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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  &nb