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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
workers' compensation; assigned risk plan
Purpose
Outlines the factors that exclude an employer who is refused workers' compensation coverage from placement in the assigned risk plan.
Background
The Industrial Commission of Arizona (ICA) is the state regulatory agency responsible for processing and adjudicating a workers' compensation claim (A.R.S. Title 23, Chapter 6). An employer must secure workers' compensation to their employees by either: 1) insuring and keeping insured the payment of such compensation with an authorized insurance carrier; or 2) furnishing to the ICA satisfactory proof of financial ability to pay the compensation directly or through a workers' compensation pool approved by the ICA (A.R.S. § 23-961).
An insurer may decline to issue a workers' compensation or occupational disease policy to an employer. An employer who is refused coverage by two or more insurers must be placed in the assigned risk plan. The Director of the Department of Insurance and Financial Institutions (DIFI) must contract with a qualified third party to be the assigned risk plan administrator. The administrator must develop a plan of operation and, on approval from the Director of DIFI, must issue directive for the equitable apportioning of assigned risks among all insurers. The plan must including the following: 1) a method for the administrator to select one or more insurers transacting workers' compensation insurance in Arizona to act as its own servicing carrier; and 2) a method for apportioning the workers' compensation assigned risk among all insurers (A.R.S. § 23-1091).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Specifies that an employer is excluded from placement in the assigned risk plan if the following factors exist when the employer submits an application for the assigned risk plan:
a) on a current or previous workers' compensation policy, the employer either:
i. knowingly does not meet reasonable health and safety requirements or audit or loss prevention requirements; or
ii. does not allow any insurance carrier or assigned insurance carrier reasonable access to the employer's records for audit or inspection purposes under the policy;
b) the employer has an outstanding premium that is due on a workers' compensation policy and that is not subject to a bona fide dispute; or
c) the employer or the employer's representative knowingly fails to comply with the assigned risk plan's application procedures or knowingly makes a material misrepresentation on the application.
2. Becomes effective on the general effective date.
House Action
COM 1/21/25 DP 10-0-0-0
3rd Read 2/4/25 59-0-1
Prepared by Senate Research
March 3, 2025
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