The director may adopt regulations to implement, define, and enforce the provisions of this chapter.
Insurance contracts procured under this chapter shall be valid and enforceable as to all parties.
Repealed or Renumbered
Repealed or Renumbered
If any provision of this chapter, or the application of a provision of this chapter to any person or circumstance, is held invalid, the remainder of the chapter and the application of that provision to persons or circumstances, other than those as to which it is held invalid, shall not be affected.
Repealed or Renumbered
A payment of premium to a surplus lines broker acting for a person other than itself in negotiating, continuing, or reviewing a policy of insurance under this chapter, is considered to be payment to the insurer, notwithstanding conditions or stipulations in the policy or contract to the contrary.
A surplus lines broker licensed by this state may originate surplus lines insurance or accept surplus lines insurance from another surplus lines broker licensed by this state or a producing broker licensed by this state as to the kind and class of insurance involved. The surplus lines broker may compensate the producing broker or surplus lines broker for the insurance.
(a) The fee for filing the statement under AS 21.34.180 (b) 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.
(b) If the filing fee is not paid when due, an additional late payment fee of $250 plus two percent of the fee due per month, or part of a month, shall become due and payable by the surplus lines broker.
In addition to meeting the requirements of AS 21.34.040 , a nonadmitted insurer shall be an eligible surplus lines insurer if it pays to the division or surplus lines association any fee required by regulation and appears on the most recent list of eligible surplus lines insurers published by the director or by the surplus lines association when approved by the director. The list is to be published at least semi-annually. Nothing in this section requires the director or the surplus lines association to place or maintain the name of a nonadmitted insurer on the list of eligible surplus lines insurers. An annual fee required under this section and adopted by regulation shall be paid before July 1 of each year.
The legislature declares that insurance transactions with nonadmitted insurers are so affected with a public interest as to require regulation, taxation, supervision, and control of the transactions and matters relating to nonadmitted insurance. The purpose of this chapter includes
(1) protection of persons seeking insurance in this state;
(2) permission for surplus lines insurance to be placed with reputable and financially sound nonadmitted insurers and to be exported from this state under this chapter;
(3) establishment of a system of regulation that will
(A) permit orderly access to surplus lines insurance in this state; and
(B) encourage admitted insurers to provide new and innovative types of insurance and make them available to consumers in this state; and
(4) protection of the revenues of this state.
(a) In addition to any other penalty provided by law, a person that the director determines under AS 21.06.170 - 21.06.240 has violated the provisions of this chapter is subject to
(1) a civil penalty equal to the compensation promised, paid or to be paid, directly or indirectly, to a licensee in regard to each violation; and
(2) either a civil penalty of not more than $10,000 for each violation or a civil penalty of not more than $25,000 for each violation if the director determines that the person wilfully violated the provisions of this chapter.
(b) A violation of this chapter is cause for denial, nonrenewal, suspension, or revocation of a license.
(a) A surplus lines insurer may be sued upon a cause of action arising in this state under a surplus lines insurance contract made by it or evidence of insurance issued or delivered by the surplus lines broker under the procedure provided in AS 21.33. A policy issued by the surplus lines broker shall contain a provision stating the substance of this section and designating the person to whom the director shall mail process.
(b) Each surplus lines insurer assuming a surplus lines risk is considered to have subjected itself to this chapter.
(c) The remedies provided in this section are in addition to other methods provided by law for service of process upon insurers.
Subscription policies or joint underwriting of insurance other than reinsurance, wet marine and transportation insurance, insurance independently procured, life insurance, health insurance, and annuity contracts by a combination of authorized insurers and nonadmitted insurers is a surplus lines insurance placement in its entirety, is subject to this chapter, is not subject to AS 21.39, AS 21.42.120 , or 21.42.130, and losses or claims are not covered by AS 21.80 (Alaska Insurance Guaranty Association Act).
Only that portion of a risk eligible for export for which the full amount of coverage is not procurable from eligible surplus lines insurers may be placed with another nonadmitted insurer that does not appear on the list of eligible surplus lines insurers published under AS 21.34.050 but nonetheless meets the requirements of AS 21.34.040 and a regulation adopted under this chapter. The surplus lines broker seeking to provide coverage through an unlisted nonadmitted insurer shall within 30 days after placing the coverage notify the director in writing on a form prescribed by the director the amount and percentage of each risk to be placed and naming each nonadmitted insurer with which placements are intended. Within 30 days after placing the coverage, the surplus lines broker shall also send written notice to the insured and the producing broker that the insurance, or a portion of it, has been placed with the unlisted nonadmitted insurer.
(a) If the tax collectible under AS 21.34.180 or the fee collectible under AS 21.34.190 by a surplus lines broker is not paid within the time prescribed, the tax, fee, or both, and late payment fees, along with appropriate penalties, may be collected by distraint or by an action in court, against the surplus lines licensee and the surety on the bond filed under AS 21.27.790 .
(b) [Repealed, Sec. 223 ch 67 SLA 1992].
(c) In addition to penalties provided in this chapter, failure to pay tax within the time prescribed is subject to penalties provided in AS 21.36.320.
(a) If after a review of a nonadmitted insurer and consideration of factors including quality of management, capital and surplus of a parent company, underwriting profit, investment income trends, trade practices, reserving practices, company record, and reputation within the industry, the director finds the insurer to be unacceptable, the director may declare the nonadmitted insurer to be ineligible.
(b) The director may issue an order declaring a nonadmitted insurer ineligible if at any time the director has reason to believe that the nonadmitted insurer
(1) is in unsound financial condition;
(2) is no longer eligible under AS 21.34.040 ;
(3) has wilfully violated the laws of this state or another state; or
(4) does not reasonably investigate and make prompt payment of just losses and claims in this state or another state.
(c) The director shall promptly mail notice of all declarations under (b) of this section to each licensed surplus lines broker.
(a) A surplus lines broker shall file with the director on or before the end of each month, on forms prescribed by the director, a verified 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 calendar month showing the aggregate gross premiums written, the aggregate return premiums, the amount of aggregate tax remitted to this state, and the amount of aggregate tax remitted to each other state for which an allocation is made under AS 21.34.150 .
(b) Instead of the report required under (a) of this section, the director may order that evidence of insurance be filed with surplus lines association and that the association file periodic reports regarding insurance transactions to the director.
(c) The surplus lines broker shall pay a penalty for late filing of the report, according to the rate established in regulations adopted by the director.
(a) Workers' compensation insurance may be placed in and written by a nonadmitted insurer if
(1) the director considers it in the best interest of the public and issues a directive to that effect;
(2) the insurance is written in accordance with this chapter; and
(3) all conditions established for writing workers' compensation insurance in a nonadmitted market receive compliance.
(b) The rates and rating plans for workers' compensation insurance are subject to AS 21.39. The surplus lines broker is responsible for making the filings required under AS 21.39 and for maintaining the records required in that chapter.
(c) Insurance placed or written in a nonadmitted insurer and the activities of the surplus lines broker relating to that transaction are subject to the applicable provision of this title.
(d) The minimum capital and surplus required is two times that required in AS 21.34.040 (c)(1).
(a) A surplus lines broker shall execute and file with the monthly report required by AS 21.34.170 a written report, which shall be kept confidential, regarding each surplus lines insurance transaction occurring in the preceding calendar month. The report must include
(1) the name and address of the insured;
(2) the identity of each insurer including the National Association of Insurance Commissioners group and company insurer number and the percentage of coverage provided by each;
(3) a complete description of the subject and location of the risk;
(4) the amount of premium charged for the insurance; and
(5) other information required by the director.
(b) Instead of the report required in (a) of this section, the director may order that evidence of insurance be filed with the surplus lines association and that the surplus lines association provide periodic reports regarding insurance transactions to the director.
(c) [Repealed, Sec. 53 ch 96 SLA 2004].
(d) A transaction, as used in this section, is any placement of coverage as well as changes in coverage that result in an increase or decrease of premiums, taxes, or fees.
(a) A contract of insurance placed by a surplus lines broker under this chapter is not binding upon the insured and a premium charged is not due and payable until
(1) the surplus lines broker has notified the insured in writing, a copy of which shall be maintained by the surplus lines broker with the records of the contract, available for examination, that the insurer with whom the surplus lines broker places the insurance does not hold a certificate of authority issued by this state and is not subject to its supervision, and, in the event of the insolvency of the surplus lines insurer, losses will not be covered under AS 21.80 (Alaska Insurance Guaranty Association Act); or
(2) the producing broker has notified the insured and the surplus lines broker in writing, a copy of which shall be maintained by the producing broker and the surplus lines broker with the records of the contract, available for examination, that the insurer with whom the surplus lines is placed does not hold a certificate of authority issued by this state and is not subject to this state's supervision, and, in the event of the insolvency of the surplus lines insurer, losses will not be covered under AS 21.80 (Alaska Insurance Guaranty Association Act).
(b) Nothing in this section may be construed as nullifying an agreement by an insurer to provide insurance.
(a) Except for a multiple employer welfare arrangement, health care insurance may be placed in and written by a nonadmitted insurer if
(1) the director finds it is in the best interest of the public and issues an order to that effect; and
(2) the insurance is in compliance with this chapter.
(b) The rates and rating methods for health care insurance placed and written under this section are subject to AS 21.87.190 . The surplus lines broker shall make the filings required under AS 21.87.190 and maintain the records and accounts as required under AS 21.87.230 .
(c) Health care insurance may not be procured under this chapter
(1) for the purpose of obtaining a lower premium rate than acceptable by an authorized insurer; or
(2) for obtaining a competitive advantage.
(d) 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, 'health care insurance' has the meaning given in AS 21.12.050 (b).
(a) Insurance other than reinsurance, wet marine and transportation insurance, insurance independently procured, life insurance, health insurance except as provided in AS 21.34.035 , and annuity contracts may be procured through a surplus lines broker licensed under AS 21.27 from nonadmitted insurers if
(1) the insurer is an eligible surplus lines insurer;
(2) the full amount, kind, or class of insurance cannot be obtained from insurers who are admitted to do business in this state;
(3) the producing broker has conducted and documented a diligent search among insurers who are admitted to transact business in this state and are actually writing the particular kind or class of insurance required by the client in this state;
(4) the director authorizes an exception to (2) of this section by regulation or by written authorization for an individual placement upon written request by the broker; and
(5) all other requirements of this chapter are met.
(b) In this section,
(1) 'amount' means limit, sublimit, retention, and broadening or restrictive endorsement;
(2) 'class' means rating class;
(3) 'kind' means one or more kinds of insurance as defined in AS 21.12.
(a) A surplus lines association of surplus lines brokers may be formed to
(1) facilitate and encourage compliance by its members with the laws of this state and the regulations relative to surplus lines insurance;
(2) attend National Association of Insurance Commissioners meetings and participate in task forces and work groups;
(3) communicate with organizations of admitted insurers with respect to the proper use of the surplus lines market;
(4) receive and disseminate to its members information relative to surplus lines coverages; and
(5) contract with the director to receive reports and affidavits under AS 21.34.080 , verify that coverage has been placed with eligible surplus lines insurers, verify the amount of taxes under AS 21.34.180 and fees under AS 21.34.190 for surplus lines insurance for each surplus lines broker, and to prepare periodic reports as required by the director.
(b) The surplus lines association shall file with the director
(1) a copy of its constitution, its articles of agreement of association, or its certificate of incorporation;
(2) a copy of its bylaws and regulations governing its activities;
(3) a current list of its members;
(4) the name of a resident of this state upon whom notices or orders of the director or processes issued at the director's instruction may be served;
(5) an agreement that the director may examine the surplus lines association in accordance with this section; and
(6) a schedule of its membership fees and assessments.
(c) A surplus lines association is subject to the same penalties under this title as a surplus lines broker.
(d) The director may, by order, require that all surplus lines brokers, as a condition of continued licensure under this chapter, join the surplus lines association.
(e) The surplus lines association shall maintain its place of business in this state.
In this chapter,
(1) 'capital' means money paid in for stock or other evidence of ownership;
(2) 'eligible surplus lines insurer' means a nonadmitted insurer with which a surplus lines broker may place surplus lines insurance under AS 21.34.040;
(3) 'export' means to place surplus lines insurance with a nonadmitted insurer;
(4) 'kind of insurance' means one of the kinds of insurance defined in AS 21.12.040 - 21.12.110;
(5) 'producing broker' means the insurance producer or surplus lines broker licensed under AS 21.27 dealing directly with the client seeking insurance;
(6) 'reciprocal state' means a state that the director has determined has enacted provisions substantially similar to those contained in AS 21.34.170, 21.34.180, and 21.34.210.
(7) 'surplus,' as used in the financial requirements of AS 21.34.040 , means money over and above liabilities and capital of the insurer for the protection of policyholders;
(8) 'transaction of insurance' means the solicitation, negotiation, procurement, effectuation, or renewal of insurance; forwarding of applications; delivery of policies or contracts; inspection of risks; fixing of rates; investigation or adjustment of claims or losses; collection or forwarding of premiums; or transaction of matters subsequent to effectuation of the contract of insurance and arising out of it;
(9) 'wet marine and transportation insurance' means
(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; and
(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.
(a) When surplus lines insurance is placed, the surplus lines broker shall promptly deliver to the named insured or the producing broker the policy or, if the policy is not then available, a certificate, cover note, binder, or other evidence of insurance. The certificate, cover note, binder, or other evidence of insurance for the named insured shall be executed by the surplus lines broker and must contain a summary of all material facts that would regularly be included in the policy, the description and location of the subject of insurance, a general description of the coverages of the insurance, the premium and rate charged and taxes to be collected from the insured, the name and address of the insured, the name of each surplus lines insurer and the percentage of the entire risk assumed by each, the name of the surplus lines broker, and the license number of the surplus lines broker.
(b) A surplus lines broker may not issue or deliver evidence of insurance or purport to insure or represent that insurance will be or has been written by an eligible surplus lines insurer, or a nonadmitted insurer under AS 21.34.060 , unless the surplus lines broker has authority from the insurer to cause the risk to be insured or has received information from the insurer in the regular course of business that the insurance has been granted.
(c) If, after delivery of evidence of insurance, there is a change in the identity of the insurers or the percentage of the risk assumed by an insurer or another material change in coverage from that stated in the surplus lines broker's original evidence of insurance or in other material concerning the evidenced insurance, the surplus lines broker shall promptly issue and deliver to the insured or the producing broker an appropriate substitute for or endorsement of the original document, accurately showing the current status of the coverage and the insurer's responsibility.
(d) A surplus lines broker who fails to comply with this section is subject to the penalties in AS 21.34.230 .
(e) Every evidence of insurance negotiated, placed, or procured under this chapter issued by a surplus lines broker must bear the name of the surplus lines broker, which may not be covered, concealed, or obscured by the producing broker, and the following legend in at least 10-point type: 'This is evidence of insurance procured and developed under the Alaska Surplus Lines Law, AS 21.34. It is not covered by the Alaska Insurance Guaranty Association Act, AS 21.80.'
(f) Every certificate issued by the producing broker or other licensee as evidence of insurance negotiated, placed, or procured under this chapter must bear the name of the surplus lines broker, which may not be covered, concealed, or obscured by the producing broker, and the following legend in at least 10-point type: 'This is evidence of insurance procured and developed under the Alaska Surplus Lines Law, AS 21.34. It is not covered by the Alaska Insurance Guaranty Association Act, AS 21.80.'
(a) Gross premiums written, less any return premium, for surplus lines insurance are subject to a premium receipts tax as outlined in AS 21.09.210, which shall be collected by the surplus lines broker as specified by the director, in addition to the full amount of the gross premium written by the insurer for the insurance. The tax on any portion of the premium unearned at termination of insurance having been credited by the state to the surplus lines broker shall be returned to the policy holder directly by the surplus lines broker or through the producing broker, if any. The surplus lines broker may not absorb the tax or any part of it, and may not rebate for any reason the tax or any part of it. However, if, under AS 21.09.210 , an admitted insurer is required to collect and pay premium tax on a portion of a subscription policy, the surplus lines broker is not required to collect any amount that would constitute double taxation of that portion of the insurance.
(b) The surplus lines tax is due on the date specified by the director and may be paid by electronic or other means as specified by the director. The tax shall be reported on forms prescribed by the director or, upon the director's order, paid to and reported on forms prescribed by the surplus lines association.
(c) If a surplus lines policy procured through a surplus lines broker covers risks or exposures only partially located or to be performed in this state, the tax payable shall be computed on the portions of the premium properly attributable to the risks or exposures located or to be performed in this state as follows:
(1) if the risk insured is real or personal property, the percentage of the entire tax that is due to this state is the same as the percentage of the entire risk that is located in this state, computed on the same basis as was employed to calculate the insurable value of the risk;
(2) if the risk insured is business operations, general liability, or employee benefits, the percentage of the entire tax that is due to this state is the same as the percentage of the insured business operations or employees that are located in this state.
(d) This section does not apply to insurance of risks of state government or its political subdivision, to an agency of state government or its political subdivision, or to insurance of aircraft primarily engaged in interstate or foreign commerce.
(e) If a multi-state risk has a portion of that risk located within this state, the surplus lines broker shall remit payment of taxes collected in this state in accordance with the provisions of (c) of this section.
(f) A surplus lines broker shall pay to the division a late payment fee of $50 a month plus five percent of the tax due each calendar month or part of a month during which the broker fails to pay the full amount of the tax or a portion of the tax and interest at the rate of one percent of the tax due each calendar month or part of a month for the period the broker fails to pay the tax. The late payment fee, not including interest, may not exceed $250 plus 25 percent of the tax due. The tax payment shall be made in the form required by the director, or a penalty shall be added to the tax equal to 25 percent of the tax due, not to exceed $2,000, with a minimum penalty of $100. In addition to any other penalty provided by law, if the provisions of this section are wilfully violated, a civil penalty may be assessed of not more than $10,000. The director may suspend or revoke the license of a broker that fails to pay its taxes, a penalty, or a late payment fee required under this section.
(a) Coverage may be placed in a nonadmitted insurer by a surplus lines broker only if
(1) at the time of placement, the nonadmitted insurer meets all the requirements of this section; and
(2) the surplus lines broker is licensed under AS 21.27.
(b) The nonadmitted insurer must establish satisfactory evidence of good repute and financial integrity to be eligible.
(c) A nonadmitted insurer may be eligible to provide coverage in this state if it qualifies under one of the following:
(1) a foreign but nonalien stock insurer may qualify under this subsection if it has the minimum unimpaired basic capital and additional surplus equal to that required in its domiciliary jurisdiction, or maintains $10,000,000 as of December 31, 1991, $12,500,000 as of December 31, 1992, and $15,000,000 as of December 31, 1993, whichever is greater;
(2) a foreign but nonalien mutual insurer, a reciprocal insurer, or a mutual protection and indemnity association may qualify under this subsection if it has the minimum unimpaired basic surplus and additional surplus equal to that required in its domiciliary jurisdiction or maintains $10,000,000 as of December 31, 1991, $12,500,000 as of December 31, 1992, and $15,000,000 as of December 31, 1993, whichever is greater;
(3) an alien insurer other than an alien mutual protection and indemnity association may qualify under this subsection if it meets the minimum requirements in (1) or (2) of this subsection and maintains in the United States an irrevocable trust fund in an amount not less than $2,500,000 in a solvent federally insured bank acceptable to the director, as security to the full amount, for the protection of all its policyholders and creditors of each member of the mutual insurer, reciprocal insurer, or mutual protection and indemnity association in the United States; the trust fund must consist of instruments of substantially the same character and quality as those that are eligible investments for the capital and statutory reserves of admitted insurers authorized to write like kinds of insurance in this state or of irrevocable, clean, and unconditional letters of credit; the trust fund must have an expiration date that at no time is less than five years;
(4) a Lloyd's syndicate or an insurer belonging to a similar group, including incorporated and individual unincorporated insurers, may qualify if it maintains a trust fund jointly and severally with the other members of the group in an amount not less than $50,000,000, as security to the full amount, for the protection of all policyholders and creditors of each member of the group in the United States; the incorporated members may not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members; the trust fund must consist of instruments of substantially the same character and quality as those that are eligible investments for the capital and statutory reserves of admitted insurers authorized to write like kinds of insurance in this state or of irrevocable, clean, and unconditional letters of credit; the trust fund must have an expiration date that at no time is less than five years;
(5) each syndicate or insurer belonging to an insurance exchange created by the laws of individual states may qualify if the insurance exchange maintains capital and surplus, or the substantial equivalent, of not less than $50,000,000 in the aggregate; for insurance exchanges that maintain funds for the protection of all insurance exchange policyholders, each individual syndicate shall maintain minimum capital and surplus, or the substantial equivalent, of not less than $3,000,000; in the event the insurance exchange does not maintain funds for the protection of all its policyholders, each individual syndicate shall meet the minimum requirements of (1) or (2) of this subsection;
(6) an alien mutual protection and indemnity association may qualify under this subsection if it has the minimum unimpaired basic capital and additional surplus equal to that required in its domiciliary jurisdiction or $10,000,000, whichever is greater, and maintains in the United States an irrevocable trust fund in an amount not less than $1,000,000 in a federally insured bank acceptable to the director, as security to the full amount, for the protection of all its policyholders and creditors or each member of the mutual protection and indemnity association in the United States; the trust fund must consist of instruments of substantially the same character and quality as those that are eligible investments for the capital and statutory reserves of admitted insurers authorized to write wet marine and transportation insurance in this state or of irrevocable, clean, and unconditional letters of credit; the trust fund must have an expiration date that at no time is less than five years.
(d) A nonadmitted insurer may be eligible to provide coverage in this state if it furnishes to the director a copy of its current annual statement that has been certified by the insurer. The statement shall be provided no more than six months after the close of the period reported upon and that is either 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. 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.
(e) The capital and surplus requirements of this section shall be calculated based upon generally accepted accounting practices used in the United States of America.
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