20-485.12. Certificate of registration; fees; expiration; revocation; civil penalties; violation; classification; injunctive relief; exemption

A. No person may claim to be an administrator in this state unless the person holds a valid certificate of registration as an administrator issued by the director.

B. An application for a certificate of registration and an application to renew a certificate shall be in the form prescribed by the director and shall be accompanied by the fee prescribed in section 20-167. The fee is not refundable if the application or renewal application is denied. Each application for a certificate shall include the following information and documents:

1. A financial statement that is certified by an officer of the applicant on a form acceptable to the director and that includes current financial information covering the ninety days immediately preceding the date that the application is filed with the director. The financial statement shall include the following:

(a) A disclosure of the total amount of Arizona monies projected to be handled for the next calendar year.

(b) An income statement and a balance sheet prepared in accordance with generally accepted accounting principles for the two years immediately preceding the date that the application is filed. The applicant shall not submit consolidated income statements or balance sheets.

2. All of the administrator's basic organization documents and amendments to these documents, including any articles of incorporation, articles of association, partnership agreement, trade name certificate, trust agreement, shareholder agreement and other applicable document.

3. An organizational chart that identifies each member of the holding company system that directly or indirectly controls the administrator and every affiliate the administrator directly or indirectly controls.

4. The bylaws, rules, regulations or similar documents that regulate the administrator's internal affairs.

5. Biographical affidavits to be completed by the individuals responsible for the administrator's affairs, including affidavits for all members of the board of directors, the board of trustees, the executive committee or any other governing board or committee, the principal officers of the corporation or the partners or members of the partnership or association, shareholders that directly or indirectly hold at least ten per cent of the voting securities of the administrator and any other person who exercises control or influence over the affairs of the administrator. The biographical affidavits shall include information concerning the personal history, business record, insurance experience and other pertinent facts as the director may require, including whether the affiant has been the subject of an investigation by any regulatory authority or has had any license of any type denied, suspended or revoked in any jurisdiction.

6. The administrator's complete name and address for all offices in each jurisdiction.

7. A declaration that states whether the administrator has:

(a) Been previously licensed to transact any kind of insurance in this state or any other jurisdiction and whether that license has been refused, suspended or revoked.

(b) Been indebted to any person, including all of the relevant details.

(c) Had an administrative agreement canceled, including all of the relevant details.

8. The details about the administrator's capacity to collect premiums or administer claims on behalf of the insurer in this state.

9. The written notice, approved by the insurer, that the administrator will provide to insured individuals and that advises the insured individuals of the administrator's identity and the relationship between the administrator and the insurer for each executed insurance administrative agreement filed in this state.

10. An affidavit signed by an officer of the administrator who is authorized by the administrator to verify the facts stated in the application.

C. The director shall issue the certificate of registration unless the director finds that the applicant is not competent, trustworthy, financially responsible or of good personal and business reputation, has had an insurance license denied for cause by any state or has failed to comply with any requirement of this article. The certificate remains in effect until the director suspends or revokes the certificate or until the director accepts the voluntary termination of the certificate. On revocation or termination, the administrator shall immediately deliver the certificate to the director.

D. Unless the certificate of registration is surrendered, suspended or revoked, a certificate of registration issued pursuant to this section to an administrator remains in effect for as long as the administrator continues in business in this state and the administrator remains in compliance with all of the requirements applicable to administrators prescribed by this title.

E. On or before March 1 of each year, each administrator that has an effective certificate of registration shall file a renewal application with the director, on a form approved by the director, that consists of a financial statement of the administrator's current financial condition, transactions and affairs as of December 31 of the preceding calendar year. The annual financial statement shall include a disclosure of the total amount of Arizona monies handled for the preceding year, including the income statement and balance sheet required by subsection B of this section and any additional information that the director may require. At least two officers of the administrator shall verify the annual financial statement. The administrator shall include with the annual financial statement the filing fee prescribed in section 20-167. The director may permit an administrator that has failed to file its annual financial statement or pay its fees on time to file the statement and pay the fees if the administrator pays an additional fee to be determined by the director of not more than twenty-five dollars for each day of delinquency.

F. The director may request further information from the administrator at any time regarding a previously filed application or the annual financial statement prescribed by subsection E of this section.

G. Within thirty days after the change becomes effective, the administrator shall provide the director with written notice of any change in the application on which the certificate of registration was issued and of any change in the administrator's ownership or control.

H. After notice and a hearing, the director may either suspend or revoke a certificate of registration for any reason for which the issuance of a certificate could be denied or for any of the following reasons:

1. The administrator is in an unsound financial condition or in a condition that renders further administrative services in this state by the administrator hazardous to policyholders, claimants, beneficiaries or any other person.

2. The administrator knowingly failed to comply with any lawful order of the director.

3. The administrator violated any provision or requirement of this title or any rule adopted by the director pursuant to this title.

I. In lieu of or in addition to suspension or revocation, if the director finds grounds pursuant to subsection H of this section to suspend or revoke an administrator's certificate of registration, the director may impose a civil penalty of at least one thousand dollars and not more than ten thousand dollars. The civil penalty is in addition to any other penalties that may be imposed for violations of this title or other laws of this state.

J. Any civil penalties imposed pursuant to this section shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund.

K. Any person who violates any provision of this article other than subsection A of this section is guilty of a class 3 misdemeanor. A person who violates subsection A of this section is guilty of a class 5 felony.

L. If the director believes from evidence satisfactory to the director that a person is violating or is about to violate subsection A of this section, the director may order the person to cease and desist and, through the attorney general, may file a complaint in the superior court in the county in which the person transacts insurance business to enjoin or restrain the person from continuing or 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 request a hearing pursuant to title 41, chapter 6, article 10. If a complaint is filed in superior court, the court has jurisdiction over the proceedings and may enter an order or judgment awarding appropriate relief.