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S.B. 115 Enrolled
AN ACT RELATING TO INSURANCE; AMENDING DEFINITION OF EXCESS SURPLUS;
INCREASING MAXIMUM TERM OF PROBATION; AMENDING METHOD FOR
ISSUING CERTIFICATE OF AUTHORITY TO A HEALTH MAINTENANCE
ORGANIZATION; CLARIFYING CLASS OF INSURERS THAT MUST MAINTAIN
RISK-BASED CAPITAL; CLARIFYING INSTANCES IN WHICH A PLAN TO
DISTRIBUTE DIVIDENDS MUST BE FILED; AMENDING MEDICARE LANGUAGE
AT DIRECTION OF FEDERAL GOVERNMENT; CLARIFYING INSTANCES IN
WHICH A COMMISSION MAY BE SHARED, PAID, OR RECEIVED; PERMITTING
NONREPORTED LOSSES TO BE CERTIFIED; CLARIFYING THE ELEMENTS OF
WORKERS' COMPENSATION FRAUD; MAKING TECHNICAL AMENDMENTS;
AND PROVIDING AN EFFECTIVE DATE.
This act affects sections of Utah Code Annotated 1953 as follows:
31A-1-301, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
31A-2-202, as enacted by Chapter 242, Laws of Utah 1985
31A-8-104, as enacted by Chapter 204, Laws of Utah 1986
31A-15-111, as last amended by Chapter 5, Laws of Utah 1991
31A-17-602, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session
31A-17-609, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session
31A-18-108, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
31A-19-405, as repealed and reenacted by Chapter 205, Laws of Utah 1992
31A-22-620, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
31A-23-217, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
31A-23-307, as last amended by Chapter 164, Laws of Utah 1990
31A-23-404, as last amended by Chapter 95, Laws of Utah 1987
31A-26-214, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
31A-27-308, as enacted by Chapter 242, Laws of Utah 1985
31A-27-314, as last amended by Chapter 204, Laws of Utah 1986
31A-27-330.5, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session
31A-27-332, as enacted by Chapter 242, Laws of Utah 1985
31A-31-108 (Effective 07/01/97), as last amended by Chapter 240, Laws of Utah 1996
35A-3-114 (Effective 07/01/97), as renumbered and amended by Chapter 240, Laws of Utah
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 31A-1-301 is amended to read:
As used in this title, unless otherwise specified:
(0.5) "Administrator" is defined in Subsection (77).
(1) "Adult" means a natural person who has attained the age of at least 18 years.
(2) "Affiliate" means any person who controls, is controlled by, or is under common control
with, another person. A corporation is an affiliate of another corporation, regardless of ownership,
if substantially the same group of natural persons manages the corporations.
(3) "Alien insurer" means an insurer domiciled outside the United States.
(4) "Annuities" means all agreements to make periodical payments for a period certain or
over the lifetime of one or more natural persons if the making or continuance of all or some of the
series of the payments, or the amount of the payment, is dependent upon the continuance of human
(5) "Articles" or "articles of incorporation" means the original articles, special laws, charters,
amendments, restated articles, articles of merger or consolidation, trust instruments, and other
constitutive documents for trusts and other entities that are not corporations, and amendments to any
of these. Refer also to "bylaws" in this section and Section 31A-5-203.
(6) "Bail bond insurance" means a guarantee that a person will attend court when required,
or will obey the orders or judgment of the court, as a condition to the release of that person from
(7) "Binder" is defined in Section 31A-21-102.
(8) "Board," "board of trustees," or "board of directors" means the group of persons with
responsibility over, or management of, a corporation, however designated. Refer also to "trustee"
in this section.
(9) "Business of insurance" is defined in Subsection (44).
(10) "Business plan" means the information required to be supplied to the commissioner
under Subsections 31A-5-204(2)(i) and (j), including the information required when these
subsections are applicable by reference under Section 31A-7-201, Section 31A-8-205, or Subsection
(11) "Bylaws" means the rules adopted for the regulation or management of a corporation's
affairs, however designated. It includes comparable rules for trusts and other entities that are not
corporations. Refer also to "articles" and Section 31A-5-203.
(12) "Casualty insurance" means liability insurance as defined in Subsection (50).
(13) "Certificate" means the evidence of insurance given to an insured under a group policy.
(14) "Certificate of authority" is included within the term "license."
(14.5) "Claim," unless the context otherwise requires, means a request or demand on an
insurer for payment of benefits according to the terms of an insurance policy.
(14.6) "Claims-made coverage" means any insurance contract or provision limiting coverage
under a policy insuring against legal liability to claims that are first made against the insured while
the policy is in force.
(15) "Commissioner" or "commissioner of insurance" means Utah's insurance commissioner.
Where appropriate, these terms apply to the equivalent supervisory official of another jurisdiction.
(16) "Control," "controlling," "controlled," or "under common control" means the direct or
indirect possession of the power to direct or cause the direction of the management and policies of
a person. This control may be by contract, by common management, through the ownership of
voting securities, or otherwise. There is no presumption that an individual holding an official
position with another person controls that person solely by reason of the position. A person having
a contract or arrangement giving control is considered to have control despite the illegality or
invalidity of the contract or arrangement. There is a rebuttable presumption of control in a person
who directly or indirectly owns, controls, holds with the power to vote, or holds proxies to vote 10%
or more of the voting securities of another person. Refer also to "affiliate" in this section.
(17) (a) "Corporation" means insurance corporation, except where referring under Chapter
23, Insurance Marketing - Licensing Agents, Brokers and Consultants, and Reinsurance
Intermediaries, and Chapter 26, Insurance Adjusters, to corporations doing business as insurance
agents, brokers, consultants, or adjusters, or where referring under Chapter 16, Insurance Holding
Companies, to a noninsurer which is part of a holding company system.
(b) "Stock corporation" means stock insurance corporation.
(c) "Mutual" or "mutual corporation" means mutual insurance corporation.
(18) "Credit disability insurance" means insurance on a debtor to provide indemnity for
payments coming due on a specific loan or other credit transaction while the debtor is disabled.
Refer also to Subsection 31A-22-802(1).
(19) "Credit insurance" means surety insurance under which mortgagees and other creditors
are indemnified against losses caused by the default of debtors.
(20) "Credit life insurance" means insurance on the life of a debtor in connection with a loan
or other credit transaction. Refer also to Subsection 31A-22-802(2).
(21) "Creditor" means a person, including an insured, having any claim, whether matured,
unmatured, liquidated, unliquidated, secured, unsecured, absolute, fixed, or contingent.
(22) "Deemer clause" means a provision under this title under which upon the occurrence
of a condition precedent, the commissioner is deemed to have taken a specific action. If the statute
so provides, the condition precedent may be the commissioner's failure to take a specific action.
Refer also to Section 31A-2-302.
(23) "Degree of relationship" means the number of steps between two persons determined
by counting the generations separating one person from a common ancestor and then counting the
generations to the other person.
(24) "Department" means the Insurance Department.
(25) "Director" means a member of the board of directors of a corporation.
(26) "Disability insurance" means insurance written to indemnify for losses and expenses
resulting from accident or sickness, to provide payments to replace income lost from accident or
sickness, and to pay for services resulting directly from accident or sickness, including medical,
surgical, hospital, and other ancillary expenses.
(27) "Domestic insurer" means an insurer organized under the laws of this state.
(28) "Domiciliary state" means the state in which an insurer is incorporated or organized or,
in the case of an alien insurer, the state of entry into the United States.
(29) "Employee benefits" means one or more benefits or services provided employees or
(30) "Employee welfare fund" means a fund established or maintained by one or more
employers, one or more labor organizations, or a combination of employers and labor organizations,
whether directly or through trustees. This fund is to provide employee benefits paid or contracted
to be paid, other than income from investments of the fund, by or on behalf of an employer doing
business in this state or for the benefit of any person employed in this state. It includes plans funded
or subsidized by user fees or tax revenues.
(31) "Excludes" is not exhaustive and does not mean that other things are not also excluded.
The items listed are representative examples for use in interpretation of this title.
(31.5) "Fidelity insurance" means insurance guaranteeing the fidelity of persons holding
positions of public or private trust.
(31.7) "First party insurance" means an insurance policy or contract in which the insurer
agrees to pay claims submitted to it by the insured for the insured's losses.
(32) "Foreign insurer" means an insurer domiciled outside of this state, including an alien
(33) "Form" means a policy, certificate, or application prepared for general use. It does not
include one specially prepared for use in an individual case. Refer also to "policy" in this section.
(34) "Franchise insurance" means individual insurance policies provided through a mass
marketing arrangement involving a defined class of persons related in some way other than through
the purchase of insurance.
(35) "Health care insurance" or "health insurance" means disability insurance providing
benefits solely of medical, surgical, hospital, or other ancillary services or payment of medical,
surgical, hospital, or other ancillary expenses incurred. "Health care insurance" or "health insurance"
does not include disability insurance providing benefits for:
(a) replacement of income;
(b) short-term accident;
(c) fixed indemnity;
(d) credit disability;
(e) supplements to liability;
(f) workers' compensation;
(g) automobile medical payment;
(h) no-fault automobile;
(i) equivalent self-insurance; or
(j) any type of disability insurance coverage that is a part of or attached to another type of
(35.5) "Indemnity" means the payment of an amount to offset all or part of an insured loss.
(36) "Independent adjuster" means an insurance adjuster required to be licensed under
Section 31A-26-201 who engages in insurance adjusting as a representative of insurers. Refer also
to Section 31A-26-102.
(37) "Independently procured insurance" means insurance procured under Section
(37.5) "Individual" means a natural person.
(38) "Inland marine insurance" includes insurance covering:
(a) property in transit on or over land;
(b) property in transit over water by means other than boat or ship;
(c) bailee liability;
(d) fixed transportation property such as bridges, electric transmission systems, radio and
television transmission towers and tunnels; and
(e) personal and commercial property floaters.
(39) "Insolvency" means that:
(a) an insurer is unable to pay its debts or meet its obligations as they mature;
(b) an insurer's total adjusted capital is less than the insurer's mandatory control level RBC
under Subsection 31A-17-601(7)(c); or
(c) an insurer is determined to be hazardous under this title.
(40) "Insurance" means any arrangement, contract, or plan for the transfer of a risk or risks
from one or more persons to one or more other persons, or any arrangement, contract, or plan for the
distribution of a risk or risks among a group of persons that includes the person seeking to distribute
his risk. "Insurance" includes:
(a) risk distributing arrangements providing for compensation or replacement for damages
or loss through the provision of services or benefits in kind;
(b) contracts of guaranty or suretyship entered into by the guarantor or surety as a business
and not as merely incidental to a business transaction; and
(c) plans in which the risk does not rest upon the person who makes the arrangements, but
with a class of persons who have agreed to share it.
(41) "Insurance adjuster" means a person who directs the investigation, negotiation, or
settlement of a claim under an insurance policy other than life insurance or an annuity, on behalf of
an insurer, policyholder, or a claimant under an insurance policy. Refer also to Section 31A-26-102.
(41.5) "Interinsurance exchange" is defined in Subsection (69).
(42) "Insurance agent" or "agent" means a person who represents insurers in soliciting,
negotiating, or placing insurance. Refer to Subsection 31A-23-102(3) for exceptions to this
(43) "Insurance broker" or "broker" means a person who acts in procuring insurance on
behalf of an applicant for insurance or an insured, and does not act on behalf of the insurer except
by collecting premiums or performing other ministerial acts. Refer also to Subsection
31A-23-102(3) for exceptions to this definition.
(44) "Insurance business" or "business of insurance" includes:
(a) providing health care insurance, as defined in Subsection (35), by organizations that are
or should be licensed under this title;
(b) providing benefits to employees in the event of contingencies not within the control of
the employees, in which the employees are entitled to the benefits as a right, which benefits may be
provided either by single employers or by multiple employer groups through trusts, associations, or
(c) providing annuities, including those issued in return for gifts, except those provided by
persons specified in Subsections 31A-22-1305(2) and (3);
(d) providing the characteristic services of motor clubs as outlined in Subsection (56);
(e) providing other persons with insurance as defined in Subsection (40);
(f) making as insurer, guarantor, or surety, or proposing to make as insurer, guarantor, or
surety, any contract or policy of title insurance;
(g) transacting or proposing to transact any phase of title insurance, including solicitation,
negotiation preliminary to execution, execution of a contract of title insurance, insuring, and
transacting matters subsequent to the execution of the contract and arising out of it, including
(h) doing, or proposing to do, any business in substance equivalent to Subsections (44)(a)
through (g) in a manner designed to evade the provisions of this title.
(45) "Insurance consultant" or "consultant" means a person who advises other persons about
insurance needs and coverages, is compensated by the person advised on a basis not directly related
to the insurance placed, and is not compensated directly or indirectly by an insurer, agent, or broker
for advice given. Refer also to Subsection 31A-23-102(3) for exceptions to this definition.
(46) "Insurance holding company system" means a group of two or more affiliated persons,
at least one of whom is an insurer.
(47) "Insured" means a person to whom or for whose benefit an insurer makes a promise in
an insurance policy. The term includes policyholders, subscribers, members, and beneficiaries. This
definition applies only to the provisions of this title and does not define the meaning of this word
as used in insurance policies or certificates.
(48) (a) "Insurer" means any person doing an insurance business as a principal, including
fraternal benefit societies, issuers of gift annuities other than those specified in Subsections
31A-22-1305(2) and (3), motor clubs, employee welfare plans, and any person purporting or
intending to do an insurance business as a principal on his own account. It does not include a
governmental entity, as defined in Subsection 63-30-2(3), to the extent it is engaged in the activities
described in Section 31A-12-107.
(b) "Admitted insurer" is defined in Subsection (80)(b).
(c) "Alien insurer" is defined in Subsection (3).
(d) "Authorized insurer" is defined in Subsection (80)(b).
(e) "Domestic insurer" is defined in Subsection (27).
(f) "Foreign insurer" is defined in Subsection (32).
(g) "Nonadmitted insurer" is defined in Subsection (80)(a).
(h) "Unauthorized insurer" is defined in Subsection (80)(a).
(49) "Legal expense insurance" means insurance written to indemnify or pay for specified
legal expenses. It includes arrangements that create reasonable expectations of enforceable rights,
but it does not include the provision of, or reimbursement for, legal services incidental to other
insurance coverages. Refer to Section 31A-1-103 for a list of exemptions.
(50) (a) "Liability insurance" means insurance against liability:
(i) for death, injury, or disability of any human being, or for damage to property, exclusive
of the coverages under Subsection (53) for medical malpractice insurance, Subsection (66) for
professional liability insurance, and Subsection (83) for workers' compensation insurance;
(ii) for medical, hospital, surgical, and funeral benefits to persons other than the insured who
are injured, irrespective of legal liability of the insured, when issued with or supplemental to
insurance against legal liability for the death, injury, or disability of human beings, exclusive of the
coverages under Subsection (53) for medical malpractice insurance, Subsection (66) for professional
liability insurance, and Subsection (83) for workers' compensation insurance;
(iii) for loss or damage to property resulting from accidents to or explosions of boilers, pipes,
pressure containers, machinery, or apparatus;
(iv) for loss or damage to any property caused by the breakage or leakage of sprinklers,
water pipes and containers, or by water entering through leaks or openings in buildings; or
(v) for other loss or damage properly the subject of insurance not within any other kind or
kinds of insurance as defined in this chapter, if such insurance is not contrary to law or public policy.
(b) "Liability insurance" includes vehicle liability insurance as defined in Subsection (81),
residential dwelling liability insurance as defined in Subsection (70.3), and also includes making
inspection of, and issuing certificates of inspection upon, elevators, boilers, machinery, and
apparatus of any kind when done in connection with insurance on them.
(51) "License" means the authorization issued by the insurance commissioner under this title
to engage in some activity that is part of or related to the insurance business. It includes certificates
of authority issued to insurers.
(52) "Life insurance" means insurance on human lives and insurances pertaining to or
connected with human life. The business of life insurance includes granting annuity benefits,
granting endowment benefits, granting additional benefits in the event of death by accident or
accidental means, granting additional benefits in the event of the total and permanent disability of
the insured, and providing optional methods of settlement of proceeds.
(53) "Medical malpractice insurance" means insurance against legal liability incident to the
practice and provision of medical services other than the practice and provision of dental services.
(54) "Member" means a person having membership rights in an insurance corporation.
Refer also to "insured" in Subsection (47).
(55) "Minimum capital" or "minimum required capital" means the capital that must be
constantly maintained by a stock insurance corporation as required by statute. Refer also to
"permanent surplus" under Subsection (76)(a) and Sections 31A-5-211, 31A-8-209, and 31A-9-209.
(56) "Motor club" means a person licensed under Chapter 5, Domestic Stock and Mutual
Insurance Corporations, Chapter 11, Motor Clubs, or Chapter 14, Foreign Insurers, that promises
for an advance consideration to provide legal services under Subsection 31A-11-102(1)(b), bail
services under Subsection 31A-11-102(1)(c), trip reimbursement, towing services, emergency road
services, stolen automobile services, a combination of these services, or any other services given in
Subsections 31A-11-102(1)(b) through (f) for a stated period of time.
(57) "Mutual" means mutual insurance corporation.
(57.5) "Nonparticipating" means a plan of insurance under which the insured is not entitled
to receive dividends representing shares of the surplus of the insurer.
(58) "Ocean marine insurance" means insurance against loss of or damage to:
(a) ships or hulls of ships;
(b) goods, freight, cargoes, merchandise, effects, disbursements, profits, moneys, securities,
choses in action, evidences of debt, valuable papers, bottomry, respondentia interests, or other
cargoes in or awaiting transit over the oceans or inland waterways;
(c) earnings such as freight, passage money, commissions, or profits derived from
transporting goods or people upon or across the oceans or inland waterways; or
(d) a vessel owner or operator as a result of liability to employees, passengers, bailors,
owners of other vessels, owners of fixed objects, customs or other authorities, or other persons in
connection with maritime activity.
(59) "Order" means an order of the commissioner.
(59.5) "Participating" means a plan of insurance under which the insured is entitled to
receive dividends representing shares of the surplus of the insurer.
(60) "Person" includes an individual, partnership, corporation, incorporated or
unincorporated association, joint stock company, trust, reciprocal, syndicate, or any similar entity
or combination of entities acting in concert.
(61) (a) "Policy" means any document, including attached endorsements and riders,
purporting to be an enforceable contract, which memorializes in writing some or all of the terms of
an insurance contract. Service contracts issued by motor clubs under Chapter 11, Motor Clubs, and
by corporations licensed under Chapter 7, Nonprofit Health Service Insurance Corporations, or
Chapter 8, Health Maintenance Organizations and Limited Health Plans, are policies. A certificate
under a group insurance contract is not a policy. A document which does not purport to have legal
effect is not a policy.
(b) "Group insurance policy" means a policy covering a group of persons that is issued to
a policyholder on behalf of the group, for the benefit of group members who are selected under
procedures defined in the policy or in agreements which are collateral to the policy. This type of
policy may, but is not required to, include members of the policyholder's family or dependents.
(c) "Blanket insurance policy" means a group policy covering classes of persons without
individual underwriting, where the persons insured are determined by definition of the class with or
without designating the persons covered.
(62) "Policyholder" means the person who controls a policy, binder, or oral contract by
ownership, premium payment, or otherwise. Refer also to "insured" in Subsection (47).
(63) "Premium" means the monetary consideration for an insurance policy, and includes
assessments, membership fees, required contributions, or monetary consideration, however
designated. Consideration paid to third party administrators for their services is not "premium,"
though amounts paid by third party administrators to insurers for insurance on the risks administered
by the third party administrators are "premium."
(64) "Principal officers" of a corporation means the officers designated under Subsection
(65) "Proceedings" includes actions and special statutory proceedings.
(66) "Professional liability insurance" means insurance against legal liability incident to the
practice of a profession and provision of any professional services.
(67) "Property insurance" means insurance against loss or damage to real or personal
property of every kind and any interest in that property, from all hazards or causes, and against loss
consequential upon the loss or damage including vehicle comprehensive and vehicle physical
damage coverages, but excluding inland marine insurance and ocean marine insurance as defined
under Subsections (38) and (58).
(67.5) "Public agency insurance mutual" means any entity formed by joint venture or
interlocal cooperation agreement by two or more political subdivisions or public agencies of the state
for the purpose of providing insurance coverage for the political subdivisions or public agencies.
Any public agency insurance mutual created under this title and Title 11, Chapter 13, Interlocal
Cooperation Act, is considered to be a governmental entity and political subdivision of the state with
all of the rights, privileges, and immunities of a governmental entity or political subdivision of the
(68) (a) Except as provided in Subsection (68)(b), "rate service organization" means any
person who assists insurers in rate making or filing by:
(i) collecting, compiling, and furnishing loss or expense statistics;
(ii) recommending, making, or filing rates or supplementary rate information; or
(iii) advising about rate questions, except as an attorney giving legal advice. Refer also to
(b) "Rate service organization" does not mean an employee of an insurer, a single insurer
or group of insurers under common control, a joint underwriting group, or a natural person serving
as an actuarial or legal consultant.
(69) "Reciprocal" or "interinsurance exchange" means any unincorporated association of
persons operating through an attorney-in-fact common to all of them and exchanging insurance
contracts with one another that provide insurance coverage on each other.
(70) "Reinsurance" means an insurance transaction where an insurer, for consideration,
transfers any portion of the risk it has assumed to another insurer. In referring to reinsurance
transactions, this title sometimes refers to the insurer transferring the risk as the "ceding insurer,"
and to the insurer assuming the risk as the "assuming insurer" or the "assuming reinsurer."
(70.3) "Residential dwelling liability insurance" means insurance against liability resulting
from or incident to the ownership, maintenance, or use of a residential dwelling that is a detached
single family residence or multifamily residence up to four units.
(71) "Retrocession" means reinsurance with another insurer of a liability assumed under a
reinsurance contract. A reinsurer "retrocedes" when it reinsures with another insurer part of a
liability assumed under a reinsurance contract.
(72) (a) "Security" means any:
(v) evidence of indebtedness;
(vi) certificate of interest or participation in any profit-sharing agreement;
(vii) collateral-trust certificate;
(viii) preorganization certificate or subscription;
(ix) transferable share;
(x) investment contract;
(xi) voting trust certificate;
(xii) certificate of deposit for a security;
(xiii) certificate of interest of participation in an oil, gas, or mining title or lease or in
payments out of production under such a title or lease;
(xiv) commodity contract or commodity option;
(xv) any certificate of interest or participation in, temporary or interim certificate for, receipt
for, guarantee of, or warrant or right to subscribe to or purchase any of the items listed in
Subsections (72)(a)(i) through (xiv); or
(xvi) any other interest or instrument commonly known as a security.
(b) "Security" does not include:
(i) any insurance or endowment policy or annuity contract under which an insurance
company promises to pay money in a specific lump sum or periodically for life or some other
specified period; or
(ii) a burial certificate or burial contract.
(73) "Self-insurance" means any arrangement under which a person provides for spreading
its own risks by a systematic plan.
(a) Except as provided in this subsection, self-insurance does not include an arrangement
under which a number of persons spread their risks among themselves.
(b) Self-insurance does include an arrangement by which a governmental entity, as defined
in Section 63-30-2, undertakes to indemnify its employees for liability arising out of the employees'
(c) Self-insurance does include an arrangement by which a person with a managed program
of self-insurance and risk management undertakes to indemnify its affiliates, subsidiaries, directors,
officers, or employees for liability or risk which is related to the relationship or employment.
Self-insurance does not include any arrangement with independent contractors.
(74) (a) "Subsidiary" of a person means an affiliate controlled by that person either directly
or indirectly through one or more affiliates or intermediaries.
(b) "Wholly owned subsidiary" of a person is a subsidiary of which all of the voting shares
are owned by that person either alone or with its affiliates, except for the minimum number of shares
the law of the subsidiary's domicile requires to be owned by directors or others.
(75) Subject to Subsection (40)(b), "surety insurance" includes:
(a) a guarantee against loss or damage resulting from failure of principals to pay or perform
their obligations to a creditor or other obligee;
(b) bail bond insurance; and
(c) fidelity insurance.
(76) (a) "Surplus" means the excess of assets over the sum of paid-in capital and liabilities.
(b) "Permanent surplus" means the surplus of a mutual insurer that has been designated by
the insurer as permanent. Sections 31A-5-211, 31A-7-201, 31A-8-209, 31A-9-209, and 31A-14-209
require that mutuals doing business in this state maintain specified minimum levels of permanent
surplus. Except for assessable mutuals, the minimum permanent surplus requirement is essentially
the same as the minimum required capital requirement that applies to stock insurers. Refer also to
Subsection (55) on "minimum capital."
(c) "Excess surplus" means [
(i) for life or disability insurers, as defined in Subsection 31A-17-601(3), and property and
casualty insurers, as defined in Subsection 31A-17-601(4), the lesser of:
(A) that amount of an insurer's total adjusted capital, as defined in Subsection
31A-1-301(78.5), that exceeds the product of 2.5 and the sum of the insurer's minimum capital or
permanent surplus required under Section 31A-5-211, 31A-9-209, or 31A-14-205; or
(B) that amount of an insurer's total adjusted capital, as defined in Subsection
31A-1-301(78.5), that exceeds the product of 3.0 and the authorized control level RBC as defined
in Subsection 31A-17-601(7)(a); and
(ii) for monoline mortgage guaranty insurers, financial guaranty insurers, and title insurers,
that amount of an insurer's paid-in-capital and surplus that exceeds the product of 1.5 and the
insurer's total adjusted capital required by Subsection 31A-17-609(1).
(77) "Third party administrator" or "administrator" means any person who collects charges
or premiums from, or who, for consideration, adjusts or settles claims of residents of the state in
connection with life or disability insurance coverage, annuities, or service insurance coverage,
(a) a union on behalf of its members;
(b) a person exempt as a trust under Section 514 of the federal Employee Retirement Income
Security Act of 1974;
(c) an employer on behalf of his employees or the employees of one or more of the
subsidiary or affiliated corporations of the employer;
(d) an insurer licensed under Chapter 5, 7, 8, 9, or 14, but only with respect to insurance
issued by the insurer; or
(e) a person licensed or exempt from licensing under Chapter 23 or 26 whose activities are
limited to those authorized under the license the person holds or for which the person is exempt.
Refer also to Section 31A-25-101.
(78) "Title insurance" means the insuring, guaranteeing, or indemnifying of owners of real
or personal property or the holders of liens or encumbrances on that property, or others interested
in the property against loss or damage suffered by reason of liens or encumbrances upon, defects in,
or the unmarketability of the title to the property, or invalidity or unenforceability of any liens or
encumbrances on the property.
(78.5) "Total adjusted capital" means the sum of an insurer's statutory capital and surplus
as determined in accordance with:
(a) the statutory accounting applicable to the annual financial statements required to be filed
under Section 31A-4-113; and
(b) any other items provided by the RBC instructions, as RBC instructions is defined in
(79) (a) "Trustee" means "director" when referring to the board of directors of a corporation.
(b) "Trustee," when used in reference to an employee welfare fund, means an individual,
firm, association, organization, joint stock company, or corporation, whether acting individually or
jointly and whether designated by that name or any other, that is charged with or has the overall
management of an employee welfare fund.
(80) (a) "Unauthorized insurer," "unadmitted insurer," or "nonadmitted insurer" means an
insurer not holding a valid certificate of authority to do an insurance business in this state, or an
insurer transacting business not authorized by a valid certificate.
(b) "Admitted insurer" or "authorized insurer" means an insurer holding a valid certificate
of authority to do an insurance business in this state[
(81) "Vehicle liability insurance" means insurance against liability resulting from or incident
to ownership, maintenance, or use of any land vehicle or aircraft, exclusive of vehicle comprehensive
and vehicle physical damage coverages under Subsection (67).
(82) "Voting security" means a security with voting rights, and includes any security
convertible into a security with a voting right associated with it.
(83) "Workers' compensation insurance" means:
(a) insurance for indemnification of employers against liability for compensation:
(i) based upon compensable accidental injuries; and
(ii) based on occupational disease disability;
(b) employer's liability insurance incidental to workers' compensation insurance and written
in connection with it; and
(c) insurance assuring to the persons entitled to workers' compensation benefits the
compensation provided by law.
Section 2. Section 31A-2-202 is amended to read:
31A-2-202. Reports and replies.
(1) When relevant, either directly or indirectly to the performance of the commissioner's
duties under the Insurance Code, the commissioner may require from any person subject to
regulation under this title:
and evidence of the information, in whatever reasonable form and reasonable intervals the
(b) full explanation of the programming of any data storage or communication system in use;
(c) information from books, records, electronic data processing systems, computers, or any
other information storage system be made available to the department, at any reasonable time and
in any reasonable manner; and
(d) timely delivery to the National Association of Insurance Commissioners or other entity
which gathers insurance industry information, a copy of the statistical data prepared for and
submitted to the Insurance Department, as specified by the commissioner.
(2) The commissioner may prescribe forms for the reports under Subsection (1) and specify
who shall execute or certify the reports. The forms shall be consistent, to the extent practicable, with
those prescribed by other jurisdictions. For basic financial data, the commissioner shall use the
annual statement forms developed by the National Association of Insurance Commissioners.
(3) The commissioner may prescribe reasonable minimum standards and techniques of
accounting and data handling to ensure that timely and reliable information exists and can be made
available. The standards and techniques prescribed shall be consistent, to the extent practicable, with
those prescribed by other states.
(4) Any person with executive authority over or in charge of any segment of the affairs of
an insurer authorized to do or doing an insurance business in this state, the affiliate of this type of
insurer, and any other person licensed under the Insurance Code[
or in other designated form[
(5) The commissioner may require that any communication made under this section be
verified, and may specify by whom it shall be verified.
(6) All information submitted to the commissioner shall be accurate and complete.
by law or by the commissioner subjects the person making it to an action for damages for
Section 3. Section 31A-8-104 is amended to read:
31A-8-104. Determination of ability to provide services.
(1) The commissioner may not issue a certificate of authority to an applicant for a certificate
of authority under this chapter unless the commissioner has determined that the applicant has:
(a) demonstrated the willingness and potential ability to furnish the proposed health care
services in a manner to assure both availability and accessibility of adequate personnel and facilities
and continuity of service;
(b) arrangements for an ongoing quality of health care assurance program concerning health
care processes and outcomes, established in accordance with rules adopted by the director of the
Department of Health based upon prevailing standards for quality assurance for other forms of health
care delivery in this state; and
(c) a procedure, established in accordance with rules of the director of the Department of
Health, to develop, compile, evaluate, and report statistics relating to the cost of its operations, the
pattern of utilization of its services, the availability and accessibility of its services, and such other
matters as may be reasonably required by the director of the Department of Health.
(2) Upon receipt of an application for a certificate of authority under this chapter, the
commissioner shall transmit a copy of the application and accompanying documents to the director
of the Department of Health. Upon receipt of the application, the director of the Department of
Health shall review the application, investigate the surrounding facts and circumstances, and make
a finding concerning whether the applicant satisfies the requirements of Subsection (1). The director
of the Department of Health is considered to have found the applicant to comply with Subsection
(1) unless he delivers to the commissioner a finding of noncompliance within [
receiving the application from the commissioner.
(3) In determining whether the requirements of Subsection (1) are satisfied, the
to the commissioner in accordance with Subsection (2). [
(4) A finding of noncompliance with Subsection (1) shall specify in what respects the
applicant is deficient[
(5) An organization's certificate of authority issued under this chapter is conclusive evidence
of compliance with Subsection (1), as to the services authorized to be performed under the certificate
of authority, except in a proceeding by the state against the organization. Licensing under this
chapter does not exempt an organization from any licensing requirement applicable under Title 26,
Section 4. Section 31A-15-111 is amended to read:
31A-15-111. Surplus lines advisory organizations.
(1) Advisory organizations of surplus lines brokers may be formed to:
(a) facilitate and encourage compliance by its members with the laws of this state and the
rules of the commissioner relative to surplus lines insurance;
(b) if authorized by the commissioner, perform and report to the commissioner on the
confidential examinations and assess and receive the stamping fees described in Subsection
(c) make recommendations to the commissioner concerning classes of insurance for which
a rule under Subsection 31A-15-103(6)(a) is appropriate;
(d) investigate "abuses of placements," as described in Subsection 31A-15-103(6)(b), and
provide recommendations to the commissioner concerning rules under Subsection 31A-15-103(6)(b);
(e) bring to the commissioner's attention the existence of grounds for issuing an order under
Subsection 31A-15-103(6)(c) concerning a particular unauthorized insurer;
(f) provide recommendations to the commissioner concerning unauthorized insurers which
should be listed on a "doubtful or objectionable" list under Subsection 31A-15-103(6)(d);
(g) provide comments to the commissioner concerning whether an unauthorized insurer has
a good reputation and financial integrity under Subsection 31A-15-103(6)(d)(ii);
(h) provide recommendations to the commissioner concerning rules under Subsection
31A-15-103(10) necessary to protect the interests of insureds and the public; and
(i) receive and disseminate to its members information relative to surplus lines coverages.
(2) Every advisory organization formed under this section shall file with the commissioner:
(a) a copy of its constitution, articles of agreement or association or articles of incorporation,
and any amendments to these documents;
(b) a copy of its bylaws and any other writing governing the organization's activities and any
amendments to these documents;
orders of the commissioner or processes issued at his direction may be served, with changes in this
list to be filed within ten days of a change; and
advisory organization, that the commissioner may examine the advisory organization in accordance
with the provisions of Sections 31A-2-203, 31A-2-204, and 31A-2-205.
(3) The commissioner may by rule or order require each person licensed as a surplus lines
broker under Chapter 23 to be a member of one or more specified advisory organizations operating
under this section. The commissioner may make compliance with the rule or order a condition to
continued licensure as a surplus lines broker.
(4) The comments and recommendations given the commissioner under Subsection (1) are
merely advisory. The formation of an advisory organization under this section does not alter the
commissioner's authority under this chapter.
Section 5. Section 31A-17-602 is amended to read:
31A-17-602. RBC reports -- RBC of life and disability insurers -- RBC of property and
(1) Every domestic life or disability insurer and every domestic property and casualty insurer
(a) on or before March 1, prepare and submit to the commissioner a report of its RBC levels
as of the end of the calendar year just ended, in a form and containing the information as is required
by the RBC instructions[
(b) file its RBC report with the insurance commissioner in any state in which the insurer is
authorized to do business, if the insurance commissioner of that state notifies the insurer of its
request in writing, in which case the insurer may file its RBC report not later than the later of:
(2) A life and disability insurer's RBC shall be determined in accordance with the formula
set forth in the RBC instructions. The formula shall take into account and may adjust for the
(a) the risk with respect to the insurer's assets;
(b) the risk of adverse insurance experience with respect to the insurer's liabilities and
(c) the interest rate risk with respect to the insurer's business; and
(d) all other business risks and other relevant risks as set forth in the RBC instructions.
(3) A property and casualty insurer's RBC shall be determined in accordance with the
formula set forth in the RBC instructions. The formula shall take the following into account and
may adjust for the covariance between:
(a) asset risk;
(b) credit risk;
(c) underwriting risk; and
(d) all other business risks and the other relevant risks as set forth in the RBC instructions.
(4) (a) If a domestic insurer files an RBC report that the commissioner determines is
inaccurate, the commissioner shall adjust the RBC report to correct the inaccuracy and shall notify
the insurer of the adjustment.
(b) The notice under Subsection (4)(a) shall contain a statement of the reason for the
Section 6. Section 31A-17-609 is amended to read:
31A-17-609. Alternate adjusted capital.
(1) Except as provided in Section 31A-17-602, insurers licensed under Chapters 5, 7, 9, and
14 shall maintain total adjusted capital as defined in Subsection 31A-1-301(78.5) in an amount equal
to the greater of:
the case of nonassessable mutuals, required by Section 31A-5-211, 31A-7-201, 31A-9-209, or
(b) the net total of:
(i) 10% of net insurance premiums earned during the year; plus
(ii) 5% of the admitted value of common stocks and real estate; plus
(iii) 2% of the admitted value of all other invested assets, exclusive of cash deposits,
short-term investments, policy loans, and premium notes; less
(iv) the amount of any asset valuation reserve being maintained by the insurer, but not to
exceed the sum of Subsections (1)(b)(ii) and (iii).
(2) As used in Subsection (1)(b), "premiums earned" means premiums and other
consideration earned for insurance in the 12-month period ending on the date the calculation is made.
(3) The commissioner may consider an insurer to be financially hazardous under Subsection
31A-27-307(3), if the insurer does not have qualified assets in an aggregate value exceeding the sum
of the insurer's[
required by Subsection (1).
(4) The commissioner shall consider an insurer to be financially hazardous under Subsection
31A-27-307(3) if the insurer does not have qualified assets in an aggregate value exceeding the sum
of the insurer's[
required by Subsection (1).
Section 7. Section 31A-18-108 is amended to read:
31A-18-108. Investment of excess surplus.
If an insurer has excess surplus, as defined under Subsection 31A-1-301(76)(c), then to the
extent of its excess surplus, the insurer may invest in a manner inconsistent with the limitations of
This section does not empower any insurer to make investments that are illegal or that are prohibited
under Section 31A-4-107. Each insurer has the burden of establishing the extent of its excess
Section 8. Section 31A-19-405 is amended to read:
31A-19-405. Payment of dividends.
(1) This part does not prohibit the [
unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or
(2) In the payment of dividends, savings, or unabsorbed premium deposits, there may not
be any unfair discrimination between policyholders.
(3) A plan for the [
deposits allowed or returned by insurers to their policyholders, members, or subscribers developed
after the inception of the insurance contracts to be included in the distribution plan and filed pursuant
to Section 31A-21-310 is not considered a rating plan or system. Filing under this part is not
(4) A dividend or participating plan developed by insurers establishing given criteria for
eligibility and the general basis for distribution for a dividend, if declared, which plan existed at the
inception of an insurance policy, is considered a rating plan. Such plans must be filed with the
commissioner pursuant to this part.
a dividend conditioned upon renewal of the policy or contract.
Section 9. Section 31A-22-620 is amended to read:
31A-22-620. Medicare Supplement Insurance Minimum Standards Act.
(1) As used in this section:
(a) "Applicant" means:
(i) in the case of an individual Medicare supplement policy, the person who seeks to contract
for insurance benefits; and
(ii) in the case of a group Medicare supplement policy, the proposed certificate holder.
(b) "Certificate" means any certificate delivered or issued for delivery in this state under a
group Medicare supplement policy.
(c) "Certificate form" means the form on which the certificate is delivered or issued for
delivery by the issuer.
(d) "Issuer" includes insurance companies, fraternal benefit societies, health care service
plans, health maintenance organizations, and any other entity delivering, or issuing for delivery in
this state, Medicare supplement policies or certificates.
(e) "Medicare" means the "Health Insurance for the Aged Act," Title XVIII of the Social
Security Amendments of 1965, as [
(f) "Medicare Supplement Policy" means a group or individual policy of disability insurance,
other than a policy issued pursuant to a contract under Section 1876 of the federal Social Security
Act, 42 U.S.C. Section 1395 et seq., or an issued policy under a demonstration project specified in
41 U.S.C. Section 1395ss(g)(1), that is advertised, marketed, or designed primarily as a supplement
to reimbursements under Medicare for the hospital, medical, or surgical expenses of persons eligible
(g) "Policy Form" means the form on which the policy is delivered or issued for delivery by
(2) (a) Except as otherwise specifically provided, this section applies to:
(i) all Medicare supplement policies delivered or issued for delivery in this state on or after
the effective date of this section;
(ii) all certificates issued under group Medicare supplement policies, that have been
delivered or issued for delivery in this state on or after the effective date of this section; and
(iii) policies or certificates that were in force prior to the effective date of this section, with
respect to requirements for benefits, claims payment, and policy reporting practice under Subsection
(3)(d), and loss ratios under Subsection (4).
(b) This section does not apply to a policy of one or more employers or labor organizations,
or of the trustees of a fund established by one or more employers or labor organizations, or a
combination of employers and labor unions, for employees or former employees or a combination
of employees and former employees, or for members or former members of the labor organizations,
or a combination of members and former members of labor organizations.
(c) This section does not prohibit, nor does it apply to insurance policies or health care
benefit plans, including group conversion policies, provided to Medicare eligible persons that are
not marketed or held out to be Medicare supplement policies or benefit plans.
(3) (a) A Medicare supplement policy or certificate in force in the state may not contain
benefits that duplicate benefits provided by Medicare.
(b) Notwithstanding any other provision of law of this state, a Medicare supplement policy
or certificate may not exclude or limit benefits for loss incurred more than six months from the
effective date of coverage because it involved a preexisting condition. The policy or certificate may
not define a preexisting condition more restrictively than: "A condition for which medical advice
was given or treatment was recommended by or received from a physician within six months before
the effective date of coverage."
(c) The commissioner shall adopt rules to establish specific standards for policy provisions
of Medicare supplement policies and certificates. The standards adopted shall be in addition to and
in accordance with applicable laws of this state. A requirement of this title relating to minimum
required policy benefits, other than the minimum standards contained in this section, may not apply
to Medicare supplement policies and certificates. The standards may include:
(i) terms of renewability;
(ii) initial and subsequent conditions of eligibility;
(iii) nonduplication of coverage;
(iv) probationary periods;
(v) benefit limitations, exceptions, and reductions;
(vi) elimination periods;
(vii) requirements for replacement;
(viii) recurrent conditions; and
(ix) definitions of terms.
(d) The commissioner shall adopt rules establishing minimum standards for benefits, claims
payment, marketing practices, compensation arrangements, and reporting practices for Medicare
supplement policies and certificates.
(e) The commissioner may adopt such rules as are necessary to conform Medicare
supplement policies and certificates to the requirements of federal law and regulations promulgated
(i) requiring refunds or credits if the policies do not meet loss ratio requirements;
(ii) establishing a uniform methodology for calculating and reporting loss ratios;
(iii) assuring public access to policies, premiums, and loss ratio information of issuers of
Medicare supplement insurance;
(iv) establishing a process for approving or disapproving policy forms and certificate forms
and proposed premium increases;
(v) establishing a policy for holding public hearings prior to approval of premium increases;
(vi) establishing standards for Medicare select policies and certificates.
(f) The commissioner may adopt rules that prohibit policy provisions not otherwise
specifically authorized by statute that, in the opinion of the commissioner, are unjust, unfair, or
unfairly discriminatory to any person insured or proposed to be insured under a Medicare
supplement policy or certificate.
(4) Medicare supplement policies shall return to policyholders benefits that are reasonable
in relation to the premium charged. The commissioner shall make rules to establish minimum
standards for loss ratios of Medicare supplement policies on the basis of incurred claims experience,
or incurred health care expenses where coverage is provided by a health maintenance organization
on a service basis rather than on a reimbursement basis, and earned premiums in accordance with
accepted actuarial principles and practices.
(5) (a) To provide for full and fair disclosure in the sale of Medicare supplement policies,
a Medicare supplement policy or certificate may not be delivered in this state unless an outline of
coverage is delivered to the applicant at the time application is made.
(b) The commissioner shall prescribe the format and content of the outline of coverage
required by Subsection (5)(a).
(c) For purposes of this section, "format" means style arrangements and overall appearance,
including such items as the size, color, and prominence of type and arrangement of text and captions.
The outline of coverage shall include:
(i) a description of the principal benefits and coverage provided in the policy;
(ii) a statement of the renewal provisions, including any reservation by the issuer of a right
to change premiums; and disclosure of the existence of any automatic renewal premium increases
based on the policyholder's age; and
(iii) a statement that the outline of coverage is a summary of the policy issued or applied for
and that the policy should be consulted to determine governing contractual provisions.
(d) The commissioner may prescribe by rule a standard form and the contents of an
informational brochure for persons eligible for Medicare, that is intended to improve the buyer's
ability to select the most appropriate coverage and improve the buyer's understanding of Medicare.
Except in the case of direct response insurance policies, the commissioner may require by rule that
the informational brochure be provided concurrently with delivery of the outline of coverage to any
prospective insureds eligible for Medicare. With respect to direct response insurance policies, the
commissioner may require by rule that the prescribed brochure be provided upon request to any
prospective insureds eligible for Medicare, but in no event later than the time of policy delivery.
(e) The commissioner may adopt reasonable rules to govern the full and fair disclosure of
the information in connection with the replacement of [
(6) Notwithstanding Subsection (1), Medicare supplement policies and certificates shall have
a notice prominently printed on the first page of the policy or certificate, or attached to the front
page, stating in substance that the applicant has the right to return the policy or certificate within 30
days of its delivery and to have the premium refunded if, after examination of the policy or
certificate, the applicant is not satisfied for any reason. Any refund made pursuant to this section
shall be paid directly to the applicant by the issuer in a timely manner.
(7) Every issuer of Medicare supplement insurance policies or certificates in this state shall
provide a copy of any Medicare supplement advertisement intended for use in this state, whether
through written or broadcast medium, to the commissioner for review.
Section 10. Section 31A-23-217 is amended to read:
(1) In any circumstances that would justify a suspension under Section 31A-23-216, the
commissioner may instead, after a formal adjudicative proceeding, put the licensee on probation for
a specified period no longer than [
(2) The probation order shall state the conditions for retention of the license, which shall be
(3) Any violation of the probation is grounds for revocation pursuant to any proceeding
authorized under Title 63, Chapter 46b, Administrative Procedures Act.
Section 11. Section 31A-23-307 is amended to read:
31A-23-307. Title insurance agents' business.
A title insurance agent may engage in the escrow, settlement, or closing business, or any
combination of such businesses, and operate as escrow, settlement, or closing agent provided that
all the following exist:
(1) The title insurance agent is properly licensed under this chapter.
(2) (a) All funds deposited with the agent in connection with any escrow, settlement, or
closing are deposited in a federally insured financial institution in separate trust accounts, with the
funds being the property of the persons entitled to them under the provisions of the escrow,
settlement, or closing. The funds shall be segregated escrow by escrow, settlement by settlement,
or closing by closing in the records of the agent. These funds are not subject to any debts of the
agent and may only be used to fulfill the terms of the individual escrow, settlement, or closing under
which the funds were accepted. None of the funds may be used until all conditions of the escrow,
settlement, or closing have been met.
(b) Any interest received on funds deposited with the agent in connection with any escrow,
settlement, or closing shall be paid over to the depositing party to the escrow, settlement, or closing
and may not be transferred to the account of the agent.
(c) No check may be drawn, executed[
segregated escrow account [
a sufficient credit balance consisting of collected or cleared funds[
(d) As used in this Subsection (2), funds are considered to be "collected or cleared," and may
be disbursed as follows:
(i) cash may be disbursed on the same day it is deposited;
(ii) wire transfers may be disbursed on the same day they are deposited;
(iii) cashier's checks, certified checks, teller's checks, U.S. Postal Service money orders, and
checks drawn on a Federal Reserve Bank or Federal Home Loan Bank may be disbursed on the day
following the date of deposit; and
(iv) other checks or deposits may be disbursed within the time limits provided under the
Expedited Funds Availability Act, 12 U.S.C. Section 4001 et seq., as amended, and related
regulations of the Federal Reserve System or upon written notification from the financial institution
to which the funds have been deposited, that final settlement has occurred on the deposited item.
(3) The title insurance agent shall maintain records of all receipts and disbursements of
escrow, settlement, and closing funds.
(4) The title insurance agent shall comply with any rules adopted by the commissioner
governing escrows, settlements, or closings.
Section 12. Section 31A-23-404 is amended to read:
31A-23-404. Sharing commissions.
(1) (a) Except as provided in Subsection 31A-15-103(3), [
a person [
(b) A person may only accept commission compensation or other compensation as an agent,
broker, or consultant that is directly or indirectly the result of any insurance transaction [
that person is licensed under this chapter to act [
particular type of insurance.
(2) (a) Except as provided in Section 31A-23-301, a consultant may not pay or receive any
commission or other compensation that is directly or indirectly the result of any insurance
(b) A consultant may share a consultant fee or other compensation received for consulting
services performed within Utah only with another consultant licensed under this chapter, and only
to the extent that the other consultant contributed to the services performed.
licensees under this chapter, former Title 31, Chapter 17, or their successors in interest under a
deferred compensation or agency sales agreement.
controlled business, or in payment of a forwarding fee or finder's fee. A person may share
compensation for the issuance of a title insurance policy only to the extent that he contributed to the
search and examination of the title or other services connected with it.
Section 13. Section 31A-26-214 is amended to read:
(1) In any circumstances that would justify a suspension under Section 31A-26-213, the
commissioner may instead, after a formal adjudicative proceeding, put the licensee on probation for
a specified period no longer than [
(2) The probation order shall state the conditions for retention of the license, which shall be
(3) Violation of the probation is grounds for revocation pursuant to any proceeding
authorized under Title 63, Chapter 46b, Administrative Procedures Act.
Section 14. Section 31A-27-308 is amended to read:
31A-27-308. Answering the petition.
(1) The insurer shall answer the petition within five working days after receiving the notice
or within any further time which the court may order. If the insurer does not answer timely, the court
shall issue a liquidation order under Section 31A-27-310.
(2) If the insurer answers and objects to the petition, the court shall hear the case as soon as
it is convenient, and shall proceed expeditiously to grant or deny the petition.
Rules of Civil Procedure and the Utah Rules of Appellate Procedure. [
shall give expeditious review of [
(b) An existing rehabilitation order shall remain in effect during the appeal of a liquidation
order under Subsection (3)(a).
Section 15. Section 31A-27-314 is amended to read:
31A-27-314. Powers and duties of the liquidator.
(1) The liquidator shall report to the court, at intervals specified by the court, on the progress
of the liquidation in whatever detail the court orders. Unless the court orders otherwise, the
liquidator has the following powers and responsibilities:
the special deputy's compensation, subject to the approval of the court. The special deputy has all
the powers of the liquidator granted by this section. The special deputy serves at the pleasure of the
31A-2-108, actuaries, accountants, appraisers, consultants, and other personnel necessary to assist
in the liquidation. The career service laws do not apply to these persons.
approval of the court.
conducting, liquidating, disposing of, or otherwise dealing with the business and property of the
insurer. If the property of the insurer does not contain sufficient cash or liquid assets to defray the
reasonable costs incurred, the commissioner may advance the costs so incurred out of the
department's appropriation. Any amounts so paid are expenses of administration and shall be repaid
for the credit of the Insurance Department out of the first available cash of the insurer.
oaths, examine any person under oath, compel any person to subscribe to his testimony after it has
been correctly reduced to writing, and in connection with these proceedings, require the production
of any books, papers, records, or other documents that the liquidator considers relevant to the
wherever located, and for this purpose institute timely action in other jurisdictions to forestall
garnishment and attachment proceedings against those debts; perform any other acts necessary or
expedient to collect, conserve, or protect its assets or property, including selling, compounding,
compromising, or assigning for collection, upon the terms and conditions as he considers best, any
bad or doubtful debts; and pursue any creditor's remedies available to enforce his claims.
prescribed by the court.
of the estate to transfer policy obligations to a solid assuming insurer, if the transfer can be arranged
without prejudice to applicable priorities under Section 31A-27-335.
dispose of or deal with any property of the insurer at its market value or upon fair and reasonable
terms and conditions, except that no transaction involving property with a market value exceeding
$25,000 may be concluded without the express permission of the court. The liquidator may also
execute, acknowledge, and deliver any deeds, assignments, releases, and other instruments necessary
or proper to effectuate any sale of property or other transaction in connection with the liquidation.
In cases where real property sold by the liquidator is located other than in the county where the
liquidation is pending, the liquidator shall cause a certified copy of the order of appointment to be
filed with the county recorder for the county in which the property is located.
and execute and deliver all documents necessary to that transaction for the purpose of facilitating the
liquidate, and assume or reject any contracts to which the insurer is a party. A contract is considered
rejected if it is not assumed within 60 days after the order of liquidation, unless the time for action
is extended by the court.
name, any suits and other legal proceedings, in this state or elsewhere. If the insurer is dissolved
under Section 31A-27-312, the liquidator may apply to any court in this state or elsewhere for leave
to substitute himself for the insurer as plaintiff.
policyholders, or shareholders of the insurer against any officer of the insurer, or any other person.
commissioner or to any other place which is convenient for the efficient and orderly execution of
the liquidation. Guaranty funds and associations shall be given reasonable access to the records to
enable them to carry out their statutory obligations.
which are required for meeting current administration expenses and dividend distributions.
all sums not currently needed, unless the court orders otherwise.
recorder or record office in this state or elsewhere, where the property of the insurer is located.
including statutes of limitations, statutes of frauds, and the defense of usury. A waiver of any
defense by the insurer after a petition for liquidation has been filed does not bind the liquidator.
shareholder, policyholder, or member of the insurer, including any power given by law to avoid any
transfer or lien that is not included among the powers given by Sections 31A-27-319 through
appointment of a receiver or trustee, and act as the receiver or trustee whenever the appointment is
obtain a court order declaring the abandonment of the property or claim.
relating to the rehabilitation, liquidation, conservation, or dissolution of an insurer doing business
in both states.
which are not inconsistent with this chapter.
a limitation upon him, and does not exclude the right to do other acts not specifically mentioned or
otherwise provided for, which acts are necessary or expedient for the accomplishment of or in aid
of the purpose of liquidation.
(2) A court order issued after a hearing and pursuant to Subsection (1)(g), (1)(i), (1)(t), or
(1)(u) may be appealed as a final order for purposes of Rule 54 of the Utah Rules of Civil Procedure.
Section 16. Section 31A-27-330.5 is amended to read:
31A-27-330.5. Claim estimation.
(1) (a) After the entry of a liquidation order, the liquidator may apply to the court for an
order authorizing the estimation of the liabilities owed by or to the insurer. The liquidator's
(i) identify the proposed method for estimating the liabilities; and
(ii) provide for reasonable participation in the estimation process of the claimant and other
affected parties, including reinsurers.
(b) The proof and allowance of liability, value, and due date of such a claim may be
(i) the proof, allowance, or adjudication of any contingent, unliquidated, or immature claim
owed by or to the insurer would unduly delay the administration of the liquidation; or
(ii) the administrative expense of processing and adjudicating the claim would be unduly
excessive when compared with the funds that are estimated to be available for distribution with
respect to the claim.
(c) An estimation made pursuant to this section:
(i) shall be made in a commercially reasonable and actuarially sound manner, or upon
another accepted and verifiable method of determining, proving, and allowing contingent,
unliquidated, or immature claims with reasonable certainty;
(ii) shall provide for reasonable participation of affected reinsurers, consistent with this
(iii) may authorize the present value estimation of contingent, unliquidated, and immature
claims, including incurred but not reported losses, except that losses incurred but not reported may
only be based upon the certification of a member in good standing of the American Academy of
(2) Contingent, unliquidated, and immature claims shall not share in any distribution to
creditors of an insurer under Section 31A-27-336 until the liability, value, and due date of the claims
have been proved, allowed, and adjudicated.
Section 17. Section 31A-27-332 is amended to read:
31A-27-332. Disputed claims.
(1) When a claim is disallowed in whole or in part by the liquidator, written notice of the
determination and of the right to object shall be given promptly to the claimant or the claimant's
attorney of record, if any, by first-class mail at the addresses shown in the proof of claim. Within
60 days from the mailing of the notice, the claimant may file objections with the court. If objections
are not filed within that period, the claimant may not further object to the determination.
(2) Whenever objections are filed with the court and the liquidator does not alter his ruling,
the liquidator shall ask the court for a hearing as soon as practicable. The court shall issue an order
setting a date as early as possible, but no sooner than 20 days after the order. The liquidator shall
give notice of the hearing by first-class mail to the claimant or his attorney and to any other persons
directly affected, not less than ten nor more than 30 days before the date of the hearing. The matter
may be heard by the court or by a court-appointed referee who shall submit findings of fact together
with his recommendations.
(3) A court order issued after a hearing and pursuant to this section may be appealed as a
final order for purposes of Rule 54 of the Utah Rules of Civil Procedure.
Section 18. Section 31A-31-108 (Effective 07/01/97) is amended to read:
31A-31-108 (Effective 07/01/97). Assessment of insurers.
(1) To implement this chapter, Section 35A-3-114, and Section 76-6-521, the commissioner
may assess each admitted insurer and each nonadmitted insurer transacting insurance under Chapter
15, Parts 1 and 2, an annual fee as follows:
but more than $1,000,000;
more than $2,500,000;
but more than $5,000,000;
$50,000,000 but more than $10,000,000; and
(2) All money received by the state under this section shall be deposited in the General Fund
as a nonlapsing dedicated credit of the Insurance Department for the purpose of providing funds to
pay for any costs and expenses incurred by the Insurance Department in the administration,
investigation, and enforcement of this chapter, Section 35A-3-114, and Section 76-6-521.
(3) As used in this section, "Utah risks" means insurance coverage on the lives, health, or
against the liability of persons residing in Utah, or on property located in Utah, other than property
temporarily in transit through Utah.
Section 19. Section 35A-3-114 (Effective 07/01/97) is amended to read:
35A-3-114 (Effective 07/01/97). Workers' compensation insurance fraud -- Elements
-- Penalties -- Notice.
(1) As used in this section:
(a) "Corporation" has the same meaning as in Subsection 76-2-201(3).
(b) "Intentionally" has the same meaning as in Subsection 76-2-103(1).
(c) "Knowingly" has the same meaning as in Subsection 76-2-103(2).
(d) "Person" has the same meaning as in Subsection 76-1-601(8).
(e) "Recklessly" has the same meaning as in Subsection 76-2-103(3).
(2) Any person who has intentionally, knowingly, or recklessly[
artifice to obtain workers' compensation insurance coverage, disability compensation, medical
benefits, goods, professional services, fees for professional services, or anything of value under this
chapter by means of false or fraudulent pretenses, representations, promises, or material omissions,
and who intentionally, knowingly, or recklessly communicates or causes a communication with
another in furtherance of the scheme or artifice, is guilty of workers' compensation insurance fraud,
which is punishable in the manner prescribed by Section 76-10-1801 for communication fraud.
(3) A corporation or association is guilty of the offense of workers' compensation insurance
fraud under the same conditions as those set forth in Section 76-2-204.
(4) The determination of the degree of any offense under Subsection (2) shall be measured
by the total value of all property, money, or other things obtained or sought to be obtained by the
scheme or artifice described in Subsection (2), except as provided in Subsection 76-10-1801(1)(e).
(5) Reliance on the part of any person is not a necessary element of the offense described
in Subsection (2).
(6) An intent on the part of the perpetrator of any offense described in Subsection (2) to
permanently deprive any person of property, money, or anything of value is not a necessary element
of this offense.
(7) An insurer or self-insured employer giving written notice in accordance with Subsection
(10) that workers' compensation insurance fraud is a crime is not a necessary element of the offense
described in Subsection (2).
any scheme or artifice to make or cause to be made any false written or oral statement or business
reorganization, incorporation, or change in ownership intended to obtain insurance coverage as
mandated by this chapter at rates that do not reflect the risk, industry, employer, or class codes
actually covered by the policy.
to collect or make a claim for temporary disability compensation as provided in Section 35A-3-410
while working for gain.
of this chapter prints, reproduces, or furnishes a form to any person upon which that person applies
for insurance coverage, reports payroll, makes a claim by reason of accident, injury, death, disease,
or other claimed loss, or otherwise reports or gives notice to the insurer or self-insured employer,
shall cause to be printed or displayed in comparative prominence with other content the statement:
"Any person who knowingly presents false or fraudulent underwriting information, files or causes
to be filed a false or fraudulent claim for disability compensation or medical benefits, or submits a
false or fraudulent report or billing for health care fees or other professional services is guilty of a
crime and may be subject to fines and confinement in state prison." [
financial instrument in payment of compensation issued under this chapter shall cause to be printed
or displayed in comparative prominence above the area for endorsement the statement: "Workers'
compensation insurance fraud is a crime punishable by Utah law."
(c) (i) The provisions of Subsections (10)(a) and (b) apply only to the legal obligations of
an insurer or a self-insured employer.
(ii) A person who violates Subsection (2) is guilty of workers' compensation insurance
fraud, and the failure of an insurer or a self-insured employer to fully comply with the provisions of
Subsections (10)(a) and (b) may not be:
(A) a defense to violating Subsection (2); or
(B) grounds for suppressing evidence.
(11) In the absence of malice, a person, employer, insurer, or governmental entity that
reports a suspected fraudulent act relating to a workers' compensation insurance policy or claim is
not subject to any civil liability for libel, slander, or any other relevant cause of action.
(12) In any action involving workers' compensation, this section supersedes Title 31A,
Chapter 31, Insurance Fraud Act.
Section 20. Effective date.
This act takes effect on July 1, 1997.
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