Arizona House of Representatives Committee on Commerce — Report of Regular Meeting, March 2, 2021 (Fifty-fifth Legislature, First Regular Session)

Summary

Minutes of a regular meeting of the Arizona House of Representatives Committee on Commerce, Fifty-fifth Legislature, First Regular Session, held March 2, 2021, convened at 2:02 P.M. and adjourned at 3:19 P.M. The committee reported three Senate bills do pass: SB1044 by 8-2-0-0, SB1062 by 6-4-0-0 and SB1151 by 10-0-0-0. Attached staff analyses cover SB 1044, credit for reinsurance, sponsored by Senator Livingston, which reorganizes credit-for-reinsurance law under Title 20, Chapter 30. SB 1062, engineering definitions, sponsored by Senator Mesnard, renames engineer as professional engineer and redefines engineering practice; SB 1151, sponsored by Senator Shope, removes an exemption from private postsecondary education licensure laws. The packet also includes the agenda, a request-to-speak report, the attendance record and roll call vote sheets.

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

Convened 2:02 P.M.
Recessed
Reconvened
Adjourned 3:19 P.M.

Members Present

Ms. Butler

Mr. Chaplik

Mr. Cook

Mrs. Fernandez

Mr. Meza

Ms, Nuit

Ms. Powers Hannley

Mr. Toma

Mr. Kaiser, Vice-Chairman
Mr. Weninger, Chairman

Agenda
Original Agenda — Attachment |

Request to Speak
Report — Attachment 2

Committee Attendance
Report — Attachment 3

Committee Action

COMMITTEE ON COMMERCE
Report of Regular Meeting
Tuesday, March 2, 2021
House Hearing Room 3 -- 2:00 P.M.
MINUTES RECEIVED
CHIEF CLERK'S OFFICE
3-3-A\
Members Absent
Mr, Espinoza
Mr. Wilmeth
Bill Action Vote Attachments
SB1044 DP 8-2-0-0 4,5
SBi062 DP 6-4-0-0 6, 7
SBIi5i1 DP 10-0-0-0 8,9

Meee LI TNaker/

Iris McMahon, Committee Secretary
March 3, 2021

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

COMMITTEE ON COMMERCE
March 2, 2021
REVISED - 2/25/21 REVISED - 2/25/21 REVISED - 2/25/21

ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fifth Legislature - First Regular Session i 2to 2am

REGULAR MEETING AGENDA

Lagrerned : BI 'p Mn
COMMITTEE ON COMMERCE

TIME 2:00 P.M.

DATE Tuesday, March 2, 2021 ROOM HHR3

This meeting will be held via teleconference software. Members of the public may access a livestream of the meeting here:
https://Avww.azleg.gov/videoplayer/?clientID=636 1 162879&eventID=202 103 1006

Members:
Mr. Chaplik Mr. Meza Mr-Wilmeth “10. TOMA
Mr. Cook Ms. Nutt Mr. Kaiser, Vice-Chairman
MrrEspineza» Gu7L2 & Ms, Powers Hannley Mr. Weninger, Chairman

Mrs. Fernandez

Bills Short Titie Strike Everything Title

SB1044 D ig credit for reinsurance
—-— (Livingston)
&<—2- 0-0 COM, RULES

SB1062 D f engineering definitions
—————- (Mesnard)

b- 4-0-0 COM, RULES
———. (Mesnard)
€OM;RULES

SBI151 . contracts; licensure requirements; exemption;
ws) f exclusion.
J (Shope)
O~ 07 O~ 8 con, RULES

ORDER OF BILLS TO BE SET BY THE CHAIRMAN

Pursuant to Committee Rule (2). Any person desiring to be heard concerning legislation remotely shall email that request to
(HouseCOM@azleg.goy) at least 24 hours, excluding weekends and holidays, in advance of committee, if practicable. The request must
state the bill the person desires to present arguments upon, and whom the person represents. Timely requests will receive a response that
inchides meeting access information to participate in the committee remotely. Sharing meeting access information with unauthorized
users may result in being prohibited to participate remotely in future legislative hearings. The request to participate remotely via
teleconference shall be in addition to requesting to speak via the Request to Speak system

(https://apps.azleg.gov/requesttospeak/topicsearch). Persons desiring to testify remotely shall indicate that the participation is remote

within the comments of the Request to Speak system.
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 (3/2/2021)

§$B1044, credit for reinsurance

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

Support:
Stephen Briggs, AZ DEPT OF INSURANCE AND FINANCIAL INSTITUTIONS; Mary Maclin, representing self; Courtney

Coolidge, AZ CHAMBER OF COMMERCE

All Comments:
J. Michael Low, AMERICAN COUNCIL OF LIFE INSURERS (ACL), PRUDENTIAL FINANCIAL INC: | will be testifying in

person in favor of the bill on behalf of ACLI and Prudential.

SB1062. engineering definitions

Testified as opposed:
Jose Aguilar, representing self

Support:

Tom Farley, American Council Of Engineering Companies Of Arizona

Oppose:

Gail Kamaras, representing self; Valerie Policastro Edie, representing self; Greer Warren, representing self; Ginna
Carico, GOODYEAR, CITY OF; Jeremy DeGeyter, representing self; Paul Turner, representing self; Michael Mathieu,
representing self; David Fablano, representing self; Benjamin Clampa, representing self; Alejandro Angel,
representing self; Gary Miller, ASCE AZ Section, representing self

All Comments:

Gail Kamaras, Self: This dumbs down the standards in an unacceptable & potentially dangerous way; Valerte
Policastro Edie, Self: How totally irresponsible and self- serving; Greer Warren, Self: This dumbs down what an
“engineer” Is. This is very dangerous.; Jeremy DeGeyter, Self: This proposed legislation seeks to redefine the
definition of “Engineer” and “Engineering Practice”, however this new language would allow an unregistered
“Engineer” to practice Engineering in the state of Arizona. This is dangerous}; Paul Turner, Self: The proposed SB
1062 is somewhat vague in its interpretation. As | read it, there is a possibility that a non registrant engineer may
be able to practice engineering. That would violate the code of ethics of both the ASCE and NSPE; Michael Mathieu,
Self: The new definition of "Engineer" in SB 1062 doesn't contain language about being qualified. That is a big
mistakel Being a Registered Professional Civil Engineer means something. the new definition does not speak of
education & testing requirements.; David Fabiano, Self: The practice of professional registration for engineers has
long served as a protection for the health and safety of the public, The change as proposed does not make
improvements but rather introduces a number of potential problems. Please vote no.; Alejandro Angel, Self: 1062
creates a gray area in engineering practice that will eliminate public protections; Gary Miller, ASCE AZ Section, Self:
ASCE opposes $B1062 as it would fundamentally change the laws that are protecting the public health and safety
of Arizonans, by effectively eliminating the tool that protects these objectives, professional engineering licensure.;

Jose Aguilar, Self: ieave the floor open for Gary Miller and myself

$B1151, contracts: licensure requirements; exemption; exclusion.

,

Support:
Trish Hart, AZ PRIVATE SCHOOL ASSOCIATION; fred lockhart, representing self; Stacey Nottingham, representing

self; Joel Kostman, representing self; kirt Hamm, representing self

Neutral:
Kevin LaMountain, AZ STATE BOARD FOR PRIVATE POSTSECONDARY ED

All Comments:
fred lockhart, Self: The passage of SB1151 would return the private postsecondary education sector to status quo

and not allow schools without a license to operate. Students would be protected and be able to access tuition
recovery fund; Joel Kostman, Self: As the president of the Arizona Private School Association, | am in strong
support of the passage of this bill in representing my constituency throughout the state of Arizona in higher

education.

ARIZONA STATE LEGISLATURE
Fifty-fifth Legislature - First Regular Session

COMMITTEE ATTENDANCE RECORD

COMMITTEE ON COMMERCE
CHAIRMAN: Jeff Weninger VICE-CHAIRMAN: _ Steve Kaiser
DATE 3/3124 121 121 124 21
CONVENED Dion pM m m m m
RECESSED
RECONVENED
ADJOURNED 4: 19 By
MEMBERS
Chaplik J
Cook 4
Espineza BuTLER J
Fernandez VA
Meza VA
Nutt V4
Powers Hannley J
Toma J
Kaiser, Vice-Chairman VA
Weninger, Chairman J

V Present “ Absent exc Excused

Attachment. 3

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fifth Legislature
First Regular Session

RRR

SB 1044: credit for reinsurance
Sponsor: Senator Livingston, LD 22
Committee on Commerce

Overview
Reorganizes laws relating to credit of reinsurance into a separate section of statute.

History
The National Association of Insurance Commissioners (NAIC) provides expertise, data, and

analysis for insurance commissioners to effectively regulate the industry and protect consumers.
The U.S. standard-setting organization is governed by the chief insurance regulators from the 50
states, the District of Columbia and five U.S, territories. Through the NAIC, state insurance
regulators establish standards and best practices, conduct peer reviews, and coordinate
regulatory oversight (www.naic.org). In 2019 the NAIC made revisions to the Credit for
Reinsurance Model Regulation (Model Regulation).

A domestic ceding insurer is allowed a credit for reinsurance as an asset to or a deduction from
liability on account of reinsurance ceded if the reinsurer satisfies requirements as outlined in
statute (A.R.S. § 20-261).

Reinsurance is the transaction whereby an assuming insurer (reinsurer), in consideration of
premium paid, agrees to indemnify another insurer (ceding company) against ail or part of the
loss which the ceding company may sustain under a specified policy or group of policies which it
has issued. The reinsurer shares the risk with the ceding company and receives a portion of the

premium paid on the policies.

Provisions
1. Repeals and reorganizes laws relating to credit for reinsurance under Title 20, Chapter 30,

Credit for Reinsurance. (Sec 1, 9)
Additions to Credit for Reinsurance Laws (Sec. 9)

2. Permits credit when the reinsurance is ceded to an assuming insurer who meets specified
conditions which include:
a) Have its head office or be domiciled in and be licensed in a reciprocal jurisdiction;
b) Have and maintain minimum capital and surplus in an amount prescribed by rule;
c) Have and maintain a minimum solvency or capital ratio prescribed by rule;
d) Provide certain documentation to the Director as specified by rule;
e) Maintain a practice of prompt payment of claims under reinsurance agreements;
f) Annually confirm to the Direct that the assuming insurer is in compliance; and
g) Provide to the Director any additional information on a voluntary basis.

3. Allows the Director to adopt rules that specify additional requirements that relate to or set

fourth:
a) The valuation of assets or reserve credits;

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

SB 1044
Initials Page 1 Commerce

Attachment H-

10.

11.

12.
13.
14.

Initials _

b) The amount and forms of security supporting reinsurance arrangements; and
c) Circumstances contingent of the credit reduction or elimination.
Requires the Director to create and publish a list of qualified reciprocal jurisdictions following

certain guidelines.
a) Allows the Director to remove a jurisdiction from the list on a determination of failure to

meet requirements.
Requires the Director, in a timely manner, to create and publish a list of assuming insurers to

which cessions will be granted credit.
a) Allows the Director to add an insurer to the list if certain requirements are met

Allows the Director to revoke or suspend the eligibility of an assuming insurer if the Director
determines that the assuming insurer no longer meets specified requirements.
a) Prohibits the granting of credit in cases of revocation or suspension.

Stipulates the ceding insurer, in a legal process of rehabilitation, liquidation or conservation,
to seek and obtain an order requiring the assuming insurer post security for all outstanding
ceded liabilities.

Outlines certain limitations of credits of reinsurance.

Allows the rules adopted by the Director to include regulation of reinsurance arrangements

relating to:
a) life insurance policies with guaranteed nonlevel gross premiums or guaranteed nonlevel

benefits;
b) universal life insurance policies with provisions resulting in the ability of a policyholder to

keep a policy in force over a secondary guarantee period;
c) variable annuities with guaranteed death or living benefits;

d) long-term care insurance policies; and
e) any other life and health insurance and annuity products that the NAIC adopts model

regulatory requirements with respect to credit for reinsurance.

Outlines the applicability and requirements of rules adopted by the Director relating to the
regulation of reinsurance arrangements of life and health insurance.

Specifies that the authority to adopt rules relating to the regulation of reinsurance
arrangements of life and health insurance does not limit the Department's general authority to

adopt administrative rules.
Specifies the applicability of Credit for Insurance requirements to certain cessions.

Contains a purpose, intent and declaration clause. (Sec. 10)
Makes technical and conforming changes. (Sec. 2-8)

SB 1044
Page 2 Commerce
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fifth Legislature - First Regular Session

ROLL CALL VOTE
/9 4p

COMMITTEE ON Commerce BILLNO. _ SB 4042~

DATE March 02, 2021 MOTION: _ DP

PASS AYE NAY PRESENT | ABSENT
Chaplik “4
Cook V4
Espinoza Gur Ler WA
Fernandez ~
‘Meza VA
Nutt 4
Powers Hanniey /
Toma 4
Kaiser, Vice-Chairman 4
Weninger, Chairman VA
g ~ O Z
\
APPROVED: COMMITTEE SECRETARY

JEFF WENINGER, Chairman
STEVE KAISER, Vice-Chairman

ATTACHMENT__3_
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fifth Legislature
First Regular Session

pee
SB 1062: engineering definitions
Sponsor: Senator Mesnard, LD 17
Committee on Commerce

Overview
Defines professional engineer and redefines other terms relating to certification and regulation by

the Arizona Board of Technical Registration (ABTR).

History
A person desiring to practice any ABTR-regulated profession or occupation must obtain a

certificate or registration by applying to ABTR for such certification or registration (A.R.S. §§ 32-
121 & 32-123). An applicant for professional registration as an engineer must be of good moral
character and be actively engaged in education or experience, or both, for at least eight years

(A.R.S. § 32-122.01).

An engineer is a person who, by reason of special knowledge of the mathematical and physical
sciences and the principles and methods of engineering analysis and design acquired by
professional education and practical experience, is qualified to practice engineering and is
registered as a professional engineer.

Statute defines engineering practice, in part, as any professional service or creative work requiring
engineering education, training and experience and the application of special knowledge of the
mathematical, physical and engineering sciences to such professional services or creative work

(A.R.S. § 32-101).

Provisions

1, Renames engineer as professional engineer. (Sec. 1)

2. Redefines engineer to mean a person who may apply engineering principles and interpret
engineering data by reason of education, training and experience. (Sec. 1)

3. Redefines engineering practice to mean any professional service or creative work requiring
engineering education, training and experience in applying engineering principals and
interpreting engineering data to engineering activities that clearly impact the health, safety
and welfare of the public and the engineering design of building, structures, products,
machines, processes and systems to the extent that the engineering education, training and
experience requirements are necessary to protect the health, safety and welfare of the public.
a) Includes, as services and creative work, providing planning services, studies, designs,

design coordination, drawings, specifications and other technical submissions, prescribed
surveying and reviewing construction or other design products for the purposes of
monitoring compliance with drawings and specifications related to engineered works.

(Sec. 1}

4. Deems a person as practicing engineering if the person:
a) Practices any engineering discipline or holds out to the public that the person is able and

authorized to practice any engineering discipline;

SB 1062
Commerce

Attachment_@ _

Initials _ Page 1
b) Represents to the public that the person is a professional engineer in any manner, or
c) Uses a title that implies that the person is a professional engineer. (Sec. 1)

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

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

SB 1062

Initfals _ Page 2 Commerce
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fifth Legislature - First Regular Session

ROLL CALL VOTE

COMMITTEE ON

Commerce

BILL NO. __ SB 1062

DATE March 02, 2021

MOTION: _DpF_

PASS

AYE NAY PRESENT | ABSENT

Chaplik

Cook

NAN

Espinoza Butler

Fernandez

Meza

Nutt

Powers Hannley

Toma

Kaiser, Vice-Chairman

Weninger, Chairman

APPROYED:

“JEFF WENINGER, Chairman
STEVE KAISER, Vice-Chairman

SIENNA OX

7 0 0

COMMITTEE SECRETARY

ATTACHMENT__7/

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fifth Legislature
First Regular Session

pss SS

SB 1151: contracts; licensure requirements; exemption; exclusion.
Sponsor: Senator Shope, LD 8
Committee on Commerce

Overview
Removes the exemption from private postsecondary education licensure and certification laws

provided to a person who meets specified requirements.

History
The State Board for Private Postsecondary Education regulates private postsecondary education

by issuing licenses to grant degrees and licenses to operate private vocational programs. A
person may not operate a private vocational program, grant or offer to grant a degree, or operate
an institution that grants or offers to grant a degree unless the person holds the appropriate

license (A.R.S. § 32-3022).

A person who is party to a private contract that meets outlined requirements is exempt from
specified laws relating to licensure, certification, registration or other authorization to act, including
requirements relating to private postsecondary education. The contract must: 1) be substantially
delivered electronically; 2) specify the laws from which the person is exempt; 3) be of a subject
that is lawful; and 4) not exceed $6,000 per transaction and $150,000 in aggregate profit for all
parties in the previous calendar year (A.R.S. § 44-171).

Provisions
1. Removes the exemption, from state postsecondary education laws relating to licensure,

certification, registration or other authorization, provided to a person who meets specified
requirements.

2. Makes technical changes. (Sec. 1)

(J Prop 105 (45 votes) 2 Prop 108 (40 votes) (1 Emergency (40 votes) 0 Fiscal Note

$B 1151
Page 1 Commerce

Initials _

Attachment g

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

ROLL CALL VOTE

COMMITTEE ON Commerce BILLNO. _ $B1151

DATE March 02, 2021 MOTION: D) fp
PASS AYE NAY PRESENT | ABSENT

Chaplik VA

Cook J

Espinoza. BUT LER WA

Fernandez J

Meza J

Nutt Vy

Powers Hannley VA

Toma /

Kaiser, Vice-Chairman J

Weninger, Chairman /

19 0 0 D

APPROYED: . COMMITTEE SECRETARY

JEFF WENINGER, Chairman
STEVE KAISER, Vice-Chairman

ATTACHMENT. q

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