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ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
AMENDED
banking; licensing; fees
Purpose
Makes various licensure and fee changes for consumer lenders, mortgage brokers, mortgage bankers, commercial mortgage bankers, dental insurers and real estate appraisal licensees or certificate or permit holders.
Background
The Department of Insurance and
Financial Institutions (DIFI) licenses and authorizes the transaction of
insurance business by insurers, producers and other enterprises and regulates
state-chartered financial entities, including sales finance companies, consumer
lenders, mortgage bankers, commercial mortgage banker, mortgage brokers, dental
insurers and real estate appraisal entities. The Deputy Director of DIFI
(Deputy Director) has the authority and responsibility for the discharge of all
duties of the Financial Institutions Division (A.R.S. Title 6 and A.R.S. Title 20).
A person may not engage in the business of a consumer lender or premium finance company without first being licensed by DIFI. A person who is not specifically exempted and who advertises for or solicits to finance premiums or enter into or acquire premium finance agreements is presumed to be engaged in the business as a premium finance company. A premium finance company licensee may not establish a branch office without first obtaining a branch office permit from the Deputy Director. Each license or branch permit applicant must submit an application in writing, under oath, on a Deputy Director-prescribed form. At the time of filing an application, an applicant must pay the statutorily prescribed fee. By June 30, each consumer lender licensee may annually obtain a license renewal by filing an application and paying the prescribed fee. Before December 31, each premium finance company licensee may annually obtain a renewal of a license or branch office permit by paying the prescribed fee (A.R.S. § 6-603 and 6-1402).
A person may not act as a mortgage broker if the person is not licensed. A person who brokers only commercial mortgage loans must obtain either a mortgage broker license or a commercial mortgage broker license. A person who brokers residential mortgage loans must obtain a mortgage broker license. A person must apply for a license or for a renewal of a license in writing on the Deputy Director-prescribed forms. The nonrefundable application fee must accompany each application for an original license only. An applicant for a mortgage broker, mortgage banker and commercial mortgage banker license must meet specific outlined criteria in order to be licensed (A.R.S. § 6-903; 6-943; and 6-973).
By March 31, DIFI must prepare an annual medical loss ratio report for each dental insurer doing business in Arizona. In calculating the medical loss ratio, DIFI must use the following data submitted by dental insurers in existing required regulatory filings: 1) adjusted incurred annual dental claims in Arizona; 2) annual dental insurance premiums earned in Arizona; and 3) annual incurred federal and state taxes, licensing fees and regulatory fees on dental premiums in Arizona (A.R.S. § 20-126).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Consumer Lenders and Premium Finance Companies
1. Specifies that a consumer lender license or premium finance company license or permit that is not suspended, revoked or terminated remains active until the license expires.
2. Requires a consumer lender licensee to annually apply for renewal, as prescribed by the Deputy Director, and pay the prescribed renewal fee by June 30.
3. Requires a premium finance company licensee or permittee to annually apply for renewal, as prescribed by the Deputy Director, and pay the prescribed renewal fee by December 31.
4. Prohibits the holder of an expired consumer lender license or premium finance company license or permit from being issued a renewal license.
5. Requires a consumer lender and premium finance company applicant to pay a $25 late fee, in addition to the prescribed fee, for each day after the renewal due date that the renewal application is not received by the Deputy Director.
6. Prohibits a consumer lender licensee and premium finance company licensee, if the Deputy Director does not receive the licensee's renewal application and fee by the due date, from acting as a licensee until the license is renewed or a new license is issued.
7. Stipulates that a consumer lender license automatically expires if the Deputy Director does not receive the licensee's renewal application and fee by July 31.
8. Stipulates that a premium finance company license or permit automatically expires if the Deputy Director does not receive the licensee's or permittee's renewal application and fee by January 31.
Mortgage Brokers, Mortgage Bankers and Commercial Mortgage Bankers
9. Increases, from two to four, the number of times a mortgage broker applicant may test within a 12-month period to obtain a mortgage broker license.
10. Removes the authorization for a mortgage broker, mortgage banker or commercial mortgage banker licensee that operates two or more licensed businesses within Arizona to maintain business records outside of Arizona.
11. Requires a mortgage broker, mortgage banker and commercial mortgage banker licensee that maintains records within Arizona, rather than licensees that maintain records outside of Arizona, to make records available to the Deputy Director within three days after demand.
12. Removes the requirement that the Deputy Director approve a mortgage banker and mortgage broker licensee that uses a computer or mechanical recordkeeping system to not keep a written copy of the records.
Real Estate Appraisal Licensee or Certificate Holder
13. Allows a real estate appraisal licensee or certificate holder to apply for license renewal within 30 days before the license or certificate expires.
14. Removes the requirement that the Deputy Director must collect a $5 fee for a duplicate property tax agent registration certificate.
Dental Insurers
15. Removes requirements for DIFI to:
a) use prescribed data from existing required regulatory filings when calculating the annual medical loss ratio for each dental insurer; and
b) prepare an annual report on the medical loss ratio for each Arizona dental insurer.
16. Requires, beginning July 1, 2024, and each year thereafter, each dental insurer doing business in Arizona to file with DIFI, on a DIFI-issued form, a dental loss ratio report (DLR report).
17. Requires the DLR report to include a combined dental loss ratio percentage for all individual dental policies and all group dental policies issued to fully insured groups.
18. Requires DIFI, by August 1, to annually post each dental insurer's reported DLRs on the DIFI website in a manner that is easily located and identifiable to the public.
19. Prohibits DIFI from posting the underlying claims, premiums and other data used to calculate the DLRs and requires DIFI to treat all claims, premiums and other data as confidential.
20. Includes, in the definition of a dental insurer, prepaid dental plan organizations.
Miscellaneous
21. Allows the Deputy Director to use the Nationwide Mortgage Licensing System for all aspects of licensure.
22. Removes the requirement that a notice from a loan originator's employing entity must contain a request for the loan originator's license and be dated, signed and notarized.
23. Removes the requirement that the Deputy Director, on receipt of the license request, forward the loan originator's license to the employing entity.
24. Delays the debt management company license renewal date to June 30, rather than June 15.
25. Defines terms.
26. Makes technical and conforming changes.
27. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
1. Removes requirements for DIFI to:
a) use prescribed data from existing required regulatory filings when calculating the annual medical loss ratio for each dental insurer; and
b) prepare an annual report on the medical loss ratio for each Arizona dental insurer.
2. Requires, beginning July 1, 2024, a dental insurer that conducts business in Arizona to annually file a DLR report with DIFI by July 1.
3. Prescribes information that must be included in each dental insurer's annual DLR report.
4. Requires DIFI to post each dental insurer's reported DLRs on the DIFI website by August 1 and prohibits DIFI from posting the underlying claims, premiums and other data used to calculate the DLRs.
5. Defines terms.
6. Makes technical changes.
House Action Senate Action
COM 1/17/23 DPA 10-0-0-0 FIN 3/6/23 DP 6-0-1
3rd Read 2/20/23 56-0-4
Prepared by Senate Research
May 9, 2023
MG/ZS/sr