HB 4118

REFERENCE TITLE: insurance; fraud unit; assessment; increase.
State of Arizona
House of Representatives
Fifty-seventh Legislature
Second Regular Session
2026
HB 4118
Introduced by
Representative
  Livingston
AN
ACT
amending section 20-466, arizona
revised statutes; relating to the fraud unit.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 20-466, Arizona Revised
Statutes, is amended to read:
START_STATUTE20-466. Fraud unit; investigators; peace officer status; powers;
information sharing; assessment
A. The fraud unit is
established in the department of insurance and financial institutions.� The
director of the department of insurance and financial institutions shall
appoint an individual to operate the fraud unit in conjunction with operating
the automobile theft authority established by section 41-3451.
B. The fraud unit shall work in conjunction with the
department of public safety.
C. The director may investigate any act or practice
of fraud prohibited by section 20-466.01 and any other act or practice of
fraud against an insurer or entity licensed under this title. The
director shall administer the fraud unit.
D. The director may employ investigators for the
fraud unit.� A fraud unit investigator has and shall exercise the law
enforcement powers of a peace officer of this state but only while acting in
the course and scope of employment for the department of insurance and
financial institutions. The director shall adopt guidelines for the
conduct of investigations that are substantially similar to the investigative
policy and procedural guidelines of the department of public safety for peace
officers. Fraud unit investigators shall not preempt the authority
and jurisdiction of other law enforcement agencies of this state or its
political subdivisions. Fraud unit investigators:
1. Shall have at least the qualifications prescribed
by the Arizona peace officer standards and training board pursuant to section
41-1822.
2. Are not eligible to participate in the public
safety personnel retirement system established by title 38, chapter 5, article
4 due solely to employment as fraud unit investigators.
E. The director may request the submission of
papers, documents, reports or other evidence relating to an investigation under
this section.� The director may issue subpoenas and take other actions pursuant
to section 20-160.� The materials are privileged and confidential until
the director completes the investigation.� Any documents, materials or other
information that is provided to the director pursuant to this section is not
subject to discovery or subpoena until opened for public inspection by the director
or, after notice and a hearing, a court determines that the director would not
be unduly burdened by compliance with the subpoena.� The director shall keep
the identity of an informant confidential, including any information that might
identify the informant, unless the request for information is made by a law
enforcement agency, the attorney general or a county attorney for purposes of a
criminal investigation or prosecution. The director may use the
documents, materials or other information in the furtherance of any regulatory
or legal action brought as a part of the director's official duties.
F. If the documents, materials or other information
the director seeks to obtain by request is located outside this state, the
person requested to provide the documents, materials or other information shall
arrange for the fraud unit or a representative, including an official of the
state in which the documents, materials or other information is located, to
examine the documents, materials or other information where it is
located. The director may respond to similar requests from other
states.
G. An insurer that believes a fraudulent claim has
been or is being made shall send to the director, on a form prescribed by the
director, information relative to the claim including the identity of parties
claiming loss or damage as a result of an accident and any other information
the fraud unit may require. The director shall review the report and
determine if further investigation is necessary. If the director
determines that further investigation is necessary, the director may conduct an
independent investigation to determine if fraud, deceit or intentional
misrepresentation in the submission of the claim exists. If the
director is satisfied that fraud, deceit or intentional misrepresentation of
any kind has been committed in the submission of a claim, the director may
report the violations of the law to the reporting insurer, to the appropriate
licensing agency as defined in section 20-466.04 and to the appropriate
county attorney or the attorney general for prosecution.
H. The director may:
1. Share nonpublic documents, materials or other
information with other state, federal and international regulatory agencies,
with the national association of insurance commissioners and its affiliates and
subsidiaries and with state, federal and international law enforcement
authorities if the recipient agrees and warrants that it has the authority to
maintain the confidentiality and privileged status of the documents, materials
or other information.
2. Receive documents, materials and other
information from the national association of insurance commissioners and its
affiliates and subsidiaries and from regulatory and law enforcement officials
of other jurisdictions and shall maintain as confidential or privileged any
document, material or other information received with notice or the
understanding that it is confidential or privileged under the laws of the
jurisdiction that is the source of the document, material or other information.
3. Enter into agreements that govern the sharing and
use of documents, materials and other information and that are consistent with
this section.
I. A disclosure to or by the director pursuant to
this section or as a result of sharing information pursuant to subsection H of
this section is not a waiver of any applicable privilege or claim of
confidentiality in the documents, materials or other information disclosed or
shared.
J. The director shall annually assess each insurer
as defined in section 20-441, subsection B authorized to transact
business in this state up to $1,050 $1,350 for
the administration and operation of the fraud unit and the prosecution of fraud
pursuant to this section.� Monies collected shall be deposited, pursuant to
sections 35-146 and 35-147, in the fraud unit assessment fund
established by section 20-466.05.
K. A person, or an officer, employee or agent of the
person acting within the scope of employment or agency of that officer,
employee or agent, who in good faith files a report or provides other
information to the fraud unit pursuant to this section is not subject to civil
or criminal liability for reporting that information to the fraud unit. END_STATUTE
Sec. 2. Retroactivity
Section 20-466, Arizona Revised
Statutes, as amended by this act, applies retroactively to from and after June
30, 2026.
Sec. 3. Requirements for enactment; two-thirds vote
Pursuant to article IX, section 22,
Constitution of Arizona, this act is effective only on the affirmative vote of
at least two-thirds of the members of each house of the legislature and
is effective immediately on the signature of the governor or, if the governor
vetoes this act, on the subsequent affirmative vote of at least three-fourths
of the members of each house of the legislature.