HB 2819
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ARIZONA HOUSE OF REPRESENTATIVES
Fifty-seventh Legislature
First Regular Session
House: APPROP DPA 10-8-0-0
HB 2819: residential property insurance; fire; underwriting
Sponsor: Representative Stahl Hamilton, LD 21
Caucus & COW
Overview
Establishes data collection requirements for the Arizona Department of Insurance and
Financial Institutions (DIFI) and underwriting reporting requirements for residential
property insurance companies.
History
DIFI was established to safeguard the public welfare by protecting the financial assets of the
citizens of Arizona and is charged with licensing, supervising and regulating state-chartered
financial institutions and enterprises. DIFI ensures that financial institutions in this state
are in compliance with federal, state and local laws related to insurance, banking and other
enterprises under DIFI's jurisdiction (A.R.S. 20-141 et seq.).
Residential property insurers are prohibited from charging more premium for residential
property insurance coverage on a property with a single below deductible claim, not exceeding
$500 in the previous three years, than it would charge for similar coverage on the same
property if the property had no below deductible claims.
Below deductible claims are defined as claims for indemnification for a loss under a
residential property insurance policy that provided coverage for the loss that was closed
without any payment because the amount of the loss was less than the amount of the
deductible provided by the policy (A.R.S. 20-270).
Provisions
1. Requires DIFI to annually compile a list of residential property insurance companies in
this state and, for each company, publish on its website each of the following:
a) the premiums and associated fees charged at the inception of the policy;
b) the number of insureds and the average premiums paid by zip code;
c) the number of insureds who were denied reinsurance coverage by the same insurer
and why;
d) the number of insureds who were denied reinsurance coverage by zip code;
e) the number of insureds whose policies lapsed;
f) the number of insurance claims that were paid by the insurer;
g) the number of insurance claims that were paid by the insurer after the insured filed
an appeal;
h) the list of the public protection classification fire rating scores for each zip code or
designated area with the corresponding premium rates; and
i) the total dollar amount collected for premiums paid each year. (Sec. 1)
☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note HB 2819
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2. Requires residential property insurance companies in this state to file with DIFI a copy
of the insurers underwriting guidelines. (Sec. 2)
3. Directs residential property insurers to update their underwriting filing with DIFI any
time the insurer's guidelines are changed. (Sec. 2)
4. Specifies that if a group of residential property insurance companies files one set of
underwriting guidelines for the group of insurers, the group must identify which
underwriting guidelines apply to each residential property insurer within the group. (Sec.
2)
5. States the underwriting guidelines submitted to DIFI may not be unfairly discriminatory
and must be actuarily justified, reasonable and substantially commensurate with a
contemplated risk. (Sec. 2)
6. Defines residential property insurance as insurance coverage against loss to residential
real property at a fixed location, and includes:
a) a residential fire insurance policy;
b) an allied lines insurance policy; or
c) any tangible personal property pursuant to a homeowner's insurance policy. (Sec. 1)
7. Defines underwriting guideline as a rule, standard, guideline or practice, whether
written, oral or electronic, that an insurer or an agent of the insurer uses to:
a) decide whether to accept or reject an application for coverage under a residential
property insurance policy; or
b) determine how to classify those risks that are accepted for the purpose of determining
a rate. (Sec. 2)
Amendments
Committee on Appropriations
Wildfire Insurance Review Task Force
1. Establishes the Wildfire Insurance Review Task Force (Task Force) within DIFI.
2. Outlines the membership and qualifications of the Task Force.
3. Directs the Task Force to:
a) review homeowners' and commercial property insurance premium and policy
coverages in every zip code in this state;
b) review designated wildfire and wildland urban interface areas within the state;
c) review customer complains related to an insurance company's nonrenewal or increase
in premiums of a homeowners' or commercial property insurance policy; and
d) identify current and past data related to trends in homeowners' and commercial
property insurance rates by area, including designated wildfire or wildland urban
interface areas, rural and metropolitan areas.
4. Allows the Task Force to establish ad hoc work groups and consult with wildfire and
insurance experts to carry out the outlined duties.
5. Requires the Task Force to hold at least four meetings per calendar year.
6. Allows members of the Task Force to receive reimbursement for work-related travel and
related meal and incidental expenses.
7. Requires the Task Force submit an annual report of its findings and recommendations to
the Governor, the Speaker of the House, the President of the Senate, the Minority Leader HB 2819
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of the House and the Minority Leader of the Senate and provide a copy of the report to
the Secretary of State.
Policy Reporting Requirements for Homeowners' Insurers
8. Requires each insurer that writes homeowners' insurance to compile and report the
following information, for every policy the insurer had in force in areas designated by the
DIFI Director (Director), to DIFI in a manner and form prescribed by the Director:
a) the physical address or location of the insured property;
b) the total written and earned premium for the policy and, if applicable, the portion of
the premium attributable to the fire risk;
c) the number of paid claims due to fire loss or for reasons other than fire loss;
d) the total of all losses paid due to fire loss or for reasons other than fire loss;
e) the type of policy form;
f) the policy's deductible;
g) the policy's coverage limits;
h) if the policy was newly issued or renewed and the date the policy was issued or
renewed;
i) if the policy was cancelled, the date the policy ended and whether the policy was
cancelled due to:
i. nonpayment of premium; or
ii. reasons other than nonpayment of premium;
j) if the policy was nonrenewed, the date the policy ended and whether the policy was
not renewed due to:
i. fire loss risk;
ii. condition of the premises; or
iii. any other reason other than fire loss risk or condition of the premises; and
k) any other information as prescribed by the Director in rule, except that in any year
the Director may require the reporting of any information consistent with the
information requested in a data call issued by the National Association of Insurance
Commissioners.
9. Specifies the reports filed with DIFI must be filed not later than April 1st each year.
10. Clarifies that the outlined data reporting requirements do not require the insurer to
provide an explanation for the cancellation or nonrenewal of a policy.
11. Designates that the information reported to DIFI is confidential and not subject to statute
related to public records, discovery or subpoena, unless the subpoena is issued by the
Attorney General, a county attorney or a court at the request of the Attorney General, or
a county attorney or other law enforcement agency and is not admissible as evidence in a
private civil action.
12. Requires the Director prepare an annual report compiling in an aggregated and
anonymized manner the information submitted by insurers to DIFI and submit the report
to the Governor, the Speaker of the House and the President of the Senate and make a
copy of the report publicly available on the DIFI website.
Underwriting Guidelines Reporting Requirements
13. Requires each insurer writing homeowners' insurance to file with the Director the
insurer's underwriting guidelines relating to fire loss risk, including wildfire risk, and all
changes and amendments to those guidelines within 30 days after they become effective. HB 2819
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14. Specifies that if a group of insurers files one set of underwriting guidelines for the group,
that group must identify which guidelines apply to each insurer within the group.
15. Directs that the underwriting guidelines must be actuarily justified, reasonable and
substantially commensurate with the contemplated fire loss risk and may not be unfairly
discriminatory.
16. Designates that the underwriting guidelines filed with the Director are confidential and
not subject to statute related to public records, discovery or subpoena, unless the
subpoena is issued by the Attorney General, a county attorney or a court at the request
of the Attorney General, or a county attorney or other law enforcement agency and is not
admissible as evidence in a private civil action.
17. Defines underwriting guidelines.
18. Makes conforming changes.