Arizona Revised Statutes Title 23. Labor § 23-963.01. Policies with deductible coverage; medical-only loss

A. Notwithstanding § 23-963, an insurance carrier authorized to transact workers' compensation insurance in this state may offer deductible coverage to employers. Deductible coverage shall be effected by attaching a benefits deductible endorsement to the policy. The endorsement shall specify whether loss adjustment expenses are to be treated as advancements within the deductible to be reimbursed by the employer. The policyholder exercising the deductible option shall choose only one deductible amount. Premium reductions for deductibles shall be determined before applying any experience modification, premium surcharge or premium discount. If an insurance carrier offers deductible coverage to an employer, the employer shall submit a certified copy of the employer's most recent financial statement to the insurance carrier to justify the deductible amount the employer chooses. The insurance carrier shall retain a copy of the financial statement for three years.

B. Any compensable claim for benefits shall be paid by the carrier. The employer shall reimburse the carrier for any deductible amounts paid by the carrier. The employer is liable for reimbursement up to the limit of the chosen deductible. The payment or nonpayment of deductible amounts by the insured employer to the carrier shall be treated under the policy in the same manner as payment or nonpayment of premiums.

C. The nonpayment of deductible amounts by the insured employer to the carrier under subsection B of this section shall not relieve the insurance carrier from paying compensation for injuries or death sustained by an employee during the period of time the agreement, contract or policy was in effect. No agreements, contracts or policies providing deductible amounts for workers' compensation coverage shall be terminated retroactively for nonpayment of deductible amounts.

D. Losses subject to the deductible shall be reported and recorded as losses for purposes of calculating rates for a policyholder on the same basis as losses under policies providing first dollar coverage.

E. Notwithstanding any other law, for any claim involving medical-only loss, any experience rating adjustment as determined by a national nonprofit insurance rating organization shall be applied to reduce the impact of the loss in the employer's experience modification calculation. For the purposes of this subsection, “medical-only loss” means loss that has no indemnity value reflecting lost wages.