20-101 Department of insurance; "commission" defined
A. There shall be a department of insurance which shall be administered by the
director of insurance.
B. In this title, unless the context otherwise requires, "commission" means the
department of insurance.
20-102 "Director" defined
When used with reference to administration of this title, "director" means the
director of insurance of the state. When used with reference to a member of the
governing body of an insurer, "director" includes "trustee."
20-103 Definition of insurance; exceptions
A. For the purposes of this title, except as otherwise provided, "insurance" is a
contract by which one undertakes to indemnify another or to pay a specified amount upon
determinable contingencies.
B. Private ambulance service contracts or private fire protection service contracts
are not insurance, and this title does not apply to those contracts.
C. Charitable gift annuities that are issued pursuant to section 20-119 are not
insurance and, except as provided in section 20-119, this title does not apply to
agreements for those annuities.
D. Collision damage waivers are not insurance, and this title does not apply to
those waivers.
20-104 "Insurer" defined
"Insurer" includes every person engaged in the business of making contracts of
insurance.
20-105 "Person" defined
"Person" includes an individual, company, insurer, association, organization,
society, reciprocal or inter-insurance exchange, partnership, syndicate, business trust,
corporation and entity.
20-106 Acts constituting the transaction of business; definition
A. "Transact" with respect to insurance includes any of the following:
1. Solicitation and inducement.
2. Preliminary negotiations.
3. Effectuation of a contract of insurance.
4. Transaction of matters subsequent to effectuation of the contract and arising
out of it.
B. Any of the following acts in this state effected by mail or otherwise, by or on
behalf of an unauthorized insurer, is deemed to constitute the transaction of an
insurance business in this state:
1. The making of or proposing to make, as an insurer, an insurance contract.
2. The making of or proposing to make, as guarantor or surety, any contract of
guaranty or suretyship as a vocation and not merely incidental to any other legitimate
business or activity of the guarantor or surety.
3. The taking or receiving of any application for insurance.
4. The receiving or collection of any premium, commission, membership fees,
assessments, dues or other consideration for any insurance or any part thereof.
5. The issuance or delivery of contracts of insurance to residents of this state or
to persons authorized to do business in this state.
6. Directly or indirectly acting as an insurance producer or agent for or otherwise
representing or aiding on behalf of another any person or insurer in the solicitation,
negotiation, procurement or effectuation of insurance or renewals thereof or in the
dissemination of information as to coverage or rates, or forwarding of applications, or
delivery of policies or contracts, or inspection of risks, a fixing of rates or
investigation or adjustment of claims or losses or in the transaction of matters
subsequent to effectuation of the contract and arising out of it, or in any other manner
representing or assisting a person or insurer in the transaction of insurance with
respect to subjects of insurance resident, located or to be performed in this state. The
provisions of this paragraph shall not operate to prohibit full-time salaried employees
of a corporate insured from acting in the capacity of an insurance manager or buyer in
placing insurance in behalf of such employer.
7. The transaction of any kind of insurance business specifically recognized as
transacting an insurance business within the meaning of the statutes relating to
insurance.
8. The transacting or proposing to transact any insurance business in substance
equivalent to any provisions as provided in paragraphs 1 through 7 of this subsection in
a manner designed to evade the laws of this state.
C. In this section, unless the context otherwise requires, "insurer" includes all
corporations, associations, partnerships and individuals engaged as principals in the
business of insurance and also includes interinsurance exchanges and mutual benefit
societies. 20-107 Limitation on transaction of insurance; exception
A. No person shall transact a business of insurance in this state, or relative to a
subject of insurance resident, located or to be performed in this state, without
complying with the applicable provisions of this title.
B. No provision of this title shall be deemed to require any license or other
authority, or impose any penalty or requirement except as provided by section 20-421, of
or upon any person for negotiation or procurement of insurance by him upon his own
insurable interests, with or from an insurer not authorized to transact insurance in this
state.
20-108.01 Extended warranty insurers; deposit with state treasurer; powers and duties; definition
A. Every extended warranty insurer shall deposit with the state treasurer and
maintain on deposit for the benefit and protection of any person purchasing such extended
warranty or guaranty in the event of insolvency of the extended warranty insurer under
its contract with any such person either of the following:
1. A bond in the amount of twenty-five thousand dollars issued by an insurance
company holding a current certificate of authority issued by the ARIZONA director of
insurance.
2. Eligible securities as defined in section 20-583 having the lesser of par or
market value of not less than twenty-five thousand dollars.
B. The director of insurance shall adopt and promulgate rules and regulations to
enforce the provisions of this section.
C. For purposes of this section "extended warranty insurer" means the same as
defined in section 20-108.
20-108 Types of insurers excepted
No provision of this title applies with respect to:
1. Hospital and medical service corporations, except as stated in chapter 4,
article 3 of this title.
2. Fraternal benefit societies, except as stated in chapter 4, article 4 of this
title.
3. Extended warranty insurers who comply with the bond requirements of section
20-108.01. For purposes of this paragraph "extended warranty insurer" means any insurer
as otherwise defined by this title that does not manufacture, sell or service radio,
television or sound reproduction equipment and that:
(a) For a premium charged, not greater than twenty dollars per annum, nor greater
than a three-year term, provides a nonrenewable warranty, guaranty or service contract on
radio, television or sound reproduction equipment in addition to, or as an extension of,
any warranty, guaranty or service provided by the manufacturer of such equipment.
(b) Is not otherwise authorized to transact property or casualty insurance business
in this state or any other governmental jurisdiction.
(c) Is not owned or controlled in any degree nor to any extent by a person, persons
or business otherwise authorized to transact property or casualty insurance business in
this state or any other state or jurisdiction.
(d) Has gross sales in this state not exceeding one hundred thousand dollars
annually.
(e) Has maximum contractual contingent liability not exceeding three hundred
thousand dollars in this state. 20-109 Existing licenses
A. The expiration dates of certificates of authority and licenses in force
immediately prior to January 1, 1955 and lawfully existing under any law repealed by Laws
1954, chapter 64, article 29, are extended as follows:
1. Licenses or certificates of authority of insurers shall expire on April 1, 1955.
2. Licenses or certificates of authority of agents, brokers and solicitors shall
expire at midnight on June 30, 1955.
B. Any such expired license or certificate may be renewed, and shall be subject to
suspension or revocation, as though originally issued under this title.
20-110 Existing contracts
No provision of this title shall be deemed to modify or invalidate any contract
lawfully in force prior to January 1, 1955.
20-111 Existing forms and filings
Every form of insurance document and every rate or other filing lawfully in use
immediately prior to January 1, 1955, may continue to be so used or be effective until
the director otherwise prescribes pursuant to this title. Before expiration of one year
from and after January 1, 1955 neither this title nor the director shall prohibit the use
of any such document, rate or filing because of any power, prohibition or requirement
contained in this title which did not exist under laws in force immediately prior to
January 1, 1955.
20-112 Existing actions or violations
Repeal by this title of any law shall not affect or abate any right accrued, action
or proceeding commenced, or any unlawful act committed under such law, prior to January
1, 1955, and punishment or deprivation of license or authority as a consequence thereof
as provided by such laws, but all proceedings taken on or after January 1, 1955 with
respect thereto shall conform to the applicable provisions of this code insofar as
possible. All such laws shall be deemed to continue in force to the extent made
necessary by this provision.
20-113 Construction of particular and general provisions
Provisions of this title relative to a particular kind of insurance or a particular
type of insurer or to a particular matter shall prevail over provisions relating to
insurance in general or insurers in general or to such matter in general.
20-114 Violations; classification
In addition to any other penalty applicable thereto, either under this title or
otherwise, violation of any provision of this title is a class 2 misdemeanor and shall be
punishable as such where no other penalty is provided therefor.
20-115 Department jurisdiction over certain health care providers; exception; examination; disclosure
A. Any person or other entity, including a provider sponsored organization that
operates under the Medicare-plus-choice program established under the balanced budget act
of 1997 (42 United States Code sections 1395w-21 through 1395w-28 and title XVIII, part C
of the social security act, sections 1851 through 1859), that provides coverage in this
state for medical, surgical, chiropractic, naturopathic medicine, occupational therapy,
physical therapy, speech pathology, audiology, professional mental health, dental,
hospital or optometric expenses, whether the coverage is by direct payment, reimbursement
or otherwise, is presumed to be subject to the jurisdiction of the department unless the
person or other entity shows that while providing coverage it is subject to the
jurisdiction of another agency of this state, any political subdivision of this or any
other state or the federal government.
B. A person or entity that provides coverage for services identified in subsection
A may show that it is subject to the jurisdiction of another agency of this state, any
political subdivision of this or any other state or the federal government by providing
to the director the appropriate certificate, license or other document that is issued by
the other governmental agency and that permits or qualifies it to provide those services.
C. Any person or entity that provides coverage in this state for services described
in subsection A and is unable to show it is subject to the jurisdiction of another agency
of this state, any political subdivision of this or any other state or the federal
government:
1. Shall submit to an examination by the director to determine the organization and
solvency of the person or the entity and to determine whether or not the person or entity
is in compliance with the applicable provisions of this title.
2. Is subject to all appropriate provisions of this title regarding the conduct of
its business.
D. Any production agency or administrator which advertises, sells, transacts or
administers coverage in this state for services described in subsection A which is
provided by any person or entity described in subsection C, if that coverage is not fully
insured or otherwise fully covered by an admitted life or disability insurer, nonprofit
hospital service plan or nonprofit health care plan, shall advise any purchaser,
prospective purchaser or covered person of the lack of insurance or other coverage.
E. Any administrator which advertises or administers coverage in this state for
services described in subsection A which is provided by any person or entity described in
subsection C shall advise any production agency of the elements of the coverage including
the amount of stop-loss insurance in effect.
F. This section does not apply to or prohibit a self-insured program operated by a
single employer for the benefit of its employees or the employees of a wholly-owned
subsidiary.
20-116 Surety bonds; cash deposit as alternative
Any provision in this title that requires a person to post a surety bond to
guarantee the performance of a legal obligation is subject to the provisions of section
35-155 pertaining to accepting a cash deposit as an alternative to a surety bond.
20-117 Definitions
In this title, unless the context otherwise requires:
1. "Health care services organization" has the same meaning prescribed in section
20-1051.
2. "Private passenger motor vehicle" means any vehicle that is rated or insured
under a family automobile policy, standard automobile policy, personal automobile policy
or similar private passenger automobile policy written for personal use, including use by
an insured of a motor vehicle in the course of the insured's volunteer work for a
tax-exempt organization as described in section 43-1201, paragraph 4, as opposed to a
motor vehicle rated or insured under a commercial automobile policy.
3. "Volunteer work" means work performed without compensation other than
reimbursement of actual expenses incurred, or disbursement of meals or other incidental
benefits.
20-118 Prohibition; definitions
A. A person subject to this title shall not restrict or prohibit, by means of a
policy or contract, whether written or otherwise, a licensed health care professional's
good faith communication with the health care professional's patient concerning the
patient's health care or medical needs, treatment options, health care risks or benefits.
B. A person subject to this title shall not terminate a contract with or refuse to
renew a contract with a health care professional solely because the health care
professional in good faith does any of the following:
1. Advocates in private or in public on behalf of a patient.
2. Assists a patient in seeking reconsideration of a decision made by the person to
deny coverage for a health care service.
3. Reports a violation of law to an appropriate authority.
C. For the purposes of this section:
1. "Contract" means a written contract under which a licensed health care
professional agrees to provide specified health care services to covered persons.
Contract does not include a contract of salaried employment.
2. "Health care professional" has the same meaning prescribed in section 20-3151.
20-119 Charitable gift annuities; audited financial statements; disclosure statement; commissions prohibited; definitions
A. On the day a charitable organization enters into an agreement for a charitable
gift annuity, the charitable organization shall have:
1. A minimum of three hundred thousand dollars in unrestricted cash, cash
equivalents or publicly traded securities, exclusive of assets funding the charitable
gift annuity agreement.
2. Been in continuous operation for at least three years or is a successor or
affiliate of a charitable organization that has been in continuous operation for at least
three years.
3. Had an annual audit of its operations conducted by an independent certified
public accountant for the past two fiscal years.
B. Any person offering a charitable gift annuity in this state shall provide the
following information in writing to a prospective donor before entering into an agreement
for a charitable gift annuity or receiving any transfer of cash or property from the
donor:
1. The name and address of the charitable organization offering the charitable gift
annuity to the donor.
2. A description of the charitable organization offering the charitable gift
annuity, including its state of organization, its date of organization and its current
operations.
3. A statement that the charitable organization will make additional financial
information, including its most current audited and interim financial statements,
available to the donor on request. This statement shall be conspicuous and printed in at
least ten point bold-faced type.
4. A disclosure that the charitable gift annuity is not insurance under the laws of
this state, is not subject to regulation by the director and is not protected by any
state guaranty fund.
5. A disclosure that this state and the department have not approved or disapproved
of the charitable gift annuity being offered and have not determined whether any of the
information provided to the donor is truthful or complete.
C. If any agreement between a charitable organization and a donor for a charitable
gift annuity is entered in violation of this section, the donor may bring an action in a
court of competent jurisdiction to recover the amount of the consideration paid for the
charitable gift annuity, with interest, taxable court costs and reasonable attorney fees,
less the amount of any income received from ownership of the charitable gift annuity, on
tender of the charitable gift annuity or the agreement for it. Any such action shall be
brought within two years of the date the donor discovered or reasonably should have
discovered that the charitable gift annuity transaction did not comply with this section.
D. In connection with the solicitation or negotiation of a charitable gift annuity,
a person shall not directly or indirectly pay or accept a commission, fee or other form
of compensation contingent on the donation or amount of the charitable gift annuity.
This subsection does not prohibit or restrict a charitable organization from paying the
regular compensation owed to its employees or the distribution of monies for authorized
charitable purposes.
E. For the purposes of this section:
1. "Charitable gift annuity" means a transfer of cash or other property by a donor
to a charitable organization in return for an annuity that is payable over one or two
lives under which the actuarial value of the annuity is less than the value of the cash
or other property transferred and the difference in value is a charitable deduction for
federal tax purposes.
2. "Charitable organization" means an entity that is described in section 501(c)(3)
or 170(c) of the internal revenue code of 1986. 20-120 Payment bonds for third party intermediary entities; contract provisions; definitions
A. A health care insurer shall not contract with a third party intermediary entity
for the delivery or provision of health benefits or services by or through that entity to
a group or panel of covered persons, unless the third party intermediary entity at its
own expense secures a payment bond or posts a cash deposit pursuant to this section.
B. The following apply to a payment bond required by this section:
1. The payment bond shall be in a face amount that is at least equal to the average
monthly payment amount that the third party intermediary entity is entitled to receive
under the terms of its contract with the health care insurer.
2. The payment bond shall be executed by a surety company or companies holding a
certificate of authority to transact surety business in this state issued by the director
pursuant to chapter 2, article 1 of this title.
3. The payment bond serves solely as a source of payment of claims for covered
health benefits or services provided by subcontracted health care professionals to the
group or panel of covered persons under the contract between the third party intermediary
entity and the health care insurer.
4. A subcontracted health care professional who has provided covered health care
benefits or services to one or more covered persons under a subcontract with a third
party intermediary entity, and who has not been paid in full for the covered benefits or
services provided pursuant to the subcontract within ninety days after the date on which
the last of the benefits or services were provided, may sue on the payment bond for the
unpaid amount owed under the subcontract, may prosecute the action to final judgment and
may execute on the judgment against the payment bond. The suit shall commence within one
year after the date on which the last of the benefits or services sued for were provided.
5. A health care insurer that pays claims of subcontracted health care
professionals for covered health care benefits or services that were the contractual
responsibility of a third party intermediary entity may sue on the payment bond for the
claims amounts paid, may prosecute the action to final judgment and may execute on the
judgment against the payment bond. The suit shall commence within one year after the date
on which the last of the claims sued for were paid.
6. The payment bond shall include a provision allowing the prevailing party in a
suit on the bond to recover as a part of the judgment a reasonable attorney fee as
determined by the court.
7. A health care insurer shall review annually a payment bond secured pursuant to
this section to determine whether the face amount of the payment bond needs to be
adjusted.
C. The following apply to cash deposits required by this section:
1. A cash deposit posted pursuant to this section shall be in an amount that is at
least equal to the average monthly payment amount that the third party intermediary
entity is entitled to receive under the terms of its contract with the health care
insurer and shall be deposited with and held in trust by the state treasurer.
2. Instead of requiring a third party intermediary to post the entire cash deposit
at the outset, for a six month period beginning with the initial contract payment, the
health care insurer may withhold from the monthly contract payment to be made to the
third party intermediary entity an amount that is equal to one-sixth of the cash deposit
required to be posted pursuant to this subsection. The health care insurer shall transfer
the monies withheld pursuant to this subsection for deposit with the state treasurer to
be held in trust as provided in this section. Monies withheld and not yet deposited with
the state treasurer pursuant to this subsection are held in trust for the purposes
described in this section and are not the monies of the health care insurer.
3. A cash deposit made pursuant to this section serves solely as a source of
payment of claims for covered health benefits or services provided by subcontracted
health care professionals to the group or panel of covered persons under the contract
between the third party intermediary entity and the health care insurer.
4. A subcontracted health care professional who has provided covered health care
benefits or services to one or more covered persons under a subcontract with a third
party intermediary entity and who has not been paid in full for the provided benefits or
services pursuant to the subcontract within ninety days after the date on which the last
of the benefits or services were provided, may sue on the cash deposit for the unpaid
amount owed under the subcontract, may prosecute the action to final judgment and may
execute on the judgment against the cash deposit. The suit shall commence within one year
after the date on which the last of the benefits or services sued for were provided.
5. A health care insurer that pays claims of subcontracted health care
professionals for covered health care benefits or services that were the contractual
responsibility of a third party intermediary entity may sue on the cash deposit for the
claims amounts paid, may prosecute the action to final judgment and may execute on the
judgment against the cash deposit. The suit shall not commence before one year after the
date on which the last of the claims sued for were paid.
6. Out of monies held on deposit by the state treasurer for a specific third party
intermediary entity pursuant to this section, monies may be awarded and paid to the
prevailing party in a suit on the cash deposit. The court may award as a part of the
judgment on that cash deposit a reasonable attorney fee as determined by the court.
7. A health care insurer shall review annually a cash deposit posted pursuant to
this section to determine whether the face amount needs to be adjusted.
D. The following apply to contracts between a third party intermediary entity and a
health care insurer:
1. The contract shall require the third party intermediary entity to submit a
quarterly report on the timeliness of payments made to all subcontracted health care
professionals to the health care insurer to measure compliance with payment timeliness
standards.
2. The contract shall require the third party intermediary entity to pay its
subcontracted health care professionals within the time period specified under section
20-3102.
E. This section does not:
1. Authorize any entity that does not hold a certificate of authority to engage in
the business of insurance in this state.
2. Require a third party intermediary entity to post a payment bond or cash deposit
if the entity holds a certificate of authority as an administrator, disability insurer,
service corporation or health care services organization.
3. Create any new private right or cause of action for or on behalf of any person,
other than a right to sue on a payment bond or cash deposit under subsection B or C of
this section. A general creditor or judgment creditor or any other claimant of a third
party intermediary entity shall not levy on any payment bond or cash deposit secured or
held pursuant to this section.
4. Require a third party intermediary entity that serves as a provider network for
an affiliated staff or group model health care services organization under a common line
of ownership or control to post a payment bond or cash deposit to that health care
services organization. Notwithstanding that a payment bond or cash deposit is not
required under this paragraph, the health care services organization may require the
third party intermediary entity to meet other payment bond or cash deposit requirements
established by the health care services organization. If the health care services
organization does not require the third party intermediary entity to post a payment bond
or cash deposit, the health care services organization is responsible for payment of
claims for covered health benefits or services that are provided by subcontracted health
care professionals to covered persons if the third party intermediary entity fails to
make payment pursuant to the subcontracts.
5. Require one or more persons who are licensed health care professionals,
hospitals or other institutional health care providers to post a payment bond or cash
deposit under a contract where the assumption of business risk is limited to benefits or
services that may be lawfully furnished within the lawful scope of practice by that
person or persons.
6. Limit the ability of a health care insurer to impose additional financial
requirements on a third party intermediary entity.
7. Require a third party intermediary entity to post a payment bond or cash deposit
if the entity has not been delegated responsibility to process and pay the claims of the
health care providers for which the entity has assumed the business risk.
F. Any bond that is secured or deposit that is posted under this section shall be
released and returned:
1. To the third party intermediary entity on extinguishment by reinsurance or
otherwise of substantially all liability of the insurer for the security of which the
bond or deposit is held.
2. To the third party intermediary entity to the extent the bond or deposit is more
than the amount required.
3. On proper order of a court of competent jurisdiction to the receiver,
conservator, rehabilitator or liquidator of the third party intermediary entity or to any
other properly designated official or officials who succeed to the management and control
of the third party intermediary entity's assets.
G. A surety shall not terminate a bond issued pursuant to this section unless the
surety files a written notice of termination with the director at least thirty days
before terminating the bond.
H. A release of deposited monies shall not be made except on application to and the
written order of the director. The director is not personally liable for the good faith
release of all or any part of a deposit.
I. A third party intermediary entity shall approve or deny claims in the manner
prescribed in chapter 20 of this title.
J. This section applies to all contracts between third party intermediary entities
and health care insurers that are entered into or renewed from and after December 31,
2000.
K. For the purposes of this section:
1. "Administrator" means an entity that holds a certificate of authority pursuant
to chapter 2, article 9 of this title.
2. "Covered persons" means enrollees, insureds, members, subscribers, dependents or
other persons who are covered by a contract of disability insurance, subscription
contract, evidence of coverage or other prepaid plan or arrangement with a health care
insurer.
3. "Health care insurer" means a disability insurer, service corporation or health
care services organization.
4. "Health care professional" has the same meaning prescribed in section 20-3151.
5. "Health care services organization" means an entity that holds a certificate of
authority pursuant to chapter 4, article 9 of this title.
6. "Service corporation" means an entity that holds a certificate of authority
pursuant to chapter 4, article 3 of this title.
7. "Third party intermediary entity" means an entity that assumes business risk
through a written contract with a disability insurer, service corporation or health care
services organization for the cost of providing covered health care benefits or services
to a group or panel of covered persons if not all of those benefits or services will be
provided by the entity or by licensed health care professionals who are subcontracted to
the entity.
20-141 Director of insurance; appointment; term; qualifications; compensation
A. There shall be a director of insurance who shall be appointed by the governor
pursuant to section 38-211.
B. The term of the director shall be six years and shall expire on the third Monday
in January of the appropriate year, but he may be removed by the governor for cause.
C. The director shall be a person well versed in insurance matters who has been a
resident of the state for at least three years prior to appointment.
D. The director shall receive compensation as determined pursuant to section
38-611.
20-142 Powers and duties of director; payment of examination and investigation costs; home health services
A. The director shall enforce the provisions of this title.
B. The director shall have powers and authority expressly conferred by or
reasonably implied from the provisions of this title.
C. The director may conduct examinations and investigations of insurance matters,
including examinations and investigations of adjusters, agents and brokers and any other
persons who are regulated under this title, in addition to examinations and
investigations expressly authorized, as the director deems proper in determining whether
a person has violated any provision of this title or for the purpose of securing
information useful in the lawful administration of any provision of this title. The
examined party shall pay the cost of examinations that are conducted pursuant to this
subsection except for examinations of adjusters, agents and brokers. The examined party
shall pay the cost of examining adjusters, agents and brokers only if the party has
violated any provision of this title. The state shall pay the cost of an investigation.
D. The director shall establish guidelines for insurers on home health services
that shall be used by the director pursuant to sections 20-826, 20-1342, 20-1402 and
20-1404. The director may use home health services as defined in section
36-151. Guidelines shall include but not be limited to:
1. Home health services that are prescribed by a physician.
2. Home health services that are determined to cost less if provided in the home
than the average length of in-hospital service for the same service.
3. Skilled professional care in the home that is comparable to skilled professional
care provided in-hospital and that is reviewed and approved at thirty day intervals by a
physician.
E. Pursuant to section 41-1750, subsection G, the director may receive criminal
history record information in connection with the issuance, renewal, suspension or
revocation of a license or certificate of authority or the consideration of a merger or
acquisition. The director may require a person to submit a full set of fingerprints to
the department. The department of insurance shall submit the fingerprints to the
department of public safety for the purpose of obtaining a state and federal criminal
records check pursuant to section 41-1750 and Public Law 92-544. The department of public
safety may exchange this fingerprint data with the federal bureau of investigation.
20-143 Rule-making power
A. The director may make reasonable rules necessary for effectuating any provision
of this title.
B. The director shall make rules concerning proxies, consents or authorizations in
respect of securities issued by domestic stock insurance companies having a class of
equity securities held of record by one hundred or more persons to conform with the
requirements of section 12(g)(2)(G)(ii) of the securities exchange act of 1934, as
amended, and as may be amended. Such rule shall not apply to any such company having a
class of equity securities which are registered or are required to be registered pursuant
to section l2 of the securities exchange act of 1934, as amended, or as may be
amended. Whenever such equity securities of any such company are registered or are
required to be registered pursuant to section l2 of the securities exchange act of 1934,
as amended, or as may be amended, then, no person shall solicit or permit the use of his
name to solicit, in any manner whatsoever, any proxy, consent or authorization in respect
of any equity security of such company without having first complied with the rules
prescribed by the securities and exchange commission pursuant to section 14 of the
securities exchange act of 1934, as amended, or as may be amended.
C. All rules made pursuant to this section shall be subject to title 41, chapter 6.
D. In addition to any other penalty provided, wilful violation of any rule made by
the director is a violation of this title.
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 insurance, state
of ARIZONA."
B. Every certificate or license issued by the director shall bear his seal.
20-145 Evidentiary effect of certificate of authority
When required, the director shall furnish his certificate as to the authority of any
person to transact insurance, and such certificate shall be evidence of the facts set
forth therein.
20-146 Supervisor
A. The director shall appoint a supervisor of insurance rates.
B. The supervisor of insurance rates shall be a person versed in insurance rating
procedure and familiar with the operation of insurance companies and rating
organizations.
C. The supervisor shall be subject to removal for cause.
D. The supervisor of insurance rates shall receive compensation as determined
pursuant to section 38-611.
20-147 Assistant director; chief examiner; appointment; qualifications
A. The director shall appoint an assistant director of insurance and a chief
examiner.
B. The assistant director of insurance shall be experienced in the fields of life
and disability and property and casualty insurance and the chief examiner shall have had
at least five years experience as a full-time examiner for a state insurance department
or departments, or as a full-time staff member of a public accounting or actuarial firm
regularly employed to conduct examinations for a state insurance department.
20-148 Deputies and other employees; special services
A. The director shall appoint such other deputies, assistants and clerks, as
necessary properly to discharge the duties imposed upon the director under this title.
B. The director may from time to time contract for and procure, on a fee or part
time basis, or both, such actuarial, technical and other professional services as he may
require for the operation of his office.
C. The compensation of each deputy, actuary, assistant and clerk shall be as
determined pursuant to section 38-611.
20-149 Prohibition on certain activities by employees; conflict of interest
A. The director, or any deputy, examiner, assistant or employee of the director
shall not be financially interested, directly or indirectly, in any insurer, agency or
any entity regulated under this title except as a policyholder or claimant under a
policy. As to such matters wherein a conflict of interests does not exist on the part of
any such individual, the director may employ from time to time insurance actuaries or
other technicians who are independently practicing their professions even though
similarly employed by insurers and others.
B. The director or any deputy, examiner, assistant or employee of the director
shall not be given nor receive any fee, compensation, loan, gift or other thing of value
in addition to the compensation provided by law for any service rendered or to be
rendered as such director, deputy or employee or in connection therewith.
C. This section shall not be deemed to prohibit employment by the director of
retired or pensioned personnel of insurers or insurance organizations.
D. The director, or any deputy, examiner, assistant or employee of the department
whose relative is an owner, partner, director, officer, holder of a beneficial interest
of more than five per cent whether as a shareholder or otherwise or a salaried employee
of any entity regulated under this title shall be subject to the conflict of interest and
disclosure requirements set forth in title 38, chapter 3, article 8.
E. For purposes of subsection D, the term "relative" shall include all persons set
forth in section 38-502, paragraph 9.
20-150 Delegation of director's authority
A. Any power, duty or function, whether ministerial or discretionary, vested by
this title in the director may be exercised or discharged by any deputy, assistant or
examiner or by any other person designated by the director pursuant to section 20-148
acting in the director's name and by his delegated authority.
B. The director shall be responsible for the official acts of his deputy,
assistant, examiner or employee or any other person designated by the director pursuant
to section 20-148 acting in the director's name and by his authority.
20-151 Issuance of orders and notices by director
A. Orders and notices of the director shall not be effective unless in writing
signed by him or by his authority.
B. Every order of the director shall state its effective date and shall concisely
state:
1. Its intent or purpose.
2. The grounds on which based.
3. The provisions of this title pursuant to which action is so taken or proposed to
be taken, but failure to so designate any provision shall not deprive the director of the
right to rely thereon.
C. An order or notice may be given by delivery to the person to be ordered or
notified or by mailing it, postage prepaid, addressed to him at his principal place of
business as last of record in the director's office.
20-152 Enforcement
A. If the director has cause to believe that a person has violated any penal
provision of this title or other laws relating to insurance, and that prosecution of the
person is advisable, he shall certify the facts of such violation to the attorney
general, who shall bring and prosecute such action as may be required for the purpose of
punishing the violation.
B. If the director has cause to believe that any person is violating or is about to
violate any provision of this title or any lawful order of the director, he may certify
the facts thereof to the attorney general, who shall bring and prosecute such action as
may be required for the purpose of enjoining the violation.
C. The attorney general shall prosecute or defend all proceedings brought pursuant
to or resulting from enforcement of this title when requested by the director.
20-153 Records
A. Records of all official transactions, examinations, investigations and
proceedings of the department shall be open to public inspection pursuant to section
39-121, except as otherwise provided in this title.
B. The director may destroy records pursuant to sections 41-1347 and 41-1351.
20-154 Annual report
A. As early in the calendar year as possible the director shall annually prepare a
report for delivery to the commission, the governor and the legislature, showing, with
respect to the preceding calendar year:
1. List of authorized insurers transacting insurance in this state, with such
report of their financial condition as he deems appropriate.
2. Names of insurers whose businesses were closed during the year, the cause
thereof, and amount of assets and liabilities as ascertainable.
3. Names of insurers against which delinquency or similar proceedings were
instituted, and a concise statement of the facts with reference to each such proceeding.
4. Name and compensation of each officer, deputy, examiner, assistant and employee
of the office of director, and the whole amount, with reasonable itemization, of the
expenses of the office of director.
5. Recommendations of the director as to amendment of laws affecting insurance, and
as to matters affecting the office of director.
6. Such other pertinent information and matters as the director deems proper.
B. The director shall cause the report to be printed and delivered for the purpose
intended.
20-155 Expenses of administration
All salaries, compensation and other expenses involved in the operation of the
office of the director shall not exceed the amount from time to time appropriated or
otherwise made available therefor by the legislature, including travel expense incurred
by the director, his deputies and assistants within or outside this state in connection
with official duties, dues assessed by the national association of insurance
commissioners and travel expense incurred by the director and any one or more deputies or
assistants designated by him in attendance upon meetings or committee meetings of such
association.
20-156 Examination of insurers and state compensation fund; financial surveillance fund; definition
A. The director shall examine the affairs, transactions, accounts, records and
assets of each authorized insurer as often as the director deems advisable. The director
shall so examine each domestic insurer, domestic life and disability reinsurer as defined
in section 20-1082, service company as defined in section 20-1095 and mechanical
reimbursement reinsurer as defined in section 20-1096 at least once every five
years. Examination of an alien insurer shall be limited to its insurance transactions in
the United States.
B. The director shall in like manner examine each insurer applying for an initial
certificate of authority to do business in this state.
C. In lieu of making an examination, the director may accept a full report of the
last recent examination of a foreign or alien insurer, certified to by the insurance
supervisory official of another state, territory, commonwealth or district of the United
States.
D. The director may examine the affairs, transactions, accounts and records of the
state compensation fund as often as the director reasonably deems advisable. The results
of such examination shall be the basis for any advisory recommendations which the
director deems necessary regarding the operations of the state compensation fund.
E. The expenses of the examinations conducted under this section shall be paid by
the insurance examiners' revolving fund as provided in section 20-159. Such expenses
shall be limited to preexamination selection and preparation costs, examination costs,
postexamination costs and other such costs of evaluations of compliance required by law.
F. The financial surveillance fund is established consisting of monies collected
pursuant to subsection G of this section. The fund is a special state fund pursuant to
section 35-142, subsection A, paragraph 8. Monies in the fund do not revert to the state
general fund. The department shall administer the fund. Monies in the fund are
continuously appropriated and are exempt from the provisions of section 35-190 relating
to lapsing of appropriations.
G. The director shall annually assess and collect from each domestic insurer, other
than a domestic life and disability reinsurer as defined in section 20-1082, a service
company as defined in section 20-1095, and a mechanical reimbursement reinsurer as
defined in section 20-1096, an amount within the ranges provided in this subsection and
on a uniform percentage basis among all fee categories, to pay the costs of employing
financial analysts who shall assist the department in conducting financial surveillance
of domestic insurers. The director shall deposit all collected monies in the financial
surveillance fund. The director shall base the amount of each insurer's assessment on the
total admitted assets of the insurer as shown in its annual statement for the calendar
year preceding the year in which the assessment is made, according to the following
schedule:
Minimum Maximum Assessment Amount Assessment Amount
Insurers with total admitted
assets of greater than
$1,000,000,000 $15,000 $22,500
Insurers with total admitted
assets of at least $200,000,000
but not more than $1,000,000,000 $ 5,000 $ 7,500
Insurers with total admitted
assets of at least $100,000,000
but not more than $199,999,999 $ 3,000 $ 4,500
Insurers with total admitted assets
of at least $50,000,000 but not
more than $99,999,999 $ 1,500 $ 2,250
Insurers with total admitted assets
of at least $25,000,000 but not
more than $49,999,999 $ 500 $ 750
Insurers with total admitted
assets of not more than
$24,999,999 $ 250 $ 375
H. For purposes of this section, "insurer" includes health care services
organizations, prepaid dental plan organizations, hospital service corporations, medical
service corporations, dental service corporations and hospital, medical, dental and
optometric service corporations incorporated in this state.
20-157.01 Insurer claim files; access by director; definition A. Pursuant to the director's authority under sections 20-156, 20-157 and 20-160, an insurer shall comply with a request to produce any documents, reports or other materials, whether maintained in written or electronic format, from an insurer's claim file. B. Any documents, reports or other materials that are provided to the director pursuant to this section are confidential and are not subject to disclosure, including discovery or subpoena, unless the subpoena is issued by the attorney general or a county attorney or by a court at the request of the attorney general, county attorney or any other law enforcement agency. The director may only disclose the information to a state or federal agency or officer pursuant to a lawful request, subpoena or formal discovery procedure. If the requesting party cannot warrant confidentiality pursuant to section 20-158, subsection F, the information that is provided pursuant to discovery, subpoena or lawful request as provided for in this subsection remains confidential. The director shall make reasonable efforts to notify an insurer of any request for a subpoena for documents, reports or other materials in an insurer claim file or record that are produced by the insurer pursuant to this section so that the insurer may assert, in a court of competent jurisdiction, any applicable privileges. C. The director may use the documents, reports or other materials in the furtherance of any regulatory action brought by the director or in actions brought against the director. D. For the purposes of this section, "insurer claim file" includes medical records, repair estimates, adjuster notes, insurance policy provisions, recordings or transcripts of witness interviews and any other records regarding coverage, settlement, payment or denial of a claim asserted under an insurance policy. 20-157 Access and powers relating to insurers' records
A. Every person being examined and its officers, employees, agents and
representatives shall produce and make freely accessible to the director or the
director's examiners the accounts, records, documents, files, assets and matters in the
person's possession or control relating to the subject of the examination.
B. If the director finds accounts to be inadequate, or improperly kept or posted,
the director may employ experts to rewrite, post or balance them at the expense of the
person being examined if the person fails to complete or correct the accounting after the
director has given the person notice and a reasonable opportunity to do so.
C. If the director deems it necessary to value any real estate involved in any
examination, the director may employ one or more competent appraisers for the purpose.
The reasonable expense of the appraisal is a part of the cost of examination to be borne
by the person being examined.
D. Any insurer or other person licensed under this title may cause its accounts,
records, documents and files described in subsection A of this section to be created,
recorded, copied or reproduced by any photographic, photostatic, microfilm, microcard,
miniature photographic, optical disk, electronic imaging, electronic data processing,
electronically transmitted facsimile, printout or reproduction of electronically stored
data or other process that accurately reproduces or forms a durable medium for storing
the account, record, document or file. If the items so stored are not the original, the
original may be destroyed unless held in a custodial or fiduciary capacity, but only if
the data is easily accessible to the department in readable form and readable reproduced
copies are obtainable. A record so stored is admissible in evidence as the original in
any judicial or administrative proceeding whether the original is in existence or
not. The introduction of a reproduced record does not preclude admission of the
original. This shall not be construed to exclude from evidence any document or copy that
is otherwise admissible under the rules of evidence. 20-158 Report of examinations by director; information sharing
A. The director shall make a full written report of each examination. The director
or the examiner in charge of the examination shall certify the report.
B. The director shall provide a copy of the report to the person examined not less
than ten days before filing the report. If the person makes a request in writing within
the ten day period, the director shall consider any objections the person may have to the
proposed report and shall not file the report until after making any amendments the
director deems proper.
C. The report, when filed, is admissible in evidence in any action or proceeding
brought by the director against the person examined, or its officers or agents. The
director or the director's examiners may at any time testify and offer other proper
evidence as to information secured during the course of an examination, whether or not a
written report of the examination has at that time been either made, served or filed in
the director's office.
D. The director may withhold from public inspection any examination or
investigation report for as long as the director deems prudent.
E. The director may disclose the nonpublic content of a report of examination, a
preliminary report or any other matter relating to a report to the insurance department
of any other state or jurisdiction, to law enforcement officials of this or any other
state or jurisdiction or to an agency of the federal government if the agency or official
receiving the report or information agrees in writing to hold the information
confidential.
F. 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.
G. A disclosure to or by the director pursuant to this section or as a result of
sharing information pursuant to subsection F is not a waiver of any applicable privilege
or claim of confidentiality in the documents, materials or other information disclosed or
shared. 20-159 Insurance examiners' revolving fund; definition
A. The director may establish a separate fund designated as the insurance
examiners' revolving fund.
B. The fund shall be used for the examination expenses authorized by section 20-156
and to compensate independent contractor examiners as authorized by section
20-148. Independent contractor examiners may be reimbursed or compensated for:
1. Actual travel expenses in amounts customary for such expenses and approved by
the director.
2. A reasonable living expense allowance at a rate customary for such expenses and
approved by the director.
3. Per diem compensation at a rate customary for such compensation as approved by
the director.
C. All persons receiving any reimbursement or compensation from the insurance
examiners' revolving fund shall submit to the director for approval a detailed account of
all expenses and compensation necessarily incurred on account of an examination. Persons
shall not receive or accept any additional emolument on account of an examination. Any
reimbursement or compensation made by the fund and approved by the director shall be
charged to the person being examined by the director and all receipts shall be credited
to the fund.
D. The fund is a special state fund pursuant to section 35-142, subsection A,
paragraph 8. Monies in the insurance examiners' revolving fund shall not revert to the
general fund.
E. Each authorized insurer shall deposit at a time determined by the director the
sum of one hundred dollars with the director to be credited to the insurance examiners'
revolving fund. Such deposit not to exceed one hundred dollars shall be returned only if
such insurer ceases to transact insurance business in this state.
F. For purposes of this section, "insurer" includes health care services
organizations, prepaid dental plan organizations, hospital service corporations, medical
service corporations, dental service corporations and hospital, medical, dental and
optometric service corporations incorporated in this state.
20-160 Powers of examination; witnesses; subpoenas; perjury
A. The director may take depositions, subpoena witnesses or documentary evidence,
administer oaths and examine under oath any individual relative to the affairs of any
person being examined or relative to the subject of any hearing or investigation.
B. Witness fees and mileage, if claimed, shall be allowed the same as for testimony
in a superior court. Witness fees, mileage and the actual expense necessarily incurred
in securing attendance of witnesses and their testimony shall be itemized, and shall be
paid by the person being examined if such person is found to have been in violation of
the law as to the matter with respect to which such witness was so subpoenaed, or by the
person, if other than the director, at whose request the hearing is held.
C. The subpoena shall be served in the same manner as if issued from a superior
court. If a person fails to obey a subpoena lawfully served, the director shall
forthwith forward a report of such disobedience, together with a copy of the subpoena and
proof of service thereof, to the superior court for the county in which the person was
required to appear. The court shall forthwith cause such person to be produced and shall
impose penalties as though he had disobeyed a subpoena issued out of such court.
D. A person who being under oath testifies falsely or makes any false affidavit
during the course of any examination, investigation or hearing, is guilty of perjury.
20-161 Hearings
A. The director may hold hearings for any purpose deemed by him to be necessary and
within the scope of this title and shall hold a hearing if required by any provision of
this title. Hearings shall be conducted pursuant to title 41, chapter 6, article 10.
B. In a hearing conducted pursuant to this section, an insurer may be represented
by a corporate officer.
20-162 Demand for hearing; stay of order
A. A request for a hearing pursuant to title 41, chapter 6, article 10 that is
received by the director before the effective date of any order issued by the director
or within ten days after the order is delivered shall stay the effectiveness of the
order pending the hearing and an order made thereon, except as to action taken or
proposed pursuant to section 41-1092.11, subsection B or under an order on hearing, an
order pursuant to an order on hearing or an order to make good an impairment of the
assets of an insurer.
B. If an automatic stay pursuant to subsection A of this section is not
applicable, any party may apply to the director for a stay for cause. If the director
fails to grant the stay, the party may appeal the director's decision to the superior
court in Maricopa county.
20-163 Notice of hearing
Not less than ten days in advance the director shall give notice of the time and
place of the hearing, stating the matters to be considered. If the persons to be given
notice are not specified in the provision pursuant to which the hearing is held, the
director shall give such notice to all persons directly affected by such hearing.
20-164 Procedure upon hearing
A. Hearings may be closed to the public at the director's discretion, but the
hearing shall be open to the public if so requested in writing by any principal party to
the hearing.
B. The director shall allow any person affected by the hearing to appear in person
and by counsel, to be present during the giving of all evidence, to have a reasonable
opportunity to inspect all documentary evidence, to examine witnesses, to present
supporting evidence and to have subpoenas issued by the director to compel attendance of
witnesses and production of evidence.
20-165 Order on hearing
A. In conducting any hearing the director shall sit as a quasi- judicial officer.
B. Within thirty days after termination of the hearing or of any rehearing thereof
or reargument thereon, the director shall make his order on the hearing, covering matters
involved in such hearing and in any rehearing or reargument thereof, and shall give a
copy of such order to the same persons given notice of the hearing.
C. The order shall contain a concise statement of the facts as found by the
director, a concise statement of his conclusions therefrom, and the effective date of the
order.
D. The order may affirm, modify or nullify action theretofore taken or may
constitute the taking of new action within the scope of the notice of hearing.
20-166 Judicial review
Except as provided in section 41-1092.08, subsection H, an appeal to the superior
court in Maricopa county may be taken from any final decision of the director pursuant to
title 12, chapter 7, article 6.
20-167 Fees
A. The director shall collect in advance the following fees, as adjusted pursuant
to subsection F of this section, which are nonrefundable on payment: Not Less Than: Not More Than:
1. For filing charter documents:
(a) Original charter documents,
articles of incorporation,
bylaws, or record of
organization of insurers,
or certified copies thereof,
required to be filed with
the director and not also
subject to filing in the
office of the corporation
commission $ 40.00 $ 115.00
(b) Amended charter documents 15.00 45.00
(c) No charge or fee shall be
required for filing with
the director any of such
documents also required
by law to be filed in the
office of the corporation
commission
2. Certificate of authority:
(a) Issuance:
Fraternal benefit societies $ 15.00 $ 45.00
Medical or hospital service
corporations, health care
services organizations or
prepaid dental plan
organizations 40.00 115.00
Mechanical
reimbursement reinsurers 150.00 450.00
All other insurers 100.00 295.00
(b) Renewal:
Fraternal benefit societies 15.00 45.00
Medical or hospital service
corporations, health care
services organizations or
prepaid dental plan
organizations 40.00 115.00
Domestic stock life insurers,
domestic stock disability
insurers or domestic stock
life and disability insurers 750.00 2,250.00
Domestic life reinsurers,
domestic disability
reinsurers or domestic
life and disability
reinsurers 2,250.00 5,500.00
Mechanical reimbursement
reinsurers 2,250.00 5,500.00
All other insurers 70.00 205.00
3. Certificate of registration as an
administrator or application for
renewal under section 20-485.12 $ 100.00 $ 295.00
4. Authority to solicit applications
for and issue policies by means
of mechanical vending machines $ 30.00 $ 90.00
5. Service company permit $ 150.00 $ 450.00
6. Application for motor vehicle
service contract program approval $ 150.00 $ 450.00
7. Life care contract application
or annual report $ 225.00 $ 675.00
8. Filing annual statement $ 150.00 $ 450.00
9. Annual statement filing for
exempt insurer transacting life
insurance, disability insurance
or annuity business pursuant to
section 20-401.05 $ 65.00 $ 100.00
10. Licenses and examinations:
(a) Licenses:
Surplus lines broker's license,
quadrennially $ 600.00 $1,000.00
All other licenses,
quadrennially 60.00 180.00
(b) Examinations for license:
Examination on laws and one kind
of insurance 8.00 25.00
Examination on laws and two or
more kinds of insurance 15.00 45.00
11. Miscellaneous:
Fee accompanying service of
process upon director $ 8.00 $ 25.00
Certificate of director,
under seal 1.50 5.00
Copy of document filed in
director's office, per page 0.50 0.75
B. Except as provided in section 20-1098.18, the director shall deposit, pursuant
to sections 35-146 and 35-147, all fees collected pursuant to this section in the state
general fund. A refund is not allowed for any unused portion of a fee, and the director
shall not prorate fees.
C. The license fees prescribed by this section shall be payment in full of all
demands for all state, county, district and municipal license fees, license taxes,
business privilege taxes and business privilege fees and charges of every kind.
D. Each domestic stock life or disability insurer that pays the renewal fee
required under subsection A of this section is entitled to a credit in the amount of at
least four hundred fifty-five dollars but not more than six hundred eighty dollars, as
adjusted pursuant to subsection F of this section, to apply to the premium tax the
insurer then owes pursuant to section 20-224, but the credit is not cumulative.
E. The director may contract for the examination for the licensing of adjusters,
insurance producers, bail bond agents, risk management consultants and surplus lines
brokers. If the director does so, the fee for examinations for licenses pursuant to this
section is payable directly to the contractor by the applicant for examination. The
director may agree to a reasonable examination fee to be charged by the contractor. The
fee may exceed the amounts prescribed in this section.
F. Each December 1, if the revenue collected from fees during the prior fiscal year
is less than ninety-five per cent or more than one hundred ten per cent of the
appropriated budget for the current fiscal year, the director shall revise all fees
within the limits prescribed by subsection A of this section on a uniform percentage
basis among all fee categories and shall adjust the credit prescribed by subsection D of
this section as necessary in order to retain any required uniformity. The director shall
revise the fees in such a manner that the revenue derived from the fees during the
subsequent fiscal year equals at least ninety-five per cent but not more than one hundred
ten per cent of the appropriated budget for the current fiscal year. The revised fee
schedule shall be effective July 1 of the subsequent fiscal year. For the purposes of
this subsection, appropriated budget does not include any appropriation for the operation
of the captive insurance program established under chapter 4, article 14 of this title.
Any fees collected from captive insurers pursuant to subsection H of this section shall
not be counted for the purpose of meeting the requirement of this section to recover at
least ninety-five but not more than one hundred ten per cent of the department's
appropriated budget.
G. The director may contract with a voluntary domestic organization of surplus
lines brokers to perform any transaction prescribed in chapter 2, article 5 of this
title, including the acceptance or maintenance of the reports required by section 20-408.
The director may allow the contractor to charge a stamping fee. The surplus lines broker
shall pay the stamping fee established pursuant to this section directly to the
contractor.
H. Captive insurers shall pay certificate of authority issuance and renewal fees as
prescribed by the director.
I. For the purposes of subsection G of this section, "stamping fee" means a
reasonable filing fee charged by a contractor for any transaction prescribed in chapter
2, article 5 of this title, including the acceptance or maintenance of the reports
required by section 20-408. 20-168 Preparation and sale of publications
To the extent he reasonably shall deem desirable and in the public interest, the
director may prepare or have prepared books, pamphlets and other publications relating to
insurance and sell or resell same in such manner and at such prices not less than cost as
he shall determine. All monies received by the director from any such sale or resale
shall revert to the general fund.
20-169 Supervision by director
Any other provision of law to the contrary notwithstanding, if upon examination
pursuant to this article or at any other time it appears to or is in the opinion of the
director that any insurance company is insolvent, or its condition is such as to render
the continuance of its business hazardous to the public or to holders of its policies or
certificates of insurance, or if such company appears to have exceeded its powers or has
failed to comply with the law, or if such insurance company gives its consent, the
director shall upon his determination:
1. Notify the insurance company of his determination,
2. Furnish to the insurance company a written list of the director's requirements
to abate his determination, and
3. If the director makes a further determination to supervise he shall notify the
insurance company that it is under the supervision of the department of insurance and
that the director is applying and effecting the provisions of this article. Such
insurance company shall comply with the lawful requirements of the director and if placed
under supervision shall under supervision have sixty days from the date of notice within
which to comply with the requirements of the director, subject however to the provisions
of this article. In the event of such insurance company's failure to comply within such
time, the director acting for himself, or through a conservator appointed by the director
for that purpose, shall immediately, after due and proper notice and hearing, take charge
as conservator of the insurance company and all of the property and effects thereof.
20-170 Prohibited acts during sixty day period of supervision
During the period of supervision, the director may appoint a supervisor to supervise
such insurance company and may provide that the insurance company may not do any of the
following things, during the period of supervision, without the prior approval of the
director or his supervisor:
1. Dispose of, convey or encumber any of its assets or its business in force;
2. Withdraw any of its bank accounts;
3. Lend any of its funds;
4. Invest any of its funds;
5. Transfer any of its property;
6. Incur any debt, obligation or liability;
7. Merge or consolidate with another company; or
8. Enter into any new reinsurance contract or treaty.
20-171 Conservatorship; liquidation
A. If, after notice, and after hearing, at the conclusion of the sixty day period,
it is determined that such insurance company has failed to comply with the lawful
requirements of the director or upon consent by an insurance company, the director may
appoint a conservator, who shall immediately take charge of such insurance company and
all of the property, books, records, and effects thereof, and conduct the business
thereof, and take such steps toward the removal of the causes and conditions, which have
necessitated such order, as the director may direct. During the pendency of
conservatorship, the conservator shall make such reports to the director from time to
time as may be required by the director and shall be empowered to take all necessary
measures to preserve, protect, and recover any assets or property of such insurance
company, including claims or causes of action belonging to or which may be asserted by
such insurance company, and to deal with the same in his own name as conservator, and
shall be empowered to file, prosecute, and defend any suit or suits which have been filed
or which may thereafter be filed by or against such insurance company which are deemed by
the conservator to be necessary to protect all of the interested parties or any property
affected thereby. If at the time of appointment of a conservator or at any time during
the pendency of such conservatorship it appears that the interest of the policyholders or
certificate holders of such insurance company can best be protected by reinsuring the
same, the conservator may, with the approval of or at the direction of the director:
1. Reinsure all or any part of such insurance company's policies or certificates of
insurance with some solvent insurance company authorized to transact business in this
state, and
2. To the extent that such insurance company in conservatorship is possessed of
reserves attributable to such policies or certificates of insurance, the conservator may
transfer to the reinsuring company such reserves or any portion thereof as may be
required to consummate the reinsurance of such policies, and any such reserves so
transferred shall not be deemed a preference of creditors.
B. If the director is satisfied that such insurance company is not in condition to
continue business in the interest of its policy or certificate holders, under the
conservator as above provided, the director shall give notice to the attorney general who
shall thereupon apply to any court in ARIZONA having jurisdiction thereof for leave to
file a suit in the nature of quo warranto to forfeit the certificate of authority of such
insurance company or to require it to comply with the law or to satisfy the director as
to its solvency, and to satisfy the requirement that its condition is such as to render
the continuance of its business not hazardous to the public or to the holders of its
policies or certificates of insurance. It shall be in the discretion of the director to
determine whether or not he will operate the insurance company through a conservator, or
report it to the attorney general. When all the policies of an insurance company are
reinsured or terminated, and all of its affairs concluded, the director shall report the
same to the attorney general, who shall take such action as may be necessary to effect
the forfeiture or cancellation of the certificate of authority of the insurance company
so reinsured and liquidated. Where the director lends his approval to the merger,
consolidation or reinsurance of all the policies of one insurance company with that of
another, the same shall be reported to the attorney general who shall proceed to effect
the forfeiture or cancellation of the certificate of authority of the insurance company
from which the policies were merged, consolidated or reinsured, in the same manner as is
provided for the charters of companies totally reinsured or liquidated.
C. The cost incident to the supervisor's and conservator's service shall be fixed
and determined by the director and shall be a charge against the assets and funds of the
insurance company to be allowed and paid as the director may determine.
20-172 Possession by director of person transacting insurance prior to appointment of receiver; powers of director in possession; stay of possession order; application to title insurance
A. The director may, upon submission of a verified petition stating that an insurer
is in such an unsafe or unsound condition that it is or will become unable to meet the
anticipated demands of its policyholders and that the condition cannot be corrected by
the procedures of sections 20-169, 20-170 or 20-171, obtain an order from the superior
court allowing the director to immediately take possession and control of the insurer
pending a hearing on the appointment of a receiver. The superior court shall immediately
consider the director's petition and shall immediately issue without notice to the
affected party such order unless the verified petition filed by the director is
faulty. After the order is granted, the director shall immediately, through the attorney
general, apply to the superior court for the appointment of a receiver for the
insurer. If at any time the court finds that no ground for receivership exists, the
receivership shall be dissolved and the director's possession terminated.
B. When the director has taken possession of an insurer and until either the
appointment and qualification of the receiver or the adjudication that no ground for the
receivership exists, the director shall be vested with the full and exclusive power of
management and control. The director shall have the power to continue or to discontinue
the business, to stop or to limit the payment of its obligations, to employ any necessary
assistants, to execute any instrument in the name of the insurer and to commence, defend
and conduct in its name any action or proceeding in which the insurer may be a party.
C. An order issued by the director pursuant to this section shall not be stayed
except by order of the superior court and upon the giving of security by the applicant in
such sum as will be adequate to protect the insurer's policyholders.
D. The provisions of this section shall apply to all types of insurers including
title insurers, hospital service corporations, medical service corporations, dental
service corporations, optometric service corporations, and health care service
organizations.
20-173 Residence requirement; exemption for officer representing insurer
Notwithstanding the provision of section 38-201, subsection A, to the contrary, a
member of a guaranty fund board established pursuant to this title, chapter 3, article 6
or 7, who is appointed to represent an insurer or group of insurers, need not be a
resident of this state.
20-181 Mandated health coverage; report to legislature
An organization or individual advocating a legislative proposal which would mandate
a health coverage or offering of a health coverage by an insurer, hospital, medical,
dental or optometric service corporation, health care services organization or any other
health care service contractor as a component of individual or group policies shall
submit a report to the standing committee of the legislature that has been assigned to
consider the proposal and the joint legislative budget committee before the committee
considers the proposal. The report shall assess both the social and financial impacts of
such coverage, including the effectiveness of the treatment or service proposed,
according to the factors prescribed in section 20-182. The legislature is not responsible
for the cost of preparing the report. 20-182 Factors for assessing impact; certification of report
A. To the extent that information is available, the report prescribed by section
20-181 shall include, but not be limited to, the following:
1. The social impact:
(a) The extent to which the treatment or service is generally utilized by a
significant portion of the population.
(b) The extent to which the insurance coverage is already generally available.
(c) If coverage is not generally available, the extent to which the lack of
coverage results in persons avoiding necessary health care treatments.
(d) If the coverage is not generally available, the extent to which the lack of
coverage results in unreasonable financial hardship to a patient.
(e) The level of public demand for the treatment or service.
(f) The level of public demand for insurance coverage of the treatment or service.
(g) The level of interest of collective bargaining agents in negotiating privately
for inclusion of this coverage in group contracts.
2. The financial impact:
(a) The extent to which the coverage will increase or decrease the cost of the
treatment or service.
(b) The extent to which the coverage will increase the appropriate use of the
treatment or service.
(c) The extent to which the mandated treatment or service will be a substitute for
a more expensive treatment or service.
(d) The extent to which the coverage will increase or decrease the administrative
expenses of insurers and the premium and administrative expenses of policyholders.
(e) The impact of this coverage on the total cost of health care.
B. An actuary who is a member of the American academy of actuaries shall prepare
the financial impact analysis required by subsection A, paragraph 2 of this section and
certify that the analysis is consistent with accepted actuarial techniques.
C. The report required by section 20-181 shall address the specific language of the
proposed mandate. A report on a similar proposal in a different jurisdiction is
insufficient and does not meet the requirements of section 20-181.
D. An organization or individual that does not submit a report required by section
20-181 is not subject to any civil sanction or criminal penalty. 20-191 Payment of premiums by mail; date of payment
A. Any payment of insurance premium that is deposited, properly addressed and
postage prepaid, in an official depository of the United States mail on or before the
date the premium is due is deemed timely payment of the premium on the date shown by the
postmark or other official mark of the United States mail stamped on the payment
envelope. An insurer may establish the postmark date by retaining the postmarked payment
envelope. If the insurer does not retain the envelope or the postmark date on the
envelope is illegible, the payment date is presumed to be five mail days before the date
the insurer receives the payment. An insurer may establish the date of receipt by a
record generated in the course of regularly conducted business. For the purposes of this
subsection, "mail days" means days on which the United States postal service performs
regular mail delivery.
B. If a payment described in subsection A is sent by United States certified or
registered mail or certificate of mailing, the date of the registration, certification or
certificate, as established by a record authenticated by proper officials of the United
States mail, is deemed the date of payment.
C. If the due date of a payment described in subsection A falls on a Saturday,
Sunday or legal holiday, the payment is considered timely if sent on the next business
day.
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