Chapter 0062 - 542R - S Ver of SB1041

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

Section 1. Section 20-281, Arizona Revised Statutes, is amended to read:

START_STATUTE20-281. Definitions

In this article, unless the context otherwise requires:

1. "Business entity" means any corporation, association, partnership, limited liability company, limited liability partnership or other legal entity except an individual or sole proprietorship.

2. "Designated producer" means the individual insurance producer that a business entity designates pursuant to section 20‑285, subsection C, paragraph 3 as the individual responsible for the business entity's compliance with the insurance laws of this state.

3. "Health or sickness insurance" means disability insurance as defined in section 20‑253.

4. "Home state" means the District of Columbia and any state or territory of the United States in which:

(a) An individual insurance producer maintains a principal place of residence or principal place of business and is licensed to act as a resident insurance producer.

(b) A business entity insurance producer maintains its principal place of business and is licensed to act as a resident insurance producer.

5. "Insurance producer" means a person required to be licensed under this article to sell, solicit or negotiate insurance.

6. "Limited line credit insurance" means any form of insurance that is offered in connection with an extension of credit and that is limited to partially or wholly extinguishing that credit obligation, including credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed asset or automobile protection insurance and any other form of insurance that is offered in connection with an extension of credit, that is limited to partially or wholly extinguishing that credit obligation and that the director determines should be designated a form of limited line credit insurance.

7. "Limited line insurance" means limited line credit insurance, limited line crop insurance, limited lines travel insurance under section 20‑333 20‑3503 and any other line of insurance that the director deems necessary to recognize for the purposes of complying with section 20‑287, subsection C, paragraph 2.

8. "Major line insurance" means life insurance, accident and health or sickness insurance, property insurance, casualty insurance, personal lines insurance and variable insurance contracts, as described in section 20‑286.

9. "Member" means, if used in reference to a business entity, a person that holds an ownership interest in the business entity, excluding any interest in publicly traded securities and any interest of less than ten percent of the voting rights.

10. "Negotiate" means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract if the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers.

11. "Nonresident" means a person whose home state is not Arizona.

12. "Person" means an individual or a business entity.

13. "Resident" means a person whose home state is Arizona and who does not hold a resident insurance producer license in another state or territory of the United States or in the District of Columbia.

14. "Sell" means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurer.

15. "Solicit" means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company. END_STATUTE

Sec. 2. Title 20, Arizona Revised Statutes, is amended by adding chapter 28, to read:

CHAPTER 28

TRAVEL INSURANCE

ARTICLE 1. GENERAL PROVISIONS

START_STATUTE20-3501. Definitions

In this chapter, unless the context otherwise requires:

1. "Aggregator site" means a website that provides access to information regarding insurance products from more than one insurer, including product and insurer information, for use in comparison shopping.

2. "Blanket travel insurance" means a policy of travel insurance that is issued to any eligible group and that provides coverage for specific classes of persons defined in the policy with coverage provided to all members of the eligible group without a separate charge to individual members of the eligible group.

3. "Cancellation fee waiver":

(a) Means a contractual agreement between a supplier of travel services and its customer to waive some or all of the nonrefundable cancellation fee provisions of the supplier's underlying travel contract with or without regard to the reason for the cancellation or form of reimbursement.

(b) Does not mean insurance.

4. "Eligible group", solely for the purposes of travel insurance:

(a) Means two or more persons who are engaged in a common enterprise or who have an economic, educational or social affinity or relationship.

(b) Includes any of the following:

(i) An entity that is engaged in the business of providing travel or travel services, including tour operators, lodging providers, vacation property owners, hotels and resorts, travel clubs, travel agencies, property managers, cultural exchange programs and common carriers, or the operator, owner or lessor of a means of transportation of passengers, including airlines, cruise lines, railroads, steamship companies and public bus carriers, wherein with regard to any particular travel or type of travel or travelers, all members or customers of the group have a common exposure to risk attendant to that travel.

(ii) Any college, school or other institution of learning covering students, teachers, employees or volunteers.

(iii) Any employer covering any group of employees, volunteers, contractors, board of directors, dependents or guests.

(iv) Any sports team or camp or any sponsor of a sports team or camp covering participants, members, campers, employees, officials, supervisors or volunteers.

(v) Any religious, charitable, recreational, educational or civic organization or any branch of that organization covering any group of members, participants or volunteers.

(vi) Any financial institution, financial institution vendor or parent holding company, trustee or agent of or designated by one or more financial institutions or financial institution vendors, including account holders, credit card holders, debtors, guarantors or purchasers.

(vii) Any incorporated or unincorporated association, including a labor union, that has a common interest, constitution and bylaws and that is organized and maintained in good faith for purposes other than obtaining insurance for members or participants of that association covering its members.

(viii) Any trust or the trustees of a fund established, created or maintained for the benefit of and covering members, employees or customers, subject to the director allowing the use of a trust and the state's premium tax provisions in section 20‑3504 of one or more associations described in item (vii) of this subdivision.

(ix) Any entertainment production company covering any group of participants, volunteers, audience members, contestants or workers.

(x) Any volunteer fire department, ambulance, rescue, police, court, first aid or civil defense group or another similar volunteer group.

(xi) Any preschool, daycare institution for children or adults and senior citizen club.

(xii) Any automobile or truck rental or leasing company covering a group of individuals who may become renters, lessees or passengers defined by their travel status on the rented or leased vehicles and in which the common carrier, the operator, owner or lessor of a means of transportation or the automobile or truck rental or leasing company is the policyholder under a policy to which this chapter applies.

(xiii) Any other group for which the director determines that the members are engaged in a common enterprise, or have an economic, educational or social affinity or relationship, and that issuance of the policy would not be contrary to the public interest.

5. "Fulfillment materials" means documentation that is sent to the purchaser of a travel protection plan and that confirms the purchase and provides the travel protection plan's coverage and assistance details.

6. "Group travel insurance" means travel insurance that is issued to any eligible group.

7. "Limited lines travel insurance producer" means any of the following:

(a) A licensed managing general agent or third-party administrator.

(b) A licensed insurance producer, including a limited lines producer.

8. "Offer and disseminate" means providing general information, including a description of the coverage and price, processing an application and collecting premiums.

9. "Travel administrator":

(a) Means a person who directly or indirectly underwrites, collects charges, collateral or premiums from, or adjusts or settles claims on residents of this state in connection with travel insurance.

(b) Does not include a person whose only actions that would otherwise cause the person to be considered a travel administrator include the following:

(i) Working for a travel administrator to the extent that the person's activities are subject to the supervision and control of the travel administrator.

(ii) Selling insurance or engaging in administrative and claims‑related activities as an insurance producer within the scope of the producer's license.

(iii) Offering and disseminating travel insurance as a travel retailer while registered under the license of a limited lines travel insurance producer in accordance with this chapter.

(iv) Adjusting or settling claims in the normal course of practice or employment as an attorney-at-law without collecting charges or premiums in connection with insurance coverage.

(v) Being a business entity that is affiliated with a licensed insurer while acting as a travel administrator for the direct and assumed insurance business of the affiliated insurer.

10. "Travel assistance services":

(a) Means noninsurance services for which the consumer is not indemnified based on a fortuitous event and where providing the service does not result in a transfer or shifting of risk that would constitute the business of insurance.

(b) Includes:

(i) Security advisories.

(ii) Destination information.

(iii) Vaccination and immunization information services.

(iv) Travel reservation services.

(v) Entertainment.

(vi) Activity and event planning.

(vii) Translation assistance.

(viii) Emergency messaging.

(ix) International legal and medical referrals.

(x) Medical case monitoring.

(xi) Coordinating transportation arrangements.

(xii) Emergency cash transfer assistance.

(xiii) Medical prescription replacement assistance.

(xiv) Passport and travel document replacement assistance.

(xv) Lost luggage assistance.

(xvi) Concierge services.

(xvii) Any other service that is provided in connection with planned travel.

11. "Travel insurance":

(a) Means insurance coverage for personal risks incident to planned travel, including:

(i) Interruption or cancellation of a trip or event.

(ii) Loss of baggage or personal effects.

(iii) Damages to accommodations or rental vehicles.

(iv) Sickness, accident, disability or death occurring during travel.

(v) Emergency evacuation.

(vi) Repatriation of remains.

(vii) Any other contractual obligations to indemnify or pay a specified amount to a traveler on determinable contingencies related to travel as approved by the director.

(b) Does not include major medical plans that provide comprehensive medical protection for travelers with trips lasting longer than six months, such as those working or residing overseas as an expatriate, or any other product that requires a specific insurance producer license.

12. "Travel protection plans" means plans that provide one or more of the following:

(a) Travel insurance.

(b) Travel assistance services.

13. "Travel retailer" means a business entity that makes, arranges or offers planned travel and may offer and disseminate travel insurance as a service to its customers on behalf of and under the direction of a limited lines travel insurance producer. END_STATUTE

START_STATUTE20-3502. Purpose; applicability

A. The purpose of this chapter is to promote the public welfare by creating a comprehensive legal framework within which travel insurance may be sold in this state.

B. The requirements of this chapter apply to travel insurance that covers any resident of this state and that is sold, solicited, negotiated or offered in this state and to policies and certificates that are delivered or issued for delivery in this state. This chapter does not apply to cancellation fee waivers or travel assistance services except as expressly provided in this chapter.

C. All other applicable provisions of this state's insurance laws continue to apply to travel insurance except that the specific provisions of this chapter supersede any general provisions of law that would otherwise be applicable to travel insurance. END_STATUTE

Sec. 3. Section 20‑333, Arizona Revised Statutes, is transferred and renumbered for placement in title 20, chapter 28, article 1, Arizona Revised Statutes, as added by this act, as section 20‑3503 and, as so renumbered, is amended to read:

START_STATUTE20-3503. Travel insurance producer licensing

A. Notwithstanding any other provision of this title, a travel retailer may offer and issue travel insurance under a limited lines travel insurance producer business entity license under the following conditions:

1. The limited lines travel insurance producer or travel retailer provides to purchasers of travel insurance all of the following:

(a) A description of the material terms or the actual material terms of the insurance coverage.

(b) A description of the process for filing a claim.

(d) The identity and contact information of the insurer and limited lines travel insurance producer.

2. At the time of licensure, the limited lines travel insurance producer establishes and maintains a register, on a form prescribed by the director, of each travel retailer that offers travel insurance on the limited lines travel insurance producer's behalf. The limited lines travel insurance producer shall maintain and annually update the register, which shall include the name, address and contact information of the travel retailer and an officer or person who directs or controls the travel retailer's operations, and the travel retailer's federal tax identification number. The limited lines travel insurance producer shall submit the register to the department within thirty days after a request. The limited lines travel insurance producer shall also certify to the department that the registered travel retailer is not in violation of 18 United States Code section 1033.

3. The limited lines travel insurance producer designates one of the producer's employees who is a licensed individual producer as the person responsible for the limited lines travel insurance producer's compliance with the travel insurance laws and rules of this state.

4. The licensed individual producer designated under paragraph 3 of this subsection complies with the fingerprinting requirements applicable to insurance producers in the resident state of the limited lines travel insurance producer.

5. The limited lines travel insurance producer pays all applicable insurance producer licensing fees required under this title.

6. The limited lines travel insurance producer requires each employee or authorized representative of the travel retailer whose duties include offering and disseminating travel insurance to receive a training or an instruction program, which may be subject to review by the director. The training material, at a minimum, shall contain instructions on the types of insurance offered, ethical sales practices and required disclosures to prospective customers.

B. Limited lines travel insurance producers and those registered under the producer's license are exempt from the examination requirements under this chapter 2 of this title and the continuing education requirements under chapter 18 of this title.

C. Any travel retailer offering or disseminating travel insurance shall make available to prospective purchasers brochures or other written materials that:

1. Provide the identity and contact information of the insurer and the limited lines travel insurance producer.

2. Explain that the purchase of travel insurance is not required in order to purchase any other product or service from the travel retailer.

3. Explain that an unlicensed travel retailer is permitted allowed to provide general information about the insurance offered by the travel retailer, including a description of the coverage and price, but is not qualified or authorized to answer technical questions about the terms and conditions of the insurance offered by the travel retailer or to evaluate the adequacy of the customer's existing insurance coverage.

D. A travel retailer's employee or authorized representative who is not licensed as an insurance producer may not do any of the following:

1. Evaluate or interpret the technical terms, benefits and conditions of the offered travel insurance coverage.

2. Evaluate or provide advice concerning a prospective purchaser's existing insurance coverage.

3. Hold himself out as a licensed insurer, licensed producer or insurance expert.

E. A travel retailer whose insurance‑related activities, and those of the retailer's employees and authorized representatives, are limited to offering and disseminating travel insurance under the limitations of this section may receive related compensation on registration by the limited lines travel insurance producer pursuant to subsection A, paragraph 2 of this section.

F. Travel insurance may be provided under an individual policy or under a group or master policy.

G. As the insurer designee, the limited lines travel insurance producer is responsible for the acts of the travel retailer and shall use reasonable means to ensure compliance by the travel retailer with the requirements of this section.

H. To the extent not inconsistent with this article chapter, section 20‑281, section 20‑286, subsections B, C and D, sections 20‑289 and 20‑289.01, section 20‑290, subsection A and sections 20‑291, 20‑292, 20‑295, 20‑296, 20‑297, 20‑298, 20‑299, 20‑301 and 20‑302 apply to a limited lines travel insurance producer and any travel retailer offering and disseminating travel insurance under the limited lines travel insurance producer business entity license.

I. For the purposes of this section:

1. "Limited lines travel insurance producer" means a business entity that is either:

(a) A managing general agent.

(b) A licensed insurance producer, including a limited lines producer, designated by an insurer as the travel insurance supervising entity.

2. "Offer and disseminate" means providing general information, including a description of the coverage and price, as well as processing the application, collecting premiums and performing other nonlicensable activities permitted by the department.

3. "Travel insurance":

(a) Means insurance coverage for personal risks incident to planned travel, including:

(i) Interruption or cancellation of a trip or event.

(ii) Loss of baggage or personal effects.

(iii) Damages to accommodations or rental vehicles.

(iv) Sickness, accident, disability or death occurring during travel.

(b) Does not include major medical plans, which provide comprehensive medical protection for travelers with trips lasting six months or longer, including those working overseas as expatriates or military personnel being deployed.

4. "Travel retailer" means a business entity that makes, arranges or offers travel services and that may offer and disseminate travel insurance as a service to its customers on behalf of and under the direction of a limited lines travel insurance producer. END_STATUTE

Sec. 4. Title 20, chapter 28, article 1, Arizona Revised Statutes, is amended by adding sections 20‑3504, 20‑3505, 20‑3506, 20‑3507 and 20‑3508, to read:

START_STATUTE20-3504. Premium tax; definitions

A. A travel insurer shall pay premium tax as provided in section 20‑224 on travel insurance premiums paid by any of the following:

1. An individual primary policyholder who is a resident of this state.

2. A primary certificate holder who is a resident of this state and who elects coverage under a group travel insurance policy.

3. A blanket travel insurance policyholder that is a resident in this state, or has its principal place of business or the principal place of business of an affiliate or subsidiary that has purchased blanket travel insurance in this state for eligible blanket group members, subject to any apportionment rules that apply to the insurer across multiple taxing jurisdictions or that allow the insurer to allocate premium on an apportioned basis in a reasonable and equitable manner in those jurisdictions.

B. A travel insurer shall:

1. Document the state of residence or principal place of business of the policyholder or certificate holder as required in subsection A of this section.

2. Report as premium only the amount allocable to travel insurance and not any amounts received for travel assistance services or cancellation fee waivers.

C. For the purposes of this section:

1. "Primary certificate holder" means an individual who elects and who purchases travel insurance under a group policy.

2. "Primary policyholder" means an individual who elects and who purchases individual travel insurance. END_STATUTE

START_STATUTE20-3505. Travel protection plans

Travel protection plans may be offered for one price for the combined features that the travel protection plan offers in this state if both:

1. The travel protection plan clearly discloses to the consumer, at or before the time of purchase, that it includes travel insurance, travel assistance services and cancellation fee waivers, as applicable, and provides information and an opportunity, at or before the time of purchase, for the consumer to obtain additional information regarding the features and pricing of each.

2. The fulfillment materials both:

(a) Describe and delineate the travel insurance, travel assistance services and cancellation fee waivers in the travel protection plan.

(b) Include the travel insurance disclosures and the contact information for persons providing travel assistance services and cancellation fee waivers, as applicable. END_STATUTE

START_STATUTE20-3506. Sales practices; definition

A. All persons offering travel insurance to residents of this state are subject to chapter 2, article 6 of this title relating to unfair trade practices and frauds, except as otherwise provided in this section. If a conflict exists between this chapter and another provision of this title regarding the sale and marketing of travel insurance and travel protection plans, this chapter controls.

B. Offering or selling a travel insurance policy that could never result in payment of any claims for any insured under the policy is an unfair trade practice under chapter 2, article 6 of this title.

C. All documents provided to consumers before the purchase of travel insurance, including sales materials, advertising materials and marketing materials, shall be consistent with the travel insurance policy itself, including forms, endorsements, policies, rate filings and certificates of insurance.

D. For travel insurance policies or certificates that contain preexisting condition exclusions, information and an opportunity to learn more about the preexisting condition exclusions shall be provided any time before the time of purchase and in the coverage's fulfillment materials.

E. The fulfillment materials and the information described in section 20‑3503, subsection A, paragraph 1 shall be provided to a policyholder or certificate holder as soon as practicable following the purchase of a travel protection plan. Unless the insured has either started a covered trip or filed a claim under the travel insurance coverage, a policyholder or certificate holder may cancel a policy or certificate for a full refund of the travel protection plan price from the date of purchase of the travel protection plan until at least either:

1. Fifteen days after the date of delivery of the travel protection plan's fulfillment materials by postal mail.

2. Ten days after the date of delivery of the travel protection plan's fulfillment materials by means other than postal mail.

F. The policy documentation and fulfillment materials shall disclose whether the travel insurance is primary or secondary to other applicable coverage.

G. If travel insurance is marketed directly to a consumer through an insurer's website or by others through an aggregator site, it is not an unfair trade practice or other violation of law if an accurate summary or short description of the coverage is provided on the website and the consumer has access to the full provisions of the policy through electronic means.

H. A person may not offer, solicit or negotiate travel insurance or travel protection plans on an individual or group basis by using a negative or opt out option that requires a consumer to take an affirmative action to deselect coverage, such as unchecking a box on an electronic form, when the consumer purchases a trip.

I. It is an unfair trade practice to market blanket travel insurance coverage as free.

J. If a consumer's destination jurisdiction requires insurance coverage, it is not an unfair trade practice to require that a consumer choose between the following options as a condition of purchasing a trip or travel package:

1. Purchasing the coverage required by the destination jurisdiction through the travel retailer or limited lines travel insurance producer supplying the trip or travel package.

2. Agreeing to obtain and provide proof of coverage that meets the destination jurisdiction's requirements before departure.

K. For the purposes of this section, "delivery" means handing fulfillment materials to the policyholder or certificate holder or sending fulfillment materials by postal mail or electronic means to the policyholder or certificate holder. END_STATUTE

START_STATUTE20-3507. Travel administrators

A. Notwithstanding any other provision of this title, a person may not act or represent itself as travel administrator for travel insurance in this state unless that person either:

1. Is a licensed property and casualty insurance producer in this state for activities allowed under that producer license.

2. Holds a valid managing general agent license in this state.

B. A travel administrator and its employees are exempt from the licensing requirements of chapter 2, article 3.2 of this title for travel insurance it administers.

C. An insurer that underwrites travel insurance is responsible for the acts of the travel administrator administering that travel insurance, ensuring that the travel administrator maintains all books and records relevant to the insurer and ensuring that the travel administrator makes the books and records available to the director on request. END_STATUTE

START_STATUTE20-3508. Classification

A. Notwithstanding any other provision of this title, travel insurance is classified and filed for purposes of rates and forms under an inland marine line of insurance, except that travel insurance that provides coverage for sickness, accident, disability or death occurring during travel, either exclusively or in conjunction with related coverages of emergency evacuation or repatriation of remains, may be filed under either an accident and health line of insurance or an inland marine line of insurance.

B. Travel insurance may be in the form of an individual, group or blanket policy.

C. Eligibility and underwriting standards for travel insurance may be developed and provided based on travel protection plans that are designed for individual or identified marketing or distribution channels, if those standards also meet this state's underwriting standards for inland marine. END_STATUTE

Sec. 5. Short title

Title 20, chapter 28, Arizona Revised Statutes, as added by this act, may be cited as the "Travel Insurance Model Act".