Alaska 2025-2026 Regular Session

Alaska Senate Bill SB11 Compare Versions

Only one version of the bill is available at this time.

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11	11	SENATE BILL NO. 11
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13	13	IN THE LEGISLATURE OF THE STATE OF ALASKA
14	14
15	15	THIRTY-FOURTH LEGISLATURE - FIRST SESSION
16	16
17	17	BY SENATOR STEDMAN
18	18
19	19	Introduced: 1/10/25
20	20	Referred: Prefiled
21	21
22	22
23	23	A BILL
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25	25	FOR AN ACT ENTITLED
26	26
27	27	"An Act relating to flood insurance; relating to property insurance; establishing the 1
28	28	Alaska Flood Authority and the Alaska flood insurance fund; and providing for an 2
29	29	effective date." 3
30	30	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 4
31	31	* Section 1. AS 21.39.030(a) is amended to read: 5
32	32	(a) Rates, including loss costs under AS 21.39.043 or any other provision of 6
33	33	law, shall be made in accordance with the following provisions: 7
34	34	(1) rates may [SHALL] not be excessive, inadequate, or unfairly
35	35	8
36	36	discriminatory; 9
37	37	(2) consideration shall be given to past and prospective loss experience 10
38	38	inside and outside this state; to the conflagration and catastrophe hazards; to a 11
39	39	reasonable margin for underwriting profit and contingencies; to dividends, savings, or 12
40	40	unabsorbed premium deposits allowed or returned by insurers to their policyholders, 13
41	41	members, or subscribers; to past and prospective expenses both countrywide and those 14 34-LS0134\A
42	42	SB 11 -2- SB0011A
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45	45	specially applicable to this state; and to all other relevant factors inside and outside 1
46	46	this state; 2
47	47	(3) the systems of expense provisions included in the rates for use by 3
48	48	an insurer or group of insurers may differ from those of other insurers or groups 4
49	49	[GROUP] of insurers to reflect the requirements of the operating methods of the 5
50	50	insurer or group of insurers with respect to any kind of insurance, or with respect to a 6
51	51	subdivision or combination thereof for which subdivision or combination separate 7
52	52	expense provisions are applicable; 8
53	53	(4) risks may be grouped by classifications for the establishment of 9
54	54	rates and minimum premiums; classification rates may be modified to produce rates 10
55	55	for individual risks in accordance with rating plans that establish standards for 11
56	56	measuring variations in hazards or expense provisions, or both; the standards may 12
57	57	measure any differences among risks that can be demonstrated to have a probable 13
58	58	effect on [UPON] losses or expenses; 14
59	59	(5) in the case of fire insurance rates, consideration may be given to 15
60	60	the experience of the fire insurance business during a period of not more than the most 16
61	61	recent five-year period for which experience is available; 17
62	62	(6) when there is an established program to inspect new and existing 18
63	63	dwellings and the program has been certified by the director as likely to reduce the 19
64	64	incidence of fires in inspected dwellings, then in any rate plan used in this state, 20
65	65	dwellings that have been found by the inspection to meet the standards established by 21
66	66	the program shall have credits applied to the rate in amounts approved by the director; 22
67	67	(7) in the case of flood insurance rates, primary consideration shall 23
68	68	be given to actual historical flood and damage data on the real and personal 24
69	69	property proposed to be insured. 25
70	70	* Sec. 2. AS 21.39.030(c) is amended to read: 26
71	71	(c) In this section, 27
72	72	(1) "dwelling" means a residential structure containing not more than 28
73	73	four family living units; 29
74	74	(2) "flood" means 30
75	75	(A) a general and temporary condition of partial or 31 34-LS0134\A
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79	79	complete inundation of normally dry land area from 1
80	80	(i) overflow of inland or tidal water; 2
81	81	(ii) unusual and rapid accumulation or runoff of 3
82	82	surface water from any source; 4
83	83	(iii) snow or ice melt; 5
84	84	(iv) an atmospheric river; or 6
85	85	(v) mudflow; or 7
86	86	(B) the collapse or subsidence of land along the shore of a 8
87	87	lake or similar body of water because of erosion or undermining caused 9
88	88	by waves or currents of water exceeding anticipated cyclical levels that 10
89	89	results in a condition described in (A) of this paragraph. 11
90	90	* Sec. 3. AS 21.60 is amended by adding new sections to read: 12
91	91	Article 2. Alaska Flood Authority. 13
92	92	Sec. 21.60.100. Creation; membership; information from members. The 14
93	93	Alaska Flood Authority is created to increase the availability of flood insurance in the 15
94	94	state. The authority is a nonprofit incorporated legal entity. The membership of the 16
95	95	authority consists of all insurers licensed to transact property insurance business in the 17
96	96	state. As a condition of transacting property insurance business in the state, an insurer 18
97	97	shall 19
98	98	(1) maintain membership in the authority; 20
99	99	(2) submit reports and provide information required by the board or the 21
100	100	director to implement AS 21.60.100 - 21.60.300. 22
101	101	Sec. 21.60.110. Board; organization; report. (a) The board of the authority 23
102	102	consists of 24
103	103	(1) three members, selected by authority members, who represent 25
104	104	insurers licensed to transact property insurance business in the state, subject to 26
105	105	approval by the director; 27
106	106	(2) two members, selected by the director, who represent consumers of 28
107	107	property insurance required by the federal government to obtain flood insurance in a 29
108	108	special flood hazard area; 30
109	109	(3) one member, selected by the director, who represents the private 31 34-LS0134\A
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113	113	banking and mortgage industry in the state; and 1
114	114	(4) one member, selected by the director, who represents the Alaska 2
115	115	Housing Finance Corporation. 3
116	116	(b) The director is a nonvoting ex officio member of the board. In approving 4
117	117	members of the board under (a)(1) of this section, the director shall consider, among 5
118	118	other things, whether all types of authority members are fairly represented. 6
119	119	(c) A member of the board serves for a term of three years and may be 7
120	120	reappointed to an unlimited number of terms. The term of a board member shall 8
121	121	continue until a successor is appointed. 9
122	122	(d) At authority meetings, an authority member is entitled to one vote in 10
123	123	person or by proxy. At board meetings, a board member is entitled to one vote in 11
124	124	person or by proxy. 12
125	125	(e) The authority may reimburse a member of the board for expenses incurred 13
126	126	as a result of board activities but may not otherwise compensate a member of the 14
127	127	board for services. The costs of conducting meetings of the authority and the board are 15
128	128	the responsibility of the members of the authority. 16
129	129	(f) On or before September 1 of each year, the board shall prepare a report 17
130	130	reviewing the operations of the previous year and deliver the report to the state's 18
131	131	congressional delegation, the governor, the senate secretary, and the chief clerk of the 19
132	132	house of representatives and notify the legislature that the report is available. In the 20
133	133	report, the board shall 21
134	134	(1) analyze the effectiveness of the operations of the authority and 22
135	135	insurance program under AS 21.60.100 - 21.60.300; 23
136	136	(2) evaluate the benefits of the insurance program under AS 21.60.100 24
137	137	- 21.60.300 as compared to 42 U.S.C. 4001 - 4131 (National Flood Insurance Act) for 25
138	138	property owners and communities in the state; and 26
139	139	(3) identify penalties or sanctions imposed or potentially imposed on 27
140	140	individuals and communities in the state by the federal government under 42 U.S.C. 28
141	141	4001 - 4131 (National Flood Insurance Act). 29
142	142	Sec. 21.60.120. Powers of the authority. The authority may 30
143	143	(1) exercise the powers granted to insurers under the laws of the state; 31 34-LS0134\A
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147	147	(2) sue or be sued; 1
148	148	(3) enter into contracts with insurers, similar authorities in other states, 2
149	149	or other persons for the performance of administrative functions; 3
150	150	(4) establish administrative and accounting procedures for the 4
151	151	operation of the authority; and 5
152	152	(5) receive funds from sources other than members of the authority. 6
153	153	Sec. 21.60.130. Plan of operation. (a) The authority shall submit to the 7
154	154	director a plan of operation to ensure the fair, reasonable, and equitable administration 8
155	155	of the authority. The authority may submit amendments to the plan of operation to the 9
156	156	director. The plan of operation and amendments become effective upon approval in 10
157	157	writing by the director. 11
158	158	(b) Each member of the authority shall comply with the plan of operation. 12
159	159	(c) The plan of operation must contain the following: 13
160	160	(1) procedures for the performance of all the powers and duties of the 14
161	161	authority under AS 21.60.100 - 21.60.300; 15
162	162	(2) procedures for handling assets of the authority; 16
163	163	(3) the amount of reimbursement and method for reimbursing 17
164	164	members of the board under AS 21.60.110(e); 18
165	165	(4) the regular places and times at which meetings of the board will 19
166	166	take place; 20
167	167	(5) record-keeping procedures for all financial transactions of the 21
168	168	authority, agents of the authority, and the board; 22
169	169	(6) a provision stating that a member of the authority aggrieved by a 23
170	170	final action or decision of the authority may appeal to the director within 30 days after 24
171	171	the action or decision is made; 25
172	172	(7) procedures for submitting board member selections to the director 26
173	173	for approval; 27
174	174	(8) additional provisions necessary or proper for the execution of the 28
175	175	powers and duties of the authority. 29
176	176	Sec. 21.60.140. Administrative Procedure Act. The authority is exempt from 30
177	177	AS 44.62 (Administrative Procedure Act). 31 34-LS0134\A
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181	181	Sec. 21.60.150. Tax exemption. The authority is exempt from the payment of 1
182	182	fees and taxes levied by the state or any of its political subdivisions except taxes levied 2
183	183	on real or personal property or under AS 21.09.210. 3
184	184	Sec. 21.60.160. Types of insurance plans. The authority shall make available 4
185	185	to a person who is eligible for coverage under AS 21.60.100 - 21.60.300 at least one 5
186	186	state plan of flood insurance. The authority may not refuse coverage under a state plan 6
187	187	to a person who is eligible under AS 21.60.100 - 21.60.300, applies for coverage, and 7
188	188	pays the required premium. 8
189	189	Sec. 21.60.170. Coverage and terms of state flood insurance plan. (a) 9
190	190	Except as provided in (b) of this section, the coverage of a flood insurance plan 10
191	191	offered under AS 21.60.160 shall be the same as the coverage provided under a 11
192	192	standard flood insurance policy offered by the National Flood Insurance Program 12
193	193	established by 42 U.S.C. 4001 - 4131 (National Flood Insurance Act), including 13
194	194	minimum amounts of coverage, deductibles, exclusions, and conditions. 14
195	195	(b) A flood insurance plan must set the maximum amount of coverage for a 15
196	196	residential property at $1,000,000 and the maximum amount of coverage for a 16
197	197	commercial property at $2,000,000. A flood insurance plan may not include a 17
198	198	requirement that a flood must inundate a certain amount of normally dry land area or 18
199	199	properties to be covered. 19
200	200	(c) The terms of a plan offered under AS 21.60.160 must contain 20
201	201	(1) a requirement to provide the notice of cancellation or nonrenewal 21
202	202	required by AS 21.36.220 and 21.36.240 to 22
203	203	(A) the insured; and 23
204	204	(B) the regulated lending institution or federal agency lender; 24
205	205	(2) a mortgage interest clause similar to the clause contained in a 25
206	206	standard flood insurance policy under the National Flood Insurance Program; 26
207	207	(3) notwithstanding AS 09.10.053, a provision requiring an insured to 27
208	208	file suit not later than one year after the date of a written denial of all or part of a claim 28
209	209	under the policy; and 29
210	210	(4) cancellation provisions that are as restrictive as the provisions 30
211	211	contained in a standard flood insurance policy under the National Flood Insurance 31 34-LS0134\A
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215	215	Program. 1
216	216	Sec. 21.60.180. State plan premiums. (a) The authority may not charge a rate 2
217	217	for flood insurance coverage that is excessive, inadequate, or unfairly discriminatory. 3
218	218	(b) The board shall determine flood insurance premium rates by primarily 4
219	219	considering the actual historical flood and damage data on the real and personal 5
220	220	property proposed to be insured. The board shall submit premium rates to the director 6
221	221	for approval before use. 7
222	222	(c) The board may retain an actuary or other consultant as may be necessary to 8
223	223	determine flood insurance premium rates and to perform other assigned duties. 9
224	224	Sec. 21.60.190. Duties of authority. (a) The authority shall perform the 10
225	225	administrative and claims payment functions required by this section. 11
226	226	(b) The authority shall provide to all eligible persons enrolled in a state plan a 12
227	227	policy setting out a statement of the insurance protection to which the person is 13
228	228	entitled, with whom claims are to be filed, and to whom benefits are payable. The 14
229	229	policy must indicate that coverage was obtained through the authority. 15
230	230	(c) The authority shall submit to the director on a semiannual basis a report on 16
231	231	the plan of operation. The director shall determine the specific information the report 17
232	232	must contain. 18
233	233	(d) The authority shall pay claims and shall indicate when a claim is paid 19
234	234	under a state plan. A claim payment must include a telephone number that can be used 20
235	235	for inquiries regarding the claim. 21
236	236	Sec. 21.60.200. Funding for authority and insurance program; penalties. 22
237	237	(a) Each member of the authority shall share the losses of the insurance program 23
238	238	established under AS 21.60.100 - 21.60.300 insuring real and personal property and 24
239	239	improvements to real property within a special flood hazard area in the state. Each 25
240	240	member of the authority shall pay member dues. Dues under this section must be 26
241	241	sufficient to cover the operating and administrative expenses of the authority. The 27
242	242	board shall determine member dues under this section. 28
243	243	(b) In addition to the member dues collected under (a) of this section, the 29
244	244	board shall make an annual determination of each member's liabi
245	245	lity under (a) of this 30
246	246	section, if any, and may make an annual fiscal year end assessment if necessary to 31 34-LS0134\A
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250	250	operate the insurance program. The board may also provide for interim assessments 1
251	251	against the members as may be necessary to ensure the financial capability of the 2
252	252	authority to pay claims and operate the insurance program until the authority's next 3
253	253	annual fiscal year end assessment. The board may make assessments under this section 4
254	254	that are sufficient to operate the insurance program. The board may decline to levy an 5
255	255	assessment against a member if the assessment would be minimal. 6
256	256	(c) Payment of an assessment is due within 30 days after a member receives 7
257	257	written notice of a fiscal year end or interim assessment. A member that no longer 8
258	258	does business in the state remains liable for assessments until the board determines 9
259	259	under (b) of this section that no assessment is due. Assessments paid by a member are 10
260	260	a general expense of the member. If a member fails to pay a fiscal year end or interim 11
261	261	assessment as required in this subsection, 12
262	262	(1) the member shall pay a civil penalty to the director in the amount 13
263	263	of $100 for each day the member fails to pay the required assessment; and 14
264	264	(2) the director may revoke the member's certificate of authority. 15
265	265	(d) If the total amount of member liability calculated under (b) of this section 16
266	266	is insufficient to satisfy a legally authorized claim against the insurance program under 17
267	267	AS 21.60.100 - 21.60.300, the legislature may appropriate up to a total of $5,000,000 18
268	268	from cash reserves of the Alaska Housing Finance Corporation to the Department of 19
269	269	Commerce, Community, and Economic Development to satisfy the unpaid claim. 20
270	270	Sec. 21.60.210. Eligibility for state flood insurance. A person determined by 21
271	271	the authority to have an insurable interest in insurable property is eligible to enroll in a 22
272	272	state plan described in AS 21.60.160. Additional eligibility requirements for 23
273	273	enrollment in a state plan may be imposed if approved by the director. 24
274	274	Sec. 21.60.220. Enrollment by an eligible person. A person may apply to 25
275	275	enroll in a state plan by applying to the authority. The application must include 26
276	276	(1) the name, address, and age of the applicant; 27
277	277	(2) a description of the property to be insured sufficient for the 28
278	278	authority to investigate and determine its insurability; 29
279	279	(3) a designation of the plan desired; and 30
280	280	(4) any other information requested by the authority. 31 34-LS0134\A
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284	284	Sec. 21.60.230. Response by the authority. Within 30 days after receiving the 1
285	285	application described in AS 21.60.220, the authority shall provide the applicant with 2
286	286	either a notice of rejection for failing to comply with the requirements of 3
287	287	AS 21.60.210 and 21.60.220 or a notice of acceptance. 4
288	288	Sec. 21.60.240. Effective date of insurance under a state plan. Insurance 5
289	289	under a state plan takes effect immediately upon receipt of the first premium if the 6
290	290	applicant otherwise complies with the requirements of AS 21.60.100 - 21.60.300. 7
291	291	Sec. 21.60.250. Solicitation of eligible persons. (a) The authority, under a 8
292	292	plan approved by the director, shall communicate to persons who reside or own 9
293	293	property in a special flood hazard area the existence of the state plan and the means of 10
294	294	enrollment. Means of communication may include electronic mail, use of the Internet, 11
295	295	press, radio, and television, as well as publication through appropriate state offices, 12
296	296	state publications, and Internet websites. 13
297	297	(b) A person may not sell or market a qualified state plan unless the person is 14
298	298	acting within the scope of a license issued in this state. 15
299	299	(c) An insurer that rejects or applies underwriting restrictions to an applicant 16
300	300	for a flood insurance policy in the state shall notify the applicant of the existence of 17
301	301	the state plan, the requirements for being accepted, and the procedure for applying. 18
302	302	Sec. 21.60.260. Duties of director; insurance program. The director shall 19
303	303	formulate general policy and, after notice and hearing, adopt regulations that are 20
304	304	reasonably necessary to administer AS 21.60.100 - 21.60.300. 21
305	305	Sec. 21.60.270. State not liable. The state is not liable for acts or omissions of 22
306	306	the authority under AS 21.60.100 - 21.60.300. 23
307	307	Sec. 21.60.280. Board member civil and criminal immunity. A member of 24
308	308	the board may not be held civilly or criminally liable for an act or omission if the act 25
309	309	or omission was in good faith and within the scope of the board member's duties under 26
310	310	AS 21.60.100 - 21.60.300. 27
311	311	Sec. 21.60.290. Alaska flood insurance fund. (a) The Alaska flood insurance 28
312	312	fund is established as a separate fund in the state treasury. Premiums, dues, and 29
313	313	assessments collected shall be separately accounted for and deposited into the fund. 30
314	314	Investment earnings and interest earned on the fund shall be retained in the fund. 31 34-LS0134\A
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318	318	(b) The legislature may appropriate the annual estimated balance in the fund to 1
319	319	the Department of Commerce, Community, and Economic Development to operate the 2
320	320	authority and fund the insurance program under AS 21.60.100 - 21.60.300. 3
321	321	(c) Payment for claims under the insurance program under AS 21.60.100 - 4
322	322	21.60.300 is subject to appropriation. 5
323	323	(d) Money in the fund does not lapse. 6
324	324	(e) Nothing in this section creates a dedicated fund. 7
325	325	(f) Money in the fund may be invested in the same manner and on the same 8
326	326	conditions as permitted for investment of money belonging to the state or held in the 9
327	327	treasury under AS 37.10.070. 10
328	328	Sec. 21.60.300. Definitions. In AS 21.60.100 - 21.60.300, 11
329	329	(1) "authority" means the Alaska Flood Authority; 12
330	330	(2) "board" means the board of the Alaska Flood Authority; 13
331	331	(3) "flood" means 14
332	332	(A) a general and temporary condition of partial or complete 15
333	333	inundation of normally dry land area from 16
334	334	(i) overflow of inland or tidal water; 17
335	335	(ii) unusual and rapid accumulation or runoff of surface 18
336	336	water from any source; 19
337	337	(iii) snow or ice melt; 20
338	338	(iv) an atmospheric river; or 21
339	339	(v) mudflow; or 22
340	340	(B) the collapse or subsidence of land along the shore of a lake 23
341	341	or similar body of water because of erosion or undermining caused by waves 24
342	342	or currents of water exceeding anticipated cyclical levels that results in a 25
343	343	condition described in (A) of this paragraph; 26
344	344	(4) "insurable interest" has the meaning given in AS 21.42.030; 27
345	345	(5) "insurable property" means real property located in a special flood 28
346	346	hazard area in the state and the personal property located on the real property; 29
347	347	(6) "property insurance" has the meaning given in AS 21.12.060; 30
348	348	(7) "special flood hazard area" means the land in a flood plain in a 31 34-LS0134\A
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352	352	community subject to a chance of flooding in any given year of one percent or greater 1
353	353	where federally mandated purchase of flood insurance applies. 2
354	354	* Sec. 4. AS 37.05.146(c) is amended by adding a new paragraph to read: 3
355	355	(88) assessments and civil penalties collected under AS 21.60.200. 4
356	356	* Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 5
357	357	read: 6
358	358	APPLICABILITY. Section 1 of this Act applies to an insurance policy or contract 7
359	359	entered into or renewed on or after the effective date of sec. 1 of this Act. 8
360	360	* Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 9
361	361	read: 10
362	362	TRANSITION: PLAN OF OPERATION. If the Alaska Flood Authority fails to 11
363	363	submit a suitable plan of operation by January 1, 2027, the director of the division of 12
364	364	insurance may adopt regulations to carry out the provisions of this Act. The director shall 13
365	365	repeal regulations superseded by a plan submitted by the authority and approved by the 14
366	366	director. 15
367	367	* Sec. 7. This Act takes effect July 1, 2026. 16