First Substitute S.B. 122

Senator L. Steven Poulton proposes the following substitute bill:

1 INSURANCE LAW AMENDMENTS
2 2002 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: L. Steven Poulton
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 [contracts] contract made by [attorneys-at-law] an attorney-at-law:
133 (i) with an individual [clients with] client; and
134 (ii) under which fees are based on estimates of the nature and amount of services to be
135 provided to the specific client[, and similar contracts];
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 [(b) arrangements] (c) an arrangement for providing benefits that do not exceed a limited
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 [(c)] (d) limited legal assistance on an informal basis involving neither an express
142 contractual obligation nor reasonable expectations, in the context of an employment, membership,
143 educational, or similar relationship; or
144 [(d)] (e) legal assistance by employee organizations to their members in matters relating
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 [where the] if the
154 organization:
155 (i) has as its principal purpose [is] to achieve charitable, educational, social, or religious
156 objectives rather than to provide death and accident and health benefits[, if the organization];
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 [such] the business in this state does not require regulation for the
162 protection of the interests of the residents of this state; or [on a finding that]
163 (ii) it would be impracticable to require compliance with this title;
164 (e) [(i) transactions] except as provided in Subsection (4), a transaction independently
165 procured through negotiations under Section 31A-15-104 ;
166 [(ii) however, the transactions described in Subsection (3)(e)(i) are subject to taxation
167 under Section 31A-3-301 ;]
168 (f) self-insurance;
169 (g) reinsurance;
170 (h) subject to Subsection [(4)] (5), employee and labor union group or blanket insurance
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 [or];
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[,]; and [if]
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 [(5)] (6):
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 [(4)] (5) (a) After a hearing, the commissioner may order an insurer of certain group or
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 [(5)] (6) (a) As used in Subsection (3)(i) and this Subsection [(5)] (6):
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 [product] products; or
206 (II) on products that are components of a system; and
207 [(B)] (C) under which the [manufacturer] person described in Subsection (6)(a)(i)(A) is
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 [(A)] (B) (I) on one or more specific [product] products; or
215 (II) on products that are components of a system; and
216 [(B)] (C) under which the [manufacturer] person described in Subsection (6)(a)(ii)(A) is
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 [(5)] (6)(b)(i) or (ii).
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; [and]
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 [(5)] (6)(e); and
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 [for] the product itself
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 [(5)] (6)(c)(iii)(C) shall
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 [(5)] (6)(c)(iii)(C) should be adjusted in
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 [(5)] (6)(e)(ii) the commissioner determines that an adjustment
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 [(111)] (122).
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 [(64)] (68).

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 [(70)] (75).
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 [(38)] (40) "Employee benefits" means one or more benefits or services provided to:
433 (a) employees; or [their]
434 (b) dependents of employees.
435 [(39)] (41) (a) "Employee welfare fund" means a fund:
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 [(40)] (42) "Endorsement" means a written agreement attached to a policy or certificate
446 to modify one or more of the provisions of the policy or certificate.
447 [(41)] (43) "Excludes" is not exhaustive and does not mean that other things are not also
448 excluded. The items listed are representative examples for use in interpretation of this title.
449 [(42)] (44) "Expense reimbursement insurance" means insurance:
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 [(43)] (45) "Fidelity insurance" means insurance guaranteeing the fidelity of persons
456 holding positions of public or private trust.
457 [(44)] (46) (a) "Filed" means that a filing is:
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 [(44)] (46)(a).
467 [(45)] (47) "Filing," when used as a noun, means an item required to be filed with the
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 [(46)] (48) "First party insurance" means an insurance policy or contract in which the
484 insurer agrees to pay claims submitted to it by the insured for the insured's losses.
485 [(47)] (49) "Foreign insurer" means an insurer domiciled outside of this state, including
486 an alien insurer.
487 [(48)] (50) (a) "Form" means [a policy, certificate, or application] one of the following
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 [(49)] (51) "Franchise insurance" means individual insurance policies provided through
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 [(50)] (54) "Health care" means any of the following intended for use in the diagnosis,
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 [(51)] (55) (a) "Health care insurance" or "health insurance" means insurance providing:
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 [(52)] (56) "Income replacement insurance" or "disability income insurance" means
548 insurance written to provide payments to replace income lost from accident or sickness.
549 [(53)] (57) "Indemnity" means the payment of an amount to offset all or part of an insured
550 loss.
551 [(54)] (58) "Independent adjuster" means an insurance adjuster required to be licensed
552 under Section 31A-26-201 who engages in insurance adjusting as a representative of insurers.

553 [(55)] (59) "Independently procured insurance" means insurance procured under Section
554 31A-15-104 .
555 [(56)] (60) "Individual" means a natural person.
556 [(57)] (61) "Inland marine insurance" includes insurance covering:
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 [(58)] (62) "Insolvency" means that:
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 [(59)] (63) (a) "Insurance" means:
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 [(60)] (64) "Insurance adjuster" means a person who directs the investigation, negotiation,
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 [(61)] (65) "Interinsurance exchange" is defined in Subsection [(100)] (110).

584 [(62)] (66) Except as provided in Subsection 31A-23-201.5 (1), "insurance agent" or
585 "agent" means a person who represents insurers in soliciting, negotiating, or placing insurance.
586 [(63)] (67) Except as provided in Subsection 31A-23-201.5 (1), "insurance broker" or
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 [(64)] (68) "Insurance business" or "business of insurance" includes:
592 (a) providing health care insurance, as defined in Subsection [(51)] (55), by organizations
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 [(77)]
602 (82);
603 (e) providing other persons with insurance as defined in Subsection [(59)] (63);
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 [(64)]
611 (68)(a) through (g) in a manner designed to evade the provisions of this title.
612 [(65)] (69) Except as provided in Subsection 31A-23-201.5 (1), "insurance consultant" or
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 [(66)] (70) "Insurance holding company system" means a group of two or more affiliated
620 persons, at least one of whom is an insurer.
621 [(67)] (71) (a) "Insured" means a person to whom or for whose benefit an insurer makes
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 [(67)] (71)(a):
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 [(68)] (72) (a) (i) "Insurer" means any person doing an insurance business as a principal
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 [(115)] (126)(b).
642 (c) "Alien insurer" is defined in Subsection (5).
643 (d) "Authorized insurer" is defined in Subsection [(115)] (126)(b).
644 (e) "Domestic insurer" is defined in Subsection (36).
645 (f) "Foreign insurer" is defined in Subsection [(47)] (49).

646 (g) "Nonadmitted insurer" is defined in Subsection [(115)] (126)(a).
647 (h) "Unauthorized insurer" is defined in Subsection [(115)] (126)(a).
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 [(69)] (74) (a) Except [as provided] for a retainer contract or legal assistance described in
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[, but it].
658 (c) "Legal expense insurance" does not include the provision of, or reimbursement for,
659 legal services incidental to other insurance coverages.
660 [(70)] (75) (a) "Liability insurance" means insurance against liability:
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 [(74)] (79) for medical malpractice insurance;
664 (B) Subsection [(92)] (102) for professional liability insurance; and
665 (C) Subsection [(118)] (129) for workers' compensation insurance;
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 [(74)] (79) for medical malpractice insurance;
671 (B) Subsection [(92)] (102) for professional liability insurance; and
672 (C) Subsection [(118)] (129) for workers' compensation insurance;
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 [(116)] (127);
682 (ii) residential dwelling liability insurance as defined in Subsection [(102)] (112); and
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 [(71)] (76) (a) "License" means the authorization issued by the insurance commissioner
686 under this title to engage in some activity that is part of or related to the insurance business. [It]
687 (b) "License" includes certificates of authority issued to insurers.
688 [(72)] (77) (a) "Life insurance" means insurance on human lives and insurances pertaining
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 [(73)] (78) (a) "Long-term care insurance" means an insurance policy or rider advertised,
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 [(73)] (78)(a)(iv)(A) through
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 [neither the benefits nor eligibility is] the following are not conditioned on the
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 [(74)] (79) "Medical malpractice insurance" means insurance against legal liability
753 incident to the practice and provision of medical services other than the practice and provision of
754 dental services.
755 [(75)] (80) "Member" means a person having membership rights in an insurance
756 corporation.
757 [(76)] (81) "Minimum capital" or "minimum required capital" means the capital that must
758 be constantly maintained by a stock insurance corporation as required by statute.
759 [(77)] (82) "Motor club" means a person:
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 [(78)] (83) "Mutual" means mutual insurance corporation.
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 [(79)] (85) "Nonparticipating" means a plan of insurance under which the insured is not
777 entitled to receive dividends representing shares of the surplus of the insurer.
778 [(80)] (86) "Ocean marine insurance" means insurance against loss of or damage to:
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 [(81)] (87) "Order" means an order of the commissioner.
789 [(82)] (88) "Outline of coverage" means a summary that explains an accident and health
790 insurance policy.
791 [(83)] (89) "Participating" means a plan of insurance under which the insured is entitled
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 [(84)] (91) "Person" includes an individual, partnership, corporation, incorporated or
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 [(85)] (94) (a) (i) "Policy" means any document, including attached endorsements and
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. [This type of]
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 [(86)] (95) "Policyholder" means the person who controls a policy, binder, or oral contract
835 by ownership, premium payment, or otherwise.
836 [(87)] (96) "Policy illustration" means a presentation or depiction that includes
837 nonguaranteed elements of a policy of life insurance over a period of years.
838 [(88)] (97) "Policy summary" means a synopsis describing the elements of a life insurance
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 [(89)] (99) (a) "Premium" means the monetary consideration for an insurance policy, and
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 [(90)] (100) "Principal officers" of a corporation means the officers designated under
854 Subsection 31A-5-203 (3).
855 [(91)] (101) "Proceedings" includes actions and special statutory proceedings.
856 [(92)] (102) "Professional liability insurance" means insurance against legal liability
857 incident to the practice of a profession and provision of any professional services.
858 [(93)] (103) "Property insurance" means insurance against loss or damage to real or
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 [(57)] (61) and [(80)] (86).

863 [(94)] (104) (a) "Public agency insurance mutual" means any entity formed by joint
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 [(95)] (105) "Qualified long-term care insurance contract" or "federally tax qualified
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 [(96)] (106) (a) "Rate" means:
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 [(97)] (107) (a) Except as provided in Subsection [(97)] (107)(b), "rate service
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 [(98)] (108) "Rating manual" means any of the following used to determine initial and
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 [(99)] (109) "Received by the department" means:
908 (a) except as provided in Subsection [(99)] (109)(b), the date delivered to and stamped
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 [(100)] (110) "Reciprocal" or "interinsurance exchange" means any unincorporated
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 [(101)] (111) "Reinsurance" means an insurance transaction where an insurer, for
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 [(102)] (112) "Residential dwelling liability insurance" means insurance against liability
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 [(103)] (113) "Retrocession" means reinsurance with another insurer of a liability assumed
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 [(104)] (114) "Rider" means an endorsement to:
937 (a) an insurance policy; or
938 (b) an insurance certificate.
939 [(105)] (115) (a) "Security" means any:
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 [(105)] (115)(a)(i) through (xiv); or
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 [(106)] (116) "Self-insurance" means any arrangement under which a person provides for
965 spreading its own risks by a systematic plan.
966 (a) Except as provided in this Subsection [(106)] (116), self-insurance does not include
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 [(107)] (117) "Short-term care insurance" means any insurance policy or rider advertised,
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 [(108)] (119) (a) "Subsidiary" of a person means an affiliate controlled by that person
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 [(109)] (120) Subject to Subsection [(59)] (63)(b), "surety insurance" includes:
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 [(110)] (121) (a) "Surplus" means the excess of assets over the sum of paid-in capital and
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 [(113)] (124), that exceeds the product of:
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 [(113)] (124), that exceeds the product of:
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 [(111)] (122) "Third party administrator" or "administrator" means any person who
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 [(112)] (123) "Title insurance" means the insuring, guaranteeing, or indemnifying of
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 [(113)] (124) "Total adjusted capital" means the sum of an insurer's or health
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 [(114)] (125) (a) "Trustee" means "director" when referring to the board of directors of a
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 [(115)] (126) (a) "Unauthorized insurer," "unadmitted insurer," or "nonadmitted insurer"
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 [(116)] (127) "Vehicle liability insurance" means insurance against liability resulting from
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 [(93)] (103).
1060 [(117)] (128) "Voting security" means a security with voting rights, and includes any
1061 security convertible into a security with a voting right associated with it.
1062 [(118)] (129) "Workers' compensation insurance" means:
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 [workers] workers' compensation insurance
1068 and written in connection with it; and
1069 (c) insurance assuring to the persons entitled to [workers] workers' compensation benefits
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 [the] an examination at any time
1081 without advance notice to the examinee [but].
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 [the] an order issued under this
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 [to those of]
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 [or] of the examinee;
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[,]; or [of]
1100 (iii) any affiliate of the examinee under Subsection 31A-2-203 (1)(b)[, if they relate to the
1101 affairs of the examinee].
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. [No]
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)[, together with]; and
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 [its] representatives of the examinee.
1116 (c) The report is confidential until [it] the report becomes a public document under
1117 Subsection (7), [but] except the commissioner may use information from the report as a basis for
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 [either]:
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[, it]:
1127 (i) the examination report immediately becomes a public document; and
1128 (ii) the commissioner shall distribute [it] the examination report to all jurisdictions in
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, [but] except that the
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. [The]
1137 (iii) Unless the examinee seeks judicial relief, the adopted examination report:
1138 (A) shall become a public document ten days after service[,]; and
1139 (B) may be distributed as described in this section[, unless the examinee seeks judicial
1140 relief].
1141 (8) The examinee shall promptly furnish copies of the adopted examination report

1142 described in Subsection (7) to each member of [its] the examinee's board.
1143 (9) [The] After an examination report becomes a public document under Subsection (7),
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[, after the report becomes a public document
1148 under Subsection (7)].
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 [it] the examination report.
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, [and] grievance, or adverse benefit determination procedure; and
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) [grievance] adverse benefit determination process initiation;
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 [a grievance] an adverse benefit

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) [The fees] For purposes of this section:
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 [(2)] (4) The commissioner shall separately publish the schedule of fees approved by the
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 [(3) (a) Fees shall be set and collected for services provided by the department. "Services"
1245 include issuing and renewing licenses and certificates of authority, filing policy forms, reporting
1246 agent appointments and terminations, filing annual statements, and other functions that are
1247 reasonable and necessary to enable the commissioner to perform the duties imposed by the
1248 Insurance Code.]
1249 [(b) Fees related to the renewal of licenses may be imposed no more frequently than once
1250 each year.]
1251 [(4)] (5) The commissioner shall, by rule, establish the deadlines for payment of [each of
1252 the various fees] any fee established by the department in accordance with this section.
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, [which] that are in excess of the taxes, licenses, other fees, deposit
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 [an individual
1286 or agency licensee] a person that is:
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[, settlement, or closing] services in connection with real estate
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, [it] the insurer shall file with the
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; [and]
1323 (iii) meeting any applicable statutory obligations[.]; and
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 [it] the plan adequately
1334 demonstrates that the insurer will:
1335 (a) protect the interests of the people of the state;
1336 (b) meet [its] the insurer's contractual obligations;
1337 (c) provide service to [its] the insurer's Utah policyholders and claimants; and
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 [its] the insurer's total annual premium volume by 75% or more.
1351 (6) An insurer [that] is subject to the civil penalties under Section 31A-2-308 , if the
1352 insurer:
1353 (a) (i) withdraws from writing insurance in this state; or [that]
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 [is subject to the civil penalties under
1356 Section 31A-2-308 ].
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 [without] unless:

1359 (a) [the approval of] the commissioner finds that the prohibition should be waived because
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) [complying] the insurer complies with Subsection 31A-30-108 (5), if applicable.
1364 (8) The commissioner shall adopt rules necessary to implement [the provisions of] this
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) [Grievance] Adverse benefit determination procedures for health insurance policies and
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[,]; and
1383 (iv) the election of directors except public directors appointed [under Subsection] in
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 [(b)] (c) The articles of any mutual may give the policyholders or voting members

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). [No]
1394 (b) An amendment to [these rules] a rule described in this Subsection (3) is not effective
1395 until at least 30 days after [it] the rule has been filed with the commissioner.
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 [may provide that any] shall state:
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 [the] directors [are] of the mutual that may be appointed as public
1419 directors [chosen under a plan proposed by the corporation and approved by the commissioner.];
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. [The persons nominated as directors]
1426 (b) A person appointed as a public director shall have insurance business or [general] other
1427 business or professional experience that qualifies [them] that person to serve responsibly and
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 [(2)] (3) (a) [Directors not chosen under Subsection (1) are] A director who is not a public
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[,]; and
1439 (ii) for a term not exceeding six years.
1440 [(3)] (4) A director may be removed from office for cause by an affirmative vote of a
1441 majority of the full board at a meeting of the board called for that purpose.
1442 [(4)] (5) Subject to Subsections (1)[, (2), and (3)] through (4), Section 16-6a-810 applies
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) [The] Immediately after the selection of a person as a director or principal officer,
1447 the insurer shall report to the commissioner:
1448 (i) the name of [a] the person selected as a director or principal officer of a corporation[,
1449 together with]; and
1450 (ii) pertinent biographical and other data that the commissioner requires by rule[, shall be
1451 reported to the commissioner immediately after the selection].

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 [he] the person:
1455 (i) is trustworthy; and
1456 (ii) has the competence and experience necessary to discharge [his] that person's
1457 responsibilities.
1458 (2) (a) Whenever a director or principal officer of a corporation is removed under [Section
1459 16-10a-808 or 16-10a-832 , Subsections 16-6a-820 (4) and 31A-5-409 (3),] a provision listed in
1460 Subsection (2)(b), the insurer shall immediately report to the commissioner:
1461 (i) the removal [shall be reported to the commissioner immediately, together with]; and
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) [If] The commissioner may order the removal of a director or officer if the
1469 commissioner finds, after a hearing, that:
1470 (a) a director or officer:
1471 (i) is incompetent [or];
1472 (ii) untrustworthy[, or];
1473 (iii) is not qualified under Section 31A-5-409 ; or
1474 (iv) has wilfully violated:
1475 (A) this [code,] title;
1476 (B) a rule adopted under Subsection 31A-2-201 (3)[,]; or
1477 (C) an order issued under Subsection 31A-2-201 (4)[,]; and [that the incompetence,
1478 untrustworthiness, or the violation]
1479 (b) the circumstances described in Subsection (3)(a) endangers the interests of:
1480 (i) insureds; or
1481 (ii) the public[, he may order the removal of the director or officer].
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 [his]
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 [(1)] (6)(a)(i);
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 [the] services described in this Subsection (6)(a).
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 [he] the
1535 individual performs [himself].
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," [in] which [case see] is described in Sections 31A-8-204 and
1544 31A-8-206 ; or

1545 (b) "organization expenses," [in] which [case see] is described in Section 31A-8-208 .
1546 (9) "Participating provider" means a provider as defined in Subsection (10) who, under a
1547 contract with the health maintenance organization, [has agreed] agrees to provide health care
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 [who]
1552 (b) is licensed or otherwise authorized to furnish [this] the health care in this state.
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 [which]
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 [Chapters]:
1564 (A) Chapter 7,[ 9, 10, 11, 12, 13, 19, and 28] Nonprofit Health Service Insurance
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 [(i)] (A) Chapter 3, Department Funding, Fees, and Taxes, except for Part I;
1575 [(ii)] (B) Section 31A-4-107 ;

1576 [(iii)] (C) Chapter 5, Domestic Stock and Mutual Insurance Corporations, except for
1577 provisions specifically made applicable by this chapter;
1578 [(iv)] (D) Chapter 14, Foreign Insurers, except for provisions specifically made applicable
1579 by this chapter;
1580 [(v)] (E) Chapter 17, Determination of Financial Condition, except:
1581 [(A) Part] (I) Parts II and VI; or
1582 [(B)] (II) as made applicable by the commissioner by rule consistent with this chapter;
1583 [(vi)] (F) Chapter 18, Investments, except as made applicable by the commissioner by rule
1584 consistent with this chapter; and
1585 [(vii)] (G) Chapter 22, Contracts in Specific Lines, except for Parts VI, VII, and XII.
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) [Nothing in this title prohibits] This title does not prohibit any health maintenance
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 [its] the organization's freedom of choice in
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 [grievances] adverse benefit determinations initiated by enrollees or
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) [is at least] be less than $10,000; [and] or
1651 (ii) [may not] exceed $100,000.
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 [(3) Before beginning operations, a health maintenance organization licensed under this
1675 chapter shall have total adjusted capital in excess of the company action level RBC as defined in
1676 Subsection 31A-17-601 (8)(b).]
1677 [(4) Each health maintenance organization authorized to do business in this state shall
1678 maintain assets in an amount equal to the total of the health maintenance organization's:]
1679 [(a) liabilities;]
1680 [(b) minimum capital or minimum permanent surplus required by Subsection (1) or (2);
1681 and]
1682 [(c) the company action level RBC as defined in Subsection 31A-17-601 (8)(b).]
1683 [(5) As a prerequisite to receiving an original certificate of authority to do business in this
1684 state, a health maintenance organization shall have initial surplus at least $400,000 in excess of
1685 the capital and surplus required by Subsection (4).]
1686 [(6)] (3) The commissioner may allow the minimum capital or permanent surplus account
1687 of an organization to be designated by some other name.
1688 [(7)] (4) A pattern of persistent deviation from the accounting and investment standards
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) [the health maintenance organization's minimum capital or minimum permanent
1698 surplus requirement of Subsection 31A-8-209 (1) or (2)] $100,000; and
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 [its] the
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 [grievances] adverse benefit determinations initiated by enrollees or
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 [later] earlier of:

1917 (I) 90 days [from] after the date of the filing of a petition for rehabilitation or the petition
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) [Any] (a) An organization [offering to sell point of service products] shall report to the
1958 commissioner on a monthly basis the number of encounters with contracted and noncontracted
1959 providers [to the commissioner on a monthly basis] if the organization offers to sell a:
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 [shall]
1965 (ii) require audited reports of the information on a yearly basis.
1966 (3) An organization may not offer a point of service [products] product or a point of sale
1967 product unless [it] the organization has secured contracts with participating providers located
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 [members] a member who [do] does not work or reside
1972 in the service area as defined by rule, except this Subsection (4) does not apply to [dependents] a
1973 dependent of [enrollees] an enrollee.
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) [For] for individual annuity and pure endowment contracts issued prior to April 2,
1991 1980, excluding any accident and health and accidental death benefits in [such] the contracts:
1992 (i) (A) the 1971 Individual Annuity Mortality Table[,]; or
1993 (B) any modification of [this table] the 1971 Individual Annuity Mortality Table approved
1994 by the commissioner[, and];
1995 (ii) 6% interest for single premium immediate annuity contracts[,]; and
1996 (iii) 4% interest for all other individual annuity and pure endowment contracts[.];
1997 (b) [For] for individual single premium immediate annuity contracts issued on or after
1998 April 2, 1980, excluding any accident and health and accidental death benefits in [such] the
1999 contracts: [the 1971 Individual Annuity Mortality Table or]
2000 (i) (A) any individual annuity mortality table[, adopted after 1980 by the National
2001 Association of Insurance Commissioners] that is approved by rule [promulgated] by the
2002 commissioner for use in determining the minimum standard of valuation for such contracts[,]; or
2003 (B) any modification of [these tables] a table described in Subsection (1)(b)(i)(A) approved
2004 by the commissioner[,]; and
2005 (ii) 7.5% interest[.];
2006 (c) [For] for individual annuity and pure endowment contracts issued on or after April 2,
2007 1980, other than single premium immediate annuity contracts, excluding any accident and health
2008 and accidental death benefits in [such] the contracts: [the 1971 Individual Annuity Mortality Table
2009 or]

2010 (i) (A) any individual annuity mortality table [adopted after 1980 by the National
2011 Association of Insurance Commissioners,] that is approved by rule [promulgated] by the
2012 commissioner for use in determining the minimum standard of valuation for such contracts[,]; or
2013 (B) any modification of [these tables] a table described in Subsection (1)(c)(i)(A) approved
2014 by the commissioner[, and];
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) [For] for all annuities and pure endowments purchased prior to April 2, 1980, under
2018 group annuity and pure endowment contracts, excluding any accident and health and accidental
2019 death benefits purchased under [such] the contracts:
2020 (i) (A) the 1971 Group Annuity Mortality Table; or
2021 (B) any modification of [this table] the 1971 Group Annuity Mortality Table approved by
2022 the commissioner[,]; and
2023 (ii) 6.5% interest[.]; and
2024 (e) [For] for all annuities and pure endowments purchased on or after April 2, 1980, under
2025 group annuity and pure endowment contracts, excluding any accident and health and accidental
2026 death benefits purchased under [such] the contracts: [the 1971 Group Annuity Mortality Table, or]
2027 (i) (A) any group annuity mortality table [adopted after 1980 by the National Association
2028 of Insurance Commissioners,] that is approved by rule [and promulgated] by the commissioner for
2029 use in determining the minimum standard of valuation for such annuities and pure endowments[,];
2030 or
2031 (B) any modification of [these tables] a table described in Subsection (1)(e)(i)(A) approved
2032 by the commissioner[,]; and
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 [the provisions of] this section after a specified date before January
2036 1, 1979, which shall be the operative date of this section for [such] the company[, provided, if].
2037 (b) If a company [makes no such] does not make an election under Subsection (2)(a), the
2038 operative date of this section for [such] the company shall be January 1, 1979.
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, [1994] 1982;
2048 (c) all annuities and pure endowments purchased in a particular calendar year on or after
2049 January 1, [1994] 1982, under group annuity and pure endowment contracts; and
2050 (d) the net increase, if any, in a particular calendar year after January 1, [1994] 1982, in
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 [other than];
2210 (B) credit life insurance;
2211 [(B)] (C) variable and fixed annuities;
2212 [(C)] (D) health and accident and health insurance [other than];
2213 (E) credit accident and health insurance; and
2214 [(D)] (F) reinsurance.
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[, settlement, and closing] charges that it proposes to use
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[, settlement,
2249 and closing charges] that would cause the title insurance company, agency, or agent to:
2250 (a) operate at less than the cost of doing:
2251 (i) the insurance business; or
2252 (ii) the escrow[, settlement, and closing] business; or
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[, settlement, and closing] charges, may be changed or amended at any time, subject to
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[, settlement, or closing] services performed in connection with the issuance
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 [he] that person has or expects to have an insurable
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[,]; or
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 [no] an insurable interest if
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 [his] the person's own life and
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 when]; and
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. [The]
2324 (b) A person shall express consent [either]:
2325 (i) by signing an application for the insurance with knowledge of the nature of the
2326 document[,]; or
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 [the following cases:] a circumstance described in this Subsection (4)(a).
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 [members] member who is living with or dependent on the person.
2336 (iv) A person may obtain an accident and health insurance policy on others that would
2337 merely indemnify the policyholder against expenses [he] the person would be legally or morally
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 [the following cases:] a circumstance described
2344 in this Subsection (4)(b).
2345 (i) A parent, a person having legal custody of a minor, or a guardian of [the] a person
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[, but].
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 [them] the
2358 proceeds, other than the one to whom the policy is designated to be payable[,]; or [it may]
2359 (ii) create a constructive trust in the proceeds or a part of [them] the proceeds on behalf
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[,]; and
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) [Except as provided in Subsection (3) or (4), or as otherwise mandated by law, no] A
2406 purported modification of a contract during the term of the policy [affects] may not affect the
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[.]; and
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[.]; and
2436 (II) incontestability provision.
2437 (iii) Upon receiving a written request, the insurer shall [also] inform any insured how the
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 [which] that are relevant
2440 to the certificate holder.
2441 (b) The commissioner may by rule impose a [similar] requirement similar to Subsection
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) [The] (i) A certificate shall be provided in a manner reasonably calculated to bring [it]
2446 the certificate to the attention of the certificate holder.
2447 (ii) The insurer may deliver or mail [the certificates] a certificate:
2448 (A) directly to the certificate holders[,]; or [may deliver or mail them]
2449 (B) in bulk to the policyholder to transmit to certificate holders.
2450 (iii) An affidavit by the insurer that [it has] the insurer mailed the certificates in the usual
2451 course of business creates a rebuttable presumption that [it] the insurer has done so.
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[,]; or
2457 (iii) publication in a house organ[, if the substitutes are reasonably calculated to inform
2458 certificate holders of their rights].
2459 (2) Unless a certificate or an authorized substitute has been made available to the
2460 certificate holder when required by this section, [no] an act or omission forbidden to or required
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, [affects] may not affect the insurer's obligations under
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[,] contract;
2470 (3) a franchise[,] contract;
2471 (4) a group[,] contract; and
2472 (5) a blanket [contracts, except where the application of a provision is specifically limited]
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) [Each] (a) Except as provided in Subsection (3), a life insurance policy is[, and shall
2501 state that,] incontestable after [it] the policy has been in force [during the lifetime of the insured]
2502 for a period of two years from [its] the policy's date of issue[, it is incontestable except for the
2503 following]:
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 [(a) The policy] (3) (a) A life insurance policy described in Subsection (2) may be
2509 contested for nonpayment of premiums.
2510 [(b) The policy] (b) A life insurance policy described in Subsection (2) may be contested
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 [the policy] a life insurance policy described in Subsection (2) allows the insured,
2516 after the policy's issuance and for an additional premium, to obtain a death benefit [which] that is
2517 larger than when the policy was originally issued, [then] the payment of the additional increment
2518 of benefit is contestable:
2519 (i) until two years after the incremental increase of benefits[, but the]; and
2520 (ii) based only on a ground [of contest] that may arise [is] in connection with the
2521 incremental increase.
2522 [(3)] (4) (a) A reinstated life insurance policy or annuity contract may be contested:
2523 (i) for two years following reinstatement on the same basis as at original issuance[, but];
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[.]; and
2529 (ii) for a survivorship life insurance policy, during the lifetime of the surviving insured.
2530 [(4)] (5) (a) The limitations on incontestability under this section:
2531 (i) preclude only a contest of the validity of the policy[,]; and
2532 (ii) do not preclude the good faith assertion at any time of defenses based upon provisions
2533 in the policy [which] that exclude or qualify coverage, whether or not those qualifications or
2534 exclusions are specifically excepted in the policy's incontestability clause. [Provisions]
2535 (b) A provision on which the contestable period would normally run may not be
2536 reformulated as a coverage [exclusions] exclusion or [restrictions] restriction to take advantage of

2537 this Subsection [(4)] (5).
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[,]; or
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 [(b)] (c) If a suicide occurs within the two-year period described in Subsection (1)(a), the
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) [policies] a policy insuring against death by accident only; or
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, [(]including a partnership or sole
2579 proprietorship[)], or by an employee organization, or by both, other than a plan providing
2580 individual retirement accounts or individual retirement annuities under Section 408 [of the],
2581 Internal Revenue Code[, as now or hereafter amended,];
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[,]; or
2587 (g) a reversionary annuity[, nor to]; or
2588 (h) any contract [which] that shall be delivered outside this state through an agent or other
2589 representative of the company issuing the contract.
2590 (3) (a) [In the case of policies] If a policy is issued after this section takes effect as set forth
2591 in Subsection (12), [no] a contract of annuity, except as stated in Subsection (2), [shall] may not
2592 be delivered or issued for delivery in this state unless [it] the contract of annuity contains in
2593 substance:
2594 (i) the [following] provisions[,] described in Subsection (3)(b); or [corresponding]
2595 (ii) provisions [which] corresponding to the provisions described in Subsection (3)(b) that
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 [(a) That] (i) upon cessation of payment of consideration under a contract, the company
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 [(b) If] (ii) if a contract provides for a lump-sum settlement at maturity, or at any other
2603 time, [that] upon surrender of the contract at or before the commencement of any annuity
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)[. The];
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 [therefor] for the payment of
2608 the cash surrender benefit with surrender of the contract[.];
2609 [(c) A] (iv) a statement of the mortality table, if any, and interest rates used in calculating
2610 any of the following that are guaranteed under the contract:
2611 (A) minimum paid-up annuity[,] benefits;
2612 (B) cash surrender benefits; or
2613 (C) death benefits [that are guaranteed under the contract, together with];
2614 (v) sufficient information to determine the amounts of [such] the benefits[.] described in
2615 Subsection (3)(b)(iv);
2616 [(d) A] (vi) a statement that any paid-up annuity, cash surrender, or death benefits that
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[, any];
2622 (B) indebtedness to the company on the contract; or [any]
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 [its] the company's option terminate the contract by payment in
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[,]; and [by such]
2632 (ii) the payment [shall be relieved] described in Subsection (3)(c)(i), relieves the company
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 [(as hereinafter defined)] paid prior to such time[,]:
2641 (A) decreased by the sum of: [(i)]
2642 (I) any prior withdrawals from or partial surrenders of the contract accumulated at a rate
2643 of interest of 3% per annum[,]; and [(ii)]
2644 (II) the amount of any indebtedness to the company on the contract, including interest due
2645 and accrued[,]; and
2646 (B) increased by any existing additional amounts credited by the company to the contract.
2647 [The] (ii) For purposes of this Subsection (4)(a), the net consideration for a given contract
2648 year used to define the minimum nonforfeiture amount shall be:
2649 (A) an amount not less than zero; and [shall be]
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 [less]
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 [the provisions of the preceding sentence] Subsection (4)(a)(iii), the
2659 percentage shall be 65% of the portion of the total net consideration for any renewal contract year
2660 [which] that exceeds by not more than two times the sum of those portions of the net

2661 considerations in all prior contract years for which the percentage was 65%.
2662 (b) [With] (i) Except as provided in Subsections (4)(b)(ii) and (iii), with respect to
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 [shall be]
2666 (B) defined as for contracts with flexible considerations [which] that are paid annually
2667 [with two exceptions:].
2668 [(i)] (ii) The portion of the net consideration for the first contract year to be accumulated
2669 shall be equal to an amount that is the sum of:
2670 (A) 65% of the net consideration for the first contract year [plus]; and
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 [years] year.
2675 [(ii)] (iii) The annual contract charge shall be the lesser of $30 or 10% of the gross annual
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 [its] the
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. [Such]
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 [which] that provide cash surrender benefits, the cash surrender
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 [which] that would be provided under the contract at
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 [which] that do not provide cash surrender benefits, the present value
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 [which] that do not provide any death benefits before commencement of
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. [However, in]
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), [in the case of annuity contracts under which an election may be made to have annuity
2718 payments commence at optional maturity dates,] the maturity date shall be considered to be the
2719 latest date [for which election shall be] permitted by the contract, [but] except that it may not be
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[, whichever is later].

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 [which] that does not provide cash surrender benefits or does not provide
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 [such]
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 [which] that provides, within the same contract by rider or
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 [the provisions of] Subsections (5), (6), (7), (8), and (10),
2744 additional benefits payable[: (a) in the event of total and permanent disability, (b) as reversionary
2745 annuity or deferred reversionary annuity benefits, or (c) as other policy benefits additional to life
2746 insurance, endowment, and annuity benefits, and considerations for all such additional benefits],
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[,]; and
2752 (D) death benefits [that may be required by this section].
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 [these] the additional benefits described in this Subsection (11) may
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 [the provisions of] this section after a specified date
2765 before [the second anniversary of the date this section takes effect. The provisions of this] July
2766 1, 1988.
2767 (b) This section [apply] applies to annuity contracts of a company issued on or after the
2768 date the company specifies in the notice.
2769 (c) If a company makes no [such] election under Subsection (12)(a), the operative date of
2770 this section for such company is [the second anniversary of the effective date of this section] July
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 [continue] convert coverage upon
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 [disapprove] prohibit the use of an accident and health
2793 insurance policy form or rates if [it does] the form or rates do not satisfy Subsection (2).
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 [later] earlier of:
2818 (I) 90 days [from] after the date of the filing of a petition for rehabilitation or the petition
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 [grievance] adverse benefit determination procedures required
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 [grievances] adverse benefit determinations initiated by
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 [female]
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 [by virtue of] because the insured [selecting] selected a primary
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" [means an employer that does not come within the definition of
2959 "small employer."] is as defined in Section 31A-1-301 .
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 [ 31A-30-103 ] 31A-1-301.
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 (b) In addition to Subsection (3)(a), an insurer may offer to provide catastrophic mental
2993 health coverage at levels that exceed the minimum requirements of this section.
2994 (c) A large employer may, at its option, choose either catastrophic mental health coverage,
2995 coverage that excludes benefits for mental health conditions, or coverage offered under Subsection
2996 (3)(b).
2997 (4) (a) An insurer may provide catastrophic mental health coverage through a managed
2998 care organization or system in a manner consistent with the provisions in Chapter 8, Health
2999 Maintenance Organizations and Limited Health Plans, regardless of whether the policy or contract
3000 uses a managed care organization or system for the treatment of physical health conditions.
3001 (b) (i) Notwithstanding any other provision of this title, an insurer may:

3002 (A) establish a closed panel of providers for catastrophic mental health coverage; and
3003 (B) refuse to provide any benefit to be paid for services rendered by a nonpanel provider
3004 unless:
3005 (I) the insured is referred to a nonpanel provider with the prior authorization of the insurer;
3006 and
3007 (II) the nonpanel provider agrees to follow the insurer's protocols and treatment guidelines.
3008 (ii) If an insured receives services from a nonpanel provider in the manner permitted by
3009 Subsection (4)(b)(i)(B), the insurer shall reimburse the insured for not less than 75% of the average
3010 amount paid by the insurer for comparable services of panel providers under a noncapitated
3011 arrangement who are members of the same class of health care providers.
3012 (iii) Nothing in this Subsection (4)(b) may be construed as requiring an insurer to authorize
3013 a referral to a nonpanel provider.
3014 (c) To be eligible for catastrophic mental health coverage, a diagnosis or treatment of a
3015 mental health condition must be rendered:
3016 (i) by a mental health therapist as defined in Section 58-60-102 ; or
3017 (ii) in a health care facility licensed or otherwise authorized to provide mental health
3018 services pursuant to Title 26, Chapter 21, Health Care Facility Licensing and Inspection Act, or
3019 Title 62A, Chapter 2, Licensure of Programs and Facilities, that provides a program for the
3020 treatment of a mental health condition pursuant to a written plan.
3021 (5) The commissioner may disapprove any policy or contract that provides mental health
3022 coverage in a manner that is inconsistent with the provisions of this section.
3023 (6) The commissioner shall:
3024 (a) adopt rules as necessary to ensure compliance with this section; and
3025 (b) provide general figures on the percentage of contracts and policies that include no
3026 mental health coverage, 50/50 mental health coverage, catastrophic mental health coverage, and
3027 coverage that exceeds the minimum requirements of this section.
3028 (7) The Health and Human Services Interim Committee shall review:
3029 (a) the impact of this section on insurers, employers, providers, and consumers of mental
3030 health services before January 1, 2004; and
3031 (b) make a recommendation as to whether the provisions of this section should be
3032 modified and whether the cost-sharing requirements for mental health conditions should be the

3033 same as for physical health conditions.
3034 (8) (a) An insurer shall offer catastrophic mental health coverage as part of a health
3035 maintenance organization contract that is governed by Chapter 8, Health Maintenance
3036 Organizations and Limited Health Plans, that is in effect on or after January 1, 2001.
3037 (b) An insurer shall offer catastrophic mental health coverage as a part of a health
3038 insurance policy that is not governed by Chapter 8, Health Maintenance Organizations and Limited
3039 Health Plans, that is in effect on or after July 1, 2001.
3040 (c) This section does not apply to the purchase or renewal of an individual insurance policy
3041 or contract.
3042 (d) Notwithstanding Subsection (8)(c), nothing in this section may be construed as
3043 discouraging or otherwise preventing insurers from continuing to provide mental health coverage
3044 in connection with an individual policy or contract.
3045 (9) This section shall be repealed in accordance with Section 63-55-231 .
3046 Section 44. Section 31A-22-629 is amended to read:
3047 31A-22-629. Adverse benefit determination review process.
3048 (1) As used in this section:
3049 [(a) "Grievance" means a written or, if accepted by the insurer, oral statement that indicates
3050 an insured's disagreement with an insurance-related decision of the insurer.]
3051 (a) (i) "Adverse benefit determination" means the:
3052 (A) denial of a benefit;
3053 (B) reduction of a benefit;
3054 (C) termination of a benefit; or
3055 (D) failure to provide or make payment, in whole or in part, for a benefit.
3056 (ii) "Adverse benefit determination" includes:
3057 (A) denial, reduction, termination, or failure to provide or make payment that is based on
3058 a determination of a insured's or beneficiary's eligibility to participate in a plan;
3059 (B) with respect to group health plans, a denial, reduction, or termination of, or a failure
3060 to provide or make payment, in whole or in part, for, a benefit resulting from the application of a
3061 utilization review; and
3062 (C) failure to cover an item or service for which benefits are otherwise provided because
3063 it is determined to be:

3064 (I) experimental;
3065 (II) investigational; or
3066 (III) not medically necessary or appropriate.
3067 (b) "Independent review" means a process that:
3068 (i) [may be created and operated internally by an insurer or externally by a third party] is
3069 a voluntary option for the resolution of an adverse benefit determination;
3070 (ii) [satisfies the requirements of Subsection (4)(b)(ii)] is conducted at the discretion of
3071 the claimant;
3072 (iii) [is designated by the insurer; and] is conducted by an independent review organization
3073 designated by the insurer;
3074 (iv) renders an independent and impartial decision on [a grievance] an adverse benefit
3075 determination submitted by an insured; and
3076 (v) may not require the insured to pay a fee for requesting the independent review.
3077 (c) "Insured" is as defined in Section 31A-1-301 and includes a person who is authorized
3078 to act on the insured's behalf.
3079 (d) "Insurer" is as defined in Section 31A-1-301 and includes:
3080 (i) a health maintenance organization; and
3081 (ii) a third-party administrator that offers, sells, manages, or administers a health insurance
3082 policy or health maintenance organization contract that is subject to this title.
3083 (e) "Internal review" means the process an insurer uses to review an insured's [grievance]
3084 adverse benefit determination before the [grievance] adverse benefit determination is submitted
3085 for independent review.
3086 (2) This section applies generally to health insurance policies and health maintenance
3087 organization contracts in effect on or after January 1, 2001.
3088 (3) (a) An insured may submit [a grievance] an adverse benefit determination to the
3089 insurer.
3090 (b) The insurer shall conduct an internal review of the insured's [grievance] adverse benefit
3091 determination.
3092 [(c) Consistent with rules adopted pursuant to Subsection (4), an insured who disagrees
3093 with the results of an internal review may submit the grievance for an independent review if the
3094 grievance involves the payment of a claim or the denial of coverage.]

3095 (4) Before October 1, 2000, the commissioner shall adopt rules that[: (a) establish a
3096 maximum flat fee that may be charged to an insured for requesting a decision from an independent
3097 review board and the circumstances under which the fee shall be waived on the basis of financial
3098 hardship; and (b)] establish minimum standards for:
3099 [(i)] (a) internal reviews;
3100 [(ii) internal and external]
3101 (b) independent reviews to ensure independence and impartiality;
3102 [(iii)] (c) the types of [grievances] adverse benefit determinations that may be submitted
3103 to an independent review; and
3104 [(iv)] (d) the timing of the review process, including an expedited review when medically
3105 necessary.
3106 (5) Nothing in this section may be construed as:
3107 (a) expanding, extending, or modifying the terms of a policy or contract with respect to
3108 benefits or coverage;
3109 (b) permitting an insurer to charge an insured for the internal review of [a grievance] an
3110 adverse benefit determination;
3111 (c) restricting the use of arbitration in connection with or subsequent to an independent
3112 review; or
3113 (d) altering the legal rights of any party to seek court or other redress in connection with:
3114 (i) an adverse decision resulting from an independent review, except that if the insurer is
3115 the party seeking legal redress, the insurer shall pay for the reasonable attorneys fees of the insured
3116 related to the action and court costs; or
3117 (ii) [a grievance] an adverse benefit determination or other claim that is not eligible for
3118 submission to independent review.
3119 Section 45. Section 31A-22-703 is amended to read:
3120 31A-22-703. Conversion rights on termination of group accident and health
3121 insurance coverage.
3122 (1) Except as provided in Subsections (2) through (5), all policies of accident and health
3123 insurance offered on a group basis under this title or Title 49, Chapter 8, Group Insurance Program
3124 Act, shall provide that a person whose insurance under the group policy has been terminated for
3125 any reason, and who has been continuously insured under the group policy or its predecessor for

3126 at least six months immediately prior to termination, is entitled to choose:
3127 (a) a converted individual policy of accident and health insurance from the insurer [which]
3128 that conforms to Section 31A-22-708 ; or
3129 (b) an extension of benefits under the group policy as provided in Section 31A-22-714 .
3130 (2) Subsection (1) does not apply if the policy:
3131 (a) provides:
3132 (i) catastrophic[,] benefits;
3133 (ii) aggregate stop loss[, or] benefits;
3134 (iii) specific stop loss benefits; or
3135 [(b) provides] (iv) benefits for:
3136 (A) specific diseases [or for];
3137 (B) accidental injuries only[,]; or
3138 (C) for dental service; or
3139 [(c)] (b) is an income replacement policy.
3140 (3) An employee or group member does not have conversion rights under Subsection (1)
3141 if:
3142 (a) termination of the group coverage occurred because [of failure of] the group member
3143 failed to pay any required individual contribution;
3144 (b) the individual group member acquires other group coverage covering all preexisting
3145 conditions including maternity, if the coverage existed under the replaced group coverage; or
3146 (c) the person has:
3147 (i) performed an act or practice that constitutes fraud; or
3148 (ii) made an intentional misrepresentation of material fact under the terms of the coverage.
3149 (4) Notwithstanding Subsections (1), (2), and (3), an employee or group member does not
3150 have conversion rights under Subsection (1) if the individual or group member qualifies to
3151 continue coverage under [his] the individual's or group member's existing group policy in
3152 accordance with the terms of [his] the individual's or group member's policy.
3153 (5) (a) Notwithstanding Subsection 31A-22-613 (1), an insurer may reduce benefits under
3154 a converted policy covering any person to the extent the benefits provided or available to that
3155 person under one or more of the sources listed under Subsection (5)(b), together with the benefits
3156 provided by the converted policy, would result in coverage that would result in payment of more

3157 than 100% of the amount of the claim.
3158 (b) The benefits sources referred to under Subsection (5)(a) include benefits under:
3159 (i) [benefits under] another insurance policy; and
3160 (ii) [benefits under] any arrangement of coverage for individuals in a group, whether on
3161 an insured or an uninsured basis.
3162 (6) (a) The conversion policy shall provide maternity benefits equal to the lesser of the
3163 maternity benefits of the group policy or the conversion policy until termination of a pregnancy
3164 that exists on the date of conversion if:
3165 (i) one of the following is pregnant on the date of the conversion:
3166 (A) the insured;
3167 (B) a spouse of the insured; or
3168 (C) a dependent of the insured; and
3169 (ii) the accident and health policy had maternity benefits.
3170 (b) The requirements of this Subsection (6) do not apply to a pregnancy that occurs after
3171 the date of conversion.
3172 Section 46. Section 31A-22-705 is amended to read:
3173 31A-22-705. Provisions in conversion policies.
3174 (1) A converted policy may include a provision under which the insurer may request from
3175 the person covered, information in advance of any premium due date as to whether there is other
3176 coverage as specified under Subsection 31A-22-703 (4).
3177 [(2) The converted policy may provide that the insurer may refuse to renew the policy or
3178 the coverage of any person insured:]
3179 [(a) for fraud or intentional misrepresentation of a material fact in applying for any benefits
3180 under the converted policy; or]
3181 [(b) for any other reason approved by the commissioner by rule or order.]
3182 (2) (a) Except as provided in Subsection (2)(b), a converted policy is renewable with
3183 respect to all individuals or dependents at the option of the individual.
3184 (b) A converted policy may be discontinued if:
3185 (i) the individual fails to pay premiums or contributions in accordance with the terms of
3186 the health benefit plan, including any timeliness requirements;
3187 (ii) the individual:

3188 (A) performs an act or practice that constitutes fraud; or
3189 (B) made an intentional misrepresentation of material fact under the terms of the coverage;
3190 or
3191 (iii) for network plans:
3192 (A) the individual no longer resides, lives, or works in:
3193 (I) the service area of the insurer; or
3194 (II) the area for which the insurer is authorized to do business; and
3195 (B) coverage is terminated uniformly without regard to any health status-related factor of
3196 covered individuals.
3197 (3) An insurer may not be required to issue a converted policy which provides benefits in
3198 excess of those provided under the group policy from which conversion is made.
3199 (4) A converted policy may not exclude a preexisting condition not excluded under the
3200 group policy.
3201 (5) During the first policy year, the converted policy may provide that the benefits payable
3202 under the converted policy, together with the benefits paid for the individual under the group
3203 policy, do not exceed those that would have been payable had the individual's insurance under the
3204 group policy remained in force and effect.
3205 Section 47. Section 31A-22-708 is amended to read:
3206 31A-22-708. Conversion of health benefit plan.
3207 If the group insurance policy from which the conversion is made is a health benefit plan,
3208 as defined in [Subsection 31A-30-103 (15)] Section 31A-1-301 , the employee or member must be
3209 offered at least basic coverage as defined in [Subsection] Section 31A-30-103 [(4)].
3210 Section 48. Section 31A-22-714 is amended to read:
3211 31A-22-714. Extension of benefits.
3212 (1) (a) In addition to the right of the employee to have a converted policy issued to the
3213 employee, and on the same bases of eligibility as for conversion of coverage under Sections
3214 31A-22-703 and 31A-22-704 , the employee has the right to continue the employee's coverage
3215 under the group policy for a period of six months, unless the employee:
3216 (i) was terminated for gross misconduct; or
3217 (ii) is eligible for any extension of coverage required by federal law.
3218 (b) This right to continue coverage includes any dependent coverages.

3219 (2) In addition to the terminated insured, those classes of persons defined in Section
3220 31A-22-710 are [also] entitled to the continuation of coverage as provided in this section.
3221 (3) (a) (i) The employer shall provide the terminated insured written notification of the
3222 right to continue group coverage and the payment amounts required for continued coverage,
3223 including the manner, place, and time in which the payments shall be made.
3224 (ii) The notice required by this Subsection (3):
3225 (A) may be sent to the terminated insured's home address as shown on the records of the
3226 employer[. This notice]; and
3227 (B) shall be given not more than 30 days after the termination date of the group coverage.
3228 (b) The payment amount for continued group coverage may not exceed 102% of the group
3229 rate in effect for a group member, including an employer's contribution, if any, for a group
3230 insurance policy.
3231 (4) The insurer shall provide the employee or any eligible dependent the opportunity to
3232 continue the group coverage at the payment amount stated in Subsection (3)(b) if:
3233 (a) the employer policyholder does not provide the terminated insured the written
3234 notification as required by Subsection (3); and
3235 (b) the employee or other insured eligible for extension contacts the insurer within 30 days
3236 of coverage termination.
3237 [(4) If] (5) (a) Except as provided in Subsection (5)(c), the coverages described in
3238 Subsection (5)(b) continues without interruption and may not terminate if the terminated insured
3239 or, with respect to a minor, the parent or guardian of the terminated insured:
3240 (i) elects to continue group coverage; and
3241 (ii) tenders the amount required:
3242 (A) (I) to the employer [the amount required]; or
3243 (II) to the insured if the right to continue notice is received from the insurer; and
3244 (B) within 30 days after receiving notice as prescribed by this section[,].
3245 (b) Subsection (5)(a) applies to coverage of:
3246 (i) the terminated insured [and coverage of];
3247 (ii) the covered spouse of the terminated insured; and
3248 (iii) dependents of the terminated insured [continues without interruption and may not
3249 terminate unless:].

3250 (c) A coverage described in Subsection (5)(b) may be terminated if:
3251 [(a)] (i) the terminated insured:
3252 (A) establishes residence outside of this state; or
3253 (B) moves out of the insurer's service area;
3254 [(b)] (ii) the terminated insured fails to make timely payment of a required contribution;
3255 [(c)] (iii) the terminated insured violates a material condition of the contract;
3256 [(d)] (iv) the terminated insured becomes eligible for similar coverage under another group
3257 policy; or
3258 [(e)] (v) the employer's coverage is terminated.
3259 [(5)] (6) If the employer replaces coverage with similar coverage under another group
3260 policy, without interruption, the terminated insured has the right to obtain coverage under the
3261 replacement group policy:
3262 (a) for the balance of the period the terminated insured would have continued coverage
3263 under the replaced group policy[, provided]; and
3264 (b) if the terminated insured is otherwise eligible for continuation of coverage.
3265 [(6)] (7) At the end of the continued benefit period as provided in this section, the covered
3266 person:
3267 (a) remains eligible for a converted policy under this chapter; and
3268 (b) shall be [so] informed that the person remains eligible:
3269 (i) by the employer; and
3270 (ii) in the same manner and according to the same terms as required by Section
3271 31A-22-703 .
3272 Section 49. Section 31A-22-721 is enacted to read:
3273 31A-22-721. A health benefit plan for a plan sponsor.
3274 (1) Except as otherwise provided in this section, a health benefit plan for a plan sponsor
3275 is renewable and continues in force:
3276 (a) with respect to all eligible employees and dependents; and
3277 (b) at the option of the plan sponsor.
3278 (2) A health benefit plan for a plan sponsor may be discontinued or nonrenewed:
3279 (a) for a network plan, if:
3280 (i) there is no longer any enrollee under the group health plan who lives, resides, or works

3281 in:
3282 (A) the service area of the insurer; or
3283 (B) the area for which the insurer is authorized to do business; and
3284 (ii) in the case of the small employer market, the insurer applies the same criteria the
3285 insurer would apply in denying enrollment in the plan under Subsection 31A-30-108 (6); or
3286 (b) for coverage made available in the small or large employer market only through an
3287 association, if:
3288 (i) the employer's membership in the association ceases; and
3289 (ii) the coverage is terminated uniformly without regard to any health status-related factor
3290 relating to any covered individual.
3291 (3) A health benefit plan for a plan sponsor may be discontinued if:
3292 (a) a condition described in Subsection (2) exists;
3293 (b) the plan sponsor fails to pay premiums or contributions in accordance with the terms
3294 of the contract;
3295 (c) the plan sponsor:
3296 (i) performs an act or practice that constitutes fraud; or
3297 (ii) makes an intentional misrepresentation of material fact under the terms of the
3298 coverage;
3299 (d) the insurer:
3300 (i) elects to discontinue offering a particular health benefit product delivered or issued for
3301 delivery in this state;
3302 (ii) (A) provides notice of the discontinuation in writing:
3303 (I) to each plan sponsor, employee, and dependent of a plan sponsor or employee; and
3304 (II) at least 90 days before the date the coverage will be discontinued;
3305 (B) provides notice of the discontinuation in writing:
3306 (I) to the commissioner; and
3307 (II) at least three working days prior to the date the notice is sent to the affected plan
3308 sponsors, employees, and dependents of plan sponsors or employees;
3309 (C) offers to each plan sponsor, on a guaranteed issue basis, the option to purchase any
3310 other health benefit products currently being offered:
3311 (I) by the insurer in the market; or

3312 (II) in the case of a large employer, any other health benefit plan currently being offered
3313 in that market; and
3314 (D) in exercising the option to discontinue that product and in offering the option of
3315 coverage in this section, the insurer acts uniformly without regard to:
3316 (I) the claims experience of a plan sponsor; or
3317 (II) any health status-related factor relating to any covered participant or beneficiary; or
3318 (III) any health status-related factor relating to a new participant or beneficiary who may
3319 become eligible for coverage; or
3320 (e) the insurer:
3321 (i) elects to discontinue all of the insurer's health benefit plans:
3322 (A) in the small employer market; or
3323 (B) the large employer market; or
3324 (C) both the small and large employer markets;
3325 (ii) (A) provides notice of the discontinuance in writing:
3326 (I) to each plan sponsor, employee, or dependent of a plan sponsor or an employee; and
3327 (II) at least 180 days before the date the coverage will be discontinued;
3328 (B) provides notice of the discontinuation in writing:
3329 (I) to the commissioner in each state in which an affected insured individual is known to
3330 reside; and
3331 (II) at least 30 business days prior to the date the notice is sent to the affected plan
3332 sponsors, employees, and dependents of a plan sponsor or employee;
3333 (C) discontinues and nonrenews all plans issued or delivered for issuance in the market;
3334 and
3335 (D) provides a plan of orderly withdrawal as required by Section 31A-4-115 .
3336 (4) A health benefit plan for a plan sponsor may be nonrenewed:
3337 (a) if a condition described in Subsection (2) exists; or
3338 (b) for noncompliance with the insurer's:
3339 (i) minimum participation requirements; or
3340 (ii) employer contribution requirements.
3341 (5) (a) Except as provided in Subsection (5)(d), an eligible employee may be discontinued
3342 if after issuance of coverage the eligible employee:

3343 (i) engages in an act or practice that constitutes fraud in connection with the coverage; or
3344 (ii) makes an intentional misrepresentation of material fact in connection with the
3345 coverage.
3346 (b) An eligible employee that is discontinued under Subsection (5)(a) may reenroll:
3347 (i) 12 months after the date of discontinuance; and
3348 (ii) if the plan sponsor's coverage is in effect at the time the eligible employee applies to
3349 reenroll.
3350 (c) At the time the eligible employee's coverage is discontinued under Subsection (5)(a),
3351 the insurer shall notify the eligible employee of the right to reenroll when coverage is discontinued.
3352 (d) An eligible employee may not be discontinued under this Subsection (5) because of
3353 a fraud or misrepresentation that relates to health status.
3354 (6) (a) Except as provided in Subsection (6)(b), an insurer that elects to discontinue
3355 offering a health benefit plan under Subsection (3)(e) shall be prohibited from writing new
3356 business in such market in this state for a period of five years beginning on the date of
3357 discontinuation of the last coverage that is discontinued.
3358 (b) The commissioner may waive the prohibition under Subsection (6)(a) when the
3359 commissioner finds that waiver is in the public interest:
3360 (i) to promote competition; or
3361 (ii) to resolve inequity in the marketplace.
3362 (7) If an insurer is doing business in one established geographic service area of the state,
3363 this section applies only to the insurer's operations in that geographic service area.
3364 (8) An insurer may modify a health benefit plan for a plan sponsor only:
3365 (a) at the time of coverage renewal; and
3366 (b) if the modification is effective uniformly among all plans with a particular product or
3367 service.
3368 (9) For purposes of this section, a reference to "plan sponsor" includes a reference to the
3369 employer:
3370 (a) with respect to coverage provided to an employer member of the association; and
3371 (b) if the health benefit plan is made available by an insurer in the employer market only
3372 through:
3373 (i) an association;

3374 (ii) a trust; or
3375 (iii) a discretionary group.
3376 (10) (a) A small employer that, after purchasing a health benefit plan in the small group
3377 market, employs on average more than 50 eligible employees on each business day in a calendar
3378 year may continue to renew the health benefit plan in the small group market.
3379 (b) A large employer that, after purchasing a health benefit plan in the large group market,
3380 employs on average less than 51 eligible employees on each business day in a calendar year may
3381 continue to renew the health benefit plan purchased in the large group market.
3382 (11) An insurer offering employer sponsored health benefit plans shall comply with the
3383 Health Insurance Portability and Accountability Act, P. L. 104-191, 110 Stat. 1962, Sec. 2701
3384 and 2702.
3385 Section 50. Section 31A-23-102 is amended to read:
3386 31A-23-102. Definitions.
3387 As used in this chapter:
3388 (1) "Actuary" means a person who is a member in good standing of the American
3389 Academy of Actuaries.
3390 (2) "Agency" means a person other than an individual, and includes a sole proprietorship
3391 by which a natural person does business under an assumed name.
3392 (3) "Broker" means an insurance broker or any other person, firm, association, or
3393 corporation that for any compensation, commission, or other thing of value acts or aids in any
3394 manner in soliciting, negotiating, or procuring the making of any insurance contract on behalf of
3395 an insured other than itself.
3396 (4) "Bail bond agent" means an individual:
3397 (a) appointed by an authorized bail bond surety insurer or appointed by a licensed bail
3398 bond surety company to execute or countersign undertakings of bail in connection with judicial
3399 proceedings; and
3400 (b) who receives or is promised money or other things of value for this service.
3401 (5) "Captive insurer" means:
3402 (a) an insurance company owned by another organization whose exclusive purpose is to
3403 insure risks of the parent organization and affiliated companies; or
3404 (b) in the case of groups and associations, an insurance organization owned by the insureds

3405 whose exclusive purpose is to insure risks of member organizations, group members, and their
3406 affiliates.
3407 (6) "Controlled insurer" means a licensed insurer that is either directly or indirectly
3408 controlled by a broker.
3409 (7) "Controlling broker" means a broker who either directly or indirectly controls an
3410 insurer.
3411 (8) "Controlling person" means any person, firm, association, or corporation that directly
3412 or indirectly has the power to direct or cause to be directed, the management, control, or activities
3413 of a reinsurance intermediary.
3414 (9) (a) "Escrow" means [a license category that allows a person to conduct escrows,
3415 settlements, or closings on behalf of:] a real estate settlement or real estate closing conducted by
3416 a third party pursuant to the requirements of a written agreement between the parties in a real estate
3417 transaction.
3418 [(a) a title insurance agency; or]
3419 [(b) a title insurer.]
3420 (b) "Escrow" includes the act of conducting a:
3421 (i) real estate settlement; or
3422 (ii) real estate closing.
3423 (10) "Home state" means any state or territory of the United States or the District of
3424 Columbia in which an insurance producer:
3425 (a) maintains the insurance producer's principal:
3426 (i) place of residence; or
3427 (ii) place of business; and
3428 (b) is licensed to act as an insurance producer.
3429 (11) "Insurer" is as defined in Section 31A-1-301 , except the following persons or similar
3430 persons are not insurers for purposes of Part 6, Broker Controlled Insurers:
3431 (a) all risk retention groups as defined in:
3432 (i) the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499;
3433 (ii) the Risk Retention Act, 15 U.S.C. Sec. 3901 et seq.; and
3434 (iii) Chapter 15, Part II, Risk Retention Groups Act;
3435 (b) all residual market pools and joint underwriting authorities or associations; and

3436 (c) all captive insurers.
3437 (12) "License" is defined in Section 31A-1-301 .
3438 (13) "Limited license" means a license that:
3439 (a) is issued for a specific product of insurance; and
3440 (b) limits an individual or agency to transact only for that product or insurance.
3441 (14) "Limited line insurance" includes:
3442 (a) bail bond;
3443 (b) limited line credit [life] insurance;
3444 [(c) credit disability;]
3445 [(d) credit property;]
3446 [(e) credit unemployment;]
3447 [(f) involuntary unemployment;]
3448 [(g)] (c) legal expense insurance;
3449 [(h) mortgage life;]
3450 [(i) mortgage guaranty;]
3451 [(j) mortgage disability;]
3452 [(k)] (d) motor club insurance;
3453 [(l)] (e) rental car-related insurance;
3454 [(m)] (f) travel insurance; and
3455 [(n)] (g) any other form of limited insurance [or insurance offered in connection with an
3456 extension of credit that: (i) is limited to partially or wholly extinguishing that credit obligation;
3457 and(ii)] that the commissioner determines by rule should be designated a form of limited line
3458 insurance.
3459 (15) "Limited line credit insurance" includes the following forms of insurance:
3460 (a) credit life;
3461 (b) credit accident and health;
3462 (c) credit property;
3463 (d) credit unemployment;
3464 (e) involuntary unemployment;
3465 (f) mortgage life;
3466 (g) mortgage guaranty;

3467 (h) mortgage accident and health;
3468 (i) guaranteed automobile protection; and
3469 (j) any other form of insurance offered in connection with an extension of credit that:
3470 (i) is limited to partially or wholly extinguishing that credit obligation; and
3471 (ii) the commissioner determines by rule should be designated as a form of limited line
3472 credit insurance.
3473 (16) "Limited line credit insurance producer" means a person who sells, solicits, or
3474 negotiates one or more forms of limited line credit insurance coverage to individuals through a
3475 master, corporate, group, or individual policy.
3476 (17) "Limited lines insurance" includes:
3477 (a) the lines of insurance listed in Subsection (14); or
3478 (b) any other line of insurance that the commissioner considers necessary to recognize in
3479 the public interest.
3480 (18) "Limited lines producer" means a person authorized to sell, solicit, or negotiate
3481 limited lines insurance.
3482 [(15)] (19) (a) "Managing general agent" means any person, firm, association, or
3483 corporation that:
3484 (i) manages all or part of the insurance business of an insurer, including the management
3485 of a separate division, department, or underwriting office;
3486 (ii) acts as an agent for the insurer whether it is known as a managing general agent,
3487 manager, or other similar term;
3488 (iii) with or without the authority, either separately or together with affiliates, directly or
3489 indirectly produces and underwrites an amount of gross direct written premium equal to, or more
3490 than 5% of, the policyholder surplus as reported in the last annual statement of the insurer in any
3491 one quarter or year; and
3492 (iv) (A) adjusts or pays claims in excess of an amount determined by the commissioner;
3493 or
3494 (B) negotiates reinsurance on behalf of the insurer.
3495 (b) Notwithstanding Subsection [(15)] (19)(a), the following persons may not be
3496 considered as managing general agent for the purposes of this chapter:
3497 (i) an employee of the insurer;

3498 (ii) a United States manager of the United States branch of an alien insurer;
3499 (iii) an underwriting manager that, pursuant to contract:
3500 (A) manages all the insurance operations of the insurer;
3501 (B) is under common control with the insurer;
3502 (C) is subject to Chapter 16, Insurance Holding Companies; and
3503 (D) is not compensated based on the volume of premiums written; and
3504 (iv) the attorney-in-fact authorized by and acting for the subscribers of a reciprocal insurer
3505 or inter-insurance exchange under powers of attorney.
3506 [(16)] (20) "Negotiate" means the act of conferring directly with or offering advice directly
3507 to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the
3508 substantive benefits, terms, or conditions of the contract if the person engaged in that act:
3509 (a) sells insurance; or
3510 (b) obtains insurance from insurers for purchasers.
3511 (21) "Personal lines" means property and casualty insurance coverage sold to individuals
3512 and families for primarily noncommercial purposes.
3513 [(17)] (22) "Producer" means a person required to be licensed under the laws of this state
3514 to sell, solicit, or negotiate insurance.
3515 [(18)] (23) "Qualified United States financial institution" means an institution that:
3516 (a) is organized or, in the case of a United States office of a foreign banking organization
3517 licensed, under the laws of the United States or any state;
3518 (b) is regulated, supervised, and examined by United States federal or state authorities
3519 having regulatory authority over banks and trust companies; and
3520 (c) meets the standards of financial condition and standing that are considered necessary
3521 and appropriate to regulate the quality of financial institutions whose letters of credit will be
3522 acceptable to the commissioner as determined by:
3523 (i) the commissioner; or
3524 (ii) the Securities Valuation Office of the National Association of Insurance
3525 Commissioners.
3526 [(19)] (24) "Reinsurance intermediary" means a reinsurance intermediary-broker or a
3527 reinsurance intermediary-manager as these terms are defined in Subsections [(20)] (25) and [(21)]
3528 (26).

3529 [(20)] (25) "Reinsurance intermediary-broker" means a person other than an officer or
3530 employee of the ceding insurer, firm, association, or corporation who solicits, negotiates, or places
3531 reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power
3532 to bind reinsurance on behalf of the insurer.
3533 [(21)] (26) (a) "Reinsurance intermediary-manager" means a person, firm, association, or
3534 corporation who:
3535 (i) has authority to bind or who manages all or part of the assumed reinsurance business
3536 of a reinsurer, including the management of a separate division, department, or underwriting
3537 office; and
3538 (ii) acts as an agent for the reinsurer whether the person, firm, association, or corporation
3539 is known as a reinsurance intermediary-manager, manager, or other similar term.
3540 (b) Notwithstanding Subsection [(21)] (26)(a), the following persons may not be
3541 considered reinsurance intermediary-managers for the purpose of this chapter with respect to the
3542 reinsurer:
3543 (i) an employee of the reinsurer;
3544 (ii) a United States manager of the United States branch of an alien reinsurer;
3545 (iii) an underwriting manager that, pursuant to contract:
3546 (A) manages all the reinsurance operations of the reinsurer;
3547 (B) is under common control with the reinsurer;
3548 (C) is subject to Chapter 16, Insurance Holding Companies; and
3549 (D) is not compensated based on the volume of premiums written; and
3550 (iv) the manager of a group, association, pool, or organization of insurers that:
3551 (A) engage in joint underwriting or joint reinsurance; and
3552 (B) are subject to examination by the insurance commissioner of the state in which the
3553 manager's principal business office is located.
3554 [(22)] (27) "Reinsurer" means any person, firm, association, or corporation duly licensed
3555 in this state as an insurer with the authority to assume reinsurance.
3556 [(23)] (28) "Search" means a license category that allows a person to issue title insurance
3557 commitments or policies on behalf of a title insurer.
3558 [(24)] (29) "Sell" means to exchange a contract of insurance:
3559 (a) by any means;

3560 (b) for money or its equivalent; and
3561 (c) on behalf of an insurance company.
3562 [(25)] (30) "Solicit" means:
3563 (a) attempting to sell insurance; or
3564 (b) asking or urging a person to apply:
3565 (i) for a particular kind of insurance; and
3566 (ii) from a particular insurance company.
3567 [(26)] (31) "Surplus lines broker" means a person licensed under Subsection
3568 31A-23-204 (5) to place insurance with unauthorized insurers in accordance with Section
3569 31A-15-103 .
3570 [(27)] (32) "Terminate" means:
3571 (a) the cancellation of the relationship between:
3572 (i) an insurance producer; and
3573 (ii) a particular insurer; or
3574 (b) the termination of the producer's authority to transact insurance on behalf of a
3575 particular insurance company.
3576 [(28)] (33) "Title marketing representative" means a person who:
3577 (a) represents a title insurer in soliciting, requesting, or negotiating the placing of:
3578 (i) title insurance; or
3579 (ii) escrow[, settlement, or closing] services; and
3580 (b) does not have a search or escrow license as provided in Section 31A-23-204 .
3581 [(29)] (34) "Underwrite" means the authority to accept or reject risk on behalf of the
3582 insurer.
3583 [(30)] (35) "Uniform application" means the version of the National Association of
3584 Insurance Commissioner's uniform application for resident and nonresident producer licensing at
3585 the time the application is filed.
3586 [(31)] (36) "Uniform business entity application" means the version of the National
3587 Association of Insurance Commissioner's uniform business entity application for resident and
3588 nonresident business entities at the time the application is filed.
3589 Section 51. Section 31A-23-204 is amended to read:
3590 31A-23-204. License classifications.

3591 A resident or nonresident license issued under this chapter shall be issued under the
3592 classifications described under Subsections (1) through (6). These classifications are intended to
3593 describe the matters to be considered under any education, examination, and training required of
3594 license applicants under Sections 31A-23-206 through 31A-23-208 .
3595 (1) An agent and broker license classification includes:
3596 (a) life insurance, including nonvariable contracts;
3597 (b) variable contracts;
3598 (c) accident and health insurance, including contracts issued to policyholders under
3599 Chapter 7 or 8;
3600 (d) property/liability insurance, which includes:
3601 (i) property insurance;
3602 (ii) liability insurance;
3603 (iii) surety and other bonds; and
3604 (iv) policies containing any combination of these coverages;
3605 (e) title insurance under one of the following categories:
3606 (i) search, including authority to act as a title marketing representative;
3607 (ii) escrow, including authority to act as a title marketing representative;
3608 (iii) search and escrow, including authority to act as a title marketing representative; and
3609 (iv) title marketing representative only; [and]
3610 (f) workers' compensation insurance[.]; and
3611 (g) personal lines.
3612 (2) A limited license classification includes:
3613 (a) limited line credit [life and credit accident and health] insurance;
3614 (b) travel insurance;
3615 (c) motor club insurance;
3616 (d) car rental related insurance;
3617 [(e) credit involuntary unemployment insurance;]
3618 [(f) credit property insurance;]
3619 (e) legal expense insurance;
3620 [(g)] (f) bail bond agent; and
3621 [(h)] (g) customer service representative.

3622 (3) A consultant license classification includes:
3623 (a) life insurance, including nonvariable contracts;
3624 (b) variable contracts;
3625 (c) accident and health insurance, including contracts issued to policyholders under Chapter
3626 7 or 8;
3627 (d) property/liability insurance, which includes:
3628 (i) property insurance;
3629 (ii) liability insurance;
3630 (iii) surety and other bonds; and
3631 (iv) policies containing any combination of these coverages; and
3632 (e) workers' compensation insurance.
3633 (4) A holder of licenses under Subsections (1)(a) and (1)(c) has all qualifications necessary
3634 to act as a holder of a license under Subsection (2)(a).
3635 (5) (a) Upon satisfying the additional applicable requirements, a holder of a brokers license
3636 may obtain a license to act as a surplus lines broker.
3637 (b) A license to act as a surplus lines broker gives the holder the authority to arrange
3638 insurance contracts with unauthorized insurers under Section 31A-15-103 , but only as to the types
3639 of insurance under Subsection (1) for which the broker holds a brokers license.
3640 (6) The commissioner may by rule recognize other agent, broker, limited license, or
3641 consultant license classifications as to kinds of insurance not listed under Subsections (1), (2), and
3642 (3).
3643 Section 52. Section 31A-23-206 is amended to read:
3644 31A-23-206. Continuing education requirements -- Regulatory authority.
3645 (1) The commissioner shall by rule prescribe the continuing education requirements for
3646 each class of agent's license under Subsection 31A-23-204 (1), except that the commissioner may
3647 not impose a continuing education requirement on a holder of a license under:
3648 (a) Subsection 31A-23-204 (2); or
3649 (b) a license classification other than under Subsection 31A-23-204 (2) that is recognized
3650 by the commissioner by rule as provided in Subsection 31A-23-204 (6).
3651 (2) (a) The commissioner may not state a continuing education requirement in terms of
3652 formal education.

3653 (b) The commissioner may state a continuing education requirement in terms of classroom
3654 hours, or their equivalent, of insurance-related instruction received.
3655 (c) Insurance-related formal education may be a substitute, in whole or in part, for
3656 classroom hours, or their equivalent, required under Subsection (2)(b).
3657 (3) (a) The commissioner shall impose continuing education requirements in accordance
3658 with a two-year licensing period in which the licensee meets the requirements of this Subsection
3659 (3).
3660 (b) Except as provided in Subsection (3)(c), for a two-year licensing period described in
3661 Subsection (3)(a) the commissioner shall require that the licensee for each line of authority held
3662 by the licensee:
3663 (i) receive [six] five hours of continuing education; or
3664 (ii) pass a line of authority continuing education examination.
3665 (c) Notwithstanding Subsection (3)(b):
3666 (i) the commissioner may not require continuing education for more than four lines of
3667 authority held by the licensee;
3668 (ii) the commissioner shall require:
3669 (A) a minimum of:
3670 (I) 12 hours of continuing education;
3671 (II) passage of two line of authority continuing education examinations; or
3672 (III) a combination of Subsections (3)(c)(ii)(A)(I) and (II);
3673 (B) that the minimum continuing education requirement of Subsection (3)(c)(ii)(A)
3674 include:
3675 (I) at least [six] five hours or one line of authority continuing education examination for
3676 each line of authority held by the licensee not to exceed four lines of authority held by the licensee;
3677 and
3678 (II) three hours of ethics training[, which may be taken in place of three hours of the hours
3679 required for a line of authority].
3680 (d) (i) If a licensee completes the licensee's continuing education requirement without
3681 taking a line of authority continuing education examination, the licensee shall complete at least 1/2
3682 of the required hours through classroom hours of insurance-related instruction.
3683 (ii) The hours not completed through classroom hours in accordance with Subsection

3684 (3)(d)(i) may be obtained through:
3685 (A) home study;
3686 (B) video tape;
3687 (C) experience credit; or
3688 (D) other method provided by rule.
3689 (e) (i) A licensee may obtain continuing education hours at any time during the two-year
3690 licensing period.
3691 (ii) The licensee may not take a line of authority continuing education examination more
3692 than 90 calendar days before the date on which the licensee's license is renewed.
3693 (f) The commissioner shall make rules for the content and procedures for line of authority
3694 continuing education examinations.
3695 (g) (i) Beginning May 3, 1999, a licensee is exempt from continuing education
3696 requirements under this section if:
3697 (A) as of April 1, 1990, the licensee has completed 20 years of licensure in good standing;
3698 (B) the licensee requests an exemption from the department; and
3699 (C) the department approves the exemption.
3700 (ii) If the department approves the exemption under Subsection (3)(g)(i), the licensee is
3701 not required to apply again for the exemption.
3702 (h) A licensee with a variable contract line of authority is exempt from the requirement
3703 for continuing education for that line of authority so long as the:
3704 (i) National Association of Securities Dealers requires continuing education for licensees
3705 having a securities license; and
3706 (ii) licensee complies with the National Association of Securities Dealers' continuing
3707 education requirements for securities licensees.
3708 (i) The commissioner shall, by rule:
3709 (i) publish a list of insurance professional designations whose continuing education
3710 requirements can be used to meet the requirements for continuing education under Subsection
3711 (3)(c); and
3712 (ii) authorize professional agent associations to:
3713 (A) offer qualified programs for all classes of licenses on a geographically accessible basis;
3714 and

3715 (B) collect reasonable fees for funding and administration of the continuing education
3716 program, subject to the review and approval of the commissioner.
3717 (j) (i) The fees permitted under Subsection (3)(i)(ii) that are charged to fund and administer
3718 the program shall reasonably relate to the costs of administering the program.
3719 (ii) Nothing in this section prohibits a provider of continuing education programs or
3720 courses from charging fees for attendance at courses offered for continuing education credit.
3721 (iii) The fees permitted under Subsection (3)(i)(ii) that are charged for attendance at a
3722 professional agent association program may be less for an association member, based on the
3723 member's affiliation expense, but shall preserve the right of a nonmember to attend without
3724 affiliation.
3725 (4) The commissioner shall designate courses, including those presented by insurers,
3726 which satisfy the requirements of this section.
3727 (5) The requirements of this section apply only to applicants who are natural persons.
3728 (6) A nonresident producer is considered to have satisfied this state's continuing education
3729 requirements if:
3730 (a) the nonresident producer satisfies the nonresident producer's home state's continuing
3731 education requirements for a licensed insurance producer; and
3732 (b) on the same basis as under this Subsection (6) the nonresident producer's home state
3733 considers satisfaction of Utah's continuing education requirements for a producer as satisfying the
3734 continuing education requirements of the home state.
3735 Section 53. Section 31A-23-211 is amended to read:
3736 31A-23-211. Special requirements for title insurance agents.
3737 Title insurance agents shall be licensed in accordance with this chapter, with the
3738 [following] additional requirements[:] listed in this section.
3739 (1) (a) Every title insurance agency or agent appointed by an insurer shall maintain:
3740 (i) a fidelity bond [or];
3741 (ii) a professional liability insurance policy[,]; or [an equivalent]
3742 (iii) a financial protection:
3743 (A) equivalent to that described in Subsection (1)(a)(i) or (ii); and
3744 (B) that the commissioner considers adequate. [This]
3745 (b) The bond or insurance required by this Subsection (1):

3746 (i) shall be supplied under a contract approved by the commissioner to provide protection
3747 against the improper performance of any service in conjunction with the issuance of a contract or
3748 policy of title insurance[. The bond or professional liability policy shall]; and
3749 (ii) be in a face amount no less than $50,000.
3750 (c) The commissioner may by rule exempt title insurance agents from the requirements of
3751 this Subsection (1) upon a finding that, and only so long as, the required policy or bond is generally
3752 unavailable at reasonable rates.
3753 (2) (a) (i) Every title insurance agency or agent appointed by an insurer shall maintain a
3754 reserve fund. [This]
3755 (ii) The reserve fund required by this Subsection (2) shall be:
3756 (A) (I) composed of assets approved by the commissioner [and];
3757 (II) maintained as a separate account; and
3758 (III) charged as a reserve liability of the title insurance agent in determining the agent's
3759 financial condition[. The reserve fund shall be]; and
3760 (B) accumulated by segregating 1% of all gross income received from the title insurance
3761 business.
3762 (iii) Assets accumulated within the reserve fund for more than ten full years shall be:
3763 (A) withdrawn from the fund; and
3764 (B) restored to the income of the agent.
3765 (iv) The title insurance agent may withdraw interest from the reserve fund related to the
3766 principal amount as it accrues.
3767 (b) (i) A disbursement may not be made from the reserve fund except as provided in
3768 Subsection (2)(a) unless the title insurance agent ceases doing business as a result of:
3769 (A) sale of assets[,];
3770 (B) merger of the agent with another agent[,];
3771 (C) termination of the agent's license[,];
3772 (D) insolvency[,]; or
3773 (E) any cessation of business by the agent.
3774 (ii) Any disbursements from the reserve fund may be made only to settle claims arising
3775 from the improper performance of the title insurance agent in providing services defined in Section
3776 31A-23-307 .

3777 (iii) The commissioner shall be notified ten days before any disbursements from the
3778 reserve fund.
3779 (iv) The notice [must] required by this Subsection (2)(b) shall contain:
3780 (A) the amount of claim[,];
3781 (B) the nature of the claim[,]; and
3782 (C) the name of the payee.
3783 (c) (i) The reserve fund shall be maintained by the title insurance agent or [his] the title
3784 insurance agent's representative for a period of two years after the agent ceases doing business.
3785 (ii) Any assets remaining in the reserve fund at the end of the two years specified in
3786 Subsection (2)(c)(i) may be withdrawn and restored to the former agent.
3787 (3) Any examination for licensure shall include questions regarding the search and
3788 examination of title to real property.
3789 (4) A title insurance agent may not perform the functions of escrow[, closing, or
3790 settlement,] unless the agent has been examined on the fiduciary duties and procedures involved
3791 in those functions.
3792 (5) The commissioner shall adopt rules outlining an examination that will satisfy this
3793 section.
3794 (6) [Licenses] A license may be issued to a title insurance [agents] agent who [have] has
3795 qualified:
3796 (a) to perform only searches and examinations of title as specified in Subsection (3)[, or
3797 to title insurance agents who have qualified];
3798 (b) to handle only escrow[, settlement, and closing] arrangements as specified in
3799 Subsection (4)[,]; or [to title insurance agents who have qualified]
3800 (c) to act as a title marketing [representatives] representative.
3801 (7) A person licensed to practice law in Utah is exempt from the requirements of
3802 Subsections (1) and (2) if[:] that person issues 12 or fewer policies in any 12-month period.
3803 [(a) (i) the issuance of title insurance is an incidental part of that person's practice of law;
3804 and]
3805 [(ii) that person does not hire employees or independent contractors to investigate title or
3806 otherwise assist in the issuance of title insurance; or]
3807 [(b) that person does not maintain a title plant, or operate primarily as a title insurance

3808 agent.]
3809 Section 54. Section 31A-23-216 is amended to read:
3810 31A-23-216. Termination of license.
3811 (1) A license issued under this chapter remains in force until:
3812 (a) revoked, suspended, or limited under Subsection (2);
3813 (b) lapsed under Subsection (3);
3814 (c) surrendered to and accepted by the commissioner; or
3815 (d) the licensee dies or is adjudicated incompetent as defined under:
3816 (i) Title 75, Chapter 5, Part 3, Guardians of Incapacitated Persons; or
3817 (ii) Title 75, Chapter 5, Part 4, Protection of Property of Persons Under Disability and
3818 Minors.
3819 (2) (a) If the commissioner makes a finding under Subsection (2)(b), after an adjudicative
3820 proceeding under Title 63, Chapter 46b, Administrative Procedures Act, the commissioner may:
3821 (i) revoke a license of an agent, broker, surplus lines broker, or consultant;
3822 (ii) suspend for a specified period of 12 months or less a license of an agent, broker,
3823 surplus lines broker, or consultant; or
3824 (iii) limit in whole or in part the license of any agent, broker, surplus lines broker, or
3825 consultant.
3826 (b) The commissioner may take an action described in Subsection (2)(a) if the
3827 commissioner finds that the licensee:
3828 (i) is unqualified for a license under Section 31A-23-203 ;
3829 (ii) has violated:
3830 (A) an insurance statute;
3831 (B) a rule that is valid under Subsection 31A-2-201 (3); or
3832 (C) an order that is valid under Subsection 31A-2-201 (4);
3833 (iii) is insolvent or the subject of receivership, conservatorship, rehabilitation, or other
3834 delinquency proceedings in any state;
3835 (iv) fails to pay any final judgment rendered against the person in this state within 60 days
3836 after the day the judgment became final;
3837 (v) fails to meet the same good faith obligations in claims settlement that is required of
3838 admitted insurers;

3839 (vi) is affiliated with and under the same general management or interlocking directorate
3840 or ownership as another insurance producer that transacts business in this state without a license;
3841 (vii) refuses to be examined or to produce its accounts, records, and files for examination;
3842 (viii) has an officer who refuses to:
3843 (A) give information with respect to the administrator's affairs; or
3844 (B) perform any other legal obligation as to an examination;
3845 (ix) provided information in the license application that is:
3846 (A) incorrect;
3847 (B) misleading;
3848 (C) incomplete; or
3849 (D) materially untrue;
3850 (x) has violated any insurance law, valid rule, or valid order of another state's insurance
3851 department;
3852 (xi) has obtained or attempted to obtain a license through misrepresentation or fraud;
3853 (xii) has improperly withheld, misappropriated, or converted any monies or properties
3854 received in the course of doing insurance business;
3855 (xiii) has intentionally misrepresented the terms of an actual or proposed:
3856 (A) insurance contract; or
3857 (B) application for insurance;
3858 (xiv) has been convicted of a felony;
3859 (xv) has admitted or been found to have committed any insurance unfair trade practice or
3860 fraud;
3861 (xvi) in the conduct of business in this state or elsewhere has:
3862 (A) used fraudulent, coercive, or dishonest practices; or
3863 (B) demonstrated incompetence, untrustworthiness, or financial irresponsibility;
3864 (xvii) has had an insurance license, or its equivalent, denied, suspended, or revoked in any
3865 other state, province, district, or territory;
3866 (xviii) has forged another's name to:
3867 (A) an application for insurance; or
3868 (B) any document related to an insurance transaction;
3869 (xix) has improperly used notes or any other reference material to complete an

3870 examination for an insurance license;
3871 (xx) has knowingly accepted insurance business from an individual who is not licensed;
3872 (xxi) has failed to comply with an administrative or court order imposing a child support
3873 obligation;
3874 (xxii) has failed to:
3875 (A) pay state income tax; or
3876 (B) comply with any administrative or court order directing payment of state income tax;
3877 (xxiii) has violated or permitted others to violate the federal Violent Crime Control and
3878 Law Enforcement Act of 1994, 18 U.S.C. Secs. 1033 and 1034; or
3879 (xxiv) has engaged in methods and practices in the conduct of business that endanger the
3880 legitimate interests of customers and the public.
3881 (3) (a) Any license issued under this chapter shall lapse if the licensee fails:
3882 (i) to pay when due a fee under Section 31A-3-103 [.];
3883 (ii) to complete continuing education requirements under Section 31A-23-206 before
3884 submitting the license renewal application;
3885 (iii) to submit a completed renewal application as required by Section 31A-23-202 ; or
3886 (iv) to submit additional documentation required to complete the licensing process as
3887 related to a specific license type.
3888 (b) A licensee whose license lapses due to military service or some other extenuating
3889 circumstances such as long-term medical disability may request:
3890 (i) reinstatement of the license; and
3891 (ii) waiver of any of the following imposed for failure to comply with renewal procedures:
3892 (A) an examination requirement;
3893 (B) a fine; or
3894 (C) other sanction imposed for failure to comply with renewal procedures.
3895 (c) The commissioner shall by rule prescribe the license renewal and reinstatement
3896 procedures, in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
3897 (4) A licensee under this chapter whose license is suspended, revoked, or lapsed, but who
3898 continues to act as a licensee, is subject to the penalties for acting as a licensee without a license.
3899 (5) Any person licensed in this state shall immediately report to the commissioner:
3900 (a) a suspension or revocation of that person's license in any other state, District of

3901 Columbia, or territory of the United States;
3902 (b) the imposition of a disciplinary sanction imposed on that person by any other state,
3903 District of Columbia, or territory of the United States; and
3904 (c) a judgment or injunction entered against that person on the basis of conduct involving
3905 fraud, deceit, misrepresentation, or violation of an insurance law or rule.
3906 (6) (a) An order revoking a license under Subsection (2) may specify a time, not to exceed
3907 five years, within which the former licensee may not apply for a new license.
3908 (b) If no time is specified in an order revoking a license under Subsection (2), the former
3909 licensee may not apply for a new license for five years without express approval by the
3910 commissioner.
3911 (7) (a) Any person whose license is suspended or revoked under Subsection (2) shall, when
3912 the suspension ends or a new license is issued, pay all fees that would have been payable if the
3913 license had not been suspended or revoked, unless the commissioner by order waives the payment
3914 of the interim fees.
3915 (b) If a new license is issued more than three years after the revocation of a similar license,
3916 this Subsection (7) applies only to the fees that would have accrued during the three years
3917 immediately following the revocation.
3918 (8) The division shall promptly withhold, suspend, restrict, or reinstate the use of a license
3919 issued under this part if so ordered by a court.
3920 Section 55. Section 31A-23-302 is amended to read:
3921 31A-23-302. Unfair marketing practices.
3922 (1) (a) (i) Any of the following may not make or cause to be made any communication that
3923 contains false or misleading information, relating to an insurance contract, any insurer, or other
3924 licensee under this title, including information that is false or misleading because it is incomplete:
3925 (A) a person who is or should be licensed under this title;
3926 (B) an employee or agent of a person described in Subsection (1)(a)(i)(A);
3927 (C) a person whose primary interest is as a competitor of a person licensed under this title;
3928 and
3929 (D) a person on behalf of any of the persons listed in this Subsection (1)(a)(i).
3930 (ii) As used in this Subsection (1), "false or misleading information" includes:
3931 (A) assuring the nonobligatory payment of future dividends or refunds of unused

3932 premiums in any specific or approximate amounts, but reporting fully and accurately past
3933 experience is not false or misleading information; and
3934 (B) with intent to deceive a person examining it, filing a report, making a false entry in a
3935 record, or wilfully refraining from making a proper entry in a record.
3936 (iii) An insurer or other licensee under this title may not:
3937 (A) use any business name, slogan, emblem, or related device that is misleading or likely
3938 to cause the insurer or other licensee to be mistaken for another insurer or other licensee already
3939 in business; or
3940 (B) use any advertisement or other insurance promotional material that would cause a
3941 reasonable person to mistakenly believe that a state or federal government agency:
3942 (I) is responsible for the insurance sales activities of the person;
3943 (II) stands behind the credit of the person;
3944 (III) guarantees any returns on insurance products of or sold by the person; or
3945 (IV) is a source of payment of any insurance obligation of or sold by the person.
3946 (iv) A person who is not an insurer may not assume or use any name that deceptively
3947 implies or suggests that it is an insurer.
3948 (v) A person other than persons licensed as health maintenance organizations under
3949 Chapter 8 may not use the term "Health Maintenance Organization" or "HMO" in referring to
3950 itself.
3951 (b) If an insurance agent or third party administrator distributes cards or documents,
3952 exhibits a sign, or publishes an advertisement that violates Subsection (1) (a), with reference to a
3953 particular insurer that the agent represents, or for whom the third party administrator processes
3954 claims, and if the cards, documents, signs, or advertisements are supplied or approved by that
3955 insurer, the agent's or the third party administrator's violation creates a rebuttable presumption that
3956 the violation was also committed by the insurer.
3957 (2) (a) (i) An insurer or licensee under this chapter, or an officer or employee of either may
3958 not induce any person to enter into or continue an insurance contract or to terminate an existing
3959 insurance contract by offering benefits not specified in the policy to be issued or continued,
3960 including premium or commission rebates.
3961 (ii) An insurer may not make or knowingly allow any agreement of insurance that is not
3962 clearly expressed in the policy to be issued or renewed.

3963 (iii) This Subsection (2)(a) does not preclude:
3964 (A) insurers from reducing premiums because of expense savings;
3965 (B) the usual kinds of social courtesies not related to particular transactions; or
3966 (C) an insurer from receiving premiums under an installment payment plan.
3967 (b) An agent, broker, or insurer may not absorb the tax under Section 31A-3-301 .
3968 (c) (i) A title insurer or agent or any officer or employee of either may not pay, allow, give,
3969 or offer to pay, allow, or give, directly or indirectly, as an inducement to obtaining any title
3970 insurance business, any rebate, reduction, or abatement of any rate or charge made incident to the
3971 issuance of the insurance, any special favor or advantage not generally available to others, or any
3972 money or other consideration or material inducement.
3973 (ii) "Charge made incident to the issuance of the insurance" includes escrow[, settlement,
3974 and closing] charges, and any other services that are prescribed by the commissioner.
3975 (iii) An insured or any other person connected, directly or indirectly, with the transaction,
3976 including a mortgage lender, real estate broker, builder, attorney, or any officer, employee, or agent
3977 of any of them, may not knowingly receive or accept, directly or indirectly, any benefit referred
3978 to in Subsection (2)(c)(i).
3979 (3) (a) An insurer may not unfairly discriminate among policyholders by charging different
3980 premiums or by offering different terms of coverage, except on the basis of classifications related
3981 to the nature and the degree of the risk covered or the expenses involved.
3982 (b) Rates are not unfairly discriminatory if they are averaged broadly among persons
3983 insured under a group, blanket, or franchise policy, and the terms of those policies are not unfairly
3984 discriminatory merely because they are more favorable than in similar individual policies.
3985 (4) A person who is or should be licensed under this title, an employee or agent of that
3986 licensee or person who should be licensed, a person whose primary interest is as a competitor of
3987 a person licensed under this title, and one acting on behalf of any of these persons, may not commit
3988 or enter into any agreement to participate in any act of boycott, coercion, or intimidation that tends
3989 to produce an unreasonable restraint of the business of insurance or a monopoly in that business.
3990 (5) (a) A person may not restrict in the choice of an insurer or insurance agent or broker,
3991 another person who is required to pay for insurance as a condition for the conclusion of a contract
3992 or other transaction or for the exercise of any right under a contract. The person requiring the
3993 coverage may, however, reserve the right to disapprove the insurer or the coverage selected on

3994 reasonable grounds.
3995 (b) The form of corporate organization of an insurer authorized to do business in this state
3996 is not a reasonable ground for disapproval, and the commissioner may by rule specify additional
3997 grounds that are not reasonable. This Subsection (5) does not bar an insurer from declining an
3998 application for insurance.
3999 (6) A person may not make any charge other than insurance premiums and premium
4000 financing charges for the protection of property or of a security interest in property, as a condition
4001 for obtaining, renewing, or continuing the financing of a purchase of the property or the lending
4002 of money on the security of an interest in the property.
4003 (7) (a) An agent may not refuse or fail to return promptly all indicia of agency to the
4004 principal on demand.
4005 (b) A licensee whose license is suspended, limited, or revoked under Section 31A-2-308 ,
4006 31A-23-216 , or 31A-23-217 may not refuse or fail to return the license to the commissioner on
4007 demand.
4008 (8) A person may not engage in any other unfair method of competition or any other unfair
4009 or deceptive act or practice in the business of insurance, as defined by the commissioner by rule,
4010 after a finding that they are misleading, deceptive, unfairly discriminatory, provide an unfair
4011 inducement, or unreasonably restrain competition.
4012 Section 56. Section 31A-23-307 is amended to read:
4013 31A-23-307. Title insurance agents' business.
4014 (1) A title insurance agent may engage in the escrow[, settlement, or closing] business[,
4015 or any combination of such businesses, and operate as escrow, settlement, or closing agent
4016 provided that] involving real property transactions if all of the following exist:
4017 [(1) The] (a) the title insurance agent is properly licensed under this chapter[.];
4018 (b) the title insurance agent is appointed by a title insurer authorized to do business in the
4019 state;
4020 (c) one or more of the following is to be issued as part of the transaction:
4021 (i) an owner's policy of title insurance; or
4022 (ii) a lender's policy of title insurance;
4023 [(2) (a) (i) All] (d) (i) all funds deposited with the agent in connection with any escrow[,
4024 settlement, or closing]:

4025 (A) are deposited:
4026 (I) in a federally insured financial institution; and
4027 (II) in [separate] a trust [accounts, with the funds being] account that is separate from all
4028 other trust account funds that are not related to real estate transactions; and
4029 (B) are the property of the persons entitled to them under the provisions of the escrow[,
4030 settlement, or closing.]; and
4031 (ii) [The funds shall be] are segregated escrow by escrow[, settlement by settlement, or
4032 closing by closing] in the records of the agent[.];
4033 [(iii) Earnings] (e) earnings on funds held in escrow may be paid out of the escrow
4034 account to any person in accordance with the [provisions] conditions of the escrow [agreement if
4035 the agreement does not otherwise provide for payment of the earnings or any portion of the
4036 earnings on the escrow funds.]; and
4037 (f) the escrow does not require the agent to hold:
4038 (i) construction funds; or
4039 (ii) funds held for exchange under Section 1031, Internal Revenue Code.
4040 [(iv)] (2) Funds held in escrow:
4041 [(A)] (a) are not subject to any debts of the agent; [and]
4042 [(B)] (b) may only be used to fulfill the terms of the individual escrow[, settlement, or
4043 closing] under which the funds were accepted[.]; and
4044 [(v) Funds held in escrow]
4045 (c) may not be used until all conditions of the escrow[, settlement, or closing] have been
4046 met.
4047 [(b)] (3) Assets or property other than escrow funds received by an agent in accordance
4048 with an escrow [agreement] shall be maintained in a manner that will:
4049 [(i)] (a) reasonably preserve and protect the asset or property from loss, theft, or damages;
4050 and
4051 [(ii)] (b) otherwise comply with all general duties and responsibilities of a fiduciary or
4052 bailee.
4053 [(c)] (4) (a) A check may not be drawn, executed or dated, or funds otherwise disbursed
4054 unless the segregated escrow account from which funds are to be disbursed contains a sufficient
4055 credit balance consisting of collected or cleared funds at the time the check is drawn, executed or

4056 dated, or funds are otherwise disbursed.
4057 [(d)] (b) As used in this Subsection [(2)] (4), funds are considered to be "collected or
4058 cleared," and may be disbursed as follows:
4059 (i) cash may be disbursed on the same day [it] the cash is deposited;
4060 (ii) a wire [transfers] transfer may be disbursed on the same day [they are] the wire transfer
4061 is deposited;
4062 (iii) [cashier's checks, certified checks, teller's checks, U.S. Postal Service money orders,
4063 and checks drawn on a Federal Reserve Bank or Federal Home Loan Bank] the following may be
4064 disbursed on the day following the date of deposit:
4065 (A) a cashier's check;
4066 (B) a certified check;
4067 (C) a teller's check;
4068 (D) a U.S. Postal Service money order; and
4069 (E) a check drawn on a Federal Reserve Bank or Federal Home Loan Bank; and
4070 (iv) any other [checks] check or [deposits] deposit may be disbursed:
4071 (A) within the time limits provided under the Expedited Funds Availability Act, 12 U.S.C.
4072 Section 4001 et seq., as amended, and related regulations of the Federal Reserve System; or
4073 (B) upon written notification from the financial institution to which the funds have been
4074 deposited, that final settlement has occurred on the deposited item.
4075 [(3)] (5) The title insurance agent shall maintain records of all receipts and disbursements
4076 of escrow[, settlement, and closing] funds.
4077 [(4)] (6) The title insurance agent shall comply with:
4078 (a) Section 31A-23-310; and
4079 (b) any rules adopted by the commissioner [governing] in accordance with Title 63,
4080 Chapter 46a, Utah Administrative Rulemaking Act, that govern escrows[, settlements, or closings].
4081 Section 57. Section 31A-23-308 is amended to read:
4082 31A-23-308. Liability of title insurers for acts of title insurance agents.
4083 Any title company, represented by one or more title insurance agents, is directly and
4084 primarily liable to others dealing with the title insurance agents for the receipt and disbursement
4085 of funds deposited in escrows[, closings, or settlements] with the title insurance agents in all those
4086 transactions where a commitment or binder for or policy or contract of title insurance of that title

4087 insurance company has been ordered, or a preliminary report of the title insurance company has
4088 been issued or distributed. This liability does not modify, mitigate, impair, or affect the contractual
4089 obligations between the title insurance agents and the title insurance company.
4090 Section 58. Section 31A-23-503 is amended to read:
4091 31A-23-503. Duties of insurers.
4092 (1) The insurer shall have on file an independent financial examination, in a form
4093 acceptable to the commissioner, of each managing general agent with which [it] the insurer has
4094 done business.
4095 (2) (a) If a managing general agent establishes loss reserves, the insurer shall annually
4096 obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses
4097 incurred and outstanding on business produced by the managing general agent. [This]
4098 (b) The requirement of Subsection (2)(a) is in addition to any other required loss reserve
4099 certification.
4100 (3) The insurer shall at least semiannually conduct an on-site review of the underwriting
4101 and claims processing operations of the managing general agent.
4102 (4) Binding authority for all reinsurance contracts or participation in insurance or
4103 reinsurance syndicates shall rest with an officer of the insurer, who may not be affiliated with the
4104 managing general agent.
4105 (5) (a) Within 30 days after entering into or terminating a contract with a managing general
4106 agent, the insurer shall provide written notification of the appointment or termination to the
4107 commissioner.
4108 (b) A notice of appointment of a managing general agent shall include:
4109 [(a)] (i) a statement of duties that the applicant is expected to perform on behalf of the
4110 insurer;
4111 [(b)] (ii) the lines of insurance for which the applicant is to be authorized to act; and
4112 [(c)] (iii) any other information the commissioner may request.
4113 (6) (a) An insurer shall review [its] the insurer's books and records each quarter to
4114 determine if any producer, as defined [by Subsection] in Section 31A-23-102 [(17)], has become
4115 a managing general agent as defined in [Subsection] Section 31A-23-102 [(15)].
4116 (b) If the insurer determines that a producer has become a managing general agent[,]:
4117 (i) the insurer shall promptly notify the producer and the commissioner of the

4118 determination[. The]; and
4119 (ii) the insurer and producer shall fully comply with the provisions of this chapter within
4120 30 days.
4121 (7) (a) An insurer may not appoint officers, directors, employees, subproducers, or
4122 controlling shareholders of [its] the insurer's managing general agents to [its] the insurer's board
4123 of directors.
4124 (b) This Subsection (7) does not apply to relationships governed by [Title 31A,]:
4125 (i) Chapter 16, Insurance Holding Companies[,]; or
4126 (ii) Chapter 23, Part 6, Broker Controlled Insurers, if it applies.
4127 Section 59. Section 31A-23-601 is amended to read:
4128 31A-23-601. Applicability.
4129 (1) This part applies to licensed insurers, as defined in [Subsection] Section
4130 31A-23-102 [(11), which], that are [either]domiciled:
4131 (a) in this state; or [domiciled]
4132 (b) in a state that does not have a substantially similar law.
4133 (2) All provisions of [Title 31A,] Chapter 16, Insurance Holding Companies, to the extent
4134 they are not superseded by this part, continue to apply to all parties within holding company
4135 systems subject to this part.
4136 Section 60. Section 31A-25-205 is amended to read:
4137 31A-25-205. Financial responsibility.
4138 (1) Every person licensed under this chapter shall[, while licensed and for one year after
4139 that date,] maintain an insurance policy or surety bond[,]:
4140 (a) (i) while licensed; and
4141 (ii) for one year after the person is licensed; and
4142 (b) issued:
4143 (i) by an authorized insurer[,];
4144 (ii) in an amount specified under Subsection (2)[,]; and
4145 (iii) on a policy or contract form [which] that is acceptable under Subsection (3).
4146 (2) (a) Insurance policies or surety bonds satisfying the requirement of Subsection (1) shall
4147 be in a face amount equal to:
4148 (i) at least the greater of:

4149 (A) 10% of the total funds handled by the administrator[. However, no policy or bond
4150 under this Subsection (2)(a) may be in a face amount of less than]; or
4151 (B) $5,000 [nor more than]; and
4152 (ii) may not exceed $500,000.
4153 (b) In fixing the policy or bond face amount under Subsection (2)(a), the total funds
4154 handled is:
4155 (i) the greater of:
4156 (A) the premiums received during the previous calendar year; or
4157 (B) claims paid through the administrator during the previous calendar year; or
4158 (ii) if no funds were handled during the preceding year, the total funds reasonably
4159 anticipated to be handled by the administrator during the current calendar year.
4160 (c) This section does not prohibit any person dealing with the administrator from requiring,
4161 by contract, insurance coverage in amounts greater than the insurance coverage required under this
4162 section.
4163 (3) (a) Insurance policies or surety bonds issued to satisfy Subsection (1) shall:
4164 (i) be on forms approved by the commissioner[. The policies or bonds shall]; and
4165 (ii) require the insurer to pay, up to the policy or bond face amount, any judgment:
4166 (A) obtained by participants in or beneficiaries of plans administered by the insured
4167 licensee [which arise]; and
4168 (B) that arises from the negligence or culpable acts of the licensee or any employee or
4169 agent of the licensee in connection with the activities [described under Subsection] of a third party
4170 administrator as defined in Section 31A-1-301 [(111)].
4171 (b) The commissioner may require that policies or bonds issued to satisfy the requirements
4172 of this section require the insurer to give the commissioner 20 day prior notice of policy
4173 cancellation.
4174 (4) The commissioner shall establish annual reporting requirements and forms to monitor
4175 compliance with this section.
4176 (5) This section may not be construed as limiting any cause of action an insured would
4177 otherwise have against the insurer.
4178 Section 61. Section 31A-26-202 (Effective 07/01/02) is amended to read:
4179 31A-26-202 (Effective 07/01/02). Application for license.

4180 (1) (a) The application for a license as an independent adjuster or public adjuster shall be:
4181 (i) made to the commissioner on forms and in a manner the commissioner prescribes; and
4182 (ii) accompanied by the applicable fee, which is not refunded if the application is denied.
4183 (b) The application shall provide:
4184 (i) information about the applicant's identity[;], including:
4185 [(ii)] (A) the applicant's:
4186 [(A)] (I) social security number; or
4187 [(B)] (II) federal employer identification number;
4188 [(iii)] (B) the applicant's personal history, experience, education, and business record;
4189 [(iv)] (C) if the applicant is a natural person, whether the applicant is 18 years of age or
4190 older; and
4191 [(v)] (D) whether the applicant has committed an act that is a ground for denial,
4192 suspension, or revocation as set forth in Section 31A-25-208 ; and
4193 [(vi)] (ii) any other information as the commissioner reasonably requires.
4194 (2) The commissioner may require documents reasonably necessary to verify the
4195 information contained in the application.
4196 (3) The following are private records under Subsection 63-2-302 (1)(a)(vii):
4197 (a) the applicant's social security number; and
4198 (b) the applicant's federal employer identification number.
4199 Section 62. Section 31A-26-202 (Superseded 07/01/02) is amended to read:
4200 31A-26-202 (Superseded 07/01/02). Application for license.
4201 (1) (a) The application for a license as an independent adjuster or public adjuster shall be:
4202 (i) made to the commissioner on forms and in a manner the commissioner prescribes; and
4203 (ii) accompanied by the applicable fee, which is not refunded if the application is denied.
4204 (b) The application shall provide:
4205 (i) information about the applicant's identity[;], including:
4206 [(ii)] (A) the applicant's:
4207 [(A)] (I) social security number; or
4208 [(B)] (II) federal employer identification number;
4209 [(iii)] (B) the applicant's personal history, experience, education, and business record;
4210 [(iv)] (C) if the applicant is a natural person, whether the applicant is 18 years of age or

4211 older; and
4212 [(v)] (D) whether the applicant has committed an act that is a ground for denial,
4213 suspension, or revocation as set forth in Section 31A-25-208 ; and
4214 [(vi)] (ii) any other information as the commissioner reasonably requires.
4215 (2) The commissioner may require documents reasonably necessary to verify the
4216 information contained in the application.
4217 (3) The following are private records under Subsection 63-2-302 (1)(g):
4218 (a) the applicant's social security number; and
4219 (b) the applicant's federal employer identification number.
4220 Section 63. Section 31A-26-206 is amended to read:
4221 31A-26-206. Continuing education requirements.
4222 (1) The commissioner shall by rule prescribe continuing education requirements for each
4223 class of license under Section 31A-26-204 .
4224 (2) (a) The commissioner shall impose continuing education requirements in accordance
4225 with a two-year licensing period in which the licensee meets the requirements of this Subsection
4226 (2).
4227 (b) Except as provided in Subsection (2)(c), for a two-year licensing period described in
4228 Subsection (2)(a) the commissioner shall require that the licensee for each line of authority held
4229 by the licensee:
4230 (i) receive [six] five hours of continuing education; or
4231 (ii) pass a line of authority continuing education examination.
4232 (c) Notwithstanding Subsection (2)(b):
4233 (i) the commissioner may not require continuing education for more than four lines of
4234 authority held by the licensee;
4235 (ii) the commissioner shall require:
4236 (A) a minimum of:
4237 (I) 12 hours of continuing education;
4238 (II) passage of two line of authority continuing education examinations; or
4239 (III) a combination of Subsection (2)(c)(ii)(A)(I) and (II);
4240 (B) that the minimum continuing education requirement of Subsection (2)(c)(ii)(A)
4241 include:

4242 (I) at least [six] five hours or one line of authority continuing education examination for
4243 each line of authority held by the licensee not to exceed four lines of authority held by the licensee;
4244 and
4245 (II) three hours of ethics training[, which may be taken in place of three hours of the hours
4246 required for a line of authority].
4247 (d) (i) If a licensee completes the licensee's continuing education requirement without
4248 taking a line of authority continuing education examination, the licensee shall complete at least 1/2
4249 of the required hours through classroom hours of insurance-related instruction.
4250 (ii) The hours not completed through classroom hours in accordance with Subsection
4251 (2)(d)(i) may be obtained through:
4252 (A) home study;
4253 (B) video tape;
4254 (C) experience credit; or
4255 (D) other method provided by rule.
4256 (e) (i) A licensee may obtain continuing education hours at any time during the two-year
4257 licensing period.
4258 (ii) The licensee may not take a line of authority continuing education examination more
4259 than 90 calendar days before the date on which the licensee's license is renewed.
4260 (f) The commissioner shall make rules for the content and procedures for line of authority
4261 continuing education examinations.
4262 (g) (i) Beginning May 3, 1999, a licensee is exempt from the continuing education
4263 requirements of this section if:
4264 (A) as of April 1, 1990, the licensee has completed 20 years of licensure in good standing;
4265 (B) the licensee requests an exemption from the department; and
4266 (C) the department approves the exemption.
4267 (ii) If the department approves the exemption under Subsection (2)(g)(i), the licensee is
4268 not required to apply again for the exemption.
4269 (h) A licensee with a variable annuity line of authority is exempt from the requirement for
4270 continuing education for that line of authority so long as:
4271 (i) the National Association of Securities Dealers requires continuing education for
4272 licensees having a securities license; and

4273 (ii) the licensee complies with the National Association of Securities Dealers' continuing
4274 education requirements for securities licensees.
4275 (i) The commissioner shall by rule:
4276 (i) publish a list of insurance professional designations whose continuing education
4277 requirements can be used to meet the requirements for continuing education under Subsection
4278 (2)(c); and
4279 (ii) authorize professional adjuster associations to:
4280 (A) offer qualified programs for all classes of licenses on a geographically accessible basis;
4281 and
4282 (B) collect reasonable fees for funding and administration of the continuing education
4283 programs, subject to the review and approval of the commissioner.
4284 (j) (i) The fees permitted under Subsection (2)(i) that are charged to fund and administer
4285 a program shall reasonably relate to the costs of administering the program.
4286 (ii) Nothing in this section shall prohibit a provider of continuing education programs or
4287 courses from charging fees for attendance at courses offered for continuing education credit.
4288 (iii) The fees permitted under Subsection (2)(i)(ii) that are charged for attendance at an
4289 association program may be less for an association member, based on the member's affiliation
4290 expense, but shall preserve the right of a nonmember to attend without affiliation.
4291 (3) The requirements of this section apply only to licensees who are natural persons.
4292 (4) The requirements of this section do not apply to members of the Utah State Bar.
4293 (5) The commissioner shall designate courses that satisfy the requirements of this section,
4294 including those presented by insurers.
4295 (6) A nonresident adjuster is considered to have satisfied this state's continuing education
4296 requirements if:
4297 (a) the nonresident adjuster satisfies the nonresident producer's home state's continuing
4298 education requirements for a licensed insurance adjuster; and
4299 (b) on the same basis the nonresident adjuster's home state considers satisfaction of Utah's
4300 continuing education requirements for a producer as satisfying the continuing education
4301 requirements of the home state.
4302 Section 64. Section 31A-26-213 is amended to read:
4303 31A-26-213. Termination of license.

4304 (1) A license issued under this chapter remains in force until:
4305 (a) revoked, suspended, or limited under Subsection (2);
4306 (b) lapsed under Subsection (3);
4307 (c) surrendered to and accepted by the commissioner; or
4308 (d) the licensee dies or is adjudicated incompetent as defined under Title 75, Chapter 5,
4309 Part 3 or 4.
4310 (2) (a) After an adjudicative proceeding under Title 63, Chapter 46b, Administrative
4311 Procedures Act, if the commissioner makes a finding described in Subsection (2)(b), the
4312 commissioner may:
4313 (i) revoke[,] a license of an adjustor;
4314 (ii) suspend a license of an adjustor for a specified period of 12 months or less[,]; or
4315 (iii) limit in whole or in part the license of any adjuster[, found to:].
4316 (b) The commissioner may take an action described in Subsection (2)(a) if the
4317 commissioner finds that the adjustor:
4318 [(a) be] (i) is unqualified for a license under Section 31A-26-203 ;
4319 [(b) have] (ii) has violated:
4320 [(i)] (A) an insurance statute;
4321 [(ii)] (B) a valid rule under Subsection 31A-2-201 (3); or
4322 [(iii)] (C) a valid order under Subsection 31A-2-201 (4);
4323 [(c) be] (iii) is insolvent, or the subject of receivership, conservatorship, rehabilitation,
4324 or other delinquency proceedings in any state;
4325 [(d) fail] (iv) has failed to pay any final judgment rendered against [it] the adjustor in this
4326 state within 60 days after the judgment became final;
4327 [(e) fail] (v) has failed to meet the same good faith obligations in claims settlement as that
4328 required of admitted insurers;
4329 [(f) be] (vi) is affiliated with and under the same general management or interlocking
4330 directorate or ownership as another adjuster [which] that transacts business in this state without
4331 a license;
4332 [(g) refuse] (vii) refuses to be examined or to produce [its] the adjustor's accounts,
4333 records, and files for examination;
4334 [(h) have] (viii) has an officer who:

4335 [(i)] (A) refuses to give information with respect to the administrator's affairs; or
4336 [(ii)] (B) refuses to perform any other legal obligation as to an examination;
4337 [(i) have] (ix) has provided incorrect, misleading, incomplete, or materially untrue
4338 information in the license application;
4339 [(j) have] (x) has violated any insurance law, valid rule, or valid order of another state's
4340 insurance department;
4341 [(k) have] (xi) has obtained or attempted to obtain a license through misrepresentation or
4342 fraud;
4343 [(l) have] (xii) has improperly withheld, misappropriated, or converted any monies or
4344 properties received in the course of doing insurance business;
4345 [(m) have] (xiii) has intentionally misrepresented the terms of an actual or proposed
4346 insurance contract or application for insurance;
4347 [(n) have] (xiv) has been convicted of a felony;
4348 [(o) have] (xv) has admitted or been found to have committed any insurance unfair trade
4349 practice or fraud;
4350 [(p) have] (xvi) has used fraudulent, coercive, or dishonest practices in the conduct of
4351 business in this state or elsewhere;
4352 [(q) have] (xvii) has demonstrated incompetence, untrustworthiness, or financial
4353 irresponsibility in the conduct of business in this state or elsewhere;
4354 [(r) have] (xviii) has had an insurance license, or its equivalent, denied, suspended, or
4355 revoked in any other state, province, district, or territory;
4356 [(s) have] (xix) has forged another's name to:
4357 [(i)] (A) an application for insurance; or
4358 [(ii)] (B) any document related to an insurance transaction;
4359 [(t) have] (xx) has improperly used notes or any other reference material to complete an
4360 examination for an insurance license;
4361 [(u) have] (xxi) has knowingly accepted insurance business from an individual who is not
4362 licensed;
4363 [(v) have] (xxii) has failed to comply with an administrative or court order imposing a
4364 child support obligation;
4365 [(w) have] (xxiii) has failed to:

4366 [(i)] (A) pay state income tax; or
4367 [(ii)] (B) comply with any administrative or court order directing payment of state income
4368 tax;
4369 [(x) have] (xxiv) has violated or permitted others to violate the federal Violent Crime
4370 Control and Law Enforcement Act of 1994, 18 U.S.C. Secs. 1033 and 1034; or
4371 [(y) have] (xxv) has engaged in methods and practices in the conduct of business [which]
4372 that endanger the legitimate interests of customers and the public.
4373 (3) (a) Any license issued under this chapter [lapses] shall lapse if the licensee fails to:
4374 (i) pay [when due] any fee that is due under Section 31A-3-103 [.] or 31A-3-104 ;
4375 (ii) complete continuing education requirements under Section 31A-26-206 before
4376 submitting the license renewal application; or
4377 (iii) submit a completed renewal application as required by Section 31A-26-202 .
4378 (b) A licensee whose license lapses due to military service or some other extenuating
4379 circumstance such as a long-term medical disability may request:
4380 (i) reinstatement; and
4381 (ii) a waiver of any of the following imposed for failure to comply with renewal
4382 procedures:
4383 (A) an examination requirement;
4384 (B) a fine; or
4385 (C) other sanction.
4386 (c) The commissioner shall by rule prescribe the license renewal and reinstatement
4387 procedures, in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
4388 (4) A licensee under this chapter whose license is suspended, revoked, or lapsed, but who
4389 continues to act as a licensee, is subject to the penalties for conducting an insurance business
4390 without a license.
4391 (5) (a) An order revoking a license under Subsection (2) may specify a time not to exceed
4392 five years within which the former licensee may not apply for a new license.
4393 (b) If no time is specified in the order revoking a license under Subsection (2), the former
4394 licensee may not apply for a new license for five years without the express approval of the
4395 commissioner.
4396 (6) (a) Any person whose license is suspended or revoked under Subsection (2) shall, when

4397 the suspension ends or a new license is issued, pay all fees that would have been payable if the
4398 license had not been suspended or revoked, unless the commissioner by order waives the payment
4399 of the interim fees.
4400 (b) If a new license is issued more than three years after the revocation of a similar license,
4401 this Subsection (6) applies only to the fees that would have accrued during the three years
4402 immediately following the revocation.
4403 (7) The [division] commissioner shall promptly withhold, suspend, restrict, or reinstate
4404 the use of a license issued under this part if so ordered by a court.
4405 Section 65. Section 31A-26-301.6 is amended to read:
4406 31A-26-301.6. Health care provider claims practices.
4407 (1) As used in this section:
4408 (a) "Articulable reason" may include a determination regarding:
4409 (i) eligibility for coverage;
4410 (ii) preexisting conditions;
4411 (iii) applicability of other public or private insurance;
4412 (iv) medical necessity; and
4413 (v) any other reason that would justify an extension of the time to investigate a claim.
4414 (b) "Health care provider" means a person licensed to provide health care under:
4415 (i) Title 26, Chapter 21, Health Care Facility Licensing and Inspection Act[,]; or
4416 (ii) Title 58, Occupations and Professions.
4417 (c) "Insurer" means an admitted or authorized insurer, as defined in Section 31A-1-301 ,
4418 and includes:
4419 (i) a health maintenance organization; and
4420 (ii) a third-party administrator that is subject to this title, provided that nothing in this
4421 section may be construed as requiring a third party administrator to use its own funds to pay claims
4422 that have not been funded by the entity for which the third party administrator is paying claims.
4423 (d) "Provider" means a health care provider to whom an insurer is obligated to pay directly
4424 in connection with a claim by virtue of:
4425 (i) an agreement between the insurer and the provider;
4426 (ii) a health insurance policy or contract of the insurer; or
4427 (iii) state or federal law.

4428 (2) An insurer shall timely pay every valid insurance claim submitted by a provider in
4429 accordance with this section.
4430 (3) (a) Within 30 days of receiving a written claim, an insurer shall do one of the
4431 following:
4432 (i) pay the claim unless Subsection (3)(a)(ii), (iii), (iv), or (v) applies;
4433 (ii) provide a written explanation if the claim is denied;
4434 (iii) specifically describe and request any additional information from the provider that is
4435 necessary to process the claim;
4436 (iv) inform the provider, pursuant to Subsection (4), of the 30-day extension of the
4437 insurer's investigation of the claim; or
4438 (v) request additional information and inform the provider of the 30-day extension if both
4439 Subsections (3)(a)(iii) and (iv) apply.
4440 (b) A provider shall respond to each request by an insurer for additional necessary
4441 information made under Subsection (3)(a)(iii) or (v) within 30 days of receipt of the request by
4442 providing the requested information that is in the possession of the provider, unless:
4443 (i) the provider has requested and received the permission of the insurer to extend the
4444 30-day period; or
4445 (ii) the provider explains to the insurer in writing that additional time, which may not
4446 exceed 30 days, is necessary to comply with the request for information.
4447 (c) Subsection (7) shall apply after an insurer has received the information requested.
4448 (4) The time to investigate a claim may be extended by the insurer for an additional
4449 30-days if:
4450 (a) the investigation of the claim cannot reasonably be completed within the initial 30-day
4451 period of Subsection (3)(a);
4452 (b) before the end of the 30-day period in Subsection (3)(a), the insurer informs the
4453 provider in writing of the reason for the payment delay, the nature of the investigation, the
4454 timelines for investigations established in this section, and the anticipated completion date.
4455 (5) Notwithstanding Subsection (4), the time to investigate a claim may be extended
4456 beyond the initial 30-day period and the extended 30-day period if:
4457 (a) due to matters beyond the control of the insurer, the investigation cannot reasonably
4458 be completed within 60 days as to some part or all of the claim;

4459 (b) before the end of the combined 60-day period, the insurer makes a written request to
4460 the commissioner for an extension, including the reason for the delay, the nature of the
4461 investigation, the anticipated completion date, and the amount of any partial payment of the claim
4462 made pursuant to Subsection (5)(d);
4463 (c) before the end of the combined 60-day period, the commissioner informs the insurer
4464 that the request for an extension has been granted, based on a finding that:
4465 (i) there is a good faith and articulable reason to believe that the insurer is not obligated
4466 to pay some part or all of the claim; and
4467 (ii) the investigation cannot reasonably be completed within 60 days; and
4468 (d) the insurer identifies and pays all sums the insurer is obligated to pay on the claim and
4469 which are not subject to the extension requested under this Subsection (5).
4470 (6) An extension granted by the commissioner under Subsection (5)(c) shall include the
4471 completion date for the investigation.
4472 (7) (a) An insurer shall pay all sums to the provider that the insurer is obligated to pay on
4473 the claim, and provide a written explanation of any part of the claim that is denied within 20 days
4474 of:
4475 (i) receiving the information requested under Subsection (3)(a)(iii);
4476 (ii) completing an investigation under Subsection (4) or (5); or
4477 (iii) the latter of Subsection (3)(a)(iii) or (iv), if Subsection (3)(a)(v) applies.
4478 (b) (i) Except as provided in Subsection (7)(c), an insurer may send a follow-up request
4479 for additional information within the 20-day time period in Subsection (7)(a) if the previous
4480 response of the provider was not sufficient for the insurer to make a decision on the claim.
4481 (ii) A follow-up request for additional necessary information shall state with specificity:
4482 (A) the reason why the previous response was insufficient;
4483 (B) the information that is necessary to comply with the request for information; and
4484 (C) the reason why the requested information is necessary to process the claim.
4485 (c) Unless an insurer has an extension for an investigation pursuant to Subsection (4) or
4486 (5), the insurer shall pay all sums it is obligated to pay on a claim and provide a written
4487 explanation of any part of the claim that is denied within [15] 20 days of receiving a notice from
4488 the provider that the provider has submitted all requested information in the provider's possession
4489 that is related to the claim.

4490 (8) (a) Whenever an insurer makes a payment to a provider on any part of a claim under
4491 this section, the insurer shall also send to the insured an explanation of benefits paid.
4492 (b) Whenever an insurer denies any part of a claim under this section, the insurer shall also
4493 send to the insured a written explanation of the part of the claim that was denied and notice of the
4494 [grievance] adverse benefit determination review process established under Section 31A-22-629 .
4495 (c) This Subsection (8) does not apply to a person receiving benefits under the state
4496 Medicaid program as defined in Section 26-18-2 , unless required by the Department of Health or
4497 federal law.
4498 (9) (a) Beginning with health care claims submitted on or after January 1, 2002, a late fee
4499 shall be imposed on:
4500 (i) an insurer that fails to timely pay a claim in accordance with this section; and
4501 (ii) a provider that fails to timely provide information on a claim in accordance with this
4502 section.
4503 (b) For the first 90 days that a claim payment or a provider response to a request for
4504 information is late, the late fee shall be determined by multiplying together:
4505 (i) the total amount of the claim;
4506 (ii) the total number of days the response or the payment is late; and
4507 (iii) .1%.
4508 (c) For a claim payment or a provider response to a request for information that is 91 or
4509 more days late, the late fee shall be determined by adding together:
4510 (i) the late fee for a 90-day period under Subsection (9)(b); and
4511 (ii) the following [sum] multiplied together:
4512 (A) the total amount of the claim;
4513 (B) the total number of days the response or payment was late beyond the initial 90-day
4514 period; and
4515 (C) the rate of interest set in accordance with Section 15-1-1 .
4516 (d) Any late fee paid or collected under this section shall be separately identified on the
4517 documentation used by the insurer to pay the claim.
4518 (e) For purposes of this Subsection (9), "late fee" does not include an amount that is less
4519 than $1.
4520 (10) Each insurer shall establish a [grievance] review process to resolve claims-related

4521 disputes between the insurer and providers.
4522 (11) No insurer or person representing an insurer may engage in any unfair claim
4523 settlement practice with respect to a provider. Unfair claim settlement practices include:
4524 (a) knowingly misrepresenting a material fact or the contents of an insurance policy in
4525 connection with a claim;
4526 (b) failing to acknowledge and substantively respond within 15 days to any written
4527 communication from a provider relating to a pending claim;
4528 (c) denying or threatening to deny the payment of a claim for any reason that is not clearly
4529 described in the insured's policy;
4530 (d) failing to maintain a payment process sufficient to comply with this section;
4531 (e) failing to maintain claims documentation sufficient to demonstrate compliance with
4532 this section;
4533 (f) failing, upon request, to give to the provider written information regarding the specific
4534 rate and terms under which the provider will be paid for health care services;
4535 (g) failing to timely pay a valid claim in accordance with this section as a means of
4536 influencing, intimidating, retaliating, or gaining an advantage over the provider with respect to an
4537 unrelated claim, an undisputed part of a pending claim, or some other aspect of the contractual
4538 relationship;
4539 (h) failing to pay the sum when required and as required under Subsection (9) when a
4540 violation has occurred;
4541 (i) threatening to retaliate or actual retaliation against a provider for availing himself of
4542 the provisions of this section;
4543 (j) any material violation of this section; and
4544 (k) any other unfair claim settlement practice established in rule or law.
4545 (12) (a) The provisions of this section shall apply to each contract between an insurer and
4546 a provider for the duration of the contract.
4547 (b) Notwithstanding Subsection (12)(a), this section may not be the basis for a bad faith
4548 insurance claim.
4549 (c) Nothing in Subsection (12)(a) may be construed as limiting the ability of an insurer and
4550 a provider from including provisions in their contract that are more stringent than the provisions
4551 of this section.

4552 (13) (a) Pursuant to Chapter 2, Part 2, Duties and Powers of Commissioner, and beginning
4553 January 1, 2002, the commissioner may conduct examinations to determine an insurer's level of
4554 compliance with this section and impose sanctions for each violation.
4555 (b) The commissioner may adopt rules only as necessary to implement this section.
4556 (c) After December 31, 2002, the commissioner may establish rules to facilitate the
4557 exchange of electronic confirmations when claims-related information has been received.
4558 (d) Notwithstanding the provisions of Subsection (13)(b), the commissioner may not adopt
4559 rules regarding the [grievance] review process required by Subsection (10).
4560 (14) Nothing in this section may be construed as limiting the collection rights of a provider
4561 under Section 31A-26-301.5 .
4562 (15) Nothing in this section may be construed as limiting the ability of an insurer to:
4563 (a) recover any amount improperly paid to a provider:
4564 (i) in accordance with Section 31A-31-103 or any other provision of state or federal law;
4565 (ii) within 36 months for a coordination of benefits error; or
4566 (iii) within 18 months for any other reason not identified in Subsection (15)(a)(i) or (ii);
4567 (b) take any action against a provider that is permitted under the terms of the provider
4568 contract and not prohibited by this section;
4569 (c) report the provider to a state or federal agency with regulatory authority over the
4570 provider for unprofessional, unlawful, or fraudulent conduct; or
4571 (d) enter into a mutual agreement with a provider to resolve alleged violations of this
4572 section through mediation or binding arbitration.
4573 Section 66. Section 31A-27-102 is amended to read:
4574 31A-27-102. Definitions.
4575 (1) As used in this chapter:
4576 (a) "Alien insurer domiciled in Utah" means an insurer domiciled outside the United States
4577 whose entry into the United States is through Utah.
4578 (b) "Ancillary state" means any state other than an insurer's state of domicile.
4579 (c) "Contingent claims" means a claim or demand upon which:
4580 (i) a right of action has accrued at the date of the order of liquidation; and
4581 (ii) liability has not been determined.
4582 (d) "Date of liquidation" means the date of the filing of a petition for liquidation that

4583 results in an order for liquidation.
4584 (e) "Delinquency proceeding" means any:
4585 (i) proceeding commenced against an insurer for the purpose of liquidating, rehabilitating,
4586 reorganizing, or conserving the insurer; and
4587 (ii) summary proceeding under Sections 31A-27-201 through 31A-27-203 .
4588 (f) "Domestic insurer" includes, for purposes of this chapter, foreign insurers commercially
4589 domiciled in this state under Section 31A-14-206 .
4590 (g) (i) "Estate" or "property of the estate" means:
4591 (A) all legal or equitable interests of an insurer that are the subject of a rehabilitation,
4592 liquidation, conservation, or other proceeding under this chapter in property as of the date of filing
4593 of the petition for rehabilitation, liquidation, or conservation;
4594 (B) any interest in property recoverable by the receiver under the provisions of this title;
4595 (C) any interest in property acquired after the date of filing of the petition; and
4596 (D) all proceeds, products, rents, and profits from this property.
4597 (ii) "Estate" or "property of the estate" includes property in which the insurer holds only
4598 legal title, but no equitable interest, only to the extent of the insolvent insurer's interest.
4599 (h) "Fair consideration" is given for property or an obligation:
4600 (i) when in exchange for the property or obligation, as a fair equivalent for it, and in good
4601 faith:
4602 (A) property is conveyed;
4603 (B) services are rendered;
4604 (C) an obligation is incurred; or
4605 (D) an antecedent debt is satisfied; or
4606 (ii) when the property or obligation is received in good faith to secure a present advance
4607 or an antecedent debt in amount not disproportionately small compared to the value of the property
4608 or obligation obtained.
4609 (i) (i) "General assets" means all property not encumbered by a security agreement for the
4610 security or benefit of specified persons or classes of persons.
4611 (ii) "General assets" does not include separate account assets under Section 31A-5-217 .
4612 (iii) For encumbered property, "general assets" includes all that property or its proceeds
4613 which is in excess of the amount necessary to discharge the sums secured by the property.

4614 (iv) Assets held in trust or on deposit for the security or benefit of all policyholders, or all
4615 policyholders and creditors, in more than a single state, are general assets.
4616 (j) "Guaranty association" means:
4617 (i) the applicable association under Chapter 28, Guaranty Associations; or
4618 (ii) the similar association under the laws of another state.
4619 (k) "Immature claim" means a claim or demand upon which payment is due, except for the
4620 passage of time.
4621 (l) "Insolvency" has the same meaning as in Section 31A-1-301 .
4622 (m) "Insurer" means any person who is doing, has done, purports to do, or is licensed to
4623 do an insurance business on its own account and is or has been subject to the authority of, or to
4624 liquidation, rehabilitation, reorganization, or supervision by, a commissioner. A separate account
4625 created under Section 31A-5-217 is an "insurer" for purposes of Chapter 27, Insurers
4626 Rehabilitation and Liquidation.
4627 (n) "Preferred claim" means any claim that the law gives priority of payment from the
4628 general assets of the insurer.
4629 (o) "Receiver" means receiver, liquidator, rehabilitator, or conservator[,]:
4630 (i) as the context requires[.]; and
4631 (ii) is consistent with the definition of "receiver" in Subsections 31A-27-110 (1)(c)(i)
4632 through (vii).
4633 (p) "Reciprocal state" means any state other than this state:
4634 (i) in which in substance Subsection 31A-27-310 (1), Subsections 31A-27-403 (1) and (3),
4635 Sections 31A-27-404 and 31A-27-406 through 31A-27-409 are in force;
4636 (ii) which has laws requiring the commissioner to be the receiver of a delinquent insurer;
4637 and
4638 (iii) which has laws for the avoidance of fraudulent conveyances and preferential transfers
4639 by the receiver of a delinquent insurer.
4640 (q) "Secured claim" means any claim secured by mortgage, trust deed, security agreement,
4641 pledge, deposit as security, escrow or otherwise, but not including special deposit claims. The
4642 term also includes claims that have become liens upon specific assets through judicial processes.
4643 (r) "Separate account assets" means those assets allocated to separate accounts under
4644 Section 31A-5-217 .

4645 (s) "Special deposit claim" means any claim secured by a deposit in trust made pursuant
4646 to this title for the security or benefit of one or more limited classes of persons.
4647 (t) "Transfer" means every mode, direct or indirect, absolute or conditional, voluntarily
4648 or involuntarily, by or without judicial proceedings, of disposing of or parting with property or
4649 with an interest in property. The retention of a security interest in or title to property delivered to
4650 a debtor is considered a transfer by the debtor.
4651 (u) "Unliquidated claim" means a claim or demand upon which:
4652 (i) a right of action has accrued at the date of the order of liquidation; and
4653 (ii) liability has been established but the amount of which has not been determined.
4654 (2) If the subject of a rehabilitation or liquidation proceeding under this chapter is an
4655 insurer engaged in a surety business, then as used in this chapter:
4656 (a) "Policy" includes a bond issued by a surety.
4657 (b) "Policyholder" includes a principal on a bond.
4658 (c) "Beneficiary" includes an obligee of a bond.
4659 (d) "Insured" includes both the principal and obligee of a bond.
4660 Section 67. Section 31A-27-103 is amended to read:
4661 31A-27-103. Jurisdiction and venue.
4662 (1) Except as provided in Subsection (2), [no] a delinquency proceeding may not be
4663 commenced under this chapter by anyone other than the Utah commissioner.
4664 (2) (a) Three or more judgment creditors holding unrelated judgments against an insurer,
4665 which judgments aggregate more than $5,000 in excess of any security held by those creditors may
4666 commence proceedings against the insurer under the conditions and in the manner prescribed in
4667 this Subsection (2), by serving notice upon the commissioner and the insurer of intention to file
4668 a petition for liquidation under Section 31A-27-307 or 31A-27-402 .
4669 (b) Each of the judgments described in Subsection (2)(a):
4670 (i) shall have been rendered against the insurer by a Utah court having jurisdiction over
4671 the subject matter and the insurer;
4672 (ii) shall have been entered more than 60 days before the service of notice under
4673 Subsection (2)(a);
4674 (iii) may not have been satisfied in full;
4675 (iv) may not be the subject of a valid contract between the insurer and any judgment

4676 creditor for payment of the judgment, unless that contract has been breached by the insurer;
4677 (v) may not be a judgment assigned in order to institute proceedings under this Subsection
4678 (2); and
4679 (vi) may not be a judgment on which an appeal or review is pending or may yet be brought.
4680 [(b)] (c) If any one of the judgments in favor of a petitioning creditor remains unpaid for
4681 30 days after service of the notice under Subsection (2)(a), and the commissioner has not then filed
4682 a petition for liquidation[,]:
4683 (i) the creditor may file a verified petition for liquidation of the insurer:
4684 (A) in the manner prescribed by Section 31A-27-307 or 31A-27-402 [,]; and
4685 (B) alleging the conditions stated in this Subsection[. The] (2); and
4686 (ii) the commissioner shall be served and joined in the action.
4687 (3) [No] Except in accordance with this chapter, a court of this state [has] does not have
4688 jurisdiction to entertain, hear, or determine any complaint praying for:
4689 (a) the dissolution, liquidation, rehabilitation, sequestration, conservation, or receivership
4690 of any insurer[,]; or [praying for]
4691 (b) an injunction or restraining order or other relief preliminary to, incidental to, or relating
4692 to [that] the type of proceedings [other than in accordance with this chapter] described in
4693 Subsection (3)(a).
4694 (4) (a) Venue for proceedings arising under this chapter shall be laid initially as specified
4695 in the sections providing for those proceedings.
4696 (b) All other actions and proceedings initiated by the receiver may be commenced and tried
4697 where:
4698 (i) the delinquency proceedings are then pending[,]; or [where]
4699 (ii) venue would be laid by applicable Utah law.
4700 (c) All other actions and proceedings against the receiver shall be commenced and tried
4701 in the county where the delinquency proceedings are pending.
4702 (d) Upon motion of any party, venue may be changed by order of the court or the presiding
4703 judge of the court to any other district court in Utah, whenever the convenience of the parties and
4704 witnesses and the ends of justice require it.
4705 (e) This Subsection (4) relates only to venue and is not jurisdictional.
4706 (5) In addition to other grounds for jurisdiction provided by the law of Utah, a Utah court

4707 having jurisdiction of the subject matter has jurisdiction over a person properly served in an action
4708 brought by the receiver of a domestic insurer or an alien insurer domiciled in Utah:
4709 (a) if the person served is obligated to the insurer in any way as an incident to any agency
4710 or brokerage arrangement that may exist or has existed between them, in any action on or incident
4711 to the obligation;
4712 (b) if the person served is a reinsurer who has at any time written a policy of reinsurance
4713 for an insurer against which a rehabilitation or liquidation order is in effect when the action is
4714 commenced[, or];
4715 (c) if the person served is an agent of or broker for the reinsurer described in Subsection
4716 (5)(b), in any action on or incident to the reinsurance contract; or
4717 [(c)] (d) if the person served is or has been an officer, manager, trustee, organizer,
4718 promoter, or person in a position of comparable authority or influence in an insurer against which
4719 a rehabilitation or liquidation order is in effect when the action is commenced, in any action
4720 resulting from the relationship with the insurer.
4721 (6) (a) Subject to Sections 31A-27-305 and 31A-27-317 , the court in which a delinquency
4722 proceeding is pending has exclusive jurisdiction for:
4723 (i) all actions and proceedings brought against the receiver of a rehabilitation or liquidation
4724 estate of the insurer; or
4725 (ii) any action or proceeding in any way related to a rehabilitation or liquidation estate of
4726 an insurer.
4727 (b) An action described in Subsection (6)(a) shall be commenced and tried in the court
4728 having exclusive jurisdiction.
4729 [(6)] (7) If the court on the motion of any party finds that any action commenced under
4730 Subsection (5) should, as a matter of substantial justice, be tried in a forum outside Utah, the court
4731 may enter an order to stay further proceedings on the action in Utah.
4732 Section 68. Section 31A-27-305 is amended to read:
4733 31A-27-305. Actions by and against rehabilitator.
4734 (1) [The] (a) An order for rehabilitation under Section 31A-27-303 [automatically] stays
4735 any action or proceeding [in this state in which the insurer is a party or is obligated to defend a
4736 party. The stay continues until the rehabilitator obtains proper representation and prepares for
4737 further proceedings. The court that entered the rehabilitation order shall order the rehabilitator

4738 to take that action respecting pending litigation and other proceedings as the court considers
4739 necessary in the interests of justice and for the protection of creditors, policyholders, and the
4740 public. The rehabilitator shall immediately evaluate all litigation or other proceedings pending
4741 outside this state and shall petition the courts or agencies having jurisdiction over that litigation
4742 or those proceedings for stays whenever the rehabilitator determines it necessary to protect the
4743 estate of the insurer.]:
4744 (i) (A) at law;
4745 (B) in equity; or
4746 (C) in arbitration;
4747 (ii) brought against the insurer or rehabilitator; and
4748 (iii) regardless of whether the action is brought in this state or elsewhere.
4749 (b) An action or proceeding existing at the time the order for rehabilitation is issued may
4750 not be enforced, perfected, maintained, or further presented after issuance of the order for
4751 rehabilitation.
4752 (c) The stay of all actions or proceedings provided in this Subsection (1) is automatic.
4753 (d) The rehabilitator may not intervene or defend in an action or proceeding except as
4754 provided in this section.
4755 (2) (a) If the rehabilitator determines that the protection of the estate of the insurer
4756 necessitates intervention in an action pending against the insurer, the rehabilitator may intervene
4757 in the action.
4758 (b) An action described in Subsection (1)(a) is not stayed if:
4759 (i) the rehabilitator applies to the court for:
4760 (A) leave to intervene or defend; or
4761 (B) for ratification by the court of intervention; and
4762 (ii) the court grants the application.
4763 (c) The estate of the insurer may be charged for the expenses incurred if the rehabilitator
4764 is defending any action in which the rehabilitator intervenes under this section.
4765 [(2)] (3) (a) No statute of limitations runs and no defense of laches arises with respect to
4766 any action by or against an insurer between the filing of a petition for rehabilitation against an
4767 insurer and the denial of the petition or an order of rehabilitation.
4768 (b) Any action by the insurer that might have been commenced when the petition was filed

4769 may be commenced by the insurer or rehabilitator for:
4770 (i) at least 60 days after:
4771 (A) the order of rehabilitation is entered; or
4772 (B) the petition is denied[,]; or [for]
4773 (ii) a longer period if ordered by the court.
4774 (c) This Subsection (3) does not limit the powers of the rehabilitator to bring actions under
4775 Sections 31A-27-319 , 31A-27-320 , 31A-27-321 , 31A-27-322 , and other provisions of this chapter.
4776 Section 69. Section 31A-27-311.5 is amended to read:
4777 31A-27-311.5. Continuance of coverage -- Health maintenance organizations.
4778 (1) As used in this section:
4779 (a) "basic health care services" is as defined in Section 31A-8-101 ;
4780 (b) "enrollee" is as defined in Section 31A-8-101 ;
4781 (c) "health care" is as defined in Section 31A-1-301 ;
4782 (d) "health maintenance organization" is as defined in Section 31A-8-101 ;
4783 (e) "limited health plan" is as defined in Section 31A-8-101 ;
4784 (f) (i) "managed care organization" means any entity licensed by, or holding a certificate
4785 of authority from, the department to furnish health care services or health insurance;
4786 (ii) "managed care organization" includes:
4787 (A) a limited health plan;
4788 (B) a health maintenance organization;
4789 (C) a preferred provider organization;
4790 (D) a fraternal benefit society; or
4791 (E) any entity similar to an entity described in Subsections (1)(f)(ii)(A) through (D);
4792 (iii) "managed care organization" does not include:
4793 (A) an insurer or other person that is eligible for membership in a guaranty association
4794 under Chapter 28, Guaranty Associations;
4795 (B) a mandatory state pooling plan;
4796 (C) a mutual assessment company or any entity that operates on an assessment basis; or
4797 (D) any entity similar to an entity described in Subsections (1)(f)(iii)(A) through (C);
4798 (g) "participating provider" means a provider who, under a contract with a managed care
4799 organization authorized under Section 31A-8-407 , [has agreed] agrees to provide health care

4800 services to enrollees with an expectation of receiving payment, directly or indirectly, from the
4801 managed care organization, other than copayment;
4802 (h) "participating provider contract" means the agreement between a participating provider
4803 and a managed care organization authorized under Section 31A-8-407 ;
4804 (i) "preferred provider" means a provider who agrees to provide health care services under
4805 an agreement authorized under Subsection 31A-22-617 (1);
4806 (j) "preferred provider contract" means the written agreement between a preferred provider
4807 and a managed care organization authorized under Subsection 31A-22-617 (1);
4808 (k) (i) except as provided in Subsection (1)(k)(ii), "preferred provider organization" means
4809 any person[, other than an insurer licensed under Chapter 7 or an individual who contracts to
4810 render professional or personal services that the individual performs himself,] that:
4811 [(i)] (A) furnishes at a minimum, through preferred providers, basic health care services
4812 to an enrollee in return for prepaid periodic payments in an amount agreed to prior to the time
4813 during which the health care may be furnished;
4814 [(ii)] (B) is obligated to the enrollee to arrange for the services described in Subsection
4815 (1)(k)(i)(A); and
4816 [(iii)] (C) permits the enrollee to obtain health care services from providers who are not
4817 preferred providers; and
4818 (ii) "preferred provider organization" does not include:
4819 (A) an insurer licensed under Chapter 7, Nonprofit Health Service Insurance Corporation;
4820 or
4821 (B) an individual who contracts to render professional or personal services that the
4822 individual performs.
4823 (l) "provider" is as defined in Section 31A-8-101 ; and
4824 (m) "uncovered expenditure" means the costs of health care services that are covered by
4825 an organization for which an enrollee is liable in the event of the managed care organization's
4826 insolvency.
4827 (2) The rehabilitator or liquidator may take one or more of the actions described in
4828 Subsections (2)(a) through (f) to assure continuation of health care coverage for enrollees of an
4829 insolvent managed care organization.
4830 (a) (i) Subject to Subsection (2)(a)(ii), a rehabilitator or liquidator may require a

4831 participating provider and preferred provider of health care services to continue to provide the
4832 health care services the provider is required to provide under the [respective] provider's
4833 participating provider contract or preferred provider contract until the [later] earlier of:
4834 (A) 90 days [from] after the date of the filing of:
4835 (I) a petition for rehabilitation; or [the]
4836 (II) a petition for liquidation; or
4837 (B) the date the term of the contract ends.
4838 (ii) A requirement by the rehabilitator or liquidator under Subsection (2)(a)(i) that a
4839 participating provider or preferred provider continue to provide health care services under a
4840 provider's participating provider contract or preferred providers contract expires when health care
4841 coverage for all enrollees of the insolvent managed care organization is obtained from another
4842 managed care organization or insurer.
4843 (b) (i) Subject to Subsection (2)(b)(ii), a rehabilitator or liquidator may reduce the fees a
4844 participating provider or preferred provider is otherwise entitled to receive from the managed care
4845 organization under its participating provider contract or preferred provider contract during the time
4846 period in Subsection (2)(a)(i).
4847 (ii) Notwithstanding Subsection (2)(b)(i) a rehabilitator or liquidator may not reduce a fee
4848 to less than 75% of the regular fee set forth in the respective participating provider contract or
4849 preferred provider contract.
4850 (iii) An enrollee shall continue to pay the same copayments, deductibles, and other
4851 payments for services received from the participating provider or preferred provider that the
4852 enrollee was required to pay before the date of filing of:
4853 (A) the petition for rehabilitation; or
4854 (B) the petition for liquidation.
4855 (c) (i) A participating provider or preferred provider shall:
4856 (A) accept the amounts specified in Subsection (2)(b) as payment in full; and
4857 (B) relinquish the right to collect additional amounts from the insolvent managed care
4858 organization's enrollee.
4859 (ii) [Subsection] Subsections (2)(b) and [Subsections] (2)(c)(i)[(A) and (B)] shall apply
4860 to the fees paid to a provider who agrees to provide health care services to an enrollee but is not
4861 a preferred or participating provider.

4862 (d) If the managed care organization is a health maintenance organization, Subsections
4863 (2)(d)(i) through [(v)] (vi) apply.
4864 (i) Subject to Subsections (2)(d)(ii), (iii), and [(iv)] (v), upon notification from and subject
4865 to the direction of the rehabilitator or liquidator of a health maintenance organization licensed
4866 under Chapter 8, Health Maintenance Organizations and Limited Health Plans, a solvent health
4867 maintenance organization licensed under Chapter 8, Health Maintenance Organizations and
4868 Limited Health Plans, and operating within a portion of the insolvent health maintenance
4869 organization's service area shall extend to the enrollees all rights, privileges, and obligations of
4870 being an enrollee in the accepting health maintenance organization[, except that].
4871 (ii) Notwithstanding Subsection (2)(d)(i), the accepting health maintenance organization
4872 shall give credit to an enrollee for any waiting period already satisfied under the provisions of the
4873 enrollee's contract with the insolvent health maintenance organization.
4874 [(ii)] (iii) A health maintenance organization accepting an enrollee of an insolvent health
4875 maintenance organization under Subsection (2)(d)(i) shall charge the enrollee the premiums
4876 applicable to the existing business of the accepting health maintenance organization.
4877 [(iii)] (iv) A health maintenance organization's obligation to accept an enrollee under
4878 Subsection (2)(d)(i) is limited in number to [its] the accepting health maintenance organization's
4879 pro rata share of all health maintenance organization enrollees in this state, as determined after
4880 excluding the enrollees of the insolvent insurer.
4881 [(iv)] (v) (A) The rehabilitator or liquidator of an insolvent health maintenance
4882 organization shall take those measures that are possible to ensure that no health maintenance
4883 organization is required to accept more than its pro rata share of the adverse risk represented by
4884 the enrollees of the insolvent health maintenance organization. [As long as]
4885 (B) If the methodology used by the rehabilitator or liquidator to assign an enrollee is one
4886 [which] that can be expected to produce a reasonably equitable distribution of adverse risk, that
4887 methodology and its results are acceptable under this Subsection (2)(d)[(iv)](v).
4888 [(v)] (vi) (A) Notwithstanding Section 31A-27-311 , the rehabilitator or liquidator may
4889 require all solvent health maintenance organizations to pay for the covered claims incurred by the
4890 enrollees of the insolvent health maintenance organization.
4891 (B) As determined by the rehabilitator or liquidator, payments required under this
4892 Subsection (2)(d)[(v)](vi) may:

4893 (I) begin as of the filing of the petition for reorganization or the petition for liquidation;
4894 and
4895 (II) continue for a maximum period through the time all enrollees are assigned pursuant
4896 to this section.
4897 (C) If the rehabilitator or liquidator makes an assessment under this Subsection
4898 (2)(d)[(v)](vi), the rehabilitator or liquidator shall assess each solvent health maintenance
4899 organization its pro rata share of the total assessment based upon its premiums from the previous
4900 calendar year.
4901 (D) (I) A solvent health maintenance organization required to pay for covered claims under
4902 this Subsection (2)(d)(vi) shall be entitled to file a claim against the estate of the insolvent health
4903 maintenance organization.
4904 (II) Any claim described in Subsection (2)(a)(vi)(D)(I), if allowed by the rehabilitator or
4905 liquidator, shall share in any distributions from the estate of the insolvent health maintenance
4906 organization as a Class 3 claim.
4907 (e) (i) A rehabilitator or liquidator may transfer, through sale, or otherwise, the group and
4908 individual health care obligations of the insolvent managed care organization to other managed
4909 care organizations or other insurers, if those other managed care organizations and other insurers
4910 are licensed or have a certificate of authority to provide the same health care services in this state
4911 that is held by the insolvent managed care organization [has].
4912 [(i)] (ii) The rehabilitator or liquidator may combine group and individual health care
4913 obligations of the insolvent managed care organization in any manner the rehabilitator or liquidator
4914 considers best to provide for continuous health care coverage for the maximum number of
4915 enrollees of the insolvent managed care organization.
4916 [(ii)] (iii) If the terms of a proposed transfer of the same combination of group and
4917 individual policy obligations to more than one other managed care organization or insurer are
4918 otherwise equal, the rehabilitator or liquidator shall give preference to the transfer of the group and
4919 individual policy obligations of an insolvent managed care organization as follows:
4920 (A) from one category of managed care organization to another managed care organization
4921 of the same category, as follows:
4922 (I) from a limited health plan to a limited health plan;
4923 (II) from a health maintenance organization to a health maintenance organization;

4924 (III) from a preferred provider organization to a preferred provider organization;
4925 (IV) from a fraternal benefit society to a fraternal benefit society; and
4926 (V) from any entity similar to any of the above to a category that is similar;
4927 (B) from one category of managed care organization to another managed care organization,
4928 regardless of the category of the transferee managed care organization; and
4929 (C) from a managed care organization to a nonmanaged care provider of health care
4930 coverage, including insurers.
4931 (f) A rehabilitator or liquidator may use the insolvent managed care organization's required
4932 capital or permanent surplus, and compulsory surplus, to continue to provide coverage for the
4933 insolvent managed care organization's enrollees, including paying uncovered expenditures.
4934 Section 70. Section 31A-27-315 is amended to read:
4935 31A-27-315. Notice to creditors and others.
4936 (1) (a) The liquidator shall give notice of the liquidation order as soon as possible:
4937 (i) by first-class mail and [either by telegram or telephone] electronic communication to
4938 the insurance commissioner of each jurisdiction in which the insurer is [licensed to do] doing
4939 business;
4940 (ii) by first-class mail and [by telephone] electronic communication to any guaranty fund
4941 or association [which] that may become obligated [because] as a result of the liquidation;
4942 [(iii) by first class mail and by telephone to the Labor Commission of this state if the
4943 insurer is or has been an insurer of workers' compensation;]
4944 [(iv)] (iii) by first-class mail to all insurance agents [and], brokers, and reinsurers doing
4945 business with the insurer;
4946 [(v)] (iv) by first-class mail to the persons designated in Subsection 31A-2-212 (5), if the
4947 insurer does a surety business;
4948 [(vi)] (v) by first-class mail to the last known address of all persons known or reasonably
4949 expected from the insurer's records to have claims against the insurer, including all policyholders;
4950 and
4951 [(vii)] (vi) unless the court orders otherwise, by publication under Section 31A-2-303 , with
4952 the last publication being not less than three months before the earliest deadline specified in the
4953 notice under Subsection (2).
4954 (b) Notice to policyholders shall include:

4955 (i) notice of impairment and termination of coverage under Section 31A-27-311 [. When
4956 it is]; and
4957 (ii) when applicable[, notice to policyholders shall also include]:
4958 [(i)] (A) notice of withdrawal of the insurer from the defense of any case in which the
4959 insured is interested; and
4960 [(ii)] (B) information about the existence of any:
4961 (I) applicable assigned risk plans or residual market facilities [and of a]; or
4962 (II) guaranty [fund] funds under Chapter 28, Guaranty Associations, or similar laws of
4963 another state.
4964 (c) (i) Within [15] 45 days of the date of entry of the liquidation order, the liquidator shall
4965 report to the court what notice has been given.
4966 (ii) The court may order [any additional] notice [it] in addition to the notice required by
4967 this Subsection (1) that the court considers appropriate.
4968 (2) (a) Notice to potential claimants under Subsection (1) shall require claimants to file
4969 with the liquidator [their claims together with proper proofs under Section 31A-27-329 ,] on or
4970 before a date the liquidator specifies in the notice[, which may not be less than six months nor
4971 more than one year after entry of the liquidation order.]:
4972 (i) the claimants' claims; and
4973 (ii) proper proofs under Section 31A-27-329 .
4974 (b) The liquidator need not require [persons] the following to file a claim:
4975 (i) a person claiming unearned premium [and persons]; or
4976 (ii) a person claiming cash surrender values or other investment values in life insurance
4977 and annuities [to file a claim].
4978 (c) The liquidator may specify different dates for filing the different kinds of claims.
4979 (3) If notice is given in accordance with this section, the distribution of the assets of the
4980 insurer under this chapter is conclusive with respect to all claimants, whether or not [they] the
4981 claimants received actual notice.
4982 Section 71. Section 31A-27-317 is amended to read:
4983 31A-27-317. Actions by and against liquidator.
4984 (1) (a) The filing of a petition for liquidation of a domestic insurer or of an alien insurer
4985 domiciled in this state stays all actions and all proceedings [against the insurer in Utah or

4986 elsewhere and the liquidator may not intervene in them, except as provided in this subsection.
4987 Whenever, in the liquidator's judgment, an action in Utah has proceeded to a point where fairness
4988 or convenience would be served by its continuation to judgment, the liquidator may apply to the
4989 court for leave to defend or to be substituted for the insurer, and if the court grants the application,
4990 the action is not stayed. Whenever in the liquidator's judgment, the protection of the estate of the
4991 insurer necessitates intervention in an action against the insurer that is pending outside Utah, with
4992 approval of the court the liquidator may intervene in the action.]:
4993 (i) (A) at law;
4994 (B) in equity; or
4995 (C) in arbitration;
4996 (ii) against the insurer or liquidator; and
4997 (iii) regardless of whether the action is brought in this state or elsewhere.
4998 (b) Any action or proceeding existing at the time the petition for liquidation is filed may
4999 not be enforced, perfected, maintained, or further presented after the filing of the petition.
5000 (c) The stay of all actions under this Subsection (1) is automatic.
5001 (d) The liquidator may not intervene or defend in an action or proceeding except as
5002 provided in this section.
5003 (2) Except as provided under Section 31A-27-323 , filing a petition for liquidation stays
5004 the exercise of any right of setoff against the insurer.
5005 (3) (a) If the liquidator determines that protection of the estate of the insurer necessitates
5006 intervention in an action pending against the insurer, the liquidator may intervene in the action.
5007 (b) An action described in Subsection (1)(a) is not stayed if:
5008 (i) the liquidator applies to the court for:
5009 (A) leave to intervene or defend; or
5010 (B) ratification by the court of intervention; and
5011 (ii) the court grants the application.
5012 (c) The estate of the insurer may be charged for the expenses incurred by the liquidator in
5013 defending any action in which the liquidator intervenes under this section.
5014 [(3)] (4) (a) The liquidator may[, within two years subsequent to an order for liquidation
5015 or within any further time as applicable law permits,] institute an action or proceeding on behalf
5016 of the estate of the insurer upon any cause of action against which the period of limitation fixed

5017 by applicable law had not expired at the time of the filing of the petition.
5018 (b) Where, by any agreement, a period of limitation is fixed for instituting [a suit] an action
5019 or proceeding upon any claim or for filing any claim, proof of claim, proof of loss, demand, notice,
5020 or the like, or where in any proceeding, judicial or otherwise, a period of limitation is fixed, either
5021 in the proceeding or by applicable law, for taking any action, filing any claim or pleading, or doing
5022 any act, and where in any of these sections the period had not expired at the date of the filing of
5023 the petition for liquidation, the liquidator may, for the benefit of the estate, take any action or do
5024 any act, required of or permitted to the insurer, within a period of 180 days subsequent to the entry
5025 of an order for liquidation, or within any further period as is permitted by the agreement, in the
5026 proceeding, or by applicable law, or within any further time period as is shown to the satisfaction
5027 of the court not to be unfairly prejudicial to the other party.
5028 [(4)] (5) (a) No statute of limitations runs and no defense of laches is available with respect
5029 to any action against an insurer between the filing of a petition for liquidation and the denial of the
5030 petition.
5031 (b) Any action against the insurer that might have been commenced when the petition was
5032 filed may be commenced for at least 60 days after the petition is denied.
5033 [(5)] (6) Any guaranty fund or association that may become liable as a result of the
5034 liquidation of an insurer may intervene in any court proceeding concerning the liquidation of the
5035 insurer.
5036 Section 72. Section 31A-27-332 is amended to read:
5037 31A-27-332. Disputed claims.
5038 (1) (a) When a claim is disallowed in whole or in part by the liquidator, written notice of
5039 the determination and of the right to object shall be given promptly to the claimant or the
5040 claimant's attorney of record, if any, by first-class mail at the addresses shown in the proof of
5041 claim.
5042 (b) (i) Within 60 days from the mailing of the notice required by Subsection (1)(a), the
5043 claimant may file objections with the court.
5044 (ii) If objections are not filed within the period provided in Subsection (1)(b)(i), the
5045 claimant may not further object to the determination.
5046 (2) (a) Whenever objections are filed with the court and the liquidator does not alter the
5047 liquidator's ruling, the liquidator shall ask the court for a hearing as soon as practicable.

5048 (b) [The] If the liquidator asks for a hearing under Subsection (2)(a), the court shall issue
5049 an order setting a date as early as possible.
5050 (c) At the request of the liquidator, the court may establish procedures for the objections
5051 hearing.
5052 (d) The liquidator shall give notice of [the] a hearing under this Subsection (2) by
5053 first-class mail to:
5054 (i) the claimant or the claimant's attorney; and
5055 (ii) any other persons directly affected.
5056 (e) A hearing under this Subsection (2):
5057 (i) shall be heard without a jury[.]; and
5058 [(f) The matter] (ii) may be heard by:
5059 [(i)] (A) the court; or
5060 [(ii)] (B) a court-appointed referee.
5061 [(g)] (f) [If a referee is appointed under Subsection (2)(f), the referee] A hearing under this
5062 Subsection (2) shall[: (i) review and] be limited to the evidence upon which the liquidator made
5063 the determination of the claims[; and].
5064 [(ii)] (g) If a referee is appointed under this Subsection (2), the referee shall submit to the
5065 court:
5066 (i) findings of fact [together with]; and
5067 (ii) recommendations.
5068 (h) Consistent with Subsection 31A-27-336 (2), the court may approve, disapprove, or
5069 modify:
5070 (i) the liquidator's determination of a claim; or
5071 (ii) a referee's recommendations on a claim.
5072 (3) A court order issued after a hearing and pursuant to this section may be appealed as a
5073 final order for purposes of Rule 54 [of the], Utah Rules of Civil Procedure.
5074 Section 73. Section 31A-27-337 is amended to read:
5075 31A-27-337. Distribution of assets.
5076 (1) (a) Subject to any instructions the court may give, the liquidator shall make
5077 distributions in a manner that will assure the proper recognition of priorities and a reasonable
5078 balance between the expeditious completion of the liquidation and the protection of unliquidated

5079 and undetermined claims, including third party claims.
5080 (b) Distribution of assets in kind may be made at valuations set by agreement between the
5081 liquidator and the creditor and approved by the court in advance of the distribution.
5082 (2) (a) The liquidator shall make distributions to guaranty funds and associations under
5083 Subsection (1) to satisfy their claims under Chapter 28, Guaranty Associations, or similar laws of
5084 other states, if the claims have been filed pursuant to rules established under Subsections
5085 31A-27-328 (1) and (4).
5086 (b) The total distributions to guaranty funds and associations paid under this Subsection
5087 (2) may not exceed the total of the claims properly made by the funds and associations under
5088 Subsections 31A-27-328 (1) and (4).
5089 (c) The liquidator shall pay distributions as frequently as is practicable and in sums as large
5090 as possible without sacrificing asset values by untimely disposition or inequitable allocation of
5091 available assets.
5092 (d) The liquidator may protect against inequitable allocations by making payments to funds
5093 and associations subject to binding agreements by [them] the funds or associations to repay any
5094 portions of the distributions [which] that are later found to be in excess of an equitable allocation.
5095 (e) If assets are available, the liquidator may [also] lend to guaranty funds and associations,
5096 subject to express advance court approval.
5097 (3) (a) The liquidator shall report to the court within [four months] 120 days after the
5098 [issuance of] day the liquidation order is issued under Section 31A-27-310 , [and every three
5099 months thereafter] on the status of the assets [and the payment of distributions and loans under
5100 Subsection (2).] of the liquidation estate.
5101 (b) (i) After the report required by Subsection (3)(a), the liquidator will report to the court
5102 on the status of the liquidation on a calendar quarter basis.
5103 (ii) A report required by this Subsection (3)(b) shall be due within 45 days of the end of
5104 the calendar quarter unless the court orders otherwise.
5105 (c) The court may order the liquidator to make distributions to guaranty funds and
5106 associations under Subsection (2) more expeditiously to minimize the need for assessments under
5107 Chapter 28, Guaranty Associations, or similar laws of other states.
5108 (4) (a) Upon liquidation of a domestic nonlife mutual insurance company, any assets held
5109 in excess of [its] the company's liabilities and of the amounts [which] that may be paid to [its] the

5110 company's members as provided under Subsection (4)(b) shall be paid into the state treasury to the
5111 credit of the Uniform School Fund.
5112 (b) The maximum amount payable upon liquidation to any member for and on account of
5113 [his] that member's membership in a domestic nonlife mutual insurance company, in addition to
5114 the insurance benefits promised in the policy, is the total of all premium payments made by the
5115 member within the past five years with interest at the legal rate compounded annually.
5116 Section 74. Section 31A-27-340 is amended to read:
5117 31A-27-340. Reopening liquidation.
5118 (1) After the liquidation proceeding has been terminated and the liquidator discharged, [the
5119 commissioner or other interested party may at any time] within a reasonable time any of the
5120 following may petition the court to reopen the proceedings for good cause, including the discovery
5121 of additional assets[.]:
5122 (a) the commissioner;
5123 (b) a policyholder;
5124 (c) a creditor; or
5125 (d) a claimant of the closed liquidation estate.
5126 (2) If the court is satisfied that there is justification for reopening, [it] the court shall order
5127 [it] the reopening.
5128 Section 75. Section 31A-27-341 is amended to read:
5129 31A-27-341. Disposition of records.
5130 [Records] Upon a motion of the liquidator, the records of any insurer in the process of
5131 liquidation or completely liquidated under this chapter may be disposed of in the [same] manner
5132 [as records under Section 31A-2-207 ] ordered by the court.
5133 Section 76. Section 31A-28-203 is amended to read:
5134 31A-28-203. Definitions.
5135 As used in this part:
5136 (1) "Affiliate" is as defined in Section 31A-1-301 .
5137 (2) "Association account" means the Utah Property and Casualty Insurance Guaranty
5138 Association Account created by Section 31A-28-205 .
5139 [(2)] (3) (a) "Claimant" means:
5140 (i) an insured making a first-party claim; or

5141 (ii) a person instituting a liability claim.
5142 (b) A person who is an affiliate of the insolvent insurer may not be a claimant.
5143 [(3)] (4) (a) "Covered claim" means an unpaid claim, including an unpaid claim under a
5144 personal lines policy for unearned premiums submitted by a claimant, if:
5145 (i) the claim arises out of the coverage;
5146 (ii) the claim is within the coverage;
5147 (iii) the claim is not in excess of the applicable limits of an insurance policy to which this
5148 part applies;
5149 (iv) the insurer who issued the policy becomes an insolvent insurer; and
5150 (v) (A) the claimant or insured is a resident of this state at the time of the insured event;
5151 or
5152 (B) the claim is a first-party claim for damage to property that is permanently located in
5153 this state.
5154 (b) "Covered claim" does not include:
5155 (i) any amount awarded as punitive or exemplary damages or any amount due any
5156 reinsurer, insurer, insurance pool, or underwriting association, as subrogation recoveries or
5157 otherwise, nor does it include any supplementary payment obligation, including adjustment fees
5158 and expenses, attorneys' fees and expenses, court costs, interest, and bond premiums, prior to the
5159 appointment of a liquidator;
5160 (ii) any amount sought as a return of premium under a retrospective rating plan;
5161 (iii) any first-party claim by an insured if:
5162 (A) the insured's net worth exceeds $25,000,000 on December 31 of the year preceding
5163 the date the insurer becomes an insolvent insurer; and
5164 (B) the insured's net worth includes the aggregate net worth of the insured and all of its
5165 subsidiaries as calculated on a consolidated basis; or
5166 (iv) any first-party claims by an insured that is an affiliate of the insolvent insurer.
5167 [(4)] (5) "Insolvent insurer" means a member insurer that is placed under an order of
5168 liquidation by a court of competent jurisdiction with a finding of insolvency.
5169 [(5)] (6) "Member insurer" means any person who:
5170 (a) writes any kind of insurance to which this part applies under Section 31A-28-202 ,
5171 including the exchange of reciprocal or inter-insurance contracts; and

5172 (b) is licensed to transact insurance in this state.
5173 [(6)] (7) (a) "Net direct written premiums" means direct gross premiums written in this
5174 state on insurance policies that this part applies to, less return premiums and dividends paid or
5175 credited to policyholders on the direct business.
5176 (b) "Net direct written premiums" does not include premiums on contracts between
5177 insurers or reinsurers.
5178 [(7)] (8) "Personal lines policy" means an insurance policy issued to an individual that:
5179 (a) insures a motor vehicle used for personal purposes and not used in trade or business;
5180 or
5181 (b) insures a residential dwelling.
5182 [(8)] (9) "Residence" means, for entities other than a natural person, the state where the
5183 principal place of business of a claimant, insured, or policyholder is located at the time of the
5184 insured event.
5185 Section 77. Section 31A-28-205 is amended to read:
5186 31A-28-205. Creation of the association.
5187 (1) (a) The Utah Property and Casualty Insurance Guaranty Association shall continue as
5188 a nonprofit legal entity.
5189 (b) All member insurers of the association are, and remain, members of the association as
5190 a condition of their authority to transact insurance business in this state.
5191 (c) The association shall:
5192 (i) perform its functions under the plan of operation established and approved under
5193 Section 31A-28-209 ; and
5194 (ii) exercise its powers through a board of directors established under Section 31A-28-206 .
5195 (d) For the purposes of administration and assessment, the association shall maintain[: (i)
5196 a workers' compensation insurance] an account[;] known as the Property and Casualty Insurance
5197 Guaranty Association Account.
5198 [(ii) an automobile insurance account; and]
5199 [(iii) a miscellaneous account for all other insurance to which this part applies.]
5200 (e) (i) If as of May 6, 2002, the association has more than one account, the association
5201 shall consolidate all accounts into the Property and Casualty Insurance Guaranty Association
5202 Account.

5203 (ii) The Property and Casualty Insurance Guaranty Association Account:
5204 (A) succeeds to all funds held by the association in an account existing on May 6, 2002;
5205 and
5206 (B) is subject to any liability or obligation attributable to an account of the association
5207 existing on May 6, 2002.
5208 (2) (a) An insurer shall cease to be a member insurer on the day following the termination
5209 or expiration of the insurer's license to transact the kinds of insurance to which this part applies.
5210 (b) Notwithstanding Subsection (2)(a), the insurer shall remain liable as a member insurer
5211 for all obligations, including assessments levied:
5212 (i) before the termination or expiration of the insurer's license; and
5213 (ii) after the termination or expiration of the insurer's license but that relate to an insurer
5214 that became an insolvent insurer before the termination or expiration of the insurer's license.
5215 (3) Meetings or records of the association shall be open to the public upon a majority vote
5216 of the board of directors of the association.
5217 (4) The association is not an agency of the state.
5218 Section 78. Section 31A-28-207 is amended to read:
5219 31A-28-207. Powers and duties of the association.
5220 (1) (a) The association is obligated on the amount of the covered claims:
5221 (i) existing prior to the order of liquidation; and
5222 (ii) arising:
5223 (A) within 30 days after the order of liquidation; or
5224 (B) (I) before the policy expiration date if it is less than 30 days after the order of
5225 liquidation; or
5226 (II) before the insured replaces the policy or causes its cancellation, if the insured does so
5227 within 30 days of the order of liquidation.
5228 (b) The obligation under Subsection (1)(a) includes only that amount of each covered
5229 claim that is less than $300,000.
5230 (c) A claim under a personal lines policy for unearned premiums shall include only those
5231 claims that exceed $100 in amount, subject to a maximum of $10,000 per policy.
5232 (d) The association shall pay the full amount of any covered claim arising out of a workers'
5233 compensation policy. The association is not obligated to a policyholder or claimant in an amount

5234 in excess of the obligation of the insolvent insurer under the policy from which the claim arises.
5235 (e) Any obligation of the association to defend an insured on a covered claim shall cease:
5236 (i) upon payment by the association, as part of a settlement releasing the insured; or
5237 (ii) on a judgment, of the lesser of:
5238 (A) the association's covered claim obligation limit; or
5239 (B) the applicable policy limit.
5240 (f) The association:
5241 (i) is considered as the insurer only to the extent of its obligation on the covered claims,
5242 subject to the limitations provided in this part;
5243 (ii) has all the rights, duties, and obligations of the insolvent insurer as if the insurer had
5244 not yet become insolvent, including the right to pursue and retain salvage and subrogation
5245 recoverable on paid covered claim obligations; and
5246 (iii) may not be considered the insolvent insurer for any purpose relating to whether the
5247 association is subject to personal jurisdiction in the courts of any state.
5248 (g) (i) Notwithstanding any other provisions of this part, except in the case of a claim for
5249 benefits under workers' compensation coverage, any obligation of the association to or on behalf
5250 of a particular insured and its affiliates on covered claims shall cease when:
5251 (A) a total amount of $10,000,000 has been paid to or on behalf of the insured and its
5252 affiliates on covered claims by the association or a similar association; and
5253 (B) all payments on covered claims arise under one or more policies of a single insolvent
5254 insurer.
5255 (ii) The association may establish a plan to allocate the amounts payable by the association
5256 in a manner the association considers equitable if the association determines that:
5257 (A) there is more than one claimant asserting a covered claim against:
5258 (I) the association;
5259 (II) a similar association; or
5260 (III) a property or casualty insurance security fund in another state; and
5261 (B) all claims arise under the policy or policies of a single insolvent insurer.
5262 (h) The association shall [allocate claims paid and expenses incurred among the accounts
5263 established under Section 31A-28-205 separately, and] assess member insurers [separately for each
5264 account] amounts necessary to pay:

5265 (i) the obligations of the association under Subsection (1)(a), as limited by Subsections
5266 (1)(e) through (g), subsequent to the liquidation of an insolvent insurer;
5267 (ii) the expenses of handling covered claims subsequent to the liquidation of an insolvent
5268 insurer;
5269 (iii) the cost of examinations under Section 31A-28-214 ; and
5270 (iv) other expenses authorized by this part.
5271 (i) (i) The association shall:
5272 (A) investigate claims brought against the association; and
5273 (B) adjust, compromise, settle, and pay covered claims to the extent of the association's
5274 obligation and deny all other claims.
5275 (ii) The association is not bound by a settlement, release, compromise, waiver, or judgment
5276 executed or entered into by the insolvent insurer:
5277 (A) less than 12 months before the entry of an order of liquidation; or
5278 (B) more than 12 months before the entry of an order of liquidation if the settlement,
5279 release, compromise, waiver, or judgment is:
5280 (I) based on a claim that is not a covered claim; or
5281 (II) the result of fraud, collusion, default, or failure to defend.
5282 (iii) The association may assert all defenses available including defenses applicable to
5283 determining and enforcing the association's statutory rights and obligations to a claim.
5284 (iv) The association may appoint and direct legal counsel retained under a liability
5285 insurance policy for the defense of a covered claim.
5286 (j) (i) The association shall handle claims through:
5287 (A) its employees;
5288 (B) one or more insurers; or
5289 (C) other persons designated as servicing facilities.
5290 (ii) Designation of a servicing facility is subject to the approval of the commissioner, but
5291 this designation may be declined by a member insurer.
5292 (k) The association shall:
5293 (i) reimburse each servicing facility for:
5294 (A) obligations of the association paid by the facility; and
5295 (B) expenses incurred by the facility while handling claims on behalf of the association;

5296 and
5297 (ii) pay the other expenses of the association as authorized by this title.
5298 (2) The association may:
5299 (a) employ or retain the persons, including private legal counsel, necessary to handle
5300 claims and perform other duties of the association;
5301 (b) borrow funds necessary to implement the purposes of this part in accord with the plan
5302 of operation;
5303 (c) sue or be sued;
5304 (d) negotiate and become a party to the contracts necessary to carry out the purpose of this
5305 part;
5306 (e) perform any other acts necessary or proper to accomplish the purposes of this chapter;
5307 or
5308 (f) refund to the member insurers, in proportion to the contribution of each member insurer
5309 to [that] the association account, the amount that the assets of the account exceed the liabilities,
5310 if, at the end of any calendar year, the board of directors finds that:
5311 (i) the assets of the association in [any] the association account exceed the liabilities [of
5312 that account] as estimated by the board of directors for the coming year; and
5313 (ii) the excess assets are not needed for other purposes of this part.
5314 (3) For a refund due to a member insurer for an assessment that has been offset against
5315 premium taxes, the association may pay the amount of the refund directly to the State Tax
5316 Commission.
5317 (4) The courts of the state shall have exclusive jurisdiction over all actions brought against
5318 the association that relate to or arise out of this part.
5319 (5) (a) Any person recovering under this part is considered to have assigned that person's
5320 rights under the policy to the association to the extent of that person's recovery from the
5321 association.
5322 (b) Every insured or claimant seeking the protection of this chapter shall cooperate with
5323 the association to the same extent the person would have been required to cooperate with the
5324 insolvent insurer.
5325 (c) Except as provided in Subsection (5)(e), the association has no cause of action against
5326 the insured of the insolvent insurer for any sums the association has paid out except those causes

5327 of action the insolvent insurer would have had if the sums had been paid by the insolvent insurer.
5328 (d) When an insolvent insurer operates on a plan with assessment liability, payments of
5329 claims of the association do not reduce the liability for unpaid assessments of the insurer to:
5330 (i) the receiver;
5331 (ii) liquidator; or
5332 (iii) statutory successor.
5333 (e) The association may recover from the following persons the amount of any "covered
5334 claim" paid on behalf of that person pursuant to this part:
5335 (i) any insured whose:
5336 (A) net worth on December 31 of the year next preceding the date the insurer becomes
5337 insolvent, exceeds $25,000,000; and
5338 (B) liability obligations to other persons are satisfied in whole or in part by payments made
5339 under this part; and
5340 (ii) any person:
5341 (A) who is an affiliate of the insolvent insurer; and
5342 (B) whose liability obligations to other persons are satisfied in whole or in part by
5343 payments made under this part.
5344 (f) (i) The receiver, liquidator, or statutory successor of an insolvent insurer is bound by:
5345 (A) a determination of a covered claim eligibility under this part; and
5346 (B) a settlement of a covered claim by the association or a similar organization in another
5347 state.
5348 (ii) The court having jurisdiction shall grant settled claims a priority equal to that which
5349 the claimant would have been entitled to in the absence of this part, against the assets of the
5350 insolvent insurer.
5351 (g) The association or any similar organization in another state shall:
5352 (i) be recognized as a claimant in the liquidation of an insolvent insurer for any amounts
5353 paid on a covered claim obligation as determined under this part or a similar law in another state;
5354 and
5355 (ii) receive dividends or distributions at the priority set forth in Section 31A-27-335 .
5356 (h) (i) The association shall periodically file with the receiver or liquidator of the insolvent
5357 insurer:

5358 (A) statements of the covered claims paid by the association; and
5359 (B) estimates of anticipated claims on the association.
5360 (ii) The filing under this Subsection (5)(h) preserves the rights of the association for claims
5361 against the assets of the insolvent insurer.
5362 (i) The association need not pay any claim filed after the final date under Sections
5363 31A-27-315 and 31A-27-328 , or similar statutes of other states, for filing the same type of claim
5364 with the liquidator of the insolvent insurer.
5365 Section 79. Section 31A-28-208 is amended to read:
5366 31A-28-208. Assessments.
5367 (1) (a) To provide the funds necessary to carry out the powers and duties of the association,
5368 the board of directors shall assess the member insurers[, separately for each account established
5369 under Section 31A-28-205 ,] at the time and in the amount the board finds necessary.
5370 (b) An assessment under this section:
5371 (i) is due not less than 30 days after written notice to the member insurers; and
5372 (ii) accrues interest to the extent unpaid after the due date at the greater of:
5373 (A) 10% per annum; or
5374 (B) the then legal rate of interest provided in Section 15-1-1 .
5375 [(c) The association shall allocate claims and incurred expenses among the accounts.]
5376 (2) An assessment [for each account] is to be made in the amount necessary to carry out
5377 the powers and duties of the association under Section 31A-28-207 for an insolvent insurer.
5378 (3) An assessment against a member insurer [for each account] is in the proportion that
5379 the net direct written premiums of the member insurer for the preceding calendar year on the kinds
5380 of insurance [in the account] for which this part applies bears to the net direct written premiums
5381 of all member insurers for the preceding calendar year on [all] the kinds of insurance [in the
5382 account] for which this part applies.
5383 (4) A member insurer may not be assessed in any year [on any account] for an amount
5384 greater than 2% of that member insurer's net direct written premiums for the preceding calendar
5385 year on the kinds of insurance [in the account] for which this part applies.
5386 (5) If the maximum assessment, together with the other assets of the association in [any]
5387 the association account, do not provide in any one year [in any account] an amount sufficient to
5388 make all necessary payments [from that account], the funds available shall be prorated and the

5389 unpaid portion shall be paid as soon as funds become available.
5390 (6) The association may exempt or defer, in whole or in part, the assessment of any
5391 member insurer, if the assessment would cause the member insurer's financial statement to reflect
5392 amounts of capital or surplus less than the minimum amounts required for a certificate of authority
5393 by any jurisdiction in which the member insurer is authorized to transact insurance.
5394 (7) Each member insurer may set off against any assessment authorized payments made
5395 on covered claims and expenses incurred in the payment of the claims by the member insurer, if
5396 they are chargeable to the association account [for which the assessment is made].
5397 Section 80. Section 31A-28-222 is amended to read:
5398 31A-28-222. Application of amendments.
5399 (1) The amendments in [this act] Chapter 363, Laws of Utah 2001, shall become effective
5400 on April 30, 2001 and apply to the association's obligations under policies of insolvent insurers as
5401 they exist on or after April [20] 30, 2001.
5402 (2) Notwithstanding Subsection (1), the amendments to Subsections 31A-28-203 (3) and
5403 31A-28-207 (1)(a) in Chapter 363, Laws of Utah 2001, that add coverage for unearned premium
5404 claims shall apply only to insurers that become insolvent after [the effective date] April 30, 2001.
5405 Section 81. Section 31A-29-113 is amended to read:
5406 31A-29-113. Benefits -- Additional types of pool insurance -- Preexisting conditions
5407 -- Waiver -- Maximum benefits.
5408 (1) (a) The pool policy shall pay for eligible expenses rendered or furnished for the
5409 diagnoses or treatment of illness or injury [which] that:
5410 (i) exceed the deductible and copayment amounts applicable under Section 31A-29-114 ;
5411 and [which]
5412 (ii) are not otherwise limited or excluded.
5413 (b) Eligible expenses are the charges for the health care services and items rendered during
5414 times for which benefits are extended under the pool policy.
5415 (2) The coverage to be issued by the pool, its schedule of benefits, exclusions, and other
5416 limitations shall be established by the board.
5417 (3) The commissioner shall approve the benefit package developed by the board to ensure
5418 its compliance with this chapter.
5419 (4) The pool shall offer at least one benefit plan through a managed care program as

5420 authorized under Section 31A-29-106 .
5421 (5) This chapter [shall] may not be construed to prohibit the pool from issuing additional
5422 types of health insurance policies with different types of benefits which in the opinion of the board
5423 may be of benefit to the citizens of Utah.
5424 (6) The board shall design and require an administrator to employ cost containment
5425 measures and requirements including preadmission certification and concurrent inpatient review
5426 for the purpose of making the pool more cost effective. The provisions of Sections 31A-22-617
5427 and 31A-22-618 of this title do not apply to coverage issued under this chapter.
5428 (7) A pool policy may contain provisions under which coverage is excluded during a
5429 six-month period following the effective date of plan coverage as to a given individual for a
5430 preexisting condition, as long as either of the following exists:
5431 (a) the condition has manifested itself within a period of six months before the effective
5432 date of coverage in such a manner as would cause an ordinary, prudent person to seek diagnosis
5433 or treatment; or
5434 (b) medical advice or treatment was recommended or received for the condition within a
5435 period of six months before the effective date of coverage.
5436 (8) A pool policy may exclude coverage for pregnancies for ten months following the
5437 effective date of coverage[.], unless the individual is eligible to receive credit for previous
5438 coverage under the Health Insurance Portability and Accountability Act, P. L. 104-91, 110 Stat.
5439 1962.
5440 (9) (a) [The] For individuals changing from individual health insurance, as defined in
5441 Subsection 31A-29-103 (5), to the health insurance pool, the preexisting condition exclusion
5442 described in Subsection (7) shall be waived to the extent to which similar exclusions have been
5443 satisfied under any prior health insurance coverage:
5444 (i) which was involuntarily terminated, other than for nonpayment of premium, if the
5445 application for pool coverage is made not later than [31] 63 days following the involuntary
5446 termination; or
5447 (ii) whose premium rate exceeds the rate of the pool for equal or lesser benefits.
5448 (b) If Subsection (9)(a) applies, coverage in the pool shall be effective from the date on
5449 which the prior coverage was terminated.
5450 (10) (a) The pool may not apply any preexisting condition exclusion to an individual that

5451 is changing group health coverage to the health insurance pool if:
5452 (i) the individual applies not later than 63 days following the date of involuntary
5453 termination from group health coverage;
5454 (ii) the individual has at least 18 months of creditable coverage as of the date the
5455 individual seeks coverage from:
5456 (A) the health insurance pool; or
5457 (B) an individual health plan;
5458 (iii) the individual's most recent prior creditable coverage was under:
5459 (A) a group health plan;
5460 (B) government plan; or
5461 (C) a church plan;
5462 (iv) the individual is not eligible for coverage under:
5463 (A) a group health plan;
5464 (B) Part A or Part B of Title XVIII of the Social Security Act; or
5465 (C) a state plan under Title XIX of the Social Security Act;
5466 (v) the individual does not have other health insurance coverage;
5467 (vi) the individual's most recent coverage was not terminated because of:
5468 (A) nonpayment of premiums; or
5469 (B) fraud;
5470 (vii) the individual has been offered the option of continuing coverage under:
5471 (A) a continuation provision; or
5472 (B) a similar state extension program; and
5473 (viii) the individual's premium rate exceeds the rate of the pool for equal or lesser
5474 coverage.
5475 (b) If Subsection (10)(a) applies, coverage in the pool shall be effective from the date on
5476 which the prior coverage was terminated.
5477 [(10)] (11) The board shall establish a policy allowing for the waiver of the preexisting
5478 condition exclusion set forth in Subsection (7) for coverage of medically necessary outpatient
5479 medical care.
5480 [(11)] (12) Benefits available under the pool may not exceed $1,000,000 paid to or on
5481 behalf of any person.

5482 Section 82. Section 31A-30-101 is amended to read:
5483 CHAPTER 30. INDIVIDUAL, SMALL, AND GROUP EMPLOYER HEALTH
5484 INSURANCE ACT
5485 31A-30-101. Title.
5486 This chapter [shall be] is known as the "Individual [and], Small, and Group Employer
5487 Health Insurance Act."
5488 Section 83. Section 31A-30-103 is amended to read:
5489 31A-30-103. Definitions.
5490 As used in this [part] chapter:
5491 (1) "Actuarial certification" means a written statement by a member of the American
5492 Academy of Actuaries or other individual approved by the commissioner that a covered carrier is
5493 in compliance with [the provisions of] Section 31A-30-106 , based upon the examination of the
5494 covered carrier, including review of the appropriate records and of the actuarial assumptions and
5495 methods [utilized] used by the covered carrier in establishing premium rates for applicable health
5496 benefit plans.
5497 (2) "Affiliate" or "affiliated" means any entity or person who directly or indirectly through
5498 one or more intermediaries, controls or is controlled by, or is under common control with, a
5499 specified entity or person.
5500 (3) "Base premium rate" means, for each class of business as to a rating period, the lowest
5501 premium rate charged or that could have been charged under a rating system for that class of
5502 business by the covered carrier to covered insureds with similar case characteristics for health
5503 benefit plans with the same or similar coverage.
5504 (4) "Basic coverage" means the coverage provided in the Basic Health Care Plan
5505 established by the Health Benefit Plan Committee under Subsection 31A-22-613.5 (6).
5506 (5) "Carrier" means any person or entity that provides health insurance in this state
5507 including:
5508 (a) an insurance company[,];
5509 (b) a prepaid hospital or medical care plan[,];
5510 (c) a health maintenance organization[,];
5511 (d) a multiple employer welfare arrangement[,]; and
5512 (e) any other person or entity providing a health insurance plan under this title.

5513 (6) (a) Except as provided in Subsection (6)(b), "case characteristics" means demographic
5514 or other objective characteristics of a covered insured that are considered by the carrier in
5515 determining premium rates for the covered insured. [However,]
5516 (b) "Case characteristics" does not include:
5517 (i) duration of coverage since the policy was issued[,];
5518 (ii) claim experience[,]; and
5519 (iii) health status[, are not case characteristics for the purposes of this chapter].
5520 (7) "Class of business" means all or a separate grouping of covered insureds established
5521 under Section 31A-30-105 .
5522 (8) "Conversion policy" means a policy providing coverage under the conversion
5523 provisions required in [Title 31A,] Chapter 22, Part VII, Group Accident and Health Insurance.
5524 (9) "Covered carrier" means any individual carrier or small employer carrier subject to this
5525 [act] chapter.
5526 (10) "Covered individual" means any individual who is covered under a health benefit plan
5527 subject to this [act] chapter.
5528 (11) "Covered insureds" means small employers and individuals who are issued a health
5529 benefit plan that is subject to this [act] chapter.
5530 (12) "Dependent" means [individuals] an individual to the extent [they are] that the
5531 individual is defined to be a dependent by:
5532 (a) the health benefit plan covering the covered individual; and
5533 (b) [the provisions of] Chapter 22, Part VI, [Disability] Accident and Health Insurance.
5534 [(13) (a) "Eligible employee" means:]
5535 [(i) an employee who works on a full-time basis and has a normal work week of 30 or
5536 more hours, and includes a sole proprietor, and a partner of a partnership, if the sole proprietor or
5537 partner is included as an employee under a health benefit plan of a small employer; or]
5538 [(ii) an independent contractor if the independent contractor is included under a health
5539 benefit plan of a small employer.]
5540 [(b) "Eligible employee" does not include:]
5541 [(i) an employee who works on a part-time, temporary, or substitute basis; or]
5542 [(ii) the spouse or dependents of the employer.]
5543 [(14)] (13) "Established geographic service area" means a geographical area approved by

5544 the commissioner within which the carrier is authorized to provide coverage.
5545 [(15) "Health benefit plan" means any certificate under a group health insurance policy,
5546 or any health insurance policy, except that health benefit plan does not include coverage only for:]
5547 [(a) accident;]
5548 [(b) dental;]
5549 [(c) vision;]
5550 [(d) Medicare supplement;]
5551 [(e) long-term care; or]
5552 [(f) the following when offered and marketed as supplemental health insurance and not
5553 as a substitute for hospital or medical expense insurance or major medical expense insurance:]
5554 [(i) specified disease;]
5555 [(ii) hospital confinement indemnity; or]
5556 [(iii) limited benefit plan.]
5557 [(16)] (14) "Index rate" means, for each class of business as to a rating period for covered
5558 insureds with similar case characteristics, the arithmetic average of the applicable base premium
5559 rate and the corresponding highest premium rate.
5560 [(17)] (15) "Individual carrier" means a carrier that [offers] provides coverage on an
5561 individual basis through a health benefit [plans covering insureds in this state under individual
5562 policies.] plan regardless of whether:
5563 (a) coverage is offered through:
5564 (i) an association;
5565 (ii) a trust;
5566 (iii) a discretionary group; or
5567 (iv) other similar groups; or
5568 (b) the policy or contract is situated out-of-state.
5569 [(18)] (16) "Individual conversion policy" means a conversion policy issued [by a health
5570 benefit plan as defined in Subsection (15)] to:
5571 (a) an individual; or
5572 (b) an individual with a family.
5573 [(19)] (17) "Individual coverage count" means the number of natural persons covered
5574 under a carrier's health benefit [plans] products that are individual policies.

5575 [(20)] (18) "Individual enrollment cap" means the percentage set by the commissioner in
5576 accordance with Section 31A-30-110 .
5577 [(21)] (19) "New business premium rate" means, for each class of business as to a rating
5578 period, the lowest premium rate charged or offered, or that could have been charged or offered, by
5579 the carrier to covered insureds with similar case characteristics for newly issued health benefit
5580 plans with the same or similar coverage.
5581 (20) "Preexisting condition" is as defined in Section 31A-1-301 .
5582 [(22)] (21) "Premium" means all monies paid by covered insureds and covered individuals
5583 as a condition of receiving coverage from a covered carrier, including any fees or other
5584 contributions associated with the health benefit plan.
5585 [(23)] (22) (a) "Rating period" means the calendar period for which premium rates
5586 established by a covered carrier are assumed to be in effect, as determined by the carrier.
5587 [However, a]
5588 (b) A covered carrier may not have:
5589 (i) more than one rating period in any calendar month[,]; and
5590 (ii) no more than 12 rating periods in any calendar year.
5591 [(24)] (23) "Resident" means an individual who has resided in this state for at least 12
5592 consecutive months immediately preceding the date of application.
5593 [(25) "Small employer" means any person, firm, corporation, partnership, or association
5594 actively engaged in business that, on at least 50% of its working days during the preceding
5595 calendar quarter, employed at least two and no more than 50 eligible employees, the majority of
5596 whom were employed within this state. In determining the number of eligible employees,
5597 companies that are affiliated or that are eligible to file a combined tax return for purposes of state
5598 taxation are considered one employer.]
5599 (24) "Short-term limited duration insurance" means a health benefit product that:
5600 (a) is not renewable; and
5601 (b) has an expiration date specified in the contract that is less than 364 days after the date
5602 the plan became effective.
5603 [(26)] (25) "Small employer carrier" means a carrier that [offers] provides health benefit
5604 plans covering eligible employees of one or more small employers in this state[.], regardless of
5605 whether:

5606 (a) coverage is offered through:
5607 (i) an association;
5608 (ii) trust;
5609 (iii) discretionary group; or
5610 (iv) other similar grouping; or
5611 (b) the policy or contract is situated out-of-state.
5612 [(27)] (26) "Uninsurable" means an individual who:
5613 (a) is eligible for the Comprehensive Health Insurance Pool coverage under the
5614 underwriting criteria established in Subsection 31A-29-111 (4); or
5615 (b) (i) is issued a certificate for coverage under Subsection 31A-30-108 (3); and
5616 (ii) has a condition of health that does not meet consistently applied underwriting criteria
5617 as established by the commissioner in accordance with Subsections 31A-30-106 (1)[(k)](i) and [(l)]
5618 (j) for which coverage the applicant is applying.
5619 [(28)] (27) "Uninsurable percentage" for a given calendar year equals UC/CI where, for
5620 purposes of this formula:
5621 (a) "UC" means the number of uninsurable individuals who were issued an individual
5622 policy on or after July 1, 1997; and
5623 (b) "CI" means the carrier's individual coverage count as of December 31 of the preceding
5624 year.
5625 Section 84. Section 31A-30-104 is amended to read:
5626 31A-30-104. Applicability and scope.
5627 (1) This chapter applies to any:
5628 (a) health benefit plan that provides coverage to:
5629 (i) individuals;
5630 (ii) small [employer groups] employers; or
5631 (iii) both Subsections (1)(a)(i) and (ii); or
5632 (b) individual conversion policy for purposes of Sections 31A-30-106.5 and [ 31A-30-107 ]
5633 31A-30-107.5 .
5634 (2) This chapter applies to a health benefit plan that provides coverage to small employers
5635 or individuals regardless of:
5636 (a) whether the contract is issued to:

5637 (i) an association;
5638 (ii) a trust;
5639 (iii) a discretionary group; or
5640 (iv) other similar grouping; or
5641 (b) the situs of delivery of the policy or contract.
5642 (3) This chapter does not apply to:
5643 (a) a large employer health benefit plan; or
5644 (b) short-term limited duration health insurance.
5645 [(2)] (4) (a) Except as provided in Subsection [(2)] (4)(b), for the purposes of this
5646 chapter[,]:
5647 (i) carriers that are affiliated companies or that are eligible to file a consolidated tax return
5648 shall be treated as one carrier; and
5649 (ii) any restrictions or limitations imposed by this chapter shall apply as if all health benefit
5650 plans delivered or issued for delivery to covered insureds in this state by the affiliated carriers were
5651 issued by one carrier.
5652 (b) [An] Upon a finding of the commissioner, an affiliated carrier that is a health
5653 maintenance organization having a certificate of authority under this title may be considered to be
5654 a separate carrier for the purposes of this chapter.
5655 (c) Unless otherwise authorized by the commissioner, a covered carrier may not enter into
5656 one or more ceding arrangements with respect to health benefit plans delivered or issued for
5657 delivery to covered insureds in this state if [such] the ceding arrangements would result in less than
5658 50% of the insurance obligation or risk for [such] the health benefit plans being retained by the
5659 ceding carrier.
5660 (d) [The provisions of] Section 31A-22-1201 [apply] applies if a covered carrier cedes or
5661 assumes all of the insurance obligation or risk with respect to one or more health benefit plans
5662 delivered or issued for delivery to covered insureds in this state.
5663 [(3)] (5) (a) A Taft Hartley trust created in accordance with Section 302(c)(5) of the
5664 Federal Labor Management Relations Act, or a carrier with the written authorization of such a
5665 trust, may make a written request to the commissioner for a waiver from the application of any of
5666 the provisions of Subsection 31A-30-106 (1) with respect to a health benefit plan provided to the
5667 trust.

5668 (b) The commissioner may grant [such] a trust or carrier described in Subsection (5)(a) a
5669 waiver if the commissioner finds that application with respect to the trust would:
5670 (i) have a substantial adverse effect on the participants and beneficiaries of the trust; and
5671 (ii) require significant modifications to one or more collective bargaining arrangements
5672 under which the trust is established or maintained.
5673 (c) A waiver granted under this Subsection [(3)] (5) may not apply to an individual if the
5674 person participates in [such] a Taft Hartley trust as an associate member of any employee
5675 organization.
5676 [(4) A carrier who offers individual and small employer health benefit plans may use the
5677 small employer index rates to establish the rate limitations for individual policies, even if some
5678 individual policies are rated below the small employer base rate.]
5679 [(5)] (6) Sections 31A-30-106 , 31A-30-106.5 , 31A-30-106.7 , 31A-30-107 , 31A-30-108 ,
5680 and 31A-30-111 apply to:
5681 (a) any insurer engaging in the business of insurance related to the risk of a small employer
5682 for medical, surgical, hospital, or ancillary health care expenses of [its] the small employer's
5683 employees provided as an employee benefit; and
5684 (b) any contract of an insurer, other than a workers' compensation policy, related to the risk
5685 of a small employer for medical, surgical, hospital, or ancillary health care expenses of [its] the
5686 small employer's employees provided as an employee benefit.
5687 [(6)] (7) The commissioner may make rules requiring that the marketing practices be
5688 consistent with this chapter for:
5689 (a) [an insurer and its] a small employer carrier;
5690 (b) a small employer carrier's agent;
5691 [(b)] (c) an insurance broker; and
5692 [(c)] (d) an insurance consultant.
5693 Section 85. Section 31A-30-106 is amended to read:
5694 31A-30-106. Premiums -- Rating restrictions -- Disclosure.
5695 (1) Premium rates for health benefit plans under this chapter are subject to the [following]
5696 provisions[:] of this Subsection (1).
5697 (a) The index rate for a rating period for any class of business [shall] may not exceed the
5698 index rate for any other class of business by more than 20%.

5699 (b) (i) For a class of business, the premium rates charged during a rating period to covered
5700 insureds with similar case characteristics for the same or similar coverage, or the rates that could
5701 be charged to such employers under the rating system for that class of business, may not vary from
5702 the index rate by more than 30% of the index rate, except as provided in Section 31A-22-625 .
5703 (ii) A covered carrier that offers individual and small employer health benefit plans may
5704 use the small employer index rates to establish the rate limitations for individual policies, even if
5705 some individual policies are rated below the small employer base rate.
5706 (c) The percentage increase in the premium rate charged to a covered insured for a new
5707 rating period, adjusted pro rata for rating periods less than a year, may not exceed the sum of the
5708 following:
5709 (i) the percentage change in the new business premium rate measured from the first day
5710 of the prior rating period to the first day of the new rating period[. In the case of a health benefit
5711 plan into which the covered carrier is no longer enrolling new covered insureds, the covered carrier
5712 shall use the percentage change in the base premium rate, provided that such change does not
5713 exceed, on a percentage basis, the change in the new business premium rate for the most similar
5714 health benefit plan into which the covered carrier is actively enrolling new covered insureds];
5715 (ii) any adjustment, not to exceed 15% annually and adjusted pro rata for rating periods
5716 of less than one year, due to the claim experience, health status, or duration of coverage of the
5717 covered individuals as determined from the covered carrier's rate manual for the class of business,
5718 except as provided in Section 31A-22-625 ; and
5719 (iii) any adjustment due to change in coverage or change in the case characteristics of the
5720 covered insured as determined from the covered carrier's rate manual for the class of business.
5721 (d) (i) Adjustments in rates for claims experience, health status, and duration from issue
5722 may not be charged to individual employees or dependents.
5723 (ii) Any [such] adjustment described in Subsection (1)(d)(i) shall be applied uniformly to
5724 the rates charged for all employees and dependents of the small employer.
5725 (e) A covered carrier may [utilize] use industry as a case characteristic in establishing
5726 premium rates, provided that the highest rate factor associated with any industry classification does
5727 not exceed the lowest rate factor associated with any industry classification by more than 15%.
5728 [(f) In the case of health benefit plans issued prior to July 1, 1994, a premium rate for a
5729 rating period, adjusted pro rata for rating period of less than a year, may exceed the ranges under

5730 Subsections (1)(a) and (b) until July 1, 1996. In that case, the percentage increase in the premium
5731 rate charged to a covered insured for a new rating period may not exceed the sum of the
5732 following:]
5733 [(i) the percentage change in the new business premium rate measured from the first day
5734 of the prior rating period to the first day of the new rating period. In the case where a covered
5735 carrier is not issuing any new policies the covered carrier shall use the percentage change in the
5736 base premium rate, provided that such change does not exceed, on a percentage basis, the change
5737 in the new business premium rate for the most similar health benefit plan into which the covered
5738 carrier is actively enrolling new covered insureds; and]
5739 [(ii) any adjustment due to change in coverage or change in the case characteristics of the
5740 covered insured as determined from the carrier's rate manual for the class of business.]
5741 [(g) The commissioner may grant a one-year extension of the July 1, 1996, deadline
5742 specified in Subsection (1)(f) if the commissioner determines that an extension is needed to avoid
5743 significant disruption of the health insurance market subject to this chapter or to insure the
5744 financial stability of carriers in the market.]
5745 [(h)] (f) (i) Covered carriers shall apply rating factors, including case characteristics,
5746 consistently with respect to all covered insureds in a class of business.
5747 (ii) Rating factors shall produce premiums for identical groups [which] that:
5748 (A) differ only by the amounts attributable to plan design; and
5749 (B) do not reflect differences due to the nature of the groups assumed to select particular
5750 health benefit [plans] products.
5751 [(ii)] (iii) A covered carrier shall treat all health benefit plans issued or renewed in the
5752 same calendar month as having the same rating period.
5753 [(i)] (g) For the purposes of this Subsection (1), a health benefit plan that [utilizes] uses
5754 a restricted network provision [shall] may not be considered similar coverage to a health benefit
5755 plan that does not [utilize] use such a network, provided that [utilization] use of the restricted
5756 network provision results in substantial difference in claims costs.
5757 [(j)] (h) The covered carrier [shall] may not, without prior approval of the commissioner,
5758 use case characteristics other than:
5759 (i) age[,];
5760 (ii) gender[,];

5761 (iii) industry[,];
5762 (iv) geographic area[,];
5763 (v) family composition[,]; and
5764 (vi) group size.
5765 [(k)] (i) (i) The commissioner may establish [regulations] rules in accordance with Title
5766 63, Chapter 46a, Utah Administrative Rulemaking Act, to:
5767 (A) implement [the provisions of] this chapter; and
5768 (B) to assure that rating practices used by covered carriers are consistent with the purposes
5769 of this chapter[, including regulations].
5770 (ii) The rules described in Subsection (1)(i)(i) may include rules that:
5771 [(i)] (A) assure that differences in rates charged for health benefit [plans] products by
5772 covered carriers are reasonable and reflect objective differences in plan design, [(]not including
5773 differences due to the nature of the groups assumed to select particular health benefit [plans)]
5774 products;
5775 [(ii)] (B) prescribe the manner in which case characteristics may be used by covered
5776 carriers;
5777 [(iii) require insurers, as a condition of transacting business with regard to health care
5778 insurance policies after January 1, 1995, to reissue a health care insurance policy to any
5779 policyholder whose health care insurance policy has, after January 1, 1994, been terminated by the
5780 insurer for reasons other than those listed in Subsections 31A-30-107 (1)(a) through (1)(e) or not
5781 renewed by the insurer after January 1, 1994. The commissioner may prescribe terms for the
5782 reissue of coverage that the commissioner determines are reasonable and necessary to provide
5783 continuity of coverage to insured individuals;]
5784 [(iv)] (C) implement the individual enrollment cap under Section 31A-30-110 , including
5785 specifying:
5786 (I) the contents for certification[,];
5787 (II) auditing standards[,];
5788 (III) underwriting criteria for uninsurable classification[,]; and
5789 (IV) limitations on high risk enrollees under Section 31A-30-111 ; and
5790 [(v)] (D) establish the individual enrollment cap under Subsection 31A-30-110 (1).
5791 [(l)] (j) Before implementing regulations for underwriting criteria for uninsurable

5792 classification, the commissioner shall contract with an independent consulting organization to
5793 develop industry-wide underwriting criteria for uninsurability based on an individual's expected
5794 claims under open enrollment coverage exceeding 200% of that expected for a standard insurable
5795 individual with the same case characteristics.
5796 [(m)] (k) The commissioner shall revise rules issued for Sections 31A-22-602 and
5797 31A-22-605 regarding individual accident and health policy rates to allow rating in accordance
5798 with this section.
5799 (2) For purposes of Subsection (1)(c)(i), if a health benefit product into which the covered
5800 carrier is no longer enrolling new covered insureds, the covered carrier shall use the percentage
5801 change in the base premium rate, provided that the change does not exceed, on a percentage basis,
5802 the change in the new business premium rate for the most similar health benefit product into which
5803 the covered carrier is actively enrolling new covered insureds.
5804 [(2)] (3) (a) A covered carrier [shall] may not transfer a covered insured involuntarily into
5805 or out of a class of business.
5806 (b) A covered carrier [shall] may not offer to transfer a covered insured into or out of a
5807 class of business unless [such] the offer is made to transfer all covered insureds in the class of
5808 business without regard:
5809 (i) to case characteristics[,];
5810 (ii) claim experience[,];
5811 (iii) health status[,]; or
5812 (iv) duration of coverage since issue.
5813 [(3) Upon offering for sale any health benefit plan to a small employer, or individual, the
5814 covered carrier shall, as part of its solicitation and sales materials, disclose or make available all
5815 of the following:]
5816 [(a) the extent to which premium rates for a specified covered insured are established or
5817 adjusted in part based on the actual or expected variation in claims costs or actual or expected
5818 variation in health status of covered individuals;]
5819 [(b) provisions concerning the covered carrier's right to change premium rates and the
5820 factors other than claim experience which affect changes in premium rates;]
5821 [(c) provisions relating to renewability of policies and contracts; and]
5822 [(d) provisions relating to any preexisting condition provision.]

5823 (4) (a) Each covered carrier shall maintain at [its] the covered carrier's principal place of
5824 business a complete and detailed description of its rating practices and renewal underwriting
5825 practices, including information and documentation that demonstrate that [its] the covered carrier's
5826 rating methods and practices are:
5827 (i) based upon commonly accepted actuarial assumptions; and [are]
5828 (ii) in accordance with sound actuarial principles.
5829 (b) (i) Each covered carrier shall file with the commissioner, on or before March 15 of
5830 each year, in a form, manner, and containing such information as prescribed by the commissioner,
5831 an actuarial certification certifying that:
5832 (A) the covered carrier is in compliance with this chapter; and [that]
5833 (B) the rating methods of the covered carrier are actuarially sound.
5834 (ii) A copy of [that] the certification required by Subsection (4)(b)(i) shall be retained by
5835 the covered carrier at [its] the covered carrier's principal place of business.
5836 (c) A covered carrier shall make the information and documentation described in this
5837 Subsection (4) available to the commissioner upon request.
5838 (d) Records submitted to the commissioner under [the provisions of] this section shall be
5839 maintained by the commissioner as protected records under Title 63, Chapter 2, Government
5840 Records Access and Management Act.
5841 Section 86. Section 31A-30-106.7 is amended to read:
5842 31A-30-106.7. Surcharge for groups changing carriers.
5843 [If] (1) (a) Except as provided in Subsection (1)(b), if prior notice is given, a covered
5844 carrier may impose upon a small group that changes coverage to that carrier from another carrier
5845 a one-time surcharge of up to 25% of the annualized premium that the carrier could otherwise
5846 charge under Section 31A-30-106 [, unless the change in carriers occurs on the annual policy
5847 renewal date of the coverage being replaced].
5848 (b) A covered carrier may not impose the surcharge described in Subsection (1)(a) if:
5849 (i) the change in carriers occurs on the anniversary of the plan year, as defined in Section
5850 31A-1-301 ;
5851 (ii) the previous coverage was terminated under Subsection 31A-30-107 (3)(e); or
5852 (iii) employees from an existing group form a new business.
5853 (2) A covered carrier may not impose the surcharge described in Subsection (1) if the offer

5854 to cover the group occurs at a time other than the anniversary of the plan year because:
5855 (a) (i) the application for coverage is made prior to the anniversary date in accordance with
5856 the covered carrier's published policies; and
5857 (ii) the offer to cover the group is not issued until after the anniversary date; or
5858 (b) (i) the application for coverage is made prior to the anniversary date in accordance with
5859 the covered carrier's published policies; and
5860 (ii) additional underwriting or rating information requested by the covered carrier is not
5861 received until after the anniversary date.
5862 (3) If a covered carrier chooses to apply a surcharge under Subsection (1), the application
5863 of the surcharge and the criteria for incurring or avoiding the surcharge shall be clearly stated in
5864 the:
5865 (a) written application materials provided to the applicant at the time of application; and
5866 (b) written producer guidelines.
5867 (4) The commissioner shall adopt rules in accordance with Title 63, Chapter 46a, Utah
5868 Administrative Rulemaking Act, to ensure compliance with this section.
5869 Section 87. Section 31A-30-107 is amended to read:
5870 31A-30-107. Renewal -- Limitations -- Exclusions.
5871 (1) [A] Except as otherwise provided in this section, a small employer health benefit plan
5872 [subject to this chapter] is renewable and continues in force:
5873 (a) with respect to all [covered individuals] eligible employees and dependents; and
5874 (b) at the option of the [covered insured except in any of the following cases:] plan
5875 sponsor.
5876 [(a) nonpayment of the required premiums;]
5877 [(b) fraud or misrepresentation of:]
5878 [(i) the employer; or]
5879 [(ii) with respect to coverage of individual insureds, the insureds or their representatives;]
5880 [(c) noncompliance with the covered carrier's minimum participation requirements;]
5881 [(d) noncompliance with the covered carrier's employer contribution requirements;]
5882 [(e) repeated misuse of a provider network provision; or]
5883 [(f) an election by the covered carrier to nonrenew all of its health benefit plans issued to
5884 covered insureds in this state, in which case the covered carrier shall:]

5885 [(i) provide advanced notice of its decision under this Subsection (1) to the commissioner
5886 in each state in which it is licensed;]
5887 [(ii) provide notice of the decision not to renew coverage to all affected covered insureds
5888 and to the commissioner in each state in which an affected insured individual is known to reside;
5889 and]
5890 [(iii) provide a plan of orderly withdrawal as required by Section 31A-4-115 .]
5891 [(2) Notice under Subsection (1) shall be provided:]
5892 [(a) to affected covered insureds at least 180 days prior to nonrenewal of any health benefit
5893 plans by the covered carrier; and]
5894 [(b) to the commissioner at least three working days prior to the notice to the affected
5895 covered insureds.]
5896 [(3) A covered carrier that elects not to renew a health benefit plan under Subsection (1)(f)
5897 is prohibited from writing new business subject to this chapter in this state for a period of five
5898 years from the date of notice to the commissioner.]
5899 [(4) When a covered carrier is doing business subject to this chapter in one service area
5900 of this state, Subsections (1) through (3) apply only to the covered carrier's operations in that
5901 service area.]
5902 [(5) Health benefit plans covering covered insureds shall comply with Subsections (5)(a)
5903 and (b).]
5904 [(a) (i) A health benefit plan may not deny, exclude, or limit benefits for a covered
5905 individual for losses incurred more than 12 months, or 18 months in the case of a late enrollee, as
5906 defined in P.L. 104-191, 110 Stat. 1940, Sec. 101, following the effective date of the individual's
5907 coverage due to a preexisting condition.]
5908 [(ii) A health benefit plan may not define a preexisting condition more restrictively than:]
5909 [(A) a condition for which medical advice, diagnosis, care, or treatment was recommended
5910 or received during the six months immediately preceding the earlier of:]
5911 [(I) the enrollment date; or]
5912 [(II) the effective date of coverage; or]
5913 [(B) for an individual insurance policy, a pregnancy existing on the effective date of
5914 coverage.]
5915 [(iii) An individual insurer shall offer a health benefit plan in compliance with Subsections

5916 (5)(a)(i) and (ii), and may, when the insurer and the insured mutually agree in writing to a
5917 condition-specific exclusion rider, offer to issue an individual policy that excludes a specific
5918 physical condition consistent with Subsections (5)(a)(iv) and (v).]
5919 [(iv) The commissioner shall establish, in rule, a list of nonlife threatening physical
5920 conditions that may be the subject of a condition-specific exclusion rider. ]
5921 [(v) A condition-specific exclusion rider shall be limited to the excluded condition and
5922 may not extend to any secondary medical condition that may or may not be directly related to the
5923 excluded condition.]
5924 [(b) (i) A covered carrier shall waive any time period applicable to a preexisting condition
5925 exclusion or limitation period with respect to particular services in a health benefit plan for the
5926 period of time the individual was previously covered by public or private health insurance or by
5927 any other health benefit arrangement that provided benefits with respect to such services, provided
5928 that:]
5929 [(A) the previous coverage was continuous to a date not more than 63 full days prior to
5930 the effective date of the new coverage; and]
5931 [(B) the insured provides notification of previous coverage to the covered carrier within
5932 36 months of the coverage effective date if the insurer has previously requested such notification.]
5933 [(ii) The period of continuous coverage under Subsection (5)(b)(i)(A) may not include any
5934 waiting period for the effective date of the new coverage applied by the employer or the carrier.
5935 This Subsection (5)(b)(ii) does not preclude application of any waiting period applicable to all new
5936 enrollees under the plan.]
5937 [(iii) Credit for previous coverage as provided under Subsection (5)(b)(i)(A) need not be
5938 given for any condition which was previously excluded under a condition-specific exclusion rider.
5939 A new preexisting waiting period may be applied to any condition that was excluded by a rider
5940 under the terms of previous individual coverage.]
5941 (2) A small employer health benefit plan may be discontinued or nonrenewed:
5942 (a) for a network plan, if:
5943 (i) there is no longer any enrollee under the group health plan who lives, resides, or works
5944 in:
5945 (A) the service area of the covered carrier; or
5946 (B) the area for which the covered carrier is authorized to do business; and

5947 (ii) in the case of the small employer market, the small employer carrier applies the same
5948 criteria the small employer carrier would apply in denying enrollment in the plan under Subsection
5949 31A-30-108 (6); or
5950 (b) for coverage made available in the small or large employer market only through an
5951 association, if:
5952 (i) the employer's membership in the association ceases; and
5953 (ii) the coverage is terminated uniformly without regard to any health status-related factor
5954 relating to any covered individual.
5955 (3) A small employer health benefit plan may be discontinued if:
5956 (a) a condition described in Subsection (2) exists;
5957 (b) the plan sponsor fails to pay premiums or contributions in accordance with the terms
5958 of the contract;
5959 (c) the plan sponsor:
5960 (i) performs an act or practice that constitutes fraud; or
5961 (ii) makes an intentional misrepresentation of material fact under the terms of the
5962 coverage;
5963 (d) the covered carrier:
5964 (i) elects to discontinue offering a particular small employer health benefit product
5965 delivered or issued for delivery in this state; and
5966 (ii) (A) provides notice of the discontinuation in writing:
5967 (I) to each plan sponsor, employee, or dependent of a plan sponsor or an employee; and
5968 (II) at least 90 days before the date the coverage will be discontinued;
5969 (B) provides notice of the discontinuation in writing:
5970 (I) to the commissioner; and
5971 (II) at least three working days prior to the date the notice is sent to the affected plan
5972 sponsors, employees, and dependents of the plan sponsors or employees;
5973 (C) offers to each plan sponsor, on a guaranteed issue basis, the option to purchase all
5974 other small employer health benefit products currently being offered by the small employer carrier
5975 in the market; and
5976 (D) in exercising the option to discontinue that product and in offering the option of
5977 coverage in this section, acts uniformly without regard to:

5978 (I) the claims experience of a plan sponsor;
5979 (II) any health status-related factor relating to any covered participant or beneficiary; or
5980 (III) any health status-related factor relating to any new participant or beneficiary who may
5981 become eligible for the coverage; or
5982 (e) the covered carrier:
5983 (i) elects to discontinue all of the covered carrier's small employer health benefit plans in:
5984 (A) the small employer market;
5985 (B) the large employer market; or
5986 (C) both the small employer and large employer markets; and
5987 (ii) (A) provides notice of the discontinuation in writing:
5988 (I) to each plan sponsor, employee, or dependent of a plan sponsor or an employee; and
5989 (II) at least 180 days before the date the coverage will be discontinued;
5990 (B) provides notice of the discontinuation in writing:
5991 (I) to the commissioner in each state in which an affected insured individual is known to
5992 reside; and
5993 (II) at least 30 working days prior to the date the notice is sent to the affected plan
5994 sponsors, employees, and the dependents of the plan sponsors or employees;
5995 (C) discontinues and nonrenews all plans issued or delivered for issuance in the market;
5996 and
5997 (D) provides a plan of orderly withdrawal as required by Section 31A-4-115 .
5998 (4) A small employer health benefit plan may be nonrenewed:
5999 (a) if a condition described in Subsection (2) exists; or
6000 (b) for noncompliance with the covered carrier's:
6001 (i) minimum participation requirements; or
6002 (ii) employer contribution requirements.
6003 (5) (a) Except as provided in Subsection (5)(d), an eligible employee may be discontinued
6004 if after issuance of coverage the eligible employee:
6005 (i) engages in an act or practice that constitutes fraud in connection with the coverage; or
6006 (ii) makes an intentional misrepresentation of material fact in connection with the
6007 coverage.
6008 (b) An eligible employee that is discontinued under Subsection (5)(a) may reenroll:

6009 (i) 12 months after the date of discontinuance; and
6010 (ii) if the plan sponsor's coverage is in effect at the time the eligible employee applies to
6011 reenroll.
6012 (c) At the time the eligible employee's coverage is discontinued under Subsection (5)(a),
6013 the covered carrier shall notify the eligible employee of the right to reenroll when coverage is
6014 discontinued.
6015 (d) An eligible employee may not be discontinued under this Subsection (5) because of
6016 a fraud or misrepresentation that relates to health status.
6017 (6) For purposes of this section, a reference to "plan sponsor" includes a reference to the
6018 employer:
6019 (a) with respect to coverage provided to an employer member of the association; and
6020 (b) if the small employer health benefit plan is made available by a covered carrier in the
6021 employer market only through:
6022 (i) an association;
6023 (ii) a trust; or
6024 (iii) a discretionary group.
6025 (7) A covered carrier may modify a small employer health benefit plan only:
6026 (a) at the time of coverage renewal; and
6027 (b) if the modification is effective uniformly among all plans with that product.
6028 Section 88. Section 31A-30-107.1 is enacted to read:
6029 31A-30-107.1. Individual discontinuance and nonrenewal.
6030 (1) (a) Except as otherwise provided in this section, a health benefit plan offered on an
6031 individual basis is renewable and continues in force:
6032 (i) with respect to all individuals or dependents; and
6033 (ii) at the option of the individual.
6034 (b) Subsection (1)(a) applies regardless of:
6035 (i) whether the contract is issued through:
6036 (A) a trust;
6037 (B) an association;
6038 (C) a discretionary group; or
6039 (D) other similar grouping; or

6040 (ii) the situs of delivery of the policy or contract.
6041 (2) A health benefit plan may be discontinued or nonrenewed:
6042 (a) for a network plan, if:
6043 (i) the individual no longer lives, resides, or works in:
6044 (A) the service area of the covered carrier; or
6045 (B) the area for which the covered carrier is authorized to do business; and
6046 (ii) coverage is terminated uniformly without regard to any health status-related factor
6047 relating to any covered individual; or
6048 (b) for coverage made available through an association, if:
6049 (i) the individual's membership in the association ceases; and
6050 (ii) the coverage is terminated uniformly without regard to any health status-related factor
6051 of covered individuals.
6052 (3) A health benefit plan may be discontinued if:
6053 (a) a condition described in Subsection (2) exists;
6054 (b) the individual fails to pay premiums or contributions in accordance with the terms of
6055 the health benefit plan, including any timeliness requirements;
6056 (c) the individual:
6057 (i) performs an act or practice that constitutes fraud in connection with the coverage; or
6058 (ii) makes an intentional misrepresentation of material fact under the terms of the
6059 coverage;
6060 (d) the covered carrier:
6061 (i) elects to discontinue offering a particular health benefit product delivered or issued for
6062 delivery in this state; and
6063 (ii) (A) provides notice of the discontinuance in writing:
6064 (I) to each individual provided coverage; and
6065 (II) at least 90 days before the date the coverage will be discontinued;
6066 (B) provides notice of the discontinuation in writing:
6067 (I) to the commissioner; and
6068 (II) at least three working days prior to the date the notice is sent to the affected
6069 individuals;
6070 (C) offers to each covered individual on a guaranteed issue basis, the option to purchase

6071 all other individual health benefit products currently being offered by the covered carrier for
6072 individuals in that market; and
6073 (D) acts uniformly without regard to any health status-related factor of a covered
6074 individual or dependent of a covered individual who may become eligible for coverage; or
6075 (e) the covered carrier:
6076 (i) elects to discontinue all of the covered carrier's health benefit plans in the individual
6077 market; and
6078 (ii) (A) provides notice of the discontinuation in writing:
6079 (I) to each covered individual; and
6080 (II) at least 180 days before the date the coverage will be discontinued;
6081 (B) provides notice of the discontinuation in writing:
6082 (I) to the commissioner in each state in which an affected insured individual is known to
6083 reside; and
6084 (II) at least 30 working days prior to the date the notice is sent to the affected individuals;
6085 (C) discontinues and nonrenews all health benefit plans the covered carrier issues or
6086 delivers for insurance in the individual market; and
6087 (D) acts uniformly without regard to any health status-related factor of a covered
6088 individual or a dependent of a covered individual who may become eligible for coverage.
6089 Section 89. Section 31A-30-107.3 is enacted to read:
6090 31A-30-107.3. Discontinuance and nonrenewal limitations.
6091 (1) (a) A carrier that elects to discontinue offering a health benefit plan under Subsection
6092 31A-30-107 (3)(e) or 31A-30-107.1 (3)(e) is prohibited from writing new business:
6093 (i) in the small employer and individual market in this state; and
6094 (ii) for a period of five years beginning on the date of discontinuation of the last coverage
6095 that is discontinued.
6096 (b) The prohibition described in Subsection (1)(a) may be waived if the commissioner
6097 finds that waiver is in the public interest:
6098 (i) to promote competition; or
6099 (ii) to resolve inequity in the marketplace.
6100 (2) If a carrier is doing business in one established geographic service area of the state,
6101 Sections 31A-30-107 and 31A-30-107.1 apply only to the carrier's operations in that geographic

6102 service area.
6103 (3) If a small employer employs less than two employees, a carrier may not discontinue
6104 or not renew the health benefit plan until the first renewal date following the beginning of a new
6105 plan year, even if the carrier knows as of the beginning of the plan year that the employer no longer
6106 has at least two current employees.
6107 Section 90. Section 31A-30-107.5 is enacted to read:
6108 31A-30-107.5. Limitations and exclusions.
6109 (1) A health benefit plan may impose a preexisting condition exclusion only if:
6110 (a) the exclusion relates to a condition, regardless of the cause of the condition, for which
6111 medical advise, diagnosis, care, or treatment was recommended or received within the six-month
6112 period ending on the enrollment date;
6113 (b) the exclusion extends for a period of:
6114 (i) not more than 12 months after the enrollment date; or
6115 (ii) in the case of a late enrollee, 18 months after the enrollment date; and
6116 (c) the period of the preexisting condition exclusion is reduced by the aggregate of the
6117 periods of creditable coverage applicable to the participant or beneficiary as of the enrollment date.
6118 (2) (a) The period of continuous coverage under Subsection (1)(c) may not include any
6119 waiting period for the effective date of the new coverage applied by the employer or the carrier.
6120 (b) This Subsection (2) does not preclude application of any waiting period applicable to
6121 all new enrollees under the plan.
6122 (3) (a) Credit for previous coverage as provided under Subsection (1)(c) need not be given
6123 for any condition that was previously excluded under a condition-specific exclusion rider issued
6124 pursuant to Subsection (5).
6125 (b) A new preexisting waiting period may be applied to any condition that was excluded
6126 by a rider under the terms of previous individual coverage.
6127 (4) (a) For purposes of Subsection (1)(c), a period of creditable coverage may not be
6128 counted with respect to enrollment of an individual under a health benefit plan, if:
6129 (i) after the period and before the enrollment date, there was a 63-day period during all of
6130 which the individual was not covered under any creditable coverage; or
6131 (ii) the insured fails to provide notification of previous coverage to the covered carrier
6132 within 36 months of the coverage effective date if the covered carrier has previously requested the

6133 notification.
6134 (b) (i) Credit for previous coverage as provided under Subsection (1)(c) need not be given
6135 for any condition that was previously excluded in compliance with Subsection (5).
6136 (ii) A new preexisting waiting period may be applied to any condition that was excluded
6137 under the terms of previous individual coverage.
6138 (5) (a) An individual carrier:
6139 (i) shall offer a health benefit plan in compliance with Subsection (1); and
6140 (ii) may, when the individual carrier and the insured mutually agree in writing to a
6141 condition-specific exclusion rider, offer to issue an individual policy that excludes a specific
6142 physical condition consistent with Subsection (5)(b).
6143 (b) (i) The commissioner shall establish by rule a list of life threatening physical conditions
6144 that may not be the subject of a condition-specific exclusion rider.
6145 (ii) A condition-specific exclusion rider:
6146 (A) shall be limited to the excluded condition; and
6147 (B) may not extend to any secondary medical condition that may or may not be directly
6148 related to the excluded condition.
6149 Section 91. Section 31A-30-108 is amended to read:
6150 31A-30-108. Eligibility for small employer and individual market.
6151 (1) (a) Small employer carriers shall accept residents for small group coverage as set forth
6152 in the Health Insurance Portability and Accountability Act, P.L. 104-191, 110 Stat. 1962, Sec.
6153 1701(f) and 2711(a).
6154 (b) Individual carriers shall accept residents for individual coverage pursuant:
6155 (i) to P.L. 104-191, 110 Stat. 1979, Sec. 2741(a)-(b); and
6156 (ii) Subsection (3).
6157 (2) (a) Small employer carriers shall offer to accept all eligible employees and their
6158 dependents at the same level of benefits under any health benefit plan provided to a small
6159 employer.
6160 (b) Small employer carriers may:
6161 (i) request a small employer to submit a copy of [its] the small employer's quarterly income
6162 tax withholdings to determine whether the employees for whom coverage is provided or requested
6163 are bona fide employees of the small employer; and

6164 (ii) deny or terminate coverage if the small employer refuses to provide documentation
6165 requested under Subsection (2)(b)(i).
6166 (3) Except as provided in Subsection (5) and Section 31A-30-110 , individual carriers shall
6167 accept for coverage individuals to whom all of the following conditions apply:
6168 (a) the individual is not covered or eligible for coverage[,]:
6169 (i) (A) as an employee of an employer[,];
6170 (B) as a member of an association[,]; or
6171 (C) as a member of any other group; and
6172 (ii) under:
6173 [(i)] (A) a health benefit plan; or
6174 [(ii)] (B) a self-insured arrangement that provides coverage similar to that provided by a
6175 health benefit plan as defined in Section [ 31A-30-103 ] 31A-1-301;
6176 (b) the individual is not covered and is not eligible for coverage under any public health
6177 benefits arrangement including:
6178 (i) the Medicare program established under Title XVIII [or];
6179 (ii) the Medicaid program established under Title XIX of the Social Security Act[, or];
6180 (iii) any [other] act of Congress or law of this or any other state that provides benefits
6181 comparable to the benefits provided under this [part, including] chapter; or
6182 (iv) coverage under the Comprehensive Health Insurance Pool Act created in Chapter 29,
6183 Comprehensive Health Insurance Pool Act;
6184 (c) unless the maximum benefit has been reached the individual is not covered or eligible
6185 for coverage under any:
6186 (i) Medicare supplement policy[,];
6187 (ii) conversion option[,];
6188 (iii) continuation or extension under COBRA[,]; or
6189 (iv) state extension [unless the maximum benefit has been reached];
6190 (d) the individual has not terminated or declined coverage described in Subsection (3)(a),
6191 (b), or (c) within 93 days of application for coverage, unless the individual is eligible for individual
6192 coverage under P.L. 104-191, 110 Stat. 1979, Sec. 2741(b), in which case, the requirement of this
6193 Subsection (3)(d) does not apply; and
6194 (e) the individual is certified as ineligible for the Health Insurance Pool if:

6195 (i) the individual applies for coverage with the Comprehensive Health Insurance Pool
6196 within 30 days after being rejected or refused coverage by the covered carrier and reapplies for
6197 coverage with that covered carrier within 30 days after the date of issuance of a certificate under
6198 Subsection 31A-29-111 (4)(c); or
6199 (ii) the individual applies for coverage with any individual carrier within 45 days after:
6200 (A) notice of cancellation of coverage under Subsection 31A-29-115 (1); or
6201 (B) the date of issuance of a certificate under Subsection 31A-29-111 (4)(c) if the
6202 individual applied first for coverage with the Comprehensive Health Insurance Pool.
6203 (4) (a) If coverage is obtained under Subsection (3)(e)(i) and the required premium is paid,
6204 the effective date of coverage shall be the first day of the month following the individual's
6205 submission of a completed insurance application to that covered carrier.
6206 (b) If coverage is obtained under Subsection (3)(e)(ii) and the required premium is paid,
6207 the effective date of coverage shall be the day following the:
6208 (i) cancellation of coverage under Subsection 31A-29-115 (1); or
6209 (ii) submission of a completed insurance application to the Comprehensive Health
6210 Insurance Pool.
6211 (5) (a) An individual carrier is not required to accept individuals for coverage under
6212 Subsection (3) if the carrier issues no new individual policies in the state after July 1, 1997.
6213 (b) A carrier described in Subsection (5)(a) may not issue new individual policies in the
6214 state for five years from July 1, 1997.
6215 (c) Notwithstanding Subsection (5)(b), a carrier may request permission to issue new
6216 policies after July 1, 1999, which may only be granted if:
6217 (i) the carrier accepts uninsurables as is required of a carrier entering the market under
6218 Subsection 31A-30-110 ; and
6219 (ii) the commissioner finds that the carrier's issuance of new individual policies:
6220 (A) is in the best interests of the state; and
6221 (B) does not provide an unfair advantage to the carrier.
6222 (6) (a) If a small employer carrier offers health benefit plans to small employers through
6223 a network plan, the small employer carrier may:
6224 (i) limit the employers that may apply for the coverage to those employers with eligible
6225 employees who live, reside, or work in the service area for the network plan; and

6226 (ii) within the service area of the network plan, deny coverage to an employer if the small
6227 employer carrier has demonstrated to the commissioner that the small employer carrier:
6228 (A) will not have the capacity to deliver services adequately to enrollees of any additional
6229 groups because of the small employer carrier's obligations to existing group contract holders and
6230 enrollees; and
6231 (B) applies this section uniformly to all employers without regard to:
6232 (I) the claims experience of an employer, an employer's employee, or a dependent of an
6233 employee; or
6234 (II) any health status-related factor relating to an employee or dependent of an employee.
6235 (b) (i) A small employer carrier that denies a health benefit product to an employer in any
6236 service area in accordance with this section may not offer coverage in the small employer market
6237 within the service area to any employer for a period of 180 days after the date the coverage is
6238 denied.
6239 (ii) This Subsection (6)(b) does not:
6240 (A) limit the small employer carrier's ability to renew coverage that is in force; or
6241 (B) relieve the small employer carrier of the responsibility to renew coverage that is in
6242 force.
6243 (c) Coverage offered within a service area after the 180-day period specified in Subsection
6244 (6)(b) is subject to the requirements of this section.
6245 Section 92. Section 31A-30-110 is amended to read:
6246 31A-30-110. Individual enrollment cap.
6247 (1) The commissioner shall set the individual enrollment cap at .5% on July 1, 1997.
6248 (2) The commissioner shall raise the individual enrollment cap by .5% at the later of the
6249 following dates:
6250 (a) six months from the last increase in the individual enrollment cap; or
6251 (b) the date when CCI/TI is greater than .90, where:
6252 (i) "CCI" is the total individual coverage count for all carriers certifying that their
6253 uninsurable percentage has reached the individual enrollment cap; and
6254 (ii) "TI" is the total individual coverage count for all carriers.
6255 (3) The commissioner may establish a minimum number of uninsurable individuals that
6256 a carrier entering the market who is subject to this chapter must accept under the individual

6257 enrollment provisions of this chapter.
6258 (4) Beginning July 1, 1997, an individual carrier may decline to accept individuals
6259 applying for individual enrollment under Subsection 31A-30-108 (3), other than individuals
6260 applying for coverage as set forth in P.L. 104-191, 110 Stat. 1979, Sec. 2741 (a)-(b), if:
6261 (a) the uninsurable percentage for that carrier equals or exceeds the cap established in
6262 Subsection (1); and
6263 (b) the covered carrier has certified on forms provided by the commissioner that its
6264 uninsurable percentage equals or exceeds the individual enrollment cap.
6265 (5) The department may audit a carrier's records to verify whether the carrier's uninsurable
6266 classification meets industry standards for underwriting criteria as established by the commissioner
6267 in accordance with Subsection 31A-30-106 (1)[(k)](i).
6268 (6) (a) If the commissioner determines that individual enrollment is causing a substantial
6269 adverse effect on premiums, enrollment, or experience, the commissioner may suspend, limit, or
6270 delay further individual enrollment for up to 12 months.
6271 (b) The commissioner shall adopt rules to establish a uniform methodology for calculating
6272 and reporting loss ratios for individual policies for determining whether the individual enrollment
6273 provisions of Section 31A-30-108 should be waived for an individual carrier experiencing
6274 significant and adverse financial impact as a result of complying with those provisions.
6275 Section 93. Section 31A-30-111 is amended to read:
6276 31A-30-111. Limitations on high risk enrollees.
6277 (1) (a) The requirements of this chapter do not apply to any carrier that is currently in a
6278 state of supervision, insolvency, or liquidation.
6279 (b) If a carrier demonstrates to the satisfaction of the commissioner that the requirements
6280 of this chapter would place the carrier in a state of supervision, insolvency, or liquidation the
6281 commissioner may waive or modify the requirements of Sections 31A-30-108 and 31A-30-110 .
6282 (2) (a) A modification or waiver by the commissioner under [this section] Subsection
6283 (1)(b) shall be effective for period of not more than one year.
6284 (b) At the end of the [year] period described in Subsection (2)(a), a carrier [must
6285 demonstrate new] is subject to Sections 31A-30-108 and 31A-30-110 unless the carrier
6286 demonstrates to the satisfaction of the commissioner the need for [the] a modification or waiver
6287 in accordance with Subsection (1)(b).

6288 (3) Notwithstanding the requirements of this chapter, a carrier may deny health benefit
6289 plan coverage in the small employer and individual market if the carrier demonstrates to the
6290 satisfaction of the commissioner that the carrier:
6291 (a) does not have the financial reserves necessary to underwrite additional coverage;
6292 (b) is applying this section uniformly to all small employers and individuals without regard
6293 to:
6294 (i) any health status-related factor of the individuals; or
6295 (ii) whether the individuals are eligible individuals.
6296 Section 94. Section 31A-30-114 is enacted to read:
6297 31A-30-114. Disclosure.
6298 (1) A covered carrier shall make the information described in Subsection (2) available:
6299 (a) to:
6300 (i) a small employer; or
6301 (ii) an individual; and
6302 (b) (i) at the time of solicitation; or
6303 (ii) upon the request of:
6304 (A) a small employer; or
6305 (B) an individual;
6306 (c) as part of the covered carrier's solicitation and sales materials.
6307 (2) The following information is required to be disclosed or made available under
6308 Subsection (1):
6309 (a) the provisions of the coverage concerning the covered carrier's right to change premium
6310 rates; and
6311 (b) the factors that may effect changes in premium rates;
6312 (c) the provisions of the coverage relating to renewability of coverage; and
6313 (d) the provisions of the coverage relating to any preexisting condition exclusion.
6314 Section 95. Section 59-9-105 is amended to read:
6315 59-9-105. Tax on certain insurers to pay for relative value study and other
6316 publications or services.
6317 (1) Each insurer providing coverage for motor vehicle liability, uninsured motorist, and
6318 personal injury protection shall pay to the State Tax Commission on or before March 31 of each

6319 year, a tax of .01% on the total premiums received for these coverages during the preceding
6320 calendar year from policies covering motor vehicle risks in this state.
6321 (2) The taxable premium under this section shall be reduced by all premiums returned or
6322 credited to policyholders on direct business subject to tax in this state.
6323 (3) All money received by the state under this section shall be deposited in the General
6324 Fund as a dedicated credit for the purpose of providing funds to pay for any costs and expenses
6325 incurred by the Insurance Department:
6326 (a) in conducting, maintaining, and administering the relative value study referred to in
6327 Section 31A-22-307 ; [and]
6328 (b) to prepare, publish, and distribute publications relating to insurance and consumers of
6329 insurance as provided in Section 31A-2-208 [.]; and
6330 (c) in providing the services of the Insurance Department through the use of:
6331 (i) electronic commerce; and
6332 (ii) other information technology.
6333 Section 96. Section 63-55-231 is amended to read:
6334 63-55-231. Repeal dates, Title 31A.
6335 (1) Section 31A-3-104 , Electronic Commerce Dedicated Fees, is repealed July 1, 2006.
6336 [(1)] (2) Section 31A-2-208.5 , Comparison tables, is repealed July 1, 2005.
6337 [(2)] (3) Section 31A-2-217 , Coordination with other states, is repealed July 1, 2003.
6338 [(3)] (4) Section 31A-22-315 , Motor Vehicle Insurance Reporting, is repealed July 1,
6339 2010.
6340 [(4)] (5) Section 31A-22-625 , Catastrophic Coverage of Mental Health Conditions, is
6341 repealed July 1, 2011.
6342 [(5)] (6) Title 31A, Chapter 31, Insurance Fraud Act, is repealed July 1, 2007.
6343 Section 97. Repealer.
6344 This act repeals:
6345 Section 31A-8-402, Contract cancellation or nonrenewal.
6346 Section 31A-15-206, Countersignatures not required.
6347 Section 31A-22-720, Mental health parity.
6348 Section 98. Effective date.
6349 This act takes effect on May 6, 2002, except that the amendments to Section 31A-26-202

6350 (Effective 07/01/02) take effect on July 1, 2002.