Arizona House of Representatives Committee on Regulatory Affairs — Report of Regular Meeting, March 2, 2020 (Fifty-fourth Legislature, Second Regular Session)

Summary

Minutes and attachments for the regular meeting of the Arizona House of Representatives Committee on Regulatory Affairs held Monday, March 2, 2020, chaired by Travis W. Grantham, in the Fifty-fourth Legislature, Second Regular Session. The minutes record SB1039 as held, do-pass recommendations for SB1131, SB1294, SB1038 and other Senate bills, SB1040 passed as amended and SB1557 approved 5-2-0-0. Attachments include the agenda, a Request to Speak report, an attendance record and roll call votes. Staff bill analyses describe SB 1131 on certified public accountant registration, SB 1294 continuing the Arizona Department of Insurance and Financial Institutions until July 1, 2025, and SB 1040 on insurer notices. The document closes with the analysis of SB 1557 on annuity transactions, which sets a delayed effective date of January 1, 2021.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fourth Legislature - Second Regular Session

COMMITTEE ON REGULATORY AFFAIRS

Report of Regular Meeting
Monday, March 2, 2020
House Hearing Room 5 -- 2:00 P.M.

MINUTES RECEIVED
Convened 3:57 P.M. CHIEF CLERK’S OFFICE

Adjourned 4:38 P.M. 2 2 _ 20

Members Present Members Absent
Mr. Blackman

Ms. Powers Hannley

Mr. Shah

Mrs. Teran

Mr. Toma

Mr. Roberts, Vice-Chairman

Mr. Grantham, Chairman

Agenda
Original Agenda — Attachment |

Request to Speak
Report — Attachment 2

Committee Attendance
Report — Attachment 3

Committee Action
Bill Action Vote Attachments
SB1i039 HELD
SB1I131 DP 7-0-0-0 4,5
SB1294 DP 7-0-0-0 6,7
SB1040 DPA 7-0-0-0 8,9,10
SB1038 DP 7-0-0-0 11,12
SB1041 DP 7-0-0-0 13,14
SB1062 DP 7-0-0-0 15,16
SB1090 DP 7-0-0-0 17,18
SB1091 DP 7-0-0-0 19,20
SB1213. DP 7-0-0-0 21,22
SB1557. DP 5-2-0-0 23,24

Susan Hite, Committee Secretary
March 3, 2020

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

COMMITTEE ON REGULATORY AFFAIRS
March 2, 2020
Conv, 22'78™

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fourth Legislature - Second Regular Session

Ady 43 8em

REGULAR MEETING AGENDA

COMMITTEE ON REGULATORY AFFAIRS

DATE Monday, March 2, 2020 ROOM HHR5 TIME 2:00 P.M.
Members:
Mr. Blackman Mrs. Terdn Mr. Roberts, Vice-Chairman
Ms. Powers Hannley Mr. Toma Mr. Grantham, Chairman
Mr. Shah
Bills Short Title Strike Everything Title
y *SB1038 a insurance policies; transfers; affiliated insurers
(Livingston)
~0-d- O
*SB1039 home service warranty contracts

Weld

(Livingston)

3*SB 1040 insurers; notices; methods of delivery
dea (Livingston)

7-0-0°O
4 *SB1041 d travel insurance
+P. (Livingston)
'l-0-0-0
B) insurance transactions; discrimination; exceptions
2 (Livingston)
7.0 -0-0
4 *SB1090 a insurance adjusters; claims certificate
LP (Livingston)
]-0-0-0

3 *SBI091 d insurance producer licensing; surrender;
application

4 *SB1062

70-0 2 (Livingston) Attachment ’

ae

Page 1 of 2

Bills Short Title Strike Everything Title

t *SBII31 certified public accountants

do (Gray)
2-0-0: O

4 *SB1213 appropriation; actuarial study; reinsurance

d ez feasibility

(Livingston)

“t{-0-0-O

2*SB1294 insurance and financial institutions; continuation
de (Mesnard)

')-0-0-O

yo *SBI5S7 R) annuity transactions; requirements
(Livingston)

5 D2-0~0
* If first read and assigned

ORDER OF BILLS TO BE SET BY THE CHAIRMAN

sh
02/25/2020

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

Page 2 of 2

Information Registered on the Request to Speak System

House Regulatory Affairs (3/2/2020)

$B1131, certified public accountants

Support:
Ryan DeMenna, AZ SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS; Monica Petersen, AZ STATE BOARD OF
ACCOUNTANCY; John Baumer, AZ SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS

$B1294, insurance and financial institutions; continuation

Support:

Ellen Poole, Executive Director, SW Region Govt Relations, American Property & Casualty Insurers; Jen Springman,
GREATER PHOENIX CHAMBER OF COMMERCE; Kerry L. Hayden, UNITED SERVICES AUTOMOBILE ASSN (USAA);
Shannon Whiteaker, CSAA INSURANCE; Stephen Briggs, Arizona Department Of Insurance

S$B1040, insurers: notices: methods of delivery

Testified in support:
Marc Osborn, Chubb Insurance And Nationwide

Support:

Ellen Poole, Executive Director, SW Region Govt Relations, American Property & Casualty Insurers; Kerry L. Hayden,
UNITED SERVICES AUTOMOBILE ASSN (USAA); Daniel Romm, ALLSTATE INSURANCE CO, American Family Insurance,
Chubb Insurance , FARMERS INSURANCE GROUP OF COMPANIES, GOVERNMENT EMPLOYEES INSURANCE
COMPANY (GEICO), LIBERTY MUTUAL INSURANCE GROUP, NATIONWIDE MUTUAL INSURANCE COMPANY

SB1038, insurance policies: transfers; affiliated insurers

Testified in support:
Mare Osborn, Chubb Insurance , Geico; Liberty Mutual Insurance; Nationwide Insurance

Support:

Kerry L. Hayden, UNITED SERVICES AUTOMOBILE ASSN (USAA}; Daniel Romm, ALLSTATE INSURANCE CO, American
Family insurance, Chubb Insurance , FARMERS INSURANCE GROUP OF COMPANIES, GOVERNMENT EMPLOYEES
INSURANCE COMPANY (GEICO), LIBERTY MUTUAL INSURANCE GROUP, NATIONWIDE MUTUAL INSURANCE
COMPANY

Attachment_2_
$B1041, travel insurance

Testified in support:
J. Michael Low, AMERICAN INTERNATIONAL GROUP INC (AIG)

Support:

Ellen Poole, Executive Director, SW Region Govt Relations, American Property & Casualty Insurers

$B1062, insurance transactions: discrimination; exceptions

Testified in support:
J. Michael Low, AMERICAN COUNCIL OF LIFE INSURERS (ACLI), METROPOLITAN LIFE INSURANCE CO (METLIFE),
PRUDENTIAL FINANCIAL INC

Oppose:

Becky Sayler, representing self

$B1090, insurance adjusters: claims certificate

Testified in support:
Mare Osborn, Claims And Litigation Alliance

Support:
Emily Rice, AZ SELF-INSURERS ASSOC; Daniel Romm, Claims And Litigation Alliance

SB1091, insurance producer licensing: surrender: application

Support:
Jeff Sandquist, Big |; Wendy Briggs, Big |; Lanny Hair, Independent Ins. Agents & Brokers Of Az; Stephen Briggs,
Arizona Department Of Insurance

$B1213, appropriation; actuarial study; reinsurance feasibilit

Testified in support:
Marc Osborn, AMERICA'S HEALTH INSURANCE PLANS (AHIP)

Support:
Elizabeth Hatch, AETNA INC

$B1557, annuity transactions: requirements

Testified in support:
J. Michael Low, AMERICAN COUNCIL OF LIFE INSURERS (ACLI}, PRUDENTIAL FINANCIAL INC

Testified as opposed:
Melissa Kemp, representing self

Support:
Kerry L. Hayden, UNITED SERVICES AUTOMOBILE ASSN (USAA); Courtney Coolidge, AZ CHAMBER OF COMMERCE

All Comments:

Melissa Kemp, Self: SB1557 disclaims fiduciary status 4 agents & companies in annuity transactions. It relies heavily
on disclosure, criticized by consumer groups as insufficient mitigation for managing conflicts of interest. AZ
consumers are not better off, confusion

$B1039, home service warranty contracts

Support:

Daniel Romm, National Home Service Contract Association

ARIZONA STATE LEGISLATURE
Fifty-fourth Legislature - Second Regular Session

COMMITTEE ATTENDANCE RECORD

COMMITTEE ON

REGULATORY AFFAIRS

CHAIRMAN: Travis W. Grantham VICE-CHAIRMAN: | Bret Roberts
; ADIAECA AL 3s oo,
DATE > 120) glx 120 hp 120| */)-q 120| 2/2. 1201
_. —|
RECESSED
“RECONVENED
ADJOURNED SLA 3:1, 3) ke Quih &3%em 4e3 Boon
MEMBERS
Blackman “a wa “ / “
Powers Hannley 4 Vv a J a
Shah Yi ly / 4
Teran 4 / a V 4
_ Toma 4 / vw v " wal
Roberts, Vice-Chairman vA Y a / vw |
Grantham, Chairman 4 “4 w i a |
V Present Absent’ exc Excused

Attachment 3

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fourth Legislature
Second Regular Session
SENATE: COM DP 5-0-3-0 | 34 Read 29-0-1-0

SB 1131: certified public accountants
Sponsor: Senator Gray, LD 21
Committee on Regulatory Affairs

Overview -
Modifies Certified Public Accountants (CPA) requirements regarding firm registration, registration
expiration and reinstatement.

History

Certified public accountant (CPA) means an individual who has been issued a certificate of
authority by the board to practice as a certified public accountant or who meets the limited
reciprocity privilege requirements (A.R.S. § 32-701).

An individual whose certificate status expires or is relinquished or revoked can request for the
certificate to be reinstated if the individual meets specified requirements, including at least thirty
semester hours of accounting-related courses (A.R.S. § 32-732).

The Arizona Board of Accountancy (Board) can employ an Executive Director (Director) to
administer and enforce statute governing a CPA (A.R.S. § 32-703).

A partnership, corporation or other entity formed under the laws of another jurisdiction relating to
the practice of accounting in that jurisdiction may use the CPA designation in this state and may
engage in the practice of accounting in this state (A.R.S. § 32-725).

A registrant's certificate or registration is expired if the registrant fails to reinstate the certificate or
registration within twelve months after it has been suspended or has been on inactive status for
more than six years (A.R.S. § 32-730-03)

Provisions
1. Modifies the definition of related courses to include other courses that are closely related to
the subject of accounting or that are satisfactory to the Board. (Sec. 1)

2. Allows the Board to delegate to the Director the authority to approve a request for continuing
professional education reciprocity. (Sec. 2)

3. Allows a business organization, rather than just a partnership or corporation, of another
jurisdiction to use the CPA designation in this state and engage in the practice of accounting
without having to register as a firm provided certain criteria are met. (Sec. 3)

4. States that a CPA's certificate or registration is expired if the CPA fails to meet registration
requirements for a firm and is not granted or exhausts an extension of time to comply with firm
registration requirements. (Sec. 5)

5. Adds to the criteria regarding firm registration fees to include an individual who uses a CPA
designation, unless the name used is the name of the individual as registered with the Board.
(Sec. 7)

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

$B 1131
Initials JR Page 1 Attachment_‘f _ Regulatory Affairs

6. Removes language relating to the Board revoking a firm's registration if the firm is not qualified
and has not been granted a time extension to comply with the requirements. (Sec. 9)

7. States that a registrant, individual or firm that qualifies for the limited reciprocity privilege must
be known as a CPA or a CPA firm and can use the CPA designation with the exact name as
registered with the Board. (Sec. 10)

8. Makes technical and conforming changes. (Sec. 1, 3-10)

$B 1131
Initials JR Page 2 Regulatory Affairs
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fourth Legislature - Second Regular Session

ROLL CALL VOTE

COMMITTEE ON Regulatory Affairs BILL NO. SB 1131

DATE March 02, 2020 MOTION: a
PASS AYE NAY PRESENT | ABSENT

Blackman v4

Powers Hannley v

Shah 4

Teran J

Toma 4

Roberts, Vice-Chairman / ,

Grantham, Chairman 4

ry Oo oO OQ
tewon Ae tee

APPROVED: GOMMITTEE SECRETARY

TRAVIS W. GRANTHAM, Chairman
BRET ROBERTS, Vice-Chairman

ATTACHMENT.

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fourth Legislature
Second Regular Session
Senate: FIN DP 9-0-1-0 | 3°4 Read 26-0-4-0
RR Gc GI i I RNS
SB 1294: insurance and financial institutions; continuation
Sponsor: Senator Mesnard, LD 17
Committee on Regulatory Affairs

Overview
Continues the Arizona Department of Insurance and Financial Institutions (DIFI) for five years.

History
Pursuant to A.R.S. § 41-2953, the Joint Legislative Audit Committee assigned the sunset review

of the Arizona Department of Insurance (Department) to the Senate Finance and the House of
Representatives Regulatory Affairs Committee of Reference (COR), The Senate Commerce COR
met on December 17, 2019 and recommended that DIF| be continued for five years, until July 4,
2025. The House Regulatory Affairs COR met on January 16, 2020 and recommended that DO!
be continued for five years.

Laws 2019, Chapter 252 merged the Arizona Department of Financial Institutions and the
Automobile Theft Authority as divisions within the Department. The Department was also
renamed the Arizona Department of Insurance and Financial Institutions, effective July 1, 2020.
The Department was most recently continued for 10 years pursuant to Laws 2010, Chapter 13.

Provisions
1. Continues DIFI until July 1, 2025. (Sec. 2)

2. Repeals, subject to voter approval, DIFI on January 1, 2026. (Sec. 2)
3. Contains a purpose clause. (Sec. 3)
4. Contains a retroactivity clause of July 1, 2020. (Sec. 4)

Attachment_{,

[J Prop 105 (45 votes) CI Prop 108 (40 votes) ( Emergency (40 votes) 1 Fiscal Note

SB 1294
Initials JR/LB Page 1 Regulatory Affairs

ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fourth Legislature - Second Regular Session

ROLL CALL VOTE

COMMITTEE ON Regulatory Affairs BILLNO. SB 1294
DATE March 02, 2020 MOTION: de
PASS AYE NAY PRESENT | ABSENT
Blackman 4
Powers Hannley 4
Shah 4
Teran VA
Toma 4
Roberts, Vice-Chairman JS
Grantham, Chairmen VA
‘) O oO ro)
APPROVED: COMMITTEE SECRETARY

<—D. A LE —=_>

TRAVIS W. GRANTHAM, Chairman
BRET ROBERTS, Vice-Chairman

ATTACHMENT “/

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fourth Legislature
Second Regular Session
Senate: FIN DPA 9-0-1-0 | 34 Read 30-0-0-0

$B 1040: insurers; notices; methods of delivery
Sponsor: Senator Livingston, LD 22
Committee on Regulatory Affairs

Overview
Clarifies that an insurer can send correspondence by means other than mail.

History
All required insurance transaction notices or documents (Notice) that serve as evidence of

insurance coverage may be delivered, stored and presented by electronic means. An insurer must
obtain distinct advanced electronic consent before delivering a Notice by electronic means to a
party (A.R.S. § 20-239).

Every insurer writing automobile liability or motor vehicle liability policies must make available to
the named insured uninsured and underinsured motorist coverage. The offer must be made to
the named insured or applicant at the time of the application (A.R.S. § 20-259.01).

A notice of cancellation, nonrenewal or reduction of limits of liability or coverage for reasons other
than nonpayment by the insurer to the policy holder must be mailed, and the insurer must obtain
proof of United States Post Office (USPS). shipping method using intelligent mail barcode or
another similar, approved USPS tracking method (A.R.S. § 20-1632) & (A.R.S. § 20-1676).

Provisions

1. States that if a notice or correspondence is sent by mail or electronic means, the insurer must
send the notice or correspondence to the recipients last known mailing address or email
address. (Sec. 2)

2. Replaces the requirement that a communication, notice or correspondence be senf rather
than mailed. (Sec. 3, 4, 6-30)

3. Removes the requirement that every insurer writing automobile or motor vehicle liability
policies must offer uninsured and underinsured motorist coverage to an insured or applicant
at the time of the application. (Sec. 5)

4. Removes the requirement that a specified insurer obtain proof of mailing by U.S. certified mail,
U.S. post office certificate of mailing, first class mail or another similar tracking method when
a notice of cancelation or reduction in specified insurance is mailed to the insured. (Sec. 12,
18)

5. Removes the requirement that a specified insurer mail a notice of cancellation or nonrenewal
at the policyholder's last address on record with the insurer by first class mail. (Sec. 13, 14,
15)

6. States that any method of proof retained by the specified insurer for sending a notice of
cancellation by any method other than by mail is sufficient. (Sec. 16, 20)

L1 Prop 105 (45 votes) Ci Prop 108 (40 votes} [] Emergency (40 votes) Ci Fiscal Note
SB 1040

Initials JR Page 1 Attachment 3 Regulatory Affairs

7. Requires a health care insurer to provide a member access to a copy of their information
packet on its website. (Sec. 24)

8. Defines send, sending or sent means to deliver by the U.S. mail, personal delivery, fax or by
electronic means. (Sec. 1)

9. Makes a conforming change. (Sec. 1)
10. Makes technical changes. (Sec. 3, 4, 8, 10- 25, 27, 29)

SB 1040
Initials JR Page 2 Regulatory Affairs

Regulatory Affairs

Fifty-fourth Legislature
S.B. 1040

Second Regular Session
PROPOSED

HOUSE OF REPRESENTATIVES AMENDMENTS TO S.B. 1040

(Reference to Senate engrossed bill)

1 Page 2, lines 14 and 15, strike “pursuant—to-sectton 20-1632" insert "pursuant to
2 section 20-1632"

3 Amend title to conform

TRAVIS W. GRANTHAM

1LO40GRANTHAM
02/26/2020
02:59 PM

H: JR/1s

Attachment__@_

ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fourth Legislature - Second Regular Session

ROLL CALL VOTE
COMMITTEE ON Regulatory Affairs BILL NO. SB 1040
DATE March 02, 2020 MOTION: _ Goa.
PASS AYE NAY PRESENT | ABSENT
Blackman v
Powers Hannley v
Shah 4
Teran v
Toma /
Roberts, Vice-Chairman v
Grantham, Chairman J
| O o O
xhuworn Wite
APPROVED: COMMITTEE SECRETARY

TRAVIS W. GRANTHAM, Chairman
BRET ROBERTS, Vice-Chairman

ATTACHMENT. /0

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fourth Legislature
Second Regular Session
Senate: FIN DP 9-0-1-0 { 3rd Read 30-0-0-0

$B 1038: insurance policies; transfers; affiliated insurers
Sponsor: Senator Livingston, LD 22
Committee on Regulatory Affairs

Overview
States that an insurer can transfer any of its insurance policies, without it being considered a
nonrenewal, to an affiliated insurer.

History
For an insurance policy renewal, or a new policy that has been in effect for sixty days, a notice of

cancellation must be based on specified occurrences that transpire after the effective date of the
policy. If an occurrence meets the outlined conditions and an insurer does not renew a policy, the
insured must be given 30 days' notice to remedy the identified conditions. If remedied, coverage
must be renewed; If not remedied, the insured may pay the premium and be given an additional
30 days to meet satisfactory conditions (A.R.S. § 20-1652).

If an insurer does not mail or deliver a notice of its intention to not renew a policy to the named
insured at the address shown in the policy, the insurer must renew the policy on the effective date
of the renewal, upon payment of the premium. (A.R.S. § 20-1654)

Provisions

1. States that nonrenewal does not include the issuance and delivery of a new policy within the
same insurer or an insurer under the same ownership or management as the original insurer.
(Sec. 1, 2)

2. Allows an insurer to transfer any of its policies to an affiliated insurer. (Sec. 1, 2)

Restricts an insurer from transferring a policyholder on the basis of the policyholder's location
of residence, age, race, color, religion, sex, national origin or ancestry. (Sec. 1, 2)

4. States that in the occurrence of a transfer, this insurer is not allowed to apply a new
unrestricted 60-day period for cancellation or nonrenewal. (Sec. 1, 2)

5. Makes technical and conforming changes. (Sec. 1, 2)

Attachment_{ |

1 Prop 105 (45 votes) 1 Prop 108 (40 votes) O Emergency (40 votes) OU Fiscal Note

SB 1038
Initials JR/LB Page 1 Regulatory Affairs

ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fourth Legislature - Second Regular Session

ROLL CALL VOTE

COMMITTEE ON Regulatory Affairs BILL NO. SB 1038
DATE March 02, 2020 MOTION: do
PASS AYE NAY PRESENT | ABSENT
Blackman WA
Powers Hannley /
Shah v
Teran 4
Toma /
Roberts, Vice-Chairman /
Grantham, Chairman J
) O O Qo
bor ete
APPROVED: COMMITTEE SECRETARY

One fee
TRAVIS W. GRANTHAM, Chairman
BRET ROBERTS, Vice-Chairman

ATTACHMENT. /24

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fourth Legislature
Second Regular Session
Senate: FIN DP 8-1-1-0 { 34 Read 27-2-1-0

SB 1041: travel insurance
Sponsor: Senator Livingston, LD 22
Committee on Regulatory Affairs

Overview

Adds Chapter 28 (Travel Insurance) to Title 20 (Insurance) statutes. Outlines the following
regarding the "Travel Insurance Model Act" (Act): premium tax, travel protection plans, sales
practices, travel administrators and travel insurance classification.

History
Travel insurance (Tl) means insurance coverage for personal risks incident to planned travel

including:
1) Interruption or cancellation of a trip or event:
2) Loss of baggage or personal effects;
3) Damages to accommodations or rental vehicles; and
4) Sickness, accident, disability or death occurring during travel.

Ti does not include major medical plans, which provide comprehensive medical protection for
travelers with trips lasting six months or longer, including those working overseas as expatriates
or military personnel being deployed (A.R.S. § 20-333).

A travel retailer (Retailer) may offer and issue TI under a limited lines travel insurance producer
(Producer) business entity license if the Producer meets the statutory requirements. Producers
and those registered under the Producer's license are exempt from the examination requirements
and continuing education requirements (A.R.S. § 20-333).

Provisions
Premium Tax (Sec. 4)
4. States that a travel insurer must pay premium tax on TI premiums paid by the following who
reside in this state:
a) An individual primary policy holder;
b) A primary certificate holder who elects coverage under a group TI policy; and
c) A blanket TI policy holder that meets certain specified conditions.

2. Requires a travel insurer to:
a) Document the state of residence or principal place of business of the policy or certificate
holder (PCH); and
b) Report only the premium amount allocable to T! and not the amounts received for travel
assistance services or cancellation fee waivers.

Travel Protection Plans (Sec. 4)
3. States that travel protection plans (Plan) can be offered for one price for the combined features
if both:
a) The Plan clearly discloses, at or before the time of purchase, that it includes travel
insurance, travel assistance services and cancellation fee waivers (Features):

(Prop 105 (45 votes) © Prop 108 (40 votes) (Emergency (40 votes) 1 Fiscal Note
SB 1041
initials JR Pagel  Attachment_1i2 Regulatory Affairs

10.

11.

12.

13.
14,

15.

i. Additional information regarding the Features and pricing of each Plan must also be
included; and
b) The fulfillment materials (FM) both;
i. Describe and delineate the Features in the Plan; and
li. Include the TI disclosures and the contact information for persons providing travel
assistance services and cancellation fee waivers.

Sales Practices (Sec. 4)
States that all persons offering TI in this state are subject to unfair trade practices (UTP) and
fraud.
a) States that if a conflict exists between the Act and another provision under the Insurance
statutes regarding the sale of TI, the Act controls.

States that offering or selling a TI policy that could never result in payment of any claims is a
UTP.

Requires all documents provided to consumers before the purchase of TI to be consistent
with the TI policy.

Requires TI policies that contain preexisting condition exclusions to provide information
regarding the preexisting condition exclusions before the time of purchase and in the
coverages FM.

Requires the FM and specified information to be provided to a PCH as soon as practicable
following the purchase of a Plan, unless the insured has either started a covered trip or filed
a claim.

States that a PCH may cancel a policy or certificate for a full refund of the Plan price from the
date of purchase of the Plan until at least either:

a) 15 days after the date of delivery of the Plan’s FM by postal mail; or

b) 10 days after the date of delivery of the Plan’s FM by means other than postal mail.

Requires the policy documentation and the FM to disclose whether the travel insurance is
primary or secondary to other applicable coverage.

States that if Tl is marketed directly on an insurer's website or through an aggregator website,
itis not a UTP or violation of law, if an accurate summary or description of the coverage is
provided and the full provisions of the policy are available for the consumer through electronic
means.

Prohibits a person from offering, soliciting or negotiating T! or Plans on an individual or group
basis by using an opt out option that requires a consumer to deselect coverage, such as
unchecking a box on an electronic form, when the consumer purchases a trip.

States that it is a UTP to market blanket Tl coverage as free.

States that if a consumer's destination requires insurance coverage, it is not a UTP to require

a consumer to choose between the following options as a condition of purchasing a trip or

travel package:

a) Purchasing the coverage through the Retailer or limited lines Producer supplying the trip
or travel package; or

b) Agreeing to obtain and provide proof of coverage that meets the destination's
requirements before departure.

Travel Administrators (Sec. 4)
Prohibits a person from acting or representing itself as a travel administrator (TA) for TI in this
state unless the person either:

SB 1041

initials JR Page 2 Regulatory Affairs
16.
17.

18.

19.

20.
21.

22.
23.
24.
25.
26.

a) Is a licensed property and casualty insurance producer for activities allowed under that
producer license; or
b) Holds a valid managing general agent license in this state.

Exempts a TA and its employees from the licensing requirements for travel it administers.

States that an insurer that underwrites TI is responsible for the acts of the TA administering

the TI.

a) States that the insurer must ensure that the TA maintains all books and records relevant
to the insurer and make the books and records available to the Director of the Department
of Insurance upon request.

Classification (Sec. 4)

States that TI is classified and filed under an inland marine line of insurance for purposes of
rate and forms.

States that a TI that provides coverage for sickness, accident, disability or death occurring
during travel, either exclusively or in conjunction with related coverages, may be filed under
either:

a) An accident and health line of insurance; or

b) An inline marine line of insurance.

States that Tl may be an individual, group or blanket policy.

States that eligibility and underwriting standards for Tl may be developed based on Plans that
are designed for individual or identified marketing or distribution channels, if those standards
also meet the state underwriting standards for injand marine.

Miscellaneous
Transfers existing statute relating to Producer licensing to the Act. (Sec. 3)
States that this act may be cited as the "Travel Insurance Model Act" (Sec. 5)
Contains a purpose and applicability clause. (Sec. 2)
Defines pertinent terms. (Sec. 2)
Makes conforming changes. (Sec. 1, 3)

SB 1041

initials JR Page 3 Regulatory Affairs
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fourth Legislature - Second Regular Session

ROLL CALL VOTE
COMMITTEE ON Regulatory Affairs BILLNO. $B 1044
DATE March 02, 2020 MOTION: do
PASS AYE NAY PRESENT | ABSENT
Blackman 4
Powers Hannley vA
Shah VA
Teran 4
Toma J
Roberts, Vice-Chairman /
Grantham, Chairman a
ry Y O O
sfuwanw lec mal
APPROVED: ; COMMITTEE SECRETARY

—). ke
TRAVIS W. GRANTHAM, Chairman
BRET ROBERTS, Vice-Chairman

ATTACHMENT. /4/

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fourth Legislature
Second Regular Session
Senate: FIN DPA 10-0-0-0 | 3°? Read 30-0-0-0

AS AC A A A Sc RR NEN AIT SAE AREA AAT

SB 1062: insurance transactions; discrimination; exceptions
Sponsor: Senator Livingston, LD 22
Committee on Regulatory Affairs

Overview
Allows a life insurer (Insurer) to offset expenses that a group policyholder or employer incurs using
implementation credits under certain conditions.

History
Statute does not include in the definitions of discrimination or rebates on life or disability insurance

the following practices:

1) Paying bonuses to life insurance or life annuity policy holders or premium abatements out
of surplus accumulated from nonparticipating insurance, provided such bonuses and
abatements are in the best interests of the Insurer and its policyholders;

2) Paying allowance to policyholders, who have made consistent premium payments directly
to an office of the Insurer for a specified period, concerning life insurance policies issued
on the industrial debit plan;

3) Readjustment of a group insurance policy premium rate due to loss or expense at the end
of a policy year, which may be retroactive only for that policy year; and

4) Issuing life or disability policies on a salary savings or payroll deduction plan at a reduced
rate proportionate with the savings of the plan (A.R.S. § 20-450).

Statute does not prohibit providing:

1) Rewards or incentives under a weliness program permitted under the Health Insurance
Portability and Accountability Act_of 1996 for group disability insurance and individual
disability insurance; or

2) Products or services that supplement a life or disability insurance policy and are intended
to minimize or prevent claims-related losses or expenses, to deter injury or death or to
improve health of the insured (A.R.S. § 20-450).

Provisions
1. Allows the payments of implementation credits an Insurer makes to offset expenses that a
group policyholder or employer incurs when the Insurer changes new or existing group
coverage to do either of the following:
a) Include implementation credits in the premium and then reimburse the policy holder;
i. The life insurer must disclose to the policy holder whether implementation credits were
included in the premium; or
b) Pay for the implementation credits and provide appropriate disclosure in the group policy.
(Sec. 1)

2. Adds to the list of products and services not prohibited to include those that enhance the
financial wellness of the insured. (Sec. 1}

3. Defines Life Insurance to include disability income policies and supplemental benefits policies.
(Sec. 1)

(1 Prop 105 (45 votes) C} Prop 108 (40 votes) ( Emergency (40 votes) 0 Fiscal Note

SB 1062
Initials JR/LB Pagel Attachment [< Regulatory Affairs
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fourth Legislature - Second Regular Session

ROLL CALL VOTE

COMMITTEE ON

Regulatory Affairs

DATE March 02, 2020

BILL NO. SB 1062

MOTION: a e

PASS

>
n<
m

NAY

PRESENT

ABSENT

Blackman

Powers Hannley

Shah

Teran

Toma

Roberts, Vice-Chairman

Grantham, Chairman

APPROVED:

TL. ALES

TRAVIS W. GRANTHAM, Chairman
BRET ROBERTS, Vice-Chairman

PDN ININDNRGEGKS

O

0

COMMITTEE SECRETARY

ATTACHMENT.__/G

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fourth Legislature
Second Regular Session
Senate: FIN DPA 10-0-0-0 | 3° Read 30-0-0-0

SB 1090: insurance adjusters; claims certificate
Sponsor: Senator Livingston, LD 22
Committee on Regulatory Affairs

Overview
Waives the examination requirement for adjuster license applicants who hold a claims certificate
that meets outlined criteria.

History
Adjuster is defined to include any person who adjusts, investigates or negotiates settlement of

claims concerning property and casualty contracts on behalf of either the insured or the insurer,
for compensation, fee or commission (A.R.S. § 20-321),

To be licensed as an Adjuster, a person must take and pass an examination that is given by or
under the supervision of the Director of the Department of Insurance (DOI) and that reasonably
tests the applicant's knowledge of insurance and legal responsibilities (A.R.S. § 20-321.01).

Provisions

1. Excludes from the definition of an adjuster an employee of a third-party administrator or self-
insured employer who adjusts, investigates or negotiates settlement of only workers'
compensations claims. (Sec. 1)

2. Removes the requirement for an adjuster license applicant to take and pass a DOI
examination if the applicant holds a national or state-based claims certificate that consists of
at least 40 hours of preexamination course work, a proctored examination of sufficient length
to adequately determine the competency of the applicant and at least 24 hours of continuing
education required for certification renewals on a biennial basis. (Sec. 2)

3. Makes technical and conforming changes. (Sec. 1, 2)

Attachment_1?

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

SB 1090
Initials JR/LB Page 1 Regulatory Affairs
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fourth Legislature - Second Regular Session

ROLL CALL VOTE

COMMITTEE ON

Regulatory Affairs

BILL NO. $B 1090 _

DATE

March 02, 2020

MOTION: dp

PASS

>
x
m

NAY PRESENT | ABSENT

Blackman

Powers Hannley

Shah

Teran

Toma

Roberts, Vice-Chairman

Grantham, Chairman

APPROVED:

TRAVIS W. GRANTHAM, Chairman
BRET ROBERTS, Vice-Chairman

as NN CLS

oO O O

Mita» Weta.

COMMITTEE SECRETARY

ATTACHMENT / 3

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fourth Legislature
Second Regular Session
Senate: FIN DP 8-2-0-0 | 3¢ Read 18-12-0-0

SB 1091: insurance producer licensing; surrender; application
Sponsor: Senator Livingston, LD 22
Committee on Regulatory Affairs

Overview
Allows a person who voluntarily surrenders their insurance producer license (License) to reapply
for the same License within one year if the applicant complies with the same requirements.

History
A person who applies for a License must apply to the Director of the Department of Insurance

(Director) and provide information concerning the applicant's identity, personal history, business
record, experience in insurance and any document deemed necessary by the Director. The
applicant must pay all required fees and pass examinations for the lines of authority for which the
individual is applying (A.R.S. § 20-285).

A License continues until suspended, terminated or revoked by the Director, or it expires. A
License that is issued or renewed expires every four years. A licensee may submit a written
request to the Director to voluntarily surrender the licensee's authority to transact one or more
lines of insurance, or their entire license. The licensee may not reapply for the same authority or
license for at least one year after the date of the surrender (A.R.S. § 20-289),

Provisions
1. Removes the one-year wait period for a previous licensee to reapply for an authority or
License that was previously surrendered. (Sec. 1)

2. States that a person who voluntarily surrenders their License can obtain the same License if
the person complies with the requirements that apply to an initial license applicant. (Sec. 1)

3. Makes technical changes. (Sec. 1)

Attachment_/¢

L) Prop 105 (45 votes) [1 Prop 108 (40 votes) (Emergency (40 votes) 1 Fiscal Note

SB 1091
Initials JR/LB Page 1 Regulatory Affairs
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fourth Legislature - Second Regular Session

ROLL CALL VOTE

COMMITTEE ON

Regulatory Affairs

BILL NO. $B 1091

DATE March 02, 2020

MOTION: d e

PASS

AYE

NAY PRESENT | ABSENT

Blackman

Powers Hannley

Shah

Teran

Toma

Roberts, Vice-Chairman

Grantham, Chairman

APPROVED:

A: Ah (Pre

TRAVIS W. GRANTHAM, Chairman
BRET ROBERTS, Vice-Chairman

SB EWN NSN NSN

0 O (6)

Mergen be te

COMMITTEE SECRETARY

ATTACHMENT. ©

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fourth Legislature
Second Regular Session
Senate: FIN DP 8-0-2-0 | 3° Read 27-3-0-0

SB 1213: appropriation; actuarial study; reinsurance feasibility
Sponsor: Senator Livingston, LD 22
Committee on Regulatory Affairs

Overview

Appropriaites $250,000 from the state General Fund (GF) to the Department of Insurance and
Financial Institutions (DIFI) in fiscal year (FY) 2021 to conduct an actuarial study on the feasibility
of establishing a reinsurance program to secure an innovation waiver.

History
The Patient Protection and Affordable Care Act (ACA) permits a state to apply for a State

Innovation Waiver (Waiver) which allows states to implement innovative ways to access quality
healthcare that is comprehensive, affordable and provides comparable coverage (42 U.S.C. §
18052).

Provisions

1.

Appropriates $250,000 from the state General Fund to DIFI in fiscal year 2020-2021 to
conduct an actuarial study to determine the feasibility of establishing a reinsurance program
to secure a Waiver by the United States Secretary of Health and Human Services under the
ACA. (Sec. 1)

Requires the actuarial study to:

a) Consider insurance premiums and risks associated with individuals who are insured
through a health exchange or marketplace under the ACA; and

b) Review states with approved risk mitigation waivers and their corresponding funding
obligations. (Sec. 1)

Mandates that DIF! include and consider stakeholder input on best practices, premium offsets
and risk factors when determining the feasibility of establishing a Waiver. (Sec. 1)

Exempts the above appropriation from lapsing one month after the beginning of each fiscal
year. (Sec. 1)

Attachment_2 |

(J Prop 105 (45 votes) [} Prop 108 (40 votes) 1 Emergency (40 votes) (1 Fiscal Note

SB 1213

Initials JR/LB Page i Regulatory Affairs

ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fourth Legislature - Second Regular Session

ROLL CALL VOTE
COMMITTEE ON Regulatory Affairs BILL NO, SB 1213
DATE March 02, 2020 MOTION: d P
PASS AYE NAY PRESENT | ABSENT
Blackman WA
Powers Hannley v
Shah J
Teran 4
Toma J
Roberts, Vice-Chairman V/
Grantham, Chairman JS
a) O O QO
APPROVED: COMMITTEE SECRETARY

Qe hh LU

TRAVIS W. GRANTHAM, Chaififian———.__
BRET ROBERTS, Vice-Chairman

ATTACHMENT. 2,

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fourth Legislature
Second Regular Session

AN SN IE i A SRE REE

SB 1557: annuity transactions; requirements
Sponsor: Senator Livingston, LD 22
Committee on Regulatory Affairs

Overview
Amends statutes relating to the duties of an insurer who recommends an annuity to a consumer.

History
In recommending the purchase or exchange of an annuity to a consumer that results in a

transaction, an insurance producer (Producer) or insurer must have reasonable grounds for
believing that the recommendation is suitable for the consumer based on the facts disclosed by
the consumer as to the consumer's investments and other insurance products and as to the
consumer's financial situation and needs. The Producer or insurer must make reasonable efforts
to obtain information concerning the consumer's financial status, tax status, investment objectives
and any other pertinent information. The Insurer does not have any obligation to the consumer if
the consumer:

1) Refuses or fails to provide complete or accurate information; or

2) Decides to enter into an insurance transaction that is not based on the insurer's

recommendation (A.R.S. § 20-1243.03).

The Director of the Department of Insurance (Director) may order a business entity that employs
or contracts with a Producer to take reasonable corrective action for any consumer who is harmed
by a violation on the part of the Producer (A.R.S. § 20-1243).

Before selling, soliciting or negotiating an annuity, a Producer with a life insurance line of authority
must complete an approved four credit-hour training course. Annuity training courses may be
conducted and completed by classroom or self-study methods in accordance with continuing
education statute and rules of DOI. Completion of substantially similar training requirements of
another state satisfy the requirements (A.R.S. § 20-1243.07).

Provisions

Duties of Insurers and Producers (Sec. 4)

1. States that when a Producer recommends an annuity (Recommendation), the Producer must
act in the interest of the consumer under the circumstances known at the time of
recommendation is made and without placing the Producer's financial interest ahead of the
consumers.

2. Stipulates that the Producer has acted in the best interest of the consumer if the Producer has
satisfied the obligations regarding care, disclosure, conflict of interest and documentation.

3. States that to satisfy the care obligation in making a Recommendation, the Producer must
exercise reasonable diligence, care and skill to do all of the following:
a) Know the consumer's financial situation, insurance needs and financial objectives
(Situation); Attachment
b) Understand the available recommended options; a
c) Have a reasonable basis to believe both of the following:

Cj Prop 105 (45 votes) (J Prop 108 (40 votes} (Emergency (40 votes) (Fiscal Note

Initials JR Page 1 Regulatory Affairs
i. The recommended option effectively addresses the consumer's Situation over the life
of the product;
ii. The consumer would benefit from features of an annuity, such as annuitization, death
or living benefits or other insurance-related features.
d) Communicate the basis of the recommendation;
e) Make a reasonable effort to obtain consumer profile information from the consumer before
recommending an annuity;
f) Consider the types of products the Producer is authorized and licensed to recommend or
sell that address the consumer's Situation and the Producer:
i. Is not required to consider any products outside the Producer's license or other
products available at the time of the recommendation;
li. Must be held to standards that apply to Producers with similar authority and licensure.
g) In the case of an exchange or replacement of an annuity, the Producer must consider
whether:
i. The consumer will incur a surrender charge, be subject to a new surrender period,
lose existing benefits or be subject to increased fees;
ii. The replacement product would substantially benefit the consumer in comparison to
the current product over the life of the product;
iii. The consumer has had another exchange or replacement of an annuity, in particular,
within the preceding sixty months.

States that the requirements under the best interest and care obligations do not create a
fiduciary obligation or relationship and only create a regulatory obligation.

Outlines the circumstances in which care obligation requirements are applicable.

6. States that under the care obligation, the consumer profile information, characteristics of the

10.

11,

12.

insurer and product costs, rates, benefits are the relevant factors in deciding whether an

annuity addresses the consumer's Situation.

a) States that the importance of factors may vary by case and each factor may not be
considered in isolation.

Outlines the information required to satisfy the disclosure obligation that the Producer must

provide to a consumer on a form before making a Recommendation.

a) The disclosure obligation form must be substantially similar to the "Insurance Agent
(Producer) Disclosure for Annuities" form from the 2020 National Association of Insurance
Commissioners Suitability in Annuity Transactions Model Regulation.

States that under the disclosure obligation, the Producer must have a reasonable basis to
believe that the consumer has been informed of the specified features, potential charges or
tax penalties, fees, interest returns and market risk of the annuity.

States that to satisfy the conflict of interest obligation, the Producer must identify and avoid or
reasonably manage and disclose material conflicts of interest, including ownership interest.

Outlines the requirements to satisfy the documentation obligation that must be completed by
the Producer at the time of the Recommendation or sale.

States that the aforementioned provisions apply to every Producer who has exercised material
control or influence in the making of a Recommendation and has received direct
compensation as a result of the Recommendation, regardless of whether the Producer has
had any direct contact with the consumer.

Outlines activities that do not constitute material control or influence.

SB 1557

Initials JR Page 2 Regulatory Affairs
13.

14.

15.

16.

17.
18.
19.

20.

21.

22.

23.

24,

25.

26.

States that an insurer's issuance of an annuity must be reasonable under all the known
circumstances at the time.

States that a Producer has no other obligation under the aforementioned provisions to a

consumer relating to an annuity transaction if:

a) No Recommendation is made;

b) A Recommendation was made based on materially inaccurate information provided by the
consumer;

¢) The consumer refuses to provide relevant profile information and the annuity transaction
is not recommended; or

d) The consumer decides to enter into an annuity transaction that is not based on a
Recommendation.

Outlines the requirements of each insurer to establish and maintain a supervision system
(System) that is designed to achieve the insurer's and its Producers’ compliance with the
aforementioned provisions.

States that an insurer may contract for performance of a function, including maintenance of
procedures, but is responsible for taking appropriate corrective action and may be subject to
sanctions and penalties pursuant to specified statute.

Outlines what an insurer's System must include for supervision of contractual performance.
Outlines what an insurer is not required to include in its System.

States that a Producer or an insurer, can not dissuade, or attempt to dissuade, a consumer

from:

a) Truthfully responding to an insurer's request for confirmation of the consumer profile
information;

b) Filing a complaint; or

¢) Cooperating in the investigation of a complaint.

States that the Recommendations and sales of annuities made by financial professionals that

comply with comparable standards satisfy the requirements of the aforementioned provisions.

a) The Recommendations and sales of annuities made by financial professionals does not
limit the Director's ability to enforce pertinent statute.

States that the insurer can base its analysis on a consumers Situation in information received
from either a financial professional or the entity supervising a financial professional.

Outlines the criteria insurers must follow to comply with Recommendations and sales of
annuities made by financial professionals.

Compliance, Enforcement & Penalties (Sec. 5)
States that an insurer is responsible for compliance and if a violation occurs, either because
of the action or inaction of the insurer or its Producer, the director can order:
a) The insurer to contract an entity to perform the insurer's supervisory duties:
b) Ageneral agency or independent agency to take reasonably appropriate corrective action;
and
c) Appropriate penalties and sanctions.

Removes a business entity that employs or contracts with a Producer for annuities sales from
taking reasonably appropriate corrective action.

Authorizes the Director to reduce or eliminate any applicable penalty if the violation was not
part of a pattern or practice.

States that the authority to enforce compliance is vested exclusively with the Director.

SB 1557

Initials JR Page 3 Regulatory Affairs
Miscellaneous
27. States that the provisions do not create or imply a private cause of action for a violation or
subject a Producer to civil liability under the best interest standard of care or under standards
of a fiduciary or fiduciary relationship. (Sec. 2)

28. Adds independent agencies to the list of entities that are able to make Recommendation
records available to the Director. (Sec. 6)

29. States that completion of any course or courses with components that are substantially similar
satisfy the Producer training requirements. (Sec. 7)

30. Requires a Producer who has completed an annuity training course, to complete the following
within six months after the effective date:
a) Anew four credit hour annuity training course approved by the Director; and
b) An additional one credit hour annuity training course approved by the Department of
Insurance and Financial Institutions on appropriate sales practices, replacement and
disclosure requirements. (Sec. 8)

31. Defines pertinent terms. (Sec. 1, 4)
32. Contains a delayed effective date of January 1, 2021. (Sec. 9)

SB 1557
Initials JR Page 4 Regulatory Affairs
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fourth Legislature - Second Regular Session

ROLL CALL VOTE
COMMITTEE ON Regulatory Affairs BILL NO. __ SB 1557
DATE March 02, 2020 moTion: _d 0
PASS AYE NAY PRESENT | ABSENT
Blackman J
Powers Hannley vA
Shah va
Teran v
Toma 4
Roberts, Vice-Chairman 4
Grantham, Chairman wv
hoy a oO O
Aion . licte
APPROVED: COMMITTEE SECRETARY

—-, A. 4 a

TRAVIS W. GRANTHAM, Chairman
BRET ROBERTS, Vice-Chairman

ATTACHMENT. AY

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