Alaska Surplus Lines key terms

Coverage placed with an insurer that is not licensed in Alaska, used only when authorized insurers decline or cannot provide the needed coverage. It fills gaps the admitted market leaves open.

An insurance company holding a certificate of authority from the Alaska Division of Insurance to transact business in the state. Admitted insurers are subject to rate filing, guaranty fund protection, and full market conduct oversight.

An insurer that has not received a certificate of authority from Alaska regulators. Such insurers may lawfully accept surplus lines placements only through a licensed surplus lines broker when statutory conditions are satisfied.

A non-admitted insurer that meets Alaska's standards for financial strength, management, and reporting, allowing it to be used for surplus lines placements. Eligibility is determined by the Division and reviewed periodically.

An insurer organized under the laws of a country other than the United States. To write Alaska surplus lines, an alien insurer must appear on the Division's eligible list and typically maintain a U.S. trust fund.

A mandated pool of assets held in trust in the United States for the protection of domestic policyholders. Alien and certain other non-admitted insurers must maintain qualifying trust assets to be eligible in Alaska.

A person licensed by Alaska to negotiate and place insurance with eligible non-admitted insurers. The broker must hold the required license, appointment, and bond, and must document a diligent search before placement.

The authorization issued by the Alaska Division of Insurance permitting a producer to transact surplus lines business. Applicants generally must already hold a property and casualty producer license and satisfy additional requirements.

A surety bond a surplus lines broker must maintain as a condition of licensure, payable to the state for the protection of policyholders and the public. The bond amount is set by Alaska statute or regulation.

The formal notification an insurer or managing general agent files with the state identifying a producer as authorized to act on its behalf. Surplus lines brokers must be appointed by the eligible insurer they place business with.

The documented effort a surplus lines broker must make among authorized insurers to obtain the requested coverage before placing it with a non-admitted insurer. It usually requires contacting multiple admitted markets and recording the results.

A refusal by an authorized insurer to write the coverage requested, or to offer it on terms the insured needs. Declinations from admitted markets are the evidence that justifies a surplus lines placement.

The broker's written file documenting which admitted insurers were approached, the dates, the coverage requested, and each insurer's response. It must be retained and made available to the Division on request.

A signed statement by the surplus lines broker confirming that the insured's coverage could not be procured from authorized insurers and that the placement meets statutory conditions. Some states require it on a prescribed form.

A state-maintained list of coverages that may be placed with non-admitted insurers with a reduced or waived diligent search requirement. Placement of listed coverages is presumed to satisfy the search obligation.

A tax imposed on surplus lines premiums written in Alaska, collected by the surplus lines broker and remitted to the state. Rates and filing schedules are set by statute, and the broker is personally responsible for payment.

The periodic report a surplus lines broker submits to Alaska showing taxable premiums, the tax due, and supporting policy detail. Late or inaccurate filings can trigger penalties and interest against the broker.

The obligation to keep complete surplus lines transaction records, including applications, declinations, policy documents, and tax filings, for the period Alaska law specifies. Records must be open to examination by the Division.

A written disclosure given to the insured explaining that the coverage is placed with a non-admitted insurer not protected by the state guaranty fund and not subject to the same regulatory oversight as admitted insurers.

A mechanism, where established, that may pay certain unpaid claims of insolvent eligible surplus lines insurers. Coverage is narrower than the admitted insurer guaranty association and many claims are excluded.

The entity that pays covered claims of insolvent admitted insurers doing business in Alaska. Surplus lines policies generally fall outside its protection, which is why policyholders receive a non-admitted insurer notice.

The legal obligation of a surplus lines broker to act in the insured's best interest and to hold and account for client and premium funds honestly. Premiums collected are trust funds, not the broker's operating money.

A segregated bank account in which a surplus lines broker deposits premiums collected from insureds before remitting them to insurers or the state. Commingling with business or personal funds is prohibited.

Mixing client premium funds with the broker's own business or personal money in one account. It is an unfair trade practice and a breach of fiduciary duty, even if the client's money is later restored.

A prohibited business act such as misrepresentation, false advertising, twisting, or improper claims settlement. Alaska insurance law defines these acts and authorizes penalties against licensees who commit them.

Making a false or misleading statement about the terms, benefits, or status of an insurance policy. For surplus lines, failing to disclose the insurer's non-admitted status can itself be a misrepresentation.

Inducing a policyholder to lapse, surrender, or replace coverage through misleading or incomplete comparisons. It is an unfair trade practice regardless of whether the replacement policy is actually better.

Offering part of a commission or other inducement to a client to buy insurance, outside what the policy or law allows. It is generally prohibited as an unfair trade practice in Alaska.

The act of arranging coverage with an eligible non-admitted insurer after a diligent search. Placement includes submitting the application, confirming the insurer's eligibility, and delivering the policy and notices.

The license the Division of Insurance issues to an insurer permitting it to transact insurance in Alaska. An insurer without one is unauthorized and can write only through the surplus lines process.

A person licensed to sell, solicit, or negotiate insurance. A producer who wishes to place surplus lines must obtain the separate surplus lines license and meet its additional requirements.

An entity authorized by an insurer to manage part or all of its business, including appointing producers and binding coverage. MGAs acting for eligible surplus lines insurers must be identified and properly authorized.

The act of placing insurance with a non-admitted insurer without a surplus lines license, a diligent search, or the required notices. It exposes the person to penalties and the insured to unenforceable coverage.

The Alaska state agency that regulates insurers and producers, maintains the eligible surplus lines insurer list, and enforces insurance statutes and regulations. It also audits premium tax filings and broker records.

The body of Alaska statutes and regulations governing non-admitted insurance, including eligibility, diligent search, broker licensing, premium tax, and disclosure obligations. It is the framework a surplus lines broker must follow.

An independent assessment of an insurer's ability to pay claims, used by regulators to decide surplus lines eligibility. Alaska generally requires eligible non-admitted insurers to maintain a minimum acceptable rating.

The duty of the surplus lines broker and eligible insurer to respond to and settle covered claims fairly and promptly, following Alaska unfair claims practice rules. The broker must help the insured reach the non-admitted insurer.

Ongoing coursework a licensed surplus lines broker must complete to renew the license, covering insurance law, ethics, and product knowledge. Alaska sets the credit hours and reporting deadlines by regulation.

The portion of continuing education and professional conduct rules that addresses honest dealing, conflicts of interest, and fair treatment of policyholders. Violations can lead to license suspension or revocation.