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ARIZONA STATE SENATE
Fifty-Fourth Legislature, Second Regular Session
insurance policies; transfers; affiliated insurers
Purpose
Permits an insurer to transfer any of its policies to an affiliated insurer without issuing a notice of cancellation.
Background
Statute governs policies of property and casualty insurance, other than motor vehicle and workers' compensation insurance, on risks located in Arizona (A.R.S. Title 20, Chapter 6, Article 12).
After
a policy has been in effect for 60 days or if the policy is a renewal, no
notice of cancellation may be effective unless it is based on one or more of
the following: 1) a failure to pay; 2) conviction of a crime that increases the
hazard insured against; 3) fraud; 4) negligence that increases the hazard
insured against; 5) a substantial change in risk that could not have been
reasonably foreseen by the insurer; 6) a determination by the Director of the
Department of Insurance of illegal policy or a major error on the part of the
insured; or 7) failure of the insured to take reasonable steps to eliminate or
reduce conditions that perpetuate the risk insured against (A.R.S.
§ 20-1652). A notice must be given 30 days in
advance of the end of a policy period if the insurer intends to not renew or to
condition policy renewal. If notice is not given, the insurer must renew the
policy upon payment of the premium due on the effective date of renewal (A.R.S.
§ 20-1654).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Allows an insurer to transfer any of its policies to an affiliated insurer.
2. Prohibits an insurer from transferring a policyholder based on the policyholder's location of residence, age, race, color, religion, sex, national origin or ancestry.
3. Prohibits an insurer from applying a new unrestricted 60-day period for cancellation or nonrenewal for a policy transfer to an affiliated insurer.
4. Specifies that nonrenewal does not include the issuance and delivery of a new policy within the same insurer or an insurer under the same ownership or management as the original insurer of the policy.
5. Makes technical and conforming changes.
6. Becomes effective on the general effective date.
Prepared by Senate Research
January 13, 2020
MG/AS/kja