ALJDEC - Licensing

25A-119-INS · Department of Insurance and Financial Institutions - Insurance · 2026-03-26

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of:

M. DUFF SMITH

(National Producer Number 6742231)

and

AZ RISK MANAGEMENT, INC.

(National Producer Number 8847291),

Respondents.

No. 25A-119-INS

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 10, 2026

APPEARANCES: Assistant Attorney General Zachary Howard represented the Arizona Department of Insurance and Financial Institutions. Wendy Greenwood appeared as a witness for the Arizona Department of Insurance and Financial Institutions. Respondents M. Duff Smith and AZ Risk Management, Inc. failed to appear.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

EXHIBITS ADMITTED INTO EVIDENCE: The Arizona Department of Insurance and Financial Institutions’ Exhibits 1 through 20

FINDINGS OF FACT

On January 26, 2026, the Arizona Department of Insurance and Financial Institutions (“Department”) issued a Notice of Hearing setting the above-captioned matter for hearing at 10:30 a.m., on March 10, 2026, before the Office of Administrative Hearings (hereinafter “OAH”) in Phoenix, Arizona.

On the date and at the time set for hearing, Assistant Attorney General Zachary Howard represented the Department. Wendy Greenwood appeared as a witness for the Department. M. Duff Smith (“Smith”) and AZ Risk Management, Inc. (“AZ Risk Management”), (collectively, “Respondents”) did not appear for the hearing, notwithstanding a grace period provided. Respondents did not notify OAH of any cause for the absence or delay, and Respondents did not request a continuance of the hearing. Consequently, the matter proceeded in Respondents’ absence.

At hearing, the Department presented the testimony of its investigator, Wendy Greenwood (hereinafter “Investigator Greenwood”). The Department’s Exhibits 1 through 20 were admitted into evidence.

On or about January 31, 1990, the Department issued to Smith an Arizona resident insurance producer license with lines of authority in casualty, property, life, and accident and health or sickness insurance, National Producer Number 6742231. Smith's license is scheduled to expire on June 30, 2026. Smith’s addresses of record with the Department are: 6501 E. Greenway Pkwy, Ste. 103-327, Scottsdale, AZ 85254 (business and mailing); and 5144 E. Aire Libre Ave., Scottsdale, AZ 85254 (residence). Smith’s email address is [email redacted].

On or about April 15, 2011, the Department issued to AZ Risk Management an Arizona resident business entity insurance producer with lines of authority in casualty, property, life, and accident and health or sickness insurance, National Producer Number 16199681. AZ Risk Management's license is scheduled to expire on April 30, 2027. Arizona Risk Management's address of record with the Department is: 6501 E. Greenway Pkwy, Ste. 103-327, Scottsdale, AZ 85254. Arizona Risk Management's email address is: [email redacted]. Smith is the Designated Responsible Licensed Producer for AZ Risk Management.

La Touf Complaint

On or about September 27, 2023, Kathryn La Touf (“Ms. La Touf”) submitted a consumer Complaint and supporting documents to the Department alleging that Smith overcharged her for commercial insurance policy premiums for multiple years and misappropriated a policy premium that she paid to him in July 2023.

Ms. La Touf stated in her Complaint that she started her business, United Getaways, in 2017, and "reached out to our long-time agent Duff Smith for a commercial policy. Since I have paid Duff each year I assume my policy has always been in effect since 2017 however, I do not receive any invoices or bill statements. Since 7/25/23 when I last sent my annual premium funds to Duff I have asked him for proof of insurance including the policy documents. I was given all kinds of excuses such as ‘companies don't send that stuff out anymore so I'll send you a certificate or I am away from my computer.’”

Ms. La Touf further alleged that Smith never provided her with the name of the company she was insured with and proof of insurance, so she looked into old files of prior policies to see if she could get the information she was requesting. While reviewing old certificates, Ms. La Touf began questioning the amounts she had been paying Smith for insurance.

Ms. La Touf further alleged that in July 2023, Smith charged her $1,420.00 for her annual policy renewal.

In 2022, Smith charged Ms. La Touf $1,354.00 for the renewal.

Ms. La Touf further alleged that on September 20, 2023, while speaking with Colonial General Insurance Agency (“Colonial General”), she was notified that her commercial policy was pending cancellation for non-payment. “The agent [Smith] never sent the funds to Colonial on 7/25/23 when I paid the annual premium. I emailed proof of payment but was forced to pay $928.80 on 9/20/23 to avoid cancellation. I then disputed my original payment of $1420 with my credit card since I was being required to pay the same bill twice.”

Along with the Complaint, Ms. La Touf provided documentation of the premium payment of $1,420.00 made to Smith in July 2023. She also provided invoices/receipts of annual premium payments made between 2019 and 2022. These documents showed that Smith overcharged Ms. La Touf each year and on occasion charged unnecessary invoice and broker fees.

Investigator Communications with Scottsdale Indemnity Company

In addition to the Complaint, Ms. La Touf submitted a Certificate of Liability Insurance dated June 15, 2022, that listed Scottsdale Indemnity Company ("Scottsdale") as the “Insurer Affording Coverage.”

The Department sent a letter to Scottsdale on February 21, 2024, asking for records relevant to Ms. La Touf’s Complaint.

Scottsdale responded that they provide insurance through general contracted agents who place business for independent retail agents, and confirmed that their general agent for Ms. LaTouf’s policy was Colonial General. Scottsdale further stated that Colonial General “has quoted and bound at least 7 policies, each for a one-year term, for United Getaways between 7/26/2017 through . . . 7/26/2024, for general liability coverage. The premium for each of these 7 policies was $750, plus taxes and fees each term.”

Investigator Greenwood’s Communications with Colonial General

On or about August 20, 2025, the Department sent a letter to Colonial General requesting records from 2021 through 2024, related to the policies transacted by Smith on behalf of United Getaways.

On or about August 25, 2025, Colonial General sent a response, summarizing all the policies they brokered for Smith (AZ Risk Management) for insured United Getaways, including policy number, term and premium. The summary reflected that for each policy year beginning in July 2019, the cost of the insurance was the same: $750.00 premium plus $150.00 policy fee plus 3.2% tax totaling, $928.80, billed to AZ Risk Management. Colonial General stated, “If Duff was charging a different amount to the insured, we would not know about that.”

Investigator Greenwood testified that Respondents were overcharging Ms. LaTouf hundreds of dollars for each policy for years. Moreover, Respondents did not forward Ms. La Touf’s last payment. Ms. LaTouf was credited by American express for this payment.

Department's Attempts to Contact Smith

On or about June 20, 2025, the Department sent Smith an email notifying him of the Complaint and requesting a narrative response and any supporting documents by July 14, 2025. Smith did not respond.

On July 18, 2025, the Department sent Smith a second and final request for his response and extended the deadline to July 25, 2025. Smith did not respond.

On July 30, 2025, the Department issued a subpoena to Smith at his addresses of record, requiring him to appear at the Department for an Examination Under Oath on August 13, 2025. Smith never responded to the subpoena.

Prior Disciplinary Action

In April 2022, Respondents entered into a Consent Order with the Department, admitting: i) the failure to forward a consumer's premium payment to the insurer leaving the consumer uninsured; and ii) providing the consumer with a fraudulent certificate of insurance. The Consent Order required that Smith’s insurance producer license and the license of his entity, AZ Risk Management, be suspended for sixty (60) days and the payment of a civil penalty in the amount of $500.00.

Investigator Greenwood testified that Respondents were overcharging Ms. LaTouf at the time the Consent Order was executed.

CONCLUSIONS OF LAW

This matter lies within the Department’s jurisdiction.

The Notice of Hearing that the Department mailed to Respondents at Respondents’ addresses of record was reasonable, and Respondents are deemed to have received notice of the hearing.

This matter is a disciplinary proceeding wherein the Department must prove by a preponderance of the evidence that Respondents violated the State’s Insurance Laws.

The Department has established by a preponderance of the evidence that Respondents did not comply with a subpoena issued by the Department in violation of A.R.S. § 20-295(A)(2).

The Department has established by a preponderance of the evidence that Respondents improperly withheld and misappropriated monies received in the course of doing insurance business in violation of A.R.S. § 20-295(A)(4).

The Department has established by a preponderance of the evidence that Respondents intentionally misrepresented the terms of an actual insurance contract to Ms. La Touf in violation of A.R.S. § 20-295(A)(5).

The Department has established by a preponderance of the evidence that Respondents used dishonest practices and demonstrated untrustworthiness in the conduct of business in the state of Arizona, in violation of A.R.S. § 20-295(A)(8).

The Department has established by a preponderance of the evidence that Smith charged and receive a fee or service charge in addition to the premiums in connection with the transactions of insurance, in violation of A.R.S. § 20-465(A).

Grounds exist for the Director of the Department to suspend, revoke, or refuse to renew Respondents’ Licenses pursuant to A.R.S. § 20-295(A).

ORDER

Based upon the above,

It is recommended that the Director of the Department revoke Respondent M. Duff Smith's insurance producer license, National Producer Number 6742231, on the effective date of the Order entered in this matter.

It is further recommended that the Director of the Department revoke Respondent AZ Risk Management Inc.’s business entity insurance producer

license, National Producer Number 16199681, on the effective date of the Order entered in this matter.

Pursuant to A.R.S. § 41-1092.08(I), the licensee may accept the Administrative Law Judge Decision by advising the Office of Administrative Hearings in writing not more than ten (10) days after receiving the decision. If the licensee accepts the Administrative Law Judge Decision, the decision shall be certified as the final decision by the Office of Administrative Hearings.

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be forty (40) days from the date of that certification.

Done this day, March 26, 2026.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Charles Bassett, Interim Director

Department of Insurance and Financial Institutions - Insurance

M. Duff Smith

[email redacted]

AZ Risk Management, Inc.

[email redacted]

Zachary Howard

Office of the Attorney General

[email redacted]

By: OAH Staff