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ARIZONA STATE SENATE
Fifty-Fourth Legislature, Second Regular Session
appropriation; actuarial study; reinsurance feasibility
Purpose
Appropriates $250,000 from the state General Fund to the Department of Insurance and Financial Institutions (DIFI) in FY 2021 to conduct an actuarial study on the feasibility of establishing a reinsurance program to secure a state innovation waiver and outlines the feasibility study.
Background
The Arizona Department of Insurance (DOI) regulates and monitors insurance companies and professionals operating in Arizona to protect the public and help ensure that these entities follow Arizona and federal laws (Ariz. Const. art. 15 § 5). DOI is responsible for: 1) licensing qualified insurance professionals and companies; 2) investigating consumer complaints and suspected fraud; 3) overseeing insurance companies’ financial solvency; 4) reviewing insurance policies, rates and products; and 5) administering funds (A.R.S. §§ 20-285; 20-376; 20-466; 20‑491.03; 20-662; and 20-683).
The Department of Financial Institutions (DFI) executes the laws of Arizona relating to financial institutions and enterprises (A.R.S. § 6-110). DFI licenses, supervises and regulates state‑chartered financial institutions and enterprises and is responsible for annual assessments of the financial institutions and enterprises to ensure the safety and stability of the financial services industry (A.R.S. § 6-121). DFI may also conduct examinations and investigations within or outside Arizona against acts that constitute unsafe practice or a violation of any law or rule applicable to the jurisdiction of the superintendent of DIFI or to aid in the enforcement of DFI's duties (A.R.S. § 6-124).
Laws 2019, Chapter 252 consolidated DFI and DOI into DIFI, effective July 1, 2020. DIFI assumes the responsibilities that are prescribed to both DFI and DOI.
S.B. 1213 appropriates $250,000 from the state General Fund to DIFI in FY 2021.
Provisions
1. Appropriates $250, 000 in FY 2021 from the state General Fund to DIFI to conduct an actuarial study on the feasibility of establishing a reinsurance program to secure a section 1332 state innovation waiver by the U.S. Secretary of Health and Human Services under the Patient Protection and Affordable Care Act.
2. Requires the actuarial study to:
a) consider insurance premiums and risks associated with individuals who are insured through a health care exchange or marketplace under the Patient Protection and Affordable Care Act; and
b) review states with approved risk mitigation waivers and their corresponding funding obligations.
3. Requires DIFI to include stakeholder input on best practices, premium offsets and risk factors to consider when determining the feasibility of establishing a section 1332 waiver.
4. Exempts the appropriation from lapsing.
5. Becomes effective in the general effective date.
Prepared by Senate Research
February 3, 2020
MG/AJS/gs