Assigned to FIN                                                                                                                 AS PASSED BY COW

ARIZONA STATE SENATE

Fifty-Fourth Legislature, Second Regular Session

AMENDED

FACT SHEET FOR S.B. 1079

health care service corporations; scope

(NOW: insurance; unfair settlement practices; rulemaking)

Purpose

            Requires the Arizona Department of Insurance and Financial Institutions (DIFI) to adopt rules that substantially conform to the current version of the National Association of Insurance Commissioners (NAIC) Unfair Claim Settlement Practices Model Act (Act).

Background

The Act sets forth standards for the investigation and disposition of claims arising under policies or certificates of insurance issued to residents. The act states it is not intended to cover claims involving workers’ compensation, fidelity, suretyship or boiler and machinery insurance (NAIC Act).

Current statute prohibits unfair, discriminatory or deceptive insurance practices. An insurer may not commit or perform certain practices, including: 1) misrepresenting pertinent facts or insurance policy coverage provisions; 2) failing to adopt and implement reasonable standards for the prompt investigation of claims; and 3) attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured. The Director of DIFI must follow, in prescribing rules relating to unfair claim settlement practices, the NAIC unfair claims settlement practices model regulation (A.R.S. § 20-461).

The Director of DIFI must adopt rules for hospital and medical service corporations and health care services organizations relating to coordination of benefits provisions in group disability insurance policies (A.R.S. § 20-1134).

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

1. Requires DIFI to adopt rules that substantially conform to the current version of the NAIC Act and that are consistent with unfair claim settlement practices statute.

2. Requires DIFI to amend the rules governing coordination of benefits in group disability insurance policies.

3. Exempts DIFI from rulemaking for one year.

4. Becomes effective on the general effective date.

Amendments Adopted by Committee

· Adopted a strike-everything amendment.

Senate Action

FIN                 2/19/20      DPA/SE      6-0-4

Prepared by Senate Research

February 26, 2020

MG/gs