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(a) A workers' compensation insurance assigned risk pool shall establish a written plan of operation.
(b) A plan of operation or amendment to the plan must be submitted to the director for written approval before its implementation.
(c) A workers' compensation insurance assigned risk pool is subject to examination by the director, and the assigned risk pool shall pay all the expenses of the examination.
(d) To the extent practical, rates shall be established and maintained at a level that permits the assigned risk pool to operate as a self-funded mechanism based upon
(1) premiums charged and collected;
(2) claims incurred, including provisions for claim development and incurred but not reported claims;
(3) administrative expenses incurred to operate the assigned risk pool; and
(4) consideration of investment income and taxes on assigned risk pool claims reserves arising from participation by insurers in the assigned risk plan.
(e) The workers' compensation review and advisory committee appointed under 3 AAC 30.200 shall assist and advise the director regarding assigned risk pool matters, including the selection and oversight of any plan administrator.
(f) The plan of operation required under (a) of this section must provide
(1) for the participation of all admitted, non-exempt insurers who are authorized to write workers' compensation coverage in this state;
(2) that termination of participation by an insurer may only be for cause and only with the prior written permission of the director;
(3) workers' compensation coverage to all eligible employers that are unable to secure workers' compensation coverage in this state for exposures in this state;
(4) reasonable rules and procedures for
(A) determining eligibility of employers that are in good faith entitled to workers' compensation coverage from the assigned risk pool;
(B) assignment of employers to participating insurers or selection of servicing carriers;
(C) binding coverage, issuing policies, and servicing policies; and
(D) establishing and monitoring performance standards for participating insurers and servicing carriers;
(5) for the equitable apportionment of the experience of the assigned risk pool; and
(6) for written notice advising the director of the amount of the reserves and the method for calculation of incurred but not reported claims and loss development reserves as they have been implemented by each participating insurer; the written notice may be provided on behalf of a member insurer by the reinsurance pool if the member insurer uses the reinsurance pool's reserve amounts in its annual and quarterly financial statement blank forms filed with the director.
(g) The plan of operation required under (a) of this section may provide for
(1) workers' compensation coverage for eligible employers that are unable to secure workers' compensation coverage in this state and that also require workers' compensation coverage in at least one other state if the other state provides coverage for Alaska exposures through a residual market mechanism similar to the Alaska assigned risk pool's plan of operation;
(2) the purchase of reinsurance;
(3) direct assignment of risks to an insurer;
(4) a reinsurance pool that equitably apportions among its members
(A) the premiums written, earned, and collected;
(B) the claims incurred, including provision for claims development and incurred but not reported claims;
(C) the administrative expenses incurred to operate the reinsurance pool, including examinations by the director; and
(D) any overall operational losses;
(5) equitable apportionment among participating insurers of administrative expenses incurred to operate the assigned risk pool, including examinations by the director;
(6) its own applications, policies and endorsements, rates and rules, manuals, and similar materials if they are submitted to the director for approval before their implementation; or
(7) the director's appointment of a plan administrator to operate the assigned risk pool.
(h) A plan administrator appointed by the director under (g) of this section shall agree in writing, as a condition of appointment,
(1) to be subject to the jurisdiction of this state;
(2) to appoint the director as its attorney for service of process;
(3) to be subject to examination at its own expense by the director, an expense that may be reimbursed under the plan of operation;
(4) that money collected for the account of the assigned risk pool will be held in a fiduciary account maintained in a manner substantially similar to the requirements of AS 21.27.360 , and that the fiduciary account must be used for all payments made on behalf of the assigned risk pool;
(5) to present an accounting to the assigned risk pool detailing all transactions, including information necessary to support any commissions, charges, or other fees received by or owing to the plan administrator;
(6) to remit all money due under the plan and any reinsurance arrangements;
(7) to maintain a separate bank account for the assigned risk pool;
(8) to maintain separate records for the assigned risk pool in a manner substantially similar to the requirements of AS 21.27.350 ; and
(9) to provide to the assigned risk pool and its member insurers access to, and the right to audit and copy, any accounts and records pertaining to the assigned risk pool.
(i) A plan administrator appointed by the director under (g) of this section does not need to be licensed under AS 21.27 as a reinsurance intermediary broker or a reinsurance intermediary manager.
History: Eff. 1/1/77, Register 61; am 4/23/77, Register 62; am 12/20/96, Register 140
Authority: AS 21.06.090
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Last modified 7/05/2006