1     
INSURANCE CONTRACTS AMENDMENTS

2     
2018 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Lincoln Fillmore

5     
House Sponsor: Brian S. King

6     Cosponsors:
7     Jacob L. Anderegg
8     Allen M. Christensen
9     Jim Dabakis
10     Gene Davis
Luz Escamilla
Deidre M. Henderson
Lyle W. Hillyard
Jani Iwamoto
Peter C. Knudson
Karen Mayne
Evan J. Vickers
Brian Zehnder

11     

12     LONG TITLE
13     General Description:
14           This bill amends provisions related to insurance contracts.
15     Highlighted Provisions:
16          This bill:
17          ▸      prohibits discretionary clauses in certain insurance contracts; and
18          ▸     makes technical and conforming changes.
19     Money Appropriated in this Bill:
20          None
21     Other Special Clauses:
22          None
23     Utah Code Sections Affected:
24     AMENDS:
25          31A-21-314, as last amended by Laws of Utah 2015, Chapter 244
26     

27     Be it enacted by the Legislature of the state of Utah:
28          Section 1. Section 31A-21-314 is amended to read:

29          31A-21-314. Prohibited provisions.
30          (1) As used in this section:
31          (a) "Reserving discretionary authority" means a policy provision that:
32          (i) has the effect of conferring discretion on an insurer, or other claim administrator, to:
33          (A) determine eligibility for benefits; or
34          (B) interpret the terms or provisions of the policy, contract, certificate, or agreement;
35     and
36          (ii) could lead to a deferential standard of review by a reviewing court.
37          (b) "Reserving discretionary authority" does not include a policy provision that:
38          (i) informs an insured that, as part of the insurer's routine operations, the insurer
39     applies the terms of the contract for:
40          (A) making a decision, including making a determination regarding eligibility, or
41     receipt of benefits or claims; or
42          (B) explaining the insurer's policies and procedures; and
43          (ii) does not give rise to a deferential standard of review by a reviewing court.
44          [(1)] (2) An insurance policy subject to this chapter may not contain [any] a provision:
45          (a) requiring [it] the insurance policy to be construed according to the laws of another
46     jurisdiction except as necessary to meet the requirements of compulsory insurance laws of
47     other jurisdictions;
48          (b) depriving Utah courts of jurisdiction over an action against the insurer, except as
49     provided in permissible arbitration provisions; [or]
50          (c) limiting the right of action against the insurer to less than three years from the date
51     the cause of action accrues[.]; or
52          (d) for life insurance or accident and health insurance, reserving discretionary
53     authority.
54          [(2)] (3) For purposes of Subsection [(1)] (2)(c), the cause of action accrues on a
55     fidelity bond on the date the insurer first denies all or part of a claim made under the fidelity
56     bond.

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