Alaska's insurance code is Title 21 of the Alaska Statutes (AS 21), backed by regulations in Title 3 of the Alaska Administrative Code (3 AAC). The state-law part of every Alaska exam draws on the same handful of chapters: who regulates, how producers are licensed, how premium money is handled, which trade practices are banned, how personal policies may be cancelled, and what the guaranty associations pay. This guide covers those rules with their citations. The general concepts (agency law, contract law, the federal backdrop) are in the national Insurance Regulation guide.

About the exam

Alaska's licensing exams are delivered by Pearson VUE. Each exam has a general section and a separate Alaska section, and the pass mark is a scaled score of 70.

Alaska does not offer a combined Life & Health exam or a combined Property & Casualty exam. A candidate who wants both life and health takes the Life and Health exams separately; a candidate who wants property and casualty takes the Property and Casualty exams separately. The Alaska section is roughly 40-44% of each exam, so the material in this guide carries real weight.

The regulator

• Insurance is regulated by the Division of Insurance, part of the Department of Commerce, Community, and Economic Development (AS 21.06.020).
• The Division is headed by the Director of Insurance, who is appointed by the commissioner of Commerce, Community, and Economic Development and serves at the commissioner's pleasure (AS 21.06.010). Alaska has no elected insurance commissioner.
• The Director enforces Title 21, has the powers it expressly confers or reasonably implies (AS 21.06.080), and may adopt regulations (AS 21.06.090). A regulation that required a hearing takes effect only after it has been on file in the Director's office for 10 days.
• The Director may examine insurers' financial condition and market conduct (AS 21.06.120, .140) and may examine a producer's accounts and records as often as there is reasonable cause (AS 21.06.130). Refusing an examination is grounds to suspend, revoke, or refuse to renew a license.
• Orders must be in writing and signed by or under the authority of the Director (AS 21.06.100).

Hearings and appeals. A person aggrieved by the Director may demand a hearing, which must be held within 30 days of the demand unless postponed (AS 21.06.180). Notice of a hearing must be given at least 20 days ahead (AS 21.06.200). A demand received before an order's effective date or within 10 days after delivery stays the order (AS 21.06.190), except for orders based on an insurer's impaired financial condition and certain others. The Director issues the order on hearing within 45 days after the hearing ends (AS 21.06.220); rehearing may be requested within 30 days (AS 21.06.210); orders are appealed to the superior court (AS 21.06.230).

Insurers

• An insurer needs a certificate of authority before transacting insurance in Alaska (AS 21.09.010). The Director must act on a completed application within 60 days, and the certificate always remains state property (AS 21.09.120).
• Domestic = formed in Alaska; foreign = formed outside Alaska, and Alaska's definition of foreign includes alien insurers; alien = formed outside the United States (AS 21.97.900).
• An admitted insurer is an authorized insurer, one holding a certificate of authority.
• A stock insurer has capital divided into shares (AS 21.69.700); a mutual has no capital stock and its board is elected by policyholders (AS 21.69.710). A fraternal benefit society works on a lodge system with ritualistic work and representative government (AS 21.84.900).
• An insurer may pay commissions for Alaska business only to a person licensed by the Director (AS 21.09.250).
• Rates must not be excessive, inadequate, or unfairly discriminatory (AS 21.39.030). Most policy forms must be filed and approved before use; surety bonds and specially rated inland marine risks are among the exemptions (AS 21.42.120).

Producer licensing

Lines of authority (AS 21.27.115): life (which includes endowments and annuities), accident and health or sickness (which may include disability income), property, casualty (which includes surety), variable life and variable annuity, and personal lines (property and casualty sold to individuals and families for primarily noncommercial purposes). Property and casualty are separate lines, so a producer selling commercial property and commercial liability needs both.

Qualifications. A resident individual applicant must be at least 18, actually reside in Alaska, be trustworthy, and pass the exam (AS 21.27.020). Resident applicants furnish fingerprints for a state and national criminal history check (AS 21.27.040). An application left incomplete through the applicant's inaction is withdrawn after 120 days. A previously licensed applicant must not have had an Alaska license suspended or revoked in the previous four calendar years (AS 21.27.530). Selling variable products also requires broker-dealer registration or a passed securities test.

Exam waivers. A producer relocating to Alaska is exempt from the exam for the same lines if the Alaska application arrives within 90 days after the prior home-state license is cancelled; a person who held a substantially similar Alaska license within the prior year is also exempt (AS 21.27.060). The Director may require a licensee who violated Title 21 to retake the exam.

Nonresidents are licensed reciprocally if in good standing at home (AS 21.27.270) and must appoint the Director as attorney for service of process.

Renewal and CE.

• Licenses renew biennially; the Director sends notice 30 days before renewal (AS 21.27.380). A license expired two years or longer cannot be renewed or reinstated.
• Residents complete 24 credit hours of approved CE each two-year period, at least 3 hours of ethics (AS 21.27.020(f); 3 AAC 23.100). Up to 8 excess hours carry over. No more than 8 hours in management, marketing, and sales training count (3 AAC 23.105). Repeating a course in the same period does not count.
• Nonresidents are exempt from Alaska CE (except a nonresident independent adjuster designating Alaska as home state), as are licensees first licensed before January 1, 1980.
• A CE extension for reasonable cause must be requested in writing before the renewal date.

Temporary licenses go only to people such as the surviving spouse, next of kin, or executor of a deceased producer, the representative of a disabled producer, or the designee of a producer entering military service. They last up to 90 days and may be renewed once for another 90 (AS 21.27.390). They are not a way around a failed exam.

Reporting. A licensee must notify the Director in writing within 30 days of a change of residence, business, mailing or email address, name, or compliance officer (AS 21.27.025). Administrative actions elsewhere are reported within 30 days of final disposition; criminal prosecutions within 30 days after the charge is filed. A licensee may use a fictitious name only if both names appear on the license (AS 21.27.010(d)).

Controlled business. Alaska does limit it: the Director may not license an applicant whose compensation from controlled business (insurance on the applicant's own life, property, or interests and those of a spouse, close relatives, or employer) would exceed 50 percent of compensation from all other business (AS 21.27.030).

Firms need a firm license; every individual the firm employs to transact insurance must be licensed and under an employment contract with the firm (AS 21.27.140), and the firm must report a change of compliance officer within 30 days.

Appointments and agency agreements

• An admitted insurer must appoint a producer no later than 30 days after the agency contract is executed or the first application is submitted (AS 21.27.100). The appointment stays in force until terminated in writing (AS 21.27.110).
• Authorized or apparently authorized acts of an appointed producer are acts of the insurer (AS 21.27.100(d)).
• An insurer that reports misconduct by a terminated producer to the Director must mail the producer a copy within 15 days (AS 21.27.110(c)).
• A producer may not assign the agency agreement, appoint subagents, bind reinsurance, or delegate producer authority (AS 21.27.550). Claims the producer settles under agency authority are reported to the insurer within 30 days.
• A producer paid a fee by the client to act as broker needs a written contract stating duties, authority, and compensation (AS 21.27.560).

Fiduciary duties

• Premiums, return premiums, and premium taxes received by a licensee are held as a fiduciary (AS 21.27.360). Fiduciary money may be commingled only to advance premiums or set up reserves for return premiums.
• Fiduciary money may not be pledged as collateral, assigned, or used for personal or business expenses (3 AAC 23.630). It must be documented within 24 hours, and cash requires a detailed receipt at the time of payment (3 AAC 23.590).
• A premium deposit must be returned if coverage is not obtained within 10 working days (3 AAC 23.600). Money held more than 120 days must be investigated and paid to the person entitled to it.
• Diverting fiduciary money brings restitution, license action, and a civil penalty up to $50,000 per violation.
• Transaction records are kept five years after completion (10 for reinsurance), and a licensee answers a records inquiry within 10 working days (AS 21.27.350).

Commissions and referral fees

Commissions may be shared only with persons licensed for that line (AS 21.27.370); paying an unlicensed person can bring a penalty of up to three times the compensation. An unlicensed person may receive a referral fee only if it is nominal, one-time, fixed per referral, and not dependent on a sale.

Unfair trade practices (AS 21.36)

• Misrepresentation (AS 21.36.030) includes any statement or omission that, in the context of the whole presentation, tends to mislead, and expressly includes calling a policy shares of stock.
• False advertising in any medium (AS 21.36.040).
• Twisting: misrepresentations or incomplete comparisons to induce a policyholder to lapse, forfeit, surrender, retain, exchange, or convert a policy (AS 21.36.050).
• False financial statements (AS 21.36.060) and defamation of a person in the insurance business (AS 21.36.070). Someone who gives the Director information about a licensee is immune from defamation liability.
• Boycott, coercion, and intimidation (AS 21.36.080).
• Unfair discrimination between individuals of the same class and equal expectation of life (life), the same class and essentially the same hazard (health), or like risk characteristics (property and casualty) (AS 21.36.090).
• Rebating. Life and health rebates are barred by AS 21.36.100, with exceptions in AS 21.36.110 (for example, collection-expense savings for bank-draft payment and wellness rewards up to 20% of the cost of coverage). For property and casualty, a premium reduction is allowed only if provided for in a filing with the Director, and an insured who knowingly accepts an illegal rebate also violates the law (AS 21.36.120).
• Anticoercion: a lender may not require a borrower to buy insurance through a particular person (AS 21.36.319). A borrower may choose the producer and insurer for required property insurance (AS 21.36.160).
• Holding out as a financial planner while only selling insurance is prohibited, and fees other than commissions need a written agreement signed before services begin (AS 21.36.500).
• A person convicted of a felony involving dishonesty or breach of trust needs written consent to work in insurance (AS 21.36.355; 18 U.S.C. 1033).

Penalties. On finding a violation the Director issues a cease and desist order and, after a hearing, may assess up to $2,500 per violation or $25,000 for a general business practice. If the person knew or should have known, the limits rise to $25,000 and $250,000. Violating a cease and desist order can cost up to $1,000,000 per violation in superior court (AS 21.36.910). Willful violations of the licensing chapter carry up to $25,000 per violation (AS 21.27.440); an unpaid penalty leads to revocation of all licenses. A suspension may not exceed 12 months, and a suspended or revoked license must be returned within 10 days.

Claims and fraud

• Unfair claim settlement practices (AS 21.36.125) include misrepresenting policy provisions, refusing to pay without a reasonable investigation, compelling insureds to sue by lowballing, and paying without stating the coverage. The statute creates no private right of action.
• Claim regulations (3 AAC 26.040-.070): acknowledge a claim within 10 working days, reply to other communications within 15 working days, complete the investigation within 30 working days, accept or deny within 15 working days after proof of loss, and pay undisputed amounts within 30 working days. An unrepresented claimant gets written notice of a statute of limitations at least 60 days before it runs.
• Fraudulent insurance acts (AS 21.36.360) include false claims, collecting premium for insurance that will not be provided, and willfully overcharging premium. Claim forms carry a fraud warning (AS 21.36.380).
• Suspected fraudulent claims are reported to the Director; suspected embezzlement, twisting, or fraud by a producer must be reported immediately (AS 21.36.390).

Replacement and privacy

• In a life or annuity replacement, the producer submits a statement signed by applicant and producer about existing coverage, reads the replacement notice aloud unless the applicant declines, and the replacing insurer notifies the existing insurer within five working days (3 AAC 26.795-.805). The replacing policy carries a 30-day right to return.
• Licensees give a privacy notice when the customer relationship begins and at least once every 12 months (3 AAC 26.610-.615).

Personal lines cancellation and nonrenewal

These rules apply to personal auto, homeowners, dwelling, and other personal policies (AS 21.36.210-.310); details are in the auto and homeowners guides.

The first 60 days of a new policy are free of the reason restrictions. An insured aged 70 or older may name a designee to receive copies of cancellation notices. Notices go by first-class mail with a certificate of mailing or electronically with confirmation of receipt (AS 21.36.260). If the insured cancels, the insurer may keep a fee of no more than 7.5% of unearned premium if the policy states it, and must refund within 45 days (AS 21.36.255).

Surplus lines

Coverage not available from admitted insurers may be placed with an eligible nonadmitted insurer through a licensed surplus lines broker after a diligent search of admitted insurers (AS 21.34.020). The insured must get written notice that the insurer is not licensed in Alaska and is not covered by the guaranty association (AS 21.34.110). The broker pays a 2.7% premium tax and may not absorb or rebate any of it (AS 21.34.180). Premium paid to the broker counts as paid to the insurer.

Guaranty associations

Alaska Life and Health Insurance Guaranty Association (AS 21.79), funded by assessments on member insurers:

Producers may not use the association's existence to sell, and member insurers deliver the association's summary document with each policy (AS 21.79.160).

Alaska Insurance Guaranty Association (AS 21.80) pays covered property and casualty claims of insolvent admitted insurers. It has workers' compensation, auto, and all-other accounts. Each claim is covered up to $500,000, except that workers' compensation claims are paid in full; unearned premium claims are capped at $10,000 per policy. Claims arising within 30 days after the liquidation order are covered, punitive damages are not, and a claimant must first exhaust any solvent insurer's policy. Surplus lines policies are not covered.

Common exam traps

• Alaska's regulator is an appointed Director, not a commissioner.
• Foreign includes alien insurers in Alaska's definition.
• CE is 24 hours with 3 of ethics every two years; nonresidents are exempt.
• Controlled business is limited in Alaska (the 50% test).
• Insurers must appoint producers within 30 days.
• Address changes are due in 30 days.
• Personal cancellation notice is 30/20/10 days; nonrenewal is 45 days.
• Surplus lines tax is 2.7% and cannot be rebated.
• The P&C guaranty association caps claims at $500,000 but pays workers' comp in full.
• Alaska offers no combined LAH or P&C exam.