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ARIZONA STATE SENATE
Fifty-Fourth Legislature, Second Regular Session
AMENDED
insurance transactions; discrimination; exceptions
Purpose
Includes, in the list of practices not prohibited in life and disability insurance, payment of implementation credits a life insurer makes to offset expenses that a group policyholder incurs when the life insurer changes or administers new or existing group coverage.
Background
Current statute outlines the following practices not prohibited in life and disability insurance and allows an insurer to: 1) in life insurance or life annuity, pay bonuses to policyholders or otherwise abate their premiums, if deemed fair to policyholders; 2) in life insurance policies issued on the industrial debit plan, make specified allowances to certain policyholders; 3) readjust the rate of premium for a group insurance policy based on the loss or expense experienced; and 4) issue life or disability policies on a salary savings or payroll deduction plan at a reduced rate that is commensurate with the savings made by the use of the plan. Additionally, insurers may offer: 1) in a group disability insurance or individual disability insurance, rewards or incentives under a wellness program that satisfies the Health Insurance Portability and Accountability Act nondiscrimination regulations; and 2) products or services that are ancillary or related to any policy of life or disability insurance and that are intended to minimize or prevent claims-related losses or expenses, to deter injury or death or to improve the health of the insured (A.R.S. § 20-450).
Statute prohibits insurers from permitting any unfair discrimination respecting hemophiliacs or between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees or rates charged for any policy or contract of disability insurance or in the benefits payable or in any of the terms or conditions of the contract, or in any other manner, with certain exceptions (A.R.S. § 20-448).
Statute prohibits an insurer from paying or giving, or offering to pay or give, directly or indirectly, any rebate of premiums payable on a contract of life insurance, life annuity or disability insurance, or any special favor or advantage in the dividends or other benefits as an inducement to such insurance or annuity contract (A.R.S. § 20-449). An insurer or insurance producer cannot offer, sell, buy, or give any of the following as an inducement to insurance or in connection with any insurance transaction: 1) employment; 2) shares of stocks or other securities; 3) any contract providing or promising any special profits; or 4) any prizes, goods or tangible property that values more than $100 (A.R.S. § 20-452).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Specifies that statute does not include, within the definition of discrimination or rebates on life and disability insurance, payment of implementation credits a life insurer makes to offset expenses that a group policyholder incurs when the life insurer initiates, changes or administers new or existing group coverage.
2. Allows a life insurer to either:
a) include implementation credits in the premium charged to a policyholder and then reimburse the policyholder; or
b) pay for implementation credits and provide appropriate disclosure in the group policy.
3. Specifies that statute does not prohibit a life insurer from providing or offering to provide payments of implementation credits to offset expenses that a group policyholder or employer incurs when the life insurer initiates, changes or administers new or existing group coverage.
4. Requires a life insurer who includes implementation credits in the premium charged to a policyholder to disclose to the policyholder that the implementation credits were included in the premium.
5. Specifies that statute does not prohibit an insurer from providing or offering ancillary products or services that enhance the financial wellness of an insured.
6. Specifies that life insurance includes disability income policies and supplemental benefit policies.
7. Makes technical and conforming changes.
8. Becomes effective on the general effective date.
Amendments Adopted by Committee
1. Specifies that statute does not prohibit an insurer from providing or offering to provide payments of implementation credits to offset expenses incurred by a group policyholder or employer when initiating, changing or administering group coverage and requires the life insurer to disclose to the policyholder whether implementation credits were included in the premium.
2. Specifies that statute does not prohibit an insurer from providing or offering ancillary products or services that enhance the financial wellness of an insured.
3. Removes the specification that statute does not prohibit an insurer from providing or offering to provide products or services that have a nexus to or that enhance the insurance benefits purchased.
4. Includes disability income policies and supplemental benefit policies in life insurance.
Senate Action
FIN 1/22/20 DPA 10-0-0
Prepared by Senate Research
January 23, 2020
MG/AB/gs