FLOOD INSURANCE

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SENATE BILL NO. 11

IN THE LEGISLATURE OF THE STATE OF ALASKA

THIRTY-FOURTH LEGISLATURE - FIRST SESSION

BY SENATORS STEDMAN, Bjorkman, Dunbar, Yundt

Introduced: 1/22/25
Referred: Labor and Commerce, Finance

A BILL

FOR AN ACT ENTITLED

"An Act relating to flood insuran ce; relating to property insur ance; establishing the 1
Alaska Flood Authority and the Alaska flood insurance fund; and providing for an 2
effective date." 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 4
* Section 1. AS 21.39.030(a) is amended to read: 5
(a) Rates, including loss costs under AS 21.39.043 or any othe r provision of 6
law, shall be made in accordance with the following provisions: 7
(1) rates may [SHALL] not be excessive, inadequate, or unfairly 8
discriminatory; 9
(2) consideration shall be given to past and prospective loss experience 10
inside and outside this state; t o the conflagration and catastr ophe hazards; to a 11
reasonable margin for underwriting profit and contingencies; to dividends, savings, or 12
unabsorbed premium deposits allowe d or returned by insurers to their policyholders, 13
members, or subscribers; to past and prospective expenses both countrywide and those 14
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specially applicable to this state; and to all other relevant f actors inside and outside 1
this state; 2
(3) the systems of expense provisions included in the rates fo r use by 3
an insurer or group of insurers may differ from those of other insurers or groups 4
[GROUP] of insurers to reflect t he requirements of the operatin g methods of the 5
insurer or group of insurers with respect to any kind of insura nce, or with respect to a 6
subdivision or combination thereo f for which subdivision or com bination separate 7
expense provisions are applicable; 8
( 4 ) r i s k s m a y b e g r o u p e d b y c l a s s i f i c a t i o n s f o r t h e e s t a b l i s h ment of 9
rates and minimum premiums; classification rates may be modifie d to produce rates 10
for individual risks in accordance with rating plans that estab lish standards for 11
measuring variations in hazards or expense provisions, or both; the standards may 12
measure any differences among risks that can be demonstrated to have a probable 13
effect on [UPON] losses or expenses; 14
(5) in the case of fire insurance rates, consideration may be given to 15
the experience of the fire insurance business during a period of not more than the most 16
recent five-year period for which experience is available; 17
(6) when there is an established program to inspect new and ex isting 18
dwellings and the program has been certified by the director as likely to reduce the 19
incidence of fires in inspected dwellings, then in any rate pla n used in this state, 20
dwellings that have been found by the inspection to meet the st andards established by 21
the program shall have credits applied to the rate in amounts approved by the director; 22
(7) in the case of flood insurance rates, primary consideration shall 23
be given to actual historical fl ood and damage data on the real and personal 24
property proposed to be insured. 25
* Sec. 2. AS 21.39.030(c) is amended to read: 26
(c) In this section, 27
(1) "dwelling" means a residential st ructure containing not more th an 28
four family living units; 29
(2) "flood" means 30
(A) a general and temporary condition of partial or 31
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complete inundation of normally dry land area from 1
(i) overflow of inland or tidal water; 2
( i i ) u n u s u a l a n d r a p i d a c c u m u l a t i o n o r r u n o f f o f 3
surface water from any source; 4
(iii) snow or ice melt; 5
(iv) an atmospheric river; or 6
(v) mudflow; or 7
(B) the collapse or subsidence of land along the shore of a 8
lake or similar body of water because of erosion or undermining c a us e d 9
by waves or currents of water exceeding anticipated cyclical le vels that 10
results in a condition described in (A) of this paragraph. 11
* Sec. 3. AS 21.60 is amended by adding new sections to read: 12
Article 2. Alaska Flood Authority. 13
Sec. 21.60.100. Creation; membership ; information from members. The 14
Alaska Flood Authority is created to increase the availability of flood insurance in the 15
state. The authority is a nonprofit incorporated legal entity. The membership of the 16
authority consists of all insurers licensed to transact propert y insurance business in the 17
state. As a condition of transacting property insurance busines s in the state, an insurer 18
shall 19
(1) maintain membership in the authority; 20
(2) submit reports and provide information required by the board or the 21
director to implement AS 21.60.100 - 21.60.300. 22
Sec. 21.60.110. Board; or ganization; report. (a) The board of the authority 23
consists of 24
(1) three members, selected by authority members, who represen t 25
insurers licensed to transact property insurance business in th e state, subject to 26
approval by the director; 27
(2) two members, selected by the director, who represent consumers of 28
property insurance required by the federal government to obtain flood insurance in a 29
special flood hazard area; 30
(3) one member, selected by the director, who represents the p rivate 31
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banking and mortgage industry in the state; and 1
(4) one member, selected by the director, who represents the A laska 2
Housing Finance Corporation. 3
(b) The director is a nonvoting ex officio member of the board . In approving 4
members of the board under (a)(1 ) of this section, the director shall consider, among 5
other things, whether all types of authority members are fairly represented. 6
(c) A member of the board serves for a term of three years and may be 7
reappointed to an unlimited numbe r of terms. The term of a boar d member shall 8
continue until a successor is appointed. 9
(d) At authority meetings, an authority member is entitled to one vote in 10
person or by proxy. At board meetings, a board member is entitl ed to one vote in 11
person or by proxy. 12
(e) The authority may reimburse a member of the board for expe nses incurred 13
as a result of board activities but may not otherwise compensat e a member of the 14
board for services. The costs of conducting meetings of the authority and the board are 15
the responsibility of the members of the authority. 16
(f) On or before September 1 of each year, the board shall pre pare a report 17
reviewing the operations of the previous year and deliver the r eport to the state's 18
congressional delegation, the governor, the senate secretary, a nd the chief clerk of the 19
house of representatives and notify the legislature that the re port is available. In the 20
report, the board shall 21
( 1 ) a n a l y z e t h e e f f e c t i v e n e s s o f the operations of the authori ty and 22
insurance program under AS 21.60.100 - 21.60.300; 23
(2) evaluate the benefits of the insurance program under AS 21 .60.100 24
- 21.60.300 as compared to 42 U.S.C. 4001 - 4131 (National Floo d Insurance Act) for 25
property owners and communities in the state; and 26
(3) identify penalties or sanctions imposed or potentially imp osed on 27
individuals and communities in the state by the federal governm ent under 42 U.S.C. 28
4001 - 4131 (National Flood Insurance Act). 29
Sec. 21.60.120. Powers of the authority. The authority may 30
(1) exercise the powers granted to insurers under the laws of the state; 31
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(2) sue or be sued; 1
(3) enter into contracts with insurers, similar authorities in other states, 2
or other persons for the performance of administrative functions; 3
(4) establish administrative a nd accounting procedures for the 4
operation of the authority; and 5
(5) receive funds from sources other than members of the authority. 6
Sec. 21.60.130. Plan of operation. (a) The authority shall submit to the 7
director a plan of operation to ensure the fair, reasonable, an d equitable administration 8
of the authority. The authority may submit amendments to the pl an of operation to the 9
director. The plan of operation and amendments become effective upon approval in 10
writing by the director. 11
(b) Each member of the authority shall comply with the plan of operation. 12
(c) The plan of operation must contain the following: 13
(1) procedures for the performance of all the powers and dutie s of the 14
authority under AS 21.60.100 - 21.60.300; 15
(2) procedures for handling assets of the authority; 16
(3) the amount of reimbursement and method for reimbursing 17
members of the board under AS 21.60.110(e); 18
(4) the regular places and times at which meetings of the boar d will 19
take place; 20
(5) record-keeping procedures f or all financial transactions o f the 21
authority, agents of the authority, and the board; 22
(6) a provision stating that a member of the authority aggriev ed by a 23
final action or decision of the authority may appeal to the dir ector within 30 days after 24
the action or decision is made; 25
(7) procedures for submitting board member selections to the d irector 26
for approval; 27
(8) additional provisions necessa ry or proper for the execution of the 28
powers and duties of the authority. 29
Sec. 21.60.140. Administrative Procedure Act. The authority is exempt from 30
AS 44.62 (Administrative Procedure Act). 31
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Sec. 21.60.150. Tax exemption. The authority is exempt from the payment of 1
fees and taxes levied by the state or any of its political subdivisions except taxes levied 2
on real or personal property or under AS 21.09.210. 3
Sec. 21.60.160. Types of insurance plans. The authority shall make available 4
to a person who is eligible for coverage under AS 21.60.100 - 2 1.60.300 at least one 5
state plan of flood insurance. The authority may not refuse cov erage under a state plan 6
to a person who is eligible under AS 21.60.100 - 21.60.300, app lies for coverage, and 7
pays the required premium. 8
Sec. 21.60.170. Coverage and terms of state flood insurance pla n. ( a ) 9
Except as provided in (b) of this section, the coverage of a fl ood insurance plan 10
offered under AS 21.60.160 shall be the same as the coverage pr ovided under a 11
standard flood insurance policy offered by the National Flood I nsurance Program 12
established by 42 U.S.C. 4001 - 4131 (National Flood Insurance Act), including 13
minimum amounts of coverage, deductibles, exclusions, and conditions. 14
(b) A flood insurance plan must set the maximum amount of cove rage for a 15
residential property at $1,000,000 and the maximum amount of co verage for a 16
commercial property at $2,000,000. A flood insurance plan may n ot include a 17
requirement that a flood must i nundate a certain amount of norm ally dry land area or 18
properties to be covered. 19
(c) The terms of a plan offered under AS 21.60.160 must contain 20
(1) a requirement to provide the notice of cancellation or non renewal 21
required by AS 21.36.220 and 21.36.240 to 22
(A) the insured; and 23
(B) the regulated lending institution or federal agency lender; 24
(2) a mortgage interest clause similar to the clause contained i n a 25
standard flood insurance policy under the National Flood Insurance Program; 26
(3) notwithstanding AS 09.10.053, a provision requiring an ins ured to 27
file suit not later than one year after the date of a written denial of all or part of a claim 28
under the policy; and 29
(4) cancellation provisions that are as restrictive as the pro visions 30
contained in a standard flood in surance policy under the Nation al Flood Insurance 31
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Program. 1
Sec. 21.60.180. State plan premiums. (a) The authority may not charge a rate 2
for flood insurance coverage that is excessive, inadequate, or unfairly discriminatory. 3
(b) The board shall determine flood insurance premium rates by primarily 4
considering the actual histori cal flood and damage data on the real and personal 5
property proposed to be insured. The board shall submit premium rates to the director 6
for approval before use. 7
(c) The board may retain an actuary or other consultant as may be necessary to 8
determine flood insurance premium rates and to perform other assigned duties. 9
Sec. 21.60.190. Duties of authority. ( a ) T h e a u t h o r i t y s h a l l p e r f o r m t h e 10
administrative and claims payment functions required by this section. 11
(b) The authority shall provide t o all eligible persons enrolled in a state plan a 12
policy setting out a statement of the insurance protection to w hich the person is 13
entitled, with whom claims are to be filed, and to whom benefit s are payable. The 14
policy must indicate that coverage was obtained through the authority. 15
(c) The authority shall submit to the director on a semiannual basis a report on 16
the plan of operation. The direct or shall determine the specifi c information the report 17
must contain. 18
(d) The authority shall pay claims and shall indicate when a c laim is paid 19
under a state plan. A claim payment must include a telephone nu mber that can be used 20
for inquiries regarding the claim. 21
Sec. 21.60.200. Funding for authority and insurance program; pe nalties. 22
(a) Each member of the authority shall share the losses of the insurance program 23
established under AS 21.60.100 - 21.60.300 insuring real and pe rsonal property and 24
improvements to real property within a special flood hazard are a in the state. Each 25
member of the authority shall pa y member dues. Dues under this section must be 26
sufficient to cover the operating and administrative expenses o f the authority. The 27
board shall determine member dues under this section. 28
(b) In addition to the member dues collected under (a) of this s e c t i o n , t h e 29
board shall make an annual deter mination of each member's liabi lity under (a) of this 30
section, if any, and may make a n annual fiscal year end assessm ent if necessary to 31
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operate the insurance program. T he board may also provide for i nterim assessments 1
against the members as may be necessary to ensure the financial capability of the 2
authority to pay claims and operate the insurance program until the authority's next 3
annual fiscal year end assessment. The board may make assessments under this section 4
that are sufficient to operate the insurance program. The board may decline to levy an 5
assessment against a member if the assessment would be minimal. 6
(c) Payment of an assessment is due within 30 days after a mem ber receives 7
written notice of a fiscal year end or interim assessment. A me mber that no longer 8
does business in the state remai ns liable for assessments until the board determines 9
under (b) of this section that no assessment is due. Assessments paid by a member are 10
a general expense of the member. If a member fails to pay a fis cal year end or interim 11
assessment as required in this subsection, 12
(1) the member shall pay a civil penalty to the director in th e amount 13
of $100 for each day the member fails to pay the required assessment; and 14
(2) the director may revoke the member's certificate of authority. 15
(d) If the total amount of member liability calculated under ( b) of this section 16
is insufficient to satisfy a legally authorized claim against the insurance program under 17
AS 21.60.100 - 21.60.300, the legislature may appropriate up to a total of $5,000,000 18
from cash reserves of the Alaska Housing Finance Corporation to the Department of 19
Commerce, Community, and Economic Development to satisfy the unpaid claim. 20
Sec. 21.60.210. Eligibility for state flood insurance. A person determined by 21
the authority to have an insurable interest in insurable property is eligible to enroll in a 22
state plan described in AS 21.60.160. Additional eligibility re quirements for 23
enrollment in a state plan may be imposed if approved by the director. 24
Sec. 21.60.220. Enrollment by an eligible person. A person may apply to 25
enroll in a state plan by applying to the authority. The application must include 26
(1) the name, address, and age of the applicant; 27
(2) a description of the property to be insured sufficient for the 28
authority to investigate and determine its insurability; 29
(3) a designation of the plan desired; and 30
(4) any other information requested by the authority. 31
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Sec. 21.60.230. Response by the authority. Within 30 days after receiving the 1
application described in AS 21.60.220, the authority shall prov ide the applicant with 2
either a notice of rejection for failing to comply with the req uirements of 3
AS 21.60.210 and 21.60.220 or a notice of acceptance. 4
Sec. 21.60.240. Effective date of in surance under a state plan. Insurance 5
under a state plan takes effect immediately upon receipt of the first premium if the 6
applicant otherwise complies with the requirements of AS 21.60.100 - 21.60.300. 7
Sec. 21.60.250. Solicitation of eligible persons. (a) The authority, under a 8
plan approved by the director, sh all communicate to persons who reside or own 9
property in a special flood hazard area the existence of the st ate plan and the means of 10
enrollment. Means of communication may include electronic mail, use of the Internet, 11
press, radio, and television, as well as publication through ap propriate state offices, 12
state publications, and Internet websites. 13
(b) A person may not sell or market a qualified state plan unl ess the person is 14
acting within the scope of a license issued in this state. 15
(c) An insurer that rejects or applies underwriting restrictio ns to an applicant 16
for a flood insurance policy in the state shall notify the appl icant of the existence of 17
the state plan, the requirements for being accepted, and the procedure for applying. 18
Sec. 21.60.260. Duties of director; insurance program. The director shall 19
formulate general policy and, after notice and hearing, adopt r egulations that are 20
reasonably necessary to administer AS 21.60.100 - 21.60.300. 21
Sec. 21.60.270. State not liable. The state is not liable for acts or omissions of 22
the authority under AS 21.60.100 - 21.60.300. 23
Sec. 21.60.280. Board member civil and criminal immunity. A member of 24
the board may not be held civilly or criminally liable for an a ct or omission if the act 25
or omission was in good faith and within the scope of the board member's duties under 26
AS 21.60.100 - 21.60.300. 27
Sec. 21.60.290. Alaska flood insurance fund. (a) The Alaska flood insurance 28
fund is established as a separate fund in the state treasury. P remiums, dues, and 29
assessments collected shall be separately accounted for and dep osited into the fund. 30
Investment earnings and interest earned on the fund shall be retained in the fund. 31
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(b) The legislature may appropriate the annual estimated balance in the fund to 1
the Department of Commerce, Community, and Economic Development to operate the 2
authority and fund the insurance program under AS 21.60.100 - 21.60.300. 3
(c) Payment for claims under the insurance program under AS 21 .60.100 - 4
21.60.300 is subject to appropriation. 5
(d) Money in the fund does not lapse. 6
(e) Nothing in this section creates a dedicated fund. 7
(f) Money in the fund may be invest ed in the same manner and o n the same 8
conditions as permitted for investment of money belonging to th e state or held in the 9
treasury under AS 37.10.070. 10
Sec. 21.60.300. Definitions. In AS 21.60.100 - 21.60.300, 11
(1) "authority" means the Alaska Flood Authority; 12
(2) "board" means the board of the Alaska Flood Authority; 13
(3) "flood" means 14
(A) a general and temporary condition of partial or complete 15
inundation of normally dry land area from 16
(i) overflow of inland or tidal water; 17
(ii) unusual and rapid accumul ation or runoff of surface 18
water from any source; 19
(iii) snow or ice melt; 20
(iv) an atmospheric river; or 21
(v) mudflow; or 22
(B) the collapse or subsidence of land along the shore of a la ke 23
or similar body of water because of erosion or undermining caus ed by waves 24
or currents of water exceeding anticipated cyclical levels that r e s u l t s i n a 25
condition described in (A) of this paragraph; 26
(4) "insurable interest" has the meaning given in AS 21.42.030; 27
(5) "insurable property" means real property located in a spec ial flood 28
hazard area in the state and the personal property located on the real property; 29
(6) "property insurance" has the meaning given in AS 21.12.060; 30
(7) "special flood hazard area" means the land in a flood plai n in a 31
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community subject to a chance of flooding in any given year of one percent or greater 1
where federally mandated purchase of flood insurance applies. 2
* Sec. 4. AS 37.05.146(c) is amended by adding a new paragraph to read: 3
(88) assessments and civil penalties collected under AS 21.60.200. 4
* Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 5
read: 6
APPLICABILITY. Section 1 of this Act applies to an insurance po licy or contract 7
entered into or renewed on or after the effective date of sec. 1 of this Act. 8
* Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 9
read: 10
TRANSITION: PLAN OF OPERATION. If the Alaska Flood Authority fa ils to 11
submit a suitable plan of operation by January 1, 2027, the dir ector of the division of 12
insurance may adopt regulations to carry out the provisions of this Act. The director shall 13
repeal regulations superseded by a plan submitted by the author ity and approved by the 14
director. 15
* Sec. 7. This Act takes effect July 1, 2026. 16