Arizona-2023-HB2007-Engrossed

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

Section 1. Title 20, chapter 6, Arizona Revised Statutes, is amended by adding article 6, to read:

ARTICLE 6. GROUP EXCESS LIABILITY INSURANCE POLICIES

START_STATUTE20-1491. Definitions

In this article, unless the context otherwise requires:

1. "Certificate holder" means the individual named insured group member under a group excess liability insurance policy.

2. "Certificate of insurance" means the certificate of insurance, evidence of coverage or other summary of coverage that is issued to each certificate holder under a group excess liability insurance policy.

3. "Conditional renewal" means a renewal that is conditioned on any of the following:

(a) A change of limits.

(b) A change in the type of coverage.

(d) increased deductibles or the addition of exclusions.

(e) Increased premiums in excess of ten percent, except for premium increases that are generated as a result of increased exposure units or as a result of experience rating, loss rating, retrospective rating or audit.

4. "Excess liability insurance" means liability insurance, as prescribed in section 20-252, paragraph 1, that provides excess coverage after the certificate holder's primary liability insurance limits have been exhausted.

5. "Excess uninsured or underinsured liability" means damages for bodily injury, personal injury or property damage that the certificate holder or an immediate family member of the certificate holder is legally entitled to receive from an uninsured or underinsured negligent person.

6. "Group excess liability insurance" means excess liability insurance that is issued on a group basis and that covers groups of persons as prescribed in this article.

7. "Group policyholder" means those groups identified in section 20-1492, subsection D to which a group excess liability insurance policy may be issued.

8. "Immediate family member" includes any of the following:

(a) The certificate holder's spouse or domestic partner.

(b) any relative of the certificate holder who lives with the certificate holder.

9. "Issued on a group basis" means the issuance of a master policy to a group policyholder, with certificates of insurance issued to certificate holders, solely for the benefit of persons other than the group policyholder.

10. "Negligent person" means a natural person who is identifiable by legal name, who is not an immediate family member of the certificate holder and who is legally responsible for any damages that were sustained by the certificate holder or the certificate holder's immediate family member and that were caused by an accident or offense to which the group excess liability insurance policy applies. END_STATUTE

START_STATUTE20-1492. Group excess liability insurance; eligible groups

A. An authorized insurer or an unauthorized insurer as provided in chapter 2, article 5 of this title may offer group excess liability insurance in this state. An authorized insurer that issues a group excess liability insurance policy in this state shall file the group policy and the certificate of insurance forms with the department pursuant to section 20-398 but is exempt from the requirements of section 20-385. The terms of the certificate of insurance shall be consistent with the terms of the group excess liability insurance policy pursuant to which the certificate of insurance is issued.

b. An insurer may issue or deliver a group excess liability insurance policy and certificate of insurance in this state only pursuant to this article. In addition to excess liability coverage, a group excess liability insurance policy may also provide excess UNINSURED motorist, excess underinsured motorist and excess uninsured or underinsured liability coverage to CERTIFICATE holders. The terms and conditions for any excess uninsured motorist coverage and excess underinsured motorist coverage provided under the group policy shall comply with this title.

C. Notwithstanding subsection B of this section, a group excess liability insurance policy may provide coverage for excess uninsured motorist or underinsured motorist coverage in amounts that exceed the limits set forth in section 20-259.01.

D. An insurer may issue a group excess liability insurance policy to an employer that insures one or more employees of the employer. For the purposes of this subsection:

1. "employees" include:

(a) The officers, directors, managers and employees of the employer.

(b) The partners if the employer is a partnership.

(c) The officers, managers and employees of a subsidiary or any affiliated corporations, companies, limited liability companies, firms or partnerships.

(d) The members of the employee's immediate family.

2. "employer" includes any type of corporation, company, firm, limited liability company and partnership.

E. An insurer may 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. Insurers shall treat all eligible groups of the same class in a like manner.

F. Nothing in this article shall 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. For the purposes of this subsection, "commercial" means insurance that insures against the risks arising from business and commercial activity. END_STATUTE

START_STATUTE20-1493. Group excess liability insurance policy; premiums; cancellation; requirements

A. The group policyholder may pay the premium for a group excess liability insurance policy from monies contributed wholly by the group policyholder, wholly by the certificate holders or jointly by the group policyholder and the certificate holders.

b. The group excess liability insurance policy shall provide separate limits of coverage for each certificate holder.

c. The insurer or, if authorized by the insurer and agreed to by the insurance producer, the group policyholder's insurance producer shall deliver a copy of the group policy and any endorsement or amendment to the group policyholder. If authorized by the insurer and agreed to by the group policyholder or the group policyholder's insurance producer, the group policyholder or the group policyholder's insurance producer may send the certificate of insurance and any endorsement or amendment to the certificate holders on behalf of the insurer.

d. The certificate of insurance shall contain all material terms and conditions of coverage that are 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 policy shall be delivered to the certificate holder within a reasonable period of time after the certificate of insurance is delivered to the certificate holder.

E. The insurer may not disclose claims-related information about any certificate holder to the group policyholder other than the existence of a claim.

F. The following requirements apply to the cancellation, nonrenewal or conditional renewal of coverage under a group excess liability insurance policy:

1. Except as provided in paragraph 5 of this subsection, an insurer may nonrenew the group policy or any certificate of insurance issued under the policy if the insurer complies with the requirements of this article. The insurer shall send notice of nonrenewal to the group policyholder and the certificate holders at least thirty days before the effective date of the nonrenewal. If authorized by the insurer and agreed to by the group policyholder, the group policyholder may send notice of nonrenewal to the certificate holders at least thirty days before the effective date of the nonrenewal on behalf of the insurer.

2. Except as provided in paragraph 5 of this subsection, After a group policy or certificate of insurance has been in effect for sixty days, or if the group policy or certificate of insurance is a renewal, effective immediately, an insurer may 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) The 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, the group policyholder's representative or the certificate holder that constitute fraud or material misrepresentation in obtaining or continuing the group policy or certificate of insurance or in presenting a claim under the group policy or certificate of insurance.

(d) A substantial change in the risk assumed by the insurer since the group policy or 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 the insurance laws of this state 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.

(g) The discovery of grossly negligent acts by the group policyholder, the group policyholder's representative or the certificate holder that materially increased any of the hazards insured against.

3. The insurer shall send notice of cancellation to the group policyholder and the certificate holders if the group policy is being canceled or to affected certificate holders if one or more certificates of insurance are being canceled at least thirty days before the effective date of the cancellation. If authorized by the insurer and agreed to by the group policyholder, the group policyholder may send notice of cancellation to the certificate holders if the group policy is being canceled or to affected certificate holders if one or more certificates of insurance are being canceled at least thirty days before the effective date of the cancellation on behalf of the insurer.

4. The group policy shall 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.

5. An act or omission by a certificate holder may not constitute the basis for cancellation of the group policy.

6. The notice of cancellation and any refund of unearned premium may be sent separately, but both must be sent within thirty days before the effective date of the cancellation.

g. With thirty days' written notice to the insurer and each certificate holder, a group policyholder may cancel or nonrenew the group policy for any reason.

h. If a certificate holder sustains a loss that would be covered by the group policy and that occurs before the effective date of the cancellation, nonrenewal or conditional renewal of the group policy or the certificate holder's certificate of insurance, whether initiated by the insurer, group policyholder or certificate holder, the loss remains covered as provided under the group policy notwithstanding the cancellation, nonrenewal or conditional renewal. END_STATUTE