Title 21. Insurance.
Chapter 03. Scope of Code.
Sec. 21.03.010. Insurance regulated.
 (a) All persons transacting a business of insurance in this state, or relative to a subject resident, located or to be performed in this state, shall comply with the applicable provisions of this title.

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

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




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 [Repealed, § 2 ch 234 SLA 1968.]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

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

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

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

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

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

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

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

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

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

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

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

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

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

 (h) A motor vehicle service contract shall be governed by AS 21.59.110 — 21.59.290 except as expressly provided in this title.

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

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

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

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

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

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

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

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

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

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

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




Secs. 21.03.030 — 21.03.050. Existing certificates of authority and licenses; existing forms and filings; existing domestic insurers. [Repealed, § 47 ch 29 SLA 1987.]
Sec. 21.03.060. 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.


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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




Chapter 05. Administration.
[Repealed, § 4 ch 120 SLA 1966.]

Chapter 06. The Director of Insurance.
Sec. 21.06.010. Appointment of director.
The commissioner of commerce, community, and economic development shall appoint the director, division of insurance, Department of Commerce, Community, and Economic Development. The director serves at the pleasure of the commissioner.


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

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




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

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

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

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

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

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

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

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




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

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




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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     (2) in the public interest.




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

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




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

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

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

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

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




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

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

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




Sec. 21.06.087. Insurance report.

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

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




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

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

     (2) the grounds on which it is based;

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

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




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

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

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

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

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

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

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

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

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

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

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




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


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

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

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

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

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

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

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

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

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




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

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

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




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

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

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

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

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

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

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

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

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

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

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

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




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

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

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

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

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

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

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

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

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




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

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

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




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

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

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

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




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

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

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

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

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




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

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

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




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

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

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

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




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


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

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

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

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

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

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

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

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




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

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

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




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


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


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


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


Sec. 21.06.260. Accounting and disposition of fees. [Repealed, § 28 ch 90 SLA 1991.]
Chapter 07. Patient Protections Under Health Care Insurance Policies.
Sec. 21.07.005. Regulations relating to health care insurance policies.
 (a) The director shall adopt regulations to provide standards and criteria for
     (1) the structure and operation of utilization review and benefit determination processes;

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

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

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

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




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

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

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

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

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

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

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

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

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

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

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

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

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

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




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

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

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

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

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

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

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




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

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

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

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

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

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

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

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

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

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

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

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

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




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

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

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

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

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

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

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




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


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

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

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

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

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

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

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

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

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

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

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




Chapter 09. Authorization, Corporate Governance Requirements.
Article 1. Authorization of Insurers and General Requirements.
Sec. 21.09.010. Certificate of authority required.
 (a) A person may not act as an insurer and an insurer may not transact insurance in this state except as authorized by a subsisting certificate of authority issued to it by the director, except as to transactions that are expressly otherwise provided for in this title.

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




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

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

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

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

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

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

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




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


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

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




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

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

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

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




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

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

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

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




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


Kind or Kindsof InsuranceBasic Capital or Basic GuaranteeSurplusAdditional Surplus When First AuthorizedAdditional Maintained Surplus
Life$1,000,000$1,000,000$750,000
Health1,000,0001,000,000750,000
Life and Health1,250,0001,250,0001,000,000
Property1,000,0001,000,000750,000
Casualty excluding
vehicle1,000,0001,000,000750,000
Vehicle1,000,0001,000,000750,000
Marine &
transportation1,000,0001,000,000750,000
Surety1,000,0001,000,000750,000
Title500,000500,000250,000
Any three or more of
the following kinds of
insurance: property, marine and transportation,
vehicle, casualty
excluding vehicle,
surety, and health3,000,0003,000,0002,250,000
Legal expenses1,000,0001,000,000750,000
Mortgage Guarantee1,000,0001,000,000750,000

 (b) Capital and surplus requirements are based upon all the kinds of insurance transacted by the insurer in all areas in which it operates or proposes to operate, whether or not only a portion of the kinds of insurance are to be transacted in this state. After a hearing, the director may for the protection of the public require an insurer to maintain funds in excess of the amounts required under (a) of this section, due to the amount, kind, or combination of kinds of insurance transacted by the insurer. Failure of an insurer to maintain funds as ordered by the director is grounds for suspension or revocation of the insurer's certificate of authority.

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

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

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

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

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

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

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

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




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

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




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

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

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

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

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

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




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


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

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

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

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

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

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

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

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

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




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

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

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




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

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

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

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




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

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

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

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

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

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

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

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




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

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

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

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




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

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

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

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

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

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

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

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




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

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

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




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

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

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

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

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

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

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

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




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


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

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

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




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

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




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

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

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

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

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

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

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

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

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

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

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

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




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

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

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

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




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

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

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

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

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

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

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

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

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




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

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

     (3) the amounts paid policyholders as returned premiums;

     (4) the amounts paid policyholders as dividends.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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




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

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

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

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

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

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




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

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

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




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


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


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


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

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

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

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

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

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

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

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




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

     (2) qualify for and hold in good standing a certificate of authority under AS 21.09.010 — 21.09.320, limited to liability insurance only.

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

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

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

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

     (2) the amount and nature of initial capitalization;

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

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

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

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

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




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

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

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

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

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

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

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

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

          (B) manner of acquisition or disposition;

          (C) description of the assets involved;

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

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

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

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

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

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

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

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

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

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

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

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

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

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




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

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

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

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

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

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

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

     (6) payment of fees established under AS 21.06.250.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          (E) secured accrued retrospective premiums;

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

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

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

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

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

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

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




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

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

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

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




Article 2. Corporate Governance Annual Disclosure.
Sec. 21.09.400. Corporate governance annual disclosure scope.
 (a) 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.

 (b) AS 21.09.400 — 21.09.460 apply to an insurer domiciled in this state.




Sec. 21.09.410. Disclosure requirement.
 (a) 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.

 (b) 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.

 (c) 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.

 (d) 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.

 (e) An insurer or insurance group
     (1) is encouraged to make the corporate governance annual disclosure at the level at which
          (A) the insurer's or insurance group's risk appetite is determined;

          (B) 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

          (C) 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,
          (A) indicate which of the three criteria under (1) of this subsection was used to determine the level of reporting; and

          (B) explain any subsequent change in the level of reporting.

 (f) 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.

 (g) 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.




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.




Sec. 21.09.430. Contents of corporate governance annual disclosure.
 (a) 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.

 (b) 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.




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.


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

 (b) A person retained under (a) of this section is under the direction and control of the director and acts in a purely advisory capacity.

 (c) 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.

 (d) 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.




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.


Chapter 10. Transaction of Insurance Business.
[Repealed, § 4 ch 120 SLA 1966.]

Chapter 12. Kinds of Insurance, Limits of Risk, and Reinsurance.
Sec. 21.12.010. Limit of risk.
 (a) An insurer may not retain a risk on any one subject of insurance, whether located or to be performed in this state or elsewhere, in an amount exceeding 10 percent of its surplus to policyholders.

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

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

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

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

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




Sec. 21.12.020. Reinsurance credit allowed a domestic ceding insurer.
 (a) Credit for reinsurance transactions 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) — (6) 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
          (A) 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;

          (B) 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

          (C) 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:
          (A) 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;

          (B) 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;

          (C) 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;

          (D) in the case of a group, including incorporated and individual unincorporated insurers,
               (i) 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

               (ii) 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;

          (E) 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
               (i) 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;

               (ii) 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

               (iii) submits to examination of its books and records by the director and bears the expense of the examination;

          (F) 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:
          (A) the assuming insurer must
               (i) be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction;

               (ii) maintain minimum capital and surplus, or its equivalent, in an amount set out in regulations adopted by the director;

               (iii) maintain financial strength ratings from two or more rating agencies as required under regulations adopted by the director;

               (iv) 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;

               (v) 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

               (vi) satisfy other requirements for certification as required by the director;

          (B) in addition to satisfying the requirements under (A) of this paragraph, an association, including an incorporated underwriter and an individual unincorporated underwriter,
               (i) 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;

               (ii) 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

               (iii) 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;

          (C) 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:
               (i) 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;

               (ii) 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;

               (iii) 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;

               (iv) 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;

          (D) 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;

          (E) 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:
               (i) 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;

               (ii) 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;

               (iii) 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;

               (iv) 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;

               (v) 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;

          (F) 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;

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

 (b) If the assuming insurer is not licensed, 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.

 (c) 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
          (A) is organized or, in the case of a United States office of a foreign banking organization, is licensed under the laws of the United States or a state of the United States;

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

          (C) has been determined by either the director or the Securities Valuation Office of the National Association of Insurance Commissioners to meet the standards of financial condition and standing 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.

 (d) 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.

 (e) 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
          (A) reinsurer waives the right to a hearing;

          (B) 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

          (C) 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.

 (f) 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.

 (g) The director may adopt regulations
     (1) to implement this section; and

     (2) relating to reinsurance arrangements, subject to the following provisions:
          (A) a regulation adopted under this paragraph may apply only to reinsurance relating to
               (i) a life insurance policy with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits;

               (ii) 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;

               (iii) a variable annuity with guaranteed death or living benefits;

               (iv) a long-term care insurance policy; or

               (v) 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;

          (B) 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;

          (C) 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;

          (D) a regulation adopted under this paragraph does not apply to cessions to an assuming insurer that is certified in this state or meets the following criteria:
               (i) 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

               (ii) 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;

          (E) nothing in this paragraph limits the director's authority to adopt regulations under (1) of this subsection.

 (h) In this section, unless otherwise indicated,
     (1) “qualified United States financial institution” means an institution that is
          (A) organized or, in the case of a United States branch or agency office of a foreign banking organization, licensed under the laws of the United States or a state of the United States, and has been granted authority to operate with fiduciary powers; and

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

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




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

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

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

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




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


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


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

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

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




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


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

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




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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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




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

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

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




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

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

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

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

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

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

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

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

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




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


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


Chapter 14. Risk Based Capital for Insurers.
Sec. 21.14.010. Risk based capital reports.
 (a) A domestic insurer shall, on or before March 1, submit to the director a report of its risk based capital covering the previous calendar year. The report must be in a form and contain the information required by risk based capital instructions. A domestic insurer required to submit a report under this subsection shall file the report with
     (1) the National Association of Insurance Commissioners; and

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

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

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

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

 (d) [Repealed, § 34 ch 52 SLA 2015.]

 (e) [Repealed, § 34 ch 52 SLA 2015.]




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


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


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

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

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

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




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

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




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

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

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




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

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

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

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

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

     (6) other information required by the director.

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

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

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

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

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

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

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

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




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

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

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

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

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

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

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

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

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




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

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

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

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

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

     (5) a corrective order applicable to the insurer.




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

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

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




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

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

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




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

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

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

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

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

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




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


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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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




Chapter 15. The Insurance Contract.
[Repealed, § 4 ch 120 SLA 1966. For current law, see AS 21.42.]

Chapter 18. Assets and Liabilities.
Sec. 21.18.010. Allowable assets.
In a determination of the financial condition of an insurer, the following assets are allowed:
     (1) assets that are wholly and exclusively owned by the insurer and that are registered, recorded, or held under the insurer's name;

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

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

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

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

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

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




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


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


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

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

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

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

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

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




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

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

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

          (C) reserves for accidental death benefits;

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

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

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

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




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

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

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

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

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




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


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


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


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

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

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




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

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

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

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

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

     (2) eight percent.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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




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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          (F) all other information requested by the director;

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

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




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

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

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

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

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

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

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




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


Sec. 21.18.110. Standard valuation law — Life insurance.
 (a) The director shall annually value, or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance policies, 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.

 (b) 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:
          (A) 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
               (i) the Commissioners 1980 Standard Ordinary Mortality Table;

               (ii) 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

               (iii) 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;

          (B) for all industrial life insurance policies issued on the standard basis, excluding disability and accidental death benefits in the policies — the 1941 Standard Industrial Mortality Table for the policies issued before the operative date of AS 21.45.300(l), of the Standard Nonforfeiture Law for Life Insurance as amended, and for the policies issued on or after April 7, 1984, the 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;

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

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

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

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

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

     (2) Except as otherwise provided in (4) and (7) of this subsection, reserves according to the 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:
          (A) a net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue of an annuity of one a year payable on the first and each subsequent anniversary of the policy on which a premium falls due; however, the net level annual premium may not exceed the net level annual premium on the 19-year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of the policy;

          (B) a net one-year term premium for the benefits provided for in the first policy year; notwithstanding this paragraph, for a life insurance policy issued on or after January 1, 1987, for which the contract premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess premium and that provides an endowment benefit or a cash surrender value or a combination of these in an amount greater than the excess premium, the reserve according to the 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
               (i) the present value shall be reduced by 15 percent of the amount of the excess first year premium;

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

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

               (iv) the cash surrender value provided on the assumed date shall be considered as an endowment benefit; in making the comparison in this subparagraph, the mortality and interest bases stated in (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;

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

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

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

               (iv) all other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts, shall be calculated by a method consistent with the principles of 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:
          (A) 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;

          (B) 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;

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

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

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

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

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

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

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

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

     (2) for a single premium immediate annuity and for an annuity benefit involving a life contingency arising from another annuity with a cash settlement option and from a guaranteed interest contract with a cash settlement option,
I = .03 + W(R — .03)

where R1 is the lesser of R and .09,

R2 is the greater of R and .09,

R is the reference interest rate defined in (j) of this section, and

W is the weighting factor defined in (f) of this section;

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

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

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

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

 (f) The weighting factors referred to in (c) of this section are as follows:
     (1) weighting factors for life insurance:

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

for life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guarantee in the policy or under an option to convert to a plan of life insurance with a premium rate or nonforfeiture value or both that are guaranteed in the original policy;

     (2) notwithstanding (3) of this subsection, the weighting factor for a single premium immediate annuity and for an annuity benefit involving 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:

GuaranteeWeighting Factor
Duration:for Plan Type
Years
ABC
5 or less;.80.60.50
more than 5, but not
more than 10;.75.60.50
more than 10, but not
more than 20;.65.50.45
more than 20;.45.35.35

     (4) for annuities and guaranteed interest contracts valued on a change in fund basis, the weighting factors shown in (3) of this subsection are increased by .15 for plan type A, .25 for plan type B, and .05 for plan type C;

     (5) for annuities and guaranteed interest contracts valued on an issue year basis, other than those with no cash settlement options, 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.

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

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

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

          (C) as an immediate life annuity; or

          (D) no withdrawal permitted;

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

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

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

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

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

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

 (j) The reference interest rates referred to in (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.

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

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

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

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

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

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

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

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

 (p) The director may adopt regulations to provide a transition period for establishing higher reserves that a qualified actuary may consider necessary in order to render the opinion required under (n) of this section.

 (q) A qualified actuary who submits an opinion under (m) of this section
     (1) is not liable for damages to a person, other than the 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.

 (r) If the insurer fails to provide a supporting memorandum as requested by the director within a period specified by regulation or the director determines that the supporting memorandum fails to meet the standards adopted by regulation or is otherwise unacceptable to the director, the director may engage a qualified actuary, at the expense of the insurer, to review the opinion and the basis for the opinion and to prepare a supporting memorandum as required under (q) of this section.

 (s) A memorandum in support of an actuarial opinion and other supporting material provided by an insurer to the director is confidential and may not be made public by the director or another person and is not subject to a civil subpoena, except for the purpose of defending an action seeking damages from a person 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.

 (t) An insurer's aggregate reserves for
     (1) all life insurance policies, excluding disability and accidental death benefits, issued on or after July 1, 1992, may not be less than the aggregate reserves calculated under (b)(2), (4), (7), and (l) of this section, and the mortality table and rates of interest used in calculating nonforfeiture benefits for the policies; and

     (2) all policies, contracts, and benefits may not be less than the aggregate reserves determined by an appointed actuary to be necessary to render the opinion required under (m) of this section.

 (u) An insurer who submits an actuarial opinion that the insurer knew or should have known was not in compliance with this section is subject to suspension or revocation of the insurer's certificate of authority under AS 21.09.150(a).

 (v) 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.




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

 (b) 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.

 (c) 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
          (A) be in form and substance as specified in the valuation manual and acceptable to the director;

          (B) be submitted with the annual statement reflecting the valuation of the reserve liabilities on or after the operative date of the valuation manual;

          (C) apply to policies and contracts subject to this section, plus other actuarial liabilities specified in the valuation manual;

          (D) be based on standards adopted by the Actuarial Standards Board or its successor and on additional standards prescribed in the valuation manual; and

          (E) 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
          (A) 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;

          (B) is subject to disciplinary action by the director against the appointed actuary or the insurer; and

          (C) 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.

 (d) 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
          (A) 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

          (B) 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:
          (A) minimum valuation standards for and definitions of the policies or contracts subject to (a) of this section; the minimum valuation standards are
               (i) the commissioners reserve valuation method for life insurance policies and contracts, other than annuity contracts, subject to (a) of this section;

               (ii) the commissioners annuity reserve valuation method for annuity contracts subject to (a) of this section; and

               (iii) minimum reserves for all other policies or contracts subject to (a) of this section;

          (B) 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;

          (C) for policies and contracts subject to a principle-based valuation under (e) of this section,
               (i) 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;

               (ii) assumptions for risks over which the insurer does not have significant control or influence;

               (iii) procedures for corporate governance and oversight of the actuarial function and a process for appropriate waiver or modification of the procedures;

          (D) for policies and contracts not subject to a principle-based valuation under (e) of this section, the minimum valuation standard
               (i) must be consistent with the minimum standard of valuation in AS 21.18.110; or

               (ii) 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;

          (E) 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

          (F) 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.

 (e) 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:
          (A) the assumptions are prescribed in the valuation manual;

          (B) 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,
          (A) establish procedures for corporate governance and oversight of the actuarial valuation function consistent with those described in the valuation manual;

          (B) 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;

          (C) 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.

 (f) An insurer shall submit mortality, morbidity, policyholder behavior, or expense experience and other data as prescribed in the valuation manual.

 (g) 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
          (A) with other state, federal, and international regulatory agencies and with the National Association of Insurance Commissioners and its affiliates and subsidiaries;

          (B) 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;

          (C) 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.

 (h) 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.

 (i) In this section,
     (1) “confidential information” means
          (A) 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;

          (B) 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;

          (C) 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;

          (D) 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

          (E) 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.




Secs. 21.18.120 — 21.18.150. Valuation of bonds; other securities, property, and purchase money mortgages. [Repealed, § 84 ch 81 SLA 2001.]
Sec. 21.18.160. Regulations.
The director may adopt regulations to implement this chapter.


Sec. 21.18.170. Valuation of investments.
For the purposes of this chapter, the value or amount of an investment acquired, held, or invested in or an investment practice engaged in under this title, unless otherwise specified in this title, must be the value at which assets of an insurer are required to be reported for accounting purposes under this title and as required under procedures prescribed in published accounting and valuation standards of the National Association of Insurance Commissioners, including the purposes and procedures manual of the securities valuation office, the valuation of securities manual, the accounting practices and procedures manual, and the annual statement instructions or valuation procedures officially adopted by the National Association of Insurance Commissioners.


Sec. 21.18.900. Definitions.
In this chapter,
     (1) “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
          (A) this state and has at least one of those policies in force or on claim; or

          (B) 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).




Chapter 20. Classes of Insurers.
[Repealed, § 4 ch 120 SLA 1966.]