Assigned to FIN FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
FACT SHEET FOR H.B. 2007
group excess liability insurance
(NOW: insurance; group excess liability)
Purpose
Allows an authorized or unauthorized insurer to offer group excess liability insurance and
allows a group excess liability policy to also provide coverage for excess uninsured motorist,
excess underinsured motorist and excess uninsured or underinsured liability coverage. Prescribes
procedures and requirements for insurers to issue group excess liability insurance.
Background
A surplus lines broker is a person who, after determining that insurance coverage is not
readily available from an Arizona-authorized insurer, procures insurance on behalf of an insured
from a qualified unauthorized insurer. Unauthorized insurance is any insurance permitted to be
placed directly or through a surplus lines broker with an insurer who is not licensed to transact
insurance in Arizona or with a domestic surplus lines insurer. Any insurance policy form applying
to insurance on statutorily regulated risks may not be issued unless the form has been filed with
the Director and the Director has issued, within 30 days, an order approving or disapproving the
form or the 30-day period has elapsed and the Director has not disapproved the form (A.R.S.
§§ 20-398; 20-401; and 20-407).
Liability insurance is insurance against legal liability for the death, injury or disability of
any human being, or for damage to property, and the provision of medical, hospital, surgical or
disability benefits to injured persons and funeral and death benefits to dependents, beneficiaries or
personal representatives of persons killed, irrespective of legal liability of the insured, when issued
as an incidental coverage with or supplemental to liability insurance (A.R.S. § 20-252).
Every insurer writing automobile liability or motor vehicle liability policies must include
uninsured motorist coverage that extends to and covers all persons insured under the policy, in limits
not less than the liability limits for bodily injury or death contained within the policy. Current motor
vehicle liability policy limits are statutorily set as follows: 1) $25,000 for bodily injury or death of
one person in any one accident; 2) $50,000 for bodily injury or death of two or more persons in any
one accident; and 3) $15,000 for injury or destruction of others' property in any one accident.
Uninsured motorist coverage is coverage for damages due to bodily injury or death if the motor
vehicle that caused the bodily injury or death is not insured by a motor vehicle liability policy that
contains the minimum required statutory coverage limits. Underinsured motorist coverage includes
coverage for a person if the sum of the limits of liability under all bodily injury or death liability
bonds and liability insurance policies applicable at the time of the accident is less than the total
damages for bodily injury or death resulting from the accident (A.R.S. §§ 20-259.01 and 28-4009).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation. FACT SHEET
H.B. 2007
Page 2
Provisions
Group Excess Liability Insurance
1. Allows an authorized or unauthorized insurer to offer group excess liability insurance that
provides excess coverage after a certificate holder's primary liability insurance limits have been
exhausted.
2. Allows an insurer to issue a group excess liability insurance policy to an employer that insures
one or more employees of the employer.
3. Allows a group excess liability insurance policy, in addition to excess liability coverage, to
also provide excess uninsured motorist, excess underinsured motorist and excess uninsured or
underinsured liability coverage to certificate holders.
4. Allows a group excess liability insurance policy to provide coverage for excess uninsured
motorist or underinsured motorist coverage in amounts that exceed the statutory minimum
coverage limits.
5. Requires the terms and conditions for any excess uninsured motorist coverage and excess
underinsured motorist coverage provided under a group policy to comply with the applicable
statutory requirements.
6. Allows a group policyholder to pay the premium for a group excess liability insurance policy
from monies contributed wholly by the group policyholder or certificate holders or jointly by
the group policyholder and certificate holders.
7. Requires the group excess liability insurance policy to provide separate limits of coverage for
each certificate holder.
Certificate of Insurance Requirements
8. Allows an insurer to establish underwriting criteria for the group policyholder and certificate
holders that apply at issuance and renewal of the group policy and the certificate of insurance
and requires insurers to treat all eligible groups of the same class in a like manner.
9. Requires an authorized insurer that issues a group excess liability insurance policy in Arizona
to file the policy and the certificate of insurance forms with DIFI and exempts the insurer from
statutory rate filing requirements.
10. Requires the terms of the certificate of insurance to be consistent with the terms of the group
excess liability insurance policy pursuant to which the certificate of insurance is issued.
11. Allows the group policyholder or the group policyholder's insurance producer to send the
certificate of insurance and any endorsement or amendment to the certificate holders on behalf
of the insurer, if authorized by the insurer and agreed to the group policyholder or the group
policyholder's insurance producer.
12. Requires the certificate of insurance to contain all material terms and conditions of coverage
afforded to the certificate holder, including a disclosure in clear and easily understandable
language of any limitation, exclusion or required underlying coverage, or a copy of the group FACT SHEET
H.B. 2007
Page 3
policy must be delivered to the certificate holder within a reasonable period after the certificate
of insurance is delivered to the certificate holder.
Cancellation, Nonrenewal or Conditional Renewal of a Group Policy
13. Allows an insurer to nonrenew a group policy or any certificate of insurance issued under the
policy if the insurer complies with the applicable statutory requirements.
14. Allows an insurer, after a policy or certificate has been in effect for 60 days or if a policy or
certificate is a renewal, to cancel the group policy or any certificate of insurance issued under
the policy after the effective date of the group policy or certificate of insurance based on any
of the following:
a) nonpayment of the premium;
b) the conviction of the group policyholder or certificate holder of a crime that arose out of
acts that increased any of the hazards insured against;
c) any acts or omissions by the group policyholder, their representative or the certificate
holder that constitute fraud or material misrepresentation in obtaining on continuing the
group policy or certificate of insurance or in presenting a claim under group policy or
certificate of insurance;
d) a substantial change in the risk assumed by the insurer since the group policy of certificate
of insurance was issued, except to the extent that the insurer should reasonably have
foreseen the change or contemplated the risk in writing the contract;
e) a determination by the Director that continuing the group policy or certificate of insurance
would place the insurer in violation of Arizona's insurance laws or would jeopardize the
solvency of the insurer;
f) the loss of reinsurance that applies to the risk insured against, but only if the absence of
reinsurance resulted from the termination of treaty reinsurance or facultative reinsurance
initiated or implemented by the reinsurer or reinsurers of the insurer issuing the group
policy; or
g) the discovery of grossly negligent acts by the group policyholder, their representative or
the certificate holder that materially increased any of the hazards insured against.
15. Allows a group policyholder to cancel or nonrenew the group policy for any reason with 30
days' written notice to the insurer and each certificate holder.
16. Applies the following to the cancellation, nonrenewal or conditional renewal of coverage under
a group excess liability insurance policy:
a) an insurer must send notice of nonrenewal to the group policyholder and the certificate
holders at least 30 days before the effective date of the nonrenewal, or an authorized group
policy holder may send the notice to the certificate holders;
b) an insurer must send notice of cancellation to the group policyholder and certificate holders
or affected certificate holders at least 30 days before the effective date of cancellation, or
an authorized group policy holder may send the notice to the certificate holders;
c) the group policy must set forth the conditions and timing on which a certificate holder's
coverage will terminate following the termination of a certificate holder's employment with
the group policyholder;
d) an act or omission by a certificate holder may not constitute the basis for cancellation of
the group policy; and FACT SHEET
H.B. 2007
Page 4
e) the notice of cancellation and any refund or unearned premium may be sent separately, but
both must be sent within 30 days before the effective date of the cancellation.
17. Requires an insurer or, if authorized by the insurer and agreed to by the insurance producer,
the group policyholder's insurance producer to deliver a copy of the group policy and any
endorsement or amendment to the group policyholder.
18. Stipulates that losses remain covered as provided under the group policy notwithstanding a
cancellation, nonrenewal or conditional renewal, if a certificate holder sustains a loss that
would be covered by the group policy and that occurs before the effective date.
Miscellaneous
19. Prohibits an insurer from disclosing claims-related information about any certificate holder to
the group policyholder other than the existence of a claim.
20. Specifies that the authorization for insurers to offer group excess liability insurance and the
related requirements do not apply to or otherwise prohibit the issuance of commercial excess
liability insurance policies that provide coverage to one or more named insureds and its owners,
employees, contractors, agents or representatives under a single limit of insurance.
21. Defines commercial as insurance that insures against the risks arising from business and
commercial activity.
22. Defines terms.
23. Becomes effective on the general effective date.
House Action
COM 1/31/23 DPA/SE 10-0-0-0
3
rd
Read 2/21/23 59-1-0
Prepared by Senate Research
March 2, 2023
MG/sr