Sec. 21.03.010. Insurance regulated.

1. 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.
2. Foreign and alien insurers doing business as authorized insurers under this title are not subject to AS 10.06 (Alaska Corporations Code).
3. 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.

History. (§ 1 ch 120 SLA 1966; am § 3 ch 62 SLA 1995)

Revisor’s notes. —

In 1988 “AS 10.06 (Alaska Corporations Code)” was substituted for “the Alaska Business Corporation Act (AS 10.05)” to conform to the enactment of AS 10.06 and the repeal of AS 10.05 by ch. 166, SLA 1988.

Administrative Code. —

For risk retention groups, see 3 AAC 24, art. 1.

For purchasing groups, see 3 AAC 24, art. 2.

For unfair claims settlement acts or practices, see 3 AAC 26, art. 1.

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 [Repealed, § 2 ch 234 SLA 1968.]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.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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
      1. 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;
      2. 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
      3. 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
      1. mechanical breakdown insurance;
      2. a contract that requires an indemnity payment for each incident, and the payment exceeds the purchase price of the property serviced;
      3. 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
      4. portable electronics insurance as defined in AS 21.36.515 .
6. 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.
7. This title does not apply to a portable electronics manufacturer’s warranty or extended warranty.
8. A motor vehicle service contract shall be governed by AS 21.59.110 — 21.59.290 except as expressly provided in this title.
9. 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.
10. 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.
11. 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
       1. a common set of ethical or religious beliefs; and
       2. 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.”

History. (§ 3 ch 234 SLA 1968; am § 2 ch 73 SLA 2001; am § 1 ch 38 SLA 2002; am § 1 ch 143 SLA 2003; am § 1 ch 23 SLA 2011; am §§ 1, 2 ch 25 SLA 2013; am §§ 1, 2 ch 78 SLA 2014; am § 1 ch 84 SLA 2014; am § 1 ch 46 SLA 2016)

Revisor’s notes. —

Subsection (j) was enacted as (h); relettered in 2014.

Effect of amendments. —

The 2013 amendment, effective January 1, 2014, in (e)(1)(B), deleted “damaged by power surges” following “handling of property”; added (e)(2)(E); added (g); and made related changes.

The first 2014 amendment, effective January 1, 2015, deleted (e)(2)(C), which read, “a contract to provide service on a motor vehicle subject to registration under AS 28.10.011 ”; added (h) and (i), and made related changes.

The second 2014 amendment, effective October 14, 2014, added (h) [now (j)].

The 2016 amendment, effective October 18, 2016, added (k).

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. Preemption.

The state hereby preempts 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.

History. (§ 1 ch 120 SLA 1966; am § 4 ch 62 SLA 1995)

Sec. 21.03.070. Exemption for qualified charitable gift annuities.

1. 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.
2. 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.
3. 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.
4. 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
      1. the charitable organization is a charitable organization; and
      2. the charitable gift annuities issued by the charitable organization are qualified charitable gift annuities.
5. 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.
6. 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.
7. 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.
8. 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
      1. actuarial value of the annuity is less than the value of the money or other property transferred; and
      2. difference in value constitutes a charitable deduction for federal income tax purposes;
   2. “charitable organization” means a person identified
      1. 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
      2. 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
      1. a minimum of
      2. 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.
9. $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

History. (§ 3 ch 73 SLA 2001)

Editor’s notes. —

Section 4(a), ch. 73, SLA 2001, provides that, in addition to a qualified charitable gift annuity established on or after October 1, 2001, the provisions of subsection (a) apply to a charitable gift annuity that is issued before October 1, 2001, and that is in effect on that date.

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.

History. (§ 1 ch 120 SLA 1966)

Revisor’s notes. —

In 1999, in this section, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” and “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999. In 2004, in this section, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development” and “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 21.06.020. Division of insurance.

1. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966)

Revisor’s notes. —

In 1999, in this section, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” and “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999. In 2004, in this section, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development” and “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 21.06.030. Deputies and assistants; volunteers.

1. 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.
2. The director may appoint additional deputies for purposes designated by the director.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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 .

History. (§ 1 ch 120 SLA 1966; am § 2 ch 81 SLA 1997)

Administrative Code. —

For annuity contract disclosures, see 3 AAC 26, art. 6.

Sec. 21.06.040. Prohibited interests, rewards. [Repealed, § 47 ch 29 SLA 1987.]

Sec. 21.06.050. Delegation of authority.

1. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966)

Administrative Code. —

For annuity contract disclosures, see 3 AAC 26, art. 6.

Sec. 21.06.060. Records.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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
      1. detailed health insurance claim cost data; and
      2. 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.
7. 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.

History. (§ 1 ch 120 SLA 1966; am §§ 2, 3 ch 38 SLA 2002; am § 1 ch 30 SLA 2009)

Administrative Code. —

For financial examination of and annual audit reporting requirements for admitted insurers, see 3 AAC 21, art. 7.

Sec. 21.06.070. Evidence.

1. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966)

Cross references. —

For rules of court relating to public records, see Evid. R. 1005.

Sec. 21.06.080. General powers, duties; catastrophes.

1. The director shall enforce the provisions of this title, and shall execute the duties imposed by this title.
2. The director has the power and authority expressly conferred by or reasonably implied from the provisions of this title.
3. 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.
4. 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.
5. The director has such additional powers and duties as may be provided by other laws of this state.

History. (§ 1 ch 120 SLA 1966; am § 5 ch 62 SLA 1995)

Revisor’s notes. —

Subsection (d) was enacted as (e). Relettered in 1995, at which time former subsection (d) was relettered as (e).

Sec. 21.06.085. Uniform data and procedures for health claims.

1. 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.
2. 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 .

History. (§ 1 ch 125 SLA 1994; am § 2 ch 56 SLA 1996; am § 3 ch 81 SLA 1997)

Revisor’s notes. —

In 1997, paragraph (b)(1) was renumbered as (b)(2) and paragraph (b)(2) was renumbered as (b)(1) in order to maintain alphabetical order.

Administrative Code. —

For uniform claim forms, see 3 AAC 28, art. 8.

Sec. 21.06.087. Insurance report.

History. [Repealed, § 64 ch 41 SLA 2016.]

Sec. 21.06.090. Regulations.

1. 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.
2. In addition to any other penalty provided, wilful violation of a regulation subjects the violator to the administrative penalty prescribed for that violation.

History. (§ 1 ch 120 SLA 1966; am § 1 ch 26 SLA 1985)

Administrative Code. —

For insurance holding companies, see 3 AAC 21, art. 1.

For investments, see 3 AAC 21, art. 2.

For record and financial reporting, see 3 AAC 21, art. 3.

For definition of standards and director’s authority for companies deemed to be in an impaired financial condition, see 3 AAC 21, art. 4.

For frequency and method of premium tax payments, see 3 AAC 21, art. 5.

For reinsurance, see 3 AAC 21, art. 6.

For financial examination of and annual audit reporting requirements for admitted insurers, see 3 AAC 21, art. 7.

For actuarial opinion and memorandum, see 3 AAC 21, art. 8.

For custodian of insurer assets, see 3 AAC 21, art. 9.

For licensing requirements, see 3 AAC 23, art. 1.

For premium financing, see 3 AAC 23, art. 2.

For fiduciary responsibilities of licensees, see 3 AAC 23, art. 4.

For bail bonds, see 3 AAC 23, art. 5.

For risk retention groups, see 3 AAC 24, art. 1.

For purchasing groups, see 3 AAC 24, art. 2.

For surplus lines — unauthorized insurers, see 3 AAC 25.

For unfair claims settlement acts or practices, see 3 AAC 26, art. 1.

For unfair discrimination, see 3 AAC 26, art. 2.

For coverage for attorney fees taxable as costs against an insured according to Alaska Rule of Civil Procedure 82, see 3 AAC 26, art. 3.

For privacy of consumer financial and health information, see 3 AAC 26, art. 4.

For annuity contract disclosures, see 3 AAC 26, art. 6.

For suitability in annuity contract transactions, see 3 AAC 26, art. 6.

For life insurance policy and annuity contract replacements, see 3 AAC 26, art. 7.

For title insurance, see 3 AAC 27, art. 1.

For variable contracts, see 3 AAC 28, art. 1.

For consumer credit insurance, see 3 AAC 28, art. 4.

For health insurance marketed as medicare supplements, see 3 AAC 28, art. 5.

For group health insurance, see 3 AAC 28, art. 6.

For mortality tables, see 3 AAC 28, art. 7.

For uniform claim forms, see 3 AAC 28, art. 8.

For life insurance policy illustrations, see 3 AAC 28, art. 9.

For rate and rating plan filings, see 3 AAC 29, art. 2.

For group-marketed property and casualty insurance, see 3 AAC 29, art. 3.

For motor vehicle liability insurance senior discount, see 3 AAC 29, art. 4.

For schedule and individual risk rating plans, see 3 AAC 29, art. 5.

For information filings for commercial insurance, see 3 AAC 29, art. 6.

For assigned risk pool, see 3 AAC 30, art. 1.

For premium installment payments, see 3 AAC 30, art. 2.

For workers’ compensation review and advisory committee, see 3 AAC 30, art. 3.

For fees, see 3 AAC 31, art. 1.

For filing procedure for forms, rates, manuals, rating plans, and rules, see 3 AAC 31, art. 2.

For viatical settlements, see 3 AAC 31, art. 3.

Sec. 21.06.100. Orders, notices.

1. Orders and notices of the director are not effective unless in writing signed by or under the authority of the director.
2. 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.
3. 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.

History. (§ 1 ch 120 SLA 1966)

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 ;
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.

History. (§ 1 ch 120 SLA 1966; am § 41 ch 21 SLA 1995; am § 4 ch 81 SLA 1997; am § 1 ch 48 SLA 1999; am § 1 ch 52 SLA 2001; am § 1 ch 80 SLA 2006; am § 1 ch 92 SLA 2010; am § 1 ch 41 SLA 2016; am § 1 ch 62 SLA 2018)

Delayed repeal of paragraph (9) in 2025. —

Under secs. 1 and 37, ch. 61, SLA 2014, as amended by sec. 40, ch. 101, SLA 2018, paragraph (9) of this section is repealed January 1, 2025.

Revisor's notes. —

In 2010, in paragraph (8), “AS 21.36.495 (a) and (d)” was substituted for “AS 21.36.128 (a) and (d)” to reflect the 2010 renumbering of AS 21.36.128 .

In 2010, in paragraph (9), “AS 21.96.070 and 21.96.075 ” was substituted for “AS 21.89.070 and 21.89.075 ” to reflect the 2010 renumbering of those sections.

Under sec. 1, ch. 62, SLA 2018, paragraph (9) was repealed. Under sec. 40, ch. 101, SLA 2018, the delayed repeal of paragraph (9) by sec. 37. ch. 61, SLA 2014, was extended to 2025. To reconcile these provisions, the repeal by ch. 62 was treated as an amendment of paragraph (9) that deleted the reference to AS 21.96.075 , which was also repealed by sec. 1, ch. 62, SLA 2018. This treatment is in accord with the revisor's instruction provided in sec. 38(a), ch. 101, SLA 2018.

In 2025, under secs. 1 and 37, ch. 61, SLA 2014, as amended by sec. 40, ch. 101, SLA 2018, the amendment to paragraph (9) by those sections to remove a reference to AS 21.96.070 will be treated as a repeal of paragraph (9) due to the 2018 repeal of AS 21.96.075 and its removal from paragraph (9) (see the earlier 2018 revisor's note). This treatment is in accord with the revisor's instruction provided in sec. 38(b), ch. 101, SLA 2018, which provides that “the revisor of statutes shall treat the removal of the cross references to AS 21.96.070 in…AS 21.06.110 (9)…as a repeal of…AS 21.06.110 (9)”.

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, added (10) and made related changes.

The 2018 amendment, effective January 1, 2019, in (9), following “AS 21.96.070 ” deleted “and 21.96.075 ”.

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.

History. (§ 1 ch 205 SLA 1976)

Sec. 21.06.120. Examination of insurers.

1. 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.
2. The director shall in like manner examine each insurer applying for an initial certificate of authority to do business in this state.
3. 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.
4. The director may examine insurers in participation with the National Association of Insurance Commissioners.
5. 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.
6. 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.
7. 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.

History. (§ 1 ch 120 SLA 1966; am § 1 ch 117 SLA 1984; am §§ 1, 2 ch 50 SLA 1990; am §§ 1 — 4 ch 67 SLA 1992; am § 6 ch 62 SLA 1995; am § 1 ch 96 SLA 2004; am § 2 ch 41 SLA 2016)

Administrative Code. —

For record and financial reporting, see 3 AAC 21, art. 3.

For financial examination of and annual audit reporting requirements for admitted insurers, see 3 AAC 21, art. 7.

For unfair claims settlement acts or practices, see 3 AAC 26, art. 1.

For assigned risk pool, see 3 AAC 30, art. 1.

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in (a), substituted “most recent edition of the Financial Condition Examiners Handbook and the Market Regulation Handbook approved” for “Examiners’ Handbook most recently approved”.

Sec. 21.06.130. Examination of producers, adjusters, and promoters.

1. 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.
2. [Repealed, § 223 ch 67 SLA 1992.]

History. (§ 1 ch 120 SLA 1966; am § 2 ch 117 SLA 1984; am §§ 5, 223 ch 67 SLA 1992; am § 1 ch 1 FSSLA 2005)

Administrative Code. —

For unfair claims settlement acts or practices, see 3 AAC 26, art. 1.

Collateral references. —

Insurer’s tort liability for acts of adjuster seeking to obtain settlement or release. 39 ALR3d 739.

Sec. 21.06.140. Conduct of examination.

1. 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.
2. 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.
3. 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.
4. 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) .
5. 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.
6. 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.
7. 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.
8. The director may terminate or suspend an examination in order to pursue other legal or regulatory action under this title.
9. 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.

History. (§ 1 ch 120 SLA 1966; am § 3 ch 50 SLA 1990; am §§ 6 — 9 ch 67 SLA 1992; am § 3 ch 41 SLA 2016)

Administrative Code. —

For financial examination of and annual audit reporting requirements for admitted insurers, see 3 AAC 21, art. 7.

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in (f), substituted “most recent edition of the Financial Condition Examiners Handbook and the Market Regulation Handbook approved” for “Examiners’ Handbook most recently approved”.

Sec. 21.06.150. Examination reports.

1. 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.
2. 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.
3. 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.
4. 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 .
5. 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.
6. 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.
7. 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.

History. (§ 1 ch 120 SLA 1966; am § 4 ch 50 SLA 1990; am § 10 ch 67 SLA 1992; am § 7 ch 62 SLA 1995; am § 4 ch 38 SLA 2002)

Administrative Code. —

For insurance holding companies, see 3 AAC 21, art. 1.

For definition of standards and director’s authority for companies deemed to be in an impaired financial condition, see 3 AAC 21, art. 4.

For financial examination of and annual audit reporting requirements for admitted insurers, see 3 AAC 21, art. 7.

For viatical settlements, see 3 AAC 31, art. 3.

Sec. 21.06.160. Examination expense.

1. 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.
2. 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.
3. 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.

History. (§ 1 ch 120 SLA 1966; am § 5 ch 50 SLA 1990; am § 11 ch 67 SLA 1992; am § 5 ch 81 SLA 1997; am § 2 ch 80 SLA 2006; am § 4 ch 41 SLA 2016)

Administrative Code. —

For assigned risk pool, see 3 AAC 30, art. 1.

For viatical settlements, see 3 AAC 31, art. 3.

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in (a), inserted “and examinations of managing general agents, third-party administrators, reinsurance intermediary managers, motor vehicle service contract providers, or surplus lines brokers” following “AS 21.06.130 ”; added the third sentence.

Sec. 21.06.165. Immunity for director and others.

1. 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.
2. 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.
3. This section does not abrogate or modify the common law or other statutory privilege or immunity.
4. This section does not preclude liability for civil damages as a result of reckless, wilful, or intentional misconduct.

History. (§ 6 ch 50 SLA 1990; am § 12 ch 67 SLA 1992)

Revisor’s notes. —

Subsection (b) enacted as (d). Relettered in 1992, at which time former (b)-(c) were relettered as (c)-(d).

Sec. 21.06.170. Witnesses, evidence, and contempt.

1. 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.
2. 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.
3. Subpoenas of witnesses shall be served in the same manner as if issued from a court.
4. 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.
5. [Repealed, § 22 ch 149 SLA 1984.]

History. (§ 1 ch 120 SLA 1966; am § 22 ch 149 SLA 1984; am §§ 39, 40 ch 163 SLA 2004)

Sec. 21.06.180. Hearings.

1. The director may hold hearings for any purpose within the scope of this title considered to be necessary.
2. 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.
3. 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.

History. (§ 1 ch 120 SLA 1966; am § 41 ch 163 SLA 2004; am §§ 2, 3 ch 30 SLA 2009)

Administrative Code. —

For actuarial opinion and memorandum, see 3 AAC 21, art. 8.

For licensing requirements, see 3 AAC 23, art. 1.

Sec. 21.06.190. Stay of action.

1. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966; am § 4 ch 30 SLA 2009)

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.

History. (§ 1 ch 120 SLA 1966; am § 42 ch 163 SLA 2004)

Administrative Code. —

For health insurance marketed as medicare supplements, see 3 AAC 28, art. 5.

Sec. 21.06.210. Hearing procedure.

1. 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.
2. 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.
3. Formal rules of pleading or evidence need not be observed at a hearing.
4. 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.
5. 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 .
6. If the parties agree, the administrative law judge or director may conduct a hearing under this section by teleconference.
7. A witness at a hearing under this section may testify telephonically.
8. 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.

History. (§ 1 ch 120 SLA 1966; am § 13 ch 67 SLA 1992; am § 5 ch 38 SLA 2002; am §§ 43 — 47 ch 163 SLA 2004)

Sec. 21.06.220. Order on hearing.

1. 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.
2. 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 .
3. 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.

History. (§ 1 ch 120 SLA 1966; am § 48 ch 163 SLA 2004)

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.

History. (§ 1 ch 120 SLA 1966)

Cross references. —

For applicable rules of court, see App. R. 601-611.

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).

History. (§ 1 ch 120 SLA 1966)

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.

History. (§ 1 ch 120 SLA 1966; am §§ 1 — 6 ch 113 SLA 1974; am § 1 ch 206 SLA 1976; am § 2 ch 26 SLA 1985; am § 7 ch 50 SLA 1990; am § 1 ch 72 SLA 2000)

Administrative Code. —

For risk retention groups, see 3 AAC 24, art. 1.

For purchasing groups, see 3 AAC 24, art. 2.

For fees, see 3 AAC 31, art. 1.

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.

History. (§ 32 ch 87 SLA 1997)

Revisor’s notes. —

In 2004, “child support enforcement agency created in AS 25.27.010 ” was changed to “child support services agency created in AS 25.27.010 ” in this section in accordance with § 12(a), ch. 107, SLA 2004.

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

Sec. 21.07.005. Regulations relating to health care insurance policies.

1. 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.
2. 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.
3. 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.

History. (§ 5 ch 41 SLA 2016)

Effective dates. —

Section 5, ch. 41, SLA 2016, which enacted this section, makes this section effective October 16, 2016.

Sec. 21.07.010. Patient and health care provider protection.

1. 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
      1. 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;
      2. 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;
      3. 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;
      4. 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.
2. 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.
3. 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.

History. (§ 2 ch 99 SLA 2000; am § 2 ch 96 SLA 2004; am §§ 3, 4 ch 80 SLA 2006; am § 2 ch 23 SLA 2011)

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.

History. (§ 2 ch 99 SLA 2000; am § 5 ch 80 SLA 2006; am § 3 ch 23 SLA 2011; am § 6 ch 41 SLA 2016)

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in (2), deleted “room” following “for emergency”; inserted “that meet the requirements under 42 U.S.C. 300gg-19a(b)” preceding “if any coverage”; substituted “an” for “a medical”; inserted “medical condition” following “emergency” at the end of (2); deleted (4), (5), (6), (7), and (9); made related and stylistic changes.

Sec. 21.07.030. Choice of health care provider.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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:
      1. the end of the current policy or plan year;
      2. 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;
      3. 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.
7. The requirements of this section do not apply to medical care services covered by Medicaid.
8. 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.

History. (§ 2 ch 99 SLA 2000; am § 6 ch 80 SLA 2006; am §§ 4 — 9 ch 23 SLA 2011; am §§ 7 — 9 ch 41 SLA 2016)

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in (a), inserted “, including a pediatrician,” preceding “that is available”; in (e), inserted “and (h) of this section” following the first “subsection”; added (h).

Sec. 21.07.040. Confidentiality of managed care information. [Repealed, § 94(a) ch 23 SLA 2011.]

Sec. 21.07.050. External health care appeals.

History. [Repealed, § 65 ch 41 SLA 2016.]

Sec. 21.07.060. Qualifications of external appeal agencies.

History. [Repealed, § 65 ch 41 SLA 2016.]

Sec. 21.07.070. Limitation on liability of reviewers.

History. [Repealed, § 65 ch 41 SLA 2016.]

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
   1. apply medically based eligibility standards;
   2. use health care providers to determine access by a covered person;
   3. use health care providers in making a decision on an internal or external appeal; or
   4. 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.

History. (§ 2 ch 99 SLA 2000; am § 15 ch 80 SLA 2006; am § 18 ch 23 SLA 2011)

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.

History. (§ 2 ch 99 SLA 2000)

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.

History. (§ 2 ch 99 SLA 2000; am §§ 16 — 24, 49 ch 80 SLA 2006; am § 29 ch 30 SLA 2009; am §§ 19, 20, 94 ch 23 SLA 2011; am §§ 10 — 12, 64, 65 ch 41 SLA 2016)

Revisor’s notes. —

Reorganized in 2010 to reflect the repeal of former paragraphs (4), (6), and (19). In 2010, in paragraph (1), “AS 21.97.900 ” was substituted for “AS 21.90.900 ” to reflect the 2010 renumbering of AS 21.90.900 .

Reorganized in 2011 to reflect the addition of paragraph (4), enacted as (17), and the repeal of former paragraphs (7) — (9).

Reorganized in 2016 to reflect the addition of paragraph (3), enacted as paragraph (15), and the repeal of former paragraph (9).

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, rewrote (3) [now (4)], repealed former (9), rewrote (14), added (15) [now (3)]; effective January 1, 2017, repealed (1), (2) and (7) [now (8)].

Sec. 21.09.010. Certificate of authority required.

1. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966)

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
   1. the insurer does not market insurance in this state;
   2. the laws of the state of issue apply to this state’s residents covered under the policies; and
   3. the insurer complies with other requirements the director adopts by regulation to qualify for an exception under this paragraph.

History. (§ 1 ch 120 SLA 1966; am § 8 ch 50 SLA 1990; am § 22 ch 23 SLA 2011)

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.

History. (§ 1 ch 120 SLA 1966)

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.

History. (§ 1 ch 120 SLA 1966)

Collateral references. —

44 C.J.S., Insurance, §§ 124 to 127.

Sec. 21.09.050. Name of insurer.

1. 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.
2. 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.
3. 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.
4. 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.

History. (§ 1 ch 120 SLA 1966)

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.

History. (§ 1 ch 120 SLA 1966; am § 9 ch 50 SLA 1990; am § 3 ch 56 SLA 1996)

Sec. 21.09.070. Capital funds required of foreign insurers and new domestic insurers.

1. 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:
2. 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.
3. 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.
4. 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.
5. A life insurer may also grant annuities without additional capital or additional surplus.
6. 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.
7. 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.

Kind or Kindsof Insurance Basic Capital or Basic GuaranteeSurplus 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

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History. (§ 1 ch 120 SLA 1966; am § 2 ch 206 SLA 1976; am § 1 ch 5 SLA 1985; am §§ 10 — 13 ch 50 SLA 1990; am § 20 ch 21 SLA 1991; am § 1 ch 80 SLA 1991; am §§ 4, 5 ch 56 SLA 1996)

Sec. 21.09.080. Capital funds required of old domestic insurers.

1. 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) .
2. [Repealed, § 85 ch 50 SLA 1990.]
3. [Repealed, § 85 ch 50 SLA 1990.]
4. 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.

History. (§ 1 ch 120 SLA 1966; am § 3 ch 206 SLA 1976; am § 2 ch 5 SLA 1985; am §§ 14, 85 ch 50 SLA 1990; am § 21 ch 21 SLA 1991)

Sec. 21.09.090. Deposit requirement.

1. This section applies to all insurers.
2. 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:
      1. the largest deposit required by this title to be made by a foreign insurer transacting like kinds of insurance; or
      2. $300,000; which surplus shall for all purposes under this title be considered to be the capital or surplus of the insurer.
3. 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 .
4. All such deposits in this state are subject to the applicable provisions of AS 21.24.

History. (§ 1 ch 120 SLA 1966; am § 4 ch 206 SLA 1976; am § 11 ch 21 SLA 1985; am § 14 ch 67 SLA 1992)

Revisor’s notes. —

Paragraphs (b)(1) and (2) were enacted as (b)(2) and (3), respectively. Renumbered in 2000 to reflect the 1985 repeal of former (b)(1), at which time a cross-reference in subsection (c) was conformed accordingly.

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.

History. (§ 1 ch 120 SLA 1966)

Sec. 21.09.110. Application for certificate of authority.

1. 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 .
2. 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.

History. (§ 1 ch 120 SLA 1966; am § 3 ch 26 SLA 1985; am § 15 ch 50 SLA 1990; am §§ 8, 9 ch 62 SLA 1995; am § 5 ch 96 SLA 2004; am § 1 ch 88 SLA 2005)

Collateral references. —

36 Am. Jur. 2d, Foreign Corporations, § 170 et seq.

43 Am. Jur. 2d, Insurance, §§ 57, 58.

44 C.J.S., Insurance, § 129.

Sec. 21.09.120. Issuance, refusal, and ownership of certificate.

1. 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.
2. 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.
3. 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.

History. (§ 1 ch 120 SLA 1966; am § 7 ch 38 SLA 2002)

Sec. 21.09.130. Continuance, expiration, reinstatement, and amendment of certificate.

1. 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 .
2. 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.
3. 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.
4. The director may amend a certificate of authority at any time to accord with changes in the insurer’s charter of insuring powers.

History. (§ 1 ch 120 SLA 1966; am §§ 4, 5 ch 26 SLA 1985; am § 10 ch 62 SLA 1995; am § 8 ch 38 SLA 2002)

Administrative Code. —

For fees, see 3 AAC 31, art. 1.

Sec. 21.09.135. Voluntary surrender of certificate of authority.

1. 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
      1. accredited by the National Association of Insurance Commissioners at the time of the request for voluntary surrender; or
      2. not accredited by the National Association of Insurance Commissioners at the time of the request and agrees in writing to be subject to
         1. 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
         2. 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.
2. 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.

History. (§ 11 ch 62 SLA 1995)

Sec. 21.09.140. Mandatory revocation or suspension of certificate.

1. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966; am § 16 ch 50 SLA 1990)

Sec. 21.09.150. Suspension or revocation for violations and special grounds.

1. 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 .
2. 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.
3. 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.

History. (§ 1 ch 120 SLA 1966; am § 76 ch 21 SLA 2000; am § 1 ch 89 SLA 2000)

Sec. 21.09.160. Notice of suspension or revocation and effect upon agent’s authority.

1. 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.
2. 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.
3. 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.

History. (§ 1 ch 120 SLA 1966; am §§ 2, 3 ch 1 FSSLA 2005)

Revisor’s notes. —

The last part of (a) was formerly designated (c). Reorganized in 1984.

Sec. 21.09.170. Duration of suspension, insurer’s obligations, and reinstatement.

1. 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.
2. 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.
3. 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.
4. 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.
5. The authority of the agents in this state to represent the insurer is reinstated upon reinstatement of the insurer’s certificate of authority.
6. The director shall promptly notify an insurer’s agents in this state, as shown by records of the director, of any reinstatement.

History. (§ 1 ch 120 SLA 1966; am § 6 ch 96 SLA 2004)

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 .

History. (§ 15 ch 67 SLA 1992)

Administrative Code. —

For definition of standards and director’s authority for companies deemed to be in an impaired financial condition, see 3 AAC 21, art. 4.

For financial examination of and annual audit reporting requirements for admitted insurers, see 3 AAC 21, art. 7.

Sec. 21.09.180. Director attorney for service of process.

1. 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.
2. 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.
3. 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.

History. (§ 1 ch 120 SLA 1966)

Collateral references. —

36 Am. Jur. 2d, Foreign Corporations, §§ 259 to 262, 488, 492 to 494, 516, 528

43 Am. Jur. 2d, Insurance, §§ 72 to 79.

Attorney representing foreign corporation in litigation as its agent for service of process in unconnected actions or proceedings. 9 ALR3d 738.

Sec. 21.09.190. Service of process.

1. 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.
2. Process served upon the director and the copy forwarded as provided in this section constitutes service upon the insurer.

History. (§ 1 ch 120 SLA 1966; am § 6 ch 26 SLA 1985)

Sec. 21.09.200. Annual statement; audited financial report.

1. 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.
2. 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.
3. 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.
4. 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 .
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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 .
11. 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.
12. 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.

History. (§ 1 ch 120 SLA 1966; am § 1 ch 149 SLA 1984; am § 7 ch 26 SLA 1985; am §§ 17, 18 ch 50 SLA 1990; am § 12 ch 62 SLA 1995; am §§ 9 — 11 ch 38 SLA 2002; am § 1 ch 38 SLA 2007; am § 23 ch 23 SLA 2011)

Administrative Code. —

For record and financial reporting, see 3 AAC 21, art. 3.

For reinsurance, see 3 AAC 21, art. 6.

For financial examination of and annual audit reporting requirements for admitted insurers, see 3 AAC 21, art. 7.

For actuarial opinion and memorandum, see 3 AAC 21, art. 8.

For consumer credit insurance, see 3 AAC 28, art. 4.

For fees, see 3 AAC 31, art. 1.

For filing procedure for forms, rates, manuals, rating plans, and rules, see 3 AAC 31, art. 2.

Sec. 21.09.205. Quarterly statement.

1. 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.
2. A quarterly financial statement, if required, is due 45 days after the end of the quarter to which it applies.
3. 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.
4. 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.

History. (§ 19 ch 50 SLA 1990; am § 13 ch 62 SLA 1995; am § 12 ch 38 SLA 2002)

Administrative Code. —

For record and financial reporting, see 3 AAC 21, art. 3.

For reinsurance, see 3 AAC 21, art. 6.

Sec. 21.09.207. Statement of actuarial opinion and supporting documentation.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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
      1. Casualty Actuarial Society; or
      2. 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.

History. (§ 25 ch 80 SLA 2006)

Sec. 21.09.210. Tax on insurers.

1. 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.
2. 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.
3. [Repealed, § 48 ch 29 SLA 1987.]
4. 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.
5. 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.
6. 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.
7. 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.
8. 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 .
9. 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.
10. The provisions of AS 21.96.070 apply to a taxpayer who is required to pay a tax due under this section.
11. 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.
12. 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.
13. 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.
14. Premiums on which taxes are paid under (m)(2) of this section are not subject to AS 21.09.270 .
15. A qualified insurer is entitled to a premium tax credit under AS 21.55.220 .
16. In this section, “premium tax credit” means an amount that an insurer may use as an offset against a premium tax payment.

History. (§ 1 ch 120 SLA 1966; am § 29 ch 137 SLA 1982; am § 1 ch 118 SLA 1986; am § 41 ch 14 SLA 1987; am §§ 1, 48 ch 29 SLA 1987; am § 1 ch 23 SLA 1989; am §§ 16 — 18 ch 67 SLA 1992; am § 1 ch 21 SLA 1994; am § 14 ch 62 SLA 1995; am §§ 6, 7 ch 81 SLA 1997; am §§ 1, 2 ch 131 SLA 1998; am §§ 13 — 15 ch 38 SLA 2002; am §§ 7 — 11 ch 96 SLA 2004; am § 1 ch 108 SLA 2006; am § 15 ch 8 SLA 2011; am § 1 ch 13 SLA 2015; am § 1 ch 62 SLA 2018)

Delayed repeal of subsection (j) in 2025. —

Under secs. 2 and 37, ch. 61, SLA 2014, as amended by sec. 40, ch. 101, SLA 2018, subsection (j) of this section is repealed January 1, 2025.

Revisor's notes. —

Subsection (m) was enacted as (n). Relettered in 1998, at which time former subsection (m) was relettered as (n) [now (p)] and an internal reference in subsection (b) was conformed. Subsection (n) was enacted as (o) and relettered in 2004, at which time former (n) was relettered as (o). Subsection (o) was enacted as (p) and relettered in 2006, at which time former (o) was relettered as (p). In 2010, in subsection (j), “AS 21.96.070 and 21.96.075 ” was substituted for “AS 21.89.070 and 21.89.075 ” to reflect the 2010 renumbering of AS 21.89.070 and 21.89.075 .

Under sec. 1, ch. 62, SLA 2018, subsection (j) was repealed. Under sec. 40, ch. 101, SLA 2018, the delayed repeal of subsection (j) by sec. 37, ch. 61, SLA 2014, was extended to 2025. To reconcile these provisions, the repeal by ch. 62 was treated as an amendment of subsection (j) that deleted the reference to AS 21.96.075 , which was also repealed by sec. 1, ch. 62, SLA 2018. This treatment is in accord with the revisor's instruction provided in sec. 38(a), ch. 101, SLA 2018.

In 2025, under secs. 2 and 37, ch. 61, SLA 2014, as amended by sec. 40, ch. 101, SLA 2018, the amendment to subsection (j) by those sections to remove a reference to AS 21.96.070 will be treated as a repeal of subsection (j) due to the 2018 repeal of AS 21.96.075 and its removal from subsection (j) (see the earlier 2018 revisor's note). This treatment is in accord with the revisor's instruction provided in sec. 38(b), ch. 101, SLA 2018, which provides that “the revisor of statutes shall treat the removal of the cross references to AS 21.96.070 in AS 21.09.210(j) …as a repeal of...AS 21.09.210(j) ”.

Cross references. —

For premium tax on nonadmitted insurers and independently procured insurance, see AS 21.33.055 and 21.33.061 .

Administrative Code. —

For frequency and method of premium tax payments, see 3 AAC 21, art. 5.

For surplus lines — unauthorized insurers, see 3 AAC 25.

Effect of amendments. —

The 2015 amendment, effective August 9, 2015, substituted “0.08” for “one-tenth of one” in subsection (m)(2).

The 2018 amendment, effective January 1, 2019, in (j), following “AS 21.96.070 ” deleted “and 21.96.075 ”.

Editor's notes. —

Under sec. 2, ch. 13, SLA 2015, the 2015 amendment to paragraph (m)(2) applies to “policy year premiums for a calendar year that begins after December 31, 2015.”

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.

1. 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
      1. 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
      2. 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.
2. 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 .

History. (§ 1 ch 96 SLA 2006; am § 3 ch 30 SLA 2014)

Revisor’s notes. —

Enacted as AS 21.09.240 and renumbered in 2006.

Effect of amendments. —

The 2014 amendment, effective January 1, 2015, added (b).

Sec. 21.09.245. Required notice.

1. 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.
2. 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.
3. 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.

History. (§ 8 ch 81 SLA 1997; am § 24 ch 23 SLA 2011)

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.

History. (§ 25 ch 23 SLA 2011)

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.

History. (§ 1 ch 120 SLA 1966; am § 2 ch 29 SLA 1987; am § 15 ch 62 SLA 1995)

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.

History. (§ 1 ch 120 SLA 1966; am § 1 ch 41 SLA 1984; am § 2 ch 149 SLA 1984)

Sec. 21.09.270. Retaliation.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.

History. (§ 1 ch 120 SLA 1966; am § 3 ch 131 SLA 1998; am §§ 16, 17 ch 38 SLA 2002; am § 2 ch 38 SLA 2007)

Sec. 21.09.280. General agents. [Repealed, § 47 ch 51 SLA 1990.]

Sec. 21.09.290. Risk retention groups.

1. 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 AS 21.09.010 — 21.09.320 , limited to liability insurance only.
2. A risk retention group shall submit with its application for a certificate of authority
   1. the identity of
      1. the initial members of the risk retention group;
      2. all persons who organized the risk retention group;
      3. all persons who will provide administrative services to the risk retention group;
      4. 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.
3. 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.
4. 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.

History. (§ 16 ch 62 SLA 1995)

Sec. 21.09.300. Disclosure of material transactions.

1. 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.
2. 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.
3. 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.
4. 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
      1. construction or development of real property by or for the reporting insurer; or
      2. 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
      1. date of transaction;
      2. manner of acquisition or disposition;
      3. description of the assets involved;
      4. nature and amount of the consideration given or received;
      5. purpose of, or reason for, the transaction;
      6. manner by which the amount of consideration was determined;
      7. gain or loss recognized or realized as a result of the transaction; and
      8. names of persons from whom the assets were acquired or to whom the assets were disposed.
5. 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:
      1. 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;
      2. 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
      3. 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
      1. the effective date of the nonrenewal, cancellation, or revision;
      2. a description of the transaction with an identification of the initiator of the transaction;
      3. the purpose of, or reason for, the transaction; and
      4. if applicable, the identity of the replacement reinsurers.
6. 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.

History. (§ 16 ch 62 SLA 1995)

Cross references. —

For effect of subsection (c) on Alaska Rule of Civil Procedure 45, see § 114, ch. 62, SLA 1995 in the Temporary and Special Acts.

Sec. 21.09.310. Authorization of United States branches of alien insurers and general requirements.

1. 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.
2. 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
      1. the minimum basic capital or basic guarantee surplus and additional maintained surplus required under AS 21.09.070 ; or
      2. 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 .
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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
      1. 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;
      2. to withdraw funds deposited in another state under (A) of this paragraph if
      3. 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;
      4. to transfer assets to an official liquidator or rehabilitator under an order of a court of competent jurisdiction; or
      5. 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.
         1. 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
9. the written trust agreement requires prior written approval of the insurance supervising official of that other state;
   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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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
       1. unearned premiums on agent’s balances or uncollected premiums not more than 90 days past due;
       2. reinsurance on losses with authorized insurers, less unpaid reinsurance premiums;
       3. 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;
       4. 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;
       5. secured accrued retrospective premiums;
       6. if a life insurer,
          1. 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
          2. the net amount of uncollected and deferred premiums; and
       7. 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.
16. 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.
17. 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.
18. 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.

(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;

History. (§ 16 ch 62 SLA 1995; am § 18 ch 38 SLA 2002; am § 12 ch 96 SLA 2004)

Sec. 21.09.320. Maintenance of records; production; civil penalty.

1. 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.
2. 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.
3. 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.
4. 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.

History. (§ 9 ch 81 SLA 1997; am § 26 ch 23 SLA 2011; am §§ 13, 14 ch 41 SLA 2016)

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in (b), deleted “as required in AS 21.69.390(d) or” following “records” and “, whichever is longer” following “jurisdiction”; added (c) and (d).

Sec. 21.09.400. Corporate governance annual disclosure scope.

1. AS 21.09.400 — 21.09.460 do not prescribe or impose a corporate governance standard or internal procedure beyond that required under AS 10. Nothing in AS 21.09.400 — 21.09.460 limits the director’s authority or the rights or obligations of a third party.
2. AS 21.09.400 — 21.09.460 apply to an insurer domiciled in this state.

History. (§ 1 ch 12 SLA 2019)

Effective dates. —

Section 1, ch. 12, SLA 2019 makes this section effective July 20, 2019.

Sec. 21.09.410. Disclosure requirement.

1. An insurer, or an insurance group of which the insurer is a member, shall submit to the director not later than June 1 of each calendar year a corporate governance annual disclosure that contains the information described in AS 21.09.430(b) . In the event the director requests an insurer to submit a disclosure under (c) of this section and the insurer is a member of an insurance group, the insurer shall submit the disclosure to the lead state insurance regulator of the insurance group, under the laws of the lead state, in accordance with the procedures set out in the Financial Analysis Handbook adopted by the National Association of Insurance Commissioners.
2. A corporate governance annual disclosure must include a signature of the insurer’s or insurance group’s chief executive officer or corporate secretary attesting that, to the best of that individual’s belief and knowledge,
   1. the insurer has implemented the corporate governance practices required under AS 21.09.400 — 21.09.460 ; and
   2. a copy of the corporate governance annual disclosure has been provided to the insurer’s board of directors or the appropriate committee of the board.
3. An insurer not required to submit a corporate governance annual disclosure under (a) of this section shall submit a disclosure upon request of the director.
4. For purposes of completing a corporate governance annual disclosure, an insurer or insurance group, depending on the insurer’s or insurance group’s corporate governance structure, may provide information regarding corporate governance at
   1. the ultimate controlling parent level;
   2. an intermediate holding company level;
   3. the individual legal entity level; or
   4. the ultimate controlling parent level, an intermediate holding company level, and the individual legal entity level.
5. An insurer or insurance group
   1. is encouraged to make the corporate governance annual disclosure at the level at which
      1. the insurer’s or insurance group’s risk appetite is determined;
      2. the earnings, capital, liquidity, operations, and reputation of the insurer are overseen collectively and at which the supervision of those factors are coordinated and exercised; or
      3. legal liability for failure of general corporate governance duties would be placed;
   2. shall, if determining the level of reporting based on the criteria under this section,
      1. indicate which of the three criteria under (1) of this subsection was used to determine the level of reporting; and
      2. explain any subsequent change in the level of reporting.
6. A review of the corporate governance annual disclosure and any additional requests for information shall be made through the lead state in accordance with the procedures set out in the Financial Analysis Handbook adopted by the National Association of Insurance Commissioners.
7. An insurer or insurance group providing information substantially similar to the information required under AS 21.09.400 — 21.09.460 in other documents provided to the director, including proxy statements filed in conjunction with Form B requirements under regulations of the division, or other state or federal filings provided to the division, is not required to duplicate that information in the corporate governance annual disclosure; however, the insurer or insurance group shall include in the disclosure a cross reference of the document in which the information is included.

History. (§ 1 ch 12 SLA 2019)

Effective dates. —

Section 1, ch. 12, SLA 2019 makes this section effective July 20, 2019.

Sec. 21.09.420. Regulations and orders.

To carry out the provisions of AS 21.09.400 — 21.09.460 , the director may

1. adopt regulations, including regulations substantially similar to the regulations under the National Association of Insurance Commissioners’ Corporate Governance Annual Disclosure Model Regulation; and
2. issue orders necessary to implement the provisions.

History. (§ 1 ch 12 SLA 2019)

Effective dates. —

Section 1, ch. 12, SLA 2019 makes this section effective July 20, 2019.

Sec. 21.09.430. Contents of corporate governance annual disclosure.

1. An insurer or insurance group may have discretion in responding to a corporate governance annual disclosure inquiry if the insurer’s or insurance group’s disclosure contains the material necessary for the director to gain an understanding of the insurer’s or insurance group’s corporate governance structure, policies, and practices. The director may request additional information the director determines necessary for the director to have a clear understanding of the insurer’s or insurance group’s corporate governance policies, reporting or information system, or controls implementing those policies.
2. An insurer or insurance group shall prepare a corporate governance annual disclosure consistent with regulations adopted by the director under AS 21.09.420 . An insurer or insurance group shall maintain documents and supporting information used in preparing the insurer’s or insurance group’s disclosure and shall make the documents and supporting information available upon examination or request of the director.

History. (§ 1 ch 12 SLA 2019)

Effective dates. —

Section 1, ch. 12, SLA 2019 makes this section effective July 20, 2019.

Sec. 21.09.440. Confidentiality.

Documents, materials, or other information, including a corporate governance annual disclosure, in the possession or control of the division that are obtained by, created by, or disclosed to the director or any person under AS 21.09.400 — 21.09.460 are confidential and subject to the provisions of AS 21.06.060 .

History. (§ 1 ch 12 SLA 2019)

Effective dates. —

Section 1, ch. 12, SLA 2019 makes this section effective July 20, 2019.

Sec. 21.09.450. Agreements with National Association of Insurance Commissioners and third-party consultants.

1. The director may retain, at the insurer’s or insurance group’s expense and as consistent with this section, third-party consultants, including attorneys, actuaries, accountants, and other experts not otherwise a part of the director’s staff, as may be reasonably necessary to assist the director in reviewing the insurer’s or insurance group’s corporate governance annual disclosure and related information or the insurer’s or insurance group’s compliance with AS 21.09.400 — 21.09.460 .
2. A person retained under (a) of this section is under the direction and control of the director and acts in a purely advisory capacity.
3. As part of the retention process, a third-party consultant must verify to the director in writing, with notice to the insurer or insurance group, that the consultant is free of a conflict of interest, has internal procedures in place to monitor compliance with a conflict, and will comply with the confidentiality standards and requirements under AS 21.09.400 — 21.09.460 .
4. A written agreement with the National Association of Insurance Commissioners, a third-party consultant, or both, governing sharing and use of information provided under AS 21.09.400 — 21.09.460 must contain the following provisions and expressly require the written consent of the insurer or insurance group before making information under AS 21.09.400 — 21.09.460 public:
   1. a provision stating that the National Association of Insurance Commissioners and third-party consultants are subject to the same confidentiality standards and requirements as the director under AS 21.22.120 and any other relevant law;
   2. specific procedures and protocols for maintaining the confidentiality and security of information related to corporate governance annual disclosures that is shared with the National Association of Insurance Commissioners or the third-party consultant under AS 21.09.400 — 21.09.460;
   3. procedures and protocols that ensure the National Association of Insurance Commissioners shares only with other state regulators from states in which the insurer or insurance group has domiciled insurers; the agreement must provide that the recipient agrees in writing to maintain the confidentiality of the documents, materials, or other information related to corporate governance annual disclosures and has verified in writing the legal authority to maintain confidentiality;
   4. a provision specifying that ownership of information related to corporate governance annual disclosures that is shared with the National Association of Insurance Commissioners or a third-party consultant remains with the division, and the use of the information by the National Association of Insurance Commissioners or the third-party consultant is subject to the direction of the director;
   5. a provision that prohibits the National Association of Insurance Commissioners or the third-party consultant from storing the information shared under AS 21.09.400 — 21.09.460 in a permanent database after the underlying analysis is completed;
   6. a provision requiring the National Association of Insurance Commissioners or the third-party consultant to provide prompt notice to the director and the insurer or insurance group regarding any subpoena, request for disclosure, or request for production of information related to the insurer’s or insurance group’s corporate governance annual disclosure;
   7. a requirement that the National Association of Insurance Commissioners or the third-party consultant consent to intervention by an insurer or insurance group in any judicial or administrative action in which the National Association of Insurance Commissioners or the third-party consultant may be required to disclose confidential information about the insurer or insurance group shared with the National Association of Insurance Commissioners or the third-party consultant under AS 21.09.400 — 21.09.460.

History. (§ 1 ch 12 SLA 2019)

Effective dates. —

Section 1, ch. 12, SLA 2019 makes this section effective July 20, 2019.

Sec. 21.09.460. Penalties.

Each day an insurer or insurance group fails, without just cause, to file the corporate governance annual disclosure in the time required under AS 21.09.410(a) , the insurer or insurance group shall pay $1,000, not to exceed $365,000. The director may reduce the penalty under this section if the insurer or insurance group demonstrates to the director that the imposition of the penalty is a financial hardship to the insurer or insurance group.

History. (§ 1 ch 12 SLA 2019)

Effective dates. —

Section 1, ch. 12, SLA 2019 makes this section effective July 20, 2019.

Sec. 21.12.010. Limit of risk.

1. 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.
2. 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.
3. 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.
4. As to alien insurers, this section relates only to risks and surplus to policyholders of the insurer’s United States branch.
5. 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.
6. 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.

History. (§ 1 ch 120 SLA 1966; am § 6 ch 56 SLA 1996)

Sec. 21.12.020. Reinsurance credit allowed a domestic ceding insurer.

1. Credit for reinsurance transactions is allowed a domestic ceding insurer as either an asset or a deduction from liability because of reinsurance ceded only when the reinsurer meets the requirements of (1) — (7) of this subsection. The director may, by regulation adopted under (g)(2) of this section, specify additional requirements relating to, or setting out, the valuation of assets or reserve credits, the amount and forms of security supporting reinsurance arrangements described in (g)(2) of this section, and the circumstances under which credit will be reduced or eliminated. Credit is allowed under (1) — (3) of this subsection 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. Credit is allowed under (3) or (4) of this subsection only if the applicable requirements in (b) of this section have been satisfied. Credit is allowed when the reinsurance is ceded to an assuming insurer that
   1. is licensed to transact insurance or reinsurance in this state;
   2. is accredited by the director as a reinsurer in this state; an accredited reinsurer is one that
      1. files with the director evidence of submission to this state’s jurisdiction, submits to this state’s authority to examine its books and records, 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;
      2. demonstrates to the satisfaction of the director that it has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers; an assuming insurer is considered to meet the requirement at the time of application if the assuming insurer maintains at least $20,000,000 in policyholder surplus and the assuming insurer’s accreditation has not been denied by the director within 90 days after application to the director; and
      3. files annually with the director a copy of the reinsurer’s annual statement filed with the insurance supervisory official of the reinsurer’s state of domicile and a copy of the reinsurer’s most recent audited financial statement;
   3. 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, maintains a policyholder surplus of at least $20,000,000, and 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. maintains a trust fund in a qualified United States financial institution for the payment of the valid claims of the assuming insurer’s United States domiciled ceding insurers, and their assigns and successors; credit for reinsurance under this paragraph shall be granted only if the following requirements are met:
      1. the trust and each amendment to the trust is 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 is filed with the insurance supervisory official of every state in which the beneficiaries of the trust are domiciled; the trust instrument provides that contested claims are valid and enforceable upon the final order of any court of competent jurisdiction in the United States; the trust vests 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; the trust remains in effect for so long as the assuming insurer has outstanding liabilities due under the reinsurance agreements subject to the trust;
      2. on or before March 1 of each year, the trustees report in writing to the director on the balance of the trust, list the trust’s investments at the end of the preceding year, and certify the date of termination of the trust, if so planned, or certify that the trust does not expire before the following December 31;
      3. in the case of a single assuming insurer, the trust consists 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, except as provided in (D) of this paragraph, the assuming insurer maintains 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; at any time after the assuming insurer permanently discontinues underwriting new business secured by a trust for not less than three years, the insurance supervisory official with principal regulatory oversight of the trust may authorize a reduction in the required trusteed surplus if, based on an assessment of the risk, the insurance supervisory official finds that the new required surplus level is adequate for the protection of United States domiciled ceding insurers, policyholders, and claimants in light of reasonably foreseeable adverse loss development; the risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and must consider all material risk factors, including, when applicable, the lines of business involved, the stability of the incurred loss estimates, and the effect of the surplus requirements on the assuming insurer’s liquidity or solvency; the minimum required trusteed surplus may not be reduced to an amount less than 30 percent of the assuming insurer’s liabilities attributable to reinsurance ceded by United States domiciled ceding insurers covered by the trust;
      4. in the case of a group, including incorporated and individual unincorporated insurers,
         1. the trust consists of, for reinsurance ceded under the reinsurance agreements with an inception, amendment, or renewal date on or after January 1, 1993, a trusteed account in an amount not less than the respective insurers’ several liabilities attributable to business ceded by United States domiciled ceding insurers to any insurer of the group, for reinsurance ceded under reinsurance agreements with an inception date on or before December 31, 1992, and not amended or renewed after that date, notwithstanding the other provisions of this section, a trusteed account not less than the respective insurers’ several insurance and reinsurance liabilities attributable to business written in the United States, and, in addition to an applicable trust described in this sub-subparagraph, trust assets representing the group’s liabilities attributable to business ceded by United States domiciled ceding insurers 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; and
         2. the incorporated members of the group are not 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 the unincorporated members; within 90 days after the group’s 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;
      5. in the case of a group of incorporated insurers under common administration that has continuously transacted an insurance business outside the United States for at least three years immediately before making application for accreditation and that has aggregate policyholders’ surplus of $10,000,000,000 or more, the trust consists 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
         1. maintains a joint trustee surplus, of which $100,000,000 is 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;
         2. not later than 90 days after the group’s financial statements are due to be filed with the group’s domiciliary regulator, ensures each member of the group makes 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 the member’s independent certified public accountant or an accountant holding a substantially equivalent designation as determined by the director; and
         3. submits to examination of its books and records by the director and bears the expense of the examination;
      6. the assuming insurer 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;
   5. is eligible for certification by the director as a reinsurer in this state if the assuming insurer secures its obligations under the following requirements:
      1. the assuming insurer must
         1. be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction;
         2. maintain minimum capital and surplus, or its equivalent, in an amount set out in regulations adopted by the director;
         3. maintain financial strength ratings from two or more rating agencies as required under regulations adopted by the director;
         4. agree to submit to the jurisdiction of this state and agree to provide security for 100 percent of the assuming insurer’s liabilities attributable to reinsurance ceded by United States domiciled ceding insurers if the assuming insurer resists enforcement of a final United States judgment;
         5. agree to meet applicable information filing requirements as determined by the director, both with respect to an initial application for certification and on an ongoing basis; and
         6. satisfy other requirements for certification as
      2. in addition to satisfying the requirements under (A) of this paragraph, an association, including an incorporated underwriter and an individual unincorporated underwriter,
         1. shall satisfy the association’s minimum capital and surplus requirements through the capital and surplus equivalents, net of liabilities, of the association and the association’s members, which must include a joint central fund that may be applied to any unsatisfied obligation of the association or a member of the association, in an amount determined by the director to provide adequate protection;
         2. may not engage in any business other than underwriting as a member of the association and be subject to the same level of regulation and solvency control by the association’s domiciliary regulator as are the unincorporated members; and
         3. shall, not later than 90 days after the association’s financial statements are filed with the association’s domiciliary regulator, provide to the director an annual certification by the association’s domiciliary regulator of the solvency of each underwriter member, or, if a certification is unavailable, financial statements prepared by independent public accountants of each underwriter member of the association;
      3. the director shall create and publish a list of qualified jurisdictions under which an assuming insurer licensed and domiciled in a qualifying jurisdiction is eligible to be considered for certification by the director as a certified reinsurer, subject to the following provisions:
         1. to determine whether the domiciliary jurisdiction of an alien assuming insurer is eligible to be recognized as a qualified jurisdiction, the director shall evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and the extent of reciprocal recognition afforded by the jurisdiction to reinsurers licensed and domiciled in the United States; a qualified jurisdiction shall agree to share information and cooperate with the director with respect to all certified reinsurers domiciled within that jurisdiction; the director may not recognize a jurisdiction as a qualified jurisdiction if the director determines that the jurisdiction does not adequately and promptly enforce final United States judgments and arbitration awards; the director may consider additional factors when making an eligibility determination under this subparagraph;
         2. the director shall consider the list of qualified jurisdictions published through the committee process of the National Association of Insurance Commissioners; if the director approves as qualified a jurisdiction that does not appear on the list of qualified jurisdictions, the director shall provide thoroughly documented justification for the approval under criteria set out in regulations adopted by the director;
         3. the director shall recognize a United States jurisdiction that meets the requirement for accreditation under the National Association of Insurance Commissioners financial standards and accreditation program as a qualified jurisdiction;
         4. the director, in lieu of revocation, may suspend a reinsurer’s certification indefinitely if the certified reinsurer’s domiciliary jurisdiction ceases to be a qualified jurisdiction;
      4. the director shall assign a rating to each certified reinsurer, giving due consideration to the financial strength ratings that have been assigned by rating agencies considered acceptable under regulations adopted by the director;
      5. a certified reinsurer shall secure obligations assumed from United States domiciled ceding insurers under this subsection at a level consistent with the reinsurer’s rating, as specified under regulations adopted by the director and subject to the following requirements:
         1. for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a form acceptable to the director and consistent with (c) of this section or in a multibeneficiary trust under (4) of this subsection, except as otherwise provided in this paragraph;
         2. if a certified reinsurer maintains a trust to secure fully the reinsurer’s obligations subject to (4) of this subsection and chooses to secure its obligations incurred as a certified reinsurer in the form of a multibeneficiary trust, the certified reinsurer shall maintain separate trust accounts for its obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted under this subsection or comparable laws of other United States jurisdictions and for its obligations subject to (4) of this subsection; a certified reinsurer shall, as a condition of the grant of certification under this paragraph, bind itself, by the language of the trust and agreement with the insurance supervisory official with principal regulatory oversight of the trust account, to use the remaining surplus of a terminated trust account for a deficiency in any other trust account of the certified reinsurer;
         3. the minimum trusteed surplus requirements under (4) of this subsection are not applicable to a multibeneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this subsection, except that the multibeneficiary trust shall maintain a minimum trusteed surplus of $10,000,000;
         4. if the obligations incurred by a certified reinsurer under this subsection are insufficiently secured, the director shall reduce the allowable credit by an amount proportionate to the deficiency and may impose further reductions in allowable credit if the director finds that there is a material risk that the certified reinsurer’s obligations will not be paid in full when due;
         5. for purposes of this subparagraph, a certified reinsurer whose certification is terminated for any reason is considered to be a certified reinsurer that is required to secure 100 percent of the reinsurer’s obligations; however, if the director continues to assign a higher rating as permitted under other provisions of this section, the requirement to secure 100 percent of the reinsurer’s obligations does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended; in this sub-subparagraph, “terminated” means revoked, suspended, voluntarily surrendered, or in inactive status;
      6. if an applicant for certification is certified as a reinsurer in a jurisdiction accredited by the National Association of Insurance Commissioners, the director may defer to that jurisdiction’s certification and to the rating assigned to the applicant by the jurisdiction; the assuming insurer shall be considered to be a certified reinsurer in this state;
      7. a certified reinsurer that ceases to assume new business in this state may request to maintain its certification in inactive status in order to continue to qualify for a reduction in security for its in-force business; an inactive certified reinsurer shall continue to comply with all applicable requirements of this subsection, and the director shall assign a rating that takes into account, if relevant, the reasons the reinsurer is not assuming new business;
   6. meets the following conditions:
      1. the assuming insurer shall have its head office or be domiciled in a reciprocal jurisdiction;
      2. the assuming insurer shall have and maintain on an ongoing basis minimum capital and surplus, or its equivalent, calculated according to the methodology of its domiciliary jurisdiction, in an amount set out in regulation; if the assuming insurer is an association, including incorporated and individual unincorporated underwriters, the assuming insurer shall have and maintain on an ongoing basis minimum capital and surplus, net of liabilities, calculated according to the methodology of its domiciliary jurisdiction, and a central fund containing a balance in an amount set out in regulation;
      3. the assuming insurer shall have and maintain on an ongoing basis a minimum solvency or capital ratio in an amount set out in regulation; if the assuming insurer is an association, including incorporated and individual unincorporated underwriters, the assuming insurer shall have and maintain on an ongoing basis a minimum solvency or capital ratio in the reciprocal jurisdiction where the assuming insurer has its head office or is domiciled and licensed;
      4. the assuming insurer shall agree to and provide adequate assurance to the director in a form specified by the director in regulation as follows:
         1. the assuming insurer shall provide prompt written notice and explanation to the director if it falls below the minimum requirements described in (B) or (C) of this paragraph, or if any regulatory action is taken against it for serious noncompliance with applicable law;
         2. the assuming insurer shall consent in writing to the jurisdiction of the courts of this state and to the appointment of the director as agent for service of process; the director may require that consent for service of process be provided to the director and included in each reinsurance agreement; nothing in this sub-subparagraph shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent the agreements are unenforceable under applicable insolvency or delinquency laws;
         3. the assuming insurer shall consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer or its legal successor, that have been declared enforceable in the jurisdiction where the judgment was obtained;
         4. each reinsurance agreement must include a provision requiring the assuming insurer to provide security in an amount equal to 100 percent of the assuming insurer’s liabilities attributable to reinsurance ceded under that agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its resolution estate; and
         5. the assuming insurer shall confirm that it is not presently participating in any solvent scheme of arrangement that involves this state’s ceding insurers and agree to notify the ceding insurer and the director and to provide security in an amount equal to 100 percent of the assuming insurer’s liabilities to the ceding insurer, should the assuming insurer enter into a solvent scheme of arrangement; a security must be in a form consistent with the provisions of (5) of this subsection and (c) of this section and as specified by the director in regulation;
      5. the assuming insurer or its legal successor shall provide, if requested by the director, on behalf of itself and any legal predecessors, certain documentation to the director as specified by the director in regulation;
      6. the assuming insurer shall maintain a practice of prompt payment of claims under reinsurance agreements under criteria set out in regulation;
      7. the assuming insurer’s supervisory authority shall confirm to the director on an annual basis as of December 31 of the preceding year or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, that the assuming insurer complies with the requirements in (B) and (C) of this paragraph;
      8. nothing in this paragraph precludes an assuming insurer from providing the director with information on a voluntary basis;
   7. does not meet the requirements of (1) — (6) 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.
2. If the assuming insurer is not licensed, accredited, or certified to transact insurance or reinsurance in this state, the credit permitted under (a)(4) and (5) of this section is not 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 a 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; 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; nothing in this subsection is 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.
3. An asset or a reduction from liability, for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of (a), (b), and (d) — (f) of this section, shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer. In addition, the director may adopt by regulation under (g)(2) of this section specific additional requirements relating to the valuation of assets or reserve credits, the amount and forms of security supporting reinsurance arrangements described in (g)(2) of this section, and the circumstances under which credit will be reduced or eliminated. 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, including those exempted from filing as defined by the purposes and procedures manual of the Securities Valuation Office, and those 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; in this paragraph, “qualified United States financial institution” means an institution that
      1. 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;
      2. is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks and trust companies; and
      3. 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 considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit are acceptable to the director; or
   4. other security acceptable to and approved in advance by the director.
4. If an assuming insurer does not meet the requirements under this section, the credit permitted under (a)(1), (2), or (3) of this section is not allowed unless the assuming insurer agrees, in the trust agreements, to the following conditions:
   1. notwithstanding any other provision in the trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required under (a)(4) or (5) of this section, or if the grantor of the trust is declared insolvent or is placed into receivership, rehabilitation, liquidation, or similar proceedings under the laws of the state or country of domicile, the trustee shall comply with an order of the insurance supervisory official with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the insurance supervisory official with regulatory oversight over the trust all of the assets of the trust fund;
   2. the assets shall be distributed by, and all claims shall be filed with and valued by, the insurance supervisory official with regulatory oversight over the trust under the laws of the state in which the trust is domiciled that are applicable to the liquidation of a domestic insurer;
   3. if the insurance supervisory official with regulatory oversight over the trust determines that the assets or report of the assets of the trust fund are not necessary to satisfy the claims of the United States domestic ceding insurers of the grantor of the trust, the insurance supervisory official with regulatory oversight over the trust shall return the assets or part of the assets to the trustee for distribution under the trust agreement;
   4. the grantor of the trust shall waive any right otherwise available to it under United States law that is inconsistent with this subsection.
5. The director may suspend or revoke a reinsurer’s accreditation or certification under the following procedures if the accredited or certified reinsurer ceases to meet the requirements for accreditation or certification:
   1. the director shall give the reinsurer notice and opportunity for a hearing under AS 21.06.170 — 21.06.230 ; the suspension or revocation may not take effect before the director issues an order on the hearing, unless the
      1. reinsurer waives the right to a hearing;
      2. director’s order is based on a regulatory action by the reinsurer’s domiciliary jurisdiction or the voluntary surrender or termination of the reinsurer’s eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer under (a)(5)(F) of this section; or
      3. director finds that an emergency requires immediate action and a court of competent jurisdiction has not stayed the director’s action;
   2. while a reinsurer’s accreditation or certification is suspended, a reinsurance contract issued or renewed by the reinsurer on or after the effective date of the suspension does not qualify for credit, except to the extent that the reinsurer’s obligations under the contract are secured under (c) of this section; if a reinsurer’s accreditation or certification is revoked, no credit for reinsurance may be granted after the effective date of the revocation except to the extent that the reinsurer’s obligations under the contract are secured under (a)(5)(E) or (c) of this section.
6. A ceding insurer shall take steps to
   1. manage its reinsurance recoverables proportionate to its own book of business; a domestic ceding insurer shall notify the director not later than 30 days after the reinsurance recoverables from any single assuming insurer or group of affiliated assuming insurers exceeds 50 percent of the domestic ceding insurer’s last reported surplus to policyholders or the domestic ceding insurer determines that reinsurance recoverables from any single assuming insurer or group of affiliated assuming insurers is likely to exceed that limit; the notification must demonstrate that the exposure is safely managed by the domestic ceding insurer; and
   2. diversify its reinsurance program; a domestic ceding insurer shall notify the director not later than 30 days after ceding to any single assuming insurer or group of affiliated assuming insurers more than 20 percent of the ceding insurer’s gross written premium in the preceding calendar year or the domestic ceding insurer determines that the reinsurance ceded to any single assuming insurer or group of affiliated assuming insurers is likely to exceed that limit; the notification must demonstrate that the exposure is safely managed by the domestic ceding insurer.
7. The director may adopt regulations
   1. to implement this section; and
   2. relating to reinsurance arrangements, subject to the following provisions:
      1. a regulation adopted under this paragraph may apply only to reinsurance relating to
         1. a life insurance policy with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits;
         2. a universal life insurance policy with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guaranteed period;
         3. a variable annuity with guaranteed death or living benefits;
         4. a long-term care insurance policy; or
         5. other life insurance, health insurance, and annuity products for which the National Association of Insurance Commissioners adopts model regulatory requirements with respect to credit for reinsurance;
      2. a regulation adopted under (A)(i) or (ii) of this paragraph applies to a treaty containing a policy issued (i) on or after January 1, 2015, and (ii) before January 1, 2015, if the risk pertaining to the policy is ceded, in whole or in part, in connection with the treaty on or after January 1, 2015; in this subparagraph, “treaty” means a contract in which a reinsurance company agrees to accept and an insurance company agrees to cede all of a particular type of risk within a specific class of insurance policies;
      3. the director may adopt a regulation under this paragraph to require a ceding insurer, in calculating the amounts or forms of security required to be held under regulations adopted under the authority of this paragraph, to use the edition of the valuation manual adopted by the National Association of Insurance Commissioners in effect on the date on which the calculation is made, to the extent applicable;
      4. a regulation adopted under this paragraph does not apply to cessions to an assuming insurer that is certified in this state, meets the conditions set out in (a)(6) of this section, or meets the following criteria:
         1. maintains at least $250,000,000 in capital and surplus as determined under the most recent edition of the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, including the effect of any permitted or prescribed practices; and
         2. is licensed in not fewer than 26 states, or licensed in not fewer than 10 states and licensed or accredited in a total of not fewer than 35 states;
      5. nothing in this paragraph limits the director’s authority to adopt regulations under (1) of this subsection.
8. The director shall consider the list of reciprocal jurisdictions published through the National Association of Insurance Commissioners committee process in determining a reciprocal jurisdiction and has the discretion to defer to the list. The director may approve a jurisdiction not on the list in accordance with criteria developed under regulations adopted by the director. The director may remove a jurisdiction from the list of reciprocal jurisdictions upon determination that the jurisdiction no longer meets the requirements of a reciprocal jurisdiction in accordance with a process set out in regulation by the director. Upon removal of a reciprocal jurisdiction from the list, credit for reinsurance ceded to an assuming insurer that has a home office or is domiciled in that jurisdiction shall be allowed if otherwise allowed under this section. The director shall timely create and publish a list of assuming insurers that have satisfied the conditions set out in this subsection and to which cessions shall be granted credit in accordance with (a) of this section. The director may add an assuming insurer to a list if a National Association of Insurance Commissioners accredited jurisdiction has added the assuming insurer to a list of assuming insurers or, if upon initial eligibility, the assuming insurer submits the information to the director as required under (a)(6)(D) of this section and complies with any additional requirements the director may impose by regulation. If the director determines that an assuming insurer no longer meets one or more of the requirements of (a)(6) of this section, the director may revoke or suspend the eligibility of the assuming insurer under (a)(6) of this section in accordance with procedures set out in regulation. While an assuming insurer’s eligibility is suspended, a reinsurance agreement issued, amended, or renewed after the effective date of the suspension does not qualify for credit except to the extent that the assuming insurer’s obligations under the contract are secured in accordance with (c) of this section. If an assuming insurer’s eligibility is revoked, a credit for reinsurance may not be granted after the effective date of the revocation with respect to any reinsurance agreement entered into by the assuming insurer, including a reinsurance agreement entered into before the date of revocation, except to the extent that the assuming insurer’s obligations under the contract are secured in a form acceptable to the director and consistent with (c) of this section. Upon entry of an order of rehabilitation, liquidation, or conservation against the ceding insurer, the supervising court shall require an assuming insurer under (a)(6) of this section to post 100 percent security for the benefit of the ceding insurer or its estate. Nothing in this subsection shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree on requirements for security or other terms in that reinsurance agreement consistent with this section. Credit under (a)(6) of this section may be taken only for reinsurance agreements entered into, renewed, or amended on or after the date the director has determined that the assuming insurer is eligible for credit, and may not be taken for reinsurance of losses incurred or reserves reported before that date. Credit under (a)(6) of this section may not apply to reinsurance agreements entered into, to losses incurred, or to reserves posted before application under (a)(6) of this section.
9. In this section, unless otherwise indicated,
   1. “qualified United States financial institution” means an institution that is
      1. 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
      2. regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks and trust companies;
   2. “reciprocal jurisdiction” means a jurisdiction that
      1. is not a United States jurisdiction that is subject to an in- force covered agreement with the United States, each within its legal authority, or in the case of a covered agreement between the United States and the European Union, is a member state of the European Union; in this subparagraph, “covered agreement” is an agreement entered into under 31 U.S.C. 313 — 314 (Dodd-Frank Wall Street Reform and Consumer Protection Act) that is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this state or for allowing the ceding insurer to recognize;
      2. is a United States jurisdiction that meets the requirements for accreditation under the National Association of Insurance Commissioners financial standards and accreditation program; or
      3. is a qualified jurisdiction, as determined by the director under (a)(5)(C) of this section, that is not otherwise described in (A) and (B) of this paragraph and that meets certain additional requirements, consistent with the terms and conditions of in-force covered agreements, as specified by the director in regulation;
   3. “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.

required by the director;

History. (§ 1 ch 120 SLA 1966; am §§ 20, 21 ch 50 SLA 1990; am § 22 ch 21 SLA 1991; am §§ 19 — 22 ch 67 SLA 1992; am §§ 17, 18 ch 62 SLA 1995; am § 10 ch 81 SLA 1997; am §§ 13, 14 ch 96 SLA 2004; am § 27 ch 23 SLA 2011; am §§ 1 —5, 19. ch 56 SLA 2018; am §§ 1 — 4 ch 11 SLA 2021)

Revisor’s notes. —

Subsection (i) was formerly AS 21.12.120 . Renumbered as (g) in 1991 and as (i) in 1993, at which time former (h) and (i) were relettered as (g) and (h), respectively. In 1991, the introductory clause of (i) was rewritten to reflect the reorganization and a manifest error in an internal reference in § 21, ch. 50, SLA 1990, which enacted former AS 21.12.120 , was corrected.

Subsections (d) — (g) were enacted as (j) — (m); relettered in 2018, at which time subsection (i) was relettered as (h) [now (i)] and internal cross references in subsections (a) and (c) were conformed to the relettering.

In 2021, the paragraphs in subsection (i) were numbered to maintain alphabetical order.

Subsection (h) was enacted as (i). Relettered in 2021, at which time former subsection (h) was relettered as subsection (i).

Effect of amendments. —

The 2018 amendment, effective July 14, 2018, rewrote (a); in (b), in the introductory language, inserted “, or certified” following “accredited”, “under (a)(4) and (5)” following “credit permitted”, substituted “section is not allowed” for “section may not be allowed”, and made related changes, in (b)(1), substituted “a state” for “any state” following “competent jurisdiction in”, deleted “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;” near the end, in (b)(2), added “, nothing in this subsection is 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” at the end; in (c), in the first sentence, substituted “An asset or a reduction” for “A reduction” at the beginning, inserted “by a domestic insurer” following “reinsurance ceded”, inserted “, (b), and (i) — ( l )” [now “, (b), and (d) — (f)”] following “requirements of (a)”, added the second sentence, in (b)(2), inserted “, including those exempted from filing as defined by the purposes and procedures manual of the Securities Valuation Office, and those” following “Insurance Commissioners”, at the end of the introductory language in (b)(3), added “in this paragraph, “qualified United States financial institution” means an institution that”, added (b)(3)(A) — (C); repealed (d) — (h); in (i), added “unless otherwise indicated,” at the end of the introductory language, added (i)(1), and made related changes; added (j) — (m) [now (d) — (g)].

The 2021 amendment, in (a), in the introductory language, substituted “(1) – (7)” for “(1) – (6)” following “meets the requirements of”, added (a)(6) and made a related change, in (a)(7), substituted “(1) – (6)” for “(1) – (5)” following “meet the requirements of”; in (g), in the introductory language of (g)(2)(D), inserted “, meets the conditions set out in (a)(6) of this section,” following “certified in this state”; added (h)(3) [now (i)(2)]; added (i) [now (h)].

Administrative Code. —

For reinsurance, see 3 AAC 21, art. 6.

For fees, see 3 AAC 31, art. 1.

Editor’s notes. —

In sub-subparagraph (a)(5)(C)(iii), the reference to “the National Association of Insurance Commissioners financial standards and accreditation program” may refer to the National Association of Insurance Commissioners financial regulation standards and accreditation program.

Legislative history reports. —

For governor's transmittal letter for ch. 56, SLA 2018 (HB 401), which amended this section, see 2018 House Journal 2601.

For governor’s transmittal letter for ch. 11, SLA 2021 (SB 87), amending (a) and (i) of this section, and adding new subsection (h), see 2021 Senate Journal 290 — 291.

Collateral references. —

43 Am. Jur. 2d, Insurance, §§ 1809 to 1827.

46 C.J.S., Insurance, §§ 2051 to 2068.

Sec. 21.12.025. Assumption reinsurance.

1. 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.
2. 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.

History. (§ 15 ch 96 SLA 2004)

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.

History. (§ 1 ch 120 SLA 1966)

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.

History. (§ 1 ch 120 SLA 1966)

Collateral references. —

43 Am. Jur. 2d, Insurance, § 5.

44 C.J.S., Insurance, §§ 11-17.

Sec. 21.12.050. Health and health care insurance defined.

1. 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.
2. 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.
3. 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.

History. (§ 1 ch 120 SLA 1966; am § 7 ch 56 SLA 1996; am §§ 11, 12 ch 81 SLA 1997; am § 28 ch 23 SLA 2011)

Collateral references. —

43 Am. Jur. 2d, Insurance, § 7.

44 C.J.S., Insurance, § 5.

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.

History. (§ 8 ch 56 SLA 1996)

Sec. 21.12.055. Annuities and annuity contract defined.

1. 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.
2. Annuity contract means a contract providing for an annuity as defined in (a) of this section.

History. (§ 1 ch 120 SLA 1966)

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 .

History. (§ 1 ch 120 SLA 1966)

Revisor’s notes. —

In 1991, “AS 21.66.480 ” was substituted for “AS 21.12.100 ” to correct a manifest error in ch. 120, SLA 1974.

Administrative Code. —

For group-marketed property and casualty insurance, see 3 AAC 29, art. 3.

Sec. 21.12.070. Casualty insurance defined.

1. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966; am § 9 ch 56 SLA 1996)

Cross references. —

For appointment of casualty insurer inspectors as special boiler inspectors, see AS 18.60.240 .

Administrative Code. —

For group-marketed property and casualty insurance, see 3 AAC 29, art. 3.

Collateral references. —

43 Am. Jur. 2d, Insurance, §§ 1 to 28.

44 C.J.S., Insurance, § 6.

Liability insurance coverage for violations of antipollution laws. 87 ALR4th 444.

Who is executive officer of insured within liability insurance policy. 1 ALR5th 132.

Homeowner’s liability insurance coverage of emotional distress allegedly inflicted on third party by insured. 8 ALR5th 254.

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.

History. (§ 1 ch 120 SLA 1966)

Administrative Code. —

For schedule and individual risk rating plans, see 3 AAC 29, art. 5.

Collateral references. —

35A Am. Jur. 2d, Fidelity Bonds and Insurance, §§ 1 to 32.

Sec. 21.12.090. Marine, wet marine, and transportation insurance defined.

1. “Marine insurance” includes
   1. insurance against any and all kinds of loss or damage to
      1. 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;
      2. 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);
      3. 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;
      4. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966; am § 15 ch 41 SLA 2016)

Revisor’s notes. —

In 1991, in (b)(2), “contracts of marine protection” was substituted for “contracts or marine protection” to correct a manifest error in ch. 120, SLA 1966.

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in (b)(1), inserted “and” preceding “hulls”, inserted “insurance” preceding “of interests”; made related and stylistic changes.

Opinions of attorney general. —

A court would probably be more likely to classify pollution liability policies for tankers and barges as “marine insurance” or “wet marine and transportation insurance” than as “liability insurance” or “miscellaneous insurance” and, therefore, they should be eligible for the lower rate of taxation specified in AS 21.09.210(d) . July 25, 1989, Op. Att’y Gen.

Collateral references. —

43 Am. Jur. 2d, Insurance, §§ 642 to 662.

44 C.J.S., Insurance, § 18.

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.

History. (§ 5 ch 206 SLA 1976)

Sec. 21.12.120. [Renumbered as AS 21.12.020(i).]

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.

History. (§ 2 ch 81 SLA 2001)

Sec. 21.14.010. Risk based capital reports.

1. 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
      1. not later than 15 days after the receipt of a request if the report has already been filed with the director; or
      2. at the time the report is filed with the director, if the report has not yet been filed with the director.
2. An insurer’s risk based capital shall be determined under the formula contained in the risk based capital instructions.
3. 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.
4. [Repealed, § 34 ch 52 SLA 2015.]
5. [Repealed, § 34 ch 52 SLA 2015.]

History. (§ 1 ch 76 SLA 1994; am § 13 ch 81 SLA 1997; am § 2 ch 72 SLA 2000; am §§ 1, 52 ch 34 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in the introductory language in (a), rewrote the first sentence, which read, “A life and health domestic insurer, property and casualty domestic insurer, or other insurer required by the director shall, on or before March 1, submit to the director a report of its risk based capital covering the previous calendar year.”; made stylistic changes in (a)(2); repealed (d) and (e).

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.

History. (§ 16 ch 96 SLA 2004)

Revisor’s notes. —

Enacted as AS 21.14.010(f) and renumbered in 2004.

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 .

History. (§ 1 ch 76 SLA 1994)

Sec. 21.14.030. Regulatory action level event.

1. 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.
2. 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.

History. (§ 1 ch 76 SLA 1994; am § 2 ch 34 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, rewrote the first sentence of (b), which read, “When conducting a review of the insurer’s plan or revised plan examining or analyzing the assets, liabilities, and operations of the insurer or formulating a corrective order with respect to the insurer, the director may retain an actuary, investment expert, or other consultant.”, and, in the second sentence, substituted “the fees, reasonable costs, and expenses of a person” for “the reasonable costs of a person”.

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.

History. (§ 1 ch 76 SLA 1994; am § 19 ch 62 SLA 1995; am § 3 ch 34 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, deleted the last part of (2), which read, “if, after a hearing under AS 21.06.180 — 21.06.240 , the director determines it to be in the best interest of the policyholders and creditors of the insurer and of the public”.

Sec. 21.14.050. Mandatory control level event.

1. 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.
2. 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.
3. 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.

History. (§ 1 ch 76 SLA 1994; am § 19 ch 38 SLA 2002; am §§ 4, 5 ch 34 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (a) and (b), inserted “or, if a fraternal benefit society, under AS 21,84” following “under AS 21.78”; added (c).

Sec. 21.14.060. Risk based capital plan.

1. 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.
2. 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 .
3. 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 .
4. 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.
5. 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.
6. 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 .

History. (§ 1 ch 76 SLA 1994; am §§ 6, 7 ch 34 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (a), made stylistic changes in the introductory language, in (a)(3), substituted “for at least the next four years, or if a health organization, for at least the next two years” for “in the four subsequent years after the current year”, and made stylistic changes; added (f).

Sec. 21.14.070. Foreign insurers.

1. 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.
2. 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.
3. 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
      1. the risk based capital statute applicable in the domiciliary state of the insurer; or
      2. 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.
4. 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.
5. 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.

History. (§ 1 ch 76 SLA 1994)

Sec. 21.14.080. Hearings.

1. 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 .
2. 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.

History. (§ 1 ch 76 SLA 1994; am § 8 ch 34 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, added (b).

Sec. 21.14.090. Confidentiality; restrictions on use.

1. 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.
2. 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.
3. 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.

History. (§ 1 ch 76 SLA 1994; am § 9 ch 34 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (a), inserted “AS 21.06.060 and” near the beginning of the first sentence, deleted the language of the subsection following “director or another person” in the first sentence, which read, “without the prior written consent of the insurer who is the subject of the report, plan, analysis, or order. 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. This subsection does not prohibit the director from releasing a report, plan, analysis, or order to an insurance regulatory agency of another state.”, added the second sentence.

Sec. 21.14.100. Penalty for violation.

1. 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.
2. 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.

History. (§ 1 ch 76 SLA 1994; am § 10 ch 34 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (b)(1), inserted “AS 21.84.535 , AS 21.86.190 , or AS 21.87.110 , as applicable to a particular insurer,” following “under AS 21.09.150 ,”.

Sec. 21.14.110. Exemptions.

1. 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.
2. 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
      1. writes direct annual premiums for comprehensive medical care of $2,000,000 or less; or
      2. is a limited health service organization that covers less than 2,000 lives.

History. (§ 11 ch 34 SLA 2015)

Effective dates. —

Section 54, ch. 34, SLA 2015 makes this section effective July 1, 2015.

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.

History. (§ 11 ch 34 SLA 2015)

Effective dates. —

Section 54, ch. 34, SLA 2015 makes this section effective July 1, 2015.

Sec. 21.14.130. Regulations.

The director may adopt regulations to implement this chapter.

History. (§ 11 ch 34 SLA 2015)

Effective dates. —

Section 54, ch. 34, SLA 2015 makes this section effective July 1, 2015.

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
   1. 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
   2. an insurer fails to respond to a corrective order issued under AS 21.14.030 in a manner satisfactory to the director, if
      1. the insurer does not challenge the corrective order as permitted under AS 21.14.080 ; or
      2. 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
   1. 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;
   2. 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
   3. 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”
    1. 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;
    2. 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
    1. 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;
    2. 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;
    3. an insurer fails to submit a plan to the director within the time period described in AS 21.14.060 ;
    4. 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
       1. the insurer does not challenge the determination of the director; or
       2. 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
    5. 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
       1. the insurer does not challenge the determination of the director; or
       2. 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
    1. an insurer’s statutory capital and surplus as reported under AS 21.09.200 or 21.09.205 ; and
    2. any other item required under the risk based capital instructions.

History. (§ 1 ch 76 SLA 1994; am §§ 10, 11 ch 56 SLA 1996; am § 14 ch 81 SLA 1997; am § 3 ch 72 SLA 2000; am §§ 29 — 33 ch 23 SLA 2011; am §§ 12 — 19 ch 34 SLA 2015)

Revisor’s notes. —

In 2010, former paragraph (19) was renumbered as (16) and former paragraphs (16) — (18) were renumbered as (17) — (19) to retain alphabetical order.

In 2010, in paragraph (7), “AS 21.97.900 ” was substituted for “AS 21.90.900 ” to reflect the 2010 renumbering of AS 21.90.900 .

Paragraph (8) was enacted as paragraph (21) and renumbered in 2011, at which time the following paragraphs were renumbered accordingly.

Paragraphs (8), (10), (13), and (14) were enacted as paragraphs (22) - (25); renumbered in 2015 to maintain alphabetical order, at which time other paragraphs were also renumbered.

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (4)(B) twice inserted “or a fraternal benefit society” following “insurer”, substituted “equal to its” for “equal to the insurer’s”, substituted “less than the product obtained by multiplying the insurer’s authorized control level risk based capital by 3.0” for “less than 250 percent of the insurer’s authorized control level risk based capital”; in (4)(C), substituted “but is less than the product obtained by multiplying its authorized control level risk based capital by 3.0 and that triggers the trend calculation in the risk based capital instructions applicable to the insurer or health organization” for “but is less than 300 percent of its authorized control level risk based capital and that has a negative trend”; in (5), substituted “the product obtained by multiplying” for “200 percent of” and added “by 2.0” at the end; in (6), deleted “by the insurer” following “has determined is required”; in (12), substituted “the product obtained by multiplying” for “70 percent of” and added “by 0.70” at the end; in (13), substituted “or a fraternal benefit society” for “, a property and casualty insurer, and a health organization” following “life and health insurer” and added “applicable to the life and health insurer or fraternal benefit society” at the end; in (16), substituted “the product obtained by multiplying” for “150 percent of” and added “by 1.5” at the end; in (20), substituted “most recently adopted by the National Association of Insurance Commissioners” for “for a life and health insurer or for a property and casualty insurer” at the end; added (22) [now (8)], (23) [now (10)], (24) [now (13)], and (25) [now (14)].

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
   1. 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;
   2. 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;
   3. 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
   4. 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.

History. (§ 1 ch 120 SLA 1966; am § 22 ch 50 SLA 1990; am § 4 ch 72 SLA 2000)

Administrative Code. —

For investments, see 3 AAC 21, art. 2.

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.

History. (§ 1 ch 120 SLA 1966)

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.

History. (§ 1 ch 120 SLA 1966; am § 23 ch 50 SLA 1990; am § 5 ch 72 SLA 2000)

Administrative Code. —

For investments, see 3 AAC 21, art. 2.

Sec. 21.18.040. Disallowance of transactions; deceptions.

1. 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.
2. 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.
3. 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.
4. 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.

History. (§ 1 ch 120 SLA 1966)

Administrative Code. —

For investments, see 3 AAC 21, art. 2.

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,
   1. 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;
   2. reserves for disability benefits, for both active and disabled lives;
   3. reserves for accidental death benefits;
   4. 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.

History. (§ 1 ch 120 SLA 1966; am § 12 ch 56 SLA 1996; am § 15 ch 81 SLA 1997; am § 6 ch 72 SLA 2000)

Sec. 21.18.060. Unearned premium reserve.

1. 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.
2. 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.
3. An insurer shall compute all of the reserves on a monthly or more frequent pro rata basis.
4. 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.
5. This section does not apply to title insurance.

History. (§ 1 ch 120 SLA 1966; am §§ 24, 25 ch 50 SLA 1990; am §§ 20, 21 ch 62 SLA 1995)

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.

History. (§ 1 ch 120 SLA 1966)

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.

History. (§ 26 ch 50 SLA 1990; am § 7 ch 72 SLA 2000)

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.

History. (§ 26 ch 50 SLA 1990)

Sec. 21.18.080. Reserve standards for health insurance.

1. 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 .
2. 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.
3. 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.

History. (§ 1 ch 120 SLA 1966; am § 13 ch 56 SLA 1996; am § 16 ch 81 SLA 1997)

Administrative Code. —

For actuarial opinion and memorandum, see 3 AAC 21, art. 8.

Sec. 21.18.082. Policy reserves for health insurance.

1. 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.
2. Policy reserves are not required for health insurance policies that cannot be continued after one year from the date of issue.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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,
      1. a mortality assumption equal to the 1983 Group Annuity Mortality Table without projection;
      2. 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
      3. 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
      1. 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;
      2. group disability income insurance issued
         1. after December 31, 1997, equal to the 1987 Commissioners’ Group Disability Table; and
         2. before January 1, 1998, equal to the morbidity assumption in use by the insurer before January 1, 1998;
      3. scheduled or fixed time period hospital, surgical, or maternity benefit policies issued
         1. after December 31, 1997, equal to the 1974 Medical Expense Table A from the Transactions of the Society of Actuaries, Volume XXX; and
         2. before January 1, 1998, equal to the morbidity assumption in use by the insurer before January 1, 1998;
      4. cancer expense benefits for policies issued
         1. after December 31, 1997, equal to the 1985 National Association of Insurance Commissioners Cancer Claim Cost Tables; and
         2. before January 1, 1998, equal to the morbidity assumption in use by the insurer before January 1, 1998;
      5. accidental death benefits for policies issued
         1. after December 31, 1997, equal to the 1959 accidental death benefit table; and
         2. before January 1, 1998, equal to the morbidity assumption in use by the insurer before January 1, 1998; or
      6. 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.

History. (§ 17 ch 81 SLA 1997)

Administrative Code. —

For actuarial opinion and memorandum, see 3 AAC 21, art. 8.

Sec. 21.18.084. Claim reserves for health insurance.

1. Claim reserves are required for all incurred and unpaid claims on all health insurance policies.
2. Claim expense reserves are required for the estimated expense of settlement of all incurred and unpaid claims.
3. 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.
4. 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
      1. individual disability income insurance must be equal to the morbidity assumption used in determining policy reserves under AS 21.18.082(g)(5) ;
      2. group disability income insurance for policies issued
         1. after December 31, 1997, must be equal to the 1987 Commissioners Group Disability Table; and
         2. before January 1, 1998, must be equal to the morbidity assumption in use by the insurer before January 1, 1998;
      3. accidental death benefits must be equal to the actual amount of claims incurred; and
      4. 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
      1. an analysis of the credibility of the experience;
      2. a description of how all the insurer’s experience is proposed to be used in setting the reserves;
      3. a description and quantification of the margins to be included;
      4. a summary of the financial impact that the proposed plan of modification would have on the insurer’s last filed annual statement;
      5. a copy of the approval from the state of domicile; and
      6. 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.
5. 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.

History. (§ 17 ch 81 SLA 1997)

Administrative Code. —

For actuarial opinion and memorandum, see 3 AAC 21, art. 8.

Sec. 21.18.086. Premium reserves for health insurance.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.

History. (§ 17 ch 81 SLA 1997)

Administrative Code. —

For actuarial opinion and memorandum, see 3 AAC 21, art. 8.

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.

History. (§ 1 ch 120 SLA 1966; am § 23 ch 67 SLA 1992)

Sec. 21.18.110. Standard valuation law — Life insurance.

1. The director shall annually value, or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance policies, annuity and pure endowment contracts, and deposit-type contracts of every life insurer doing business in this state issued before the operative date of the valuation manual described in AS 21.18.112 . In calculating the reserves for policies and contracts issued before the operative date of the valuation manual described in AS 21.18.112 , 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 the alien insurer’s insurance transactions in the United States. For the purpose of making the valuation, the director may employ a qualified 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. This subsection provides for the minimum standard for the valuation of reserves for policies and contracts subject to this subsection and applies to a policy and contract issued before the operative date of the valuation manual described in AS 21.18.112. An insurer that has 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.
2. This subsection applies to only those policies and contracts issued on or after the operative date of AS 21.45.300 except as provided in (c) — (k) of this section, (5) and (6) of this subsection for group annuity and pure endowment contracts issued before that operative date, and AS 21.18.112(b) :
   1. Except as provided in (c) — (k) of this section, (5) and (6) of this subsection, and AS 21.18.112(b) , the minimum standard for the valuation of all these policies and contracts shall be the commissioners reserve evaluation methods defined in (2)(A) and (B), (4), and (7) of this subsection, and AS 21.18.112(b), 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:
      1. for all ordinary policies of life insurance issued on the standard basis, excluding disability and accidental death benefits in the policies — the Commissioners 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
         1. the Commissioners 1980 Standard Ordinary Mortality Table;
         2. at the election of the insurer for any one or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with 10-year Select Mortality Factors; or
         3. any ordinary 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 policies;
      2. 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 Commissioners 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 adopted by the director for use in determining the minimum standard of valuation for those policies;
      3. 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;
      4. 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;
      5. 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;
      6. 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;
      7. 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 commissioners 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:
      1. 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;
      2. 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 commissioners 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 (A) of this paragraph and the reserve as of the policy anniversary; the reserve shall be calculated as described in (A) of this paragraph, except that
         1. the present value shall be reduced by 15 percent of the amount of the excess first year premium;
         2. 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;
         3. the policy shall be assumed to mature on the assumed ending date as an endowment; and
         4. 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 (4) and (6) of this subsection and (c) of this section 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;
      3. reserves according to the commissioners reserve valuation method for
         1. life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums;
         2. 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;
         3. disability and accidental death benefits in all policies and contracts;
         4. 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 this paragraph, 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 that 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) — (k) of this section, 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 commissioners reserve valuation methods defined in (2) and (7) of this subsection and the following tables and interest rates:
      1. for individual single premium immediate annuity contracts, excluding any disability and accidental death benefits in those 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;
      2. for individual annuity and pure endowment contracts, other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in those 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 comparable individual annuity and pure endowment contracts;
      3. 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 commissioners 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 that 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 those 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.
3. 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.
4. 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,
   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,
   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.
5. 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) .
6. The weighting factors referred to in (c) of this section are as follows:
   1. weighting factors for life insurance:
   2. notwithstanding (3) of this subsection, the weighting factor 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 -.80;
   3. for annuities and guaranteed interest contracts valued on an issue year basis:
   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, that 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 that 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 (4) of this subsection are increased by .05.
7. 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.
8. In this section, “plan type” is defined as follows:
   1. plan type A: at any time policyholder may withdraw funds only
      1. with an adjustment to reflect a change in interest rates or asset values since receipt of the funds by the insurer;
      2. without such adjustment but in installments over five years or more;
      3. as an immediate life annuity; or
      4. no withdrawal permitted;
   2. plan type B: before expiration of the interest rate guarantee, policyholder may withdraw funds only
      1. with adjustment to reflect a change in interest rates or asset values since receipt of the funds by the insurer;
      2. without adjustment but in installments over five years or more; or
      3. 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
      1. without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer; or
      2. subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.
9. 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.
10. The reference interest rates referred to in (d) and (e) 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. 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.
17. A qualified actuary who submits an opinion under (m) of this section
    1. is not liable for damages to a person, other than the insurer 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.
18. 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.
19. 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 because 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 insurer to the news media, the remainder of the confidential memorandum or other material is no longer confidential.
20. 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 an appointed actuary to be necessary to render the opinion required under (m) of this section.
21. 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) .
22. In this section, unless the context requires otherwise, “insurer” means an entity that
    1. has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this state and has at least one of those policies in force or claim; or
    2. has written, issued, or reinsured life insurance contracts in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance, or deposit-type contracts in this state.

I = .03 + W(R1 — .03) + W/2(R2 — .09);

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;

Guarantee Duration: Weighting Years Factors 10 or less .50 more than 10, but not more than 20; .45 more than 20; .35

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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 that are guaranteed in the original policy;

Guarantee Weighting Factor Duration: for Plan Type Years 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

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History. (§ 1 ch 120 SLA 1966; am § 1 ch 100 SLA 1978; am §§ 1, 2 ch 28 SLA 1984; am §§ 23 — 25 ch 21 SLA 1991; am §§ 24, 25 ch 67 SLA 1992; am §§ 14, 15 ch 6 SLA 1993; am §§ 23 — 26, 112 ch 62 SLA 1995; am § 32 ch 30 SLA 1996; am § 26 ch 32 SLA 1997; am §§ 6 — 13 ch 56 SLA 2018)

Revisor’s notes. —

In 1991, in the second sentence of (e), “this subsection” was substituted for “this paragraph” to correct a manifest error in ch. 28, SLA 1984.

Paragraphs (b)(3)-(7) were enacted as (b)(4)-(8). Renumbered in 2000 to reflect the 1995 repeal of former (b)(3), at which time cross references in subsection (b); paragraphs (b)(1), (b)(2), (b)(6), and (b)(7); subsection ( l ); and subsection (t) were conformed accordingly.

Cross references. —

For operative date of AS 21.45.300 as to particular insurers, see AS 21.45.300 (w).

Effect of amendments. —

The 2018 amendment, effective July 14, 2018, in (a), in the first sentence, inserted “, and deposit-type contracts” following “pure endowment contracts”, substituted “Issued before the operative date of the valuation manual described in AS 21.18.112 ” for “, and may certify the amount of the reserves, specifying the mortality table or tables, rate or rated of interest, and methods (net level premium method or other) used in the calculation of the reserves”, in the second sentence, inserted “for policies and contracts issued before the operative date of the valuation manual described in AS 21.18.112 ” following “calculating the reserves”, in the third sentence, substituted “the alien insurer's insurance” for “its insurance” following “shall be limited to” and “qualified actuary” for “competent actuary” following “may employ a” and made a related change, in the fifth sentence, substituted “This subsection provides for the minimum standard for the valuation of reserves for policies and contracts subject to this subsection and applies to a policy and contract issued before the operative date of the valuation manual described in AS 21.18.112” for “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”, in the last sentence, near the beginning, substituted “Insurer that has” for “insurer that at any time”; in (b), in the introductory language, deleted “otherwise” following “except as”, inserted “— (k) following “provided in (c)”, inserted “and (6) preceding “of this subsection”, added “, and AS 21.18.112(b) at the end, in (a)(1), deleted “otherwise” following “except as”, inserted “— (k)” following “provided in (c)”, inserted “and (6)” preceding “of this subsection”, inserted “and AS 21.18.112(b) ,” preceding “the minimum standard”, substituted “defined in (2)(A) and (B)” for “defined in (2)” following “evaluation methods”, inserted “, and AS 21.18.112(b)” following “of this subsection”, in (b)(5), in the introductory language, substituted “in (c) — (k) of this section” for “in (C) of this paragraph”, substituted “commissioners” for “commissioner's” throughout the subsection; in (j), in the introductory language, substituted “in (d) and (e)” for “in (c)” following “interest rates referred to”; in (t)(2) substituted “an appointed actuary” for “a qualified actuary” following “determined by”; made related and stylistic changes throughout the section.

Administrative Code. —

For actuarial opinion and memorandum, see 3 AAC 21, art. 8.

For mortality tables, see 3 AAC 28, art. 7.

Legislative history reports. —

For governor's transmittal letter for ch. 56, SLA 2018 (HB 401), which amended this section, see 2018 House Journal 2601.

Collateral references. —

Liability of insurance agent or broker to insured for misrepresentation of cash surrender value or accumulated value benefits of life insurance policy. 44 ALR4th 1030.

Sec. 21.18.112. Standard valuation for policies and contracts issued on or after the operative date of the valuation manual.

1. The director shall annually value, or cause to be valued, the reserve liabilities, hereinafter called reserves, for all outstanding life insurance contracts, annuity and pure endowment contracts, accident and health contracts, and deposit-type contracts of every insurer issued on or after the operative date of the valuation manual. In lieu of the valuation of the reserves required of a foreign or alien insurer, the director may accept a valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in this section.
2. For accident and health insurance contracts issued on or after the operative date of the valuation manual, the standard described in the valuation manual is the minimum standard of valuation required under (a) of this section. For accident and health insurance contracts issued before the operative date of the valuation manual, the minimum standard of valuation is the standard required under AS 21.18.080 — 21.18.086 .
3. Every insurer with outstanding life insurance contracts, accident and health insurance contracts, or deposit-type contracts in the state and subject to regulation by the director shall annually submit to the director an opinion of the appointed 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 the state. The valuation manual must prescribe the specifics of this opinion, including any items considered to be necessary to its scope, as follows:
   1. the actuarial opinion must
      1. be in form and substance as specified in the valuation manual and acceptable to the director;
      2. be submitted with the annual statement reflecting the valuation of the reserve liabilities on or after the operative date of the valuation manual;
      3. apply to policies and contracts subject to this section, plus other actuarial liabilities specified in the valuation manual;
      4. be based on standards adopted by the Actuarial Standards Board or its successor and on additional standards prescribed in the valuation manual; and
      5. include, unless exempted in the valuation manual, an assessment of whether the reserves and related actuarial items held in support of the policies and contracts specified in the valuation manual, 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, adequately provide for an insurer’s obligations under policies or contracts, including the benefits under and expenses associated with the policies or contracts;
   2. 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 the state;
   3. an appointed actuary who submits an opinion under this subsection
      1. is not liable for damages to a person, other than the insurer and the director, for an act, an error, an omission, a decision, or conduct with respect to the appointed actuary’s opinion, except in the case of fraud or wilful misconduct;
      2. is subject to disciplinary action by the director against the appointed actuary or the insurer; and
      3. shall prepare a memorandum, in form and substance acceptable to the director, to support the actuarial opinion;
   4. if an insurer fails to provide a supporting memorandum as requested by the director within a period specified in the valuation manual or the director determines that the supporting memorandum fails to meet the standards adopted by the valuation manual 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 (3)(C) of this subsection.
4. Except as provided under (4) or (6) of this subsection, for policies and contracts issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under (a) of this section, as follows:
   1. the operative date of the valuation manual is January 1 following the effective date of this section;
   2. unless a change in the valuation manual specifies a later effective date, changes to the valuation manual are effective on January 1 following the date when the change to the valuation manual has been adopted by the National Association of Insurance Commissioners by an affirmative vote representing
      1. at least three-fourths of the members of the National Association of Insurance Commissioners voting, but not less than a majority of the total membership; and
      2. members of the National Association of Insurance Commissioners representing jurisdictions totaling greater than 75 percent of the direct premiums written as reported in the following annual statements most recently available before the vote in this paragraph: life, accident and health annual statements, health annual statements, or fraternal annual statements;
   3. the valuation manual must specify all of the following:
      1. minimum valuation standards for and definitions of the policies or contracts subject to (a) of this section; the minimum valuation standards are
         1. the commissioners reserve valuation method for life insurance policies and contracts, other than annuity contracts, subject to (a) of this section;
         2. the commissioners annuity reserve valuation method for annuity contracts subject to (a) of this section; and
         3. minimum reserves for all other policies or contracts subject to (a) of this section;
      2. which policies or contracts or types of policies or contracts that are subject to the requirements of a principle-based valuation in (e) of this section and the minimum valuation standards consistent with those requirements;
      3. for policies and contracts subject to a principle-based valuation under (e) of this section,
         1. requirements for the format of reports to the director under (e)(5)(C) of this section that include information necessary to determine whether the valuation is appropriate and in compliance with this section;
         2. assumptions for risks over which the insurer does not have significant control or influence;
         3. procedures for corporate governance and oversight of the actuarial function and a process for appropriate waiver or modification of the procedures;
      4. for policies and contracts not subject to a principle-based valuation under (e) of this section, the minimum valuation standard
         1. must be consistent with the minimum standard of valuation in AS 21.18.110 ; or
         2. if there is no applicable minimum standard in AS 21.18.110 , must develop reserves that quantify the benefits, guarantees, and funding associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring;
      5. other requirements, including those relating to reserve methods, models for measuring risk, generation of economic scenarios, assumptions, margins, use of insurer experience, risk measurement, disclosure, certifications, reports, actuarial opinions and memorandums, transition rules and internal controls; and
      6. the data and form of the data required under (f) of this section, directions for submitting the data, and other requirements, including data analyses and reporting of analyses;
   4. in the absence of a specific valuation requirement or if the director determines that a specific valuation requirement in the valuation manual is not in compliance with this section, the insurer shall, with respect to those requirements, comply with minimum valuation standards in AS 21.18.110;
   5. the director may engage a qualified actuary, at the expense of the insurer, to perform an actuarial examination of the insurer, to determine the appropriateness of a reserve assumption or method used by the insurer, or to review and determine an insurer’s compliance with a requirement of this section; the director may rely on the opinion of a qualified actuary engaged by the director of another state, district, or territory of the United States regarding provisions contained in this section; in this paragraph, “engage” includes employ and contract;
   6. the director may require an insurer to change an assumption or method if the director determines the change is necessary to comply with the requirements of the valuation manual or this section, and the insurer shall adjust the reserves as required by the director.
5. An insurer shall establish reserves using a principle-based valuation that meets the following conditions for policies or contracts as specified in the valuation manual:
   1. quantify the benefits, guarantees, and funding associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring during the lifetime of the contracts and, for policies or contracts with significant tail risk, that reflect conditions appropriately adverse to quantify the tail risk;
   2. incorporate assumptions, risk analysis methods, and financial models and management techniques that are consistent with, but not necessarily identical to, those used in the insurer’s overall risk assessment process while recognizing potential differences in financial reporting structures and prescribed assumptions or methods;
   3. incorporate assumptions that are derived in one of the following manners:
      1. the assumptions are prescribed in the valuation manual;
      2. for assumptions that are not prescribed, the assumptions shall be established using the insurer’s available experience, to the extent it is relevant and statistically credible; to the extent that data is not available, relevant, or statistically credible, the assumptions shall be established using other relevant or statistically credible experience;
   4. provide margins for uncertainty, including adverse deviation and estimation error, so that the greater the uncertainty the larger the margin and resulting reserve;
   5. for an insurer using a principle-based valuation for one or more policies or contracts subject to this subsection as specified in the valuation manual,
      1. establish procedures for corporate governance and oversight of the actuarial valuation function consistent with those described in the valuation manual;
      2. provide to the director an annual certification of the effectiveness of the internal controls with respect to the principle-based valuation; the controls shall be designed to ensure that all material risks inherent in the liabilities and associated assets subject to the valuation are included in the valuation and that valuations are made in accordance with the valuation manual; the certification shall be based on the controls in place as of the end of the preceding calendar year;
      3. develop and file with the director upon request a principle-based valuation report that complies with standards prescribed in the valuation manual;
   6. a principle-based valuation may include a prescribed formulaic reserve component.
6. An insurer shall submit mortality, morbidity, policyholder behavior, or expense experience and other data as prescribed in the valuation manual.
7. The use of information in this section is subject to the following provisions:
   1. except as provided in this subsection, an insurer’s confidential information is not a public record under AS 40.25.100 — 40.25.295 , except that, the director may use the confidential information in any regulatory or legal action brought against the insurer as a part of the director’s official duties;
   2. the director or another person who received confidential information while acting under the authority of the director is not permitted or required to testify in any private civil action concerning the confidential information;
   3. to assist in the performance of the director’s duties, the director may share confidential information
      1. with other state, federal, and international regulatory agencies and with the National Association of Insurance Commissioners and its affiliates and subsidiaries;
      2. in the case of confidential information specified in (i)(1)(A) and (D) of this section, with the Actuarial Board for Counseling and Discipline or its successor upon request stating that the confidential information is required for the purpose of professional disciplinary proceedings and with state, federal, and international law enforcement officials;
      3. under (A) and (B) of this paragraph only if the recipient agrees and has the legal authority to agree to maintain the confidentiality and privileged status of the documents, materials, data, and other information in the same manner and to the same extent required for the director;
   4. the director may receive documents, materials, data, and other information, including otherwise confidential and privileged documents, materials, data, or information from the National Association of Insurance Commissioners and its affiliates and subsidiaries, from regulatory or law enforcement officials of other foreign or domestic jurisdictions, and from the Actuarial Board for Counseling and Discipline or its successor and shall maintain as confidential or privileged any document, material, data, or other information received with notice or the understanding that the document material, data, or information is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, data, or other information;
   5. the director may enter into agreements governing the sharing and use of information consistent with this section;
   6. a disclosure to the director under this section or sharing confidential information as authorized in (3) of this subsection does not constitute a waiver of a claim of confidentiality.
8. Notwithstanding (g) of this section, confidential information specified in (i)(1)(A) and (D) of this section
   1. may be subject to subpoena for the purpose of defending an action seeking damages from the appointed actuary submitting the related memorandum in support of an opinion submitted under (c) of this section or principle-based valuation report developed under (e)(5)(C) of this section because of an action required by this section or by regulations adopted under this section;
   2. may otherwise be released by the director with the written consent of the insurer; and
   3. is not confidential after any portion of a memorandum in support of an opinion submitted under (c) of this section or a principle-based valuation report developed under (e)(5)(C) of this section is cited by the insurer in its marketing or is publicly volunteered to or before a governmental agency other than a state insurance department or is released by the insurer to the news media.
9. In this section,
   1. “confidential information” means
      1. a memorandum in support of an opinion submitted under (c) of this section and documents, materials, and other information, including working papers and copies of them, created, produced, or obtained by or disclosed to the director or another person in connection with the memorandum;
      2. documents, materials, and other information, including working papers and copies of them, created, produced, or obtained by or disclosed to the director or another person in the course of an examination made under (d)(5) of this section; however, if an examination report or other material prepared in connection with an examination made under AS 21.06.120 — 21.06.150 is not held as private and confidential information under AS 21.06.120 — 21.06.150 , an examination report or other material prepared in connection with an examination made under (d)(5) of this section is not confidential information to the same extent as if the examination report or other material had been prepared under AS 21.06.120 — 21.06.150;
      3. reports, documents, materials, and other information developed by an insurer in support of or in connection with an annual certification by the insurer under (e)(5)(B) of this section evaluating the effectiveness of the insurer’s internal controls with respect to a principle-based valuation and other documents, materials, and other information, including working papers and copies of them, created, produced, or obtained by or disclosed to the director or another person in connection with the reports, documents, materials, and other information;
      4. a principle-based valuation report developed under (e)(5)(C) of this section and other documents, materials, and other information, including working papers and copies of them, created, produced, or obtained by or disclosed to the director or another person in connection with the report; and
      5. documents, materials, data, and other information submitted by an insurer under (f) of this section, known as experience data and experience materials, other documents, materials, data, and other information, including working papers and copies of them, created or produced in connection with the experience data, or documents, materials, data, or other information that includes any potentially insurer-identifying or personally identifiable information that is provided to or obtained by the director together with experience data, experience materials, and other documents, materials, data, and other information, including working papers and copies of them, created, produced, or obtained by or disclosed to the director or another person in connection with the experience materials;
   2. “law enforcement agency,” “National Association of Insurance Commissioners,” and “regulatory agency,” includes an employee, agent, consultant, or contractor of the law enforcement agency, National Association of Insurance Commissioners, or regulatory agency.

History. (§ 14 ch 56 SLA 2018)

Effective dates. —

Section 21, ch. 56, SLA 2018 makes this section effective July 14, 2018, in accordance with AS 01.10.070(c) .

Legislative history reports. —

For governor's transmittal letter for ch. 56, SLA 2018 (HB 401), which added this section, see 2018 House Journal 2601.

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.

History. (§ 8 ch 72 SLA 2000)

Administrative Code. —

For actuarial opinion and memorandum, see 3 AAC 21, art. 8.

For mortality tables, see 3 AAC 28, art. 7.

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.

History. (§ 3 ch 81 SLA 2001)

Administrative Code. —

For investments, see 3 AAC 21, art. 2.

Sec. 21.18.900. Definitions.

In this chapter,

1. “accident and health insurance” means a contract that incorporates morbidity risk and provides protection against economic loss resulting from accident, sickness, or a medical condition or a contract as may be specified in the valuation manual;
2. “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;
3. “affiliate” has the meaning given in AS 21.22.200 ;
4. “appointed actuary” means a qualified actuary who is appointed in accordance with the valuation manual to prepare the actuarial opinion required in AS 21.18.112 ;
5. “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;
6. “deposit-type contract” means a contract that does not incorporate mortality or morbidity risks or a contract specified in the valuation manual;
7. “insurer” means an entity that has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in
   1. this state and has at least one of those policies in force or on claim; or
   2. another state and is required to hold a certificate of authority to write life insurance, accident and health insurance, or deposit-type contracts in this state;
8. “ledger asset” means an asset recorded on the general ledger of an insurer;
9. “life insurance” means a contract that incorporates mortality risk, including an annuity and pure endowment contract, or a contract specified in the valuation manual;
10. “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;
11. “nonledger asset” means an asset not recorded on the general ledger of an insurer;
12. “policyholder behavior” means an action of a policyholder, contract holder, or another person with the right to elect options;
13. “principle-based valuation” means a reserve valuation that uses one or more methods or one or more assumptions determined by the insurer under AS 21.18.112(e) , as specified in the valuation manual;
14. “qualified actuary” means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the qualification standards of the American Academy of Actuaries and who meets the requirements specified in the valuation manual;
15. “solvent” means able to satisfy all current and future obligations and operate as an ongoing entity;
16. “tail risk” means a risk that occurs either where the frequency of low probability events is higher than expected under a normal probability distribution or when there are observed events of very significant size or magnitude;
17. “valuation manual” means the manual of valuation instructions adopted by the National Association of Insurance Commissioners as specified in AS 21.18.112(d) .

History. (§ 28 ch 50 SLA 1990; am § 20 ch 72 SLA 2000; am § 15 ch 56 SLA 2018)

Revisor’s notes. —

Reorganized in 2010 to reflect the repeal of former paragraph (4); and in 2018 to maintain alphabetical order.

Effect of amendments. —

The 2018 amendment, effective July 14, 2018, added (8) [now (1)], (9) [now (4)], (10) and (11) [now (6) and (7)], (12) [now (9)], (13) — (15) [now (12) — (14)], and (16) and (17).

Administrative Code. —

For investments, see 3 AAC 21, art. 2.

Legislative history reports. —

For governor's transmittal letter for ch. 56, SLA 2018 (HB 401), which amended this section, see 2018 House Journal 2601.

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.

History. (§ 1 ch 120 SLA 1966; am § 4 ch 81 SLA 2001)

Administrative Code. —

For investments, see 3 AAC 21, art. 2.

Sec. 21.21.020. Eligible investments.

1. 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.
2. [Repealed, § 85 ch 50 SLA 1990.]
3. Eligibility of an investment shall be determined as of the date of its making or acquisition.
4. 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.
5. For purposes of determining compliance with investment limitations imposed under this chapter, the director or an insurer shall use admitted asset values.

History. (§ 1 ch 120 SLA 1966; am §§ 29, 85 ch 50 SLA 1990; am §§ 5, 6 ch 81 SLA 2001)

Administrative Code. —

For investments, see 3 AAC 21, art. 2.

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.

History. (§ 1 ch 95 SLA 1991; am § 32 ch 67 SLA 1992; am § 7 ch 81 SLA 2001)

Administrative Code. —

For investments, see 3 AAC 21, art. 2.

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.

1. 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.
2. 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.
3. 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.

History. (§ 18 ch 81 SLA 1997; am § 3 ch 38 SLA 2007)

Administrative Code. —

For custodian of insurer assets, see 3 AAC 21, art. 9.

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.

History. (§ 8 ch 81 SLA 2001)

Administrative Code. —

For investments, see 3 AAC 21, art. 2.

Sec. 21.21.600. Definitions. [Repealed, § 84 ch 81 SLA 2001.]

Sec. 21.22.010. Filing requirements for acquisition of control of or merger with domestic insurer.

1. 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.
2. 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 .
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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) .
10. 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.

History. (§ 1 ch 202 SLA 1976; am § 30 ch 62 SLA 1995; am § 21 ch 72 SLA 2000; am §§ 20 — 23 ch 34 SLA 2015)

Revisor’s notes. —

In 2010, in subsection (g), paragraph numbers were removed to reflect the repeal of former (g)(1).

Subsections (h) and (i) were enacted as (i) and (j); relettered in 2015, at which time former subsection (h) was relettered as (j).

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (a)(1), added “unless the person is an issuer,” at the beginning, in (a)(2) added “or a person controlling a domestic insurer” at the end; in (c), deleted the last sentence, which read, “However, the director may require the person making the proposal to produce other information the director considers necessary to carry out the duties of the director under this chapter.”; in (h) [now (j)], added the second sentence; added (i) [now (h)] and (j) [now (i)].

Sec. 21.22.020. Content of statement for acquisition or merger filing.

1. 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:
      1. 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;
      2. if the person is not an individual,
         1. 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;
         2. an informative description of the business intended to be done by the person and the person’s subsidiaries; and
         3. 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 individual under this sub-subparagraph 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
      1. the source, nature, and amount;
      2. a description of any transaction in which funds were or are to be obtained for a purpose under this paragraph; and
      3. 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 the 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
      1. liquidate the insurer;
      2. sell its assets or merge or consolidate it with any person; or
      3. 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, 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 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 the 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 an acquiring party, including the dates of purchase, the 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 on 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 security holders of the insurer or in the public interest.
2. 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.
3. In this section, “consideration” includes a pledge of the stock of an insurer or the insurer’s subsidiary.

History. (§ 1 ch 202 SLA 1976; am § 24 ch 34 SLA 2015; am § 69 ch 13 SLA 2019)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, added (b) and (c).

The 2019 amendment, effective October 17, 2019, made a stylistic change in (a)(1), in (a)(1)(B)(iii) substituted “each individual under this subsubparagraph” for “each such individual” following shall include for”, in (a)(2)(B) substituted “for a purpose under this paragraph” for “for any such purpose”, made stylistic changes in (a)(3) and (5), in (a)(7) deleted “but not limited to” following “including” and made a stylistic change, made stylistic changes in (a)(8) through (12).

Sec. 21.22.030. Hearing, findings, and approval.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.

History. (§ 1 ch 202 SLA 1976; am § 36 ch 67 SLA 1992; am § 31 ch 62 SLA 1995; am § 17 ch 96 SLA 2004; am §§ 25 — 27 ch 34 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, repealed and reenacted (b), which read, “The purchase, merger, or other acquisition of control referred to in AS 21.22.010(a) may not be made until the director either approves the transaction within 60 days after the statement required by AS 21.22.010(b) has been filed or the director fails to disapprove the transaction within the 60-day period.”; repealed and reenacted (c), which read, “When evaluating the effect of a merger or other acquisition under (a)(2) of this section, the director may consider relevant factors including market shares, volatility of ranking market leaders, number of competitors, concentration, trend of concentration in the industry, and ease of entry into and exit out of the market, but may not consider the standards under AS 21.22.065(d)(3), (4), or (e).”; added (e).

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.

History. (§ 1 ch 202 SLA 1976)

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.

History. (§ 1 ch 202 SLA 1976)

Sec. 21.22.060. Registration required.

1. 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.
2. 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:
      1. loans, other investments, or purchases, sales, or exchanges of securities of the affiliates by the insurer or of the insurer by its affiliates;
      2. purchases, sales, or exchanges of assets;
      3. transactions not in the ordinary course of business;
      4. 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;
      5. all management and service contracts and all cost-sharing arrangements;
      6. reinsurance agreements;
      7. dividends and other distributions to shareholders; and
      8. 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.
3. 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.
4. 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.
5. 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.
6. The director shall terminate the registration of an insurer that demonstrates that it no longer is a member of an insurance holding company system.
7. 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.
8. 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.
9. 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.
10. 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 .
11. 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.
12. 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.
13. 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.
14. 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.

History. (§ 1 ch 202 SLA 1976; am § 37 ch 67 SLA 1992; am §§ 32 — 35 ch 62 SLA 1995; am § 34 ch 23 SLA 2011; am §§ 28 — 33 ch 34 SLA 2015)

Administrative Code. —

For insurance holding companies, see 3 AAC 21, art. 1.

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (a), in the first sentence, substituted “Except as provided in (c) of this section an insurer” for “Every insurer”, in the second sentence substituted “shall register not later than 15 days after the insurer becomes subject to registration” for “shall register within 60 days after January 1, 1977 or 15 days after it becomes subject to registration, whichever is later”; in (b), substituted “An” for “Every” at the beginning of the introductory language, in (b)(2), inserted “and relationship” following “the identity”, in (b)(3), substituted “and transactions currently outstanding or that have occurred in the last calendar year” for “, relationships subsisting, and transactions currently outstanding”, added (b)(3)(G) and (3)(H), added (b)(5), (6), (7), and (8); rewrote (c), which read, “The director may permit an authorized insurer that is a member of a holding company system subject to registration under the laws or regulations of its state of domicile that are in the opinion of the director substantially similar to those contained in this chapter to satisfy the requirements of (a) of this section by filing a statement in accordance with the laws of its state of domicile.”; in (e), substituted “within 15 business days following their declaration” for “within two business days following their declaration” at the end; in (j), added the third sentence, and deleted “After a disclaimer has been filed, the insurer is relieved of any duty to register or report under this section that may arise out of the insurer’s relationship with that person until the director disallows the disclaimer. The director shall disallow a disclaimer only after furnishing all parties in interest with notice and opportunity to be heard and after making specific findings of fact to support the disallowance.”; added (m) and (n).

Sec. 21.22.065. Acquisitions involving change of control.

1. 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.
2. 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.
3. 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.
4. 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
      1. if the market is highly concentrated and the involved insurers possess the following shares of the market:
      2. if the market is not highly concentrated and the involved insurers possess the following shares of the market:
   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
      1. 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;
      2. one of the insurers involved is an insurer in a grouping of large insurers showing the requisite increase in market share; and
      3. another involved insurer’s market share is two percent or more.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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,
       1. the combined market share of the involved insurers would not exceed five percent of a market;
       2. there would not be an increase in a market share of the larger writer; or
       3. 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.
11. AS 21.22.150 , 21.22.160 , and 21.22.180 do not apply to acquisitions covered under this section.

Insurer A Insurer B 4 percent 4 percent or more 10 percent 2 percent or more 15 percent 1 percent or more;

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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.

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History. (§ 38 ch 67 SLA 1992; am § 16 ch 8 SLA 2011; am § 34 ch 34 SLA 2015)

Administrative Code. —

For insurance holding companies, see 3 AAC 21, art. 1.

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (d), reorganized the subsection, incorporating the content of former (d)(1) and (d)(2) into the introductory language and adding the last sentence; the content of (d)(3), related to determination of the existence of substantial evidence, was deleted, and the content of (d)(4) became part of (d)(1), while in the introductory language of (d)(1), “prima facie” was inserted preceding “evidence of a violation”, (d)(2) was added, and related and stylistic changes were made throughout.

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.

History. (§ 1 ch 202 SLA 1976)

Administrative Code. —

For insurance holding companies, see 3 AAC 21, art. 1.

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.

History. (§ 1 ch 202 SLA 1976; am § 39 ch 67 SLA 1992; am § 35 ch 34 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (4), inserted “to the transactions” following “records of each party” and deleted “precise” preceding “nature and details”, added (6), and made related changes.

Sec. 21.22.085. Transactions involving a domestic insurer requiring director review.

1. 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
      1. 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 previous calendar year; or
      2. with respect to life insurers, three percent of the insurer’s admitted assets as of December 31 of the previous calendar year;
   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
      1. 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 previous calendar year; or
      2. with respect to life insurers, three percent of the insurer’s admitted assets as of December 31 of the previous calendar year;
   3. a reinsurance agreement or modification, including
      1. a reinsurance pooling agreement;
      2. 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 previous calendar year, 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 previous calendar year; 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.
2. 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.
3. 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 .
4. 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.
5. 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.

History. (§ 40 ch 67 SLA 1992; am § 36 ch 34 SLA 2015; am § 2 ch 12 SLA 2019)

Revisor's notes. —

In 2010, “AS 21.36.360(a) and 21.36.910 ” was substituted for “AS 21.36.320 and 21.36.360(a) ” to reflect the 2010 renumbering of AS 21.36.320 .

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, rewrote the introductory language in (a), which read, “The following transactions involving a domestic insurer and a person in its holding company system 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:”, in (a)(1), deleted “guarantee,” following “extension of credit,”, in (a)(1)(A), substituted “policyholders, as of December 31 of the calendar year in which the transaction took place” for “policyholder surplus, each calculated under AS 21.21.020(d) ”, in (a)(1)(B), substituted “as of December 31 of the calendar year in which the transaction took place” for “calculated under AS 21.21.020(d) ”, in (a)(2)(A), substituted “as of December 31 of the calendar year in which the transaction took place” for “each calculated under AS 21.21.020(d)”, in (a)(2)(B), substituted “as of December 31 of the calendar year in which the transaction took place” for “each calculated under AS 21.21.020(d)”, rewrote (a)(3), which read, “a reinsurance agreement or modification in which the reinsurance premium or change in the insurer’s liabilities equals or exceeds five percent of the insurer’s surplus that pertains to policyholder surplus, calculated under AS 21.21.020(d), 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 an affiliate of the insurer;”, in (a)(4), inserted “tax allocation agreement, guarantee,” following “service contract,”, added (a)(6) and (a)(7).

The 2019 amendment, effective July 20, 2019, in (a), substituted “the previous calendar year” for “the calendar year in which the transaction took place” six times.

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.

History. (§ 1 ch 202 SLA 1976; am § 41 ch 67 SLA 1992)

Sec. 21.22.100. Dividends and other distributions.

1. 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.
2. 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.
3. 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.

History. (§ 1 ch 202 SLA 1976; am §§ 42, 43 ch 67 SLA 1992)

Administrative Code. —

For insurance holding companies, see 3 AAC 21, art. 1.

Sec. 21.22.105. Management of domestic insurers subject to registration.

1. 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.
2. 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 .

History. (§ 44 ch 67 SLA 1992)

Sec. 21.22.110. Examination.

1. 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.
2. 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.
3. 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.
4. 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 .

History. (§ 1 ch 202 SLA 1976; am §§ 37, 38 ch 34 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, repealed and reenacted (a), which read, “Subject to the limitation in (b) of this section, the director may order an insurer registered under AS 21.22.060 to produce records, books, or other information or papers in the possession of the insurer or its affiliates as are necessary to ascertain the financial condition or legality of conduct of the insurer. If an insurer fails to comply with the director’s order, the director may examine the insurer’s affiliates to obtain the information required.”; repealed and reenacted (b), which read, “The director shall exercise the power under (a) of this section only if the examination of the insurer under AS 21.06.120 — 21.06.170 is inadequate or the interests of the policyholders of the insurer may be adversely affected.”

Sec. 21.22.115. Supervisory colleges.

1. 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.
2. 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.
3. 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.
4. 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.

History. (§ 39 ch 34 SLA 2015)

Effective dates. —

Section 54, ch. 34, SLA 2015 makes this section effective July 1, 2015.

Sec. 21.22.117. Group-wide supervision of internationally active insurance groups.

1. The director may act as the group-wide supervisor for an internationally active insurance group in accordance with this section. However, the director may acknowledge another regulatory official as the group-wide supervisor if the internationally active insurance group
   1. does not have substantial insurance operations in the United States;
   2. has substantial insurance operations in the United States but not in this state; or
   3. has substantial insurance operations in the United States and this state, but the director has determined under (b) or (f) of this section that the other regulatory official is the appropriate group-wide supervisor; an insurance holding company system that does not otherwise qualify as an internationally active insurance group may request that the director make a determination or acknowledgment of a group-wide supervisor under this section.
2. In cooperation with other state, federal, and international regulatory agencies, the director shall identify a single group-wide supervisor for an internationally active insurance group. The director may determine that the director is the appropriate group-wide supervisor for an internationally active insurance group that conducts substantial insurance operations concentrated in this state. However, the director may acknowledge that a regulatory official from another jurisdiction is the appropriate group-wide supervisor for the internationally active insurance group. The director shall consider the following factors when making a determination or acknowledgment under this subsection:
   1. the place of domicile of the insurers within the internationally active insurance group that hold the largest share of the group’s written premiums, assets, or liabilities;
   2. the place of domicile of the top-tiered insurer or insurers in the insurance holding company system of the internationally active insurance group;
   3. the location of the executive offices or largest operational offices of the internationally active insurance group;
   4. whether another regulatory official is acting or is seeking to act as the group-wide supervisor under a regulatory system that the director determines to be
      1. substantially similar to the system of regulation provided under the laws of this state; or
      2. otherwise sufficient in terms of providing for group-wide supervision, enterprise risk analysis, and cooperation with other regulatory officials; and
   5. whether another regulatory official acting or seeking to act as the group-wide supervisor provides the director with reasonably reciprocal recognition and cooperation; a regulatory official identified under this section as the group-wide supervisor may determine that it is appropriate to acknowledge another supervisor to serve as the group-wide supervisor; the regulatory official shall consider the factors listed in this subsection when making an acknowledgment under this subsection and shall make the acknowledgment in cooperation with, and subject to, the acknowledgment of other regulatory officials involved with supervision of members of the internationally active insurance group and in consultation with the internationally active insurance group.
3. Notwithstanding any other provision of law, when another regulatory official is acting as the group-wide supervisor of an internationally active insurance group, the director shall acknowledge that regulatory official as the group-wide supervisor. However, the director shall make a determination or acknowledgment of the appropriate group-wide supervisor for the internationally active insurance group under (b) of this section in the event of a material change in the internationally active insurance group that results in
   1. the internationally active insurance group’s insurers domiciled in this state holding the largest share of the group’s premiums, assets, or liabilities; or
   2. this state being the place of domicile of the top-tiered insurer or insurers in the insurance holding company system of the internationally active insurance group.
4. Under AS 21.22.110 , the director may collect from an insurer registered under AS 21.22.060 the information necessary to determine whether the director may act as the group-wide supervisor of an internationally active insurance group or if the director may acknowledge another regulatory official to act as the group-wide supervisor. Before issuing a determination that an internationally active insurance group is subject to group-wide supervision, the director shall notify the insurer registered under AS 21.22.060 and the ultimate controlling person within the internationally active insurance group. Upon notification, the internationally active insurance group has a minimum of 30 days to provide the director with additional information pertinent to the pending determination. The director may publish on the division’s Internet website the identity of internationally active insurance groups that the director has determined are subject to group-wide supervision by the director.
5. If the director is the group-wide supervisor for an internationally active insurance group, the director may
   1. assess the enterprise risks in the internationally active insurance group to ensure
      1. the material financial condition and liquidity risks to members of the internationally active insurance group that are engaged in the business of insurance are identified by management; and
      2. reasonable and effective mitigation measures are in place;
   2. request from a member of an internationally active insurance group subject to the director’s supervision information necessary and appropriate to assess enterprise risk, including information about the members of the internationally active insurance group regarding
      1. governance, risk assessment, and management;
      2. capital adequacy; and
      3. material intercompany transactions;
   3. coordinate and, through the authority of the regulatory officials of the jurisdictions where members of the internationally active insurance group are domiciled, compel development and implementation of reasonable measures designed to ensure that the internationally active insurance group is able to timely recognize and mitigate enterprise risks to members of the internationally active insurance group that are engaged in the business of insurance;
   4. communicate with other state, federal, and international regulatory agencies for members in the internationally active insurance group and share relevant information subject to the confidentiality provisions under AS 21.22.120 , through supervisory colleges under AS 21.22.115 or otherwise;
   5. enter into agreements with, or obtain documentation from, an insurer registered under AS 21.22.060 , a member of the internationally active insurance group, or a state, federal, or international regulatory agency for members of the internationally active insurance group, providing the basis for, or otherwise clarifying, the director’s role as group-wide supervisor, including provisions for resolving disputes with other regulatory officials; the agreements or documentation may not serve as evidence in a proceeding against an insurer or person in an insurance holding company system not domiciled or incorporated in this state or doing business in this state or otherwise subject to jurisdiction in this state; and
   6. perform other group-wide supervision activities, consistent with the authorities and purposes set out in this subsection.
6. If the director acknowledges that another regulatory official from a jurisdiction that is not accredited by the National Association of Insurance Commissioners is the group-wide supervisor, the director may reasonably cooperate, through supervisory colleges or otherwise, with group-wide supervision undertaken by the group-wide supervisor under the following conditions:
   1. the director’s cooperation is in compliance with the laws of this state; and
   2. the regulatory official acknowledged as the group-wide supervisor recognizes and cooperates with the director’s activities as a group-wide supervisor for other internationally active insurance groups, where applicable; if recognition and cooperation is not reasonably reciprocal, the director may refuse recognition and cooperation.
7. The director may enter into agreements with, or obtain documentation from, an insurer registered under AS 21.22.060 , an affiliate of the insurer, or other state, federal, and international regulatory agencies for members of the internationally active insurance group, that provide the basis for, or otherwise clarify, a regulatory official’s role as group-wide supervisor.
8. A registered insurer subject to this section is liable for and shall pay the reasonable expenses of the director’s participation in the administration of this section, including the engagement of attorneys, actuaries, and other professionals, and all reasonable travel expenses.

History. (§ 3 ch 12 SLA 2019)

Effective dates. —

Section 10, ch. 12, SLA 2019 makes this section effective July 20, 2019, in accordance with AS 01.10.070(c) .

Editor's notes. —

Section 8, ch. 12, SLA 2019 provides that the enactment of this section has the effect of amending Rule 402, Alaska Rules of Evidence, by precluding admissibility of documents, materials, or other information in the possession or control of the National Association of Insurance Commissioners relating to insurance holding companies and insurance holding company systems.

Sec. 21.22.120. Confidentiality.

1. 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 , 21.22.085 — 21.22.105 , and 21.22.117 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.
2. 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
      1. 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;
      2. 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;
      3. 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
      4. 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.
3. The director or a person who receives documents, materials, or other information while acting under the authority of the director or with whom documents, materials, or other information are shared under this chapter may not be permitted or required to testify in any private civil action concerning confidential documents, materials, or information subject to (a) of this section.
4. The sharing of information by the director under this chapter does not constitute a delegation of regulatory authority or rulemaking. The director is solely responsible for the administration, execution, and enforcement of this chapter.
5. A waiver of an applicable privilege or claim of confidentiality in the documents, materials, or information under (a) of this section may not be given as a result of disclosure to the director under this section or as a result of sharing as authorized under (b) of this section.
6. Documents, materials, or other information in the possession or control of the National Association of Insurance Commissioners under this chapter
   1. are confidential by law;
   2. are not subject to
      1. AS 40.25.110 — 40.25.220 ;
      2. subpoena; or
      3. discovery or admissible in evidence in any private action.

History. (§ 1 ch 202 SLA 1976; am § 45 ch 67 SLA 1992; am §§ 40, 41 ch 34 SLA 2015; am §§ 4, 5 ch 12 SLA 2019)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (a), in the first sentence, inserted “holding company analyses, insurer profile summaries,” following “All information, documents,”, substituted “all information reported under AS 21.22.020(b) , 21.22.060 , and 21.22.085 — 21.22.105 ,” for “all information reported under AS 21.22.060 ” and substituted “confidential treatment under AS 21.06.060 ” for “confidential treatment and may not be made public by the director or any other person, except to insurance agencies of other states, without the prior written consent of the insurer to which it pertains”; added (b).

The 2019 amendment, effective July 20, 2019, in (a), in the list of citations, added “and 21.22.117” and made a related change; added(c) through (f).

Editor's notes. —

Section 8, ch. 12, SLA 2019 provides that the enactment of this section has the effect of amending Rule 26, Alaska Rules of Civil Procedure, by precluding discovery of documents, materials, or other information in the possession or control of the National Association of Insurance Commissioners under this chapter, Rule 402, Alaska Rules of Evidence, by precluding admissibility of documents, materials, or other information in the possession or control of the National Association of Insurance Commissioners under this chapter, and Rule 501, Alaska Rules of Evidence, by creating a new privilege relating to insurance holding companies and insurance holding company systems.

Sec. 21.22.130. Regulations.

The director may adopt regulations to carry out the provisions of this chapter.

History. (§ 1 ch 202 SLA 1976)

Administrative Code. —

For insurance holding companies, see 3 AAC 21, art. 1.

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.

History. (§ 1 ch 202 SLA 1976)

Sec. 21.22.150. Voting of certain securities prohibited.

1. 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.
2. 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.
3. This section does not apply to a security that constitutes an acquisition covered by AS 21.22.065 .

History. (§ 1 ch 202 SLA 1976; am § 46 ch 67 SLA 1992)

Sec. 21.22.160. Sequestration of voting securities.

1. 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.
2. This section does not apply to a security that constitutes an acquisition covered by AS 21.22.065 .

History. (§ 1 ch 202 SLA 1976; am § 47 ch 67 SLA 1992)

Sec. 21.22.170. Civil penalties for violations.

1. 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.
2. 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.
3. 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.
4. 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 .

History. (§ 42 ch 34 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, repealed and reenacted the section, which read, “An insurer that the director determines, following an appropriate hearing as provided in AS 21.06.170 — 21.06.230 , is guilty of a wilful violation of this chapter is subject to a civil penalty of not more than $25,000. A person who is not an insurer and who the director determines, following an appropriate hearing as provided in AS 21.06.170 — 21.06.230 , to be guilty of a wilful violation of this chapter is subject to a civil penalty of not more than $15,000.”

Sec. 21.22.175. Criminal penalties.

1. An insurer or a director, officer, employee, or agent of an insurer who knowingly violates this chapter is guilty of a class C felony.
2. 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.
3. 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.
4. In this section, “knowingly” has the meaning given in AS 11.81.900(a) .

History. (§ 43 ch 34 SLA 2015)

Cross references. —

For punishment of class C felonies, see AS 12.55.125 for imprisonment and AS 12.55.035 for fines.

Effective dates. —

Section 54, ch. 34, SLA 2015 makes this section effective July 1, 2015.

Sec. 21.22.180. Receivership.

1. 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.
2. This section does not apply to a violation involving a security that constitutes an acquisition covered by AS 21.22.065 .

History. (§ 1 ch 202 SLA 1976; am § 48 ch 67 SLA 1992)

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.

History. (§ 1 ch 202 SLA 1976)

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. “group-wide supervisor” means the regulatory official authorized to engage in conducting and coordinating group-wide supervision activities who is determined or acknowledged by the director under AS 21.22.117 to have sufficient significant contacts with the internationally active insurance group;
7. “highly concentrated” means a market in which the share of the four largest insurers is 75 percent or more of the market;
8. “insurance holding company system” means a system consisting of two or more affiliated persons, one or more of which is an insurer;
9. “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;
10. “internationally active insurance group” means an insurance holding company system that includes an insurer registered under AS 21.22.060 and that meets the following criteria:
    1. insurers that are part of the insurance holding company system write premiums in at least three countries;
    2. the percentage of gross premiums written outside the United States is at least 10 percent of the insurance holding company system’s total gross written premiums; and
    3. based on a three-year rolling average, the total assets of the insurance holding company system are at least $50,000,000,000 or the total gross written premiums of the insurance holding company system are at least $10,000,000,000.
11. “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;
12. “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;
13. “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;
14. “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;
15. “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;
16. “subsidiary” means an affiliate controlled by a specified person directly or indirectly through one or more intermediaries;
17. “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.
18. “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.

History. (§ 1 ch 202 SLA 1976; am § 12 ch 21 SLA 1985; am § 49 ch 67 SLA 1992; am §§ 44, 45 ch 34 SLA 2015; am § 6 ch 12 SLA 2019)

Revisor's notes. —

Section 49, ch. 67, SLA 1992 added a definition of “insurer” even though the term was already defined in former paragraph (6) (current (7)). To give effect to all enacted language, the language added by § 49, ch. 67, SLA 1992 was added to the language in effect on the effective date of ch. 67, SLA 1992, with a minor word change to conform to the style of the Alaska Statutes. In 2010, in paragraphs (4) and (7), “ AS 21.97.900 ” was substituted for “ AS 21.90.900 ” to reflect the 2010 renumbering of AS 21.90.900 .

Paragraphs renumbered in 1992, 2015, and 2019 to maintain alphabetical order.

Administrative Code. —

For insurance holding companies, see 3 AAC 21, art. 1.

For investments, see 3 AAC 21, art. 2.

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (10), inserted “a limited liability company,” following “an individual, a corporation,” near the beginning, and “a joint venture partnership exclusively engaged in owning, managing, leasing, or developing real or tangible personal property, or” following “but does not include”, and made a stylistic change; added (15) [now (5)] and (16) [now (15)].

The 2019 amendment, effective July 20, 2019, added (17) and (18) [now (6) and (10), respectively].

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.

History. (§ 46 ch 34 SLA 2015)

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.

History. (§ 46 ch 34 SLA 2015)

Sec. 21.23.030. Own risk and solvency assessment summary report.

1. 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.
2. 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.
3. 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.

History. (§ 46 ch 34 SLA 2015)

Sec. 21.23.040. Exemptions.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.

History. (§ 46 ch 34 SLA 2015)

Sec. 21.23.050. Contents of own risk and solvency assessment summary report.

1. 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.
2. 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.

History. (§ 46 ch 34 SLA 2015)

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) .

History. (§ 46 ch 34 SLA 2015)

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.

History. (§ 46 ch 34 SLA 2015)

Sec. 21.23.080. Regulations.

The director may adopt regulations to implement, define, and enforce the provisions of this chapter.

History. (§ 46 ch 34 SLA 2015)

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 own risk and solvency assessment guidance manual.

History. (§ 46 ch 34 SLA 2015)

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 .

History. (§ 1 ch 120 SLA 1966)

Sec. 21.24.020. Purpose of deposits.

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.

History. (§ 1 ch 120 SLA 1966)

Sec. 21.24.030. Securities eligible for deposits.

1. 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.
2. 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.
3. 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.

History. (§ 1 ch 120 SLA 1966; am § 9 ch 81 SLA 2001)

Sec. 21.24.040. Depositary or custodian.

1. 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.
2. [Repealed, § 34 ch 1 FSSLA 2005.]
3. 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.
4. 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.
5. The compensation and expenses of the depositary or custodian shall be borne by the insurer.

History. (§ 1 ch 120 SLA 1966; am §§ 4, 5, 34 ch 1 FSSLA 2005)

Sec. 21.24.050. Record of deposits.

1. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966)

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.

History. (§ 1 ch 120 SLA 1966)

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.

History. (§ 1 ch 120 SLA 1966)

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.

History. (§ 1 ch 120 SLA 1966)

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.

History. (§ 1 ch 120 SLA 1966)

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) .

History. (§ 1 ch 120 SLA 1966)

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.

History. (§ 1 ch 120 SLA 1966)

Sec. 21.24.130. Duration and release of deposit.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.

History. (§ 1 ch 120 SLA 1966; am § 6 ch 1 FSSLA 2005; am § 1 ch 10 FSSLA 2005; am §§ 5 — 7 ch 30 SLA 2009)

Revisor’s notes. —

In 2000, in subsection (c), “AS 21.09.090 (b)(1) or (2)” was substituted for “AS 21.09.090 (b)(2) or (3)” to reflect the 2000 renumbering of those paragraphs.

Sec. 21.27.010. License required.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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
      1. the person is a United States manager of the United States branch of an alien admitted insurer; or
      2. the person’s compensation is not based on the volume of premium written; and
   2. the person
      1. is a wholly-owned subsidiary of the admitted insurer;
      2. wholly owns the admitted insurer; or
      3. is a wholly-owned subsidiary of the insurance holding company subject to AS 21.22 that owns or controls the admitted insurer.
7. 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
      1. is a wholly-owned subsidiary of the admitted insurer;
      2. wholly owns the admitted insurer; or
      3. 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
      1. the director has determined has enacted provisions substantially similar to those contained in this chapter; and
      2. is accredited by the National Association of Insurance Commissioners.
8. 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
      1. service contract on a motor vehicle subject to registration under AS 28.10.011 ; or
      2. home warranty; in this subparagraph, “home warranty” has the meaning given in AS 21.03.021(e)(2)(C) .
9. 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.
10. 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:
       1. performing administrative services related to
          1. group life insurance;
          2. group property and casualty insurance;
          3. group annuities;
          4. group or blanket accident and health insurance;
       2. enrolling individuals under plans for the types of insurance or annuities specified in (A) of this paragraph;
       3. issuing certificates under plans for the types of insurance or annuities specified in (A) of this paragraph, or otherwise assisting in administering those plans;
       4. 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
       1. 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;
       2. arrange appointments for a licensee if the person does not solicit insurance coverage;
       3. 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;
       4. 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
       5. 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
       1. performs no other insurance-related activities in this state;
       2. does not intend to solicit in this state; and
       3. 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
        1. may be used only by a licensed independent adjuster, licensed agent, or supervised individuals operating under this section;
        2. must comply with the claims payment requirements of this title; and
        3. must be certified as compliant with this paragraph by a licensed independent adjuster that is an officer of a licensed entity under this chapter.
11. 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.

History. (§ 1 ch 120 SLA 1966; am § 4 ch 149 SLA 1984; am §§ 1, 2 ch 51 SLA 1990; am § 50 ch 67 SLA 1992; am § 36 ch 62 SLA 1995; am § 15 ch 56 SLA 1996; am §§ 19, 20 ch 81 SLA 1997; am §§ 10, 11 ch 81 SLA 2001; am § 2 ch 143 SLA 2003; am § 7 ch 1 FSSLA 2005; am § 3 ch 78 SLA 2014; am § 1 ch 103 SLA 2014)

Administrative Code. —

For bail bonds, see 3 AAC 23, art. 5.

For group-marketed property and casualty insurance, see 3 AAC 29, art. 3.

For assigned risk pool, see 3 AAC 30, art. 1.

Effect of amendments. —

The first 2014 amendment, effective January 1, 2015, in (h)(2)(B), substituted “AS 21.03.021(e)(2)(C) ” for “AS 21.03.021(e)(2)(D) ”.

The second 2014 amendment, effective October 26, 2014, added (j)(10) and made a related change.

Sec. 21.27.020. General qualifications for license.

1. 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.
2. 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.
3. 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.
4. 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.
5. [Repealed, § 94(a) ch 23 SLA 2011.]
6. 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.
7. 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.
8. The director may make arrangements, including contracting with an outside agency, for administrative services.

History. (§ 1 ch 120 SLA 1966; am § 5 ch 29 SLA 1987; am §§ 51, 52 ch 67 SLA 1992; am § 37 ch 62 SLA 1995; am § 16 ch 56 SLA 1996; am §§ 12 — 14 ch 81 SLA 2001; am § 20 ch 38 SLA 2002; am §§ 26, 27 ch 80 SLA 2006; am §§ 35, 36, 94(a) ch 23 SLA 2011; am §§ 16, 17 ch 41 SLA 2016)

Administrative Code. —

For licensing requirements, see 3 AAC 23, art. 1.

For fiduciary responsibilities of licensees, see 3 AAC 23, art. 4.

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in (c)(3), inserted “, except that not more than one compliance officer may be designated for each class of authority” following “firm”; in (c)(5), substituted “not later than” for “within” and “after” for “of”; in (f), inserted “, and continuing education providers” following “licensees”; and made a stylistic change.

Sec. 21.27.025. Required notice of licensee.

1. 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.
2. 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.

History. (§ 53 ch 67 SLA 1992; am § 38 ch 62 SLA 1995; am §§ 15, 16 ch 81 SLA 2001; am § 37 ch 23 SLA 2011; am § 18 ch 41 SLA 2016)

Administrative Code. —

For viatical settlements, see 3 AAC 31, art. 3.

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in (a), substituted “not later than” for “within” preceding “30 days” in two places; inserted “, or compliance officer” following “telephone number”; substituted “, or by a financial industry regulatory authority sanction or arbitration proceeding not later than” for “within” following “another jurisdiction”; and made a stylistic change.

Sec. 21.27.030. Controlled business disqualification.

1. 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.
2. 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.
3. 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.
4. 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 .
5. “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.

History. (§ 1 ch 120 SLA 1966; am §§ 6, 7 ch 29 SLA 1987; am §§ 3, 4 ch 51 SLA 1990; am §§ 54 — 56 ch 67 SLA 1992)

Revisor’s notes. —

Subsections (b) and (c) were formerly (c) and (d); relettered in 1991. Subsection (d) enacted as (e); relettered in 1992. Subsection (e) was formerly (b); relettered as (d) in 1991 and again in 1992.

Sec. 21.27.040. Application for license.

1. 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.
2. [Repealed, § 47 ch 29 SLA 1987.]
3. 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 .
4. 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.
5. 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 .
6. 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.

History. (§ 1 ch 120 SLA 1966; am § 47 ch 29 SLA 1987; am §§ 57 — 59 ch 67 SLA 1992; am § 21 ch 81 SLA 1997; am §§ 17, 18 ch 81 SLA 2001; am § 15 ch 79 SLA 2004; am § 28 ch 80 SLA 2006; am § 38 ch 23 SLA 2011)

Administrative Code. —

For licensing requirements, see 3 AAC 23, art. 1.

For viatical settlements, see 3 AAC 31, art. 3.

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.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.

History. (§ 1 ch 120 SLA 1966; am § 8 ch 29 SLA 1987; am § 6 ch 51 SLA 1990; am §§ 60 — 62 ch 67 SLA 1992; am § 39 ch 62 SLA 1995; am § 1 ch 15 SLA 1999; am §§ 19 — 21 ch 81 SLA 2001; am § 18 ch 96 SLA 2004; am § 3 ch 25 SLA 2013)

Administrative Code. —

For licensing requirements, see 3 AAC 23, art. 1.

Effect of amendments. —

The 2013 amendment, effective January 1, 2014, added “, or (8)” at the end of (d)(1), and made a related change.

Sec. 21.27.070. Scope of examination. [Repealed, § 223 ch 67 SLA 1992.]

Sec. 21.27.080. Examinations.

1. 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.
2. 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.
3. 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.
4. The director may make arrangements, including contracting with an outside testing service, for administering examinations and collecting a nonrefundable fee.

History. (§ 1 ch 120 SLA 1966; am § 9 ch 26 SLA 1985; am § 7 ch 51 SLA 1990; am § 63 ch 67 SLA 1992)

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.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.

History. (§ 1 ch 120 SLA 1966; am §§ 10, 11 ch 51 SLA 1990; am § 64 ch 67 SLA 1992; am § 40 ch 62 SLA 1995; am § 22 ch 81 SLA 2001; am § 8 ch 1 FSSLA 2005; am § 39 ch 23 SLA 2011)

Sec. 21.27.110. Term of appointment.

1. An appointment under AS 21.27.100 continues in force until the appointment is terminated in writing.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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 .

History. (§ 1 ch 120 SLA 1966; am § 12 ch 51 SLA 1990; am § 65 ch 67 SLA 1992; am § 23 ch 81 SLA 2001; am § 9 ch 1 FSSLA 2005; am § 17 ch 42 SLA 2006)

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”
   1. includes benefits of endowment and annuities; and
   2. 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 .

History. (§ 24 ch 81 SLA 2001; am § 19 ch 96 SLA 2004; am § 66 ch 41 SLA 2016)

Effect of amendments. —

The 2016 amendment, effective March 1, 2017, repealed (8) and (9).

Sec. 21.27.120. Revocation of appointment. [Repealed, § 223 ch 67 SLA 1992.]

Sec. 21.27.130. Form and content of licenses.

1. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966; am § 11 ch 29 SLA 1987; am § 14 ch 51 SLA 1990; am § 66 ch 67 SLA 1992; am § 41 ch 62 SLA 1995; am §§ 25, 26 ch 81 SLA 2001)

Sec. 21.27.140. Firm licenses.

1. 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.
2. 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.
3. 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 .

History. (§ 1 ch 120 SLA 1966; am § 8 ch 113 SLA 1974; am § 12 ch 29 SLA 1987; am § 67 ch 67 SLA 1992; am §§ 27, 28 ch 81 SLA 2001; am §§ 21, 22 ch 38 SLA 2002; am § 20 ch 96 SLA 2004; am § 8 ch 30 SLA 2009; am § 40 ch 23 SLA 2011)

Administrative Code. —

For fiduciary responsibilities of licensees, see 3 AAC 23, art. 4.

Collateral references. —

Insurer’s tort liability for acts of adjuster seeking to obtain settlement or release. 39 ALR3d 739.

Sec. 21.27.150. Limited licenses.

1. 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
      1. rents to others, without operators,
         1. private passenger motor vehicles, including passenger vans, minivans, and sport utility vehicles; or
         2. 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;
      2. rents motor vehicles only to persons under rental agreements that do not exceed a term of 90 days;
      3. transacts only the following kinds of insurance:
         1. 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;
         2. 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;
         3. 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;
         4. 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;
         5. towing and roadside assistance with respect to vehicles rented from the licensee during the term of the rental agreement; and
         6. other insurance as may be authorized by regulation by the director;
      4. 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
      5. 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:
      1. 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;
      2. 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
      3. the employees or authorized representatives of the vendor may transact portable electronics insurance and are not required to obtain a limited producer license if
         1. 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;
         2. 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
         3. 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.
2. [Repealed, § 82 ch 81 SLA 2001.]

History. (§ 1 ch 120 SLA 1966; am § 68 ch 67 SLA 1992; am § 17 ch 56 SLA 1996; am § 2 ch 15 SLA 1999; am §§ 29, 82 ch 81 SLA 2001; am § 21 ch 96 SLA 2004; am § 9 ch 30 SLA 2009; am § 1 ch 17 SLA 2013; am § 4 ch 25 SLA 2013; am § 19 ch 41 SLA 2016)

Revisor’s notes. —

In 2010, in (a)(4)(C)(ii) of this section, “AS 21.96.020(c) and (d)” was substituted for “AS 21.89.020(c) and (d)” to reflect the 2010 renumbering of AS 21.89.020.

Administrative Code. —

For licensing requirements, see 3 AAC 23, art. 1.

For bail bonds, see 3 AAC 23, art. 5.

Effect of amendments. —

The first 2013 amendment, effective August 21, 2013, in (a)(1), substituted “travel insurance; in this paragraph, ‘travel insurance’ has the meaning given in AS 21.27.152 ” for “insurance connected with transportation provided by a common carrier, and limited to a specific trip, that covers (A) trip cancellation; (B) trip interruption; or (C) life, health, disability, or personal effects”.

The second 2013 amendment, effective January 1, 2014, added (a)(8).

The 2016 amendment, effective October 16, 2016, in (a)(4)(D), substituted “not later than” for “within” and “after” for “of”; in (a)(8)(C)(iii), substituted “not later than” for “within”; added (a)(9) effective March 1, 2017; and made a minor stylistic change.

Sec. 21.27.152. Travel insurance.

1. 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 .
2. 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.
3. 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.
4. 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.
5. 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
      1. the identity and contact information of the person transacting travel insurance;
      2. the identity of a person who directs or controls the person who transacts travel insurance; and
      3. 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.
6. 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.
7. Travel insurance may be provided under an individual policy or under a group or master policy.
8. In this section, “travel insurance”
   1. means insurance coverage for personal risks connected to travel, including
      1. trip interruption or cancellation;
      2. lost baggage or personal effects;
      3. damage to accommodations or rental vehicles; or
      4. 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.

History. (§ 2 ch 17 SLA 2013)

Effective dates. —

Section 2, ch. 17, SLA 2013 which enacted this section, is effective August 21, 2013.

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.

History. (§ 1 ch 120 SLA 1966; am §§ 15, 16 ch 51 SLA 1990; am § 69 ch 67 SLA 1992)

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.

1. 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.
2. 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.
3. 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.
4. [Repealed, § 83 ch 81 SLA 2001.]
5. 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.

History. (§ 1 ch 120 SLA 1966; am §§ 14, 15 ch 29 SLA 1987; am § 17 ch 51 SLA 1990; am § 71 ch 67 SLA 1992; am § 83 ch 81 SLA 2001)

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.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.

History. (§ 41 ch 23 SLA 2011)

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.

1. 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).
2. 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
      1. the license application the person submitted to the person’s home state; or
      2. 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.
3. 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.
4. 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.
5. 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.
6. 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 .
7. 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.
8. 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.
9. 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.

History. (§ 1 ch 120 SLA 1966; am § 22 ch 51 SLA 1990; am §§ 72 — 74 ch 67 SLA 1992; am § 30 ch 81 SLA 2001; am § 2 ch 103 SLA 2014)

Administrative Code. —

For viatical settlements, see 3 AAC 31, art. 3.

Effect of amendments. —

The 2014 amendment, effective October 26, 2014, added (h) and (i).

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.

History. (§ 31 ch 81 SLA 2001)

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.

1. 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.
2. [Repealed, § 34 ch 1 FSSLA 2005.]

History. (§ 1 ch 120 SLA 1966; am § 32 ch 51 SLA 1990; am § 75 ch 67 SLA 1992; am § 18 ch 56 SLA 1996; am § 32 ch 81 SLA 2001; am § 23 ch 38 SLA 2002; am § 34 ch 1 FSSLA 2005; am § 3 ch 103 SLA 2014)

Effect of amendments. —

The 2014 amendment, effective October 26, 2014, in (a), in the third sentence, inserted “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” preceding “a licensee who only conducts”.

Sec. 21.27.340. Public display of license. [Repealed, § 94(a) ch 23 SLA 2011.]

Sec. 21.27.350. Records of licensees.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.

History. (§ 1 ch 120 SLA 1966; am § 20 ch 29 SLA 1987; am §§ 34, 35 ch 51 SLA 1990; am § 77 ch 67 SLA 1992; am § 33 ch 81 SLA 2001; am § 42 ch 23 SLA 2011)

Administrative Code. —

For fiduciary responsibilities of licensees, see 3 AAC 23, art. 4.

For bail bonds, see 3 AAC 23, art. 5.

For surplus lines — unauthorized insurers, see 3 AAC 25.

For suitability in annuity contract transactions, see 3 AAC 26, art. 6.

Sec. 21.27.360. Reporting and accounting for premiums and premium taxes and fees.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. [Repealed, § 223 ch 67 SLA 1992.]
8. 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.
9. The director of insurance may adopt regulations to implement, define, and enforce this section.

History. (§ 1 ch 120 SLA 1966; am §§ 5, 6 ch 149 SLA 1984; am §§ 21, 22 ch 29 SLA 1987; am §§ 36, 37 ch 51 SLA 1990; am §§ 78 — 82, 223 ch 67 SLA 1992; am § 42 ch 62 SLA 1995; am §§ 1, 2 ch 77 SLA 2001; am §§ 34 — 39 ch 81 SLA 2001; am § 22 ch 96 SLA 2004; am § 43 ch 23 SLA 2011)

Revisor’s notes. —

Subsection (i) was enacted as subsection (h) and relettered in 2001.

Cross references. —

For criminal provisions relating to misapplication of property by a fiduciary, see AS 11.46.620 .

Administrative Code. —

For fiduciary responsibilities of licensees, see 3 AAC 23, art. 4.

For bail bonds, see 3 AAC 23, art. 5.

Collateral references. —

Liability of insurance agent, for exposure of insurer to liability because of failure to fully disclose or assess risk or to report issuance of policy. 35 ALR3d 821.

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.

1. 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.
2. 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.
3. 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
      1. nominal;
      2. on a one-time basis; and
      3. 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.
4. 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 .
5. 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.
6. 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.

History. (§ 1 ch 120 SLA 1966; am § 84 ch 67 SLA 1992; am § 22 ch 81 SLA 1997; am § 40 ch 81 SLA 2001; am § 24 ch 38 SLA 2002)

Sec. 21.27.380. License renewal, expiration, and reinstatement.

1. 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.
2. 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.
3. 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 .
4. 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.
5. A trainee license issued to an independent adjuster shall be for a term not to exceed 12 months and may not be renewed.
6. [Repealed, § 14 ch 6 SLA 2012.]

History. (§ 1 ch 120 SLA 1966; am §§ 11, 12 ch 26 SLA 1985; am § 23 ch 29 SLA 1987; am § 38 ch 51 SLA 1990; am § 85 ch 67 SLA 1992; am § 43 ch 62 SLA 1995; am § 23 ch 96 SLA 2004; am § 10 ch 1 FSSLA 2005; am § 14 ch 6 SLA 2012; am §§ 20 — 22 ch 41 SLA 2016)

Administrative Code. —

For licensing requirements, see 3 AAC 23, art. 1.

For fees, see 3 AAC 31, art. 1.

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in (a), deleted “the close of business of” following “on or before”, substituted “license expiration” for “renewal”, inserted “, submits a renewal application” following “regulation”, inserted “authority” preceding “to the director”, substituted “expires” for “lapses”; in (b), substituted “expires” for “lapses” in four places and made minor stylistic changes; in (d), substituted “The director shall mail a notice” for “notice”, “expiration” for “lapse from the director” and “expiration” for “lapse shall be mailed”.

Sec. 21.27.390. Temporary license.

1. 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.
2. 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.
3. 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.
4. [Repealed, § 34 ch 23 SLA 2018.]

History. (§ 1 ch 120 SLA 1966; am § 13 ch 26 SLA 1985; am § 24 ch 29 SLA 1987; am § 39 ch 51 SLA 1990; am § 86 ch 67 SLA 1992; am § 16 ch 54 SLA 1997; am § 23 ch 81 SLA 1997; am § 41 ch 81 SLA 2001; am § 34 ch 23 SLA 2018)

Administrative Code. —

For licensing requirements, see 3 AAC 23, art. 1.

Effect of amendments. —

The 2018 amendment, effective January 1, 2019, repealed (d).

Sec. 21.27.400. Temporary license limitations. [Repealed, § 223 ch 67 SLA 1992.]

Sec. 21.27.405. Hearing and order on violation.

1. 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.
2. 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 .
3. 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.

History. (§ 87 ch 67 SLA 1992; am § 24 ch 81 SLA 1997)

Sec. 21.27.410. Denial, nonrenewal, suspension, or revocation of licenses.

1. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966; am §§ 25, 26 ch 29 SLA 1987; am § 41 ch 51 SLA 1990; am § 88 ch 67 SLA 1992; am § 42 ch 81 SLA 2001; am § 29 ch 30 SLA 2009)

Revisor’s notes. —

Paragraphs (a)(10) — (13) were formerly (a)(13) — (16) and were renumbered in 2010 to reflect the 2009 repeal of former paragraphs (10) — (12).

Administrative Code. —

For licensing requirements, see 3 AAC 23, art. 1.

For bail bonds, see 3 AAC 23, art. 5.

Sec. 21.27.420. Procedure for suspending, revoking, or conditioning a license.

1. 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.
2. 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.
3. 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.
4. 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.

History. (§ 1 ch 120 SLA 1966; am § 23 ch 94 SLA 1980; am § 27 ch 29 SLA 1987; am § 89 ch 67 SLA 1992; am § 44 ch 62 SLA 1995; am § 10 ch 30 SLA 2009)

Collateral references. —

Revocation or suspension of insurance agent’s license for withholding or misappropriation of premiums. 17 ALR4th 1106.

Sec. 21.27.430. Suspensions and revocations.

1. An order suspending a license shall specify the period during which the license is suspended. A period of suspension may not exceed 12 months.
2. 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.
3. 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.

History. (§ 1 ch 120 SLA 1966; am § 90 ch 67 SLA 1992)

Sec. 21.27.440. Penalties.

1. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966; am § 7 ch 149 SLA 1984; am § 28 ch 29 SLA 1987; am § 91 ch 67 SLA 1992; am § 25 ch 81 SLA 1997)

Administrative Code. —

For licensing requirements, see 3 AAC 23, art. 1.

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.

1. 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.
2. 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.
3. 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.

History. (§ 1 ch 120 SLA 1966; am § 30 ch 29 SLA 1987; am § 42 ch 51 SLA 1990; am §§ 92, 93 ch 67 SLA 1992; am § 43 ch 81 SLA 2001)

Administrative Code. —

For viatical settlements, see 3 AAC 31, art. 3.

Secs. 21.27.470 — 21.27.520. Agent, broker, solicitor, service representatives, and adjuster defined; exceptions from definitions. [Repealed, § 47 ch 29 SLA 1987.]

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.

History. (§ 94 ch 67 SLA 1992; am § 45 ch 62 SLA 1995; am § 82 ch 81 SLA 2001; am § 53 ch 96 SLA 2004)

Revisor’s notes. —

Paragraph (3) was formerly (4); renumbered in 2010 to reflect the repeal of former paragraphs (3) and (5).

Sec. 21.27.540. Trainee insurance producers. [Repealed, § 53 ch 96 SLA 2004.]

Sec. 21.27.550. Appointment of insurance producer as an agent.

1. 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 .
2. 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.
3. All money collected for the account of an insurer shall be held by the insurance producer as a fiduciary.
4. An agency agreement may not be assigned in whole or in part by the insurance producer.
5. 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.
6. An insurance producer is subject to the unfair trade practice and fraud provisions under AS 21.36.
7. 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.
8. 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.
9. 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
      1. jointly employ an individual who is employed with the reinsurer or reinsurance intermediary manager; or
      2. delegate insurance producer authority to another person.

History. (§ 94 ch 67 SLA 1992; am §§ 45, 46 ch 81 SLA 2001)

Administrative Code. —

For bail bonds, see 3 AAC 23, art. 5.

Sec. 21.27.560. Appointment of insurance producers as brokers.

1. 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.
2. 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.
3. 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.
4. A contract between a client and an insurance producer may not be assigned in whole or in part by the insurance producer.
5. 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.
6. [Repealed, § 52 ch 34 SLA 2015.]
7. Money paid by a client to an insurance producer for insurance premiums shall be held by the insurance producer as a fiduciary.
8. 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.
9. 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.

History. (§ 94 ch 67 SLA 1992; am § 4 ch 22 SLA 2001; am §§ 47, 48 ch 81 SLA 2001; am § 52 ch 34 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, repealed (f).

Sec. 21.27.570. Operating requirements for controlling insurance producers.

1. 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:
      1. 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;
      2. 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;
      3. the controlling insurance producer shall remit money due under the contract to the controlled insurer at least monthly;
      4. premiums or installments collected shall be due not later than 90 days after the effective date of coverage placed with the controlled insurer;
      5. 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;
      6. all payments on behalf of the controlled insurer shall be held by the controlling insurance producer as a fiduciary;
      7. 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;
      8. the contract may not be assigned in whole or in part by the controlling insurance producer;
      9. 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;
      10. 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;
      11. 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;
      12. 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;
      13. 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;
      14. 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
          1. 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;
          2. a later period established by the director for specified kinds or classes of insurance; and
          3. not until the profits have been verified under (b) of this section;
      15. 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.
2. 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.
3. 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.
4. A controlling insurance producer may be examined by the director as if it were the controlled insurer.
5. 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.
6. 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.
7. 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.
8. 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 .
9. Except as provided in this section, AS 21.22 applies to all parties within an insurance holding company system subject to this section.
10. 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.

History. (§ 94 ch 67 SLA 1992; am § 46 ch 62 SLA 1995; am § 49 ch 81 SLA 2001; am §§ 47, 48, 52 ch 34 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (a)(3)(A), deleted “by certified mail” following “upon written notice sent”, in each of (a)(3)(J) and (a)(3)(K), twice substituted “insurance producers” for “licensees”; repealed (h)(5); added (i) and (j).

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.

History. (§ 94 ch 67 SLA 1992; am § 24 ch 96 SLA 2004)

Collateral references. —

Coverage and exclusions for insurance brokers and agents in error and omissions policy. 89 ALR2d 1192.

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.

History. (§ 94 ch 67 SLA 1992)

Sec. 21.27.620. Operating requirements for managing general agents; actions for loss.

1. 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:
      1. 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;
      2. 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;
      3. all money collected for the account of an insurer shall be held by the managing general agent as a fiduciary;
      4. all payments on behalf of the insurer shall be held by the managing general agent as a fiduciary;
      5. the managing general agent may not retain more than three months’ estimated claims payments and allocated loss adjustment expenses;
      6. 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;
      7. the contract may not be assigned in whole or in part by the managing general agent;
      8. if the contract permits the managing general agent to do underwriting, the contract must include the following:
         1. the managing general agent’s maximum annual premium volume;
         2. the rating system and basis of the rates to be charged;
         3. the types of risks that may be written;
         4. maximum limits of liability;
         5. applicable exclusions;
         6. territorial limitations;
         7. policy cancellation provisions;
         8. the maximum policy term; and
         9. that the insurer shall have the right to cancel or not renew a policy of insurance subject to applicable state law;
      9. if the contract permits the managing general agent to settle claims on behalf of the insurer, the contract must include the following:
         1. 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;
         2. claims shall be reported to the insurer within 30 days;
         3. 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;
         4. each party shall comply with unfair claims settlement statutes and regulations;
         5. transmission of electronic data at least monthly if electronic claim files are in existence; and
         6. 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;
      10. 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
          1. one year after they are earned for property insurance business and five years after they are earned on casualty business;
          2. a later period established by the director for specified kinds or classes of insurance; and
          3. not until the profits have been verified under (d) of this section;
      11. 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
      12. the insurer shall provide written notification to the director within 30 days of the termination of a contract with a managing general agent.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. The actual or apparently authorized acts of the managing general agent are considered the acts of the insurer upon whose behalf it is acting.
9. A managing general agent may be examined by the director as if it were the insurer.
10. 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.
11. 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.
12. In this section, “transact” has the meaning given in AS 21.97.900 .

History. (§ 94 ch 67 SLA 1992; am § 95 ch 67 SLA 1992; am § 47 ch 62 SLA 1995; am §§ 51, 52 ch 81 SLA 2001; am § 29 ch 80 SLA 2006)

Revisor’s notes. —

In 2010, in subsection ( l ), “AS 21.97.900 ” was substituted for “AS 21.90.900 ” to reflect the 2010 renumbering of AS 21.90.900 .

Sec. 21.27.630. Registration required.

1. 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.
2. A third-party administrator may not transact business for a kind or class of authority for which the person is not registered.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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 .
11. 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.
12. 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.
13. 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.

History. (§ 94 ch 67 SLA 1992; am §§ 11 — 13 ch 1 FSSLA 2005; am § 11 ch 30 SLA 2009)

Sec. 21.27.640. Third-party administrator qualifications.

1. 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.
2. 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
      1. 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;
      2. the bylaws, rules, regulations, or similar documents regulating the internal affairs of the administrator;
      3. 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;
      4. 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
      5. 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
      1. a change in compliance officer, residence, place of business, mailing address, or phone number;
      2. 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
      3. a conviction of a misdemeanor or felony of the third-party administrator, its officers, directors, partners, owners, or employees.
3. 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.
4. 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.

History. (§ 94 ch 67 SLA 1992; am § 26 ch 81 SLA 1997; am § 53 ch 81 SLA 2001; am § 23 ch 41 SLA 2016)

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in the introductory language of (b)(9), substituted “not later than” for “within” and “after” for “of”, in (b)(9)(B), substituted “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” for “the suspension or revocation of an insurance license or registration by another state or jurisdiction”.

Sec. 21.27.650. Operating requirements for third-party administrators.

1. 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
      1. 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;
      2. a list of current insurers under contract; and
      3. 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:
      1. 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;
      2. 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;
      3. all money collected for the account of an insurer shall be held by the third-party administrator as a fiduciary;
      4. all payments on behalf of the insurer shall be held by the third-party administrator as a fiduciary;
      5. the third-party administrator may not retain more than three months’ estimated claims payments and allocated loss adjustment expenses;
      6. 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;
      7. the contract may not be assigned in whole or in part by the third-party administrator;
      8. if the contract permits the third-party administrator to do underwriting, the contract must include the following:
         1. the third-party administrator’s maximum annual premium volume;
         2. the rating system and basis of the rates to be charged;
         3. the types of risks that may be written;
         4. maximum limits of liability;
         5. applicable exclusions;
         6. territorial limitations;
         7. policy cancellation provisions;
         8. the maximum policy term; and
         9. that the insurer shall have the right to cancel or not renew a policy of insurance subject to applicable state law;
      9. if the contract permits the third-party administrator to administer claims on behalf of the insurer, the contract must include the following:
         1. 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;
         2. claims shall be reported to the insurer within 30 days;
         3. 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;
         4. each party to the contract shall comply with unfair claims settlement statutes and regulations;
         5. transmission of electronic data must occur at least monthly if electronic claim files are in existence; and
         6. 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
      10. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. A third-party administrator shall maintain records as described in AS 21.27.350 .
11. 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.
12. 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.
13. A third-party administrator may be examined by the director under AS 21.06.120 as if it were the insurer.
14. 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.
15. 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.
16. [Repealed, § 34 ch 1 FSSLA 2005.]
17. 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.
18. 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.

History. (§ 94 ch 67 SLA 1992; am § 112 ch 62 SLA 1995; am §§ 54, 55 ch 81 SLA 2001; am §§ 14, 15, 34 ch 1 FSSLA 2005; am § 30 ch 80 SLA 2006; am § 24 ch 41 SLA 2016)

Revisor’s notes. —

Paragraphs (f)(3)-(9) were enacted as (f)(4)-(10). Renumbered in 2000 to reflect the 1995 repeal of former (f)(3).

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, added (r).

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 .

History. (§ 16 ch 1 FSSLA 2005)

Revisor’s notes. —

In 2010, in paragraph (2), “AS 21.97.900 ” was substituted for “AS 21.90.900 ” to reflect the 2010 renumbering of AS 21.90.900 .

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.

History. (§ 94 ch 67 SLA 1992; am § 25 ch 96 SLA 2004)

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.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. In this section, “transact” has the meaning given in AS 21.97.900 .

History. (§ 94 ch 67 SLA 1992; am §§ 48, 49 ch 62 SLA 1995; am §§ 57, 58 ch 81 SLA 2001; am § 25 ch 41 SLA 2016)

Revisor’s notes. —

In 2010, in subsection (g), “AS 21.97.900 ” was substituted for “AS 21.90.900 ” to reflect the 2010 renumbering of AS 21.90.900 .

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in (b), inserted “the reinsurance intermediary broker has filed a certification with the director that the reinsurance intermediary broker is operating only for a foreign insurer and” following “this chapter if”, inserted “has filed a certification with the director that the reinsurance intermediary broker is operating only for a domestic insurer and” preceding “is licensed in good standing”.

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
    1. written evidence directly from an assuming reinsurer that it has agreed to assume the risk; or
    2. 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.

History. (§ 94 ch 67 SLA 1992)

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.

History. (§ 94 ch 67 SLA 1992; am § 26 ch 96 SLA 2004)

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.

History. (§ 94 ch 67 SLA 1992)

Sec. 21.27.760. Operating requirements for reinsurance intermediary managers; actions for loss.

1. 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.
2. 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,
       1. 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;
       2. claims shall be reported to the reinsurer within 30 days;
       3. a copy of the claim file shall be sent to the reinsurer upon request or as soon as it becomes known that the claim
          1. has the potential to exceed an amount determined by the director or exceeds the limit set by the insurer, whichever is less;
          2. involves a coverage dispute;
          3. may exceed the reinsurance intermediary manager’s claims settlement authority;
          4. is open for more than six months;
          5. involves extra contractual allegations; or
          6. is closed by payment in excess of an amount set by the director or an amount set by the insurer, whichever is less;
       4. the reinsurance intermediary manager shall comply with unfair claims settlement statutes and regulations;
       5. transmission of electronic data at least once a month if electronic claims files are in existence;
       6. 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
       1. 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;
       2. a later period established by the director for specified kinds or classes of insurance; and
       3. the profits have been verified under (e)(2) of this section;
   13. the reinsurance intermediary manager may not
       1. 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;
       2. commit the reinsurer to participate in 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 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;
       5. 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;
       6. jointly employ an individual who is employed with the reinsurer; or
       7. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. A reinsurance intermediary manager may be examined by the director as if it were the insurer.
10. 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.
11. 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.
12. In this section, “transact” has the meaning given in AS 21.97.900 .

History. (§ 94 ch 67 SLA 1992; am § 96 ch 67 SLA 1992; am § 50 ch 62 SLA 1995; am §§ 59, 60 ch 81 SLA 2001)

Revisor’s notes. —

In 2001, in subsection (i), “were” was substituted for “where” to correct a manifest error in ch. 67, SLA 1992. In 2010, in subsection ( l ), “AS 21.97.900 ” was substituted for “AS 21.90.900 ” to reflect the 2010 renumbering of AS 21.90.900 .

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
    1. directly from an assuming reinsurer that it has agreed to assume the risk; or
    2. 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.

History. (§ 94 ch 67 SLA 1992)

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.

History. (§ 94 ch 67 SLA 1992; am § 61 ch 81 SLA 2001; am § 27 ch 96 SLA 2004; am § 44 ch 23 SLA 2011)

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.

History. (§ 94 ch 67 SLA 1992)

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.

History. (§ 94 ch 67 SLA 1992)

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.

History. (§ 94 ch 67 SLA 1992)

Sec. 21.27.840. Trainee independent adjusters.

1. 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.
2. 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.
3. 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.
4. 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.
5. Upon satisfying the requirements of (c) of this section, a trainee independent adjuster shall apply within 30 days for an independent adjuster license.
6. 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.
7. 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.
8. 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.
9. 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 .

History. (§ 94 ch 67 SLA 1992; am §§ 63, 64 ch 81 SLA 2001)

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.

History. (§ 94 ch 67 SLA 1992)

Collateral references. —

Insurer’s tort liability for acts of adjuster seeking to obtain settlement or release. 39 ALR3d 739.

Sec. 21.27.860. Unlicensed nonresident adjusters.

1. 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.
2. 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.

History. (§ 94 ch 67 SLA 1992)

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.

History. (§ 94 ch 67 SLA 1992)

Sec. 21.27.901. Registration of pharmacy benefits managers; scope of business practice.

1. A person may not conduct business in the state as a pharmacy benefits manager unless the person is registered with the director as a third-party administrator under  AS 21.27.630 .
2. A pharmacy benefits manager registered under  AS 21.27.630 may
   1. contract with an insurer to administer or manage pharmacy benefits provided by an insurer for a covered person, including claims processing services for and audits of payments for prescription drugs and medical devices and supplies;
   2. contract with network pharmacies;
   3. set the cost of multi-source generic drugs under  AS 21.27.945 ; and
   4. adjudicate appeals related to multi-source generic drug reimbursement.

History. (§ 5 ch 100 SLA 2018)

Effective dates. —

Section 10, ch. 100, SLA 2018 makes this section effective July 1, 2019.

Sec. 21.27.905. Renewal of registration.

1. A pharmacy benefits manager shall biennially renew a registration with the director.
2. To renew a registration under this section, a pharmacy benefits manager shall pay a renewal fee established by the director. The director shall set the amount of the renewal fee to allow the renewal and oversight activities of the division to be self- supporting.

History. (§ 5 ch 100 SLA 2018)

Effective dates. —

Section 10, ch. 100, SLA 2018 makes this section effective July 1, 2019.

Sec. 21.27.910. Pharmacy audit procedural requirements.

1. When a pharmacy benefits manager conducts an audit of the records of a pharmacy, the period covered by the audit of a claim may not exceed two years from the date that the claim was submitted to or adjudicated by the pharmacy benefits manager, whichever is earlier. Except as required under  AS 21.36.495 , a claim submitted to or adjudicated by a pharmacy benefits manager does not accrue interest during the audit period.
2. A pharmacy benefits manager conducting an on-site audit shall give the pharmacy written notice of at least 10 business days before conducting an initial audit.
3. A pharmacy benefits manager may not conduct
   1. an audit during the first seven calendar days of any month unless agreed to by the pharmacy;
   2. more than one on-site audit of a pharmacy within a 12-month period; or
   3. on-site audits of more than 250 separate prescriptions at one pharmacy within a 12-month period unless fraud by the pharmacy or an employee of the pharmacy is alleged.
4. If an audit involves clinical or professional judgment, the individual conducting the audit must
   1. be a pharmacist who is licensed and in good standing under  AS 08.80; or
   2. conduct the audit in consultation with a pharmacist who is licensed and in good standing under  AS 08.80.
5. A pharmacy, in responding to an audit, may use
   1. verifiable statements or records, including medication administration records of a nursing home, assisted living facility, hospital, physician, or other authorized practitioner, to validate the pharmacy record;
   2. a legal prescription to validate claims in connection with prescriptions, refills, or changes in prescriptions, including medication administration records, prescriptions transmitted by facsimile, electronic prescriptions, or documented telephone calls from the prescriber or the prescriber’s agent.
6. A pharmacy benefits manager shall audit each pharmacy under the same standards and parameters as other similarly situated pharmacies in a network pharmacy contract in this state.

History. (§ 5 ch 100 SLA 2018)

Effective dates. —

Section 10, ch. 100, SLA 2018 makes this section effective July 1, 2019.

Sec. 21.27.915. Overpayment or underpayment.

1. When a pharmacy benefits manager conducts an audit of a pharmacy, the pharmacy benefits manager shall base a finding of overpayment or underpayment by the pharmacy on the actual overpayment or underpayment and not on a projection based on the number of patients served having a similar diagnosis or on the number of similar orders or refills for similar drugs, except as provided in (b) of this section.
2. A pharmacy benefits manager may resolve a finding of overpayment or underpayment by entering into a settlement agreement with the pharmacy. The settlement agreement
   1. must comply with the requirements of AS 21.36.125 ; and
   2. may be based on a statistically justifiable projection method.
3. A pharmacy benefits manager may not include the dispensing fee amount in a finding of an overpayment unless
   1. a prescription was not actually dispensed;
   2. the prescriber denied authorization;
   3. the prescription dispensed was a medication error by the pharmacy; or
   4. the identified overpayment is solely based on an extra dispensing fee.

History. (§ 5 ch 100 SLA 2018)

Effective dates. —

Section 10, ch. 100, SLA 2018 makes this section effective July 1, 2019.

Sec. 21.27.920. Recoupment.

1. When a pharmacy benefits manager conducts an audit of a pharmacy, the pharmacy benefits manager shall base the recoupment of overpayments on the actual overpayment of the claim, except as provided in AS 21.27.915(b) .
2. A pharmacy benefits manager conducting an audit of a pharmacy may not
   1. use extrapolation in calculating recoupments or penalties for audits, unless required by state or federal contracts;
   2. assess a charge-back, recoupment, or other penalty against a pharmacy solely because a prescription is mailed or delivered at the request of a patient; or
   3. receive payment
      1. based on a percentage of the amount recovered; or
      2. for errors that have no actual financial harm to the patient or medical plan.

History. (§ 5 ch 100 SLA 2018)

Effective dates. —

Section 10, ch. 100, SLA 2018 makes this section effective July 1, 2019.

Sec. 21.27.925. Pharmacy audit reports.

1. A pharmacy benefits manager shall deliver a preliminary audit report to the pharmacy audited within 60 days after the conclusion of the audit.
2. A pharmacy benefits manager shall allow the pharmacy at least 30 days following receipt of the preliminary audit report to provide documentation to the pharmacy benefits manager to address a discrepancy found in the audit. A pharmacy benefits manager may grant a reasonable extension upon request by the pharmacy.
3. A pharmacy benefits manager shall deliver a final audit report to the pharmacy within 120 days after receipt of the preliminary audit report, settlement agreement, or final appeal, whichever is latest.

History. (§ 5 ch 100 SLA 2018)

Effective dates. —

Section 10, ch. 100, SLA 2018 makes this section effective July 1, 2019.

Sec. 21.27.930. Pharmacy audit appeal; future repayment.

1. A pharmacy benefits manager conducting an audit shall establish a written appeals process.
2. Recoupment of disputed funds or repayment of funds to the pharmacy benefits manager by the pharmacy, if permitted by contract, shall occur, to the extent demonstrated or documented in the pharmacy audit findings, after final internal disposition of the audit, including the appeals process.  If the identified discrepancy for an individual audit exceeds $15,000, future payments to the pharmacy may be withheld pending finalization of the audit.
3. A pharmacy benefits manager may not assess against a pharmacy a charge- back, recoupment, or other penalty until the pharmacy benefits manager’s appeals process has been exhausted and the final report or settlement agreement issued.

History. (§ 5 ch 100 SLA 2018)

Effective dates. —

Section 10, ch. 100, SLA 2018 makes this section effective July 1, 2019.

Sec. 21.27.935. Fraudulent activity.

When a pharmacy benefits manager conducts an audit of a pharmacy, the pharmacy benefits manager may not consider unintentional clerical or record-keeping errors, including typographical errors, writer’s errors, or computer errors regarding a required document or record, to be fraudulent activity. In this section, “fraudulent activity” means an intentional act of theft, deception, misrepresentation, or concealment committed by the pharmacy.

History. (§ 5 ch 100 SLA 2018)

Effective dates. —

Section 10, ch. 100, SLA 2018 makes this section effective July 1, 2019.

Sec. 21.27.940. Pharmacy audits; restrictions.

The requirements of AS 21.27.901 — 21.27.955 do not apply to an audit

1. in which suspected fraudulent activity or other intentional or wilful misrepresentation is evidenced by a physical review, a review of claims data, a statement, or another investigative method; or
2. of claims paid for under the medical assistance program under AS 47.07.

History. (§ 5 ch 100 SLA 2018)

Effective dates. —

Section 10, ch. 100, SLA 2018 makes this section effective July 1, 2019.

Sec. 21.27.945. Drug pricing list; procedural requirements.

1. A pharmacy benefits manager shall
   1. make available to each network pharmacy at the beginning of the term of the network pharmacy’s contract, and upon renewal of the contract, the methodology and sources used to determine the drug pricing list;
   2. provide a telephone number at which a network pharmacy may contact an employee of a pharmacy benefits manager to discuss the pharmacy’s appeal;
   3. provide a process for a network pharmacy to have ready access to the list specific to that pharmacy;
   4. review and update applicable list information at least once every seven business days to reflect modification of list pricing;
   5. update list prices within one business day after a significant price update or modification provided by the pharmacy benefits manager’s national drug database provider; and
   6. ensure that dispensing fees are not included in the calculation of the list pricing.
2. When establishing a list, the pharmacy benefits manager shall use
   1. the most up-to-date pricing data to calculate reimbursement to a network pharmacy for drugs subject to list prices;
   2. multi-source generic drugs that are sold or marketed in the state during the list period.

History. (§ 5 ch 100 SLA 2018)

Effective dates. —

Section 10, ch. 100, SLA 2018 makes this section effective July 1, 2019.

Sec. 21.27.950. Multi-source generic drug appeal.

1. A pharmacy benefits manager shall establish a process by which a network pharmacy, or a network pharmacy’s contracting agent, may appeal the reimbursement for a multi-source generic drug. A pharmacy benefits manager shall resolve an appeal from a network pharmacy within 10 calendar days after the network pharmacy or the contracting agent submits the appeal.
2. A network pharmacy, or a network pharmacy’s contracting agent, may appeal a reimbursement from a pharmacy benefits manager for a multi-source generic drug if the reimbursement for the drug is less than the amount that the network pharmacy can purchase from two or more of its contracted suppliers.
3. A pharmacy benefits manager may grant a network pharmacy’s appeal if an equivalent multi-source generic drug is not available at a price at or below the pharmacy benefits manager’s list price for purchase from national or regional wholesalers who operate in the state. If an appeal is granted, the pharmacy benefits manager shall adjust the reimbursement of the network pharmacy to equal the network pharmacy acquisition cost for each paid claim included in the appeal.
4. If the pharmacy benefits manager denies a network pharmacy’s appeal, the pharmacy benefits manager shall provide the network pharmacy with the
   1. reason for the denial;
   2. national drug code of an equivalent multi-source generic drug that has been purchased by another network pharmacy located in the state at a price that is equal to or less than the pharmacy benefits manager’s list price within seven days after the network pharmacy appeals the claim; and
   3. name of a pharmaceutical wholesaler who operates in the state in which the drug may be acquired by the challenging network pharmacy.
5. A network pharmacy may request a hearing under AS 21.06.170 — 21.06.240 for an adverse decision from a pharmacy benefits manager within 30 calendar days after receiving the decision. The parties may present all relevant information to the director for the director’s review.
6. The director shall enter an order that
   1. grants the network pharmacy’s appeal and directs the pharmacy benefits manager to make an adjustment to the disputed claim;
   2. denies the network pharmacy’s appeal; or
   3. directs other actions considered fair and equitable.

History. (§ 5 ch 100 SLA 2018)

Effective dates. —

Section 10, ch. 100, SLA 2018 makes this section effective July 1, 2019.

Sec. 21.27.955. Definitions.

In AS 21.27.901 — 21.27.955 ,

1. “audit”  means an official examination and verification of accounts and records;
2. “claim”  means a request from a pharmacy or pharmacist to be reimbursed for the cost of filling or refilling a prescription for a drug or for providing a medical supply or device;
3. “extrapolation”  means the practice of inferring a frequency or dollar amount of overpayments, underpayments, invalid claims, or other errors on any portion of claims submitted, based on the frequency or dollar amount of overpayments, underpayments, invalid claims, or other errors actually measured in a sample of claims;
4. “list”  means the list of multi-source generic drugs for which a predetermined reimbursement amount has been established such as a maximum allowable cost or maximum allowable cost list or any other list of prices used by a pharmacy benefits manager;
5. “multi-source generic drug” means any covered outpatient prescription drug that the United States Food and Drug Administration has determined is pharmaceutically equivalent or bioequivalent to the originator or name brand drug and for which there are at least two drug products that are rated as therapeutically equivalent under the United States Food and Drug Administration’s most recent publication of “Approved Drug Products with Therapeutic Equivalence Evaluations”;
6. “network pharmacy” means a pharmacy that provides covered health care services or supplies to an insured or a member under a contract with a network plan to act as a participating provider;
7. “pharmacy”  has the meaning given in  AS 08.80.480 ;
8. “pharmacy acquisition cost” means the amount that a pharmaceutical wholesaler or distributor charges for a pharmaceutical product as listed on the pharmacy’s invoice;
9. “pharmacy benefits manager” means a person that contracts with a pharmacy on behalf of an insurer to process claims or pay pharmacies for prescription drugs or medical devices and supplies or provide network management for pharmacies;
10. “recoupment”  means the amount that a pharmacy must remit to a pharmacy benefits manager when the pharmacy benefits manager has determined that an overpayment to the pharmacy has occurred.

History. (§ 5 ch 100 SLA 2018)

Effective dates. —

Section 10, ch. 100, SLA 2018 makes this section effective July 1, 2019.

Sec. 21.27.990. 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”
    1. means
       1. 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;
       2. a risk retention group as defined in 15 U.S.C. 3901, as amended;
    2. 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
    1. 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;
    2. 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
    1. 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;
    2. 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.

History. (§ 94 ch 67 SLA 1992; am §§ 65, 66, 82, 83 ch 81 SLA 2001; am §§ 25, 26 ch 38 SLA 2002; am § 53 ch 96 SLA 2004; am § 17 ch 1 FSSLA 2005; am § 49 ch 80 SLA 2006; am §§ 45, 94(a) ch 23 SLA 2011; am §§ 4, 5 ch 103 SLA 2014; am §§ 49, 50 ch 34 SLA 2015)

Revisor's notes. —

Reorganized in 2001, 2002, 2005, 2010, 2011, 2014 and 2015 to maintain alphabetical order.

Formerly AS 21.27.900; renumbered in 2018.

Administrative Code. —

For viatical settlements, see 3 AAC 31, art. 3.

Effect of amendments. —

The 2014 amendment, effective October 26, 2014, in (10), rewrote the introductory language, which read, “’home state”’, added the (A) and (B) designations, in (10)(A) added “an insurance producer,” at the beginning, added (10)(B), and made related changes; added (31) [now (11)].

The 2015 amendment, effective July 1, 2015, rewrote (8), which read, “‘controlled insurer’ means an admitted insurer that is controlled, directly or indirectly, by an insurance producer”; added (32) [now (1)] and (33) [now (4)].

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.

History. (§ 1 ch 234 SLA 1968; am § 3 ch 117 SLA 1984; am § 97 ch 67 SLA 1992)

Administrative Code. —

For unfair claims settlement acts or practices, see 3 AAC 26, art. 1.

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.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.

History. (§ 1 ch 234 SLA 1968; am §§ 4, 5 ch 117 SLA 1984; am § 14 ch 26 SLA 1985; am § 26 ch 21 SLA 1991; am § 98 ch 67 SLA 1992)

Sec. 21.33.025. Service of process on lieutenant governor.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.

History. (§ 1 ch 234 SLA 1968; am § 6 ch 117 SLA 1984; am § 99 ch 67 SLA 1992)

Sec. 21.33.030. Director process agent. [Repealed, § 2 ch 234 SLA 1968.]

Sec. 21.33.031. Defendant’s duties and rights.

1. 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.
2. 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.
3. 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.

History. (§ 1 ch 234 SLA 1968; am §§ 7, 8 ch 117 SLA 1984; am §§ 100, 101 ch 67 SLA 1992)

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.

History. (§ 1 ch 234 SLA 1968; am § 9 ch 117 SLA 1984)

Sec. 21.33.037. Acting for or aiding nonadmitted insurers prohibited.

1. 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.
2. 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.
3. 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.
4. 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.

History. (§ 10 ch 117 SLA 1984; am §§ 102, 103 ch 67 SLA 1992; am § 21 ch 56 SLA 1996; am § 27 ch 38 SLA 2002)

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.

History. (§ 11 ch 117 SLA 1984; am § 104 ch 67 SLA 1992; am § 22 ch 56 SLA 1996)

Sec. 21.33.045. Investigation and disclosure of insurance contracts.

1. 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.
2. [Repealed, § 26 ch 117 SLA 1984.]
3. 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.
4. [Repealed, § 60 ch 38 SLA 2002.]

History. (§ 1 ch 234 SLA 1968; am §§ 12, 13, 26 ch 117 SLA 1984; am § 105 ch 67 SLA 1992; am § 23 ch 56 SLA 1996; am § 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.

1. 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.
2. 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,
      1. 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;
      2. 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;
      3. 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:
      1. by use of the allocation schedule where the subject is appropriately identified in the schedule;
      2. 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.
3. 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.
4. 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.

History. (§ 1 ch 234 SLA 1968; am § 14 ch 117 SLA 1984; am §§ 106 — 108 ch 67 SLA 1992; am §§ 28, 29 ch 38 SLA 2002; am §§ 46, 47 ch 23 SLA 2011)

Cross references. —

For taxes on insurers in general, see AS 21.09.210 .

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.

1. 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.
2. 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.
3. 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.
4. 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,
      1. 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;
      2. 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;
      3. 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:
      1. by use of the allocation schedule where the subject is appropriately identified in the schedule;
      2. 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.
5. [Repealed, § 223 ch 67 SLA 1992.]
6. 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.
7. 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.
8. 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.
9. [Repealed, § 223 ch 67 SLA 1992.]
10. 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.

History. (§ 1 ch 234 SLA 1968; am §§ 15 — 18 ch 117 SLA 1984; am §§ 109 — 112, 223 ch 67 SLA 1992; am § 24 ch 56 SLA 1996; am §§ 30, 31 ch 38 SLA 2002; am §§ 48, 49 ch 23 SLA 2011)

Cross references. —

For taxes on insurers in general, see AS 21.09.210 .

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.

History. (§ 50 ch 23 SLA 2011)

Sec. 21.33.065. Penalties.

1. 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.
2. 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.
3. [Repealed, § 223 ch 67 SLA 1992.]

History. (§ 1 ch 234 SLA 1968; am § 19 ch 117 SLA 1984; am §§ 113, 114, 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 .

History. (§ 1 ch 120 SLA 1966; am § 9 ch 149 SLA 1984; am § 115 ch 67 SLA 1992)

Revisor’s notes. —

Formerly AS 21.33.320 . Renumbered in 1984.

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 .

History. (§ 20 ch 117 SLA 1984; am § 116 ch 67 SLA 1992)

Revisor’s notes. —

Enacted as AS 21.33.900 . Renumbered in 1984.

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
   1. permit orderly access to surplus lines insurance in this state; and
   2. 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.

History. (§ 21 ch 117 SLA 1984)

Administrative Code. —

For surplus lines — unauthorized insurers, see 3 AAC 25.

Sec. 21.34.020. Placement of surplus lines insurance.

1. 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.
2. 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.
3. 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.

History. (§ 21 ch 117 SLA 1984; am § 117 ch 67 SLA 1992; am § 25 ch 56 SLA 1996; am §§ 28, 29 ch 96 SLA 2004; am § 12 ch 30 SLA 2009; am § 51 ch 23 SLA 2011)

Revisor’s notes. —

Subsection (c) was enacted as (b) and relettered in 2009, at which time former (b) was relettered as (c).

Administrative Code. —

For surplus lines — unauthorized insurers, see 3 AAC 25.

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).

History. (§ 118 ch 67 SLA 1992; am § 26 ch 56 SLA 1996)

Sec. 21.34.030. Workers’ compensation insurance.

1. 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.
2. 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.
3. 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.
4. The minimum capital and surplus required is two times that required in AS 21.34.040(c)(1) .

History. (§ 21 ch 117 SLA 1984; am § 4 ch 38 SLA 2007)

Administrative Code. —

For surplus lines — unauthorized insurers, see 3 AAC 25.

Sec. 21.34.035. Health care insurance.

1. 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.
2. 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 .
3. 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.
4. 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.
5. In this section, “health care insurance” has the meaning given in AS 21.12.050(b) .

History. (§ 30 ch 96 SLA 2004; am § 26 ch 41 SLA 2016)

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in (b), substituted “AS 21.51.405 and AS 21.54.015 ” for “AS 21.87.190 ” in two places.

Sec. 21.34.040. Eligible surplus lines insurers required.

1. 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.
2. The nonadmitted insurer must establish satisfactory evidence of good repute and financial integrity to be eligible.
3. 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.
4. 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.
5. The capital and surplus requirements of this section shall be calculated based upon generally accepted accounting practices used in the United States of America.
6. 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.
7. 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.

History. (§ 21 ch 117 SLA 1984; am § 31 ch 29 SLA 1987; am § 51 ch 50 SLA 1990; am §§ 119 — 121 ch 67 SLA 1992; am § 51 ch 62 SLA 1995; am §§ 27, 28 ch 81 SLA 1997; am § 18 ch 1 FSSLA 2005; am § 13 ch 30 SLA 2009; am §§ 52, 53 ch 23 SLA 2011)

Administrative Code. —

For surplus lines — unauthorized insurers, see 3 AAC 25.

For fees, see 3 AAC 31, art. 1.

Sec. 21.34.050. Listing eligible surplus lines insurers.

1. 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.
2. 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.
3. 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.

History. (§ 21 ch 117 SLA 1984; am § 31 ch 96 SLA 2004; am § 31 ch 80 SLA 2006; am §§ 27, 28 ch 41 SLA 2016)

Administrative Code. —

For surplus lines — unauthorized insurers, see 3 AAC 25.

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in (a), deleted “pays fees required by regulation and” preceding “appears”; in (c), in the introductory language, deleted “fails to pay, before July 1 of each year, the fee authorized under this section or” preceding “fails to meet”, deleted (c)(1) and (3); and made related and stylistic changes.

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.

History. (§ 21 ch 117 SLA 1984; am § 122 ch 67 SLA 1992)

Revisor’s notes. —

In 1991, “are” was inserted after “placements” to correct a manifest error in ch. 117, SLA 1984.

Administrative Code. —

For surplus lines — unauthorized insurers, see 3 AAC 25.

Sec. 21.34.070. Declaration of ineligibility.

1. 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.
2. 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.
3. The director shall promptly mail notice of all declarations under (b) of this section to each licensed surplus lines broker.

History. (§ 21 ch 117 SLA 1984; am § 123 ch 67 SLA 1992)

Sec. 21.34.080. Transaction report; evidence of insurance.

1. 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.
2. 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.
3. [Repealed, § 53 ch 96 SLA 2004.]
4. 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.

History. (§ 21 ch 117 SLA 1984; am § 124 ch 67 SLA 1992; am § 52 ch 62 SLA 1995; am §§ 32, 53 ch 96 SLA 2004; am § 14 ch 30 SLA 2009; am § 54 ch 23 SLA 2011)

Revisor’s notes. —

In 1991, in (a)(4) of this section, “premium charged for the insurance” was substituted for “insurance charged for the insurance” to correct a manifest error in ch. 117, SLA 1984.

Administrative Code. —

For surplus lines — unauthorized insurers, see 3 AAC 25.

Sec. 21.34.090. Surplus lines association.

1. 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.
2. 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.
3. A surplus lines association is subject to the same penalties under this title as a surplus lines broker.
4. 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.
5. The surplus lines association shall maintain its place of business in this state.

History. (§ 21 ch 117 SLA 1984; am §§ 125 — 127 ch 67 SLA 1992)

Sec. 21.34.100. Evidence of insurance.

1. 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.
2. 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.
3. 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.
4. A surplus lines broker who fails to comply with this section is subject to the penalties in AS 21.34.230 .
5. 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.”
6. 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.”

History. (§ 21 ch 117 SLA 1984; am § 128 ch 67 SLA 1992; am § 33 ch 96 SLA 2004; am §§ 19, 20 ch 1 FSSLA 2005)

Administrative Code. —

For surplus lines — unauthorized insurers, see 3 AAC 25.

Sec. 21.34.110. Surplus lines broker’s duty to notify insured.

1. 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).
2. Nothing in this section may be construed as nullifying an agreement by an insurer to provide insurance.

History. (§ 21 ch 117 SLA 1984; am § 129 ch 67 SLA 1992; am § 53 ch 62 SLA 1995; am § 34 ch 96 SLA 2004)

Administrative Code. —

For surplus lines — unauthorized insurers, see 3 AAC 25.

Sec. 21.34.120. Validity of surplus lines contracts.

Insurance contracts procured under this chapter shall be valid and enforceable as to all parties.

History. (§ 21 ch 117 SLA 1984)

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.

History. (§ 21 ch 117 SLA 1984; am § 130 ch 67 SLA 1992)

Administrative Code. —

For surplus lines — unauthorized insurers, see 3 AAC 25.

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.

History. (§ 21 ch 117 SLA 1984; am § 131 ch 67 SLA 1992)

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.

1. 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.
2. 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.
3. 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.

History. (§ 21 ch 117 SLA 1984; am § 132 ch 67 SLA 1992; am §§ 35, 36 ch 96 SLA 2004; am § 35 ch 56 SLA 2005; am § 5 ch 38 SLA 2007; am § 55 ch 23 SLA 2011)

Administrative Code. —

For surplus lines — unauthorized insurers, see 3 AAC 25.

Sec. 21.34.180. Surplus lines tax.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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:
      1. 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;
      2. 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;
      3. 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:
      1. by use of the allocation schedule if the risk is appropriately identified in the schedule;
      2. 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.
7. 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.
8. 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.
9. 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.
10. 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.

History. (§ 21 ch 117 SLA 1984; am § 29 ch 81 SLA 1997; am §§ 32 — 34 ch 38 SLA 2002; am §§ 37, 38 ch 96 SLA 2004; am § 36 ch 56 SLA 2005; am § 56 ch 23 SLA 2011; am § 29 ch 41 SLA 2016)

Administrative Code. —

For frequency and method of premium tax payments, see 3 AAC 21, art. 5.

For surplus lines — unauthorized insurers, see 3 AAC 25.

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, in (a), inserted “home state of the insured is this state and the” near the beginning of the second sentence.

Sec. 21.34.190. Filing fee.

1. 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.
2. 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.

History. (§ 21 ch 117 SLA 1984; am §§ 133, 134 ch 67 SLA 1992; am § 54 ch 62 SLA 1995; am § 30 ch 81 SLA 1997; am § 57 ch 23 SLA 2011)

Administrative Code. —

For frequency and method of premium tax payments, see 3 AAC 21, art. 5.

For surplus lines — unauthorized insurers, see 3 AAC 25.

Sec. 21.34.200. Collection of taxes and fees.

1. 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 .
2. [Repealed, § 223 ch 67 SLA 1992.]
3. 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 .

History. (§ 21 ch 117 SLA 1984; am §§ 135, 223 ch 67 SLA 1992)

Revisor’s notes. —

In 2010, in subsection (c), “AS 21.36.910 ” was substituted for “AS 21.36.320 ” to reflect the 2010 renumbering of AS 21.36.320 .

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.

1. 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.
2. Each surplus lines insurer assuming a surplus lines risk is considered to have subjected itself to this chapter.
3. The remedies provided in this section are in addition to other methods provided by law for service of process upon insurers.

History. (§ 21 ch 117 SLA 1984)

Sec. 21.34.230. Penalties.

1. 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.
2. A violation of this chapter is cause for denial, nonrenewal, suspension, or revocation of a license.

History. (§ 21 ch 117 SLA 1984; am § 136 ch 67 SLA 1992)

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.

History. (§ 21 ch 117 SLA 1984)

Sec. 21.34.250. Regulations.

The director may adopt regulations to implement, define, and enforce the provisions of this chapter.

History. (§ 21 ch 117 SLA 1984)

Administrative Code. —

For surplus lines — unauthorized insurers, see 3 AAC 25.

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,
   1. 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
   2. 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:
   1. except as provided in (B) of this paragraph, “home state” means, with respect to an insured,
      1. 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
      2. 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;
   2. 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;
   3. 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:
    1. insurance upon, of interest in, or relating to vessels, crafts, hulls, except vessels of 50 displacement tons or less;
    2. insurance of marine builders risks, marine war risks, and contracts of marine protection and indemnity insurance;
    3. insurance of freight and disbursements pertaining to a subject of insurance coming within this paragraph; or
    4. 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.

History. (§ 21 ch 117 SLA 1984; am § 137 ch 67 SLA 1992; am § 6 ch 38 SLA 2007; am § 17 ch 8 SLA 2011; am § 58 ch 23 SLA 2011)

Revisor’s notes. —

In 2000, “AS 21.34.170 , 21.34.180 ,” was substituted for “AS 21.34.160 — 21.31.180” in paragraph (11) to reflect the 1992 repeal of AS 21.34.160 .

Paragraphs (1), (2), (4), (6), (8), and (12) were enacted as (10) — (15); the paragraphs were renumbered in 2011 to maintain alphabetical order.

Administrative Code. —

For surplus lines — unauthorized insurers, see 3 AAC 25.

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.

History. (§ 1 ch 120 SLA 1966; am § 1 ch 163 SLA 1976; am § 2 ch 97 SLA 2000)

Administrative Code. —

For unfair claims settlement acts or practices, see 3 AAC 26, art. 1.

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.

History. (§ 1 ch 120 SLA 1966; am § 138 ch 67 SLA 1992; am § 3 ch 97 SLA 2000)

Administrative Code. —

For unfair claims settlement acts or practices, see 3 AAC 26, art. 1.

For annuity contract disclosures, see 3 AAC 26, art. 6.

For suitability in annuity contract transactions, see 3 AAC 26, art. 7.

For life insurance policy and annuity contract replacements, see 3 AAC 26, art. 8.

For health insurance marketed as medicare supplements, see 3 AAC 28, art. 5.

For life insurance policy illustrations, see 3 AAC 28, art. 9.

For group-marketed property and casualty insurance, see 3 AAC 29, art. 3.

Sec. 21.36.025. Unfair marketing practices prohibited.

1. A person may not violate the applicable provisions of AS 21.56.180 .
2. A person may not sell a membership in an association or labor union for the purpose of qualifying an individual for group insurance.
3. 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.

History. (§ 2 ch 39 SLA 1993; am § 30 ch 41 SLA 2016)

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, added (b) and (c).

Sec. 21.36.030. Misrepresentation and false advertising of insurance policies.

1. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966; am § 2 ch 163 SLA 1976; am §§ 21, 22 ch 1 FSSLA 2005)

Administrative Code. —

For annuity contract disclosures, see 3 AAC 26, art. 5.

For suitability in annuity contract transactions, see 3 AAC 26, art. 6.

For life insurance policy and annuity contract replacements, see 3 AAC 26, art. 7.

For health insurance marketed as medicare supplements, see 3 AAC 28, art. 5.

For life insurance policy illustrations, see 3 AAC 28, art. 9.

For group-marketed property and casualty insurance, see 3 AAC 29, art. 3.

Collateral references. —

Liability of insurance agent or broker to insured for misrepresentation of cash surrender value or accumulated value benefits of life insurance policy. 44 ALR4th 1030.

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.

History. (§ 1 ch 120 SLA 1966)

Administrative Code. —

For annuity contract disclosures, see 3 AAC 26, art. 6.

For suitability in annuity contract transactions, see 3 AAC 26, art. 6.

For life insurance policy and annuity contract replacements, see 3 AAC 26, art. 7.

For health insurance marketed as medicare supplements, see 3 AAC 28, art. 5.

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.

History. (§ 1 ch 120 SLA 1966)

Administrative Code. —

For annuity contract disclosures, see 3 AAC 26, art. 6.

For suitability in annuity contract transactions, see 3 AAC 26, art. 7.

For life insurance policy and annuity contract replacements, see 3 AAC 26, art. 8.

For health insurance marketed as medicare supplements, see 3 AAC 28, art. 5.

Sec. 21.36.055. [Renumbered as AS 21.36.470.]

Sec. 21.36.060. False or misleading financial statements.

1. 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.
2. 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.
3. 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.
4. 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.

History. (§ 1 ch 120 SLA 1966; am § 3 ch 163 SLA 1976; am § 7 ch 38 SLA 2007)

Administrative Code. —

For financial examination of and annual audit reporting requirements for admitted insurers, see 3 AAC 21, art. 7.

Sec. 21.36.065. [Renumbered as AS 21.36.475.]

Sec. 21.36.070. Defamation.

1. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966; am § 4 ch 163 SLA 1976; am § 4 ch 97 SLA 2000)

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.

History. (§ 1 ch 120 SLA 1966)

Administrative Code. —

For bail bonds, see 3 AAC 23, art. 5.

For group-marketed property and casualty insurance, see 3 AAC 29, art. 3.

Sec. 21.36.090. Unfair discrimination.

1. 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.
2. 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.
3. 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.
4. 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.

History. (§ 1 ch 120 SLA 1966; am § 5 ch 163 SLA 1976; am § 1 ch 80 SLA 1983; am § 28 ch 2 FSSLA 1987; am § 1 ch 56 SLA 1988; am § 1 ch 150 SLA 1988; am § 139 ch 67 SLA 1992; am § 3 ch 39 SLA 1993; am § 1 ch 51 SLA 1993; am §§ 28, 29 ch 56 SLA 1996; am § 1 ch 50 SLA 1998; am § 1 ch 60 SLA 1998; am § 2 ch 18 SLA 2002; am § 2 ch 17 SLA 2007; am § 35 ch 33 SLA 2016)

Administrative Code. —

For unfair claims settlement acts or practices, see 3 AAC 26, art. 1.

For unfair discrimination, see 3 AAC 26, art. 2.

For group-marketed property and casualty insurance, see 3 AAC 29, art. 3.

Effect of amendments. —

The 2016 amendment, effective July 7, 2016, in (d), deleted “nurse midwife” following “chiropractor” and substituted “practice registered nurse” for “nurse practitioner”.

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.

History. (§ 7 ch 97 SLA 2000)

Revisor’s notes. —

Formerly AS 21.36.212 . Renumbered in 2010.

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.

History. (§ 1 ch 120 SLA 1966; am § 31 ch 56 SLA 1996)

Administrative Code. —

For fiduciary responsibilities of licensees, see 3 AAC 23, art. 4.

For bail bonds, see 3 AAC 23, art. 5.

For consumer credit insurance, see 3 AAC 28, art. 4.

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:
   1. the wellness program is reasonably designed to promote health or prevent disease;
   2. an individual has an opportunity to qualify for the reward at least once a year;
   3. the reward is available for all similarly situated individuals;
   4. the wellness program has alternative standards for individuals who are unable to obtain the reward because of a health factor;
   5. alternative standards are available for an individual who is unable to participate in a reward program because of a health condition;
   6. the insurer provides information explaining the standard for achieving the reward and discloses the alternative standards; and
   7. the total rewards for all wellness programs under the health insurance policy do not exceed 20 percent of the cost of coverage.

History. (§ 1 ch 120 SLA 1966; am § 32 ch 56 SLA 1996; am § 15 ch 30 SLA 2009)

Sec. 21.36.120. Unfair discrimination and rebates prohibited in property and casualty insurance.

1. 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.
2. 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.
3. 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.
4. 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.

History. (§ 1 ch 120 SLA 1966; am § 55 ch 62 SLA 1995)

Administrative Code. —

For bail bonds, see 3 AAC 23, art. 5.

For schedule and individual risk rating plans, see 3 AAC 29, art. 5.

Sec. 21.36.122. [Renumbered as AS 21.36.490.]

Sec. 21.36.125. Unfair claim settlement practices.

1. 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.
2. The provisions of this section do not create or imply a private cause of action for a violation of this section.
3. The director of insurance shall adopt regulations to implement, define, and enforce this section.

History. (§ 6 ch 163 SLA 1976; am §§ 5, 6 ch 97 SLA 2000; am § 3 ch 99 SLA 2000)

Revisor’s notes. —

Paragraph (a)(17) was enacted as (16). Renumbered in 2000.

Subsection (c) was formerly AS 21.36.350 . Renumbered in 2010, at which time “this section” was substituted for “ AS 21.36.350 ”. Also in 2010, in (a)(16), “ AS 21.96.030 ” was substituted for “ AS 21.89.030” to reflect the 2010 renumbering of AS 21.89.030.

Administrative Code. —

For bail bonds, see 3 AAC 23, art. 5.

For unfair claims settlement acts or practices, see 3 AAC 26, art. 1.

For uniform claim forms, see 3 AAC 28, art. 8.

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.

History. (§ 1 ch 120 SLA 1966; am § 7 ch 163 SLA 1976)

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.

History. (§ 1 ch 120 SLA 1966; am § 56 ch 62 SLA 1995)

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.

1. 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.
2. 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.

History. (§ 1 ch 120 SLA 1966)

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 , an insurer 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.

History. (§ 35 ch 81 SLA 1997; am § 31 ch 41 SLA 2016)

Effect of amendments. —

The 2016 amendment, effective October 16, 2016, substituted “Except for records subject to health carrier grievance reporting and record keeping requirements established under AS 21.07.005 , an” for “An” at the beginning of the first sentence.

Sec. 21.36.190. Fictitious groups.

1. 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.
2. 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.
3. This section does not apply to mortgage guaranty insurance, life insurance, health insurance, or annuity contracts.
4. 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.
5. This section does not apply to insurance coverage under a joint insurance arrangement authorized by AS 21.76.
6. 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 .

History. (§ 1 ch 120 SLA 1966; am § 9 ch 206 SLA 1976; am § 1 ch 75 SLA 1977; am § 2 ch 136 SLA 1986; am § 33 ch 56 SLA 1996; am § 25 ch 1 FSSLA 2005)

Revisor’s notes. —

In 2010, in subsection (f), “AS 21.36.475 ” was substituted for “AS 21.36.065 ” to reflect the 2010 renumbering of AS 21.36.065 .

Administrative Code. —

For group-marketed property and casualty insurance, see 3 AAC 29, art. 3.

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.

History. (§ 22 ch 117 SLA 1984; am § 57 ch 62 SLA 1995; am § 26 ch 1 FSSLA 2005)

Administrative Code. —

For surplus lines — unauthorized insurers, see 3 AAC 25.

Sec. 21.36.200. False applications, claims, proofs of loss. [Repealed, § 22 ch 149 SLA 1984.]

Sec. 21.36.210. Limits on cancellation.

1. 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.
2. 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.
3. [Repealed, § 47 ch 29 SLA 1987.]
4. 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.
5. [Repealed, § 47 ch 29 SLA 1987.]
6. 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.

History. (§ 1 ch 28 SLA 1970; am § 1 ch 13 SLA 1972; am §§ 32 — 34, 47 ch 29 SLA 1987; am § 1 ch 67 SLA 1998; am § 1 ch 54 SLA 2014; am § 16 ch 32 SLA 2016)

Revisor’s notes. —

In 2010, in (a)(2) of this section, “AS 21.96.027 ” was substituted for “AS 21.89.027” to reflect the 2010 renumbering of AS 21.89.027.

Administrative Code. —

For group-marketed property and casualty insurance, see 3 AAC 29, art. 3.

Effect of amendments. —

The 2014 amendment, effective September 21, 2014, added (f)(6), and made a related change.

The 2016 amendment, effective October 4, 2016, in (a)(2), deleted “; this paragraph does not apply to revocation as described under AS 21.96.027 ” at the end.

Editor’s notes. —

Under sec. 2, ch. 54, SLA 2014, paragraph (f)(6) “applies to property that becomes entirely abandoned on or after September 21, 2014.”

Sec. 21.36.212. [Renumbered as AS 21.36.096.]

Sec. 21.36.220. Notice of cancellation.

1. 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.
2. 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.
3. 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
      1. 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;
      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. failure or refusal of the insured to provide the information necessary to confirm exposure or necessary to determine the policy premium;
      5. 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.
4. The division may require an insurer to perform an audit that the insurer has elected to waive under (c) of this section.
5. 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.

History. (§ 1 ch 28 SLA 1970; am §§ 35, 36 ch 29 SLA 1987; am § 143 ch 67 SLA 1992; am § 2 ch 48 SLA 1999)

Administrative Code. —

For fiduciary responsibilities of licensees, see 3 AAC 23, art. 4.

For group-marketed property and casualty insurance, see 3 AAC 29, art. 3.