Arizona Department of Insurance

The report focuses on the Department’s ability to efficiently and effectively fulfill its role to regulate insurance rates and investigate insurance fraud. Although Arizona adopted an open competition approach to regulating most property and casualty rates in 1980, the Department continues to subject all rate filings to the same scrutiny as it did when rates required Department approval prior to their use. Since market forces serve as the primary regulator of rates in an open competition environment, such detailed and comprehensive reviews are unnecessary and offer minimal consumer protection. Rather than reviewing every filing in detail, the Department should adopt a targeted approach to reviewing open competition rate filings. Furthermore, because an open competition environment depends on competitive markets, the Department should expand its market monitoring activities to ensure that all insurance markets remain competitive. In addition, while the Department’s Fraud Unit has improved its efforts and ability to successfully pursue insurance fraud, inadequate tracking and analysis of referrals may ultimately limit its impact in fighting insurance fraud.