Authority for the Department of Insurance is found in both the Arizona Constitution and the Arizona Revised Statutes. The Arizona Constitution, Article 15, Section 5 requires domestic and foreign insurers to be subject to licensing, control and supervision by a department of insurance as prescribed by law.
Arizona Revised Statutes, Title 20, outlines insurance law and establishes the Department of Insurance. The Director of the Department of Insurance, appointed by the Governor, has general authority to enforce insurance laws, to adopt rules, and to investigate and resolve consumer complaints (A.R.S.§20-101 et seq.).
The Department’s mission is to “promote a strong insurance marketplace through consumer protection, sound financial regulation, and economic development” (https://insurance.az.gov).
The objectives of the Department are to “administer the state’s insurance laws, protect the citizens of this state who purchase insurance, provide a better response to the needs of persons who purchase insurance, stimulate the insurance market by encouraging competition, protect the public from unregulated insurers and represent insurance consumers’ interest” (Laws 2010, Chapter 13).
The Department consists of several divisions:
Administrative Services Division; Captive Insurance Division; Consumer Affairs Division; Financial Affairs Division; Information Services Division; Investigations Division; Rates and Forms Division (which includes life, health, property and casualty insurance); and Receivership Division.
The Department’s Insurance Guaranty Funds provide a safety net to protect consumers from financial loss if an insurance company becomes insolvent. Subject to some conditions and limitations, the Life and Disability Insurance Guaranty Fund and the Property and Casualty Insurance Guaranty Fund pay certain claims of policyholders and other claimants owed by an insolvent insurance company.
In 1913, Arizona’s First Legislature established the Corporation Commission, and the Division of Insurance was included within the Commission. The Division’s original goals were to protect insurance consumers within the state and to ensure insurer solvency. The 1962 Annual Report states: “…insurance laws and the authority of the Director were periodically reviewed and rendered stronger and more comprehensive. These improvements took place most notably in 1915, 1928, 1933, 1943 and 1947.”
In 1954 the Legislature enacted a state insurance code, which revised and codified all the state insurance laws in place at that time. The law also repealed prior versions of state insurance laws which had been adopted since 1913. The “Arizona Insurance Code” regulated insurance companies, the insurance business, the sale and solicitation of insurance, and prescribed penalties. The Insurance Code also levied taxes and provided for their disposition. (Laws 1954, Chapter 64, effective January 1, 1955). In addition, the law provided for a Director of Insurance, who was appointed by the Arizona Corporation Commission.
In 1962, the responsibilities of the Director of Insurance were expanded. Laws 1962, Chapter 133 created the office of Commissioner of Public Building Safety, designating the Director of Insurance as the administrator with authority to enforce fire prevention and fire safety laws of the state and ordinances of cities and counties. This responsibility remained with the Director of Insurance until 1972 when the office of Commissioner of Public Building Safety was abolished and the Office of Fire Marshal was established within the Industrial Commission. See Laws 1972, Chapter 61. Note: A history of the Department of Fire, Building and Life Safety is included as a separate entry, elsewhere in this document.
The Department of Insurance was created as a separate agency in 1968 (Laws 1968, Chapter 197). In order to create the Department, a constitutional amendment was necessary because the Department would assume authority for licensing, control and supervision of domestic and foreign insurers, a power that had been solely the jurisdiction of the Corporation Commission. The constitutional amendment to Article 15 was approved by voters in the general election of November 1968. It transferred the authority to regulate insurance companies from the Corporation Commission (by modifying the first paragraph of Section 5) to the Department of Insurance (by adding the second paragraph to Section 5). The second paragraph also authorized establishment of the Department of Insurance and required the Governor to appoint the department director.
The Department of Insurance has remained a separate agency since 1968, and has been subject to sunset review several times. The Department was most recently renewed in 2010 pursuant to Laws 2010, Chapter 13.
- Arizona State Constitution, Article 15, Section 5
- A.R.S.§§20-101 et seq.
- Session Laws
- Laws 1913, Chapter 94
- Laws 1954, Chapter 64
- Laws 1962, Chapter 133
- Laws 1968, Chapter 197
- Laws 1972, Chapter 61
- Laws 2010, Chapter 13
- Arizona Administrative Code: R20-6-101 et seq.
- Master List of State Programs
- Arizona Department of Insurance, Sunset Review Report (2009) (State Library of Arizona, State Documents Collection, ID 1.2:S 85/ 2009)
- A Consumer’s Guide to the Arizona Department of Insurance (ADOI, 2015) https://insurance.az.gov/home/about-adoi
- Annual Report; Insurance Department of Arizona. “Fifty Years of Successful Regulation of Insurance in Arizona.” August 1, 1962.
Related collections at Arizona State Archives
- Record Group 172 Insurance, Arizona Department of
Publication locations within State Documents Collection at State Library:
- CC 7 Insurance Division
- ID 1 Dept. of Insurance
- ID 2 Fraud Unit
- ID 3 Consumer Affairs Division
- ID 6 Joint Underwriting Plan
- ID 8 Commission on Property and Casualty Insurance