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25 31A-19-405, as repealed and reenacted by Chapter 205, Laws of Utah 1992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