Arizona House of Representatives Committee on Commerce — Report of Regular Meeting, January 24, 2023 (Fifty-sixth Legislature, First Regular Session)

Summary

The report of a regular meeting of the Arizona House of Representatives Committee on Commerce held January 24, 2023 in House Hearing Room 3, Fifty-sixth Legislature, First Regular Session. It records that the meeting convened at 2:15 P.M. and adjourned at 3:05 P.M., lists members present and absent, and reports HB2006 and HB2197 given do pass and HB2252 do pass amended, each on a 10-0-0-0 vote. Attachments include the agenda, a Request to Speak report and an attendance record. A staff analysis of HB 2006 describes conforming state insurance holding company statutes to the National Association of Insurance Commissioners model act, adding group capital and liquidity stress test filings. A staff analysis of HB 2252 sets out duties for state corrections and transportation agencies to give released inmates a nonoperating identification license, with a proposed amendment and a roll call sheet.

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ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - First Regular Session

COMMITTEE ON COMMERCE

Report of Regular Meeting
Tuesday, January 24, 2023
House Hearing Room 3 -- 2:00 P.M.

eIvED
gnunuTes RECEFigE

Conyened 2:15 P.M. ECLERY
Recessed CHIE ma CS
Reconvyened [- Be S- —_

Adjourned 3:05 P.M.

Members Present Members Absent
Representative Aguilar

Representative Austin

Representative Carter

Representative Gress

Representative Heap

Representative Hendrix

Representative Ortiz

Representative Sun

Representative Carbone, Vice-Chairman
Representative Wilmeth, Chairman

Agenda
Original Agenda — Attachment 1

Request to Speak
Report — Attachment 2

Committee Attendance
Report — Attachment 3

Committee Action
Bill Action Vote Attachments
HB2006 DP 10-0-0-0
HB2197 DP 10-0-0-0
HB2252. DPA 10-0-0-0

Susan Nelson, Committee Secretary
January 25, 2023

(Original attachments on file in the Office of the Chief Clerk; video archives available at http://www.azleg.gov)

COMMITTEE ON COMMERCE
January 24, 2023
REVISED # 2 (CORRECTED) - 1/24/23 REVISED # 2 (CORRECTED) - 1/24/23. REVISED #2 (CORRECTED) - 1/24/23

ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - First Regular Session C OWE W Eve Ail py

REGULAR MEETING AGENDA
COMMITTEE ON COMMERCE

PDDouURNED} 3/o5pny

DATE Tuesday, January 24, 2023 ROOM HHR3 TIME 2:00 P.M.

Members of the public may access a livestream of the meeting here:
https:/Avww.azleg.gov/videoplayer/?clientID=636 | 162879&eventID=202301 1109

Members:
Representative Aguilar Representative Heap Representative Sun
Representative Austin Representative Hendrix Representative Carbone, Vice-Chairman
Representative Carter Representative Ortiz Representative Wilmeth, Chairman
Representative Gress

Bills Short Title Strike Everything Title

, HB2006 D insurance; liquidity; financial assessment
(Livingston)
J0.6-0.0 COM, RULES

2HB2007 group-excess liabilityinsurance
——— thivingsten)
COM-RULES

HB2066 banks:-financial institutions; personal information
COM;RULES

& HB2197 D wills; electronic signatures; requirements
(Wilmeth)
O100 COM, RULES

[0+ 00:0

HB2209 econemic-oppertunity; industrial- development
authority

CVilmeth)
COM,-RULES

Page 1 of 2
Attachment a

Bills Short Title

4 HB2252 D pP fA inmates; documentation; workforce reentry

RA

oY
OHAS2023
0149/2023
01/24/2023

People with disabilities may request reasonable accommodations such as interpreters, alternative formats, or
assistance with physical accessibility. If you require accommodations, please contact the Chief Clerk's Office at

(Wilmeth)
10:0: (OM, RULES

On previous agenda

ORDER OF BILLS TO BE SET BY THE CHAIRMAN

(602) 926-3032 or through Arizona Relay Service 7-1-1.

Page 2 of 2

Strike Everything Title
Information Registered on the Request to Speak System

House Commerce (1/24/2023)

HB2006, insurance; liquidity; financial assessment

Support:

Daniel Schwartzer, representing self; Jeremy Gerlach, AMERICAN PROPERTY CASUALTY INSURANCE ASSOCIATION;
Daniel Romm, ALLSTATE INSURANCE CO, AMERICAN FAMILY LIFE ASSURANCE CO {AFLAC}, Chubb Insurance ,
FARMERS INSURANCE GROUP OF COMPANIES, GOVERNMENT EMPLOYEES INSURANCE COMPANY (GEICO),
LIBERTY MUTUAL INSURANCE GROUP, NATIONWIDE MUTUAL INSURANCE COMPANY; Courtney Coolidge,
representing self; Wendy Briggs, AMERICAN PROPERTY CASUALTY INSURANCE ASSOCIATION

Neutral:
Stephen Briggs, AZ DEPT OF INSURANCE AND FINANCIAL INSTITUTIONS

Ail Comments:

Daniel Romm, ALLSTATE INSURANCE CO, AMERICAN FAMILY LIFE ASSURANCE CO (AFLAC), Chubb Insurance ,
FARMERS INSURANCE GROUP OF COMPANIES, GOVERNMENT EMPLOYEES INSURANCE COMPANY (GEICO},
LIBERTY MUTUAL INSURANCE GROUP, NATIONWIDE MUTUAL INSURANCE COMPANY: Please support this NAIC
Model Act; Stephen Briggs, AZ DEPT OF INSURANCE AND FINANCIAL INSTITUTIONS: This bill is a bipartisan NAIC
model flaw developed by regulators, industry and consumer advocates.

HB2197, wills: electronic signatures; requirements

Support:
Marc Osborn, Met Life

HB2252, inmates: documentation: workforce reentry

Support:

Spencer Kamps, HOME BUILDERS ASSOCIATION OF CENTRAL AZ; Jeff Taylor, SAGE COUNSELING INC; Kathleen
Petiycrew, representing self; Shaun Rieve, JUSTICE ACTION NETWORK; Jeff Sandquist, JUSTICE ACTION NETWORK;
Mike Huckins, GREATER PHOENIX CHAMBER OF COMMERCE; Kenneth Bierman, representing self; Dianne Post,
representing self; Becky Sayler, representing self; Anna Arnold, representing self; Sharon Lee, representing self;
Phyllis Smith, representing self; Kathleen Dubbs, representing self; Marilyn Rodriguez, ACLU Of Arizona , AZ
ATTORNEYS FOR CRIMINAL JUSTICE; Marie Thearle, representing self; Christine McLachlan-Comer, representing
self; Roger Blain, representing self; Amelia Cramer, STATE CONFERENCE NAACP; David Morris, AMERICANS FOR

PROSPERITY AZ

Attachment _&
Neutral:
Waldemar Mehner, FRATERNAL ORDER OF POLICE (AZ STATE LODGE); Jessica Roza, ARIZONA DEPARTMENT OF
VETERANS' SERVICES

All Comments:
Spencer Kamps, HOME BUILDERS ASSOCIATION OF CENTRAL AZ: HBACA supports the bill

ARIZONA STATE LEGISLATURE
Fifty-sixth Legislature - First Regular Session

COMMITTEE ATTENDANCE RECORD

COMMITTEE ON

COMMERCE

CHAIRMAN: Justin Wilmeth

VICE-CHAIRMAN: _Michael Carbone

DATE 01/24/23 123 123 123 - (23
CONVENED | 3; 6pm m m m m
RECESSED
RECONVENED
ADJOURNED at OS pw
MEMBERS
Aguilar VA
Austin Vv.
Carter v
Gress v
Heap v
Hendrix v
Ortiz A
Sun v
Carbone, Vice-Chairman 4
Wilmeth, Chairman VA
v Present --- Absent exc Excused

3

Attachment ~~.

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-sixth Legislature
First Regular Session

HB 2006: insurance; liquidity; financial assessment
Sponsor: Representative Livingston, LD 28
Committee on Commerce

Overview
Conforms Insurance Holding Company System statutes to the National Association of Insurance
Commissioners {NAIC) Insurance Holding Company System Regulatory Act.

History
The NAIC is the U.S. standard-setting and regulatory support organization governed by the chief

insurance regulators from each of the 50 states. The NAIC provides expertise, data and analysis
for insurance commissioners to effectively regulate the industry and protect consumers.

According to the NAIC, The Holding Company Act regulates certain activities of entities that are
affiliated with insurance companies that would not otherwise be subject to such regulation as well
as the acquisition of control of an insurer. The Act contains certain reporting requirements,
including the requirement that insurance company subsidiaries file information relating to capital
structure, ownership, financial condition and general business operations.

An insurance holding company system is statutorily defined as two or more affiliated persons, one
or more of whom is an insurer. An insurance holding company system may consist of one
company that directly or indirectly controls one or more other companies (A.R.S. § 20-481).

Provisions
1. Includes additional provisions applicable to enterprise risk filings, including:

a) requiring the ultimate controlling person to file an annual group capital calculation report
and outlines the types of insurance holding companies that are exempt from filing the
report;

b) requiring certain ultimate controlling persons to file the results of a liquidity stress test and
provides the provisions applicable to the liquidity stress test framework. (Sec. 3)

2. Excludes the group capital calculation and the liquidity stress test framework from the
exemption for nonmaterial items relating to a registration statement. (Sec. 4)

3. Prescribes additional standards relating to certain insurance holding company transactions,

including:

a) permitting the Director of DIFI (Director) to require an insurer that is deemed to be in a
hazardous financial condition to submit a deposit or a bond to protect the insurer;

b) asserting that all records and data of the insurer that are held by an affiliate are the
property of the insurer;

c) allowing, at the request of the insurer, the receiver to obtain specified records and access
to certain operating systems on which the data is maintained;

d) specifying the insurer's premiums or other funds that are collected or held by an affiliate
are the exclusive property of the insurer. (Sec. 5)

(1 Prop 105 (45 votes) C1 Prop 108 (40 votes) Emergency (40 votes) © Fiscal Note

HB 2006
Initials PRB Page 1 Commerce

Attachment 4
10.

4.

Te:

13.

14.

15.
16.

Subjects certain affiliates to the jurisdiction of any supervision, seizure, conservatorship or
receivership proceedings against the insurer and to the authority of any appointed supervisor,
conservator, rehabilitator or liquidator enforcing or overseeing the affiliate’s contractual
obligations. (Sec. 5)

Allows the Director to require that an agreement or contract for certain services specify that
the insurer consents to the jurisdiction of any supervision, seizure, conservatorship or
receivership proceedings. (Sec. 5)

Adds that all insurance holding companies documents and materials that are in the
possession or control of DIFI are considered proprietary and contain trade secrets. (Sec. 6)

Directs the Director to maintain the confidentiality of:

a) the group capital calculation, the group capital ratio and any group capital calculation
information received from a supervised insurance holding company system; and

b) the liquidity stress test results and supporting disclosures and any liquidity stress test
framework information received from a supervised insurance holding company system.
(Sec. 6)

Permits the Director to share and receive specified documents, materials and information, and
enter into agreements with, third-party consultants designated by the Director rather than
NAIC's affiliates and subsidiaries. (Sec. 6)

Allows the Director to prohibit NAIC or a third-party consultant from storing shared information
in a permanent database after an underly analysis is completed. (Sec. 6)

Allows the Director to provide notification of the identity of any third-party consultant to all
applicable insurers, (Sec, 6)

Clarifies documents, materials or other information in the possession or control of a third-party
consultant designated by the Director, rather than NAIC's affiliates and subsidiaries, are
confidential and privileged. (Sec. 6)

Asseris the group capital calculation and the liquidity stress test are regulatory tools for
assessing group risks and capital adequacy and are not a means to rank insurers or insurance
holding companies. (Sec. 6)

Specifies publishing or disseminating a statement regarding a group capital calculation or
liquidity stress test results in a newspaper or other publication or over radio or any electronic
means of communication would be misleading and is prohibited. (Sec. 6)

Stipulates an insurer may publish written announcemenis with the sole purpose of rebutting a
materially false statement. (Sec. 6)

Defines pertinent terms. (Sec. 1)
Makes technical changes. (Sec. 2, 3, 4, 5)

HB 2006

Initials PRB Page 2 Commerce
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - First Regular Session

ROLL CALL VOTE
COMMITTEE ON Commerce BILL NO. __ HB 2006
DATE January 24, 2023 MOTION: DP
PASS AYE NAY PRESENT | ABSENT
Aguilar 6 J
Austin wf
Carter ee
Gress vo
Heap Vv
Hendrix v
Ortiz v
Sun we
Carbone, Vice-Chairman Vv
Wilmeth, Chairman v
| ©

APPROVED;

JUSTIN WILMETH, Chairman
MICHAEL CARBONE, Vice-Chairman

© © fa)
Duden Noli

~* COMMITTEE SECRETARY

ATTACHMENT. 5
ARIZONA HOUSE OF REPRESENTATIVES

Fifty-sixth Legislature
First Regular Session

HB2197: wills; electronic signatures; requirements
Sponsor: Representative Wilmeth, LD 2
Committee on Commerce

Overview
Allows the witnesses of an electronic will signing to be electronically present.

History
An electronic will must: 1) be created and maintained in an electronic record; 2) contain the

electronic signature of the testator or the testator's electronic signature made by some other
individual in the testator's conscious presence and by the testator's direction; 3) contain the
electronic signatures of at least two persons, each of whom were both required to be physically
present with the testator when the testator electronically signed the will, acknowledged the
testator's signature or acknowledged the will and have electronically signed the will within a
reasonable time after the person witnessed the testator signing the will; 4) state the date that the
testator and each of the witnesses electronically signed the will; and 5) contain a copy of a
government-issued identification card of the testator current at the time of execution of the will

(A.R.S. § 14-2518).

Provisions
1. Allows, as a requirement for an electronic will, the persons who are electronically signing to
be electronically present provided they were physically located within the U.S. at the time of

serving as a witness. (Sec. 2) ©
2. Creates an affidavit for an attested self-proving electronic will. (Sec. 3)

3. Allows a qualified custodian's written statement to be executed by an electronic signature and
maintained as an electronic record. (Sec. 4)

4, Clarifies an electronic will must be created and maintained in an electronic record that is
readable as text at the time of signing. (Sec. 2)

5. Defines electronically present as two or more individuals who are in a different physical
location and who are communicating in real time by electronic means to the same extent as
if the individuals were physically present in the same location. (Sec. 1)

6. Makes clarifying changes. (Sec. 4)

Li Prop 105 (45 votes) O Prop 108 (40 votes) 0 Emergency (40 votes) O Fiscal Note

HB 2197
Initials PRB/LM Page 1 Commerce

|

Attachment b
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - First Regular Session

TROLL CALL VOTE

COMMITTEE ON Commerce BILL NO. HB 2197
DATE January 24, 2023 MOTION: DP
PASS AYE NAY PRESENT | ABSENT
Aguilar Vv
Austin V
Carter V
Gress 4
Heap v
Hendrix VA
Ortiz V
Sun v
Carbone, Vice-Chairman V
Wilmeth, Chairman wv
[oO © © O
UA. A baer
APPROVED; et /COMMITTEE SECRETARY

ZZ
JOSTINWILMETH, Chairman
IGAAEL CARBONE, Vice-Chairman

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ATTACHMENT. I
ARIZONA HOUSE OF REPRESENTATIVES

Fifty-sixth Legislature
First Regular Session

HB2252: inmates; documentation; workforce reentry
Sponsor: Representative Wilmeth, LD 2
Committee on Commerce

Overview
Prescribes requirements for the Arizona Department of Corrections (ADC) to assist an inmate in

workforce reentry.

History
ADC was established by statute with the objective of encompassing the various institutions,

facilities and programs which are now or may become a part of the correctional program of the
state, and to provide the supervisory staff and administrative functions of all matters relating to
the institutionalization, rehabilitation and community supervision functions of all adult offenders
(A.R.S. § 41-1602).

On receipt of an application from a person who does not have a valid driver license issued by this
state or whose driving privilege is suspended, the Arizona Department of Transportation (ADOT)
must issue a nonoperating identification license containing: 1) a distinguishing number assigned
to the licensee; 2) the full legal name; 3) the date of birth; 4) the residence address; 5) a brief
description of the licensee; and 6) either a facsimile of the signature of the licensee or a space on
which the licensee is required to write the licensee's usual signature with pen and ink. A
nonoperating identification license issued to a person whose driving privilege is suspended must
not be valid for more than 180 days from the date of issuance (A.R.S. § 28-3165).

Provisions
1. Requires ADC to provide an inmate who is discharged from imprisonment for a felony offense
and who intends to reside in this state with relevant documentation to assist the inmate in

obtaining postrelease employment. (Sec. 1)

2. Directs ADC, in coordination with ADOT, to replace the inmate's current nonoperating
identification license or driver license (License) or to provide the inmate with a nonoperating
identification license if the inmate does not possess a current License. (Sec. 1)

3. Requires ADC, in coordination with ADOT, to determine whether the inmate possesses a
current and valid license nine months before the inmate's release. (Sec. 1)

4. Mandates ADC to begin gathering the documentation required for obtaining a nonoperating
identification license if the inmate does not possess a current and valid License. (Sec. 1)

5. Instructs ADC, in coordination with ADOT, to provide a nonoperating identification license to
each eligible inmate on release from custody who does not possess a current or valid License.

(Sec. 1)

6. Stipulates a License that is issued to an inmate to be issued, replaced, canceled and denied
in the same manner as a statutorily prescribed License. (Sec. 1)

Of Prop 105 (45 votes) fF Prop 108 (40 votes) 0 Emergency (40 votes) 1 Fiscal Note

HB 2252
Initials PRB/LM Page 1 Commerce
|

|

Attachment ss
10.

1.

12.

13.

14.

15.

Requires ADOT to allow copies of birth certificates along with an ADC issued record card to
serve as a valid form of photo identification to obtain a License. (Sec. 1)

Specifies a nonoperating identification license issued to an inmate is valid for four years from
the month of issuance and is nonrenewable and nontransferable. (Sec. 1)

Specifies the fee for an eligible inmate's nonoperating identification license is determined by
ADOT. (Sec. 1)

Requires ADC to provide any inmate who has served in the US military with the contact
information of the Department of Veteran's Services and its benefits guide. (Sec. 1)

Allows ADC to use any monies available, including inmate trust fund monies, existing ADC
fund monies and donations, to cover costs associated with implementing and administering
licensing requirements for released inmates and to pay associated license fees. (Sec. 1)

Requires ADC to notify an inmate, if eligible, to apply for a license or certificate from a state
agency that oversees occupational licenses or certifications. (Sec. 1)

Outlines specified documentation that ADC must provide to an inmate in assistance in
obtaining postrelease employment. (Sec. 1)

Excludes the following inmates from receiving specified documentation provided by ADC:

a) 65 years of age or older;

b) released for medical reasons or who are discharged from a prison infirmary;

c) released to the custody of another jurisdiction on a warrant or detainer; or

d) determined by ADC to be physically or mentally unable to return to the workforce on
release from incarceration. (Sec. 1).

Allows ADC, the Arizona Department of Health and ADOT to adopt rules to implement the
regulations for inmate workforce and reentry. (Sec. 1)

HB 2252

initials PRB/LM Page 2 Commerce

Fifty-sixth Legislature Commerce
First Regular Session H,B. 2252

PROPOSED
HOUSE OF REPRESENTATIVES AMENDMENTS TO H.B. 2252

(Reference to printed bill)

Page 1, line 11, strike "NECESSARY" insert "APPLICABLE"
Page 2, line 14, after the second "CARD" insert ", IF OBTAINABLE"

Amend title to conform

JUSTIN WILMETH

2252WILMETH. docx
01/23/2023

09:20 AM

H: LG@/ra

mracoment Ar ysts Initials

ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - First Regular Session

ROLL CALL VOTE

COMMITTEE ON Commerce BILLNO. HB 2252

DATE January 24, 2023 motion: _DPA

PASS NAY PRESENT | ABSENT

Aguilar

Austin
Carter

Gress

Heap

Hendrix
Ortiz
Sun

Carbone, Vice-Chairman
Wilmeth, Chairman

ONIN SINS)

O O O

x Mba AC ebuo

COMMITTEE SECRETARY

ISTIN WILMETH, Chairman
ICHAEL CARBONE, Vice-Chairman

ATTACHMENT__| Q

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