H.B. 109 Enrolled

AMENDMENTS TO THE INSURANCE LAW
2001 GENERAL SESSION
STATE OF UTAH
Sponsor: John E. Swallow
This act modifies provisions of the Insurance Code by recodifying the Utah Life and
Disability Insurance Guaranty Association Act. The act amends the purpose and coverage
of the act and makes technical changes. The act clarifies the rules of construction. The act
modifies definitions. The act addresses membership in the association and the board of
directors of the association. The act modifies the powers and duties of the association. The
act addresses assessments made on member insurers. The act addresses the plan of
operation of the association. The act modifies the powers and duties of the commissioner.
The act addresses prevention of insolvencies. The act modifies miscellaneous provisions.
The act modifies the requirements for examinations, annual reports, and summary
documents. The act addresses advertisements. The act addresses prospective application.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
31A-28-102, as last amended by Chapter 316, Laws of Utah 1994
31A-28-103, as last amended by Chapter 316, Laws of Utah 1994
31A-28-104, as repealed and reenacted by Chapter 211, Laws of Utah 1991
31A-28-105, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
31A-28-106, as repealed and reenacted by Chapter 211, Laws of Utah 1991
31A-28-107, as last amended by Chapter 10, Laws of Utah 1997
31A-28-108, as last amended by Chapter 344, Laws of Utah 1995
31A-28-109, as repealed and reenacted by Chapter 211, Laws of Utah 1991
31A-28-110, as repealed and reenacted by Chapter 211, Laws of Utah 1991
31A-28-111, as repealed and reenacted by Chapter 211, Laws of Utah 1991
31A-28-112, as enacted by Chapter 211, Laws of Utah 1991
31A-28-113, as repealed and reenacted by Chapter 211, Laws of Utah 1991
31A-28-114, as last amended by Chapters 20 and 344, Laws of Utah 1995

31A-28-115, as repealed and reenacted by Chapter 211, Laws of Utah 1991
31A-28-117, as repealed and reenacted by Chapter 211, Laws of Utah 1991
31A-28-119, as repealed and reenacted by Chapter 211, Laws of Utah 1991
ENACTS:
31A-28-120, Utah Code Annotated 1953
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 31A-28-102 is amended to read:
31A-28-102. Purpose.
(1) The purpose of this part is to protect, subject to certain limitations, the persons specified
in Subsection 31A-28-103 (1) against failure in the performance of contractual obligations, under
[the] a life and disability insurance [policies and] policy or annuity [contracts] contract specified in
Subsection 31A-28-103 (2), because of the impairment or insolvency of the member insurer that
issued the [policies] policy or [contracts] contract.
(2) To provide the protection described in Subsection (1)[,]:
(a) the Utah Life and Disability Insurance Guaranty Association, which currently exists, is
continued [in order] to pay benefits and to continue coverages as limited [in] by this part[,]; and
(b) members of the association are subject to assessment to provide funds to carry out the
purpose of this part.
Section 2. Section 31A-28-103 is amended to read:
31A-28-103. Coverage and limitations.
(1) (a) This part provides coverage for the policies and contracts specified in Subsection (2)
to [persons] a person who [are] is:
[(a)] (i) [beneficiaries, assignees, or payees of the persons covered under Subsection (1)(b),]
a beneficiary, assignee, or payee of a person covered by Subsection (1)(a)(ii) regardless of where
[they reside] that person resides, except for a nonresident certificate [holders] holder under a group
[policies] policy or [contracts] contract; or
[(b) owners] (ii) an owner of or a certificate [holders] holder under [such policies] a policy
or [contracts; or, in the case of] contract, other than an unallocated annuity [contracts] contract or

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structured settlement annuity, [to the persons who are the contract holders, and who are] if the owner
or certificate holder is:
[(i) residents] (A) a resident of Utah; or
[(ii)] (B) not [residents] a resident of Utah, but only [under the following conditions] if:
[(A)] (I) the [insurers which] insurer that issued the [policies] policy or [contracts are]
contract is domiciled in this state;
[(B)] (II) [the insurers never held a license or certificate of authority in] the [states] state in
which the [persons reside;] person resides has an association similar to the association created by this
part; and
(III) the person is not eligible for coverage by an association in any other state because the
insurer was not licensed in the state at the time specified in the state's guaranty association's law.
[(C) the states have associations similar to the association created by this chapter; and]
[(D) the persons are not eligible for coverage by the associations described in Subsection
(1)(b)(ii)(C).]
(b) For an unallocated annuity contract specified in Subsection (2):
(i) Subsections (1)(a)(i) and (ii) do not apply; and
(ii) except as provided in Subsections (1)(d) and (1)(e), this part shall provide coverage for
the unallocated annuity contract specified in Subsection (2) to a person who is:
(A) the owner of the unallocated annuity contract if the contract is issued to or in connection
with a specific benefit plan whose plan sponsor has its principal place of business in this state; and
(B) an owner of an unallocated annuity contract issued to or in connection with a
government lottery if the owner is a resident.
(c) For a structured settlement annuity specified in Subsection (2):
(i) Subsections (1)(a)(i) and (ii) do not apply; and
(ii) except as provided in Subsections (1)(d) and (1)(e), this part shall provide coverage for
the structured settlement annuity specified in Subsection (2) to a person who is a payee under a
structured settlement annuity, or beneficiary of a payee if the payee is deceased, if the payee:
(A) is a resident, regardless of where the contract owner resides; or

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(B) is not a resident, but only if the contract owner of the structured settlement annuity is a
resident, or the contract owner of the structured settlement annuity is not a resident, but:
(I) the insurer that issued the structured settlement annuity is domiciled in this state;
(II) the state in which the contract owner resides has an association similar to the association
created by this part; and
(III) the payee, beneficiary, or the contract owner is not eligible for coverage by the
association of the state in which the payee or contract owner resides.
(d) This part may not provide coverage for the policies and contracts specified in Subsection
(2) to:
(i) a person who is a payee or beneficiary of a contract owner resident of this state, if the
payee or beneficiary is afforded any coverage by the association of another state; or
(ii) a person covered under Subsection (1)(b), if any coverage is provided to the person by
the association of another state.
(e) (i) This part provides coverage for a policy or contract specified in Subsection (2) to a
person who is a resident of this state and, in special circumstances, to a nonresident.
(ii) To avoid duplicate coverage, if a person who would otherwise receive coverage under
this part is provided coverage under the laws of any other state, the person may not be provided
coverage under this part.
(iii) In determining the application of this Subsection (1)(e) in situations where a person
could be covered by the association of more than one state, whether as an owner, payee, beneficiary,
or assignee, this part shall be construed in conjunction with other state laws to result in coverage by
only one association.
(2) (a) (i) Except as [otherwise] limited by this part, this part provides coverage to the
persons specified in Subsection (1) for:
(A) a direct, nongroup life, disability, or annuity [and] policy or contract;
(B) a supplemental [policies or contracts, for certificates] contract to a policy or contract
described in Subsection (2)(a)(i)(A);
(C) a certificate under a direct group [policies and contracts,] policy or contract; and [for]

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(D) an unallocated annuity [contracts] contract issued by a member [insurers] insurer.
[Annuity contracts]
(ii) For purposes of Subsection (2)(a)(i), an annuity contract and [certificates] a certificate
under a group annuity [contracts include] contract includes:
(A) a guaranteed investment [contracts,] contract;
(B) a deposit administration [contracts,] contract;
(C) an unallocated funding [agreements,] agreement;
(D) a structured settlement [agreements, lottery contracts,] annuity;
(E) an annuity issued to or in connection with a government lottery; and [any]
(F) an immediate or deferred annuity [contracts] contract.
(b) This part does not provide coverage for:
(i) [any] a portion of a policy or contract:
(A) not guaranteed by the insurer[,]; or
(B) under which the risk is borne by the policy or contract [holder] owner;
(ii) [any] a policy or contract of reinsurance, unless:
(A) an assumption [certificates have been] certificate is issued;
(B) the assumption certificate required by Subsection (2)(b)(ii)(A) is in effect pursuant to
the reinsurance policy or contract; and
(C) the reinsurance contract is approved by the appropriate regulatory authorities; or
(iii) [any] a portion of a policy or contract to the extent that the rate of interest on which it
is based[:] or the interest rate, crediting rate, or similar factor determined by use of an index or other
external reference stated in the policy or contract employed in calculating returns or changes in
value, if the interest rate, crediting rate, or similar factor:
(A) is not excluded from coverage by Subsection (2)(b)(xii); and
(B) averaged over the period of four years prior to the date on which the association becomes
obligated with respect to the policy or contract, exceeds a rate of interest determined by subtracting
two percentage points from Moody's Corporate Bond Yield Average averaged:
(I) for that same four-year period; or

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(II) for the corresponding lesser period if the policy or contract was issued less than four
years before the association became obligated; [and]
[(B) on or after the date on which the association becomes obligated with respect to the
policy or contract, exceeds the rate of interest determined by subtracting three percentage points from
Moody's Corporate Bond Yield Average as most recently available;]
(iv) [any] a portion of a policy or contract issued to a plan or program of an employer,
association, or [similar entity] other person to provide life, disability, or annuity benefits to its
employees [or], members, or others, to the extent that the plan or program is self-funded or
uninsured, including benefits payable by an employer, association, or [similar entity] other person
under:
(A) a multiple employer welfare arrangement as defined in [Section 514 of the Employee
Retirement Income Security Act of 1974, as amended] 29 U.S.C. Sec. 1144;
(B) a minimum premium group insurance plan;
(C) a stop-loss group insurance plan; or
(D) an administrative services only contract;
(v) [any] a portion of a policy or contract to the extent that it provides [dividends or
experience rating credits, or provides that any fees or allowances be paid to any person, including
the policy or contract holder, in connection with the service to or administration of the policy or
contract;]:
(A) a dividend;
(B) an experience rating credit;
(C) voting rights; or
(D) payment of a fee or allowance to any person, including the policy or contract owner, in
connection with the service to or administration of the policy or contract;
(vi) [any] a policy or contract issued in this state by a member insurer at a time when:
(A) it was not licensed; or
(B) did not have a certificate of authority to issue the policy or contract in this state;
(vii) [any] an unallocated annuity contract issued to [an employee] or in connection with a

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benefit plan protected under the federal Pension Benefit Guaranty Corporation, regardless of whether
the federal Pension Benefit Guaranty Corporation has yet become liable to make any payment with
respect to the benefit plan; [and]
(viii) [any] a portion of [any] an unallocated annuity contract [which] that is not issued to
or in connection with:
(A) a specific [employee,] benefit plan of:
(I) employees;
(II) a union[,]; or
(III) an association of natural persons [benefit plan]; or
(B) a government lottery[.];
(ix) a portion of a policy or contract to the extent that the assessment required by Section
31A-28-109 that applies to the policy or contract is preempted by federal or state law;
(x) an obligation that does not arise under the express written terms of the policy or contract
issued by an insurer to the contract owner or policy owner, including:
(A) a claim based on marketing materials;
(B) a claim based on documents that are issued by the insurer without meeting applicable
policy form filing or approval requirements;
(C) a misrepresentation regarding a policy benefit;
(D) an extra-contractual claim;
(E) a claim for penalties; or
(F) a claim for consequential or incidental damages;
(xi) a contract that establishes the member insurer's obligations to provide a book value
accounting guaranty for defined contribution benefit plan participants by reference to a portfolio of
assets that is owned by a person that is:
(A) (I) the benefit plan; or
(II) the benefit plan's trustee; and
(B) not an affiliate of the member insurer; and
(xii) a portion of a policy or contract to the extent it provides for interest or other changes

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in value:
(A) to be determined by the use of an index or other external reference stated in the policy
or contract; and
(B) (I) that have not been credited to the policy or contract; or
(II) as to which the policy or contract owner's rights are subject to forfeiture as of the date
the member insurer becomes an impaired or insolvent insurer under this part.
[(c) The] (3) Subject to Subsection (4), the benefits for which the association may become
liable [shall in no event] may not exceed the lesser of:
[(i)] (a) the contractual obligations for which the insurer is liable or would have been liable
if it were not an impaired or insolvent insurer; [or]
[(ii) (A)] (b) with respect to [any] one life, regardless of the number of policies or contracts:
[(I) $300,000 in life insurance death benefits, but not more than $100,000 in net cash
surrender and net cash withdrawal values for life insurance;]
[(II) $100,000 in disability insurance benefits, including any net cash surrender and net cash
withdrawal values;]
[(III) $100,000 in the present value of annuity benefits, including net cash surrender and net
cash withdrawal values;]
(i) for a life insurance policy:
(A) if the insured died before the coverage date, $500,000 of the death benefit;
(B) if the insurer received a valid request for cash surrender before the coverage date but has
not paid the cash surrender value before the coverage date, $200,000 of cash surrender benefits; or
(C) if neither Subsection (3)(b)(i)(A) nor (B) apply, the covered portion of each benefit
provided under the policy;
(ii) for an annuity contract, the covered portion of each benefit provided under the contract;
(iii) for a disability policy:
(A) classified as basic hospital and medical or major medical, $500,000; or
(B) not classified as basic hospital and medical or major medical, the covered portion of each
benefit provided under the policy;

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[(B)] (c) [with respect to each] for an individual, or a beneficiary of that individual if the
individual is deceased, participating in a governmental retirement plan established under Section
[401(k)] 401, 403(b), or 457 [of the], Internal Revenue Code, covered by an unallocated annuity
contract [or the beneficiaries of each such individual if deceased], in the aggregate[, $100,000]
$200,000 in present value of annuity benefits, including:
(i) net cash surrender; and
(ii) net cash withdrawal values; or
(d) for a payee of a structured settlement annuity or a beneficiary of the payee if the payee
is deceased, the limits set forth in Subsection (3)(b).
[(C)] (4) [however, in no event shall] Notwithstanding Subsections (3)(a) through (d), the
association [be liable to expend more than $300,000 in the aggregate with respect to any one
individual under Subsections (2)(c)(ii)(A) and (ii)(B);] may not be obligated to cover more than:
[(iii) with respect to any one contract holder covered by any unallocated annuity contract not
included in Subsection (2)(c)(ii)(B), $5,000,000 in benefits, irrespective of the number of contracts
held by that contract holder.]
(a) an aggregate of $500,000 in benefits for any one life under:
(i) Subsection (3)(b)(i)(A);
(ii) Subsection (3)(b)(i)(B);
(iii) Subsection (3)(b)(ii); or
(iv) Subsection (3)(b)(iii);
(b) $5,000,000 in benefits for one owner of multiple nongroup policies of life insurance:
(i) whether the policy owner is an individual, firm, corporation, or other person;
(ii) whether the persons insured are officers, managers, employees, or other persons; and
(iii) regardless of the number of policies and contracts held by the owner; and
(c) $5,000,000 in benefits, regardless of the number of contracts held by the contract owner
or plan sponsor, for:
(i) one contract owner provided coverage under Subsection (1)(b)(ii)(B); or
(ii) one plan sponsor whose plans own, directly or in trust, one or more unallocated annuity

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contracts not included in Subsection (3)(b)(ii).
(5) (a) Notwithstanding Subsection (4)(c) and except as provided in Subsection (5)(b), the
association shall provide coverage if one or more unallocated annuity contracts are:
(i) covered contracts under this part;
(ii) owned by a trust or other entity for the benefit of two or more plan sponsors; and
(iii) the largest interest in the trust or entity owning the contract or contracts is held by a plan
sponsor whose principal place of business is in the state.
(b) Notwithstanding Subsection (5)(a) the association may not be obligated to cover more
than $5,000,000 in benefits with respect to all unallocated contracts described in Subsection (5)(a).
(6) (a) The limitations set forth in Subsections (3) and (4) are limitations on the benefits for
which the association is obligated before taking into account:
(i) the association's subrogation and assignment rights; or
(ii) the extent to which those benefits could be provided out of the assets of the impaired or
insolvent insurer attributable to covered policies.
(b) The costs of the association's obligations under this part may be met by the use of assets:
(i) attributable to covered policies; or
(ii) reimbursed to the association pursuant to the association's subrogation and assignment
rights.
(c) On and after the date on which the association becomes obligated for any covered policy,
the association may not be obligated to provide benefits to the extent that the benefits are based on
an interest rate, crediting rate, or similar factor determined by use of an index or other external
reference stated in the policy or contract employed in calculating returns or changes in value if the
interest rate, crediting rate, or similar factor exceeds the rate of interest determined by subtracting
three percentage points from Moody's Corporate Bond Yield Average as most recently available on
each date on which interest is credited or attributed to the covered policy.
(d) In performing its obligations to provide coverage under Section 31A-28-108 , the
association may not be required to guarantee, assume, reinsure, perform, or cause to be guaranteed,
assumed, reinsured, or performed a contractual obligation of the insolvent or impaired insurer under

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a covered policy or contract that does not materially affect the economic values or economic benefits
of the covered policy or contract.
Section 3. Section 31A-28-104 is amended to read:
31A-28-104. Construction.
This part shall be [liberally] construed to effect the purposes under Section 31A-28-102
[constituting an aid and guide to interpretation of this part].
Section 4. Section 31A-28-105 is amended to read:
31A-28-105. Definitions.
As used in this [chapter] part:
[(1) "Account" means any of the two accounts created under Section 31A-28-106 .]
[(2)] (1) "Association" means the Utah Life and Disability Insurance Guaranty Association
continued under Section 31A-28-106 .
(2) (a) "Authorized assessment" or "authorized," when used in the context of assessments,
means that the board of directors passed a resolution whereby an assessment will be called
immediately or in the future from member insurers for an amount set forth in the resolution.
(b) An assessment is authorized when the resolution is passed.
(3) "Benefit plan" means a specific benefit plan of:
(a) employees;
(b) a union; or
(c) an association of natural persons.
(4) (a) "Called assessment" or "called," when used in the context of assessments, means that
the association issued a notice to member insurers requiring that an authorized assessment be paid
within the time frame set forth in the notice.
(b) All or part of an authorized assessment becomes a called assessment when notice is
mailed by the association to member insurers.
[(3)] (5) "Contractual obligation" means an obligation under any [obligation under] of the
following for which coverage is provided under Section 31A-28-103 :
(a) a policy or contract[, or];

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(b) a certificate under a group policy or contract[,]; or
(c) a portion of [the] a policy or contract [for which coverage is provided under Section
31A-28-103 ].
(6) "Coverage date" means the date on which the association becomes responsible for the
obligations of a member insurer.
[(4)] (7) "Covered policy" means any of the following for which coverage is provided in
Section 31A-28-103 :
(a) a policy or contract [within the scope of this chapter under Section 31A-28-103 ]; or
(b) a portion of a policy or contract.
(8) (a) "Covered portion" means:
(i) for any covered policy that has a cash surrender value, a fraction obtained by dividing:
(A) the lesser of:
(I) $200,000; or
(II) the cash surrender value of the policy; by
(B) the cash surrender value of the policy; and
(ii) for any covered policy that does not have a cash surrender value, a fraction obtained by
dividing:
(A) the lesser of:
(I) $200,000; or
(II) the policy's minimum statutory reserve; by
(B) the policy's minimum statutory reserve.
(b) The cash surrender value and the minimum statutory reserve are determined as of the
coverage date in accordance with the exclusions in Subsection 31A-28-103 (2)(b)(iii).
(9) "Extra-contractual claim" includes a claim relating to:
(a) bad faith in the payment of a claim;
(b) punitive or exemplary damages; or
(c) attorneys' fees and costs.
[(5)] (10) "Impaired insurer" means a member insurer that is not an insolvent insurer and:

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(a) is considered by the commissioner to be hazardous pursuant to this title; or
(b) is placed under an order of rehabilitation or conservation by a court of competent
jurisdiction.
[(6)] (11) "Insolvent insurer" means a member insurer [which] that is placed under an order
of liquidation by a court of competent jurisdiction with a finding of insolvency.
[(7)] (12) (a) "Member insurer" means a person that:
(i) is an insurer [licensed or holding]; and
(ii) holds a certificate of authority to transact in this state any kind of insurance for which
coverage is provided under [Sections] Section 31A-28-103 [and 31A-28-202 ]. [The term]
(b) "Member insurer" includes an insurer whose license or certificate of authority in this state
may have been:
(i) suspended[,];
(ii) revoked[,];
(iii) not renewed[,]; or
(iv) voluntarily withdrawn.
[(b)] (c) "Member insurer" does not include:
[(i) a limited health plan;]
[(ii)] (i) a health maintenance organization;
[(iii)] (ii) a fraternal benefit society;
[(iv)] (iii) a mandatory state pooling plan;
[(v)] (iv) a mutual assessment company or [any entity] other person that operates on an
assessment basis; [or]
(v) an insurance exchange; or
(vi) [any] an entity similar to [any of the above] an entity described in Subsections (12)(c)(i)
through (v).
[(8)] (13) "Moody's Corporate Bond Yield Average" means the Monthly Average Corporates
as published by Moody's [Investment] Investors Service, Inc., or any successor [thereto] to Moody's
Investors Service, Inc.

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(14) (a) "Owner" of a policy or contract, "policy owner," or "contract owner" means the
person who:
(i) is identified as the legal owner under the terms of the policy or contract; or
(ii) is otherwise vested with legal title to the policy or contract through a valid assignment:
(A) completed in accordance with the terms of the policy or contract; and
(B) properly recorded as the owner on the books of the insurer.
(b) "Owner," "policy owner," or "contract owner" does not include a person with only a
beneficial interest in a policy or contract.
[(9)] (15) "Person" means any:
(a) individual[,];
(b) corporation[,];
(c) limited liability company;
(d) partnership[,];
(e) association[,];
(f) governmental body or entity; or
(g) voluntary organization.
(16) "Plan sponsor" means:
(a) the employer, in the case of a benefit plan established or maintained by a single
employer;
(b) the employee organization, in the case of a benefit plan established or maintained by an
employee organization; or
(c) the association, committee, joint board of trustees, or other similar group of
representatives of the parties who establish or maintain a benefit plan, in the case of a benefit plan
established or maintained by:
(i) two or more employers; or
(ii) jointly by:
(A) one or more employers; and
(B) one or more employee organizations.

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[(10)] (17) (a) "Premiums" means [amounts] an amount or consideration received [in any
calendar year] on covered policies or contracts, less:
(i) returned:
(A) premiums[,];
(B) considerations[,]; and
(C) deposits [returned]; and
(ii) dividends and experience credits [on the amounts].
(b) (i) "Premiums" does not include [any amounts] an amount or consideration received for
[any policies or contracts or for]:
(A) a policy or contract for which coverage is not provided under Subsection 31A-28-103 (2);
or
(B) the [portions] portion of [any] [policies or contracts] a policy or contract for which
coverage is not provided under Subsection 31A-28-103 (2)[, except that assessable premiums].
(ii) Notwithstanding Subsection (17)(b)(i), an assessable premium may not be reduced on
account of:
(A) Subsection 31A-28-103 (2)(b)(iii) relating to interest limitations; and
(B) Subsection 31A-28-103 [(2)(c)](3) relating to limitations [with respect to any] for:
(I) one individual[,];
(II) any one participant[,]; and
(III) any one contract [holder] owner.
(c) "Premiums" may not include any premiums in excess of $5,000,000:
(i) on any unallocated annuity contract not issued under a governmental retirement plan
established under Section [401(k)] 401, 403(b), or 457 [of the], Internal Revenue Code[.]; or
(ii) for multiple nongroup policies of life insurance owned by one owner:
(A) whether the policy owner is an individual, firm, corporation, or other person;
(B) whether the persons insured are officers, managers, employees, or other persons; and
(C) regardless of the number of policies or contracts held by the owner.
(18) (a) Except as provided in Subsection (18)(b), "principal place of business" of a plan

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sponsor or a person other than a natural person means the single state:
(i) in which the natural persons who establish policy for the direction, control, and
coordination of the operations of the entity as a whole primarily exercise the function; and
(ii) determined by the association in its reasonable judgment by considering the following
factors:
(A) the state in which the primary executive and administrative headquarters of the entity
are located;
(B) the state in which the principal office of the chief executive officer of the entity is
located;
(C) the state in which the board of directors, or similar governing person or persons, of the
entity conducts the majority of its meetings;
(D) the state in which the executive or management committee of the board of directors, or
similar governing person, of the entity conducts the majority of its meetings;
(E) the state from which the management of the overall operations of the entity is directed;
and
(F) in the case of a benefit plan sponsored by affiliated companies comprising a consolidated
corporation, the state in which the holding company or controlling affiliate has its principal place
of business as determined using the factors described in Subsections (18)(a)(ii)(A) through (E).
(b) Notwithstanding Subsection (18)(a), in the case of a plan sponsor, if more than 50% of
the participants in the benefit plan are employed in a single state, the state where more than 50% of
the participants are employed is considered to be the principal place of business of the plan sponsor.
(c) (i) The principal place of business of a plan sponsor of a benefit plan described in
Subsection (3) is considered to be the principal place of business of the association, committee, joint
board of trustees, or other similar group of representatives of the parties who establish or maintain
the benefit plan.
(ii) If for a benefit plan described in Subsection (3) there is not a specific or clear designation
of a principal place of business under Subsection (18)(c)(i), the principal place of business is
considered to be the principal place of business of the employer or employee organization that has

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the largest investment in the benefit plan.
(19) "Receivership court" means the court in the insolvent or impaired insurer's state having
jurisdiction over the conservation, rehabilitation, or liquidation of the insurer.
[(11)] (20) (a) "Resident" means [any] a person:
(i) to whom a contractual obligation is owed; and
(ii) who resides in this state [at the time] on the earlier of the date a member insurer is
[determined to be] an:
(A) impaired insurer; or
(B) insolvent insurer [and to whom a contractual obligation is owed].
(b) A person may be a resident of only one state, which in the case of a person other than a
natural person shall be [the state in which] its principal place of business [is located].
(c) A citizen of the United States that is either a resident of a foreign country or a resident
of a United States possession, territory, or protectorate that does not have an association similar to
the association created by this part, is considered a resident of the state of domicile of the insurer that
issued the policy or contract.
(21) "State" means:
(a) a state;
(b) the District of Columbia;
(c) Puerto Rico; and
(d) a United States possession, territory, or protectorate.
(22) "Structured settlement annuity" means an annuity purchased to fund periodic payments
for a plaintiff or other claimant in payment for personal injury suffered by the plaintiff or other
claimant.
[(12)] (23) "Supplemental contract" means [any] a written agreement entered into for the
distribution of [policy or contract] proceeds under a policy or contract for:
(a) life;
(b) disability; or
(c) annuity.

- 17 -

[(13)] (24) "Unallocated annuity contract" means [any] an annuity contract or group annuity
certificate [which] that is not issued to and owned by an individual, except to the extent of any
annuity benefits guaranteed to an individual by an insurer under [such] the contract or certificate.
Section 5. Section 31A-28-106 is amended to read:
31A-28-106. Continuation of the association -- Association duties -- Allocation of
assessments.
(1) (a) There is continued under this [chapter] part the nonprofit legal entity known as the
Utah Life and Disability Insurance Guaranty Association created under former provisions of this
title.
(b) All member insurers shall be and remain members of the association as a condition of
their authority to transact [business] insurance in this state.
(c) The association shall:
(i) perform its functions under the plan of operation established and approved under Section
31A-28-110 ; and [shall]
(ii) exercise its powers through a board of directors established under [the provisions of]
Section 31A-28-107 . [For purposes of administration and assessment the]
(d) The association shall [maintain two accounts] allocate assessments among the following
classes or subclasses:
[(a)] (i) the life insurance and annuity [account] class, which includes the following
[subaccounts] subclasses:
[(i)] (A) the life insurance [Account] subclass;
[(ii)] (B) the annuity [Account] subclass:
(I) which includes annuity contracts owned by a governmental retirement plan, or its trustee,
established under Section 401, 403(b), or 457, Internal Revenue Code; and
(II) otherwise excludes unallocated annuities; and
[(iii)] (C) the unallocated annuity [account] subclass, which [includes] excludes contracts
[qualified] owned by a governmental retirement benefit plan, or its trustee, established under
Sections [401(k)] 401, 403(b), or 457 [of the], Internal Revenue Code; and

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[(b)] (ii) the disability insurance [account] class.
(2) (a) The association shall:
(i) come under the immediate supervision of the commissioner; and [shall]
(ii) be subject to the applicable provisions of the insurance laws of this state.
(b) Meetings or records of the association may be opened to the public upon majority vote
of the board of directors of the association.
Section 6. Section 31A-28-107 is amended to read:
31A-28-107. Board of directors.
(1) (a) The board of directors of the association shall consist of at least five but not more
than nine member insurers serving terms [of four years each] as established in the plan of operation.
(b) (i) The members of the board of directors shall be selected by member insurers, subject
to the approval of the commissioner.
(ii) When a vacancy occurs in the membership of the board of directors for any reason, [the]
a replacement [shall] may be elected for the unexpired term by a majority vote of the remaining
board members, subject to the approval of the commissioner.
(c) In approving selections or in appointing members to the board of directors, the
commissioner shall consider, among other things, whether all member insurers are fairly represented.
(d) Notwithstanding [the requirements of] Subsection (1)(a), the commissioner shall, at the
time of election or reelection, adjust the length of terms to ensure that the terms of board members
are staggered so that approximately half of the board of directors is selected [every two years] during
any two-year period.
(2) (a) [Members shall receive no compensation or benefits for their services, but may receive
per diem and expenses incurred in the performance of the member's official duties at the rates
established by the Division of Finance under Sections 63A-3-106 and 63A-3-107 from the assets of
the association] A member of the board of directors may be reimbursed from the assets of the
association for expenses incurred by the member as a member of the board of directors.
(b) Except as provided in Subsection (2)(a), a member of the board of directors may not be
compensated by the association for the member's services.

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[(b) Members may decline to receive per diem and expenses for their service.]
Section 7. Section 31A-28-108 is amended to read:
31A-28-108. Powers and duties of the association.
(1) (a) If a member insurer is an impaired [domestic] insurer, [the association in its discretion
and] subject to any conditions imposed by the association that do not impair the contractual
obligations of the impaired insurer [that are approved by the commissioner, and also by the impaired
insurer, except in cases of court-ordered conservation or rehabilitation, may:], the association may
elect to provide the protections provided by this part to the policyholders of the impaired insurer.
(b) If the association makes the election described in Subsection (1)(a), the association may
proceed under one or more of the options described in Subsection (3).
[(a) guarantee, assume, or reinsure, or cause to be guaranteed, assumed, or reinsured, any
or all of the policies or contracts of the impaired insurer;]
[(b) provide the necessary monies, pledges, notes, guarantees or other means to effectuate
Subsection (1)(a) and assure payment of the contractual obligations of the impaired insurer pending
action under Subsection (1)(a); or]
[(c) loan money to the impaired insurer.]
[(2) (a) If a member insurer is an impaired insurer, whether domestic, foreign, or alien, and
the insurer is not paying claims timely, the association shall in its discretion and subject to the
preconditions specified in Subsection (2)(b), either:]
[(i) take any of the actions specified in Subsection (1), subject to the conditions specified
in Subsection (1); or]
[(ii) provide substitute benefits in lieu of the contractual obligations of the impaired insurer
solely for disability claims, periodic annuity benefit payments, death benefits, supplemental benefits,
and cash withdrawals for policy or contract owners who petition for such benefits under claims of
emergency or hardship in accordance with the standards proposed by the association and approved
by the commissioner.]
[(b) The association is subject to the requirements of Subsection (2)(a) only if:]
[(i) the laws of the impaired insurer's state of domicile provide that until all payments of, or

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an account of, the impaired insurer's contractual obligations by all guaranty associations, along with
all expenses of the obligation and interest on all such payments and expenses, have been repaid to
the guaranty associations or a plan of repayment by the impaired insurer has been approved by the
guaranty associations:]
[(A) the delinquency proceeding shall not be dismissed;]
[(B) neither the impaired insurer nor its assets shall be returned to the control of its
shareholders or private management;]
[(C) it shall not be permitted to solicit or accept new business or have any suspended or
revoked license restored; and]
[(ii) (A) if the impaired insurer is a domestic insurer, it has been placed under an order of
rehabilitation by a court of competent jurisdiction in this state; or]
[(B) if the impaired insurer is a foreign or alien insurer:]
[(I) it has been prohibited from soliciting or accepting new business in this state;]
[(II) its certificate of authority has been suspended or revoked in this state; and]
[(III) a petition for rehabilitation or liquidation has been filed in a court of competent
jurisdiction in its state of domicile by the commissioner of the state.]
[(3)] (2) If a member insurer is an insolvent insurer, the association [in its discretion] shall
[either:] provide the protections provided by this part to the policyholders of the insolvent insurer
by electing in its discretion to proceed under one or more of the options in Subsection (3).
(3) With respect to the covered portions of covered policies of an impaired or insolvent
insurer, the association may:
(a) (i) (A) guaranty, assume, or reinsure, or cause to be guaranteed, assumed, or reinsured,
the policies or contracts of the [insolvent] insurer; or
[(ii)] (B) assure payment of the contractual obligations of the insolvent insurer; and
[(iii)] (ii) provide such monies, pledges, guarantees, or other means as are reasonably
necessary to discharge such duties; or
[(b) with respect only to disability insurance policies, provide benefits and coverages in
accordance with Subsection (4).]

- 21 -

[(4) When proceeding under Subsections (2)(a)(ii) or (3)(b), with respect only to disability
insurance policies, the association shall:]
(b) provide benefits and coverages in accordance with Subsection (4).
(4) (a) In accordance with Subsection (3)(b), the association may:
(i) assure payment of benefits for premiums identical to the premiums and benefits, except
for terms of conversion and renewability, that would have been payable under the policies or
contracts of the [insolvent] insurer, for claims incurred:
[(i)] (A) with respect to group policies[,]:
(I) not later than the earlier of the next renewal date under the policies or contracts or 45
days[, but] after the coverage date; and
(II) in no event less than 30 days[,] after the coverage date [on which the association
becomes obligated with respect to the policies]; or
[(ii)] (B) with respect to [individual] nongroup policies[,] or contracts:
(I) not later than the earlier of the next renewal date, if any, under the policies or contracts
or one year[, but] from the coverage date; and
(II) in no event less than 30 days[,] from the coverage date [on which the association
becomes obligated with respect to the policies];
[(b)] (ii) make diligent efforts to provide 30 days' notice of [the] any termination of the
benefits provided to:
(A) all known insureds[,] or annuitants for nongroup policies and contracts; or
(B) group [policyholders with respect to] policy owners for group policies and contracts; and
[(c)] (iii) with respect to nongroup life and disability insurance policies and annuities, make
available substitute coverage on an individual basis, in accordance with [the provisions of]
Subsection (4)[(d)] (b), to each known insured, annuitant, or owner [under an individual policy,] and
to each individual formerly insured or formerly an annuitant under a group policy who is not eligible
for replacement group coverage on an individual basis in accordance with Subsection (4)(b), if the
insured or annuitant had a right under law or the terminated policy or annuity contract to:
(A) convert coverage to individual coverage; or [to]

- 22 -

(B) continue an individual policy in force until a specified age or for a specified time during
which the insurer had:
(I) no right unilaterally to make changes in any provision of the policy; or [had]
(II) a right only to make changes in premium by class.
[(d)] (b) (i) In providing the substitute coverage required under Subsection (4)[(c)](a)(iii),
the association may offer [either] to:
(A) reissue the terminated coverage; or [to]
(B) issue an alternative policy.
(ii) [Alternate] An alternative or reissued [policies] policy under Subsection (4)(b)(i):
(A) shall be offered without requiring evidence of insurability[,]; and [shall]
(B) may not provide for any waiting period or exclusion that would not have applied under
the terminated policy.
(iii) The association may reinsure any alternative or reissued policy.
[(e)] (c) (i) [Alternative policies] An alternative policy adopted by the association shall be
subject to the approval of the commissioner.
(ii) The association may adopt alternative policies of various types for future issuance
without regard to any particular impairment or insolvency.
[(ii) Alternative policies]
(iii) An alternative policy:
(A) shall contain at least the minimum statutory provisions required in this state; and
(B) provide benefits that are not unreasonable in relation to the premium charged.
(iv) The association shall set the premium for an alternative policy in accordance with [its]
a table of [adopted] rates that the association adopts. The premium shall reflect:
(A) the amount of insurance to be provided; and
(B) the age and class of risk of each insured.
(v) For an alternative [policies] policy issued [to insureds] under an individual [policies]
policy of the impaired or insolvent insurer[,]:
(A) age shall be determined in accordance with the original policy provisions; and

- 23 -

(B) class of risk shall be the class of risk under the original policy.
(vi) For an alternative [policies] policy issued to individuals insured under a group policy[,]:
(A) age and class of risk shall be determined by the association in accordance with the
alternative policy provisions and risk classification standards approved by the commissioner[.
However,]; and
(B) the premium may not reflect any changes in the health of the insured after the original
policy was last underwritten.
[(iii)] (vii) Any alternative policy issued by the association shall provide coverage of a type
similar to that of the policy issued by the impaired or insolvent insurer, as determined by the
association.
[(f)] (d) If the association elects to reissue terminated coverage at a premium rate different
from that charged under the terminated policy, the premium shall be set by the association in
accordance with the amount of insurance provided and the age and class of risk, subject to the
approval of the commissioner or by a court of competent jurisdiction.
[(g)] (e) The association's obligations with respect to coverage under any policy of the
impaired or insolvent insurer or under any reissued or alternative policy shall cease on the date the
coverage or policy is replaced by another similar policy by:
(i) the policyholder[,];
(ii) the insured[,]; or
(iii) the association.
[(h)] (f) (i) With respect to [claims] a claim unpaid as of the coverage date [of insolvency]
and [claims] a claim incurred during the period defined in Subsection (4)(a)(i), a provider of health
care services, by accepting a payment from the association upon a claim of the provider against an
insured whose health care insurer is an insolvent member insurer, agrees to forgive the insured of
20% of the debt which otherwise would be paid by the insurer had it not been insolvent, subject to
a maximum of [$4,000] $8,000 being required to be forgiven by any one provider as to each
claimant.
(ii) The obligations of a solvent [insurers] insurer to pay all or part of the covered claim are

- 24 -

not diminished by the forgiveness provided for in this section.
(5) When proceeding under Subsection [(2)(a)(ii) or] (3)(b) with respect to any policy or
contract carrying guaranteed minimum interest rates, the association shall assure the payment or
crediting of a rate of interest consistent with Subsection 31A-28-103 (2)(b)(iii).
(6) Nonpayment of premiums within 31 days after the date required under the terms of any
guaranteed, assumed, alternative, or reissued policy or contract or substitute coverage shall terminate
the association's obligations under the policy or coverage under this [chapter] part with respect to
the policy or coverage, except with respect to any claims incurred or any net cash surrender value
[which] that may be due in accordance with [the provisions of] this [chapter] part.
(7) (a) Premiums due [for coverage after entry of an order of liquidation of an] after the
coverage date with respect to the covered portion of a policy or contract of an impaired or insolvent
insurer shall belong to and be payable at the direction of the association[, and the].
(b) The association [shall be] is liable to the policy or contract owners for unearned
premiums due to policy or contract owners [of the insurer after the entry of the order] arising after
the coverage date with respect to the covered portion of the policy or contract.
(8) The protection provided by this [chapter] part does not apply if any guaranty protection
is provided to residents of this state by laws of the domiciliary state or jurisdiction of the impaired
or insolvent insurer other than this state.
(9) In carrying out its duties under [this subsection and] Subsections [(2)] (1) and [(3)] (2),
and subject to approval by [the] a court in this state, the association may:
(a) impose permanent policy or contract liens in connection with [any] a guarantee,
assumption, or reinsurance agreement, if the association finds that:
(i) the amounts [which] that can be assessed under this [chapter] part are less than the
amounts needed to assure full and prompt performance of the association's duties under this
[chapter,] part; or [that]
(ii) the economic or financial conditions as they affect member insurers are sufficiently
adverse to render the imposition of the permanent policy or contract liens to be in the public interest;
(b) impose temporary moratoriums or liens on payments of cash values and policy loans, or

- 25 -

any other right to withdraw funds held in conjunction with policies or contracts, in addition to any
contractual provisions for deferral of cash or policy loan value[.]; and
(c) if the receivership court imposes a temporary moratorium or moratorium charge on
payment of cash values or policy loans, or on any other right to withdraw funds held in conjunction
with policies or contracts, out of the assets of the impaired or insolvent insurer, defer the payment
of cash values, policy loans, or other rights by the association for the period of the moratorium or
moratorium charge imposed by the receivership court, except for claims covered by the association
to be paid in accordance with a hardship procedure:
(i) established by the liquidator or rehabilitator; and
(ii) approved by the receivership court.
(10) (a) A deposit in this state held pursuant to law or required by the commissioner for the
benefit of creditors, including policy owners, that is not turned over to the domiciliary liquidator
upon the entry of a final order of liquidation or order approving a rehabilitation plan of an insurer
domiciled in this state or in a reciprocal state, defined in Subsection 31A-27-102 (1)(p), shall be
promptly paid to the association.
(b) Any amount paid under Subsection (10)(a) to the association less the amount retained
by the association shall be treated as a distribution of estate assets pursuant to Subsection
31A-27-337 (2).
[(10)] (11) If the association fails to act within a reasonable period of time as provided in
[Subsections (2)(a)(ii), (3), and (4)] this section, the commissioner shall have the powers and duties
of the association under this [chapter] part with respect to an impaired or insolvent [insurers] insurer.
[(11)] (12) The association may render assistance and advice to the commissioner, upon [his]
the commissioner's request, concerning:
(a) rehabilitation[,];
(b) payment of claims[,];
(c) continuance of coverage[,]; or
(d) the performance of other contractual obligations of any impaired or insolvent insurer.
[(12)] (13) (a) The association has standing to appear or intervene before [any] a court or

- 26 -

agency in this state with jurisdiction over:
(i) an impaired or insolvent insurer concerning which the association is or may become
obligated under this [chapter] part; or
(ii) any person or property against which the association may have rights through
subrogation or otherwise. [Standing]
(b) The standing referred to in Subsection (13)(a) extends to all matters germane to the
powers and duties of the association, including:
(i) proposals for reinsuring, modifying, or guaranteeing the policies or contracts of the
impaired or insolvent insurer; and
(ii) the determination of the policies or contracts and contractual obligations.
(c) The association [also] has the right to appear or intervene before a court in another state
with jurisdiction over:
(i) an impaired or insolvent insurer for which the association is or may become obligated;
or [with jurisdiction over a third party]
(ii) any person or property against [whom] which the association may have rights through
subrogation of the insurer's policyholders.
[(13)] (14) (a) Any person receiving benefits under this [chapter] part shall be considered
to have assigned the rights under, and any causes of action against any person for losses arising
under, resulting from, or otherwise relating to the covered policy or contract to the association to the
extent of the benefits received because of this [chapter] part, whether the benefits are payments of,
or on account of[,]:
(i) contractual obligations[,];
(ii) continuation of coverage[,]; or
(iii) provision of substitute or alternative coverages. [The]
(b) As a condition precedent to the receipt of any right or benefits conferred by this part upon
that person, the association may require an assignment to it of [these] the rights and causes of action
described in Subsection (14)(a) by any:
(i) payee[,];

- 27 -

(ii) policy or contract owner[,];
(iii) beneficiary[,];
(iv) insured[,]; or
(v) annuitant [as a condition precedent to the receipt of any right or benefits conferred by this
chapter upon that person].
[(b)] (c) The subrogation rights obtained by the association under this [subsection become
third class claims under Section 31A-27-335 ] Subsection (14) shall have the same priority against
the assets of the impaired or insolvent insurer as that possessed by the person entitled to receive
benefits under this part.
[(c)] (d) In addition to Subsections [(13)] (14)(a) [and (b)] through (c), the association has
all common law rights of subrogation and any other equitable or legal remedy [which] that would
have been available to the impaired or insolvent insurer or [holder] owner, beneficiary, or payee of
a policy or contract with respect to the policy or contract, including in the case of a structured
settlement annuity any rights of the owner, beneficiary, or payee of the annuity to the extent of
benefits received pursuant to this part against a person originally or by succession responsible for
the losses arising from the personal injury relating to the annuity or payment of the annuity.
(e) If a provision of this Subsection (14) is invalid or ineffective with respect to any person
or claim for any reason, the amount payable by the association with respect to the related covered
obligations shall be reduced by the amount realized by any other person with respect to the person
or claim that is attributable to the policies, or portion of the policies, covered by the association.
(f) If the association has provided benefits with respect to a covered policy and a person
recovers amounts as to which the association has rights as described in this Subsection (14), the
person shall pay to the association the portion of the recovery attributable to the covered policies.
[(14)] (15) (a) [The] In addition to the rights and powers elsewhere in this part, the
association may:
[(a)] (i) enter into contracts [which] that are necessary or proper to carry out the provisions
and purposes of this [chapter] part;
[(b)] (ii) sue or be sued, including taking any legal actions necessary or proper to:

- 28 -

(A) recover any unpaid assessments under Section 31A-28-109 ; and [to]
(B) settle claims or potential claims against [it] the association;
[(c)] (iii) borrow money to effect the purposes of this [chapter, and any notes or other
evidence or indebtedness of the association not in default shall be legal investments for domestic
insurers and may be carried as admitted assets] part;
[(d)] (iv) employ or retain the persons necessary or the appropriate staff members to:
(A) handle the financial transactions of the association[,]; and [to]
(B) perform other functions as become necessary or proper under this [chapter] part;
[(e)] (v) take necessary or appropriate legal action to avoid or recover payment of improper
claims;
[(f)] (vi) exercise, for the purposes of this [chapter] part and to the extent approved by the
commissioner, the powers of a domestic life or health insurer, but in no case may the association
issue insurance policies or annuity contracts other than those issued to perform its obligation under
this [chapter] part; [or]
(vii) request information from a person seeking coverage from the association to aid the
association in determining the association's obligations under this part with respect to the person;
(viii) take other necessary or appropriate action to discharge the association's duties and
obligations under this part or to exercise the association's powers under this part; and
[(g)] (ix) act as a special deputy liquidator if appointed by the commissioner.
(b) Any note or other evidence of indebtedness of the association under Subsection
(15)(a)(iii) that is not in default:
(i) is a legal investment for a domestic insurer; and
(ii) may be carried as admitted assets.
(c) A person seeking coverage from the association shall promptly comply with a request
for information by the association under Subsection (15)(a)(vii).
[(15)] (16) The association may join an organization of one or more other state associations
of similar purposes to further the purposes and administer the powers and duties of the association.
(17) (a) Except as provided in Subsection (17)(b), at any time within one year after the

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coverage date, the association may elect to succeed to the rights and obligations of the member
insurer that:
(i) accrue on or after the coverage date; and
(ii) relate to covered policies under any one or more indemnity reinsurance agreements
entered into by the member insurer as a ceding insurer and selected by the association.
(b) Notwithstanding Subsection (17)(a), the association may not exercise an election with
respect to a reinsurance agreement if the receiver, rehabilitator, or liquidator of the member insurer
has previously and expressly disaffirmed the reinsurance agreement.
(c) The election described in Subsection (17)(a) shall be effected by a notice to:
(i) (A) the receiver;
(B) rehabilitator; or
(C) liquidator; and
(ii) the affected reinsurers.
(d) If the association makes an election under Subsection (17)(a), the association shall
comply with Subsections (17)(d)(i) through (vi) with respect to the agreements selected by the
association.
(i) For contracts covered, in whole or in part, by the association, the association shall be
responsible for:
(A) all unpaid premiums due under the agreements for periods both before and after the
coverage date; and
(B) the performance of all other obligations to be performed after the coverage date.
(ii) The association may charge contracts covered in part by the association the costs for
reinsurance in excess of the obligations of the association, through reasonable allocation methods.
(iii) The association is entitled to any amounts payable by the reinsurer under the agreements
with respect to losses or events that:
(A) occur in periods after the coverage date; and
(B) relate to contracts covered by the association, in whole or in part.
(iv) On receipt of any amounts under Subsection (17)(d)(iii), the association shall pay to the

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beneficiary under the policy or contract on account of which the amounts were paid an amount equal
to the excess of the amount received by the association over the benefits paid or payable by the
association on account of the policy or contract.
(v) (A) Within 30 days following the association's election, the association and each
indemnity reinsurer shall calculate the net balance due to or from the association under each
reinsurance agreement as of the date of the association's election, giving full credit to all items paid
by either the member insurer, or its receiver, rehabilitator, or liquidator, or the indemnity reinsurer
during the period between the coverage date and the date of the association's election.
(B) Either the association or indemnity reinsurer shall pay the net balance due the other
within five days of the completion of the calculation under Subsection (17)(d)(v)(A).
(C) If the receiver, rehabilitator, or liquidator has received any amounts due the association
pursuant to Subsection (17)(d)(iii), the receiver, rehabilitator, or liquidator shall remit the same to
the association as promptly as practicable.
(vi) If the association, within 60 days of the election, pays the premiums due for periods both
before and after the coverage date that relate to contracts covered by the association, in whole or in
part, the reinsurer may not:
(A) terminate the reinsurance agreements, to the extent the agreements relate to contracts
covered by the association, in whole or in part; and
(B) set off any unpaid premium due for periods prior to the coverage date against amounts
due the association.
(e) An insurer other than the association shall succeed to the rights and obligations of the
association under Subsections (17)(a) through (d) effective as of the date agreed upon by the
association and the other insurer and regardless of whether the association has made the election
referred to in Subsections (17)(a) through (d) provided that:
(i) the association transfers its obligations to the other insurer;
(ii) the association and the other insurer agree to the transfer;
(iii) the indemnity reinsurance agreements automatically terminate for new reinsurance
unless the indemnity reinsurer and the other insurer agree to the contrary;

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(iv) the obligations described in Subsection (17)(d)(iv) may not apply on and after the date
the indemnity reinsurance agreement is transferred to the third party insurer; and
(v) this Subsection (17)(e) may not apply if the association has previously expressly
determined in writing that the association will not exercise the election referred to in Subsections
(17)(a) through (d).
(f) (i) This Subsection (17) supersedes the provisions of any law of this state or of any
affected reinsurance agreement that provides for or requires any payment of reinsurance proceeds
on account of losses or events that occur in periods after the coverage date, to the receiver, liquidator,
or rehabilitator of an insolvent member insurer.
(ii) The receiver, rehabilitator, or liquidator shall remain entitled to any amounts payable by
the reinsurer under the reinsurance agreement with respect to losses or events that occur in periods
prior to the coverage date, subject to applicable setoff provisions.
(g) Except as otherwise expressly provided in Subsections (17)(a) through (f), this
Subsection (17) does not:
(i) alter or modify the terms and conditions of the indemnity reinsurance agreements of the
insolvent member insurer;
(ii) abrogate or limit any rights of any reinsurer to claim that it is entitled to rescind a
reinsurance agreement; or
(iii) give a policy owner or beneficiary an independent cause of action against an indemnity
reinsurer that is not otherwise set forth in the indemnity reinsurance agreement.
(18) The board of directors of the association shall have discretion and may exercise
reasonable business judgment to determine the means by which the association is to provide the
benefits of this part in an economical and efficient manner.
(19) If the association has arranged or offered to provide the benefits of this part to a covered
person under a plan or arrangement that fulfills the association's obligations under this part, the
person is not entitled to benefits from the association in addition to or other than those provided
under the plan or arrangement.
(20) (a) Venue in a suit against the association arising under this part shall be in Salt Lake

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County.
(b) The association may not be required to give an appeal bond in an appeal that relates to
a cause of action arising under this part.
Section 8. Section 31A-28-109 is amended to read:
31A-28-109. Assessments.
(1) (a) For the purpose of providing the funds necessary to carry out the powers and duties
of the association, the board of directors shall assess the member insurers, separately for each
[account] class or subclass, at the time and for the amounts that the board of directors finds
necessary. [Assessments are]
(b) Member liability for an assessment is established as of the coverage date.
(c) Subject to Subsection (1)(d), a called assessment:
(i) is due not less than 30 days after prior written notice to the member [insurers. Class B
assessments, described in Subsection (2)(b),] insurer; and
(ii) shall accrue interest at 10% per annum on and after the due date.
(d) Notwithstanding Subsection (1)(c), the association may:
(i) assess the association's members as of the coverage date; and
(ii) defer the collection of the assessment described in Subsection (1)(d)(i).
(e) An assessment:
(i) has the force and effect of a judgment lien against the member insurer; and
(ii) may not be extinguished until paid.
(2) [There are] The two classes of assessment[:] are described in Subsections (2)(a) and
(2)(b).
(a) A Class A [assessments] assessment shall be [made] authorized and called for the
purpose of meeting administrative and legal costs and other expenses [and examinations conducted
under the authority of Subsection 31A-28-112 (5)]. A Class A [assessments] assessment may be
[made] authorized and called whether or not related to a particular impaired or insolvent insurer.
(b) A Class B [assessments] assessment shall be [made] authorized and called to the extent
necessary to carry out the powers and duties of the association under Section 31A-28-108 with

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regard to an impaired or an insolvent insurer.
(3) (a) (i) The amount of [any] a Class A assessment:
(A) shall be determined by the board of directors; and
(B) may be [made] authorized and called on a pro rata or non-pro rata basis.
(ii) If the Class A assessment is pro rata, the board of directors may credit the assessment
against future Class B assessments. [A]
(iii) The total of all non-pro rata [assessment] assessments may not exceed [$150] $300 per
member insurer in any one calendar year.
(b) The amount of [any] a Class B assessment shall be allocated for assessment purposes
among [the accounts] subclasses pursuant to an allocation formula [which] that may be based on:
(i) the premiums or reserves of the impaired or insolvent insurer; or [based on]
(ii) any other standard determined by the board of directors in [its] the board of directors'
sole discretion [to be] as being fair and reasonable under the circumstances.
(c) (i) A Class B [assessments] assessment against a member [insurers] insurer for [each
account and subaccount] the life insurance subclass, the annuity subclass, and the unallocated
annuity subclass shall be in the proportion that the premiums received on business in this state by
[each assessed] the member insurer on policies or contracts included in the subclass for the three
most recent calendar years for which information is available preceding the year which includes the
coverage date bears to the premiums received on business in this state for the same [calendar years]
period by all assessed member insurers.
(ii) ["Premiums received" is based] A Class B assessment against a member insurer for a
disability insurance subclass shall be in the proportion that the premiums received on business in this
state by each assessed member insurer on policies or contracts included in the subclass for the most
recent calendar year for which information is available preceding the year in which the assessment
is made bears to the premiums received on business in this state on policies or contracts [covered
by each account] included in the subclass for [the three most recent calendar years for which
information is available, which precede the year in which the insurer became impaired or insolvent]
that calendar year by all assessed member insurers.

- 34 -

(d) Assessments for funds to meet the requirements of the association with respect to an
impaired or insolvent insurer may not be [made] authorized or called until necessary to implement
the purposes of this [chapter] part.
(e) Classification of assessments and premiums under Subsection (3)(b) and computation
of assessments under this Subsection (3) shall be made with a reasonable degree of accuracy,
recognizing that exact determinations may not always be possible.
(4) (a) The association may abate or defer, in whole or in part, the assessment of a member
insurer if, in the opinion of the board of directors, payment of the assessment would endanger the
ability of the member insurer to fulfill its contractual obligations. [ In the event]
(b) If an assessment against a member insurer is abated or deferred in whole or in part under
Subsection (4)(a), the amount by which the assessment is abated or deferred may be assessed against
the other member insurers in a manner consistent with the basis for assessments set forth in this
section.
(c) Once a condition that caused a deferral is removed or rectified, the member insurer shall
pay all assessments that were deferred pursuant to a repayment plan approved by the association.
(5) (a) (i) [The] Subject to Subsection (5)(b), the total of all assessments [upon] authorized
by the association on a member insurer for [the life and annuity account, and for each subaccount,
may not in any one calendar year exceed 2% and the disability account] each subclass may not in any
one calendar year exceed 2% [of the insurer's yearly average premiums received in this state on the
policies and contracts covered by the account during the three calendar years preceding the year in
which the insurer became an impaired or insolvent insurer. If the maximum assessment, together
with the other assets of the association in any account, does not provide in any one year in either
account an amount sufficient to carry out the responsibilities of the association, the necessary
additional funds shall be assessed as soon as permitted by this chapter] of that member's total average
annual assessable premium in that subclass as defined in Subsection (3).
(ii) If two or more assessments are authorized in one calendar year with respect to one or
more insurers that become impaired or insolvent in different calendar years, the average annual
premiums for purposes of the aggregate assessment percentage limitation in Subsection (5)(a)(i) shall

- 35 -

be equal and limited to the highest of the total average annual assessable premiums of the different
calendar year periods involved in the assessment or assessments.
(iii) If the maximum assessment together with the other assets of the association do not
provide in one year an amount sufficient to carry out the responsibilities of the association, the
necessary additional funds shall be assessed as soon after as permitted by this part.
(b) The board of directors may provide in the plan of operation a method of allocating funds
among claims, whether relating to one or more impaired or insolvent insurers, when the maximum
assessment will be insufficient to cover anticipated claims.
(c) If [a 1%] the maximum assessment for [any subaccount of] the life insurance [and] or
annuity [account] subclass in any one year does not provide an amount sufficient to carry out the
responsibilities of the association, the board of directors shall assess [all subaccounts] the other of
the subclasses of the life insurance and annuity [account] class for the necessary additional amount:
(i) pursuant to Subsection (3)(b)[,]; and
(ii) subject to the maximum stated in Subsection (5)(a).
(6) (a) The board of directors may, by an equitable method established in the plan of
operation, refund to member insurers in proportion to the contribution of each insurer to that
[account] subclass the amount by which the assets of the [account] subclass exceed the amount the
board of directors finds is necessary to carry out [during the coming year] the obligations of the
association with regard to that [account] subclass, including assets accruing from:
(i) assignment[,];
(ii) subrogation[,];
(iii) net realized gains[,]; and
(iv) income from investments. [A]
(b) Notwithstanding Subsection (6)(a), a reasonable amount may be retained [in any account]
to provide funds for the continuing expenses of the association and for future losses.
(7) [It shall be proper for any] A member insurer, in determining its premium rates and
policyowner dividends as to any kind of insurance within the scope of this [chapter] part, [to] may
consider the amount reasonably necessary to meet its assessment obligations under this [chapter]

- 36 -

part.
(8) (a) The association shall issue to each insurer paying an assessment under this [chapter]
part, other than a Class A assessment, a certificate of contribution, in a form approved by the
commissioner, for the amount of the assessment [so] paid.
(b) All outstanding certificates described in Subsection (8)(a) shall be of equal dignity and
priority without reference to amounts or dates of issue.
(c) (i) A certificate of contribution described in Subsection (8)(a) may be shown by the
insurer in its financial statement as an asset [in such form and for such amount, if any, and period
of time as the commissioner may approve] in the amount of the certificate of contribution less the
amount by which the insurer's premium taxes have already been reduced with respect to the
certificate.
(ii) For good cause shown, the commissioner may order the insurer to show a different
amount in its financial statement than the amount under Subsection (8)(c)(i).
Section 9. Section 31A-28-110 is amended to read:
31A-28-110. Plan of operation.
(1) (a) The association shall submit to the commissioner a plan of operation and any
amendments to the plan necessary or suitable to assure the fair, reasonable, and equitable
administration of the association.
(b) The plan of operation and any amendments become effective:
(i) upon the commissioner's written approval; or
(ii) after 30 days from the date the plan of operation or amendment is submitted to the
commissioner if [he] the commissioner has not disapproved [it] the plan or amendment.
[(b)] (c) (i) If the association fails to submit a suitable amendment to the plan [of operation
prior to November 1, 1991, or if at any time after November 1, 1991, the association fails to submit
suitable amendments to the plan], the commissioner, after notice and hearing, shall adopt reasonable
rules [which] that are necessary or advisable to effectuate the provisions of this part. [These]
(ii) The rules described in Subsection (1)(c)(i) shall continue in force until:
(A) modified by the commissioner; or

- 37 -

(B) superseded by [a] an amendment to the plan:
(I) submitted by the association; and
(II) approved by the commissioner.
(2) All member insurers shall comply with the plan of operation.
(3) The plan of operation shall, in addition to [requirements enumerated elsewhere] any other
requirement in this part:
(a) establish procedures for handling the assets of the association;
(b) establish the amount and method of reimbursing members of the board of directors under
Section 31A-28-107 ;
(c) establish regular places and times for meetings of the board of directors, including
telephone conference calls;
(d) establish procedures for records to be kept of all financial transactions of:
(i) the association[, its];
(ii) the association's agents[,]; and
(iii) the board of directors;
(e) subject to Section 31A-28-107 , establish the procedures [whereby selections] to be
followed for [the]:
(i) selecting members to the board of directors [will be made]; and [submitted]
(ii) submitting the selected members to the commissioner for approval;
(f) establish any additional procedures for assessments under Section 31A-28-109 ; and
(g) contain additional provisions necessary or proper for the execution of the powers and
duties of the association.
(4) (a) The plan of operation may provide that any or all powers and duties of the
association, except those under Subsection 31A-28-108 [(13)(c)](14)(d) and Section 31A-28-109 ,
are delegated to a corporation, association, or other organization [which] that will perform functions
similar to those of the association, or its equivalent, in two or more states. [Such a]
(b) A corporation, association, or organization described in Subsection (4)(a) shall be:
(i) reimbursed for any payments made on behalf of the association; and [shall be]

- 38 -

(ii) paid for its performance of any function of the association.
(c) A delegation under this Subsection (4):
(i) shall take effect only with the approval of [both]:
(A) the board of directors; and
(B) the commissioner[,]; and
(ii) may be made only to a corporation, association, or organization [which] that extends
protection not substantially less favorable and effective than that provided by this [chapter] part.
Section 10. Section 31A-28-111 is amended to read:
31A-28-111. Duties and powers under this part.
In addition to the duties and powers enumerated elsewhere in this [chapter:] part, the persons
listed in this section have the duties and powers described in Subsections (1) through (6).
(1) The commissioner shall:
(a) upon request of the board of directors, provide the association with a statement of the
premiums [in this state] for each member insurer [upon request of the board of directors;]:
(i) in this state; and
(ii) any other appropriate state;
(b) if an impairment is declared and the amount of the impairment is determined, serve a
demand upon the impaired insurer to make good the impairment within a reasonable time [after an
impairment is declared and the amount of the impairment is determined:]; and
[(i) notice to the impaired insurer shall constitute notice to its shareholders, if any;]
[(ii) the failure of the insurer to promptly comply with the commissioner's demand does not
excuse the association from the performance of its powers and duties under this part;]
(c) in a liquidation or rehabilitation proceeding involving a domestic insurer, be appointed
as the liquidator or rehabilitator [in any liquidation or rehabilitation proceeding involving a domestic
insurer].
(2) Notice to the impaired insurer under Subsection (1)(b) shall constitute notice to the
shareholders of the impaired insurer if the impaired insurer has shareholders.
(3) The failure of the insurer to promptly comply with the commissioner's demand under

- 39 -

Subsection (1)(b) does not excuse the association from the performance of its powers and duties
under this part.
[(2)] (4) (a) After notice and hearing, the commissioner may suspend or revoke the
certificate of authority to transact insurance in this state of any member insurer [which] that fails to:
(i) pay an assessment when due; or [which fails to]
(ii) comply with the plan of operation.
(b) (i) As an alternative to suspending or revoking a certificate of authority under Subsection
(4)(a), the commissioner may levy a forfeiture on any member insurer [which] that fails to pay an
assessment when due.
(ii) A forfeiture described in Subsection (4)(b)(i):
(A) may not exceed 5% of the unpaid assessment per month[. However, no forfeiture shall];
and
(B) may not be less than $100 per month.
[(3)] (5) (a) [Any] A final action of the board of directors or the association may be appealed
to the commissioner by any member insurer if appeal is taken within 60 days of the date the member
insurer received notice of the final action being appealed.
(b) If a member [company] insurer is appealing an assessment, the amount assessed shall be:
(i) paid to the association; and [shall be]
(ii) made available to meet association obligations during the pendency of an appeal.
(c) If the appeal on the assessment described in Subsection (5)(b) is upheld, the amount paid
in error or excess shall be returned to the member [company] insurer.
(d) Any final action or order of the commissioner shall be subject to judicial review in a
court of competent jurisdiction in accordance with the laws of this state that apply to the actions or
orders of the commissioner.
[(4)] (6) The liquidator, rehabilitator, or conservator of any impaired insurer shall notify all
interested persons of the effect of this [chapter] part.
Section 11. Section 31A-28-112 is amended to read:
31A-28-112. Prevention of insolvencies.

- 40 -

[To] (1) The purpose of this section is to aid in the detection and prevention of insurer
insolvencies or impairments[:].
[(1)] (2) [It is the duty of the] The commissioner shall:
(a) [to] notify the [commissioners] commissioner of every state[, the territories of the United
States, and the District of Columbia] within 30 days following the action taken or the date the action
occurs, when [he] the commissioner takes [either of] the following actions against a member insurer:
(i) revokes its license; [or]
(ii) suspends its license[.]; or
[(b) Such notice shall be mailed to all commissioners within 30 days following the action
taken or the date on which the action occurs.]
(iii) makes a formal order that the member insurer:
(A) restrict its premium writing;
(B) obtain additional contributions to surplus;
(C) withdraw from the state;
(D) reinsure all or any part of its business; or
(E) increase capital, surplus, or any other account for the security of policy owners or
creditors;
[(c) To] (b) report to the board of directors when [he] the commissioner has:
(i) taken any of the actions set forth in Subsection (2)(a); or [has]
(ii) received a report from any other commissioner indicating that [any such] an action
described in Subsection (2)(a) has been taken in another state[. The];
(c) include in the report to the board of directors [shall contain] required by Subsection
(2)(b):
(i) all significant details of the action taken; or
(ii) the report received from another commissioner[.];
(d) [To] promptly report to the board of directors when [he] the commissioner has reasonable
cause to believe from [any] an examination of any member [company] insurer, whether completed
or in process, that the [company] insurer may be an impaired or insolvent insurer[.]; and

- 41 -

(e) [To] furnish to the board of directors the National Association of Insurance
Commissioners [(NAIC)] Insurance Regulatory Information System [(IRIS)] ratios and listings of
companies not included in the ratios developed by [NAIC] the National Association of Insurance
Commissioners.
(3) (a) The board of directors may use the information contained [therein] in the ratios and
listings described in Subsection (2)(e) in carrying out [its] the board of directors' duties and
responsibilities under this section. [Such]
(b) The report and the information contained in the ratios and listings shall be kept
confidential by the board of directors until the commissioner or other lawful authority publishes the
information.
[(2)] (4) The commissioner may seek the advice and recommendations of the board of
directors concerning any matter affecting [his] the commissioner's duties and responsibilities
regarding the financial condition of member insurers and companies seeking admission to transact
insurance business in this state.
[(3)] (5) (a) The board of directors may[, upon majority vote,] make reports and
recommendations to the commissioner upon any matter germane to:
(i) the solvency, liquidation, rehabilitation, or conservation of any member insurer; or
[germane to]
(ii) the solvency of any company seeking to do an insurance business in this state.
(b) The reports and recommendations of the board of directors described in Subsection (5)(a)
may not be considered public documents.
[(4) It is the duty of the]
(6) The board of directors may, upon majority vote, [to] notify the commissioner of any
information indicating [any] a member insurer may be an impaired or insolvent insurer.
[(5) (a)] (7) The board of directors may[, upon majority vote, request that the commissioner
order an examination of any member insurer which the board in good faith believes may be an
impaired or insolvent insurer. Within 30 days of the receipt of the request the commissioner shall
begin the examination. The examination may be conducted as a NAIC examination or may be

- 42 -

conducted by any person designated by the commissioner. The cost of the examination shall be paid
by the association. The examination report shall be treated as are other examination reports. Subject
to the commissioner's compliance with Subsection (1), the examination report may not be released
to the board of directors prior to its release to the public] make recommendations to the
commissioner for the detection and prevention of insurer insolvencies.
[(b) The commissioner shall notify the board of directors when the examination is
completed. The request for an examination shall be kept on file by the commissioner and may not
be open to public inspection prior to the release of the examination report to the public.]
[(6) The board of directors may, upon majority vote, make recommendations to the
commissioner for the detection and prevention of insurer insolvencies.]
[(7)] (8) (a) At the conclusion of any insurer insolvency in which the association was
obligated to pay covered claims, the board of directors shall prepare a report to the commissioner
containing the information the board of directors has in its possession bearing on the history and
causes of the insolvency. [The board shall cooperate with the boards of directors of guaranty
associations in other states in]
(b) In preparing a report on the history and causes of insolvency of a particular insurer, [and]
the board of directors may cooperate with:
(i) the board of directors of a guaranty association in another state; or
(ii) an organization described in Subsection 31A-28-108 (16).
(c) The board of directors may adopt by reference any report prepared by [other]:
(i) a guaranty association in another state [associations.]; or
(ii) an organization described in Subsection 31A-28-108 (16).
Section 12. Section 31A-28-113 is amended to read:
31A-28-113. Credit for assessments paid.
(1) (a) A member insurer may offset against its premium tax liability to this state an
assessment described in Subsection 31A-28-109 (2)(b) to the extent of 20% of the amount of the
assessment for each of the five calendar years following the year in which the assessment was paid.
(b) To the extent [these] that the offsets described in Subsection (1)(a) exceed premium tax

- 43 -

liability, [they] the offsets may be carried forward and used to offset premium tax liability in future
years. [In the event]
(c) If a member insurer ceases doing business, all uncredited assessments may be credited
against its premium tax liability for the year it ceases doing business.
(2) (a) [Any sums which] Monies shall be paid by the insurers to the state in a manner
required by the State Tax Commission if the monies:
(i) are acquired by refund [from the association by member insurers under] in accordance
with Subsection 31A-28-109 (6)[,] from the association by member insurers; and [which]
(ii) have been offset against premium taxes as provided in Subsection (1)[, shall be paid by
the insurers to the state in a manner required by the State Tax Commission].
(b) The association shall notify the commissioner that the refunds described in Subsection
(2)(a) have been made.
Section 13. Section 31A-28-114 is amended to read:
31A-28-114. Miscellaneous provisions.
(1) Nothing in this [chapter] part shall be construed to reduce the liability for unpaid
assessments of the insureds of an impaired or insolvent insurer operating under a plan with
assessment liability.
(2) (a) Records shall be kept of all [negotiations and] meetings [in which the association or
its representatives are involved] of the board of directors to discuss the activities of the association
in carrying out it powers and duties under Section 31A-28-108 .
(b) Records of [such negotiations or meetings shall be made public only upon the
termination of a liquidation, rehabilitation, or conservation proceeding involving the impaired or
insolvent insurer, upon the termination of] the association with respect to an impaired or insolvent
insurer may not be disclosed before the earlier of:
(i) the termination of a liquidation, rehabilitation, or conservation proceeding involving the
impaired or insolvent insurer;
(ii) the termination of the impairment or insolvency of the insurer[,]; or
(iii) upon the order of a court of competent jurisdiction.

- 44 -

(c) Nothing in this Subsection (2) shall limit the duty of the association to render a report
of its activities under Section 31A-28-115 .
(3) (a) For the purpose of carrying out its obligations under this [chapter] part, the
association shall be considered to be a creditor of [the] an impaired or insolvent insurer to the extent
of assets attributable to covered policies reduced by any amounts to which the association is entitled
as subrogee pursuant to Subsection 31A-28-108 [(13)](14).
(b) Assets of the impaired or insolvent insurer attributable to covered policies shall be used
to continue all covered policies and pay all contractual obligations of the impaired or insolvent
insurer as required by this [chapter] part.
[(b)] (c) As used in this Subsection (3), assets attributable to covered policies are that
proportion of the assets which the reserves that should have been established for covered policies
bear to the reserves that should have been established for all policies of insurance written by the
impaired or insolvent insurer.
[(c) The creditor status obtained by the association under Subsection (3)(a) entitles it to file
a third class claim under Section 31A-27-335 .]
(4) (a) As a creditor of the impaired or insolvent insurer under Subsection (3) and consistent
with Section 31A-27-335 , the association and any other similar association are entitled to receive
a disbursement of assets out of the marshaled assets, from time to time as the assets become
available to reimburse the association and any other similar association.
(b) If, within 120 days of a final determination of insolvency of an insurer by the
receivership court, the liquidator has not made an application to the court for the approval of a
proposal to disburse assets out of marshaled assets to all guaranty associations having obligations
because of the insolvency, the association is entitled to make application to the receivership court
for approval of the association's proposal for disbursement of these assets.
[(4)] (5) (a) Prior to the termination of any liquidation, rehabilitation, or conservation
proceeding, the court may take into consideration the contributions of the respective parties,
including:
(i) the association[,];

- 45 -

(ii) the shareholders[,];
(iii) policyowners of the insolvent insurer[,]; and
(iv) any other party with a bona fide interest in making an equitable distribution of the
ownership rights of the insolvent insurer.
(b) In making [such] a determination[, consideration shall be given to] under Subsection
(5)(a), the court shall consider the welfare of the policyholders of the continuing or successor insurer.
[(b)] (c) A distribution to any stockholder of an impaired or insolvent insurer may not be
made until and unless the total amount of valid claims of the association with interest has been fully
recovered by the association for funds expended in carrying out its powers and duties under Section
31A-28-108 with respect to the insurer.
(6) (a) If an order for liquidation or rehabilitation of an insurer domiciled in this state has
been entered, the receiver appointed under the order shall have a right to recover on behalf of the
insurer, from any affiliate that controlled the insurer, the amount of distributions, other than stock
dividends paid by the insurer on its capital stock, made at any time during the five years preceding
the petition for liquidation or rehabilitation subject to the limitations of Subsections (6)(b) through
(d).
(b) A distribution described in Subsection (6)(a) may not be recovered if the insurer shows
that:
(i) when paid the distribution was lawful and reasonable; and
(ii) the insurer did not know and could not reasonably have known that the distribution might
adversely affect the ability of the insurer to fulfill its contractual obligations.
(c) (i) A person that was an affiliate that controlled the insurer at the time the distributions
were paid shall be liable up to the amount of distributions received.
(ii) A person that was an affiliate that controlled the insurer at the time the distributions were
declared shall be liable up to the amount of distributions that would have been received if they had
been paid immediately.
(iii) If two or more persons are liable with respect to the same distributions, they shall be
jointly and severally liable.

- 46 -

(d) The maximum amount recoverable under this Subsection (6) shall be the amount needed
in excess of all other available assets of the insolvent insurer to pay the contractual obligations of
the insolvent insurer.
(e) If any person liable under Subsection (6)(c) is insolvent, all of its affiliates that controlled
it at the time the distribution was paid shall be jointly and severally liable for any resulting deficiency
in the amount recovered from the insolvent affiliate.
Section 14. Section 31A-28-115 is amended to read:
31A-28-115. Examination of the association -- Annual report.
(1) The association shall be subject to examination and regulation by the commissioner.
(2) The board of directors shall submit to the commissioner each year, not later than 120
days after the association's fiscal year[,]:
(a) a financial report in a form approved by the commissioner; and
(b) a report of its activities during the preceding fiscal year.
(3) At the request of a member insurer, the association shall provide the member insurer with
a copy of a report submitted under Subsection (2).
Section 15. Section 31A-28-117 is amended to read:
31A-28-117. Immunity.
(1) [There shall be] For any action or omission committed in the performance of their powers
and duties under this part, there is no liability on the part of, and no cause of action of any nature
shall arise against[,]:
(a) any member insurer [or its];
(b) a member insurer's agents or employees[,];
(c) the association [or its];
(d) the association's:
(i) agents or employees[,]; or
(ii) members of the board of directors [or their];
(e) representatives[, or] of persons described in Subsections (1)(a) through (d);
(f) the commissioner; or [his]

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(g) the commissioner's representatives [for any action or omission committed in the
performance of their powers and duties under this chapter. This].
(2) The immunity described in Subsection (1) extends to:
(a) the participation in any organization of one or more other state associations of similar
purposes [and to any such];
(b) an organization described in Subsection (2)(a); and [its]
(c) the agents or employees of an organization described in Subsection (2)(a).
Section 16. Section 31A-28-119 is amended to read:
31A-28-119. Prohibited advertisement of the association -- Notice to policyholders.
(1) (a) [A] Except as provided in Subsection (1)(b), a person, including an insurer, agent,
or affiliate of an insurer may not make, publish, disseminate, circulate, or place before the public,
or cause directly or indirectly to be made, published, disseminated, circulated, or placed before the
public, in any newspaper, magazine, or other publication, or in the form of a notice, circular,
pamphlet, letter, or poster, or over any radio station or television station, or in any other way, any
advertisement, announcement, or statement written or oral, which uses the existence of the
association for the purpose of sales, solicitation, or inducement to purchase any form of insurance
[covered by the association under this chapter. However,].
(b) Notwithstanding Subsection (1)(a), this section does not apply to:
(i) the association; or
(ii) any other entity [which] that does not sell or solicit insurance.
(2) (a) Prior to January 1, [1992] 2002, the association shall:
(i) prepare a summary document describing the general purposes and current limitations of
this [chapter] part that complies with Subsection (3)[. The summary shall be submitted]; and
(ii) submit the summary document described in Subsection (2)(a)(i) to the commissioner for
approval.
(b) Sixty days after [receiving] the [commissioner's approval] day on which the
commissioner approves the summary document described in Subsection (2)(a), [no] an insurer may
not deliver a policy or contract [described in Subsection 31A-28-103 (2)(a)] to a policy or contract

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[holder] owner unless the summary document is also delivered to the policy or contract [holder]
owner prior to, or at the time of, delivery of the policy or contract[, except as provided in Subsection
(4)].
(c) The summary document shall [also] be available upon request by a [policyholder] policy
owner.
[(c)] (d) The distribution, delivery, or contents or interpretation of the summary [may not
state] document does not guarantee that:
(i) the policy or the contract is covered in the event of the impairment or insolvency of a
member insurer; or
(ii) the [holder] owner of the policy or contract [would be] is covered in the event of the
impairment or insolvency of a member insurer.
[(d)] (e) The summary document shall be revised by the association as amendments to this
part may require.
[(e)] (f) Failure to receive the summary document as required in Subsection (2)(b) does not
give the policyholder, contract holder, certificate holder, or insured any greater rights than those
stated in this part.
(3) (a) The summary document prepared under Subsection (2) shall contain a clear and
conspicuous disclaimer on its face.
(b) The commissioner shall, by rule, establish the form and content of the disclaimer[. The]
described in Subsection (3)(a), except that the disclaimer shall:
[(a)] (i) state the name and address of:
(A) the association; and
(B) the insurance department;
[(b)] (ii) prominently warn the policy or contract [holder] owner that:
(A) the association may not cover the policy; or[,]
(B) if coverage is available, [that] it [may be] is:
(I) subject to substantial limitations [or] and exclusions; and
(II) conditioned on continued residence in the state;

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(iii) state the types of policies for which the association will provide coverage;
[(c)] (iv) state that the insurer and its agents are prohibited by law from using the existence
of the association for the purpose of sales, solicitation, or inducement to purchase any form of
insurance;
[(d) emphasize] (v) state that the policy or contract [holder] owner should not rely on
coverage under the association when selecting an insurer; [and]
(vi) explain the rights available and procedures for filing a complaint to allege a violation
of this part; and
[(e)] (vii) provide other information as directed by the commissioner including sources for
information about the financial condition of insurers provided that the information:
(A) is not proprietary; and
(B) is subject to disclosure under public records laws.
(4) [No] (a) An insurer or agent may not deliver a policy or contract described in Subsection
31A-28-103 (2)(a) and wholly excluded under Subsection 31A-28-103 (2)(b)(i) from coverage under
this [chapter] part unless the insurer or agent, prior to or at the time of delivery, gives the policy or
contract holder a separate written notice [which] that clearly and conspicuously discloses that the
policy or contract is not covered by the association.
(b) The commissioner shall by rule specify the form and content of the notice required by
Subsection (4)(a).
(5) A member insurer shall retain evidence of compliance with Subsection (2) for the later
of:
(a) three years; or
(b) until the conclusion of the next market conduct examination by the department of
insurance where the member insurer is domiciled.
Section 17. Section 31A-28-120 is enacted to read:
31A-28-120. Prospective application.
Notwithstanding any prior or subsequent law, the provisions of this part that are in effect on
the date on which the association first becomes obligated for the policies or contracts of an insolvent

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or impaired member shall govern the association's rights and obligations to the policyholders of the
insolvent or impaired member.

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