AZ Regulatory Bulletin 2005-02: Revision of Private Passenger Automobile Property Damage Threshold For Purposes Of A.R.S. § 20-1631(E

STATE OF ARIZONA DEPARTMENT OF INSURANCE JANET NAPOLITANO 2910 NORTH 44th STREET, SUITE 210 CHRISTINA URIAS Governor PHOENIX, ARIZONA 85018-7256 Director of Insurance (602) 912-8456 (phone) (602) 912-8452 (fax) REGULATORY BULLETIN 2005- 2 1 TO: Insurance Rating Organizations Insurance Industry Representatives; Insurance Trade Associations; Property & Casualty Insurers; and, Other Interested Parties From: Christina Urias Director Date: February 2, 2005 RE: Revision of Private Passenger Automobile Property Damage Threshold For Purposes Of A.R.S. § 20-1631(E) 1This Substantive Policy Statement is advisory only. A Substantive Policy Statement does not include internal procedural documents that only affect the internal procedures of the Agency, and does not impose additional requirements or penalties on regulated parties or include confidential information or rules made in accordance with the Arizona Administrative Procedure Act. If you believe that this Substantive Policy Statement does impose additional requirements or penalties on regulated parties you may petition the agency under Arizona Revised Statutes Section 41-1033 for a review of the Statement. The Arizona Department of Insurance (“Department”) administers the Arizona Revised Statutes, Title 20, Chapter 6, Article 11, regarding the cancellation or nonrenewal of personal automobile insurance. This article restricts the reasons an insurer may cancel or nonrenew a personal automobile policy after it has been in effect for 60 days to the reasons set forth in A.R.S. §20-1631(D). However, A.R.S. §20-1631(E) sets forth the conditions under which an insurer is permitted to annually nonrenew no more than one-half of one percent of its personal automobile policies. For accidents occurring after January 1, 2000, A.R.S. § 20-1631(E) requires the Department to annually adjust and publish, to the nearest $10, the threshold amount of property damages insurers may use to nonrenew private passenger automobile policies under Subsection E. The threshold adjustment must be based upon the percentage change in the all-items component of the consumer price index for all urban consumers (CPI-U) of the United States Department of Labor, Bureau of Labor Statistics (BLS). To date, the Department has adjusted the threshold as follows: Circular Letter Or Bulletin Number Date BLS' CPI-U Property Damage Threshold Circular Letter 2000-3 2/14/00 2.2% $1,840 Regulatory Bulletin 2001-1 2/7/01 3.4% $1,900 Regulatory Bulletin 2002-1 1/28/02 2.8% $1,950 Regulatory Bulletin 2003-02 1/23/03 1.6% $1,980 Regulatory Bulletin 2004-1 2/13/04 2.3% $2,030 Regulatory Bulletin 2005-2 02/02/05 Page 2 The BLS’ most current United States’ City Average CPI-U is 2.7%. Therefore, as of this date, the property damage threshold level is hereby increased to $2,080 ($2,030 X 1.027 rounded to the nearest $10). Insurers may not use Subsection E to nonrenew personal automobile policies unless all of the requirements stated in A.R.S. § 20-1631(E) are met and the property damage has exceeded $2,080 in 2005. The $2,080 threshold will remain in effect until the Department publishes an adjusted threshold in 2006. If you have any questions regarding this matter, please feel free to contact Jack Sneathen at (602) 912-8461.