BULLETIN B 02-01
TO: ALL LICENSEES AND ADMITTED INSURERS IN THE STATE OF ALASKA
AND OTHER INTERESTED PARTIES
RE: CHANGES IN THE ALASKA INSURANCE LICENSING SYSTEM THAT ENSURE
RECIPROCITY UNDER THE GRAMM LEACH BLILEY ACT
During the 2001 Legislative Session, the legislature passed SCS
CSHB 184 (Judiciary), which Governor Knowles signed into law. This
legislation was developed by the governor with the support of the
division and the insurance industry. Many of the sections of this
legislation, particularly those that amend Chapter 27 of the insurance
code (AS 21.27), incorporate into Alaska law the requirements necessary
to ensure reciprocity under the federal legislation passed in the
Gramm Leach Bliley Act (GLBA), simplify producer licensing, and
protect consumers who purchase insurance through banks.
This bulletin outlines major changes in Alaska insurance licensing
laws that have occurred with the passage of SCS CSHB 184 (JUD).
This bulletin is for informational purposes only and is not intended
to be an exhaustive or interpretive analysis of statutory changes
to the insurance code. Please review the insurance laws in their
entirety to assure your compliance when transacting Alaska insurance
business. You can access SCS CSHB 184(JUD) at www.legis.state.ak.us/basis/start.asp
and enter "HB184" as the Bill Root.
AREAS OF SIGNIFICANT CHANGE
- Lines of Authority
- License Types, Firms with More Than One Location, Limited Lines
- Requirements for Banks Selling Insurance (13 Safe Harbors)
- Background Checks
- Specific to Insurers
- Application Forms
The new definitions in the law are consistent with the definitions
in the National Association of Insurance Commissioners (NAIC) Producer
Licensing Model Act for "compliance officer," "home
state," "insurance producer," "license,"
"limited lines credit insurance," "negotiate,"
"sells," "solicit," "transact," "uniform
application," and "uniform business entity application,"
among others. AS 21.27.900
LINES OF AUTHORITY
Eight lines of authority have been established whereby the
director issues a qualified applicant a license for one or more
of the lines of insurance coverage. Seven of the lines of authority
are life, health, property, casualty, variable life and variable
annuity products, personal lines property and casualty, and limited
lines credit insurance. There is also an eighth line of authority
for a license for limited lines insurance. These lines of authority
are consistent with those listed in the NAIC Producer License Model
Act. AS 21.27.115
LICENSE TYPES, FIRMS WITH MORE THAN ONE LOCATION, LIMITED LINES
License Types: Principal/Manager/Compliance Officer
The requirements for a firm to have a principal or manager have
been eliminated. Instead, a compliance officer will be responsible
for the firmís compliance with Alaska insurance law.
An individual previously licensed as a principal or manager of
a firm will be changed to the compliance officer of the firm and
continue to operate under the existing license until it is up for
renewal. Once renewed, the license issued will indicate the new
license type of compliance officer.
If a firm has designated someone other than the licensed principal
or manager as the compliance officer for the firm, unless that individual
is appropriately licensed, that individual will no longer be recognized
as the compliance officer of the firm and will be replaced by the
existing licensed manager or principal of that firm. If the firm
wishes to designate another licensee as its compliance officer,
the firm should submit a completed section 11 of Change Form 08-1245
to the division. This form is available at
A Firm with a Branch or Secondary Location
A firm that transacts business in more than one location must pay
a license fee and submit an application for each additional location.
These branch or secondary locations are no longer separate licensees.
The primary firm location must hold a license and its compliance
officer will be held responsible for the activities of its branch
or secondary locations. All information regarding the branch or
secondary licenses will be transferred to the licensed firm. AS 21.27.330
The division is in the process of contacting firms that have multiple
licensed locations to ascertain which location will be designated
the licensed primary firm location.
Limited Lines of Authority
Under the lines of authority, the division will continue to offer
limited lines licenses. Limited lines licenses for travel, bail
bond, fraternal, motor vehicle rental agency, and credit insurance
will be available to both residents and nonresidents. Effective
January 1, 2002, the health insurance limited producer license
for the sole purpose of being appointed by and acting as an agent
for health insurance pertaining to sports and recreation, and the
retired insurance producer license for the sole purpose of
allowing a retired or retiring individual who surrenders all in-force
insurance licenses to receive continuing commissions for insurance
transacted before retirement have been eliminated.
Under AS 21.27.370(e), a person no longer licensed in this
state may be paid renewal or other deferred compensation for selling,
soliciting, or negotiating insurance if that person was required
to be licensed at the time of the sale, solicitation, or negotiation
and held the required license.
Also effective January 1, 2002, AS 21.27.170, which provided for
insurance vending machines licenses has been repealed and
such a license has been eliminated.
The following lines of authority that previously have been issued
as a limited lines license have been combined with one of the lines
of authority listed in AS 21.27.115, as of January 1, 2002. The
division will not print new licenses reflecting the new authority
name until the next renewal of a license.
Mortgage guarantee authority only will be combined with
and become limited lines credit authority.
Credit Life/Credit Disability authority only will be
combined with and become limited lines credit authority.
Vehicle authority only will be combined with and become
Property, casualty, surety and marine authority only
will be combined with and become property and casualty
lines of authorities.
As of December 31, 2001, the division has converted all active
licenses into the new license structure that is effective January
1, 2002. Nearly all of the conversion is automatic. The division
will only contact those licensees who have a license that does not
convert into the new license structure so that the licensee can
advise the division of what type of license to issue.
A licensee who was licensed for property and casualty authorities
before conversion occurred is now qualified to transact business
for personal lines property and casualty authority, as well
as the property and casualty authorities. A licensee who wishes
to convert the license to only personal lines property and casualty
to sell coverage to individuals and families for primarily noncommercial
purposes and to eliminate the more general property and casualty
authorities should request that the division make that change.
A licensee who was licensed for both life and health authorities
before conversion occurred and who was selling credit products
or who now wishes to sell credit products must obtain separate
limited lines credit authority in order to sell credit products.
Such a licensee will not be required to take the new limited lines
credit exam discussed later in this bulletin but must notify our
office to request the addition of limited lines credit authority.
A licensee who was licensed for either life or health authority
but not both before conversion occurred and who now wishes
to sell credit products must obtain separate limited lines credit
authority and must take the new limited lines credit
exam discussed later in this bulletin.
REQUIREMENTS FOR BANKS SELLING INSURANCE (13 SAFE HARBORS)
The legislation provides guidelines to financial institutions that
engage in insurance sales. The new law
- Establishes consumer protection standards consistent with Sections
104, often referred to as the "13 safe harbors," and
305 of GLBA, and incorporates four major areas of protection relating
to licensing, misrepresentation, disclosure, and antitying
and anticoercion; AS 21.36.164-21.36.169
- Requires each person transacting the business of insurance
to obtain a separate insurance license; AS 21.36.164
- Defines a financial institution, which includes a credit union,
a bank, savings bank, savings and loan association, or trust company,
among others, but excludes an insurer; AS 21.36.169(2)
- Requires a financial institution to use separate documents for
an insurance transaction other than for credit or flood insurance;
- Requires a financial institution selling insurance products
to, among other things,
- inform consumers that the insurance products are not protected
by federal insurance,
- state that the insurance is not guaranteed by the financial
- inform customers that they are not obligated to purchase insurance
to obtain a loan or an extension of credit from the financial
institution. AS 21.36.168
Fingerprint Card Requirements
Previously, an individual seeking licensure in this state was
required to submit one fingerprint card and the fingerprint card
processing fee for the division to conduct a criminal background
check. An applicant seeking licensure now must submit with the
application two fingerprint cards and a separate check for $59.00,
payable to the DEPARTMENT OF PUBLIC SAFETY. This change will allow
the division to obtain a national criminal history check from
the Federal Bureau of Investigation.
As of July 1, 2002, the federal requirements under18 USC 1033
and 1034 that a person having a conviction for a felony involving
dishonesty or breach of trust must obtain the written consent
of the director before transacting insurance are incorporated
into Alaska law. AS 21.36.355
A licensee has a fiduciary responsibility for the money the licensee
collects for premium taxes and fees, premiums, or return premiums
and the money must be accounted for promptly and paid to the appropriate
party. AS 21.27.360
Bonds for Insurance Producers
Effective January 1, 2002, an insurance producer acting as a
broker or collecting insurance premiums is no longer required
to file and maintain a $10,000 bond. If a producer has a current
bond on file with the division, the producer should request cancellation
of the bond by the surety company. All bonds on file will remain
active until the division has received a bond cancellation notice.
Bonds for Surplus Lines Brokers
As of January 1, 2002, a surplus lines broker is no longer required
to maintain a bond in any amount unless the director by regulation
requires a bond in a particular amount. AS 21.27.790
A nonresident licensee is now exempt from Alaskaís continuing
education requirement. AS 21.27.020(f)(5)
An insurer or producer may pay compensation to a person without
a license as long as the person has not transacted the business
of insurance and the payment does not violate AS 21.36.100
or 21.36.120. AS 21.27.370
An unlicensed person may also receive compensation for referrals
to a licensee if the person does not discuss specific terms and
conditions of a policy, does not give opinions or advice regarding
insurance, and if the referral is nominal, on a one-time
basis, and fixed in amount by referral. The compensation for the
referral cannot depend on whether insurance is purchased or be
contingent upon volume of insurance transacted.
- As of January 1, 2002, the minimum age for licensure is 18
and a high school or GED diploma or equivalent is no longer
required. AS 21.27.020
- Application forms no longer need to be notarized.
- A nonresident licensee who applies for an Alaska license within
90 days of cancellation of the previous license in the prior home
state no longer needs to take the Alaska examination if the license
applied for is for the same lines of authority. AS 21.27.060
- An applicant who has been previously licensed in Alaska must
take and pass the appropriate examination under AS 21.27.060 unless
the applicant has been licensed in good standing within one year
from the date the division receives the new application.
SPECIFIC TO INSURERS
Changes have been made that allow for company employees to respond
to requests from existing policyholders on existing policies. But,
if an employee is directly compensated based on volume of premiums
or if the employee transacts the business of insurance, that employee
must be licensed. AS 21.27.010(e)
Multiple insurers within an insurerís holding company system or
group may now file a single appointment request, thereby reducing
their paper filings. Bulletin B 01-14, dated November 21, 2001,
provides additional information regarding appointments and terminations.
The division has developed new examinations for licenses for limited
lines credit insurance and personal lines insurance.
These examinations will be implemented in January 2002. The other
examinations for licenses have been updated to reflect the changes
in the insurance laws.
A new Alaska Candidate Handbook, published by Assessment
Systems, Inc. (ASI), will be made available early in 2002 that incorporates
the new licensing laws.
The division has developed new application forms that are consistent
with the NAIC Uniform Applications and with the new Alaska laws.
(08-240 for Individuals/Individuals in a Firm and 08-241 for Firms.)
Due to these changes, we encourage use of the new application forms.
We will continue to accept the existing application forms, however.
You may access the new forms through our web site at
or you may obtain them by writing to the division and including
a self-addressed, stamped envelope with your request to:
Anchorage Office: Juneau Office:
3601 C Street, Suite 1324 P.O. Box 110805
Anchorage, AK 99503 Juneau, AK 99811-0805
(907) 269-7900 (907) 465-2515
The division appreciates your patience during this period of conversion
to the new laws. We are confident that the new laws will allow us
to provide you with more effective and efficient service once the
transition is complete.
The Frequently Asked Questions (FAQ) section on our web site will
provide further information on producer licensing: www.commerce.state.ak.us/insurance/index.html
and click on the Frequently Asked Questions button.
If you have questions regarding this bulletin, please contact the
licensing staff at (907) 465-2515.
Dated this 25th day of January, 2002.