Ariz. Admin. Code § 20-6-1407

Current through Register Vol. 30, No. 45, November 8, 2024

Section R20-6-1407 - Transactions Subject to Prior Notice - Notice Filing

A. An insurer required to give notice of a proposed transaction pursuant to A.R.S. § 20-481.12 shall furnish the required information on Form D, attached hereto as Appendix D, in accordance with the instructions in Appendix G.

B. Agreements for cost sharing services and management services shall at a minimum and as applicable:

1. Identify the person providing services and the nature of such services;

2. Set forth the methods to allocate costs;

3. Require timely settlement, not less frequently than on a quarterly basis, and compliance with the requirements in the Accounting Practices and Procedures Manual;

4. Prohibit advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement;

5. State that the insurer will maintain oversight for functions provided to the insurer by the affiliate and that the insurer will monitor services annually for quality assurance;

6. Define records and data of the insurer to include all records and data developed or maintained under or related to the agreement that are otherwise the property of the insurer, in whatever form maintained, including, but not limited to, claims and claim files, policyholder lists, application files, litigation files, premium records, rate books, underwriting manuals, personnel records, financial records, or similar records within the possession, custody, or control of the affiliate;

7. Specify that all records and data of the insurer are and remain the property of the insurer, and;

a. Are subject to control of the insurer;

b. Are identifiable; and

c. Are segregated from all other persons' records and data and are readily capable of segregation at no additional cost to the insurer;

8. State that all funds and invested assets of the insurer are the exclusive property of the insurer, held for the benefit of the insurer and are subject to the control of the insurer;

9. Include standards for termination of the agreement with and without cause;

10. Include provisions for indemnification of the insurer in the event of gross negligence or willful misconduct on the part of the affiliate providing the services and for any actions by the affiliate that violate the provisions of the agreement required in subsections (B)(11), (B)(12), (B)(13), (B)(14), and (B)(15):

11. Specify that, if the insurer is placed into supervision, conservatorship, or receivership by the Director pursuant to A.R.S. §§ 20-169(3), 20-171(A), 20-172, or the Arizona Receivership Act:

a. All of the rights of the insurer under the agreement extend to the receiver or Director to the extent permitted by the law of Arizona;

b. All records and data of the insurer shall be identifiable and segregated from all other persons' records and data or readily capable of segregation at no additional cost to the receiver or the Director;

c. A complete set of records and data of the insurer will immediately be made available to the receiver or the Director, shall be made available in a usable format and shall be turned over to the receiver or Director immediately upon the receiver or the Director's request, and the cost to transfer data to the receiver or Director shall be fair and reasonable; and

d. The affiliated person or persons will make available all employees essential to the operations of the insurer and the services associated therewith for the immediate continued performance of the essential services ordered or directed by the receiver or Director;

12. Specify that the affiliate has no automatic right to terminate the agreement if the insurer is placed into supervision, conservatorship, or receivership pursuant to A.R.S. §§ 20-169(3), 20-171(A), 20-172, or the Arizona Receivership Act;

13. Specify that the affiliate will provide the essential services for a minimum period of time after termination of the agreement, if the insurer is placed into supervision, conservatorship, or receivership pursuant to A.R.S. §§ 20-169(3), 20-171(A), 20-172, or the Arizona Receivership Act, as ordered or directed by the receiver or Director. Performance of the essential services will continue to be provided without regard to pre-receivership unpaid fees, so long as the affiliate continues to receive timely payment for post-receivership services rendered, and unless released by the receiver, Director, or supervising court;

14. Specify that the affiliate will continue to maintain any systems, programs, or other infrastructure notwithstanding supervision, conservatorship or receivership pursuant to A.R.S. §§ 20-169(3), 20-171(A), 20-172, or the Arizona Receivership Act, and will make them available to the receiver or Director as ordered or directed by the receiver or Director for so long as the affiliate continues to receive timely payment for post-receivership services rendered, and unless released by the receiver, Director, or supervising court; and

15. Specify that, in furtherance of the cooperation between the receiver and the affected guaranty association or associations and subject to the receiver's authority over the insurer, if the insurer is placed into supervision, conservatorship, or receivership pursuant to A.R.S. §§ 20-169(3), 20-171(A), 20-172, or the Arizona Receivership Act, and portions of the insurer's policies or contracts are eligible for coverage by one or more guaranty associations, the affiliate's commitments under subsections (B)(11), (B)(12), (B)(13), and (B)(14) will extend to those guaranty association or associations.

Ariz. Admin. Code § R20-6-1407

Adopted effective February 22, 1993 (Supp. 93-1). R20-6-1407 recodified from R4-14-1407 (Supp. 95-1). Amended by exempt rulemaking at 21 A.A.R. 54, effective 2/14/2015. Amended by final rulemaking at 30 A.A.R. 482, effective 5/7/2024.