OMNIBUS INSURANCE BILL, the official text

Enrolled SB 132 
 Relating to insurance; and providing for an effective date. 
 _______________ 
 * Section 1. AS 12.10.020 is amended by adding a new subsection to read: 
 (d) Even if the general time limitation has expired, a prosecution for any 
 offense related to life insurance may be commenced within one year after discovery of 
 the offense by an aggrieved party or by a person who has legal capacity to represent an 
 aggrieved party or a legal duty to report the offense and who is not a party to the 
 offense, but in no case shall this provision extend the period of limitation otherwise 
 applicable by more than 20 years. 
 * Sec. 2. AS 21.06.120(a) is amended to read: 
 (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, pharmacy benefits manager, 
 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. 
 * Sec. 3. AS 21.06.120(d) is amended to read: 
 (d) The director may examine insurers, third-party administrators, and 
 pharmacy benefits managers in participation with the National Association of 
 Insurance Commissioners. 
 * Sec. 4. AS 21.06.120 is amended by adding a new subsection to read: 
 (h) The director may examine a third-party administrator or pharmacy benefits 
 manager any time the director determines that an examination or investigation is 
 necessary. 
 * Sec. 5. AS 21.06.160(a) is amended to read: 
 (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. 
 * Sec. 6. AS 21.07.030(a) is amended to read: 
 (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 
 (1) a covered person who is offered non-network coverage through 
 another health care insurance policy or through another health care insurer; or 
 (2) a health maintenance organization licensed under AS 21.86. 
 * Sec. 7. AS 21.07.030 is amended by adding a new subsection to read: 
 (i) A health care insurer that offers a health care insurance policy that provides 
 different levels of coverage for health care services based on network status and 
 performs utilization review shall include details on a prior authorization request form 
 on how a health care provider or covered person may request a benefit-level 
 exception. If the health care insurer approves the prior authorization, the insurer shall

detail whether the claim will be processed as a network or non-network claim. If the 
 benefit will be paid based on a non-network reimbursement level and a benefit-level 
 exception requires an application process separate from the prior authorization 
 process, the prior authorization must include instructions for requesting the benefit- 
 level exception. In this subsection, a "benefit-level exception" means an exception to 
 medical care coverage where a health care insurer applies network health care benefit 
 levels to services received from an out-of-network health care provider or facility. 
 * Sec. 8. AS 21.09.200(g) is amended to read: 
 (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. 
 * Sec. 9. AS 21.09.200 is amended by adding a new subsection to read: 
 (m) An insurer may apply to the director for an exemption from compliance 
 with a requirement of this section if compliance would cause the insurer to suffer a 
 financial or organizational hardship. The director may, in the director's discretion, 
 approve an exemption. If the director denies an insurer's application for exemption, the 
 insurer may, within 15 days after the date of the denial, submit a request in writing to 
 the director for a hearing as provided under AS 21.06.180 - 21.06.240. 
 * Sec. 10. AS 21.09.210(b) is amended to read: 
 (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; 
 (3) for wet marine and transportation insurance, three-quarters of 
 one percent. 
 * Sec. 11. AS 21.09.242(a) is amended to read: 
 (a) Each [AN] insurer and [, INCLUDING A] pharmacy benefits manager 
 shall, with respect to a medical assistance program [PROGRAMS] under AS 47.07, 
 [SHALL] cooperate with the Department of Health to 
 (1) provide, with respect to an individual who is eligible for or is 
 provided medical assistance under AS 47.07, at [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 within 60 days 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, a 
 failure to obtain prior authorization, 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. 
 * Sec. 12. AS 21.12.020(h) is amended to read: 
 (h) The director shall consider the list of reciprocal jurisdictions published 
 through the National Association of Insurance Commissioners committee process in 
 determining a reciprocal jurisdiction and has the discretion to defer to the list. The 
 director may approve a jurisdiction not on the list in accordance with criteria 
 developed under regulations adopted by the director. The director may remove a 
 jurisdiction from the list of reciprocal jurisdictions upon determination that the 
 jurisdiction no longer meets the requirements of a reciprocal jurisdiction in accordance 
 with a process set out in regulation by the director. Upon removal of a reciprocal 
 jurisdiction from the list, credit for reinsurance ceded to an assuming insurer that has a 
 home office or is domiciled in that jurisdiction shall be allowed if otherwise allowed 
 under this section. The director shall timely create and publish a list of assuming 
 insurers that have satisfied the conditions set out in this subsection and to which 
 cessions shall be granted credit in accordance with (a) of this section. The director 
 may add an assuming insurer to a list if a National Association of Insurance 
 Commissioners accredited jurisdiction has added the assuming insurer to a list of

assuming insurers or, if upon initial eligibility, the assuming insurer submits the 
 information to the director as required under (a)(6)(D) of this section and complies 
 with any additional requirements the director may impose by regulation. If the director 
 determines that an assuming insurer no longer meets one or more of the requirements 
 of (a)(6) of this section, the director may revoke or suspend the eligibility of the 
 assuming insurer under (a)(6) of this section in accordance with procedures set out in 
 regulation. While an assuming insurer's eligibility is suspended, a reinsurance 
 agreement issued, amended, or renewed after the effective date of the suspension does 
 not qualify for credit except to the extent that the assuming insurer's obligations under 
 the contract are secured in accordance with (c) of this section. If an assuming insurer's 
 eligibility is revoked, a credit for reinsurance may not be granted after the effective 
 date of the revocation with respect to any reinsurance agreement entered into by the 
 assuming insurer, including a reinsurance agreement entered into before the date of 
 revocation, except to the extent that the assuming insurer's obligations under the 
 contract are secured in a form acceptable to the director and consistent with (c) of this 
 section. Upon entry of an order of rehabilitation, liquidation, or conservation against 
 the ceding insurer, the supervising court may [SHALL] require an assuming insurer 
 under (a)(6) of this section to post 100 percent security for the benefit of the ceding 
 insurer or its estate. Nothing in this subsection shall limit or in any way alter the 
 capacity of parties to a reinsurance agreement to agree on requirements for security or 
 other terms in that reinsurance agreement consistent with this section. Credit under 
 (a)(6) of this section may be taken only for reinsurance agreements entered into, 
 renewed, or amended on or after the date the director has determined that the assuming 
 insurer is eligible for credit, and may not be taken for reinsurance of losses incurred or 
 reserves reported before that date. Credit under (a)(6) of this section may not apply to 
 reinsurance agreements entered into, to losses incurred, or to reserves posted before 
 application under (a)(6) of this section. 
 * Sec. 13. AS 21.12.020(i)(2) is amended to read: 
 (2) "reciprocal jurisdiction" means a jurisdiction that 
 (A) is not a United States jurisdiction that is subject to an in- 
 force covered agreement with the United States, each within its legal authority,

or in the case of a covered agreement between the United States and the 
 European Union, is a member state of the European Union; in this 
 subparagraph, "covered agreement" is an agreement entered into under 31 
 U.S.C. 313 - 314 (Dodd-Frank Wall Street Reform and Consumer Protection 
 Act) that is currently in effect or in a period of provisional application and 
 addresses the elimination, under specified conditions, of collateral 
 requirements as a condition for entering into any reinsurance agreement with a 
 ceding insurer domiciled in this state or for allowing the ceding insurer to 
 recognize credit for reinsurance; 
 (B) is a United States jurisdiction that meets the requirements 
 for accreditation under the National Association of Insurance Commissioners 
 financial standards and accreditation program; or 
 (C) is a qualified jurisdiction, as determined by the director 
 under (a)(5)(C) of this section, that is not otherwise described in (A) and (B) of 
 this paragraph and that meets certain additional requirements, consistent with 
 the terms and conditions of in-force covered agreements, as specified by the 
 director in regulation; 
 * Sec. 14. AS 21.18.112(e) is amended to read: 
 (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 and a process for appropriate waiver or modification 
 of the established procedures; 
 (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. 
 * Sec. 15. AS 21.18.900(12) is amended to read: 
 (12) "policyholder behavior" means a lapse, withdrawal, transfer,

deposit, premium payment, loan, annuitization, or election of a policy benefit by 
 the terms of a policy or contract, or another [AN] action of a policyholder, contract 
 holder, or another person with the right to elect options; "policyholder behavior" 
 does not include events of mortality or morbidity that result in a benefit 
 prescribed by the terms of a policy or contract; 
 * Sec. 16. AS 21.27.010(a) is amended to read: 
 (a) Except as provided otherwise in this chapter, a person may not act as or 
 represent to be an insurance producer, managing general agent, reinsurance 
 intermediary broker, reinsurance intermediary manager, surplus lines broker, third- 
 party administrator, pharmacy benefits manager, or independent adjuster in this 
 state or relative to a subject resident, located, or to be performed in this state unless 
 licensed under this chapter. A person may not act as or represent to be a managing 
 general agent, reinsurance intermediary broker, third-party administrator, 
 pharmacy benefits manager, or reinsurance intermediary manager representing an 
 insurer domiciled in this state regarding a risk located outside this state unless licensed 
 by this state. 
 * Sec. 17. AS 21.27.010(c) is amended to read: 
 (c) A third-party administrator is not required to be licensed as a managing 
 general agent if the third-party administrator 
 (1) is licensed [REGISTERED] under this chapter [AS 21.27.630 - 
 21.27.660]; or 
 (2) only investigates and adjusts claims and is licensed under this 
 chapter as an independent adjuster. 
 * Sec. 18. AS 21.27.010 is amended by adding a new subsection to read: 
 (l) In addition to the requirements under AS 21.27.010 - 21.27.460, a 
 (1) third-party administrator is subject to the licensing requirements 
 under AS 21.27.630 - 21.27.660; and 
 (2) pharmacy benefits manager is subject to the licensing requirements 
 under AS 21.27.901 - 21.27.975. 
 * Sec. 19. AS 21.27.020(c) is amended to read: 
 (c) To qualify for issuance or renewal of a license as a firm insurance

producer, a firm managing general agent, a firm reinsurance intermediary broker, a 
 firm reinsurance intermediary manager, a firm surplus lines broker, or a firm 
 independent adjuster, an applicant or licensee shall 
 (1) comply with (b)(4) and (5) of this section; 
 (2) maintain a lawfully established place of business in this state, 
 except when licensed as a nonresident under AS 21.27.270; 
 (3) designate one or more compliance officers for the firm, except that 
 not more than one compliance officer may be designated for each line [CLASS] of 
 authority under AS 21.27.115; 
 (4) provide to the director documents necessary to verify the 
 information contained in or made in connection with the application; and 
 (5) notify the director, in writing, not later than 30 days after a change 
 in the firm's compliance officer. 
 * Sec. 20. AS 21.27.020(f) is amended to read: 
 (f) The director may adopt regulations establishing additional education or 
 experience requirements for applicants, licensees, and continuing education providers 
 under this chapter upon due consideration of the availability and accessibility of 
 education and training opportunities in rural areas of the state. Regulations adopted 
 under this subsection are subject to the following provisions: 
 (1) additional educational or experience requirements may not apply to 
 a licensee who has been licensed by the division of insurance before January 1, 1980; 
 (2) a licensee shall complete at least 24 credit hours of approved 
 continuing education courses during each two-year license period; 
 (3) if a licensee has accumulated more credit hours than required under 
 (2) of this subsection by the end of the license period, a maximum of eight hours may 
 be carried over to meet the requirements of (2) of this subsection in the next license 
 period; 
 (4) a program or seminar may not be approved as an acceptable 
 continuing education program unless it is a formal program of learning that 
 contributes to the professional competence of the licensee; individual study programs 
 or correspondence courses may be used to fulfill continuing education requirements if

approved by the director; 
 (5) a nonresident licensee is exempt from the requirements of this 
 subsection, except for a nonresident independent adjuster who designates this 
 state as the adjuster's home state. 
 * Sec. 21. AS 21.27.025(a) is amended to read: 
 (a) A licensee shall notify the director in writing not later than 30 days after a 
 change in residence, place of business, legal name, fictitious name or alias, mailing 
 address, electronic mailing address, telephone number, or compliance officer. A 
 licensee shall report to the director in writing any administrative action taken against 
 the licensee by a governmental agency [OF ANOTHER STATE, BY A 
 GOVERNMENTAL AGENCY OF ANOTHER JURISDICTION,] or by a financial 
 industry regulatory authority sanction or arbitration proceeding not later than 30 days 
 after the final disposition of the action. A licensee shall submit to the director the final 
 order and other relevant legal documents in the action. A licensee shall report to the 
 director in writing any criminal prosecution of the licensee in this or another state or 
 jurisdiction not later than 30 days after the date of filing of the criminal complaint, 
 indictment, information, or citation in the prosecution. The licensee shall submit to the 
 director a copy of the criminal complaint, calendaring order, and other relevant legal 
 documents in the prosecution. 
 * Sec. 22. AS 21.27.060(d) is amended to read: 
 (d) This section does not apply to an applicant 
 (1) for a limited license under AS 21.27.150(a)(1), (4), (5), or (8); 
 [OR] 
 (2) who, at any time within the one-year period immediately preceding 
 the date the current pending application is received by the division, had been licensed 
 in good standing in this state under a license requiring substantially similar 
 qualifications as required by the license applied for; or 
 (3) who is a compliance officer for a third-party administrator or 
 pharmacy benefits manager. 
 * Sec. 23. AS 21.27.115 is amended to read: 
 Sec. 21.27.115. Lines of authority. If a person has met the applicable

requirements of AS 21.27.020 and 21.27.270, the director shall issue a license for one 
 or more of the following lines of authority: 
 (1) life insurance coverage on natural persons; in this paragraph, "life 
 insurance coverage" 
 (A) includes benefits of endowment and annuities; and 
 (B) may include benefits in the event of death or 
 dismemberment by accident and benefits for disability income; 
 (2) accidental and health or sickness insurance coverage for sickness, 
 bodily injury, or accidental death; in this paragraph, "accidental and health or 
 sickness insurance coverage" includes health insurance, as defined in 
 AS 21.12.050(a), and may include benefits for disability income; 
 (3) property insurance coverage for the direct or consequential loss for 
 damage to property of every kind; 
 (4) casualty insurance coverage against legal liability, including that 
 for death, injury, or disability or damage to real or personal property; in this 
 paragraph, "casualty insurance" includes surety insurance as defined in AS 21.12.080; 
 (5) variable life and variable annuity products insurance coverage; 
 (6) personal lines property and casualty insurance coverage sold to 
 individuals and families for primarily noncommercial purposes; 
 (7) limited lines credit insurance; 
 (8) [REPEALED 
 (9) REPEALED 
 (10)] any insurance for which a limited lines license may be issued 
 under AS 21.27.150. 
 * Sec. 24. AS 21.27.270(b) is amended to read: 
 (b) Unless the director denies or refuses to renew a license under 
 AS 21.27.410, the director shall issue a nonresident producer, limited lines, surplus 
 lines broker, managing general agent, reinsurance intermediary broker, independent 
 adjuster, or reinsurance intermediary manager license to a person who is not a 
 resident of this state if 
 (1) the person is currently licensed and is in good standing in the

person's home state; the director may verify the person's licensing status through the 
 producer licensing database records maintained by the National Association of 
 Insurance Commissioners or its affiliates or subsidiaries; 
 (2) the person has paid the fees required under AS 21.06.250 and has 
 submitted to the director 
 (A) the license application the person submitted to the person's 
 home state; or 
 (B) if the person is not a firm, a completed uniform application 
 or, if a firm, the uniform business entity application; and 
 (3) the person's home state awards nonresident producer, limited lines, 
 surplus lines broker, managing general agent, reinsurance intermediary broker, 
 independent adjuster, and reinsurance intermediary manager licenses to residents of 
 this state on the same basis as does this state. 
 * Sec. 25. AS 21.27.270(h) is amended to read: 
 (h) A nonresident applicant for an independent adjuster license who [ONLY 
 ADJUSTS CLAIMS RELATED TO PORTABLE ELECTRONICS INSURANCE 
 UNDER AS 21.36.515 AND WHO] is licensed as an independent adjuster and in 
 good standing in the applicant's home state does not have to meet the requirements of 
 AS 21.27.060 or 21.27.830 to be licensed under this section. [A RESIDENT OF 
 CANADA MAY NOT BE LICENSED AS AN INDEPENDENT ADJUSTER 
 UNDER THIS SECTION UNLESS THE APPLICANT HAS OBTAINED A 
 RESIDENT INDEPENDENT ADJUSTER LICENSE IN ANOTHER STATE OR 
 DECLARED ANOTHER STATE THE APPLICANT'S HOME STATE AND 
 OBTAINED AN INDEPENDENT ADJUSTER LICENSE IN THAT STATE.] 
 * Sec. 26. AS 21.27.270(i) is amended to read: 
 (i) If a nonresident independent [PORTABLE ELECTRONICS] adjuster 
 applicant's home state does not license independent adjusters, the independent 
 [PORTABLE ELECTRONICS] adjuster applicant may designate the applicant's home 
 state as any state in which the applicant is licensed in good standing. 
 * Sec. 27. AS 21.27.270 is amended by adding a new subsection to read: 
 (j) A nonresident applicant for issuance or renewal of an independent adjuster

license or firm independent adjuster license who designates this state as the applicant's 
 home state must qualify for licensure under AS 21.27.020 and apply for the issuance 
 or renewal of the license in accordance with AS 21.27.040. 
 * Sec. 28. AS 21.27.380(b) is amended to read: 
 (b) If a license is not renewed on or before the renewal date set by the director, 
 the license expires. A licensee may not act as or represent to be an insurance producer, 
 managing general agent, reinsurance intermediary broker, third-party administrator, 
 pharmacy benefits manager, reinsurance intermediary manager, surplus lines broker, 
 or independent adjuster during the time a license has expired. The director may 
 reinstate an expired license if the person continues to qualify for the license and pays 
 renewal license fees and a delayed renewal penalty. Reinstatement does not exempt a 
 person from a penalty provided by law for transacting business while unlicensed. A 
 license may not be renewed if it has expired for two years or longer. 
 * Sec. 29. AS 21.27.380(d) is amended to read: 
 (d) The director shall send [MAIL] a notice of license expiration stating the 
 reason for the expiration to a licensee at the licensee's most current electronic mail 
 address or mailing [LAST] address on record with the director. [THE DIRECTOR 
 SHALL OBTAIN A CERTIFICATE OF MAILING FROM THE UNITED STATES 
 POSTAL SERVICE.] 
 * Sec. 30. AS 21.27.630(a) is amended to read: 
 (a) A person may not act as or represent to be a third-party administrator in 
 this state or relative to a subject resident, located, or to be performed in this state, 
 unless licensed [REGISTERED] under this chapter or in another jurisdiction under 
 AS 21.27.650. A person may not act as or represent to be a third-party administrator 
 representing an insurer domiciled in this state regarding a risk located outside this state 
 unless licensed [REGISTERED] by this state under the provisions of this chapter. 
 * Sec. 31. AS 21.27.630(b) is amended to read: 
 (b) A third-party administrator may not transact business for a kind or class of 
 authority for which the person is not licensed [REGISTERED]. 
 * Sec. 32. AS 21.27.630(c) is amended to read: 
 (c) Except as otherwise provided in this chapter, a third-party administrator

shall be licensed [REGISTERED] under this chapter [AS 21.27.630 - 21.27.660] 
 unless the third-party administrator only investigates and adjusts claims and is licensed 
 under this chapter as an independent adjuster. 
 * Sec. 33. AS 21.27.630(d) is amended to read: 
 (d) A third-party administrator may not use a fictitious name or alias unless 
 the third-party administrator's [LICENSEE'S] legal name and fictitious name or 
 alias are on the license [REGISTRATION]. 
 * Sec. 34. AS 21.27.630(e) is amended to read: 
 (e) A person who is an employee of an admitted insurer, who acts within the 
 course and scope of that employment, and within the scope of the insurer's certificate 
 of authority is not required to be licensed [REGISTERED] under this chapter 
 [SECTION]. 
 * Sec. 35. AS 21.27.630(g) is amended to read: 
 (g) A credit union or a financial institution subject to supervision or 
 examination by federal or state banking authorities, or a mortgage lender, that 
 performs no functions other than advancing premiums to the insurer and collecting a 
 debt from the insured is not required to be licensed [REGISTERED] as a third-party 
 administrator. 
 * Sec. 36. AS 21.27.630(h) is amended to read: 
 (h) A credit card issuing company that performs no functions, including 
 adjustment or settlement of claims, other than advancing and collecting premiums 
 from its credit card holders who have authorized collection is not required to be 
 licensed [REGISTERED] as a third-party administrator. 
 * Sec. 37. AS 21.27.630(i) is amended to read: 
 (i) A person who only provides services to bona fide employee benefit plans 
 that are established by an employer or an employee organization, or both, for which 
 the insurance laws of this state are preempted under the Employee Retirement Income 
 Security Act of 1974, is not required to be additionally licensed [REGISTERED] as a 
 third-party administrator if the person certifies to the director on or before February 1 
 of each year its exempt status. 
 * Sec. 38. AS 21.27.630(j) is amended to read:

(j) A third-party administrator 
 [(1) SHALL APPLY FOR REGISTRATION UNDER THE 
 PROCEDURES OF AS 21.27.040; 
 (2) SHALL RENEW ITS REGISTRATION UNDER THE 
 PROCEDURES OF AS 21.27.380; AND 
 (3)] is subject to hearings and orders on violations; denial, nonrenewal, 
 suspension, or revocation of license [REGISTRATION]; penalties; and surrender of 
 license [REGISTRATION] under the procedures set out in AS 21.27.405 - 21.27.460. 
 * Sec. 39. AS 21.27.630(k) is amended to read: 
 (k) An insurer that holds a certificate of authority issued by the director and is 
 in good standing under this title is not required to be licensed [REGISTERED] as a 
 third-party administrator in this state. 
 * Sec. 40. AS 21.27.630(l) is amended to read: 
 (l) A person that is not required to be licensed [REGISTERED] as a third- 
 party administrator under (e) - (k) of this section must file an annual [A] certification 
 with the director that the person meets the requirements for exemption on or before 
 February 1 of each year. 
 * Sec. 41. AS 21.27.630(m) is amended to read: 
 (m) A person who is an employee of a third-party administrator and who acts 
 within the course and scope of that employment and within the scope of the written 
 contract required under AS 21.27.650(a)(4) is not required to be licensed 
 [REGISTERED] as a third-party administrator under this section unless that person 
 is the designated compliance officer under AS 21.27.640(b)(6). The third-party 
 administrator is responsible for the acts of its employees regulated under this title. 
 * Sec. 42. AS 21.27.640(a) is amended to read: 
 (a) The director may not issue or renew a license [REGISTRATION] except 
 in compliance with this chapter and may not issue a license [REGISTRATION] to a 
 person, or to be exercised by a person, found by the director to be untrustworthy, 
 incompetent, financially irresponsible, or who has not established to the satisfaction of 
 the director that the person is qualified under this chapter. 
 * Sec. 43. AS 21.27.640(b) is amended to read:

(b) To qualify for issuance or renewal of a license [REGISTRATION], an 
 applicant or licensee [REGISTRANT] shall comply with this title, regulations adopted 
 under AS 21.06.090, and 
 (1) be a trustworthy person; 
 (2) have active working experience in administrative functions that, in 
 the director's opinion, exhibits the ability to competently perform the administrative 
 functions of a third-party administrator; 
 (3) not have committed an act that is a cause for denial, nonrenewal, 
 suspension, or revocation of a registration or license in this state or another 
 jurisdiction; 
 (4) maintain a lawfully established place of business [AS 
 DESCRIBED IN AS 21.27.330] in this state, unless licensed as a nonresident under 
 AS 21.27.270; 
 (5) disclose to the director all owners, officers, directors, or partners, if 
 any; 
 (6) designate a compliance officer for the firm; 
 (7) provide in or with its application 
 (A) all basic organizational documents of the third-party 
 administrator, including articles of incorporation, articles of association, 
 partnership agreement, trade name certificate, trust agreement, shareholder 
 agreement, and other applicable documents and all endorsements to the 
 required documents; 
 (B) the bylaws, rules, regulations, or similar documents 
 regulating the internal affairs of the administrator; 
 (C) the names, mailing addresses, physical addresses, official 
 positions, and professional qualifications of persons who are responsible for 
 the conduct of affairs of the third-party administrator, including the members 
 of the board of directors, board of trustees, executive committee, or other 
 governing board or committee; the principal officers in the case of a 
 corporation, or the partners or members in the case of a partnership, limited 
 liability company, limited liability partnership, or association; shareholders

holding directly or indirectly 10 percent or more of the voting securities of the 
 third-party administrator; and any other person who exercises control or 
 influence over the affairs of the third-party administrator; 
 (D) certified financial statements for the preceding two years, 
 or for each year and partial year that the applicant has been in business if less 
 than two years, prepared by an independent certified public accountant 
 establishing that the applicant is solvent, that the applicant's system of 
 accounting, internal control, and procedure is operating effectively to provide 
 reasonable assurance that money is promptly accounted for and paid to the 
 person entitled to the money, and any other information that the director may 
 require to review the current financial condition of the applicant; and 
 (E) a statement describing the business plan, including 
 information on staffing levels and activities proposed in this state and in other 
 jurisdictions and providing details establishing the third-party administrator's 
 capability for providing a sufficient number of experienced and qualified 
 personnel in the areas of claims handling, underwriting, and record keeping; 
 (8) provide to the director documents necessary to verify the 
 statements contained in or in connection with the application; and 
 (9) notify the director, in writing, not later than 30 days after 
 (A) a change in compliance officer, residence, place of 
 business, mailing address, or phone number; 
 (B) the final disposition of an administrative action taken 
 against the licensee [REGISTRANT] by a governmental agency [OF 
 ANOTHER STATE, BY A GOVERNMENTAL AGENCY OF ANOTHER 
 JURISDICTION,] or by a financial industry regulatory authority sanction or 
 arbitration proceeding; in addition, a licensee [REGISTRANT] shall submit to 
 the director documents relating to the final disposition on, including the final 
 order and other relevant legal documents in, the action; or 
 (C) a conviction of a misdemeanor or felony of the third-party 
 administrator, its officers, directors, partners, owners, or employees. 
 * Sec. 44. AS 21.27.640(d) is amended to read:

(d) If the director finds that the applicant or licensee [REGISTRANT] is 
 qualified and that application, license [REGISTRATION], or renewal fees have been 
 paid, the director may issue or renew the license [REGISTRATION]. 
 * Sec. 45. AS 21.27.640 is amended by adding a new subsection to read: 
 (e) The fee for an initial license is $2,000. The fee to renew a license is 
 $2,000, and the license must be renewed every two years. 
 * Sec. 46. AS 21.27.650(a) is amended to read: 
 (a) An insurer may not transact business with a third-party administrator 
 unless 
 (1) the insurer holds a certificate of authority in this state if required 
 under this title; 
 (2) the third-party administrator is licensed [REGISTERED] under 
 this chapter [OR THE THIRD-PARTY ADMINISTRATOR HAS FILED A 
 CERTIFICATION WITH THE DIRECTOR CERTIFYING THAT THE THIRD- 
 PARTY ADMINISTRATOR IS OPERATING ONLY FOR A FOREIGN INSURER 
 OTHER THAN A SELF-FUNDED MULTIPLE EMPLOYER WELFARE 
 ARRANGEMENT REGULATED UNDER AS 21.85 AND IS REGISTERED AS A 
 THIRD-PARTY ADMINISTRATOR BY THE THIRD-PARTY 
 ADMINISTRATOR'S RESIDENT INSURANCE REGULATOR IN A STATE 
 THAT THE DIRECTOR HAS DETERMINED HAS ENACTED PROVISIONS 
 SUBSTANTIALLY SIMILAR TO THOSE CONTAINED IN AS 21.27.630 - 
 21.27.650 AND THAT IS ACCREDITED BY THE NATIONAL ASSOCIATION OF 
 INSURANCE COMMISSIONERS]; 
 (3) the third-party administrator provides the director on January 1, 
 April 1, July 1, and October 1 of each year 
 (A) a list of persons who supervise or have responsibility over 
 personnel performing administrative functions, including claims administration 
 and payment, marketing administrative functions, premium accounting, 
 premium billing, coverage verification, underwriting, or certificate issuance 
 upon a subject resident, located, or to be performed in this state; 
 (B) a list of current insurers under contract; and

(C) other information the director may require; 
 (4) a written contract is in effect between the parties that establishes 
 the responsibilities of each party, indicates both parties' share of responsibility for a 
 particular function, and specifies the division of responsibilities; 
 (5) there is in effect a written contract between the insurer and third- 
 party administrator that contains the following provisions: 
 (A) the insurer may terminate the contract for cause upon 
 written notice sent by certified mail to the third-party administrator and may 
 suspend the underwriting authority of the third-party administrator during a 
 dispute regarding the cause for termination; but the insurer must fulfill all 
 lawful obligations with respect to policies affected by the written agreement, 
 regardless of any dispute between the insurer and the third-party administrator; 
 (B) the third-party administrator shall render accounts to the 
 insurer detailing all transactions and remit all money due under the contract to 
 the insurer at least monthly; 
 (C) all money collected for the account of an insurer shall be 
 held by the third-party administrator as a fiduciary; 
 (D) all payments on behalf of the insurer shall be held by the 
 third-party administrator as a fiduciary; 
 (E) the third-party administrator may not retain more than three 
 months' estimated claims payments and allocated loss adjustment expenses; 
 (F) the third-party administrator shall maintain separate records 
 for each insurer in a form usable by the insurer; the insurer or its authorized 
 representative shall have the right to audit and the right to copy all accounts 
 and records related to the insurer's business; the director, in addition to other 
 authority granted in this title, shall have access to all books, bank accounts, and 
 records of the third-party administrator in a form usable to the director; any 
 trade secrets contained in books and records reviewed by the director, 
 including the identity and addresses of policyholders and certificate holders, 
 shall be kept confidential, except that the director may use the information in a 
 proceeding instituted against the third-party administrator or the insurer;

(G) the contract may not be assigned in whole or in part by the 
 third-party administrator; 
 (H) if the contract permits the third-party administrator to do 
 underwriting, the contract must include the following: 
 (i) the third-party administrator's maximum annual 
 premium volume; 
 (ii) the rating system and basis of the rates to be 
 charged; 
 (iii) the types of risks that may be written; 
 (iv) maximum limits of liability; 
 (v) applicable exclusions; 
 (vi) territorial limitations; 
 (vii) policy cancellation provisions; 
 (viii) the maximum policy term; and 
 (ix) that the insurer shall have the right to cancel or not 
 renew a policy of insurance subject to applicable state law; 
 (I) if the contract permits the third-party administrator to 
 administer claims on behalf of the insurer, the contract must include the 
 following: 
 (i) written settlement authority must be provided by the 
 insurer and may be terminated for cause upon the insurer's written 
 notice sent by certified mail to the third-party administrator or upon the 
 termination of the contract, but the insurer may suspend the settlement 
 authority during a dispute regarding the cause of termination; 
 (ii) claims shall be reported to the insurer within 30 
 days; 
 (iii) a copy of the claim file shall be sent to the insurer 
 upon request or as soon as it becomes known that the claim has the 
 potential to exceed an amount determined by the director or exceeds the 
 limit set by the insurer, whichever is less, involves a coverage dispute, 
 may exceed the third-party administrator's claims settlement authority,

is open for more than six months, involves extra contractual 
 allegations, or is closed by payment in excess of an amount set by the 
 director or an amount set by the insurer, whichever is less; 
 (iv) each party to the contract shall comply with unfair 
 claims settlement statutes and regulations; 
 (v) transmission of electronic data must occur at least 
 monthly if electronic claim files are in existence; and 
 (vi) claim files shall be the sole property of the insurer; 
 upon an order of liquidation of the insurer, the third-party administrator 
 shall have reasonable access to and the right to copy the files on a 
 timely basis; and 
 (J) the contract may not provide for commissions, fees, or 
 charges contingent upon savings obtained in the adjustment, settlement, and 
 payment of losses covered by the insurer's obligations; but a third-party 
 administrator may receive performance-based compensation for providing 
 hospital or other auditing services or may receive compensation based on 
 premiums or charges collected or the number of claims paid or processed. 
 * Sec. 47. AS 21.27.650(q) is amended to read: 
 (q) The director may, without advance notice or hearing, immediately suspend 
 by order the license [REGISTRATION] of a third-party administrator if the director 
 finds that one or more of the following circumstances exist: 
 (1) the third-party administrator is insolvent or impaired; 
 (2) a proceeding for bankruptcy, receivership, conservatorship, or 
 rehabilitation, or another delinquency proceeding regarding the third-party 
 administrator has been commenced in any state or by a governmental agency of 
 another jurisdiction; 
 (3) the third-party administrator is in an unsound condition, or is in a 
 condition or using methods or practices that render its further transaction of insurance 
 injurious to policy holders or the public. 
 * Sec. 48. AS 21.27.901 is amended to read: 
 Sec. 21.27.901. Licensure [REGISTRATION] of pharmacy benefits

managers; scope of business practice. (a) A person may not conduct business in the 
 state as a pharmacy benefits manager unless the person is licensed [REGISTERED] 
 with the director. 
 (b) A pharmacy benefits manager licensed [REGISTERED] under this section 
 may 
 (1) contract with an insurer to administer or manage pharmacy benefits 
 provided by an insurer for a covered person, including claims processing services for 
 and audits of payments for prescription drugs and medical devices and supplies; and 
 (2) contract with network pharmacies. 
 (c) A pharmacy benefits manager 
 (1) shall apply for licensure [REGISTRATION] following the same 
 procedures for licensure set out in AS 21.27.040; 
 (2) is subject to hearings and orders on violations; denial, nonrenewal, 
 suspension, or revocation of license [REGISTRATION]; penalties; and surrender of 
 license [REGISTRATION] under the procedures set out in AS 21.27.405 - 21.27.460. 
 (d) Each day that a pharmacy benefits manager conducts business in the state 
 as a pharmacy benefits manager without being licensed [REGISTERED] is a separate 
 violation of this section, and each separate violation is subject to the maximum civil 
 penalty under AS 21.97.020. 
 * Sec. 49. AS 21.27 is amended by adding new sections to read: 
 Sec. 21.27.903. Pharmacy benefits manager qualifications. (a) An 
 application for a pharmacy benefits manager license must be in a form prescribed by 
 the director. 
 (b) The director may only issue or renew a license if the director is satisfied 
 that the applicant is a trustworthy person. The director may not issue a license to an 
 applicant who has committed an act that is a cause for denial, nonrenewal, suspension, 
 or revocation of a registration or license in this state or another jurisdiction. 
 (c) An application must disclose 
 (1) information concerning the identity, professional history, 
 professional experience, and background history of all owners, officers, directors, or 
 partners;

(2) any administrative action taken against the owners, officers, 
 directors, or partners by a governmental agency of this or another jurisdiction and any 
 sanction imposed by a financial industry regulatory authority or arbitration 
 proceeding; 
 (3) any criminal prosecution in this state or another state or jurisdiction 
 of an owner, officer, director, or partner; the application must include the criminal 
 complaint, calendaring order, and other relevant legal documents. 
 (d) An application must designate a compliance officer for the pharmacy 
 benefits manager and include the name, business address, telephone number, 
 electronic mailing address, professional experience, and information concerning the 
 background history of the officer. 
 (e) An application must include 
 (1) the required application fee; 
 (2) the organizational documents of the pharmacy benefits manager, 
 including articles of incorporation, articles of association, partnership agreement, trade 
 name certificate, trust agreement, shareholder agreement, and other applicable 
 documents, as well as the endorsements to the required documents; 
 (3) the name and address of the pharmacy benefits manager's agent for 
 service of process in the state; 
 (4) the bylaws, rules, regulations, or similar documents regulating the 
 internal affairs of the pharmacy benefits manager; 
 (5) the name, electronic mailing address, physical address, official 
 position, and professional qualifications of each person who is responsible for the 
 conduct of affairs of the pharmacy benefits manager, including the board of directors, 
 board of trustees, executive committee, or other governing board or committee; the 
 principal officers in the case of a corporation, or the partners or members in the case of 
 a partnership, limited liability company, limited liability partnership, or association; 
 shareholders holding directly or indirectly 10 percent or more of the voting securities 
 of the pharmacy benefits manager; and any other person who exercises control or 
 influence over the affairs of the pharmacy benefits manager; 
 (6) certified financial statements for the preceding two years, or for

each year and partial year that the applicant has been in business if less than two years, 
 prepared by an independent certified public accountant establishing that the applicant 
 is solvent, that the applicant's system of accounting, internal control, and procedure is 
 operating effectively to provide reasonable assurance that money is promptly 
 accounted for and paid to the person entitled to the money, and any other information 
 that the director may require to review the current financial condition of the applicant. 
 Sec. 21.27.904. Pharmacy benefits manager required notifications. (a) A 
 licensed pharmacy benefits manager shall notify the director in writing not later than 
 30 days after 
 (1) a change in the information contained within the licensee's license, 
 place of business, electronic mailing address, physical mailing address, or telephone 
 number; 
 (2) a change in compliance officer, residence, place of business, 
 mailing address, or telephone number; 
 (3) the final disposition of an administrative action taken against the 
 licensee by a governmental agency of another state, by a governmental agency of 
 another jurisdiction, or by a financial industry regulatory authority sanction or 
 arbitration proceeding; in addition, a licensee shall submit to the director documents 
 relating to the final disposition on, including the final order and other relevant legal 
 documents in, the action; or 
 (4) a conviction of a misdemeanor or felony of the pharmacy benefits 
 manager, its officers, designated compliance officer, directors, partners, or owners. 
 (b) Failure to provide the information required under this section within 30 
 days is cause for denial, revocation, or suspension of license. 
 * Sec. 50. AS 21.27.905(a) is amended to read: 
 (a) A pharmacy benefits manager shall biennially renew a license 
 [REGISTRATION] with the director following the procedures for license renewal in 
 AS 21.27.380. The fee for an initial license is $20,000, and the fee to renew a 
 license is $20,000. 
 * Sec. 51. AS 21.27.975(15) is amended to read: 
 (15) "pharmacy benefits manager" means a person that contracts with a

pharmacy on behalf of an insurer to process claims or pay pharmacies for prescription 
 drugs or medical devices and supplies or provide network management for pharmacies 
 regardless of ownership of the pharmacy benefits manager; 
 * Sec. 52. AS 21.27.990(8) is amended to read: 
 (8) "compliance officer" means a licensee designated for a specific line 
 [AND CLASS] of authority under AS 21.27.115 [THIS CHAPTER] who is 
 responsible for a firm's compliance with the insurance statutes and regulations of this 
 state; 
 * Sec. 53. AS 21.27.990(12) is amended to read: 
 (12) "home state," with respect to 
 (A) an insurance producer, means the District of Columbia or a 
 state or territory of the United States in which an insurance producer maintains 
 the producer's principal place of residence or principal place of business and is 
 licensed to act as an insurance producer; 
 (B) an independent [PORTABLE ELECTRONICS] adjuster, 
 means the District of Columbia or a state or territory of the United States in 
 which an independent [PORTABLE ELECTRONICS] adjuster maintains the 
 independent [PORTABLE ELECTRONICS] adjuster's principal place of 
 residence or principal place of business and is licensed to act as an independent 
 adjuster or, if the state or territory of the United States of the independent 
 [PORTABLE ELECTRONICS] adjuster's principal place of residence or 
 principal place of business does not license independent adjusters, the state or 
 territory of the United States designated by the independent [PORTABLE 
 ELECTRONICS] adjuster where the independent [PORTABLE 
 ELECTRONICS] adjuster is licensed; 
 * Sec. 54. AS 21.27.990(13) is amended to read: 
 (13) "independent [PORTABLE ELECTRONICS] adjuster" means a 
 person [AN INDEPENDENT ADJUSTER] who investigates, negotiates, or settles 
 property, casualty, or workers' compensation claims for insurers or self-insurers 
 [COLLECTS, FURNISHES, OR ENTERS CLAIM INFORMATION FOR 
 PORTABLE ELECTRONICS INSURANCE ISSUED UNDER AS 21.36.515];

* Sec. 55. AS 21.27.990(20) is amended to read: 
 (20) "limited lines" means those lines of insurance defined in 
 AS 21.27.150 [OR ANY OTHER LINE OF INSURANCE THAT THE DIRECTOR 
 DESIGNATES BY ORDER AS A LIMITED LINE]; 
 * Sec. 56. AS 21.33.055(d) is amended to read: 
 (d) On default of a nonadmitted insurer in the payment of the tax, the insured 
 shall pay the tax within 30 days after written notice from the director of the default by 
 the nonadmitted insurer. For wet marine and transportation insurance, a surplus 
 lines broker may pay the tax on behalf of the nonadmitted insurer or the insured. 
 If the tax prescribed by this section is not paid [BY THE NONADMITTED 
 INSURER] within the time stated [OR BY THE INSURED WITHIN THE TIME 
 STATED] after notice of default from the director [BY THE NONADMITTED 
 INSURER], the tax may be increased by 
 (1) a late payment fee of $1,000 or 10 percent of the tax due, 
 whichever is greater; 
 (2) interest at the rate of one percent a month or part of a month from 
 the date the payment was originally due to the date paid; and 
 (3) a penalty not to exceed $100 a day or 25 percent of the tax due, 
 whichever is greater, from the date the payment was due to the date paid. 
 * Sec. 57. AS 21.34.035 is amended to read: 
 Sec. 21.34.035. Health care insurance and disability insurance. (a) Except 
 for a multiple employer welfare arrangement, health care insurance and disability 
 insurance may be placed in and written by a nonadmitted insurer if 
 (1) the director finds it is in the best interest of the public and issues an 
 order to that effect; and 
 (2) the insurance is in compliance with this chapter. 
 (b) The rates and rating methods for health care insurance and disability 
 insurance placed and written under this section are subject to AS 21.51.405 and 
 AS 21.54.015. The surplus lines broker shall make the filings required under 
 AS 21.51.405 and AS 21.54.015 and maintain the records and accounts as required 
 under AS 21.87.230.

(c) Health care insurance and disability insurance may not be procured under 
 this chapter 
 (1) for the purpose of obtaining a lower premium rate than acceptable 
 by an authorized insurer; or 
 (2) for obtaining a competitive advantage. 
 (d) Health care insurance and disability insurance [INSURANCE] placed 
 in or written by a nonadmitted insurer and the activities of the surplus lines broker 
 relating to that transaction are subject to this title. 
 (e) In this section, 
 (1) "disability insurance" means disability insurance as defined in 
 AS 21.12.052 that is excess insurance or for individuals unable to obtain disability 
 insurance with any admitted insurer; 
 (2) "health care insurance" has the meaning given in AS 21.12.050(b). 
 * Sec. 58. AS 21.34.040(d) is amended to read: 
 (d) An insurer, including a nonadmitted insurer, not domiciled in a state 
 or territory of the United States and not listed on the Quarterly Listing of Alien 
 Insurers maintained by the National Association of Insurance Commissioners 
 International Insurers Department [A NONADMITTED INSURER] may be 
 eligible to provide coverage in this state if it files with the director or the director's 
 designee a copy of its current annual financial statement that has been certified by the 
 insurer. The financial statement must be filed with and approved by the regulatory 
 authority in the domicile of the [NONADMITTED] insurer [,] or certified by an 
 accounting or auditing firm licensed in the jurisdiction of the insurer's domicile. The 
 [A FOREIGN] insurer shall file [PROVIDE] the approved or certified financial 
 statement with the director or director's designee not more than nine [SIX] months 
 after the close of the reporting period. [AN ALIEN INSURER SHALL PROVIDE 
 THE APPROVED OR CERTIFIED FINANCIAL STATEMENT NOT MORE THAN 
 NINE MONTHS AFTER THE CLOSE OF THE REPORTING PERIOD. IN THE 
 CASE OF AN INSURANCE EXCHANGE, THE STATEMENT MAY BE AN 
 AGGREGATE COMBINED STATEMENT OF ALL UNDERWRITING 
 SYNDICATES OPERATING DURING THE PERIOD REPORTED UPON.]

* Sec. 59. AS 21.34.170(a) is amended to read: 
 (a) A surplus lines broker shall file with the director, on forms prescribed by 
 the director, a report of all surplus lines insurance, by type of insurance as required to 
 be reported in the annual statement that must be filed with the director by admitted 
 insurers. The report must include all surplus lines insurance transactions during the 
 preceding period showing the aggregate gross premiums written, the aggregate return 
 premiums, and the amount of aggregate tax remitted to this state [, AND THE 
 AMOUNT OF AGGREGATE TAX REMITTED TO EACH OTHER STATE FOR 
 WHICH AN ALLOCATION IS MADE UNDER AS 21.34.180]. The surplus lines 
 broker [FORMS] shall file the report [BE FILED] quarterly on March 1, June 1, 
 September 1, and December 1 of each year. 
 * Sec. 60. AS 21.34.190 is amended to read: 
 Sec. 21.34.190. Filing fee. (a) The fee for filing the statement under 
 AS 21.34.180(e) is an amount equal to one percent on gross premium charged less any 
 return premiums as reported on the statement. The surplus lines broker shall pay the 
 fee at the time of filing [OF] the statement and in a form and manner required by 
 the director. 
 (b) If the surplus lines broker does not pay the filing fee [IS NOT PAID] 
 when due, the surplus lines broker shall pay an additional late payment fee of $50 a 
 month [$250] plus two percent of the fee due per month, or part of a month, during 
 which the surplus lines broker fails to pay the full amount of the filing fee. The 
 late payment fee may not exceed $250 plus 10 percent of the filing fee due. If the 
 surplus lines broker does not pay the filing fee in the form or manner required by 
 the director, a penalty fee will be assessed equal to 25 percent of the filing fee due, 
 not to exceed $1,000, with a minimum penalty of $50. In addition to any other 
 penalty provided by law, the director may assess a penalty of not more than 
 $10,000 for a violation of this section. The director may suspend or revoke the 
 license of a surplus lines broker that fails to pay a fee under this section [SHALL 
 BECOME DUE AND PAYABLE BY THE SURPLUS LINES BROKER]. 
 * Sec. 61. AS 21.34.900(8) is amended to read: 
 (8) "home state," for purposes of determining the home state of an

insured in a multistate or multinational placement of nonadmitted insurance, is 
 defined as follows: 
 (A) except as provided in (B) or (C) of this paragraph, "home 
 state" means, with respect to an insured, 
 (i) the state in which an insured maintains its principal 
 place of business or, in the case of an individual, the individual's 
 principal residence; or 
 (ii) if 100 percent of the insured risk is located out of 
 the state referred to in (i) of this subparagraph, the state to which the 
 greatest percentage of the insured's taxable premium for that insurance 
 contract is allocated; 
 (B) if two or more insureds from an affiliated group are named 
 insureds on a single policy, "home state" under (A) of this paragraph is based 
 on the member of the affiliated group that has the largest percentage of 
 premium attributed to it under the insurance contract; 
 (C) if two or more insureds are named insureds on a 
 nonaffiliated group policy, "home state" under (A) of this paragraph 
 (i) is based on the group policyholder if the group 
 policyholder pays 100 percent of the premium; or 
 (ii) is based on the named insured of the group 
 policy if the group policyholder does not pay 100 percent of the 
 premium from the policyholder's own funds; 
 (D) for purposes of (A) of this paragraph, the principal place of 
 business of an insured is 
 (i) the state where the insured maintains its headquarters 
 and where the insured's high-level officers direct, control, and 
 coordinate the business activities of the insured; or 
 (ii) if an insured's high-level officers direct, control, 
 and coordinate the business activities of the insured in more than 
 one state or if the insured maintains its headquarters in a 
 jurisdiction outside the United States, the state where the greatest

percentage of the insured's taxable premium for the insurance 
 contract is allocated; 
 (E) for purposes of (A) of this paragraph, the principal 
 residence of an insured is 
 (i) the state where the insured resides for the 
 greatest number of days in a calendar year; or 
 (ii) if the insured resides for the greatest number of 
 days in a calendar year in a jurisdiction outside the United States, 
 the state where the greatest percentage of the insured's taxable 
 premium for the insurance contract is allocated; 
 * Sec. 62. AS 21.34.900(15) is amended to read: 
 (15) "wet marine and transportation insurance" has the meaning given 
 in AS 21.12.090(b) [MEANS ONE OR MORE OF THE FOLLOWING: 
 (A) INSURANCE UPON, OF INTEREST IN, OR RELATING 
 TO VESSELS, CRAFTS, HULLS, EXCEPT VESSELS OF 50 
 DISPLACEMENT TONS OR LESS; 
 (B) INSURANCE OF MARINE BUILDERS RISKS, 
 MARINE WAR RISKS, AND CONTRACTS OF MARINE PROTECTION 
 AND INDEMNITY INSURANCE; 
 (C) INSURANCE OF FREIGHT AND DISBURSEMENTS 
 PERTAINING TO A SUBJECT OF INSURANCE COMING WITHIN THIS 
 PARAGRAPH; OR 
 (D) INSURANCE OF PERSONAL PROPERTY AND 
 INTERESTS IN PERSONAL PROPERTY, IN COURSE OF 
 EXPORTATION FROM OR IMPORTATION INTO A COUNTRY OR IN 
 THE COURSE OF COASTAL OR INLAND WATER TRANSPORTATION, 
 INCLUDING TRANSPORTATION BY LAND, WATER, OR AIR FROM 
 POINT OF ORIGIN TO FINAL DESTINATION IN CONNECTION WITH 
 ANY AND ALL RISKS OR PERILS OF NAVIGATION, TRANSIT, OR 
 TRANSPORTATION, AND WHILE BEING REPAIRED FOR AND WHILE 
 AWAITING SHIPMENT, AND DURING ANY DELAYS,

TRANSSHIPMENT, OR RESHIPMENT INCIDENT TO THEM]. 
 * Sec. 63. AS 21.36.125(a) is amended to read: 
 (a) A person may not commit any of the following acts or practices: 
 (1) misrepresent facts or policy provisions relating to coverage of an 
 insurance policy; 
 (2) fail to acknowledge and act promptly upon communications 
 regarding a claim arising under an insurance policy; 
 (3) fail to adopt and implement reasonable standards for prompt 
 investigation of claims; 
 (4) refuse to pay a claim without a reasonable investigation of all of 
 the available information and an explanation of the basis for denial of the claim or for 
 an offer of compromise settlement; 
 (5) fail to affirm or deny coverage of claims within a reasonable time 
 of the completion of proof-of-loss statements; 
 (6) fail to attempt in good faith to make prompt and equitable 
 settlement of claims in which liability is reasonably clear; 
 (7) engage in a pattern or practice of compelling insureds to litigate for 
 recovery of amounts due under insurance policies by offering substantially less than 
 the amounts ultimately recovered in actions brought by those insureds; 
 (8) compel an insured or third-party claimant in a case in which 
 liability is clear to litigate for recovery of an amount due under an insurance policy by 
 offering an amount that does not have an objectively reasonable basis in law and fact 
 and that has not been documented in the insurer's file; 
 (9) attempt to make an unreasonably low settlement by reference to 
 printed advertising matter accompanying or included in an application; 
 (10) attempt to settle a claim on the basis of an application that has 
 been altered without the consent of the insured; 
 (11) make a claims payment without including a statement of the 
 coverage under which the payment is made; 
 (12) make known to an insured or third-party claimant a policy of 
 appealing from an arbitration award in favor of an insured or third-party claimant for

the purpose of compelling the insured or third-party claimant to accept a settlement or 
 compromise less than the amount awarded in arbitration; 
 (13) delay investigation or payment of claims by requiring submission 
 of unnecessary or substantially repetitive claims reports and proof-of-loss forms; 
 (14) fail to promptly settle claims under one portion of a policy for the 
 purpose of influencing settlements under other portions of the policy; 
 (15) fail to promptly provide a reasonable explanation of the basis in 
 the insurance policy in relation to the facts or applicable law for denial of a claim or 
 for the offer of a compromise settlement; [OR] 
 (16) offer a form of settlement or pay a judgment in any manner 
 prohibited by AS 21.96.030; 
 (17) violate a provision contained in AS 21.07; or 
 (18) offer a valuation that depreciates the expense of labor in 
 violation of AS 21.60.030. 
 * Sec. 64. AS 21.36.225(a) is amended to read: 
 (a) An [EXCEPT FOR A HEALTH CARE INSURANCE POLICY 
 SUBJECT TO AS 21.51.400 OR AS 21.54.130, AN] insurer may not cancel a health 
 insurance policy unless the insurer provides written notice to a policyholder at least 45 
 days before the effective date of the cancellation. 
 * Sec. 65. AS 21.36.235(a) is amended to read: 
 (a) Except as provided in AS 21.36.305, if the renewal premium is increased 
 more than 10 percent for a reason other than an increase in coverage or exposure base, 
 or if after renewal there will be a material restriction or reduction in coverage not 
 specifically requested by the insured, written notice shall be mailed to the insured and 
 to the agent or broker of record as required by AS 21.36.260 
 [(1) AT LEAST 20 DAYS BEFORE EXPIRATION OF A 
 PERSONAL INSURANCE POLICY; OR 
 (2)] at least 45 days before expiration of the [A BUSINESS OR 
 COMMERCIAL] policy. 
 * Sec. 66. AS 21.36.240(a) is amended to read: 
 (a) An insurer may only fail to renew a personal insurance policy on the

policy's annual anniversary. An insurer may not fail to renew a policy unless a written 
 notice of nonrenewal is mailed to the named insured under AS 21.36.260 at least [20 
 DAYS FOR A PERSONAL INSURANCE POLICY, AND AT LEAST] 45 days 
 [FOR A BUSINESS OR COMMERCIAL INSURANCE POLICY,] before the date 
 the policy expires or the anniversary date of a policy written for a term longer than one 
 year or with no fixed expiration date. 
 * Sec. 67. AS 21.36.240 is amended by adding a new subsection to read: 
 (e) For purposes of this section, an offer of placement with an affiliate insurer 
 does not constitute a failure by an insurer to renew coverage. 
 * Sec. 68. AS 21.36 is amended by adding a new section to read: 
 Sec. 21.36.245. Cancellation of and failure to renew property and casualty 
 insurance. An insurer may not cancel or fail to renew a property insurance policy, or a 
 casualty insurance policy insuring a business or commercial property, as a result of a 
 claim to an insurer made solely to meet a local, state, or federal aid requirement where 
 the insurer does not apply coverage and does not pay a benefit. 
 * Sec. 69. AS 21.36.475(a) is amended to read: 
 (a) An owner controlled insurance program or a contractor controlled 
 insurance program is subject to both AS 21.39 and AS 21.42, must be approved by the 
 director, and shall be allowed only for a major construction project or a major multi- 
 owner residential construction project. Owner controlled and contractor controlled 
 insurance programs are limited to property insurance as defined in AS 21.12.060 and 
 casualty insurance as defined in AS 21.12.070. 
 * Sec. 70. AS 21.36.475(b) is amended to read: 
 (b) In this section, an owner controlled or contractor controlled insurance 
 [INSURED] program does not include 
 (1) builder's risk or course of construction insurance; 
 (2) insurance relating to the transportation of cargo or other property; 
 or 
 (3) insurance covering one or more affiliates, subsidiaries, partners, or 
 joint venture partners of a person [; OR 
 (4) INSURANCE POLICIES ENDORSED TO NAME ONE OR

MORE PERSONS AS ADDITIONAL INSUREDS]. 
 * Sec. 71. AS 21.36.475(c) is amended by adding a new paragraph to read: 
 (7) "major multi-owner residential construction project" means a 
 construction project for condominiums, townhouses, cooperative housing 
 developments, or other residential housing involving at least 40 units and three or 
 more property owners with a total cost of $20,000,000 or more. 
 * Sec. 72. AS 21.36.505(a) is amended to read: 
 (a) A person may not sell, market, promote, advertise, or otherwise distribute a 
 health discount plan unless 
 (1) each advertisement, policy, document, information, statement, or 
 other communication regarding the health discount plan and the plan itself contain a 
 statement, in bold and prominent type, that the health discount plan is not insurance; 
 (2) [THE DISCOUNTS OFFERED UNDER THE HEALTH 
 DISCOUNT PLAN ARE SPECIFICALLY AUTHORIZED BY A CONTRACT 
 WITH EACH PROVIDER OF THE SERVICES OR SUPPLIES LISTED IN 
 CONJUNCTION WITH THE PLAN; 
 (3)] the health discount plan states the name, address, and telephone 
 number of the administrator of the plan; 
 (3) [(4)] the person makes readily available to the consumer a 
 complete, accurate, and up-to-date list of providers participating in the plan that offer 
 discounted health care services or supplies in the consumer's local area and the 
 discounts offered by the providers; 
 (4) [(5)] the person provides the consumer the right to cancel the 
 health discount plan within 30 days after purchase of the plan; 
 (5) [AND (6)] the person provides the consumer with a full refund of 
 all payments made, except for a nominal processing fee, within 30 days after 
 notification of cancellation of the plan under (4) [(5)] of this subsection; 
 (6) the person registers the health discount plan in accordance 
 with regulations adopted by the director; and 
 (7) the person renews the health discount plan when required 
 under regulations adopted by the director.

* Sec. 73. AS 21.36.520(a) is amended to read: 
 (a) An insurer providing a health care insurance policy or its pharmacy 
 benefits manager may not 
 (1) interfere with a covered person's right to choose a pharmacy or 
 provider; 
 (2) interfere with a covered person's right of access to a clinician- 
 administered drug; 
 (3) interfere with the right of a pharmacy or pharmacist to participate 
 as a network pharmacy; 
 (4) reimburse a pharmacy or pharmacist an amount less than the 
 amount the pharmacy benefits manager reimburses an affiliate for providing the same 
 pharmacy services, calculated on a per-unit basis using the same generic product 
 identifier or generic code number; 
 (5) impose a reduction in reimbursement for pharmacy services 
 because of the person's choice among pharmacies that have agreed to participate in the 
 plan according to the terms offered by the insurer or its pharmacy benefits manager; 
 (6) use a covered person's pharmacy services data collected under the 
 provision of claims processing services for the purpose of soliciting, marketing, or 
 referring the person to an affiliate of the pharmacy benefits manager; 
 (7) prohibit or limit a pharmacy from mailing, shipping, or delivering 
 drugs to a patient as an ancillary service; however, the insurer or its pharmacy benefits 
 manager 
 (A) is not required to reimburse a delivery fee charged by a 
 pharmacy unless the fee is specified in the contract between the pharmacy 
 benefits manager and the pharmacy; 
 (B) may not require a patient signature as proof of delivery of a 
 mailed or shipped drug if the pharmacy 
 (i) maintains a mailing or shipping log signed by a 
 representative of the pharmacy or keeps a record of each notification of 
 delivery provided by the United States mail or a package delivery 
 service; and

(ii) is responsible for the cost of mailing, shipping, or 
 delivering a replacement for a drug that was mailed or shipped but not 
 received by the covered person; 
 (8) prohibit or limit a network pharmacy from informing an insured 
 person of the difference between the out-of-pocket cost to the covered person to 
 purchase a drug, medical device, or supply using the covered person's pharmacy 
 benefits and the pharmacy's usual and customary charge for the drug, medical device, 
 or supply; 
 (9) conduct or participate in spread pricing in the state; 
 (10) assess, charge, or collect a form of remuneration that passes from 
 a pharmacy or a pharmacist in a pharmacy network to the pharmacy benefits manager, 
 including claim processing fees, performance-based fees, network participation fees, 
 or accreditation fees; 
 (11) reverse and resubmit the claim of a pharmacy more than 90 days 
 after the date the claim was first adjudicated, and may not reverse and resubmit the 
 claim of a pharmacy unless the insurer or pharmacy benefits manager 
 (A) provides prior written notification to the pharmacy; 
 (B) has just cause; 
 (C) first attempts to reconcile the claim with the pharmacy; and 
 (D) provides to the pharmacy, at the time of the reversal and 
 resubmittal, a written description that includes details of and justification for 
 the reversal and resubmittal; 
 (12) prohibit or limit a pharmacy from collecting a fee from a 
 covered person for a service or product not covered by the covered person's 
 health care insurance policy. 
 * Sec. 74. AS 21.36 is amended by adding a new section to article 5 to read: 
 Sec. 21.36.525. Decisions based on elected official status. (a) A person 
 transacting insurance in this state may not, solely because of a person's status as an 
 elected official, 
 (1) refuse to issue or renew insurance coverage; 
 (2) limit the scope of insurance coverage;

(3) cancel an existing policy of insurance; 
 (4) deny a covered claim; or 
 (5) increase the premium, policy fees, or rates charged on an insurance 
 policy. 
 (b) The provisions of (a) of this section do not apply if the refusal, limitation, 
 cancellation, denial, or increase is 
 (1) based on sound underwriting or actuarial principles reasonably 
 related to actual or anticipated loss experience; or 
 (2) required or authorized by law or regulation. 
 (c) In this section, "elected official" means a member of the legislature, the 
 governor, the lieutenant governor, a member of the state's congressional delegation, a 
 constitutional convention delegate, a borough or city mayor, a member of a borough or 
 city assembly, council, or school board, or a member of a regional school board for a 
 regional educational attendance area. 
 * Sec. 75. AS 21.36.910(d) is amended to read: 
 (d) In addition to an order issued under (c) of this section, the director may, 
 after a hearing, order restitution, assess a penalty of not more than $2,500 for each 
 violation or $25,000 for engaging in a general business practice in violation of this 
 chapter. The director may include interest calculated under AS 09.30.070 in an 
 order for restitution entered under this subsection. 
 * Sec. 76. AS 21.39.155(c) is amended to read: 
 (c) An insurer may impose a surcharge not to exceed 25 percent of the 
 premium for assigned risk pool insurance, except that a surcharge may not be applied 
 to the first $6,000 [$3,000] in premium in any policy year. 
 * Sec. 77. AS 21.42.250(a) is amended to read: 
 (a) An insurer shall provide a policy or endorsement to the insured or to the 
 person entitled to it by mail or electronic mail [DELIVERY] or by posting on the 
 insurer's Internet website under (c) of this section within a reasonable period of time 
 after its issuance. The insurer is not required to mail, deliver, or post the policy or 
 endorsement until all conditions required by the insurer have been met by the insured. 
 * Sec. 78. AS 21.42.375(e) is amended to read:

(e) Except as necessary to qualify a plan as a high deductible health plan 
 eligible for a health savings account tax deduction under 26 U.S.C. 223 (Internal 
 Revenue Code), a health care insurer that offers, issues, delivers, or renews a health 
 care insurance plan in the individual or group market in the state that provides 
 coverage for mammography screening, diagnostic breast examinations, and 
 supplemental breast examinations may not impose cost sharing, a deductible, 
 coinsurance, a copayment obligation, or another similar out-of-pocket expense on an 
 insured for coverage of a low-dose mammography screening, diagnostic breast 
 examination, [OR] supplemental breast examination, biopsy, or consultation. 
 * Sec. 79. AS 21.42.375(f) is amended by adding new paragraphs to read: 
 (4) "biopsy" means a medical procedure involving the removal of 
 tissue to determine the presence of cancer cells; 
 (5) "consultation" means a medical consultation with a health care 
 provider to discuss the results of a diagnostic breast examination and whether further 
 biopsies or other diagnostic procedures are needed. 
 * Sec. 80. AS 21.42.377(a) is amended to read: 
 (a) Except for a fraternal benefit society, a health care insurer that offers, 
 issues for delivery, delivers, or renews in this state a health care insurance plan shall 
 provide coverage for the costs of colorectal cancer screening examinations and 
 laboratory tests under the schedule described in (b) of this section. [THE COVERAGE 
 REQUIRED BY THIS SECTION IS SUBJECT TO STANDARD POLICY 
 PROVISIONS APPLICABLE TO OTHER BENEFITS, INCLUDING 
 DEDUCTIBLE OR COPAYMENT PROVISIONS.] 
 * Sec. 81. AS 21.42.377(b) is amended to read: 
 (b) The minimum coverage required under (a) of this section for colorectal 
 cancer screening includes coverage for colorectal cancer examinations and laboratory 
 tests as recommended by the most recent [SPECIFIED IN] American Cancer 
 Society guidelines for colorectal cancer screening of [ASYMPTOMATIC] individuals 
 considered at average risk for colorectal cancer. Coverage shall be provided for all 
 colorectal screening examinations and tests, including a colonoscopy performed as a 
 result of a positive result on a non-colonoscopy preventive screening test, that are

administered at a frequency identified in the most recent American Cancer Society 
 guidelines for colorectal cancer. 
 * Sec. 82. AS 21.42.377(e) is amended to read: 
 (e) For individuals considered at 
 (1) average risk for colorectal cancer, coverage or benefits shall be 
 provided for the choice of screening, so long as it is conducted in accordance with the 
 specified frequency; coverage required by this paragraph is not subject to cost 
 sharing, including deductible, coinsurance, or copayment provisions; 
 (2) [. FOR INDIVIDUALS CONSIDERED AT] high risk for 
 colorectal cancer, screening shall be provided at a frequency determined necessary by 
 a health care provider. 
 * Sec. 83. AS 21.45.305(c)(2) is amended to read: 
 (2) The interest rate used in determining minimum nonforfeiture 
 amounts shall be an annual rate of interest determined as the lesser of three percent a 
 year or the following, which shall be specified in the contract if the interest rate will be 
 reset: (A) the five-year constant maturity treasury rate reported by the federal reserve 
 as of a date, or average over a period, rounded to the nearest 1/ 20 of one percent, 
 specified in the contract not more than 15 months before the contract issue date or 
 redetermination date under (D) of this paragraph; (B) reduced by 125 basis points; (C) 
 where the resulting interest rate is not less than 0.15 [ONE] percent; and (D) the 
 interest rate must apply for an initial period and may be redetermined for additional 
 periods; the redetermination date, basis, and period, if any, must be stated in the 
 contract; the basis is the date or average over a specified period that produces the 
 value of the five-year constant maturity treasury rate to be used at each 
 redetermination date. 
 * Sec. 84. AS 21.48.010(f) is amended to read: 
 (f) An insurer shall submit to the director information demonstrating 
 [SATISFACTORY TO THE DIRECTOR] that the group meets the requirements of 
 (a) or (e) of this section. If the director finds the information to be satisfactory, the 
 director shall [, AND THE DIRECTOR MUST AFFIRMATIVELY] approve [OF] 
 the [GROUP BEFORE AN] insurer to [MAY] issue a group life policy to a group

under (a) or (e) of this section. The director's approval is not required for a single 
 employer group, labor union group, or multiple employer welfare arrangement 
 authorized under AS 21.85. 
 * Sec. 85. AS 21.51.060(b) is amended to read: 
 (b) A policy in which the insurer reserves the right to refuse renewal shall 
 have, at the beginning of the provision in (a) of this section, 
 "Unless not less than 45 [30] days before the premium due date the insurer has 
 delivered to the insured or has mailed to the last address of the insured as shown by 
 the records of the insurer written notice of its intention not to renew this policy beyond 
 the period for which the premium has been accepted." 
 * Sec. 86. AS 21.57.160(1) is amended to read: 
 (1) "agricultural [AGRICULTURE] credit transaction commitment" 
 means a binding agreement to loan money up to a fixed amount as needed for 
 agricultural purposes; 
 * Sec. 87. AS 21.59 is amended by adding a new section to read: 
 Sec. 21.59.125. Motor vehicle service contract approval. (a) A provider may 
 not deliver or issue for delivery a motor vehicle service contract unless the provider 
 files the contract with the division and receives approval from the director for the 
 contract. 
 (b) If a change is made to a motor vehicle service contract after it has been 
 approved, the provider shall file and receive approval for the changed contract in 
 accordance with (a) of this section. 
 * Sec. 88. AS 21.59.140(c) is amended to read: 
 (c) A licensee shall report to the director in writing any administrative action 
 taken against the licensee by a governmental agency [OF ANOTHER STATE OR BY 
 A GOVERNMENTAL AGENCY OF ANOTHER JURISDICTION] within 30 days 
 after the final disposition of the action. A licensee shall submit to the director the final 
 order and other relevant legal documents in the action. A licensee shall report to the 
 director any criminal prosecution of the licensee within 30 days after the date of filing 
 of the criminal complaint, indictment, or citation in the prosecution. The licensee shall 
 submit to the director a copy of the criminal complaint, calendaring order, and other

relevant legal documents in the prosecution. 
 * Sec. 89. AS 21.60 is amended by adding a new section to read: 
 Sec. 21.60.030. Depreciation of labor. In a residential property policy, the 
 valuation of the expense of labor may not be depreciated, except where offered as a 
 stand-alone endorsement that specifically identifies the intangible items subject to 
 depreciation. An endorsement offered under this section must be an optional coverage 
 and provide a proportionate reduction in premium. 
 * Sec. 90. AS 21.76.070 is amended to read: 
 Sec. 21.76.070. Excess insurance. A cooperative agreement may authorize the 
 board of directors to purchase excess or catastrophic insurance on behalf of the joint 
 insurance arrangement. The cost of the insurance shall be apportioned in the manner 
 specified in the joint insurance agreement. The board may purchase insurance under 
 this section only from an insurer authorized to do business in the state, except that an 
 arrangement formed by municipalities or school districts may purchase insurance 
 under this section from a risk-sharing pool established by a national association of 
 similar entities if the risk-sharing pool meets the qualifications for a nonadmitted 
 [AN UNAUTHORIZED] insurer under AS 21.34.040(d) [AS 21.34.040(b) AND (d) 
 AND 21.34.220] and has capital and policyholders surplus in an amount at least as 
 great as would be required if the association were a domestic multiple line insurer. An 
 arrangement may purchase insurance under this section for property and liability risks 
 from unauthorized insurers allowed for use by licensed Alaska surplus lines brokers. 
 * Sec. 91. AS 21.79.020(c) is amended to read: 
 (c) This chapter does not apply to 
 (1) that part of a policy or contract that is not guaranteed by the 
 member insurer; 
 (2) that part of the risk borne by the policy or contract owner; 
 (3) a policy or contract of reinsurance, unless an assumption certificate 
 has been issued; 
 (4) that part of a policy or contract, except for part of a policy or 
 contract, including a rider, that provides long-term care or other health insurance 
 benefits, to the extent that the rate of interest on which it is based, or the interest rate,

crediting rate, or similar factor determined by use of an index or other external 
 reference stated in the policy or contract employed in calculating returns or changes in 
 value, 
 (A) averaged over the period of four years before the date on 
 which the member insurer becomes an impaired or insolvent insurer under this 
 chapter, whichever occurs first, exceeds the rate of interest determined by 
 subtracting two percentage points from the published monthly average for that 
 same four-year period or for a lesser period if the policy or contract was issued 
 less than four years before the member insurer becomes an impaired or 
 insolvent insurer under this chapter, whichever occurs first; and 
 (B) on and after the date on which the member insurer becomes 
 an impaired or insolvent insurer under this chapter, whichever occurs first, 
 exceeds the rate of interest determined by subtracting three percentage points 
 from the most recent published monthly average; 
 (5) a portion of a policy or contract issued to a plan or program of an 
 employer, association, or similar entity to provide life, health, or an annuity benefit to 
 an employee, member, or other person, to the extent that the plan or program is self- 
 funded or uninsured, including a benefit payable by the employer, association, or 
 similar entity under 
 (A) a multiple employer welfare arrangement as defined in 29 
 U.S.C. 1002 (Employee Retirement Income Security Act of 1974); 
 (B) a minimum premium group insurance plan; 
 (C) a stop-loss group insurance plan; or 
 (D) an administrative services only contract; 
 (6) that part of a policy or contract that provides a dividend or 
 experience rating credit or voting rights, or provides that a fee or allowance be paid to 
 a person, including the policy or contract owner, in connection with the service to or 
 administration of the policy or contract; 
 (7) a policy or contract issued in this state by a member insurer at a 
 time when it was not licensed or did not have a certificate of authority to issue the 
 policy or contract in this state;

(8) a person who is a payee or beneficiary of a contract owner who is a 
 resident of this state if the payee or beneficiary is provided coverage by the association 
 of another state; 
 (9) a person covered under (d) of this section if any coverage is 
 provided by the association of another state to that person; 
 (10) an unallocated annuity contract issued to or in connection with a 
 benefit plan protected under the United States Pension Benefit Guaranty Corporation, 
 regardless of whether the United States Pension Benefit Guaranty Corporation has 
 become liable to make any payments with respect to the benefit plan; 
 (11) that part of an unallocated annuity contract that is not issued to or 
 in connection with a specific employee, union, or association of natural persons 
 benefit plan or a government lottery; 
 (12) that part of a policy or contract to the extent that assessments 
 required by AS 21.79.070 with respect to the policy or contract are preempted by law; 
 (13) an obligation that does not arise under the express written terms of 
 the policy or contract issued by the member insurer to the enrollee, certificate holder, 
 contract owner, or policy owner, including, without limitation, 
 (A) a claim based on marketing materials; 
 (B) a claim based on a side letter or other document that was 
 issued by the member insurer without meeting applicable policy or contract 
 form filing or approval requirements; 
 (C) a misrepresentation of or regarding policy or contract 
 benefits; 
 (D) an extra contractual claim; or 
 (E) a claim for penalties or consequential or incidental 
 damages; 
 (14) a contractual agreement that establishes the member insurer's 
 obligations to provide a book value accounting guaranty for defined contribution 
 benefit plan participants by reference to a portfolio of assets that is owned by the 
 benefit plan or its trustee, which, in each case, is not an affiliate of the member 
 insurer;

(15) that part of a policy or contract to the extent the part of the policy 
 or contract provides for interest or other changes in value to be determined by the use 
 of an index or other external reference stated in the policy or contract, but that have 
 not been credited to the policy or contract, or as to which the policy or contract 
 owner's rights are subject to forfeiture, as of the date the member insurer becomes an 
 impaired or insolvent insurer under this chapter, whichever is earlier; if a policy's or 
 contract's interest or changes in value are credited less frequently than annually, then, 
 for purposes of determining the values that have been credited and are not subject to 
 forfeiture under this paragraph, the interest or change in value determined by using the 
 procedures defined in the policy or contract shall be credited as if the contractual date 
 of crediting interest or changing values was the date of impairment or insolvency, 
 whichever is earlier, and will not be subject to forfeiture; 
 (16) a policy or contract providing a hospital, medical, prescription 
 drug, or other health care benefit in accordance with 42 U.S.C. 1395w-21 - 42 U.S.C. 
 1395w-28, 42 U.S.C. 1395w-101 - 42 U.S.C. 1395w-154, 42 U.S.C. 1396 - 42 U.S.C. 
 1396w-8, [42 U.S.C. 1395w-21 - 1395w-154] or federal regulations adopted under 
 those sections; 
 (17) a person who acquires rights to receive payments through a 
 structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), 
 regardless of whether the transaction occurred before, on, or after 26 U.S.C. 
 5891(c)(3)(A) became effective; or 
 (18) structured settlement annuity benefits to which a payee or 
 beneficiary has transferred the payee's or beneficiary's rights in a structured settlement 
 factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the 
 transaction occurred before, on, or after 26 U.S.C. 5891(c)(3)(A) became effective. 
 * Sec. 92. AS 21.86.040(a) is amended to read: 
 (a) The governing body of a health maintenance organization may include 
 providers, or other individuals, or both. At least one-quarter [ONE-THIRD] of the 
 governing body must consist of consumers who are substantially representative of 
 enrollees. 
 * Sec. 93. AS 21.86.060(b) is amended to read:

(b) In addition to basic health care services, a health maintenance organization 
 may provide, or arrange for, other health care services on a prepayment, fixed fee, or 
 other financial basis. 
 * Sec. 94. AS 21.86.060 is amended by adding new subsections to read: 
 (d) A health maintenance organization shall provide coverage for emergency 
 services, as that term is defined in AS 21.07.250, that are necessary to screen and 
 stabilize a covered person at the health maintenance organization provider employee 
 or contracted provider level of cost sharing when the services are not provided by a 
 health maintenance organization provider. The health maintenance organization may 
 require the transfer of a hospitalized covered person upon stabilization. 
 (e) A health maintenance organization shall provide coverage at the health 
 maintenance organization provider employee or contracted provider level of cost 
 sharing upon referral from a health maintenance organization provider that states the 
 covered person requires medically necessary services from a provider that is not a 
 health maintenance organization provider. The health maintenance organization may 
 deny the referral when an in-network provider is available to provide the medically 
 necessary services. 
 * Sec. 95. AS 21.96.090 is amended by adding a new subsection to read: 
 (g) A risk retention group shall file a report in accordance with 
 AS 21.09.210(a) and pay the tax required for a domestic and foreign insurer under 
 AS 21.09.210(b). 
 * Sec. 96. AS 21.96.120 is amended to read: 
 Sec. 21.96.120. Waiver for state innovation. The director may apply to a 
 federal agency for a waiver of federal law that relates to a health insurance 
 requirement, including applying to the United States Secretary of Health and 
 Human Services under 42 U.S.C. 18052, as amended, for a waiver of applicable 
 provisions of P.L. 111-148 (Patient Protection and Affordable Care Act), as amended, 
 with respect to health insurance [COVERAGE] in the state for a plan year beginning 
 on or after January 1, 2017. The director may implement a state plan meeting the 
 waiver requirements in a manner consistent with state and federal law and as approved 
 by the United States Secretary of Health and Human Services.

* Sec. 97. AS 21.97.900 is amended by adding a new paragraph to read: 
 (48) "motor vehicle" means a motor vehicle subject to registration 
 under AS 28.10.011. 
 * Sec. 98. AS 21.09.210(d); AS 21.27.020(g), 21.27.330(a), 21.27.630(f), 21.27.905(b); 
 AS 21.34.030(d); AS 21.39.020(b)(4); AS 21.42.377(c); AS 21.59.290(2); and AS 21.86.078 
 are repealed. 
 * Sec. 99. The uncodified law of the State of Alaska is amended by adding a new section to 
 read: 
 APPLICABILITY. (a) AS 21.36.475(b), as amended by sec. 70 of this Act, applies to 
 contracts entered into on or after the effective date of sec. 70 of this Act. 
 (b) AS 21.36.525, added by sec. 74 of this Act, applies to an insurance policy or 
 contract issued, delivered, or renewed on or after the effective date of sec. 74 of this Act. 
 * Sec. 100. Sections 69 - 71 of this Act take effect immediately under AS 01.10.070(c). 
 * Sec. 101. Except as provided in sec. 100 of this Act, this Act takes effect January 1, 2026.