State RegulationsAZ specificDifficulty 2/5
An officer of a Tucson insurer files financial statements with the Department knowing they materially overstate the company's surplus. Under A.R.S. 20-447, this filing is:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
A.R.S. 20-447 prohibits filing false financial statements with intent to deceive, and a knowingly overstated surplus is designed to mislead the Arizona Department of Insurance and Financial Institutions about the insurer's solvency. The officer and the insurer face enforcement for the deceptive filing; the deception, not the eventual correction, is the violation.
Why the other options are wrong
- A) Wrong because later correction does not erase the deceptive filing; the knowing false statement itself violates A.R.S. 20-447.
- C) Wrong because independent audits do not excuse a knowing overstatement; the officer filed the statement with intent to deceive, which A.R.S. 20-447 prohibits.
- D) Wrong because responsibility for false filings is not delegated away; A.R.S. 20-447 reaches the insurer and the persons who make the false statements.
Memory hook
Inflating surplus in a filing is 20-447's core case — deception is the offense.