State SealARIZONA HOUSE OF REPRESENTATIVES

 

HB 2124: life and disability insurance; insolvencies

PRIME SPONSOR: Representative Livingston, LD 22

BILL STATUS: Chaptered

               

Legend: Board – The Guaranty Fund Board Director – Director of the Department of Insurance Fund – The Life and Disability Insurance Guaranty Fund Amendments – BOLD and Stricken (Committee)

Abstract

☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal NoteRelating to the Life and Disability Insurance Guaranty Fund.

Provisions

1.       Includes health care services organizations to the Fund.

a.       Exempts structured settlement factoring transactions.

b.       Exempts Medicaid policies. (Sec. 3)

2.       Defines health benefit plan. (Sec. 2)

3.       Includes health care service organization to the definition of member insurer. (Sec. 2)

4.       Includes certain health care providers as covered individuals. (Sec. 3)

5.       Applies a benefits cap to health benefit plans. (Sec. 3)

6.       Asserts benefits provided by a long-term care rider are considered the same type of benefits as the base life insurance policy to which it relates. (Sec. 3)

7.       Includes variable rate policies if the policy provides long-term care insurance benefit. (Sec. 3)

8.       Increase the Board membership from 9 to 11. (Sec. 5)

9.       Allows the Board to reissue policies or contracts of an impaired insurer or an insolvent insurer. (Sec. 6)

10.   Clarifies the Fund may, when providing substitute coverage, issue an alternative policy at actuarially justified rates, with the approval of the Director. (Sec. 6)

11.   Stipulates that if the fund reissues a terminate coverage at a different rate, the rate must be actuarially justified to the risk. (Sec. 6)

12.   Allows the Board to file for actuarially justified rate or premium increases for any policy or contract for which the Fund provides coverage. (Sec. 6)

13.   Allows the Board to issue a substitute coverage for a policy or contract without the approval of the court presiding over the delinquency proceeding. (Sec. 6)

14.   Asserts the assessments relating to long-term care insurance be allocated according to a defined methodology: 50% is allocated to accident and disability insurers and 50% is allocated to life and annuity insurers. (Sec. 7)

15.   Repeals statutes relating to financial reserve and risk of insolvency plan for health care services organizations. (Sec. 13, 16)

16.   Contains an effective date of January 1, 2019. (Sec. 19)

17.   Makes conforming changes. (Sec. 1-12, 14, 15, 17)

Current Law

Laws 1977, Chapter 136 established the Fund.  The 9-member Guaranty Fund Board administers the Fund.  The Fund covers certain policies in the event a member insurer becomes impaired or insolvent and payouts are statutorily capped.  Monies from an assessment levied on insurers are deposited into the Fund.

Additional Information

In 2017, the National Association of Insurance Commissioners created a group to review, discuss, and revise the Life and Health Insurance Guaranty Association Model Act.  The Act is intended to protect policy or contract owners, insureds, beneficiaries, health care providers, annuitants, payees and assignees against failure which occurs due to impairment or insolvency of an insurer.

 

 

 

 

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Fifty-third Legislature                  HB 2124

Second Regular Session                               Version 4: Chaptered

 

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