H.B. 97

1

CONTINUING EDUCATION REQUIREMENTS
2 FOR INSURANCE PROFESSIONALS
3 1997 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Lowell A. Nelson
6 AN ACT RELATING TO INSURANCE; AMENDING CONTINUING EDUCATION FOR
7 INSURANCE BROKERS AND AGENTS TO INCLUDE PROFESSIONAL INSURANCE
8 DESIGNATION COURSE REQUIREMENT.
9 This act affects sections of Utah Code Annotated 1953 as follows:
10 AMENDS:
11 31A-23-102, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
12 31A-23-206, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
13 Be it enacted by the Legislature of the state of Utah:
14 Section 1. Section 31A-23-102 is amended to read:
14a h 31A-23-207, as last amended by Chapter 316, Laws of Utah 1994 h
15 31A-23-102. Definitions.
16 As used in this chapter:
17 (1) Except as provided in Subsection (3):
18 (a) "Escrow" is a license category that allows a person to conduct escrows, settlements,
19 or closings on behalf of a title insurance agency or a title insurer.
20 (b) "Insurance agent" or "agent" means a person who represents an insurer or insurers in
21 soliciting, negotiating, or placing insurance.
22 (c) "Insurance broker" or "broker" means a broker as defined in Subsection (5) or any other
23 person, firm, association, or corporation, that for any compensation, commission, or any other
24 thing of value acts or aids in any manner in soliciting, negotiating, or procuring the making of any
25 insurance contract on behalf of an insured other than himself or itself.
26 (d) "Limited license" means a license that is issued for a specific product of insurance and
27 limits an individual or agency to transact only for those products.

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1 (e) "Search" is a license category that allows a person to issue title insurance commitments
2 or policies on behalf of a title insurer.
3 (f) "Title marketing representative" means a person who represents a title insurer in
4 soliciting, requesting, or negotiating the placing of title insurance or escrow, settlement, or closing
5 services and who does not have a search or escrow license.
6 (2) Except as provided in Subsection (3) and Subsection 31A-23-301(1)(b), "insurance
7 consultant" or "consultant" means a person who advises other persons about insurance needs and
8 coverages, who is compensated by the person advised on a basis which is not directly related to
9 the insurance placed, and who is not compensated directly or indirectly by an insurer, agent, or
10 broker for the advice given.
11 (3) The following persons are not acting as agents, brokers, title marketing representatives,
12 or consultants when acting in the following capacities:
13 (a) any regular salaried officer, employee, or other representative of an insurer or licensee
14 under this chapter who devotes substantially all of his working time to activities other than those
15 described in Subsections (1), (2), and (3), including the clerical employees of persons required to
16 be licensed under this chapter;
17 (b) a regular salaried officer or employee of a person seeking to purchase insurance, who
18 receives no compensation that is directly dependent upon the amount of insurance coverage
19 purchased;
20 (c) a person who gives incidental advice in the normal course of a business or professional
21 activity, other than insurance consulting, if neither that person nor that person's employer receives
22 direct or indirect compensation on account of any insurance transaction that results from that
23 advice;
24 (d) a person who, without special compensation, performs incidental services for another
25 at the other's request, without providing advice or technical or professional services of a kind
26 normally provided by an agent, broker, or consultant;
27 (e) (i) a holder of a group insurance policy, or any other person involved in mass
28 marketing, but only with respect to administrative activities in connection with that type of policy,
29 including the collection of premiums; and
30 (ii) only if the person receives no compensation for the activities described in Subsection
31 (3)(e)(i) beyond reasonable expenses including a fair payment for the use of capital; and

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1 (f) a person who gives advice or assistance without direct or indirect compensation or any
2 expectation of direct or indirect compensation.
3 (4) "Actuary" means a person who is a member in good standing of the American
4 Academy of Actuaries.
5 (5) "Agency" means a person other than an individual, and includes a sole proprietorship
6 by which a natural person does business under an assumed name.
7 (6) "Broker" means an insurance broker or any other person, firm, association, or
8 corporation that for any compensation, commission, or other thing of value acts or aids in any
9 manner in soliciting, negotiating, or procuring the making of any insurance contract on behalf of
10 an insured other than itself.
11 (7) "Controlled insurer" means a licensed insurer that is either directly or indirectly
12 controlled by a broker.
13 (8) "Controlling broker" means a broker who either directly or indirectly controls an
14 insurer.
15 (9) "Controlling person" means any person, firm, association, or corporation that directly
16 or indirectly has the power to direct or cause to be directed, the management, control, or activities
17 of a reinsurance intermediary.
18 (10) "Insurer" is defined in Subsection 31A-1-301(48). The following persons or similar
19 persons are not insurers for purposes of Part 6 of this chapter:
20 (a) all risk retention groups as defined in the Superfund Amendments and Reauthorization
21 Act of 1986, Pub. L. No. 99-499, and the Risk Retention Act, 15 U.S.C. Sec. 3901 et seq., and
22 Title 31A, Chapter 15, Part 2, Risk Retention Groups;
23 (b) all residual market pools and joint underwriting authorities or associations; and
24 (c) all captive insurers; for the purposes of this chapter, captive insurers are insurance
25 companies owned by another organization whose exclusive purpose is to insure risks of the parent
26 organization and affiliated companies or, in the case of groups and associations, insurance
27 organizations owned by the insureds whose exclusive purpose is to insure risks of member
28 organizations, group members, and their affiliates.
29 (11) (a) "Managing general agent" means any person, firm, association, or corporation that
30 manages all or part of the insurance business of an insurer, including the management of a separate
31 division, department, or underwriting office, and that acts as an agent for the insurer whether it is

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1 known as a managing general agent, manager, or other similar term, and that, with or without the
2 authority, either separately or together with affiliates, directly or indirectly produces and
3 underwrites an amount of gross direct written premium equal to, or more than 5% of, the
4 policyholder surplus as reported in the last annual statement of the insurer in any one quarter or
5 year, and that also either adjusts or pays claims in excess of an amount determined by the
6 commissioner, or that negotiates reinsurance on behalf of the insurer.
7 (b) Notwithstanding Subsection (11)(a), the following persons may not be considered as
8 managing general agent for the purposes of this chapter:
9 (i) an employee of the insurer;
10 (ii) a U.S. manager of the United States branch of an alien insurer;
11 (iii) an underwriting manager which, pursuant to contract:
12 (A) manages all the insurance operations of the insurer;
13 (B) is under common control with the insurer;
14 (C) subject to Title 31A, Chapter 16, Insurance Holding Companies; and
15 (D) whose compensation is not based on the volume of premiums written; and
16 (c) the attorney-in-fact authorized by and acting for the subscribers of a reciprocal insurer
17 or inter-insurance exchange under powers of attorney.
18 (12) "Producer" is a person who arranges for insurance coverages between insureds and
19 insurers.
20 (13) "Professional insurance designation" means a professional designation:
21 (a) of benefit to a person licensed as an insurance agent or broker under this chapter;
22 (b) available through a national accreditation body h OR A LOCAL CHAPTER OF A STATE OR
22a NATIONAL ASSOCIATION FOR INSURANCE PROFESSIONALS h ; and
23 (c) specifically approved by the commissioner as meeting the professional insurance
24 designation course requirement of continuing education.
25 [(13)] (14) "Qualified U.S. financial institution" means an institution that:
26 (a) is organized or, in the case of a U.S. office of a foreign banking organization licensed,
27 under the laws of the United States or any state;
28 (b) is regulated, supervised, and examined by U.S. federal or state authorities having
29 regulatory authority over banks and trust companies; and
30 (c) has been determined by either the commissioner, or the Securities Valuation Office of
31 the National Association of Insurance Commissioners, to meet the standards of financial condition

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1 and standing which are considered necessary and appropriate to regulate the quality of financial
2 institutions whose letters of credit will be acceptable to the commissioner.
3 [(14)] (15) "Reinsurance intermediary" means a reinsurance intermediary-broker or a
4 reinsurance intermediary-manager as these terms are defined in Subsections (15) and (16).
5 [(15)] (16) "Reinsurance intermediary-broker" means a person other than an officer or
6 employee of the ceding insurer, firm, association, or corporation who solicits, negotiates, or places
7 reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power
8 to bind reinsurance on behalf of the insurer.
9 [(16)] (17) (a) "Reinsurance intermediary-manager" means a person, firm, association, or
10 corporation who has authority to bind or who manages all or part of the assumed reinsurance
11 business of a reinsurer, including the management of a separate division, department, or
12 underwriting office and who acts as an agent for the reinsurer whether he is known as a reinsurance
13 intermediary-manager, manager, or other similar term.
14 (b) Notwithstanding Subsection (16)(a), the following persons may not be considered
15 reinsurance intermediary-managers for the purpose of this chapter with respect to the reinsurer:
16 (i) an employee of the reinsurer;
17 (ii) a U.S. manager of the United States branch of an alien reinsurer;
18 (iii) an underwriting manager that, pursuant to contract, manages all the reinsurance
19 operations of the reinsurer, is under common control with the reinsurer, is subject to Title 31A,
20 Chapter 16, Insurance Holding Companies, and whose compensation is not based on the volume
21 of premiums written; and
22 (iv) the manager of a group, association, pool, or organization of insurers that:
23 (A) engage in joint underwriting or joint reinsurance; and
24 (B) are subject to examination by the insurance commissioner of the state in which the
25 manager's principal business office is located.
26 [(17)] (18) "Reinsurer" means any person, firm, association, or corporation duly licensed
27 in this state as an insurer with the authority to assume reinsurance.
28 [(18)] (19) "Surplus lines broker" means a person licensed under Subsection
29 31A-23-204(5) to place insurance with unauthorized insurers in accordance with Section
30 31A-15-103.
31 [(19)] (20) "Underwrite" means the authority to accept or reject risk on behalf of the

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1 insurer.
2 Section 2. Section 31A-23-206 is amended to read:
3 31A-23-206. Continuing education requirements -- Regulatory authority.
4 (1) The commissioner shall by rule prescribe the continuing education requirements for
5 each class of agent's license under Subsection 31A-23-204(1), except that no continuing education
6 requirement may be imposed upon holders of licenses under Subsection 31A-23-204(2) or other
7 license classifications recognized by the commissioner by rule as provided in Subsection
8 31A-23-204(6).
9 (2) (a) Educational requirements may not be stated in terms of formal education. [These
10 requirements may be stated in terms of classroom hours, or their equivalent, of insurance-related
11 instruction received, for which insurance-related formal education may be a substitute, in whole
12 or in part.]
13 (b) Notwithstanding Subsection (2)(a), the commissioner may count formal education
14 related to insurance toward a licensee's educational requirements.
15 h [ (c) (i) No more than one required course for a professional insurance designation and six
16 classroom hours, or their equivalent, of continuing education may be required for a two-year
17 period regardless of the number of lines for which an agent or broker may be licensed. ]
17a (c)(i) NO MORE THAN 18 CLASSROOM HOURS, OR THEIR EQUIVALENT, OF CONTINUING
17b EDUCATION, NINE CLASSROOM HOURS OF CONTINUING EDUCATION AND ONE COURSE FOR A
17c PROFESSIONAL INSURANCE DESIGNATION, OR TWO COURSES FOR A PROFESSIONAL INSURANCE
17d DESIGNATION MAY BE REQUIRED FOR A TWO-YEAR PERIOD REGARDLESS OF THE NUMBER OF
17e LINES FOR WHICH AN AGENT OR BROKER MAY BE LICENSED. h
18 [(3) (a)] (ii) No more than h [ 12 ] 6 h classroom hours, or their equivalent, of continuing
18a education h , ONE COURSE FOR A PROFESSIONAL INSURANCE DESIGNATION, OR THE
18b CONTINUING EDUCATION REQUIREMENTS OF A PROFESSIONAL INSURANCE DESIGNATION, IF 30 OR
18c MORE HOURS OF CONTINUING EDUCATION ARE REQUIRED EVERY TWO YEARS TO MAINTAIN THAT
18d DESIGNATION, h
19 may be required for a two-year period regardless of the number of lines for which an agent or
20 broker may be licensed if the agent or broker has at least one professional insurance designation.
21 (iii) Licensees who, as of April 1, 1990, have completed 20 years of licensure in good
22 standing shall be exempt from the requirement of continuing education.
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23 (b) The rules shall:
24 (i) provide for home study, video tapes, and experience credits in addition to other
25 provisions[. However, not less than half of the required hours shall be met through actual class
26 attendance.];
27 (ii) require a licensee to attend at least half of the required continuing education classroom
28 hours in person; and
29 (iii) allow a licensee to satisfy the professional insurance designation course requirement
30 through:
31 (A) attending at least 65% of the classes in person; or

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1 (B) passing the final examination for the course h [; and ] . h
2 h [ (iv) allow a licensee to take a professional insurance designation course to satisfy the
3 required continuing education classroom hours if the licensee is subject to:
4 (A) Subsection (2)(c)(i) and has completed the professional insurance designation course
5 requirement within the current two-year educational cycle; or
6 (B) Subsection (2)(c)(ii). ] h
7 (c) The rules shall authorize professional agent associations to offer qualified programs
8 and courses for all classes of licenses on a geographically accessible basis and to collect reasonable
9 fees for funding and administration of the continuing education program, subject to the review and
10 approval of the commissioner. The fees charged to fund and administer the [program] programs
11 and courses shall reasonably relate to the costs of [administering the program] administration.
12 Nothing in this section prohibits a provider of continuing education programs or courses from
13 charging fees for attendance at courses offered for continuing education credit.
14 (d) The fees charged for attendance at a professional agent association program may be
15 less for an association member, based on the member's affiliation expense, but shall preserve the
16 right of a nonmember to attend without affiliation.
17 [(4)] (3) The commissioner shall designate programs and courses, including those
18 presented by insurers, which satisfy the requirements of this section.
19 [(5)] (4) The requirements of this section apply only to applicants who are natural persons.
20 [(6)] (5) The commissioner may waive the requirements of this section as to any person
21 who has been an active insurance agent or broker in another state for two years immediately prior
22 to applying for a license in this state, but only if the applicant's state of residence [has imposed
23 upon] currently requires the applicant to satisfy education requirements which are substantially as
24 rigorous as those of this state.
24a h Section 3. Section 31A-23-207 is amended to read:
24b 31A-23-207. Examination requirements.
24c (1) The commissioner may require applicants for any particular class of license under Section
24d 31A-23-204 to pass an examination as a requirement for a license AFTER COMPLETING 21 CLASSROOM
24e HOURS IN PREPARATION FOR THE EXAMINATION, except that no examination may be required of
24f applicants for licenses under Subsection 31A-23-204 (2) or other license classifications recognized by h
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24g h the commissioner by rule as provided in Subsection 31A-23-204(6). The examination shall reasonably
24h relate to the specific classes for which it is prescribed. The examination may be administered by the
24i commissioner or as otherwise specified by rule.
24j (2) The commissioner may waive the requirement of an examination for a nonresident applicant
24k who has held a similar license in his home state for the two years immediately preceding application in
24l this state, but only if the applicant's state of residence has imposed upon the applicant examination
24m requirements which are substantially as rigorous as those of this state.
24n (3) This section's requirement may only be applied to applicants who are natural persons. h



Legislative Review Note
as of 12-31-96 9:09 AM

A limited legal review of this bill raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

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