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NOTE: This
section is part of
AS 21.27.010 through AS 21.27.900 In addition to the general qualifications under AS 21.27.020 , to qualify for issuance or renewal of an insurance producer license, an applicant or licensee (1) must possess the competence necessary to fulfill the responsibilities of an insurance producer; (2) if previously licensed in good standing in this state as an insurance producer, must not have had a license suspended or revoked within the previous four calendar years; (3) for a fraternal society limited insurance producer license, shall file with the application a statement by an officer or director of the appointing fraternal society that affirms that the society has satisfied itself that the applicant is trustworthy and competent to act as its insurance agent; and (4) for a license with a scope that includes variable contracts, must either be currently registered with the federal Securities and Exchange Commission as a broker-dealer or personally take and pass, to the satisfaction of the director, tests of the knowledge and competence of the applicant concerning securities; (5) [Repealed, Sec. 82 ch 81 SLA 2001]. AS 21.27.540. Trainee Insurance Producers. (a) Except for life, health, and annuity insurance, a person who has not passed the examinations required under AS 21.27.060 , but who otherwise meets the requirements of AS 21.27.530 , may be employed by a licensed insurance producer as a trainee insurance producer. (b) Before a trainee may transact insurance, the licensed insurance producer employing the trainee insurance producer shall submit to the director the application of the trainee insurance producer, with the fee set under AS 21.06.250 , and receive the trainee insurance producer license. (c) The director shall terminate a trainee insurance producer license unless the individual has (1) not later than four months after the effective date of the trainee insurance producer license, complied with the insurance producer licensing requirements of AS 21.27.060 concerning the insurance laws and regulations of this state; and (2) within eight months after the effective date of the trainee insurance producer license, complied with the insurance producer licensing requirements of AS 21.27.060 concerning the knowledge and competence of the licensee and the licensee's duties and responsibilities as a licensee. (d) Upon satisfying the requirements of (c) of this section, a trainee insurance producer shall apply within 30 days for an insurance producer license. (e) A licensed trainee insurance producer (1) shall at all times be working at the direction and under the supervision of the employing licensed insurance producer; file and record documentation must reflect the direction and supervision, and activities must be in the name of the employing licensed insurance producer, who is responsible for all actions of the trainee insurance producer; (2) is restricted to assisting the employing licensed insurance producer to prepare applications; binders; certificates of insurance; schedules of equipment, vehicles, drivers; loss notices to insurers; and invoices; and to performing clerical functions for which a license is not required; file and record documentation must reflect compliance with these restrictions; (3) may not transact business away from the place of business with clients or insurers unless a licensed insurance producer physically accompanies the trainee. (f) In addition to any other penalty provided by law, the director shall revoke the trainee license of a trainee insurance producer that the director determines has violated the provisions of this section. A licensee or other person having possession or custody of the license shall immediately surrender the license to the director either personally or by certified mail. (g) In addition to any other penalty provided by law, if the director determines under AS 21.06.170 - 21.06.240 that the employing licensed insurance producer knew of or should have known that a trainee insurance producer violated this section, the employing licensed insurance producer and firm, and the compliance officer, if any, are subject to the penalties provided under AS 21.27.440 . AS 21.27.550. Appointment of Insurance Producer as An Agent. (a) A person may not act as or represent to be a representative of, authorized or appointed agent of, or other term implying a contractual relationship with a particular admitted insurer, or accept applications on behalf of an admitted insurer, unless the person is licensed as an insurance producer under this chapter and is or becomes an appointed agent of the admitted insurer under AS 21.27.100 . (b) An admitted insurer or managing general agent of an admitted insurer may not enter into an agency agreement with an insurance producer unless the managing general agent and the insurance producer are licensed under this chapter and there is in effect a written agency agreement that specifically sets out the duties, functions, powers, authority, and compensation of all parties to the contract. The written agreement shall be kept in the permanent records of the insurer or managing general agent, if any, and the insurance producer, and be open to inspection by the director. (c) All money collected for the account of an insurer shall be held by the insurance producer as a fiduciary. (d) An agency agreement may not be assigned in whole or in part by the insurance producer. (e) If the agency agreement permits the insurance producer to settle a claim on behalf of the insurer (1) a claim must be reported to the insurer within 30 days; (2) a copy of the claim file shall be sent to the insurer; (3) all insurance claim files shall be the property of the insurer or managing general agent, if any, and insurance producer, but upon an order of liquidation of the insurer, the files shall become the sole property of the insurer or the insurer's estate; the insurance producer shall have reasonable access to and the right to copy the files on a timely basis. (f) An insurance producer is subject to the unfair trade practice and fraud provisions under AS 21.36. (g) The insurance producer may not (1) bind reinsurance or retrocessions on behalf of the insurer; (2) commit the insurer to participate in insurance or reinsurance syndicates; (3) appoint an agent or subagent; (4) jointly employ an individual who is employed by the insurer or by the managing general agent; or (5) delegate insurance producer authority to another person. (h) Except as provided under AS 21.27.560 , an agency appointment may not extend, directly or indirectly, to a client for whom the insurance producer is a producing broker or for whom insurance is exported to nonadmitted insurers under AS 21.34. (i) A reinsurance intermediary manager may not enter into an agency agreement with an insurance producer unless both parties are licensed under this chapter and there is in effect a written agency agreement that specifically sets out the duties, functions, powers, authority, and compensation of all parties to the agreement. The written agreement shall be kept in the permanent records of the reinsurance intermediary manager, the reinsurer, and the insurance producer, and be open to inspection by the director. A written agreement must contain the following minimum provisions: (1) money collected for the account of a reinsurer must be held by the insurance producer as a fiduciary; (2) the agreement may not be assigned in whole or in part by the insurance producer; (3) the agreement may not permit the insurance producer to settle claims on behalf of the reinsurer or reinsurance intermediary manager; and (4) the insurance producer may not (A) jointly employ an individual who is employed with the reinsurer or reinsurance intermediary manager; or (B) delegate insurance producer authority to another person. AS 21.27.560. Appointment of Insurance Producers as Brokers. (a) A client who appoints an insurance producer as its broker in this state or relative to a subject resident, located, or to be performed in this state shall execute a written contract that specifically sets out the duties, functions, powers, authority, and compensation of the insurance producer, if the broker is compensated by a fee paid by the client or by a combination of a fee paid by a client and a commission paid by an insurer with which coverage has been placed. The written contract shall be kept in the permanent records of the insurance producer and be open to inspection by the director. (b) The insurance producer may not knowingly accept payment of a premium for coverage until the coverage has been authorized by the insurer. This subsection does not apply to renewal of existing coverage placed by the insurance producer or to a premium deposit for the purchase of insurance. A premium deposit shall be returned to the client if coverage is not obtained within 10 working days. (c) An insurance producer appointed as a client's broker may only receive compensation if the compensation is a (1) fee that requires the insurance producer to offset or reimburse the client for the full amount of a commission earned by the insurance producer; (2) combination of a fee paid by a client and a commission paid by an insurer with which coverage is placed that may offset or reimburse a client for all or part of a commission earned by the insurance producer if the amount of the commission is disclosed to the client; or (3) commission paid by an insurer with which coverage has been placed. (d) A contract between a client and an insurance producer may not be assigned in whole or in part by the insurance producer. (e) An insurance producer appointed as a broker by a client may act as an appointed agent of an admitted insurer and may accept an application, bind coverage, and collect a premium from the client on behalf of the admitted insurer. (f) A controlling insurance producer may not be appointed as a broker by a client in this state or relative to a subject resident, located, or to be performed in this state unless, in a form acceptable to the director, the controlling insurance producer has disclosed in writing to the client the relationship between the controlling insurance producer and the controlled insurer, each client has acknowledged receipt of the disclosure, and a copy of the acknowledged disclosure is maintained by the controlling insurance producer in its records. The records shall be available for inspection by the director. (g) Money paid by a client to an insurance producer for insurance premiums shall be held by the insurance producer as a fiduciary. (h) An insured shall be entitled to coverage or a return premium and the premium shall be considered received by the insurer if the premium payment made to the insurance producer was, at the time made, designated for specific coverage, and the insurer accepted or acknowledged coverage by issuing a policy binder or other evidence of temporary insurance, or the insurance producer received information from the insurer in the normal course of business that the insurance had been granted. (i) Except as provided under (c) and (e) of this section, this section does not alter the common law of agency as applied to transactions under this title. AS 21.27.570. Operating Requirements For Controlling Insurance Producers. (a) If the aggregate amount of gross written premium on business placed by a controlling insurance producer exceeds five percent of the admitted assets of the controlled insurer for a calendar year as reported in the insurer's most recent financial statement filed with the director, the controlling insurance producer may not place business with the controlled insurer and the controlled insurer may not accept business from the controlling insurance producer unless a written contract is in effect between the parties that (1) establishes the responsibilities of each party, indicates each party's share of responsibility for each particular function, and specifies the division of responsibilities; (2) has been approved by the board of directors of the controlled insurer; (3) contains the following minimum provisions: (A) the controlled insurer may terminate the contract for cause upon written notice sent by certified mail to the controlling producer and shall suspend the authority of the controlling insurance producer to write business during a dispute regarding the cause for termination; (B) the controlling insurance producer shall render accounts to the controlled insurer detailing all transactions, including information in the accounts necessary to support compensation, commissions, charges, and other fees received by, or owing to, the controlling producer; (C) the controlling insurance producer shall remit money due under the contract to the controlled insurer at least monthly; (D) premiums or installments collected shall be due not later than 90 days after the effective date of coverage placed with the controlled insurer; (E) money collected for the account of a controlled insurer shall be held by the controlling insurance producer as a fiduciary, except a controlling insurance producer not required to be licensed under this chapter shall act as a fiduciary in compliance with the requirements of its domiciliary jurisdiction; (F) all payments on behalf of the controlled insurer shall be held by the controlling insurance producer as a fiduciary; (G) the controlling insurance producer shall maintain separate records for each controlled insurer in a form usable by the controlled insurer; the controlled insurer or its authorized representative shall have the right to audit and the right to copy all accounts and records related to the controlled insurer's business; the director, in addition to authority granted in this title, shall have access to all books, bank accounts, and records of the controlling insurance producer in a form usable to the director; (H) the contract may not be assigned in whole or in part by the controlling insurance producer; (I) the controlled insurer shall provide, and the controlling producer shall follow, written underwriting standards, rules, procedures, and manuals that must include the conditions for acceptance or rejection of risks, including types of risks that may be written, maximum limits of liability, applicable exclusions, territorial limitations, policy cancellation provisions, the maximum policy term, the rating system, and basis of the rates to be charged; (J) the underwriting standards, rules, procedures, and manuals shall be the same as those applicable to comparable business placed with the controlled insurer by licensees other than the controlling licensee; (K) the rates and terms of the controlling insurance producer's compensation including commissions, charges, and other fees may not be greater than those applicable to comparable business placed with the controlled insurer by licensees other than the controlling licensee; (L) the controlled insurer shall establish a limit, that may be different for each kind or class of business, on the amount of premium that the controlling insurance producer may place with the controlled insurer in relation to the controlled insurer's surplus and total writings; (M) the controlled insurer shall notify the controlling insurance producer if an applicable limit is approached and the controlling insurance producer may not place and the controlled insurer may not accept business if the limit under (L) of this paragraph has been reached; (N) if the contract provides that the controlling insurance producer, on insurance placed with the controlled insurer, is to be compensated contingent upon the controlling insurer's profits on the placed insurance, the contingent compensation may not be determined or paid until (i) at least five years after the premiums are earned on casualty business and at least one year after the premiums are earned on any other insurance; (ii) a later period established by the director for specified kinds or classes of insurance; and (iii) not until the profits have been verified under (b) of this section; (O) the controlling insurance producer may negotiate but may not bind reinsurance on behalf of the controlled insurer on insurance that the controlling insurance producer places with the controlled insurer, except that the controlling insurance producer may bind facultative reinsurance contracts under obligatory agreements if the contract with the controlled insurer contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which automatic agreements are in effect, the coverage and amounts or percentages that may be reinsured, and commission schedules; and (4) provides that the controlled insurer has an audit committee composed of independent members of the board of directors that meet at least annually with management, the insurer's independent certified public accountants, and an independent actuary specialist acceptable to the director to review the adequacy of the insurer's reserves for losses incurred and outstanding. (b) In addition to any other required loss reserve certification, the controlled insurer shall annually obtain the opinion of an independent qualified actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the controlling insurance producer. The controlled insurer shall file with the director on or before April 1 of each year an opinion of an independent actuary attesting to the adequacy of the reserves for losses incurred and outstanding and reporting the loss ratios for each kind and class of business placed with the controlled insurer by the controlling producer. (c) The controlled insurer shall annually report by kind and class of insurance in a form acceptable to the director the amount of compensation paid to the controlling producer, the percentage the compensation represents to the net premiums written, the amount of compensation paid to uncontrolling producers, and the percentage the compensation represents to the net premiums written. (d) A controlling insurance producer may be examined by the director as if it were the controlled insurer. (e) If the conservator, rehabilitator, or liquidator of a controlled insurer or formerly controlled insurer has reason to believe that the controlled insurer or formerly controlled insurer suffered loss or damage arising out of a failure to comply with this section by the controlling producer or another person, the conservator, rehabilitator, or liquidator may maintain a civil action for recovery of damages or other relief for the benefit of the controlled insurer or its estate. (f) In addition to any other liability and without intent to limit in any manner the rights of policyholders, claimants, auditors, creditors, or third parties, if the director determines after a hearing under AS 21.06.170 - 21.06.240 that a controlling insurance producer caused losses arising out of a violation of this section to a controlled insurer, the director may order the controlling insurance producer to make restitution to the controlled insurer, the rehabilitator, or the liquidator of the controlled insurer for the loss. (g) In addition to any other penalty provided by law, a person who violates this section is subject to the penalties provided under AS 21.27.440 and a controlled insurer's certificate of authority may be suspended or revoked. The director may also order the controlling producer to cease placing business with the controlled insurer. (h) This section does not apply to (1) a person appointed to act on behalf of the controlled insurer as a managing general agent under this chapter; (2) a person who receives no compensation based upon the amount of premiums written with the controlled insurer and who places insurance only with the controlled insurer, only with the controlled insurer and an admitted member or admitted members of the insurer's holding company system, or only with the controlled insurer's parent, affiliate, or subsidiary if admitted in this state; (3) a person who does not accept insurance placements directly from an insured and who only accepts insurance placements from a nonaffiliated subagent; (4) a controlled insurer and its controlling insurance producer if, except for insurance written through a residual market facility under this title, insurance placements are accepted only from a controlling producer, an insurance producer controlled by the controlled insurer, or a producer that is a subsidiary of the controlled insurer; (5) a risk retention group under 15 U.S.C. 3901; or (6) a risk apportionment plan under AS 21.39.150 or an assigned risk pool under AS 21.39.155 . |