Assigned to FIN AS PASSED BY HOUSE
ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
AMENDED
FACT SHEET FOR S.B. 1118
insurance; fees; consent; limits
(NOW: insurance; fees; consent; medicare supplement)
Purpose
Allows an insurer to file for Medicare supplement rates that include an early enrollment
discount that will not be considered an attained age rating structure. Decreases the minimum
amount of the nonrefundable fee for the certificate of the Director of the Department of Insurance
and Financial Institutions (DIFI), under seal. Requires an oral communication that meets outlined
requirements to qualify as consent for an insurer to deliver documents electronically. Prescribes
flood insurance and high-risk fire area posting and notification requirements for insurers, the State
Forester and DIFI.
Background
Insurance
The Secretary of the U.S. Department of Health and Human Services must establish a
procedure for Medicare supplemental policies to be certified as meeting minimum standards and
requirements. The Director of DIFI must adopt rules necessary to comply with federal requirements,
laws and regulations so that the State of Arizona may retain its full authority to regulate minimum
standards for Medicare supplement insurance (42 U.S.C. 1395ss; A.R.S. § 20-1133).
Every health care insurer that offers individual health insurance coverage in the individual
market in Arizona must provide guaranteed availability of coverage to an eligible individual who
desires to enroll in individual health insurance coverage and may not: 1) decline to offer that
coverage to, or deny enrollment of, that individual; or 2) impose any preexisting condition
exclusion for that coverage. Statute requires a health care insurer to provide a written certificate of
creditable coverage if the individual: 1) ceases to be covered under a policy offered by the health
care insurer; and 2) requests certification from the insurer within 24 months after the coverage
ceases (A.R.S. § 20-1379).
Fees and Communications
DIFI collects nonrefundable fees from financial institutions and enterprises with the filing
of certain documents and applications (A.R.S. § 6-126).
Any notice to a party or other document required in an insurance transaction may be
delivered, stored and presented electronically if certain requirements are met. An oral
communication or a recording of an oral communication does not qualify as consent to deliver a
notice or document by electronic means (A.R.S. § 20-239). FACT SHEET – Amended
S.B. 1118
Page 2
Title Insurance Agencies
An agent for a title insurer may not adopt a corporate or business name that contains the
words title insurance, title guaranty or title guarantee or other words indicating that the agent is
in the business of title insurance, unless followed by agent or agency. The words agent or agency
must be the same size and type as the words preceding them in any print or advertisement. A title
insurer is not responsible for an agent's violation of corporate or business name and is not liable
for a civil penalty imposed on an agent (A.R.S. § 20-1583).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
Medicare Supplement Insurance
1. Allows an insurer, for the purposes of Medicare supplement insurance, to file for Medicare
supplement rates that include an early enrollment discount that will not be considered an
attained age rating structure.
2. Requires an early enrollment discount to diminish over a period of time and is only available
to enrollees who purchase the plan within the early enrollment period designated by the insurer.
3. Requires an insurer to disclose to all applicants how the early enrollment discount will diminish
over time.
Fees and Communications
4. Reduces, from $1.50 to $0.00, the minimum amount of the nonrefundable fee for the certificate
of the Director, under seal.
5. Requires either an oral communication with a contemporaneous written record made of the
communication or an archived recording, subject to the insurer's written record retention
policy, to qualify as consent for an insurer to deliver a notice or document by electronic means.
6. Specifies that oral consent applies only to an agreement to the use of electronic communication
with the insurer and is not an agreement to any other insurance matter.
Title Insurance Agencies
7. Removes the restrictions on the corporate or business name of an agent for a title insurer.
Miscellaneous
8. Exempts an insurer, if the federal laws that require providing a certificate of creditable
coverage are superseded by the prohibition on preexisting condition exclusions, from the
requirement to:
a) provide a certificate of creditable coverage; and
b) comply with certain annual reporting requirements relating to eligible individuals. FACT SHEET – Amended
S.B. 1118
Page 3
9. Requires a person, to qualify as an advisory organization, to assist two or more insurers or rate
service organizations in the making of rates.
10. Makes technical and conforming changes.
11. Becomes effective on the general effective date.
Amendments Adopted by Committee
1. Modifies consent through oral communication by requiring, rather than allowing, either the
contemporaneous record to be written or a recording to be archived subject to the insurer's
written record retention policy.
2. Prohibits the Director from prohibiting Medicare supplement insurance from offering
discounts to enrollees for early enrollment or payment method.
Amendments Adopted by Committee of the Whole
1. Specifies that oral consent to electronic delivery applies only to an agreement to the use of
electronic communication with the insurer and is not an agreement to any other insurance
matter.
2. Removes the requirement for an insurance producer to disclose fees and service charges in
writing.
3. Requires a person, to qualify as an advisory organization, to assist two or more insurers or rate
service organizations in the making of rates.
4. Makes technical changes.
Amendments Adopted by the House of Representatives
1. Removes the prohibition on the Director of DIFI prohibiting Medicare supplement insurance
providers from offering discounts to enrollees for early enrollment or payment method.
2. Allows an insurer to file for Medicare supplement rates that include an early enrollment
discount that will not be considered an attained age rating structure.
3. Requires an early enrollment discount to diminish over a period of time and requires an insurer
to disclose how the early enrollment discount will diminish over time.
4. Exempts an insurer, if the federal laws that require providing a certificate of creditable
coverage are superseded by the prohibition on preexisting condition exclusions, from the
requirement to:
a) provide a certificate of creditable coverage; and
b) comply with certain annual reporting requirements relating to eligible individuals.
5. Removes the specification that a motor vehicle liability policy is not required to provide
coverage for any liability not required under state law. FACT SHEET – Amended
S.B. 1118
Page 4
6. Removes the authorization for a motor vehicle liability policy to contain exclusions except as
specifically prohibited by law.
7. Makes technical and conforming changes.
Senate Action House Action
FIN 1/26/22 DPA 10-0-0 COM 3/8/22 DPA 10-0-0-0
3
rd
Read 2/24/22 28-0-2 3
rd
Read 6/22/22 57-0-3
Prepared by Senate Research
June 22, 2022
MG/AN/slp