H.B. 76

             1     

INSURANCE RELATED REVISIONS

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Jim Bird

             5     
Senate Sponsor: Wayne A. Harper

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Insurance Code to address inducements.
             10      Highlighted Provisions:
             11          This bill:
             12          .    addresses when a de minimis gift or meal may be given;
             13          .    addresses what constitutes fair market value of certain inducements; and
             14          .    makes technical changes.
             15      Money Appropriated in this Bill:
             16          None
             17      Other Special Clauses:
             18          None
             19      Utah Code Sections Affected:
             20      AMENDS:
             21           31A-23a-402.5 , as last amended by Laws of Utah 2013, Chapter 319
             22     
             23      Be it enacted by the Legislature of the state of Utah:
             24          Section 1. Section 31A-23a-402.5 is amended to read:
             25           31A-23a-402.5. Inducements.
             26          (1) (a) Except as provided in Subsection (2), a producer, consultant, or other licensee
             27      under this title, or an officer or employee of a licensee, may not induce a person to enter into,


             28      continue, or terminate an insurance contract by offering a benefit that is not:
             29          (i) specified in the insurance contract; or
             30          (ii) directly related to the insurance contract.
             31          (b) An insurer may not make or knowingly allow an agreement of insurance that is not
             32      clearly expressed in the insurance contract to be issued or renewed.
             33          (c) A licensee under this title may not absorb the tax under Section 31A-3-301 .
             34          (2) This section does not apply to a title insurer, an individual title insurance producer,
             35      or agency title insurance producer, or an officer or employee of a title insurer, an individual
             36      title insurance producer, or an agency title insurance producer.
             37          (3) Items not prohibited by Subsection (1) include an insurer:
             38          (a) reducing premiums because of expense savings;
             39          (b) providing to a policyholder or insured one or more incentives, as defined by the
             40      commissioner by rule made in accordance with Title 63G, Chapter 3, Utah Administrative
             41      Rulemaking Act, to participate in a program or activity designed to reduce claims or claim
             42      expenses, including:
             43          (i) a premium discount offered to a small or large employer group based on a wellness
             44      program if:
             45          (A) the premium discount for the employer group does not exceed 20% of the group
             46      premium; and
             47          (B) the premium discount based on the wellness program is offered uniformly by the
             48      insurer to all employer groups in the large or small group market;
             49          (ii) a premium discount offered to employees of a small or large employer group in an
             50      amount that does not exceed federal limits on wellness program incentives; or
             51          (iii) a combination of premium discounts offered to the employer group and the
             52      employees of an employer group, based on a wellness program, if:
             53          (A) the premium discounts for the employer group comply with Subsection (3)(b)(i);
             54      and
             55          (B) the premium discounts for the employees of an employer group comply with
             56      Subsection (3)(b)(ii); or
             57          (c) receiving premiums under an installment payment plan.
             58          (4) Items not prohibited by Subsection (1) include a producer, consultant, or other


             59      licensee, or an officer or employee of a licensee, either directly or through a third party:
             60          (a) engaging in a usual kind of social courtesy if receipt of the social courtesy is not
             61      conditioned on a quote or the purchase of a particular insurance product;
             62          (b) extending credit on a premium to the insured:
             63          (i) without interest, for no more than 90 days from the effective date of the insurance
             64      contract;
             65          (ii) for interest that is not less than the legal rate under Section 15-1-1 , on the unpaid
             66      balance after the time period described in Subsection (4)(b)(i); and
             67          (iii) except that an installment or payroll deduction payment of premiums on an
             68      insurance contract issued under an insurer's mass marketing program is not considered an
             69      extension of credit for purposes of this Subsection (4)(b);
             70          (c) preparing or conducting a survey that:
             71          (i) is directly related to an accident and health insurance policy purchased from the
             72      licensee; or
             73          (ii) is used by the licensee to assess the benefit needs and preferences of insureds,
             74      employers, or employees directly related to an insurance product sold by the licensee;
             75          (d) providing limited human resource services that are directly related to an insurance
             76      product sold by the licensee, including:
             77          (i) answering questions directly related to:
             78          (A) an employee benefit offering or administration, if the insurance product purchased
             79      from the licensee is accident and health insurance or health insurance; and
             80          (B) employment practices liability, if the insurance product offered by or purchased
             81      from the licensee is property or casualty insurance; and
             82          (ii) providing limited human resource compliance training and education directly
             83      pertaining to an insurance product purchased from the licensee;
             84          (e) providing the following types of information or guidance:
             85          (i) providing guidance directly related to compliance with federal and state laws for an
             86      insurance product purchased from the licensee;
             87          (ii) providing a workshop or seminar addressing an insurance issue that is directly
             88      related to an insurance product purchased from the licensee; or
             89          (iii) providing information regarding:


             90          (A) employee benefit issues;
             91          (B) directly related insurance regulatory and legislative updates; or
             92          (C) similar education about an insurance product sold by the licensee and how the
             93      insurance product interacts with tax law;
             94          (f) preparing or providing a form that is directly related to an insurance product
             95      purchased from, or offered by, the licensee;
             96          (g) preparing or providing documents directly related to a premium only cafeteria plan
             97      within the meaning of Section 125, Internal Revenue Code, or a flexible spending account, but
             98      not providing ongoing administration of a flexible spending account;
             99          (h) providing enrollment and billing assistance, including:
             100          (i) providing benefit statements or new hire insurance benefits packages; and
             101          (ii) providing technology services such as an electronic enrollment platform or
             102      application system;
             103          (i) communicating coverages in writing and in consultation with the insured and
             104      employees;
             105          (j) providing employee communication materials and notifications directly related to an
             106      insurance product purchased from a licensee;
             107          (k) providing claims management and resolution to the extent permitted under the
             108      licensee's license;
             109          (l) providing underwriting or actuarial analysis or services;
             110          (m) negotiating with an insurer regarding the placement and pricing of an insurance
             111      product;
             112          (n) recommending placement and coverage options;
             113          (o) providing a health fair or providing assistance or advice on establishing or
             114      operating a wellness program, but not providing any payment for or direct operation of the
             115      wellness program;
             116          (p) providing COBRA and Utah mini-COBRA administration, consultations, and other
             117      services directly related to an insurance product purchased from the licensee;
             118          (q) assisting with a summary plan description;
             119          (r) providing information necessary for the preparation of documents directly related to
             120      the Employee Retirement Income Security Act of 1974, 29 U.S.C. Sec. 1001, et seq., as


             121      amended;
             122          (s) providing information or services directly related to the Health Insurance Portability
             123      and Accountability Act of 1996, Pub. L. 104-191, 110 Stat. 1936, as amended, such as services
             124      directly related to health care access, portability, and renewability when offered in connection
             125      with accident and health insurance sold by a licensee;
             126          (t) sending proof of coverage to a third party with a legitimate interest in coverage;
             127          (u) providing information in a form approved by the commissioner and directly related
             128      to determining whether an insurance product sold by the licensee meets the requirements of a
             129      third party contract that requires or references insurance coverage;
             130          (v) facilitating risk management services directly related to property and casualty
             131      insurance products sold or offered for sale by the licensee, including:
             132          (i) risk management;
             133          (ii) claims and loss control services;
             134          (iii) risk assessment consulting, including analysis of:
             135          (A) employer's job descriptions; or
             136          (B) employer's safety procedures or manuals; and
             137          (iv) providing information and training on best practices;
             138          (w) otherwise providing services that are legitimately part of servicing an insurance
             139      product purchased from a licensee; and
             140          (x) providing other directly related services approved by the department.
             141          (5) An inducement prohibited under Subsection (1) includes a producer, consultant, or
             142      other licensee, or an officer or employee of a licensee:
             143          (a) (i) providing a premium or commission rebate;
             144          (ii) paying the salary of an employee of a person who purchases an insurance product
             145      from the licensee; or
             146          (iii) if the licensee is an insurer, or a third party administrator who contracts with an
             147      insurer, paying the salary for an onsite staff member to perform an act prohibited under
             148      Subsection (5)(b)(xii); or
             149          (b) engaging in one or more of the following unless a fee is paid in accordance with
             150      Subsection (8):
             151          (i) performing background checks of prospective employees;


             152          (ii) providing legal services by a person licensed to practice law;
             153          (iii) performing drug testing that is directly related to an insurance product purchased
             154      from the licensee;
             155          (iv) preparing employer or employee handbooks, except that a licensee may:
             156          (A) provide information for a medical benefit section of an employee handbook;
             157          (B) provide information for the section of an employee handbook directly related to an
             158      employment practices liability insurance product purchased from the licensee; or
             159          (C) prepare or print an employee benefit enrollment guide;
             160          (v) providing job descriptions, postings, and applications for a person;
             161          (vi) providing payroll services;
             162          (vii) providing performance reviews or performance review training;
             163          (viii) providing union advice;
             164          (ix) providing accounting services;
             165          (x) providing data analysis information technology programs, except as provided in
             166      Subsection (4)(h)(ii);
             167          (xi) providing administration of health reimbursement accounts or health savings
             168      accounts; or
             169          (xii) if the licensee is an insurer, or a third party administrator who contracts with an
             170      insurer, the insurer issuing an insurance policy that lists in the insurance policy one or more of
             171      the following prohibited benefits:
             172          (A) performing background checks of prospective employees;
             173          (B) providing legal services by a person licensed to practice law;
             174          (C) performing drug testing that is directly related to an insurance product purchased
             175      from the insurer;
             176          (D) preparing employer or employee handbooks;
             177          (E) providing job descriptions postings, and applications;
             178          (F) providing payroll services;
             179          (G) providing performance reviews or performance review training;
             180          (H) providing union advice;
             181          (I) providing accounting services;
             182          (J) providing discrimination testing; or


             183          (K) providing data analysis information technology programs.
             184          (6) A producer, consultant, or other licensee or an officer or employee of a licensee
             185      shall itemize and bill separately from any other insurance product or service offered or
             186      provided under Subsection (5)(b).
             187          (7) [(a)] A de minimis gift or meal not to exceed a fair market value of $25 for each
             188      individual receiving the gift or meal is presumed to be a social courtesy not conditioned on a
             189      quote or purchase of a particular insurance product for purposes of Subsection (4)(a).
             190          [(b) Notwithstanding Subsection (4)(a), a de minimis gift or meal not to exceed $10
             191      may be conditioned on receipt of a quote of a particular insurance product if the de minimis gift
             192      or meal is provided by the insurer and not by a producer or consultant.]
             193          (8) If as provided under Subsection (5)(b) a producer, consultant, or other licensee is
             194      paid a fee to provide an item listed in Subsection (5)(b), the licensee shall comply with
             195      Subsection 31A-23a-501 (2) in charging the fee, except that the fee paid for the item shall equal
             196      or exceed the fair market value of the item.
             197          (9) For purposes of this section, "fair market value" is determined on the basis of what
             198      an individual insured or policyholder would pay on the open market for that item.




Legislative Review Note
    as of 1-23-14 1:41 PM


Office of Legislative Research and General Counsel


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