SB1684 - 542R

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

Section 1. Section 20-167, Arizona Revised Statutes, is amended to read:

START_STATUTE20-167. Fees; definition

A. The director shall collect in advance the following fees, as adjusted pursuant to subsection E of this section, which are nonrefundable on payment:

Not Less Than: Not More Than:

1. For filing charter documents:

(a) Original charter documents,

articles of incorporation,

bylaws, or record of

organization of insurers,

or certified copies thereof,

required to be filed with

the director and not also

subject to filing in the

office of the corporation

commission $ 40.00 $ 115.00

(b) Amended charter documents 15.00 45.00

required for filing with

the director any of such

documents also required

by law to be filed in the

office of the corporation

commission

2. Certificate of authority:

(a) Issuance:

Fraternal benefit societies $ 15.00 $ 45.00

Medical or hospital service

corporations, health care

services organizations or

prepaid dental plan

organizations 40.00 115.00

Mechanical

reimbursement reinsurers 150.00 450.00

All other insurers 100.00 295.00

(b) Renewal:

Fraternal benefit societies 15.00 45.00

Medical or hospital service

corporations, health care

services organizations or

prepaid dental plan

organizations 40.00 115.00

Domestic stock life insurers,

domestic stock disability

insurers or domestic stock

life and disability insurers 750.00 2,250.00

Domestic life reinsurers,

domestic disability

reinsurers or domestic

life and disability

reinsurers 2,250.00 5,500.00

Mechanical reimbursement

reinsurers 2,250.00 5,500.00

All other insurers 70.00 205.00

3. Certificate of registration as an

administrator or application for

renewal under section 20‑485.12 $ 100.00 $ 295.00

4. Authority to solicit applications

for and issue policies by means

of mechanical vending machines $ 30.00 $ 90.00

5. Service company permit $ 150.00 $ 450.00

6. Application for motor vehicle

service contract program approval $ 150.00 $ 450.00

7. Life care contract application

or annual report $ 225.00 $ 675.00

8. Filing annual statement $ 150.00 $ 450.00

9. Annual statement filing for

exempt insurer transacting life

insurance, disability insurance

or annuity business pursuant to

section 20‑401.05 $ 65.00 $ 100.00

10. Licenses and examinations:

(a) Licenses:

Surplus lines broker's license,

quadrennially $ 600.00 $1,000.00

All other licenses,

quadrennially 60.00 180.00

(b) Examinations for license:

Examination on laws and one kind

of insurance 8.00 25.00

Examination on laws and two or

more kinds of insurance 15.00 45.00

11. Miscellaneous:

Fee accompanying service of

process on director $ 8.00 $ 25.00

Certificate of director,

under seal 1.50 5.00

Copy of document filed in

director's office, per page 0.50 0.75

B. Except as provided in section 20‑1098.18, the director shall deposit, pursuant to sections 35‑146 and 35‑147, all fees collected pursuant to this section in the state general fund. A refund is not allowed for any unused portion of a fee, and the director shall not prorate fees.

C. The license fees prescribed by this section shall be payment in full of all demands for all state, county, district and municipal license fees, license taxes, business privilege taxes and business privilege fees and charges of every kind.

D. The director may contract for the examination for the licensing of adjusters, insurance producers, bail bond agents, risk management consultants and surplus lines brokers. If the director does so, the fee for examinations for licenses pursuant to this section is payable directly to the contractor by the applicant for examination. The director may agree to a reasonable examination fee to be charged by the contractor. The fee may exceed the amounts prescribed in this section.

E. Each December 1, if the revenue collected from fees during the prior fiscal year is less than ninety‑five percent or more than one hundred ten percent of the appropriated budget for the current fiscal year, the director shall revise all fees within the limits prescribed by subsection A of this section on a uniform percentage basis among all fee categories. The director shall revise the fees in such a manner that the revenue derived from the fees during the subsequent fiscal year equals at least ninety‑five percent but not more than one hundred ten percent of the appropriated budget for the current fiscal year. The revised fee schedule is effective July 1 of the subsequent fiscal year. For the purposes of this subsection, appropriated budget does not include any appropriation for the operation of the captive insurance program established under chapter 4, article 14 of this title. Any fees collected from captive insurers pursuant to subsection G of this section shall not be counted for the purpose of meeting the requirement of this subsection to recover at least ninety‑five but not more than one hundred ten percent of the department's appropriated budget.

F. E. The director may contract with a voluntary domestic organization of surplus lines brokers to perform any transaction prescribed in chapter 2, article 5 of this title, including the acceptance or maintenance of the reports required by section 20‑408. The director may allow the contractor to charge a stamping fee. The surplus lines broker shall pay the stamping fee established pursuant to this section directly to the contractor.

G. F. Captive insurers shall pay certificate of authority issuance and renewal fees as prescribed by the director.

H. G. For the purposes of subsection F of this section, "stamping fee" means a reasonable filing fee charged by a contractor for any transaction prescribed in chapter 2, article 5 of this title, including the acceptance or maintenance of the reports required by section 20‑408. END_STATUTE

Sec. 2. Section 20-423, Arizona Revised Statutes, is amended to read:

START_STATUTE20-423. Voluntary domestic organization of surplus lines brokers; membership; stamping fee collection; meetings; definition

A. A voluntary domestic organization of surplus lines brokers that contracts with the director pursuant to section 20‑167, subsection G E shall be incorporated in this state as a nonprofit corporation. A surplus lines broker who is licensed and in good standing in this state may be a member in the organization if the broker pays any required membership fee and dues required to be paid by all members.

B. The organization may collect stamping fees pursuant to section 20‑167 from any of the following:

1. A member of the organization.

2. A licensed surplus lines broker who is not a member of the organization.

3. A person who is no longer a licensed surplus lines broker if the stamping fee is paid in connection with transactions that the person effectuated while licensed as a surplus lines broker.

C. The organization shall hold an annual meeting of its members and may hold special meetings of its members. Members may participate in annual and special member meetings through the use of any means of communication if the communication allows all members participating in the meeting to simultaneously hear each other during the meeting and the organization provides a meeting notice that specifies how members can participate. Any member participating by this alternate means of communication is deemed to be present in person at the meeting for purposes of determining a quorum and voting and for any other purpose authorized or required by law.

D. Two percent of the total membership of the organization present in person or by proxy and entitled to vote at a meeting constitutes a quorum for the transaction of business at the meeting.

E. For the purposes of this section, "stamping fee" has the same meaning prescribed in section 20‑167. END_STATUTE

Sec. 3. Section 20-466, Arizona Revised Statutes, is amended to read:

START_STATUTE20-466. Fraud unit; peace officer status; powers; information sharing duty of insurers

A. A The fraud unit is established in the department of insurance and financial institutions.

B. The fraud unit shall work in conjunction with the department of public safety.

C. The director may investigate any act or practice of fraud prohibited by section 20‑466.01 and any other act or practice of fraud against an insurer or entity licensed under this title. The director shall administer the fraud unit.

D. The director may employ investigators for the fraud unit. A fraud unit investigator has and shall exercise the law enforcement powers of a peace officer of this state but only while acting in the course and scope of employment for the department of insurance and financial institutions. The director shall adopt guidelines for the conduct of investigations that are substantially similar to the investigative policy and procedural guidelines of the department of public safety for peace officers. Fraud unit investigators shall not preempt the authority and jurisdiction of other law enforcement agencies of this state or its political subdivisions. Fraud unit investigators:

1. Shall have at least the qualifications prescribed by the Arizona peace officer standards and training board pursuant to section 41‑1822.

2. Are not eligible to participate in the public safety personnel retirement system established by title 38, chapter 5, article 4 due solely to employment as fraud unit investigators.

E. The director may request the submission of papers, documents, reports or other evidence relating to an investigation under this section. The director may issue subpoenas and take other actions pursuant to section 20‑160. The materials are privileged and confidential until the director completes the investigation. Any documents, materials or other information that is provided to the director pursuant to this section is not subject to discovery or subpoena until opened for public inspection by the director or, after notice and a hearing, a court determines that the director would not be unduly burdened by compliance with the subpoena. The director shall keep the identity of an informant confidential, including any information that might identify the informant, unless the request for information is made by a law enforcement agency, the attorney general or a county attorney for purposes of a criminal investigation or prosecution. The director may use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the director's official duties.

F. If the documents, materials or other information the director seeks to obtain by request is located outside this state, the person requested to provide the documents, materials or other information shall arrange for the fraud unit or a representative, including an official of the state in which the documents, materials or other information is located, to examine the documents, materials or other information where it is located. The director may respond to similar requests from other states.

G. An insurer that believes a fraudulent claim has been or is being made shall send to the director, on a form prescribed by the director, information relative to the claim including the identity of parties claiming loss or damage as a result of an accident and any other information the fraud unit may require. The director shall review the report and determine if further investigation is necessary. If the director determines that further investigation is necessary, the director may conduct an independent investigation to determine if fraud, deceit or intentional misrepresentation in the submission of the claim exists. If the director is satisfied that fraud, deceit or intentional misrepresentation of any kind has been committed in the submission of a claim, the director may report the violations of the law to the reporting insurer, to the appropriate licensing agency as defined in section 20‑466.04 and to the appropriate county attorney or the attorney general for prosecution.

H. The director may:

1. Share nonpublic documents, materials or other information with other state, federal and international regulatory agencies, with the national association of insurance commissioners and its affiliates and subsidiaries and with state, federal and international law enforcement authorities if the recipient agrees and warrants that it has the authority to maintain the confidentiality and privileged status of the documents, materials or other information.

2. Receive documents, materials and other information from the national association of insurance commissioners and its affiliates and subsidiaries and from regulatory and law enforcement officials of other jurisdictions and shall maintain as confidential or privileged any document, material or other information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or other information.

3. Enter into agreements that govern the sharing and use of documents, materials and other information and that are consistent with this section.

I. A disclosure to or by the director pursuant to this section or as a result of sharing information pursuant to subsection G of this section is not a waiver of any applicable privilege or claim of confidentiality in the documents, materials or other information disclosed or shared.

J. The director shall annually assess each insurer as defined in section 20‑441, subsection B authorized to transact business in this state up to one thousand fifty dollars, as annually adjusted pursuant to this subsection $1,050 for the administration and operation of the fraud unit and the prosecution of fraud pursuant to this section. Monies collected shall be deposited, pursuant to sections 35‑146 and 35‑147, in the state general fund. The director shall annually revise the assessment amount in such a manner that the revenue derived from the assessment equals at least ninety‑five per cent but not more than one hundred ten per cent of the appropriated budget of the fraud unit for the prior fiscal year.

K. A person, or an officer, employee or agent of the person acting within the scope of employment or agency of that officer, employee or agent, who in good faith files a report or provides other information to the fraud unit pursuant to this section is not subject to civil or criminal liability for reporting that information to the fraud unit. END_STATUTE

Sec. 4. Section 20-1098.17, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1098.17. Effect of fees payment; premium tax

A. The fees paid by a captive insurer pursuant to section 20‑167, subsection G F are payment in full and in lieu of all other demands for all state, county, district, municipal and school taxes, licenses and excises of whatever kind or character, except for:

1. A tax on real and tangible personal property that is located within this state.

2. The transaction privilege tax and the use tax that is imposed pursuant to title 42, chapter 5, articles 1 and 4.

3. The transaction privilege tax and use tax that is imposed by any county, city or town.

B. Notwithstanding subsection A of this section, an agency captive insurer that insures risks on policies as specified in section 20‑1098.01, subsection A, paragraph 3, subdivision (b) shall pay the premium tax prescribed in section 20‑224 for such policies that is in excess of any fees paid pursuant to section 20‑167. END_STATUTE

Sec. 5. Department of gaming; regulatory assessment; pari‑mutuel pool

Notwithstanding any other law, in fiscal year 2020‑2021, the department of gaming shall establish and collect a regulatory assessment from each commercial racing permittee, payable from amounts deducted from pari‑mutuel pools by the permittee, in addition to the amounts the permittee is authorized to deduct pursuant to section 5‑111, subsection B, Arizona Revised Statutes, from amounts wagered on live and simulcast races from in‑state and out‑of‑state wagering handled by the permittee, in the amount of 0.5 percent of the amounts wagered.

Sec. 6. Agricultural fees; continuation; intent; rulemaking exemption

A. Notwithstanding any other law, the director of the Arizona department of agriculture, with the assistance of the department of agriculture advisory council, may continue, increase or lower existing fees from fiscal years 2018‑2019 and 2019-2020 in fiscal year 2020-2021 for services provided in fiscal year 2020‑2021.

B. The legislature intends that the additional revenue generated by the fees prescribed in subsection A of this section not exceed $218,000 to the state general fund, $113,000 to the pesticide trust fund established by section 3-350, Arizona Revised Statutes, and $26,000 to the dangerous plants, pests and diseases trust fund established by section 3‑214.01, Arizona Revised Statutes, in fiscal year 2020-2021.

C. The Arizona department of agriculture is exempt from the rulemaking requirements of title 41, chapter 6, Arizona Revised Statutes, until July 1, 2021 for the purpose of establishing fees pursuant to this section.

Sec. 7. County fiscal obligations; report

A. Notwithstanding any other law, for fiscal year 2020-2021, a county with a population of less than two hundred fifty thousand persons according to the 2010 United States decennial census may meet any county fiscal obligation from any source of county revenue designated by the county, including monies of any countywide special taxing jurisdiction of which the board of supervisors serves as the board of directors. Under the authority provided in this subsection, a county may not use more than $1,250,000 for purposes other than the purposes of the revenue source.

B. On or before October 1, 2020, all counties with a population of less than two hundred fifty thousand persons according to the 2010 United States decennial census shall report to the director of the joint legislative budget committee whether the county used a revenue source for purposes other than the purposes of the revenue source to meet a county fiscal obligation pursuant to subsection A of this section and, if so, the specific source and amount of revenues that the county intends to use in fiscal year 2020-2021.

Sec. 8. Legislative intent

The legislature intends that in fiscal year 2020-2021 the fee prescribed in section 42‑5041, subsection B, Arizona Revised Statutes, be assessed and collected pursuant to the following guidelines:

1. The total amount of fees for all counties, cities, towns, councils of governments and regional transportation authorities may not exceed $20,755,835 in any fiscal year.

2. The share of fees assessed to all counties pursuant to paragraph 1 of this section shall be in proportion to the aggregate amount of monies distributed to counties for the fiscal year two years preceding the current fiscal year pursuant to sections 42-5029, 42-6103, 42-6107, 42‑6108, 42‑6108.01, 42-6109, 42-6109.01, 42-6110, 42-6111 and 42-6112, Arizona Revised Statutes, as a percentage of aggregate distributions to all counties, cities, towns, councils of governments and regional transportation authorities located in a county with a population of more than four hundred thousand persons for the fiscal year two years preceding the current fiscal year pursuant to sections 42‑5029, 42-6001, 42-6103, 42‑6105, 42‑6106, 42‑6107, 42-6108, 42-6108.01, 42-6109, 42-6109.01, 42‑6110, 42-6111, 42-6112 and 43‑206, Arizona Revised Statutes.

3. The share of fees assessed to all cities and towns pursuant to paragraph 1 of this section shall be in proportion to the aggregate amount of monies distributed to cities and towns for the fiscal year two years preceding the current fiscal year pursuant to sections 42-5029, 42‑6001 and 43‑206, Arizona Revised Statutes, as a percentage of aggregate distributions to all counties, cities, towns, councils of governments and regional transportation authorities located in a county with a population of more than four hundred thousand persons for the fiscal year two years preceding the current fiscal year pursuant to sections 42-5029, 42-6001, 42-6103, 42‑6105, 42‑6106, 42-6107, 42-6108, 42-6108.01, 42-6109, 42‑6109.01, 42-6110, 42-6111, 42-6112 and 43-206, Arizona Revised Statutes.

4. The share of fees assessed to all councils of governments pursuant to paragraph 1 of this section shall be in proportion to the aggregate amount of monies distributed to all councils of governments for the fiscal year two years preceding the current fiscal year pursuant to section 42-6105, Arizona Revised Statutes, as a percentage of aggregate distributions to all counties, cities, towns, councils of governments and regional transportation authorities located in a county with a population of more than four hundred thousand persons for the fiscal year two years preceding the current fiscal year pursuant to sections 42-5029, 42-6001, 42-6103, 42-6105, 42-6106, 42‑6107, 42-6108, 42-6108.01, 42-6109, 42‑6109.01, 42-6110, 42-6111, 42-6112 and 43-206, Arizona Revised Statutes.

5. The share of fees assessed to all regional transportation authorities located in a county with a population of more than four hundred thousand persons pursuant to paragraph 1 of this section shall be in proportion to the aggregate amount of monies distributed to all regional transportation authorities located in a county with a population of more than four hundred thousand persons for the fiscal year two years preceding the current fiscal year pursuant to section 42-6106, Arizona Revised Statutes, as a percentage of aggregate distributions to all counties, cities, towns, councils of governments and regional transportation authorities located in a county with a population of more than four hundred thousand persons for the fiscal year two years preceding the current fiscal year pursuant to sections 42-5029, 42‑6001, 42-6103, 42-6105, 42-6106, 42-6107, 42-6108, 42-6108.01, 42-6109, 42-6109.01, 42‑6110, 42-6111, 42-6112 and 43-206, Arizona Revised Statutes.

6. Except as provided by sections 42-5033 and 42-5033.01, Arizona Revised Statutes, the population of a county as determined by the most recent United States decennial census plus any revision to the decennial census certified by the United States census bureau shall be used as the basis for apportioning monies pursuant to paragraph 2 of this section.

7. Except as provided by sections 42-5033 and 42-5033.01, Arizona Revised Statutes, the population of a city or town as determined by the most recent United States decennial census plus any revision to the decennial census certified by the United States census bureau shall be used as the basis for apportioning monies pursuant to paragraph 3 of this section.