Arizona House of Representatives Committee on Commerce — Report of Regular Meeting, January 21, 2025 (Fifty-seventh Legislature, First Regular Session)

Summary

The report of a regular meeting of the Arizona House of Representatives Committee on Commerce, Fifty-seventh Legislature, First Regular Session, held Tuesday, January 21, 2025, with Representative Weninger as chairman. The report records that the committee adopted its rules and gave HB2032, HB2033 and HB2054 do pass recommendations and HB2076 a do pass amended recommendation, each by a 10-0-0-0 vote. Attachments include the agenda, the Request to Speak report, the attendance record, the standing committee rules, and bill summaries for HB 2032 (workers' compensation; assigned risk plan), HB 2033 (workers' compensation; service; definition) and HB 2054 (DIFI; financial enterprises; insurance; compact). The document closes with House amendments to H.B. 2076 on life insurance illustrations, effective after December 31, 2025, and the roll call vote on HB 2076.

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-seventh Legislature - First Regular Session

COMMITTEE ON COMMERCE

Report of Regular Meeting
Tuesday, January 21, 2025
House Hearing Room 5 -- 2:00 P.M. OR UPON RECESS OR ADJOURNMENT OF FLOOR

Convened 2:05 P.M.
Recessed
Reconyened
Adjourned 2:48 P.M.

Members Present

Representative Aguilar
Representative Blackman
Representative Cavero
Representative Connolly
Representative Diaz

Representative Hendrix
Representative Livingston
Representative Villegas
Representative Way, Vice-Chairman
Representative Weninger, Chairman

Agenda
Original Agenda — Attachment !

Request to Speak
Report — Attachment 2

Committee Attendance
Report — Attachment 3

Committee Action

Members Absent

Bill Action Vote
Committee on Commerce Rules Adopted

HB2032 DP 10-0-0-0

HB2033 DP 10-0-0-0

HB2054 DP 10-0-0-0

HB2076 DPA 10-0-0-0

MINUTES RECEIVED
CHIEF CLERK'S OFFICE

Holf as

Attachments

>

i

6
8
, 10, 11

4
5
7
9
12, 13, 14

(Udy Alyey >

Abby Selve¥, Committee Becretary

January 21, 2025

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

COMMITTEE ON COMMERCE
January 21, 2025
Cony! 2205 EM
Adirnt 2248 pry
REVISED - 1/17/25 REVISED - 1/17/25 REVISED - 1/17/25

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-seventh Legislature - First Regular Session

REGULAR MEETING AGENDA

COMMITTEE ON COMMERCE

DATE Tuesday, January 21, 2025 ROOM HHR5 TIME 2:00 P.M. or upon recess or
adjournment of Floor

Members of the public may access a livestream of the meeting here:
https:/Awww.azleg.gov/videoplayer/?clientID=6361 162879&eventID=202501 1041

Members:

Representative Aguilar Representative Diaz Representative Wilmeth <—

Representative Blackman Representative Hendrix Representative Way, Vice-Chairman
Representative Cavero Representative Livingston Representative Weninger, Chairman
Representative Connolly Representative Villegas Sa

Introduction of Members and Staff ee

2; Adoption of Committee Rules

—

Bills Short Title Strike Everything Title
HB2032 workers' compensation; assigned risk plan
(Livingston)
-0-0-O COM, RULES
HB2033 D p workers' compensation; service; definition
(Livingston)

_, COM, RULES

lo-Q-0 O
HB2054 dD & DIFI; financial enterprises; insurance; compact
(Livingston)
/0-0-0-0

COM, RULES
HB2076 DPA life insurance; illustrations
———_ (Livingston)
COM, RULES

jO-0-00

ORDER OF BILLS TO BE SET BY THE CHAIRMAN

RA
vc
OH452025
01/17/2025

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 1 of 1 ATTACHMENT |
Information Registered on the Request to Speak System

House Commerce (1/21/2025)

HB2032, workers' compensation; assigned risk plan

Support:
Mark Kendall, COPPERPOINT INSURANCE COMPANY; Wendy Briggs, AMERICAN PROPERTY CASUALTY INSURANCE

ASSOCIATION; Marc Osborn, 7710 insurance Company, AMERICAN INTERNATIONAL GROUP INC {AIG}, Chubb
Insurance , NATIONWIDE MUTUAL INSURANCE COMPANY; Jeremy Gerlach, AMERICAN PROPERTY CASUALTY
INSURANCE ASSOCIATION; Rex Bartlett, Copperpoint Insurance Companies; Michael Colletto, representing self

Neutral:
Barry M. Aarons, AZ ASSN OF LAWYERS FOR INJURED WORKERS

HB2033, workers' compensation; service; definition

Support:
Mark Kendall, COPPERPOINT INSURANCE COMPANY; Wendy Briggs, AMERICAN PROPERTY CASUALTY INSURANCE

ASSOCIATION; Mare Osborn, 7710 insurance Company, AMERICAN INTERNATIONAL GROUP INC (AIG}, Chubb
Insurance And Nationwide ; Barry M. Aarons, AZ ASSN OF LAWYERS FOR INJURED WORKERS; Jeremy Gerlach,
AMERICAN PROPERTY CASUALTY INSURANCE ASSOCIATION; Emily Rice, AZ SELF-INSURERS ASSOC; Rex Bartlett,
Copperpoint Insurance Companies; Michael Colletto, representing self

HB2054, DIFI: financial enterprises; insurance; compact

Support:
Fausto Burruel, AZ DEPT. OF INSURANCE AND FINANCIAL INSTITUTIONS; Daniel Romm, AMERICAN COUNCIL OF

LIFE INSURERS {ACLI)

HB2076, life insurance; illustrations

Support:
Marc Osborn, AMERICAN COUNCIL OF LIFE INSURERS {ACLI), Corebridge

ATT ACHMENT
ARIZONA STATE LEGISLATURE

Fifty-seventh Legislature - First Regular Session

COMMITTEE ATTENDANCE RECORD

COMMITTEE ON COMMERCE
CHAIRMAN: Jeff Weninger VICE-CHAIRMAN: Michael Way
DATE b/24 125 125 125 125 /25
CONVENED 7:05pm m m m m
RECESSED
RECONVENED
ADJOURNED 2:4 fon
MEMBERS
Aguilar ~~
Blackman ~~
Cavero “A
Connolly WA
Diaz ~~
Hendrix “A
Living ston ~
Way, Vice-Chairman VA
Weninger, Chairman VA

V Present --- Absent exc Excused

ATTACHMENT 2
January 17, 2025

COMMITTEE ON COMMERCE
Standing Committee Rules

RULE 1. A majority of the members of the committee shall constitute a quorum. No
official action may be taken unless a quorum is present in person at the time of
taking such action.

RULE 2. The chairman sets the agenda and determines the order of measures. The
chairman also controls all public testimony.

RULE 3. The following motions are customary and in order relating to actions on
measures:

1. Do pass

2. Do pass as amended

3. Return for consideration of the House

4, Hold for further study

5. Do not pass

6, Be assigned to subcommittee for....
RULE 4. The affirmative vote of a majority of those voting is required to take any action.
RULE 5. On a roll call vote the names of committee members shall be called alphabetically

by surname; except that the vice chairman and the chairman shall be called upon
last. Each member present shall be allowed to pass on one call of the roll, and
shall vote “yes” or “no” (aye, nay) or respond “present.” Members may change
their votes before the announcement of the results and any member may explain
his or her vote on any measure.

RULE 6. Whenever a measure is reported from the committee on a divided vote, any
member may request a minority report.

RULE 7. All amendments (except strike-everything amendments; see House Rule 8(T))
shall be distributed to each committee member’s office by 5:00 P.M. the day
before the committee at which it will be offered. Verbal amendments may be
offered during the committee meeting at the discretion of the chairman.

In accordance with Rule 9 of the House Rules, the following House Rules are also incorporated
into the Committee Rules:

RULE 9(C) Each Standing Committee shall adopt and file with the Chief Clerk’s Office rules
of procedure consistent with the Rules of the House and shall include the
following:

ATIACHMENT 4
RULE 9 (£).

January 17, 2025

l. With the exception of executive session ordered by a majority of the
committee constituting a quorum, all committee meetings shall be open to
the other members of the Legislature, the press and public so long as
proper decorum is maintained.

2. All committees shall meet at regularly scheduled times and places unless
cancejled with the permission of the Speaker. In the absence of the
chairman, the vice chairman shall preside. In the absence of both the
chairman and vice chairman, some other committee member designated by
the Speaker shall preside.

3, The committee chairman (presiding officer) other than the chairman of the
Committee on Rules shall prepare an agenda and distribute copies to
committee members, the Information Desk and the Chief Clerk's Office by
5:00 p.m. at least five days before the committee meeting. Absence of a
bill, memorial or resolution from the committee agenda will prohibit its
consideration unless unanimous consent of all committee members is
obtained. Unless a reconsideration motion has been offered and failed, a
chairman may place a measure that failed in committee on any subsequent
agenda.

4, A bill not on the committee agenda shall be scheduled for discussion at the
next subsequent committee meeting by a presentation of a petition
containing the signatures of two-thirds or more of the committee
members.

5. A roll call vote shall be taken in each standing committee when final
action on any bill is voted.

6, Written committee reports shall be filed with the Chief Clerk’s Office
within a reasonable time but no later than two weeks from time of
completion of meetings. A recording of the meeting shall be made
available for public inspection three working days after the meeting.
Attendance records of all committee meetings shall be filed with the Chief
Clerk’s Office within 24 hours from time of completion of meetings.

7. Special meetings may be called by the chairman but require permission of
the Speaker and notice to members and the general public at the
Information Desk by 5:00 p.m. on the previous day, except that the notice
of a special meeting of the Committee on Rules may be given in open
session prior to the meeting and does not require the Speaker's permission.

No committee other than the Committee on Rules shall meet while the House is
meeting in session without special permission of the Speaker.
ARIZONA HOUSE OF REPRESENTATIVES

Fifty-seventh Legislature
First Regular Session

HB 2032: workers' compensation; assigned risk plan
Sponsor: Representative Livingston, LD 28
Committee on Commerce

Overview
Adds factors that exempt an employer from placement in the assigned risk plan.

History
The Industrial Commission of Arizona (ICA) administers and enforces state laws relating to

the protection of life, health, safety and welfare of Arizona's employees, including workers'
compensation. Employers are required to provide workers’ compensation to their employees
either by securing insurance through an authorized carrier or providing the ICA with proof
of financial ability to pay workers’ compensation costs (A.R.S. § 23-961).

Insurers may decline to issue a workers' compensation or occupational disease policy to an
employer. An employer who is refused coverage by two or more insurers must be placed in
the assigned risk plan. The director of the Department of Insurance and Financial
Institutions must contract with a qualified party to be the administrator for the assigned risk
plan. The assigned risk plan administrator must develop a plan of operation and issue a
directive for the equitable apportioning of assigned risks among all the insurers. The plan
must include a method for the administrator to select one or more insurers transacting
workers' compensation to act as servicing carriers and a method for appropriating the
workers' compensation assigned risk among all insurers (A.R.S. § 23-1091).

Provisions
1. Specifies that employers are exempt from being placed in the assigned risk plan if any of
the following factors exist:
a) ona workers' compensation policy, the employer either:
i. knowingly fails to meet reasonable health and safety or audit or loss prevention
requirements;
ii. refuses an insurance carrier reasonable access to the employer's records;
b) has an outstanding premium due on a workers' compensation policy and that is not
subject to a bona fide dispute; or
c) knowingly fails to comply with the assigned risk plan's application procedures or
makes a material misrepresentation on the application. (Sec. 1)

ATTACHMENT 5

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

HB 2032
Initials PB Page 1 Commerce
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-seventh Legislature - First Regular Session

ROLL CALL VOTE

COMMITTEE ON Commerce BILLNO. HB 2032

January 21, 2025 MOTION: D E

PASS AYE NAY PRESENT | ABSENT

DATE

Aguilar

Blackman

Cavero

Connolly

KAANA

Diaz

Hendrix

Livingston
Villegas 1

Way, Vice-Chairman

Weninger, Chairman

re CmEe) O

Ms, )olver ;
APPROVED: 7 COMMITTEE SEGRETARY
JEFF WENINGER, Chairman
MICHAEL WAY, Vice-Chairman

ATTACHMENT. 6
ARIZONA HOUSE OF REPRESENTATIVES

Fifty-seventh Legislature
First Regular Session

HB 2033: workers' compensation; service; definition
Sponsor: Representative Livingston, LD 28
Committee on Commerce

Overview
Modifies the definition of serve or service.

History
Statute prescribes the term serve in the context of the transfer of documentation to another

party such as the act of serving someone subpoenas or legal summons (A.R.S. §§ 23-941, 23-
946).

Additionally, statute defines serve or service as either: a) mailing to the last known address
of the receiving party; or b) transmitting by other means, including electronic transmission,
with the written consent of the receiving party (A.R.S. § 23-901),

Provisions

1. Modifies the definition of serve or service to include transmitting by electronic
transmission in a manner reasonably calculated to achieve effective service unless the
receiving party opts out by providing written notice to the other party. (Sec. 1)

ATTACHMENT 1

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

HB 2033
Initials PB Page 1 Commerce
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-seventh Legislature - First Regular Session

ROLL CALL VOTE

COMMITTEE ON Commerce

BILL NO.

DATE January 21, 2025

__HB 2033

PASS AYE NAY

PRESENT

ABSENT

Aguilar

Blackman

Cavero

Connolly

Diaz

Hendrix

Livingston

Villegas

Way, Vice-Chairman

Weninger, Chairman

O

& AKAKANAAAN

or,

Mty  Neluexy

APPROVED:

JEFF WENINGER, Chairman
MICHAEL WAY, Vice-Chairman

COMMITTEE SECRETARY

ATTACHMENT. %

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-seventh Legislature
First Regular Session

HB 2054: DIFI; financial enterprises; insurance; compact
Sponsor: Representative Livingston, LD 28
Committee on Commerce

Overview
Makes various revisions to statutes relating to the Department of Insurance and Financial
institutions (DIFD) licensure requirements and director responsibilities.

History
Established in 2020 with the consolidation of the Department of Financial Institutions, the

Department of Insurance and the Automobile Theft Authority, DIFI is a multifaceted agency
that regulates the insurance industry, financial institutions and enterprises as well as the
distribution of Arizona Automobile Theft Authority Fund monies to combat auto theft.

DIFI regulates such industries through licensure of financial and insurance professionals
such as collection agencies, mortgage bankers and brokers, insurers and insurance
producers, registering and certifying state-chartered banks and credit unions and conducting
scheduled examinations and investigating complaints of licensed professionals and
businesses.

DIF is also responsible for analyzing the methods of combating the problem of vehicle theft
and promoting successful methods of reducing the number of vehicle thefts in Arizona.

Provisions
1. Modifies the consumer lender license year from a fiscal year to a calendar year. (Sec. 1)

2. Requires a consumer lender licensee to apply for renewal by December 31 rather than
June 30 of each year. (Sec. 1)

3. Changes the consumer lender license expiration date from July 31 to January 31. (Sec. 1)

4. Changes the debt management company license expiration and renewal date from June
30 to December 31. (Sec. 2)

5. Requires an escrow agent licensee to apply for renewal by December 31 rather than
September 30. (Sec. 3)

6. Changes the escrow agent license expiration date from October 31 to January 31. (Sec. 3)

Requires a registered advance fee loan broker to apply for renewal by December 31 rather
than June 30 of each year. (Sec. 5)

8. Stipulates the advance fee loan broker registration is suspended if not received by
December 31 rather than June 30. (Sec. 5)

ATTACHMENT 4

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

HB 2054
Initials PB Page 1 Commerce
10.

11.
12.

13.
14.

15.

16.

17.

18.

Changes the advance fee loan broker registration expiration date from July 31 to January
31. (Sec. 5)

Requires a sales finance company licensee to apply for renewal by December 31 rather
than the continuation date of each year. (Sec. 12)

Removes references of the license continuation date. (Sec. 12)

Allows, rather than requires, the director of DIFI to adopt rules:

a) toimplement statutes governing money transmitters; (Sec. 4)

b) to enforce requirements relating to extended warranty insurers’ deposits; (Sec. 6)

c) relating to the requirement for an insurer to possess and maintain any required
additional free surplus; (Sec. 7) and

d) which require certain insurers to report loss and expense experience and other data.
(Sec. 8)

Deletes an archaic reporting date relating to risk retention groups. (Sec. 9)

Modifies the information that must be reported by DIFI relating to risk retention groups.
(Sec. 9)

Removes the requirement for the director of DIFI to include the minimum performance
standards in any request for proposals relating to approved providers of continuing
education programs. (Sec. 10)

Removes the specification stating that Arizona opts out of all uniform standards involving
long-term care insurance products relating to the interstate insurance product regulation
compact, (Sec. 11)

Specifies certain licensee who hold an active license do not have to renew such license
until December 31, 2025. (Sec. 13)

Applies license renewal requirements retroactive to January 1, 2025. (Sec. 13)

Page 2
ARIZANA 4B. 2054

DEPARTMENT OF INSURANCE ; ; i
& FINANCIAL INSTITUTIONS — DIFI; financial enterprises; insurance; compact

FACT SHEET

Goal: Streamline financial enterprises licensing renewal dates and reduce the backlog of
long-term care rate filings.

Background
Financial Enterprises

Most financial enterprises’ license periods coincide with the calendar year, but five
license types - consumer lenders, debt management companies, escrow agents,
advance fee loan brokers and sales finance companies — renew on June 30 or September
30. Because the National Mortgage Licensing System (NMLS) has an account renewal
date of December 31, which financial enterprises licensees use to apply and renew their
licenses, these licensees must renew their licenses and their NMLS accounts on separate
dates. Aligning license renewal with NMLS account renewal reduces administrative
burden on licensees and the likelihood that they inadvertently allow their licenses to lapse,
resulting in statutory late fees (A.R.S. §§ 6-604, 6-707, 6-815, 6-1305 and 44-282).

Interstate Insurance Product Regulation Compact (IIPRC)

Adopted by the Legislature in 2014, the IIPRC develops uniform standards for
annuity, life, disability income and long-term care (LTC) insurance products through a
multi-state Commission and serves as a central clearinghouse to enhance the efficiency
and effectiveness of the way these insurance products are filed, reviewed and approved.
While Arizona currently allows annuity, life and disability income insurance products to be
approved through the IIPRC, the state opted-out of the LTC uniform standards when it
adopted the IIPRC at the request of the then-Arizona Department of Insurance. Currently,
DIFI is experiencing a backlog of LTC rate filings, which the Department is working to
address per Recommendations 11-13 of the Department’s 2024 performance audit and
sunset review. Eliminating Arizona’s opt-out of the LTC uniform standards will further help
to reduce the LTC filing backlog and improve speed-to-market for LTC insurance products
while maintaining consumer protections and the state’s authority over LTC products filed
with the Department and rate increases greater than 15 percent (A.R.S. § 20-3251; IIPRC).

Miscellaneous

H.B. 2054 addresses Recommendation 22 of DIFI’s 2024 performance audit and
sunset review by authorizing, rather than requiring, the Department to adopt rules
pursuant to A.R.S. §§ 6-1203, 20-108.01, 20-211 and 20-235 (Auditor General). The bill
also eliminates the following statutory deficiencies: 1) reporting requirements relating to
private passenger auto (PPA) policies written by risk retention groups (RRGs) as RRGs
are not authorized to write PPA policies; and 2) references to the since-repealed
Continuing Education Review Committee (A.R.S. § 20-2402; Laws 2020, Chapter 37).

Please contact Fausto Burruel, Legislative Liaison, at fausto.burruel@difi.az.gov or (602)
531-3069 with any questions you may have.

1/20/2025
ATTACHMENT 10
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-seventh Legislature - First Regular Session

COMMITTEE ON

Commerce

ROLL CALL VOTE

BILL NO.

DATE January 21, 2025

HB 2054

MOTION: | ) E

PASS

>
ng

E NAY PRESENT

ABSENT

Aguilar

Blackman

Cavero

Connolly

Diaz

Hendrix

Livingston

Villegas

Way, Vice-Chairman

Weninger, Chairman

APPROVED:

Sahin —

JEFF WENINGER, Chairman
MICHAEL WAY, Vice-Chairman

esas

~ ANAANAARKA

Oo O

O

.

G@MMITTEE SeoRETARY

ATTACHMENT. | |

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-seventh Legislature
First Regular Session

HB 2076: life insurance; illustrations
Sponsor: Representative Livingston, LD 28
Committee on Commerce

Overview
Establishes statutory provisions relating to life insurance illustrations.

History
The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting

and regulatory support organization governed by state chief insurance regulators. The NAIC
provides expertise, data and analysis for insurance commissioners to effectively regulate the
industry and protect consumers.

The NAIC established the Life Insurance Illustrations Model Regulation (#582) with the
purpose of providing rules for life insurance policy illustrations that will protect consumers
and foster consumer education. The regulation provides illustration formats, prescribes
standards to be followed when illustrations are used, and specifies the disclosures that are
required in connection with illustrations. An illustration is a presentation or depiction
provided to prospective or new policy owners that shows how the policy should perform under
specific circumstances set out in the illustration.

Provisions
Life Insurance Illustrations
1. Establishes statutory requirements for an illustration which is a presentation or
depiction that includes nonguaranteed elements of a life insurance policy over a period of
years and that is basic illustration, supplemental illustration or in-force illustration. (Sec.
1)

Applicability
2. Applies life insurance illustrations provisions to all group and individual life insurance
policies and certificates. (Sec. 1)

3. Exempts, from the life insurance illustrations provisions:
a) variable life insurance;
b) individual and group annuity contracts;
c) credit life insurance; and
d) certain life insurance policies. (Sec. 1)

Illustration Identification
4. Directs insurers to notify the director whether a policy will be marketed with or without
an illustration. (Sec. 1)

ATTACHMENT /Z

0 Prop 105 (45 votes) OO Prop 108 (40 votes) UO Emergency (40 votes) UO Fiscal Note

HB 2076
Initials PB Page 1 Commerce
10.

11.

12.

13.

14,
15.

16.

17.

18.

19.

20.

Stipulates, for policy forms that are actively marketed on January 1, 2026, an insurer
must identify those forms and whether an illustration will be used. (Sec. 1)

Specifies, for policy forms that filed after January 1, 2026, an insurer must identify
whether an illustration will be used at the time of filing. (Sec. 1)

Allows an insurer to change an identification by notifying the director. (Sec. 1)

Prohibits any use of an illustration before the first policy anniversary for any policy form
that is identified as one to be marketed without an illustration. (Sec. 1)

Requires, for a policy form identified as one to be marketed with an illustration, a basic
illustration to be prepared and delivered an accordance with statutory ilustration
requirements, with exception. (Sec. 1)

Allows an insurer, for certain policies, to furnish either an individual or composite
illustration representing coverage on the lives of members of the group, or the multiple
lives covered. (Sec. 1)

Outlines requirements for including a quote that shows potential policy values for sample
ages and policy years on a guaranteed and nonguaranteed basis appropriate to the group
and the coverage. (Sec. 1)

Instructs an insurer to provide a basic illustration at the delivery of the certificate to
certain enrollees for nonterm group life insurance and make the basic illustration
available to any nonterm group life enrollee on request. (Sec. 1)

Illustration Requirements; Prohibitions
Requires an illustration that is used in the sale of a life insurance policy to be clearly
labeled and contain specified information. (Sec. 1)

Outlines prohibitions for insurers or producers when using an illustration. (Sec. 1)

Prohibits the interest rate from being grater than the earned interest rate underlying the
disciplined current scale if the rate that is used to determine the illustrated
nonguaranteed elements is shown. (Sec. 1)

Specifies the format of a basic illustration must conform with outlined requirements,
including be labeled with the preparation date, page numbering, show any guaranteed
death benefits, nonguaranteed and guaranteed elements. (Sec. 1)

Requires a basic illustration to contain a narrative summary that includes specified
information, including a brief description of the policy being illustrated, the premium
outlay and each policy feature, rider or option, that is shown in the basic illustration. (Sec.

1)
Requires a basic illustration, following the narrative summary, to include a numeric
summary of the death benefits and values and the premium outlay and contract premium.

(sec. 1)

Adds the guaranteed death benefits and values must be based on the contract premium.
(Sec. 1)

Specifies the numeric summary must be shown for at least policy years 5, 10 and 20 and
at age 70 on three bases. (Sec. 1)

Page 2
21.

22.

23.

24,

25.

26,

27,

28.

29,

30.

31.

32,

33.

34,

35.

36.

37,

38.

Outlines requirements applicable to the numeric summary, including to the three bases.
(Sec. 1)

Outlines specified statements which must be included on the same page as the numeric
summary and be signed by the applicant or policy holder. (Sec. 1)

Outlines specified tabular details applicable to a basic illustration. (Sec. 1)

Supplemental Illustrations
Stipulates the conditions and requirements for providing a supplemental illustration.
(Sec. 1)

Requires the supplemental illustration to include a notice referring to the basic
illustration for guaranteed elements and other important information. (Sec. 1)

Illustrations Delivery
Requires a copy of a signed basic illustration that used by an insurance producer in the
sale of a life insurance policy be submitted to the insurer at the time of policy application
with a copy provided to the applicant. (Sec. 1)

Stipulates a revised basic illustration, for a policy that is issued other than as applied for,
must be sent with the policy and a copy provided to the insurer and policyholder. (Sec. 1)

Adds the revised illustration must conform to statutory requirements, be labeled as
revised and have appropriate signatures. (Sec. 1)

Stipulates a producer must certify in writing if an illustration is not used in the sale of a
life insurance policy or if the policy is applied for other than as illustrated. (Sec. 1)

Requires an applicant to acknowledge that a conforming illustration was not provided
and will be provided no later than the time of the policy delivery. (Sec. 1)

Instructs the applicant to submit such information to the insurer at the time of policy
application. (Sec. 1)

Requires, for policies that are issued, a basic illustration that conforms as issued be sent
with the policy and appropriately signed no later than the time the policy is delivered
with a copy provided to the insurer and the policyholder. (Sec. 1)

Requires a basic illustration or revised illustration that is mailed by the insurer to include
instructions for the applicant or policyowner to sign the duplicate copy of the numeric
summary page and return the copy to the insurer. (Sec. 1)

Outlines conditions for an insurer to demonstrate satisfactory compliance with the
delivery obligation. (Sec. 1)

Allows the insurer to send and received an electronic signed copy provided the applicant
or policyholder consents to transact insurance electronically. (Sec. 1)

Provides retention requirements for the insurer. (Sec. 1)

Annual Report
Stipulates the insurer must provide each policyholder with an annual report on the state
of the policy and outlines contents of the report. (Sec. 1)

Instructs insurers who write life insurance policies that do not build nonforfeiture values
to provide an annual report with respect to such policies only for those years when the
insurer has made a change to nonguaranteed policy elements. (Sec. 1)

Page 8
39.

40.

41.

42.

43.

44,

45.
46.

47.

48.

49,

50.

51,

52.

53.

Requires a specified notice be prominently displayed in an annual report that does not
include an in-force illustration. (See. 1)

Instructs an insurer, on request of a policyholder, to furnish an in-force illustration of
current and future benefits and values.

Specifies such in-force illustration must comply with statutory requirements and is not
required to have a signature. (Sec. 1)

Stipulates the annual report must contain a notice of change if the insurer makes an
adverse change in nonguaranteed elements that could affect the policy. (Sec. 1)

Hlustration Actuaries
Instructs the board of directors of each insurer to appoint one or more illustration
actuaries. (Sec. 1)

Directs the actuary to certify that the disciplined current scale that is used in illustrations
conforms with the actuarial standard of practice for compliance with NIAC model
regulation and meet the statutory requirements for life insurance illustrations. (Sec. 1)

Delineates the actuary requirements and responsibilities. (Sec. 1)

Instructs the actuary to file the annual certification with the board of directors of the
insurer and the director as outlined. (Sec. 1)

Requires the actuary to notify the board of directors and the director if an error is found
in previous certification. (Sec. 1)

Stipulates the actuary must notify the board of directors and the director of the inability
to certify if the actuary is unable to certify the scale for any policy from illustration that
the insurer intends to use. (Sec. 1)

Instructs a responsible officer of the insurer to annually certify:

a) that the illustration formats meet statutory requirements and that the scales used in
insurer-authorized illustrations are those scales that have been certified by the
illustration actuary; and

b) that the company has provided its agents with information about the expense
allocation method used in its illustrations. (Sec. 1)

Requires the annual certifications be provided to the director each year by the date
determined by the insurer. (Sec. 1)

Stipulates an insurer who changes the illustration actuary responsible for all or a portion
of the company's policy forms to notify the director of the change and reason for the

change. (Sec. 1)

Penalties
Specifies an insurer or producer that violates statutory requirements relating to life
insurance illustrations commits an unfair trade practice. (Sec. 1)

Miscellaneous
Contains a delayed effective date of January 1, 2025. (Sec. 2)

Page 4
Fifty-seventh Legislature Commerce
First Regular Session H.B. 2076

PROPOSED
HOUSE OF REPRESENTATIVES AMENDMENTS TO H.B. 2076
(Reference to printed bill)

Amendment instruction key:
(GREEN UNDERLINING IN BRACKETS] indicates text added to statute or
previously enacted session law.
{Green underlining in brackets] indicates text added to new session law
or text restoring existing law.
[GREEN-STRIKECUT-F- BRACKETS] indicates new text removed from statute
or previously enacted session law. “~\
(Green-strirevut—irtracrets] indicates text removed from existing statute,
previously enacted session law or new session law.
<<Green carets>> indicate a section added to the bill.
<<Green—str+kevut—ircarets>> indicates a section removed from the bill.

The bill as proposed to be amended is reprinted as follows:

Section 1. Title 20, chapter 2, Arizona Revised Statutes, is
amended by adding article 5.1, to read:

ARTICLE 5.1. LIFE INSURANCE ILLUSTRATIONS

20-431. Definitions

IN THIS ARTICLE, UNLESS THE CONTEXT OTHERWISE REQUIRES:

1. “ACTUARIAL STANDARDS BOARD" MEANS THE BOARD THAT IS ESTABLISHED
BY THE AMERICAN ACADEMY OF ACTUARIES TO DEVELOP AND ADOPT STANDARDS OF
ACTUARIAL PRACTICE.
10 2. “BASIC ILLUSTRATION" MEANS A LEDGER OR PROPOSAL THAT IS USED IN
11 THE SALE OF A LIFE INSURANCE POLICY AND THAT SHOWS BOTH GUARANTEED AND
12 NONGUARANTEED ELEMENTS.

OOnNDOHP WME

13 3. "CONTRACT PREMIUM":

14 (a) MEANS THE GROSS PREMIUM THAT IS REQUIRED TO BE PAID UNDER A
15 FIXED PREMIUM POLICY.

16 (b) INCLUDES THE PREMIUM FOR A RIDER FOR WHICH BENEFITS ARE SHOWN
17 IN AN ILLUSTRATION.

18 4. “CURRENTLY PAYABLE SCALE" MEANS A SCALE OF NONGUARANTEED

19 ELEMENTS IN EFFECT FOR A POLICY FORM AS OF THE PREPARATION DATE OF THE
20 ILLUSTRATION OR DECLARED TO BECOME EFFECTIVE WITHIN THE NEXT NINETY-FIVE
21 DAYS.

22 5. “DISCIPLINED CURRENT SCALE":

23 (a) MEANS A SCALE OF NONGUARANTEED ELEMENTS THAT CONSTITUTES A
24 LIMIT ON ILLUSTRATIONS CURRENTLY BEING ILLUSTRATED BY AN INSURER AND THAT
25 IS REASONABLY BASED ON RECENT, ACTUAL HISTORICAL EXPERIENCE AS CERTIFIED
26 ANNUALLY BY AN ILLUSTRATION ACTUARY DESIGNATED BY THE INSURER.

ATTACHMENT /3
House Amendments to H.B. 2076

(b) INCLUDES RELIANCE ON FURTHER GUIDANCE IN DETERMINING THE
DISCIPLINED CURRENT SCALE AS CONTAINED IN STANDARDS BY THE ACTUARIAL
STANDARDS BOARD IF THE STANDARDS COMPLY WITH ALL OF THE FOLLOWING:

(1) ARE CONSISTENT WITH THIS ARTICLE.

(ii) LIMIT A DISCIPLINED CURRENT SCALE TO REFLECT ONLY ACTIONS THAT
HAVE ALREADY BEEN TAKEN OR EVENTS THAT HAVE ALREADY OCCURRED.

(iii) DO NOT ALLOW A DISCIPLINED CURRENT SCALE TO INCLUDE ANY
PROJECTED TRENDS OF IMPROVEMENTS IN EXPERIENCE OR ANY ASSUMED IMPROVEMENTS
IN EXPERIENCE BEYOND THE ILLUSTRATION DATE.

(iv) DO NOT ALLOW ASSUMED EXPENSES TO BE LESS THAN THE MINIMUM
ASSUMED EXPENSES.

6. "GENERIC NAME" MEANS A SHORT TITLE DESCRIPTIVE OF THE POLICY
BEING ILLUSTRATED SUCH AS "WHOLE LIFE", "TERM LIFE" OR “FLEXIBLE PREMIUM
ADJUSTABLE LIFE".

7. “GUARANTEED ELEMENTS" MEANS THE PREMIUMS, [BENEFITS,] VALUES,
CREDITS OR CHARGES UNDER A POLICY OF LIFE INSURANCE THAT ARE GUARANTEED
AND THAT ARE DETERMINED WHEN THE POLICY IS ISSUED.

8. "ILLUSTRATED SCALE" MEANS A SCALE OF NONGUARANTEED ELEMENTS
CURRENTLY BEING ILLUSTRATED THAT IS NOT MORE FAVORABLE TO THE POLICYOWNER
THAN THE LESSER OF EITHER OF THE FOLLOWING:

(a) THE DISCIPLINED CURRENT SCALE.

(b) THE CURRENTLY PAYABLE SCALE.

9. “ILLUSTRATION" MEANS A PRESENTATION OR DEPICTION THAT INCLUDES
NONGUARANTEED ELEMENTS OF A LIFE INSURANCE POLICY OVER A PERIOD OF YEARS
AND THAT IS A BASIC ILLUSTRATION, SUPPLEMENTAL ILLUSTRATION OR IN-FORCE
ILLUSTRATION.

10. “ILLUSTRATION ACTUARY" MEANS AN ACTUARY WHO MEETS THE
REQUIREMENTS PRESCRIBED IN SECTION 20-431.08 AND WHO CERTIFIES THE
ILLUSTRATIONS BASED ON THE STANDARD OF PRACTICE ADOPTED BY THE ACTUARIAL
STANDARDS BOARD.

11, “IN-FORCE ILLUSTRATION" MEANS AN ILLUSTRATION THAT IS FURNISHED
AT ANY TIME AFTER THE LIFE INSURANCE POLICY THAT IT DEPICTS HAS BEEN IN
FORCE FOR ONE YEAR OR MORE.

12. “LAPSE-SUPPORTED ILLUSTRATION" MEANS AN ILLUSTRATION OF A
POLICY FORM THAT FAILS TO MEET THE DEFINITION OF SELF-SUPPORTING
ILLUSTRATION UNDER A MODIFIED PERSISTENCY RATE ASSUMPTION THAT USES
PERSISTENCY RATES UNDERLYING THE DISCIPLINED CURRENT SCALE FOR THE FIRST
FIVE YEARS AND ONE HUNDRED PERCENT POLICY PERSISTENCY THEREAFTER.

13. “MINIMUM-ASSUMED EXPENSES" MEANS THE MINIMUM EXPENSES THAT MAY
BE USED IN CALCULATING THE DISCIPLINED CURRENT SCALE FOR A POLICY [TERM]
AND FOR WHICH THE INSURER MAY ANNUALLY DESIGNATE ONE OF THE FOLLOWING
METHODS TO DETERMINE ASSUMED EXPENSES FOR ALL POLICY FORMS:

(a) FULLY ALLOCATED EXPENSES, WHICH MUST BE USED IF A GENERALLY
RECOGNIZED EXPENSE TABLE IS NOT APPROVED.

(b) MARGINAL EXPENSES, WHICH MAY BE USED ONLY IF THE MARGINAL
EXPENSES ARE GREATER THAN A GENERALLY RECOGNIZED EXPENSE TABLE.

(c) A GENERALLY RECOGNIZED EXPENSE TABLE BASED ON FULLY ALLOCATED
EXPENSES THAT REPRESENTS A SIGNIFICANT PORTION OF INSURANCE COMPANIES AND

House Amendments to H.B. 2076

OONA OAH WNMYE

EPPS HPPP HP HSPWWWWWWWWWWNHYDNDNMDNDYDNDNDYDNDYHFPRP RP RP RP RP PRP eB
ANAOFWNHERFOWANDA TAP WNHHOWOANDAOTAPWNHKERPOWANDTAHWNHEHEO

THAT IS APPROVED BY THE [NATEONAE—ASSOCTATTON—-OF-TNSURANCE—COMMES STONERS ]
(DIRECTOR).

14. "NONGUARANTEED ELEMENTS" MEANS THE PREMIUMS, BENEFITS, VALUES,
CREDITS OR CHARGES UNDER A POLICY OF LIFE INSURANCE THAT ARE NOT
GUARANTEED OR NOT DETERMINED AT ISSUE.

15. “NONTERM GROUP LIFE" MEANS A GROUP POLICY OR INDIVIDUAL
POLICIES OF LIFE INSURANCE THAT ARE ISSUED TO MEMBERS OF AN EMPLOYER GROUP
OR OTHER ALLOWED GROUP TO WHICH ALL OF THE FOLLOWING APPLY:

(a) THE EMPLOYER OR OTHER GROUP REPRESENTATIVE SELECTS EVERY PLAN
OF COVERAGE.

(b) SOME PORTION OF THE PREMIUM IS PAID BY THE GROUP OR THROUGH
PAYROLL DEDUCTION. ;

(c) GROUP UNDERWRITING OR SIMPLIFIED UNDERWRITING IS USED.

16. "“POLICYOWNER" MEANS THE OWNER WHO IS NAMED IN THE POLICY OR THE

CERTIFICATE HOLDER IN THE CASE OF A GROUP POLICY.

17. “POLICYOWNER VALUE" INCLUDES THE CASH SURRENDER VALUES AND
OTHER ILLUSTRATED BENEFIT AMOUNTS THAT ARE AVAILABLE AT THE POLICYOWNER'S
ELECTION.

18. “PREMIUM OUTLAY" MEANS THE AMOUNT OF PREMIUM THAT IS ASSUMED TO
BE PAID BY THE POLICYOWNER OR OTHER PREMIUM PAYOR OUT OF POCKET.

19. "“SELF-SUPPORTING ILLUSTRATION" MEANS AN ILLUSTRATION OF A
POLICY FORM FOR WHICH IT CAN BE DEMONSTRATED THAT WHEN USING EXPERIENCE
ASSUMPTIONS UNDERLYING THE DISCIPLINED CURRENT SCALE FOR ALL ILLUSTRATED
POINTS IN TIME ON OR AFTER THE FIFTEENTH POLICY ANNIVERSARY OR’ THE
TWENTIETH POLICY ANNIVERSARY FOR SECOND-OR-LATER-TO-DIE POLICIES, OR ON
POLICY EXPIRATION IF SOONER, THE ACCUMULATED VALUE OF ALL POLICY CASH
FLOWS EQUALS OR EXCEEDS THE TOTAL POLICYOWNER VALUE AVAILABLE.

20. “SUPPLEMENTAL ILLUSTRATION" MEANS AN ILLUSTRATION THAT IS
FURNISHED IN ADDITION TO A BASIC ILLUSTRATION AND THAT MAY BE PRESENTED IN
A DIFFERENT FORMAT FROM THE BASIC ILLUSTRATION BUT THAT MAY DEPICT ONLY A
SCALE OF NONGUARANTEED ELEMENTS AS PROVIDED IN THE BASIC ILLUSTRATION.

20-431.01. Applicability

THIS ARTICLE APPLIES TO ALL GROUP AND INDIVIDUAL LIFE INSURANCE
POLICIES AND CERTIFICATES EXCEPT:

1. VARIABLE LIFE INSURANCE.

2. INDIVIDUAL AND GROUP ANNUITY CONTRACTS.

3. CREDIT LIFE INSURANCE.

4. LIFE INSURANCE POLICIES WITH NO ILLUSTRATED DEATH BENEFITS ON
ANY INDIVIDUAL EXCEEDING $10,000.

20-431.02. Group and individual life insurance policy forms;

identification for illustrated

A. EACH INSURER THAT MARKETS POLICIES SHALL NOTIFY THE DIRECTOR
WHETHER A POLICY FORM WILL BE MARKETED WITH OR WITHOUT AN ILLUSTRATION.
FOR ALL POLICY FORMS THAT ARE ACTIVELY MARKETED ON JANUARY 1, 2026, THE
INSURER SHALL IDENTIFY THOSE POLICY FORMS AND WHETHER AN ILLUSTRATION WILL
BE USED. FOR ALL POLICY FORMS THAT ARE FILED AFTER JANUARY 1, 2026, THE
INSURER SHALL MAKE THIS IDENTIFICATION AT THE TIME OF FILING. AN INSURER
MAY CHANGE AN IDENTIFICATION BY PROVIDING NOTICE TO THE DIRECTOR.

House Amendments to H.B. 2076

ONanfwNnrre

B. IF THE INSURER IDENTIFIES A POLICY FORM AS ONE TO BE MARKETED
WITHOUT AN ILLUSTRATION, ANY USE OF AN ILLUSTRATION FOR ANY POLICY USING
THAT FORM BEFORE THE FIRST POLICY ANNIVERSARY IS PROHIBITED.

C. IF THE INSURER IDENTIFIES A POLICY FORM AS ONE TO BE MARKETED
WITH AN ILLUSTRATION, A BASIC ILLUSTRATION SHALL BE PREPARED AND DELIVERED
IN ACCORDANCE WITH THIS ARTICLE, EXCEPT THAT A BASIC ILLUSTRATION DOES NOT
NEED TO BE PROVIDED TO INDIVIDUAL MEMBERS OF A GROUP OR TO INDIVIDUALS WHO
ARE INSURED UNDER MULTIPLE LIVES COVERAGE THAT IS ISSUED TO A SINGLE
APPLICANT UNLESS THE COVERAGE IS MARKETED TO THESE INDIVIDUALS. FOR A
GROUP LIFE INSURANCE POLICY OR A POLICY ISSUED TO A SINGLE APPLICANT ON
MULTIPLE LIVES, THE INSURER MAY FURNISH EITHER AN INDIVIDUAL OR COMPOSITE
ILLUSTRATION REPRESENTING COVERAGE ON THE LIVES OF MEMBERS OF THE GROUP OR
THE MULTIPLE LIVES COVERED.

D. THE INSURER SHALL INCLUDE A QUOTE WITH THE ENROLLMENT MATERIALS
THAT ARE PROVIDED TO POTENTIAL ENROLLEES OF NONTERM GROUP LIFE INSURANCE
POLICIES THAT ARE SUBJECT TO THIS ARTICLE. THE QUOTE SHALL SHOW POTENTIAL
POLICY VALUES FOR SAMPLE AGES AND POLICY YEARS ON A GUARANTEED AND
NONGUARANTEED BASIS APPROPRIATE TO THE GROUP AND THE COVERAGE. THIS QUOTE
IS NOT CONSIDERED AN ILLUSTRATION FOR THE PURPOSES OF THIS ARTICLE, BUT
ALL INFORMATION PROVIDED SHALL BE CONSISTENT WITH THE ILLUSTRATED SCALE.
THE INSURER SHALL PROVIDE A BASIC ILLUSTRATION AT THE DELIVERY OF THE
CERTIFICATE TO ENROLLEES FOR NONTERM GROUP LIFE INSURANCE WHO HAVE
ENROLLED IN MORE THAN THE MINIMUM PREMIUM NECESSARY TO PROVIDE PURE DEATH
BENEFIT PROTECTION AND SHALL MAKE THE BASIC ILLUSTRATION AVAILABLE TO ANY
NONTERM GROUP LIFE ENROLLEE ON REQUEST.

20-431.03. Life insurance policy illustrations; requirements;

prohibitions

A. AN ILLUSTRATION THAT IS USED IN THE SALE OF A LIFE INSURANCE
POLICY SHALL BE CLEARLY LABELED LIFE INSURANCE ILLUSTRATION AND SHALL
CONTAIN ALL OF THE FOLLOWING:

1. THE NAME OF THE INSURER THAT ISSUED THE POLICY.

2. THE NAME AND BUSINESS ADDRESS OF THE PRODUCER OR THE INSURER'S
AUTHORIZED REPRESENTATIVE, IF ANY.

3. THE NAME, AGE AND SEX OF THE PROPOSED INSURED, UNLESS A
COMPOSITE ILLUSTRATION IS ALLOWED UNDER THIS ARTICLE.

4. THE UNDERWRITING OR RATING CLASSIFICATION ON WHICH’ THE
ILLUSTRATION IS BASED.

5. THE GENERIC NAME OF THE POLICY, THE COMPANY PRODUCT NAME, IF
DIFFERENT FROM THE GENERIC NAME OF THE POLICY, AND THE FORM NUMBER.

6. THE INITIAL DEATH BENEFIT.

7. DIVIDEND OPTION ELECTION OR APPLICATION OF NONGUARANTEED
ELEMENTS, IF APPLICABLE.

B. WHEN USING AN ILLUSTRATION IN THE SALE OF A LIFE INSURANCE
POLICY, AN INSURER OR ITS PRODUCERS OR OTHER AUTHORIZED REPRESENTATIVES
MAY NOT: .

1. REPRESENT THE POLICY AS ANYTHING OTHER THAN A LIFE INSURANCE

POLICY.

House Amendments to H.B. 2076

ANON WDM FE

2. USE OR DESCRIBE NONGUARANTEED ELEMENTS IN A MANNER THAT IS
MISLEADING OR THAT HAS THE CAPACITY OR TENDENCY TO MISLEAD.

3. STATE OR IMPLY THAT THE PAYMENT OR AMOUNT OF NONGUARANTEED
ELEMENTS IS GUARANTEED.

4. USE AN ILLUSTRATION THAT DOES NOT COMPLY WITH THIS ARTICLE.

5. USE AN ILLUSTRATION THAT DEPICTS POLICY PERFORMANCE THAT IS MORE
FAVORABLE TO THE POLICYOWNER THAN THAT PRODUCED BY THE ILLUSTRATED SCALE.

6. PROVIDE AN APPLICANT WITH AN INCOMPLETE ILLUSTRATION.

7. REPRESENT IN ANY WAY THAT PREMIUM PAYMENTS WILL NOT BE REQUIRED
FOR EACH YEAR OF THE POLICY IN ORDER TO MAINTAIN THE ILLUSTRATED DEATH
BENEFITS, UNLESS THAT IS THE FACT.

8. USE THE TERM VANISH OR VANISHING PREMIUM OR A SIMILAR TERM THAT
IMPLIES THE POLICY BECOMES PAID UP TO DESCRIBE A PLAN FOR’ USING
NONGUARANTEED ELEMENTS TO PAY A PORTION OF FUTURE PREMIUMS.

9. EXCEPT FOR POLICIES THAT CAN NEVER DEVELOP NONFORFEITURE VALUES,
USE A LAPSE-SUPPORTED ILLUSTRATION.

10. USE AN ILLUSTRATION THAT IS NOT A SELF-SUPPORTING ILLUSTRATION.

C. IF AN INTEREST RATE THAT IS USED TO DETERMINE THE ILLUSTRATED
NONGUARANTEED ELEMENTS IS SHOWN, THE INTEREST RATE MAY NOT BE GREATER THAN
THE EARNED INTEREST RATE UNDERLYING THE DISCIPLINED CURRENT SCALE.

20-431.04. Basic illustrations: format; narrative summary;

numeric summary; tabular detail; re ents

A. THE FORMAT OF A _ BASIC ILLUSTRATION SHALL CONFORM WITH THE
FOLLOWING REQUIREMENTS:

1. THE BASIC ILLUSTRATION SHALL BE LABELED WITH THE DATE ON WHICH
THE ILLUSTRATION WAS PREPARED.

2. EACH PAGE, INCLUDING ANY EXPLANATORY NOTES OR PAGES, SHALL BE
NUMBERED. THE PAGE NUMBERS MUST SHOW THE RELATIONSHIP TO THE TOTAL NUMBER
OF PAGES IN THE ILLUSTRATION.

3. THE ASSUMED DATES OF PAYMENT RECEIPT AND BENEFIT PAYOUT WITHIN A
POLICY YEAR SHALL BE CLEARLY IDENTIFIED.

4. IF THE AGE OF THE PROPOSED INSURED IS SHOWN AS A COMPONENT OF
THE TABULAR DETAIL, THE PROPOSED INSURED'S AGE MUST BE SHOWN AS THE AGE
PLUS THE NUMBER OF YEARS THE POLICY IS ASSUMED TO HAVE BEEN IN FORCE.

5. THE ASSUMED PAYMENTS ON WHICH THE ILLUSTRATED BENEFITS AND
VALUES ARE BASED SHALL BE IDENTIFIED AS PREMIUM OUTLAY OR CONTRACT
PREMIUM, AS APPLICABLE. FOR POLICIES THAT DO NOT REQUIRE A SPECIFIC
CONTRACT PREMIUM, THE ILLUSTRATED PAYMENTS SHALL BE IDENTIFIED AS PREMIUM
OUTLAY.

6. GUARANTEED DEATH BENEFITS AND VALUES AVAILABLE ON SURRENDER, IF
ANY, FOR THE ILLUSTRATED PREMIUM OUTLAY OR CONTRACT PREMIUM SHALL BE SHOWN
AND CLEARLY LABELED GUARANTEED.

7. IF THE ILLUSTRATION SHOWS ANY NONGUARANTEED ELEMENTS, THOSE
ELEMENTS CANNOT BE BASED ON A SCALE MORE FAVORABLE TO THE POLICYOWNER THAN
THE INSURER'S ILLUSTRATED SCALE AT ANY DURATION. THESE ELEMENTS SHALL BE
CLEARLY LABELED NONGUARANTEED.

8. THE GUARANTEED ELEMENTS, IF ANY, SHALL BE SHOWN BEFORE ANY
NONGUARANTEED ELEMENTS AND SHALL BE SPECIFICALLY REFERRED TO ON ANY PAGE

House Amendments to H.B. 2076

ry
SCM ONDA HPWNMEHE

PPPS PP WWWWWWWWWWNYDNYDNMDNDNDDNYDYDNYNDYNDHPHRP RRP RPP
SNMDOTFWNHFDHOANATNAPWNHEFDHOANATNBWNHEHOWDWONDAOBRWDHYHE

OF AN ILLUSTRATION THAT SHOWS OR DESCRIBES THE NONGUARANTEED ELEMENTS
ONLY.

9. THE ACCOUNT OR ACCUMULATION VALUE OF A POLICY, IF SHOWN, SHALL
BE IDENTIFIED BY THE NAME THIS VALUE IS GIVEN IN THE POLICY BEING
ILLUSTRATED AND SHALL BE SHOWN IN CLOSE PROXIMITY TO THE CORRESPONDING
VALUE THAT IS AVAILABLE ON SURRENDER.

10. THE VALUE THAT IS AVAILABLE ON SURRENDER SHALL BE IDENTIFIED BY
THE NAME THIS VALUE IS GIVEN IN THE POLICY BEING ILLUSTRATED AND SHALL BE
THE AMOUNT THAT IS AVAILABLE TO THE POLICYOWNER IN A LUMP SUM AFTER
DEDUCTING SURRENDER CHARGES, POLICY LOANS AND POLICY LOAN INTEREST, AS
APPLICABLE.

11. ILLUSTRATIONS MAY SHOW POLICY BENEFITS AND VALUES IN GRAPHIC OR
CHART FORM IN ADDITION TO TABULAR FORM.

12. ANY ILLUSTRATION OF NONGUARANTEED ELEMENTS SHALL BE ACCOMPANIED
BY A STATEMENT INDICATING ALL OF THE FOLLOWING:

(a) THE BENEFITS AND VALUES ARE NOT GUARANTEED.

(b) THE ASSUMPTIONS ON WHICH THE NONGUARANTEED ELEMENTS ARE BASED
ARE SUBJECT TO CHANGE BY THE INSURER.

(c) THE ACTUAL RESULTS MAY BE MORE OR LESS FAVORABLE.

13. IF THE ILLUSTRATION SHOWS THAT THE PREMIUM PAYOR MAY HAVE THE
OPTION TO ALLOW POLICY CHARGES TO BE PAID USING NONGUARANTEED VALUES, THE
ILLUSTRATION MUST CLEARLY DISCLOSE THAT A CHARGE CONTINUES TO BE REQUIRED
AND THAT, DEPENDING ON ACTUAL RESULTS, THE PREMIUM PAYOR MAY NEED TO
CONTINUE OR RESUME PREMIUM OUTLAYS. A SIMILAR DISCLOSURE SHALL BE MADE
FOR PREMIUM OUTLAY OF LESSER AMOUNTS OR SHORTER DURATIONS THAN THE
CONTRACT PREMIUM. IF A CONTRACT PREMIUM IS DUE, THE PREMIUM OUTLAY
DISPLAY MAY NOT BE LEFT BLANK OR SHOW A ZERO UNLESS THE PREMIUM OUTLAY
DISPLAY IS ACCOMPANIED BY AN ASTERISK OR SIMILAR MARK TO DRAW ATTENTION TO
THE FACT THAT THE POLICY IS NOT PAID UP.

14. IF THE APPLICANT PLANS TO USE DIVIDENDS OR POLICY VALUES,
GUARANTEED OR NONGUARANTEED, TO PAY ALL OR A PORTION OF THE CONTRACT
PREMIUM OR POLICY CHARGES OR FOR ANY OTHER PURPOSE, THE ILLUSTRATION MAY
REFLECT THOSE PLANS AND THE IMPACT ON FUTURE POLICY BENEFITS AND VALUES.

B. A BASIC ILLUSTRATION SHALL CONTAIN A NARRATIVE SUMMARY THAT
INCLUDES THE FOLLOWING:

1. A BRIEF DESCRIPTION OF THE POLICY BEING ILLUSTRATED THAT
INCLUDES A STATEMENT THAT THE POLICY IS A LIFE INSURANCE POLICY.

2. A BRIEF DESCRIPTION OF THE PREMIUM OUTLAY OR CONTRACT PREMIUM,
AS APPLICABLE, FOR THE POLICY. FOR A POLICY THAT DOES NOT REQUIRE PAYMENT
OF A SPECIFIC CONTRACT PREMIUM, THE ILLUSTRATION SHALL SHOW THE PREMIUM
OUTLAY THAT MUST BE PAID TO GUARANTEE COVERAGE FOR THE TERM OF THE
CONTRACT, SUBJECT TO MAXIMUM PREMIUMS ALLOWABLE TO QUALIFY AS A LIFE
INSURANCE POLICY UNDER THE APPLICABLE PROVISIONS OF THE INTERNAL REVENUE
CODE.

3. A BRIEF DESCRIPTION OF EACH POLICY FEATURE, RIDER OR OPTION,
GUARANTEED OR NONGUARANTEED, THAT IS SHOWN IN THE BASIC ILLUSTRATION AND
THE IMPACT THEY MAY HAVE ON THE BENEFITS AND VALUES OF THE POLICY.

House Amendments to H.B. 2076

WOON DOH WNEHE

4. AN IDENTIFICATION AND BRIEF DEFINITION OF COLUMN HEADINGS AND
KEY TERMS THAT ARE USED IN THE ILLUSTRATION.

5. A STATEMENT THAT CONTAINS IN SUBSTANCE THE FOLLOWING: "THIS
ILLUSTRATION ASSUMES THAT THE CURRENTLY ILLUSTRATED NONGUARANTEED ELEMENTS
WILL CONTINUE UNCHANGED FOR ALL YEARS SHOWN, WHICH IS LIKELY NOT TO OCCUR.
THE ACTUAL RESULTS MAY BE MORE OR LESS FAVORABLE THAN THE ONES SHOWN IN
THIS ILLUSTRATION". .

C. FOLLOWING THE NARRATIVE SUMMARY, A BASIC ILLUSTRATION SHALL
INCLUDE A NUMERIC SUMMARY OF THE DEATH BENEFITS AND VALUES AND THE PREMIUM
OUTLAY AND CONTRACT PREMIUM, AS APPLICABLE. FOR A POLICY THAT PROVIDES
FOR A CONTRACT PREMIUM, THE GUARANTEED DEATH BENEFITS AND VALUES SHALL BE
BASED ON THE CONTRACT PREMIUM. THIS SUMMARY SHALL BE SHOWN FOR AT LEAST
POLICY YEARS FIVE, TEN AND TWENTY AND AT AGE SEVENTY, IF APPLICABLE, ON
THE THREE BASES LISTED IN SUBSECTION D OF THIS SECTION. FOR MULTIPLE LIFE
POLICIES, THE NUMERIC SUMMARY SHALL SHOW POLICY YEARS FIVE, TEN, TWENTY
AND THIRTY.

D. FOR THE PURPOSES OF THE NUMERIC SUMMARY UNDER SUBSECTION C OF
THIS SECTION, ALL OF THE FOLLOWING APPLY:

1. THE THREE BASES INCLUDE:

(a) POLICY GUARANTEES.

(b) INSURER'S ILLUSTRATED SCALE.

(c) INSURER'S ILLUSTRATED SCALE USED BUT WITH THE NONGUARANTEED
ELEMENTS REDUCED AS FOLLOWS:

(i) DIVIDENDS AT FIFTY PERCENT OF THE DIVIDENDS THAT ARE CONTAINED
IN THE ILLUSTRATED SCALE USED.

(ii) NONGUARANTEED CREDITED INTEREST AT RATES THAT ARE THE AVERAGE
OF THE GUARANTEED RATES AND THE RATES THAT ARE CONTAINED IN THE
ILLUSTRATED SCALE USED.

(iii) ALL NONGUARANTEED CHARGES, INCLUDING TERM INSURANCE CHARGES,
MORTALITY AND EXPENSE CHARGES, AT RATES THAT ARE THE AVERAGE OF THE
GUARANTEED RATES AND THE RATES CONTAINED IN THE ILLUSTRATED SCALE USED.

2. IF COVERAGE CEASES BEFORE THE POLICY MATURES OR WHEN THE
POLICYOWNER REACHES ONE HUNDRED YEARS OF AGE, THE YEAR IN WHICH COVERAGE
CEASES SHALL BE IDENTIFIED FOR EACH OF THE THREE BASES LISTED IN PARAGRAPH
1 OF THIS SUBSECTION.

E. STATEMENTS THAT ARE SUBSTANTIALLY SIMILAR TO THE FOLLOWING SHALL
BE INCLUDED ON THE SAME PAGE AS THE NUMERIC SUMMARY AND SHALL BE SIGNED BY
THE APPLICANT OR, IF AN ILLUSTRATION IS PROVIDED AT THE TIME OF DELIVERY,
BY THE POLICY HOLDER:

1. A STATEMENT TO BE SIGNED AND DATED BY THE APPLICANT OR
POLICYOWNER THAT STATES: "I HAVE RECEIVED A COPY OF THIS ILLUSTRATION AND
UNDERSTAND THAT ANY NONGUARANTEED ELEMENTS ILLUSTRATED ARE SUBJECT TO
CHANGE AND COULD BE EITHER HIGHER OR LOWER. THE AGENT HAS TOLD ME THEY
ARE NOT GUARANTEED".

2. A STATEMENT TO BE SIGNED AND DATED BY THE INSURANCE PRODUCER OR
OTHER AUTHORIZED REPRESENTATIVE OF THE INSURER THAT STATES: "I CERTIFY
THAT THIS ILLUSTRATION HAS BEEN PRESENTED TO THE APPLICANT AND THAT I HAVE
EXPLAINED THAT ANY NONGUARANTEED ELEMENTS ILLUSTRATED ARE SUBJECT TO

House Amendments to H.B. 2076

ra
CWO ON DOT HPWNM FE

PERERA RRWWWWWWWWWWNHNNNDNADANNANDEPRPE REE HE
NOOR WNP ODODNAGBWANHOCANAGRWNHHEOCODNDRTGAWNDE

CHANGE. I HAVE MADE NO STATEMENTS THAT ARE INCONSISTENT WITH THE
ILLUSTRATION".

F. ALL OF THE FOLLOWING TABULAR DETAILS APPLY TO A_ BASIC
ILLUSTRATION:

1. THE BASIC ILLUSTRATION SHALL INCLUDE ALL OF THE FOLLOWING FOR AT
LEAST EACH POLICY YEAR FROM YEAR ONE TO TEN AND FOR EVERY FIFTH POLICY
YEAR THEREAFTER UNTIL THE INSURED REACHES ONE HUNDRED YEARS OF AGE, POLICY
MATURITY OR FINAL EXPIRATION [AND], EXCEPT FOR TERM INSURANCE BEYOND THE
TWENTIETH YEAR, FOR ANY YEAR IN WHICH THE PREMIUM OUTLAY AND CONTRACT
PREMIUM, IF APPLICABLE, IS SUBJECT TO CHANGE:

(a) THE PREMIUM OUTLAY AND MODE THE APPLICANT PLANS TO PAY AND THE
CONTRACT PREMIUM, AS APPLICABLE.

(b) THE CORRESPONDING GUARANTEED DEATH BENEFIT, AS PROVIDED IN THE
POLICY.

(c) THE CORRESPONDING GUARANTEED VALUE THAT IS _ AVAILABLE ON
SURRENDER, AS PROVIDED IN THE POLICY.

2. FOR A POLICY THAT PROVIDES FOR A CONTRACT PREMIUM, THE
GUARANTEED DEATH BENEFIT AND VALUE THAT IS AVAILABLE ON SURRENDER SHALL
CORRESPOND TO THE CONTRACT PREMIUM.

3. NONGUARANTEED ELEMENTS MAY BE SHOWN IF THE NONGUARANTEED
ELEMENTS ARE DESCRIBED IN THE CONTRACT. AN ILLUSTRATION FOR A POLICY FOR
WHICH THE INSURER INTENDS TO CREDIT TERMINAL DIVIDENDS, THE NONGUARANTEED
ELEMENTS MAY BE SHOWN IF THE INSURER'S CURRENT PRACTICE IS TO PAY TERMINAL
DIVIDENDS. IF ANY NONGUARANTEED ELEMENTS ARE SHOWN, THE NONGUARANTEED
ELEMENTS MUST BE SHOWN AT THE SAME DURATIONS AS THE CORRESPONDING
GUARANTEED ELEMENTS, IF ANY. IF A GUARANTEED BENEFIT OR VALUE IS NOT
AVAILABLE AT ANY DURATION FOR WHICH A NONGUARANTEED BENEFIT OR VALUE IS
SHOWN, A ZERO SHALL BE DISPLAYED IN THE GUARANTEED COLUMN.

20-431.05. Supplemental i ons; requirements

A. A SUPPLEMENTAL ILLUSTRATION MAY BE PROVIDED IF:

1. THE SUPPLEMENTAL ILLUSTRATION IS APPENDED TO, ACCOMPANIED BY OR
PRECEDED BY A BASIC ILLUSTRATION THAT COMPLIES WITH THIS ARTICLE.

2. THE NONGUARANTEED ELEMENTS SHOWN ARE NOT MORE FAVORABLE TO THE
POLICYOWNER THAN THE CORRESPONDING ELEMENTS BASED ON THE SCALE THAT IS
USED IN THE BASIC ILLUSTRATION.

3. THE SUPPLEMENTAL ILLUSTRATION CONTAINS THE SAME STATEMENT
REQUIRED OF A BASIC ILLUSTRATION THAT NONGUARANTEED ELEMENTS ARE NOT
GUARANTEED.

4. FOR A POLICY THAT HAS A CONTRACT PREMIUM, THE CONTRACT PREMIUM
UNDERLYING THE SUPPLEMENTAL ILLUSTRATION IS EQUAL TO THE CONTRACT PREMIUM
SHOWN IN THE BASIC ILLUSTRATION. FOR POLICIES THAT DO NOT REQUIRE A
CONTRACT PREMIUM, THE PREMIUM OUTLAY UNDERLYING THE SUPPLEMENTAL
ILLUSTRATION MUST BE EQUAL TO THE PREMIUM OUTLAY SHOWN IN THE BASIC
ILLUSTRATION.

B. THE SUPPLEMENTAL ILLUSTRATION SHALL INCLUDE A NOTICE REFERRING
TO THE BASIC ILLUSTRATION FOR GUARANTEED ELEMENTS AND OTHER IMPORTANT
INFORMATION.

House Amendments to H.B. 2076

OANADANHPWNHEHE

20-431.06. Delivery of illustrations; record retention;

requirements

A. IF A BASIC ILLUSTRATION IS USED BY AN INSURANCE PRODUCER OR
OTHER AUTHORIZED REPRESENTATIVE OF THE INSURER IN THE SALE OF A LIFE
INSURANCE POLICY AND THE POLICY IS APPLIED FOR AS ILLUSTRATED, A COPY OF
THAT ILLUSTRATION, SIGNED IN ACCORDANCE WITH THIS ARTICLE, SHALL BE
SUBMITTED TO THE INSURER AT THE TIME OF POLICY APPLICATION. A COPY SHALL
ALSO BE PROVIDED TO THE APPLICANT.

B. IF THE POLICY IS ISSUED OTHER THAN AS APPLIED FOR, A REVISED
BASIC ILLUSTRATION THAT CONFORMS TO THE POLICY AS ISSUED SHALL BE SENT
WITH THE POLICY. THE REVISED ILLUSTRATION SHALL CONFORM TO THE
REQUIREMENTS OF THIS ARTICLE, SHALL BE LABELED REVISED ILLUSTRATION AND
SHALL BE SIGNED AND DATED BY THE APPLICANT OR POLICYOWNER AND PRODUCER OR
OTHER AUTHORIZED REPRESENTATIVE OF THE INSURER NOT LATER THAN THE TIME THE
POLICY IS DELIVERED. A COPY SHALL BE PROVIDED TO THE INSURER AND THE
POLICYOWNER.

C. IF AN ILLUSTRATION IS NOT USED BY AN INSURANCE PRODUCER OR OTHER
AUTHORIZED REPRESENTATIVE IN THE SALE OF A LIFE INSURANCE POLICY OR IF THE
POLICY IS APPLIED FOR OTHER THAN AS ILLUSTRATED, THE PRODUCER OR
AUTHORIZED REPRESENTATIVE SHALL CERTIFY TO THAT EFFECT IN WRITING ON A
FORM PROVIDED BY THE INSURER. ON THE SAME FORM, THE APPLICANT SHALL
ACKNOWLEDGE THAT AN ILLUSTRATION CONFORMING TO THE POLICY APPLIED FOR WAS
NOT PROVIDED AND SHALL FURTHER ACKNOWLEDGE AN UNDERSTANDING THAT AN
ILLUSTRATION CONFORMING TO THE POLICY AS ISSUED WILL BE PROVIDED NOT LATER
THAN AT THE TIME OF POLICY DELIVERY. THE APPLICANT SHALL SUBMIT THIS FORM
TO THE INSURER AT THE TIME OF POLICY APPLICATION.

D. IF THE POLICY IS ISSUED, A BASIC ILLUSTRATION THAT CONFORMS TO
THE POLICY AS ISSUED SHALL BE SENT WITH THE POLICY AND SIGNED IN
ACCORDANCE WITH THE REQUIREMENTS OF THIS SECTION NOT LATER THAN THE TIME
THE POLICY IS DELIVERED. A COPY SHALL BE PROVIDED TO THE INSURER AND THE
POLICYOWNER.

E. IF THE INSURER MAILS THE BASIC ILLUSTRATION OR’ REVISED
ILLUSTRATION TO THE APPLICANT OR POLICYOWNER, THE BASIC ILLUSTRATION OR
REVISED ILLUSTRATION SHALL INCLUDE INSTRUCTIONS FOR THE APPLICANT OR
POLICYOWNER TO SIGN THE DUPLICATE COPY OF THE NUMERIC SUMMARY PAGE OF THE
ILLUSTRATION FOR THE POLICY ISSUED AND RETURN THE SIGNED COPY TO THE
INSURER. THE INSURER'S OBLIGATION UNDER THIS SUBSECTION IS SATISFIED IF
THE INSURER CAN DEMONSTRATE THAT IT HAS MADE A DILIGENT EFFORT TO SECURE A
SIGNED COPY OF THE NUMERIC SUMMARY PAGE. THE INSURER'S REQUIREMENT TO
MAKE A DILIGENT EFFORT IS SATISFIED IF THE INSURER INCLUDES IN THE MAILING
A SELF-ADDRESSED, POSTAGE PREPAID ENVELOPE WITH INSTRUCTIONS FOR RETURNING
THE SIGNED NUMERIC SUMMARY PAGE. IF THE APPLICANT OR POLICYOWNER CONSENTS
TO TRANSACT INSURANCE ELECTRONICALLY, THE INSURER MAY SEND A COPY WITH
INSTRUCTIONS FOR SIGNING AND RETURNING THE SIGNED COPY ELECTRONICALLY.

F. THE INSURER SHALL RETAIN A COPY OF THE BASIC ILLUSTRATION AND A
REVISED BASIC ILLUSTRATION, IF ANY, SIGNED AS APPLICABLE, ALONG WITH ANY
CERTIFICATION THAT EITHER NO ILLUSTRATION WAS USED OR THAT THE POLICY WAS
APPLIED FOR OTHER THAN AS ILLUSTRATED UNTIL THREE YEARS AFTER THE POLICY

House Amendments to H.B. 2076

i
SCWMO ON ODO PWN

PHF FSPPAPPHPWWWWWWWWWWNYDNYDNYDNDNDNYDNYDNYNNDHPHPHEP PRP PP HEE
DNDN FWNHRFDOOANDAAARWNHFP OHO DANDATAARWNHHE OD OND OA WD

IS NO LONGER IN FORCE. THE INSURER DOES NOT NEED TO RETAIN A COPY IF A
POLICY IS NOT ISSUED.

20-431.07. Annual report; notice to policyowners

A. IF A POLICY IS DESIGNATED AS ONE THAT WILL USE ILLUSTRATIONS,
THE INSURER SHALL PROVIDE EACH POLICYOWNER WITH AN ANNUAL REPORT ON THE
STATUS OF THE POLICY AS FOLLOWS:

1. FOR UNIVERSAL LIFE POLICIES, THE ANNUAL REPORT SHALL INCLUDE:

(a) THE BEGINNING DATE AND END DATE OF THE CURRENT REPORT PERIOD.

(b) THE POLICY VALUE AT THE END OF THE PREVIOUS REPORT PERIOD AND
AT THE END OF THE CURRENT REPORT PERIOD.

(c) THE TOTAL AMOUNTS THAT HAVE BEEN CREDITED OR DEBITED TO THE
POLICY VALUE DURING THE CURRENT REPORT PERIOD, IDENTIFYING EACH BY TYPE
AND INCLUDING INTEREST, MORTALITY, EXPENSE AND RIDERS.

(d) THE CURRENT DEATH BENEFIT AT THE END OF THE CURRENT REPORT
PERIOD ON EACH LIFE COVERED BY THE POLICY.

(e) THE NET CASH SURRENDER VALUE OF THE POLICY AS OF THE END OF THE
CURRENT REPORT PERIOD.

(f) THE AMOUNT OF OUTSTANDING LOANS, IF ANY, AS OF THE END OF THE
CURRENT REPORT PERIOD.

(g) FOR FIXED PREMIUM POLICIES, A NOTICE [HAF] [WHETHER] THE
POLICY'S NET CASH SURRENDER VALUE IS SUCH THAT IT WOULD NOT MAINTAIN
INSURANCE IN FORCE UNTIL THE END OF THE NEXT REPORTING PERIOD, ASSUMING
GUARANTEED INTEREST, MORTALITY AND EXPENSE LOADS AND CONTINUED SCHEDULED
PREMIUM PAYMENTS.

(h) FOR FLEXIBLE PREMIUM POLICIES, A NOTICE [HAF] (CWHETHER] THE
POLICY'S NET CASH SURRENDER VALUE WILL NOT MAINTAIN INSURANCE IN FORCE
UNTIL THE END OF THE NEXT REPORTING PERIOD UNLESS FURTHER PREMIUM PAYMENTS
ARE MADE, ASSUMING GUARANTEED INTEREST, MORTALITY AND EXPENSE LOADS.

2. FOR ALL OTHER POLICIES, WHERE APPLICABLE, THE ANNUAL REPORT
SHALL INCLUDE THE FOLLOWING:

(a) CURRENT DEATH BENEFIT.

(b) ANNUAL CONTRACT PREMIUM.

(c) CURRENT CASH SURRENDER VALUE.

(d) CURRENT DIVIDEND.

(e) APPLICATION OF CURRENT DIVIDEND.

(f) AMOUNT OF OUTSTANDING LOAN.

B. INSURERS WRITING LIFE INSURANCE POLICES THAT DO NOT BUILD
NONFORFEITURE VALUES SHALL BE REQUIRED TO PROVIDE AN ANNUAL REPORT WITH
RESPECT TO SUCH POLICIES ONLY FOR THOSE YEARS WHEN THE INSURER HAS MADE A
CHANGE TO NONGUARANTEED POLICY ELEMENTS.

C. IF THE ANNUAL REPORT DOES NOT INCLUDE AN IN-FORCE ILLUSTRATION,
THE ANNUAL REPORT SHALL CONTAIN THE FOLLOWING PROMINENTLY DISPLAYED
NOTICE: "IMPORTANT POLICYOWNER NOTICE: YOU SHOULD CONSIDER REQUESTING MORE
DETAILED INFORMATION ABOUT YOUR POLICY TO UNDERSTAND HOW IT MAY PERFORM IN
THE FUTURE. YOU SHOULD NOT CONSIDER REPLACEMENT OF YOUR POLICY OR MAKE
CHANGES IN YOUR COVERAGE WITHOUT REQUESTING A CURRENT ILLUSTRATION. YOU
MAY ANNUALLY REQUEST, WITHOUT CHARGE, AN ILLUSTRATION BY CALLING
(INSURER'S TELEPHONE NUMBER), WRITING TO (INSURER'S NAME) AT (INSURER'S

-10-

House Amendments to H.B. 2076

OANOOHPWNE

PPPS APHFPPWWWWWWWWWWNNYNDNNNNNNNDNKPHRP RP RPE E EP ReE
NAT WNHRFTDDOANADAAHRWNHEFOWO ONAN BWNHEHOWDONDOBRWNHHOW

ADDRESS OR EMAIL ADDRESS) OR CONTACTING YOUR AGENT. IF YOU DO NOT RECEIVE
A CURRENT ILLUSTRATION OF YOUR POLICY WITHIN THIRTY DAYS FROM THE DATE OF
YOUR REQUEST, YOU SHOULD CONTACT YOUR STATE INSURANCE DEPARTMENT." THE
INSURER MAY VARY THE SEQUENTIAL ORDER OF THE METHODS FOR OBTAINING AN
IN-FORCE ILLUSTRATION.

D. ON REQUEST OF A POLICYOWNER, THE INSURER SHALL FURNISH AN
IN-FORCE ILLUSTRATION OF CURRENT AND FUTURE BENEFITS AND VALUES BASED ON
THE INSURER'S PRESENT ILLUSTRATED SCALE. THIS ILLUSTRATION SHALL COMPLY
WITH SECTION 20-431.03, SUBSECTIONS A AND B [AND SECTION 20-431.04,
SUBSECTIONS A AND FJ. A SIGNATURE OR OTHER ACKNOWLEDGEMENT OF RECEIPT OF
THIS ILLUSTRATION IS NOT REQUIRED.

E. IF THE INSURER MAKES AN ADVERSE CHANGE IN NONGUARANTEED ELEMENTS
THAT COULD AFFECT THE POLICY [SINCE THE LAST ANNUAL REPORT], THE ANNUAL
REPORT SHALL CONTAIN A NOTICE OF THAT FACT AND SHALL PROMINENTLY DISPLAY
THE NATURE OF THE CHANGE.

20-431.08. Illustration actuaries; annual certifications

A. THE BOARD OF DIRECTORS OF EACH INSURER SHALL APPOINT ONE OR MORE
ILLUSTRATION ACTUARIES.

B. THE ILLUSTRATION ACTUARY SHALL CERTIFY THAT THE DISCIPLINED
CURRENT SCALE THAT IS USED IN ILLUSTRATIONS CONFORMS WITH THE ACTUARIAL
STANDARD OF PRACTICE FOR COMPLIANCE WITH THE NATIONAL ASSOCIATION OF
INSURANCE COMMISSIONERS MODEL REGULATION ON LIFE INSURANCE ILLUSTRATIONS
THAT IS ADOPTED BY THE ACTUARIAL STANDARDS BOARD AND THAT THE ILLUSTRATED
SCALES USED IN INSURER AUTHORIZED ILLUSTRATIONS MEET THE REQUIREMENTS OF
THIS ARTICLE.

C. THE ILLUSTRATION ACTUARY SHALL:

1. BE A MEMBER IN GOOD STANDING OF THE AMERICAN ACADEMY OF
ACTUARIES.

2. BE FAMILIAR WITH THE STANDARD OF PRACTICE REGARDING LIFE
INSURANCE POLICY ILLUSTRATIONS.

3. AFTER NOTICE AND A HEARING, NOT HAVE BEEN FOUND BY THE DIRECTOR
TO HAVE:

(a) VIOLATED ANY PROVISION OF, OR ANY OBLIGATION IMPOSED BY, THIS
TITLE OR ANY OTHER LAW IN THE COURSE OF THE INDIVIDUAL'S DEALINGS AS AN
ILLUSTRATION ACTUARY.

(b) BEEN FOUND GUILTY OF FRAUDULENT OR DISHONEST PRACTICES.

(c) DEMONSTRATED INCOMPETENCE, LACK OF COOPERATION OR
UNTRUSTWORTHINESS TO ACT AS AN ILLUSTRATION ACTUARY.

(d) RESIGNED OR BEEN REMOVED AS AN ILLUSTRATION ACTUARY WITHIN THE
PREVIOUS FIVE YEARS AS A RESULT OF ACTS OR OMISSIONS INDICATED IN ANY
ADVERSE REPORT ON EXAMINATION OR AS A RESULT OF A FAILURE TO ADHERE TO
GENERALLY ACCEPTABLE ACTUARIAL STANDARDS.

4. NOTIFY THE DIRECTOR OF ANY ACTION TAKEN BY THE INSURANCE
DIRECTOR OF ANOTHER STATE FOR ACTS SIMILAR TO THOSE LISTED IN PARAGRAPH 3
OF THIS SUBSECTION.

5. DISCLOSE THE FOLLOWING IN THE ANNUAL CERTIFICATION, AS
APPLICABLE:

-ll-

House Amendments to H.B. 2076

1
2
3
4
5
6
7
8

9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46

(a) SINCE THE LAST ANNUAL CERTIFICATION, WHETHER A CURRENTLY
PAYABLE SCALE APPLICABLE FOR BUSINESS ISSUED WITHIN THE PREVIOUS FIVE
YEARS AND WITHIN THE SCOPE OF THE CERTIFICATION WAS REDUCED FOR REASONS
OTHER THAN CHANGES IN THE EXPERIENCE FACTORS UNDERLYING THE DISCIPLINED
CURRENT SCALE.

(b) IF NONGUARANTEED ELEMENTS ILLUSTRATED FOR NEW POLICIES ARE NOT
CONSISTENT WITH THOSE ILLUSTRATED FOR SIMILAR IN-FORCE POLICIES.

(c) IF NONGUARANTEED ELEMENTS ILLUSTRATED FOR BOTH NEW AND IN-FORCE
POLICIES ARE INCONSISTENT WITH THE NONGUARANTEED ELEMENTS ACTUALLY BEING
PAID, CHARGED OR CREDITED TO THE SAME OR SIMILAR FORMS.

6. DISCLOSE IN THE ANNUAL CERTIFICATION THE METHOD THAT IS USED TO
ALLOCATE OVERHEAD EXPENSES FOR ALL ILLUSTRATIONS AS BEING ONE OF THE
FOLLOWING:

(a) FULLY ALLOCATED EXPENSES.

(b) MARGINAL EXPENSES.

(c) A GENERALLY RECOGNIZED EXPENSE TABLE THAT IS BASED ON FULLY
ALLOCATED EXPENSES REPRESENTING A SIGNIFICANT PORTION OF INSURANCE
COMPANIES AND THAT IS APPROVED BY THE [NATTONAL—ASSOCTATTON—OF—ENSURANCE
COMMTSSTONERS] [DIRECTOR].

D. THE ILLUSTRATION ACTUARY SHALL FILE THE ANNUAL CERTIFICATION
WITH THE BOARD OF DIRECTORS OF THE INSURER AND WITH THE DIRECTOR AS
FOLLOWS:

1. ANNUALLY FOR ALL POLICY FORMS FOR WHICH ILLUSTRATIONS ARE USED.

2. BEFORE A NEW POLICY FORM IS ILLUSTRATED.

E. THE ILLUSTRATION ACTUARY SHALL PROMPTLY NOTIFY THE BOARD OF
DIRECTORS AND THE DIRECTOR IF AN ERROR IS FOUND IN PREVIOUS CERTIFICATION.

F. IF AN ILLUSTRATION ACTUARY IS UNABLE TO CERTIFY THE SCALE FOR
ANY POLICY FORM ILLUSTRATION THAT THE INSURER INTENDS TO USE, THE
ILLUSTRATION ACTUARY SHALL NOTIFY THE BOARD OF DIRECTORS OF THE INSURER
AND THE DIRECTOR PROMPTLY OF THE ILLUSTRATION ACTUARY'S INABILITY TO
GERTIFY:.

G. A RESPONSIBLE OFFICER OF THE INSURER, OTHER THAN’ THE
ILLUSTRATION ACTUARY, SHALL CERTIFY ANNUALLY BOTH OF THE FOLLOWING:

1. THAT THE ILLUSTRATION FORMATS MEET THE REQUIREMENTS OF THIS
ARTICLE AND THAT THE SCALES USED IN INSURER-AUTHORIZED ILLUSTRATIONS ARE
THOSE SCALES THAT HAVE BEEN CERTIFIED BY THE ILLUSTRATION ACTUARY.

2. THAT THE COMPANY HAS PROVIDED ITS AGENTS WITH INFORMATION ABOUT
THE EXPENSE ALLOCATION METHOD USED IN ITS ILLUSTRATIONS AS DISCLOSED IN
SUBSECTION C, PARAGRAPH 6 OF THIS SECTION.

H. THE ANNUAL CERTIFICATIONS SHALL BE PROVIDED TO THE DIRECTOR EACH
YEAR BY THE DATE DETERMINED BY THE CTNSURER] [DIRECTOR].

I. IF AN INSURER CHANGES THE ILLUSTRATION ACTUARY WHO IS
RESPONSIBLE FOR ALL OR A PORTION OF THE COMPANY'S POLICY FORMS, THE
INSURER SHALL NOTIFY THE DIRECTOR OF THE CHANGE PROMPTLY AS WELL AS THE
REASON FOR THE CHANGE.

20-431.09. Penalties

-12-

House Amendments to H.B. 2076

IN ADDITION TO ANY OTHER PENALTIES PROVIDED BY LAW, AN INSURER OR
PRODUCER THAT VIOLATES THIS ARTICLE COMMITS AN UNFAIR TRADE PRACTICE IN
VIOLATION OF SECTION 20-442.

Sec. 2. Effective date

This act is effective from and after December 31, 2025.

6 Enroll and engross to conform
7 Amend title to conform

arPwNnrr

JEFF WENINGER

2076WENINGER. docx
01/17/2025

11:28 AM

H: PRB/1s

-13-
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-seventh Legislature - First Regular Session

COMMITTEE ON

ROLL CALL VOTE

Commerce

BILL NO.

DATE

January 21, 2025

__HB 2076 _

PASS

NAY

PRESENT

ABSENT

Aguilar

Blackman

Cavero

Connolly

Diaz

Hendrix

Livingston

Villegas

Way, Vice-Chairman

Weninger, Chairman

APPROVED:

an

JEFF WENINGER, Chairman
MICHAEL WAY, Vice-Chairman

e ARRAARAAANA

O

O

Nel)

COMMITTEE SECREAARY

ATTACHMENT |

File and source

File

2025-01-21_commerce-minutes.pdf

Size

9,284,222 bytes

SHA-256

1104d8df6350566c09c344611e3a0f88b05765fd429405a81c864aa755584c56

Our copy

2025-01-21_commerce-minutes.pdf

Original

www.azleg.gov