(a) An automobile service corporation shall establish and maintain complete and accurate records and accounts covering its transactions and affairs in accordance with generally accepted accounting principles as applied to the business of the corporation.

(b) The director may accept an audited financial statement instead of the examination required under AS 21.06.120 .

(a) This chapter applies to a person, firm, corporation, or organization providing or intending to provide automobile service corporation services for subscribers in exchange for periodic prepayments by a subscriber.

(b) This chapter does not apply to a person issued a certificate of authority under AS 21.09.

(c) Other provisions of this title do not apply to an automobile service corporation except as expressly provided in this chapter.

The director may not issue a certificate of authority to be or act as an automobile service corporation and shall revoke an existing certificate of authority unless the corporation

(1) if a newly formed corporation, possesses sufficient available working funds to pay all reasonably anticipated costs of acquisition of new business and operating expenses, other than losses, for a period of not less than six months following the date of issuance of the certificate of authority;

(2) posts with the director a bond in the amount of $50,000, issued by a corporate surety authorized under this title to act as surety and conditioned upon the organization's faithful fulfillment of its contracts; and

(3) fulfills all other applicable requirements of this chapter.

(a) A person providing or intending to provide automobile service corporation services shall be a corporation currently authorized as an automobile service corporation under a certificate of authority issued by the director under this chapter.

(b) If the corporation is to be formed under the laws of this state, the articles of incorporation of the proposed corporation or amendments to existing articles of incorporation shall be submitted to the director before they are filed with the commissioner of commerce, community, and economic development. The commissioner of commerce, community, and economic development may not file the articles or amendments unless the director's approval is endorsed. The director shall approve the articles or amendments unless the director finds that the articles or amendments do not comply with law. If not approved, the director shall return the proposed articles of incorporation to the incorporators or amendments to the corporation, together with a written, detailed statement of the reasons for nonapproval.

In this chapter

(1) 'automobile service corporation' means a corporation providing all or part of one or more automobile service corporation services for subscribers in exchange for periodic prepayment in identifiable amount by or as to the subscribers;

(2) 'automobile service corporation services' means any professional service, technical service, replacement of goods that the corporation may become obligated to provide upon a contingent event or a certain event that may occur at an uncertain time and for which a specified single or periodic prepayment is charged or collected, including, but not limited to (A) emergency road service; (B) reimbursement of legal fees for representation on traffic offenses; and (C) providing bail bonds for traffic offenses; an automobile service corporation may provide other services or benefits that do not fall within the definition of an automobile service corporation services;

(3) 'subscriber's contract' means the contract between the automobile service corporation and its subscriber under which all or a part of one or more services is to be rendered to or on behalf of the subscriber by an automobile service corporation or by a provider that has entered into a service agreement with the automobile service corporation.

(a) An automobile service corporation shall establish and maintain unimpaired reserves as follows:

(1) a reserve in an amount not less than all legal obligations of the corporation, other than claims originating under subscriber's contracts, due but unpaid;

(2) a reserve equal to not less than the amount necessary by reasonable estimate to pay all claims incurred under subscriber's contracts but currently unpaid, and including a reasonable additional amount to cover claims incurred but not reported to the corporation at the time of determination of the corporation's financial condition; and

(3) a reserve equal to 50 percent of all sums charged and received by the corporation during the calendar period covered by the financial statement, on account of indemnity benefits provided in subscriber's contracts for terms for which premium was last paid and unexpired at the date of the financial statement.

(b) The reserves required under (a) of this section constitute a liability of the corporation in a determination of its financial condition.

(c) Instead of the reserves required by (a) of this section and the bond required by AS 21.59.030 (2), the automobile service corporation may file a bond in the amount of $250,000.

(a) Application for a certificate of authority to transact business as an automobile service corporation shall be made to the director, on forms furnished by the director and requiring the information about the applicant, its directors, officers, and affairs as the director may reasonably require consistent with this chapter.

(b) The applicant shall file the following documents with the application:

(1) a copy of the applicant's articles of incorporation and all amendments, certified by the appropriate official of the state of incorporation;

(2) a copy of the applicant's bylaws, certified by its corporate secretary;

(3) a copy of each subscriber's contract proposed to be offered;

(4) either

(A) audited financial statements for the three fiscal years immediately preceding the application; or

(B) a financial statement of the applicant prepared by a certified public accountant and dated not more than 30 days before the filing of the application, showing the amount of working funds available to the applicant, a reconciliation of the net worth or capital account, the source and application of the funds, and any data pertinent to the financial statement;

(5) the bond required under AS 21.59.030 (2) or 21.59.050(c); and

(6) a copy of any other relevant document reasonably requested by the director.

In addition to the provisions of this chapter, the following provisions of this title shall apply to automobile service corporations, to the extent applicable and not in conflict with the express provisions of this chapter and the reasonable implications of the express provisions, and for the purposes of the application the corporations shall be considered to be stock insurers:

(1) AS 21.03;

(2) AS 21.06;

(3) AS 21.09.050 ;

(4) AS 21.09.100 ;

(5) AS 21.09.120 - 21.09.210;

(6) AS 21.12;

(7) AS 21.36;

(8) AS 21.69;

(9) AS 21.78;

(10) AS 21.90.