2005 Arizona Revised Statutes - Revised Statutes §20-1098  Definitions

In this article, unless the context otherwise requires:

1. "Affiliate" has the same meaning prescribed in section 20-481.

2. "Agency captive insurer" means a captive insurer that is owned by one or more business entities that are licensed in any state as insurance producers or managing general agents and that only insure risks on policies placed through their owners.

3. "Association" means any lawfully formed association of individuals, corporations or partnerships that has been in existence for at least one year and that is organized for a primary purpose other than insuring its members.

4. "Business entity" has the same meaning prescribed in section 20-281.

5. "Captive insurer" means any pure captive insurer, agency captive insurer, group captive insurer or protected cell captive insurer that is domiciled in this state and that is formed and licensed under this article.

6. "Controlled unaffiliated business" means a company that satisfies all of the following:

(a) Is not an affiliate of the captive insurer providing coverage or reinsurance.

(b) Has an existing contractual relationship with an affiliate of the captive insurer providing coverage or reinsurance out of which the subject risk of loss arises.

(c) Whose risk management function is controlled by an affiliate of the captive insurer providing coverage or reinsurance.

7. "Group" means either:

(a) A risk retention group formed pursuant to section 20-2402 and either the product liability risk retention act of 1981 (15 United States Code section 3901) or the liability risk retention act of 1986 (P.L. 99-563).

(b) An industry group or association that directly or through its members satisfies at least one of the following criteria:

(i) Owns or controls, or holds with power to vote, all outstanding voting securities of a group captive insurer incorporated as a stock insurer.

(ii) Has complete voting control over a group captive insurer incorporated as a mutual insurer.

(iii) Constitutes all of the subscribers of a group captive insurer formed as a reciprocal insurer.

8. "Group captive insurer" means a captive insurer that insures only the risks of the group members and their affiliates.

9. "Industry group" means two or more individuals or business entities that each:

(a) Procure the insurance of any risk or risks by use of the services of a full-time employee or third party consultant acting as an insurance manager or buyer.

(b) Have aggregate annual premiums for insurance on all risks that total at least twenty-five thousand dollars.

10. "Manager" means a person who is experienced in the field of captive insurance and who maintains all documents relating to a captive insurer's operations, transactions and affairs in this state and assists the captive insurer in its management and compliance with this article.

11. "Participant" means an entity and any affiliates of the entity that are insured by a protected cell captive insurer pursuant to a participant contract.

12. "Participant contract" means a contract by which a protected cell captive insurer insures a participant's risks and limits the participant's losses to the assets of the protected cell.

13. "Protected cell" means a separate account established and maintained by a protected cell captive insurer for one participant.

14. "Protected cell captive insurer" means a captive insurer:

(a) In which the minimum capital and surplus required by applicable law is provided by one or more sponsors.

(b) That is formed and licensed under this article.

(c) That insures the risks of separate participants through a contract.

(d) That segregates each participant's liability through one or more protected cells.

15. "Pure captive insurer" means any company that insures risks of its affiliate or controlled unaffiliated business.

16. "Sponsor" means an entity that meets the requirements of section 20-1098.06 and that the director has approved to provide all or part of the capital and surplus required by applicable law to operate a protected cell captive insurer.