HB321 By Representatives Faust, Shiver, Sessions, Gaston, Baker, McMillan, Bracy, Buskey, Pringle, Williams (JW), Wilcox, Davis, Clarke, Drummond and Jackson RFD Insurance Rd 1 25-FEB-16

SYNOPSIS: Under existing law, all insurers authorized and writing property insurance in the State of Alabama are required to be members of the Alabama Insurance Underwriting Association, which was established to provide a method whereby essential property insurance coverage would be provided in any county contiguous to the Gulf of Mexico and Mobile Bay.

This bill would create the Alabama Coastal Insurance Authority for the purpose of providing affordable windstorm insurance for owners of insurable property in any county contiguous to the Gulf of Mexico and Mobile Bay.

This bill would provide for the selection of the board of directors of the authority.

This bill would provide for the adoption of the plan of operation of the authority, including the process for post-loss assessments of policyholders and assessable insurers.

This bill would authorize the sale of bonds and would require assessable insurers to purchase any bonds remaining unsold after 60 days based on the percentage of participation of each insurer.

This bill would authorize the Commissioner of Insurance to require the authority to submit quarterly and annual financial statements and to be subject to rate and form filing requirements.

This bill would exempt the authority from paying insurance premium taxes and other license and privilege taxes.

This bill would authorize the authority to assess policyholders in the event of excess losses; to record property liens to secure payments; and to negotiate with local tax assessors, tax collectors, or revenue commissioners for the collection of assessments.

This bill would authorize assessable insurers to recoup authority assessments from their policyholders.

This bill would require the authority to use licensed insurance producers.

This bill would exempt bonds, properties, and income of the authority from taxation .

This bill would declare the debt assumed and created by the authority and all bonds issued by the authority to be solely and exclusively obligations of the authority and not debts of the state.

This bill would authorize the Commissioner of Insurance to discontinue the Alabama Insurance Underwriting Association to permit an orderly transition for policyholders from the association to the authority.

A BILL TO BE ENTITLED AN ACT

To add Chapter 22B to Title 27, Code of Alabama 1975, to create the Alabama Coastal Insurance Authority for the purpose of providing affordable windstorm insurance for owners of insurable property in any county contiguous to the Gulf of Mexico and Mobile Bay; to provide for the selection of the board of directors of the authority; to provide for the adoption of the plan of operation of the authority, including the process for post-loss assessments of policyholders and assessable insurers; to authorize the sale of bonds and require assessable insurers to purchase any bonds remaining unsold after 60 days based on the percentage participation of each insurer; to authorize the Commissioner of Insurance to require the authority to submit quarterly and annual financial statements and to be subject to rate and form filing requirements; to require the authority to provide for reduced premium rates through post-loss financing programs; to exempt the authority from paying insurance premium taxes and other license and privilege taxes; to authorize the authority to assess policyholders in the event of excess losses; to record property liens to secure payments; to authorize the authority to negotiate with local tax assessors, tax collectors, or revenue commissioners for the collection of assessments; to authorize assessable insurers to recoup authority assessments from their policyholders; to require the authority to use licensed insurance producers; to exempt bonds, properties, and income of the authority from taxation; to declare the debt assumed and created by the authority and all bonds issued by the authority to be solely and exclusively obligations of the authority and not debts of the state; to authorize the discontinuation of the Alabama Insurance Underwriting Association to permit an orderly transition for policyholders from the association to the authority; and to repeal Section 27-1-24, Code of Alabama 1975, providing for the creation of the association.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. Chapter 22B is added to Title 27 of the Code of Alabama 1975, to read as follows:

§27-22B-1.

This chapter shall be known and may be cited as the Alabama Coastal Insurance Authority Act.

§27-22B-2.

For the purposes of this chapter, the following terms shall have the following meanings:

(1) AFFORDABLE WINDSTORM INSURANCE. Windstorm insurance for property located in any county contiguous to the Gulf of Mexico and Mobile Bay, the premium for which is equal to or less than the same policy issued by the authority.

(2) ASSESSABLE INSURER. Any insurer authorized to write property insurance in this state.

(3) AUTHORITY. The Alabama Coastal Insurance Authority.

(4) COMMISSIONER. The Alabama Commissioner of Insurance.

(5) DEPARTMENT. The Alabama Department of Insurance.

(6) FINANCING DOCUMENTS. Any agreement or agreements, instrument or instruments, or other document or documents now existing or hereafter created evidencing any bonds or other indebtedness of the authority or pursuant to which any bonds or other indebtedness has been or may be issued and pursuant to which any rights, revenues, or other assets of the authority are pledged or sold to secure the repayment of the bonds or indebtedness, together with the payment of interest on the bonds or the indebtedness, or the payment of any other obligation or financial product of the authority related to the bonds or indebtedness.

(7) PERCENTAGE OF PARTICIPATION. The percentage determined by dividing the net direct premiums of the assessable insurer for property insurance written in this state in the previous calendar year by the aggregate net direct premium for property insurance written in this state by all assessable insurers in the previous year. The percentage of participation may be modified as provided in the plan of operation.

(8) RATE REDUCTION AMOUNT. An amount to be determined annually by the authority for each policy as provided in the plan of operation.

§27-22B-3.

(a) It is the intent of the Legislature by the enactment of this chapter to authorize the creation of the authority.

(b) The public purpose of this chapter is to ensure that there is an orderly market for windstorm insurance for residents and businesses of any county contiguous to the Gulf of Mexico and Mobile Bay.

(c) The Legislature finds that private insurers are unwilling or unable to provide affordable windstorm insurance coverage in any county contiguous to the Gulf of Mexico and Mobile Bay to the extent sought and needed. The absence of affordable windstorm insurance threatens the public health, safety, and welfare and likewise threatens the economic health of the state. The state therefore has a compelling public interest and a public purpose to assist in assuring that property in any county contiguous to the Gulf of Mexico and Mobile Bay is insured against windstorms and insured at affordable rates so as to facilitate the remediation, reconstruction, and replacement of damaged or destroyed property in order to reduce or avoid the negative effects otherwise resulting to the public health, safety, and welfare, to the economy of the state, and to the revenues of the state and local governments which are needed to provide for the public welfare. It is necessary, therefore, to provide affordable windstorm insurance to applicants who are in good faith entitled to procure affordable windstorm insurance through the voluntary market in any county contiguous to the Gulf of Mexico and Mobile Bay but are unable to do so. The Legislature intends, therefore, that affordable windstorm insurance be provided in any county contiguous to the Gulf of Mexico and Mobile Bay and that it continue to be provided, as long as necessary, through the authority, a government entity that is an integral part of the state, and that is not a private insurance company. To that end, the authority shall strive to increase the availability of affordable property insurance in any county contiguous to the Gulf of Mexico and Mobile Bay, while achieving efficiencies and economies, and while providing service to policyholders, applicants, and agents which is no less than the quality generally provided in the voluntary market, for the achievement of the foregoing public purposes. Because it is essential for this governmental entity to have the maximum financial resources to pay claims following a catastrophic hurricane or windstorm, it is the intent of the Legislature that the authority continue to be an integral part of the state and that the income of the authority be exempt from federal income taxation and that interest on the debt obligations issued by the authority be exempt from federal income taxation.

(d) The authority shall provide affordable windstorm insurance for residential and commercial property in any county contiguous to the Gulf of Mexico and Mobile Bay, for applicants who are entitled, but, in good faith, are unable to procure affordable windstorm insurance through the voluntary market.

(e) The Legislature finds that the revenues of the authority are revenues that are necessary to meet the requirements set forth in documents authorizing the issuance of bonds under this chapter.

(f) The income of the authority may not inure to the benefit of any private person.

(g) This chapter shall be liberally construed in order to effect the purposes of the chapter.

§27-22B-4.

(a) The Alabama Coastal Insurance Authority is created as a separate and independent entity of the state. The authority may incorporate. All assets in the possession of the authority shall belong to the authority. There shall be no distribution of income or assets other than for the benefit of the authority, which shall have the right to invest and reinvest those assets.

(b) Any insurer authorized to write property insurance on the effective date of this chapter shall become an assessable insurer on the effective date of this chapter. Any insurer authorized to write property insurance after the effective date of this chapter shall become an assessable insurer on the first day of January immediately following authorization.

(c) Any debt obligations issued by the authority, their transfer, and the income therefrom, including any profit made on the sale thereof, shall at all times be free from taxation of every kind by the state and any political subdivision or instrumentality of the state.

(d) Upon a determination by the department that the conditions giving rise to the establishment and activation of the authority no longer exist, the authority is dissolved. Upon dissolution, the assets of the authority shall be applied first to pay all debts, liabilities, and obligations of the authority, including the establishment of reasonable reserves for any contingent liabilities or obligations, and all remaining assets of the authority shall become property of the state and shall be deposited in the State General Fund. No dissolution shall take effect as long as the authority has bonds or other financial obligations outstanding unless adequate provision has been made for the payment of the bonds or other financial obligations pursuant to the documents authorizing the issuance of the bonds or other financial obligations.

(e) Any provision of law to the contrary notwithstanding:

(1) The pledge or sale of the lien upon, and the security interest in, any rights, revenues, or other assets of the authority created or purported to be created pursuant to any financing documents to secure any bonds or other indebtedness of the authority shall be and remain valid and enforceable, notwithstanding the commencement of and during the continuation of, and after, any rehabilitation, insolvency, liquidation, bankruptcy, receivership, conservatorship, reorganization, or similar proceeding against the authority under the laws of this state.

(2) A proceeding described in subdivision (1) does not relieve the authority of its obligation, or otherwise affect its ability to perform its obligation, to continue to collect, or levy and collect, assessments or any other rights, revenues, or other assets of the authority pledged pursuant to any financing documents.

(3) Each pledge or sale of, lien upon, and security interest in, including the priority of the pledge, lien, or security interest, any such assessments, policyholder surcharges or other surcharges, or other rights, revenues, or other assets which are collected, or levied and collected, after the commencement of and during the pendency of, or after, any proceeding described in subdivision (1) shall continue unaffected by the proceeding.

(4) Any pledge or sale of assessments, revenues, contract rights, or other rights or assets of the authority shall constitute a lien and security interest, or sale, as the case may be, that is immediately effective and attaches to the assessments, revenues, or contract rights or other rights or assets, whether or not imposed or collected at the time the pledge or sale is made. Any pledge or sale is effective, valid, binding, and enforceable against the authority or other entity making the pledge or sale, and valid and binding against and superior to any competing claims or obligations owed to any other person or entity, including policyholders in this state, asserting rights in any assessments, revenues, or contract rights or other rights or assets to the extent set forth in and in accordance with the terms of the pledge or sale contained in the applicable financing documents, whether or not any person or entity has notice of the pledge or sale and without the need for any physical delivery, recordation, filing, or other action.

(5) As long as the authority has any bonds outstanding, the authority may not file a voluntary petition under Chapter 9 of the federal Bankruptcy Code or corresponding chapter or sections as may be in effect, from time to time, and a public department or any organization, entity, or other person may not authorize the authority to be or become a debtor under Chapter 9 of the federal Bankruptcy Code or corresponding chapter or sections as may be in effect, from time to time, during any such period.

(f) The authority is not subject to the procurement provisions applicable to state agencies. The policies and decisions of the authority including, but not limited to, decisions relating to incurring debt, levying of assessments, the issuance and sale of bonds, claims decisions under authority policies, hiring and firing of employees, and all services relating to the operation of the authority are not subject to the provisions applicable to state agencies. The authority is generally subject to the Alabama Open Meetings Act and the Alabama Open Records Act; however, the following records of the authority are confidential and exempt from the Alabama Open Records Act:

(1) Underwriting files, except that a policyholder or an applicant shall have access to his or her own underwriting files. Confidential and exempt underwriting file records may also be released to other governmental agencies upon written request and demonstration of need; those records held by the receiving agency remain confidential and exempt as provided in this subdivision.

(2) Claims files, until termination of all litigation and settlement of all claims arising out of the same incident, although portions of the claims files may remain exempt, as otherwise provided by law. Confidential and exempt claims file records may be released to other governmental agencies upon written request and demonstration of need; those records held by the receiving agency remain confidential and exempt as provided in this subdivision.

(3) Records obtained or generated by an internal auditor pursuant to a routine audit, until the audit is completed, or if the audit is conducted as part of an investigation, until the investigation is closed or ceases to be active. An investigation is considered active while the investigation is being conducted with a reasonable, good faith belief that the investigation could lead to the filing of administrative, civil, or criminal proceedings.

(4) Matters reasonably encompassed in privileged attorney-client communications.

(5) Proprietary information licensed to the authority under contract if the contract provides for the confidentiality of the proprietary information.

(6) All information relating to the medical condition or medical status of an authority employee which is not relevant to the capacity of the employee to perform his or her duties, except as otherwise provided in this subdivision. Exempt information includes, but is not limited to, information relating to workers' compensation, insurance benefits, and retirement or disability benefits.

(7) Information relating to negotiations for financing, reinsurance, depopulation, or contractual services, until the conclusion of the negotiations.

(8) Minutes of closed meetings regarding underwriting files, and minutes of closed meetings regarding an open claims file until termination of all litigation and settlement of all claims with regard to that claim, except that information otherwise confidential or exempt by law shall be redacted.

(g) The authority may not be required to obtain or hold a license or certificate of authority issued by the commissioner or any other department. The authority may not be required to participate as a member of the Alabama Insurance Guaranty Association.

(h) There is no liability on the part of, and no cause of action of any nature shall arise against, any assessable insurer or its agents or employees, the authority or its agents or employees, members of the board of directors or their respective designees at a board meeting, authority committee members, or the department or its representatives, for any action taken by them in the performance of their duties or responsibilities under this subsection. This immunity does not apply to any of the following:

(1) Any of the foregoing persons or entities for any willful tort.

(2) The authority or its producing agents for breach of any contract or agreement pertaining to insurance coverage.

(3) The authority with respect to the issuance or payment of debt.

(4) Any assessable insurer with respect to any action to enforce the obligations of the assessable insurer to the authority under this subsection.

(5) The authority in any pending or future action for breach of contract or for benefits under a policy issued by the authority.

(i) The authority is a political subdivision of the state and exempt from corporate income tax. The premiums, assessments, investment income, and other revenue of the authority are funds received for providing windstorm insurance coverage as required by this chapter, paying claims for policies issued by the authority, securing and repaying debt obligations issued by the authority, and conducting all other activities of the authority, and may not be considered taxes, fees, licenses, or charges for services imposed by the Legislature on individuals, businesses, or agencies outside state government. Bonds and other debt obligations issued by or on behalf of the authority are not to be considered state bonds and are not an obligation of the state. It is the intent of the Legislature that the tax exemptions provided in this subsection shall augment the financial resources of the authority to better enable the authority to fulfill its public purpose. Any debt obligations issued by the authority, their transfer, and the income therefrom, including any profit made on the sale thereof, shall at all times be free from taxation of every kind by the state and any political subdivision or local unit or other instrumentality of the state.

§27-22B-5.

(a) The Board of Directors of the Alabama Coastal Insurance Authority shall consist of the State Director of Risk Management, or his or her designee, and 12 members appointed by and serving at the pleasure of the commissioner as follows:

(1) Two members recommended by the two assessable insurers or insurance company groups with the largest average market share of property insurance written in this state over the last three calendar years.

(2) Four members representing other assessable insurers as selected by the commissioner.

(3) Two insurance producers as selected by the commissioner. Each producer shall have at least 10 years of experience in selling property and casualty insurance and neither producer shall be the employee or exclusive agent of any insurer. At least one of the producers shall be a resident of a county contiguous to the Gulf of Mexico and Mobile Bay.

(4) Four business leaders with knowledge of coastal homeowners insurance as selected by the commissioner. Each business leader appointee shall have no less than 10 years of experience in the management of a business and no business leader appointee shall be affiliated with any assessable insurer. At least three of the business leader appointees shall be residents of a county contiguous to the Gulf of Mexico and Mobile Bay.

(b) At least one of the six members representing assessable insurers selected pursuant to subdivisions (1) and (2) shall be representative of an Alabama-domiciled insurer.

(c) The terms of office of the initial board members shall begin on the effective date of this chapter. The commissioner may stagger the terms of the initial board members from one to three years so that the terms of approximately one-third of the members of the board expire each year. Thereafter, board members shall serve terms of three years. A board member may be reappointed after the expiration of his or her term without limitation.

(d) The membership of the board of directors shall be inclusive and reflect the racial, gender, geographic, urban/rural, and economic diversity of the state.

(e) The board shall select and hire the chief executive officer of the authority, subject to the approval of the commissioner.

§27-22B-6.

(a) The authority shall operate pursuant to a plan of operation approved by order of the commissioner. The plan of operation is subject to continuous review by the commissioner. The commissioner, by order, may withdraw approval of all or part of a plan of operation if the commissioner determines that conditions have changed since approval was granted and that the purposes of the plan require changes in the plan. The plan of operation of the authority shall be adopted pursuant to this section, and any revision to the plan of operation shall be approved by the board of directors pursuant to the method provided in the plan of operation and submitted to and approved by the commissioner before the effective date of the revision. A copy of the approved plan of operation, together with a copy of any approved revision to the plan, shall be maintained for public inspection, during normal business hours, at the offices of the Department of Insurance.

(b) The plan of operation shall include the process and procedures whereby a post-loss assessment shall be implemented to recover losses in excess of reserves. The first level of assessments shall be to policyholders up to an amount equal to the rate reduction amount. The second level of assessments shall be to assessable insurers.

(c) If any of the bonds issued by the authority remain unsold 60 days after issuance, the commissioner shall require all assessable insurers to purchase the bonds, which purchased bonds shall be treated as admitted assets of the insurers. Each insurer shall be required to purchase that percentage of the unsold portion of the bond issue that equals the current percentage of participation of the insurer as defined in this chapter. The insurer may not be required to purchase the bonds to the extent that the commissioner determines that the purchase would endanger or impair the solvency of the insurer, in which case all other insurers shall be required to purchase their appropriate share of the share of the bonds of that insurer. The bonds shall be in a form approved by the commissioner. With approval of the commissioner, the authority may issue bonds or incur other indebtedness to retire or consolidate bonds as appropriate.

(d) The commissioner may require the authority to submit quarterly and annual financial statements and be subject to financial examinations. The authority shall pay rate and form filing fees and shall pay the expenses of examination as provided in Section 27-2-25, but shall otherwise be exempt from the fees and taxes collected by the department.

(e) The authority shall submit all forms and rates to the commissioner for approval. The authority shall develop plans designed to reduce the wind insurance premium by implementing post-loss financing programs.

(f) The authority may assess its policyholders in the event of excess losses up to the rate reduction amount as defined in the plan of operation.

(g) The authority may secure payment of policyholder assessments through the office of the county tax assessor, tax collector, or revenue commissioner when necessary. The assessment shall take priority over any liens on the property other than a recorded mortgage and ad valorem taxes. The authority may negotiate a reasonable fee to be retained by the tax assessor, tax collector, or revenue commissioner for providing the collection service.

(h) Assessable insurers may recoup authority assessments from their policyholders in the manner defined in the plan of operation.

§27-22B-7.

(a) The authority shall have the general power and authority to maintain and carry over any unexpended surplus which may exist to subsequent fiscal years. Monies may not lapse or be transferred to the State General Fund or other state funds. Any interest earned or investment earnings shall be deposited to the credit of the authority. Monies shall be used for the purpose of assisting the authority in defraying expenses, paying claims, paying reinsurance costs, and performing all acts that relate to the function and purpose of the authority.

(b) The authority shall have all of the following powers:

(1) To have succession by its corporate name until it is dissolved.

(2) To adopt a plan of operation for the regulation of its affairs and the conduct of its business.

(3) To adopt and use an official seal and alter the same at pleasure.

(4) To maintain a principal office in a county contiguous to the Gulf of Mexico and Mobile Bay, and such other offices at such places within the state as the authority may designate.

(5) To sue and be sued and to prosecute and defend civil actions in any court having jurisdiction of the subject matter and of the parties.

(6) To acquire by purchase, gift, condemnation, or any other lawful means any real, personal, or mixed property necessary or convenient in connection with the purpose for which the authority is formed and to hold title to that property, together with all rights incidental to its estate in that property.

(7) To issue policies of essential property insurance on insurable property in any county contiguous to the Gulf of Mexico and Mobile Bay in accordance with a plan of operation approved by the commissioner.

(8) To purchase reinsurance for all or part of the risks of the authority.

(9) To levy and collect assessments from assessable insurers.

(10) To establish underwriting criteria consistent with the purposes of this chapter and as approved by the commissioner.

(11) To make and enter into contracts, leases, and agreements with any person necessary for or incidental to the execution of the powers of the authority under this chapter, including contracts and agreements for professional services deemed necessary for such purpose by the authority.

(12) To appoint and employ managers, employees, agents, fiscal advisors, and attorneys as the business of the authority may require for efficient accomplishment of the purpose of this chapter.

(13) To borrow money for its corporate purposes and, in evidence of that borrowing, to sell and issue bonds of the authority and to refund any of those bonds by the issuance of refunding bonds, the bonds to be payable as to both principal and interest solely from the revenues of the authority and proceeds from the sale of the bonds as provided in this chapter and, as security for payment of the principal of and the interest on its bonds, to pledge the revenues and anticipated revenues of the authority as provided in this chapter. No bonds issued under this chapter shall constitute a debt or liability of the state or any political subdivision thereof other than the authority or a pledge of the faith and credit of the state or of any political subdivision thereof, but the bonds shall be payable solely from the revenues and anticipated revenues pledged or available for that payment as authorized in this chapter. All bonds shall contain on the face thereof a statement to the effect that the authority is obligated to pay the principal thereof and interest thereon only from its revenues and the proceeds from the sale of the bonds, that neither the state nor any political subdivision thereof other than the authority is obligated to pay the principal or interest, and that neither the faith and credit nor the taxing power of the state or of any political subdivision of the state is pledged to the payment of the principal or interest.

(14) To anticipate by the issuance of its bonds, as limited in this chapter, the receipt of the revenues from its facilities and, as security for the payment of the principal of and interest on its bonds, to enter into any lawful covenant and to pledge the revenues from its facilities.

(15) The authority may pledge the proceeds of assessments, other insurance and reinsurance recoverables, policyholder surcharges and other surcharges, and other funds available to the authority as the source of revenue for and to secure bonds, or other indebtedness, or lines of credit or other financing mechanisms issued or created, or to retire any other debt incurred as a result of deficits or events giving rise to deficits, or in any other way that the authority determines shall efficiently recover such deficits.

(16) The authority may borrow funds by issuing bonds or by incurring other indebtedness, and shall have other powers reasonably necessary to effectuate the requirements of this subsection including, but not limited to, the power to issue bonds and incur other indebtedness in order to refinance outstanding bonds or other indebtedness. The authority may seek judicial validation of its bonds or other indebtedness. The authority may issue bonds or incur other indebtedness, or have bonds issued on its behalf by a unit of local government, upon a determination by the authority, subject to approval by the department, that the action would enable it to efficiently meet the financial obligations of the authority and that the financings are reasonably necessary to effectuate the purpose of the authority. The authority may take all actions needed to facilitate tax free status for the bonds or indebtedness, including formation of trusts or other affiliated entities. The authority may pledge assessments, other reinsurance recoverables, policyholder surcharges and other surcharges, and other funds available to the authority as security for bonds or other indebtedness. It is the intent of the Legislature that no action be taken whose purpose is to impair any bond indenture or financing agreement or any revenue source committed by contract to such bond or other indebtedness.

(17) To invest as provided in this chapter the proceeds from the sale of its bonds pending need therefor.

(18) To incur other forms of indebtedness including, but not limited to, loans, lines of credit, letters of credit, or surplus notes.

(19) To establish a fiscal year.

(20) To do all other acts and things necessary or convenient to carry out the powers granted in this chapter.

§27-22B-8.

The authority shall accept application for policies only through insurance producers licensed for property insurance in accordance with Chapter 7, except the authority is not required to appoint the producers as otherwise required in Section 27-7-30.

§27-22B-9.

(a) It is the intent of the Legislature that the authority be and act as a nonprofit entity. The authority is granted the authority to take those steps necessary to obtain federal tax exempt status.

(b) Any provision of law to the contrary notwithstanding, the property of the authority and the income therefrom and all contracts and agreements including, but not limited to, insurance policies, made by the authority and income therefrom shall be forever exempt from the payment of any and all taxation in the State of Alabama of every kind by the state and any political subdivision or other instrumentality of the state including, but not limited to, municipal license fees and business privilege or license taxes heretofore or hereafter levied by the state or any county or municipality of the state.

(c) The bonds of the authority and the income therefrom shall be forever exempt from any and all taxation in the State of Alabama.

(d) Any of the bonds may be used by the holder thereof as security for the deposit of any funds belonging to the state or to any instrumentality or agency of the state in any instance where security for such deposits may be required by law.

(e) Unless otherwise directed by a court having jurisdiction thereof or by the document that is the source of authority, a trustee, executor, administrator, guardian, or one acting in any other fiduciary capacity, in addition to any other investment powers conferred by law and with the exercise of reasonable business prudence, may invest trust funds in any of the bonds.

§27-22B-10.

All debts assumed or created by the authority and all bonds issued by the authority shall be solely and exclusively obligations of the authority and are not obligations or debts of the State of Alabama. All contracts and agreements including, but not limited to, insurance policies, made by the authority pursuant to this chapter shall be solely and exclusively obligations of the authority and are not obligations of the State of Alabama.

§27-22B-11.

The governing body of any unit of local government, any residents of which are insured by the authority, may issue bonds from time to time to fund an assistance program, in conjunction with the authority, for the purpose of defraying deficits of the authority. In order to avoid needless and indiscriminate proliferation, duplication, and fragmentation of these assistance programs, any unit of local government, any residents of which are insured by the authority, may provide for the payment of losses, regardless of whether or not the losses occurred within or outside of the territorial jurisdiction of the local government. Any unit of local government may enter into contracts with the authority and with any other entity created pursuant to this section as are necessary to carry out this section. Any bonds issued under this section shall be payable from and secured by monies received by the authority from assessments and assigned and pledged to or on behalf of the unit of local government for the benefit of the holders of the bonds. The funds, credit, property, and taxing power of the state or of the unit of local government may not be pledged for the payment of the bonds.

§27-22B-12.

The commissioner may promulgate reasonable regulations as are necessary or proper to carry out this chapter in accordance with Chapter 2. The commissioner, by regulation, may provide for the discontinuation of operation of the Alabama Insurance Underwriting Association and the implementation of operations of the authority created by this chapter.

Section 2. All laws or parts of laws which conflict with this act are repealed and specifically, Section 27-1-24, Code of Alabama 1975, establishing the Alabama Insurance Underwriting Association, is repealed effective December 31, 2018.

Section 3. This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.

Property Insurance

Alabama Coastal Insurance Authority

Gulf of Mexico

Alabama Insurance Underwriting Association

Insurance Commissioner

Code Repealed

Code Added