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S.B. 115





Sponsor: L. Steven Poulton

19    This act affects sections of Utah Code Annotated 1953 as follows:
20    AMENDS:
21         31A-1-301, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
22         31A-2-202, as enacted by Chapter 242, Laws of Utah 1985
23         31A-2-205, as last amended by Chapter 2, Laws of Utah 1987
24         31A-8-104, as enacted by Chapter 204, Laws of Utah 1986
25         31A-15-111, as last amended by Chapter 5, Laws of Utah 1991
26         31A-17-602, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session
27         31A-17-609, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session

1         31A-18-108, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
2         31A-19-405, as repealed and reenacted by Chapter 205, Laws of Utah 1992
3         31A-22-620, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
4         31A-23-215, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
5         31A-23-217, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
6         31A-23-307, as last amended by Chapter 164, Laws of Utah 1990
7         31A-23-404, as last amended by Chapter 95, Laws of Utah 1987
8         31A-26-210, as last amended by Chapter 204, Laws of Utah 1986
9         31A-26-214, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
10         31A-27-102, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
11         31A-27-330.5, as enacted by Chapter 9, Laws of Utah 1996, Second Special Session
12         31A-31-108 (Effective 07/01/97), as last amended by Chapter 240, Laws of Utah 1996
13         35A-3-114 (Effective 07/01/97), as renumbered and amended by Chapter 240, Laws of Utah
14    1996
15         59-9-102, as renumbered and amended by Chapter 2, Laws of Utah 1987
16     Be it enacted by the Legislature of the state of Utah:
17        Section 1. Section 31A-1-301 is amended to read:
18         31A-1-301. Definitions.
19        As used in this title, unless otherwise specified:
20        (0.5) "Administrator" is defined in Subsection (77).
21        (1) "Adult" means a natural person who has attained the age of at least 18 years.
22        (2) "Affiliate" means any person who controls, is controlled by, or is under common
23    control with, another person. A corporation is an affiliate of another corporation, regardless of
24    ownership, if substantially the same group of natural persons manages the corporations.
25        (3) "Alien insurer" means an insurer domiciled outside the United States.
26        (4) "Annuities" means all agreements to make periodical payments for a period certain or
27    over the lifetime of one or more natural persons if the making or continuance of all or some of the
28    series of the payments, or the amount of the payment, is dependent upon the continuance of human
29    life.
30        (5) "Articles" or "articles of incorporation" means the original articles, special laws,
31    charters, amendments, restated articles, articles of merger or consolidation, trust instruments, and

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1    other constitutive documents for trusts and other entities that are not corporations, and
2    amendments to any of these. Refer also to "bylaws" in this section and Section 31A-5-203.
3        (6) "Bail bond insurance" means a guarantee that a person will attend court when required,
4    or will obey the orders or judgment of the court, as a condition to the release of that person from
5    confinement.
6        (7) "Binder" is defined in Section 31A-21-102.
7        (8) "Board," "board of trustees," or "board of directors" means the group of persons with
8    responsibility over, or management of, a corporation, however designated. Refer also to "trustee"
9    in this section.
10        (9) "Business of insurance" is defined in Subsection (44).
11        (10) "Business plan" means the information required to be supplied to the commissioner
12    under Subsections 31A-5-204(2)(i) and (j), including the information required when these
13    subsections are applicable by reference under Section 31A-7-201, Section 31A-8-205, or
14    Subsection 31A-9-205(2).
15        (11) "Bylaws" means the rules adopted for the regulation or management of a corporation's
16    affairs, however designated. It includes comparable rules for trusts and other entities that are not
17    corporations. Refer also to "articles" and Section 31A-5-203.
18        (12) "Casualty insurance" means liability insurance as defined in Subsection (50).
19        (13) "Certificate" means the evidence of insurance given to an insured under a group
20    policy.
21        (14) "Certificate of authority" is included within the term "license."
22        (14.5) "Claim," unless the context otherwise requires, means a request or demand on an
23    insurer for payment of benefits according to the terms of an insurance policy.
24        (14.6) "Claims-made coverage" means any insurance contract or provision limiting
25    coverage under a policy insuring against legal liability to claims that are first made against the
26    insured while the policy is in force.
27        (15) "Commissioner" or "commissioner of insurance" means Utah's insurance
28    commissioner. Where appropriate, these terms apply to the equivalent supervisory official of
29    another jurisdiction.
30        (16) "Control," "controlling," "controlled," or "under common control" means the direct
31    or indirect possession of the power to direct or cause the direction of the management and policies

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1    of a person. This control may be by contract, by common management, through the ownership
2    of voting securities, or otherwise. There is no presumption that an individual holding an official
3    position with another person controls that person solely by reason of the position. A person having
4    a contract or arrangement giving control is considered to have control despite the illegality or
5    invalidity of the contract or arrangement. There is a rebuttable presumption of control in a person
6    who directly or indirectly owns, controls, holds with the power to vote, or holds proxies to vote
7    10% or more of the voting securities of another person. Refer also to "affiliate" in this section.
8        (17) (a) "Corporation" means insurance corporation, except where referring under Chapter
9    23, Insurance Marketing - Licensing Agents, Brokers and Consultants, and Reinsurance
10    Intermediaries, and Chapter 26, Insurance Adjusters, to corporations doing business as insurance
11    agents, brokers, consultants, or adjusters, or where referring under Chapter 16, Insurance Holding
12    Companies, to a noninsurer which is part of a holding company system.
13        (b) "Stock corporation" means stock insurance corporation.
14        (c) "Mutual" or "mutual corporation" means mutual insurance corporation.
15        (18) "Credit disability insurance" means insurance on a debtor to provide indemnity for
16    payments coming due on a specific loan or other credit transaction while the debtor is disabled.
17    Refer also to Subsection 31A-22-802(1).
18        (19) "Credit insurance" means surety insurance under which mortgagees and other
19    creditors are indemnified against losses caused by the default of debtors.
20        (20) "Credit life insurance" means insurance on the life of a debtor in connection with a
21    loan or other credit transaction. Refer also to Subsection 31A-22-802(2).
22        (21) "Creditor" means a person, including an insured, having any claim, whether matured,
23    unmatured, liquidated, unliquidated, secured, unsecured, absolute, fixed, or contingent.
24        (22) "Deemer clause" means a provision under this title under which upon the occurrence
25    of a condition precedent, the commissioner is deemed to have taken a specific action. If the statute
26    so provides, the condition precedent may be the commissioner's failure to take a specific action.
27    Refer also to Section 31A-2-302.
28        (23) "Degree of relationship" means the number of steps between two persons determined
29    by counting the generations separating one person from a common ancestor and then counting the
30    generations to the other person.
31        (24) "Department" means the Insurance Department.

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1        (25) "Director" means a member of the board of directors of a corporation.
2        (26) "Disability insurance" means insurance written to indemnify for losses and expenses
3    resulting from accident or sickness, to provide payments to replace income lost from accident or
4    sickness, and to pay for services resulting directly from accident or sickness, including medical,
5    surgical, hospital, and other ancillary expenses.
6        (27) "Domestic insurer" means an insurer organized under the laws of this state.
7        (28) "Domiciliary state" means the state in which an insurer is incorporated or organized
8    or, in the case of an alien insurer, the state of entry into the United States.
9        (29) "Employee benefits" means one or more benefits or services provided employees or
10    their dependents.
11        (30) "Employee welfare fund" means a fund established or maintained by one or more
12    employers, one or more labor organizations, or a combination of employers and labor
13    organizations, whether directly or through trustees. This fund is to provide employee benefits paid
14    or contracted to be paid, other than income from investments of the fund, by or on behalf of an
15    employer doing business in this state or for the benefit of any person employed in this state. It
16    includes plans funded or subsidized by user fees or tax revenues.
17        (31) "Excludes" is not exhaustive and does not mean that other things are not also
18    excluded. The items listed are representative examples for use in interpretation of this title.
19        (31.5) "Fidelity insurance" means insurance guaranteeing the fidelity of persons holding
20    positions of public or private trust.
21        (31.7) "First party insurance" means an insurance policy or contract in which the insurer
22    agrees to pay claims submitted to it by the insured for the insured's losses.
23        (32) "Foreign insurer" means an insurer domiciled outside of this state, including an alien
24    insurer.
25        (33) "Form" means a policy, certificate, or application prepared for general use. It does
26    not include one specially prepared for use in an individual case. Refer also to "policy" in this
27    section.
28        (34) "Franchise insurance" means individual insurance policies provided through a mass
29    marketing arrangement involving a defined class of persons related in some way other than
30    through the purchase of insurance.
31        (35) "Health care insurance" or "health insurance" means disability insurance providing

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1    benefits solely of medical, surgical, hospital, or other ancillary services or payment of medical,
2    surgical, hospital, or other ancillary expenses incurred. "Health care insurance" or "health
3    insurance" does not include disability insurance providing benefits for:
4        (a) replacement of income;
5        (b) short-term accident;
6        (c) fixed indemnity;
7        (d) credit disability;
8        (e) supplements to liability;
9        (f) workers' compensation;
10        (g) automobile medical payment;
11        (h) no-fault automobile;
12        (i) equivalent self-insurance; or
13        (j) any type of disability insurance coverage that is a part of or attached to another type of
14    policy.
15        (35.5) "Indemnity" means the payment of an amount to offset all or part of an insured loss.
16        (36) "Independent adjuster" means an insurance adjuster required to be licensed under
17    Section 31A-26-201 who engages in insurance adjusting as a representative of insurers. Refer also
18    to Section 31A-26-102.
19        (37) "Independently procured insurance" means insurance procured under Section
20    31A-15-104.
21        (37.5) "Individual" means a natural person.
22        (38) "Inland marine insurance" includes insurance covering:
23        (a) property in transit on or over land;
24        (b) property in transit over water by means other than boat or ship;
25        (c) bailee liability;
26        (d) fixed transportation property such as bridges, electric transmission systems, radio and
27    television transmission towers and tunnels; and
28        (e) personal and commercial property floaters.
29        (39) "Insolvency" means that:
30        (a) an insurer is unable to pay its debts or meet its obligations as they mature;
31        (b) an insurer's total adjusted capital is less than the insurer's mandatory control level RBC

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1    under Subsection 31A-17-601(7)(c); or
2        (c) an insurer is determined to be hazardous under this title.
3        (40) "Insurance" means any arrangement, contract, or plan for the transfer of a risk or risks
4    from one or more persons to one or more other persons, or any arrangement, contract, or plan for
5    the distribution of a risk or risks among a group of persons that includes the person seeking to
6    distribute his risk. "Insurance" includes:
7        (a) risk distributing arrangements providing for compensation or replacement for damages
8    or loss through the provision of services or benefits in kind;
9        (b) contracts of guaranty or suretyship entered into by the guarantor or surety as a business
10    and not as merely incidental to a business transaction; and
11        (c) plans in which the risk does not rest upon the person who makes the arrangements, but
12    with a class of persons who have agreed to share it.
13        (41) "Insurance adjuster" means a person who directs the investigation, negotiation, or
14    settlement of a claim under an insurance policy other than life insurance or an annuity, on behalf
15    of an insurer, policyholder, or a claimant under an insurance policy. Refer also to Section
16    31A-26-102.
17        (41.5) "Interinsurance exchange" is defined in Subsection (69).
18        (42) "Insurance agent" or "agent" means a person who represents insurers in soliciting,
19    negotiating, or placing insurance. Refer to Subsection 31A-23-102(3) for exceptions to this
20    definition.
21        (43) "Insurance broker" or "broker" means a person who acts in procuring insurance on
22    behalf of an applicant for insurance or an insured, and does not act on behalf of the insurer except
23    by collecting premiums or performing other ministerial acts. Refer also to Subsection
24    31A-23-102(3) for exceptions to this definition.
25        (44) "Insurance business" or "business of insurance" includes:
26        (a) providing health care insurance, as defined in Subsection (35), by organizations that
27    are or should be licensed under this title;
28        (b) providing benefits to employees in the event of contingencies not within the control
29    of the employees, in which the employees are entitled to the benefits as a right, which benefits may
30    be provided either by single employers or by multiple employer groups through trusts,
31    associations, or other entities;

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1        (c) providing annuities, including those issued in return for gifts, except those provided
2    by persons specified in Subsections 31A-22-1305(2) and (3);
3        (d) providing the characteristic services of motor clubs as outlined in Subsection (56);
4        (e) providing other persons with insurance as defined in Subsection (40);
5        (f) making as insurer, guarantor, or surety, or proposing to make as insurer, guarantor, or
6    surety, any contract or policy of title insurance;
7        (g) transacting or proposing to transact any phase of title insurance, including solicitation,
8    negotiation preliminary to execution, execution of a contract of title insurance, insuring, and
9    transacting matters subsequent to the execution of the contract and arising out of it, including
10    reinsurance; and
11        (h) doing, or proposing to do, any business in substance equivalent to Subsections (44)(a)
12    through (g) in a manner designed to evade the provisions of this title.
13        (45) "Insurance consultant" or "consultant" means a person who advises other persons
14    about insurance needs and coverages, is compensated by the person advised on a basis not directly
15    related to the insurance placed, and is not compensated directly or indirectly by an insurer, agent,
16    or broker for advice given. Refer also to Subsection 31A-23-102(3) for exceptions to this
17    definition.
18        (46) "Insurance holding company system" means a group of two or more affiliated
19    persons, at least one of whom is an insurer.
20        (47) "Insured" means a person to whom or for whose benefit an insurer makes a promise
21    in an insurance policy. The term includes policyholders, subscribers, members, and beneficiaries.
22    This definition applies only to the provisions of this title and does not define the meaning of this
23    word as used in insurance policies or certificates.
24        (48) (a) "Insurer" means any person doing an insurance business as a principal, including
25    fraternal benefit societies, issuers of gift annuities other than those specified in Subsections
26    31A-22-1305(2) and (3), motor clubs, employee welfare plans, and any person purporting or
27    intending to do an insurance business as a principal on his own account. It does not include a
28    governmental entity, as defined in Subsection 63-30-2(3), to the extent it is engaged in the
29    activities described in Section 31A-12-107.
30        (b) "Admitted insurer" is defined in Subsection (80)(b).
31        (c) "Alien insurer" is defined in Subsection (3).

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1        (d) "Authorized insurer" is defined in Subsection (80)(b).
2        (e) "Domestic insurer" is defined in Subsection (27).
3        (f) "Foreign insurer" is defined in Subsection (32).
4        (g) "Nonadmitted insurer" is defined in Subsection (80)(a).
5        (h) "Unauthorized insurer" is defined in Subsection (80)(a).
6        (49) "Legal expense insurance" means insurance written to indemnify or pay for specified
7    legal expenses. It includes arrangements that create reasonable expectations of enforceable rights,
8    but it does not include the provision of, or reimbursement for, legal services incidental to other
9    insurance coverages. Refer to Section 31A-1-103 for a list of exemptions.
10        (50) (a) "Liability insurance" means insurance against liability:
11        (i) for death, injury, or disability of any human being, or for damage to property, exclusive
12    of the coverages under Subsection (53) for medical malpractice insurance, Subsection (66) for
13    professional liability insurance, and Subsection (83) for workers' compensation insurance;
14        (ii) for medical, hospital, surgical, and funeral benefits to persons other than the insured
15    who are injured, irrespective of legal liability of the insured, when issued with or supplemental to
16    insurance against legal liability for the death, injury, or disability of human beings, exclusive of
17    the coverages under Subsection (53) for medical malpractice insurance, Subsection (66) for
18    professional liability insurance, and Subsection (83) for workers' compensation insurance;
19        (iii) for loss or damage to property resulting from accidents to or explosions of boilers,
20    pipes, pressure containers, machinery, or apparatus;
21        (iv) for loss or damage to any property caused by the breakage or leakage of sprinklers,
22    water pipes and containers, or by water entering through leaks or openings in buildings; or
23        (v) for other loss or damage properly the subject of insurance not within any other kind
24    or kinds of insurance as defined in this chapter, if such insurance is not contrary to law or public
25    policy.
26        (b) "Liability insurance" includes vehicle liability insurance as defined in Subsection (81),
27    residential dwelling liability insurance as defined in Subsection (70.3), and also includes making
28    inspection of, and issuing certificates of inspection upon, elevators, boilers, machinery, and
29    apparatus of any kind when done in connection with insurance on them.
30        (51) "License" means the authorization issued by the insurance commissioner under this
31    title to engage in some activity that is part of or related to the insurance business. It includes

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1    certificates of authority issued to insurers.
2        (52) "Life insurance" means insurance on human lives and insurances pertaining to or
3    connected with human life. The business of life insurance includes granting annuity benefits,
4    granting endowment benefits, granting additional benefits in the event of death by accident or
5    accidental means, granting additional benefits in the event of the total and permanent disability of
6    the insured, and providing optional methods of settlement of proceeds.
7        (53) "Medical malpractice insurance" means insurance against legal liability incident to
8    the practice and provision of medical services other than the practice and provision of dental
9    services.
10        (54) "Member" means a person having membership rights in an insurance corporation.
11    Refer also to "insured" in Subsection (47).
12        (55) "Minimum capital" or "minimum required capital" means the capital that must be
13    constantly maintained by a stock insurance corporation as required by statute. Refer also to
14    "permanent surplus" under Subsection (76)(a) and Sections 31A-5-211, 31A-8-209, and
15    31A-9-209.
16        (56) "Motor club" means a person licensed under Chapter 5, Domestic Stock and Mutual
17    Insurance Corporations, Chapter 11, Motor Clubs, or Chapter 14, Foreign Insurers, that promises
18    for an advance consideration to provide legal services under Subsection 31A-11-102(1)(b), bail
19    services under Subsection 31A-11-102(1)(c), trip reimbursement, towing services, emergency road
20    services, stolen automobile services, a combination of these services, or any other services given
21    in Subsections 31A-11-102(1)(b) through (f) for a stated period of time.
22        (57) "Mutual" means mutual insurance corporation.
23        (57.5) "Nonparticipating" means a plan of insurance under which the insured is not entitled
24    to receive dividends representing shares of the surplus of the insurer.
25        (58) "Ocean marine insurance" means insurance against loss of or damage to:
26        (a) ships or hulls of ships;
27        (b) goods, freight, cargoes, merchandise, effects, disbursements, profits, moneys,
28    securities, choses in action, evidences of debt, valuable papers, bottomry, respondentia interests,
29    or other cargoes in or awaiting transit over the oceans or inland waterways;
30        (c) earnings such as freight, passage money, commissions, or profits derived from
31    transporting goods or people upon or across the oceans or inland waterways; or

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1        (d) a vessel owner or operator as a result of liability to employees, passengers, bailors,
2    owners of other vessels, owners of fixed objects, customs or other authorities, or other persons in
3    connection with maritime activity.
4        (59) "Order" means an order of the commissioner.
5        (59.5) "Participating" means a plan of insurance under which the insured is entitled to
6    receive dividends representing shares of the surplus of the insurer.
7        (60) "Person" includes an individual, partnership, corporation, incorporated or
8    unincorporated association, joint stock company, trust, reciprocal, syndicate, or any similar entity
9    or combination of entities acting in concert.
10        (61) (a) "Policy" means any document, including attached endorsements and riders,
11    purporting to be an enforceable contract, which memorializes in writing some or all of the terms
12    of an insurance contract. Service contracts issued by motor clubs under Chapter 11, Motor Clubs,
13    and by corporations licensed under Chapter 7, Nonprofit Health Service Insurance Corporations,
14    or Chapter 8, Health Maintenance Organizations and Limited Health Plans, are policies. A
15    certificate under a group insurance contract is not a policy. A document which does not purport
16    to have legal effect is not a policy.
17        (b) "Group insurance policy" means a policy covering a group of persons that is issued to
18    a policyholder on behalf of the group, for the benefit of group members who are selected under
19    procedures defined in the policy or in agreements which are collateral to the policy. This type of
20    policy may, but is not required to, include members of the policyholder's family or dependents.
21        (c) "Blanket insurance policy" means a group policy covering classes of persons without
22    individual underwriting, where the persons insured are determined by definition of the class with
23    or without designating the persons covered.
24        (62) "Policyholder" means the person who controls a policy, binder, or oral contract by
25    ownership, premium payment, or otherwise. Refer also to "insured" in Subsection (47).
26        (63) "Premium" means the monetary consideration for an insurance policy, and includes
27    assessments, membership fees, required contributions, or monetary consideration, however
28    designated. Consideration paid to third party administrators for their services is not "premium,"
29    though amounts paid by third party administrators to insurers for insurance on the risks
30    administered by the third party administrators are "premium."
31        (64) "Principal officers" of a corporation means the officers designated under Subsection

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1    31A-5-203(3).
2        (65) "Proceedings" includes actions and special statutory proceedings.
3        (66) "Professional liability insurance" means insurance against legal liability incident to
4    the practice of a profession and provision of any professional services.
5        (67) "Property insurance" means insurance against loss or damage to real or personal
6    property of every kind and any interest in that property, from all hazards or causes, and against loss
7    consequential upon the loss or damage including vehicle comprehensive and vehicle physical
8    damage coverages, but excluding inland marine insurance and ocean marine insurance as defined
9    under Subsections (38) and (58).
10        (67.5) "Public agency insurance mutual" means any entity formed by joint venture or
11    interlocal cooperation agreement by two or more political subdivisions or public agencies of the
12    state for the purpose of providing insurance coverage for the political subdivisions or public
13    agencies. Any public agency insurance mutual created under this title and Title 11, Chapter 13,
14    Interlocal Cooperation Act, is considered to be a governmental entity and political subdivision of
15    the state with all of the rights, privileges, and immunities of a governmental entity or political
16    subdivision of the state.
17        (68) (a) Except as provided in Subsection (68)(b), "rate service organization" means any
18    person who assists insurers in rate making or filing by:
19        (i) collecting, compiling, and furnishing loss or expense statistics;
20        (ii) recommending, making, or filing rates or supplementary rate information; or
21        (iii) advising about rate questions, except as an attorney giving legal advice. Refer also
22    to Subsection 31A-19-102(2).
23        (b) "Rate service organization" does not mean an employee of an insurer, a single insurer
24    or group of insurers under common control, a joint underwriting group, or a natural person serving
25    as an actuarial or legal consultant.
26        (69) "Reciprocal" or "interinsurance exchange" means any unincorporated association of
27    persons operating through an attorney-in-fact common to all of them and exchanging insurance
28    contracts with one another that provide insurance coverage on each other.
29        (70) "Reinsurance" means an insurance transaction where an insurer, for consideration,
30    transfers any portion of the risk it has assumed to another insurer. In referring to reinsurance
31    transactions, this title sometimes refers to the insurer transferring the risk as the "ceding insurer,"

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1    and to the insurer assuming the risk as the "assuming insurer" or the "assuming reinsurer."
2        (70.3) "Residential dwelling liability insurance" means insurance against liability resulting
3    from or incident to the ownership, maintenance, or use of a residential dwelling that is a detached
4    single family residence or multifamily residence up to four units.
5        (71) "Retrocession" means reinsurance with another insurer of a liability assumed under
6    a reinsurance contract. A reinsurer "retrocedes" when it reinsures with another insurer part of a
7    liability assumed under a reinsurance contract.
8        (72) (a) "Security" means any:
9        (i) note;
10        (ii) stock;
11        (iii) bond;
12        (iv) debenture;
13        (v) evidence of indebtedness;
14        (vi) certificate of interest or participation in any profit-sharing agreement;
15        (vii) collateral-trust certificate;
16        (viii) preorganization certificate or subscription;
17        (ix) transferable share;
18        (x) investment contract;
19        (xi) voting trust certificate;
20        (xii) certificate of deposit for a security;
21        (xiii) certificate of interest of participation in an oil, gas, or mining title or lease or in
22    payments out of production under such a title or lease;
23        (xiv) commodity contract or commodity option;
24        (xv) any certificate of interest or participation in, temporary or interim certificate for,
25    receipt for, guarantee of, or warrant or right to subscribe to or purchase any of the items listed in
26    Subsections (72)(a)(i) through (xiv); or
27        (xvi) any other interest or instrument commonly known as a security.
28        (b) "Security" does not include:
29        (i) any insurance or endowment policy or annuity contract under which an insurance
30    company promises to pay money in a specific lump sum or periodically for life or some other
31    specified period; or

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1        (ii) a burial certificate or burial contract.
2        (73) "Self-insurance" means any arrangement under which a person provides for spreading
3    its own risks by a systematic plan.
4        (a) Except as provided in this subsection, self-insurance does not include an arrangement
5    under which a number of persons spread their risks among themselves.
6        (b) Self-insurance does include an arrangement by which a governmental entity, as defined
7    in Section 63-30-2, undertakes to indemnify its employees for liability arising out of the
8    employees' employment.
9        (c) Self-insurance does include an arrangement by which a person with a managed
10    program of self-insurance and risk management undertakes to indemnify its affiliates, subsidiaries,
11    directors, officers, or employees for liability or risk which is related to the relationship or
12    employment. Self-insurance does not include any arrangement with independent contractors.
13        (74) (a) "Subsidiary" of a person means an affiliate controlled by that person either directly
14    or indirectly through one or more affiliates or intermediaries.
15        (b) "Wholly owned subsidiary" of a person is a subsidiary of which all of the voting shares
16    are owned by that person either alone or with its affiliates, except for the minimum number of
17    shares the law of the subsidiary's domicile requires to be owned by directors or others.
18        (75) Subject to Subsection (40)(b), "surety insurance" includes:
19        (a) a guarantee against loss or damage resulting from failure of principals to pay or
20    perform their obligations to a creditor or other obligee;
21        (b) bail bond insurance; and
22        (c) fidelity insurance.
23        (76) (a) "Surplus" means the excess of assets over the sum of paid-in capital and liabilities.
24        (b) "Permanent surplus" means the surplus of a mutual insurer that has been designated
25    by the insurer as permanent. Sections 31A-5-211, 31A-7-201, 31A-8-209, 31A-9-209, and
26    31A-14-209 require that mutuals doing business in this state maintain specified minimum levels
27    of permanent surplus. Except for assessable mutuals, the minimum permanent surplus requirement
28    is essentially the same as the minimum required capital requirement that applies to stock insurers.
29    Refer also to Subsection (55) on "minimum capital."
30        (c) "Excess surplus" means [that amount of an insurer's total adjusted capital that exceeds
31    the product of 3.0 and the authorized control level RBC as defined in Subsection

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1    31A-17-601(7)(a).]:
2        (i) for life or disability insurers as, defined in Subsection 31A-17-601(3), and property and
3    casualty insurers, as defined in Subsection 31A-17-601(4), the lesser of:
4        (A) that amount of an insurer's total adjusted capital, as defined in Subsection
5    31A-1-301(78.5), that exceeds the product of 2.5 and the sum of the insurer's minimum capital or
6    permanent surplus required under Section 31A-5-211, 31A-9-209, or 31A-14-205; or
7        (B) that amount of an insurer's total adjusted capital, as defined in Subsection
8    31A-1-301(78.5), that exceeds the product of 3.0 and the authorized control level RBC as defined
9    in Subsection 31A-17-601(7)(a); and
10        (ii) for monoline mortgage guaranty insurers, financial guaranty insurers, and title insurers,
11    that amount of an insurer's paid-in-capital and surplus that exceeds the product of 1.5 and the
12    insurer's total adjusted capital required by Subsection 31A-17-609(1).
13        (77) "Third party administrator" or "administrator" means any person who collects charges
14    or premiums from, or who, for consideration, adjusts or settles claims of residents of the state in
15    connection with life or disability insurance coverage, annuities, or service insurance coverage,
16    except:
17        (a) a union on behalf of its members;
18        (b) a person exempt as a trust under Section 514 of the federal Employee Retirement
19    Income Security Act of 1974;
20        (c) an employer on behalf of his employees or the employees of one or more of the
21    subsidiary or affiliated corporations of the employer;
22        (d) an insurer licensed under Chapter 5, 7, 8, 9, or 14, but only with respect to insurance
23    issued by the insurer; or
24        (e) a person licensed or exempt from licensing under Chapter 23 or 26 whose activities are
25    limited to those authorized under the license the person holds or for which the person is exempt.
26    Refer also to Section 31A-25-101.
27        (78) "Title insurance" means the insuring, guaranteeing, or indemnifying of owners of real
28    or personal property or the holders of liens or encumbrances on that property, or others interested
29    in the property against loss or damage suffered by reason of liens or encumbrances upon, defects
30    in, or the unmarketability of the title to the property, or invalidity or unenforceability of any liens
31    or encumbrances on the property.

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1        (78.5) "Total adjusted capital" means the sum of an insurer's statutory capital and surplus
2    as determined in accordance with:
3        (a) the statutory accounting applicable to the annual financial statements required to be
4    filed under Section 31A-4-113; and
5        (b) any other items provided by the RBC instructions, as RBC instructions is defined in
6    Subsection 31A-17-601(6).
7        (79) (a) "Trustee" means "director" when referring to the board of directors of a
8    corporation.
9        (b) "Trustee," when used in reference to an employee welfare fund, means an individual,
10    firm, association, organization, joint stock company, or corporation, whether acting individually
11    or jointly and whether designated by that name or any other, that is charged with or has the overall
12    management of an employee welfare fund.
13        (80) (a) "Unauthorized insurer," "unadmitted insurer," or "nonadmitted insurer" means an
14    insurer not holding a valid certificate of authority to do an insurance business in this state, or an
15    insurer transacting business not authorized by a valid certificate.
16        (b) "Admitted insurer" or "authorized insurer" means an insurer holding a valid certificate
17    of authority to do an insurance business in this state, and transacting business as authorized by a
18    valid certificate.
19        (81) "Vehicle liability insurance" means insurance against liability resulting from or
20    incident to ownership, maintenance, or use of any land vehicle or aircraft, exclusive of vehicle
21    comprehensive and vehicle physical damage coverages under Subsection (67).
22        (82) "Voting security" means a security with voting rights, and includes any security
23    convertible into a security with a voting right associated with it.
24        (83) "Workers' compensation insurance" means:
25        (a) insurance for indemnification of employers against liability for compensation:
26        (i) based upon compensable accidental injuries; and
27        (ii) based on occupational disease disability;
28        (b) employer's liability insurance incidental to workers' compensation insurance and
29    written in connection with it; and
30        (c) insurance assuring to the persons entitled to workers' compensation benefits the
31    compensation provided by law.

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1        Section 2. Section 31A-2-202 is amended to read:
2         31A-2-202. Reports and replies.
3        (1) When relevant, either directly or indirectly to the performance of the commissioner's
4    duties under the Insurance Code, the commissioner may require from any person subject to
5    regulation under this title:
6        (a) [accurate and complete] statements, reports, answers to questionnaires, other
7    information, and evidence of the information, in whatever reasonable form and reasonable
8    intervals the commissioner designates;
9        (b) full explanation of the programming of any data storage or communication system in
10    use;
11        (c) information from books, records, electronic data processing systems, computers, or any
12    other information storage system be made available to the department, at any reasonable time and
13    in any reasonable manner; and
14        (d) timely delivery to the National Association of Insurance Commissioners or other entity
15    which gathers insurance industry information, a copy of the statistical data prepared for and
16    submitted to the Insurance Department, as specified by the commissioner.
17        (2) The commissioner may prescribe forms for the reports under Subsection (1) and
18    specify who shall execute or certify the reports. The forms shall be consistent, to the extent
19    practicable, with those prescribed by other jurisdictions. For basic financial data, the
20    commissioner shall use the annual statement forms developed by the National Association of
21    Insurance Commissioners.
22        (3) The commissioner may prescribe reasonable minimum standards and techniques of
23    accounting and data handling to ensure that timely and reliable information exists and can be made
24    available. The standards and techniques prescribed shall be consistent, to the extent practicable,
25    with those prescribed by other states.
26        (4) Any person with executive authority over or in charge of any segment of the affairs of
27    an insurer authorized to do or doing an insurance business in this state, the affiliate of this type of
28    insurer, and any other person licensed under the Insurance Code, shall reply promptly in writing
29    or in other designated form, to a reasonable written inquiry from the commissioner.
30        (5) The commissioner may require that any communication made under this section be
31    verified, and may specify by whom it shall be verified.

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1        (6) All information submitted to the commissioner shall be accurate and complete.
2        [(6)] (7) In the absence of actual malice, no communication to the commissioner required
3    by law or by the commissioner subjects the person making it to an action for damages for
4    defamation.
5        Section 3. Section 31A-2-205 is amended to read:
6         31A-2-205. Examination costs.
7        (1) (a) Except as provided in Subsection (3), examinees that are insurers, rate service
8    organizations, or the subsidiaries of either shall reimburse the Insurance Department for the
9    reasonable costs of examinations made under Sections 31A-2-203 and 31A-2-204. The following
10    costs shall be reimbursed:
11        (i) actual travel expenses[,];
12        (ii) reasonable living expense allowance[,];
13        (iii) compensation at reasonable rates for all professionals reasonably employed for the
14    examination under Subsection (4)[,];
15        (iv) the administration and supervisory expense of the Insurance Department and the
16    attorney general's office[,]; and
17        (v) an amount necessary to cover fringe benefits authorized by the commissioner or
18    provided by law.
19        (b) In determining rates, the commissioner shall consider the rates recommended by the
20    National Association of Insurance Commissioners and outlined in the examination manual
21    sponsored by the association.
22        [(b)] (c) This subsection [(1)] applies to surplus lines brokers to the extent that the
23    examinations are of their surplus lines business.
24        (2) An insurer requesting the examination of one of its agents shall pay the cost of the
25    examination. Otherwise, the department shall pay the cost of examining licensees other than those
26    specified under Subsection (1).
27        (3) On the examinee's request or at the commissioner's discretion, the Insurance
28    Department may pay all or part of the costs of an examination whenever the commissioner finds
29    that because of the frequency of examinations or the financial condition of the examinee,
30    imposition of the costs would place an unreasonable burden on the examinee. The commissioner
31    shall include in his annual report information about any instance in which the commissioner has

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1    applied this Subsection (3).
2        (4) Technical experts employed under Subsection 31A-2-203(3) shall present to the
3    commissioner a statement of all expenses incurred by them in conjunction with an examination.
4    The examined insurer shall, at the commissioner's direction, pay to the technical experts or
5    specialists the actual travel expenses, reasonable living expenses, and compensation at customary
6    rates for expenses necessarily incurred as approved by the commissioner. The examined insurer
7    shall reimburse department examiners for their actual travel expenses and reasonable living
8    expenses and shall reimburse the department for the compensation of department examiners
9    involved in the examination. The examined insurer shall certify the consolidated account of all
10    charges and expenses for the examination. One copy shall be retained by the insurer and the other
11    shall be filed with the department as a public record. An annual report of examination charges
12    paid by examined insurers directly to persons employed under Subsection 31A-2-203(3) or to
13    department examiners shall be included with the department's budget request, but amounts paid
14    directly by examined insurers to persons employed under Subsection 31A-2-203(3) or to
15    department examiners may not be deducted from the department's appropriation.
16        (5) The amount payable under Subsection (1) is due ten days after the examinee has been
17    served with a detailed account of the costs. Payments received by the department under this
18    Subsection (5) shall be handled as provided by Subsection 31A-3-101.
19        (6) The commissioner may require an examinee under Subsection (1), or an insurer
20    requesting an examination under Subsection (2), either before or during an examination, to make
21    deposits with the state treasurer to pay the costs of examination. Any deposit made under this
22    Subsection (6) shall be held in trust by the state treasurer until applied to pay the Insurance
23    Department the costs payable under this section. If a deposit exceeds examination costs, the state
24    treasurer shall refund the surplus.
25        (7) (a) Domestic insurers may offset the examination expenses paid under this section
26    against premium taxes under Subsection 59-9-102 (2).
27        (b) To the extent examination expenses exceed premium tax liability in the year the
28    expenses are incurred, the examination expenses may be carried forward and used to offset
29    premium tax liability for a period of five years from the year the expenses were incurred.
30        Section 4. Section 31A-8-104 is amended to read:
31         31A-8-104. Determination of ability to provide services.

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1        (1) The commissioner may not issue a certificate of authority to an applicant for a
2    certificate of authority under this chapter unless the commissioner has determined that the
3    applicant has:
4        (a) demonstrated the willingness and potential ability to furnish the proposed health care
5    services in a manner to assure both availability and accessibility of adequate personnel and
6    facilities and continuity of service;
7        (b) arrangements for an ongoing quality of health care assurance program concerning
8    health care processes and outcomes, established in accordance with rules adopted by the director
9    of the Department of Health based upon prevailing standards for quality assurance for other forms
10    of health care delivery in this state; and
11        (c) a procedure, established in accordance with rules of the director of the Department of
12    Health, to develop, compile, evaluate, and report statistics relating to the cost of its operations, the
13    pattern of utilization of its services, the availability and accessibility of its services, and such other
14    matters as may be reasonably required by the director of the Department of Health.
15        (2) Upon receipt of an application for a certificate of authority under this chapter, the
16    commissioner shall transmit a copy of the application and accompanying documents to the director
17    of the Department of Health. Upon receipt of the application, the director of the Department of
18    Health shall review the application, investigate the surrounding facts and circumstances, and make
19    a finding concerning whether the applicant satisfies the requirements of Subsection (1). The
20    director of the Department of Health is considered to have found the applicant to comply with
21    Subsection (1) unless he delivers to the commissioner a finding of noncompliance within [30] 90
22    days after receiving the application from the commissioner.
23        (3) In determining whether the requirements of Subsection (1) are satisfied, the
24    commissioner [may] shall rely on the findings of the director of the Department of Health
25    delivered to the commissioner in accordance with Subsection (2). [The commissioner may rely
26    on his own findings concerning whether an applicant complies with Subsection (1), even though
27    the commissioner's findings are inconsistent with the findings of the director of the Department
28    of Health. If the commissioner makes a finding inconsistent with those of the director of the
29    Department of Health, the commissioner shall provide the director with a statement of the reasons
30    the commissioner's finding varies from those of the director of the Department of Health.]
31        (4) A finding of noncompliance with Subsection (1) shall specify in what respects the

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1    applicant is deficient[, whether the finding is made by the commissioner or by the director of the
2    Department of Health] in meeting the requirements of Subsection (1).
3        (5) An organization's certificate of authority issued under this chapter is conclusive
4    evidence of compliance with Subsection (1), as to the services authorized to be performed under
5    the certificate of authority, except in a proceeding by the state against the organization. Licensing
6    under this chapter does not exempt an organization from any licensing requirement applicable
7    under Title 26, Chapter 21.
8        Section 5. Section 31A-15-111 is amended to read:
9         31A-15-111. Surplus lines advisory organizations.
10        (1) Advisory organizations of surplus lines brokers may be formed to:
11        (a) facilitate and encourage compliance by its members with the laws of this state and the
12    rules of the commissioner relative to surplus lines insurance;
13        (b) if authorized by the commissioner, perform and report to the commissioner on the
14    confidential examinations and assess and receive the stamping fees described in Subsection
15    31A-15-103(11);
16        (c) make recommendations to the commissioner concerning classes of insurance for which
17    a rule under Subsection 31A-15-103(6)(a) is appropriate;
18        (d) investigate "abuses of placements," as described in Subsection 31A-15-103(6)(b), and
19    provide recommendations to the commissioner concerning rules under Subsection
20    31A-15-103(6)(b);
21        (e) bring to the commissioner's attention the existence of grounds for issuing an order
22    under Subsection 31A-15-103(6)(c) concerning a particular unauthorized insurer;
23        (f) provide recommendations to the commissioner concerning unauthorized insurers which
24    should be listed on a "doubtful or objectionable" list under Subsection 31A-15-103(6)(d);
25        (g) provide comments to the commissioner concerning whether an unauthorized insurer
26    has a good reputation and financial integrity under Subsection 31A-15-103(6)(d)(ii);
27        (h) provide recommendations to the commissioner concerning rules under Subsection
28    31A-15-103(10) necessary to protect the interests of insureds and the public; and
29        (i) receive and disseminate to its members information relative to surplus lines coverages.
30        (2) Every advisory organization formed under this section shall file with the
31    commissioner:

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1        (a) a copy of its constitution, articles of agreement or association or articles of
2    incorporation, and any amendments to these documents;
3        (b) a copy of its bylaws and any other writing governing the organization's activities and
4    any amendments to these documents;
5        [(c) a current list of its members, to be provided in a frequency specified by rule;]
6        [(d)] (c) a list of the names and addresses of residents of this state upon whom notices or
7    orders of the commissioner or processes issued at his direction may be served, with changes in this
8    list to be filed within ten days of a change; and
9        [(e)] (d) an agreement, on a form provided by the commissioner and executed by the
10    advisory organization, that the commissioner may examine the advisory organization in
11    accordance with the provisions of Sections 31A-2-203, 31A-2-204, and 31A-2-205.
12        (3) The commissioner may by rule or order require each person licensed as a surplus lines
13    broker under Chapter 23 to be a member of one or more specified advisory organizations operating
14    under this section. The commissioner may make compliance with the rule or order a condition to
15    continued licensure as a surplus lines broker.
16        (4) The comments and recommendations given the commissioner under Subsection (1)
17    are merely advisory. The formation of an advisory organization under this section does not alter
18    the commissioner's authority under this chapter.
19        Section 6. Section 31A-17-602 is amended to read:
20         31A-17-602. RBC reports -- RBC of life and disability insurers -- RBC of property
21     and casualty insurers.
22        (1) Every domestic life or disability insurer and every domestic property and casualty
23    insurer shall[,]:
24        (a) on or before March 1, prepare and submit to the commissioner a report of its RBC
25    levels as of the end of the calendar year just ended, in a form and containing the information as is
26    required by the RBC instructions[. In addition, every domestic insurer shall]; and
27        (b) file its RBC report with the insurance commissioner in any state in which the insurer
28    is authorized to do business, if the insurance commissioner of that state notifies the insurer of its
29    request in writing, in which case the insurer may file its RBC report not later than the later of:
30        [(a)] (i) 15 days from the receipt of notice to file its RBC report with that state; or
31        [(b)] (ii) March 1.

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1        (2) A life and disability insurer's RBC shall be determined in accordance with the formula
2    set forth in the RBC instructions. The formula shall take into account and may adjust for the
3    covariance between:
4        (a) the risk with respect to the insurer's assets;
5        (b) the risk of adverse insurance experience with respect to the insurer's liabilities and
6    obligations;
7        (c) the interest rate risk with respect to the insurer's business; and
8        (d) all other business risks and other relevant risks as set forth in the RBC instructions.
9        (3) A property and casualty insurer's RBC shall be determined in accordance with the
10    formula set forth in the RBC instructions. The formula shall take the following into account and
11    may adjust for the covariance between:
12        (a) asset risk;
13        (b) credit risk;
14        (c) underwriting risk; and
15        (d) all other business risks and the other relevant risks as set forth in the RBC instructions.
16        (4) (a) If a domestic insurer files an RBC report that the commissioner determines is
17    inaccurate, the commissioner shall adjust the RBC report to correct the inaccuracy and shall notify
18    the insurer of the adjustment.
19        (b) The notice under Subsection (4)(a) shall contain a statement of the reason for the
20    adjustment.
21        Section 7. Section 31A-17-609 is amended to read:
22         31A-17-609. Alternate adjusted capital.
23        (1) Except as provided in Section 31A-17-602, insurers licensed under Chapters 5, 7, 9,
24    and 14 shall maintain total adjusted capital as defined in Subsection 31A-1-301(78.5) in an amount
25    equal to the greater of:
26        (a) [75%] 175% of the minimum required capital, or of the minimum permanent surplus
27    in the case of nonassessable mutuals, required by Section 31A-5-211, 31A-7-201, 31A-9-209, or
28    31A-14-205; or
29        (b) the net total of:
30        (i) 10% of net insurance premiums earned during the year; plus
31        (ii) 5% of the admitted value of common stocks and real estate; plus

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1        (iii) 2% of the admitted value of all other invested assets, exclusive of cash deposits,
2    short-term investments, policy loans, and premium notes; less
3        (iv) the amount of any asset valuation reserve being maintained by the insurer, but not to
4    exceed the sum of Subsections (1)(b)(ii) and (iii).
5        (2) As used in Subsection (1)(b), "premiums earned" means premiums and other
6    consideration earned for insurance in the 12-month period ending on the date the calculation is
7    made.
8        (3) The commissioner may consider an insurer to be financially hazardous under
9    Subsection 31A-27-307(3), if the insurer does not have qualified assets in an aggregate value
10    exceeding the sum of the insurer's[: (a)] liabilities[; (b) minimum capital or minimum permanent
11    surplus under Section 31A-5-211, 31A-7-201, 31A-8-209, or 31A-14-205;] and [(c)] the total
12    adjusted capital required by Subsection (1).
13        (4) The commissioner shall consider an insurer to be financially hazardous under
14    Subsection 31A-27-307(3) if the insurer does not have qualified assets in an aggregate value
15    exceeding the sum of the insurer's[: (a)] liabilities[; (b) minimum capital or minimum permanent
16    surplus under Section 31A-5-211, 31A-7-201, 31A-8-209, or 31A-14-205;] and [(c)] 70% of the
17    total adjusted capital required by Subsection (1).
18        Section 8. Section 31A-18-108 is amended to read:
19         31A-18-108. Investment of excess surplus.
20        If an insurer has excess surplus, as defined under Subsection 31A-1-301(76)(c), then to the
21    extent of its excess surplus, the insurer may invest in a manner inconsistent with the limitations
22    of [Sections 31A-18-105 and] Section 31A-18-106 or in other assets approved by the
23    commissioner. This section does not empower any insurer to make investments that are illegal or
24    that are prohibited under Section 31A-4-107. Each insurer has the burden of establishing the
25    extent of its excess surplus.
26        Section 9. Section 31A-19-405 is amended to read:
27         31A-19-405. Payment of dividends.
28        (1) This part does not prohibit the [payment] distribution of dividends, savings, or
29    unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or
30    subscribers.
31        (2) In the payment of dividends, savings, or unabsorbed premium deposits, there may not

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1    be any unfair discrimination between policyholders.
2        (3) A plan for the [payment] distribution of dividends, savings, or unabsorbed premium
3    deposits allowed or returned by insurers to their policyholders, members, or subscribers developed
4    after the inception of the insurance contracts to be included in the distribution plan and filed
5    pursuant to Section 31A-21-310 is not considered a rating plan or system. Filing under this part
6    is not required.
7        (4) A dividend or participating plan developed by insurers establishing given criteria for
8    eligibility and the general basis for distribution for a dividend, if declared, which plan existed at
9    the inception of an insurance policy, is considered a rating plan. Such plans must be filed with the
10    commissioner pursuant to this part.
11        [(4)] (5) It is prohibited to make the [payment] distribution of a dividend or any portion
12    of a dividend conditioned upon renewal of the policy or contract.
13        Section 10. Section 31A-22-620 is amended to read:
14         31A-22-620. Medicare Supplement Insurance Minimum Standards Act.
15        (1) As used in this section:
16        (a) "Applicant" means:
17        (i) in the case of an individual Medicare supplement policy, the person who seeks to
18    contract for insurance benefits; and
19        (ii) in the case of a group Medicare supplement policy, the proposed certificate holder.
20        (b) "Certificate" means any certificate delivered or issued for delivery in this state under
21    a group Medicare supplement policy.
22        (c) "Certificate form" means the form on which the certificate is delivered or issued for
23    delivery by the issuer.
24        (d) "Issuer" includes insurance companies, fraternal benefit societies, health care service
25    plans, health maintenance organizations, and any other entity delivering, or issuing for delivery
26    in this state, Medicare supplement policies or certificates.
27        (e) "Medicare" means the "Health Insurance for the Aged Act," Title XVIII of the Social
28    Security Amendments of 1965, as [amended] then constituted or later amended.
29        (f) "Medicare Supplement Policy" means a group or individual policy of disability
30    insurance, other than a policy issued pursuant to a contract under Section 1876 of the federal
31    Social Security Act, 42 U.S.C. Section 1395 et seq., or an issued policy under a demonstration

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1    project specified in 41 U.S.C. Section 1395ss(g)(1), that is advertised, marketed, or designed
2    primarily as a supplement to reimbursements under Medicare for the hospital, medical, or surgical
3    expenses of persons eligible for Medicare.
4        (g) "Policy Form" means the form on which the policy is delivered or issued for delivery
5    by the issuer.
6        (2) (a) Except as otherwise specifically provided, this section applies to:
7        (i) all Medicare supplement policies delivered or issued for delivery in this state on or after
8    the effective date of this section;
9        (ii) all certificates issued under group Medicare supplement policies, that have been
10    delivered or issued for delivery in this state on or after the effective date of this section; and
11        (iii) policies or certificates that were in force prior to the effective date of this section, with
12    respect to requirements for benefits, claims payment, and policy reporting practice under
13    Subsection (3)(d), and loss ratios under Subsection (4).
14        (b) This section does not apply to a policy of one or more employers or labor
15    organizations, or of the trustees of a fund established by one or more employers or labor
16    organizations, or a combination of employers and labor unions, for employees or former
17    employees or a combination of employees and former employees, or for members or former
18    members of the labor organizations, or a combination of members and former members of labor
19    organizations.
20        (c) This section does not prohibit, nor does it apply to insurance policies or health care
21    benefit plans, including group conversion policies, provided to Medicare eligible persons that are
22    not marketed or held out to be Medicare supplement policies or benefit plans.
23        (3) (a) A Medicare supplement policy or certificate in force in the state may not contain
24    benefits that duplicate benefits provided by Medicare.
25        (b) Notwithstanding any other provision of law of this state, a Medicare supplement policy
26    or certificate may not exclude or limit benefits for loss incurred more than six months from the
27    effective date of coverage because it involved a preexisting condition. The policy or certificate
28    may not define a preexisting condition more restrictively than: "A condition for which medical
29    advice was given or treatment was recommended by or received from a physician within six
30    months before the effective date of coverage."
31        (c) The commissioner shall adopt rules to establish specific standards for policy provisions

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1    of Medicare supplement policies and certificates. The standards adopted shall be in addition to
2    and in accordance with applicable laws of this state. A requirement of this title relating to
3    minimum required policy benefits, other than the minimum standards contained in this section,
4    may not apply to Medicare supplement policies and certificates. The standards may include:
5        (i) terms of renewability;
6        (ii) initial and subsequent conditions of eligibility;
7        (iii) nonduplication of coverage;
8        (iv) probationary periods;
9        (v) benefit limitations, exceptions, and reductions;
10        (vi) elimination periods;
11        (vii) requirements for replacement;
12        (viii) recurrent conditions; and
13        (ix) definitions of terms.
14        (d) The commissioner shall adopt rules establishing minimum standards for benefits,
15    claims payment, marketing practices, compensation arrangements, and reporting practices for
16    Medicare supplement policies and certificates.
17        (e) The commissioner may adopt such rules as are necessary to conform Medicare
18    supplement policies and certificates to the requirements of federal law and regulations promulgated
19    thereunder, including:
20        (i) requiring refunds or credits if the policies do not meet loss ratio requirements;
21        (ii) establishing a uniform methodology for calculating and reporting loss ratios;
22        (iii) assuring public access to policies, premiums and loss ratio information of issuers of
23    Medicare supplement insurance;
24        (iv) establishing a process for approving or disapproving policy forms and certificate
25    forms and proposed premium increases;
26        (v) establishing a policy for holding public hearings prior to approval of premium
27    increases; and
28        (vi) establishing standards for Medicare select policies and certificates.
29        (f) The commissioner may adopt rules that prohibit policy provisions not otherwise
30    specifically authorized by statute that, in the opinion of the commissioner, are unjust, unfair, or
31    unfairly discriminatory to any person insured or proposed to be insured under a Medicare

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1    supplement policy or certificate.
2        (4) Medicare supplement policies shall return to policyholders benefits that are reasonable
3    in relation to the premium charged. The commissioner shall make rules to establish minimum
4    standards for loss ratios of Medicare supplement policies on the basis of incurred claims
5    experience, or incurred health care expenses where coverage is provided by a health maintenance
6    organization on a service basis rather than on a reimbursement basis, and earned premiums in
7    accordance with accepted actuarial principles and practices.
8        (5) (a) To provide for full and fair disclosure in the sale of Medicare supplement policies,
9    a Medicare supplement policy or certificate may not be delivered in this state unless an outline of
10    coverage is delivered to the applicant at the time application is made.
11        (b) The commissioner shall prescribe the format and content of the outline of coverage
12    required by Subsection (5)(a).
13        (c) For purposes of this section, "format" means style arrangements and overall
14    appearance, including such items as the size, color, and prominence of type and arrangement of
15    text and captions. The outline of coverage shall include:
16        (i) a description of the principal benefits and coverage provided in the policy;
17        (ii) a statement of the renewal provisions, including any reservation by the issuer of a right
18    to change premiums; and disclosure of the existence of any automatic renewal premium increases
19    based on the policyholder's age; and
20        (iii) a statement that the outline of coverage is a summary of the policy issued or applied
21    for and that the policy should be consulted to determine governing contractual provisions.
22        (d) The commissioner may prescribe by rule a standard form and the contents of an
23    informational brochure for persons eligible for Medicare, that is intended to improve the buyer's
24    ability to select the most appropriate coverage and improve the buyer's understanding of Medicare.
25    Except in the case of direct response insurance policies, the commissioner may require by rule that
26    the informational brochure be provided concurrently with delivery of the outline of coverage to
27    any prospective insureds eligible for Medicare. With respect to direct response insurance policies,
28    the commissioner may require by rule that the prescribed brochure be provided upon request to
29    any prospective insureds eligible for Medicare, but in no event later than the time of policy
30    delivery.
31        (e) The commissioner may adopt reasonable rules to govern the full and fair disclosure of

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1    the information in connection with the replacement of [Medicare supplement policies and
2    certificates] disability policies, subscriber contracts, or certificates by persons eligible for
3    Medicare.
4        (6) Notwithstanding Subsection (1), Medicare supplement policies and certificates shall
5    have a notice prominently printed on the first page of the policy or certificate, or attached to the
6    front page, stating in substance that the applicant has the right to return the policy or certificate
7    within 30 days of its delivery and to have the premium refunded if, after examination of the policy
8    or certificate, the applicant is not satisfied for any reason. Any refund made pursuant to this
9    section shall be paid directly to the applicant by the issuer in a timely manner.
10        (7) Every issuer of Medicare supplement insurance policies or certificates in this state shall
11    provide a copy of any Medicare supplement advertisement intended for use in this state, whether
12    through written or broadcast medium, to the commissioner for review.
13        Section 11. Section 31A-23-215 is amended to read:
14         31A-23-215. Agency licensees -- Reports -- Suspension, revocation, or limitation of
15     license.
16        (1) Every two years, on a date specified by rule, each agency licensed as an agent,
17    managing general agent, broker, or consultant shall report to the commissioner, in a form the
18    commissioner establishes by rule, all natural person agents, brokers, or consultants acting in those
19    capacities for the organization.
20        (2) An agency licensed under this chapter shall report to the commissioner promptly, in
21    the detail and form prescribed by rule, every change in the list of natural person agents, managing
22    general agents, brokers, or consultants authorized to act in those capacities for the agency.
23        (3) (a) An agency licensed under this chapter shall report to the commissioner the cause
24    of termination of a designated licensee's appointment. The information provided the commissioner
25    shall remain confidential.
26        (b) An agency is immune from civil action, civil penalty, or damages if the agency
27    complies in good faith with Subsection (3) in reporting to the commissioner the cause of
28    termination of licensees' appointments. Notwithstanding any other provision in this section, an
29    agency is not immune from any action or resulting penalty imposed on the reporting agency as a
30    result of proceedings brought by or on behalf of the department if the action is based on evidence
31    other than the report submitted in compliance with Subsection (3).

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1        (4) Agencies licensed under this chapter may act in the capacities for which it is licensed
2    only through natural persons who are licensed under this chapter to act in the same manner.
3        (5) Agencies licensed under this chapter shall designate and report promptly to the
4    commissioner the name of at least one natural person who has authority to act on behalf of the
5    agency in all matters pertaining to compliance with this title and orders of the commissioner.
6        (6) When a license is held by an agency, both the agency itself and any persons named on
7    the license shall, for purposes of this section, be considered to be the holders of the license. If a
8    person named on the agency license commits any act or fails to perform any duty that is a ground
9    for suspending, revoking, or limiting the agency license, the commissioner may suspend, revoke,
10    or limit the license of that person or of the agency, or both.
11        (7) When a license is held by an agency, all partners, directors, principal officers, or
12    persons having comparable powers who are not otherwise licensees are subject to the jurisdiction
13    of the commissioner and the provisions of this title.
14        Section 12. Section 31A-23-217 is amended to read:
15         31A-23-217. Probation.
16        (1) In any circumstances that would justify a suspension under Section 31A-23-216, the
17    commissioner may instead, after a formal adjudicative proceeding, put the licensee on probation
18    for a specified period no longer than [12] 24 months.
19        (2) The probation order shall state the conditions for retention of the license, which shall
20    be reasonable.
21        (3) Any violation of the probation is grounds for revocation pursuant to any proceeding
22    authorized under Title 63, Chapter 46b, Administrative Procedures Act.
23        Section 13. Section 31A-23-307 is amended to read:
24         31A-23-307. Title insurance agents' business.
25        A title insurance agent may engage in the escrow, settlement, or closing business, or any
26    combination of such businesses, and operate as escrow, settlement, or closing agent provided that
27    all the following exist:
28        (1) The title insurance agent is properly licensed under this chapter.
29        (2) (a) All funds deposited with the agent in connection with any escrow, settlement, or
30    closing are deposited in a federally insured financial institution in separate trust accounts, with the
31    funds being the property of the persons entitled to them under the provisions of the escrow,

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1    settlement, or closing. The funds shall be segregated escrow by escrow, settlement by settlement,
2    or closing by closing in the records of the agent. These funds are not subject to any debts of the
3    agent and may only be used to fulfill the terms of the individual escrow, settlement, or closing
4    under which the funds were accepted. None of the funds may be used until all conditions of the
5    escrow, settlement, or closing have been met.
6        (b) Any interest received on funds deposited with the agent in connection with any escrow,
7    settlement, or closing shall be paid over to the depositing party to the escrow, settlement, or
8    closing and may not be transferred to the account of the agent.
9        (c) No check may be drawn, executed[,] or dated, or funds otherwise disbursed unless the
10    segregated escrow account [against which it is drawn] from which funds are to be disbursed
11    contains a sufficient credit balance consisting of collected or cleared funds[,] at the time the check
12    is drawn, executed[,] or dated, or funds are otherwise disbursed.
13        (d) As used in this Subsection (2), funds are considered to be "collected or cleared," and
14    may be disbursed as follows:
15        (i) cash may be disbursed on the same day it is deposited;
16        (ii) wire transfers may be disbursed on the same day they are deposited;
17        (iii) cashier's checks, certified checks, teller's checks, U.S. Postal Service money orders,
18    and checks drawn on a Federal Reserve Bank or Federal Home Loan Bank may be disbursed on
19    the day following the date of deposit; and
20        (iv) other checks or deposits may be disbursed within the time limits provided under the
21    Expedited Funds Availability Act, 12 U.S.C. Section 4001 et seq., as amended, and related
22    regulations of the Federal Reserve System or upon written notification from the financial
23    institution to which the funds have been deposited, that final settlement has occurred on the
24    deposited item.
25        (3) The title insurance agent shall maintain records of all receipts and disbursements of
26    escrow, settlement, and closing funds.
27        (4) The title insurance agent shall comply with any rules adopted by the commissioner
28    governing escrows, settlements, or closings.
29        Section 14. Section 31A-23-404 is amended to read:
30         31A-23-404. Sharing commissions.
31        (1) (a) Except as provided in Subsection 31A-15-103(3), [no] a licensee under this chapter

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1    [nor] or an insurer may only pay [any] consideration or reimburse out-of-pocket expenses to [any]
2    a person [for services performed within Utah as an agent, broker, or consultant,] if [he] the licensee
3    knows [or should know] that the [payee] person is [not] licensed under this chapter to act [in that
4    capacity] as an agent or broker in Utah as to the particular type of insurance.
5        (b) A person may only accept commission compensation or other compensation as an
6    agent, broker, or consultant that is directly or indirectly the result of any insurance transaction
7    [only] if [he] that person is licensed under this chapter to act [in that capacity] as an agent or broker
8    as to the particular type of insurance.
9        (2) (a) Except as provided in Section 31A-23-301, a consultant may not pay or receive any
10    commission or other compensation that is directly or indirectly the result of any insurance
11    transaction.
12        (b) A consultant may share a consultant fee or other compensation received for consulting
13    services performed within Utah only with another consultant licensed under this chapter, and only
14    to the extent that the other consultant contributed to the services performed.
15        [(2)] (3) This section does not prohibit the payment of renewal commissions to former
16    licensees under this chapter, former Title 31, Chapter 17, or their successors in interest under a
17    deferred compensation or agency sales agreement.
18        [(3)] (4) In selling any policy of title insurance, no sharing of commissions under
19    Subsection [(2)] (1) may occur if it will result in an unlawful rebate, or in compensation in
20    connection with controlled business, or in payment of a forwarding fee or finder's fee. A person
21    may share compensation for the issuance of a title insurance policy only to the extent that he
22    contributed to the search and examination of the title or other services connected with it.
23        Section 15. Section 31A-26-210 is amended to read:
24         31A-26-210. Reports from organizations licensed as adjusters.
25        (1) Organizations licensed as adjusters under Section 31A-26-203 shall report to the
26    commissioner, at the times and in the detail and form as prescribed by rule, every change in the
27    list of natural person adjusters authorized to act in that position for the organization.
28        (2) Each organization licensed as an adjuster shall, at the time of paying its license
29    continuation fee under Subsection 31A-3-103, report to the commissioner, in the form established
30    by the commissioner by rule, all natural person adjusters acting in that position for the
31    organization.

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1        (3) Organizations licensed under this chapter shall designate and report promptly to the
2    commissioner the name of at least one natural person who has authority to act on behalf of the
3    organization in all matters pertaining to compliance with this title and orders of the commissioner.
4        (4) Where a license is held by an organization, both the organization itself and any persons
5    named on the license shall, for purposes of this section, be considered to be the holders of the
6    license. If a person named on the organization license commits any act or fails to perform any
7    duty which is a ground for suspending, revoking, or limiting the organization license, the
8    commissioner may suspend, revoke, or limit the license of that person or the organization, or both.
9        (5) When a license is held by an organization, all partners, directors, principal officers, or
10    persons having comparable powers who are not otherwise licensees are subject to the jurisdiction
11    of the commissioner and the provisions of this title.
12        Section 16. Section 31A-26-214 is amended to read:
13         31A-26-214. Probation.
14        (1) In any circumstances that would justify a suspension under Section 31A-26-213, the
15    commissioner may instead, after a formal adjudicative proceeding, put the licensee on probation
16    for a specified period no longer than [12] 24 months.
17        (2) The probation order shall state the conditions for retention of the license, which shall
18    be reasonable.
19        (3) Violation of the probation is grounds for revocation pursuant to any proceeding
20    authorized under Title 63, Chapter 46b, Administrative Procedures Act.
21        Section 17. Section 31A-27-102 is amended to read:
22         31A-27-102. Definitions.
23        (1) As used in this chapter:
24        (a) "Alien insurer domiciled in Utah" means an insurer domiciled outside the United States
25    whose entry into the United States is through Utah.
26        (b) "Ancillary state" means any state other than an insurer's state of domicile.
27        (c) "Contingent claims" means a claim or demand upon which a right of action has accrued
28    at the date of the order of liquidation and upon which liability has not been determined.
29        (d) "Date of liquidation" means the date of the filing of a petition for liquidation that
30    results in an order for liquidation.
31        (e) "Delinquency proceeding" means any proceeding commenced against an insurer for

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1    the purpose of liquidating, rehabilitating, reorganizing, or conserving the insurer, and any
2    summary proceeding under Sections 31A-27-201 through 31A-27-203.
3        (f) "Domestic insurer" includes, for purposes of this chapter, foreign insurers commercially
4    domiciled in this state under Section 31A-14-206.
5        (g) (i) "Estate" or "property of the estate" means:
6        (A) all legal or equitable interests of an insurer that are the subject of a rehabilitation,
7    liquidation, conservation, or other proceeding under this chapter in property as of the date of filing
8    of the petition for rehabilitation, liquidation, or conservation;
9        (B) any interest in property recoverable by the receiver under the provisions of this title;
10        (C) any interest in property acquired after the date of filing of the petition; and
11        (D) all proceeds, products, rents, and profits from this property.
12        (ii) It includes property in which the insurer holds only legal title, but no equitable interest,
13    only to the extent of the insolvent insurer's interest.
14        (h) "Fair consideration" is given for property or an obligation:
15        (i) when in exchange for the property or obligation, as a fair equivalent for it, and in good
16    faith, property is conveyed, services are rendered, an obligation is incurred, or an antecedent debt
17    is satisfied; or
18        (ii) when the property or obligation is received in good faith to secure a present advance
19    or an antecedent debt in amount not disproportionately small compared to the value of the property
20    or obligation obtained.
21        (i) "General assets" means all property not encumbered by a security agreement for the
22    security or benefit of specified persons or classes of persons. It does not include separate account
23    assets under Section 31A-5-217. For encumbered property "general assets" includes all that
24    property or its proceeds which is in excess of the amount necessary to discharge the sums secured
25    by the property. Assets held in trust or on deposit for the security or benefit of all policyholders,
26    or all policyholders and creditors, in more than a single state, are general assets.
27        (j) "Guaranty association" means the applicable association under Chapter 28 or the
28    similar association under the laws of another state.
29        (k) "Immature claim" means a claim or demand upon which payment is due, except for
30    the passage of time.
31        (l) "Insolvency" has the same meaning as in Subsection 31A-1-301(39).

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1        (m) "Insurer" means any person who is doing, has done, purports to do, or is licensed to
2    do an insurance business on its own account and is or has been subject to the authority of, or to
3    liquidation, rehabilitation, reorganization, or supervision by, a commissioner. A separate account
4    created under Section 31A-5-217 is an "insurer" for purposes of Chapter 27.
5        (n) "Preferred claim" means any claim which the law gives priority of payment from the
6    general assets of the insurer.
7        (o) "Qualified loss reserve specialist" means:
8        (i) a member in good standing of the American Academy of Actuaries; or
9        (ii) a person who otherwise has competency in loss reserve evaluation as demonstrated to
10    the satisfaction of the commissioner.
11        [(o)] (p) "Receiver" means receiver, liquidator, rehabilitator, or conservator, as the context
12    requires.
13        [(p)] (q) "Reciprocal state" means any state other than this state in which in substance
14    Subsection 31A-27-310(1), Subsections 31A-27-403(1) and (3), Sections 31A-27-404 and
15    31A-27-406 through 31A-27-409 are in force, and which has laws requiring the commissioner to
16    be the receiver of a delinquent insurer, and which has laws for the avoidance of fraudulent
17    conveyances and preferential transfers by the receiver of a delinquent insurer.
18        [(q)] (r) "Secured claim" means any claim secured by mortgage, trust deed, security
19    agreement, pledge, deposit as security, escrow or otherwise, but not including special deposit
20    claims. The term also includes claims that have become liens upon specific assets through judicial
21    processes.
22        [(r)] (s) "Separate account assets" means those assets allocated to separate accounts under
23    Section 31A-5-217.
24        [(s)] (t) "Special deposit claim" means any claim secured by a deposit in trust made
25    pursuant to this title for the security or benefit of one or more limited classes of persons.
26        [(t)] (u) "Transfer" means every mode, direct or indirect, absolute or conditional,
27    voluntarily or involuntarily, by or without judicial proceedings, of disposing of or parting with
28    property or with an interest in property. The retention of a security interest in or title to property
29    delivered to a debtor is considered a transfer by the debtor.
30        [(u)] (v) "Unliquidated claim" means a claim or demand upon which:
31        (i) a right of action has accrued at the date of the order of liquidation; and

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1        (ii) liability has been established but the amount of which has not been determined.
2        (2) If the subject of a rehabilitation or liquidation proceeding under this chapter is an
3    insurer engaged in a surety business, then as used in this chapter:
4        (a) "Policy" includes a bond issued by a surety.
5        (b) "Policyholder" includes a principal on a bond.
6        (c) "Beneficiary" includes an obligee of a bond.
7        (d) "Insured" includes both the principal and obligee of a bond.
8        Section 18. Section 31A-27-330.5 is amended to read:
9         31A-27-330.5. Claim estimation.
10        (1) (a) After the entry of a liquidation order, the liquidator may apply to the court for an
11    order authorizing the estimation of the liabilities owed by or to the insurer. The liquidator's
12    application shall:
13        (i) identify the proposed method for estimating the liabilities; and
14        (ii) provide for reasonable participation in the estimation process of the claimant and other
15    affected parties, including reinsurers.
16        (b) The proof and allowance of liability, value and due date of such a claim may be
17    estimated if:
18        (i) the proof, allowance, or adjudication of any contingent, unliquidated, or immature
19    claim owed by or to the insurer would unduly delay the administration of the liquidation; or
20        (ii) the administrative expense of processing and adjudicating the claim would be unduly
21    excessive when compared with the funds that are estimated to be available for distribution with
22    respect to the claim.
23        (c) An estimation made pursuant to this section:
24        (i) [shall be made in a commercially reasonable and actuarially sound manner, or upon
25    another accepted and verifiable method of determining, proving, and allowing contingent,
26    unliquidated, or immature claims with reasonable certainty] shall, for contingent or unliquidated
27    claims representing known losses of any claimant that are not made absolute and liquidated by the
28    date of the court's order allowing estimation, be estimated in a commercially reasonable and
29    actuarially sound manner;
30        (ii) shall provide for reasonable participation of affected reinsurers, consistent with this
31    section; and

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1        (iii) may authorize the present value estimation of contingent, unliquidated, and immature
2    claims, including incurred but not reported losses utilizing an actuarial methodology of valuing
3    claims with reasonable certainty.
4        (2) Contingent, unliquidated, and immature claims shall not share in any distribution to
5    creditors of an insurer under Section 31A-27-336 until the liability, value, and due date of the
6    claims have been proved, allowed, and adjudicated. The liability of the insurer, the value, and the
7    due date of contingent, unliquidated, or immature claims that have been estimated in accordance
8    with this section shall be proved, allowed, and adjudicated for all purposes in the estate.
9        (3) Nothing in Subsection (1)(c)(i) shall be construed to prevent the liquidator from using
10    a qualified loss reserve specialist to estimate outstanding liabilities of a claimant.
11        Section 19. Section 31A-31-108 (Effective 07/01/97) is amended to read:
12         31A-31-108 (Effective 07/01/97). Assessment of insurers.
13        (1) To implement this chapter, Section 35A-3-114, and Section 76-6-521, the
14    commissioner may assess each admitted insurer and each nonadmitted insurer transacting
15    insurance under Chapter 15, Parts 1 and 2, an annual fee as follows:
16        (a) [$50] $75 for an insurer with total premiums for Utah risks of $1,000,000 or less;
17        (b) [$175] $263 for an insurer with total premiums for Utah risks of less than $2,500,000
18    but more than $1,000,000;
19        (c) [$375] $563 for an insurer with total premiums for Utah risks of less than $5,000,000
20    but more than $2,500,000;
21        (d) [$750] $1,125 for an insurer with total premiums for Utah risks of less than
22    $10,000,000 but more than $5,000,000;
23        (e) [$3,000] $4,500 for an insurer with total premiums for Utah risks of less than
24    $50,000,000 but more than $10,000,000; and
25        (f) [$7,500] $11,250 for an insurer with total premiums for Utah risks of $50,000,000 or
26    more.
27        (2) All money received by the state under this section shall be deposited in the General
28    Fund as a nonlapsing dedicated credit of the Insurance Department for the purpose of providing
29    funds to pay for any costs and expenses incurred by the Insurance Department in the
30    administration, investigation, and enforcement of this chapter, Section 35A-3-114, and Section
31    76-6-521.

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1        (3) As used in this section, "Utah risks" means insurance coverage on the lives, health, or
2    against the liability of persons residing in Utah, or on property located in Utah, other than property
3    temporarily in transit through Utah.
4        Section 20. Section 35A-3-114 (Effective 07/01/97) is amended to read:
5         35A-3-114 (Effective 07/01/97). Workers' compensation insurance fraud -- Elements
6     -- Penalties -- Notice.
7        (1) As used in this section:
8        (a) "Corporation" has the same meaning as in Subsection 76-2-201(3).
9        (b) "Intentionally" has the same meaning as in Subsection 76-2-103(1).
10        (c) "Knowingly" has the same meaning as in Subsection 76-2-103(2).
11        (d) "Person" has the same meaning as in Subsection 76-1-601(8).
12        (e) "Recklessly" has the same meaning as in Subsection 76-2-103(3).
13        (2) Any person who has intentionally, knowingly, or recklessly, devised any scheme or
14    artifice to obtain workers' compensation insurance coverage, disability compensation, medical
15    benefits, goods, professional services, fees for professional services, or anything of value under
16    this chapter by means of false or fraudulent pretenses, representations, promises, or material
17    omissions, and who intentionally, knowingly, or recklessly communicates or causes a
18    communication with another in furtherance of the scheme or artifice, is guilty of workers'
19    compensation insurance fraud, which is punishable in the manner prescribed by Section
20    76-10-1801 for communication fraud.
21        (3) A corporation or association is guilty of the offense of workers' compensation
22    insurance fraud under the same conditions as those set forth in Section 76-2-204.
23        (4) The determination of the degree of any offense under Subsection (2) shall be measured
24    by the total value of all property, money, or other things obtained or sought to be obtained by the
25    scheme or artifice described in Subsection (2), except as provided in Subsection 76-10-1801(1)(e).
26        (5) Reliance on the part of any person is not a necessary element of the offense described
27    in Subsection (2).
28        (6) An intent on the part of the perpetrator of any offense described in Subsection (2) to
29    permanently deprive any person of property, money, or anything of value is not a necessary
30    element of this offense.
31        (7) An insurer or self-insured employer giving written notice in accordance with

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1    Subsection (10) that workers' compensation insurance fraud is a crime is not a necessary element
2    of the offense described in Subsection (2).
3        [(7)] (8) A scheme or artifice to obtain workers' compensation insurance coverage includes
4    any scheme or artifice to make or cause to be made any false written or oral statement or business
5    reorganization, incorporation, or change in ownership intended to obtain insurance coverage as
6    mandated by this chapter at rates that do not reflect the risk, industry, employer, or class codes
7    actually covered by the policy.
8        [(8)] (9) A scheme or artifice to obtain disability compensation includes a scheme or
9    artifice to collect or make a claim for temporary disability compensation as provided in Section
10    35A-3-410 while working for gain.
11        [(9)] (10) (a) Each insurer or self-insured employer who, in connection with any provision
12    of this chapter prints, reproduces, or furnishes a form to any person upon which that person applies
13    for insurance coverage, reports payroll, makes a claim by reason of accident, injury, death, disease,
14    or other claimed loss, or otherwise reports or gives notice to the insurer or self-insured employer,
15    shall cause to be printed or displayed in comparative prominence with other content the statement:
16    "Any person who knowingly presents false or fraudulent underwriting information, files or causes
17    to be filed a false or fraudulent claim for disability compensation or medical benefits, or submits
18    a false or fraudulent report or billing for health care fees or other professional services is guilty of
19    a crime and may be subject to fines and confinement in state prison." [This statement shall be
20    preceded by the words: "For your protection, Utah law requires the following to appear on this
21    form" or other explanatory words of similar meaning.]
22        [(10)] (b) Each insurer or self-insured employer who issues a check, warrant, or other
23    financial instrument in payment of compensation issued under this chapter shall cause to be printed
24    or displayed in comparative prominence above the area for endorsement the statement: "Workers'
25    compensation insurance fraud is a crime punishable by Utah law."
26        (c) (i) The provisions of Subsections (10)(a) and (b) apply only to the legal obligations of
27    an insurer or a self-insured employer.
28        (ii) A person who violates Subsection (2) is guilty of workers' compensation insurance
29    fraud, and the failure of an insurer or a self-insured employer to fully comply with the provisions
30    of Subsections (10)(a) and (b) may not be:
31        (A) a defense to violating Subsection (2); or

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1        (B) grounds for suppressing evidence.
2        (11) In the absence of malice, a person, employer, insurer, or governmental entity that
3    reports a suspected fraudulent act relating to a workers' compensation insurance policy or claim
4    is not subject to any civil liability for libel, slander, or any other relevant cause of action.
5        (12) In any action involving workers' compensation, this section supersedes Title 31A,
6    Chapter 31, Insurance Fraud Act.
7        Section 21. Section 59-9-102 is amended to read:
8         59-9-102. Offsets.
9        (1) If any authorized insurer doing business in this state during the tax year pays a property
10    tax in this state, the insurer may deduct from the tax provided under this chapter that portion of the
11    property tax paid for general state purposes.
12        (2) Any domestic insurance company paying a fee for examination under Section
13    31A-2-205 may deduct from the tax provided under this chapter the amount of the examination
14    fee paid in the manner provided for in Section 31A-2-205, subject to the limitations of Subsection
15    31A-2-203(2)(d).
16        (3) There is offset against the taxes imposed under Section 59-9-101 the amount of any
17    assessments paid by an insurance company under the guaranty associations established under Title
18    31A, Chapter 28, in the manner provided by Sections 31A-28-113 and 31A-28-212.
19        (4) The state has no liability to insurers for any amount by which offsets allowed under
20    this section exceed the insurer's premium tax liability.
21        Section 22. Effective date.
22        This act takes effect on July 1, 1997.

Legislative Review Note
    as of 12-31-96 12:08 PM

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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