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2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-381 - Definitions

20-381.
Definitions
In this article,  unless the context otherwise requires:
1. " Advisory organization" :
(a) Means any person other than a single insurer who assists two or more insurers or rate service organizations in the making of rates by compiling and furnishing loss or expense statistics or other statistical information and data,  or by the submission of recommendations as to rates,  forms or supplementary rate information.
(b) Does not include a joint underwriting association,  any actuarial or legal consultant,  any employee of an insurer or insurers under common control or management or their employees or manager.
2. " Loss cost adjustment" :
(a) Means that portion of a rate filed by an insurer with the director that includes the insurer s general expenses,  total product expenses,  taxes,  licenses and fee expenses and underwriting profit and contingencies.
(b) Does not include loss adjustment expenses or prospective loss costs.
3. " Loss cost modification factor"  means that rating factor filed by an insurer with the director for the purpose of modifying the rate service organization s prospective loss cost filing.
4. " Prospective loss costs"  means the historical aggregate losses and loss adjustment expenses filed by a rate service organization with the director on which a portion of a rate is based,  adjusted through actuarial trending to a future point in time and developed to their ultimate values.
5. " Rate" :
(a) Means that cost of insurance per exposure unit whether expressed as a single number or as a prospective loss cost with an adjustment to account for the treatment of expenses,  profit and individual insurer variation in loss experience before any application of individual risk variations based on loss or expense considerations.
(b) Does not include the minimum premium.
6. " Rate service organization" :
(a) Means any person other than a single insurer who assists insurers by compiling and furnishing loss or expense statistics and recommending,  making or filing rates,  forms or supplementary rate information.
(b) Does not include a joint underwriting association,  any actuarial or legal consultant,  any employee of an insurer or insurers under common control or management,  or their employees or manager.
7. " Supplementary rate information" :
(a) Means any manual or plan of rates,  statistical plan,  classification,  rating schedule,  minimum premium,  schedule of fees,  including membership fees charged by a reciprocal or mutual insurer,  rating rule,  rate related underwriting rule and other information used by an insurer in making rates.
(b) Does not include the final rate pages that combine the prospective loss costs with the loss cost adjustments.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-382 - Scope of application

20-382.
Scope of application
A. This article applies to all insurance on risks or on operations in this state,  except:
1. Reinsurance,  other than joint reinsurance to the extent stated in section 20-391.
2. Any policy of insurance against loss or damage to or legal liability in connection with property located outside this state,  any motor vehicle or aircraft principally garaged and used outside this state or any activity wholly carried on outside this state.
3. Insurance of vessels or craft,  their cargoes,  marine builders' risks,  marine protection and indemnity or other risks commonly insured under marine,  as distinguished from inland marine,  insurance policies.
4. Disability or life insurance.
5. Annuities.
6. Workers' compensation and employers' liability insurance written in connection with workers' compensation.
7. Title insurance.
8. Rates developed by an insurer to be applied individually to the insurance policies of risks,  other than medical malpractice risks and industrial insured risks pursuant to section 20-400.10,  for which no rate service organization has published a rate or loss costs in this or any other state and for which insufficient similar exposure units and loss experience data exist to develop statistically credible rates for the risk and no homogeneous rating class exists in which the risk could reasonably be placed. With respect to each type of risk covered by this subsection,  the insurer shall annually certify by January 30 to the director for the preceding calendar year,  on a form acceptable to the director,  that the insurer did not have when the risks were written credible experience to establish a rating class for the specific types of risks. The insurer or rate service organization on the insurer's behalf shall file a rate for the specific risks with the director pursuant to section 20-385 when either of the following occurs:
(a) The insurer's written premiums for any specific risk covered by this subsection exceed twenty-five per cent of the insurer's total annual written premium in this state and the insurer has issued contracts for five or more homogeneous risks covered by this subsection in this state in any consecutive three year period,  unless an insurer demonstrates to the director that its experience under this subsection does not produce sufficient data to satisfy the requirements of subdivision (b) of this paragraph.
(b) The number of specific risks covered by this subsection and written by the insurer in a specific class meet the standards set forth in the actuarial standard of practice 25 applying to credibility for rate making purposes as adopted by the actuarial standards board as of January 1,  1997.
B. This article does not apply to hospital service or medical service corporations,  investment companies,  mutual benefit associations or fraternal beneficiary associations.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-383 - Rate standards

20-383.
Rate standards
A. An insurer shall not charge rates that are excessive,  inadequate or unfairly discriminatory. An insurer shall not charge any rate which if continued will have or tend to have the effect of destroying competition or establishing a monopoly.
B. Rates are excessive if they are likely to produce an underwriting profit that is unreasonably high for the class of business or if expenses are unreasonably high in relation to established services rendered. Rates are presumed not to be excessive if a reasonable degree of price competition exists at the consumer level with respect to a particular class of business. A competitive market is presumed to exist unless the director,  after a hearing,  determines that a reasonable degree of price competition does not exist in the market and issues an order pursuant to section 20-388 to that effect. The order expires no later than one year after its effective date unless the director finds,  after a hearing,  that there is a continuing lack of reasonable competition in the market. If the director finds,  after a hearing,  that a reasonable degree of price competition among insurers writing a particular line,  subline or class of business does not exist,  he may prescribe an allowable percentage of increase in a proposed rate level for such line,  subline or class of business. Any insurer making a rate filing exceeding the allowable percentage of increase shall,  prior to the effective date of such proposed rate increase,  provide the director with sufficient actuarial data to support such increase. The director's order establishing allowable percentages of increase for a particular line,  subline or class of business shall expire no later than one year after its effective date. In determining whether a reasonable degree of price competition exists,  the director shall consider relevant tests of competition pertaining to market structure,  market performance and market conduct,  including:
1. The number of insurers actively engaged in the class of business.
2. The market share and changes in market share of insurers.
3. The existence of a degree of rate differentials in a particular class of business.
4. The ease of entry and latent competition of insurers capable of easy entry.
C. Rates are inadequate if they are clearly insufficient to sustain projected losses and expenses in the class of business to which they apply.
D. A rate is not unfairly discriminatory in relation to another in the same class if it reflects equitably the differences in expected losses and expenses. Rates are not unfairly discriminatory because different premiums result for policyholders with like loss exposures but different expense factors,  or like expense factors but different loss exposures,  if the rates reflect the differences with reasonable accuracy. Rates are not unfairly discriminatory if they are averaged broadly among persons insured under a group,  franchise or blanket policy.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-384 - Rating criteria

20-384.
Rating criteria
A. In setting rates,  an insurer shall apply the criteria prescribed in this section.
B. An insurer shall give due consideration to past and prospective loss and expense experience within and outside this state,  to catastrophe hazards,  to a reasonable margin for underwriting profit and contingencies,  to investment income from unearned premium and loss reserves,  to trends within and outside this state,  to reasonable dividends or savings to be allowed or returned by insurers to their policyholders,  members or subscribers and to all other factors,  including judgment factors.
C. Risks may be classified in any reasonable way for the establishment of rates and minimum premiums. Classifications shall not be based on race,  color,  creed or national origin. Rates produced may be modified for individual risks in accordance with rating plans or schedules that establish reasonable standards for measuring probable variations in hazards or expenses,  or both.
D. The expense provisions included in the rates to be used by an insurer may reflect the operating methods of the insurer and its own expense experience.
E. Rates and supplementary rate information established pursuant to this article shall not be based on or include loss and expense experience attributable to insurance coverage issued to an industrial insured pursuant to section 20-400.10.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-386 - Filings open to inspection

20-386.
Filings open to inspection
The director shall open to public inspection at any reasonable time each filing and supporting information filed pursuant to this article except information in a filing or supporting information that is a trade secret under title 44,  chapter 4,  article 1. The insurer or filer shall have the burden of asserting to the director that the information is a trade secret. A person may obtain copies of materials open to public inspection upon request and payment of a reasonable charge.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-387 - Delegation of rate making and rate filing obligations

20-387.
Delegation of rate making and rate filing obligations
A. An insurer may establish rates and supplementary rate information based on the factors in section 20-384 using,  if desired,  the recommendations of an advisory organization,  or rates and supplementary rate information prepared by a rate service organization,  with average expense factors determined by the rate service organization or with such modification for its own expense and loss experience as the credibility of that experience allows.
B. An insurer may discharge its obligations pursuant to section 20-385 by giving notice to the director that it uses rates and supplementary rate information prepared by a designated rate service organization,  with such information about modifications of the rates as is necessary to inform the director. The insurer's rates and supplementary rate information are those filed by the rate service organization,  including any amendments to the rate as filed,  subject to the modifications filed by the insurer.
C. Licensed rate service organizations,  advisory organizations and admitted insurers are authorized to exchange information and experience data with rate service organizations,  advisory organizations and insurers in this and other states and may consult with them with respect to rate making.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-388 - Disapproval of rates

20-388.
Disapproval of rates
If the director finds that a rate is not in compliance with section 20-383,  the director shall issue an order specifying in what respects it so fails and stating that,  within thirty days after the order is issued,  the rate is no longer effective. The order does not affect any contract or policy made or issued prior to the effective date of the order. The order shall be served immediately pursuant to section 20-151. Any insurer,  rate service organization or advisory organization may request a hearing pursuant to title 41,  chapter 6,  article 10,  and the request for a hearing stays the effectiveness of the order as provided in section 20-162.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-389 - Rate service organizations; license; application

20-389.
Rate service organizations;  license;  application
A. A rate service organization shall not provide any service relating to the rates of any insurance subject to this article nor may any insurer utilize the service of such organization for such purposes unless the organization has obtained a license from the director.
B. No rate service organization may refuse to supply any services for which it is licensed in this state to any insurer authorized to do business in this state and offering to pay the fair and usual compensation for the services.
C. A rate service organization applying for a license shall include with its application:
1. A copy of its constitution,  charter,  articles of organization,  agreement,  association or incorporation and a copy of its bylaws and any other rules or regulations governing its activities.
2. A list of its members and subscribers.
3. The name and address of one or more residents of this state upon whom notices,  process affecting it or orders of the director may be served.
4. A statement showing its technical qualifications for acting in the capacity for which it seeks a license.
5. Any other relevant information or documents the director may require.
D. If the director finds that the applicant and the natural persons through whom it acts are qualified to provide the services proposed and that all requirements of law are met,  the director shall issue a license specifying the authorized activity of the applicant. The director shall not issue a license if the proposed activity would tend to establish a monopoly or to lessen or to destroy price competition. Licenses issued pursuant to this section remain in effect until the licensee withdraws from this state or until the license is suspended or revoked.
E. A rate service organization shall promptly file any amendment to a document required to be filed pursuant to this section. Failure to file any such amendment is a ground for suspension of the license during the period of noncompliance. Repeated failures to file such amendments are grounds for revocation of the license.
F. Pending its application to the director for a license to provide services as a rate service organization,  every rating organization providing services in this state on the effective date of this section may continue to provide services after that date as a rate service organization subject to the provisions of this article. A rate service organization shall apply for a license within thirty days after the effective date of this article.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-390 - Advisory organizations; filing with director

20-390.
Advisory organizations;  filing with director
A. An advisory organization shall not conduct its operations in this state until it files with the director:
1. A copy of its constitution,  charter,  articles of organization,  agreement,  association or incorporation and a copy of its bylaws and any other rules or regulations governing its activities.
2. A list of its members and subscribers.
3. The name and address of one or more residents of this state upon whom notices,  process affecting it or orders of the director may be served.
B. An advisory organization shall promptly file any amendments to a document required to be filed pursuant to this section.
C. It is unlawful for an advisory organization to engage in any unfair or unreasonable practice.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-391 - Joint underwriting and joint reinsurance organizations; filing with director

20-391.
Joint underwriting and joint reinsurance organizations;  filing with director
A. Every group,  association or other organization of insurers which engages in joint underwriting or joint reinsurance through such group,  association or organization or by standing agreement among the members shall file with the director:
1. A copy of its constitution,  articles of association and bylaws.
2. A list of its members.
3. The name and address of a resident of this state upon whom notices or orders of the director or process may be served.
B. Every such group,  association or other organization shall notify the director promptly of any change in the documents required to be filed with the director.
C. If after a hearing the director finds that any activity or practice of any such group,  association or other organization is inconsistent with this article,  the director may issue a written order specifying the inconsistencies and requiring the discontinuance of such activity or practice.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-392 - Rate agreements among insurers prohibited

20-392.
Rate agreements among insurers prohibited
A. Except with respect to apportionment agreements among insurers approved by the director pursuant to section 20-395,  an insurer shall not assume any obligation to any person,  other than a policyholder or other insurers which,  with it,  are under common control or management or are members of a joint underwriting or joint reinsurance organization,  to use or adhere to certain rates or rules. No person other than the director may impose any penalty or other adverse consequence for failure of an insurer to adhere to certain rates or rules.
B. Members and subscribers of rate service organizations or advisory organizations may use the work products and services of such organizations as their individual judgment may dictate. Such use by two or more authorized insurers shall not be sufficient to support a finding that an agreement to adhere exists and may be used only for the purpose of supplementing direct evidence of such an agreement.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-393 - Recording and reporting of experience

20-393.
Recording and reporting of experience
The director shall promulgate reasonable rules,  including rules providing statistical plans,  for use by all insurers in the recording and reporting of loss and expense experience,  in order that the experience of such insurers may be made available to the director. No insurer may be required to record or report its experience on a classification basis inconsistent with its own rating system. An insurer may report its experience to any rate service organization or advisory organization with which it affiliates.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-394 - Examination of rate service organizations and joint underwriting and joint reinsurance organizations

20-394.
Examination of rate service organizations and joint underwriting and joint reinsurance organizations
The director,  as often as considered necessary,  may examine each rate service organization,  each advisory organization and each group,  association or other organization filing pursuant to section 20-391. The director shall examine only those activities conducted pursuant to this article. The director may examine the officers,  manager,  agents and employees of such organizations at any time under oath. The organization examined shall pay the reasonable costs of the examination upon presentation to it of a detailed account of the costs. The organization examined shall exhibit all books,  records,  accounts,  documents or agreements governing its method of operation. In lieu of the examination the director may accept the report of an examination made by the insurance supervisory official of another state,  pursuant to the laws of such state.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-395 - Apportionment agreements among insurers

20-395.
Apportionment agreements among insurers
Insurers may make agreements among themselves with respect to equitable apportionment among them of insurance which may be afforded applicants who are in good faith entitled to but who are unable to procure such insurance through ordinary methods,  and such insurers may agree among themselves on the use of reasonable rate modifications for such insurance,  with all such agreements and rate modifications subject to the approval of the director.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-396 - Hearing and judicial review

20-396.
Hearing and judicial review
Any insurer,  rate service organization or advisory organization to which the director has issued an order or decision may request a hearing pursuant to title 41,  chapter 6,  article 10 and,  except as provided in section 41-1092.08,  subsection H,  seek judicial review pursuant to title 12,  chapter 7,  article 6.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-397 - Penalties; exception

20-397.
Penalties;  exception
A. If the director finds that a person or organization has violated this article or any order of the director issued pursuant to this article after the effective date of such order,  the director may,  after a hearing,  impose a civil penalty of not more than fifty dollars for each violation. If the director finds that a person or organization knowingly violated this article or any order of the director issued pursuant to this article after the effective date of such order,  the director may,  after a hearing,  impose a civil penalty of not more than five hundred dollars for each violation. Such civil penalties,  which may not in the aggregate exceed fifty thousand dollars,  may be in addition to any other penalty provided by law.
B. It is not a violation of this article if an insurer or rate service organization files a rate or rate change pursuant to section 20-385 which is later disapproved by the director.
C. The director may suspend the license of any rate service organization or insurer which fails to comply with an order of the director within the time prescribed by such order,  or any extension of the order which the director may grant. The director shall not suspend the license of any rate service organization or insurer for failure to comply with an order until the time prescribed for an appeal from the order has expired,  or if an appeal has been taken,  until such order has been affirmed. The director may determine when a suspension of a license becomes effective and it shall remain in effect for the period fixed by the director,  unless the director modifies or rescinds such suspension,  or until the order upon which such suspension is based is modified,  rescinded or reversed.
D. The director shall not impose a penalty or suspend or revoke a license except upon a written order stating the director's findings,  made after a hearing held upon not less than ten days' written notice to such person or organization specifying the alleged violation.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-398 - Policy forms; approval or disapproval; exemption

20-398.
Policy forms;  approval or disapproval;  exemption
A. Except for fidelity,  surety or guaranty bonds or industrial insurance as provided in section 20-400.10,  except for any portion of a property insurance policy that contains wildfire protection services,  and except as to inland marine risks that by general custom of the business are not written according to manual rates or rating plans,  a policy form applying to insurance on risks or operations covered by this article may not be delivered or issued for delivery unless the form has been filed with the director and either the director has issued,  within thirty days,  an order affirmatively approving or disapproving the form or the thirty-day period has elapsed and the director has not disapproved the form as ambiguous,  misleading or deceptive. On written notice given within the thirty-day period to the person making the filing,  the director may extend the period for up to fifteen additional days to enable the director to complete the review of the filing.
B. The director,  by order,  may exempt from the requirements of this section,  for as long as the director deems proper,  any insurance document or form as specified in the order,  to which,  in the director's opinion,  this section may not practicably be applied,  or the filing and approval of which are,  in the director's opinion,  not desirable or necessary for the protection of the public.
C. Any property insurance policy containing wildfire protection services,  including wildfire mitigation and wildfire suppression services conducted by a private entity,  that is issued for delivery to an insured in this state shall contain a conspicuously stamped or written notice in bold-faced type that states that the wildfire protection services are not subject to review by the department.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-399 - Payment of dividends

20-399.
Payment of dividends
This article does not prohibit or regulate the payment of dividends,  savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders,  members or subscribers. A plan for the payment of dividends,  savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders,  members or subscribers is not considered a rating plan or system.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-400 - Scope of provisions

20-400.
Scope of provisions
A. This article applies to all insurers having a certificate of authority issued by the director to transact insurance in this state except:
1. Reinsurance.
2. Annuities.
3. Title insurance.
4. Mortgage guaranty insurance.
5. Disability or life insurance.
6. Risks subject to section 20-395.
7. Risks commonly insured under marine and inland marine insurance policies.
8. Personal lines automobile,  dwelling and homeowner insurance policies.
9. Any policy of insurance against loss or damage to or legal liability in connection with property located outside this state,  any motor vehicle or aircraft principally garaged and used outside this state or any activity wholly carried on outside this state.
B. This article does not apply to hospital service or medical service corporations,  investment companies,  mutual benefit associations or fraternal beneficiary associations.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-400.01 - Unjustified adjustments

20-400.01.
Unjustified adjustments
A. No insurer may issue a policy of insurance subject to this article with a premium developed in a manner which is not consistent with a filing made pursuant to sections 20-357 and 20-385.
B. No insurer may make any adjustment to the full manual premium developed for any risk without adequate justification for that adjustment. An adjustment will be presumed to be adequately justified if both:
1. It is applied in a manner consistent with the insurer's filed rules.
2. The insurer's files contain adequate documentation of the facts supporting the adjustment.
C. A misclassification of a risk shall be considered an adjustment without adequate justification.
D. Each insurer shall maintain reasonable records of the information collected or used by it in developing the premium charged for any risk so that such records will be available to enable the director to verify compliance with this section.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-400.02 - Submittal of data comparing premiums charged to filed rates

20-400.02.
Submittal of data comparing premiums charged to filed rates
On the request of the director,  each insurer authorized to write any insurance in this state to which this article applies shall submit data to the director establishing the relationship of the aggregate premiums actually charged policyholders by the insurer for each line of insurance to the premiums produced by the insurer's filed unmodified rates for each line of insurance. A rate service organization may file the data on behalf of the insurer. Any insurer whose data indicates that the aggregate premiums actually charged policyholders for each line of insurance exceed the premiums produced by its filed unmodified rates by more than a percentage established by the director by rule,  or fall below the premiums produced by its filed unmodified rates by more than a percentage established and published by the director by rule,  shall be examined by the director to determine whether the rating plan or filed unmodified rates comply with sections 20-356 and 20-357 or 20-384 and 20-385. The director shall prescribe the time period the data are to cover and the form in which the data are to be submitted.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-400.03 - Penalties

20-400.03.
Penalties
If the director finds after a hearing that the insurer has knowingly,  or with such frequency as to indicate a general business practice,  violated the provisions of section 20-400.01 with respect to a particular class or that an insurer examined under section 20-400.02 has not complied with sections 20-356 and 20-357 or 20-384 and 20-385,  he may,  in addition to or in lieu of the penalties provided in section 20-397,  do the following:
1. Impose a civil penalty equal to the difference between the premium charged and that which would have been charged without the application of inadequately justified adjustments if a refund pursuant to paragraph 3 of this section has not been ordered.
2. Suspend the insurer's authority to do business in any given class.
3. Require applicable refunds to policyholders.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-400.05 - Examiners and examination related expenses

20-400.05.
Examiners and examination related expenses
A. The director shall utilize independent contractor examiners pursuant to section 20-148,  subsection B and section 20-159 to perform the examinations required under sections 20-400.01 and 20-400.02.
B. All examination and examination related expenses shall be borne by the insurer and shall be paid by the insurance examiners' revolving fund in accordance with section 20-159.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-400.10 - Industrial insureds

20-400.10.
Industrial insureds
A. An industrial insured as defined in section 20-401.07 may purchase and an admitted insurer may sell to an industrial insured a policy of insurance that is subject to article 4.1 of this chapter and that is on a form that has not been filed for review or approval by the director pursuant to article 4.1 of this chapter. The admitted insurer may use rates for a policy provided pursuant to this section that have not been filed for review or approval by the director pursuant to article 4.1 of this chapter.
B. At the inception of each new policy and at the time of each renewal,  but not less than annually during the term of the policy,  each industrial insured that purchases a policy as provided in this section shall certify to the insurer on a form prescribed by the director that the insured meets the definition of industrial insured prescribed in section 20-401.07.
C. Except as otherwise provided in section 20-407,  subsection B,  the insurer shall maintain the certification described in subsection B of this section in the insurer's policy file.
D. The following provisions do not apply to insurance issued to industrial insureds pursuant to this section:
1. Section 20-229.
2. Section 20-400.
3. Sections 20-400.01 through 20-400.05 and 20-400.07.
4. Section 20-448,  subsection C.
5. Section 20-451.
6. Section 20-452.
7. Section 20-465.
8. Sections 20-1111 through 20-1117.
9. Sections 20-1120,  20-1121 and 20-1122.
10. Article 4.1 of this chapter.
11. Chapter 3,  article 6 of this title.
12. Chapter 6,  articles 7 and 14 of this title.
E. Any policy issued for delivery to an industrial insured in this state by an insurer pursuant to this section shall contain a conspicuously stamped or written notice in bold-faced type that states:
Pursuant to Arizona Revised Statutes section 20-400.10,  this policy and the rates charged for it have not been filed with or approved by the director of the Arizona department of insurance and financial institutions. Certain provisions of Arizona law,  specified in Arizona Revised Statutes section 20-400.10,  do not apply to this policy. If the insurer that issued this policy becomes insolvent,  insureds or claimants will not be eligible for insurance guaranty fund protection pursuant to Arizona Revised Statutes title 20.
F. An insurer shall annually file with the insurer's annual statement filed pursuant to section 20-223 on a form prescribed by the director the following information for the prior year ending December 31 for all policies issued to industrial insureds pursuant to this section:
1. The total number of policies written.
2. The total premiums written.
3. The total premiums earned.
4. The total losses paid.
5. The total losses incurred.
6. The total number of claims incurred.
7. Any other information the director deems appropriate.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-401.01 - Unlawful transaction of insurance business; exemptions

20-401.01.
Unlawful transaction of insurance business;  exemptions
A. It is unlawful for any insurer to transact insurance business,  as provided by section 20-106,  in this state without a certificate of authority from the director.
B. The provisions of subsection A of this section do not apply to:
1. The lawful transaction of surplus lines insurance.
2. The lawful transaction of reinsurance by insurers.
3. Transactions in this state involving a policy lawfully solicited,  written and delivered outside of this state covering only subjects of insurance not resident,  located or expressly to be performed in this state at the time of issuance,  and which transactions are subsequent to the issuance of such policy.
4. Attorneys acting in the ordinary relation of attorney and client in the adjustment of claims or losses.
5. Transactions in this state involving group annuities where the master policy of such groups was lawfully issued and delivered in and pursuant to the laws of a state in which the insurer was authorized to do an insurance business,  to a group organized for purposes other than the procurement of insurance,  and where the policyholder is domiciled or otherwise has a bona fide situs.
6. Transactions in this state involving any policy of insurance or annuity contract issued prior to August 13,  1972.
7. Transactions in this state relative to a policy issued or to be issued outside this state involving insurance on vessels,  craft or hulls,  cargoes,  marine builder's risk,  marine protection and indemnity or other risk,  including strikes and war risks commonly insured under ocean or wet marine forms of policy.
8. Transactions in this state involving contracts of insurance not readily obtainable from insurers authorized to transact insurance in this state issued to one or more industrial insureds,  as defined in section 20-401.07.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-401.02 - Violation; cease and desist orders; injunctive relief

20-401.02.
Violation;  cease and desist orders;  injunctive relief
A. If the director has cause to believe that any insurer is violating or about to violate section 20-401.01,  the director may order the insurer to cease and desist and,  through the attorney general,  may cause a complaint to be filed in the superior court in Maricopa county to enjoin and restrain the insurer from continuing the violation,  engaging in the violation or doing any act in furtherance of the violation.
B. If the director orders the insurer to cease and desist,  the insurer may request a hearing pursuant to title 41,  chapter 6,  article 10. Except as provided in section 41-1092.08,  subsection H,  a final decision of the director is subject to judicial review pursuant to title 12,  chapter 7,  article 6.
C. If the director,  through the attorney general,  causes a complaint to be filed,  the superior court in Maricopa county shall have jurisdiction of the proceeding and may make and enter an order or judgment awarding the preliminary or final relief as in its judgment is proper.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-401.04 - Action by attorney general to enforce order or decision of court or director; foreign decrees

20-401.04.
Action by attorney general to enforce order or decision of court or director;  foreign decrees
A. The attorney general,  on request of the director,  may proceed in the courts of this state or any reciprocal state to enforce an order or decision in any court proceeding or any administrative proceeding before the director or any foreign decree.
B. The director shall determine which states and territories qualify as reciprocal states and shall maintain at all times an up-to-date list of those states.
C. A copy of any foreign decree authenticated as provided by the laws of this state may be filed in the office of the clerk of any superior court in this state. The clerk,  on verifying with the director that the decree or order qualified as a foreign decree,  shall treat the foreign decree in the same manner as a decree of a superior court in this state. A foreign decree so filed has the same effect and shall be deemed as a decree of a superior court in this state,  and is subject to the same procedures,  defenses and proceedings for reopening,  vacating or staying as a decree of a superior court in this state and may be enforced or satisfied in like manner.
D. At the time of the filing of the foreign decree,  the attorney general shall make and file with the clerk of the court an affidavit setting forth the name and last known post office address of the defendant.
E. Promptly on the filing of the foreign decree and the affidavit,  the clerk shall mail notice of the filing of the foreign decree to the defendant at the address given and to the director and shall make a note of the mailing in the docket. In addition,  the attorney general may mail a notice of the filing of the foreign decree to the defendant and to the director and may file proof of mailing with the clerk. Lack of mailing notice of filing by the clerk does not affect the enforcement proceedings if proof of mailing by the attorney general has been filed.
F. An execution or other process for enforcement of a foreign decree filed under this section shall not issue until thirty days after the date the decree is filed.
G. If the defendant shows the superior court that an appeal from the foreign decree is pending or will be taken,  or that a stay of execution has been granted,  the court shall stay enforcement of the foreign decree until the appeal is concluded,  the time for appeal expires,  or the stay of execution expires or is vacated,  on proof that the defendant has furnished the security for the satisfaction of the decree required by the state in which it was rendered.
H. If the defendant shows the superior court any ground on which enforcement of a decree of any superior court in this state would be stayed,  the court shall stay enforcement of the foreign decree for an appropriate period,  on requiring the same security for satisfaction of the decree that is required in this state.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-401.07 - Premium receipts tax on industrial insureds contracting with unauthorized insurer; definitions

20-401.07.
Premium receipts tax on industrial insureds contracting with unauthorized insurer;  definitions
A. Every industrial insured under a contract procured from an unauthorized insurer shall pay to the director for coverage on Arizona single-state risks or to the clearinghouse for coverage on multistate risks on or before the dates prescribed by in section 20-415 a premium receipts tax of three per cent of the gross premiums,  less premiums returned on account of cancellation or reduction of premium. Such insurance procured by an insured whose home state is Arizona,  whether procured through negotiation or an application,  in whole or in part occurring or made within or outside of this state,  or for which premiums in whole or in part are remitted directly or indirectly from within or outside of this state,  shall be deemed to be insurance effectuated or continued in this state.
B. Beginning January 1,  2015 and every five years thereafter,  the amounts listed in subsection C,  paragraph 1,  subdivisions (a) and (e) shall be adjusted to reflect the percentage change for the five-year period in the consumer price index for all urban consumers published by the bureau of labor statistics of the United States department of labor.
C. For the purposes of this section:
1. " Industrial insured"  means an insured whose home state is Arizona,  that applies for or procures any insurance that is subject to article 4.1 of this chapter through the use of a qualified risk manager,  that has aggregate annual gross premiums for insurance on all property and casualty risks that are subject to article 4.1 of this chapter totaling at least one hundred thousand dollars as of the insured's preceding fiscal year end and that meets one of the following criteria:
(a) Possesses a net worth of over twenty million dollars as of the preceding fiscal year end of the industrial insured as verified by a certified public accountant.
(b) Has net revenues or sales exceeding fifty million dollars as of the preceding fiscal year end of the industrial insured as verified by a certified public accountant.
(c) Has more than five hundred full-time employees or equivalent per individual company or is a member of an affiliated group employing more than one thousand employees in the aggregate.
(d) Is a municipality with a population of more than fifty thousand persons.
(e) Is a nonprofit organization or public entity generating annual budgeted expenditures of at least thirty million dollars.
2. " Qualified risk manager"  has the same meaning prescribed in the nonadmitted and reinsurance reform act of 2010 (15 United States Code section 8206).
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-402 - Validity of contracts

20-402.
Validity of contracts
A. The transaction of business in violation of section 20-401.01 by an insurer does not impair the validity of any act or contract of the insurer and does not prevent the insurer from defending any action at law or suit in equity in any court of this state,  except that no insurer transacting insurance business in this state without a certificate of authority is permitted to maintain an action in any court of this state to enforce any right,  claim or demand arising out of the transaction of the business until the insurer obtains a certificate of authority.
B. If an insurer transacting business in violation of section 20-401.01 fails to pay any claim or loss within the provisions of the insurance contract,  any person who acted directly or indirectly as an insurance producer for or otherwise represented or aided the insurer in the solicitation,  negotiation,  procurement or effectuation of the insurance contract or renewal of the contract is liable to the insured for the full amount of the claim or loss in the manner provided by the provisions of the insurance contract.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-403 - Service of process in an action by someone other than the director

20-403.
Service of process in an action by someone other than the director
A. The transaction of an insurance business in this state,  as provided in section 20-106,  by,  or on behalf of,  an unauthorized nonresident insurer shall be deemed to constitute an appointment by the insurer of the director and the director's successors in office as its attorney,  on whom may be served all lawful process issued within this state in any action or proceeding against such insurer brought by someone other than the director and arising out of any such transaction.
B. Such service of process shall be made by delivering to and leaving with the director two copies thereof. At the time of service the plaintiff shall pay $5 to the director,  taxable as costs in the action. The director shall immediately mail by registered or certified mail one of the copies of process to the defendant at its principal place of business as last known to the director and shall keep a record of all process so served.
C. Notice of service and a copy of process shall be sent by the plaintiff's attorney to the defendant insurer at its last known principal place of business by registered or certified mail. The defendant insurer's receipt,  or registry receipt as to the mailing issued by the post office where registered or certified,  showing the name of the sender and name and address of the addressee,  and the affidavit of plaintiff's attorney showing compliance with this subsection,  shall be filed in the court in which the action is pending on or before the date the defendant insurer is required to appear,  or within such further time as the court may allow. A judgment by default against the insurer may not be taken under this section until the expiration of thirty days after the date of filing of the affidavit of compliance.
D. Service of process in an action or proceeding against an unauthorized resident insurer shall be valid if served on any person within this state who transacts an insurance business in this state on behalf of such insurer. Subsection C of this section applies with respect to service of process.
E. Service of process on an insurer in accordance with this section shall be as valid and effective as if served on a defendant personally present in this state.
F. Means provided in this section for service of process on the insurer shall not be deemed to prevent service of process on the insurer by any other lawful means.
G. An insurer that has been so served with process,  subject to section 20-405,  shall have the right to appear in and defend the action and employ attorneys and other persons in this state to assist in the action's defense or settlement.
2023 Arizona Revised Statutes › Title 20 - Insurance › § 20-404 - Exemptions

20-404.
Exemptions
Sections 20-403,  20-405 and 20-406 shall not apply to such transactions as are prescribed in section 20-401.01,  paragraphs 1,  2,  3,  4,  5,  7 and 8,  nor to any action or proceeding against an unauthorized insurer arising out of the following types of insurance where the policy or contract contains a provision designating the director as its attorney for the acceptance of service of lawful process in any action or proceeding instituted by or on behalf of an insured or beneficiary arising out of any such policy,  or where the insurer enters a general appearance in any such action:
1. Ocean marine and foreign trade insurance.
2. Insurance on subjects located,  resident or to be performed,  wholly outside this state,  or on vehicles or aircraft owned and principally garaged outside this state.
3. Insurance on property or operations of railroads engaged in interstate commerce.