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S.B. 122 Enrolled

                 

INSURANCE LAW AMENDMENTS

                 
2002 GENERAL SESSION

                 
STATE OF UTAH

                 
Sponsor: L. Steven Poulton

                  This act modifies the Insurance Code by amending definitions, making technical changes,
                  and making the following changes. This act addresses the scope of the title. The act
                  addresses examination reports. The act addresses fees. The act addresses waiver of
                  retaliatory requirements. The act addresses withdrawal from a line of insurance. The act
                  addresses selection and removal of directors and officers of mutual insurers. This act
                  addresses health maintenance organizations. This act addresses the requirements for certain
                  insurers for minimum capital, deposits, and permanent surplus. This act addresses
                  cancellation, termination, nonrenewal, or changes in certain insurance coverage. This act
                  addresses reporting requirements for point of service or point of sales products. The act
                  addresses computation for minimum standards for annuities. This act addresses the scope
                  of the Utah Rate Regulation Act. This act addresses what constitutes an insurable interest.
                  This act addresses when information can be incorporated by reference. The act addresses
                  requirements for certificates of group insurance policies. The act addresses provisions
                  related to the regulation of life insurance, annuities, health insurance, and accident and
                  health insurance. This act addresses insurance marketing and licensing, including
                  requirements for title insurance, escrows, and title insurance agents. This act addresses the
                  regulation of third party administrators and insurance adjustors. This act addresses
                  rehabilitation and liquidation of insurers. This act modifies requirements for the account
                  maintained by the Utah Property and Casualty Health Insurance Guaranty Association.
                  This act addresses the Individual and Small Employer Health Insurance Act. This act
                  provides an effective date.
                  This act affects sections of Utah Code Annotated 1953 as follows:
                  AMENDS:
                      31A-1-103, as last amended by Chapter 116, Laws of Utah 2001
                      31A-1-301, as last amended by Chapter 116, Laws of Utah 2001


                      31A-2-204, as last amended by Chapter 316, Laws of Utah 1994
                      31A-2-215, as enacted by Chapter 143, Laws of Utah 1999
                      31A-2-216, as enacted by Chapter 143, Laws of Utah 1999
                      31A-3-103, as last amended by Chapter 329, Laws of Utah 1998
                      31A-3-401, as last amended by Chapter 131, Laws of Utah 1999
                      31A-4-107, as last amended by Chapter 204, Laws of Utah 1986
                      31A-4-115, as last amended by Chapter 114, Laws of Utah 2000
                      31A-4-116, as last amended by Chapter 162, Laws of Utah 2000
                      31A-5-405, as last amended by Chapter 300, Laws of Utah 2000
                      31A-5-409, as last amended by Chapter 300, Laws of Utah 2000
                      31A-5-410, as last amended by Chapter 300, Laws of Utah 2000
                      31A-8-101, as last amended by Chapter 116, Laws of Utah 2001
                      31A-8-103, as last amended by Chapter 116, Laws of Utah 2001
                      31A-8-205, as enacted by Chapter 204, Laws of Utah 1986
                      31A-8-209, as last amended by Chapter 116, Laws of Utah 2001
                      31A-8-211, as last amended by Chapter 116, Laws of Utah 2001
                      31A-8-401, as last amended by Chapter 143, Laws of Utah 1999
                      31A-8-407, as last amended by Chapter 116, Laws of Utah 2001
                      31A-8-408, as last amended by Chapter 116, Laws of Utah 2001
                      31A-17-505, as last amended by Chapter 116, Laws of Utah 2001
                      31A-17-506, as last amended by Chapter 20, Laws of Utah 1995
                      31A-19a-101, as last amended by Chapter 116, Laws of Utah 2001
                      31A-19a-209, as renumbered and amended by Chapter 130, Laws of Utah 1999
                      31A-21-104, as last amended by Chapter 116, Laws of Utah 2001
                      31A-21-106, as last amended by Chapter 114, Laws of Utah 2000
                      31A-21-311, as enacted by Chapter 242, Laws of Utah 1985
                      31A-22-400, as enacted by Chapter 242, Laws of Utah 1985
                      31A-22-402, as last amended by Chapter 114, Laws of Utah 2000

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                      31A-22-403, as last amended by Chapter 116, Laws of Utah 2001
                      31A-22-404, as last amended by Chapter 116, Laws of Utah 2001
                      31A-22-405, as enacted by Chapter 242, Laws of Utah 1985
                      31A-22-409, as last amended by Chapter 204, Laws of Utah 1986
                      31A-22-522, as enacted by Chapter 116, Laws of Utah 2001
                      31A-22-602, as last amended by Chapter 116, Laws of Utah 2001
                      31A-22-617, as last amended by Chapter 116, Laws of Utah 2001
                      31A-22-624, as last amended by Chapter 116, Laws of Utah 2001
                      31A-22-625, as last amended by Chapter 9, Laws of Utah 2001
                      31A-22-629, as enacted by Chapter 162, Laws of Utah 2000
                      31A-22-703, as last amended by Chapter 116, Laws of Utah 2001
                      31A-22-705, as last amended by Chapter 116, Laws of Utah 2001
                      31A-22-708, as repealed and reenacted by Chapter 329, Laws of Utah 1998
                      31A-22-714, as last amended by Chapter 329, Laws of Utah 1998
                      31A-23-102, as last amended by Chapters 9 and 116, Laws of Utah 2001
                      31A-23-204, as last amended by Chapter 116, Laws of Utah 2001
                      31A-23-206, as last amended by Chapter 116, Laws of Utah 2001
                      31A-23-211, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
                      31A-23-216, as last amended by Chapter 116, Laws of Utah 2001
                      31A-23-302, as last amended by Chapter 116, Laws of Utah 2001
                      31A-23-307, as last amended by Chapter 116, Laws of Utah 2001
                      31A-23-308, as enacted by Chapter 242, Laws of Utah 1985
                      31A-23-503, as last amended by Chapter 116, Laws of Utah 2001
                      31A-23-601, as last amended by Chapter 116, Laws of Utah 2001
                      31A-25-205, as last amended by Chapter 116, Laws of Utah 2001
                      31A-26-202 (Effective 07/01/02), as last amended by Chapter 8, Laws of Utah 2001, First
                  Special Session
                      31A-26-202 (Superseded 07/01/02), as last amended by Chapter 116, Laws of Utah 2001

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                      31A-26-206, as last amended by Chapter 116, Laws of Utah 2001
                      31A-26-213, as last amended by Chapter 116, Laws of Utah 2001
                      31A-26-301.6, as enacted by Chapter 240, Laws of Utah 2001
                      31A-27-102, as last amended by Chapter 131, Laws of Utah 1999
                      31A-27-103, as enacted by Chapter 242, Laws of Utah 1985
                      31A-27-305, as last amended by Chapter 204, Laws of Utah 1986
                      31A-27-311.5, as repealed and reenacted by Chapter 116, Laws of Utah 2001
                      31A-27-315, as last amended by Chapter 375, Laws of Utah 1997
                      31A-27-317, as enacted by Chapter 242, Laws of Utah 1985
                      31A-27-332, as last amended by Chapter 131, Laws of Utah 1999
                      31A-27-337, as last amended by Chapter 204, Laws of Utah 1986
                      31A-27-340, as enacted by Chapter 242, Laws of Utah 1985
                      31A-27-341, as enacted by Chapter 242, Laws of Utah 1985
                      31A-28-203, as last amended by Chapter 363, Laws of Utah 2001
                      31A-28-205, as last amended by Chapter 363, Laws of Utah 2001
                      31A-28-207, as last amended by Chapter 363, Laws of Utah 2001
                      31A-28-208, as last amended by Chapter 363, Laws of Utah 2001
                      31A-28-222, as enacted by Chapter 363, Laws of Utah 2001
                      31A-29-113, as last amended by Chapter 329, Laws of Utah 1998
                      31A-30-101, as last amended by Chapter 321, Laws of Utah 1995
                      31A-30-103, as last amended by Chapter 116, Laws of Utah 2001
                      31A-30-104, as last amended by Chapter 116, Laws of Utah 2001
                      31A-30-106, as last amended by Chapter 116, Laws of Utah 2001
                      31A-30-106.7, as enacted by Chapter 265, Laws of Utah 1997
                      31A-30-107, as last amended by Chapter 116, Laws of Utah 2001
                      31A-30-108, as last amended by Chapter 329, Laws of Utah 1998
                      31A-30-110, as last amended by Chapter 53, Laws of Utah 2001
                      31A-30-111, as enacted by Chapter 321, Laws of Utah 1995

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                      59-9-105, as last amended by Chapter 131, Laws of Utah 1999
                      63-55-231, as last amended by Chapter 116, Laws of Utah 2001
                  ENACTS:
                      31A-3-104, Utah Code Annotated 1953
                      31A-8-402.3, Utah Code Annotated 1953
                      31A-8-402.5, Utah Code Annotated 1953
                      31A-8-402.7, Utah Code Annotated 1953
                      31A-22-721, Utah Code Annotated 1953
                      31A-30-107.1, Utah Code Annotated 1953
                      31A-30-107.3, Utah Code Annotated 1953
                      31A-30-107.5, Utah Code Annotated 1953
                      31A-30-114, Utah Code Annotated 1953
                  REPEALS:
                      31A-8-402, as last amended by Chapter 116, Laws of Utah 2001
                      31A-15-206, as enacted by Chapter 258, Laws of Utah 1992
                      31A-22-720, as last amended by Chapter 116, Laws of Utah 2001
                  Be it enacted by the Legislature of the state of Utah:
                      Section 1. Section 31A-1-103 is amended to read:
                       31A-1-103. Scope and applicability of title.
                      (1) This title does not apply to:
                      (a) a retainer [contracts] contract made by [attorneys-at-law] an attorney-at-law:
                      (i) with an individual [clients with] client; and
                      (ii) under which fees are based on estimates of the nature and amount of services to be
                  provided to the specific client[, and similar contracts];
                      (b) a contract similar to a contract described in Subsection (1)(a) made with a group of
                  clients involved in the same or closely related legal matters;
                      [(b) arrangements] (c) an arrangement for providing benefits that do not exceed a limited
                  amount of consultations, advice on simple legal matters, either alone or in combination with referral

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                  services, or the promise of fee discounts for handling other legal matters;
                      [(c)] (d) limited legal assistance on an informal basis involving neither an express
                  contractual obligation nor reasonable expectations, in the context of an employment, membership,
                  educational, or similar relationship; or
                      [(d)] (e) legal assistance by employee organizations to their members in matters relating to
                  employment.
                      (2) (a) This title restricts otherwise legitimate business activity.
                      (b) What this title does not prohibit is permitted unless contrary to other provisions of Utah
                  law.
                      (3) Except as otherwise expressly provided, this title does not apply to:
                      (a) those activities of an insurer where state jurisdiction is preempted by Section 514 of the
                  federal Employee Retirement Income Security Act of 1974, as amended;
                      (b) ocean marine insurance;
                      (c) death and accident and health benefits provided by an organization [where the] if the
                  organization:
                      (i) has as its principal purpose [is] to achieve charitable, educational, social, or religious
                  objectives rather than to provide death and accident and health benefits[, if the organization];
                      (ii) does not incur a legal obligation to pay a specified amount; and
                      (iii) does not create reasonable expectations of receiving a specified amount on the part of
                  an insured person;
                      (d) other business specified in rules adopted by the commissioner on a finding that:
                      (i) the transaction of [such] the business in this state does not require regulation for the
                  protection of the interests of the residents of this state; or [on a finding that]
                      (ii) it would be impracticable to require compliance with this title;
                      (e) [(i) transactions] except as provided in Subsection (4), a transaction independently
                  procured through negotiations under Section 31A-15-104 ;
                      [(ii) however, the transactions described in Subsection (3)(e)(i) are subject to taxation under
                  Section 31A-3-301 ;]

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                      (f) self-insurance;
                      (g) reinsurance;
                      (h) subject to Subsection [(4)] (5), employee and labor union group or blanket insurance
                  covering risks in this state if:
                      (i) the policyholder exists primarily for purposes other than to procure insurance;
                      (ii) the policyholder:
                      (A) is not a resident of this state [or];
                      (B) is not a domestic corporation; or
                      (C) does not have its principal office in this state;
                      (iii) no more than 25% of the certificate holders or insureds are residents of this state;
                      (iv) on request of the commissioner, the insurer files with the department a copy of the
                  policy and a copy of each form or certificate; and
                      (v) (A) the insurer agrees to pay premium taxes on the Utah portion of its business, as if it
                  were authorized to do business in this state[,]; and [if]
                      (B) the insurer provides the commissioner with the security the commissioner considers
                  necessary for the payment of premium taxes under Title 59, Chapter 9, Taxation of Admitted
                  Insurers; or
                      (i) to the extent provided in Subsection [(5)] (6):
                      (i) a manufacturer's or seller's warranty; and
                      (ii) a manufacturer's or seller's service contract.
                      (4) A transaction described in Subsection (3)(e) is subject to taxation under Section
                  31A-3-301 .
                      [(4)] (5) (a) After a hearing, the commissioner may order an insurer of certain group or
                  blanket contracts to transfer the Utah portion of the business otherwise exempted under Subsection
                  (3)(h) to an authorized insurer if the contracts have been written by an unauthorized insurer.
                      (b) If the commissioner finds that the conditions required for the exemption of a group or
                  blanket insurer are not satisfied or that adequate protection to residents of this state is not provided,
                  the commissioner may require:

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                      (i) the insurer to be authorized to do business in this state; or
                      (ii) that any of the insurer's transactions be subject to this title.
                      [(5)] (6) (a) As used in Subsection (3)(i) and this Subsection [(5)] (6):
                      (i) "manufacturer's or seller's service contract" means a service contract:
                      (A) made available by:
                      (I) a manufacturer of a product[:];
                      (II) a seller of a product; or
                      (III) an affiliate of a manufacturer or seller of a product;
                      (B) made available:
                      (I) on one or more specific [product] products; or
                      (II) on products that are components of a system; and
                      [(B)] (C) under which the [manufacturer] person described in Subsection (6)(a)(i)(A) is
                  liable for services to be provided under the service contract including, if the manufacturer's or seller's
                  service contract designates, providing parts and labor;
                      (ii) "manufacturer's or seller's warranty" means the guaranty of:
                      (A) (I) the manufacturer of a product[:];
                      (II) a seller of a product; or
                      (III) an affiliate of a manufacturer or seller of a product;
                      [(A)] (B) (I) on one or more specific [product] products; or
                      (II) on products that are components of a system; and
                      [(B)] (C) under which the [manufacturer] person described in Subsection (6)(a)(ii)(A) is
                  liable for services to be provided under the warranty, including, if the manufacturer's or seller's
                  warranty designates, providing parts and labor; and
                      (iii) "service contract" is as defined in Section 31A-6a-101 .
                      (b) A manufacturer's or seller's warranty may be designated as:
                      (i) a warranty;
                      (ii) a guaranty; or
                      (iii) a term similar to a term described in Subsection [(5)] (6)(b)(i) or (ii).

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                      (c) This title does not apply to:
                      (i) a manufacturer's or seller's warranty;
                      (ii) a manufacturer's or seller's service contract paid for with consideration that is in addition
                  to the consideration paid for the product itself; and
                      (iii) a service contract that is not a manufacturer's or seller's warranty or manufacturer's or
                  seller's service contract if:
                      (A) the service contract is paid for with consideration that is in addition to the consideration
                  paid for the product itself; [and]
                      (B) the service contract is for the repair or maintenance of goods;
                      (C) the cost of the product is equal to an amount determined in accordance with Subsection
                  [(5)] (6)(e); and
                      (D) the product is not a motor vehicle.
                      (d) This title does not apply to a manufacturer's or seller's warranty or service contract paid
                  for with consideration that is in addition to the consideration paid for [for] the product itself
                  regardless of whether the manufacturer's or seller's warranty or service contract is sold:
                      (i) at the time of the purchase of the product; or
                      (ii) at a time other than the time of the purchase of the product.
                      (e) (i) For fiscal year 2001-02, the amount described in Subsection [(5)] (6)(c)(iii)(C) shall
                  be equal to $3,700 or less.
                      (ii) For each fiscal year after fiscal year 2001-02, the commissioner shall annually determine
                  whether the amount described in Subsection [(5)] (6)(c)(iii)(C) should be adjusted in accordance
                  with changes in the Consumer Price Index published by the United States Bureau of Labor Statistics
                  selected by the commissioner by rule, between:
                      (A) the Consumer Price Index for the February immediately preceding the adjustment; and
                      (B) the Consumer Price Index for February 2001.
                      (iii) If under Subsection [(5)] (6)(e)(ii) the commissioner determines that an adjustment
                  should be made, the commissioner shall make the adjustment by rule.
                      Section 2. Section 31A-1-301 is amended to read:

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                       31A-1-301. Definitions.
                      As used in this title, unless otherwise specified:
                      (1) (a) "Accident and health insurance" means insurance to provide protection against
                  economic losses resulting from:
                      (i) a medical condition including:
                      (A) medical care expenses; or
                      (B) the risk of disability;
                      (ii) accident; or
                      (iii) sickness.
                      (b) "Accident and health insurance":
                      (i) includes a contract with disability contingencies including:
                      (A) an income replacement contract;
                      (B) a health care contract;
                      (C) an expense reimbursement contract;
                      (D) a credit accident and health contract;
                      (E) a continuing care contract; and
                      (F) long-term care contracts; and
                      (ii) may provide:
                      (A) hospital coverage;
                      (B) surgical coverage;
                      (C) medical coverage; or
                      (D) loss of income coverage.
                      (c) "Accident and health insurance" does not include workers' compensation insurance.
                      (2) "Administrator" is defined in Subsection [(111)] (122).
                      (3) "Adult" means a natural person who has attained the age of at least 18 years.
                      (4) "Affiliate" means any person who controls, is controlled by, or is under common control
                  with, another person. A corporation is an affiliate of another corporation, regardless of ownership,
                  if substantially the same group of natural persons manages the corporations.

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                      (5) "Alien insurer" means an insurer domiciled outside the United States.
                      (6) "Amendment" means an endorsement to an insurance policy or certificate.
                      (7) "Annuity" means an agreement to make periodical payments for a period certain or over
                  the lifetime of one or more natural persons if the making or continuance of all or some of the series
                  of the payments, or the amount of the payment, is dependent upon the continuance of human life.
                      (8) "Application" means a document:
                      (a) completed by an applicant to provide information about the risk to be insured; and
                      (b) that contains information that is used by the insurer to:
                      (i) evaluate risk; and
                      (ii) decide whether to:
                      (A) insure the risk under:
                      (I) the coverages as originally offered; or
                      (II) a modification of the coverage as originally offered; or
                      (B) decline to insure the risk.
                      (9) "Articles" or "articles of incorporation" means the original articles, special laws, charters,
                  amendments, restated articles, articles of merger or consolidation, trust instruments, and other
                  constitutive documents for trusts and other entities that are not corporations, and amendments to any
                  of these.
                      (10) "Bail bond insurance" means a guarantee that a person will attend court when required,
                  or will obey the orders or judgment of the court, as a condition to the release of that person from
                  confinement.
                      (11) "Binder" is defined in Section 31A-21-102 .
                      (12) "Board," "board of trustees," or "board of directors" means the group of persons with
                  responsibility over, or management of, a corporation, however designated.
                      (13) "Business of insurance" is defined in Subsection [(64)] (68).
                      (14) "Business plan" means the information required to be supplied to the commissioner
                  under Subsections 31A-5-204 (2)(i) and (j), including the information required when these
                  subsections are applicable by reference under:

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                      (a) Section 31A-7-201 ;
                      (b) Section 31A-8-205 ; or
                      (c) Subsection 31A-9-205 (2).
                      (15) "Bylaws" means the rules adopted for the regulation or management of a corporation's
                  affairs, however designated and includes comparable rules for trusts and other entities that are not
                  corporations.
                      (16) "Casualty insurance" means liability insurance as defined in Subsection [(70)] (75).
                      (17) "Certificate" means evidence of insurance given to:
                      (a) an insured under a group insurance policy; or
                      (b) a third party.
                      (18) "Certificate of authority" is included within the term "license."
                      (19) "Claim," unless the context otherwise requires, means a request or demand on an insurer
                  for payment of benefits according to the terms of an insurance policy.
                      (20) "Claims-made coverage" means an insurance contract or provision limiting coverage
                  under a policy insuring against legal liability to claims that are first made against the insured while
                  the policy is in force.
                      (21) (a) "Commissioner" or "commissioner of insurance" means Utah's insurance
                  commissioner.
                      (b) When appropriate, the terms listed in Subsection (21)(a) apply to the equivalent
                  supervisory official of another jurisdiction.
                      (22) (a) "Continuing care insurance" means insurance that:
                      (i) provides board and lodging;
                      (ii) provides one or more of the following services:
                      (A) personal services;
                      (B) nursing services;
                      (C) medical services; or
                      (D) other health-related services; and
                      (iii) provides the coverage described in Subsection (22)(a)(i) under an agreement effective:

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                      (A) for the life of the insured; or
                      (B) for a period in excess of one year.
                      (b) Insurance is continuing care insurance regardless of whether or not the board and lodging
                  are provided at the same location as the services described in Subsection (22)(a)(ii).
                      (23) (a) "Control," "controlling," "controlled," or "under common control" means the direct
                  or indirect possession of the power to direct or cause the direction of the management and policies
                  of a person. This control may be:
                      (i) by contract;
                      (ii) by common management;
                      (iii) through the ownership of voting securities; or
                      (iv) by a means other than those described in Subsections (23)(a)(i) through (iii).
                      (b) There is no presumption that an individual holding an official position with another
                  person controls that person solely by reason of the position.
                      (c) A person having a contract or arrangement giving control is considered to have control
                  despite the illegality or invalidity of the contract or arrangement.
                      (d) There is a rebuttable presumption of control in a person who directly or indirectly owns,
                  controls, holds with the power to vote, or holds proxies to vote 10% or more of the voting securities
                  of another person.
                      (24) (a) "Corporation" means insurance corporation, except when referring to:
                      (i) a corporation doing business as an insurance broker, consultant, or adjuster under:
                      (A) Chapter 23, Insurance Marketing - Licensing Agents, Brokers, Consultants, and
                  Reinsurance Intermediaries; and
                      (B) Chapter 26, Insurance Adjusters; or
                      (ii) a noninsurer that is part of a holding company system under Chapter 16, Insurance
                  Holding Companies.
                      (b) "Stock corporation" means stock insurance corporation.
                      (c) "Mutual" or "mutual corporation" means a mutual insurance corporation.
                      (25) "Credit accident and health insurance" means insurance on a debtor to provide

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                  indemnity for payments coming due on a specific loan or other credit transaction while the debtor
                  is disabled.
                      (26) "Credit insurance" means surety insurance under which mortgagees and other creditors
                  are indemnified against losses caused by the default of debtors.
                      (27) "Credit life insurance" means insurance on the life of a debtor in connection with a loan
                  or other credit transaction.
                      (28) "Creditor" means a person, including an insured, having any claim, whether:
                      (a) matured;
                      (b) unmatured;
                      (c) liquidated;
                      (d) unliquidated;
                      (e) secured;
                      (f) unsecured;
                      (g) absolute;
                      (h) fixed; or
                      (i) contingent.
                      (29) (a) "Customer service representative" means a person that provides insurance services
                  and insurance product information:
                      (i) for its agent, broker, or consultant employer; and
                      (ii) to its employer's customer, client, or organization.
                      (b) A customer service representative may only operate within the scope of authority of its
                  agent, broker, or consultant employer.
                      (30) "Deadline" means the final date or time:
                      (a) imposed by:
                      (i) statute;
                      (ii) rule; or
                      (iii) order; and
                      (b) by which a required filing or payment must be received by the department.

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                      (31) "Deemer clause" means a provision under this title under which upon the occurrence
                  of a condition precedent, the commissioner is deemed to have taken a specific action. If the statute
                  so provides, the condition precedent may be the commissioner's failure to take a specific action.
                      (32) "Degree of relationship" means the number of steps between two persons determined
                  by counting the generations separating one person from a common ancestor and then counting the
                  generations to the other person.
                      (33) "Department" means the Insurance Department.
                      (34) "Director" means a member of the board of directors of a corporation.
                      (35) "Disability" means a physiological or psychological condition that partially or totally
                  limits an individual's ability to:
                      (a) perform the duties of:
                      (i) that individual's occupation; or
                      (ii) any occupation for which the individual is reasonably suited by education, training, or
                  experience; or
                      (b) perform two or more of the following basic activities of daily living:
                      (i) eating;
                      (ii) toileting;
                      (iii) transferring;
                      (iv) bathing; or
                      (v) dressing.
                      (36) "Domestic insurer" means an insurer organized under the laws of this state.
                      (37) "Domiciliary state" means the state in which an insurer:
                      (a) is incorporated;
                      (b) is organized; or
                      (c) in the case of an alien insurer, enters into the United States.
                      (38) (a) "Eligible employee" means:
                      (i) an employee who:
                      (A) works on a full-time basis; and

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                      (B) has a normal work week of 30 or more hours; or
                      (ii) a person described in Subsection (38)(b).
                      (b) "Eligible employee" includes, if the individual is included under a health benefit plan of
                  a small employer:
                      (i) a sole proprietor;
                      (ii) a partner in a partnership; or
                      (iii) an independent contractor.
                      (c) "Eligible employee" does not include, unless eligible under Subsection (38)(b):
                      (i) an individual who works on a temporary or substitute basis for a small employer;
                      (ii) an employer's spouse; or
                      (iii) a dependent of an employer.
                      (39) "Employee" means any individual employed by an employer.
                      [(38)] (40) "Employee benefits" means one or more benefits or services provided to:
                      (a) employees; or [their]
                      (b) dependents of employees.
                      [(39)] (41) (a) "Employee welfare fund" means a fund:
                      (i) established or maintained, whether directly or through trustees, by:
                      (A) one or more employers;
                      (B) one or more labor organizations; or
                      (C) a combination of employers and labor organizations; and
                      (ii) that provides employee benefits paid or contracted to be paid, other than income from
                  investments of the fund, by or on behalf of an employer doing business in this state or for the benefit
                  of any person employed in this state.
                      (b) "Employee welfare fund" includes a plan funded or subsidized by user fees or tax
                  revenues.
                      [(40)] (42) "Endorsement" means a written agreement attached to a policy or certificate to
                  modify one or more of the provisions of the policy or certificate.
                      [(41)] (43) "Excludes" is not exhaustive and does not mean that other things are not also

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                  excluded. The items listed are representative examples for use in interpretation of this title.
                      [(42)] (44) "Expense reimbursement insurance" means insurance:
                      (a) written to provide payments for expenses relating to hospital confinements resulting from
                  illness or injury; and
                      (b) written:
                      (i) as a daily limit for a specific number of days in a hospital; and
                      (ii) to have a one or two day waiting period following a hospitalization.
                      [(43)] (45) "Fidelity insurance" means insurance guaranteeing the fidelity of persons holding
                  positions of public or private trust.
                      [(44)] (46) (a) "Filed" means that a filing is:
                      (i) submitted to the department in accordance with any applicable statute, rule, or filing
                  order;
                      (ii) received by the department within the time period provided in the applicable statute, rule,
                  or filing order; and
                      (iii) accompanied with the applicable one or more filing fees required by:
                      (A) Section 31A-3-103 ; or
                      (B) rule.
                      (b) "Filed" does not include a filing that is rejected by the department because it is not
                  submitted in accordance with Subsection [(44)] (46)(a).
                      [(45)] (47) "Filing," when used as a noun, means an item required to be filed with the
                  department including:
                      (a) a policy;
                      (b) a rate;
                      (c) a form;
                      (d) a document;
                      (e) a plan;
                      (f) a manual;
                      (g) an application;

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                      (h) a report;
                      (i) a certificate;
                      (j) an endorsement;
                      (k) an actuarial certification;
                      (l) a licensee annual statement;
                      (m) a licensee renewal application; or
                      (n) an advertisement.
                      [(46)] (48) "First party insurance" means an insurance policy or contract in which the insurer
                  agrees to pay claims submitted to it by the insured for the insured's losses.
                      [(47)] (49) "Foreign insurer" means an insurer domiciled outside of this state, including an
                  alien insurer.
                      [(48)] (50) (a) "Form" means [a policy, certificate, or application] one of the following
                  prepared for general use[.]:
                      (i) a policy;
                      (ii) a certificate;
                      (iii) an application; or
                      (iv) an outline of coverage.
                      (b) "Form" does not include a document specially prepared for use in an individual case.
                      [(49)] (51) "Franchise insurance" means individual insurance policies provided through a
                  mass marketing arrangement involving a defined class of persons related in some way other than
                  through the purchase of insurance.
                      (52) "Group health plan" means an employee welfare benefit plan to the extent that the plan
                  provides medical care:
                      (a) (i) to employees; or
                      (ii) to a dependent of an employee; and
                      (b) (i) directly;
                      (ii) through insurance reimbursement; or
                      (iii) through any other method.

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                      (53) "Health benefit plan" means a policy or certificate for health care insurance, except that
                  health benefit plan does not include coverage:
                      (a) solely for:
                      (i) accident;
                      (ii) dental;
                      (iii) vision;
                      (iv) Medicare supplement;
                      (v) long-term care; or
                      (vi) income replacement; or
                      (b) that is:
                      (i) offered and marketed as supplemental health insurance;
                      (ii) not offered or marketed as a substitute for:
                      (A) hospital or medical expense insurance; or
                      (B) major medical expense insurance; and
                      (iii) solely for:
                      (A) a specified disease;
                      (B) hospital confinement indemnity; or
                      (C) limited benefit plan.
                      [(50)] (54) "Health care" means any of the following intended for use in the diagnosis,
                  treatment, mitigation, or prevention of a human ailment or impairment:
                      (a) professional services;
                      (b) personal services;
                      (c) facilities;
                      (d) equipment;
                      (e) devices;
                      (f) supplies; or
                      (g) medicine.
                      [(51)] (55) (a) "Health care insurance" or "health insurance" means insurance providing:

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                      (i) health care benefits; or
                      (ii) payment of incurred health care expenses.
                      (b) "Health care insurance" or "health insurance" does not include accident and health
                  insurance providing benefits for:
                      (i) replacement of income;
                      (ii) short-term accident;
                      (iii) fixed indemnity;
                      (iv) credit accident and health;
                      (v) supplements to liability;
                      (vi) workers' compensation;
                      (vii) automobile medical payment;
                      (viii) no-fault automobile;
                      (ix) equivalent self-insurance; or
                      (x) any type of accident and health insurance coverage that is a part of or attached to another
                  type of policy.
                      [(52)] (56) "Income replacement insurance" or "disability income insurance" means
                  insurance written to provide payments to replace income lost from accident or sickness.
                      [(53)] (57) "Indemnity" means the payment of an amount to offset all or part of an insured
                  loss.
                      [(54)] (58) "Independent adjuster" means an insurance adjuster required to be licensed under
                  Section 31A-26-201 who engages in insurance adjusting as a representative of insurers.
                      [(55)] (59) "Independently procured insurance" means insurance procured under Section
                  31A-15-104 .
                      [(56)] (60) "Individual" means a natural person.
                      [(57)] (61) "Inland marine insurance" includes insurance covering:
                      (a) property in transit on or over land;
                      (b) property in transit over water by means other than boat or ship;
                      (c) bailee liability;

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                      (d) fixed transportation property such as bridges, electric transmission systems, radio and
                  television transmission towers and tunnels; and
                      (e) personal and commercial property floaters.
                      [(58)] (62) "Insolvency" means that:
                      (a) an insurer is unable to pay its debts or meet its obligations as they mature;
                      (b) an insurer's total adjusted capital is less than the insurer's mandatory control level RBC
                  under Subsection 31A-17-601 (8)(c); or
                      (c) an insurer is determined to be hazardous under this title.
                      [(59)] (63) (a) "Insurance" means:
                      (i) an arrangement, contract, or plan for the transfer of a risk or risks from one or more
                  persons to one or more other persons; or
                      (ii) an arrangement, contract, or plan for the distribution of a risk or risks among a group of
                  persons that includes the person seeking to distribute that person's risk.
                      (b) "Insurance" includes:
                      (i) risk distributing arrangements providing for compensation or replacement for damages
                  or loss through the provision of services or benefits in kind;
                      (ii) contracts of guaranty or suretyship entered into by the guarantor or surety as a business
                  and not as merely incidental to a business transaction; and
                      (iii) plans in which the risk does not rest upon the person who makes the arrangements, but
                  with a class of persons who have agreed to share it.
                      [(60)] (64) "Insurance adjuster" means a person who directs the investigation, negotiation,
                  or settlement of a claim under an insurance policy other than life insurance or an annuity, on behalf
                  of an insurer, policyholder, or a claimant under an insurance policy.
                      [(61)] (65) "Interinsurance exchange" is defined in Subsection [(100)] (110).
                      [(62)] (66) Except as provided in Subsection 31A-23-201.5 (1), "insurance agent" or "agent"
                  means a person who represents insurers in soliciting, negotiating, or placing insurance.
                      [(63)] (67) Except as provided in Subsection 31A-23-201.5 (1), "insurance broker" or
                  "broker" means a person who:

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                      (a) acts in procuring insurance on behalf of an applicant for insurance or an insured; and
                      (b) does not act on behalf of the insurer except by collecting premiums or performing other
                  ministerial acts.
                      [(64)] (68) "Insurance business" or "business of insurance" includes:
                      (a) providing health care insurance, as defined in Subsection [(51)] (55), by organizations
                  that are or should be licensed under this title;
                      (b) providing benefits to employees in the event of contingencies not within the control of
                  the employees, in which the employees are entitled to the benefits as a right, which benefits may be
                  provided either:
                      (i) by single employers or by multiple employer groups; or
                      (ii) through trusts, associations, or other entities;
                      (c) providing annuities, including those issued in return for gifts, except those provided by
                  persons specified in Subsections 31A-22-1305 (2) and (3);
                      (d) providing the characteristic services of motor clubs as outlined in Subsection [(77)] (82);
                      (e) providing other persons with insurance as defined in Subsection [(59)] (63);
                      (f) making as insurer, guarantor, or surety, or proposing to make as insurer, guarantor, or
                  surety, any contract or policy of title insurance;
                      (g) transacting or proposing to transact any phase of title insurance, including solicitation,
                  negotiation preliminary to execution, execution of a contract of title insurance, insuring, and
                  transacting matters subsequent to the execution of the contract and arising out of it, including
                  reinsurance; and
                      (h) doing, or proposing to do, any business in substance equivalent to Subsections [(64)]
                  (68)(a) through (g) in a manner designed to evade the provisions of this title.
                      [(65)] (69) Except as provided in Subsection 31A-23-201.5 (1), "insurance consultant" or
                  "consultant" means a person who:
                      (a) advises other persons about insurance needs and coverages;
                      (b) is compensated by the person advised on a basis not directly related to the insurance
                  placed; and

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                      (c) is not compensated directly or indirectly by an insurer, agent, or broker for advice given.
                      [(66)] (70) "Insurance holding company system" means a group of two or more affiliated
                  persons, at least one of whom is an insurer.
                      [(67)] (71) (a) "Insured" means a person to whom or for whose benefit an insurer makes a
                  promise in an insurance policy and includes:
                      (i) policyholders;
                      (ii) subscribers;
                      (iii) members; and
                      (iv) beneficiaries.
                      (b) The definition in Subsection [(67)] (71)(a):
                      (i) applies only to this title; and
                      (ii) does not define the meaning of this word as used in insurance policies or certificates.
                      [(68)] (72) (a) (i) "Insurer" means any person doing an insurance business as a principal
                  including:
                      (A) fraternal benefit societies;
                      (B) issuers of gift annuities other than those specified in Subsections 31A-22-1305 (2) and
                  (3);
                      (C) motor clubs;
                      (D) employee welfare plans; and
                      (E) any person purporting or intending to do an insurance business as a principal on that
                  person's own account.
                      (ii) "Insurer" does not include a governmental entity, as defined in Section 63-30-2 , to the
                  extent it is engaged in the activities described in Section 31A-12-107 .
                      (b) "Admitted insurer" is defined in Subsection [(115)] (126)(b).
                      (c) "Alien insurer" is defined in Subsection (5).
                      (d) "Authorized insurer" is defined in Subsection [(115)] (126)(b).
                      (e) "Domestic insurer" is defined in Subsection (36).
                      (f) "Foreign insurer" is defined in Subsection [(47)] (49).

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                      (g) "Nonadmitted insurer" is defined in Subsection [(115)] (126)(a).
                      (h) "Unauthorized insurer" is defined in Subsection [(115)] (126)(a).
                      (73) "Large employer," in connection with a health benefit plan, means an employer who,
                  with respect to a calendar year and to a plan year:
                      (a) employed an average of at least 51 eligible employees on each business day during the
                  preceding calendar year; and
                      (b) employs at least two employees on the first day of the plan year.
                      [(69)] (74) (a) Except [as provided] for a retainer contract or legal assistance described in
                  Section 31A-1-103 , "legal expense insurance" means insurance written to indemnify or pay for
                  specified legal expenses.
                      (b) "Legal expense insurance" includes arrangements that create reasonable expectations of
                  enforceable rights[, but it].
                      (c) "Legal expense insurance" does not include the provision of, or reimbursement for, legal
                  services incidental to other insurance coverages.
                      [(70)] (75) (a) "Liability insurance" means insurance against liability:
                      (i) for death, injury, or disability of any human being, or for damage to property, exclusive
                  of the coverages under:
                      (A) Subsection [(74)] (79) for medical malpractice insurance;
                      (B) Subsection [(92)] (102) for professional liability insurance; and
                      (C) Subsection [(118)] (129) for workers' compensation insurance;
                      (ii) for medical, hospital, surgical, and funeral benefits to persons other than the insured who
                  are injured, irrespective of legal liability of the insured, when issued with or supplemental to
                  insurance against legal liability for the death, injury, or disability of human beings, exclusive of the
                  coverages under:
                      (A) Subsection [(74)] (79) for medical malpractice insurance;
                      (B) Subsection [(92)] (102) for professional liability insurance; and
                      (C) Subsection [(118)] (129) for workers' compensation insurance;
                      (iii) for loss or damage to property resulting from accidents to or explosions of boilers, pipes,

- 24 -


                  pressure containers, machinery, or apparatus;
                      (iv) for loss or damage to any property caused by the breakage or leakage of sprinklers, water
                  pipes and containers, or by water entering through leaks or openings in buildings; or
                      (v) for other loss or damage properly the subject of insurance not within any other kind or
                  kinds of insurance as defined in this chapter, if such insurance is not contrary to law or public policy.
                      (b) "Liability insurance" includes:
                      (i) vehicle liability insurance as defined in Subsection [(116)] (127);
                      (ii) residential dwelling liability insurance as defined in Subsection [(102)] (112); and
                      (iii) making inspection of, and issuing certificates of inspection upon, elevators, boilers,
                  machinery, and apparatus of any kind when done in connection with insurance on them.
                      [(71)] (76) (a) "License" means the authorization issued by the insurance commissioner
                  under this title to engage in some activity that is part of or related to the insurance business. [It]
                      (b) "License" includes certificates of authority issued to insurers.
                      [(72)] (77) (a) "Life insurance" means insurance on human lives and insurances pertaining
                  to or connected with human life.
                      (b) The business of life insurance includes:
                      (i) granting death benefits;
                      (ii) granting annuity benefits;
                      (iii) granting endowment benefits;
                      (iv) granting additional benefits in the event of death by accident;
                      (v) granting additional benefits to safeguard the policy against lapse in the event of
                  disability; and
                      (vi) providing optional methods of settlement of proceeds.
                      [(73)] (78) (a) "Long-term care insurance" means an insurance policy or rider advertised,
                  marketed, offered, or designated to provide coverage:
                      (i) in a setting other than an acute care unit of a hospital;
                      (ii) for not less than 12 consecutive months for each covered person on the basis of:
                      (A) expenses incurred;

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                      (B) indemnity;
                      (C) prepayment; or
                      (D) another method;
                      (iii) for one or more necessary or medically necessary services that are:
                      (A) diagnostic;
                      (B) preventative;
                      (C) therapeutic;
                      (D) rehabilitative;
                      (E) maintenance; or
                      (F) personal care; and
                      (iv) that may be issued by:
                      (A) an insurer;
                      (B) a fraternal benefit society;
                      (C) (I) a nonprofit health hospital; and
                      (II) a medical service corporation;
                      (D) a prepaid health plan;
                      (E) a health maintenance organization; or
                      (F) an entity similar to the entities described in Subsections [(73)] (78)(a)(iv)(A) through (E)
                  to the extent that the entity is otherwise authorized to issue life or health care insurance.
                      (b) "Long-term care insurance" includes:
                      (i) any of the following that provide directly or supplement long-term care insurance:
                      (A) a group or individual annuity or rider; or
                      (B) a life insurance policy or rider;
                      (ii) a policy or rider that provides for payment of benefits based on:
                      (A) cognitive impairment; or
                      (B) functional capacity; or
                      (iii) a qualified long-term care insurance contract.
                      (c) "Long-term care insurance" does not include:

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                      (i) a policy that is offered primarily to provide basic Medicare supplement coverage;
                      (ii) basic hospital expense coverage;
                      (iii) basic medical/surgical expense coverage;
                      (iv) hospital confinement indemnity coverage;
                      (v) major medical expense coverage;
                      (vi) income replacement or related asset-protection coverage;
                      (vii) accident only coverage;
                      (viii) coverage for a specified:
                      (A) disease; or
                      (B) accident;
                      (ix) limited benefit health coverage; or
                      (x) a life insurance policy that accelerates the death benefit to provide the option of a lump
                  sum payment:
                      (A) if [neither the benefits nor eligibility is] the following are not conditioned on the receipt
                  of long-term care:
                      (I) benefits; or
                      (II) eligibility; and
                      (B) the coverage is for one or more the following qualifying events:
                      (I) terminal illness;
                      (II) medical conditions requiring extraordinary medical intervention; or
                      (III) permanent institutional confinement.
                      [(74)] (79) "Medical malpractice insurance" means insurance against legal liability incident
                  to the practice and provision of medical services other than the practice and provision of dental
                  services.
                      [(75)] (80) "Member" means a person having membership rights in an insurance corporation.
                      [(76)] (81) "Minimum capital" or "minimum required capital" means the capital that must
                  be constantly maintained by a stock insurance corporation as required by statute.
                      [(77)] (82) "Motor club" means a person:

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                      (a) licensed under:
                      (i) Chapter 5, Domestic Stock and Mutual Insurance Corporations;
                      (ii) Chapter 11, Motor Clubs; or
                      (iii) Chapter 14, Foreign Insurers; and
                      (b) that promises for an advance consideration to provide for a stated period of time:
                      (i) legal services under Subsection 31A-11-102 (1)(b);
                      (ii) bail services under Subsection 31A-11-102 (1)(c); or
                      (iii) trip reimbursement, towing services, emergency road services, stolen automobile
                  services, a combination of these services, or any other services given in Subsections
                  31A-11-102 (1)(b) through (f).
                      [(78)] (83) "Mutual" means mutual insurance corporation.
                      (84) "Network plan" means health care insurance:
                      (a) that is issued by an insurer; and
                      (b) under which the financing and delivery of medical care is provided, in whole or in part,
                  through a defined set of providers under contract with the insurer, including the financing and
                  delivery of items paid for as medical care.
                      [(79)] (85) "Nonparticipating" means a plan of insurance under which the insured is not
                  entitled to receive dividends representing shares of the surplus of the insurer.
                      [(80)] (86) "Ocean marine insurance" means insurance against loss of or damage to:
                      (a) ships or hulls of ships;
                      (b) goods, freight, cargoes, merchandise, effects, disbursements, profits, moneys, securities,
                  choses in action, evidences of debt, valuable papers, bottomry, respondentia interests, or other
                  cargoes in or awaiting transit over the oceans or inland waterways;
                      (c) earnings such as freight, passage money, commissions, or profits derived from
                  transporting goods or people upon or across the oceans or inland waterways; or
                      (d) a vessel owner or operator as a result of liability to employees, passengers, bailors,
                  owners of other vessels, owners of fixed objects, customs or other authorities, or other persons in
                  connection with maritime activity.

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                      [(81)] (87) "Order" means an order of the commissioner.
                      [(82)] (88) "Outline of coverage" means a summary that explains an accident and health
                  insurance policy.
                      [(83)] (89) "Participating" means a plan of insurance under which the insured is entitled to
                  receive dividends representing shares of the surplus of the insurer.
                      (90) "Participation," as used in a health benefit plan, means a requirement relating to the
                  minimum percentage of eligible employees that must be enrolled in relation to the total number of
                  eligible employees of an employer reduced by each eligible employee who voluntarily declines
                  coverage under the plan because the employee has other health care insurance coverage.
                      [(84)] (91) "Person" includes an individual, partnership, corporation, incorporated or
                  unincorporated association, joint stock company, trust, reciprocal, syndicate, or any similar entity
                  or combination of entities acting in concert.
                      (92) "Plan sponsor" is as defined in 29 U.S.C. Sec. 1002(16)(B).
                      (93) "Plan year" means:
                      (a) the year that is designated as the plan year in:
                      (i) the plan document of a group health plan; or
                      (ii) a summary plan description of a group health plan;
                      (b) if the plan document or summary plan description does not designate a plan year or there
                  is no plan document or summary plan description:
                      (i) the year used to determine deductibles or limits;
                      (ii) the policy year, if the plan does not impose deductibles or limits on a yearly basis; or
                      (iii) the employer's taxable year if:
                      (A) the plan does not impose deductibles or limits on a yearly basis; and
                      (B) (I) the plan is not insured; or
                      (II) the insurance policy is not renewed on an annual basis; or
                      (c) in a case not described in Subsection (93)(a) or (b), the calendar year.
                      [(85)] (94) (a) (i) "Policy" means any document, including attached endorsements and riders,
                  purporting to be an enforceable contract, which memorializes in writing some or all of the terms of

- 29 -


                  an insurance contract.
                      (ii) "Policy" includes a service contract issued by:
                      (A) a motor club under Chapter 11, Motor Clubs;
                      (B) a service contract provided under Chapter 6a, Service Contracts; and
                      (C) a corporation licensed under:
                      (I) Chapter 7, Nonprofit Health Service Insurance Corporations; or
                      (II) Chapter 8, Health Maintenance Organizations and Limited Health Plans.
                      (iii) "Policy" does not include:
                      (A) a certificate under a group insurance contract; or
                      (B) a document that does not purport to have legal effect.
                      (b) (i) "Group insurance policy" means a policy covering a group of persons that is issued
                  to a policyholder on behalf of the group, for the benefit of group members who are selected under
                  procedures defined in the policy or in agreements which are collateral to the policy. [This type of]
                      (ii) A group insurance policy may include members of the policyholder's family or
                  dependents.
                      (c) "Blanket insurance policy" means a group policy covering classes of persons without
                  individual underwriting, where the persons insured are determined by definition of the class with or
                  without designating the persons covered.
                      [(86)] (95) "Policyholder" means the person who controls a policy, binder, or oral contract
                  by ownership, premium payment, or otherwise.
                      [(87)] (96) "Policy illustration" means a presentation or depiction that includes
                  nonguaranteed elements of a policy of life insurance over a period of years.
                      [(88)] (97) "Policy summary" means a synopsis describing the elements of a life insurance
                  policy.
                      (98) "Preexisting condition," in connection with a health benefit plan, means:
                      (a) a condition for which medical advice, diagnosis, care, or treatment was recommended
                  or received during the six months immediately preceding the earlier of:
                      (i) the enrollment date; or

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                      (ii) the effective date of coverage; or
                      (b) for an individual insurance policy, a pregnancy existing on the effective date of coverage.
                      [(89)] (99) (a) "Premium" means the monetary consideration for an insurance policy, and
                  includes assessments, membership fees, required contributions, or monetary consideration, however
                  designated.
                      (b) Consideration paid to third party administrators for their services is not "premium,"
                  though amounts paid by third party administrators to insurers for insurance on the risks administered
                  by the third party administrators are "premium."
                      [(90)] (100) "Principal officers" of a corporation means the officers designated under
                  Subsection 31A-5-203 (3).
                      [(91)] (101) "Proceedings" includes actions and special statutory proceedings.
                      [(92)] (102) "Professional liability insurance" means insurance against legal liability incident
                  to the practice of a profession and provision of any professional services.
                      [(93)] (103) "Property insurance" means insurance against loss or damage to real or personal
                  property of every kind and any interest in that property, from all hazards or causes, and against loss
                  consequential upon the loss or damage including vehicle comprehensive and vehicle physical
                  damage coverages, but excluding inland marine insurance and ocean marine insurance as defined
                  under Subsections [(57)] (61) and [(80)] (86).
                      [(94)] (104) (a) "Public agency insurance mutual" means any entity formed by joint venture
                  or interlocal cooperation agreement by two or more political subdivisions or public agencies of the
                  state for the purpose of providing insurance coverage for the political subdivisions or public
                  agencies.
                      (b) Any public agency insurance mutual created under this title and Title 11, Chapter 13,
                  Interlocal Cooperation Act, is considered to be a governmental entity and political subdivision of the
                  state with all of the rights, privileges, and immunities of a governmental entity or political
                  subdivision of the state.
                      [(95)] (105) "Qualified long-term care insurance contract" or "federally tax qualified
                  long-term care insurance contract" means:

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                      (a) an individual or group insurance contract that meets the requirements of Section
                  7702B(b), Internal Revenue Code; or
                      (b) the portion of a life insurance contract that provides long-term care insurance:
                      (i) (A) by rider; or
                      (B) as a part of the contract; and
                      (ii) that satisfies the requirements of Section 7702B(b) and (e), Internal Revenue Code.
                      [(96)] (106) (a) "Rate" means:
                      (i) the cost of a given unit of insurance; or
                      (ii) for property-casualty insurance, that cost of insurance per exposure unit either expressed
                  as:
                      (A) a single number; or
                      (B) a pure premium rate, adjusted before any application of individual risk variations based
                  on loss or expense considerations to account for the treatment of:
                      (I) expenses;
                      (II) profit; and
                      (III) individual insurer variation in loss experience.
                      (b) "Rate" does not include a minimum premium.
                      [(97)] (107) (a) Except as provided in Subsection [(97)] (107)(b), "rate service organization"
                  means any person who assists insurers in rate making or filing by:
                      (i) collecting, compiling, and furnishing loss or expense statistics;
                      (ii) recommending, making, or filing rates or supplementary rate information; or
                      (iii) advising about rate questions, except as an attorney giving legal advice.
                      (b) "Rate service organization" does not mean:
                      (i) an employee of an insurer;
                      (ii) a single insurer or group of insurers under common control;
                      (iii) a joint underwriting group; or
                      (iv) a natural person serving as an actuarial or legal consultant.
                      [(98)] (108) "Rating manual" means any of the following used to determine initial and

- 32 -


                  renewal policy premiums:
                      (a) a manual of rates;
                      (b) classifications;
                      (c) rate-related underwriting rules; and
                      (d) rating formulas that describe steps, policies, and procedures for determining initial and
                  renewal policy premiums.
                      [(99)] (109) "Received by the department" means:
                      (a) except as provided in Subsection [(99)] (109)(b), the date delivered to and stamped
                  received by the department, whether delivered:
                      (i) in person;
                      (ii) by a delivery service; or
                      (iii) electronically; and
                      (b) if an item with a department imposed deadline is delivered to the department by a
                  delivery service, the delivery service's postmark date or pick-up date unless otherwise stated in:
                      (i) statute;
                      (ii) rule; or
                      (iii) a specific filing order.
                      [(100)] (110) "Reciprocal" or "interinsurance exchange" means any unincorporated
                  association of persons:
                      (a) operating through an attorney-in-fact common to all of them; and
                      (b) exchanging insurance contracts with one another that provide insurance coverage on each
                  other.
                      [(101)] (111) "Reinsurance" means an insurance transaction where an insurer, for
                  consideration, transfers any portion of the risk it has assumed to another insurer. In referring to
                  reinsurance transactions, this title sometimes refers to:
                      (a) the insurer transferring the risk as the "ceding insurer"; and
                      (b) the insurer assuming the risk as the:
                      (i) "assuming insurer"; or

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                      (ii) "assuming reinsurer."
                      [(102)] (112) "Residential dwelling liability insurance" means insurance against liability
                  resulting from or incident to the ownership, maintenance, or use of a residential dwelling that is a
                  detached single family residence or multifamily residence up to four units.
                      [(103)] (113) "Retrocession" means reinsurance with another insurer of a liability assumed
                  under a reinsurance contract. A reinsurer "retrocedes" when it reinsures with another insurer part
                  of a liability assumed under a reinsurance contract.
                      [(104)] (114) "Rider" means an endorsement to:
                      (a) an insurance policy; or
                      (b) an insurance certificate.
                      [(105)] (115) (a) "Security" means any:
                      (i) note;
                      (ii) stock;
                      (iii) bond;
                      (iv) debenture;
                      (v) evidence of indebtedness;
                      (vi) certificate of interest or participation in any profit-sharing agreement;
                      (vii) collateral-trust certificate;
                      (viii) preorganization certificate or subscription;
                      (ix) transferable share;
                      (x) investment contract;
                      (xi) voting trust certificate;
                      (xii) certificate of deposit for a security;
                      (xiii) certificate of interest of participation in an oil, gas, or mining title or lease or in
                  payments out of production under such a title or lease;
                      (xiv) commodity contract or commodity option;
                      (xv) any certificate of interest or participation in, temporary or interim certificate for, receipt
                  for, guarantee of, or warrant or right to subscribe to or purchase any of the items listed in Subsections

- 34 -


                  [(105)] (115)(a)(i) through (xiv); or
                      (xvi) any other interest or instrument commonly known as a security.
                      (b) "Security" does not include:
                      (i) any insurance or endowment policy or annuity contract under which an insurance
                  company promises to pay money in a specific lump sum or periodically for life or some other
                  specified period; or
                      (ii) a burial certificate or burial contract.
                      [(106)] (116) "Self-insurance" means any arrangement under which a person provides for
                  spreading its own risks by a systematic plan.
                      (a) Except as provided in this Subsection [(106)] (116), self-insurance does not include an
                  arrangement under which a number of persons spread their risks among themselves.
                      (b) Self-insurance does include an arrangement by which a governmental entity, as defined
                  in Section 63-30-2 , undertakes to indemnify its employees for liability arising out of the employees'
                  employment.
                      (c) Self-insurance does include an arrangement by which a person with a managed program
                  of self-insurance and risk management undertakes to indemnify its affiliates, subsidiaries, directors,
                  officers, or employees for liability or risk which is related to the relationship or employment.
                      (d) Self-insurance does not include any arrangement with independent contractors.
                      [(107)] (117) "Short-term care insurance" means any insurance policy or rider advertised,
                  marketed, offered, or designed to provide coverage that is similar to long-term care insurance but
                  that provides coverage for less than 12 consecutive months for each covered person.
                      (118) "Small employer," in connection with a health benefit plan, means an employer who,
                  with respect to a calendar year and to a plan year:
                      (a) employed an average of at least two employees but not more than 50 eligible employees
                  on each business day during the preceding calendar year; and
                      (b) employs at least two employees on the first day of the plan year.
                      [(108)] (119) (a) "Subsidiary" of a person means an affiliate controlled by that person either
                  directly or indirectly through one or more affiliates or intermediaries.

- 35 -


                      (b) "Wholly owned subsidiary" of a person is a subsidiary of which all of the voting shares
                  are owned by that person either alone or with its affiliates, except for the minimum number of shares
                  the law of the subsidiary's domicile requires to be owned by directors or others.
                      [(109)] (120) Subject to Subsection [(59)] (63)(b), "surety insurance" includes:
                      (a) a guarantee against loss or damage resulting from failure of principals to pay or perform
                  their obligations to a creditor or other obligee;
                      (b) bail bond insurance; and
                      (c) fidelity insurance.
                      [(110)] (121) (a) "Surplus" means the excess of assets over the sum of paid-in capital and
                  liabilities.
                      (b) (i) "Permanent surplus" means the surplus of a mutual insurer that has been designated
                  by the insurer as permanent.
                      (ii) Sections 31A-5-211 , 31A-7-201 , 31A-8-209 , 31A-9-209 , and 31A-14-209 require that
                  mutuals doing business in this state maintain specified minimum levels of permanent surplus.
                      (iii) Except for assessable mutuals, the minimum permanent surplus requirement is
                  essentially the same as the minimum required capital requirement that applies to stock insurers.
                      (c) "Excess surplus" means:
                      (i) for life or accident and health insurers, health organizations, and property and casualty
                  insurers as defined in Section 31A-17-601 , the lesser of:
                      (A) that amount of an insurer's or health organization's total adjusted capital, as defined in
                  Subsection [(113)] (124), that exceeds the product of:
                      (I) 2.5; and
                      (II) the sum of the insurer's or health organization's minimum capital or permanent surplus
                  required under Section 31A-5-211 , 31A-9-209 , or 31A-14-205 ; or
                      (B) that amount of an insurer's or health organization's total adjusted capital, as defined in
                  Subsection [(113)] (124), that exceeds the product of:
                      (I) 3.0; and
                      (II) the authorized control level RBC as defined in Subsection 31A-17-601 (8)(a); and

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                      (ii) for monoline mortgage guaranty insurers, financial guaranty insurers, and title insurers,
                  that amount of an insurer's paid-in-capital and surplus that exceeds the product of:
                      (A) 1.5; and
                      (B) the insurer's total adjusted capital required by Subsection 31A-17-609 (1).
                      [(111)] (122) "Third party administrator" or "administrator" means any person who collects
                  charges or premiums from, or who, for consideration, adjusts or settles claims of residents of the
                  state in connection with insurance coverage, annuities, or service insurance coverage, except:
                      (a) a union on behalf of its members;
                      (b) a person administering any:
                      (i) pension plan subject to the federal Employee Retirement Income Security Act of 1974;
                      (ii) governmental plan as defined in Section 414(d), Internal Revenue Code; or
                      (iii) nonelecting church plan as described in Section 410(d), Internal Revenue Code;
                      (c) an employer on behalf of the employer's employees or the employees of one or more of
                  the subsidiary or affiliated corporations of the employer;
                      (d) an insurer licensed under Chapter 5, 7, 8, 9, or 14, but only for a line of insurance for
                  which the insurer holds a license in this state; or
                      (e) a person licensed or exempt from licensing under Chapter 23 or 26 whose activities are
                  limited to those authorized under the license the person holds or for which the person is exempt.
                      [(112)] (123) "Title insurance" means the insuring, guaranteeing, or indemnifying of owners
                  of real or personal property or the holders of liens or encumbrances on that property, or others
                  interested in the property against loss or damage suffered by reason of liens or encumbrances upon,
                  defects in, or the unmarketability of the title to the property, or invalidity or unenforceability of any
                  liens or encumbrances on the property.
                      [(113)] (124) "Total adjusted capital" means the sum of an insurer's or health organization's
                  statutory capital and surplus as determined in accordance with:
                      (a) the statutory accounting applicable to the annual financial statements required to be filed
                  under Section 31A-4-113 ; and
                      (b) any other items provided by the RBC instructions, as RBC instructions is defined in

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                  Section 31A-17-601 .
                      [(114)] (125) (a) "Trustee" means "director" when referring to the board of directors of a
                  corporation.
                      (b) "Trustee," when used in reference to an employee welfare fund, means an individual,
                  firm, association, organization, joint stock company, or corporation, whether acting individually or
                  jointly and whether designated by that name or any other, that is charged with or has the overall
                  management of an employee welfare fund.
                      [(115)] (126) (a) "Unauthorized insurer," "unadmitted insurer," or "nonadmitted insurer"
                  means an insurer:
                      (i) not holding a valid certificate of authority to do an insurance business in this state; or
                      (ii) transacting business not authorized by a valid certificate.
                      (b) "Admitted insurer" or "authorized insurer" means an insurer:
                      (i) holding a valid certificate of authority to do an insurance business in this state; and
                      (ii) transacting business as authorized by a valid certificate.
                      [(116)] (127) "Vehicle liability insurance" means insurance against liability resulting from
                  or incident to ownership, maintenance, or use of any land vehicle or aircraft, exclusive of vehicle
                  comprehensive and vehicle physical damage coverages under Subsection [(93)] (103).
                      [(117)] (128) "Voting security" means a security with voting rights, and includes any security
                  convertible into a security with a voting right associated with it.
                      [(118)] (129) "Workers' compensation insurance" means:
                      (a) insurance for indemnification of employers against liability for compensation based on:
                      (i) compensable accidental injuries; and
                      (ii) occupational disease disability;
                      (b) employer's liability insurance incidental to [workers] workers' compensation insurance
                  and written in connection with it; and
                      (c) insurance assuring to the persons entitled to [workers] workers' compensation benefits
                  the compensation provided by law.
                      Section 3. Section 31A-2-204 is amended to read:

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                       31A-2-204. Conducting examinations.
                      (1) (a) For each examination under Section 31A-2-203 , the commissioner shall issue an
                  order:
                      (i) stating the scope of the examination; and
                      (ii) designating the examiner in charge.
                      (b) The commissioner need not give advance notice of an examination to an examinee.
                      (c) The examiner in charge shall give the examinee a copy of the order issued under this
                  Subsection (1).
                      (d) (i) The commissioner may alter the scope or nature of [the] an examination at any time
                  without advance notice to the examinee [but].
                      (ii) If the commissioner amends an order described in this Subsection (1), the commissioner
                  shall provide a copy of any amended order to the examinee.
                      (e) Statements in the commissioner's examination order concerning examination scope are
                  for the examiner's guidance only.
                      (f) Examining relevant matters not mentioned in [the] an order issued under this Subsection
                  (1) is not a violation of this title.
                      (2) The commissioner shall, whenever practicable, cooperate with the insurance regulators
                  of other states by conducting joint examinations of multistate insurers doing business in this state.
                      (3) An examiner authorized by the commissioner shall, when necessary to the purposes of
                  the examination, have access at all reasonable hours to the premises and to any books, records, files,
                  securities, documents, or property of:
                      (a) the examinee; and [to those of]
                      (b) any of the following if the premises, books, records, files, securities, documents, or
                  property relate to the affairs of the examinee:
                      (i) an officer [or] of the examinee;
                      (ii) any other person who:
                      (A) has executive authority over the examinee; or
                      (B) is in charge of any segment of the examinee's affairs[,]; or [of]

- 39 -


                      (iii) any affiliate of the examinee under Subsection 31A-2-203 (1)(b)[, if they relate to the
                  affairs of the examinee].
                      (4) (a) The officers, employees, and agents of the examinee and of persons under Subsection
                  31A-2-203 (1)(b) shall comply with every reasonable request of the examiners for assistance in any
                  matter relating to the examination. [No]
                      (b) A person may not obstruct or interfere with the examination except by legal process.
                      (5) If the commissioner finds the accounts or records to be inadequate for proper
                  examination of the condition and affairs of the examinee or improperly kept or posted, the
                  commissioner may employ experts to rewrite, post, or balance the accounts or records at the expense
                  of the examinee.
                      (6) (a) The examiner in charge of an examination shall make a report of the examination no
                  later than 60 days after the completion of the examination that shall include:
                      (i) the information and analysis ordered under Subsection (1)[, together with]; and
                      (ii) the examiner's recommendations.
                      (b) At the option of the examiner in charge, preparation of the report may include
                  conferences with the examinee or [its] representatives of the examinee.
                      (c) The report is confidential until [it] the report becomes a public document under
                  Subsection (7), [but] except the commissioner may use information from the report as a basis for
                  action under Chapter 27, Insurers Rehabilitation and Liquidation.
                      (7) (a) The commissioner shall serve a copy of the examination report described in
                  Subsection (6) upon the examinee.
                      (b) Within 20 days after service, the examinee shall [either]:
                      (i) accept the examination report as written; or
                      (ii) request agency action to modify the examination report.
                      (c) The report is considered accepted under this Subsection (7) if the examinee does not file
                  a request for agency action to modify the report within 20 days after service of the report.
                      (d) If the examination report is accepted[, it]:
                      (i) the examination report immediately becomes a public document; and

- 40 -


                      (ii) the commissioner shall distribute [it] the examination report to all jurisdictions in which
                  the examinee is authorized to do business.
                      (e) (i) Any adjudicative proceeding held as a result of the examinee's request for agency
                  action shall, upon the examinee's demand, be closed to the public, [but] except that the commissioner
                  need not exclude any participating examiner from this closed hearing.
                      (ii) Within 20 days after the hearing held under this Subsection (7)(e), the commissioner
                  shall:
                      (A) adopt the examination report with any necessary modifications; and
                      (B) serve a copy of the adopted report upon the examinee. [The]
                      (iii) Unless the examinee seeks judicial relief, the adopted examination report:
                      (A) shall become a public document ten days after service[,]; and
                      (B) may be distributed as described in this section[, unless the examinee seeks judicial
                  relief].
                      (8) The examinee shall promptly furnish copies of the adopted examination report described
                  in Subsection (7) to each member of [its] the examinee's board.
                      (9) [The] After an examination report becomes a public document under Subsection (7), the
                  commissioner may furnish, without cost or at a reasonable price set under Section 31A-3-103 , a copy
                  of the examination report to interested persons, including:
                      (a) a member of the board of the examinee; or
                      (b) one or more newspapers in this state[, after the report becomes a public document under
                  Subsection (7)].
                      (10) (a) In a proceeding by or against the examinee, or any officer or agent of the examinee,
                  the examination report as adopted by the commissioner is admissible as evidence of the facts stated
                  in the report.
                      (b) In any proceeding commenced under Chapter 27, Insurers Rehabilitation and Liquidation,
                  the examination report, whether adopted by the commissioner or not, is admissible as evidence of
                  the facts stated in [it] the examination report.
                      Section 4. Section 31A-2-215 is amended to read:

- 41 -


                       31A-2-215. Consumer education.
                      (1) In furtherance of the purposes in Section 31A-1-102 , the commissioner may educate
                  consumers about insurance and provide consumer assistance.
                      (2) Consumer education may include:
                      (a) outreach activities; and
                      (b) the production or collection and dissemination of educational materials.
                      (3) (a) Consumer assistance may include explaining:
                      (i) the terms of a policy;
                      (ii) a policy's complaint, [and] grievance, or adverse benefit determination procedure; and
                      (iii) the fundamentals of self-advocacy.
                      (b) Notwithstanding Subsection (3)(a), consumer assistance may not include testifying or
                  representing a consumer in any grievance or adverse benefit determination, arbitration, judicial, or
                  related proceeding, unless the proceeding is in connection with an enforcement action brought under
                  Section 31A-2-308 .
                      (4) The commissioner may adopt rules necessary to implement the requirements of this
                  section.
                      Section 5. Section 31A-2-216 is amended to read:
                       31A-2-216. Office of Consumer Health Assistance.
                      (1) The commissioner shall establish:
                      (a) an Office of Consumer Health Assistance before July 1, 1999; and
                      (b) a committee to advise the commissioner on consumer assistance rendered under this
                  section.
                      (2) The office shall:
                      (a) be a resource for health care consumers concerning health care coverage or the need for
                  such coverage;
                      (b) help health care consumers understand:
                      (i) contractual rights and responsibilities;
                      (ii) statutory protections; and

- 42 -


                      (iii) available remedies;
                      (c) educate health care consumers:
                      (i) by producing or collecting and disseminating educational materials to consumers, health
                  insurers, and health benefit plans; and
                      (ii) through outreach and other educational activities;
                      (d) for health care consumers that have difficulty in accessing their health insurance policies
                  because of language, disability, age, or ethnicity, provide services, directly or through referral, such
                  as:
                      (i) information and referral; and
                      (ii) [grievance] adverse benefit determination process initiation;
                      (e) analyze and monitor federal and state consumer health-related statutes, rules, and
                  regulations; and
                      (f) summarize information gathered under this section and make the summaries available
                  to the public, government agencies, and the Legislature.
                      (3) The office may:
                      (a) obtain data from health care consumers as necessary to further the office's duties under
                  this section;
                      (b) investigate complaints and attempt to resolve complaints at the lowest possible level; and
                      (c) assist, but not testify or represent, a consumer in [a grievance] an adverse benefit
                  determination, arbitration, judicial, or related proceeding, unless the proceeding is in connection with
                  an enforcement action brought under Section 31A-2-308 .
                      (4) The commissioner may adopt rules necessary to implement the requirements of this
                  section.
                      Section 6. Section 31A-3-103 is amended to read:
                       31A-3-103. Fees.
                      (1) [The fees] For purposes of this section:
                      (a) "Regulatory fee" is as defined in Section 63-38-3.2.
                      (b) "Services" means functions that are reasonable and necessary to enable the commissioner

- 43 -


                  to perform the duties imposed by this title including:
                      (i) issuing and renewing licenses and certificates of authority;
                      (ii) filing policy forms;
                      (iii) reporting agent appointments and terminations; and
                      (iv) filing annual statements.
                      (c) Fees related to the renewal of licenses may be imposed no more frequently than once
                  each year.
                      (2) (a) A regulatory fee charged by the department shall be set in accordance with Section
                  63-38-3.2 .
                      (b) Fees shall be set and collected for services provided by the department.
                      (3) (a) For a fee authorized by this chapter that is not a regulatory fee, the department may
                  adopt a schedule of fees provided that each fee in the schedule of fees is:
                      (i) reasonable and fair; and
                      (ii) submitted to the Legislature as part of the department's annual appropriations request.
                      (b) If a fee schedule described in Subsection (3)(a) is submitted as part of the department's
                  annual appropriations request, the Legislature may, in a manner substantially similar to Section
                  63-38-3.2 :
                      (i) approve any fee in the fee schedule;
                      (ii) (A) increase or decrease any fee in the fee schedule; and
                      (B) approve any fee in the fee schedule as changed by the Legislature; or
                      (iii) reject any fee in the fee schedule.
                      (c) (i) Except as provided in Subsection (3)(c)(ii), a fee approved by the Legislature pursuant
                  to this Subsection (3) shall be deposited into the General Fund for appropriation by the Legislature.
                      (ii) Beginning on July 1, 2002 and ending on June 30, 2006, a fee approved by the
                  Legislature pursuant to this Subsection (3) that relates to the use of electronic or other similar
                  technology to provide the services of the department shall be deposited into the General Fund as a
                  dedicated credit to be used by the department to provide services through use of electronic commerce
                  or other similar technology.

- 44 -


                      [(2)] (4) The commissioner shall separately publish the schedule of fees approved by the
                  Legislature and make it available upon request for $1 per copy. This fee schedule shall also be
                  included in any compilation of rules promulgated by the commissioner.
                      [(3) (a) Fees shall be set and collected for services provided by the department. "Services"
                  include issuing and renewing licenses and certificates of authority, filing policy forms, reporting
                  agent appointments and terminations, filing annual statements, and other functions that are
                  reasonable and necessary to enable the commissioner to perform the duties imposed by the Insurance
                  Code.]
                      [(b) Fees related to the renewal of licenses may be imposed no more frequently than once
                  each year.]
                      [(4)] (5) The commissioner shall, by rule, establish the deadlines for payment of [each of the
                  various fees] any fee established by the department in accordance with this section.
                      Section 7. Section 31A-3-104 is enacted to read:
                      31A-3-104. Electronic commerce dedicated fees.
                      (1) The department may charge a fee for requests for information:
                      (a) that is obtained from an electronic database of the department; or
                      (b) derived from data that is generated by electronic means.
                      (2) In addition to any fee authorized in this title, the department shall impose a supplemental
                  fee on the issuance or renewal of any of the following issued by the department:
                      (a) a license;
                      (b) a registration; or
                      (c) a certificate of authority.
                      (3) A fee imposed under this section shall be:
                      (a) established in accordance with Subsection 31A-3-103 (3); and
                      (b) deposited into the General Fund as a dedicated credit in accordance with Subsection
                  31A-3-103 (3).
                      (4) In accordance with Section 63-55-231 , this section is repealed on July 1, 2006.
                      Section 8. Section 31A-3-401 is amended to read:

- 45 -


                       31A-3-401. Retaliation against insurers of foreign state or country.
                      (1) Except as provided in Section 31A-3-402 , when, under the laws of another state or
                  foreign country any taxes, licenses, other fees, deposit requirements, or other material obligations,
                  prohibitions, or restrictions are or would be imposed on Utah insurers, or on the agents or
                  representatives of Utah insurers, [which] that are in excess of the taxes, licenses, other fees, deposit
                  requirements, or other obligations, prohibitions, or restrictions directly imposed upon similar
                  insurers, or upon the agents or representatives of those insurers, of that other state or country under
                  the statutes of this state, as long as the laws of that other state or country continue in force or are so
                  applied, the same taxes, licenses, other fees, deposit requirements, or other material obligations,
                  prohibitions, or restrictions of any kind shall be imposed, collected, and enforced by the State Tax
                  Commission, with the assistance of the commissioner, upon the insurers, or upon the agents or
                  representatives of those insurers, of that other state or country doing business or seeking to do
                  business in this state.
                      (2) Any tax, license, or other obligation imposed by any city, county, or other political
                  subdivision or agency of another state or country on Utah insurers, their agents, or representatives
                  is considered as being imposed by that state or country within the meaning of this section.
                      (3) The commissioner may by rule waive the retaliatory requirements for [an individual or
                  agency licensee] a person that is:
                      (a) doing business in this state; or
                      (b) seeking to do business in this state.
                      Section 9. Section 31A-4-107 is amended to read:
                       31A-4-107. Other business.
                      (1) As used in this section, "business reasonably incidental to insurance business" includes:
                      (a) in the case of an insurer authorized to transact title insurance:
                      (i) preparing or selling abstracts of title and related documents; and
                      (ii) providing escrow[, settlement, or closing] services in connection with real estate
                  transactions, or other services incidental to the sale or transfer of insurance related to the sale or
                  transfer of real property, except the sale of other kinds of insurance related to the sale or transfer of

- 46 -


                  real property; and
                      (b) the business that could be done through subsidiaries authorized under Subsection
                  31A-5-218 (3) or, in the case of a nondomestic insurer, through corporations that would be authorized
                  under Subsection 31A-5-218 (3) if the insurer were a domestic insurer.
                      (2) No domestic insurer may engage, directly or indirectly, in any business other than
                  insurance and business reasonably incidental to its insurance business, except as specifically
                  authorized by Section 31A-5-218 or other law in this state.
                      (3) No nondomestic insurer may engage in this state in any business forbidden to a domestic
                  insurer, nor may the insurer engage in that type of business elsewhere if the commissioner orders the
                  nondomestic insurer to cease doing that type of business upon finding that doing that business is not
                  consistent with the interests of its insureds, creditors, or the public in this state.
                      Section 10. Section 31A-4-115 is amended to read:
                       31A-4-115. Plan of orderly withdrawal.
                      (1) (a) When an insurer intends to withdraw from writing a line of insurance in this state or
                  to reduce its total annual premium volume by 75% or more, [it] the insurer shall file with the
                  commissioner a plan of orderly withdrawal.
                      (b) For purposes of this section, a discontinuance of a health benefit plan pursuant to one of
                  the following provisions is a withdrawal from a line of insurance:
                      (i) Subsection 31A-30-107 (3)(e); or
                      (ii) Subsection 31A-30-107.1 (3)(e).
                      (2) An insurer's plan of orderly withdrawal shall:
                      (a) indicate the date the insurer intends to begin and complete its withdrawal plan; and
                      (b) include provisions for:
                      (i) meeting the insurer's contractual obligations;
                      (ii) providing services to its Utah policyholders and claimants; [and]
                      (iii) meeting any applicable statutory obligations[.]; and
                      (iv) (A) the payment of a withdrawal fee of $50,000 to the Utah Comprehensive Health
                  Insurance Pool if:

- 47 -


                      (I) the insurer is an accident and health insurer; and
                      (II) the insurer's line of business is not assumed or placed with another insurer approved by
                  the commissioner; or
                      (B) the payment of a withdrawal fee of $50,000 to the department if:
                      (I) the insurer is not an accident and health insurer; and
                      (II) the insurer's line of business is not assumed or placed with another insurer approved by
                  the commissioner.
                      (3) The commissioner shall approve a plan of orderly withdrawal if [it] the plan adequately
                  demonstrates that the insurer will:
                      (a) protect the interests of the people of the state;
                      (b) meet [its] the insurer's contractual obligations;
                      (c) provide service to [its] the insurer's Utah policyholders and claimants; and
                      (d) meet any applicable statutory obligations.
                      (4) Section 31A-2-302 governs the commissioner's approval or disapproval of a plan for
                  orderly withdrawal.
                      (5) The commissioner may require an insurer to increase the deposit maintained in
                  accordance with Section 31A-4-105 or Section 31A-4-105.5 and place the deposit in trust in the
                  name of the commissioner upon finding, after an adjudicative proceeding that:
                      (a) there is reasonable cause to conclude that the interests of the people of the state are best
                  served by such action; and
                      (b) the insurer:
                      (i) has filed a plan of orderly withdrawal; or
                      (ii) intends to:
                      (A) withdraw from writing a line of insurance in this state; or
                      (B) reduce [its] the insurer's total annual premium volume by 75% or more.
                      (6) An insurer [that] is subject to the civil penalties under Section 31A-2-308 , if the insurer:
                      (a) withdraws from writing insurance in this state; or [that]
                      (b) reduces its total annual premium volume by 75% or more in any year without having

- 48 -


                  submitted a plan or receiving the commissioner's approval [is subject to the civil penalties under
                  Section 31A-2-308 ].
                      (7) An insurer that withdraws from writing all lines of insurance in this state may not resume
                  writing insurance in this state for five years [without] unless:
                      (a) [the approval of] the commissioner finds that the prohibition should be waived because
                  the waiver is:
                      (i) in the public interest to promote competition; or
                      (ii) to resolve inequity in the marketplace; and
                      (b) [complying] the insurer complies with Subsection 31A-30-108 (5), if applicable.
                      (8) The commissioner shall adopt rules necessary to implement [the provisions of] this
                  section.
                      Section 11. Section 31A-4-116 is amended to read:
                       31A-4-116. Adverse benefit determination procedures.
                      (1) If an insurer has established a complaint resolution body or grievance appeal board, the
                  body or board shall include at least one consumer representative.
                      (2) [Grievance] Adverse benefit determination procedures for health insurance policies and
                  health maintenance organization contracts shall be established in accordance Section 31A-22-629 .
                      Section 12. Section 31A-5-405 is amended to read:
                       31A-5-405. Meetings of mutuals and mutual policyholders' and members' voting
                  rights.
                      (1) (a) Subject to this section, Sections 16-6a-701 , 16-6a-702 , 16-6a-704 , and 16-6a-714
                  apply to the meetings of members, the notice, and the voting in mutuals.
                      (b) Subject to this section and Section 31A-5-409 , Section 16-6a-711 applies to the voting
                  of members of mutuals.
                      (2) (a) Policyholders or voting members in all mutuals have the right to vote on:
                      (i) conversion[,];
                      (ii) voluntary dissolution[,];
                      (iii) amendment of the articles[,]; and

- 49 -


                      (iv) the election of directors except public directors appointed [under Subsection] in
                  accordance with Subsections 31A-5-409 (1) and (2).
                      (b) The mutual may adopt reasonable provisions in its bylaws to determine:
                      (i) which individual among joint policyholders may exercise a voting right; and
                      (ii) how to deal with cases where the same individual is one of several joint policyholders
                  in various policies.
                      [(b)] (c) The articles of any mutual may give the policyholders or voting members additional
                  voting rights. These articles may require a greater percentage of affirmative votes to approve an
                  action than the statutes require.
                      (3) (a) The articles or bylaws shall contain rules governing voting procedures and voting
                  eligibility consistent with Subsection (1). [No]
                      (b) An amendment to [these rules] a rule described in this Subsection (3) is not effective
                  until at least 30 days after [it] the rule has been filed with the commissioner.
                      (4) (a) The articles or bylaws may provide for regular or special meetings of the
                  policyholders or voting members, and, if meetings are not provided for, then mail elections shall be
                  provided for in lieu of elections at meetings.
                      (b) Notice of the time and place of regular meetings or elections shall be given to each
                  policyholder or voting member in a reasonable manner as the commissioner approves or requires.
                  Changes may be made by written notice mailed, properly addressed, and stamped, to the last-known
                  address of all policyholders or voting members.
                      (5) (a) The articles may provide that representatives or delegates selected by the
                  policyholders or voting members shall be from specific geographical districts or defined classes of
                  policyholders or voting members, as determined on a reasonable basis.
                      (b) After the representative assembly has been selected by the policyholder or voting
                  members, the assembly or the respective classes of policyholders or voting members may choose
                  replacements for members unable to complete their terms, if the articles provide for their
                  replacement.
                      (c) The vote of a person holding a valid proxy is treated as the vote of the policyholders or

- 50 -


                  voting members who gave the proxy.
                      Section 13. Section 31A-5-409 is amended to read:
                       31A-5-409. Selection and removal of directors and officers of mutuals.
                      (1) The articles or bylaws of a mutual [may provide that any] shall state:
                      (a) the number of directors of the mutual including the directors that are:
                      (i) appointed as public directors under this Subsection (1) and Subsection (2); or
                      (ii) elected under Subsection (3);
                      (b) the number of [the] directors [are] of the mutual that may be appointed as public                   directors
                  [chosen under a plan proposed by the corporation and approved by the commissioner.]; and
                      (c) the plan that specifies the manner in which:
                      (i) a public director is to be appointed; and
                      (ii) a director who is not a public director is to be elected.
                      (2) (a) The plan for the appointment of public directors specified in Subsection (1) shall
                  assure true public representation on the board. [The persons nominated as directors]
                      (b) A person appointed as a public director shall have insurance business or [general] other
                  business or professional experience that qualifies [them] that person to serve responsibly and
                  impartially as a director.
                      (c) A public director may be an uncompensated member of the board of directors.
                      (d) Notwithstanding Subsection (2)(c), a public director shall meet the qualifications of
                  Subsection (2)(b).
                      [(2)] (3) (a) [Directors not chosen under Subsection (1) are] A director who is not a public
                  director shall be elected by:
                      (i) the policyholders; or
                      (ii) voting members.
                      (b) If the directors who are not public directors are divided into classes, one class shall be
                  elected:
                      (i) at least every four years[,]; and
                      (ii) for a term not exceeding six years.

- 51 -


                      [(3)] (4) A director may be removed from office for cause by an affirmative vote of a
                  majority of the full board at a meeting of the board called for that purpose.
                      [(4)] (5) Subject to Subsections (1)[, (2), and (3)] through (4), Section 16-6a-810 applies to
                  vacancies on the governing board.
                      Section 14. Section 31A-5-410 is amended to read:
                       31A-5-410. Supervision of management changes.
                      (1) (a) [The] Immediately after the selection of a person as a director or principal officer, the
                  insurer shall report to the commissioner:
                      (i) the name of [a] the person selected as a director or principal officer of a corporation[,
                  together with]; and
                      (ii) pertinent biographical and other data that the commissioner requires by rule[, shall be
                  reported to the commissioner immediately after the selection].
                      (b) For five years after the initial issuance of a certificate of authority to a corporation, the
                  commissioner may, within 30 days after receipt of a report under Subsection (1)(a), disapprove any
                  person selected who fails to satisfy the commissioner that [he] the person:
                      (i) is trustworthy; and
                      (ii) has the competence and experience necessary to discharge [his] that person's
                  responsibilities.
                      (2) (a) Whenever a director or principal officer of a corporation is removed under [Section
                  16-10a-808 or 16-10a-832 , Subsections 16-6a-820 (4) and 31A-5-409 (3),] a provision listed in
                  Subsection (2)(b), the insurer shall immediately report to the commissioner:
                      (i) the removal [shall be reported to the commissioner immediately, together with]; and
                      (ii) a statement of the reasons for the removal.
                      (b) Subsection (2)(a) applies to a removal under:
                      (i) Subsection 16-6a-820 (4);
                      (ii) Section 16-10a-808 ;
                      (iii) Section 16-10a-832 ; and
                      (iv) Subsection 31A-5-409 (4).

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                      (3) [If] The commissioner may order the removal of a director or officer if the commissioner
                  finds, after a hearing, that:
                      (a) a director or officer:
                      (i) is incompetent [or];
                      (ii) untrustworthy[, or];
                      (iii) is not qualified under Section 31A-5-409 ; or
                      (iv) has wilfully violated:
                      (A) this [code,] title;
                      (B) a rule adopted under Subsection 31A-2-201 (3)[,]; or
                      (C) an order issued under Subsection 31A-2-201 (4)[,]; and [that the incompetence,
                  untrustworthiness, or the violation]
                      (b) the circumstances described in Subsection (3)(a) endangers the interests of:
                      (i) insureds; or
                      (ii) the public[, he may order the removal of the director or officer].
                      Section 15. Section 31A-8-101 is amended to read:
                       31A-8-101. Definitions.
                      For purposes of this chapter:
                      (1) "Basic health care services" means:
                      (a) emergency care;
                      (b) inpatient hospital and physician care;
                      (c) outpatient medical services; and
                      (d) out-of-area coverage.
                      (2) "Director of health" means:
                      (a) the executive director of the Department of Health; or [his]
                      (b) the authorized representative of the executive director of the Department of Health.
                      (3) "Enrollee" means an individual:
                      (a) who has entered into a contract with an organization for health care; or
                      (b) in whose behalf an arrangement for health care has been made.

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                      (4) "Health care" is as defined in Section 31A-1-301 .
                      (5) "Health maintenance organization" means any person:
                      (a) other than:
                      (i) an insurer licensed under Chapter 7, Nonprofit Health Service Insurance Corporations;
                  or
                      (ii) an individual who contracts to render professional or personal services that the individual
                  directly performs; and
                      (b) that:
                      (i) furnishes at a minimum, either directly or through arrangements with others, basic health
                  care services to an enrollee in return for prepaid periodic payments agreed to in amount prior to the
                  time during which the health care may be furnished; and
                      (ii) is obligated to the enrollee to arrange for or to directly provide available and accessible
                  health care.
                      (6) (a) "Limited health plan" means, except as limited under Subsection (6)(b), any person
                  who furnishes, either directly or through arrangements with others, services:
                      (i) of:
                      (A) dentists;
                      (B) optometrists;
                      (C) physical therapists;
                      (D) podiatrists;
                      (E) psychologists;
                      (F) physicians;
                      (G) chiropractic physicians;
                      (H) naturopathic physicians;
                      (I) osteopathic physicians;
                      (J) social workers;
                      (K) family counselors;
                      (L) other health care providers; or

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                      (M) reasonable combinations of the services described in this Subsection [(1)] (6)(a)(i);
                      (ii) to an enrollee;
                      (iii) in return for prepaid periodic payments agreed to in amount prior to the time during
                  which the services may be furnished; and
                      (iv) for which the person is obligated to the enrollee to arrange for or directly provide the
                  available and accessible [the] services described in this Subsection (6)(a).
                      (b) "Limited health plan" does not include:
                      (i) a health maintenance organization;
                      (ii) an insurer licensed under Chapter 7, Nonprofit Health Service Insurance Corporations;
                  or
                      (iii) an individual who contracts to render professional or personal services that [he] the
                  individual performs [himself].
                      (7) (a) "Nonprofit organization" or "nonprofit corporation" means an organization no part
                  of the income of which is distributable to its members, trustees, or officers, or a nonprofit
                  cooperative association, except in a manner allowed under Section 31A-8-406 .
                      (b) "Nonprofit health maintenance organization" and "nonprofit limited health plan" are used
                  when referring specifically to one of the types of organizations with "nonprofit" status.
                      (8) "Organization" means a health maintenance organization and limited health plan, unless
                  used in the context of:
                      (a) "organization permit," [in] which [case see] is described in Sections 31A-8-204 and
                  31A-8-206 ; or
                      (b) "organization expenses," [in] which [case see] is described in Section 31A-8-208 .
                      (9) "Participating provider" means a provider as defined in Subsection (10) who, under a
                  contract with the health maintenance organization, [has agreed] agrees to provide health care services
                  to enrollees with an expectation of receiving payment, directly or indirectly, from the health
                  maintenance organization, other than copayment.
                      (10) "Provider" means any person who:
                      (a) furnishes health care directly to the enrollee; and [who]

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                      (b) is licensed or otherwise authorized to furnish [this] the health care in this state.
                      (11) "Uncovered expenditures" means the costs of health care services that are covered by
                  an organization for which an enrollee is liable in the event of the organization's insolvency.
                      (12) "Unusual or infrequently used health services" means those health services [which] that
                  are projected to involve fewer than 10% of the organization's enrollees' encounters with providers,
                  measured on an annual basis over the organization's entire enrollment.
                      Section 16. Section 31A-8-103 is amended to read:
                       31A-8-103. Applicability to other provisions of law.
                      (1) (a) Except for exemptions specifically granted under this title, an organization is subject
                  to regulation under all of the provisions of this title.
                      (b) Notwithstanding any provision of this title, an organization licensed under this chapter:
                      (i) is wholly exempt from [Chapters]:
                      (A) Chapter 7,[ 9, 10, 11, 12, 13, 19, and 28] Nonprofit Health Service Insurance
                  Corporations;
                      (B) Chapter 9, Insurance Fraternals;
                      (C) Chapter 10, Annuities;
                      (D) Chapter 11, Motor Clubs;
                      (E) Chapter 12, State Risk Management Fund;
                      (F) Chapter 13, Employee Welfare Funds and Plans;
                      (G) Chapter 19a, Utah Rate Regulation Act; and
                      (H) Chapter 28, Guaranty Associations; and
                      (ii) not subject to:
                      [(i)] (A) Chapter 3, Department Funding, Fees, and Taxes, except for Part I;
                      [(ii)] (B) Section 31A-4-107 ;
                      [(iii)] (C) Chapter 5, Domestic Stock and Mutual Insurance Corporations, except for
                  provisions specifically made applicable by this chapter;
                      [(iv)] (D) Chapter 14, Foreign Insurers, except for provisions specifically made applicable
                  by this chapter;

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                      [(v)] (E) Chapter 17, Determination of Financial Condition, except:
                      [(A) Part] (I) Parts II and VI; or
                      [(B)] (II) as made applicable by the commissioner by rule consistent with this chapter;
                      [(vi)] (F) Chapter 18, Investments, except as made applicable by the commissioner by rule
                  consistent with this chapter; and
                      [(vii)] (G) Chapter 22, Contracts in Specific Lines, except for Parts VI, VII, and XII.
                      (2) The commissioner may by rule waive other specific provisions of this title that the
                  commissioner considers inapplicable to health maintenance organizations or limited health plans,
                  upon a finding that the waiver will not endanger the interests of:
                      (a) enrollees;
                      (b) investors; or
                      (c) the public.
                      (3) Title 16, Chapter 6a, Utah Revised Nonprofit Corporation Act, and Title 16, Chapter 10a,
                  Utah Revised Business Corporation Act, do not apply to an organization except as specifically made
                  applicable by:
                      (a) this chapter;
                      (b) a provision referenced under this chapter; or
                      (c) a rule adopted by the commissioner to deal with corporate law issues of health
                  maintenance organizations that are not settled under this chapter.
                      (4) (a) Whenever in this chapter, Chapter 5, or Chapter 14 is made applicable to an
                  organization, the application is:
                      (i) of those provisions that apply to a mutual corporation if the organization is nonprofit; and
                      (ii) of those that apply to a stock corporation if the organization is for profit.
                      (b) When Chapter 5 or 14 is made applicable to an organization under this chapter, "mutual"
                  means nonprofit organization.
                      (5) Solicitation of enrollees by an organization is not a violation of any provision of law
                  relating to solicitation or advertising by health professionals if that solicitation is made in accordance
                  with:

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                      (a) this chapter; and
                      (b) Chapter 23, Insurance Marketing - Licensing Agents, Brokers, Consultants, and
                  Reinsurance Intermediaries.
                      (6) [Nothing in this title prohibits] This title does not prohibit any health maintenance
                  organization from meeting the requirements of any federal law that enables the health maintenance
                  organization to:
                      (a) receive federal funds; or
                      (b) obtain or maintain federal qualification status.
                      (7) Except as provided in Section 31A-8-501 , an organization is exempt from statutes in this
                  title or department rules that restrict or limit [its] the organization's freedom of choice in contracting
                  with or selecting health care providers, including Section 31A-22-618 .
                      (8) An organization is exempt from the assessment or payment of premium taxes imposed
                  by Sections 59-9-101 through 59-9-104 .
                      Section 17. Section 31A-8-205 is amended to read:
                       31A-8-205. Organization permit and certificate of incorporation.
                      (1) Section 31A-5-204 applies to the formation of organizations, except that "Section
                  31A-5-211 " in Subsection 31A-5-204 (5) shall be read "Section 31A-8-209 ."
                      (2) In addition to the requirements of Section 31A-5-204 , the application for a permit shall
                  include a description of the initial locations of facilities where health care will be available to
                  enrollees, the hours during which various services will be provided, the types of health care
                  personnel to be used at each location and the approximate number of each personnel type to be
                  available at each location, the methods to be used to monitor the quality of health care furnished, the
                  method of resolving [grievances] adverse benefit determinations initiated by enrollees or providers,
                  the method used to give enrollees an opportunity to participate in matters of policy, the medical
                  records system, and the method for documentation of utilization of health care by persons insured.
                      Section 18. Section 31A-8-209 is amended to read:
                       31A-8-209. Minimum capital or minimum permanent surplus.
                      (1) (a) A health maintenance organization being organized or operating under this chapter

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                  shall have and maintain a minimum capital or minimum permanent surplus of $100,000.
                      (b) Each health maintenance organization authorized to do business in this state shall have
                  and maintain qualified assets as defined in Subsection 31A-17-201 (2) in an amount not less than the
                  total of:
                      (i) the health maintenance organization's liabilities;
                      (ii) the health maintenance organization's minimum capital or minimum permanent surplus
                  required by Subsection (1)(a); and
                      (iii) the greater of:
                      (A) the company action level RBC as defined in Subsection 31A-17-601 (8)(b); or
                      (B) $1,300,000.
                      (2) (a) The minimum required capital or minimum permanent surplus for a limited health
                  plan may not:
                      (i) [is at least] be less than $10,000; [and] or
                      (ii) [may not] exceed $100,000.
                      (b) The initial minimum required capital or minimum permanent surplus for a limited health
                  plan required by Subsection (2)(a) shall be set by the commissioner, after:
                      (i) a hearing; and
                      (ii) consideration of:
                      (A) the services to be provided by the limited health plan;
                      (B) the size and geographical distribution of the population the limited health plan
                  anticipates serving;
                      (C) the nature of the limited health plan's arrangements with providers; and
                      (D) the arrangements, agreements, and relationships of the limited health plan in place or
                  reasonably anticipated with respect to:
                      (I) insolvency insurance;
                      (II) reinsurance;
                      (III) lenders subordinating to the interests of enrollees and trade creditors;
                      (IV) personal and corporate financial guarantees;

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                      (V) provider withholds and assessments;
                      (VI) surety bonds;
                      (VII) hold harmless agreements in provider contracts; and
                      (VIII) other arrangements, agreements, and relationships impacting the security of enrollees.
                      (c) Upon a material change in the scope or nature of a limited health plan's operations, the
                  commissioner may, after a hearing, alter the limited health plan's minimum required capital or
                  minimum permanent surplus.
                      [(3) Before beginning operations, a health maintenance organization licensed under this
                  chapter shall have total adjusted capital in excess of the company action level RBC as defined in
                  Subsection 31A-17-601 (8)(b).]
                      [(4) Each health maintenance organization authorized to do business in this state shall
                  maintain assets in an amount equal to the total of the health maintenance organization's:]
                      [(a) liabilities;]
                      [(b) minimum capital or minimum permanent surplus required by Subsection (1) or (2); and]
                      [(c) the company action level RBC as defined in Subsection 31A-17-601 (8)(b).]
                      [(5) As a prerequisite to receiving an original certificate of authority to do business in this
                  state, a health maintenance organization shall have initial surplus at least $400,000 in excess of the
                  capital and surplus required by Subsection (4).]
                      [(6)] (3) The commissioner may allow the minimum capital or permanent surplus account
                  of an organization to be designated by some other name.
                      [(7)] (4) A pattern of persistent deviation from the accounting and investment standards
                  under this section may be grounds for the commissioner to find that the one or more persons with
                  authority to make the organization's accounting or investment decisions are incompetent for purposes
                  of Subsection 31A-5-410 (3).
                      Section 19. Section 31A-8-211 is amended to read:
                       31A-8-211. Deposit.
                      (1) Except as provided in Subsection (2), each health maintenance organization authorized
                  in this state shall maintain a deposit with the commissioner under Section 31A-2-206 in an amount

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                  equal to the sum of:
                      (a) [the health maintenance organization's minimum capital or minimum permanent surplus
                  requirement of Subsection 31A-8-209 (1) or (2)] $100,000; and
                      (b) 50% of the greater of:
                      (i) $900,000;
                      (ii) 2% of the annual premium revenues as reported on the most recent annual financial
                  statement filed with the commissioner; or
                      (iii) an amount equal to the sum of three months uncovered health care expenditures as
                  reported on the most recent financial statement filed with the commissioner.
                      (2) (a) After a hearing the commissioner may exempt a health maintenance organization
                  from the deposit requirement of Subsection (1) if:
                      (i) the commissioner determines that the enrollees' interests are adequately protected;
                      (ii) the health maintenance organization has been continuously authorized to do business in
                  this state for at least five years; and
                      (iii) the health maintenance organization has $5,000,000 surplus in excess of [its] the health
                  maintenance organization's company action level RBC as defined in Subsection 31A-17-601 (8)(b).
                      (b) The commissioner may rescind an exemption given under Subsection (2)(a).
                      (3) (a) Each limited health plan authorized in this state shall maintain a deposit with the
                  commissioner under Section 31A-2-206 in an amount equal to the minimum capital or permanent
                  surplus plus 50% of the greater of:
                      (i) .5 times minimum required capital or minimum permanent surplus; or
                      (ii) (A) during the first year of operation, 10% of the limited health plan's projected
                  uncovered expenditures for the first year of operation;
                      (B) during the second year of operation, 12% of the limited health plan's projected uncovered
                  expenditures for the second year of operation;
                      (C) during the third year of operation, 14% of the limited health plan's projected uncovered
                  expenditures for the third year of operation;
                      (D) during the fourth year of operation, 18% of the limited health plan's projected uncovered

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                  expenditures during the fourth year of operation; or
                      (E) during the fifth year of operation, and during all subsequent years, 20% of the limited
                  health plan's projected uncovered expenditures for the previous 12 months.
                      (b) Projections of future uncovered expenditures shall be established in a manner that is
                  approved by the commissioner.
                      (4) A deposit required by this section may be counted toward the minimum capital or
                  minimum permanent surplus required under Section 31A-8-209 .
                      Section 20. Section 31A-8-401 is amended to read:
                       31A-8-401. Enrollee participation.
                      Every organization shall provide a reasonable procedure, consistent with Section 31A-4-116 ,
                  for allowing enrollees to participate in matters of policy of the organization and for resolving
                  complaints and [grievances] adverse benefit determinations initiated by enrollees or providers.
                      Section 21. Section 31A-8-402.3 is enacted to read:
                      31A-8-402.3. Discontinuance, nonrenewal, or changes to group health benefit plans.
                      (1) Except as otherwise provided in this section, a group health benefit plan for a plan
                  sponsor is renewable and continues in force:
                      (a) with respect to all eligible employees and dependents; and
                      (b) at the option of the plan sponsor.
                      (2) A health benefit plan for a plan sponsor may be discontinued or nonrenewed:
                      (a) for a network plan, if:
                      (i) there is no longer any enrollee under the group health plan who lives, resides, or works
                  in:
                      (A) the service area of the insurer; or
                      (B) the area for which the insurer is authorized to do business; and
                      (ii) in the case of the small employer market, the insurer applies the same criteria the insurer
                  would apply in denying enrollment in the plan under Subsection 31A-30-108 (6); or
                      (b) for coverage made available in the small or large employer market only through an
                  association, if:

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                      (i) the employer's membership in the association ceases; and
                      (ii) the coverage is terminated uniformly without regard to any health status-related factor
                  relating to any covered individual.
                      (3) A health benefit plan for a plan sponsor may be discontinued if:
                      (a) a condition described in Subsection (2) exists;
                      (b) the plan sponsor fails to pay premiums or contributions in accordance with the terms of
                  the contract;
                      (c) the plan sponsor:
                      (i) performs an act or practice that constitutes fraud; or
                      (ii) makes an intentional misrepresentation of material fact under the terms of the coverage;
                      (d) the insurer:
                      (i) elects to discontinue offering a particular health benefit product delivered or issued for
                  delivery in this state; and
                      (ii) (A) provides notice of the discontinuation in writing:
                      (I) to each plan sponsor, employee, or dependent of a plan sponsor or an employee; and
                      (II) at least 90 days before the date the coverage will be discontinued;
                      (B) provides notice of the discontinuation in writing:
                      (I) to the commissioner; and
                      (II) at least three working days prior to the date the notice is sent to the affected plan
                  sponsors, employees, and dependents of the plan sponsors or employees;
                      (C) offers to each plan sponsor, on a guaranteed issue basis, the option to purchase:
                      (I) all other health benefit products currently being offered by the insurer in the market; or
                      (II) in the case of a large employer, any other health benefit product currently being offered
                  in that market; and
                      (D) in exercising the option to discontinue that product and in offering the option of
                  coverage in this section, acts uniformly without regard to:
                      (I) the claims experience of a plan sponsor;
                      (II) any health status-related factor relating to any covered participant or beneficiary; or

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                      (III) any health status-related factor relating to any new participant or beneficiary who may
                  become eligible for the coverage; or
                      (e) the insurer:
                      (i) elects to discontinue all of the insurer's health benefit plans in:
                      (A) the small employer market;
                      (B) the large employer market; or
                      (C) both the small employer and large employer markets; and
                      (ii) (A) provides notice of the discontinuation in writing:
                      (I) to each plan sponsor, employee, or dependent of a plan sponsor or an employee; and
                      (II) at least 180 days before the date the coverage will be discontinued;
                      (B) provides notice of the discontinuation in writing:
                      (I) to the commissioner in each state in which an affected insured individual is known to
                  reside; and
                      (II) at least 30 working days prior to the date the notice is sent to the affected plan sponsors,
                  employees, and the dependents of the plan sponsors or employees;
                      (C) discontinues and nonrenews all plans issued or delivered for issuance in the market; and
                      (D) provides a plan of orderly withdrawal as required by Section 31A-4-115 .
                      (4) A health benefit plan for a plan sponsor may be nonrenewed:
                      (a) if a condition described in Subsection (2) exists; or
                      (b) for noncompliance with the insurer's:
                      (i) minimum participation requirements; or
                      (ii) employer contribution requirements.
                      (5) (a) Except as provided in Subsection (5)(d), an eligible employee may be discontinued
                  if after issuance of coverage the eligible employee:
                      (i) engages in an act or practice in connection with the coverage that constitutes fraud; or
                      (ii) makes an intentional misrepresentation of material fact in connection with the coverage.
                      (b) An eligible employee that is discontinued under Subsection (5)(a) may reenroll:
                      (i) 12 months after the date of discontinuance; and

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                      (ii) if the plan sponsor's coverage is in effect at the time the eligible employee applies to
                  reenroll.
                      (c) At the time the eligible employee's coverage is discontinued under Subsection (5)(a), the
                  insurer shall notify the eligible employee of the right to reenroll when coverage is discontinued.
                      (d) An eligible employee may not be discontinued under this Subsection (5) because of a
                  fraud or misrepresentation that relates to health status.
                      (6) For purposes of this section, a reference to "plan sponsor" includes a reference to the
                  employer:
                      (a) with respect to coverage provided to an employer member of the association; and
                      (b) if the health benefit plan is made available by an insurer in the employer market only
                  through:
                      (i) an association;
                      (ii) a trust; or
                      (iii) a discretionary group.
                      (7) An insurer may modify a health benefit plan for a plan sponsor only:
                      (a) at the time of coverage renewal; and
                      (b) if the modification is effective uniformly among all plans with that product.
                      Section 22. Section 31A-8-402.5 is enacted to read:
                      31A-8-402.5. Individual discontinuance and nonrenewal.
                      (1) (a) Except as otherwise provided in this section, a health benefit plan offered on an
                  individual basis is renewable and continues in force:
                      (i) with respect to all individuals or dependents; and
                      (ii) at the option of the individual.
                      (b) Subsection (1)(a) applies regardless of:
                      (i) whether the contract is issued through:
                      (A) a trust;
                      (B) an association;
                      (C) a discretionary group; or

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                      (D) other similar grouping; or
                      (ii) the situs of delivery of the policy or contract.
                      (2) A health benefit plan may be discontinued or nonrenewed:
                      (a) for a network plan, if:
                      (i) the individual no longer lives, resides, or works in:
                      (A) the service area of the insurer; or
                      (B) the area for which the insurer is authorized to do business; and
                      (ii) coverage is terminated uniformly without regard to any health status-related factor
                  relating to any covered individual; or
                      (b) for coverage made available through an association, if:
                      (i) the individual's membership in the association ceases; and
                      (ii) the coverage is terminated uniformly without regard to any health status-related factor
                  relating to any covered individual.
                      (3) A health benefit plan may be discontinued if:
                      (a) a condition described in Subsection (2) exists;
                      (b) the individual fails to pay premiums or contributions in accordance with the terms of the
                  health benefit plan, including any timeliness requirements;
                      (c) the individual:
                      (i) performs an act or practice in connection with the coverage that constitutes fraud; or
                      (ii) makes an intentional misrepresentation of material fact under the terms of the coverage;
                      (d) the insurer:
                      (i) elects to discontinue offering a particular health benefit product delivered or issued for
                  delivery in this state; and
                      (ii) (A) provides notice of the discontinuation in writing:
                      (I) to each individual provided coverage; and
                      (II) at least 90 days before the date the coverage will be discontinued;
                      (B) provides notice of the discontinuation in writing:
                      (I) to the commissioner; and

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                      (II) at least three working days prior to the date the notice is sent to the affected individuals;
                      (C) offers to each covered individual on a guaranteed issue basis, the option to purchase all
                  other individual health benefit products currently being offered by the insurer for individuals in that
                  market; and
                      (D) acts uniformly without regard to any health status-related factor of covered individuals
                  or dependents of covered individuals who may become eligible for coverage; or
                      (e) the insurer:
                      (i) elects to discontinue all of the insurer's health benefit plans in the individual market; and
                      (ii) (A) provides notice of the discontinuation in writing:
                      (I) to each individual provided coverage; and
                      (II) at least 180 days before the date the coverage will be discontinued;
                      (B) provides notice of the discontinuation in writing:
                      (I) to the commissioner in each state in which an affected insured individual is known to
                  reside; and
                      (II) at least 30 working days prior to the date the notice is sent to the affected individuals;
                      (C) discontinues and nonrenews all health benefit plans the insurer issues or delivers for
                  insurance in the individual market; and
                      (D) acts uniformly without regard to any health status-related factor of covered individuals
                  or dependents of covered individuals who may become eligible for coverage.
                      Section 23. Section 31A-8-402.7 is enacted to read:
                      31A-8-402.7. Discontinuance and nonrenewal limitations.
                      (1) Subject to Section 31A-4-115 , an insurer that elects to discontinue offering a health
                  benefit plan under Subsections 31A-8-402.3 (3)(e) and 31A-8-402.5 (3)(e) is prohibited from writing
                  new business:
                      (a) in the market in this state for which the insurer discontinues or does not renew; and
                      (b) for a period of five years beginning on the date of discontinuation of the last coverage
                  that is discontinued.
                      (2) If an insurer is doing business in one established geographic service area of the state,

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                  Sections 31A-8-402.3 and 31A-8-402.5 apply only to the insurer's operations in that service area.
                      (3) Notwithstanding whether Chapter 22, Part VII, Group Accident and Health Insurance,
                  requires a conversion policy be available for certain persons who are no longer entitled to group
                  coverage, an organization may not be required to provide a conversion policy to a person residing
                  outside of the organization's service area.
                      (4) The commissioner may, by rule or order, define the scope of service area.
                      Section 24. Section 31A-8-407 is amended to read:
                       31A-8-407. Written contracts -- Limited liability of enrollee.
                      (1) (a) Every contract between an organization and a participating provider of health care
                  services shall be in writing and shall set forth that if the organization:
                      (i) fails to pay for health care services as set forth in the contract, the enrollee may not be
                  liable to the provider for any sums owed by the organization; and
                      (ii) the organization becomes insolvent, the rehabilitator or liquidator may require the
                  participating provider of health care services to:
                      (A) continue to provide health care services under the contract between the participating
                  provider and the organization until the [later] earlier of:
                      (I) 90 days [from] after the date of the filing of a petition for rehabilitation or the petition for
                  liquidation; or
                      (II) the date the term of the contract ends; and
                      (B) subject to Subsection (1)(c), reduce the fees the participating provider is otherwise
                  entitled to receive from the organization under the contract between the participating provider and
                  the organization during the time period described in Subsection (1)(a)(ii)(A).
                      (b) If the conditions of Subsection (1)(c) are met, the participating provider shall:
                      (i) accept the reduced payment as payment in full; and
                      (ii) relinquish the right to collect additional amounts from the insolvent organization's
                  enrollee.
                      (c) Notwithstanding Subsection (1)(a)(ii)(B):
                      (i) the rehabilitator or liquidator may not reduce a fee to less than 75% of the regular fee set

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                  forth in the participating provider contract; and
                      (ii) the enrollee shall continue to pay the same copayments, deductibles, and other payments
                  for services received from the participating provider that the enrollee was required to pay before the
                  filing of:
                      (A) the petition for reorganization; or
                      (B) the petition for liquidation.
                      (2) A participating provider may not collect or attempt to collect from the enrollee sums
                  owed by the organization or the amount of the regular fee reduction authorized under Subsection
                  (1)(a)(ii) if the participating provider contract:
                      (a) is not in writing as required in Subsection (1); or
                      (b) fails to contain the language required by Subsection (1).
                      (3) (a) A person listed in Subsection (3)(b) may not bill or maintain any action at law against
                  an enrollee to collect:
                      (i) sums owed by the organization; or
                      (ii) the amount of the regular fee reduction authorized under Subsection (1)(a)(ii).
                      (b) Subsection (3)(a) applies to:
                      (i) a participating provider;
                      (ii) an agent;
                      (iii) a trustee; or
                      (iv) an assignee of a person described in Subsections (3)(b)(i) through (iii).
                      Section 25. Section 31A-8-408 is amended to read:
                       31A-8-408. Organizations offering point of service or point of sales products.
                      Effective July 1, 1991, a health maintenance organization offering products that permit
                  members the option of obtaining covered services from a noncontracted provider, which is a point
                  of service or point of sale product, shall comply with the requirements of Subsections (1) through
                  (7).
                      (1) The cost of an encounter with a noncontracted provider is considered an uncovered
                  expenditure as defined in Section 31A-8-101 .

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                      (2) [Any] (a) An organization [offering to sell point of service products] shall report to the
                  commissioner on a monthly basis the number of encounters with contracted and noncontracted
                  providers [to the commissioner on a monthly basis] if the organization offers to sell a:
                      (i) point of service product; or
                      (ii) point of sale product.
                      (b) The commissioner shall:
                      (i) define the form, content, and due date of the report required by this Subsection (2); and
                  [shall]
                      (ii) require audited reports of the information on a yearly basis.
                      (3) An organization may not offer a point of service [products] product or a point of sale
                  product unless [it] the organization has secured contracts with participating providers located within
                  the organization's service area for each covered service other than those unusual or infrequently used
                  health services that are not available from the organization's health care providers.
                      (4) An organization may not enroll [members] a member who [do] does not work or reside
                  in the service area as defined by rule, except this Subsection (4) does not apply to [dependents] a
                  dependent of [enrollees] an enrollee.
                      (5) Any organization that exceeds the 10% limit of unusual or infrequently used health
                  services as defined in Section 31A-8-101 is subject to a forfeiture of up to $50 per encounter.
                      (6) An organization shall disclose to employees and members the existence of the 10% limit:
                      (a) at enrollment; or
                      (b) prior to enrollment.
                      (7) The commissioner shall hold hearings and adopt rules providing any additional
                  limitations or requirements necessary to secure the public interest in conformity with this section.
                      Section 26. Section 31A-17-505 is amended to read:
                       31A-17-505. Computation of minimum standard for annuities.
                      (1) Except as provided in Section 31A-17-506 , the minimum standard for the valuation of
                  all individual annuity and pure endowment contracts issued on or after the operative date of this
                  section, as defined in Subsection (2), and for all annuities and pure endowments purchased on or

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                  after such operative date under group annuity and pure endowment contracts, shall be the
                  commissioner's reserve valuation methods defined in Sections 31A-17-507 and 31A-17-508 and the
                  following tables and interest rates:
                      (a) [For] for individual annuity and pure endowment contracts issued prior to April 2, 1980,
                  excluding any accident and health and accidental death benefits in [such] the contracts:
                      (i) (A) the 1971 Individual Annuity Mortality Table[,]; or
                      (B) any modification of [this table] the 1971 Individual Annuity Mortality Table approved
                  by the commissioner[, and];
                      (ii) 6% interest for single premium immediate annuity contracts[,]; and
                      (iii) 4% interest for all other individual annuity and pure endowment contracts[.];
                      (b) [For] for individual single premium immediate annuity contracts issued on or after April
                  2, 1980, excluding any accident and health and accidental death benefits in [such] the contracts: [the
                  1971 Individual Annuity Mortality Table or]
                      (i) (A) any individual annuity mortality table[, adopted after 1980 by the National
                  Association of Insurance Commissioners] that is approved by rule [promulgated] by the
                  commissioner for use in determining the minimum standard of valuation for such contracts[,]; or
                      (B) any modification of [these tables] a table described in Subsection (1)(b)(i)(A) approved
                  by the commissioner[,]; and
                      (ii) 7.5% interest[.];
                      (c) [For] for individual annuity and pure endowment contracts issued on or after April 2,
                  1980, other than single premium immediate annuity contracts, excluding any accident and health and
                  accidental death benefits in [such] the contracts: [the 1971 Individual Annuity Mortality Table or]
                      (i) (A) any individual annuity mortality table [adopted after 1980 by the National                   Association
                  of Insurance Commissioners,] that is approved by rule [promulgated] by the commissioner for use
                  in determining the minimum standard of valuation for such contracts[,]; or
                      (B) any modification of [these tables] a table described in Subsection (1)(c)(i)(A) approved
                  by the commissioner[, and];
                      (ii) 5.5% interest for single premium deferred annuity and pure endowment contracts; and

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                      (iii) 4.5% interest for all other such individual annuity and pure endowment contracts[.];
                      (d) [For] for all annuities and pure endowments purchased prior to April 2, 1980, under
                  group annuity and pure endowment contracts, excluding any accident and health and accidental death
                  benefits purchased under [such] the contracts:
                      (i) (A) the 1971 Group Annuity Mortality Table; or
                      (B) any modification of [this table] the 1971 Group Annuity Mortality Table approved by
                  the commissioner[,]; and
                      (ii) 6.5% interest[.]; and
                      (e) [For] for all annuities and pure endowments purchased on or after April 2, 1980, under
                  group annuity and pure endowment contracts, excluding any accident and health and accidental death
                  benefits purchased under [such] the contracts: [the 1971 Group Annuity Mortality Table, or]
                      (i) (A) any group annuity mortality table [adopted after 1980 by the National Association
                  of Insurance Commissioners,] that is approved by rule [and promulgated] by the commissioner for
                  use in determining the minimum standard of valuation for such annuities and pure endowments[,];
                  or
                      (B) any modification of [these tables] a table described in Subsection (1)(e)(i)(A) approved
                  by the commissioner[,]; and
                      (ii) 7.5% interest.
                      (2) (a) After June 1, 1973, any company may file with the commissioner a written notice of
                  its election to comply with [the provisions of] this section after a specified date before January 1,
                  1979, which shall be the operative date of this section for [such] the company[, provided, if].
                      (b) If a company [makes no such] does not make an election under Subsection (2)(a), the
                  operative date of this section for [such] the company shall be January 1, 1979.
                      Section 27. Section 31A-17-506 is amended to read:
                       31A-17-506. Computation of minimum standard by calendar year of issue.
                      (1) Applicability of Section 31A-17-506 : The interest rates used in determining the
                  minimum standard for the valuation shall be the calendar year statutory valuation interest rates as
                  defined in this section for:

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                      (a) all life insurance policies issued in a particular calendar year, on or after the operative
                  date of Subsection 31A-22-408 (6)(d);
                      (b) all individual annuity and pure endowment contracts issued in a particular calendar year
                  on or after January 1, [1994] 1982;
                      (c) all annuities and pure endowments purchased in a particular calendar year on or after
                  January 1, [1994] 1982, under group annuity and pure endowment contracts; and
                      (d) the net increase, if any, in a particular calendar year after January 1, [1994] 1982, in
                  amounts held under guaranteed interest contracts.
                      (2) Calendar year statutory valuation interest rates:
                      (a) The calendar year statutory valuation interest rates, "I," shall be determined as follows
                  and the results rounded to the nearer 1/4 of 1%:
                      (i) For life insurance:
                      I =.03 + W(R1 -.03) + (W/2)(R2 -.09);
                      (ii) For single premium immediate annuities and for annuity benefits involving life
                  contingencies arising from other annuities with cash settlement options and from guaranteed interest
                  contracts with cash settlement options:
                      I =.03 + W(R -.03),
                      where R1 is the lesser of R and.09,
                      R2 is the greater of R and.09,
                      R is the reference interest rate defined in Subsection (4), and
                      W is the weighting factor defined in this section;
                      (iii) For other annuities with cash settlement options and guaranteed interest contracts with
                  cash settlement options, valued on an issue year basis, except as stated in Subsection (ii), the formula
                  for life insurance stated in Subsection (i) shall apply to annuities and guaranteed interest contracts
                  with guarantee durations in excess of ten years, and the formula for single premium immediate
                  annuities stated in Subsection (ii) shall apply to annuities and guaranteed interest contracts with
                  guarantee duration of ten years or less;
                      (iv) For other annuities with no cash settlement options and for guaranteed interest contracts

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                  with no cash settlement options, the formula for single premium immediate annuities stated in
                  Subsection (ii) shall apply.
                      (v) For other annuities with cash settlement options and guaranteed interest contracts with
                  cash settlement options, valued on a change in fund basis, the formula for single premium immediate
                  annuities stated in Subsection (ii) shall apply.
                      (b) However, if the calendar year statutory valuation interest rate for any life insurance
                  policies issued in any calendar year determined without reference to this sentence differs from the
                  corresponding actual rate for similar policies issued in the immediately preceding calendar year by
                  less than 1/2 of 1% the calendar year statutory valuation interest rate for such life insurance policies
                  shall be equal to the corresponding actual rate for the immediately preceding calendar year. For
                  purposes of applying the immediately preceding sentence, the calendar year statutory valuation
                  interest rate for life insurance policies issued in a calendar year shall be determined for 1980, using
                  the reference interest rate defined in 1979, and shall be determined for each subsequent calendar year
                  regardless of when Subsection 31A-22-408 (6)(d) becomes operative.
                      (3) Weighting factors:
                      (a) The weighting factors referred to in the formulas stated in Subsection (2) are given in the
                  following tables:
                      (i) Weighting factors for life insurance:
                      Guarantee Duration (Years)                Weighting Factors
                      10 or less:                            .50
                      More than 10, but less than 20:                .45
                      More than 20:                            .35
                      For life insurance, the guarantee duration is the maximum number of years the life insurance
                  can remain in force on a basis guaranteed in the policy or under options to convert to plans of life
                  insurance with premium rates or nonforfeiture values or both which are guaranteed in the original
                  policy;
                      (ii) Weighting factor for single premium immediate annuities and for annuity benefits
                  involving life contingencies arising from other annuities with cash settlement options and guaranteed

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                  interest contracts with cash settlement options: .80
                      (iii) Weighting factors for other annuities and for guaranteed interest contracts, except as
                  stated in Subsection (ii), shall be as specified in Tables (A), (B), and (C) below, according to the
                  rules and definitions in (D), (E), and (F) below:
                      (A) For annuities and guaranteed interest contracts valued on an issue year basis:
                      Guarantee Duration (Years)            Weighting Factors for Plan Type
                                                   A     B     C
                      5 or less:                        .80    .60    .50
                      More than 5, but not more than 10:            .75    .60    .50
                      More than 10, but not more than 20:            .65    .50    .45
                      More than 20:                        .45    .35    .35
                                                   Plan Type
                                                   A     B     C
                  (B) For annuities and guaranteed interest
                  contracts valued on a change in fund basis, the
                  factors shown in (A) above increased by:            .15    .25    .05
                                                   Plan Type
                                                   A     B     C
                  (C) For annuities and guaranteed interest
                  contracts valued on an issue year basis, other than
                  those with no cash settlement options, which do
                  not guarantee interest on considerations received
                  more than one year after issue or purchase and for
                  annuities and guaranteed interest contracts valued
                  on a change in fund basis which do not guarantee
                  interest rates on considerations received more
                  than 12 months beyond the valuation date, the
                  factors shown in (A) or derived in (B) increased

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                  by:                                .05    .05    .05
                      (D) For other annuities with cash settlement options and guaranteed interest contracts with
                  cash settlement options, the guarantee duration is the number of years for which the contract
                  guarantees interest rates in excess of the calendar year statutory valuation interest rate for life
                  insurance policies with guarantee duration in excess of 20 years. For other annuities with no cash
                  settlement options and for guaranteed interest contracts with no cash settlement options, the
                  guaranteed duration is the number of years from the date of issue or date of purchase to the date
                  annuity benefits are scheduled to commence.
                      (E) Plan type as used in the above tables is defined as follows:
                      Plan Type A: At any time policyholder may withdraw funds only:
                      (I) with an adjustment to reflect changes in interest rates or asset values since receipt of the
                  funds by the insurance company, or (II) without such adjustment but installments over five years or
                  more, or (III) as an immediate life annuity, or (IV) no withdrawal permitted.
                      Plan Type B: Before expiration of the interest rate guarantee, policyholder withdraw funds
                  only:
                      (I) with an adjustment to reflect changes in interest rates or asset values since receipt of the
                  funds by the insurance company, or (II) without such adjustment but in installments over five years
                  or more, or (III) no withdrawal permitted. At the end of interest rate guarantee, funds may be
                  withdrawn without such adjustment in a single sum or installments over less than five years.
                      Plan Type C: Policyholder may withdraw funds before expiration of interest rate guarantee
                  in a single sum or installments over less than five years either:
                      (I) without adjustment to reflect changes in interest rates or asset values since receipt of the
                  funds by the insurance company, or (II) subject only to a fixed surrender charge stipulated in the
                  contract as a percentage of the fund.
                      (F) A company may elect to value guaranteed interest contracts with cash settlement options
                  and annuities with cash settlement options on either an issue year basis or on a change in fund basis.
                  Guaranteed interest contracts with no cash settlement options and other annuities with no cash
                  settlement options must be valued on an issue year basis. As used in this section, an issue year basis

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                  of valuation refers to a valuation basis under which the interest rate used to determine the minimum
                  valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar
                  year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed
                  interest contract, and the change in fund basis of valuation refers to a valuation basis under which
                  the interest rate used to determine the minimum valuation standard applicable to each change in the
                  fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate
                  for the year of the change in the fund.
                      (4) Reference interest rate: "Reference interest rate" referred to in Subsection (2)(a) is
                  defined as follows:
                      (a) For all life insurance, the lesser of the average over a period of 36 months and the
                  average over a period of 12 months, ending on June 30 of the calendar year next preceding the year
                  of issue, of the Monthly Average of the composite Yield on Seasoned Corporate Bonds, as published
                  by Moody's Investors Service, Inc.
                      (b) For single premium immediate annuities and for annuity benefits involving life
                  contingencies arising from other annuities with cash settlement options and guaranteed interest
                  contracts with cash settlement options, the average over a period of 12 months, ending on June 30
                  of the calendar year of issue or year of purchase, of the Monthly Average of the Composite Yield on
                  Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.
                      (c) For other annuities with cash settlement options and guaranteed interest contracts with
                  cash settlement options, valued on a year of issue basis, except as stated in Subsection (b), with
                  guarantee duration in excess of ten years, the lesser of the average over a period of 36 months and
                  the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase,
                  of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by
                  Moody's Investors Service, Inc.
                      (d) For other annuities with cash settlement options and guaranteed interest contracts with
                  cash settlement options, valued on a year of issue basis, except as stated in Subsection (b), with
                  guarantee duration of ten years or less, the average over a period of 12 months, ending on June 30
                  of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on

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                  Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.
                      (e) For other annuities with no cash settlement options and for guaranteed interest contracts
                  with no cash settlement options, the average over a period of 12 months, ending on June 30 of the
                  calendar year of issue or purchase, of the Monthly Average of the Composite Yield on Seasoned
                  Corporate Bonds, as published by Moody's Investors Service, Inc.
                      (f) For other annuities with cash settlement options and guaranteed interest contracts with
                  cash settlement options, valued on a change in fund basis, except as stated in Subsection (b), the
                  average over a period of 12 months, ending on June 30 of the calendar year of the change in the fund,
                  of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by
                  Moody's Investors Service, Inc.
                      (5) Alternative method for determining reference interest rates: In the event that the Monthly
                  Average of the Composite Yield on Seasoned Corporate Bonds is no longer published by Moody's
                  Investors Service, Inc. or in the event that the National Association of Insurance Commissioners
                  determines that the Monthly Average of the Composite Yield on Seasoned Corporate Bonds as
                  published by Moody's Investors Service, Inc. is no longer appropriate for the determination of the
                  reference interest rate, then an alternative method for determination of the reference interest rate,
                  which is adopted by the National Association of Insurance Commissioners and approved by rule
                  promulgated by the commissioner, may be substituted.
                      Section 28. Section 31A-19a-101 is amended to read:
                       31A-19a-101. Title -- Scope and purposes.
                      (1) This chapter is known as the "Utah Rate Regulation Act."
                      (2) (a) (i) Except as provided in Subsection (2)(a)(ii), this chapter applies to all kinds and
                  lines of direct insurance written on risks or operations in this state by an insurer authorized to do
                  business in this state.
                      (ii) This chapter does not apply to:
                      (A) life insurance [other than];
                      (B) credit life insurance;
                      [(B)] (C) variable and fixed annuities;

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                      [(C)] (D) health and accident and health insurance [other than];
                      (E) credit accident and health insurance; and
                      [(D)] (F) reinsurance.
                      (b) This chapter applies to all insurers authorized to do any line of business, except those
                  specified in Subsection (2)(a)(ii).
                      (3) It is the purpose of this chapter to:
                      (a) protect policyholders and the public against the adverse effects of excessive, inadequate,
                  or unfairly discriminatory rates;
                      (b) encourage independent action by and reasonable price competition among insurers so
                  that rates are responsive to competitive market conditions;
                      (c) provide formal regulatory controls for use if independent action and price competition
                  fail;
                      (d) provide regulatory procedures for the maintenance of appropriate data reporting systems;
                      (e) authorize cooperative action among insurers in the rate-making process, and regulate that
                  cooperation to prevent practices that bring about a monopoly or lessen or destroy competition;
                      (f) encourage the most efficient and economic marketing practices; and
                      (g) regulate the business of insurance in a manner that, under the McCarran-Ferguson Act,
                  15 U.S.C. Secs. 1011 through 1015, will preclude application of federal antitrust laws.
                      (4) Rate filings made prior to July 1, 1986, under former Title 31, Chapter 18, are continued.
                  Rate filings made after July 1, 1986, are subject to the requirements of this chapter.
                      Section 29. Section 31A-19a-209 is amended to read:
                       31A-19a-209. Special provisions for title insurance.
                      (1) In addition to the considerations in determining compliance with rate standards and                   rating
                  methods as set forth in Sections 31A-19a-201 and 31A-19a-202 , the commissioner shall also
                  consider the costs and expenses incurred by title insurance companies, agencies, and agents peculiar
                  to the business of title insurance including:
                      (a) the maintenance of title plants; and
                      (b) the searching and examining of public records to determine insurability of title to real

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                  redevelopment property.
                      (2) (a) Every title insurance company, agency, and title insurance agent shall file with the
                  commissioner a schedule of the escrow[, settlement, and closing] charges that it proposes to use in
                  this state for services performed in connection with the issuance of policies of title insurance.
                      (b) The filing required by Subsection (2)(a) shall state the effective date of this schedule,
                  which may not be less than 30 calendar days after the date of filing.
                      (3) A title insurance company, agency, or agent may not file or use any rate or other charge
                  relating to the business of title insurance, including rates or charges filed for escrow[, settlement, and
                  closing charges] that would cause the title insurance company, agency, or agent to:
                      (a) operate at less than the cost of doing:
                      (i) the insurance business; or
                      (ii) the escrow[, settlement, and closing] business; or
                      (b) fail to adequately underwrite a title insurance policy.
                      (4) (a) All or any of the schedule of rates or schedule of charges, including the schedule of
                  escrow[, settlement, and closing] charges, may be changed or amended at any time, subject to the
                  limitations in this Subsection (4).
                      (b) Each change or amendment shall:
                      (i) be filed with the commissioner; and
                      (ii) state the effective date of the change or amendment, which may not be less than 30
                  calendar days after the date of filing.
                      (c) Any change or amendment remains in force for a period of at least 90 calendar days from
                  its effective date.
                      (5) While the schedule of rates and schedule of charges are effective, a copy of each shall
                  be:
                      (a) retained in each of the offices of:
                      (i) the insurance company in this state;
                      (ii) its agents in this state; and
                      [(iii)] (b) upon request, furnished to the public.

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                      (6) Except in accordance with the schedules of rates and charges filed with the commissioner,
                  a title insurance company, agency, or agent may not make or impose any premium or other charge:
                      (a) in connection with the issuance of a policy of title insurance; or
                      (b) for escrow[, settlement, or closing] services performed in connection with the issuance
                  of a policy of title insurance.
                      Section 30. Section 31A-21-104 is amended to read:
                       31A-21-104. Insurable interest and consent.
                      (1) (a) An insurer may not knowingly provide insurance to a person who does not have or
                  expect to have an insurable interest in the subject of the insurance.
                      (b) A person may not knowingly procure, directly, by assignment, or otherwise, an interest
                  in the proceeds of an insurance policy unless [he] that person has or expects to have an insurable
                  interest in the subject of the insurance.
                      (c) Except as provided in Subsections (6), (7), and (8), any insurance provided in violation
                  of this Subsection (1) is subject to Subsection (5).
                      (2) As used in this chapter:
                      (a) (i) "Insurable interest" in a person means[,]:
                      (A) for persons closely related by blood or by law, a substantial interest engendered by love
                  and affection[,]; or
                      (B) in the case of other persons, a lawful and substantial interest in having the life, health,
                  and bodily safety of the person insured continue.
                      (ii) Policyholders in group insurance contracts do not need [no] an insurable interest if
                  certificate holders or persons other than group policyholders who are specified by the certificate
                  holders are the recipients of the proceeds of the policies.
                      (iii) Each person has an unlimited insurable interest in [his] the person's own life and health.
                      (iv) A shareholder or partner has an insurable interest in the life of other shareholders or
                  partners for purposes of insurance contracts that are an integral part of a legitimate buy-sell
                  agreement respecting shares or a partnership interest in the business.
                      (v) Subject to Subsection (9), an employer or an employer sponsored trust for the benefit of

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                  the employer's employees:
                      (A) has an insurable interest in the lives of the employer's:
                      (I) directors;
                      (II) officers;
                      (III) managers;
                      (IV) nonmanagement employees; and
                      (V) retired employees; and
                      (B) may insure the lives listed in Subsection (2)(a)(v)(A):
                      (I) on an individual or group basis; and
                      (II) with the written consent of the insured.
                      (b) "Insurable interest" in property or liability means any lawful and substantial economic
                  interest in the nonoccurrence of the event insured against.
                      (c) "Viatical settlement" means a written contract:
                      (i) entered into by a person who is the policyholder of a life insurance policy insuring the
                  life of a terminally ill person[,];
                      (ii) under which the insured assigns, transfers ownership, irrevocably designates a specific
                  person or otherwise alienates all control and right in the insurance policy to another person[, when];
                  and
                      (iii) the proceeds or a part of the proceeds of the contract is paid to the policyholder of the
                  insurance policy or the policyholder's designee prior to the death of the subject.
                      (3) (a) Except as provided in Subsection (4), an insurer may not knowingly issue an
                  individual life or accident and health insurance policy to a person other than the one whose life or
                  health is at risk unless that person, who is 18 years of age or older and not under guardianship under
                  Title 75, Chapter 5, Protection of Persons Under Disability and Their Property, has given written
                  consent to the issuance of the policy. [The]
                      (b) A person shall express consent [either]:
                      (i) by signing an application for the insurance with knowledge of the nature of the
                  document[,]; or

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                      (ii) in any other reasonable way.
                      (c) Any insurance provided in violation of this Subsection (3) is subject to Subsection (5).
                      (4) (a) A life or accident and health insurance policy may be taken out without consent in
                  [the following cases:] a circumstance described in this Subsection (4)(a).
                      (i) A person may obtain insurance on a dependent who does not have legal capacity.
                      (ii) A creditor may, at the creditor's expense, obtain insurance on the debtor in an amount
                  reasonably related to the amount of the debt.
                      (iii) A person may obtain life and accident and health insurance on an immediate family
                  [members] member who is living with or dependent on the person.
                      (iv) A person may obtain an accident and health insurance policy on others that would
                  merely indemnify the policyholder against expenses [he] the person would be legally or morally
                  obligated to pay.
                      (v) The commissioner may adopt rules permitting issuance of insurance for a limited term
                  on the life or health of a person serving outside the continental United States who is in the public
                  service of the United States, if the policyholder is related within the second degree by blood or by
                  marriage to the person whose life or health is insured.
                      (b) Consent may be given by another in [the following cases:] a circumstance described in
                  this Subsection (4)(b).
                      (i) A parent, a person having legal custody of a minor, or a guardian of [the] a person under
                  Title 75, Chapter 5, Protection of Persons Under Disability and Their Property, may consent to the
                  issuance of a policy on a dependent child or on a person under guardianship under Title 75, Chapter
                  5, Protection of Persons Under Disability and Their Property.
                      (ii) A grandparent may consent to the issuance of life or accident and health insurance on
                  a grandchild.
                      (iii) A court of general jurisdiction may give consent to the issuance of a life or accident and
                  health insurance policy on an ex parte application showing facts the court considers sufficient to
                  justify the issuance of that insurance.
                      (5) (a) An insurance policy is not invalid because the policyholder lacks insurable interest

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                  or because consent has not been given[, but].
                      (b) Notwithstanding Subsection (5)(a), a court with appropriate jurisdiction may:
                      (i) order the proceeds to be paid to some person who is equitably entitled to [them] the
                  proceeds, other than the one to whom the policy is designated to be payable[,]; or [it may]
                      (ii) create a constructive trust in the proceeds or a part of [them] the proceeds on behalf of
                  such a person, subject to all the valid terms and conditions of the policy other than those relating to
                  insurable interest or consent.
                      (6) This section does not prevent any organization described under 26 U.S.C. Sec. 501(c)(3),
                  (e), or (f), as amended, and the regulations made under this section, and which is regulated under
                  Title 13, Chapter 22, Charitable Solicitations Act, from soliciting and procuring, by assignment or
                  designation as beneficiary, a gift or assignment of an interest in life insurance on the life of the donor
                  or assignor or from enforcing payment of proceeds from that interest.
                      (7) This section does not prevent:
                      (a) any policyholder of life insurance, whether or not the policyholder is also the subject of
                  the insurance, from entering into a viatical settlement;
                      (b) any person from soliciting a person to enter into a viatical settlement; or
                      (c) a person from enforcing payment of proceeds from the interest obtained under a viatical
                  settlement.
                      (8) Notwithstanding Subsection (1), an insurer authorized under this title to issue a workers'
                  compensation policy may issue a workers' compensation policy to a sole proprietorship, corporation,
                  or partnership that elects not to include any owner, corporate officer, or partner as an employee under
                  the policy even if at the time the policy is issued the sole proprietorship, corporation, or partnership
                  has no employees.
                      (9) The extent of an employer's or employer sponsored trust's insurable interest for a
                  nonmanagement and retired employee under Subsection (2)(a)(v) is limited to an amount
                  commensurate with the employer's unfunded liabilities.
                      Section 31. Section 31A-21-106 is amended to read:
                       31A-21-106. Incorporation by reference.

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                      (1) (a) Except as provided in Subsection (1)(b), an insurance policy may not contain any
                  agreement or incorporate any provision not fully set forth in the policy or in an application or other
                  document attached to and made a part of the policy at the time of its delivery, unless the policy,
                  application, or agreement accurately reflects the terms of the incorporated agreement, provision, or
                  attached document.
                      (b) (i) A policy may by reference incorporate rate schedules and classifications of risks and
                  short-rate tables filed with the commissioner.
                      (ii) By rule or order, the commissioner may authorize incorporation by reference of
                  provisions for:
                      (A) administrative arrangements[,];
                      (B) premium schedules[,]; and
                      (C) payment procedures for complex contracts.
                      (c) (i) A policy of title insurance insuring the mortgage or deed of trust of an institutional
                  lender may, if requested by an institutional lender, incorporate by reference generally applicable
                  policy terms that are contained in a specifically identified policy that has been filed with the
                  commissioner.
                      (ii) As used in Subsection (1)(c)(i), "institutional lender" means a person that regularly
                  engages in the business of making loans secured by real estate.
                      (d) A policy may incorporate by reference the following by citing in the policy:
                      (i) a federal law or regulation;
                      (ii) a state law or rule; or
                      (iii) a public directive of a federal or state agency.
                      (2) [Except as provided in Subsection (3) or (4), or as otherwise mandated by law, no] A
                  purported modification of a contract during the term of the policy [affects] may not affect the
                  obligations of a party to the contract:
                      (a) unless the modification is:
                      (i) in writing; and
                      (ii) agreed to by the party against whose interest the modification operates[.]; and

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                      (b) except:
                      (i) as provided in:
                      (A) Subsection (3) or (4);
                      (B) Subsection 31A-8-402.3 (7);
                      (C) Subsection 31A-22-721 (8); or
                      (D) Subsection 31A-30-107 (7); or
                      (ii) as otherwise mandated by law.
                      (3) Subsection (2) does not prevent a change in coverage under group contracts resulting
                  from:
                      (a) provisions of an employer eligibility rule;
                      (b) the terms of a collective bargaining agreement; or
                      (c) provisions in federal Employee Retirement Income Security Act plan documents.
                      (4) Subsection (2) does not prevent a premium increase at any renewal date that is applicable
                  uniformly to all comparable persons.
                      Section 32. Section 31A-21-311 is amended to read:
                       31A-21-311. Group and blanket insurance.
                      (1) (a) (i) Except under Subsection (1)(d), an insurer issuing a group insurance policy other
                  than a blanket insurance policy shall, as soon as practicable after the coverage is effective, provide
                  a certificate for each member of the insured group, except that only one certificate need be provided
                  for the members of a family unit.
                      (ii) The certificate required by this Subsection (1) shall contain a summary of the essential
                  features of the insurance coverage, including:
                      (A) any rights of conversion to an individual policy; and[,]
                      (B) in the case of group life insurance, any:
                      (I) continuation of coverage during total disability[.]; and
                      (II) incontestability provision.
                      (iii) Upon receiving a written request, the insurer shall [also] inform any insured how the
                  insured may inspect, during normal business hours at a place reasonably convenient to the insured,

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                  a copy of the policy or a summary of the policy containing all the details [which] that are relevant
                  to the certificate holder.
                      (b) The commissioner may by rule impose a [similar] requirement similar to Subsection
                  (1)(a) on any class of blanket insurance policies for which the commissioner finds that the group of
                  persons covered is constant enough for that type of action to be practicable and not unreasonably
                  expensive.
                      (c) [The] (i) A certificate shall be provided in a manner reasonably calculated to bring [it]
                  the certificate to the attention of the certificate holder.
                      (ii) The insurer may deliver or mail [the certificates] a certificate:
                      (A) directly to the certificate holders[,]; or [may deliver or mail them]
                      (B) in bulk to the policyholder to transmit to certificate holders.
                      (iii) An affidavit by the insurer that [it has] the insurer mailed the certificates in the usual
                  course of business creates a rebuttable presumption that [it] the insurer has done so.
                      (d) The commissioner may by rule or order prescribe substitutes for delivery or mailing of
                  certificates that are reasonably calculated to inform a certificate holder of the certificate holder's
                  rights, including:
                      (i) booklets describing the coverage[,];
                      (ii) the posting of notices in the place of business[,]; or
                      (iii) publication in a house organ[, if the substitutes are reasonably calculated to inform
                  certificate holders of their rights].
                      (2) Unless a certificate or an authorized substitute has been made available to the certificate
                  holder when required by this section, [no] an act or omission forbidden to or required of the
                  certificate holder by the certificate after the coverage has become effective as to the certificate
                  holder, other than intentionally causing the loss insured against or failing to make required
                  contributory premium payments, [affects] may not affect the insurer's obligations under the insurance
                  contract.
                      Section 33. Section 31A-22-400 is amended to read:
                       31A-22-400. Scope of part.

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                      Part IV applies to all life insurance policies and contracts, including:
                      (1) an annuity contract;
                      (2) a credit life[,] contract;
                      (3) a franchise[,] contract;
                      (4) a group[,] contract; and
                      (5) a blanket [contracts, except where the application of a provision is specifically limited]
                  contract.
                      Section 34. Section 31A-22-402 is amended to read:
                       31A-22-402. Grace period.
                      (1) (a) Every life insurance policy other than a group policy shall contain a provision
                  entitling the policyholder to a grace period within which the payment of any premium may be made
                  after the first payment of any premium.
                      (b) During the grace period described in Subsection (1)(a), the policy continues in full force.
                      (2) The grace period required by Subsection (1) may not be less than:
                      (a) 31 days; or
                      (b) four weeks for policies whose premiums are payable more frequently than monthly.
                      (3) The insurer may impose an interest charge during the grace period not in excess of the
                  interest rate:
                      (a) set by the policy for policy loans; or
                      (b) in the absence of a provision described in Subsection (3)(a), a rate set by the
                  commissioner by rule.
                      (4) If a claim arises under the policy during the grace period, an insurer may deduct from the
                  policy proceeds:
                      (a) the amount of any premium due or overdue;
                      (b) interest at the rate provided in this section; and
                      (c) any deferred installment of the annual premium.
                      (5) The insurer shall send written notice of termination of coverage:
                      (a) to the policyholder's last-known address; and

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                      (b) at least 30 days before the date that the coverage is terminated.
                      Section 35. Section 31A-22-403 is amended to read:
                       31A-22-403. Incontestability.
                      (1) This section does not apply to group policies.
                      (2) [Each] (a) Except as provided in Subsection (3), a life insurance policy is[, and shall
                  state that,] incontestable after [it] the policy has been in force [during the lifetime of the insured] for
                  a period of two years from [its] the policy's date of issue[, it is incontestable except for the
                  following]:
                      (i) during the lifetime of the insured; or
                      (ii) for a survivorship life insurance policy, during the lifetime of the surviving insured.
                      (b) A life insurance policy shall state that the life insurance policy is incontestable after the
                  time period described in Subsection (2)(a).
                      [(a) The policy] (3) (a) A life insurance policy described in Subsection (2) may be contested
                  for nonpayment of premiums.
                      [(b) The policy] (b) A life insurance policy described in Subsection (2) may be contested
                  as to:
                      (i) provisions relating to accident and health benefits allowed under Section 31A-22-609 ;
                  and
                      (ii) additional benefits in the event of death by accident.
                      (c) If [the policy] a life insurance policy described in Subsection (2) allows the insured, after
                  the policy's issuance and for an additional premium, to obtain a death benefit [which] that is larger
                  than when the policy was originally issued, [then] the payment of the additional increment of benefit
                  is contestable:
                      (i) until two years after the incremental increase of benefits[, but the]; and
                      (ii) based only on a ground [of contest] that may arise [is] in connection with the incremental
                  increase.
                      [(3)] (4) (a) A reinstated life insurance policy or annuity contract may be contested:
                      (i) for two years following reinstatement on the same basis as at original issuance[, but]; and

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                      (ii) only as to matters arising in connection with the reinstatement.
                      (b) Any grounds for contest available at original issuance continue to be available for contest
                  until the policy has been in force for a total of two years:
                      (i) during the lifetime of the insured[.]; and
                      (ii) for a survivorship life insurance policy, during the lifetime of the surviving insured.
                      [(4)] (5) (a) The limitations on incontestability under this section:
                      (i) preclude only a contest of the validity of the policy[,]; and
                      (ii) do not preclude the good faith assertion at any time of defenses based upon provisions
                  in the policy [which] that exclude or qualify coverage, whether or not those qualifications or
                  exclusions are specifically excepted in the policy's incontestability clause. [Provisions]
                      (b) A provision on which the contestable period would normally run may not be
                  reformulated as a coverage [exclusions] exclusion or [restrictions] restriction to take advantage of
                  this Subsection [(4)] (5).
                      (6) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
                  commissioner may make rules to implement this section.
                      Section 36. Section 31A-22-404 is amended to read:
                       31A-22-404. Suicide.
                      (1) (a) Suicide is not a defense to a claim under a life insurance policy that has been in force
                  as to a policyholder or certificate holder for two years from the date of issuance of the later of:
                      (i) the policy[,]; or
                      (ii) the certificate.
                      (b) Subsection (1)(a) applies whether:
                      (i) the suicide was voluntary or involuntary; or
                      (ii) the insured was sane or insane.
                      [(b)] (c) If a suicide occurs within the two-year period described in Subsection (1)(a), the
                  insurer shall pay to the beneficiary an amount not less than the premium paid for the life insurance
                  policy.
                      (2) (a) If after a life insurance policy is in effect the policy allows the insured to obtain a

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                  death benefit that is larger than when the policy was originally effective for an additional premium,
                  the payment of the additional increment of benefit may be limited in the event of a suicide within
                  a two-year period beginning on the date the increment increase takes effect.
                      (b) If a suicide occurs within the two-year period described in Subsection (2)(a), the insurer
                  shall pay to the beneficiary an amount not less than the additional premium paid for the additional
                  increment of benefit.
                      (3) This section does not apply to:
                      (a) [policies] a policy insuring against death by accident only; or
                      (b) the accident or double indemnity provisions of an insurance policy.
                      Section 37. Section 31A-22-405 is amended to read:
                       31A-22-405. Misstated age or gender.
                      (1) Subject to Subsection (2), if the age or gender of the person whose life is at risk is
                  misstated in an application for a policy of life insurance, and the error is not adjusted during the
                  person's lifetime, the amount payable under the policy is what the premium paid would have
                  purchased if the age or gender had been stated correctly.
                      (2) If the person whose life is at risk was, at the time the insurance was applied for, beyond
                  the maximum age limit designated by the insurer, the insurer shall refund at least the amount of the
                  premiums collected under the policy.
                      Section 38. Section 31A-22-409 is amended to read:
                       31A-22-409. Standard Nonforfeiture Law for Individual Deferred Annuities.
                      (1) This section is known as the "Standard Nonforfeiture Law for Individual Deferred
                  Annuities."
                      (2) This section does not apply to:
                      (a) any reinsurance group annuity purchased under a retirement plan or plan of deferred
                  compensation established or maintained by an employer, [(]including a partnership or sole
                  proprietorship[)], or by an employee organization, or by both, other than a plan providing individual
                  retirement accounts or individual retirement annuities under Section 408 [of the], Internal Revenue
                  Code[, as now or hereafter amended,];

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                      (b) a premium deposit fund[,];
                      (c) a variable annuity[,];
                      (d) an investment annuity[,];
                      (e) an immediate annuity[,];
                      (f) a deferred annuity contract after annuity payments have commenced[,]; or
                      (g) a reversionary annuity[, nor to]; or
                      (h) any contract [which] that shall be delivered outside this state through an agent or other
                  representative of the company issuing the contract.
                      (3) (a) [In the case of policies] If a policy is issued after this section takes effect as set forth
                  in Subsection (12), [no] a contract of annuity, except as stated in Subsection (2), [shall] may not be
                  delivered or issued for delivery in this state unless [it] the contract of annuity contains in substance:
                      (i) the [following] provisions[,] described in Subsection (3)(b); or [corresponding]
                      (ii) provisions [which] corresponding to the provisions described in Subsection (3)(b) that
                  in the opinion of the commissioner are at least as favorable to the contractholder, governing                   cessation
                  of payment of consideration under the contract[:].
                      (b) Subsection (3)(a)(i) requires the following provisions:
                      [(a) That] (i) upon cessation of payment of consideration under a contract, the company will
                  grant a paid-up annuity benefit on a plan stipulated in the contract of such a value as specified in
                  Subsections (5), (6), (7), (8), and (10)[.];
                      [(b) If] (ii) if a contract provides for a lump-sum settlement at maturity, or at any other time,
                  [that] upon surrender of the contract at or before the commencement of any annuity payments, the
                  company will pay in lieu of any paid-up annuity benefit a cash surrender benefit of such amount as
                  is specified in Subsections (5), (6), (8), and (10)[. The];
                      (iii) the company shall reserve the right to defer the payment of the cash surrender benefit
                  under Subsection (3)(b)(ii) for a period of six months after demand [therefor] for the payment of the
                  cash surrender benefit with surrender of the contract[.];
                      [(c) A] (iv) a statement of the mortality table, if any, and interest rates used in calculating
                  any of the following that are guaranteed under the contract:

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                      (A) minimum paid-up annuity[,] benefits;
                      (B) cash surrender benefits; or
                      (C) death benefits [that are guaranteed under the contract, together with];
                      (v) sufficient information to determine the amounts of [such] the benefits[.] described in
                  Subsection (3)(b)(iv);
                      [(d) A] (vi) a statement that any paid-up annuity, cash surrender, or death benefits that may
                  be available under the contract are not less than the minimum benefits required by any statute of the
                  state in which the contract is delivered; and
                      (vii) an explanation of the manner in which the benefits described in Subsection (3)(b)(vi)
                  are altered by the existence of any:
                      (A) additional amounts credited by the company to the contract[, any];
                      (B) indebtedness to the company on the contract; or [any]
                      (C) prior withdrawals from or partial surrender of the contract.
                      (c) Notwithstanding the requirements of this Subsection (3), any deferred annuity contract
                  may provide that if no consideration has been received under a contract for a period of two full years
                  and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising
                  from consideration paid before the period would be less than $20 monthly[,]:
                      (i) the company may at [its] the company's option terminate the contract by payment in cash
                  of the then present value of such portion of the paid-up annuity benefit, calculated on the basis of
                  the mortality table specified in the contract, if any, and the interest rate specified in the contract for
                  determining the paid-up annuity benefit[,]; and [by such]
                      (ii) the payment [shall be relieved] described in Subsection (3)(c)(i), relieves the company
                  of any further obligation under the contract.
                      (4) The minimum values as specified in Subsections (5), (6), (7), (8), and (10) of any paid-up
                  annuity, cash surrender, or death benefits available under an annuity contract shall be based upon
                  minimum nonforfeiture amounts as established in this section.
                      (a) (i) With respect to contracts providing for flexible considerations, the minimum
                  nonforfeiture amount at any time at or before the commencement of any annuity payments shall be

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                  equal to an accumulation up to such time, at a rate of interest of 3% per annum of percentages of the
                  net considerations [(as hereinafter defined)] paid prior to such time[,]:
                      (A) decreased by the sum of: [(i)]
                      (I) any prior withdrawals from or partial surrenders of the contract accumulated at a rate of
                  interest of 3% per annum[,]; and [(ii)]
                      (II) the amount of any indebtedness to the company on the contract, including interest due
                  and accrued[,]; and
                      (B) increased by any existing additional amounts credited by the company to the contract.
                      [The] (ii) For purposes of this Subsection (4)(a), the net consideration for a given contract
                  year used to define the minimum nonforfeiture amount shall be:
                      (A) an amount not less than zero; and [shall be]
                      (B) equal to the corresponding gross considerations credited to the contract during that
                  contract year less:
                      (I) an annual contract charge of $30; and [less]
                      (II) a collection charge of $1.25 per consideration credited to the contract during that                   contract
                  year.
                      (iii) The percentages of net considerations shall be:
                      (A) 65% of the net consideration for the first contract year; and
                      (B) 87-1/2% of the net considerations for the second and later contract years.
                      (iv) Notwithstanding [the provisions of the preceding sentence] Subsection (4)(a)(iii), the
                  percentage shall be 65% of the portion of the total net consideration for any renewal contract year
                  [which] that exceeds by not more than two times the sum of those portions of the net considerations
                  in all prior contract years for which the percentage was 65%.
                      (b) [With] (i) Except as provided in Subsections (4)(b)(ii) and (iii), with respect to contracts
                  providing for fixed scheduled consideration, minimum nonforfeiture amounts shall be:
                      (A) calculated on the assumption that considerations are paid annually in advance; and [shall
                  be]
                      (B) defined as for contracts with flexible considerations [which] that are paid annually [with

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                  two exceptions:].
                      [(i)] (ii) The portion of the net consideration for the first contract year to be accumulated
                  shall be equal to an amount that is the sum of:
                      (A) 65% of the net consideration for the first contract year [plus]; and
                      (B) 22-1/2% of the excess of the net consideration for the first contract year over the lesser
                  of the net considerations for:
                      (I) the second contract year; and
                      (II) the third contract [years] year.
                      [(ii)] (iii) The annual contract charge shall be the lesser of $30 or 10% of the gross annual
                  consideration.
                      (c) With respect to contracts providing for a single consideration payment, minimum
                  nonforfeiture amounts shall be defined as for contracts with flexible considerations except that:
                      (i) the percentage of net consideration used to determine the minimum nonforfeiture amount
                  shall be equal to 90%; and
                      (ii) the net consideration shall be the gross consideration less a contract charge of $75.
                      (5) (a) Any paid-up annuity benefit available under a contract shall be such that [its] the
                  contract's present value on the date annuity payments are to commence is at least equal to the
                  minimum nonforfeiture amount on that date. [Such]
                      (b) The present value described in Subsection (5)(a) shall be computed using the mortality
                  table, if any, and the interest rate specified in the contract for determining the minimum paid-up
                  annuity benefits guaranteed in the contract.
                      (6) (a) For contracts [which] that provide cash surrender benefits, the cash surrender benefits
                  available before maturity may not be less than the present value as of the date of surrender of that
                  portion of the cash surrender value [which] that would be provided under the contract at maturity
                  arising from considerations paid before the time of cash surrender reduced by the amount appropriate
                  to reflect any prior withdrawals from or partial surrender of the contract, the present value being
                  calculated on the basis of an interest rate not more than 1% higher than the interest rate specified in
                  the contract for accumulating the net considerations to determine the maturity value, decreased by

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                  the amount of any indebtedness to the company on the contract, including interest due and accrued,
                  and increased by any existing additional amounts credited by the company to the contract.
                      (b) In no event shall any cash surrender benefit be less than the minimum nonforfeiture
                  amount at that time.
                      (c) The death benefit under these contracts shall be at least equal to the cash surrender
                  benefit.
                      (7) (a) For contracts [which] that do not provide cash surrender benefits, the present value
                  of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity may
                  not be less than the present value of that portion of the maturity value of the paid-up annuity benefit
                  provided under the contract arising from considerations paid before the time the contract is
                  surrendered in exchange for, or changed to, a deferred paid-up annuity, this present value being
                  calculated for the period prior to the maturity date on the basis of the interest rate specified in the
                  contract for accumulating the net considerations to determine maturity value, and increased by any
                  existing additional amounts credited by the company to the contract.
                      (b) For contracts [which] that do not provide any death benefits before commencement of
                  any annuity payments, the present values shall be calculated on the basis of the interest rate and the
                  mortality table specified in the contract for determining the maturity value of the paid-up annuity
                  benefit. [However, in]
                      (c) In no event shall the present value of a paid-up annuity benefit be less than the minimum
                  nonforfeiture amount at that time.
                      (8) (a) For the purpose of determining the benefits calculated under Subsections (6) and (7),
                  [in the case of annuity contracts under which an election may be made to have annuity payments
                  commence at optional maturity dates,] the maturity date shall be considered to be the latest date [for
                  which election shall be] permitted by the contract, [but] except that it may not be considered to be
                  later than the later of:
                      (i) the anniversary of the contract next following the annuitant's 70th birthday; or
                      (ii) the tenth anniversary of the contract[, whichever is later].
                      (b) For a contract that provides cash surrender benefits on or past the maturity date, the cash

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                  surrender value shall be equal to the amount used to determine the annuity benefit payments.
                      (c) A surrender charge may not be imposed on or past maturity.
                      (9) Any contract [which] that does not provide cash surrender benefits or does not provide
                  death benefits at least equal to the minimum nonforfeiture amount before the commencement of any
                  annuity payments shall include a statement in a prominent place in the contract that [such] these
                  benefits are not provided.
                      (10) Any paid-up annuity, cash surrender, or death benefits available at any time, other than
                  on the contract anniversary under any contract with fixed scheduled considerations, shall be
                  calculated with allowance for the lapse of time and the payment of any scheduled considerations
                  beyond the beginning of the contract year in which cessation of payment of considerations under the
                  contract occurs.
                      (11) (a) For any contract [which] that provides, within the same contract by rider or
                  supplemental contract provisions, both annuity benefits and life insurance benefits that are in excess
                  of the greater of cash surrender benefits or a return of the gross considerations with interest, the
                  minimum nonforfeiture benefits shall:
                      (i) be equal to the sum of:
                      (A) the minimum nonforfeiture benefits for the annuity portion; and
                      (B) the minimum nonforfeiture benefits, if any, for the life insurance portion; and
                      (ii) computed as if each portion were a separate contract.
                      (b) (i) Notwithstanding [the provisions of] Subsections (5), (6), (7), (8), and (10), additional
                  benefits payable[: (a) in the event of total and permanent disability, (b) as reversionary annuity or
                  deferred reversionary annuity benefits, or (c) as other policy benefits additional to life insurance,
                  endowment, and annuity benefits, and considerations for all such additional benefits], as described
                  in Subsection (11)(b)(ii), and consideration for the additional benefits payable, shall be disregarded
                  in ascertaining, if required by this section:
                      (A) the minimum nonforfeiture amounts[,];
                      (B) paid-up annuity[,];
                      (C) cash surrender[,]; and

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                      (D) death benefits [that may be required by this section].
                      (ii) For purposes of this Subsection (11), an additional benefit is a benefit payable:
                      (A) in the event of total and permanent disability;
                      (B) as reversionary annuity or deferred reversionary annuity benefits; or
                      (C) as other policy benefits additional to life insurance, endowment, and annuity benefits.
                      (iii) The inclusion of [these] the additional benefits described in this Subsection (11) may
                  not be required in any paid-up benefits, unless the additional benefits separately would require:
                      (A) minimum nonforfeiture amounts[,];
                      (B) paid-up annuity[,];
                      (C) cash surrender; and
                      (D) death benefits.
                      (12) (a) After this section takes effect, any company may file with the commissioner a
                  written notice of its election to comply with [the provisions of] this section after a specified date
                  before [the second anniversary of the date this section takes effect. The provisions of this] July 1,
                  1988.
                      (b) This section [apply] applies to annuity contracts of a company issued on or after the date
                  the company specifies in the notice.
                      (c) If a company makes no [such] election under Subsection (12)(a), the operative date of
                  this section for such company is [the second anniversary of the effective date of this section] July
                  1, 1988.
                      Section 39. Section 31A-22-522 is amended to read:
                       31A-22-522. Required provision for notice of termination.
                      (1) A policy for group or blanket life insurance coverage issued or renewed after July 1,
                  2001, shall include a provision that obligates the policyholder to notify each employee or group
                  member:
                      (a) in writing;
                      (b) 30 days before the date the coverage is terminated; and
                      (c) (i) that the group or blanket life insurance coverage is being terminated; and

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                      (ii) the rights the employee or group member has to [continue] convert coverage upon
                  termination.
                      (2) For a policy for group or blanket life insurance coverage described in Subsection (1), an
                  insurer shall:
                      (a) include a statement of a policyholder's obligations under Subsection (1) in the insurer's
                  monthly notice to the policyholder of premium payments due; and
                      (b) provide a sample notice to the policyholder at least once a year.
                      Section 40. Section 31A-22-602 is amended to read:
                       31A-22-602. Premium rates.
                      (1) This section does not apply to group accident and health insurance.
                      (2) The benefits in an accident and health insurance policy shall be reasonable in relation to
                  the premiums charged.
                      (3) The commissioner shall [disapprove] prohibit the use of an accident and health insurance
                  policy form or rates if [it does] the form or rates do not satisfy Subsection (2).
                      Section 41. Section 31A-22-617 is amended to read:
                       31A-22-617. Preferred provider contract provisions.
                      Health insurance policies may provide for insureds to receive services or reimbursement
                  under the policies in accordance with preferred health care provider contracts as follows:
                      (1) Subject to restrictions under this section, any insurer or third party administrator may
                  enter into contracts with health care providers as defined in Section 78-14-3 under which the health
                  care providers agree to supply services, at prices specified in the contracts, to persons insured by an
                  insurer.
                      (a) A health care provider contract may require the health care provider to accept the
                  specified payment as payment in full, relinquishing the right to collect additional amounts from the
                  insured person.
                      (b) The insurance contract may reward the insured for selection of preferred health care
                  providers by:
                      (i) reducing premium rates;

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                      (ii) reducing deductibles;
                      (iii) coinsurance;
                      (iv) other copayments; or
                      (v) in any other reasonable manner.
                      (c) If the insurer is a managed care organization, as defined in Subsection
                  31A-27-311.5 (1)(f):
                      (i) the insurance contract and the health care provider contract shall provide that in the event
                  the managed care organization becomes insolvent, the rehabilitator or liquidator may:
                      (A) require the health care provider to continue to provide health care services under the
                  contract until the [later] earlier of:
                      (I) 90 days [from] after the date of the filing of a petition for rehabilitation or the petition for
                  liquidation; or
                      (II) the date the term of the contract ends; and
                      (B) subject to Subsection (1)(c)(v), reduce the fees the provider is otherwise entitled to
                  receive from the managed care organization during the time period described in Subsection
                  (1)(c)(i)(A);
                      (ii) the provider is required to:
                      (A) accept the reduced payment under Subsection (1)(c)(i)(B) as payment in full; and
                      (B) relinquish the right to collect additional amounts from the insolvent managed care
                  organization's enrollee, as defined in Section 31A-27-311.5 (1)(b);
                      (iii) if the contract between the health care provider and the managed care organization has
                  not been reduced to writing, or the contract fails to contain the language required by Subsection
                  (1)(c)(i), the provider may not collect or attempt to collect from the enrollee:
                      (A) sums owed by the insolvent managed care organization; or
                      (B) the amount of the regular fee reduction authorized under Subsection (1)(c)(i)(B);
                      (iv) the following may not bill or maintain any action at law against an enrollee to collect
                  sums owed by the insolvent managed care organization or the amount of the regular fee reduction
                  authorized under Subsection (1)(c)(i)(B):

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                      (A) a provider;
                      (B) an agent;
                      (C) a trustee; or
                      (D) an assignee of a person described in Subsections (1)(c)(iv)(A) through (C); and
                      (v) notwithstanding Subsection (1)(c)(i):
                      (A) a rehabilitator or liquidator may not reduce a fee by less than 75% of the provider's
                  regular fee set forth in the contract; and
                      (B) the enrollee shall continue to pay the copayments, deductibles, and other payments for
                  services received from the provider that the enrollee was required to pay before the filing of:
                      (I) a petition for rehabilitation; or
                      (II) a petition for liquidation.
                      (2) (a) Subject to Subsections (2)(b) through (2)(f), an insurer using preferred health care
                  provider contracts shall pay for the services of health care providers not under the contract, unless
                  the illnesses or injuries treated by the health care provider are not within the scope of the insurance
                  contract. As used in this section, "class of health care providers" means all health care providers
                  licensed or licensed and certified by the state within the same professional, trade, occupational, or
                  facility licensure or licensure and certification category established pursuant to Titles 26 and 58.
                      (b) When the insured receives services from a health care provider not under contract, the
                  insurer shall reimburse the insured for at least 75% of the average amount paid by the insurer for
                  comparable services of preferred health care providers who are members of the same class of health
                  care providers. The commissioner may adopt a rule dealing with the determination of what
                  constitutes 75% of the average amount paid by the insurer for comparable services of preferred
                  health care providers who are members of the same class of health care providers.
                      (c) When reimbursing for services of health care providers not under contract, the insurer
                  may make direct payment to the insured.
                      (d) Notwithstanding Subsection (2)(b), an insurer using preferred health care provider
                  contracts may impose a deductible on coverage of health care providers not under contract.
                      (e) When selecting health care providers with whom to contract under Subsection (1), an

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                  insurer may not unfairly discriminate between classes of health care providers, but may discriminate
                  within a class of health care providers, subject to Subsection (7).
                      (f) For purposes of this section, unfair discrimination between classes of health care
                  providers shall include:
                      (i) refusal to contract with class members in reasonable proportion to the number of insureds
                  covered by the insurer and the expected demand for services from class members; and
                      (ii) refusal to cover procedures for one class of providers that are:
                      (A) commonly utilized by members of the class of health care providers for the treatment
                  of illnesses, injuries, or conditions;
                      (B) otherwise covered by the insurer; and
                      (C) within the scope of practice of the class of health care providers.
                      (3) Before the insured consents to the insurance contract, the insurer shall fully disclose to
                  the insured that it has entered into preferred health care provider contracts. The insurer shall provide
                  sufficient detail on the preferred health care provider contracts to permit the insured to agree to the
                  terms of the insurance contract. The insurer shall provide at least the following information:
                      (a) a list of the health care providers under contract and if requested their business locations
                  and specialties;
                      (b) a description of the insured benefits, including any deductibles, coinsurance, or other
                  copayments;
                      (c) a description of the quality assurance program required under Subsection (4); and
                      (d) a description of the [grievance] adverse benefit determination procedures required under
                  Subsection (5).
                      (4) (a) An insurer using preferred health care provider contracts shall maintain a quality
                  assurance program for assuring that the care provided by the health care providers under contract
                  meets prevailing standards in the state.
                      (b) The commissioner in consultation with the executive director of the Department of
                  Health may designate qualified persons to perform an audit of the quality assurance program. The
                  auditors shall have full access to all records of the organization and its health care providers,

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                  including medical records of individual patients.
                      (c) The information contained in the medical records of individual patients shall remain
                  confidential. All information, interviews, reports, statements, memoranda, or other data furnished
                  for purposes of the audit and any findings or conclusions of the auditors are privileged. The
                  information is not subject to discovery, use, or receipt in evidence in any legal proceeding except
                  hearings before the commissioner concerning alleged violations of this section.
                      (5) An insurer using preferred health care provider contracts shall provide a reasonable
                  procedure for resolving complaints and [grievances] adverse benefit determinations initiated by the
                  insureds and health care providers.
                      (6) An insurer may not contract with a health care provider for treatment of illness or injury
                  unless the health care provider is licensed to perform that treatment.
                      (7) (a) A health care provider or insurer may not discriminate against a preferred health care
                  provider for agreeing to a contract under Subsection (1).
                      (b) Any health care provider licensed to treat any illness or injury within the scope of the
                  health care provider's practice, who is willing and able to meet the terms and conditions established
                  by the insurer for designation as a preferred health care provider, shall be able to apply for and
                  receive the designation as a preferred health care provider. Contract terms and conditions may
                  include reasonable limitations on the number of designated preferred health care providers based
                  upon substantial objective and economic grounds, or expected use of particular services based upon
                  prior provider-patient profiles.
                      (8) Upon the written request of a provider excluded from a provider contract, the
                  commissioner may hold a hearing to determine if the insurer's exclusion of the provider is based on
                  the criteria set forth in Subsection (7)(b).
                      (9) Insurers are subject to the provisions of Sections 31A-22-613.5 , 31A-22-614.5 , and
                  31A-22-618 .
                      (10) Nothing in this section is to be construed as to require an insurer to offer a certain
                  benefit or service as part of a health benefit plan.
                      (11) This section does not apply to catastrophic mental health coverage provided in

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                  accordance with Section 31A-22-625 .
                      Section 42. Section 31A-22-624 is amended to read:
                       31A-22-624. Primary care physician.
                      An accident and health insurance policy that requires an insured to select a primary care
                  physician to receive optimum coverage:
                      (1) shall permit an insured to select a participating provider who:
                      (a) is an:
                      (i) obstetrician[/];
                      (ii) gynecologist; or
                      (iii) pediatrician; and
                      (b) is qualified and willing to provide primary care services, as defined by the health care
                  plan, as the insured's provider from whom primary care services are received;
                      (2) shall clearly state in literature explaining the policy the option available to [female]
                  insureds under Subsection (1); and
                      (3) may not impose a higher premium, higher copayment requirement, or any other
                  additional expense on an insured [by virtue of] because the insured [selecting] selected a primary
                  care physician in accordance with Subsection (1).
                      Section 43. Section 31A-22-625 is amended to read:
                       31A-22-625. Catastrophic coverage of mental health conditions.
                      (1) As used in this section:
                      (a) (i) "Catastrophic mental health coverage" means coverage in a health insurance policy
                  or health maintenance organization contract that does not impose any lifetime limit, annual payment
                  limit, episodic limit, inpatient or outpatient service limit, or maximum out-of-pocket limit that places
                  a greater financial burden on an insured for the evaluation and treatment of a mental health condition
                  than for the evaluation and treatment of a physical health condition.
                      (ii) "Catastrophic mental health coverage" may include a restriction on cost sharing factors,
                  such as deductibles, copayments, or coinsurance, prior to reaching any maximum out-of-pocket limit.
                      (iii) "Catastrophic mental health coverage" may include one maximum out-of-pocket limit

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                  for physical health conditions and another maximum out-of-pocket limit for mental health
                  conditions, provided that, if separate out-of-pocket limits are established, the out-of-pocket limit for
                  mental health conditions may not exceed the out-of-pocket limit for physical health conditions.
                      (b) (i) "50/50 mental health coverage" means coverage in a health insurance policy or health
                  maintenance organization contract that pays for at least 50% of covered services for the diagnosis
                  and treatment of mental health conditions.
                      (ii) "50/50 mental health coverage" may include a restriction on episodic limits, inpatient
                  or outpatient service limits, or maximum out-of-pocket limits.
                      (c) "Large employer" [means an employer that does not come within the definition of "small
                  employer."] is as defined in Section 31A-1-301 .
                      (d) (i) "Mental health condition" means any condition or disorder involving mental illness
                  that falls under any of the diagnostic categories listed in the Diagnostic and Statistical Manual, as
                  periodically revised.
                      (ii) "Mental health condition" does not include the following when diagnosed as the primary
                  or substantial reason or need for treatment:
                      (A) marital or family problem;
                      (B) social, occupational, religious, or other social maladjustment;
                      (C) conduct disorder;
                      (D) chronic adjustment disorder;
                      (E) psychosexual disorder;
                      (F) chronic organic brain syndrome;
                      (G) personality disorder;
                      (H) specific developmental disorder or learning disability; or
                      (I) mental retardation.
                      (e) "Small employer" is as defined in Section [ 31A-30-103 ] 31A-1-301.
                      (2) (a) At the time of purchase and renewal, an insurer shall offer to each small employer
                  that it insures or seeks to insure a choice between catastrophic mental health coverage and 50/50
                  mental health coverage.

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                      (b) In addition to Subsection (2)(a), an insurer may offer to provide:
                      (i) catastrophic mental health coverage, 50/50 mental health coverage, or both at levels that
                  exceed the minimum requirements of this section; or
                      (ii) coverage that excludes benefits for mental health conditions.
                      (c) A small employer may, at its option, choose either catastrophic mental health coverage,
                  50/50 mental health coverage, or coverage offered under Subsection (2)(b), regardless of the
                  employer's previous coverage for mental health conditions.
                      (d) An insurer is exempt from the 30% index rating restriction in Subsection
                  31A-30-106 (1)(b) and, for the first year only that catastrophic mental health coverage is chosen, the
                  15% annual adjustment restriction in Subsection 31A-30-106 (1)(c)(ii), for any small employer with
                  20 or less enrolled employees who chooses coverage that meets or exceeds catastrophic mental
                  health coverage.
                      (3) (a) At the time of purchase and renewal, an insurer shall offer catastrophic mental health
                  coverage to each large employer that it insures or seeks to insure.
                      (b) In addition to Subsection (3)(a), an insurer may offer to provide catastrophic mental
                  health coverage at levels that exceed the minimum requirements of this section.
                      (c) A large employer may, at its option, choose either catastrophic mental health coverage,
                  coverage that excludes benefits for mental health conditions, or coverage offered under Subsection
                  (3)(b).
                      (4) (a) An insurer may provide catastrophic mental health coverage through a managed care
                  organization or system in a manner consistent with the provisions in Chapter 8, Health Maintenance
                  Organizations and Limited Health Plans, regardless of whether the policy or contract uses a managed
                  care organization or system for the treatment of physical health conditions.
                      (b) (i) Notwithstanding any other provision of this title, an insurer may:
                      (A) establish a closed panel of providers for catastrophic mental health coverage; and
                      (B) refuse to provide any benefit to be paid for services rendered by a nonpanel provider
                  unless:
                      (I) the insured is referred to a nonpanel provider with the prior authorization of the insurer;

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                  and
                      (II) the nonpanel provider agrees to follow the insurer's protocols and treatment guidelines.
                      (ii) If an insured receives services from a nonpanel provider in the manner permitted by
                  Subsection (4)(b)(i)(B), the insurer shall reimburse the insured for not less than 75% of the average
                  amount paid by the insurer for comparable services of panel providers under a noncapitated
                  arrangement who are members of the same class of health care providers.
                      (iii) Nothing in this Subsection (4)(b) may be construed as requiring an insurer to authorize
                  a referral to a nonpanel provider.
                      (c) To be eligible for catastrophic mental health coverage, a diagnosis or treatment of a
                  mental health condition must be rendered:
                      (i) by a mental health therapist as defined in Section 58-60-102 ; or
                      (ii) in a health care facility licensed or otherwise authorized to provide mental health services
                  pursuant to Title 26, Chapter 21, Health Care Facility Licensing and Inspection Act, or Title 62A,
                  Chapter 2, Licensure of Programs and Facilities, that provides a program for the treatment of a
                  mental health condition pursuant to a written plan.
                      (5) The commissioner may disapprove any policy or contract that provides mental health
                  coverage in a manner that is inconsistent with the provisions of this section.
                      (6) The commissioner shall:
                      (a) adopt rules as necessary to ensure compliance with this section; and
                      (b) provide general figures on the percentage of contracts and policies that include no mental
                  health coverage, 50/50 mental health coverage, catastrophic mental health coverage, and coverage
                  that exceeds the minimum requirements of this section.
                      (7) The Health and Human Services Interim Committee shall review:
                      (a) the impact of this section on insurers, employers, providers, and consumers of mental
                  health services before January 1, 2004; and
                      (b) make a recommendation as to whether the provisions of this section should be modified
                  and whether the cost-sharing requirements for mental health conditions should be the same as for
                  physical health conditions.

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                      (8) (a) An insurer shall offer catastrophic mental health coverage as part of a health