Licensing Requirements

Transcription

1 Arizona Adjuster What is an Adjuster? Licensing Requirements An adjuster is an individual or business that is paid to adjust, investigate or negotiate insurance claims settlements on behalf of an insurance company or insured. Who Must Be Licensed as an Adjuster? An individual or business entity must be a licensed adjuster in Arizona in order to act as an adjuster or to present themselves as an adjuster unless the scope of activities is limited to one or more of the following conditions: You are a licensed attorney-at-law who is qualified to practice law in this state; You are a salaried employee of an insurer or of a managing general agent whose compensation is not contingent on the outcome of a claim determination; You are an Arizona-licensed insurance producer and you only perform adjuster activities for losses under policies you sold. You are an independent contractor retained by an adjuster to provide technical assistance in connection with a claim such as photography, estimation, engineering, private detection, handwriting evaluation, etc. You are licensed or otherwise permitted to act as an adjuster in your home state (state of domicile) AND an insurer sends you to Arizona to investigate or adjust a particular loss under an insurance policy or a series of losses resulting from a catastrophe common to all those losses. Individual who acts as an adjuster in Arizona must be individually licensed even if they work for a business-entity adjuster. "Automated claims adjudication system" means a preprogrammed computer system that is designed for the collection, data entry, calculation and final resolution of portable consumer electronic products insurance claims and that: May be used only by a licensed adjuster, licensed producer or supervised individuals operating pursuant to this paragraph. Must comply with all claims payment requirements under this title and be certified as compliant by a licensed adjuster. "Portable consumer electronic products" means electronic devices and related accessories that are portable in nature. (20-321) Arizona Adjuster - 1

2 Adjuster License Qualifications A person may not act as or claim to be an adjuster unless the person is licensed to do so. To obtain a license as an adjuster a person must apply to the Director for the license and use the forms prescribed and provided by the Director. The Director will issue the license to qualified persons on payment of the required license fee. To be licensed as an adjuster the applicant must meet all of the following qualifications: Be a person who is at least 18 years of age. Be a resident of this state, or a resident of another state that allows residents of this state to act as adjusters in the other state. Take and pass an examination that is given by or under the supervision of the Director and that reasonably tests the applicant's knowledge of insurance and legal responsibilities as an adjuster and otherwise comply with insurance regulations. An adjuster who is licensed or permitted to act as an adjuster in the state of the adjuster's domicile is not required to be licensed or meet the qualifications of this section if the adjuster is sent to this state on behalf of an insurer for the purpose of investigating or making adjustment of a particular loss under an insurance policy or a series of losses resulting from a catastrophe common to all those losses. To determine license eligibility, the Director may require fingerprints of applicants and submit the fee and the fingerprints as required by regulation. A resident of Canada may not be licensed as a nonresident adjuster unless the person has obtained a resident adjuster license in another state and designated that state as the person's home state. The Director may contract with nongovernmental entities to perform any ministerial functions, including collection of fees and data related to licensing, that the director deems appropriate. A resident of Canada may apply for a license that grants the applicant the authority only to adjust portable electronics insurance claims in this state if the person has obtained an adjuster license in another state that permits that person to adjust portable electronics insurance claims in that state. An applicant who resides in a state that does not issue licenses to adjusters and who is otherwise permitted to adjust portable electronics insurance claims in the applicant's resident state may apply for a license that grants the applicant the authority only to adjust portable electronics insurance claims in this state. ( ) Business Name or Trade Name A licensee doing business under any name other than their legal name, they must notify the Director on a form prescribed by the Director before using the assumed name. The Director Arizona Adjuster - 2

3 may deny the use of an assumed business name, require the use of a different assumed business name or require the use of an assumed business name if a licensee uses or proposes to use an assumed business name that either: Is so similar to the legal name or name already assumed under this section by any other licensed insurance producer so as to cause uncertainty or confusion. Tends to deceive or mislead the public as to the nature of the business that is or will be conducted. A licensee must notify the Director in writing within 30 days after any material change to the information filed with the Director under this section. The Director will not issue any license in a trade name except to a business entity and on proof satisfactory to the Director that the trade name has been lawfully registered. (20-297) Application for Examination A resident individual applying for an insurance license must pass an examination within the one year period that precedes the date the Director received the individual's license application unless the individual is exempt. The examination will test the knowledge of the individual concerning the lines of authority for which the application is made, the duties and responsibilities of a licensee and the insurance laws of this state. For an individual called into active military service after passing the examination, the one year period prescribed by this section will be extended by the number of days that the individual was in active military service, not to exceed a total of one and one-half years. An individual applying for a license must include with the license application a copy of the documentation from the armed forces showing the period of time that the individual was in active military service. For the purposes of this section, active military service does not include periodic and routine service as a military reservist. The Director will make the examination available to applicants for licenses with such frequency as meets the reasonable convenience of both the Director and applicants, but at least every 60 days. The Director may reasonably prescribe by rule the time, places and conduct of examinations. The Director may require a reasonable waiting period before examination of an applicant who failed to pass a previous similar examination. The Director will ensure that all examinations are given, conducted and graded in a fair and impartial manner and without unfair discrimination as among individuals examined. At the Director's discretion, any written examination may be supplemented by an oral examination of the applicant. The Director will inform the applicant of the result of the examination within 30 days after the examination. The Director may appoint one or more advisory committees to make recommendations to the Director as to the scope, type and conduct of written examinations under this article. The members of the committee will serve without pay and without expense to the state. Arizona Adjuster - 3

4 An individual who fails to appear for the examination as scheduled or who fails to pass the examination must reapply for an examination and remit all required fees and forms before being rescheduled for another examination. An individual may not take an examination for a line of authority for which the individual already holds a license in this state. The Director will not allow an individual to take an examination administered for any line of license authority pursuant to this section more than four times within a twelve month period. If an individual fails an examination for a specific line of authority four times, the individual may not take an examination for that line of authority for one year. For the purposes of this section, an individual who fails an examination that covers more than one line of license authority is considered to have failed the examination for each individual line of license authority. (20-284) An applicant for a license as a nonresident insurance producer who meets the requirements of this title. An applicant for a rental car agent license. An applicant for a self-service storage agent license. An applicant who resides in a state that does not license adjusters and who will be only adjusting portable electronics insurance policy claims in this state. (20-288) Nonresident Licensing Unless the Director denies a license, the Director will issue a nonresident person a nonresident license if all of the following apply: The person is currently licensed as a resident and in good standing in the person's home state. The person has submitted the proper request for licensure and has paid the required fees. The person has submitted the application for licensure as an insurance adjuster that the person submitted to the person's home state or a completed uniform application on a form prescribed by the National Association of Insurance Commissioners. The person's home state issues nonresident licenses to residents of this state on the same basis. A nonresident insurance adjuster who moves from one state to another state or a resident insurance adjuster who moves from this state to another state must file a change of address form and provide the Director with certification of licensure from the new resident state within 30 days after receiving the new resident license. A fee or license application is not required. (20-287) Arizona Adjuster - 4

5 License Maintenance and Duration Expiration, Renewal or Surrender Any license that is issued pursuant to this article, other than a temporary license, continues in force until it expires or the Director suspends, revokes or terminates the license. The license is also subject to renewal pursuant to this section. A license that is issued or renewed expires quadrennially (every four years) as follows: If the licensee is an individual, on the last day of the month of the licensee's birthday, but not less than three years and not more than four years after the last day of the month in which the license is issued or is required to be renewed. If the licensee is a business entity, on the last day of the same month four years after the issuance or renewal due date of the license as provided pursuant to this article. The Director may renew a license if the Director receives from the licensee all of the following on or before the license expiration date: An application on a form approved by the Director. The required license fee. Before renewing a license, the Director may require the applicant to: Provide all documents that are reasonably necessary to verify the information that is contained in the application and any other information including prior criminal records. Submit a full set of fingerprints to the Department. The Department of Insurance will submit the fingerprints to the Department of Public Safety for the purpose of obtaining a state and federal criminal records check. The Department of Public Safety may exchange this fingerprint data with the Federal Bureau of Investigation. Any license for which the Director does not receive timely application for renewal and full payment of fees expires at midnight on the renewal date. During the one year period after the expiration of a license under this section, a person who otherwise meets the qualifications for a license may renew an expired license by filing with the Director a renewal application, the quadrennial license fee and an additional $100 as a late renewal fee. Any application that is received during this one year period for the same license that expired under this section is deemed a renewal application. Any application that is received after the one year period for the same license that expired under this section is deemed a new application. On the written request of a licensed person, the Director may accept the voluntary surrender of the person's authority to transact one or more lines of insurance or of the person's entire license. A person who surrenders an authority or a license may not reapply for the same authority or license for at least one year after the date of the surrender. (20-289) Arizona Adjuster - 5

6 Inactive Status During Military Service A licensee or applicant who is ordered into active military service may request that the license or application be placed on inactive status by sending the Department a written statement that includes all of the following: The licensee's name. The licensee's license number or social security number. The date that the active military service begins. A request for inactive status. The license or application is deemed to be on inactive status while the licensee or applicant is in active military service. A licensee whose license is on inactive status: May not sell, solicit or negotiate insurance. May receive renewal or other deferred commissions for selling, soliciting or negotiating insurance in this state if the licensee was required to be licensed under this article at the time of the sale, solicitation or negotiation and held an active license at that time. The time periods for submission of the license renewal fee and for completion of the applicable renewal requirements that apply to a licensee with an active license are extended for a licensee whose license is on inactive status by the number of days that the licensee is in active military service. A licensee applying for renewal under this section must include, with the renewal application, a copy of the documentation from the armed forces showing the period of time that the licensee was in active military service. For the purposes of this section, active military service does not include periodic and routine service as a military reservist. ( ) Report of Actions Within 30 days after the final disposition of the matter, an insurance licensee must report to the Director any administrative action taken against the licensee in another jurisdiction or by another governmental agency in this state. The report must include a copy of the order, consent to order or other relevant dispositive document. Within 30 days after the initial pretrial hearing date, an insurance licensee must report to the Director any criminal prosecution of the licensee taken in any jurisdiction. The report must include a copy of the initial complaint filed, the order resulting from the hearing and all other relevant legal documents. (20-301, ) Change of Address or Name A licensee must inform the Director in writing within 30 days of any change in the licensee's: Residential, business or address. Members, directors, officers or designated producer. The Director may require that a licensee who notifies the Director of such a change to submit a full set of fingerprints of each new member, Director, officer or designated producer to the Director for the Arizona Adjuster - 6

7 purpose of obtaining a state and federal criminal records check. The Department of Public Safety may exchange this fingerprint data with the Federal Bureau of Investigation. (20-286(C)) Disciplinary Actions License Denial, Suspension or Revocation The Director may deny or suspend for not more than 12 months, revoke or refuse to renew an insurance license or may impose a civil penalty in accordance with this section or any combination of actions for any one or more of the following causes: Providing incorrect, misleading, incomplete or materially untrue information in the license application. Violating any provision of this title or any rule, subpoena or order of the Director. Obtaining or attempting to obtain a license through misrepresentation or fraud. Improperly withholding, misappropriating or converting any monies or properties received in the course of doing insurance business. Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance. Having been convicted of a felony. Having admitted or been found to have committed any insurance unfair trade practice or fraud. Using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere. Having an insurance license or its equivalent, denied, suspended or revoked in any other state, province, district or territory. Forging another's name to any document related to an insurance transaction. Aiding or assisting any person in the unauthorized transaction of insurance business. The Director may deny, suspend for not more than 12 months, revoke or refuse to renew the license of a business entity: For any of the causes outlined above if the cause relates to the designated licensee or any member, officer, Director or manager of the business entity. If the Director finds that a licensee s violation was known or should have been known by the designated licensee or one or more of the members, officers, Directors or managers acting on behalf of the business entity and the violation was not seasonably reported to the Director and no reasonable corrective action was taken. If the Director denies an application for a license, the Director will notify the applicant by personal delivery or certified mail, return receipt requested. The Director may revoke, suspend or refuse to renew a license after notice and an opportunity for a hearing. Arizona Adjuster - 7

8 If a hearing is required, not less than 10 days in advance the Director will give notice of the time and place of the hearing, stating the matters to be considered. If the persons to be given notice are not specified in the provision pursuant to which the hearing is held, the Director will give such notice to all persons directly affected by such hearing. (20-163) In addition to or instead of any suspension, revocation or refusal to renew a license pursuant to this section, after a hearing the Director may: Impose a civil penalty of not more than $250 for each unintentional failure or violation, up to an aggregate civil penalty of $2,500. Impose a civil penalty of not more than $2,500 for each intentional failure or violation, up to an aggregate civil penalty of $15,000. Order the licensee to provide restitution to any party injured by the licensee's action. The civil penalty is in addition to any other applicable penalty or restraint either in this article or in any other law and may be recovered in a civil action brought by the Director. The Director retains the authority to enforce this title and impose any penalty or remedy authorized by this title against any person who is under investigation for or charged with a violation of this title even if the person's license has been surrendered or has lapsed by operation of law. (20-295) Effect of Suspension or Revocation of License On suspension or revocation of the license the licensee must deliver the license to the Director. The Director will not again issue any license under this title to any person whose license has been revoked until one year after the revocation and the person again qualifies in accordance with the applicable provisions of this title. If the license of a business entity is suspended or revoked, a member, officer or Director of or designated producer for the business entity will not be issued a license or serve as the designated producer for any licensee during the period of the suspension or revocation unless the Director determines that the member, officer, Director or designated producer was not personally at fault and did not acquiesce in the matter that resulted in the suspension or revocation of the license. (20-296) Cease and Desist Order If the Director has cause to believe that any person is violating or about to violate the insurance laws of this state, the Director may order the person to cease and desist and, through the attorney general, may cause a complaint to be filed in the superior court in Maricopa county to enjoin and restrain the person from continuing the violation, engaging in the violation or doing any act in furtherance of the violation. If the Director orders the person to cease and desist, the person may file a notice of appeal and may appeal any final order. If the Director, through the attorney general, causes a complaint to be filed, the superior court in Arizona Adjuster - 8

9 Maricopa county has jurisdiction of the proceeding and may make and enter an order or judgment awarding the preliminary or final relief as in its judgment is proper. (20-292) Cease and Desist Order for Defined or Prohibited Practices If after a hearing the Director finds that the person charged has engaged or is engaging in any act or practice defined in or prohibited under this article as an illegal or unfair method of competition or an unfair or deceptive act or practice, the Director will order the person to cease and desist from the acts or practices. If the act or practice is an unfair trade practice, an act of fraud or a general business practice of committing or performing acts or omissions prohibited by this article, the Director may also impose a civil penalty of not more than $1,000 for each act or violation but not to exceed an aggregate penalty of $10,000 for unintentional acts or violations. However, if the acts or violations are intentional, the Director may impose a civil penalty of up to $5,000 for each act or violation but not to exceed an aggregate penalty of $50,000 in any six month period. No order of the Director pursuant to this section or order of a court to enforce it, or holding of a hearing, will in any manner relieve or absolve any person affected by the order or hearing from any other liability, penalty or forfeiture under law. (20-456) Claim Settlement Laws and Regulations Unfair Claim Settlement Practices - Applicability This rule applies to all persons and to all insurance policies, insurance contracts and subscription contracts except policies of Worker s Compensation and title insurance. (R ) Definitions "Agent" means any individual, corporation, association, partnership or other legal entity authorized to represent an insurer with respect to a claim. "Claimant" means either a first party claimant, a third party claimant, or both and includes such claimant's designated legal representative and includes a member of the claimant's immediate family designated by the claimant. "Director" means the Director of Insurance of the State of Arizona. "First party claimant" means an individual, corporation, association, partnership or other legal entity asserting a right to payment under an insurance policy or insurance contract arising out of the occurrence of the contingency of loss covered by such policy or contract. Arizona Adjuster - 9

10 Unless the context otherwise requires, "insurer" includes all corporations, associations, partnerships and individuals engaged as principals in the business of insurance and also includes interinsurance exchanges and mutual benefit societies. (20-106) "Investigation" means all activities of an insurer directly or indirectly related to the determination of liabilities under coverages afforded by an insurance policy or insurance contract. "Notification of claim" means any notification, whether in writing or other means, acceptable under the terms of any insurance policy or insurance contract, to an insurer or its agent, by a claimant, which reasonably apprises the insurer of the facts pertinent to a claim. "Third party claimant" means any individual, corporation, association, partnership or other legal entity asserting a claim against any individual, corporation, association, partnership or other legal entity insured under an insurance policy or insurance contract of an insurer. "Worker's compensation" includes, but is not limited to, Longshoremen's and Harbor Worker's Compensation. Unfair Claim Settlement Practices A person may not commit or perform with such a frequency to indicate as a general business practice any of the following: Misrepresenting pertinent facts or policy provisions relating to coverage; Failing to acknowledge and act reasonably and promptly on communications regarding claims; Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under an insurance policy; Refusing to pay claims without a reasonable investigation; Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed; Not attempting in good faith to make prompt, fair and equitable settlement of claims in which liability has become reasonably clear; As a property or casualty insurer, failing to recognize a valid assignment of a claim. The property or casualty insurer shall have the rights consistent with the provisions of its insurance policy to receive notice of loss or claim and to all defenses it may have to the loss or claim, but not otherwise to restrict an assignment of a loss or claim after a loss has occurred; Compelling insureds to resort to litigation to recover amounts due under a policy by offering substantially less than the amount ultimately recovered in actions brought by the insured; Arizona Adjuster - 10

11 Attempting to settle a claim for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of an application; Attempting to settle claims on the basis of an application that was altered without notice to or the knowledge or consent of the insured; Making claim payments without stating the coverage under which the payments are being made; Making known a policy of appealing from arbitration awards in favor of insureds for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration; Delaying the investigation or payment of claims by requiring a preliminary claim report and formal proof of loss forms that contain substantially the same information; Failing to promptly settle claims if liability has become reasonably clear under one portion of the policy in order to influence settlements under other portions of the policy; Failing to promptly provide a reasonable explanation of the basis in the policy for denial of a claim or offer of a compromise settlement; Attempting to settle claims for the replacement of any non-mechanical sheet metal or plastic part that generally constitutes the exterior of a motor vehicle with an aftermarket crash part that is not made by or for the manufacturer of an insured's motor vehicle without properly notifying the insured and otherwise complying with the law; Denying liability for a claim under a motor vehicle liability policy in effect at the time of an accident without having substantial facts based on reasonable investigation to justify the denial for damages or injuries that are a result of the accident and that were caused by the insured if the denial is based solely on a medical condition that could affect the insured s driving ability. Nothing in this section will be construed to prohibit the application of deductibles, coinsurance, preferred provider organization requirements, cost containment measures or quality assurance measures if they are equally applied to all types of physicians referred to in this section, and if any limitation or condition placed upon payment to or upon services, diagnosis or treatment by any physician covered by this section is equally applied to all physicians, without discrimination to the usual and customary procedures of any type of physician. A determination under this section of discrimination to the usual and customary procedures of any type of physician will not be based on whether an insurer applies medical necessity review to a particular type of service or treatment. In prescribing rules to implement this section, the Director will follow, to the extent appropriate the National Association of Insurance Commissioners unfair claims settlement practices model regulation. Nothing contained in this section is intended to provide any private right or cause of action to or on behalf of any insured or uninsured resident or nonresident of this state. It is, however, Arizona Adjuster - 11

12 the specific intent of this section to provide solely an administrative remedy to the Director for any violation of this section or rule related to this section. (20-461) Timely Payment of Claims From and after July 15, 1986 any first party claim not paid within 30 days after the receipt of an acceptable proof of loss by the insurer which contains all information necessary for claim adjudication will be required to pay interest at the legal rate from the date the claim is received by the insurer. The interest will be calculated on the amount the insurer is legally obligated to pay according to the terms of the insurance contract under which the claim is being submitted. For purposes of determining whether the claim has been paid within 30 days, the date of payment will be deemed to have been received by the addressee on the date shown by the postmark or other official mark of the United States mail stamped on the payment envelope. If the receipt disputes the date where there is no mark or the mark is not legible, the sender may establish the mailing or transfer date by competent evidence. This section does not apply to: Claims submitted for payment under Medicare. Claims submitted under a Medicare supplement contract where, according to the terms of the supplement contract, claims will be based upon the amount paid by Medicare. The payment of a claim will not be overdue during any period in which the insurer is unable to pay such claim because there is no recipient who is legally able to give a valid release for such payment, or in which the insurer is unable to determine who is entitled to receive such payment, if the insurer has promptly notified the claimant of such inability and has offered in good faith to promptly pay said claim upon determination of who is entitled to receive such payment. Claims submitted to a person who is the processing agent for a foreign insurer or other person providing an insurance program for retirees residing in Arizona. Claims denied in good faith within 30 days after receipt of acceptable proofs of loss. This section will apply only to claims that are to be paid by the insurer directly to the insured, to a beneficiary named in the contract, or to a provider who has been assigned the right to receive benefits under the contract by the insured. (20-462) File and Record Documentation The insurer's claim files are subject to examination by the Director or by his duly appointed designees. Such files must contain all notes and work papers pertaining to the claim in such detail that pertinent events and the dates of such events can be reconstructed. Arizona Adjuster - 12

13 Misrepresentation of Policy Provisions No insurer may fail to fully disclose to first party claimants all pertinent benefits, coverages or other provisions of an insurance policy or insurance contract under which a claim is presented. No agent may conceal from first party claimants benefits, coverages or other provisions of any insurance policy or insurance contract when such benefits, coverages or other provisions are pertinent to a claim. No insurer may deny a claim on the basis that the claimant has failed to exhibit the damaged property to the insurer, unless the insurer has requested the claimant to exhibit the property and the claimant has refused without a sound basis. No insurer may, except where there is a time limit specified in the policy, make statements, written or otherwise, requiring a claimant to give written notice of loss or proof of loss within a specified time limit and which seek to relieve the company of its obligations if such a time limit is not complied with unless the failure to comply with such time limit prejudices the insurer's rights. No insurer may request a first party claimant to sign a release that extends beyond the subject matter that gave rise to the claim payment. No insurer may issue checks or drafts in partial settlement of a loss or claim under a specific coverage which contain language that releases the insurer or it s insured from its total liability. Failure to Acknowledge Pertinent Communications Upon receiving notification of a claim, every insurer must acknowledge the receipt of the notice within 10 working days (unless payment is made within that period of time). If an acknowledgment is made by means other than writing, an appropriate notation of the acknowledgment must be made in the claim file of the insurer and dated. Notification given to an agent of an insurer will be considered notification to the insurer. Upon receipt of any inquiry from the Department of Insurance respecting a claim, every insurer must furnish the Department with an adequate response to the inquiry within 15 working days. An appropriate reply must be made within 10 working days on all other pertinent communications from a claimant who reasonably suggest that a response is expected. Every insurer; upon receiving notification of claim, must promptly (within 10 days) provide necessary claim forms, instructions and reasonable assistance so that first-party claimants can comply with the policy conditions and the insurer's reasonable requirements. Arizona Adjuster - 13

14 Standards for Prompt Investigation & Settlements - All Insurers Every insurer must complete investigation of a claim within 30 days after notification of a claim, unless the investigation cannot reasonably be completed within that time. Within 15 working days after receipt by the insurer of properly executed proofs of loss, the first-party claimant must be advised of the acceptance or denial of the claim by the insurer. If an insurer denies a claim on the grounds of a specific policy provision, condition or exclusion, then a reference to the provision, condition or exclusion must be included in the denial. The denial must be given to the claimant in writing and the claim file of the insurer must contain a copy of the denial. If the insurer needs more time to determine whether a first-party claim should be accepted or denied, it must also notify the first-party claimant within 15 working days after receipt of the proofs of loss, giving the reasons more time is needed. If the investigation remains incomplete, the insurer must send a letter to the claimant within 45 days from the date of the initial notification and every 45 days thereafter setting forth the reasons additional time is needed for investigation. Where there is a reasonable basis supported by specific information for suspecting that the first-party claimant has fraudulently caused or contributed to the loss by arson, the insurer is relieved from the above requirements. However, the claimant must be advised of the acceptance or denial of the claim by the insurer within a reasonable time for full investigation. If a claim is denied for reasons other than those described above, and is made by any other means than writing, an appropriate notation must be made in the claim file of the insurer. Insurers must not fail to settle first-party claims on the basis that responsibility for payment should be assumed by others. Insurers shall not continue negotiations for settlement of a claim directly with a claimant who is neither an attorney nor represented by an attorney until the claimant s rights may be affected by a statute of limitations or a policy or contract time limit, without giving the claimant written notice that the time limit may be expiring and may affect the claimant s right. Such notice shall be given to first party claimants 30 days and to third party claimants 60 days before the date on which such time limit may expire. An insurer must not make statements which indicate that the rights of a third-party claimant may be impaired if a form or release is not completed within a given period of time unless the statement is given for the purpose of notifying the third party claimant of the provision of a statute of limitations. Arizona Adjuster - 14

15 Standards for Prompt Settlements Applicable to Automobile Claims When the insurance policy provides for the adjustment and settlement of first party automobile total losses on the basis of actual cash value or replacement with another of like kind and quality, one of the following methods must apply: The insurer may elect to offer a replacement automobile which is a specific comparable automobile available to the insured, with all applicable taxes, license fees and other fees incident to transfer of evidence of ownership of the automobile paid, at no cost other than any deductible provided in the policy. The offer and any rejection thereof must be documented in the claim file. The insurer may elect a cash settlement based upon the actual cost, less any deductible provided in the policy, to purchase a comparable automobile including all applicable taxes, license fees and other fees incident to transfer of evidence of ownership of a comparable automobile. Such cost may be determined by: The cost of a comparable automobile in the local market area when a comparable automobile is available in the local market area. One of two or more quotations obtained by the insurer from two or more qualified dealers located within the local market area when a comparable automobile is not available in the local market area. When a first party automobile total loss is settled on a basis which deviates from the methods described above, the deviation must be supported by documentation giving particulars of the automobile condition. Any deductions from such cost, including deduction for salvage, must be measurable, discernible, itemized and specified as to dollar amount and must be appropriate in amount. The basis for such settlement must be fully explained to the first party claimant. Where liability and damages are reasonably clear, insurers may not recommend that third party claimants make claim under their own policies solely to avoid paying claims under such insurer's policy or insurance contract. Insurers may not require a claimant to travel unreasonably either to inspect a replacement automobile, to obtain a repair estimate or to have the automobile repaired at a specific repair shop. Insurers must, upon the claimant's request, include the first party claimant's deductible, if any, in subrogation demands. Subrogation recoveries must be shared on a proportionate basis with the first party claimant, unless the deductible amount has been otherwise recovered. No deduction for expenses can be made from the deductible recovery unless an outside attorney is retained to collect such recovery. The deduction may then be for only a pro rata share of the allocated loss adjustment expense. If an insurer prepares an estimate of the cost of automobile repairs, such estimate must be in an amount for which it may be reasonably expected the damage can be satisfactorily repaired. The Arizona Adjuster - 15

16 insurer must give a copy of the estimate to the claimant and may furnish to the claimant the names of one or more conveniently located repair shops. When the amount claimed is reduced because of betterment or depreciation all information for such reduction must be contained in the claim file. Such deductions must be itemized and specified as to dollar amount and must be appropriate for the amount of deductions. When the insurer elects to repair and designates a specific repair shop for automobile repairs, the insurer will cause the damaged automobile to be restored to its condition prior to the loss at no additional cost to the claimant other than as stated in the policy and within a reasonable period of time. The insurer may not use as a basis for cash settlement with a first party claimant an amount which is less than the amount which the insurer would pay if the repairs were made, other than in total loss situations, unless such amount is agreed to by the insured. (R ) Bad Faith and Unfair Claim Processing Practices Workers Compensation Claims An employer, self-insured employer, insurance carrier, or claims processing representative commits bad faith if the employer, self-insured employer, insurance carrier, or claims processing representative: Institutes a proceeding or interposes a defense that is not: Well-grounded in fact; Warranted by existing law; or A good faith argument for the extension, modification, or reversal of existing law; Unreasonably delays: Payment of benefits; or Authorization for, or receipt of, medical benefits or treatment; Unreasonably underpays benefits; Unreasonably terminates benefits; Intentionally misleads a claimant as to applicable statutes of limitation, benefits, or remedies available to the claimant under the Act or under this Article; or Unreasonably interferes with or obstructs the claimant s right to choose the claimant s attending physician, except in cases involving a self-insured employer. An employer, self-insured employer, insurance carrier, or claims processing representative commits unfair claim processing practices if the employer, self-insured employer, insurance carrier, or claims processing representative: Arizona Adjuster - 16

17 Unreasonably issues a notice of claim status without adequate supporting information in its possession or available to it; Unreasonably fails to acknowledge communications from the Commission, an unrepresented claimant, or a claimant s attorney with respect to a claim; Fails to act reasonably and promptly upon communications from the Commission, an unrepresented claimant, or a claimant s attorney with respect to a claim; Directly advises a claimant not to consult or obtain the services of an attorney; or Communicates directly, for an improper purpose, with a claimant represented by an attorney. A person alleging bad faith or unfair claim processing practices ( complainant ) must file a written complaint with the claims manager of the Commission. The complainant, or the complainant s authorized representative, must sign the complaint. The complaint must describe the specific actions of the employer, self-insured employer, insurance carrier, or claims processing representative, that are alleged to constitute bad faith or unfair claim processing practices. A complaint form is available upon request from the Commission. Upon receipt of a complaint under this section, the claims manager of the Commission will serve the complaint upon all parties. If the Commission acts on its own motion, the claims manager must mail a notice of alleged bad faith or unfair claim processing practices to the claimant or the claimant s authorized representative and the: Employer; Self-insured employer; Insurance carrier; or Claims processing representative. The person or entity named in a complaint or notice served must file with the claims manager a written response to the complaint or notice, within 30 days after service by the Commission of the complaint or notice. The person or entity filing a written response must serve a copy of the response upon the complainant, or the complainant s authorized representative, if represented. If the person or entity named in a complaint or notice fails to file a written response, the Commission will consider the absence of a response a denial of the allegations of the complaint or notice. Upon receipt of a written response, or upon the expiration of 30 days if no response is filed, the Commission will enter an award as it deems, in its discretion, appropriate under this Article. (R ) Required Provisions Arizona Adjuster - 17

18 Fraudulent Practices It is a fraudulent practice and unlawful for a person to knowingly: Present, cause to be presented or prepare with the knowledge or belief that it will be presented an oral or written statement, including computer generated documents, to or by an insurer, reinsurer, purported insurer or reinsurer, insurance producer or agent of a reinsurer that contains untrue statements of material fact or that fails to state any material fact with respect to any of the following: An application for the issuance or renewal of an insurance policy. The rating of an insurance policy. A claim for payment or benefit pursuant to an insurance policy. Premiums paid on any insurance policy. Payments made pursuant to the terms of any insurance policy. An application for a certificate of authority. The financial condition of an insurer, reinsurer or purported insurer or reinsurer. The acquisition of an insurer or reinsurer or the concealing of any information concerning any fact material to the acquisition. Solicit or accept new or renewal insurance risks by or for any insolvent insurer, reinsurer or other entity licensed to transact insurance business in this state. Conceal or attempt to conceal from the Department or remove or attempt to remove from the home office, place of safekeeping or other place of business of any insurer, reinsurer or other entity licensed to transact insurance business in this state part or all of the assets or records of the assets, transactions and affairs. Divert or attempt or conspire to divert the monies of an insurer, reinsurer, entity licensed to transact insurance business in this state or other person in connection with: The transaction of insurance or reinsurance. The conduct of business activities by any insurer, reinsurer or other entity licensed to transact insurance business in this state. The formation, acquisition or dissolution of any insurer, reinsurer or other entity licensed to transact insurance business in this state. Assist, abet, solicit or conspire with another person to violate section. Employ, use or act as a runner, capper or steerer for the purposes of violating this section. A person who acts without malice, fraudulent intent or bad faith is not subject to liability for filing reports or furnishing orally or in writing other information concerning suspected, anticipated or completed fraudulent insurance acts if the reports or information is provided to or received from: Arizona Adjuster - 18

19 The Director or the Department. Law enforcement officials and their agents and employees. The National Association of Insurance Commissioners, other state insurance departments, a federal or state agency or bureau established to detect and prevent fraudulent insurance acts, and the agency's or bureau's agents, employees or designees, or an organization established by insurers to assist in the detection and prevention of fraudulent insurance acts, and the organization's agents, employees or designees. A person, or an officer, employee or agent of the person acting within the scope of employment or agency of that officer, employee or agent, above when performing authorized activities without malice, fraudulent intent or bad faith is not subject to civil liability for libel, slander or another relevant tort. No civil cause of action may be brought against the person or entity. A person or entity under this section is entitled to an award of attorney fees and costs if the person or entity is a prevailing party in a civil cause of action for libel, slander or other relevant tort and the action is not substantially justified. For purposes of this section, "substantially justified" means a proceeding that has a reasonable basis in law or fact at the time that it is initiated. Nothing in this section limits any common law right of the person or entity. Nothing in this section is intended to prohibit contact or communication with clients or patients for any lawful purpose, including communication by and between insurers, the insurers' policyholders and claimants under policies issued to the insurers' policyholders regarding the investigation or settlement of any claim. For the purposes of this section: "Runner", "capper" or "steerer" means a person who procures clients at the direction of, or in cooperation with, a person who intends to perform or obtain services or benefits under a contract of insurance or who intends to assert a claim against an insured. "Statement" includes any notice, proof of injury, bill for services, payment for services, hospital or doctor records, x-rays, test reports, medical or legal expenses, or other evidence of loss or injury, or other expense or payment. (20-463) Personal Insurance - Cancellation and Nonrenewal This section applies to policies of insurance on personal risks in Arizona which insure any of the following contingencies: Loss of or damage to real property which is used predominantly for residential purposes and which consists of not more than four dwelling units; Arizona Adjuster - 19

20 Loss of or damage to personal property in which natural persons who reside in specifically described real property have an insurable interest, except personal property used in the conduct of a commercial or industrial enterprise. Legal liability of a natural person for loss, damage or injury to persons or property, but not including policies primarily insuring risks arising from the conduct of a commercial or industrial enterprise. This section does not apply to motor vehicle insurance and workers compensation insurance. ( ) Reasons for Cancellation - After a policy has been in effect for 60 days (or, if the policy is a renewal, effective immediately) no notice of cancellation is effective unless it is based on the occurrence, after the effective date of the policy, of one or more of the following: Nonpayment of premium Conviction of the named insured of a crime arising out of acts increasing the hazard insured against Acts or omissions by the insured or his representative constituting fraud or material misrepresentation in obtaining the policy, continuing the policy or in presenting a claim under the policy Discovery of grossly negligent acts or omissions by the insured substantially increasing any of the hazards insured against Substantial change in the risk assumed by the insurer; since the policy was issued, except to the extent that the insurer should reasonably have foreseen the change or contemplated the risk in writing the contract A determination by the Director of Insurance that the continuation of the policy would place the insurer in violation of the insurance laws of this state Failure of the insured to take reasonable steps to eliminate or reduce any conditions in or on the insured premises which contributed to a loss in the past or will increase the probability of future losses In the event of nonrenewal, the insured must be given 30 days' notice to remedy the identified conditions. In the event that the identified conditions are remedied, coverage must be renewed. In the event that the identified conditions are not satisfactorily remedied, the insured must be given an additional 30 days, upon payment of premium, to cure the defective condition. Any insured who believes nonrenewal under this subsection is arbitrary or capricious may utilize the appeal procedures set forth in Arizona law. Notice of Cancellation - All notices of cancellation or nonrenewal must be in writing, must be mailed to the named insured at the address shown in the policy or to the last known address of the insured and must state the specific reason the policy is being denied or nonrenewed. The insurer may not fail to renew a policy upon payment of the premium due unless the insurer mails or delivers a notice of its intention not to renew the policy to the named insured at the address shown in the policy at least 30 days in advance of the end of Arizona Adjuster - 20