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2023 Alaska Statutes › Title 21. Insurance › Chapter 27. Producers, Agents, Administrators, Brokers, Adjusters, and Managers › Article 9. Pharmacy Benefits Managers. › Sec. 21.27.901. 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 registered with the director as a third-party administrator under AS 21.27.630.
(b) A pharmacy benefits manager registered under AS 21.27.630 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;
(2) contract with network pharmacies;
(3) set the cost of multi-source generic drugs under AS 21.27.945; and
(4) adjudicate appeals related to multi-source generic drug reimbursement.
2023 Alaska Statutes › Title 21. Insurance › Chapter 27. Producers, Agents, Administrators, Brokers, Adjusters, and Managers › Article 9. Pharmacy Benefits Managers. › Sec. 21.27.905. Renewal of registration.

(a) A pharmacy benefits manager shall biennially renew a registration with the director.
(b) To renew a registration under this section, a pharmacy benefits manager shall pay a renewal fee established by the director. The director shall set the amount of the renewal fee to allow the renewal and oversight activities of the division to be self- supporting.
2023 Alaska Statutes › Title 21. Insurance › Chapter 27. Producers, Agents, Administrators, Brokers, Adjusters, and Managers › Article 9. Pharmacy Benefits Managers. › Sec. 21.27.910. Pharmacy audit procedural requirements.

(a) When a pharmacy benefits manager conducts an audit of the records of a pharmacy, the period covered by the audit of a claim may not exceed two years from the date that the claim was submitted to or adjudicated by the pharmacy benefits manager, whichever is earlier. Except as required under AS 21.36.495, a claim submitted to or adjudicated by a pharmacy benefits manager does not accrue interest during the audit period.
(b) A pharmacy benefits manager conducting an on-site audit shall give the pharmacy written notice of at least 10 business days before conducting an initial audit.
(c) A pharmacy benefits manager may not conduct
(1) an audit during the first seven calendar days of any month unless agreed to by the pharmacy;
(2) more than one on-site audit of a pharmacy within a 12-month period; or
(3) on-site audits of more than 250 separate prescriptions at one pharmacy within a 12-month period unless fraud by the pharmacy or an employee of the pharmacy is alleged.
(d) If an audit involves clinical or professional judgment, the individual conducting the audit must
(1) be a pharmacist who is licensed and in good standing under AS 08.80; or
(2) conduct the audit in consultation with a pharmacist who is licensed and in good standing under AS 08.80.
(e) A pharmacy, in responding to an audit, may use
(1) verifiable statements or records, including medication administration records of a nursing home, assisted living facility, hospital, physician, or other authorized practitioner, to validate the pharmacy record;
(2) a legal prescription to validate claims in connection with prescriptions, refills, or changes in prescriptions, including medication administration records, prescriptions transmitted by facsimile, electronic prescriptions, or documented telephone calls from the prescriber or the prescriber's agent.
(f) A pharmacy benefits manager shall audit each pharmacy under the same standards and parameters as other similarly situated pharmacies in a network pharmacy contract in this state.
2023 Alaska Statutes › Title 21. Insurance › Chapter 27. Producers, Agents, Administrators, Brokers, Adjusters, and Managers › Article 9. Pharmacy Benefits Managers. › Sec. 21.27.915. Overpayment or underpayment.

(a) When a pharmacy benefits manager conducts an audit of a pharmacy, the pharmacy benefits manager shall base a finding of overpayment or underpayment by the pharmacy on the actual overpayment or underpayment and not on a projection based on the number of patients served having a similar diagnosis or on the number of similar orders or refills for similar drugs, except as provided in (b) of this section.
(b) A pharmacy benefits manager may resolve a finding of overpayment or underpayment by entering into a settlement agreement with the pharmacy. The settlement agreement
(1) must comply with the requirements of AS 21.36.125; and
(2) may be based on a statistically justifiable projection method.
(c) A pharmacy benefits manager may not include the dispensing fee amount in a finding of an overpayment unless
(1) a prescription was not actually dispensed;
(2) the prescriber denied authorization;
(3) the prescription dispensed was a medication error by the pharmacy; or
(4) the identified overpayment is solely based on an extra dispensing fee.
2023 Alaska Statutes › Title 21. Insurance › Chapter 27. Producers, Agents, Administrators, Brokers, Adjusters, and Managers › Article 9. Pharmacy Benefits Managers. › Sec. 21.27.920. Recoupment.

(a) When a pharmacy benefits manager conducts an audit of a pharmacy, the pharmacy benefits manager shall base the recoupment of overpayments on the actual overpayment of the claim, except as provided in AS 21.27.915(b).
(b) A pharmacy benefits manager conducting an audit of a pharmacy may not
(1) use extrapolation in calculating recoupments or penalties for audits, unless required by state or federal contracts;
(2) assess a charge-back, recoupment, or other penalty against a pharmacy solely because a prescription is mailed or delivered at the request of a patient; or
(3) receive payment
(A) based on a percentage of the amount recovered; or
(B) for errors that have no actual financial harm to the patient or medical plan.
2023 Alaska Statutes › Title 21. Insurance › Chapter 27. Producers, Agents, Administrators, Brokers, Adjusters, and Managers › Article 9. Pharmacy Benefits Managers. › Sec. 21.27.925. Pharmacy audit reports.

(a) A pharmacy benefits manager shall deliver a preliminary audit report to the pharmacy audited within 60 days after the conclusion of the audit.
(b) A pharmacy benefits manager shall allow the pharmacy at least 30 days following receipt of the preliminary audit report to provide documentation to the pharmacy benefits manager to address a discrepancy found in the audit. A pharmacy benefits manager may grant a reasonable extension upon request by the pharmacy.
(c) A pharmacy benefits manager shall deliver a final audit report to the pharmacy within 120 days after receipt of the preliminary audit report, settlement agreement, or final appeal, whichever is latest.
2023 Alaska Statutes › Title 21. Insurance › Chapter 27. Producers, Agents, Administrators, Brokers, Adjusters, and Managers › Article 9. Pharmacy Benefits Managers. › Sec. 21.27.930. Pharmacy audit appeal; future repayment.

(a) A pharmacy benefits manager conducting an audit shall establish a written appeals process.
(b) Recoupment of disputed funds or repayment of funds to the pharmacy benefits manager by the pharmacy, if permitted by contract, shall occur, to the extent demonstrated or documented in the pharmacy audit findings, after final internal disposition of the audit, including the appeals process. If the identified discrepancy for an individual audit exceeds $15,000, future payments to the pharmacy may be withheld pending finalization of the audit.
(c) A pharmacy benefits manager may not assess against a pharmacy a charge- back, recoupment, or other penalty until the pharmacy benefits manager's appeals process has been exhausted and the final report or settlement agreement issued.
2023 Alaska Statutes › Title 21. Insurance › Chapter 27. Producers, Agents, Administrators, Brokers, Adjusters, and Managers › Article 9. Pharmacy Benefits Managers. › Sec. 21.27.935. Fraudulent activity.

When a pharmacy benefits manager conducts an audit of a pharmacy, the pharmacy benefits manager may not consider unintentional clerical or record-keeping errors, including typographical errors, writer's errors, or computer errors regarding a required document or record, to be fraudulent activity. In this section, “fraudulent activity” means an intentional act of theft, deception, misrepresentation, or concealment committed by the pharmacy.
2023 Alaska Statutes › Title 21. Insurance › Chapter 27. Producers, Agents, Administrators, Brokers, Adjusters, and Managers › Article 9. Pharmacy Benefits Managers. › Sec. 21.27.940. Pharmacy audits; restrictions.

The requirements of AS 21.27.901 - 21.27.955 do not apply to an audit
(1) in which suspected fraudulent activity or other intentional or wilful misrepresentation is evidenced by a physical review, a review of claims data, a statement, or another investigative method; or
(2) of claims paid for under the medical assistance program under AS 47.07.
2023 Alaska Statutes › Title 21. Insurance › Chapter 27. Producers, Agents, Administrators, Brokers, Adjusters, and Managers › Article 9. Pharmacy Benefits Managers. › Sec. 21.27.945. Drug pricing list; procedural requirements.

(a) A pharmacy benefits manager shall
(1) make available to each network pharmacy at the beginning of the term of the network pharmacy's contract, and upon renewal of the contract, the methodology and sources used to determine the drug pricing list;
(2) provide a telephone number at which a network pharmacy may contact an employee of a pharmacy benefits manager to discuss the pharmacy's appeal;
(3) provide a process for a network pharmacy to have ready access to the list specific to that pharmacy;
(4) review and update applicable list information at least once every seven business days to reflect modification of list pricing;
(5) update list prices within one business day after a significant price update or modification provided by the pharmacy benefits manager's national drug database provider; and
(6) ensure that dispensing fees are not included in the calculation of the list pricing.
(b) When establishing a list, the pharmacy benefits manager shall use
(1) the most up-to-date pricing data to calculate reimbursement to a network pharmacy for drugs subject to list prices;
(2) multi-source generic drugs that are sold or marketed in the state during the list period.
2023 Alaska Statutes › Title 21. Insurance › Chapter 27. Producers, Agents, Administrators, Brokers, Adjusters, and Managers › Article 9. Pharmacy Benefits Managers. › Sec. 21.27.950. Multi-source generic drug appeal.

(a) A pharmacy benefits manager shall establish a process by which a network pharmacy, or a network pharmacy's contracting agent, may appeal the reimbursement for a multi-source generic drug. A pharmacy benefits manager shall resolve an appeal from a network pharmacy within 10 calendar days after the network pharmacy or the contracting agent submits the appeal.
(b) A network pharmacy, or a network pharmacy's contracting agent, may appeal a reimbursement from a pharmacy benefits manager for a multi-source generic drug if the reimbursement for the drug is less than the amount that the network pharmacy can purchase from two or more of its contracted suppliers.
(c) A pharmacy benefits manager may grant a network pharmacy's appeal if an equivalent multi-source generic drug is not available at a price at or below the pharmacy benefits manager's list price for purchase from national or regional wholesalers who operate in the state. If an appeal is granted, the pharmacy benefits manager shall adjust the reimbursement of the network pharmacy to equal the network pharmacy acquisition cost for each paid claim included in the appeal.
(d) If the pharmacy benefits manager denies a network pharmacy's appeal, the pharmacy benefits manager shall provide the network pharmacy with the
(1) reason for the denial;
(2) national drug code of an equivalent multi-source generic drug that has been purchased by another network pharmacy located in the state at a price that is equal to or less than the pharmacy benefits manager's list price within seven days after the network pharmacy appeals the claim; and
(3) name of a pharmaceutical wholesaler who operates in the state in which the drug may be acquired by the challenging network pharmacy.
(e) A network pharmacy may request a hearing under AS 21.06.170 - 21.06.240 for an adverse decision from a pharmacy benefits manager within 30 calendar days after receiving the decision. The parties may present all relevant information to the director for the director's review.
(f) The director shall enter an order that
(1) grants the network pharmacy's appeal and directs the pharmacy benefits manager to make an adjustment to the disputed claim;
(2) denies the network pharmacy's appeal; or
(3) directs other actions considered fair and equitable.
2023 Alaska Statutes › Title 21. Insurance › Chapter 27. Producers, Agents, Administrators, Brokers, Adjusters, and Managers › Article 9. Pharmacy Benefits Managers. › Sec. 21.27.955. Definitions.

In AS 21.27.901 - 21.27.955,
(1) “audit” means an official examination and verification of accounts and records;
(2) “claim” means a request from a pharmacy or pharmacist to be reimbursed for the cost of filling or refilling a prescription for a drug or for providing a medical supply or device;
(3) “extrapolation” means the practice of inferring a frequency or dollar amount of overpayments, underpayments, invalid claims, or other errors on any portion of claims submitted, based on the frequency or dollar amount of overpayments, underpayments, invalid claims, or other errors actually measured in a sample of claims;
(4) “list” means the list of multi-source generic drugs for which a predetermined reimbursement amount has been established such as a maximum allowable cost or maximum allowable cost list or any other list of prices used by a pharmacy benefits manager;
(5) “multi-source generic drug” means any covered outpatient prescription drug that the United States Food and Drug Administration has determined is pharmaceutically equivalent or bioequivalent to the originator or name brand drug and for which there are at least two drug products that are rated as therapeutically equivalent under the United States Food and Drug Administration's most recent publication of “Approved Drug Products with Therapeutic Equivalence Evaluations”;
(6) “network pharmacy” means a pharmacy that provides covered health care services or supplies to an insured or a member under a contract with a network plan to act as a participating provider;
(7) “pharmacy” has the meaning given in AS 08.80.480;
(8) “pharmacy acquisition cost” means the amount that a pharmaceutical wholesaler or distributor charges for a pharmaceutical product as listed on the pharmacy's invoice;
(9) “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;
(10) “recoupment” means the amount that a pharmacy must remit to a pharmacy benefits manager when the pharmacy benefits manager has determined that an overpayment to the pharmacy has occurred.
2023 Alaska Statutes › Title 21. Insurance › Chapter 33. Unauthorized Insurers › Sec. 21.33.011. Purpose.

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 as provided in this chapter in order to
(1) protect the insureds and claimants of this state in transactions involving the purchase of insurance from nonadmitted insurers;
(2) avoid the obstacle of resorting to distant forums for the purpose of asserting legal rights under policies issued by nonadmitted insurers;
(3) provide a method of substituted service of process upon nonadmitted insurers for proceedings before the director and in the courts in this state;
(4) provide for the public the ability to self-procure insurance directly from nonadmitted insurers;
(5) protect the revenue of the state;
(6) protect regulated, admitted insurers from unregulated and unfair competition by nonadmitted insurers;
(7) regulate and supervise the effectuation of nonadmitted insurance under the laws of this state and 15 U.S.C. 1011; and
(8) maintain reliable insurance markets.
2023 Alaska Statutes › Title 21. Insurance › Chapter 33. Unauthorized Insurers › Sec. 21.33.031. Defendant's duties and rights.

(a) Before an unauthorized person or nonadmitted insurer files or causes to be filed a pleading, a court action, suit, or proceeding or a notice, order, pleading, or process in an administrative proceeding before the director instituted against the person or insurer, by service made as provided in AS 21.33.021 or 21.33.025, the person or insurer shall either
(1) deposit with the clerk of the court in which the action, suit, or proceeding is pending, or with the director in administrative proceedings before the director, cash or securities or bond with an admitted insurer to be approved by the court, or the director, in an amount to be fixed by the court or the director sufficient to secure the payment of a final judgment that may be rendered in the court proceeding or in the administrative proceeding before the director; however the court, or the director in administrative proceedings before the director, may in its or the director's discretion make an order dispensing with the deposit or bond where the insurer makes a showing satisfactory to the court or the director that it maintains in a state of the United States funds or securities, in trust or otherwise, sufficient and available to satisfy a final judgment that may be entered in the court action, suit, or proceeding or in an administrative proceeding before the director; or
(2) obtain admission to transact insurance in this state through a certificate of authority issued under this title.
(b) The court in an action, suit, or proceeding in which service is made as provided in AS 21.33.021 or AS 21.33.025, or the director in an administrative proceeding before the director in which service is made as provided in AS 21.33.025, may order postponement that may be necessary to afford the defendant reasonable opportunity to comply with (a) of this section and to offer a defense in the court action or administrative proceeding.
(c) Nothing in (a) of this section may be construed to prevent an unauthorized person or nonadmitted insurer from filing a motion to quash a writ or to set aside service made as provided in AS 21.33.021 or 21.33.025 on the ground that the unauthorized person or insurer has not transacted insurance in this state or relative to a subject resident, located, or to be performed in this state or that the person on whom service was made under AS 21.33.021(d) was not transacting insurance in this state or relative to a subject resident, located, or to be performed in this state.
2023 Alaska Statutes › Title 21. Insurance › Chapter 33. Unauthorized Insurers › Sec. 21.33.035. Attorney fees.

In an action against an unauthorized person or nonadmitted insurer upon a contract of insurance issued or delivered in this state to a resident or to a corporation authorized to do business in this state, if the person or insurer has failed for 30 days after demand before the commencement of the action to make payment in accordance with the terms of the contract, and it appears to the court that the refusal was vexatious and without reasonable cause, the court may allow to the plaintiff a reasonable attorney fee and include the fee in the judgment that may be rendered in the action. Failure of the person or insurer to defend the action shall be considered prima facie evidence that its failure to make payment was vexatious and without reasonable cause.
2023 Alaska Statutes › Title 21. Insurance › Chapter 33. Unauthorized Insurers › Sec. 21.33.037. Acting for or aiding nonadmitted insurers prohibited.

(a) A person may not directly or indirectly act as agent for, or otherwise represent, assist, or aid on behalf of another, a nonadmitted insurer in the transaction of insurance in this state.
(b) This section does not apply to
(1) matters authorized to be done by the director;
(2) surplus lines insurance effected and written under AS 21.34;
(3) transactions for which a certificate of authority is not required under this title;
(4) reinsurance;
(5) the property and operations of railroads or aircraft primarily engaged in interstate or foreign commerce and wet marine and transportation insurance;
(6) life insurance, health insurance, and annuity contracts when solicited solely by mail or when not solicited, negotiated, or procured in this state;
(7) transactions subsequent to issuance of a policy not covering a subject resident, located, or to be performed in this state at time of issuance and lawfully solicited, written, or delivered outside this state.
(c) In addition to other penalties under this title, a person who represents or aids a nonadmitted insurer in violation of this chapter is subject to the penalties provided in AS 21.33.065. This chapter does not preclude the insured from enforcing, under the terms and provisions of the contract and the laws of this state, the insured's rights under a contract entered into in violation of this chapter.
(d) If the nonadmitted insurer fails to pay a claim or loss within the provisions of the insurance contract, a person who assisted or in any manner aided directly or indirectly in the procurement of the insurance contract, shall be liable to the insured for the full amount under the provisions of the insurance contract.
2023 Alaska Statutes › Title 21. Insurance › Chapter 33. Unauthorized Insurers › Sec. 21.33.042. Suits by nonadmitted insurers.

A nonadmitted insurer may not commence or maintain an action in law or equity in this state to enforce a right arising out of a transaction of insurance in this state except with respect to
(1) claims under policies lawfully written in this state;
(2) liquidation of assets and liabilities, other than the collection of new premiums, resulting from its former admitted operations in this state;
(3) transactions subsequent to issuance of a policy not covering a subject resident, located, or to be performed in this state at time of issuance and lawfully solicited, written, or delivered outside this state;
(4) surplus lines insurance coverage exported under AS 21.34;
(5) reinsurance;
(6) the continuation and servicing of life insurance, health insurance policies, or annuity contracts remaining in force as to residents of this state where the insurer has withdrawn from the state and is not transacting new insurance;
(7) servicing of policies written by an admitted insurer in a state to which the insured has moved but in which the insured is not licensed, until the term of the policy expires;
(8) claims under policies covering wet marine and transportation insurance, including vessels of 50 displacement tons or less.
2023 Alaska Statutes › Title 21. Insurance › Chapter 33. Unauthorized Insurers › Sec. 21.33.045. Investigation and disclosure of insurance contracts.

(a) When the director has reason to believe that insurance has been effectuated by or for a person in this state with a nonadmitted insurer, the director shall in writing order the person to produce for examination all insurance contracts and other documents evidencing insurance with nonadmitted insurers and to disclose to the director the amount of insurance, name and address of each insurer, gross amount of premium paid or to be paid, the name and address of the person or persons assisting or aiding in the solicitation, negotiation, or effectuation of the insurance, and other information required by the director.
(b) [Repealed, § 26 ch 117 SLA 1984.]
(c) In case of a failure of any person to comply with the director's order under (a) of this section, the superior court, on application of the director, may issue an order requiring the production of the records and information sought by the director.
(d) [Repealed, § 60 ch 38 SLA 2002.]
2023 Alaska Statutes › Title 21. Insurance › Chapter 33. Unauthorized Insurers › Sec. 21.33.063. Agreements with other states.

The director is authorized to participate in an agreement with another state for the purposes of collecting and disbursing to the other state any premium tax collected under this chapter and payable to the other state and for receiving from the other state premium tax it has collected and is owed to this state. To the extent that another state where a portion of the properties, risks, or exposures reside has failed to enter into an agreement with this state, the director shall retain all of the net premium tax collected by this state.
2023 Alaska Statutes › Title 21. Insurance › Chapter 33. Unauthorized Insurers › Sec. 21.33.065. Penalties.

(a) A person other than an insured, who in this state represents or aids a nonadmitted insurer in violation of AS 21.33.037, is subject to a civil penalty of not more than $50,000 in addition to applicable criminal penalties and other penalties prescribed in this title.
(b) In addition to any other penalty provided, a person who violates a provision of this chapter is subject to a civil penalty of not more than $10,000 for the first offense and not more than $100,000 for each succeeding violation.
(c) [Repealed, § 223 ch 67 SLA 1992.]
2023 Alaska Statutes › Title 21. Insurance › Chapter 33. Unauthorized Insurers › Sec. 21.33.900. Records of insureds.

In order that the director may effectively administer this chapter, a person who has placed insurance with an unauthorized insurer shall, upon the director's order, produce for the examination of the director all policies and other documents evidencing the insurance and shall disclose to the director the amount of premiums paid or agreed to be paid for the insurance and other information required by the director. For each refusal to obey the order, in addition to any other penalties prescribed in this title, the person is subject to a civil penalty of not more than $25,000 following an appropriate hearing as provided in AS 21.06.170 - 21.06.230.
2023 Alaska Statutes › Title 21. Insurance › Chapter 33. Unauthorized Insurers › Sec. 21.33.910. Definitions.

In this chapter,
(1) “export” means to place surplus lines insurance with a nonadmitted insurer;
(2) “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;
(3) “unauthorized person” means a person not licensed as a surplus lines broker, or not a salaried employee of the insured;
(4) “wet marine and transportation insurance” has the meaning given in AS 21.34.900.
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.010. Purpose.

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.
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.020. Placement of surplus lines insurance.

(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) If a policyholder meets the standards of an exempt commercial purchaser under this title and regulations adopted by the director, insurance may be procured from a surplus lines broker without complying with (a)(2), (3), and (4) of this section if
(1) the broker procuring or placing the surplus lines insurance has disclosed to the exempt commercial purchaser that the insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight; and
(2) the exempt commercial purchaser has subsequently requested in writing that the broker procure or place the insurance from a nonadmitted insurer.
(c) 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.
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.025. Subscription policies or joint underwriting in combination with admitted 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).
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.030. Workers' compensation insurance.

(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 an order 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).
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.035. Health care 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 21.51.405 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 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).
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.050. Listing eligible surplus lines insurers.

(a) In addition to meeting the requirements of AS 21.34.040, a nonadmitted insurer shall be considered an eligible surplus lines insurer if it appears on the most recent list of eligible surplus lines insurers published by the director. The list is to be published at least semiannually by
(1) posting the list on the division's Internet website; and
(2) providing a copy of the list to a person on request to the division.
(b) Nothing in this section requires the director to place or maintain the name of a nonadmitted insurer on the list of eligible surplus lines insurers.
(c) A nonadmitted insurer shall be removed from the list of eligible surplus lines insurers if the nonadmitted insurer fails to meet the requirement under AS 21.34.040(d). However, the director may reinstate a nonadmitted insurer on the list of eligible surplus lines insurers if the nonadmitted insurer has remedied the reason for removal from the list.
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.060. Other nonadmitted insurers.

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.
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.070. Declaration of ineligibility.

(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.
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.080. Transaction report; evidence of insurance.

(a) A surplus lines broker shall execute and file with the 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 period. 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 company 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 gross premium written 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, § 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.
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.090. Surplus lines association.

(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.
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.100. Evidence of insurance.

(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 cover note, binder, or other evidence of insurance. The 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) A producing broker or other licensee may issue to a person, other than the named insured, a certificate as evidence of insurance negotiated, placed, or procured under this chapter. The certificate 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.”
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.110. Surplus lines broker's duty to notify insured.

(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.
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.130. Effect of payment to surplus lines broker.

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.
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.150. Surplus lines brokers may accept business from other brokers.

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.
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.170. Quarterly reports, summary of exported business.

(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, 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 forms shall be filed quarterly on March 1, June 1, September 1, and December 1 of each year.
(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.
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › 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.
(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.
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.200. Collection of taxes and fees.

(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, § 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 21.36.910.
2023 Alaska Statutes › Title 21. Insurance › Chapter 34. Surplus Lines Insurance › Sec. 21.34.220. Actions against surplus lines insurer; service of process.

(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.