in more than one state, the director shall coordinate with the lead state regulator and with the other domiciliary regulators in considering whether to grant the insurer’s request for a waiver.

 (e) Notwithstanding the exemptions stated in this section, the director may require that an insurer maintain a risk management framework, conduct an own risk and solvency assessment, and file an own risk and solvency assessment summary report
     (1) based on unique circumstances, including the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests;

     (2) if the insurer has risk based capital for company action level event as set out in AS 21.14, meets one or more of the standards of an insurer considered to be impaired or in imminent danger of becoming impaired as defined in AS 21.97.900 and in regulations adopted by the director, or otherwise exhibits qualities of a troubled insurer as determined by the director.

 (f) If an insurer that qualified for an exemption under (a) of this section no longer qualifies for that exemption because of changes in premium as reflected in the insurer’s most recent annual statement or in the most recent annual statements of the insurers within the insurance group of which the insurer is a member, the insurer shall comply with the requirements of this chapter within one year after the year the threshold in (a) of this section is exceeded.




Sec. 21.23.050. Contents of own risk and solvency assessment summary report.
 (a) The own risk and solvency assessment summary report under AS 21.23.030 must be prepared in compliance with the own risk and solvency assessment guidance manual, subject to the requirements of (b) of this section. The insurer shall maintain documentation and supporting information relating to the assessment and make the documentation and information available on examination or on request of the director.

 (b) The director shall use the procedures currently used in the analysis and examination of multistate or global insurers and insurance groups when reviewing the report and additional requests for information.




Sec. 21.23.060. Confidentiality.
Documents, materials, or other information, including the own risk and solvency assessment summary report, that are obtained by, created by, or disclosed to the director or another person under this chapter are confidential and are considered trade secrets and proprietary business information subject to AS 21.06.060 and AS 21.22.120. A third-party consultant is subject to the information sharing requirements of AS 21.22.120(b).


Sec. 21.23.070. Penalties.
An insurer shall pay $1,000 for each day the insurer fails to file the report within the time required in AS 21.23.030(a), not to exceed $365,000. The director may reduce the penalty under this section if the insurer demonstrates to the director that the imposition of the penalty is a financial hardship to the insurer.


Sec. 21.23.080. Regulations.
The director may adopt regulations to implement, define, and enforce the provisions of this chapter.


Sec. 21.23.090. Definitions.
In this chapter,
     (1) “insurance group” means those insurers and affiliates included in an insurance holding company system as defined in AS 21.22.200;

     (2) “insurer” has the meaning given in AS 21.97.900, except that it does not include agencies, authorities, or instrumentalities of the United States or a possession or territory of the United States, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state;

     (3) “own risk and solvency assessment” means a confidential internal assessment, appropriate to the nature, scale, and complexity of an insurer or insurance group, conducted by that insurer or insurance group of the material and relevant risks associated with the insurer’s or insurance group’s current business plan and the sufficiency of capital resources to support those risks;

     (4) “own risk and solvency assessment guidance manual” means the Own Risk and Solvency Assessment Guidance Manual developed and most recently adopted by the National Association of Insurance Commissioners;

     (5) “own risk and solvency assessment summary report” means a confidential, high-level summary of an insurer’s or insurance group’s own risk and solvency assessment;

     (6) “risk management framework” means a set of internal policies or procedures that address an insurer’s or insurance group’s risk culture and governance, risk identification and prioritization, risk appetite, tolerance and limits, risk management controls, and risk reporting and communication as described in and most recently adopted by the National Association of Insurance Commissioners Own Risk and Solvency Assessment Guidance Manual.




Chapter 24. Administration of Deposits.

Sec. 21.24.010. Authorized deposits of insurers.
The following deposits of insurers when made through the director shall be accepted and held and are subject to the provisions of this chapter:
     (1) deposits required under this title for authority to transact insurance in this state;

     (2) deposits of domestic insurers when made under the laws of other states, provinces, and countries as requirement for authority to transact insurance in the state, province, or country;

     (3) deposits in the additional amounts that are permitted to be made under AS 21.24.100.




Sec. 21.24.020. Purpose of deposit.
The deposits shall be held for purposes as follows:
     (1) deposits made in this state under AS 21.09.090 shall be held for the purpose stated in that section;

     (2) a deposit made in this state by a domestic insurer transacting insurance in another state, province, or country, in accordance with the laws of the other state, province, or country, shall be held for the protection of all creditors or for the other purpose or purposes that may be specified under those laws;

     (3) deposits required under AS 21.09.270 shall be held for the purposes required by the retaliatory law and specified in the director’s order requiring the deposit to be made.




Sec. 21.24.030. Securities eligible for deposit.
 (a) All deposits required under AS 21.09.090 for authority to transact insurance in this state shall consist of certificates of deposit or any combination of rated credit instruments of the United States, Canada, or a state of the United States.

 (b) Deposits of a domestic insurer held in this state under the laws of another state, province, or country shall be comprised of assets of the kinds described in (a) of this section, and of the additional kind or kinds of securities required or permitted by the laws of the state, province, or country except common stocks, mortgages of any kind, and real estate.

 (c) Deposits of foreign insurers made in this state under AS 21.09.270 shall consist of the assets required by the director under the law.




Sec. 21.24.040. Depositary or custodian.
 (a) Deposits made in this state under this title shall be made through the office of the director under custodial arrangements as required or approved by the director consistent with the purposes of the deposit, with an established safe deposit institution, bank, or trust company located in this state selected by the insurer with the director’s approval.

 (b) [Repealed, § 34 ch 1 FSSLA 2005.]
 (c) If of convenience to the insurer in the buying, selling, and exchange of securities making up its deposit, and in the collection of interest and other income currently accruing on the securities, the insurer may, with the director’s advance written approval, deposit a portion of the securities under custodial arrangements with an established bank or trust company located outside this state, if receipts representing all the securities are issued by the custodial bank or trust company and are held in custody subject to the requirements of (a) of this section.

 (d) The form and terms of all depositary or custodial agreements shall be as prescribed or approved by the director consistent with the applicable provisions of this title.

 (e) The compensation and expenses of the depositary or custodian shall be borne by the insurer.




Sec. 21.24.050. Record of deposits.
 (a) The director shall give to the depositing insurer vouchers of all assets and securities deposited by it in this state through the director as provided in this title.

 (b) The director shall keep a record of the assets and securities comprising each deposit, showing as far as practical the amount and market value of each item, and all transactions regarding them.




Sec. 21.24.060. Liability of director and state.
The director and the state are not liable for the safekeeping of a deposit by the depositary or custodian.


Sec. 21.24.070. Assignment, conveyance of assets or securities.
All securities not negotiable by delivery and deposited under this title shall be assigned to the director and successors in office. In the case of securities held under custodial arrangements outside this state under AS 21.24.040(c), the custodian’s receipt for the securities shall be delivered, if negotiable, or assigned to the director if thereby legal title to the securities is vested in the director. The insurer shall transfer or convey to the director and successors in office all other assets so deposited. Upon release to the insurer of the asset or security the director shall reassign or transfer or reconvey it to the insurer.


Sec. 21.24.080. Appraisal.
The director may before acceptance for deposit of any particular asset or security, or at any time thereafter while so deposited, have the asset or security appraised by competent appraisers. The reasonable costs of the appraisal shall be borne by the insurer.


Sec. 21.24.090. Rights of insurer during solvency.
If the insurer remains solvent and is in compliance with this title it may
     (1) demand, receive, sue for, and recover the income from the assets or securities deposited;

     (2) exchange and substitute for the deposited assets or securities, or any part thereof, other eligible assets or securities of equivalent or greater value;

     (3) at any reasonable time inspect the deposit.




Sec. 21.24.100. Excess deposits.
An insurer may deposit and have on deposit assets or securities in an amount exceeding its deposit required or otherwise permitted under this title by no more than 20 percent of the required or permitted deposit or $50,000, whichever is the larger amount, for the purpose of absorbing fluctuations in the value of assets and securities deposited and to facilitate the exchange and substitution of the assets and securities. During the solvency of the insurer an excess shall be released to the insurer upon its request. During the insolvency of the insurer the excess deposit shall be released only in accordance with AS 21.24.130(d).


Sec. 21.24.110. Levy upon deposit. [Repealed, § 14 ch 62 SLA 1982. For current law see AS 09.38.025(b).]
Sec. 21.24.120. Deficiency of deposit.
If the market value of assets and securities of an insurer held on deposit in this state, or in another state under custodial arrangements authorized by AS 21.24.040(c), falls below the amount required under this title, the insurer shall promptly deposit other or additional assets or securities eligible for deposit under this chapter and in an amount sufficient to cure the deficiency. If the insurer fails to cure the deficiency within 20 days after receipt of notice by registered mail from the director, the director shall immediately revoke the insurer’s certificate of authority.


Sec. 21.24.130. Duration and release of deposit.
 (a) Each deposit made in this state by an insurer under this title, including assets and securities held in another state under custodial arrangements permitted by AS 21.24.040(c), shall be held for as long as there is any outstanding liability of the insurer as to which the deposit was required. Each deposit required under AS 21.09.270 shall be held for so long as the basis of the retaliation exists.

 (b) Upon the request of a domestic insurer, the director shall return to the insurer the whole or any portion of the assets and securities of the insurer held on deposit when the director is satisfied that the assets and securities to be returned are subject to no liability and are no longer required to be held by any provision of law or purposes of the original deposit. If the insurer has reinsured all of its outstanding risks in another insurer or insurers authorized to transact insurance in this state, the director shall deliver the assets and securities to the insurer or insurers assuming the risks, upon written notice to the director by the domestic insurer that the assets and securities have been assigned, transferred, and set over to the reinsuring insurer or insurers, which notice shall be accompanied by a verified copy of the assignment, transfer, or conveyance.

 (c) The director shall return to a foreign insurer any deposit made in this state by the insurer, when (1) the insurer has ceased transacting insurance in this state, or in the United States, and the insurer is not subject to liability in this state on account of which the deposit was held; (2) the deposit is no longer required by a provision of law; (3) the insurer, during its solvency, has made a similar deposit in another state and has filed with the director the certificate of evidence thereof, under the conditions provided for in AS 21.09.090(b)(1) or (2). Upon the effectuation of a merger or consolidation of an insurer that has made a deposit in this state, the director shall return the deposit to the resulting or surviving corporation, or to any person it may designate for that purpose, provided that the resulting or surviving corporation is or becomes authorized to transact an insurance business in this state.

 (d) If a domestic insurer is subject to delinquency proceedings under AS 21.78, the director shall yield the assets and securities held on deposit under AS 21.09.090(b) to the receiver, conservator, rehabilitator, or liquidator of the domestic insurer. The director may release the deposit directly to the guaranty fund of which the insurer is a member if the right to receive all or a portion of the deposit is assigned to the guaranty fund.

 (e) A release of deposited assets may not be made except upon application to and the written order of the director. The director is not personally liable for a release of a deposit or part thereof made in good faith.

 (f) If a foreign insurer that is a member of the Alaska Life and Health Insurance Guaranty Association (AS 21.79) or the Alaska Insurance Guaranty Association (AS 21.80) is found to be insolvent by a proceeding under AS 21.78 or by a court of competent jurisdiction in another state, the director shall take control of the insurer’s deposit made under AS 21.09.090(b). The deposit assets shall be released to the applicable guaranty association upon a showing to the director that the association paid a valid loss, loss expense, or contractual obligation that is within the purpose of the deposit. After the director determines that all losses, loss expense liabilities, or contractual obligations that were incurred on the insurer’s policies written in this state for which the deposit was required have been paid, the director shall pay the remaining deposit assets to the receiver, conservator, rehabilitator, or liquidator of the insurer, or to another properly designated official who succeeds to the management and control of the insurer’s assets.

 (g) If an insurer is not a member of the Alaska Life and Health Insurance Guaranty Association established by AS 21.79 or the Alaska Insurance Guaranty Association established by AS 21.80, the director shall take control of the insurer’s deposit made under AS 21.09.090(b) if the insurer is found to be insolvent by a proceeding under AS 21.78 or by a court of competent jurisdiction in another state. The director shall release the deposit assets to the receiver, conservator, rehabilitator, or liquidator of the insurer, or to any other properly designated official who succeeds to the management and control of the insurer’s assets.




Chapter 25. Classes of Insurance.

[Repealed, § 4 ch 120 SLA 1966. For current law, see AS 21.12.]

Chapter 27. Producers, Agents, Administrators, Brokers, Adjusters, and Managers.

Article 1. Licensing.


Sec. 21.27.010. License required.
 (a) Except as provided otherwise in this chapter, a person may not act as or represent to be an insurance producer, managing general agent, reinsurance intermediary broker, reinsurance intermediary manager, surplus lines broker, or independent adjuster in this state or relative to a subject resident, located, or to be performed in this state unless licensed under this chapter. A person may not act as or represent to be a managing general agent, reinsurance intermediary broker, or reinsurance intermediary manager representing an insurer domiciled in this state regarding a risk located outside this state unless licensed by this state.

 (b) An insurance producer, a managing general agent, a reinsurance intermediary broker, a reinsurance intermediary manager, or a surplus lines broker may not solicit or take applications for, procure, place for others, or otherwise transact business for a kind or class of insurance for which the person is not licensed.

 (c) A third-party administrator is not required to be licensed as a managing general agent if the third-party administrator
     (1) is registered under AS 21.27.630 — 21.27.660; or

     (2) only investigates and adjusts claims and is licensed under this chapter as an independent adjuster.

 (d) A licensee may not use a fictitious name or alias unless the licensee’s legal name and fictitious name or alias are on the license.

 (e) An employee of an insurer who responds to requests from existing policyholders on existing policies is not required to be licensed under this section if the employee
     (1) is not directly compensated based on volume of premiums that may result from those services; and

     (2) does not transact insurance.

 (f) A person who performs management services under a written contract for an admitted insurer is not required to be licensed as a managing general agent if
     (1) either
          (A) the person is a United States manager of the United States branch of an alien admitted insurer; or

          (B) the person’s compensation is not based on the volume of premium written; and

     (2) the person
          (A) is a wholly-owned subsidiary of the admitted insurer;

          (B) wholly owns the admitted insurer; or

          (C) is a wholly-owned subsidiary of the insurance holding company subject to AS 21.22 that owns or controls the admitted insurer.

 (g) A person who performs management services for an admitted reinsurer is not required to be licensed as a reinsurance intermediary manager if
     (1) the person’s compensation is not based on the volume of premium written and the person
          (A) is a wholly-owned subsidiary of the admitted insurer;

          (B) wholly owns the admitted insurer; or

          (C) is a wholly-owned subsidiary of an insurance holding company subject to AS 21.22 that owns or controls the admitted insurer;

     (2) the person is a United States manager of the United States branch of an alien admitted insurer; or

     (3) the person is the manager of a group, association, pool, or organization of insurers that does joint underwriting and that is subject to examination by its resident insurance regulator in a state that
          (A) the director has determined has enacted provisions substantially similar to those contained in this chapter; and

          (B) is accredited by the National Association of Insurance Commissioners.

 (h) This chapter does not apply to a person
     (1) licensed to practice as an attorney at law while the person is acting as an attorney at law; or

     (2) who sells, solicits, or negotiates a
          (A) service contract on a motor vehicle subject to registration under AS 28.10.011; or

          (B) home warranty; in this subparagraph, “home warranty” has the meaning given in AS 21.03.021(e)(2)(C).

 (i) A person licensed under AS 21.75 as an attorney-in-fact, or a person who meets the requirements for exemption from licensure under AS 21.75, is not required to be additionally licensed under this chapter while acting on behalf of subscribers and within the scope and authority of a subscribers agreement of a reciprocal insurer or exchange licensed under AS 21.75.

 (j) This section does not apply to a person who
     (1) is employed on salary or hourly wage by a person licensed under this section solely for the performance of accounting, clerical, stenographic, and similar office duties;

     (2) only secures and forwards information required for the purposes of, and does not receive a commission for, any of the following services:
          (A) performing administrative services related to
               (i) group life insurance;

               (ii) group property and casualty insurance;

               (iii) group annuities;

               (iv) group or blanket accident and health insurance;

          (B) enrolling individuals under plans for the types of insurance or annuities specified in (A) of this paragraph;

          (C) issuing certificates under plans for the types of insurance or annuities specified in (A) of this paragraph, or otherwise assisting in administering those plans;

          (D) performing administrative services related to mass-marketed property and casualty insurance;

     (3) is employed on salary by a licensee at the licensee’s place of business, is supervised by and reports directly to a licensee in the firm, and who, after explaining that the matter must be reviewed by a licensee, may
          (A) furnish premium estimates from published or printed lists of standard rates if the person does not advise, counsel, or suggest what coverage may be needed, or otherwise solicit insurance coverage;

          (B) arrange appointments for a licensee if the person does not solicit insurance coverage;

          (C) record information from an applicant or policyholder and complete for the licensee’s personal review and signature, a certificate of insurance that is not a contract of insurance; the licensee’s signature may be by facsimile;

          (D) inform a policyholder of the type of coverage shown in the licensee’s policy record if the person does not advise that an event or hypothetical event is or is not covered; or

          (E) in the physical presence of the licensee, record information from an applicant or policyholder and complete for a licensee’s personal review and personal signature, applications, binders, endorsements, or identification cards if the person discloses to the applicant or policyholder that the applicant or policyholder may review the matter with a licensee;

     (4) is an employee of an insurer or an organization employed by an insurer and is engaged in the inspection, rating, or classification of risks, or in the supervision of the training of insurance producers and is not individually engaged in the sale, solicitation, or negotiation of insurance;

     (5) advertises in this state through printed publications or electronic mass media, the distribution of which is not limited to residents of this state, if the person
          (A) performs no other insurance-related activities in this state;

          (B) does not intend to solicit in this state; and

          (C) does not sell, solicit, or negotiate insurance of risks resident, located, or to be performed in this state;

     (6) is not a resident of this state, but sells, solicits, or negotiates commercial property and casualty insurance for an insured with risks located in more than one state if the person is licensed as an insurance producer in the state where the insured maintains its principal place of business and the contract of insurance covers risks located in that state;

     (7) is a salaried full-time employee who counsels or advises the person’s employer regarding the insurance interests of the employer or of the subsidiaries or business affiliates of the employer, if the employee does not sell or solicit insurance or receive a commission from the sale or solicitation of insurance;

     (8) is an employer or association or the employer’s or association’s officer, director, employee, or the trustee of an employee trust plan, if the person is not compensated, directly or indirectly, for transacting insurance and is engaged in the administration or operation of a plan offering employee benefits for the employer’s or association’s own employees, or the employees of its subsidiaries or affiliates; to qualify under this paragraph, the plan must include insurance for employees;

     (9) is an officer, director, or employee of an admitted insurer who does not receive a commission on policies written or sold to risks resident, located, or to be performed in this state if the officer’s, director’s, or employee’s functions are executive, administrative, managerial, clerical, or a combination of these and are only indirectly related to the transaction of insurance; relate to underwriting or loss control; or are in the capacity of an agency supervisor where the activities are limited to providing technical assistance to insurance producers and whose activities do not include transacting insurance;

     (10) is an employee of a licensed independent adjuster or an employee of an affiliate of a licensed independent adjuster with not more than 25 people under the supervision of one licensed independent adjuster or licensed producer who collects or furnishes claim information for portable electronics insurance issued under AS 21.36.515 to insureds or claimants and enters the information into an automated claims adjudication system; the automated claims adjudication system must be a preprogrammed computer system designed for the collection, data entry, calculation, and final resolution of portable electronics insurance claims that
          (A) may be used only by a licensed independent adjuster, licensed agent, or supervised individuals operating under this section;

          (B) must comply with the claims payment requirements of this title; and

          (C) must be certified as compliant with this paragraph by a licensed independent adjuster that is an officer of a licensed entity under this chapter.

 (k) In addition to the business activities expressly exempt from licensing under this section, the director may adopt regulations that exempt other activities from the licensing requirements of this section.




Sec. 21.27.020. General qualifications for license.
 (a) For the protection of the people of this state, the director may not issue or renew a license except in compliance with this chapter and may not issue a license to a person, or to be exercised by a person, found by the director to be untrustworthy, incompetent, or who has not established to the satisfaction of the director that the person is qualified under this chapter.

 (b) To qualify for issuance or renewal of an individual license, an applicant or licensee shall comply with this title and regulations adopted under AS 21.06.090 and
     (1) shall be 18 years of age or older;

     (2) if for a resident license, shall be a bona fide resident before issuance of the license and actually reside in the state;

     (3) shall successfully pass an examination required under AS 21.27.060;

     (4) shall be a trustworthy person;

     (5) may not use or intend to use the license for the purpose principally of writing controlled business, as defined in AS 21.27.030;

     (6) may not have committed an act that is a cause for denial, nonrenewal, suspension, or revocation of a license in this state or another jurisdiction.

 (c) To qualify for issuance or renewal of a license as a firm insurance producer, a firm managing general agent, a firm reinsurance intermediary broker, a firm reinsurance intermediary manager, a firm surplus lines broker, or a firm independent adjuster, an applicant or licensee shall
     (1) comply with (b)(4) and (5) of this section;

     (2) maintain a lawfully established place of business in this state, except when licensed as a nonresident under AS 21.27.270;

     (3) designate one or more compliance officers for the firm, except that not more than one compliance officer may be designated for each class of authority;

     (4) provide to the director documents necessary to verify the information contained in or made in connection with the application; and

     (5) notify the director, in writing, not later than 30 days after a change in the firm’s compliance officer.

 (d) If the director finds that the applicant or licensee is qualified and that application, license, or renewal fees have been paid, the director may issue or renew the license.

 (e) [Repealed, § 94(a) ch 23 SLA 2011.]
 (f) The director may adopt regulations establishing additional education or experience requirements for applicants, licensees, and continuing education providers under this chapter upon due consideration of the availability and accessibility of education and training opportunities in rural areas of the state. Regulations adopted under this subsection are subject to the following provisions:
     (1) additional educational or experience requirements may not apply to a licensee who has been licensed by the division of insurance before January 1, 1980;

     (2) a licensee shall complete at least 24 credit hours of approved continuing education courses during each two-year license period;

     (3) if a licensee has accumulated more credit hours than required under (2) of this subsection by the end of the license period, a maximum of eight hours may be carried over to meet the requirements of (2) of this subsection in the next license period;

     (4) a program or seminar may not be approved as an acceptable continuing education program unless it is a formal program of learning that contributes to the professional competence of the licensee; individual study programs or correspondence courses may be used to fulfill continuing education requirements if approved by the director;

     (5) a nonresident licensee is exempt from the requirements of this subsection.

 (g) The director shall establish a continuing education advisory committee. The committee consists of one representative from the division of insurance, one life and health insurance representative, one property and casualty insurance representative, and one independent insurance adjuster representative. Each committee representative from the insurance industry must possess a valid, current insurance license issued in this state for the field to be represented.

 (h) The director may make arrangements, including contracting with an outside agency, for administrative services.




Sec. 21.27.025. Required notice of licensee.
 (a) A licensee shall notify the director in writing not later than 30 days after a change in residence, place of business, legal name, fictitious name or alias, mailing address, electronic mailing address, telephone number, or compliance officer. A licensee shall report to the director in writing any administrative action taken against the licensee by a governmental agency of another state, by a governmental agency of another jurisdiction, or by a financial industry regulatory authority sanction or arbitration proceeding not later than 30 days after the final disposition of the action. A licensee shall submit to the director the final order and other relevant legal documents in the action. A licensee shall report to the director any criminal prosecution of the licensee in this or another state or jurisdiction not later than 30 days after the date of filing of the criminal complaint, indictment, information, or citation in the prosecution. The licensee shall submit to the director a copy of the criminal complaint, calendaring order, and other relevant legal documents in the prosecution.

 (b) In addition to any other penalty provided by law, a failure to notify the director as required by this section is cause for denial, nonrenewal, suspension, or revocation of a license.




Sec. 21.27.030. Controlled business disqualification.
 (a) The director may not issue an insurance producer, a managing general agent, or a surplus lines broker license to a person if the director has reasonable cause to believe that the applicant for the license would, during the 12-month period immediately following issuance of the license, earn or receive an aggregate amount in commission, service fees, brokerage, or other valuable consideration, directly or indirectly, by whatever name called, represented by the controlled business that exceeds 50 percent of the aggregate amount of compensation, commission, service fees, brokerage, or other valuable consideration represented by all other insurance business that would be procured by or through the applicant.

 (b) The vendor who is title holder of property being sold under an installment purchase contract is not considered to be the owner of the property for the purposes of this section.

 (c) A licensee may not earn or receive an aggregate amount in commission, service fees, brokerage, or other valuable consideration, directly or indirectly, by whatever name called, represented by the controlled business that exceeds 50 percent of the aggregate amount in compensation, commission, service fees, brokerage, or other valuable consideration represented by all other insurance business in a calendar year.

 (d) In addition to any other penalty provided by law, a person who violates this section is subject to the penalties provided under AS 21.27.440.

 (e) “Controlled business” means insurance procured or to be procured by or through the person upon
     (1) the life, person, or property of the person or those of the person’s spouse or relatives by blood or marriage to the second degree;

     (2) the life, person, or property of the employer or firm of the person, or of an officer, director, stockholder, or member of the employer or firm of the person, other than members of mutual insurers, or of a spouse of the employer, officer, director, stockholder, or member;

     (3) the life, person, or property of the ward or employees of the person, or upon persons or property under the person’s supervision or control as trustee under an indenture or decree, or as administrator or executor of an estate.




Sec. 21.27.040. Application for license.
 (a) Application for a license shall be made to the director upon forms prescribed by the director. As a part of or in connection with the application, the applicant shall furnish information concerning the applicant’s identity, personal history, experience, business record, purposes, and other pertinent facts that the director may reasonably require. The applicant shall declare, subject to penalty of denial, nonrenewal, suspension, or revocation of a license issued by the director, that the statements made in or in connection with the application are true, correct, and complete to the best of the applicant’s knowledge and belief. Payment of an application fee established under AS 21.06.250 must be submitted with the application.

 (b) [Repealed, § 47 ch 29 SLA 1987.]
 (c) In addition to any other penalty provided by law, a person wilfully misrepresenting a fact required to be disclosed in or in connection with the application or other information required by this section is subject to the penalties provided for under AS 21.27.440.

 (d) The director may require an applicant or licensee at any time, including at the time of license renewal, to supply current information of the type made in or supplemental to an application.

 (e) As part of the application required by (a) of this section, a resident applicant shall furnish to the director a full set of fingerprints and the fees required by the Department of Public Safety under AS 12.62.160 for criminal justice information and a national criminal history record check so that the director may obtain criminal justice information as provided under AS 12.62 about the applicant. The director shall submit the completed fingerprint card and fees to the Department of Public Safety for a report of criminal justice information under AS 12.62 and a national criminal history record check under AS 12.62.400.

 (f) If, through inaction, an applicant fails to complete the application process, the applicant’s application filed with the director under (a) of this section is considered withdrawn. The withdrawal becomes effective 120 days after the filing of the application. If the director has initiated administrative action with respect to an application, withdrawal becomes effective at the time and on the conditions required by an order issued under this chapter.




Sec. 21.27.050. One filing of personal data sufficient. [Repealed, § 223 ch 67 SLA 1992.]
Sec. 21.27.060. Examination of applicants and licensees.
 (a) Except as provided in this chapter, an applicant for an individual license and a compliance officer applicant for a firm license shall, before the issuance of the license, personally take and pass, to the satisfaction of the director, an examination that tests the knowledge and competence of the applicant as to the applicant’s duties and responsibilities as a licensee and the insurance statutes and regulations of the state.

 (b) If the director determines that a licensee has violated this title or that a licensee has conducted affairs under the license that cause the director reasonably to desire further evidence of the qualifications of the licensee, the director may at any time require the licensee to personally take and pass, to the satisfaction of the director, an examination that tests the knowledge and competence of the licensee as to the licensee’s duties and responsibilities as a licensee, or the insurance laws of the state.

 (c) An individual who applies for an insurance producer license in this state who was previously licensed for the same lines of authority in that individual’s prior home state is not required to pass the examination required by (a) of this section in order to secure the same authority in this state. The exemption available under this subsection applies only if the application is received within 90 days after the cancellation of the applicant’s previous license in the applicant’s prior home state and
     (1) the applicant’s prior home state verifies that, at the time of cancellation, the applicant held an insurance producer license that was in good standing in that state; or

     (2) the insurance producer licensing database records for the prior home state that are maintained by the National Association of Insurance Commissioners or its affiliates or subsidiaries indicate that the applicant is or was licensed in good standing for the kind of license requested.

 (d) This section does not apply to an applicant
     (1) for a limited license under AS 21.27.150(a)(1), (4), (5), or (8); or

     (2) who, at any time within the one-year period immediately preceding the date the current pending application is received by the division, had been licensed in good standing in this state under a license requiring substantially similar qualifications as required by the license applied for.

 (e) The director may make available a printed manual specifying in general terms the subjects that may be covered in an examination for a particular license.




Sec. 21.27.070. Scope of examination. [Repealed, § 223 ch 67 SLA 1992.]
Sec. 21.27.080. Examinations.
 (a) The answers of the applicant to an examination shall be written by the applicant under the director’s supervision, and the written examination may be supplemented by oral examination at the director’s discretion.

 (b) The director shall give examinations at the times and places that the director considers necessary to reasonably serve the convenience of the director, applicants, and licensees.

 (c) The director may require a waiting period of reasonable duration before giving a new examination to an applicant who has failed to pass a previous similar examination.

 (d) The director may make arrangements, including contracting with an outside testing service, for administering examinations and collecting a nonrefundable fee.




Secs. 21.27.090 , 21.27.095. Qualifications for licensing; licensing of general agents. [Repealed, § 223 ch 67 SLA 1992.]
Sec. 21.27.100. Appointment of insurance producer, managing general agent, and reinsurance intermediary manager; acts of agent.
 (a) An appointment is required to be made in accordance with this section when one or more of the following has occurred:
     (1) an admitted insurer appoints a managing general agent in this state or relative to a subject resident, located, or to be performed in this state;

     (2) a managing general agent appoints an insurance producer as its subagent in this state or relative to subjects resident, located, or to be performed in this state;

     (3) a domestic reinsurer appoints a reinsurance intermediary manager;

     (4) a reinsurance intermediary manager appoints an insurance producer as its subagent in this state.

 (b) An admitted insurer shall appoint an insurance producer as its agent in this state or relative to a subject resident, located, or to be performed in this state not later than 30 days after the date that a written agency contract is executed or the first insurance application is submitted to the admitted insurer by the licensed insurance producer.

 (c) An individual who has entered into an employment contract with a licensed firm that is appointed as an agent or a managing general agent on behalf of an admitted insurer under this section may not be required to also have an appointment under this section if the individual has entered into an employment contract with that firm for a specific class of authority.

 (d) The authorized or apparently authorized acts on behalf of an appointing insurer of an insurance producer appointed under this section are considered the acts of that insurer.

 (e) An insurer and managing general agent shall maintain a current list of all appointments made or required to be made under this section that identifies the licensee’s name, licensee’s mailing address, license number, and effective date of appointment.

 (f) An insurance producer shall maintain a list of all appointments made or required to be made under this section that identifies the insurer’s name, insurer’s mailing address, and effective date of appointment.

 (g) An insurer, managing general agent, or insurance producer shall reply in writing within three working days to an inquiry of the director regarding an appointment.




Sec. 21.27.110. Term of appointment.
 (a) An appointment under AS 21.27.100 continues in force until the appointment is terminated in writing.

 (b) If an insurer, reinsurer, or authorized representative discovers information showing that the appointee whose appointment was terminated has engaged in an activity identified in AS 21.27.410 during the period of the appointment, the insurer, reinsurer, or authorized representative shall, on a form or in a format prescribed by the director, promptly notify the director.

 (c) Within 15 days after providing notification in accordance with (b) of this section, the insurer, reinsurer, or authorized representative shall mail a copy of the notification to the appointee at the last address on record with the insurer, reinsurer, or authorized representative. The notice must be provided by certified mail, return receipt requested, postage prepaid, or by overnight delivery using a nationally recognized mail carrier.

 (d) Within 30 days after the appointee receives notification in accordance with (c) of this section, the appointee may file written comments concerning the substance of the notification with the director and shall provide a copy of the written comments to the insurer, reinsurer, or authorized representative. The written comments filed with the director must be included with each report distributed or disclosed concerning a reason about the termination of the appointment.

 (e) If requested by the director, an insurer, a reinsurer, or an authorized representative shall provide to the director additional information, documents, records, or other data pertaining to a termination or activity of a licensee under this title.

 (f) A notice of termination submitted to the director under this section must include a statement of the reasons for the termination. A statement of the reasons for termination is confidential and not subject to inspection and copying under AS 40.25.110. A statement of reasons for the termination may not be admitted as evidence in a civil action or an administrative proceeding against an insurer, reinsurer, or authorized representative by or on behalf of a person affected by the termination, except when the action or proceeding involves perjury, unsworn falsification in the second degree, fraud, or failure to comply with this subsection.

 (g) If an insurer, a reinsurer, or an authorized representative fails to report as required under this section or is found by a court to have knowingly or intentionally falsely made that report, the director may, after notice and hearing, suspend or revoke the license or certificate of authority of the insurer, reinsurer, or authorized representative and may impose a penalty in accordance with AS 21.27.440.




Sec. 21.27.115. Lines of authority.
If a person has met the applicable requirements of AS 21.27.020 and 21.27.270, the director shall issue a license for one or more of the following lines of authority:
     (1) life insurance coverage on natural persons; in this paragraph, “life insurance coverage”
          (A) includes benefits of endowment and annuities; and

          (B) may include benefits in the event of death or dismemberment by accident and benefits for disability income;

     (2) health insurance coverage for sickness, bodily injury, or accidental death; in this paragraph, “health insurance coverage” may include benefits for disability income;

     (3) property insurance coverage for the direct or consequential loss for damage to property of every kind;

     (4) casualty insurance coverage against legal liability, including that for death, injury, or disability or damage to real or personal property; in this paragraph, “casualty insurance” includes surety insurance as defined in AS 21.12.080;

     (5) variable life and variable annuity products insurance coverage;

     (6) personal lines property and casualty insurance coverage sold to individuals and families for primarily noncommercial purposes;

     (7) limited lines credit insurance;

     (8) [Repealed, § 66 ch 41 SLA 2016.]
     (9) [Repealed, § 66 ch 41 SLA 2016.]
     (10) any insurance for which a limited lines license may be issued under AS 21.27.150.




Sec. 21.27.120. Revocation of appointment. [Repealed, § 223 ch 67 SLA 1992.]
Sec. 21.27.130. Form and content of licenses.
 (a) A license must be in the form the director prescribes and must set out
     (1) the name and address of the licensee and, if the licensee is required to have a place of business, the physical address of the place of business;

     (2) the type, class, and lines of authority the licensee is licensed to handle;

     (3) the effective date and expiration date of the license;

     (4) each condition, if any, under which the license is granted;

     (5) the date of issuance of the license;

     (6) each fictitious name and alias under which the licensee may do business; and

     (7) other information required by the director.

 (b) A license issued by the director does not in itself create any authority, actual, apparent, or inherent, in the holder of the license to represent or commit an insurer.




Sec. 21.27.140. Firm licenses.
 (a) A firm shall have a firm license, the scope of which includes all lines and classes of authority of each individual employee of the firm.

 (b) A firm may not be licensed as an insurance producer, managing general agent, reinsurance intermediary broker, reinsurance intermediary manager, surplus lines broker, or independent adjuster, or transact insurance unless each individual employed by the firm as an insurance producer, managing general agent, surplus lines broker, trainee independent adjuster, or independent adjuster is licensed and has entered into an employment contract with the firm.

 (c) If the director determines under AS 21.06.170 — 21.06.240 that a firm knew or should have known of an act or representation made on the firm’s behalf by a person not licensed as required by this chapter, the firm and the firm’s compliance officer are subject to the penalties provided under AS 21.27.440.




Sec. 21.27.150. Limited licenses.
 (a) The director may issue a
     (1) travel insurance limited producer license to a person who is appointed under AS 21.27.100 and who sells travel insurance; in this paragraph, “travel insurance” has the meaning given in AS 21.27.152;

     (2) title insurance limited producer license to a person whose place of business is located in this state and whose sole purpose is to be appointed by and act on behalf of a title insurer;

     (3) bail bond limited producer license to a person who is appointed by and acts on behalf of a surety insurer pertaining to bail bonds;

     (4) motor vehicle rental agency limited producer license to a person and, subject to the approval of the director, to employees of the person licensed that the licensee authorizes to transact the business of insurance on the licensee’s behalf if, as to an employee, the licensee complies with (D) of this paragraph and if the licensee
          (A) rents to others, without operators,
               (i) private passenger motor vehicles, including passenger vans, minivans, and sport utility vehicles; or

               (ii) cargo motor vehicles, including cargo vans, pickup trucks, and trucks with a gross vehicle weight of less than 26,000 pounds that do not require the operator to possess a commercial driver’s license;

          (B) rents motor vehicles only to persons under rental agreements that do not exceed a term of 90 days;

          (C) transacts only the following kinds of insurance:
               (i) motor vehicle liability insurance with respect to liability arising out of the use of a vehicle rented from the licensee during the term of the rental agreement;

               (ii) uninsured or underinsured motorist coverage, with minimum limits described in AS 21.96.020(c) and (d) arising from the use of a vehicle rented from the licensee during the term of the rental agreement;

               (iii) insurance against medical, hospital, surgical, and disability benefits to an injured person and funeral and death benefits to dependents, beneficiaries, or personal representatives of a deceased person if the insurance is issued as incidental coverage with or supplemental to liability insurance and arises out of the use of a vehicle rented from the licensee during the term of the rental agreement;

               (iv) personal effects insurance, including loss of use, with respect to damage to or loss of personal property of a person renting the vehicle and other vehicle occupants while that property is being loaded into, transported by, or unloaded from a vehicle rented from the licensee during the term of the rental agreement;

               (v) towing and roadside assistance with respect to vehicles rented from the licensee during the term of the rental agreement; and

               (vi) other insurance as may be authorized by regulation by the director;

          (D) notifies the director in writing, not later than 30 days after employment, of the name, date of birth, social security number, location of employment, and home address of an employee authorized by the licensee to transact insurance on the licensee’s behalf; and

          (E) provides other information as required by the director;

     (5) nonresident limited producer license to a person; a license that the director issues under this paragraph grants the same scope of authority as a limited lines producer license issued to the person by the person’s home state;

     (6) credit insurance limited producer license to a person who sells limited lines credit insurance;

     (7) miscellaneous limited producer license to a person who transacts insurance in this state that restricts the person’s authority to less than the total authority for a line of authority described in AS 21.27.115(1) — (6);

     (8) portable electronics limited producer license to a vendor that sells or offers portable electronics insurance as defined in AS 21.36.515; the following provisions apply to a license issued under this paragraph:
          (A) a vendor shall file with the director a sworn application for a license under this paragraph on a form prescribed and furnished by the director; the vendor shall provide the name, residence address, location of the vendor’s home office, and other information required by the director for an employee or officer that is designated by the vendor as the person responsible for the vendor’s compliance with the requirements of this chapter; however, if the vendor derives more than 50 percent of its revenue from the sale of portable electronics insurance, the vendor shall provide the information required under this subparagraph for all officers, directors, and shareholders of record having beneficial ownership of 10 percent or more of any class of securities registered under the federal securities law;

          (B) a portable electronics limited producer license issued under this paragraph must authorize the employees or authorized representatives of a vendor to transact portable electronics insurance at each location at which a vendor offers portable electronics to customers in this state; and

          (C) the employees or authorized representatives of the vendor may transact portable electronics insurance and are not required to obtain a limited producer license if
               (i) the employees or authorized representatives are not compensated based primarily on the number of customers enrolled for coverage; however, an employee or authorized representative may receive compensation for activities under the license that is incidental to the employee’s or authorized representative’s overall compensation;

               (ii) the insurer issuing the portable electronics insurance provides a training program for employees and authorized representatives of the portable electronics limited producer licensee that includes instruction about the portable electronics insurance offered to customers and the disclosures required under AS 21.36.515; and

               (iii) the vendor maintains a register of each location in the state where the vendor offers portable electronics insurance and submits the register to the director not later than 30 days after the director requests the register;

     (9) crop insurance limited producer license to a person who sells or offers crop insurance coverage for damage to crops from unfavorable weather conditions, fire or lightning, flood, hail, insect infestation, disease, or other yield- reducing conditions or perils provided by the private insurance market or that is subsidized by the Federal Crop Insurance Corporation, including multi-peril crop insurance.

 (b) [Repealed, § 82 ch 81 SLA 2001.]




Sec. 21.27.152. Travel insurance.
 (a) A person that makes, arranges, or offers travel services may transact travel insurance by offering, issuing for delivery, issuing, or renewing travel insurance to its customers on behalf of and under the direction of a person holding a travel insurance limited producer license under AS 21.27.150.

 (b) A person may transact travel insurance under (a) of this section only if the person is included in the register maintained by the travel insurance limited producer under (e)(1) of this section.

 (c) A person transacting travel insurance under (a) of this section may not
     (1) evaluate or interpret the terms, benefits, and conditions of travel insurance;

     (2) evaluate or provide advice concerning a prospective purchaser’s existing insurance coverage; or

     (3) represent that the person is a licensed insurer, licensed producer, or insurance expert.

 (d) A person transacting travel insurance under (a) of this section shall provide to its prospective customers
     (1) a description of the terms of the insurance coverage;

     (2) a description of the claims process;

     (3) a description of the review and return or cancellation process;

     (4) the identity and contact information for the insurer and the travel insurance limited producer;

     (5) notice that a customer is not required to purchase travel insurance as a condition to purchasing other travel products or services; and

     (6) a statement that a person transacting travel insurance may provide general information about the insurance offered, including a description of the coverage and price, but is not qualified or authorized to answer questions about the terms and conditions of the insurance offered or to evaluate the adequacy of the customer’s insurance coverage.

 (e) A travel insurance limited producer licensed under this section shall
     (1) maintain, in a format prescribed by the director, a register of each person who transacts travel insurance on behalf of and under the direction of the travel insurance limited producer and make the register available to the director on request; the register must include
          (A) the identity and contact information of the person transacting travel insurance;

          (B) the identity of a person who directs or controls the person who transacts travel insurance; and

          (C) the federal employment identification number of a person who directs or controls the person who transacts travel insurance;

     (2) certify that the person transacting travel insurance complies with 18 U.S.C. 1033; and

     (3) require a person transacting travel insurance satisfactorily to complete a training program that, at a minimum, contains instruction on the type of insurance offered, ethical practices, and the disclosures that must be provided to its prospective customers; the training program may be reviewed by the director.

 (f) A travel insurance limited producer is liable for the acts of a person transacting travel insurance on behalf of and under the direction of the producer. The travel insurance limited producer shall designate one of its employees as the person responsible for the travel insurance limited producer’s compliance with applicable travel insurance laws and regulations.

 (g) Travel insurance may be provided under an individual policy or under a group or master policy.

 (h) In this section, “travel insurance”
     (1) means insurance coverage for personal risks connected to travel, including
          (A) trip interruption or cancellation;

          (B) lost baggage or personal effects;

          (C) damage to accommodations or rental vehicles; or

          (D) sickness, accident, disability, or death occurring during travel;

     (2) does not include comprehensive medical insurance that provides coverage during trips lasting six months or longer.




Sec. 21.27.160. Scope of licenses.
An insurance producer, managing general agent, reinsurance intermediary broker, reinsurance intermediary manager, surplus lines broker, or independent adjuster is only required to have one license inclusive of all kinds or combination of kinds or all classes or combination of classes of insurance the insurance producer, managing general agent, reinsurance intermediary broker, reinsurance intermediary manager, surplus lines broker, or independent adjuster is licensed to handle.


Sec. 21.27.170. Insurance vending machines license. [Repealed, § 82 ch 81 SLA 2001.]
Sec. 21.27.180. Scope of broker license. [Repealed, § 47 ch 51 SLA 1990.]
Sec. 21.27.190. Bond.
 (a) In addition to any other requirements in this title, a bond required under this title or an alternative indemnity permitted under this section shall meet the following requirements:
     (1) it shall be continuous in form;

     (2) it shall remain in force until the licensee is released from liability by the director or until cancelled by the issuer;

     (3) without prejudice to any liability accrued before the effective cancellation, it may be cancelled if the director receives 60 days advance written notice;

     (4) the amount required to be maintained must be maintained unimpaired; and

     (5) it shall be in favor of insurers, insureds, and this state.

 (b) A bond may only be issued by an admitted insurer authorized to transact surety insurance in this state, or by a surplus lines insurer on the most recent list of eligible surplus lines insurers published by the director, that is acceptable to the director.

 (c) For a firm licensee, a single bond or an alternative indemnity permitted under this section may combine the sureties required
     (1) by separate sections of this title; and

     (2) for separate places of business.

 (d) [Repealed, § 83 ch 81 SLA 2001.]
 (e) Except as provided in this title, the director may adopt, by regulation, a deposit of cash, a certificate of deposit, or letter of credit as an alternative to a bond if the deposit of cash, certificate of deposit, or letter of credit meets the requirements of this section, other provisions of this title, and other requirements established by the director.




Secs. 21.27.200 , 21.27.210. Broker’s authority and commissions; agent-broker combinations. [Repealed, § 223 ch 67 SLA 1992.]
Sec. 21.27.215. Employment contracts.
 (a) A firm may enter into an employment contract with a licensed individual to conduct business under the supervision of and in the name of the firm. The employment contract must be in writing and must specify the lines and classes of authorities of the individual and the firm. The individual and the firm shall retain a copy of the contract and shall reply in writing within three working days to an inquiry of the director regarding any business transacted by the individual and the firm.

 (b) The firm shall examine the credentials of the individual to determine that the individual is licensed to conduct the kinds of business described in the contract.

 (c) A licensed individual may, if authorized by the firm and an insurer for which the firm is an agent, issue on the firm’s behalf contracts of insurance in accordance with a written agency employment contract.

 (d) A firm shall be responsible for the actions of an individual transacting insurance under the firm’s employment contracts. In any disciplinary proceeding under this title, the existence of the employment contract shall be prima facie evidence that the firm knew of the activities of the individual.

 (e) The individual and the firm shall maintain a current list of all of their respective contracts that identifies, for each contract, the parties to the contract, the parties’ mailing addresses, electronic mailing addresses, and telephone numbers, and the parties’ license numbers, and the effective and termination dates of employment.

 (f) A licensee shall retain the records of an employment contract and make the records available for examination and inspection by the director, at any business time during the five years immediately following the date of the termination of the employment contract unless the director orders a longer period of retention. If the licensee assumes the business of another licensee or former licensee by merger, purchase, or otherwise, the requirements of AS 21.27.350(c) apply.




Secs. 21.27.220 , 21.27.230. Solicitor’s qualifications; application for solicitor’s license. [Repealed, § 47 ch 51 SLA 1990.]
Secs. 21.27.240 — 21.27.260. Fee for and custody of solicitor’s license; limitations; employer’s responsibility. [Repealed, § 223 ch 67 SLA 1992.]
Sec. 21.27.270. Licensing of nonresidents.
 (a) In accordance with P.L. 106-102 (Gramm-Leach-Bliley Act), the director shall issue a license to a nonresident license applicant on terms that are reciprocal with those of the applicant’s home state. Notwithstanding any contrary provision of this chapter, the director may by order waive any license application requirement in this chapter to achieve reciprocity to license a nonresident in accordance with P.L. 106-102 (Gramm-Leach-Bliley Act).

 (b) Unless the director denies or refuses to renew a license under AS 21.27.410, the director shall issue a nonresident producer, limited lines, surplus lines broker, managing general agent, reinsurance intermediary broker, or reinsurance intermediary manager license to a person who is not a resident of this state if
     (1) the person is currently licensed and is in good standing in the person’s home state; the director may verify the person’s licensing status through the producer licensing database records maintained by the National Association of Insurance Commissioners or its affiliates or subsidiaries;

     (2) the person has paid the fees required under AS 21.06.250 and has submitted to the director
          (A) the license application the person submitted to the person’s home state; or

          (B) if the person is not a firm, a completed uniform application or, if a firm, the uniform business entity application; and

     (3) the person’s home state awards nonresident producer, limited lines, surplus lines, managing general agent, reinsurance intermediary broker, and reinsurance intermediary manager licenses to residents of this state on the same basis as does this state.

 (c) Notwithstanding (b) of this section, the director may require a person applying for a
     (1) nonresident license to furnish the person’s fingerprints as required of a person applying for a license under AS 21.27.040(e);

     (2) surplus lines broker license under this section to have, and maintain while licensed in this state, the bond required of a person applying for a license under AS 21.27.790(2); and

     (3) nonresident license to comply with the premium fiduciary account requirements of AS 21.27.360 and the regulations adopted under that statute.

 (d) A person licensed as a limited lines producer in the person’s home state shall receive a nonresident limited lines producer license granting the same scope of authority as the license issued by the producer’s home state.

 (e) In addition to the other requirements of this chapter, a person may not be licensed as a nonresident licensee until the person files a power of attorney as follows:
     (1) an applicant shall appoint the director as attorney to receive service of legal process issued against the licensee in this state upon a cause of action arising in this state or relative to a subject resident, located, or to be performed in this state; service upon the director as attorney shall constitute effective legal service upon the licensee; and

     (2) the appointment shall be irrevocable for as long as there could be a cause of action against the licensee arising out of an insurance transaction in this state or relative to a subject resident, located, or to be performed in this state.

 (f) Duplicate copies of legal process against a licensed or formerly licensed nonresident licensee shall be served upon the director either by a peace officer or through certified mail with return receipt requested. At the time of service, the plaintiff shall pay to the director a fee set under AS 21.06.250.

 (g) Upon receiving a service of process, the director shall immediately send one of the copies of the process by certified mail, return receipt requested, to the licensed or formerly licensed nonresident licensee at the last address of record filed with the director.

 (h) A nonresident applicant for an independent adjuster license who only adjusts claims related to portable electronics insurance under AS 21.36.515 and who is licensed as an independent adjuster and in good standing in the applicant’s home state does not have to meet the requirements of AS 21.27.060 or 21.27.830 to be licensed under this section. A resident of Canada may not be licensed as an independent adjuster under this section unless the applicant has obtained a resident independent adjuster license in another state or declared another state the applicant’s home state and obtained an independent adjuster license in that state.

 (i) If a nonresident independent portable electronics adjuster applicant’s home state does not license independent adjusters, the independent portable electronics adjuster applicant may designate the applicant’s home state as any state in which the applicant is licensed in good standing.




Sec. 21.27.275. Alien licensees.
The director may issue a license authorized by this chapter to a nonresident of this state who does not have a home state if that person meets all the requirements of this chapter for that license applicable to a resident of this state applying for the same license.


Sec. 21.27.280. Director as agent for service of process. [Repealed, § 223 ch 67 SLA 1992.]
Secs. 21.27.290 , 21.27.300. Adjuster’s qualifications; contents of license. [Repealed, § 47 ch 51 SLA 1990.]
Secs. 21.27.310 , 21.27.320. Trainee adjusters; agent or general agent as adjuster; nonresident adjusters. [Repealed, § 223 ch 67 SLA 1992.]
Sec. 21.27.330. Place of business.
 (a) A person licensed under this chapter shall have and maintain at least one place of business that is physically accessible to the public in this state unless the person holds a nonresident license and principally conducts transactions in another state. However, the nonresident licensee must have at least one physically accessible place in the nonresident licensee’s home state. The requirements of this subsection do not apply to a nonresident independent portable electronics adjuster that has designated a state or territory other than the nonresident adjuster’s resident state as the nonresident adjuster’s home state or to a licensee who only conducts business in life or health insurance or annuities.

 (b) [Repealed, § 34 ch 1 FSSLA 2005.]




Sec. 21.27.340. Public display of license. [Repealed, § 94(a) ch 23 SLA 2011.]
Sec. 21.27.350. Records of licensees.
 (a) A licensee shall document each action taken in regard to an insurance transaction. The documentation must contain all notes, work papers, documents, and similar material, and be in sufficient detail that relevant events, the dates of those events, and all persons participating in those events can be identified. The documentation must include a record of each insurance contract procured, issued, or countersigned, together with the names of the insurers and insureds, the amount of premium paid or to be paid, and a statement of the subject of the insurance; the names of other licensees from whom business is accepted, and of persons to whom commissions or allowances are promised or paid; and a record of each investigation or adjustment undertaken or consummated, and a statement of the fee, commission, or other compensation received or to be received on account of the investigation or adjustment.

 (b) A licensee shall keep at the licensee’s place of business or at the place of business of an admitted insurer a complete record of transactions under the license. An admitted insurer shall maintain records received from a licensee as required by this section.

 (c) The records of a particular transaction shall be retained and kept open for examination and inspection by the director at any business time during the five years immediately after the date of the completion of the transaction or 10 years for reinsurance transactions, unless the director orders a longer period of retention. If a licensee assumes the business of another licensee or former licensee by merger, purchase, or otherwise, the compliance officer of the assuming licensee firm shall provide to the director in writing each location where the assumed licensee’s records are maintained by the assuming licensee during the period in which the records must be kept available and open to the inspection of the director. A formerly licensed person shall provide to the director in writing each location where records shall be maintained during the period in which the records of a particular transaction must be kept available and open to the examination and inspection of the director. A formerly licensed person may, with the permission of the director, arrange to have a current licensee or the home office of the last known insurer of each policyholder maintain the records open to the examination and inspection of the director during the period in which the records must be maintained.

 (d) In addition to the record required under (a) of this section, a licensee shall have and maintain at the licensee’s principal place of business current accounting and financial records maintained under generally accepted accounting principles.

 (e) A licensee shall reply in writing within 10 working days to a records inquiry of the director. The director may inspect or request summary or detailed copies of records for examination by the division. Accounting and financial records inspected or examined under this section are confidential when in the possession of the division, but may be used by the director in a proceeding against the licensee. For purposes of this section, the records of a firm shall include and be considered the records of an individual licensee who has entered into an employment contract with the firm.




Sec. 21.27.360. Reporting and accounting for premiums and premium taxes and fees.
 (a) A licensee involved in the procuring or issuance of an insurance contract shall report to the insurer the exact amount of consideration charged as a premium for the contract. The amount charged shall be shown in the contract and in the records of the licensee.

 (b) Except as provided under (h) of this section, all money, except that made payable to the insurer, representing premium taxes and fees, premiums, or return premiums received by the licensee shall be received by the licensee as a fiduciary and shall be promptly accounted for and paid to the person entitled to the money. Money held by the licensee as a fiduciary may not be commingled or otherwise combined with other money not held by the licensee as a fiduciary.

 (c) In addition to any other penalty provided by law, a person who the director has determined has acted to divert or appropriate money held as a fiduciary for personal use shall be ordered to make restitution and shall be subject to suspension or revocation under AS 21.27.420 — 21.27.430 of all licenses and a civil penalty not to exceed $50,000 for each violation.

 (d) A licensee may only commingle premium taxes and fees, premiums, and return premiums with additional money for the purpose of advancing premiums, establishing reserves for the payment of return premiums, or reserves for receiving and transmitting premium or return premium money.

 (e) Money held by a licensee as a fiduciary may not be treated as a personal asset, as collateral for a personal or business loan, or as a personal asset or income on a financial statement, except that money held by the licensee as a fiduciary may be included in a financial statement of the licensee if clearly identified as assets held by the licensee as a fiduciary.

 (f) This section does not apply to an individual licensee who has entered into an employment contract with a firm and who acts solely on behalf of a firm that maintains compliance with this section.

 (g) [Repealed, § 223 ch 67 SLA 1992.]
 (h) A licensee who transacts the business of insurance under a motor vehicle rental agency limited producer license under AS 21.27.150(a)(4) is not required to hold money collected from a person for the purchase of rental motor vehicle insurance coverage in a separate fiduciary account if
     (1) the fees for the rental insurance coverage are itemized and are a part of a rental motor vehicle transaction; and

     (2) the insurer has given written consent that the money need not be segregated from other money received by the licensee and the consent is signed by an officer of the insurer.

 (i) The director of insurance may adopt regulations to implement, define, and enforce this section.




Sec. 21.27.365. Deposit or surety bond in place of fiduciary account. [Repealed, § 83 ch 81 SLA 2001.]
Sec. 21.27.370. Sharing compensation.
 (a) Except as provided in (c) and (d) of this section, a licensee may not compensate a person, other than a licensee who is acting within the scope of the person’s license, for transacting insurance in this state or relative to a risk resident, located, or to be performed in this state.

 (b) Except as provided in (c) and (d) of this section, a person may not be promised or paid, directly or indirectly, compensation for transacting a kind or class of insurance for which the person is not then licensed to transact or for insurance that the person is prohibited by this title from transacting.

 (c) An unlicensed person who refers a customer or potential customer to a licensee and who does not discuss specific terms and conditions of a policy or give opinions or advice regarding insurance may be compensated for the referral, if the compensation
     (1) for each referral is
          (A) nominal;

          (B) on a one-time basis; and

          (C) fixed in amount by referral;

     (2) does not depend on whether the customer or potential customer purchases the insurance; and

     (3) is not contingent on the volume of insurance transacted.

 (d) An insurer or insurance producer may compensate an insurance agency or another person if that person does not transact the business of insurance in this state and the payment does not violate AS 21.36.100 or 21.36.120.

 (e) A person who is no longer licensed in this state may be paid renewal or other deferred compensation for selling, soliciting, or negotiating insurance in this state if the person
     (1) was required to be licensed under this chapter at the time of the sale, solicitation, or negotiation; and

     (2) held that required license.

 (f) In addition to any other penalty provided by law, the director may suspend or revoke the license of a licensee participating in a violation of this section. The director may order a licensee who violates this section to pay a penalty of not more than three times the compensation promised or paid.




Sec. 21.27.380. License renewal, expiration, and reinstatement.
 (a) Except as provided in this title, the director may renew a license biennially on a date set by the director if the licensee continues to be qualified under this chapter and, on or before the license expiration date, meets all renewal requirements established by regulation, submits a renewal application, and pays the renewal license fees set under AS 21.06.250 for each license authority to the director. A licensee is responsible for knowing the date that a license expires and for renewing a license before expiration. The director shall notify the licensee of the license renewal 30 days before the renewal date.

 (b) If a license is not renewed on or before the renewal date set by the director, the license expires. A licensee may not act as or represent to be an insurance producer, managing general agent, reinsurance intermediary broker, reinsurance intermediary manager, surplus lines broker, or independent adjuster during the time a license has expired. The director may reinstate an expired license if the person continues to qualify for the license and pays renewal license fees and a delayed renewal penalty. Reinstatement does not exempt a person from a penalty provided by law for transacting business while unlicensed. A license may not be renewed if it has expired for two years or longer.

 (c) If a licensee does not wish to renew a license issued under this chapter, the licensee shall surrender the license to the director on or before the close of business of the renewal date in the manner prescribed in AS 21.27.460.

 (d) The director shall mail a notice of expiration stating the reason for the expiration to a licensee at the licensee’s last address on record with the director. The director shall obtain a certificate of mailing from the United States Postal Service.

 (e) A trainee license issued to an independent adjuster shall be for a term not to exceed 12 months and may not be renewed.

 (f) [Repealed, § 14 ch 6 SLA 2012.]




Sec. 21.27.390. Temporary license.
 (a) The director may issue a temporary license only to a person who, except for experience, training, or the taking of an examination, meets all qualifications for a permanent license and if the person is
     (1) the surviving spouse, next of kin, or the administrator or executor of a deceased licensed insurance producer or managing general agent;

     (2) the spouse, next of kin, employee, or legal guardian of a licensed insurance producer or managing general agent who is disabled from transacting insurance because of sickness, mental illness, or injury;

     (3) a surviving member, officer, or employee of a firm licensed as insurance producer or managing general agent upon the death of the compliance officer of the firm holding the same licenses as the firm; or

     (4) the designee of a licensed insurance producer who enters active service in the armed forces of the United States, but only for insurance relating to insurers for whom the licensee was acting as an agent.

 (b) Except as otherwise provided by law, a temporary license may not be in effect for more than 90 consecutive days and may not be renewed or reissued for more than one additional 90-day period.

 (c) A temporary licensee may not be appointed by an insurer for which a licensed insurance producer or managing general agent was not appointed at the time of death or commencement of disability.

 (d) This section does not apply to a temporary license issued under AS 14.43.148.




Sec. 21.27.400. Temporary license limitations. [Repealed, § 223 ch 67 SLA 1992.]
Sec. 21.27.405. Hearing and order on violation.
 (a) On the complaint of a person or on the motion of the director, the director may conduct an investigation to determine whether a person has violated this chapter.

 (b) If the director determines that a person has violated this chapter, the director shall serve an order upon the person charged requiring that person to cease and desist from engaging in the act or practice. A person aggrieved by the cease and desist order may demand a hearing under AS 21.06.170 — 21.06.240.

 (c) If the director believes that a person has violated a cease and desist order issued under (b) of this section, the director may certify the relevant facts to the superior court for proceedings under AS 44.62.590. In addition to the penalties and remedies provided for in AS 44.62.590, the superior court, upon finding that the cease and desist order has been violated, may order the violator to comply with the order, pay a penalty of not more than $100,000 for each violation, revoke or suspend the violator’s license, and bar the violator from transacting the business of insurance in the future.




Sec. 21.27.410. Denial, nonrenewal, suspension, or revocation of licenses.
 (a) The director may deny issuance of or not renew a license or may suspend or revoke a license issued under this chapter for any of the following:
     (1) a cause for which issuance of the license or its renewal could have been denied had it then existed and been known to the director;

     (2) a violation or participation in a violation of a provision of this title;

     (3) wilful misrepresentation or fraud by the licensee or applicant to obtain or attempt to obtain a license;

     (4) misappropriation, conversion to personal use, or illegally withholding money required to be held in a fiduciary capacity by a licensee or applicant;

     (5) with intent to deceive, material misrepresentation of the terms or effect of an insurance contract by a licensee or applicant;

     (6) twisting in violation of AS 21.36.050 or rebating in violation of AS 21.36.100 by a licensee or applicant;

     (7) conviction of a felony;

     (8) the conduct of affairs under a license if the licensee exhibits conduct considered by the director to reflect incompetence or untrustworthiness, or to be a source of potential injury and loss to the public;

     (9) the licensee or applicant dealing with, or attempting to deal with, or to exercise a power relative to, insurance outside the scope of the license of the licensee or applicant;

     (10) a licensee or applicant engaging in or about to engage in an unfair or fraudulent insurance transaction;

     (11) suspension or revocation of a license in another jurisdiction;

     (12) forgery of another’s name to an application for insurance by a licensee or applicant;

     (13) accepting insurance business from a person not licensed as required by this title if the applicant or licensee knew or should have known that the person was unlicensed.

 (b) The license of a firm and its compliance officer may be denied, nonrenewed, suspended, or revoked for a violation or cause that relates to a person representing or acting on behalf of the firm.




Sec. 21.27.420. Procedure for suspending, revoking, or conditioning a license.
 (a) After a hearing under AS 21.06.170 — 21.06.240, if the director determines that a person has violated a provision of this title and that the person’s license should be suspended or revoked, the director shall issue an order effective 10 days after the date of issuing that the license is suspended or revoked.

 (b) After a hearing under AS 21.06.170 — 21.06.240, if the director determines the person has violated a provision of this title, the director may place conditions on a person’s license if the director finds that the conditions will protect the public from injury or potential injury.

 (c) With the consent of an applicant or licensee, the director may issue or renew a license with restrictions upon the scope of the person’s license or may otherwise restrict or condition the activities of the licensee if the director determines that the person has violated the provisions of this title or to protect the public from injury or potential injury.

 (d) Without prior hearing, the director may order summary suspension of a license if the director finds that protection of the public requires emergency action and incorporates that finding in an order. The suspension is effective on the date specified in the order or on the date of mailing by first class mail to the licensee’s business address on record with the division, whichever is later. If the licensee requests a hearing, the director shall conduct a hearing on the suspension within a reasonable time but not later than 20 days after the effective date of the summary suspension unless the person whose license is suspended requests a later date. At the hearing, the director shall determine if the suspension should be continued or withdrawn and, if proper notice is given, may determine if the license should be revoked. The director shall issue a decision within 30 days after the conclusion of the hearing. If the director decides to continue the suspension or revoke the license, the suspension or revocation must be based on one or more grounds in AS 21.27.410. The summary suspension continues until the decision is issued. AS 21.06.190 and AS 44.64.030 are not applicable to a hearing under this subsection.




Sec. 21.27.430. Suspensions and revocations.
 (a) An order suspending a license shall specify the period during which the license is suspended. A period of suspension may not exceed 12 months.

 (b) An order revoking a license shall specify the period during which the person may not seek to be licensed in this state or licensed relative to a subject resident, located, or to be performed in this state.

 (c) In addition to any other penalty provided by law, a person whose license has been suspended or revoked shall pay a penalty equal to all or a portion of the compensation received during the suspension or revocation relating to the transaction of insurance.




Sec. 21.27.440. Penalties.
 (a) In addition to any other penalty provided by law, a person that the director determines under AS 21.06.170 — 21.06.240 has violated the provisions of this chapter is subject to
     (1) a civil penalty equal to the compensation promised, paid, or to be paid, directly or indirectly, to a person in regard to each violation;

     (2) either a civil penalty of not more than $10,000 for each violation or a civil penalty of not more than $25,000 for each violation if the director determines that the person wilfully violated the provisions of this chapter; and

     (3) denial, nonrenewal, suspension, or revocation of a license.

 (b) An order issued by the director that levies a civil penalty shall specify the time period within which the civil penalty must be fully paid. The period may not be less than 15 days or more than one year after the date of the order. Upon failure to pay a civil penalty when due, the director shall revoke, without further hearing, all licenses of the licensee not already revoked.




Sec. 21.27.450. Fine in lieu of action against the license. [Repealed, § 223 ch 67 SLA 1992.]
Sec. 21.27.460. Return of license.
 (a) A license issued under this chapter is the property of the state. Within 10 days of an order or notice of nonrenewal, suspension, or revocation of the license, the licensee or other person having possession or custody of the license shall deliver it to the director either personally or by certified mail.

 (b) If a license is lost, stolen, or destroyed while in the possession of the licensee or person, the director may accept, in lieu of the return of the license, an affidavit of the licensee or other person responsible for or involved in the safekeeping of the license concerning the facts of the loss, theft, or destruction.

 (c) Upon a change in the state of residence, a place of business, a mailing address, or in the compliance officer of a firm, a license subject to the change shall be surrendered to the director within 10 days either personally or by certified mail and the division shall reissue the license reflecting the changes if the licensee continues to satisfy the qualifications under this chapter.




Secs. 21.27.470 — 21.27.520. Agent, broker, solicitor, service representatives, and adjuster defined; exceptions from definitions. [Repealed, § 47 ch 29 SLA 1987.]

Article 2. Insurance Producers.


Sec. 21.27.530. Insurance producer qualifications.
In addition to the general qualifications under AS 21.27.020, to qualify for issuance or renewal of an insurance producer license, an applicant or licensee
     (1) must possess the competence necessary to fulfill the responsibilities of an insurance producer;

     (2) if previously licensed in good standing in this state as an insurance producer, must not have had a license suspended or revoked within the previous four calendar years;

     (3) for a license with a scope that includes variable contracts, must either be currently registered with the federal Securities and Exchange Commission as a broker-dealer or personally take and pass, to the satisfaction of the director, tests of the knowledge and competence of the applicant concerning securities.




Sec. 21.27.540. Trainee insurance producers. [Repealed, § 53 ch 96 SLA 2004.]
Sec. 21.27.550. Appointment of insurance producer as an agent.
 (a) A person may not act as or represent to be a representative of, authorized or appointed agent of, or other term implying a contractual relationship with a particular admitted insurer, or accept applications on behalf of an admitted insurer, unless the person is licensed as an insurance producer under this chapter and is or becomes an appointed agent of the admitted insurer under AS 21.27.100.

 (b) An admitted insurer or managing general agent of an admitted insurer may not enter into an agency agreement with an insurance producer unless the managing general agent and the insurance producer are licensed under this chapter and there is in effect a written agency agreement that specifically sets out the duties, functions, powers, authority, and compensation of all parties to the contract. The written agreement shall be kept in the permanent records of the insurer or managing general agent, if any, and the insurance producer, and be open to inspection by the director.

 (c) All money collected for the account of an insurer shall be held by the insurance producer as a fiduciary.

 (d) An agency agreement may not be assigned in whole or in part by the insurance producer.

 (e) If the agency agreement permits the insurance producer to settle a claim on behalf of the insurer
     (1) a claim must be reported to the insurer within 30 days;

     (2) a copy of the claim file shall be sent to the insurer;

     (3) all insurance claim files shall be the property of the insurer or managing general agent, if any, and insurance producer, but upon an order of liquidation of the insurer, the files shall become the sole property of the insurer or the insurer’s estate; the insurance producer shall have reasonable access to and the right to copy the files on a timely basis.

 (f) An insurance producer is subject to the unfair trade practice and fraud provisions under AS 21.36.

 (g) The insurance producer may not
     (1) bind reinsurance or retrocessions on behalf of the insurer;

     (2) commit the insurer to participate in insurance or reinsurance syndicates;

     (3) appoint an agent or subagent;

     (4) jointly employ an individual who is employed by the insurer or by the managing general agent; or

     (5) delegate insurance producer authority to another person.

 (h) Except as provided under AS 21.27.560, an agency appointment may not extend, directly or indirectly, to a client for whom the insurance producer is a producing broker or for whom insurance is exported to nonadmitted insurers under AS 21.34.

 (i) A reinsurance intermediary manager may not enter into an agency agreement with an insurance producer unless both parties are licensed under this chapter and there is in effect a written agency agreement that specifically sets out the duties, functions, powers, authority, and compensation of all parties to the agreement. The written agreement shall be kept in the permanent records of the reinsurance intermediary manager, the reinsurer, and the insurance producer, and be open to inspection by the director. A written agreement must contain the following minimum provisions:
     (1) money collected for the account of a reinsurer must be held by the insurance producer as a fiduciary;

     (2) the agreement may not be assigned in whole or in part by the insurance producer;

     (3) the agreement may not permit the insurance producer to settle claims on behalf of the reinsurer or reinsurance intermediary manager; and

     (4) the insurance producer may not
          (A) jointly employ an individual who is employed with the reinsurer or reinsurance intermediary manager; or

          (B) delegate insurance producer authority to another person.




Sec. 21.27.560. Appointment of insurance producers as brokers.
 (a) A client who appoints an insurance producer as its broker in this state or relative to a subject resident, located, or to be performed in this state shall execute a written contract that specifically sets out the duties, functions, powers, authority, and compensation of the insurance producer, if the broker is compensated by a fee paid by the client or by a combination of a fee paid by a client and a commission paid by an insurer with which coverage has been placed. The written contract shall be kept in the permanent records of the insurance producer and be open to inspection by the director.

 (b) The insurance producer may not knowingly accept payment of a premium for coverage until the coverage has been authorized by the insurer. This subsection does not apply to renewal of existing coverage placed by the insurance producer or to a premium deposit for the purchase of insurance. A premium deposit shall be returned to the client if coverage is not obtained within 10 working days.

 (c) An insurance producer appointed as a client’s broker may only receive compensation if the compensation is a
     (1) fee that requires the insurance producer to offset or reimburse the client for the full amount of a commission earned by the insurance producer;

     (2) combination of a fee paid by a client and a commission paid by an insurer with which coverage is placed that may offset or reimburse a client for all or part of a commission earned by the insurance producer if the amount of the commission is disclosed to the client; or

     (3) commission paid by an insurer with which coverage has been placed.

 (d) A contract between a client and an insurance producer may not be assigned in whole or in part by the insurance producer.

 (e) An insurance producer appointed as a broker by a client may act as an appointed agent of an admitted insurer and may accept an application, bind coverage, and collect a premium from the client on behalf of the admitted insurer.

 (f) [Repealed, § 52 ch 34 SLA 2015.]
 (g) Money paid by a client to an insurance producer for insurance premiums shall be held by the insurance producer as a fiduciary.

 (h) An insured shall be entitled to coverage or a return premium and the premium shall be considered received by the insurer if the premium payment made to the insurance producer was, at the time made, designated for specific coverage, and the insurer accepted or acknowledged coverage by issuing a policy binder or other evidence of temporary insurance, or the insurance producer received information from the insurer in the normal course of business that the insurance had been granted.

 (i) Except as provided under (c) and (e) of this section, this section does not alter the common law of agency as applied to transactions under this title.




Sec. 21.27.570. Operating requirements for controlling insurance producers.
 (a) If the aggregate amount of gross written premium on business placed by a controlling insurance producer exceeds five percent of the admitted assets of the controlled insurer for a calendar year as reported in the insurer’s most recent financial statement filed with the director, the controlling insurance producer may not place business with the controlled insurer and the controlled insurer may not accept business from the controlling insurance producer unless a written contract is in effect between the parties that
     (1) establishes the responsibilities of each party, indicates each party’s share of responsibility for each particular function, and specifies the division of responsibilities;

     (2) has been approved by the board of directors of the controlled insurer;

     (3) contains the following minimum provisions:
          (A) the controlled insurer may terminate the contract for cause upon written notice sent to the controlling producer and shall suspend the authority of the controlling insurance producer to write business during a dispute regarding the cause for termination;

          (B) the controlling insurance producer shall render accounts to the controlled insurer detailing all transactions, including information in the accounts necessary to support compensation, commissions, charges, and other fees received by, or owing to, the controlling producer;

          (C) the controlling insurance producer shall remit money due under the contract to the controlled insurer at least monthly;

          (D) premiums or installments collected shall be due not later than 90 days after the effective date of coverage placed with the controlled insurer;

          (E) money collected for the account of a controlled insurer shall be held by the controlling insurance producer as a fiduciary, except a controlling insurance producer not required to be licensed under this chapter shall act as a fiduciary in compliance with the requirements of its domiciliary jurisdiction;

          (F) all payments on behalf of the controlled insurer shall be held by the controlling insurance producer as a fiduciary;

          (G) the controlling insurance producer shall maintain separate records for each controlled insurer in a form usable by the controlled insurer; the controlled insurer or its authorized representative shall have the right to audit and the right to copy all accounts and records related to the controlled insurer’s business; the director, in addition to authority granted in this title, shall have access to all books, bank accounts, and records of the controlling insurance producer in a form usable to the director;

          (H) the contract may not be assigned in whole or in part by the controlling insurance producer;

          (I) the controlled insurer shall provide, and the controlling producer shall follow, written underwriting standards, rules, procedures, and manuals that must include the conditions for acceptance or rejection of risks, including types of risks that may be written, maximum limits of liability, applicable exclusions, territorial limitations, policy cancellation provisions, the maximum policy term, the rating system, and basis of the rates to be charged;

          (J) the underwriting standards, rules, procedures, and manuals shall be the same as those applicable to comparable business placed with the controlled insurer by insurance producers other than the controlling insurance producer;

          (K) the rates and terms of the controlling insurance producer’s compensation including commissions, charges, and other fees may not be greater than those applicable to comparable business placed with the controlled insurer by insurance producers other than the controlling insurance producer;

          (L) the controlled insurer shall establish a limit, that may be different for each kind or class of business, on the amount of premium that the controlling insurance producer may place with the controlled insurer in relation to the controlled insurer’s surplus and total writings;

          (M) the controlled insurer shall notify the controlling insurance producer if an applicable limit is approached and the controlling insurance producer may not place and the controlled insurer may not accept business if the limit under (L) of this paragraph has been reached;

          (N) if the contract provides that the controlling insurance producer, on insurance placed with the controlled insurer, is to be compensated contingent upon the controlling insurer’s profits on the placed insurance, the contingent compensation may not be determined or paid until
               (i) at least five years after the premiums are earned on casualty business and at least one year after the premiums are earned on any other insurance;

               (ii) a later period established by the director for specified kinds or classes of insurance; and

               (iii) not until the profits have been verified under (b) of this section;

          (O) the controlling insurance producer may negotiate but may not bind reinsurance on behalf of the controlled insurer on insurance that the controlling insurance producer places with the controlled insurer, except that the controlling insurance producer may bind facultative reinsurance contracts under obligatory agreements if the contract with the controlled insurer contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which automatic agreements are in effect, the coverage and amounts or percentages that may be reinsured, and commission schedules; and

     (4) provides that the controlled insurer has an audit committee composed of independent members of the board of directors that meet at least annually with management, the insurer’s independent certified public accountants, and an independent actuary specialist acceptable to the director to review the adequacy of the insurer’s reserves for losses incurred and outstanding.

 (b) In addition to any other required loss reserve certification, the controlled insurer shall annually obtain the opinion of an independent qualified actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the controlling insurance producer. The controlled insurer shall file with the director on or before April 1 of each year an opinion of an independent actuary attesting to the adequacy of the reserves for losses incurred and outstanding and reporting the loss ratios for each kind and class of business placed with the controlled insurer by the controlling producer.

 (c) The controlled insurer shall annually report by kind and class of insurance in a form acceptable to the director the amount of compensation paid to the controlling producer, the percentage the compensation represents to the net premiums written, the amount of compensation paid to uncontrolling producers, and the percentage the compensation represents to the net premiums written.

 (d) A controlling insurance producer may be examined by the director as if it were the controlled insurer.

 (e) If the conservator, rehabilitator, or liquidator of a controlled insurer or formerly controlled insurer has reason to believe that the controlled insurer or formerly controlled insurer suffered loss or damage arising out of a failure to comply with this section by the controlling producer or another person, the conservator, rehabilitator, or liquidator may maintain a civil action for recovery of damages or other relief for the benefit of the controlled insurer or its estate.

 (f) In addition to any other liability and without intent to limit in any manner the rights of policyholders, claimants, auditors, creditors, or third parties, if the director determines after a hearing under AS 21.06.170 — 21.06.240 that a controlling insurance producer caused losses arising out of a violation of this section to a controlled insurer, the director may order the controlling insurance producer to make restitution to the controlled insurer, the rehabilitator, or the liquidator of the controlled insurer for the loss.

 (g) In addition to any other penalty provided by law, a person who violates this section is subject to the penalties provided under AS 21.27.440 and a controlled insurer’s certificate of authority may be suspended or revoked. The director may also order the controlling producer to cease placing business with the controlled insurer.

 (h) This section does not apply to
     (1) a person appointed to act on behalf of the controlled insurer as a managing general agent under this chapter;

     (2) a person who receives no compensation based upon the amount of premiums written with the controlled insurer and who places insurance only with the controlled insurer, only with the controlled insurer and an admitted member or admitted members of the insurer’s holding company system, or only with the controlled insurer’s parent, affiliate, or subsidiary if admitted in this state;

     (3) a person who does not accept insurance placements directly from an insured and who only accepts insurance placements from a nonaffiliated subagent;

     (4) a controlled insurer and its controlling insurance producer if, except for insurance written through a residual market facility under this title, insurance placements are accepted only from a controlling producer, an insurance producer controlled by the controlled insurer, or a producer that is a subsidiary of the controlled insurer;

     (5) [Repealed, § 52 ch 34 SLA 2015.]
     (6) a risk apportionment plan under AS 21.39.150 or an assigned risk pool under AS 21.39.155.

 (i) Except as provided in this section, AS 21.22 applies to all parties within an insurance holding company system subject to this section.

 (j) A controlling insurance producer may not be appointed as a broker by a client in this state or relative to a subject resident, located, or to be performed in this state unless, in a form acceptable to the director, the controlling insurance producer has disclosed in writing to the client the relationship between the controlling insurance producer and controlled insurer, each client has acknowledged receipt of the disclosure, and a copy of the acknowledged disclosure is maintained by the controlling insurance producer in its records. The records shall be available for inspection by the director.




Article 3. Managing General Agents.


Sec. 21.27.590. Managing general agents qualifications.
In addition to the general qualifications under AS 21.27.020, the director may require that a managing general agent maintain
     (1) a bond in an amount acceptable to the director and that requires the managing general agent to conduct business under this title; and

     (2) an errors and omissions insurance policy acceptable to the director.




Sec. 21.27.600. Trainee managing general agents. [Repealed, § 53 ch 96 SLA 2004.]
Sec. 21.27.610. Authority of managing general agents.
A managing general agent has only the authority consistent with this title that is conferred by an admitted insurer. A managing general agent, resident or nonresident, qualified and licensed under this chapter, may exercise the powers conferred by this title upon insurance producers and independent adjusters only for the kinds or classes of insurance and within the scope authorized by the insurer appointing the managing general agent.


Sec. 21.27.620. Operating requirements for managing general agents; actions for loss.
 (a) An insurer may not transact business with a managing general agent unless
     (1) the insurer holds a certificate of authority in this state;

     (2) the managing general agent is licensed under this chapter or has filed a certification with the director certifying that the managing general agent is operating only for a foreign insurer and is licensed by its resident insurance regulator in a state that the director has determined has enacted provisions substantially similar to those contained in this chapter and the state is accredited by the National Association of Insurance Commissioners;

     (3) a written contract is in effect between the parties that establishes the responsibilities of each party, indicates both party’s share of responsibility for a particular function, and specifies the division of responsibilities;

     (4) a written contract between an insurer and a managing general agent contains the following provisions:
          (A) the insurer may terminate the contract for cause upon written notice sent by certified mail to the managing general agent and may suspend the underwriting authority of the managing general agent during a dispute regarding the cause for termination;

          (B) the managing general agent shall render accounts to the insurer detailing all transactions and remit all money due under the contract to the insurer at least monthly;

          (C) all money collected for the account of an insurer shall be held by the managing general agent as a fiduciary;

          (D) all payments on behalf of the insurer shall be held by the managing general agent as a fiduciary;

          (E) the managing general agent may not retain more than three months’ estimated claims payments and allocated loss adjustment expenses;

          (F) the managing general agent shall maintain separate records for each insurer in a form usable by the insurer; the insurer or its authorized representative shall have the right to audit and the right to copy all accounts and records related to the insurer’s business; the director, in addition to authority granted in this title, shall have access to all books, bank accounts, and records of the managing general agent in a form usable to the director;

          (G) the contract may not be assigned in whole or in part by the managing general agent;

          (H) if the contract permits the managing general agent to do underwriting, the contract must include the following:
               (i) the managing general agent’s maximum annual premium volume;

               (ii) the rating system and basis of the rates to be charged;

               (iii) the types of risks that may be written;

               (iv) maximum limits of liability;

               (v) applicable exclusions;

               (vi) territorial limitations;

               (vii) policy cancellation provisions;

               (viii) the maximum policy term; and

               (ix) that the insurer shall have the right to cancel or not renew a policy of insurance subject to applicable state law;

          (I) if the contract permits the managing general agent to settle claims on behalf of the insurer, the contract must include the following:
               (i) written settlement authority must be provided by the insurer and may be terminated for cause upon the insurer’s written notice sent by certified mail to the managing general agent or upon the termination of the contract, but the insurer may suspend the settlement authority during a dispute regarding the cause of termination;

               (ii) claims shall be reported to the insurer within 30 days;

               (iii) a copy of the claim file shall be sent to the insurer upon request or as soon as it becomes known that the claim has the potential to exceed an amount determined by the director or exceeds the limit set by the insurer, whichever is less, involves a coverage dispute, may exceed the managing general agent’s claims settlement authority, is open for more than six months, involves extra contractual allegations, or is closed by payment in excess of an amount set by the director or an amount set by the insurer, whichever is less;

               (iv) each party shall comply with unfair claims settlement statutes and regulations;

               (v) transmission of electronic data at least monthly if electronic claim files are in existence; and

               (vi) claim files shall be the property of both the insurer and managing general agent; upon an order of liquidation of the insurer, the files shall become the sole property of the insurer or the insurer’s estate; the managing general agent shall have reasonable access to and the right to copy the files on a timely basis;

          (J) if the contract provides for sharing of interim profits by the managing general agent and the managing general agent has the authority to determine the amount of the interim profits by establishing loss reserves, by controlling claim payments, or in any other manner, interim profits may not be paid to the managing general agent until
               (i) one year after they are earned for property insurance business and five years after they are earned on casualty business;

               (ii) a later period established by the director for specified kinds or classes of insurance; and

               (iii) not until the profits have been verified under (d) of this section;

          (K) the insurer shall provide a copy of the contract to the director within 30 days after entering into a contract with a managing general agent; and

          (L) the insurer shall provide written notification to the director within 30 days of the termination of a contract with a managing general agent.

 (b) The managing general agent may not
     (1) bind reinsurance or retrocessions on behalf of the insurer, except that the managing general agent may bind facultative reinsurance contracts under obligatory agreements if the contract with the insurer contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which automatic agreements are in effect, the coverage and amounts or percentages that may be reinsured, and commission schedules;

     (2) commit the insurer to participate in insurance or reinsurance syndicates;

     (3) appoint a subagent unless the scope of the subagent’s license as an insurance producer includes the kinds and classes of insurance for which the subagent is appointed;

     (4) pay or commit the insurer to pay a claim, net of reinsurance, the amount of which exceeds one percent of the insurer’s policyholder’s surplus as of December 31 of the last completed calendar year without the prior written approval of the insurer for the settlement and the approval is received after the insurer has been notified in writing that the claim settlement will exceed one percent of the insurer’s policyholder’s surplus as of December 31 of the last completed calendar year;

     (5) collect a payment from a reinsurer or commit the insurer to a claim settlement with a reinsurer without prior written approval of the insurer, but if prior written approval is given, a complete report must be forwarded to the insurer within 30 days;

     (6) permit a subagent to serve on the insurer’s board of directors;

     (7) jointly employ an individual who is employed with the insurer; or

     (8) delegate managing general agent authority to another person.

 (c) In a form acceptable to the director, a managing general agent shall annually provide and an insurer shall annually obtain a copy of certified financial statements of each managing general agent with which the insurer has done business. The financial statements shall be prepared by an independent certified public accountant if the managing general agent, with or without authority, either separately or with affiliates, directly or indirectly produces or underwrites an amount of gross written premium equal to or more than five percent of the policy holder’s surplus in a quarter or year, as reported in the insurer’s last annual statement.

 (d) In addition to any other required loss reserve certification, if a managing general agent establishes loss reserves, the insurer shall annually obtain the opinion of an independent qualified actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the managing general agent. The insurer retains an independent responsibility to determine the adequacy of its loss reserves, including those established by its managing general agents.

 (e) An insurer shall at least semiannually conduct an on-site review of the underwriting and claims processing operations of the managing general agent if the managing general agent, with or without authority, either separately or with affiliates, directly or indirectly produces or underwrites an amount of gross written premium equal to or more than five percent of the policy holder’s surplus in a quarter or year, as reported in the insurer’s last annual statement.

 (f) An insurer shall review its books and records quarterly to determine if a person or insurance producer has acted as its managing general agent. If an insurer determines that a person or insurance producer has acted as its managing general agent, the insurer shall promptly notify the person or insurance producer and the director of the determination and the insurer and person or insurance producer must fully comply with the provisions of this chapter within 30 days.

 (g) An insurer may not appoint to its board of directors an officer, director, employee, subagent, insurance producer, or controlling shareholder of its managing general agent.

 (h) The actual or apparently authorized acts of the managing general agent are considered the acts of the insurer upon whose behalf it is acting.

 (i) A managing general agent may be examined by the director as if it were the insurer.

 (j) If the director determines after a hearing under AS 21.06.170 — 21.06.240 that a managing general agent caused loss or damage arising out of a violation of AS 21.27.590 — 21.27.630 to an insurer, the director may order the managing general agent to make restitution to the insurer, receiver, rehabilitator, or liquidator of the insurer for the loss. Restitution ordered under this subsection is in addition to any other liability of the managing general agent and does not affect the rights of a policy holder, claimant, creditor, or third party. The director may, at the request of the insurer, maintain or bring a civil action brought by or on behalf of the insurer and its policyholders and creditors for recovery of compensatory damages for the benefit of the insurer and its policyholders and creditors or seek other appropriate relief. If an order of rehabilitation or liquidation of the insurer has been entered under AS 21.78, the receiver appointed under the order determines that a person has not materially complied with AS 21.27.590 — 21.27.630 or an order of the director, and the insurer suffers loss or damage from the noncompliance, the receiver may bring a civil action for the recovery of damages or other appropriate sanctions for the benefit of the insurer.

 (k) In addition to any other penalty provided by law, a person who violates this section is subject to the penalties provided under AS 21.27.440 and an insurer’s certificate of authority may be suspended or revoked.

 (l) In this section, “transact” has the meaning given in AS 21.97.900.




Article 4. Third-Party Administrators.


Sec. 21.27.630. Registration required.
 (a) A person may not act as or represent to be a third-party administrator in this state or relative to a subject resident, located, or to be performed in this state, unless registered under this chapter or in another jurisdiction under AS 21.27.650. A person may not act as or represent to be a third-party administrator representing an insurer domiciled in this state regarding a risk located outside this state unless registered by this state under the provisions of this chapter.

 (b) A third-party administrator may not transact business for a kind or class of authority for which the person is not registered.

 (c) Except as otherwise provided in this chapter, a third-party administrator shall be registered under AS 21.27.630 — 21.27.660 unless the third-party administrator only investigates and adjusts claims and is licensed under this chapter as an independent adjuster.

 (d) A third-party administrator may not use a fictitious name or alias unless the licensee’s legal name and fictitious name or alias are on the registration.

 (e) A person who is an employee of an admitted insurer, who acts within the course and scope of that employment, and within the scope of the insurer’s certificate of authority is not required to be registered under this section.

 (f) A person who performs management services for an admitted insurer is not required to be registered as a third-party administrator if the person’s compensation is not based on the volume of premium written and the person
     (1) is a wholly-owned subsidiary of the admitted insurer;

     (2) wholly owns the admitted insurer;

     (3) is a wholly-owned subsidiary of the insurance holding company that owns or controls the admitted insurer;

     (4) is a United States manager of the United States branch of an alien admitted insurer; or

     (5) is the manager of a group, association, pool, or organization of admitted insurers that does joint underwriting if it is subject to examination by the authorized insurance regulator in the state in which the person’s principal place of business is located.

 (g) A credit union or a financial institution subject to supervision or examination by federal or state banking authorities, or a mortgage lender, that performs no functions other than advancing premiums to the insurer and collecting a debt from the insured is not required to be registered as a third-party administrator.

 (h) A credit card issuing company that performs no functions, including adjustment or settlement of claims, other than advancing and collecting premiums from its credit card holders who have authorized collection is not required to be registered as a third-party administrator.

 (i) A person who only provides services to bona fide employee benefit plans that are established by an employer or an employee organization, or both, for which the insurance laws of this state are preempted under the Employee Retirement Income Security Act of 1974, is not required to be additionally registered as a third-party administrator if the person certifies to the director on or before February 1 of each year its exempt status.

 (j) A third-party administrator
     (1) shall apply for registration under the procedures of AS 21.27.040;

     (2) shall renew its registration under the procedures of AS 21.27.380; and

     (3) is subject to hearings and orders on violations; denial, nonrenewal, suspension, or revocation of registration; penalties; and surrender of registration under the procedures set out in AS 21.27.405 — 21.27.460.

 (k) An insurer that holds a certificate of authority issued by the director and is in good standing under this title is not required to be registered as a third-party administrator in this state.

 (l) A person that is not required to be registered as a third-party administrator under (e) — (k) of this section must file a certification with the director that the person meets the requirements for exemption.

 (m) A person who is an employee of a third-party administrator and who acts within the course and scope of that employment and within the scope of the written contract required under AS 21.27.650(a)(4) is not required to be registered as a third-party administrator under this section. The third-party administrator is responsible for the acts of its employees regulated under this title.




Sec. 21.27.640. Third-party administrator qualifications.
 (a) The director may not issue or renew a registration except in compliance with this chapter and may not issue a registration to a person, or to be exercised by a person, found by the director to be untrustworthy, incompetent, financially irresponsible, or who has not established to the satisfaction of the director that the person is qualified under this chapter.

 (b) To qualify for issuance or renewal of a registration, an applicant or registrant shall comply with this title, regulations adopted under AS 21.06.090, and
     (1) be a trustworthy person;

     (2) have active working experience in administrative functions that, in the director’s opinion, exhibits the ability to competently perform the administrative functions of a third-party administrator;

     (3) not have committed an act that is a cause for denial, nonrenewal, suspension, or revocation of a registration or license in this state or another jurisdiction;

     (4) maintain a lawfully established place of business as described in AS 21.27.330 in this state, unless licensed as a nonresident under AS 21.27.270;

     (5) disclose to the director all owners, officers, directors, or partners, if any;

     (6) designate a compliance officer for the firm;

     (7) provide in or with its application
          (A) all basic organizational documents of the third-party administrator, including articles of incorporation, articles of association, partnership agreement, trade name certificate, trust agreement, shareholder agreement, and other applicable documents and all endorsements to the required documents;

          (B) the bylaws, rules, regulations, or similar documents regulating the internal affairs of the administrator;

          (C) the names, mailing addresses, physical addresses, official positions, and professional qualifications of persons who are responsible for the conduct of affairs of the third-party administrator, including the members of the board of directors, board of trustees, executive committee, or other governing board or committee; the principal officers in the case of a corporation, or the partners or members in the case of a partnership, limited liability company, limited liability partnership, or association; shareholders holding directly or indirectly 10 percent or more of the voting securities of the third-party administrator; and any other person who exercises control or influence over the affairs of the third-party administrator;

          (D) certified financial statements for the preceding two years, or for each year and partial year that the applicant has been in business if less than two years, prepared by an independent certified public accountant establishing that the applicant is solvent, that the applicant’s system of accounting, internal control, and procedure is operating effectively to provide reasonable assurance that money is promptly accounted for and paid to the person entitled to the money, and any other information that the director may require to review the current financial condition of the applicant; and

          (E) a statement describing the business plan, including information on staffing levels and activities proposed in this state and in other jurisdictions and providing details establishing the third-party administrator’s capability for providing a sufficient number of experienced and qualified personnel in the areas of claims handling, underwriting, and record keeping;

     (8) provide to the director documents necessary to verify the statements contained in or in connection with the application; and

     (9) notify the director, in writing, not later than 30 days after
          (A) a change in compliance officer, residence, place of business, mailing address, or phone number;

          (B) the final disposition of an administrative action taken against the registrant by a governmental agency of another state, by a governmental agency of another jurisdiction, or by a financial industry regulatory authority sanction or arbitration proceeding; in addition, a registrant shall submit to the director documents relating to the final disposition on, including the final order and other relevant legal documents in, the action; or

          (C) a conviction of a misdemeanor or felony of the third-party administrator, its officers, directors, partners, owners, or employees.

 (c) The director may require that a third-party administrator maintain
     (1) a bond as described in AS 21.27.190 in an amount acceptable to the director and conditioned in that the third-party administrator will conduct business as required by this title; and

     (2) an errors and omissions insurance policy acceptable to the director.

 (d) If the director finds that the applicant or registrant is qualified and that application, registration, or renewal fees have been paid, the director may issue or renew the registration.




Sec. 21.27.650. Operating requirements for third-party administrators.
 (a) An insurer may not transact business with a third-party administrator unless
     (1) the insurer holds a certificate of authority in this state if required under this title;

     (2) the third-party administrator is registered under this chapter or the third-party administrator has filed a certification with the director certifying that the third-party administrator is operating only for a foreign insurer other than a self-funded multiple employer welfare arrangement regulated under AS 21.85 and is registered as a third-party administrator by the third-party administrator’s resident insurance regulator in a state that the director has determined has enacted provisions substantially similar to those contained in AS 21.27.630 — 21.27.650 and that is accredited by the National Association of Insurance Commissioners;

     (3) the third-party administrator provides the director on January 1, April 1, July 1, and October 1 of each year
          (A) a list of persons who supervise or have responsibility over personnel performing administrative functions, including claims administration and payment, marketing administrative functions, premium accounting, premium billing, coverage verification, underwriting, or certificate issuance upon a subject resident, located, or to be performed in this state;

          (B) a list of current insurers under contract; and

          (C) other information the director may require;

     (4) a written contract is in effect between the parties that establishes the responsibilities of each party, indicates both parties’ share of responsibility for a particular function, and specifies the division of responsibilities;

     (5) there is in effect a written contract between the insurer and third-party administrator that contains the following provisions:
          (A) the insurer may terminate the contract for cause upon written notice sent by certified mail to the third-party administrator and may suspend the underwriting authority of the third-party administrator during a dispute regarding the cause for termination; but the insurer must fulfill all lawful obligations with respect to policies affected by the written agreement, regardless of any dispute between the insurer and the third-party administrator;

          (B) the third-party administrator shall render accounts to the insurer detailing all transactions and remit all money due under the contract to the insurer at least monthly;

          (C) all money collected for the account of an insurer shall be held by the third-party administrator as a fiduciary;

          (D) all payments on behalf of the insurer shall be held by the third-party administrator as a fiduciary;

          (E) the third-party administrator may not retain more than three months’ estimated claims payments and allocated loss adjustment expenses;

          (F) the third-party administrator shall maintain separate records for each insurer in a form usable by the insurer; the insurer or its authorized representative shall have the right to audit and the right to copy all accounts and records related to the insurer’s business; the director, in addition to other authority granted in this title, shall have access to all books, bank accounts, and records of the third-party administrator in a form usable to the director; any trade secrets contained in books and records reviewed by the director, including the identity and addresses of policyholders and certificate holders, shall be kept confidential, except that the director may use the information in a proceeding instituted against the third-party administrator or the insurer;

          (G) the contract may not be assigned in whole or in part by the third-party administrator;

          (H) if the contract permits the third-party administrator to do underwriting, the contract must include the following:
               (i) the third-party administrator’s maximum annual premium volume;

               (ii) the rating system and basis of the rates to be charged;

               (iii) the types of risks that may be written;

               (iv) maximum limits of liability;

               (v) applicable exclusions;

               (vi) territorial limitations;

               (vii) policy cancellation provisions;

               (viii) the maximum policy term; and

               (ix) that the insurer shall have the right to cancel or not renew a policy of insurance subject to applicable state law;

          (I) if the contract permits the third-party administrator to administer claims on behalf of the insurer, the contract must include the following:
               (i) written settlement authority must be provided by the insurer and may be terminated for cause upon the insurer’s written notice sent by certified mail to the third-party administrator or upon the termination of the contract, but the insurer may suspend the settlement authority during a dispute regarding the cause of termination;

               (ii) claims shall be reported to the insurer within 30 days;

               (iii) a copy of the claim file shall be sent to the insurer upon request or as soon as it becomes known that the claim has the potential to exceed an amount determined by the director or exceeds the limit set by the insurer, whichever is less, involves a coverage dispute, may exceed the third-party administrator’s claims settlement authority, is open for more than six months, involves extra contractual allegations, or is closed by payment in excess of an amount set by the director or an amount set by the insurer, whichever is less;

               (iv) each party to the contract shall comply with unfair claims settlement statutes and regulations;

               (v) transmission of electronic data must occur at least monthly if electronic claim files are in existence; and

               (vi) claim files shall be the sole property of the insurer; upon an order of liquidation of the insurer, the third-party administrator shall have reasonable access to and the right to copy the files on a timely basis; and

          (J) the contract may not provide for commissions, fees, or charges contingent upon savings obtained in the adjustment, settlement, and payment of losses covered by the insurer’s obligations; but a third-party administrator may receive performance-based compensation for providing hospital or other auditing services or may receive compensation based on premiums or charges collected or the number of claims paid or processed.

 (b) If the insurer is domiciled in this state or the third-party administrator has a place of business in this state, a copy of the contract must be filed with and approved by the director at least 30 days before the third-party administrator transacts business on behalf of the insurer. If the contract is not required to be approved in advance by the director, the insurer shall provide written notification to the director within 30 days of the entry into or termination of a contract with a third-party administrator; the notice must include a statement of duties to be performed by the third-party administrator on behalf of the insurer, the kinds and classes of insurance for which the third-party administrator has authorization to act, and other information required by the director.

 (c) If the contract provides for the third-party administrator to receive or collect premiums, payment by or on behalf of the insured of premiums for insurance to the third-party administrator shall be presumed to have been received by the insurer; payment of return premiums or claim payments forwarded by the insurer to the third-party administrator may not be presumed to have been received by the person entitled to the money until the payments are received by the insured or claimant. Nothing in this subsection limits the rights that the insurer may have against the third-party administrator resulting from the failure of the third-party administrator to make payments to persons entitled to money.

 (d) Policies, certificates, booklets, termination notices or other written communications delivered by the insurer to the third-party administrator for delivery to the insured or covered individuals shall be delivered by the third-party administrator within 10 days after receipt of instructions from the insurer to deliver them.

 (e) When the services of a third-party administrator are utilized, the third-party administrator shall provide a written notice, approved in writing by the insurer, to a covered person advising the person of the identity of the insurer and the relationship between the third-party administrator, the policyholder, and the insurer.

 (f) The third-party administrator may not
     (1) bind reinsurance or retrocessions on behalf of the insurer;

     (2) commit the insurer to participate in insurance or reinsurance syndicates;

     (3) pay or commit the insurer to pay a claim, net of reinsurance, the amount of which exceeds one percent of the insurer’s policyholder’s surplus as of December 31 of the last completed calendar year without prior written approval of the insurer for the settlement; the approval of an insurer must be received after the insurer has been notified in writing that the claim settlement will exceed one percent of the insurer’s policyholder’s surplus as of December 31 of the last completed calendar year;

     (4) collect a payment from a reinsurer or commit the insurer to a claim settlement with a reinsurer without prior written approval of the insurer, but if prior written approval is given, a complete report must be forwarded to the insurer within 30 days;

     (5) serve on the insurer’s board of directors;

     (6) jointly employ an individual who is employed by the insurer;

     (7) delegate third-party administrator authority to another person;

     (8) solicit applications for insurance or renewals of insurance directly through employees or by appointments of insurance producers as its subagents unless its employees or the insurance producers appointed under the procedures set out in AS 21.27.100 and 21.27.110 are licensed for the kinds or classes of insurance and the solicitation or renewals are within the scope of authority granted by the insurer contracting with the third-party administrator; or

     (9) advertise the business underwritten by an insurer unless the advertising has been approved in writing by the insurer in advance of its use.

 (g) In a form acceptable to the director, a third-party administrator shall annually provide to the insurer and an insurer shall annually obtain a copy of certified financial statements prepared by an independent certified public accountant of each third-party administrator with which the insurer has done business.

 (h) In addition to any other required loss reserve certification, if a third-party administrator establishes loss reserves, the insurer shall annually obtain the opinion of an independent qualified actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the third-party administrator. The insurer retains an independent responsibility to determine the adequacy of its loss reserves, including those established by its third-party administrators.

 (i) If a third-party administrator provides services for more than 100 certificate holders on behalf of an insurer, the insurer shall at least semiannually conduct a review of the operations of the third-party administrator. At least one review required under this subsection must be an on-site review.

 (j) A third-party administrator shall maintain records as described in AS 21.27.350.

 (k) An insurer may not appoint to its board of directors an officer, director, employee, subagent, insurance producer, or controlling shareholder of its third-party administrator.

 (l) An actual or apparently authorized act of the third-party administrator is considered to be the act of the insurer upon whose behalf the third-party administrator is acting.

 (m) A third-party administrator may be examined by the director under AS 21.06.120 as if it were the insurer.

 (n) If the director determines after a hearing under AS 21.06.170 — 21.06.240 that a third-party administrator caused loss arising out of a violation of AS 21.27.630 — 21.27.650 to an insurer, the director may order the third-party administrator to reimburse the insurer, the rehabilitator, or the liquidator of the insurer for the loss. Reimbursement ordered under this subsection is in addition to any other liability of the third-party administrator and does not affect the rights of a policyholder, claimant, creditor, or third-party.

 (o) In addition to any other penalty provided by law, a person who violates this section is subject to the penalties provided under AS 21.27.440 and an insurer’s certificate of authority may be suspended or revoked.

 (p) [Repealed, § 34 ch 1 FSSLA 2005.]
 (q) The director may, without advance notice or hearing, immediately suspend by order the registration of a third-party administrator if the director finds that one or more of the following circumstances exist:
     (1) the third-party administrator is insolvent or impaired;

     (2) a proceeding for bankruptcy, receivership, conservatorship, or rehabilitation, or another delinquency proceeding regarding the third-party administrator has been commenced in any state or by a governmental agency of another jurisdiction;

     (3) the third-party administrator is in an unsound condition, or is in a condition or using methods or practices that render its further transaction of insurance injurious to policy holders or the public.

 (r) An insurer shall review its books and records quarterly to determine whether a person or insurance producer has acted as the insurer’s third-party administrator. If an insurer determines that a person or insurance producer has acted as the insurer’s third-party administrator, the insurer shall promptly notify the person or insurance producer and the director of this determination. The insurer and the person or insurance producer must fully comply with the provisions of this chapter not later than 30 days after notification.




Sec. 21.27.660. Definitions.
In AS 21.27.630 — 21.27.660,
     (1) “insurer” includes the Comprehensive Health Insurance Association created under AS 21.55.010 and any person issued or required to obtain a certificate of authority under this title to transact life insurance, annuities, and health insurance or to provide coverage for the cost of medical care;

     (2) “transact” has the meaning given in AS 21.97.900.




Article 5. Reinsurance Intermediary Brokers.


Sec. 21.27.670. Reinsurance intermediary broker qualifications.
In addition to the general qualifications under AS 21.27.020, the director may require that a reinsurance intermediary broker maintain
     (1) a bond in an amount acceptable to the director in favor of insurers and this state that requires the reinsurance intermediary broker to conduct business under this title; and

     (2) an errors and omissions insurance policy acceptable to the director.




Sec. 21.27.680. Trainee reinsurance intermediary brokers. [Repealed, § 53 ch 96 SLA 2004.]
Sec. 21.27.690. Operating requirements for reinsurance intermediary brokers; actions for loss.
 (a) Except as provided in (b) of this section, an insurer may not transact business with a reinsurance intermediary broker unless the insurer holds a certificate of authority in this state, the reinsurance intermediary broker is licensed in this state, and there is in effect a written contract between the parties that establishes the responsibilities of each party, indicates each party’s share of responsibility for each particular function, and specifies the division of responsibilities. The written contract shall be kept in the permanent records of the insurer and the reinsurance intermediary broker, be open to inspection by the director, and must contain the following minimum provisions:
     (1) the insurer may terminate the reinsurance intermediary broker’s authority at any time by written notice sent by certified mail;

     (2) the reinsurance intermediary broker shall render accounts to the insurer detailing all transactions including information necessary to support all commissions, charges, and other fees received by or owing to the reinsurance intermediary broker and remit the money due under the contract to the insurer within 30 days of receipt;

     (3) money collected for the account of an insurer shall be held by the reinsurance intermediary broker as a fiduciary;

     (4) the reinsurance intermediary broker shall maintain separate accounts and records for each insurer and maintain the records in a form usable by the insurer; the insurer or the authorized representative of the insurer shall have access and the right to audit and the right to copy all accounts and records related to the insurer’s business; the director, in addition to the other authority granted in this title, shall have access to all books, bank accounts, and records of the insurance intermediary broker in a form usable to the director;

     (5) the insurer shall establish written standards for the cession or retrocession of all risks, and the reinsurance intermediary broker shall comply with those standards;

     (6) the reinsurance intermediary broker shall disclose to the insurer all its relationships with insurers and reinsurers to whom risks are ceded or retroceded; and

     (7) the contract may not be assigned in whole or in part by the reinsurance intermediary broker.

 (b) An insurer may use a nonresident reinsurance intermediary broker who is not licensed under this chapter if the reinsurance intermediary broker has filed a certification with the director that the reinsurance intermediary broker is operating only for a foreign insurer and the person is licensed in good standing as a resident reinsurance intermediary broker by an insurance regulator of another state that is accredited by the National Association of Insurance Commissioners. Upon written request, the director may grant written permission for a domestic insurer to use an alien reinsurance intermediary broker not licensed by and without a place of business in a jurisdiction subject to accreditation by the National Association of Insurance Commissioners if the alien reinsurance intermediary broker has filed a certification with the director that the reinsurance intermediary broker is operating only for a domestic insurer and is licensed in good standing by its domiciliary insurance regulator. The domestic insurer and unlicensed reinsurance intermediary broker are subject to all other requirements of this section.

 (c) An insurer may not employ a person who is employed by a reinsurance intermediary broker with which it transacts business, unless the reinsurance intermediary broker is under common control with the insurer and subject to AS 21.22.

 (d) In a form acceptable to the director, a reinsurance intermediary broker shall annually provide and an insurer shall annually obtain a copy of certified financial statements of each reinsurance intermediary broker with which the insurer has done business, prepared by the independent certified public accountant.

 (e) If the director determines after a hearing under AS 21.06.170 — 21.06.240 that a reinsurance intermediary broker caused losses or damage arising out of a violation of AS 21.27.670 — 21.27.700 to an insurer or reinsurer, the director may order the reinsurance intermediary broker to make restitution to the insurer, reinsurer, receiver, rehabilitator, or liquidator of the insurer or reinsurer for the net losses incurred by the insurer or reinsurer. Restitution ordered under this subsection is in addition to any other liability of the reinsurance intermediary broker and does not affect the rights of a policyholder, claimant, creditor, or third party. The director may, at the request of the insurer, maintain or bring a civil action brought by or on behalf of the reinsurer or insurer and its policyholders and creditors for recovery of compensatory damages for the benefit of the reinsurer or insurer and its policyholders and creditors or seek other appropriate relief. If an order of rehabilitation or liquidation of the insurer has been entered under AS 21.78, the receiver appointed under the order determines that a person has not materially complied with AS 21.27.670 — 21.27.700 or an order of the director, and the insurer suffers loss or damage from the noncompliance, the receiver may bring a civil action for the recovery of damages or other appropriate sanctions for the benefit of the insurer.

 (f) In addition to any other penalty provided by law, a person who violates this section is subject to the penalties provided under AS 21.27.440 and an insurer’s certificate of authority may be suspended or revoked.

 (g) In this section, “transact” has the meaning given in AS 21.97.900.




Sec. 21.27.700. Reinsurance intermediary broker records.
In addition to any other records requirements under this title, a reinsurance intermediary broker shall maintain in organized form a record of each transaction including
     (1) the type of contract, limits, underwriting restrictions, classes or risks, and territory;

     (2) the period of coverage, including effective and expiration dates, cancellation provisions, and required notice of cancellation;

     (3) the reporting and settlement requirements of balances;

     (4) the rate used to compute the reinsurance premium;

     (5) the names and addresses of reinsurers;

     (6) the rate of all reinsurance commissions, including the commissions on retrocessions handled by the reinsurance intermediary broker;

     (7) the related correspondence and memoranda;

     (8) the proof of placement;

     (9) the details regarding retrocessions handled by the reinsurance intermediary broker including the identity of retrocessionaires and the percentage of each contract assumed or ceded;

     (10) the financial records of premium and loss accounts;

     (11) if the reinsurance intermediary broker procures a reinsurance contract on behalf of an admitted ceding insurer
          (A) written evidence directly from an assuming reinsurer that it has agreed to assume the risk; or

          (B) written evidence, if placed through a representative of the assuming reinsurer other than an employee, that the reinsurer had delegated binding authority to the representative; and

     (12) additional information that is customary or that may be required by the director.




Article 6. Reinsurance Intermediary Managers.


Sec. 21.27.730. Reinsurance intermediary manager qualifications.
In addition to the general qualifications under AS 21.27.020, the director may require that a reinsurance intermediary manager maintain
     (1) a bond in an amount acceptable to the director that requires the reinsurance intermediary manager to conduct business under this title; and

     (2) an errors and omissions insurance policy acceptable to the director.




Sec. 21.27.740. Trainee reinsurance intermediary managers. [Repealed, § 53 ch 96 SLA 2004.]
Sec. 21.27.750. Authority of reinsurance intermediary managers.
A reinsurance intermediary manager has only the authority that is consistent with this title and that is conferred by the reinsurer. A reinsurance intermediary manager, resident or nonresident, qualified and licensed under this chapter, may exercise the powers conferred by this title upon insurance producers and independent adjusters only for the kinds or classes of insurance and within the scope that reinsurance intermediary is authorized by the reinsurer appointing the reinsurance intermediary manager.


Sec. 21.27.760. Operating requirements for reinsurance intermediary managers; actions for loss.
 (a) A reinsurer may not transact business with a reinsurance intermediary manager unless there is in effect a written contract approved by the reinsurer’s board of directors between the parties that establishes the responsibilities of each party, indicates each party’s share of responsibility for each particular function, and specifies the division of responsibilities.

 (b) The contract required under (a) of this section must include the following provisions:
     (1) the reinsurer may terminate the contract for cause upon written notice sent by certified mail to the reinsurance intermediary manager and may suspend the underwriting authority of the reinsurance intermediary manager during a dispute regarding the cause for termination;

     (2) the reinsurance intermediary manager shall render accounts to the reinsurer detailing all transactions including information necessary to support all commissions, charges, and other fees received by or owing to the reinsurance intermediary manager and remit all money due under the contract to the insurer at least monthly;

     (3) money collected for the account of a reinsurer shall be held by the reinsurance intermediary manager as a fiduciary;

     (4) the reinsurance intermediary manager shall maintain a separate bank account for each reinsurer that it represents;

     (5) all payments on behalf of the reinsurer shall be held by the reinsurance intermediary manager as a fiduciary;

     (6) the reinsurance intermediary manager may retain not more than three months estimated claims payments and allocated loss adjustment expenses;

     (7) the reinsurance intermediary manager shall maintain separate accounts and records for each reinsurer and maintain the records in a form usable by the reinsurer; the reinsurer or its authorized representative shall have access and the right to audit and the right to copy all accounts and records related to the reinsurer’s business; the director, in addition to the other authority granted in this title, shall have access to all books, bank accounts, and records of the reinsurance intermediary manager in a form usable to the director;

     (8) the contract may not be assigned in whole or in part by the reinsurance intermediary manager;

     (9) the reinsurer shall establish written underwriting and rating standards for the acceptance, rejection, or cession of all risks and the reinsurance intermediary manager shall comply with the standards;

     (10) compensation including rates, terms, purposes of commissions, charges, and other fees that the reinsurance intermediary manager may levy against the reinsurer;

     (11) if the contract permits the reinsurance intermediary manager to settle claims on behalf of the reinsurer,
          (A) written settlement authority must be provided by the reinsurer and may be terminated for cause upon the insurer’s written notice by certified mail to the reinsurance intermediary manager or upon the termination of the contract; the reinsurer may suspend the settlement authority during a dispute regarding the cause of termination;

          (B) claims shall be reported to the reinsurer within 30 days;

          (C) a copy of the claim file shall be sent to the reinsurer upon request or as soon as it becomes known that the claim
               (i) has the potential to exceed an amount determined by the director or exceeds the limit set by the insurer, whichever is less;

               (ii) involves a coverage dispute;

               (iii) may exceed the reinsurance intermediary manager’s claims settlement authority;

               (iv) is open for more than six months;

               (v) involves extra contractual allegations; or

               (vi) is closed by payment in excess of an amount set by the director or an amount set by the insurer, whichever is less;

          (D) the reinsurance intermediary manager shall comply with unfair claims settlement statutes and regulations;

          (E) transmission of electronic data at least once a month if electronic claims files are in existence;

          (F) claim files shall be the property of both the reinsurer and reinsurance intermediary manager, but upon an order of liquidation of the reinsurer, the files shall become the sole property of the reinsurer or the reinsurer’s estate; the reinsurance intermediary manager shall have reasonable access to and the right to copy the files on a timely basis;

     (12) if the contract provides for sharing of interim profits by the reinsurance intermediary manager, the interim profits may not be paid until
          (A) one calendar year after the end of each underwriting period for property risks and five years after the end of each underwriting period for casualty risks;

          (B) a later period established by the director for specified kinds or classes of insurance; and

          (C) the profits have been verified under (e)(2) of this section;

     (13) the reinsurance intermediary manager may not
          (A) cede retrocessions on behalf of the reinsurer, except that the reinsurance intermediary manager may cede facultative retrocessions under obligatory agreements if the contract with the reinsurer contains reinsurance underwriting guidelines including a list of reinsurers with which automatic agreements are in effect, and, for each reinsurer, the coverage and amounts or percentages that may be reinsured, and commission schedules;

          (B) commit the reinsurer to participate in reinsurance syndicates;

          (C) appoint a subagent unless the scope of the subagent’s license as an insurance producer includes the kinds and classes of insurance for which the subagent is appointed;

          (D) pay or commit the reinsurer to pay a claim, net of retrocessions, the amount of which exceeds one percent of the reinsurer’s policyholder’s surplus as of December 31 of the last completed calendar year without the prior written approval of the reinsurer for the settlement and the approval is received after the reinsurer has been notified in writing that the claim settlement will exceed one percent of the reinsurer’s policyholder’s surplus as of December 31 of the last completed calendar year;

          (E) collect payment from a retrocessionaire or commit the reinsurer to a claim settlement with a retrocessionaire without prior written approval of the reinsurer, but if prior written approval is given, a complete report shall be forwarded to the reinsurer within 30 days;

          (F) jointly employ an individual who is employed with the reinsurer; or

          (G) delegate reinsurance intermediary manager authority to another person;

     (14) if the insurer is domiciled in this state or the reinsurance intermediary manager has a place of business in this state, a copy of the contract must be filed with and approved by the director at least 30 days before the reinsurance intermediary manager transacts business on behalf of the reinsurer; if the reinsurer is not domiciled in this state or the reinsurance intermediary manager transacts business relative to a subject resident, located, or to be performed in this state from a place of business not physically located in this state, a copy of the contract required in this section must be filed with and approved by the director at least 30 days before the reinsurance intermediary manager transacts business on behalf of the insurer in this state or relative to a subject resident, located, or to be performed in this state if the insurer or the reinsurance intermediary manager are domiciled in a state not accredited by the National Association of Insurance Commissioners; and

     (15) if the contract is not required to be approved in advance by the director, the insurer shall provide written notification to the director within 30 days of the entry into or termination of a contract with a reinsurance intermediary manager; the notice must include a statement of duties to be performed by the reinsurance intermediary manager on behalf of the reinsurer, the kinds and classes of insurance for which the reinsurance intermediary manager has authorization to act, and other information required by the director.

 (c) Binding authority for all retrocession contracts or participation in reinsurance syndicates may only rest with an officer of the reinsurer who is not affiliated with a reinsurance intermediary manager.

 (d) In a form acceptable to the director, a reinsurance intermediary manager shall annually provide and a reinsurer shall annually obtain a copy of certified financial statements of each reinsurance intermediary manager that the reinsurer has used, prepared by an independent certified public accountant.

 (e) The reinsurer shall
     (1) at least semiannually conduct an on-site review of the underwriting and claims processing operations of each reinsurance intermediary manager;

     (2) in addition to any other required loss reserve certification, annually obtain the opinion of an independent qualified actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the reinsurance intermediary manager if a reinsurance intermediary manager establishes loss reserves; the reinsurer retains an independent responsibility to determine the adequacy of its loss reserves, including those established by its reinsurance intermediary manager; and

     (3) provide written notification to the director by certified mail within 30 days of the termination of a contract with a reinsurance intermediary manager.

 (f) The reinsurance intermediary manager shall disclose to the reinsurer a relationship with an insurer before ceding or assuming risks with the insurer under the contract.

 (g) A reinsurer may not appoint to its board of directors an officer, director, employee, subagent, insurance producer, or controlling shareholder of its reinsurance intermediary manager.

 (h) Within the scope of the actual or apparent authority, the acts of the reinsurance intermediary manager are considered the acts of the reinsurer upon whose behalf it is acting.

 (i) A reinsurance intermediary manager may be examined by the director as if it were the insurer.

 (j) If the director determines after a hearing under AS 21.06.170 — 21.06.240 that a reinsurance intermediary manager caused losses or damage arising out of a violation of AS 21.27.730 — 21.27.770 to an insurer or reinsurer, the director may order the reinsurance intermediary manager to make restitution to the insurer, reinsurer, receiver, rehabilitator, or liquidator of the insurer or reinsurer for the net losses incurred by the insurer or reinsurer. Restitution ordered under this subsection is in addition to any other liability of the reinsurance intermediary manager and does not affect the rights of a policyholder, claimant, creditor, or third party. The director may, at the request of the insurer, maintain or bring a civil action brought by or on behalf of the reinsurer or insurer and its policyholders and creditors for recovery of compensatory damages for the benefit of the reinsurer or insurer and its policyholders and creditors or seek other appropriate relief. If an order of rehabilitation or liquidation of the insurer has been entered under AS 21.78, the receiver appointed under the order determines that a person has not materially complied with AS 21.27.730 — 21.27.770 or an order of the director, and the insurer suffers loss or damage from the noncompliance, the receiver may bring a civil action for the recovery of damages or other appropriate sanctions for the benefit of the insurer.

 (k) In addition to any other penalty provided by law, a person who violates this section is subject to the penalties provided under AS 21.27.440 and an insurer’s or reinsurer’s certificate of authority may be suspended or revoked.

 (l) In this section, “transact” has the meaning given in AS 21.97.900.




Sec. 21.27.770. Reinsurance intermediary manager records.
In addition to any other records requirements under this chapter, a reinsurance intermediary manager shall maintain in organized form a complete record of each transaction including
     (1) the type of contract, limits, underwriting restrictions, classes or risks, and territory;

     (2) the period of coverage, including effective and expiration dates, cancellation provisions, and required notice of cancellation;

     (3) disposition of outstanding reserves on covered risks;

     (4) the reporting and settlement requirements of balances;

     (5) the rate used to compute the reinsurance premium;

     (6) the names and addresses of reinsurers;

     (7) the rate of all reinsurance commissions, including the commissions on retrocessions handled by the reinsurance intermediary broker and reinsurance intermediary manager;

     (8) related correspondence and memoranda;

     (9) proof of placement;

     (10) details regarding retrocessions handled by the reinsurance intermediary broker and reinsurance intermediary manager including the identity of retrocessionaires and the percentage of each contract assumed or ceded;

     (11) financial records of premium and loss accounts; and

     (12) if the reinsurance intermediary broker procures a reinsurance contract on behalf of an admitted ceding insurer or when the reinsurance intermediary manager places a reinsurance contract on behalf of a ceding insurer, written evidence
          (A) directly from an assuming reinsurer that it has agreed to assume the risk; or

          (B) that the reinsurer had delegated binding authority to the representative, if placed through a representative of the assuming reinsurer other than an employee of the assuming reinsurer.




Article 7. Surplus Lines Brokers.


Sec. 21.27.790. Surplus lines broker qualifications.
In addition to the general qualifications under AS 21.27.020, to qualify for issuance or for renewal of a resident surplus lines broker license, an applicant or licensee shall
     (1) be licensed as either an insurance producer or managing general agent for property and casualty lines of authority;

     (2) if required by the director by regulation, maintain a bond as described in AS 21.27.190 in an amount acceptable to the director that requires the surplus lines broker to conduct business under this title, promptly remit the taxes and fees required by law, return premiums promptly when due, and pay proper losses promptly;

     (3) if the director requires, maintain an errors and omissions insurance policy acceptable to the director.




Sec. 21.27.800. Trainee surplus lines broker. [Repealed, § 53 ch 96 SLA 2004.]
Sec. 21.27.810. Surplus lines broker records.
In addition to any other records requirements under this chapter, a surplus lines broker shall maintain in organized form a complete record including
     (1) the amount of insurance and perils insured;

     (2) a complete description of property insured and the location of the property;

     (3) gross premium charged;

     (4) a return premium paid;

     (5) the rate of premium charged upon the several items of property;

     (6) the effective date of the contract and the terms of the contract;

     (7) the name and address of the insured;

     (8) the name and address of the insurer;

     (9) the amount of tax and other sums to be collected from the insured;

     (10) the allocation of taxes by state under AS 21.34.180;

     (11) evidence of insurance issued in compliance with AS 21.34.100;

     (12) the identity and license number of the producing broker;

     (13) any confirming correspondence from the insurer or the representative of the insurer; and

     (14) the application.




Sec. 21.27.820. Denial, nonrenewal, suspension, or revocation of surplus lines broker license.
In addition to other action available under this title, the director may deny issuance of or not renew a license, or may suspend or revoke a license of a surplus lines broker issued under this chapter for any of the following causes:
     (1) removal of the resident surplus lines broker’s office from this state;

     (2) removal of the resident surplus lines broker’s accounts and records from this state during the period within which the accounts and records are required to be maintained under this chapter;

     (3) removal of the nonresident surplus lines broker’s accounts and records required to be maintained under this chapter from the location described in the license without prior approval of the director;

     (4) closing of the surplus lines broker’s office for a period of more than 45 calendar days, unless permission is granted by the director;

     (5) failure to make a required report;

     (6) failure to transmit a required tax or fee on a surplus line premium to this state or a reciprocal state to which a tax is owing;

     (7) failure to maintain a required bond.




Article 8. Independent Adjusters.


Sec. 21.27.830. Independent adjuster qualifications.
In addition to the general qualifications under AS 21.27.020, to qualify for issuance or renewal of an independent adjuster license, an applicant or licensee shall
     (1) have at least six months active working experience within the previous two calendar years as either an independent adjuster trainee, an insurance producer, a managing general agent, a reinsurance intermediary broker, a reinsurance intermediary manager, a surplus lines broker, an independent adjuster, or an underwriter or claims adjuster employee of an insurer, and, in the director’s opinion, exhibit the ability to competently perform the responsibilities of an independent adjuster; or

     (2) have been previously licensed in good standing in this state as an independent adjuster within the previous four calendar years and not have had a license suspended or revoked.




Sec. 21.27.840. Trainee independent adjusters.
 (a) An individual resident who does not have the experience with reference to the handling of loss claims but who otherwise meets the requirements of AS 21.27.830, may be employed by a licensed independent adjuster as a trainee independent adjuster, subject to the provisions of this section.

 (b) Before the individual may handle loss claims, the licensed independent adjuster employing the trainee independent adjuster shall submit to the director the application of the trainee independent adjuster, with the fee set under AS 21.06.250, and receive the trainee independent adjuster license.

 (c) The director shall revoke a trainee independent adjuster license unless the individual has
     (1) not later than four months after the effective date of the trainee adjuster license, complied with the independent adjuster licensing requirements of AS 21.27.060 concerning the insurance laws and regulations of this state;

     (2) not later than eight months after the effective date of the trainee adjuster license, complied with the independent adjuster licensing requirements of AS 21.27.060 concerning the knowledge and competence of the licensee concerning handling of loss claims and the licensee’s duties and responsibilities as a licensee; and

     (3) within 12 months after the effective date of the trainee adjuster license, complied with all other independent adjuster licensing requirements.

 (d) A person whose trainee independent adjuster license was revoked for failure to meet a requirement of (c) of this section may submit a new application for a trainee independent adjuster license after the person has successfully passed both tests required under (c) of this section.

 (e) Upon satisfying the requirements of (c) of this section, a trainee independent adjuster shall apply within 30 days for an independent adjuster license.

 (f) A trainee independent adjuster shall at all times be working at the direction and under the supervision of the employing licensed independent adjuster, and the file and record documentation shall reflect the direction and supervision. The employing licensed independent adjuster and its firm, and the compliance officer, if any, are responsible for all insurance actions of the trainee independent adjuster.

 (g) A trainee independent adjuster is restricted to participation in a factual investigation and a tentative closing of a loss subject to review and final determination by the employing licensed independent adjuster, and file and record documentation shall reflect compliance with this subsection.

 (h) A trainee independent adjuster may not participate in a factual investigation and a tentative closing of a loss away from the place of business unless a licensed independent adjuster physically accompanies the trainee.

 (i) In addition to any other penalty provided by law,
     (1) a trainee independent adjuster who the director determines has violated the provisions of this section shall have its license terminated; a licensee or other person having possession or custody of the license shall within 30 days surrender the license to the director either personally or by certified mail;

     (2) if the director determines under AS 21.06.170 — 21.06.240 that the employing licensed independent adjuster knew of or should have known that a trainee independent adjuster violated this section, the employing licensed independent adjuster and firm, and the compliance officer, if any, are subject to the penalties provided under AS 21.27.440.




Sec. 21.27.850. Insurance producer, managing general agent, surplus lines broker, reinsurance intermediary broker, and reinsurance intermediary manager as independent adjuster.
Without being required by this chapter to be licensed also as an independent adjuster
     (1) a licensed insurance producer and a licensed managing general agent, incidental to acting as an insurance producer, may act as an adjuster and investigate, adjust, and report upon claims on behalf of and as authorized by an admitted insurer that has appointed the insurance producer or the managing general agent as its agent under AS 21.27.100;

     (2) a surplus lines broker may act as an adjuster and investigate, adjust, and report upon claims on behalf of and as authorized by a nonadmitted insurer; and

     (3) a reinsurance intermediary broker or a reinsurance intermediary manager may act as an adjuster and investigate, adjust, and report upon claims on behalf of and as authorized by an insurer or reinsurer under the contract required by this chapter.




Sec. 21.27.860. Unlicensed nonresident adjusters.
 (a) A nonresident independent adjuster not licensed by this state who is licensed by and in good standing with its resident state may act as an adjuster and adjust a single loss in this state during a calendar year, or may act as an adjuster and adjust losses arising out of a catastrophe as declared by the director, if, within 10 days after the start of an investigation or adjustment under this section, the nonresident independent adjuster has advised the director in writing of the adjustment and provided the following information:
     (1) the individual and firm name;

     (2) the business mailing address;

     (3) the business physical address and phone number;

     (4) the licensing state of residence;

     (5) the resident license number; and

     (6) other facts that the director may require.

 (b) A nonresident independent adjuster may be sued upon a cause of action arising in this state arising from an adjustment under this section under the procedure provided in AS 21.33.




Sec. 21.27.870. Independent adjuster records.
In addition to any other records requirements under this chapter, an independent adjuster shall maintain in organized form a complete record of each investigation or adjustment undertaken or consummated, and a statement of the fee, commission, or other compensation received or to be received by the adjuster on account of the investigation or adjustment.


Article 9. General Provisions.


Sec. 21.27.900. Definitions.
In this chapter,
     (1) “accredited state” means a state in which the insurance department or regulatory agency of that state has qualified as meeting the minimum financial regulatory standards adopted and established by the National Association of Insurance Commissioners;

     (2) “affiliate” or “affiliated” has the meaning given in AS 21.22.200;

     (3) “appointment” means an act by a person evidencing a grant of authority to another to act on the grantor’s behalf;

     (4) “captive insurer” means an insurer owned by another organization whose exclusive purpose is to insure risks of the parent organization and affiliated companies or, in the case of groups and associations, an insurance organization owned by the insureds whose exclusive purpose is to insure risks of member organizations and group members and their affiliates;

     (5) “cession” means a unit of insurance, passed to a reinsurer by a primary insurer that issued the policy to the original insured, that may transfer part or all of a single risk, defined in the policy, or a defined group of business as agreed to in a contract of reinsurance;

     (6) “class of authority” means the authority held by a person under a license as an insurance producer, managing general agent, reinsurance intermediary broker, reinsurance intermediary manager, surplus lines broker, or independent adjuster, or under registration as a third-party administrator;

     (7) “comparable business” means the same lines or kinds of insurance, the same classes of risks, similar policy limits, and quality of business;

     (8) “compliance officer” means a licensee designated for a specific line and class of authority under this chapter who is responsible for a firm’s compliance with the insurance statutes and regulations of this state;

     (9) “control,” “controlling,” and “controlled by” have the meaning given in AS 21.22.200;

     (10) “controlled insurer”
          (A) means
               (i) an admitted insurer domiciled in this state or domiciled in a state that is not an accredited state having a law substantially similar to AS 21.27.570 that is controlled, directly or indirectly, by an insurance producer;

               (ii) a risk retention group as defined in 15 U.S.C. 3901, as amended;

          (B) does not include a captive insurer;

     (11) “controlling insurance producer” means an insurance producer that, directly or indirectly, controls an insurer;

     (12) “home state,” with respect to
          (A) an insurance producer, means the District of Columbia or a state or territory of the United States in which an insurance producer maintains the producer’s principal place of residence or principal place of business and is licensed to act as an insurance producer;

          (B) an independent portable electronics adjuster, means the District of Columbia or a state or territory of the United States in which an independent portable electronics adjuster maintains the independent portable electronics adjuster’s principal place of residence or principal place of business and is licensed to act as an independent adjuster or, if the state or territory of the United States of the independent portable electronics adjuster’s principal place of residence or principal place of business does not license independent adjusters, the state or territory of the United States designated by the independent portable electronics adjuster where the independent portable electronics adjuster is licensed;

     (13) “independent portable electronics adjuster” means an independent adjuster who collects, furnishes, or enters claim information for portable electronics insurance issued under AS 21.36.515;

     (14) “independent qualified actuary” means an actuary who is a member of the American Academy of Actuaries and who is not affiliated with, an employee, principal, the direct owner or indirect owner of, or in any way controlled by the insurer, managing general agent, reinsurance intermediary broker, or reinsurance intermediary manager;

     (15) “individual” means a natural person required to be licensed under AS 21.27.010;

     (16) “insurance holding company system” has the meaning given in AS 21.22.200;

     (17) “insurance producer” means a person who sells, solicits, or negotiates insurance or insurance products;

     (18) “interim profits” means the excess of income over expenses and claim reserves determined before the expiration of all claim liabilities and contract obligations of the insurer to the insured;

     (19) “license” means, unless the context requires otherwise, a document issued by the director authorizing a person to act for the type, class, and lines of authority specified in the document;

     (20) “limited lines” means those lines of insurance defined in AS 21.27.150 or any other line of insurance that the director designates by order as a limited line;

     (21) “limited lines credit insurance” includes credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection insurance, and any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation that the director of insurance determines must be designated a form of limited lines credit insurance;

     (22) “negotiate” means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms, or conditions of the contract if the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers;

     (23) “physical presence or physically present” means contemporaneously available in the licensee’s place of business;

     (24) “resident” means
          (A) for an individual, a natural person who is domiciled in this state, whose principal place of business is in this state, who has a present intent to remain in this state while licensed, and who manifests that intent by establishing an ongoing physical presence in this state;

          (B) for a firm, a person whose principal place of business is in this state;

     (25) “retrocession” means a transaction in which a reinsurer cedes to another reinsurer all or part of the risk that the reinsurer has previously assumed;

     (26) “sells” means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company;

     (27) “solicit” means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company;

     (28) “subagent” means an agent reporting to a managing general agent or reinsurance intermediary manager and not directly to an insurer;

     (29) “subsidiary” has the meaning given in AS 21.22.200;

     (30) “transact” or “transact business” means sell, solicit, or negotiate insurance or insurance products;

     (31) “underwrite” means the authority to accept or reject risk on behalf of the insurer;

     (32) “uniform application” means the most recent version of the uniform application of the National Association of Insurance Commissioners;

     (33) “uniform business entity application” means the most recent version of the uniform business entity application of the National Association of Insurance Commissioners.




Chapter 33. Unauthorized Insurers.

Sec. 21.33.010. Unauthorized insurers (unadmitted companies). [Repealed, § 2 ch 234 SLA 1968.]
Sec. 21.33.011. Purpose.
The legislature declares that insurance transactions with nonadmitted insurers are so affected with a public interest as to require regulation, taxation, supervision, and control of the transactions and matters relating to nonadmitted insurance as provided in this chapter in order to
     (1) protect the insureds and claimants of this state in transactions involving the purchase of insurance from nonadmitted insurers;

     (2) avoid the obstacle of resorting to distant forums for the purpose of asserting legal rights under policies issued by nonadmitted insurers;

     (3) provide a method of substituted service of process upon nonadmitted insurers for proceedings before the director and in the courts in this state;

     (4) provide for the public the ability to self-procure insurance directly from nonadmitted insurers;

     (5) protect the revenue of the state;

     (6) protect regulated, admitted insurers from unregulated and unfair competition by nonadmitted insurers;

     (7) regulate and supervise the effectuation of nonadmitted insurance under the laws of this state and 15 U.S.C. 1011; and

     (8) maintain reliable insurance markets.




Sec. 21.33.015. Unauthorized insurance prohibited. [Repealed, § 26 ch 117 SLA 1984.]
Sec. 21.33.020. Unauthorized Insurers Process Act. [Repealed, § 2 ch 234 SLA 1968.]
Sec. 21.33.021. Service of process on director.
 (a) The transaction of insurance by an unauthorized person or nonadmitted insurer is equivalent to and constitutes an irrevocable appointment by that person or insurer, binding upon the person or insurer, the executor, administrator, or personal representative of the person or insurer, or its successor in interest if a corporation, of the director and the successors of the director in office to be the lawful attorney of that person or insurer upon whom may be served all legal process in any action, suit, or proceeding in any court arising out of a transaction of insurance in this state or relative to a subject resident, located, or to be performed in this state by that person or nonadmitted insurer, except in an action, suit, or proceeding by the director or by the state. The transaction of insurance by an unauthorized person or nonadmitted insurer is acceptance by that person or insurer that legal process so served has the same legal force and validity as personal service of process in this state upon the person or insurer, or upon the executor, administrator, or personal representative of the person or insurer, or its successor in interest if a corporation.

 (b) Service of process shall be made by leaving two copies in the hands or office of the director and paying to the director for the use of the state a fee set under AS 21.06.250 for each person or insurer. A certificate by the director showing the service, which shall be attached to the original or third copy of the process presented to the director for that purpose, is sufficient evidence of service. Service upon the director as attorney shall be service upon the principal.

 (c) The director shall immediately mail one copy of the process to the defendant at its last known principal place of business and shall keep a record of all process so served upon the director, which shall show the day and hour of service. This service of process is sufficient, provided notice of the service and a copy of the process are sent within 10 days by registered mail by the plaintiff or the attorney of the plaintiff to the defendant at the last known principal place of business of the defendant and the defendant’s receipt, or receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person or insurer to whom the letter is addressed, and the affidavit of the plaintiff or the attorney of the plaintiff showing compliance with this subsection are filed with the clerk of the court in which the action is pending on or before the date the defendant is required to appear, or within additional time that the court may allow.

 (d) Service of process in an action, suit, or proceeding described in (a) of this section, in addition to the manner provided in (b) and (c) of this section, is valid if served upon a person in this state who on behalf of an unauthorized person or nonadmitted insurer is doing any transaction of insurance, and if a copy of the process is sent within 10 days by registered mail by the plaintiff or the attorney of the plaintiff to the defendant at the last known principal place of business of the defendant and the defendant’s receipt, or receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person or insurer to whom the letter is addressed and the affidavit of the plaintiff or the attorney of the plaintiff showing compliance with this subsection are filed with the clerk of the court in which the action is pending on or before the date the defendant is required to appear, or within additional time that the court may allow.

 (e) A plaintiff or complainant is not entitled to a judgment by default in an action, suit or proceeding in which the process is served under this section unless there is compliance with the Rules of Civil Procedure governing default judgments.

 (f) Nothing contained in this section limits or abridges the right to serve a process, notice, or demand upon a person or insurer in any other manner now or hereafter permitted by law.




Sec. 21.33.025. Service of process on lieutenant governor.
 (a) The transaction of insurance by an unauthorized person or nonadmitted insurer is equivalent to and constitutes an irrevocable appointment by that person or insurer, binding upon the person or insurer, the executor, administrator, or personal representative of the person or insurer, or its successor in interest if a corporation, of the lieutenant governor and the successors in office of the lieutenant governor to be the lawful attorney of that person or insurer upon whom may be served all legal process in any action, suit, or proceeding in any court by the director or by the state and upon whom may be served any notice, order, pleading, or process in any proceeding before the director and that arises out of the transaction of insurance in this state or relative to a subject resident, located, or to be performed in this state by that person or insurer. The transaction of insurance by an unauthorized person or nonadmitted insurer is acceptance by that person or insurer that legal process in the court action, suit, or proceeding and any notice, order, pleading, or process in an administrative proceeding before the director so served has the same legal force and validity as personal service of process in this state upon the person or insurer, or upon the executor, administrator, or personal representative of that person or insurer, or its successor in interest if a corporation.

 (b) The service of process in the action, suit, or proceeding in any court or the notice, order, pleading, or process in the administrative proceeding authorized by (a) of this section shall be made by leaving two copies in the hands or office of the lieutenant governor. A certificate by the lieutenant governor showing the service, which shall be attached to the original or third copy of the process presented to the lieutenant governor for that purpose, is sufficient evidence of service. Service upon the lieutenant governor as attorney shall be service upon the principal.

 (c) The lieutenant governor shall immediately mail one copy of the court process or notice, order, pleading, or process in proceedings before the director to the defendant in the court proceeding or to whom the notice, order, pleading, or process in the administrative proceeding is addressed or directed at the last known principal place of business of the defendant and shall keep a record of all process so served that shall show the day and hour of service. The service is sufficient, provided notice of the service and a copy of the court process or the notice, order, pleading, or process in the administrative proceeding are sent within 10 days after service by registered mail by the plaintiff or the attorney of the plaintiff in the court proceeding or by the director in the administrative proceeding to the defendant in the court proceeding or by whom the notice, order, pleading, or process in the administrative proceeding is addressed or directed at its last known principal place of business of the defendant in the court or administrative proceeding, and the defendant’s receipt, or receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person or insurer to whom the letter is addressed, and the affidavit of the plaintiff or the attorney of the plaintiff in a court proceeding or of the director in an administrative proceeding, showing compliance are filed with the clerk of the court in which the action, suit, or proceeding is pending or with the director in administrative proceedings, on or before the date the defendant in the court or administrative proceeding is required to appear or respond, or within additional time that the court or director may allow.

 (d) A plaintiff or complainant may not obtain a judgment or determination by default in a court or administrative proceeding in which court process or notice, order, pleading, or process in proceedings before the director is served under this section until there is compliance with the Rules of Civil Procedure regarding default judgments.

 (e) This section does not limit or abridge the right to serve a process, notice, order, pleading, or demand upon a person or insurer in any other manner now or hereafter permitted by law.

 (f) The attorney general, upon request of the director, is authorized to proceed in the courts of this or another state or in a federal court or agency to enforce an order or decision in a court proceeding or in an administrative proceeding before the director.




Sec. 21.33.030. Director process agent. [Repealed, § 2 ch 234 SLA 1968.]
Sec. 21.33.031. Defendant’s duties and rights.
 (a) Before an unauthorized person or nonadmitted insurer files or causes to be filed a pleading, a court action, suit, or proceeding or a notice, order, pleading, or process in an administrative proceeding before the director instituted against the person or insurer, by service made as provided in AS 21.33.021 or 21.33.025, the person or insurer shall either
     (1) deposit with the clerk of the court in which the action, suit, or proceeding is pending, or with the director in administrative proceedings before the director, cash or securities or bond with an admitted insurer to be approved by the court, or the director, in an amount to be fixed by the court or the director sufficient to secure the payment of a final judgment that may be rendered in the court proceeding or in the administrative proceeding before the director; however the court, or the director in administrative proceedings before the director, may in its or the director’s discretion make an order dispensing with the deposit or bond where the insurer makes a showing satisfactory to the court or the director that it maintains in a state of the United States funds or securities, in trust or otherwise, sufficient and available to satisfy a final judgment that may be entered in the court action, suit, or proceeding or in an administrative proceeding before the director; or

     (2) obtain admission to transact insurance in this state through a certificate of authority issued under this title.

 (b) The court in an action, suit, or proceeding in which service is made as provided in AS 21.33.021 or AS 21.33.025, or the director in an administrative proceeding before the director in which service is made as provided in AS 21.33.025, may order postponement that may be necessary to afford the defendant reasonable opportunity to comply with (a) of this section and to offer a defense in the court action or administrative proceeding.

 (c) Nothing in (a) of this section may be construed to prevent an unauthorized person or nonadmitted insurer from filing a motion to quash a writ or to set aside service made as provided in AS 21.33.021 or 21.33.025 on the ground that the unauthorized person or insurer has not transacted insurance in this state or relative to a subject resident, located, or to be performed in this state or that the person on whom service was made under AS 21.33.021(d) was not transacting insurance in this state or relative to a subject resident, located, or to be performed in this state.




Sec. 21.33.035. Attorney fees.
In an action against an unauthorized person or nonadmitted insurer upon a contract of insurance issued or delivered in this state to a resident or to a corporation authorized to do business in this state, if the person or insurer has failed for 30 days after demand before the commencement of the action to make payment in accordance with the terms of the contract, and it appears to the court that the refusal was vexatious and without reasonable cause, the court may allow to the plaintiff a reasonable attorney fee and include the fee in the judgment that may be rendered in the action. Failure of the person or insurer to defend the action shall be considered prima facie evidence that its failure to make payment was vexatious and without reasonable cause.


Sec. 21.33.037. Acting for or aiding nonadmitted insurers prohibited.
 (a) A person may not directly or indirectly act as agent for, or otherwise represent, assist, or aid on behalf of another, a nonadmitted insurer in the transaction of insurance in this state.

 (b) This section does not apply to
     (1) matters authorized to be done by the director;

     (2) surplus lines insurance effected and written under AS 21.34;

     (3) transactions for which a certificate of authority is not required under this title;

     (4) reinsurance;

     (5) the property and operations of railroads or aircraft primarily engaged in interstate or foreign commerce and wet marine and transportation insurance;

     (6) life insurance, health insurance, and annuity contracts when solicited solely by mail or when not solicited, negotiated, or procured in this state;

     (7) transactions subsequent to issuance of a policy not covering a subject resident, located, or to be performed in this state at time of issuance and lawfully solicited, written, or delivered outside this state.

 (c) In addition to other penalties under this title, a person who represents or aids a nonadmitted insurer in violation of this chapter is subject to the penalties provided in AS 21.33.065. This chapter does not preclude the insured from enforcing, under the terms and provisions of the contract and the laws of this state, the insured’s rights under a contract entered into in violation of this chapter.

 (d) If the nonadmitted insurer fails to pay a claim or loss within the provisions of the insurance contract, a person who assisted or in any manner aided directly or indirectly in the procurement of the insurance contract, shall be liable to the insured for the full amount under the provisions of the insurance contract.




Sec. 21.33.040. Service of process. [Repealed, § 2 ch 234 SLA 1968.]
Sec. 21.33.041. Contract validity. [Repealed, § 26 ch 117 SLA 1984.]
Sec. 21.33.042. Suits by nonadmitted insurers.
A nonadmitted insurer may not commence or maintain an action in law or equity in this state to enforce a right arising out of a transaction of insurance in this state except with respect to
     (1) claims under policies lawfully written in this state;

     (2) liquidation of assets and liabilities, other than the collection of new premiums, resulting from its former admitted operations in this state;

     (3) transactions subsequent to issuance of a policy not covering a subject resident, located, or to be performed in this state at time of issuance and lawfully solicited, written, or delivered outside this state;

     (4) surplus lines insurance coverage exported under AS 21.34;

     (5) reinsurance;

     (6) the continuation and servicing of life insurance, health insurance policies, or annuity contracts remaining in force as to residents of this state where the insurer has withdrawn from the state and is not transacting new insurance;

     (7) servicing of policies written by an admitted insurer in a state to which the insured has moved but in which the insured is not licensed, until the term of the policy expires;

     (8) claims under policies covering wet marine and transportation insurance, including vessels of 50 displacement tons or less.




Sec. 21.33.045. Investigation and disclosure of insurance contracts.
 (a) When the director has reason to believe that insurance has been effectuated by or for a person in this state with a nonadmitted insurer, the director shall in writing order the person to produce for examination all insurance contracts and other documents evidencing insurance with nonadmitted insurers and to disclose to the director the amount of insurance, name and address of each insurer, gross amount of premium paid or to be paid, the name and address of the person or persons assisting or aiding in the solicitation, negotiation, or effectuation of the insurance, and other information required by the director.

 (b) [Repealed, § 26 ch 117 SLA 1984.]
 (c) In case of a failure of any person to comply with the director’s order under (a) of this section, the superior court, on application of the director, may issue an order requiring the production of the records and information sought by the director.

 (d) [Repealed, § 60 ch 38 SLA 2002.]




Sec. 21.33.050. Exemptions from service of process provisions. [Repealed, § 2 ch 234 SLA 1968.]
Sec. 21.33.051. Reporting of unauthorized insurance. [Repealed, § 26 ch 117 SLA 1984.]
Sec. 21.33.055. Unauthorized insurance premium tax.
 (a) Except as to premiums on lawfully procured surplus lines insurance exported under AS 21.34 and premiums on independently procured insurance on which a tax has been paid under AS 21.33.061, every nonadmitted insurer shall pay to the director, on or before March 1 following the calendar year in which the insurance was procured, continued, or renewed, a premium-receipts tax of 3.7 percent of gross premiums written for the insurance other than wet marine and transportation insurance and a premium-receipts tax of three-fourths of one percent of gross premiums charged for the wet marine and transportation insurance if the insured’s home state is this state. If the insurance covers properties, risks, or exposures located or to be performed both in and out of this state, the tax payable shall be computed based on an amount equal to that portion of the gross premiums allocated under (b) of this section to this state, plus an amount equal to the portion of the premiums allocated under (b) of this section to other properties, risks, or exposures located or to be performed outside of this state. The insurance on subjects resident, located, or to be performed in this state procured through negotiations or an application, in whole or in part occurring or made in or from in or out of this state, or for which premiums in whole or in part are remitted directly or indirectly from in or out of this state, shall be considered to be insurance procured or continued or renewed in this state. The tax paid by the insurer under this section is in lieu of all insurer taxes and fire department dues. In this subsection, “premium” includes all premiums, membership fees, assessments, dues, and any other consideration for insurance.

 (b) In determining the amount of premiums taxable in this state, all premiums written, procured, or received in this state shall be considered written on property or a subject located or resident in this state, except premiums that are properly allocated or apportioned and reported as taxable premiums of another state. In determining the amount of gross premiums taxable in this state covering a subject resident, located, or to be performed both inside and outside the state, the tax due shall be computed on that portion of the policy premium that is attributable to the subject resident, located, or to be performed in this state and that relates to the kind of insurance being placed as determined by reference to an allocation schedule as follows:
     (1) if a policy covers more than one classification,
          (A) for any portion of the coverage identified by a classification on the allocation schedule, the tax shall be computed by using the allocation schedule for the corresponding portion of the premium;

          (B) for any portion of the coverage not identified by a classification on the allocation schedule, the tax shall be computed by using an alternative equitable method of allocation for the property or subject;

          (C) for any portion of the coverage where the premium is indivisible, the tax shall be computed by using the method of allocation that pertains to the classification describing the predominant coverage.

     (2) if the information provided is insufficient to substantiate the method of allocation used or if the director determines that the method is incorrect, the director shall determine the equitable and appropriate amount of tax due to the state as follows:
          (A) by use of the allocation schedule where the subject is appropriately identified in the schedule;

          (B) where the allocation schedule does not identify a classification appropriate to the coverage, the director may give acceptance by significant weight to documented evidence of the underwriting bases and other criteria used by the insurer or may give consideration to other available information to the extent it is sufficient and relevant, including the percentage of the insured’s physical assets in this state, the percentage of the insured’s sales in this state, the percentage of income or resources derived from this state, and the amount of premium tax paid to another jurisdiction for the policy.

 (c) This section does not apply to insurance of risks of the state or a political subdivision of the state, or to insurance of aircraft primarily engaged in interstate or foreign commerce.

 (d) On default of a nonadmitted insurer in the payment of the tax, the insured shall pay the tax within 30 days after written notice from the director of the default by the nonadmitted insurer. If the tax prescribed by this section is not paid by the nonadmitted insurer within the time stated or by the insured within the time stated after notice of default by the nonadmitted insurer, the tax may be increased by
     (1) a late payment fee of $1,000 or 10 percent of the tax due, whichever is greater;

     (2) interest at the rate of one percent a month or part of a month from the date the payment was originally due to the date paid; and

     (3) a penalty not to exceed $100 a day or 25 percent of the tax due, whichever is greater, from the date the payment was due to the date paid.




Sec. 21.33.060. Defense of action by unauthorized insurer. [Repealed, § 2 ch 234 SLA 1968.]
Sec. 21.33.061. Independently procured insurance; premium tax.
 (a) Every insured who procures or causes to be procured or continues or renews insurance with a nonadmitted insurer, or an insured or self-insurer who so procures or continues excess loss, catastrophe or other insurance, upon a subject of insurance resident, located, or to be performed in this state, other than insurance lawfully procured through a surplus lines broker under AS 21.34 shall, within 30 days after the date the insurance was procured, continued, or renewed, file a report with the director in writing and in a form prescribed by the director. The report must show the name and address of the insured, name and address of the insurer, the subject of the insurance, a general description of the coverage, the amount of premium currently charged, and additional pertinent information required by the director.

 (b) Insurance in a nonadmitted insurer of a subject of insurance resident, located, or to be performed in this state procured through negotiations or an application, in whole or in part occurring or made in or from in or out of this state, or for which premiums in whole or in part are remitted directly or indirectly from in or out of this state, is considered to be insurance procured or continued or renewed in this state within the intent of (a) of this section.

 (c) If the insured’s home state is this state, the insured shall pay to the director, on or before March 1 following the calendar year in which the insurance was procured, continued, or renewed, a tax of 3.7 percent of the gross premiums paid for the insurance other than wet marine and transportation insurance, less any return premiums. For wet marine and transportation insurance, if the insured’s home state is this state, the insured shall pay to the director a tax of three-fourths of one percent of the gross premiums paid for the wet marine and transportation insurance. If the insurance covers properties, risks, or exposures located or to be performed both in and out of this state, the tax payable shall be computed based on an amount equal to that portion of the gross premiums allocated under (d) of this section to this state, plus an amount equal to the portion of the premiums allocated under (d) of this section to other properties, risks, or exposures located or to be performed outside of this state. In the event of cancellation and rewriting of the insurance contract, the additional premium for tax purposes is the premium in excess of the unearned premium of the cancelled insurance contract. In this subsection, “premium” includes all premiums, membership fees, assessments, dues, and any other consideration for insurance.

 (d) In determining the amount of premiums taxable in this state, all premiums written, procured, or received in this state shall be considered written on property or a subject located or resident in this state, except premiums that are properly allocated or apportioned and reported as taxable premiums of another state. In determining the amount of gross premiums taxable in this state, the tax due shall be computed on that portion of the policy premium that is attributable to a subject resident, located, or to be performed in this state and that relates to the kind of insurance being placed as determined by reference to an allocation schedule as follows:
     (1) if a policy covers more than one classification,
          (A) for any portion of the coverage identified by a classification on the allocation schedule, the tax shall be computed by using the allocation schedule for the corresponding portion of the premium;

          (B) for any portion of the coverage not identified by a classification on the allocation schedule, the tax shall be computed by using an alternative equitable method of allocation for the property or subject;

          (C) for any portion of the coverage where the premium is indivisible, the tax shall be computed by using the method of allocation that pertains to the classification describing the predominant coverage;

     (2) if the information provided is insufficient to substantiate the method of allocation used, or if the director determines that the method is incorrect, the director shall determine the equitable and appropriate amount of tax due to this state as follows:
          (A) by use of the allocation schedule where the subject is appropriately identified in the schedule;

          (B) where the allocation schedule does not identify a classification appropriate to the coverage, the director may give significant weight to documented evidence of the underwriting bases and other criteria used by the insurer or may give consideration to other available information to the extent sufficient and relevant, including the percentage of the insured’s physical assets in this state, the percentage of the insured’s sales in this state, the percentage of income or resources derived from this state, and the amount of premium tax paid to another jurisdiction for the policy.

 (e) [Repealed, § 223 ch 67 SLA 1992.]
 (f) The attorney general, upon request of the director, shall proceed in the courts of this or another state or in a federal court or agency to recover the tax not paid within the time prescribed in this section.

 (g) This section does not apply to insurance of risks of the state or a political subdivision of the state, to insurance of aircraft primarily engaged in interstate or foreign commerce, to life insurance, to health insurance, or to annuity contracts.

 (h) This section does not abrogate or modify, and may not be construed or considered to abrogate or modify, a provision of AS 21.33.037 or 21.33.042 or another provision of this chapter.

 (i) [Repealed, § 223 ch 67 SLA 1992.]
 (j) If the tax payable under (c) of this section is not paid within the time stated, the tax may be increased by
     (1) a late payment fee of $1,000 or 10 percent of the tax due, whichever is greater;

     (2) interest at the rate of one percent a month or part of a month from the date the payment was due to the date paid; and

     (3) a penalty not to exceed $100 a day or 25 percent of the tax due, whichever is greater, from the date the payment was due to the date paid.




Sec. 21.33.063. Agreements with other states.
The director is authorized to participate in an agreement with another state for the purposes of collecting and disbursing to the other state any premium tax collected under this chapter and payable to the other state and for receiving from the other state premium tax it has collected and is owed to this state. To the extent that another state where a portion of the properties, risks, or exposures reside has failed to enter into an agreement with this state, the director shall retain all of the net premium tax collected by this state.


Sec. 21.33.065. Penalties.
 (a) A person other than an insured, who in this state represents or aids a nonadmitted insurer in violation of AS 21.33.037, is subject to a civil penalty of not more than $50,000 in addition to applicable criminal penalties and other penalties prescribed in this title.

 (b) In addition to any other penalty provided, a person who violates a provision of this chapter is subject to a civil penalty of not more than $10,000 for the first offense and not more than $100,000 for each succeeding violation.

 (c) [Repealed, § 223 ch 67 SLA 1992.]




Sec. 21.33.068. Venue. [Repealed, § 26 ch 117 SLA 1984.]
Sec. 21.33.070. Attorney fees. [Repealed, § 2 ch 234 SLA 1968.]
Secs. 21.33.071 , 21.33.075. Insurer and insurance business defined; exceptions. [Repealed, § 26 ch 117 SLA 1984.]
Secs. 21.33.080 — 21.33.300. Surplus Lines Insurance Law. [Repealed, § 26 ch 117 SLA 1984.]
Sec. 21.33.310. Exemptions from surplus line law. [Repealed, § 13 ch 21 SLA 1985.]
Sec. 21.33.320. [Renumbered as AS 21.33.900.]
Sec. 21.33.330. Surplus line broker defined. [Repealed, § 13 ch 21 SLA 1985.]
Sec. 21.33.900. Records of insureds.
In order that the director may effectively administer this chapter, a person who has placed insurance with an unauthorized insurer shall, upon the director’s order, produce for the examination of the director all policies and other documents evidencing the insurance and shall disclose to the director the amount of premiums paid or agreed to be paid for the insurance and other information required by the director. For each refusal to obey the order, in addition to any other penalties prescribed in this title, the person is subject to a civil penalty of not more than $25,000 following an appropriate hearing as provided in AS 21.06.170 — 21.06.230.


Sec. 21.33.910. Definitions.
In this chapter,
     (1) “export” means to place surplus lines insurance with a nonadmitted insurer;

     (2) “transaction of insurance” means the solicitation, negotiation, procurement, effectuation, or renewal of insurance; forwarding of applications; delivery of policies or contracts; inspection of risks; fixing of rates; investigation or adjustment of claims or losses; collection or forwarding of premiums; or transaction of matters subsequent to effectuation of the contract of insurance and arising out of it;

     (3) “unauthorized person” means a person not licensed as a surplus lines broker, or not a salaried employee of the insured;

     (4) “wet marine and transportation insurance” has the meaning given in AS 21.34.900.




Chapter 34. Surplus Lines Insurance.

Sec. 21.34.010. Purpose.
The legislature declares that insurance transactions with nonadmitted insurers are so affected with a public interest as to require regulation, taxation, supervision, and control of the transactions and matters relating to nonadmitted insurance. The purpose of this chapter includes
     (1) protection of persons seeking insurance in this state;

     (2) permission for surplus lines insurance to be placed with reputable and financially sound nonadmitted insurers and to be exported from this state under this chapter;

     (3) establishment of a system of regulation that will
          (A) permit orderly access to surplus lines insurance in this state; and

          (B) encourage admitted insurers to provide new and innovative types of insurance and make them available to consumers in this state; and

     (4) protection of the revenues of this state.




Sec. 21.34.020. Placement of surplus lines insurance.
 (a) Insurance other than reinsurance, wet marine and transportation insurance, insurance independently procured, life insurance, health insurance except as provided in AS 21.34.035, and annuity contracts may be procured through a surplus lines broker licensed under AS 21.27 from nonadmitted insurers if
     (1) the insurer is an eligible surplus lines insurer;

     (2) the full amount, kind, or class of insurance cannot be obtained from insurers who are admitted to do business in this state;

     (3) the producing broker has conducted and documented a diligent search among insurers who are admitted to transact business in this state and are actually writing the particular kind or class of insurance required by the client in this state;

     (4) the director authorizes an exception to (2) of this section by regulation or by written authorization for an individual placement upon written request by the broker; and

     (5) all other requirements of this chapter are met.

 (b) If a policyholder meets the standards of an exempt commercial purchaser under this title and regulations adopted by the director, insurance may be procured from a surplus lines broker without complying with (a)(2), (3), and (4) of this section if
     (1) the broker procuring or placing the surplus lines insurance has disclosed to the exempt commercial purchaser that the insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight; and

     (2) the exempt commercial purchaser has subsequently requested in writing that the broker procure or place the insurance from a nonadmitted insurer.

 (c) In this section,
     (1) “amount” means limit, sublimit, retention, and broadening or restrictive endorsement;

     (2) “class” means rating class;

     (3) “kind” means one or more kinds of insurance as defined in AS 21.12.




Sec. 21.34.025. Subscription policies or joint underwriting in combination with admitted insurers.
Subscription policies or joint underwriting of insurance other than reinsurance, wet marine and transportation insurance, insurance independently procured, life insurance, health insurance, and annuity contracts by a combination of authorized insurers and nonadmitted insurers is a surplus lines insurance placement in its entirety, is subject to this chapter, is not subject to AS 21.39, AS 21.42.120, or 21.42.130, and losses or claims are not covered by AS 21.80 (Alaska Insurance Guaranty Association Act).


Sec. 21.34.030. Workers’ compensation insurance.
 (a) Workers’ compensation insurance may be placed in and written by a nonadmitted insurer if
     (1) the director considers it in the best interest of the public and issues an order to that effect;

     (2) the insurance is written in accordance with this chapter; and

     (3) all conditions established for writing workers’ compensation insurance in a nonadmitted market receive compliance.

 (b) The rates and rating plans for workers’ compensation insurance are subject to AS 21.39. The surplus lines broker is responsible for making the filings required under AS 21.39 and for maintaining the records required in that chapter.

 (c) Insurance placed or written in a nonadmitted insurer and the activities of the surplus lines broker relating to that transaction are subject to the applicable provision of this title.

 (d) The minimum capital and surplus required is two times that required in AS 21.34.040(c)(1).




Sec. 21.34.035. Health care insurance.
 (a) Except for a multiple employer welfare arrangement, health care insurance may be placed in and written by a nonadmitted insurer if
     (1) the director finds it is in the best interest of the public and issues an order to that effect; and

     (2) the insurance is in compliance with this chapter.

 (b) The rates and rating methods for health care insurance placed and written under this section are subject to AS 21.51.405 and AS 21.54.015. The surplus lines broker shall make the filings required under AS 21.51.405 and AS 21.54.015 and maintain the records and accounts as required under AS 21.87.230.

 (c) Health care insurance may not be procured under this chapter
     (1) for the purpose of obtaining a lower premium rate than acceptable by an authorized insurer; or

     (2) for obtaining a competitive advantage.

 (d) Insurance placed in or written by a nonadmitted insurer and the activities of the surplus lines broker relating to that transaction are subject to this title.

 (e) In this section, “health care insurance” has the meaning given in AS 21.12.050(b).




Sec. 21.34.040. Eligible surplus lines insurers required.
 (a) Coverage may be placed in a nonadmitted insurer by a surplus lines broker only if
     (1) at the time of placement, the nonadmitted insurer meets all the requirements of this section; and

     (2) the surplus lines broker is licensed under AS 21.27.

 (b) The nonadmitted insurer must establish satisfactory evidence of good repute and financial integrity to be eligible.

 (c) A nonadmitted insurer may be eligible to provide coverage in this state if it qualifies under one of the following:
     (1) a foreign but nonalien stock insurer may qualify under this subsection if it has the minimum unimpaired basic capital and additional surplus equal to that required in its domiciliary jurisdiction, or maintains $15,000,000, whichever is greater;

     (2) a foreign but nonalien mutual insurer, a reciprocal insurer, or a mutual protection and indemnity association may qualify under this subsection if it has the minimum unimpaired basic surplus and additional surplus equal to that required in its domiciliary jurisdiction or maintains $15,000,000, whichever is greater;

     (3) an alien insurer other than an alien mutual protection and indemnity association may qualify under this subsection if it meets the minimum requirements in (1) or (2) of this subsection and maintains in the United States an irrevocable trust fund in an amount not less than $2,500,000 in a solvent federally insured bank acceptable to the director, as security to the full amount, for the protection of all its policyholders and creditors of each member of the mutual insurer, reciprocal insurer, or mutual protection and indemnity association in the United States; the trust fund must consist of instruments of substantially the same character and quality as those that are eligible investments for the capital and statutory reserves of admitted insurers authorized to write like kinds of insurance in this state or of irrevocable, clean, and unconditional letters of credit; the trust fund must have an expiration date that at no time is less than five years;

     (4) a Lloyd’s syndicate or an insurer belonging to a similar group, including incorporated and individual unincorporated insurers, may qualify if it maintains a trust fund jointly and severally with the other members of the group in an amount not less than $50,000,000, as security to the full amount, for the protection of all policyholders and creditors of each member of the group in the United States; the incorporated members may not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of solvency regulation and control by the group’s domiciliary regulator as are the unincorporated members; the trust fund must consist of instruments of substantially the same character and quality as those that are eligible investments for the capital and statutory reserves of admitted insurers authorized to write like kinds of insurance in this state or of irrevocable, clean, and unconditional letters of credit; the trust fund must have an expiration date that at no time is less than five years;

     (5) each syndicate or insurer belonging to an insurance exchange created by the laws of individual states may qualify if the insurance exchange maintains capital and surplus, or the substantial equivalent, of not less than $50,000,000 in the aggregate; for insurance exchanges that maintain funds for the protection of all insurance exchange policyholders, each individual syndicate shall maintain minimum capital and surplus, or the substantial equivalent, of not less than $3,000,000; in the event the insurance exchange does not maintain funds for the protection of all its policyholders, each individual syndicate shall meet the minimum requirements of (1) or (2) of this subsection;

     (6) an alien mutual protection and indemnity association may qualify under this subsection if it has the minimum unimpaired basic capital and additional surplus equal to that required in its domiciliary jurisdiction or $10,000,000, whichever is greater, and maintains in the United States an irrevocable trust fund in an amount not less than $1,000,000 in a federally insured bank acceptable to the director, as security to the full amount, for the protection of all its policyholders and creditors or each member of the mutual protection and indemnity association in the United States; the trust fund must consist of instruments of substantially the same character and quality as those that are eligible investments for the capital and statutory reserves of admitted insurers authorized to write wet marine and transportation insurance in this state or of irrevocable, clean, and unconditional letters of credit; the trust fund must have an expiration date that at no time is less than five years;

     (7) an insurer not domiciled in the United States or its territories qualifies under this subsection if it is listed on the Quarterly Listing of Alien Insurers maintained by the National Association of Insurance Commissioners International Insurers Department.

 (d) A nonadmitted insurer may be eligible to provide coverage in this state if it files with the director or the director’s designee a copy of its current annual financial statement that has been certified by the insurer. The financial statement must be filed with and approved by the regulatory authority in the domicile of the nonadmitted insurer, or certified by an accounting or auditing firm licensed in the jurisdiction of the insurer’s domicile. A foreign insurer shall provide the approved or certified financial statement not more than six months after the close of the reporting period. An alien insurer shall provide the approved or certified financial statement not more than nine months after the close of the reporting period. In the case of an insurance exchange, the statement may be an aggregate combined statement of all underwriting syndicates operating during the period reported upon.

 (e) The capital and surplus requirements of this section shall be calculated based upon generally accepted accounting practices used in the United States of America.

 (f) If an insurer has less than the minimum capital and surplus required in (c) of this section, the insurer may satisfy the requirements of this section upon an affirmative finding of acceptability by the director. The director’s finding must be based on factors including quality of management, capital and surplus of any parent company, company underwriting profit and investment income trends, market availability, and company record and reputation within the industry. The director may not make an affirmative finding of acceptability when the nonadmitted insurer’s capital and surplus is less than $4,500,000.

 (g) The director may participate in interstate agreements formed for the purpose of developing additional and alternative nationwide uniform eligibility requirements that are applicable to nonadmitted insurers domiciled in another state or territory of the United States.




Sec. 21.34.050. Listing eligible surplus lines insurers.
 (a) In addition to meeting the requirements of AS 21.34.040, a nonadmitted insurer shall be considered an eligible surplus lines insurer if it appears on the most recent list of eligible surplus lines insurers published by the director. The list is to be published at least semiannually by
     (1) posting the list on the division’s Internet website; and

     (2) providing a copy of the list to a person on request to the division.

 (b) Nothing in this section requires the director to place or maintain the name of a nonadmitted insurer on the list of eligible surplus lines insurers.

 (c) A nonadmitted insurer shall be removed from the list of eligible surplus lines insurers if the nonadmitted insurer fails to meet the requirement under AS 21.34.040(d). However, the director may reinstate a nonadmitted insurer on the list of eligible surplus lines insurers if the nonadmitted insurer has remedied the reason for removal from the list.




Sec. 21.34.060. Other nonadmitted insurers.
Only that portion of a risk eligible for export for which the full amount of coverage is not procurable from eligible surplus lines insurers may be placed with another nonadmitted insurer that does not appear on the list of eligible surplus lines insurers published under AS 21.34.050 but nonetheless meets the requirements of AS 21.34.040 and a regulation adopted under this chapter. The surplus lines broker seeking to provide coverage through an unlisted nonadmitted insurer shall within 30 days after placing the coverage notify the director in writing on a form prescribed by the director the amount and percentage of each risk to be placed and naming each nonadmitted insurer with which placements are intended. Within 30 days after placing the coverage, the surplus lines broker shall also send written notice to the insured and the producing broker that the insurance, or a portion of it, has been placed with the unlisted nonadmitted insurer.


Sec. 21.34.070. Declaration of ineligibility.
 (a) If after a review of a nonadmitted insurer and consideration of factors including quality of management, capital and surplus of a parent company, underwriting profit, investment income trends, trade practices, reserving practices, company record, and reputation within the industry, the director finds the insurer to be unacceptable, the director may declare the nonadmitted insurer to be ineligible.

 (b) The director may issue an order declaring a nonadmitted insurer ineligible if at any time the director has reason to believe that the nonadmitted insurer
     (1) is in unsound financial condition;

     (2) is no longer eligible under AS 21.34.040;

     (3) has wilfully violated the laws of this state or another state; or

     (4) does not reasonably investigate and make prompt payment of just losses and claims in this state or another state.

 (c) The director shall promptly mail notice of all declarations under (b) of this section to each licensed surplus lines broker.




Sec. 21.34.080. Transaction report; evidence of insurance.
 (a) A surplus lines broker shall execute and file with the report required by AS 21.34.170 a written report, which shall be kept confidential, regarding each surplus lines insurance transaction occurring in the preceding period. The report must include
     (1) the name and address of the insured;

     (2) the identity of each insurer including the National Association of Insurance Commissioners company number and the percentage of coverage provided by each;

     (3) a complete description of the subject and location of the risk;

     (4) the amount of gross premium written for the insurance; and

     (5) other information required by the director.

 (b) Instead of the report required in (a) of this section, the director may order that evidence of insurance be filed with the surplus lines association and that the surplus lines association provide periodic reports regarding insurance transactions to the director.

 (c) [Repealed, § 53 ch 96 SLA 2004.]
 (d) A transaction, as used in this section, is any placement of coverage as well as changes in coverage that result in an increase or decrease of premiums, taxes, or fees.




Sec. 21.34.090. Surplus lines association.
 (a) A surplus lines association of surplus lines brokers may be formed to
     (1) facilitate and encourage compliance by its members with the laws of this state and the regulations relative to surplus lines insurance;

     (2) attend National Association of Insurance Commissioners meetings and participate in task forces and work groups;

     (3) communicate with organizations of admitted insurers with respect to the proper use of the surplus lines market;

     (4) receive and disseminate to its members information relative to surplus lines coverages; and

     (5) contract with the director to receive reports and affidavits under AS 21.34.080, verify that coverage has been placed with eligible surplus lines insurers, verify the amount of taxes under AS 21.34.180 and fees under AS 21.34.190 for surplus lines insurance for each surplus lines broker, and to prepare periodic reports as required by the director.

 (b) The surplus lines association shall file with the director
     (1) a copy of its constitution, its articles of agreement of association, or its certificate of incorporation;

     (2) a copy of its bylaws and regulations governing its activities;

     (3) a current list of its members;

     (4) the name of a resident of this state upon whom notices or orders of the director or processes issued at the director’s instruction may be served;

     (5) an agreement that the director may examine the surplus lines association in accordance with this section; and

     (6) a schedule of its membership fees and assessments.

 (c) A surplus lines association is subject to the same penalties under this title as a surplus lines broker.

 (d) The director may, by order, require that all surplus lines brokers, as a condition of continued licensure under this chapter, join the surplus lines association.

 (e) The surplus lines association shall maintain its place of business in this state.




Sec. 21.34.100. Evidence of insurance.
 (a) When surplus lines insurance is placed, the surplus lines broker shall promptly deliver to the named insured or the producing broker the policy or, if the policy is not then available, a cover note, binder, or other evidence of insurance. The cover note, binder, or other evidence of insurance for the named insured shall be executed by the surplus lines broker and must contain a summary of all material facts that would regularly be included in the policy, the description and location of the subject of insurance, a general description of the coverages of the insurance, the premium and rate charged and taxes to be collected from the insured, the name and address of the insured, the name of each surplus lines insurer and the percentage of the entire risk assumed by each, the name of the surplus lines broker, and the license number of the surplus lines broker.

 (b) A surplus lines broker may not issue or deliver evidence of insurance or purport to insure or represent that insurance will be or has been written by an eligible surplus lines insurer, or a nonadmitted insurer under AS 21.34.060, unless the surplus lines broker has authority from the insurer to cause the risk to be insured or has received information from the insurer in the regular course of business that the insurance has been granted.

 (c) If, after delivery of evidence of insurance, there is a change in the identity of the insurers or the percentage of the risk assumed by an insurer or another material change in coverage from that stated in the surplus lines broker’s original evidence of insurance or in other material concerning the evidenced insurance, the surplus lines broker shall promptly issue and deliver to the insured or the producing broker an appropriate substitute for or endorsement of the original document, accurately showing the current status of the coverage and the insurer’s responsibility.

 (d) A surplus lines broker who fails to comply with this section is subject to the penalties in AS 21.34.230.

 (e) Every evidence of insurance negotiated, placed, or procured under this chapter issued by a surplus lines broker must bear the name of the surplus lines broker, which may not be covered, concealed, or obscured by the producing broker, and the following legend in at least 10-point type: “This is evidence of insurance procured and developed under the Alaska Surplus Lines Law, AS 21.34. It is not covered by the Alaska Insurance Guaranty Association Act, AS 21.80

 (f) A producing broker or other licensee may issue to a person, other than the named insured, a certificate as evidence of insurance negotiated, placed, or procured under this chapter. The certificate must bear the name of the surplus lines broker, which may not be covered, concealed, or obscured by the producing broker, and the following legend in at least 10-point type: “This is evidence of insurance procured and developed under the Alaska Surplus Lines Law, AS 21.34. It is not covered by the Alaska Insurance Guaranty Association Act, AS 21.80




Sec. 21.34.110. Surplus lines broker’s duty to notify insured.
 (a) A contract of insurance placed by a surplus lines broker under this chapter is not binding upon the insured and a premium charged is not due and payable until
     (1) the surplus lines broker has notified the insured in writing, a copy of which shall be maintained by the surplus lines broker with the records of the contract, available for examination, that the insurer with whom the surplus lines broker places the insurance does not hold a certificate of authority issued by this state and is not subject to its supervision, and, in the event of the insolvency of the surplus lines insurer, losses will not be covered under AS 21.80 (Alaska Insurance Guaranty Association Act); or

     (2) the producing broker has notified the insured and the surplus lines broker in writing, a copy of which shall be maintained by the producing broker and the surplus lines broker with the records of the contract, available for examination, that the insurer with whom the surplus lines is placed does not hold a certificate of authority issued by this state and is not subject to this state’s supervision, and, in the event of the insolvency of the surplus lines insurer, losses will not be covered under AS 21.80 (Alaska Insurance Guaranty Association Act).

 (b) Nothing in this section may be construed as nullifying an agreement by an insurer to provide insurance.




Sec. 21.34.120. Validity of surplus lines contracts.
Insurance contracts procured under this chapter shall be valid and enforceable as to all parties.


Sec. 21.34.130. Effect of payment to surplus lines broker.
A payment of premium to a surplus lines broker acting for a person other than itself in negotiating, continuing, or reviewing a policy of insurance under this chapter, is considered to be payment to the insurer, notwithstanding conditions or stipulations in the policy or contract to the contrary.


Sec. 21.34.140. Licensing of surplus lines brokers. [Repealed, § 223 ch 67 SLA 1992.]
Sec. 21.34.150. Surplus lines brokers may accept business from other brokers.
A surplus lines broker licensed by this state may originate surplus lines insurance or accept surplus lines insurance from another surplus lines broker licensed by this state or a producing broker licensed by this state as to the kind and class of insurance involved. The surplus lines broker may compensate the producing broker or surplus lines broker for the insurance.


Sec. 21.34.160. Records of surplus lines broker. [Repealed, § 223 ch 67 SLA 1992.]
Sec. 21.34.170. Quarterly reports, summary of exported business.
 (a) A surplus lines broker shall file with the director, on forms prescribed by the director, a report of all surplus lines insurance, by type of insurance as required to be reported in the annual statement that must be filed with the director by admitted insurers. The report must include all surplus lines insurance transactions during the preceding period showing the aggregate gross premiums written, the aggregate return premiums, the amount of aggregate tax remitted to this state, and the amount of aggregate tax remitted to each other state for which an allocation is made under AS 21.34.180. The forms shall be filed quarterly on March 1, June 1, September 1, and December 1 of each year.

 (b) Instead of the report required under (a) of this section, the director may order that evidence of insurance be filed with surplus lines association and that the association file periodic reports regarding insurance transactions to the director.

 (c) The surplus lines broker shall pay a penalty for late filing of the report, according to the rate established in regulations adopted by the director.




Sec. 21.34.180. Surplus lines tax.
 (a) In addition to collecting the full amount of gross premiums written by an insurer for surplus lines insurance, the surplus lines broker shall collect and pay to the director a tax of 2.7 percent on the net premium, which is the total gross premiums written, less any return premiums, for the insurance. Where the home state of the insured is this state and the insurance covers properties, risks, or exposures located or to be performed both in and out of this state, the tax payable shall be computed based on an amount equal to 2.7 percent on that portion of the net premiums allocated under (f) of this section to this state, plus an amount equal to the portion of the premiums allocated under (f) of this section to other states or territories based on the tax rates and fees applicable to other properties, risks, or exposures located or to be performed outside of this state.

 (b) The surplus lines broker may not absorb the tax or any part of it and may not rebate, for any reason, any part of the tax.

 (c) If, under AS 21.09.210, an admitted insurer is required to collect and pay premium tax on a portion of a subscription policy, the surplus lines broker is not required to collect any amount that would constitute double taxation of that portion of the insurance.

 (d) The director may participate in an agreement with another state formed for the purpose of collecting and disbursing to a remitting state any funds collected under (a) of this section applicable to other properties, risks, or exposures located or to be performed outside of this state. To the extent that another state where a portion of the properties, risks, or exposures resides has failed to enter into an agreement with this state, the director shall retain all of the net premium tax collected by this state.

 (e) At the time of filing the quarterly report as set out in AS 21.34.170, each surplus lines broker shall pay the premium tax due for transactions occurring during the period covered by the report. The tax must be paid by electronic or other means as specified by the director.

 (f) In determining the amount of premiums taxable in this state, all premiums written, procured, or received in this state shall be considered written on properties, risks, or exposures located or to be performed in this state except premiums that are properly allocated or apportioned and reported as taxable premiums of a remitting state. Allocation of the amount of premiums taxable for surplus lines insurance covering properties, risks, or exposures only partially located or to be performed in this state shall be determined by reference to an allocation schedule established by regulation adopted by the director subject to the following:
     (1) if a policy covers more than one classification, the following apply:
          (A) for any portion of the coverage identified by a classification on the allocation schedule, the tax shall be computed by using the allocation schedule for the corresponding portion of the premium;

          (B) for any portion of the coverage not identified by a classification on the allocation schedule, the tax shall be computed by using an alternative equitable method of allocation for the property or risk;

          (C) for any portion of the coverage where the premium is indivisible, the tax shall be computed by using the method of allocation that pertains to the classification describing the predominant coverage;

     (2) if the information provided by the surplus lines broker is insufficient to substantiate the method of allocation used by the surplus lines broker, or if the director determines that the broker’s method is incorrect, the director shall determine the equitable and appropriate amount of tax due to this state as follows:
          (A) by use of the allocation schedule if the risk is appropriately identified in the schedule;

          (B) if the allocation schedule does not identify a classification appropriate to the coverage, the director may give significant weight to documented evidence of the underwriting bases and other rating criteria used by the insurer; the director may also consider other available information to the extent sufficient and relevant, including the percentage of the insured’s physical assets in this state, the percentage of the insured’s sales in this state, the percentage of income or resources derived from this state, and the amount of premium tax paid to another jurisdiction for the policy.

 (g) If the amount of tax due under (a) of this section is less than $50 in any jurisdiction, the tax must be paid in the jurisdiction in which the reports and summary of exported business are filed.

 (h) The director shall, at least annually, furnish to the commissioner of a remitting state a copy of all filings reporting an allocation of taxes required by this section.

 (i) This section does not apply to insurance of risks of state government or its political subdivisions, to an agency of state government or its political subdivisions, or to insurance of aircraft primarily engaged in interstate or foreign commerce.

 (j) A surplus lines broker shall pay to the division a late payment fee of $50 a month plus five percent of the tax due each calendar month or part of a month during which the broker fails to pay the full amount of the tax or a portion of the tax and interest at the rate of one percent of the tax due each calendar month or part of a month for the period the broker fails to pay the tax. The late payment fee, not including interest, may not exceed $250 plus 25 percent of the tax due. The tax payment shall be made in the form required by the director, or a penalty shall be added to the tax equal to 25 percent of the tax due, not to exceed $2,000, with a minimum penalty of $100. In addition to any other penalty provided by law, if the provisions of this section are wilfully violated, a civil penalty may be assessed of not more than $10,000. The director may suspend or revoke the license of a broker that fails to pay its taxes, a penalty, or a late payment fee required under this section.




Sec. 21.34.190. Filing fee.
 (a) The fee for filing the statement under AS 21.34.180(e) is an amount equal to one percent on gross premium charged less any return premiums as reported on the statement. The surplus lines broker shall pay the fee at the time of filing of the statement.

 (b) If the filing fee is not paid when due, an additional late payment fee of $250 plus two percent of the fee due per month, or part of a month, shall become due and payable by the surplus lines broker.




Sec. 21.34.200. Collection of taxes and fees.
 (a) If the tax collectible under AS 21.34.180 or the fee collectible under AS 21.34.190 by a surplus lines broker is not paid within the time prescribed, the tax, fee, or both, and late payment fees, along with appropriate penalties, may be collected by distraint or by an action in court, against the surplus lines licensee and the surety on the bond filed under AS 21.27.790.

 (b) [Repealed, § 223 ch 67 SLA 1992.]
 (c) In addition to penalties provided in this chapter, failure to pay tax within the time prescribed is subject to penalties provided in AS 21.36.910.




Sec. 21.34.210. Suspension, revocation, or non-renewal of surplus lines broker license. [Repealed, § 223 ch 67 SLA 1992.]
Sec. 21.34.220. Actions against surplus lines insurer; service of process.
 (a) A surplus lines insurer may be sued upon a cause of action arising in this state under a surplus lines insurance contract made by it or evidence of insurance issued or delivered by the surplus lines broker under the procedure provided in AS 21.33. A policy issued by the surplus lines broker shall contain a provision stating the substance of this section and designating the person to whom the director shall mail process.

 (b) Each surplus lines insurer assuming a surplus lines risk is considered to have subjected itself to this chapter.

 (c) The remedies provided in this section are in addition to other methods provided by law for service of process upon insurers.




Sec. 21.34.230. Penalties.
 (a) In addition to any other penalty provided by law, a person that the director determines under AS 21.06.170 — 21.06.240 has violated the provisions of this chapter is subject to
     (1) a civil penalty equal to the compensation promised, paid or to be paid, directly or indirectly, to a licensee in regard to each violation; and

     (2) either a civil penalty of not more than $10,000 for each violation or a civil penalty of not more than $25,000 for each violation if the director determines that the person wilfully violated the provisions of this chapter.

 (b) A violation of this chapter is cause for denial, nonrenewal, suspension, or revocation of a license.




Sec. 21.34.240. Severability.
If any provision of this chapter, or the application of a provision of this chapter to any person or circumstance, is held invalid, the remainder of the chapter and the application of that provision to persons or circumstances, other than those as to which it is held invalid, shall not be affected.


Sec. 21.34.250. Regulations.
The director may adopt regulations to implement, define, and enforce the provisions of this chapter.


Sec. 21.34.900. Definitions.
In this chapter,
     (1) “affiliate” or “affiliated” means, with respect to an insured, any entity that controls, is controlled by, or is under common control with the insured;

     (2) “affiliated group” means any group of entities that are all affiliated;

     (3) “capital” means money paid in for stock or other evidence of ownership;

     (4) “control” means, for purposes of an entity having “control” over another entity,
          (A) the entity, directly or indirectly or acting through one or more other persons, owns, controls, or has the power to vote 25 percent or more of any class of voting securities of the other entity; or

          (B) the entity controls, in any manner, the election of a majority of the directors or trustees of the other entity;

     (5) “eligible surplus lines insurer” means a nonadmitted insurer with which a surplus lines broker may place surplus lines insurance under AS 21.34.040;

     (6) “exempt commercial purchaser” has the meaning given under 15 U.S.C. 8206 (Nonadmitted and Reinsurance Reform Act of 2010);

     (7) “export” means to place surplus lines insurance with a nonadmitted insurer;

     (8) “home state,” for purposes of determining the home state of an insured in a multistate placement of nonadmitted insurance, is defined as follows:
          (A) except as provided in (B) of this paragraph, “home state” means, with respect to an insured,
               (i) the state in which an insured maintains its principal place of business or, in the case of an individual, the individual’s principal residence; or

               (ii) if 100 percent of the insured risk is located out of the state referred to in (i) of this subparagraph, the state to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated;

          (B) if two or more insureds from an affiliated group are named insureds on a single policy, “home state” under (A) of this paragraph is based on the member of the affiliated group that has the largest percentage of premium attributed to it under the insurance contract;

          (C) for purposes of (A) of this paragraph, the principal place of business of an insured is the state where the insured maintains its headquarters and where the insured’s high-level officers direct control and coordinate the business activities of the insured;

     (9) “kind of insurance” means one of the kinds of insurance defined in AS 21.12.040 — 21.12.110;

     (10) “producing broker” means the insurance producer or surplus lines broker licensed under AS 21.27 dealing directly with the client seeking insurance;

     (11) “reciprocal state” means a state that the director has determined has enacted provisions substantially similar to those contained in AS 21.34.170 and 21.34.180;

     (12) “remitting state” means a state that has entered into an agreement with this state for remitting to this state any premium tax collected by the other state on premiums allocated to properties, risks, or exposures located in this state;

     (13) “surplus,” as used in the financial requirements of AS 21.34.040, means money over and above liabilities and capital of the insurer for the protection of policyholders;

     (14) “transaction of insurance” means the solicitation, negotiation, procurement, effectuation, or renewal of insurance; forwarding of applications; delivery of policies or contracts; inspection of risks; fixing of rates; investigation or adjustment of claims or losses; collection or forwarding of premiums; or transaction of matters subsequent to effectuation of the contract of insurance and arising out of it;

     (15) “wet marine and transportation insurance” means one or more of the following:
          (A) insurance upon, of interest in, or relating to vessels, crafts, hulls, except vessels of 50 displacement tons or less;

          (B) insurance of marine builders risks, marine war risks, and contracts of marine protection and indemnity insurance;

          (C) insurance of freight and disbursements pertaining to a subject of insurance coming within this paragraph; or

          (D) insurance of personal property and interests in personal property, in course of exportation from or importation into a country or in the course of coastal or inland water transportation, including transportation by land, water, or air from point of origin to final destination in connection with any and all risks or perils of navigation, transit, or transportation, and while being repaired for and while awaiting shipment, and during any delays, transshipment, or reshipment incident to them.




Article 1. Trade Practices in General.


Chapter 36. Trade Practices and Frauds.

Sec. 21.36.010. Purpose.
The purpose of this chapter is to regulate an act or a trade practice in the business of insurance in accordance with the intent of Congress as expressed in 15 U.S.C. 1011 — 1015 (McCarran-Ferguson Act) by defining or providing for determination of all the practices in this state that constitute an unfair method of competition or an unfair or deceptive act or practice and by prohibiting them.


Sec. 21.36.020. Unfair methods, deceptive acts prohibited.
A person may not engage in an act or a trade practice in this state or relative to a subject resident, located, or to be performed in this state that is defined in this chapter as, or determined under this chapter to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.


Sec. 21.36.025. Unfair marketing practices prohibited.
 (a) A person may not violate the applicable provisions of AS 21.56.180.

 (b) A person may not sell a membership in an association or labor union for the purpose of qualifying an individual for group insurance.

 (c) A person that sells a membership in an association may not offer group insurance for purposes of selling membership in an association or labor union.




Sec. 21.36.030. Misrepresentation and false advertising of insurance policies.
 (a) A person may not make, issue, circulate, broadcast, or have made, issued, circulated, or broadcast an estimate, circular, statement, illustration, comparison, assertion, or other written, electronic, or oral presentation that
     (1) misrepresents the benefits, advantages, conditions, sponsorship, source, or terms of an insurance policy or a health discount plan;

     (2) misrepresents the dividends or share of the surplus to be received on an insurance policy;

     (3) misrepresents an insurance policy as being a share or shares of stock;

     (4) makes a false or misleading statement as to the dividends or shares of the surplus previously paid on an insurance policy;

     (5) misrepresents or makes a misleading statement as to the financial condition of an insurer or as to the legal reserve system upon which a life insurer operates;

     (6) uses a name or title of an insurance policy or class of insurance policies misrepresenting its true nature;

     (7) is a misrepresentation for the purpose of inducing, or that tends to induce the lapse, forfeiture, exchange, conversion, or surrender of an insurance policy;

     (8) is a misrepresentation for the purpose of effecting or tending to effect a pledge or assignment of or loan against an insurance policy;

     (9) appears to be an actual policy for a named individual when it is merely an advertisement;

     (10) does not clearly designate the name of the insurer providing the coverage or about which the statements are made;

     (11) is in any other way misleading, false, or deceptive;

     (12) misrepresents a health discount plan as a form or type of insurance;

     (13) describes a health discount plan using common insurance terminology; or

     (14) misrepresents that a health discount plan is underwritten by or associated with an insurer.

 (b) In this section, “misrepresentation” includes any statement or omission of a statement that when taken in the context of the whole presentation may tend to mislead or deceive the person or persons addressed.




Sec. 21.36.035. Prohibited advertisements and representations. [Repealed, § 46 ch 119 SLA 2000.]
Sec. 21.36.040. False information, advertising.
A person may not make, publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over a radio or television station, or in any other way, an advertisement, announcement, or statement containing an assertion, representation, or statement with respect to the business of insurance or with respect to a person in the conduct of the person’s insurance business, that is untrue, deceptive, or misleading.


Sec. 21.36.045. [Renumbered as AS 21.36.465.]
Sec. 21.36.050. Twisting prohibited.
A person may not make or issue, or cause to be made or issued, a written or oral statement misrepresenting or making incomplete comparisons as to the terms, conditions, or benefits contained in a policy for the purpose of inducing or attempting or tending to induce the policyholder to lapse, forfeit, surrender, retain, exchange, or convert an insurance policy.


Sec. 21.36.055. [Renumbered as AS 21.36.470.]
Sec. 21.36.060. False or misleading financial statements.
 (a) A person may not knowingly file with a public official, or knowingly make, publish, disseminate, circulate, or deliver to a person, or place before the public, or knowingly cause, directly or indirectly, to be made, published, disseminated, circulated, delivered to a person, or placed before the public, a false statement of the financial condition of a person in the insurance business.

 (b) A person may not make a false entry in a book, report, or statement of a person in the insurance business, knowing it to be a false entry, or knowingly omit to make a true entry of a material fact pertaining to the business of a person in the insurance business in a book, report, or statement.

 (c) A person may not, directly or indirectly, in connection with an audit, review, or communication required under AS 21.09.200,
     (1) make or cause to be made a materially false or misleading statement to an accountant; or

     (2) omit to state or cause another person to omit to state any material fact necessary in order to make other statements made not misleading to an accountant.

 (d) A person may not, directly or indirectly, take any action to coerce, manipulate, mislead, or fraudulently influence any accountant engaged in the performance of an audit under AS 21.09.200 if that person knew or should have known that the action, if successful, could result in rendering the insurer’s financial statement materially misleading.




Sec. 21.36.065. [Renumbered as AS 21.36.475.]
Sec. 21.36.070. Defamation.
 (a) A person may not make, publish, disseminate, or circulate, directly or indirectly, or aid, abet, or encourage the making, publishing, disseminating, or circulating of an oral or written statement or a pamphlet, circular, article, or literature that is false, or maliciously critical of or derogatory to the financial condition of a person in the insurance business or proposing to enter the insurance business and that is calculated to injure a person engaged or proposing to engage in the business of insurance.

 (b) A person providing the director with information concerning the financial condition or an act or a practice of a licensee of the division is immune from liability for defamation.




Sec. 21.36.080. Boycott, coercion, and intimidation.
A person may not enter into an agreement to commit, or by any concerted action commit, an act of boycott, coercion, or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance.


Sec. 21.36.090. Unfair discrimination.
 (a) A person may not make or permit unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for a contract of life insurance or of life annuity or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contract.

 (b) A person may not make or permit unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for a policy or contract of health insurance or in the benefits payable, or in any of the terms or conditions of the contract, or in any other manner whatever.

 (c) A person may not make or permit arbitrary or unfair discrimination between insureds or property having like insuring or risk characteristics, in the premium or rates charged for a policy or contract of property, casualty, surety, marine, wet marine or transportation insurance, or in the dividends or other benefits payable on the insurance, or in the selection of it, or in any other of the terms and conditions of the insurance.

 (d) Except to the extent necessary to comply with AS 21.42.365 and AS 21.56, a person may not practice or permit unfair discrimination against a person who provides a service covered under a group health insurance policy that extends coverage on an expense incurred basis, or under a group service or indemnity type contract issued by a health maintenance organization or a nonprofit corporation, if the service is within the scope of the provider’s occupational license. In this subsection, “provider” means a state licensed physician, physician assistant, dentist, osteopath, optometrist, chiropractor, advanced practice registered nurse, naturopath, physical therapist, occupational therapist, marital and family therapist, psychologist, psychological associate, licensed clinical social worker, licensed professional counselor, or certified direct-entry midwife.




Sec. 21.36.093. [Renumbered as AS 21.36.480.]
Sec. 21.36.095. [Renumbered as AS 21.36.485.]
Sec. 21.36.096. Prohibited denial of claim for causation.
An insurer may not deny a claim if a risk, hazard, or contingency insured against is the dominant cause of a loss and the denial occurs because an excluded risk, hazard, or contingency is also in a chain of causes but operates on a secondary basis.


Sec. 21.36.100. Rebates.
Except as otherwise expressly provided by law, a person may not knowingly permit or offer to make or make a contract of life insurance, life annuity or health insurance, or agreement under the contract other than as plainly expressed in the contract, or pay, allow, give or offer to pay, allow, or give, directly or indirectly, as inducement to the insurance, or annuity, a rebate of premiums payable on the contract, or a special favor or advantage in the dividends or other benefits, or paid employment or contract for services of any kind, or any valuable consideration or inducement whatever not specified in the contract; or directly or indirectly give, sell, purchase or offer to agree to give, sell, purchase, or allow as inducement to the insurance or annuity or in connection therewith, whether or not to be specified in the policy or contract, an agreement of any form or nature promising returns, profits, stocks, bonds, or other securities, or interest present or contingent in the contract or as measured by the contract, of an insurance company or other corporation, association, or partnership, or dividends or profits accrued or to accrue under the contract; or offer, promise, or give anything of value that is not specified in the contract.


Sec. 21.36.110. Exceptions to discrimination and rebates.
Nothing in AS 21.36.090, 21.36.100, and AS 21.54.100 may be construed as including within the definition of discrimination or rebates any of the following practices:
     (1) in the case of a contract of life insurance or life annuity, paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance, if the bonuses or abatement of premiums is fair and equitable to policyholders and for the best interests of the insurer;

     (2) in the case of a life insurance policy issued on industrial debit, preauthorized check, bank draft, or similar plans, making allowance to policyholders who have made premium payments directly to an office of the insurer or by preauthorized debit, check, bank draft, or similar plan, in an amount that fairly represents the saving in collection expense;

     (3) readjustment of the rate of premium for a group insurance policy based on the loss or expense experience thereunder, at the end of the first or a subsequent policy year of insurance thereunder, which may be made retroactive only for that policy year;

     (4) issuance of life or health insurance policies or annuity contracts at rates less than the usual rates of premiums for the policies or contracts, or modification of premium or rate based on amount of insurance; but the issuance or modification may not result in reduction in premium or rate in excess of savings in administration and issuance expenses reasonably attributable to the policies or contracts;

     (5) a reward under a wellness program established under a health care plan that favors an individual if the wellness program meets the following requirements:
          (A) the wellness program is reasonably designed to promote health or prevent disease;

          (B) an individual has an opportunity to qualify for the reward at least once a year;

          (C) the reward is available for all similarly situated individuals;

          (D) the wellness program has alternative standards for individuals who are unable to obtain the reward because of a health factor;

          (E) alternative standards are available for an individual who is unable to participate in a reward program because of a health condition;

          (F) the insurer provides information explaining the standard for achieving the reward and discloses the alternative standards; and

          (G) the total rewards for all wellness programs under the health insurance policy do not exceed 20 percent of the cost of coverage.




Sec. 21.36.120. Unfair discrimination and rebates prohibited in property and casualty insurance.
 (a) A property, casualty, or surety insurer or its employee or representative, or an agent, or solicitor may not pay, allow, give, or offer to pay, allow, or give, directly or indirectly, as an inducement to insurance or after insurance has been effected, a rebate, discount, abatement, credit, or reduction of the premium named in the policy of insurance, or a special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement, not specified in the policy, except to the extent provided for in an applicable filing with the director as provided by law.

 (b) An insured named in a policy, or an employee of the insured may not knowingly receive or accept directly or indirectly, a rebate, discount, abatement, credit, or reduction of premium, or special favor or advantage or valuable consideration or inducement.

 (c) An insurer may not make or permit an unfair discrimination between insureds or property having like insuring or risk characteristics, in the premium or rates charged for insurance, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the insurance.

 (d) Nothing in this section may be construed as prohibiting the payment of commissions or other compensation to persons duly transacting business under AS 21.27, or as prohibiting an insurer from allowing or returning to its participating policyholders, members, or subscribers, lawful dividends, savings, or unabsorbed premium deposits.




Sec. 21.36.122. [Renumbered as AS 21.36.490.]
Sec. 21.36.125. Unfair claim settlement practices.
 (a) A person may not commit any of the following acts or practices:
     (1) misrepresent facts or policy provisions relating to coverage of an insurance policy;

     (2) fail to acknowledge and act promptly upon communications regarding a claim arising under an insurance policy;

     (3) fail to adopt and implement reasonable standards for prompt investigation of claims;

     (4) refuse to pay a claim without a reasonable investigation of all of the available information and an explanation of the basis for denial of the claim or for an offer of compromise settlement;

     (5) fail to affirm or deny coverage of claims within a reasonable time of the completion of proof-of-loss statements;

     (6) fail to attempt in good faith to make prompt and equitable settlement of claims in which liability is reasonably clear;

     (7) engage in a pattern or practice of compelling insureds to litigate for recovery of amounts due under insurance policies by offering substantially less than the amounts ultimately recovered in actions brought by those insureds;

     (8) compel an insured or third-party claimant in a case in which liability is clear to litigate for recovery of an amount due under an insurance policy by offering an amount that does not have an objectively reasonable basis in law and fact and that has not been documented in the insurer’s file;

     (9) attempt to make an unreasonably low settlement by reference to printed advertising matter accompanying or included in an application;

     (10) attempt to settle a claim on the basis of an application that has been altered without the consent of the insured;

     (11) make a claims payment without including a statement of the coverage under which the payment is made;

     (12) make known to an insured or third-party claimant a policy of appealing from an arbitration award in favor of an insured or third-party claimant for the purpose of compelling the insured or third-party claimant to accept a settlement or compromise less than the amount awarded in arbitration;

     (13) delay investigation or payment of claims by requiring submission of unnecessary or substantially repetitive claims reports and proof-of-loss forms;

     (14) fail to promptly settle claims under one portion of a policy for the purpose of influencing settlements under other portions of the policy;

     (15) fail to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement; or

     (16) offer a form of settlement or pay a judgment in any manner prohibited by AS 21.96.030;

     (17) violate a provision contained in AS 21.07.

 (b) The provisions of this section do not create or imply a private cause of action for a violation of this section.

 (c) The director of insurance shall adopt regulations to implement, define, and enforce this section.




Sec. 21.36.128. [Renumbered as AS 21.36.495.]
Sec. 21.36.130. Stock operations and advisory board contracts.
A person may not issue or deliver or permit its agents, officers, or employees to issue or deliver, agency company stock or other capital stock, or benefit certificates or shares in a common law corporation, or securities, or an advisory board contract or other similar contract of any kind promising returns and profits as an inducement to insurance.


Sec. 21.36.140. Desist orders for prohibited practices. [Repealed, § 11 ch 163 SLA 1976.]
Sec. 21.36.145. [Renumbered as AS 21.36.500.]
Sec. 21.36.150. [Renumbered as AS 23.36.900.]
Sec. 21.36.155. [Renumbered as AS 21.36.505.]
Sec. 21.36.160. Right of debtor or borrower to select insurance producer and insurer.
If property insurance is required in connection with a debt or loan, the debtor or borrower has the reasonable right to select the insurance producer and insurer through whom the insurance is to be placed if (1) the insurance is provided for the protection of the creditor’s or lender’s interest in the property at the commencement of the risk; or (2) in the case of renewal of insurance, the renewal policy is delivered to the creditor or lender no later than 30 days before the renewal date.


Sec. 21.36.162. [Renumbered as AS 21.36.510.]
Sec. 21.36.164. [Renumbered as AS 21.36.317.]
Sec. 21.36.165. [Renumbered as AS 21.36.319.]
Sec. 21.36.167. [Renumbered as AS 21.36.321.]
Sec. 21.36.168. [Renumbered as AS 21.36.323.]
Sec. 21.36.169. [Renumbered as AS 21.36.325.]
Sec. 21.36.170. Interlocking ownership, management.
 (a) An insurer may retain, invest in, or acquire the whole or a part of the capital stock of another insurer or insurers, or have a common management with another insurer or insurers, unless the retention, investment, acquisition, or common management is inconsistent with a provision of this title, or unless by reason thereof the business of the insurers with the public is conducted in a manner that substantially lessens competition generally in the insurance business or tends to create a monopoly.

 (b) A person otherwise qualified may be director of two or more insurers that are competitors, unless the effect is to lessen substantially competition between insurers generally or tends materially to create a monopoly.




Sec. 21.36.180. Illegal dealing in premiums. [Repealed, § 22 ch 149 SLA 1984.]
Sec. 21.36.185. Maintenance of complaint handling records.
Except for records subject to health carrier grievance reporting and record keeping requirements established under AS 21.07.005, aninsurer shall maintain a complete record of all the complaints received by the insurer since the date of the insurer’s last market conduct examination under AS 21.06.120 or for four years, whichever occurs first. This record must indicate the total number of complaints, the classification of each complaint by line of insurance, the nature of each complaint, the disposition of each complaint, and the time it took to process each complaint. For purposes of this section, “complaint” means any written communication primarily expressing a grievance.


Sec. 21.36.190. Fictitious groups.
 (a) An insurer, whether an authorized or unauthorized insurer, may not make available through a rating plan or form, property, casualty, or surety insurance to a firm, corporation, or association of individuals, a preferred rate or premium based upon a fictitious group of the firm, corporation, or association of individuals.

 (b) A form or plan of insurance covering a group or combination of persons or risks may not be written or delivered inside or outside this state to cover persons or risks in this state at a preferred rate or on a form other than that offered to persons not in the group or combination and to the public generally, unless the form, plan of insurance, and the rates or premiums to be charged have been submitted to and approved by the director as being not unfairly discriminatory and not otherwise in conflict with (a) of this section or with AS 21.39 to the extent that AS 21.39 is, by its terms, applicable to it.

 (c) This section does not apply to mortgage guaranty insurance, life insurance, health insurance, or annuity contracts.

 (d) This section does not apply to workers’ compensation insurance when issued to an association of employers formed for purposes other than the purchase of insurance and that
     (1) has a constitution and bylaws;

     (2) incorporates a safety program;

     (3) as a group has preferred characteristics over similar risks written on an individual basis; and

     (4) has filed and received approval from the director for the rating program to be applied to the group.

 (e) This section does not apply to insurance coverage under a joint insurance arrangement authorized by AS 21.76.

 (f) Except as provided in AS 21.36.475, an insurer, whether authorized or unauthorized, may not underwrite an owner controlled insurance program or contractor controlled insurance program. In this subsection, “owner controlled insurance program” and “contractor controlled insurance program” have the meanings given in AS 21.36.475.




Sec. 21.36.195. Surplus lines brokers and insurance producers; prohibited acts.
A surplus lines broker or an insurance producer may not fail to provide evidence of insurance, filings, or reports, or fail to maintain the records, or fail to pay the taxes and fees, required under AS 21.34.


Sec. 21.36.200. False applications, claims, proofs of loss. [Repealed, § 22 ch 149 SLA 1984.]

Article 2. Cancellations and Renewals.


Sec. 21.36.210. Limits on cancellation.
 (a) An insurer may not exercise its right to cancel a policy of personal automobile insurance except for the following reasons:
     (1) nonpayment of premium; or

     (2) the driver’s license or motor vehicle registration of either the named insured or of an operator who resides in the same household as the named insured or who customarily operates a motor vehicle insured under the policy has been under suspension or revocation during the policy period or, if the policy is a renewal, during its policy period or the 180 days immediately preceding its effective date.

 (b) During the policy period, a modification of automobile physical damage coverage, except coverage for loss caused by collision, whereby provision is made for the application of a deductible amount not exceeding $100 is not a cancellation of the coverage or of the policy.

 (c) [Repealed, § 47 ch 29 SLA 1987.]
 (d) This section does not apply to
     (1) the failure to renew a policy, except as to coverage in force for less than 12 months;

     (2) a policy that has been in effect less than 60 days at the time notice of cancellation is mailed or delivered by the insurer, unless it is a renewal policy.

 (e) [Repealed, § 47 ch 29 SLA 1987.]
 (f) An insurer may not exercise its right to cancel a policy of personal insurance other than personal automobile insurance, except for the following reasons:
     (1) nonpayment of premiums, including nonpayment of additional premiums, calculated in accordance with the current rating manual of the insurer, justified by a physical change in the insured property or a change in its occupancy or use;

     (2) conviction of the insured of a crime having as one of its necessary elements an act increasing a hazard insured against;

     (3) discovery of fraud or material misrepresentation made by the insured or a representative of the insured in obtaining the insurance or by the insured in pursuing a claim under the policy;

     (4) discovery of a grossly negligent act or omission by the insured that substantially increases the hazards insured against;

     (5) physical changes in the insured property that result in the property becoming uninsurable; or

     (6) entire abandonment of the property that increases a hazard insured against; if a policy is cancelled under this paragraph, in addition to the notice required under AS 21.36.220, the insurer shall give notice of cancellation of the policy to a lender on file with the insurer at the time of the cancellation; in this paragraph, “entire abandonment” means the property is no longer occupied by the insured as defined by the policy and does not have contents of substantial utility; however, property is not entirely abandoned if the insured or an agent for the insured demonstrates that the property is being reasonably maintained and monitored for a condition that might cause damage to the property.




Sec. 21.36.212. [Renumbered as AS 21.36.096.]
Sec. 21.36.220. Notice of cancellation.
 (a) An insurer may not exercise its right to cancel a personal insurance policy unless, for a named insured who is
     (1) less than 70 years of age, a written notice of cancellation is mailed to the named insured as required by AS 21.36.260 at least 30 days before the effective date of cancellation; however, if cancellation is for nonpayment of premium, the notice shall be mailed to the named insured as required by AS 21.36.260 at least 20 days before the effective date of cancellation, and, if cancellation is for a reason described in AS 21.36.210(a)(2), (f)(2), or (f)(3), the notice shall be mailed to the named insured as required by AS 21.36.260 at least 10 days before the effective date of cancellation; and

     (2) 70 years of age or older, a written notice of cancellation is mailed to the named insured and, if the named insured has made a written request to the insurer, to the named insured’s designee as required by AS 21.36.260 at least 30 days before the effective date of cancellation; however, if cancellation is for nonpayment of premium, the notice shall be mailed to the named insured and, if the named insured has made a written request to the insurer, to the named insured’s designee as required by AS 21.36.260 at least 20 days before the effective date of cancellation, and, if cancellation is for a reason described in AS 21.36.210(a)(2), (f)(2), or (f)(3), the notice shall be mailed to the named insured and, if the named insured has made a written request to the insurer, to the named insured’s designee as required by AS 21.36.260 at least 10 days before the effective date of cancellation; an insurer who provides a personal insurance policy to an insured who is 70 years of age or older shall annually give written notice to the insured of the insured’s right to have a designee receive notice as provided in this paragraph.

 (b) An insurer may not exercise its right to cancel a policy of business or commercial insurance unless a written notice of cancellation is mailed to the named insured as required by AS 21.36.260 and to the agent or broker of record at least 60 days before the effective date of cancellation. However, if cancellation is for nonpayment of premium, or for failure or refusal of the insured to provide the information necessary to confirm exposure or necessary to determine the policy premium, the notice shall be mailed to the named insured as required by AS 21.36.260 and to the agent or broker of record at least 20 days before the effective date of cancellation. If cancellation is (1) for conviction of the insured of a crime having as one of its necessary elements an act increasing a hazard insured against, or (2) for discovery of fraud or material misrepresentation made by the insured or a representative of the insured in obtaining the insurance or by the insured in pursuing a claim under the policy, the notice shall be mailed to the named insured as required by AS 21.36.260 and to the agent or broker of record at least 10 days before the effective date of cancellation.

 (c) If an insurer cancels a policy under this section, it shall return or credit any unearned premium to the agent or broker of record or directly to the insured or premium finance company, if applicable, before the effective date of cancellation, except that
     (1) an unearned premium shall be returned or credited within 45 days after notice of cancellation is given, if cancellation is for
          (A) nonpayment of premium, including nonpayment of additional premiums, calculated in accordance with the current rating manual of the insurer, justified by a physical change in the insured property, a change in its occupancy or use, or a change in payroll, receipts, values, or other exposure units;

          (B) conviction of the insured of a crime having as one of its necessary elements an act increasing a hazard insured against;

          (C) discovery of fraud or material misrepresentation made by the insured or a representative of the insured in obtaining the insurance or by the insured in pursuing a claim under the policy;

          (D) failure or refusal of the insured to provide the information necessary to confirm exposure or necessary to determine the policy premium;

          (E) a reason described in AS 21.36.210(a)(2);

     (2) the insurer shall perform or waive the audit before the effective date of the cancellation and return or credit any estimated unearned premium before the effective date of cancellation if the policy is subject to audit and is cancelled for a reason other than those described in (1)(A) — (D) of this subsection.

 (d) The division may require an insurer to perform an audit that the insurer has elected to waive under (c) of this section.

 (e) A notice of cancellation of insurance required to be given under this section must include or be accompanied by a statement of the reason for the cancellation.




Sec. 21.36.225. Notice of health insurance coverage cancellation, coverage change, or premium change.
 (a) Except for a health care insurance policy subject to AS 21.51.400 or AS 21.54.130, an insurer may not cancel a health insurance policy unless the insurer provides written notice to a policyholder at least 45 days before the effective date of the cancellation.

 (b) An insurer shall provide written notice to a policyholder of the specific changes in coverage or the exact change in premium at least 45 days before the effective date of the change in coverage or premium.




Sec. 21.36.230. Statement of reasons. [Repealed, § 47 ch 29 SLA 1987.]
Sec. 21.36.235. Notice of premium or coverage changes upon renewal.
 (a) Except as provided in AS 21.36.305, if the renewal premium is increased more than 10 percent for a reason other than an increase in coverage or exposure base, or if after renewal there will be a material restriction or reduction in coverage not specifically requested by the insured, written notice shall be mailed to the insured and to the agent or broker of record as required by AS 21.36.260
     (1) at least 20 days before expiration of a personal insurance policy; or

     (2) at least 45 days before expiration of a business or commercial policy.

 (b) If notice before expiration of the policy is not given as required by (a) of this section, the existing policy shall continue until the insurer provides notice for the time period required by (a) of this section for that policy.

 (c) This section does not apply to workers’ compensation insurance or to business or commercial policies issued under AS 21.34.




Sec. 21.36.240. Failure to renew.
An insurer may only fail to renew a personal insurance policy on the policy’s annual anniversary. An insurer may not fail to renew a policy unless a written notice of nonrenewal is mailed to the named insured as required by AS 21.36.260 at least 20 days for a personal insurance policy, and at least 45 days for a business or commercial insurance policy, before the expiration date of the policy or of the anniversary date of a policy written for a term longer than one year or with no fixed expiration date. If notice of nonrenewal is not given as required by this section, the existing policy shall continue until the insurer provides notice for the time period required by this section for that policy. This section does not apply
     (1) if the insurer has in good faith manifested its willingness to renew;

     (2) in case of nonpayment of premium for the expiring policy;

     (3) if the insured fails to pay the premium as required by the insurer for renewal; or

     (4) to business or commercial policies placed under AS 21.34.




Sec. 21.36.250. Cancellation or nonrenewal of automobile insurance.
When a policy of automobile liability insurance is cancelled, other than for nonpayment of premium, or is not renewed in accordance with AS 21.36.240, the insurer shall notify the named insured of possible eligibility for automobile insurance through the automobile assigned risk plan, or automobile insurance plan. The notification must accompany or be included in the notice of cancellation or nonrenewal required by AS 21.36.220 and 21.36.240.


Sec. 21.36.255. Premium return or credit.
 (a) If an insurance policy is cancelled, rejected, or rescinded by the
     (1) insurer, the insurer shall return or credit any unearned premium paid to the agent or broker of record, or directly to the insured or premium finance company, if applicable; or

     (2) insured, the insurer shall return or credit any unearned premium to the agent or broker of record or directly to the insured or premium finance company, if applicable, less a cancellation fee not to exceed 7.5 percent of the unearned premium; a cancellation fee may not be charged unless the fee is clearly stated in the policy; the insurer shall return or credit the unearned premium less a lawful cancellation fee
          (A) within 45 days of receipt of the request for cancellation or the effective date of cancellation, whichever is later; or

          (B) if the policy is selected for audit, within 45 days of completion of an audit; the insurer shall perform and complete an audit within 45 days of receipt of the request for cancellation or the effective date of cancellation, whichever is later.

 (b) Notwithstanding (a) of this section, if the insurer clearly indicates one or more of the following features in the policy, an insurer may issue a policy
     (1) whose premium is earned at a varying rate due to seasonality of exposure;

     (2) that contains a minimum earned premium; or

     (3) with a fluctuating premium base.




Sec. 21.36.260. Proof and method of mailing notice.
If a notice is required from an insurer under this chapter, the insurer shall
     (1) mail the notice by first class mail to the last known address of the insured and

obtain a certificate of mailing from the United States Postal Service; or

     (2) transmit the notice by electronic means, to the last known electronic address of the intended recipient, if the insurer can obtain an electronic confirmation of receipt by the intended recipient.




Sec. 21.36.270. Effect of failure to comply.
Notwithstanding the failure of an insurer to comply with AS 21.36.210 — 21.36.310, termination of coverage under the policy either by cancellation or nonrenewal is effective on the effective date of any other policy providing similar coverage on the same risk or motor vehicle or a replacement of it.


Sec. 21.36.280. Immunity of insurer, director, and informer.
There is no liability on the part of, and a cause of action of any nature may not arise against, the director of insurance or against an insurer, its authorized representatives, agents, or employees, or a person furnishing to the insurer information as to reasons for cancellation, for any statement made by any of them in a written notice of cancellation, or in any other communication, oral or written, specifying the reasons for cancellation, or the providing of information pertaining to a cancellation or for statements made or evidence submitted at a hearing conducted in connection with a cancellation. However, this immunity from liability does not apply when the information furnished or statement made is untrue and the person furnishing the information or making the statement knew of the lack of truth or was grossly negligent in ascertaining the truth.


Sec. 21.36.290. Policy period.
 (a) A policy with a policy period or term longer than one year or a policy with no fixed expiration date shall be considered to be written for successive policy periods or terms of one year, and termination by an insurer effective on an anniversary date of the policy shall be considered a failure to renew.

 (b) The rate for a personal automobile insurance policy may not be changed more frequently than once every six months.




Sec. 21.36.300. Applicability of AS 21.36.210 — 21.36.310. [Repealed, § 47 ch 29 SLA 1987.]
Sec. 21.36.305. Premium increases on personal automobile insurance policies.
 (a) An insurer may not increase the premium on a personal automobile insurance policy unless the increase applies to all insureds of the same class.

 (b) An insurer may not increase the premium or add a surcharge to a personal automobile insurance policy because of the issuance of a citation for a moving traffic violation unless the insured or another person who resides in the insured’s household and is covered by the policy has been convicted of the violation or has entered a plea of no contest to the violation.

 (c) The director shall adopt regulations to determine circumstances under which an insurer may increase the premium or add a surcharge to a personal automobile insurance policy.

 (d) An insurer that increases the premium or adds a surcharge to a personal automobile insurance policy may only make the increase or surcharge effective on the renewal date of the policy.

 (e) An insurer that increases the premium or adds a surcharge to a personal automobile insurance policy shall give written notice of the increase or surcharge at least 20 days before it takes effect, stating the reason for the change and the right of appeal under AS 21.39.090. This subsection does not apply to
     (1) premium increase resulting from a change requested by an insured, if the insured is notified at the time the request is made that the amount of the insured’s premium will change as a result of the requested policy change; or

     (2) rate approved by the director if the insurer gives written notice of a premium increase to the insured at least 20 days before the renewal date of the affected policy.




Sec. 21.36.307. Effect of overweight vehicle offenses on personal automobile insurance.
 (a) An insurer may not take adverse action relating to the personal automobile insurance of a driver who commits one or more violations related to an overweight vehicle under AS 45.75.380(a)(10) or (11).

 (b) In this section, “adverse action” means the cancellation, refusal to insure, denial or failure to renew, increase in premiums, placement with an affiliate that charges higher premiums or offers less favorable policy terms, or any other action that increases the cost or decreases the extent of coverage or availability of personal automobile insurance to the driver.




Sec. 21.36.310. Definitions.
In AS 21.36.210 — 21.36.310,
     (1) “business or commercial insurance” means insurance other than personal insurance, reinsurance, life insurance, health insurance, fidelity and surety insurance, title insurance, or an annuity contract;

     (2) “nonpayment of premium” means failure of the named insured to discharge when due any obligations of the named insured in connection with the payment of premium on a policy, or any installment of the premium, whether the premium is payable directly to the insurer or its agent or indirectly under any premium finance plan or extension of credit;

     (3) “personal automobile insurance” means insurance not related to business or commercial activities, covering automobile liability, uninsured or underinsured motorists, automobile medical payments, or automobile physical damage, that is delivered or issued for delivery in this state, and under which the insured vehicles are of the following types only:
          (A) a motor vehicle of the private passenger or station wagon type that is not used as a public or livery conveyance, nor rented to others; or

          (B) any other four-wheel motor vehicle with a load capacity of 1,500 pounds or less that is not used in the occupation, profession, or business of the insured, nor used as a public or livery conveyance, nor rented to others;

     (4) “personal insurance”
          (A) means personal automobile insurance, or insurance covering
               (i) loss of or damage to real property that is used predominantly for residential purposes and that does not consist of more than four dwelling units;

               (ii) loss of or damage to personal property, including personal effects, household furniture, fixtures, and equipment located in not more than four dwelling units; or

               (iii) legal liability of natural persons for loss of, damage to, or injury to persons or property if the insurance does not cover liability arising from or in connection with business or commercial activities;

          (B) does not include an annuity contract or a policy of life insurance, health insurance, or title insurance;

     (5) “renewal” or “renew” means
          (A) the issuance and delivery of an insurance policy at the end of the policy period, that replaces a policy previously issued and delivered by the same insurer;

          (B) the issuance and delivery of a certificate or notice extending the term of a policy beyond its policy period or term; or

          (C) the extension of the term of a policy beyond its policy period or term under a provision for extending the policy by payment of a continuation premium.




Article 3. Financial Institutions; Loans; Credit.


Sec. 21.36.317. Licensing of persons in a financial institution.
A financial institution may not allow a person to transact insurance in an office of the institution or on behalf of the institution, unless the person is licensed as required under AS 21.27.


Sec. 21.36.319. Anticoercion and antitying.
 (a) A person may not
     (1) require, as a condition to the lending of money or extension of credit, or a renewal of the loan or extension of credit, that the obligee of the money or credit negotiate a policy or contract of insurance through any particular person or group of persons;

     (2) disapprove the insurance policy provided by a borrower for the protection of property securing credit or a loan if disapproval is based on other than reasonable standards uniformly applied and relating to the extent of coverage required and the financial soundness and the services of the insurer; the standards may not discriminate against a particular type of insurer or call for the disapproval of a policy containing coverage in addition to that required;

     (3) unless charges are required when the person handling the insurance transaction is a licensee, require a consumer, insurer, broker, or agent to pay a separate charge for handling an insurance policy required as security for a loan on real property, or to pay a separate charge to substitute the insurance policy of one insurer for that of another, except that interest may be charged on premium loans or premium advancements in accordance with the security instrument.

 (b) A person shall
     (1) use separate documents for an insurance transaction, other than credit insurance or flood insurance, and for a credit transaction; and

     (2) maintain separate and distinct records relating to insurance transactions, including consumer complaint information, and make the records available to the director for inspection upon notice.

 (c) A person may not include insurance premiums in a primary credit transaction without the consent of the consumer.

 (d) Nothing in this section prohibits a person from informing a consumer or prospective consumer that insurance is required in order to obtain a loan or credit, that loan or credit approval is contingent on the procurement of acceptable insurance by the consumer, or that insurance is available from the person.




Sec. 21.36.320. [Renumbered as AS 21.36.910.]
Sec. 21.36.321. Misrepresentation in financial institution sales.
In the sale of insurance by a financial institution, a person may not engage in any practice or use an advertisement that may tend to mislead or deceive a consumer or cause a consumer to erroneously believe that
     (1) the insurance is backed by or a return on the insurance is guaranteed by the state, the federal government, the person, or the Federal Deposit Insurance Corporation;

     (2) the state or federal government
          (A) will pay a claim under an insurance contract that is an obligation of or was sold by the person;

          (B) is responsible for the insurance sales activities of the person; or

          (C) guarantees the credit of the person;

     (3) for insurance that contains investment risk, the insurance does not contain investment risk, the principal may not be lost, or the value of the insurance may not decline;

     (4) the lending of money, extension of credit, or a renewal of a loan is conditioned on the purchase of insurance from the person and that insurance may not be purchased from another source.




Sec. 21.36.323. Disclosures required in financial institution sales.
 (a) In the sale of insurance by a financial institution, a person shall disclose both orally and in writing to a consumer before the initial purchase of insurance that
     (1) the insurance is not a deposit or other obligation of the person;

     (2) the insurance is not guaranteed by the person or the person soliciting insurance;

     (3) the insurance is not insured by the Federal Deposit Insurance Corporation or other agency of the United States, the financial institution, or the person;

     (4) if the insurance contains risk, the insurance contains investment risk and the insurance may lose value;

     (5) the consumer is not required to negotiate a policy or contract of insurance through any particular person or group of persons as a condition to the lending of money or extension of credit, or a renewal of the loan or extension of credit, except that the person may impose reasonable requirements uniformly applied and relating to the extent of coverage required and the financial soundness and the services of the insurer and that the standards may not discriminate against a particular type of insurer or require disapproval of a policy containing coverage in addition to that required.

 (b) A person shall also provide the disclosures required in (a) of this section to a consumer both orally and in writing at the time of application for an extension of credit.

 (c) If an application for insurance is made by telephone, written disclosure as required in (a) of this section must be mailed to the consumer within three working days.

 (d) A person may provide the disclosures required in (a) of this section electronically, if
     (1) the consumer affirmatively consents to electronic disclosure; and

     (2) the disclosures are provided in a format that the consumer is able to access at a later time by a method such as through printing or storing the disclosures electronically.

 (e) A person shall provide the disclosures required in (a) of this section in a meaningful form and in a conspicuous, simple, direct, and understandable manner that is designed to call attention to the information provided.

 (f) A person shall obtain a written acknowledgment or, in the case of an electronic disclosure provided in compliance with (d) of this section, a written or electronic acknowledgment, by the consumer that the consumer received the disclosures as required in this section.

 (g) This section does not require that a person provide the disclosures required in this section in advertisements that are of a general nature or that describe or list the services or products offered by a financial institution or on behalf of a financial institution.

 (h) In this section, “meaningful form” means
     (1) for other than an electronic form, a form of disclosure that is provided to a consumer orally and in writing;

     (2) for an electronic form, a disclosure that a consumer cannot electronically bypass before purchasing insurance.




Sec. 21.36.325. Definitions for AS 21.36.317 — 21.36.325.
In AS 21.36.317 — 21.36.325, unless the context otherwise requires,
     (1) “consumer” means a person who obtains, applies to obtain, or is solicited to obtain insurance from or on behalf of a financial institution;

     (2) “financial institution” means a bank holding company under 12 U.S.C. 1841 (Bank Holding Company Act of 1956); a credit union under 12 U.S.C. 1752 (Federal Credit Union Act); a bank, savings bank, savings and loan association, or trust company, or any depository institution under 12 U.S.C. 1813(c)(1); and any other person authorized to take federally insured deposits and make loans in the state; “financial institution” includes any employee or agent of a financial institution and any nondepository affiliate or subsidiary of a financial institution but only in the instances when the nondepository affiliate or subsidiary is soliciting the sale or purchase of insurance recommended or sponsored by, on the premises of, or in connection with a product offering of the financial institution; “financial institution” does not include an insurer.




Sec. 21.36.330. [Renumbered as AS 21.36.920.]
Sec. 21.36.340. [Renumbered as AS 21.36.930.]
Sec. 21.36.350. [Renumbered as AS 21.36.125(c).]

Article 4. Fraud, Crimes, and Investigations.


Sec. 21.36.355. Felony convictions involving dishonesty or breach of trust.
 (a) A person who has a conviction for a felony involving dishonesty or a breach of trust may not engage or participate in the business of insurance without receiving prior written consent by the director or by the insurance regulatory official of the person’s home state as required under 18 U.S.C. 1033 and 1034 (Violent Crime Control and Law Enforcement Act of 1994).

 (b) A person who fails to seek prior written consent from the director under (a) of this section is in violation of this chapter.

 (c) A person who is engaged in the business of insurance may not knowingly permit the participation in the business of insurance by a person who has been convicted of a felony involving dishonesty or breach of trust except as allowed under (a) of this section.




Sec. 21.36.360. Fraudulent or criminal insurance acts.
 (a) A person may not commit a fraudulent or criminal insurance act involving an insurance transaction that is subject to the provisions of this title. The penalty for a fraudulent or criminal insurance act described in this section is in addition to a civil penalty levied under this title.

 (b) A fraudulent insurance act is committed by a person who, with intent to injure, defraud, or deceive,
     (1) collects a sum as premium or charge for insurance if the insurance has not been provided or is not in due course to be provided, subject to acceptance of the risk by the insurer, by an insurance policy authorized under this title;

     (2) presents to an insurer a written or oral statement in support of a claim for payment or other benefit under an insurance policy, knowing that the statement contains false, incomplete, or misleading information or omits information concerning a matter material to the claim;

     (3) assists or conspires with another to prepare or make a written or oral statement that is presented to an insurer in support of a claim for a benefit under an insurance policy, knowing that the statement contains false, incomplete, or misleading information or omits information concerning a matter material to the claim;

     (4) wilfully collects as premium or charge for insurance a sum in excess of the premium or charge applicable to the insurance as specified in the policy by the insurer in accordance with the applicable classifications and rates approved by the director, or in cases where classifications and rates are not subject to approval, the premiums and charges applicable to the insurance as specified in the policy and fixed by the insurer;

     (5) fails to make disposition of funds received or held or misappropriates funds received or held representing premiums or return premiums;

     (6) fails to pay its tax liability under this title when due; or

     (7) makes a written or oral statement in response to an insurer’s inquiries related to another person’s claim for payment or other benefit under an insurance policy, knowing that the statement contains false, incomplete, or misleading information or omits information concerning a matter material to the claim.

 (c) A fraudulent insurance act is committed by a person forming or proposing to form an insurer, an insurance holding corporation, a stock corporation to finance an insurer or insurance production, a corporation to manage an insurer, a corporation to be attorney-in-fact for a reciprocal insurer, or a syndicate for any of these purposes that advertises, or solicits or receives funds, agreement, stock subscription, or membership on account unless the person has applied for and has received from the director a solicitation permit as required by AS 21.69.

 (d) A fraudulent insurance act is committed by a person who makes a false sworn statement that the person does not believe to be true as to matter material to an examination, investigation, or hearing of the division.

 (e) A fraudulent insurance act is committed by a person if
     (1) as to a matter material to an examination, investigation, or hearing by the division, the person makes two or more sworn statements that are irreconcilably inconsistent to the degree that one of them is necessarily false; and

     (2) the person does not believe one of the statements to be true at the time the statement is made.

 (f) A fraudulent insurance act is committed by a person who with intent to deceive, knowingly exhibits a false account, document, or advertisement, relative to the affairs of an insurer, a corporation, or syndicate of the kind described in AS 21.69.060, formed or proposed to be formed.

 (g) A fraudulent insurance act is committed by a person who wrongfully removes or attempts to remove records from the place where they are required to be kept under AS 21.69.390(a) or who conceals or attempts to conceal records from the director.

 (h) [Repealed, § 34 ch 52 SLA 2015.]
 (i) A criminal insurance act is committed by a person doing business in this state or relative to a subject resident, located, or to be performed in this state who knowingly
     (1) writes, places, or causes to be written or placed in this state or relative to a subject resident, located, or to be performed in this state a policy, duplicate policy, or contract of insurance of any kind or character, or general or floating policy upon persons or property resident, situated, or located in this state, from or through a person not authorized to transact business under AS 21.27 or a risk retention group or purchasing group not registered under AS 21.96.090; or

     (2) pays a commission or other form of remuneration to a person, firm, or organization for the writing or placing of insurance coverage in this state or relative to a subject resident, located, or to be performed in this state unless that person, firm, or organization is authorized under AS 21.27 to transact the kind or class of insurance written or placed, or, in the case of a risk retention group or purchasing group, is registered under AS 21.96.090.

 (j) A criminal insurance act is committed by a person in this state or relative to a subject resident, located, or to be performed in this state who acts as an insurance producer, managing general agent, third-party administrator, reinsurance intermediary broker, reinsurance intermediary manager, surplus lines broker, or independent adjuster without being licensed by the director as required under this title or as a risk retention group or purchasing group without being registered as required under AS 21.96.090. A criminal insurance act is committed by an insurance producer, managing general agent, third-party administrator, reinsurance intermediary broker, reinsurance intermediary manager, or surplus lines broker who solicits or takes application for, procures, or places for others any insurance for which the person is not licensed as required under AS 21.27 or for which the license of the person has been suspended or revoked. A criminal insurance act is committed by a person in this state or relative to a subject resident, located, or to be performed in this state who acts as or on behalf of a risk retention group or a purchasing group that is not registered under AS 21.96.090.

 (k) A criminal insurance act is committed by an insurance producer, managing general agent, third-party administrator, reinsurance intermediary broker, reinsurance intermediary manager, or surplus lines broker who knowingly compensates or offers to compensate in any manner a person other than an insurance producer, managing general agent, third-party administrator, reinsurance intermediary broker, reinsurance intermediary manager, or surplus lines broker licensed as required under this title in this or another jurisdiction, for procuring or in any manner helping to procure applications for or to place insurance in this state. A criminal insurance act is committed by a person in this state or relative to a subject resident, located, or to be performed in this state who acts as or on behalf of a risk retention group or a purchasing group that is not registered under AS 21.96.090. This subsection does not apply to the payment of compensation that is not contingent upon volume of business transacted in the form of salaries to the regular employees of the insurance producer, managing general agent, third-party administrator, reinsurance intermediary broker, reinsurance intermediary manager, or surplus lines broker.

 (l) A criminal insurance act is committed by a person who has placed insurance with an unauthorized insurer and refuses to obey an order by the director to produce for examination all policies and other documents evidencing the insurance and the amount of premiums paid or agreed to be paid for the insurance.

 (m) A criminal insurance act is committed by a director of a domestic stock or mutual insurer who votes for or concurs in a declaration or payment of a dividend to stockholders or members other than as authorized under AS 21.69.490 — 21.69.500.

 (n) A criminal insurance act is committed by an agent, managing general agent, third-party administrator, reinsurance intermediary broker, reinsurance intermediary manager, or other representative of an insurer involved in the procuring or issuance of an insurance contract who intentionally fails to report to the insurer the exact amount of consideration charged as premium for the contract and to maintain records showing that information.

 (o) A fraudulent insurance act is committed by a person who, with intent to injure, defraud, or deceive, knowingly makes a false or fraudulent statement or representation in or with reference to an application for insurance.

 (p) A fraudulent insurance act is committed by a person who
     (1) violates a provision of this title or a regulation issued under it;

     (2) falsely makes, completes, or alters a certificate of insurance or other document relating to insurance;

     (3) knowingly possesses a forged certificate of insurance or other document relating to insurance; or

     (4) knowingly issues a forged certificate of insurance or other document relating to insurance.

 (q) A fraudulent or criminal insurance act described in
     (1) (b) of this section that is committed to obtain $10,000 or more is a class B felony;

     (2) (c), (d), or (p)(4) of this section is a class B felony;

     (3) (b) of this section that is committed to obtain $500 or more but less than $10,000 is a class C felony;

     (4) (e), (f), (g), or (p)(2) or (3) of this section is a class C felony;

     (5) (b) of this section that is committed to obtain less than $500 is a class A misdemeanor;

     (6) (i), (j), (k), (l), (m), or (n) of this section is a class A misdemeanor;

     (7) (o) of this section is a class B misdemeanor; and

     (8) (p)(1) of this section is a class B misdemeanor unless another specific penalty is provided for the violation of the provision.

 (r) The director may adopt regulations to implement, define, and enforce this section.

 (s) For the purpose of this section, the charging and collection by surplus line brokers licensed under AS 21.27 of the amount of applicable state and federal taxes and filing fees under AS 21.34 is not considered a premium or charge for insurance.




Sec. 21.36.365. Immunity for reports on fraud.
 (a) A person is not liable for civil damages for filing a report with or furnishing other information whether written or oral, concerning suspected, anticipated, or completed fraudulent acts to
     (1) law enforcement officials, their agents, and employees;

     (2) the National Association of Insurance Commissioners, the division of insurance, an agency in a state that regulates insurance, or an organization established to detect and prevent fraudulent insurance acts, their agents, employees, or designees;

     (3) a person involved in the prevention and detection of fraudulent insurance acts or that person’s employees, agents, or representatives.

 (b) This section does not preclude liability for civil damages as a result of reckless, wilful, or intentional misconduct.




Sec. 21.36.370. [Renumbered as AS 21.36.360(s).]
Sec. 21.36.380. Notice on claim form.
A claim form must contain a statement that states in substance the following: “A person who knowingly and with intent to injure, defraud, or deceive an insurance company files a claim containing false, incomplete, or misleading information may be prosecuted under state law.” A lack of the statement on a claim form does not constitute a defense to prosecution under this title.


Sec. 21.36.390. Notice to director.
 (a) An insurer or licensee that has reason to believe that a fraudulent claim has been made against it shall send the director a report disclosing information that the director may require.

 (b) An insurer or licensee that has reason to believe that an insurance producer with which it is doing business is involved in a defalcation, embezzlement, or violation of the provisions of AS 21.36.030, 21.36.050, or 21.36.360 shall immediately send the director a report disclosing the basis for that belief and any other information that the director may require.

 (c) An insurer or licensee, its employee or agent, or another person acting in good faith is not civilly liable for damages resulting from the filing of the report or the furnishing of information required by this section or by the director.

 (d) The director shall investigate facts reported under this section and shall refer facts indicating a violation of law to the appropriate prosecutor or agency.




Sec. 21.36.400. Confidentiality.
 (a) The papers, reports, documents, and evidence received under AS 21.36.390 or an investigation arising out of information received under AS 21.36.390 are not subject to public inspection for so long as the director considers confidentiality to be in the public interest or reasonably necessary to complete an investigation or protect the person investigated from unwarranted injury. Papers, reports, documents, and evidence relative to an investigation under this section are confidential and not subject to subpoena unless, after notice to the director and a hearing, a court determines the director would not be unduly hindered by public inspection.

 (b) An investigator of the director is not subject to subpoena in a civil action by a court of this state to testify concerning a matter that the investigator has knowledge of under a pending insurance fraud investigation by the director.




Sec. 21.36.410. Out-of-state investigations.
 (a) If material the director seeks to obtain is located outside the state, the material may be made available to the director to examine at the place where the material is located. The director may designate representatives, including officials of the state in which the material is located, to inspect the material on behalf of the director.

 (b) The director may respond to a request from an official of another state under procedures established in (a) of this section.




Sec. 21.36.420. Premium increases on automobile insurance policies. [Repealed, § 112 ch 62 SLA 1995.]

Article 5. Specific Acts and Types of Insurance.


Sec. 21.36.430. Insurance for domestic violence victims and providers of services to victims; records.
 (a) A person transacting insurance in this state may not (1) refuse to issue or renew insurance coverage; (2) limit the scope of insurance coverage; (3) cancel an existing policy of insurance; (4) deny a covered claim; or (5) increase the premium on an insurance policy if the refusal, cancellation, denial, or increase results only from the fact that the person was a victim of domestic violence or a provider of services to victims of domestic violence.

 (b) The provisions of (a) of this section may not prevent an insurer from underwriting or rating
     (1) for a medical condition, including a medical condition resulting from domestic violence, in the same manner as it would for a person who is not a victim of domestic violence; or

     (2) a person based on known frequency of losses in the same manner the insurer would for a person who is not a victim of domestic violence.

 (c) In this section, “domestic violence” means the occurrence of one or more of the following by a current or former family member, household member, intimate partner, or caretaker:
     (1) attempting to cause, causing, or threatening another person with physical harm, severe emotional distress, psychological trauma, rape, or sexual assault;

     (2) engaging in a course of conduct or repeatedly committing acts toward another person, including following the person without proper authority, under circumstances that place the person in reasonable fear of bodily injury or physical harm;

     (3) subjecting another person to false imprisonment; or

     (4) attempting to cause or causing damage to property so as to intimidate or attempt to control the behavior of another person.




Sec. 21.36.440. Required disclosure for failure to provide coverage to an applicant.
An insurer who refuses to provide insurance coverage to an applicant initially applying for insurance shall
     (1) inform the applicant that the applicant has a right to know the reason for the refusal; and

     (2) upon receipt of a written request from the applicant, provide a written explanation of the refusal to the applicant.




Sec. 21.36.450. Definition of insurer for AS 21.36.430 — 21.36.440.
In AS 21.36.430 — 21.36.440, “insurer” includes
     (1) an insurer, as defined in AS 21.97.900;

     (2) a group health plan, as defined in 29 U.S.C. 1167(1) (Employee Retirement Income Security Act of 1974);

     (3) a health maintenance organization, as defined in AS 21.86.900;

     (4) a hospital service corporation or medical service corporation, as defined in AS 21.87.330;

     (5) the Comprehensive Health Insurance Association, established in AS 21.55.010; and

     (6) an entity offering a service benefit plan, as referred to in 42 U.S.C. 1396g-1.




Sec. 21.36.460. Uses of and restrictions on credit history or insurance scoring applicable to personal insurance.
 (a) If an insurer writing personal insurance uses credit information in underwriting or rating a consumer, the insurer shall disclose, either on the insurance application or, at the time the insurance application is taken, that the insurer will obtain credit information in connection with the application. The disclosure required under this subsection shall be in writing or in the same medium as the application for insurance. Use of the following statement constitutes compliance with this subsection: “In connection with this application for insurance, we will review your credit report or obtain or use a credit-based insurance score based on the information contained in your credit report. We may use this information to decide whether to insure you or how much to charge.” If an insurer uses a third party to calculate the applicant’s insurance score, the disclosure required under this subsection must also contain language similar to: “We may use a third party in connection with the development of your insurance score.”

 (b) An insurer that takes adverse action involving personal insurance against a consumer based in whole or in part on credit history or insurance score shall provide the consumer the opportunity to request reconsideration of the adverse action and provide written notice to the applicant or named insured. The notice must
     (1) clearly and specifically state the significant factors of the credit history or insurance score that resulted in the adverse action, in a manner that allows the consumer to identify the basis for the adverse action;

     (2) inform the consumer that the consumer is entitled to
          (A) request reconsideration of the adverse action; and

          (B) a free copy of the consumer’s report under 15 U.S.C. 1681 et seq. (Fair Credit Reporting Act);

     (3) inform the consumer that the consumer has the right to correct errors in the credit report;

     (4) advise the consumer on ways to improve the consumer’s insurance score; and

     (5) provide information to assist the consumer with the error correction process.

 (c) An insurer may use credit history to cancel, deny, underwrite, or rate personal insurance only in combination with other substantive underwriting factors. For the purposes of this subsection,
     (1) refusal to offer personal insurance coverage to a consumer constitutes denial of personal insurance; and

     (2) an offer of placement with an affiliate insurer does not constitute denial of coverage.

 (d) An insurer may not
     (1) fail to renew or, at renewal, again underwrite or rate a personal insurance policy based in whole or in part on a consumer’s credit history or insurance score; the prohibition in this paragraph against underwriting or rating a personal insurance policy at renewal may be waived by the consumer; waiver allowed under this paragraph must occur at each renewal;

     (2) cancel, deny, underwrite, or rate personal insurance coverage based in whole or in part on
          (A) the absence of credit history or the inability to determine the consumer’s credit history if the insurer has received accurate and complete information from the consumer; this subparagraph does not apply if the insurer treats the consumer as if the consumer had neutral credit information as approved by the director;

          (B) credit inquiries not initiated by the consumer;

          (C) credit inquiries relating to insurance coverage if identified on a consumer’s credit report;

          (D) credit inquiries by the consumer for the consumer’s own credit information;

          (E) multiple lender inquiries if coded on the consumer’s credit report as being for automobile, boat, recreation vehicle, or home mortgage loans, unless all inquiries under that code within a 30-day period are counted as one;

          (F) credit history or an insurance score based on collection accounts identified with a medical industry code;

          (G) the consumer’s use of a particular type of credit card, charge card, or debit card or the absence of a credit card;

          (H) the consumer’s total available line of credit; however, the consumer’s ratio of debt to total available line of credit may be considered;

          (I) the age of the most recent automobile or home loan obtained by the consumer; however, an insurer may consider the bill payment history or total number of loans; or

          (J) the person’s age when credit is established;

     (3) use the credit history of the consumer when the consumer is adversely affected by a joint account owner who was the spouse of the consumer or a joint account owner who is the spouse of the consumer and who is a party to a divorce or dissolution action against the consumer; this paragraph applies only if the consumer provides written notice to the insurer that identifies the credit information that is adversely affected by the joint account owner; this paragraph does not prevent the use of credit history that is not identified by the consumer as required by this paragraph;

     (4) use an insurance score that is calculated using the income, age, sex, address, zip code, census block, ethnic group, religion, marital status, or nationality of the consumer as a factor;

     (5) use credit history to determine an insurance score if the history is obtained more than 90 days before the policy is issued;

     (6) use an insurance score derived from an insurance scoring model to determine eligibility for an insurance payment plan; this paragraph does not prohibit the use of credit history to evaluate the ability of the consumer to make payments.

 (e) If incorrect credit history is used to underwrite or rate personal insurance coverage and a consumer is charged higher premiums or offered less favorable policy terms due to the disputed credit history, the insurer shall reissue or rerate the policy retroactive to the effective date of the current policy term, and the policy, as reissued or rerated, shall provide premiums and policy terms the consumer would have been eligible for if accurate credit history had been used to underwrite or rate the policy. If an insurer determines that the insured has overpaid a premium, the insurer shall refund to the insured the amount of overpayment calculated back to the last 12 months of coverage or the actual policy period, whichever period is shorter. This subsection applies only if the consumer discovers the incorrect credit history within 12 months after the policy is issued, resolves the dispute as described under (f) of this section or under the process in 15 U.S.C. 1681 et seq. (Fair Credit Reporting Act), and notifies the insurer in writing that the dispute has been resolved.

 (f) If the use of disputed credit history results in denial or cancellation of personal insurance coverage, an insurer shall reunderwrite the coverage without the use of credit information as a factor. This subsection applies only if, within 10 days following denial or cancellation, the consumer provides a reconsideration certification to the insurer that sets forth any items of the credit history that are disputed and that indicates that the consumer has initiated the dispute resolution process in 15 U.S.C. 1681 (Fair Credit Reporting Act) by requesting a copy of the consumer’s credit report. An insurer’s reconsideration certification form
     (1) is subject to filing and approval by the director under AS 21.42.120; and

     (2) shall be provided by an insurer to the consumer at the time of denial or cancellation.

 (g) This section does not require an insurer to use credit history for any purpose.

 (h) An insurer shall indemnify, defend, and hold the insurer’s producers harmless from all liability, fees, and costs arising out of or relating to the actions, errors, or omissions of an insurance producer who obtains or uses credit information or insurance scores for an insurer if the insurance producer follows the instructions of or procedures established by the insurer and complies with any applicable law or regulation. This subsection does not provide a consumer or other insured with a cause of action that does not exist in the absence of this subsection.

 (i) In this section,
     (1) “adverse action” has the meaning given in 15 U.S.C. 1681 et seq. (Fair Credit Reporting Act) and includes
          (A) cancellation, denial, or failure to renew personal insurance coverage;

          (B) charging a higher insurance premium for personal insurance than would have been offered if the credit history or insurance score had been more favorable, whether the charge is by
               (i) application of a rating rule;

               (ii) assignment to a rating tier that does not have the lowest available rates; or

               (iii) placement with an affiliate company that does not offer the lowest rates available to the consumer within the affiliate group of insurance companies; or

          (C) any reduction or adverse or unfavorable change in the terms of coverage or amount of personal insurance due to a consumer’s credit history or insurance score; a reduction or adverse or unfavorable change in the terms of coverage occurs when
               (i) coverage provided to the consumer is not as broad in scope as coverage requested by the consumer but available to other insureds of the insurer or any affiliate; or

               (ii) the consumer is not eligible for benefits that are available through affiliate insurers;

     (2) “affiliate” has the meaning given in AS 21.22.200;

     (3) “consumer” means an individual policyholder or applicant for insurance;

     (4) “consumer report” has the meaning given in 15 U.S.C. 1681 et seq. (Fair Credit Reporting Act);

     (5) “credit history” means written, oral, or other communication of information by a consumer reporting agency bearing on a consumer’s creditworthiness, credit standing, or credit capacity that is used or expected to be used, or collected in whole or in part, for the purpose of serving as a factor in determining personal insurance premiums or eligibility for coverage;

     (6) “insurance score” means a number or rating that is derived from an algorithm, computer application, model, or other process that is based in whole or in part on credit history;

     (7) “personal insurance” means
          (A) private passenger automobile or motorcycle coverage;

          (B) homeowner coverage, including mobile homeowner’s, manufactured homeowner’s, condominium owner’s, and renter’s coverage;

          (C) dwelling property coverage;

          (D) earthquake coverage for a residence or personal property;

          (E) personal liability and theft coverage;

          (F) personal property inland marine coverage;

          (G) personal boat, watercraft, snowmobile, and recreational vehicle coverage; and

          (H) umbrella insurance coverage.




Sec. 21.36.465. Notice of limited motor vehicle insurance.
 (a) An insurance policy that provides coverage only against property damage to a motor vehicle and that does not provide liability coverage required under AS 28.22.101(d) must contain the following statement printed in bold face type: “This policy provides insurance only against damage to the motor vehicle. This policy does not insure against bodily injury, death, or property damage liability and does not satisfy the mandatory motor vehicle liability insurance requirements of AS 28.22.011

 (b) If the insured under a policy described in (a) of this section is not the owner of the motor vehicle, the insurer shall provide a copy of the policy to the owner.




Sec. 21.36.470. Violation of viatical settlement provisions prohibited.
A person may not violate the viatical settlement transaction provisions of AS 21.96.110 or regulations adopted under AS 21.96.110.


Sec. 21.36.475. Limitation on owner controlled and contractor controlled insurance programs.
 (a) An owner controlled insurance program or a contractor controlled insurance program is subject to both AS 21.39 and AS 21.42, must be approved by the director, and shall be allowed only for a major construction project. Owner controlled and contractor controlled insurance programs are limited to property insurance as defined in AS 21.12.060 and casualty insurance as defined in AS 21.12.070.

 (b) In this section, an owner controlled or contractor controlled insured program does not include
     (1) builder’s risk or course of construction insurance;

     (2) insurance relating to the transportation of cargo or other property;

     (3) insurance covering one or more affiliates, subsidiaries, partners, or joint venture partners of a person; or

     (4) insurance policies endorsed to name one or more persons as additional insureds.

 (c) In this section,
     (1) “contractor” means a person who meets the definition of “contractor” in AS 08.18.171 and who undertakes the performance of a construction project for a project owner, its agent, or its representative;

     (2) “contractor controlled insurance program” means an insurance program where one or more insurance policies are procured on behalf of a contractor, its agent, or its representative, by its insurance producer, as defined in AS 21.27.900, for the purpose of insuring the contractor and one or more of the following:
          (A) the project owner;

          (B) a subcontractor;

          (C) an architect;

          (D) an engineer; or

          (E) a person performing professional services;

     (3) “major construction project” means the process of constructing a structure, building, facility, or roadway or major renovation of more than 50 percent of an existing structure, building, facility, or roadway having a contract cost of more than $50,000,000 of a definite term at a geographically defined project site;

     (4) “owner controlled insurance program” means an insurance program where one or more insurance policies are procured on behalf of a project owner, its agent, or its representative, by its insurance producer, as defined in AS 21.27.900, for the purpose of insuring the project owner and one or more of the following:
          (A) the contractor;

          (B) a subcontractor;

          (C) an architect;

          (D) an engineer; or

          (E) a person performing professional services;

     (5) “project owner” means a person who, in the course of the person’s business, engages the service of a contractor for the purpose of working on a construction project;

     (6) “subcontractor” means a person to whom a contractor sublets all or part of a contractor’s initial undertaking.




Sec. 21.36.480. Genetic information nondiscrimination.
 (a) A health care insurer that offers a health care insurance plan in the individual market shall comply with the genetic information nondiscrimination requirements established under 42 U.S.C. 300gg-53.

 (b) A health care insurer that offers a health care insurance plan in the group market shall comply with the genetic information nondiscrimination requirements established under 42 U.S.C. 300gg-1(b)(3), 42 U.S.C. 300gg-1(c) — (f), and 42 U.S.C. 300gg-91.

 (c) In this section,
     (1) “group market” has the meaning given in AS 21.54.500;

     (2) “health care insurance plan” has the meaning given in AS 21.54.500;

     (3) “health care insurer” has the meaning given in AS 21.54.500;

     (4) “individual market” has the meaning given in AS 21.51.500.




Sec. 21.36.485. Coverage of children.
 (a) A health care insurer may not deny enrollment of a child under the health care insurance of the child’s parent on the ground that the child
     (1) was born out of wedlock;

     (2) is not claimed as a dependent on the parent’s federal income tax return;

     (3) does not reside with the parent; or

     (4) does not reside in the health care insurer’s service area.

 (b) If a parent is required under AS 25.27.020(a)(9) or 25.27.060(c) to provide medical support for a child and the parent is eligible for family health care insurance coverage through an insurer, the parent’s health care insurer
     (1) shall allow the parent to enroll the child under the family health care insurance coverage without regard to restrictions relating to enrollment periods if the child is otherwise eligible;

     (2) shall, if the parent fails to apply for enrollment of a child under (1) of this subsection, enroll the child under the parent’s family health care insurance coverage upon application by the child’s other parent or custodian, the child support services agency, or the Department of Health and Social Services; and

     (3) may not disenroll or eliminate health care insurance coverage of the child unless the insurer has received written evidence that
          (A) the parent with the insurance coverage is no longer required by court order or administrative order to provide the child’s medical support; or

          (B) the child is or will be enrolled in comparable health care insurance coverage through another insurer that will take effect not later than the effective date of the disenrollment or elimination of coverage.

 (c) A health care insurer who provides health care insurance coverage of a child through family health care insurance coverage of a parent who does not have sole physical custody of the child shall
     (1) provide to the child’s other parent or custodian the information that may be necessary for the child to obtain benefits through the family health care insurance coverage;

     (2) allow the child’s other parent or custodian, or the child’s health care provider with the parent’s or custodian’s approval, to submit claims for covered services without the approval of the parent whose health care insurance covers the child; and

     (3) make payment on claims submitted under (2) of this subsection directly to the child’s other parent or custodian, the health care provider, or a state agency to which the child’s medical support rights have been assigned under AS 25.27.120 or AS 47.07.025.

 (d) If an individual is covered for health benefits from an insurer, the insurer may not impose requirements on a state agency to which the rights of the individual under AS 25.27.120 or AS 47.07.025 have been assigned that are different from requirements applicable to an agent or assignee of other individuals covered by the insurer.

 (e) In this section, “health care insurer” has the meaning given in AS 21.54.500 and includes the Comprehensive Health Insurance Association as described in AS 21.55.010.




Sec. 21.36.490. Premium financing.
A person licensed under AS 21.27 may not
     (1) enter into any insurance transaction in which the premium is financed by other than the licensee unless the person providing the financing is licensed under and in compliance with AS 06.40 or is exempted from licensure under AS 06.40.020; or

     (2) finance premiums or extend credit to persons purchasing insurance except as provided in regulations adopted by the director; the director shall adopt regulations establishing the conditions under which licensees may extend credit or finance premiums except that in no event may the regulations permit a rate of interest on amounts lent or credit extended greater than that provided in AS 06.40.120.




Sec. 21.36.495. Prompt payment of health care insurance claims.
 (a) A health care insurer shall pay or deny indemnities under a health care insurance policy, whether or not services were provided by a participating provider, within 30 calendar days after the insurer or a third-party administrator under contract with the insurer receives a clean claim.

 (b) If a health care insurer does not pay or denies a health care insurance claim, the insurer shall give notice to the covered person, or to the provider of the medical care services or supplies if the claim was assigned or if the covered person elected direct payment under AS 21.51.120(a)(2) or AS 21.54.020(a), of the basis for denial or the specific information that is needed for the insurer to adjudicate the claim. The health care insurer shall provide the notice required under this subsection within 30 calendar days after the insurer or third-party administrator under contract with the insurer receives the claim.

 (c) If a health care insurer does not provide the notice as required under (b) of this section, the claim is presumed a clean claim, and interest shall accrue at a rate of 15 percent annually beginning on the day following the day that the notice was due and continues to accrue until the date that the claim is paid.

 (d) If a health care insurer provides the notice required under (b) of this section and requests specific information that is needed to adjudicate the claim, the insurer shall pay the claim not later than 15 calendar days after receipt of the information specified in the notice or within 30 days after receipt of the claim. If a health care insurer does not pay the claim within the time period required under this subsection, the claim is presumed to be a clean claim, interest at a rate of 15 percent accrues, and interest continues to accrue until the date the claim is paid.

 (e) For purposes of (c) and (d) of this section, if only a portion of a claim is covered under the terms of the insurance policy, interest accrues based only on the portion of the claim that is covered.

 (f) For the purposes of this section, a claim is considered paid on the day payment is mailed or transmitted electronically.

 (g) If interest is accrued on a claim under (c) or (d) of this section, a health care insurer may not include the amount of interest accrued in calculating an applicable limit on benefits payable to a covered person or other person claiming payments under the health insurance policy.

 (h) A health care insurer is not required to pay interest due as a result of the application of (c) or (d) of this section if the amount of the interest is $1 or less.

 (i) In this section,
     (1) “clean claim” means a claim that does not have a defect or impropriety, including a lack of any required substantiating documentation, or a particular circumstance requiring special treatment that prevents timely payment of the claim;

     (2) “health care insurer” has the meaning given in AS 21.54.500.




Sec. 21.36.500. Unfair financial planning practices.
 (a) A person may not represent, directly or indirectly, to be a financial planner, investment adviser, consultant, financial counselor, or similar specialist engaged in the business of giving financial planning or advice relating to investments, insurance, real estate, tax matters, or trust and estate matters when the person is in fact only engaging in the sale of insurance.

 (b) A person may not engage in the business of financial planning and solicit the sale of a product or service on the basis that the person is an insurance salesperson or that a commission for the sale of an insurance product will be received in addition to a fee for financial planning without full disclosure to the client before the execution of the agreement required in (c) of this section.

 (c) A person licensed under this title may not charge a fee other than a commission for financial planning unless the fee is based upon a written agreement signed before the performance of a service under the agreement. The insurance salesperson shall provide the client a copy of the signed agreement at the time of signing. The agreement must specifically state the service for which a fee is to be charged and how the fee will be determined or calculated. The agreement must provide that the client is under no obligation to purchase an insurance product. The licensee shall retain a copy of the agreement for not less than five years after completion of services and the agreement shall be available to the director upon request.




Sec. 21.36.505. Health discount plans.
 (a) A person may not sell, market, promote, advertise, or otherwise distribute a health discount plan unless
     (1) each advertisement, policy, document, information, statement, or other communication regarding the health discount plan and the plan itself contain a statement, in bold and prominent type, that the health discount plan is not insurance;

     (2) the discounts offered under the health discount plan are specifically authorized by a contract with each provider of the services or supplies listed in conjunction with the plan;

     (3) the health discount plan states the name, address, and telephone number of the administrator of the plan;

     (4) the person makes readily available to the consumer a complete, accurate, and up-to-date list of providers participating in the plan that offer discounted health care services or supplies in the consumer’s local area and the discounts offered by the providers;

     (5) the person provides the consumer the right to cancel the health discount plan within 30 days after purchase of the plan; and

     (6) the person provides the consumer with a full refund of all payments made, except for a nominal processing fee, within 30 days after notification of cancellation of the plan under (5) of this subsection.

 (b) The director may adopt regulations to implement this section and to establish additional requirements intended to prohibit unfair or deceptive practices relating to health discount plans.




Sec. 21.36.510. Nondisclosure of personal financial and personal health information.
The director shall adopt regulations regarding the release of financial and health information regarding an individual who seeks to obtain, obtains, or has obtained an insurance product or service from a licensee that is to be used primarily for personal, family, or household purposes. The regulations must be at least as restrictive as the model regulations adopted under the National Conference of Insurance Legislators Financial Information Privacy Protection Model Act, adopted by the National Conference of Insurance Legislators Executive Committee on November 17, 2000, and amended on March 2, 2001.


Sec. 21.36.515. Portable electronics insurance.
 (a) Portable electronics insurance may be offered, issued for delivery, issued, or renewed only if the insurer makes available to customers written material stating
     (1) a summary of the material terms of the insurance, including
          (A) the identity of the insurer;

          (B) the identity of the vendor offering or selling the portable electronics insurance;

          (C) the amount of the premium for coverage to be paid by the customer;

          (D) the period for which coverage is effective;

          (E) deductible amounts, and how the deductible is to be paid;

          (F) the benefits of the coverage;

          (G) the process for filing a claim;

          (H) requirements for returning a device to the vendor or insurer, including related costs;

          (I) proof-of-loss requirements;

     (2) whether the portable electronic device may be repaired or replaced by the insurer in response to a claim;

     (3) whether similar make and model reconditioned devices or nonoriginal manufacturer parts and equipment may be used by the insurer in response to a claim;

     (4) that the insurance offered may duplicate coverage in a homeowner’s, renter’s, or other similar insurance policy;

     (5) that the customer is not obligated to purchase insurance to purchase, lease, or service a portable electronic device; and

     (6) that the customer may cancel enrollment for coverage at any time and receive a refund or credit based on a proration of the premium amount paid by the customer for the period that coverage was effective.

 (b) The written materials required by this section are not subject to the requirements of AS 21.42.120.

 (c) Portable electronics insurance may be offered on a month-to-month or other periodic basis as a group or master policy issued to a vendor under which an individual customer may elect to enroll for coverage. The insurer offering coverage under a group or master policy shall establish eligibility and underwriting standards for customers electing to enroll in coverage for each portable electronics insurance program.

 (d) Portable electronics insurance may be offered as commercial inland marine insurance.

 (e) A premium for portable electronics insurance may be billed and collected by the vendor of portable electronics. A charge to the customer for coverage that is not included in the cost associated with the purchase or lease of portable electronics or related services must be itemized separately from the charges for the purchase, lease, or service of a portable electronic device. If the coverage is included with the purchase or lease of portable electronics or related services, the vendor shall clearly and conspicuously disclose to the consumer that the coverage is included with the portable electronics or related services. Vendors collecting premiums for portable electronics insurance are not required to maintain premiums in a segregated account if the vendor is authorized by the producer or insurer to hold premiums in an alternative manner and pays the premiums to the insurer within 60 days after receipt. Premiums received by a vendor from a customer purchasing portable electronics insurance shall be held in a fiduciary capacity for the benefit of the insurer. A vendor may receive compensation for billing and collection services.

 (f) A portable electronics insurance policy may be changed or terminated as follows:
     (1) an insurer may cancel or change the terms and conditions of the policy; the insurer shall provide the vendor and enrolled customers with at least 30 days’ notice and shall provide the vendor with a revised policy or endorsement and each enrolled customer with a revised certificate, endorsement, updated brochure, or other evidence indicating that a change in the terms and conditions has occurred and a summary of material changes;

     (2) an insurer may, upon 15 days’ notice, terminate an enrolled customer’s enrollment under a portable electronics insurance policy for fraud or material misrepresentation in obtaining coverage or in the presentation of a claim under the terms of the policy;

     (3) an insurer may, without prior notice, immediately terminate an enrolled customer’s enrollment under a portable electronics insurance policy
          (A) for nonpayment of premium;

          (B) if the enrolled customer ceases to have an active service contract with the vendor; or

          (C) if an enrolled customer exhausts the aggregate limit of liability, if any, under the terms of the portable electronics insurance policy and the insurer sends notice of termination to the enrolled customer within 30 calendar days after exhaustion of the limit; however, if notice is not sent within 30 calendar days, enrollment shall continue, notwithstanding the exhaustion of the aggregate limit of liability, until the insurer sends notice of termination to the enrolled customer;

     (4) if a portable electronics insurance policy is terminated by a vendor, the vendor shall mail or deliver written notice to each enrolled customer advising the enrolled customer of the termination of the policy and the effective date of termination; the written notice shall be mailed or delivered to the enrolled customer at least 30 days before the termination;

     (5) if a policy of portable electronics insurance is terminated by an insurer or a vendor, the insurer or vendor shall, within 60 days after termination, return any unearned premium to the person who paid the premium;

     (6) if notice or correspondence with respect to a policy of portable electronics insurance is required under this section or is otherwise required by law, the notice or correspondence must be in writing; notices and correspondence may be sent either by mail or by electronic means as follows:
          (A) if the notice or correspondence is mailed, it shall be sent to the vendor of portable electronics at the vendor’s mailing address specified for that purpose and to the vendor’s affected enrolled customers’ last known mailing addresses on file with the insurer; the insurer or vendor of portable electronics shall maintain proof of mailing in a form authorized or accepted by the United States Postal Service or other commercial mail delivery service;

          (B) if the notice or correspondence is sent by electronic means, it shall be sent to the vendor of portable electronics at the vendor’s electronic mail address specified for that purpose and to the vendor’s affected enrolled customers’ last known electronic mail addresses as provided by each enrolled customer to the insurer or vendor of portable electronics; for purposes of this subparagraph, an enrolled customer’s provision of an electronic mail address to the insurer or vendor of portable electronics shall be considered consent to receive notices and correspondence electronically; the insurer or vendor of portable electronics shall maintain proof that the notice or correspondence was sent;

     (7) notice or correspondence required by this section or otherwise required by law may be sent on behalf of an insurer or vendor by a producer appointed by the insurer.

 (g) A portable electronics insurance policy must provide that, in the event of a covered loss under more than one policy, the portable electronics policy will provide primary coverage.

 (h) In this section,
     (1) “portable electronics insurance”
          (A) means insurance offered, issued for delivery, delivered, or renewed by a vendor engaged in the business of selling, leasing, or servicing portable electronic devices to cover the loss, theft, mechanical failure, malfunction, damage, repair, or replacement of a small electronic device, including a cell phone, laptop computer, electronic tablet, GPS device, radio, portable music player, or associated accessory;

          (B) does not include
               (i) a service contract described in AS 21.03.021(e);

               (ii) a policy of insurance covering a seller’s or a manufacturer’s obligations under a warranty; or

               (iii) a homeowner’s, renter’s, private passenger automobile, commercial multiperil, or similar policy that covers loss or theft of portable electronics;

     (2) “vendor” means a business entity in the business of selling or leasing portable electronics and related services and accessories.




Article 6. Remedies and General Provisions.


Sec. 21.36.900. Procedures as to undefined practices.
 (a) If the director believes that a person engaged in the insurance business is engaging in this state in an unfair method of competition or in an unfair or deceptive act or practice in the conduct of the business that is not defined as being unfair or deceptive under this chapter, the director shall hold a hearing on the matter, if the director believes it would be in the public interest to do so after giving notice of the hearing and of the charges. Upon conclusion of the hearing the director shall make a written report of the findings of fact relative to the charges and serve a copy upon the person and any intervenor at the hearing.

 (b) If the report charges a violation of this chapter and if the method of competition, act, or practice has not been discontinued, the director may, through the attorney general of this state, at any time after the service of the report, cause an action to be instituted to enjoin and restrain the person from engaging in the method, act, or practice. In the action the court may grant a restraining order or injunction upon just terms, but the state may not be required to give security before the issuance of the order or injunction. If a record of the proceedings in the hearing before the director was made, a certified transcript, including all evidence taken and the report and findings, shall be received in evidence in the action.

 (c) If the director’s report made under (a) of this section, or order on hearing made under AS 21.36.910 does not charge a violation of this chapter, an intervenor in the proceedings may appeal from the order or report within the time and in the manner provided for appeals from the director generally.

 (d) In addition to the unfair methods and unfair or deceptive acts or practices expressly defined in this title, the director may adopt regulations to define other methods of competition and other acts and practices related to the business of insurance that are unfair or deceptive.




Sec. 21.36.910. Hearings and order on violation.
 (a) On the complaint of a person or on the motion of the director, the director may conduct an investigation to determine whether a person is engaged in an unfair method of competition or unfair or deceptive act or practice prohibited by this chapter.

 (b) If there are grounds for believing that a person is engaged in an act or practice prohibited by this chapter, the director may institute proceedings under AS 21.06.170 — 21.06.240.

 (c) If the director determines that a person violated this chapter, the director shall serve upon the person charged an order requiring that person to cease and desist from engaging in the act or practice.

 (d) In addition to an order issued under (c) of this section, the director may, after a hearing, order restitution, assess a penalty of not more than $2,500 for each violation or $25,000 for engaging in a general business practice in violation of this chapter.

 (e) If the director determines after a hearing that the person charged knew or should have known that the person was in violation of this chapter, in addition to the penalty prescribed in (d) of this section, a suspension or revocation of the person’s license and a penalty of not more than $25,000 for each violation or $250,000 for engaging in the general business practice in violation of this chapter may also be ordered by the director.

 (f) If the director believes that a person has violated a cease and desist order issued under (c) of this section, the director may certify the relevant facts to the superior court in the appropriate district, for proceedings under AS 44.62.590. In addition to the penalties and remedies provided for in AS 44.62.590, the superior court, upon finding that the cease and desist order has been violated, may order the violator to comply with the order, pay an additional penalty of not more than $1,000,000 for each violation, may revoke or suspend the violator’s license, and may bar the violator from transacting the business of insurance in the future.

 (g) In determining the penalty imposed under (d) and (e) of this section, the director shall consider the amount of loss or harm caused by the violation and the amount of benefit derived by the person by reason of the violation and may consider other factors, including the seriousness of the violation, the promptness and completeness of remedial action, whether the violation was a single act or a trade practice, and deterrence of the violator or others.

 (h) If the violation is a single act prohibited under AS 21.36.125 that results in loss or harm, the director may require restitution or issue a cease and desist order but may not impose a penalty that includes a fine or require other remedial action, unless the violation results in loss or harm and is intentional. This subsection does not affect the director’s authority to impose a penalty for multiple acts prohibited under AS 21.36.125 or a penalty for an act prohibited under a provision of law other than AS 21.36.125.




Sec. 21.36.920. Injunctive relief.
The director may seek injunctive relief to aid in the enforcement of the provisions of this chapter.


Sec. 21.36.930. Provisions of this chapter additional to other law.
The powers vested in the director by this chapter are in addition to any other powers to enforce penalties, fines, or other forfeitures authorized by law with respect to acts and practices declared in this chapter to be unfair or deceptive.


Chapter 39. Rates and Rating Organizations.

Sec. 21.39.010. Purpose.
The purpose of this chapter is to promote the public welfare by regulating insurance rates in order that they will not be excessive, inadequate, or unfairly discriminatory, and to authorize and regulate cooperative action among insurers in rate making and in other matters within the scope of this chapter. Nothing in this chapter is intended (1) to prohibit or discourage reasonable competition, or (2) to prohibit or encourage, except to the extent necessary to accomplish the purpose of this chapter, uniformity in insurance rates, rating systems, rating plans or practices. This chapter shall be liberally interpreted to carry into effect the intent of this section.


Sec. 21.39.020. Applicability.
 (a) This chapter applies to all forms of casualty insurance, including fidelity, surety, and guaranty bonds, to all forms of fire, marine, and inland marine insurance, and to a combination of any of them, or risks or operations in this state. Inland marine insurance includes insurance defined by statute, or by interpretation of statute, or if not defined or interpreted, by ruling of the director, or as established by general custom of the business, as inland marine insurance.

 (b) This chapter does not apply to
     (1) reinsurance, other than joint reinsurance to the extent stated in AS 21.39.110;

     (2) health insurance;

     (3) insurance of vessels or craft, their cargoes, marine builders’ risks, marine protection and indemnity, or other risks commonly insured under marine, as distinguished from inland marine insurance policies;

     (4) insurance against loss of or damage to aircraft or against liability, other than workers’ compensation and employer’s liability, arising out of the ownership, maintenance, or use of aircraft; or, to insurance of hulls of aircraft, including their accessories and equipment;

     (5) insurance written under AS 21.34, except as provided in AS 21.34.030(b).




Sec. 21.39.030. Making of rates.
 (a) Rates, including loss costs under AS 21.39.043 or any other provision of law, shall be made in accordance with the following provisions:
     (1) rates shall not be excessive, inadequate, or unfairly discriminatory;

     (2) consideration shall be given to past and prospective loss experience inside and outside this state; to the conflagration and catastrophe hazards; to a reasonable margin for underwriting profit and contingencies; to dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers; to past and prospective expenses both countrywide and those specially applicable to this state; and to all other relevant factors inside and outside this state;

     (3) the systems of expense provisions included in the rates for use by an insurer or group of insurers may differ from those of other insurers or group of insurers to reflect the requirements of the operating methods of the insurer or group of insurers with respect to any kind of insurance, or with respect to a subdivision or combination thereof for which subdivision or combination separate expense provisions are applicable;

     (4) risks may be grouped by classifications for the establishment of rates and minimum premiums; classification rates may be modified to produce rates for individual risks in accordance with rating plans that establish standards for measuring variations in hazards or expense provisions, or both; the standards may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses;

     (5) in the case of fire insurance rates, consideration may be given to the experience of the fire insurance business during a period of not more than the most recent five-year period for which experience is available;

     (6) when there is an established program to inspect new and existing dwellings and the program has been certified by the director as likely to reduce the incidence of fires in inspected dwellings, then in any rate plan used in this state, dwellings that have been found by the inspection to meet the standards established by the program shall have credits applied to the rate in amounts approved by the director.

 (b) Except to the extent necessary to meet the provisions of (a)(1) of this section, uniformity among insurers in matters within the scope of this section is neither required nor prohibited.

 (c) In this section “dwelling” means a residential structure containing not more than four family living units.




Sec. 21.39.035. Required filing of insurance scoring models; personal insurance.
 (a) Credit history may not be used to determine personal insurance rates or premiums or to make underwriting decisions unless the insurance scoring models are filed with the director. Insurance scoring models include all attributes and factors used in the calculation of an insurance score, statistical validation, documentation, appropriate loss information, and any other relevant factors.

 (b) Information filed under (a) of this section
     (1) is confidential, shall be considered a trade secret, and is not subject to public inspection under AS 21.06.060;

     (2) may be released or otherwise shared as provided in AS 21.06.060; and

     (3) shall be filed by the insurer and may not be filed by a third party or vendor.

 (c) An insurer shall comply with AS 21.36.460 when using credit history to calculate a personal insurance score or determine personal insurance premiums or rates.

 (d) Notwithstanding (b) of this section, the director shall make available to the public a general description of the insurance scoring models filed under (a) of this section. A general description of insurance scoring models may not disclose any trade secrets contained in the models.

 (e) In this section,
     (1) “credit history” has the meaning given in AS 21.36.460;

     (2) “insurance score” has the meaning given in AS 21.36.460;

     (3) “personal insurance” has the meaning given in AS 21.36.460.




Sec. 21.39.040. Rate filings.
 (a) Each insurer shall file with the director, except as to inland marine risks, which, by general custom of the business, are not written according to manual rates or rating plans, and except for rates for commercial insurance for which the director, by regulation authorizes an informational filing as set out in (k) of this section, every manual, minimum, class rate, rating shedule, loss cost adjustment, or rating plan and every other rating rule, and each modification of any of them that it proposes to use. Each filing
     (1) shall be made under the applicable filing procedures in AS 21.39.041, 21.39.210, or 21.39.220;

     (2) must state the proposed effective date; the effective date may be
          (A) a specific date;

          (B) the date the filing is approved by the director; or

          (C) a date conditioned on some other event when approved by the director; and

     (3) must indicate the character and extent of the coverage contemplated.

 (b) An insurer may satisfy its obligation to make filings by becoming a member of, or a subscriber to, a licensed rating organization that makes filings and by authorizing the director to accept the filings on its behalf, except that nothing in this chapter may be construed as requiring an insurer to become a member of or a subscriber to a rating organization.

 (c) The director shall review filings as soon as reasonably possible after they have been made in order to determine whether they meet the requirements of this chapter.

 (d) When a filing is not accompanied by the information upon which the insurer supports the filing, and the director does not have sufficient information to determine whether the filing meets the requirements of this chapter, the director shall require the insurer to furnish the information upon which the insurer supports the filing. The waiting period in AS 21.39.041(a) or 21.39.220(b) begins on the date the information is furnished to the director. The information furnished in support of a filing may include (1) the experience or judgment of the insurer or rating organization making the filing; (2) the insurer’s interpretation of the statistical data it relies upon; (3) the experience of other insurers or rating organizations; (4) any other relevant factors. Specific inland marine rates on risks specially rated, made by a rating organization, shall be filed with the director.

 (e) Specific inland marine rates on risks specially rated by a rating organization, or a specific filing with respect to a surety or guaranty bond required by law or by court, executive order, or regulation of a public body and not covered by a previous filing, shall become effective when filed and considered to meet the requirements of this chapter until such time as the director reviews the filing and as long thereafter as the filing remains in effect.

 (f) The director may, by written order, suspend or modify the requirement of filing on a kind of insurance, subdivision or combination of them, or on classes of risks, the rates for which cannot practicably be filed before they are used or the filing and approval of which are, in the director’s opinion, not desirable or necessary for the protection of the public. The orders shall be made known to insurers and rating organizations affected by them. The director may make an examination that the director may consider advisable to ascertain whether the rates affected by the order meet the standards set out in AS 21.39.030(a)(2).

 (g) Upon the written application of the insured describing the unusual characteristics that are not otherwise contemplated in the filed rating plan, the insurer may file a rate other than a rate provided for in an applicable rate filing that may be used on a specific risk. The filing shall be made under the applicable filing procedures in AS 21.39.041 or 21.39.220.

 (h) An insurer may not make or issue a contract or policy except in accordance with the filings that are in effect for that insurer as provided in this chapter or in accordance with (f), (g), and (i) of this section. This subsection does not apply to contracts or policies for inland marine risks on which filings are not required.

 (i) An insurer may use a rate less than that provided by a filing otherwise applicable on a specific risk the insurance for which would otherwise be exported under AS 21.34. Within 30 days of this action the insurer shall file a report detailing the information required by the director on a form prescribed by the director.

 (j) An insurer who has submitted an application for a certificate of authority under AS 21.09.110 and a filing of policy forms under AS 21.42.120 may file a proposed rating system as described in this section. The director’s approval of the rating system is contingent upon the issuance of a certificate of authority under AS 21.09.120.

 (k) The director
     (1) may adopt regulations detailing the format and content of a rating system filing under this section;

     (2) shall adopt regulations consistent with the National Association of Insurance Commissioners Property and Casualty Model Rate and Policy Form Act, including those provisions relating to the format and content of informational filings for rates for commercial insurance; the provisions of AS 21.39.030(a) apply to an informational filing authorized by the director; in this paragraph, “informational filing” means a filing that the director does not approve before its use and that meets the format and content requirements of regulations adopted by the director.




Sec. 21.39.041. Prior approval.
 (a) Except for workers’ compensation prospective loss cost filings and workers’ compensation assigned risk pool rates by a rating organization under AS 21.39.043, an insurer or rating organization shall file medical malpractice, workers’ compensation and assigned risk plan rating systems as specified in AS 21.39.040(a) with the director for review and approval prior to use. Each filing shall be on file for a waiting period of 15 days before it becomes effective. This period may be extended by the director for an additional period not to exceed 15 days if the director gives written notice within the waiting period to the insurer or rating organization that made the filing stating that additional time for the consideration of the filing is required. The director shall approve the filing upon a determination that the filing meets the requirements of this title.

 (b) The filing must include the effective date. In place of a specific date, the insurer or rating organization may specify a reasonable time period after approval for the filing to be effective.

 (c) Upon written application by the insurer or rating organization, the director may authorize a filing that the director has approved to become effective before the expiration of the waiting period. A filing shall be considered to meet the requirements of this title unless disapproved by the director within the waiting period.

 (d) If the insurer or rating organization fails to provide information requested by the director under AS 21.39.040(d) within 30 days after the director requests the information, the response period may be extended by the director for an additional 15 days upon written application of the insurer or rating organization within the initial 30-day response period. The director shall consider the failure to provide information as a request by the insurer or rating organization to withdraw the filing from further consideration.

 (e) A filing and supporting information shall be open to public inspection after the filing becomes effective.

 (f) If, within the review period provided for in (a) of this section, the director finds that a filing does not meet the requirements of this title, the director shall send to the insurer or rating organization that made the filing written notice of disapproval of the filing specifying in what respects the filing fails to meet the requirements of this title and stating that the filing may not become effective.




Sec. 21.39.043. Workers’ compensation loss cost filings and assigned risk pool rate filings.
 (a) On at least an annual calendar year basis, a rating organization shall make a workers’ compensation prospective loss cost filing and an assigned risk pool rate filing, even if the rating organization determines that a change in the prospective loss costs or rates is not indicated.

 (b) A rating organization shall submit a prospective loss cost filing and an assigned risk pool rate filing to the director not less than 125 days before the proposed effective date of each filing.

 (c) At the time a prospective loss cost filing and assigned risk pool rate filing are submitted to the director under (b) of this section, the rating organization shall make available to any member or subscriber that may be affected by the filings a complete copy of the filings, together with the materials, aggregate data, and other information submitted in support of the filings. The prospective loss cost and assigned risk pool rate filings and supporting information are available for public inspection. Before the hearing under (d) of this section, members and subscribers may submit interrogatories to the rating organization, including requests for additional supporting information concerning the filings.

 (d) The director shall hold an administrative hearing on whether a prospective loss cost filing meets the requirements of this chapter and whether the filing should be approved, disapproved, or modified, in whole or in part. The director shall hold the hearing not earlier than 20 days and not later than 25 days after the date of receipt of the prospective loss cost filing by the director. The director may adopt regulations governing the conduct of the hearing subject to the following:
     (1) the director shall sit in a quasi-judicial capacity;

     (2) an interested party may
          (A) have a reasonable opportunity to inspect the filing and supporting information and to examine witnesses, including the designated actuary and other witnesses of the rating organization;

          (B) present witnesses, oral and written testimony, and documentary evidence; and

          (C) apply for subpoenas to be issued by the director to compel attendance of witnesses and the production of evidence on the interested party’s behalf;

     (3) evidence and testimony from interested parties is limited to matters relevant to a determination of whether the filing’s prospective loss costs meet the requirements of this chapter and may include a recommendation for approval, disapproval, or modification of the prospective loss cost filing;

     (4) the director shall record the hearing;

     (5) formal rules of pleading or evidence need not be observed;

     (6) the director may conduct part or all of a hearing by teleconference and allow a witness to testify telephonically; and

     (7) the director shall leave the hearing record open for 10 days after the date of the hearing, during which time interested parties may submit additional written testimony and documentary evidence concerning the prospective loss cost filing to the director subject to the limitations of (3) of this subsection, and members and subscribers may submit to the rating organization and to the director proposed modifications to the prospective loss cost filing accompanied by the information upon which the member or subscriber supports the modification.

 (e) The director shall review the prospective loss cost filing and the evidence presented through the hearing process within 15 days after the hearing. The 15-day period may be extended for an additional 15 days if the director gives written notice within the first 15-day period to the rating organization that additional time for consideration of the filing is required. If, under (d)(7) of this section, evidence is provided to support a modification and the rating organization does not include the requested modification in the filing, the director shall require that the rating organization rebut the evidence to show why the modification should not be included. The director may request that the rating organization
     (1) provide additional supporting information for the filing; or

     (2) modify the filing based on evidence provided through the hearing process.

 (f) The rating organization shall file its rebuttal, if required by the director under (e) of this section, and any other information requested under (e)(1) of this section, or its modification of the loss cost filing under (e)(2) of this section within 15 days after receipt of the director’s request unless additional time is allowed by the director. The director shall review the rating organization’s responses to the director’s interrogatories within 15 days after receipt of the response. The 15-day period may be extended for an additional 15 days if the director gives written notice within the first 15-day period to the rating organization that additional time for consideration of the filing is required.

 (g) Subject to AS 21.06.060(f), all communications under this section between the director, the rating organization, and any interested party concerning a prospective loss cost filing, including the director’s interrogatories, the rating organization’s written responses, modified filings and all supporting information, except for information related to a particular insured, are part of the filing record and are available for public inspection.

 (h) The rating organization shall make available to a member or subscriber all information that is available for public inspection under this section as soon as possible after issuance or receipt of the information by the director. Other interested parties may obtain copies of public documents from the director.

 (i) The director shall issue a written order approving or disapproving the prospective loss cost filing and the assigned risk pool rate filing. The order must include details of the director’s reasoning for approving or disapproving the filings.

 (j) A separate prospective loss cost filing submitted solely to address an amendment to AS 23.30 is not subject to the procedures of this section, but shall be reviewed and approved or disapproved by the director in accordance with AS 21.39.040(d). A filing under this subsection, together with all supporting information and communications between the director and the rating organization, is available for public inspection.

 (k) A written order of the director under this section is subject to review by appeal to the superior court. An appeal under this section shall be filed with the court within 30 days after the date of the written order. The court shall determine whether the filing of the appeal will operate as a stay of the order.

 (l) A filing made under this section is subject to all other provisions of this chapter except to the extent that the other provisions are inconsistent with this section. AS 21.39.080 does not apply to a prospective loss cost filing by a workers’ compensation rating organization.

 (m) An assigned risk pool filing is not directly subject to (d) — (h) of this section.

 (n) In this section,
     (1) “assigned risk pool rate filing” means the filing submitted by a rating organization for rates proposed to be charged by the rating organization for the assigned risk pool insurance under AS 21.39.155;

     (2) “interested party” means
          (A) an employer association;

          (B) an employee or labor association;

          (C) a producer;

          (D) a producer association;

          (E) an insurer member or subscriber of the rating organization; and

          (F) other persons who are substantially affected by the loss cost filing;

     (3) “prospective loss cost filing” means the historical aggregate losses and loss adjustment expenses upon which a portion of a rate is based, adjusted through trending to a future point in time, but does not include expenses, other than loss adjustment expenses, or profit.




Sec. 21.39.045. Workers’ compensation rate filings.
 (a) Notwithstanding any other provision of this chapter, a rate filing for workers’ compensation insurance that classifies a risk in the construction industry may not contain or impose a higher premium rate if the risk upon which the higher rate filing is based consists only of a higher wage rate paid by the employer.

 (b) The director shall accept a rate filing for workers’ compensation insurance if the filing includes a reasonable method of recognizing differences in rates of pay for the construction industry, and the method uses a credit scale that begins at an amount equal to the average weekly wage in this state for the construction industry as determined by the Department of Labor and Workforce Development.




Sec. 21.39.050. Disapproval of filings.
 (a) [Repealed, § 12 ch 88 SLA 2005.]
 (b) If, within 30 days after a specific inland marine rate on a risk especially rated by a rating organization subject to AS 21.39.040(e) has become effective or, if within 30 days after a special surety or guaranty filing subject to AS 21.39.040(e) has become effective, the director finds that the filing does not meet the requirements of this chapter, the director shall send to the rating organization or insurer that made the filing written notice of disapproval of the filing specifying in what respects the filing fails to meet the requirements of this chapter and stating when, within a reasonable period, the filing shall be considered no longer effective. Disapproval shall not affect a contract made or issued before the expiration of the period set out in the notice.

 (c) If, at any time subsequent to the applicable review period provided for in AS 21.39.041(a) or 21.39.220(b), the director finds that a filing does not meet the requirements of this title, the director shall, after a hearing held upon not less than 10 days written notice specifying the matters to be considered at the hearing and given to each insurer and rating organization that made the filing, issue an order specifying in what respects the filing fails to meet the requirements of this title and stating when, within a reasonable period thereafter, the filing shall be considered no longer effective. Copies of the order shall be sent to each insurer and rating organization that made the filing. The order may not affect a contract or policy made or issued before the expiration of the period set out in the order.

 (d) A person or organization aggrieved by a filing that is in effect may make written application to the director for a hearing, except that the insurer that made the filing may not be authorized to proceed under this subsection. The application shall specify the grounds to be relied upon by the applicant and the application must show that the person or organization making the application has a specific economic interest affected by the filing. If the director finds that the application is made in good faith, that the applicant has a specific economic interest, that the applicant would be so aggrieved if the grounds are established, and that the grounds otherwise justify holding a hearing, the director shall within 30 days after receipt of the application hold a hearing upon not less than 10 days written notice to the applicant and to every insurer and rating organization that made the filing. A rating or advisory organization has status under this chapter to make application for a hearing on a filing made by an insurer with the director. If, after the hearing, the director finds that the filing does not meet the requirements of this chapter, the director shall issue an order specifying in what respects that the filing fails to meet the requirements of this chapter, and stating when, within a reasonable period thereafter, the filing shall be considered no longer effective. Copies of the order shall be sent to the applicant and to every insurer and rating organization that made the filing. The order shall not affect a contract or policy made or issued before the expiration of the period set out in the order.

 (e) A filing may not be disapproved if the rates in the filing meet the requirements of this chapter.




Sec. 21.39.055. Cancellation of approved filing.
The voluntary surrender of a certificate of authority or the failure of the surrendering admitted foreign insurer to continue a certificate of authority in force has the effect of cancelling an approval that the insurer may have received under this chapter, unless the approval has been affirmed by the director at the time of the surrender or noncontinuation of the certificate of authority.


Sec. 21.39.060. Rating organizations.
 (a) A corporation, an unincorporated association, a partnership, or a person, whether located inside or outside this state, may make application to the director for license as a rating organization for the kinds of insurance, or subdivision or class of risk or a part or combination thereof as are specified in its application and shall file with the application (1) a copy of its constitution, its articles of agreement or association, or its certificate of incorporation, and of its bylaws and regulations governing the conduct of its business; (2) a list of its members and subscribers; (3) the name and address of a resident of this state upon whom notices or orders of the director or process affecting the rating organization may be served; and (4) a statement of its qualifications as a rating organization. If the director finds that the applicant is competent, trustworthy, and otherwise qualified to act as a rating organization and that its constitution, articles of agreement or association or certificate of incorporation, and its bylaws and regulations governing the conduct of its business conform to the requirements of law, the director shall issue a license specifying the kinds of insurance, or subdivisions or classes or risks or parts or combinations of them for which the applicant is authorized to act as a rating organization. Each application shall be granted or denied in whole or in part by the director within 60 days after the date of its filing. Licenses issued under this section shall remain in effect for three years unless suspended or revoked by the director. The fee for the license is set under AS 21.06.250. Licenses issued under this section may be suspended or revoked by the director, after hearing upon notice, if the rating organization ceases to meet the requirements of this subsection and (b) of this section.

 (b) Each rating organization shall notify the director promptly of every change in
     (1) its constitution, its articles of agreement or association, or its certificate of incorporation, and its bylaws and regulations governing the conduct of its business;

     (2) its list of members and subscribers; and

     (3) the name and address of the resident of this state designated by it upon whom notices or orders of the director or process affecting the rating organization may be served.

 (c) Subject to regulations that have been approved by the director as reasonable, each rating organization shall permit an insurer that is not a member to be a subscriber to its rating services for the kind of insurance, subdivision, or class of risk or a part or combination of them for which it is authorized to act as a rating organization. Notice of proposed changes in the regulations shall be given to subscribers. Each rating organization shall furnish its rating service without discrimination to its members and subscribers. The reasonableness of a regulation in its application to subscribers, or the refusal of a rating organization to admit an insurer as a subscriber, shall, at the request of a subscriber or an insurer, be reviewed by the director at a hearing held upon at least 10 days’ written notice to the rating organization and to the subscriber or insurer. If the director finds that the regulation is unreasonable in its application to subscribers, the director shall order that the regulation shall not be applicable to subscribers. If the rating organization fails to grant or reject an insurer’s application for subscribership within 30 days after it was made, the insurer may request a review by the director as if the application had been rejected. If the director finds that the insurer has been refused admittance to the rating organization as a subscriber without justification, the director shall order the rating organization to admit the insurer as a subscriber. If the director finds that the action of the rating organization was justified, the director shall make an order affirming the action.

 (d) A rating organization may not adopt a regulation that would prohibit or regulate the payment of dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers.

 (e) Cooperation among rating organizations or among rating organizations and insurers in rate making or other matters within the scope of this chapter is authorized. The filings resulting from the cooperation are subject to the provisions of this chapter that are applicable to filings generally. The director may review the cooperative activities and practices, and if, after a hearing, the director finds that the activity or practice is unfair or unreasonable or inconsistent with this chapter, the director may issue a written order specifying in what respects the activity or practice is unfair or unreasonable or otherwise inconsistent with this chapter, and requiring the discontinuance of the activity or practice.

 (f) A rating organization may provide for the examination of policies, daily reports, binders, renewal certificates, endorsements, or other evidences of insurance, or the cancellation of them, and may make reasonable rules governing their submission. The rules must contain a provision that in the event an insurer does not within 60 days furnish satisfactory evidence to the rating organization of the correction of an error or omission previously called to its attention by the rating organization, it shall be the duty of the rating organization to notify the director. All information submitted for examination shall be confidential.

 (g) A rating organization may subscribe for or purchase actuarial, technical, or other service. The services shall be available to all members and subscribers without discrimination.




Sec. 21.39.070. Deviations.
 (a) Each member of or subscriber to a rating organization shall adhere to the filings made on its behalf by the organization except that an insurer may file with the director, in accordance with AS 21.39.040(a), a deviation from the class rates, schedules, rating plans, or rules respecting a kind of insurance, or class of risk within a kind of insurance, or a combination of them.

 (b) [Repealed, § 12 ch 88 SLA 2005.]




Sec. 21.39.080. Appeal by minority.
 (a) A member or subscriber to a rating organization may appeal to the director from the action or decision of the rating organization in approving or rejecting a proposed change in or addition to the filings of the rating organization and the director shall, after a hearing held upon not less than 10 days written notice to the appellant and to the rating organization, issue an order approving the action or decision of the rating organization or directing it to give further consideration to the proposal, or, if the appeal is from the action or decision of the rating organization in rejecting a proposed addition to its filings, the director may, on a finding that the action or decision was unreasonable, issue an order directing the rating organization to make an addition to its filings, on behalf of its members and subscribers, in a manner consistent with the findings, within a reasonable time after the issuance of the order.

 (b) If the appeal is based upon the failure of the rating organization to make a filing on behalf of the member or subscriber, that is based on a system of expense provisions that differs, in accordance with the right granted in AS 21.39.030(a)(3), from the system of expense provisions included in a filing made by the rating organization, the director shall, if the appeal is granted, order the rating organization to make the requested filing for use by the appellant. In deciding the appeal the director shall apply the standards set out in AS 21.39.030.




Sec. 21.39.090. Rights of insureds.
Each rating organization and each insurer that makes its own rate shall, within a reasonable time after receiving written request and upon payment of the reasonable charge as it may make, furnish to an insured affected by a rate made by it, or to the authorized representative of the insured, all pertinent information concerning the rate. Each rating organization and each insurer that makes its own rates shall provide within this state reasonable means for a person aggrieved by the application of its rating system to be heard, in person or by an authorized representative, on a written request to review the manner in which the rating system has been applied in connection with the insurance. If the rating organization or insurer fails to grant or reject the request within 30 days after it is made, the applicant may proceed in the same manner as if the application had been rejected. A party affected by the action of the rating organization or the insurer on the request may, within 30 days after written notice of the action, appeal to the director, who, after a hearing held upon not less than 10 days written notice to the appellant and to the rating organization or insurer, may affirm or reverse the action.


Sec. 21.39.100. Advisory organizations.
 (a) Each group, association or other organization of insurers, whether located inside or outside this state, that assists insurers that make their own filings or rating organizations in rate making by the collection and furnishing of loss or expense statistics or by the submission of recommendations, but that does not make filings under this chapter, shall be known as an advisory organization.

 (b) Each advisory organization shall file with the director
     (1) a copy of its constitution, its articles of agreement or association, or its certificate of incorporation and of its bylaws and regulations governing its activities;

     (2) a list of its members;

     (3) the name and address of a resident of this state upon whom notices or orders of the director or process issued at the direction of the director may be served; and

     (4) an agreement that the director may examine the advisory organization in accordance with AS 21.39.120.

 (c) If, after a hearing, the director finds that the furnishing of the information or assistance involves an act or practice that is unfair or unreasonable or otherwise inconsistent with this chapter, the director may issue a written order specifying in what respects the act or practice is unfair or unreasonable or otherwise inconsistent with this chapter, and requiring the discontinuance of the act or practice.

 (d) An insurer that makes its own filings and a rating organization may not support its filings by statistics or adopt rate making recommendations, furnished to it by an advisory organization that has not complied with this section or with an order of the director involving the statistics or recommendations issued under (c) of this section. If the director finds the insurer or rating organization to be in violation of this subsection the director may issue an order requiring the discontinuance of the violation.




Sec. 21.39.110. Joint underwriting or joint reinsurance.
 (a) Each group, association, or other organization of insurers that engages in joint underwriting or joint reinsurance is subject to regulation in accordance with this section. In addition, joint underwriting is subject to all other provisions of this chapter, except for AS 21.39.210, and joint reinsurance is subject to AS 21.39.120, 21.39.160, and 21.39.170.

 (b) If, after a hearing, the director finds that an activity or practice of a group, association, or other organization is unfair or unreasonable or otherwise inconsistent with this chapter, the director may issue a written order specifying in what respects the activity or practice is unfair or unreasonable or otherwise inconsistent with this chapter, and requiring the discontinuance of the activity or practice.




Sec. 21.39.120. Examinations.
 (a) The director shall, at least once in five years, make or cause to be made an examination of each rating organization licensed in this state under AS 21.39.060 and may, as often as the director may consider it expedient, make or cause to be made an examination of each advisory organization referred to in AS 21.39.100 and of each group, association, or other organization referred to in AS 21.39.110. The reasonable costs of the examination shall be paid by the rating organization, advisory organization, or group, association, or other organization examined upon presentation to it of a detailed account of the costs. The officers, manager, agents, and employees of the rating organization, advisory organization, or group, association, or other organization may be examined at any time under oath and shall exhibit all books, records, accounts, documents, or agreements governing its method of operation. In lieu of an examination the director may accept the report of an examination made by the insurance supervisory official of another state, under the laws of that state.

 (b) A report of an examination may not be made public unless the rating organization, advisory organization, group, association, or other organization examined within 30 days after its receipt of the director’s written notice of intention to publicize the report, does not apply to the director for a hearing. If the application is made within the 30 days, the director shall hold a hearing, after first giving reasonable written notice of the time and place, and either approve or disapprove the report as being correct. If the director approves the report or if no application is made for a hearing, the report shall immediately become and be admissible in evidence as a public record, and open to public inspection.




Sec. 21.39.130. Rate administration.
 (a) The director shall adopt reasonable regulations and statistical plans, reasonably adapted to each of the rating systems filed with the director, that may be modified and that shall be used by each insurer in the recording and reporting of its loss and countrywide expense experience, in order that the experience of all insurers may be made available at least annually in the form and detail that may be necessary to aid in determining whether rating systems comply with the standards set out in AS 21.39.030. The regulations and plans may also provide for the recording and reporting of expense experience items that are specially applicable to this state and are not susceptible of determination by a prorating of countrywide expense experience. In adopting the regulations and plans, the director shall give due consideration to the rating systems filed with the director and, in order that the regulations and plans may be as uniform as is practicable among the several states, to the regulations and to the form of the plans used for the rating systems in other states. An insurer may not be required to record or report its loss experience on a classification basis that is inconsistent with the rating system filed by it. The director may designate one or more rating organizations or other agencies to assist in gathering the experience and making compilations. The compilations shall be made available, subject to reasonable regulations adopted by the director, to insurers and rating organizations.

 (b) Reasonable regulations and plans may be adopted by the director for the interchange of data necessary for the application of rating plans.

 (c) In order to further uniform administration of rate regulatory laws, the director and each insurer and rating organization may exchange information and experience data with insurance supervisory officials, insurers, and rating organizations in other states and may consult with them with respect to rate making and the application of rating systems.

 (d) The director may adopt reasonable regulations necessary to carry out the purposes of this chapter.




Sec. 21.39.140. False or misleading information.
A person or organization may not wilfully withhold information from, or knowingly give false or misleading information to, the director, a statistical agency designated by the director, a rating organization, or an insurer, that will affect the rates or premiums chargeable under this chapter. A violation of this section shall subject the one guilty of the violation to the penalties provided in AS 21.39.160.


Sec. 21.39.150. Assigned risks.
Agreements may be made among insurers with respect to the equitable apportionment among them of insurance that may be afforded applicants who are in good faith entitled to the insurance but who are unable to procure the insurance through ordinary methods. The insurers may agree among themselves on the use of reasonable rate modifications for the insurance. The agreements and rate modifications are subject to the approval of the director.


Sec. 21.39.155. Assigned risk pool.
 (a) The director may require insurers, except a reciprocal insurer formed under AS 21.75, as a condition of writing a line of insurance dealing with medical malpractice or workers’ compensation, to participate in an assigned risk pool if the director finds that mandatory carrier participation is in the public interest.

 (b) The assigned risk pool and the procedures to be followed in administering the pool shall be established by regulation.

 (c) An insurer may impose a surcharge not to exceed 25 percent of the premium for assigned risk pool insurance, except that a surcharge may not be applied to the first $3,000 in premium in any policy year.




Sec. 21.39.160. Penalties.
 (a) If the director finds, following an appropriate hearing, that a person or organization has violated a provision of this chapter, the director may impose a civil penalty not to exceed $200 or the actual amount of gain, whichever is greater, for each violation, but if the director finds the violation to be wilful the director may impose a penalty of $2,000 or three times the actual amount of gain, whichever is greater, for each violation. The penalties may be in addition to any other penalty provided by law. In this section, “gain” means the difference between the amount actually charged and the amount that should have been charged under applicable filings of the person or organization.

 (b) The director may suspend the license of a rating organization or insurer that fails to comply with an order of the director within the time limited by the order or an extension of time granted by the director. The director may not suspend the license of a rating organization or insurer for failure to comply with an order until the time prescribed for an appeal has expired or, if an appeal has been taken, until the order has been affirmed. The director may determine when a suspension of license becomes effective. The suspension shall remain in effect for the period fixed by the director unless the director modifies or rescinds the suspension, or until the order upon which the suspension is based is modified, rescinded, or reversed.

 (c) A penalty may not be imposed and a license may not be suspended or revoked except upon a written order of the director, stating findings, made after a hearing held upon not less than 10 days written notice to the person or organization specifying the alleged violation.




Sec. 21.39.170. Hearing procedure and judicial review.
 (a) An insurer or rating organization to which the director has issued an order made without a hearing may, within 30 days after notice to it of the order, make written request to the director for a hearing. The director shall hear the party or parties within 20 days after receipt of the request and shall give not less than 10 days written notice of the time and place of the hearing. Within 15 days after the hearing the director shall affirm, reverse or modify the previous action, specifying the reasons. Pending the hearing and decision the director may suspend or postpone the effective date of the previous action.

 (b) Nothing contained in this chapter may require the observance at a hearing of formal rules of pleading or evidence.

 (c) An order or decision of the director is subject to review by appeal to the superior court at the instance of a party in interest. The court shall determine whether the filing of the appeal will operate as a stay of an order or decision of the director. The court may, in disposing of the issue before it, modify, affirm, or reverse the order or decision of the director in whole or in part.




Sec. 21.39.175. Statistics. [Repealed, § 19 ch 6 SLA 1998.]
Sec. 21.39.180. [Renumbered as AS 21.39.030(c).]
Sec. 21.39.210. Flex-rating.
 (a) Except for workers’ compensation, medical malpractice, and assigned risk plan rates, an insurer’s rate level increase or decrease may take effect without prior approval if the cumulative rate level change for all coverages combined, calculated from the effective date to 12 months before the effective date, is not greater than 10 percent.

 (b) An insurer may make multiple rate filings under this provision during any 12-month period if the cumulative rate level change is within the specified limitation as described in (a) of this section. For an insurer adopting a rating organization prospective loss cost filing, the cumulative rate level change includes both the rating organization’s prospective loss cost change as well as the insurer’s loss cost adjustment change.

 (c) Notwithstanding any other provision of this title, for a policy governed by this section, a filing that produces a rate level change within the limitations provided in (a) of this section is effective without prior approval and may take effect on the date specified in the filing, but not earlier than the date it is received by the division. A rate level change within the limitation in (a) of this section may not be applied to a policy until the beginning of the policy period.

 (d) A filing submitted under (a) of this section must include an exhibit showing the calculation of the overall rate level change and an exhibit showing the insurer’s expense provisions. An insurer submitting a loss cost adjustment filing shall include supporting information showing how the loss cost adjustment is calculated. The director may request additional supporting information if the director does not have enough information upon which to determine if the filing meets the requirements of this title.

 (e) A filing submitted under (a) of this section is considered to comply with this title. However, if the director determines that the filing does not meet the requirements of this title, the director shall issue an order specifying in detail the specific statutes the insurer has violated and the reasons the filing is not in compliance. The order must state a reasonable future date on which the filing is to be considered no longer effective. An order by the director under this subsection is prospective and does not affect any contract issued or made before the effective date of the order.

 (f) The director may adopt regulations implementing the provisions of this section.

 (g) This section does not apply to rating organizations or to any impaired or insolvent insurer operating under a rehabilitation plan, an order of supervision, or an impaired financial condition as determined by the director.




Sec. 21.39.220. File and use, filing of rates, supplementary rate information, and supporting information.
 (a) An insurer’s rate level increase or decrease filing falling outside of the limitation provided in AS 21.39.210(a) is subject to file and use provisions under this section, unless the filing is otherwise exempt from those provisions under another provision in this chapter. A rate filing from a rating organization shall be submitted to the director under the file and use provisions. A rate filing from an insurer operating under a rehabilitation plan, an order of supervision, or an impaired financial condition as determined by the director shall be submitted to the division under the prior approval provisions. The insurer shall submit a filing for a new product or coverage introduction that does not have a rate on file under the file and use provisions.

 (b) Each insurer shall file with the director all rates, supplementary rate information, and supporting information at least 30 days before the proposed effective date. The director shall review the filing within 15 days. This period may be extended by the director for an additional period not to exceed 15 days if the director gives written notice within the initial 15-day period to the insurer or rating organization that made the filing that states additional time for the consideration of the filing is required. The waiting period is the 30-day period following the date the director receives the filing.

 (c) The filing must include the effective date that may not be before the end of the waiting period. Upon written application by the insurer or rating organization, the director may authorize a filing that the director has reviewed to become effective before the expiration of the waiting period.

 (d) A filing shall be considered to meet the requirements of this chapter and to become effective unless disapproved by the director within the waiting period.

 (e) The director shall disapprove a filing if the director finds that the filing does not meet the requirements of this title.

 (f) If the insurer or rating organization is unable to provide information requested by the director under AS 21.39.040(d) within 30 days after the director’s request, the response period may be extended by the director for an additional 15 days upon written application of the insurer or rating organization within the initial 30-day response period. The director may disapprove the filing for failure to provide the requested information during the response period. The disapproval notice must state a reasonable future date on which the filing is to be considered no longer effective.

 (g) A filing and supporting information shall be open to public inspection after the director completes the review of the filing or after the filing becomes effective, whichever is later.

 (h) If within the waiting period in (b) of this section, the director finds that a filing does not meet the requirements of this title, the director shall send to the insurer or rating organization that made the filing, written notice of disapproval of the filing specifying in what respects the filing fails to meet the requirements of this title and shall state a reasonable future date on which the filing is to be considered no longer effective.




Chapter 40. Insider Trading of Domestic Stock Insurance Company Equity Securities.

Sec. 21.40.010. Filing statement of ownership of equity securities.
Every person who is directly or indirectly the beneficial owner of more than 10 percent of a class of an equity security of a domestic stock insurance company, or who is a director or an officer of the company, shall file with the department within 10 days after becoming the beneficial owner, director, or officer, a statement of the amount of all equity securities of the company of which the person is the beneficial owner. Within 10 days after the close of each calendar month, if there has been a change in ownership during the month, the beneficial owner, director, or officer shall file with the department a statement indicating ownership at the close of the calendar month, the changes in ownership that have occurred during the calendar month, and any other information required by the department. Statements shall be made in a form prescribed by the department.


Sec. 21.40.020. Suit to recover profits realized on unfair use of information.
For the purpose of preventing the unfair use of information that may have been obtained by a beneficial owner of more than 10 percent of a class of an equity security, or by a director or officer by reason of a relationship to a company, the profit realized by the beneficial owner, director, or officer from a purchase and sale, or a sale and purchase, of an equity security of the company within any period of less than six months, unless the security was acquired in good faith in connection with a debt previously contracted, shall inure to and be recoverable by the company. The profit shall inure to and be recoverable by the company irrespective of the intention on the part of the beneficial owner, director, or officer in entering into the transaction of holding the security purchased or of not repurchasing the security sold, for a period exceeding six months. Suit to recover the profit may be instituted at law or in equity in the superior court by the company, or by the owner of a security of the company in the name and in behalf of the company if the company fails or refuses to bring a suit within 60 days after request or fails diligently to prosecute the suit. However, a suit to recover profit may not be brought more than two years after the date the profit was realized. This section may not be construed to cover a transaction where the beneficial owner was not a beneficial owner both at the time of the purchase and sale, or the sale and purchase, of the security involved, or cover a transaction or transactions that the department by regulation may exempt as not comprehended within the purpose of the section.


Sec. 21.40.030. Unlawful sales of equity securities.
A beneficial owner of more than 10 percent of a class of equity security, or a director or officer, may not, directly or indirectly, sell an equity security of the company if the person selling the security or the principal of that person (1) does not own the security sold, or (2) if owning the security, does not deliver it against the sale within 20 days after the sale or does not within five days after the sale deposit it in the mails or other usual channels of transportation; but a person shall not be considered to have violated this section on proof that notwithstanding the exercise of good faith the person was unable to make the delivery or deposit within the time prescribed, or that to do so would cause undue inconvenience or expense.


Sec. 21.40.040. Exemption of certain sales of equity securities.
AS 21.40.020 does not apply to a purchase and sale, or sale and purchase, and AS 21.40.030 does not apply to a sale, of an equity security of a domestic stock insurance company not then or theretofore held in an investment account, by a dealer in the ordinary course of business and incident to the establishment or maintenance of a primary or secondary market, otherwise than on an exchange as defined in the Securities Exchange Act of 1934, as amended, for the security. The department may, by regulations that it considers necessary or appropriate in the public interest, define and prescribe terms and conditions regarding securities held in an investment account and transactions made in the ordinary course of business and incident to the establishment or maintenance of a primary or secondary market.


Sec. 21.40.050. Arbitrage transactions exempted.
AS 21.40.010 — 21.40.030 do not apply to foreign or domestic arbitrage transactions unless made in contravention of regulations adopted by the department in carrying out the purposes of this chapter.


Sec. 21.40.060. Exemption of registered or closely held equity securities.
AS 21.40.010 — 21.40.030 do not apply to equity securities of a domestic stock insurance company if
     (1) the securities are registered, or are required to be registered, under 15 U.S.C. 78l (§ 12, Securities Exchange Act of 1934), as amended; or

     (2) the domestic stock insurance company does not have a class of its equity securities held of record by 100 or more persons on the last business day of the year preceding the year in which equity securities of the company would be subject to AS 21.40.010 — 21.40.030 except for the provisions of this section.




Sec. 21.40.070. Enforcement; regulations.
The department may, under AS 44.62 (Administrative Procedure Act), adopt regulations necessary for the execution of the functions vested in it by AS 21.40.010 — 21.40.060, and may for that purpose classify domestic stock insurance companies, securities, and other persons or matters within its jurisdiction. A provision of AS 21.40.010 and 21.40.020 imposing a liability does not apply to an act done or omitted in good faith in conformity with a regulation of the department, notwithstanding that the regulation may, after the act or omission, be amended or rescinded or determined by judicial or other authority to be invalid for any reason.


Sec. 21.40.080. Definitions.
In this chapter,
     (1) “domestic stock insurance corporation” means a stock insurance corporation organized under the laws of this state or the Territory of Alaska;

     (2) “equity security” means a stock or similar security; or a security convertible, with or without considerations, into stock or similar security, or carrying a warrant or right to subscribe to or purchase stock or similar security; or any such warrant or right; or any other security that the department shall consider to be of similar nature and consider necessary or appropriate, by regulations the department may adopt in the public interest or for the protection of investors, to treat as an equity security;

     (3) “officer” means a president, vice president, treasurer, actuary, secretary, controller, and any other person who performs for the company functions corresponding to those performed by the foregoing officers.




Article 1. The Insurance Contract.


Chapter 42. The Insurance Contract.

Sec. 21.42.010. Applicability.
AS 21.42.010 — 21.42.599 do not apply to
     (1) reinsurance;

     (2) policies or contracts not issued for delivery in this state or delivered in this state, except as provided in AS 21.42.120;

     (3) wet marine and transportation insurance;

     (4) title insurance, except that AS 21.42.080, 21.42.120, 21.42.130, 21.42.180, 21.42.190 and 21.42.230 do apply.




Sec. 21.42.020. Insurable interest: life, annuity, or health.
 (a) A person of competent legal capacity may procure or effect an insurance contract on the life or body of the person for the benefit of any person. A person may not procure or cause to be procured an insurance contract upon the life or body of another person unless the benefits under the contract are payable to the individual insured, the personal representatives of the individual insured, or to a person having, at the time the contract was made, an insurable interest in the individual insured.

 (b) If the beneficiary, assignee, or other payee under a contract made in violation of this section receives from the insurer any benefits from the contract upon the death, disablement, or injury of the person insured, the person insured or the executor or administrator of the person insured may maintain an action to recover the benefits from the person receiving them.

 (c) Notwithstanding the other provisions of this section, a charitable organization may obtain, by procurement, assignment, or otherwise, life or health insurance on an insured who consents to the issuance of the insurance. In this subsection, “charitable organization” means a charity that is exempt from taxation under 26 U.S.C. 501(c)(3) (Internal Revenue Code).

 (d) Notwithstanding (a) of this section, a trustee, acting in a fiduciary capacity, may procure or cause to be procured an insurance contract that is on the life or body of an individual and under which the proceeds of the insurance contract are payable to the trustee, acting in a fiduciary capacity, if
     (1) the trustee, acting in a fiduciary capacity, owns the insurance contract or the trust itself owns the insurance contract;

     (2) on the date the contract is made, a settlor of the trust is the individual insured, has an insurable interest in the individual insured, or would have had an insurable interest in the individual insured if the settlor were living at the time the contract was made; in this paragraph, “settlor” means a person, including a person for whom a fiduciary or agent is acting, who executes the trust instrument; and

     (3) the proceeds of the contract are primarily for the benefit of a trust beneficiary who has an insurable interest in the individual insured, except that, if the determination of the trust beneficiary’s insurable interest is based on (e)(1) of this section, the trust beneficiary’s relation by blood or law must be within the third degree.

 (e) “Insurable interest,” with reference to life, annuity, or health insurance, includes only the following interests:
     (1) in the case of persons related closely by blood or by law, a substantial interest engendered by love and affection;

     (2) in the case of persons other than those described in (1) of this subsection, a lawful and substantial economic interest in having the life, health, or bodily safety of the person insured continue, as distinguished from an interest that would arise only by, or would be enhanced in value by, the death, disablement, or injury of the individual insured;

     (3) an individual party to a contract or option for the purchase or sale of an interest in a business partnership or firm, or of shares of stock of a closed corporation or of an interest in the shares, has an insurable interest in the life of each individual party to the contract for the purposes of the contract only, in addition to an insurable interest that may otherwise exist as to the life of the individual.

 (f) A person who has an insurable interest in the life or body of an individual may form a business firm that is substantially or solely for the purpose of purchasing, holding, or administering an insurance contract on the life or body of the individual. In this subsection, “firm” has the meaning given in AS 21.97.900, but also includes a business trust and a joint venture.




Sec. 21.42.030. Insurable interest: property.
 (a) A contract of insurance of property or of an interest in property or arising from property may not be enforced as to the insurance except for the benefit of persons having an insurable interest in the things insured at the time of the loss.

 (b) The measure of an insurable interest in property is the extent to which the insured might be indemnified by loss, injury, or impairment.

 (c) In this section, “insurable interest” means an actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage or impairment.




Sec. 21.42.040. Interest of named insured.
When the name of the person insured is specified in a policy insuring property the insurance can be applied only to the proper interest of the person insured.


Sec. 21.42.050. Change of interest on death.
A change of interest, by will or succession, on the death of the insured does not avoid an insurance of property and the insurance passes to the person taking an interest in the thing insured.


Sec. 21.42.060. Transfer of interest between joint insureds.
A transfer of interest by one of the several partners, joint owners, or owners in common, who are jointly insured, to the others, does not avoid an insurance of property even though it has been agreed that the insurance shall cease upon an alienation of the thing insured.


Sec. 21.42.070. Insurance without interest, or of wager, is void.
 (a) A stipulation in a policy of insurance of property for the payment of loss without regard to absence of an insurable interest in the property on the part of the insured, or that the policy shall be received as proof of the interest, is void.

 (b) A policy executed by way of gaming or wagering is void.




Sec. 21.42.075. Reimbursement of losses.
An insurer may make a filing for approval by the director that provides for reimbursement by an insured of losses paid by the insurer under a workers’ compensation insurance policy. A form that alters the obligation of the insurer to an employee under AS 23.30.025 or 23.30.030 may not be approved by the director. Filing for approval under this section is not a deviation under AS 21.39.070.


Sec. 21.42.080. Capacity to contract.
 (a) A person of competent legal capacity may contract for insurance.

 (b) [Repealed, § 25 ch 245 SLA 1970.]
 (c) [Repealed, § 25 ch 245 SLA 1970.]
 (d) [Repealed, § 25 ch 245 SLA 1970.]




Sec. 21.42.090. Application required, life and health insurance.
A life or health insurance contract upon an individual, except a contract of group life insurance or of group or blanket health insurance, may not be made or effectuated unless at the time of the making of the contract the individual insured, being of competent legal capacity to contract, applies for the contract or has consented to it in writing, except in the following cases:
     (1) a spouse may effectuate the insurance upon the other spouse;

     (2) a person having an insurable interest in the life of a minor or a person upon whom a minor is dependent for support and maintenance, may effectuate insurance upon the life of or pertaining to the minor;

     (3) family policies insuring any two or more members of a family may be issued on an application signed by either parent, a stepparent, or by a husband or wife.




Sec. 21.42.100. Alteration of application.
 (a) If a policy of life or health insurance delivered in this state is reinstated or renewed, and the insured or the beneficiary or assignee of the policy makes written request to the insurer for a copy of the application, if any, for the reinstatement or renewal, the insurer shall, within 30 days after receipt of the request at its home office or at one of its branch offices, deliver, or mail to the person making the request a copy of the application. In the case of a request from a beneficiary, the time within which the insurer is required to furnish a copy of the application does not begin to run until after receipt of evidence satisfactory to the insurer of the beneficiary’s vested interest in the policy or contract.

 (b) An alteration of a written application for a life or health insurance policy may not be made by a person other than the applicant without the written consent of the applicant, except that insertions may be made by the insurer, for administrative purposes only, in a manner that indicates clearly that the insertions are not to be ascribed to the applicant.




Sec. 21.42.110. Representations in applications.
All statements and descriptions in an application for an insurance policy or annuity contract, or in negotiations for the policy or contract, by or in behalf of the insured or annuitant, shall be considered to be representations and not warranties. Misrepresentations, omissions, concealment of facts, and incorrect statements may not prevent a recovery under the policy or contract unless either
     (1) fraudulent;

     (2) material either to the acceptance of the risk, or to the hazard assumed by the insurer; or

     (3) the insurer in good faith would either not have issued the policy or contract, or would not have issued a policy or contract in as large an amount, or at the same premium or rate, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required either by the application for the policy or contract or otherwise.




Sec. 21.42.120. Filing, approval of forms.
 (a) A basic insurance policy or annuity contract form, or application form where written application is required and is to be made a part of the policy or contract, or printed rider or endorsement form or form of renewal certificate, may not be delivered, or issued for delivery in this state, unless the form has been filed with and approved by the director. This provision does not apply to surety bonds or to specially rated inland marine risks, nor to policies, riders, endorsements, or forms of unique character designed for and used with relation to insurance upon a particular subject, or that relate to the manner of distribution of benefits or to the reservation of rights and benefits under life or health insurance policies and are used at the request of the individual policyholder, contract holder, or certificate holder; or to policies of commercial insurance that the director has authorized under (d) of this section to be filed on or before the date of use and that are not subject to the prior approval of the director. The filing required by this section of forms for use in property, marine other than wet marine and transportation coverages, casualty, and surety coverages may be made by a rating organization on behalf of its members and subscribers; but this provision does not prohibit a member or subscriber from filing the forms on its own behalf.

 (b) Each insurer or rating organization shall submit a filing under one of the following procedures, clearly specifying the filing procedure under which the filing is being made:
     (1) for prior approval under AS 21.42.123; or

     (2) for file and use under AS 21.42.125.

 (c) An order of the director disapproving the form or withdrawing a previous approval shall state the grounds and the particulars in such detail as reasonably to inform the insurer thereof.

 (d) The director may, by order, require that a form or document be filed for informational purposes or may exempt a form or document from the requirements of this section for a time determined by the director when, in the opinion of the director, this section may not practicably be applied, or the filing or approval of the form or document is, in the opinion of the director, not desirable or necessary for the protection of the public.

 (e) This section applies to a form used by domestic insurers for delivery in a jurisdiction outside this state, if the insurance supervisory official of that jurisdiction informs the director that the form is not subject to approval or disapproval by the official, and upon the director’s order requiring the form to be submitted for review and approval under this section. The applicable same standards shall apply to these forms as apply to forms for domestic use.

 (f) This section does not apply to a type of insurance subject to AS 21.57 or to policies issued under AS 21.34.

 (g) An insurer who has submitted an application for a certificate of authority under AS 21.09.110 may file a proposed policy form as described in this section. The director’s approval of the policy form is contingent upon the issuance of a certificate of authority under AS 21.09.120.

 (h) The director may adopt regulations detailing the format and content of the filing of a policy form under this section.

 (i) The director may by order require an insurance document, form, or type of insurance document or form as specified in the order, to be submitted for prior approval if, in the opinion of the director, the approval of the insurance document, form, or type of insurance document or form is necessary for the protection of the public.




Sec. 21.42.123. Form filing subject to prior approval.
 (a) A prior approval filing shall be made not less than 30 days before the effective date. At the end of the 30-day period, the form filed shall be considered approved unless, before the end of the 30-day period, it has been affirmatively disapproved by the director. Approval of the form by the director before the end of the 30-day period constitutes a waiver of the unexpired portion of the waiting period. The director may extend by not more than an additional 30 days the period for approving or disapproving the form, by giving notice of the extension during the initial 30-day period. At the expiration of the extended period, and in the absence of a prior approval or disapproval, the form shall be considered approved. The director may, by order, at any time after the notice, and for cause shown, withdraw the approval.

 (b) The director may require the insurer or rating organization to revise the filing to comply with this title. Failure of the insurer or rating organization to provide the information within 30 days after the director’s request, or an extension of the period by the director for an additional 15 days upon written request of the insurer or rating organization within the response period, is considered to be a request by the insurer or rating organization to withdraw the filing from further consideration.

 (c) The filing must state an effective date. In place of a specific date, the insurer or rating organization may specify a reasonable time period after approval for the filing to be effective.

 (d) A prior approval filing shall be open to public inspection after the filing becomes effective.




Sec. 21.42.125. Form filing subject to file and use; penalties.
 (a) A file and use filing shall be filed with the director for a waiting period of not less than 30 days. The period may be extended by the director or the insurer or rating organization for an additional 30 days if notice is given within the initial 30-day period that additional time is needed for the consideration of the filing. The filing may become effective at the end of the waiting period unless disapproved by the director before the expiration of the waiting period.

 (b) The filing must state an effective date that must be after the waiting period. Upon written notice by the insurer or rating organization, the director may authorize a filing that has been reviewed to become effective before the expiration of the waiting period.

 (c) A file and use form filing must include a signed compliance certificate certifying that the filing complies with this title. An authorized officer or state filings manager of the insurer shall sign the compliance certificate stating that, to the best of the individual’s knowledge, the filing complies with this title. The director may issue an order requiring an insurer who submits an incomplete or inaccurate compliance certificate to submit future form filings for prior approval. The order must specify the conditions under which the insurer may again submit filings under this section. In addition to any other penalty provided by law, a person that the director finds has submitted a materially false or misleading compliance certificate may be subject to either a civil penalty of not more than $10,000 for each violation or a civil penalty of not more than $25,000 for each violation if the director finds that the person knowingly violated the provisions of this title. A filing that does not include the signed compliance certificate shall be reviewed under the prior approval procedure under AS 21.42.123. In this subsection, “knowingly” has the meaning given in AS 11.81.900.

 (d) The director may require an insurer or rating organization to provide additional information to demonstrate that a file and use filing meets the requirements of this title or to revise the filing to meet the requirements of this title. If an insurer or rating organization fails to provide the information within the waiting period described in (a) of this section, the director shall consider the failure to be a request to withdraw the filing from further consideration.

 (e) A file and use filing shall be open to public inspection after the filing becomes effective.




Sec. 21.42.130. Grounds for disapproval.
The director shall disapprove a form filed under AS 21.42.120 or withdraw a previous approval of the form only if the form
     (1) is in any respect in violation of or does not comply with this title;

     (2) contains or incorporates by reference, where incorporation is permissible, an inconsistent, ambiguous, or misleading clause, or exception and condition that deceptively affects the risk purported to be assumed in the general coverage of the contract;

     (3) has a title, heading, or other indication of its provisions that is misleading;

     (4) is printed or otherwise reproduced in a manner that renders a provision of the form substantially illegible;

     (5) provides benefits for Medicare supplement insurance that are unreasonable in relation to the premium charged.




Sec. 21.42.140. Standard provisions.
 (a) Insurance contracts must contain the standard or uniform provisions that are required by the applicable provisions of this title pertaining to contracts of particular kinds of insurance. The director may waive the required use of a particular provision in a particular insurance policy form on a determination that
     (1) the provision is unnecessary for the protection of the insured and inconsistent with the purposes of the policy; and

     (2) the policy is otherwise approved.

 (b) A policy may not contain a provision inconsistent with a standard or uniform provision used or required to be used, but the director may approve a substitute provision that the director determines is not less favorable in any particular to the insured or beneficiary than the provisions otherwise required.

 (c) In lieu of the provisions required by this title for contracts for particular kinds of insurance, substantially similar provisions required by the law of the domicile of a foreign or alien insurer may be used when approved by the director.

 (d) A provision required by this title to be contained in a policy cannot be waived by agreement between the insurer and another person.




Sec. 21.42.145. Stop-loss insurance provisions.
 (a) An insurance company licensed under AS 21.09, a hospital or medical service corporation licensed under AS 21.87, a fraternal benefit society licensed under AS 21.84, a health maintenance organization licensed under AS 21.86, or a multiple employer welfare arrangement may not issue a stop-loss insurance policy that
     (1) has an annual attachment point for claims incurred for each individual that is lower than $10,000;

     (2) has an annual aggregate attachment point for a small employer that is lower than the greatest of
          (A) $4,000 times the number of individuals covered under the health benefit plan;

          (B) 120 percent of the expected claims for the health benefit plan for the period covered by the stop-loss insurance policy; or

          (C) $20,000;

     (3) has an annual aggregate attachment point for a large employer that is lower than 110 percent of expected claims for the health benefit plan for the period covered by the stop-loss insurance policy; or

     (4) provides direct coverage of health care expenses of an individual.

 (b) The director may, by regulation, change the dollar amounts established under (a) of this section to reflect medical costs in this state, including adjustments to reflect changes in the medical care component of the Consumer Price Index for all urban consumers for the Anchorage Metropolitan Area compiled by the Bureau of Labor Statistics, United States Department of Labor.

 (c) For the purposes of this section,
     (1) “attachment point” means the claim amount incurred by an insured group beyond which the insurer incurs a liability for payment;

     (2) “expected claims” means the amount of claims that, in absence of a stop-loss insurance policy or other insurance, are projected to be incurred by an insured group through its health benefit plan;

     (3) “health benefit plan” has the meaning given in AS 21.54.500;

     (4) “large employer” has the meaning given in AS 21.54.500;

     (5) “small employer” has the meaning given in AS 21.54.500.




Sec. 21.42.150. Policy must contain entire contract.
The policy, when issued, shall contain the entire contract between the parties, and neither the insurer nor its agent or representative, nor a person insured by the policy, may make an agreement as to the insurance that is not expressed in the policy. This section does not prohibit the modification of a policy, after issuance, by written rider or endorsement issued by the insurer.


Sec. 21.42.160. Contents of policies in general.
 (a) Each policy must specify
     (1) the names of the parties of the contract;

     (2) the subject of the insurance;

     (3) the risks insured against;

     (4) the time when the insurance thereunder takes effect and the period during which the insurance is to continue;

     (5) the premium;

     (6) the conditions pertaining to the insurance.

 (b) If under the policy the exact amount of premium is determinable only at stated intervals or termination of the contract, a statement of the basis and rates upon which the premium is to be determined and paid shall be included.

 (c) Subsections (a) and (b) of this section do not apply to surety contracts, or to group insurance policies.

 (d) Each policy and annuity contract issued by an insurer, and the forms thereof filed with the director, must have printed on them an appropriate designating letter or figure, or combination of letters or figures, or terms identifying the respective forms of policies or contracts. When a change is made in the form, the designating letters, figures, or terms must be correspondingly changed.




Sec. 21.42.170. Additional policy contents.
A policy may contain additional provisions not inconsistent with this title that are
     (1) required to be inserted by the laws of the insurer’s domicile;

     (2) necessary, on account of the manner in which the insurer is constituted or operated, in order to state the rights and obligations of the parties to the contract; or

     (3) desired by the insurer and neither prohibited by law nor in conflict with any provisions required to be included in it.




Sec. 21.42.175. Non-English translations.
 (a) The director may approve an insurance policy form in a language other than English if the insurance policy form
     (1) is filed with a copy of the same material in English; and

     (2) discloses, in both English and the language other than English, that the English language version is the official version and the non-English language version is for informational purposes only.

 (b) The English language version of the insurance policy form or associated material shall be the official version for purposes of application and interpretation if the non-English insurance policy form or associated material
     (1) is provided with a copy of the same material in English; and

     (2) discloses, in both English and the language other than English, that the English language version is the official version and the non-English language version is for informational purposes only.

 (c) An insurer may not misrepresent information in an insurance policy form or associated material translated into a language other than English. For purposes of this subsection, “misrepresent information” means to include a statement or omit a statement when, taken in the context of the whole presentation, the statement or omission may tend to mislead or deceive the person or persons addressed.

 (d) For purposes of this section, “associated material” means advertising and marketing information including brochures, pamphlets, or electronic media used to describe or promote the insurance policy form.




Sec. 21.42.180. Charter, bylaw provisions.
A policy may not contain a provision purporting to make a portion of the charter, bylaws, or other constituent document of the insurer, other than the subscribers’ agreement or power of attorney of a reciprocal insurer, a part of the contract unless the portion is set forth in full in the policy. A policy provision in violation of this section is invalid.


Sec. 21.42.190. Execution of policies.
 (a) Each insurance policy shall be executed in the name of and on behalf of the insurer by its officer, attorney-in-fact, employee, or representative duly authorized by the insurer.

 (b) A facsimile signature of the executing individual may be used in lieu of an original signature.

 (c) An insurance contract that is otherwise valid is not rendered invalid by reason of the apparent execution on behalf of the insurer by the imprinted facsimile signature of an individual who is not authorized to execute as of the date of the policy.




Sec. 21.42.200. Underwriters’ and combination policies.
 (a) Two or more authorized insurers may jointly issue, and shall be jointly and severally liable on, an underwriters’ policy bearing their names. Any one insurer may issue policies in the name of an underwriter’s department and the policy must plainly show the true name of the insurer.

 (b) Two or more insurers may, with the approval of the director, issue a combination policy which shall contain provisions substantially as follows:
     (1) that the insurers executing the policy shall be severally liable for the full amount of loss or damage, according to the terms of the policy, or for specified percentages or amounts thereof, aggregating the full amount of insurance under the policy; and

     (2) that service of process, or of notice or proof of loss required by the policy, upon any of the insurers executing the policy, constitutes service upon all the insurers.

 (c) This section does not apply to cosurety obligations.




Sec. 21.42.205. Coordination of benefits.
 (a) Unless prohibited by federal law, an insurer authorized under AS 21.09 to offer, issue for delivery, deliver, or renew an individual or group health insurance policy for major medical coverage on an expense incurred basis; a health maintenance organization authorized under AS 21.86 to offer a contract to provide major medical health care services on a prepaid basis; or a service corporation authorized under AS 21.87 to offer or renew an individual or group subscriber’s contract for major medical coverage shall include a coordination of benefits provision in a major medical policy or contract.

 (b) The director may adopt regulations to implement this section.




Sec. 21.42.210. Interest in reinsurance.
The original insured has no interest in a contract of reinsurance.


Sec. 21.42.220. Validity of noncomplying forms.
An insurance policy, rider, or endorsement issued and otherwise valid that contains a condition or provision not in compliance with the requirements of this title, is not thereby rendered invalid but shall be construed and applied in accordance with the conditions and provisions as would have applied had the policy, rider, or endorsement been in full compliance with this title.


Sec. 21.42.230. Construction of policies.
Each insurance contract shall be construed according to the entirety of its terms and conditions as set out in the policy and as amplified, extended, or modified by a rider, endorsement, or application that is a part of the policy.


Sec. 21.42.240. Binders.
 (a) A binder or other contract for temporary insurance may be made orally or in writing and shall be considered to include all the usual terms of the policy as to which the binder was given together with the applicable endorsements designated in the binder, except as superseded by the clear and express terms of the binder.

 (b) A binder is not valid after the issuance of the policy with respect to which it was given, or after 90 days from its effective date, whichever period is the shortest.

 (c) If the policy has not been issued a binder may be extended or renewed after the 90 days with the written approval of the insurer.

 (d) This section does not apply to life or health insurances.




Sec. 21.42.250. Delivery or posting of policy; notifications.
 (a) An insurer shall provide a policy or endorsement to the insured or to the person entitled to it by mail or delivery or by posting on the insurer’s Internet website under (c) of this section within a reasonable period of time after its issuance. The insurer is not required to mail, deliver, or post the policy or endorsement until all conditions required by the insurer have been met by the insured.

 (b) If the original policy is delivered or is required to be delivered to or for deposit with a vendor, mortgagee, or pledgee of a motor vehicle or aircraft, and in which policy an interest of the vendee, mortgagor, or pledgor in or with reference to the vehicle or aircraft is insured, a duplicate of the policy setting out the name and address of the insurer, insurance classification of vehicle or aircraft, type of coverage, limits of liability, premiums for the respective coverages, and duration of the policy or memorandum thereof containing the same information, shall be delivered by the vendor, mortgagee, or pledgee to each vendee, mortgagor, or pledgor named in the policy or coming within the group of persons designated in the policy to be included. If the policy does not provide coverage of legal liability for injury to persons or damage to the property of third parties, a statement of the facts shall be printed, written, or stamped conspicuously on the face of the duplicate policy or memorandum.

 (c) An insurer may provide an insurance policy or endorsement by posting the policy or endorsement on the insurer’s Internet website and clearly identifying the posted policy or endorsement purchased by the insured in the declaration page provided to the insured. An insurance policy or endorsement posted under this subsection
     (1) must contain the standard or uniform provisions required by AS 21.42.140;

     (2) must be in a form approved by the director under AS 21.42.120;

     (3) must be posted in a manner that reasonably allows the insured to retrieve and print or save the policy or endorsement from the website without paying a fee;

     (4) must remain posted on the insurer’s Internet website during the time that the policy or endorsement is in effect, be retained by the insurer for not less than three years after the policy or endorsement is no longer in effect, and be made available to the insured on request; and

     (5) may not include personally identifiable information.

 (d) The insurer shall notify the insured at the time of issuance or renewal of the method by which the insured may request and the insurer shall provide a paper or electronic copy of the insured’s policy or endorsement without the insured paying a fee.

 (e) If the policy or endorsement change or the means of obtaining policy information from the insurer’s Internet website changes, the insurer shall notify the insured in the manner the insurer customarily communicates with an insured.




Sec. 21.42.260. Renewal by certificate.
An insurance policy terminating by its terms at a specified expiration date and not otherwise renewable, may be renewed or extended at the option of the insurer upon a currently authorized policy form and at the premium rate then required for the policy, for a specific additional period or periods by certificate or by endorsement of the policy, without requiring the issuance of a new policy.


Sec. 21.42.265. Effective date of coverage.
Unless otherwise provided by law, the effective date of a change relating to coverage under an insurance contract as a result of a change to this title is the issue date for a new policy or the renewal date for a renewal policy.


Sec. 21.42.270. Assignment of policies.
A policy may be assignable or nonassignable, depending upon its terms. Subject to its terms relating to its assignability, a life, group life, or health insurance policy, whether issued before or after July 1, 1966, under the terms of which the beneficiary may be changed upon the sole request of the insured, may be assigned either by pledge or transfer of title by an assignment executed by the insured alone and delivered to the insurer, whether or not the pledgee or assignee is the insurer. The assignment entitles the insurer to deal with the assignee as the owner or pledgee of the policy in accordance with the terms of the assignment until the insurer has received at its home office written notice of termination of the assignment or pledge, or written notice by or on behalf of some other person claiming an interest in the policy that is in conflict with the assignment.


Sec. 21.42.280. Payment discharges insurer.
When the proceeds of or payments under a life or health insurance policy or annuity contract, whether issued before or after July 1, 1966, become payable in accordance with the terms of the policy or contract, or the exercise of a right or privilege under the policy or contract and the insurer makes payment in accordance with the terms of the policy or contract or in accordance with a written assignment, the person then designated under the policy as being entitled to the proceeds or payments shall be entitled to receive the proceeds or payments and to give full acquittance for them. The payments shall fully discharge the insurer from all claims under the policy or contract unless, before payment is made, the insurer has received at its home office written notice by or on behalf of another person that the other person claims to be entitled to the payment or some interest in the policy or contract.


Sec. 21.42.290. Minor may give acquittance.
 (a) A minor domiciled in this state who has attained the age of 16 years shall be considered competent to receive and to give full acquittance and discharge for a payment or payments in aggregate amount not exceeding $3,000 in any one year made by a life insurer under the maturity, death, or settlement agreement provisions in effect or elected by the minor under a life insurance policy or annuity contract, if the policy, contract, or agreement provides for the payment or payments to the minor, and if before the payment the insurer has not received written notice of the appointment of a duly qualified guardian of the property of the minor. A minor is not competent to alienate to the right to or to anticipate the payments.

 (b) This section does not require an insurer to determine whether another insurer is effecting a similar payment to the same minor.




Sec. 21.42.300. Forms for proof of loss to be furnished.
An insurer shall furnish, upon written request of the person claiming to have a loss under an insurance contract issued by the insurer, forms of proof of loss for completion by the person, but the insurer is not, by reason of the requirement to furnish forms, responsible for or with reference to the completion of the proof or the manner of the completion or attempted completion.


Sec. 21.42.310. Claims administration not waiver.
Without limitation of a right or defense of an insurer otherwise, none of the following acts by or on behalf of an insurer constitute a waiver of a provision of a policy or of a defense of the insurer thereunder:
     (1) acknowledgment of the receipt of notice of loss or claim under the policy;

     (2) furnishing forms for reporting a loss or claim, for giving information relative to it, or for making proof of loss, or receiving or acknowledging receipt of forms or proofs completed or uncompleted;

     (3) investigating a loss or claim under a policy or engaging in negotiations for a possible settlement of the loss or claim.




Sec. 21.42.315. Separate accounts.
 (a) A domestic life insurance company may establish one or more separate accounts, and may allocate to an account amounts, including proceeds applied under optional methods of settlement or under divided options, to provide for life insurance or annuities and benefits incidental to the account, payable in fixed or variable amounts or both.

 (b) The income, gains, and losses, realized or unrealized, from assets allocated to a separate account shall be credited to or charged against the account, without regard to other income, gains, or losses of the company.

 (c) Except as may be provided for reserves for guaranteed benefits and funds referred to in (d) of this section, amounts allocated to a separate account and accumulations to it may be invested and reinvested in securities eligible for investment for life insurance companies without regard to quantitative investment limitations prescribed by law for life insurance companies. The investments from separate accounts may not be considered in applying the investment limitations otherwise applicable to the investments of the company.

 (d) Reserves for benefits guaranteed as to dollar amount and duration and for funds guaranteed as to principal amount or stated rate of interest may not be maintained in a separate account, unless approved by the director and in accordance with conditions as to investments and other matters prescribed by the director. In imposing conditions, the director shall take into consideration the guaranteed nature of the benefits provided.

 (e) Unless otherwise approved by the director,
     (1) assets allocated to a separate account shall be valued at their market value on the date of valuation, or if there is no readily available market, then as provided under the terms of the contract or the rules or other written agreement applicable to a separate account; and

     (2) the portion of the assets of a separate account equal to the company’s reserve liability for the guaranteed benefits and funds referred to in (d) of this section shall be valued under the rules applicable to the valuation of the company’s other assets.

 (f) Amounts allocated to a separate account as provided in this section shall be owned by the company, and the company may not be, nor hold itself out to be, a trustee for those amounts. If the applicable contracts so provide, that portion of the assets of a separate account equal to the reserves and other contract liabilities of that account may not be chargeable with liabilities arising out of any other business the company may conduct.

 (g) A sale, exchange, or other transfer of assets may not be made by a company among its separate accounts or between other investment accounts and one or more of its separate accounts, unless, in the case of a transfer into a separate account, the transfer is made solely to establish the account or to support the operation of the contracts of the separate account to which the transfer is made, and unless the transfer, whether into or from a separate account, is made (1) by a transfer of cash, or (2) by a transfer of securities having a readily determinable market value, unless the transfer of securities is approved by the director. The director may approve other transfers among these accounts if the transfers would be equitable.

 (h) To the extent the company considers it necessary in order to comply with applicable federal or state laws, the company may give persons having an interest in a separate account, including a separate account that is a management investment company or a unit investment trust, appropriate voting and other rights and may adopt special procedures for the conduct of the business of the account which include special rights and procedures relating to investment policy, investment advisory services, selection of independent public accountants, and the selection of a committee, the members of which need not be otherwise affiliated with the company, to manage the business of the account.

 (i) A contract providing benefits payable in variable amounts delivered or issued for delivery in this state must contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of the variable benefits. A contract under which the benefits vary to reflect investment experience, including a group contract and certificate in evidence of variable benefits issued under it, must state that the dollar benefit amount will vary and must contain on its first page a statement that the benefits under it are on a variable basis.

 (j) A company may not deliver or issue for delivery in this state variable contracts unless it is licensed or organized to undertake a life insurance or annuity business in this state. The director may review the company’s financial condition or method of operation for the issuance of contracts payable in variable amounts to determine whether the company’s operation is hazardous to the public or its policyholders in this state. During the review the director shall consider (1) the history and financial condition of the company; (2) the character, responsibility, and fitness of the officers and directors of the company; and (3) the laws and regulations under which the company is authorized in the state of domicile to issue variable contracts. If the company is a subsidiary of an admitted life insurance company, or affiliated with an admitted company through common management or ownership, the director may consider that the company meets the provisions of this subsection if either it or the parent or the affiliated company meets the requirements of this subsection. If the company fails to meet the requirements contained in this subsection, the director may suspend the certificate of authority of the company until the requirements are met or may prohibit the further issuance of variable contracts.

 (k) The director has sole authority to regulate the issuance and sale of variable contracts, to examine and license agents to sell variable contracts, and to adopt regulations considered appropriate to carry out the purposes and provisions of this section.

 (l) Except for AS 21.45.030, 21.45.080, 21.45.110, 21.45.180, 21.45.230, 21.45.240, 21.45.290, 21.45.300, and AS 21.48.110, and except as otherwise provided in this section, the provisions of this title apply to separate accounts and contracts relating to them. An individual variable life insurance contract delivered or issued for delivery in the state must contain grace reinstatement and nonforfeiture provisions appropriate to that contract. An individual variable annuity contract delivered or issued for delivery in the state must contain grace and reinstatement provisions appropriate for that contract. A group variable life insurance contract delivered or issued for delivery in the state must contain a grace provision appropriate for that contract. The reserve liability for variable contracts shall be established in accordance with actuarial procedures, acceptable to the director, that recognize the variable nature of the benefits provided and any mortality guarantees.




Secs. 21.42.320 — 21.42.340. Exemption of life insurance, group life insurance, and disability insurance proceeds. [Repealed, § 14 ch 62 SLA 1982. For current law see AS 09.38.025(a), 09.38.030(e), and 09.38.050.]

Article 2. Specific Coverage Provisions.


Sec. 21.42.345. Required provision for coverage of dependents.
 (a) A health care insurance plan providing coverage for a dependent of a covered individual shall, as to the dependent’s coverage, also provide that the health care insurance benefits applicable for dependents shall be payable with respect to
     (1) a newly born child of a covered individual from the moment of birth;

     (2) a child adopted by a covered individual from the date of adoption;

     (3) a child placed with a covered individual for adoption from the date of placement for adoption; and

     (4) a spouse from not later than the first day of the first month beginning after the date the request for enrollment is received, but the insurer may require that a request for enrollment be received within 31 days of the date of marriage.

 (b) The coverage for a newly born child under this section shall consist of coverage of injury or sickness, including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities.

 (c) If payment of a specific charge is required to provide coverage for a child under this section, the policy or contract may require that notification of birth of a newly born child, adopted child, or child placed for adoption and payment of the required premium or fees may be required to be furnished to the health care insurer within 31 days after the date of birth, adoption, or placement for adoption in order to have the coverage continue beyond the 31-day period.

 (d) Under (a) — (c) of this section, a health care insurer shall offer coverage for a family member, including a newly born child, adopted child, or child placed for adoption, regardless of the marital status of the covered individual.




Sec. 21.42.347. Coverage for costs of birth.
 (a) A health care insurer who provides coverage for the costs of childbirth shall also provide coverage for the costs of hospitalization or medical care following childbirth for a period of not less than
     (1) 48 hours after a vaginal birth; and

     (2) 96 hours after a caesarean birth.

 (b) Except as otherwise required to provide coverage specified under (a) of this section, this section does not affect a payment arrangement entered into between a hospital or health care provider and a health care insurer.

 (c) This section may not be construed to require hospitalization or medical care as described under (a)(1) or (2) of this section if the mother giving birth and the mother’s health care provider agree that the mother and any newborn child of the mother should be discharged earlier than required under (a)(1) or (2) of this section.

 (d) In this section,
     (1) “health care insurer” has the meaning given in AS 21.54.500; “health care insurer” includes the Comprehensive Health Insurance Association as described in AS 21.55.010;

     (2) “health care provider” means a person licensed in this state to provide health care services.




Sec. 21.42.349. Coverage for newborn and infant hearing screening.
 (a) Except for a fraternal benefit society, a health care insurer that offers, issues for delivery, delivers, or renews in this state a health care insurance plan shall provide coverage for newborn and infant hearing screening under the schedule described in (b) of this section if the plan covers services provided to women during pregnancy and childbirth and the dependents of a covered individual.

 (b) The minimum coverage required under (a) of this section includes
     (1) a newborn or infant hearing screening to be performed within 30 days after the child’s birth; and

     (2) if the initial screening under (1) of this subsection determines that the child may have a hearing impairment, a confirmatory hearing diagnostic evaluation.

 (c) The coverage required by this section may be subject to standard policy provisions that are applicable to other benefits, such as deductible or copayment provisions.




Sec. 21.42.350. Exemption of proceeds, annuity contracts. [Repealed, § 14 ch 62 SLA 1982. For current law see AS 09.38.025(a).]
Sec. 21.42.351. Coverage for well-baby exams.
 (a) A health care insurer that offers health care insurance that covers a dependent of a covered individual shall, initially and at each renewal, offer coverage for the cost of well-baby exams. The coverage required to be offered by this section is subject to standard policy provisions applicable to other benefits, including deductible or copayment provisions.

 (b) In this section,
     (1) “health care insurer” has the meaning given in AS 21.54.500;

     (2) “health care professional” means a health aide, physician, nurse, and physician assistant, but does not include a practitioner of religious healing;

     (3) “well-baby exam” means
          (A) a periodic physical examination by a qualified health care professional of a baby during the first 24 months of life in which information is collected on matters including normal development, growth rate, hearing, vision, language skills, motor development, diet, general care, preventative health care, immunizations, and infectious diseases; and

          (B) consultation between the health care professional and a parent.




Sec. 21.42.353. Coverage for the costs of acupuncture treatment.
Except for a fraternal benefit society, a health care insurer that offers, issues for delivery, delivers, or renews in this state a health care insurance plan may offer coverage for services of an acupuncturist licensed under AS 08.06 if the plan covers acupuncture treatment by a health care provider who is subject to other provisions of AS 08.


Sec. 21.42.355. Coverage for cost of services provided by certified nurse midwives.
 (a) If a health care insurance plan or an excepted benefits policy or contract provides indemnity for the cost of services of a physician provided to women during pregnancy, childbirth, and the period after childbirth, indemnity in a reasonable amount shall also be provided for the cost of an advanced practice registered nurse who provides the same services. Indemnity may be provided under this subsection only if the advanced practice registered nurse is practicing as a certified nurse midwife in accordance with regulations adopted under AS 08.68.100(a), and the services provided are within the scope of practice of that certification.

 (b) If a health care insurance plan or an excepted benefits policy or contract provides for furnishing those services required of a physician in the care of women during pregnancy, childbirth, and the period after childbirth, the contract shall also provide that an advanced practice registered nurse may furnish those same services instead of a physician. Services may be provided under this subsection only if the advanced practice registered nurse is practicing as a certified nurse midwife in accordance with regulations adopted under AS 08.68.100(a), and the services provided are within the scope of practice of that certification.




Sec. 21.42.360. Definitions. [Repealed, § 11 ch 163 SLA 1976. For current law see AS 21.97.]
Sec. 21.42.363. Eye care under health insurance.
A policy, contract, or prepaid plan for individual or group health insurance issued or delivered in the state that provides reimbursement for a service within the lawful scope of practice of an optometrist licensed under AS 08.72 must provide for reimbursement to a person covered under the policy, contract, or plan who had the service performed by an optometrist.


Sec. 21.42.365. Coverage for treatment of alcoholism or drug abuse.
 (a) Except for a fraternal benefit society, a health care insurer that offers, issues for delivery, delivers, or renews in this state a health care insurance plan providing coverage for five or more employees of an employer in the group market shall offer a covered employee or the employee’s dependent coverage for the treatment of alcoholism or drug abuse.

 (b) In this section, “alcoholism or drug abuse” means an illness characterized by
     (1) a physiological or psychological dependency, or both, on alcoholic beverages or controlled substances as defined in AS 11.71.900; or

     (2) habitual lack of self-control in using alcoholic beverages or controlled substances to the extent that the person’s health is substantially impaired or the person’s social or economic function is substantially disrupted.




Sec. 21.42.370. [Renumbered as AS 21.42.315.]
Sec. 21.42.375. Coverage for mammograms.
 (a) Except for a fraternal benefit society, a health care insurer that offers, issues for delivery, delivers, or renews in this state a health care insurance plan shall provide coverage for low-dose mammography screening under the schedule described in (b) of this section if the plan covers mastectomies and prosthetic devices and reconstructive surgery incident to mastectomies.

 (b) The minimum coverage required under (a) of this section includes
     (1) a baseline mammogram for a covered individual who is at least 35 years of age but less than 40 years of age;

     (2) one mammogram every two years for a covered individual who is at least 40 years of age but less than 50 years of age;

     (3) an annual mammogram for a covered individual who is at least 50 years of age;

     (4) a mammogram at any age for a covered individual with a history of breast cancer or whose parent or sibling has a history of breast cancer, upon referral by a physician.

 (c) The coverage required by this section
     (1) must be included in the health care insurance plan on a basis that is not less favorable than for other radiological examinations;

     (2) may be subject to standard policy provisions applicable to other benefits, such as deductible or copayment provisions.

 (d) [Repealed, § 115 ch 81 SLA 1997.]
 (e) In this section, “low-dose mammography screening” and “mammogram” mean the X-ray examination of the breast using equipment dedicated specifically for mammography, including the X-ray tube, filter, compression device, screens, films, and cassettes, with an average radiation exposure delivery of less than one rad mid-breast, with two views for each breast.




Sec. 21.42.377. Coverage for colorectal cancer screening.
 (a) Except for a fraternal benefit society, a health care insurer that offers, issues for delivery, delivers, or renews in this state a health care insurance plan shall provide coverage for the costs of colorectal cancer screening examinations and laboratory tests under the schedule described in (b) of this section. The coverage required by this section is subject to standard policy provisions applicable to other benefits, including deductible or copayment provisions.

 (b) The minimum coverage required under (a) of this section for colorectal cancer screening includes coverage for colorectal cancer examinations and laboratory tests specified in American Cancer Society guidelines for colorectal cancer screening of asymptomatic individuals. Coverage shall be provided for all colorectal screening examinations and tests that are administered at a frequency identified in the American Cancer Society guidelines for colorectal cancer.

 (c) Coverage provided under this section applies to a covered individual who is
     (1) at least 50 years of age; or

     (2) less than 50 years of age and at high risk for colorectal cancer.

 (d) All screening options identified in (b) of this section shall be covered by the insurer, with the choice of option determined by the covered individual in consultation with a health care provider.

 (e) For individuals considered at average risk for colorectal cancer, coverage or benefits shall be provided for the choice of screening, so long as it is conducted in accordance with the specified frequency. For individuals considered at high risk for colorectal cancer, screening shall be provided at a frequency determined necessary by a health care provider.

 (f) An employer that provides a health care insurance plan under this section shall notify each covered individual of the coverage for colorectal cancer screenings unless coverage for colorectal cancer screening previously exists. The notice shall be included in the health benefit handbook or be provided by written or electronic communication between an employer or health plan administrator and a covered individual. However, if the covered individual purchases the health care insurance plan from the insurer issuing the policy, the insurer is responsible for notifying the covered individual of the coverage for colorectal cancer screening under this section.

 (g) In this section, “individual considered at high risk for colorectal cancer” means an individual who faces a high risk for colorectal cancer because of
     (1) family history;

     (2) prior experience of cancer or precursor neoplastic polyps;

     (3) a history of a chronic digestive disease condition, including inflammatory bowel disease, Crohn’s Disease, or ulcerative colitis;

     (4) the presence of any appropriate recognized gene markers for colorectal cancer; or

     (5) other predisposing factors.




Sec. 21.42.380. Coverage for treatment of phenylketonuria.
 (a) Except for a fraternal benefit society, a health care insurer that offers, issues for delivery, delivers, or renews in this state a health care insurance plan shall provide coverage under the plan for the formulas necessary for the treatment of phenylketonuria. This subsection does not apply to a health care insurance plan that the director has determined by order should be excluded from this subsection.

 (b) A health care insurer providing coverage under this section may impose reasonable contract limitations but may not refuse coverage based on a preexisting condition of phenylketonuria or require that an individual covered under the plan pay a higher deductible or copayment for the cost of treating phenylketonuria than for the cost of treating another condition or illness.

 (c) In this section, “cost” means the lowest of the following:
     (1) the actual charge for the treatment received for phenylketonuria;

     (2) the usual, customary, and reasonable charge for the treatment as determined by the contract of coverage; or

     (3) the charge agreed to by contract between the treatment provider and the health care insurer.




Sec. 21.42.385. Dental, vision, and hearing coverage.
 (a) Except for a fraternal benefit society, a health care insurer that offers, issues for delivery, delivers, or renews in this state a health care insurance plan, including a Medicare supplement policy to the extent not prohibited by 42 U.S.C. 1395 (Social Security Act), shall offer to each plan sponsor or individual minimum dental, vision, and hearing coverage described in (b) of this section. Coverage required under this subsection may be offered as a rider or in a separate policy.

 (b) The minimum coverage required under (a) of this section
     (1) may be provided under contract with another health care insurer;

     (2) may not be less than the dental, vision, and hearing coverage provided on July 1, 2009, to an individual entitled to medical benefits under AS 39.35.535 (public employees’ retirement system of Alaska); and

     (3) shall be adjusted by the director on July 1, 2012, and every three years thereafter to correspond to changes in coverage provided to individuals entitled to medical benefits under AS 39.35.535.

 (c) This section does not apply to a health care insurer that has written less than $300,000 in premiums in the previous calendar year. A health care insurer exempt under this subsection shall disclose the exemption when offering, issuing for delivery, delivering, or renewing a health care insurance plan or an excepted benefits contract, and shall advise the individual covered under the plan that health care insurers that have written more than $300,000 in premiums in the previous calendar year are required to offer coverage under (a) and (b) of this section.

 (d) This section does not require an insurer who offers only group insurance coverage under AS 21.54 to offer dental, vision, and hearing coverage to an individual.




Sec. 21.42.390. Coverage for treatment of diabetes.
 (a) A health care insurer that offers in this state a health care insurance plan that includes coverage for pharmacy services shall initially and at each renewal provide coverage for the cost of treating diabetes, including medication, equipment, and supplies. All health care insurance plans must include coverage for outpatient self-management training or education, and medical nutrition therapy, if diabetes treatment is prescribed by a health care provider. The coverage required by this section is subject to standard policy provisions applicable to other benefits, including deductible or copayment provisions. Coverage for the cost of diabetes outpatient self-management training or education and for the cost of medical nutrition therapy is only required if provided by a health care provider with training in the treatment of diabetes.

 (b) [Repealed, § 2 ch 23 SLA 2000.]
 (c) In this section,
     (1) “diabetes” includes insulin-dependent diabetes, insulin-using diabetes, gestational diabetes, and non-insulin-using diabetes;

     (2) “health care provider” means a person licensed to provide health care services as required by the state.




Sec. 21.42.392. Requirements relating to dental care coverage provisions.
 (a) A health care insurer who provides coverage for dental care may not include in the health care insurance plan or contract a provision that
     (1) prohibits a covered person from obtaining dental care services from a dentist of the person’s choice, including a specialist;

     (2) restricts a covered person’s right to receive full information from the person’s dentist regarding the care or treatment options that the dentist believes are in the best interests of the person.

 (b) A health care insurance plan or contract that provides coverage for dental services that allows the health care insurer to review a treatment plan or conduct a utilization review must contain a provision that a treatment plan review or utilization review relating to dental care for a covered person receiving treatment in this state must be conducted by a dentist if the claim for reimbursement or payment is denied.

 (c) A health care insurer that provides coverage for dental care
     (1) may reimburse a covered person at a different rate because of the person’s choice of a dentist if the dentist is not a part of the covered person’s dental network or preferred provider organization agreement; the covered expense for non-network providers may not be less than that allowed to a network provider, although the covered expense may be reimbursed at a lower percentage or with higher deductibles than if the service had been provided within the network;

     (2) may not limit a fee set by a dentist for a service unless the service is covered under the insurer’s plan or contract; and

     (3) may offer a dentist the option of entering into a preferred provider contract with the insurer that provides a fee schedule for covered services only or a fee schedule for both covered and uncovered services; under this paragraph,
          (A) the health care insurer may not
               (i) take an action against the dentist based on the dentist’s refusal to enter into a contract with an insurer;

               (ii) fail to list a dentist who does not enter into a contract with an insurer in the insurer’s marketing materials; or

               (iii) take action against the dentist during the management or administration of a contract based on the dentist’s choice of contract;

          (B) the terms or provisions of the contract
               (i) may not violate AS 45.50.562 — 45.50.566; and

               (ii) may authorize the insurer to provide information to the insured describing the dentist’s choice of contract and fee schedules;

          (C) “covered service” means a health care service for which a health care insurer pays a benefit for all or part of the service, including a benefit that is available but limited by deductible, coinsurance, or frequency terms under the contract between the insurer and the insured.

 (d) A health care insurer may not deny
     (1) dental coverage, cancel a health care insurance plan or contract, or otherwise take action against a covered person or a dentist because the person has asserted a right described in this section;

     (2) dental coverage or eligibility for dental coverage because the covered person chooses a dentist outside of a preferred provider organization agreement.

 (e) A covered person may bring a civil action against a health care insurer to enforce the person’s rights under this section if the covered person has exhausted the administrative appeal process.

 (f) A dentist who treats a covered person may not waive uncovered dental expenses for which the covered person has liability because a covered person chose the dentist outside of a dental network or a preferred provider organization agreement.

 (g) In this section,
     (1) “covered expense” means charges that are payable under plan provisions;

     (2) “dentist” means a person licensed to practice dentistry;

     (3) “preferred provider” means a dental provider who has signed an agreement with a dental care plan to provide services to plan participants at a specific rate.




Sec. 21.42.395. Coverage for prostate and cervical cancer detection.
 (a) Except for a fraternal benefit society, a health care insurer that offers, issues for delivery, delivers, or renews in this state a health care insurance plan shall provide coverage for the costs of prostate cancer screening tests as required under the schedule described in (b) of this section and shall provide coverage for the costs of cervical cancer screening tests as required under (c) of this section. The coverage required by this section is subject to standard policy provisions applicable to other benefits, including deductible or copayment provisions. If a physician recommends that a covered individual undergo prostate cancer screening by taking a prostate antigen blood test, coverage may not be denied because the covered individual has already had a digital rectal examination and the examination results were negative.

 (b) The minimum coverage required under (a) of this section includes an annual prostate cancer screening test for a person who is
     (1) at least 35 years of age but less than 40 years of age and the person is in a high risk group; in this paragraph, “high risk” means a person who is an African-American or who has a family history of prostate cancer; or

     (2) 40 or more years of age.

 (c) The minimum coverage required under (a) of this section for cervical cancer screening is an annual pap smear cancer screening test for a person who is 18 or more years of age.

 (d) [Repealed, § 115 ch 81 SLA 1997.]
 (e) In this section, “prostate cancer screening tests” includes a prostate antigen blood test or another test that is equivalent or better in cancer detection.




Sec. 21.42.397. Coverage for autism spectrum disorders.
 (a) Except for a fraternal benefit society, a health care insurer that offers, issues for delivery, delivers, or renews a health care insurance plan in this state shall provide coverage for the costs of the diagnosis and treatment of autism spectrum disorders. Coverage required by this subsection must include treatment prescribed by a licensed physician, psychologist, or advanced practice registered nurse, provided by or supervised by an autism service provider, and as identified in a treatment plan developed following a comprehensive evaluation. Covered treatment includes medically necessary pharmacy care, psychiatric care, psychological care, habilitative or rehabilitative care, and therapeutic care. In this subsection,
     (1) “habilitative or rehabilitative care” means professional counseling, guidance services, and treatment programs necessary to develop, restore, or maintain the functioning of an individual to the maximum extent practicable, including applied behavior analysis or other structured behavioral therapies; in this paragraph, “applied behavior analysis” means the design, implementation, and evaluation of environmental modifications, using behavioral stimuli and consequences, including direct observation, measurement, and functional analysis of the relationship between environment and behavior, to produce socially significant improvement in human behavior or to prevent the loss of an attained skill or function;

     (2) “therapeutic care” means services provided by or under the supervision of a speech-language pathologist licensed under AS 08.11 or an occupational therapist or physical therapist licensed under AS 08.84.

 (b) Coverage under this section
     (1) is required to be provided only to individuals under 21 years of age;

     (2) may not limit the number of visits to an autism service provider for treatment;

     (3) is subject to copayment, deductible, and coinsurance provisions, and other general exclusions or limitations included in a health insurance policy to the same extent as other health care services covered by the policy; and

     (4) must cover medically necessary treatment that is coordinated with an education program, but may not be contingent on the coordination of treatment with an education program.

 (c) An insurer providing health care insurance to a small employer in the group market with 20 or fewer employees is not required to provide insurance coverage to the small employer that includes the coverage required under (a) of this section.

 (d) The director may waive the coverage required in this section for an insurer providing health care insurance to a small employer in the group market with 21 — 25 employees if the small employer demonstrates to the director by actual claims experience over any consecutive 12-month period that compliance with this section has increased the premium cost of the small employer’s health insurance policy by three percent or more during the consecutive 12-month period.

 (e) This section does not limit benefits that are otherwise available to an individual under a health care insurance plan.

 (f) A health care insurer may not refuse to deliver, execute, issue, amend, or renew coverage to an individual or terminate coverage because the individual is diagnosed with or has received treatment for autism spectrum disorders.

 (g) In this section,
     (1) “autism service provider” means an individual who is licensed, certified, or registered by the applicable state licensing board or by a nationally recognized certifying organization and who provides direct services to an individual with an autism spectrum disorder;

     (2) “autism spectrum disorders” means pervasive developmental disorders, or a group of conditions having substantially the same characteristics as pervasive developmental disorders, as defined in the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders-IV-TR, as amended or reissued from time to time;

     (3) “health care insurance plan” has the meaning given in AS 21.54.500;

     (4) “health care insurer” has the meaning given in AS 21.54.500;

     (5) “medically necessary” means any care, treatment, intervention, service, or item prescribed by a licensed physician, psychologist, or advanced practice registered nurse in accordance with accepted standards of practice that will, or is reasonably expected to,
          (A) prevent the onset of an illness, condition, injury, or disability;

          (B) reduce or ameliorate the physical, mental, or developmental effects of an illness, condition, injury, or disability;

          (C) assist to achieve or maintain maximum functional capacity in performing daily activities, taking into account both the functional capacity of the individual and the functional capacity of other persons of the individual’s age.




Sec. 21.42.400. Coverage for reconstructive surgery following mastectomy.
A health care insurer that offers, issues for delivery, delivers, or renews in this state a health care insurance plan providing medical and surgical benefits for mastectomies shall comply with 42 U.S.C. 300gg-6 and 42 U.S.C. 300gg-52 regarding coverage for reconstructive surgery following mastectomies.


Sec. 21.42.405. High deductible health plan.
 (a) A health care insurer that offers, issues, delivers, or renews a health care insurance plan in this state may apply deductible or copayment requirements to health care benefits and services that qualify the health care insurance plan as a high deductible health plan.

 (b) In this section, “high deductible health plan” has the meaning given in 26 U.S.C. 223 (Internal Revenue Code).




Sec. 21.42.410. Coverage of dependent students on medically necessary leaves of absence.
A health care insurer that offers a health care insurance plan in the individual or group market shall comply with the coverage requirements for dependent students on medically necessary leaves of absence under 42 U.S.C. 300gg-54.


Sec. 21.42.415. Coverage for clinical trials related to cancer.
 (a) A health care insurer that offers, issues for delivery, delivers, or renews a health care insurance plan in the state shall cover routine patient care costs incurred by a patient enrolled in an approved clinical trial related to cancer, including leukemia, lymphoma, and bone marrow stem cell disorders.

 (b) The health care insurer is required to provide coverage under this section only if the patient’s treating physician determines that
     (1) there is no clearly superior noninvestigational treatment alternative; and

     (2) available clinical or preclinical data provide a reasonable expectation that the treatment provided in the clinical trial will be at least as efficacious as any noninvestigational alternative.

 (c) The coverage to be provided under (a) of this section must include payment for the costs of
     (1) prevention, diagnosis, treatment, and palliative care of cancer;

     (2) medical care for an approved clinical trial related to cancer that would otherwise be covered under a health care insurance plan if the medical care were not in connection with an approved clinical trial related to cancer;

     (3) items or services necessary to provide an investigational item or service;

     (4) the diagnosis or treatment of complications;

     (5) a drug or device approved by the United States Food and Drug Administration without regard to whether the United States Food and Drug Administration approved the drug or device for use in treating a patient’s particular condition, but only to the extent that the drug or device is not paid for by the manufacturer, distributor, or provider of the drug or device;

     (6) services necessary to administer a drug or device under evaluation in the clinical trial; and

     (7) transportation for the patient that is primarily for and essential to the medical care.

 (d) The coverage to be provided under (a) of this section may not include the cost of
     (1) a drug or device that is associated with the clinical trial that has not been approved by the United States Food and Drug Administration;

     (2) housing, companion expenses, or other nonclinical expenses associated with the clinical trial;

     (3) an item or service provided solely to satisfy data collection and analysis and not used in the clinical management of the patient;

     (4) an item or service excluded from coverage under the patient’s health care insurance plan; and

     (5) an item or service paid for or customarily paid for through grants or other funding.

 (e) The coverage required by this section is subject to the standard policy provisions applicable to other benefits, including deductible, coinsurance, or copayment provisions.

 (f) This section does not apply to a fraternal benefit society.

 (g) In this section, “approved clinical trial” means a scientific study using human subjects designed to test and improve prevention, diagnosis, treatment, or palliative care of cancer, or the safety and effectiveness of a drug, device, or procedure used in the prevention, diagnosis, treatment, or palliative care of a subject, if the study is approved by
     (1) an institutional review board that complies with 45 C.F.R. Part 46; and

     (2) one or more of the following:
          (A) the United States Department of Health and Human Services, National Institutes of Health, or its institutes or centers;

          (B) the United States Department of Health and Human Services, United States Food and Drug Administration;

          (C) the United States Department of Defense;

          (D) the United States Department of Veterans Affairs; or

          (E) a nongovernmental research entity abiding by current National Institutes of Health guidelines.




Sec. 21.42.420. Coverage for prescription drugs; specialty drug tiers prohibited.
A health care insurer that offers, issues, delivers, or renews a health care insurance plan in the individual or group market in the state that provides coverage for prescription drugs for which cost sharing, deductibles, or copayment obligations are determined by unique categories or specialty tiers may impose cost sharing, deductibles, or copayment obligations for a unique category or specialty tier prescription drug that exceed the dollar amount of cost sharing, deductibles, or copayment obligations, as applicable, for a nonpreferred brand drug or the drug’s equivalent, but only if the insurer notifies the insured of the cost sharing, deductible, or copayment terms applicable to unique categories or specialty tiers at least 90 days before the terms apply.


Sec. 21.42.422. Coverage for telehealth and mental health benefits.
A health care insurer that offers, issues for delivery, or renews in the state a health care insurance plan in the group or individual market that provides mental health benefits shall provide coverage for mental health benefits provided through telehealth by a health care provider licensed in this state and may not require that prior in-person contact occur between a health care provider and a patient before payment is made for covered services.


Sec. 21.42.425. Coverage for prescription topical eye medication.
 (a) A health care insurer that offers, issues for delivery, delivers, or renews a health care insurance plan in the group or individual market in the state that provides coverage for prescription topical eye medication shall allow the early refill of a prescription for a topical eye medication to treat a chronic condition before the last day of the prescribed dosage period, without regard to a coverage restriction.

 (b) A covered person may request an early refill under this section
     (1) not earlier than 23 days after a prescription for a 30-day supply is dispensed;

     (2) not earlier than 45 days after a prescription for a 60-day supply is dispensed;

     (3) not earlier than 68 days after a prescription for a 90-day supply is dispensed;

     (4) if the prescriber has indicated the number of refills needed; and

     (5) if the prescription topical eye medication being refilled is covered under the covered person’s policy.

 (c) A covered person may receive an early refill under this section not more than once during the approved dosage period.

 (d) A covered person may only receive an early refill under this section if the refill does not exceed the number of refills prescribed.




Sec. 21.42.430. Coverage for anti-cancer medication.
 (a) Except for a fraternal benefit society, a health care insurer that offers, issues for delivery, delivers, or renews in this state a health care insurance plan that provides coverage for anti- cancer medications that are injected or intravenously administered by a health care provider and patient-administered anti-cancer medications, including those orally administered or self-injected, may not require a higher copayment, deductible, or coinsurance amount for a patient-administered medication than it requires for an anti- cancer medication injected or intravenously administered by a health care provider, regardless of the formulation or benefit category determination by the policy or plan.

 (b) A health care insurer may not offset the costs of compliance with (a) of this section by
     (1) increasing the copayment, deductible, or coinsurance amount required for anti-cancer medications injected or intravenously administered by a health care provider that are covered under the health insurance plan; or

     (2) reclassifying benefits with respect to anti-cancer medications.

 (c) Nothing in this section prohibits a health care insurance plan from requiring different cost-sharing rates for in-network and out-of-network providers or pharmacies.

 (d) In this section, “anti-cancer medication” means a drug or biologic used to kill cancerous cells, to slow or prevent the growth of cancerous cells, or to treat related side effects.




Sec. 21.42.500. [Renumbered as AS 21.42.599.]
Sec. 21.42.599. Definitions.
In AS 21.42.345 — 21.42.599,
     (1) “copayment” means the portion of medical care expenses in excess of the deductible to be paid by a covered individual;

     (2) “deductible” means the portion of medical care expenses for which a covered individual must pay before benefits become payable;

     (3) “excepted benefits” has the meaning given in AS 21.54.160;

     (4) “fraternal benefit society” has the meaning given in AS 21.84.900;

     (5) “health care insurance plan” has the meaning given in AS 21.54.500; “health care insurance plan” does not include short-term limited-duration insurance offered to individuals in the individual market;

     (6) “health care insurer” has the meaning given in AS 21.54.500;

     (7) “individual market” has the meaning given in AS 21.51.500;

     (8) “placed for adoption” has the meaning given in AS 21.54.500.




Article 3. Compact Concerning Annuity, Life, Disability, and Long-term Care Insurance.


Sec. 21.42.700. Interstate Insurance Product Regulation Compact.
The Interstate Insurance Product Regulation Compact contained in this section is enacted into law and entered into on behalf of the state with other states joining in it in a form substantially as set out in this section. The director of the division of insurance is designated as the representative of this state to the commission created by the compact.


Sec. 21.42.705. Opt-out duties, guidelines, remedies.
 (a) As a participant in the Interstate Insurance Product Regulation Compact, it is the policy of the state to opt out, and the director shall opt out, of any Uniform Standard that provides a materially lower level of protection for or materially diminishes the rights of Alaska policyholders or policy applicants under Alaska law.

 (b) If the director or a court of competent jurisdiction finds that the policy set out in (a) of this section has been violated, notice of the violation shall be given to the legislature, and reasonable and prompt measures shall be taken to opt out of the Uniform Standard that does not comply with the policy statement set out in (a) of this section to the extent that such action is permissible under the Interstate Insurance Product Regulation Compact.




Chapter 45. Life Insurance and Annuities.

Sec. 21.45.010. Applicability.
This chapter applies only to contracts of life insurance and annuities, other than reinsurance, group life insurance, and group annuities.


Sec. 21.45.020. Standards provisions required; return and refund.
 (a) A policy of life insurance, other than group and pure endowments with or without return of premiums or of premiums and interest, may not be delivered or issued for delivery in this state unless it contains in substance all of the applicable provisions required by AS 21.45.030 — 21.45.150. This section does not apply to annuity contracts or to a provision of a life insurance policy, or contract supplemental to it, relating to health insurance benefits or to additional benefits in the event of death by accident or accidental means.

 (b) The provisions or portions of provisions not applicable to single premium or term policies may not to that extent be incorporated in the policy.

 (c) A life insurance policy or annuity contract delivered or issued for delivery in this state and each life insurance policy or annuity contract application must contain a notice prominently printed on or attached to the first page stating
     (1) on written request, an insurer is required to provide, within a reasonable time, reasonable factual information regarding the benefits and provisions of the policy or contract to the policy or contract holder; and

     (2) if, for any reason, the policy or contract holder is not satisfied with the policy or contract, the policy or contract holder may return the policy or contract within 10 days after the policy or contract is delivered and, except as provided in (d) of this section, receive a refund of all money paid.

 (d) For a variable life insurance policy or variable annuity contract, the refund under (c) of this section must equal the sum of
     (1) the difference between the premiums paid, including any policy or contract fees or other charges and the amounts allocated to any separate accounts under the policy or contract; and

     (2) the value of amounts allocated to any separate accounts on the date the returned policy is received by the insurer or its insurance producer.




Sec. 21.45.030. Grace period.
There shall be a provision that a grace period of 30 days, or, at the option of the insurer, of one month of not less than 30 days, or of four weeks in the case of industrial life insurance policies the premiums for which are payable more frequently than monthly, is allowed within which the payment of each premium after the first premium may be made, during which period of grace the policy shall continue in full force. If a claim arises under the policy during the period of grace the amount of the premium due or overdue may be deducted from the policy proceeds.


Sec. 21.45.040. Incontestability.
There shall be a provision that the policy, exclusive of provisions relating to health insurance benefits or to additional benefits in the event of death by accident or accidental means and except for nonpayment of premiums, is uncontestable after it has been in force during the lifetime of the insured for a period of two years from its date of issue.


Sec. 21.45.050. Entire contract.
There shall be a provision that the policy, or the policy and the policy application if a copy of the application is endorsed upon or attached to the policy when issued, constitute the entire contract between the parties, and if the application is made a part of the policy, that all statements contained in the application shall, in the absence of fraud, be considered representations and not warranties.


Sec. 21.45.060. Misstatement of age.
Except as provided in AS 21.45.210, there shall be a provision that if the age of the insured or of another person whose age is considered in determining the premium or benefit has been misstated, any amount payable or benefit accruing under the policy shall be such as the premium would have purchased at the correct age or ages.


Sec. 21.45.070. Dividends.
 (a) Except as provided in AS 21.45.220, there shall be a provision in participating policies that, beginning not later than the end of the third policy year, the insurer shall annually ascertain and apportion the divisible surplus, if any, that will accrue on the policy anniversary or other dividend date specified in the policy if the policy is in force and all premiums to that date are paid. Except as hereinafter provided, any dividend becoming payable shall, at the option of the party entitled to elect the option, be either
     (1) payable in cash; or

     (2) applied to one of the other dividend options that may be provided by the policy; if any other dividend option is provided, the policy must further state which options shall be automatically effective when the party does not elect another option; if the policy specifies a period within which the other dividend option may be elected, the period may not be less than 30 days following the date on which the dividend is due and payable; the annually apportioned dividend shall be payable in cash even though the policy provides that payment of the dividend is to be deferred for a specified period if the period does not exceed six years from the date of apportionment and that interest will be added to the dividend at a specified rate; if a participating policy provides that the benefit under a paid-up nonforfeiture provision is to be participating, it may provide that any divisible surplus becoming payable or apportioned while the insurance is in force under the nonforfeiture provision shall be applied in the manner set out in the policy.

 (b) In participating industrial life insurance policies, in lieu of the provision required in (a) of this section, there shall be a provision that, beginning not later than the end of the fifth policy year, the policy shall participate annually in the divisible surplus, if any, in the manner set out in the policy.




Sec. 21.45.080. Policy loan.
 (a) There shall be a provision that after three full years’ premiums have been paid and after the policy has a cash surrender value and while no premium is in default beyond the grace period for payment, the insurer will advance, on proper assignment or pledge of the policy and on the sole security of the policy, at a specified rate of interest not exceeding eight pe