Arkansas P&C Study Guide

The combined Property and Casualty exam reaches commercial risks the Personal Lines paper never touches, and Arkansas’s distinctive material clusters in three places: a rating regime at the light-touch end of the spectrum, a guaranty fund with an unusual shape, and a workers’ compensation scheme whose threshold is lower than most. None of the three is intuitive from national material.

Rate regulation — file-and-use, and that is genuinely the answer

Arkansas is a competitive rating, file-and-use state (§ 23-67-211). An insurer files a rate 20 days before use — extended to 60 days if the Commissioner has declared the market noncompetitive — and the filing takes effect automatically unless it is disapproved.

That is the opposite end of the regulatory spectrum from prior-approval states, where nothing may be used until the regulator says yes. If an answer choice tells you the Commissioner must approve a rate before an Arkansas insurer may use it, that choice is describing California, not Arkansas.

Credit-based insurance scoring is permitted, with restrictions (§ 23-67-405). It may not be the sole basis for an adverse action; gender, income, ZIP code and ethnicity are barred as factors; there can be no adverse action solely for a lack of credit history or the absence of a credit card; a credit report used for an adverse action must be 90 days old or newer; and the insurer must re-underwrite on request every 36 months.

The guaranty fund — a cap, no deductible, and one big exception

When a property-casualty carrier fails, the Arkansas Property and Casualty Insurance Guaranty Fund responds (§ 23-90-101 et seq.). Three features, and each is tested:

• The cap is $300,000 per covered claim (§ 23-90-103(2)(A))
• Unearned premium is returned in full up to $25,000 per policy
• Workers’ compensation claims are EXCLUDED from the cap

And one absence worth noticing: Arkansas law contains no per-claim deductible. Several states subtract $100 or $200 from every covered claim before paying. Arkansas does not.

Workers’ compensation — the threshold is three

Arkansas requires workers’ compensation coverage from three or more employees (§ 11-9-102), administered by the Arkansas Workers’ Compensation Commission within a scheme where an employer may either insure with a licensed carrier or qualify as a self-insurer.

Three is the number to hold. Many states begin at one employee; several begin at four or five. Arkansas’s three catches small commercial clients constantly, which is precisely why it earns exam questions — and why a P&C producer writing small business in this state needs it at their fingertips.

The benefit numbers follow a familiar shape with an Arkansas twist. Temporary total disability pays 66⅔% of the average weekly wage, subject to a $20 per week minimum and a maximum set at 85% of the state average weekly wage — and it is payable only after a 7-day waiting period (§ 11-9-501). A claim must be commenced within 2 years of the date of injury (§ 11-9-702).

The residual market, and the perils behind it

Arkansas runs no FAIR Plan. Its residual property mechanism is the Arkansas Rural Risk Underwriting Association (ARRUA), covering rural risks the voluntary market will not write (§§ 23-88-301 to -309) — an inversion of the urban-focused residual markets most states operate.

The perils driving that market are tornado and severe storm, earthquake — northeastern Arkansas lies over the New Madrid Seismic Zone, making it one of the few inland states where earthquake is a live underwriting question — and flood.

Surplus lines — the step up is a real one

Placing business with a non-admitted carrier requires a separate surplus lines credential, and Arkansas gates it heavily: three years of multi-line Property and Casualty authority in Arkansas or another state, a $50,000 surety bond, affiliation with a licensed Arkansas broker firm, a separate examination, and a $1,035 application fee. A diligent effort search of the admitted market is required before any placement (§ 23-65).