HB2238 - 522R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 20, chapter 6, Arizona Revised Statutes, is amended by adding article 18, to read:

ARTICLE 18. IDENTITY THEFT GROUP INSURANCE POLICIES

START_STATUTE20-1694. Definitions

In this article, unless the context otherwise requires:

1. "Account group member" means a person who either:

(a) Has a credit card account or debit card account that is issued by a sponsor or has agreed with the sponsor to pay obligations arising from the use of a credit card or debit card issued to another person.

(b) May access by check an account maintained by the sponsor.

2. "Authorized user" means a group member or any other person designated by the group member as an authorized user of the account group member's payment medium.

3. "Conditional renewal" means a renewal that is conditioned on change of limits, change in type of coverage, reduction or elimination of coverage, increased deductibles or addition of exclusions or increased premiums in excess of ten percent, except for premium increases that are generated as a result of increased exposure units or as a result of experience rating, loss rating, retrospective rating or audit.

4. "Employer" includes subsidiaries or affiliates of the employer.

5. "Sponsor" means any of the following:

(a) A commercial creditor that issues a credit card or debit card to its account group members.

(b) A commercial creditor that maintains an account that may be accessed by check by the commercial creditor's account group members.

(c) The trustee or trustees of a trust established or participated in by one or more commercial creditors for the benefit of the commercial creditor's account group members.

6. "Stolen identity event" includes the theft, accidental release, publication or misappropriation of information related to an individual's personal identification or social security number or other method of identifying the individual that has resulted in or could reasonably result in the wrongful use of the information. END_STATUTE

START_STATUTE20-1694.01. Identity theft group insurance; eligible groups

A. An insurer may issue or deliver an identity theft group insurance policy in this state only in accordance with this article. The policy shall cover losses and expenses incurred because of a stolen identity event.

B. An insurer may issue an identity theft group insurance policy to any of the following:

1. An employer, or the trustee or trustees of a fund established by an employer, where the policy insures the employees of the employer and the employer or trustee is the policyholder.

2. A labor union, or the trustee or trustees of a fund established by a labor union, where the policy insures the members of the labor union and the labor union or trustee is the policyholder.

3. A trustee of a trust established or participated in by two or more employers or labor unions or by one or more employers and one or more labor unions, where the policy insures the employees of the employers and the members of the labor unions and the trustee is the policyholder.

4. A sponsor, where the policy insures account group members.

5. An association, or the trustee or trustees of a fund established, created or maintained for the benefit of one or more associations, where all the eligible members of the association or associations have the same profession, trade or occupation and the association or associations have been organized and maintained in good faith for purposes principally other than for obtaining insurance and have been in active existence for at least two years. The policy insures the members of the associations and the Association or trustee is the policyholder.

6. A business that sells services or products that are designed to prevent or to minimize the effects of stolen identity events, where the policy insures the persons who purchase the services or products and the business is the policyholder.

7. Any other business or association that has in its possession individuals' personal identification information, where the policy insures the individuals whose information the business or association possesses.

8. Any other entity that the director determines by rule that the members are engaged in a common enterprise or have an economic or social affinity or relationship and that the issuance of the policy would not be contrary to the best interests of the public.

C. The groups listed in subsection B of this section shall consist only of natural persons and may include a member of the group member's immediate family or household or, where the group policyholder is a sponsor, an authorized user.

D. An insurer shall treat all eligible groups of the same class in a like manner. Except for the group listed in subsection B, paragraph 6 of this section, a group member may not be required to purchase any product or service to be eligible for the coverage. END_STATUTE

START_STATUTE20-1694.02. Identity theft group insurance policy; premiums; cancellation; requirements

A. The group policyholder may pay the premium for an identity theft group insurance policy from monies contributed wholly by the group policyholder, wholly by the group members or jointly by the group policyholder and the group members, except that the group policyholder shall pay the premium for the group policy specified in section 20‑1694.01, subsection B, paragraph 7.

B. The following requirements apply to the cancellation, nonrenewal or conditional renewal of coverage under an identity theft GROUP insurance policy:

1. The policy shall be issued or renewed for a one‑year policy period unless the policy provides for a longer policy period.

2. Except as provided in paragraph 3 of this subsection, an insurer may cancel the policy or any certificate issued under the policy only if cancellation is based on one or more of the following reasons:

(a) Nonpayment of premium if the notice of cancellation informs the insured of the amount due.

(b) Conviction of a criminal offense arising out of acts increasing the hazard insured against.

(c) Discovery of fraud or material misrepresentation in obtaining the policy or in the presentation of a claim under the policy.

(d) After the policy is issued or after the last renewal date, discovery of an act or omission or a violation of any policy condition that substantially and materially increases the hazard insured against and that occurred subsequent to the inception of the current policy period.

(e) Material change in the nature or extent of the risk that occurred after the issuance or last annual renewal anniversary date of the policy that causes the risk of loss to be substantially and materially increased beyond what was contemplated at the time the policy was issued or last renewed.

(f) A determination by the director that continuation of the present premium volume of the insurer would jeopardize that insurer's solvency or be hazardous to the interests of the policyholders of the insurer, its creditors or the public.

3. An individual group member's coverage under this article terminates on termination of the member's employment by or other affiliation with the group policyholder that constitutes membership in the group.

4. An act or omission by a group member does not constitute the basis for cancellation of the group policy.

5. An insurer's cancellation, nonrenewal or conditional renewal of a group policy or any certificate issued under the policy shall set forth the specific reasons for cancellation, nonrenewal or conditional renewal and does not become effective until at least forty‑five days, or twenty days if based on nonpayment of premium, after the insurer mails or delivers written notice of the cancellation, nonrenewal or conditional renewal to the group policyholder at the mailing address shown in the policy and to affected certificate holders at each certificate holder's last known mailing address. If authorized by the insurer, the group policyholder may mail or deliver the notice to the certificate holder on behalf of the insurer.

C. A group policyholder may cancel the group policy for any reason on thirty days' written notice to the insurer and each affected group member. A group policyholder is not required to give notice to a group member if substantially similar coverage has been obtained from another insurer without a lapse of coverage.

D. If a group member sustains an identity theft loss before the effective date of the cancellation, nonrenewal or conditional renewal of a group policy or the cancellation, nonrenewal, conditional renewal or termination of a certificate, whether initiated by the insurer, group policyholder or group member, the loss shall remain covered as provided under the policy notwithstanding the cancellation, nonrenewal, conditional renewal or termination. END_STATUTE

Sec. 2. Rulemaking; department of insurance; exemption

The director of the department of insurance shall adopt rules necessary to implement this act. For the purposes of this act, the department of insurance is exempt from the rulemaking requirements of title 41, chapter 6, Arizona Revised Statutes, for one year after the effective date of this act.