Enrolled HB 540: Relating to workers' compensation insurance rates; and providing for an effective date.

00 Enrolled HB 540                                                                                                         
01 Relating to workers' compensation insurance rates; and providing for an effective date.                                 
02                           _______________                                                                               
03    * Section 1.  AS 21.39.030(a) is amended to read:                                                                  
04            (a)  Rates, including loss costs under AS 21.39.043 or any other provision                               
05       of law, shall be made in accordance with the following provisions:                                            
06                 (1)  rates shall not be excessive, inadequate, or unfairly discriminatory;                              
07                 (2)  consideration shall be given to past and prospective loss experience                               
08       inside and outside this state; to the conflagration and catastrophe hazards; to a                                 
09       reasonable margin for underwriting profit and contingencies; to dividends, savings, or                            
10       unabsorbed premium deposits allowed or returned by insurers to their policyholders,                               
11       members, or subscribers; to past and prospective expenses both countrywide and those                              
12       specially applicable to this state; and to all other relevant factors inside and outside                          
13       this state;                                                                                                       
01                 (3)  the systems of expense provisions included in the rates for use by                                 
02       an insurer or group of insurers may differ from those of other insurers or group of                               
03       insurers to reflect the requirements of the operating methods of the insurer or group of                          
04       insurers with respect to any kind of insurance, or with respect to a subdivision or                               
05       combination thereof for which subdivision or combination separate expense provisions                              
06       are applicable;                                                                                                   
07                 (4)  risks may be grouped by classifications for the establishment of                                   
08       rates and minimum premiums; classification rates may be modified to produce rates                                 
09       for individual risks in accordance with rating plans that establish standards for                                 
10       measuring variations in hazards or expense provisions, or both; the standards may                                 
11       measure any differences among risks that can be demonstrated to have a probable                                   
12       effect upon losses or expenses;                                                                                   
13                 (5)  in the case of fire insurance rates, consideration may be given to                                 
14       the experience of the fire insurance business during a period of not more than the most                           
15       recent five-year period for which experience is available;                                                        
16                 (6)  when there is an established program to inspect new and existing                                   
17       dwellings and the program has been certified by the director as likely to reduce the                              
18       incidence of fires in inspected dwellings, then in any rate plan used in this state,                              
19       dwellings that have been found by the inspection to meet the standards established by                             
20       the program shall have credits applied to the rate in amounts approved by the director.                           
21    * Sec. 2.  AS 21.39.040(d) is amended to read:                                                                     
22            (d)  Subject to the exception specified in (e) of this section and not including                         
23       workers' compensation prospective loss cost filings and workers' compensation                                 
24       assigned risk pool rates by a rating organization under AS 21.39.043, each filing                             
25       shall be on file for a waiting period of 15 days before it becomes effective, which                               
26       period may be extended by the director for an additional period not to exceed 15 days                             
27       if the director gives written notice within the waiting period to the insurer or rating                           
28       organization that made the filing stating that additional time for the consideration of                           
29       the filing is required.  Upon written application by the insurer or rating organization,                          
30       the director may authorize a filing that the director has reviewed to become effective                            
31       before the expiration of the waiting period.  A filing shall be considered to meet the                            
01       requirements of this chapter unless disapproved by the director within the waiting                                
02       period.                                                                                                           
03    * Sec. 3.  AS 21.39 is amended by adding a new section to read:                                                    
04            Sec.  21.39.043.  Workers' compensation loss cost filings and assigned risk                                
05       pool rate filings.  (a)  On at least an annual calendar year basis, a rating organization                       
06       shall make a workers' compensation prospective loss cost filing and an assigned risk                              
07       pool rate filing, even if the rating organization determines that a change in the                                 
08       prospective loss costs or rates is not indicated.                                                                 
09            (b)  A rating organization shall submit a prospective loss cost filing and an                                
10       assigned risk pool rate filing to the director not less than 125 days before the proposed                         
11       effective date of each filing.                                                                                    
12            (c)  At the time a prospective loss cost filing and assigned risk pool rate filing                           
13       are submitted to the director under (b) of this section, the rating organization shall                            
14       make available to any member or subscriber that may be affected by the filings a                                  
15       complete copy of the filings, together with the materials, aggregate data, and other                              
16       information submitted in support of the filings.  The prospective loss cost and assigned                          
17       risk pool rate filings and supporting information are available for public inspection.                            
18       Before the hearing under (d) of this section, members and subscribers may submit                                  
19       interrogatories to the rating organization, including requests for additional supporting                          
20       information concerning the filings.                                                                               
21            (d)  The director shall hold an administrative hearing on whether a prospective                              
22       loss cost filing meets the requirements of this chapter and whether the filing should be                          
23       approved, disapproved, or modified, in whole or in part.  The director shall hold the                             
24       hearing not earlier than 20 days and not later than 25 days after the date of receipt of                          
25       the prospective loss cost filing by the director.  The director may adopt regulations                             
26       governing the conduct of the hearing subject to the following:                                                    
27                 (1)  the director shall sit in a quasi-judicial capacity;                                               
28                 (2)  an interested party may                                                                            
29                      (A)  have a reasonable opportunity to inspect the filing and                                       
30            supporting information and to examine witnesses, including the designated                                    
31            actuary and other witnesses of the rating organization;                                                      
01                      (B)  present witnesses, oral and written testimony, and                                            
02            documentary evidence; and                                                                                    
03                      (C)  apply for subpoenas to be issued by the director to compel                                    
04            attendance of witnesses and the production of evidence on the interested                                     
05            party's behalf;                                                                                              
06                 (3)  evidence and testimony from interested parties is limited to matters                               
07       relevant to a determination of whether the filing's prospective loss costs meet the                               
08       requirements of this chapter and may include a recommendation for approval,                                       
09       disapproval, or modification of the prospective loss cost filing;                                                 
10                 (4)  the director shall record the hearing;                                                             
11                 (5)  formal rules of pleading or evidence need not be observed;                                         
12                 (6)  the director may conduct part or all of a hearing by teleconference                                
13       and allow a witness to testify telephonically; and                                                                
14                 (7)  the director shall leave the hearing record open for 10 days after the                             
15       date of the hearing, during which time interested parties may submit additional written                           
16       testimony and documentary evidence concerning the prospective loss cost filing to the                             
17       director subject to the limitations of (3) of this subsection, and members and                                    
18       subscribers may submit to the rating organization and to the director proposed                                    
19       modifications to the prospective loss cost filing accompanied by the information upon                             
20       which the member or subscriber supports the modification.                                                         
21            (e)  The director shall review the prospective loss cost filing and the evidence                             
22       presented through the hearing process within 15 days after the hearing.  The 15-day                               
23       period may be extended for an additional 15 days if the director gives written notice                             
24       within the first 15-day period to the rating organization that additional time for                                
25       consideration of the filing is required.  If, under (d)(7) of this section, evidence is                           
26       provided to support a modification and the rating organization does not include the                               
27       requested modification in the filing, the director shall require that the rating                                  
28       organization rebut the evidence to show why the modification should not be included.                              
29       The director may request that the rating organization                                                             
30                 (1)  provide additional supporting information for the filing; or                                       
31                 (2)  modify the filing based on evidence provided through the hearing                                   
01       process.                                                                                                          
02            (f)  The rating organization shall file its rebuttal, if required by the director                            
03       under (e) of this section, and any other information requested under (e)(1) of this                               
04       section, or its modification of the loss cost filing under (e)(2) of this section within 15                       
05       days after receipt of the director's request unless additional time is allowed by the                             
06       director.  The director shall review the rating organization's responses to the director's                        
07       interrogatories within 15 days after receipt of the response.  The 15-day period may be                           
08       extended for an additional 15 days if the director gives written notice within the first                          
09       15-day period to the rating organization that additional time for consideration of the                            
10       filing is required.                                                                                               
11            (g)  Subject to AS 21.06.060(f), all communications under this section between                               
12       the director, the rating organization, and any interested party concerning a prospective                          
13       loss cost filing, including the director's interrogatories, the rating organization's written                     
14       responses, modified filings and all supporting information, except for information                                
15       related to a particular insured, are part of the filing record and are available for public                       
16       inspection.                                                                                                       
17            (h)  The rating organization shall make available to a member or subscriber all                              
18       information that is available for public inspection under this section as soon as                                 
19       possible after issuance or receipt of the information by the director.  Other interested                          
20       parties may obtain copies of public documents from the director.                                                  
21            (i)  The director shall issue a written order approving or disapproving the                                  
22       prospective loss cost filing and the assigned risk pool rate filing.  The order must                              
23       include details of the director's reasoning for approving or disapproving the filings.                            
24            (j)  A separate prospective loss cost filing submitted solely to address an                                  
25       amendment to AS 23.30 is not subject to the procedures of this section, but shall be                              
26       reviewed and approved or disapproved by the director in accordance with                                           
27       AS 21.39.040(d).  A filing under this subsection, together with all supporting                                    
28       information and communications between the director and the rating organization, is                               
29       available for public inspection.                                                                                  
30            (k)  A written order of the director under this section is subject to review by                              
31       appeal to the superior court.  An appeal under this section shall be filed with the court                         
01       within 30 days after the date of the written order.  The court shall determine whether                            
02       the filing of the appeal will operate as a stay of the order.                                                     
03            (l)  A filing made under this section is subject to all other provisions of this                             
04       chapter except to the extent that the other provisions are inconsistent with this section.                        
05       AS 21.39.080 does not apply to a prospective loss cost filing by a workers'                                       
06       compensation rating organization.                                                                                 
07            (m)  An assigned risk pool filing is not directly subject to (d) - (h) of this                               
08       section.                                                                                                          
09            (n)  In this section,                                                                                        
10                 (1)  "assigned risk pool rate filing" means the filing submitted by a                                   
11       rating organization for rates proposed to be charged by the rating organization for the                           
12       assigned risk pool insurance under AS 21.39.155;                                                                  
13                 (2)  "interested party" means                                                                           
14                      (A)  an employer association;                                                                      
15                      (B)  an employee or labor association;                                                             
16                      (C)  a producer;                                                                                   
17                      (D)  a producer association;                                                                       
18                      (E)  an insurer member or subscriber of the rating organization;                                   
19            and                                                                                                          
20                      (F)  other persons who are substantially affected by the loss cost                                 
21            filing;                                                                                                      
22                 (3)  "prospective loss cost filing" means the historical aggregate losses                               
23       and loss adjustment expenses upon which a portion of a rate is based, adjusted through                            
24       trending to a future point in time, but does not include expenses, other than loss                                
25       adjustment expenses, or profit.                                                                                   
26    * Sec. 4.  This Act takes effect July 1, 2004.