Licensing

To apply for an Alaska resident producer’s license, you must:

• Be at least 18 years old
• Be a resident of Alaska before you submit the application

Prospective insurance producers must pass a pre-licensing exam.

Fingerprints/Background check

As part of the application process, you must submit fingerprints to the Alaska Department of Insurance. Fingerprints and a background check are required when you are:

• Seeking initial licensure
• Changing a license from nonresident to resident status
• Reinstating a license canceled or expired more than 12 months

Controlled business

Controlled business is insurance written solely in the interest of the producer or the producer’s family members. Producers are prohibited from obtaining an Alaska insurance license for the purpose of writing controlled business.

You may sell a policy to yourself or your family members, but you can’t obtain a license for that sole purpose.

Non-resident license

A licensed producer must meet the following requirements to obtain a nonresident license:

• The individual must hold a resident license in their home state and be in good standing.

• The individual must complete the appropriate application and submit the required fees to the insurance department/commission in each state where they want to be licensed.

• The individual’s home state must offer equal reciprocity for the state where the individual is applying for a non-resident license. Currently, Alaska has reciprocation agreements with all other states.

Temporary license

The Alaska Department of Insurance may issue a temporary producer’s license without requiring an examination to the surviving spouse or legal representative of a deceased or disabled producer, or to a producer who is called to active military duty.

In Alaska, a temporary license may be issued for a maximum of 180 days.

Inactive status

An Alaska resident producer who is ordered to active military duty may place their license on inactive status until they are discharged. While the license is inactive, the producer may continue to receive residual or “trailing” commissions, but may not solicit or transact any new business.

Renewal maintenance

Alaska insurance licenses are initially issued for 2 years. A producer must renew their license every 2 years, by the last day of the birth month of the licensee.

There is a 1-year grace period for those who fail to renew prior to expiration.

• Reinstating a license within 61 days of expiration results in a $100 late fee.
• After 61 days, the late fee is $200.

If more than 1 year has passed since the license expired, the producer must pass the pre-licensing examination again to get the license back.

Continuing education

All states, including Alaska, have continuing education requirements that must be met to renew any major lines (life, health, property, liability) insurance license. Individuals licensed in the state of Alaska must complete 24 hours of CE prior to renewing their license.

Notice of change of name or address

Any change of name or address (residential or business) must be reported by the licensee to the Alaska Division of Insurance within 30 days of relocation. Failure to do so may result in monetary fines and/or suspension of a license.

Company regulations

An insurance company must be authorized by the Department of Insurance to conduct business in Alaska. To receive authorization, the insurance company must present its rate tables and articles of incorporation, including the nature and purpose of the company’s business intentions, along with the appropriate bylaws for the corporation and the required fees.

Place of business

Every resident insurance producer authorized to conduct business in Alaska must maintain a place of business (with public access) within the state.

Capital and surplus requirement

A company that has been authorized to conduct insurance business in Alaska must maintain minimum standards as a corporation. The certificate of authority allows the insurer to conduct business in the state only if it maintains the minimum capital or permanent surplus required.

Medigap policies

To reduce confusion about the many types of Medicare supplement policies available, federal law requires national standardization of Medigap policies. The law requires that insurers offer no more than 12 “standardized” Medigap plans developed by the National Association of Insurance Commissioners (NAIC).

The 12 standard plans include a basic policy offering “core” benefits called Plan A (Parts A and B co-payments, 365 additional days of hospitalization, and the first 3 pints of blood). Each of the other 11 plans has a different combination of additional benefits, identified by letters B through L.

If an insurer sells ANY Medigap policies in Alaska, it MUST offer Plan A. A Buyer’s Guide and an Outline of Coverage must be delivered at the time of application, prior to accepting any premium payment.

Duties of the Director of Insurance

The Alaska Director of Insurance is a state executive position in the Alaska state government. The Director oversees the Division of Insurance, a subdivision of the Alaska Department of Commerce, Community, and Economic Development. The Division of Insurance is responsible for establishing and enforcing regulations for the insurance industry in Alaska.

The Director is appointed by the commissioner of commerce, community, and economic development, and there are no term limits for the Director. The Alaska DOI is responsible for enforcing and administering all laws pertaining to insurance in the state, including:

• Investigate all claims and complaints of legal violations relating to insurance.

• If the Director finds that laws have been violated, their findings and supporting documents will be forwarded to the state attorney general to pursue prosecution.

• Monitor transactions of all companies including domestic, foreign, and alien insurance companies.

• Audit the books and records of all Domestic insurers at least every 3 years.

• Audit the books and records of any resident producer as frequently as necessary.

• Collect all fees associated with producers and insurers.

• Determine and administer fines associated with violations for insurers and producers.

• Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.

• Approve documentation used by insurance companies such as forms and rates.

Additionally, the Director plays an important role in the Alaska government’s response to natural disasters by determining whether a catastrophe has occurred for insurance purposes. The Director may also take extraordinary measures to license insurance adjusters, etc., to ensure companies address and pay claims promptly following a disaster.

Sidenote

Know this...

The Director does not have the authority to arrest, issue injunctions, or sentence jail time.

Suspend, revoke or non-renew

The DOI has the authority to suspend, revoke, or refuse to renew a license for:

• Providing false information on the application for an insurance license.

• Omitting any relevant information on an application that would have disqualified the individual from being eligible to receive a license.

• Being found guilty of a violation or the noncompliance of insurance regulations and laws…

• Committing fraud while attempting to obtain an insurance license.

• Commingling policy owners’, insurers’, and beneficiaries’ money with the producer’s own money.

• Providing false information in reference to the terms and conditions of an insurance contract.

• Having been found guilty of a felony (or misdemeanor involving activities related to the individual’s moral character.)

• Having been convicted of violations in reference to unfair trade practices or fraud.

• Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.

• Having had a prior insurance license revoked or suspended in a state other than Alaska.

• Using another person’s identity and forging their name on an insurance application.

• Being found guilty of using unethical practices or cheating on an examination for an insurance license.

Cease and desist

If the DOI believes that a producer has violated (or is about to violate) an insurance regulation in Alaska, it may issue a cease and desist order. Receiving a cease and desist order does not automatically mean the producer’s registration has been suspended or revoked, but the producer must stop or limit the activity addressed in the order.

Hearing

Although the recipient of a cease and desist order must comply immediately, actions taken by the DOI are not “final and binding.” Any Alaska resident producer who is subject to disciplinary action has the right to request a hearing to discuss the merits of the situation.

Likewise, the DOI has the authority to investigate any producer doing business in Alaska to determine whether a hearing is required.

Unfair claims settlement practices

• The intentional obstruction and delay of claims payment or the delay of a claims investigation is a violation of regulation.

• Neglecting to provide a prompt response and written explanation of insurance policy terms, conditions, and laws related to the contract are examples of unfair claims settlement practices.

• Failure to provide claims without launching a thorough investigation is a violation of regulation.

• Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of regulation.

• Denying a claim without conducting a thorough investigation.

• Attempting to settle a claim for less than fair market value.

Policy forms

Alaska is a “file and use” state. A file and use filing is a submission that must be filed with the DOI, but the insurer may begin using it as soon as it is filed. The insurer does not have to wait for approval from the Department before using it.

A file and use filing does not mean the company can submit anything it wants. The submission still must comply with the law, regulations, and bulletins.

If the wording on a health insurance policy (or other form) conflicts with Alaska state law, the policy will be amended to minimum conformity with state statutes.

Record maintenance

Complete and accurate records must be kept at the producer’s place of business for a minimum of 3 years. The records must show every contract placed, the named insured, changes or amendments, and premiums received with each transaction. Records may be inspected at any time by the DOI or any representative appointed on its behalf.

Fraudulent producer representation

An insurance producer who represents to the public that they are licensed to conduct insurance business in Alaska, but has not passed the appropriate licensing examination, is in violation of regulation. This includes any public communication, such as advertisements, letterheads, circulars, business cards, and other methods of representation.

A producer found guilty of conducting business in Alaska in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.

Misrepresentation

• Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited.

• Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.

• Providing inaccurate or incomplete information with the sole purpose of inducing lapse, exchange, conversion, forfeiture, or surrender is a violation as well (twisting).

According to the Alaska Department of Law, penalties for insurance fraud can include imprisonment for up to 10 years and/or a fine of up to $100,000 for individuals, as well as potential civil penalties and restitution. Companies may also face fines and other sanctions if found guilty of insurance fraud.

False advertising

Communication through newspapers, magazines, radio, or television that is intended to deliver false information in reference to insurance is a violation of NAIC regulation.

Defamation

• The intentional and malicious circulation of written or oral information intended for the direct or indirect dissemination of derogatory statements is prohibited.

• Publishing and circulating inaccurate information regarding the financial condition of an insurer, person, or competitor in the insurance industry is a violation of NAIC regulation.

Boycott, coercion and intimidation

Participation in any boycott or activity involving coercion and intimidation for the sole purpose of retaining business, or that results in a monopoly of insurance business, is prohibited.

False financial statements

Any licensed producer who makes false statements containing inaccurate material facts, or who makes false statements on an application for insurance, is in violation of NAIC regulation.

Illegal inducements

In Alaska, it is prohibited to induce the purchase of insurance by offering anything with a monetary value in excess of $10. It is also prohibited to accept anything with a monetary value in excess of $10 from a client. Any producer who participates in this activity is subject to suspension of their license and a monetary fine.

Unfair discrimination

Discriminating on the basis of class, race, marital status, or sexual preference is a violation of regulation. Any unfair discriminatory practices intended to directly or indirectly favor an applicant or insured are prohibited. Denying insurance coverage based on the blindness or partial blindness of an individual is considered discrimination and is a violation of NAIC regulation.

Errors & omissions

Errors & Omissions (E&O) insurance is a type of professional liability insurance that protects insurance agents if they are sued for negligent performance of their duties. E&O covers negligence and unintentional mistakes that cause financial harm to clients. It does not cover intentional misconduct, criminal acts, or regulatory fines.

Children covered as dependents

Newborn children must be covered as a dependent from the moment of birth by their parent’s policy. Adopted children (even unborn) are covered by the adoptive parent’s policy from the moment the adoption becomes legal. The newborn or newly adopted child may be enrolled within 30 days without any pre-existing condition limitations.

A dependent child may remain on a parent’s policy until age 26, regardless of student status. However, a mentally or physically handicapped child (any age) can be covered as a dependent on their parents policy until they become self supporting.

Rebating

Alaska licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance.

Furthermore, producers in Alaska are also prohibited from receiving any payment for the sale, solicitation or negotiation of insurance outside of commissions and/or salary.

Sidenote

Know this...

To “solicit” or “negotiate” insurance implies that the person is licensed.

Sharing commission

The splitting or sharing of commissions with a licensed producer is allowed. Both parties must be licensed in the line of business in which the proposed commission is to be split.

An unlicensed person may 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.

Twisting

Providing false information or expressing derogatory ideas about the financial conditions of a competitor company with the intent to lapse or surrender an existing policy is a violation of the law. Any written or oral statements used to induce the lapse, termination, exchange, or surrender of an insurance contract based on inaccurate information are prohibited.

Unfair marketing practices

The DOI is responsible for establishing minimum standards for full and fair disclosure of policy content. The DOI also requires standardization and simplification of the terms used to describe insurance coverage. Advertising may not involve the following:

• Any implication that policies are approved or that the financial condition of a company is endorsed by any government agency or by any independent group, individual, organization, or society.

• Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.

Gramm-Leach Bliley Act (GLBA)

This law repealed the Glass-Steagall Act of 1933, allowing consolidation of commercial banks, investment institutions, and insurance companies. GLBA established a framework of responsibilities for federal and state regulators for these financial industries. It permits financial services companies to merge and engage in a variety of new business activities, including insurance, while attempting to address the regulatory issues raised by such combinations.

McCarran-Ferguson Act

Federal law signed in 1945 in which Congress declared that the insurance industry would be regulated at the state level. Grants insurers a limited exemption from federal antitrust legislation.

National Association of Insurance Commissioners (NAIC)

The U.S. standard-setting and regulatory support organization is created and governed by the chief insurance regulators from the 50 states, the District of Columbia, and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.

Fair Credit Reporting Act of 1971

The Fair Credit Reporting Act (FCRA) is a federal law that regulates how consumer reporting agencies collect, share, and use personal data. It applies to insurance underwriting when insurers obtain consumer reports such as credit history, MIB files, or investigative consumer reports.

If an insurer takes adverse action, such as denying coverage or charging higher premiums, based on a consumer report, the applicant must be notified within 3 business days. The applicant then has 60 calendar days to request a copy of the report and dispute any incorrect or incomplete information.

Privacy Act of 1974

The Privacy Act of 1974 is a federal law that regulates how U.S. government agencies handle personal information. It applies only to federal agencies, not to private insurance companies.

When an applicant signs an insurance application, they typically give consent for the insurer to access consumer reports such as MIB files, credit reports, and investigative consumer reports. This process is regulated by the Fair Credit Reporting Act, not the Privacy Act.

A signed application generally authorizes the insurer to access this information for up to 30 months. If the report is not obtained within that time, a new authorization must be secured. This rule comes from the Fair Credit Reporting Act.

Telemarketing

The DO NOT CALL registry is a list of telephone numbers, and it is intended to prevent calls from telemarketers. Unsolicited sales calls must be made in accordance with the following provisions:

• No call may be placed outside of the hours of 8 am to 9 pm local time where the call is received.

• The sales nature of the call must be disclosed and the nature of the product/service being offered must be disclosed.

• The caller must identify themselves and the broker/dealer they represent.

• If a prize is being offered, the prize cannot be contingent on purchase.

CAN-Spam

When an unsolicited e-mail is sent the sender must:

• Use the word advertisement or the letters ADV on the subject line.

• Notate the physical location from where the email originated.

• Give the recipient the opportunity to opt out of ever receiving another email from the sender.