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First Substitute S.B. 122
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5 This act modifies the Insurance Code by amending definitions, making technical changes,
6 and making the following changes. The act addresses disclosure of examination reports.
7 The act addresses fees. The act addresses waiver of retaliatory requirements. The act
8 addresses withdrawal from a line of insurance. The act addresses selection and removal of
9 directors and officers of mutual insurers. This act addresses required minimum capital of
10 certain insurers, deposits, and permanent surplus. This act addresses cancellation,
11 termination, nonrenewal, or changes in certain insurance coverage. This act addresses
12 reporting requirements for point of service or point of sales products. The act addresses
13 computation for minimum standards for annuities. This act addresses the scope of the Utah
14 Rate Regulation Act. This act addresses what constitutes an insurable interest. This act
15 addresses when information can be incorporated by reference. The act addresses
16 requirements for certificates of group insurance policies. The act addresses provisions
17 related to the regulation of life and accident and health insurance. This act addresses
18 insurance marketing and licensing, including requirements for title insurance. This act
19 addresses the regulation of third party administrators and insurance adjustors. This act
20 addresses rehabilitation and liquidation of insurers. This act modifies requirements for the
21 account maintained by the Utah Property and Casualty Health Insurance Guaranty
22 Association. This act addresses the Individual and Small Employer Health Insurance Act.
23 This act provides an effective date.
24 This act affects sections of Utah Code Annotated 1953 as follows:
25 AMENDS:
26 31A-1-103, as last amended by Chapter 116, Laws of Utah 2001
27 31A-1-301, as last amended by Chapter 116, Laws of Utah 2001
28 31A-2-204, as last amended by Chapter 316, Laws of Utah 1994
29 31A-2-215, as enacted by Chapter 143, Laws of Utah 1999
30 31A-2-216, as enacted by Chapter 143, Laws of Utah 1999
31 31A-3-103, as last amended by Chapter 329, Laws of Utah 1998
32 31A-3-401, as last amended by Chapter 131, Laws of Utah 1999
33 31A-4-107, as last amended by Chapter 204, Laws of Utah 1986
34 31A-4-115, as last amended by Chapter 114, Laws of Utah 2000
35 31A-4-116, as last amended by Chapter 162, Laws of Utah 2000
36 31A-5-405, as last amended by Chapter 300, Laws of Utah 2000
37 31A-5-409, as last amended by Chapter 300, Laws of Utah 2000
38 31A-5-410, as last amended by Chapter 300, Laws of Utah 2000
39 31A-8-101, as last amended by Chapter 116, Laws of Utah 2001
40 31A-8-103, as last amended by Chapter 116, Laws of Utah 2001
41 31A-8-205, as enacted by Chapter 204, Laws of Utah 1986
42 31A-8-209, as last amended by Chapter 116, Laws of Utah 2001
43 31A-8-211, as last amended by Chapter 116, Laws of Utah 2001
44 31A-8-401, as last amended by Chapter 143, Laws of Utah 1999
45 31A-8-407, as last amended by Chapter 116, Laws of Utah 2001
46 31A-8-408, as last amended by Chapter 116, Laws of Utah 2001
47 31A-17-505, as last amended by Chapter 116, Laws of Utah 2001
48 31A-17-506, as last amended by Chapter 20, Laws of Utah 1995
49 31A-19a-101, as last amended by Chapter 116, Laws of Utah 2001
50 31A-19a-209, as renumbered and amended by Chapter 130, Laws of Utah 1999
51 31A-21-104, as last amended by Chapter 116, Laws of Utah 2001
52 31A-21-106, as last amended by Chapter 114, Laws of Utah 2000
53 31A-21-311, as enacted by Chapter 242, Laws of Utah 1985
54 31A-22-400, as enacted by Chapter 242, Laws of Utah 1985
55 31A-22-402, as last amended by Chapter 114, Laws of Utah 2000
56 31A-22-403, as last amended by Chapter 116, Laws of Utah 2001
57 31A-22-404, as last amended by Chapter 116, Laws of Utah 2001
58 31A-22-405, as enacted by Chapter 242, Laws of Utah 1985
59 31A-22-409, as last amended by Chapter 204, Laws of Utah 1986
60 31A-22-522, as enacted by Chapter 116, Laws of Utah 2001
61 31A-22-602, as last amended by Chapter 116, Laws of Utah 2001
62 31A-22-617, as last amended by Chapter 116, Laws of Utah 2001
63 31A-22-624, as last amended by Chapter 116, Laws of Utah 2001
64 31A-22-625, as last amended by Chapter 9, Laws of Utah 2001
65 31A-22-629, as enacted by Chapter 162, Laws of Utah 2000
66 31A-22-703, as last amended by Chapter 116, Laws of Utah 2001
67 31A-22-705, as last amended by Chapter 116, Laws of Utah 2001
68 31A-22-708, as repealed and reenacted by Chapter 329, Laws of Utah 1998
69 31A-22-714, as last amended by Chapter 329, Laws of Utah 1998
70 31A-23-102, as last amended by Chapters 9 and 116, Laws of Utah 2001
71 31A-23-204, as last amended by Chapter 116, Laws of Utah 2001
72 31A-23-206, as last amended by Chapter 116, Laws of Utah 2001
73 31A-23-211, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
74 31A-23-216, as last amended by Chapter 116, Laws of Utah 2001
75 31A-23-302, as last amended by Chapter 116, Laws of Utah 2001
76 31A-23-307, as last amended by Chapter 116, Laws of Utah 2001
77 31A-23-308, as enacted by Chapter 242, Laws of Utah 1985
78 31A-23-503, as last amended by Chapter 116, Laws of Utah 2001
79 31A-23-601, as last amended by Chapter 116, Laws of Utah 2001
80 31A-25-205, as last amended by Chapter 116, Laws of Utah 2001
81 31A-26-202 (Effective 07/01/02), as last amended by Chapter 8, Laws of Utah 2001, First
82 Special Session
83 31A-26-202 (Superseded 07/01/02), as last amended by Chapter 116, Laws of Utah 2001
84 31A-26-206, as last amended by Chapter 116, Laws of Utah 2001
85 31A-26-213, as last amended by Chapter 116, Laws of Utah 2001
86 31A-26-301.6, as enacted by Chapter 240, Laws of Utah 2001
87 31A-27-102, as last amended by Chapter 131, Laws of Utah 1999
88 31A-27-103, as enacted by Chapter 242, Laws of Utah 1985
89 31A-27-305, as last amended by Chapter 204, Laws of Utah 1986
90 31A-27-311.5, as repealed and reenacted by Chapter 116, Laws of Utah 2001
91 31A-27-315, as last amended by Chapter 375, Laws of Utah 1997
92 31A-27-317, as enacted by Chapter 242, Laws of Utah 1985
93 31A-27-332, as last amended by Chapter 131, Laws of Utah 1999
94 31A-27-337, as last amended by Chapter 204, Laws of Utah 1986
95 31A-27-340, as enacted by Chapter 242, Laws of Utah 1985
96 31A-27-341, as enacted by Chapter 242, Laws of Utah 1985
97 31A-28-203, as last amended by Chapter 363, Laws of Utah 2001
98 31A-28-205, as last amended by Chapter 363, Laws of Utah 2001
99 31A-28-207, as last amended by Chapter 363, Laws of Utah 2001
100 31A-28-208, as last amended by Chapter 363, Laws of Utah 2001
101 31A-28-222, as enacted by Chapter 363, Laws of Utah 2001
102 31A-29-113, as last amended by Chapter 329, Laws of Utah 1998
103 31A-30-101, as last amended by Chapter 321, Laws of Utah 1995
104 31A-30-103, as last amended by Chapter 116, Laws of Utah 2001
105 31A-30-104, as last amended by Chapter 116, Laws of Utah 2001
106 31A-30-106, as last amended by Chapter 116, Laws of Utah 2001
107 31A-30-106.7, as enacted by Chapter 265, Laws of Utah 1997
108 31A-30-107, as last amended by Chapter 116, Laws of Utah 2001
109 31A-30-108, as last amended by Chapter 329, Laws of Utah 1998
110 31A-30-110, as last amended by Chapter 53, Laws of Utah 2001
111 31A-30-111, as enacted by Chapter 321, Laws of Utah 1995
112 59-9-105, as last amended by Chapter 131, Laws of Utah 1999
113 63-55-231, as last amended by Chapter 116, Laws of Utah 2001
114 ENACTS:
115 31A-3-104, Utah Code Annotated 1953
116 31A-8-402.3, Utah Code Annotated 1953
117 31A-8-402.5, Utah Code Annotated 1953
118 31A-8-402.7, Utah Code Annotated 1953
119 31A-22-721, Utah Code Annotated 1953
120 31A-30-107.1, Utah Code Annotated 1953
121 31A-30-107.3, Utah Code Annotated 1953
122 31A-30-107.5, Utah Code Annotated 1953
123 31A-30-114, Utah Code Annotated 1953
124 REPEALS:
125 31A-8-402, as last amended by Chapter 116, Laws of Utah 2001
126 31A-15-206, as enacted by Chapter 258, Laws of Utah 1992
127 31A-22-720, as last amended by Chapter 116, Laws of Utah 2001
128 Be it enacted by the Legislature of the state of Utah:
129 Section 1. Section 31A-1-103 is amended to read:
130 31A-1-103. Scope and applicability of title.
131 (1) This title does not apply to:
132 (a) a retainer [
133 (i) with an individual [
134 (ii) under which fees are based on estimates of the nature and amount of services to be
135 provided to the specific client[
136 (b) a contract similar to a contract described in Subsection (1)(a) made with a group of
137 clients involved in the same or closely related legal matters;
138 [
139 amount of consultations, advice on simple legal matters, either alone or in combination with
140 referral services, or the promise of fee discounts for handling other legal matters;
141 [
142 contractual obligation nor reasonable expectations, in the context of an employment, membership,
143 educational, or similar relationship; or
144 [
145 to employment.
146 (2) (a) This title restricts otherwise legitimate business activity.
147 (b) What this title does not prohibit is permitted unless contrary to other provisions of Utah
148 law.
149 (3) Except as otherwise expressly provided, this title does not apply to:
150 (a) those activities of an insurer where state jurisdiction is preempted by Section 514 of
151 the federal Employee Retirement Income Security Act of 1974, as amended;
152 (b) ocean marine insurance;
153 (c) death and accident and health benefits provided by an organization [
154 organization:
155 (i) has as its principal purpose [
156 objectives rather than to provide death and accident and health benefits[
157 (ii) does not incur a legal obligation to pay a specified amount; and
158 (iii) does not create reasonable expectations of receiving a specified amount on the part
159 of an insured person;
160 (d) other business specified in rules adopted by the commissioner on a finding that:
161 (i) the transaction of [
162 protection of the interests of the residents of this state; or [
163 (ii) it would be impracticable to require compliance with this title;
164 (e) [
165 procured through negotiations under Section 31A-15-104 ;
166 [
167
168 (f) self-insurance;
169 (g) reinsurance;
170 (h) subject to Subsection [
171 covering risks in this state if:
172 (i) the policyholder exists primarily for purposes other than to procure insurance;
173 (ii) the policyholder:
174 (A) is not a resident of this state [
175 (B) is not a domestic corporation; or
176 (C) does not have its principal office in this state;
177 (iii) no more than 25% of the certificate holders or insureds are residents of this state;
178 (iv) on request of the commissioner, the insurer files with the department a copy of the
179 policy and a copy of each form or certificate; and
180 (v) (A) the insurer agrees to pay premium taxes on the Utah portion of its business, as if
181 it were authorized to do business in this state[
182 (B) the insurer provides the commissioner with the security the commissioner considers
183 necessary for the payment of premium taxes under Title 59, Chapter 9, Taxation of Admitted
184 Insurers; or
185 (i) to the extent provided in Subsection [
186 (i) a manufacturer's or seller's warranty; and
187 (ii) a manufacturer's or seller's service contract.
188 (4) A transaction described in Subsection (3)(e) is subject to taxation under Section
189 31A-3-301 .
190 [
191 blanket contracts to transfer the Utah portion of the business otherwise exempted under Subsection
192 (3)(h) to an authorized insurer if the contracts have been written by an unauthorized insurer.
193 (b) If the commissioner finds that the conditions required for the exemption of a group or
194 blanket insurer are not satisfied or that adequate protection to residents of this state is not provided,
195 the commissioner may require:
196 (i) the insurer to be authorized to do business in this state; or
197 (ii) that any of the insurer's transactions be subject to this title.
198 [
199 (i) "manufacturer's or seller's service contract" means a service contract:
200 (A) made available by:
201 (I) a manufacturer of a product[
202 (II) a seller of a product; or
203 (III) an affiliate of a manufacturer or seller of a product;
204 (B) made available:
205 (I) on one or more specific [
206 (II) on products that are components of a system; and
207 [
208 liable for services to be provided under the service contract including, if the manufacturer's or
209 seller's service contract designates, providing parts and labor;
210 (ii) "manufacturer's or seller's warranty" means the guaranty of:
211 (A) (I) the manufacturer of a product[
212 (II) a seller of a product; or
213 (III) an affiliate of a manufacturer or seller of a product;
214 [
215 (II) on products that are components of a system; and
216 [
217 liable for services to be provided under the warranty, including, if the manufacturer's or seller's
218 warranty designates, providing parts and labor; and
219 (iii) "service contract" is as defined in Section 31A-6a-101 .
220 (b) A manufacturer's or seller's warranty may be designated as:
221 (i) a warranty;
222 (ii) a guaranty; or
223 (iii) a term similar to a term described in Subsection [
224 (c) This title does not apply to:
225 (i) a manufacturer's or seller's warranty;
226 (ii) a manufacturer's or seller's service contract paid for with consideration that is in
227 addition to the consideration paid for the product itself; and
228 (iii) a service contract that is not a manufacturer's or seller's warranty or manufacturer's
229 or seller's service contract if:
230 (A) the service contract is paid for with consideration that is in addition to the
231 consideration paid for the product itself; [
232 (B) the service contract is for the repair or maintenance of goods;
233 (C) the cost of the product is equal to an amount determined in accordance with
234 Subsection [
235 (D) the product is not a motor vehicle.
236 (d) This title does not apply to a manufacturer's or seller's warranty or service contract paid
237 for with consideration that is in addition to the consideration paid for [
238 regardless of whether the manufacturer's or seller's warranty or service contract is sold:
239 (i) at the time of the purchase of the product; or
240 (ii) at a time other than the time of the purchase of the product.
241 (e) (i) For fiscal year 2001-02, the amount described in Subsection [
242 be equal to $3,700 or less.
243 (ii) For each fiscal year after fiscal year 2001-02, the commissioner shall annually
244 determine whether the amount described in Subsection [
245 accordance with changes in the Consumer Price Index published by the United States Bureau of
246 Labor Statistics selected by the commissioner by rule, between:
247 (A) the Consumer Price Index for the February immediately preceding the adjustment; and
248 (B) the Consumer Price Index for February 2001.
249 (iii) If under Subsection [
250 should be made, the commissioner shall make the adjustment by rule.
251 Section 2. Section 31A-1-301 is amended to read:
252 31A-1-301. Definitions.
253 As used in this title, unless otherwise specified:
254 (1) (a) "Accident and health insurance" means insurance to provide protection against
255 economic losses resulting from:
256 (i) a medical condition including:
257 (A) medical care expenses; or
258 (B) the risk of disability;
259 (ii) accident; or
260 (iii) sickness.
261 (b) "Accident and health insurance":
262 (i) includes a contract with disability contingencies including:
263 (A) an income replacement contract;
264 (B) a health care contract;
265 (C) an expense reimbursement contract;
266 (D) a credit accident and health contract;
267 (E) a continuing care contract; and
268 (F) long-term care contracts; and
269 (ii) may provide:
270 (A) hospital coverage;
271 (B) surgical coverage;
272 (C) medical coverage; or
273 (D) loss of income coverage.
274 (c) "Accident and health insurance" does not include workers' compensation insurance.
275 (2) "Administrator" is defined in Subsection [
276 (3) "Adult" means a natural person who has attained the age of at least 18 years.
277 (4) "Affiliate" means any person who controls, is controlled by, or is under common
278 control with, another person. A corporation is an affiliate of another corporation, regardless of
279 ownership, if substantially the same group of natural persons manages the corporations.
280 (5) "Alien insurer" means an insurer domiciled outside the United States.
281 (6) "Amendment" means an endorsement to an insurance policy or certificate.
282 (7) "Annuity" means an agreement to make periodical payments for a period certain or over
283 the lifetime of one or more natural persons if the making or continuance of all or some of the series
284 of the payments, or the amount of the payment, is dependent upon the continuance of human life.
285 (8) "Application" means a document:
286 (a) completed by an applicant to provide information about the risk to be insured; and
287 (b) that contains information that is used by the insurer to:
288 (i) evaluate risk; and
289 (ii) decide whether to:
290 (A) insure the risk under:
291 (I) the coverages as originally offered; or
292 (II) a modification of the coverage as originally offered; or
293 (B) decline to insure the risk.
294 (9) "Articles" or "articles of incorporation" means the original articles, special laws,
295 charters, amendments, restated articles, articles of merger or consolidation, trust instruments, and
296 other constitutive documents for trusts and other entities that are not corporations, and
297 amendments to any of these.
298 (10) "Bail bond insurance" means a guarantee that a person will attend court when
299 required, or will obey the orders or judgment of the court, as a condition to the release of that
300 person from confinement.
301 (11) "Binder" is defined in Section 31A-21-102 .
302 (12) "Board," "board of trustees," or "board of directors" means the group of persons with
303 responsibility over, or management of, a corporation, however designated.
304 (13) "Business of insurance" is defined in Subsection [
305 (14) "Business plan" means the information required to be supplied to the commissioner
306 under Subsections 31A-5-204 (2)(i) and (j), including the information required when these
307 subsections are applicable by reference under:
308 (a) Section 31A-7-201 ;
309 (b) Section 31A-8-205 ; or
310 (c) Subsection 31A-9-205 (2).
311 (15) "Bylaws" means the rules adopted for the regulation or management of a corporation's
312 affairs, however designated and includes comparable rules for trusts and other entities that are not
313 corporations.
314 (16) "Casualty insurance" means liability insurance as defined in Subsection [
315 (17) "Certificate" means evidence of insurance given to:
316 (a) an insured under a group insurance policy; or
317 (b) a third party.
318 (18) "Certificate of authority" is included within the term "license."
319 (19) "Claim," unless the context otherwise requires, means a request or demand on an
320 insurer for payment of benefits according to the terms of an insurance policy.
321 (20) "Claims-made coverage" means an insurance contract or provision limiting coverage
322 under a policy insuring against legal liability to claims that are first made against the insured while
323 the policy is in force.
324 (21) (a) "Commissioner" or "commissioner of insurance" means Utah's insurance
325 commissioner.
326 (b) When appropriate, the terms listed in Subsection (21)(a) apply to the equivalent
327 supervisory official of another jurisdiction.
328 (22) (a) "Continuing care insurance" means insurance that:
329 (i) provides board and lodging;
330 (ii) provides one or more of the following services:
331 (A) personal services;
332 (B) nursing services;
333 (C) medical services; or
334 (D) other health-related services; and
335 (iii) provides the coverage described in Subsection (22)(a)(i) under an agreement effective:
336 (A) for the life of the insured; or
337 (B) for a period in excess of one year.
338 (b) Insurance is continuing care insurance regardless of whether or not the board and
339 lodging are provided at the same location as the services described in Subsection (22)(a)(ii).
340 (23) (a) "Control," "controlling," "controlled," or "under common control" means the direct
341 or indirect possession of the power to direct or cause the direction of the management and policies
342 of a person. This control may be:
343 (i) by contract;
344 (ii) by common management;
345 (iii) through the ownership of voting securities; or
346 (iv) by a means other than those described in Subsections (23)(a)(i) through (iii).
347 (b) There is no presumption that an individual holding an official position with another
348 person controls that person solely by reason of the position.
349 (c) A person having a contract or arrangement giving control is considered to have control
350 despite the illegality or invalidity of the contract or arrangement.
351 (d) There is a rebuttable presumption of control in a person who directly or indirectly
352 owns, controls, holds with the power to vote, or holds proxies to vote 10% or more of the voting
353 securities of another person.
354 (24) (a) "Corporation" means insurance corporation, except when referring to:
355 (i) a corporation doing business as an insurance broker, consultant, or adjuster under:
356 (A) Chapter 23, Insurance Marketing - Licensing Agents, Brokers, Consultants, and
357 Reinsurance Intermediaries; and
358 (B) Chapter 26, Insurance Adjusters; or
359 (ii) a noninsurer that is part of a holding company system under Chapter 16, Insurance
360 Holding Companies.
361 (b) "Stock corporation" means stock insurance corporation.
362 (c) "Mutual" or "mutual corporation" means a mutual insurance corporation.
363 (25) "Credit accident and health insurance" means insurance on a debtor to provide
364 indemnity for payments coming due on a specific loan or other credit transaction while the debtor
365 is disabled.
366 (26) "Credit insurance" means surety insurance under which mortgagees and other
367 creditors are indemnified against losses caused by the default of debtors.
368 (27) "Credit life insurance" means insurance on the life of a debtor in connection with a
369 loan or other credit transaction.
370 (28) "Creditor" means a person, including an insured, having any claim, whether:
371 (a) matured;
372 (b) unmatured;
373 (c) liquidated;
374 (d) unliquidated;
375 (e) secured;
376 (f) unsecured;
377 (g) absolute;
378 (h) fixed; or
379 (i) contingent.
380 (29) (a) "Customer service representative" means a person that provides insurance services
381 and insurance product information:
382 (i) for its agent, broker, or consultant employer; and
383 (ii) to its employer's customer, client, or organization.
384 (b) A customer service representative may only operate within the scope of authority of
385 its agent, broker, or consultant employer.
386 (30) "Deadline" means the final date or time:
387 (a) imposed by:
388 (i) statute;
389 (ii) rule; or
390 (iii) order; and
391 (b) by which a required filing or payment must be received by the department.
392 (31) "Deemer clause" means a provision under this title under which upon the occurrence
393 of a condition precedent, the commissioner is deemed to have taken a specific action. If the statute
394 so provides, the condition precedent may be the commissioner's failure to take a specific action.
395 (32) "Degree of relationship" means the number of steps between two persons determined
396 by counting the generations separating one person from a common ancestor and then counting the
397 generations to the other person.
398 (33) "Department" means the Insurance Department.
399 (34) "Director" means a member of the board of directors of a corporation.
400 (35) "Disability" means a physiological or psychological condition that partially or totally
401 limits an individual's ability to:
402 (a) perform the duties of:
403 (i) that individual's occupation; or
404 (ii) any occupation for which the individual is reasonably suited by education, training, or
405 experience; or
406 (b) perform two or more of the following basic activities of daily living:
407 (i) eating;
408 (ii) toileting;
409 (iii) transferring;
410 (iv) bathing; or
411 (v) dressing.
412 (36) "Domestic insurer" means an insurer organized under the laws of this state.
413 (37) "Domiciliary state" means the state in which an insurer:
414 (a) is incorporated;
415 (b) is organized; or
416 (c) in the case of an alien insurer, enters into the United States.
417 (38) (a) "Eligible employee" means:
418 (i) an employee who:
419 (A) works on a full-time basis; and
420 (B) has a normal work week of 30 or more hours; or
421 (ii) a person described in Subsection (38)(b).
422 (b) "Eligible employee" includes, if the individual is included under a health benefit plan
423 of a small employer:
424 (i) a sole proprietor;
425 (ii) a partner in a partnership; or
426 (iii) an independent contractor.
427 (c) "Eligible employee" does not include, unless eligible under Subsection (38)(b):
428 (i) an individual who works on a temporary or substitute basis for a small employer;
429 (ii) an employer's spouse; or
430 (iii) a dependent of an employer.
431 (39) "Employee" means any individual employed by an employer.
432 [
433 (a) employees; or [
434 (b) dependents of employees.
435 [
436 (i) established or maintained, whether directly or through trustees, by:
437 (A) one or more employers;
438 (B) one or more labor organizations; or
439 (C) a combination of employers and labor organizations; and
440 (ii) that provides employee benefits paid or contracted to be paid, other than income from
441 investments of the fund, by or on behalf of an employer doing business in this state or for the
442 benefit of any person employed in this state.
443 (b) "Employee welfare fund" includes a plan funded or subsidized by user fees or tax
444 revenues.
445 [
446 to modify one or more of the provisions of the policy or certificate.
447 [
448 excluded. The items listed are representative examples for use in interpretation of this title.
449 [
450 (a) written to provide payments for expenses relating to hospital confinements resulting
451 from illness or injury; and
452 (b) written:
453 (i) as a daily limit for a specific number of days in a hospital; and
454 (ii) to have a one or two day waiting period following a hospitalization.
455 [
456 holding positions of public or private trust.
457 [
458 (i) submitted to the department in accordance with any applicable statute, rule, or filing
459 order;
460 (ii) received by the department within the time period provided in the applicable statute,
461 rule, or filing order; and
462 (iii) accompanied with the applicable one or more filing fees required by:
463 (A) Section 31A-3-103 ; or
464 (B) rule.
465 (b) "Filed" does not include a filing that is rejected by the department because it is not
466 submitted in accordance with Subsection [
467 [
468 department including:
469 (a) a policy;
470 (b) a rate;
471 (c) a form;
472 (d) a document;
473 (e) a plan;
474 (f) a manual;
475 (g) an application;
476 (h) a report;
477 (i) a certificate;
478 (j) an endorsement;
479 (k) an actuarial certification;
480 (l) a licensee annual statement;
481 (m) a licensee renewal application; or
482 (n) an advertisement.
483 [
484 insurer agrees to pay claims submitted to it by the insured for the insured's losses.
485 [
486 an alien insurer.
487 [
488 prepared for general use[
489 (i) a policy;
490 (ii) a certificate;
491 (iii) an application; or
492 (iv) an outline of coverage.
493 (b) "Form" does not include a document specially prepared for use in an individual case.
494 [
495 a mass marketing arrangement involving a defined class of persons related in some way other than
496 through the purchase of insurance.
497 (52) "Group health plan" means an employee welfare benefit plan to the extent that the
498 plan provides medical care:
499 (a) (i) to employees; or
500 (ii) to a dependent of an employee; and
501 (b) (i) directly;
502 (ii) through insurance reimbursement; or
503 (iii) through any other method.
504 (53) "Health benefit plan" means a policy or certificate for health care insurance, except
505 that health benefit plan does not include coverage:
506 (a) solely for:
507 (i) accident;
508 (ii) dental;
509 (iii) vision;
510 (iv) Medicare supplement;
511 (v) long-term care; or
512 (vi) income replacement; or
513 (b) that is:
514 (i) offered and marketed as supplemental health insurance;
515 (ii) not offered or marketed as a substitute for:
516 (A) hospital or medical expense insurance; or
517 (B) major medical expense insurance; and
518 (iii) solely for:
519 (A) a specified disease;
520 (B) hospital confinement indemnity; or
521 (C) limited benefit plan.
522 [
523 treatment, mitigation, or prevention of a human ailment or impairment:
524 (a) professional services;
525 (b) personal services;
526 (c) facilities;
527 (d) equipment;
528 (e) devices;
529 (f) supplies; or
530 (g) medicine.
531 [
532 (i) health care benefits; or
533 (ii) payment of incurred health care expenses.
534 (b) "Health care insurance" or "health insurance" does not include accident and health
535 insurance providing benefits for:
536 (i) replacement of income;
537 (ii) short-term accident;
538 (iii) fixed indemnity;
539 (iv) credit accident and health;
540 (v) supplements to liability;
541 (vi) workers' compensation;
542 (vii) automobile medical payment;
543 (viii) no-fault automobile;
544 (ix) equivalent self-insurance; or
545 (x) any type of accident and health insurance coverage that is a part of or attached to
546 another type of policy.
547 [
548 insurance written to provide payments to replace income lost from accident or sickness.
549 [
550 loss.
551 [
552 under Section 31A-26-201 who engages in insurance adjusting as a representative of insurers.
553 [
554 31A-15-104 .
555 [
556 [
557 (a) property in transit on or over land;
558 (b) property in transit over water by means other than boat or ship;
559 (c) bailee liability;
560 (d) fixed transportation property such as bridges, electric transmission systems, radio and
561 television transmission towers and tunnels; and
562 (e) personal and commercial property floaters.
563 [
564 (a) an insurer is unable to pay its debts or meet its obligations as they mature;
565 (b) an insurer's total adjusted capital is less than the insurer's mandatory control level RBC
566 under Subsection 31A-17-601 (8)(c); or
567 (c) an insurer is determined to be hazardous under this title.
568 [
569 (i) an arrangement, contract, or plan for the transfer of a risk or risks from one or more
570 persons to one or more other persons; or
571 (ii) an arrangement, contract, or plan for the distribution of a risk or risks among a group
572 of persons that includes the person seeking to distribute that person's risk.
573 (b) "Insurance" includes:
574 (i) risk distributing arrangements providing for compensation or replacement for damages
575 or loss through the provision of services or benefits in kind;
576 (ii) contracts of guaranty or suretyship entered into by the guarantor or surety as a business
577 and not as merely incidental to a business transaction; and
578 (iii) plans in which the risk does not rest upon the person who makes the arrangements,
579 but with a class of persons who have agreed to share it.
580 [
581 or settlement of a claim under an insurance policy other than life insurance or an annuity, on behalf
582 of an insurer, policyholder, or a claimant under an insurance policy.
583 [
584 [
585 "agent" means a person who represents insurers in soliciting, negotiating, or placing insurance.
586 [
587 "broker" means a person who:
588 (a) acts in procuring insurance on behalf of an applicant for insurance or an insured; and
589 (b) does not act on behalf of the insurer except by collecting premiums or performing other
590 ministerial acts.
591 [
592 (a) providing health care insurance, as defined in Subsection [
593 that are or should be licensed under this title;
594 (b) providing benefits to employees in the event of contingencies not within the control
595 of the employees, in which the employees are entitled to the benefits as a right, which benefits may
596 be provided either:
597 (i) by single employers or by multiple employer groups; or
598 (ii) through trusts, associations, or other entities;
599 (c) providing annuities, including those issued in return for gifts, except those provided
600 by persons specified in Subsections 31A-22-1305 (2) and (3);
601 (d) providing the characteristic services of motor clubs as outlined in Subsection [
602 (82);
603 (e) providing other persons with insurance as defined in Subsection [
604 (f) making as insurer, guarantor, or surety, or proposing to make as insurer, guarantor, or
605 surety, any contract or policy of title insurance;
606 (g) transacting or proposing to transact any phase of title insurance, including solicitation,
607 negotiation preliminary to execution, execution of a contract of title insurance, insuring, and
608 transacting matters subsequent to the execution of the contract and arising out of it, including
609 reinsurance; and
610 (h) doing, or proposing to do, any business in substance equivalent to Subsections [
611 (68)(a) through (g) in a manner designed to evade the provisions of this title.
612 [
613 "consultant" means a person who:
614 (a) advises other persons about insurance needs and coverages;
615 (b) is compensated by the person advised on a basis not directly related to the insurance
616 placed; and
617 (c) is not compensated directly or indirectly by an insurer, agent, or broker for advice
618 given.
619 [
620 persons, at least one of whom is an insurer.
621 [
622 a promise in an insurance policy and includes:
623 (i) policyholders;
624 (ii) subscribers;
625 (iii) members; and
626 (iv) beneficiaries.
627 (b) The definition in Subsection [
628 (i) applies only to this title; and
629 (ii) does not define the meaning of this word as used in insurance policies or certificates.
630 [
631 including:
632 (A) fraternal benefit societies;
633 (B) issuers of gift annuities other than those specified in Subsections 31A-22-1305 (2) and
634 (3);
635 (C) motor clubs;
636 (D) employee welfare plans; and
637 (E) any person purporting or intending to do an insurance business as a principal on that
638 person's own account.
639 (ii) "Insurer" does not include a governmental entity, as defined in Section 63-30-2 , to the
640 extent it is engaged in the activities described in Section 31A-12-107 .
641 (b) "Admitted insurer" is defined in Subsection [
642 (c) "Alien insurer" is defined in Subsection (5).
643 (d) "Authorized insurer" is defined in Subsection [
644 (e) "Domestic insurer" is defined in Subsection (36).
645 (f) "Foreign insurer" is defined in Subsection [
646 (g) "Nonadmitted insurer" is defined in Subsection [
647 (h) "Unauthorized insurer" is defined in Subsection [
648 (73) "Large employer," in connection with a health benefit plan, means an employer who,
649 with respect to a calendar year and to a plan year:
650 (a) employed an average of at least 51 eligible employees on each business day during the
651 preceding calendar year; and
652 (b) employs at least two employees on the first day of the plan year.
653 [
654 Section 31A-1-103 , "legal expense insurance" means insurance written to indemnify or pay for
655 specified legal expenses.
656 (b) "Legal expense insurance" includes arrangements that create reasonable expectations
657 of enforceable rights[
658 (c) "Legal expense insurance" does not include the provision of, or reimbursement for,
659 legal services incidental to other insurance coverages.
660 [
661 (i) for death, injury, or disability of any human being, or for damage to property, exclusive
662 of the coverages under:
663 (A) Subsection [
664 (B) Subsection [
665 (C) Subsection [
666 (ii) for medical, hospital, surgical, and funeral benefits to persons other than the insured
667 who are injured, irrespective of legal liability of the insured, when issued with or supplemental to
668 insurance against legal liability for the death, injury, or disability of human beings, exclusive of
669 the coverages under:
670 (A) Subsection [
671 (B) Subsection [
672 (C) Subsection [
673 (iii) for loss or damage to property resulting from accidents to or explosions of boilers,
674 pipes, pressure containers, machinery, or apparatus;
675 (iv) for loss or damage to any property caused by the breakage or leakage of sprinklers,
676 water pipes and containers, or by water entering through leaks or openings in buildings; or
677 (v) for other loss or damage properly the subject of insurance not within any other kind
678 or kinds of insurance as defined in this chapter, if such insurance is not contrary to law or public
679 policy.
680 (b) "Liability insurance" includes:
681 (i) vehicle liability insurance as defined in Subsection [
682 (ii) residential dwelling liability insurance as defined in Subsection [
683 (iii) making inspection of, and issuing certificates of inspection upon, elevators, boilers,
684 machinery, and apparatus of any kind when done in connection with insurance on them.
685 [
686 under this title to engage in some activity that is part of or related to the insurance business. [
687 (b) "License" includes certificates of authority issued to insurers.
688 [
689 to or connected with human life.
690 (b) The business of life insurance includes:
691 (i) granting death benefits;
692 (ii) granting annuity benefits;
693 (iii) granting endowment benefits;
694 (iv) granting additional benefits in the event of death by accident;
695 (v) granting additional benefits to safeguard the policy against lapse in the event of
696 disability; and
697 (vi) providing optional methods of settlement of proceeds.
698 [
699 marketed, offered, or designated to provide coverage:
700 (i) in a setting other than an acute care unit of a hospital;
701 (ii) for not less than 12 consecutive months for each covered person on the basis of:
702 (A) expenses incurred;
703 (B) indemnity;
704 (C) prepayment; or
705 (D) another method;
706 (iii) for one or more necessary or medically necessary services that are:
707 (A) diagnostic;
708 (B) preventative;
709 (C) therapeutic;
710 (D) rehabilitative;
711 (E) maintenance; or
712 (F) personal care; and
713 (iv) that may be issued by:
714 (A) an insurer;
715 (B) a fraternal benefit society;
716 (C) (I) a nonprofit health hospital; and
717 (II) a medical service corporation;
718 (D) a prepaid health plan;
719 (E) a health maintenance organization; or
720 (F) an entity similar to the entities described in Subsections [
721 (E) to the extent that the entity is otherwise authorized to issue life or health care insurance.
722 (b) "Long-term care insurance" includes:
723 (i) any of the following that provide directly or supplement long-term care insurance:
724 (A) a group or individual annuity or rider; or
725 (B) a life insurance policy or rider;
726 (ii) a policy or rider that provides for payment of benefits based on:
727 (A) cognitive impairment; or
728 (B) functional capacity; or
729 (iii) a qualified long-term care insurance contract.
730 (c) "Long-term care insurance" does not include:
731 (i) a policy that is offered primarily to provide basic Medicare supplement coverage;
732 (ii) basic hospital expense coverage;
733 (iii) basic medical/surgical expense coverage;
734 (iv) hospital confinement indemnity coverage;
735 (v) major medical expense coverage;
736 (vi) income replacement or related asset-protection coverage;
737 (vii) accident only coverage;
738 (viii) coverage for a specified:
739 (A) disease; or
740 (B) accident;
741 (ix) limited benefit health coverage; or
742 (x) a life insurance policy that accelerates the death benefit to provide the option of a lump
743 sum payment:
744 (A) if [
745 receipt of long-term care:
746 (I) benefits; or
747 (II) eligibility; and
748 (B) the coverage is for one or more the following qualifying events:
749 (I) terminal illness;
750 (II) medical conditions requiring extraordinary medical intervention; or
751 (III) permanent institutional confinement.
752 [
753 incident to the practice and provision of medical services other than the practice and provision of
754 dental services.
755 [
756 corporation.
757 [
758 be constantly maintained by a stock insurance corporation as required by statute.
759 [
760 (a) licensed under:
761 (i) Chapter 5, Domestic Stock and Mutual Insurance Corporations;
762 (ii) Chapter 11, Motor Clubs; or
763 (iii) Chapter 14, Foreign Insurers; and
764 (b) that promises for an advance consideration to provide for a stated period of time:
765 (i) legal services under Subsection 31A-11-102 (1)(b);
766 (ii) bail services under Subsection 31A-11-102 (1)(c); or
767 (iii) trip reimbursement, towing services, emergency road services, stolen automobile
768 services, a combination of these services, or any other services given in Subsections
769 31A-11-102 (1)(b) through (f).
770 [
771 (84) "Network plan" means health care insurance that:
772 (a) is issued by an insurer; and
773 (b) under which the financing and delivery of medical care is provided, in whole or in part,
774 through a defined set of providers under contract with the insurer, including the financing and
775 delivery of items paid for as medial care.
776 [
777 entitled to receive dividends representing shares of the surplus of the insurer.
778 [
779 (a) ships or hulls of ships;
780 (b) goods, freight, cargoes, merchandise, effects, disbursements, profits, moneys,
781 securities, choses in action, evidences of debt, valuable papers, bottomry, respondentia interests,
782 or other cargoes in or awaiting transit over the oceans or inland waterways;
783 (c) earnings such as freight, passage money, commissions, or profits derived from
784 transporting goods or people upon or across the oceans or inland waterways; or
785 (d) a vessel owner or operator as a result of liability to employees, passengers, bailors,
786 owners of other vessels, owners of fixed objects, customs or other authorities, or other persons in
787 connection with maritime activity.
788 [
789 [
790 insurance policy.
791 [
792 to receive dividends representing shares of the surplus of the insurer.
793 (90) "Participation," as used in a health benefit plan, means a requirement relating to the
794 minimum percentage of eligible employees that must be enrolled in relation to the total number
795 of eligible employees of an employer reduced by each eligible employee who voluntarily declines
796 coverage under the plan because the employee has other health care insurance coverage.
797 [
798 unincorporated association, joint stock company, trust, reciprocal, syndicate, or any similar entity
799 or combination of entities acting in concert.
800 (92) "Plan sponsor" is as defined in 29 U.S.C. Sec. 1002(16)(B).
801 (93) "Plan year" means:
802 (a) the year that is designated as the plan year in:
803 (i) the plan document of a group health plan; or
804 (ii) a summary plan description of a group health plan;
805 (b) if the plan document or summary plan description does not designate a plan year or
806 there is no plan document or summary plan description:
807 (i) the year used to determine deductibles or limits;
808 (ii) the policy year, if the plan does not impose deductibles or limits on a yearly basis; or
809 (iii) the employer's taxable year if:
810 (A) the plan does not impose deductibles or limits on a yearly basis; and
811 (B) (I) the plan is not insured; or
812 (II) the insurance policy is not renewed on an annual basis; or
813 (c) in a case not described in Subsection (93)(a) or (b), the calendar year.
814 [
815 riders, purporting to be an enforceable contract, which memorializes in writing some or all of the
816 terms of an insurance contract.
817 (ii) "Policy" includes a service contract issued by:
818 (A) a motor club under Chapter 11, Motor Clubs;
819 (B) a service contract provided under Chapter 6a, Service Contracts; and
820 (C) a corporation licensed under:
821 (I) Chapter 7, Nonprofit Health Service Insurance Corporations; or
822 (II) Chapter 8, Health Maintenance Organizations and Limited Health Plans.
823 (iii) "Policy" does not include:
824 (A) a certificate under a group insurance contract; or
825 (B) a document that does not purport to have legal effect.
826 (b) (i) "Group insurance policy" means a policy covering a group of persons that is issued
827 to a policyholder on behalf of the group, for the benefit of group members who are selected under
828 procedures defined in the policy or in agreements which are collateral to the policy. [
829 (ii) A group insurance policy may include members of the policyholder's family or
830 dependents.
831 (c) "Blanket insurance policy" means a group policy covering classes of persons without
832 individual underwriting, where the persons insured are determined by definition of the class with
833 or without designating the persons covered.
834 [
835 by ownership, premium payment, or otherwise.
836 [
837 nonguaranteed elements of a policy of life insurance over a period of years.
838 [
839 policy.
840 (98) "Preexisting condition," in connection with a health benefit plan, means:
841 (a) a condition for which medical advice, diagnosis, care, or treatment was recommended
842 or received during the six months immediately preceding the earlier of:
843 (i) the enrollment date; or
844 (ii) the effective date of coverage; or
845 (b) for an individual insurance policy, a pregnancy existing on the effective date of
846 coverage.
847 [
848 includes assessments, membership fees, required contributions, or monetary consideration,
849 however designated.
850 (b) Consideration paid to third party administrators for their services is not "premium,"
851 though amounts paid by third party administrators to insurers for insurance on the risks
852 administered by the third party administrators are "premium."
853 [
854 Subsection 31A-5-203 (3).
855 [
856 [
857 incident to the practice of a profession and provision of any professional services.
858 [
859 personal property of every kind and any interest in that property, from all hazards or causes, and
860 against loss consequential upon the loss or damage including vehicle comprehensive and vehicle
861 physical damage coverages, but excluding inland marine insurance and ocean marine insurance
862 as defined under Subsections [
863 [
864 venture or interlocal cooperation agreement by two or more political subdivisions or public
865 agencies of the state for the purpose of providing insurance coverage for the political subdivisions
866 or public agencies.
867 (b) Any public agency insurance mutual created under this title and Title 11, Chapter 13,
868 Interlocal Cooperation Act, is considered to be a governmental entity and political subdivision of
869 the state with all of the rights, privileges, and immunities of a governmental entity or political
870 subdivision of the state.
871 [
872 long-term care insurance contract" means:
873 (a) an individual or group insurance contract that meets the requirements of Section
874 7702B(b), Internal Revenue Code; or
875 (b) the portion of a life insurance contract that provides long-term care insurance:
876 (i) (A) by rider; or
877 (B) as a part of the contract; and
878 (ii) that satisfies the requirements of Section 7702B(b) and (e), Internal Revenue Code.
879 [
880 (i) the cost of a given unit of insurance; or
881 (ii) for property-casualty insurance, that cost of insurance per exposure unit either
882 expressed as:
883 (A) a single number; or
884 (B) a pure premium rate, adjusted before any application of individual risk variations based
885 on loss or expense considerations to account for the treatment of:
886 (I) expenses;
887 (II) profit; and
888 (III) individual insurer variation in loss experience.
889 (b) "Rate" does not include a minimum premium.
890 [
891 organization" means any person who assists insurers in rate making or filing by:
892 (i) collecting, compiling, and furnishing loss or expense statistics;
893 (ii) recommending, making, or filing rates or supplementary rate information; or
894 (iii) advising about rate questions, except as an attorney giving legal advice.
895 (b) "Rate service organization" does not mean:
896 (i) an employee of an insurer;
897 (ii) a single insurer or group of insurers under common control;
898 (iii) a joint underwriting group; or
899 (iv) a natural person serving as an actuarial or legal consultant.
900 [
901 renewal policy premiums:
902 (a) a manual of rates;
903 (b) classifications;
904 (c) rate-related underwriting rules; and
905 (d) rating formulas that describe steps, policies, and procedures for determining initial and
906 renewal policy premiums.
907 [
908 (a) except as provided in Subsection [
909 received by the department, whether delivered:
910 (i) in person;
911 (ii) by a delivery service; or
912 (iii) electronically; and
913 (b) if an item with a department imposed deadline is delivered to the department by a
914 delivery service, the delivery service's postmark date or pick-up date unless otherwise stated in:
915 (i) statute;
916 (ii) rule; or
917 (iii) a specific filing order.
918 [
919 association of persons:
920 (a) operating through an attorney-in-fact common to all of them; and
921 (b) exchanging insurance contracts with one another that provide insurance coverage on
922 each other.
923 [
924 consideration, transfers any portion of the risk it has assumed to another insurer. In referring to
925 reinsurance transactions, this title sometimes refers to:
926 (a) the insurer transferring the risk as the "ceding insurer"; and
927 (b) the insurer assuming the risk as the:
928 (i) "assuming insurer"; or
929 (ii) "assuming reinsurer."
930 [
931 resulting from or incident to the ownership, maintenance, or use of a residential dwelling that is
932 a detached single family residence or multifamily residence up to four units.
933 [
934 under a reinsurance contract. A reinsurer "retrocedes" when it reinsures with another insurer part
935 of a liability assumed under a reinsurance contract.
936 [
937 (a) an insurance policy; or
938 (b) an insurance certificate.
939 [
940 (i) note;
941 (ii) stock;
942 (iii) bond;
943 (iv) debenture;
944 (v) evidence of indebtedness;
945 (vi) certificate of interest or participation in any profit-sharing agreement;
946 (vii) collateral-trust certificate;
947 (viii) preorganization certificate or subscription;
948 (ix) transferable share;
949 (x) investment contract;
950 (xi) voting trust certificate;
951 (xii) certificate of deposit for a security;
952 (xiii) certificate of interest of participation in an oil, gas, or mining title or lease or in
953 payments out of production under such a title or lease;
954 (xiv) commodity contract or commodity option;
955 (xv) any certificate of interest or participation in, temporary or interim certificate for,
956 receipt for, guarantee of, or warrant or right to subscribe to or purchase any of the items listed in
957 Subsections [
958 (xvi) any other interest or instrument commonly known as a security.
959 (b) "Security" does not include:
960 (i) any insurance or endowment policy or annuity contract under which an insurance
961 company promises to pay money in a specific lump sum or periodically for life or some other
962 specified period; or
963 (ii) a burial certificate or burial contract.
964 [
965 spreading its own risks by a systematic plan.
966 (a) Except as provided in this Subsection [
967 an arrangement under which a number of persons spread their risks among themselves.
968 (b) Self-insurance does include an arrangement by which a governmental entity, as defined
969 in Section 63-30-2 , undertakes to indemnify its employees for liability arising out of the
970 employees' employment.
971 (c) Self-insurance does include an arrangement by which a person with a managed
972 program of self-insurance and risk management undertakes to indemnify its affiliates, subsidiaries,
973 directors, officers, or employees for liability or risk which is related to the relationship or
974 employment.
975 (d) Self-insurance does not include any arrangement with independent contractors.
976 [
977 marketed, offered, or designed to provide coverage that is similar to long-term care insurance but
978 that provides coverage for less than 12 consecutive months for each covered person.
979 (118) "Small employer," in connection with a health benefit plan, means an employer who,
980 with respect to a calendar year and to a plan year:
981 (a) employed an average of at least two employees but not more than 50 eligible employees
982 on each business day during the preceding calendar year; and
983 (b) employs at least two employees on the first day of the plan year.
984 [
985 either directly or indirectly through one or more affiliates or intermediaries.
986 (b) "Wholly owned subsidiary" of a person is a subsidiary of which all of the voting shares
987 are owned by that person either alone or with its affiliates, except for the minimum number of
988 shares the law of the subsidiary's domicile requires to be owned by directors or others.
989 [
990 (a) a guarantee against loss or damage resulting from failure of principals to pay or
991 perform their obligations to a creditor or other obligee;
992 (b) bail bond insurance; and
993 (c) fidelity insurance.
994 [
995 liabilities.
996 (b) (i) "Permanent surplus" means the surplus of a mutual insurer that has been designated
997 by the insurer as permanent.
998 (ii) Sections 31A-5-211 , 31A-7-201 , 31A-8-209 , 31A-9-209 , and 31A-14-209 require that
999 mutuals doing business in this state maintain specified minimum levels of permanent surplus.
1000 (iii) Except for assessable mutuals, the minimum permanent surplus requirement is
1001 essentially the same as the minimum required capital requirement that applies to stock insurers.
1002 (c) "Excess surplus" means:
1003 (i) for life or accident and health insurers, health organizations, and property and casualty
1004 insurers as defined in Section 31A-17-601 , the lesser of:
1005 (A) that amount of an insurer's or health organization's total adjusted capital, as defined
1006 in Subsection [
1007 (I) 2.5; and
1008 (II) the sum of the insurer's or health organization's minimum capital or permanent surplus
1009 required under Section 31A-5-211 , 31A-9-209 , or 31A-14-205 ; or
1010 (B) that amount of an insurer's or health organization's total adjusted capital, as defined
1011 in Subsection [
1012 (I) 3.0; and
1013 (II) the authorized control level RBC as defined in Subsection 31A-17-601 (8)(a); and
1014 (ii) for monoline mortgage guaranty insurers, financial guaranty insurers, and title insurers,
1015 that amount of an insurer's paid-in-capital and surplus that exceeds the product of:
1016 (A) 1.5; and
1017 (B) the insurer's total adjusted capital required by Subsection 31A-17-609 (1).
1018 [
1019 collects charges or premiums from, or who, for consideration, adjusts or settles claims of residents
1020 of the state in connection with insurance coverage, annuities, or service insurance coverage,
1021 except:
1022 (a) a union on behalf of its members;
1023 (b) a person administering any:
1024 (i) pension plan subject to the federal Employee Retirement Income Security Act of 1974;
1025 (ii) governmental plan as defined in Section 414(d), Internal Revenue Code; or
1026 (iii) nonelecting church plan as described in Section 410(d), Internal Revenue Code;
1027 (c) an employer on behalf of the employer's employees or the employees of one or more
1028 of the subsidiary or affiliated corporations of the employer;
1029 (d) an insurer licensed under Chapter 5, 7, 8, 9, or 14, but only for a line of insurance for
1030 which the insurer holds a license in this state; or
1031 (e) a person licensed or exempt from licensing under Chapter 23 or 26 whose activities are
1032 limited to those authorized under the license the person holds or for which the person is exempt.
1033 [
1034 owners of real or personal property or the holders of liens or encumbrances on that property, or
1035 others interested in the property against loss or damage suffered by reason of liens or
1036 encumbrances upon, defects in, or the unmarketability of the title to the property, or invalidity or
1037 unenforceability of any liens or encumbrances on the property.
1038 [
1039 organization's statutory capital and surplus as determined in accordance with:
1040 (a) the statutory accounting applicable to the annual financial statements required to be
1041 filed under Section 31A-4-113 ; and
1042 (b) any other items provided by the RBC instructions, as RBC instructions is defined in
1043 Section 31A-17-601 .
1044 [
1045 corporation.
1046 (b) "Trustee," when used in reference to an employee welfare fund, means an individual,
1047 firm, association, organization, joint stock company, or corporation, whether acting individually
1048 or jointly and whether designated by that name or any other, that is charged with or has the overall
1049 management of an employee welfare fund.
1050 [
1051 means an insurer:
1052 (i) not holding a valid certificate of authority to do an insurance business in this state; or
1053 (ii) transacting business not authorized by a valid certificate.
1054 (b) "Admitted insurer" or "authorized insurer" means an insurer:
1055 (i) holding a valid certificate of authority to do an insurance business in this state; and
1056 (ii) transacting business as authorized by a valid certificate.
1057 [
1058 or incident to ownership, maintenance, or use of any land vehicle or aircraft, exclusive of vehicle
1059 comprehensive and vehicle physical damage coverages under Subsection [
1060 [
1061 security convertible into a security with a voting right associated with it.
1062 [
1063 (a) insurance for indemnification of employers against liability for compensation based
1064 on:
1065 (i) compensable accidental injuries; and
1066 (ii) occupational disease disability;
1067 (b) employer's liability insurance incidental to [
1068 and written in connection with it; and
1069 (c) insurance assuring to the persons entitled to [
1070 the compensation provided by law.
1071 Section 3. Section 31A-2-204 is amended to read:
1072 31A-2-204. Conducting examinations.
1073 (1) (a) For each examination under Section 31A-2-203 , the commissioner shall issue an
1074 order:
1075 (i) stating the scope of the examination; and
1076 (ii) designating the examiner in charge.
1077 (b) The commissioner need not give advance notice of an examination to an examinee.
1078 (c) The examiner in charge shall give the examinee a copy of the order issued under this
1079 Subsection (1).
1080 (d) (i) The commissioner may alter the scope or nature of [
1081 without advance notice to the examinee [
1082 (ii) If the commissioner amends an order described in this Subsection (1), the
1083 commissioner shall provide a copy of any amended order to the examinee.
1084 (e) Statements in the commissioner's examination order concerning examination scope are
1085 for the examiner's guidance only.
1086 (f) Examining relevant matters not mentioned in [
1087 Subsection (1) is not a violation of this title.
1088 (2) The commissioner shall, whenever practicable, cooperate with the insurance regulators
1089 of other states by conducting joint examinations of multistate insurers doing business in this state.
1090 (3) An examiner authorized by the commissioner shall, when necessary to the purposes
1091 of the examination, have access at all reasonable hours to the premises and to any books, records,
1092 files, securities, documents, or property of:
1093 (a) the examinee; and [
1094 (b) any of the following if the premises, books, records, files, securities, documents, or
1095 property relate to the affairs of the examinee:
1096 (i) an officer [
1097 (ii) any other person who:
1098 (A) has executive authority over the examinee; or
1099 (B) is in charge of any segment of the examinee's affairs[
1100 (iii) any affiliate of the examinee under Subsection 31A-2-203 (1)(b)[
1101
1102 (4) (a) The officers, employees, and agents of the examinee and of persons under
1103 Subsection 31A-2-203 (1)(b) shall comply with every reasonable request of the examiners for
1104 assistance in any matter relating to the examination. [
1105 (b) A person may not obstruct or interfere with the examination except by legal process.
1106 (5) If the commissioner finds the accounts or records to be inadequate for proper
1107 examination of the condition and affairs of the examinee or improperly kept or posted, the
1108 commissioner may employ experts to rewrite, post, or balance the accounts or records at the
1109 expense of the examinee.
1110 (6) (a) The examiner in charge of an examination shall make a report of the examination
1111 no later than 60 days after the completion of the examination that shall include:
1112 (i) the information and analysis ordered under Subsection (1)[
1113 (ii) the examiner's recommendations.
1114 (b) At the option of the examiner in charge, preparation of the report may include
1115 conferences with the examinee or [
1116 (c) The report is confidential until [
1117 Subsection (7), [
1118 action under Chapter 27, Insurers Rehabilitation and Liquidation.
1119 (7) (a) The commissioner shall serve a copy of the examination report described in
1120 Subsection (6) upon the examinee.
1121 (b) Within 20 days after service, the examinee shall [
1122 (i) accept the examination report as written; or
1123 (ii) request agency action to modify the examination report.
1124 (c) The report is considered accepted under this Subsection (7) if the examinee does not
1125 file a request for agency action to modify the report within 20 days after service of the report.
1126 (d) If the examination report is accepted[
1127 (i) the examination report immediately becomes a public document; and
1128 (ii) the commissioner shall distribute [
1129 which the examinee is authorized to do business.
1130 (e) (i) Any adjudicative proceeding held as a result of the examinee's request for agency
1131 action shall, upon the examinee's demand, be closed to the public, [
1132 commissioner need not exclude any participating examiner from this closed hearing.
1133 (ii) Within 20 days after the hearing held under this Subsection (7)(e), the commissioner
1134 shall:
1135 (A) adopt the examination report with any necessary modifications; and
1136 (B) serve a copy of the adopted report upon the examinee. [
1137 (iii) Unless the examinee seeks judicial relief, the adopted examination report:
1138 (A) shall become a public document ten days after service[
1139 (B) may be distributed as described in this section[
1140
1141 (8) The examinee shall promptly furnish copies of the adopted examination report
1142 described in Subsection (7) to each member of [
1143 (9) [
1144 the commissioner may furnish, without cost or at a reasonable price set under Section 31A-3-103 ,
1145 a copy of the examination report to interested persons, including:
1146 (a) a member of the board of the examinee; or
1147 (b) one or more newspapers in this state[
1148
1149 (10) (a) In a proceeding by or against the examinee, or any officer or agent of the
1150 examinee, the examination report as adopted by the commissioner is admissible as evidence of the
1151 facts stated in the report.
1152 (b) In any proceeding commenced under Chapter 27, Insurers Rehabilitation and
1153 Liquidation, the examination report, whether adopted by the commissioner or not, is admissible
1154 as evidence of the facts stated in [
1155 Section 4. Section 31A-2-215 is amended to read:
1156 31A-2-215. Consumer education.
1157 (1) In furtherance of the purposes in Section 31A-1-102 , the commissioner may educate
1158 consumers about insurance and provide consumer assistance.
1159 (2) Consumer education may include:
1160 (a) outreach activities; and
1161 (b) the production or collection and dissemination of educational materials.
1162 (3) (a) Consumer assistance may include explaining:
1163 (i) the terms of a policy;
1164 (ii) a policy's complaint, [
1165 (iii) the fundamentals of self-advocacy.
1166 (b) Notwithstanding Subsection (3)(a), consumer assistance may not include testifying or
1167 representing a consumer in any grievance or adverse benefit determination, arbitration, judicial,
1168 or related proceeding, unless the proceeding is in connection with an enforcement action brought
1169 under Section 31A-2-308 .
1170 (4) The commissioner may adopt rules necessary to implement the requirements of this
1171 section.
1172 Section 5. Section 31A-2-216 is amended to read:
1173 31A-2-216. Office of Consumer Health Assistance.
1174 (1) The commissioner shall establish:
1175 (a) an Office of Consumer Health Assistance before July 1, 1999; and
1176 (b) a committee to advise the commissioner on consumer assistance rendered under this
1177 section.
1178 (2) The office shall:
1179 (a) be a resource for health care consumers concerning health care coverage or the need
1180 for such coverage;
1181 (b) help health care consumers understand:
1182 (i) contractual rights and responsibilities;
1183 (ii) statutory protections; and
1184 (iii) available remedies;
1185 (c) educate health care consumers:
1186 (i) by producing or collecting and disseminating educational materials to consumers, health
1187 insurers, and health benefit plans; and
1188 (ii) through outreach and other educational activities;
1189 (d) for health care consumers that have difficulty in accessing their health insurance
1190 policies because of language, disability, age, or ethnicity, provide services, directly or through
1191 referral, such as:
1192 (i) information and referral; and
1193 (ii) [
1194 (e) analyze and monitor federal and state consumer health-related statutes, rules, and
1195 regulations; and
1196 (f) summarize information gathered under this section and make the summaries available
1197 to the public, government agencies, and the Legislature.
1198 (3) The office may:
1199 (a) obtain data from health care consumers as necessary to further the office's duties under
1200 this section;
1201 (b) investigate complaints and attempt to resolve complaints at the lowest possible level;
1202 and
1203 (c) assist, but not testify or represent, a consumer in [
1204 determination, arbitration, judicial, or related proceeding, unless the proceeding is in connection
1205 with an enforcement action brought under Section 31A-2-308 .
1206 (4) The commissioner may adopt rules necessary to implement the requirements of this
1207 section.
1208 Section 6. Section 31A-3-103 is amended to read:
1209 31A-3-103. Fees.
1210 (1) [
1211 (a) "Regulatory fee" is as defined in Section 63-38-3.2.
1212 (b) "Services" means functions that are reasonable and necessary to enable the
1213 commissioner to perform the duties imposed by this title including:
1214 (i) issuing and renewing licenses and certificates of authority;
1215 (ii) filing policy forms;
1216 (iii) reporting agent appointments and terminations; and
1217 (iv) filing annual statements.
1218 (c) Fees related to the renewal of licenses may be imposed no more frequently than once
1219 each year.
1220 (2) (a) A regulatory fee charged by the department shall be set in accordance with Section
1221 63-38-3.2 .
1222 (b) Fees shall be set and collected for services provided by the department.
1223 (3) (a) For a fee authorized by this chapter that is not a regulatory fee, the department may
1224 adopt a schedule of fees provided that each fee in the schedule of fees is:
1225 (i) reasonable and fair; and
1226 (ii) submitted to the Legislature as part of the department's annual appropriations request.
1227 (b) If a fee schedule described in Subsection (3)(a) is submitted as part of the department's
1228 annual appropriations request, the Legislature may, in a manner substantially similar to Section
1229 63-38-3.2 :
1230 (i) approve any fee in the fee schedule;
1231 (ii) (A) increase or decrease any fee in the fee schedule; and
1232 (B) approve any fee in the fee schedule as changed by the Legislature; or
1233 (iii) reject any fee in the fee schedule.
1234 (c) (i) Except as provided in Subsection (3)(c)(ii), a fee approved by the Legislature
1235 pursuant to this Subsection (3) shall be deposited into the General Fund for appropriation by the
1236 Legislature.
1237 (ii) A fee approved by the Legislature pursuant to this Subsection (3) that relates to the use
1238 of electronic or other similar technology to provide the services of the department shall be
1239 deposited into the General Fund as a dedicated credit to be used by the department to provide
1240 services through use of electronic commerce or other similar technology.
1241 [
1242 Legislature and make it available upon request for $1 per copy. This fee schedule shall also be
1243 included in any compilation of rules promulgated by the commissioner.
1244 [
1245
1246
1247
1248
1249 [
1250
1251 [
1252
1253 Section 7. Section 31A-3-104 is enacted to read:
1254 31A-3-104. Electronic commerce dedicated fees.
1255 (1) The department may charge a fee for requests for information:
1256 (a) that is obtained from an electronic database of the department; or
1257 (b) derived from data that is generated by electronic means.
1258 (2) In addition to any fee authorized in this title, the department shall impose a
1259 supplemental fee on the issuance or renewal of any of the following issued by the department:
1260 (a) a license;
1261 (b) a registration; or
1262 (c) a certificate of authority.
1263 (3) A fee imposed under this section shall be:
1264 (a) established in accordance with Subsection 31A-3-103 (3); and
1265 (b) deposited into the General Fund as a dedicated credit in accordance with Subsection
1266 31A-3-103 (3).
1267 (4) In accordance with Section 63-55-231 , this section is repealed on July 1, 2006.
1268 Section 8. Section 31A-3-401 is amended to read:
1269 31A-3-401. Retaliation against insurers of foreign state or country.
1270 (1) Except as provided in Section 31A-3-402 , when, under the laws of another state or
1271 foreign country any taxes, licenses, other fees, deposit requirements, or other material obligations,
1272 prohibitions, or restrictions are or would be imposed on Utah insurers, or on the agents or
1273 representatives of Utah insurers, [
1274 requirements, or other obligations, prohibitions, or restrictions directly imposed upon similar
1275 insurers, or upon the agents or representatives of those insurers, of that other state or country under
1276 the statutes of this state, as long as the laws of that other state or country continue in force or are
1277 so applied, the same taxes, licenses, other fees, deposit requirements, or other material obligations,
1278 prohibitions, or restrictions of any kind shall be imposed, collected, and enforced by the State Tax
1279 Commission, with the assistance of the commissioner, upon the insurers, or upon the agents or
1280 representatives of those insurers, of that other state or country doing business or seeking to do
1281 business in this state.
1282 (2) Any tax, license, or other obligation imposed by any city, county, or other political
1283 subdivision or agency of another state or country on Utah insurers, their agents, or representatives
1284 is considered as being imposed by that state or country within the meaning of this section.
1285 (3) The commissioner may by rule waive the retaliatory requirements for [
1286
1287 (a) doing business in this state; or
1288 (b) seeking to do business in this state.
1289 Section 9. Section 31A-4-107 is amended to read:
1290 31A-4-107. Other business.
1291 (1) As used in this section, "business reasonably incidental to insurance business" includes:
1292 (a) in the case of an insurer authorized to transact title insurance:
1293 (i) preparing or selling abstracts of title and related documents; and
1294 (ii) providing escrow[
1295 transactions, or other services incidental to the sale or transfer of insurance related to the sale or
1296 transfer of real property, except the sale of other kinds of insurance related to the sale or transfer
1297 of real property; and
1298 (b) the business that could be done through subsidiaries authorized under Subsection
1299 31A-5-218 (3) or, in the case of a nondomestic insurer, through corporations that would be
1300 authorized under Subsection 31A-5-218 (3) if the insurer were a domestic insurer.
1301 (2) No domestic insurer may engage, directly or indirectly, in any business other than
1302 insurance and business reasonably incidental to its insurance business, except as specifically
1303 authorized by Section 31A-5-218 or other law in this state.
1304 (3) No nondomestic insurer may engage in this state in any business forbidden to a
1305 domestic insurer, nor may the insurer engage in that type of business elsewhere if the
1306 commissioner orders the nondomestic insurer to cease doing that type of business upon finding that
1307 doing that business is not consistent with the interests of its insureds, creditors, or the public in this
1308 state.
1309 Section 10. Section 31A-4-115 is amended to read:
1310 31A-4-115. Plan of orderly withdrawal.
1311 (1) (a) When an insurer intends to withdraw from writing a line of insurance in this state
1312 or to reduce its total annual premium volume by 75% or more, [
1313 commissioner a plan of orderly withdrawal.
1314 (b) For purposes of this section, a discontinuance of a health benefit plan pursuant to one
1315 of the following provisions is a withdrawal from a line of insurance:
1316 (i) Subsection 31A-30-107 (3)(e); or
1317 (ii) Subsection 31A-30-107.1 (3)(e).
1318 (2) An insurer's plan of orderly withdrawal shall:
1319 (a) indicate the date the insurer intends to begin and complete its withdrawal plan; and
1320 (b) include provisions for:
1321 (i) meeting the insurer's contractual obligations;
1322 (ii) providing services to its Utah policyholders and claimants; [
1323 (iii) meeting any applicable statutory obligations[
1324 (iv) (A) the payment of a withdrawal fee of $50,000 to the Utah Comprehensive Health
1325 Insurance Pool if:
1326 (I) the insurer is an accident and health insurer; and
1327 (II) the insurer's line of business is not assumed or placed with another insurer approved
1328 by the commissioner; or
1329 (B) the payment of a withdrawal fee of $50,000 to the department if:
1330 (I) the insurer is not an accident and health insurer; and
1331 (II) the insurer's line of business is not assumed or placed with another insurer approved
1332 by the commissioner.
1333 (3) The commissioner shall approve a plan of orderly withdrawal if [
1334 demonstrates that the insurer will:
1335 (a) protect the interests of the people of the state;
1336 (b) meet [
1337 (c) provide service to [
1338 (d) meet any applicable statutory obligations.
1339 (4) Section 31A-2-302 governs the commissioner's approval or disapproval of a plan for
1340 orderly withdrawal.
1341 (5) The commissioner may require an insurer to increase the deposit maintained in
1342 accordance with Section 31A-4-105 or Section 31A-4-105.5 and place the deposit in trust in the
1343 name of the commissioner upon finding, after an adjudicative proceeding that:
1344 (a) there is reasonable cause to conclude that the interests of the people of the state are best
1345 served by such action; and
1346 (b) the insurer:
1347 (i) has filed a plan of orderly withdrawal; or
1348 (ii) intends to:
1349 (A) withdraw from writing a line of insurance in this state; or
1350 (B) reduce [
1351 (6) An insurer [
1352 insurer:
1353 (a) (i) withdraws from writing insurance in this state; or [
1354 (ii) reduces its total annual premium volume by 75% or more in any year without having
1355 submitted a plan or receiving the commissioner's approval [
1356
1357 (7) An insurer that withdraws from writing all lines of insurance in this state may not
1358 resume writing insurance in this state for five years [
1359 (a) [
1360 the waiver is:
1361 (i) in the public interest to promote competition; or
1362 (ii) to resolve inequity in the marketplace; and
1363 (b) [
1364 (8) The commissioner shall adopt rules necessary to implement [
1365 section.
1366 Section 11. Section 31A-4-116 is amended to read:
1367 31A-4-116. Adverse benefit determination procedures.
1368 (1) If an insurer has established a complaint resolution body or grievance appeal board,
1369 the body or board shall include at least one consumer representative.
1370 (2) [
1371 health maintenance organization contracts shall be established in accordance Section 31A-22-629 .
1372 Section 12. Section 31A-5-405 is amended to read:
1373 31A-5-405. Meetings of mutuals and mutual policyholders' and members' voting
1374 rights.
1375 (1) (a) Subject to this section, Sections 16-6a-701 , 16-6a-702 , 16-6a-704 , and 16-6a-714
1376 apply to the meetings of members, the notice, and the voting in mutuals.
1377 (b) Subject to this section and Section 31A-5-409 , Section 16-6a-711 applies to the voting
1378 of members of mutuals.
1379 (2) (a) Policyholders or voting members in all mutuals have the right to vote on:
1380 (i) conversion[
1381 (ii) voluntary dissolution[
1382 (iii) amendment of the articles[
1383 (iv) the election of directors except public directors appointed [
1384 accordance with Subsections 31A-5-409 (1) and (2).
1385 (b) The mutual may adopt reasonable provisions in its bylaws to determine:
1386 (i) which individual among joint policyholders may exercise a voting right; and
1387 (ii) how to deal with cases where the same individual is one of several joint policyholders
1388 in various policies.
1389 [
1390 additional voting rights. These articles may require a greater percentage of affirmative votes to
1391 approve an action than the statutes require.
1392 (3) (a) The articles or bylaws shall contain rules governing voting procedures and voting
1393 eligibility consistent with Subsection (1). [
1394 (b) An amendment to [
1395 until at least 30 days after [
1396 (4) (a) The articles or bylaws may provide for regular or special meetings of the
1397 policyholders or voting members, and, if meetings are not provided for, then mail elections shall
1398 be provided for in lieu of elections at meetings.
1399 (b) Notice of the time and place of regular meetings or elections shall be given to each
1400 policyholder or voting member in a reasonable manner as the commissioner approves or requires.
1401 Changes may be made by written notice mailed, properly addressed, and stamped, to the
1402 last-known address of all policyholders or voting members.
1403 (5) (a) The articles may provide that representatives or delegates selected by the
1404 policyholders or voting members shall be from specific geographical districts or defined classes
1405 of policyholders or voting members, as determined on a reasonable basis.
1406 (b) After the representative assembly has been selected by the policyholder or voting
1407 members, the assembly or the respective classes of policyholders or voting members may choose
1408 replacements for members unable to complete their terms, if the articles provide for their
1409 replacement.
1410 (c) The vote of a person holding a valid proxy is treated as the vote of the policyholders
1411 or voting members who gave the proxy.
1412 Section 13. Section 31A-5-409 is amended to read:
1413 31A-5-409. Selection and removal of directors and officers of mutuals.
1414 (1) The articles or bylaws of a mutual [
1415 (a) the number of directors of the mutual including the directors that are:
1416 (i) appointed as public directors under this Subsection (1) and Subsection (2); or
1417 (ii) elected under Subsection (3);
1418 (b) the number of [
1419 directors [
1420 and
1421 (c) the plan that specifies the manner in which:
1422 (i) a public director is to be appointed; and
1423 (ii) a director who is not a public director is to be elected.
1424 (2) (a) The plan for the appointment of public directors specified in Subsection (1) shall
1425 assure true public representation on the board. [
1426 (b) A person appointed as a public director shall have insurance business or [
1427 business or professional experience that qualifies [
1428 impartially as a director.
1429 (c) A public director may be an uncompensated member of the board of directors.
1430 (d) Notwithstanding Subsection (2)(c), a public director shall meet the qualifications of
1431 Subsection (2)(b).
1432 [
1433 director shall be elected by:
1434 (i) the policyholders; or
1435 (ii) voting members.
1436 (b) If the directors who are not public directors are divided into classes, one class shall be
1437 elected:
1438 (i) at least every four years[
1439 (ii) for a term not exceeding six years.
1440 [
1441 majority of the full board at a meeting of the board called for that purpose.
1442 [
1443 to vacancies on the governing board.
1444 Section 14. Section 31A-5-410 is amended to read:
1445 31A-5-410. Supervision of management changes.
1446 (1) (a) [
1447 the insurer shall report to the commissioner:
1448 (i) the name of [
1449
1450 (ii) pertinent biographical and other data that the commissioner requires by rule[
1451
1452 (b) For five years after the initial issuance of a certificate of authority to a corporation, the
1453 commissioner may, within 30 days after receipt of a report under Subsection (1)(a), disapprove any
1454 person selected who fails to satisfy the commissioner that [
1455 (i) is trustworthy; and
1456 (ii) has the competence and experience necessary to discharge [
1457 responsibilities.
1458 (2) (a) Whenever a director or principal officer of a corporation is removed under [
1459
1460 Subsection (2)(b), the insurer shall immediately report to the commissioner:
1461 (i) the removal [
1462 (ii) a statement of the reasons for the removal.
1463 (b) Subsection (2)(a) applies to a removal under:
1464 (i) Subsection 16-6a-820 (4);
1465 (ii) Section 16-10a-808 ;
1466 (iii) Section 16-10a-832 ; and
1467 (iv) Subsection 31A-5-409 (4).
1468 (3) [
1469 commissioner finds, after a hearing, that:
1470 (a) a director or officer:
1471 (i) is incompetent [
1472 (ii) untrustworthy[
1473 (iii) is not qualified under Section 31A-5-409 ; or
1474 (iv) has wilfully violated:
1475 (A) this [
1476 (B) a rule adopted under Subsection 31A-2-201 (3)[
1477 (C) an order issued under Subsection 31A-2-201 (4)[
1478
1479 (b) the circumstances described in Subsection (3)(a) endangers the interests of:
1480 (i) insureds; or
1481 (ii) the public[
1482 Section 15. Section 31A-8-101 is amended to read:
1483 31A-8-101. Definitions.
1484 For purposes of this chapter:
1485 (1) "Basic health care services" means:
1486 (a) emergency care;
1487 (b) inpatient hospital and physician care;
1488 (c) outpatient medical services; and
1489 (d) out-of-area coverage.
1490 (2) "Director of health" means:
1491 (a) the executive director of the Department of Health; or [
1492 (b) the authorized representative of the executive director of the Department of Health.
1493 (3) "Enrollee" means an individual:
1494 (a) who has entered into a contract with an organization for health care; or
1495 (b) in whose behalf an arrangement for health care has been made.
1496 (4) "Health care" is as defined in Section 31A-1-301 .
1497 (5) "Health maintenance organization" means any person:
1498 (a) other than:
1499 (i) an insurer licensed under Chapter 7, Nonprofit Health Service Insurance Corporations;
1500 or
1501 (ii) an individual who contracts to render professional or personal services that the
1502 individual directly performs; and
1503 (b) that:
1504 (i) furnishes at a minimum, either directly or through arrangements with others, basic
1505 health care services to an enrollee in return for prepaid periodic payments agreed to in amount
1506 prior to the time during which the health care may be furnished; and
1507 (ii) is obligated to the enrollee to arrange for or to directly provide available and accessible
1508 health care.
1509 (6) (a) "Limited health plan" means, except as limited under Subsection (6)(b), any person
1510 who furnishes, either directly or through arrangements with others, services:
1511 (i) of:
1512 (A) dentists;
1513 (B) optometrists;
1514 (C) physical therapists;
1515 (D) podiatrists;
1516 (E) psychologists;
1517 (F) physicians;
1518 (G) chiropractic physicians;
1519 (H) naturopathic physicians;
1520 (I) osteopathic physicians;
1521 (J) social workers;
1522 (K) family counselors;
1523 (L) other health care providers; or
1524 (M) reasonable combinations of the services described in this Subsection [
1525 (ii) to an enrollee;
1526 (iii) in return for prepaid periodic payments agreed to in amount prior to the time during
1527 which the services may be furnished; and
1528 (iv) for which the person is obligated to the enrollee to arrange for or directly provide the
1529 available and accessible [
1530 (b) "Limited health plan" does not include:
1531 (i) a health maintenance organization;
1532 (ii) an insurer licensed under Chapter 7, Nonprofit Health Service Insurance Corporations;
1533 or
1534 (iii) an individual who contracts to render professional or personal services that [
1535 individual performs [
1536 (7) (a) "Nonprofit organization" or "nonprofit corporation" means an organization no part
1537 of the income of which is distributable to its members, trustees, or officers, or a nonprofit
1538 cooperative association, except in a manner allowed under Section 31A-8-406 .
1539 (b) "Nonprofit health maintenance organization" and "nonprofit limited health plan" are
1540 used when referring specifically to one of the types of organizations with "nonprofit" status.
1541 (8) "Organization" means a health maintenance organization and limited health plan,
1542 unless used in the context of:
1543 (a) "organization permit," [
1544 31A-8-206 ; or
1545 (b) "organization expenses," [
1546 (9) "Participating provider" means a provider as defined in Subsection (10) who, under a
1547 contract with the health maintenance organization, [
1548 services to enrollees with an expectation of receiving payment, directly or indirectly, from the
1549 health maintenance organization, other than copayment.
1550 (10) "Provider" means any person who:
1551 (a) furnishes health care directly to the enrollee; and [
1552 (b) is licensed or otherwise authorized to furnish [
1553 (11) "Uncovered expenditures" means the costs of health care services that are covered by
1554 an organization for which an enrollee is liable in the event of the organization's insolvency.
1555 (12) "Unusual or infrequently used health services" means those health services [
1556 that are projected to involve fewer than 10% of the organization's enrollees' encounters with
1557 providers, measured on an annual basis over the organization's entire enrollment.
1558 Section 16. Section 31A-8-103 is amended to read:
1559 31A-8-103. Applicability to other provisions of law.
1560 (1) (a) Except for exemptions specifically granted under this title, an organization is
1561 subject to regulation under all of the provisions of this title.
1562 (b) Notwithstanding any provision of this title, an organization licensed under this chapter:
1563 (i) is wholly exempt from [
1564 (A) Chapter 7,[
1565 Corporations;
1566 (B) Chapter 9, Insurance Fraternals;
1567 (C) Chapter 10, Annuities;
1568 (D) Chapter 11, Motor Clubs;
1569 (E) Chapter 12, State Risk Management Fund;
1570 (F) Chapter 13, Employee Welfare Funds and Plans;
1571 (G) Chapter 19a, Utah Rate Regulation Act; and
1572 (H) Chapter 28, Guaranty Associations; and
1573 (ii) not subject to:
1574 [
1575 [
1576 [
1577 provisions specifically made applicable by this chapter;
1578 [
1579 by this chapter;
1580 [
1581 [
1582 [
1583 [
1584 consistent with this chapter; and
1585 [
1586 (2) The commissioner may by rule waive other specific provisions of this title that the
1587 commissioner considers inapplicable to health maintenance organizations or limited health plans,
1588 upon a finding that the waiver will not endanger the interests of:
1589 (a) enrollees;
1590 (b) investors; or
1591 (c) the public.
1592 (3) Title 16, Chapter 6a, Utah Revised Nonprofit Corporation Act, and Title 16, Chapter
1593 10a, Utah Revised Business Corporation Act, do not apply to an organization except as specifically
1594 made applicable by:
1595 (a) this chapter;
1596 (b) a provision referenced under this chapter; or
1597 (c) a rule adopted by the commissioner to deal with corporate law issues of health
1598 maintenance organizations that are not settled under this chapter.
1599 (4) (a) Whenever in this chapter, Chapter 5, or Chapter 14 is made applicable to an
1600 organization, the application is:
1601 (i) of those provisions that apply to a mutual corporation if the organization is nonprofit;
1602 and
1603 (ii) of those that apply to a stock corporation if the organization is for profit.
1604 (b) When Chapter 5 or 14 is made applicable to an organization under this chapter,
1605 "mutual" means nonprofit organization.
1606 (5) Solicitation of enrollees by an organization is not a violation of any provision of law
1607 relating to solicitation or advertising by health professionals if that solicitation is made in
1608 accordance with:
1609 (a) this chapter; and
1610 (b) Chapter 23, Insurance Marketing - Licensing Agents, Brokers, Consultants, and
1611 Reinsurance Intermediaries.
1612 (6) [
1613 organization from meeting the requirements of any federal law that enables the health maintenance
1614 organization to:
1615 (a) receive federal funds; or
1616 (b) obtain or maintain federal qualification status.
1617 (7) Except as provided in Section 31A-8-501 , an organization is exempt from statutes in
1618 this title or department rules that restrict or limit [
1619 contracting with or selecting health care providers, including Section 31A-22-618 .
1620 (8) An organization is exempt from the assessment or payment of premium taxes imposed
1621 by Sections 59-9-101 through 59-9-104 .
1622 Section 17. Section 31A-8-205 is amended to read:
1623 31A-8-205. Organization permit and certificate of incorporation.
1624 (1) Section 31A-5-204 applies to the formation of organizations, except that "Section
1625 31A-5-211 " in Subsection 31A-5-204 (5) shall be read "Section 31A-8-209 ."
1626 (2) In addition to the requirements of Section 31A-5-204 , the application for a permit shall
1627 include a description of the initial locations of facilities where health care will be available to
1628 enrollees, the hours during which various services will be provided, the types of health care
1629 personnel to be used at each location and the approximate number of each personnel type to be
1630 available at each location, the methods to be used to monitor the quality of health care furnished,
1631 the method of resolving [
1632 providers, the method used to give enrollees an opportunity to participate in matters of policy, the
1633 medical records system, and the method for documentation of utilization of health care by persons
1634 insured.
1635 Section 18. Section 31A-8-209 is amended to read:
1636 31A-8-209. Minimum capital or minimum permanent surplus.
1637 (1) (a) A health maintenance organization being organized or operating under this chapter
1638 shall have and maintain a minimum capital or minimum permanent surplus of $100,000.
1639 (b) Each health maintenance organization authorized to do business in this state shall have
1640 and maintain qualified assets as defined in Subsection 31A-17-201 (2)(b) in an amount not less
1641 than the total of:
1642 (i) the health maintenance organization's liabilities;
1643 (ii) the health maintenance organization's minimum capital or minimum permanent surplus
1644 required by Subsection (1)(a); and
1645 (iii) the greater of:
1646 (A) the company action level RBC as defined in Subsection 31A-17-601 (8)(b); or
1647 (B) $1,300,000.
1648 (2) (a) The minimum required capital or minimum permanent surplus for a limited health
1649 plan may not:
1650 (i) [
1651 (ii) [
1652 (b) The initial minimum required capital or minimum permanent surplus for a limited
1653 health plan required by Subsection (2)(a) shall be set by the commissioner, after:
1654 (i) a hearing; and
1655 (ii) consideration of:
1656 (A) the services to be provided by the limited health plan;
1657 (B) the size and geographical distribution of the population the limited health plan
1658 anticipates serving;
1659 (C) the nature of the limited health plan's arrangements with providers; and
1660 (D) the arrangements, agreements, and relationships of the limited health plan in place or
1661 reasonably anticipated with respect to:
1662 (I) insolvency insurance;
1663 (II) reinsurance;
1664 (III) lenders subordinating to the interests of enrollees and trade creditors;
1665 (IV) personal and corporate financial guarantees;
1666 (V) provider withholds and assessments;
1667 (VI) surety bonds;
1668 (VII) hold harmless agreements in provider contracts; and
1669 (VIII) other arrangements, agreements, and relationships impacting the security of
1670 enrollees.
1671 (c) Upon a material change in the scope or nature of a limited health plan's operations, the
1672 commissioner may, after a hearing, alter the limited health plan's minimum required capital or
1673 minimum permanent surplus.
1674 [
1675
1676
1677 [
1678
1679 [
1680 [
1681
1682 [
1683 [
1684
1685
1686 [
1687 of an organization to be designated by some other name.
1688 [
1689 under this section may be grounds for the commissioner to find that the one or more persons with
1690 authority to make the organization's accounting or investment decisions are incompetent for
1691 purposes of Subsection 31A-5-410 (3).
1692 Section 19. Section 31A-8-211 is amended to read:
1693 31A-8-211. Deposit.
1694 (1) Except as provided in Subsection (2), each health maintenance organization authorized
1695 in this state shall maintain a deposit with the commissioner under Section 31A-2-206 in an amount
1696 equal to the sum of:
1697 (a) [
1698
1699 (b) 50% of the greater of:
1700 (i) $900,000;
1701 (ii) 2% of the annual premium revenues as reported on the most recent annual financial
1702 statement filed with the commissioner; or
1703 (iii) an amount equal to the sum of three months uncovered health care expenditures as
1704 reported on the most recent financial statement filed with the commissioner.
1705 (2) (a) After a hearing the commissioner may exempt a health maintenance organization
1706 from the deposit requirement of Subsection (1) if:
1707 (i) the commissioner determines that the enrollees' interests are adequately protected;
1708 (ii) the health maintenance organization has been continuously authorized to do business
1709 in this state for at least five years; and
1710 (iii) the health maintenance organization has $5,000,000 surplus in excess of [
1711 health maintenance organization's company action level RBC as defined in Subsection
1712 31A-17-601 (8)(b).
1713 (b) The commissioner may rescind an exemption given under Subsection (2)(a).
1714 (3) (a) Each limited health plan authorized in this state shall maintain a deposit with the
1715 commissioner under Section 31A-2-206 in an amount equal to the minimum capital or permanent
1716 surplus plus 50% of the greater of:
1717 (i) .5 times minimum required capital or minimum permanent surplus; or
1718 (ii) (A) during the first year of operation, 10% of the limited health plan's projected
1719 uncovered expenditures for the first year of operation;
1720 (B) during the second year of operation, 12% of the limited health plan's projected
1721 uncovered expenditures for the second year of operation;
1722 (C) during the third year of operation, 14% of the limited health plan's projected uncovered
1723 expenditures for the third year of operation;
1724 (D) during the fourth year of operation, 18% of the limited health plan's projected
1725 uncovered expenditures during the fourth year of operation; or
1726 (E) during the fifth year of operation, and during all subsequent years, 20% of the limited
1727 health plan's projected uncovered expenditures for the previous 12 months.
1728 (b) Projections of future uncovered expenditures shall be established in a manner that is
1729 approved by the commissioner.
1730 (4) A deposit required by this section may be counted toward the minimum capital or
1731 minimum permanent surplus required under Section 31A-8-209 .
1732 Section 20. Section 31A-8-401 is amended to read:
1733 31A-8-401. Enrollee participation.
1734 Every organization shall provide a reasonable procedure, consistent with Section
1735 31A-4-116 , for allowing enrollees to participate in matters of policy of the organization and for
1736 resolving complaints and [
1737 providers.
1738 Section 21. Section 31A-8-402.3 is enacted to read:
1739 31A-8-402.3. Discontinuance, nonrenewal, or changes to group health benefit plans.
1740 (1) Except as otherwise provided in this section, a group health benefit plan for a plan
1741 sponsor is renewable and continues in force:
1742 (a) with respect to all eligible employees and dependents; and
1743 (b) at the option of the plan sponsor.
1744 (2) A health benefit plan for a plan sponsor may be discontinued or nonrenewed:
1745 (a) for a network plan, if:
1746 (i) there is no longer any enrollee under the group health plan who lives, resides, or works
1747 in:
1748 (A) the service area of the insurer; or
1749 (B) the area for which the insurer is authorized to do business; and
1750 (ii) in the case of the small employer market, the insurer applies the same criteria the
1751 insurer would apply in denying enrollment in the plan under Subsection 31A-30-108 (6); or
1752 (b) for coverage made available in the small or large employer market only through an
1753 association, if:
1754 (i) the employer's membership in the association ceases; and
1755 (ii) the coverage is terminated uniformly without regard to any health status-related factor
1756 relating to any covered individual.
1757 (3) A health benefit plan for a plan sponsor may be discontinued if:
1758 (a) a condition described in Subsection (2) exists;
1759 (b) the plan sponsor fails to pay premiums or contributions in accordance with the terms
1760 of the contract;
1761 (c) the plan sponsor:
1762 (i) performs an act or practice that constitutes fraud; or
1763 (ii) makes an intentional misrepresentation of material fact under the terms of the
1764 coverage;
1765 (d) the insurer:
1766 (i) elects to discontinue offering a particular health benefit product delivered or issued for
1767 delivery in this state; and
1768 (ii) (A) provides notice of the discontinuation in writing:
1769 (I) to each plan sponsor, employee, or dependent of a plan sponsor or an employee; and
1770 (II) at least 90 days before the date the coverage will be discontinued;
1771 (B) provides notice of the discontinuation in writing:
1772 (I) to the commissioner; and
1773 (II) at least three working days prior to the date the notice is sent to the affected plan
1774 sponsors, employees, and dependents of the plan sponsors or employees;
1775 (C) offers to each plan sponsor, on a guaranteed issue basis, the option to purchase:
1776 (I) all other health benefit products currently being offered by the insurer in the market;
1777 or
1778 (II) in the case of a large employer, any other health benefit product currently being offered
1779 in that market; and
1780 (D) in exercising the option to discontinue that product and in offering the option of
1781 coverage in this section, acts uniformly without regard to:
1782 (I) the claims experience of a plan sponsor;
1783 (II) any health status-related factor relating to any covered participant or beneficiary; or
1784 (III) any health status-related factor relating to any new participant or beneficiary who may
1785 become eligible for the coverage; or
1786 (e) the insurer:
1787 (i) elects to discontinue all of the insurer's health benefit plans in:
1788 (A) the small employer market;
1789 (B) the large employer market; or
1790 (C) both the small employer and large employer markets; and
1791 (ii) (A) provides notice of the discontinuation in writing:
1792 (I) to each plan sponsor, employee, or dependent of a plan sponsor or an employee; and
1793 (II) at least 180 days before the date the coverage will be discontinued;
1794 (B) provides notice of the discontinuation in writing:
1795 (I) to the commissioner in each state in which an affected insured individual is known to
1796 reside; and
1797 (II) at least 30 working days prior to the date the notice is sent to the affected plan
1798 sponsors, employees, and the dependents of the plan sponsors or employees;
1799 (C) discontinues and nonrenews all plans issued or delivered for issuance in the market;
1800 and
1801 (D) provides a plan of orderly withdrawal as required by Section 31A-4-115 .
1802 (4) A health benefit plan for a plan sponsor may be nonrenewed:
1803 (a) if a condition described in Subsection (2) exists; or
1804 (b) for noncompliance with the insurer's:
1805 (i) minimum participation requirements; or
1806 (ii) employer contribution requirements.
1807 (5) (a) Except as provided in Subsection (5)(d), an eligible employee may be discontinued
1808 if after issuance of coverage the eligible employee:
1809 (i) engages in an act or practice in connection with the coverage that constitutes fraud; or
1810 (ii) makes an intentional misrepresentation of material fact in connection with the
1811 coverage.
1812 (b) An eligible employee that is discontinued under Subsection (5)(a) may reenroll:
1813 (i) 12 months after the date of discontinuance; and
1814 (ii) if the plan sponsor's coverage is in effect at the time the eligible employee applies to
1815 reenroll.
1816 (c) At the time the eligible employee's coverage is discontinued under Subsection (5)(a),
1817 the insurer shall notify the eligible employee of the right to reenroll when coverage is discontinued.
1818 (d) An eligible employee may not be discontinued under this Subsection (5) because of
1819 a fraud or misrepresentation that relates to health status.
1820 (6) For purposes of this section, a reference to "plan sponsor" includes a reference to the
1821 employer:
1822 (a) with respect to coverage provided to an employer member of the association; and
1823 (b) if the health benefit plan is made available by an insurer in the employer market only
1824 through:
1825 (i) an association;
1826 (ii) a trust; or
1827 (iii) a discretionary group.
1828 (7) An insurer may modify a health benefit plan for a plan sponsor only:
1829 (a) at the time of coverage renewal; and
1830 (b) if the modification is effective uniformly among all plans with that product.
1831 Section 22. Section 31A-8-402.5 is enacted to read:
1832 31A-8-402.5. Individual discontinuance and nonrenewal.
1833 (1) (a) Except as otherwise provided in this section, a health benefit plan offered on an
1834 individual basis is renewable and continues in force:
1835 (i) with respect to all individuals or dependents; and
1836 (ii) at the option of the individual.
1837 (b) Subsection (1)(a) applies regardless of:
1838 (i) whether the contract is issued through:
1839 (A) a trust;
1840 (B) an association;
1841 (C) a discretionary group; or
1842 (D) other similar grouping; or
1843 (ii) the situs of delivery of the policy or contract.
1844 (2) A health benefit plan may be discontinued or nonrenewed:
1845 (a) for a network plan, if:
1846 (i) the individual no longer lives, resides, or works in:
1847 (A) the service area of the insurer; or
1848 (B) the area for which the insurer is authorized to do business; and
1849 (ii) coverage is terminated uniformly without regard to any health status-related factor
1850 relating to any covered individual; or
1851 (b) for coverage made available through an association, if:
1852 (i) the individual's membership in the association ceases; and
1853 (ii) the coverage is terminated uniformly without regard to any health status-related factor
1854 relating to any covered individual.
1855 (3) A health benefit plan may be discontinued if:
1856 (a) a condition described in Subsection (2) exists;
1857 (b) the individual fails to pay premiums or contributions in accordance with the terms of
1858 the health benefit plan, including any timeliness requirements;
1859 (c) the individual:
1860 (i) performs an act or practice in connection with the coverage that constitutes fraud; or
1861 (ii) makes an intentional misrepresentation of material fact under the terms of the
1862 coverage;
1863 (d) the insurer:
1864 (i) elects to discontinue offering a particular health benefit product delivered or issued for
1865 delivery in this state; and
1866 (ii) (A) provides notice of the discontinuation in writing:
1867 (I) to each individual provided coverage; and
1868 (II) at least 90 days before the date the coverage will be discontinued;
1869 (B) provides notice of the discontinuation in writing:
1870 (I) to the commissioner; and
1871 (II) at least three working days prior to the date the notice is sent to the affected
1872 individuals;
1873 (C) offers to each covered individual on a guaranteed issue basis, the option to purchase
1874 all other individual health benefit products currently being offered by the insurer for individuals
1875 in that market; and
1876 (D) acts uniformly without regard to any health status-related factor of covered individuals
1877 or dependents of covered individuals who may become eligible for coverage; or
1878 (e) the insurer:
1879 (i) elects to discontinue all of the insurer's health benefit plans in the individual market;
1880 and
1881 (ii) (A) provides notice of the discontinuation in writing:
1882 (I) to each individual provided coverage; and
1883 (II) at least 180 days before the date the coverage will be discontinued;
1884 (B) provides notice of the discontinuation in writing:
1885 (I) to the commissioner in each state in which an affected insured individual is known to
1886 reside; and
1887 (II) at least 30 working days prior to the date the notice is sent to the affected individuals;
1888 (C) discontinues and nonrenews all health benefit plans the insurer issues or delivers for
1889 insurance in the individual market; and
1890 (D) acts uniformly without regard to any health status-related factor of covered individuals
1891 or dependents of covered individuals who may become eligible for coverage.
1892 Section 23. Section 31A-8-402.7 is enacted to read:
1893 31A-8-402.7. Discontinuance and nonrenewal limitations.
1894 (1) Subject to Section 31A-4-115 , an insurer that elects to discontinue offering a health
1895 benefit plan under Subsections 31A-8-402.3 (3)(e) and 31A-8-402.5 (3)(e) is prohibited from
1896 writing new business:
1897 (a) in the market in this state for which the insurer discontinues or does not renew; and
1898 (b) for a period of five years beginning on the date of discontinuation of the last coverage
1899 that is discontinued.
1900 (2) If an insurer is doing business in one established geographic service area of the state,
1901 Sections 31A-8-402.3 and 31A-8-402.5 apply only to the insurer's operations in that service area.
1902 (3) Notwithstanding whether Chapter 22, Part VII, Group Accident and Health Insurance,
1903 requires a conversion policy be available for certain persons who are no longer entitled to group
1904 coverage, an organization may not be required to provide a conversion policy to a person residing
1905 outside of the organization's service area.
1906 (4) The commissioner may, by rule or order, define the scope of service area.
1907 Section 24. Section 31A-8-407 is amended to read:
1908 31A-8-407. Written contracts -- Limited liability of enrollee.
1909 (1) (a) Every contract between an organization and a participating provider of health care
1910 services shall be in writing and shall set forth that if the organization:
1911 (i) fails to pay for health care services as set forth in the contract, the enrollee may not be
1912 liable to the provider for any sums owed by the organization; and
1913 (ii) the organization becomes insolvent, the rehabilitator or liquidator may require the
1914 participating provider of health care services to:
1915 (A) continue to provide health care services under the contract between the participating
1916 provider and the organization until the [
1917 (I) 90 days [
1918 for liquidation; or
1919 (II) the date the term of the contract ends; and
1920 (B) subject to Subsection (1)(c), reduce the fees the participating provider is otherwise
1921 entitled to receive from the organization under the contract between the participating provider and
1922 the organization during the time period described in Subsection (1)(a)(ii)(A).
1923 (b) If the conditions of Subsection (1)(c) are met, the participating provider shall:
1924 (i) accept the reduced payment as payment in full; and
1925 (ii) relinquish the right to collect additional amounts from the insolvent organization's
1926 enrollee.
1927 (c) Notwithstanding Subsection (1)(a)(ii)(B):
1928 (i) the rehabilitator or liquidator may not reduce a fee to less than 75% of the regular fee
1929 set forth in the participating provider contract; and
1930 (ii) the enrollee shall continue to pay the same copayments, deductibles, and other
1931 payments for services received from the participating provider that the enrollee was required to pay
1932 before the filing of:
1933 (A) the petition for reorganization; or
1934 (B) the petition for liquidation.
1935 (2) A participating provider may not collect or attempt to collect from the enrollee sums
1936 owed by the organization or the amount of the regular fee reduction authorized under Subsection
1937 (1)(a)(ii) if the participating provider contract:
1938 (a) is not in writing as required in Subsection (1); or
1939 (b) fails to contain the language required by Subsection (1).
1940 (3) (a) A person listed in Subsection (3)(b) may not bill or maintain any action at law
1941 against an enrollee to collect:
1942 (i) sums owed by the organization; or
1943 (ii) the amount of the regular fee reduction authorized under Subsection (1)(a)(ii).
1944 (b) Subsection (3)(a) applies to:
1945 (i) a participating provider;
1946 (ii) an agent;
1947 (iii) a trustee; or
1948 (iv) an assignee of a person described in Subsections (3)(b)(i) through (iii).
1949 Section 25. Section 31A-8-408 is amended to read:
1950 31A-8-408. Organizations offering point of service or point of sales products.
1951 Effective July 1, 1991, a health maintenance organization offering products that permit
1952 members the option of obtaining covered services from a noncontracted provider, which is a point
1953 of service or point of sale product, shall comply with the requirements of Subsections (1) through
1954 (7).
1955 (1) The cost of an encounter with a noncontracted provider is considered an uncovered
1956 expenditure as defined in Section 31A-8-101 .
1957 (2) [
1958 commissioner on a monthly basis the number of encounters with contracted and noncontracted
1959 providers [
1960 (i) point of service product; or
1961 (ii) point of sale product.
1962 (b) The commissioner shall:
1963 (i) define the form, content, and due date of the report required by this Subsection (2); and
1964 [
1965 (ii) require audited reports of the information on a yearly basis.
1966 (3) An organization may not offer a point of service [
1967 product unless [
1968 within the organization's service area for each covered service other than those unusual or
1969 infrequently used health services that are not available from the organization's health care
1970 providers.
1971 (4) An organization may not enroll [
1972 in the service area as defined by rule, except this Subsection (4) does not apply to [
1973 dependent of [
1974 (5) Any organization that exceeds the 10% limit of unusual or infrequently used health
1975 services as defined in Section 31A-8-101 is subject to a forfeiture of up to $50 per encounter.
1976 (6) An organization shall disclose to employees and members the existence of the 10%
1977 limit:
1978 (a) at enrollment; or
1979 (b) prior to enrollment.
1980 (7) The commissioner shall hold hearings and adopt rules providing any additional
1981 limitations or requirements necessary to secure the public interest in conformity with this section.
1982 Section 26. Section 31A-17-505 is amended to read:
1983 31A-17-505. Computation of minimum standard for annuities.
1984 (1) Except as provided in Section 31A-17-506 , the minimum standard for the valuation
1985 of all individual annuity and pure endowment contracts issued on or after the operative date of this
1986 section, as defined in Subsection (2), and for all annuities and pure endowments purchased on or
1987 after such operative date under group annuity and pure endowment contracts, shall be the
1988 commissioner's reserve valuation methods defined in Sections 31A-17-507 and 31A-17-508 and
1989 the following tables and interest rates:
1990 (a) [
1991 1980, excluding any accident and health and accidental death benefits in [
1992 (i) (A) the 1971 Individual Annuity Mortality Table[
1993 (B) any modification of [
1994 by the commissioner[
1995 (ii) 6% interest for single premium immediate annuity contracts[
1996 (iii) 4% interest for all other individual annuity and pure endowment contracts[
1997 (b) [
1998 April 2, 1980, excluding any accident and health and accidental death benefits in [
1999 contracts: [
2000 (i) (A) any individual annuity mortality table[
2001
2002 commissioner for use in determining the minimum standard of valuation for such contracts[
2003 (B) any modification of [
2004 by the commissioner[
2005 (ii) 7.5% interest[
2006 (c) [
2007 1980, other than single premium immediate annuity contracts, excluding any accident and health
2008 and accidental death benefits in [
2009
2010 (i) (A) any individual annuity mortality table [
2011
2012 commissioner for use in determining the minimum standard of valuation for such contracts[
2013 (B) any modification of [
2014 by the commissioner[
2015 (ii) 5.5% interest for single premium deferred annuity and pure endowment contracts; and
2016 (iii) 4.5% interest for all other such individual annuity and pure endowment contracts[
2017 (d) [
2018 group annuity and pure endowment contracts, excluding any accident and health and accidental
2019 death benefits purchased under [
2020 (i) (A) the 1971 Group Annuity Mortality Table; or
2021 (B) any modification of [
2022 the commissioner[
2023 (ii) 6.5% interest[
2024 (e) [
2025 group annuity and pure endowment contracts, excluding any accident and health and accidental
2026 death benefits purchased under [
2027 (i) (A) any group annuity mortality table [
2028
2029 use in determining the minimum standard of valuation for such annuities and pure endowments[
2030 or
2031 (B) any modification of [
2032 by the commissioner[
2033 (ii) 7.5% interest.
2034 (2) (a) After June 1, 1973, any company may file with the commissioner a written notice
2035 of its election to comply with [
2036 1, 1979, which shall be the operative date of this section for [
2037 (b) If a company [
2038 operative date of this section for [
2039 Section 27. Section 31A-17-506 is amended to read:
2040 31A-17-506. Computation of minimum standard by calendar year of issue.
2041 (1) Applicability of Section 31A-17-506 : The interest rates used in determining the
2042 minimum standard for the valuation shall be the calendar year statutory valuation interest rates as
2043 defined in this section for:
2044 (a) all life insurance policies issued in a particular calendar year, on or after the operative
2045 date of Subsection 31A-22-408 (6)(d);
2046 (b) all individual annuity and pure endowment contracts issued in a particular calendar
2047 year on or after January 1, [
2048 (c) all annuities and pure endowments purchased in a particular calendar year on or after
2049 January 1, [
2050 (d) the net increase, if any, in a particular calendar year after January 1, [
2051 amounts held under guaranteed interest contracts.
2052 (2) Calendar year statutory valuation interest rates:
2053 (a) The calendar year statutory valuation interest rates, "I," shall be determined as follows
2054 and the results rounded to the nearer 1/4 of 1%:
2055 (i) For life insurance:
2056 I =.03 + W(R1 -.03) + (W/2)(R2 -.09);
2057 (ii) For single premium immediate annuities and for annuity benefits involving life
2058 contingencies arising from other annuities with cash settlement options and from guaranteed
2059 interest contracts with cash settlement options:
2060 I =.03 + W(R -.03),
2061 where R1 is the lesser of R and.09,
2062 R2 is the greater of R and.09,
2063 R is the reference interest rate defined in Subsection (4), and
2064 W is the weighting factor defined in this section;
2065 (iii) For other annuities with cash settlement options and guaranteed interest contracts with
2066 cash settlement options, valued on an issue year basis, except as stated in Subsection (ii), the
2067 formula for life insurance stated in Subsection (i) shall apply to annuities and guaranteed interest
2068 contracts with guarantee durations in excess of ten years, and the formula for single premium
2069 immediate annuities stated in Subsection (ii) shall apply to annuities and guaranteed interest
2070 contracts with guarantee duration of ten years or less;
2071 (iv) For other annuities with no cash settlement options and for guaranteed interest
2072 contracts with no cash settlement options, the formula for single premium immediate annuities
2073 stated in Subsection (ii) shall apply.
2074 (v) For other annuities with cash settlement options and guaranteed interest contracts with
2075 cash settlement options, valued on a change in fund basis, the formula for single premium
2076 immediate annuities stated in Subsection (ii) shall apply.
2077 (b) However, if the calendar year statutory valuation interest rate for any life insurance
2078 policies issued in any calendar year determined without reference to this sentence differs from the
2079 corresponding actual rate for similar policies issued in the immediately preceding calendar year
2080 by less than 1/2 of 1% the calendar year statutory valuation interest rate for such life insurance
2081 policies shall be equal to the corresponding actual rate for the immediately preceding calendar
2082 year. For purposes of applying the immediately preceding sentence, the calendar year statutory
2083 valuation interest rate for life insurance policies issued in a calendar year shall be determined for
2084 1980, using the reference interest rate defined in 1979, and shall be determined for each subsequent
2085 calendar year regardless of when Subsection 31A-22-408 (6)(d) becomes operative.
2086 (3) Weighting factors:
2087 (a) The weighting factors referred to in the formulas stated in Subsection (2) are given in
2088 the following tables:
2089 (i) Weighting factors for life insurance:
2090 Guarantee Duration (Years) Weighting Factors
2091 10 or less: .50
2092 More than 10, but less than 20: .45
2093 More than 20: .35
2094 For life insurance, the guarantee duration is the maximum number of years the life
2095 insurance can remain in force on a basis guaranteed in the policy or under options to convert to
2096 plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed
2097 in the original policy;
2098 (ii) Weighting factor for single premium immediate annuities and for annuity benefits
2099 involving life contingencies arising from other annuities with cash settlement options and
2100 guaranteed interest contracts with cash settlement options: .80
2101 (iii) Weighting factors for other annuities and for guaranteed interest contracts, except as
2102 stated in Subsection (ii), shall be as specified in Tables (A), (B), and (C) below, according to the
2103 rules and definitions in (D), (E), and (F) below:
2104 (A) For annuities and guaranteed interest contracts valued on an issue year basis:
2105 Guarantee Duration (Years) Weighting Factors for Plan Type
2106 A B C
2107 5 or less: .80 .60 .50
2108 More than 5, but not more than 10: .75 .60 .50
2109 More than 10, but not more than 20: .65 .50 .45
2110 More than 20: .45 .35 .35
2111 Plan Type
2112 A B C
2113 (B) For annuities and guaranteed interest
2114 contracts valued on a change in fund basis, the
2115 factors shown in (A) above increased by: .15 .25 .05
2116 Plan Type
2117 A B C
2118 (C) For annuities and guaranteed interest
2119 contracts valued on an issue year basis, other than
2120 those with no cash settlement options, which do
2121 not guarantee interest on considerations received
2122 more than one year after issue or purchase and for
2123 annuities and guaranteed interest contracts valued
2124 on a change in fund basis which do not guarantee
2125 interest rates on considerations received more
2126 than 12 months beyond the valuation date, the
2127 factors shown in (A) or derived in (B) increased
2128 by: .05 .05 .05
2129 (D) For other annuities with cash settlement options and guaranteed interest contracts with
2130 cash settlement options, the guarantee duration is the number of years for which the contract
2131 guarantees interest rates in excess of the calendar year statutory valuation interest rate for life
2132 insurance policies with guarantee duration in excess of 20 years. For other annuities with no cash
2133 settlement options and for guaranteed interest contracts with no cash settlement options, the
2134 guaranteed duration is the number of years from the date of issue or date of purchase to the date
2135 annuity benefits are scheduled to commence.
2136 (E) Plan type as used in the above tables is defined as follows:
2137 Plan Type A: At any time policyholder may withdraw funds only:
2138 (I) with an adjustment to reflect changes in interest rates or asset values since receipt of
2139 the funds by the insurance company, or (II) without such adjustment but installments over five
2140 years or more, or (III) as an immediate life annuity, or (IV) no withdrawal permitted.
2141 Plan Type B: Before expiration of the interest rate guarantee, policyholder withdraw funds
2142 only:
2143 (I) with an adjustment to reflect changes in interest rates or asset values since receipt of
2144 the funds by the insurance company, or (II) without such adjustment but in installments over five
2145 years or more, or (III) no withdrawal permitted. At the end of interest rate guarantee, funds may
2146 be withdrawn without such adjustment in a single sum or installments over less than five years.
2147 Plan Type C: Policyholder may withdraw funds before expiration of interest rate guarantee
2148 in a single sum or installments over less than five years either:
2149 (I) without adjustment to reflect changes in interest rates or asset values since receipt of
2150 the funds by the insurance company, or (II) subject only to a fixed surrender charge stipulated in
2151 the contract as a percentage of the fund.
2152 (F) A company may elect to value guaranteed interest contracts with cash settlement
2153 options and annuities with cash settlement options on either an issue year basis or on a change in
2154 fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with
2155 no cash settlement options must be valued on an issue year basis. As used in this section, an issue
2156 year basis of valuation refers to a valuation basis under which the interest rate used to determine
2157 the minimum valuation standard for the entire duration of the annuity or guaranteed interest
2158 contract is the calendar year valuation interest rate for the year of issue or year of purchase of the
2159 annuity or guaranteed interest contract, and the change in fund basis of valuation refers to a
2160 valuation basis under which the interest rate used to determine the minimum valuation standard
2161 applicable to each change in the fund held under the annuity or guaranteed interest contract is the
2162 calendar year valuation interest rate for the year of the change in the fund.
2163 (4) Reference interest rate: "Reference interest rate" referred to in Subsection (2)(a) is
2164 defined as follows:
2165 (a) For all life insurance, the lesser of the average over a period of 36 months and the
2166 average over a period of 12 months, ending on June 30 of the calendar year next preceding the year
2167 of issue, of the Monthly Average of the composite Yield on Seasoned Corporate Bonds, as
2168 published by Moody's Investors Service, Inc.
2169 (b) For single premium immediate annuities and for annuity benefits involving life
2170 contingencies arising from other annuities with cash settlement options and guaranteed interest
2171 contracts with cash settlement options, the average over a period of 12 months, ending on June 30
2172 of the calendar year of issue or year of purchase, of the Monthly Average of the Composite Yield
2173 on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.
2174 (c) For other annuities with cash settlement options and guaranteed interest contracts with
2175 cash settlement options, valued on a year of issue basis, except as stated in Subsection (b), with
2176 guarantee duration in excess of ten years, the lesser of the average over a period of 36 months and
2177 the average over a period of 12 months, ending on June 30 of the calendar year of issue or
2178 purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as
2179 published by Moody's Investors Service, Inc.
2180 (d) For other annuities with cash settlement options and guaranteed interest contracts with
2181 cash settlement options, valued on a year of issue basis, except as stated in Subsection (b), with
2182 guarantee duration of ten years or less, the average over a period of 12 months, ending on June 30
2183 of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on
2184 Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.
2185 (e) For other annuities with no cash settlement options and for guaranteed interest
2186 contracts with no cash settlement options, the average over a period of 12 months, ending on June
2187 30 of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on
2188 Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.
2189 (f) For other annuities with cash settlement options and guaranteed interest contracts with
2190 cash settlement options, valued on a change in fund basis, except as stated in Subsection (b), the
2191 average over a period of 12 months, ending on June 30 of the calendar year of the change in the
2192 fund, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published
2193 by Moody's Investors Service, Inc.
2194 (5) Alternative method for determining reference interest rates: In the event that the
2195 Monthly Average of the Composite Yield on Seasoned Corporate Bonds is no longer published
2196 by Moody's Investors Service, Inc. or in the event that the National Association of Insurance
2197 Commissioners determines that the Monthly Average of the Composite Yield on Seasoned
2198 Corporate Bonds as published by Moody's Investors Service, Inc. is no longer appropriate for the
2199 determination of the reference interest rate, then an alternative method for determination of the
2200 reference interest rate, which is adopted by the National Association of Insurance Commissioners
2201 and approved by rule promulgated by the commissioner, may be substituted.
2202 Section 28. Section 31A-19a-101 is amended to read:
2203 31A-19a-101. Title -- Scope and purposes.
2204 (1) This chapter is known as the "Utah Rate Regulation Act."
2205 (2) (a) (i) Except as provided in Subsection (2)(a)(ii), this chapter applies to all kinds and
2206 lines of direct insurance written on risks or operations in this state by an insurer authorized to do
2207 business in this state.
2208 (ii) This chapter does not apply to:
2209 (A) life insurance [
2210 (B) credit life insurance;
2211 [
2212 [
2213 (E) credit accident and health insurance; and
2214 [
2215 (b) This chapter applies to all insurers authorized to do any line of business, except those
2216 specified in Subsection (2)(a)(ii).
2217 (3) It is the purpose of this chapter to:
2218 (a) protect policyholders and the public against the adverse effects of excessive,
2219 inadequate, or unfairly discriminatory rates;
2220 (b) encourage independent action by and reasonable price competition among insurers so
2221 that rates are responsive to competitive market conditions;
2222 (c) provide formal regulatory controls for use if independent action and price competition
2223 fail;
2224 (d) provide regulatory procedures for the maintenance of appropriate data reporting
2225 systems;
2226 (e) authorize cooperative action among insurers in the rate-making process, and regulate
2227 that cooperation to prevent practices that bring about a monopoly or lessen or destroy competition;
2228 (f) encourage the most efficient and economic marketing practices; and
2229 (g) regulate the business of insurance in a manner that, under the McCarran-Ferguson Act,
2230 15 U.S.C. Secs. 1011 through 1015, will preclude application of federal antitrust laws.
2231 (4) Rate filings made prior to July 1, 1986, under former Title 31, Chapter 18, are
2232 continued. Rate filings made after July 1, 1986, are subject to the requirements of this chapter.
2233 Section 29. Section 31A-19a-209 is amended to read:
2234 31A-19a-209. Special provisions for title insurance.
2235 (1) In addition to the considerations in determining compliance with rate standards and
2236 rating methods as set forth in Sections 31A-19a-201 and 31A-19a-202 , the commissioner shall also
2237 consider the costs and expenses incurred by title insurance companies, agencies, and agents
2238 peculiar to the business of title insurance including:
2239 (a) the maintenance of title plants; and
2240 (b) the searching and examining of public records to determine insurability of title to real
2241 property.
2242 (2) (a) Every title insurance company, agency, and title insurance agent shall file with the
2243 commissioner a schedule of the escrow[
2244 in this state for services performed in connection with the issuance of policies of title insurance.
2245 (b) The filing required by Subsection (2)(a) shall state the effective date of this schedule,
2246 which may not be less than 30 calendar days after the date of filing.
2247 (3) A title insurance company, agency, or agent may not file or use any rate or other charge
2248 relating to the business of title insurance, including rates or charges filed for escrow[
2249
2250 (a) operate at less than the cost of doing:
2251 (i) the insurance business; or
2252 (ii) the escrow[
2253 (b) fail to adequately underwrite a title insurance policy.
2254 (4) (a) All or any of the schedule of rates or schedule of charges, including the schedule
2255 of escrow[
2256 the limitations in this Subsection (4).
2257 (b) Each change or amendment shall:
2258 (i) be filed with the commissioner; and
2259 (ii) state the effective date of the change or amendment, which may not be less than 30
2260 calendar days after the date of filing.
2261 (c) Any change or amendment remains in force for a period of at least 90 calendar days
2262 from its effective date.
2263 (5) While the schedule of rates and schedule of charges are effective, a copy of each shall
2264 be:
2265 (a) retained in each of the offices of:
2266 (i) the insurance company in this state;
2267 (ii) its agents in this state; and
2268 (iii) upon request, furnished to the public.
2269 (6) Except in accordance with the schedules of rates and charges filed with the
2270 commissioner, a title insurance company, agency, or agent may not make or impose any premium
2271 or other charge:
2272 (a) in connection with the issuance of a policy of title insurance; or
2273 (b) for escrow[
2274 of a policy of title insurance.
2275 Section 30. Section 31A-21-104 is amended to read:
2276 31A-21-104. Insurable interest and consent.
2277 (1) (a) An insurer may not knowingly provide insurance to a person who does not have or
2278 expect to have an insurable interest in the subject of the insurance.
2279 (b) A person may not knowingly procure, directly, by assignment, or otherwise, an interest
2280 in the proceeds of an insurance policy unless [
2281 interest in the subject of the insurance.
2282 (c) Except as provided in Subsections (6), (7), and (8), any insurance provided in violation
2283 of this Subsection (1) is subject to Subsection (5).
2284 (2) As used in this chapter:
2285 (a) (i) "Insurable interest" in a person means[
2286 (A) for persons closely related by blood or by law, a substantial interest engendered by
2287 love and affection[
2288 (B) in the case of other persons, a lawful and substantial interest in having the life, health,
2289 and bodily safety of the person insured continue.
2290 (ii) Policyholders in group insurance contracts do not need [
2291 certificate holders or persons other than group policyholders who are specified by the certificate
2292 holders are the recipients of the proceeds of the policies.
2293 (iii) Each person has an unlimited insurable interest in [
2294 health.
2295 (iv) A shareholder or partner has an insurable interest in the life of other shareholders or
2296 partners for purposes of insurance contracts that are an integral part of a legitimate buy-sell
2297 agreement respecting shares or a partnership interest in the business.
2298 (v) Subject to Subsection (9), an employer or an employer sponsored trust for the benefit
2299 of the employer's employees:
2300 (A) has an insurable interest in the lives of the employer's:
2301 (I) directors;
2302 (II) officers;
2303 (III) managers;
2304 (IV) nonmanagement employees; and
2305 (V) retired employees; and
2306 (B) may insure the lives listed in Subsection (2)(a)(v)(A):
2307 (I) on an individual or group basis; and
2308 (II) with the written consent of the insured.
2309 (b) "Insurable interest" in property or liability means any lawful and substantial economic
2310 interest in the nonoccurrence of the event insured against.
2311 (c) "Viatical settlement" means a written contract:
2312 (i) entered into by a person who is the policyholder of a life insurance policy insuring the
2313 life of a terminally ill person[
2314 (ii) under which the insured assigns, transfers ownership, irrevocably designates a specific
2315 person or otherwise alienates all control and right in the insurance policy to another person[
2316
2317 (iii) the proceeds or a part of the proceeds of the contract is paid to the policyholder of the
2318 insurance policy or the policyholder's designee prior to the death of the subject.
2319 (3) (a) Except as provided in Subsection (4), an insurer may not knowingly issue an
2320 individual life or accident and health insurance policy to a person other than the one whose life or
2321 health is at risk unless that person, who is 18 years of age or older and not under guardianship
2322 under Title 75, Chapter 5, Protection of Persons Under Disability and Their Property, has given
2323 written consent to the issuance of the policy. [
2324 (b) A person shall express consent [
2325 (i) by signing an application for the insurance with knowledge of the nature of the
2326 document[
2327 (ii) in any other reasonable way.
2328 (c) Any insurance provided in violation of this Subsection (3) is subject to Subsection (5).
2329 (4) (a) A life or accident and health insurance policy may be taken out without consent in
2330 [
2331 (i) A person may obtain insurance on a dependent who does not have legal capacity.
2332 (ii) A creditor may, at the creditor's expense, obtain insurance on the debtor in an amount
2333 reasonably related to the amount of the debt.
2334 (iii) A person may obtain life and accident and health insurance on an immediate family
2335 [
2336 (iv) A person may obtain an accident and health insurance policy on others that would
2337 merely indemnify the policyholder against expenses [
2338 obligated to pay.
2339 (v) The commissioner may adopt rules permitting issuance of insurance for a limited term
2340 on the life or health of a person serving outside the continental United States who is in the public
2341 service of the United States, if the policyholder is related within the second degree by blood or by
2342 marriage to the person whose life or health is insured.
2343 (b) Consent may be given by another in [
2344 in this Subsection (4)(b).
2345 (i) A parent, a person having legal custody of a minor, or a guardian of [
2346 under Title 75, Chapter 5, Protection of Persons Under Disability and Their Property, may consent
2347 to the issuance of a policy on a dependent child or on a person under guardianship under Title 75,
2348 Chapter 5, Protection of Persons Under Disability and Their Property.
2349 (ii) A grandparent may consent to the issuance of life or accident and health insurance on
2350 a grandchild.
2351 (iii) A court of general jurisdiction may give consent to the issuance of a life or accident
2352 and health insurance policy on an ex parte application showing facts the court considers sufficient
2353 to justify the issuance of that insurance.
2354 (5) (a) An insurance policy is not invalid because the policyholder lacks insurable interest
2355 or because consent has not been given[
2356 (b) Notwithstanding Subsection (5)(a), a court with appropriate jurisdiction may:
2357 (i) order the proceeds to be paid to some person who is equitably entitled to [
2358 proceeds, other than the one to whom the policy is designated to be payable[
2359 (ii) create a constructive trust in the proceeds or a part of [
2360 of such a person, subject to all the valid terms and conditions of the policy other than those relating
2361 to insurable interest or consent.
2362 (6) This section does not prevent any organization described under 26 U.S.C. Sec.
2363 501(c)(3), (e), or (f), as amended, and the regulations made under this section, and which is
2364 regulated under Title 13, Chapter 22, Charitable Solicitations Act, from soliciting and procuring,
2365 by assignment or designation as beneficiary, a gift or assignment of an interest in life insurance on
2366 the life of the donor or assignor or from enforcing payment of proceeds from that interest.
2367 (7) This section does not prevent:
2368 (a) any policyholder of life insurance, whether or not the policyholder is also the subject
2369 of the insurance, from entering into a viatical settlement;
2370 (b) any person from soliciting a person to enter into a viatical settlement; or
2371 (c) a person from enforcing payment of proceeds from the interest obtained under a viatical
2372 settlement.
2373 (8) Notwithstanding Subsection (1), an insurer authorized under this title to issue a
2374 workers' compensation policy may issue a workers' compensation policy to a sole proprietorship,
2375 corporation, or partnership that elects not to include any owner, corporate officer, or partner as an
2376 employee under the policy even if at the time the policy is issued the sole proprietorship,
2377 corporation, or partnership has no employees.
2378 (9) The extent of an employer's or employer sponsored trust's insurable interest for a
2379 nonmanagement and retired employee under Subsection (2)(a)(v) is limited to an amount
2380 commensurate with the employer's unfunded liabilities.
2381 Section 31. Section 31A-21-106 is amended to read:
2382 31A-21-106. Incorporation by reference.
2383 (1) (a) Except as provided in Subsection (1)(b), an insurance policy may not contain any
2384 agreement or incorporate any provision not fully set forth in the policy or in an application or other
2385 document attached to and made a part of the policy at the time of its delivery, unless the policy,
2386 application, or agreement accurately reflects the terms of the incorporated agreement, provision,
2387 or attached document.
2388 (b) (i) A policy may by reference incorporate rate schedules and classifications of risks and
2389 short-rate tables filed with the commissioner.
2390 (ii) By rule or order, the commissioner may authorize incorporation by reference of
2391 provisions for:
2392 (A) administrative arrangements[
2393 (B) premium schedules[
2394 (C) payment procedures for complex contracts.
2395 (c) (i) A policy of title insurance insuring the mortgage or deed of trust of an institutional
2396 lender may, if requested by an institutional lender, incorporate by reference generally applicable
2397 policy terms that are contained in a specifically identified policy that has been filed with the
2398 commissioner.
2399 (ii) As used in Subsection (1)(c)(i), "institutional lender" means a person that regularly
2400 engages in the business of making loans secured by real estate.
2401 (d) A policy may incorporate by reference the following by citing in the policy:
2402 (i) a federal law or regulation;
2403 (ii) a state law or rule; or
2404 (iii) a public directive of a federal or state agency.
2405 (2) [
2406 purported modification of a contract during the term of the policy [
2407 obligations of a party to the contract:
2408 (a) unless the modification is:
2409 (i) in writing; and
2410 (ii) agreed to by the party against whose interest the modification operates[
2411 (b) except:
2412 (i) as provided in:
2413 (A) Subsection (3) or (4);
2414 (B) Subsection 31A-8-402.3 (7);
2415 (C) Subsection 31A-22-721 (8); or
2416 (D) Subsection 31A-30-107 (7); or
2417 (ii) as otherwise mandated by law.
2418 (3) Subsection (2) does not prevent a change in coverage under group contracts resulting
2419 from:
2420 (a) provisions of an employer eligibility rule;
2421 (b) the terms of a collective bargaining agreement; or
2422 (c) provisions in federal Employee Retirement Income Security Act plan documents.
2423 (4) Subsection (2) does not prevent a premium increase at any renewal date that is
2424 applicable uniformly to all comparable persons.
2425 Section 32. Section 31A-21-311 is amended to read:
2426 31A-21-311. Group and blanket insurance.
2427 (1) (a) (i) Except under Subsection (1)(d), an insurer issuing a group insurance policy other
2428 than a blanket insurance policy shall, as soon as practicable after the coverage is effective, provide
2429 a certificate for each member of the insured group, except that only one certificate need be
2430 provided for the members of a family unit.
2431 (ii) The certificate required by this Subsection (1) shall contain a summary of the essential
2432 features of the insurance coverage, including:
2433 (A) any rights of conversion to an individual policy; and[
2434 (B) in the case of group life insurance, any:
2435 (I) continuation of coverage during total disability[
2436 (II) incontestability provision.
2437 (iii) Upon receiving a written request, the insurer shall [
2438 insured may inspect, during normal business hours at a place reasonably convenient to the insured,
2439 a copy of the policy or a summary of the policy containing all the details [
2440 to the certificate holder.
2441 (b) The commissioner may by rule impose a [
2442 (1)(a) on any class of blanket insurance policies for which the commissioner finds that the group
2443 of persons covered is constant enough for that type of action to be practicable and not unreasonably
2444 expensive.
2445 (c) [
2446 the certificate to the attention of the certificate holder.
2447 (ii) The insurer may deliver or mail [
2448 (A) directly to the certificate holders[
2449 (B) in bulk to the policyholder to transmit to certificate holders.
2450 (iii) An affidavit by the insurer that [
2451 course of business creates a rebuttable presumption that [
2452 (d) The commissioner may by rule or order prescribe substitutes for delivery or mailing
2453 of certificates that are reasonably calculated to inform a certificate holder of the certificate holder's
2454 rights, including:
2455 (i) booklets describing the coverage[
2456 (ii) the posting of notices in the place of business[
2457 (iii) publication in a house organ[
2458
2459 (2) Unless a certificate or an authorized substitute has been made available to the
2460 certificate holder when required by this section, [
2461 of the certificate holder by the certificate after the coverage has become effective as to the
2462 certificate holder, other than intentionally causing the loss insured against or failing to make
2463 required contributory premium payments, [
2464 the insurance contract.
2465 Section 33. Section 31A-22-400 is amended to read:
2466 31A-22-400. Scope of part.
2467 Part IV applies to all life insurance policies and contracts, including:
2468 (1) an annuity contract;
2469 (2) a credit life[
2470 (3) a franchise[
2471 (4) a group[
2472 (5) a blanket [
2473 contract.
2474 Section 34. Section 31A-22-402 is amended to read:
2475 31A-22-402. Grace period.
2476 (1) (a) Every life insurance policy other than a group policy shall contain a provision
2477 entitling the policyholder to a grace period within which the payment of any premium may be
2478 made after the first payment of any premium.
2479 (b) During the grace period described in Subsection (1)(a), the policy continues in full
2480 force.
2481 (2) The grace period required by Subsection (1) may not be less than:
2482 (a) 31 days; or
2483 (b) four weeks for policies whose premiums are payable more frequently than monthly.
2484 (3) The insurer may impose an interest charge during the grace period not in excess of the
2485 interest rate:
2486 (a) set by the policy for policy loans; or
2487 (b) in the absence of a provision described in Subsection (3)(a), a rate set by the
2488 commissioner by rule.
2489 (4) If a claim arises under the policy during the grace period, an insurer may deduct from
2490 the policy proceeds:
2491 (a) the amount of any premium due or overdue;
2492 (b) interest at the rate provided in this section; and
2493 (c) any deferred installment of the annual premium.
2494 (5) The insurer shall send written notice of termination of coverage:
2495 (a) to the policyholder's last-known address; and
2496 (b) at least 30 days before the date that the coverage is terminated.
2497 Section 35. Section 31A-22-403 is amended to read:
2498 31A-22-403. Incontestability.
2499 (1) This section does not apply to group policies.
2500 (2) [
2501
2502 for a period of two years from [
2503
2504 (i) during the lifetime of the insured; or
2505 (ii) for a survivorship life insurance policy, during the lifetime of the surviving insured.
2506 (b) A life insurance policy shall state that the life insurance policy is incontestable after
2507 the time period described in Subsection (2)(a).
2508 [
2509 contested for nonpayment of premiums.
2510 [
2511 as to:
2512 (i) provisions relating to accident and health benefits allowed under Section 31A-22-609 ;
2513 and
2514 (ii) additional benefits in the event of death by accident.
2515 (c) If [
2516 after the policy's issuance and for an additional premium, to obtain a death benefit [
2517 larger than when the policy was originally issued, [
2518 of benefit is contestable:
2519 (i) until two years after the incremental increase of benefits[
2520 (ii) based only on a ground [
2521 incremental increase.
2522 [
2523 (i) for two years following reinstatement on the same basis as at original issuance[
2524 and
2525 (ii) only as to matters arising in connection with the reinstatement.
2526 (b) Any grounds for contest available at original issuance continue to be available for
2527 contest until the policy has been in force for a total of two years:
2528 (i) during the lifetime of the insured[
2529 (ii) for a survivorship life insurance policy, during the lifetime of the surviving insured.
2530 [
2531 (i) preclude only a contest of the validity of the policy[
2532 (ii) do not preclude the good faith assertion at any time of defenses based upon provisions
2533 in the policy [
2534 exclusions are specifically excepted in the policy's incontestability clause. [
2535 (b) A provision on which the contestable period would normally run may not be
2536 reformulated as a coverage [
2537 this Subsection [
2538 (6) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
2539 commissioner may make rules to implement this section.
2540 Section 36. Section 31A-22-404 is amended to read:
2541 31A-22-404. Suicide.
2542 (1) (a) Suicide is not a defense to a claim under a life insurance policy that has been in
2543 force as to a policyholder or certificate holder for two years from the date of issuance of the later
2544 of:
2545 (i) the policy[
2546 (ii) the certificate.
2547 (b) Subsection (1)(a) applies whether:
2548 (i) the suicide was voluntary or involuntary; or
2549 (ii) the insured was sane or insane.
2550 [
2551 insurer shall pay to the beneficiary an amount not less than the premium paid for the life insurance
2552 policy.
2553 (2) (a) If after a life insurance policy is in effect the policy allows the insured to obtain a
2554 death benefit that is larger than when the policy was originally effective for an additional premium,
2555 the payment of the additional increment of benefit may be limited in the event of a suicide within
2556 a two-year period beginning on the date the increment increase takes effect.
2557 (b) If a suicide occurs within the two-year period described in Subsection (2)(a), the
2558 insurer shall pay to the beneficiary an amount not less than the additional premium paid for the
2559 additional increment of benefit.
2560 (3) This section does not apply to:
2561 (a) [
2562 (b) the accident or double indemnity provisions of an insurance policy.
2563 Section 37. Section 31A-22-405 is amended to read:
2564 31A-22-405. Misstated age or gender.
2565 (1) Subject to Subsection (2), if the age or gender of the person whose life is at risk is
2566 misstated in an application for a policy of life insurance, and the error is not adjusted during the
2567 person's lifetime, the amount payable under the policy is what the premium paid would have
2568 purchased if the age or gender had been stated correctly.
2569 (2) If the person whose life is at risk was, at the time the insurance was applied for, beyond
2570 the maximum age limit designated by the insurer, the insurer shall refund at least the amount of
2571 the premiums collected under the policy.
2572 Section 38. Section 31A-22-409 is amended to read:
2573 31A-22-409. Standard Nonforfeiture Law for Individual Deferred Annuities.
2574 (1) This section is known as the "Standard Nonforfeiture Law for Individual Deferred
2575 Annuities."
2576 (2) This section does not apply to:
2577 (a) any reinsurance group annuity purchased under a retirement plan or plan of deferred
2578 compensation established or maintained by an employer, [
2579 proprietorship[
2580 individual retirement accounts or individual retirement annuities under Section 408 [
2581 Internal Revenue Code[
2582 (b) a premium deposit fund[
2583 (c) a variable annuity[
2584 (d) an investment annuity[
2585 (e) an immediate annuity[
2586 (f) a deferred annuity contract after annuity payments have commenced[
2587 (g) a reversionary annuity[
2588 (h) any contract [
2589 representative of the company issuing the contract.
2590 (3) (a) [
2591 in Subsection (12), [
2592 be delivered or issued for delivery in this state unless [
2593 substance:
2594 (i) the [
2595 (ii) provisions [
2596 in the opinion of the commissioner are at least as favorable to the contractholder, governing
2597 cessation of payment of consideration under the contract[
2598 (b) Subsection (3)(a)(i) requires the following provisions:
2599 [
2600 will grant a paid-up annuity benefit on a plan stipulated in the contract of such a value as specified
2601 in Subsections (5), (6), (7), (8), and (10)[
2602 [
2603 time, [
2604 payments, the company will pay in lieu of any paid-up annuity benefit a cash surrender benefit of
2605 such amount as is specified in Subsections (5), (6), (8), and (10)[
2606 (iii) the company shall reserve the right to defer the payment of the cash surrender benefit
2607 under Subsection (3)(b)(ii) for a period of six months after demand [
2608 the cash surrender benefit with surrender of the contract[
2609 [
2610 any of the following that are guaranteed under the contract:
2611 (A) minimum paid-up annuity[
2612 (B) cash surrender benefits; or
2613 (C) death benefits [
2614 (v) sufficient information to determine the amounts of [
2615 Subsection (3)(b)(iv);
2616 [
2617 may be available under the contract are not less than the minimum benefits required by any statute
2618 of the state in which the contract is delivered; and
2619 (vii) an explanation of the manner in which the benefits described in Subsection (3)(b)(vi)
2620 are altered by the existence of any:
2621 (A) additional amounts credited by the company to the contract[
2622 (B) indebtedness to the company on the contract; or [
2623 (C) prior withdrawals from or partial surrender of the contract.
2624 (c) Notwithstanding the requirements of this Subsection (3), any deferred annuity contract
2625 may provide that if no consideration has been received under a contract for a period of two full
2626 years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the
2627 contract arising from consideration paid before the period would be less than $20 monthly[
2628 (i) the company may at [
2629 cash of the then present value of such portion of the paid-up annuity benefit, calculated on the
2630 basis of the mortality table specified in the contract, if any, and the interest rate specified in the
2631 contract for determining the paid-up annuity benefit[
2632 (ii) the payment [
2633 of any further obligation under the contract.
2634 (4) The minimum values as specified in Subsections (5), (6), (7), (8), and (10) of any
2635 paid-up annuity, cash surrender, or death benefits available under an annuity contract shall be
2636 based upon minimum nonforfeiture amounts as established in this section.
2637 (a) (i) With respect to contracts providing for flexible considerations, the minimum
2638 nonforfeiture amount at any time at or before the commencement of any annuity payments shall
2639 be equal to an accumulation up to such time, at a rate of interest of 3% per annum of percentages
2640 of the net considerations [
2641 (A) decreased by the sum of: [
2642 (I) any prior withdrawals from or partial surrenders of the contract accumulated at a rate
2643 of interest of 3% per annum[
2644 (II) the amount of any indebtedness to the company on the contract, including interest due
2645 and accrued[
2646 (B) increased by any existing additional amounts credited by the company to the contract.
2647 [
2648 year used to define the minimum nonforfeiture amount shall be:
2649 (A) an amount not less than zero; and [
2650 (B) equal to the corresponding gross considerations credited to the contract during that
2651 contract year less:
2652 (I) an annual contract charge of $30; and [
2653 (II) a collection charge of $1.25 per consideration credited to the contract during that
2654 contract year.
2655 (iii) The percentages of net considerations shall be:
2656 (A) 65% of the net consideration for the first contract year; and
2657 (B) 87-1/2% of the net considerations for the second and later contract years.
2658 (iv) Notwithstanding [
2659 percentage shall be 65% of the portion of the total net consideration for any renewal contract year
2660 [
2661 considerations in all prior contract years for which the percentage was 65%.
2662 (b) [
2663 contracts providing for fixed scheduled consideration, minimum nonforfeiture amounts shall be:
2664 (A) calculated on the assumption that considerations are paid annually in advance; and
2665 [
2666 (B) defined as for contracts with flexible considerations [
2667 [
2668 [
2669 shall be equal to an amount that is the sum of:
2670 (A) 65% of the net consideration for the first contract year [
2671 (B) 22-1/2% of the excess of the net consideration for the first contract year over the lesser
2672 of the net considerations for:
2673 (I) the second contract year; and
2674 (II) the third contract [
2675 [
2676 consideration.
2677 (c) With respect to contracts providing for a single consideration payment, minimum
2678 nonforfeiture amounts shall be defined as for contracts with flexible considerations except that:
2679 (i) the percentage of net consideration used to determine the minimum nonforfeiture
2680 amount shall be equal to 90%; and
2681 (ii) the net consideration shall be the gross consideration less a contract charge of $75.
2682 (5) (a) Any paid-up annuity benefit available under a contract shall be such that [
2683 contract's present value on the date annuity payments are to commence is at least equal to the
2684 minimum nonforfeiture amount on that date. [
2685 (b) The present value described in Subsection (5)(a) shall be computed using the mortality
2686 table, if any, and the interest rate specified in the contract for determining the minimum paid-up
2687 annuity benefits guaranteed in the contract.
2688 (6) (a) For contracts [
2689 benefits available before maturity may not be less than the present value as of the date of surrender
2690 of that portion of the cash surrender value [
2691 maturity arising from considerations paid before the time of cash surrender reduced by the amount
2692 appropriate to reflect any prior withdrawals from or partial surrender of the contract, the present
2693 value being calculated on the basis of an interest rate not more than 1% higher than the interest rate
2694 specified in the contract for accumulating the net considerations to determine the maturity value,
2695 decreased by the amount of any indebtedness to the company on the contract, including interest
2696 due and accrued, and increased by any existing additional amounts credited by the company to the
2697 contract.
2698 (b) In no event shall any cash surrender benefit be less than the minimum nonforfeiture
2699 amount at that time.
2700 (c) The death benefit under these contracts shall be at least equal to the cash surrender
2701 benefit.
2702 (7) (a) For contracts [
2703 of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity may
2704 not be less than the present value of that portion of the maturity value of the paid-up annuity
2705 benefit provided under the contract arising from considerations paid before the time the contract
2706 is surrendered in exchange for, or changed to, a deferred paid-up annuity, this present value being
2707 calculated for the period prior to the maturity date on the basis of the interest rate specified in the
2708 contract for accumulating the net considerations to determine maturity value, and increased by any
2709 existing additional amounts credited by the company to the contract.
2710 (b) For contracts [
2711 any annuity payments, the present values shall be calculated on the basis of the interest rate and
2712 the mortality table specified in the contract for determining the maturity value of the paid-up
2713 annuity benefit. [
2714 (c) In no event shall the present value of a paid-up annuity benefit be less than the
2715 minimum nonforfeiture amount at that time.
2716 (8) (a) For the purpose of determining the benefits calculated under Subsections (6) and
2717 (7), [
2718
2719 latest date [
2720 considered to be later than the later of:
2721 (i) the anniversary of the contract next following the annuitant's 70th birthday; or
2722 (ii) the tenth anniversary of the contract[
2723 (b) For a contract that provides cash surrender benefits on or past the maturity date, the
2724 cash surrender value shall be equal to the amount used to determine the annuity benefit payments.
2725 (c) A surrender charge may not be imposed on or past maturity.
2726 (9) Any contract [
2727 death benefits at least equal to the minimum nonforfeiture amount before the commencement of
2728 any annuity payments shall include a statement in a prominent place in the contract that [
2729 these benefits are not provided.
2730 (10) Any paid-up annuity, cash surrender, or death benefits available at any time, other
2731 than on the contract anniversary under any contract with fixed scheduled considerations, shall be
2732 calculated with allowance for the lapse of time and the payment of any scheduled considerations
2733 beyond the beginning of the contract year in which cessation of payment of considerations under
2734 the contract occurs.
2735 (11) (a) For any contract [
2736 supplemental contract provisions, both annuity benefits and life insurance benefits that are in
2737 excess of the greater of cash surrender benefits or a return of the gross considerations with interest,
2738 the minimum nonforfeiture benefits shall:
2739 (i) be equal to the sum of:
2740 (A) the minimum nonforfeiture benefits for the annuity portion; and
2741 (B) the minimum nonforfeiture benefits, if any, for the life insurance portion; and
2742 (ii) computed as if each portion were a separate contract.
2743 (b) (i) Notwithstanding [
2744 additional benefits payable[
2745
2746
2747 as described in Subsection (11)(b)(ii), and consideration for the additional benefits payable, shall
2748 be disregarded in ascertaining, if required by this section:
2749 (A) the minimum nonforfeiture amounts[
2750 (B) paid-up annuity[
2751 (C) cash surrender[
2752 (D) death benefits [
2753 (ii) For purposes of this Subsection (11), an additional benefit is a benefit payable:
2754 (A) in the event of total and permanent disability;
2755 (B) as reversionary annuity or deferred reversionary annuity benefits; or
2756 (C) as other policy benefits additional to life insurance, endowment, and annuity benefits.
2757 (iii) The inclusion of [
2758 not be required in any paid-up benefits, unless the additional benefits separately would require:
2759 (A) minimum nonforfeiture amounts[
2760 (B) paid-up annuity[
2761 (C) cash surrender; and
2762 (D) death benefits.
2763 (12) (a) After this section takes effect, any company may file with the commissioner a
2764 written notice of its election to comply with [
2765 before [
2766 1, 1988.
2767 (b) This section [
2768 date the company specifies in the notice.
2769 (c) If a company makes no [
2770 this section for such company is [
2771 1, 1988.
2772 Section 39. Section 31A-22-522 is amended to read:
2773 31A-22-522. Required provision for notice of termination.
2774 (1) A policy for group or blanket life insurance coverage issued or renewed after July 1,
2775 2001, shall include a provision that obligates the policyholder to notify each employee or group
2776 member:
2777 (a) in writing;
2778 (b) 30 days before the date the coverage is terminated; and
2779 (c) (i) that the group or blanket life insurance coverage is being terminated; and
2780 (ii) the rights the employee or group member has to [
2781 termination.
2782 (2) For a policy for group or blanket life insurance coverage described in Subsection (1),
2783 an insurer shall:
2784 (a) include a statement of a policyholder's obligations under Subsection (1) in the insurer's
2785 monthly notice to the policyholder of premium payments due; and
2786 (b) provide a sample notice to the policyholder at least once a year.
2787 Section 40. Section 31A-22-602 is amended to read:
2788 31A-22-602. Premium rates.
2789 (1) This section does not apply to group accident and health insurance.
2790 (2) The benefits in an accident and health insurance policy shall be reasonable in relation
2791 to the premiums charged.
2792 (3) The commissioner shall [
2793 insurance policy form or rates if [
2794 Section 41. Section 31A-22-617 is amended to read:
2795 31A-22-617. Preferred provider contract provisions.
2796 Health insurance policies may provide for insureds to receive services or reimbursement
2797 under the policies in accordance with preferred health care provider contracts as follows:
2798 (1) Subject to restrictions under this section, any insurer or third party administrator may
2799 enter into contracts with health care providers as defined in Section 78-14-3 under which the health
2800 care providers agree to supply services, at prices specified in the contracts, to persons insured by
2801 an insurer.
2802 (a) A health care provider contract may require the health care provider to accept the
2803 specified payment as payment in full, relinquishing the right to collect additional amounts from
2804 the insured person.
2805 (b) The insurance contract may reward the insured for selection of preferred health care
2806 providers by:
2807 (i) reducing premium rates;
2808 (ii) reducing deductibles;
2809 (iii) coinsurance;
2810 (iv) other copayments; or
2811 (v) in any other reasonable manner.
2812 (c) If the insurer is a managed care organization, as defined in Subsection
2813 31A-27-311.5 (1)(f):
2814 (i) the insurance contract and the health care provider contract shall provide that in the
2815 event the managed care organization becomes insolvent, the rehabilitator or liquidator may:
2816 (A) require the health care provider to continue to provide health care services under the
2817 contract until the [
2818 (I) 90 days [
2819 for liquidation; or
2820 (II) the date the term of the contract ends; and
2821 (B) subject to Subsection (1)(c)(v), reduce the fees the provider is otherwise entitled to
2822 receive from the managed care organization during the time period described in Subsection
2823 (1)(c)(i)(A);
2824 (ii) the provider is required to:
2825 (A) accept the reduced payment under Subsection (1)(c)(i)(B) as payment in full; and
2826 (B) relinquish the right to collect additional amounts from the insolvent managed care
2827 organization's enrollee, as defined in Section 31A-27-311.5 (1)(b);
2828 (iii) if the contract between the health care provider and the managed care organization has
2829 not been reduced to writing, or the contract fails to contain the language required by Subsection
2830 (1)(c)(i), the provider may not collect or attempt to collect from the enrollee:
2831 (A) sums owed by the insolvent managed care organization; or
2832 (B) the amount of the regular fee reduction authorized under Subsection (1)(c)(i)(B);
2833 (iv) the following may not bill or maintain any action at law against an enrollee to collect
2834 sums owed by the insolvent managed care organization or the amount of the regular fee reduction
2835 authorized under Subsection (1)(c)(i)(B):
2836 (A) a provider;
2837 (B) an agent;
2838 (C) a trustee; or
2839 (D) an assignee of a person described in Subsections (1)(c)(iv)(A) through (C); and
2840 (v) notwithstanding Subsection (1)(c)(i):
2841 (A) a rehabilitator or liquidator may not reduce a fee by less than 75% of the provider's
2842 regular fee set forth in the contract; and
2843 (B) the enrollee shall continue to pay the copayments, deductibles, and other payments for
2844 services received from the provider that the enrollee was required to pay before the filing of:
2845 (I) a petition for rehabilitation; or
2846 (II) a petition for liquidation.
2847 (2) (a) Subject to Subsections (2)(b) through (2)(f), an insurer using preferred health care
2848 provider contracts shall pay for the services of health care providers not under the contract, unless
2849 the illnesses or injuries treated by the health care provider are not within the scope of the insurance
2850 contract. As used in this section, "class of health care providers" means all health care providers
2851 licensed or licensed and certified by the state within the same professional, trade, occupational, or
2852 facility licensure or licensure and certification category established pursuant to Titles 26 and 58.
2853 (b) When the insured receives services from a health care provider not under contract, the
2854 insurer shall reimburse the insured for at least 75% of the average amount paid by the insurer for
2855 comparable services of preferred health care providers who are members of the same class of
2856 health care providers. The commissioner may adopt a rule dealing with the determination of what
2857 constitutes 75% of the average amount paid by the insurer for comparable services of preferred
2858 health care providers who are members of the same class of health care providers.
2859 (c) When reimbursing for services of health care providers not under contract, the insurer
2860 may make direct payment to the insured.
2861 (d) Notwithstanding Subsection (2)(b), an insurer using preferred health care provider
2862 contracts may impose a deductible on coverage of health care providers not under contract.
2863 (e) When selecting health care providers with whom to contract under Subsection (1), an
2864 insurer may not unfairly discriminate between classes of health care providers, but may
2865 discriminate within a class of health care providers, subject to Subsection (7).
2866 (f) For purposes of this section, unfair discrimination between classes of health care
2867 providers shall include:
2868 (i) refusal to contract with class members in reasonable proportion to the number of
2869 insureds covered by the insurer and the expected demand for services from class members; and
2870 (ii) refusal to cover procedures for one class of providers that are:
2871 (A) commonly utilized by members of the class of health care providers for the treatment
2872 of illnesses, injuries, or conditions;
2873 (B) otherwise covered by the insurer; and
2874 (C) within the scope of practice of the class of health care providers.
2875 (3) Before the insured consents to the insurance contract, the insurer shall fully disclose
2876 to the insured that it has entered into preferred health care provider contracts. The insurer shall
2877 provide sufficient detail on the preferred health care provider contracts to permit the insured to
2878 agree to the terms of the insurance contract. The insurer shall provide at least the following
2879 information:
2880 (a) a list of the health care providers under contract and if requested their business
2881 locations and specialties;
2882 (b) a description of the insured benefits, including any deductibles, coinsurance, or other
2883 copayments;
2884 (c) a description of the quality assurance program required under Subsection (4); and
2885 (d) a description of the [
2886 under Subsection (5).
2887 (4) (a) An insurer using preferred health care provider contracts shall maintain a quality
2888 assurance program for assuring that the care provided by the health care providers under contract
2889 meets prevailing standards in the state.
2890 (b) The commissioner in consultation with the executive director of the Department of
2891 Health may designate qualified persons to perform an audit of the quality assurance program. The
2892 auditors shall have full access to all records of the organization and its health care providers,
2893 including medical records of individual patients.
2894 (c) The information contained in the medical records of individual patients shall remain
2895 confidential. All information, interviews, reports, statements, memoranda, or other data furnished
2896 for purposes of the audit and any findings or conclusions of the auditors are privileged. The
2897 information is not subject to discovery, use, or receipt in evidence in any legal proceeding except
2898 hearings before the commissioner concerning alleged violations of this section.
2899 (5) An insurer using preferred health care provider contracts shall provide a reasonable
2900 procedure for resolving complaints and [
2901 the insureds and health care providers.
2902 (6) An insurer may not contract with a health care provider for treatment of illness or
2903 injury unless the health care provider is licensed to perform that treatment.
2904 (7) (a) A health care provider or insurer may not discriminate against a preferred health care
2905 provider for agreeing to a contract under Subsection (1).
2906 (b) Any health care provider licensed to treat any illness or injury within the scope of the
2907 health care provider's practice, who is willing and able to meet the terms and conditions established
2908 by the insurer for designation as a preferred health care provider, shall be able to apply for and
2909 receive the designation as a preferred health care provider. Contract terms and conditions may
2910 include reasonable limitations on the number of designated preferred health care providers based
2911 upon substantial objective and economic grounds, or expected use of particular services based
2912 upon prior provider-patient profiles.
2913 (8) Upon the written request of a provider excluded from a provider contract, the
2914 commissioner may hold a hearing to determine if the insurer's exclusion of the provider is based
2915 on the criteria set forth in Subsection (7)(b).
2916 (9) Insurers are subject to the provisions of Sections 31A-22-613.5 , 31A-22-614.5 , and
2917 31A-22-618 .
2918 (10) Nothing in this section is to be construed as to require an insurer to offer a certain
2919 benefit or service as part of a health benefit plan.
2920 (11) This section does not apply to catastrophic mental health coverage provided in
2921 accordance with Section 31A-22-625 .
2922 Section 42. Section 31A-22-624 is amended to read:
2923 31A-22-624. Primary care physician.
2924 An accident and health insurance policy that requires an insured to select a primary care
2925 physician to receive optimum coverage:
2926 (1) shall permit an insured to select a participating provider who:
2927 (a) is an:
2928 (i) obstetrician[
2929 (ii) gynecologist; or
2930 (iii) pediatrician; and
2931 (b) is qualified and willing to provide primary care services, as defined by the health care
2932 plan, as the insured's provider from whom primary care services are received;
2933 (2) shall clearly state in literature explaining the policy the option available to [
2934 insureds under Subsection (1); and
2935 (3) may not impose a higher premium, higher copayment requirement, or any other
2936 additional expense on an insured [
2937 care physician in accordance with Subsection (1).
2938 Section 43. Section 31A-22-625 is amended to read:
2939 31A-22-625. Catastrophic coverage of mental health conditions.
2940 (1) As used in this section:
2941 (a) (i) "Catastrophic mental health coverage" means coverage in a health insurance policy
2942 or health maintenance organization contract that does not impose any lifetime limit, annual
2943 payment limit, episodic limit, inpatient or outpatient service limit, or maximum out-of-pocket limit
2944 that places a greater financial burden on an insured for the evaluation and treatment of a mental
2945 health condition than for the evaluation and treatment of a physical health condition.
2946 (ii) "Catastrophic mental health coverage" may include a restriction on cost sharing factors,
2947 such as deductibles, copayments, or coinsurance, prior to reaching any maximum out-of-pocket
2948 limit.
2949 (iii) "Catastrophic mental health coverage" may include one maximum out-of-pocket limit
2950 for physical health conditions and another maximum out-of-pocket limit for mental health
2951 conditions, provided that, if separate out-of-pocket limits are established, the out-of-pocket limit
2952 for mental health conditions may not exceed the out-of-pocket limit for physical health conditions.
2953 (b) (i) "50/50 mental health coverage" means coverage in a health insurance policy or
2954 health maintenance organization contract that pays for at least 50% of covered services for the
2955 diagnosis and treatment of mental health conditions.
2956 (ii) "50/50 mental health coverage" may include a restriction on episodic limits, inpatient
2957 or outpatient service limits, or maximum out-of-pocket limits.
2958 (c) "Large employer" [
2959
2960 (d) (i) "Mental health condition" means any condition or disorder involving mental illness
2961 that falls under any of the diagnostic categories listed in the Diagnostic and Statistical Manual, as
2962 periodically revised.
2963 (ii) "Mental health condition" does not include the following when diagnosed as the
2964 primary or substantial reason or need for treatment:
2965 (A) marital or family problem;
2966 (B) social, occupational, religious, or other social maladjustment;
2967 (C) conduct disorder;
2968 (D) chronic adjustment disorder;
2969 (E) psychosexual disorder;
2970 (F) chronic organic brain syndrome;
2971 (G) personality disorder;
2972 (H) specific developmental disorder or learning disability; or
2973 (I) mental retardation.
2974 (e) "Small employer" is as defined in Section [
2975 (2) (a) At the time of purchase and renewal, an insurer shall offer to each small employer
2976 that it insures or seeks to insure a choice between catastrophic mental health coverage and 50/50
2977 mental health coverage.
2978 (b) In addition to Subsection (2)(a), an insurer may offer to provide:
2979 (i) catastrophic mental health coverage, 50/50 mental health coverage, or both at levels that
2980 exceed the minimum requirements of this section; or
2981 (ii) coverage that excludes benefits for mental health conditions.
2982 (c) A small employer may, at its option, choose either catastrophic mental health coverage,
2983 50/50 mental health coverage, or coverage offered under Subsection (2)(b), regardless of the
2984 employer's previous coverage for mental health conditions.
2985 (d) An insurer is exempt from the 30% index rating restriction in Subsection
2986 31A-30-106 (1)(b) and, for the first year only that catastrophic mental health coverage is chosen,
2987 the 15% annual adjustment restriction in Subsection 31A-30-106 (1)(c)(ii), for any small employer
2988 with 20 or less enrolled employees who chooses coverage that meets or exceeds catastrophic
2989 mental health coverage.
2990 (3) (a) At the time of purchase and renewal, an insurer shall offer catastrophic mental
2991 health coverage to each large employer that it insures or seeks to insure.
2992 &nb