HB2279 - 531R

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

Section 1. Section 20-265, Arizona Revised Statutes, is amended to read:

START_STATUTE20-265. Motor vehicle insurance; premium and fee comparisons and complaint ratios

The department of insurance shall compile premium comparisons of premium and fees charged at policy inception and complaint ratios for motor vehicle insurance policies that insure six or fewer motor vehicles. The premium comparisons shall reflect premiums and fees associated with the inception of a policy for not fewer than five hypothetical insureds for urban areas and five hypothetical insureds for rural areas. The department of insurance shall forward copies of the premium comparisons of premium and fees charged at policy inception and complaint ratios to the department of transportation. The director of the department of transportation in consultation with the director of the department of insurance shall make the copies available to the public. The department of insurance may include in the premium comparison information consumer information that describes the nature of bodily injury coverage, property damage coverage, collision coverage, comprehensive coverage, medical payment coverage, uninsured motorist coverage and underinsured motorist coverage. END_STATUTE

Sec. 2. Section 20-381, Arizona Revised Statutes, is amended to read:

START_STATUTE20-381. Definitions

In this article, unless the context otherwise requires:

1. "Advisory organization" means any person other than a single insurer who assists insurers or rate service organizations in the making of rates by compiling and furnishing loss or expense statistics or other statistical information and data, or by the submission of recommendations as to rates, forms or supplementary rate information. Advisory organization does not include a joint underwriting association, any actuarial or legal consultant, any employee of an insurer or insurers under common control or management or their employees or manager.

2. "Loss cost adjustment" means that portion of a rate filed by an insurer with the director that includes the insurer’s general expenses, total product expenses, taxes, licenses and fee expenses and underwriting profit and contingencies. Loss cost adjustment does not include loss adjustment expenses or prospective loss costs.

3. "Loss cost modification factor" means that rating factor filed by an insurer with the director for the purpose of modifying the rate service organization’s prospective loss cost filing.

4. "Prospective loss costs" means the historical aggregate losses and loss adjustment expenses filed by a rate service organization with the director on which a portion of a rate is based, adjusted through actuarial trending to a future point in time and developed to their ultimate values.

5. "Rate" means that cost of insurance per exposure unit whether expressed as a single number or as a prospective loss cost with an adjustment to account for the treatment of expenses, profit and individual insurer variation in loss experience before any application of individual risk variations based on loss or expense considerations. Rate does not include the minimum premium.

6. "Rate service organization" means any person other than a single insurer who assists insurers by compiling and furnishing loss or expense statistics and recommending, making or filing rates, forms or supplementary rate information. Rate service organization does not include a joint underwriting association, any actuarial or legal consultant, any employee of an insurer or insurers under common control or management, or their employees or manager.

7. "Supplementary rate information" means any manual or plan of rates, statistical plan, classification, rating schedule, minimum premium, policy fee schedule of fees, including membership fees charged by a reciprocal or mutual insurer, rating rule, rate related underwriting rule and any other information used by an insurer in making rates. Supplementary rate information does not include the final rate pages that combine the prospective loss costs with the loss cost adjustments. END_STATUTE

Sec. 3. Section 20-465, Arizona Revised Statutes, is amended to read:

START_STATUTE20-465. Fees; insurance producers; definition

A. An insurer and insurance producer shall not charge or receive any fee or service charge in addition to the premium charged for services customarily provided in connection with the transaction of insurance for motor vehicle insurance policies that insure six or fewer motor vehicles.

B. An insurer and insurance producer may charge and receive a fee for services not customarily provided in the transaction of insurance if the fee is filed with the director and the following conditions exist:

1. The services performed by the insurer or insurance producer are in excess of those normally performed for insureds. subject to article 4.1 of this chapter, unless:

1. The fee or service charge and information in support of the fee or service charge are filed with the director not less than thirty days before the fee or service charge becomes effective, on a form prescribed by the director.

2. The fee or service charge and the specific services for which the charge is made it is charged are disclosed and agreed to in writing by the insured on a form that is approved by the director.

3. The amount of the fee or service charge is reasonably related to the cost of the service performed rendered and does not duplicate or increase any fee or service charge included in the insurer's rate filing pursuant to article 4.1 of this chapter.

B. The director may disapprove any fee or service charge filed pursuant to this section by issuing an order specifying in what respects the fee or service charge fails to comply with the requirements of this section. If the fee or service charge has become effective, the order shall specify the date on which the fee or service charge is no longer effective. Subject to subsection C of this section, the order may not affect any fee or service charge received or payable before the effective date of the order.

C. After notice and a hearing, the director shall prescribe the services that are customarily provided in the transaction of insurance.

D. C. If after an examination and a hearing the director determines that an insurer or insurance producer has violated subsection A of failed to comply with this section, the director may order the insurer or insurance producer to refund the fee or that part of the fee that the director determines was excessive all or part of the fee or service charge and may impose civil penalties as set forth in section 20‑456 20‑295. The insurer or insurance producer shall pay the costs of the examination from monies deposited with the director pursuant to section 20‑159 regardless of the findings of the examination.

D. This section does not restrict or prohibit insurance producers from charging and collecting fees included in the insurer's rate filing pursuant to article 4.1 of this chapter.

E. This section does not prohibit fees, including membership fees charged by a reciprocal or mutual insurer, if the fees are filed with the director and are included by an insurer in supplemental rate information insurance producers from imposing fees or service charges in conjunction with the sale of commercial insurance.

F. This section does not apply to insurers and insurance producers transacting commercial insurance. For the purposes of this subsection section, "commercial insurance" means insurance that insures against the risks resulting from the responsibilities or activities of one or more businesses, including motor vehicle insurance policies insuring seven or more motor vehicles arising from business and commercial activity other than insurance maintained by a transportation network company driver under a private passenger automobile insurance policy. END_STATUTE

Sec. 4. Intent

It is the intent of the legislature that the only limitations on the ability of insurance producers to charge or receive compensation for additional services provided to insureds, whether referred to as fees or any other name, are set forth in section 20‑465, Arizona Revised Statutes, as amended by this act. The legislature further intends that the limitations set forth in section 20‑465, Arizona Revised Statutes, as amended by this act, apply only to insurance producers and is not applicable to fees or service charges charged by insurers pursuant to the applicable law.