1994 Alaska Statutes
TITLE 21 INSURANCE
Chapter 21.80. ALASKA INSURANCE GUARANTY ASSOCIATION ACT
Sec. 21.80.060. POWERS AND DUTIES OF THE ASSOCIATION.

(a) The association

(1) is obligated to the extent of the covered claims existing before the determination of insolvency and arising within 30 days after the determination of insolvency by a court of competent jurisdiction if the insolvent insurer or receiver ceases to pay any or all claims while preparing and adopting a plan of liquidation or having entered into a plan of liquidation approved by the court under AS 21.78, or before the policy expiration date if less than 30 days after the determination, or before the insured replaces the policy or causes its cancellation if the insured does so within 30 days of the determination, but this obligation includes only that amount of each covered claim that is in excess of $100 and is less than $500,000, except that the association shall pay the full amount of any covered claim arising out of a workers' compensation policy; in no event is the association obligated to a policyholder or claimant in an amount in excess of the obligation of the insolvent insurer under the policy from which the claim arises;

(2) is considered the insurer to the extent of its obligation on the covered claims and to that extent has all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent;

(3) shall allocate claims paid and expenses incurred among the three accounts separately, and assess member insurers separately for each account amounts necessary to pay the obligation of the association under (1) of this subsection subsequent to an insolvency, the expenses of handling covered claims subsequent to an insolvency, the cost of examinations under AS 21.80.110 , and other expenses authorized by this chapter; the assessments of each member insurer must be in the proportion that the net direct written premiums of the member insurer for the preceding calendar year on the kinds of insurance in the account bears to the net direct written premiums of all member insurers for the preceding calendar year on the kinds of insurance in the account; each member insurer shall be notified of the assessment not later than 30 days before it is due; a member insurer may not be assessed in any year on any account an amount greater than two per cent of the member insurer's net direct written premiums for the preceding calendar year on the kinds of insurance in the account; if the maximum assessment, together with the other assets of the association in any account, does not provide in any one year in any account an amount sufficient to make all necessary payments from that account, the funds available shall be prorated and the unpaid portion shall be paid as soon thereafter as funds become available; the association may exempt or defer, in whole or in part, an assessment of any member insurer, if the assessment would endanger the ability of the member insurer to fulfill the insurer's contractual obligations or cause the member insurer's financial statement to reflect amounts of capital or surplus less than the minimum amounts required for a certificate of authority by any jurisdiction in which the member insurer is authorized to transact insurance; each member insurer may set off against an assessment, authorized payments made on covered claims and expenses incurred in the payment of these claims by the member insurer if they are chargeable to the account for which the assessment is made;

(4) shall investigate claims brought against the association and adjust, compromise, settle, and pay covered claims to the extent of the association's obligation and deny all other claims and may review settlements, releases, and judgments to which the insolvent insurer or its insureds were parties to determine the extent to which settlements, releases, and judgments may be properly contested;

(5) shall notify persons under AS 21.80.080 (b)(1);

(6) shall handle claims through its employees or through one or more insurers or other persons designated as servicing facilities; a servicing facility shall operate and maintain its principal office in this state unless the use of a servicing facility located outside of the state would result in operating cost savings of at least 10 percent and would not result in material delay in claim payments; designation of a servicing facility is subject to the approval of the director, but designation may be declined by a member insurer;

(7) shall reimburse each servicing facility for obligations of the association paid by the facility and for expenses incurred by the facility while handling claims on behalf of the association and shall pay the other expenses of the association authorized by this chapter.

(b) The association may

(1) employ or retain those persons necessary to handle claims and perform other duties of the association;

(2) borrow funds necessary to effect the purposes of this chapter in accord with the plan of operation;

(3) sue or be sued;

(4) negotiate and become a party to those contracts as are necessary to carry out the purposes of this chapter;

(5) perform all other acts necessary or proper to effectuate the purposes of this chapter;

(6) refund to the member insurers in proportion to the contribution of each member insurer to that account that amount by which the assets of the account exceed the liabilities if, at the end of any calendar year, the board of directors finds that the assets of the association in any account exceed the liabilities of that account as estimated by the board of directors for the coming year;

(7) appear in, defend, and appeal any action on a claim brought against the association.