SB1040 - 542R

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

Section 1. Section 20-117, Arizona Revised Statutes, is amended to read:

START_STATUTE20-117. Definitions

In this title, unless the context otherwise requires:

1. "Health care services organization" has the same meaning prescribed in section 20‑1051.

2. "Private passenger motor vehicle" means any vehicle that is rated or insured under a family automobile policy, standard automobile policy, personal automobile policy or similar private passenger automobile policy written for personal use, including use by an insured of a motor vehicle in the course of the insured's volunteer work for a tax‑exempt organization as described in section 501(c)(3) of the internal revenue code, as opposed to a motor vehicle rated or insured under a commercial automobile policy.

3. "Send", "sending" or "sent" means to deliver by United States mail, personal delivery or fax or by electronic means consistent with the requirements of section 20‑239.

3. 4. "Volunteer work" means work performed without compensation other than reimbursement of actual expenses incurred, or disbursement of meals or other incidental benefits. END_STATUTE

Sec. 2. Title 20, chapter 1, article 1, Arizona Revised Statutes, is amended by adding section 20-123, to read:

START_STATUTE20-123. Sending notices and correspondence

For the purposes of this title, if a notice or correspondence is sent by:

1. Mail, the sender must send the notice or correspondence to the recipient's last known mailing address on file with the insurer.

2. Electronic means, the sender must send the notice or correspondence to the recipient's last known email address as provided by the recipient to the insurer. END_STATUTE

Sec. 3. Section 20-239, Arizona Revised Statutes, is amended to read:

START_STATUTE20-239. Electronic communications and records; applicability; definitions

A. Any notice to a party or any other document that is required under this title in an insurance transaction or that is to serve as evidence of insurance coverage may be delivered, stored and presented by electronic means if it meets the requirements of title 44, chapter 26, article 1.

B. An insurer may deliver a notice or document by electronic means to a party pursuant to this section if the party electronically consents, or confirms consent electronically in advance, to that method of electronic delivery and has not withdrawn consent. An insurer shall obtain distinct advanced electronic consent from the named insured for delivery of any notice under section 20‑1632.

C. An oral communication or a recording of an oral communication does not qualify as consent for the purposes of this section.

D. Notwithstanding subsection A of this section, an insurer issuing sending a notice pursuant to section 20‑1632, subsection A, for a period of five years after the date of the notice, shall maintain in its files verification that the notice was sent by electronic means with a United States postal service electronic postmark or another electronic mail email delivery service that provides electronic postmarks substantially similar to a United States postal service electronic postmark. The verification must contain sufficient information from which the department may determine that the notice was properly sent.

E. An insurer providing notice to an insured pursuant to section 20‑1632 by electronic means shall further deliver also send that notice to the named insured by United States postal service certified mail, certificate of mailing or first class mail using intelligent mail barcode or another similar tracking method used or approved by the United States postal service pursuant to section 20‑1632 if either of the following applies:

1. The notice being electronically delivered is rejected for delivery or returned to the insurer.

2. The insurer becomes aware that the electronic mail email address provided by the party is no longer valid.

F. Delivery of a notice or document pursuant to this section is equivalent to any delivery method required under this title, including delivery by the United States postal service by first class mail, postage prepaid, certified mail, certificate of mailing or first class mail using intelligent mail barcode or another similar tracking method used or approved by the United States postal service.

G. After the party gives consent, if a change in the hardware or software requirements needed to access or retain a notice or document delivered by electronic means creates a material risk that the party will not be able to access or retain a subsequent notice or document to which the consent applies, the insurer must inform the party of:

1. The revised hardware and software requirements for access to and retention of a notice or document delivered by electronic means.

2. The party's right to withdraw consent without the imposition of any fee, condition or consequence.

H. This section does not affect the requirements related to content or timing of any notice or document required under this title.

I. If a provision of this title expressly requires verification or acknowledgment of receipt of a notice or document, the notice or document may be delivered by electronic means only if the method used provides for verification or acknowledgment of receipt.

J. The legal effectiveness, validity or enforceability of any insurance contract or policy executed by a party may not be denied solely because the insurer failed to obtain electronic consent or confirmation of consent.

K. A party's withdrawal of consent:

1. Does not affect the legal effectiveness, validity or enforceability of a notice or document delivered by electronic means to the party before the withdrawal of consent is effective.

2. Is effective within seven days after the insurer receives the withdrawal.

L. If an insurer fails to comply with subsection G of this section, the party may treat that failure as a withdrawal of consent for the purposes of this section.

M. This section does not apply to a notice or document delivered by an insurer in an electronic format before the effective date of this section July 24, 2014 to a party who, before that date, has consented to receive a notice or document in an electronic format as otherwise provided by law.

N. If a party's consent to receive certain notices or documents in an electronic format is on file with an insurer before the effective date of this section July 24, 2014 and the insurer intends to deliver additional notices or documents to that party in an electronic format pursuant to this section, before delivering the additional notices or documents electronically the insurer must notify the party of both of the following:

1. The notices or documents that may be delivered by electronic means under this section that were not previously delivered electronically.

2. The party's right to withdraw consent to have notices or documents delivered by electronic means.

O. An insurer may not charge a fee to a party who does not consent to receive notices or documents by electronic means and who chooses to receive the notices or documents in hard copy.

P. This section applies only to property, casualty and life insurance policies that are subject to this title.

Q. This section does not modify, limit or supersede the electronic signatures in global and national commerce act (P.L. 106-229; 15 United States Code section sections 7001 through 7031).

R. For the purposes of this section:

1. "Delivered by electronic means" includes either:

(a) The delivery to an e-mail email address at which a party has consented to receive notices or documents.

(b) The posting on an electronic network or site accessible via the internet, or a mobile application, computer, mobile device, tablet or other electronic device, together with a separate notice of the posting that is provided by electronic mail email to the e-mail email address at which the party has consented to receive notice or by any other delivery method that has been consented to by the party.

2. "Party" means a recipient of any notice or document as part of an insurance transaction, including an applicant, an insured or a policyholder. END_STATUTE

Sec. 4. Section 20-240, Arizona Revised Statutes, is amended to read:

START_STATUTE20-240. Electronic posting of policies; definitions

A. Notwithstanding section 20‑239, an insurer may post property and casualty insurance policies and endorsements that are subject to article 4.1 of this chapter pursuant to section 20‑382 on the insurer's website instead of mailing or delivering sending the policies and endorsements to the insured, if all of the following conditions are satisfied:

1. The policies and endorsements posted by the insurer on its website do not contain personal information or privileged information.

2. The insurer makes accessible each policy and endorsement:

(a) On the insurer's website while each policy and endorsement remains in use.

(b) For a period of five years after the insurer discontinues the policy or endorsement is discontinued by the insurer.

3. The insurer posts its policies and endorsements on the insurer's website in a manner that enables the insured to print and save a copy of the policy and endorsements using programs and applications that are widely available on the internet and free of charge to use.

4. The insurer agrees to respond to requests from the insured in a timely manner and to provide notice in the manner that the insurer customarily communicates with an insured:

(a) At the time of issuance of the initial policy forms and any renewal forms of a method by which the insured may obtain, on request and without charge, a paper or electronic copy of the insured's policy or endorsement.

(b) Of any changes to the forms or endorsements, and of the insured's right to obtain, on request and without charge, a paper or electronic copy of the forms and endorsements.

(c) Of the insurer's specific website address and instructions on how to access the referenced policy and endorsement forms on the insurer's website.

5. On each declarations page delivered to an insured, the insurer clearly identifies the exact policy and endorsement forms purchased by the insured.

B. For the purposes of this section, "personal information" and "privileged information" have the same meanings prescribed in section 20‑2102. END_STATUTE

Sec. 5. Section 20-367.01, Arizona Revised Statutes, is amended to read:

START_STATUTE20-367.01. Appeals procedure

A. Within a reasonable time after receiving a written request and on payment of a reasonable fee, every rating organization and insurer shall give to any insured affected by a rate that is made or applied by the organization or insurer, or to the insured's authorized representative, all pertinent information related to the rate.

B. If a person is aggrieved by the application of a rating system, the person may send a written request to the workers' compensation appeals board established by section 20‑367 to review the manner in which the rating system has been applied to the insurance afforded the aggrieved person. The aggrieved person or that person's representative may present the grievance before the board. A representative of the rating organization whose rating system is the subject of the appeal shall attend any hearing before the board pursuant to this section to explain that application of the rating system to the aggrieved person.

C. If the board does not act on the aggrieved person's request for review within thirty days after receiving the request, the aggrieved person may proceed as if the board had rejected the request for review.

D. The appellant shall pay the cost to record the board's proceedings.

E. The board shall mail send a written notice of its decision to the aggrieved person. Within thirty days after the date the board sends the written notice of the board's its decision is mailed by the board, the aggrieved person may appeal the action to the director. After a hearing held on at least ten days' written notice to the person and the rating organization or insurer, the director shall affirm, modify or reverse the board's decision. The person appealing the board's decision shall pay the costs of the transcript and record of the appeal to the director. END_STATUTE

Sec. 6. Section 20-866, Arizona Revised Statutes, is amended to read:

START_STATUTE20-866. Location of office; publications; grievance procedure

A. The principal office of a domestic society shall be located in this state. The meetings of the society's supreme governing body may be held in any state, district, province or territory in which the society has at least one subordinate lodge or in any other place that is determined by the supreme governing body. Business that is transacted at an out of state meeting is valid in all respects as if the meeting were held in this state. The minutes of the proceedings of the supreme governing body and the board of directors shall be in English.

B. A society may publish an official publication in which any notice, report or statement required by the society's laws to be given to its members is published. A required notice, report or statement shall be conspicuously printed in the publication. If the records of the society show that two or more members have the same mailing address, an official publication that is mailed sent to one member is deemed to be mailed sent to all members at the same address unless a member requests a separate copy.

C. By June 1 of each year, the society shall publish and mail send to each benefit member a synopsis of the society's annual statement that explains the condition of the society. The synopsis may be published in the society's official publication.

D. A society may establish grievance or complaint procedures by law or rule. END_STATUTE

Sec. 7. Section 20-1108, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1108. Admissibility of application as evidence

A. No An application for the issuance of any life or disability insurance policy or contract shall be is not admissible in evidence in any action relative to such policy or contract, unless a true copy of the application was attached to or otherwise made a part of the policy when issued and delivered. This provision shall subsection does not apply to industrial life insurance policies.

B. If any policy of life or disability insurance delivered in this state is reinstated or renewed, and the insured or the beneficiary or assignee of the policy makes written request to the insurer for a copy of the application, if any, for such reinstatement or renewal, the insurer shall, within thirty days after receipt of the request at its home office or at any of its branch offices, shall deliver or mail send to the person making the request a copy of the application. If the copy is not so delivered or mailed sent after having been requested, the insurer shall be is precluded from introducing the application in evidence in any action or proceeding based upon on or involving the policy or its reinstatement or renewal.

C. As to kinds of insurance other than life insurance, no an application for insurance signed by or on behalf of the insured shall be is not admissible in evidence in any action between the insured and the insurer arising out of the policy so applied for, if the insurer has failed, at the expiration of thirty days after receipt by the insurer of written demand therefor by or on behalf of the insured, to furnish to the insured a copy of the application reproduced by any legible means. END_STATUTE

Sec. 8. Section 20-1241.03, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1241.03. Duties of insurance producers

A. An insurance producer who initiates an application shall submit to the insurer, with or as part of the application, a statement signed by both the applicant and the insurance producer as to whether the applicant has an existing policy or contract.

B. If the answer is "no" to the question under subsection A of this section regarding existing coverage, the insurance producer has no further replacement duties.

C. If the answer is "yes" to the question under subsection A of this section regarding existing coverage, the insurance producer shall present and read to the applicant, not later than the time of taking the application, a notice regarding replacements that is in a form that the director has approved or prescribed by rule.

D. The applicant and the insurance producer shall sign the notice required under subsection C of this section. The insurance producer shall leave the signed notice with the applicant. If the notice is presented electronically, the insurer shall mail send the applicant a copy of the notice within three business days after the application is submitted to the insurer. In the notice the insurance producer and the applicant shall attest that the insurance producer either read the notice aloud or that the applicant did not wish the notice to be read aloud, in which case the producer need not have read the notice aloud.

E. The notice prescribed in subsection C of this section shall:

1. Identify each policy and contract proposed to be replaced by:

(a) Name of the insurer.

(b) Name of the insured or annuitant.

(d) Application or receipt number if the policy or contract number is not available.

2. Include a statement as to whether each policy or contract will be replaced or whether a policy will be used as a source of financing for the new policy or contract.

F. If the application for a new policy or contract is completed in any replacement transaction, the insurance producer shall give the applicant the original or a copy of all sales material at the time of the application for the new policy or contract. The insurance producer or insurer shall provide the applicant with a printed copy of any electronically presented sales material not later than at the time of policy or contract delivery.

G. Except as provided in section 20‑1241.05, subsection G, in connection with any replacement transaction, an insurance producer shall submit to the insurer to which an application for a policy or contract is presented a copy of:

1. Each document required by this section.

2. A statement identifying any preprinted or electronically presented company approved sales materials used.

3. Any individualized sales materials, including any illustrations related to the specific policy or contract purchased. END_STATUTE

Sec. 9. Section 20-1241.05, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1241.05. Duties of replacing insurers that use insurance producers

A. A replacing insurer shall comply with the requirements of this section for each replacement transaction.

B. The insurer shall verify that it has received all required forms and that the forms comply with this article.

C. The insurer shall notify any existing insurer that may be affected by the proposed replacement within five business days of after the receipt of a completed application indicating replacement or, if not indicated on the application, when the replacement is identified, and mail send a copy of the available illustration or policy summary for the proposed policy or available disclosure document for the proposed contract within five business days of after a request from an existing insurer.

D. The insurer shall be able to produce copies of the notification regarding replacement required in section 20‑1241.03, subsections C and D, indexed by the insurance producer, for at least five years or until the next regular examination by the insurance regulatory authority of its state of domicile, whichever is later.

E. The insurer shall provide the policy or contract owner notice of the right to return the policy or contract within thirty days of delivery and receive an unconditional full refund of all premiums or consideration paid, including any policy fees or charges or, in the case of a variable or market value adjustment policy or contract, a payment of the cash surrender value provided under the policy or contract plus all fees and other charges deducted from the gross premiums or considerations or imposed under the policy or contract. The notice may be included in the notice required under section 20‑1241.03, subsections C and D.

F. If the replacing insurer and the existing insurer are the same or subsidiaries or affiliates under common ownership or control, the replacing insurer shall allow credit for the period of time that has elapsed under the replacement policy's or contract's incontestability and suicide period up to the face amount of the existing policy or contract. For financed purchases, the insurer may limit the credit to the amount that the face amount of the existing policy is reduced by the use of existing policy values to fund the new policy or contract.

G. If an insurer prohibits the use of sales materials the insurer has not approved, the insurer, as an alternative to the requirements of section 20‑1241.03, subsection G, may comply as follows:

1. The insurer shall require an insurance producer to submit a signed statement with each application stating that the insurance producer used only sales material that the insurer approved and that the insurance producer will provide copies to the applicant as required by section 20‑1241.03, subsection F.

2. Within ten days of after the issuance of the policy or contract, the insurer shall:

(a) Notify the applicant by letter or by verbal communication from a person whose duties are separate from the marketing area of the insurer that the insurance producer made the representation about leaving sales materials as described in paragraph 1 of this subsection.

(b) Provide the applicant with a toll free toll-free number to contact insurer personnel responsible for regulatory compliance if the insurance producer did not leave sales materials.

3. The insurer shall be able to produce a copy of the letter or other verification required by paragraph 2, subdivision (a) of this subsection for at least five years after the termination or expiration of the policy or contract. END_STATUTE

Sec. 10. Section 20-1631, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1631. Definition of motor vehicle; cancellation of or failure to renew coverage; limitations; limitation of liability; exceptions; insurance producers; definitions

A. In this article, unless the context otherwise requires, "motor vehicle" means a licensed land, motor‑driven vehicle but does not mean:

1. A private passenger or station wagon type vehicle used as a public or livery conveyance or rented to others.

2. Any other four‑wheel motor vehicle of a load capacity of fifteen hundred pounds or less that is used in the business of transporting passengers for hire, used in business primarily to transport property or equipment, used as a public or livery conveyance or rented to others.

3. Any motor vehicle with a load capacity of more than fifteen hundred pounds.

4. From and after February 29, 2016, A vehicle that otherwise qualifies as a motor vehicle under this subsection but only while the driver of the vehicle is logged in to a transportation network company's digital network or software application to be a driver or is providing transportation network services, unless expressly covered by the private passenger policy.

B. A motor vehicle used as a public or livery conveyance or rented to others does not include a motor vehicle used in the course of volunteer work for a tax‑exempt organization as described in section 501(c)(3) of the internal revenue code.

C. An insurer shall not cancel or refuse to renew a motor vehicle insurance policy solely because of the location of residence, age, race, color, religion, sex, national origin or ancestry of anyone who is an insured, except that an insurer may refuse to renew a motor vehicle insurance policy if a named insured establishes a primary residence in a state other than Arizona this state.

D. An insurer shall not issue a motor vehicle insurance policy in this state unless the cancellation and renewal conditions of the policy or the endorsement on the policy includes the limitations required by this section. After a policy issued in this state has been in effect for sixty days, or if the policy is a renewal, effective immediately, the company shall not exercise its right to cancel the insurance afforded under the policy unless:

1. The named insured fails to discharge when due any of the obligations of the named insured in connection with the payment of premium for this policy or any installment of the premium.

2. The insurance was obtained through fraudulent misrepresentation.

3. The named insured, any person who resides in the same household as the named insured and who customarily operates a motor vehicle insured under the policy or any other person who regularly and frequently operates a motor vehicle insured under the policy:

(a) Has had the person's driver license suspended or revoked during the policy period.

(b) Develops a permanent disability, either physically or mentally, and such individual the person does not produce a certificate from a physician or a registered nurse practitioner testifying to such the person's ability to operate a motor vehicle.

(c) Is or has been convicted during the thirty‑six months immediately preceding the effective date of the policy or during the policy period of:

(i) Criminal negligence resulting in death, homicide or assault and arising out of the operation of a motor vehicle.

(ii) Operating a motor vehicle while in an intoxicated condition or while under the influence of drugs.

(iii) Leaving the scene of an accident.

(iv) Making false statements in an application for a driver license.

(v) Reckless driving.

4. The insurer is placed in rehabilitation or receivership by the insurance supervisory official in its state of domicile or by a court of competent jurisdiction or the director has suspended the insurer's certificate of authority based on its financially hazardous condition.

5. The named insured, any person who resides in the same household as the named insured and who customarily operates a motor vehicle insured under the policy or any other person who regularly and frequently operates a motor vehicle insured under the policy uses a motor vehicle rated or insured under the policy as a private passenger motor vehicle regularly and frequently for commercial purposes.

6. From and after February 29, 2016, The named insured, any person who resides in the same household as the named insured and who customarily operates a motor vehicle insured under the policy or any other person who regularly and frequently operates a motor vehicle insured under the policy uses a motor vehicle rated or insured under the policy to provide transportation network services unless, while the driver is logged in to the transportation network company's digital network or software application to be a driver or is providing transportation network services, the named insured either:

(a) Has procured an endorsement to the private passenger policy that expressly provides such coverage.

(b) Is covered by a motor vehicle liability insurance policy issued by another insurer expressly providing such coverage.

7. The director determines that the continuation of the policy would place the insurer in violation of the laws of this state or would jeopardize the solvency of the insurer.

E. An insurer may nonrenew a motor vehicle insurance policy if the insurer complies with the requirements of this article. An insurer shall provide notice of a nonrenewal to the named insured as prescribed by section 20‑1632. A named insured who disputes the nonrenewal of the named insured's policy may file an objection with the director pursuant to section 20‑1633.

F. The company shall not cancel the insurance when a person other than the named insured has violated subsection D, paragraph 3 of this section, if the named insured in writing agrees to exclude as insured the person by name when operating a motor vehicle and further agrees to exclude coverage to the named insured for any negligence that may be imputed by law to the named insured arising out of the maintenance, operation or use of a motor vehicle by the excluded person. The written agreement that excludes coverage under a policy for a named individual is effective for each renewal of the policy by the insurer and remains in effect until the insurer agrees in writing to provide coverage for the named individual who was previously excluded from coverage.

G. This article does not apply to any policy that has been in effect less than sixty days at the time notice of cancellation is mailed or delivered by the insurer unless the policy is a renewal policy, or to policies:

1. Insuring any motor vehicle other than a private passenger motor vehicle as defined in section 20‑117.

2. Insuring the motor vehicle hazard of garages, motor vehicle sales agencies, repair shops, service stations or public parking places.

3. Providing insurance only on an excess basis.

H. If a consumer purchases motor vehicle insurance coverage from an insurance producer licensed in this state, the insurance producer that owns the policy expiration shall remain the insurance producer of record for that insured. In the event If the insurer terminates the insurance producer's contract, the insurance producer shall continue to provide customary services to the insured. The insurer shall provide the insurance producer with a minimum degree of authority necessary to provide customary services to the insured and shall provide the same level of compensation for these services that were in effect prior to before the termination of the insurance producer contract.

I. Subsection H of this section shall does not apply if one or more of the following conditions exist:

1. The insurance producer of record has had its license suspended or revoked by the department.

2. The insurance producer of record is indebted to the insurer.

3. The insured has supplied the insurer with a written request that its insurance producer of record be changed to another insurance producer of the insurer.

4. The insurance producer of record has authorized transfer of this account to another licensed insurance producer of the insurer.

5. The director has determined after a public hearing that continuation of this relationship is not in the best interest of the public.

6. The insurance producer of record is under an exclusive contract or contract requiring the insurance producer to submit all eligible business to an insurer or group of insurers under a common management.

J. Subsection H of this section shall does not apply to any transaction in which the expiration of the policies is owned by the insurer.

K. Notwithstanding any law to the contrary, if an insurer chooses to renew a policy, the issuance at renewal of revised policy provisions to modify an existing policy by adding coverages or policy provisions, modifying coverages or policy provisions or eliminating coverages or policy provisions is not a nonrenewal or cancellation of the policy if the modification of a basic coverage does not eliminate the essential benefit of that basic coverage. If the modification of the basic coverage eliminates the essential benefit of the basic coverage, the director shall order the insurer to remove the modification from the policy. This subsection does not allow the insurer, without the written consent of the insured, to eliminate the basic coverages of the policy or to reduce the monetary limits of any of the basic coverages of the policy that were selected and agreed on. If an insurer chooses to renew a policy, this subsection does not limit a policyholder from continuing to renew uninsured or underinsured motorist coverage pursuant to section 20‑259.01. For the purposes of this subsection, "basic coverage" means any of the following:

1. Bodily injury coverage.

2. Property damage coverage.

3. Uninsured motorist coverage.

4. Underinsured motorist coverage.

5. Medical payments coverage.

6. Comprehensive coverage.

7. Collision coverage.

L. For the purposes of this section, fail to renew or nonrenewal does not include the issuance and delivery of a new policy within the same insurer or an insurer under the same ownership or management as the original insurer as provided in this subsection. An insurer may transfer any of its policies to an affiliated insurer. No An insurer shall may not transfer policyholders because of their location of residence, age, race, color, religion, sex, national origin or ancestry. Transfers A transfer by an insurer pursuant to this subsection shall does not be construed to permit allow the insurer to apply a new unrestricted sixty-day period for cancellation or nonrenewal.

M. Except as provided in this subsection, an insurer shall not refuse to renew a policy until after August 31, 1998, based on an insured's failure to maintain membership in a bona fide association, until both the insurer and bona fide association have complied with this subsection and shall not refuse to renew any coverage continuously in effect before September 1, 1998, subject to all the following:

1. In addition to any other reason provided in this section, an insurer may refuse to renew an insurance policy issued pursuant to this article if all of the following conditions apply:

(a) The insurer clearly discloses to the applicant and the insured in the application for insurance and insurance policy that both the payment of dues and current membership in the bona fide association are prerequisites to obtaining or renewing the insurance.

(b) Any money paid to the bona fide association as a membership fee:

(i) Is not used by the insurer directly or indirectly to defray any costs or expenses in connection with the sale or purchase of the insurance.

(ii) Is set independently of any factor used by the insurer to make any judgment or determination about the eligibility of any individual, including the member, an employee of a member or a dependent of a member, to purchase or renew the insurance.

(c) The bona fide association has filed a certification with the director verifying the eligibility of the insurer to refuse to renew an insurance policy based on membership in the bona fide association.

2. To qualify as a bona fide association pursuant to this subsection, the association shall meet all of the requirements of this paragraph. The association shall file a statement with the director at least thirty days before the commencement of the offer or sale of insurance as provided by this subsection verifying that the association meets the requirements of this paragraph. The association shall update the filing required by this paragraph at least thirty days before the effective date of any material change in the information contained in the statement, and shall file a separate notice with the director if the insurance described in the statement is no longer available through the association. The statement shall include the following information:

(a) That the association has been in active existence for at least five consecutive years immediately before the filing of the statement.

(b) That the association has been formed and maintained in good faith for purposes other than obtaining or providing insurance and does not condition membership in the association on the purchase of insurance.

(d) That the association does not condition membership in the association or set membership fees on the eligibility of any individual, including the member, an employee of the member or a dependent of the member, to purchase or renew the insurance, or on any factor that the insurer could not lawfully consider when setting rates.

(e) That the association has a relationship with a specific insurer or insurers and identifies the insurer or insurers.

3. Membership fees collected by the bona fide association are not premiums of the insurer that issued the coverage unless the bona fide association:

(a) Uses any portion of the membership fees directly or indirectly to defray any costs or expenses in connection with the sale or purchase of the insurance.

(b) Sets or adjusts membership fees for any member of the bona fide association based on any factor used by the insurer that issues the insurance to make any judgment or determination about the eligibility of any individual, including the member, an employee of the member or a dependent of the member, to purchase or renew the insurance.

4. If the membership fees constitute premiums pursuant to paragraph 3 of this subsection, an insurer shall not refuse to renew a policy as otherwise permitted allowed by this subsection.

N. An insurer or insurance producer shall not inquire on an application for a motor vehicle insurance policy whether the applicant, any person who resides in the same household as the applicant and who customarily operates a motor vehicle to be insured under the policy, or any other person who regularly and frequently operates a motor vehicle to be insured under the policy has been nonrenewed by an insurer.

O. An insurer may issue an endorsement to a private passenger policy that expressly provides coverage for the provision of transportation network services, but that endorsement may not be treated as basic coverage as defined in subsection K of this section and any termination of the endorsement may not be treated as a modification of basic coverage. An insurer may terminate the endorsement allowed by this subsection by giving advance notice of the termination. Any notice by the insurer to the policyholder to terminate the endorsement allowed by this subsection shall be mailed sent to the named insured by United States mail at least forty‑five days before the effective date of the termination. The notice shall include an explanation to the named insured that the further provision of transportation network services following the effective date of the termination might subject the insured to cancellation or nonrenewal of the insured's private passenger motor vehicle policy.

P. This section and section 28‑4009 do not create an obligation of an insurer to offer, provide or issue a policy or an endorsement that includes coverage for any liability incurred while a transportation network company driver is logged in to the transportation network company's digital network or software application to be a driver or is providing transportation network services.

Q. For the purposes of this section, "transportation network company", "transportation network company driver" and "transportation network services" have the same meanings prescribed in section 28‑9551. END_STATUTE

Sec. 11. Section 20-1632, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1632. Cancellation, nonrenewal and reduction of limits for reasons other than nonpayment of premium; notices to insured; refund of unearned premium

A. A notice by the insurer to the policyholder of cancellation or reduction in the limits of liability or coverage for reasons other than nonpayment of premium shall be mailed sent to the named insured with the insurer obtaining proof of mailing by United States certified mail, United States post office certificate of mailing or first class mail using intelligent mail barcode or another similar tracking method used or approved by the United States postal service at least ten days before the effective date of the cancellation or reduction in limits of liability or coverage. Notice of nonrenewal for reasons other than nonpayment of premium shall be mailed sent at least forty‑five days before the effective date of the nonrenewal. A notice under this section subsection shall include or be accompanied by all of the following:

1. A statement in writing of the specific facts that constitute the reasons, consistent with this article, for such action by the insurer and a notice indicating the named insured's right to complain to the director of the insurer's action within ten days after receipt of the notice by the insured.

2. Notice of the insured's possible eligibility for insurance through the automobile assigned risk plan, and the notice shall state that all information included in the notice is given pursuant to this article.

3. Except as provided in paragraph 4 of this subsection, a refund of unearned premium. For the purposes of this paragraph, the insurer shall either mail send the notice and refund of unearned premium together at least ten days before the effective date or mail send the notice before the refund of unearned premium if both the notice and the refund of unearned premium are mailed sent separately to the insured at least ten days before the effective date. As an alternative to mailing sending the refund by mail, an insurer may choose to refund the unearned premium by any electronic means previously established with the customer insured to make and receive premium payments for the policy.

4. In the case of a notice of cancellation or nonrenewal of a policyholder whose premium payment is collected and remitted on the insurer's behalf by the insurer's affiliate, the insurer shall refund any unearned premium to the policyholder within ten days after the policy cancellation or nonrenewal. For the purposes of this paragraph, "affiliate" has the same meaning prescribed in section 20‑481.

B. Failure of the insurer to comply with subsection A of this section shall invalidate any cancellation, nonrenewal or reduction in limits of liability or coverage.

C. If a premium has been financed, a refund of unearned premium shall be returned as provided in section 6‑1416. END_STATUTE

Sec. 12. Section 20-1632.01, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1632.01. Cancellation or nonrenewal for nonpayment of premium; grace period; notice of cancellation; discrimination; definition

A. In Motor vehicle insurance policies there shall be contain a provision that the policyholder is entitled to a minimum grace period of seven days for the payment of any premium due except the first payment, during which grace period the policy shall continue in full force. For the purposes of this subsection, an initial payment on the renewal of a policy is not a first payment of premium.

B. For any motor vehicle insurance policy that is cancelled or nonrenewed for nonpayment of premium by the insurer after the grace period, the insurer must mail send a notice of cancellation or nonrenewal to the policyholder at the policyholder's last address on record with the insurer by first class mail. The cancellation or nonrenewal is effective on the date the notice is mailed sent to the policyholder. The notice shall include or be accompanied by a statement in writing of the reasons for such action by the insurer and a notice indicating the named insured's right to complain to the director of the insurer's action within ten days after receipt of the notice by the insured. An insurer shall not cancel or nonrenew a motor vehicle insurance policy pursuant to this section because of the named insured's location of residence, age, race, color, religion, sex, sexual orientation, marital status, national origin, ancestry or driving record.

C. This section does not apply to policies being cancelled pursuant to section 6‑1415. The grace period provided in such policies shall be satisfied by the ten day ten-day notice of intent of the premium finance company to cancel the insurance contract unless the default is cured within the ten day ten-day period.

D. For the purposes of this section, "grace period" means the period of time after the premium due date during which the policy remains in force without penalty even though the premium due has not been paid. END_STATUTE

Sec. 13. Section 20-1653, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1653. Sending notice of cancellation or nonrenewal to insured; statement of grounds and facts on which cancellation or nonrenewal is based

All notices of cancellation or nonrenewal shall be in writing, shall be mailed sent to the named insured at the address shown in the policy or to the last known address of the insured and shall state, with respect to cancellation of policies in effect after the time limits specified in section 20‑1652 and, in the case of nonrenewal of policies as specified in section 20‑1654:

1. In the case of cancellation which the specific facts that constitute the grounds set forth in section 20‑1652 relied upon on.

2. In the case of nonrenewal the specific facts which that constitute the reason the policy is not being renewed, which may include, but are not limited to, the grounds set forth in section 20‑1652. END_STATUTE

Sec. 14. Section 20-1654, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1654. Sending notice of intention not to renew to insured; time; term of policy

A. Unless the insurer, at least thirty days in advance of before the end of the policy period, mails or delivers sends to the named insured at the address shown in the policy, notice of its intention not to renew the policy or to condition its renewal upon on reduction of limits or elimination of coverages, the insurer shall not fail to renew the policy upon on payment of the premium due on the effective date of the renewal, in accordance with the then existing rating manual of the insurer. For the purposes of this section, any policy written for a term of less than one year may be renewed for a term of one year if the notice is not given as required by this subsection. For the purposes of this subsection, a policy with no fixed expiration date shall be deemed written for successive policy periods of one year.

B. This section shall does not apply if the insured has accepted replacement coverage or has agreed to nonrenewal. END_STATUTE

Sec. 15. Section 20-1656, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1656. Proof of sending as proof of notice

A. Proof of mailing of sending a notice of cancellation and the reasons for cancellation or of intention not to renew to the named insured by mail at the address shown in the policy shall be is sufficient proof of the notice required by this article.

B. Any method of proof retained by the insurer for sending a notice of cancellation by any method other than by mail is sufficient proof of the notice required by this article. END_STATUTE

Sec. 16. Section 20-1674, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1674. Notice of cancellation; refund of unearned premium

A. No A cancellation under section 20‑1673 is not effective unless the insurer mails or electronically delivers, consistent with the requirements of title 44, chapter 26, sends a copy of the notice of cancellation to the insured's agent and written notice of the cancellation is mailed with the insurer obtaining proof of mailing by United States certified mail or first class mail using intelligent mail barcode or another similar tracking method used or approved by the United States postal service to the named insured at the address shown in the policy or to the last known address of the insured at least forty-five days before the effective date of the cancellation, except that, if cancellation is for nonpayment of premium, at least ten days' notice of cancellation must be given. The notice must state the specific facts that constitute the grounds set forth in section 20‑1673 that are relied on. If the insurer sends the notice by mail, the insurer shall obtain proof of mailing by United States certified mail or first class mail using intelligent mail barcode or another similar tracking method used or approved by the United States postal service.

B. The notice of cancellation and any refund of unearned premium may be mailed sent separately, but both must be mailed sent within the time frames established in subsection A, of this section. If a premium has been financed, a refund of unearned premium shall be returned as provided in section 6‑1416. END_STATUTE

Sec. 17. Section 20-1676, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1676. Notice of nonrenewal

A. This article does not apply to the nonrenewal of insurance policies except as provided in subsection B of this section.

B. No A nonrenewal of any policy of insurance to which this article applies is not effective unless the insurer mails or electronically delivers, consistent with the requirements of title 44, chapter 26, sends a copy of the notice of nonrenewal to the insured's agent and mails with the insurer obtaining proof of mail by United States certified mail or first class mail using intelligent mail barcode or another similar tracking method used or approved by the United States postal service written notice to the named insured, at the address shown in the policy or to the last known address of the insured, at least forty-five days before the end of the policy period, of its intention not to renew the policy. The transfer of a policyholder between companies within the same insurance group or changes in deductibles, premium, amount of insurance or coverage are not refusals to renew.

C. Notice of nonrenewal is not required if either of the following occurs:

1. The insurer or a company within the same insurance group has offered to issue a renewal policy.

2. The named insured has obtained replacement coverage or has agreed in writing to obtain replacement coverage.

D. If an insurer provides the notice described in subsection B of this section and the insurer subsequently extends the policy for ninety days at the request of the policyholder, an additional notice of nonrenewal is not required with respect to the extension.

E. If the notice of nonrenewal is mailed sent less than forty-five days before expiration, the coverage shall remain remains in effect until forty-five days after the notice is mailed sent. Earned premium for any period of coverage that extends beyond the expiration date shall be considered pro rata based on the previous year's rate. END_STATUTE

Sec. 18. Section 20-1677, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1677. Notice of premium or coverage changes

A. An insurer shall mail or deliver send to the named insured at the mailing address shown on the policy written notice of a premium increase, change in deductible or reduction in limits or substantial reduction in coverage at least thirty days before the expiration date of the policy. If the insurer fails to provide the thirty days' notice, the coverage provided to the named insured remains in effect until notice is given or until the effective date of replacement coverage obtained by the named insured, whichever occurs first.

B. Notice is considered given thirty days following after the date of mailing or delivery of the notice is sent. If the insured elects not to renew, any earned premium for the period of extension of the terminated policy shall be calculated pro rata at the lower of the current or previous year's rate. If the insured accepts the renewal, the premium increase, if any, and other changes are effective the day following the prior policy's expiration or anniversary date.

C. For the purposes of this section, notice shall be is considered given if an insurer delivers new policy terms and conditions thirty days before the expiration date of the policy. END_STATUTE

Sec. 19. Section 20-1678, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1678. Proof of notice

A. Proof of mailing of the sending a notice or of cancellation, or of nonrenewal or of premium or coverage changes, by mail to the named insured at the address shown in the policy is sufficient proof of notice.

B. Any method of proof retained by the insurer for sending a notice of cancellation, or of nonrenewal or of premium or coverage changes, by any method other than by mail is sufficient proof of notice. END_STATUTE

Sec. 20. Section 20-1693.05, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1693.05. Termination of portable electronics insurance; notice; cancellation

A. Notwithstanding any other law:

1. An insurer may terminate or otherwise change the terms and conditions of a portable electronics insurance policy only on providing the policyholder and enrolled customers with at least thirty days' notice.

2. If the insurer changes the terms and conditions of a policy, the insurer shall provide the vendor policyholder with a revised policy or endorsement and each enrolled customer with a revised certificate, endorsement, updated brochure or other evidence indicating that a change in the terms and conditions has occurred and that includes a summary of the material changes.

B. Notwithstanding subsection A, paragraph 1 of this section:

1. An insurer may terminate a customer's enrollment under a portable electronics insurance policy with fifteen days' notice for discovery of fraud or material misrepresentation in obtaining coverage or in the presentation of a claim.

2. An insurer may immediately terminate a customer's enrollment under a portable electronics insurance policy for any of the following reasons:

(a) Nonpayment of premium.

(b) If the enrolled customer ceases to have an active service with the vendor.

(c) If an enrolled customer exhausts the aggregate limit of liability, if any, under the terms of the portable electronics insurance policy and the insurer sends notice of termination to the enrolled customer within thirty calendar days after exhaustion of the limit. If notice is not timely sent, enrollment shall continue notwithstanding the aggregate limit of liability until the insurer sends notice of termination to the enrolled customer.

C. If a vendor terminates a portable electronics insurance policy, the vendor shall mail or deliver send written notice to each enrolled customer advising the enrolled customer of the termination of the policy and the effective date of termination. The written notice shall be mailed or delivered sent to the enrolled customer at least thirty days before the termination.

D. If notice or correspondence with respect to a policy of portable electronics insurance is required pursuant to this section or is otherwise required by law, it shall be in writing and sent within the notice period, if any, specified in the statute or rule requiring the notice or correspondence. Notwithstanding any other law, notices and correspondence may be sent either by mail or by electronic means. If the notice or correspondence is mailed, it shall be sent to the vendor at the vendor's mailing address specified for such purpose and to its affected enrolled customers' last known mailing addresses on file with the insurer. The insurer or vendor shall maintain proof of mailing in a form authorized or accepted by the United States postal service or other commercial mail delivery service. If the notice or correspondence is sent by electronic means, it shall be sent to the vendor at the vendor's electronic mail address specified for such purpose and to its affected enrolled customers' last known electronic mail addresses as provided by each enrolled customer to the insurer or vendor, as applicable. For the purposes of this section, an enrolled customer's provision of an electronic mail address to the insurer or vendor is deemed to constitute consent to receive notices and correspondence by electronic means. The insurer or vendor, as applicable, shall maintain proof that the notice or correspondence was sent.

E. The supervising entity appointed by the insurer may send notice or correspondence that is required by this section, or that is otherwise required by law, on behalf of an insurer or vendor.

F. An enrolled customer may cancel enrollment for coverage under a portable electronics insurance policy at any time and the person paying the premium shall receive a pro rata refund or credit of any applicable unearned premium within sixty days after the insurer or vendor receives the notice of cancellation from the enrolled customer. END_STATUTE

Sec. 21. Section 20-1694.02, Arizona Revised Statutes, is amended to read:

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.

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 the cancellation is based on one or more of the following:

(a) The nonpayment of premium if the notice of cancellation informs the group policyholder of the amount due.

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

(c) The 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, the 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) A 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 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 sends 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 send 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 a loss pursuant to a stolen identity event that occurs 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 remains covered as provided under the policy notwithstanding the cancellation, nonrenewal, conditional renewal or termination. END_STATUTE

Sec. 22. Section 20-2110, Arizona Revised Statutes, is amended to read:

START_STATUTE20-2110. Reasons for adverse underwriting decisions

A. In the event of an adverse underwriting decision the insurance institution or insurance producer responsible for the decision shall either provide the applicant, policyholder or individual proposed for coverage with the specific reason for the adverse underwriting decision in writing or advise the person, in writing, that upon on written request the person may receive the specific reason in writing and provide the applicant, policyholder or individual proposed for coverage with a summary of the rights established under subsection B of this section and sections 20‑2108 and 20‑2109.

B. Upon On receipt of a written request within ninety business days from after the date of the mailing of notice or other communication of an adverse underwriting decision is sent to an applicant, policyholder or individual proposed for coverage, the insurance institution or insurance producer shall furnish send to the person within twenty‑one business days from after the date of receipt of the written request:

1. The specific reason for the adverse underwriting decision, in writing, if the information was not initially furnished in writing pursuant to subsection A of this section.

2. The specific items of personal and privileged information that support those reasons except that:

(a) The insurance institution or insurance producer is not required to furnish specific items of privileged information if it has a reasonable suspicion, based upon on specific information available for review by the director, that the applicant, policyholder or individual proposed for coverage has engaged in criminal activity, fraud, material misrepresentation or material nondisclosure.

(b) Specific items of medical record information supplied by a medical care institution or medical professional shall be disclosed either directly to the individual about whom the information relates or to a medical professional designated by the individual and licensed to provide medical care with respect to the condition to which the information relates, at the option of the insurance institution or insurance producer.

3. The names and addresses of the institutional sources that supplied the specific items of information pursuant to paragraph 2 of this subsection, except that the identity of any medical professional or medical care institution shall be disclosed either directly to the individual or to the designated medical professional, whichever the insurance institution or insurance producer prefers.

C. The obligations imposed by this section upon on an insurance institution or insurance producer may be satisfied by another insurance institution or insurance producer authorized to act on its behalf.

D. If an adverse underwriting decision results solely from an oral request or inquiry, the explanation of the specific reasons and summary of rights required by subsection A of this section may be given orally.

E. In providing the specific reason for an adverse underwriting decision based on credit related information contained or not contained in an individual's consumer report, the insurance institution or agent shall provide at least the following information:

1. That the decision was based in part on a consumer report or the absence of credit history.

2. The source of the consumer report and how the individual may obtain a copy of the consumer report.

3. A description of up to four factors that were the primary cause for the adverse action that resulted from the insurance score.

F. An insurer shall not use the following types of credit history to calculate an insurance score to determine property or casualty premiums for insurance transactions that are subject to this article and shall not knowingly use an insurance score developed by a third party if the score is calculated using any of the following types of credit history:

1. The absence of credit history or the inability to determine the consumer's credit history unless the insurer's action is actuarially justified or the insurer treats the consumer as if the consumer had neutral credit information, as defined by the insurer.

2. Credit history or an insurance score based on collection accounts identified with a medical industry code.

3. A bankruptcy or a lien satisfaction that is more than seven years old.

4. The consumer's use of a particular type of credit card, charge card or debit card unless actuarially justified.

5. The consumer's total available line of credit, except that an insurer may consider the total amount of outstanding debt in relation to the total available line of credit.

6. An insurance score that is calculated using the income, gender, address, zip code, ethnic group, religion, marital status or nationality of the consumer as a factor. This section paragraph does not prohibit an insurer from using zip code, address, gender and marital status information for underwriting purposes. END_STATUTE

Sec. 23. Section 20-2209, Arizona Revised Statutes, is amended to read:

START_STATUTE20-2209. Claims‑made policy; cancellation

A policy issued pursuant to this chapter may provide that the association may cancel any of its policies for the reasons specified in section 20‑1673 or in the event of nonpayment of any premium assessment or other charge by mailing or delivering sending to the insured at the address shown in the policy written notice at least ten days before the effective date of the cancellation. END_STATUTE

Sec. 24. Section 20-2533, Arizona Revised Statutes, is amended to read:

START_STATUTE20-2533. Denial; levels of review; disclosure; review process

A. Any member who is denied a covered service or whose claim for a service is denied may pursue the applicable review process prescribed in this article. Except as provided in sections 20‑2534 and 20‑2535, health care insurers shall provide at least the following levels of review, as applicable:

1. An expedited medical review and expedited appeal pursuant to section 20‑2534.

2. An informal reconsideration pursuant to section 20‑2535.

3. A formal appeal process pursuant to section 20‑2536.

4. An external independent review pursuant to section 20‑2537.

B. A health care insurer may offer additional levels of review other than the levels prescribed in subsection A of this section as long as the additional levels of review do not increase the time period limitations prescribed by this article.

C. At the time coverage is initiated, each health care insurer that operates in this state and whose utilization review system includes the power to affect the direct or indirect denial of requested medical or health care services or claims for medical or health care services shall include a separate information packet that is approved by the director with the member's policy, evidence of coverage or similar document. At the time coverage is renewed, each health care insurer shall include a separate statement with the member's policy, evidence of coverage or similar document that informs the member that the member can obtain a replacement packet that explains the appeal process by contacting a specific department and telephone number. A health care insurer shall also provide a copy of the information packet to the member or the member's treating provider on request and to the member within five business days after the date the appeal is initiated pursuant to section 20‑2534, 20‑2535 or 20‑2536 provide access to a copy of the information packet on its website. The information packet provided by the health care insurer shall include all of the following information:

1. A detailed description and explanation of each level of review prescribed in subsection A of this section and notice of the member's right to proceed to the next level of review if the prior review is unsuccessful.

2. An explanation of the procedures that the member must follow, including the applicable time periods, for each level of review prescribed in subsection A of this section and an explanation of how the member may obtain the member's medical records pursuant to title 12, chapter 13, article 7.1.

3. The specific title and department of the person and the address, telephone number and telefacsimile fax number or email address of that the person whom the member must notify at each level of review prescribed in subsection A of this section in order to pursue that level of review.

4. The specific title and department of the person and the address, telephone number and telefacsimile fax number or email address of the person who will be responsible for processing that review.

5. A notice that if the member decides to pursue an appeal the member must provide the person who will be responsible for processing the appeal with any material justification or documentation for the appeal at the time that the member files the written appeal.

6. A description of the utilization review agent's and health care insurer's roles at each level of review prescribed by subsection A of this section and an outline of the director's role during the external independent review process, if not already described in response to paragraph 1 of this subsection.

7. A notice that if the member participates in the process of review pursuant to this article the member waives any privilege of confidentiality of the member's medical records regarding any person who examined or will examine the member's medical records in connection with that review process for the medical condition under review.

8. A statement that the member is not responsible for the costs of any external independent review.

9. Standardized forms that are prescribed by the department and that a member may use to file and pursue an appeal.

10. The name and telephone number for the department of insurance and financial institutions consumer assistance office with a statement that the department of insurance and financial institutions consumer assistance office can assist consumers with questions about the health care appeals process.

D. At the time of issuing a denial, the health care insurer shall notify the member of the right to appeal under this article. A health care insurer that issues an explanation of benefits document shall satisfy this obligation by prominently displaying in the document a statement about the right to appeal. A health care insurer that does not issue an explanation of benefits document shall satisfy this obligation through some other reasonable means to assure that the member is apprised of the right to appeal at the time of a denial. A reasonable means that includes giving the member's treating provider a form statement about the right to appeal shall require the treating provider to notify the member of the member's right to appeal.

E. Any written notice, acknowledgment, request, decision or other written document required to be mailed pursuant to this article that is sent by mail is deemed received by the person to whom the document is properly addressed on the fifth business day after the request is mailed. For the purposes of this subsection "properly addressed" means the last known address mailing.

F. The director shall require any member who files a complaint with the department relating to an adverse decision to pursue the review process prescribed in this article. This subsection does not limit the director's authority pursuant to chapter 1, article 2 of this title.

G. If the member's complaint is an issue of medical necessity under the coverage document and not whether the claim or service is covered, the informal reconsideration shall be performed as prescribed by section 20‑2535 by a licensed health care professional. If the member's complaint is an issue of medical necessity under the coverage document and not whether the claim or service is covered, the expedited review or formal appeal shall be decided by a physician, provider or other health care professional as prescribed by section 20‑2534 or 20‑2536. Any external independent review shall be decided by a physician, provider or other health care professional as prescribed by section 20‑2537.

H. Any person given access to a member's medical records or other medical information in connection with proceedings pursuant to this article shall maintain the confidentiality of the records or information in accordance with title 12, chapter 13, article 7.1. END_STATUTE

Sec. 25. Section 20-2534, Arizona Revised Statutes, is amended to read:

START_STATUTE20-2534. Expedited medical review; expedited appeal

A. Any member who is denied a request for a covered service may pursue an expedited medical review of that denial if the member's treating provider certifies in writing and provides supporting documentation to the utilization review agent that the time period for the informal reconsideration process and formal appeal process prescribed in sections 20‑2535 and 20‑2536 is likely to cause a significant negative change in the member's medical condition at issue that is subject to the appeal. The treating provider's certification is not challengeable by the health care insurer. A health care insurer whose utilization review activities consist only of claims review for services already provided is not required to provide its members an expedited medical review or expedited appeal pursuant to this section. A health care insurer who conducts utilization review of claims in connection with services already provided is not required to provide its members an expedited medical review or expedited appeal of a claim related to a service already provided.

B. On receipt of the certification and supporting documentation, the utilization review agent has one business day to make a decision and mail send to the member and the member's treating provider a notice of that decision, including the criteria used and the clinical reasons for that decision and any references to supporting documentation. If the member's complaint is an issue of medical necessity under the coverage document and not whether the service is covered, before making a decision, the agent shall consult with a physician or other health care professional who is licensed pursuant to title 32, chapter 7, 8, 11, 13, 14, 17, 19 or 29 or an out of state out-of-state provider, physician or other health care professional who is licensed in another state and who is not licensed in this state and who typically manages the medical condition under review.

C. If the utilization review agent affirms the denial of the requested service, the agent shall telephonically provide and mail send to the member and the member's treating provider a notice of the adverse decision and of the member's option to immediately proceed to an expedited appeal pursuant to subsection E of this section.

D. At any time during the expedited appeal process, the utilization review agent may request an expedited external independent review process pursuant to section 20‑2537. If the utilization review agent initiates the an expedited external independent review process, the utilization review agent does not have to comply with subsection E of this section.

E. If the member chooses to proceed with an expedited appeal, the member's treating provider shall immediately submit a written appeal of the denial of the service to the utilization review agent and provide the utilization review agent with any additional material justification or documentation to support the member's request for the service. Within three business days after receiving the request for an expedited appeal, the utilization review agent shall provide notice of the expedited appeal decision as prescribed in this subsection. If the member's complaint is an issue of medical necessity under the coverage document and not whether the service is covered, any provider, physician or other health care professional who is licensed pursuant to title 32, chapter 7, 8, 11, 13, 14, 16, 17, 19, 19.1 or 29 or an out of state out-of-state provider, physician or other health care professional who is licensed in another state and who is not licensed in this state, who is employed or under contract with the utilization review agent and who is qualified in a similar scope of practice as a provider, physician or other health care professional who is licensed pursuant to title 32, chapter 7, 8, 11, 13, 14, 16, 17, 19, 19.1 or 29 or an out of state out-of-state provider, physician or other health care professional who is licensed in another state and who is not licensed in this state and who typically manages the medical condition under appeal shall review the expedited appeal and render a decision based on the utilization review plan adopted by the utilization review agent. Pursuant to the requirements of this subsection, the utilization review agent shall select the provider, physician or other health care professional who shall review the appeal and render the decision. If the utilization review agent, provider, physician or other health care professional denies the expedited appeal, the utilization review agent shall telephonically provide and mail send to the member and the member's treating provider a notice of the denial and of the member's option to immediately proceed to the external independent review prescribed in section 20‑2537.

F. If the utilization review agent, provider, physician or other health care professional concludes that the covered service should be provided, the health care insurer is bound by the utilization review agent's decision. END_STATUTE

Sec. 26. Section 20-2535, Arizona Revised Statutes, is amended to read:

START_STATUTE20-2535. Informal reconsideration

A. Any member who is denied a service and who does not qualify for an expedited medical review pursuant to section 20‑2534 may request, either orally or in writing, an informal reconsideration of that denial by notifying the person described in section 20‑2533, subsection C, paragraph 3. After the denial, the member has up to two years one year to request an informal reconsideration. A health care insurer whose utilization review consists only of claims review for services already provided is not required to provide its members an informal reconsideration pursuant to this section. A health care insurer who conducts utilization review of claims in connection with services already provided is not required to provide its members an informal reconsideration of a claim related to a service already provided.

B. The utilization review agent shall mail send a written acknowledgment to the member and the member's treating provider within five business days after the utilization review agent receives the request for informal reconsideration.

C. The utilization review agent may request any pertinent medical records pursuant to title 12, chapter 13, article 7.1 that are necessary for the informal reconsideration.

D. The utilization review agent has up to thirty days after receipt of the request for reconsideration to mail send to the member and the member's treating provider a notice of the utilization review agent's decision and the criteria used and the clinical reasons for that decision.

E. At any time during the informal reconsideration process, the utilization review agent may submit a request to the director to initiate an external independent review process pursuant to section 20‑2537. At the same time that the utilization review agent submits the request to the director, the utilization review agent shall also render a written decision and shall send the written decision, including the criteria used and the clinical reasons for that decision and any references to supporting documentation, to the member, the member's treating provider and the director.

F. If the utilization review agent does not submit a request to the director pursuant to subsection E of this section and at the conclusion of the informal reconsideration process the utilization review agent denies the covered service or the claim for the covered service, the utilization review agent shall provide the member and the treating provider with a written statement of the agent's decision and the criteria used and the clinical reasons for that decision, including any references to any supporting documentation and a notice of the option to proceed after the formal appeal process to an external independent review.

G. If the utilization review agent concludes that the covered service should be provided or the claim for a covered service should be paid, the health care insurer is bound by the utilization review agent's decision. END_STATUTE

Sec. 27. Section 20-2536, Arizona Revised Statutes, is amended to read:

START_STATUTE20-2536. Formal appeal

A. After any applicable informal reconsideration pursuant to section 20‑2535, if the utilization review agent denies the member's request for a covered service, the member may appeal that adverse decision. The member shall mail send a written appeal to the utilization review agent within sixty days after receipt of the adverse decision. In the event of a denial of a claim for a service that has already been provided, the member may appeal that denial by filing a written appeal with the utilization review agent within two years one year after receipt of the notice of the denial.

B. The utilization review agent shall mail send a written acknowledgment to the member and the member's treating provider within five business days after the agent receives the formal appeal.

C. The member or the member's treating provider shall submit to the utilization review agent with the written formal appeal any material justification or documentation to support the member's request for the service or claim for a service.

D. If the member's complaint is an issue of medical necessity under the coverage document and not whether the service is covered, a provider, physician or other health care professional who is licensed pursuant to title 32, chapter 7, 8, 11, 13, 14, 16, 17, 19, 19.1 or 29 or an out of state out-of-state provider physician or other health care professional who is licensed in another state and who is not licensed in this state, who is employed or under contract with the utilization review agent and who is qualified in a similar scope of practice as a provider, physician or other health care professional licensed pursuant to title 32, chapter 7, 8, 11, 13, 14, 16, 17, 19, 19.1 or 29 or an out of state out-of-state provider, physician or other health care professional who is licensed in another state and who is not licensed in this state and who typically manages the medical condition under appeal shall review the appeal and render a decision based on the utilization review plan adopted by the utilization review agent. Pursuant to the requirements of this subsection, the utilization review agent shall select the provider, physician or other health care professional who shall review the appeal and render the decision.

E. Except as provided in subsection F of this section, the utilization review agent has:

1. With respect to adverse decisions relating to services that have not been provided, up to thirty days after receipt of the written appeal to notify the member in writing of the utilization review agent's decision and the criteria used and the clinical reasons for that decision.

2. With respect to denials relating to claims that have already been provided, up to sixty days after receipt of the written appeal to notify the member in writing of the utilization review agent's decision and the criteria used and the clinical reasons for that decision.

F. At any time during the formal appeal process, the utilization review agent may request an external independent review process pursuant to section 20‑2537. If the utilization review agent initiates the external independent review process, the utilization review agent does not have to comply with subsection E of this section.

G. If at the conclusion of the formal appeal process the utilization review agent denies the appeal and the utilization review agent does not initiate the external independent review process, the utilization review agent shall provide the member with notice of the option to proceed to an external independent review pursuant to section 20‑2537.

H. If the utilization review agent concludes that the covered service should be provided or the claim for a covered service should be paid, the health care insurer is bound by the utilization review agent's decision. END_STATUTE

Sec. 28. Section 20-2537, Arizona Revised Statutes, is amended to read:

START_STATUTE20-2537. External independent review; expedited external independent review

A. If the utilization review agent denies the member's request for a covered service or claim for a covered service at both the informal reconsideration level and the formal appeal level, or at the expedited medical review level, the member may initiate an external independent review.

B. Except as provided in subsection K of this section, within four months after the member receives written notice by the utilization review agent of the adverse decision made pursuant to section 20‑2534 or 20‑2536, if the member decides to initiate an external independent review, the member shall mail send to the utilization review agent a written request for an external independent review, including any material justification or documentation to support the member's request for the covered service or claim for a covered service.

C. Except as provided in subsection K of this section, within five business days after the utilization review agent receives a request for an external independent review from the member pursuant to subsection B of this section or the director pursuant to subsection G of this section, or if the utilization review agent initiates an external independent review pursuant to section 20‑2536, subsection F, the utilization review agent shall:

1. Mail send a written acknowledgment to the director, the member, the member's treating provider and the health care insurer.

2. Forward to the director the request for review, the terms of agreement in the member's policy, evidence of coverage or a similar document and all medical records and supporting documentation used to render the decision pertaining to the member's case, a summary description of the applicable issues including a statement of the utilization review agent's decision, the criteria used and the clinical reasons for that decision, the relevant portions of the utilization review agent's utilization review plan and the name and credentials of the licensed health care provider who reviewed the case as required by section 20‑2533, subsection G.

D. Except as provided in subsection K of this section, within five days after the director receives all of the information prescribed in subsection C, paragraph 2 of this section and if the case involves an issue of medical necessity under the coverage document, the director shall choose an independent review organization procured pursuant to section 20‑2538 and forward to the organization all of the information required by subsection C, paragraph 2 of this section.

E. Except as provided in subsection K of this section, for cases involving an issue of medical necessity under the coverage document, within twenty‑one days after the date of receiving a case for independent review from the director, the independent review organization shall evaluate and analyze the case and, based on all information required under subsection C, paragraph 2 of this section, render a decision that is consistent with the utilization review plan on whether or not the service or claim for the service is medically necessary and send the decision to the director. Within five business days after receiving a notice of decision from the independent review organization, the director shall mail send a notice of the decision to the utilization review agent, the health care insurer, the member and the member's treating provider. The decision by the independent review organization is a final administrative decision pursuant to title 41, chapter 6, article 10 and is subject to judicial review pursuant to title 12, chapter 7, article 6. The health care insurer shall provide any service or pay any claim determined to be covered and medically necessary by the independent review organization for the case under review regardless of whether judicial review is sought.

F. Except as provided in subsection K of this section, for cases involving an issue of coverage, within fifteen business days after receipt of all of the information prescribed in subsection C, paragraph 2 of this section from the utilization review agent, the director shall determine if the service or claim is or is not covered and if the adverse decision made pursuant to section 20‑2536 conforms to the utilization review agent's utilization review plan and this article and shall mail send a notice of determination to the utilization review agent, the health care insurer, the member and the member's treating provider.

G. If the director finds that the case involves a medical issue or is unable to determine issues of coverage, the director shall submit the member's case to the external independent review organization in accordance with subsections E and K of this section.

H. After a decision is made pursuant to subsection E, F, G or K of this section, the reconsideration, appeal and administrative processes are completed and the department's role is ended, except:

1. To transmit, when necessary, a record of the proceedings to superior court or to the office of administrative hearings.

2. To issue a final administrative decision pursuant to section 41‑1092.08.

I. Except as provided in subsection K of this section, on written request by the independent review organization, the member or the utilization review agent, the director may extend the twenty‑one day time period prescribed in subsection E of this section for up to an additional thirty days if the requesting party demonstrates good cause for an extension.

J. A decision made by the director or an independent review organization pursuant to this section is admissible in proceedings involving a health care insurer or utilization review agent.

K. If the utilization review agent denies the member's request for a covered service or claim for a covered service at the expedited medical review level presented and resolved pursuant to section 20‑2534, subsections A and E, the member may initiate an expedited external independent review in accordance with the following:

1. Within five business days after the member receives written notice by the utilization review agent of the adverse decision made pursuant to section 20‑2534, if the member decides to initiate an external independent review, the member shall mail send to the utilization review agent a written request for an expedited external independent review, including any material justification or documentation to support the member's request for the covered service or claim for a covered service.

2. Within one business day after the utilization review agent receives a request for an expedited external independent review from the member pursuant to this subsection or if the utilization review agent initiates an expedited external independent review pursuant to section 20‑2534, subsection D, the utilization review agent shall:

(a) Mail Send a written acknowledgment to the director, the member, the member's treating provider and the health care insurer.

(b) Forward to the director the request for an expedited independent external review, the terms of agreement in the member's policy, evidence of coverage or a similar document and all medical records and supporting documentation used to render the decision pertaining to the member's case, a summary description of the applicable issues including a statement of the utilization review agent's decision, the criteria used and the clinical reasons for that decision, the relevant portions of the utilization review agent's utilization review plan and the name and credentials of the licensed health care provider who reviewed the case as required by section 20‑2534, subsection B.

3. Within two business days after the director receives all of the information prescribed in this subsection and if the case involves an issue of medical necessity, the director shall choose an independent review organization procured pursuant to section 20‑2538 and forward to the organization all of the information required by this subsection.

4. For cases involving an issue of medical necessity, within seventy‑two hours from the date of receiving a case for expedited external independent review from the director, the independent review organization shall evaluate and analyze the case and, based on all information required under subsection C, paragraph 2 of this section, render a decision that is consistent with the utilization review plan on whether or not the service or claim for the service is medically necessary and send the decision to the director. Within one business day after receiving a notice of decision from the independent review organization, the director shall mail send a notice of the decision to the utilization review agent, the health care insurer, the member and the member's treating provider. The decision by the independent review organization is a final administrative decision pursuant to title 41, chapter 6, article 10 and, except as provided in section 41‑1092.08, subsection H, is subject to judicial review pursuant to title 12, chapter 7, article 6. The health care insurer shall provide any service or pay any claim determined to be covered and medically necessary by the independent review organization for the case under review regardless of whether judicial review is sought.

5. For cases involving an issue of coverage, within two business days after receipt of all of the information prescribed in subsection C of this section from the utilization review agent, the director shall determine if the service or claim is or is not covered and if the adverse decision made pursuant to section 20‑2534 conforms to the utilization review agent's utilization review plan and this article and shall mail send a notice of determination to the utilization review agent, the health care insurer, the member and the member's treating provider.

L. Notwithstanding title 41, chapter 6, article 10 and section 12‑908, if a party to a decision issued under this section seeks further administrative review, the department shall not be a party to the action unless the department files a motion to intervene in the action.

M. The independent review organization, the director or the office of administrative hearings may not order the health care insurer to provide a service or to pay a claim for a benefit or service that is excluded from coverage by the contract.

N. The health care insurer shall provide any service or pay any claim determined in a final administrative decision to be covered and medically necessary for the case under review regardless of whether judicial review is sought. Any proceedings before the office of administrative hearings that involve an expedited external independent review and that are subject to subsection K of this section shall be promptly instituted and completed. END_STATUTE

Sec. 29. Section 20-2609, Arizona Revised Statutes, is amended to read:

START_STATUTE20-2609. Policyholder reports

An insurer that delivers or issues for delivery in this state a variable life insurance policy shall mail send the following reports to each variable life insurance policyholder at the policyholder's last known address:

1. Within thirty days after each anniversary of the policy, a statement or statements of the cash surrender value, the death benefit, any partial withdrawal or policy loan, any interest charge and any optional payments that are allowed under the policy and that are computed as of the policy anniversary date. The statement may be furnished within thirty days after a specified date in each policy year if the information contained in the statement is computed not more than sixty days before the notice is mailed sent. This statement shall state that the cash values and the variable death benefit may increase or decrease according to the investment experience of the separate account and shall prominently identify any value that the statement describes and that may be recomputed before the next statement required by this section. If the policy guarantees that the variable death benefit on the next policy anniversary date will not be less than the variable death benefit specified in the statement, the statement shall be modified to indicate this policy guarantee. In addition, the report must show the projected cash value and cash surrender value, if different, as of one year from the end of the period covered by the report. In determining the projected value, the insurer shall assume that the planned periodic premiums, if any, are paid as scheduled, that the guaranteed costs of insurance are deducted and that the net return is equal to the guaranteed rate, or if there is no guaranteed rate, is not greater than zero. If the projected value is less than zero, the statement shall include a warning message that the policy may be in danger of terminating without value in the next twelve months unless additional premium is paid. For flexible premium policies, the report shall contain a reconciliation of the change since the previous report in cash value and cash surrender value, if different, because of payments made, less deductions for expense charges, withdrawals, investment experience, insurance charges and any other charges made against the cash value.

2. An annual statement or statements, including:

(a) A summary of the financial statement of the separate account that is based on the annual statement last filed with the director.

(b) The net investment return of the separate account for the last year and, for each year after the first, a comparison of the investment rate of the separate account during the last year with the investment rate during prior years, up to a total of not less than five years if available.

(c) A list of investments that are held by the separate account as of a date not earlier than the end of the last year for which an annual statement was filed with the director.

(d) Any charges that were levied against the separate account during the previous year.

(e) A statement of any change in the investment objective and orientation of the separate account, in any investment restriction or material quantitative or qualitative investment requirement that applies to the separate account or in the investment advisor of the separate account.

3. For flexible premium policies, if the amounts that are available under the policy on any policy processing day to pay the charges that are authorized by the policy are less than the amount necessary to keep the policy in force until the next following policy processing day, a report that indicates the minimum payment that is required under the terms of the policy to keep the policy in force and the length of the grace period for the payment of that amount. END_STATUTE

Sec. 30. Section 20-2637, Arizona Revised Statutes, is amended to read:

START_STATUTE20-2637. Reports

A. At least once in each contract year after the first contract year, a company that issues individual variable annuities shall mail send to the contract holder at the contract holder's last known address a statement reporting the investments that are held in the separate account as of a date not more than four months before the sent date of mailing. The company shall submit annually to the director on a form prescribed by the national association of insurance commissioners a statement of the business of its separate account or accounts.

B. If payments under an annuity contract have not yet commenced the statement shall contain either:

1. The number of accumulation units that are credited to the contract and the dollar value of a unit.

2. The value of the contract holder's account. END_STATUTE