Arizona Laws 20-481.26. Penalties; cease and desist order; violation; classification
A. An insurer failing to file without just cause a registration statement required by this article after notice and a hearing shall pay a penalty of two hundred fifty dollars for each day’s delay in filing, not to exceed fifty thousand dollars. The director may reduce the penalty if the insurer demonstrates that the imposition of the penalty would constitute a financial hardship to the insurer. The director shall deposit, pursuant to sections 35-146 and 35-147, the penalties collected in the state general fund.
Attorney's Note
Under the Arizona Laws, punishments for crimes depend on the classification. In the case of this section:| Class | Prison | Fine |
|---|---|---|
| Class 6 felony | up to 1 1/2 years | up to $150,000 |
| Class 1 misdemeanor | up to 6 months | up to $2,500 |
Terms Used In Arizona Laws 20-481.26
- Action: includes any matter or proceeding in a court, civil or criminal. See Arizona Laws 1-215
- Contract: A legal written agreement that becomes binding when signed.
- Enterprise risk: means any activity, circumstance, event or series of events involving one or more affiliates of an insurer that if not remedied promptly is likely to have a material adverse effect on the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including causing the insurer's risk-based capital to decrease to or below a company action level under Section 20-488. See Arizona Laws 20-481
- Insurance holding company system: means two or more affiliated persons, one or more of whom is an insurer. See Arizona Laws 20-481
- Insurer: means every person engaged in the business of making contracts of insurance except:
(a) Agencies, authorities or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia or a state or political subdivision of a state. See Arizona Laws 20-481
- Person: means an individual, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization and any similar entity or any combination of the foregoing acting in concert but does not include any joint venture partnership exclusively engaged in owning, managing, leasing or developing real or tangible personal property. See Arizona Laws 20-481
- Wilfully: means , with respect to conduct or to a circumstance described by a statute defining an offense, that a person is aware or believes that the person's conduct is of that nature or that the circumstance exists. See Arizona Laws 1-215
B. Every director or officer of an insurance holding company system who knowingly violates, participates in, assents to or permits an officer or agent of the insurer to engage in transactions or make investments that have not been properly reported or submitted pursuant to Section 20-481.02, 20-481.05 or 20-481.09 or who violates this article in his individual capacity after notice and a hearing shall pay a civil penalty of not more than ten thousand dollars for each violation. In determining the amount of the civil penalty, the director shall consider the appropriateness of the penalty with respect to the gravity of the violation, the history of previous violations and other matters as justice may require.
C. If it appears to the director that an insurer subject to this article or a director, officer, employee or agent of the insurer has engaged in a transaction or entered into a contract that is subject to this article and that would not have been approved had such approval been requested, the director may order the insurer to cease and desist immediately any further activity under that transaction or contract. After notice and a hearing the director also may order the insurer to void the contract and restore the status quo if that action is in the best interest of the policyholders, the creditors or the public.
D. A knowing violation of this article is a class 1 misdemeanor. Notwithstanding any other law, an insurer that wilfully violates this article may be fined not more than fifty thousand dollars or an individual who wilfully violates this article may be fined in his individual capacity not more than ten thousand dollars.
E. An officer, director or employee of an insurance holding company system who wilfully and knowingly subscribes to or makes or causes to be made any false statements, reports or filings with the intent to deceive the director in the performance of his duties under this article is guilty of a class 6 felony. No insurance holding company system shall pay a fine on behalf of an officer, director or employee found guilty under this subsection.
F. Whenever it appears to the director that any person has committed a violation of Section 20-481.02 and that violation prevents a full understanding by the director of the enterprise risk to the insurer by affiliates or by the insurance holding company system, the violation may serve as an independent basis for disapproving dividends or distributions and for placing the insurer under an order of supervision in accordance section 20-169.