HB2238 - 522R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 20, chapter 6, Arizona Revised Statutes, is amended by adding article 18, to read:

ARTICLE 18. IDENTITY THEFT GROUP INSURANCE POLICIES

START_STATUTE20-1694. Definitions

In this article, unless the context otherwise requires:

1. "Certificate holder" means the individual insured group member.

2. "Conditional renewal" means a renewal that is conditioned on change of limits, change in type of coverage, reduction or elimination of coverage, increased deductibles or addition of exclusions or increased premiums in excess of ten percent, except for premium increases that are generated as a result of increased exposure units or as a result of experience rating, loss rating, retrospective rating or audit.

3. "Group policyholder" means those groups described in section 20‑1694.01, subsection C to which an identity theft group insurance policy may be issued.

4. "Identity theft group insurance" means a form of identity theft insurance covering groups of persons as prescribed in this article.

5. "Identity theft insurance" means insurance against losses and expenses resulting from a stolen identity event.

6. "Stolen identity event" includes the theft, accidental release, publication or misappropriation of information related to an individual's personal identification or social security number or other method of identifying the individual that results in or could reasonably result in the wrongful use of the information. END_STATUTE

START_STATUTE20-1694.01. Identity theft group insurance; eligible groups

A. An authorized insurer or, subject to chapter 2, article 5 of this title, an unauthorized insurer may issue an identity theft group insurance policy in this state. If an authorized insurer issues an identity theft group insurance policy in this state, the insurer shall file with the department pursuant to section 20-398 the policy to be issued to the group policyholder and the certificate to be issued to individual group members. The contents of any certificate that is filed shall be consistent with the terms of the identity theft group insurance policy pursuant to which such certificate is issued.

B. An insurer may issue or deliver an identity theft group insurance policy in this state only pursuant to this article. The policy shall cover losses and expenses incurred by the certificate holder because of a stolen identity event.

C. An insurer may issue an identity theft group insurance policy to either of the following:

1. A business that sells services or products that are designed to prevent or to minimize the effects of a stolen identity event, if the policy insures the persons who purchase the services or products of the business and the business is the policyholder.

2. An entity for which the director determines by rule that the members are engaged in a common enterprise or have an economic or social affinity or relationship and that the issuance of the policy would not be contrary to the best interests of the public.

D. The groups listed in subsection C of this section shall consist of only natural persons and may include a member of a group member's immediate family or household.

E. An insurer shall treat all eligible groups of the same class in a like manner. END_STATUTE

START_STATUTE20-1694.02. Identity theft group insurance policy; premiums; cancellation; requirements

A. The group policyholder may pay the premium for an identity theft group insurance policy from monies contributed wholly by the group policyholder, wholly by the group members or jointly by the group policyholder and the group members.

B. The following requirements apply to the cancellation, nonrenewal or conditional renewal of coverage under an identity theft group insurance policy:

1. The policy shall be issued or renewed for a one‑year policy period unless the policy provides for a longer policy period.

2. Except as provided in paragraph 3 of this subsection, an insurer may cancel the policy or any certificate issued under the policy only if the cancellation is based on one or more of the following:

(a) The nonpayment of premium if the notice of cancellation informs the group policyholder of the amount due.

(b) The conviction of a criminal offense arising out of acts increasing the hazard insured against.

(c) The discovery of fraud or material misrepresentation in obtaining the policy or in the presentation of a claim under the policy.

(d) After the policy is issued or after the last renewal date, the discovery of an act or omission or a violation of any policy condition that substantially and materially increases the hazard insured against and that occurred subsequent to the inception of the current policy period.

(e) A material change in the nature or extent of the risk that occurred after the issuance or last annual renewal anniversary date of the policy that causes the risk of loss to be substantially and materially increased beyond what was contemplated at the time the policy was issued or last renewed.

(f) A determination by the director that continuation of the present premium volume of the insurer would jeopardize that insurer's solvency or be hazardous to the interests of the policyholders of the insurer, its creditors or the public.

3. An individual group member's coverage under this article terminates on termination of the member's affiliation with the group policyholder that constitutes membership in the group.

4. An act or omission by a group member does not constitute the basis for cancellation of the group policy.

5. An insurer's cancellation, nonrenewal or conditional renewal of a group policy or any certificate issued under the policy shall set forth the specific reasons for cancellation, nonrenewal or conditional renewal and does not become effective until at least forty‑five days, or twenty days if based on nonpayment of premium, after the insurer mails or delivers written notice of the cancellation, nonrenewal or conditional renewal to the group policyholder at the mailing address shown in the policy and to affected certificate holders at each certificate holder's last known mailing address. If authorized by the insurer, the group policyholder may mail or deliver the notice to the certificate holder on behalf of the insurer.

C. A group policyholder may cancel the group policy for any reason on thirty days' written notice to the insurer and each affected group member. A group policyholder is not required to give notice to a group member if substantially similar coverage has been obtained from another insurer without a lapse of coverage.

D. If a group member sustains a loss pursuant to a stolen identity event that occurs before the effective date of the cancellation, nonrenewal or conditional renewal of a group policy or the cancellation, nonrenewal, conditional renewal or termination of a certificate, whether initiated by the insurer, group policyholder or group member, the loss remains covered as provided under the policy notwithstanding the cancellation, nonrenewal, conditional renewal or termination. END_STATUTE

Sec. 2. Department of insurance; rulemaking exemption

The director of the department of insurance may adopt rules necessary to implement this act. For the purposes of this act, the department of insurance is exempt from the rulemaking requirements of title 41, chapter 6, Arizona Revised Statutes, for one year after the effective date of this act.