Life insurance; illustrations
HB2076 creates a new Arizona statutory article governing life insurance illustrations and updates the state’s insurance replacement definitions to align with that framework. The bill requires insurers that market life insurance policies with illustrations to provide standardized “basic illustrations” showing both guaranteed and nonguaranteed policy elements, along with narrative summaries, numeric summaries, tabular details, and signed acknowledgments by the applicant or policyowner and the producer. It also regulates supplemental illustrations, in-force illustrations, annual policyowner reports, and record-retention requirements, and it requires insurers to designate illustration actuaries who certify the scales used in illustrations.
The bill applies to most group and individual life insurance policies and certificates, but excludes variable life insurance, annuities, credit life insurance, and policies with no illustrated death benefit over $10,000. It prohibits misleading sales practices such as representing nonguaranteed values as guaranteed, using incomplete or overly favorable illustrations, or using “vanishing premium” or lapse-supported illustrations. It also requires insurers to notify the Department of Insurance about whether policy forms will be marketed with or without illustrations, and it makes violations an unfair trade practice. The act takes effect after December 31, 2025.
HB2076 adds a new set of statutory requirements to Title 20 governing how life insurers may market and document policy illustrations in Arizona, and it amends the replacement statute’s definition of “illustration” to reference the new life-insurance illustration article. The measure imposes compliance duties on insurers, producers, and illustration actuaries, including disclosure, certification, delivery, annual reporting, and retention obligations, while giving the director of insurance oversight authority. It affects life insurers selling participating, universal life, term, and other covered policies, as well as consumers receiving sales materials and annual policy status reports.
The bill appears to have been broadly supported and moved with strong margins through both chambers. Committee and floor votes were largely favorable, including unanimous or near-unanimous committee actions and substantial bipartisan majorities on third reading in the House and Senate. The voting pattern suggests the measure was viewed as a technical consumer-protection and regulatory update rather than a controversial policy change.
There is little evidence of major substantive opposition in the available record, but the bill’s main policy tension is between consumer protection and industry compliance burden. The most notable points of concern are the detailed disclosure and certification requirements, the prohibition on favorable or lapse-supported illustrations, and the need for insurers to use actuaries and maintain annual reporting systems. Any dissent likely centered on the administrative complexity of the new illustration rules and the potential cost of compliance for insurers and producers, rather than on the underlying goal of preventing misleading sales practices.