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ARIZONA HOUSE OF REPRESENTATIVES57th Legislature, 2nd Regular Session |
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HB 2174: insurance; modeling organizations; predictive models
Sponsor: Representative Livingston, LD 28
Committee on Commerce
Overview
Prohibits predictive models created by modeling organizations to be used by insurers in this state without authorization from the Director (Director) of the Arizona Department of Insurance and Financial Institutions (DIFI).
History
DIFI is responsible for regulating the insurance industry, financial institutions, financial service professionals and business entities. DIFI registers and certifies state-chartered banks and credit unions and licenses financial and insurance professionals, including collection agencies, mortgage brokers, loan originators, premium finance companies and sales finance companies. DIFI conducts examinations on licensees and businesses and investigates fraud, deceptive practices, unprofessional conduct, claim delays and unfair claim settlement practices (Title 6, A.R.S.).
In the making of insurance rates, advisory and rate service organizations assist insurers by compiling and furnishing loss or expense statistics, submitting rate recommendations and forms or supplementary rate information, or by filing rates. It is statutorily required that before providing any of its services in Arizona, advisory organizations must file with the director and rate service organizations must obtain a license from the director (A.R.S. §§ 20-381; 20-389; 20-390).
Provisions
Modeling Organization Requirements
1. Outlines the information required to be filed with the Director before a modeling organization may make predictive models available for use by an insurer in Arizona. (Sec. 2)
2. Mandates the timely filing of any amendment to any document that is required to be filed with the Director relating to the modeling organization's predictive model. (Sec. 2)
3. Allows the Director to require that the modeling organization file additional data or information to verify that the predictive model complies with Arizona's insurance statutes. (Sec. 2)
4. Prohibits authorized insurers from using a predictive model unless the model has been approved by the Director. (Sec. 2)
5. Exempts predictive models and any information filed with the Director from being subject to subpoena and from the Arizona Public Records statutes. (Sec. 2)
6. Declares it is unlawful for a modeling organization to engage in any unfair practice. (Sec. 2)
Applicability
7. Applies the filing requirements only to modeling organizations that file with DIFI from and after December 31, 2026. (Sec. 3)
8. Omits modeling organizations from the necessity to refile after the effective date, if the predictive model is filed with and has been approved by DIFI before January 1, 2027. (Sec. 3)
Miscellaneous
9. Modifies the definition of advisory organization to mean any person who assists insurers or rate service organizations in the making of rates by compiling and furnishing loss or expense statistics and other statistical information and data. (Sec. 1)
10. Specifies additional entities that are not considered advisory organizations:
a. a modeling organization; and
b. any person that furnishes nonstatistical information or data, including data that has not been aggregated and analyzed by the person for use by an insurer for risk-based underwriting. (Sec. 1)
11. Defines modeling organization to mean any person that prepares predictive models that are used by insurers in a rate filing but that does not make rates or submit recommendations regarding rates or supplementary rate information. (Sec. 1)
12. Defines predictive model to mean a statistical or mathematical model that is used to predict future outcomes or events. (Sec. 1)
13. Specifies that a modeling organization is not included in the definition of rate service organization. (Sec. 1)
14. Makes technical changes. (Sec. 1)
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18. Initials PB/AI HB 2174
19. 1/29/2026 Page 0 Commerce
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