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First Substitute S.B. 100

Senator L. Steven Poulton proposes to substitute the following bill:


             1     
INSURANCE LAW AMENDMENTS

             2     
2001 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: L. Steven Poulton

             5      This act modifies the Insurance Code and related provisions by addressing issues related to
             6      the insurance business in general, health insurance, life insurance, and property insurance.
             7      The act standardizes definition of terms and makes other technical changes. The act changes
             8      terminology from "disability insurance" to "accident and health insurance." The act defines
             9      the scope and applicability of certain provisions included in this act. The act imposes certain
             10      requirements on health organizations that are imposed on insurers. The act addresses the
             11      conditions governing the issuance and renewal of certificates of authority, including allowing
             12      the commissioner to enter into interstate compacts. The act addresses the form of and
             13      information required in statements filed with the department including permitting the
             14      department to accept documents complying with National Association of Insurance
             15      Commissioners requirements instead of statutory requirements. The act addresses the
             16      requirements of minimum capital and permanent surplus as well as the amount of the
             17      deposit each authorized organization shall maintain with the commissioner. The act
             18      addresses issues related to formation, cancellation, and required provisions of insurance
             19      contracts. The act redefines the qualified assets that may be used in determining the
             20      financial condition of an insurer. The act changes the requirements for title insurance
             21      reserves. The act requires that all documents and agreements that constitute a life insurance
             22      policy shall be defined and attached to the policy. The act creates notification requirements
             23      for termination of a group or blanket life insurance policy. The act modifies the
             24      responsibilities of the Health Benefit Plan Committee. The act expands the commissioner's
             25      rulemaking responsibilities for Medicare supplemental policies. The act requires a policy


             26      summary or illustration to be delivered with a life insurance policy. The act requires, in
             27      certain circumstances, monthly reports on an accident and health rider or supplemental
             28      benefit. The act addresses maternity benefits required in a conversion policy. The act
             29      changes the requirements and restrictions on long-term care insurance policies. The act
             30      modifies the licensing, continuing education, and examination requirements for agents,
             31      brokers, consultants, third party administrators, and independent or public adjusters. The
             32      act also addresses the termination of licenses for agents, brokers, consultants, third party
             33      administrators, and independent or public adjusters. The act expands the list of activities
             34      that qualify as unfair marketing practices. The act addresses the handling of escrow funds
             35      by title insurance agents. The act requires title insurance agents to make disclosures to loan
             36      applicants purchasing title insurance. The act requires a financial institution to maintain
             37      customer privacy by ensuring confidentiality of insurance information. The act addresses
             38      sharing commissions for referrals of potential customers. The act addresses continuance of
             39      coverage by health maintenance organizations.
             40      This act affects sections of Utah Code Annotated 1953 as follows:
             41      AMENDS:
             42          7-9-5, as last amended by Chapter 329, Laws of Utah 1999
             43          26-19-2, as last amended by Chapters 39 and 145, Laws of Utah 1998
             44          26-40-104, as enacted by Chapter 360, Laws of Utah 1998
             45          31A-1-103, as last amended by Chapter 4, Laws of Utah 1993
             46          31A-1-301, as last amended by Chapters 130 and 131, Laws of Utah 1999
             47          31A-2-214, as last amended by Chapter 12, Laws of Utah 1987, First Special Session
             48          31A-4-103, as enacted by Chapter 242, Laws of Utah 1985
             49          31A-4-113, as last amended by Chapter 258, Laws of Utah 1992
             50          31A-5-211, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
             51          31A-5-418, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
             52          31A-5-703, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session
             53          31A-6a-102, as enacted by Chapter 203, Laws of Utah 1992
             54          31A-6a-110, as enacted by Chapter 203, Laws of Utah 1992
             55          31A-8-101, as last amended by Chapter 261, Laws of Utah 1989
             56          31A-8-103 (Effective 04/30/01), as last amended by Chapter 300, Laws of Utah 2000


             57          31A-8-205, as enacted by Chapter 204, Laws of Utah 1986
             58          31A-8-209, as enacted by Chapter 204, Laws of Utah 1986
             59          31A-8-211, as last amended by Chapter 30, Laws of Utah 1992
             60          31A-8-213, as enacted by Chapter 204, Laws of Utah 1986
             61          31A-8-402, as last amended by Chapter 327, Laws of Utah 1990
             62          31A-8-407, as enacted by Chapter 261, Laws of Utah 1989
             63          31A-8-408, as last amended by Chapter 344, Laws of Utah 1995
             64          31A-9-212 (Effective 04/30/01), as last amended by Chapter 300, Laws of Utah 2000
             65          31A-11-102, as last amended by Chapter 10, Laws of Utah 1988, Second Special Session
             66          31A-14-201, as last amended by Chapter 204, Laws of Utah 1986
             67          31A-14-212, as enacted by Chapter 242, Laws of Utah 1985
             68          31A-15-103, as last amended by Chapter 55, Laws of Utah 1999
             69          31A-15-106, as last amended by Chapter 204, Laws of Utah 1986
             70          31A-17-201, as last amended by Chapter 131, Laws of Utah 1999
             71          31A-17-401, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
             72          31A-17-402, as last amended by Chapter 305, Laws of Utah 1993
             73          31A-17-408, as enacted by Chapter 242, Laws of Utah 1985
             74          31A-17-504, as enacted by Chapter 305, Laws of Utah 1993
             75          31A-17-505, as enacted by Chapter 305, Laws of Utah 1993
             76          31A-17-507, as enacted by Chapter 305, Laws of Utah 1993
             77          31A-17-508, as enacted by Chapter 305, Laws of Utah 1993
             78          31A-17-509, as enacted by Chapter 305, Laws of Utah 1993
             79          31A-17-513, as enacted by Chapter 305, Laws of Utah 1993
             80          31A-17-601, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session
             81          31A-17-602, as last amended by Chapter 185, Laws of Utah 1997
             82          31A-17-603, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session
             83          31A-17-604, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session
             84          31A-17-605, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session
             85          31A-17-606, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session
             86          31A-17-607, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session
             87          31A-17-608, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session


             88          31A-17-609, as last amended by Chapter 131, Laws of Utah 1999
             89          31A-17-610, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session
             90          31A-17-613, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session
             91          31A-18-105, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
             92          31A-19a-101, as renumbered and amended by Chapter 130, Laws of Utah 1999
             93          31A-21-103, as last amended by Chapter 204, Laws of Utah 1986
             94          31A-21-104, as last amended by Chapter 190, Laws of Utah 1996
             95          31A-21-201, as last amended by Chapter 114, Laws of Utah 2000
             96          31A-21-301, as last amended by Chapter 230, Laws of Utah 1992
             97          31A-21-303, as last amended by Chapter 203, Laws of Utah 1999
             98          31A-21-307, as last amended by Chapter 68, Laws of Utah 1989
             99          31A-21-401, as enacted by Chapter 204, Laws of Utah 1986
             100          31A-21-402, as enacted by Chapter 204, Laws of Utah 1986
             101          31A-21-403, as enacted by Chapter 204, Laws of Utah 1986
             102          31A-21-404, as enacted by Chapter 204, Laws of Utah 1986
             103          31A-21-501, as last amended by Chapter 302, Laws of Utah 1999
             104          31A-21-502, as enacted by Chapter 132, Laws of Utah 1997
             105          31A-21-503, as enacted by Chapter 132, Laws of Utah 1997
             106          31A-21-505, as enacted by Chapter 132, Laws of Utah 1997
             107          31A-22-307, as last amended by Chapter 71, Laws of Utah 1994
             108          31A-22-403, as enacted by Chapter 242, Laws of Utah 1985
             109          31A-22-404, as last amended by Chapter 114, Laws of Utah 2000
             110          31A-22-415, as last amended by Chapter 39, Laws of Utah 1998
             111          31A-22-423, as last amended by Chapter 329, Laws of Utah 1998
             112          31A-22-510, as last amended by Chapter 91, Laws of Utah 1987
             113          31A-22-517, as enacted by Chapter 242, Laws of Utah 1985
             114          31A-22-518, as enacted by Chapter 242, Laws of Utah 1985
             115          31A-22-520, as enacted by Chapter 242, Laws of Utah 1985
             116          31A-22-600, as enacted by Chapter 242, Laws of Utah 1985
             117          31A-22-601, as enacted by Chapter 242, Laws of Utah 1985
             118          31A-22-602, as enacted by Chapter 242, Laws of Utah 1985


             119          31A-22-603, as enacted by Chapter 242, Laws of Utah 1985
             120          31A-22-604, as last amended by Chapter 1, Laws of Utah 2000
             121          31A-22-605, as last amended by Chapter 224, Laws of Utah 1992
             122          31A-22-606, as last amended by Chapter 316, Laws of Utah 1994
             123          31A-22-607, as enacted by Chapter 242, Laws of Utah 1985
             124          31A-22-608, as last amended by Chapter 91, Laws of Utah 1987
             125          31A-22-609, as enacted by Chapter 242, Laws of Utah 1985
             126          31A-22-610, as last amended by Chapter 206, Laws of Utah 1996
             127          31A-22-610.2, as enacted by Chapter 114, Laws of Utah 2000
             128          31A-22-610.5, as last amended by Chapters 102 and 137, Laws of Utah 1995
             129          31A-22-611, as enacted by Chapter 242, Laws of Utah 1985
             130          31A-22-612, as last amended by Chapter 204, Laws of Utah 1986
             131          31A-22-613, as last amended by Chapter 160, Laws of Utah 2000
             132          31A-22-613.5, as last amended by Chapter 114, Laws of Utah 2000
             133          31A-22-614, as enacted by Chapter 242, Laws of Utah 1985
             134          31A-22-617, as last amended by Chapter 267, Laws of Utah 2000
             135          31A-22-619, as last amended by Chapter 316, Laws of Utah 1994
             136          31A-22-620, as last amended by Chapter 185, Laws of Utah 1997
             137          31A-22-623, as enacted by Chapter 6, Laws of Utah 1998
             138          31A-22-624, as enacted by Chapter 357, Laws of Utah 1998
             139          31A-22-626, as enacted by Chapter 248, Laws of Utah 2000
             140          31A-22-630, as enacted by Chapter 114, Laws of Utah 2000
             141          31A-22-701, as last amended by Chapter 143, Laws of Utah 1996
             142          31A-22-702, as enacted by Chapter 242, Laws of Utah 1985
             143          31A-22-703, as last amended by Chapter 329, Laws of Utah 1998
             144          31A-22-704, as last amended by Chapter 321, Laws of Utah 1995
             145          31A-22-705, as last amended by Chapter 261, Laws of Utah 1989
             146          31A-22-715, as last amended by Chapter 12, Laws of Utah 1994
             147          31A-22-716, as enacted by Chapter 327, Laws of Utah 1990
             148          31A-22-717, as enacted by Chapter 253, Laws of Utah 1991
             149          31A-22-720, as enacted by Chapter 114, Laws of Utah 2000


             150          31A-22-801, as enacted by Chapter 242, Laws of Utah 1985
             151          31A-22-802, as enacted by Chapter 242, Laws of Utah 1985
             152          31A-22-803, as enacted by Chapter 242, Laws of Utah 1985
             153          31A-22-804, as enacted by Chapter 242, Laws of Utah 1985
             154          31A-22-805, as enacted by Chapter 242, Laws of Utah 1985
             155          31A-22-806, as last amended by Chapter 204, Laws of Utah 1986
             156          31A-22-807, as last amended by Chapter 230, Laws of Utah 1992
             157          31A-22-808, as enacted by Chapter 242, Laws of Utah 1985
             158          31A-22-809, as enacted by Chapter 242, Laws of Utah 1985
             159          31A-22-1002, as last amended by Chapter 375, Laws of Utah 1997
             160          31A-22-1101, as enacted by Chapter 242, Laws of Utah 1985
             161          31A-22-1401, as enacted by Chapter 243, Laws of Utah 1991
             162          31A-22-1402, as enacted by Chapter 243, Laws of Utah 1991
             163          31A-22-1407, as last amended by Chapter 344, Laws of Utah 1995
             164          31A-22-1409, as enacted by Chapter 243, Laws of Utah 1991
             165          31A-22-1411, as enacted by Chapter 344, Laws of Utah 1995
             166          31A-22-1412, as enacted by Chapter 344, Laws of Utah 1995
             167          31A-23-101, as enacted by Chapter 242, Laws of Utah 1985
             168          31A-23-102, as last amended by Chapter 1, Laws of Utah 2000
             169          31A-23-201, as last amended by Chapter 344, Laws of Utah 1995
             170          31A-23-202, as last amended by Chapter 232, Laws of Utah 1997
             171          31A-23-203, as last amended by Chapter 131, Laws of Utah 1999
             172          31A-23-204, as last amended by Chapter 131, Laws of Utah 1999
             173          31A-23-206, as last amended by Chapter 131, Laws of Utah 1999
             174          31A-23-207, as last amended by Chapter 316, Laws of Utah 1994
             175          31A-23-209, as last amended by Chapter 204, Laws of Utah 1986
             176          31A-23-211.7, as enacted by Chapter 131, Laws of Utah 1999
             177          31A-23-212, as last amended by Chapter 131, Laws of Utah 1999
             178          31A-23-216, as last amended by Chapter 232, Laws of Utah 1997
             179          31A-23-218, as enacted by Chapter 242, Laws of Utah 1985
             180          31A-23-302, as last amended by Chapter 344, Laws of Utah 1995


             181          31A-23-303, as last amended by Chapter 204, Laws of Utah 1986
             182          31A-23-307, as last amended by Chapter 185, Laws of Utah 1997
             183          31A-23-310, as last amended by Chapter 344, Laws of Utah 1995
             184          31A-23-312, as last amended by Chapter 230, Laws of Utah 1992
             185          31A-23-404, as last amended by Chapter 293, Laws of Utah 1998
             186          31A-23-503, as last amended by Chapter 1, Laws of Utah 2000
             187          31A-23-601, as last amended by Chapter 1, Laws of Utah 2000
             188          31A-23-702, as enacted by Chapter 258, Laws of Utah 1992
             189          31A-23-705, as enacted by Chapter 258, Laws of Utah 1992
             190          31A-25-102, as enacted by Chapter 242, Laws of Utah 1985
             191          31A-25-202, as enacted by Chapter 242, Laws of Utah 1985
             192          31A-25-203, as enacted by Chapter 242, Laws of Utah 1985
             193          31A-25-205, as last amended by Chapters 1 and 114, Laws of Utah 2000
             194          31A-25-206, as enacted by Chapter 242, Laws of Utah 1985
             195          31A-25-207, as enacted by Chapter 242, Laws of Utah 1985
             196          31A-25-208, as enacted by Chapter 242, Laws of Utah 1985
             197          31A-26-101, as last amended by Chapter 30, Laws of Utah 1992
             198          31A-26-202, as last amended by Chapter 232, Laws of Utah 1997
             199          31A-26-203, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
             200          31A-26-204, as last amended by Chapter 131, Laws of Utah 1999
             201          31A-26-206, as last amended by Chapter 131, Laws of Utah 1999
             202          31A-26-207, as last amended by Chapter 204, Laws of Utah 1986
             203          31A-26-208, as last amended by Chapter 204, Laws of Utah 1986
             204          31A-26-209, as last amended by Chapter 204, Laws of Utah 1986
             205          31A-26-213, as last amended by Chapter 232, Laws of Utah 1997
             206          31A-26-302, as enacted by Chapter 242, Laws of Utah 1985
             207          31A-28-102, as last amended by Chapter 316, Laws of Utah 1994
             208          31A-28-103, as last amended by Chapter 316, Laws of Utah 1994
             209          31A-28-106, as repealed and reenacted by Chapter 211, Laws of Utah 1991
             210          31A-28-108, as last amended by Chapter 344, Laws of Utah 1995
             211          31A-28-109, as repealed and reenacted by Chapter 211, Laws of Utah 1991


             212          31A-28-202, as last amended by Chapter 97, Laws of Utah 1988
             213          31A-29-103, as enacted by Chapter 232, Laws of Utah 1990
             214          31A-29-117, as last amended by Chapter 114, Laws of Utah 2000
             215          31A-30-103, as last amended by Chapter 265, Laws of Utah 1997
             216          31A-30-104, as last amended by Chapter 131, Laws of Utah 1999
             217          31A-30-106, as last amended by Chapter 267, Laws of Utah 2000
             218          31A-30-106.5, as enacted by Chapter 321, Laws of Utah 1995
             219          31A-30-107, as last amended by Chapters 114 and 315, Laws of Utah 2000
             220          31A-32a-102, as enacted by Chapter 131, Laws of Utah 1999
             221          31A-33-103.5, as last amended by Chapter 107, Laws of Utah 1998
             222          31A-33-113, as last amended by Chapter 375, Laws of Utah 1997
             223          34A-2-103, as last amended by Chapters 55 and 199, Laws of Utah 1999
             224          58-67-501, as last amended by Chapter 227, Laws of Utah 1997
             225          58-68-501, as last amended by Chapter 227, Laws of Utah 1997
             226          59-10-114, as last amended by Chapter 257, Laws of Utah 2000
             227          62A-11-326.1, as last amended by Chapter 145, Laws of Utah 1998
             228          62A-11-326.2, as last amended by Chapter 145, Laws of Utah 1998
             229          63-25a-413, as renumbered and amended by Chapter 242, Laws of Utah 1996
             230          63-55-231, as last amended by Chapters 52 and 267, Laws of Utah 2000
             231          67-22-1, as last amended by Chapter 117, Laws of Utah 2000
             232          67-22-2, as last amended by Chapter 117, Laws of Utah 2000
             233          78-14-4.5, as last amended by Chapters 30 and 240, Laws of Utah 1992
             234          78-45-7.5, as last amended by Chapter 161, Laws of Utah 2000
             235      ENACTS:
             236          31A-2-217, Utah Code Annotated 1953
             237          31A-22-424, Utah Code Annotated 1953
             238          31A-22-522, Utah Code Annotated 1953
             239          31A-22-631, Utah Code Annotated 1953
             240          31A-22-632, Utah Code Annotated 1953
             241          31A-22-1413, Utah Code Annotated 1953
             242          31A-22-1414, Utah Code Annotated 1953


             243          31A-23-201.5, Utah Code Annotated 1953
             244          31A-23-317, Utah Code Annotated 1953
             245          31A-26-215, Utah Code Annotated 1953
             246      REPEALS AND REENACTS:
             247          31A-27-311.5, as enacted by Chapter 170, Laws of Utah 1990
             248      REPEALS:
             249          31A-8-210, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
             250          31A-8-212, as last amended by Chapter 327, Laws of Utah 1990
             251      Be it enacted by the Legislature of the state of Utah:
             252          Section 1. Section 7-9-5 is amended to read:
             253           7-9-5. Powers of credit unions.
             254          In addition to the powers specified elsewhere in this chapter, a credit union may:
             255          (1) make contracts;
             256          (2) sue and be sued;
             257          (3) acquire, lease, or hold fixed assets, including real property, furniture, fixtures, and
             258      equipment as the directors consider necessary or incidental to the operation and business of the
             259      credit union, but the value of the real property may not exceed 7% of credit union assets, unless
             260      approved by the commissioner;
             261          (4) pledge, hypothecate, sell, or otherwise dispose of real or personal property, either in
             262      whole or in part, necessary or incidental to its operation;
             263          (5) incur and pay necessary and incidental operating expenses;
             264          (6) require an entrance or membership fee;
             265          (7) receive the funds of its members in payment for:
             266          (a) shares;
             267          (b) share certificates;
             268          (c) deposits;
             269          (d) deposit certificates;
             270          (e) share drafts;
             271          (f) NOW accounts; and
             272          (g) other instruments;
             273          (8) allow withdrawal of shares and deposits, as requested by a member orally to a third


             274      party with prior authorization in writing, including, but not limited to, drafts drawn on the credit
             275      union for payment to the member or any third party, in accordance with the procedures established
             276      by the board of directors, including, but not limited to, drafts, third-party instruments, and other
             277      transaction instruments, as provided in the bylaws;
             278          (9) charge fees for its services;
             279          (10) extend credit to its members, at rates established in accordance with the bylaws or by
             280      the board of directors;
             281          (11) extend credit secured by real estate;
             282          (12) make loan participation arrangements with other credit unions, credit union
             283      organizations, or financial organizations in accordance with written policies of the board of
             284      directors, if the credit union that originates a loan for which participation arrangements are made
             285      retains an interest of at least 10% of the loan;
             286          (13) sell and pledge eligible obligations in accordance with written policies of the board
             287      of directors;
             288          (14) engage in activities and programs of the federal government or this state or any
             289      agency or political subdivision of the state, when approved by the board of directors and not
             290      inconsistent with this chapter;
             291          (15) act as fiscal agent for and receive payments on shares and deposits from the federal
             292      government, this state, or its agencies or political subdivisions not inconsistent with the laws of
             293      this state;
             294          (16) borrow money and issue evidence of indebtedness for a loan or loans for temporary
             295      purposes in the usual course of its operations;
             296          (17) discount and sell notes and obligations;
             297          (18) sell all or any portion of its assets to another credit union or purchase all or any
             298      portion of the assets of another credit union;
             299          (19) invest funds as provided in this title and in its bylaws;
             300          (20) maintain deposits in insured depository institutions as provided in this title and in its
             301      bylaws;
             302          (21) (a) hold membership in corporate credit unions organized under this chapter or under
             303      other state or federal statutes; and
             304          (b) hold membership or equity interest in associations and organizations of credit unions,


             305      including credit union service organizations;
             306          (22) declare and pay dividends on shares, contract for and pay interest on deposits, and pay
             307      refunds of interest on loans as provided in this title and in its bylaws;
             308          (23) collect, receive, and disburse funds in connection with the sale of negotiable or
             309      nonnegotiable instruments and for other purposes that provide benefits or convenience to its
             310      members, as provided in this title and in its bylaws;
             311          (24) make donations for the members' welfare or for civic, charitable, scientific, or
             312      educational purposes as authorized by the board of directors or provided in its bylaws;
             313          (25) act as trustee of funds permitted by federal law to be deposited in a credit union as
             314      a deferred compensation or tax deferred device, including, but not limited to, individual retirement
             315      accounts as defined by Section 408, Internal Revenue Code;
             316          (26) purchase reasonable [disability] accident and health insurance, including accidental
             317      death benefits, for directors and committee members through insurance companies licensed in this
             318      state as provided in its bylaws;
             319          (27) provide reasonable protection through insurance or other means to protect board
             320      members, committee members, and employees from liability arising out of consumer legislation
             321      such as, but not limited to, truth-in-lending and equal credit laws and as provided in its bylaws;
             322          (28) reimburse directors and committee members for reasonable and necessary expenses
             323      incurred in the performance of their duties;
             324          (29) participate in systems which allow the transfer, withdrawal, or deposit of funds of
             325      credit unions or credit union members by automated or electronic means and hold membership in
             326      entities established to promote and effectuate these systems, if:
             327          (a) the participation is not inconsistent with the law and rules of the department; and
             328          (b) any credit union participating in any system notifies the department as provided by law;
             329          (30) issue credit cards and debit cards to allow members to obtain access to their shares,
             330      deposits, and extensions of credit;
             331          (31) provide any act necessary to obtain and maintain membership in the credit union;
             332          (32) exercise incidental powers necessary to carry out the purpose for which a credit union
             333      is organized;
             334          (33) undertake other activities relating to its purpose as its bylaws may provide;
             335          (34) engage in other activities, exercise other powers, and enjoy other rights, privileges,


             336      benefits, and immunities authorized by rules of the commissioner;
             337          (35) act as trustee, custodian, or administrator for Keogh plans, individual retirement
             338      accounts, credit union employee pension plans, and other employee benefit programs; and
             339          (36) advertise to the general public the products and services offered by the credit union
             340      if the advertisement prominently discloses that to use the products or services of the credit union
             341      a person is required to:
             342          (a) be eligible for membership in the credit union; and
             343          (b) become a member of the credit union.
             344          Section 2. Section 26-19-2 is amended to read:
             345           26-19-2. Definitions.
             346          As used in this chapter:
             347          (1) "Employee welfare benefit plan" means a medical insurance plan developed by an
             348      employer under 29 U.S.C. Section 1001, et seq., the Employee Retirement Income Security Act
             349      of 1974 as amended.
             350          (2) "Estate" means, regarding a deceased recipient, all real and personal property or other
             351      assets included within a decedent's estate as defined in Section 75-1-201 and a decedent's
             352      augmented estate as defined in Section 75-2-203 .
             353          (3) "Insurer" includes:
             354          (a) a group health plan as defined in Subsection 607(1) of the federal Employee Retirement
             355      Income Security Act of 1974;
             356          (b) a health maintenance organization; and
             357          (c) any entity offering a health service benefit plan.
             358          (4) "Medical assistance" means:
             359          (a) all funds expended for the benefit of a recipient under Title 26, Chapter 18, Medical
             360      Assistance Act, or under Titles XVIII and XIX, federal Social Security Act; and
             361          (b) any other services provided for the benefit of a recipient by a prepaid health care
             362      delivery system under contract with the department.
             363          (5) "Provider" means a person or entity who provides services to a recipient.
             364          (6) "Recipient" means:
             365          (a) a person who has applied for or received medical assistance from the state;
             366          (b) the guardian, conservator, or other personal representative of a person under Subsection


             367      (6)(a) if the person is a minor or an incapacitated person; or
             368          (c) the estate and survivors of a person under Subsection (6)(a) if the person is deceased.
             369          (7) "State plan" means the state Medicaid program as enacted in accordance with Title
             370      XIX, federal Social Security Act.
             371          (8) "Third party" includes:
             372          (a) an individual, institution, corporation, public or private agency, trust, estate, insurance
             373      carrier, employee welfare benefit plan, health maintenance organization, health service
             374      organization, preferred provider organization, governmental program such as Medicare,
             375      CHAMPUS, and workers' compensation, which may be obligated to pay all or part of the medical
             376      costs of injury, disease, or disability of a recipient, unless any of these are excluded by department
             377      rule; and
             378          (b) a spouse or a parent who:
             379          (i) may be obligated to pay all or part of the medical costs of a recipient under law or by
             380      court or administrative order; or
             381          (ii) has been ordered to maintain health, dental, or [disability] accident and health
             382      insurance to cover medical expenses of a spouse or dependent child by court or administrative
             383      order.
             384          Section 3. Section 26-40-104 is amended to read:
             385           26-40-104. Advisory Council.
             386          (1) There is created a Utah Children's Health Insurance Program Advisory Council
             387      consisting of at least eight and no more than eleven members appointed by the executive director
             388      of the department. The term of each appointment shall be three years. The appointments shall be
             389      staggered at one-year intervals to ensure continuity of the advisory council.
             390          (2) The advisory council shall meet at least quarterly.
             391          (3) The membership of the advisory council shall include at least one representative from
             392      each of the following groups:
             393          (a) child health care providers;
             394          (b) parents and guardians of children enrolled in the program;
             395          (c) ethnic populations other than American Indians;
             396          (d) American Indians;
             397          (e) the Health Policy Commission;


             398          (f) the Utah Association of Health Care Providers;
             399          (g) health and [disability] accident and health insurance providers; and
             400          (h) the general public.
             401          (4) The advisory council shall advise the department on:
             402          (a) benefits design;
             403          (b) eligibility criteria;
             404          (c) outreach;
             405          (d) evaluation; and
             406          (e) special strategies for under-served populations.
             407          (5) (a) (i) Members who are not government employees may not receive compensation or
             408      benefits for their services, but may receive per diem and expenses incurred in the performance of
             409      the member's official duties at the rates established by the Division of Finance under Sections
             410      63A-3-106 and 63A-3-107 .
             411          (ii) Members may decline to receive per diem and expenses for their service.
             412          (b) (i) State government officer and employee members who do not receive salary, per
             413      diem, or expenses from their agency for their service may receive per diem and expenses incurred
             414      in the performance of their official duties from the council at the rates established by the Division
             415      of Finance under Sections 63A-3-106 and 63A-3-107 .
             416          (ii) State government officer and employee members may decline to receive per diem and
             417      expenses for their service.
             418          Section 4. Section 31A-1-103 is amended to read:
             419           31A-1-103. Scope and applicability of title.
             420          (1) This title does not apply to:
             421          (a) retainer contracts made by attorneys-at-law with individual clients with fees based on
             422      estimates of the nature and amount of services to be provided to the specific client, and similar
             423      contracts made with a group of clients involved in the same or closely related legal matters;
             424          (b) arrangements for providing benefits that do not exceed a limited amount of
             425      consultations, advice on simple legal matters, either alone or in combination with referral services,
             426      or the promise of fee discounts for handling other legal matters;
             427          (c) limited legal assistance on an informal basis involving neither an express contractual
             428      obligation nor reasonable expectations, in the context of an employment, membership, educational,


             429      or similar relationship; or
             430          (d) legal assistance by employee organizations to their members in matters relating to
             431      employment.
             432          (2) (a) This title restricts otherwise legitimate business activity.
             433          (b) What this title does not prohibit is permitted unless contrary to other provisions of Utah
             434      law.
             435          (3) Except as otherwise expressly provided, this title does not apply to:
             436          (a) those activities of an insurer where state jurisdiction is preempted by Section 514 of
             437      the federal Employee Retirement Income Security Act of 1974, as amended;
             438          (b) ocean marine insurance;
             439          (c) death and [disability] accident and health benefits provided by an organization where
             440      the principal purpose is to achieve charitable, educational, social, or religious objectives rather than
             441      to provide death and [disability] accident and health benefits, if the organization does not incur a
             442      legal obligation to pay a specified amount and does not create reasonable expectations of receiving
             443      a specified amount on the part of an insured person;
             444          (d) other business specified in rules adopted by the commissioner on a finding that the
             445      transaction of such business in this state does not require regulation for the protection of the
             446      interests of the residents of this state or on a finding that it would be impracticable to require
             447      compliance with this title;
             448          (e) (i) transactions independently procured through negotiations under Section
             449      31A-15-104 ;
             450          (ii) however, the transactions described in Subsection (3)(e)(i) are subject to taxation under
             451      Section 31A-3-301 ;
             452          (f) self-insurance;
             453          (g) reinsurance;
             454          (h) subject to Subsection (4), employee and labor union group or blanket insurance
             455      covering risks in this state if:
             456          (i) the policyholder exists primarily for purposes other than to procure insurance;
             457          (ii) the policyholder is not a resident of this state or a domestic corporation or does not
             458      have its principal office in this state;
             459          (iii) no more than 25% of the certificate holders or insureds are residents of this state;


             460          (iv) on request of the commissioner, the insurer files with the department a copy of the
             461      policy and a copy of each form or certificate; and
             462          (v) the insurer agrees to pay premium taxes on the Utah portion of its business, as if it were
             463      authorized to do business in this state, and if the insurer provides the commissioner with the
             464      security the commissioner considers necessary for the payment of premium taxes under Title 59,
             465      Chapter 9, Taxation of Admitted Insurers; or
             466          (i) to the extent provided in Subsection (5):
             467          (A) a manufacturer's [warranties issued in the ordinary course of sale;] warranty; and
             468          [(j) manufacturer's warranties or service contracts paid for with separate or additional
             469      consideration; or]
             470          [(k) service contracts paid for with separate or additional consideration, issued in the
             471      ordinary course of sale, that are for the repair or maintenance of goods, other than motor vehicles,
             472      having a purchase price of $3,000 or less]
             473          (B) a manufacturer's service contract.
             474          (4) (a) After a hearing, the commissioner may order an insurer of certain group or blanket
             475      contracts to transfer the Utah portion of the business otherwise exempted under Subsection (3)(h)
             476      to an authorized insurer if the contracts have been written by an unauthorized insurer.
             477          (b) If the commissioner finds that the conditions required for the exemption of a group or
             478      blanket insurer are not satisfied or that adequate protection to residents of this state is not provided,
             479      [he] the commissioner may require:
             480          (i) the insurer to be authorized to do business in this state; or [require]
             481          (ii) that any of the insurer's transactions be subject to this title.
             482          (5) (a) As used in Subsection (3)(i) and this Subsection (5):
             483          (i) "manufacturer's service contract" means a service contract:
             484          (A) made available by a manufacturer of a product:
             485          (I) on one specific product; or
             486          (II) on products that are components of a system; and
             487          (B) under which the manufacturer is liable for services to be provided under the service
             488      contract including, if the manufacturer's service contract designates, providing parts and labor;
             489          (ii) "manufacturer's warranty" means the guaranty of the manufacturer of a product:
             490          (A) (I) on one specific product; or


             491          (II) on products that are components of a system; and
             492          (B) under which the manufacturer is liable for services to be provided under the warranty,
             493      including, if the manufacturer's warranty designates, providing parts and labor; and
             494          (iii) "service contract" is as defined in Section 31A-6a-101 .
             495          (b) A manufacturer's warranty may be designated as:
             496          (i) a warranty;
             497          (ii) a guaranty; or
             498          (iii) a term similar to a term described in Subsection (5)(b)(i) or (ii).
             499          (c) This title does not apply to:
             500          (i) a manufacturer's warranty;
             501          (ii) a manufacturer's service contract paid for with consideration that is in addition to the
             502      consideration paid for the product itself; and
             503          (iii) a service contract that is not a manufacturer's warranty or manufacturer's service
             504      contract if:
             505          (A) the service contract is paid for with consideration that is in addition to the
             506      consideration paid for the product itself; and
             507          (B) the service contract is for the repair or maintenance of goods;
             508          (C) the cost of the product is equal to an amount determined in accordance with
             509      Subsection (5)(e); and
             510          (D) the product is not a motor vehicle.
             511          (d) This title does not apply to a manufacturer's warranty or service contract paid for with
             512      consideration that is in addition to the consideration paid for for the product itself regardless of
             513      whether the manufacturer's warranty or service contract is sold:
             514          (i) at the time of the purchase of the product; or
             515          (ii) at a time other than the time of the purchase of the product.
             516          (e) (i) For fiscal year 2001-02, the amount described in Subsection (5)(c)(iii)(C) shall be
             517      equal to $3,700 or less.
             518          (ii) For each fiscal year after fiscal year 2001-02, the commissioner shall annually
             519      determine whether the amount described in Subsection (5)(c)(iii)(C) should be adjusted in
             520      accordance with changes in the Consumer Price Index published by the United States Bureau of
             521      Labor Statistics selected by the commissioner by rule, between:


             522          (A) the Consumer Price Index for the February immediately preceding the adjustment; and
             523          (B) the Consumer Price Index for February 2001.
             524          (iii) If under Subsection (5)(e)(ii) the commissioner determines that an adjustment should
             525      be made, the commission shall make the adjustment by rule.
             526          Section 5. Section 31A-1-301 is amended to read:
             527           31A-1-301. Definitions.
             528          As used in this title, unless otherwise specified:
             529          (1) (a) "Accident and health insurance" means insurance to provide protection against
             530      economic losses resulting from:
             531          (i) a medical condition including:
             532          (A) medical care expenses; or
             533          (B) the risk of disability;
             534          (ii) accident; or
             535          (iii) sickness.
             536          (b) "Accident and health insurance":
             537          (i) includes a contract with disability contingencies including:
             538          (A) an income replacement contract;
             539          (B) a health care contract;
             540          (C) an expense reimbursement contract;
             541          (D) a credit accident and health contract;
             542          (E) a continuing care contract; and
             543          (F) long-term care contracts; and
             544          (ii) may provide:
             545          (A) hospital coverage;
             546          (B) surgical coverage;
             547          (C) medical coverage; or
             548          (D) loss of income coverage.
             549          (c) "Accident and health insurance" does not include workers' compensation insurance.
             550          [(1)] (2) "Administrator" is defined in Subsection [(90)] (111).
             551          [(2)] (3) "Adult" means a natural person who has attained the age of at least 18 years.
             552          [(3)] (4) "Affiliate" means any person who controls, is controlled by, or is under common


             553      control with, another person. A corporation is an affiliate of another corporation, regardless of
             554      ownership, if substantially the same group of natural persons manages the corporations.
             555          [(4)] (5) "Alien insurer" means an insurer domiciled outside the United States.
             556          (6) "Amendment" means an endorsement to an insurance policy or certificate.
             557          [(5)] (7) "Annuity" means an agreement to make periodical payments for a period certain
             558      or over the lifetime of one or more natural persons if the making or continuance of all or some of
             559      the series of the payments, or the amount of the payment, is dependent upon the continuance of
             560      human life.
             561          (8) "Application" means a document:
             562          (a) completed by an applicant to provide information about the risk to be insured; and
             563          (b) that contains information that is used by the insurer to:
             564          (i) evaluate risk; and
             565          (ii) decide whether to:
             566          (A) insure the risk under:
             567          (I) the coverages as originally offered; or
             568          (II) a modification of the coverage as originally offered; or
             569          (B) decline to insure the risk.
             570          [(6)] (9) "Articles" or "articles of incorporation" means the original articles, special laws,
             571      charters, amendments, restated articles, articles of merger or consolidation, trust instruments, and
             572      other constitutive documents for trusts and other entities that are not corporations, and
             573      amendments to any of these.
             574          [(7)] (10) "Bail bond insurance" means a guarantee that a person will attend court when
             575      required, or will obey the orders or judgment of the court, as a condition to the release of that
             576      person from confinement.
             577          [(8)] (11) "Binder" is defined in Section 31A-21-102 .
             578          [(9)] (12) "Board," "board of trustees," or "board of directors" means the group of persons
             579      with responsibility over, or management of, a corporation, however designated.
             580          [(10)] (13) "Business of insurance" is defined in Subsection [(53)] (64).
             581          [(11)] (14) "Business plan" means the information required to be supplied to the
             582      commissioner under Subsections 31A-5-204 (2)(i) and (j), including the information required when
             583      these subsections are applicable by reference under:


             584          (a) Section 31A-7-201 ;
             585          (b) Section 31A-8-205 ; or
             586          (c) Subsection 31A-9-205 (2).
             587          [(12)] (15) "Bylaws" means the rules adopted for the regulation or management of a
             588      corporation's affairs, however designated and includes comparable rules for trusts and other entities
             589      that are not corporations.
             590          [(13)] (16) "Casualty insurance" means liability insurance as defined in Subsection [(59)]
             591      (70).
             592          [(14)] (17) "Certificate" means [the] evidence of insurance given to:
             593          (a) an insured under a group insurance policy; or
             594          (b) a third party.
             595          [(15)] (18) "Certificate of authority" is included within the term "license."
             596          [(16)] (19) "Claim," unless the context otherwise requires, means a request or demand on
             597      an insurer for payment of benefits according to the terms of an insurance policy.
             598          [(17)] (20) "Claims-made coverage" means an insurance contract or provision limiting
             599      coverage under a policy insuring against legal liability to claims that are first made against the
             600      insured while the policy is in force.
             601          [(18)] (21) (a) "Commissioner" or "commissioner of insurance" means Utah's insurance
             602      commissioner.
             603          (b) When appropriate, the terms listed in Subsection [(18)] (21)(a) apply to the equivalent
             604      supervisory official of another jurisdiction.
             605          (22) (a) "Continuing care insurance" means insurance that:
             606          (i) provides board and lodging:
             607          (ii) provides one or more of the following services:
             608          (A) personal services;
             609          (B) nursing services;
             610          (C) medical services; or
             611          (D) other health-related services; and
             612          (iii) provides the coverage described in Subsection (22)(a)(i) under an agreement effective:
             613          (A) for the life of the insured; or
             614          (B) for a period in excess of one year.


             615          (b) Insurance is continuing care insurance regardless of whether or not the board and
             616      lodging are provided at the same location as the services described in Subsection (22)(a)(ii).
             617          [(19)] (23) (a) "Control," "controlling," "controlled," or "under common control" means
             618      the direct or indirect possession of the power to direct or cause the direction of the management
             619      and policies of a person. This control may be:
             620          (i) by contract;
             621          (ii) by common management;
             622          (iii) through the ownership of voting securities; or
             623          (iv) by a means other than those described in Subsections [(19)] (23)(a)(i) through (iii).
             624          (b) There is no presumption that an individual holding an official position with another
             625      person controls that person solely by reason of the position.
             626          (c) A person having a contract or arrangement giving control is considered to have control
             627      despite the illegality or invalidity of the contract or arrangement.
             628          (d) There is a rebuttable presumption of control in a person who directly or indirectly
             629      owns, controls, holds with the power to vote, or holds proxies to vote 10% or more of the voting
             630      securities of another person.
             631          [(20)] (24) (a) "Corporation" means insurance corporation, except when referring to:
             632          (i) a corporation doing business as an insurance broker, consultant, or adjuster under:
             633          (A) Chapter 23, Insurance Marketing - Licensing Agents, Brokers, Consultants, and
             634      Reinsurance Intermediaries; and
             635          (B) Chapter 26, Insurance Adjusters; or
             636          (ii) a noninsurer that is part of a holding company system under Chapter 16, Insurance
             637      Holding Companies.
             638          (b) "Stock corporation" means stock insurance corporation.
             639          (c) "Mutual" or "mutual corporation" means a mutual insurance corporation.
             640          [(21)] (25) "Credit [disability] accident and health insurance" means insurance on a debtor
             641      to provide indemnity for payments coming due on a specific loan or other credit transaction while
             642      the debtor is disabled.
             643          [(22)] (26) "Credit insurance" means surety insurance under which mortgagees and other
             644      creditors are indemnified against losses caused by the default of debtors.
             645          [(23)] (27) "Credit life insurance" means insurance on the life of a debtor in connection


             646      with a loan or other credit transaction.
             647          [(24)] (28) "Creditor" means a person, including an insured, having any claim, whether:
             648          (a) matured;
             649          (b) unmatured;
             650          (c) liquidated;
             651          (d) unliquidated;
             652          (e) secured;
             653          (f) unsecured;
             654          (g) absolute;
             655          (h) fixed; or
             656          (i) contingent.
             657          [(25)] (29) (a) "Customer service representative" means a person that provides insurance
             658      services and insurance product information:
             659          (i) for its agent, broker, or consultant employer; and
             660          (ii) to its employer's customer, client, or organization.
             661          (b) A customer service representative may only operate within the scope of authority of
             662      its agent, broker, or consultant employer.
             663          (30) "Deadline" means the final date or time:
             664          (a) imposed by:
             665          (i) statute;
             666          (ii) rule; or
             667          (iii) order; and
             668          (b) by which a required filing or payment must be received by the department.
             669          [(26)] (31) "Deemer clause" means a provision under this title under which upon the
             670      occurrence of a condition precedent, the commissioner is deemed to have taken a specific action.
             671      If the statute so provides, the condition precedent may be the commissioner's failure to take a
             672      specific action.
             673          [(27)] (32) "Degree of relationship" means the number of steps between two persons
             674      determined by counting the generations separating one person from a common ancestor and then
             675      counting the generations to the other person.
             676          [(28)] (33) "Department" means the Insurance Department.


             677          [(29)] (34) "Director" means a member of the board of directors of a corporation.
             678          [(30) "Disability insurance" means insurance written to:]
             679          [(a) indemnify for losses and expenses resulting from accident or sickness;]
             680          [(b) provide payments to replace income lost from accident or sickness; and]
             681          [(c) pay for services resulting directly from accident or sickness, including medical,
             682      surgical, hospital, and other ancillary expenses.]
             683          (35) "Disability" means a physiological or psychological condition that partially or totally
             684      limits an individual's ability to:
             685          (a) perform the duties of:
             686          (i) that individual's occupation; or
             687          (ii) any occupation for which the individual is reasonably suited by education, training, or
             688      experience; or
             689          (b) perform two or more of the following basic activities of daily living:
             690          (i) eating;
             691          (ii) toileting;
             692          (iii) transferring;
             693          (iv) bathing; or
             694          (v) dressing.
             695          [(31)] (36) "Domestic insurer" means an insurer organized under the laws of this state.
             696          [(32)] (37) "Domiciliary state" means the state in which an insurer:
             697          (a) is incorporated;
             698          (b) is organized; or
             699          (c) in the case of an alien insurer, enters into the United States.
             700          [(33)] (38) "Employee benefits" means one or more benefits or services provided
             701      employees or their dependents.
             702          [(34)] (39) (a) "Employee welfare fund" means a fund:
             703          (i) established or maintained, whether directly or through trustees, by:
             704          (A) one or more employers;
             705          (B) one or more labor organizations; or
             706          (C) a combination of employers and labor organizations; and
             707          (ii) that provides employee benefits paid or contracted to be paid, other than income from


             708      investments of the fund, by or on behalf of an employer doing business in this state or for the
             709      benefit of any person employed in this state.
             710          (b) "Employee welfare fund" includes a plan funded or subsidized by user fees or tax
             711      revenues.
             712          (40) "Endorsement" means a written agreement attached to a policy or certificate to modify
             713      one or more of the provisions of the policy or certificate.
             714          [(35)] (41) "Excludes" is not exhaustive and does not mean that other things are not also
             715      excluded. The items listed are representative examples for use in interpretation of this title.
             716          (42) "Expense reimbursement insurance" means insurance:
             717          (a) written to provide payments for expenses relating to hospital confinements resulting
             718      from illness or injury; and
             719          (b) written:
             720          (i) as a daily limit for a specific number of days in a hospital; and
             721          (ii) to have a one or two day waiting period following a hospitalization.
             722          [(36)] (43) "Fidelity insurance" means insurance guaranteeing the fidelity of persons
             723      holding positions of public or private trust.
             724          (44) (a) "Filed" means that a filing is:
             725          (i) submitted to the department in accordance with any applicable statute, rule, or filing
             726      order:
             727          (ii) received by the department within the time period provided in the applicable statute,
             728      rule, or filing order; and
             729          (iii) accompanied with the applicable one or more filing fees required by:
             730          (A) Section 31A-3-103 ; or
             731          (B) rule.
             732          (b) "Filed" does not include a filing that is rejected by the department because it is not
             733      submitted in accordance with Subsection (44)(a).
             734          (45) "Filing," when used as a noun, means an item required to be filed with the department
             735      including:
             736          (a) a policy;
             737          (b) a rate;
             738          (c) a form;


             739          (d) a document;
             740          (e) a plan;
             741          (f) a manual;
             742          (g) an application;
             743          (h) a report;
             744          (i) a certificate;
             745          (j) an endorsement;
             746          (k) an actuarial certification;
             747          (l) a licensee annual statement;
             748          (m) a licensee renewal application; or
             749          (n) an advertisement.
             750          [(37)] (46) "First party insurance" means an insurance policy or contract in which the
             751      insurer agrees to pay claims submitted to it by the insured for the insured's losses.
             752          [(38)] (47) "Foreign insurer" means an insurer domiciled outside of this state, including
             753      an alien insurer.
             754          [(39)] (48) (a) "Form" means a policy, certificate, or application prepared for general use.
             755          (b) "Form" does not include a document specially prepared for use in an individual case.
             756          [(40)] (49) "Franchise insurance" means individual insurance policies provided through
             757      a mass marketing arrangement involving a defined class of persons related in some way other than
             758      through the purchase of insurance.
             759          (50) "Health care" means any of the following intended for use in the diagnosis, treatment,
             760      mitigation, or prevention of a human ailment or impairment:
             761          (a) professional services;
             762          (b) personal services;
             763          (c) facilities;
             764          (d) equipment;
             765          (e) devices;
             766          (f) supplies; or
             767          (g) medicine.
             768          [(41)] (51) (a) "Health care insurance" or "health insurance" means [disability] insurance
             769      providing [benefits solely of medical, surgical, hospital, or other ancillary services or payment of


             770      medical, surgical, hospital, or other ancillary expenses incurred.]:
             771          (i) health care benefits; or
             772          (ii) payment of incurred health care expenses.
             773          (b) "Health care insurance" or "health insurance" does not include [disability] accident and
             774      health insurance providing benefits for:
             775          (i) replacement of income;
             776          (ii) short-term accident;
             777          (iii) fixed indemnity;
             778          (iv) credit [disability] accident and health;
             779          (v) supplements to liability;
             780          (vi) workers' compensation;
             781          (vii) automobile medical payment;
             782          (viii) no-fault automobile;
             783          (ix) equivalent self-insurance; or
             784          (x) any type of [disability] accident and health insurance coverage that is a part of or
             785      attached to another type of policy.
             786          (52) "Income replacement insurance" or "disability income insurance" means insurance
             787      written to provide payments to replace income lost from accident or sickness.
             788          [(42)] (53) "Indemnity" means the payment of an amount to offset all or part of an insured
             789      loss.
             790          [(43)] (54) "Independent adjuster" means an insurance adjuster required to be licensed
             791      under Section 31A-26-201 who engages in insurance adjusting as a representative of insurers.
             792          [(44)] (55) "Independently procured insurance" means insurance procured under Section
             793      31A-15-104 .
             794          [(45)] (56) "Individual" means a natural person.
             795          [(46)] (57) "Inland marine insurance" includes insurance covering:
             796          (a) property in transit on or over land;
             797          (b) property in transit over water by means other than boat or ship;
             798          (c) bailee liability;
             799          (d) fixed transportation property such as bridges, electric transmission systems, radio and
             800      television transmission towers and tunnels; and


             801          (e) personal and commercial property floaters.
             802          [(47)] (58) "Insolvency" means that:
             803          (a) an insurer is unable to pay its debts or meet its obligations as they mature;
             804          (b) an insurer's total adjusted capital is less than the insurer's mandatory control level RBC
             805      under Subsection 31A-17-601 [(7)](8)(c); or
             806          (c) an insurer is determined to be hazardous under this title.
             807          [(48)] (59) (a) "Insurance" means:
             808          (i) an arrangement, contract, or plan for the transfer of a risk or risks from one or more
             809      persons to one or more other persons; or
             810          (ii) an arrangement, contract, or plan for the distribution of a risk or risks among a group
             811      of persons that includes the person seeking to distribute that person's risk.
             812          (b) "Insurance" includes:
             813          (i) risk distributing arrangements providing for compensation or replacement for damages
             814      or loss through the provision of services or benefits in kind;
             815          (ii) contracts of guaranty or suretyship entered into by the guarantor or surety as a business
             816      and not as merely incidental to a business transaction; and
             817          (iii) plans in which the risk does not rest upon the person who makes the arrangements,
             818      but with a class of persons who have agreed to share it.
             819          [(49)] (60) "Insurance adjuster" means a person who directs the investigation, negotiation,
             820      or settlement of a claim under an insurance policy other than life insurance or an annuity, on behalf
             821      of an insurer, policyholder, or a claimant under an insurance policy.
             822          [(50)] (61) "Interinsurance exchange" is defined in Subsection [(81)] (100).
             823          [(51)] (62) Except as provided in Subsection [ 31A-23-102 (2)] 31A-23-201.5 (1),
             824      "insurance agent" or "agent" means a person who represents insurers in soliciting, negotiating, or
             825      placing insurance.
             826          [(52)] (63) Except as provided in Subsection [ 31A-23-102 (2)] 31A-23-201.5 (1),
             827      "insurance broker" or "broker" means a person who:
             828          (a) acts in procuring insurance on behalf of an applicant for insurance or an insured; and
             829          (b) does not act on behalf of the insurer except by collecting premiums or performing other
             830      ministerial acts.
             831          [(53)] (64) "Insurance business" or "business of insurance" includes:


             832          (a) providing health care insurance, as defined in Subsection [(41)] (51), by organizations
             833      that are or should be licensed under this title;
             834          (b) providing benefits to employees in the event of contingencies not within the control
             835      of the employees, in which the employees are entitled to the benefits as a right, which benefits may
             836      be provided either:
             837          (i) by single employers or by multiple employer groups; or
             838          (ii) through trusts, associations, or other entities;
             839          (c) providing annuities, including those issued in return for gifts, except those provided
             840      by persons specified in Subsections 31A-22-1305 (2) and (3);
             841          (d) providing the characteristic services of motor clubs as outlined in Subsection [(65)]
             842      (77);
             843          (e) providing other persons with insurance as defined in Subsection [(48)] (59);
             844          (f) making as insurer, guarantor, or surety, or proposing to make as insurer, guarantor, or
             845      surety, any contract or policy of title insurance;
             846          (g) transacting or proposing to transact any phase of title insurance, including solicitation,
             847      negotiation preliminary to execution, execution of a contract of title insurance, insuring, and
             848      transacting matters subsequent to the execution of the contract and arising out of it, including
             849      reinsurance; and
             850          (h) doing, or proposing to do, any business in substance equivalent to Subsections [(53)]
             851      (64)(a) through (g) in a manner designed to evade the provisions of this title.
             852          [(54)] (65) Except as provided in Subsection [ 31A-23-102 (2)] 31A-23-201.5 (1),
             853      "insurance consultant" or "consultant" means a person who:
             854          (a) advises other persons about insurance needs and coverages;
             855          (b) is compensated by the person advised on a basis not directly related to the insurance
             856      placed; and
             857          (c) is not compensated directly or indirectly by an insurer, agent, or broker for advice
             858      given.
             859          [(55)] (66) "Insurance holding company system" means a group of two or more affiliated
             860      persons, at least one of whom is an insurer.
             861          [(56)] (67) (a) "Insured" means a person to whom or for whose benefit an insurer makes
             862      a promise in an insurance policy and includes:


             863          (i) policyholders;
             864          (ii) subscribers;
             865          (iii) members; and
             866          (iv) beneficiaries.
             867          (b) The definition in Subsection [(56)] (67)(a) applies only to this title and does not define
             868      the meaning of this word as used in insurance policies or certificates.
             869          [(57)] (68) (a) (i) "Insurer" means any person doing an insurance business as a principal
             870      including:
             871          (A) fraternal benefit societies;
             872          (B) issuers of gift annuities other than those specified in Subsections 31A-22-1305 (2) and
             873      (3);
             874          (C) motor clubs;
             875          (D) employee welfare plans; and
             876          (E) any person purporting or intending to do an insurance business as a principal on that
             877      person's own account.
             878          (ii) "Insurer" does not include a governmental entity, as defined in Section 63-30-2 , to the
             879      extent it is engaged in the activities described in Section 31A-12-107 .
             880          (b) "Admitted insurer" is defined in Subsection [(94)] (115)(b).
             881          (c) "Alien insurer" is defined in Subsection [(4)] (5).
             882          (d) "Authorized insurer" is defined in Subsection [(94)] (115)(b).
             883          (e) "Domestic insurer" is defined in Subsection [(31)] (36).
             884          (f) "Foreign insurer" is defined in Subsection [(38)] (47).
             885          (g) "Nonadmitted insurer" is defined in Subsection [(94)] (115)(a).
             886          (h) "Unauthorized insurer" is defined in Subsection [(94)] (115)(a).
             887          [(58)] (69) (a) Except as provided in Section 31A-1-103 , "legal expense insurance" means
             888      insurance written to indemnify or pay for specified legal expenses.
             889          (b) "Legal expense insurance" includes arrangements that create reasonable expectations
             890      of enforceable rights, but it does not include the provision of, or reimbursement for, legal services
             891      incidental to other insurance coverages.
             892          [(59)] (70) (a) "Liability insurance" means insurance against liability:
             893          (i) for death, injury, or disability of any human being, or for damage to property, exclusive


             894      of the coverages under:
             895          (A) Subsection [(62)] (74) for medical malpractice insurance;
             896          (B) Subsection [(77)] (92) for professional liability insurance; and
             897          (C) Subsection [(97)] (119) for workers' compensation insurance;
             898          (ii) for medical, hospital, surgical, and funeral benefits to persons other than the insured
             899      who are injured, irrespective of legal liability of the insured, when issued with or supplemental to
             900      insurance against legal liability for the death, injury, or disability of human beings, exclusive of
             901      the coverages under:
             902          (A) Subsection [(62)] (74) for medical malpractice insurance;
             903          (B) Subsection [(77)] (92) for professional liability insurance; and
             904          (C) Subsection [(97)] (118) for workers' compensation insurance;
             905          (iii) for loss or damage to property resulting from accidents to or explosions of boilers,
             906      pipes, pressure containers, machinery, or apparatus;
             907          (iv) for loss or damage to any property caused by the breakage or leakage of sprinklers,
             908      water pipes and containers, or by water entering through leaks or openings in buildings; or
             909          (v) for other loss or damage properly the subject of insurance not within any other kind
             910      or kinds of insurance as defined in this chapter, if such insurance is not contrary to law or public
             911      policy.
             912          (b) "Liability insurance" includes:
             913          (i) vehicle liability insurance as defined in Subsection [(95)] (116);
             914          (ii) residential dwelling liability insurance as defined in Subsection [(83)] (102); and
             915          (iii) making inspection of, and issuing certificates of inspection upon, elevators, boilers,
             916      machinery, and apparatus of any kind when done in connection with insurance on them.
             917          [(60)] (71) "License" means the authorization issued by the insurance commissioner under
             918      this title to engage in some activity that is part of or related to the insurance business. It includes
             919      certificates of authority issued to insurers.
             920          [(61)] (72) (a) "Life insurance" means insurance on human lives and insurances pertaining
             921      to or connected with human life.
             922          (b) The business of life insurance includes:
             923          (i) granting death benefits;
             924          [(i)] (ii) granting annuity benefits;


             925          [(ii)] (iii) granting endowment benefits;
             926          [(iii)] (iv) granting additional benefits in the event of death by accident [or accidental
             927      means];
             928          [(iv)] (v) granting additional benefits to safeguard the policy against lapse in the event of
             929      [the total and permanent] disability [of the insured]; and
             930          [(v)] (vi) providing optional methods of settlement of proceeds.
             931          (73) (a) "Long-term care insurance" means an insurance policy or rider advertised,
             932      marketed, offered, or designated to provide coverage:
             933          (i) in a setting other than an acute care unit of a hospital;
             934          (ii) for not less than 12 consecutive months for each covered person on the basis of:
             935          (A) expenses incurred;
             936          (B) indemnity;
             937          (C) prepayment; or
             938          (D) another method;
             939          (iii) for one or more necessary or medically necessary services that are:
             940          (A) diagnostic;
             941          (B) preventative;
             942          (C) therapeutic;
             943          (D) rehabilitative;
             944          (E) maintenance; or
             945          (F) personal care; and
             946          (iv) that may be issued by:
             947          (A) an insurer;
             948          (B) a fraternal benefit society;
             949          (C) (I) a nonprofit health hospital; and
             950          (II) a medical service corporation;
             951          (D) a prepaid health plan;
             952          (E) a health maintenance organization; or
             953          (F) an entity similar to the entities described in Subsections (73)(a)(iv)(A) through (E) to
             954      the extent that the entity is otherwise authorized to issue life or health care insurance.
             955          (b) "Long-term care insurance" includes:


             956          (i) any of the following that provide directly or supplement long-term care insurance:
             957          (A) a group or individual annuity or rider; or
             958          (B) a life insurance policy or rider;
             959          (ii) a policy or rider that provides for payment of benefits based on:
             960          (A) cognitive impairment; or
             961          (B) functional capacity; or
             962          (iii) a qualified long-term care insurance contract.
             963          (c) "Long-term care insurance" does not include:
             964          (i) a policy that is offered primarily to provide basic Medicare supplement coverage;
             965          (ii) basic hospital expense coverage;
             966          (iii) basic medical/surgical expense coverage;
             967          (iv) hospital confinement indemnity coverage;
             968          (v) major medical expense coverage;
             969          (vi) income replacement or related asset-protection coverage;
             970          (vii) accident only coverage;
             971          (viii) coverage for a specified:
             972          (A) disease; or
             973          (B) accident;
             974          (ix) limited benefit health coverage; or
             975          (x) a life insurance policy that accelerates the death benefit to provide the option of a lump
             976      sum payment:
             977          (A) if neither the benefits nor eligibility is conditioned on the receipt of long-term care;
             978      and
             979          (B) the coverage is for one or more the following qualifying events:
             980          (I) terminal illness;
             981          (II) medical conditions requiring extraordinary medical intervention; or
             982          (III) permanent institutional confinement.
             983          [(62)] (74) "Medical malpractice insurance" means insurance against legal liability
             984      incident to the practice and provision of medical services other than the practice and provision of
             985      dental services.
             986          [(63)] (75) "Member" means a person having membership rights in an insurance


             987      corporation.
             988          [(64)] (76) "Minimum capital" or "minimum required capital" means the capital that must
             989      be constantly maintained by a stock insurance corporation as required by statute.
             990          [(65)] (77) "Motor club" means a person:
             991          (a) licensed under:
             992          (i) Chapter 5, Domestic Stock and Mutual Insurance Corporations;
             993          (ii) Chapter 11, Motor Clubs; or
             994          (iii) Chapter 14, Foreign Insurers; and
             995          (b) that promises for an advance consideration to provide for a stated period of time:
             996          (i) legal services under Subsection 31A-11-102 (1)(b);
             997          (ii) bail services under Subsection 31A-11-102 (1)(c); or
             998          (iii) trip reimbursement, towing services, emergency road services, stolen automobile
             999      services, a combination of these services, or any other services given in Subsections
             1000      31A-11-102 (1)(b) through (f).
             1001          [(66)] (78) "Mutual" means mutual insurance corporation.
             1002          [(67)] (79) "Nonparticipating" means a plan of insurance under which the insured is not
             1003      entitled to receive dividends representing shares of the surplus of the insurer.
             1004          [(68)] (80) "Ocean marine insurance" means insurance against loss of or damage to:
             1005          (a) ships or hulls of ships;
             1006          (b) goods, freight, cargoes, merchandise, effects, disbursements, profits, moneys,
             1007      securities, choses in action, evidences of debt, valuable papers, bottomry, respondentia interests,
             1008      or other cargoes in or awaiting transit over the oceans or inland waterways;
             1009          (c) earnings such as freight, passage money, commissions, or profits derived from
             1010      transporting goods or people upon or across the oceans or inland waterways; or
             1011          (d) a vessel owner or operator as a result of liability to employees, passengers, bailors,
             1012      owners of other vessels, owners of fixed objects, customs or other authorities, or other persons in
             1013      connection with maritime activity.
             1014          [(69)] (81) "Order" means an order of the commissioner.
             1015          (82) "Outline of coverage" means a summary that explains an accident and health
             1016      insurance policy.
             1017          [(70)] (83) "Participating" means a plan of insurance under which the insured is entitled


             1018      to receive dividends representing shares of the surplus of the insurer.
             1019          [(71)] (84) "Person" includes an individual, partnership, corporation, incorporated or
             1020      unincorporated association, joint stock company, trust, reciprocal, syndicate, or any similar entity
             1021      or combination of entities acting in concert.
             1022          [(72)] (85) (a) (i) "Policy" means any document, including attached endorsements and
             1023      riders, purporting to be an enforceable contract, which memorializes in writing some or all of the
             1024      terms of an insurance contract.
             1025          (ii) "Policy" includes a service contract issued by:
             1026          (A) a motor club under Chapter 11, Motor Clubs; [and]
             1027          (B) a service contract provided under Chapter 6a, Service Contracts; and
             1028          [(B)] (C) a corporation licensed under:
             1029          (I) Chapter 7, Nonprofit Health Service Insurance Corporations; or
             1030          (II) Chapter 8, Health Maintenance Organizations and Limited Health Plans.
             1031          (iii) "Policy" does not include:
             1032          (A) a certificate under a group insurance contract; or
             1033          (B) a document that does not purport to have legal effect.
             1034          (b) "Group insurance policy" means a policy covering a group of persons that is issued to
             1035      a policyholder on behalf of the group, for the benefit of group members who are selected under
             1036      procedures defined in the policy or in agreements which are collateral to the policy. This type of
             1037      policy may include members of the policyholder's family or dependents.
             1038          (c) "Blanket insurance policy" means a group policy covering classes of persons without
             1039      individual underwriting, where the persons insured are determined by definition of the class with
             1040      or without designating the persons covered.
             1041          [(73)] (86) "Policyholder" means the person who controls a policy, binder, or oral contract
             1042      by ownership, premium payment, or otherwise.
             1043          (87) "Policy illustration" means a presentation or depiction that includes nonguaranteed
             1044      elements of a policy of life insurance over a period of years.
             1045          (88) "Policy summary" means a synopsis describing the elements of a life insurance policy.
             1046          [(74)] (89) (a) "Premium" means the monetary consideration for an insurance policy, and
             1047      includes assessments, membership fees, required contributions, or monetary consideration,
             1048      however designated.


             1049          (b) Consideration paid to third party administrators for their services is not "premium,"
             1050      though amounts paid by third party administrators to insurers for insurance on the risks
             1051      administered by the third party administrators are "premium."
             1052          [(75)] (90) "Principal officers" of a corporation means the officers designated under
             1053      Subsection 31A-5-203 (3).
             1054          [(76)] (91) "Proceedings" includes actions and special statutory proceedings.
             1055          [(77)] (92) "Professional liability insurance" means insurance against legal liability
             1056      incident to the practice of a profession and provision of any professional services.
             1057          [(78)] (93) "Property insurance" means insurance against loss or damage to real or personal
             1058      property of every kind and any interest in that property, from all hazards or causes, and against loss
             1059      consequential upon the loss or damage including vehicle comprehensive and vehicle physical
             1060      damage coverages, but excluding inland marine insurance and ocean marine insurance as defined
             1061      under Subsections [(46)] (57) and [(68)] (80).
             1062          [(79)] (94) (a) "Public agency insurance mutual" means any entity formed by joint venture
             1063      or interlocal cooperation agreement by two or more political subdivisions or public agencies of the
             1064      state for the purpose of providing insurance coverage for the political subdivisions or public
             1065      agencies.
             1066          (b) Any public agency insurance mutual created under this title and Title 11, Chapter 13,
             1067      Interlocal Cooperation Act, is considered to be a governmental entity and political subdivision of
             1068      the state with all of the rights, privileges, and immunities of a governmental entity or political
             1069      subdivision of the state.
             1070          (95) "Qualified long-term care insurance contract" or "federally tax qualified long-term
             1071      care insurance contract" means:
             1072          (a) an individual or group insurance contract that meets the requirements of Section
             1073      7702B(b), Internal Revenue Code; or
             1074          (b) the portion of a life insurance contract that provides long-term care insurance:
             1075          (i) (A) by rider; or
             1076          (B) as a part of the contract; and
             1077          (ii) that satisfies the requirements of Section 7702B(b) and (e), Internal Revenue Code.
             1078          (96) (a) "Rate" means:
             1079          (i) the cost of a given unit of insurance; or


             1080          (ii) for property-casualty insurance, that cost of insurance per exposure unit either
             1081      expressed as:
             1082          (A) a single number; or
             1083          (B) a pure premium rate, adjusted before any application of individual risk variations based
             1084      on loss or expense considerations to account for the treatment of:
             1085          (I) expenses;
             1086          (II) profit; and
             1087          (III) individual insurer variation in loss experience.
             1088          (b) "Rate" does not include a minimum premium.
             1089          [(80)] (97) (a) Except as provided in Subsection [(80)] (97)(b), "rate service organization"
             1090      means any person who assists insurers in rate making or filing by:
             1091          (i) collecting, compiling, and furnishing loss or expense statistics;
             1092          (ii) recommending, making, or filing rates or supplementary rate information; or
             1093          (iii) advising about rate questions, except as an attorney giving legal advice.
             1094          (b) "Rate service organization" does not mean:
             1095          (i) an employee of an insurer;
             1096          (ii) a single insurer or group of insurers under common control;
             1097          (iii) a joint underwriting group; or
             1098          (iv) a natural person serving as an actuarial or legal consultant.
             1099          (98) "Rating manual" means any of the following used to determine initial and renewal
             1100      policy premiums:
             1101          (a) a manual of rates;
             1102          (b) classifications;
             1103          (c) rate-related underwriting rules; and
             1104          (d) rating formulas that describe steps, policies, and procedures for determining initial and
             1105      renewal policy premiums.
             1106          (99) "Received by the department" means:
             1107          (a) except as provided in Subsection (99)(b), the date delivered to and stamped received
             1108      by the department, whether delivered:
             1109          (i) in person;
             1110          (ii) by a delivery service; or


             1111          (iii) electronically; and
             1112          (b) if an item with a department imposed deadline is delivered to the department by a
             1113      delivery service, the delivery service's postmark date or pick-up date unless otherwise stated in:
             1114          (i) statute;
             1115          (ii) rule; or
             1116          (iii) a specific filing order.
             1117          [(81)] (100) "Reciprocal" or "interinsurance exchange" means any unincorporated
             1118      association of persons:
             1119          (a) operating through an attorney-in-fact common to all of them; and
             1120          (b) exchanging insurance contracts with one another that provide insurance coverage on
             1121      each other.
             1122          [(82)] (101) "Reinsurance" means an insurance transaction where an insurer, for
             1123      consideration, transfers any portion of the risk it has assumed to another insurer. In referring to
             1124      reinsurance transactions, this title sometimes refers to:
             1125          (a) the insurer transferring the risk as the "ceding insurer"; and
             1126          (b) the insurer assuming the risk as the:
             1127          (i) "assuming insurer"; or
             1128          (ii) "assuming reinsurer."
             1129          [(83)] (102) "Residential dwelling liability insurance" means insurance against liability
             1130      resulting from or incident to the ownership, maintenance, or use of a residential dwelling that is
             1131      a detached single family residence or multifamily residence up to four units.
             1132          [(84)] (103) "Retrocession" means reinsurance with another insurer of a liability assumed
             1133      under a reinsurance contract. A reinsurer "retrocedes" when it reinsures with another insurer part
             1134      of a liability assumed under a reinsurance contract.
             1135          (104) "Rider" means an endorsement to:
             1136          (a) an insurance policy; or
             1137          (b) an insurance certificate.
             1138          [(85)] (105) (a) "Security" means any:
             1139          (i) note;
             1140          (ii) stock;
             1141          (iii) bond;


             1142          (iv) debenture;
             1143          (v) evidence of indebtedness;
             1144          (vi) certificate of interest or participation in any profit-sharing agreement;
             1145          (vii) collateral-trust certificate;
             1146          (viii) preorganization certificate or subscription;
             1147          (ix) transferable share;
             1148          (x) investment contract;
             1149          (xi) voting trust certificate;
             1150          (xii) certificate of deposit for a security;
             1151          (xiii) certificate of interest of participation in an oil, gas, or mining title or lease or in
             1152      payments out of production under such a title or lease;
             1153          (xiv) commodity contract or commodity option;
             1154          (xv) any certificate of interest or participation in, temporary or interim certificate for,
             1155      receipt for, guarantee of, or warrant or right to subscribe to or purchase any of the items listed in
             1156      Subsections [(85)] (105)(a)(i) through (xiv); or
             1157          (xvi) any other interest or instrument commonly known as a security.
             1158          (b) "Security" does not include:
             1159          (i) any insurance or endowment policy or annuity contract under which an insurance
             1160      company promises to pay money in a specific lump sum or periodically for life or some other
             1161      specified period; or
             1162          (ii) a burial certificate or burial contract.
             1163          [(86)] (106) "Self-insurance" means any arrangement under which a person provides for
             1164      spreading its own risks by a systematic plan.
             1165          (a) Except as provided in this Subsection [(86)] (106), self-insurance does not include an
             1166      arrangement under which a number of persons spread their risks among themselves.
             1167          (b) Self-insurance does include an arrangement by which a governmental entity, as defined
             1168      in Section 63-30-2 , undertakes to indemnify its employees for liability arising out of the
             1169      employees' employment.
             1170          (c) Self-insurance does include an arrangement by which a person with a managed
             1171      program of self-insurance and risk management undertakes to indemnify its affiliates, subsidiaries,
             1172      directors, officers, or employees for liability or risk which is related to the relationship or


             1173      employment.
             1174          (d) Self-insurance does not include any arrangement with independent contractors.
             1175          (107) "Short-term care insurance" means any insurance policy or rider advertised,
             1176      marketed, offered, or designed to provide coverage that is similar to long-term care insurance but
             1177      that provides coverage for less than 12 consecutive months for each covered person.
             1178          [(87)] (108) (a) "Subsidiary" of a person means an affiliate controlled by that person either
             1179      directly or indirectly through one or more affiliates or intermediaries.
             1180          (b) "Wholly owned subsidiary" of a person is a subsidiary of which all of the voting shares
             1181      are owned by that person either alone or with its affiliates, except for the minimum number of
             1182      shares the law of the subsidiary's domicile requires to be owned by directors or others.
             1183          [(88)] (109) Subject to Subsection [(48)] (59)(b), "surety insurance" includes:
             1184          (a) a guarantee against loss or damage resulting from failure of principals to pay or
             1185      perform their obligations to a creditor or other obligee;
             1186          (b) bail bond insurance; and
             1187          (c) fidelity insurance.
             1188          [(89)] (110) (a) "Surplus" means the excess of assets over the sum of paid-in capital and
             1189      liabilities.
             1190          (b) (i) "Permanent surplus" means the surplus of a mutual insurer that has been designated
             1191      by the insurer as permanent.
             1192          (ii) Sections 31A-5-211 , 31A-7-201 , 31A-8-209 , 31A-9-209 , and 31A-14-209 require that
             1193      mutuals doing business in this state maintain specified minimum levels of permanent surplus.
             1194          (iii) Except for assessable mutuals, the minimum permanent surplus requirement is
             1195      essentially the same as the minimum required capital requirement that applies to stock insurers.
             1196          (c) "Excess surplus" means:
             1197          (i) for life or [disability insurers, as defined in Subsection 31A-17-601 (3),] accident and
             1198      health insurers, health organizations, and property and casualty insurers[,] as defined in
             1199      [Subsection] Section 31A-17-601 [(4)], the lesser of:
             1200          (A) that amount of an insurer's or health organization's total adjusted capital, as defined
             1201      in Subsection [(92)] (113), that exceeds the product of:
             1202          (I) 2.5; and
             1203          (II) the sum of the insurer's or health organization's minimum capital or permanent surplus


             1204      required under Section 31A-5-211 , 31A-9-209 , or 31A-14-205 ; or
             1205          (B) that amount of an insurer's or health organization's total adjusted capital, as defined
             1206      in Subsection [(92)] 113, that exceeds the product of:
             1207          (I) 3.0; and
             1208          (II) the authorized control level RBC as defined in Subsection 31A-17-601 [(7)](8)(a); and
             1209          (ii) for monoline mortgage guaranty insurers, financial guaranty insurers, and title insurers,
             1210      that amount of an insurer's paid-in-capital and surplus that exceeds the product of:
             1211          (A) 1.5; and
             1212          (B) the insurer's total adjusted capital required by Subsection 31A-17-609 (1).
             1213          [(90)] (111) "Third party administrator" or "administrator" means any person who collects
             1214      charges or premiums from, or who, for consideration, adjusts or settles claims of residents of the
             1215      state in connection with insurance coverage, annuities, or service insurance coverage, except:
             1216          (a) a union on behalf of its members;
             1217          (b) a person [exempt as a trust under Section 514 of] administering any:
             1218          (i) pension plan subject to the federal Employee Retirement Income Security Act of 1974;
             1219          (ii) governmental plan as defined in Section 414(d), Internal Revenue Code; or
             1220          (iii) nonelecting church plan as described in Section 410(d), Internal Revenue Code;
             1221          (c) an employer on behalf of the employer's employees or the employees of one or more
             1222      of the subsidiary or affiliated corporations of the employer;
             1223          (d) an insurer licensed under Chapter 5, 7, 8, 9, or 14, but only [with respect to insurance
             1224      issued by the insurer] for a line of insurance for which the insurer holds a license in this state; or
             1225          (e) a person licensed or exempt from licensing under Chapter 23 or 26 whose activities are
             1226      limited to those authorized under the license the person holds or for which the person is exempt.
             1227          [(91)] (112) "Title insurance" means the insuring, guaranteeing, or indemnifying of owners
             1228      of real or personal property or the holders of liens or encumbrances on that property, or others
             1229      interested in the property against loss or damage suffered by reason of liens or encumbrances upon,
             1230      defects in, or the unmarketability of the title to the property, or invalidity or unenforceability of any
             1231      liens or encumbrances on the property.
             1232          [(92)] (113) "Total adjusted capital" means the sum of an insurer's or health organization's
             1233      statutory capital and surplus as determined in accordance with:
             1234          (a) the statutory accounting applicable to the annual financial statements required to be


             1235      filed under Section 31A-4-113 ; and
             1236          (b) any other items provided by the RBC instructions, as RBC instructions is defined in
             1237      [Subsection] Section 31A-17-601 [(6)].
             1238          [(93)] (114) (a) "Trustee" means "director" when referring to the board of directors of a
             1239      corporation.
             1240          (b) "Trustee," when used in reference to an employee welfare fund, means an individual,
             1241      firm, association, organization, joint stock company, or corporation, whether acting individually
             1242      or jointly and whether designated by that name or any other, that is charged with or has the overall
             1243      management of an employee welfare fund.
             1244          [(94)] (115) (a) "Unauthorized insurer," "unadmitted insurer," or "nonadmitted insurer"
             1245      means an insurer:
             1246          (i) not holding a valid certificate of authority to do an insurance business in this state; or
             1247          (ii) transacting business not authorized by a valid certificate.
             1248          (b) "Admitted insurer" or "authorized insurer" means an insurer:
             1249          (i) holding a valid certificate of authority to do an insurance business in this state; and
             1250          (ii) transacting business as authorized by a valid certificate.
             1251          [(95)] (116) "Vehicle liability insurance" means insurance against liability resulting from
             1252      or incident to ownership, maintenance, or use of any land vehicle or aircraft, exclusive of vehicle
             1253      comprehensive and vehicle physical damage coverages under Subsection [(78)] (93).
             1254          [(96)] (117) "Voting security" means a security with voting rights, and includes any
             1255      security convertible into a security with a voting right associated with it.
             1256          [(97)] (118) "Workers' compensation insurance" means:
             1257          (a) insurance for indemnification of employers against liability for compensation based
             1258      on:
             1259          (i) compensable accidental injuries; and
             1260          (ii) occupational disease disability;
             1261          (b) employer's liability insurance incidental to workers compensation insurance and written
             1262      in connection with it; and
             1263          (c) insurance assuring to the persons entitled to workers compensation benefits the
             1264      compensation provided by law.
             1265          Section 6. Section 31A-2-214 is amended to read:


             1266           31A-2-214. Market assistance programs -- Joint underwriting associations.
             1267          (1) (a) If the commissioner finds that in any part of this state a line of insurance is not
             1268      generally available in the marketplace or that it is priced in such a manner as to severely limit its
             1269      availability, and that the public interest requires it, [he] the commissioner may by rule implement
             1270      a market assistance program whereby all licensed insurers and agents may pool their information
             1271      as to the available markets.
             1272          (b) Insurers doing business in this state may, at their own instance or at the request of the
             1273      commissioner, prepare and submit to the commissioner, for [his] the commissioner's approval and
             1274      adoption, voluntary plans providing any line of insurance coverage for all or any part of this state
             1275      in which this insurance is not generally available in the voluntary market or is priced in such a
             1276      manner as to severely limit its availability and in which the public interest requires the availability
             1277      of this coverage.
             1278          (2) (a) If the commissioner finds after notice and hearing that a market assistance program
             1279      formed under Subsection (1)(a) or (b) has not met the needs it was intended to address, [he] the
             1280      commissioner may by rule form a joint underwriting association to make available the insurance
             1281      to applicants who are in good faith entitled to but unable to procure this insurance through ordinary
             1282      methods.
             1283          (b) The commissioner shall allow any market assistance program formed under Subsection
             1284      (1)(a) or (b) a minimum of 30 days operation before [he] the commissioner forms a joint
             1285      underwriting association. The commissioner may not adopt a rule forming a joint underwriting
             1286      association unless [he] the commissioner finds as a result of the hearing that:
             1287          (i) a certain coverage is not available or that the price for that coverage is no longer
             1288      commensurate with the risk in this state; and
             1289          (ii) the coverage is:
             1290          (A) vital to the economic health of this state[, is];
             1291          (B) vital to the quality of life in this state[, is];
             1292          (C) vital in maintaining competition in insurance in this state[,]; or
             1293          (D) the number of people affected is significant enough to justify its creation.
             1294          [(b)] (c) The commissioner may not adopt a rule forming a joint underwriting association
             1295      under Subsection (2)(a) on the basis that applicants for particular lines of insurance are unable to
             1296      pay a premium that is commensurate with the risk involved or that the number of applicants or


             1297      people affected is too small to justify its creation.
             1298          [(c)] (d) Each joint underwriting association formed under Subsection (2)(a) shall require
             1299      participation by all insurers licensed and engaged in writing that line of insurance or any
             1300      component of that line of insurance within this state.
             1301          [(d)] (e) Each association formed under Subsection (2)(a) shall:
             1302          (i) give consideration to:
             1303          (A) the need for adequate and readily accessible coverage;
             1304          (B) alternative methods of improving the market affected;
             1305          (C) the preference of the insurers and agents;
             1306          (D) the inherent limitations of the insurance mechanism;
             1307          (E) the need for reasonable underwriting standards; and
             1308          (F) the requirement of reasonable loss prevention measures;
             1309          (ii) establish procedures that will create minimum interference with the voluntary market;
             1310          (iii) allocate the burden imposed by the association equitably and efficiently among the
             1311      insurers doing business in this state;
             1312          (iv) establish procedures for applicants and participants to have grievances reviewed by
             1313      an impartial body;
             1314          (v) provide for the method of classifying risks and making and filing applicable rates; and
             1315          (vi) specify:
             1316          (A) the basis of participation of insurers and agents in the association;
             1317          (B) the conditions under which risks must be accepted; and
             1318          (C) the commission rates to be paid for insurance business placed with the association.
             1319          [(e)] (f) Any deficit in an association in any year shall be recouped by rate increases for
             1320      the association, applicable prospectively. Any surplus in excess of the loss reserves of the
             1321      association in any year shall be distributed either by rate decreases or by distribution to the
             1322      members of the association on a pro-rata basis.
             1323          (3) Notwithstanding [the provisions of] Subsection (2), the commissioner may not create
             1324      a joint underwriting association under [that subsection] Subsection (2) for:
             1325          (a) life insurance[,];
             1326          (b) annuities[, disability];
             1327          (c) accident and health insurance[,];


             1328          (d) ocean marine insurance[,];
             1329          (e) medical malpractice insurance[,];
             1330          (f) earthquake insurance[,];
             1331          (g) workers' compensation insurance[,];
             1332          (h) public agency insurance mutuals[,]; or
             1333          (i) private passenger automobile liability insurance.
             1334          (4) Every insurer and agent participating in a joint underwriting association adopted by the
             1335      commissioner under Subsection (2) shall provide the services prescribed by the association to any
             1336      person seeking coverage of the kind available in the plan, including full information about the
             1337      requirements and procedures for obtaining coverage with the association.
             1338          (5) If the commissioner finds that the lack of cooperating insurers or agents in an area
             1339      makes the functioning of the association difficult, [he] the commissioner may order the association
             1340      to:
             1341          (a) establish branch service offices[,];
             1342          (b) make special contracts for provision of the service[,]; or
             1343          (c) take other appropriate steps to ensure that service is available.
             1344          (6) The association may issue policies for a period of one year. If, at the end of any one
             1345      year period, the commissioner determines that the market conditions justify the continued
             1346      existence of the association, [he] the commissioner may reauthorize its existence. In reauthorizing
             1347      the association, the commissioner shall follow the procedure set forth in Subsection (2).
             1348          Section 7. Section 31A-2-217 is enacted to read:
             1349          31A-2-217. Coordination with other states.
             1350          (1) (a) Subject to Subsection (1)(b), the commissioner, by rule, may adopt one or more
             1351      agreements with another governmental regulatory agency, within and outside of this state, or with
             1352      the National Association of Insurance Commissioners to address:
             1353          (i) licensing of insurance companies;
             1354          (ii) licensing of agents;
             1355          (iii) regulation of premium rates and policy forms; and
             1356          (iv) regulation of insurer insolvency and insurance receiverships.
             1357          (b) An agreement described in Subsection (1)(a), may authorize the commissioner to
             1358      modify a requirement of this title if the commissioner determines that the requirements under the


             1359      agreement provide protections similar to or greater than the requirements under this title.
             1360          (2) (a) The commissioner may negotiate an interstate compact that addresses issuing
             1361      certificates of authority, if the commissioner determines that:
             1362          (i) each state participating in the compact has requirements for issuing certificates of
             1363      authority that provide protections similar to or greater than the requirements of this title; or
             1364          (ii) the interstate compact contains requirements for issuing certificates of authority that
             1365      provide protections similar to or greater than the requirements of this title.
             1366          (b) If an interstate compact described in Subsection (2)(a) is adopted by the Legislature,
             1367      the commissioner may issue certificates of authority to insurers in accordance with the terms of
             1368      the interstate compact.
             1369          (3) If any provision of this title conflicts with a provision of the annual statement
             1370      instructions or the National Association of Insurance Commissioners Accounting Practices and
             1371      Procedures Manual, the commissioner may, by rule, resolve the conflict in favor of the annual
             1372      statement instructions or the National Association of Insurance Commissioners Accounting
             1373      Practices and Procedures Manual.
             1374          (4) The commissioner may, by rule, accept the information prescribed by the National
             1375      Association of Insurance Commissioners instead of the documents required to be filed with an
             1376      application for a certificate of authority under:
             1377          (a) Section 31A-4-103 , 31A-5-204 , 31A-8-205 , or 31A-14-201 ; or
             1378          (b) rules made by the commissioner.
             1379          (5) Before November 30, 2001, the commissioner shall report to the Business, Labor, and
             1380      Economic Development Interim Committee regarding the status of:
             1381          (a) any agreements entered into under Subsection (1);
             1382          (b) any interstate compact entered into under Subsection (2); and
             1383          (c) any rule made under Subsections (3) and (4).
             1384          (6) This section shall be repealed in accordance with Section 63-55-231 .
             1385          Section 8. Section 31A-4-103 is amended to read:
             1386           31A-4-103. Certificate of authority.
             1387          (1) Each certificate of authority issued by the commissioner shall specify:
             1388          (a) the name of the insurer[,];
             1389          (b) the kinds of insurance it is authorized to transact in Utah[,]; and


             1390          (c) any other information the commissioner requires.
             1391          (2) A certificate of authority issued under this chapter remains in force until, under
             1392      Subsection (3), the certificate of authority is:
             1393          (a) revoked;
             1394          (b) suspended; or
             1395          (c) limited.
             1396          (3) (a) After an adjudicative proceeding under Title 63, Chapter 46b, Administrative
             1397      Procedures Act, the commissioner may revoke, suspend, or limit in whole or in part the certificate
             1398      of authority of any insurer if:
             1399          (i) the insurer is found to have:
             1400          (A) failed to pay when due any fee due under Section 31A-3-103 ;
             1401          (B) violated or failed to comply with:
             1402          (I) this title;
             1403          (II) a rule made under Subsection 31A-2-201 (3); or
             1404          (III) an order issued under Subsection 31A-2-201 (4); or
             1405          (ii) the insurer's methods and practices in the conduct of business endanger the legitimate
             1406      interests of customers and the public.
             1407          (b) An order suspending or limiting a certificate of authority issued under this chapter shall
             1408      specify:
             1409          (i) the period of the suspension or limitation, which in no event may be in excess of 12
             1410      months;
             1411          (ii) the conditions and limitations imposed on the insurer during the suspension or
             1412      limitation; and
             1413          (iii) the conditions and procedures for reinstatement from suspension or limitation.
             1414          (4) Subject to the requirements of this section and in accordance with Title 63, Chapter
             1415      46a, Utah Administrative Rulemaking Act, the commissioner shall by rule prescribe procedures
             1416      to renew or reinstate a certificate of authority.
             1417          (5) An insurer under this chapter whose certificate of authority is suspended or revoked,
             1418      but that continues to act as an authorized insurer, is subject to the penalties for acting as an insurer
             1419      without a certificate of authority.
             1420          (6) Any insurer holding a certificate of authority in this state shall immediately report to


             1421      the commissioner a suspension or revocation of that insurer's certificate of authority in any:
             1422          (a) state;
             1423          (b) the District of Columbia; or
             1424          (c) a territory of the United States.
             1425          (7) (a) An order revoking a certificate of authority under Subsection (3) may specify a time
             1426      within which the former authorized insurer may not apply for a new certificate of authority, except
             1427      that the time may not exceed five years from the date the certificate of authority is revoked.
             1428          (b) If no time is specified in an order revoking a certificate of authority under Subsection
             1429      (3), the former authorized insurer may not apply for a new certificate of authority for five years
             1430      from the date the certificate of authority is revoked without express approval by the commissioner.
             1431          (8) (a) Subject to Subsection (8)(b), the insurer shall pay all fees under Section 31A-3-103
             1432      that would have been payable if the certificate of authority had not been suspended or revoked,
             1433      unless the commissioner, in accordance with rule, waives the payment of the fees by no later than
             1434      the day of:
             1435          (i) a suspension under Subsection (3) of an insurer's certificate of authority ends; or
             1436          (ii) a new certificate of authority is issued to an insurer whose certificate of authority is
             1437      revoked under Subsection (3).
             1438          (b) If a new certificate of authority is issued more than three years after the revocation of
             1439      a similar certificate of authority, this Subsection (8) applies only to the fees that would have
             1440      accrued during the three years immediately following the revocation.
             1441          Section 9. Section 31A-4-113 is amended to read:
             1442           31A-4-113. Annual statements.
             1443          (1) (a) Each authorized insurer shall annually, on or before March 1, file with the
             1444      commissioner a true statement of its financial condition, transactions, and affairs as of December
             1445      31 of the preceding year. [This]
             1446          (b) The statement required by Subsection (1)(a) shall be:
             1447          (i) verified by the oaths of at least two of the insurer's principal officers[.]; and
             1448          (ii) in the general form and provide the information as prescribed by the commissioner by
             1449      rule.
             1450          (c) The commissioner may, for good cause shown, extend the date for filing the statement[.
             1451      The] required by Subsection (1)(a), except that the deadline for filing fee payment may not be


             1452      extended.
             1453          [(2) The statement shall be in the general form and provide the information as prescribed
             1454      by rule of the commissioner. In the absence of a statute providing otherwise, the statement shall
             1455      be prepared in accordance with the annual statement instructions and the Accounting Practices and
             1456      Procedures Manual which is published by the National Association of Insurance Commissioners.]
             1457          [(3)] (2) The annual statement of an alien insurer shall:
             1458          (a) relate only to its transactions and affairs in the United States unless the commissioner
             1459      requires otherwise[. The statement shall]; and
             1460          (b) be verified by:
             1461          (i) the insurer's United States manager; or [by its]
             1462          (ii) the insurer's authorized officers.
             1463          Section 10. Section 31A-5-211 is amended to read:
             1464           31A-5-211. Minimum capital or permanent surplus requirements.
             1465          (1) (a) Except as provided in Subsections (4) and (5), insurers being organized or operating
             1466      under this chapter shall maintain minimum capital or permanent surplus for a mutual, in amounts
             1467      specified in Subsection (2).
             1468          (b) The certificate of authority issued under Section 31A-5-212 does not permit an insurer
             1469      to transact types of insurance for which the insurer does not have the required minimum capital
             1470      or permanent surplus for a mutual, in at least the amounts specified under Subsection (2).
             1471          (c) The types of insurance under this section are defined in Section 31A-1-301 . Minimum
             1472      capital and permanent surplus requirements under this section are based upon all types of insurance
             1473      transacted by the insurer in any and all areas which it operates, whether or not only a portion of
             1474      those types of insurance is or is to be transacted in this state.
             1475          (2) The minimum capital, or permanent surplus for a nonassessable mutual, is as follows
             1476      for the indicated types of insurance:
             1477          (a) life, annuity, [disability] accident and health, or any combination of these
$400,000

             1478          (b) subject to an aggregate maximum of $1,000,000 for more than one of the following
             1479      types of coverages:
             1480          (i) property insurance
200,000

             1481          (ii) surety insurance
300,000

             1482          (iii) bail bonds insurance only
100,000


             1483          (iv) marine and transportation insurance
200,000

             1484          (v) vehicle liability insurance, residential dwelling liability insurance,
             1485              or both
400,000

             1486          (vi) liability insurance
600,000

             1487          (vii) workers' compensation insurance
300,000

             1488          (c) title insurance
200,000

             1489          (d) professional liability insurance, excluding medical malpractice
700,000

             1490          (e) professional liability, including medical malpractice
1,000,000

             1491          (f) all types of insurance, except life, annuity, or title
2,000,000

             1492          (3) Prior to beginning operations, an insurer licensed under this chapter shall have total
             1493      adjusted capital in excess of the company action level RBC as defined in Subsection
             1494      31A-17-601 [(7)](8)(b).
             1495          (4) (a) Subject to Subsections (4)(b) and (4)(c), an insurer holding a valid certificate of
             1496      authority to transact insurance in this state prior to July 1, 1986, continues to be authorized to
             1497      transact the same kinds of insurance as permitted by that certificate of authority, if the insurer
             1498      maintains not less than the amount of minimum capital or permanent surplus required for that
             1499      authority under the laws of this state in force immediately prior to July 1, 1986.
             1500          (b) If, after July 1, 1986, an insurer ever has minimum capital or permanent surplus that
             1501      meets or exceeds the requirements of Subsections (2) and (3), then Subsection (4)(a) is
             1502      inapplicable to that insurer and it shall comply with Subsections (2) and (3).
             1503          (c) Any insurer satisfying the minimum capital or permanent surplus requirement through
             1504      application of Subsection (4)(a) shall comply with Subsections (2) and (3) by July 1, 1990.
             1505          (d) Beginning July 1, 1987, former county mutuals shall comply with the capital and
             1506      surplus requirements of this section.
             1507          (5) (a) An assessable mutual may be organized under this chapter, but it may not issue life
             1508      insurance or annuities. An assessable mutual need not have a permanent surplus if the assessment
             1509      liability of its policyholders is unlimited and all insurance policies clearly state that. If assessments
             1510      are limited to a specified amount or a specified multiple of annual advance premiums, the
             1511      minimum permanent surplus is the amount that would be required under Subsections (2) and (3)
             1512      if the corporation were not assessable, reduced by an amount that reasonably reflects the value of
             1513      the policyholders' assessment liability in satisfying the financial needs of the corporation. The


             1514      liability of members in an assessable mutual is joint and several up to the limits provided by the
             1515      articles of incorporation or this title.
             1516          (b) (i) Except as provided in Subsections (5)(c) and (d), no certificate of authority may be
             1517      issued to an assessable mutual until it has at least 400 bona fide applications for insurance from
             1518      not less than 400 separate applicants, on separate risks located in this state, in each of the classes
             1519      of business upon which assessments may be separately levied. A full year's premium shall be paid
             1520      with each application and the aggregate premium is at least $50,000 for each class.
             1521          (ii) If at any time while the corporation is an assessable mutual, the business plan is
             1522      amended to include an additional class of business on which assessments may be separately levied,
             1523      identical requirements of Subsection (5)(b)(i) are applicable to each additional class.
             1524          (c) Five or more employers may join in the formation of an assessable mutual to write only
             1525      workers' compensation insurance if, instead of the requirements of Subsection (5)(b), policies are
             1526      simultaneously put into effect that cover at least 1,500 employees, with no single employer having
             1527      more than 1/5 of the employees insured by the assessable mutual. A full year's premium shall be
             1528      paid by each employer, aggregating at least $200,000.
             1529          (d) The number and amount of required initial applications and premium payments may
             1530      be reduced by substituting surplus for the applications or premium payments. The commissioner
             1531      shall determine the reduction in required initial applications and premium payments that is
             1532      appropriate for a given amount of surplus. The insurer shall continue to be assessable until
             1533      conversion under Subsection 31A-5-508 (1) to a nonassessable mutual.
             1534          (6) The capital or permanent surplus requirements of Subsection (2) apply to persons
             1535      seeking certificates of authority under this chapter to write reinsurance. This subsection may not
             1536      be construed as requiring reinsurers to obtain a certificate of authority. However, Section
             1537      31A-17-404 imposes alternate safety prerequisites to reserve credit being granted for reinsurance
             1538      ceded to a reinsurer without a certificate of authority.
             1539          Section 11. Section 31A-5-418 is amended to read:
             1540           31A-5-418. Dividends and other distributions.
             1541          (1) Subject to the requirements of Section 16-10a-842 and Subsection 31A-16-106 (2), a
             1542      stock corporation may make distributions under Section 16-10a-640 if all the following conditions
             1543      are satisfied:
             1544          (a) A dividend may not be paid that would reduce the insurer's total adjusted capital below


             1545      the insurer's company action level RBC as defined in Subsection 31A-17-601 [(7)](8)(b).
             1546          (b) Except as to excess surplus, or unless the commissioner issues an order allowing
             1547      otherwise, a dividend may not be paid that exceeds the insurer's net gain from operations or net
             1548      income for the period ending December 31 of the preceding year.
             1549          (2) Title 67, Chapter 4a, Unclaimed Property Act, applies to unclaimed dividends and
             1550      distributions in insurance corporations.
             1551          Section 12. Section 31A-5-703 is amended to read:
             1552           31A-5-703. Nonrenewals, cancellations, or revisions of ceded reinsurance
             1553      agreements.
             1554          (1) (a) A nonrenewal, cancellation, or revision of ceded reinsurance agreements is not
             1555      subject to the reporting requirements of Section 31A-5-701 if:
             1556          (i) the nonrenewal, cancellation, or revision is not material; or
             1557          (ii) with respect to a property and casualty business, the insurer's total ceded written
             1558      premium [represents], on an annualized basis, is less than 10% of its total written premium for
             1559      direct and assumed business; or
             1560          (iii) with respect to a life, annuity, and [disability] accident and health business, the total
             1561      reserve credit taken for business ceded [represents], on an annualized basis, is less than 10% of the
             1562      statutory reserve requirement prior to a cession.
             1563          (b) For purposes of this part, a material nonrenewal, cancellation, or revision is one that
             1564      affects:
             1565          (i) with respect to a property and casualty business:
             1566          (A) more than 50% of the insurer's total ceded written premium; or
             1567          (B) more than 50% of the insurer's total ceded indemnity and loss adjustment reserves;
             1568          (ii) with respect to a life, annuity, and [disability] accident and health business, more than
             1569      50% of the total reserve credit taken for business ceded, on an annualized basis, as indicated in the
             1570      insurer's most recent annual statement; or
             1571          (iii) with respect to either property and casualty or life, annuity, or [disability] accident and
             1572      health business[, is either of the following events]:
             1573          (A) an authorized reinsurer representing more than 10% of a total cession is replaced by
             1574      one or more unauthorized reinsurers; or
             1575          (B) previously established collateral requirements have been reduced or waived as respects


             1576      one or more unauthorized reinsurers representing collectively more than 10% of a total cession.
             1577          (2) (a) The following information is required to be disclosed in any report filed pursuant
             1578      to Section 31A-5-701 of a material nonrenewal, cancellation, or revision of a ceded reinsurance
             1579      agreement:
             1580          (i) the effective date of the nonrenewal, cancellation, or revision;
             1581          (ii) the description of the transaction with an identification of the initiator of the
             1582      transaction;
             1583          (iii) the purpose of, or reason for the transaction; and
             1584          (iv) if applicable, the identity of the replacement reinsurers.
             1585          (b) (i) Insurers are required to report all material nonrenewals, cancellations, or revisions
             1586      of ceded reinsurance agreements on a nonconsolidated basis unless the insurer:
             1587          (A) is part of a consolidated group of insurers that uses a pooling arrangement or 100%
             1588      reinsurance agreement that affects the solvency and integrity of the insurer's reserves; and
             1589          (B) ceded substantially all of its direct and assumed business to the pool.
             1590          (ii) An insurer is considered to have ceded substantially all of its direct and assumed
             1591      business to a pool if:
             1592          (A) the insurer has less than $1,000,000 total direct plus assumed written premiums during
             1593      a calendar year that are not subject to a pooling arrangement; and
             1594          (B) the net income of the business not subject to the pooling arrangement represents less
             1595      than 5% of the insurer's capital and surplus.
             1596          Section 13. Section 31A-6a-102 is amended to read:
             1597           31A-6a-102. Scope and purposes.
             1598          (1) The purposes of this chapter are to:
             1599          (a) create a legal framework within which service contracts may be sold in this state;
             1600          (b) encourage innovation in the marketing and development of more economical and
             1601      effective ways of providing services under service contracts, while placing the risk of innovation
             1602      on the service contract providers rather than on consumers; and
             1603          (c) permit and encourage fair and effective competition among different systems of
             1604      providing and paying for these services.
             1605          (2) Service contracts may not be issued, sold, or offered for sale in this state unless the
             1606      provider has complied with this chapter. [Subsections 31A-1-103 (3)(i), (j), and (k) limit the


             1607      application of this chapter to certain persons engaged in a limited manner in providing extended
             1608      warranties or service contracts.]
             1609          (3) This chapter applies only to a service contract not otherwise exempted from this title
             1610      by Section 31A-1-103 .
             1611          Section 14. Section 31A-6a-110 is amended to read:
             1612           31A-6a-110. Rulemaking.
             1613          (1) Pursuant to Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             1614      commissioner may make rules necessary to assist in the enforcement of this chapter.
             1615          (2) The commissioner may by rule or order, after a hearing, exempt certain service contract
             1616      providers or service contract providers for a specific class of service contracts that are not
             1617      otherwise exempt under [Subsections] Subsection 31A-1-103 (3)[(i), (j), or (k),] from any provision
             1618      of this title. The commissioner may order substitute requirements on a finding that a particular
             1619      provision of this title is not necessary for the protection of the public or that the substitute
             1620      requirement is reasonably certain to provide equivalent protection to the public.
             1621          Section 15. Section 31A-8-101 is amended to read:
             1622           31A-8-101. Definitions.
             1623          For purposes of this chapter:
             1624          (1) "Basic health care services" means:
             1625          (a) emergency care[,];
             1626          (b) inpatient hospital and physician care[,];
             1627          (c) outpatient medical services[,]; and
             1628          (d) out-of-area coverage.
             1629          (2) "Director of health" means the executive director of the Department of Health or his
             1630      authorized representative.
             1631          (3) "Enrollee" means [any] an individual:
             1632          (a) who has entered into a contract with [a health maintenance] an organization for health
             1633      care; or
             1634          (b) in whose behalf [such] an arrangement for health care has been made.
             1635          (4) "Health care" [means professional or personal services, facilities, equipment, devices,
             1636      supplies, or medicine, intended for use in the diagnosis, treatment, mitigation, or prevention of any
             1637      human ailment or impairment] is as defined in Section 31A-1-301 .


             1638          (5) "Health maintenance organization" means any person[,]:
             1639          (a) other than:
             1640          (i) an insurer licensed under Chapter 7; or
             1641          (ii) an individual who contracts to render professional or personal services that [he] the
             1642      individual directly performs [himself, which:]; and
             1643          (b) that:
             1644          [(a)] (i) furnishes at a minimum, either directly or through arrangements with others, basic
             1645      health care services to an enrollee in return for prepaid periodic payments agreed to in amount
             1646      prior to the time during which the health care may be furnished; and
             1647          [(b)] (ii) is obligated to the enrollee to arrange for or to directly provide available and
             1648      accessible health care.
             1649          (6) (a) "Limited health plan" means, except as limited under Subsection (6)(b), any person
             1650      who furnishes, either directly or through arrangements with others, [the] services:
             1651          (i) of:
             1652          (A) dentists[,];
             1653          (B) optometrists[,];
             1654          (C) physical therapists[,];
             1655          (D) podiatrists[,];
             1656          (E) psychologists[,];
             1657          (F) physicians[,];
             1658          (G) chiropractic physicians[,];
             1659          (H) naturopathic physicians[,];
             1660          (I) osteopathic physicians[,];
             1661          (J) social workers[,];
             1662          (K) family counselors[,];
             1663          (L) other health care providers[,]; or
             1664          (M) reasonable combinations of [these,] the services described in this Subsection (1)(a)(i);
             1665          (ii) to an enrollee;
             1666          (iii) in return for prepaid periodic payments agreed to in amount prior to the time during
             1667      which the services may be furnished[,]; and [who is]
             1668          (iv) for which the person is obligated to the enrollee to arrange for or directly provide


             1669      available and accessible the services described in this Subsection (6)(a).
             1670          (b) "Limited health plan" does not include:
             1671          (i) a health maintenance organization;
             1672          (ii) an insurer licensed under Chapter 7; or
             1673          (iii) an individual who contracts to render professional or personal services that he
             1674      performs himself.
             1675          (7) (a) "Nonprofit organization" or "nonprofit corporation" means an organization no part
             1676      of the income of which is distributable to its members, trustees, or officers, or a nonprofit
             1677      cooperative association, except in a manner allowed under Section 31A-8-406 .
             1678          (b) "Nonprofit health maintenance organization" and "nonprofit limited health plan" are
             1679      used when referring specifically to one of the types of organizations with "nonprofit" status.
             1680          (8) "Organization" means health maintenance organization and limited health plan, unless
             1681      used in the context of:
             1682          (a) "organization permit," in which case see Sections 31A-8-204 and 31A-8-206 [,]; or
             1683      [unless used in the context of]
             1684          (b) "organization expenses," in which case see Section 31A-8-208 .
             1685          (9) "Participating provider" means a provider as defined in Subsection (10) who, under [an
             1686      express or implied] a contract with the health maintenance organization, has agreed to provide
             1687      health care services to enrollees with an expectation of receiving payment, directly or indirectly,
             1688      from the health maintenance organization, other than copayment.
             1689          (10) "Provider" means any person who furnishes health care directly to the enrollee and
             1690      who is licensed or otherwise authorized to furnish this care in this state.
             1691          (11) "Uncovered expenditures" means the costs of health care services that are covered by
             1692      an organization for which an enrollee is liable in the event of the organization's insolvency.
             1693          (12) "Unusual or infrequently used health services" means those health services which are
             1694      projected to involve fewer than 10% of the organization's enrollees' encounters with providers,
             1695      measured on an annual basis over the organization's entire enrollment.
             1696          Section 16. Section 31A-8-103 (Effective 04/30/01) is amended to read:
             1697           31A-8-103 (Effective 04/30/01). Applicability to other provisions of law.
             1698          (1) (a) Except for exemptions specifically granted under this title, [organizations are] an
             1699      organization is subject to regulation under all of the provisions of this title.


             1700          (b) Notwithstanding any provision of this title, [organizations] an organization licensed
             1701      under this chapter [are] is:
             1702          (i) wholly exempt from [the provisions of] Chapters 7, 9, 10, 11, 12, 13, 19, and 28[. In
             1703      addition, organizations are] and not subject to:
             1704          [(a)] (A) Chapter 3, except for Part I;
             1705          [(b)] (B) Section 31A-4-107 ;
             1706          [(c)] (C) Chapter 5, except for provisions specifically made applicable by this chapter;
             1707          [(d)] (D) Chapter 14, except for provisions specifically made applicable by this chapter;
             1708          [(e) Chapters] (E) Chapter 17 [and 18], except:
             1709          (I) Part VI; or
             1710          (II) as made applicable by the commissioner by rule consistent with this chapter; [and]
             1711          (F) Chapter 18, except as made applicable by the commissioner by rule consistent with this
             1712      chapter; and
             1713          [(f)] (G) Chapter 22, except for Parts VI, VII, and XII.
             1714          (2) The commissioner may by rule waive other specific provisions of this title that [he] the
             1715      commissioner considers inapplicable to health maintenance organizations or limited health plans,
             1716      upon a finding that [such a] the waiver will not endanger the interests of:
             1717          (a) enrollees[,];
             1718          (b) investors[,]; or
             1719          (c) the public.
             1720          (3) Title 16, Chapter 6a, Utah Revised Nonprofit Corporation Act, and Title 16, Chapter
             1721      10a, Utah Revised Business Corporation Act, do not apply to [organizations] an organization
             1722      except as specifically made applicable by:
             1723          (a) this chapter;
             1724          (b) a provision referenced under this chapter; or
             1725          (c) a rule adopted by the commissioner to deal with corporate law issues of health
             1726      maintenance organizations that are not settled under this chapter.
             1727          (4) (a) Whenever in this chapter [a section, subsection, or paragraph of], Chapter 5, or
             1728      Chapter 14 is made applicable to [organizations] an organization, the application is:
             1729          (i) of those provisions that apply to a mutual [corporations] corporation if the organization
             1730      is nonprofit; and


             1731          (ii) of those that apply to a stock [corporations] corporation if the organization is for profit.
             1732      [Whenever a provision under]
             1733          (b) When Chapter 5 or 14 is made applicable to [organizations] an organization under this
             1734      chapter, "mutual" means nonprofit organization.
             1735          (5) Solicitation of enrollees by an organization is not a violation of any provision of law
             1736      relating to solicitation or advertising by health professionals if that solicitation is made in
             1737      accordance with [the provisions of]:
             1738          (a) this chapter; and
             1739          (b) Chapter 23.
             1740          (6) Nothing in this title prohibits any health maintenance organization from meeting the
             1741      requirements of any federal law that enables the health maintenance organization to:
             1742          (a) receive federal funds; or [to]
             1743          (b) obtain or maintain federal qualification status.
             1744          (7) Except as provided in Section 31A-8-501 , [organizations are] an organization is exempt
             1745      from statutes in this title or department rules that restrict or limit [their] its freedom of choice in
             1746      contracting with or selecting health care providers, including Section 31A-22-618 .
             1747          (8) [Organizations are exempt from] the assessment or payment of premium taxes imposed
             1748      by Sections 59-9-101 through 59-9-104 .
             1749          Section 17. Section 31A-8-205 is amended to read:
             1750           31A-8-205. Organization permit and certificate of incorporation.
             1751          (1) Section 31A-5-204 applies to the formation of organizations, except that "Section
             1752      31A-5-211 " in Subsection 31A-5-204 (5) shall be read "Section 31A-8-209 ."
             1753          (2) In addition to the requirements of Section 31A-5-204 , the application for a permit shall
             1754      include a description of the initial locations of facilities where health care will be available to
             1755      enrollees, the hours during which various services will be provided, the types of health care
             1756      personnel to be used at each location and the approximate number of each personnel type to be
             1757      available at each location, the methods to be used to monitor the quality of health care furnished,
             1758      the method of resolving grievances initiated by enrollees or providers, the method used to give
             1759      enrollees an opportunity to participate in matters of policy, the medical records system, and the
             1760      method for documentation of utilization of health care by persons insured.
             1761          Section 18. Section 31A-8-209 is amended to read:


             1762           31A-8-209. Minimum capital or minimum permanent surplus.
             1763          (1) [Health] A health maintenance [organizations] organization being organized or
             1764      operating under this chapter shall have and maintain a minimum capital or minimum permanent
             1765      surplus of $100,000.
             1766          [(2) Limited health plans being organized or operating under this chapter shall have and
             1767      maintain a minimum capital or permanent surplus in an amount determined under Subsection
             1768      31A-8-210 (9).]
             1769          [(3) For purposes of measuring compliance with Section 31A-8-210 , to the extent an
             1770      organization has capital or permanent surplus in excess of its required minimum capital, or in
             1771      excess of its required minimum permanent surplus, the excess shall be counted as surplus.]
             1772          (2) (a) The minimum required capital or minimum permanent surplus for a limited health
             1773      plan:
             1774          (i) is at least $10,000; and
             1775          (ii) may not exceed $100,000.
             1776          (b) The initial minimum required capital or minimum permanent surplus for a limited
             1777      health plan required by Subsection (2)(a) shall be set by the commissioner, after:
             1778          (i) a hearing; and
             1779          (ii) consideration of:
             1780          (A) the services to be provided by the limited health plan;
             1781          (B) the size and geographical distribution of the population the limited health plan
             1782      anticipates serving;
             1783          (C) the nature of the limited health plan's arrangements with providers; and
             1784          (D) the arrangements, agreements, and relationships in place or reasonably anticipated with
             1785      respect to:
             1786          (I) insolvency insurance;
             1787          (II) reinsurance;
             1788          (III) lenders subordinating to the interests of enrollees and trade creditors;
             1789          (IV) personal and corporate financial guarantees;
             1790          (V) provider withholds and assessments;
             1791          (VI) surety bonds;
             1792          (VII) hold harmless agreements in provider contracts; and


             1793          (VIII) other arrangements, agreements, and relationships impacting the security of
             1794      enrollees.
             1795          (c) Upon a material change in the scope or nature of a limited health plan's operations, the
             1796      commissioner may, after a hearing, alter the limited health plan's minimum required capital or
             1797      minimum permanent surplus.
             1798          (3) Before beginning operations, a health maintenance organization licensed under this
             1799      chapter shall have total adjusted capital in excess of the company action level RBC as defined in
             1800      Subsection 31A-17-601 (8)(b).
             1801          (4) Each health maintenance organization authorized to do business in this state shall
             1802      maintain assets in an amount equal to the total of the health maintenance organization's:
             1803          (a) liabilities;
             1804          (b) minimum capital or minimum permanent surplus required by Subsection (1) or (2); and
             1805          (c) the company action level RBC as defined in Subsection 31A-17-601 (8)(b).
             1806          (5) As a prerequisite to receiving an original certificate of authority to do business in this
             1807      state, a health maintenance organization shall have initial surplus at least $400,000 in excess of
             1808      the capital and surplus required by Subsection (4).
             1809          [(4)] (6) The commissioner may allow the minimum capital or permanent surplus account
             1810      of an organization to be designated by some other name.
             1811          (7) A pattern of persistent deviation from the accounting and investment standards under
             1812      this section may be grounds for the commissioner to find that the one or more persons with
             1813      authority to make the organization's accounting or investment decisions are incompetent for
             1814      purposes of Subsection 31A-5-410 (3).
             1815          Section 19. Section 31A-8-211 is amended to read:
             1816           31A-8-211. Deposit.
             1817          (1) Except as provided in Subsection (2), each organization authorized in this state shall
             1818      maintain a deposit with the commissioner under Section 31A-2-206 in an amount equal to the sum
             1819      of:
             1820          (a) the organization's minimum capital or minimum permanent surplus [plus] requirement
             1821      of Subsection 31A-8-209 (1) or (2); and
             1822          (b) 50% of [compulsory surplus] the company action level RBC as defined in Subsection
             1823      31A-17-601 (8)(b).


             1824          (2) [A] (a) After a hearing the commissioner may exempt a health maintenance
             1825      organization from the deposit requirement of Subsection (1) if:
             1826          (i) the commissioner determines that the enrollees' interests are adequately protected;
             1827          (ii) the health maintenance organization [which] has been continuously authorized to do
             1828      business in this state for at least five years[,]; and [which]
             1829          (iii) the health maintenance organization has $5,000,000 surplus [over and above] in
             1830      excess of its [compulsory surplus in an amount specified in Subsection (3), may, after a hearing,
             1831      be exempted from the deposit requirement of Subsection (1) if the commissioner determines that
             1832      the enrollees' interests are adequately protected] company action level RBC as defined in
             1833      Subsection 31A-17-601 (8)(b).
             1834          (b) The commissioner may rescind [such] an exemption given under Subsection (2)(a).
             1835          [(3) No health maintenance organization may be exempted under Subsection (2) from the
             1836      deposit requirement unless:]
             1837          [(a) disregarding assets described in Subsection 31A-8-210 (8)(a), the health maintenance
             1838      organization has $1,000,000 of surplus in excess of the amount required to satisfy its compulsory
             1839      surplus requirement; or]
             1840          [(b) the health maintenance organization has $5,000,000 surplus in excess of the amount
             1841      required to satisfy its compulsory surplus requirement.]
             1842          Section 20. Section 31A-8-213 is amended to read:
             1843           31A-8-213. Certificate of authority.
             1844          (1) [The] An organization may apply for a certificate of authority at any time prior to the
             1845      expiration of its organization permit. The application shall include:
             1846          (a) a detailed statement by a principal officer about any material changes that have taken
             1847      place or are likely to take place in the facts on which the issuance of the organization permit was
             1848      based[,]; and
             1849          (b) if any material changes are proposed in the business plan, the information about the
             1850      changes that would be required if an organization permit were then being applied for.
             1851          (2) The commissioner shall issue a certificate of authority, if [he] the commissioner finds
             1852      that:
             1853          (a) the [organization satisfies] organization's capital and surplus complies with the
             1854      requirements of [Sections] Section 31A-8-209 [and 31A-8-210 ] as to the operations proposed


             1855      under the new certificate of authority;
             1856          (b) there is no basis for revoking the organization permit under Section 31A-8-207 ;
             1857          (c) the deposit required by Section 31A-8-211 has been made;
             1858          (d) the organization satisfies the requirements of Section 31A-8-104 ; and
             1859          [(e) the organization satisfies the surplus requirement of Subsection 31A-8-210 (4) or (5),
             1860      whichever applies; and]
             1861          [(f)] (e) all other applicable requirements of the law have been met.
             1862          (3) The certificate of authority shall specify any limits imposed by the commissioner upon
             1863      the organization's business or methods of operation, including the general types of health care
             1864      services the organization is authorized to provide.
             1865          (4) Upon the issuance of the certificate of authority:
             1866          (a) the board shall authorize and direct the issuance of certificates for shares, bonds, or
             1867      notes subscribed to under the organization permit, and of insurance policies upon qualifying
             1868      applications obtained under the organization permit; and
             1869          (b) the commissioner shall authorize the release to the organization of all funds held in
             1870      escrow under Section 31A-5-208 , as adopted by Section 31A-8-206 .
             1871          (5) (a) An organization may at any time apply to the commissioner for a new or amended
             1872      certificate of authority altering the limits on its business or methods of operation. The application
             1873      shall contain or be accompanied by that information reasonably required by the commissioner
             1874      under Subsections 31A-5-204 (2) and 31A-8-205 (2). The commissioner shall issue the new
             1875      certificate as requested if [he] the commissioner finds that the organization continues to satisfy the
             1876      requirements specified under Subsection (2).
             1877          (b) If the commissioner issues a summary order under Section 31A-27-201 against an
             1878      organization, [he] the commissioner may also revoke the organization's certificate and issue a new
             1879      one with any limitation he considers necessary.
             1880          Section 21. Section 31A-8-402 is amended to read:
             1881           31A-8-402. Contract cancellation or nonrenewal.
             1882          (1) An enrollee may not be cancelled or nonrenewed except for:
             1883          [(a) failure to pay the charge for the enrollment or coverage;]
             1884          [(b) violation of reasonable, published policies of the organization;]
             1885          [(c) unreasonable refusal to comply with care or treatment prescribed by the health care


             1886      personnel of the organization; or]
             1887          [(d) such other reasons as the commissioner may specify by rule.]
             1888          (a) nonpayment of a premium or contribution;
             1889          (b) a fraudulent act committed by the plan sponsor;
             1890          (c) a violation of participation or contribution rules;
             1891          (d) termination of the plan where the issuer is ceasing to offer coverage in the market
             1892      according to:
             1893          (i) regulations required under the Health Insurance Portability and Accountability Act of
             1894      1996 42 U.S.C. 1301, et seq.; and
             1895          (ii) Subsections 31A-2-201 (3), 31A-4-115 (8), and 31A-30-106 (1)(k); or
             1896          (e) the enrollee moving to outside of the service area.
             1897          (2) Every organization authorized under this chapter shall provide its enrollees an
             1898      opportunity, at least once each year, to:
             1899          (a) enroll again with the organization; or
             1900          (b) choose another source through which they may secure health care services or benefits.
             1901          (3) This section does not prohibit reasonable underwriting classifications for the purpose
             1902      of establishing rates nor does it prohibit experience rating.
             1903          (4) (a) The requirement in [Part VII of] Chapter 22, Part VII, Group Accident and Health
             1904      Insurance, that a conversion policy be available for certain persons who are no longer entitled to
             1905      group coverage does not require an organization to provide a conversion policy to a person
             1906      residing outside of the organization's service area.
             1907          (b) The commissioner may, by rule or order, define the scope of an organization's service
             1908      area.
             1909          Section 22. Section 31A-8-407 is amended to read:
             1910           31A-8-407. Written contracts -- Limited liability of enrollee.
             1911          (1) (a) Every contract between [a health maintenance] an organization and a participating
             1912      provider of health care services shall be in writing and shall set forth that [in the event the health
             1913      maintenance] if the organization:
             1914          (i) fails to pay for health care services as set forth in the contract, the enrollee [shall] may
             1915      not be liable to the provider for any sums owed by the [health maintenance] organization[.]; and
             1916          (ii) the organization becomes insolvent, the rehabilitator or liquidator may require the


             1917      participating provider of health care services to:
             1918          (A) continue to provide health care services under the contract between the participating
             1919      provider and the organization until the later of:
             1920          (I) 90 days from the date of the filing of a petition for rehabilitation or the petition for
             1921      liquidation; or
             1922          (II) the date the term of the contract ends; and
             1923          (B) subject to Subsection (1)(c), reduce the fees the participating provider is otherwise
             1924      entitled to receive from the organization under the contract between the participating provider and
             1925      the organization during the time period described in Subsection (1)(b)(i).
             1926          (b) If the conditions of Subsection (1)(a)(ii)(b) are met, the participating provider shall:
             1927          (i) accept the reduced payment as payment in full; and
             1928          (ii) relinquish the right to collect additional amounts from the insolvent organization's
             1929      enrollee.
             1930          (c) Notwithstanding Subsection (1)(a)(ii)(b):
             1931          (i) the rehabilitator or liquidator may not reduce a fee to less than 75% of the regular fee
             1932      set forth in the participating provider contract; and
             1933          (ii) the enrollee shall continue to pay the same copayments, deductibles, and other
             1934      payments for services received from the participating provider that the enrollee was required to pay
             1935      before the filing of:
             1936          (A) the petition for reorganization; or
             1937          (B) the petition for liquidation.
             1938          (2) [In the event that the participating provider contract has not been reduced to writing
             1939      as required by Subsection (1) or that the contract fails to contain the required prohibition, the] A
             1940      participating provider [shall] may not collect or attempt to collect from the enrollee sums owed
             1941      by the [health maintenance] organization or the amount of the regular fee reduction authorized
             1942      under Subsection (1)(a)(ii) if the participating provider contract:
             1943          (a) is not in writing as required in Subsection (1); or
             1944          (b) fails to contain the language required by Subsection (1).
             1945          (3) (a) [No participating provider, or agent, trustee, or assignee thereof] A person listed
             1946      in Subsection (3)(b) may not bill or maintain any action at law against an enrollee to collect:
             1947          (i) sums owed by the [health maintenance] organization[.]; or


             1948          (ii) the amount of the regular fee reduction authorized under Subsection (1)(a)(ii).
             1949          (b) Subsection (3)(a) applies to:
             1950          (i) a participating provider;
             1951          (ii) an agent;
             1952          (iii) a trustee; or
             1953          (iv) an assignee of a person described in Subsections (3)(b)(i) through (iii).
             1954          Section 23. Section 31A-8-408 is amended to read:
             1955           31A-8-408. Organizations offering point of service products.
             1956          Effective July 1, 1991, a health maintenance [organizations] organization offering products
             1957      that permit members the option of obtaining covered services from a noncontracted provider,
             1958      which is a point of service or [POS] point of sale product, shall comply with the [following]
             1959      requirements[:] of Subsections (1) through (7).
             1960          (1) The cost of an encounter with a noncontracted provider is considered an uncovered
             1961      expenditure as defined in Section 31A-8-101 [for purposes of Section 31A-8-210 ].
             1962          (2) Any organization offering to sell point of service products shall report the number of
             1963      encounters with contracted and noncontracted providers to the commissioner on a monthly basis.
             1964      The commissioner shall define the form, content, and due date of the report and shall require
             1965      audited reports of the information on a yearly basis.
             1966          (3) An organization may not offer point of service products unless it has secured contracts
             1967      with participating providers located within the organization's service area for each covered service
             1968      other than those unusual or infrequently used health services that are not available from the
             1969      organization's health care providers.
             1970          (4) An organization may not enroll members who do not work or reside in the service area
             1971      as defined by rule, except this Subsection (4) does not apply to dependents of enrollees.
             1972          (5) Any organization [which] that exceeds the 10% limit of unusual or infrequently used
             1973      health services as defined in Section 31A-8-101 is subject to a forfeiture of up to $50 per
             1974      encounter.
             1975          (6) [Organizations] An organization shall disclose to employees and members the
             1976      existence of the 10% limit at or prior to enrollment.
             1977          (7) The commissioner shall hold hearings and adopt rules providing any additional
             1978      limitations or requirements necessary to secure the public interest in conformity with this section.


             1979          Section 24. Section 31A-9-212 (Effective 04/30/01) is amended to read:
             1980           31A-9-212 (Effective 04/30/01). Separate accounts and subsidiaries.
             1981          (1) Except as provided in Subsections (2) and (3), Sections 31A-5-217 and 31A-5-218
             1982      apply to separate accounts and subsidiaries of fraternals. If a fraternal issues contracts on a variable
             1983      basis, Subsections 31A-22-902 (2) and (6) and 31A-9-209 (2) do not apply, except that Subsection
             1984      31A-9-209 (2) applies to any benefits contained in the variable contracts which are fixed or
             1985      guaranteed dollar amounts.
             1986          (2) If a fraternal engages in any insurance business other than life, [disability] accident
             1987      and health, annuities, property, or liability insurance, it shall do so through a subsidiary under
             1988      Section 31A-5-218 .
             1989          (3) (a) A local lodge may incorporate under Title 16, Chapter 6a, Utah Revised Nonprofit
             1990      Corporation Act, or the corresponding law of the state where it is located, to carry out the
             1991      noninsurance activities of the local lodge.
             1992          (b) Corporations may be formed under Title 16, Chapter 6a, Utah Revised Nonprofit
             1993      Corporation Act, to implement Subsection 31A-9-602 (2).
             1994          Section 25. Section 31A-11-102 is amended to read:
             1995           31A-11-102. Activities of motor clubs.
             1996          (1) Motor clubs authorized under this chapter may provide or arrange for the following
             1997      services:
             1998          (a) service as agent or broker in obtaining insurance coverage from authorized insurers,
             1999      subject to Chapter 23;
             2000          (b) provision of, or payment for, legal services and costs in the defense of traffic offenses
             2001      or other legal problems connected with the ownership or use of a motor vehicle, provided the
             2002      maximum amount payable for any one incident is not more than 100 times the [the] annual charge
             2003      for the motor club contract;
             2004          (c) guaranteed arrest bond certificates and cash bond guarantees as specified under Section
             2005      31A-11-112 ;
             2006          (d) payment of specified expenses resulting from an automobile accident, other than
             2007      expenses for personal injury or for damage to an automobile, provided the maximum amount
             2008      payable for any one accident is not more than 100 times the annual charge for the motor club
             2009      contract;


             2010          (e) towing and emergency road services and theft services; and
             2011          (f) any services relating to travel not involving the transfer and distribution of risk.
             2012          (2) Unless they are also insurers under Chapter 5 or 14, motor clubs may not provide any
             2013      liability or physical damage insurance or insurance of life or [disability] accident and health,
             2014      whether or not related to motor vehicles.
             2015          (3) If a motor club is a separate division of a corporation, the activities of the other
             2016      divisions of the corporation are not limited by this section, if the motor club division complies with
             2017      Subsection 31A-11-106 (3).
             2018          Section 26. Section 31A-14-201 is amended to read:
             2019           31A-14-201. Application.
             2020          [Any] (1) (a) An incorporated person, other than a foreign health maintenance
             2021      organization[, including the United States branch of an alien insurer], authorized as an insurer in
             2022      another jurisdiction in the United States may apply under this section for a certificate of authority
             2023      as an insurer in this state. [This insurer]
             2024          (b) An alien insurer that is incorporated may apply under this section for a certificate of
             2025      authority as an insurer in this state.
             2026          (2) An applicant for a certificate of authority under this section shall:
             2027          (a) use the forms prescribed by the commissioner[. The applicant shall]; and
             2028          (b) provide the information and documents the commissioner requests, including the
             2029      following[, unless the commissioner excludes any of them because they will not be helpful in
             2030      making the decision of whether to issue a certificate of authority]:
             2031          [(1)] (i) a copy of the applicant's articles and bylaws;
             2032          [(2)] (ii) financial statements for the most recent complete fiscal year, with an explanation
             2033      of the bases of all valuations and computations, in the detail reasonably required by the
             2034      commissioner;
             2035          [(3)] (iii) a summary, as detailed as the commissioner reasonably requires, of the
             2036      applicant's financial history for:
             2037          (A) the preceding ten years[,]; or [for]
             2038          (B) the entire period of the applicant's existence if less than ten years;
             2039          [(4)] (iv) [the names of the] for each of the applicant's current or proposed directors and
             2040      principal officers [and their addresses and occupations]:


             2041          (A) the name of the director or principal officer;
             2042          (B) the address of the director or principal officer; and
             2043          (C) the occupation for the preceding ten years of the director or principal officer;
             2044          [(5)] (v) for an alien insurer[,]:
             2045          (A) the name of its United States manager, the manager's addresses and occupations for
             2046      the preceding ten years; and
             2047          (B) if the manager is a corporation, the names, addresses, and occupations of its directors
             2048      and principal officers, and its most recent detailed financial statements;
             2049          [(6)] (vi) a schedule listing:
             2050          [(a)] (A) all jurisdictions in which applicant has done or has been authorized to conduct
             2051      an insurance business during the preceding ten years;
             2052          [(b)] (B) all jurisdictions in which the applicant has applied for authorization to conduct
             2053      an insurance business during the preceding ten years, and the dates and results of those
             2054      applications;
             2055          [(c)] (C) all jurisdictions from which the applicant has withdrawn from conducting an
             2056      insurance business during the preceding ten years, and the reasons for its withdrawals; and
             2057          [(d)] (D) the name of and the circumstances surrounding any officer, director, or
             2058      controlling shareholder of the corporation ever being subject to a:
             2059          [(i)] (I) felony indictment or conviction; or
             2060          [(ii)] (II) civil, criminal, or administrative action alleging fraud;
             2061          [(7)] (vii) a summary description of the applicant's present business operations, including
             2062      the coverages written and the states and countries in which it does business;
             2063          [(8)] (viii) a list of any statements, reports, or other documents that have, within the last
             2064      five years, been generally transmitted or distributed to or among the insurer's creditors,
             2065      shareholders, members, subscribers, or policyholders;
             2066          [(9)] (ix) if the applicant has been in the insurance business for less than ten years, a
             2067      summary of the past and a projection of the anticipated operating results at the end of each year
             2068      of the first ten years of operation, based, where known, on actual data and otherwise on reasonable
             2069      assumptions of loss experience, premium and other income, operating expenses, and acquisition
             2070      costs;
             2071          [(10)] (x) a statement that organizational and promotional expenses have been paid, and


             2072      that organizational procedures required by the insurer's domiciliary authority are complete;
             2073          [(11)] (xi) a statement from the domiciliary regulatory authority and the state of entry into
             2074      the United States, if any, that so far as known, the applicant is sound and there are no legitimate
             2075      objections to its proposed operations in this state;
             2076          [(12)] (xii) the plan for conducting an insurance business in this state, including:
             2077          [(a)] (A) the geographical area where business is to be conducted;
             2078          [(b)] (B) the types of insurance to be written;
             2079          [(c)] (C) the proposed general marketing methods;
             2080          [(d)] (D) the proposed method for establishing premium rates; and
             2081          [(e)] (E) copies of the policy and application forms to be used in this state;
             2082          [(13)] (xiii) any other information the commissioner reasonably requires;
             2083          [(14)] (xiv) authorization to the commissioner to make inquiry of any person about the
             2084      applicant, its manager under a management contract, its attorney in fact, its general agents, and any
             2085      of the officers, directors, or shareholders of any of them designated by the commissioner; and
             2086          [(15)] (xv) written agreement by the applicant and any other designated persons that in the
             2087      absence of actual malice, no communication made in response to any inquiry under Subsection
             2088      [(14)] (2)(xiv) will subject the person making it to an action for damages for defamation brought
             2089      by the applicant, the designated person, or a legal representative of either.
             2090          (3) No action for damages for defamation lies even in the absence of this agreement.
             2091          (4) Notwithstanding Subsection (2), the commissioner may exempt an applicant for a
             2092      certificate of authority from providing the information described in Subsection (2) if the
             2093      commissioner finds that the information will not be helpful in making the decision of whether to
             2094      issue a certificate of authority.
             2095          Section 27. Section 31A-14-212 is amended to read:
             2096           31A-14-212. Changes in business plan.
             2097          (1) Within two years after the initial issuance of a certificate of authority to a foreign
             2098      insurer by its domiciliary jurisdiction, the insurer may not substantially deviate from its business
             2099      plan under Subsection 31A-14-201 [(12)] (2)(xii) unless notice of the proposed action is filed with
             2100      the commissioner 30 days in advance of the proposed effective date.
             2101          (2) If the commissioner believes that the change proposed under Subsection (1) would be
             2102      contrary to Utah law or to the interests of insureds, creditors, or the public, he may prohibit the


             2103      application of the change to Utah. In his prohibitory order he shall explain why he has prohibited
             2104      the change.
             2105          (3) If the commissioner finds after a hearing that the application of the proposed change
             2106      outside Utah would endanger the interests of insureds, creditors, or the public in Utah, the
             2107      commissioner may revoke the insurer's certificate of authority unless the insurer agrees not to make
             2108      the change.
             2109          Section 28. Section 31A-15-103 is amended to read:
             2110           31A-15-103. Surplus lines insurance -- Unauthorized insurers.
             2111          (1) Notwithstanding Section 31A-15-102 , a foreign insurer that has not obtained a
             2112      certificate of authority to do business in this state under Section 31A-14-202 may negotiate for and
             2113      make insurance contracts with persons in this state and on risks located in this state, subject to the
             2114      limitations and requirements of this section.
             2115          (2) For contracts made under this section, the insurer may, in this state, inspect the risks
             2116      to be insured, collect premiums and adjust losses, and do all other acts reasonably incidental to the
             2117      contract, through employees or through independent contractors.
             2118          (3) (a) Subsections (1) and (2) do not permit any person to solicit business in this state on
             2119      behalf of an insurer that has no certificate of authority.
             2120          (b) Any insurance placed with a nonadmitted insurer shall be placed with a surplus lines
             2121      broker licensed under Chapter 23.
             2122          (c) The commissioner may by rule prescribe how a surplus lines broker may:
             2123          (i) pay or permit the payment, commission, or other remuneration on insurance placed by
             2124      the surplus lines broker under authority of the surplus lines broker's license to one holding a license
             2125      to act as an insurance agent; and
             2126          (ii) advertise the availability of the surplus lines broker's services in procuring, on behalf
             2127      of persons seeking insurance, contracts with nonadmitted insurers.
             2128          (4) For contracts made under this section, nonadmitted insurers are subject to Sections
             2129      31A-23-302 and 31A-26-303 and the rules adopted under those sections.
             2130          (5) A nonadmitted insurer may not issue workers' compensation insurance coverage to
             2131      employers located in this state, except for stop loss coverages issued to employers securing
             2132      workers' compensation under Subsection 34A-2-201 (3).
             2133          (6) (a) The commissioner may by rule prohibit making contracts under Subsection (1) for


             2134      a specified class of insurance if authorized insurers provide an established market for the class in
             2135      this state that is adequate and reasonably competitive.
             2136          (b) The commissioner may by rule place restrictions and limitations on and create special
             2137      procedures for making contracts under Subsection (1) for a specified class of insurance if there
             2138      have been abuses of placements in the class or if the policyholders in the class, because of limited
             2139      financial resources, business experience, or knowledge, cannot protect their own interests
             2140      adequately.
             2141          (c) The commissioner may prohibit an individual insurer from making any contract under
             2142      Subsection (1) and all insurance agents and brokers from dealing with the insurer if:
             2143          (i) the insurer has willfully violated this section, Section 31A-4-102 , 31A-23-302 , or
             2144      31A-26-303 , or any rule adopted under any of these sections;
             2145          (ii) the insurer has failed to pay the fees and taxes specified under Section 31A-3-301 ; or
             2146          (iii) the commissioner has reason to believe that the insurer is in an unsound condition or
             2147      is operated in a fraudulent, dishonest, or incompetent manner or in violation of the law of its
             2148      domicile.
             2149          (d) (i) The commissioner may issue lists of unauthorized foreign insurers whose solidity
             2150      the commissioner doubts, or whose practices the commissioner considers objectionable.
             2151          (ii) The commissioner shall issue lists of unauthorized foreign insurers the commissioner
             2152      considers to be reliable and solid. [The]
             2153          (iii) In addition to the lists described in Subsections (7)(d)(i) and (ii), the commissioner
             2154      may [also] issue other relevant evaluations of unauthorized insurers. [No]
             2155          (iv) An action [lies] may not lie against the commissioner or any employee of the
             2156      department for any written or oral communication made in, or in connection with the issuance of,
             2157      [these] the lists or evaluations described in this Subsection (6)(d).
             2158          (e) A foreign unauthorized insurer shall be listed on the commissioner's "reliable" list only
             2159      if the unauthorized insurer:
             2160          (i) has delivered a request to the commissioner to be on the list;
             2161          (ii) has established satisfactory evidence of good reputation and financial integrity;
             2162          (iii) has delivered to the commissioner a copy of its current annual statement certified by
             2163      the insurer and continues each subsequent year to file its annual statements with the commissioner
             2164      within 60 days of its filing with the insurance regulatory authority where it is domiciled; [and]


             2165          (iv) (A) is in substantial compliance with the solvency standards in Chapter 17, Part VI,
             2166      Risk-Based Capital, or maintains capital and surplus of at least [$5,000,000] $15,000,000,
             2167      whichever is greater, and maintains in the United States an irrevocable trust fund in either a
             2168      national bank or a member of the Federal Reserve System, or maintains a deposit meeting the
             2169      statutory deposit requirements for insurers in the state where it is made, which trust fund or
             2170      deposit:
             2171          (I) shall be in an amount not less than [$1,500,000] $2,500,000 for the protection of all of
             2172      the insurer's policyholders in the United States;
             2173          (II) may consist of cash, securities, or investments of substantially the same character and
             2174      quality as those which are "qualified assets" under Section 31A-17-201 ; and
             2175          (III) may include as part of the trust arrangement a letter of credit that qualifies as
             2176      acceptable security under Subsection 31A-17-404 (3)(c)(iii); or
             2177          (B) in the case of any "Lloyd's" or other similar incorporated or unincorporated group of
             2178      alien individual insurers, maintains a trust fund that:
             2179          (I) shall be in an amount not less than $50,000,000 as security to its full amount for all
             2180      policyholders and creditors in the United States of each member of the group;
             2181          (II) may consist of cash, securities, or investments of substantially the same character and
             2182      quality as those which are "qualified assets" under Section 31A-17-201 ; and
             2183          (III) may include as part of this trust arrangement a letter of credit that qualifies as
             2184      acceptable security under Subsection 31A-17-404 (3)(c)(iii)[.]; and
             2185          (v) for an alien insurer not domiciled in the United States or a territory of the United
             2186      States, is listed on the Quarterly Listing of Alien Insurers maintained by the National Association
             2187      of Insurance Commissions International Insurers Department.
             2188          (7) A surplus lines broker may not, either knowingly or without reasonable investigation
             2189      of the financial condition and general reputation of the insurer, place insurance under this section
             2190      with financially unsound insurers or with insurers engaging in unfair practices, or with otherwise
             2191      substandard insurers, unless the broker gives the applicant notice in writing of the known
             2192      deficiencies of the insurer or the limitations on his investigation, and explains the need to place
             2193      the business with that insurer. A copy of this notice shall be kept in the office of the broker for at
             2194      least five years. To be financially sound, an insurer shall satisfy standards that are comparable to
             2195      those applied under the laws of this state to authorized insurers. Insurers on the "doubtful or


             2196      objectionable" list under Subsection (6)(d) and insurers not on the commissioner's "reliable" list
             2197      under Subsection (6)[(d)](e) are presumed substandard.
             2198          (8) A policy issued under this section shall include a description of the subject of the
             2199      insurance and indicate the coverage, conditions, and term of the insurance, the premium charged
             2200      and premium taxes to be collected from the policyholder, and the name and address of the
             2201      policyholder and insurer. If the direct risk is assumed by more than one insurer, the policy shall
             2202      state the names and addresses of all insurers and the portion of the entire direct risk each has
             2203      assumed. All policies issued under the authority of this section shall have attached or affixed to
             2204      the policy the following statement: "The insurer issuing this policy does not hold a certificate of
             2205      authority to do business in this state and thus is not fully subject to regulation by the Utah
             2206      insurance commissioner. This policy receives no protection from any of the guaranty associations
             2207      created under Title 31A, Chapter 28."
             2208          (9) Upon placing a new or renewal coverage under this section, the broker shall promptly
             2209      deliver to the policyholder or his agent evidence of the insurance consisting either of the policy as
             2210      issued by the insurer or, if the policy is not then available, a certificate, cover note, or other
             2211      confirmation of insurance complying with Subsection (8).
             2212          (10) If the commissioner finds it necessary to protect the interests of insureds and the
             2213      public in this state, the commissioner may by rule subject policies issued under this section to as
             2214      much of the regulation provided by this title as is required for comparable policies written by
             2215      authorized foreign insurers.
             2216          (11) (a) Each surplus lines transaction in this state shall be examined to determine whether
             2217      it complies with:
             2218          (i) the surplus lines tax levied under Chapter 3;
             2219          (ii) the solicitation limitations of Subsection (3);
             2220          (iii) the requirement of Subsection (3) that placement be through a surplus lines broker;
             2221          (iv) placement limitations imposed under Subsections (6)(a), (b), and (c); and
             2222          (v) the policy form requirements of Subsections (8) and (10).
             2223          (b) The examination described in Subsection (11)(a) shall take place as soon as practicable
             2224      after the transaction. The surplus lines broker shall submit to the examiner information necessary
             2225      to conduct the examination within a period specified by rule.
             2226          (c) The examination described in Subsection (11)(a) may be conducted by the


             2227      commissioner or by an advisory organization created under Section 31A-15-111 and authorized
             2228      by the commissioner to conduct these examinations. The commissioner is not required to
             2229      authorize any additional advisory organizations to conduct examinations under this Subsection
             2230      (11)(c). The commissioner's authorization of one or more advisory organizations to act as
             2231      examiners under this subsection shall be by rule. In addition, the authorization shall be evidenced
             2232      by a contract, on a form provided by the commissioner, between the authorized advisory
             2233      organization and the department.
             2234          (d) The person conducting the examination described in Subsection (11)(a) shall collect
             2235      a stamping fee of an amount not to exceed 1% of the policy premium payable in connection with
             2236      the transaction. Stamping fees collected by the commissioner shall be deposited in the General
             2237      Fund. The commissioner shall establish this fee by rule. Stamping fees collected by an advisory
             2238      organization are the property of the advisory organization to be used in paying the expenses of the
             2239      advisory organization. Liability for paying the stamping fee is as required under Subsection
             2240      31A-3-303 (1) for taxes imposed under Section 31A-3-301 . The commissioner shall adopt a rule
             2241      dealing with the payment of stamping fees. If stamping fees are not paid when due, the
             2242      commissioner or advisory organization may impose a penalty of 25% of the fee due, plus 1-1/2%
             2243      per month from the time of default until full payment of the fee. Fees relative to policies covering
             2244      risks located partially in this state shall be allocated in the same manner as under Subsection
             2245      31A-3-303 (4).
             2246          (e) The commissioner, representatives of the department, advisory organizations,
             2247      representatives and members of advisory organizations, authorized insurers, and surplus lines
             2248      insurers are not liable for damages on account of statements, comments, or recommendations made
             2249      in good faith in connection with their duties under this Subsection (11)(e) or under Section
             2250      31A-15-111 .
             2251          (f) Examinations conducted under this Subsection (11) and the documents and materials
             2252      related to the examinations are confidential.
             2253          Section 29. Section 31A-15-106 is amended to read:
             2254           31A-15-106. Servicing of contracts made out of state.
             2255          (1) A foreign insurer that does not have a certificate of authority to do business in this state
             2256      under Section 31A-14-202 may, in this state, collect premiums and adjust losses and do all other
             2257      acts reasonably incidental to contracts made outside this state without violating this chapter. Any


             2258      premiums collected under this section are subject to Section 31A-3-301 .
             2259          (2) Subsection (1) does not permit a renewal, extension, increase, or other substantial
             2260      change in the terms of any contract under Subsection (1) unless:
             2261          (a) it is permitted under Section 31A-15-103 ;
             2262          (b) the contract is for life or [disability] accident and health insurance or annuities; or
             2263          (c) a rule adopted by the commissioner permits this action when the interests of the
             2264      policyholder and the public appear to be sufficiently protected.
             2265          Section 30. Section 31A-17-201 is amended to read:
             2266           31A-17-201. Qualified assets.
             2267          (1) Except as provided under Subsections (3) and (4), only the qualified assets listed in
             2268      Subsection (2) may be used in determining the financial condition of an insurer, except to the
             2269      extent an insurer has shown to the commissioner that the insurer has excess surplus, as defined in
             2270      Section 31A-1-301 .
             2271          (2) For purposes of Subsection (1), "qualified assets" means:
             2272          [(a) investments, securities, properties, and loans acquired or held in accordance with
             2273      Sections 31A-18-105 and 31A-18-106 , and the income due and accrued on these;]
             2274          [(b) the net amount of uncollected and deferred premiums for a life insurer that carries the
             2275      full annual mean tabular reserve liability;]
             2276          [(c) premiums in the course of collection, other than for life insurance, not more than 90
             2277      days past due, less commissions payable on the premiums, with the 90-day limitation being
             2278      inapplicable to premiums payable directly or indirectly by the United States government or any of
             2279      its instrumentalities;]
             2280          [(d) installment premiums, other than life insurance premiums, in accordance with:]
             2281          [(i) the rules adopted by the commissioner; or]
             2282          [(ii) in the absence of rules adopted by the commissioner, practices formulated or adopted
             2283      by the National Association of Insurance Commissioners;]
             2284          [(e) notes and similar written obligations that are:]
             2285          [(i) not past due;]
             2286          [(ii) taken for premiums other than life insurance premiums;]
             2287          [(iii) on policies permitted to be issued on that basis; and]
             2288          [(iv) to the extent of the unearned premium reserves carried on the policies;]


             2289          [(f) amounts recoverable or receivable from reinsurers under a reinsurance contract that
             2290      qualifies for reserve credit under Section 31A-17-404 ;]
             2291          [(g) electronic and mechanical machines constituting a data processing and accounting
             2292      system, the cost of which is depreciated in full over a period of five years or less;]
             2293          [(h) tangible components of the health care delivery systems of insurers licensed under
             2294      Chapter 7, with the cost of these assets having a finite useful life being depreciated in full over
             2295      periods provided by rule;]
             2296          [(i) cash or currency; and]
             2297          (a) assets as determined to be admitted in the Accounting Practices and Procedures
             2298      Manual, published by the National Association of Insurance Commissioners; and
             2299          [(j)] (b) other assets authorized by rule.
             2300          (3) (a) Subject to Subsection (5) and even if they could not otherwise be counted under this
             2301      chapter, assets acquired in the bona fide enforcement of creditors' rights may be counted for the
             2302      purposes of Subsection (1) and Sections 31A-18-105 and 31A-18-106 :
             2303          (i) for five years after their acquisition if they are real property; and
             2304          (ii) for one year if they are not real property.
             2305          (b) (i) The commissioner may allow reasonable extensions of the periods described in
             2306      Subsection (3)(a), if disposal of the assets within the periods given is not possible without
             2307      substantial loss.
             2308          (ii) Extensions under Subsection (3)(b)(i) may not, as to any particular asset, exceed a total
             2309      of five years.
             2310          (4) Subject to Subsection (5), and even though under this chapter the assets could not
             2311      otherwise be counted, assets acquired in connection with mergers, consolidations, or bulk
             2312      reinsurance, or as a dividend or distribution of assets, may be counted for the same purposes, in
             2313      the same manner, and for the same periods as assets acquired under Subsection (3).
             2314          (5) Assets described under Subsection (3) or (4) may not be counted for the purposes of
             2315      Subsection (1), except to the extent they are counted as assets in determining insurer solvency
             2316      under the laws of the state of domicile of the creditor or acquired insurer.
             2317          Section 31. Section 31A-17-401 is amended to read:
             2318           31A-17-401. Valuation of assets.
             2319          (1) The commissioner shall value the assets of insurers in accordance with then current


             2320      insurance business practices, but not in a manner inconsistent with the provisions of this title. In
             2321      valuing assets, the commissioner shall consider any method then current, formulated, or approved
             2322      by the National Association of Insurance Commissioners.
             2323          (2) Assets that are not qualified assets under Subsection 31A-17-201 (2) are considered to
             2324      have no value in evaluating an insurer's compliance with Chapter 17, Part 6, Risk-Based Capital.
             2325      Those assets may be used in evaluating the insurer's financial condition only to the extent the
             2326      insurer has excess surplus.
             2327          (3) (a) Insurance subsidiaries are valued on the books of a parent insurer as follows:
             2328          (i) Except as provided under Subsections (3)(a)(iii) [through (vi)] and (iv), common stock
             2329      of the subsidiary is valued on the basis of the parent insurer's percentage of ownership of the
             2330      common stock multiplied by the total of the subsidiary's capital and surplus, less amounts needed
             2331      to liquidate all claims to the capital and surplus which are senior to common stock. Subsection
             2332      31A-18-106 (1)(k) provides applicable limitations on investments in subsidiaries.
             2333          (ii) The value of securities other than common stock issued by a subsidiary is the lesser
             2334      of the present value of the future income to be derived under the securities or the amount the parent
             2335      insurer would receive as a result of the securities if the subsidiary were liquidated and all creditors
             2336      of the subsidiary and holders of the subsidiary's securities with senior priority were paid in full.
             2337      The present value of future income derived from securities is determined by rule adopted by the
             2338      commissioner. A parent insurer may attribute value to a security of its subsidiary only if the parent
             2339      insurer is being paid dividends or interest on the security, and only if the parent insurer can
             2340      reasonably anticipate that dividends or interest will continue to be paid on the security.
             2341          (iii) Except as provided under [Subsections (3)(a)(iv) through (vi)] Subsection (3)(iv), any
             2342      portion of the subsidiary's value permitted under Subsection (3)(a) that is represented by assets
             2343      other than assets listed under Section 31A-17-201 , may only be classified as excess surplus of the
             2344      parent insurer, and then only to the extent the parent insurer has established that it has excess
             2345      surplus under Section 31A-17-202 .
             2346          (iv) For the purposes of Subsection (3)(a)(iii), assets of a newly acquired subsidiary that
             2347      are the equivalent of qualified assets in the subsidiary's domiciliary state, are, for the first five years
             2348      after the subsidiary's acquisition, considered to be qualified assets under Section 31A-17-201 . This
             2349      assumption stands even if the assets are not otherwise qualified assets under Section 31A-17-201 .
             2350          [(v) Under a plan of merger approved by the commissioner, a newly-acquired insurance


             2351      subsidiary may be valued initially at its cost to the parent insurer, or a greater or lesser value
             2352      established by the commissioner. The amount in excess of the parent insurer's proportionate share
             2353      of the subsidiary's capital and surplus shall be written off for regulatory purposes over a period
             2354      specified by the commissioner in the commissioner's order approving the plan of merger. This
             2355      period may not exceed five years. Once they are established by the commissioner, any amounts
             2356      not yet written off may be counted as assets for the purposes specified under Chapter 17, Part 6,
             2357      Risk-Based Capital.]
             2358          [(vi) Subject to Subsection 31A-18-106 (1)(k), an insurance subsidiary that is acquired by
             2359      another insurer, but not under an approved plan of merger, may be valued initially at the lesser of
             2360      its cost to the parent insurer, or the parent insurer's proportionate share of the subsidiary's capital
             2361      and surplus plus 10% of the parent insurer's capital and surplus. The amount in excess of the
             2362      parent insurer's proportionate share of the subsidiary's capital and surplus shall be written off for
             2363      regulatory purposes over a period specified by the commissioner in an order approving the
             2364      acquisition. This period may not exceed ten years.]
             2365          [(vii) For subsidiaries valued under Subsection (3)(a)(v) or (3)(a)(vi), until the excess of
             2366      the subsidiary's cost over the parent insurer's proportionate share of the subsidiary's capital and
             2367      surplus is completely amortized, the commissioner shall semiannually review the actual
             2368      performance of the subsidiary to determine whether the amortization schedule provided by the
             2369      commissioner's order is reasonable, based on the subsidiary's actual performance. The
             2370      commissioner may adjust the amortization schedule based on the findings of this semiannual
             2371      review.]
             2372          (b) A subsidiary formed or acquired to hold or manage investments that the parent
             2373      insurance company might hold or manage directly, shall be valued as if the assets of the subsidiary
             2374      were owned directly by the insurer in a percentage equal to the insurer's percentage of ownership
             2375      of the subsidiary. The subsidiary investment limitation of Subsection 31A-18-106 (1)(k) does not
             2376      apply to these subsidiaries.
             2377          (c) Subsidiaries other than those described in Subsections (3)(a) and (b) shall be valued
             2378      in accordance with Subsection (1). The subsidiary investment limitation under Subsection
             2379      31A-18-106 (1)(k) applies to these subsidiaries in the same manner as to subsidiaries described in
             2380      Subsection (3)(a).
             2381          (d) In determining an insurer's financial condition, no value is given to:


             2382          (i) any interest held by the insurer in its own stock, including debts due the insurer that are
             2383      secured by the insurer's own stock; or
             2384          (ii) any proportionate interest in the insurer's own stock, including debts that are secured
             2385      by the insurer's own stock, which is held by any corporation, partnership, business unit, firm, or
             2386      person owned in whole or in part by the insurer.
             2387          (4) The commissioner shall adopt rules to implement the provisions of this section.
             2388          Section 32. Section 31A-17-402 is amended to read:
             2389           31A-17-402. Valuation of liabilities.
             2390          The commissioner shall adopt rules specifying the liabilities required to be reported by
             2391      insurers in financial statements submitted under Section 31A-2-202 and the methods of valuing
             2392      them. For life insurance, those methods shall be consistent with Part 5 of this chapter, Standard
             2393      Valuation Law. Title insurance reserves are provided for under Section 31A-17-408 . In
             2394      determining the financial condition of an insurer, liabilities include:
             2395          (l) the estimated amount necessary to pay all its unpaid losses and claims incurred on or
             2396      prior to the date of statement, whether reported or unreported, together with the expense of
             2397      adjustment or settlement of the loss or claim;
             2398          (2) for life, [disability] accident and health insurance, and annuity contracts:
             2399          (a) the reserves on life insurance policies and annuity contracts in force, valued according
             2400      to appropriate tables of mortality and the applicable rates of interest;
             2401          (b) the reserves for [disability] accident and health benefits, for both active and disabled
             2402      lives;
             2403          (c) the reserves for accidental death benefits; and
             2404          (d) any additional reserves which may be required by the commissioner by rule, or if no
             2405      rule is applicable, then in a manner consistent with the practice formulated or approved by the
             2406      National Association of Insurance Commissioners with respect to those types of insurance;
             2407          (3) for insurance other than life, [disability] accident and health, and title insurance, the
             2408      amount of reserves equal to the unearned portions of the gross premiums charged on policies in
             2409      force, computed on a daily or monthly pro rata basis or other basis approved by the commissioner;
             2410      provided that after adopting any one of the methods for computing those reserves, an insurer may
             2411      not change methods without the commissioner's written consent;
             2412          (4) for ocean marine and other transportation insurance, reserves equal to 50% of the


             2413      amount of premiums upon risks covering not more than one trip or passage not terminated, and
             2414      computed upon a pro rata basis or, with the commissioner's consent, in accordance with methods
             2415      provided under Subsection (3); and
             2416          (5) its other liabilities, including taxes, expenses, and other obligations due or accrued at
             2417      the date of statement.
             2418          Section 33. Section 31A-17-408 is amended to read:
             2419           31A-17-408. Title insurance reserves.
             2420          (1) In addition to an adequate reserve for outstanding losses, a title insurance company
             2421      shall either:
             2422          (a) maintain and segregate an unearned premium reserve fund of not less than 10 cents for
             2423      each $1,000 face amount of retained liability under each title insurance contract or policy on a
             2424      single insurance risk issued[, except that during each of the 20 years following the year in which
             2425      the title insurance policy or contract was issued, the reserve applicable to the contract may be
             2426      reduced by 5% of the original amount of the reserve]; or
             2427          (b) have the commissioner review and approve a contract of reinsurance applicable to the
             2428      title insurance company's policies, which contract adequately covers the exposure or risk which
             2429      the unearned premium reserve would serve.
             2430          (2) The fund shall be maintained for the protection of policyholders and is not subject to
             2431      the claims of stockholders or creditors other than policyholders.
             2432          Section 34. Section 31A-17-504 is amended to read:
             2433           31A-17-504. Computation of minimum standard.
             2434          Except as otherwise provided in Sections 31A-17-505 , 31A-17-506 , and 31A-17-513 , the
             2435      minimum standard for the valuation of all life insurance policies and annuity and pure endowment
             2436      contracts issued prior to January 1, 1994, shall be that provided by the laws in effect immediately
             2437      prior to that date. Except as otherwise provided in Sections 31A-17-505 , 31A-17-506 , and
             2438      31A-17-513 , the minimum standard for the valuation of all such policies and contracts issued on
             2439      or after January 1, 1994, shall be the commissioner's reserve valuation methods defined in Sections
             2440      31A-17-507 , 31A-17-508 , 31A-17-511 , and 31A-17-513 , 3.5% interest, or in the case of life
             2441      insurance policies and contracts, other than annuity and pure endowment contracts, issued on or
             2442      after June 1, 1973, 4% interest for such policies issued prior to April 2, 1980, 5.5% interest for
             2443      single premium life insurance policies, and 4.5% interest for all other such policies issued on and


             2444      after April 2, 1980, and the following tables:
             2445          (1) For all ordinary policies of life insurance issued on the standard basis, excluding any
             2446      [disability] accident and health and accidental death benefits in such policies: the National
             2447      Association of Insurance Commissioners 1941 Standard Ordinary Mortality Table for such policies
             2448      issued prior to the operative date of Subsection 31A-22-408 (6)(a) (that is, the Standard
             2449      Nonforfeiture Law for Life Insurance), the National Association of Insurance Commissioners 1958
             2450      Standard Ordinary Mortality Table for such policies issued on or after the operative date of
             2451      Subsection 31A-22-408 (6)(a) and prior to the operative date of Subsection 31A-22-408 (6)(d),
             2452      provided that for any category of such policies issued on female risks, all modified net premiums
             2453      and present values referred to in this section may be calculated according to an age not more than
             2454      six years younger than the actual age of the insured; and for such policies issued on or after the
             2455      operative date of Subsection 31A-22-408 (6)(d):
             2456          (a) the National Association of Insurance Commissioners 1980 Standard Ordinary
             2457      Mortality Table;
             2458          (b) at the election of the company for any one or more specified plans of life insurance,
             2459      the National Association of Insurance Commissioners 1980 Standard Ordinary Mortality Table
             2460      with Ten-Year Select Mortality Factors; or
             2461          (c) any ordinary mortality table, adopted after 1980 by the National Association of
             2462      Insurance Commissioners, that is approved by rule promulgated by the commissioner for use in
             2463      determining the minimum standard of valuation for such policies.
             2464          (2) For all industrial life insurance policies issued on the standard basis, excluding any
             2465      [disability] accident and health and accidental death benefits in such policies: the 1941 Standard
             2466      Industrial Mortality Table for such policies issued prior to the operative date of Subsection
             2467      31A-22-408 (6)(c), and for such policies issued on or after such operative date, the National
             2468      Association of Insurance Commissioners 1961 Standard Industrial Mortality Table or any
             2469      industrial mortality table, adopted after 1980 by the National Association of Insurance
             2470      Commissioners, that is approved by rule promulgated by the commissioner for use in determining
             2471      the minimum standard of valuation for such policies.
             2472          (3) For individual annuity and pure endowment contracts, excluding any disability and
             2473      accidental death benefits in such policies:
             2474          (a) the 1937 Standard Annuity Mortality Table[, or];


             2475          (b) at the option of the company, the Annuity Mortality Table for 1949, Ultimate[,]; or
             2476          (c) any modification of either of these tables approved by the commissioner.
             2477          (4) For group annuity and pure endowment contracts, excluding any [disability] accident
             2478      and health and accidental death benefits in such policies:
             2479          (a) the Group Annuity Mortality Table for 1951, any modification of such table approved
             2480      by the commissioner[,]; or
             2481          (b) at the option of the company, any of the tables or modifications of tables specified for
             2482      individual annuity and pure endowment contracts.
             2483          (5) For total and permanent disability benefits in or supplementary to ordinary policies or
             2484      contracts: for policies or contracts issued on or after January 1, 1966, the tables of Period 2
             2485      disablement rates and the 1930 to 1950 termination rates of the 1952 Disability Study of the
             2486      Society of Actuaries, with due regard to the type of benefit or any tables of disablement rates and
             2487      termination rates adopted after 1980 by the National Association of Insurance Commissioners, that
             2488      are approved by rule promulgated by the commissioner for use in determining the minimum
             2489      standard of valuation for such policies; for policies or contracts issued on or after January 1, 1961,
             2490      and prior to January 1, 1966, either such tables or, at the option of the company, the Class (3)
             2491      Disability Table (1926); and for policies issued prior to January 1, 1961, the Class (3) Disability
             2492      Table (1926). Any such table shall, for active lives, be combined with a mortality table permitted
             2493      for calculating the reserves for life insurance policies.
             2494          (6) For accidental death benefits in or supplementary to policies issued on or after January
             2495      1, 1966, the 1959 Accidental Death Benefits Table or any accidental death benefits table adopted
             2496      after 1980 by the National Association of Insurance Commissioners, that is approved by rule
             2497      promulgated by the commissioner for use in determining the minimum standard of valuation for
             2498      such policies, for policies issued on or after January 1, 1961, and prior to January 1, 1966, either
             2499      such table or, at the option of the company, the Inter-Company Double Indemnity Mortality Table;
             2500      and for policies issued prior to January 1, 1961, the Inter-Company Double Indemnity Mortality
             2501      Table. Either table shall be combined with a mortality table for calculating the reserves for life
             2502      insurance policies.
             2503          (7) For group life insurance, life insurance issued on the substandard basis and other
             2504      special benefits: such tables as may be approved by the commissioner.
             2505          Section 35. Section 31A-17-505 is amended to read:


             2506           31A-17-505. Computation of minimum standard for annuities.
             2507          (1) Except as provided in Section 31A-17-506 , the minimum standard for the valuation
             2508      of all individual annuity and pure endowment contracts issued on or after the operative date of this
             2509      section, as defined in Subsection (2), and for all annuities and pure endowments purchased on or
             2510      after such operative date under group annuity and pure endowment contracts, shall be the
             2511      commissioner's reserve valuation methods defined in Sections 31A-17-507 and 31A-17-508 and
             2512      the following tables and interest rates:
             2513          (a) For individual annuity and pure endowment contracts issued prior to April 2, 1980,
             2514      excluding any [disability] accident and health and accidental death benefits in such contracts: the
             2515      1971 Individual Annuity Mortality Table, or any modification of this table approved by the
             2516      commissioner, and 6% interest for single premium immediate annuity contracts, and 4% interest
             2517      for all other individual annuity and pure endowment contracts.
             2518          (b) For individual single premium immediate annuity contracts issued on or after April 2,
             2519      1980, excluding any [disability] accident and health and accidental death benefits in such
             2520      contracts: the 1971 Individual Annuity Mortality Table or any individual annuity mortality table,
             2521      adopted after 1980 by the National Association of Insurance Commissioners that is approved by
             2522      rule promulgated by the commissioner for use in determining the minimum standard of valuation
             2523      for such contracts, or any modification of these tables approved by the commissioner, and 7.5%
             2524      interest.
             2525          (c) For individual annuity and pure endowment contracts issued on or after April 2, 1980,
             2526      other than single premium immediate annuity contracts, excluding any [disability] accident and
             2527      health and accidental death benefits in such contracts: the 1971 Individual Annuity Mortality Table
             2528      or any individual annuity mortality table adopted after 1980 by the National Association of
             2529      Insurance Commissioners, that is approved by rule promulgated by the commissioner for use in
             2530      determining the minimum standard of valuation for such contracts, or any modification of these
             2531      tables approved by the commissioner, and 5.5% interest for single premium deferred annuity and
             2532      pure endowment contracts and 4.5% interest for all other such individual annuity and pure
             2533      endowment contracts.
             2534          (d) For all annuities and pure endowments purchased prior to April 2, 1980, under group
             2535      annuity and pure endowment contracts, excluding any [disability] accident and health and
             2536      accidental death benefits purchased under such contracts: the 1971 Group Annuity Mortality Table


             2537      or any modification of this table approved by the commissioner, and 6.5% interest.
             2538          (e) For all annuities and pure endowments purchased on or after April 2, 1980, under
             2539      group annuity and pure endowment contracts, excluding any [disability] accident and health and
             2540      accidental death benefits purchased under such contracts: the 1971 Group Annuity Mortality Table,
             2541      or any group annuity mortality table adopted after 1980 by the National Association of Insurance
             2542      Commissioners, that is approved by rule and promulgated by the commissioner for use in
             2543      determining the minimum standard of valuation for such annuities and pure endowments, or any
             2544      modification of these tables approved by the commissioner, and 7.5% interest.
             2545          (2) After June 1, 1973, any company may file with the commissioner a written notice of
             2546      its election to comply with the provisions of this section after a specified date before January 1,
             2547      1979, which shall be the operative date of this section for such company, provided, if a company
             2548      makes no such election, the operative date of this section for such company shall be January 1,
             2549      1979.
             2550          Section 36. Section 31A-17-507 is amended to read:
             2551           31A-17-507. Reserve valuation method -- Life insurance and endowment benefits.
             2552          (1) Except as otherwise provided in Sections 31A-17-508 , 31A-17-511 , and 31A-17-513 ,
             2553      reserves according to the commissioner's reserve valuation method, for the life insurance and
             2554      endowment benefits of policies providing for a uniform amount of insurance and requiring the
             2555      payment of uniform premiums shall be the excess, if any, of the present value, at the date of
             2556      valuation, of such future guaranteed benefits provided for by such policies, over the then present
             2557      value of any future modified net premiums therefor. The modified net premiums for any such
             2558      policy shall be such uniform percentage of the respective contract premiums for such benefits that
             2559      the present value, at the date of issue of the policy, of all such modified net premiums shall be
             2560      equal to the sum of the then present value of such benefits provided for by the policy and the
             2561      excess of Subsection (1)(a) over Subsection (1)(b), as follows:
             2562          (a) A net level annual premium equal to the present value, at the date of issue, of such
             2563      benefits provided for after the first policy year, divided by the present value, at the date of issue,
             2564      of an annuity of one per annum payable on the first and each subsequent anniversary of such policy
             2565      on which a premium falls due; provided, however, that such net level annual premium shall not
             2566      exceed the net level annual premium on the 19 year premium whole life plan for insurance of the
             2567      same amount at an age one year higher than the age at issue of such policy.


             2568          (b) A net one year term premium for such benefits provided for in the first policy year.
             2569          (2) Provided that for any life insurance policy issued on or after January 1, 1997, for which
             2570      the contract premium in the first policy year exceeds that of the second year and for which no
             2571      comparable additional benefit is provided in the first year for such excess and which provides an
             2572      endowment benefit or a cash surrender value or a combination thereof in an amount greater than
             2573      such excess premium, the reserve according to the commissioner's reserve valuation method as of
             2574      any policy anniversary occurring on or before the assumed ending date defined herein as the first
             2575      policy anniversary on which the sum of any endowment benefit and any cash surrender value then
             2576      available is greater than such excess premium shall, except as otherwise provided in Section
             2577      31A-17-511 , be the greater of the reserve as of such policy anniversary calculated as described in
             2578      Subsection (1) and the reserve as of such policy anniversary calculated as described in that
             2579      subsection, but with:
             2580          (a) the value defined in Subsection (1)(a) being reduced by 15% of the amount of such
             2581      excess first year premium[,];
             2582          (b) all present values of benefits and premiums being determined without reference to
             2583      premiums or benefits provided for by the policy after the assumed ending date[,];
             2584          (c) the policy being assumed to mature on such date as an endowment[,]; and
             2585          (d) the cash surrender value provided on such date being considered as an endowment
             2586      benefit. In making the above comparison the mortality and interest bases stated in Sections
             2587      31A-17-504 and 31A-17-506 shall be used.
             2588          (3) Reserves according to the commissioner's reserve valuation method for:
             2589          (a) life insurance policies providing for a varying amount of insurance or requiring the
             2590      payment of varying premiums;
             2591          (b) group annuity and pure endowment contracts purchased under a retirement plan or plan
             2592      of deferred compensation, established or maintained by an employer, including a partnership or
             2593      sole proprietorship, or by an employee organization, or by both, other than a plan providing
             2594      individual retirement accounts or individual retirement annuities under [26 U.S.C. Sec. 408, as
             2595      amended] Section 408, Internal Revenue Code;
             2596          (c) [disability] accident and health and accidental death benefits in all policies and
             2597      contracts; and
             2598          (d) all other benefits, except life insurance and endowment benefits in life insurance


             2599      policies and benefits provided by all other annuity and pure endowment contracts, shall be
             2600      calculated by a method consistent with the principles of Subsections (1) and (2).
             2601          Section 37. Section 31A-17-508 is amended to read:
             2602           31A-17-508. Reserve valuation method -- Annuity and pure endowment benefits.
             2603          (1) This section shall apply to all annuity and pure endowment contracts other than group
             2604      annuity and pure endowment contracts purchased under a retirement plan or plan of deferred
             2605      compensation, established or maintained by an employer, including a partnership or sole
             2606      proprietorship, or by an employee organization, or by both, other than a plan providing individual
             2607      retirement accounts or individual retirement annuities under [26 U.S.C. Sec. 408, as amended]
             2608      Section 408, Internal Revenue Code.
             2609          (2) Reserves according to the commissioner's annuity reserve method for benefits under
             2610      annuity or pure endowment contracts, excluding any [disability] accident and health and accidental
             2611      death benefits in such contracts, shall be the greatest of the respective excesses of the present
             2612      values, at the date of valuation, of the future guaranteed benefits, including guaranteed
             2613      nonforfeiture benefits, provided for by such contracts at the end of each respective contract year,
             2614      over the present value, at the date of valuation, of any future valuation considerations derived from
             2615      future gross considerations, required by the terms of such contract, that become payable prior to
             2616      the end of such respective contract year. The future guaranteed benefits shall be determined by
             2617      using the mortality table, if any, and the interest rate, or rates, specified in such contracts for
             2618      determining guaranteed benefits. The valuation considerations are the portions of the respective
             2619      gross considerations applied under the terms of such contracts to determine nonforfeiture values.
             2620          Section 38. Section 31A-17-509 is amended to read:
             2621           31A-17-509. Minimum reserves.
             2622          (1) In no event shall a company's aggregate reserves for all life insurance policies,
             2623      excluding [disability] accident and health and accidental death benefits, issued on or after January
             2624      1, 1994, be less than the aggregate reserves calculated in accordance with the methods set forth in
             2625      Sections 31A-17-507 , 31A-17-508 , 31A-17-511 , and 31A-17-512 and the mortality table or tables
             2626      and rate or rates of interest used in calculating nonforfeiture benefits for such policies.
             2627          (2) In no event shall the aggregate reserves for all policies, contracts, and benefits be less
             2628      than the aggregate reserves determined by the qualified actuary to be necessary to render the
             2629      opinion required by Section 31A-17-503 .


             2630          Section 39. Section 31A-17-513 is amended to read:
             2631           31A-17-513. Minimum standards for accident and health plans.
             2632          The commissioner shall promulgate a rule containing the minimum standards applicable
             2633      to the valuation of [disability] accident and health plans.
             2634          Section 40. Section 31A-17-601 is amended to read:
             2635           31A-17-601. Definitions.
             2636          As used in this part:
             2637          (1) "Adjusted RBC report" means an RBC report that has been adjusted by the
             2638      commissioner in accordance with Subsection 31A-17-602 [(4)] (5).
             2639          (2) "Corrective order" means an order issued by the commissioner specifying corrective
             2640      action that the commissioner determines is required.
             2641          (3) "Health organization" means:
             2642          (a) an entity that is authorized under Chapter 7 or 8; and
             2643          (b) that is:
             2644          (i) a health maintenance organization;
             2645          (ii) a limited health service organization;
             2646          (iii) a dental or vision plan;
             2647          (iv) a hospital, medical, and dental indemnity or service corporation; or
             2648          (v) other managed care organization.
             2649          [(3)] (4) "Life or [disability] accident and health insurer" means:
             2650          (a) an insurance company licensed to write life insurance, disability insurance, or both; or
             2651          (b) a licensed property casualty insurer writing only disability insurance.
             2652          [(4)] (5) "Property and casualty insurer" means any insurance company licensed to write
             2653      lines of insurance other than life but does not include a monoline mortgage guaranty insurer,
             2654      financial guaranty insurer, or title insurer.
             2655          [(5)] (6) "RBC" means risk-based capital.
             2656          [(6)] (7) "RBC instructions" means the RBC report including risk-based capital
             2657      instructions adopted by the department by rule.
             2658          [(7)] (8) "RBC level" means an insurer's or health organization's authorized control level
             2659      RBC, company action level RBC, mandatory control level RBC, or regulatory action level RBC.
             2660          (a) "Authorized control level RBC" means the number determined under the risk-based


             2661      capital formula in accordance with the RBC instructions;
             2662          (b) "Company action level RBC" means the product of 2.0 and its authorized control level
             2663      RBC;
             2664          (c) "Mandatory control level RBC" means the product of .70 and the authorized control
             2665      level RBC; and
             2666          (d) "Regulatory action level RBC" means the product of 1.5 and its authorized control
             2667      level RBC.
             2668          [(8)] (9) (a) "RBC plan" means a comprehensive financial plan containing the elements
             2669      specified in Subsection 31A-17-603 (2). [If]
             2670          (b) Notwithstanding Subsection (9)(a), the plan is a "revised RBC plan" if:
             2671          (i) the commissioner rejects the RBC plan[,]; and [it]
             2672          (ii) the plan is revised by the insurer or health organization, with or without the
             2673      commissioner's recommendation[, the plan shall be called the "Revised RBC Plan."].
             2674          [(9)] (10) "RBC report" means the report required in Section 31A-17-602 .
             2675          Section 41. Section 31A-17-602 is amended to read:
             2676           31A-17-602. RBC reports -- RBC of life and accident and health insurers -- RBC of
             2677      property and casualty insurers.
             2678          (1) Every domestic life or [disability] accident and health insurer [and], every domestic
             2679      property and casualty insurer, and every domestic health organization shall:
             2680          (a) on or before March 1, prepare and submit to the commissioner a report of its RBC
             2681      levels as of the end of the calendar year just ended, in a form and containing the information as is
             2682      required by the RBC instructions; [and]
             2683          (b) file its RBC report with the insurance commissioner in any state in which the insurer
             2684      or health organization is authorized to do business, if the insurance commissioner of that state
             2685      notifies the insurer or health organization of its request in writing, in which case the insurer or
             2686      health organization may file its RBC report not later than the later of:
             2687          (i) 15 days from the receipt of notice to file its RBC report with that state; or
             2688          (ii) March 1[.]; and
             2689          (c) file the documents described in Subsections (1)(a) and (b) with the National
             2690      Association of Insurance Commissioners in accordance with RBC instructions.
             2691          (2) A life and [disability] accident and health insurer's RBC shall be determined in


             2692      accordance with the formula set forth in the RBC instructions. The formula shall take into account
             2693      and may adjust for the covariance between:
             2694          (a) the risk with respect to the insurer's assets;
             2695          (b) the risk of adverse insurance experience with respect to the insurer's liabilities and
             2696      obligations;
             2697          (c) the interest rate risk with respect to the insurer's business; and
             2698          (d) all other business risks and other relevant risks as set forth in the RBC instructions.
             2699          (3) A property and casualty insurer's RBC shall be determined in accordance with the
             2700      formula set forth in the RBC instructions. The formula shall take the following into account and
             2701      may adjust for the covariance between:
             2702          (a) asset risk;
             2703          (b) credit risk;
             2704          (c) underwriting risk; and
             2705          (d) all other business risks and the other relevant risks as set forth in the RBC instructions.
             2706          (4) A health organization's RBC shall be determined in accordance with the formula set
             2707      forth in the RBC instructions. The formula shall take the following into account and may adjust
             2708      for the covariance between:
             2709          (a) asset risk;
             2710          (b) credit risk;
             2711          (c) underwriting risk; and
             2712          (d) all other business risks and such other relevant risks as are set forth in the RBC
             2713      instructions.
             2714          [(4)] (5) (a) If a domestic insurer files an RBC report that the commissioner determines
             2715      is inaccurate, the commissioner shall adjust the RBC report to correct the inaccuracy and shall
             2716      notify the insurer of the adjustment.
             2717          (b) The notice under Subsection [(4)] (5)(a) shall contain a statement of the reason for the
             2718      adjustment.
             2719          (6) The commissioner may make rules to assist in applying the provisions of this part to
             2720      health organizations.
             2721          Section 42. Section 31A-17-603 is amended to read:
             2722           31A-17-603. Company action level event.


             2723          (1) "Company action level event" means any of the following events:
             2724          (a) the filing of an RBC report by an insurer or health organization that indicates that:
             2725          (i) the insurer's or health organization's total adjusted capital is greater than or equal to its
             2726      regulatory action level RBC but less than its company action level RBC; or
             2727          (ii) if a life or [disability] accident and health insurer, the insurer has:
             2728          (A) total adjusted capital that is greater than or equal to its company action level RBC but
             2729      less than the product of its authorized control level RBC and 2.5; and
             2730          (B) a negative trend, determined in accordance with the "trend test calculation" included
             2731      in the RBC instructions;
             2732          (b) the notification by the commissioner to the insurer or health organization of an adjusted
             2733      RBC report that indicates an event in Subsection (1)(a), provided the insurer or health organization
             2734      does not challenge the adjusted RBC report under Section 31A-17-607 ; or
             2735          (c) if, pursuant to Section 31A-17-607 , an insurer or health organization challenges an
             2736      adjusted RBC report that indicates the event in Subsection (1)(a), the notification by the
             2737      commissioner to the insurer or health organization that after a hearing the commissioner rejects
             2738      the insurer's or health organization's challenge.
             2739          (2) (a) In the event of a company action level event, the insurer or health organization shall
             2740      prepare and submit to the commissioner an RBC plan that shall:
             2741          (i) identify the conditions that contribute to the company action level event;
             2742          (ii) contain proposals of corrective actions that the insurer or health organization intends
             2743      to take and that are expected to result in the elimination of the company action level event;
             2744          (iii) provide projections of the insurer's or health organization's financial results in the
             2745      current year and at least the four succeeding years, both in the absence of proposed corrective
             2746      actions and giving effect to the proposed corrective actions, including projections of:
             2747          (A) statutory operating income[,];
             2748          (B) net income[,];
             2749          (C) capital[, and];
             2750          (D) surplus; and
             2751          (E) RBC levels;
             2752          (iv) identify the key assumptions impacting the insurer's or health organization's
             2753      projections and the sensitivity of the projections to the assumptions; and


             2754          (v) identify the quality of, and problems associated with, the insurer's or health
             2755      organization's business, including its assets, anticipated business growth and associated surplus
             2756      strain, extraordinary exposure to risk, mix of business and use of reinsurance, if any, in each case.
             2757          (b) For purposes of Subsection (2)(a)(iii), the projections for both new and renewal
             2758      business may include separate projections for each major line of business and separately identify
             2759      each significant income, expense, and benefit component.
             2760          (3) The RBC plan shall be submitted:
             2761          (a) within 45 days of the company action level event; or
             2762          (b) if the insurer or health organization challenges an adjusted RBC report pursuant to
             2763      Section 31A-17-607 , within 45 days after notification to the insurer or health organization that
             2764      after a hearing the commissioner rejects the insurer's or health organization's challenge.
             2765          (4) (a) Within 60 days after the submission by an insurer or health organization of an RBC
             2766      plan to the commissioner, the commissioner shall notify the insurer or health organization whether
             2767      the RBC plan:
             2768          (i) shall be implemented; or
             2769          (ii) is unsatisfactory.
             2770          (b) If the commissioner determines the RBC plan is unsatisfactory, the notification to the
             2771      insurer or health organization shall set forth the reasons for the determination, and may propose
             2772      revisions that will render the RBC plan satisfactory. Upon notification from the commissioner,
             2773      the insurer or health organization shall:
             2774          (i) prepare a revised RBC plan that incorporates any revision proposed by the
             2775      commissioner; and
             2776          (ii) submit the revised RBC plan to the commissioner:
             2777          (A) within 45 days after the notification from the commissioner; or
             2778          (B) if the insurer challenges the notification from the commissioner under Section
             2779      31A-17-607 , within 45 days after a notification to the insurer or health organization that after a
             2780      hearing the commissioner rejects the insurer's or health organization's challenge.
             2781          (5) In the event of a notification by the commissioner to an insurer or health organization
             2782      that the insurer's or health organization's RBC plan or revised RBC plan is unsatisfactory, the
             2783      commissioner may specify in the notification that the notification constitutes a regulatory action
             2784      level event subject to the insurer's or health organization's right to a hearing under Section


             2785      31A-17-607 .
             2786          (6) Every domestic insurer or health organization that files an RBC plan or revised RBC
             2787      plan with the commissioner shall file a copy of the RBC plan or revised RBC plan with the
             2788      insurance commissioner in any state in which the insurer or health organization is authorized to
             2789      do business if:
             2790          (a) the state has an RBC provision substantially similar to Subsection 31A-17-608 (1); and
             2791          (b) the insurance commissioner of that state notifies the insurer or health organization of
             2792      its request for the filing in writing, in which case the insurer or health organization shall file a copy
             2793      of the RBC plan or revised RBC plan in that state no later than the later of:
             2794          (i) 15 days after the receipt of notice to file a copy of its RBC plan or revised RBC plan
             2795      with that state; or
             2796          (ii) the date on which the RBC plan or revised RBC plan is filed under Subsections (3) and
             2797      (4).
             2798          Section 43. Section 31A-17-604 is amended to read:
             2799           31A-17-604. Regulatory action level event.
             2800          (1) "Regulatory action level event" means with respect to any insurer or health
             2801      organization, any of the following events:
             2802          (a) the filing of an RBC report by the insurer or health organization that indicates that the
             2803      insurer's or health organization's total adjusted capital is greater than or equal to its authorized
             2804      control level RBC but less than its regulatory action level RBC;
             2805          (b) the notification by the commissioner to an insurer or health organization of an adjusted
             2806      RBC report that indicates the event in Subsection (1)(a), provided the insurer or health
             2807      organization does not challenge the adjusted RBC report under Section 31A-17-607 ;
             2808          (c) if, pursuant to Section 31A-17-607 , the insurer or health organization challenges an
             2809      adjusted RBC report that indicates the event in Subsection (1)(a), the notification by the
             2810      commissioner to the insurer or health organization that after a hearing the commissioner rejects
             2811      the insurer's or health organization's challenge;
             2812          (d) the failure of the insurer or health organization to file an RBC report by March 1,
             2813      unless the insurer or health organization has:
             2814          (i) provided an explanation for the failure that is satisfactory to the commissioner; and
             2815          (ii) cured the failure within ten days after March 1;


             2816          (e) the failure of the insurer or health organization to submit an RBC plan to the
             2817      commissioner within the time period set forth in Subsection 31A-17-603 (3);
             2818          (f) notification by the commissioner to the insurer or health organization that:
             2819          (i) the RBC plan or revised RBC plan submitted by the insurer or health organization is
             2820      unsatisfactory; and
             2821          (ii) the notification constitutes a regulatory action level event with respect to the insurer
             2822      or health organization, provided the insurer has not challenged the determination under Section
             2823      31A-17-607 ;
             2824          (g) if, pursuant to Section 31A-17-607 , the insurer or health organization challenges a
             2825      determination by the commissioner under Subsection (1)(f), the notification by the commissioner
             2826      to the insurer or health organization that after a hearing the commissioner rejects the challenge;
             2827      or
             2828          (h) notification by the commissioner to the insurer or health organization that the insurer
             2829      or health organization has failed to adhere to its RBC plan or revised RBC plan, but only if:
             2830          (i) the failure has a substantial adverse effect on the ability of the insurer or health
             2831      organization to eliminate the company action level event in accordance with its RBC plan or
             2832      revised RBC plan; and
             2833          (ii) the commissioner has so stated in the notification, provided the insurer or health
             2834      organization has not challenged the determination under Section 31A-17-607 ; or
             2835          (iii) if, pursuant to Section 31A-17-607 , the insurer or health organization challenges a
             2836      determination by the commissioner under Subsection (1)(h), the notification by the commissioner
             2837      to the insurer or health organization that after a hearing the commissioner rejects the challenge.
             2838          (2) In the event of a regulatory action level event the commissioner shall:
             2839          (a) require the insurer or health organization to prepare and submit an RBC plan or, if
             2840      applicable, a revised RBC plan;
             2841          (b) perform any examination or analysis the commissioner considers necessary of the
             2842      assets, liabilities, and operations of the insurer or health organization, including a review of its
             2843      RBC plan or revised RBC plan; and
             2844          (c) subsequent to the examination or analysis, issue a corrective order specifying the
             2845      corrective action the commissioner determines is required.
             2846          (3) In determining a corrective action, the commissioner may take into account such


             2847      factors the commissioner considers relevant with respect to the insurer or health organization based
             2848      upon the commissioner's examination or analysis of the assets, liabilities, and operations of the
             2849      insurer or health organization, including the results of any sensitivity tests undertaken pursuant to
             2850      the RBC instructions. The RBC plan or revised RBC plan shall be submitted:
             2851          (a) within 45 days after the occurrence of the regulatory action level event;
             2852          (b) if the insurer or health organization challenges an adjusted RBC report pursuant to
             2853      Section 31A-17-607 and the commissioner determines the challenge is not frivolous, within 45
             2854      days after the notification to the insurer or health organization that after a hearing the
             2855      commissioner rejects the insurer's or health organization's challenge; or
             2856          (c) if the insurer or health organization challenges a revised RBC plan pursuant to Section
             2857      31A-17-607 and the commissioner determines the challenge is not frivolous, within 45 days after
             2858      the notification to the insurer or health organization that after a hearing the commissioner rejects
             2859      the insurer's or health organization's challenge.
             2860          Section 44. Section 31A-17-605 is amended to read:
             2861           31A-17-605. Authorized control level event.
             2862          (1) "Authorized control level event" means any of the following events:
             2863          (a) the filing of an RBC report by the insurer or health organization that indicates that the
             2864      insurer's or health organization's total adjusted capital is greater than or equal to its mandatory
             2865      control level RBC but less than its authorized control level RBC;
             2866          (b) the notification by the commissioner to the insurer or health organization of an adjusted
             2867      RBC report that indicates the event in Subsection (1)(a), provided the insurer or health
             2868      organization does not challenge the adjusted RBC report under Section 31A-17-607 ;
             2869          (c) if, pursuant to Section 31A-17-607 , the insurer or health organization challenges an
             2870      adjusted RBC report that indicates the event in Subsection (1)(a), notification by the commissioner
             2871      to the insurer or health organization that after a hearing the commissioner rejects the insurer's or
             2872      health organization's challenge;
             2873          (d) the failure of the insurer or health organization to respond, in a manner satisfactory to
             2874      the commissioner, to a corrective order, provided the insurer or health organization has not
             2875      challenged the corrective order under Section 31A-17-607 ; or
             2876          (e) if the insurer or health organization has challenged a corrective order under Section
             2877      31A-17-607 and the commissioner after a hearing rejects the challenge or modifies the corrective


             2878      order, the failure of the insurer or health organization to respond, in a manner satisfactory to the
             2879      commissioner, to the corrective order subsequent to rejection or modification by the commissioner.
             2880          (2) (a) In the event of an authorized control level event with respect to an insurer or health
             2881      organization, the commissioner shall:
             2882          (i) take any action required under Section 31A-17-604 regarding an insurer or health
             2883      organization with respect to which a regulatory action level event has occurred; or
             2884          (ii) take any action as is necessary to cause the insurer or health organization to be placed
             2885      under regulatory control under Section 31A-27-201 if the commissioner considers it to be in the
             2886      best interests of:
             2887          (A) the policyholders [and] or members;
             2888          (B) creditors of the insurer or health organization; and
             2889          (C) the public.
             2890          (b) In the event the commissioner takes an action described in Subsection (2)(a), the
             2891      authorized control level event is sufficient grounds for the commissioner to take action under
             2892      Section 31A-27-201 , and the commissioner shall have the rights, powers, and duties with respect
             2893      to the insurer or health organization set forth in Section 31A-27-201 .
             2894          (c) If the commissioner takes an action under Subsection (2)(a) pursuant to an adjusted
             2895      RBC report, the insurer or health organization is entitled to the protections afforded to [insurers]
             2896      an insurer or health organization under Section 31A-27-203 pertaining to summary proceedings.
             2897          Section 45. Section 31A-17-606 is amended to read:
             2898           31A-17-606. Mandatory control level event.
             2899          (1) "Mandatory control level event" means any of the following events:
             2900          (a) the filing of an RBC report that indicates that the insurer's or health organization's total
             2901      adjusted capital is less than its mandatory control level RBC;
             2902          (b) notification by the commissioner to the insurer or health organization of an adjusted
             2903      RBC report that indicates the event in Subsection (1)(a), provided the insurer or health
             2904      organization does not challenge the adjusted RBC report under Section 31A-17-607 ; or
             2905          (c) if, pursuant to Section 31A-17-607 , the insurer or health organization challenges an
             2906      adjusted RBC report that indicates the event in Subsection (1)(a), notification by the commissioner
             2907      to the insurer or health organization that after a hearing the commissioner rejects the insurer's or
             2908      health organization's challenge.


             2909          (2) (a) [(i)] In the event of a mandatory control level event with respect to [a life] an
             2910      insurer or health organization, the commissioner shall take any actions necessary to place the
             2911      insurer under regulatory control under Section 31A-27-201 .
             2912          [(ii)] (b) The mandatory control level event is sufficient grounds for the commissioner to
             2913      take action under Section 31A-27-201 , and the commissioner shall have the rights, powers, and
             2914      duties with respect to the insurer or health organization as are set forth in Section 31A-27-201 .
             2915          [(iii)] (c) If the commissioner takes an action pursuant to an adjusted RBC report, the
             2916      insurer or health organization is entitled to the protections of Section 31A-27-203 pertaining to
             2917      summary proceedings.
             2918          [(iv)] (d) Notwithstanding the other provisions of Subsection (2), the commissioner may
             2919      forego action for up to 90 days after the mandatory control level event if the commissioner finds
             2920      there is a reasonable expectation that the mandatory control level event may be eliminated within
             2921      the 90-day period.
             2922          [(b) (i) In the event of a mandatory control level with respect to a property and casualty
             2923      insurer, the commissioner shall take any action necessary to place the insurer under regulatory
             2924      control under Section 31A-27-201 .]
             2925          [(ii) The mandatory control level event is sufficient grounds for the commissioner to take
             2926      action under Section 31A-27-201 and the commissioner shall have the rights, powers, and duties
             2927      with respect to the insurer set forth in Section 31A-27-201 .]
             2928          [(iii) If the commissioner takes actions pursuant to an adjusted RBC report, the insurer
             2929      shall be entitled to the protections of Section 31A-27-203 pertaining to summary proceedings.]
             2930          [(iv) Notwithstanding any other provision of this section, the commissioner may forego
             2931      action for up to 90 days after the mandatory control level event if the commissioner finds there is
             2932      a reasonable expectation that the mandatory control level event may be eliminated within the
             2933      90-day period.]
             2934          Section 46. Section 31A-17-607 is amended to read:
             2935           31A-17-607. Hearings.
             2936          (1) (a) Following receipt of a notice described in Subsection (2), the insurer or health
             2937      organization shall have the right to a confidential departmental hearing at which the insurer or
             2938      health organization may challenge any determination or action by the commissioner.
             2939          (b) The insurer or health organization shall notify the commissioner of its request for a


             2940      hearing within five days after the notification by the commissioner under Subsections
             2941      31A-17-604 (1), (2), and (3).
             2942          (c) Upon receipt of the insurer's or health organization's request for a hearing, the
             2943      commissioner shall set a date for the hearing, which date shall be no less than ten nor more than
             2944      30 days after the date of the insurer's or health organization's request.
             2945          (2) An insurer or health organization has the right to a hearing under Subsection (1) after:
             2946          (a) notification to an insurer or health organization by the commissioner of an adjusted
             2947      RBC report;
             2948          (b) notification to an insurer or health organization by the commissioner that:
             2949          (i) the insurer's or health organization's RBC plan or revised RBC plan is unsatisfactory;
             2950      and
             2951          (ii) the notification constitutes a regulatory action level event with respect to the insurer
             2952      or health organization;
             2953          (c) notification to any insurer or health organization by the commissioner that the insurer
             2954      or health organization has failed to adhere to its RBC plan or revised RBC plan and that the failure
             2955      has substantial adverse effect on the ability of the insurer or health organization to eliminate the
             2956      company action level event with respect to the insurer or health organization in accordance with
             2957      its RBC plan or revised RBC plan; or
             2958          (d) notification to an insurer or health organization by the commissioner of a corrective
             2959      order with respect to the insurer or health organization.
             2960          Section 47. Section 31A-17-608 is amended to read:
             2961           31A-17-608. Confidentiality -- Prohibition on announcements -- Prohibition on use
             2962      in ratemaking.
             2963          (1) (a) The commissioner shall keep confidential to the extent that information in a report
             2964      or plan is not required to be included in a publicly available annual statement schedule, any detail
             2965      in an RBC report or RBC plan including the results or report of any examination or analysis of an
             2966      insurer or health organization performed pursuant to this part, that is filed by a domestic or foreign
             2967      insurer or health organization with the commissioner or any corrective order issued by the
             2968      commissioner pursuant to examination or analysis.
             2969          (b) Information kept confidential under Subsection (1)(a) may not be made public or be
             2970      subject to subpoena, other than by the commissioner and then only for the purpose of enforcement


             2971      actions taken by the commissioner pursuant to this part or any other provision of the insurance
             2972      laws of this state.
             2973          (2) (a) Except as otherwise required under this part, any insurer or health organization,
             2974      agent, broker, or other person engaged in any manner in the insurance business may not publish,
             2975      disseminate, circulate or place before the public, or cause, directly or indirectly, the publishing,
             2976      disseminating, circulating or placing before the public including, in a newspaper, magazine, other
             2977      publication, a notice, circular, pamphlet, letter, or poster, or over any radio or television station,
             2978      an advertisement, announcement, or statement containing an assertion, representation, or statement
             2979      with regard to the RBC levels of any insurer or health organization, or of any component derived
             2980      in the calculation.
             2981          (b) If any materially false statement with respect to the comparison regarding an insurer's
             2982      or health organization's total adjusted capital to its RBC levels, or an inappropriate comparison of
             2983      any other amount to the insurer's or health organization's RBC levels is published in any written
             2984      publication and the insurer or health organization is able to demonstrate to the commissioner with
             2985      substantial proof the falsity of the statement or the inappropriateness, the insurer or health
             2986      organization may publish an announcement in a written publication if the sole purpose of the
             2987      announcement is to rebut the materially false statement or inappropriate comparison.
             2988          (3) The commissioner may not use an RBC instruction, report, plan, or revised plan:
             2989          (a) for ratemaking;
             2990          (b) as evidence in any rate proceeding; or
             2991          (c) to calculate or derive any element of an appropriate premium level or rate of return for
             2992      any line of insurance or coverage that an insurer or health organization or any affiliate is authorized
             2993      to write or cover.
             2994          Section 48. Section 31A-17-609 is amended to read:
             2995           31A-17-609. Alternate adjusted capital.
             2996          (1) Except as provided in Section 31A-17-602 , [insurers] an insurer or health organization
             2997      licensed under Chapters 5, 7, 8, 9, and 14 shall maintain total adjusted capital as defined in Section
             2998      31A-1-301 in an amount equal to the greater of:
             2999          (a) 175% of the minimum required capital, or of the minimum permanent surplus in the
             3000      case of nonassessable mutuals, required by Section 31A-5-211 , 31A-7-201 , 31A-8-209 ,
             3001      31A-9-209 , or 31A-14-205 ; or


             3002          (b) the net total of:
             3003          (i) 10% of net insurance premiums earned during the year; plus
             3004          (ii) 5% of the admitted value of common stocks and real estate; plus
             3005          (iii) 2% of the admitted value of all other invested assets, exclusive of cash deposits,
             3006      short-term investments, policy loans, and premium notes; less
             3007          (iv) the amount of any asset valuation reserve being maintained by the insurer or health
             3008      organization, but not to exceed the sum of Subsections (1)(b)(ii) and (iii).
             3009          (2) As used in Subsection (1)(b), "premiums earned" means premiums and other
             3010      consideration earned for insurance in the 12-month period ending on the date the calculation is
             3011      made.
             3012          (3) The commissioner may consider an insurer or health organization to be financially
             3013      hazardous under Subsection 31A-27-307 (3), if the insurer or health organization does not have
             3014      qualified assets in an aggregate value exceeding the sum of the insurer's or health organization's
             3015      liabilities and the total adjusted capital required by Subsection (1).
             3016          (4) The commissioner shall consider an insurer or health organization to be financially
             3017      hazardous under Subsection 31A-27-307 (3) if the insurer or health organization does not have
             3018      qualified assets in an aggregate value exceeding the sum of the insurer's or health organization's
             3019      liabilities and 70% of the total adjusted capital required by Subsection (1).
             3020          Section 49. Section 31A-17-610 is amended to read:
             3021           31A-17-610. Foreign insurers.
             3022          (1) (a) Any foreign insurer or health organization shall, upon the written request of the
             3023      commissioner, submit to the commissioner an RBC report as of the end of the most recent calendar
             3024      year by the later of:
             3025          (i) the date an RBC report would be required to be filed by a domestic insurer or health
             3026      organization under this part; or
             3027          (ii) 15 days after the request is received by the foreign insurer or health organization.
             3028          (b) Any foreign insurer or health organization shall, at the written request of the
             3029      commissioner, promptly submit to the commissioner a copy of any RBC plan that is filed with the
             3030      insurance commissioner of any other state.
             3031          (2) (a) The commissioner may require a foreign insurer or health organization to file an
             3032      RBC plan with the commissioner if:


             3033          (i) there is a company action level event, regulatory action level event, or authorized
             3034      control level event with respect to the foreign insurer or health organization as determined under:
             3035          (A) the RBC statute applicable in the state of domicile of the insurer or health
             3036      organization; or[,]
             3037          (B) if no RBC statute is in force in that state, under [the provisions of] this part; and
             3038          (ii) the insurance commissioner of the state of domicile of the foreign insurer or health
             3039      organization fails to require the foreign insurer or health organization to file an RBC plan in the
             3040      manner specified under:
             3041          (A) that state's RBC statute; or[,]
             3042          (B) if no RBC statute is in force in that state, under Section 31A-17-603 .
             3043          (b) If the commissioner requires a foreign insurer or health organization to file an RBC
             3044      plan, the failure of the foreign insurer or health organization to file the RBC plan with the
             3045      commissioner is grounds to order the insurer or health organization to cease and desist from
             3046      writing new insurance business in this state.
             3047          (3) The commissioner may make application to the Third District Court for Salt Lake
             3048      County permitted under Section 31A-27-401 with respect to the liquidation of property of a foreign
             3049      [insurers] insurer or health organization found in this state if:
             3050          (a) a mandatory control level event occurs with respect to any foreign insurer or health
             3051      organization; and
             3052          (b) no domiciliary receiver has been appointed with respect to the foreign insurer or health
             3053      organization under the rehabilitation and liquidation statute applicable in the state of domicile of
             3054      the foreign insurer or health organization.
             3055          Section 50. Section 31A-17-613 is amended to read:
             3056           31A-17-613. Effective date of notice.
             3057          A notice by the commissioner to an insurer or health organization that may result in
             3058      regulatory action under this chapter is effective the sooner of:
             3059          (1) the date the insurer or health organization receives the notice; or
             3060          (2) three days after mailing the notice.
             3061          Section 51. Section 31A-18-105 is amended to read:
             3062           31A-18-105. Permitted classes of investments.
             3063          The following classes of investment may be counted for the purposes specified under


             3064      Chapter 17, Part 6, Risk-Based Capital:
             3065          (1) bonds or other evidences of indebtedness of:
             3066          (a) (i) governmental units in the United States or Canada[, or];
             3067          (ii) instrumentalities of [those] the governmental units[,] described in Subsection (1)(a)(i);
             3068      or [of]
             3069          (iii) private corporations domiciled in the United States[,]; and
             3070          (b) including demand deposits and certificates of deposits in solvent banks and savings and
             3071      loan institutions;
             3072          (2) equipment trust obligations or certificates [which] that are adequately secured
             3073      instruments evidencing an interest in transportation equipment [which] that is located wholly or
             3074      in part within the United States, with a right to receive determined portions of the rental, or to
             3075      purchase other fixed obligatory payments for the use or purchase of the transportation equipment;
             3076          (3) loans secured by:
             3077          (a) mortgages[,];
             3078          (b) trust deeds[,]; or
             3079          (c) other statutorily authorized types of security interests in real estate located in the United
             3080      States;
             3081          (4) loans secured by pledged securities or evidences of debt eligible for investment under
             3082      this section;
             3083          (5) preferred stocks of United States corporations;
             3084          (6) common stocks of United States corporations;
             3085          (7) real estate which is used as the home office or branch office of the insurer;
             3086          (8) real estate in the United States which produces substantial income;
             3087          (9) loans upon the security of the insurer's own policies in amounts that are adequately
             3088      secured by the policies and that do not exceed the surrender value of the policies;
             3089          (10) financial futures contracts used for hedging and not for speculation, as approved under
             3090      rules adopted by the commissioner;
             3091          (11) investments in foreign securities of the classes permitted under this section as required
             3092      for compliance with Section 31A-18-103 ;
             3093          (12) investments permitted under Subsection 31A-18-102 (2); and
             3094          (13) other investments as the commissioner authorizes by rule.


             3095          Section 52. Section 31A-19a-101 is amended to read:
             3096           31A-19a-101. Title -- Scope and purposes.
             3097          (1) This chapter is known as the "Utah Rate Regulation Act."
             3098          (2) (a) (i) Except as provided in Subsection (2)(a)(ii), this chapter applies to all kinds and
             3099      lines of direct insurance written on risks or operations in this state by an insurer authorized to do
             3100      business in this state.
             3101          (ii) This chapter does not apply to:
             3102          (A) life insurance other than credit life insurance;
             3103          (B) variable and fixed annuities;
             3104          (C) health and [disability] accident and health insurance other than credit [disability]
             3105      accident and health insurance; and
             3106          (D) reinsurance.
             3107          (b) This chapter applies to all insurers authorized to do any line of business, except those
             3108      specified in Subsection (2)(a)(ii).
             3109          (3) It is the purpose of this chapter to:
             3110          (a) protect policyholders and the public against the adverse effects of excessive,
             3111      inadequate, or unfairly discriminatory rates;
             3112          (b) encourage independent action by and reasonable price competition among insurers so
             3113      that rates are responsive to competitive market conditions;
             3114          (c) provide formal regulatory controls for use if independent action and price competition
             3115      fail;
             3116          (d) provide regulatory procedures for the maintenance of appropriate data reporting
             3117      systems;
             3118          (e) authorize cooperative action among insurers in the rate-making process, and regulate
             3119      that cooperation to prevent practices that bring about a monopoly or lessen or destroy competition;
             3120          (f) encourage the most efficient and economic marketing practices; and
             3121          (g) regulate the business of insurance in a manner that, under the McCarran-Ferguson Act,
             3122      15 U.S.C. Secs. 1011 through 1015, will preclude application of federal antitrust laws.
             3123          (4) Rate filings made prior to July 1, 1986, under former Title 31, Chapter 18, are
             3124      continued. Rate filings made after July 1, 1986, are subject to the requirements of this chapter.
             3125          Section 53. Section 31A-21-103 is amended to read:


             3126           31A-21-103. Capacity to contract.
             3127           Any person 16 years of age or older who is otherwise competent to contract under Utah
             3128      law, and who is not subject to any legal disability, may contract for insurance. If there is a
             3129      conservator appointed under Title 75, the conservator, rather than the person whose property is
             3130      subject to the conservatorship, may contract for insurance to protect the property under
             3131      conservatorship. In the case of a conservatorship over the person or property of a person under 16
             3132      years of age, the conservator may invest funds of the estate in life or [disability] accident and
             3133      health insurance or annuity contracts, but only with the approval of the court having jurisdiction
             3134      over the conservatorship.
             3135          Section 54. Section 31A-21-104 is amended to read:
             3136           31A-21-104. Insurable interest and consent.
             3137          (1) (a) An insurer may not knowingly provide insurance to a person who does not have or
             3138      expect to have an insurable interest in the subject of the insurance.
             3139          (b) A person may not knowingly procure, directly, by assignment, or otherwise, an interest
             3140      in the proceeds of an insurance policy unless he has or expects to have an insurable interest in the
             3141      subject of the insurance.
             3142          (c) Except as provided in Subsections (6), (7), and (8), any insurance provided in violation
             3143      of this subsection is subject to Subsection (5).
             3144          (2) As used in this chapter:
             3145          (a) "Insurable interest" in a person means, for persons closely related by blood or by law,
             3146      a substantial interest engendered by love and affection, or in the case of other persons, a lawful and
             3147      substantial interest in having the life, health, and bodily safety of the person insured continue.
             3148      Policyholders in group insurance contracts need no insurable interest if certificate holders or
             3149      persons other than group policyholders who are specified by the certificate holders are the
             3150      recipients of the proceeds of the policies. Each person has an unlimited insurable interest in his
             3151      own life and health. A shareholder or partner has an insurable interest in the life of other
             3152      shareholders or partners for purposes of insurance contracts that are an integral part of a legitimate
             3153      buy-sell agreement respecting shares or a partnership interest in the business.
             3154          (b) "Insurable interest" in property or liability means any lawful and substantial economic
             3155      interest in the nonoccurrence of the event insured against.
             3156          (c) "Viatical settlement" means a written contract entered into by a person who is the


             3157      policyholder of a life insurance policy insuring the life of a terminally ill person, under which the
             3158      insured assigns, transfers ownership, irrevocably designates a specific person or otherwise
             3159      alienates all control and right in the insurance policy to another person, when the proceeds of the
             3160      contract is paid to the policyholder of the insurance policy or the policyholder's designee prior to
             3161      the death of the subject.
             3162          (3) Except as provided in Subsection (4), an insurer may not knowingly issue an individual
             3163      life or [disability] accident and health insurance policy to a person other than the one whose life
             3164      or health is at risk unless that person, who is 18 years of age or older and not under guardianship
             3165      under Title 75, Chapter 5, Protection of Persons Under Disability and Their Property, has given
             3166      written consent to the issuance of the policy. The person shall express consent either by signing
             3167      an application for the insurance with knowledge of the nature of the document, or in any other
             3168      reasonable way. Any insurance provided in violation of this subsection is subject to Subsection (5).
             3169          (4) (a) A life or [disability] accident and health insurance policy may be taken out without
             3170      consent in the following cases:
             3171          (i) A person may obtain insurance on a dependent who does not have legal capacity.
             3172          (ii) A creditor may, at the creditor's expense, obtain insurance on the debtor in an amount
             3173      reasonably related to the amount of the debt.
             3174          (iii) A person may obtain life and [disability] accident and health insurance on immediate
             3175      family members living with or dependent on the person.
             3176          (iv) A person may obtain [a disability] an accident and health insurance policy on others
             3177      that would merely indemnify the policyholder against expenses he would be legally or morally
             3178      obligated to pay.
             3179          (v) The commissioner may adopt rules permitting issuance of insurance for a limited term
             3180      on the life or health of a person serving outside the continental United States who is in the public
             3181      service of the United States, if the policyholder is related within the second degree by blood or by
             3182      marriage to the person whose life or health is insured.
             3183          (b) Consent may be given by another in the following cases:
             3184          (i) A parent, a person having legal custody of a minor, or a guardian of the person under
             3185      Title 75, Chapter 5, Protection of Persons Under Disability and Their Property, may consent to the
             3186      issuance of a policy on a dependent child or on a person under guardianship under Title 75,
             3187      Chapter 5, Protection of Persons Under Disability and Their Property.


             3188          (ii) A grandparent may consent to the issuance of life or [disability] accident and health
             3189      insurance on a grandchild.
             3190          (iii) A court of general jurisdiction may give consent to the issuance of a life or [disability]
             3191      accident and health insurance policy on an ex parte application showing facts the court considers
             3192      sufficient to justify the issuance of that insurance.
             3193          (5) An insurance policy is not invalid because the policyholder lacks insurable interest or
             3194      because consent has not been given, but a court with appropriate jurisdiction may order the
             3195      proceeds to be paid to some person who is equitably entitled to them, other than the one to whom
             3196      the policy is designated to be payable, or it may create a constructive trust in the proceeds or a part
             3197      of them on behalf of such a person, subject to all the valid terms and conditions of the policy other
             3198      than those relating to insurable interest or consent.
             3199          (6) This section does not prevent any organization described under 26 U.S.C. Sec.
             3200      501(c)(3), (e), or (f), as amended, and the regulations made under this section, and which is
             3201      regulated under Title 13, Chapter 22, Charitable Solicitations Act, from soliciting and procuring,
             3202      by assignment or designation as beneficiary, a gift or assignment of an interest in life insurance on
             3203      the life of the donor or assignor or from enforcing payment of proceeds from that interest.
             3204          (7) This section does not prevent:
             3205          (a) any policyholder of life insurance, whether or not the policyholder is also the subject
             3206      of the insurance, from entering into a viatical settlement;
             3207          (b) any person from soliciting a person to enter into a viatical settlement; or
             3208          (c) a person from enforcing payment of proceeds from the interest obtained under a viatical
             3209      settlement.
             3210          (8) Notwithstanding Subsection (1), an insurer authorized under this title to issue a
             3211      workers' compensation policy may issue a workers' compensation policy to a sole proprietorship,
             3212      corporation, or partnership that elects not to include any owner, corporate officer, or partner as an
             3213      employee under the policy even if at the time the policy is issued the sole proprietorship,
             3214      corporation, or partnership has no employees.
             3215          Section 55. Section 31A-21-201 is amended to read:
             3216           31A-21-201. Filing and approval of forms.
             3217          (1) (a) A form subject to Subsection 31A-21-101 (1), except as exempted under
             3218      Subsections 31A-21-101 (2) through (6), may not be used, sold, or offered for sale unless it has


             3219      been filed with the commissioner.
             3220          (b) A form is considered filed with the commissioner when the commissioner receives:
             3221          (i) the form;
             3222          (ii) the applicable filing fee as prescribed under Section 31A-3-103 ; and
             3223          (iii) the applicable transmittal forms as required by the commissioner.
             3224          (2) In filing a form for use in this state the insurer is responsible for assuring that the form
             3225      is in compliance with this title and rules adopted by the commissioner.
             3226          (3) (a) The commissioner may [disapprove] prohibit the use of a form at any time upon
             3227      a finding that:
             3228          (i) it is:
             3229          (A) inequitable;
             3230          (B) unfairly discriminatory;
             3231          (C) misleading;
             3232          (D) deceptive;
             3233          (E) obscure;
             3234          (F) unfair;
             3235          (G) encourages misrepresentation; or
             3236          (H) not in the public interest;
             3237          (ii) it provides benefits or contains other provisions that endanger the solidity of the
             3238      insurer;
             3239          (iii) in the case of the basic policy and the application for a basic policy, it fails to
             3240      conspicuously, as defined by rule, provide:
             3241          (A) the exact name of the insurer [and];
             3242          (B) its state of domicile; and
             3243          (C) the address of its administrative office.
             3244          (iv) it violates a statute or a rule adopted by the commissioner; or
             3245          (v) it is otherwise contrary to law.
             3246          (b) Subsection (3)(a)(iii) does not apply to riders and endorsements to a basic policy.
             3247          (c) (i) Whenever the commissioner [disapproves] prohibits the use of a form under
             3248      Subsection (3)(a), the commissioner may order that, on or before a date not less than 15 days after
             3249      the order, the use of the form be discontinued.


             3250          (ii) Once a form has been [disapproved] prohibited, it may not be used unless appropriate
             3251      changes are filed with and [approved] reviewed by the commissioner.
             3252          (iii) Whenever the commissioner [disapproves] prohibits the use a form under Subsection
             3253      (3)(a), the commissioner may require the insurer to disclose contract deficiencies to existing
             3254      policyholders.
             3255          (d) The commissioner's [disapproval] prohibition under this Subsection (3) shall:
             3256          (i) be in writing [and constitutes];
             3257          (ii) constitute an order[. The order shall]; and
             3258          (iii) state the reasons for [disapproval] the prohibition.
             3259          (4) (a) If, after a hearing, the commissioner determines that it is in the public interest, the
             3260      commissioner may require by rule or order that certain forms be subject to the commissioner's
             3261      approval prior to their use.
             3262          (b) The rule or order described in Subsection (4)(a) shall prescribe the filing procedures
             3263      for the forms if different than stated in this section.
             3264          (c) The types of forms that may be addressed under Subsection (4)(a) include:
             3265          (i) forms for a particular class of insurance;
             3266          (ii) forms for a specific line of insurance;
             3267          (iii) a specific type of form; or
             3268          (iv) forms for a specific market segment.
             3269          Section 56. Section 31A-21-301 is amended to read:
             3270           31A-21-301. Clauses required to be in a prominent position.
             3271          (1) The following portions of insurance policies shall appear conspicuously in the policy:
             3272          (a) [the name and state of domicile of the insurer] as required by Subsection 31A-21-201
             3273      (3)(a)(iii)[;]:
             3274          (i) the exact name of the insurer;
             3275          (ii) the state of domicile of the insurer; and
             3276          (iii) the address of the administrative office of the insurer;
             3277          (b) information that two or more insurers under Subsection (1)(a) undertake only several
             3278      liability, as required by Section 31A-21-306 ;
             3279          (c) if a policy is assessable, a statement of that;
             3280          (d) a statement that benefits are variable, as required by Subsection 31A-22-411 (1);


             3281      however, the methods of calculation need not be in a prominent position;
             3282          (e) the right to return a life or [disability] accident and health insurance policy under
             3283      Sections 31A-22-423 and 31A-22-606 ; and
             3284          (f) the beginning and ending dates of insurance protection.
             3285          (2) Each clause listed in Subsection (1) shall be displayed conspicuously and separately
             3286      from any other clause.
             3287          Section 57. Section 31A-21-303 is amended to read:
             3288           31A-21-303. Termination of insurance policies by insurers.
             3289          (1) (a) Except as otherwise provided in this section, in other statutes, or by rule under
             3290      Subsection (1)(c), this section applies to all policies of insurance other than life and [disability]
             3291      accident and health insurance and annuities, if the policies of insurance are issued on forms that
             3292      are subject to filing and approval under Subsection 31A-21-201 (1).
             3293          (b) A policy may provide terms more favorable to insureds than this section requires.
             3294          (c) The commissioner may by rule totally or partially exempt from this section classes of
             3295      insurance policies in which the insureds do not need protection against arbitrary or unannounced
             3296      termination.
             3297          (d) The rights provided by this section are in addition to and do not prejudice any other
             3298      rights the insureds may have at common law or under other statutes.
             3299          (2) (a) As used in this Subsection (2), "grounds" means:
             3300          (i) material misrepresentation;
             3301          (ii) substantial change in the risk assumed, unless the insurer should reasonably have
             3302      foreseen the change or contemplated the risk when entering into the contract;
             3303          (iii) substantial breaches of contractual duties, conditions, or warranties;
             3304          (iv) attainment of the age specified as the terminal age for coverage, in which case the
             3305      insurer may cancel by notice under Subsection (2)(c), accompanied by a tender of proportional
             3306      return of premium; or
             3307          (v) in the case of automobile insurance, revocation or suspension of the driver's license of
             3308      the named insured or any other person who customarily drives the car.
             3309          (b) (i) Except as provided in Subsection (2)(e) or unless the conditions of Subsection
             3310      (2)(b)(ii) are met, an insurance policy may not be canceled by the insurer before the earlier of:
             3311          (A) the expiration of the agreed term; or


             3312          (B) one year from the effective date of the policy or renewal.
             3313          (ii) Notwithstanding Subsection (2)(b)(i), an insurance policy may be canceled by the
             3314      insurer for:
             3315          (A) nonpayment of a premium when due; or
             3316          (B) on grounds defined in Subsection (2)(a).
             3317          (c) (i) The cancellation provided by Subsection (2)(b), except cancellation for nonpayment
             3318      of premium, is effective no sooner than 30 days after the delivery or first-class mailing of a written
             3319      notice to the policyholder.
             3320          (ii) Cancellation for nonpayment of premium is effective no sooner than ten days after
             3321      delivery or first class mailing of a written notice to the policyholder.
             3322          (d) (i) Notice of cancellation for nonpayment of premium shall include a statement of the
             3323      reason for cancellation.
             3324          (ii) Subsection (6) applies to the notice required for grounds of cancellation other than
             3325      nonpayment of premium.
             3326          (e) (i) Subsections (2)(a) through (d) do not apply to any insurance contract that has not
             3327      been previously renewed if the contract has been in effect less than 60 days when the written notice
             3328      of cancellation is mailed or delivered.
             3329          (ii) A cancellation under this Subsection (2)(e) may not be effective until at least ten days
             3330      after the delivery to the insured of a written notice of cancellation.
             3331          (iii) If the notice required by this Subsection (2)(e) is sent by first-class mail, postage
             3332      prepaid, to the insured at the insured's last-known address, delivery is considered accomplished
             3333      after the passing, since the mailing date, of the mailing time specified in the Utah Rules of Civil
             3334      Procedure.
             3335          (iv) A policy cancellation subject to this Subsection (2)(e) is not subject to the procedures
             3336      described in Subsection (6).
             3337          (3) A policy may be issued for a term longer than one year or for an indefinite term if the
             3338      policy includes a clause providing for cancellation by the insurer by giving notice as provided in
             3339      Subsection (4)(b)(i) 30 days prior to any anniversary date.
             3340          (4) (a) Subject to Subsections (2), (3), and (4)(b), a policyholder has a right to have the
             3341      policy renewed:
             3342          (i) on the terms then being applied by the insurer to similar risks; and


             3343          (ii) (A) for an additional period of time equivalent to the expiring term if the agreed term
             3344      is one year or less; or
             3345          (B) for one year if the agreed term is longer than one year.
             3346          (b) Except as provided in Subsection (4)(c), the right to renewal under Subsection (4)(a)
             3347      is extinguished if:
             3348          (i) at least 30 days prior to the policy expiration or anniversary date a notice of intention
             3349      not to renew the policy beyond the agreed expiration or anniversary date is delivered or sent by
             3350      first-class mail by the insurer to the policyholder at the policyholder's last-known address;
             3351          (ii) not more than 45 nor less than 14 days prior to the due date of the renewal premium,
             3352      the insurer delivers or sends by first-class mail a notice to the policyholder at the policyholder's
             3353      last-known address, clearly stating:
             3354          (A) the renewal premium;
             3355          (B) how it may be paid; and
             3356          (C) that failure to pay the renewal premium by the due date extinguishes the policyholder's
             3357      right to renewal;
             3358          (iii) the policyholder has:
             3359          (A) accepted replacement coverage; or
             3360          (B) requested or agreed to nonrenewal; or
             3361          (iv) the policy is expressly designated as nonrenewable.
             3362          (c) Unless the conditions of Subsection (4)(b)(iii) or (iv) apply, an insurer may not fail to
             3363      renew an insurance policy as a result of a telephone call or other inquiry that:
             3364          (i) references a policy coverage; and
             3365          (ii) does not result in a claim being filed or paid.
             3366          (5) (a) (i) Subject to Subsection (5)(b), if the insurer offers or purports to renew the policy,
             3367      but on less favorable terms or at higher rates, the new terms or rates take effect on the renewal date
             3368      if the insurer delivered or sent by first-class mail to the policyholder notice of the new terms or
             3369      rates at least 30 days prior to the expiration date of the prior policy.
             3370          (ii) If the insurer did not give the prior notification described in Subsection (5)(a)(i) to the
             3371      policyholder the new terms or rates do not take effect until 30 days after the notice is delivered or
             3372      sent by first-class mail, in which case the policyholder may elect to cancel the renewal policy at
             3373      any time during the 30-day period.


             3374          (iii) Return premiums or additional premium charges shall be calculated proportionately
             3375      on the basis that the old rates apply.
             3376          (b) Subsection (5)(a) does not apply if the only change in terms that is adverse to the
             3377      policyholder is:
             3378          (i) a rate increase generally applicable to the class of business to which the policy belongs;
             3379          (ii) a rate increase resulting from a classification change based on the altered nature or
             3380      extent of the risk insured against; or
             3381          (iii) a policy form change made to make the form consistent with Utah law.
             3382          (6) (a) If a notice of cancellation or nonrenewal under Subsection (2)(c) does not state with
             3383      reasonable precision the facts on which the insurer's decision is based, the insurer shall send by
             3384      first-class mail or deliver that information within ten working days after receipt of a written request
             3385      by the policyholder.
             3386          (b) A notice under Subsection (2)(c) is not effective unless it contains information about
             3387      the policyholder's right to make the request.
             3388          (7) If a risk-sharing plan under Section 31A-2-214 exists for the kind of coverage provided
             3389      by the insurance being cancelled or nonrenewed, a notice of cancellation or nonrenewal required
             3390      under Subsection (2)(c) or (4)(b)(i) may not be effective unless it contains instructions to the
             3391      policyholder for applying for insurance through the available risk-sharing plan.
             3392          (8) There is no liability on the part of, and no cause of action against, any insurer, its
             3393      authorized representatives, agents, employees, or any other person furnishing to the insurer
             3394      information relating to the reasons for cancellation or nonrenewal or for any statement made or
             3395      information given by them in complying or enabling the insurer to comply with this section unless
             3396      actual malice is proved by clear and convincing evidence.
             3397          (9) This section does not alter any common law right of contract rescission for material
             3398      misrepresentation.
             3399          Section 58. Section 31A-21-307 is amended to read:
             3400           31A-21-307. Other insurance.
             3401          (1) When two or more policies promise to indemnify an insured against the same loss
             3402      without intending cumulative coverage, no "other insurance" provisions of the policies may reduce
             3403      the aggregate protection of the insured below the lesser of the actual insured loss suffered by the
             3404      insured and the maximum indemnification promised by any policy without regard to any "other


             3405      insurance" provision.
             3406          (2) Subject to Subsection (1), the policies may by their terms define the extent to which
             3407      each insurance is primary and each is excess, but if the "other insurance" terms of the policies are
             3408      inconsistent, there is joint and several liability to the insured on any coverage which overlaps and
             3409      which has inconsistent terms. Subsequent settlement among the insurers does not alter any rights
             3410      of the insured. The commissioner may adopt rules consistent with this section concerning "other
             3411      insurance."
             3412          (3) This section does not apply to [disability] accident and health insurance policies. Refer
             3413      to Section 31A-22-619 for the coordination of [disability] accident and health benefits.
             3414          Section 59. Section 31A-21-401 is amended to read:
             3415           31A-21-401. Scope and construction of part.
             3416          This part applies to all mass marketed life or [disability] accident and health insurance,
             3417      notwithstanding Subsection 31A-1-103 (3)[(h)]. This part may not be construed to limit the
             3418      application of other provisions of this title to insurers effecting mass marketed life or [disability]
             3419      accident and health insurance policies on persons in this state.
             3420          Section 60. Section 31A-21-402 is amended to read:
             3421           31A-21-402. Definitions.
             3422          As used in this part:
             3423          (1) "Direct response solicitation" means any offer by an insurer to persons in this state,
             3424      either directly or through a third party, to effect life or [disability] accident and health insurance
             3425      coverage which enables the individual to apply or enroll for the insurance on the basis of the offer.
             3426      Direct response solicitation does not include solicitations for insurance through an employee
             3427      benefit plan exempt from state regulation under preemptive federal law, nor does it include
             3428      solicitations through the individual's creditor with respect to credit life or credit [disability]
             3429      accident and health insurance.
             3430          (2) "Mass marketed life or [disability] accident and health insurance" means the insurance
             3431      under any individual, franchise, group, or blanket policy of life or [disability] accident and health
             3432      insurance which is offered by means of direct response solicitation through a sponsoring
             3433      organization or through the mails or other mass communications media and under which the
             3434      person insured pays all or substantially all of the cost of his insurance.
             3435          Section 61. Section 31A-21-403 is amended to read:


             3436           31A-21-403. Orders terminating effectiveness of policies.
             3437          Upon the commissioner's order, no mass marketed life or [disability] accident and health
             3438      insurance issued by an insurer may continue to be effected on persons in this state. The
             3439      commissioner may issue an order under this section only if he finds, after a hearing, that the total
             3440      charges for the insurance to the persons insured are unreasonable in relation to the benefits
             3441      provided. The commissioner's findings under this section must be in writing. Orders under this
             3442      section may direct the insurer to cease effecting the insurance until the total charges for the
             3443      insurance are found by the commissioner to be reasonable in relation to the benefits provided.
             3444          Section 62. Section 31A-21-404 is amended to read:
             3445           31A-21-404. Out-of-state insurers.
             3446          Any insurer extending mass marketed life or [disability] accident and health insurance
             3447      under a group or blanket policy issued outside of this state to residents of this state shall, with
             3448      respect to the mass marketed life or [disability] accident and health insurance policy:
             3449          (1) comply with Sections 31A-23-302 and 31A-23-303 and Part III of Chapter 26; and
             3450          (2) upon the commissioner's request, deliver to the commissioner a copy of any mass
             3451      marketed life or [disability] accident and health insurance policy, certificates issued under these
             3452      policies, and advertising material used in this state in connection with the policy.
             3453          Section 63. Section 31A-21-501 is amended to read:
             3454           31A-21-501. Definitions.
             3455          For purposes of this part:
             3456          (1) "Applicant" means:
             3457          (a) in the case of an individual life or [disability] accident and health policy, the person
             3458      who seeks to contract for insurance benefits; or
             3459          (b) in the case of a group life or [disability] accident and health policy, the proposed
             3460      certificate holder.
             3461          (2) "Cohabitant" means an emancipated individual pursuant to Section 15-2-1 or an
             3462      individual who is 16 years of age or older who:
             3463          (a) is or was a spouse of the other party;
             3464          (b) is or was living as if a spouse of the other party;
             3465          (c) is related by blood or marriage to the other party;
             3466          (d) has one or more children in common with the other party; or


             3467          (e) resides or has resided in the same residence as the other party.
             3468          (3) "Child abuse" means the commission or attempt to commit against a child a criminal
             3469      offense described in:
             3470          (a) Title 76, Chapter 5, Part 1, Assault and Related Offenses;
             3471          (b) Title 76, Chapter 5, Part 4, Sexual Offenses;
             3472          (c) Subsections 76-9-702 (1) through (4), Lewdness- Sexual battery; or
             3473          (d) Section 76-9-702.5 , Lewdness Involving a Child.
             3474          (4) "Domestic violence" means any criminal offense involving violence or physical harm
             3475      or threat of violence or physical harm, or any attempt, conspiracy, or solicitation to commit a
             3476      criminal offense involving violence or physical harm, when committed by one cohabitant against
             3477      another and includes commission or attempt to commit, any of the following offenses by one
             3478      cohabitant against another:
             3479          (a) aggravated assault, as described in Section 76-5-103 ;
             3480          (b) assault, as described in Section 76-5-102 ;
             3481          (c) criminal homicide, as described in Section 76-5-201 ;
             3482          (d) harassment, as described in Section 76-5-106 ;
             3483          (e) telephone harassment, as described in Section 76-9-201 ;
             3484          (f) kidnaping, child kidnaping, or aggravated kidnaping, as described in Sections 76-5-301 ,
             3485      76-5-301.1 , and 76-5-302 ;
             3486          (g) mayhem, as described in Section 76-5-105 ;
             3487          (h) sexual offenses, as described in Title 76, Chapter 5, Part 4, and Title 76, Chapter 5a;
             3488          (i) stalking, as described in Section 76-5-106.5 ;
             3489          (j) unlawful detention, as described in Section 76-5-304 ;
             3490          (k) violation of a protective order or ex parte protective order, as described in Section
             3491      76-5-108 ;
             3492          (l) any offense against property described in Title 76, Chapter 6, Part 1, 2, or 3;
             3493          (m) possession of a deadly weapon with intent to assault, as described in Section
             3494      76-10-507 ; or
             3495          (n) discharge of a firearm from a vehicle, near a highway, or in the direction of any person,
             3496      building, or vehicle, as described in Section 76-10-508 .
             3497          (5) "Subject of domestic abuse" means an individual who is, has been, may currently be,


             3498      or may have been subject to domestic violence or child abuse.
             3499          Section 64. Section 31A-21-502 is amended to read:
             3500           31A-21-502. Scope of part.
             3501          This part applies to only life and [disability] accident and health insurance.
             3502          Section 65. Section 31A-21-503 is amended to read:
             3503           31A-21-503. Discrimination based on domestic violence or child abuse prohibited.
             3504          (1) Except as provided in Subsection (2), an insurer of life or [disability] accident and
             3505      health insurance may not consider whether an insured or applicant is the subject of domestic abuse
             3506      as a factor to:
             3507          (a) refuse to insure the applicant;
             3508          (b) refuse to continue to insure the insured;
             3509          (c) refuse to renew or reissue a policy to insure the insured or applicant;
             3510          (d) limit the amount, extent, or kind of coverage available to the insured or applicant;
             3511          (e) charge a different rate for coverage to the insured or applicant;
             3512          (f) exclude or limit benefits or coverage under an insurance policy or contract for losses
             3513      incurred;
             3514          (g) deny a claim; or
             3515          (h) terminate coverage or fail to provide conversion privileges in violation of Sections
             3516      31A-22-612 and 31A-22-710 under a group [disability] accident and health policy for the insured
             3517      because the coverage was issued in the name of the perpetrator of the domestic violence or abuse.
             3518          (2) (a) Notwithstanding Subsection (1), an insurer may underwrite based on the physical
             3519      or mental condition of an insured or applicant if the underwriting is based on a determination that
             3520      there is a correlation between the medical or mental condition and a material increase in insurance
             3521      risk.
             3522          (b) For purposes of Subsection (2)(a), the fact that an insured or applicant is a subject of
             3523      domestic abuse is not a mental or physical condition.
             3524          (c) The determination required by Subsection (2)(a) shall be made in conformance with
             3525      sound actuarial principles.
             3526          (d) Within 30 days after receiving an oral or written request from an insured or applicant,
             3527      an insurer shall disclose in writing:
             3528          (i) the basis of an action permitted under Subsection (2)(a); and


             3529          (ii) if the policy has been issued or modified, the extent the action taken will impact the
             3530      amount, extent, or kind of coverage or benefits available to the insured.
             3531          Section 66. Section 31A-21-505 is amended to read:
             3532           31A-21-505. Limit on liability.
             3533          An insurer that issues a life or [disability] accident and health insurance policy to an
             3534      individual who is the subject of domestic abuse is not liable civilly or criminally for the death of
             3535      or any injuries to the insured as a result of domestic violence or child abuse beyond the obligations
             3536      of the insurer under:
             3537          (1) the insurance policy; or
             3538          (2) this title.
             3539          Section 67. Section 31A-22-307 is amended to read:
             3540           31A-22-307. Personal injury protection coverages and benefits.
             3541          (1) Personal injury protection coverages and benefits include:
             3542          (a) the reasonable value of all expenses for necessary medical, surgical, X-ray, dental,
             3543      rehabilitation, including prosthetic devices, ambulance, hospital, and nursing services, not to
             3544      exceed a total of $3,000 per person;
             3545          (b) (i) the lesser of $250 per week or 85% of any loss of gross income and loss of earning
             3546      capacity per person from inability to work, for a maximum of 52 consecutive weeks after the loss,
             3547      except that this benefit need not be paid for the first three days of disability, unless the disability
             3548      continues for longer than two consecutive weeks after the date of injury; and
             3549          (ii) a special damage allowance not exceeding $20 per day for a maximum of 365 days,
             3550      for services actually rendered or expenses reasonably incurred for services that, but for the injury,
             3551      the injured person would have performed for his household, except that this benefit need not be
             3552      paid for the first three days after the date of injury unless the person's inability to perform these
             3553      services continues for more than two consecutive weeks;
             3554          (c) funeral, burial, or cremation benefits not to exceed a total of $1,500 per person; and
             3555          (d) compensation on account of death of a person, payable to his heirs, in the total of
             3556      $3,000.
             3557          (2) (a) To determine the reasonable value of the medical expenses provided for in
             3558      Subsection (1) and under Subsection 31A-22-309 (1)(e), the commissioner shall conduct a relative
             3559      value study of services and accommodations for the diagnosis, care, recovery, or rehabilitation of


             3560      an injured person in the most populous county in the state to assign a unit value and determine the
             3561      75th percentile charge for each type of service and accommodation. The study shall be updated
             3562      every other year. In conducting the study, the department may consult or contract with appropriate
             3563      public and private medical and health agencies or other technical experts. The costs and expenses
             3564      incurred in conducting, maintaining, and administering the relative value study shall be funded by
             3565      the tax created under Section 59-9-105 . Upon completion of the study, the department shall
             3566      prepare and publish a relative value study which sets forth the unit value and the 75th percentile
             3567      charge assigned to each type of service and accommodation.
             3568          (b) The reasonable value of any service or accommodation is determined by applying the
             3569      unit value and the 75th percentile charge assigned to the service or accommodation under the
             3570      relative value study. If a service or accommodation is not assigned a unit value or the 75th
             3571      percentile charge under the relative value study, the value of the service or accommodation shall
             3572      equal the reasonable cost of the same or similar service or accommodation in the most populous
             3573      county of this state.
             3574          (c) This subsection does not preclude the department from adopting a schedule already
             3575      established or a schedule prepared by persons outside the department, if it meets the requirements
             3576      of this subsection.
             3577          (d) Every insurer shall report to the Commissioner of Insurance any patterns of
             3578      overcharging, excessive treatment, or other improper actions by a health provider within 30 days
             3579      after such insurer has knowledge of such pattern.
             3580          (e) (i) In disputed cases, a court on its own motion or on the motion of either party may
             3581      designate an impartial medical panel of not more than three licensed physicians to examine the
             3582      claimant and testify on the issue of the reasonable value of the claimant's medical services or
             3583      expenses.
             3584          (ii) An impartial medical panel designated under Subsection (2)(e)(i) shall consist of a
             3585      majority of health care professionals within the same license classification and specialty as the
             3586      provider of the claimant's medical services or expenses.
             3587          (3) Medical expenses as provided for in Subsection (1)(a) and in Subsection 31A-22-309
             3588      (1)(e) include expenses for any nonmedical remedial care and treatment rendered in accordance
             3589      with a recognized religious method of healing.
             3590          (4) The insured may waive for the named insured and the named insured's spouse only the


             3591      loss of gross income benefits of Subsection (1)(b)(i) if the insured states in writing that:
             3592          (a) within 31 days of applying for coverage, neither the insured nor the insured's spouse
             3593      received any earned income from regular employment; and
             3594          (b) for at least 180 days from the date of the writing and during the period of insurance,
             3595      neither the insured nor the insured's spouse will receive earned income from regular employment.
             3596          (5) This section does not prohibit the issuance of policies of insurance providing coverages
             3597      greater than the minimum coverage required under this chapter nor does it require the segregation
             3598      of those minimum coverages from other coverages in the same policy.
             3599          (6) Deductibles are not permitted with respect to the insurance coverages required under
             3600      this section.
             3601          Section 68. Section 31A-22-403 is amended to read:
             3602           31A-22-403. Incontestability.
             3603          (1) This section does not apply to group policies.
             3604          (2) Each life insurance policy is, and shall state that, after it has been in force during the
             3605      lifetime of the insured for a period of two years from its date of issue, it is incontestable except for
             3606      the following:
             3607          (a) The policy may be contested for nonpayment of premiums.
             3608          (b) The policy may be contested as to:
             3609          (i) provisions relating to [disability] accident and health benefits allowed under Section
             3610      31A-22-609 [,]; and [as to]
             3611          (ii) additional benefits in the event of death by accident [or accidental means].
             3612          (c) If the policy allows the insured, after the policy's issuance and for an additional
             3613      premium, to obtain a death benefit which is larger than when the policy was originally issued, then
             3614      the payment of the additional increment of benefit is contestable until two years after the
             3615      incremental increase of benefits, but the only ground of contest that may arise is in connection with
             3616      the incremental increase.
             3617          (3) A reinstated life insurance policy or annuity contract may be contested for two years
             3618      following reinstatement on the same basis as at original issuance, but only as to matters arising in
             3619      connection with the reinstatement. Any grounds for contest available at original issuance continue
             3620      to be available for contest until the policy has been in force for a total of two years during the
             3621      lifetime of the insured.


             3622          (4) The limitations on incontestability under this section preclude only a contest of the
             3623      validity of the policy, and do not preclude the good faith assertion at any time of defenses based
             3624      upon provisions in the policy which exclude or qualify coverage, whether or not those
             3625      qualifications or exclusions are specifically excepted in the policy's incontestability clause.
             3626      Provisions on which the contestable period would normally run may not be reformulated as
             3627      coverage exclusions or restrictions to take advantage of this Subsection (4).
             3628          Section 69. Section 31A-22-404 is amended to read:
             3629           31A-22-404. Suicide.
             3630          (1) (a) Suicide is not a defense to a claim under a life insurance policy that has been in
             3631      force as to a policyholder or certificate holder for two years from the date [the coverage is
             3632      effective] of issuance of the policy, whether:
             3633          (i) the suicide was voluntary or involuntary; or
             3634          (ii) the insured was sane or insane.
             3635          (b) If a suicide occurs within the two-year period described in Subsection (1)(a), the
             3636      insurer shall pay to the beneficiary an amount not less than the premium paid for the life insurance
             3637      policy.
             3638          (2) (a) If after a life insurance policy is in effect the policy allows the insured to obtain a
             3639      death benefit that is larger than when the policy was originally effective for an additional premium,
             3640      the payment of the additional increment of benefit may be limited in the event of a suicide within
             3641      a two-year period beginning on the date the increment increase takes effect.
             3642          (b) If a suicide occurs within the two-year period described in Subsection (2)(a), the
             3643      insurer shall pay to the beneficiary an amount not less than the additional premium paid for the
             3644      additional increment of benefit.
             3645          (3) This section does not apply to:
             3646          (a) policies insuring against death by accident only; or
             3647          (b) the accident or double indemnity provisions of an insurance policy.
             3648          Section 70. Section 31A-22-415 is amended to read:
             3649           31A-22-415. Simultaneous death.
             3650          Section 75-2-702 applies to all policies of life and [disability] accident and health
             3651      insurance.
             3652          Section 71. Section 31A-22-423 is amended to read:


             3653           31A-22-423. Policy and annuity examination period.
             3654          (1) (a) Except as provided under Subsection (2), all life insurance policies and annuities
             3655      shall contain a notice prominently printed on or attached to the cover or front page stating that the
             3656      policyholder has the right to return the policy for any reason on or before:
             3657          (i) ten days after delivery; or
             3658          (ii) in case of a replacement policy, 20 days after the replacement policy is delivered.
             3659          (b) For purposes of this section, "return" means a written statement on the policy or an
             3660      accompanying writing that the policy is being returned for termination of coverage that is delivered
             3661      to or mailed first class to the insurer or its agent.
             3662          (c) A policy returned under this section is void from the date of [return] issuance.
             3663          (d) A policyholder returning a policy is entitled to a refund of any premium paid[, except
             3664      that the insurer may retain an amount not exceeding that determined by rule adopted by the
             3665      commissioner].
             3666          (2) This section does not apply to:
             3667          (a) group policies; and
             3668          (b) other classes of life insurance policies that the commissioner specifies by rule after
             3669      finding that a right to return those policies would be impracticable or unnecessary to protect the
             3670      policyholder's interests.
             3671          Section 72. Section 31A-22-424 is enacted to read:
             3672          31A-22-424. Documents constituting entire life insurance policy.
             3673          (1) A life insurance policy shall contain a provision that defines the documents and
             3674      agreements that constitute the entire contract between the parties.
             3675          (2) Except as permitted by Section 31A-21-106 , all documents and agreements defined
             3676      under Subsection (1) shall be attached to the policy.
             3677          Section 73. Section 31A-22-510 is amended to read:
             3678           31A-22-510. Requirements for group life insurance delivered in another jurisdiction.
             3679          (1) [No] A Utah resident may not be enrolled in a policy of group life insurance delivered
             3680      in another jurisdiction in violation of Subsection (2) or (3), notwithstanding any contrary provision
             3681      in Subsection 31A-1-103 (3) [(h)].
             3682          (2) Unless specifically authorized by the commissioner under Section 31A-22-509 ,
             3683      coverage under a group life insurance policy delivered in another jurisdiction may not be initially


             3684      provided to any person unless the policy conforms substantially to one of the types of groups
             3685      specified under Sections 31A-22-502 through 31A-22-508 .
             3686          (3) [No coverage] Coverage may not be initially provided to any person in Utah under a
             3687      group life policy issued in another jurisdiction by an insurer not authorized to engage in life
             3688      insurance business in Utah unless the policyholder conforms substantially to the type of group
             3689      specified under Section 31A-22-502 , 31A-22-503 , or 31A-22-504 .
             3690          Section 74. Section 31A-22-517 is amended to read:
             3691           31A-22-517. Conversion on termination of eligibility.
             3692          (1) If any portion of the insurance on a person covered under the policy ceases because of
             3693      termination of employment or of membership in the classes eligible for coverage, the person is
             3694      entitled to be issued by the insurer, without evidence of insurability, an individual policy of life
             3695      insurance without [disability] accident and health or other supplementary benefits, if an application
             3696      for the individual policy is made and the first premium paid to the insurer within 31 days after the
             3697      termination.
             3698          (2) The individual policy shall, at the option of the person entitled, be on any form then
             3699      customarily issued by the insurer at the age and for the amount applied for, except that the group
             3700      policy may exclude the option to elect term insurance.
             3701          (3) The individual policy shall be for an amount not in excess of the life insurance which
             3702      ceases because of the termination, less the amount of any life insurance for which the person is
             3703      eligible because of the termination and within 30 days after it. Any amount of insurance which
             3704      matures on or before the termination, as an endowment payable to the person insured, whether in
             3705      one sum, in installments, or in the form of an annuity, is not included in the amount which is
             3706      considered to cease because of the termination.
             3707          (4) The premium on the individual policy shall be at the insurer's customary rate at the
             3708      time of termination, which is applicable to the form and amount of the individual policy, to the
             3709      class of risk to which the person belonged when terminated from the group policy, and to the age
             3710      attained on the effective date of the individual policy.
             3711          (5) Subject to the conditions of this section, the conversion privilege is available:
             3712          (a) to a surviving dependent, if any, at the death of the employee or member, with respect
             3713      to the survivor's coverage under the group policy which terminates by reason of the death; and
             3714          (b) to the dependent of the employee or member upon termination of coverage of the


             3715      dependent, while the employee or member remains insured, because the dependent ceases to be
             3716      a qualified dependent under the group policy.
             3717          Section 75. Section 31A-22-518 is amended to read:
             3718           31A-22-518. Conversion on termination of policy.
             3719          [If] (1) Subject to Subsection (2), if the group policy terminates or is amended to terminate
             3720      the insurance of any class of covered persons, every insured person whose insurance terminates,
             3721      including the insured dependent of a covered person who has been insured for at least five years
             3722      prior to the termination date, is entitled to have the insurer issue to [him] the person an individual
             3723      policy of life insurance, subject to the conditions and limitations in Section 31A-22-517 [, except
             3724      that the].
             3725          (2) The group policy [may] described in Subsection (1) shall provide [either] that[: (1)
             3726      The] the amount of the individual policy may not [exceed] be less than the smaller of:
             3727          (a) the amount of the person's life insurance protection ceasing because of the termination
             3728      or amendment of the group policy, less the amount of any life insurance for which [he] the person
             3729      is eligible under any group policy issued or reinstated by the same or another insurer within 30
             3730      days after the termination[. (2) The amount of the individual policy may not exceed]; or
             3731          (b) $10,000.
             3732          Section 76. Section 31A-22-520 is amended to read:
             3733           31A-22-520. Continuation of coverage during total disability.
             3734          (1) An insured person in a group life insurance policy may continue coverage during the
             3735      total disability of the insured person or dependent by timely payment to the policyholder of that
             3736      portion, if any, of the premium that would have been required on behalf of the insured person in
             3737      the absence of total disability.
             3738          (2) The continuation shall be on a premium paying basis until the earlier of:
             3739          (a) six months from the date of total disability;
             3740          (b) approval by the insurer of continuation of the coverage under any disability provision
             3741      the group insurance policy may contain; or
             3742          (c) the discontinuance of the group insurance policy.
             3743          (3) If the group policy has a waiting period for [a disability] an accident and health benefit,
             3744      the continuation extends to the end of the waiting period, even if the group policy is otherwise
             3745      discontinued.


             3746          Section 77. Section 31A-22-522 is enacted to read:
             3747          31A-22-522. Required provision for notice of termination.
             3748          (1) A policy for group or blanket life insurance coverage issued or renewed after July 1,
             3749      2001, shall include a provision that obligates the policyholder to notify each employee or group
             3750      member:
             3751          (a) in writing;
             3752          (b) 30 days before the date the coverage is terminated; and
             3753          (c) (i) that the group or blanket life insurance coverage is being terminated; and
             3754          (ii) the rights the employee or group member has to continue coverage upon termination.
             3755          (2) For a policy for group or blanket life insurance coverage described in Subsection (1),
             3756      an insurer shall:
             3757          (a) include a statement of a policyholder's obligations under Subsection (1) in the insurer's
             3758      monthly notice to the policyholder of premium payments due; and
             3759          (b) provide a sample notice to the policyholder at least once a year.
             3760          Section 78. Section 31A-22-600 is amended to read:
             3761           31A-22-600. Scope of Part VI.
             3762          (1) [This] Except where a provision's appreciation is otherwise specifically limited, this
             3763      part applies to all [disability]:
             3764          (a) accident and health insurance contracts, including credit [disability,] accident and
             3765      health;
             3766          (b) franchise[, and];
             3767          (c) group contracts[, except where a provision's application is otherwise specifically
             3768      limited.]; and
             3769          (d) a life insurance and annuity policy, but only if:
             3770          (i) it includes supplemental benefits and riders including accelerated benefits; and
             3771          (ii) receipt of benefits in contingent on morbidity requirements.
             3772          (2) Nothing in this part applies to or affects:
             3773          (a) workers' compensation insurance;
             3774          (b) reinsurance; or
             3775          [(c) annuities or life insurance, or their supplemental contracts which contain only those
             3776      provisions relating to disability insurance which provide additional benefits in case of


             3777      dismemberment or loss of sight by accident, safeguard the contract against lapse, or give a special
             3778      surrender value or special benefit or an annuity if the insured or annuitant becomes totally and
             3779      permanently disabled, as defined by the contract or supplemental contract; (d) disability]
             3780          (c) accident and health insurance when it is part of or supplemental to liability, steam
             3781      boiler, elevator, automobile, or other insurance covering loss of or damage to property, provided
             3782      the loss, damage, or expense arises out of a hazard directly related to the other insurance.
             3783          (3) Except as provided in Subsection (1), this part does not apply to or affect a life
             3784      insurance or annuity policy including a life insurance policy:
             3785          (a) with a rider or supplemental benefit that accelerates the death benefit contingent upon
             3786      a mortality risk specifically for one or more of the qualifying events of:
             3787          (i) terminal illness;
             3788          (ii) medical conditions requiring extraordinary medical intervention; or
             3789          (iii) permanent institutional confinement; and
             3790          (b) that provides the option of a lump-sum payment for those benefits.
             3791          Section 79. Section 31A-22-601 is amended to read:
             3792           31A-22-601. Applicability of life insurance provisions.
             3793          Sections 31A-22-412 through 31A-22-417 apply to death benefits in [disability] accident
             3794      and health insurance policies.
             3795          Section 80. Section 31A-22-602 is amended to read:
             3796           31A-22-602. Premium rates.
             3797          (1) This section does not apply to group [disability] accident and health insurance.
             3798          (2) The benefits in [a disability] an accident and health insurance policy shall be
             3799      reasonable in relation to the premiums charged.
             3800          (3) The commissioner shall disapprove [a disability] an accident and health insurance
             3801      policy form if it does not satisfy Subsection (2).
             3802          Section 81. Section 31A-22-603 is amended to read:
             3803           31A-22-603. Persons insured under an individual accident and health policy.
             3804          A policy of individual [disability] accident and health insurance may insure only one
             3805      person, except that originally or by subsequent amendment, upon the application of an adult
             3806      policyholder, a policy may insure any two or more eligible members of the policyholder's family,
             3807      including husband, wife, dependent children, and any other person dependent upon the


             3808      policyholder.
             3809          Section 82. Section 31A-22-604 is amended to read:
             3810           31A-22-604. Reimbursement by insurers of Medicaid benefits.
             3811          (1) As used in this section, "Medicaid" means the program under Title XIX of the federal
             3812      Social Security Act.
             3813          (2) Any [disability] accident and health insurer, including a group [disability] accident and
             3814      health insurance plan, as defined in Section 607(1), Federal Employee Retirement Income Security
             3815      Act of 1974, or health maintenance organization as defined in Section 31A-8-101 , is prohibited
             3816      from considering the availability or eligibility for medical assistance in this or any other state under
             3817      Medicaid, when considering eligibility for coverage or making payments under its plan for eligible
             3818      enrollees, subscribers, policyholders, or certificate holders.
             3819          (3) To the extent that payment for covered expenses has been made under the state
             3820      Medicaid program for health care items or services furnished to an individual in any case when a
             3821      third party has a legal liability to make payments, the state is considered to have acquired the rights
             3822      of the individual to payment by any other party for those health care items or services.
             3823          (4) Title 26, Chapter 19, Medical Benefits Recovery Act, applies to reimbursement of
             3824      insurers of Medicaid benefits.
             3825          Section 83. Section 31A-22-605 is amended to read:
             3826           31A-22-605. Accident and health insurance standards.
             3827          (1) The purposes of this section include:
             3828          (a) reasonable standardization and simplification of terms and coverages of individual and
             3829      franchise [disability] accident and health insurance policies, including [disability] accident and
             3830      health insurance contracts of insurers licensed under Chapters 7 and 8, to facilitate public
             3831      understanding and comparison in purchasing;
             3832          (b) elimination of provisions contained in individual and franchise [disability] accident
             3833      and health insurance contracts [which] that may be misleading or confusing in connection with
             3834      either the purchase of those types of coverages or the settlement of claims; and
             3835          (c) full disclosure in the sale of individual and franchise [disability] accident and health
             3836      insurance contracts.
             3837          (2) As used in this section:
             3838          (a) "Direct response insurance policy" means an individual insurance policy solicited and


             3839      sold without the policyholder having direct contact with a natural person intermediary.
             3840          (b) "Medicare" is defined in Subsection 31A-22-620 (1)(e).
             3841          (c) "Medicare supplement policy" is defined in Subsection 31A-22-620 (1)(f).
             3842          (3) This section applies to all individual and franchise [disability] accident and health
             3843      policies.
             3844          (4) The commissioner shall adopt rules relating to the following matters:
             3845          (a) standards for the manner and content of policy provisions, and disclosures to be made
             3846      in connection with the sale of policies covered by this section, dealing with at least the following
             3847      matters:
             3848          (i) terms of renewability;
             3849          (ii) initial and subsequent conditions of eligibility;
             3850          (iii) nonduplication of coverage provisions;
             3851          (iv) coverage of dependents;
             3852          (v) preexisting conditions;
             3853          (vi) termination of insurance;
             3854          (vii) probationary periods;
             3855          (viii) limitations;
             3856          (ix) exceptions;
             3857          (x) reductions;
             3858          (xi) elimination periods;
             3859          (xii) requirements for replacement;
             3860          (xiii) recurrent conditions;
             3861          (xiv) coverage of persons eligible for Medicare; and
             3862          (xv) definition of terms;
             3863          (b) minimum standards for benefits under each of the following categories of coverage in
             3864      policies covered in this section:
             3865          (i) basic hospital expense coverage;
             3866          (ii) basic medical-surgical expense coverage;
             3867          (iii) hospital confinement indemnity coverage;
             3868          (iv) major medical expense coverage;
             3869          (v) [disability] income [protection] replacement coverage;


             3870          (vi) accident only coverage;
             3871          (vii) specified disease or specified accident coverage;
             3872          (viii) limited benefit health coverage; and
             3873          (ix) nursing home and long-term care coverage;
             3874          (c) the content and format of the outline of coverage, in addition to that required under
             3875      Subsection (6); [and]
             3876          (d) the method of identification of policies and contracts based upon coverages
             3877      provided[.]; and
             3878          (e) rating practices.
             3879          (5) Nothing in Subsection (4)(b) precludes the issuance of policies that combine categories
             3880      of coverage in that subsection provided that any combination of categories meets the standards of
             3881      a component category of coverage.
             3882          (6) The commissioner may adopt rules relating to the following matters:
             3883          (a) establishing disclosure requirements for insurance policies covered in this section,
             3884      designed to adequately inform the prospective insured of the need for and extent of the coverage
             3885      offered, and requiring that this disclosure be furnished to the prospective insured with the
             3886      application form, unless it is a direct response insurance policy;
             3887          (b) (i) prescribing caption or notice requirements designed to inform prospective insureds
             3888      that particular insurance coverages are not Medicare Supplement coverages;
             3889          (ii) the requirements of Subsection (6)(b)(i) apply to all [disability] insurance policies and
             3890      certificates sold to persons eligible for Medicare; and
             3891          (c) requiring the disclosures or information brochures to be furnished to the prospective
             3892      insured on direct response insurance policies, upon his request or, in any event, no later than the
             3893      time of the policy delivery.
             3894          (7) A policy covered by this section may be issued only if it meets the minimum standards
             3895      established by the commissioner under Subsection (4), an outline of coverage accompanies the
             3896      policy or is delivered to the applicant at the time of the application, and, except with respect to
             3897      direct response insurance policies, an acknowledged receipt is provided to the insurer. The outline
             3898      of coverage shall include:
             3899          (a) a statement identifying the applicable categories of coverage provided by the policy as
             3900      prescribed under Subsection (4);


             3901          (b) a description of the principal benefits and coverage;
             3902          (c) a statement of the exceptions, reductions, and limitations contained in the policy;
             3903          (d) a statement of the renewal provisions, including any reservation by the insurer of a
             3904      right to change premiums;
             3905          (e) a statement that the outline is a summary of the policy issued or applied for and that
             3906      the policy should be consulted to determine governing contractual provisions; and
             3907          (f) any other contents the commissioner prescribes.
             3908          (8) If a policy is issued on a basis other than that applied for, the outline of coverage shall
             3909      accompany the policy when it is delivered and it shall clearly state that it is not the policy for
             3910      which application was made.
             3911          (9) (a) Notwithstanding Subsection 31A-22-609 (2), and except as provided under
             3912      Subsection (9)(b), an insurer that elects to use an application form without questions concerning
             3913      the insured's health history or medical treatment history, shall provide coverage under the policy
             3914      for any loss which occurs more than 12 months after the effective date of the policy due to a
             3915      preexisting condition which is not specifically excluded from coverage.
             3916          (b) (i) An insurer that issues a specified disease policy, regardless of whether the basis of
             3917      issuance is a detailed application form, a simplified application form, or an enrollment form, may
             3918      not deny a claim for loss due to a preexisting condition which occurs more than six months after
             3919      the effective date of coverage.
             3920          (ii) A specified disease policy may not define a preexisting condition more restrictively
             3921      than a condition which first manifested itself within six months prior to the effective date of
             3922      coverage or which was diagnosed by a physician at any time prior to the effective date of coverage.
             3923          (iii) A specified disease policy may not include wording that provides a defense based
             3924      upon a preexisting condition except as allowed under this Subsection (9).
             3925          (10) Notwithstanding Subsection 31A-22-606 (1), limited accident and health policies or
             3926      certificates issued to persons eligible for Medicare shall contain a notice prominently printed on
             3927      or attached to the cover or front page which states that the policyholder or certificate holder has
             3928      the right to return the policy for any reason within 30 days after its delivery and to have the
             3929      premium refunded.
             3930          Section 84. Section 31A-22-606 is amended to read:
             3931           31A-22-606. Policy examination period.


             3932          (1) (a) Except as provided in Subsection (2), all [disability] accident and health policies
             3933      shall contain a notice prominently printed on or attached to the cover or front page stating that the
             3934      policyholder has the right to return the policy for any reason within ten days after its delivery.
             3935          (b) "Return" means delivery to the insurer or its agent or mailing of the policy to either,
             3936      properly addressed and stamped for first class handling, with a written statement on the policy or
             3937      an accompanying communication that it is being returned for termination of coverage. A policy
             3938      returned under Subsection (1) is void from the beginning and a policyholder returning his policy
             3939      is entitled to a refund of any premium paid.
             3940          (2) This section does not apply to:
             3941          (a) group policies;
             3942          (b) policies issued to persons entitled to a 30-day examination period under Subsection
             3943      31A-22-605 (10);
             3944          (c) single premium nonrenewable policies issued for terms not longer than 60 days;
             3945          (d) policies covering accidents only or accidental bodily injury only; and
             3946          (e) other classes of policies which the commissioner by rule specifies after a finding that
             3947      a right to return those policies would be impracticable or unnecessary to protect the policyholder's
             3948      interests.
             3949          Section 85. Section 31A-22-607 is amended to read:
             3950           31A-22-607. Grace period.
             3951          (1) Every individual or franchise [disability] accident and health insurance policy shall
             3952      contain clauses providing for a grace period of at least seven days for weekly premium policies,
             3953      ten days for monthly premium policies and 30 days for all other policies, for each premium after
             3954      the first. During the grace period, the policy continues in force.
             3955          (2) Every group or blanket [disability] accident and health policy shall provide for a grace
             3956      period of at least 30 days, unless the policyholder gives written notice of discontinuance prior to
             3957      the date of discontinuance, in accordance with the policy terms. In group or blanket policies, the
             3958      policy may provide for payment of a pro rata premium for the period the policy is in effect during
             3959      the grace period under this [subsection] Subsection (2).
             3960          (3) If the insurer has not guaranteed the insured a right to renew [a disability] an accident
             3961      and health policy, any grace period beyond the expiration or anniversary date may, if provided in
             3962      the policy, be cut off by compliance with the notice provision under Subsection 31A-21-303 (4)(b).


             3963          Section 86. Section 31A-22-608 is amended to read:
             3964           31A-22-608. Reinstatement of individual or franchise accident and health insurance
             3965      policies.
             3966          (1) Every individual or franchise [disability] accident and health insurance policy shall
             3967      contain a provision which reads as follows:
             3968          "REINSTATEMENT: If any renewal premium is not paid within the time granted the
             3969      insured for payment, a subsequent acceptance of premium by the insurer or by any agent duly
             3970      authorized by the insurer to accept the premium, without also requiring an application for
             3971      reinstatement, shall reinstate the policy. However, if the insurer or agent requires an application
             3972      for reinstatement and issues a conditional receipt for the premium tendered, the policy shall be
             3973      reinstated upon approval of this application from the insurer or, lacking this approval, upon the
             3974      45th day following the date of the conditional receipt, unless the insurer has previously notified
             3975      the insured in writing of its disapproval of the application. The reinstated policy shall cover only
             3976      loss resulting from such accidental injury as may be sustained after the date of reinstatement and
             3977      loss due to such sickness as may begin more than ten days after that date. In all other respects the
             3978      insured and insurer have the same rights under the reinstated policy as they had under the policy
             3979      immediately before the due date of the defaulted premium, subject to any provisions endorsed on
             3980      or attached to this policy in connection with the reinstatement. Any premium accepted in
             3981      connection with a reinstatement shall be applied to a period for which premium has not been
             3982      previously paid, but not to any period more than 60 days prior to the date of reinstatement."
             3983          (2) The last sentence of the provision set forth in Subsection (1) may be omitted from any
             3984      policy [which] that the insured has the right to continue in force subject to its terms by the timely
             3985      payment of premiums until at least age 50, or in the case of a policy issued after age 44, for at least
             3986      five years from its date of issue.
             3987          Section 87. Section 31A-22-609 is amended to read:
             3988           31A-22-609. Incontestability for accident and health insurance.
             3989          (1) [No] (a) A statement made by an applicant in the application for individual or
             3990      franchise [disability] accident and health insurance coverage [and no] or statement made relating
             3991      to the person's insurability by a person insured under a group policy, except fraudulent
             3992      misrepresentation, [is] may not be a basis for avoidance of the policy or denial of a claim for loss
             3993      incurred or disability commencing after the coverage has been in effect for two years.


             3994          (b) The insurer has the burden of proving fraud by clear and convincing evidence.
             3995          (c) The policy may provide for incontestability even for fraudulent misstatements.
             3996          (2) Except as otherwise provided under Subsection 31A-22-605 (9), [no] a claim for loss
             3997      incurred or disability commencing after two years from the date of issue of the policy may not be
             3998      reduced or denied on the ground that a disease or physical condition existed prior to the effective
             3999      date of coverage, unless the condition was excluded from coverage by name or specific description
             4000      in a provision [which] that was in effect on the date of loss.
             4001          Section 88. Section 31A-22-610 is amended to read:
             4002           31A-22-610. Dependent coverage from moment of birth or adoption.
             4003          (1) As used in this section:
             4004          (a) "Child" means, in connection with any adoption, or placement for adoption of the child,
             4005      an individual who is younger than 18 years of age as of the date of the adoption or placement for
             4006      adoption.
             4007          (b) "Placement for adoption" means the assumption and retention by a person of a legal
             4008      obligation for total or partial support of a child in anticipation of the adoption of the child.
             4009          (2) (a) If any [disability] accident and health insurance policy provides coverage for any
             4010      members of the policyholder's or certificate holder's family, the policy shall also provide that any
             4011      health insurance benefits applicable to dependents of the insured are applicable on the same basis
             4012      to a newly born child from the moment of birth, and to an adopted child:
             4013          (i) beginning from the moment of birth if placement for adoption occurs within 30 days
             4014      of the child's birth; or
             4015          (ii) beginning from the date of placement if placement for adoption occurs 30 days or more
             4016      after the child's birth.
             4017          (b) This coverage is not subject to any preexisting conditions, and includes any injury or
             4018      sickness, including the necessary care and treatment of medically diagnosed congenital defects and
             4019      birth abnormalities or prematurity.
             4020          (c) If the payment of a specific premium is required to provide coverage for a child of the
             4021      policyholder or certificate holder, the policy may require that the insurer be notified of the birth
             4022      or placement for the purpose of adoption, and that the required premium be paid within 30 days
             4023      after the date of birth or placement for the purpose of adoption, in order to have the coverage
             4024      extend beyond that 30-day period.


             4025          (3) The coverage required by Subsection (2) as to children placed for the purpose of
             4026      adoption with a policyholder or certificate holder continues in the same manner as it would with
             4027      respect to a child of the policyholder or certificate holder unless the placement is disrupted prior
             4028      to legal adoption and the child is removed from placement. The coverage requirement ends if the
             4029      child is removed from placement prior to being legally adopted.
             4030          (4) The provisions of this section apply to employee welfare benefit plans as defined in
             4031      Section 26-19-2 .
             4032          Section 89. Section 31A-22-610.2 is amended to read:
             4033           31A-22-610.2. Maternity stay minimum limits.
             4034          (1) (a) If an insured has coverage for maternity benefits, the policy may not be limited to
             4035      a less than a 48-hour benefit for both mother and newborn with a normal vaginal delivery.
             4036          (b) If an insured has coverage for maternity benefits, the policy may not be limited to a less
             4037      than 96-hour benefit for both mother and newborn with a caesarean section delivery.
             4038          (2) Subsection (1) applies to [a disability] an accident and health insurer who offers
             4039      maternity coverage.
             4040          Section 90. Section 31A-22-610.5 is amended to read:
             4041           31A-22-610.5. Dependent coverage.
             4042          (1) As used in this section, "child" has the same meaning as defined in Section 78-45-2 .
             4043          (2) (a) Any individual or group health insurance policy or health maintenance organization
             4044      contract that provides coverage for a policyholder's or certificate holder's dependent shall not
             4045      terminate coverage of an unmarried dependent by reason of the dependent's age before the
             4046      dependent's 26th birthday and shall, upon application, provide coverage for all unmarried
             4047      dependents up to age 26.
             4048          (b) The cost of coverage for unmarried dependents 19 to 26 years of age shall be included
             4049      in the premium on the same basis as other dependent coverage.
             4050          (c) This section does not prohibit the employer from requiring the employee to pay all or
             4051      part of the cost of coverage for unmarried dependents.
             4052          (3) An individual or group health insurance policy or health maintenance organization
             4053      contract shall reinstate dependent coverage, and for purposes of all exclusions and limitations,
             4054      shall treat the dependent as if the coverage had been in force since it was terminated; if:
             4055          (a) the dependent has not reached the age of 26 by July 1, 1995;


             4056          (b) the dependent had coverage prior to July 1, 1994;
             4057          (c) prior to July 1, 1994, the dependent's coverage was terminated solely due to the age of
             4058      the dependent; and
             4059          (d) the policy has not been terminated since the dependent's coverage was terminated.
             4060          (4) (a) When a parent is required by a court or administrative order to provide health
             4061      insurance coverage for a child, [a disability] an accident and health insurer may not deny
             4062      enrollment of a child under the [disability] accident and health insurance plan of the child's parent
             4063      on the grounds the child:
             4064          (i) was born out of wedlock and is entitled to coverage under Subsection (6);
             4065          (ii) was born out of wedlock and the custodial parent seeks enrollment for the child under
             4066      the custodial parent's policy;
             4067          (iii) is not claimed as a dependent on the parent's federal tax return; or
             4068          (iv) does not reside with the parent or in the insurer's service area.
             4069          (b) [A disability] An accident and health insurer providing enrollment under Subsection
             4070      (4)(a)(iv) is subject to the requirements of Subsection (5).
             4071          (5) A health maintenance organization or a preferred provider organization may use
             4072      alternative delivery systems or indemnity insurers to provide coverage under Subsection (4)(a)(iv)
             4073      outside its service area. [The provisions of] Section 31A-8-408 [do] does not apply to this
             4074      Subsection (5).
             4075          (6) When a child has [disability] accident and health coverage through an insurer of a
             4076      noncustodial parent the insurer shall:
             4077          (a) provide information to the custodial parent as necessary for the child to obtain benefits
             4078      through that coverage, but the insurer or employer, or the agents or employees of either of them,
             4079      are not civilly or criminally liable for providing information in compliance with this Subsection
             4080      (6)(a), whether the information is provided pursuant to a verbal or written request;
             4081          (b) permit the custodial parent or the service provider, with the custodial parent's approval,
             4082      to submit claims for covered services without the approval of the noncustodial parent; and
             4083          (c) make payments on claims submitted in accordance with Subsection (6)(b) directly to
             4084      the custodial parent, the provider, or the state Medicaid agency.
             4085          (7) When a parent is required by a court or administrative order to provide health coverage
             4086      for a child, and the parent is eligible for family health coverage, the insurer shall:


             4087          (a) permit the parent to enroll, under the family coverage, a child who is otherwise eligible
             4088      for the coverage without regard to an enrollment season restrictions;
             4089          (b) if the parent is enrolled but fails to make application to obtain coverage for the child,
             4090      enroll the child under family coverage upon application of the child's other parent, the state agency
             4091      administering the Medicaid program, or the state agency administering 42 U.S.C. 651 through 669,
             4092      the child support enforcement program; and
             4093          (c) not disenroll or eliminate coverage of the child unless the insurer is provided
             4094      satisfactory written evidence that:
             4095          (i) the court or administrative order is no longer in effect; or
             4096          (ii) the child is or will be enrolled in comparable [disability] accident and health coverage
             4097      through another insurer which will take effect not later than the effective date of disenrollment.
             4098          (8) An insurer may not impose requirements on a state agency [which] that has been
             4099      assigned the rights of an individual eligible for medical assistance under Medicaid and covered for
             4100      [disability] accident and health benefits from the insurer that are different from requirements
             4101      applicable to an agent or assignee of any other individual so covered.
             4102          (9) Insurers may not reduce their coverage of pediatric vaccines below the benefit level
             4103      in effect on May 1, 1993.
             4104          (10) When a parent is required by a court or administrative order to provide health
             4105      coverage, which is available through an employer doing business in this state, the employer shall:
             4106          (a) permit the parent to enroll under family coverage any child who is otherwise eligible
             4107      for coverage without regard to any enrollment season restrictions;
             4108          (b) if the parent is enrolled but fails to make application to obtain coverage of the child,
             4109      enroll the child under family coverage upon application by the child's other parent, by the state
             4110      agency administering the Medicaid program, or the state agency administering 42 U.S.C. 651
             4111      through 669, the child support enforcement program;
             4112          (c) not disenroll or eliminate coverage of the child unless the employer is provided
             4113      satisfactory written evidence that:
             4114          (i) the court order is no longer in effect;
             4115          (ii) the child is or will be enrolled in comparable coverage which will take effect no later
             4116      than the effective date of disenrollment; or
             4117          (iii) the employer has eliminated family health coverage for all of its employees; and


             4118          (d) withhold from the employee's compensation the employee's share, if any, of premiums
             4119      for health coverage and to pay this amount to the insurer.
             4120          (11) An order issued under Section 62A-11-326.1 may be considered a "qualified medical
             4121      support order" for the purpose of enrolling a dependent child in a group [disability] accident and
             4122      health insurance plan as defined in Section 609(a), Federal Employee Retirement Income Security
             4123      Act of 1974.
             4124          (12) This section does not affect any insurer's ability to require as a precondition of any
             4125      child being covered under any policy of insurance that:
             4126          (a) the parent continues to be eligible for coverage;
             4127          (b) the child shall be identified to the insurer; and
             4128          (c) the premium shall be paid when due.
             4129          (13) The provisions of this section apply to employee welfare benefit plans as defined in
             4130      Section 26-19-2 .
             4131          Section 91. Section 31A-22-611 is amended to read:
             4132           31A-22-611. Policy extension for handicapped children.
             4133          (1) Every [disability] accident and health insurance policy or contract that provides that
             4134      coverage of a dependent child of a person insured under the policy shall terminate upon reaching
             4135      a limiting age as specified in the policy, shall also provide that the age limitation does not
             4136      terminate the coverage of a dependent child while the child is and continues to be both:
             4137          (a) incapable of self-sustaining employment because of mental retardation or physical
             4138      handicap; and
             4139          (b) chiefly dependent upon the person insured under the policy for support and
             4140      maintenance.
             4141          (2) The insurer may require proof of the incapacity and dependency be furnished by the
             4142      person insured under the policy within 30 days of the date the child attains the limiting age, and
             4143      at any time thereafter, except that the insurer may not require proof more often than annually after
             4144      the two-year period immediately following attainment of the limiting age by the child.
             4145          Section 92. Section 31A-22-612 is amended to read:
             4146           31A-22-612. Conversion privileges for insured former spouse.
             4147          (1) [No disability] An accident and health insurance policy, which in addition to covering
             4148      the insured also provides coverage to the spouse of the insured, may not contain a provision for


             4149      termination of coverage of a spouse covered under the policy, except by entry of a valid decree of
             4150      divorce or annulment between the parties.
             4151          (2) Every policy which contains this type of provision shall provide that upon the entry of
             4152      the divorce decree the spouse is entitled to have issued an individual policy of [disability] accident
             4153      and health insurance without evidence of insurability, upon application to the company and
             4154      payment of the appropriate premium. The policy shall provide the coverage being issued which
             4155      is most nearly similar to the terminated coverage. Probationary or waiting periods in the policy
             4156      are considered satisfied to the extent the coverage was in force under the prior policy.
             4157          (3) When the insurer receives actual notice that the coverage of a spouse is to be
             4158      terminated because of a divorce or annulment, the insurer shall promptly provide the spouse
             4159      written notification of the right to obtain individual coverage as provided in Subsection (2), the
             4160      premium amounts required, and the manner, place, and time in which premiums may be paid. The
             4161      premium is determined in accordance with the insurer's table of premium rates applicable to the
             4162      age and class of risk of the persons to be covered and to the type and amount of coverage provided.
             4163      If the spouse applies and tenders the first monthly premium to the insurer within 30 days after
             4164      receiving the notice provided by this subsection, the spouse shall receive individual coverage that
             4165      commences immediately upon termination of coverage under the insured's policy.
             4166          (4) This section does not apply to [disability] accident and health insurance policies
             4167      offered on a group blanket basis.
             4168          Section 93. Section 31A-22-613 is amended to read:
             4169           31A-22-613. Permitted provisions for accident and health insurance policies.
             4170          The following provisions may be contained in [a disability] an accident and health
             4171      insurance policy, but if they are in that policy, they shall conform to at least the [following]
             4172      minimum requirements for the policyholder [:] in this section.
             4173          (1) Any provision respecting change of occupation may provide only for a lower maximum
             4174      benefit payment and for reduction of loss payments proportionate to the change in appropriate
             4175      premium rates, if the change is to a higher rated occupation, and this provision shall provide for
             4176      retroactive reduction of premium rates from the date of change of occupation or the last policy
             4177      anniversary date, whichever is the more recent, if the change is to a lower rated occupation.
             4178          (2) Section 31A-22-405 applies to misstatement of age in [disability] accident and health
             4179      policies, with the appropriate modifications of terminology.


             4180          (3) Any policy which contains a provision establishing, as an age limit or otherwise, a date
             4181      after which the coverage provided by the policy is not effective, and if that date falls within a
             4182      period for which a premium is accepted by the insurer or if the insurer accepts a premium after that
             4183      date, the coverage provided by the policy continues in force, subject to any right of cancellation,
             4184      until the end of the period for which the premium was accepted. This Subsection (3) does not
             4185      apply if the acceptance of premium would not have occurred but for a misstatement of age by the
             4186      insured.
             4187          (4) Any provision dealing with preexisting conditions shall be consistent with Subsections
             4188      31A-22-605 (9)(a) and 31A-22-609 (2), and any applicable rule adopted by the commissioner.
             4189          (5) (a) If an insured is otherwise eligible for maternity benefits, a policy may not contain
             4190      language which requires an insured to obtain any additional preauthorization or preapproval for
             4191      customary and reasonable maternity care expenses or for the delivery of the child after an initial
             4192      preauthorization or preapproval has been obtained from the insurer for prenatal care. A
             4193      requirement for notice of admission for delivery is not a requirement for preauthorization or
             4194      preapproval, however, the maternity benefit may not be denied or diminished for failure to provide
             4195      admission notice. The policy may not require the provision of admission notice by only the
             4196      insured patient.
             4197          (b) This Subsection (5) does not prohibit an insurer from:
             4198          (i) requiring a referral before maternity care can be obtained;
             4199          (ii) specifying a group of providers or a particular location from which an insured is
             4200      required to obtain maternity care; or
             4201          (iii) limiting reimbursement for maternity expenses and benefits in accordance with the
             4202      terms and conditions of the insurance contract so long as such terms do not conflict with
             4203      Subsection (5)(a).
             4204          (6) An insurer may only represent that a policy:
             4205          (a) offers a vision benefit if the policy:
             4206          (i) charges a premium for the benefit; and
             4207          (ii) provides reimbursement for materials or services provided under the policy; and
             4208          (b) covers laser vision correction, whether photorefractive keratectomy, laser assisted
             4209      in-situ keratomelusis, or related procedure, if the policy:
             4210          (i) charges a premium for the benefit; and


             4211          (ii) the procedure is at least a partially covered benefit.
             4212          Section 94. Section 31A-22-613.5 is amended to read:
             4213           31A-22-613.5. Price and value comparisons of health insurance.
             4214          (1) This section applies generally to all health insurance policies and health maintenance
             4215      organization contracts.
             4216          (2) (a) Immediately after the effective date of this section, the commissioner shall appoint
             4217      a Health Benefit Plan Committee.
             4218          (b) The committee shall be composed of representatives of carriers, employers, employees,
             4219      health care providers, consumers, and producers.
             4220          (c) A member of the committee shall be appointed to a four-year term.
             4221          (d) Notwithstanding the requirements of Subsection (2)(c), the commissioner shall, at the
             4222      time of appointment or reappointment, adjust the length of terms to ensure that the terms of
             4223      committee members are staggered so that approximately half of the committee is appointed every
             4224      two years.
             4225          (3) When a vacancy occurs in the membership for any reason, the replacement shall be
             4226      appointed for the unexpired term.
             4227          (4) (a) Members shall receive no compensation or benefits for their services, but may
             4228      receive per diem and expenses incurred in the performance of the member's official duties at the
             4229      rates established by the Division of Finance under Sections 63A-3-106 and 63A-3-107 .
             4230          (b) Members may decline to receive per diem and expenses for their service.
             4231          (5) [(a)] The committee shall[: (i)] serve as an advisory committee to the commissioner[;
             4232      and].
             4233          [(ii) recommend for two or more designated health care plans to be marketed in the state:]
             4234          [(A) services to be covered;]
             4235          [(B) copays;]
             4236          [(C) deductibles;]
             4237          [(D) levels of coinsurance;]
             4238          [(E) annual out-of-pocket maximums;]
             4239          [(F) exclusions; and]
             4240          [(G) limitations.]
             4241          [(b) The plans recommended by the committee may include reasonable benefit differentials


             4242      applicable to participating and nonparticipating providers.]
             4243          [(c) The plans recommended by the committee may not prohibit the use of the following
             4244      cost management techniques by an insurer:]
             4245          [(i) preauthorization of health care services;]
             4246          [(ii) concurrent review of health care services;]
             4247          [(iii) case management of health care services;]
             4248          [(iv) retrospective review of medical appropriateness;]
             4249          [(v) selective contracting with hospitals, physicians, and other health care providers to the
             4250      extent permitted by law; and]
             4251          [(vi) other reasonable techniques intended to manage health care costs.]
             4252          [(d) The committee shall submit the plans to the commissioner within 180 days after the
             4253      appointment of the committee in accordance with this section.]
             4254          [(e) The commissioner shall adopt two or more health benefit plans within 60 days after
             4255      the committee submits recommendations.]
             4256          [(f) (i) If the committee fails to submit recommendations to the commissioner within 180
             4257      days after appointment, the commissioner shall, within 90 days, develop two or more designated
             4258      health benefit plans.]
             4259          [(ii) The commissioner shall, after notice and hearing, adopt two or more designated health
             4260      benefit plans.]
             4261          [(iii) The commissioner shall provide incentives for personal management of health care
             4262      expenses by adopting:]
             4263          [(A) one plan that applies deductibles in the amount of $1,500; and]
             4264          [(B) another plan that applies deductibles in the amount of $2,500.]
             4265          [(iv) The plans described in Subsection (5)(f)(iii) may include:]
             4266          [(A) illustrations and explanations showing the premium savings generated by the high
             4267      deductibles being applied to a medical savings account for the insured that can be used to pay:]
             4268          [(I) medical expenses up to the plan deductible;]
             4269          [(II) any other medical expenses not covered by the insurance; or]
             4270          [(III) both the medical expenses described in Subsections (5)(f)(iv)(A)(I) and (II); and]
             4271          [(B) an explanation that any funds in the savings account belong to the insured.]
             4272          [(g) The commissioner may reconvene a Health Benefit Plan Committee in accordance


             4273      with Subsections (2) and (5) to recommend revisions to the designated benefit plans adopted by
             4274      the commissioner.]
             4275          [(6) (a) Within 180 days after the adoption of the designated benefit plans by the
             4276      commissioner, or any changes in the designated plans, an insurer offering health insurance policies
             4277      for sale in this state shall, at the request of a potential buyer, offer the current designated plans at
             4278      a premium based on factors such as that buyer's previous claims experience, group size,
             4279      demographic characteristics, and health status.]
             4280          [(b) This section does not prohibit an insurer from refusing to insure, under any plan, a
             4281      person or group. However, if the insurer offers any policy or contract to that person or group, the
             4282      insurer shall offer the designated plans.]
             4283          [(7) The designated benefit plans, described in Subsection (5) are intended to facilitate
             4284      price and value comparisons by consumers. The designated benefit plans are not minimum
             4285      standards for health insurance policies. An insurer offering the designated benefit plans may offer
             4286      policies that provide more or less coverage than the designated benefit plans.]
             4287          [(8)] (6) (a) The commissioner shall convene or reconvene a Health Benefit Plan
             4288      Committee for the purpose of developing a Basic Health Care Plan to be offered under the open
             4289      enrollment provisions of Chapter 30.
             4290          (b) The commissioner shall adopt a Basic Health Care Plan within 60 days after the
             4291      committee submits recommendations, or if the committee fails to submit recommendations to the
             4292      commissioner within 180 days after appointment, the commissioner shall, within 90 days, adopt
             4293      a Basic Health Care Plan.
             4294          (c) (i) Before adoption of a plan under Subsection [(8)](6)(b), the commissioner shall
             4295      submit the proposed Basic Health Care Plan to the Health and Human Services Interim Committee
             4296      for review and recommendations.
             4297          (ii) After the commissioner adopts the Basic Health Care Plan, the Health and Human
             4298      Services Interim Committee:
             4299          (A) shall provide legislative oversight of the Basic Health Care Plan; and
             4300          (B) may recommend legislation to modify the Basic Health Care Plan adopted by the
             4301      commissioner.
             4302          (d) The committee's recommendations for the Basic Health Care Plan shall be advisory
             4303      to the commissioner.


             4304          [(9)] (7) (a) The commissioner shall promote informed consumer behavior and responsible
             4305      health insurance and health plans by requiring an insurer issuing health insurance policies or health
             4306      maintenance organization contracts to provide to all enrollees, prior to enrollment in the health
             4307      benefit plan or health insurance policy, written disclosure of:
             4308          (i) restrictions or limitations on prescription drugs and biologics including the use of a
             4309      formulary and generic substitution; and
             4310          (ii) coverage limits under the plan.
             4311          (b) In addition to the requirements of Subsections [(9)] (7)(a) and (d), an insurer described
             4312      in Subsection [(9)] (7)(a) shall submit the written disclosure required by this Subsection [(9)] (7)
             4313      to the commissioner:
             4314          (i) [annually] upon commencement of operations in the state; and
             4315          (ii) anytime the insurer amends any of the following described in Subsection [(9)] (7)(a):
             4316          (A) treatment policies;
             4317          (B) practice standards;
             4318          (C) restrictions; or
             4319          (D) coverage limits of the insurer's health benefit plan or health insurance policy.
             4320          (c) The commissioner may adopt rules to implement the disclosure requirements of this
             4321      Subsection [(9)] (7), taking into account:
             4322          (i) business confidentiality of the insurer;
             4323          (ii) definitions of terms; and
             4324          (iii) the method of disclosure to enrollees.
             4325          (d) If under Subsection [(9)] (7)(a)(i) a formulary is used, the insurer shall make available
             4326      to prospective enrollees and maintain evidence of the fact of the disclosure of:
             4327          (i) the drugs included;
             4328          (ii) the patented drugs not included; and
             4329          (iii) any conditions that exist as a precedent to coverage.
             4330          [(10) (a) The commissioner shall annually publish a table comparing the rates charged by
             4331      insurers for the designated health plans and other health insurance plans in this state.]
             4332          [(b) The comparison required by Subsection (10)(a) shall list:]
             4333          [(i) the top 20 insurers writing the greatest volume by premium dollar per calendar year;
             4334      and]


             4335          [(ii) others requesting inclusion in the comparison.]
             4336          [(c) In conjunction with the rate comparison described in this Subsection (10), the
             4337      commissioner shall publish for each of the listed health insurers a table comparing the complaints
             4338      filed and the combined loss and expense ratio as described in Subsections 31A-2-208.5 (2) and (3).]
             4339          Section 95. Section 31A-22-614 is amended to read:
             4340           31A-22-614. Claims under accident and health policies.
             4341          (1) Section 31A-21-312 applies generally to claims under [disability] accident and health
             4342      policies.
             4343          (2) (a) Subject to Subsection (1), [no disability] an accident and health insurance policy
             4344      may not contain a claim notice requirement less favorable to the insured than one which requires
             4345      written notice of the claim within 20 days after the occurrence or commencement of any loss
             4346      covered by the policy. The policy shall specify to whom claim notices may be given.
             4347          (b) If a loss of time benefit under a policy may be paid for a period of at least two years,
             4348      an insurer may require periodic notices that the insured continues to be disabled, unless the insured
             4349      is legally incapacitated. The insured's delay in giving that notice does not impair the insured's or
             4350      beneficiary's right to any indemnity which would otherwise have accrued during the six months
             4351      preceding the date on which that notice is actually given.
             4352          (3) [No disability] An accident and health insurance policy may not contain a time limit
             4353      on proof of loss which is more restrictive to the insured than a provision requiring written proof
             4354      of loss, delivered to the insurer, within the following time:
             4355          (a) for a claim where periodic payments are contingent upon continuing loss, within 90
             4356      days after the termination of the period for which the insurer is liable;
             4357          (b) for any other claim, within 90 days after the date of the loss.
             4358          (4) (a) (i) Section 31A-26-301 applies generally to the payment of claims.
             4359          (ii) Indemnity for loss of life is paid in accordance with the beneficiary designation
             4360      effective at the time of payment. If no valid beneficiary designation exists, the indemnity is paid
             4361      to the insured's estate. Any other accrued indemnities unpaid at the insured's death are paid to the
             4362      insured's estate.
             4363          (b) Reasonable facility of payment clauses, specified by the commissioner by rule or in
             4364      approving the policy form, are permitted. Payment made in good faith and in accordance with
             4365      those clauses discharges the insurer's obligation to pay those claims.


             4366          (c) All or a portion of any indemnities provided under [a disability] an accident and health
             4367      policy on account of hospital, nursing, medical, or surgical services may, at the insurer's option,
             4368      be paid directly to the hospital or person rendering the services.
             4369          Section 96. Section 31A-22-617 is amended to read:
             4370           31A-22-617. Preferred provider contract provisions.
             4371          Health insurance policies may provide for insureds to receive services or reimbursement
             4372      under the policies in accordance with preferred health care provider contracts as follows:
             4373          (1) Subject to restrictions under this section, any insurer or third party administrator may
             4374      enter into contracts with health care providers as defined in Section 78-14-3 under which the health
             4375      care providers agree to supply services, at prices specified in the contracts, to persons insured by
             4376      an insurer. [The]
             4377          (a) A health care provider contract may require the health care provider to accept the
             4378      specified payment as payment in full, relinquishing the right to collect additional amounts from
             4379      the insured person.
             4380          (b) The insurance contract may reward the insured for selection of preferred health care
             4381      providers by:
             4382          (i) reducing premium rates[,];
             4383          (ii) reducing deductibles[,];
             4384          (iii) coinsurance[, or];
             4385          (iv) other copayments[,]; or
             4386          (v) in any other reasonable manner.
             4387          (c) If the insurer is a managed care organization, as defined in Subsection
             4388      31A-27-311.5 (1)(f):
             4389          (i) the insurance contract shall provide that in the event the managed care organization
             4390      becomes insolvent, the rehabilitator or liquidator may:
             4391          (A) require the health care provider to continue to provide health care services under the
             4392      contract until the later of:
             4393          (I) 90 days from the date of the filing of a petition for rehabilitation or the petition for
             4394      liquidation; or
             4395          (II) the date the term of the contract ends; and
             4396          (B) subject to Subsection (1)(c)(v), reduce the fees the provider is otherwise entitled to


             4397      receive from the managed care organization during the time period described in Subsection
             4398      (1)(c)(i)(A);
             4399          (ii) the provider is required to:
             4400          (A) accept the reduced payment under Subsection (1)(c)(i)(B) as payment in full; and
             4401          (B) relinquish the right to collect additional amounts from the insolvent managed care
             4402      organization's enrollee, as defined in Section 31A-27-311.5 (1)(b);
             4403          (iii) if the contract between the health care provider and the managed care organization has
             4404      not been reduced to writing, or the contract fails to contain the language required by Subsection
             4405      (1)(c)(i), the provider may not collect or attempt to collect from the enrollee:
             4406          (A) sums owed by the managed care organization; or
             4407          (B) the amount of the regular fee reduction authorized under Subsection (1)(c)(i)(B);
             4408          (iv) the following may not bill or maintain any action at law against an enrollee to collect
             4409      sums owed by the managed care organization or the amount of the regular fee reduction authorized
             4410      under Subsection (1)(c)(i)(B):
             4411          (A) a provider;
             4412          (B) an agent;
             4413          (C) a trustee; or
             4414          (D) an assignee of a person described in Subsections (1)(c)(iv)(A) through (C); and
             4415          (v) notwithstanding Subsection (1)(c)(i):
             4416          (A) a rehabilitator or liquidator may not reduce a fee by less than 75% of the provider's
             4417      regular fee set forth in the contract; and
             4418          (B) the enrollee shall continue to pay the copayments, deductibles, and other payments for
             4419      services received from the provider that the enrollee was required to pay before the filing of:
             4420          (I) a petition for rehabilitation; or
             4421          (II) a petition for liquidation.
             4422          (2) (a) Subject to Subsections (2)(b) through (2)(f), an insurer using preferred health care
             4423      provider contracts shall pay for the services of health care providers not under the contract, unless
             4424      the illnesses or injuries treated by the health care provider are not within the scope of the insurance
             4425      contract. As used in this section, "class of health care providers" means all health care providers
             4426      licensed or licensed and certified by the state within the same professional, trade, occupational, or
             4427      facility licensure or licensure and certification category established pursuant to Titles 26 and 58.


             4428          (b) When the insured receives services from a health care provider not under contract, the
             4429      insurer shall reimburse the insured for at least 75% of the average amount paid by the insurer for
             4430      comparable services of preferred health care providers who are members of the same class of
             4431      health care providers. The commissioner may adopt a rule dealing with the determination of what
             4432      constitutes 75% of the average amount paid by the insurer for comparable services of preferred
             4433      health care providers who are members of the same class of health care providers.
             4434          (c) When reimbursing for services of health care providers not under contract, the insurer
             4435      may make direct payment to the insured.
             4436          (d) Notwithstanding Subsection (2)(b), an insurer using preferred health care provider
             4437      contracts may impose a deductible on coverage of health care providers not under contract.
             4438          (e) When selecting health care providers with whom to contract under Subsection (1), an
             4439      insurer may not unfairly discriminate between classes of health care providers, but may
             4440      discriminate within a class of health care providers, subject to Subsection (7).
             4441          (f) For purposes of this section, unfair discrimination between classes of health care
             4442      providers shall include:
             4443          (i) refusal to contract with class members in reasonable proportion to the number of
             4444      insureds covered by the insurer and the expected demand for services from class members; and
             4445          (ii) refusal to cover procedures for one class of providers that are:
             4446          (A) commonly utilized by members of the class of health care providers for the treatment
             4447      of illnesses, injuries, or conditions;
             4448          (B) otherwise covered by the insurer; and
             4449          (C) within the scope of practice of the class of health care providers.
             4450          (3) Before the insured consents to the insurance contract, the insurer shall fully disclose
             4451      to the insured that it has entered into preferred health care provider contracts. The insurer shall
             4452      provide sufficient detail on the preferred health care provider contracts to permit the insured to
             4453      agree to the terms of the insurance contract. The insurer shall provide at least the following
             4454      information:
             4455          (a) a list of the health care providers under contract and if requested their business
             4456      locations and specialties;
             4457          (b) a description of the insured benefits, including any deductibles, coinsurance, or other
             4458      copayments;


             4459          (c) a description of the quality assurance program required under Subsection (4); and
             4460          (d) a description of the grievance procedures required under Subsection (5).
             4461          (4) (a) An insurer using preferred health care provider contracts shall maintain a quality
             4462      assurance program for assuring that the care provided by the health care providers under contract
             4463      meets prevailing standards in the state.
             4464          (b) The commissioner in consultation with the executive director of the Department of
             4465      Health may designate qualified persons to perform an audit of the quality assurance program. The
             4466      auditors shall have full access to all records of the organization and its health care providers,
             4467      including medical records of individual patients.
             4468          (c) The information contained in the medical records of individual patients shall remain
             4469      confidential. All information, interviews, reports, statements, memoranda, or other data furnished
             4470      for purposes of the audit and any findings or conclusions of the auditors are privileged. The
             4471      information is not subject to discovery, use, or receipt in evidence in any legal proceeding except
             4472      hearings before the commissioner concerning alleged violations of this section.
             4473          (5) An insurer using preferred health care provider contracts shall provide a reasonable
             4474      procedure for resolving complaints and grievances initiated by the insureds and health care
             4475      providers.
             4476          (6) An insurer may not contract with a health care provider for treatment of illness or
             4477      injury unless the health care provider is licensed to perform that treatment.
             4478          (7) (a) [No] A health care provider or insurer may not discriminate against a preferred
             4479      health care provider for agreeing to a contract under Subsection (1).
             4480          (b) Any health care provider licensed to treat any illness or injury within the scope of the
             4481      health care provider's practice, who is willing and able to meet the terms and conditions established
             4482      by the insurer for designation as a preferred health care provider, shall be able to apply for and
             4483      receive the designation as a preferred health care provider. Contract terms and conditions may
             4484      include reasonable limitations on the number of designated preferred health care providers based
             4485      upon substantial objective and economic grounds, or expected use of particular services based
             4486      upon prior provider-patient profiles.
             4487          (8) Upon the written request of a provider excluded from a provider contract, the
             4488      commissioner may hold a hearing to determine if the insurer's exclusion of the provider is based
             4489      on the criteria set forth in Subsection (7)(b).


             4490          (9) Insurers are subject to the provisions of Sections 31A-22-613.5 , 31A-22-614.5 , and
             4491      31A-22-618 .
             4492          (10) Nothing in this section is to be construed as to require an insurer to offer a certain
             4493      benefit or service as part of a health benefit plan.
             4494          (11) This section does not apply to catastrophic mental health coverage provided in
             4495      accordance with Section 31A-22-625 .
             4496          Section 97. Section 31A-22-619 is amended to read:
             4497           31A-22-619. Coordination of benefits.
             4498          (1) The commissioner shall adopt rules concerning the coordination of benefits between
             4499      [disability] accident and health insurance policies.
             4500          (2) Rules adopted by the commissioner under Subsection (1):
             4501          (a) may not prohibit coordination of benefits with individual [disability] accident and
             4502      health insurance policies; and
             4503          (b) shall apply equally to all [disability] accident and health insurance policies without
             4504      regard to whether the policies are group or individual policies.
             4505          Section 98. Section 31A-22-620 is amended to read:
             4506           31A-22-620. Medicare Supplement Insurance Minimum Standards Act.
             4507          (1) As used in this section:
             4508          (a) "Applicant" means:
             4509          (i) in the case of an individual Medicare supplement policy, the person who seeks to
             4510      contract for insurance benefits; and
             4511          (ii) in the case of a group Medicare supplement policy, the proposed certificate holder.
             4512          (b) "Certificate" means any certificate delivered or issued for delivery in this state under
             4513      a group Medicare supplement policy.
             4514          (c) "Certificate form" means the form on which the certificate is delivered or issued for
             4515      delivery by the issuer.
             4516          (d) "Issuer" includes insurance companies, fraternal benefit societies, health care service
             4517      plans, health maintenance organizations, and any other entity delivering, or issuing for delivery in
             4518      this state, Medicare supplement policies or certificates.
             4519          (e) "Medicare" means the "Health Insurance for the Aged Act," Title XVIII of the Social
             4520      Security Amendments of 1965, as then constituted or later amended.


             4521          (f) "Medicare Supplement Policy" means a group or individual policy of disability
             4522      insurance, other than a policy issued pursuant to a contract under Section 1876 of the federal Social
             4523      Security Act, 42 U.S.C. Section 1395 et seq., or an issued policy under a demonstration project
             4524      specified in 41 U.S.C. Section 1395ss(g)(1), that is advertised, marketed, or designed primarily as
             4525      a supplement to reimbursements under Medicare for the hospital, medical, or surgical expenses
             4526      of persons eligible for Medicare.
             4527          (g) "Policy Form" means the form on which the policy is delivered or issued for delivery
             4528      by the issuer.
             4529          (2) (a) Except as otherwise specifically provided, this section applies to:
             4530          (i) all Medicare supplement policies delivered or issued for delivery in this state on or after
             4531      the effective date of this section;
             4532          (ii) all certificates issued under group Medicare supplement policies, that have been
             4533      delivered or issued for delivery in this state on or after the effective date of this section; and
             4534          (iii) policies or certificates that were in force prior to the effective date of this section, with
             4535      respect to requirements for benefits, claims payment, and policy reporting practice under
             4536      Subsection (3)(d), and loss ratios under Subsection (4).
             4537          (b) This section does not apply to a policy of one or more employers or labor
             4538      organizations, or of the trustees of a fund established by one or more employers or labor
             4539      organizations, or a combination of employers and labor unions, for employees or former employees
             4540      or a combination of employees and former employees, or for members or former members of the
             4541      labor organizations, or a combination of members and former members of labor organizations.
             4542          (c) This section does not prohibit, nor does it apply to insurance policies or health care
             4543      benefit plans, including group conversion policies, provided to Medicare eligible persons that are
             4544      not marketed or held out to be Medicare supplement policies or benefit plans.
             4545          (3) (a) A Medicare supplement policy or certificate in force in the state may not contain
             4546      benefits that duplicate benefits provided by Medicare.
             4547          (b) Notwithstanding any other provision of law of this state, a Medicare supplement policy
             4548      or certificate may not exclude or limit benefits for loss incurred more than six months from the
             4549      effective date of coverage because it involved a preexisting condition. The policy or certificate
             4550      may not define a preexisting condition more restrictively than: "A condition for which medical
             4551      advice was given or treatment was recommended by or received from a physician within six


             4552      months before the effective date of coverage."
             4553          (c) The commissioner shall adopt rules to establish specific standards for policy provisions
             4554      of Medicare supplement policies and certificates. The standards adopted shall be in addition to
             4555      and in accordance with applicable laws of this state. A requirement of this title relating to
             4556      minimum required policy benefits, other than the minimum standards contained in this section,
             4557      may not apply to Medicare supplement policies and certificates. The standards may include:
             4558          (i) terms of renewability;
             4559          (ii) initial and subsequent conditions of eligibility;
             4560          (iii) nonduplication of coverage;
             4561          (iv) probationary periods;
             4562          (v) benefit limitations, exceptions, and reductions;
             4563          (vi) elimination periods;
             4564          (vii) requirements for replacement;
             4565          (viii) recurrent conditions; and
             4566          (ix) definitions of terms.
             4567          (d) The commissioner shall adopt rules establishing minimum standards for benefits,
             4568      claims payment, marketing practices, compensation arrangements, and reporting practices for
             4569      Medicare supplement policies and certificates.
             4570          (e) The commissioner may adopt such rules as are necessary to conform Medicare
             4571      supplement policies and certificates to the requirements of federal law and regulations promulgated
             4572      thereunder, including:
             4573          (i) requiring refunds or credits if the policies do not meet loss ratio requirements;
             4574          (ii) establishing a uniform methodology for calculating and reporting loss ratios;
             4575          (iii) assuring public access to policies, premiums, and loss ratio information of issuers of
             4576      Medicare supplement insurance;
             4577          (iv) establishing a process for approving or disapproving policy forms and certificate forms
             4578      and proposed premium increases;
             4579          (v) establishing a policy for holding public hearings prior to approval of premium
             4580      increases; and
             4581          (vi) establishing standards for Medicare select policies and certificates.
             4582          (f) The commissioner may adopt rules that prohibit policy provisions not otherwise


             4583      specifically authorized by statute that, in the opinion of the commissioner, are unjust, unfair, or
             4584      unfairly discriminatory to any person insured or proposed to be insured under a Medicare
             4585      supplement policy or certificate.
             4586          (4) Medicare supplement policies shall return to policyholders benefits that are reasonable
             4587      in relation to the premium charged. The commissioner shall make rules to establish minimum
             4588      standards for loss ratios of Medicare supplement policies on the basis of incurred claims
             4589      experience, or incurred health care expenses where coverage is provided by a health maintenance
             4590      organization on a service basis rather than on a reimbursement basis, and earned premiums in
             4591      accordance with accepted actuarial principles and practices.
             4592          (5) (a) To provide for full and fair disclosure in the sale of Medicare supplement policies,
             4593      a Medicare supplement policy or certificate may not be delivered in this state unless an outline of
             4594      coverage is delivered to the applicant at the time application is made.
             4595          (b) The commissioner shall prescribe the format and content of the outline of coverage
             4596      required by Subsection (5)(a).
             4597          (c) For purposes of this section, "format" means style arrangements and overall
             4598      appearance, including such items as the size, color, and prominence of type and arrangement of
             4599      text and captions. The outline of coverage shall include:
             4600          (i) a description of the principal benefits and coverage provided in the policy;
             4601          (ii) a statement of the renewal provisions, including any reservation by the issuer of a right
             4602      to change premiums; and disclosure of the existence of any automatic renewal premium increases
             4603      based on the policyholder's age; and
             4604          (iii) a statement that the outline of coverage is a summary of the policy issued or applied
             4605      for and that the policy should be consulted to determine governing contractual provisions.
             4606          (d) The commissioner may make rules for captions or notice if the commissioner finds that
             4607      the rules are:
             4608          (i) in the public interest; and
             4609          (ii) designed to inform prospective insureds that particular insurance coverages are not
             4610      Medicare supplement coverages, for all accident an health insurance policies sold to person
             4611      eligible for Medicare, other than:
             4612          (A) a medicare supplement policy; or
             4613          (B) a disability income policy.


             4614          [(d)] (e) The commissioner may prescribe by rule a standard form and the contents of an
             4615      informational brochure for persons eligible for Medicare, that is intended to improve the buyer's
             4616      ability to select the most appropriate coverage and improve the buyer's understanding of Medicare.
             4617      Except in the case of direct response insurance policies, the commissioner may require by rule that
             4618      the informational brochure be provided concurrently with delivery of the outline of coverage to
             4619      any prospective insureds eligible for Medicare. With respect to direct response insurance policies,
             4620      the commissioner may require by rule that the prescribed brochure be provided upon request to any
             4621      prospective insureds eligible for Medicare, but in no event later than the time of policy delivery.
             4622          [(e)] (f) The commissioner may adopt reasonable rules to govern the full and fair
             4623      disclosure of the information in connection with the replacement of [disability] accident and health
             4624      policies, subscriber contracts, or certificates by persons eligible for Medicare.
             4625          (6) Notwithstanding Subsection (1), Medicare supplement policies and certificates shall
             4626      have a notice prominently printed on the first page of the policy or certificate, or attached to the
             4627      front page, stating in substance that the applicant has the right to return the policy or certificate
             4628      within 30 days of its delivery and to have the premium refunded if, after examination of the policy
             4629      or certificate, the applicant is not satisfied for any reason. Any refund made pursuant to this
             4630      section shall be paid directly to the applicant by the issuer in a timely manner.
             4631          (7) Every issuer of Medicare supplement insurance policies or certificates in this state shall
             4632      provide a copy of any Medicare supplement advertisement intended for use in this state, whether
             4633      through written or broadcast medium, to the commissioner for review.
             4634          Section 99. Section 31A-22-623 is amended to read:
             4635           31A-22-623. Coverage of inborn metabolic errors.
             4636          (1) As used in this section:
             4637          (a) "Dietary products" means medical food or a low protein modified food product that:
             4638          (i) is specifically formulated to treat inborn errors of amino acid or urea cycle metabolism;
             4639          (ii) is not a natural food that is naturally low in protein; and
             4640          (iii) is used under the direction of a physician.
             4641          (b) "Inborn errors of amino acid or urea cycle metabolism" means a disease caused by an
             4642      inherited abnormality of body chemistry which is treatable by the dietary restriction of one or more
             4643      amino acid.
             4644          (2) The commissioner shall establish, by rule, minimum standards of coverage for dietary


             4645      products used for the treatment of inborn errors of amino acid or urea cycle metabolism at levels
             4646      consistent with the major medical benefit provided under [a disability] an accident and health
             4647      insurance policy.
             4648          Section 100. Section 31A-22-624 is amended to read:
             4649           31A-22-624. Primary care physician.
             4650          [A disability] An accident and health insurance policy that requires an insured to select a
             4651      primary care physician to receive optimum coverage:
             4652          (1) shall permit an insured to select a participating provider who is an
             4653      obstetrician/gynecologist and is qualified and willing to provide primary care services, as defined
             4654      by the health care plan, as the insured's provider from whom primary care services are received;
             4655          (2) shall clearly state in literature explaining the policy the option available to female
             4656      insureds under Subsection (1); and
             4657          (3) may not impose a higher premium, higher copayment requirement, or any other
             4658      additional expense on an insured by virtue of the insured selecting a primary care physician in
             4659      accordance with Subsection (1).
             4660          Section 101. Section 31A-22-626 is amended to read:
             4661           31A-22-626. Coverage of diabetes.
             4662          (1) As used in this section, "diabetes" includes individuals with:
             4663          (a) complete insulin deficiency or type 1 diabetes;
             4664          (b) insulin resistant with partial insulin deficiency or type 2 diabetes; and
             4665          (c) elevated blood glucose levels induced by pregnancy or gestational diabetes.
             4666          (2) The commissioner shall establish, by rule, minimum standards of coverage for diabetes
             4667      for [disability] accident and health insurance policies that provide a health insurance benefit before
             4668      July 1, 2000.
             4669          (3) In making rules under Subsection (2), the commissioner shall require rules:
             4670          (a) with durational limits, amount limits, deductibles, and coinsurance for the treatment
             4671      of diabetes equitable or identical to coverage provided for the treatment of other illnesses or
             4672      diseases; and
             4673          (b) that provide coverage for:
             4674          (i) diabetes self-management training and patient management, including medical nutrition
             4675      therapy as defined by rule, provided by an accredited or certified program and referred by an


             4676      attending physician within the plan and consistent with the health plan provisions for
             4677      self-management education:
             4678          (A) recognized by the federal Health Care Financing [Agency] Administration; or
             4679          (B) certified by the Department of Health; and
             4680          (ii) the following equipment, supplies, and appliances to treat diabetes when medically
             4681      necessary:
             4682          (A) blood glucose monitors, including those for the legally blind;
             4683          (B) test strips for blood glucose monitors;
             4684          (C) visual reading urine and ketone strips;
             4685          (D) lancets and lancet devices;
             4686          (E) insulin;
             4687          (F) injection aides, including those adaptable to meet the needs of the legally blind, and
             4688      infusion delivery systems;
             4689          (G) syringes;
             4690          (H) prescriptive oral agents for controlling blood glucose levels; and
             4691          (I) glucagon kits.
             4692          (4) (a) Before October 1, 2003, the commissioner shall report to the Health and Human
             4693      Services Interim Committee on the effects of Section 31A-22-626 . The report shall be based on
             4694      three years of data and shall include, to the extent possible:
             4695          (i) a review of the rules established under Subsection (3);
             4696          (ii) the change in availability of coverage resulting from this section;
             4697          (iii) the extent to which persons have been benefitted by the provisions of this section; and
             4698          (iv) the impact of this section on premiums.
             4699          (b) The Legislature shall consider the results of the report under Subsection (4)(a) when
             4700      determining whether to reauthorize the provisions of this section.
             4701          Section 102. Section 31A-22-630 is amended to read:
             4702           31A-22-630. Mastectomy coverage.
             4703          (1) If an insured has coverage that provides medical and surgical benefits with respect to
             4704      a mastectomy, it shall provide coverage, with consultation of the attending physician and the
             4705      patient, for:
             4706          (a) reconstruction of the breast on which the mastectomy has been performed;


             4707          (b) surgery and reconstruction of the breast on which the mastectomy was not performed
             4708      to produce symmetrical appearance; and
             4709          (c) prostheses and physical complications with regards to all stages of mastectomy,
             4710      including lymphedemas.
             4711          (2) (a) This section does not prevent [a disability] an accident and health insurer from
             4712      imposing cost-sharing measures for health benefits relating to this coverage, if cost-sharing
             4713      measures are not greater than those imposed on any other medical condition.
             4714          (b) For purposes of this Subsection (2), cost-sharing measures include imposing a
             4715      deductible or coinsurance requirement.
             4716          (3) Written notice of the availability of the coverage described in Subsection (1) shall be
             4717      delivered to the participant:
             4718          (a) upon enrollment; and
             4719          (b) annually after the enrollment.
             4720          Section 103. Section 31A-22-631 is enacted to read:
             4721          31A-22-631. Policy summary or illustration.
             4722          (1) (a) Except as provided in Subsection (1)(b), at the time a life insurance policy is
             4723      delivered, a policy summary or illustration shall be delivered for the life insurance policy if:
             4724          (i) the life insurance policy includes riders or supplemental benefits, including accelerated
             4725      benefits; and
             4726          (ii) receipt of benefits under the life insurance policy is contingent upon morbidity
             4727      requirements.
             4728          (b) In the case of a direct response solicitation, the insurer shall deliver the policy summary
             4729      or illustration at the sooner of:
             4730          (i) the applicant's request; or
             4731          (ii) at the time of policy delivery regardless of whether the applicant requests a policy
             4732      summary or illustration.
             4733          (2) In addition to complying with all applicable requirements, the policy summary or
             4734      illustration shall include:
             4735          (a) a clear and prominent disclosure of how the rider or supplemental benefit interacts with
             4736      other components of the policy, including deductions from death benefits and policy values;
             4737          (b) an illustration for each covered person of:


             4738          (i) the amount of benefits;
             4739          (ii) the length of benefits; and
             4740          (iii) the guaranteed lifetime benefits, if any;
             4741          (c) a disclosure of the maximum premiums for the rider or supplemental benefit;
             4742          (d) any exclusions, reductions, or limitations on the benefits of the rider or supplemental
             4743      benefit; and
             4744          (e) if applicable to the policy type:
             4745          (i) a disclosure of the effects of exercising other rights under the policy; and
             4746          (ii) guaranteed maximum lifetime benefits.
             4747          Section 104. Section 31A-22-632 is enacted to read:
             4748          31A-22-632. Report to policy holder.
             4749          (1) An insurer shall provide the policyholder a monthly report if an accident and health
             4750      rider or supplemental benefit is:
             4751          (a) funded through a life insurance vehicle by acceleration of the death benefit; and
             4752          (b) in benefit payment status.
             4753          (2) The report required by Subsection (1) shall include:
             4754          (a) any rider or supplemental benefits paid out during the month;
             4755          (b) an explanation of any changes in the policy due to rider or supplemental benefits being
             4756      paid out such as:
             4757          (i) death benefits; or
             4758          (ii) cash values; and
             4759          (c) the amount of the rider or supplemental benefits existing or remaining.
             4760          Section 105. Section 31A-22-701 is amended to read:
             4761     
Part VII. Group Accident and Health Insurance

             4762           31A-22-701. Groups eligible for group or blanket insurance.
             4763          (1) A group or blanket [disability] accident and health insurance policy may be issued to:
             4764          (a) any group to which a group life insurance policy may be issued under Sections
             4765      31A-22-502 through 31A-22-507 ;
             4766          (b) a policy issued pursuant to a conversion privilege under Part VII; or
             4767          (c) a group specifically authorized by the commissioner upon a finding that:
             4768          (i) authorization is not contrary to the public interest;


             4769          (ii) the proposed group is actuarially sound;
             4770          (iii) formation of the proposed group may result in economies of scale in administrative,
             4771      marketing, and brokerage costs; and
             4772          (iv) the health insurance policy, certificate, or other indicia of coverage that will be offered
             4773      to the proposed group is substantially equivalent to policies that are otherwise available to similar
             4774      groups.
             4775          (2) Blanket policies may also be issued to:
             4776          (a) any common carrier or any operator, owner, or lessee of a means of transportation, as
             4777      policyholder, covering persons who may become passengers as defined by reference to their travel
             4778      status;
             4779          (b) an employer, as policyholder, covering any group of employees, dependents, or guests,
             4780      as defined by reference to specified hazards incident to any activities of the policyholder;
             4781          (c) an institution of learning, including a school district, school jurisdictional units, or the
             4782      head, principal, or governing board of any of those units, as policyholder, covering students,
             4783      teachers, or employees;
             4784          (d) any religious, charitable, recreational, educational, or civic organization, or branch of
             4785      those organizations, as policyholder, covering any group of members or participants as defined by
             4786      reference to specified hazards incident to the activities sponsored or supervised by the
             4787      policyholder;
             4788          (e) a sports team, camp, or sponsor of the team or camp, as policyholder, covering
             4789      members, campers, employees, officials, or supervisors;
             4790          (f) any volunteer fire department, first aid, civil defense, or other similar volunteer
             4791      organization, as policyholder, covering any group of members or participants as defined by
             4792      reference to specified hazards incident to activities sponsored, supervised, or participated in by the
             4793      policyholder;
             4794          (g) a newspaper or other publisher, as policyholder, covering its carriers;
             4795          (h) an association, including a labor union, which has a constitution and bylaws and which
             4796      has been organized in good faith for purposes other than that of obtaining insurance, as
             4797      policyholder, covering any group of members or participants as defined by reference to specified
             4798      hazards incident to the activities or operations sponsored or supervised by the policyholder;
             4799          (i) a health insurance purchasing association organized and controlled solely by


             4800      participating employers as defined in Section 31A-34-103 ; and
             4801          (j) any other class of risks which, in the judgment of the commissioner, may be properly
             4802      eligible for blanket [disability] accident and health insurance.
             4803          (3) The judgment of the commissioner may be exercised on the basis of:
             4804          (a) individual risks [or];
             4805          (b) class of risks; or
             4806          (c) both Subsections (3)(a) and (b).
             4807          Section 106. Section 31A-22-702 is amended to read:
             4808           31A-22-702. Adjustment of premium rate and application of dividends or rate
             4809      reductions.
             4810          Any group [disability] accident and health insurance policy may provide for the adjustment
             4811      of the rate of premium based upon the experience under the contract. If a policy dividend is
             4812      declared or a reduction in rate is made or continued for the first or any subsequent year of
             4813      insurance under any policy of group [disability] accident and health insurance, the excess, if any,
             4814      of the aggregate dividends or rate reductions under the policy and all other group insurance policies
             4815      of the policyholder over the aggregate expenditure for insurance under those policies made from
             4816      funds contributed by the policyholder, including expenditures made in connection with the
             4817      administration of the policies, shall be applied by the policyholder for the sole benefit of insured
             4818      employees or members unless the insured employee or member explicitly elects otherwise.
             4819          Section 107. Section 31A-22-703 is amended to read:
             4820           31A-22-703. Conversion rights on termination of group accident and health
             4821      insurance coverage.
             4822          (1) Except as provided in Subsections (2) through (5), all policies of [disability] accident
             4823      and health insurance offered on a group basis under this title or Title 49, Chapter 8, Group
             4824      Insurance Program Act, shall provide that a person whose insurance under the group policy has
             4825      been terminated for any reason, and who has been continuously insured under the group policy or
             4826      its predecessor for at least six months immediately prior to termination, is entitled to choose
             4827      [either] a converted individual [or group] policy of [disability] accident and health insurance from
             4828      the insurer which conforms to Section 31A-22-708 or an extension of benefits under the group
             4829      policy as provided in Section 31A-22-714 .
             4830          (2) Subsection (1) does not apply if the policy:


             4831          (a) provides catastrophic, aggregate stop loss, or specific stop loss benefits;
             4832          (b) provides benefits for specific diseases or for accidental injuries only, or for dental
             4833      service; or
             4834          (c) is [a disability] an income replacement policy.
             4835          (3) An employee or group member does not have conversion rights under Subsection (1)
             4836      if:
             4837          (a) termination of the group coverage occurred because of failure of the group member to
             4838      pay any required individual contribution;
             4839          (b) the individual group member acquires other group coverage covering all preexisting
             4840      conditions including maternity, if the coverage existed under the replaced group coverage; or
             4841          (c) the person [who would be covered is or could be covered by Medicare] has:
             4842          (i) performed an act or practice that constitutes fraud; or
             4843          (ii) made an intentional misrepresentation of material fact under the terms of the coverage.
             4844          (4) Notwithstanding Subsections (1), (2), and (3), an employee or group member does not
             4845      have conversion rights under Subsection (1) if the individual or group member qualifies to
             4846      continue coverage under his existing group policy in accordance with the terms of his policy.
             4847          (5) (a) Notwithstanding Subsection 31A-22-613 (1), an insurer may reduce benefits under
             4848      a converted [disability] policy covering any person to the extent the benefits provided or available
             4849      to that person under one or more of the sources listed under Subsection (5)(b), together with the
             4850      benefits provided by the converted policy, would result in [overinsurance according to the insurer's
             4851      standards. The insurer's standards shall bear a reasonable relationship to actual health care costs
             4852      in the area in which the insured lives at the time of conversion and shall be filed with the
             4853      commissioner prior to their use in denying coverage] duplicate coverage.
             4854          (b) The benefits sources referred to under Subsection (5)(a) include:
             4855          (i) benefits under another insurance policy; and
             4856          (ii) benefits under any arrangement of coverage for individuals in a group, whether on an
             4857      insured or an uninsured basis[; and].
             4858          [(iii) benefits provided for or available to that person, in accordance with the requirements
             4859      of any state or federal law.]
             4860          (6) (a) The conversion policy shall provide maternity benefits equal to the maternity
             4861      benefits of the group policy until termination of pregnancy that exists on the date of conversion


             4862      if:
             4863          (i) one of the following is pregnant on the date of the conversion:
             4864          (A) the insured;
             4865          (B) a spouse of the insured; or
             4866          (C) a dependent of the insured; and
             4867          (ii) the accident and health policy had maternity benefits.
             4868          (b) The requirements of this Subsection (6) do not apply to a pregnancy that occurs after
             4869      the date of conversion.
             4870          Section 108. Section 31A-22-704 is amended to read:
             4871           31A-22-704. Conversion rules and procedures.
             4872          (1) Written application for the converted policy shall be made and the first premium paid
             4873      to the insurer no later than 60 days after termination of the group [disability] accident and health
             4874      insurance.
             4875          (2) The converted policy shall be issued without evidence of insurability.
             4876          (3) (a) The initial premium for the converted policy for the first 12 months and subsequent
             4877      renewal premiums shall be determined in accordance with premium rates applicable to age, class
             4878      of risk of the person, and the type and amount of insurance provided[.]; and
             4879          (b) the initial premium for the first 12 months may not be raised based on pregnancy of
             4880      a covered insured.
             4881          (4) Conditions pertaining to health are not an acceptable basis for classification under this
             4882      section.
             4883          (5) The premium for converted [disability] policies shall be payable monthly or quarterly
             4884      as required by the insurer for the policy form and plan selected, unless another mode of premium
             4885      payment is mutually agreed upon.
             4886          (6) The converted policy becomes effective at the time the insurance under the group
             4887      policy terminates.
             4888          (7) The converted policy covers the employee or member and the dependents who were
             4889      covered by the group policy on the date of termination of insurance. At the option of the insurer,
             4890      a separate converted policy may be issued to cover any dependent.
             4891          Section 109. Section 31A-22-705 is amended to read:
             4892           31A-22-705. Provisions in conversion policies.


             4893          (1) A converted policy may include a provision under which the insurer may request from
             4894      the person covered, information in advance of any premium due date as to whether there is other
             4895      coverage as specified under Subsection 31A-22-703 (4).
             4896          (2) The converted policy may provide that the insurer may refuse to renew the policy or
             4897      the coverage of any person insured:
             4898          [(a) if the insured could be covered by Medicare;]
             4899          [(b) the converted policy creates an unreasonable over-insurance position;]
             4900          [(c)] (a) for fraud or [material] intentional misrepresentation of a material fact in applying
             4901      for any benefits under the converted policy; or
             4902          [(d)] (b) for any other reason approved by the commissioner by rule or order.
             4903          (3) [No] An insurer may not be required to issue a converted policy which provides
             4904      benefits in excess of those provided under the group policy from which conversion is made.
             4905          (4) [No] A converted policy may not exclude a preexisting condition not excluded under
             4906      the group policy.
             4907          (5) During the first policy year, the converted policy may provide that the benefits payable
             4908      under the converted policy, together with the benefits paid for the individual under the group
             4909      policy, do not exceed those that would have been payable had the individual's insurance under the
             4910      group policy remained in force and effect.
             4911          Section 110. Section 31A-22-715 is amended to read:
             4912           31A-22-715. Optional rider for alcohol and drug dependency treatment.
             4913          Each group [disability] accident and health insurance policy shall contain an optional rider
             4914      allowing certificate holders to obtain coverage for alcohol or drug dependency treatment in
             4915      programs licensed by the Department of Human Services, under Title 62A, Chapter 2, inpatient
             4916      hospitals accredited by the joint commission on the accreditation of hospitals, or facilities licensed
             4917      by the Department of Health.
             4918          Section 111. Section 31A-22-716 is amended to read:
             4919           31A-22-716. Required provision for notice of termination.
             4920          (1) Every policy for group or blanket [disability] accident and health coverage issued or
             4921      renewed after July 1, 1990, shall include a provision that obligates the policyholder to give 30 days
             4922      prior written notice of termination to each employee or group member and to notify each employee
             4923      or group member of his rights to continue coverage upon termination.


             4924          (2) An insurer's monthly notice to the policyholder of premium payments due shall include
             4925      a statement of the policyholder's obligations as set forth in Subsection (1). Insurers shall provide
             4926      a sample notice to the policyholder at least once a year.
             4927          Section 112. Section 31A-22-717 is amended to read:
             4928           31A-22-717. Provisions pertaining to service members and their families affected by
             4929      Operation Desert Shield and Operation Desert Storm.
             4930          For any group or blanket [disability] accident and health coverage, an insurer:
             4931          (1) may not refuse to reinstate an insured or his family whose coverage lapsed due to the
             4932      insured's participation in Operation Desert Shield or Operation Desert Storm provided application
             4933      is made within 180 days of release from active duty;
             4934          (2) shall reinstate an insured in full upon payment of the first premium without the
             4935      requirement of a waiting period or exclusion for preexisting conditions or any other underwriting
             4936      requirements that were covered previously; and
             4937          (3) may not increase the insured's premium in excess of what it would have been increased
             4938      in the normal course of time had the insured not participated in Operation Desert Shield or
             4939      Operation Desert Storm.
             4940          Section 113. Section 31A-22-720 is amended to read:
             4941           31A-22-720. Mental health parity.
             4942          (1) (a) A group [disability] accident and health plan offered by an insurer shall comply
             4943      with Subsection (1)(b) if the group disability plan:
             4944          (i) applies an aggregate lifetime limit to plan payments for medical or surgical services
             4945      covered by the group [disability] accident and health plan; and
             4946          (ii) provides a mental health benefit.
             4947          (b) A group [disability] accident and health plan described in Subsection (1)(a) shall:
             4948          (i) include in the aggregate lifetime limit for medical or surgical services covered by the
             4949      group [disability] accident and health plan the payments made under the plan for mental health
             4950      services; or
             4951          (ii) establish a separate aggregate lifetime limit to plan payments for mental health services
             4952      covered by the group [disability] accident and health plan, but only if the dollar amount of the
             4953      aggregate lifetime limit for mental health services covered by that plan is equal to or greater than
             4954      the dollar amount of the aggregate lifetime limit for medical or surgical services covered by that


             4955      plan.
             4956          (2) (a) A group [disability] accident and health plan offered by an insurer shall comply
             4957      with Subsection (2)(b) if the group [disability] accident and health plan:
             4958          (i) applies an annual limit to plan payments for medical or surgical services covered by the
             4959      group [disability] accident and health plan; and
             4960          (ii) provides a mental health benefit.
             4961          (b) A group [disability] accident and health plan described in Subsection (2)(a) shall:
             4962          (i) include in the annual limit for medical or surgical services covered by the group
             4963      [disability] accident and health plan the payments made under the plan for mental health services;
             4964      or
             4965          (ii) establish a separate annual limit to plan payments for mental health services covered
             4966      by the group [disability] accident and health plan, but only if the dollar amount of the annual limit
             4967      for mental health services covered by that plan is equal to or greater than the dollar amount of the
             4968      annual limit for medical or surgical services covered by that plan.
             4969          (3) This section does not prohibit a group [disability] accident and health plan offered by
             4970      an insurer from:
             4971          (a) using other forms of cost containment not prohibited under Subsection (1); or
             4972          (b) applying requirements that make distinctions between acute care and chronic care.
             4973          (4) This section does not apply to:
             4974          (a) benefits for:
             4975          (i) substance abuse; or
             4976          (ii) chemical dependency; or
             4977          (b) [disability] accident and health benefits or plans paid under Title XVII or XIX of the
             4978      Social Security Act.
             4979          (5) (a) This section does not apply to plans maintained by employers that employ less than
             4980      50 employees.
             4981          (b) For purposes of determining whether an employer is exempt under Subsection (5)(a):
             4982          (i) if the employer was not in existence throughout the preceding calendar year, the number
             4983      of employees of the employer is determined based on the average number of employees that the
             4984      employer is reasonably expected to employ on business days in the calendar year for which the
             4985      determination is made; and


             4986          (ii) as used in this Subsection (5), "employer" includes a predecessor of the employer.
             4987          Section 114. Section 31A-22-801 is amended to read:
             4988           31A-22-801. Scope of part.
             4989          (1) Except as provided under Subsection (2), all life insurance and [disability] accident and
             4990      health insurance in connection with loans or other credit transactions are subject to this part.
             4991          (2) (a) Insurance in connection with a loan or other credit transaction of more than ten
             4992      years duration is not subject to this part, but is subject to other provisions of this title.
             4993          (b) Isolated transactions on the part of an insurer [which] that are not related to an
             4994      agreement or plan for insuring debtors of the creditor are not subject to this part.
             4995          Section 115. Section 31A-22-802 is amended to read:
             4996           31A-22-802. Definitions.
             4997          As used in Part VIII:
             4998          (1) "Credit [disability] accident and health insurance" means [disability] insurance on a
             4999      debtor to provide indemnity for payments coming due on a specific loan or other credit transaction
             5000      while the debtor is disabled.
             5001          (2) "Credit life insurance" means life insurance on the life of a debtor in connection with
             5002      a specific loan or credit transaction.
             5003          (3) "Credit transaction" means any transaction under which the payment for money loaned
             5004      or for goods, services, or properties sold or leased is to be made on future dates.
             5005          (4) "Creditor" means the lender of money or the vendor or lessor of goods, services, or
             5006      property, for which payment is arranged through a credit transaction, or any successor to the right,
             5007      title, or interest of any lender or vendor.
             5008          (5) "Debtor" means a borrower of money or a purchaser, including a lessee under a lease
             5009      intended as security, of goods, services, or property, for which payment is arranged through a credit
             5010      transaction.
             5011          (6) "Indebtedness" means the total amount payable by a debtor to a creditor in connection
             5012      with a credit transaction, including principal finance charges and interest.
             5013          (7) "Net indebtedness" means the total amount required to liquidate the indebtedness,
             5014      exclusive of any unearned interest, any insurance on the monthly outstanding balance coverage,
             5015      or any finance charge.
             5016          (8) "Net written premiums" means gross written premiums minus refunds on termination.


             5017          Section 116. Section 31A-22-803 is amended to read:
             5018           31A-22-803. Forms of insurance permitted.
             5019          Credit life insurance and credit [disability] accident and health insurance may be issued
             5020      only in the following forms:
             5021          (1) individual policies of term life insurance issued to debtors;
             5022          (2) individual policies of term [disability] accident and health insurance issued to debtors,
             5023      or [disability] accident and health benefit provisions in individual policies of credit life insurance;
             5024          (3) group policies of term life insurance issued to creditors, providing insurance upon the
             5025      lives of debtors;
             5026          (4) group policies of term [disability] accident and health insurance issued to creditors
             5027      insuring debtors, or [disability] accident and health benefit provisions in group credit life insurance
             5028      policies.
             5029          Section 117. Section 31A-22-804 is amended to read:
             5030           31A-22-804. Limitations on amounts of insurance.
             5031          (1) Except as provided under Subsection (2), the initial amount of credit life insurance on
             5032      the life of any one debtor may not exceed the total amount repayable under the contract of
             5033      indebtedness. Where an indebtedness is repayable in substantially equal periodic installments,
             5034      the amount of insurance may not exceed the scheduled or actual amount of unpaid indebtedness,
             5035      whichever is greater.
             5036          (2) Subsection (1) does not apply to:
             5037          (a) insurance on agricultural credit transaction commitments not exceeding the
             5038      commitment period, which may be written for the amount of the commitment on a nondecreasing
             5039      or level term plan;
             5040          (b) insurance on educational credit transaction commitments, which may be written to
             5041      include the portion of the commitment that has not been advanced by the creditor;
             5042          (c) insurance on preauthorized lines of credit not exceeding the commitment period which
             5043      may be written for the preauthorized amount on a nondecreasing or level term plan, whether
             5044      secured or unsecured[.]; and
             5045          (d) insurance on any other class of lawful credit transaction or commitment, which in the
             5046      commissioner's opinion does not require the application of the restrictions under Subsection (1),
             5047      in which case the commissioner may authorize by rule a class exception to Subsection (1).


             5048          (3) The total amount of indemnity payable by credit [disability] accident and health
             5049      insurance in the event of disability, as defined in the policy, may not exceed the aggregate of the
             5050      periodic scheduled unpaid installments of the indebtedness. The amount of each periodic
             5051      indemnity payment may not exceed the total amount repayable under the contract of indebtedness
             5052      divided by the number of periodic installments.
             5053          Section 118. Section 31A-22-805 is amended to read:
             5054           31A-22-805. Beginning date of insurance.
             5055          (1) Except as provided under Subsection (2), any credit life insurance or credit [disability]
             5056      accident and health insurance, subject to acceptance by the insurer, commences on the date when
             5057      the debtor becomes obligated to the creditor.
             5058          (2) (a) Where a group policy provides coverage for existing obligations, the insurance on
             5059      a debtor with respect to that indebtedness commences on the effective date of the policy.
             5060          (b) Where evidence of insurability is required and the evidence is furnished more than 30
             5061      days after the debtor becomes obligated to the creditor, the insurance may commence when the
             5062      insurance company determines the evidence of insurability to be satisfactory. In this event, the
             5063      insurer shall make an appropriate refund or adjustment of any charge to the debtor for insurance.
             5064          (3) The insurance may not extend more than 15 days beyond the scheduled maturity date
             5065      of the indebtedness, unless it does so at no additional cost to the debtor.
             5066          (4) If the indebtedness is discharged due to renewal or refinancing prior to the scheduled
             5067      maturity date, the insurance in force shall terminate before any new insurance may be issued in
             5068      connection with the renewed or refinanced indebtedness. In all cases of termination prior to
             5069      scheduled maturity, a refund shall be paid or credited as provided in Section 31A-22-808 .
             5070          Section 119. Section 31A-22-806 is amended to read:
             5071           31A-22-806. Provisions of policies and certificates.
             5072          (1) All credit life insurance and credit [disability] accident and health insurance shall be
             5073      evidenced by an individual policy, or, in the case of group insurance, by a certificate of insurance
             5074      delivered to the debtor.
             5075          (2) Each of these types of policies or certificates shall, in addition to satisfying the
             5076      requirements of Chapter 21, set forth:
             5077          (a) the name and home office address of the insurer;
             5078          (b) the identity, by name or otherwise, of the persons insured;


             5079          (c) the rate, premium, or amount of payment by the debtor, if any, given separately for
             5080      credit life insurance and credit [disability] accident and health insurance;
             5081          (d) a description of the amount, term, and coverage, including any exceptions, limitations,
             5082      and restrictions;
             5083          (e) that the benefits shall be paid to the creditor to reduce or extinguish the unpaid
             5084      indebtedness; and
             5085          (f) that whenever the amount of insurance exceeds the unpaid indebtedness, that excess
             5086      is payable to a beneficiary, other than the creditor, named by the debtor or to the debtor's estate.
             5087          (3) Except as provided in Subsection (4), the policy or certificate shall be delivered to the
             5088      debtor within 30 days after the date when the indebtedness is incurred.
             5089          (4) (a) If the policy or certificate is not delivered to the debtor within 30 days after the date
             5090      the indebtedness is incurred, a copy of the application for the policy or a notice of proposed
             5091      insurance shall be delivered to the debtor.
             5092          (b) The application or the notice shall be signed by the debtor and shall set forth:
             5093          (i) the name and home office address of the insurer;
             5094          (ii) the name of the debtor;
             5095          (iii) the premium or amount of payment by the debtor, if any, separately for credit life
             5096      insurance and credit [disability] accident and health insurance; and
             5097          (iv) the amount, term, and a brief description of the coverage provided.
             5098          (c) The copy of the application for or notice of proposed insurance, shall also refer
             5099      exclusively to insurance coverage, and shall be separate from the loan, sale, or other credit
             5100      statement of account or instrument, unless the information required by this Subsection (4)(c) is
             5101      prominently set forth therein.
             5102          (d) Upon acceptance of the insurance by the insurer and within 60 days after the later of
             5103      the date on which the indebtedness is incurred or the date on which the credit life or credit
             5104      [disability] accident and health policy was purchased, the insurer shall deliver the individual policy
             5105      or group certificate of insurance to the debtor.
             5106          (e) The application or notice shall state that upon acceptance by the insurer, the insurance
             5107      is effective as provided in Section 31A-22-805 .
             5108          (5) If the named insurer does not accept the risk, the debtor shall receive a policy or
             5109      certificate of insurance setting forth the name and home office address of the substituted insurer


             5110      and the amount of the premium to be charged. If the premium is less than that set forth in the
             5111      notice of proposed insurance, an appropriate refund shall be made.
             5112          (6) If a creditor makes available to the debtors more than one plan of credit life or credit
             5113      [disability] accident and health insurance, all debtors must be informed of the plans applicable to
             5114      the specific type of loan transaction for which the debtor is applying.
             5115          Section 120. Section 31A-22-807 is amended to read:
             5116           31A-22-807. Filing and approval of forms -- Loss ratio standards.
             5117          (1) All forms of policies, certificates of insurance, statements of insurance, endorsements,
             5118      and riders intended for use in Utah are subject to Section 31A-21-201 .
             5119          (2) In addition to the grounds for disapproval under Subsection 31A-21-201 (3), it is a
             5120      ground for disapproval that the benefits provided in the form are not reasonable in relation to the
             5121      premium charge.
             5122          (3) In ascertaining whether the benefits are reasonable in relation to the premium charged,
             5123      the commissioner shall consider the mortality cost of the life insurance and the morbidity cost of
             5124      the [disability] accident and health insurance, and the reserves set up for the payment of claims
             5125      unreported or in the process of settlement. The benefits are considered reasonable in relation to
             5126      the premium charged if the premium rate charged develops or may reasonably be expected to
             5127      develop a loss ratio of not less than 50% for credit life insurance and not less than 55% for credit
             5128      [disability] accident and health insurance given the above costs.
             5129          (4) Benefits are considered reasonable in relation to premium charged if the ratio of claims
             5130      incurred to premium earned during the most recent four-year period at the rates in use produces
             5131      a loss ratio that is equal to or exceeds the minimum loss ratio standard specified in Subsection (3).
             5132          (5) If the minimum loss ratio test produces a loss ratio that exceeds Subsection (4)'s
             5133      minimum loss ratio standard by five percentage points or more, the insurer may file for approval
             5134      and use rates that are higher than prima facie rates, if it can be expected that the use of those higher
             5135      rates will continue to produce a loss ratio for the accounts to which they are applied that will
             5136      satisfy the minimum loss ratio test.
             5137          (6) If the minimum loss ratio test produces a loss ratio that is lower than Subsection (4)'s
             5138      minimum loss standard by five percentage points or more, the commissioner may require that the
             5139      insurer file adjusted rates that can be expected to produce a loss ratio that will satisfy the minimum
             5140      loss ratio test, or to submit reasons acceptable to the commissioner why the insurer should not be


             5141      required to file these adjusted rates.
             5142          Section 121. Section 31A-22-808 is amended to read:
             5143           31A-22-808. Premiums and refunds.
             5144          (1) Each policy, certificate, or statement of insurance shall provide that in the event of
             5145      termination of the insurance prior to the scheduled maturity date of the indebtedness, any refund
             5146      of an amount paid by the debtor for insurance shall be paid or credited promptly to the person
             5147      entitled to it. The formula used in computing the refund shall be filed with and approved by the
             5148      commissioner under Chapter 21, Part II. No refund is required if it would be less than $5.
             5149          (2) If a creditor requires a debtor to make any payment for credit life or credit [disability]
             5150      accident and health insurance and an individual policy, certificate, or statement of insurance is not
             5151      issued, the creditor shall immediately give written notice to the debtor and credit the account.
             5152          (3) The amount charged the debtor for credit life or [disability] accident and health
             5153      insurance may not exceed the premiums charged by the insurer as computed at the time the charge
             5154      to the debtor is determined.
             5155          Section 122. Section 31A-22-809 is amended to read:
             5156           31A-22-809. Right of debtor to choose insurer.
             5157          When credit life insurance or credit [disability] accident and health insurance is required
             5158      as security for any indebtedness, the creditor shall inform the debtor of the debtor's option to
             5159      furnish the required insurance through existing policies of insurance owned or controlled by the
             5160      debtor or to procure and furnish the required coverage through any insurer authorized to transact
             5161      life or [disability] accident and health insurance in Utah.
             5162          Section 123. Section 31A-22-1002 is amended to read:
             5163           31A-22-1002. Duration of coverage.
             5164          (1) Any insurer assuming a workers' compensation risk shall carry it until the policy is
             5165      canceled, either:
             5166          (a) by agreement between the Division of Industrial Accidents in the Labor Commission,
             5167      the insurer, and the employer; or
             5168          (b) after:
             5169          (i) [30 days] notice by the insurer to the employer as provided in Section 31A-21-303 ; and
             5170          (ii) notice to the Division of Industrial Accidents in the Labor Commission as provided
             5171      in Section 34A-2-205 .


             5172          (2) Subsection (1) does not affect the requirements of Section 31A-22-1001 .
             5173          Section 124. Section 31A-22-1101 is amended to read:
             5174           31A-22-1101. Combination of lines.
             5175          (1) Legal expense insurance may be transacted alone or together with life insurance,
             5176      [disability] accident and health insurance, or casualty insurance.
             5177          (2) [No] An insurer may not transact liability insurance and also issue legal expense
             5178      insurance policies providing coverage for the expense of enforcing claims against third persons,
             5179      unless the requirements of Subsection (3) are met and the commissioner is satisfied that the
             5180      interests of policyholders of legal expense insurance policies are not endangered by potential
             5181      conflicts of interest within the insurer.
             5182          (3) Adequate precautions shall be taken to make sure that the handling of an insured's
             5183      claim for legal assistance in enforcing a claim against a third person is not affected by the insurer's
             5184      actual or potential obligation as a liability insurer to pay the claim for the third person. These
             5185      precautions may include:
             5186          (a) a provision in the policy that claims against third persons shall be handled exclusively
             5187      by attorneys selected by the insureds themselves rather than by the insurer, that no information
             5188      about the case other than the name of the defendant and the nature of the claim may be made
             5189      available to the insurer, and that the insurer may not interfere with the handling of the case; or
             5190          (b) organizational separation between the legal expense and the liability insurance
             5191      departments with respect to management, accounting, record keeping, and claims handling, with
             5192      appropriate rules and procedures, satisfactory to the commissioner, to prevent the exchange of
             5193      information between the two departments about details of cases.
             5194          Section 125. Section 31A-22-1401 is amended to read:
             5195           31A-22-1401. Application.
             5196          (1) The requirements of this part apply to individual policies and to group policies and
             5197      certificates marketed in this state on or after July 1, [1991] 2001, other than employee and labor
             5198      union group policies and certificates.
             5199          (2) Entities subject to this part shall comply with other applicable insurance laws and rules
             5200      unless they are in conflict with this part.
             5201          (3) The laws, regulations, and rules designed and intended to apply to Medicare
             5202      supplement insurance policies may not be applied to long-term care insurance.


             5203          (4) Any policy or rider advertised, marketed, or offered as long-term care or nursing home
             5204      insurance shall comply with the provisions of this part.
             5205          Section 126. Section 31A-22-1402 is amended to read:
             5206           31A-22-1402. Definitions.
             5207          Unless the context requires otherwise, the following definitions apply in this part:
             5208          (1) "Applicant" means:
             5209          (a) in the case of an individual long-term care insurance policy, the person who seeks to
             5210      contract for benefits; and
             5211          (b) in the case of a group long-term care insurance policy, the proposed certificate holder.
             5212          [(2) (a) "Long-term care insurance" means any insurance policy or rider advertised,
             5213      marketed, offered, or designed to provide coverage:]
             5214          [(i) for not less than 12 consecutive months for each covered person on an expense
             5215      incurred, indemnity, prepaid, or other basis;]
             5216          [(ii) for one or more necessary or medically necessary diagnostic, preventive, therapeutic,
             5217      rehabilitative, maintenance, or personal care service, provided in a setting other than an acute care
             5218      unit of a hospital.]
             5219          [(b) The term includes group and individual annuities and life insurance policies or riders
             5220      which provide directly or supplement long-term care insurance. The term also includes a policy
             5221      or rider which provides for payment of benefits based upon cognitive impairment or the loss of
             5222      functional capacity.]
             5223          [(c) Long-term care insurance does not include any insurance policy which is offered
             5224      primarily to provide basic Medicare supplement coverage, basic hospital expense coverage, basic
             5225      medical-surgical expense coverage, hospital confinement indemnity coverage, major medical
             5226      expense coverage, disability income or related asset-protection coverage, accident only coverage,
             5227      specified disease or specified accident coverage, or limited benefit health coverage.]
             5228          (2) Notwithstanding Section 31A-1-301 ,"certificate" means a certificate issued under a
             5229      group long-term care insurance policy if the group long-term care insurance policy is delivered or
             5230      issued for delivery in this state.
             5231          (3) Notwithstanding Section 31A-1-301 , "policy" means a policy, contract subscriber
             5232      agreement, rider, or endorsement, if the policy, contract subscriber agreement, rider, or
             5233      endorsement is delivered or issued:


             5234          (a) in this state; and
             5235          (b) by:
             5236          (i) an insurer;
             5237          (ii) a fraternal benefit society;
             5238          (iii) a nonprofit health, hospital, or medical service corporation;
             5239          (iv) a prepaid health plan;
             5240          (v) a health maintenance organization; or
             5241          (vi) an entity similar to an entity described in Subsections (4)(b)(i) through (v).
             5242          Section 127. Section 31A-22-1407 is amended to read:
             5243           31A-22-1407. Restricted conditional terms.
             5244          (1) A long-term care insurance policy may not contain a provision that conditions
             5245      eligibility:
             5246          (a) [conditions eligibility] for any benefits on a prior hospitalization requirement; [or]
             5247          (b) [conditions eligibility] for benefits provided in an institutional care setting on the
             5248      receipt of a higher level of institutional care[.]; or
             5249          (c) for any benefits on a prior institutionalization requirement except for eligibility for:
             5250          (i) waiver of premium;
             5251          (ii) post confinement;
             5252          (iii) post-acute care; or
             5253          (iv) recuperative benefits.
             5254          (2) A long-term care insurance policy containing [any limitations or conditions for
             5255      eligibility other than those prohibited in Subsection (1)] post confinement, post-acute care, or
             5256      recuperative benefits shall clearly label the limitations or conditions, including any required
             5257      number of days of confinement in a separate paragraph of the policy or certificate that is entitled
             5258      "Limitations or Conditions on Eligibility for Benefits."
             5259          [(3) A long-term care insurance policy containing a benefit advertised, marketed, or
             5260      offered as a home health care benefit may not condition receipt of benefits on a prior
             5261      institutionalization.]
             5262          [(4) A long-term care insurance policy or rider that provides benefits only following
             5263      institutionalization may not condition the benefits upon admission to a facility for the same or
             5264      related conditions within a period of less than 30 days after discharge from the institution.]


             5265          (3) A long-term care insurance policy or rider that conditions eligibility of noninstitutional
             5266      benefits on the prior receipt of institutional care may not require a prior institutional stay of more
             5267      than 30 days.
             5268          Section 128. Section 31A-22-1409 is amended to read:
             5269           31A-22-1409. Statements of coverage.
             5270          (1) An outline of coverage shall be delivered to a prospective applicant for long-term care
             5271      insurance at the time of initial solicitation through means which prominently direct the attention
             5272      of the applicant to the document and its purpose.
             5273          (2) The commissioner may prescribe a standard format of an outline of coverage, including
             5274      style, arrangement, and overall appearance, and the content.
             5275          (3) In the case of agent solicitations an agent must deliver the outline of coverage prior to
             5276      the presentation of any application or enrollment form.
             5277          (4) In the case of direct response solicitations, the outline of coverage must be presented
             5278      in conjunction with any application or enrollment form.
             5279          (5) An outline of coverage under this section shall include:
             5280          (a) a description of the principal benefits and coverage provided in the policy;
             5281          (b) a statement of the principal exclusions, reductions, and limitations contained in the
             5282      policy;
             5283          (c) a statement of the terms under which the policy or certificate, or both, may be
             5284      continued in force or discontinued, including any reservation in the policy of a right to change
             5285      premium;
             5286          (d) a specific description of continuation or conversion provisions of group coverage;
             5287          (e) a statement that the outline of coverage is not a contract of insurance but a summary
             5288      only and that the policy or group master policy contains governing contractual provisions;
             5289          (f) a description of the terms under which the policy or certificate may be returned and
             5290      premium refunded; [and]
             5291          (g) a brief description of the relationship of cost of care and benefits[.]; and
             5292          (h) a statement that discloses to the policyholder or certificate holder whether the policy
             5293      is intended to be a federally tax-qualified, long-term care insurance contract under Section
             5294      7702B(b), Internal Revenue Code.
             5295          (6) A certificate issued pursuant to a group long-term care insurance policy, which policy


             5296      is delivered or issued for delivery in this state, shall include:
             5297          (a) a description of the principal benefits and coverage provided in the policy;
             5298          (b) a statement of the principal exclusions, reductions, and limitations contained in the
             5299      policy; [and]
             5300          (c) a statement that the group master policy determines governing contractual
             5301      provisions[.]; and
             5302          (d) a statement that any long-term care inflation protection option required by rule is not
             5303      available under the policy.
             5304          (7) If an application for a long-term care contract or certificate is approved, the issuer shall
             5305      deliver the contract or certificate of insurance to the applicant no later than 30 days after the date
             5306      of approval.
             5307          [(7)] (8) At the time of policy delivery, a policy summary shall be delivered for an
             5308      individual life insurance policy which provides long-term care benefits within the policy or by
             5309      rider. In the case of direct response solicitations, the insurer shall deliver the policy summary upon
             5310      the applicant's request. However, the insurer shall deliver the summary to the applicant no later
             5311      than at the time of policy delivery regardless of request. In addition to complying with all
             5312      applicable requirements, the summary shall also include:
             5313          (a) an explanation of how the long-term care benefit interacts with other components of
             5314      the policy, including deductions from death benefits;
             5315          (b) an illustration for each covered person of the amount of benefits, the length of benefit,
             5316      and the guaranteed lifetime benefits if any;
             5317          (c) any exclusions, reductions, and limitations on benefits of long-term care; and
             5318          (d) if applicable to the policy type, the summary shall also include:
             5319          (i) a disclosure of the effects of exercising other rights under the policy;
             5320          (ii) a disclosure of guarantees related to long-term care costs of insurance charges; and
             5321          (iii) current and projected maximum lifetime benefits.
             5322          (9) The provisions of the policy summary required under Subsection (8) may be
             5323      incorporated into:
             5324          (a) a basic illustration; or
             5325          (b) the life insurance policy summary required to be delivered in accordance with rule.
             5326          Section 129. Section 31A-22-1411 is amended to read:


             5327           31A-22-1411. Incontestability period.
             5328          (1) For a policy or certificate that has been in force for less than six months, an insurer may
             5329      rescind a long-term care insurance policy or certificate upon a showing of misrepresentation that
             5330      is material to the acceptance for coverage.
             5331          (2) For a policy or certificate that has been in force for at least six months but less than two
             5332      years, an insurer may rescind a long-term care insurance policy or certificate upon a showing of
             5333      misrepresentation that:
             5334          (a) is material to the acceptance for coverage; and
             5335          (b) pertains to the condition for which benefits are sought.
             5336          (3) If an insurer has paid benefits under a long-term care insurance policy or certificate,
             5337      the benefit payments may not be recovered by the insurer if the policy or certificate is rescinded.
             5338          (4) (a) In the event of the death of the insured:
             5339          (i) this section may not apply to the remaining death benefit of a life insurance policy or
             5340      certificate that accelerates benefits for long-term care; and
             5341          (ii) the remaining death benefits under the policy or certificate shall be governed by
             5342      Section 31A-22-403 or 31A-22-514 .
             5343          (b) In a situation other than a situation described in Subsection (4)(a), this section shall
             5344      apply to life insurance policies or certificates that accelerate benefits for long-term care.
             5345          Section 130. Section 31A-22-1412 is amended to read:
             5346           31A-22-1412. Nonforfeiture benefits.
             5347          (1) (a) A long-term care insurance policy or certificate may not be delivered or issued for
             5348      delivery in this state unless the [issuer of the policy or certificate offers nonforfeiture benefits to
             5349      the defaulting or surrendering policyholder or certificate holder] policyholder or certificate holder
             5350      has been offered the option of purchasing a policy or certificate including a nonforfeiture benefit.
             5351          (b) The offer of a nonforfeiture benefit under Subsection (1)(a) may be in the form of a
             5352      rider that is attached to the policy.
             5353          (c) If the policyholder or certificate holder declines the nonforfeiture benefit offered under
             5354      this Subsection (1), the insurer shall provide a contingent benefit upon lapse of the policy or
             5355      certificate that is available for a specified period of time following a substantial increase in
             5356      premium rates.
             5357          (d) (i) Except as provided in Subsection (1)(d)(ii), if a group long-term care insurance


             5358      policy is issued, the offer required in this Subsection (1) shall be made to the group policyholder.
             5359          (ii) If the policy is issued to a group authorized under Section 31A-22-509 , the offer
             5360      required under this Subsection (1) shall be made to each proposed certificate holder.
             5361          (2) The commissioner shall make rules:
             5362          (a) specifying the types of nonforfeiture benefits [and] to be offered as part of a long-term
             5363      care insurance policy or certificate;
             5364          (b) specifying the standards for [the] nonforfeiture benefits [to be included in the policies
             5365      and certificates.]; and
             5366          (c) regarding contingent benefits upon lapse, including a determination of:
             5367          (i) the specified period of time during which a contingent benefit upon lapse will be
             5368      available as provided in Subsection (1); and
             5369          (ii) the substantial premium rate increase that triggers a contingent benefit upon lapse as
             5370      provided in Subsection (1).
             5371          Section 131. Section 31A-22-1413 is enacted to read:
             5372          31A-22-1413. Claim information.
             5373          If a claim under a long-term care insurance contract is denied, within 60 days of the date
             5374      a written request by the policyholder or a representative of a policyholder is filed with the insurer,
             5375      the insurer shall:
             5376          (1) provide a written explanation of the reason for the denial; and
             5377          (2) make available all information directly related to the denial.
             5378          Section 132. Section 31A-22-1414 is enacted to read:
             5379          31A-22-1414. Marketing.
             5380          A policy or rider shall comply with this part if it is advertised, marketed, or offered as:
             5381          (1) long-term care insurance; or
             5382          (2) nursing home insurance.
             5383          Section 133. Section 31A-23-101 is amended to read:
             5384           31A-23-101. Purposes.
             5385          The purposes of this chapter include:
             5386          (1) promoting the professional competence of insurance agents, brokers, and consultants;
             5387          (2) providing maximum freedom of marketing methods for insurance, consistent with the
             5388      interests of the Utah public;


             5389          (3) preserving and encouraging competition at the consumer level; [and]
             5390          (4) regulating insurance marketing practices in conformity with the general purposes of
             5391      [the Insurance Code.] this title; and
             5392          (5) governing the qualifications and procedures for the licensing of insurance producers.
             5393          Section 134. Section 31A-23-102 is amended to read:
             5394           31A-23-102. Definitions.
             5395          As used in this chapter:
             5396          [(1) Except as provided in Subsection (2):]
             5397          [(a) "Escrow" is a license category that allows a person to conduct escrows, settlements,
             5398      or closings on behalf of a title insurance agency or a title insurer.]
             5399          [(b) "Limited license" means a license that is issued for a specific product of insurance and
             5400      limits an individual or agency to transact only for those products.]
             5401          [(c) "Search" is a license category that allows a person to issue title insurance
             5402      commitments or policies on behalf of a title insurer.]
             5403          [(d) "Title marketing representative" means a person who:]
             5404          [(i) represents a title insurer in soliciting, requesting, or negotiating the placing of:]
             5405          [(A) title insurance; or]
             5406          [(B) escrow, settlement, or closing services; and]
             5407          [(ii) does not have a search or escrow license.]
             5408          [(2) The following persons are not acting as agents, brokers, title marketing
             5409      representatives, or consultants when acting in the following capacities:]
             5410          [(a) any regular salaried officer, employee, or other representative of an insurer or licensee
             5411      under this chapter who devotes substantially all of the officer's, employee's, or representative's
             5412      working time to activities other than those described in Subsection (1) and Subsections
             5413      31A-1-301 (51), (52), and (54) including the clerical employees of persons required to be licensed
             5414      under this chapter;]
             5415          [(b) a regular salaried officer or employee of a person seeking to purchase insurance, who
             5416      receives no compensation that is directly dependent upon the amount of insurance coverage
             5417      purchased;]
             5418          [(c) a person who gives incidental advice in the normal course of a business or professional
             5419      activity, other than insurance consulting, if neither that person nor that person's employer receives


             5420      direct or indirect compensation on account of any insurance transaction that results from that
             5421      advice;]
             5422          [(d) a person who, without special compensation, performs incidental services for another
             5423      at the other's request, without providing advice or technical or professional services of a kind
             5424      normally provided by an agent, broker, or consultant;]
             5425          [(e) a holder of a group insurance policy, or any other person involved in mass marketing,
             5426      but only:]
             5427          [(i) with respect to administrative activities in connection with that type of policy,
             5428      including the collection of premiums; and]
             5429          [(ii) if the person receives no compensation for the activities described in Subsection
             5430      (2)(e)(i) beyond reasonable expenses including a fair payment for the use of capital; and]
             5431          [(f) a person who gives advice or assistance without direct or indirect compensation or any
             5432      expectation of direct or indirect compensation.]
             5433          [(3)] (1) "Actuary" means a person who is a member in good standing of the American
             5434      Academy of Actuaries.
             5435          [(4)] (2) "Agency" means a person other than an individual, and includes a sole
             5436      proprietorship by which a natural person does business under an assumed name.
             5437          [(5)] (3) "Broker" means an insurance broker or any other person, firm, association, or
             5438      corporation that for any compensation, commission, or other thing of value acts or aids in any
             5439      manner in soliciting, negotiating, or procuring the making of any insurance contract on behalf of
             5440      an insured other than itself.
             5441          [(6)] (4) "Bail bond agent" means [any] an individual:
             5442          (a) appointed by an authorized bail bond surety insurer or appointed by a licensed bail
             5443      bond surety company to execute or countersign undertakings of bail in connection with judicial
             5444      proceedings; and
             5445          (b) who receives or is promised money or other things of value for this service.
             5446          [(7)] (5) "Captive insurer" means:
             5447          (a) an insurance company owned by another organization whose exclusive purpose is to
             5448      insure risks of the parent organization and affiliated companies; or
             5449          (b) in the case of groups and associations, an insurance organization owned by the insureds
             5450      whose exclusive purpose is to insure risks of member organizations, group members, and their


             5451      affiliates.
             5452          [(8)] (6) "Controlled insurer" means a licensed insurer that is either directly or indirectly
             5453      controlled by a broker.
             5454          [(9)] (7) "Controlling broker" means a broker who either directly or indirectly controls an
             5455      insurer.
             5456          [(10)] (8) "Controlling person" means any person, firm, association, or corporation that
             5457      directly or indirectly has the power to direct or cause to be directed, the management, control, or
             5458      activities of a reinsurance intermediary.
             5459          (9) "Escrow" means a license category that allows a person to conduct escrows,
             5460      settlements, or closings on behalf of:
             5461          (a) a title insurance agency; or
             5462          (b) a title insurer.
             5463          (10) "Home state" means any state or territory of the United States or the District of
             5464      Columbia in which an insurance producer:
             5465          (a) maintains the insurance producer's principal:
             5466          (i) place of residence; or
             5467          (ii) place of business; and
             5468          (b) is licensed to act as an insurance producer.
             5469          (11) "Insurer" is as defined in Section 31A-1-301 , except the following persons or similar
             5470      persons are not insurers for purposes of Part 6, Broker Controlled Insurers:
             5471          (a) all risk retention groups as defined in:
             5472          (i) the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499;
             5473          (ii) the Risk Retention Act, 15 U.S.C. Sec. 3901 et seq.; and
             5474          (iii) [Title 31A,] Chapter 15, Part II, Risk Retention Groups Act;
             5475          (b) all residual market pools and joint underwriting authorities or associations; and
             5476          (c) all captive insurers.
             5477          (12) "License" is defined in Section 31A-1-301 .
             5478          (13) "Limited license" means a license that:
             5479          (a) is issued for a specific product of insurance; and
             5480          (b) limits an individual or agency to transact only for that product or insurance.
             5481          (14) "Limited line insurance" includes:


             5482          (a) bail bond;
             5483          (b) credit life;
             5484          (c) credit disability;
             5485          (d) credit property;
             5486          (e) credit unemployment;
             5487          (f) involuntary unemployment;
             5488          (g) legal expense;
             5489          (h) mortgage life;
             5490          (i) mortgage guaranty;
             5491          (j) mortgage disability;
             5492          (k) motor club;
             5493          (l) rental car-related;
             5494          (m) travel insurance; and
             5495          (n) any other form of limited insurance or insurance offered in connection with an
             5496      extension of credit that:
             5497          (i) is limited to partially or wholly extinguishing that credit obligation; and
             5498          (ii) the commissioner determines should be designated a form of limited line insurance.
             5499          [(12)] (15) (a) "Managing general agent" means any person, firm, association, or
             5500      corporation that:
             5501          (i) manages all or part of the insurance business of an insurer, including the management
             5502      of a separate division, department, or underwriting office;
             5503          (ii) acts as an agent for the insurer whether it is known as a managing general agent,
             5504      manager, or other similar term;
             5505          (iii) with or without the authority, either separately or together with affiliates, directly or
             5506      indirectly produces and underwrites an amount of gross direct written premium equal to, or more
             5507      than 5% of, the policyholder surplus as reported in the last annual statement of the insurer in any
             5508      one quarter or year; and
             5509          (iv) [either] (A) adjusts or pays claims in excess of an amount determined by the
             5510      commissioner[,]; or [that]
             5511          (B) negotiates reinsurance on behalf of the insurer.
             5512          (b) Notwithstanding Subsection [(12)] (15)(a), the following persons may not be


             5513      considered as managing general agent for the purposes of this chapter:
             5514          (i) an employee of the insurer;
             5515          (ii) a [U.S.] United States manager of the United States branch of an alien insurer;
             5516          (iii) an underwriting manager that, pursuant to contract:
             5517          (A) manages all the insurance operations of the insurer;
             5518          (B) is under common control with the insurer;
             5519          (C) is subject to [Title 31A,] Chapter 16, Insurance Holding Companies; and
             5520          (D) is not compensated based on the volume of premiums written; and
             5521          (iv) the attorney-in-fact authorized by and acting for the subscribers of a reciprocal insurer
             5522      or inter-insurance exchange under powers of attorney.
             5523          (16) "Negotiate" means the act of conferring directly with or offering advice directly to a
             5524      purchaser or prospective purchaser of a particular contract of insurance concerning any of the
             5525      substantive benefits, terms or conditions of the contract if the person engaged in that act:
             5526          (a) sells insurance; or
             5527          (b) obtains insurance from insurers for purchasers.
             5528          [(13)] (17) "Producer" [is] means a person [who arranges for insurance coverages between
             5529      insureds and insurers] required to be licensed under the laws of this state to sell, solicit, or
             5530      negotiate insurance.
             5531          [(14)] (18) "Qualified [U.S.] United States financial institution" means an institution that:
             5532          (a) is organized or, in the case of a [U.S.] United States office of a foreign banking
             5533      organization licensed, under the laws of the United States or any state;
             5534          (b) is regulated, supervised, and examined by [U.S.] United States federal or state
             5535      authorities having regulatory authority over banks and trust companies; and
             5536          (c) [has been determined by either the commissioner, or the Securities Valuation Office
             5537      of the National Association of Insurance Commissioners, to meet] meets the standards of financial
             5538      condition and standing that are considered necessary and appropriate to regulate the quality of
             5539      financial institutions whose letters of credit will be acceptable to the commissioner[.] as
             5540      determined by:
             5541          (i) the commissioner; or
             5542          (ii) the Securities Valuation Office of the National Association of Insurance
             5543      Commissioners.


             5544          [(15)] (19) "Reinsurance intermediary" means a reinsurance intermediary-broker or a
             5545      reinsurance intermediary-manager as these terms are defined in Subsections [(16)] (20) and [(17)]
             5546      (21).
             5547          [(16)] (20) "Reinsurance intermediary-broker" means a person other than an officer or
             5548      employee of the ceding insurer, firm, association, or corporation who solicits, negotiates, or places
             5549      reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power
             5550      to bind reinsurance on behalf of the insurer.
             5551          [(17)] (21) (a) "Reinsurance intermediary-manager" means a person, firm, association, or
             5552      corporation who:
             5553          (i) has authority to bind or who manages all or part of the assumed reinsurance business
             5554      of a reinsurer, including the management of a separate division, department, or underwriting
             5555      office; and
             5556          (ii) acts as an agent for the reinsurer whether the person, firm, association, or corporation
             5557      is known as a reinsurance intermediary-manager, manager, or other similar term.
             5558          (b) Notwithstanding Subsection [(17)] (21)(a), the following persons may not be
             5559      considered reinsurance intermediary-managers for the purpose of this chapter with respect to the
             5560      reinsurer:
             5561          (i) an employee of the reinsurer;
             5562          (ii) a [U.S.] United States manager of the United States branch of an alien reinsurer;
             5563          (iii) an underwriting manager that, pursuant to contract:
             5564          (A) manages all the reinsurance operations of the reinsurer;
             5565          (B) is under common control with the reinsurer;
             5566          (C) is subject to [Title 31A,] Chapter 16, Insurance Holding Companies; and
             5567          (D) is not compensated based on the volume of premiums written; and
             5568          (iv) the manager of a group, association, pool, or organization of insurers that:
             5569          (A) engage in joint underwriting or joint reinsurance; and
             5570          (B) are subject to examination by the insurance commissioner of the state in which the
             5571      manager's principal business office is located.
             5572          [(18)] (22) "Reinsurer" means any person, firm, association, or corporation duly licensed
             5573      in this state as an insurer with the authority to assume reinsurance.
             5574          (23) "Search" means a license category that allows a person to issue title insurance


             5575      commitments or policies on behalf of a title insurer.
             5576          (24) "Sell" means to exchange a contract of insurance:
             5577          (a) by any means;
             5578          (b) for money or its equivalent; and
             5579          (c) on behalf of an insurance company.
             5580          (25) "Solicit" means:
             5581          (a) attempting to sell insurance; or
             5582          (b) asking or urging a person to apply:
             5583          (i) for a particular kind of insurance; and
             5584          (ii) from a particular insurance company.
             5585          [(19)] (26) "Surplus lines broker" means a person licensed under Subsection
             5586      31A-23-204 (5) to place insurance with unauthorized insurers in accordance with Section
             5587      31A-15-103 .
             5588          (27) "Terminate" means:
             5589          (a) the cancellation of the relationship between:
             5590          (i) an insurance producer; and
             5591          (ii) a particular insurer; or
             5592          (b) the termination of the producer's authority to transact insurance on behalf of a
             5593      particular insurance company.
             5594          (28) "Title marketing representative" means a person who:
             5595          (a) represents a title insurer in soliciting, requesting, or negotiating the placing of:
             5596          (i) title insurance; or
             5597          (ii) escrow, settlement, or closing services; and
             5598          (b) does not have a search or escrow license.
             5599          [(20)] (29) "Underwrite" means the authority to accept or reject risk on behalf of the
             5600      insurer.
             5601          (30) "Uniform application" means the version of the National Association of Insurance
             5602      Commissioner's uniform application for resident and nonresident producer licensing at the time
             5603      the application is filed.
             5604          (31) "Uniform business entity application" means the version of the National Association
             5605      of Insurance Commissioner's uniform business entity application for resident and nonresident


             5606      business entities at the time the application is filed.
             5607          Section 135. Section 31A-23-201 is amended to read:
             5608           31A-23-201. Requirement of license.
             5609          (1) (a) Unless exempted from the licensing requirement under [Subsection (2) or] Section
             5610      31A-23-201.5 or 31A-23-214 , a person may not perform, offer to perform, or advertise any service
             5611      as an agent, broker, or consultant in Utah, without a valid license under Section 31A-23-203 .
             5612          (b) A person may not utilize the services of another as an agent, broker, or consultant if
             5613      [he] that person knows or should know that the other does not have a license as required by law.
             5614          [(2) The commissioner may by rule exempt certain classes of persons from the license
             5615      requirement of Subsection (1) if either of these circumstances exist:]
             5616          [(a) the functions they perform do not require special competence, trustworthiness, or the
             5617      regulatory surveillance made possible by licensing; or]
             5618          [(b) other existing safeguards make regulation unnecessary.]
             5619          (2) This part may not be construed to require an insurer to obtain an insurance producer
             5620      license.
             5621          (3) [No] An insurance contract is not invalid as a result of a violation of this section.
             5622          Section 136. Section 31A-23-201.5 is enacted to read:
             5623          31A-23-201.5. Exceptions to licensing.
             5624          (1) The commissioner may not require a license as an insurance producer of:
             5625          (a) an officer, director, or employee of an insurer or of an insurance producer if:
             5626          (i) the officer, director, or employee does not receive any commission on a policy written
             5627      or sold to insure risks residing, located, or to be performed in this state; and
             5628          (ii) (A) the officer's, director's, or employee's activities are:
             5629          (I) executive, administrative, managerial, clerical, or a combination of these activities; and
             5630          (II) only indirectly related to the sale, solicitation, or negotiation of insurance;
             5631          (B) the officer's, director's, or employee's function relates to:
             5632          (I) underwriting;
             5633          (II) loss control;
             5634          (III) inspection; or
             5635          (IV) the processing, adjusting, investigating or settling of a claim on a contract of
             5636      insurance; or


             5637          (C) (I) the officer, director, or employee is acting in the capacity of a special agent or
             5638      agency supervisor assisting an insurance producer;
             5639          (II) the officer's, director's, or employee's activities are limited to providing technical
             5640      advice and assistance to a licensed insurance producer; and
             5641          (III) the officer's, director's, or employee's activities do not include the sale, solicitation,
             5642      or negotiation of insurance;
             5643          (b) a person who:
             5644          (i) is paid no commission for the services described in Subsection (1)(b)(ii); and
             5645          (ii) secures and furnishes information for the purpose of:
             5646          (A) group life insurance;
             5647          (B) group property and casualty insurance;
             5648          (C) group annuities;
             5649          (D) group or blanket accident and health insurance;
             5650          (E) enrolling individuals under plans;
             5651          (F) issuing certificates under plans; or
             5652          (G) otherwise assisting in administering plans;
             5653          (c) a person who:
             5654          (i) is paid no commission for the services described in Subsection (1)(c)(ii); and
             5655          (ii) performs administrative services related to mass marketed property and casualty
             5656      insurance;
             5657          (d) (i) any of the following if the conditions of Subsection (1)(d)(ii) are met:
             5658          (A) an employer or association; or
             5659          (B) an officer, director, employee, or trustee of an employee trust plan;
             5660          (ii) a person listed in Subsection (1)(d)(i):
             5661          (A) to the extent that the employer, officer, employee, director, or trustee is engaged in the
             5662      administration or operation of a program of employee benefits for:
             5663          (I) the employer's or association's own employees; or
             5664          (II) the employees of a subsidiary or affiliate of an employer or association;
             5665          (B) the program involves the use of insurance issued by an insurer; and
             5666          (C) the employer, association, officer, director, employee, or trustee is not in any manner
             5667      compensated, directly or indirectly, by the company issuing the contract;


             5668          (e) an employee of an insurer or organization employed by an insurer who:
             5669          (i) is engaging in:
             5670          (A) the inspection, rating, or classification of risks; or
             5671          (B) the supervision of the training of insurance producers; and
             5672          (ii) is not individually engaged in the sale, solicitation, or negotiation of insurance;
             5673          (f) a person whose activities in this state are limited to advertising:
             5674          (i) without the intent to solicit insurance in this state;
             5675          (ii) through communications in mass media including:
             5676          (A) a printed publication; or
             5677          (B) a form of electronic mass media;
             5678          (iii) that is distributed to residents outside of the state; and
             5679          (iv) if the person does not sell, solicit, or negotiate insurance that would insure risks
             5680      residing, located, or to be performed in this state;
             5681          (g) a person who:
             5682          (i) is not a resident of this state;
             5683          (ii) sells, solicits, or negotiates a contract of insurance:
             5684          (A) for commercial property and casualty risks to an insured with risks located in more
             5685      than one state insured under that contract; and
             5686          (B) insures risks located in a state in which the person is licensed as provided in
             5687      Subsection (1)(g)(iii); and
             5688          (iii) is licensed as an insurance producer to sell, solicit, or negotiate that insurance in the
             5689      state where the insured maintains its principal place of business;
             5690          (h) if the employee does not sell, solicit, or receive a commission for a contract of
             5691      insurance, a salaried full-time employee who counsels or advises the employee's employer relating
             5692      to the insurance interests of:
             5693          (i) the employer; or
             5694          (ii) a subsidiary or business affiliate of the employer; or
             5695          (i) an employee of an insurer or of an insurance producer if the employee:
             5696          (i) responds to requests from existing policyholders on existing policies;
             5697          (ii) is not directly compensated based on the volume of premiums that may result from the
             5698      services; and


             5699          (iii) does not otherwise sell, solicit, or negotiate insurance.
             5700          (2) The commissioner may by rule exempt a class of persons from the license requirement
             5701      of Subsection 31A-23-201 (1) if:
             5702          (a) the functions performed by the class of persons does not require:
             5703          (i) special competence;
             5704          (ii) special trustworthiness; or
             5705          (iii) regulatory surveillance made possible by licensing; or
             5706          (b) other existing safeguards make regulation unnecessary.
             5707          Section 137. Section 31A-23-202 is amended to read:
             5708           31A-23-202. Application for license.
             5709          (1) [The] (a) Subject to Subsection (2) the application for a resident license as an agent,
             5710      a broker, or a consultant shall be:
             5711          (i) made to the commissioner on forms and in a manner [he] the commissioner prescribes[.
             5712      The]; and
             5713          (ii) accompanied by an applicable fee that is not refunded if the application is denied; and
             5714          (b) the application for a nonresident license as an agent, a broker, or a consultant shall be:
             5715          (i) made on the uniform application; and
             5716          (ii) accompanied by an applicable fee that is not refunded if the application is denied.
             5717          (2) An application described in Subsection (1) shall provide:
             5718          (a) information about the applicant's identity[,];
             5719          (b) the applicant's:
             5720          (i) social security number[,]; or
             5721          (ii) federal employer identification number;
             5722          (c) the applicant's personal history, experience, education, and business record[, and];
             5723          (d) if the applicant is a natural person, whether the applicant is 18 years of age or older;
             5724          (e) whether the applicant has committed an act that is a ground for denial, suspension, or
             5725      revocation as set forth in Section 31A-23-216 ; and
             5726          (f) any other information the commissioner reasonably requires.
             5727          (3) The commissioner may require any documents reasonably necessary to verify the
             5728      information contained in an application.
             5729          [(2)] (4) [An applicant's social security number is a] The following are private [record]


             5730      records under Subsection 63-2-302 (1)(g)[.] an applicant's:
             5731          (a) social security number; or
             5732          (b) federal employer identification number.
             5733          Section 138. Section 31A-23-203 is amended to read:
             5734           31A-23-203. General requirements for license issuance and renewal.
             5735          (1) The commissioner shall issue or renew a license to act as an agent, broker, or
             5736      consultant to any person who, as to the license classification applied for under Section
             5737      31A-23-204 :
             5738          (a) has satisfied the character requirements under Section 31A-23-205 ;
             5739          (b) has satisfied any applicable continuing education requirements under Section
             5740      31A-23-206 ;
             5741          (c) has satisfied any applicable examination requirements under Section 31A-23-207 ;
             5742          (d) has satisfied any applicable training period requirements under Section 31A-23-208 ;
             5743          (e) if a nonresident:
             5744          (i) has complied with Section 31A-23-209 ; and
             5745          (ii) holds an active similar license in that person's state of residence;
             5746          (f) as to applicants for licenses to act as title insurance agents, has satisfied the
             5747      requirements of Section 31A-23-211 ; and
             5748          (g) has paid the applicable fees under Section 31A-3-103 .
             5749          (2) (a) This Subsection (2) applies to the following persons:
             5750          (i) an applicant for a pending producer's license; or
             5751          (ii) a licensed producer.
             5752          (b) A person described in Subsection (2)(a) shall report to the commissioner:
             5753          (i) any administrative action taken against the person:
             5754          (A) in another jurisdiction; or
             5755          (B) by another regulatory agency in this state; and
             5756          (ii) any criminal prosecution taken against the person in any jurisdiction.
             5757          (c) The report required by Subsection (2)(b) shall:
             5758          (i) be filed:
             5759          (A) at the time the person files the application for a producer's license; or
             5760          (B) within 30 days of the initiation of an action or prosecution described in Subsection


             5761      (2)(b); and
             5762          (ii) include a copy of the complaint or other relevant legal documents related to the action
             5763      or prosecution described in Subsection (2)(b).
             5764          [(2)] (3) (a) The department may request:
             5765          (i) criminal background information maintained pursuant to Title 53, Chapter 10, Part 2,
             5766      from the Bureau of Criminal Identification; and
             5767          (ii) complete Federal Bureau of Investigation criminal background checks through the
             5768      national criminal history system.
             5769          (b) Information obtained by the department from the review of criminal history records
             5770      received under Subsection [(2)] (3)(a) shall be used by the department for the purposes of:
             5771          (i) determining if a person satisfies the character requirements under Section 31A-23-205
             5772      for issuance or renewal of a license;
             5773          (ii) determining if a person has failed to maintain the character requirements under Section
             5774      31A-23-205 ; and
             5775          (iii) preventing persons who violate the federal Violent Crime Control and Law
             5776      Enforcement Act of 1994, 18 U.S.C. Secs. 1033 and 1034, from engaging in the business of
             5777      insurance in the state.
             5778          (c) If the department requests the criminal background information, the department shall:
             5779          (i) pay to the Department of Public Safety the costs incurred by the Department of Public
             5780      Safety in providing the department criminal background information under Subsection [(2)]
             5781      (3)(a)(i);
             5782          (ii) pay to the Federal Bureau of Investigation the costs incurred by the Federal Bureau of
             5783      Investigation in providing the department criminal background information under Subsection[(2)]
             5784      (3)(a)(ii); and
             5785          (iii) charge the person applying for a license or for renewal of a license a fee equal to the
             5786      aggregate of Subsections [(2)] (3)(c)(i) and (ii).
             5787          Section 139. Section 31A-23-204 is amended to read:
             5788           31A-23-204. License classifications.
             5789          [Licenses] A resident or nonresident license issued under this chapter shall be issued under
             5790      the classifications described under Subsections (1) through (6). These classifications are intended
             5791      to describe the matters to be considered under any education, examination, and training required


             5792      of license applicants under Sections 31A-23-206 through 31A-23-208 .
             5793          (1) [Agent] An agent and broker license [classifications include] classification includes:
             5794          (a) life insurance, including nonvariable [annuities] contracts;
             5795          (b) variable [annuities] contracts;
             5796          (c) [disability] accident and health insurance, including contracts issued to policyholders
             5797      under Chapter 7 or 8;
             5798          (d) property/liability insurance, which includes:
             5799          (i) property insurance;
             5800          (ii) liability insurance;
             5801          (iii) surety and other bonds; and
             5802          (iv) policies containing any combination of these coverages;
             5803          (e) title insurance under one of the following categories:
             5804          (i) search, including authority to act as a title marketing representative;
             5805          (ii) escrow, including authority to act as a title marketing representative;
             5806          (iii) search and escrow, including authority to act as a title marketing representative; and
             5807          (iv) title marketing representative only; and
             5808          (f) workers' compensation insurance.
             5809          (2) [Limited] A limited license [product] classification includes:
             5810          (a) credit life and credit [disability] accident and health insurance;
             5811          (b) travel insurance;
             5812          (c) motor club insurance;
             5813          (d) car rental related insurance;
             5814          (e) credit involuntary unemployment insurance [and];
             5815          (f) credit property insurance;
             5816          [(f)] (g) bail bond agent; and
             5817          [(g)] (h) customer service representative.
             5818          (3) [Consultant] A consultant license classification includes:
             5819          (a) life insurance, including nonvariable [annuities] contracts;
             5820          (b) variable [annuities] contracts;
             5821          (c) [disability] accident and health insurance, including contracts issued to policyholders
             5822      under Chapter 7 or 8;


             5823          (d) property/liability insurance, which includes:
             5824          (i) property insurance;
             5825          (ii) liability insurance;
             5826          (iii) surety and other bonds; and
             5827          (iv) policies containing any combination of these coverages; and
             5828          (e) workers' compensation insurance.
             5829          (4) A holder of licenses under Subsections (1)(a) and (1)(c) has all qualifications necessary
             5830      to act as a holder of a license under Subsection (2)(a).
             5831          (5) (a) Upon satisfying the additional applicable requirements, a holder of a brokers license
             5832      may obtain a license to act as a surplus lines broker.
             5833          (b) A license to act as a surplus lines broker gives the holder the authority to arrange
             5834      insurance contracts with unauthorized insurers under Section 31A-15-103 , but only as to the types
             5835      of insurance under Subsection (1) for which the broker holds a brokers license.
             5836          (6) The commissioner may by rule recognize other agent, broker, limited license, or
             5837      consultant license classifications as to kinds of insurance not listed under Subsections (1), (2), and
             5838      (3).
             5839          Section 140. Section 31A-23-206 is amended to read:
             5840           31A-23-206. Continuing education requirements -- Regulatory authority.
             5841          (1) The commissioner shall by rule prescribe the continuing education requirements for
             5842      each class of agent's license under Subsection 31A-23-204 (1), except that the commissioner may
             5843      not impose a continuing education requirement on a holder of a license under:
             5844          (a) Subsection 31A-23-204 (2); or
             5845          (b) a license classification other than under Subsection 31A-23-204 (2) that is recognized
             5846      by the commissioner by rule as provided in Subsection 31A-23-204 (6).
             5847          (2) (a) The commissioner may not state a continuing education requirement in terms of
             5848      formal education.
             5849          (b) The commissioner may state a continuing education requirement in terms of classroom
             5850      hours, or their equivalent, of insurance-related instruction received.
             5851          (c) Insurance-related formal education may be a substitute, in whole or in part, for
             5852      classroom hours, or their equivalent, required under Subsection (2)(b).
             5853          (3) (a) The commissioner shall impose continuing education requirements in accordance


             5854      with a two-year licensing period in which the licensee meets the requirements of this Subsection
             5855      (3).
             5856          (b) Except as provided in Subsection (3)(c), for a two-year licensing period described in
             5857      Subsection (3)(a) the commissioner shall require that the licensee for each line of authority held
             5858      by the licensee:
             5859          (i) receive six hours of continuing education; or
             5860          (ii) pass a line of authority continuing education examination.
             5861          (c) Notwithstanding Subsection (3)(b):
             5862          (i) the commissioner may not require continuing education for more than four lines of
             5863      authority held by the licensee;
             5864          (ii) the commissioner shall require:
             5865          (A) a minimum of:
             5866          (I) 12 hours of continuing education;
             5867          (II) passage of two line of authority continuing education examinations; or
             5868          (III) a combination of Subsections (3)(c)(ii)(A)(I) and (II);
             5869          (B) that the minimum continuing education requirement of Subsection (3)(c)(ii)(A)
             5870      include:
             5871          (I) at least six hours or one line of authority continuing education examination for each line
             5872      of authority held by the licensee not to exceed four lines of authority held by the licensee; and
             5873          (II) three hours of ethics training, which may be taken in place of three hours of the hours
             5874      required for a line of authority.
             5875          (d) (i) If a licensee completes the licensee's continuing education requirement without
             5876      taking a line of authority continuing education examination, the licensee shall complete at least 1/2
             5877      of the required hours through classroom hours of insurance-related instruction.
             5878          (ii) The hours not completed through classroom hours in accordance with Subsection
             5879      (3)(d)(i) may be obtained through:
             5880          (A) home study;
             5881          (B) video tape;
             5882          (C) experience credit; or
             5883          (D) other method provided by rule.
             5884          (e) (i) A licensee may obtain continuing education hours at any time during the two-year


             5885      licensing period.
             5886          (ii) The licensee may not take a line of authority continuing education examination more
             5887      than 90 calendar days before the date on which the licensee's license is renewed.
             5888          (f) The commissioner shall make rules for the content and procedures for line of authority
             5889      continuing education examinations.
             5890          (g) (i) Beginning May 3, 1999, a licensee is exempt from continuing education
             5891      requirements under this section if:
             5892          (A) as of April 1, 1990, the licensee has completed 20 years of licensure in good standing;
             5893          (B) the licensee requests an exemption from the department; and
             5894          (C) the department approves the exemption.
             5895          (ii) If the department approves the exemption under Subsection (3)(g)(i), the licensee is
             5896      not required to apply again for the exemption.
             5897          (h) A licensee with a variable [annuity] contract line of authority is exempt from the
             5898      requirement for continuing education for that line of authority so long as the:
             5899          (i) National Association of Securities Dealers requires continuing education for licensees
             5900      having a securities license; and
             5901          (ii) licensee complies with the National Association of Securities Dealers' continuing
             5902      education requirements for securities licensees.
             5903          (i) The commissioner shall, by rule:
             5904          (i) publish a list of insurance professional designations whose continuing education
             5905      requirements can be used to meet the requirements for continuing education under Subsection
             5906      (3)(c); and
             5907          (ii) authorize professional agent associations to:
             5908          (A) offer qualified programs for all classes of licenses on a geographically accessible basis;
             5909      and
             5910          (B) collect reasonable fees for funding and administration of the continuing education
             5911      program, subject to the review and approval of the commissioner.
             5912          (j) (i) The fees permitted under Subsection (3)(i)(ii) that are charged to fund and administer
             5913      the program shall reasonably relate to the costs of administering the program.
             5914          (ii) Nothing in this section prohibits a provider of continuing education programs or
             5915      courses from charging fees for attendance at courses offered for continuing education credit.


             5916          (iii) The fees permitted under Subsection (3)(i)(ii) that are charged for attendance at a
             5917      professional agent association program may be less for an association member, based on the
             5918      member's affiliation expense, but shall preserve the right of a nonmember to attend without
             5919      affiliation.
             5920          (4) The commissioner shall designate courses, including those presented by insurers,
             5921      which satisfy the requirements of this section.
             5922          (5) The requirements of this section apply only to applicants who are natural persons.
             5923          [(6) The commissioner may waive the requirements of this section as to any person who
             5924      has been an active insurance agent or broker in another state for two years immediately prior to
             5925      applying for a license in this state, but only if the applicant's state of residence has imposed upon
             5926      the applicant education requirements which are substantially as rigorous as those of this state.]
             5927          (6) A nonresident producer is considered to have satisfied this state's continuing education
             5928      requirements if:
             5929          (a) the nonresident producer satisfies the nonresident producer's home state's continuing
             5930      education requirements for a licensed insurance producer; and
             5931          (b) on the same basis as under this Subsection (6) the nonresident producer's home state
             5932      considers satisfaction of Utah's continuing education requirements for a producer as satisfying the
             5933      continuing education requirements of the home state.
             5934          Section 141. Section 31A-23-207 is amended to read:
             5935           31A-23-207. Examination requirements.
             5936          (1) (a) The commissioner may require applicants for any particular class of license under
             5937      Section 31A-23-204 to pass an examination as a requirement for a license, except that [no] an
             5938      examination may not be required of applicants for:
             5939          (i) licenses under Subsection 31A-23-204 (2); or
             5940          (ii) other license classifications recognized by the commissioner by rule as provided in
             5941      Subsection 31A-23-204 (6).
             5942          (b) The examination described in Subsection (1)(a):
             5943          (i) shall reasonably relate to the specific classes for which it is prescribed[. The
             5944      examination]; and
             5945          (ii) may be administered by the commissioner or as otherwise specified by rule.
             5946          (2) The commissioner [may] shall waive the requirement of an examination for a


             5947      nonresident applicant who [has held a similar license in his home state for the two years
             5948      immediately preceding application in this state, but only if the applicant's state of residence has
             5949      imposed upon the applicant examination requirements which are substantially as rigorous as those
             5950      of this state.]:
             5951          (a) applies for an insurance producer license in this state;
             5952          (b) has been licensed for the same line of authority in another state; and
             5953          (c) (i) is licensed in the state described in Subsection (2)(b) at the time the applicant
             5954      applies for an insurance producer license in this state; or
             5955          (ii) if the application is received within 90 days of the cancellation of the applicant's
             5956      previous license:
             5957          (A) the prior state certifies that at the time of cancellation, the applicant was in good
             5958      standing in that state; or
             5959          (B) the state's producer database records maintained by the National Association of
             5960      Insurance Commissioners or the National Association of Insurance Commissioner's affiliates or
             5961      subsidiaries, indicates that the producer is or was licensed in good standing for the line of authority
             5962      requested.
             5963          (3) (a) To become a resident licensee in accordance with Sections 31A-23-202 and
             5964      31A-23-203 , a person licensed as an insurance producer in another state who moves to this state
             5965      shall make application within 90 days of establishing legal residence in this state.
             5966          (b) A person who becomes a resident licensee under Subsection (3)(a) may not be required
             5967      to meet prelicensing education or examination requirements to obtain any line of authority
             5968      previously held in the prior state unless:
             5969          (i) the prior state would require a prior resident of this state to meet the prior state's
             5970      prelicensing education or examination requirements to become a resident licensee; or
             5971          (ii) the commissioner imposes the requirements by rule.
             5972          [(3)] (4) This section's requirement may only be applied to applicants who are natural
             5973      persons.
             5974          Section 142. Section 31A-23-209 is amended to read:
             5975           31A-23-209. Nonresident jurisdictional agreement.
             5976          (1) (a) [Nonresident applicants for licenses under this chapter shall] If a nonresident
             5977      license applicant has a valid license from the nonresident license applicant's home state and the


             5978      conditions of Subsection (1)(b) are met, the commissioner shall:
             5979          (i) waive any license requirement for a license under this chapter; and
             5980          (ii) issue the nonresident license applicant a nonresident producer license.
             5981          (b) Subsection (1)(a) applies if:
             5982          (i) the nonresident license applicant:
             5983          (A) is licensed as a resident in the nonresident license applicant's home state at the time
             5984      the nonresident license applicant applies for a nonresident producer license;
             5985          (B) has submitted the proper request for licensure;
             5986          (C) has submitted to the commissioner:
             5987          (I) the application for licensure that the nonresident license applicant submitted to the
             5988      applicant's home state; or
             5989          (II) a completed uniform application; and
             5990          (D) has paid the applicable fees under Section 31A-3-103 ;
             5991          (ii) the nonresident license applicant's license in the applicant's home state is in good
             5992      standing; and
             5993          (iii) the nonresident license applicant's home state awards nonresident producer licenses
             5994      to residents of this state on the same basis as this state awards licenses to residents of that home
             5995      state.
             5996          (2) A nonresident applicant shall execute, in a form acceptable to the commissioner, an
             5997      agreement to be subject to the jurisdiction of the Utah commissioner and courts on any matter
             5998      related to the applicant's insurance activities in this state, on the basis of:
             5999          (a) service of process under Sections 31A-2-309 and 31A-2-310 ; or [other]
             6000          (b) service authorized:
             6001          (i) in the Utah Rules of Civil Procedure; or
             6002          (ii) under Section 78-27-25 .
             6003          (3) The commissioner may verify the producer's licensing status through the producer
             6004      database maintained by:
             6005          (a) the National Association of Insurance Commissioners; or
             6006          (b) an affiliate or subsidiary of the National Association of Insurance Commissioners.
             6007          (4) The commissioner may not assess a greater fee for an insurance license or related
             6008      service to a person not residing in this state solely on the fact that the person does not reside in this


             6009      state.
             6010          Section 143. Section 31A-23-211.7 is amended to read:
             6011           31A-23-211.7. Special requirements for variable annuity line of authority.
             6012          (1) Before applying for a variable [annuity] contracts line of authority, an agent, broker,
             6013      or consultant shall be licensed under Section 61-1-3 as a:
             6014          (a) broker-dealer; or
             6015          (b) agent.
             6016          (2) An agent's, broker's, or consultant's variable [annuity] contracts line of authority is
             6017      revoked on the day on which an agent's, broker's, or consultant's license under Section 61-1-3 is
             6018      no longer valid.
             6019          Section 144. Section 31A-23-212 is amended to read:
             6020           31A-23-212. Form and contents of license.
             6021          (1) Licenses issued under this chapter shall be in the form the commissioner prescribes and
             6022      shall set forth:
             6023          (a) the name, address, and telephone number of the licensee;
             6024          (b) the license classifications under Section 31A-23-204 ;
             6025          (c) the date of license issuance; and
             6026          (d) any other information the commissioner considers necessary.
             6027          (2) An insurance producer doing business under any other name than the producer's legal
             6028      name shall notify the commissioner prior to using the assumed name in this state.
             6029          [(2)] (3) (a) An agency shall be licensed as an agency if the agency acts as:
             6030          (i) an agent;
             6031          (ii) a broker;
             6032          (iii) a surplus lines broker;
             6033          (iv) a managing general agent; or
             6034          (v) a consultant.
             6035          (b) The agency license [required] issued under [Subsections (2)] Subsection (3)(a) shall
             6036      set forth the names of all natural persons licensed under this chapter who are authorized to act in
             6037      those capacities for the agency in this state.
             6038          [(3)] (4) (a) So far as is practicable, the commissioner shall issue a single license to each
             6039      agent, broker, or consultant for a single fee.


             6040          (b) For purposes of the fee described in Subsection (4)(a), the less expensive license is
             6041      included within the most expensive license.
             6042          Section 145. Section 31A-23-216 is amended to read:
             6043           31A-23-216. Termination of license.
             6044          (1) A license issued under this chapter remains in force until:
             6045          (a) revoked, suspended, or limited under Subsection (2);
             6046          (b) lapsed under Subsection (3);
             6047          (c) surrendered to and accepted by the commissioner; or
             6048          (d) the licensee dies or is adjudicated incompetent as defined under Title 75, Chapter 5,
             6049      Part 3, Guardians of Incapacitated Persons or Part 4, Protection of Property of Persons Under
             6050      Disability and Minors.
             6051          [(2) (a) After an adjudicative proceeding under Title 63, Chapter 46b, Administrative
             6052      Procedures Act, the commissioner may revoke, suspend, or limit in whole or in part the license of
             6053      any agent, broker, surplus lines broker, or consultant who is found:]
             6054          [(i) to be unqualified;]
             6055          [(ii) to have violated an insurance statute, valid rule under Subsection 31A-2-201 (3), or
             6056      a valid order under Subsection 31A-2-201 (4); or]
             6057          [(iii) if the licensee's methods and practices in the conduct of business endanger the
             6058      legitimate interests of customers and the public.]
             6059          [(b) Every order suspending a license issued under this chapter shall specify the period for
             6060      which the suspension is effective, but in no event may the period exceed 12 months.]
             6061          (2) (a) If the commissioner makes a finding under Subsection (2)(b), after an adjudicative
             6062      proceeding under Title 63, Chapter 46b, Administrative Procedures Act, the commissioner may:
             6063          (i) revoke a license of an agent, broker, surplus lines broker, or consultant;
             6064          (ii) suspend for a specified period of 12 months or less a license of an agent, broker,
             6065      surplus lines broker, or consultant; or
             6066          (iii) limit in whole or in part the license of any agent, broker, surplus lines broker, or
             6067      consultant.
             6068          (b) The commissioner may take an action described in Subsection (2)(a) if the
             6069      commissioner finds that the licensee:
             6070          (i) is unqualified for a license under Section 31A-23-203 ;


             6071          (ii) has violated:
             6072          (A) an insurance statute;
             6073          (B) a rule that is valid under Subsection 31A-2-201 (3); or
             6074          (C) an order that is valid under Subsection 31A-2-201 (4);
             6075          (iii) is insolvent or the subject of receivership, conservatorship, rehabilitation, or other
             6076      delinquency proceedings in any state;
             6077          (iv) fails to pay any final judgment rendered against the person in this state within 60 days
             6078      after the day the judgment became final;
             6079          (v) fails to meet the same good faith obligations in claims settlement that is required of
             6080      admitted insurers;
             6081          (vi) is affiliated with and under the same general management or interlocking directorate
             6082      or ownership as another insurance producer that transacts business in this state without a license;
             6083          (vii) refuses to be examined or to produce its accounts, records, and files for examination;
             6084          (viii) has an officer who refuses to:
             6085          (A) give information with respect to the administrator's affairs; or
             6086          (B) perform any other legal obligation as to an examination;
             6087          (ix) provided information in the license application that is:
             6088          (A) incorrect;
             6089          (B) misleading;
             6090          (C) incomplete; or
             6091          (D) materially untrue;
             6092          (x) has violated any insurance law, valid rule, or valid order of another state's insurance
             6093      department;
             6094          (xi) has obtained or attempted to obtain a license through misrepresentation or fraud;
             6095          (xii) has improperly withheld, misappropriated, or converted any monies or properties
             6096      received in the course of doing insurance business;
             6097          (xiii) has intentionally misrepresented the terms of an actual or proposed:
             6098          (A) insurance contract; or
             6099          (B) application for insurance;
             6100          (xiv) has been convicted of a felony;
             6101          (xv) has admitted or been found to have committed any insurance unfair trade practice or


             6102      fraud;
             6103          (xvi) in the conduct of business in this state or elsewhere has:
             6104          (A) used fraudulent, coercive, or dishonest practices; or
             6105          (B) demonstrated incompetence, untrustworthiness, or financial irresponsibility;
             6106          (xvii) has had an insurance license, or its equivalent, denied, suspended, or revoked in any
             6107      other state, province, district, or territory;
             6108          (xviii) has forged another's name to:
             6109          (A) an application for insurance; or
             6110          (B) any document related to an insurance transaction;
             6111          (xix) has improperly used notes or any other reference material to complete an
             6112      examination for an insurance license;
             6113          (xx) has knowingly accepted insurance business from an individual who is not licensed;
             6114          (xxi) has failed to comply with an administrative or court order imposing a child support
             6115      obligation;
             6116          (xxii) has failed to:
             6117          (A) pay state income tax; or
             6118          (B) comply with any administrative or court order directing payment of state income tax;
             6119          (xxiii) has violated or permitted others to violate the federal Violent Crime Control and
             6120      Law Enforcement Act of 1994, 18 U.S.C. Secs. 1033 and 1034; or
             6121          (xxiv) has engaged in methods and practices in the conduct of business that endanger the
             6122      legitimate interests of customers and the public.
             6123          (3) (a) Any license issued under this chapter shall lapse if the licensee fails to pay when
             6124      due a fee under Section 31A-3-103 .
             6125          (b) A licensee whose license lapses due to military service or some other extenuating
             6126      circumstances such as long-term medical disability may request:
             6127          (i) reinstatement of the license; and
             6128          (ii) waiver of any of the following imposed for failure to comply with renewal procedures:
             6129          (A) an examination requirement;
             6130          (B) a fine; or
             6131          (C) other sanction imposed for failure to comply with renewal procedures.
             6132          (c) The commissioner shall by rule prescribe the license renewal and reinstatement


             6133      procedures, in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
             6134          (4) A licensee under this chapter whose license is suspended, revoked, or lapsed, but who
             6135      continues to act as a licensee, is subject to the penalties for acting as a licensee without a license.
             6136          (5) Any person licensed in this state shall immediately report to the commissioner:
             6137          (a) a suspension or revocation of that person's license in any other state, District of
             6138      Columbia, or territory of the United States;
             6139          (b) the imposition of a disciplinary sanction imposed on that person by any other state,
             6140      District of Columbia, or territory of the United States; and
             6141          (c) a judgment or injunction entered against that person on the basis of conduct involving
             6142      fraud, deceit, misrepresentation, or violation of an insurance law or rule.
             6143          (6) An order revoking a license under Subsection (2) may specify a time, not to exceed five
             6144      years, within which the former licensee may not apply for a new license. If no time is specified,
             6145      the former licensee may not apply for a new license for five years without express approval by the
             6146      commissioner.
             6147          (7) Any person whose license is suspended or revoked under Subsection (2) shall, when
             6148      the suspension ends or a new license is issued, pay all fees that would have been payable if the
             6149      license had not been suspended or revoked, unless the commissioner by order waives the payment
             6150      of the interim fees. If a new license is issued more than three years after the revocation of a similar
             6151      license, this subsection applies only to the fees that would have accrued during the three years
             6152      immediately following the revocation.
             6153          (8) The division shall promptly withhold, suspend, restrict, or reinstate the use of a license
             6154      issued under this part if so ordered by a court.
             6155          Section 146. Section 31A-23-218 is amended to read:
             6156           31A-23-218. Temporary insurance producer license -- Trustee for terminated
             6157      licensee's business.
             6158          (1) (a) [Upon the request of the spouse, guardian, conservator, or personal representative
             6159      of a deceased or disabled agent or broker, or upon the request of a person whose license has been
             6160      terminated under Section 31A-23-216 , the commissioner may appoint a trustee to provide
             6161      continuing service to the insureds who procured insurance through the deceased, disabled, or
             6162      unlicensed person.] The commissioner may issue a temporary insurance producer license:
             6163          (i) to a person listed in Subsection (1)(b):


             6164          (A) if the commissioner considers that the temporary license is necessary:
             6165          (I) for the servicing of an insurance business in the public interest; and
             6166          (II) to provide continued service to the insureds who procured insurance in a circumstance
             6167      described in Subsection (1)(b);
             6168          (B) for a period not to exceed 180 days; and
             6169          (C) without requiring an examination; or
             6170          (ii) in any other circumstance:
             6171          (A) if the commissioner considers the public interest will best be served by issuing the
             6172      temporary license;
             6173          (B) for a period not to exceed 180 days; and
             6174          (C) without requiring an examination.
             6175          (b) The commissioner may issue a temporary insurance producer license in accordance
             6176      with Subsection (1)(a) to:
             6177          (i) the surviving spouse or court-appointed personal representative of a licensed insurance
             6178      producer who dies or becomes mentally or physically disabled to allow adequate time for:
             6179          (A) the sale of the insurance business owned by the producer;
             6180          (B) recovery or return of the producer to the business; or
             6181          (C) the training and licensing of new personnel to operate the producer's business;
             6182          (ii) to a member or employee of a business entity licensed as an insurance producer upon
             6183      the death or disability of an individual designated in:
             6184          (A) the business entity application; or
             6185          (B) the license; or
             6186          (iii) the designee of a licensed insurance producer entering active service in the armed
             6187      forces of the United States of America.
             6188          (2) If a person's license is terminated under Section 31A-23-216 , the commissioner may
             6189      appoint a trustee to provide in the public interest continuing service to the insureds who procured
             6190      insurance through the person whose license is terminated:
             6191          (a) at the request of the person whose license is terminated; or
             6192          (b) upon the commissioner's own initiative.
             6193          (3) This section does not apply if the deceased or disabled agent or broker [owned or owns
             6194      no] does not or did not own any ownership interest in the accounts and associated expiration lists


             6195      [which] that were previously serviced by the agent or broker. [Any]
             6196          (4) (a) A person issued a temporary license under Subsection (1) receives the license and
             6197      shall perform the duties under the license subject to the commissioner's authority to:
             6198          (i) require a temporary licensee to have a suitable sponsor who:
             6199          (A) is a licensed producer; and
             6200          (B) assumes responsibility for all acts of the temporary licensee; or
             6201          (ii) impose other requirements that are:
             6202          (A) designed to protect the insureds and the public; and
             6203          (B) similar to the condition described in Subsection (4)(a)(i).
             6204          (b) A trustee appointed under [this section] Subsection (2) shall [receive his appointment]
             6205      be appointed and perform [his] the trustee's duties subject to the [following] terms and
             6206      conditions[:] described in Subsections (4)(b)(i) through (vi).
             6207          [(l) Trustees] (i) (A) A trustee appointed under [this section] Subsection (2) shall be
             6208      licensed under this chapter to perform the services required by the trustor's clients.
             6209          (B) When possible, the commissioner shall appoint a trustee who is no longer actively
             6210      engaged on [his] the trustee's own behalf in business as an agent or broker.
             6211          (C) The commissioner shall only select [persons] a person to act as trustee who [are] is
             6212      trustworthy and competent to perform the necessary services.
             6213          [(2)] (ii) (A) If the deceased, disabled, or unlicensed person for whom the trustee is acting
             6214      was an agent, the insurers through which the former agent's business was written shall cooperate
             6215      with the trustee in allowing [him] the trustee to service the policies written through the insurer.
             6216          (B) The trustee shall abide by the terms of the agency agreement between the former agent
             6217      and the issuing insurer, except that terms in those agreements terminating the agreement upon the
             6218      death, disability, or license termination of the former agent do not bar the trustee from continuing
             6219      to act under the agreement.
             6220          [(3)] (iii) (A) The commissioner shall set the trustee's compensation, which:
             6221          (I) may be stated in terms of a percentage of commissions[, but which is required to]; and
             6222          (II) shall be equitable.
             6223          (B) The compensation shall be paid exclusively from:
             6224          (I) the commissions generated by the former agent or broker's insurance accounts serviced
             6225      by the trustee; and [from]


             6226          (II) other funds the former agent or broker or [his] the agent's or broker's successor in
             6227      interest agree to pay.
             6228          (C) The trustee has no special priority to commissions over the former agent or broker's
             6229      creditors.
             6230          [(4) Neither the] (iv) (A) The commissioner [nor] or the state [of Utah] may not be held
             6231      liable for errors or omissions of:
             6232          (I) the former agent or broker; or
             6233          (II) the trustee.
             6234          (B) The trustee may not be held liable for errors and omissions [which] that were caused
             6235      in any material way by the negligence of the former agent or broker.
             6236          (C) The trustee may be held liable for errors and omissions which arise solely from the
             6237      trustee's negligence.
             6238          (D) The trustee's compensation level shall be sufficient to allow the trustee to purchase
             6239      errors and omissions coverage, if that coverage is not provided the trustee by:
             6240          (I) the former agent or broker; or [his]
             6241          (II) the agent's or broker's successor in interest.
             6242          [(5)] (v) (A) It is a breach of the trustee's fiduciary duty to capture the accounts of trustor's
             6243      clients, either directly or indirectly.
             6244          (B) The trustee may not purchase the accounts or expiration lists of the former agent or
             6245      broker, unless the commissioner expressly ratifies the terms of the sale.
             6246          (C) The commissioner may adopt rules [which] that:
             6247          (I) further define the trustee's fiduciary duties; and
             6248          (II) explain how the trustee is to carry out [his] the trustee's responsibilities.
             6249          [(6)] (vi) (A) The trust may be terminated by:
             6250          (I) the commissioner; or [by]
             6251          (II) the person that requested the trust be established.
             6252          (B) The trust is terminated by written notice being delivered to:
             6253          (I) the trustee; and
             6254          (II) the commissioner.
             6255          (5) (a) The commissioner may by order:
             6256          (i) limit the authority of any temporary licensee or trustee in any way the commissioner


             6257      considers necessary to protect insureds and the public; and
             6258          (ii) revoke a temporary license or trustee's appointment if the commissioner finds that the
             6259      insureds or the public are endangered.
             6260          (b) A temporary license or trustee's appointment may not continue after the owner or
             6261      personal representative disposes of the business.
             6262          Section 147. Section 31A-23-302 is amended to read:
             6263           31A-23-302. Unfair marketing practices.
             6264          (1) (a) (i) [A person who is or should be licensed under this title, an employee or agent of
             6265      that licensee or person who should be licensed, a person whose primary interest is as a competitor
             6266      of a person licensed under this title, and a person on behalf of any of these persons] Any of the
             6267      following may not make or cause to be made any communication that contains false or misleading
             6268      information, relating to an insurance contract, any insurer, or other licensee under this title,
             6269      including information that is false or misleading because it is incomplete[.]:
             6270          (A) a person who is or should be licensed under this title;
             6271          (B) an employee or agent of a person described in Subsection (1)(a)(i)(A);
             6272          (C) a person whose primary interest is as a competitor of a person licensed under this title;
             6273      and
             6274          (D) a person on behalf of any of the persons listed in this Subsection (1)(a)(i).
             6275          (ii) As used in this Subsection (1), "false or misleading information" includes:
             6276          (A) assuring the nonobligatory payment of future dividends or refunds of unused
             6277      premiums in any specific or approximate amounts, but reporting fully and accurately past
             6278      experience is not false or misleading information; and
             6279          (B) with intent to deceive a person examining it, filing a report, making a false entry in a
             6280      record, or wilfully refraining from making a proper entry in a record.
             6281          (iii) An insurer or other licensee under this title may not:
             6282          (A) use any business name, slogan, emblem, or related device that is misleading or likely
             6283      to cause the insurer or other licensee to be mistaken for another insurer or other licensee already
             6284      in business[.]; or
             6285          (B) use any advertisement or other insurance promotional material that would cause a
             6286      reasonable person to mistakenly believe that a state or federal government agency:
             6287          (I) is responsible for the insurance sales activities of the person;


             6288          (II) stands behind the credit of the person;
             6289          (III) guarantees any returns on insurance products of or sold by the person; or
             6290          (IV) is a source of payment of any insurance obligation of or sold by the person.
             6291          (iv) A person who is not an insurer may not assume or use any name that deceptively
             6292      implies or suggests that it is an insurer.
             6293          (v) A person other than persons licensed as health maintenance organizations under
             6294      Chapter 8 may not use the term "Health Maintenance Organization" or "HMO" in referring to
             6295      itself.
             6296          (b) If an insurance agent or third party administrator distributes cards or documents,
             6297      exhibits a sign, or publishes an advertisement that violates Subsection (1) (a), with reference to a
             6298      particular insurer that the agent represents, or for whom the third party administrator processes
             6299      claims, and if the cards, documents, signs, or advertisements are supplied or approved by that
             6300      insurer, the agent's or the third party administrator's violation creates a rebuttable presumption that
             6301      the violation was also committed by the insurer.
             6302          (2) (a) (i) An insurer or licensee under this chapter, or an officer or employee of either may
             6303      not induce any person to enter into or continue an insurance contract or to terminate an existing
             6304      insurance contract by offering benefits not specified in the policy to be issued or continued,
             6305      including premium or commission rebates.
             6306          (ii) An insurer may not make or knowingly allow any agreement of insurance that is not
             6307      clearly expressed in the policy to be issued or renewed.
             6308          (iii) Subsection (2)(a) does not preclude:
             6309          (A) insurers from reducing premiums because of expense savings;
             6310          (B) the usual kinds of social courtesies not related to particular transactions; or
             6311          (C) an insurer from receiving premiums under an installment payment plan.
             6312          (b) An agent, broker, or insurer may not absorb the tax under Section 31A-3-301 .
             6313          (c) (i) A title insurer or agent or any officer or employee of either may not pay, allow, give,
             6314      or offer to pay, allow, or give, directly or indirectly, as an inducement to obtaining any title
             6315      insurance business, any rebate, reduction, or abatement of any rate or charge made incident to the
             6316      issuance of the insurance, any special favor or advantage not generally available to others, or any
             6317      money or other consideration or material inducement.
             6318          (ii) "Charge made incident to the issuance of the insurance" includes escrow, settlement,


             6319      and closing charges, and any other services that are prescribed by the commissioner.
             6320          (iii) An insured or any other person connected, directly or indirectly, with the transaction,
             6321      including a mortgage lender, real estate broker, builder, attorney, or any officer, employee, or agent
             6322      of any of them, may not knowingly receive or accept, directly or indirectly, any benefit referred
             6323      to in Subsection (2)(c)(i).
             6324          (3) (a) An insurer may not unfairly discriminate among policyholders by charging different
             6325      premiums or by offering different terms of coverage, except on the basis of classifications related
             6326      to the nature and the degree of the risk covered or the expenses involved.
             6327          (b) Rates are not unfairly discriminatory if they are averaged broadly among persons
             6328      insured under a group, blanket, or franchise policy, and the terms of those policies are not unfairly
             6329      discriminatory merely because they are more favorable than in similar individual policies.
             6330          (4) A person who is or should be licensed under this title, an employee or agent of that
             6331      licensee or person who should be licensed, a person whose primary interest is as a competitor of
             6332      a person licensed under this title, and one acting on behalf of any of these persons, may not commit
             6333      or enter into any agreement to participate in any act of boycott, coercion, or intimidation that tends
             6334      to produce an unreasonable restraint of the business of insurance or a monopoly in that business.
             6335          (5) (a) A person may not restrict in the choice of an insurer or insurance agent or broker,
             6336      another person who is required to pay for insurance as a condition for the conclusion of a contract
             6337      or other transaction or for the exercise of any right under a contract. The person requiring the
             6338      coverage may, however, reserve the right to disapprove the insurer or the coverage selected on
             6339      reasonable grounds.
             6340          (b) The form of corporate organization of an insurer authorized to do business in this state
             6341      is not a reasonable ground for disapproval, and the commissioner may by rule specify additional
             6342      grounds that are not reasonable. This Subsection (5) does not bar an insurer from declining an
             6343      application for insurance.
             6344          (6) A person may not make any charge other than insurance premiums and premium
             6345      financing charges for the protection of property or of a security interest in property, as a condition
             6346      for obtaining, renewing, or continuing the financing of a purchase of the property or the lending
             6347      of money on the security of an interest in the property.
             6348          (7) (a) An agent may not refuse or fail to return promptly all indicia of agency to the
             6349      principal on demand.


             6350          (b) A licensee whose license is suspended, limited, or revoked under Section 31A-2-308 ,
             6351      31A-23-216 , or 31A-23-217 may not refuse or fail to return the license to the commissioner on
             6352      demand.
             6353          (8) A person may not engage in any other unfair method of competition or any other unfair
             6354      or deceptive act or practice in the business of insurance, as defined by the commissioner by rule,
             6355      after a finding that they are misleading, deceptive, unfairly discriminatory, provide an unfair
             6356      inducement, or unreasonably restrain competition.
             6357          Section 148. Section 31A-23-303 is amended to read:
             6358           31A-23-303. Inherent unsuitability.
             6359          [In the event] (1) If the commissioner finds after a hearing that a certain type of [disability]
             6360      accident and health insurance, life insurance, or annuity product is inherently unsuitable for
             6361      persons of certain ages or in certain conditions of health, the commissioner shall [promulgate]
             6362      make a rule declaring [this disability] the accident and health insurance, life insurance, or annuity
             6363      product as inherently unsuitable for persons of certain ages or in certain conditions of health. [No
             6364      disability]
             6365          (2) An accident and health insurance, life insurance, or annuity product that is subject to
             6366      the rule may not be sold to a person for whom the product has been determined as inherently
             6367      unsuitable unless that person purchasing the product signs a receipt acknowledging having
             6368      received a statement [which] that expresses that the product has been determined by the
             6369      commissioner to be inherently unsuitable for persons of certain ages or in certain conditions of
             6370      health.
             6371          (3) Unless the insurer or its agent establishes that its sale of coverage [which] is
             6372      inconsistent with the rule made under Subsection (1) is due to excusable neglect, the purchaser
             6373      may treat the sale as voidable, if acted upon by the insured within a two-year period from the date
             6374      of sale.
             6375          Section 149. Section 31A-23-307 is amended to read:
             6376           31A-23-307. Title insurance agents' business.
             6377          A title insurance agent may engage in the escrow, settlement, or closing business, or any
             6378      combination of such businesses, and operate as escrow, settlement, or closing agent provided that
             6379      all the following exist:
             6380          (1) The title insurance agent is properly licensed under this chapter.


             6381          (2) (a) (i) All funds deposited with the agent in connection with any escrow, settlement,
             6382      or closing are deposited in a federally insured financial institution in separate trust accounts, with
             6383      the funds being the property of the persons entitled to them under the provisions of the escrow,
             6384      settlement, or closing.
             6385          (ii) The funds shall be segregated escrow by escrow, settlement by settlement, or closing
             6386      by closing in the records of the agent. [These funds]
             6387          (iii) Earnings on funds held in escrow may be paid out of the escrow account to any person
             6388      in accordance with the provisions of the escrow agreement if the agreement does not otherwise
             6389      provide for payment of the earnings or any portion of the earnings on the escrow funds.
             6390          (iv) Funds held in escrow:
             6391          (A) are not subject to any debts of the agent; and
             6392          (B) may only be used to fulfill the terms of the individual escrow, settlement, or closing
             6393      under which the funds were accepted. [None of the funds]
             6394          (v) Funds held in escrow may not be used until all conditions of the escrow, settlement,
             6395      or closing have been met.
             6396          [(b) Any interest received on funds deposited with the agent in connection with any
             6397      escrow, settlement, or closing shall be paid over to the depositing party to the escrow, settlement,
             6398      or closing and may not be transferred to the account of the agent.]
             6399          (b) Assets or property other than escrow funds received by an agent in accordance with an
             6400      escrow agreement shall be maintained in a manner that will:
             6401          (i) reasonably preserve and protect the asset or property from loss, theft, or damages; and
             6402          (ii) otherwise comply with all general duties and responsibilities of a fiduciary or bailee.
             6403          (c) [No] A check may not be drawn, executed or dated, or funds otherwise disbursed
             6404      unless the segregated escrow account from which funds are to be disbursed contains a sufficient
             6405      credit balance consisting of collected or cleared funds at the time the check is drawn, executed or
             6406      dated, or funds are otherwise disbursed.
             6407          (d) As used in this Subsection (2), funds are considered to be "collected or cleared," and
             6408      may be disbursed as follows:
             6409          (i) cash may be disbursed on the same day it is deposited;
             6410          (ii) wire transfers may be disbursed on the same day they are deposited;
             6411          (iii) cashier's checks, certified checks, teller's checks, U.S. Postal Service money orders,


             6412      and checks drawn on a Federal Reserve Bank or Federal Home Loan Bank may be disbursed on
             6413      the day following the date of deposit; and
             6414          (iv) other checks or deposits may be disbursed within the time limits provided under the
             6415      Expedited Funds Availability Act, 12 U.S.C. Section 4001 et seq., as amended, and related
             6416      regulations of the Federal Reserve System or upon written notification from the financial
             6417      institution to which the funds have been deposited, that final settlement has occurred on the
             6418      deposited item.
             6419          (3) The title insurance agent shall maintain records of all receipts and disbursements of
             6420      escrow, settlement, and closing funds.
             6421          (4) The title insurance agent shall comply with any rules adopted by the commissioner
             6422      governing escrows, settlements, or closings.
             6423          Section 150. Section 31A-23-310 is amended to read:
             6424           31A-23-310. Trust obligation for funds collected.
             6425          (1) Every agent or broker is a trustee for all funds received or collected as an agent or
             6426      broker for forwarding to insurers or to insureds. Except for amounts necessary to pay bank
             6427      charges, and except for funds paid by insureds and belonging in part to the agent or broker as fees
             6428      or commissions, an agent or broker may not commingle trust funds with the agent or broker's own
             6429      funds or with funds held in any other capacity. Except as provided under Subsection (4), every
             6430      agent or broker owes to insureds and insurers the fiduciary duties of a trustee with respect to
             6431      money to be forwarded to insurers or insureds through the agent or broker. Unless the funds are
             6432      sent to the appropriate payee by the close of the next business day after their receipt, the licensee
             6433      shall deposit them in an account authorized under Subsection (2). Funds so deposited shall remain
             6434      in an account authorized under Subsection (2) until sent to the appropriate payee.
             6435          (2) Funds required to be deposited under Subsection (1) shall be deposited:
             6436          (a) in a federally insured trust account with a financial institution located in this state; or
             6437          (b) in some other account, approved by the commissioner by rule or order, providing safety
             6438      comparable to federally insured trust accounts.
             6439          (3) It is not a violation of Subsection (2)(a) if the amounts in the accounts exceed the
             6440      amount of the federal insurance on the accounts.
             6441          (4) A trust account into which funds are deposited may be interest bearing. [Except as
             6442      provided under Subsection 31A-23-307 (2)(b), the] The interest accrued on the account may be


             6443      paid to the agent or broker, so long as the agent or broker otherwise complies with this section and
             6444      with the contract with the insurer.
             6445          (5) A financial institution or other organization holding trust funds under this section may
             6446      not offset or impound trust account funds against debts and obligations incurred by the agent or
             6447      broker.
             6448          (6) Any licensee who, not being lawfully entitled thereto, diverts or appropriates any
             6449      portion of the funds held under Subsection (1) to the licensee's own use, is guilty of theft under
             6450      Title 76, Chapter 6, Part 4. Section 76-6-412 applies in determining the classification of the
             6451      offense. Sanctions under Section 31A-2-308 also apply.
             6452          Section 151. Section 31A-23-312 is amended to read:
             6453           31A-23-312. Place of business and residence address -- Records.
             6454          (1) (a) All licensees under this chapter shall register with the commissioner the address
             6455      and telephone numbers of their principal place of business.
             6456          (b) If the licensee is an individual, [he] in addition to complying with Subsection (1)(a)
             6457      the individual shall [also] provide [his] to the commissioner the individual's residence address and
             6458      telephone number. [Licensees]
             6459          (c) A licensee shall notify the commissioner, in writing, within 30 days of any change of
             6460      address or telephone number.
             6461          (2) (a) Except as provided under Subsection (3), every licensee under this chapter shall
             6462      keep at the principal place of business address registered under Subsection (1), [a record] separate
             6463      and distinct books and records of all transactions consummated under the Utah license. [The
             6464      record]
             6465          (b) The books and records described in Subsection (2)(a) shall:
             6466          (i) be in an organized form;
             6467          (ii) be available to the commissioner for inspection upon reasonable notice; and [shall]
             6468          (iii) include all of the following:
             6469          [(a)] (A) if the licensee is an agent or broker:
             6470          [(i)] (I) a record of each insurance contract procured by or issued through the licensee, with
             6471      the names of insurers and insureds, the amount of premium and commissions or other
             6472      compensation, and the subject of the insurance;
             6473          [(ii)] (II) the names of any other agents or brokers from whom business is accepted, and


             6474      of persons to whom commissions or allowances of any kind are promised or paid; and
             6475          (III) a record of all consumer complaints forwarded to the licensee by an insurance
             6476      regulator;
             6477          [(b)] (B) if the licensee is a consultant, a record of each agreement outlining the work
             6478      performed and the fee for the work; and
             6479          [(c)] (C) any additional information which:
             6480          (I) is customary for a similar business[,]; or [which]
             6481          (II) may reasonably be required by the commissioner by rule.
             6482          (3) Subsection (2) is satisfied if the books and records specified in [that] Subsection (2)
             6483      can be obtained immediately from a central storage place or elsewhere by on-line computer
             6484      terminals located at the registered address.
             6485          (4) An agent who represents only a single insurer satisfies Subsection (2) if the insurer
             6486      maintains the books and records pursuant to Subsection (2) at a place satisfying Subsections (1)
             6487      and (5).
             6488          (5) (a) The books and records maintained [as to a transaction] under Subsection (2) or
             6489      Section 31A-23-313 shall be available for the inspection of the commissioner during all business
             6490      hours for a period of time after the date of the transaction as specified by the commissioner by rule,
             6491      but in no case for less than three years.
             6492          (b) Discarding books and records after the applicable record retention period has expired
             6493      does not place the licensee in violation of a later-adopted longer record retention period.
             6494          Section 152. Section 31A-23-317 is enacted to read:
             6495          31A-23-317. Financial services insurance activities regulation.
             6496          (1) It is the intent of the Legislature that the regulation of insurance activities of any person
             6497      in this state be based on functional regulation principles established in the Gramm-Leach-Bliley
             6498      Act of 1999, Pub. L. No. 106-102.
             6499          (2) The insurance activities of any person in this state shall be functionally regulated by
             6500      the commissioner subject to Sections 104, 301-308, 501-507, and 509 of the Gramm-Leach-Bliley
             6501      Act of 1999, Pub. L. No. 106-102.
             6502          (3) Under Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the commissioner
             6503      shall adopt rules consistent with Section 104(d) of the Gramm-Leach-Bliley Act of 1999, Pub. L.
             6504      No. 106-102, and the functional regulation of insurance activities of any person otherwise subject


             6505      to the jurisdiction of the commissioner in this state described in Subsection (2).
             6506          (4) The commissioner shall consult and coordinate with the commissioner of the
             6507      Department of Financial Institutions and the director of the Division of Securities for the purpose
             6508      of assuring, to the extent possible, that the rules prescribed by the department are consistent and
             6509      comparable with federal regulations governing the insurance, banking, and securities industries.
             6510          Section 153. Section 31A-23-404 is amended to read:
             6511           31A-23-404. Sharing commissions.
             6512          (1) (a) Except as provided in Subsection 31A-15-103 (3), a licensee under this chapter or
             6513      an insurer may only pay consideration or reimburse out-of-pocket expenses to a person if the
             6514      licensee knows that the person is licensed under this chapter to act as an agent or broker in Utah
             6515      as to the particular type of insurance.
             6516          (b) A person may only accept commission compensation or other compensation as an
             6517      agent, broker, or consultant that is directly or indirectly the result of any insurance transaction if
             6518      that person is licensed under this chapter to act as an agent or broker as to the particular type of
             6519      insurance.
             6520          (2) (a) Except as provided in Section 31A-23-301 , a consultant may not pay or receive any
             6521      commission or other compensation that is directly or indirectly the result of any insurance
             6522      transaction.
             6523          (b) A consultant may share a consultant fee or other compensation received for consulting
             6524      services performed within Utah only with another consultant licensed under this chapter, and only
             6525      to the extent that the other consultant contributed to the services performed.
             6526          (3) This section does not prohibit the payment of renewal commissions to former licensees
             6527      under this chapter, former Title 31, Chapter 17, or their successors in interest under a deferred
             6528      compensation or agency sales agreement.
             6529          (4) This section does not prohibit compensation paid to or received by an individual for
             6530      referral of a potential customer that seeks to purchase or obtain an opinion or advice on an
             6531      insurance product if:
             6532          (a) the person is not licensed to sell insurance;
             6533          (b) the person sells or provides opinions or advice on the product; and
             6534          (c) the compensation does not depend on whether the referral results in a purchase or sale.
             6535          [(4)] (5) In selling any policy of title insurance, no sharing of commissions under


             6536      Subsection (1) may occur if it will result in an unlawful rebate, or in compensation in connection
             6537      with controlled business, or in payment of a forwarding fee or finder's fee. A person may share
             6538      compensation for the issuance of a title insurance policy only to the extent that he contributed to
             6539      the search and examination of the title or other services connected with it.
             6540          [(5)] (6) This section does not apply to bail bond agents or bail enforcement agents as
             6541      defined in Section 31A-35-102 .
             6542          Section 154. Section 31A-23-503 is amended to read:
             6543           31A-23-503. Duties of insurers.
             6544          (1) The insurer shall have on file an independent financial examination, in a form
             6545      acceptable to the commissioner, of each managing general agent with which it has done business.
             6546          (2) If a managing general agent establishes loss reserves, the insurer shall annually obtain
             6547      the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred
             6548      and outstanding on business produced by the managing general agent. This is in addition to any
             6549      other required loss reserve certification.
             6550          (3) The insurer shall at least semiannually conduct an on-site review of the underwriting
             6551      and claims processing operations of the managing general agent.
             6552          (4) Binding authority for all reinsurance contracts or participation in insurance or
             6553      reinsurance syndicates shall rest with an officer of the insurer, who may not be affiliated with the
             6554      managing general agent.
             6555          (5) Within 30 days after entering into or terminating a contract with a managing general
             6556      agent, the insurer shall provide written notification of the appointment or termination to the
             6557      commissioner. A notice of appointment of a managing general agent shall include:
             6558          (a) a statement of duties that the applicant is expected to perform on behalf of the insurer;
             6559          (b) the lines of insurance for which the applicant is to be authorized to act; and
             6560          (c) any other information the commissioner may request.
             6561          (6) An insurer shall review its books and records each quarter to determine if any producer,
             6562      as defined by Subsection 31A-23-102 [(13)](20), has become a managing general agent as defined
             6563      in Subsection 31A-23-102 [(12)](17). If the insurer determines that a producer has become a
             6564      managing general agent, the insurer shall promptly notify the producer and the commissioner of
             6565      the determination. The insurer and producer shall fully comply with the provisions of this chapter
             6566      within 30 days.


             6567          (7) An insurer may not appoint officers, directors, employees, subproducers, or controlling
             6568      shareholders of its managing general agents to its board of directors. This Subsection (7) does not
             6569      apply to relationships governed by Title 31A, Chapter 16, Insurance Holding Companies, or
             6570      Chapter 23, Part 6, Broker Controlled Insurers, if it applies.
             6571          Section 155. Section 31A-23-601 is amended to read:
             6572           31A-23-601. Applicability.
             6573          This part applies to licensed insurers, as defined in Subsection 31A-23-102 [(11)](12),
             6574      which are either domiciled in this state or domiciled in a state that does not have a substantially
             6575      similar law. All provisions of Title 31A, Chapter 16, Insurance Holding Companies, to the extent
             6576      they are not superseded by this part, continue to apply to all parties within holding company
             6577      systems subject to this part.
             6578          Section 156. Section 31A-23-702 is amended to read:
             6579           31A-23-702. Required contract provisions -- Reinsurance intermediary-broker.
             6580          Transactions between a reinsurance intermediary-broker and the insurer it represents in that
             6581      capacity may only be entered into pursuant to a written authorization, which specifies the
             6582      responsibilities of each party. The authorization shall, at a minimum, provide that the reinsurance
             6583      intermediary-broker:
             6584          (1) may have his authority terminated by the insurer at any time;
             6585          (2) will render accounts to the insurer accurately detailing all material transactions,
             6586      including information necessary to support all commissions, charges and other fees received by,
             6587      or owing to the reinsurance intermediary-broker, and that he will remit all funds due to the insurer
             6588      within 30 days of receipt;
             6589          (3) shall hold, in a fiduciary capacity, all funds collected for the insurer's account in a bank,
             6590      which is a qualified [U.S.] United States financial institution;
             6591          (4) will comply with Section 31A-23-703 ;
             6592          (5) will comply with the written standards established by the insurer for the cession or
             6593      retrocession of all risks; and
             6594          (6) will disclose to the insurer any relationship with any reinsurer to which business will
             6595      be ceded or retroceded.
             6596          Section 157. Section 31A-23-705 is amended to read:
             6597           31A-23-705. Required contract provisions -- Reinsurance intermediary-manager.


             6598          Transactions between a reinsurance intermediary-manager and the reinsurer it represents
             6599      in that capacity may only be entered into pursuant to a written contract, which specifies the
             6600      responsibilities of each party, and which shall be approved by the reinsurer's board of directors.
             6601      At least 30 days before the reinsurer assumes or cedes business through the producer, a true copy
             6602      of the approved contract shall be filed with the commissioner for approval. The contract shall, at
             6603      a minimum, provide or require the following:
             6604          (1) The reinsurer may terminate the contract for cause upon written notice to the
             6605      reinsurance intermediary-manager. The reinsurer may immediately suspend the authority of the
             6606      reinsurance intermediary-manager to assume or cede business during the pendency of any dispute
             6607      regarding the cause for termination.
             6608          (2) The reinsurance intermediary-manager will render accounts to the reinsurer accurately
             6609      detailing all material transactions, including information necessary to support all commissions,
             6610      charges, and other fees received by, or owing to the reinsurance intermediary-manager, and he shall
             6611      remit all funds due under the contract to the reinsurer at least monthly.
             6612          (3) All funds collected for the reinsurer's account will be held by the reinsurance
             6613      intermediary-manager in a fiduciary capacity in a bank which is a qualified [U.S.] United States
             6614      financial institution. The reinsurance intermediary-manager may retain no more than three months
             6615      estimated claims payments and allocated loss adjustment expenses. The reinsurance
             6616      intermediary-manager shall maintain a separate bank account for each reinsurer that it represents.
             6617          (4) For at least ten years after expiration of each contract of reinsurance transacted by the
             6618      reinsurance intermediary-manager, he shall keep a complete record for each transactions showing:
             6619          (a) the type of contract, limits, underwriting restrictions, classes of risks, and territory;
             6620          (b) period of coverage, including effective and expiration dates, cancellation provisions
             6621      and notice required of cancellation, and disposition of outstanding reserves on covered risks;
             6622          (c) reporting and settlement requirements of balances;
             6623          (d) rates used to compute the reinsurance premium;
             6624          (e) names and addresses of reinsurers;
             6625          (f) rates of all reinsurance commissions, including the commissions on any retrocessions
             6626      handled by the reinsurance intermediary-manager;
             6627          (g) related correspondence and memoranda;
             6628          (h) proof of placement;


             6629          (i) details regarding retrocessions handled by the reinsurance intermediary-manager, as
             6630      permitted by Subsection 31A-23-707 (4), including the identity of retrocessionaires and percentage
             6631      of each contract assumed or ceded;
             6632          (j) financial records, including premium and loss accounts; and
             6633          (k) when the reinsurance intermediary-manager places a reinsurance contract on behalf of
             6634      a ceding insurer:
             6635          (i) directly from any assuming reinsurer, written evidence that the assuming reinsurer has
             6636      agreed to assume the risk; or
             6637          (ii) if placed through a representative of the assuming reinsurer, other than an employee,
             6638      written evidence that the reinsurer has delegated binding authority to the representative.
             6639          (5) The reinsurer will have access and the right to copy all accounts and records
             6640      maintained by the reinsurance intermediary-manager which are related to its business, in a form
             6641      usable by the reinsurer.
             6642          (6) The contract cannot be assigned in whole or in part by the reinsurance
             6643      intermediary-manager.
             6644          (7) The reinsurance intermediary-manager will comply with the written underwriting and
             6645      rating standards established by the insurer for the acceptance, rejection, or cession of all risks.
             6646          (8) The contract shall set forth the rates, terms, and purposes of commissions, charges, and
             6647      other fees which the reinsurance intermediary-manager may levy against the reinsurer.
             6648          (9) If the contract permits the reinsurance intermediary-manager to settle claims on behalf
             6649      of the reinsurer:
             6650          (a) All claims will be reported to the reinsurer in a timely manner.
             6651          (b) A copy of the claim file will be sent to the reinsurer at its request or as soon as it
             6652      becomes known that the claim:
             6653          (i) has the potential to exceed the lesser of an amount determined by the commissioner or
             6654      the limit set by the reinsurer;
             6655          (ii) involves a coverage dispute;
             6656          (iii) may exceed the reinsurance intermediary-manager claims settlement authority;
             6657          (iv) is open for more than six months; or
             6658          (v) is closed by payment of the lesser of an amount set by the commissioner or an amount
             6659      set by the reinsurer.


             6660          (c) All claim files will be the joint property of the reinsurer and reinsurance
             6661      intermediary-manager. However, upon an order of liquidation of the reinsurer the files shall
             6662      become the sole property of the reinsurer or its estate. The reinsurance intermediary-manager shall
             6663      have reasonable access to and the right to copy the files on a timely basis.
             6664          (d) Any settlement authority granted to the reinsurance intermediary-manager may be
             6665      terminated for cause upon the reinsurer's written notice to the reinsurance intermediary-manager,
             6666      or upon the termination of the contract. The reinsurer may suspend the settlement authority during
             6667      the pendency of the dispute regarding the cause of termination.
             6668          (10) If the contract provides for a sharing of interim profits by the reinsurance
             6669      intermediary-manager, that the contract shall provide interim profits will not be paid until one year
             6670      after the end of each underwriting period for property business and five years after the end of each
             6671      underwriting period for casualty business, or a later time period set by the commissioner for
             6672      specified lines of insurance, and not until the adequacy of reserves on remaining claims has been
             6673      verified pursuant to Subsection 31A-23-707 (3).
             6674          (11) The reinsurance intermediary-manager will annually provide the reinsurer with a
             6675      statement of its financial condition prepared by an independent certified public accountant.
             6676          (12) The reinsurer shall at least semi-annually conduct an on-site review of the
             6677      underwriting and claims processing operations of the reinsurance intermediary-manager.
             6678          (13) The reinsurance intermediary-manager will disclose to the reinsurer any relationship
             6679      it has with any insurer prior to ceding or assuming any business with the insurer pursuant to this
             6680      contract.
             6681          (14) Within the scope of its actual or apparent authority the acts of the reinsurance
             6682      intermediary-manager shall be considered to be the acts of the reinsurer on whose behalf it is
             6683      acting.
             6684          Section 158. Section 31A-25-102 is amended to read:
             6685           31A-25-102. Scope and purposes.
             6686          (1) This chapter applies to all third party administrators.
             6687          (2) The purposes of this chapter include:
             6688          (a) encouraging disclosure of contracts between insurers and third party administrators,
             6689      both to potential insureds and to the commissioner;
             6690          (b) promoting the financial responsibility of [insurance] third party administrators;


             6691          (c) subjecting persons administering insurance in Utah to the jurisdiction of the Utah
             6692      commissioner and courts; [and]
             6693          (d) regulating [insurance] third party administrators' practices in conformity with the
             6694      general purposes of [the Insurance Code.] this title; and
             6695          (e) governing the qualifications and procedures for the licensing of third party
             6696      administrators.
             6697          Section 159. Section 31A-25-202 is amended to read:
             6698           31A-25-202. Application for license.
             6699          (1) (a) An application for a license as a third party administrator shall be:
             6700          (i) made to the commissioner on forms and in a manner [he] the commissioner
             6701      prescribes[,]; and [be]
             6702          (ii) accompanied by the applicable fee, which is not refundable if the application is denied.
             6703          (b) The application for a license as a third party administrator shall:
             6704          (i) state the applicant's:
             6705          (A) social security number; or
             6706          (B) federal employer identification number;
             6707          (ii) provide information about:
             6708          (A) the applicant's identity[,];
             6709          (B) the applicant's personal history, experience, education, and business record[,];
             6710          (C) if the applicant is a natural person, whether the applicant is 18 years of age or older;
             6711      and
             6712          (D) whether the applicant has committed an act that is a ground for denial, suspension, or
             6713      revocation as set forth in Section 31A-25-208 ; and
             6714          (iii) any other information as the commissioner reasonably requires.
             6715          (2) The commissioner may require documents reasonably necessary to verify the
             6716      information contained in the application.
             6717          (3) The following are private records under Subsection 63-2-302 (1)(g):
             6718          (a) an applicant's social security number; and
             6719          (b) an applicant's federal employer identification number.
             6720          Section 160. Section 31A-25-203 is amended to read:
             6721           31A-25-203. General requirements for license issuance.


             6722          (1) The commissioner shall issue a license to act as a third party administrator to any
             6723      person who has:
             6724          (a) satisfied the character requirements under Section 31A-25-204 ;
             6725          (b) satisfied the financial responsibility requirement under Section 31A-25-205 ;
             6726          (c) if a nonresident, complied with Section 31A-25-206 ; and
             6727          (d) paid the applicable fees under Section 31A-3-103 .
             6728          (2) The license of each third party administrator licensed under former Title 31, Chapter
             6729      15a, is continued under this chapter.
             6730          (3) (a) This Subsection (3) applies to the following persons:
             6731          (i) an applicant for a third party administrator's license; or
             6732          (ii) a licensed third party administrator.
             6733          (b) A person described in Subsection (3)(a) shall report to the commissioner:
             6734          (i) any administrative action taken against the person:
             6735          (A) in another jurisdiction; or
             6736          (B) by another regulatory agency in this state; and
             6737          (ii) any criminal prosecution taken against the person in any jurisdiction.
             6738          (c) The report required by Subsection (3)(b) shall:
             6739          (i) be filed:
             6740          (A) at the time the person applies for a third party administrator's license; or
             6741          (B) within 30 days of the initiation of an action or prosecution described in Subsection
             6742      (3)(b); and
             6743          (ii) include a copy of the complaint or other relevant legal documents related to the action
             6744      or prosecution described in Subsection (3)(b).
             6745          (4) (a) The department may request concerning a person applying for a third party
             6746      administrator's license:
             6747          (i) criminal background information maintained pursuant to Title 53, Chapter 10, Part 2,
             6748      from the Bureau of Criminal Identification; and
             6749          (ii) complete Federal Bureau of Investigation criminal background checks through the
             6750      national criminal history system.
             6751          (b) Information obtained by the department from the review of criminal history records
             6752      received under Subsection (4)(a) shall be used by the department for the purposes of:


             6753          (i) determining if a person satisfies the character requirements under Section 31A-25-204
             6754      for issuance or renewal of a license;
             6755          (ii) determining if a person has failed to maintain the character requirements under Section
             6756      31A-25-204 ; and
             6757          (iii) preventing persons who violate the federal Violent Crime Control and Law
             6758      Enforcement Act of 1994, 18 U.S.C. Secs. 1033 and 1034, from engaging in the business of
             6759      insurance in the state.
             6760          (c) If the department requests the criminal background information, the department shall:
             6761          (i) pay to the Department of Public Safety the costs incurred by the Department of Public
             6762      Safety in providing the department criminal background information under Subsection (4)(a)(i);
             6763          (ii) pay to the Federal Bureau of Investigation the costs incurred by the Federal Bureau of
             6764      Investigation in providing the department criminal background information under Subsection
             6765      (4)(a)(ii); and
             6766          (iii) charge the person applying for a license or for renewal of a license a fee equal to the
             6767      aggregate of Subsections (4)(c)(i) and (ii).
             6768          Section 161. Section 31A-25-205 is amended to read:
             6769           31A-25-205. Financial responsibility.
             6770          (1) Every person licensed under this chapter shall, while licensed and for one year after
             6771      that date, maintain an insurance policy or surety bond, issued by an authorized insurer, in an
             6772      amount specified under Subsection (2), on a policy or contract form which is acceptable under
             6773      Subsection (3).
             6774          (2) (a) Insurance policies or surety bonds satisfying the requirement of Subsection (1) shall
             6775      be in a face amount equal to at least 10% of the total funds handled by the administrator.
             6776      However, no policy or bond under this [subsection] Subsection (2)(a) may be in a face amount of
             6777      less than $5,000 nor more than $500,000.
             6778          (b) In fixing the policy or bond face amount under Subsection (2)(a), the total funds
             6779      handled is:
             6780          (i) the greater of:
             6781          (A) the premiums received during the previous calendar year; or
             6782          (B) claims paid through the administrator during the previous calendar year[,]; or[,]
             6783          (ii) if no funds were handled during the preceding year, the total funds reasonably


             6784      anticipated to be handled by the administrator during the current calendar year.
             6785          (c) This section does not prohibit any person dealing with the administrator from requiring,
             6786      by contract, insurance coverage in amounts greater than required under this section.
             6787          (3) Insurance policies or surety bonds issued to satisfy Subsection (1) shall be on forms
             6788      approved by the commissioner. The policies or bonds shall require the insurer to pay, up to the
             6789      policy or bond face amount, any judgment obtained by participants in or beneficiaries of plans
             6790      administered by the insured licensee which arise from the negligence or culpable acts of the
             6791      licensee or any employee or agent of the licensee in connection with the activities described under
             6792      Subsection 31A-1-301 [(90)](111). The commissioner may require that policies or bonds issued
             6793      to satisfy the requirements of this section require the insurer to give the commissioner 20 day prior
             6794      notice of policy cancellation.
             6795          (4) The commissioner shall establish annual reporting requirements and forms to monitor
             6796      compliance with this section.
             6797          (5) This section may not be construed as limiting any cause of action an insured would
             6798      otherwise have against the insurer.
             6799          Section 162. Section 31A-25-206 is amended to read:
             6800           31A-25-206. Nonresident jurisdictional agreement.
             6801          (1) (a) [Nonresident applicants for licenses under this chapter] If a nonresident license
             6802      applicant has a valid license from the nonresident license applicant's home state and the conditions
             6803      of Subsection (1)(b) are met, the commissioner shall:
             6804          (i) waive any license requirement for a license under this chapter; and
             6805          (ii) issue the nonresident license applicant a nonresident third party administrator license.
             6806          (b) Subsection (1)(a) applies if:
             6807          (i) the nonresident license applicant:
             6808          (A) is licensed as a resident in the nonresident license applicant's home state at the time
             6809      the nonresident license applicant applies for a nonresident third party administrator license;
             6810          (B) has submitted the proper request for licensure;
             6811          (C) has submitted to the commissioner:
             6812          (I) the application for licensure that the nonresident license applicant submitted to the
             6813      applicant's home state; or
             6814          (II) a completed uniform application; and


             6815          (D) has paid the applicable fees under Section 31A-3-103 ;
             6816          (ii) the nonresident license applicant's license in the applicant's home state is in good
             6817      standing; and
             6818          (iii) the nonresident license applicant's home state awards nonresident third party
             6819      administrator licenses to residents of this state on the same basis as this state awards licenses to
             6820      residents of that home state.
             6821          (2) A nonresident applicant shall execute in a form acceptable to the commissioner an
             6822      agreement to be subject to the jurisdiction of the Utah commissioner and courts on any matter
             6823      related to [his] the applicant's insurance activities in Utah, on the basis of:
             6824          (a) service of process under Sections 31A-2-309 and 31A-2-310 ; or
             6825          (b) other service authorized in the Utah Rules of Civil Procedure.
             6826          (3) The commissioner may verify the third party administrator's licensing status through
             6827      the database maintained by:
             6828          (a) the National Association of Insurance Commissioners; or
             6829          (b) an affiliate or subsidiary of the National Association of Insurance Commissioners.
             6830          (4) The commissioner may not assess a greater fee for an insurance license or related
             6831      service to a person not residing in this state based solely on the fact that the person does not reside
             6832      in this state.
             6833          Section 163. Section 31A-25-207 is amended to read:
             6834           31A-25-207. Form and contents of license.
             6835          (1) Licenses issued under this chapter shall be in the form the commissioner prescribes and
             6836      shall set forth:
             6837          [(1)] (a) the name, address, and telephone number of the licensee;
             6838          [(2)] (b) the date of license issuance; and
             6839          [(3)] (c) any other information the commissioner considers advisable.
             6840          (2) A third party administrator doing business under any other name than the
             6841      administrator's legal name shall notify the commissioner prior to using the assumed name in this
             6842      state.
             6843          (3) (a) An organization shall be licensed as an agency if the organization acts as a third
             6844      party administrator.
             6845          (b) An agency license issued under Subsection (3)(a) shall set forth the names of all natural


             6846      persons licensed under this chapter who are authorized to act in those capacities for the
             6847      organization in this state.
             6848          Section 164. Section 31A-25-208 is amended to read:
             6849           31A-25-208. Termination of license.
             6850          (1) A license issued under this chapter remains in force until:
             6851          (a) revoked, suspended, or limited under Subsection (2);
             6852          (b) lapsed under Subsection (3);
             6853          (c) surrendered to and accepted by the commissioner; or
             6854          (d) the licensee dies or is adjudicated incompetent as defined under Title 75, Chapter 5,
             6855      Part 3 or 4.
             6856          (2) After [a hearing] an adjudicative proceeding under Title 63, Chapter 46b,
             6857      Administrative Procedures Act, the commissioner may revoke, suspend for a specified period of
             6858      [less than] 12 months or less, or limit in whole or in part the license of any administrator, found
             6859      to:
             6860          (a) be unqualified for a license under Section 31A-25-203 ;
             6861          (b) have violated an insurance statute, valid rule under Subsection 31A-2-201 (3), or a valid
             6862      order under Subsection 31A-2-201 (4);
             6863          (c) be insolvent, or the subject of receivership, conservatorship, rehabilitation, or other
             6864      delinquency proceedings in any state;
             6865          (d) have failed to pay any final judgment rendered against it in this state within 60 days
             6866      after the judgment became final;
             6867          (e) have failed to meet the same good faith obligations in claims settlement as that required
             6868      of admitted insurers;
             6869          (f) be affiliated with and under the same general management or interlocking directorate
             6870      or ownership as another administrator which transacts business in this state without a license; [or]
             6871          (g) have refused to be examined or to produce its accounts, records, and files for
             6872      examination, or have officers who have refused to give information with respect to the
             6873      administrator's affairs or to perform any other legal obligation as to an examination; [or]
             6874          (h) have provided incorrect, misleading, incomplete, or materially untrue information in
             6875      the license application;
             6876          (i) have violated an insurance law, valid rule, or valid order of another state's insurance


             6877      department;
             6878          (j) have obtained or attempted to obtain a license through misrepresentation or fraud;
             6879          (k) have improperly withheld, misappropriated, or converted any monies or properties
             6880      received in the course of doing insurance business;
             6881          (l) have intentionally misrepresented the terms of an actual or proposed insurance contract
             6882      or application for insurance;
             6883          (m) have been convicted of a felony;
             6884          (n) have admitted or been found to have committed any insurance unfair trade practice or
             6885      fraud;
             6886          (o) have used fraudulent, coercive, or dishonest practices in this state or elsewhere;
             6887          (p) have demonstrated incompetence, untrustworthiness, or financial irresponsibility in the
             6888      conduct of business in this state or elsewhere;
             6889          (q) have had an insurance license or its equivalent, denied, suspended, or revoked in any
             6890      other state, province, district, or territory;
             6891          (r) have forged another's name to:
             6892          (i) an application for insurance; or
             6893          (ii) a document related to an insurance transaction;
             6894          (s) have improperly used notes or any other reference material to complete an examination
             6895      for an insurance license;
             6896          (t) have knowingly accepted insurance business from an individual who is not licensed;
             6897          (u) have failed to comply with an administrative or court order imposing a child support
             6898      obligation;
             6899          (v) have failed to:
             6900          (i) pay state income tax; or
             6901          (ii) comply with any administrative or court order directing payment of state income tax;
             6902          (w) have violated or permitted others to violate the federal Violent Crime Control and Law
             6903      Enforcement Act of 1994, 18 U.S.C. Secs. 1033 and 1034; or
             6904          [(h)] (x) have engaged in methods and practices in the conduct of business [which] that
             6905      endanger the legitimate interests of customers and the public.
             6906          (3) (a) Any license issued under this chapter lapses if the licensee fails to:
             6907          (i) pay the fee due under Section 31A-3-103 [,]; or [if the licensee fails to]


             6908          (ii) produce, when due, evidence of compliance with the financial responsibility
             6909      requirement under Section 31A-25-205 . [A]
             6910          (b) Subject to Subsection (3)(c) a license [which] that has lapsed under this Subsection (3)
             6911      may be reinstated if the licensee[, within 90 days after license lapse,] cures the deficiency or
             6912      deficiencies [which] that brought about the license lapse within 90 days after the date the license
             6913      lapsed.
             6914          (c) The licensee shall pay twice the applicable license renewal fee if the cause of the
             6915      license lapse was failure to pay the usual renewal fee.
             6916          (4) Notwithstanding Subsection (3), a licensee whose license lapses due to military service
             6917      or some other extenuating circumstance such as a long-term medical disability may request:
             6918          (a) reinstatement; and
             6919          (b) a waiver of any of the following imposed for failure to comply with renewal
             6920      procedures:
             6921          (i) an examination requirement;
             6922          (ii) a fine; or
             6923          (iii) other sanction.
             6924          (5) The commissioner shall by rule prescribe the license renewal and reinstatement
             6925      procedures, in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
             6926          [(4)] (6) A licensee under this chapter whose license is suspended, revoked, or lapsed, but
             6927      who continues to act as a licensee, is subject to the penalties for acting as an administrator without
             6928      a license.
             6929          [(5)] (7) An order revoking a license under Subsection (2) may specify a time, not to
             6930      exceed five years, within which the former licensee may not apply for a new license. If no time
             6931      is specified, the former licensee may not apply for five years without the express approval of the
             6932      commissioner.
             6933          [(6)] (8) Any person whose license is suspended or revoked under Subsection (2) shall,
             6934      when the suspension ends or a new license is issued, pay all the fees that would have been payable
             6935      if the license had not been suspended or revoked, unless the commissioner by order waives the
             6936      payment of the interim fees. If a new license is issued more than three years after the revocation
             6937      of a similar license, this subsection applies only to the fees that would have accrued during the
             6938      three years immediately following the revocation.


             6939          (9) If ordered by a court, the commissioner shall promptly withhold, suspend, restrict, or
             6940      reinstate the use of a license issued under this part.
             6941          Section 165. Section 31A-26-101 is amended to read:
             6942           31A-26-101. Purposes.
             6943          The purposes of this chapter are:
             6944          (1) to promote the professional competence of those engaged in claims adjusting;
             6945          (2) to encourage fair and rapid settlement of claims;
             6946          (3) to protect claimants under insurance policies from unfair claims adjustment practices;
             6947      [and]
             6948          (4) to prevent compensation arrangements for insurance adjusters that endanger the
             6949      fairness of claim settlements[.]; and
             6950          (5) to govern the qualifications and procedures for the licensing of insurance adjustors.
             6951          Section 166. Section 31A-26-202 is amended to read:
             6952           31A-26-202. Application for license.
             6953          (1) (a) The application for a license as an independent adjuster or public adjuster shall be:
             6954          (i) made to the commissioner on forms and in a manner [he] the commissioner
             6955      prescribes[.]; and
             6956          (ii) accompanied by the applicable fee, which is not refunded if the application is denied.
             6957          (b) The application shall provide:
             6958          (i) information about the identity[,];
             6959          (ii) the applicant's:
             6960          (A) social security number[,]; or
             6961          (B) federal employer identification number;
             6962          (iii) the applicant's personal history, experience, education, and business record[, and];
             6963          (iv) if the applicant is a natural person, whether the applicant is 18 years of age or older;
             6964          (v) whether the applicant has committed an act that is a ground for denial, suspension, or
             6965      revocation as set forth in Section 31A-25-208 ; and
             6966          (vi) any other information as the commissioner reasonably requires.
             6967          (2) The commissioner may require documents reasonably necessary to verify the
             6968      information contained in the application.
             6969          [(b)] (3) [An applicant's social security number is a] The following are private [record]


             6970      records under Subsection 63-2-302 (1)(g)[.]:
             6971          [(2) Insurance adjusters' licenses issued under former Title 31 remain in effect until their
             6972      expiration date, but they are subject to any requirement or limitation generally imposed under this
             6973      title on similar licenses issued after July 1, 1986. Upon timely payment of the license continuation
             6974      fee under Section 31A-3-103 , the commissioner shall issue to adjusters licensed under the former
             6975      title new licenses conforming to the provisions of this title and rules adopted under it.]
             6976          (a) the applicant's social security number; and
             6977          (b) the applicant's federal employer identification number.
             6978          Section 167. Section 31A-26-203 is amended to read:
             6979           31A-26-203. Adjuster's license required.
             6980          (1) The commissioner shall issue a license to act as an independent adjuster or public
             6981      adjuster to any person who, as to the license classification applied for under Section 31A-26-204 ,
             6982      has:
             6983          [(1)] (a) satisfied the character requirements under Section 31A-26-205 ;
             6984          [(2)] (b) satisfied the applicable continuing education requirements under Section
             6985      31A-26-206 ;
             6986          [(3)] (c) satisfied the applicable examination requirements under Section 31A-26-207 ;
             6987          [(4)] (d) if a nonresident, complied with Section 31A-26-208 ; and
             6988          [(5)] (e) paid the applicable fees under Section 31A-3-103 .
             6989          (2) (a) This Subsection (2) applies to the following persons:
             6990          (i) an applicant for:
             6991          (A) an independent adjuster's license; or
             6992          (B) a public adjuster's license;
             6993          (ii) a licensed independent adjuster; or
             6994          (iii) a licensed public adjuster.
             6995          (b) A person described in Subsection (2)(a) shall report to the commissioner:
             6996          (i) any administrative action taken against the person:
             6997          (A) in another jurisdiction; or
             6998          (B) by another regulatory agency in this state; and
             6999          (ii) any criminal prosecution taken against the person in any jurisdiction.
             7000          (c) The report required by Subsection (2)(b) shall:


             7001          (i) be filed:
             7002          (A) at the time the person applies for a third party administrator's license; or
             7003          (B) within 30 days of the initiation of an action or prosecution described in Subsection
             7004      (2)(b); and
             7005          (ii) include a copy of the complaint or other relevant legal documents related to the action
             7006      or prosecution described in Subsection (2)(b).
             7007          (3) (a) The department may request concerning a person applying for an independent or
             7008      public adjuster's license:
             7009          (i) criminal background information maintained pursuant to Title 53, Chapter 10, Part 2,
             7010      from the Bureau of Criminal Identification; and
             7011          (ii) complete Federal Bureau of Investigation criminal background checks through the
             7012      national criminal history system.
             7013          (b) Information obtained by the department from the review of criminal history records
             7014      received under Subsection (3)(a) shall be used by the department for the purposes of:
             7015          (i) determining if a person satisfies the character requirements under Section 31A-26-205
             7016      for issuance or renewal of a license;
             7017          (ii) determining if a person has failed to maintain the character requirements under Section
             7018      31A-25-204 ; and
             7019          (iii) preventing persons who violate the federal Violent Crime Control and Law
             7020      Enforcement Act of 1994, 18 U.S.C. Secs. 1033 and 1034, from engaging in the business of
             7021      insurance in the state.
             7022          (c) If the department requests the criminal background information, the department shall:
             7023          (i) pay to the Department of Public Safety the costs incurred by the Department of Public
             7024      Safety in providing the department criminal background information under Subsection (3)(a)(i);
             7025          (ii) pay to the Federal Bureau of Investigation the costs incurred by the Federal Bureau of
             7026      Investigation in providing the department criminal background information under Subsection
             7027      (3)(a)(ii); and
             7028          (iii) charge the person applying for a license or for renewal of a license a fee equal to the
             7029      aggregate of Subsections (3)(c)(i) and (ii).
             7030          Section 168. Section 31A-26-204 is amended to read:
             7031           31A-26-204. License classifications.


             7032          [Licenses] A resident or nonresident license issued under this chapter shall be issued under
             7033      the classifications described under Subsections (1), (2), and (3). These classifications are intended
             7034      to describe the matters to be considered under any prerequisite education and examination required
             7035      of license applicants under Sections 31A-26-206 and 31A-26-207 .
             7036          (1) Independent adjuster license classifications include:
             7037          (a) [disability] accident and health insurance, including related service insurance under
             7038      Chapter 7 or 8;
             7039          (b) property and liability insurance, which includes:
             7040          (i) property insurance;
             7041          (ii) liability insurance;
             7042          (iii) surety bonds; and
             7043          (iv) policies containing combinations or variations of these coverages;
             7044          (c) service insurance;
             7045          (d) title insurance;
             7046          (e) credit insurance; and
             7047          (f) workers' compensation insurance.
             7048          (2) Public adjuster license classifications include:
             7049          (a) [disability] accident and health insurance, including related service insurance under
             7050      Chapter 7 or 8;
             7051          (b) property and liability insurance, which includes:
             7052          (i) property insurance;
             7053          (ii) liability insurance;
             7054          (iii) surety bonds; and
             7055          (iv) policies containing combinations or variations of these coverages;
             7056          (c) service insurance;
             7057          (d) title insurance;
             7058          (e) credit insurance; and
             7059          (f) workers' compensation insurance.
             7060          (3) The commissioner may by rule recognize other independent adjuster or public adjuster
             7061      license classifications as to other kinds of insurance not listed under Subsection (1). The
             7062      commissioner may also by rule create license classifications which grant only part of the authority


             7063      arising under another license class.
             7064          Section 169. Section 31A-26-206 is amended to read:
             7065           31A-26-206. Continuing education requirements.
             7066          (1) The commissioner shall by rule prescribe continuing education requirements for each
             7067      class of license under Section 31A-26-204 .
             7068          (2) (a) The commissioner shall impose continuing education requirements in accordance
             7069      with a two-year licensing period in which the licensee meets the requirements of this Subsection
             7070      (2).
             7071          (b) Except as provided in Subsection (2)(c), for a two-year licensing period described in
             7072      Subsection (2)(a) the commissioner shall require that the licensee for each line of authority held
             7073      by the licensee:
             7074          (i) receive six hours of continuing education; or
             7075          (ii) pass a line of authority continuing education examination.
             7076          (c) Notwithstanding Subsection (2)(b):
             7077          (i) the commissioner may not require continuing education for more than four lines of
             7078      authority held by the licensee;
             7079          (ii) the commissioner shall require:
             7080          (A) a minimum of:
             7081          (I) 12 hours of continuing education;
             7082          (II) passage of two line of authority continuing education examinations; or
             7083          (III) a combination of Subsection (2)(c)(ii)(A)(I) and (II);
             7084          (B) that the minimum continuing education requirement of Subsection (2)(c)(ii)(A)
             7085      include:
             7086          (I) at least six hours or one line of authority continuing education examination for each line
             7087      of authority held by the licensee not to exceed four lines of authority held by the licensee; and
             7088          (II) three hours of ethics training, which may be taken in place of three hours of the hours
             7089      required for a line of authority.
             7090          (d) (i) If a licensee completes the licensee's continuing education requirement without
             7091      taking a line of authority continuing education examination, the licensee shall complete at least 1/2
             7092      of the required hours through classroom hours of insurance-related instruction.
             7093          (ii) The hours not completed through classroom hours in accordance with Subsection


             7094      (2)(d)(i) may be obtained through:
             7095          (A) home study;
             7096          (B) video tape;
             7097          (C) experience credit; or
             7098          (D) other method provided by rule.
             7099          (e) (i) A licensee may obtain continuing education hours at any time during the two-year
             7100      licensing period.
             7101          (ii) The licensee may not take a line of authority continuing education examination more
             7102      than 90 calendar days before the date on which the licensee's license is renewed.
             7103          (f) The commissioner shall make rules for the content and procedures for line of authority
             7104      continuing education examinations.
             7105          (g) (i) Beginning May 3, 1999, a licensee is exempt from the continuing education
             7106      requirements of this section if:
             7107          (A) as of April 1, 1990, the licensee has completed 20 years of licensure in good standing;
             7108          (B) the licensee requests an exemption from the department; and
             7109          (C) the department approves the exemption.
             7110          (ii) If the department approves the exemption under Subsection (2)(g)(i), the licensee is
             7111      not required to apply again for the exemption.
             7112          (h) A licensee with a variable annuity line of authority is exempt from the requirement for
             7113      continuing education for that line of authority so long as:
             7114          (i) the National Association of Securities Dealers requires continuing education for
             7115      licensees having a securities license; and
             7116          (ii) the licensee complies with the National Association of Securities Dealers' continuing
             7117      education requirements for securities licensees.
             7118          (i) The commissioner shall by rule:
             7119          (i) publish a list of insurance professional designations whose continuing education
             7120      requirements can be used to meet the requirements for continuing education under Subsection
             7121      (2)(c); and
             7122          (ii) authorize professional adjuster associations to:
             7123          (A) offer qualified programs for all classes of licenses on a geographically accessible basis;
             7124      and


             7125          (B) collect reasonable fees for funding and administration of the continuing education
             7126      programs, subject to the review and approval of the commissioner.
             7127          (j) (i) The fees permitted under Subsection (2)(i) that are charged to fund and administer
             7128      a program shall reasonably relate to the costs of administering the program.
             7129          (ii) Nothing in this section shall prohibit a provider of continuing education programs or
             7130      courses from charging fees for attendance at courses offered for continuing education credit.
             7131          (iii) The fees permitted under Subsection (2)(i)(ii) that are charged for attendance at an
             7132      association program may be less for an association member, based on the member's affiliation
             7133      expense, but shall preserve the right of a nonmember to attend without affiliation.
             7134          (3) The requirements of this section apply only to licensees who are natural persons.
             7135          (4) The requirements of this section do not apply to members of the Utah State Bar.
             7136          (5) The commissioner shall designate courses that satisfy the requirements of this section,
             7137      including those presented by insurers.
             7138          (6) A nonresident adjuster is considered to have satisfied this state's continuing education
             7139      requirements if:
             7140          (a) the nonresident adjuster satisfies the nonresident producer's home state's continuing
             7141      education requirements for a licensed insurance adjuster; and
             7142          (b) on the same basis the nonresident adjuster's home state considers satisfaction of Utah's
             7143      continuing education requirements for a producer as satisfying the continuing education
             7144      requirements of the home state.
             7145          Section 170. Section 31A-26-207 is amended to read:
             7146           31A-26-207. Examination requirements.
             7147          (1) The commissioner may require applicants for any particular class of license under
             7148      Section 31A-26-204 to pass an examination as a requirement to receiving a license. The
             7149      examination shall reasonably relate to the specific license class for which it is prescribed. The
             7150      examinations may be administered by the commissioner or as specified by rule.
             7151          (2) The commissioner [may] shall waive the requirement of an examination for a
             7152      nonresident applicant who [has held a similar license in his home state for the two years
             7153      immediately preceding application in this state, but only if the applicant's state of residence has
             7154      imposed upon the applicant examination requirements which are substantially as rigorous as those
             7155      of this state.]:


             7156          (a) applies for an insurance adjuster license in this state;
             7157          (b) has been licensed for the same line of authority in another state; and
             7158          (c) (i) is licensed in the state described in Subsection (2)(b) at the time the applicant
             7159      applies for an insurance producer license in this state; or
             7160          (ii) if the application is received within 90 days of the cancellation of the applicant's
             7161      previous license:
             7162          (A) the prior state certifies that at the time of cancellation, the applicant was in good
             7163      standing in that state; or
             7164          (B) the state's producer database records maintained by the National Association of
             7165      Insurance Commissioners or the National Association of Insurance Commissioner's affiliates or
             7166      subsidiaries, indicates that the producer is or was licensed in good standing for the line of authority
             7167      requested.
             7168          (3) (a) To become a resident licensee in accordance with Sections 31A-26-202 and
             7169      31A-26-203 , a person licensed as an insurance producer in another state who moves to this state
             7170      shall make application within 90 days of establishing legal residence in this state.
             7171          (b) A person who becomes a resident licensee under Subsection (3)(a) may not be required
             7172      to meet prelicensing education or examination requirements to obtain any line of authority
             7173      previously held in the prior state unless:
             7174          (i) the prior state would require a prior resident of this state to meet the prior state's
             7175      prelicensing education or examination requirements to become a resident licensee; or
             7176          (ii) the commissioner imposes the requirements by rule.
             7177          [(3)] (4) The requirements of this section only apply to applicants who are natural persons.
             7178          [(4)] (5) The requirements of this section do not apply to members of the Utah State Bar.
             7179          Section 171. Section 31A-26-208 is amended to read:
             7180           31A-26-208. Nonresident jurisdictional agreement.
             7181          (1) (a) [Nonresident applicants for licenses under this chapter] If a nonresident license
             7182      applicant has a valid license from the nonresident license applicant's home state and the conditions
             7183      of Subsection (1)(b) are met, the commissioner shall:
             7184          (i) waive any license requirement for a license under this chapter; and
             7185          (ii) issue the nonresident license applicant a nonresident adjuster's license.
             7186          (b) Subsection (1)(a) applies if:


             7187          (i) the nonresident license applicant:
             7188          (A) is licensed as a resident in the nonresident license applicant's home state at the time
             7189      the nonresident license applicant applies for a nonresident adjuster license;
             7190          (B) has submitted the proper request for licensure;
             7191          (C) has submitted to the commissioner:
             7192          (I) the application for licensure that the nonresident license applicant submitted to the
             7193      applicant's home state; or
             7194          (II) a completed uniform application; and
             7195          (D) has paid the applicable fees under Section 31A-3-103 ;
             7196          (ii) the nonresident license applicant's license in the applicant's home state is in good
             7197      standing; and
             7198          (iii) the nonresident license applicant's home state awards nonresident adjuster licenses to
             7199      residents of this state on the same basis as this state awards licenses to residents of that home state.
             7200          (2) A nonresident applicant shall execute in a form acceptable to the commissioner an
             7201      agreement to be subject to the jurisdiction of the commissioner and courts of this state on any
             7202      matter related to [his] the adjuster's insurance activities in this state, on the basis of:
             7203          (a) service of process under Sections 31A-2-309 and 31A-2-310 ; or
             7204          (b) other service authorized under the Utah Rules of Civil Procedure or Section 78-27-25 .
             7205          (3) The commissioner may verify the third party administrator's licensing status through
             7206      the database maintained by:
             7207          (a) the National Association of Insurance Commissioners; or
             7208          (b) an affiliate or subsidiary of the National Association of Insurance Commissioners.
             7209          (4) The commissioner may not assess a greater fee for an insurance license or related
             7210      service to a person not residing in this state based solely on the fact that the person does not reside
             7211      in this state.
             7212          Section 172. Section 31A-26-209 is amended to read:
             7213           31A-26-209. Form and contents of license.
             7214          (1) Licenses issued under this chapter shall be in the form the commissioner prescribes and
             7215      shall set forth:
             7216          (a) the name, address, and telephone number of the licensee;
             7217          (b) the license classifications under Section 31A-26-204 ;


             7218          (c) the date of license issuance; and
             7219          (d) any other information the commissioner considers advisable.
             7220          (2) An adjuster doing business under any other name than the adjuster's legal name shall
             7221      notify the commissioner prior to using the assumed name in this state.
             7222          [(2)] (3) (a) An organization [acting] shall be licensed as an agency if the organization acts
             7223      as:
             7224          (i) an independent adjuster [shall be licensed under this chapter as an organization.]; or
             7225          (ii) a public adjuster.
             7226          (b) The [organization] agency license issued under Subsection (3)(a) shall set forth the
             7227      names of all natural persons licensed under this chapter who are authorized to act in those
             7228      capacities for the organization in this state.
             7229          (3) (a) So far as is practicable, the commissioner shall issue a single license to each
             7230      licensed adjuster for a single fee.
             7231          (b) For fee purposes, the less expensive license is [subsumed] included within the most
             7232      expensive license.
             7233          Section 173. Section 31A-26-213 is amended to read:
             7234           31A-26-213. Termination of license.
             7235          (1) A license issued under this chapter remains in force until:
             7236          (a) revoked, suspended, or limited under Subsection (2);
             7237          (b) lapsed under Subsection (3);
             7238          (c) surrendered to and accepted by the commissioner; or
             7239          (d) the licensee dies or is adjudicated incompetent as defined under Title 75, Chapter 5,
             7240      Part 3 or 4.
             7241          [(2) After a hearing, the commissioner may revoke, suspend, or limit in whole or in part
             7242      the license of any person licensed under this chapter whom the commissioner finds is unqualified
             7243      for his license or who has violated an insurance statute, valid rule under Subsection 31A-2-201 (3),
             7244      or a valid order under Subsection 31A-2-201 (4), or if the licensee's methods and practices in the
             7245      conduct of business endanger the legitimate interests of customers and the public. Every order
             7246      suspending a license issued under this chapter shall specify the period for which the suspension
             7247      is to be effective, but in no event may the period exceed 12 months.]
             7248          (2) After an adjudicative proceeding under Title 63, Chapter 46b, Administrative


             7249      Procedures Act, the commissioner may revoke, suspend for a specified period of 12 months or less,
             7250      or limit in whole or in part the license of any adjuster, found to:
             7251          (a) be unqualified for a license under Section 31A-26-203 ;
             7252          (b) have violated:
             7253          (i) an insurance statute;
             7254          (ii) a valid rule under Subsection 31A-2-201 (3); or
             7255          (iii) a valid order under Subsection 31A-2-201 (4);
             7256          (c) be insolvent, or the subject of receivership, conservatorship, rehabilitation, or other
             7257      delinquency proceedings in any state;
             7258          (d) fail to pay any final judgment rendered against it in this state within 60 days after the
             7259      judgment became final;
             7260          (e) fail to meet the same good faith obligations in claims settlement as that required of
             7261      admitted insurers;
             7262          (f) be affiliated with and under the same general management or interlocking directorate
             7263      or ownership as another adjuster which transacts business in this state without a license;
             7264          (g) refuse to be examined or to produce its accounts, records, and files for examination;
             7265          (h) have an officer who:
             7266          (i) refuses to give information with respect to the administrator's affairs; or
             7267          (ii) to perform any other legal obligation as to an examination;
             7268          (i) have provided incorrect, misleading, incomplete, or materially untrue information in
             7269      the license application;
             7270          (j) have violated any insurance law, valid rule, or valid order of another state's insurance
             7271      department;
             7272          (k) have obtained or attempted to obtain a license through misrepresentation or fraud;
             7273          (l) have improperly withheld, misappropriated, or converted any monies or properties
             7274      received in the course of doing insurance business;
             7275          (m) have intentionally misrepresented the terms of an actual or proposed insurance
             7276      contract or application for insurance;
             7277          (n) have been convicted of a felony;
             7278          (o) have admitted or been found to have committed any insurance unfair trade practice or
             7279      fraud;


             7280          (p) have used fraudulent, coercive, or dishonest practices in the conduct of business in this
             7281      state or elsewhere;
             7282          (q) have demonstrated incompetence, untrustworthiness, or financial irresponsibility in the
             7283      conduct of business in this state or elsewhere;
             7284          (r) have had an insurance license, or its equivalent, denied, suspended, or revoked in any
             7285      other state, province, district, or territory;
             7286          (s) have forged another's name to:
             7287          (i) an application for insurance; or
             7288          (ii) any document related to an insurance transaction;
             7289          (t) have improperly used notes or any other reference material to complete an examination
             7290      for an insurance license;
             7291          (u) have knowingly accepted insurance business from an individual who is not licensed;
             7292          (v) have failed to comply with an administrative or court order imposing a child support
             7293      obligation;
             7294          (w) have failed to:
             7295          (i) pay state income tax; or
             7296          (ii) comply with any administrative or court order directing payment of state income tax;
             7297          (x) have violated or permitted others to violate the federal Violent Crime Control and Law
             7298      Enforcement Act of 1994, 18 U.S.C. Secs. 1033 and 1034; or
             7299          (y) have engaged in methods and practices in the conduct of business which endanger the
             7300      legitimate interests of customers and the public.
             7301          (3) (a) Any license issued under this chapter lapses if the licensee fails to pay when due
             7302      any fee under Section 31A-3-103 .
             7303          (b) A licensee whose license lapses due to military service or some other extenuating
             7304      circumstance such as a long-term medical disability may request:
             7305          (i) reinstatement; and
             7306          (ii) a waiver of any of the following imposed for failure to comply with renewal
             7307      procedures:
             7308          (A) an examination requirement;
             7309          (B) a fine; or
             7310          (C) other sanction.


             7311          (c) The commissioner shall by rule prescribe the license renewal and reinstatement
             7312      procedures, in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
             7313          (4) A licensee under this chapter whose license is suspended, revoked, or lapsed, but who
             7314      continues to act as a licensee, is subject to the penalties for conducting an insurance business
             7315      without a license.
             7316          (5) An order revoking a license under Subsection (2) may specify a time not to exceed five
             7317      years within which the former licensee may not apply for a new license. If no time is specified,
             7318      the former licensee may not apply for a new license for five years without the express approval of
             7319      the commissioner.
             7320          (6) Any person whose license is suspended or revoked under Subsection (2) shall, when
             7321      the suspension ends or a new license is issued, pay all fees that would have been payable if the
             7322      license had not been suspended or revoked, unless the commissioner by order waives the payment
             7323      of the interim fees. If a new license is issued more than three years after the revocation of a similar
             7324      license, this subsection applies only to the fees that would have accrued during the three years
             7325      immediately following the revocation.
             7326          (7) The division shall promptly withhold, suspend, restrict, or reinstate the use of a license
             7327      issued under this part if so ordered by a court.
             7328          Section 174. Section 31A-26-215 is enacted to read:
             7329          31A-26-215. Temporary license -- Appointment of trustee for terminated licensee's
             7330      business.
             7331          (1) (a) The commissioner may issue a temporary insurance adjuster license:
             7332          (i) to a person listed in Subsection (1)(b):
             7333          (A) if the commissioner considers that the temporary license is necessary:
             7334          (I) for the servicing of an insurance business in the public interest; and
             7335          (II) to provide continued service to the insureds who are being serviced in a circumstance
             7336      described in Subsection (1)(b);
             7337          (B) for a period not to exceed 180 days; and
             7338          (C) without requiring an examination; or
             7339          (ii) in any other circumstance:
             7340          (A) if the commissioner considers the public interest will best be served by issuing the
             7341      temporary license;


             7342          (B) for a period not to exceed 180 days; and
             7343          (C) without requiring an examination.
             7344          (b) The commissioner may issue a temporary insurance producer license in accordance
             7345      with Subsection (1)(a) to:
             7346          (i) the surviving spouse or court-appointed personal representative of a licensed insurance
             7347      adjuster who dies or becomes mentally or physically disabled to allow adequate time for:
             7348          (A) the sale of the insurance business owned by the adjuster;
             7349          (B) recovery or return of the adjuster to the business; or
             7350          (C) the training and licensing of new personnel to operate the adjuster's business;
             7351          (ii) to a member or employee of a business entity licensed as an insurance adjuster upon
             7352      the death or disability of an individual designated in:
             7353          (A) the business entity application; or
             7354          (B) the license; or
             7355          (iii) the designee of a licensed insurance adjuster entering active service in the armed
             7356      forces of the United States of America.
             7357          (2) If a person's license is terminated under Section 31A-26-213 , the commissioner may
             7358      appoint a trustee to provide in the public interest continuing service to the insureds who procured
             7359      insurance through the person whose license is terminated:
             7360          (a) at the request of the person whose license is terminated; or
             7361          (b) upon the commissioner's own initiative.
             7362          (3) This section does not apply if the deceased or disabled adjuster has not owned or does
             7363      not own an ownership interest in the accounts and associated expiration lists that were previously
             7364      serviced by the adjuster.
             7365          (4) (a) A person issued a temporary license under Subsection (1) receives the license and
             7366      shall perform the duties under the license subject to the commissioner's authority to:
             7367          (i) require a temporary licensee to have a suitable sponsor who:
             7368          (A) is a licensed producer; and
             7369          (B) assumes responsibility for all acts of the temporary licensee; or
             7370          (ii) impose other requirements that are:
             7371          (A) designed to protect the insureds and the public; and
             7372          (B) similar to the condition described in Subsection (4)(a)(i).


             7373          (b) A trustee appointed under Subsection (2) shall receive the trustee's appointment and
             7374      perform the trustee's duties subject to the conditions listed in Subsections (4)(b)(i) through (xv).
             7375          (i) A trustee appointed under this section shall be licensed under this chapter to perform
             7376      the services required by the trustor's clients.
             7377          (ii) When possible, the commissioner shall appoint a trustee who is no longer actively
             7378      engaged on the trustee's own behalf in business as an adjuster.
             7379          (iii) The commissioner shall only select a person to act as trustee who is trustworthy and
             7380      competent to perform the necessary services.
             7381          (iv) If the deceased, disabled, or unlicenced person for whom the trustee is acting is an
             7382      associated adjuster, the insurers through or with which the former adjuster's business was
             7383      associated shall cooperate with the trustee in allowing the trustee to service the claims associated
             7384      with or through the insurer.
             7385          (v) The trustee shall abide by the terms of any agreement between the former adjuster and
             7386      the associated insurer, except that terms in those agreements terminating the agreement upon the
             7387      death, disability, or license termination of the former agent do not bar the trustee from continuing
             7388      to act under the agreement.
             7389          (vi) The commissioner shall set the trustee's compensation which:
             7390          (A) may be stated in terms of a percentage of commissions;
             7391          (B) shall be equitable; and
             7392          (C) paid exclusively from:
             7393          (I) the commissions generated by the former adjuster's accounts serviced by the trustee;
             7394      and
             7395          (II) other funds the former adjuster or the former adjuster's successor in interest agree to
             7396      pay.
             7397          (vii) The trustee has no special priority to commissions over the former adjuster's creditors.
             7398          (viii) The following may not be held liable for errors or omissions of the former adjuster
             7399      or the trustee:
             7400          (A) the commissioner; or
             7401          (B) the state.
             7402          (ix) The trustee may not be held liable for errors and omissions that were caused in any
             7403      material way by the negligence of the former adjuster.


             7404          (x) The trustee may be held liable for errors and omissions that arise solely from the
             7405      trustee's negligence.
             7406          (xi) The trustee's compensation level shall be sufficient to allow the trustee to purchase
             7407      errors and omissions coverage, if that coverage is not provided to the trustee by:
             7408          (A) the former adjuster; or
             7409          (B) the former adjuster's successor in interest.
             7410          (xii) It is a breach of the trustee's fiduciary duty to capture the accounts of trustor's clients,
             7411      either directly or indirectly.
             7412          (xiii) The trustee may not purchase the accounts or expiration lists of the former adjuster,
             7413      unless the commissioner expressly ratifies the terms of the sale.
             7414          (xiv) The commissioner may adopt rules that:
             7415          (A) further define the trustee's fiduciary duties; and
             7416          (B) explain how the trustee is to carry out the trustee's responsibilities.
             7417          (xv) The trust may be terminated by:
             7418          (A) the commissioner; or
             7419          (B) the person that requested the trust be established.
             7420          (c) A person described in Subsection (4)(b)(vi)(B) shall terminate the trust by sending
             7421      written notice to:
             7422          (i) the trustee; and
             7423          (ii) the commissioner.
             7424          (5) (a) The commissioner may by order limit the authority of any temporary licensee or
             7425      trustee in any way considered necessary to protect:
             7426          (i) persons being serviced; and
             7427          (ii) the public.
             7428          (b) The commissioner may by order revoke a temporary license or trustee's appointment
             7429      if the interest of persons being serviced or the public are endangered.
             7430          (c) A temporary license or trustee's appointment may not continue after the owner or
             7431      personal representative disposes of the business.
             7432          Section 175. Section 31A-26-302 is amended to read:
             7433           31A-26-302. Settlement of claims in credit life and accident and health insurance.
             7434          (1) The creditor shall promptly report all claims to the insurer or its designated claim


             7435      representative. The insurer shall maintain adequate claims files. All claims shall be settled as
             7436      soon as possible in accordance with the terms of the insurance contract.
             7437          (2) The insurer shall pay all claims either by draft drawn upon the insurer or by check of
             7438      the insurer to the order of the claimant to whom payment of the claim is due pursuant to the policy
             7439      provisions, or upon direction of that claimant to another.
             7440          (3) [No] A person other than the insurer or its designated claim representative may not
             7441      settle or adjust claims. The creditor may not be designated as a claims representative.
             7442          Section 176. Section 31A-27-311.5 is repealed and reenacted to read:
             7443           31A-27-311.5. Continuance of coverage -- Health maintenance organizations.
             7444          (1) As used in this section:
             7445          (a) "basic health care services" is as defined in Section 31A-8-101 ;
             7446          (b) "enrollee" is as defined in Section 31A-8-101 ;
             7447          (c) "health care" is as defined in Section 31A-1-301 ;
             7448          (d) "health maintenance organization" is as defined in Section 31A-8-101 ;
             7449          (e) "limited health plan" is as defined in Section 31A-8-101 ;
             7450          (f) (i) "managed care organization" means any entity licensed by, or holding a certificate
             7451      of authority from, the department to furnish health care services or health insurance;
             7452          (ii) "managed care organization" includes:
             7453          (A) a limited health plan;
             7454          (B) a health maintenance organization;
             7455          (C) a preferred provider organization;
             7456          (D) a fraternal benefit society; or
             7457          (E) any entity similar to an entity described in Subsections (1)(f)(ii)(A) through (D);
             7458          (iii) "managed care organization" does not include:
             7459          (A) an insurer or other person that is eligible for membership in a guaranty association
             7460      under Chapter 28;
             7461          (B) a mandatory state pooling plan;
             7462          (C) a mutual assessment company or any entity that operates on an assessment basis; or
             7463          (D) any entity similar to an entity described in Subsections (1)(f)(iii)(A) through (C);
             7464          (g) "participating provider" means a provider who, under a contract with a managed care
             7465      organization authorized under Section 31A-8-407 , has agreed to provide health care services to


             7466      enrollees with an expectation of receiving payment, directly or indirectly, from the managed care
             7467      organization, other than copayment;
             7468          (h) "participating provider contract" means the agreement between a participating provider
             7469      and a managed care organization authorized under Section 31A-8-407 ;
             7470          (i) "preferred provider" means a provider who agrees to provide health care services under
             7471      an agreement authorized under Subsection 31A-22-617 (1);
             7472          (j) "preferred provider contract" means the written agreement between a preferred provider
             7473      and a managed care organization authorized under Subsection 31A-22-617 (1);
             7474          (k) "preferred provider organization" means any person, other than an insurer licensed
             7475      under Chapter 7 or an individual who contracts to render professional or personal services that the
             7476      individual performs himself, that:
             7477          (i) furnishes at a minimum, through preferred providers, basic health care services to an
             7478      enrollee in return for prepaid periodic payments in an amount agreed to prior to the time during
             7479      which the health care may be furnished;
             7480          (ii) is obligated to the enrollee to arrange for the services described in Subsection (1)(k)(i);
             7481      and
             7482          (iii) permits the enrollee to obtain health care services from providers who are not
             7483      preferred providers;
             7484          (l) "provider" is as defined in Section 31A-8-101 ; and
             7485          (m) "uncovered expenditure" means the costs of health care services that are covered by
             7486      an organization for which an enrollee is liable in the event of the managed care organization's
             7487      insolvency.
             7488          (2) The rehabilitator or liquidator may take one or more of the actions described in
             7489      Subsections (2)(a) through (f) to assure continuation of health care coverage for enrollees of an
             7490      insolvent managed care organization.
             7491          (a) (i) Subject to Subsection (2)(a)(ii), a rehabilitator or liquidator may require a
             7492      participating provider and preferred provider of health care services to continue to provide the
             7493      health care services the provider is required to provide under the respective participating provider
             7494      contract or preferred provider contract until the later of:
             7495          (A) 90 days from the date of the filing of a petition for rehabilitation or the petition for
             7496      liquidation; or


             7497          (B) the date the term of the contract ends.
             7498          (ii) A requirement by the rehabilitator or liquidator under Subsection (2)(a)(i) that a
             7499      participating provider or preferred provider continue to provide health care services under a
             7500      provider's participating provider contract or preferred providers contract expires when health care
             7501      coverage for all enrollees of the insolvent managed care organization is obtained from another
             7502      managed care organization or insurer.
             7503          (b) (i) Subject to Subsection (2)(b)(ii), a rehabilitator or liquidator may reduce the fees a
             7504      participating provider or preferred provider is otherwise entitled to receive from the managed care
             7505      organization under its participating provider contract or preferred provider contract during the time
             7506      period in Subsection (2)(a)(i).
             7507          (ii) Notwithstanding Subsection (2)(b)(i):
             7508          (A) a rehabilitator or liquidator may not reduce a fee to less than 75% of the regular fee
             7509      set forth in the respective participating provider contract or preferred provider contract; and
             7510          (B) the enrollee shall continue to pay the same copayments, deductibles, and other
             7511      payments for services received from the participating provider or preferred provider that the
             7512      enrollee was required to pay before the date of filing of:
             7513          (I) the petition for rehabilitation; or
             7514          (II) the petition for liquidation.
             7515          (c) (i) If the conditions of Subsection (2)(b) are met, a participating provider or preferred
             7516      provider shall:
             7517          (A) accept the reduced payment as payment in full; and
             7518          (B) relinquish the right to collect additional amounts from the insolvent managed care
             7519      organization's enrollee.
             7520          (ii) Subsection (2)(b) and Subsections (2)(c)(i)(A) and (B) shall apply to the fees paid to
             7521      a provider who agrees to provide health care services to an enrollee but is not a preferred or
             7522      participating provider.
             7523          (d) If the managed care organization is a health maintenance organization, Subsections
             7524      (2)(d)(i) through (v) apply.
             7525          (i) Subject to Subsections (2)(d)(ii) and (iv), upon notification from and subject to the
             7526      direction of the rehabilitator or liquidator of a health maintenance organization licensed under
             7527      Chapter 8, a solvent health maintenance organization licensed under Chapter 8 and operating


             7528      within a portion of the insolvent health maintenance organization's service area shall extend to the
             7529      enrollees all rights, privileges, and obligations of being an enrollee in the accepting health
             7530      maintenance organization, except that the accepting health maintenance organization shall give
             7531      credit to an enrollee for any waiting period already satisfied under the provisions of the enrollee's
             7532      contract with the insolvent health maintenance organization.
             7533          (ii) A health maintenance organization accepting an enrollee of an insolvent health
             7534      maintenance organization under Subsection (2)(d)(i) shall charge the enrollee the premiums
             7535      applicable to the existing business of the accepting health maintenance organization.
             7536          (iii) A health maintenance organization's obligation to accept an enrollee under Subsection
             7537      (2)(d)(i) is limited in number to its pro rata share of all health maintenance organization enrollees
             7538      in this state, as determined after excluding the enrollees of the insolvent insurer.
             7539          (iv) The rehabilitator or liquidator of an insolvent health maintenance organization shall
             7540      take those measures that are possible to ensure that no health maintenance organization is required
             7541      to accept more than its pro rata share of the adverse risk represented by the enrollees of the
             7542      insolvent health maintenance organization. As long as the methodology used by the rehabilitator
             7543      or liquidator to assign an enrollee is one which can be expected to produce a reasonably equitable
             7544      distribution of adverse risk, that methodology and its results are acceptable under this Subsection
             7545      (2)(d)(iv).
             7546          (v) (A) Notwithstanding Section 31A-27-311 , the rehabilitator or liquidator may require
             7547      all solvent health maintenance organizations to pay for the covered claims incurred by the enrollees
             7548      of the insolvent health maintenance organization.
             7549          (B) As determined by the rehabilitator or liquidator, payments required under this
             7550      Subsection (2)(d)(v) may:
             7551          (I) begin as of the filing of the petition for reorganization or the petition for liquidation;
             7552      and
             7553          (II) continue for a maximum period through the time all enrollees are assigned pursuant
             7554      to this section.
             7555          (C) If the rehabilitator or liquidator makes an assessment under this Subsection (2)(d)(v),
             7556      the rehabilitator or liquidator shall assess each solvent health maintenance organization its pro rata
             7557      share of the total assessment based upon its premiums from the previous calendar year.
             7558          (e) A rehabilitator or liquidator may transfer, through sale, or otherwise, the group and


             7559      individual health care obligations of the insolvent managed care organization to other managed
             7560      care organizations or other insurers, if those other managed care organizations and other insurers
             7561      are licensed or have a certificate of authority to provide the same health care services in this state
             7562      that the insolvent managed care organization has.
             7563          (i) The rehabilitator or liquidator may combine group and individual health care
             7564      obligations of the insolvent managed care organization in any manner the rehabilitator or liquidator
             7565      considers best to provide for continuous health care coverage for the maximum number of
             7566      enrollees of the insolvent managed care organization.
             7567          (ii) If the terms of a proposed transfer of the same combination of group and individual
             7568      policy obligations to more than one other managed care organization or insurer are otherwise
             7569      equal, the rehabilitator or liquidator shall give preference to the transfer of the group and individual
             7570      policy obligations of an insolvent managed care organization as follows:
             7571          (A) from one category of managed care organization to another managed care organization
             7572      of the same category, as follows:
             7573          (I) from a limited health plan to a limited health plan;
             7574          (II) from a health maintenance organization to a health maintenance organization;
             7575          (III) from a preferred provider organization to a preferred provider organization;
             7576          (IV) from a fraternal benefit society to a fraternal benefit society; and
             7577          (V) from any entity similar to any of the above to a category that is similar;
             7578          (B) from one category of managed care organization to another managed care organization,
             7579      regardless of the category of the transferee managed care organization; and
             7580          (C) from a managed care organization to a nonmanaged care provider of health care
             7581      coverage, including insurers.
             7582          (f) A rehabilitator or liquidator may use the insolvent managed care organization's required
             7583      capital or permanent surplus, and compulsory surplus, to continue to provide coverage for the
             7584      insolvent managed care organization's enrollees, including paying uncovered expenditures.
             7585          Section 177. Section 31A-28-102 is amended to read:
             7586           31A-28-102. Purpose.
             7587          (1) The purpose of this part is to protect, subject to certain limitations, the persons
             7588      specified in Subsection 31A-28-103 (1) against failure in the performance of contractual
             7589      obligations, under the life and [disability] accident and health insurance policies and annuity


             7590      contracts specified in Subsection 31A-28-103 (2), because of the impairment or insolvency of the
             7591      member insurer that issued the policies or contracts.
             7592          (2) To provide the protection described in Subsection (1), the Utah Life and Disability
             7593      Insurance Guaranty Association, which currently exists, is continued in order to pay benefits and
             7594      to continue coverages as limited in this part, and members of the association are subject to
             7595      assessment to provide funds to carry out the purpose of this part.
             7596          Section 178. Section 31A-28-103 is amended to read:
             7597           31A-28-103. Coverage and limitations.
             7598          (1) This part provides coverage for the policies and contracts specified in Subsection (2)
             7599      to persons who are:
             7600          (a) beneficiaries, assignees, or payees of the persons covered under Subsection (1)(b),
             7601      regardless of where they reside, except for nonresident certificate holders under group policies or
             7602      contracts;
             7603          (b) owners of or certificate holders under such policies or contracts; or, in the case of
             7604      unallocated annuity contracts, to the persons who are the contract holders, and who are:
             7605          (i) residents of Utah; or
             7606          (ii) not residents of Utah, but only under the following conditions:
             7607          (A) the insurers which issued the policies or contracts are domiciled in this state;
             7608          (B) the insurers never held a license or certificate of authority in the states in which the
             7609      persons reside;
             7610          (C) the states have associations similar to the association created by this chapter; and
             7611          (D) the persons are not eligible for coverage by the associations described in Subsection
             7612      (1)(b)(ii)(C).
             7613          (2) (a) Except as otherwise limited by this part, this part provides coverage to the persons
             7614      specified in Subsection (1) for direct, nongroup life, [disability] accident and health, annuity and
             7615      supplemental policies or contracts, for certificates under direct group policies and contracts, and
             7616      for unallocated annuity contracts issued by member insurers. Annuity contracts and certificates
             7617      under group annuity contracts include guaranteed investment contracts, deposit administration
             7618      contracts, unallocated funding agreements, structured settlement agreements, lottery contracts, and
             7619      any immediate or deferred annuity contracts.
             7620          (b) This part does not provide coverage for:


             7621          (i) any portion of a policy or contract not guaranteed by the insurer, or under which the risk
             7622      is borne by the policy or contract holder;
             7623          (ii) any policy or contract of reinsurance, unless assumption certificates have been issued;
             7624          (iii) any portion of a policy or contract to the extent that the rate of interest on which it is
             7625      based:
             7626          (A) averaged over the period of four years prior to the date on which the association
             7627      becomes obligated with respect to the policy or contract, exceeds a rate of interest determined by
             7628      subtracting two percentage points from Moody's Corporate Bond Yield Average averaged for that
             7629      same four-year period or for the corresponding lesser period if the policy or contract was issued
             7630      less than four years before the association became obligated; and
             7631          (B) on or after the date on which the association becomes obligated with respect to the
             7632      policy or contract, exceeds the rate of interest determined by subtracting three percentage points
             7633      from Moody's Corporate Bond Yield Average as most recently available;
             7634          (iv) any plan or program of an employer, association, or similar entity to provide life,
             7635      [disability] accident and health, or annuity benefits to its employees or members to the extent that
             7636      the plan or program is self-funded or uninsured, including benefits payable by an employer,
             7637      association, or similar entity under:
             7638          (A) a multiple employer welfare arrangement as defined in Section 514 of the Employee
             7639      Retirement Income Security Act of 1974, as amended;
             7640          (B) a minimum premium group insurance plan;
             7641          (C) a stop-loss group insurance plan; or
             7642          (D) an administrative services only contract;
             7643          (v) any portion of a policy or contract to the extent that it provides dividends or experience
             7644      rating credits, or provides that any fees or allowances be paid to any person, including the policy
             7645      or contract holder, in connection with the service to or administration of the policy or contract;
             7646          (vi) any policy or contract issued in this state by a member insurer at a time when it was
             7647      not licensed or did not have a certificate of authority to issue the policy or contract in this state;
             7648          (vii) any unallocated annuity contract issued to an employee benefit plan protected under
             7649      the federal Pension Benefit Guaranty Corporation; and
             7650          (viii) any portion of any unallocated annuity contract which is not issued to or in
             7651      connection with a specific employee, union, or association of natural persons benefit plan or a


             7652      government lottery.
             7653          (c) The benefits for which the association may become liable shall in no event exceed the
             7654      lesser of:
             7655          (i) the contractual obligations for which the insurer is liable or would have been liable if
             7656      it were not an impaired or insolvent insurer; or
             7657          (ii) (A) with respect to any one life, regardless of the number of policies or contracts:
             7658          (I) $300,000 in life insurance death benefits, but not more than $100,000 in net cash
             7659      surrender and net cash withdrawal values for life insurance;
             7660          (II) $100,000 in [disability] accident and health insurance benefits, including any net cash
             7661      surrender and net cash withdrawal values;
             7662          (III) $100,000 in the present value of annuity benefits, including net cash surrender and
             7663      net cash withdrawal values;
             7664          (B) with respect to each individual participating in a governmental retirement plan
             7665      established under Section 401(k), 403(b), or 457 of the Internal Revenue Code covered by an
             7666      unallocated annuity contract or the beneficiaries of each such individual if deceased, in the
             7667      aggregate, $100,000 in present value of annuity benefits, including net cash surrender and net cash
             7668      withdrawal values;
             7669          (C) however, in no event shall the association be liable to expend more than $300,000 in
             7670      the aggregate with respect to any one individual under Subsections (2)(c)(ii)(A) and (ii)(B);
             7671          (iii) with respect to any one contract holder covered by any unallocated annuity contract
             7672      not included in Subsection (2)(c)(ii)(B), $5,000,000 in benefits, irrespective of the number of
             7673      contracts held by that contract holder.
             7674          Section 179. Section 31A-28-106 is amended to read:
             7675           31A-28-106. Continuation of the association.
             7676          (1) There is continued under this chapter the nonprofit legal entity known as the Utah Life
             7677      and Disability Insurance Guaranty Association created under former provisions of this title. All
             7678      member insurers shall be and remain members of the association as a condition of their authority
             7679      to transact business in this state. The association shall perform its functions under the plan of
             7680      operation established and approved under Section 31A-28-110 and shall exercise its powers
             7681      through a board of directors under the provisions of Section 31A-28-107 . For purposes of
             7682      administration and assessment the association shall maintain two accounts:


             7683          (a) the life and annuity account, which includes the following subaccounts:
             7684          (i) Life Insurance Account;
             7685          (ii) Annuity Account; and
             7686          (iii) Unallocated Annuity Account, which includes contracts qualified under Sections
             7687      401(k), 403(b), or 457 of the Internal Revenue Code; and
             7688          (b) the [disability] accident and health insurance account.
             7689          (2) The association shall come under the immediate supervision of the commissioner and
             7690      shall be subject to the applicable provisions of the insurance laws of this state. Meetings or records
             7691      of the association may be opened to the public upon majority vote of the board of directors of the
             7692      association.
             7693          Section 180. Section 31A-28-108 is amended to read:
             7694           31A-28-108. Powers and duties of the association.
             7695          (1) If a member insurer is an impaired domestic insurer, the association in its discretion
             7696      and subject to any conditions imposed by the association that do not impair the contractual
             7697      obligations of the impaired insurer that are approved by the commissioner, and also by the
             7698      impaired insurer, except in cases of court-ordered conservation or rehabilitation, may:
             7699          (a) guarantee, assume, or reinsure, or cause to be guaranteed, assumed, or reinsured, any
             7700      or all of the policies or contracts of the impaired insurer;
             7701          (b) provide the necessary monies, pledges, notes, guarantees or other means to effectuate
             7702      Subsection (1)(a) and assure payment of the contractual obligations of the impaired insurer
             7703      pending action under Subsection (1)(a); or
             7704          (c) loan money to the impaired insurer.
             7705          (2) (a) If a member insurer is an impaired insurer, whether domestic, foreign, or alien, and
             7706      the insurer is not paying claims timely, the association shall in its discretion and subject to the
             7707      preconditions specified in Subsection (2)(b), either:
             7708          (i) take any of the actions specified in Subsection (1), subject to the conditions specified
             7709      in Subsection (1); or
             7710          (ii) provide substitute benefits in lieu of the contractual obligations of the impaired insurer
             7711      solely for [disability] accident and health claims, periodic annuity benefit payments, death benefits,
             7712      supplemental benefits, and cash withdrawals for policy or contract owners who petition for such
             7713      benefits under claims of emergency or hardship in accordance with the standards proposed by the


             7714      association and approved by the commissioner.
             7715          (b) The association is subject to the requirements of Subsection (2)(a) only if:
             7716          (i) the laws of the impaired insurer's state of domicile provide that until all payments of,
             7717      or an account of, the impaired insurer's contractual obligations by all guaranty associations, along
             7718      with all expenses of the obligation and interest on all such payments and expenses, have been
             7719      repaid to the guaranty associations or a plan of repayment by the impaired insurer has been
             7720      approved by the guaranty associations:
             7721          (A) the delinquency proceeding shall not be dismissed;
             7722          (B) neither the impaired insurer nor its assets shall be returned to the control of its
             7723      shareholders or private management;
             7724          (C) it shall not be permitted to solicit or accept new business or have any suspended or
             7725      revoked license restored; and
             7726          (ii) (A) if the impaired insurer is a domestic insurer, it has been placed under an order of
             7727      rehabilitation by a court of competent jurisdiction in this state; or
             7728          (B) if the impaired insurer is a foreign or alien insurer:
             7729          (I) it has been prohibited from soliciting or accepting new business in this state;
             7730          (II) its certificate of authority has been suspended or revoked in this state; and
             7731          (III) a petition for rehabilitation or liquidation has been filed in a court of competent
             7732      jurisdiction in its state of domicile by the commissioner of the state.
             7733          (3) If a member insurer is an insolvent insurer, the association in its discretion shall either:
             7734          (a) (i) guaranty, assume, or reinsure, or cause to be guaranteed, assumed, or reinsured, the
             7735      policies or contracts of the insolvent insurer; or
             7736          (ii) assure payment of the contractual obligations of the insolvent insurer; and
             7737          (iii) provide such monies, pledges, guarantees, or other means as are reasonably necessary
             7738      to discharge such duties; or
             7739          (b) with respect only to [disability] accident and health insurance policies, provide benefits
             7740      and coverages in accordance with Subsection (4).
             7741          (4) When proceeding under Subsections (2)(a)(ii) or (3)(b), with respect only to [disability]
             7742      accident and health insurance policies, the association shall:
             7743          (a) assure payment of benefits for premiums identical to the premiums and benefits, except
             7744      for terms of conversion and renewability, that would have been payable under the policies of the


             7745      insolvent insurer, for claims incurred:
             7746          (i) with respect to group policies, not later than the earlier of the next renewal date under
             7747      the policies or contracts or 45 days, but in no event less than 30 days, after the date on which the
             7748      association becomes obligated with respect to the policies;
             7749          (ii) with respect to individual policies, not later than the earlier of the next renewal date,
             7750      if any, under the policies or one year, but in no event less than 30 days, from the date on which the
             7751      association becomes obligated with respect to the policies;
             7752          (b) make diligent efforts to provide 30 days' notice of the termination of the benefits
             7753      provided to all known insureds, or group policyholders with respect to group policies;
             7754          (c) make available substitute coverage on an individual basis, in accordance with the
             7755      provisions of Subsection (4)(d), to each known insured or owner under an individual policy, and
             7756      to each individual formerly insured under a group policy who is not eligible for replacement group
             7757      coverage, if the insured had a right under law or the terminated policy to convert coverage to
             7758      individual coverage or to continue an individual policy in force until a specified age or for a
             7759      specified time during which the insurer had no right unilaterally to make changes in any provision
             7760      of the policy or had a right only to make changes in premium by class.
             7761          (d) (i) In providing the substitute coverage required under Subsection (4)(c), the
             7762      association may offer either to reissue the terminated coverage or to issue an alternative policy.
             7763          (ii) Alternate or reissued policies shall be offered without requiring evidence of
             7764      insurability, and shall not provide for any waiting period or exclusion that would not have applied
             7765      under the terminated policy.
             7766          (iii) The association may reinsure any alternative or reissued policy.
             7767          (e) (i) Alternative policies adopted by the association shall be subject to the approval of
             7768      the commissioner. The association may adopt alternative policies of various types for future
             7769      issuance without regard to any particular impairment or insolvency.
             7770          (ii) Alternative policies shall contain at least the minimum statutory provisions required
             7771      in this state and provide benefits that are not unreasonable in relation to the premium charged. The
             7772      association shall set the premium in accordance with its table of adopted rates. The premium shall
             7773      reflect the amount of insurance to be provided and the age and class of risk of each insured. For
             7774      alternative policies issued to insureds under individual policies of the impaired or insolvent
             7775      insurer, age shall be determined in accordance with the original policy provisions and class of risk


             7776      shall be the class of risk under the original policy. For alternative policies issued to individuals
             7777      insured under a group policy, age and class of risk shall be determined by the association in
             7778      accordance with the alternative policy provisions and risk classification standards approved by the
             7779      commissioner. However, the premium may not reflect any changes in the health of the insured
             7780      after the original policy was last underwritten.
             7781          (iii) Any alternative policy issued by the association shall provide coverage of a type
             7782      similar to that of the policy issued by the impaired or insolvent insurer, as determined by the
             7783      association.
             7784          (f) If the association elects to reissue terminated coverage at a premium rate different from
             7785      that charged under the terminated policy, the premium shall be set by the association in accordance
             7786      with the amount of insurance provided and the age and class of risk, subject to the approval of the
             7787      commissioner or by a court of competent jurisdiction.
             7788          (g) The association's obligations with respect to coverage under any policy of the impaired
             7789      or insolvent insurer or under any reissued or alternative policy shall cease on the date the coverage
             7790      or policy is replaced by another similar policy by the policyholder, the insured, or the association.
             7791          (h) With respect to claims unpaid as of the date of insolvency and claims incurred during
             7792      the period defined in Subsection (4)(a), a provider of health care services, by accepting a payment
             7793      from the association upon a claim of the provider against an insured whose health care insurer is
             7794      an insolvent member insurer, agrees to forgive the insured of 20% of the debt which otherwise
             7795      would be paid by the insurer had it not been insolvent, subject to a maximum of $4,000 being
             7796      required to be forgiven by any one provider as to each claimant. The obligations of solvent
             7797      insurers to pay all or part of the covered claim are not diminished by the forgiveness provided for
             7798      in this section.
             7799          (5) When proceeding under Subsection (2)(a)(ii) or (3) with respect to any policy or
             7800      contract carrying guaranteed minimum interest rates, the association shall assure the payment or
             7801      crediting of a rate of interest consistent with Subsection 31A-28-103 (2)(b)(iii).
             7802          (6) Nonpayment of premiums within 31 days after the date required under the terms of any
             7803      guaranteed, assumed, alternative, or reissued policy or contract or substitute coverage shall
             7804      terminate the association's obligations under the policy or coverage under this chapter with respect
             7805      to the policy or coverage, except with respect to any claims incurred or any net cash surrender
             7806      value which may be due in accordance with the provisions of this chapter.


             7807          (7) Premiums due for coverage after entry of an order of liquidation of an insolvent insurer
             7808      shall belong to and be payable at the direction of the association, and the association shall be liable
             7809      for unearned premiums due to policy or contract owners of the insurer after the entry of the order.
             7810          (8) The protection provided by this chapter does not apply if any guaranty protection is
             7811      provided to residents of this state by laws of the domiciliary state or jurisdiction of the impaired
             7812      or insolvent insurer other than this state.
             7813          (9) In carrying out its duties under this subsection and Subsections (2) and (3), and subject
             7814      to approval by the court, the association may:
             7815          (a) impose permanent policy or contract liens in connection with any guarantee,
             7816      assumption, or reinsurance agreement, if the association finds that the amounts which can be
             7817      assessed under this chapter are less than the amounts needed to assure full and prompt performance
             7818      of the association's duties under this chapter, or that the economic or financial conditions as they
             7819      affect member insurers are sufficiently adverse to render the imposition of the permanent policy
             7820      or contract liens to be in the public interest;
             7821          (b) impose temporary moratoriums or liens on payments of cash values and policy loans,
             7822      or any other right to withdraw funds held in conjunction with policies or contracts, in addition to
             7823      any contractual provisions for deferral of cash or policy loan value.
             7824          (10) If the association fails to act within a reasonable period of time as provided in
             7825      Subsections (2)(a)(ii), (3), and (4), the commissioner shall have the powers and duties of the
             7826      association under this chapter with respect to impaired or insolvent insurers.
             7827          (11) The association may render assistance and advice to the commissioner, upon his
             7828      request, concerning rehabilitation, payment of claims, continuance of coverage, or the performance
             7829      of other contractual obligations of any impaired or insolvent insurer.
             7830          (12) The association has standing to appear before any court in this state with jurisdiction
             7831      over an impaired or insolvent insurer concerning which the association is or may become obligated
             7832      under this chapter. Standing extends to all matters germane to the powers and duties of the
             7833      association, including proposals for reinsuring, modifying, or guaranteeing the policies or contracts
             7834      of the impaired or insolvent insurer and the determination of the policies or contracts and
             7835      contractual obligations. The association also has the right to appear or intervene before a court in
             7836      another state with jurisdiction over an impaired or insolvent insurer for which the association is
             7837      or may become obligated or with jurisdiction over a third party against whom the association may


             7838      have rights through subrogation of the insurer's policyholders.
             7839          (13) (a) Any person receiving benefits under this chapter shall be considered to have
             7840      assigned the rights under, and any causes of action relating to the covered policy or contract to the
             7841      association to the extent of the benefits received because of this chapter, whether the benefits are
             7842      payments of, or on account of, contractual obligations, continuation of coverage, or provision of
             7843      substitute or alternative coverages. The association may require an assignment to it of these rights
             7844      and causes of action by any payee, policy or contract owner, beneficiary, insured, or annuitant as
             7845      a condition precedent to the receipt of any right or benefits conferred by this chapter upon that
             7846      person.
             7847          (b) The subrogation rights obtained by the association under this subsection become third
             7848      class claims under Section 31A-27-335 .
             7849          (c) In addition to Subsections (13)(a) and (b), the association has all common law rights
             7850      of subrogation and any other equitable or legal remedy which would have been available to the
             7851      impaired or insolvent insurer or holder of a policy or contract with respect to the policy or contract.
             7852          (14) The association may:
             7853          (a) enter into contracts which are necessary or proper to carry out the provisions and
             7854      purposes of this chapter;
             7855          (b) sue or be sued, including taking any legal actions necessary or proper to recover any
             7856      unpaid assessments under Section 31A-28-109 and to settle claims or potential claims against it;
             7857          (c) borrow money to effect the purposes of this chapter, and any notes or other evidence
             7858      or indebtedness of the association not in default shall be legal investments for domestic insurers
             7859      and may be carried as admitted assets;
             7860          (d) employ or retain necessary staff members to handle the financial transactions of the
             7861      association, and to perform other functions as become necessary or proper under this chapter;
             7862          (e) take necessary legal action to avoid payment of improper claims;
             7863          (f) exercise, for the purposes of this chapter and to the extent approved by the
             7864      commissioner, the powers of a domestic life or health insurer, but in no case may the association
             7865      issue insurance policies or annuity contracts other than those issued to perform its obligation under
             7866      this chapter; or
             7867          (g) act as a special deputy liquidator if appointed by the commissioner.
             7868          (15) The association may join an organization of one or more other state associations of


             7869      similar purposes to further the purposes and administer the powers and duties of the association.
             7870          Section 181. Section 31A-28-109 is amended to read:
             7871           31A-28-109. Assessments.
             7872          (1) For the purpose of providing the funds necessary to carry out the powers and duties of
             7873      the association, the board of directors shall assess the member insurers, separately for each
             7874      account, at the time and for the amounts that the board finds necessary. Assessments are due not
             7875      less than 30 days after prior written notice to the member insurers. Class B assessments, described
             7876      in Subsection (2)(b), shall accrue interest at 10% per annum on and after the due date.
             7877          (2) There are two classes of assessment:
             7878          (a) Class A assessments shall be made for the purpose of meeting administrative and legal
             7879      costs and other expenses and examinations conducted under the authority of Subsection
             7880      31A-28-112 (5). Class A assessments may be made whether or not related to a particular impaired
             7881      or insolvent insurer.
             7882          (b) Class B assessments shall be made to the extent necessary to carry out the powers and
             7883      duties of the association under Section 31A-28-108 with regard to an impaired or an insolvent
             7884      insurer.
             7885          (3) (a) The amount of any Class A assessment shall be determined by the board and may
             7886      be made on a pro rata or non-pro rata basis. If the assessment is pro rata, the board may credit the
             7887      assessment against future Class B assessments. A non-pro rata assessment may not exceed $150
             7888      per member insurer in any one calendar year.
             7889          (b) The amount of any Class B assessment shall be allocated for assessment purposes
             7890      among the accounts pursuant to an allocation formula which may be based on the premiums or
             7891      reserves of the impaired or insolvent insurer or based on any other standard determined by the
             7892      board in its sole discretion to be fair and reasonable under the circumstances.
             7893          (c) (i) Class B assessments against member insurers for each account and subaccount shall
             7894      be in the proportion that the premiums received on business in this state by each assessed member
             7895      insurer bears to the premiums received on business in this state for the same calendar years by all
             7896      assessed member insurers.
             7897          (ii) "Premiums received" is based on policies or contracts covered by each account for the
             7898      three most recent calendar years for which information is available, which precede the year in
             7899      which the insurer became impaired or insolvent.


             7900          (d) Assessments for funds to meet the requirements of the association with respect to an
             7901      impaired or insolvent insurer may not be made until necessary to implement the purposes of this
             7902      chapter. Classification of assessments under Subsection (3)(b) and computation of assessments
             7903      under this Subsection (3) shall be made with a reasonable degree of accuracy, recognizing that
             7904      exact determinations may not always be possible.
             7905          (4) The association may abate or defer, in whole or in part, the assessment of a member
             7906      insurer if, in the opinion of the board, payment of the assessment would endanger the ability of the
             7907      member insurer to fulfill its contractual obligations. In the event an assessment against a member
             7908      insurer is abated or deferred in whole or in part, the amount by which the assessment is abated or
             7909      deferred may be assessed against the other member insurers in a manner consistent with the basis
             7910      for assessments set forth in this section.
             7911          (5) (a) The total of all assessments upon a member insurer for the life and annuity account,
             7912      and for each subaccount, may not in any one calendar year exceed 2% and the [disability] accident
             7913      and health account may not in any one calendar year exceed 2% of the insurer's yearly average
             7914      premiums received in this state on the policies and contracts covered by the account during the
             7915      three calendar years preceding the year in which the insurer became an impaired or insolvent
             7916      insurer. If the maximum assessment, together with the other assets of the association in any
             7917      account, does not provide in any one year in either account an amount sufficient to carry out the
             7918      responsibilities of the association, the necessary additional funds shall be assessed as soon as
             7919      permitted by this chapter.
             7920          (b) The board may provide in the plan of operation a method of allocating funds among
             7921      claims, whether relating to one or more impaired or insolvent insurers, when the maximum
             7922      assessment will be insufficient to cover anticipated claims.
             7923          (c) If a 1% assessment for any subaccount of the life and annuity account in any one year
             7924      does not provide an amount sufficient to carry out the responsibilities of the association, the board
             7925      shall assess all subaccounts of the life and annuity account for the necessary additional amount
             7926      pursuant to Subsection (3)(b), subject to the maximum stated in Subsection (5)(a).
             7927          (6) The board may, by an equitable method established in the plan of operation, refund to
             7928      member insurers in proportion to the contribution of each insurer to that account the amount by
             7929      which the assets of the account exceed the amount the board finds is necessary to carry out during
             7930      the coming year the obligations of the association with regard to that account, including assets


             7931      accruing from assignment, subrogation, net realized gains, and income from investments. A
             7932      reasonable amount may be retained in any account to provide funds for the continuing expenses
             7933      of the association and for future losses.
             7934          (7) It shall be proper for any member insurer, in determining its premium rates and
             7935      policyowner dividends as to any kind of insurance within the scope of this chapter, to consider the
             7936      amount reasonably necessary to meet its assessment obligations under this chapter.
             7937          (8) The association shall issue to each insurer paying an assessment under this chapter,
             7938      other than a Class A assessment, a certificate of contribution, in a form approved by the
             7939      commissioner, for the amount of the assessment so paid. All outstanding certificates shall be of
             7940      equal dignity and priority without reference to amounts or dates of issue. A certificate of
             7941      contribution may be shown by the insurer in its financial statement as an asset in such form and
             7942      for such amount, if any, and period of time as the commissioner may approve.
             7943          Section 182. Section 31A-28-202 is amended to read:
             7944           31A-28-202. Scope.
             7945          This part applies to protect resident policyowners and insureds under all types of direct
             7946      insurance, except:
             7947          (1) life[,];
             7948          (2) title[,];
             7949          (3) surety[, disability,];
             7950          (4) accident and health;
             7951          (5) credit, [(]including mortgage guarantee[),];
             7952          (6) ocean marine insurance[,];
             7953          (7) insurance of warranties or service contracts[,];
             7954          (8) financial guarantee[,]; and
             7955          (9) all insurance coverages guaranteed by the United States Government.
             7956          Section 183. Section 31A-29-103 is amended to read:
             7957           31A-29-103. Definitions.
             7958          As used in this chapter:
             7959          (1) "Board" means the board of directors of the pool created in Section 31A-29-104 .
             7960          (2) "Health care facility" means any entity providing health care services which is licensed
             7961      under Title 26, Chapter 21.


             7962          (3) "Health care provider" has the same meaning as provided in Section 78-14-3 .
             7963          (4) "Health care services" means any service or product used in furnishing to any
             7964      individual medical care or hospitalization, or incidental to furnishing medical care or
             7965      hospitalization, and any other service or product furnished for the purpose of preventing,
             7966      alleviating, curing, or healing human illness or injury.
             7967          (5) (a) "Health insurance" means any:
             7968          (i) hospital and medical expense-incurred policy;
             7969          (ii) nonprofit health care service plan contract; and
             7970          (iii) health maintenance organization subscriber contract.
             7971          (b) "Health insurance" does not include any insurance arising out of the Workers'
             7972      Compensation Act or similar law, automobile medical payment insurance, or insurance under
             7973      which benefits are payable with or without regard to fault and which is required by law to be
             7974      contained in any liability insurance policy[;].
             7975          (6) "Health maintenance organization" has the same meaning as provided in Section
             7976      31A-8-101 .
             7977          (7) "Health plan" means any arrangement by which a person, including a dependent or
             7978      spouse, covered or making application to be covered under the pool has access to hospital and
             7979      medical benefits or reimbursement including group or individual insurance or subscriber contract;
             7980      coverage through a health maintenance organization, preferred provider prepayment, group
             7981      practice, or individual practice plan; coverage under an uninsured arrangement of group or
             7982      group-type contracts including employer self-insured, cost-plus, or other benefits methodologies
             7983      not involving insurance; coverage under a group type contract which is not available to the general
             7984      public and can be obtained only because of connection with a particular organization or group; and
             7985      coverage by medicare or other governmental benefit. The term includes coverage through health
             7986      insurance.
             7987          (8) "Insured" means an individual resident of this state who is eligible to receive benefits
             7988      from any insurer, health maintenance organization, or other health plan.
             7989          (9) "Insurer" means an insurance company authorized to transact [disability] accident and
             7990      health insurance business in this state, health maintenance organization, and a self-insurer not
             7991      subject to federal preemption.
             7992          (10) "Medicaid" means coverage under Title XIX of the Social Security Act, 42 U.S.C.


             7993      Sec. 1396 et seq., as amended.
             7994          (11) "Medicare" means coverage under both Part A and B of Title XVIII of the Social
             7995      Security Act, 42 U.S.C. 1395 et seq., as amended.
             7996          (12) "Plan of operation" means the plan developed by the board in accordance with Section
             7997      31A-29-105 and includes the articles, bylaws, and operating rules adopted by the board under
             7998      Section 31A-29-106 .
             7999          (13) "Pool" means the Utah Comprehensive Health Insurance Pool created in Section
             8000      31A-29-104 .
             8001          (14) "Pool Fund" means the Comprehensive Health Insurance Pool Enterprise Fund
             8002      created in Section 31A-29-120 .
             8003          (15) "Pool policy" means an insurance policy issued under this chapter.
             8004          (16) "Third-party administrator" has the same meaning as provided in Section 31A-1-301 .
             8005          Section 184. Section 31A-29-117 is amended to read:
             8006           31A-29-117. Premium rates.
             8007          (1) (a) Premium charges for coverage under the pool may not be unreasonable in relation
             8008      to:
             8009          (i) the benefits provided;
             8010          (ii) the risk experience; and
             8011          (iii) the reasonable expenses provided in the coverage.
             8012          (b) Separate schedules of premium rates based on age and other appropriate demographic
             8013      characteristics may apply for individual risks.
             8014          (2) A small employer carrier shall annually inform the commissioner by April 1 of the
             8015      carrier's:
             8016          (a) small employer index premium rates as of March 1 of the current and preceding year[.];
             8017      and
             8018          (b) average percentage change in the index premium rate as of March 1, of the current and
             8019      preceding year.
             8020          (3) (a) Premium rates in effect as of January 1, 1997, shall be adjusted on July 1, 1997, and
             8021      each following July 1 may be adjusted by the board.
             8022          (b) In adjusting premium rates, the board shall:
             8023          (i) consider the average increase in small employer index rates for the five largest small


             8024      employer carriers submitted under Subsection (2); and
             8025          (ii) be subject to Subsection (1).
             8026          (4) The board may establish a premium scale based on income. The highest rate may not
             8027      exceed the expected claims and expenses for the individual.
             8028          (5) If a person is an eligible individual as defined in the Health Insurance Portability and
             8029      Accountability Act, P.L. 104-191, 110 Stat. 1979, Sec. 2741(b), the maximum premium rate for
             8030      that person may not exceed the amount permitted under P.L. 104-191, 110 Stat. 1986, Sec.
             8031      2744(c)(2)(B).
             8032          (6) All rates and rate schedules shall be submitted by the board to the commissioner for
             8033      approval.
             8034          Section 185. Section 31A-30-103 is amended to read:
             8035           31A-30-103. Definitions.
             8036          As used in this part:
             8037          (1) "Actuarial certification" means a written statement by a member of the American
             8038      Academy of Actuaries or other individual approved by the commissioner that a covered carrier is
             8039      in compliance with the provisions of Section 31A-30-106 , based upon the examination of the
             8040      covered carrier, including review of the appropriate records and of the actuarial assumptions and
             8041      methods utilized by the covered carrier in establishing premium rates for applicable health benefit
             8042      plans.
             8043          (2) "Affiliate" or "affiliated" means any entity or person who directly or indirectly through
             8044      one or more intermediaries, controls or is controlled by, or is under common control with, a
             8045      specified entity or person.
             8046          (3) "Base premium rate" means, for each class of business as to a rating period, the lowest
             8047      premium rate charged or that could have been charged under a rating system for that class of
             8048      business by the covered carrier to covered insureds with similar case characteristics for health
             8049      benefit plans with the same or similar coverage.
             8050          (4) "Basic coverage" means the coverage provided in the Basic Health Care Plan
             8051      established by the Health Benefit Plan Committee under Subsection 31A-22-613.5 [(8)] (6).
             8052          (5) "Carrier" means any person or entity that provides health insurance in this state
             8053      including an insurance company, a prepaid hospital or medical care plan, a health maintenance
             8054      organization, a multiple employer welfare arrangement, and any other person or entity providing


             8055      a health insurance plan under this title.
             8056          (6) "Case characteristics" means demographic or other objective characteristics of a
             8057      covered insured that are considered by the carrier in determining premium rates for the covered
             8058      insured. However, duration of coverage since the policy was issued, claim experience, and health
             8059      status, are not case characteristics for the purposes of this chapter.
             8060          (7) "Class of business" means all or a separate grouping of covered insureds established
             8061      under Section 31A-30-105 .
             8062          (8) "Conversion policy" means a policy providing coverage under the conversion
             8063      provisions required in Title 31A, Chapter 22, Part VII, Group [Disability] Accident and Health
             8064      Insurance.
             8065          (9) "Covered carrier" means any individual carrier or small employer carrier subject to this
             8066      act.
             8067          (10) "Covered individual" means any individual who is covered under a health benefit plan
             8068      subject to this act.
             8069          (11) "Covered insureds" means small employers and individuals who are issued a health
             8070      benefit plan that is subject to this act.
             8071          (12) "Dependent" means individuals to the extent they are defined to be a dependent by:
             8072          (a) the health benefit plan covering the covered individual; and
             8073          (b) the provisions of Chapter 22, Part VI, Disability Insurance.
             8074          (13) (a) "Eligible employee" means:
             8075          (i) an employee who works on a full-time basis and has a normal work week of 30 or more
             8076      hours, and includes a sole proprietor, and a partner of a partnership, if the sole proprietor or partner
             8077      is included as an employee under a health benefit plan of a small employer; or
             8078          (ii) an independent contractor if the independent contractor is included under a health
             8079      benefit plan of a small employer.
             8080          (b) "Eligible employee" does not include:
             8081          (i) an employee who works on a part-time, temporary, or substitute basis; or
             8082          (ii) the spouse or dependents of the employer.
             8083          (14) "Established geographic service area" means a geographical area approved by the
             8084      commissioner within which the carrier is authorized to provide coverage.
             8085          (15) "Health benefit plan" means any certificate under a group health insurance policy, or


             8086      any health insurance policy, except that health benefit plan does not include coverage only for:
             8087          (a) accident;
             8088          (b) dental;
             8089          (c) vision;
             8090          (d) Medicare supplement;
             8091          (e) long-term care; or
             8092          (f) the following when offered and marketed as supplemental health insurance and not as
             8093      a substitute for hospital or medical expense insurance or major medical expense insurance:
             8094          (i) specified disease;
             8095          (ii) hospital confinement indemnity; or
             8096          (iii) limited benefit plan.
             8097          (16) "Index rate" means, for each class of business as to a rating period for covered
             8098      insureds with similar case characteristics, the arithmetic average of the applicable base premium
             8099      rate and the corresponding highest premium rate.
             8100          (17) "Individual carrier" means a carrier that offers health benefit plans covering insureds
             8101      in this state under individual policies.
             8102          (18) "Individual conversion policy" means a conversion policy issued by a health benefit
             8103      plan as defined in Subsection (15) to:
             8104          (a) an individual; or
             8105          (b) an individual with a family.
             8106          [(18)] (19) "Individual coverage count" means the number of natural persons covered
             8107      under a carrier's health benefit plans that are individual policies.
             8108          [(19)] (20) "Individual enrollment cap" means the percentage set by the commissioner in
             8109      accordance with Section 31A-30-110 .
             8110          [(20)] (21) "New business premium rate" means, for each class of business as to a rating
             8111      period, the lowest premium rate charged or offered, or that could have been charged or offered, by
             8112      the carrier to covered insureds with similar case characteristics for newly issued health benefit
             8113      plans with the same or similar coverage.
             8114          [(21)] (22) "Premium" means all monies paid by covered insureds and covered individuals
             8115      as a condition of receiving coverage from a covered carrier, including any fees or other
             8116      contributions associated with the health benefit plan.


             8117          [(22)] (23) "Rating period" means the calendar period for which premium rates established
             8118      by a covered carrier are assumed to be in effect, as determined by the carrier. However, a covered
             8119      carrier may not have more than one rating period in any calendar month, and no more than 12
             8120      rating periods in any calendar year.
             8121          [(23)] (24) "Resident" means an individual who has resided in this state for at least 12
             8122      consecutive months immediately preceding the date of application.
             8123          [(24)] (25) "Small employer" means any person, firm, corporation, partnership, or
             8124      association actively engaged in business that, on at least 50% of its working days during the
             8125      preceding calendar quarter, employed at least two and no more than 50 eligible employees, the
             8126      majority of whom were employed within this state. In determining the number of eligible
             8127      employees, companies that are affiliated or that are eligible to file a combined tax return for
             8128      purposes of state taxation are considered one employer.
             8129          [(25)] (26) "Small employer carrier" means a carrier that offers health benefit plans
             8130      covering eligible employees of one or more small employers in this state.
             8131          [(26)] (27) "Uninsurable" means an individual who:
             8132          (a) is eligible for the Comprehensive Health Insurance Pool coverage under the
             8133      underwriting criteria established in Subsection 31A-29-111 (4); or
             8134          (b) (i) is issued a certificate for coverage under Subsection 31A-30-108 (3); and
             8135          (ii) has a condition of health that does not meet consistently applied underwriting criteria
             8136      as established by the commissioner in accordance with Subsections 31A-30-106 (1)(k) and (l) for
             8137      which coverage the applicant is applying.
             8138          [(27)] (28) "Uninsurable percentage" for a given calendar year equals UC/CI where, for
             8139      purposes of this formula:
             8140          (a) "UC" means the number of uninsurable individuals who were issued an individual
             8141      policy on or after July 1, 1997; and
             8142          (b) "CI" means the carrier's individual coverage count as of December 31 of the preceding
             8143      year.
             8144          Section 186. Section 31A-30-104 is amended to read:
             8145           31A-30-104. Applicability and scope.
             8146          (1) This chapter applies to any:
             8147          (a) health benefit plan that provides coverage to:


             8148          (i) individuals;
             8149          (ii) small employer groups; or
             8150          (iii) both Subsections (1)(a)(i) and (ii); or
             8151          (b) individual conversion policy for purposes of [Section] Sections 31A-30-106.5 and
             8152      31A-30-107 .
             8153          (2) (a) Except as provided in Subsection (2)(b), for the purposes of this chapter, carriers
             8154      that are affiliated companies or that are eligible to file a consolidated tax return shall be treated as
             8155      one carrier and any restrictions or limitations imposed by this chapter shall apply as if all health
             8156      benefit plans delivered or issued for delivery to covered insureds in this state by the affiliated
             8157      carriers were issued by one carrier.
             8158          (b) An affiliated carrier that is a health maintenance organization having a certificate of
             8159      authority under this title may be considered to be a separate carrier for the purposes of this chapter.
             8160          (c) Unless otherwise authorized by the commissioner, a covered carrier may not enter into
             8161      one or more ceding arrangements with respect to health benefit plans delivered or issued for
             8162      delivery to covered insureds in this state if such arrangements would result in less than 50% of the
             8163      insurance obligation or risk for such health benefit plans being retained by the ceding carrier.
             8164          (d) The provisions of Section 31A-22-1201 apply if a covered carrier cedes or assumes all
             8165      of the insurance obligation or risk with respect to one or more health benefit plans delivered or
             8166      issued for delivery to covered insureds in this state.
             8167          (3) (a) A Taft Hartley trust created in accordance with Section 302(c)(5) of the Federal
             8168      Labor Management Relations Act, or a carrier with the written authorization of such a trust, may
             8169      make a written request to the commissioner for a waiver from the application of any of the
             8170      provisions of Subsection 31A-30-106 (1) with respect to a health benefit plan provided to the trust.
             8171          (b) The commissioner may grant such a waiver if the commissioner finds that application
             8172      with respect to the trust would:
             8173          (i) have a substantial adverse effect on the participants and beneficiaries of the trust; and
             8174          (ii) require significant modifications to one or more collective bargaining arrangements
             8175      under which the trust is established or maintained.
             8176          (c) A waiver granted under this Subsection (3) may not apply to an individual if the person
             8177      participates in such a trust as an associate member of any employee organization.
             8178          (4) A carrier who offers individual and small employer health benefit plans may use the


             8179      small employer index rates to establish the rate limitations for individual policies, even if some
             8180      individual policies are rated below the small employer base rate.
             8181          (5) Sections 31A-30-106 , 31A-30-106.5 , 31A-30-106.7 , 31A-30-107 , 31A-30-108 , and
             8182      31A-30-111 apply to:
             8183          (a) any insurer engaging in the business of insurance related to the risk of a small employer
             8184      for medical, surgical, hospital, or ancillary health care expenses of its employees provided as an
             8185      employee benefit; and
             8186          (b) any contract of an insurer, other than a workers' compensation policy, related to the risk
             8187      of a small employer for medical, surgical, hospital, or ancillary health care expenses of its
             8188      employees provided as an employee benefit.
             8189          (6) The commissioner may make rules requiring that the marketing practices be consistent
             8190      with this chapter for:
             8191          (a) an insurer and its agent;
             8192          (b) an insurance broker; and
             8193          (c) an insurance consultant.
             8194          Section 187. Section 31A-30-106 is amended to read:
             8195           31A-30-106. Premiums -- Rating restrictions -- Disclosure.
             8196          (1) Premium rates for health benefit plans under this chapter are subject to the following
             8197      provisions:
             8198          (a) The index rate for a rating period for any class of business shall not exceed the index
             8199      rate for any other class of business by more than 20%.
             8200          (b) For a class of business, the premium rates charged during a rating period to covered
             8201      insureds with similar case characteristics for the same or similar coverage, or the rates that could
             8202      be charged to such employers under the rating system for that class of business, may not vary from
             8203      the index rate by more than 30% of the index rate, except as provided in Section 31A-22-625 .
             8204          (c) The percentage increase in the premium rate charged to a covered insured for a new
             8205      rating period, adjusted pro rata for rating periods less than a year, may not exceed the sum of the
             8206      following:
             8207          (i) the percentage change in the new business premium rate measured from the first day
             8208      of the prior rating period to the first day of the new rating period. In the case of a health benefit
             8209      plan into which the covered carrier is no longer enrolling new covered insureds, the covered carrier


             8210      shall use the percentage change in the base premium rate, provided that such change does not
             8211      exceed, on a percentage basis, the change in the new business premium rate for the most similar
             8212      health benefit plan into which the covered carrier is actively enrolling new covered insureds;
             8213          (ii) any adjustment, not to exceed 15% annually and adjusted pro rata for rating periods
             8214      of less than one year, due to the claim experience, health status, or duration of coverage of the
             8215      covered individuals as determined from the covered carrier's rate manual for the class of business,
             8216      except as provided in Section 31A-22-625 ; and
             8217          (iii) any adjustment due to change in coverage or change in the case characteristics of the
             8218      covered insured as determined from the covered carrier's rate manual for the class of business.
             8219          (d) Adjustments in rates for claims experience, health status, and duration from issue may
             8220      not be charged to individual employees or dependents. Any such adjustment shall be applied
             8221      uniformly to the rates charged for all employees and dependents of the small employer.
             8222          (e) A covered carrier may utilize industry as a case characteristic in establishing premium
             8223      rates, provided that the highest rate factor associated with any industry classification does not
             8224      exceed the lowest rate factor associated with any industry classification by more than 15%.
             8225          (f) In the case of health benefit plans issued prior to July 1, 1994, a premium rate for a
             8226      rating period, adjusted pro rata for rating period of less than a year, may exceed the ranges under
             8227      Subsections (1)(a) and (b) until July 1, 1996. In that case, the percentage increase in the premium
             8228      rate charged to a covered insured for a new rating period may not exceed the sum of the following:
             8229          (i) the percentage change in the new business premium rate measured from the first day
             8230      of the prior rating period to the first day of the new rating period. In the case where a covered
             8231      carrier is not issuing any new policies the covered carrier shall use the percentage change in the
             8232      base premium rate, provided that such change does not exceed, on a percentage basis, the change
             8233      in the new business premium rate for the most similar health benefit plan into which the covered
             8234      carrier is actively enrolling new covered insureds; and
             8235          (ii) any adjustment due to change in coverage or change in the case characteristics of the
             8236      covered insured as determined from the carrier's rate manual for the class of business.
             8237          (g) The commissioner may grant a one-year extension of the July 1, 1996, deadline
             8238      specified in Subsection (1)(f) if the commissioner determines that an extension is needed to avoid
             8239      significant disruption of the health insurance market subject to this chapter or to insure the
             8240      financial stability of carriers in the market.


             8241          (h) (i) Covered carriers shall apply rating factors, including case characteristics,
             8242      consistently with respect to all covered insureds in a class of business. Rating factors shall produce
             8243      premiums for identical groups which differ only by the amounts attributable to plan design and do
             8244      not reflect differences due to the nature of the groups assumed to select particular health benefit
             8245      plans.
             8246          (ii) A covered carrier shall treat all health benefit plans issued or renewed in the same
             8247      calendar month as having the same rating period.
             8248          (i) For the purposes of this subsection, a health benefit plan that utilizes a restricted
             8249      network provision shall not be considered similar coverage to a health benefit plan that does not
             8250      utilize such a network, provided that utilization of the restricted network provision results in
             8251      substantial difference in claims costs.
             8252          (j) The covered carrier shall not, without prior approval of the commissioner, use case
             8253      characteristics other than age, gender, industry, geographic area, family composition, and group
             8254      size.
             8255          (k) The commissioner may establish regulations in accordance with Title 63, Chapter 46a,
             8256      Utah Administrative Rulemaking Act, to implement the provisions of this chapter and to assure
             8257      that rating practices used by covered carriers are consistent with the purposes of this chapter,
             8258      including regulations that:
             8259          (i) assure that differences in rates charged for health benefit plans by covered carriers are
             8260      reasonable and reflect objective differences in plan design (not including differences due to the
             8261      nature of the groups assumed to select particular health benefit plans);
             8262          (ii) prescribe the manner in which case characteristics may be used by covered carriers;
             8263          (iii) require insurers, as a condition of transacting business with regard to health care
             8264      insurance [disability] policies after January 1, 1995, to reissue a health care insurance [disability]
             8265      policy to any policyholder whose health care insurance [disability] policy has, after January 1,
             8266      1994, been terminated by the insurer for reasons other than those listed in Subsections
             8267      31A-30-107 (1)(a) through (1)(e) or not renewed by the insurer after January 1, 1994. The
             8268      commissioner may prescribe terms for the reissue of coverage that the commissioner determines
             8269      are reasonable and necessary to provide continuity of coverage to insured individuals;
             8270          (iv) implement the individual enrollment cap under Section 31A-30-110 , including
             8271      specifying the contents for certification, auditing standards, underwriting criteria for uninsurable


             8272      classification, and limitations on high risk enrollees under Section 31A-30-111 ; and
             8273          (v) establish the individual enrollment cap under Subsection 31A-30-110 (1).
             8274          (l) Before implementing regulations for underwriting criteria for uninsurable classification,
             8275      the commissioner shall contract with an independent consulting organization to develop
             8276      industry-wide underwriting criteria for uninsurability based on an individual's expected claims
             8277      under open enrollment coverage exceeding 200% of that expected for a standard insurable
             8278      individual with the same case characteristics.
             8279          (m) The commissioner shall revise rules issued for Sections 31A-22-602 and 31A-22-605
             8280      regarding individual [disability] accident and health policy rates to allow rating in accordance with
             8281      this section.
             8282          (2) A covered carrier shall not transfer a covered insured involuntarily into or out of a class
             8283      of business. A covered carrier shall not offer to transfer a covered insured into or out of a class
             8284      of business unless such offer is made to transfer all covered insureds in the class of business
             8285      without regard to case characteristics, claim experience, health status, or duration of coverage since
             8286      issue.
             8287          (3) Upon offering for sale any health benefit plan to a small employer, or individual, the
             8288      covered carrier shall, as part of its solicitation and sales materials, disclose or make available all
             8289      of the following:
             8290          (a) the extent to which premium rates for a specified covered insured are established or
             8291      adjusted in part based on the actual or expected variation in claims costs or actual or expected
             8292      variation in health status of covered individuals;
             8293          (b) provisions concerning the covered carrier's right to change premium rates and the
             8294      factors other than claim experience which affect changes in premium rates;
             8295          (c) provisions relating to renewability of policies and contracts; and
             8296          (d) provisions relating to any preexisting condition provision.
             8297          (4) (a) Each covered carrier shall maintain at its principal place of business a complete and
             8298      detailed description of its rating practices and renewal underwriting practices, including
             8299      information and documentation that demonstrate that its rating methods and practices are based
             8300      upon commonly accepted actuarial assumptions and are in accordance with sound actuarial
             8301      principles.
             8302          (b) Each covered carrier shall file with the commissioner, on or before March 15 of each


             8303      year, in a form, manner, and containing such information as prescribed by the commissioner, an
             8304      actuarial certification certifying that the covered carrier is in compliance with this chapter and that
             8305      the rating methods of the covered carrier are actuarially sound. A copy of that certification shall
             8306      be retained by the covered carrier at its principal place of business.
             8307          (c) A covered carrier shall make the information and documentation described in this
             8308      subsection available to the commissioner upon request.
             8309          (d) Records submitted to the commissioner under the provisions of this section shall be
             8310      maintained by the commissioner as protected records under Title 63, Chapter 2, Government
             8311      Records Access and Management Act.
             8312          Section 188. Section 31A-30-106.5 is amended to read:
             8313           31A-30-106.5. Conversion policy -- Premiums -- Rating restrictions.
             8314          (1) All provisions of Section 31A-30-106 , except Subsection 31A-30-106 (1)(b), apply to
             8315      conversion policies.
             8316          (2) Conversion policy premium rates may not exceed by more than 35% the index rate for
             8317      individuals with similar case characteristics for any class of business in which the policy form has
             8318      been approved.
             8319          (3) An insurer may not consider pregnancy of a covered insured in determining its
             8320      conversion policy premium rates.
             8321          Section 189. Section 31A-30-107 is amended to read:
             8322           31A-30-107. Renewal -- Limitations -- Exclusions.
             8323          (1) A health benefit plan subject to this chapter is renewable with respect to all covered
             8324      individuals at the option of the covered insured except in any of the following cases:
             8325          (a) nonpayment of the required premiums;
             8326          (b) fraud or misrepresentation of:
             8327          (i) the employer; or
             8328          (ii) with respect to coverage of individual insureds, the insureds or their representatives;
             8329          (c) noncompliance with the covered carrier's minimum participation requirements;
             8330          (d) noncompliance with the covered carrier's employer contribution requirements;
             8331          (e) repeated misuse of a provider network provision; or
             8332          (f) an election by the covered carrier to nonrenew all of its health benefit plans issued to
             8333      covered insureds in this state, in which case the covered carrier shall:


             8334          (i) provide advanced notice of its decision under this Subsection (1) to the commissioner
             8335      in each state in which it is licensed; [and]
             8336          (ii) provide notice of the decision not to renew coverage to all affected covered insureds
             8337      and to the commissioner in each state in which an affected insured individual is known to reside[.];
             8338      and
             8339          (iii) provide a plan of orderly withdrawal as required by Section 31A-4-115 .
             8340          (2) Notice under Subsection (1) shall be provided:
             8341          (a) to affected covered insureds at least 180 days prior to nonrenewal of any health benefit
             8342      plans by the covered carrier; and
             8343          (b) to the commissioner at least three working days prior to the notice to the affected
             8344      covered insureds.
             8345          (3) A covered carrier that elects not to renew a health benefit plan under Subsection (1)(f)
             8346      is prohibited from writing new business subject to this chapter in this state for a period of five
             8347      years from the date of notice to the commissioner.
             8348          (4) When a covered carrier is doing business subject to this chapter in one service area of
             8349      this state, Subsections (1) through (3) apply only to the covered carrier's operations in that service
             8350      area.
             8351          (5) Health benefit plans covering covered insureds shall comply with Subsections (5)(a)
             8352      and (b).
             8353          (a) (i) A health benefit plan may not deny, exclude, or limit benefits for a covered
             8354      individual for losses incurred more than 12 months, or 18 months in the case of a late enrollee, as
             8355      defined in P.L. 104-191, 110 Stat. 1940, Sec. 101, following the effective date of the individual's
             8356      coverage due to a preexisting condition.
             8357          (ii) A health benefit plan may not define a preexisting condition more restrictively than:
             8358          (A) a condition for which medical advice, diagnosis, care, or treatment was recommended
             8359      or received during the six months immediately preceding the earlier of:
             8360          (I) the enrollment date; or
             8361          (II) the effective date of coverage; or
             8362          (B) for an individual insurance policy, a pregnancy existing on the effective date of
             8363      coverage.
             8364          (iii) An individual insurer shall offer a health benefit plan in compliance with Subsections


             8365      (5)(a)(i) and (ii), and may, when the insurer and the insured mutually agree in writing to a
             8366      condition-specific exclusion rider, offer to issue an individual policy that excludes a specific
             8367      physical condition consistent with Subsections (5)(a)(iv) and (v).
             8368          (iv) The commissioner shall establish, in rule, a list of nonlife threatening [and
             8369      nondegenerative] physical conditions that may be the subject of a condition-specific exclusion
             8370      rider.
             8371          (v) A condition-specific exclusion rider shall be limited to the excluded condition and may
             8372      not extend to any secondary medical condition that may or may not be directly related to the
             8373      excluded condition.
             8374          (b) (i) A covered carrier shall waive any time period applicable to a preexisting condition
             8375      exclusion or limitation period with respect to particular services in a health benefit plan for the
             8376      period of time the individual was previously covered by public or private health insurance or by
             8377      any other health benefit arrangement that provided benefits with respect to such services, provided
             8378      that:
             8379          (A) the previous coverage was continuous to a date not more than 63 full days prior to the
             8380      effective date of the new coverage; and
             8381          (B) the insured provides notification of previous coverage to the covered carrier within 36
             8382      months of the coverage effective date if the insurer has previously requested such notification.
             8383          (ii) The period of continuous coverage under Subsection (5)(b)(i)(A) may not include any
             8384      waiting period for the effective date of the new coverage applied by the employer or the carrier.
             8385      This Subsection (5)(b)(ii) does not preclude application of any waiting period applicable to all new
             8386      enrollees under the plan.
             8387          (iii) Credit for previous coverage as provided under Subsection (5)(b)(i)(A) need not be
             8388      given for any condition which was previously excluded under a condition-specific exclusion rider.
             8389      A new preexisting waiting period may be applied to any condition that was excluded by a rider
             8390      under the terms of previous individual coverage.
             8391          Section 190. Section 31A-32a-102 is amended to read:
             8392           31A-32a-102. Definitions.
             8393          As used in this chapter:
             8394          (1) "Account administrator" means any of the following:
             8395          (a) a depository institution as defined in Section 7-1-103 ;


             8396          (b) a trust company as defined in Section 7-1-103 ;
             8397          (c) an insurance company authorized to do business in this state under this title;
             8398          (d) a third party administrator licensed under Section 31A-25-203 ; and
             8399          (e) an employer if the employer has a self-insured health plan under ERISA.
             8400          (2) "Account holder" means the resident individual who establishes a medical care savings
             8401      account or for whose benefit a medical care savings account is established.
             8402          (3) "Deductible" means the total deductible for an employee and all the dependents of that
             8403      employee for a calendar year.
             8404          (4) "Dependent" means the same as "dependent" under Section 31A-30-103 .
             8405          (5) "Eligible medical expense" means an expense paid by the taxpayer for:
             8406          (a) medical care described in Section 213(d), Internal Revenue Code;
             8407          (b) the purchase of a health coverage policy, certificate, or contract, including a qualified
             8408      higher deductible health plan; or
             8409          (c) premiums on long-term care insurance policies as defined in Section [ 31A-22-1402 ]
             8410      31A-1-301 .
             8411          (6) "Employee" means the individual for whose benefit or for the benefit of whose
             8412      dependents a medical care savings account is established. Employee includes a self-employed
             8413      individual.
             8414          (7) "ERISA" means the Employee Retirement Income Security Act of 1974, Public Law
             8415      93-406, 88 Stat. 829.
             8416          (8) "Higher deductible" means a deductible of not less than $1,000.
             8417          (9) "Medical care savings account" or "account" means a trust account established at a
             8418      depository institution in this state pursuant to a medical care savings account program to pay the
             8419      eligible medical expenses of:
             8420          (a) an employee or account holder; and
             8421          (b) the dependents of the employee or account holder.
             8422          (10) "Medical care savings account program" or "program" means one of the following
             8423      programs:
             8424          (a) a program established by an employer in which the employer:
             8425          (i) purchases a qualified higher deductible health plan for the benefit of an employee and
             8426      the employee's dependents; and


             8427          (ii) contributes on behalf of an employee into a medical care savings account; or
             8428          (b) a program established by an account holder in which the account holder:
             8429          (i) purchases a qualified higher deductible health plan for the benefit of the account holder
             8430      and the account holder's dependents; and
             8431          (ii) contributes an amount to the medical care savings account.
             8432          (11) "Qualified higher deductible health plan" means a health coverage policy, certificate,
             8433      or contract that:
             8434          (a) provides for payments for covered benefits that exceed the higher deductible; and
             8435          (b) is purchased by:
             8436          (i) an employer for the benefit of an employee for whom the employer makes deposits into
             8437      a medical care savings account; or
             8438          (ii) an account holder.
             8439          Section 191. Section 31A-33-103.5 is amended to read:
             8440           31A-33-103.5. Powers of Fund -- Limitations.
             8441          (1) The fund may form or acquire subsidiaries or enter into a joint enterprise:
             8442          (a) in accordance with Section 31A-33-107 ; and
             8443          (b) except as limited by this section and applicable insurance rules and statutes.
             8444          (2) Subject to applicable insurance rules and statutes, the fund may only offer:
             8445          (a) workers' compensation insurance in Utah;
             8446          (b) workers' compensation insurance in a state other than Utah to the extent necessary to:
             8447          (i) accomplish its purpose under Subsection 31A-33-102 (1)(b); and
             8448          (ii) provide workers' compensation or occupational disease insurance coverage to Utah
             8449      employers and their employees engaged in interstate commerce; and
             8450          (c) workers' compensation products and services in Utah or other states.
             8451          (3) Subject to applicable insurance rules and statutes, a subsidiary of the fund may:
             8452          (a) offer workers' compensation insurance coverage only:
             8453          (i) in a state other than Utah; and
             8454          (ii) (A) to insure the following against liability for compensation based on job-related
             8455      accidental injuries and occupational diseases[;]:
             8456          (I) an employer, as defined in Section 34A-2-103 , that has a majority of its employees, as
             8457      defined in Section 34A-2-104 , hired or regularly employed in Utah;


             8458          (II) an employer, as defined in Section 34A-2-103 , whose principal administrative office
             8459      is located in Utah; or
             8460          (III) a subsidiary or affiliate of an employer described in Subsection (3)(a)(ii)(A)(I) or (II);
             8461      or
             8462          (B) for a state fund organization that is not an admitted insurer in the other state:
             8463          (I) on a fee for service basis; and
             8464          (II) without bearing any insurance risk; and
             8465          (b) offer workers' compensation products and services in Utah and other states.
             8466          (4) The fund shall write workers' compensation insurance in accordance with Section
             8467      31A-22-1001 .
             8468          (5) (a) The fund may enter into a joint enterprise that offers workers' compensation
             8469      insurance and other coverage only in the state, provided:
             8470          (i) the joint enterprise offers only property or liability insurance in addition to workers'
             8471      compensation insurance;
             8472          (ii) the fund may not bear any insurance risk associated with the insurance coverage other
             8473      than risk associated with workers' compensation insurance; and
             8474          (iii) the offer of other insurance shall be part of an insurance program that includes
             8475      workers' compensation insurance coverage that is provided by the fund.
             8476          (b) The fund or a subsidiary of the fund may not offer, or enter into a joint enterprise that
             8477      offers, or otherwise participate in the offering of accident and health [or disability] insurance.
             8478          Section 192. Section 31A-33-113 is amended to read:
             8479           31A-33-113. Cancellation of policies.
             8480          The Workers' Compensation Fund may cancel a policy [prior to the conclusion of the
             8481      policy period only:] as provided in Section 31A-22-1002.
             8482          [(1) (a) by agreeing to the cancellation with the policyholder; and]
             8483          [(b) sending notice of the cancellation to the Labor Commission;]
             8484          [(2) for nonpayment of premium, after 30 days' notice to:]
             8485          [(a) the Labor Commission; and]
             8486          [(b) the policyholder; or]
             8487          [(3) for failure on the part of the policyholder to comply with the contractual provisions
             8488      of the policy, after 30 days' notice to:]


             8489          [(a) the Labor Commission; and]
             8490          [(b) the policyholder.]
             8491          Section 193. Section 34A-2-103 is amended to read:
             8492           34A-2-103. Employers enumerated and defined -- Regularly employed -- Statutory
             8493      employers.
             8494          (1) (a) The state, and each county, city, town, and school district in the state are considered
             8495      employers under this chapter and Chapter 3, Utah Occupational Disease Act.
             8496          (b) For the purposes of the exclusive remedy in this chapter and Chapter 3, Utah
             8497      Occupational Disease Act prescribed in Sections 34A-2-105 and 34A-3-102 , the state is considered
             8498      to be a single employer and includes any office, department, agency, authority, commission, board,
             8499      institution, hospital, college, university, or other instrumentality of the state.
             8500          (2) Except as provided in Subsection (4), each person, including each public utility and
             8501      each independent contractor, who regularly employs one or more workers or operatives in the same
             8502      business, or in or about the same establishment, under any contract of hire, express or implied, oral
             8503      or written, is considered an employer under this chapter and Chapter 3, Utah Occupational Disease
             8504      Act. As used in this Subsection (2):
             8505          (a) "Independent contractor" means any person engaged in the performance of any work
             8506      for another who, while so engaged, is:
             8507          (i) independent of the employer in all that pertains to the execution of the work;
             8508          (ii) not subject to the routine rule or control of the employer;
             8509          (iii) engaged only in the performance of a definite job or piece of work; and
             8510          (iv) subordinate to the employer only in effecting a result in accordance with the
             8511      employer's design.
             8512          (b) "Regularly" includes all employments in the usual course of the trade, business,
             8513      profession, or occupation of the employer, whether continuous throughout the year or for only a
             8514      portion of the year.
             8515          (3) (a) The client company in an employee leasing arrangement under Title 58, Chapter
             8516      59, Professional Employer Organization Licensing Act, is considered the employer of leased
             8517      employees and shall secure workers' compensation benefits for them by complying with
             8518      Subsection 34A-2-201 (1) or (2) and commission rules.
             8519          (b) Insurance carriers may underwrite workers' compensation secured in accordance with


             8520      Subsection (3)(a) showing the leasing company as the named insured and each client company as
             8521      an additional insured by means of individual endorsements.
             8522          (c) Endorsements shall be filed with the division as directed by commission rule.
             8523          (d) The division shall promptly inform the Division of Occupation and Professional
             8524      Licensing within the Department of Commerce if the division has reason to believe that an
             8525      employee leasing company is not in compliance with Subsection 34A-2-201 (1) or (2) and
             8526      commission rules.
             8527          (4) A domestic employer who does not employ one employee or more than one employee
             8528      at least 40 hours per week is not considered an employer under this chapter and Chapter 3, Utah
             8529      Occupational Disease Act.
             8530          (5) (a) As used in this Subsection (5):
             8531          (i) (A) "agricultural employer" means a person who employs agricultural labor as defined
             8532      in Subsections 35A-4-206 (1) and (2) and does not include employment as provided in Subsection
             8533      35A-4-206 (3); and
             8534          (B) notwithstanding Subsection (5)(a)(i)(A), only for purposes of determining who is a
             8535      member of the employer's immediate family under Subsection (5)(a)(ii), if the agricultural
             8536      employer is a corporation, partnership, or other business entity, "agricultural employer" means an
             8537      officer, director, or partner of the business entity;
             8538          (ii) "employer's immediate family" means:
             8539          (A) an agricultural employer's:
             8540          (I) spouse;
             8541          (II) grandparent;
             8542          (III) parent;
             8543          (IV) sibling;
             8544          (V) child;
             8545          (VI) grandchild;
             8546          (VII) nephew; or
             8547          (VIII) niece;
             8548          (B) a spouse of any person provided in Subsection [(4)] (5)(a)(ii)(A)(II) through (VIII);
             8549      or
             8550          (C) an individual who is similar to those listed in Subsections [(4)] (5)(a)(ii)(A) or (B) as


             8551      defined by rules of the commission; and
             8552          (iii) "non-immediate family" means a person who is not a member of the employer's
             8553      immediate family.
             8554          (b) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
             8555      agricultural employer is not considered an employer of a member of the employer's immediate
             8556      family.
             8557          (c) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
             8558      agricultural employer is not considered an employer of a non-immediate family employee if:
             8559          (i) for the previous calendar year the agricultural employer's total annual payroll for all
             8560      non-immediate family employees was less than $8,000; or
             8561          (ii) (A) for the previous calendar year the agricultural employer's total annual payroll for
             8562      all non-immediate family employees was equal to or greater than $8,000 but less than $50,000; and
             8563          (B) the agricultural employer maintains insurance that covers job-related injuries of the
             8564      employer's non-immediate family employees in at least the following amounts:
             8565          (I) $300,000 liability insurance, as defined in Section 31A-1-301 ; and
             8566          (II) $5,000 for [medical, hospital, and surgical] health care benefits similar to benefits
             8567      under health care insurance as [described] defined in [Subsection] Section 31A-1-301 [(50)(a)(ii)].
             8568          (d) For purposes of this chapter and Chapter 3, Utah Occupational Disease Act, an
             8569      agricultural employer is considered an employer of a non-immediate family employee if:
             8570          (i) for the previous calendar year the agricultural employer's total annual payroll for all
             8571      non-immediate family employees is equal to or greater than $50,000; or
             8572          (ii) (A) for the previous year the agricultural employer's total payroll for non-immediate
             8573      family employees was equal to or exceeds $8,000 but is less than $50,000; and
             8574          (B) the agricultural employer fails to maintain the insurance required under Subsection
             8575      (5)(c)(ii).
             8576          (6) An employer of agricultural laborers or domestic servants who is not considered an
             8577      employer under this chapter and Chapter 3, Utah Occupational Disease Act, may come under this
             8578      chapter and Chapter 3, Utah Occupational Disease Act, by complying with:
             8579          (a) this chapter and Chapter 3, Utah Occupational Disease Act; and
             8580          (b) the rules of the commission.
             8581          (7) (a) If any person who is an employer procures any work to be done wholly or in part


             8582      for the employer by a contractor over whose work the employer retains supervision or control, and
             8583      this work is a part or process in the trade or business of the employer, the contractor, all persons
             8584      employed by the contractor, all subcontractors under the contractor, and all persons employed by
             8585      any of these subcontractors, are considered employees of the original employer for the purposes
             8586      of this chapter and Chapter 3, Utah Occupational Disease Act.
             8587          (b) Any person who is engaged in constructing, improving, repairing, or remodelling a
             8588      residence that the person owns or is in the process of acquiring as the person's personal residence
             8589      may not be considered an employee or employer solely by operation of Subsection (7)(a).
             8590          (c) A partner in a partnership or an owner of a sole proprietorship may not be considered
             8591      an employee under Subsection (7)(a) if the employer who procures work to be done by the
             8592      partnership or sole proprietorship obtains and relies on either:
             8593          (i) a valid certification of the partnership's or sole proprietorship's compliance with Section
             8594      34A-2-201 indicating that the partnership or sole proprietorship secured the payment of workers'
             8595      compensation benefits pursuant to Section 34A-2-201 ; or
             8596          (ii) if a partnership or sole proprietorship with no employees other than a partner of the
             8597      partnership or owner of the sole proprietorship, a workers' compensation policy issued by an
             8598      insurer pursuant to Subsection 31A-21-104 (8) stating that:
             8599          (A) the partnership or sole proprietorship is customarily engaged in an independently
             8600      established trade, occupation, profession, or business; and
             8601          (B) the partner or owner personally waives the partner's or owner's entitlement to the
             8602      benefits of this chapter and Chapter 3, Utah Occupational Disease Act, in the operation of the
             8603      partnership or sole proprietorship.
             8604          (d) A director or officer of a corporation may not be considered an employee under
             8605      Subsection (7)(a) if the director or officer is excluded from coverage under Subsection
             8606      34A-2-104 (4).
             8607          (e) A contractor or subcontractor is not an employee of the employer under Subsection
             8608      (7)(a), if the employer who procures work to be done by the contractor or subcontractor obtains
             8609      and relies on either:
             8610          (i) a valid certification of the contractor's or subcontractor's compliance with Section
             8611      34A-2-201 ; or
             8612          (ii) if a partnership, corporation, or sole proprietorship with no employees other than a


             8613      partner of the partnership, officer of the corporation, or owner of the sole proprietorship, a workers'
             8614      compensation policy issued by an insurer pursuant to Subsection 31A-21-104 (8) stating that:
             8615          (A) the partnership, corporation, or sole proprietorship is customarily engaged in an
             8616      independently established trade, occupation, profession, or business; and
             8617          (B) the partner, corporate officer, or owner personally waives the partner's, corporate
             8618      officer's, or owner's entitlement to the benefits of this chapter and Chapter 3, Utah Occupational
             8619      Disease Act, in the operation of the partnership's, corporation's, or sole proprietorship's enterprise
             8620      under a contract of hire for services.
             8621          Section 194. Section 58-67-501 is amended to read:
             8622           58-67-501. Unlawful conduct.
             8623          (1) "Unlawful conduct" includes, in addition to the definition in Section 58-1-501 :
             8624          (a) buying, selling, or fraudulently obtaining, any medical diploma, license, certificate, or
             8625      registration;
             8626          (b) aiding or abetting the buying, selling, or fraudulently obtaining of any medical diploma,
             8627      license, certificate, or registration;
             8628          (c) substantially interfering with a licensee's lawful and competent practice of medicine
             8629      in accordance with this chapter by:
             8630          (i) any person or entity that manages, owns, operates, or conducts a business having a
             8631      direct or indirect financial interest in the licensee's professional practice; or
             8632          (ii) anyone other than another physician licensed under this title, who is engaged in direct
             8633      clinical care or consultation with the licensee in accordance with the standards and ethics of the
             8634      profession of medicine; or
             8635          (d) entering into a contract that limits a licensee's ability to advise the licensee's patients
             8636      fully about treatment options or other issues that affect the health care of the licensee's patients.
             8637          (2) "Unlawful conduct" does not include:
             8638          (a) establishing, administering, or enforcing the provisions of a policy of [disability]
             8639      accident and health insurance by an insurer doing business in this state in accordance with Title
             8640      31A, Insurance Code;
             8641          (b) adopting, implementing, or enforcing utilization management standards related to
             8642      payment for a licensee's services, provided that:
             8643          (i) utilization management standards adopted, implemented, and enforced by the payer


             8644      have been approved by a physician or by a committee that contains one or more physicians; and
             8645          (ii) the utilization management standards does not preclude a licensee from exercising
             8646      independent professional judgment on behalf of the licensee's patients in a manner that is
             8647      independent of payment considerations;
             8648          (c) developing and implementing clinical practice standards that are intended to reduce
             8649      morbidity and mortality or developing and implementing other medical or surgical practice
             8650      standards related to the standardization of effective health care practices, provided that:
             8651          (i) the practice standards and recommendations have been approved by a physician or by
             8652      a committee that contains one or more physicians; and
             8653          (ii) the practice standards do not preclude a licensee from exercising independent
             8654      professional judgment on behalf of the licensee's patients in a manner that is independent of
             8655      payment considerations;
             8656          (d) requesting or recommending that a patient obtain a second opinion from a licensee;
             8657          (e) conducting peer review, quality evaluation, quality improvement, risk management,
             8658      or similar activities designed to identify and address practice deficiencies with health care
             8659      providers, health care facilities, or the delivery of health care;
             8660          (f) providing employment supervision or adopting employment requirements that do not
             8661      interfere with the licensee's ability to exercise independent professional judgment on behalf of the
             8662      licensee's patients, provided that employment requirements that may not be considered to interfere
             8663      with an employed licensee's exercise of independent professional judgment include:
             8664          (i) an employment requirement that restricts the licensee's access to patients with whom
             8665      the licensee's employer does not have a contractual relationship, either directly or through contracts
             8666      with one or more third-party payers; or
             8667          (ii) providing compensation incentives that are not related to the treatment of any
             8668      particular patient;
             8669          (g) providing benefit coverage information, giving advice, or expressing opinions to a
             8670      patient or to a family member of a patient to assist the patient or family member in making a
             8671      decision about health care that has been recommended by a licensee; or
             8672          (h) any otherwise lawful conduct that does not substantially interfere with the licensee's
             8673      ability to exercise independent professional judgment on behalf of the licensee's patients and that
             8674      does not constitute the practice of medicine as defined in this chapter.


             8675          Section 195. Section 58-68-501 is amended to read:
             8676           58-68-501. Unlawful conduct.
             8677          (1) "Unlawful conduct" includes, in addition to the definition in Section 58-1-501 :
             8678          (a) buying, selling, or fraudulently obtaining any osteopathic medical diploma, license,
             8679      certificate, or registration; and
             8680          (b) aiding or abetting the buying, selling, or fraudulently obtaining of any osteopathic
             8681      medical diploma, license, certificate, or registration;
             8682          (c) substantially interfering with a licensee's lawful and competent practice of medicine
             8683      in accordance with this chapter by:
             8684          (i) any person or entity that manages, owns, operates, or conducts a business having a
             8685      direct or indirect financial interest in the licensee's professional practice; or
             8686          (ii) anyone other than another physician licensed under this title, who is engaged in direct
             8687      clinical care or consultation with the licensee in accordance with the standards and ethics of the
             8688      profession of medicine; or
             8689          (d) entering into a contract that limits a licensee's ability to advise the licensee's patients
             8690      fully about treatment options or other issues that affect the health care of the licensee's patients.
             8691          (2) "Unlawful conduct" does not include:
             8692          (a) establishing, administering, or enforcing the provisions of a policy of [disability]
             8693      accident and health insurance by an insurer doing business in this state in accordance with Title
             8694      31A, Insurance Code;
             8695          (b) adopting, implementing, or enforcing utilization management standards related to
             8696      payment for a licensee's services, provided that:
             8697          (i) utilization management standards adopted, implemented, and enforced by the payer
             8698      have been approved by a physician or by a committee that contains one or more physicians; and
             8699          (ii) the utilization management standards does not preclude a licensee from exercising
             8700      independent professional judgment on behalf of the licensee's patients in a manner that is
             8701      independent of payment considerations;
             8702          (c) developing and implementing clinical practice standards that are intended to reduce
             8703      morbidity and mortality or developing and implementing other medical or surgical practice
             8704      standards related to the standardization of effective health care practices, provided that:
             8705          (i) the practice standards and recommendations have been approved by a physician or by


             8706      a committee that contains one or more physicians; and
             8707          (ii) the practice standards do not preclude a licensee from exercising independent
             8708      professional judgment on behalf of the licensee's patients in a manner that is independent of
             8709      payment considerations;
             8710          (d) requesting or recommending that a patient obtain a second opinion from a licensee;
             8711          (e) conducting peer review, quality evaluation, quality improvement, risk management,
             8712      or similar activities designed to identify and address practice deficiencies with health care
             8713      providers, health care facilities, or the delivery of health care;
             8714          (f) providing employment supervision or adopting employment requirements that do not
             8715      interfere with the licensee's ability to exercise independent professional judgment on behalf of the
             8716      licensee's patients, provided that employment requirements that may not be considered to interfere
             8717      with an employed licensee's exercise of independent professional judgment include:
             8718          (i) an employment requirement that restricts the licensee's access to patients with whom
             8719      the licensee's employer does not have a contractual relationship, either directly or through contracts
             8720      with one or more third-party payers; or
             8721          (ii) providing compensation incentives that are not related to the treatment of any
             8722      particular patient;
             8723          (g) providing benefit coverage information, giving advice, or expressing opinions to a
             8724      patient or to a family member of a patient to assist the patient or family member in making a
             8725      decision about health care that has been recommended by a licensee; or
             8726          (h) any otherwise lawful conduct that does not substantially interfere with the licensee's
             8727      ability to exercise independent professional judgment on behalf of the licensee's patients and that
             8728      does not constitute the practice of medicine as defined in this chapter.
             8729          Section 196. Section 59-10-114 is amended to read:
             8730           59-10-114. Additions to and subtractions from federal taxable income of an
             8731      individual.
             8732          (1) There shall be added to federal taxable income of a resident or nonresident individual:
             8733          (a) the amount of any income tax imposed by this or any predecessor Utah individual
             8734      income tax law and the amount of any income tax imposed by the laws of another state, the District
             8735      of Columbia, or a possession of the United States, to the extent deducted from federal adjusted
             8736      gross income, as defined by Section 62, Internal Revenue Code, in determining federal taxable


             8737      income;
             8738          (b) a lump sum distribution allowable as a deduction under Section 402(d)(3), Internal
             8739      Revenue Code, to the extent deductible under Section 62(a)(8), Internal Revenue Code, in
             8740      determining federal adjusted gross income;
             8741          (c) 25% of the personal exemptions, as defined and calculated in the Internal Revenue
             8742      Code;
             8743          (d) a withdrawal from a medical care savings account and any penalty imposed in the
             8744      taxable year if:
             8745          (i) the taxpayer did not deduct or include the amounts on his federal tax return pursuant
             8746      to Section 220, Internal Revenue Code; and
             8747          (ii) the withdrawal is subject to Subsections 31A-32a-105 (1) and (2); and
             8748          (e) the amount refunded to a participant under Title 53B, Chapter 8a, Higher Education
             8749      Savings Incentive Program, in the year in which the amount is refunded.
             8750          (2) There shall be subtracted from federal taxable income of a resident or nonresident
             8751      individual:
             8752          (a) the interest or dividends on obligations or securities of the United States and its
             8753      possessions or of any authority, commission, or instrumentality of the United States, to the extent
             8754      includable in gross income for federal income tax purposes but exempt from state income taxes
             8755      under the laws of the United States, but the amount subtracted under this subsection shall be
             8756      reduced by any interest on indebtedness incurred or continued to purchase or carry the obligations
             8757      or securities described in this subsection, and by any expenses incurred in the production of
             8758      interest or dividend income described in this subsection to the extent that such expenses, including
             8759      amortizable bond premiums, are deductible in determining federal taxable income;
             8760          (b) 1/2 of the net amount of any income tax paid or payable to the United States after all
             8761      allowable credits, as reported on the United States individual income tax return of the taxpayer for
             8762      the same taxable year;
             8763          (c) the amount of adoption expenses which, for purposes of this subsection, means any
             8764      actual medical and hospital expenses of the mother of the adopted child which are incident to the
             8765      child's birth and any welfare agency, child placement service, legal, and other fees or costs relating
             8766      to the adoption;
             8767          (d) amounts received by taxpayers under age 65 as retirement income which, for purposes


             8768      of this section, means pensions and annuities, paid from an annuity contract purchased by an
             8769      employer under a plan which meets the requirements of Section 404(a)(2), Internal Revenue Code,
             8770      or purchased by an employee under a plan which meets the requirements of Section 408, Internal
             8771      Revenue Code, or paid by the United States, a state, or political subdivision thereof, or the District
             8772      of Columbia, to the employee involved or the surviving spouse;
             8773          (e) for each taxpayer age 65 or over before the close of the taxable year, a $7,500 personal
             8774      retirement exemption;
             8775          (f) 75% of the amount of the personal exemption, as defined and calculated in the Internal
             8776      Revenue Code, for each dependent child with a disability and adult with a disability who is
             8777      claimed as a dependent on a taxpayer's return;
             8778          (g) any amount included in federal taxable income that was received pursuant to any
             8779      federal law enacted in 1988 to provide reparation payments, as damages for human suffering, to
             8780      United States citizens and resident aliens of Japanese ancestry who were interned during World
             8781      War II;
             8782          (h) subject to the limitations of Subsection (3)(e), amounts a taxpayer pays during the
             8783      taxable year for health care insurance, as defined in Title 31A, Chapter 1, General Provisions:
             8784          (i) for:
             8785          (A) the taxpayer;
             8786          (B) the taxpayer's spouse; and
             8787          (C) the taxpayer's dependents; and
             8788          (ii) to the extent the taxpayer does not deduct the amounts under Section 125, 162, or 213,
             8789      Internal Revenue Code, in determining federal taxable income for the taxable year;
             8790          (i) except as otherwise provided in this subsection, the amount of a contribution made in
             8791      the tax year on behalf of the taxpayer to a medical care savings account and interest earned on a
             8792      contribution to a medical care savings account established pursuant to Title 31A, Chapter 32a,
             8793      Medical Care Savings Account Act, to the extent the contribution is accepted by the account
             8794      administrator as provided in the Medical Care Savings Account Act, and if the taxpayer did not
             8795      deduct or include amounts on his federal tax return pursuant to Section 220, Internal Revenue
             8796      Code. A contribution deductible under this subsection may not exceed either of the following:
             8797          (i) the maximum contribution allowed under the Medical Care Savings Account Act for
             8798      the tax year multiplied by two for taxpayers who file a joint return, if neither spouse is covered by


             8799      health care insurance as defined in Section 31A-1-301 or self-funded plan that covers the other
             8800      spouse, and each spouse has a medical care savings account; or
             8801          (ii) the maximum contribution allowed under the Medical Care Savings Account Act for
             8802      the tax year for taxpayers:
             8803          (A) who do not file a joint return; or
             8804          (B) who file a joint return, but do not qualify under Subsection (2)(i)(i); and
             8805          (j) the amount included in federal taxable income that was derived from money paid by
             8806      the taxpayer to the program fund under Title 53B, Chapter 8a, Higher Education Savings Incentive
             8807      Program, not to exceed amounts determined under Subsection 53B-8a-106 (1)(d) and investment
             8808      income earned on participation agreements under Subsection 53B-8a-106 (1) when used for higher
             8809      education costs of the beneficiary;
             8810          (k) for tax years beginning on or after January 1, 2000, any amounts paid for premiums
             8811      on long-term care insurance policies as defined in Section [ 31A-22-1402 ] 31A-1-301 to the extent
             8812      the amounts paid for long-term care insurance were not deducted under Section 213, Internal
             8813      Revenue Code, in determining federal taxable income; and
             8814          (l) for taxable years beginning on or after January 1, 2000, if the conditions of Subsection
             8815      (4)(a) are met, the amount of income derived by a Ute tribal member:
             8816          (i) during a time period that the Ute tribal member resides on homesteaded land
             8817      diminished from the Uintah and Ouray Reservation; and
             8818          (ii) from a source within the Uintah and Ouray Reservation.
             8819          (3) (a) For purposes of Subsection (2)(d), the amount of retirement income subtracted for
             8820      taxpayers under 65 shall be the lesser of the amount included in federal taxable income, or $4,800,
             8821      except that:
             8822          (i) for married taxpayers filing joint returns, for each $1 of adjusted gross income earned
             8823      over $32,000, the amount of the retirement income exemption that may be subtracted shall be
             8824      reduced by 50 cents;
             8825          (ii) for married taxpayers filing separate returns, for each $1 of adjusted gross income
             8826      earned over $16,000, the amount of the retirement income exemption that may be subtracted shall
             8827      be reduced by 50 cents; and
             8828          (iii) for individual taxpayers, for each $1 of adjusted gross income earned over $25,000,
             8829      the amount of the retirement income exemption that may be subtracted shall be reduced by 50


             8830      cents.
             8831          (b) For purposes of Subsection (2)(e), the amount of the personal retirement exemption
             8832      shall be further reduced according to the following schedule:
             8833          (i) for married taxpayers filing joint returns, for each $1 of adjusted gross income earned
             8834      over $32,000, the amount of the personal retirement exemption shall be reduced by 50 cents;
             8835          (ii) for married taxpayers filing separate returns, for each $1 of adjusted gross income
             8836      earned over $16,000, the amount of the personal retirement exemption shall be reduced by 50
             8837      cents; and
             8838          (iii) for individual taxpayers, for each $1 of adjusted gross income earned over $25,000,
             8839      the amount of the personal retirement exemption shall be reduced by 50 cents.
             8840          (c) For purposes of Subsections (3)(a) and (b), adjusted gross income shall be calculated
             8841      by adding to federal adjusted gross income any interest income not otherwise included in federal
             8842      adjusted gross income.
             8843          (d) For purposes of determining ownership of items of retirement income common law
             8844      doctrine will be applied in all cases even though some items may have originated from service or
             8845      investments in a community property state. Amounts received by the spouse of a living retiree
             8846      because of the retiree's having been employed in a community property state are not deductible as
             8847      retirement income of such spouse.
             8848          (e) For purposes of Subsection (2)(h), a subtraction for an amount paid for health care
             8849      insurance as defined in Title 31A, Chapter 1, General Provisions, is not allowed:
             8850          (i) for an amount that is reimbursed or funded in whole or in part by the federal
             8851      government, the state, or an agency or instrumentality of the federal government or the state; and
             8852          (ii) for a taxpayer who is eligible to participate in a health plan maintained and funded in
             8853      whole or in part by the taxpayer's employer or the taxpayer's spouse's employer.
             8854          (4) (a) A subtraction for an amount described in Subsection (2)(l) is allowed only if:
             8855          (i) the taxpayer is a Ute tribal member; and
             8856          (ii) the governor and the Ute tribe execute and maintain an agreement meeting the
             8857      requirements of this Subsection (4).
             8858          (b) The agreement described in Subsection (4)(a):
             8859          (i) may not:
             8860          (A) authorize the state to impose a tax in addition to a tax imposed under this chapter;


             8861          (B) provide a subtraction under this section greater than or different from the subtraction
             8862      described in Subsection (2)(l); or
             8863          (C) affect the power of the state to establish rates of taxation; and
             8864          (ii) shall:
             8865          (A) provide for the implementation of the subtraction described in Subsection (2)(l);
             8866          (B) be in writing;
             8867          (C) be signed by:
             8868          (I) the governor; and
             8869          (II) the chair of the Business Committee of the Ute tribe;
             8870          (D) be conditioned on obtaining any approval required by federal law; and
             8871          (E) state the effective date of the agreement.
             8872          (c) (i) The governor shall report to the commission by no later than February 1 of each year
             8873      regarding whether or not an agreement meeting the requirements of this Subsection (4) is in effect.
             8874          (ii) If an agreement meeting the requirements of this Subsection (4) is terminated, the
             8875      subtraction permitted under Subsection (2)(l) is not allowed for taxable years beginning on or after
             8876      the January 1 following the termination of the agreement.
             8877          (d) For purposes of Subsection (2)(l) and in accordance with Title 63, Chapter 46a, Utah
             8878      Administrative Rulemaking Act, the commission may make rules:
             8879          (i) for determining whether income is derived from a source within the Uintah and Ouray
             8880      Reservation; and
             8881          (ii) that are substantially similar to how federal adjusted gross income derived from Utah
             8882      sources is determined under Section 59-10-117 .
             8883          Section 197. Section 62A-11-326.1 is amended to read:
             8884           62A-11-326.1. Enrollment of child in accident and health insurance plan -- Order
             8885      -- Notice.
             8886          (1) The office may issue a notice to existing and future employers or unions to enroll a
             8887      dependent child in [a disability] an accident and health insurance plan that is available through
             8888      [his] the dependent child's parent or legal guardian's employer or union, when the following
             8889      conditions are satisfied:
             8890          (a) the parent or legal guardian is already required to obtain insurance coverage for the
             8891      child by a prior court or administrative order; and


             8892          (b) the parent or legal guardian has failed to provide written proof to the office that:
             8893          (i) the child has been enrolled in [a disability] an accident and health insurance plan in
             8894      accordance with the court or administrative order; or
             8895          (ii) the coverage required by the order was not available at group rates through the
             8896      employer or union 30 or more days prior to the date of the mailing of the notice to enroll.
             8897          (2) The office shall provide concurrent notice to the parent or legal guardian in accordance
             8898      with Section 62A-11-304.4 of:
             8899          (a) the notice to enroll sent to the employer or union; and
             8900          (b) the opportunity to contest the enrollment due to a mistake of fact by filing a written
             8901      request for an adjudicative proceeding with the office within 15 days of the notice being sent.
             8902          (3) A notice to enroll shall result in the enrollment of the child in the parent's [disability]
             8903      accident and health insurance plan, unless the parent successfully contests the notice based on a
             8904      mistake of fact.
             8905          (4) A notice to enroll issued under this section may be considered a "qualified medical
             8906      support order" for the purposes of enrolling a dependent child in a group [disability] accident and
             8907      health insurance plan as defined in Section 609(a), Federal Employee Retirement Income Security
             8908      Act of 1974.
             8909          Section 198. Section 62A-11-326.2 is amended to read:
             8910           62A-11-326.2. Compliance with order -- Enrollment of dependent child for
             8911      insurance.
             8912          (1) An employer or union shall comply with a notice to enroll issued by the office under
             8913      Section 62A-11-326.1 by enrolling the dependent child that is the subject of the notice in the:
             8914          (a) [disability] accident and health insurance plan in which the parent or legal guardian is
             8915      enrolled, if the plan satisfies the prior court or administrative order; or
             8916          (b) least expensive plan, assuming equivalent benefits, offered by the employer or union
             8917      that complies with the prior court or administrative order which provides coverage [which] that
             8918      is reasonably accessible to the dependent child.
             8919          (2) The employer, union, or insurer may not refuse to enroll a dependent child pursuant
             8920      to a notice to enroll because a parent or legal guardian has not signed an enrollment application.
             8921          (3) Upon enrollment of the dependent child, the employer shall deduct the appropriate
             8922      premiums from the parent or legal guardian's wages and remit them directly to the insurer.


             8923          (4) The insurer shall provide proof of insurance to the office upon request.
             8924          (5) The signature of the custodial parent of the insured dependent is a valid authorization
             8925      to the insurer for purposes of processing any insurance reimbursement claim.
             8926          Section 199. Section 63-25a-413 is amended to read:
             8927           63-25a-413. Collateral sources.
             8928          (1) Collateral source shall include any source of benefits or advantages for economic loss
             8929      otherwise reparable under this chapter which the victim or claimant has received, or which is
             8930      readily available to the victim from:
             8931          (a) the offender;
             8932          (b) the insurance of the offender;
             8933          (c) the United States government or any of its agencies, a state or any of its political
             8934      subdivisions, or an instrumentality of two or more states, except in the case on nonobligatory
             8935      state-funded programs;
             8936          (d) social security, Medicare, and Medicaid;
             8937          (e) state-required temporary nonoccupational income replacement insurance or disability
             8938      income insurance;
             8939          (f) workers' compensation;
             8940          (g) wage continuation programs of any employer;
             8941          (h) proceeds of a contract of insurance payable to the victim for the loss he sustained
             8942      because of the criminally injurious conduct;
             8943          (i) a contract providing prepaid hospital and other health care services or benefits for
             8944      disability; or
             8945          (j) veteran's benefits, including veteran's hospitalization benefits.
             8946          (2) (a) An order of restitution shall not be considered readily available as a collateral
             8947      source.
             8948          (b) Receipt of an award of reparations under this chapter shall be considered an assignment
             8949      of the victim's rights to restitution from the offender.
             8950          (3) The victim shall not discharge a claim against a person or entity without the state's
             8951      written permission and shall fully cooperate with the state in pursuing its right of reimbursement,
             8952      including providing the state with any evidence in his possession.
             8953          (4) The state's right of reimbursement applies regardless of whether the victim has been


             8954      fully compensated for his losses.
             8955          (5) Notwithstanding the collateral source provisions in [Subsections] Subsection (1) and
             8956      Subsection 63-25a-412 (1)(a) [and 63-25a-413 (1)], a victim of a sexual offense who requests
             8957      testing of himself may be reimbursed for the costs of the HIV test only as provided in Subsection
             8958      76-5-503 (4).
             8959          Section 200. Section 63-55-231 is amended to read:
             8960           63-55-231. Repeal dates, Title 31A.
             8961          (1) Section 31A-2-208.5 , Comparison tables, is repealed July 1, 2005.
             8962          (2) Section 31A-2-217 , Coordination with other states, is repealed July 1, 2003.
             8963          [(2)] (3) Section 31A-22-315 , Motor Vehicle Insurance Reporting, is repealed July 1,
             8964      2010.
             8965          [(3)] (4) Section 31A-22-625 , Catastrophic Coverage of Mental Health Conditions, is
             8966      repealed July 1, 2011.
             8967          [(4)] (5) Title 31A, Chapter 31, Insurance Fraud Act, is repealed July 1, 2007.
             8968          Section 201. Section 67-22-1 is amended to read:
             8969           67-22-1. Compensation -- Constitutional offices.
             8970          (1) The Legislature fixes salaries for the constitutional offices as follows:
             8971          (a) Governor                         $96,700
             8972          (b) Lieutenant Governor                 $75,200
             8973          (c) Attorney General                     $81,300
             8974          (d) State Auditor                     $77,600
             8975          (e) State Treasurer                     $75,200
             8976          (2) The Legislature fixes benefits for the constitutional offices as follows:
             8977          (a) Governor:
             8978          (i) a vehicle for official and personal use;
             8979          (ii) housing;
             8980          (iii) household and security staff;
             8981          (iv) household expenses;
             8982          (v) retirement benefits as provided in Title 49;
             8983          (vi) health insurance;
             8984          (vii) dental insurance;


             8985          (viii) basic life insurance;
             8986          (ix) workers' compensation;
             8987          (x) required employer contribution to Social Security;
             8988          (xi) long-term disability income insurance; and
             8989          (xii) the same additional state paid life insurance available to other noncareer service
             8990      employees.
             8991          (b) Lieutenant governor, attorney general, state auditor, and state treasurer:
             8992          (i) a vehicle for official and personal use;
             8993          (ii) the option of participating in a state retirement system established by Title 49, Chapter
             8994      2, Public Employees' Retirement Act, or Chapter 3, Public Employees' Noncontributory
             8995      Retirement Act, or in a deferred compensation plan administered by the State Retirement Office,
             8996      in accordance with the Internal Revenue Code and its accompanying rules and regulations;
             8997          (iii) health insurance;
             8998          (iv) dental insurance;
             8999          (v) basic life insurance;
             9000          (vi) workers' compensation;
             9001          (vii) required employer contribution to social security;
             9002          (viii) long-term disability income insurance; and
             9003          (ix) the same additional state paid life insurance available to other noncareer service
             9004      employees.
             9005          (c) Each constitutional office shall pay the cost of the additional state-paid life insurance
             9006      for its constitutional officer from its existing budget.
             9007          Section 202. Section 67-22-2 is amended to read:
             9008           67-22-2. Compensation -- Other state officers.
             9009          (1) The governor shall establish salaries for the following state officers within the
             9010      following salary ranges fixed by the Legislature:
             9011              State Officer                     Salary Range
             9012          Director, Health Policy Commission             $57,900 - $78,400
             9013          Commissioner of Agriculture and Food         $62,100 - $84,100
             9014          Commissioner of Insurance                 $62,100 - $84,100
             9015          Commissioner of the Labor Commission         $62,100 - $84,100


             9016          Director, Alcoholic Beverage Control
             9017              Commission                     $62,100 - $84,100
             9018          Commissioner, Department of
             9019              Financial Institutions                 $62,100 - $84,100
             9020          Members, Board of Pardons and Parole         $62,100 - $84,100
             9021          Executive Director, Department
             9022              of Commerce                     $62,100 - $84,100
             9023          Executive Director, Commission on
             9024              Criminal and Juvenile Justice         $62,100 - $84,100
             9025          Adjutant General                     $62,100 - $84,100
             9026          Chair, Tax Commission                 $67,200 - $90,700
             9027          Commissioners, Tax Commission             $67,200 - $90,700
             9028          Executive Director, Department of
             9029              Community and Economic
             9030              Development                     $67,200 - $90,700
             9031          Executive Director, Tax Commission         $67,200 - $90,700
             9032          Chair, Public Service Commission             $67,200 - $90,700
             9033          Commissioner, Public Service Commission         $67,200 - $90,700
             9034          Executive Director, Department
             9035              of Corrections                     $73,100 - $98,700
             9036          Commissioner, Department of Public Safety         $73,100 - $98,700
             9037          Executive Director, Department of
             9038              Natural Resources                 $73,100 - $98,700
             9039          Director, Office of Planning
             9040              and Budget                     $73,100 - $98,700
             9041          Executive Director, Department of
             9042              Administrative Services             $73,100 - $98,700
             9043          Executive Director, Department of
             9044              Human Resource Management         $73,100 - $98,700
             9045          Executive Director, Department of
             9046              Environmental Quality             $73,100 - $98,700


             9047          State Olympic Officer                 $79,600 - $107,500
             9048          Executive Director, Department of             $79,600 - $107,500
             9049              Workforce Services
             9050          Executive Director, Department of
             9051              Health                         $79,600 - $107,500
             9052          Executive Director, Department
             9053              of Human Services                 $79,600 - $107,500
             9054          Executive Director, Department
             9055              of Transportation                 $79,600 - $107,500
             9056          Chief Information Officer                 $79,600 - $107,500
             9057          (2) (a) The Legislature fixes benefits for the state offices outlined in Subsection (1) as
             9058      follows:
             9059          (i) the option of participating in a state retirement system established by Title 49, Utah
             9060      State Retirement Act, or in a deferred compensation plan administered by the State Retirement
             9061      Office in accordance with the Internal Revenue Code and its accompanying rules and regulations;
             9062          (ii) health insurance;
             9063          (iii) dental insurance;
             9064          (iv) basic life insurance;
             9065          (v) unemployment compensation;
             9066          (vi) workers' compensation;
             9067          (vii) required employer contribution to Social Security;
             9068          (viii) long-term disability income insurance;
             9069          (ix) the same additional state-paid life insurance available to other noncareer service
             9070      employees;
             9071          (x) the same severance pay available to other noncareer service employees;
             9072          (xi) the same sick leave, converted sick leave, educational allowances, and holidays
             9073      granted to Schedule B state employees, and the same annual leave granted to Schedule B state
             9074      employees with more than ten years of state service;
             9075          (xii) the option to convert accumulated sick leave to cash or insurance benefits as provided
             9076      by law or rule upon resignation or retirement according to the same criteria and procedures applied
             9077      to Schedule B state employees;


             9078          (xiii) the option to purchase additional life insurance at group insurance rates according
             9079      to the same criteria and procedures applied to Schedule B state employees; and
             9080          (xiv) professional memberships if being a member of the professional organization is a
             9081      requirement of the position.
             9082          (b) Each department shall pay the cost of additional state-paid life insurance for its
             9083      executive director from its existing budget.
             9084          (3) The Legislature fixes the following additional benefits:
             9085          (a) for the executive director of the State Tax Commission a vehicle for official and
             9086      personal use;
             9087          (b) for the executive director of the Department of Transportation a vehicle for official and
             9088      personal use;
             9089          (c) for the executive director of the Department of Natural Resources a vehicle for
             9090      commute and official use;
             9091          (d) for the Commissioner of Public Safety:
             9092          (i) an accidental death insurance policy if POST certified; and
             9093          (ii) a public safety vehicle for official and personal use;
             9094          (e) for the executive director of the Department of Corrections:
             9095          (i) an accidental death insurance policy if POST certified; and
             9096          (ii) a public safety vehicle for official and personal use;
             9097          (f) for the Adjutant General a vehicle for official and personal use; and
             9098          (g) for each member of the Board of Pardons and Parole a vehicle for commute and official
             9099      use.
             9100          (4) (a) The governor has the discretion to establish a specific salary for each office listed
             9101      in Subsection (1), and, within that discretion, may provide salary increases within the range fixed
             9102      by the Legislature.
             9103          (b) The governor shall apply the same overtime regulations applicable to other FLSA
             9104      exempt positions.
             9105          (c) The governor may develop standards and criteria for reviewing the performance of the
             9106      state officers listed in Subsection (1).
             9107          (5) Salaries for other Schedule A employees, as defined in Section 67-19-15 , which are
             9108      not provided for in this chapter, or in Title 67, Chapter 8, Utah Executive and Judicial Salary Act,


             9109      shall be established as provided in Section 67-19-15 .
             9110          Section 203. Section 78-14-4.5 is amended to read:
             9111           78-14-4.5. Amount of award reduced by amounts of collateral sources available to
             9112      plaintiff -- No reduction where subrogation right exists -- Collateral sources defined --
             9113      Procedure to preserve subrogation rights -- Evidence admissible -- Exceptions.
             9114          (1) In all malpractice actions against health care providers as defined in Section 78-14-3
             9115      in which damages are awarded to compensate the plaintiff for losses sustained, the court shall
             9116      reduce the amount of such award by the total of all amounts paid to the plaintiff from all collateral
             9117      sources which are available to him; however, there shall be no reduction for collateral sources for
             9118      which a subrogation right exists as provided in this section nor shall there be a reduction for any
             9119      collateral payment not included in the award of damages. Upon a finding of liability and an
             9120      awarding of damages by the trier of fact, the court shall receive evidence concerning the total
             9121      amounts of collateral sources which have been paid to or for the benefit of the plaintiff or are
             9122      otherwise available to him. The court shall also take testimony of any amount which has been
             9123      paid, contributed, or forfeited by, or on behalf of the plaintiff or members of his immediate family
             9124      to secure his right to any collateral source benefit which he is receiving as a result of his injury,
             9125      and shall offset any reduction in the award by such amounts. No evidence shall be received and
             9126      no reduction made with respect to future collateral source benefits except as specified in
             9127      Subsection (4).
             9128          (2) For purposes of this section "collateral source" means payments made to or for the
             9129      benefit of the plaintiff for:
             9130          (a) medical expenses and disability payments payable under the United States Social
             9131      Security Act, any federal, state, or local income disability act, or any other public program, except
             9132      the federal programs which are required by law to seek subrogation;
             9133          (b) any health, sickness, or income [disability] replacement insurance, automobile accident
             9134      insurance that provides health benefits or income [disability] replacement coverage, and any other
             9135      similar insurance benefits, except life insurance benefits available to the plaintiff, whether
             9136      purchased by the plaintiff or provided by others;
             9137          (c) any contract or agreement of any person, group, organization, partnership, or
             9138      corporation to provide, pay for, or reimburse the costs of hospital, medical, dental, or other health
             9139      care services, except benefits received as gifts, contributions, or assistance made gratuitously; and


             9140          (d) any contractual or voluntary wage continuation plan provided by employers or any
             9141      other system intended to provide wages during a period of disability.
             9142          (3) To preserve subrogation rights for amounts paid or received prior to settlement or
             9143      judgment, a provider of collateral sources shall serve at least 30 days before settlement or trial of
             9144      the action a written notice upon each health care provider against whom the malpractice action has
             9145      been asserted. The written notice shall state the name and address of the provider of collateral
             9146      sources, the amount of collateral sources paid, the names and addresses of all persons who received
             9147      payment, and the items and purposes for which payment has been made.
             9148          (4) Evidence is admissible of government programs that provide payments or benefits
             9149      available in the future to or for the benefit of the plaintiff to the extent available irrespective of the
             9150      recipient's ability to pay. Evidence of the likelihood or unlikelihood that such programs, payments,
             9151      or benefits will be available in the future is also admissible. The trier of fact may consider such
             9152      evidence in determining the amount of damages awarded to a plaintiff for future expenses.
             9153          (5) [No] A provider of collateral sources is not entitled to recover the amounts of such
             9154      benefits from a health care provider, the plaintiff, or any other person or entity as reimbursement
             9155      for collateral source payments made prior to settlement or judgment, including any payments made
             9156      under Title 26, Chapter 19, Medical Benefits Recovery Act, except to the extent that subrogation
             9157      rights to amounts paid prior to settlement or judgment are preserved as provided in this section.
             9158      All policies of insurance providing benefits affected by this section are construed in accordance
             9159      with this section.
             9160          Section 204. Section 78-45-7.5 is amended to read:
             9161           78-45-7.5. Determination of gross income -- Imputed income.
             9162          (1) As used in the guidelines, "gross income" includes:
             9163          (a) prospective income from any source, including nonearned sources, except under
             9164      Subsection (3); and
             9165          (b) income from salaries, wages, commissions, royalties, bonuses, rents, gifts from anyone,
             9166      prizes, dividends, severance pay, pensions, interest, trust income, alimony from previous
             9167      marriages, annuities, capital gains, social security benefits, workers' compensation benefits,
             9168      unemployment compensation, income replacement disability insurance benefits, and payments
             9169      from "nonmeans-tested" government programs.
             9170          (2) Income from earned income sources is limited to the equivalent of one full-time


             9171      40-hour job. However, if and only if during the time prior to the original support order, the parent
             9172      normally and consistently worked more than 40 hours at his job, the court may consider this extra
             9173      time as a pattern in calculating the parent's ability to provide child support.
             9174          (3) Specifically excluded from gross income are:
             9175          (a) cash assistance provided under Title 35A, Chapter 3, Part 3, Family Employment
             9176      Program;
             9177          (b) benefits received under a housing subsidy program, the Job Training Partnership Act,
             9178      Supplemental Security Income, Social Security Disability Insurance, Medicaid, Food Stamps, or
             9179      General Assistance; and
             9180          (c) other similar means-tested welfare benefits received by a parent.
             9181          (4) (a) Gross income from self-employment or operation of a business shall be calculated
             9182      by subtracting necessary expenses required for self-employment or business operation from gross
             9183      receipts. The income and expenses from self-employment or operation of a business shall be
             9184      reviewed to determine an appropriate level of gross income available to the parent to satisfy a child
             9185      support award. Only those expenses necessary to allow the business to operate at a reasonable
             9186      level may be deducted from gross receipts.
             9187          (b) Gross income determined under this subsection may differ from the amount of business
             9188      income determined for tax purposes.
             9189          (5) (a) When possible, gross income should first be computed on an annual basis and then
             9190      recalculated to determine the average gross monthly income.
             9191          (b) Each parent shall provide verification of current income. Each parent shall provide
             9192      year-to-date pay stubs or employer statements and complete copies of tax returns from at least the
             9193      most recent year unless the court finds the verification is not reasonably available. Verification
             9194      of income from records maintained by the Department of Workforce Services may be substituted
             9195      for pay stubs, employer statements, and income tax returns.
             9196          (c) Historical and current earnings shall be used to determine whether an
             9197      underemployment or overemployment situation exists.
             9198          (6) Gross income includes income imputed to the parent under Subsection (7).
             9199          (7) (a) Income may not be imputed to a parent unless the parent stipulates to the amount
             9200      imputed, the party defaults, or, in contested cases, a hearing is held and a finding made that the
             9201      parent is voluntarily unemployed or underemployed.


             9202          (b) If income is imputed to a parent, the income shall be based upon employment potential
             9203      and probable earnings as derived from work history, occupation qualifications, and prevailing
             9204      earnings for persons of similar backgrounds in the community, or the median earning for persons
             9205      in the same occupation in the same geographical area as found in the statistics maintained by the
             9206      Bureau of Labor Statistics.
             9207          (c) If a parent has no recent work history or their occupation is unknown, income shall be
             9208      imputed at least at the federal minimum wage for a 40-hour work week. To impute a greater
             9209      income, the judge in a judicial proceeding or the presiding officer in an administrative proceeding
             9210      shall enter specific findings of fact as to the evidentiary basis for the imputation.
             9211          (d) Income may not be imputed if any of the following conditions exist:
             9212          (i) the reasonable costs of child care for the parents' minor children approach or equal the
             9213      amount of income the custodial parent can earn;
             9214          (ii) a parent is physically or mentally disabled to the extent he cannot earn minimum wage;
             9215          (iii) a parent is engaged in career or occupational training to establish basic job skills; or
             9216          (iv) unusual emotional or physical needs of a child require the custodial parent's presence
             9217      in the home.
             9218          (8) (a) Gross income may not include the earnings of a minor child who is the subject of
             9219      a child support award nor benefits to a minor child in the child's own right such as Supplemental
             9220      Security Income.
             9221          (b) Social Security benefits received by a child due to the earnings of a parent shall be
             9222      credited as child support to the parent upon whose earning record it is based, by crediting the
             9223      amount against the potential obligation of that parent. Other unearned income of a child may be
             9224      considered as income to a parent depending upon the circumstances of each case.
             9225          Section 205. Repealer.
             9226          This act repeals:
             9227          Section 31A-8-210, Solvency standards.
             9228          Section 31A-8-212, Solvency standards transition.


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