A.R.S. § 20-3251 — Arizona Code / Title 20 / Chapter 23 / Article 1 / Section 3251
20-3251 Interstate insurance product regulation compact
Status: repealed

20-3251. Interstate insurance product regulation compact

The interstate insurance product regulation compact is enacted into law as follows:

Article I

Purpose

Under the terms and conditions of this compact, this state seeks to join with other states and establish the interstate insurance product regulation compact and thus become a member of the interstate insurance product regulation commission.  The director is hereby designated to serve as the representative of this state to the commission.  The purposes of the compact are, through means of joint and cooperative action among the compacting states:

1. To promote and protect the interest of consumers of individual and group annuity, life insurance, disability income and long-term care insurance products.

2. To develop uniform standards for insurance products covered under the compact.

3. To establish a central clearinghouse to receive and provide prompt review of insurance products covered under the compact and, in certain cases, related advertisements, submitted by insurers authorized to do business in one or more compacting states.

4. To give appropriate regulatory approval to those product filings and advertisements satisfying the applicable uniform standard.

5. To improve coordination of regulatory resources and expertise between state insurance departments regarding the setting of uniform standards and review of insurance products covered under the compact.

6. To create the interstate insurance product regulation commission.

7. To perform these and other related functions as may be consistent with the state regulation of the business of insurance.

Article II

Definitions

In this compact, unless the context otherwise requires:

1. "Advertisement" means any material designed to create public interest in a product or induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain a policy, as more specifically defined in the rules and operating procedures of the commission.

2. "Bylaws" means those bylaws established by the commission for its governance or for directing or controlling the commission's actions or conduct.

3. "Commission" means the interstate insurance product regulation commission established by this compact.

4. "Commissioner" means the insurance director or the chief insurance regulatory official of a state including commissioner, deputy director, director or administrator.

5. "Compact" means the interstate insurance product regulation compact.

6. "Compacting state" means any state that has enacted the compact and that has not withdrawn or been terminated under article XIV of this compact.

7. "Insurer" means any entity licensed by a state to issue contracts of insurance for any of the lines of insurance covered by the compact.

8. "Member" means the person chosen by a compacting state as its representative to the commission or the person's designee.

9. "Noncompacting state" means any state that is not at the time a compacting state.

10. "Operating procedures" means procedures adopted by the commission implementing a rule, uniform standard or compact provision.

11. "Product" means the form of a policy or contract, including any application, endorsement or related form that is attached to and made a part of the policy or contract, and any evidence of coverage or certificate, for an individual or group annuity, life insurance, disability income or long-term care insurance product that an insurer is authorized to issue.

12. "Rule" means a statement of general or particular applicability and future effect that is adopted by the commission, including a uniform standard developed pursuant to article VII of this compact, and that is designed to implement, interpret or prescribe law or policy or describes the organization, procedure or practice requirements of the commission, which shall have the force and effect of law in the compacting states.

13. "State" means any state, district or territory of the United States.

14. "Third-party filer" means an entity that submits a product filing to the commission on behalf of an insurer.

15. "Uniform standard" means a standard adopted by the commission for a product line pursuant to article VII of this compact and includes all of the product requirements in aggregate. Each uniform standard shall be construed, whether express or implied, to prohibit the use of any inconsistent, misleading or ambiguous provisions in a product and the form of the product made available to the public shall not be unfair, inequitable or against public policy as determined by the commission.

Article III

Commission Establishment and Venue

A. The compacting states hereby create and establish a joint public agency known as the interstate insurance product regulation commission.  Under article IV of this compact, the commission has the power to develop uniform standards for product lines, receive and provide prompt review of products filed with the commission and give approval to those product filings satisfying applicable uniform standards. It is not intended for the commission to be the exclusive entity for receipt and review of insurance product filings. This section does not prohibit any insurer from filing its product in any state wherein the insurer is licensed to conduct the business of insurance.  Any filing is subject to the laws of the state where filed.

B. The commission is a body corporate and politic, and an instrumentality of the compacting states.

C. The commission is solely responsible for its liabilities except as otherwise specifically provided in this compact.

D. Venue is proper and judicial proceedings by or against the commission shall be brought solely and exclusively in a court of competent jurisdiction where the principal office of the commission is located.

Article IV

Commission Powers

The commission has the following powers:

1. To adopt rules pursuant to article VII of this compact that shall have the force and effect of law and shall be binding in the compacting states to the extent and in the manner provided in the compact.

2. To exercise its rulemaking authority and establish reasonable uniform standards for products covered under the compact, and advertisement related thereto, which shall have the force and effect of law and shall be binding in the compacting states, but only for those products filed with the commission. A compacting state shall have the right to opt out of the uniform standard pursuant to article VII of this compact, to the extent and in the manner provided in this compact.  Any uniform standard established by the commission for long-term care insurance products may provide the same or greater protections for consumers as, but shall not provide less than, those protections set forth in the national association of insurance commissioners' long-term care insurance model act and long-term care insurance model regulation, respectively, adopted as of 2001.  The commission shall consider whether any subsequent amendments to the long-term care insurance model act or long-term care insurance model regulation adopted by the national association of insurance commissioners require amending of the uniform standards established by the commission for long-term care insurance products.

3. To receive and review in an expeditious manner products filed with the commission, and rate filings for disability income and long-term care insurance products, and give approval of those products and rate filings that satisfy the applicable uniform standard, where such approval shall have the force and effect of law and be binding on the compacting states to the extent and in the manner provided in the compact.

4. To receive and review in an expeditious manner advertisement relating to long-term care insurance products for which uniform standards have been adopted by the commission, and give approval to all advertisement that satisfies the applicable uniform standard. For any product covered under this compact, other than long-term care insurance products, the commission shall have the authority to require an insurer to submit all or any part of its advertisement with respect to that product for review or approval before use if the commission determines that the nature of the product is such that an advertisement of the product could have the capacity or tendency to mislead the public.  The actions of the commission as provided in this section shall have the force and effect of law and shall be binding in the compacting states to the extent and in the manner provided in the compact.

5. To exercise its rulemaking authority and designate products and advertisement that may be subject to a self-certification process without the need for prior approval by the commission.

6. To adopt operating procedures pursuant to article VII of this compact that shall be binding in the compacting states to the extent and in the manner provided in the compact.

7. To bring and prosecute legal proceedings or actions in its name as the commission.  The standing of any state insurance department to sue or be sued under applicable law shall not be affected.

8. To issue subpoenas requiring the attendance and testimony of witnesses and the production of evidence.

9. To establish and maintain offices.

10. To purchase and maintain insurance and bonds.

11. To borrow, accept or contract for services of personnel, including employees of a compacting state.

12. To hire employees, professionals or specialists, and elect or appoint officers, and to fix their compensation, define their duties and give them appropriate authority to carry out the purposes of the compact, and determine their qualifications and to establish the commission's personnel policies and programs relating to, among other things, conflicts of interest, rates of compensation and qualifications of personnel.

13. To accept any and all appropriate donations and grants of money, equipment, supplies, materials and services, and to receive, use and dispose of the same. The commission shall strive to avoid any appearance of impropriety.

14. To lease, purchase, accept appropriate gifts or donations of, or otherwise to own, hold, improve or use, any property, real, personal or mixed. The commission shall strive to avoid any appearance of impropriety.

15. To sell, convey, mortgage, pledge, lease, exchange, abandon or otherwise dispose of any property, real, personal or mixed.

16. To remit filing fees to compacting states as may be set forth in the bylaws, rules or operating procedures.

17. To enforce compliance by compacting states with rules, uniform standards, operating procedures and bylaws.

18. To provide for dispute resolution among compacting states.

19. To advise compacting states on issues relating to insurers domiciled or doing business in noncompacting jurisdictions, consistent with the purposes of the compact.

20. To provide advice and training to those personnel in state insurance departments responsible for product review, and to be a resource for state insurance departments.

21. To establish a budget and make expenditures.

22. To borrow money.

23. To appoint committees, including advisory committees comprising members, state insurance regulators, state legislators or their representatives, insurance industry and consumer representatives and other interested persons as may be designated in the bylaws.

24. To provide and receive information from, and to cooperate with, law enforcement agencies.

25. To adopt and use a corporate seal.

26. To perform other functions as may be necessary or appropriate to achieve the purposes of the compact consistent with the state regulation of the business of insurance.

Article V

Commission Organization

A. Each compacting state shall have and be limited to one member.  Each member shall be qualified to serve in that capacity pursuant to applicable law of the compacting state. Any member may be removed or suspended from office as provided by the law of the state from which the member shall be appointed.  Any vacancy occurring in the commission shall be filled in accordance with the laws of the compacting state wherein the vacancy exists. This section does not affect the manner in which a compacting state determines the election or appointment and qualification of its own commissioner.

B. Each member shall be entitled to one vote and shall have an opportunity to participate in the governance of the commission in accordance with the bylaws.  Notwithstanding any provision in this compact to the contrary, no action of the commission with respect to the adoption of a uniform standard shall be effective unless two-thirds of the members vote in favor of the uniform standard.

C. The commission, by a majority of the members, shall prescribe bylaws to govern its conduct as may be necessary or appropriate to carry out the purposes, and exercise the powers, of the compact, including:

1. Establishing the fiscal year of the commission.

2. Providing reasonable procedures for appointing and electing members, as well as holding meetings, of the management committee.

3. Providing reasonable standards and procedures for:

(a) The establishment and meetings of other committees.

(b) Governing any general or specific delegation of any authority or function of the commission.

4. Providing reasonable procedures for calling and conducting meetings of the commission that consist of a majority of commission members, ensuring reasonable advance notice of each such meeting and providing for the right of citizens to attend each such meeting with enumerated exceptions designed to protect the public's interest, the privacy of individuals and insurers' proprietary information, including trade secrets. The commission may meet in camera only after a majority of the entire membership votes to close a meeting.  As soon as practicable, the commission must make public a copy of the vote to close the meeting revealing the vote of each member with no proxy votes allowed and the votes taken during the meeting.

5. Establishing the titles, duties, authority and reasonable procedures for the election of the officers of the commission.

6. Providing reasonable standards and procedures for the establishment of the personnel policies and programs of the commission.  Notwithstanding any civil service or other similar laws of any compacting state, the bylaws shall exclusively govern the personnel policies and programs of the commission.

7. Adopting a code of ethics to address permissible and prohibited activities of commission members and employees.

8. Providing a mechanism for winding up the operations of the commission and the equitable disposition of any surplus funds that may exist after the termination of the compact and after the payment or reserving of all of its debts and obligations.

D. The commission shall publish its bylaws in a convenient form and file a copy of the bylaws and any amendment to the bylaws with the appropriate agency or officer in each of the compacting states.

E. A management committee comprising no more than fourteen members shall be established as follows:

1. One member from each of the six compacting states with the largest premium volume for individual and group annuities, life, disability income, and long-term care insurance products, determined from the records of the national association of insurance commissioners for the prior year.

2. Four members from those compacting states with at least two percent of the market based on the premium volume described in paragraph 1 of this subsection, other than the six compacting states with the largest premium volume, selected on a rotating basis as provided in the bylaws.

3. Four members from those compacting states with less than two percent of the market, based on the premium volume described in paragraph 1 of this subsection, with one selected from each of the four zone regions of the national association of insurance commissioners as provided in the bylaws.

F. The management committee shall have such authority and duties as may be set forth in the bylaws, including:

1. Managing the affairs of the commission in a manner consistent with the bylaws and purposes of the commission.

2. Establishing and overseeing an organizational structure within, and appropriate procedures for, the commission to provide for the creation of uniform standards and other rules, the receipt and review of product filings, administrative and technical support functions, the review of decisions regarding the disapproval of a product filing and the review of elections made by a compacting state to opt out of a uniform standard. However, a uniform standard shall not be submitted to the compacting states for adoption unless approved by two-thirds of the members of the management committee.

3. Overseeing the offices of the commission.

4. Planning, implementing and coordinating communications and activities with other state, federal and local government organizations in order to advance the goals of the commission.

G. The commission shall elect annually officers from the management committee, with each having such authority and duties, as may be specified in the bylaws.

H. The management committee, subject to the approval of the commission, may appoint or retain an executive director for such period, on such terms and conditions and for such compensation as the commission may deem appropriate. The executive director shall serve as secretary to the commission, but shall not be a member of the commission. The executive director shall hire and supervise other staff as may be authorized by the commission.

I. A legislative committee comprising state legislators or their designees shall be established to monitor the operations of, and make recommendations to, the commission, including the management committee. However, the manner of selection and term of any legislative committee member shall be as set forth in the bylaws.  Before the adoption by the commission of any uniform standard, revision to the bylaws, annual budget or other significant matter as may be provided in the bylaws, the management committee shall consult with and report to the legislative committee.

J. The commission shall establish two advisory committees, one of which shall comprise consumer representatives independent of the insurance industry, and the other comprising insurance industry representatives.

K. The commission may establish additional advisory committees as its bylaws may provide for the carrying out of its functions.

L. The commission shall maintain its corporate books and records in accordance with the bylaws.

M. The members, officers, executive director, employees and representatives of the commission shall be immune from suit and liability, either personally or in their official capacity, for any claim for damage to or loss of property or personal injury or other civil liability caused by or arising out of any actual or alleged act, error or omission that occurred, or that the person against whom the claim is made had a reasonable basis for believing occurred within the scope of commission employment, duties or responsibilities.  This subsection does not protect any such person from suit or liability for any damage, loss, injury or liability caused by the intentional or wilful and wanton misconduct of that person.

N. The commission shall defend any member, officer, executive director, employee or representative of the commission in any civil action seeking to impose liability arising out of any actual or alleged act, error or omission that occurred within the scope of commission employment, duties or responsibilities, or that the person against whom the claim is made had a reasonable basis for believing occurred within the scope of commission employment, duties or responsibilities. This subsection does not prohibit that person from retaining the person's own counsel.  Also, the actual or alleged act, error or omission may not have resulted from that person's intentional or wilful and wanton misconduct.

O. The commission shall indemnify and hold harmless any member, officer, executive director, employee or representative of the commission for the amount of any settlement or judgment obtained against that person arising out of any actual or alleged act, error or omission that occurred within the scope of commission employment, duties or responsibilities, or that such person had a reasonable basis for believing occurred within the scope of commission employment, duties or responsibilities.  However, the actual or alleged act, error or omission may not have resulted from the intentional or wilful and wanton misconduct of that person.

Article VI

Commission Meeting and Acts

A. The commission shall meet and take such actions as are consistent with the provisions of this compact and the bylaws.

B. Each member of the commission shall have the right and power to cast a vote to which that compacting state is entitled and to participate in the business and affairs of the commission.  A member shall vote in person or by such other means as provided in the bylaws.  The bylaws may provide for members' participation in meetings by telephone or other means of communication.

C. The commission shall meet at least once during each calendar year.  Additional meetings shall be held as set forth in the bylaws.

Article VII

Rules and Operating Procedures, Rulemaking Functions

and Opting Out of Uniform Standards

A. The commission shall adopt reasonable rules, including uniform standards, and operating procedures in order to effectively and efficiently achieve the purposes of this compact. If the commission exercises its rulemaking authority in a manner that is beyond the scope of the purposes of this compact, the action by the commission shall be invalid and have no force and effect.

B. Rules and operating procedures shall be made pursuant to a rulemaking process that conforms to the model state administrative procedure act of 1981 as amended, as may be appropriate to the operations of the commission.  Before the commission adopts a uniform standard, the commission shall give written notice to the relevant state legislative committees in each compacting state responsible for insurance issues of its intention to adopt the uniform standard.  The commission in adopting a uniform standard shall consider fully all submitted materials and issue a concise explanation of its decision.

C. A uniform standard shall become effective ninety days after its adoption by the commission or such later date as the commission may determine. A compacting state may opt out of a uniform standard as provided in this article. "Opt out" means any action by a compacting state to decline to adopt or participate in an adopted uniform standard.  All other rules and operating procedures, and amendments thereto, shall become effective as of the date specified in each rule, operating procedure or amendment.

D. A compacting state may opt out of a uniform standard, either by legislation or rule adopted by the insurance department under the compacting state's administrative procedure act. If a compacting state elects to opt out of a uniform standard by rule, it must:

1. Give written notice to the commission no later than ten business days after the uniform standard is adopted, or at the time the state becomes a compacting state.

2. Find that the uniform standard does not provide reasonable protections to the citizens of the state, given the conditions in the state.

E. The commissioner shall make specific findings of fact and conclusions of law, based on a preponderance of the evidence, detailing the conditions in the state that warrant a departure from the uniform standard and determining that the uniform standard would not reasonably protect the citizens of the state. The commissioner must consider and balance the following factors and find that the conditions in the state and needs of the citizens of the state outweigh both:

1. The intent of the legislature to participate in, and the benefits of, an interstate agreement to establish national uniform consumer protections for the products subject to this compact.

2. The presumption that a uniform standard adopted by the commission provides reasonable protections to consumers of the relevant product.

F. A compacting state, at the time of its enactment of the compact, may prospectively opt out of all uniform standards involving long-term care insurance products by expressly providing for such opt out in the enacted compact, and such an opt out shall not be treated as a material variance in the offer or acceptance of any state to participate in the compact.  Such an opt out shall be effective at the time of enactment of the compact by the compacting state and shall apply to all existing uniform standards involving long-term care insurance products and those subsequently adopted.

G. If a compacting state elects to opt out of a uniform standard, the uniform standard shall remain applicable in the compacting state electing to opt out until the opt out legislation is enacted into law or the regulation opting out becomes effective. Once the opt out of a uniform standard by a compacting state becomes effective as provided under the laws of that state, the uniform standard shall have no further force and effect in that state unless and until the legislation or regulation implementing the opt out is repealed or otherwise becomes ineffective under the laws of that state.  If a compacting state opts out of a uniform standard after the uniform standard has been made effective in that state, the opt out shall have the same prospective effect as provided under article XIV of this compact for withdrawals.

H. If a compacting state has formally initiated the process of opting out of a uniform standard by regulation, and while the regulatory opt out is pending, the compacting state may petition the commission, at least fifteen days before the effective date of the uniform standard, to stay the effectiveness of the uniform standard in that state. The commission may grant a stay if it determines the regulatory opt out is being pursued in a reasonable manner and there is a likelihood of success.  If a stay is granted or extended by the commission, the stay or extension thereof may postpone the effective date by up to ninety days, unless affirmatively extended by the commission. However, a stay may not be permitted to remain in effect for more than one year unless the compacting state can show extraordinary circumstances that warrant a continuance of the stay, including, the existence of a legal challenge that prevents the compacting state from opting out. A stay may be terminated by the commission on notice that the rulemaking process has been terminated.

I. Not later than thirty days after a rule or operating procedure is adopted, any person may file a petition for judicial review of the rule or operating procedure.  However, the filing of such a petition shall not stay or otherwise prevent the rule or operating procedure from becoming effective unless the court finds that the petitioner has a substantial likelihood of success. The court shall give deference to the actions of the commission consistent with applicable law and shall not find the rule or operating procedure to be unlawful if the rule or operating procedure represents a reasonable exercise of the commission's authority.

Article VIII

Commission Records and Enforcement

A. The commission shall adopt rules establishing conditions and procedures for public inspection and copying of its information and official records, except information and records involving the privacy of individuals and insurers' trade secrets. The commission may adopt additional rules under which it may make available to federal and state agencies, including law enforcement agencies, records and information otherwise exempt from disclosure, and may enter into agreements with such agencies to receive or exchange information or records subject to nondisclosure and confidentiality provisions.

B. Except as to privileged records, data and information, the laws of any compacting state pertaining to confidentiality or nondisclosure shall not relieve any compacting state commissioner of the duty to disclose any relevant records, data or information to the commission. Disclosure to the commission does not waive or otherwise affect any confidentiality requirement. Except as otherwise expressly provided in this compact, the commission shall not be subject to the compacting state's laws pertaining to confidentiality and nondisclosure with respect to records, data and information in its possession. Confidential information of the commission shall remain confidential after the information is provided to any commissioner.

C. The commission shall monitor compacting states for compliance with duly adopted bylaws, rules, including uniform standards, and operating procedures. The commission shall notify any noncomplying compacting state in writing of its noncompliance with commission bylaws, rules or operating procedures. If a noncomplying compacting state fails to remedy its noncompliance within the time specified in the notice of noncompliance, the compacting state shall be deemed to be in default as set forth in article XIV of this compact.

D. The commissioner of any state in which an insurer is authorized to do business, or is conducting the business of insurance, shall continue to exercise the commissioner's authority to oversee the market regulation of the activities of the insurer in accordance with the provisions of the state's law. The commissioner's enforcement of compliance with the compact is governed by the following provisions:

1. With respect to the commissioner's market regulation of a product or advertisement that is approved or certified to the commission, the content of the product or advertisement shall not constitute a violation of the provisions, standards or requirements of the compact except on a final order of the commission, issued at the request of a commissioner after prior notice to the insurer and an opportunity for hearing before the commission.

2. Before a commissioner may bring an action for violation of any provision, standard or requirement of the compact relating to the content of an advertisement not approved or certified to the commission, the commission, or an authorized commission officer or employee, must authorize the action.  Authorization under this paragraph does not require notice to the insurer, opportunity for hearing or disclosure of requests for authorization or records of the commission's action on such requests.

Article IX

Dispute Resolution

On the request of a member, the commission shall attempt to resolve any disputes or other issues that are subject to this compact and that may arise between two or more compacting states, or between compacting states and noncompacting states, and the commission shall adopt an operating procedure providing for resolution of such disputes.

Article X

Product Filing and Approval

A. Insurers and third-party filers seeking to have a product approved by the commission shall file the product with, and pay applicable filing fees to, the commission. This compact does not restrict or otherwise prevent an insurer from filing its product with the insurance department in any state wherein the insurer is licensed to conduct the business of insurance, and such filing shall be subject to the laws of the states where filed.

B. The commission shall establish appropriate filing and review processes and procedures pursuant to commission rules and operating procedures.  The commission shall adopt rules to establish conditions and procedures under which the commission will provide public access to product filing information. In establishing such rules, the commission shall consider the interests of the public in having access to such information, as well as protection of personal medical and financial information and trade secrets, that may be contained in a product filing or supporting information.

C. Any product approved by the commission may be sold or otherwise issued in those compacting states for which the insurer is legally authorized to do business.

Article XI

Review of Commission Decisions Regarding Filings

A. Not later than thirty days after the commission has given notice of a disapproved product or advertisement filed with the commission, the insurer or third-party filer whose filing was disapproved may appeal the determination to a review panel appointed by the commission. The commission shall adopt rules to establish procedures for appointing the review panels and provide for notice and hearing.  An allegation that the commission, in disapproving a product or advertisement filed with the commission, acted arbitrarily, capriciously or in a manner that is an abuse of discretion or otherwise not in accordance with the law, is subject to judicial review in accordance with article III, subsection D of this compact.

B. The commission shall have authority to monitor, review and reconsider products and advertisement subsequent to their filing or approval on a finding that the product does not meet the relevant uniform standard. Where appropriate, the commission may withdraw or modify its approval after proper notice and hearing, subject to the appeal process in subsection A of this article.

Article XII

Finance

A. The commission shall pay or provide for the payment of the reasonable expenses of its establishment and organization. To fund the cost of its initial operations, the commission may accept contributions and other forms of funding from the national association of insurance commissioners, compacting states and other sources. Contributions and other forms of funding from other sources shall be of such a nature that the independence of the commission concerning the performance of its duties shall not be compromised.

B. The commission shall collect a filing fee from each insurer and third-party filer filing a product with the commission to cover the cost of the operations and activities of the commission and its staff in a total amount sufficient to cover the commission's annual budget.

C. The commission's budget for a fiscal year shall not be approved until it has been subject to notice and comment as set forth in article VII of this compact.

D. The commission shall be exempt from all taxation in and by the compacting states.

E. The commission shall not pledge the credit of any compacting state, except by and with the appropriate legal authority of that compacting state.

F. The commission shall keep complete and accurate accounts of all its internal receipts, including grants and donations, and disbursements of all funds under its control. The internal financial accounts of the commission shall be subject to the accounting procedures established under its bylaws. The financial accounts and reports including the system of internal controls and procedures of the commission shall be audited annually by an independent certified public accountant. On the determination of the commission, but no less frequently than every three years, the review of the independent auditor shall include a management and performance audit of the commission. The commission shall make an annual report to the governor and legislature of the compacting states, which shall include a report of the independent audit. The commission's internal accounts shall not be confidential and such materials may be shared with the commissioner of any compacting state on request.  Any work papers related to any internal or independent audit and any information regarding the privacy of individuals and insurers' proprietary information, including trade secrets, shall remain confidential.

G. A compacting state does not have any claim to or ownership of any property held by or vested in the commission or to any commission funds held under this compact.

Article XIII

Compacting States, Effective Date and Amendment

A. Any state is eligible to become a compacting state.

B. The compact shall become effective and binding on legislative enactment of the compact into law by two compacting states. The commission shall become effective for purposes of adopting uniform standards for, reviewing and giving approval or disapproval of products filed with the commission that satisfy applicable uniform standards only after twenty-six states are compacting states or, alternatively, by states representing greater than forty percent of the premium volume for life insurance, annuity, disability income and long-term care insurance products, based on records of the national association of insurance commissioners for the prior year. Thereafter, it shall become effective and binding as to any other compacting state on enactment of the compact into law by that state.

C. Amendments to the compact may be proposed by the commission for enactment by the compacting states. An amendment does not become effective and binding on the commission and the compacting states unless and until all compacting states enact the amendment into law.

Article XIV

Withdrawal, Default and Termination

A. Once effective, the compact shall continue in force and remain binding on each and every compacting state. A compacting state may withdraw from the compact by enacting a statute specifically repealing the statute that enacted the compact into law.

B. The effective date of withdrawal is the effective date of the repealing statute.  The withdrawal shall not apply to any product filings approved or self-certified, or any advertisement of such products, on the date the repealing statute becomes effective, except by mutual agreement of the commission and the withdrawing state unless the approval is rescinded by the withdrawing state as provided in subsection E of this article.

C. The commissioner of the withdrawing state shall immediately notify the management committee in writing on the introduction of legislation repealing the compact in the withdrawing state.

D. The commission shall notify the other compacting states of the introduction of such legislation within ten days after its receipt of notice thereof.

E. The withdrawing state is responsible for all obligations, duties and liabilities incurred through the effective date of withdrawal, including any obligations, the performance of which extend beyond the effective date of withdrawal, except to the extent those obligations may have been released or relinquished by mutual agreement of the commission and the withdrawing state. The commission's approval of products and advertisement before the effective date of withdrawal shall continue to be effective and be given full force and effect in the withdrawing state, unless formally rescinded by the withdrawing state in the same manner as provided by the laws of the withdrawing state for the prospective disapproval of products or advertisement previously approved under state law.

F. Reinstatement following withdrawal of any compacting state shall occur on the effective date of the withdrawing state reenacting the compact.

G. If the commission determines that any compacting state has at any time defaulted in the performance of any of its obligations or responsibilities under the compact, the bylaws or adopted rules or operating procedures, after notice and hearing as set forth in the bylaws, all rights, privileges and benefits conferred by the compact on the defaulting state shall be suspended from the effective date of default as fixed by the commission. The grounds for default include failure of a compacting state to perform its obligations or responsibilities and any other grounds designated in commission rules. The commission shall immediately notify the defaulting state in writing of the defaulting state's suspension pending a cure of the default. The commission shall stipulate the conditions and the time period within which the defaulting state must cure its default. If the defaulting state fails to cure the default within the time period specified by the commission, the defaulting state shall be terminated from the compact and all rights, privileges and benefits conferred by the compact shall be terminated from the effective date of termination.

H. Product approvals by the commission or product self-certifications, or any advertisement in connection with such product, that are in force on the effective date of termination shall remain in force in the defaulting state in the same manner as if the defaulting state had withdrawn voluntarily under this article.

I. Reinstatement following termination of any compacting state requires a reenactment of the compact.

J. The compact dissolves effective on the date of the withdrawal or default of the compacting state that reduces membership in the compact to one compacting state. On the dissolution of the compact, the compact becomes null and void and shall be of no further force or effect, and the business and affairs of the commission shall be wound up and any surplus funds shall be distributed in accordance with the bylaws.

Article XV

Binding Effect of Compact and Other Laws

A. The compact does not prevent the enforcement of any other law of a compacting state, except as provided in subsection B of this article.

B. For any product approved or certified to the commission, the rules, uniform standards and any other requirements of the commission shall constitute the exclusive provisions applicable to the content, approval and certification of such products. For advertisement that is subject to the commission's authority, any rule, uniform standard or other requirement of the commission that governs the content of the advertisement shall constitute the exclusive provision that a commissioner may apply to the content of the advertisement. No action taken by the commission shall abrogate or restrict any of the following:

1. The access of any person to state courts.

2. Remedies available under state law related to breach of contract, tort or other laws not specifically directed to the content of the product.

3. State law relating to the construction of insurance contracts.

4. The authority of the attorney general of the state, including maintaining any actions or proceedings, as authorized by law.

C. All insurance products filed with individual states shall be subject to the laws of those states.

D. All lawful actions of the commission, including all rules and operating procedures adopted by the commission, are binding on the compacting states.

E. All agreements between the commission and the compacting states are binding in accordance with their terms.

F. On the request of a party to a conflict over the meaning or interpretation of commission actions, and on a majority vote of the compacting states, the commission may issue advisory opinions regarding the meaning or interpretation in dispute.

G. If any provision of the compact exceeds the constitutional limits imposed on the legislature of any compacting state, the obligations, duties, powers or jurisdiction sought to be conferred by that provision on the commission shall be ineffective as to that compacting state, and those obligations, duties, powers or jurisdiction shall remain in the compacting state and shall be exercised by the agency thereof to which those obligations, duties, powers or jurisdiction are delegated by law in effect at the time the compact becomes effective.

Article XVI

Severability and Construction

A. If any provision of this compact or its application to any person or circumstance is held invalid, the remainder of the compact or the application of the provision to other persons or circumstances is not affected.

B. This compact shall be liberally construed to effectuate its purposes.
A.R.S. § 20-1362 — Arizona Code / Title 20 / Chapter 6 / Article 4 / Section 1362
20-1362 Insurance with other insurers
Status: in_force

20-1362. Insurance with other insurers

A. There may be a provision as follows:

"Insurance with other insurers: If there be other valid coverage, not with this insurer, providing benefits for the same loss on other than an expense incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability for such benefits under this policy shall be for such proportion of the indemnities otherwise provided hereunder for such loss as the like indemnities of which the insurer had notice (including the indemnities under this policy) bear to the total amount of all like indemnities for such loss, and for the return of such portion of the premium paid as shall exceed the pro rata portion for the indemnities thus determined."

B. If the provision is included in a policy which also contains the policy provision set out in section 20-1361 there shall be added to the caption of the provision set forth in subsection A of this section the phrase "--other benefits." The insurer may, at its option, include in this provision a definition of "other valid coverage," approved as to form by the director, which definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, and to any other coverage the inclusion of which may be approved by the director. In the absence of such definition the term shall not include group insurance, or benefits provided by union welfare plans or by employer or employee benefit organizations. For the purpose of applying the policy provision with respect to any insured, any amount of benefit provided for the insured pursuant to any compulsory benefit statute, including any workers' compensation or employer's liability statute, whether provided by a governmental agency or otherwise shall in all cases be deemed to be "other valid coverage" of which the insurer has had notice. In applying the policy provision no third party liability coverage shall be included as "other valid coverage."
A.R.S. § 20-485.12 — Arizona Code / Title 20 / Chapter 2 / Article 9 / Section 485.12
20-485.12 Certificate of registration; fees; expiration; revocation; civil penalties; violations; classification; injunctive relief
Status: in_force

20-485.12. Certificate of registration; fees; expiration; revocation; civil penalties; violations; classification; injunctive relief

A. A person may not claim to be an administrator in this state unless the person holds a valid certificate of registration as an administrator issued by the director.

B. An application for a certificate of registration and an application to renew a certificate shall be in the form prescribed by the director and shall be accompanied by the fee prescribed in section 20-167. The fee is not refundable if the application or renewal application is denied.  Each application for a certificate shall include the following information and documents:

1. A financial statement that is certified by an officer of the applicant on a form acceptable to the director and that includes current financial information covering the ninety days immediately preceding the date that the application is filed with the director. The financial statement shall include the following:

(a) A disclosure of the total amount of Arizona monies projected to be handled for the next calendar year.

(b) An income statement and a balance sheet prepared in accordance with generally accepted accounting principles for the two years immediately preceding the date that the application is filed. The applicant shall not submit consolidated income statements or balance sheets.

2. All of the administrator's basic organization documents and amendments to these documents, including any articles of incorporation, articles of association, partnership agreement, trade name certificate, trust agreement, shareholder agreement and other applicable document.

3. An organizational chart that identifies each member of the holding company system that directly or indirectly controls the administrator and every affiliate the administrator directly or indirectly controls.

4. The administrator's bylaws, rules or regulations or similar documents that regulate the administrator's internal affairs.

5. Biographical affidavits to be completed by the individuals responsible for the administrator's affairs, including affidavits for all members of the board of directors, the board of trustees, the executive committee or any other governing board or committee, the principal officers of the corporation or the partners or members of the partnership or association, shareholders that directly or indirectly hold at least ten percent of the voting securities of the administrator and any other person who exercises control or influence over the affairs of the administrator. The biographical affidavits shall include information concerning the personal history, business record, insurance experience and other pertinent facts as the director may require, including whether the affiant has been the subject of an investigation by any regulatory authority or has had any license of any type denied, suspended or revoked in any jurisdiction.

6. The administrator's complete name and address for all offices in each jurisdiction.

7. A declaration that states whether the administrator has:

(a) Been previously licensed to transact any kind of insurance in this state or any other jurisdiction and whether that license has been refused, suspended or revoked.

(b) Been indebted to any person, including all of the relevant details.

(c) Had an administrative agreement canceled, including all of the relevant details.

8. The details about the administrator's capacity to collect premiums or administer claims on behalf of the insurer in this state.

9. The written notice, approved by the insurer, that the administrator will provide to insured individuals and that advises the insured individuals of the administrator's identity and the relationship between the administrator and the insurer for each executed insurance administrative agreement filed in this state.

10. An affidavit signed by an officer of the administrator who is authorized by the administrator to verify the facts stated in the application.

C. The director shall issue the certificate of registration unless the director finds that the applicant is not competent or financially responsible, has had an insurance license denied for cause by any state or has failed to comply with any requirement of this article. The certificate remains in effect until the director suspends or revokes the certificate or until the director accepts the voluntary termination of the certificate. On revocation or termination, the administrator shall immediately deliver the certificate to the director.

D. Unless the certificate of registration is surrendered, suspended or revoked, a certificate of registration issued pursuant to this section to an administrator remains in effect for as long as the administrator continues in business in this state and the administrator remains in compliance with all of the requirements applicable to administrators prescribed by this title.

E. On or before March 1 of each year, each administrator that has an effective certificate of registration shall file a renewal application with the director, on a form approved by the director, that consists of a financial statement of the administrator's current financial condition, transactions and affairs as of December 31 of the preceding calendar year. The annual financial statement shall include a disclosure of the total amount of Arizona monies handled for the preceding year, including the income statement and balance sheet required by subsection B of this section and any additional information that the director may require.  At least two officers of the administrator shall verify the annual financial statement. The administrator shall include with the annual financial statement the filing fee prescribed in section 20-167.  The director may allow an administrator that has failed to file its annual financial statement or pay its fees on time to file the statement and pay the fees if the administrator pays an additional fee to be determined by the director of not more than $25 for each day of delinquency.

F. The director may request further information from the administrator at any time regarding a previously filed application or the annual financial statement prescribed by subsection E of this section.

G. Within thirty days after the change becomes effective, the administrator shall provide the director with written notice of any change in the application on which the certificate of registration was issued and of any change in the administrator's ownership or control.

H. After notice and a hearing, the director may either suspend or revoke a certificate of registration for any reason for which the issuance of a certificate could be denied or for any of the following reasons:

1. The administrator is in an unsound financial condition or in a condition that renders further administrative services in this state by the administrator hazardous to policyholders, claimants, beneficiaries or any other person.

2. The administrator knowingly failed to comply with any lawful order of the director.

3. The administrator violated any provision or requirement of this title or any rule adopted by the director pursuant to this title.

I. In lieu of or in addition to suspension or revocation, if the director finds grounds pursuant to subsection H of this section to suspend or revoke an administrator's certificate of registration, the director may impose a civil penalty of at least $1,000 and not more than $10,000. The civil penalty is in addition to any other penalties that may be imposed for violations of this title or other laws of this state.

J. Any civil penalties imposed pursuant to this section shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund.

K. Any person who violates any provision of this article other than subsection A of this section is guilty of a class 3 misdemeanor. A person who violates subsection A of this section is guilty of a class 5 felony.

L. If the director believes from evidence satisfactory to the director that a person is violating or is about to violate subsection A of this section, the director may order the person to cease and desist and, through the attorney general, may file a complaint in the superior court in the county in which the person transacts insurance business to enjoin or restrain the person from continuing or engaging in the violation or doing any act in furtherance of the violation.  If the director orders the person to cease and desist, the person may request a hearing pursuant to title 41, chapter 6, article 10.  If a complaint is filed in superior court, the court has jurisdiction over the proceedings and may enter an order or judgment awarding appropriate relief.
A.R.S. § 20-144 — Arizona Code / Title 20 / Chapter 1 / Article 2 / Section 144
20-144 Seal of office
Status: in_force

20-144. Seal of office

A. The director shall have a seal of office consisting of the shield as used in the great seal of the state of Arizona encircled by the words "director of the department of insurance and financial institutions, state of Arizona."

B. Every certificate or license issued by the director shall bear the director's seal.
A.R.S. § 20-1206 — Arizona Code / Title 20 / Chapter 6 / Article 1 / Section 1206
20-1206 Misstatement of age
Status: in_force

20-1206. Misstatement of age

There shall be a provision that if the age of the insured or of any other person whose age is considered in determining the premium has been misstated, any amount payable or benefit accruing under the policy shall be such as the premium would have purchased at the correct age or ages.
A.R.S. § 20-1376.08 — Arizona Code / Title 20 / Chapter 6 / Article 4 / Section 1376.08
20-1376.08 Prescription eyedrops; refills
Status: in_force

20-1376.08. Prescription eyedrops; refills

A. Beginning January 1, 2018, any policy that is issued, delivered or renewed by a disability insurer and that provides coverage for prescription eyedrops to treat glaucoma or ocular hypertension may not deny coverage for a refill of a prescription for eyedrops to treat glaucoma or ocular hypertension if all of the following apply:

1. The insured requests the refill:

(a) For a thirty-day supply, at least twenty-three days and less than thirty days from the later of:

(i) The original date that the prescription was distributed to the insured.

(ii) The date of the most recent refill that was distributed to the insured.

(b) For a sixty-day supply, at least forty-five days and less than sixty days from the later of:

(i) The original date that the prescription was distributed to the insured.

(ii) The date of the most recent refill that was distributed to the insured.

(c) For a ninety-day supply, at least sixty-eight days and less than ninety days from the later of:

(i) The original date that the prescription was distributed to the insured.

(ii) The date of the most recent refill that was distributed to the insured.

2. The prescription eyedrops to treat glaucoma or ocular hypertension prescribed by the health care provider are a covered benefit under the insured's policy.

3. The prescribing health care provider indicates on the original prescription that additional quantities of the prescription eyedrops to treat glaucoma or ocular hypertension are needed.

4. The refill requested by the insured does not exceed the number of additional quantities prescribed.

B. To the extent practicable, the requirements of this section are limited in quantity to the remaining dosage initially approved for coverage, except that any limited refilling may not limit or restrict coverage to any previously or subsequently approved prescription eyedrops to treat glaucoma or ocular hypertension and is subject to the terms and conditions of the policy that are applicable to this coverage.
A.R.S. § 20-1243.03 — Arizona Code / Title 20 / Chapter 6 / Article 1.3 / Section 1243.03
20-1243.03 Duties of insurers and producers; definitions
Status: in_force

20-1243.03. Duties of insurers and producers; definitions

A. When a producer makes a recommendation of an annuity, the producer shall act in the best interest of the consumer under the circumstances known at the time the recommendation is made, without placing the producer's or the insurer's financial interest ahead of the consumer's interest.  The producer has acted in the best interest of the consumer if the producer has satisfied the obligations regarding care, disclosure, conflict of interest and documentation prescribed in this section.

B. To satisfy the care obligation, in making a recommendation, the producer shall exercise reasonable diligence, care and skill to do all of the following:

1. Know the consumer's financial situation, insurance needs and financial objectives.

2. Understand the available recommendation options after making a reasonable inquiry into options available to the producer.

3. Have a reasonable basis to believe both of the following:

(a) The recommended option effectively addresses the consumer's financial situation, insurance needs and financial objectives over the life of the product, as evaluated in light of the consumer profile information.

(b) The consumer would benefit from certain features of the annuity, such as annuitization, death or living benefits or other insurance-related features.

4. Communicate the basis or bases of the recommendation.

5. Make reasonable efforts to obtain consumer profile information from the consumer before the recommendation of an annuity.

6. Consider the types of products the producer is authorized and licensed to recommend or sell that address the consumer's financial situation, insurance needs and financial objectives.  The producer:

(a) Is not required to analyze or consider any product outside the producer's authority and license or other possible alternative products or strategies that are available in the market at the time of recommendation.

(b) Shall be held to standards that apply to producers with similar authority and licensure.

7. In the case of an exchange or replacement of an annuity, consider the whole transaction, including taking into consideration whether:

(a) The consumer will incur a surrender charge, be subject to the commencement of a new surrender period, lose existing benefits, such as death, living or other contractual benefits, or be subject to increased fees, investment advisory fees or charges for riders and similar product enhancements.

(b) The replacing product would substantially benefit the consumer in comparison to the replaced product over the life of the product.

(c) The consumer has had another annuity exchange or replacement and, in particular, an exchange or replacement within the preceding sixty months.

C. The requirements under the best interest and care obligations under subsections A and B of this section do not create a fiduciary obligation or relationship and only create a regulatory obligation as established in this article.

D. The requirements under the care obligation under subsection B of this section:

1. Apply to the particular annuity as a whole and the underlying subaccounts to which funds are allocated at the time of purchase or exchange of an annuity, and riders and similar product enhancements, if any.

2. Do not mean the annuity with the lowest onetime or multiple occurrence compensation structure shall necessarily be recommended.

3. Do not mean the producer has ongoing monitoring obligations under the care obligation under subsection B of this section, although such an obligation may be separately owed under the terms of a fiduciary, consulting, investment advising or financial planning agreement between the consumer and the producer.

4. Do not require a producer to obtain any license other than a producer license with the appropriate line of authority to sell, solicit or negotiate insurance in this state, including any securities license, in order to fulfill the duties and obligations contained in this article if the producer does not give advice or provide services that are otherwise subject to securities laws or engage in any other activity requiring other professional licenses.

E. Under the care obligation under subsection B of this section, the consumer profile information, characteristics of the insurer and product costs, rates, benefits and features are those factors generally relevant in making a determination whether an annuity effectively addresses the consumer's financial situation, insurance needs and financial objectives, but the level of importance of each factor under the care obligation under subsection B of this section may vary depending on the facts and circumstances of a particular case, and each factor may not be considered in isolation.

F. To satisfy the disclosure obligation, before the recommendation or sale of an annuity, the producer shall prominently disclose the following information to the consumer on a form substantially similar to the "insurance agent (producer) disclosure for annuities" form in appendix A of the 2020 national association of insurance commissioners suitability in annuity transactions model regulation:

1. A description of the scope and terms of the relationship with the consumer and the role of the producer in the transaction.

2. An affirmative statement on whether the producer is licensed and authorized to sell the following products:

(a) Fixed annuities.

(b) Fixed indexed annuities.

(c) Variable annuities.

(d) Life insurance.

(e) Mutual funds.

(f) Stocks and bonds.

(g) Certificates of deposit.

3. An affirmative statement describing the insurers for which the producer is authorized, contracted or appointed or otherwise able to sell insurance products, using the following descriptions:

(a) One insurer.

(b) From two or more insurers.

(c) From two or more insurers although primarily contracted with one insurer.

4. A description of the sources and types of cash compensation and noncash compensation to be received by the producer, including whether the producer is to be compensated for the sale of a recommended annuity by commission as part of a premium or other remuneration received from the insurer, intermediary or other producer or by fee as a result of a contract for advice or consulting services.

5. A notice of the consumer's right to request additional information regarding cash compensation.  On request of the consumer or the consumer's designated representative, the producer shall disclose both of the following:

(a) A reasonable estimate of the amount of cash compensation to be received by the producer, which may be stated as a range of amounts or percentages.

(b) Whether the cash compensation is a onetime or multiple occurrence amount and, if a multiple occurrence amount, the frequency and amount of the occurrence, which may be stated as a range of amounts or percentages.

G. The disclosure obligation under subsection F of this section requires that before or at the time of the recommendation or sale of an annuity, the producer shall have a reasonable basis to believe the consumer has been informed of various features of the annuity, such as the potential surrender period and surrender charge, potential tax penalty if the consumer sells, exchanges, surrenders or annuitizes the annuity, mortality and expense fees, investment advisory fees, any annual fees, potential charges for and features of riders or other options of the annuity, limits on interest returns, potential changes in nonguaranteed elements of the annuity, insurance and investment components and market risk.

H. To satisfy the conflict of interest obligation, the producer shall identify and avoid or reasonably manage and disclose material conflicts of interest, including material conflicts of interest related to an ownership interest.

I. To satisfy the documentation obligation, the producer at the time of recommendation or sale shall:

1. Make a written record of any recommendation and the basis for the recommendation subject to this article.

2. Obtain a consumer-signed statement on a form substantially similar to the "consumer refusal to provide information" form in appendix B of the 2020 national association of insurance commissioners suitability in annuity transactions model regulation documenting both:

(a) A customer's refusal to provide the consumer profile information, if any.

(b) A customer's understanding of the ramifications of not providing the consumer profile information or providing insufficient consumer profile information.

3. Obtain a consumer-signed statement on a form substantially similar to the "consumer decision to purchase an annuity not based on a recommendation" form in appendix C of the 2020 national association of insurance commissioners suitability in annuity transactions model regulation acknowledging the annuity transaction is not recommended if a customer decides to enter into an annuity transaction that is not based on the producer's recommendation.

J. Any requirement applicable to a producer under subsections A, B, C, D, E, F, G, H and I of this section applies to every producer who has exercised material control or influence in the making of a recommendation and has received direct compensation as a result of the recommendation or sale, regardless of whether the producer has had any direct contact with the consumer. Activities such as the following do not in and of themselves constitute material control or influence:

1. Providing or delivering marketing or educational material.

2. Product wholesaling or other back-office product support.

3. General supervision of a producer.

K. An insurer's issuance of an annuity subject to this subsection shall be reasonable under all the circumstances actually known to the insurer at the time the annuity is issued.  A producer has no other obligation under subsections A, B, C, D and E of this section to a consumer related to an annuity transaction if:

1. No recommendation is made.

2. A recommendation was made that was later found to have been prepared based on materially inaccurate information provided by the consumer.

3. The consumer refuses to provide relevant consumer profile information and the annuity transaction is not recommended.

4. The consumer decides to enter into an annuity transaction that is not based on a recommendation by the producer.

L. Except as allowed under this subsection, an insurer may not issue an annuity recommended to a consumer unless there is a reasonable basis to believe the annuity would effectively address the particular consumer's financial situation, insurance needs and financial objectives based on the consumer's consumer profile information.  Each insurer shall establish and maintain a supervision system that is reasonably designed to achieve the insurer's and its producers' compliance with this article and that includes the following:

1. Reasonable procedures to inform its producers of the requirements of this article, including incorporating the requirements of this article in relevant producer training manuals.

2. Standards for producer product training, including establishing and maintaining reasonable procedures to ensure compliance with section 20-1243.07.

3. Product-specific training and training materials that explain all material features of its annuity products to its producers.

4. Procedures for reviewing each recommendation before issuing an annuity that are designed to ensure there is a reasonable basis to determine that the recommended annuity would effectively address the particular consumer's financial situation, insurance needs and financial objectives.  The review procedures may apply a screening system for the purpose of identifying selected transactions for additional review and may be accomplished electronically or through other means, including physical review. The electronic system or other system may be designed to require additional review of only those transactions that are identified for additional review by the selection criteria.

5. Reasonable procedures to detect recommendations that do not comply with subsections A, B, C, D, E, F, G, H, I, J, K, O and P of this section, including confirmation of the consumer's consumer profile information, systematic customer surveys, producer and consumer interviews, confirmation letters, producer statements or attestations and programs of internal monitoring. This paragraph does not prevent an insurer from complying with this paragraph by applying sampling procedures or by confirming the consumer profile information or other required information under this section after issuing or delivering the annuity.

6. Reasonable procedures to assess, before or on issuance or delivery of an annuity, whether a producer has provided to the consumer the information required to be provided under this section.

7. Reasonable procedures to identify and address suspicious consumer refusals to provide consumer profile information.

8. Reasonable procedures to identify and eliminate any sales contests, sales quotas, bonuses and noncash compensation that are based on the sales of specific annuities within a limited period of time.  This paragraph does not prohibit the receipt of health insurance, office rent, office support, retirement benefits or other employee benefits by employees so long as those benefits are not based on the volume of sales of a specific annuity within a limited period of time.

9. A written annual report to senior management, including to the senior manager responsible for audit functions, that details a review with appropriate testing and that is reasonably designed to determine the effectiveness of the supervision system, the exceptions found and corrective action taken or recommended, if any.

M. An insurer may contract for performance of a function, including maintenance of procedures, required under subsection L of this section but is responsible for taking appropriate corrective action and may be subject to sanctions and penalties pursuant to section 20-1243.05 regardless of whether the insurer contracts for performance of a function and regardless of the insurer's compliance with paragraphs 1 and 2 of this subsection.  An insurer's supervision system under this subsection shall include supervision of contractual performance under this subsection by incorporating at least both of the following:

1. Monitoring and, as appropriate, conducting audits to ensure that the contracted function is properly performed.

2. Annually obtaining a certification from a senior manager who has responsibility for the contracted function that the manager has a reasonable basis to represent, and does represent, that the function is properly performed.

N. An insurer is not required to include in its system of supervision:

1. A producer's recommendations to consumers of products other than the annuities offered by the insurer.

2. Consideration of or comparison to options available to the producer or compensation relating to those options other than annuities or other products offered by the insurer.

O. A producer or an insurer may not dissuade, or attempt to dissuade, a consumer from:

1. Truthfully responding to an insurer's request for confirmation of the consumer profile information.

2. Filing a complaint.

3. Cooperating with the investigation of a complaint.

P. Recommendations and sales of annuities that comply with comparable standards satisfy the requirements under this article. This subsection applies to all recommendations and sales of annuities made by financial professionals in compliance with business rules, controls and procedures that satisfy a comparable standard even if such a standard would not otherwise apply to the product or recommendation at issue.  This subsection does not limit the director's ability to investigate and enforce this article or limit the insurer's obligation to comply with its obligation under subsection L of this section not to issue an annuity recommended to a consumer unless there is a reasonable basis to believe the annuity would effectively address the particular consumer's financial situation, insurance needs and financial objectives based on the consumer's consumer profile information, although the insurer may base its analysis on information received from either the financial professional or the entity supervising the financial professional.  An insurer complies with this subsection if the insurer does all of the following:

1. Monitors the relevant conduct of the financial professional seeking to rely on this subsection or the entity responsible for supervising the financial professional, such as the financial professional's broker-dealer or an investment adviser registered under federal or state securities laws using information collected in the normal course of an insurer's business.

2. Provides to the entity responsible for supervising the financial professional seeking to rely on this subsection, such as the financial professional's broker-dealer or investment adviser registered under federal or state securities laws, information and reports that are reasonably appropriate to assist the entity to maintain its supervision system.

Q. For the purposes of this section:

1. "Comparable standards" means:

(a) With respect to broker-dealers and registered representatives of broker-dealers, applicable SEC and FINRA rules relating to best interest obligations and supervision of annuity recommendations and sales, including regulation best interest and any amendments or successor regulations.

(b) With respect to investment advisers registered under federal or state securities law or investment adviser representatives, the fiduciary duties and all other requirements imposed on the investment advisers or investment adviser representatives by contract or under the investment advisers act of 1940, including the form ADV and interpretations.

(c) With respect to plan fiduciaries or other fiduciaries, the fiduciary duties, obligations and prohibitions and all other requirements attendant to such a status under the employee retirement income security act of 1974 or the internal revenue code and any amendments or successor statutes.

2. "Financial professional" means a producer that is regulated and acting as:

(a) A broker-dealer registered under federal or state securities laws or a registered representative of a broker-dealer.

(b) An investment adviser registered under federal or state securities laws or an investment adviser representative associated with the federal or state investment adviser.

(c) A plan fiduciary under section 3(21) of the employee retirement income security act of 1974 or section 4975(e)(3) of the internal revenue code or any amendments or successor statutes.
A.R.S. § 20-1209.01 — Arizona Code / Title 20 / Chapter 6 / Article 1 / Section 1209.01
20-1209.01 Maximum rate of interest on policy loans; definitions
Status: in_force

20-1209.01. Maximum rate of interest on policy loans; definitions

A. Policies issued on or after the effective date of this section shall provide for policy loan interest rates at either of the following levels:

1. A maximum interest rate of not more than eight per cent a year.

2. An adjustable maximum interest rate established by the life insurer as provided by this section.

B. The rate of interest charged on a policy loan made by a life insurer under subsection A, paragraph 2 of this section shall not exceed the higher of the following:

1. The published monthly average for the calendar month ending two months before the date on which the rate is determined.

2. The rate used to compute the cash surrender values under the policy during the applicable period plus one per cent a year.

C. If the maximum rate of interest on a policy loan is determined under subsection A, paragraph 2 of this section, the policy shall contain a provision prescribing the frequency at which the rate is to be recalculated for that policy.

D. The life insurer shall determine the maximum rate for each policy containing a provision permitting an adjustable policy loan interest rate at regular intervals at least once every twelve months but not more frequently than once in any three month period. At the intervals specified in the policy:

1. The life insurer may increase the policy loan interest rate being charged if the increase as determined under subsection B of this section would increase that rate by one-half per cent or more a year.

2. The life insurer shall reduce the policy loan interest rate being charged if the reduction as determined under subsection B of this section would decrease that rate by one-half per cent or more a year.

E. The life insurer shall:

1. Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan.

2. Notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan. Notice need not be given to the policyholder if a further premium loan is added, except as provided in paragraph 3 of this subsection.

3. Send to policyholders with loans reasonable advance notice of any increase in the rate.

4. Include in the notices required by this subsection the substance of the provisions of either subsection A, paragraph 1, or subsection A, paragraph 2 and subsection C of this section, whichever is applicable.

F. The life insurer shall determine the loan value of the policy according to section 20-1209, but no policy may terminate in a policy year as the sole result of a change in the interest rate during that policy year, and the life insurer shall maintain coverage during that policy year until the time at which it would otherwise have terminated if there had been no change during that policy year.

G. The substance of the provisions of either subsection A, paragraph 1, or subsection A, paragraph 2 and subsection C of this section shall be set forth in the policies to which they apply.

H. The rate of interest on policy loans permitted under this section includes the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy.

I. In this section, unless the context otherwise requires:

1. "Policy" includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy loans.

2. "Policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer.

3. "Policy loan" includes any premium loan made under a policy to pay one or more premiums that were not paid to the life insurer as they fell due.

4. "Published monthly average" means either:

(a) The Moody's corporate bond yield average, monthly average corporates, as published by Moody's investors service, incorporated or any successor to the corporation.

(b) If the Moody's corporate bond yield average, monthly average corporates, is no longer published, a substantially similar average, established by rule of the director.

J. No other provisions of law applies to policy loan interest rates unless made specifically applicable to such a rate.
A.R.S. § 20-1090 — Arizona Code / Title 20 / Chapter 4 / Article 10 / Section 1090
20-1090 Reorganization; limitation
Status: in_force

20-1090. Reorganization; limitation

Any domestic life and disability reinsurer, with appropriate powers in its articles of incorporation and with the necessary capital and surplus, and upon application to the director, may become a domestic life and disability insurer free from the restrictions otherwise imposed by this article. Except as provided in subsection B of section 20-1089, domestic life and disability reinsurers shall not have authority to transact insurance directly with the public.
A.R.S. § 20-257 — Arizona Code / Title 20 / Chapter 2 / Article 2 / Section 257
20-257 "Surety insurance" defined
Status: in_force

20-257. "Surety insurance" defined

"Surety insurance" includes:

1. Fidelity insurance, which is insurance guaranteeing the fidelity of persons holding positions of public or private trust.

2. Insurance guaranteeing the performance of contracts, other than insurance policies, and guaranteeing and executing bonds, undertakings and contracts of suretyship.

3. Insurance indemnifying banks, bankers, brokers, financial or monied corporations or associations against loss, resulting from any cause, of bills of exchange, notes, bonds, securities, evidences of debt, deeds, mortgages, warehouse receipts or other valuable papers, documents, money, precious metals and articles made therefrom, jewelry, watches, necklaces, bracelets, gems, precious and semi-precious stones, including any loss while they are being transported in armored motor vehicles, or by messenger, but not including any other risks of transportation or navigation, and also insurance against loss or damage to such an insured's premises or to his furnishings, fixtures, equipment, safes and vaults therein, caused by burglary, robbery, theft, vandalism or malicious mischief, or any attempt to commit such crimes.
A.R.S. § 20-785 — Arizona Code / Title 20 / Chapter 4 / Article 2 / Section 785
20-785 Time limit for assessment
Status: in_force

20-785. Time limit for assessment

Every subscriber of a domestic reciprocal insurer having contingent liability shall be liable for, and shall pay his share of any assessment, as computed and limited in accordance with this article, if:

1. While his policy is in force or within one year after its termination, he is notified by either the attorney or the director of his intentions to levy such assessment.

2. An order to show cause why a receiver, conservator, rehabilitator or liquidator of the insurer should not be appointed is issued while his policy is in force or within one year after its termination.
A.R.S. § 20-1259 — Arizona Code / Title 20 / Chapter 6 / Article 2 / Section 1259
20-1259 Grace period
Status: in_force

20-1259. Grace period

In group life policies there shall be a provision that the policyholder is entitled to a grace period of thirty-one days for the payment of any premium due except the first, during which grace period the death benefit coverage shall continue in force, unless the policyholder has given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The policy may provide that the policyholder shall be liable to the insurer for the payment of a pro rata premium for the time the policy was in force during such grace period.
A.R.S. § 20-2324 — Arizona Code / Title 20 / Chapter 13 / Article 1 / Section 2324
20-2324 Bona fide associations; definitions
Status: in_force

20-2324. Bona fide associations; definitions

A.  An association qualifies as a path 1 bona fide association if the association meets the following requirements:

1. Has been formed and maintained in good faith for purposes other than obtaining insurance and does not condition membership in the association on the purchase of insurance that is sponsored by the association.

2. Has a constitution and bylaws.

3. Insures at least twenty-five members, employees or employees of members of the association for the benefit of persons other than the association or its officers or trustees.

4. Does not condition membership in the association on any health status-related factor relating to an individual, including an employee of an employer or a dependent of an employee, and clearly states this in all membership and application materials.

5. Makes health benefits plans offered through the association available to all members regardless of any health status-related factor relating to any member of the association or individual eligible for coverage through a member and clearly states this in all membership and application materials.

6. Does not make health benefits plans offered through the association available other than in connection with a member of the association and clearly states this in all membership and application materials.

B. An association qualifies as a path 2 bona fide association if the association meets the requirements of 29 Code of Federal Regulations section 2510.3-5. An insurer electing to offer health benefits plans through a bona fide association to small employer groups of one, which may include sole proprietors or working owners, is not required to make health benefits plans available under section 20-2304, subsection A to small employer groups of one if the small employer is not seeking a health benefits plan through a bona fide association.

C. The requirements of section 20-2304, subsection A do not apply to health benefits plans offered by an accountable health plan if the accountable health plan makes this coverage available in the small group market only through one or more path 1 bona fide associations.

D. The department may survey insurers issuing health benefits plans to determine the number of health benefits plans issued to bona fide associations in this state each year.

E. This section does not limit or prohibit the issuance of self-funded health benefits plans in this state through a bona fide association if the association is established and operating in compliance with applicable provisions of the employee retirement income security act of 1974.  The department retains the authority to investigate whether an association is unlawfully transacting insurance in violation of this title.

F. For the purposes of subsection A of this section, "employees" includes retired employees.

G. For the purposes of this section:

1. "Bona fide association" includes path 1 bona fide associations and path 2 bona fide associations.

2. "Small employer" includes, if an insurer elects to issue coverage to small employer groups of one:

(a) For health benefits plans issued through a bona fide association, an employer who employs at least one but not more than fifty eligible employees on a typical business day during any one calendar year.

(b) For health benefits plans issued through a path 2 bona fide association, a sole proprietor or working owner.

3. "Sole proprietor" means a person who is a working owner, who owns a business and who does not operate the business using any type of entity.

4. "Working owner" means a person who a responsible plan fiduciary reasonably determines is an individual who meets all of the following requirements:

(a) Has an ownership right of any nature in a trade or business, whether incorporated or unincorporated, including a partner and another self-employed individual.

(b) Is earning wages or self-employment income from the trade or business for providing personal services to the trade or business.

(c) Either:

(i) Works on average at least twenty hours per week or at least eighty hours per month providing personal services to the trade or business.

(ii) Has wages or self-employment income from the trade or business that at least equals the working owner's cost of coverage for participation by the working owner and any covered beneficiaries in the group health plan sponsored by the association in which the individual is participating.
A.R.S. § 20-1354 — Arizona Code / Title 20 / Chapter 6 / Article 4 / Section 1354
20-1354 Physical examination; autopsy
Status: in_force

20-1354. Physical examination; autopsy

There shall be a provision as follows: "Physical examinations and autopsy: The insurer at its own expense shall have the right and opportunity to examine the person of the insured when and as often as it may reasonably require during the pendency of a claim hereunder and to make an autopsy in case of death where it is not forbidden by law."
A.R.S. § 20-295 — Arizona Code / Title 20 / Chapter 2 / Article 3 / Section 295
20-295 License denial, suspension or revocation; civil penalty
Status: in_force

20-295. License denial, suspension or revocation; civil penalty

A. The director may deny, suspend for not more than twelve months, revoke or refuse to renew an insurance producer's license or may impose a civil penalty in accordance with subsection F of this section or any combination of actions for any one or more of the following causes:

1. Providing incorrect, misleading, incomplete or materially untrue information in the license application.

2. Violating any provision of this title or any rule, subpoena or order of the director.

3. Obtaining or attempting to obtain a license through misrepresentation or fraud.

4. Improperly withholding, misappropriating or converting any monies or properties received in the course of doing insurance business.

5. Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance.

6. Having been convicted of a felony.

7. Having admitted or been found to have committed any insurance unfair trade practice or fraud.

8. Using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere.

9. Having an insurance producer license, or its equivalent, denied, suspended or revoked in any state, province, district or territory.

10. Forging another's name to any document related to an insurance transaction.

11. Aiding or assisting any person in the unauthorized transaction of insurance business.

12. Violating section 41-624, subsection B or C.

13. Violating section 6-1410, 6-1412 or 6-1413.

14. Using the insurance producer's license principally to procure insurance that covers the life, property or insurable interests, other than to insure an interest in property that is being sold under a contract or that is securing a loan, of any of the following:

(a) The licensee.

(b) The licensee's family or relatives to the second degree.

(c) The licensee’s employer.

(d) The licensee’s employees.

(e) A firm or corporation, or its employees, in which the licensee owns a substantial interest.

B. The director may deny, suspend for not more than twelve months, revoke or refuse to renew the license of a business entity:

1. For any of the causes prescribed in subsection A of this section if the cause relates to the designated producer or any member, officer, director or manager of the business entity.

2. If the director finds that an individual insurance producer's violation was known or should have been known by the designated producer or one or more of the members, officers, directors or managers acting on behalf of the business entity and the violation was not seasonably reported to the director and no reasonable corrective action was taken.

C. If the director denies an application for a license, the director shall notify the applicant in accordance with title 41, chapter 6, article 10.

D. The director may revoke, suspend or refuse to renew a license after notice and an opportunity for a hearing in accordance with title 41, chapter 6, article 10.

E. Any hearing required by this section shall be conducted as prescribed in chapter 1, article 2 of this title and title 41, chapter 6, article 10.

F. In addition to or instead of any suspension, revocation or refusal to renew a license pursuant to this section, after a hearing the director may:

1. Impose a civil penalty of not more than two hundred fifty dollars for each unintentional failure or violation, up to an aggregate civil penalty of two thousand five hundred dollars.

2. Impose a civil penalty of not more than two thousand five hundred dollars for each intentional failure or violation, up to an aggregate civil penalty of fifteen thousand dollars.

3. Order the licensee to provide restitution to any party injured by the licensee's action.

G. The licensee shall pay any civil penalty to the director who shall deposit it, pursuant to sections 35-146 and 35-147, in the state general fund.  The civil penalty is in addition to any other applicable penalty or restraint either in this article or in any other law and may be recovered in a civil action brought by the director.  For the purposes of subsection F of this section, a single publication, exhibition or utterance of any matter in violation of this title is deemed one violation or failure, including an edition of a newspaper, book or magazine, a single representation to an audience, a single broadcast over radio or television or a single exhibition of a motion picture.

H. The director shall retain the authority to enforce this title and impose any penalty or remedy authorized by this title against any person who is under investigation for or charged with a violation of this title even if the person's license has been surrendered or has lapsed by operation of law.
A.R.S. § 20-1202 — Arizona Code / Title 20 / Chapter 6 / Article 1 / Section 1202
20-1202 Standard provisions required in life insurance policies
Status: in_force

20-1202. Standard provisions required in life insurance policies

A. No policy of life insurance other than industrial, group and pure endowments with or without return of premiums or of premiums and interest, shall be delivered or issued for delivery in this state unless it contains in substance all of the provisions required by sections 20-1203 to 20-1216, inclusive. This section shall not apply to annuity contracts nor to any provision of a life insurance policy relating to disability benefits or to additional benefits in the event of death by accident or accidental means.

B. Any provisions or portions thereof not applicable to single premium or term policies shall to that extent not be incorporated therein.
A.R.S. § 20-419 — Arizona Code / Title 20 / Chapter 2 / Article 5 / Section 419
20-419 Legal process against surplus lines insurer
Status: in_force

20-419. Legal process against surplus lines insurer

A. Every unauthorized nonresident insurer issuing or delivering a surplus lines policy through a surplus lines broker in this state is conclusively deemed to have irrevocably appointed the director as its agent for acceptance of service of all legal process issued in this state in any action or proceeding under or arising out of the policy, and service of the process on the director is lawful personal service on the nonresident insurer.

B. Service of process in an action or proceeding against an unauthorized resident insurer issuing or delivering a surplus lines policy through a surplus lines broker in this state is valid if served on any person within this state who transacts an insurance business in this state on behalf of the insurer.

C. Each surplus lines policy shall contain a provision stating the substance of subsection A or B of this section, whichever is applicable, and designating the person to whom process shall be mailed as provided in subsection D of this section.

D. Duplicate copies of legal process against a nonresident insurer shall be served on the director, and at the time of service the plaintiff shall pay to the director the service of process fee prescribed in section 20-167, taxable as costs in the action.  The director shall immediately mail one copy of the process served to the person designated by the nonresident insurer in the policy for the purpose, by certified mail, return receipt requested.  Legal process against a resident insurer shall be served on any person within this state who transacts an insurance business within this state on behalf of the insurer.  The plaintiff shall mail notice of service and a copy of the process to the person designated by the resident insurer in the policy for the purpose, by certified mail, return receipt requested. An insurer shall have forty days after the date of mailing within which to plead, answer or otherwise defend the action.
A.R.S. § 20-1344 — Arizona Code / Title 20 / Chapter 6 / Article 4 / Section 1344
20-1344 Policy provisions required; omissions; substitutions
Status: in_force

20-1344. Policy provisions required; omissions; substitutions

A. Except as provided in subsection B of this section, each such policy delivered or issued for delivery to any person in this state shall contain the provisions specified in sections 20-1345 to 20-1356, inclusive, in the words in which such provisions appear, except that the insurer may, at its option, substitute for one or more of such provisions corresponding provisions of different wording approved by the director which are in each instance not less favorable in any respect to the insured or the beneficiary. Each such provision shall be preceded individually by the applicable caption shown, or, at the option of the insurer, by such appropriate individual or group captions or subcaptions as the director approves.

B. If any such provision is in whole or in part inapplicable to or inconsistent with the coverage provided by a particular form of policy, the insurer, with the approval of the director, shall omit from the policy any inapplicable provision or part of a provision, and shall modify any inconsistent provision or part of a provision in such manner as to make the provision as contained in the policy consistent with the coverage provided by the policy.
A.R.S. § 20-1057.08 — Arizona Code / Title 20 / Chapter 4 / Article 9 / Section 1057.08
20-1057.08 Prescription contraceptive drugs and devices; definition
Status: in_force

20-1057.08. Prescription contraceptive drugs and devices; definition

A. If a health care services organization issues evidence of coverage that provides coverage for:

1. Prescription drugs, the evidence of coverage shall provide coverage for any prescribed drug or device that is approved by the United States food and drug administration for use as a contraceptive.  A health care services organization may use a drug formulary, multitiered drug formulary or list but that formulary or list shall include oral, implant and injectable contraceptive drugs, intrauterine devices and prescription barrier methods if the health care services organization does not impose deductibles, coinsurance, copayments or other cost containment measures for contraceptive drugs that are greater than the deductibles, coinsurance, copayments or other cost containment measures for other drugs on the same level of the formulary or list.

2. Outpatient health care services, the evidence of coverage shall provide coverage for outpatient contraceptive services.  For the purposes of this paragraph, "outpatient contraceptive services" means consultations, examinations, procedures and medical services provided on an outpatient basis and related to the use of United States food and drug prescription contraceptive methods to prevent unintended pregnancies.

B. Notwithstanding subsection A of this section, a religiously affiliated employer may require that the health care services organization provide an evidence of coverage without coverage for specific items or services required under subsection A of this section because providing or paying for coverage of the specific items or services is contrary to the religious beliefs of the religiously affiliated employer offering the plan. If a religiously affiliated employer objects to providing coverage for specific items or services required under subsection A of this section, a written affidavit shall be filed with the health care services organization stating the objection.  On receipt of the affidavit, the health care services organization shall issue to the religiously affiliated employer an evidence of coverage that excludes coverage for specific items or services required under subsection A of this section. The health care services organization shall retain the affidavit for the duration of the coverage and any renewals of the coverage.

C. Subsection B of this section does not exclude coverage for prescription contraceptive methods ordered by a health care provider with prescriptive authority for medical indications other than for contraceptive, abortifacient, abortion or sterilization purposes. A religiously affiliated employer offering the plan may state religious beliefs in its affidavit and may require the enrollee to first pay for the prescription and then submit a claim to the health care services organization along with evidence that the prescription is not for a purpose covered by the objection. A health care services organization may charge an administrative fee for handling claims under this subsection.

D. Subsections B and C of this section do not authorize a religiously affiliated employer to obtain an employee's protected health information or to violate the health insurance portability and accountability act of 1996 (P.L. 104-191; 110 Stat. 1936) or any federal regulations adopted pursuant to that act.

E. Subsections B and C of this section shall not be construed to restrict or limit any protections against employment discrimination that are prescribed in federal or state law.

F. This section does not apply to evidences of coverage issued to individuals on a nongroup basis.

G. For the purposes of this section, "religiously affiliated employer" means either:

1. An entity for which all of the following apply:

(a) The entity primarily employs persons who share the religious tenets of the entity.

(b) The entity serves primarily persons who share the religious tenets of the entity.

(c) The entity is a nonprofit organization as described in section 6033(a)(3)(A)(i) or (iii) of the internal revenue code of 1986, as amended.

2. An entity whose articles of incorporation clearly state that it is a religiously motivated organization and whose religious beliefs are central to the organization's operating principles.
A.R.S. § 20-1374 — Arizona Code / Title 20 / Chapter 6 / Article 4 / Section 1374
20-1374 Effective date of provisions; moratorium
Status: in_force

20-1374. Effective date of provisions; moratorium

A policy, rider or endorsement which could have been lawfully used or delivered or issued for delivery to any person in this state immediately prior to January 1, 1955, may be used or delivered or issued for delivery to any such person until January 1, 1957, without being subject to the provisions of sections 20-1341 to 20-1372, inclusive.
A.R.S. § 20-1691.09 — Arizona Code / Title 20 / Chapter 6 / Article 15 / Section 1691.09
20-1691.09 Penalties
Status: in_force

20-1691.09. Penalties

In addition to any other penalty provided by law, an insurer or insurance producer who is found to have violated any provision relating to the regulation of long-term care insurance or the marketing of long-term care insurance is subject to a civil penalty of up to three times the amount of any commissions paid for each policy involved in the violation or up to ten thousand dollars, whichever is more.
A.R.S. § 20-1692 — Arizona Code / Title 20 / Chapter 6 / Article 16 / Section 1692
20-1692 Definitions
Status: in_force

20-1692. Definitions

In this article, unless the context otherwise requires:

1. "Alternate recipient" means a child of a participant who has a right to enrollment under a group health plan pursuant to a medical child support order.

2. "Child" means an individual who is under eighteen years of age as of the date of the adoption or placement for adoption.

3. "Group health plan" means a plan covering employees of an employer as defined in section 607(1) of the employee retirement income security act of 1974.

4. "Placement for adoption" means the assumption and retention by a person of a legal obligation for total or partial support of a child in anticipation of adoption of the child. The child's placement with a person terminates on the termination of the legal obligations.

5. "Qualified medical child support order" means an order that creates or recognizes an alternate payment right to receive benefits for which a participant or beneficiary is eligible under a group plan.
A.R.S. § 20-466.02 — Arizona Code / Title 20 / Chapter 2 / Article 6 / Section 466.02
20-466.02 Injunction; restitution; civil penalties; costs
Status: in_force

20-466.02. Injunction; restitution; civil penalties; costs

A. On request by the director, the attorney general may seek and obtain in an action in the superior court an injunction that prohibits a person from engaging in practices or doing any acts that violate section 20-463, 20-463.01 or 23-1028. The court may enter any order or judgment that is necessary to:

1. Prevent any act or practice that is unlawful under section 20-463, 20-463.01 or 23-1028.

2. Return any monies, interest or real or personal property that was acquired by an act or practice that is unlawful under section 20-463, 20-463.01 or 23-1028.

B. An order of restitution may also include expenses incurred and paid by an insurer in connection with any medical evaluation or treatment services.

C. If the court finds that a person has violated section 20-463, 20-463.01 or 23-1028, the attorney general on petition or complaint to the court may recover from that person on behalf of the state a civil penalty of not more than five thousand dollars for each violation.

D. In any action pursuant to this section, the court may award the attorney general costs including reasonable attorney fees and investigative costs for the services rendered.
A.R.S. § 20-1542 — Arizona Code / Title 20 / Chapter 6 / Article 8.1 / Section 1542
20-1542 Capital and surplus
Status: in_force

20-1542. Capital and surplus

A. A mortgage guaranty insurance company shall not transact the business of mortgage guaranty insurance unless:

1. If a stock insurance company, it has paid in capital of at least one million dollars and paid in surplus of at least one million dollars.

2. If a mutual insurance company, it has a minimum initial surplus of two million dollars.

B. A stock company or a mutual company shall at all times thereafter maintain a minimum policyholders' surplus of at least one million five hundred thousand dollars.
A.R.S. § 20-486.01 — Arizona Code / Title 20 / Chapter 2 / Article 10 / Section 486.01
20-486.01 Licensure of reinsurance intermediaries
Status: in_force

20-486.01. Licensure of reinsurance intermediaries

A. A person, firm, association or corporation shall not act as a reinsurance intermediary broker in this state unless:

1. With respect to a reinsurance intermediary broker who maintains an office in this state, whether directly or as a member or employee of a firm or association or as an officer, director or employee of a corporation, the reinsurance intermediary broker is a licensed producer in this state.

2. With respect to a reinsurance intermediary broker who does not maintain an office in this state, the reinsurance intermediary is a licensed producer in another state having a requirement that is substantially similar to this article or the reinsurance intermediary broker is licensed in this state as a nonresident reinsurance intermediary.

B. A person, firm, association or corporation shall not act as a reinsurance intermediary manager:

1. For a reinsurer domiciled in this state, unless the reinsurance intermediary manager is a licensed producer in this state.

2. In this state if the reinsurance intermediary manager maintains an office either directly or as a member or employee of a firm or association, or as an officer, director or employee of a corporation in this state, unless the reinsurance intermediary manager is a licensed producer in this state.

3. In another state for a nondomestic insurer, unless the reinsurance intermediary manager is a licensed producer in this state or another state under a similar law of that state or the reinsurance intermediary manager is licensed in this state as a nonresident reinsurance intermediary.

C. The director may require a reinsurance intermediary manager to:

1. File a bond from an insurer for the protection of the reinsurer in an amount that is acceptable to the director.

2. Maintain an errors and omissions policy in an amount that is acceptable to the director.

D. The director may issue a reinsurance intermediary license to a person, firm, association or corporation that complies with the requirements of this article. A license that is issued to a firm or association authorizes all the members and designated employees of the firm or association to act as reinsurance intermediaries under the license. Members and designated employees shall be named in the application and any supplements to the application. A license that is issued to a corporation authorizes all of the officers, designated employees and directors of the corporation to act as reinsurance intermediaries on behalf of the corporation. The officers, designated employees and directors shall be named in the application and any supplements to the application. If the applicant for a reinsurance intermediary license is a nonresident, as a condition precedent to receiving or holding a license the applicant shall designate the director as the agent for service of process pursuant to this article. The applicant shall furnish the director with the name and address of a resident of this state on whom may be served notice, orders of the director or process affecting the nonresident reinsurance intermediary. The licensee shall notify promptly the director in writing of every change in its designated agent for service of process. The change does not become effective until it is acknowledged by the director.

E. The director may refuse to issue a reinsurance intermediary license if, in the director's judgment, the applicant, a person named on the application or a member, principal, officer or director of the applicant or controlling person of the applicant gives cause for revocation or suspension of the license or fails to comply with any prerequisite for the issuance of the license. On written request, the director shall furnish a summary of the basis for refusal to issue a license. The summary is privileged and confidential.

F. Attorneys licensed to practice law in this state are exempt from this section when acting in their professional capacity.

G. The director may exempt from this section a reinsurance intermediary broker whose activities with respect to reinsurance comply with all of the following:

1. Has no authorization to bind any party.

2. Compensation is not dependent on the sale or placement of reinsurance and the amount of compensation is not related to the amount of reinsurance or reinsurance premium.

3. Reinsurance related activities are infrequent and incidental to other professional services.

4. Does not handle or control the funds of any party directly or indirectly involved in the reinsurance activities of the reinsurance intermediary broker.
A.R.S. § 20-826.01 — Arizona Code / Title 20 / Chapter 4 / Article 3 / Section 826.01
20-826.01 Hospital or medical service corporations; clinical trials; cancer; definitions
Status: in_force

20-826.01. Hospital or medical service corporations; clinical trials; cancer; definitions

A. A hospital service corporation or medical service corporation is not obligated to pay any costs, other than covered patient costs, that are directly associated with a cancer clinical trial that is offered in this state and in which the subscriber participates voluntarily.  A cancer clinical trial is a course of treatment in which all of the following apply:

1. The treatment is part of a scientific study of a new therapy or intervention that is being conducted at an institution in this state, that is for the treatment, palliation or prevention of cancer in humans and in which the scientific study includes all of the following:

(a) Specific goals.

(b) A rationale and background for the study.

(c) Criteria for patient selection.

(d) Specific directions for administering the therapy and monitoring patients.

(e) A definition of quantitative measures for determining treatment response.

(f) Methods for documenting and treating adverse reactions.

2. The treatment is being provided as part of a study being conducted in a phase I, phase II, phase III or phase IV cancer clinical trial.

3. The treatment is being provided as part of a study being conducted in accordance with a clinical trial approved by at least one of the following:

(a) One of the national institutes of health.

(b) A national institutes of health cooperative group or center.

(c) The United States food and drug administration in the form of an investigational new drug application.

(d) The United States department of defense.

(e) The United States department of veterans affairs.

(f) A qualified research entity that meets the criteria established by the national institutes of health for grant eligibility.

(g) A panel of qualified recognized experts in clinical research within academic health institutions in this state.

4. The proposed treatment or study has been reviewed and approved by an institutional review board of an institution in this state.

5. The personnel providing the treatment or conducting the study:

(a) Are providing the treatment or conducting the study within their scope of practice, experience and training and are capable of providing the treatment because of their experience, training and volume of patients treated to maintain expertise.

(b) Agree to accept reimbursement as payment in full from the corporation at the rates that are established by the corporation and that are not more than the level of reimbursement applicable to other similar services provided by health care providers with the corporation's provider network.

6. There is no clearly superior, noninvestigational treatment alternative.

7. The available clinical or preclinical data provide a reasonable expectation that the treatment will be at least as efficacious as any noninvestigational alternative.

B. Pursuant to the patient informed consent document, no party is liable for damages associated with the treatment provided during any phase of a cancer clinical trial.

C. Each contract delivered or issued for delivery in this state shall provide benefits under the contract, and those benefits shall not supplant any portion of the clinical trial that is customarily paid for by government, biotechnical, pharmaceutical or medical device industry sources.

D. This section does not create any private right or cause of action for or on behalf of any patient against the corporation. This section provides solely an administrative remedy to the director for any violation of this section or any related rule.

E. Nothing in this section prohibits the corporation from imposing deductibles, coinsurance or other cost sharing measures in relation to benefits provided pursuant to this section.

F. A trade association that represents hospital service corporations, medical service corporations and health care services organizations as defined in section 20-1051 may select a representative to voluntarily serve on the institutional review board of an institution in this state that reviews and approves the proposed treatment or study conducted during the cancer clinical trial.

G. For the purposes of this section:

1. "Cooperative group" means a formal network of facilities that collaborates on research projects and that has an established national institutes of health approved peer review program operating within the group, including the national cancer institute clinical cooperative group and the national cancer institute community clinical oncology program.

2. "Institutional review board" means any board, committee or other group that is both:

(a) Formally designated by an institution to approve the initiation of and to conduct periodic review of biomedical research involving human subjects and in which the primary purpose of such review is to assure the protection of the rights and welfare of the human subjects and not to review a clinical trial for scientific merit.

(b) Approved by the national institutes of health office for protection from research risks.

3. "Multiple project assurance contract" means a contract between an institution and the United States department of health and human services that defines the relationship of the institution to the United States department of health and human services and that sets out the responsibilities of the institution and the procedures that will be used by the institution to protect human subjects.

4. "Patient" means the subscriber or the subscriber's covered dependent.

5. "Patient cost" means any fee or expense that is covered under the contract and that is for a service or treatment that would be required if the patient were receiving usual and customary care.  Patient cost does not include the cost:

(a) Of any drug or device provided in a phase I cancer clinical trial.

(b) Of any investigational drug or device.

(c) Of nonhealth services that might be required for a person to receive treatment or intervention.

(d) Of managing the research of the clinical trial.

(e) That would not be covered under the patient's contract.

(f) Of treatment or services provided outside this state.
A.R.S. § 20-491.01 — Arizona Code / Title 20 / Chapter 2 / Article 15 / Section 491.01
20-491.01 Risk management framework required
Status: in_force

20-491.01. Risk management framework required

An insurer shall maintain a risk management framework to assist the insurer with identifying, assessing, monitoring, managing and reporting on its material and relevant risks.  This requirement is satisfied if the insurance group of which the insurer is a member maintains a risk management framework applicable to the operations of the insurer.
A.R.S. § 20-1573 — Arizona Code / Title 20 / Chapter 6 / Article 9 / Section 1573
20-1573 Net retained liability
Status: in_force

20-1573. Net retained liability

A. The net retained liability of any title insurer under any single insurance risk as defined in section 20-1562, paragraphs 4 and 7 shall not exceed fifty per cent of the net amount remaining after deducting from the sum of its capital, surplus, unearned premium reserve and voluntary reserves the value, if any, assigned in such summation to its title insurance plants, all as shown in its most recent report on file with the director. The same limitation shall apply to any secondary risk assumed by means of reinsurance or coinsurance except, whenever the primary retained liability of a ceding company shall equal or exceed ten per cent of the single insurance risk liability, the net retained or assumed liability limit of this section may be increased by an additional two hundred fifty thousand dollars, but in no event above one hundred per cent of the net amount remaining after deducting from the sum of its capital and surplus the value, if any, assigned in such summation to its title insurance plants, all as shown by its most recent report on file with the director.

B. Nothing in this section is intended to limit the amount of a single insurance risk, as defined in section 20-1562, paragraph 7, that may be written or assumed by a title insurer, provided, however, that every title insurer shall cede, to one or more other title insurers, on or before the effective date of such writing or assumption, such portion, or portions, of any risk as shall be sufficient to bring its net retained liability thereunder within the limits set forth in this section; and provided further that each such cession of risk shall also be within the limits of this section as applied to the sum of the capital, surplus, unearned premium reserve and voluntary reserves, less the value, if any, assigned in such summation to the title insurance plants of the assuming and reinsuring title insurer, as shown by its most recent report on file with the supervisory agency in the state of its domicile.
A.R.S. § 20-206 — Arizona Code / Title 20 / Chapter 2 / Article 1 / Section 206
20-206 Authority to transact insurance
Status: in_force

20-206. Authority to transact insurance

A. No person shall act as an insurer and no insurer shall transact insurance in this state except as authorized by a subsisting authority granted to it by the director, except as to such transactions as are expressly otherwise provided for in this title. No such authority shall be required for an insurer, formerly so authorized, to enable it to investigate and settle losses under its policies lawfully written in this state, or to liquidate such assets and liabilities of the insurer, other than collection of new premiums, as has resulted from its former authorized operations in this state.

B. An insurer not transacting new insurance business in this state but continuing collection of premiums on and servicing of policies remaining in force as to residents of or risks located in this state, is transacting insurance in this state for the purpose of premium tax requirements only and is not required to have a certificate of authority therefor. This subsection shall not apply to insurers which have withdrawn from this state prior to January 1, 1955.

C. As to an insurance coverage on a subject of insurance not resident, located, or expressly to be performed in this state at time of issuance, and solicited, written and delivered outside the state, no such authority shall be required of an insurer as to subsequent transactions in this state on account thereof.
A.R.S. § 20-617 — Arizona Code / Title 20 / Chapter 3 / Article 4 / Section 617
20-617 Grounds for conservation of foreign insurers
Status: in_force

20-617. Grounds for conservation of foreign insurers

The director may apply to the court for an order appointing him as receiver or ancillary receiver, and directing him to conserve the assets within this state, of a foreign insurer upon any of the following grounds:

1. Upon any of the grounds specified in sections 20-615 or 20-616.

2. Upon the ground that its property has been sequestrated in its domiciliary sovereignty or in any other sovereignty.
A.R.S. § 20-677 — Arizona Code / Title 20 / Chapter 3 / Article 6 / Section 677
20-677 Interest
Status: in_force

20-677. Interest

All interest earned on monies held and invested by the fund shall be credited to the account from which the funds were obtained. Investments by the board shall be restricted to those investments which are permitted by insurers for statutory deposits pursuant to section 20-583.
A.R.S. § 20-637 — Arizona Code / Title 20 / Chapter 3 / Article 4 / Section 637
20-637 Qualified financial contracts; definition
Status: in_force

20-637. Qualified financial contracts; definition

A. Notwithstanding any other provision of this article, a person shall not be enjoined or prohibited from exercising:

1. A contractual right to cause the termination, liquidation, acceleration or close out of obligations under or in connection with any netting agreement or qualified financial contract with an insurer because of either:

(a) The insolvency, financial condition or default of the insurer at any time if the right is enforceable under applicable law other than this article.

(b) The commencement of a formal delinquency proceeding under this article.

2. Any right under a pledge, security, collateral, reimbursement or guarantee agreement or arrangement or any other similar security agreement or arrangement or other credit enhancement relating to one or more netting agreements or qualified financial contracts.

3. Subject to section 20-638, subsection B, any right to offset or net out any termination value, payment amount or other transfer obligation arising under or in connection with one or more qualified financial contracts where the counterparty or its guarantor is organized under the laws of the United States or a state or a foreign jurisdiction approved by the securities valuation office of the national association of insurance commissioners as eligible for netting.

B. If a counterparty to a master netting agreement or a qualified financial contract with an insurer subject to a proceeding under this article terminates, liquidates, closes out or accelerates the agreement or contract, damages shall be measured as of the date or dates of termination, liquidation, close out or acceleration. The amount of a claim for damages shall be actual direct compensatory damages calculated pursuant to subsection H of this section.

C. On termination of a netting agreement or qualified financial contract, the net or settlement amount owed by a nondefaulting party to an insurer against which a proceeding under this article has been commenced shall be transferred to or on the order of the receiver for the insurer, even if the insurer is the defaulting party, notwithstanding any walkaway clause in the netting agreement or qualified financial contract. Any limited two-way payment or first method provision in a netting agreement or qualified financial contract with an insurer that has defaulted shall be deemed to be a full two-way payment or second method provision as against the defaulting insurer. Any such property or amount shall be a general asset of the insurer, except to the extent it is subject to one or more secondary liens or encumbrances or rights of netting or offset. For the purposes of this subsection, "walkaway clause" means a provision in a netting agreement or a qualified financial contract that, after calculation of a value of a party's position or an amount due to or from one of the parties in accordance with its terms on termination, liquidation or acceleration of the netting agreement or qualified financial contract, either does not create a payment obligation of a party or extinguishes a payment obligation of a party in whole or in part solely because of the party's status as a nondefaulting party.

D. In making any transfer of a netting agreement or qualified financial contract of an insurer subject to a proceeding under this article, the receiver shall either:

1. Transfer to one party, other than an insurer subject to a proceeding under this article, all netting agreements and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer that is the subject of the proceeding including:

(a) All rights and obligations of each party under each netting agreement and qualified financial contract.

(b) All property, including any guarantees or other credit enhancement, securing any claims of each party under each netting agreement and qualified financial contract.

2. Transfer none of the netting agreements, qualified financial contracts, rights, obligations or property referred to in paragraph 1 of this subsection with respect to the counterparty and any affiliate of the counterparty.

E. If the receiver makes a transfer of one or more netting agreements or qualified financial contracts, the receiver shall use its best efforts to notify any person who is a party to the netting agreements or qualified financial contracts of the transfer by noon in the receiver's local time on the business day following the transfer. For the purposes of this subsection, "business day" means a day other than a Saturday, Sunday or other day on which either the New York stock exchange or the federal reserve bank of New York is closed.

F. Notwithstanding any other provision of this article, the receiver may not avoid a transfer of money or other property arising under or in connection with a netting agreement or qualified financial contract or any pledge, security, collateral or guarantee agreement or any other similar security arrangement or credit support document relating to a netting agreement or qualified financial contract that is made before the commencement of a delinquency proceeding under this article.  However, a transfer may be avoided under section 20-636, subsection C if the transfer was made with actual intent to hinder, delay or defraud the insurer, a receiver appointed for the insurer or existing or future creditors.

G. In disaffirming or repudiating any netting agreement or qualified financial contract to which an insurer is a party, the receiver for the insurer shall either:

1. Disaffirm or repudiate all netting agreements and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer that is the subject of the proceeding.

2. Disaffirm or repudiate none of the netting agreements and qualified financial contracts referred to in paragraph 1 of this subsection with respect to the person or any affiliate of the person.

H. Notwithstanding any other provision of this article, any claim of a counterparty against the estate arising from the receiver's disaffirmance or repudiation of a netting agreement or qualified financial contract that has not been previously affirmed in the proceeding under this article shall be determined and shall be allowed or disallowed as if the claim had arisen before the date of the commencement of a proceeding under this article.  The amount of the claim shall be the actual direct compensatory damages determined as of the date of the disaffirmance or repudiation of the netting agreement or qualified financial contract.  For the purposes of this subsection, "actual direct compensatory damages":

1. Does not include punitive or exemplary damages, damages for lost profit or lost opportunity or damages for pain and suffering.

2. Includes normal and reasonable costs of cover or other reasonable measures of damages used in the derivatives, securities or other market for the contract and agreement claims.

I. This section does not apply to persons who are affiliates of the insurer that is the subject of the proceeding.

J. All rights of counterparties under this article apply to netting agreements and qualified financial contracts entered into on behalf of the general account or separate accounts if the assets of each separate account are available only to counterparties to netting agreements and qualified financial contracts entered into on behalf of that separate account.

K. Notwithstanding any other provision of this chapter, a federal home loan bank may not be stayed, enjoined or prohibited from exercising or enforcing any right or cause of action against collateral pledged by an insurer member under any federal home loan bank security agreement or any pledge, security, collateral or guarantee agreement or other similar arrangement or credit enhancement relating to a security agreement to which that federal home loan bank is a party.

L. For the purposes of this section, "contractual right" includes:

1. Any right set forth:

(a) In a rule or bylaw of a derivatives clearing organization as defined in the commodity exchange act, a multilateral clearing organization as defined in the federal deposit insurance corporation improvement act of 1991 (12 United States Code section 4421), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the commodity exchange act, a derivatives transaction execution facility registered under the commodity exchange act or a board of trade as defined in the commodity exchange act.

(b) In a resolution of the governing board of any entity described in subdivision (a) of this paragraph.

2. Any right, whether or not evidenced in writing, arising under statutory or common law, or under law merchant or by reason of normal business practice.
A.R.S. § 20-2508 — Arizona Code / Title 20 / Chapter 15 / Article 1 / Section 2508
20-2508 Denial, suspension or revocation of certificates; hearing; civil penalties
Status: in_force

20-2508. Denial, suspension or revocation of certificates; hearing; civil penalties

A. The director shall deny a certificate if the director finds that the utilization review agent does not:

1. Have an allopathic or osteopathic physician available to supervise utilization review activities of any medical, surgical or health care services except that:

(a) A dental service corporation that is licensed pursuant to chapter 4, article 3 of this title and a prepaid dental plan organization that is licensed pursuant to chapter 4, article 7 of this title may have a licensed dentist supervise or conduct utilization review activities for health care services that involve dental care.

(b) An optometric service corporation that is licensed pursuant to chapter 4, article 3 of this title may have a licensed optometrist supervise or conduct utilization review activities for health care services that involve optometric care.

(c) A utilization review agent shall have a licensed chiropractor supervise or conduct utilization review activities for health care services that are performed by a chiropractor and within the chiropractor's scope of practice pursuant to title 32, chapter 8.

2. Meet all applicable department rules relating to the qualifications of utilization review agents or the performance of utilization review.

3. Provide assurances satisfactory to the director that the procedure and policies of the utilization review agent will protect the confidentiality of medical records and the utilization review agent will be reasonably accessible to patients and providers in this state and the department by a toll free telephone line or by acceptance of long-distance collect calls for forty hours each week during normal business hours.

B. The director shall deny a certificate to a utilization review agent who has been convicted of a misdemeanor involving moral turpitude or a felony or who employs a person who has been convicted of a felony.

C. The director may suspend, revoke or refuse to renew a certificate issued under this chapter if after giving notice to the utilization review agent, and holding a hearing if demanded by the agent, the director finds that the agent has violated this chapter or a rule adopted under this chapter.

D. If after a hearing the director finds that the agent has violated this chapter or an applicable rule or order adopted under this chapter, the director shall issue an order that specifies the violation and may impose a civil penalty of not more than two hundred fifty dollars for each violation or an aggregate civil penalty of not more than two thousand five hundred dollars. The director may also impose a civil penalty of not more than two thousand five hundred dollars for each knowing violation or an aggregate civil penalty of not more than fifteen thousand dollars. The director shall deposit, pursuant to sections 35-146 and 35-147, all monies in the state general fund. A civil penalty is in addition to any other applicable penalty or restraint provided in this chapter and may be recovered in a civil action brought by the director.

E. A certificate does not expire or terminate until a pending department investigation is resolved but is suspended on the date it would otherwise expire or terminate. The utilization review agent shall not transact business in this state until the investigation is completed.

F. When the director suspends or revokes a certificate the director shall immediately notify the utilization review agent either by personal service or by mail addressed to the agent at the agent's address of record. Notice by mail is effective at the time it is mailed.

G. The utilization review agent shall deliver a revoked or suspended certificate to the director on the director's request.

H. The director shall not issue a new certificate earlier than one year after the date of a previous revocation. Agents shall reapply to the director and shall meet all the requirements of this chapter to obtain a new certificate.

I. If the certificate of a firm or corporation is suspended or revoked, no member of that firm or officer or director of the corporation may hold a certificate during the period of the suspension or revocation unless the director determines, based on substantial evidence, that the member, officer or corporation director was not personally at fault.
A.R.S. § 20-1118 — Arizona Code / Title 20 / Chapter 5 / Article 1 / Section 1118
20-1118 Validity of noncomplying forms
Status: in_force

20-1118. Validity of noncomplying forms

Any insurance policy, rider or endorsement issued after January 1, 1955 and otherwise valid which contains any condition or provision not in compliance with the requirements of this title shall not be thereby rendered invalid but shall be construed and applied in accordance with such conditions and provisions as would have applied had such policy, rider or endorsement been in full compliance with this title.
A.R.S. § 20-616 — Arizona Code / Title 20 / Chapter 3 / Article 4 / Section 616
20-616 Grounds for liquidation
Status: in_force

20-616. Grounds for liquidation

The director may apply to the court for an order appointing him as receiver, if his appointment as receiver is not then in effect, and directing him to liquidate the business of a domestic insurer or of the United States branch of an alien insurer having trusteed assets in this state, regardless of whether or not there has been a prior order directing him to rehabilitate such insurer, upon any of the grounds specified in section 20-615, or if such insurer:

1. Has ceased transacting business for a period of one year.

2. Is an insolvent insurer and has commenced voluntary liquidation or dissolution, or attempts to commence or prosecute any action or proceeding to liquidate its business or affairs, or to dissolve its corporate charter, or to procure the appointment of a receiver, trustee, custodian or sequestrator under any law except this title.
A.R.S. § 20-1082 — Arizona Code / Title 20 / Chapter 4 / Article 10 / Section 1082
20-1082 Definitions
Status: in_force

20-1082. Definitions

In this article, unless the context otherwise requires:

1. "Affiliated" has the same meaning prescribed in section 20-481.

2. "Credit life and disability reinsurer" means a domestic life and disability reinsurer that reinsures only credit life insurance or credit disability insurance that is issued according to chapter 6, article 10 of this title by an insurer that is authorized to transact insurance in this state, as certified in a form prescribed by the director and reaffirmed annually in conjunction with the annual statement filed pursuant to section 20-223.

3. "Domestic life and disability reinsurer" means an incorporated stock reinsurer holding a certificate of authority to accept insurance ceded by any domestic insurer or foreign insurer.

4. "Unaffiliated" means not affiliated with another insurer as defined in section 20-104.
A.R.S. § 20-1901 — Arizona Code / Title 20 / Chapter 9 / Article 1 / Section 1901
20-1901 Definitions
Status: in_force

20-1901. Definitions

In this chapter, unless the context otherwise requires:

1. "Authorized agency" means:

(a) The office of the state fire marshal when authorized or charged with the investigation of a fire.

(b) The director of the department of public safety.

(c) A county attorney.

(d) A county sheriff.

(e) The attorney general.

(f) The fire department of any city, town or county of this state.

(g) A police agency of any city, town or county of this state.

(h) Solely for the purposes of section 20-1902, subsection A, the federal bureau of investigation, any other federal agency or the United States attorney general's office when authorized or charged with investigation or prosecution of a crime in this state.

(i) The automobile theft authority.

2. "Insurer" means every person or entity engaged in the business of making contracts of insurance in this state.

3. "Relevant" means having any tendency to make the existence of any fact that is of consequence to the investigation or determination of the issue more probable or less probable than it would be without the evidence.
A.R.S. § 20-3553 — Arizona Code / Title 20 / Chapter 29 / Article 1 / Section 3553
20-3553 Limited lines travel insurance producer licensing
Status: in_force

20-3553. Limited lines travel insurance producer licensing

A. Notwithstanding any other provision of this title, a travel retailer may offer and issue travel insurance under a limited lines travel insurance producer business entity license under the following conditions:

1. The limited lines travel insurance producer or travel retailer provides to purchasers of travel insurance all of the following:

(a) A description of the material terms or the actual material terms of the insurance coverage.

(b) A description of the process for filing a claim.

(c) A description of the review or cancellation process for the travel insurance policy.

(d) The identity and contact information of the insurer and limited lines travel insurance producer.

2. At the time of licensure, the limited lines travel insurance producer establishes and maintains a register, on a form prescribed by the director, of each travel retailer that offers travel insurance on the limited lines travel insurance producer's behalf.  The limited lines travel insurance producer shall maintain and annually update the register, which shall include the name, address and contact information of the travel retailer and an officer or person who directs or controls the travel retailer's operations, and the travel retailer's federal tax identification number.  The limited lines travel insurance producer shall submit the register to the department within thirty days after a request.  The limited lines travel insurance producer shall also certify to the department that the registered travel retailer is not in violation of 18 United States Code section 1033.

3. The limited lines travel insurance producer designates one of the producer's employees who is a licensed individual producer as the person responsible for the limited lines travel insurance producer's compliance with the travel insurance laws and rules of this state.

4. The licensed individual producer designated under paragraph 3 of this subsection complies with the fingerprinting requirements applicable to insurance producers in the resident state of the limited lines travel insurance producer.

5. The limited lines travel insurance producer pays all applicable insurance producer licensing fees required under this title.

6. The limited lines travel insurance producer requires each employee or authorized representative of the travel retailer whose duties include offering and disseminating travel insurance to receive a training or an instruction program, which may be subject to review by the director. The training material, at a minimum, shall contain instructions on the types of insurance offered, ethical sales practices and required disclosures to prospective customers.

B. Limited lines travel insurance producers and those registered under the producer's license are exempt from the examination requirements under chapter 2 of this title and the continuing education requirements under chapter 18 of this title.

C. Any travel retailer offering or disseminating travel insurance shall make available to prospective purchasers brochures or other written materials that:

1. Provide the identity and contact information of the insurer and the limited lines travel insurance producer.

2. Explain that the purchase of travel insurance is not required in order to purchase any other product or service from the travel retailer.

3. Explain that an unlicensed travel retailer is allowed to provide general information about the insurance offered by the travel retailer, including a description of the coverage and price, but is not qualified or authorized to answer technical questions about the terms and conditions of the insurance offered by the travel retailer or to evaluate the adequacy of the customer's existing insurance coverage.

D. A travel retailer's employee or authorized representative who is not licensed as an insurance producer may not do any of the following:

1. Evaluate or interpret the technical terms, benefits and conditions of the offered travel insurance coverage.

2. Evaluate or provide advice concerning a prospective purchaser's existing insurance coverage.

3. Hold himself out as a licensed insurer, licensed producer or insurance expert.

E. A travel retailer whose insurance-related activities, and those of the retailer's employees and authorized representatives, are limited to offering and disseminating travel insurance under the limitations of this section may receive related compensation on registration by the limited lines travel insurance producer pursuant to subsection A, paragraph 2 of this section.

F. Travel insurance may be provided under an individual policy or under a group or master policy.

G. As the insurer designee, the limited lines travel insurance producer is responsible for the acts of the travel retailer and shall use reasonable means to ensure compliance by the travel retailer with the requirements of this section.

H. To the extent not inconsistent with this chapter, section 20-281, section 20-286, subsections B, C and D, sections 20-289 and 20-289.01, section 20-290, subsection A and sections 20-291, 20-292, 20-295, 20-296, 20-297, 20-298, 20-299, 20-301 and 20-302 apply to a limited lines travel insurance producer and any travel retailer offering and disseminating travel insurance under the limited lines travel insurance producer business entity license.
A.R.S. § 20-869 — Arizona Code / Title 20 / Chapter 4 / Article 4 / Section 869
20-869 Organization
Status: in_force

20-869. Organization

Beginning on January 1, 1995, a domestic fraternal benefit society may be organized as follows:

1. Seven or more citizens of the United States, a majority of whom are citizens of this state, who desire to form a fraternal benefit society may make, sign and acknowledge articles of incorporation before an officer who is competent to take acknowledgement of deeds. The articles of incorporation shall state all of the following:

(a) The proposed corporate name of the society. The proposed name shall not so closely resemble the name of any society or insurance company as to be misleading or confusing.

(b) The purposes for which the society is being formed and the mode in which its corporate powers will be exercised. The purposes shall not include powers that are more liberal than those granted by this article.

(c) The names and residences of the incorporators and the names, residences and official titles of all of the officers, trustees, directors or other persons who are to have and exercise the general control and the management of the affairs and funds of the society for the first year or until the ensuing election at which all of the officers shall be elected by the supreme governing body and that shall be held not later than one year from the date of issuance of the permanent certificate of authority.

2. The applicants shall file with the director the articles of incorporation, duly certified copies of the constitution and laws and rules, copies of all proposed forms of certificates, applications and circulars to be issued by the society and a bond conditioned on the return to the applicants of the advance payments if the organization is not completed within one year. The bond with sureties approved by the director shall be in an amount determined by the director of not less than three hundred thousand dollars or more than one million five hundred thousand dollars. All of the documents that are filed with the director shall be in English. If the purposes of the society conform to the requirements of this article and if all applicable provisions of law have been complied with, the director shall certify, retain and file the articles of incorporation and shall furnish to the incorporators a preliminary certificate of authority authorizing the society to solicit members pursuant to this section.

3. A preliminary certificate of authority is not valid after one year from its date of issuance or after a further period of time of not more than one year that is authorized by the director for good cause unless the five hundred applicants as required by this section have been secured and the organization has been completed pursuant to this article. The articles of incorporation and all proceedings authorized by the articles of incorporation become null and void one year from the date of the preliminary certificate or at the expiration of the extended period, unless the society has completed its organization and received a final certificate of authority to do business pursuant to this section.

4. On receipt of the preliminary certificate of authority from the director, the society may solicit members for the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates and shall issue to each applicant a receipt for the amount collected. A society shall not incur liability other than for the return of the advance payment, issue any certificate or pay, allow or offer or promise to pay or allow any death or disability benefit to any person until:

(a) Actual bona fide applications for benefits have been secured on not less than five hundred applicants and any necessary evidence of insurability has been furnished to and approved by the society.

(b) At least ten subordinate lodges have been established into which the five hundred applicants have been admitted.

(c) The treasurer or other corresponding officer of the society submits to the director a sworn statement showing that at least five hundred applicants have each paid in cash at least one regular monthly payment pursuant to this section and that the payments in the aggregate amount to at least one hundred fifty thousand dollars. The advance premiums shall be held in trust during the period of organization. If the society does not qualify for a certificate of authority within one year, the premiums shall be returned to the applicants.

5. The director may make any examination and require further information as the director deems advisable. After the society presents satisfactory evidence that it has complied with any applicable provisions of law, the director shall issue a certificate of authority to that effect. The certificate of authority is prima facie evidence of the existence of the society at the date of the certificate. The director shall record the certificate of authority. A certified copy of the record may be given in evidence.

6. An incorporated society that is authorized to transact business in this state, on or before January 1, 1995 is not required to reincorporate.
A.R.S. § 20-202 — Arizona Code / Title 20 / Chapter 2 / Article 1 / Section 202
20-202 "Charter" defined
Status: in_force

20-202. "Charter" defined

"Charter" means articles of incorporation, of agreement or of association, or other basic constituent document of a corporation, or subscribers' agreement and power of attorney of a reciprocal insurer.
A.R.S. § 20-485.06 — Arizona Code / Title 20 / Chapter 2 / Article 9 / Section 485.06
20-485.06 Charges or premiums collected held in fiduciary capacity; establishment of account; disbursements
Status: in_force

20-485.06. Charges or premiums collected held in fiduciary capacity; establishment of account; disbursements

A. All insurance charges or premiums collected by an administrator on behalf of or for an insurer or insurers, and return premiums received from such insurer or insurers, shall be held by the administrator in a fiduciary capacity. Such funds shall be immediately remitted to the person or persons entitled to such funds or shall be deposited promptly in a fiduciary bank account established and maintained by the administrator.

B. If charges or premiums deposited in a fiduciary account have been collected on behalf of or for more than one insurer, the administrator shall keep records clearly recording the deposits in and withdrawals from such account on behalf of or for each insurer. The administrator shall, upon request of an insurer, furnish such insurer with copies of such records pertaining to deposits and withdrawals on behalf of or for such insurer.

C. The administrator shall not pay any claim by withdrawals from a fiduciary account. Withdrawals from such account shall be made, as provided in the written agreement between the administrator and the insurer required by section 20-485.01, for any of the following:

1. Remittance to an insurer entitled to such remittance.

2. Deposit in an account maintained in the name of such insurer.

3. Transfer to and deposit in a claims-paying account, with claims to be paid as provided by section 20-485.07.

4. Payment to a group policyholder for remittance to the insurer entitled to such remittance.

5. Payment to the administrator of such administrator's commission, fees or charges.

6. Remittance of return premiums to the person or persons entitled to such return premiums.
A.R.S. § 20-2606 — Arizona Code / Title 20 / Chapter 16 / Article 1 / Section 2606
20-2606 Separate accounts
Status: in_force

20-2606.  Separate accounts

A. A domestic insurer issuing variable life insurance contracts shall establish one or more separate accounts pursuant to section 20-651.  The following apply to the establishment of separate accounts:

1. If no law governs the custody of separate account assets and if the insurer is not the custodian of the separate account assets, all contracts for the custody of the assets shall be in writing and the director may review and approve both the terms of a contract and the proposed custodian before the transfer of custody.

2. Without the director's prior written approval, the insurer shall not employ any person in connection with the handling of separate account assets who within the last ten years either:

(a) Was convicted of a felony or a misdemeanor offense involving embezzlement, fraudulent conversion, the misappropriation of funds or securities or a violation of 18 United States Code section 1341, 1342 or 1343.

(b) Was found to have violated or has acknowledged violating any law involving fraud, deceit or knowing misrepresentation.

3. All persons who have access to the cash, securities or other assets of any separate account established pursuant to this chapter shall be under bond in an amount of not less than the following amounts based on the combined assets of the insurer's separate accounts:

Combined assets     Minimum amount of bond

Equal to or more than:  But less than:

$     0     $      100,000    $10,000

100,000     600,000     $10,000 plus 4% of assets

over $100,000

600,000     1,200,000   $30,000 plus 3 1/3% of

assets over $600,000

1,200,000   3,200,000   $50,000 plus 2 1/2% of

assets over $1,200,000

3,200,000   4,450,000   $100,000 plus 2% of assets

over $3,200,000

4,450,000   6,450,000   $125,000 plus 1 1/4% of

assets over $4,450,000

6,450,000   90,450,000  $150,000 plus 5/8% of

assets over $6,450,000

90,450,000  350,450,000 $675,000 plus 3/8% of

assets over $90,450,000

350,450,000 1,070,450,000     $1,650,000 plus 3/16% of

assets over $350,450,000

1,070,450,000           $3,000,000 plus 3/32% of

assets over $1,070,450,000

until the total of the

bonds equals $5,000,000

4. The insurer shall value the assets of the separate accounts at least monthly.

B. The insurer shall maintain in each separate account assets with a value that is at least equal to the greater of the valuation reserves for the variable portion of the variable life insurance policies or the benefit base for the variable life insurance policies.

C. The following apply to investments by the separate account:

1. An insurer or any of its affiliates may not make any sale, exchange or other transfer of assets between any of its separate accounts or between any other investment account and one or more of its separate accounts unless both:

(a) If assets are transferred into a separate account, the transfer is made solely to establish the account or to support the operation of the policies with respect to the separate account to which the transfer is made.

(b) The transfer, whether into or from a separate account, is made by a transfer of cash.  The director may approve the  transfer of other assets in advance of the transfer.

2. The separate account shall have sufficient net investment income and readily marketable assets to meet anticipated withdrawals under the policies that are funded by the account.

D. Except for securities issued or guaranteed as to principal and interest by the United States, a separate account shall not purchase or otherwise acquire the securities of any issuer if immediately after the purchase or acquisition the value of the investment, together with any prior investments of the account in the security that is valued pursuant to this article, exceeds ten per cent of the value of the assets of the separate account.  The director may waive this limitation in writing if the director believes that the waiver will not render the operation of the separate account hazardous to the public or to the policyholders in this state.

E. A separate account shall not purchase or otherwise acquire the voting securities of any issuer if as a result of the purchase or acquisition the insurer and its aggregated separate accounts will own more than ten per cent of the issuer's total issued and outstanding voting securities.  The director may waive this limitation in writing if the director believes that the waiver will not render the operation of the separate account hazardous to the public or to the policyholders in this state or jeopardize the independent operation of the issuer of the securities.

F. The ten per cent limitation under subsection D of this section does not preclude the investment of separate account assets in shares of investment companies that are registered pursuant to the investment company act of 1940 (15 United States Code sections 80a-1 through 80a-64) or in other pools of investment assets if the investments and investment policies of the investment companies or asset pools comply substantially with subsection C of this section and with any other applicable provisions under this article.

G. The insurer shall value investments of the separate account at their market value on the date of valuation or at amortized cost if it approximates market value.

H. A domestic insurer shall not change its investment policy of a separate account without first filing the change with the director.  A change that is filed pursuant to this subsection is effective sixty days after the date on which it was filed with the director, unless the director notifies the insurer before the end of the sixty day period of the director's disapproval of the proposed change.  At any time, after notice and a public hearing, the director may disapprove any change that has become effective. The director may disapprove the change if the director determines that the change would be detrimental to the interests of the policyholders who participate in the separate accounts.

I. Before or contemporaneously with the delivery of the policy, the insurer shall disclose to the insured in writing all charges that may be made against the separate account, including the following:

1. Taxes or reserves for taxes that are attributable to investment gains and income of the separate account.

2. Actual cost of reasonable brokerage fees and similar direct acquisition and sale costs that are incurred in the purchase or sale of separate account assets.

3. Actuarially determined tabular costs of insurance and the release of separate account liabilities.

4. Charges for administrative expenses and investment management expenses, including internal costs that are attributable to the investment management of assets of the separate account.

5.  A charge for mortality and expense guarantees at a rate specified in the policy.

6. Any amounts in excess of the amounts that are required to be held in the separate accounts.

7. Charges for incidental insurance benefits.

J. The board of directors of each insurer that seeks approval to enter into the variable life insurance business in this state shall adopt written standards of conduct relating to the purchase or sale of investments of separate accounts.  The standards of conduct are binding on the insurer and its officers, directors, employees and affiliates.  The adoption of a code of ethics that meets the requirements of section 17j of the investment company act of 1940 satisfies this section.

K. A law that applies to the officers and directors of insurance companies with respect to conflicts of interest also applies to the members of a committee or any other similar body of a separate account.

L. An insurer shall not enter into a contract under which a person for a fee undertakes to regularly furnish investment advice to the insurer with respect to its separate accounts that are maintained for variable life insurance policies unless the contract is in writing, the contract states that the insurer may terminate the contract without penalty to the insurer or the separate account on sixty days' written notice to the investment advisor and one of the following applies:

1. The person who provides the advice is registered as an investment adviser under the investment advisers act of 1940 (15 United States Code sections 80b-1 through 80b-21).

2. The person who provides the advice is an investment manager under the employee retirement income security act of 1974 (29 United States Code sections 1001 through 1461) with respect to the assets of each employee benefit plan that are allocated to the separate account.

3. The insurer has filed with the director and continues to file annually the following information and statements concerning the proposed advisor:

(a) The name and form of the organization, the state of organization and the proposed advisor's principal place of business.

(b) The names and addresses of the proposed advisor's partners, officers and directors and of persons who perform similar functions if the investment advisor is an individual.

(c) A written standard of conduct that complies in substance with subsection J of this section.

(d) A statement that is submitted by the proposed advisor to the insurer and that states with respect to each of the following that the proposed advisor or a person associated with the proposed advisor has not:

(i) Within the last ten years been convicted of a felony or misdemeanor offense arising out of such person's conduct as an employee, salesman, officer or director of an insurance company, a banker, an insurance producer, a securities broker or an investment advisor involving embezzlement, fraudulent conversion, the misappropriation of funds or securities or a violation of 18 United States Code section 1341, 1342 or 1343, and arising out of the person's conduct as an employee, salesperson, officer or director of an insurance company or as a banker, insurance producer, securities broker or investment advisor.

(ii) Been permanently or temporarily enjoined by a court order, judgment or decree from acting as an investment advisor, underwriter, broker or dealer, acting as an affiliated person or an employee of an investment company, bank or insurance company or engaging in or continuing any conduct or practice in connection with any enjoined activity.

(iii) Been found by a federal or state regulatory authority to have wilfully violated or acknowledged a wilful violation of a federal or state securities law or the insurance laws of this state.

(iv) Been censured, been denied an investment advisor registration, had a registration as an investment advisor revoked or suspended or been barred or suspended from associating with an investment advisor by a federal or state regulatory authority.

M. After notice and an opportunity for a hearing, the director may require that the investment advisory contract be terminated if the director deems that continued operation under the contract would be hazardous to the public or the insurer's policyholders.
A.R.S. § 20-1634 — Arizona Code / Title 20 / Chapter 6 / Article 11 / Section 1634
20-1634 Immunity
Status: in_force

20-1634. Immunity

The director or any person who in good faith furnishes to the insured or insurer information as to reasons for cancellation or nonrenewal of a motor vehicle policy shall not be liable to any party for providing such information.
A.R.S. § 20-431.07 — Arizona Code / Title 20 / Chapter 2 / Article 5.1 / Section 431.07
20-431.07 Annual report; notice to policyowners
Status: in_force

20-431.07. Annual report; notice to policyowners

A. If a policy is designated as one that will use illustrations, the insurer shall provide each policyowner with an annual report on the status of the policy as follows:

1. For universal life policies, the annual report shall include:

(a) The beginning date and end date of the current report period.

(b) The policy value at the end of the previous report period and at the end of the current report period.

(c) The total amounts that have been credited or debited to the policy value during the current report period, identifying each by type and including interest, mortality, expense and riders.

(d) The current death benefit at the end of the current report period on each life covered by the policy.

(e) The net cash surrender value of the policy as of the end of the current report period.

(f) The amount of outstanding loans, if any, as of the end of the current report period.

(g) For fixed premium policies, a notice whether the policy's net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period, assuming guaranteed interest, mortality and expense loads and continued scheduled premium payments.

(h) For flexible premium policies, a notice whether the policy's net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made, assuming guaranteed interest, mortality and expense loads.

2. For all other policies, where applicable, the annual report shall include the following:

(a) Current death benefit.

(b) Annual contract premium.

(c) Current cash surrender value.

(d) Current dividend.

(e) Application of current dividend.

(f) Amount of outstanding loan.

B. Insurers writing life insurance policies that do not build nonforfeiture values shall be required to provide an annual report with respect to such policies only for those years when the insurer has made a change to nonguaranteed policy elements.

C. If the annual report does not include an in-force illustration, the annual report shall contain the following prominently displayed notice: "important policyowner notice: you should consider requesting more detailed information about your policy to understand how it may perform in the future.  You should not consider replacement of your policy or make changes in your coverage without requesting a current illustration.  You may annually request, without charge, an illustration by calling (insurer's telephone number), writing to (insurer's name) at (insurer's address or email address) or contacting your agent.  If you do not receive a current illustration of your policy within thirty days from the date of your request, you should contact your state insurance department."  The insurer may vary the sequential order of the methods for obtaining an in-force illustration.

D. On request of a policyowner, the insurer shall furnish an in-force illustration of current and future benefits and values based on the insurer's present illustrated scale.  This illustration shall comply with section 20-431.03, subsections A and B and section 20-431.04, subsections A and F.  A signature or other acknowledgment of receipt of this illustration is not required.

E. If the insurer makes an adverse change in nonguaranteed elements that could affect the policy since the last annual report, the annual report shall contain a notice of that fact and shall prominently display the nature of the change.
A.R.S. § 20-466 — Arizona Code / Title 20 / Chapter 2 / Article 6 / Section 466
20-466 Fraud unit; investigators; peace officer status; powers; information sharing; assessment
Status: in_force

20-466. Fraud unit; investigators; peace officer status; powers; information sharing; assessment

A. The fraud unit is established in the department of insurance and financial institutions.  The director of the department of insurance and financial institutions shall appoint an individual to operate the fraud unit in conjunction with operating the automobile theft authority established by section 41-3451.

B. The fraud unit shall work in conjunction with the department of public safety.

C. The director may investigate any act or practice of fraud prohibited by section 20-466.01 and any other act or practice of fraud against an insurer or entity licensed under this title. The director shall administer the fraud unit.

D. The director may employ investigators for the fraud unit.  A fraud unit investigator has and shall exercise the law enforcement powers of a peace officer of this state but only while acting in the course and scope of employment for the department of insurance and financial institutions. The director shall adopt guidelines for the conduct of investigations that are substantially similar to the investigative policy and procedural guidelines of the department of public safety for peace officers. Fraud unit investigators shall not preempt the authority and jurisdiction of other law enforcement agencies of this state or its political subdivisions. Fraud unit investigators:

1. Shall have at least the qualifications prescribed by the Arizona peace officer standards and training board pursuant to section 41-1822.

2. Are not eligible to participate in the public safety personnel retirement system established by title 38, chapter 5, article 4 due solely to employment as fraud unit investigators.

E. The director may request the submission of papers, documents, reports or other evidence relating to an investigation under this section.  The director may issue subpoenas and take other actions pursuant to section 20-160.  The materials are privileged and confidential until the director completes the investigation.  Any documents, materials or other information that is provided to the director pursuant to this section is not subject to discovery or subpoena until opened for public inspection by the director or, after notice and a hearing, a court determines that the director would not be unduly burdened by compliance with the subpoena.  The director shall keep the identity of an informant confidential, including any information that might identify the informant, unless the request for information is made by a law enforcement agency, the attorney general or a county attorney for purposes of a criminal investigation or prosecution. The director may use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the director's official duties.

F. If the documents, materials or other information the director seeks to obtain by request is located outside this state, the person requested to provide the documents, materials or other information shall arrange for the fraud unit or a representative, including an official of the state in which the documents, materials or other information is located, to examine the documents, materials or other information where it is located. The director may respond to similar requests from other states.

G. An insurer that believes a fraudulent claim has been or is being made shall send to the director, on a form prescribed by the director, information relative to the claim including the identity of parties claiming loss or damage as a result of an accident and any other information the fraud unit may require. The director shall review the report and determine if further investigation is necessary. If the director determines that further investigation is necessary, the director may conduct an independent investigation to determine if fraud, deceit or intentional misrepresentation in the submission of the claim exists. If the director is satisfied that fraud, deceit or intentional misrepresentation of any kind has been committed in the submission of a claim, the director may report the violations of the law to the reporting insurer, to the appropriate licensing agency as defined in section 20-466.04 and to the appropriate county attorney or the attorney general for prosecution.

H. The director may:

1. Share nonpublic documents, materials or other information with other state, federal and international regulatory agencies, with the national association of insurance commissioners and its affiliates and subsidiaries and with state, federal and international law enforcement authorities if the recipient agrees and warrants that it has the authority to maintain the confidentiality and privileged status of the documents, materials or other information.

2. Receive documents, materials and other information from the national association of insurance commissioners and its affiliates and subsidiaries and from regulatory and law enforcement officials of other jurisdictions and shall maintain as confidential or privileged any document, material or other information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or other information.

3. Enter into agreements that govern the sharing and use of documents, materials and other information and that are consistent with this section.

I. A disclosure to or by the director pursuant to this section or as a result of sharing information pursuant to subsection H of this section is not a waiver of any applicable privilege or claim of confidentiality in the documents, materials or other information disclosed or shared.

J. The director shall annually assess each insurer as defined in section 20-441, subsection B authorized to transact business in this state up to $1,050 for the administration and operation of the fraud unit and the prosecution of fraud pursuant to this section.  Monies collected shall be deposited, pursuant to sections 35-146 and 35-147, in the fraud unit assessment fund established by section 20-466.05.

K. A person, or an officer, employee or agent of the person acting within the scope of employment or agency of that officer, employee or agent, who in good faith files a report or provides other information to the fraud unit pursuant to this section is not subject to civil or criminal liability for reporting that information to the fraud unit.
A.R.S. § 20-613 — Arizona Code / Title 20 / Chapter 3 / Article 4 / Section 613
20-613 Commencement of delinquency proceedings
Status: in_force

20-613. Commencement of delinquency proceedings

A. The director shall commence any delinquency proceeding, the attorney general representing the director, by an application to the court for an order directing the insurer to show cause why the director should not have the relief prayed for. On the return of the order to show cause and after a full hearing, the court shall either deny the application or grant the application, together with such other relief as the nature of the case and the interests of policyholders, creditors, stockholders, members, subscribers or the public requires.

B. The director may file with the superior court a certificate stating that the delinquency proceeding is of special public importance. On receipt of the certificate the presiding judge of the superior court immediately shall designate a judge to hear and determine the proceeding. The designated judge shall assign the proceeding for hearing at the earliest practicable date and cause the proceeding to be expedited in every way, including applications for temporary restraining orders, preliminary injunctions and orders appointing receivers. An expedited hearing under this subsection is in addition to the requirements of section 20-172, subsection A.

C. Pending proceedings commenced under section 20-169, the director is not precluded from commencing a delinquency proceeding under this article. The pendency of proceedings under section 20-169 is not a ground for denying an application for an order under this article.
A.R.S. § 20-1057.13 — Arizona Code / Title 20 / Chapter 4 / Article 9 / Section 1057.13
20-1057.13 Telehealth; coverage of health care services; definition
Status: in_force

20-1057.13. Telehealth; coverage of health care services; definition

A. An evidence of coverage issued, delivered or renewed by a health care services organization in this state must provide coverage for health care services that are provided through telehealth if the health care service would be covered were it provided through an in-person encounter between the enrollee and a health care provider and provided to an enrollee receiving the service in this state.  The following requirements apply to coverage of telehealth services:

1. Except as otherwise provided in this subsection, a health care services organization may not limit or deny the coverage of health care services provided through telehealth, including ancillary services, and may apply only the same limits or exclusions on a health care service provided through telehealth that are applicable to an in-person encounter for the same health care service, except for procedures or services as identified by the diagnostic and procedure codes, for which the weight of evidence, based on practice guidelines, peer-reviewed clinical publications or research or recommendations by the telehealth advisory committee on telehealth best practices established by section 36-3607, determines not to be appropriate to be provided through telehealth.

2. Except as otherwise provided in this paragraph, a health care services organization shall reimburse health care providers at the same level of payment for equivalent services as identified by the healthcare common procedure coding system, whether provided through telehealth using an audio-visual format or in-person care. A health care services organization shall reimburse health care providers at the same level of payment for equivalent in-person behavioral health and substance use disorder services as identified by the healthcare common procedure coding system if provided through telehealth using an audio-only format.  This paragraph does not apply to a telehealth encounter provided through a telehealth platform that is sponsored or provided by the health care services organization. A health care services organization may not require a health care provider to use a telehealth platform that is sponsored or provided by the health care services organization as a condition of network participation.

3. Before January 1, 2022, a health care services organization shall cover services provided through an audio-only telehealth encounter if that service is covered by medicare or the Arizona health care cost containment system when provided through an audio-only telehealth encounter.  Beginning January 1, 2022, a health care services organization shall cover services provided through an audio-only telehealth encounter if the telehealth advisory committee on telehealth best practices established by section 36-3607 recommends that the services may appropriately be provided through an audio-only telehealth encounter.

4. A health care provider shall bill for a telehealth encounter using the healthcare common procedure coding system and shall identify whether the telehealth encounter was provided in an audio-only or audio-video format.  To submit a claim for an audio-only service, the health care provider must make telehealth services generally available to patients through the interactive use of audio, video or other electronic media.

5. At the time of the telehealth encounter, the health care provider shall access clinical information and records, if available, that are appropriate to evaluate the patient's condition.  The health care provider shall inform the enrollee before the telehealth encounter if there is a charge for the encounter.

6. A health care services organization may establish reasonable requirements and parameters for telehealth services, including documentation, fraud prevention, identity verification and recordkeeping, but such requirements and parameters may not be more restrictive or less favorable to health care providers or enrollees than are required for health care services delivered in person.

7. Covered telehealth services may be provided regardless of where the enrollee is located or the type of site.

8. Except in an emergency as prescribed in section 20-2803, the evidence of coverage may limit the coverage to those health care providers who are members of the health care services organization's provider network.

B. Subsection A of this section does not:

1. Limit the ability of health care services organizations to provide incentives to enrollees that are designed to improve health outcomes, increase adherence to a course of treatment or reduce risk.

2. Prevent health care services organizations from offering network contracts to health care providers who employ value-based purchasing or bundled payment methodologies if otherwise allowed by law or prevent health care providers from voluntarily agreeing to enter into such contracts with a health care services organization.

C. This section does not relieve a health care services organization from an obligation to provide adequate access to in-person health care services.  Network adequacy standards required by federal or state law may not be met by a health care services organization through the use of contracted health care providers who provide only telehealth services and do not provide in-person health care services in this state or within fifty miles of the border of this state.

D. This section does not prevent a health care services organization from imposing deductibles or copayment or coinsurance requirements for a health care service provided through telehealth if the deductible, copayment or coinsurance does not exceed the deductible, copayment or coinsurance applicable to an in-person encounter for the same health care service.  If the health care services organization waives a deductible or copayment or coinsurance requirement that impacts a health care provider's contracted reimbursement rate, the health care services organization shall reimburse the health care provider for the cost of the deductible or copayment or coinsurance requirement to ensure that the health care provider receives the contracted reimbursement rate if the service is covered and the claim meets other requirements of the network participation agreement.

E. Services provided through telehealth or resulting from a telehealth encounter are subject to all of this state's laws and rules that govern prescribing, dispensing and administering prescription pharmaceuticals and devices and shall comply with Arizona licensure requirements and any practice guidelines of the telehealth advisory committee on telehealth best practices established by section 36-3607 or, if not addressed, the practice guidelines of a national association of medical professionals promoting access to medical care for consumers via telecommunications technology or other qualified medical professional societies to ensure quality of care.

F. This section does not apply to limited benefit coverage as defined in section 20-1137.

G. For the purposes of this section, "telehealth":

1. Means the interactive use of audio, video or other electronic media, including asynchronous store-and-forward technologies and remote patient monitoring technologies, for the purpose of diagnosis, consultation or treatment.

2. Includes:

(a) The use of an audio-only telephone encounter between an enrollee who has an existing relationship with a health care provider or provider group if both of the following apply:

(i) An audio-visual telehealth encounter is not reasonably available due to the enrollee's functional status, the enrollee's lack of technology or telecommunications infrastructure limits, as determined by the health care provider.

(ii) The telehealth encounter is initiated at the request of the enrollee or authorized by the enrollee before the telehealth encounter.

(b) The use of an audio-only encounter between the enrollee and a health care provider, regardless of whether there is an existing relationship with the health care provider or provider group, if the telehealth encounter is for a behavioral health or substance use disorder service and both items of subdivision (a) of this paragraph apply.

3. Does not include the sole use of a fax machine, instant messages, voice mail or email.