3.5.1 Minimum Requirements for Fund Participation

• Jurisdiction: Arizona

In 1970, the Arizona Legislature established the Arizona Insurance Guarantee Association.^[250] The purpose of the original act was to "avoid financial loss to claimants or policyholders because of the insolvency of an insurer."^[251] This legislative objective was achieved by making the association, and later the Fund, "liable to the same extent that the insolvent insurer would have been liable under its policy."^[252]

The original act was held to be unconstitutional in Fireman's Fund Insurance Co. v. Arizona Insurance Guaranty Ass'n,^[253] because the statute creating the Association violated Arizona's constitutional prohibition against the creation of public corporations by special act.^[254]

In 1977, the original act was repealed in its entirety^[255] and then reenacted^[256] leaving the majority of its provisions unchanged.^[257] The new act changed the name of the Association to the Arizona Property and Casualty Insurance Guarantee Fund. The new act established the fund "within the Department of Insurance." Thus, the constitutional challenge which previously existed as a result of the Association's creation by special act, was eliminated when the Fund...