H.B. 340 Enrolled

1

INSURER RECEIVERSHIP ACT
2 2007 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: James A. Dunnigan
5 Senate Sponsor: Curtis S. Bramble
6
7 LONG TITLE
8 General Description:
9 This bill modifies the Insurance Code by repealing existing insurer rehabilitation and
10 liquidation provisions and enacting the Insurer Receivership Act.
11 Highlighted Provisions:
12 This bill:
13 . repeals most provisions of Title 31A, Chapter 27, Insurers Rehabilitation and
14 Liquidation, and enacts Title 31A, Chapter 27a, Insurer Receivership Act;
15 . renumbers and amends provisions in Title 31A, Chapter 27, related to
16 administrative actions;
17 . provides general provisions relating to:
18 . construction and commissioner's powers;
19 . definitions;
20 . insurer receivership laws;
21 . persons covered;
22 . court proceedings including jurisdiction, venue, notice and hearings,
23 injunctions, orders, and statutes of limitations;
24 . exemptions from fees;
25 . cooperation of officers, owners, and employees;
26 . actions by and against a receiver, providing immunity and indemnification, and
27 the possession and control of an insurer's records by a receiver;
28 . affiliates;
29

30 . executory contracts;
31 . financial obligations, including approval and payment of expenses and financial
32 reporting;
33 . reporting;
34 . records;
35 . the affect of delinquency proceedings commenced before April 30, 2007; and
36 . severability;
37 . provides procedures governing delinquency proceedings, including:
38 . commencing delinquency proceedings, expedited trials, decisions, and appeals;
39 . preserving the confidentiality of the proceedings; and
40 . finding grounds for rehabilitation or liquidation, and the entry and effect of an
41 order of rehabilitation or liquidation;
42 . provides provisions governing the rehabilitation of an insurer, including:
43 . issuing rehabilitation orders;
44 . establishing the powers and duties of the rehabilitator;
45 . filing of rehabilitation plans;
46 . terminating rehabilitation; and
47 . requiring coordination with guaranty associations to assist in the orderly
48 transition to rehabilitation or liquidation;
49 . establishes provisions for liquidation of an insurer, including:
50 . addressing liquidation orders;
51 . addressing continuance of coverage;
52 . providing for the sale or dissolution of the corporate entity;
53 . establishing the power of the liquidator;
54 . providing notice requirements; and
55 . duties of agents;
56 . addresses asset recovery, including:
57 . turning over assets;

58 . recovering from affiliates;
59 . addressing unauthorized postpetition transfers;
60 . addressing voidable preferences and liens;
61 . addressing avoidance of property title transfers;
62 . addressing fraudulent transfers and obligations;
63 . addressing receiver as lien creditor;
64 . addressing liability of transferees;
65 . providing for setoffs;
66 . providing for assessments;
67 . addressing a reinsurer's liability;
68 . reinsurance;
69 . recovering of premiums owed;
70 . commutation and release agreements; and
71 . requiring in certain circumstances reinsurance recoverable trust;
72 . establishes claim procedures relating to:
73 . filing, proof, and allowance of claims;
74 . claims under occurrence policies, surety bonds, and surety undertakings;
75 . allowance of contingent and unliquidated claims;
76 . provisions for third party claims, disputed claims, codebtors, and secured
77 creditors' claims;
78 . qualified financial contracts; and
79 . provides for the administration of deductive policies and insured collateral;
80 . provides for distribution of assets, including priority for distribution, early
81 distribution, and partial and final distribution;
82 . establishes discharge and termination of delinquency proceedings;
83 . establishes provisions relating to interstate relations; and
84 . makes technical and conforming changes.
85 Monies Appropriated in this Bill:

86 None
87 Other Special Clauses:
88 None
89 Utah Code Sections Affected:
90 AMENDS:
91 31A-1-106, as last amended by Chapter 95, Laws of Utah 1987
92 31A-2-108, as last amended by Chapter 344, Laws of Utah 1995
93 31A-2-203, as last amended by Chapter 177, Laws of Utah 2006
94 31A-2-204, as last amended by Chapter 177, Laws of Utah 2006
95 31A-2-206, as last amended by Chapters 79 and 204, Laws of Utah 1996
96 31A-2-207, as last amended by Chapter 2, Laws of Utah 2004
97 31A-2-212, as last amended by Chapter 177, Laws of Utah 2006
98 31A-2-308, as last amended by Chapter 58, Laws of Utah 2005
99 31A-5-212, as enacted by Chapter 242, Laws of Utah 1985
100 31A-5-217, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
101 31A-5-305, as last amended by Chapter 316, Laws of Utah 1994
102 31A-5-416, as last amended by Chapter 277, Laws of Utah 1992
103 31A-5-504, as last amended by Chapter 320, Laws of Utah 2006
104 31A-5-506, as last amended by Chapter 204, Laws of Utah 1986
105 31A-8-213, as last amended by Chapter 116, Laws of Utah 2001
106 31A-9-502, as last amended by Chapter 300, Laws of Utah 2000
107 31A-9-504, as enacted by Chapter 242, Laws of Utah 1985
108 31A-11-104, as last amended by Chapter 90, Laws of Utah 2004
109 31A-11-109, as enacted by Chapter 242, Laws of Utah 1985
110 31A-13-107, as last amended by Chapter 204, Laws of Utah 1986
111 31A-14-206, as last amended by Chapter 90, Laws of Utah 2004
112 31A-14-215, as last amended by Chapter 204, Laws of Utah 1986
113 31A-14-217, as last amended by Chapter 230, Laws of Utah 1992

114 31A-15-105, as last amended by Chapter 204, Laws of Utah 1986
115 31A-17-605, as last amended by Chapter 116, Laws of Utah 2001
116 31A-17-606, as last amended by Chapter 116, Laws of Utah 2001
117 31A-17-609, as last amended by Chapter 116, Laws of Utah 2001
118 31A-17-610, as last amended by Chapter 116, Laws of Utah 2001
119 31A-18-106, as last amended by Chapter 176, Laws of Utah 2006
120 31A-22-617, as last amended by Chapter 3, Laws of Utah 2005, First Special Session
121 31A-23a-704, as renumbered and amended by Chapter 298, Laws of Utah 2003
122 31A-28-108, as last amended by Chapters 116 and 161, Laws of Utah 2001
123 31A-28-114, as last amended by Chapter 161, Laws of Utah 2001
124 31A-28-207, as last amended by Chapter 308, Laws of Utah 2002
125 31A-28-213, as last amended by Chapter 363, Laws of Utah 2001
126 31A-35-103, as enacted by Chapter 293, Laws of Utah 1998
127 31A-37-504, as last amended by Chapter 312, Laws of Utah 2004
128 ENACTS:
129 31A-27-502, Utah Code Annotated 1953
130 31A-27a-101, Utah Code Annotated 1953
131 31A-27a-102, Utah Code Annotated 1953
132 31A-27a-103, Utah Code Annotated 1953
133 31A-27a-104, Utah Code Annotated 1953
134 31A-27a-105, Utah Code Annotated 1953
135 31A-27a-106, Utah Code Annotated 1953
136 31A-27a-107, Utah Code Annotated 1953
137 31A-27a-108, Utah Code Annotated 1953
138 31A-27a-109, Utah Code Annotated 1953
139 31A-27a-110, Utah Code Annotated 1953
140 31A-27a-111, Utah Code Annotated 1953
141 31A-27a-112, Utah Code Annotated 1953

142 31A-27a-113, Utah Code Annotated 1953
143 31A-27a-114, Utah Code Annotated 1953
144 31A-27a-115, Utah Code Annotated 1953
145 31A-27a-116, Utah Code Annotated 1953
146 31A-27a-117, Utah Code Annotated 1953
147 31A-27a-119, Utah Code Annotated 1953
148 31A-27a-120, Utah Code Annotated 1953
149 31A-27a-201, Utah Code Annotated 1953
150 31A-27a-202, Utah Code Annotated 1953
151 31A-27a-203, Utah Code Annotated 1953
152 31A-27a-204, Utah Code Annotated 1953
153 31A-27a-205, Utah Code Annotated 1953
154 31A-27a-206, Utah Code Annotated 1953
155 31A-27a-207, Utah Code Annotated 1953
156 31A-27a-208, Utah Code Annotated 1953
157 31A-27a-209, Utah Code Annotated 1953
158 31A-27a-301, Utah Code Annotated 1953
159 31A-27a-302, Utah Code Annotated 1953
160 31A-27a-303, Utah Code Annotated 1953
161 31A-27a-304, Utah Code Annotated 1953
162 31A-27a-305, Utah Code Annotated 1953
163 31A-27a-401, Utah Code Annotated 1953
164 31A-27a-402, Utah Code Annotated 1953
165 31A-27a-403, Utah Code Annotated 1953
166 31A-27a-404, Utah Code Annotated 1953
167 31A-27a-405, Utah Code Annotated 1953
168 31A-27a-406, Utah Code Annotated 1953
169 31A-27a-407, Utah Code Annotated 1953

170 31A-27a-501, Utah Code Annotated 1953
171 31A-27a-502, Utah Code Annotated 1953
172 31A-27a-503, Utah Code Annotated 1953
173 31A-27a-504, Utah Code Annotated 1953
174 31A-27a-505, Utah Code Annotated 1953
175 31A-27a-506, Utah Code Annotated 1953
176 31A-27a-507, Utah Code Annotated 1953
177 31A-27a-508, Utah Code Annotated 1953
178 31A-27a-509, Utah Code Annotated 1953
179 31A-27a-510, Utah Code Annotated 1953
180 31A-27a-511, Utah Code Annotated 1953
181 31A-27a-512, Utah Code Annotated 1953
182 31A-27a-513, Utah Code Annotated 1953
183 31A-27a-514, Utah Code Annotated 1953
184 31A-27a-515, Utah Code Annotated 1953
185 31A-27a-516, Utah Code Annotated 1953
186 31A-27a-601, Utah Code Annotated 1953
187 31A-27a-602, Utah Code Annotated 1953
188 31A-27a-603, Utah Code Annotated 1953
189 31A-27a-604, Utah Code Annotated 1953
190 31A-27a-605, Utah Code Annotated 1953
191 31A-27a-606, Utah Code Annotated 1953
192 31A-27a-607, Utah Code Annotated 1953
193 31A-27a-608, Utah Code Annotated 1953
194 31A-27a-609, Utah Code Annotated 1953
195 31A-27a-610, Utah Code Annotated 1953
196 31A-27a-611, Utah Code Annotated 1953
197 31A-27a-612, Utah Code Annotated 1953

198 31A-27a-701, Utah Code Annotated 1953
199 31A-27a-702, Utah Code Annotated 1953
200 31A-27a-703, Utah Code Annotated 1953
201 31A-27a-704, Utah Code Annotated 1953
202 31A-27a-705, Utah Code Annotated 1953
203 31A-27a-801, Utah Code Annotated 1953
204 31A-27a-802, Utah Code Annotated 1953
205 31A-27a-803, Utah Code Annotated 1953
206 31A-27a-804, Utah Code Annotated 1953
207 31A-27a-805, Utah Code Annotated 1953
208 31A-27a-901, Utah Code Annotated 1953
209 31A-27a-902, Utah Code Annotated 1953
210 RENUMBERS AND AMENDS:
211 31A-27-501, (Renumbered from 31A-27-101, as last amended by Chapter 204, Laws of
212 Utah 1986)
213 31A-27-503, (Renumbered from 31A-27-201, as last amended by Chapter 161, Laws of
214 Utah 1987)
215 31A-27-504, (Renumbered from 31A-27-203, as last amended by Chapter 204, Laws of
216 Utah 1986)
217 31A-27a-118, (Renumbered from 31A-27-107, as enacted by Chapter 242, Laws of
218 Utah 1985)
219 REPEALS:
220 31A-27-102, as last amended by Chapter 308, Laws of Utah 2002
221 31A-27-103, as last amended by Chapter 298, Laws of Utah 2003
222 31A-27-104, as last amended by Chapter 131, Laws of Utah 1999
223 31A-27-105, as enacted by Chapter 242, Laws of Utah 1985
224 31A-27-106, as last amended by Chapter 204, Laws of Utah 1986
225 31A-27-108, as enacted by Chapter 242, Laws of Utah 1985

226 31A-27-109, as enacted by Chapter 204, Laws of Utah 1986
227 31A-27-110, as enacted by Chapter 131, Laws of Utah 1999
228 31A-27-202, as last amended by Chapter 204, Laws of Utah 1986
229 31A-27-301, as last amended by Chapter 204, Laws of Utah 1986
230 31A-27-302, as last amended by Chapter 252, Laws of Utah 2003
231 31A-27-303, as last amended by Chapter 204, Laws of Utah 1986
232 31A-27-304, as last amended by Chapter 344, Laws of Utah 1995
233 31A-27-305, as last amended by Chapter 308, Laws of Utah 2002
234 31A-27-306, as enacted by Chapter 242, Laws of Utah 1985
235 31A-27-307, as last amended by Chapter 131, Laws of Utah 1999
236 31A-27-308, as last amended by Chapter 185, Laws of Utah 1997
237 31A-27-309, as enacted by Chapter 242, Laws of Utah 1985
238 31A-27-310, as last amended by Chapter 131, Laws of Utah 1999
239 31A-27-311, as last amended by Chapter 13, Laws of Utah 1998
240 31A-27-311.5, as last amended by Chapter 252, Laws of Utah 2003
241 31A-27-312, as last amended by Chapter 230, Laws of Utah 1992
242 31A-27-313, as enacted by Chapter 242, Laws of Utah 1985
243 31A-27-314, as last amended by Chapter 105, Laws of Utah 2004
244 31A-27-315, as last amended by Chapter 177, Laws of Utah 2006
245 31A-27-316, as last amended by Chapter 298, Laws of Utah 2003
246 31A-27-317, as last amended by Chapter 308, Laws of Utah 2002
247 31A-27-318, as enacted by Chapter 242, Laws of Utah 1985
248 31A-27-319, as last amended by Chapter 204, Laws of Utah 1986
249 31A-27-320, as last amended by Chapter 204, Laws of Utah 1986
250 31A-27-321, as last amended by Chapter 277, Laws of Utah 1992
251 31A-27-322, as enacted by Chapter 204, Laws of Utah 1986
252 31A-27-323, as last amended by Chapter 131, Laws of Utah 1999
253 31A-27-324, as last amended by Chapter 298, Laws of Utah 2003

254 31A-27-325, as last amended by Chapter 204, Laws of Utah 1986
255 31A-27-326, as last amended by Chapter 105, Laws of Utah 2004
256 31A-27-327, as last amended by Chapter 105, Laws of Utah 2004
257 31A-27-328, as last amended by Chapter 131, Laws of Utah 1999
258 31A-27-329, as enacted by Chapter 242, Laws of Utah 1985
259 31A-27-330, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
260 31A-27-330.5, as last amended by Chapter 185, Laws of Utah 1997
261 31A-27-330.6, as last amended by Chapter 105, Laws of Utah 2004
262 31A-27-331, as enacted by Chapter 242, Laws of Utah 1985
263 31A-27-332, as last amended by Chapter 308, Laws of Utah 2002
264 31A-27-333, as last amended by Chapter 204, Laws of Utah 1986
265 31A-27-334, as last amended by Chapter 204, Laws of Utah 1986
266 31A-27-335, as last amended by Chapter 300, Laws of Utah 2000
267 31A-27-335.5, as last amended by Chapter 344, Laws of Utah 1995
268 31A-27-336, as enacted by Chapter 242, Laws of Utah 1985
269 31A-27-337, as last amended by Chapter 308, Laws of Utah 2002
270 31A-27-338, as enacted by Chapter 242, Laws of Utah 1985
271 31A-27-339, as last amended by Chapter 204, Laws of Utah 1986
272 31A-27-340, as last amended by Chapter 308, Laws of Utah 2002
273 31A-27-341, as last amended by Chapter 308, Laws of Utah 2002
274 31A-27-342, as enacted by Chapter 242, Laws of Utah 1985
275 31A-27-401, as last amended by Chapter 204, Laws of Utah 1986
276 31A-27-402, as enacted by Chapter 242, Laws of Utah 1985
277 31A-27-403, as enacted by Chapter 242, Laws of Utah 1985
278 31A-27-404, as enacted by Chapter 242, Laws of Utah 1985
279 31A-27-405, as enacted by Chapter 242, Laws of Utah 1985
280 31A-27-406, as enacted by Chapter 242, Laws of Utah 1985
281 31A-27-407, as last amended by Chapter 204, Laws of Utah 1986

282 31A-27-408, as enacted by Chapter 242, Laws of Utah 1985
283 31A-27-409, as last amended by Chapter 204, Laws of Utah 1986
284 31A-27-410, as last amended by Chapter 344, Laws of Utah 1995
285 31A-27-411, as last amended by Chapter 204, Laws of Utah 1986
286
287 Be it enacted by the Legislature of the state of Utah:
288 Section 1. Section 31A-1-106 is amended to read:
289 31A-1-106. Residual unlicensed domestic insurers.
290 (1) Every person doing an insurance business in Utah not covered under another
291 section of this title, that does not hold a valid certificate of authority or license under [the
292 Insurance Code,] this title shall, by July 1, 1987, complete one of the actions prescribed in
293 Subsections (2) through (5). This section does not apply to an unauthorized foreign insurer
294 doing an insurance business in Utah in full compliance with Section 31A-15-103 .
295 (2) An insurer under Subsection (1) may incorporate and apply, or if already
296 incorporated, may apply for a certificate of authority under Chapter 5, 6, 7, 8, or 9. If the
297 commissioner is satisfied that the insurer substantially complies with the requirements of the
298 appropriate chapter necessary for the protection of insureds and the public, the commissioner
299 shall issue a certificate of authority.
300 (3) An insurer under Subsection (1) may transfer all its obligations to a corporation
301 authorized under this title to assume them, according to a plan approved by the commissioner.
302 The commissioner may disapprove the plan on a finding, after a hearing, that it is contrary to
303 the interests of insureds, the public, or the law.
304 (4) An insurer under Subsection (1) may adopt a plan to run off existing obligations
305 without accepting any new policyholders or new obligations. The commissioner may
306 disapprove the plan on a finding, after a hearing, that it is contrary to the interests of insureds,
307 the public, or the law.
308 (5) The commissioner may, by order, exempt an insurer from the requirements of
309 Subsection (1) or extend the deadline under Subsection (1) on a finding that:

310 (a) incorporation, licensing, reinsurance, or run off would cause disproportionate
311 expense, loss, or substantial hardship; and
312 (b) the nature of the existing and prospective business, the assets, or the business plan
313 of the insurer can be reasonably expected to continue to operate in a sound manner and can be
314 subjected to adequate regulatory controls.
315 (6) Whenever the commissioner grants an exemption under Subsection (5), the
316 commissioner shall issue to the insurer a certificate of authority. The commissioner may
317 amend the certificate at any time, specifying the business that the insurer may transact and
318 specifying in detail the controls to which the insurer shall be subject. These controls shall
319 correspond as nearly as practicable to the controls applicable to corporations transacting a like
320 business.
321 (7) It is a ground for liquidation under Section [ 31A-27-307 ] 31A-27a-207 if an insurer
322 has not completed action under one of Subsections (2) through (4) and has not applied for and
323 been granted exemption under Subsection (5) before July 1, 1987.
324 Section 2. Section 31A-2-108 is amended to read:
325 31A-2-108. Legal services.
326 (1) Except as provided in Subsection (4), the commissioner shall call upon the attorney
327 general for the legal counsel and assistance necessary to enforce [the provisions of] this title.
328 Upon the commissioner's request, or upon the attorney general's own initiative, the attorney
329 general may hire special legal counsel under Section 67-5-5 to represent the [Insurance]
330 department.
331 (2) Upon the commissioner's request, or upon the commissioner's own initiative, the
332 attorney general may aid in any investigation, hearing, or other procedure under this title and
333 may institute, prosecute, and defend proceedings relating to the enforcement or interpretation
334 of this title, including any proceeding to which the state, or the commissioner or any employee
335 of the department in an official capacity, is a party or is interested.
336 (3) The commissioner may refer such evidence as is available concerning violations of
337 this title or of any rule or order under this title to the proper county attorney or district attorney,

338 who may, with or without this reference, institute the appropriate criminal proceedings.
339 (4) For proceedings authorized by [Title 31A, Chapter 27, Insurers Rehabilitation and
340 Liquidation] Chapter 27a, Insurer Receivership Act, the commissioner may employ on a
341 contract basis legal counsel other than the attorney general, with the fees, costs, and expenses
342 of the counsel and the attorney general being a class one administrative expense under Section
343 [31A-27-335 ] 31A-27a-701 .
344 Section 3. Section 31A-2-203 is amended to read:
345 31A-2-203. Examinations and alternatives.
346 (1) (a) Whenever the commissioner considers it necessary in order to inform the
347 commissioner about any matter related to the enforcement of this title, the commissioner may
348 examine the affairs and condition of:
349 (i) a licensee under this title;
350 (ii) an applicant for a license under this title;
351 (iii) a person or organization of persons doing or in process of organizing to do an
352 insurance business in this state; or
353 (iv) a person who is not, but should be, licensed under this title.
354 (b) When reasonably necessary for an examination under Subsection (1)(a), the
355 commissioner may examine:
356 (i) so far as they relate to the examinee, the accounts, records, documents, or evidences
357 of transactions of:
358 (A) the insurer or other licensee;
359 (B) any officer or other person who has executive authority over or is in charge of any
360 segment of the examinee's affairs; or
361 (C) any affiliate of the examinee; or
362 (ii) any third party model or product used by the examinee.
363 (c) (i) On demand, each examinee under Subsection (1)(a) shall make available to the
364 commissioner for examination:
365 (A) any of the examinee's own accounts, records, files, documents, or evidences of

366 transactions; and
367 (B) to the extent reasonably necessary for an examination, the accounts, records, files,
368 documents, or evidences of transactions of any persons under Subsection (1)(b).
369 (ii) Except as provided in Subsection (1)(c)(iii), failure to make the documents
370 described in Subsection (1)(c)(i) available is concealment of records under Subsection
371 [ 31A-27-307 (7)] 31A-27a-207 (1)(e).
372 (iii) If the examinee is unable to obtain accounts, records, files, documents, or
373 evidences of transactions from persons under Subsection (1)(b), that failure is not concealment
374 of records if the examinee immediately terminates the relationship with the other person.
375 (d) (i) Neither the commissioner nor an examiner may remove any account, record, file,
376 document, evidence of transaction, or other property of the examinee from the examinee's
377 offices unless:
378 (A) the examinee consents in writing; or
379 (B) a court grants permission.
380 (ii) The commissioner may make and remove copies or abstracts of the following
381 described in Subsection (1)(d)(i):
382 (A) an account;
383 (B) a record;
384 (C) a file;
385 (D) a document;
386 (E) evidence of transaction; or
387 (F) other property.
388 (2) (a) Subject to the other provisions of this section, the commissioner shall examine
389 as needed and as otherwise provided by law:
390 (i) every insurer, both domestic and nondomestic;
391 (ii) every licensed rate service organization; and
392 (iii) any other licensee.
393 (b) The commissioner shall examine insurers, both domestic and nondomestic, no less

394 frequently than once every five years, but the commissioner may use in lieu examinations
395 under Subsection (4) to satisfy this requirement.
396 (c) The commissioner shall revoke the certificate of authority of an insurer or the
397 license of a rate service organization that has not been examined, or submitted an acceptable in
398 lieu report under Subsection (4), within the past five years.
399 (d) (i) Any 25 persons who are policyholders, shareholders, or creditors of a domestic
400 insurer may by verified petition demand a hearing under Section 31A-2-301 to determine
401 whether the commissioner should conduct an unscheduled examination of the insurer.
402 (ii) Persons demanding the hearing under this Subsection (2)(d) shall be given an
403 opportunity in the hearing to present evidence that an examination of the insurer is necessary.
404 (iii) If the evidence justifies an examination, the commissioner shall order an
405 examination.
406 (e) (i) When the board of directors of a domestic insurer requests that the
407 commissioner examine the insurer, the commissioner shall examine the insurer as soon as
408 reasonably possible.
409 (ii) If the examination requested under this Subsection (2)(e) is conducted within two
410 years after completion of a comprehensive examination by the commissioner, costs of the
411 requested examination may not be deducted from premium taxes under Section 59-9-102
412 unless the commissioner's order specifically provides for the deduction.
413 (f) Bail bond surety companies as defined in Section 31A-35-102 are exempted from:
414 (i) the five-year examination requirement in Subsection (2)(b);
415 (ii) the revocation under Subsection (2)(c); and
416 (iii) Subsections (2)(d) and (2)(e).
417 (3) (a) The commissioner may order an independent audit or examination by technical
418 experts, including certified public accountants and actuaries:
419 (i) in lieu of all or part of an examination under Subsection (1) or (2); or
420 (ii) in addition to an examination under Subsection (1) or (2).
421 (b) Any audit or evaluation under this Subsection (3) is subject to Subsection (5),

422 Section 31A-2-204 , and Subsection 31A-2-205 (4).
423 (4) (a) In lieu of all or any part of an examination under this section, the commissioner
424 may accept the report of an examination made by:
425 (i) the insurance department of another state; or
426 (ii) another government agency in:
427 (A) this state;
428 (B) the federal government; or
429 (C) another state.
430 (b) An examination by the commissioner under Subsection (1) or (2) or accepted by the
431 commissioner under this Subsection (4) may use:
432 (i) an audit already made by a certified public accountant; or
433 (ii) an actuarial evaluation made by an actuary approved by the commissioner.
434 (5) (a) An examination may be comprehensive or limited with respect to the
435 examinee's affairs and condition. The commissioner shall determine the nature and scope of
436 each examination, taking into account all relevant factors, including:
437 (i) the length of time the examinee has been licensed in this state;
438 (ii) the nature of the business being examined;
439 (iii) the nature of the accounting or other records available;
440 (iv) reports from:
441 (A) independent auditors; and
442 (B) self-certification entities; and
443 (v) the nature of examinations performed elsewhere.
444 (b) The examination of an alien insurer shall be limited to insurance transactions and
445 assets in the United States, unless the commissioner orders otherwise after finding that
446 extraordinary circumstances necessitate a broader examination.
447 (6) To effectively administer this section, the commissioner:
448 (a) shall:
449 (i) maintain effective financial condition and market regulation surveillance systems

450 including:
451 (A) financial and market analysis; and
452 (B) review of insurance regulatory information system reports;
453 (ii) employ a priority scheduling method that focuses on insurers and other licensees
454 most in need of examination; and
455 (iii) use examination management techniques similar to those outlined in the Financial
456 Condition Examination Handbook of the National Association of Insurance Commissioners;
457 and
458 (b) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
459 may make rules pertaining to the financial condition and market regulation surveillance
460 systems.
461 Section 4. Section 31A-2-204 is amended to read:
462 31A-2-204. Conducting examinations.
463 (1) (a) For each examination under Section 31A-2-203 , the commissioner shall issue an
464 order:
465 (i) stating the scope of the examination; and
466 (ii) designating the examiner in charge.
467 (b) The commissioner need not give advance notice of an examination to an examinee.
468 (c) The examiner in charge shall give the examinee a copy of the order issued under
469 this Subsection (1).
470 (d) (i) The commissioner may alter the scope or nature of an examination at any time
471 without advance notice to the examinee.
472 (ii) If the commissioner amends an order described in this Subsection (1), the
473 commissioner shall provide a copy of any amended order to the examinee.
474 (e) Statements in the commissioner's examination order concerning examination scope
475 are for the examiner's guidance only.
476 (f) Examining relevant matters not mentioned in an order issued under this Subsection
477 (1) is not a violation of this title.

478 (2) The commissioner shall, whenever practicable, cooperate with the insurance
479 regulators of other states by conducting joint examinations of:
480 (a) multistate insurers doing business in this state; or
481 (b) other multistate licensees doing business in this state.
482 (3) An examiner authorized by the commissioner shall, when necessary to the purposes
483 of the examination, have access at all reasonable hours to the premises and to any books,
484 records, files, securities, documents, or property of:
485 (a) the examinee; and
486 (b) any of the following if the premises, books, records, files, securities, documents, or
487 property relate to the affairs of the examinee:
488 (i) an officer of the examinee;
489 (ii) any other person who:
490 (A) has executive authority over the examinee; or
491 (B) is in charge of any segment of the examinee's affairs; or
492 (iii) any affiliate of the examinee under Subsection 31A-2-203 (1)(b).
493 (4) (a) The officers, employees, and agents of the examinee and of persons under
494 Subsection 31A-2-203 (1)(b) shall comply with every reasonable request of the examiners for
495 assistance in any matter relating to the examination.
496 (b) A person may not obstruct or interfere with the examination except by legal
497 process.
498 (5) If the commissioner finds the accounts or records to be inadequate for proper
499 examination of the condition and affairs of the examinee or improperly kept or posted, the
500 commissioner may employ experts to rewrite, post, or balance the accounts or records at the
501 expense of the examinee.
502 (6) (a) The examiner in charge of an examination shall make a report of the
503 examination no later than 60 days after the completion of the examination that shall include:
504 (i) the information and analysis ordered under Subsection (1); and
505 (ii) the examiner's recommendations.

506 (b) At the option of the examiner in charge, preparation of the report may include
507 conferences with the examinee or representatives of the examinee.
508 (c) The report is confidential until the report becomes a public document under
509 Subsection (7), except the commissioner may use information from the report as a basis for
510 action under Chapter [27, Insurers Rehabilitation and Liquidation] 27a, Insurer Receivership
511 Act.
512 (7) (a) The commissioner shall serve a copy of the examination report described in
513 Subsection (6) upon the examinee.
514 (b) Within 20 days after service, the examinee shall:
515 (i) accept the examination report as written; or
516 (ii) request agency action to modify the examination report.
517 (c) The report is considered accepted under this Subsection (7) if the examinee does
518 not file a request for agency action to modify the report within 20 days after service of the
519 report.
520 (d) If the examination report is accepted:
521 (i) the examination report immediately becomes a public document; and
522 (ii) the commissioner shall distribute the examination report to all jurisdictions in
523 which the examinee is authorized to do business.
524 (e) (i) Any adjudicative proceeding held as a result of the examinee's request for
525 agency action shall, upon the examinee's demand, be closed to the public, except that the
526 commissioner need not exclude any participating examiner from this closed hearing.
527 (ii) Within 20 days after the hearing held under this Subsection (7)(e), the
528 commissioner shall:
529 (A) adopt the examination report with any necessary modifications; and
530 (B) serve a copy of the adopted report upon the examinee.
531 (iii) Unless the examinee seeks judicial relief, the adopted examination report:
532 (A) shall become a public document ten days after service; and
533 (B) may be distributed as described in this section.

534 (f) Notwithstanding Title 63, Chapter 46b, Administrative Procedures Act, to the
535 extent that this section is in conflict with Title 63, Chapter 46b, this section governs:
536 (i) a request for agency action under this section; or
537 (ii) adjudicative proceeding under this section.
538 (8) The examinee shall promptly furnish copies of the adopted examination report
539 described in Subsection (7) to each member of the examinee's board.
540 (9) After an examination report becomes a public document under Subsection (7), the
541 commissioner may furnish, without cost or at a reasonable price set under Section 31A-3-103 ,
542 a copy of the examination report to interested persons, including:
543 (a) a member of the board of the examinee; or
544 (b) one or more newspapers in this state.
545 (10) (a) In a proceeding by or against the examinee, or any officer or agent of the
546 examinee, the examination report as adopted by the commissioner is admissible as evidence of
547 the facts stated in the report.
548 (b) In any proceeding commenced under Chapter [27, Insurers Rehabilitation and
549 Liquidation] 27a, Insurer Receivership Act, the examination report, whether adopted by the
550 commissioner or not, is admissible as evidence of the facts stated in the examination report.
551 Section 5. Section 31A-2-206 is amended to read:
552 31A-2-206. Receipt and handling of deposits.
553 (1) As used in this chapter:
554 (a) "Custodian institution" means [any] a financial institution in this state as defined
555 under Section 7-1-103 that:
556 (i) has authority under Title 7, Chapter 5, Trust Business, to engage in a trust business;
557 and
558 (ii) is approved by the commissioner to have custody of deposited securities, whether
559 physically, through the Federal Reserve book-entry system, or through a clearing corporation as
560 defined under Subsection 70A-8-101 (1).
561 (b) "Federal Reserve book-entry system" means the computerized system sponsored by

562 the United States Department of the Treasury and certain other agencies and instrumentalities
563 of the United States for holding and transferring securities of the United States government and
564 other agencies and instrumentalities.
565 (2) Subject to the commissioner's approval and to the requirements of this section, the
566 state treasurer shall accept, and a custodian institution qualified under Subsection (1)(a) may
567 accept:
568 (a) deposits required or permitted under this title or rules adopted under this title;
569 (b) deposits of domestic insurers or of alien insurers domiciled in this state if required
570 by the laws of other states as a prerequisite to authority to do an insurance business in other
571 states; and
572 (c) deposits resulting from application of any retaliatory provisions of this title.
573 (3) Deposits authorized under Subsection (2) shall be of securities described in
574 Subsection (7).
575 (4) Unless otherwise provided by the law requiring or permitting the deposit, each
576 deposit shall be held in trust:
577 (a) first, for administrative costs under Subsection [ 31A-27-335 ] 31A-27a-701 (2)(a);
578 (b) second, for the claimants under Subsection [ 31A-27-335 ] 31A-27a-701 (2)(c);
579 (c) third, for the claimants under Subsection [ 31A-27-335 ] 31A-27a-701 (2)(d); and
580 (d) fourth, for all other creditors in the order of priority established under Section
581 [ 31A-27-335 ] 31A-27a-701 .
582 (5) A claim may be made against the deposit of an alien insurer only if it arises out of a
583 transaction in the United States.
584 (6) Deposits may be made by:
585 (a) delivering physical custody and control of the deposited security to the state
586 treasurer or a custodian institution, accompanied by a statement signed by the depositor
587 indicating that the deposit shall be held in trust under the terms of this section and subject to
588 the commissioner's exclusive direction until control is released by the commissioner; or
589 (b) delivering to the commissioner, on a form adopted by rule, a signed certificate of a

590 custodian institution, describing securities qualifying for deposit under Subsection (7) that are
591 on deposit with a clearing corporation or held in the Federal Reserve book-entry system in the
592 name of the custodian institution, in trust for the purposes stated under this section, and that
593 these securities are subject to the exclusive direction of the commissioner and may not be
594 withdrawn or transferred by any person, including the insurer owning the securities, without the
595 commissioner's written approval.
596 (7) (a) Deposits may consist of any securities authorized in Subsection (7) (b) for
597 which there is a ready market if they:
598 (i) are expressly approved by the commissioner;
599 (ii) are subject to disposition by the state treasurer or custodian institution only with the
600 concurrence of the commissioner; and
601 (iii) are not available to any other person except as expressly provided by law.
602 (b) The authorized securities are:
603 (i) deposits or certificates of deposit insured by the Federal Deposit Insurance
604 Corporation;
605 (ii) bonds or other evidences of indebtedness that are guaranteed as to principal and
606 interest by the United States;
607 (iii) tax anticipation bonds or notes, general obligation bonds, or revenue bonds of this
608 state or of any county, incorporated city or town, school district, or other political subdivision
609 of this state, if the bonds or notes are rated AAA by Standard and Poor's or an equivalent
610 nationally recognized rating agency;
611 (iv) bonds or other evidences of indebtedness issued or guaranteed by an agency or
612 instrumentality of the United States; and
613 (v) any other security approved by the commissioner that [he] the commissioner
614 considers an equivalent grade investment to those enumerated under Subsections (7)(b)(i)
615 through (iv) based on tests of the safety of principal and liquidity.
616 (8) Securities held on deposit shall be valued under Section 31A-17-401 as those
617 investments are valued for life insurers, or at market, whichever is lower. The securities shall

618 be revalued whenever the commissioner requests to ensure continued compliance with the
619 requirements of this title.
620 (9) (a) The state treasurer or custodian institution shall:
621 (i) deliver to the depositor a receipt for all securities deposited or held;
622 (ii) issue a duplicate copy of the receipt to the commissioner; and
623 (iii) permit the depositor to inspect its physically held securities at any reasonable time.
624 (b) On application of the depositor or when required by the law of any state or country
625 or by the order of any court of competent jurisdiction, the state treasurer or custodian institution
626 shall certify that the deposit was made and what is on deposit.
627 (c) Depositors, the state treasurer, any custodian institution, and the commissioner shall
628 each keep a permanent record of securities deposited or held under this section and of any
629 substitutions or withdrawals. They shall compare records at least annually.
630 (10) A transfer of a deposited security, whether voluntary or by operation of law, is
631 valid only if approved in writing by the commissioner and countersigned by the state treasurer
632 or custodian institution.
633 (11) Neither a judgment creditor nor other person may levy upon any deposit held
634 under this section.
635 (12) A depositor that has complied with all provisions of this title intended to preserve
636 its financial solidity is, while solvent and complying with the laws of this state, entitled to:
637 (a) receive interest and cash dividends accruing on the securities held for its account;
638 and
639 (b) substitute for deposited securities other eligible securities, as expressly approved by
640 the commissioner.
641 (13) Within 45 days after the commissioner gives notice to a depositor that a deposit is
642 not an acceptable deposit under Subsection (7), the depositor shall substitute other eligible
643 securities expressly approved by the commissioner and allowed under Subsection (7).
644 (14) A depositor may voluntarily deposit or transfer control of eligible securities in
645 excess of requirements to absorb fluctuations in value and to facilitate substitution of

646 securities.
647 (15) Upon the depositor's request and upon approval of the commissioner, any deposit
648 or part of a deposit shall be released to, or on order of, the depositor to the extent not needed to
649 satisfy requirements of this title. On the order of a court of competent jurisdiction, the deposit
650 or appropriate part of the deposit shall be released to the person for whom it is held.
651 (16) Each depositor shall pay the cost of custody of securities by a custodian institution
652 or by the state treasurer.
653 (17) The commissioner shall adopt rules to implement this section.
654 Section 6. Section 31A-2-207 is amended to read:
655 31A-2-207. Commissioner's records and reports -- Protection from disclosure of
656 certain records.
657 (1) The commissioner shall maintain all department records that are:
658 (a) required by law;
659 (b) necessary for the effective operation of the department; or
660 (c) necessary to maintain a full record of department activities.
661 (2) The records of the department may be preserved, managed, stored, and made
662 available for review consistent with:
663 (a) another Utah statute;
664 (b) the rules made under Section 63-2-904 ;
665 (c) the decisions of the State Records Committee made under Title 63, Chapter 2,
666 Government Records Access and Management Act; or
667 (d) the needs of the public.
668 (3) A department record may not be destroyed, damaged, or disposed of without:
669 (a) authorization of the commissioner; and
670 (b) compliance with all other applicable laws.
671 (4) The commissioner shall maintain a permanent record of the commissioner's
672 proceedings and important activities, including:
673 (a) a concise statement of the condition of each insurer examined by the commissioner;

674 and
675 (b) a record of all certificates of authority and licenses issued by the commissioner.
676 (5) (a) Prior to October 1 of each year, the commissioner shall prepare an annual report
677 to the governor which shall include, for the preceding calendar year, the information
678 concerning the department and the insurance industry which the commissioner believes will be
679 useful to the governor and the public.
680 (b) The report required by this Subsection (5) shall include the information required
681 under Chapter [27] 27a, Insurer Receivership Act, and Subsections 31A-2-106 (2),
682 31A-2-205 (3), and 31A-2-208 (3).
683 (c) The commissioner shall make the report required by this Subsection (5) available to
684 the public and industry in electronic format.
685 (6) All department records and reports are open to public inspection unless specifically
686 provided otherwise by statute or by Title 63, Chapter 2, Government Records Access and
687 Management Act.
688 (7) On request, the commissioner shall provide to any person certified or uncertified
689 copies of any record in the department that is open to public inspection.
690 (8) Notwithstanding Subsection (6) and Title 63, Chapter 2, Government Records
691 Access and Management Act, the commissioner shall protect from disclosure any record, as
692 defined in Section 63-2-103 , or other document received from an insurance regulator of
693 another jurisdiction:
694 (a) at least to the same extent the record or document is protected from disclosure
695 under the laws applicable to the insurance regulator providing the record or document; or
696 (b) under the same terms and conditions of confidentiality as the National Association
697 of Insurance Commissioners requires as a condition of participating in any of the National
698 Association of Insurance Commissioners' programs.
699 Section 7. Section 31A-2-212 is amended to read:
700 31A-2-212. Miscellaneous duties.
701 (1) Upon issuance of any order limiting, suspending, or revoking an insurer's authority

702 to do business in Utah, and on institution of any proceedings against the insurer under Chapter
703 [27, Insurers Rehabilitation and Liquidation] 27a, Insurer Receivership Act, the commissioner:
704 (a) shall notify by mail all agents of the insurer of whom the commissioner has record;
705 and
706 (b) may publish notice of the order or proceeding in any manner the commissioner
707 considers necessary to protect the rights of the public.
708 (2) When required for evidence in any legal proceeding, the commissioner shall furnish
709 a certificate of the authority of any licensee to transact insurance business in Utah on any
710 particular date. The court or other officer shall receive the certificate of authority in lieu of the
711 commissioner's testimony.
712 (3) (a) On the request of any insurer authorized to do a surety business, the
713 commissioner shall furnish a copy of the insurer's certificate of authority to any designated
714 public officer in this state who requires that certificate of authority before accepting a bond.
715 (b) The public officer described in Subsection (3)(a) shall file the certificate of
716 authority furnished under Subsection (3)(a).
717 (c) After a certified copy of a certificate of authority has been furnished to a public
718 officer, it is not necessary, while the certificate of authority remains effective, to attach a copy
719 of it to any instrument of suretyship filed with that public officer.
720 (d) Whenever the commissioner revokes the certificate of authority or starts
721 proceedings under Chapter [27, Insurers Rehabilitation and Liquidation] 27a, Insurer
722 Receivership Act, against any insurer authorized to do a surety business, the commissioner
723 shall immediately give notice of that action to each public officer who was sent a certified copy
724 under this Subsection (3).
725 (4) (a) The commissioner shall immediately notify every judge and clerk of all courts
726 of record in the state when:
727 (i) an authorized insurer doing a surety business:
728 (A) files a petition for receivership; or
729 (B) is in receivership; or

730 (ii) the commissioner has reason to believe that the authorized insurer doing surety
731 business:
732 (A) is in financial difficulty; or
733 (B) has unreasonably failed to carry out any of its contracts.
734 (b) Upon the receipt of the notice required by this Subsection (4) it is the duty of the
735 judges and clerks to notify and require every person that has filed with the court a bond on
736 which the authorized insurer doing surety business is surety, to immediately file a new bond
737 with a new surety.
738 (5) The commissioner shall require an insurer that issues, sells, renews, or offers health
739 insurance coverage in this state to comply with the Health Insurance Portability and
740 Accountability Act, P.L. 104-191, pursuant to 110 Stat. 1968, Sec. 2722.
741 Section 8. Section 31A-2-308 is amended to read:
742 31A-2-308. Enforcement penalties and procedures.
743 (1) (a) A person who violates any insurance statute or rule or any order issued under
744 Subsection 31A-2-201 (4) shall forfeit to the state twice the amount of any profit gained from
745 the violation, in addition to any other forfeiture or penalty imposed.
746 (b) (i) The commissioner may order an individual producer, limited line producer,
747 customer service representative, managing general agent, reinsurance intermediary, adjuster, or
748 insurance consultant who violates an insurance statute or rule to forfeit to the state not more
749 than $2,500 for each violation.
750 (ii) The commissioner may order any other person who violates an insurance statute or
751 rule to forfeit to the state not more than $5,000 for each violation.
752 (c) (i) The commissioner may order an individual producer, limited line producer,
753 customer service representative, managing general agent, reinsurance intermediary, adjuster, or
754 insurance consultant who violates an order issued under Subsection 31A-2-201 (4) to forfeit to
755 the state not more than $2,500 for each violation. Each day the violation continues is a
756 separate violation.
757 (ii) The commissioner may order any other person who violates an order issued under

758 Subsection 31A-2-201 (4) to forfeit to the state not more than $5,000 for each violation. Each
759 day the violation continues is a separate violation.
760 (d) The commissioner may accept or compromise any forfeiture under this Subsection
761 (1) until after a complaint is filed under Subsection (2). After the filing of the complaint, only
762 the attorney general may compromise the forfeiture.
763 (2) When a person fails to comply with an order issued under Subsection
764 31A-2-201 (4), including a forfeiture order, the commissioner may file an action in any court of
765 competent jurisdiction or obtain a court order or judgment:
766 (a) enforcing the commissioner's order;
767 (b) (i) directing compliance with the commissioner's order and restraining further
768 violation of the order; and
769 (ii) subjecting the person ordered to the procedures and sanctions available to the court
770 for punishing contempt if the failure to comply continues; or
771 (c) imposing a forfeiture in an amount the court considers just, up to $10,000 for each
772 day the failure to comply continues after the filing of the complaint until judgment is rendered.
773 (3) The Utah Rules of Civil Procedure govern actions brought under Subsection (2),
774 except that the commissioner may file a complaint seeking a court-ordered forfeiture under
775 Subsection (2)(c) no sooner than two weeks after giving written notice of the commissioner's
776 intention to proceed under Subsection (2)(c). The commissioner's order issued under
777 Subsection 31A-2-201 (4) may contain a notice of intention to seek a court-ordered forfeiture if
778 the commissioner's order is disobeyed.
779 (4) If, after a court order is issued under Subsection (2), the person fails to comply with
780 the commissioner's order or judgment:
781 (a) the commissioner may certify the fact of the failure to the court by affidavit; and
782 (b) the court may, after a hearing following at least five days written notice to the
783 parties subject to the order or judgment, amend the order or judgment to add the forfeiture or
784 forfeitures, as prescribed in Subsection (2)(c), until the person complies.
785 (5) (a) The proceeds of all forfeitures under this section, including collection expenses,

786 shall be paid into the General Fund.
787 (b) The expenses of collection shall be credited to the [Insurance] department's budget.
788 (c) The attorney general's budget shall be credited to the extent the [Insurance]
789 department reimburses the attorney general's office for its collection expenses under this
790 section.
791 (6) (a) Forfeitures and judgments under this section bear interest at the rate charged by
792 the United States Internal Revenue Service for past due taxes on the:
793 (i) date of entry of the commissioner's order under Subsection (1); or
794 (ii) date of judgment under Subsection (2).
795 (b) Interest accrues from the later of the dates described in Subsection (6)(a) until the
796 forfeiture and accrued interest are fully paid.
797 (7) A forfeiture may not be imposed under Subsection (2)(c) if:
798 (a) at the time the forfeiture action is commenced, the person was in compliance with
799 the commissioner's order; or
800 (b) the violation of the order occurred during the order's suspension.
801 (8) The commissioner may seek an injunction as an alternative to issuing an order
802 under Subsection 31A-2-201 (4).
803 (9) (a) A person is guilty of a class B misdemeanor if that person:
804 (i) intentionally violates:
805 (A) an insurance statute or rule of this state; or
806 (B) an order issued under Subsection 31A-2-201 (4);
807 (ii) intentionally permits a person over whom that person has authority to violate:
808 (A) an insurance statute or rule of this state; or
809 (B) an order issued under Subsection 31A-2-201 (4); or
810 (iii) intentionally aids any person in violating:
811 (A) an insurance statute or rule of this state; or
812 (B) an order issued under Subsection 31A-2-201 (4).
813 (b) Unless a specific criminal penalty is provided elsewhere in this title, the person may

814 be fined not more than:
815 (i) $10,000 if a corporation; or
816 (ii) $5,000 if a person other than a corporation.
817 (c) If the person is an individual, the person may, in addition, be imprisoned for up to
818 one year.
819 (d) As used in this Subsection (9), "intentionally" has the same meaning as under
820 Subsection 76-2-103 (1).
821 (10) (a) A person who knowingly and intentionally violates Section 31A-4-102 ,
822 31A-8a-208 , 31A-15-105 , 31A-23a-116 , or 31A-31-111 is guilty of a felony as provided in this
823 Subsection (10).
824 (b) When the value of the property, money, or other things obtained or sought to be
825 obtained in violation of Subsection (10)(a):
826 (i) is less than $5,000, a person is guilty of a third degree felony; or
827 (ii) is or exceeds $5,000, a person is guilty of a second degree felony.
828 (11) (a) After a hearing, the commissioner may, in whole or in part, revoke, suspend,
829 place on probation, limit, or refuse to renew the licensee's license or certificate of authority:
830 (i) when a licensee of the department, other than a domestic insurer:
831 (A) persistently or substantially violates the insurance law; or
832 (B) violates an order of the commissioner under Subsection 31A-2-201 (4);
833 (ii) if there are grounds for delinquency proceedings against the licensee under Section
834 [ 31A-27-301 or Section 31A-27-307 ] 31A-27a-207 ; or
835 (iii) if the licensee's methods and practices in the conduct of the licensee's business
836 endanger, or the licensee's financial resources are inadequate to safeguard, the legitimate
837 interests of the licensee's customers and the public.
838 (b) Additional license termination or probation provisions for licensees other than
839 insurers are set forth in Sections 31A-19a-303 , 31A-19a-304 , 31A-23a-111 , 31A-23a-112 ,
840 31A-25-208 , 31A-25-209 , 31A-26-213 , 31A-26-214 , 31A-35-501 , and 31A-35-503 .
841 (12) The enforcement penalties and procedures set forth in this section are not

842 exclusive, but are cumulative of other rights and remedies the commissioner has pursuant to
843 applicable law.
844 Section 9. Section 31A-5-212 is amended to read:
845 31A-5-212. Certificate of authority.
846 (1) The corporation may apply for a certificate of authority at any time prior to the
847 expiration of its organization permit. The application shall include a detailed statement by a
848 principal officer about any material changes that have taken place or are likely to take place in
849 the facts on which the issuance of the organization permit was based, and if any material
850 changes are proposed in the business plan, the information about the changes that would be
851 required if an organization permit were being applied for.
852 (2) (a) The commissioner shall issue a certificate of authority if [he] the commissioner
853 finds:
854 (i) enough cash or property authorized under Subsection 31A-5-207 (1)(a) or (2)(a) has
855 been received to satisfy the requirements of Section 31A-5-211 ;
856 (ii) there is no basis for revoking the organization permit under Subsection
857 31A-5-209 (2); and
858 (iii) all other applicable requirements of the law have been met.
859 (b) The certificate of authority shall specify any limits placed on the insurance business
860 the corporation may carry on and may, within the powers given the commissioner under this
861 title, specify limits on the corporation's methods of operation.
862 (3) After the issuance of the certificate of authority the following action shall take
863 place:
864 (a) The board shall authorize and direct the issuance of certificates for shares, bonds, or
865 notes subscribed to under the organization permit, and of insurance policies upon qualifying
866 applications obtained under the organization permit.
867 (b) The commissioner shall authorize the release to the corporation of all funds held in
868 escrow under Section 31A-5-208 .
869 (4) (a) A corporation may apply to the commissioner for a new or amended certificate

870 of authority altering limits on its business or methods of operation. The application shall
871 contain or be accompanied by information in Subsection 31A-5-204 (2) as the commissioner
872 reasonably requires. The commissioner shall issue the new certificate if [he] the commissioner
873 finds:
874 (i) the corporation's capital and surplus satisfy the requirements of Section 31A-5-211
875 as to the operations proposed under the new certificate of authority; and
876 (ii) the proposed business would not be contrary to law or to the interests of insureds or
877 the public.
878 (b) If the commissioner issues [a summary] an order under [Section 31A-27-201 ]
879 Chapter 27, Part 5, Administrative Actions, against a corporation, [he] the commissioner may
880 also revoke the corporation's certificate and issue a new one with any limitation [he] the
881 commissioner considers necessary.
882 (5) Except as to Subsection (4), this section does not apply to stock or mutual
883 insurance corporations already in existence on July 1, 1986.
884 Section 10. Section 31A-5-217 is amended to read:
885 31A-5-217. Separate accounts for variable contracts.
886 (1) Separate accounts under this section may be designated by any appropriate name
887 the corporation wishes to use, except that the commissioner may by rule provide guidelines for
888 the naming of separate accounts.
889 (2) With the approval of the commissioner, any corporation may establish, or at the
890 direction of the commissioner shall establish, one or more separate accounts and allocate to
891 them any amounts paid or remitted to, or held by, the corporation under designated contracts or
892 classes of contracts. These amounts are to be applied to provide benefits payable partly or
893 wholly in variable dollar amounts, and to provide benefits in fixed and guaranteed dollar
894 amounts and other incidental benefits.
895 (3) To the extent necessary to comply with the federal Investment Company Act of
896 1940, 15 U.S.C. Sec. 80a-1 et seq., or its interpretive rules, the corporation may:
897 (a) adopt special procedures for the conduct of the business and affairs of a separate

898 account; and
899 (b) for persons having beneficial interests in a separate account, provide special voting
900 and other rights, including special rights and procedures relating to investment policy,
901 investment advisory services, selection of certified public accountants, and selection of a
902 committee, the members of which need not be otherwise affiliated with the corporation, to
903 manage the business and affairs of the account.
904 (4) The commissioner may specify in the certificate of authority of a newly organized
905 corporation the minimum required capital or the minimum required permanent surplus to be
906 provided for each separate account. If a separate account is established after a certificate of
907 authority has been issued, the commissioner shall require the corporation to allocate an
908 adequate amount of capital and surplus to the separate account. An insurer may not be required
909 to allocate more capital and surplus to a separate account than would be required of a separate
910 insurer under Section 31A-5-211 and Chapter 17, Part 6, Risk-Based Capital.
911 (5) The income and assets attributable to a separate account shall always remain
912 identified with the particular account, but unless the commissioner so orders, the assets need
913 not be kept physically separate from other assets of the corporation. The income and gains and
914 losses, whether or not realized, from assets attributable to a separate account shall be credited
915 to or charged against the account without regard to other income, gains, or losses of the
916 corporation.
917 (6) Except as provided in Subsection (7), liabilities arising out of any other business of
918 the corporation are not to be allocated to a separate account, nor are any liabilities arising out of
919 a separate account to be allocated to any other account of the corporation, except as provided in
920 Subsection (11).
921 (7) (a) Each separate account shall be considered as an insurer within the meaning of
922 Subsection [ 31A-27-102 (1)(m)] 31A-27a-102 (23).
923 (b) A liquidation order under Section [ 31A-27-310 ] 31A-27a-401 for the general
924 account or for any separate account shall have effect as a rehabilitation order under Section
925 [ 31A-27-303 ] 31A-27a-301 for all other accounts of the corporation. Claims remaining unpaid

926 after completion of the liquidation under Chapter [27] 27a, Insurer Receivership Act, shall be
927 liens on the interests of shareholders, if any, but not on any other interests, in all of the
928 corporation's assets that are not liquidated. The rehabilitator may transform these liens into
929 ownership interests under [Subsection 31A-27-304 (5)] Section 31A-27a-302 .
930 (8) Assets in excess of the liabilities allocated to separate accounts are the property of
931 the corporation.
932 (9) A corporation may own a particular asset in determinate proportions for separate
933 accounts, for its general account, or as a trustee when acting as such within its legal powers.
934 (10) The corporation may by an identifiable act transfer assets among the separate
935 accounts, the general account, and any trust accounts of the corporation, for fair consideration
936 as defined in [Subsection 31A-27-102 (1)(h)] Section 31A-27a-102.
937 (11) The general account of the corporation, or any separate account, may, for a fair
938 consideration as defined in [Subsection 31A-27-102 (1)(h)] Section 31A-27a-102, provide
939 guarantees in connection with, perform services for, or reinsure other accounts, subject to rules
940 adopted by the commissioner. The determination of a fair consideration shall be made by
941 applying generally accepted accounting principles and realistic actuarial tables.
942 (12) Section 31A-18-102 deals with separate account investments. Section
943 31A-20-106 requires the commissioner's approval before delivery of certain variable contracts.
944 Section 31A-22-411 and Subsection 31A-21-301 (1)(d) deal with policy provisions in separate
945 account contracts.
946 Section 11. Section 31A-5-305 is amended to read:
947 31A-5-305. Authorized securities.
948 (1) (a) The articles of incorporation of a stock corporation may authorize the kind of
949 shares permitted by Sections 16-10a-601 and 16-10a-602 , and stock rights and options, except
950 that:
951 (i) [no] nonvoting common stock may not be issued;
952 (ii) all classes of common stock must have equal voting rights;
953 (iii) all common stock must have a stated par value; and

954 (iv) except with the commissioner's approval, for two years after the initial issuance of
955 a certificate of authority, the corporation may issue no shares and no other securities
956 convertible into shares except a single class of common stock.
957 (b) Section 16-10a-604 applies to the issuance of certificates for fractional shares or
958 scrip.
959 (c) The consideration and payment for shares and certificates representing shares is
960 governed by [Section] Subsection 31A-5-207 (1)(a).
961 (d) The liability of subscribers and shareholders for unpaid subscriptions and the status
962 of stock is governed by Section 16-10a-622 .
963 (e) A shareholder's preemptive rights is governed by Section 16-10a-630 .
964 (f) Stock corporations may issue bonds and contribution notes on the same basis as
965 mutuals under Subsections (2)(a) and (b).
966 (2) (a) The articles of incorporation of a nonassessable mutual may authorize bonds of
967 one or more classes. The articles of incorporation shall specify the amount of each class of
968 bonds the corporation is authorized to issue, their designations, preferences, limitations, rates
969 of interest, relative rights, and other terms, subject to all of the following provisions:
970 (i) During the first year after the initial issuance of a certificate of authority, the
971 corporation may issue only a single class of bonds with identical rights.
972 (ii) After the first year, but within five years after the initial issuance of a certificate of
973 authority, additional classes of bonds may be authorized after receiving the approval of the
974 commissioner. The commissioner shall approve the issuance if [he] the commissioner finds
975 that policyholders and prior bondholders will not be prejudiced.
976 (iii) The rate of interest shall be fair.
977 (iv) The bonds shall bear a maturity date not later than ten years from the date of
978 issuance, when principal and accrued interest shall be due and payable, subject to Subsection
979 (2)(d).
980 (b) A mutual may issue contribution notes with the commissioner's approval. The
981 contribution notes may be denominated by any name that is not misleading. The contribution

982 notes are subject to this subsection. The commissioner may approve the issuance only if [he]
983 the commissioner finds that:
984 (i) the notes will not be issued in denominations of less than $2,500, and no single
985 issue will be sold to more than 15 persons;
986 (ii) no discount, commission, or other fee will be paid or allowed;
987 (iii) the notes will not be the subject of a public offering;
988 (iv) the terms of the notes are not prejudicial to policyholders, holders of mutual bonds,
989 or prior contribution notes; and
990 (v) the mutual's articles or bylaws do not forbid their issuance.
991 (c) [No] A mutual may not:
992 (i) if it has any outstanding obligations on bonds or contribution notes, borrow on
993 contribution notes from, or sell bonds to, any other insurer without the approval of the
994 commissioner; or
995 (ii) make a loan to another insurer except a fully secured loan at usual market rates of
996 interest.
997 (d) Payment of the principal or interest on bonds or contribution notes may be made in
998 whole or in part only after approval by the commissioner. The commissioner's approval shall
999 be given if all the financial requirements of the issuer to do the insurance business it is then
1000 doing will continue to be satisfied after that payment, and if the interests of its insureds and the
1001 public are not endangered by the payment. In the event of liquidation under Chapter [27] 27a,
1002 Insurer Receivership Act, unpaid amounts of principal and interest on contribution notes are
1003 subordinate to the payment of principal and interest on any bonds issued by the corporation.
1004 (e) This section does not prevent a mutual from borrowing money on notes which are
1005 its general obligations, nor from pledging any part of its disposable assets.
1006 (3) This section does not apply to securities issued prior to July 1, 1986.
1007 Section 12. Section 31A-5-416 is amended to read:
1008 31A-5-416. Executive compensation.
1009 (1) Subject to this section, Section 16-10a-302 , except Subsection 16-10a-302 (13),

1010 applies to stock and mutual corporations.
1011 (2) Shareholders' approval is required of any benefit or payment to a director or officer
1012 for services rendered to a stock corporation more than 90 days before the agreement or decision
1013 to give the benefit or make the payment, unless the benefit or payment is made under a plan
1014 approved by the shareholders. Shareholder approval is also required for a new pension plan,
1015 profit-sharing plan, stock option plan, or an amendment to an existing plan which, so far as it
1016 pertains to any director or officer, substantially increases the financial burden on the
1017 corporation.
1018 (3) An action taken by the board of a mutual on the compensation of officers, directors,
1019 or employees, other than setting individual salaries or standards for salaries of classes of
1020 employees, shall be reported to the commissioner within 30 days.
1021 (4) The annual report to the commissioner shall include the amount of all direct and
1022 indirect remuneration for services, including retirement and other deferred compensation
1023 benefits and stock options, paid or accrued each year:
1024 (a) for the benefit of each director, each officer, and employee whose remuneration
1025 exceeds an amount established by the commissioner by rule;
1026 (b) for all directors and officers as a group; and
1027 (c) for the five most highly compensated officers, directors, and employees.
1028 (5) [No] An arrangement for compensation or other employment benefits for any
1029 director, officer, or employee with decision-making power may not be made if it would:
1030 (a) measure the compensation or other benefits in whole or in part by any criteria that
1031 would create a financial inducement to act contrary to the best interests of the corporation; or
1032 (b) have a tendency to make the corporation depend for continuance or soundness of
1033 operation upon the continuation of any director, officer, or employee in [his] the person's
1034 position.
1035 (6) Except for the insurer, no person having any authority in the investment or
1036 disposition of the funds of a domestic insurer may accept any fee, brokerage, gift, or other
1037 emolument because of any investment, loan, deposit, purchase, sale, payment, or exchange

1038 made by or for the insurer, nor may that person be financially interested in the investment or
1039 disposition of funds in any capacity.
1040 (7) Unless the commissioner, acting in the corporation's best interests, orders
1041 otherwise, if an order of rehabilitation or liquidation is issued under Section [ 31A-27-303 ]
1042 31A-27a-301 or [Section 31A-27-310 ] 31A-27a-401 , the contractual obligations of the insurer
1043 for unperformed services of any director, principal officer, or person performing similar
1044 functions or having similar powers are terminated. This Subsection (7) does not apply to
1045 obligations vested before July 1, 1986.
1046 Section 13. Section 31A-5-504 is amended to read:
1047 31A-5-504. Voluntary dissolution of domestic insurance corporations.
1048 (1) (a) Except as otherwise modified by this section, a domestic stock insurance
1049 corporation may dissolve under Sections 16-10a-1401 through 16-10a-1409 and Section
1050 16-10a-1440 .
1051 (b) Except as otherwise modified by this section, a domestic mutual insurance
1052 corporation may dissolve under Sections 16-6a-1401 through 16-6a-1409 and Section
1053 16-6a-1419 .
1054 (2) (a) At least 60 days prior to the submission to shareholders or policyholders of any
1055 proposed voluntary dissolution of an insurance corporation, the plan of dissolution shall be
1056 filed with the commissioner.
1057 (b) The commissioner may require the submission of any information in addition to the
1058 plan of dissolution that will establish:
1059 (i) the financial condition of the corporation; or
1060 (ii) other facts relevant to the proposed dissolution.
1061 (c) If the shareholders or policyholders adopt the resolution to dissolve, the
1062 commissioner shall, within 30 days after the adoption of the resolution, begin an examination
1063 of the corporation.
1064 (d) The commissioner shall approve the dissolution unless the commissioner finds,
1065 after a hearing, that the corporation:

1066 (i) is insolvent; or
1067 (ii) may become insolvent in the process of dissolution.
1068 (e) Upon approval, the corporation may:
1069 (i) transfer all of its obligations under insurance policies to other insurers approved by
1070 the commissioner; and
1071 (ii) after the transfers described in Subsection (2)(e)(i), dissolve under Subsection (1).
1072 (f) If the commissioner disapproves the dissolution, the commissioner shall petition the
1073 court for a liquidation under Section [ 31A-27-307 ] 31A-27a-207 .
1074 (3) During the dissolution under Subsection (1), the corporation may apply to the
1075 commissioner to have the dissolution continued under the commissioner's supervision. After
1076 receiving this application, the commissioner shall apply to the court for a liquidation under
1077 Section [ 31A-27-307 ] 31A-27a-207 .
1078 (4) If the corporation revokes the voluntary dissolution proceedings under Section
1079 16-6a-1404 or 16-10a-1404 , the corporation shall file a copy of the revocation of voluntary
1080 dissolution proceedings with the commissioner.
1081 (5) In distributing the assets in the dissolution of a nonlife mutual, [Subsection
1082 31A-27-337 (4)] Section 31A-27a-705 applies.
1083 (6) (a) No remedy available to or against the corporation, its directors, officers, or
1084 shareholders is taken away or impaired if an action or other proceeding is brought within two
1085 years after dissolution for any right or claim existing, or any liability incurred, prior to the
1086 voluntary dissolution under this section.
1087 (b) The action or proceeding described in Subsection (6)(a) may be prosecuted or
1088 defended by the corporation in its corporate name. The shareholders, directors, and officers
1089 may take appropriate corporate or other action to protect the remedy, right, or claim.
1090 (c) A corporation which is dissolved by the expiration of its period of duration may
1091 amend its articles of incorporation during the two years to provide for perpetual existence.
1092 (7) During the voluntary dissolution of a domestic insurance corporation under this
1093 section, its corporate existence continues to allow the winding up of the corporation's affairs

1094 regarding any property and assets not distributed or otherwise disposed of prior to dissolution.
1095 To effect that purpose, the corporation may:
1096 (a) sell or otherwise dispose of the property and assets;
1097 (b) sue and be sued;
1098 (c) contract; and
1099 (d) exercise all other necessary powers.
1100 Section 14. Section 31A-5-506 is amended to read:
1101 31A-5-506. Conversion of a domestic mutual into a stock corporation.
1102 (1) (a) Except as provided in Subsection (1) (b), a domestic mutual may be converted
1103 into a domestic stock corporation under Subsections (2) through (11).
1104 (b) [No] A domestic mutual that is affiliated with other mutuals may not be converted
1105 into a stock corporation, unless all the affiliated mutuals are converted at the same time, or the
1106 commissioner finds that the interests of the policyholders of the remaining mutuals can be
1107 permanently protected by limitations on the corporate powers of the new stock corporation or
1108 on its authority to do business, or otherwise.
1109 (2) The board shall pass a resolution stating that the conversion is in the best interests
1110 of the policyholders. The resolution shall specify the reasons for and the purposes of the
1111 proposed conversion, and how the conversion is expected to benefit policyholders.
1112 (3) (a) [The provisions of] Chapter 16 [apply], Insurance Holding Companies, applies
1113 to the conversion of a domestic mutual into a stock corporation. In addition, the commissioner
1114 shall order the examination and appraisal of the corporation, unless [he] the commissioner
1115 finds that:
1116 (i) the resolution is defective upon its face; or
1117 (ii) the basis or the purposes of the proposed conversion are contrary to law, to the
1118 interests of the policyholders, or to the public.
1119 (b) The commissioner shall examine the company and all of its controlled affiliates
1120 under Section 31A-2-203 to determine their financial condition and whether they are operating
1121 in accordance with law.

1122 (c) The commissioner shall appoint an appraisal committee, consisting of at least three
1123 qualified and disinterested persons with differing expertise, to determine the value of the
1124 corporation on the date of the resolution required by Subsection (2). Members of the appraisal
1125 committee shall receive reasonable compensation and shall be reimbursed for reasonable
1126 expenses in discharging their duties. They may employ consultants to advise them on technical
1127 problems of the appraisal, if necessary. The appraisal committee shall consider the assets and
1128 liabilities of the corporation, adjusting liabilities to take account of:
1129 (i) the amounts of any reserves in excess of or below realistic estimates;
1130 (ii) the value of the marketing organization;
1131 (iii) the value of goodwill;
1132 (iv) the going-concern value; and
1133 (v) any other factor having an influence on the value of the corporation.
1134 (4) When the examination and appraisal reports have been made to the commissioner,
1135 [he] the commissioner shall make copies available to the board. The board shall then prepare
1136 and adopt by resolution a plan of conversion. The plan shall be consistent with Subsections
1137 (4)(a) through (e) and shall state how the requirements of those subsections are satisfied.
1138 (a) The plan of conversion shall state the number of shares proposed to be authorized
1139 for the new stock corporation, their par value, if any, and the price per share at which they will
1140 be offered to policyholders. The price per share may not exceed 1/2 of the median equitable
1141 share of all policyholders under Subsection (4)(b).
1142 (b) (i) When an insurer has the type of policies with no investment value to the
1143 policyholders, each person who has been a policyholder and has paid premiums within five
1144 years prior to the resolution under Subsection (2) is entitled, without additional payment, to as
1145 much common stock of the new stock corporation as [his] that person's equitable share of the
1146 value of the converting corporation will purchase. The equitable share is determined by the
1147 ratio which the net premium [he] that person has paid to the corporation during the five years
1148 immediately preceding the resolution required by Subsection (2) bears to the total net
1149 premiums received by the corporation during the same period. The net premium is the gross

1150 premium less the return premium and dividends paid. If the equitable share would only
1151 purchase a fraction of a share of stock, the policyholder has the option of either receiving the
1152 value of the fractional share in cash or purchasing a full share by paying the balance in cash.
1153 (ii) When an insurer has the type of policies with specifically attributable investment
1154 value to the policyholders, each policyholder is entitled, without additional payment, to as
1155 much common stock of the new stock corporation as [his] the policyholder's investment value
1156 in the converting corporation will purchase, determined by the proportion of [his] the
1157 policyholder's investment value to the aggregate investment values of all policyholders. If the
1158 policyholder's share would only purchase a fraction of a share of stock, the policyholder has the
1159 option of either receiving the value of the fractional share in cash or purchasing a full share by
1160 paying the balance in cash.
1161 (c) A written offer shall be sent to each policyholder indicating [his] the policyholder's
1162 individual equitable share and the terms upon which the policyholder may subscribe for stock.
1163 (d) [No common] Common shares may not be subscribed by or issued to persons other
1164 than policyholders, until all subscriptions by the policyholders have been filled. After those
1165 subscriptions have been filled, any new issue of stock for five years after the conversion shall
1166 first be offered to the persons who have become shareholders under Subsection (4)(b) in
1167 proportion to their interests under Subsection (4)(b).
1168 (e) [No] A policyholder in a nonlife mutual may not receive a distribution of shares
1169 valued under Subsection (4)(b)(i), which distribution is greater than the amount [he] the
1170 policyholder is entitled to under [Subsection 31A-27-337 (4)] Section 31A-27a-701 . Any
1171 excess over the policyholder's entitlement under [Subsection 31A-27-337 (4)] Section
1172 31A-27a-701 shall be distributed [in shares to the state treasury for the benefit of the Uniform
1173 School Fund. After five years, the shares may be sold by the state treasurer and the proceeds
1174 credited to the Uniform School Fund] in accordance with Section 31A-27a-705 .
1175 (5) The plan of conversion shall be submitted to the commissioner for approval,
1176 together with:
1177 (a) the proposed articles and bylaws of the new stock corporation which comply with

1178 Section 31A-5-203 ;
1179 (b) any information specified under Subsection 31A-5-204 (2), which the commissioner
1180 reasonably requires; and
1181 (c) a projection of the planned or anticipated financial situation of the new corporation
1182 for five years after the conversion.
1183 (6) The commissioner shall then hold a hearing. The notice of the hearing shall be
1184 mailed to each person who was a policyholder of the corporation on the date of the resolution
1185 required by Subsection (2). This notice shall include a copy of the plan of conversion and any
1186 comments the commissioner considers necessary to adequately inform the policyholders.
1187 (7) The commissioner shall approve the plan of conversion unless [he] the
1188 commissioner finds that the plan violates the law or is contrary to the interests of policyholders
1189 or the public.
1190 (8) After approval under Subsection (7), the conversion plan shall be submitted to a
1191 vote of:
1192 (a) for mutuals subject to Subsection (4)(b)(i), those persons who were policyholders
1193 of the mutual on the date of the resolution required by Subsection (2); or
1194 (b) for mutuals subject to Subsection (4)(b)(ii), those persons who had investment
1195 values in their policies as of the date of the resolution required by Subsection (2).
1196 (9) If the policyholders approve the conversion under Subsection (8), the commissioner
1197 shall issue a new certificate of authority. The issuance of the certificate is the conversion of the
1198 mutual to a stock corporation. This stock corporation is considered as being organized at the
1199 time the converted mutual was organized. Subject to the plan of conversion, the directors,
1200 officers, agents, and employees of the mutual shall continue in their same positions with the
1201 stock corporation.
1202 (10) In the proposed conversion, the corporation may not pay any person compensation
1203 other than regular salaries to existing personnel and compensation for clerical and mailing
1204 expenses. With the commissioner's approval, the corporation may pay, at reasonable rates, for
1205 printing costs and for legal and other professional fees for services actually rendered. All

1206 expenses of the conversion, including the expenses incurred by the commissioner and the
1207 prorated salaries of any [Insurance] department staff members involved, shall be paid by the
1208 corporation being converted.
1209 (11) The commissioner's approval of the plan of conversion satisfies the registration
1210 requirement of Section 31A-5-302 .
1211 Section 15. Section 31A-8-213 is amended to read:
1212 31A-8-213. Certificate of authority.
1213 (1) An organization may apply for a certificate of authority at any time prior to the
1214 expiration of its organization permit. The application shall include:
1215 (a) a detailed statement by a principal officer about any material changes that have
1216 taken place or are likely to take place in the facts on which the issuance of the organization
1217 permit was based; and
1218 (b) if any material changes are proposed in the business plan, the information about the
1219 changes that would be required if an organization permit were then being applied for.
1220 (2) The commissioner shall issue a certificate of authority, if the commissioner finds
1221 that:
1222 (a) the organization's capital and surplus complies with the requirements of Section
1223 31A-8-209 as to the operations proposed under the new certificate of authority;
1224 (b) there is no basis for revoking the organization permit under Section 31A-8-207 ;
1225 (c) the deposit required by Section 31A-8-211 has been made;
1226 (d) the organization satisfies the requirements of Section 31A-8-104 ; and
1227 (e) all other applicable requirements of the law have been met.
1228 (3) The certificate of authority shall specify any limits imposed by the commissioner
1229 upon the organization's business or methods of operation, including the general types of health
1230 care services the organization is authorized to provide.
1231 (4) Upon the issuance of the certificate of authority:
1232 (a) the board shall authorize and direct the issuance of certificates for shares, bonds, or
1233 notes subscribed to under the organization permit, and of insurance policies upon qualifying

1234 applications obtained under the organization permit; and
1235 (b) the commissioner shall authorize the release to the organization of all funds held in
1236 escrow under Section 31A-5-208 , as adopted by Section 31A-8-206 .
1237 (5) (a) An organization may at any time apply to the commissioner for a new or
1238 amended certificate of authority altering the limits on its business or methods of operation.
1239 The application shall contain or be accompanied by that information reasonably required by the
1240 commissioner under Subsections 31A-5-204 (2) and 31A-8-205 (2). The commissioner shall
1241 issue the new certificate as requested if the commissioner finds that the organization continues
1242 to satisfy the requirements specified under Subsection (2).
1243 (b) If the commissioner issues [a summary] an order under [Section 31A-27-201 ]
1244 Chapter 27, Part 5, Administration Actions, against an organization, the commissioner may
1245 also revoke the organization's certificate and issue a new one with any limitation [he] the
1246 commissioner considers necessary.
1247 Section 16. Section 31A-9-502 is amended to read:
1248 31A-9-502. Voluntary dissolution of solvent domestic fraternals.
1249 (1) Subject to this section, a domestic fraternal may voluntarily dissolve under Sections
1250 16-6a-1401 through 16-6a-1405 .
1251 (2) The proposal for voluntary dissolution shall be filed with the commissioner at least
1252 60 days prior to the submission of that proposal to the supreme governing body or the
1253 members. The commissioner may require the submission of additional information necessary
1254 to establish the financial condition of the fraternal or other facts relevant to the proposed
1255 dissolution. If the supreme governing body or the members adopt the resolution to dissolve, by
1256 a majority of those voting or a larger number as required by the laws of the fraternal, the
1257 commissioner shall, within 30 days after the adoption of the resolution, begin to examine the
1258 fraternal. The commissioner shall approve the dissolution unless [he] the commissioner finds,
1259 after the examination and a hearing, that it is insolvent or may become insolvent in the process
1260 of dissolution. Upon approval, the fraternal may provide for a transfer to other fraternals
1261 approved by the commissioner of all its obligations under insurance policies and then may

1262 dissolve under Subsection (1). If the commissioner disapproves, [he] the commissioner shall
1263 petition the court for liquidation under Section [ 31A-27-307 ] 31A-27a-207 .
1264 (3) During the liquidation under Sections 16-6a-1401 through 16-6a-1408 , the fraternal
1265 may apply to the commissioner to have the liquidation continued under the commissioner's
1266 supervision. Upon receiving this request, the commissioner shall apply to the court for
1267 liquidation under Section [ 31A-27-307 ] 31A-27a-207 .
1268 (4) If the fraternal revokes the voluntary dissolution proceedings under Section
1269 16-6a-1404 , a copy of the revocation of voluntary dissolution proceedings shall be filed with
1270 the commissioner.
1271 (5) Subsections 31A-5-504 (6) and (7) apply to the survival of remedies and
1272 continuance of corporate existence of a voluntarily dissolved fraternal.
1273 Section 17. Section 31A-9-504 is amended to read:
1274 31A-9-504. Rehabilitation or involuntary conversion.
1275 (1) (a) If the commissioner believes that a fraternal does not satisfy the requirements of
1276 this chapter, [he] the commissioner shall call a hearing. If [he] the commissioner then finds
1277 that the fraternal does not satisfy the requirements:
1278 [(a) If] (i) if the fraternal is domestic, the commissioner shall petition for rehabilitation
1279 under Section [ 31A-27-301 ] 31A-27a-207 to rehabilitate the fraternal or, if that is not possible,
1280 convert the fraternal to a mutual[.]; or
1281 [(b) If] (ii) if the fraternal is nondomestic, the commissioner shall order it to comply as
1282 soon as practicable with the requirements of this chapter or lose its tax exemption. [The]
1283 (b) An order issued under Subsection (1)(a)(ii) shall specify the ways the nondomestic
1284 fraternal does not comply with this chapter.
1285 (2) If the fraternal does not promptly comply with the requirements of this chapter,
1286 after notice of the adverse results of a hearing under Subsection (1), it is subject to taxation as a
1287 mutual life insurance company. This tax is retroactive to the date on which the commissioner
1288 gave the fraternal notice of the hearing under Subsection (1).
1289 Section 18. Section 31A-11-104 is amended to read:

1290 31A-11-104. Applicability of other portions of this title.
1291 (1) In addition to this chapter, motor clubs are subject to the applicable sections of:
1292 (a) Chapters 1, 2, 4, 16, 21, 22, 26, [and] 27, and 27a;
1293 (b) Chapter 3, Part 1;
1294 (c) Chapter 23a, Parts 1, 4, and 5; and
1295 (d) Section 31A-23a-207 .
1296 (2) Sections 31A-14-204 and 31A-14-216 apply to nondomestic motor clubs.
1297 (3) Section 31A-5-401 applies to domestic motor clubs.
1298 (4) Sections 31A-5-105 , 31A-5-106 , and 31A-5-216 apply to both domestic and
1299 nondomestic motor clubs.
1300 (5) Both domestic and nondomestic motor clubs are subject to the [Insurance]
1301 department fees under Section 31A-3-103 . Other provisions of [the Insurance Code] this title
1302 apply to motor clubs only as specifically provided in this chapter.
1303 Section 19. Section 31A-11-109 is amended to read:
1304 31A-11-109. Alteration or revocation of certificate of authority.
1305 If the commissioner issues [a summary] an order under [Section 31A-27-201 ] Chapter
1306 27, Part 5, Administrative Actions, against a motor club, [he] the commissioner may revoke its
1307 certificate of authority or issue a new one with the limits [he] the commissioner considers
1308 necessary.
1309 Section 20. Section 31A-13-107 is amended to read:
1310 31A-13-107. Commissioner's remedies.
1311 If the trustees of any employee welfare fund have failed to register the fund in
1312 accordance with Section 31A-13-103 , or otherwise fail to comply with [any provision of] this
1313 chapter, the commissioner shall notify the employers of the failure. In addition to ordering
1314 compliance under Subsection 31A-2-201 (4), the commissioner may:
1315 (1) order the employers to stop making payments to the trustees until the employers are
1316 notified by the commissioner that the trustees are in compliance with this chapter; or
1317 (2) rehabilitate or liquidate the employee welfare fund under Chapter [27] 27a, Insurer

1318 Receivership Act.
1319 Section 21. Section 31A-14-206 is amended to read:
1320 31A-14-206. Commercially domiciled insurers.
1321 (1) As used in this section, and except as to title insurers, the commissioner may
1322 consider a foreign insurer to be "commercially domiciled" in this state if:
1323 (a) during the three immediately preceding calendar years, the foreign insurer wrote
1324 more insurance premiums in this state than it wrote in its state of domicile during the same
1325 period; or
1326 (b) during the same three-year period, the foreign insurer's gross premiums written in
1327 this state constituted 15% or more of the insurer's total gross premiums written in the United
1328 States.
1329 (2) Subject to Subsection (3), an insurer determined by the commissioner to be
1330 commercially domiciled in this state may be subjected to Chapters 16, 17, 18, 27, and 27a, and
1331 Chapter 5, Parts 4, 5, and 6 in the same manner and to the same extent as domestic insurers.
1332 The commissioner shall, by order, notify any commercially domiciled insurer not exempt under
1333 Subsection (3) of the extent to which the insurer is subject to the provisions listed under this
1334 Subsection (2).
1335 (3) The commissioner may exempt from the provisions of this section any
1336 commercially domiciled insurer if [he] the commissioner determines that the insurer has assets
1337 physically located in this state or an asset to liability ratio sufficient to justify the conclusion
1338 that there is no reasonable danger that the operations or conduct of the business of the insurer
1339 could present a danger of loss to Utah policyholders.
1340 (4) Subsection 31A-14-205 (4) applies to the conflict of the laws of this state with the
1341 laws of the insurer's domicile for foreign insurers, including commercially domiciled insurers,
1342 under this section.
1343 (5) This section does not excuse or exempt any foreign insurer from complying with
1344 the provisions under this title which are otherwise applicable to a foreign insurer.
1345 Section 22. Section 31A-14-215 is amended to read:

1346 31A-14-215. Assessment by foreign company.
1347 Every foreign mutual insurer authorized in this state shall notify the commissioner
1348 immediately after making an assessment upon any of its members in this state. The insurer
1349 shall attach to the notice a statement of the condition of the insurer, giving the facts showing
1350 the necessity for the assessment. Unless the commissioner orders otherwise under a Chapter
1351 27, Part 5, Administrative Actions, proceeding, a foreign mutual insurer authorized in this state
1352 may not make or increase any assessment because of its inability to collect assessments from its
1353 members in other states.
1354 Section 23. Section 31A-14-217 is amended to read:
1355 31A-14-217. Revocation of certificate of authority.
1356 Whenever there would be grounds for delinquency proceedings under Chapter [27] 27a,
1357 Insurer Receivership Act, against a foreign insurer, if the foreign insurer were a domestic
1358 insurer, the commissioner may, after any proceeding authorized by Title 63, Chapter 46b,
1359 Administrative Procedures Act, revoke, suspend, or limit the foreign insurer's certificate of
1360 authority. This action does not affect insurance which has already been issued. The insurer
1361 remains subject to regulation until released under Section 31A-14-216 .
1362 Section 24. Section 31A-15-105 is amended to read:
1363 31A-15-105. Effect of contracts illegal because insurer was unauthorized.
1364 (1) An insurance contract entered into in violation of this chapter is unenforceable by,
1365 but enforceable against, the insurer. In an action against the insurer on the contract, the insured
1366 is bound by the terms of the contract as affected by this title and rules adopted under this title.
1367 (2) An insurance policy entered into in violation of this chapter is voidable by the
1368 policyholder who entered into the transaction without knowing it was illegal. The policyholder
1369 may avoid the contract by notice to the insurer, if no insured has enforced the contract by an
1370 action under Subsection (1), and may recover any consideration paid under the contract.
1371 (3) Any person who assisted in the procurement of an illegal contract under this
1372 chapter, and who knew or should have known the transaction was illegal, is liable to the
1373 insured for the full amount of a claim or loss payable under the contract, if the insurer does not

1374 pay it. The receiver appointed under Chapter [27] 27a, Insurer Receivership Act, may assert the
1375 claims of insureds if the insurer is the subject of a proceeding under Chapter [27] 27a.
1376 Section 25. Section 31A-17-605 is amended to read:
1377 31A-17-605. Authorized control level event.
1378 (1) "Authorized control level event" means any of the following events:
1379 (a) the filing of an RBC report by the insurer or health organization that indicates that
1380 the insurer's or health organization's total adjusted capital is greater than or equal to its
1381 mandatory control level RBC but less than its authorized control level RBC;
1382 (b) the notification by the commissioner to the insurer or health organization of an
1383 adjusted RBC report that indicates the event in Subsection (1)(a), provided the insurer or health
1384 organization does not challenge the adjusted RBC report under Section 31A-17-607 ;
1385 (c) if, pursuant to Section 31A-17-607 , the insurer or health organization challenges an
1386 adjusted RBC report that indicates the event in Subsection (1)(a), notification by the
1387 commissioner to the insurer or health organization that after a hearing the commissioner rejects
1388 the insurer's or health organization's challenge;
1389 (d) the failure of the insurer or health organization to respond, in a manner satisfactory
1390 to the commissioner, to a corrective order, provided the insurer or health organization has not
1391 challenged the corrective order under Section 31A-17-607 ; or
1392 (e) if the insurer or health organization has challenged a corrective order under Section
1393 31A-17-607 and the commissioner after a hearing rejects the challenge or modifies the
1394 corrective order, the failure of the insurer or health organization to respond, in a manner
1395 satisfactory to the commissioner, to the corrective order subsequent to rejection or modification
1396 by the commissioner.
1397 (2) (a) In the event of an authorized control level event with respect to an insurer or
1398 health organization, the commissioner shall:
1399 (i) take any action required under Section 31A-17-604 regarding an insurer or health
1400 organization with respect to which a regulatory action level event has occurred; or
1401 (ii) take any action as is necessary to cause the insurer or health organization to be

1402 placed under regulatory control under [Section 31A-27-201 ] Chapter 27, Part 5, Administrative
1403 Actions, if the commissioner considers it to be in the best interests of:
1404 (A) the policyholders or members;
1405 (B) creditors of the insurer or health organization; and
1406 (C) the public.
1407 (b) [In the event] If the commissioner takes an action described in Subsection (2)(a),
1408 the authorized control level event is sufficient grounds for the commissioner to take action
1409 under [Section 31A-27-201 ] Chapter 27, Part 5, Administrative Actions, and the commissioner
1410 shall have the rights, powers, and duties with respect to the insurer or health organization set
1411 forth in [Section 31A-27-201 ] Chapter 27, Part 5, Administrative Actions.
1412 (c) If the commissioner takes an action under Subsection (2)(a) pursuant to an adjusted
1413 RBC report, the insurer or health organization is entitled to the protections afforded to an
1414 insurer or health organization under Section [ 31A-27-203 ] 31A-27-504 pertaining to [summary
1415 proceedings] an action by the commissioner.
1416 Section 26. Section 31A-17-606 is amended to read:
1417 31A-17-606. Mandatory control level event.
1418 (1) "Mandatory control level event" means any of the following events:
1419 (a) the filing of an RBC report that indicates that the insurer's or health organization's
1420 total adjusted capital is less than its mandatory control level RBC;
1421 (b) notification by the commissioner to the insurer or health organization of an adjusted
1422 RBC report that indicates the event in Subsection (1)(a), provided the insurer or health
1423 organization does not challenge the adjusted RBC report under Section 31A-17-607 ; or
1424 (c) if, pursuant to Section 31A-17-607 , the insurer or health organization challenges an
1425 adjusted RBC report that indicates the event in Subsection (1)(a), notification by the
1426 commissioner to the insurer or health organization that after a hearing the commissioner rejects
1427 the insurer's or health organization's challenge.
1428 (2) (a) In the event of a mandatory control level event with respect to an insurer or
1429 health organization, the commissioner shall take any actions necessary to place the insurer

1430 under regulatory control under [Section 31A-27-201 ] Chapter 27, Part 5, Administrative
1431 Actions.
1432 (b) The mandatory control level event is sufficient grounds for the commissioner to
1433 take action under [Section 31A-27-201 ] Chapter 27, Part 5, Administrative Actions, and the
1434 commissioner shall have the rights, powers, and duties with respect to the insurer or health
1435 organization as are set forth in [Section 31A-27-201 ] Chapter 27, Part 5, Administrative
1436 Actions.
1437 (c) If the commissioner takes an action pursuant to an adjusted RBC report, the insurer
1438 or health organization is entitled to the protections of Section [ 31A-27-203 ] 31A-27-504
1439 pertaining to summary proceedings.
1440 (d) Notwithstanding the other provisions of Subsection (2), the commissioner may
1441 forego action for up to 90 days after the mandatory control level event if the commissioner
1442 finds there is a reasonable expectation that the mandatory control level event may be eliminated
1443 within the 90-day period.
1444 Section 27. Section 31A-17-609 is amended to read:
1445 31A-17-609. Alternate adjusted capital.
1446 (1) Except as provided in Section 31A-17-602 , an insurer or health organization
1447 licensed under Chapters 5, 7, 8, 9, and 14 shall maintain total adjusted capital as defined in
1448 Section 31A-1-301 in an amount equal to the greater of:
1449 (a) 175% of the minimum required capital, or of the minimum permanent surplus in the
1450 case of nonassessable mutuals, required by Section 31A-5-211 , 31A-7-201 , 31A-8-209 ,
1451 31A-9-209 , or 31A-14-205 ; or
1452 (b) the net total of:
1453 (i) 10% of net insurance premiums earned during the year; plus
1454 (ii) 5% of the admitted value of common stocks and real estate; plus
1455 (iii) 2% of the admitted value of all other invested assets, exclusive of cash deposits,
1456 short-term investments, policy loans, and premium notes; less
1457 (iv) the amount of any asset valuation reserve being maintained by the insurer or health

1458 organization, but not to exceed the sum of Subsections (1)(b)(ii) and (iii).
1459 (2) As used in Subsection (1)(b), "premiums earned" means premiums and other
1460 consideration earned for insurance in the 12-month period ending on the date the calculation is
1461 made.
1462 (3) The commissioner may consider an insurer or health organization to be financially
1463 hazardous under Subsection [ 31A-27-307 (3)] 31A-27a-207 (1)(i), if the insurer or health
1464 organization does not have qualified assets in an aggregate value exceeding the sum of the
1465 insurer's or health organization's liabilities and the total adjusted capital required by Subsection
1466 (1).
1467 (4) The commissioner shall consider an insurer or health organization to be financially
1468 hazardous under Subsection [ 31A-27-307 (3)] 31A-27a-207 (1)(i) if the insurer or health
1469 organization does not have qualified assets in an aggregate value exceeding the sum of the
1470 insurer's or health organization's liabilities and 70% of the total adjusted capital required by
1471 Subsection (1).
1472 Section 28. Section 31A-17-610 is amended to read:
1473 31A-17-610. Foreign insurers or health organizations.
1474 (1) (a) Any foreign insurer or health organization shall, upon the written request of the
1475 commissioner, submit to the commissioner an RBC report as of the end of the most recent
1476 calendar year by the later of:
1477 (i) the date an RBC report would be required to be filed by a domestic insurer or health
1478 organization under this part; or
1479 (ii) 15 days after the request is received by the foreign insurer or health organization.
1480 (b) Any foreign insurer or health organization shall, at the written request of the
1481 commissioner, promptly submit to the commissioner a copy of any RBC plan that is filed with
1482 the insurance commissioner of any other state.
1483 (2) (a) The commissioner may require a foreign insurer or health organization to file an
1484 RBC plan with the commissioner if:
1485 (i) there is a company action level event, regulatory action level event, or authorized

1486 control level event with respect to the foreign insurer or health organization as determined
1487 under:
1488 (A) the RBC statute applicable in the state of domicile of the insurer or health
1489 organization; or
1490 (B) if no RBC statute is in force in that state, under this part; and
1491 (ii) the insurance commissioner of the state of domicile of the foreign insurer or health
1492 organization fails to require the foreign insurer or health organization to file an RBC plan in the
1493 manner specified under:
1494 (A) that state's RBC statute; or
1495 (B) if no RBC statute is in force in that state, under Section 31A-17-603 .
1496 (b) If the commissioner requires a foreign insurer or health organization to file an RBC
1497 plan, the failure of the foreign insurer or health organization to file the RBC plan with the
1498 commissioner is grounds to order the insurer or health organization to cease and desist from
1499 writing new insurance business in this state.
1500 (3) The commissioner may make application to the Third District Court for Salt Lake
1501