H.B. 342

1

INSURANCE CODE AMENDMENTS
2 2008 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: James A. Dunnigan
5 Senate Sponsor: Sheldon L. Killpack
6
7 LONG TITLE
8 General Description:
9 This bill modifies the Insurance Code to make various amendments.
10 Highlighted Provisions:
11 This bill:
12 . modifies definition provisions;
13 . addresses the timing of examinations;
14 . changes the requirements for appointments to the Title and Escrow Commission;
15 . addresses requirements to conduct an insurance business in Utah;
16 . addresses filing of evidence of preemption;
17 . addresses service contract providers and service contract reimbursement insurance
18 policies including:
19 . prohibiting a captive insurance company from writing certain reimbursement
20 policies for service contract providers;
21 . requiring registration;
22 . requiring disclosures; and
23 . addressing prohibited acts;
24 . addresses how to calculate monies paid a beneficiary in certain circumstances where
25 a suicide occurs;
26 . addresses certain circumstances related to annuity payments;
27 . addresses the Basic Health Care Plan;

28 . clarifies language related to catastrophic coverage of mental health conditions;
29 . provides for the payment of interest on life insurance proceeds;
30 . provides for special enrollment for individuals receiving premium assistance;
31 . clarifies circumstances when the commissioner can prohibit a policy, contract,
32 certificate, or form;
33 . requires submission to criminal background checks in certain circumstances;
34 . modifies the contents of a form used in a license;
35 . addresses grounds involving a viatical settlement for action against a licensee;
36 . makes technical changes regarding delinquency proceedings;
37 . expands the purposes of the Individual, Small Employer, and Group Health
38 Insurance Act;
39 . addresses when individual carriers must accept individuals; and
40 . makes additional technical amendments.
41 Monies Appropriated in this Bill:
42 None
43 Other Special Clauses:
44 None
45 Utah Code Sections Affected:
46 AMENDS:
47 31A-1-301, as last amended by Laws of Utah 2007, Chapter 307
48 31A-2-203, as last amended by Laws of Utah 2007, Chapter 309
49 31A-2-403, as last amended by Laws of Utah 2007, Chapter 325
50 31A-4-102, as last amended by Laws of Utah 1998, Chapter 293
51 31A-4-106, as last amended by Laws of Utah 2003, Chapter 298
52 31A-6a-103, as last amended by Laws of Utah 2005, Chapter 124
53 31A-6a-104, as enacted by Laws of Utah 1992, Chapter 203
54 31A-6a-105, as enacted by Laws of Utah 1992, Chapter 203
55 31A-22-404, as last amended by Laws of Utah 2002, Chapter 308
56 31A-22-409, as last amended by Laws of Utah 2005, Chapter 125
57 31A-22-613.5, as last amended by Laws of Utah 2007, Chapter 307
58 31A-22-625, as last amended by Laws of Utah 2002, Chapter 308

59 31A-22-807, as last amended by Laws of Utah 2001, Chapter 116
60 31A-23a-105, as last amended by Laws of Utah 2007, Chapter 307
61 31A-23a-110, as renumbered and amended by Laws of Utah 2003, Chapter 298
62 31A-23a-111, as last amended by Laws of Utah 2006, Chapter 312
63 31A-23a-116, as renumbered and amended by Laws of Utah 2003, Chapter 298
64 31A-25-203, as last amended by Laws of Utah 2006, Chapter 312
65 31A-26-203, as last amended by Laws of Utah 2006, Chapter 312
66 31A-27a-513, as enacted by Laws of Utah 2007, Chapter 309
67 31A-27a-515, as enacted by Laws of Utah 2007, Chapter 309
68 31A-27a-516, as enacted by Laws of Utah 2007, Chapter 309
69 31A-30-102, as last amended by Laws of Utah 1997, Chapter 265
70 31A-30-108, as last amended by Laws of Utah 2004, Chapters 2 and 329
71 31A-30-112, as last amended by Laws of Utah 2007, Chapter 307
72 ENACTS:
73 31A-22-428, Utah Code Annotated 1953
74 31A-22-610.6, Utah Code Annotated 1953
75
76 Be it enacted by the Legislature of the state of Utah:
77 Section 1. Section 31A-1-301 is amended to read:
78 31A-1-301. Definitions.
79 As used in this title, unless otherwise specified:
80 (1) (a) "Accident and health insurance" means insurance to provide protection against
81 economic losses resulting from:
82 (i) a medical condition including:
83 (A) a medical care [expenses] expense; or
84 (B) the risk of disability;
85 (ii) accident; or
86 (iii) sickness.
87 (b) "Accident and health insurance":
88 (i) includes a contract with disability contingencies including:
89 (A) an income replacement contract;

90 (B) a health care contract;
91 (C) an expense reimbursement contract;
92 (D) a credit accident and health contract;
93 (E) a continuing care contract; and
94 (F) a long-term care contract; and
95 (ii) may provide:
96 (A) hospital coverage;
97 (B) surgical coverage;
98 (C) medical coverage; [or]
99 (D) loss of income coverage[.];
100 (E) prescription drug coverage;
101 (F) dental coverage; or
102 (G) vision coverage.
103 (c) "Accident and health insurance" does not include workers' compensation insurance.
104 (2) "Actuary" is as defined by the commissioner by rule, made in accordance with Title
105 63, Chapter 46a, Utah Administrative Rulemaking Act.
106 (3) "Administrator" is defined in Subsection [(157)] (159).
107 (4) "Adult" means a natural person who has attained the age of at least 18 years.
108 (5) "Affiliate" means [any] a person who controls, is controlled by, or is under
109 common control with, another person. A corporation is an affiliate of another corporation,
110 regardless of ownership, if substantially the same group of natural persons manages the
111 corporations.
112 (6) "Agency" means:
113 (a) a person other than an individual, including a sole proprietorship by which a natural
114 person does business under an assumed name; and
115 (b) an insurance organization licensed or required to be licensed under Section
116 31A-23a-301 .
117 (7) "Alien insurer" means an insurer domiciled outside the United States.
118 (8) "Amendment" means an endorsement to an insurance policy or certificate.
119 (9) "Annuity" means an agreement to make periodical payments for a period certain or
120 over the lifetime of one or more natural persons if the making or continuance of all or some of

121 the series of the payments, or the amount of the payment, is dependent upon the continuance of
122 human life.
123 (10) "Application" means a document:
124 (a) (i) completed by an applicant to provide information about the risk to be insured;
125 and
126 (ii) that contains information that is used by the insurer to evaluate risk and decide
127 whether to:
128 (A) insure the risk under:
129 (I) the [coverages] coverage as originally offered; or
130 (II) a modification of the coverage as originally offered; or
131 (B) decline to insure the risk; or
132 (b) used by the insurer to gather information from the applicant before issuance of an
133 annuity contract.
134 (11) "Articles" or "articles of incorporation" means:
135 (a) the original articles[,];
136 (b) a special [laws, charters, amendments,] law;
137 (c) a charter;
138 (d) an amendment;
139 (e) restated articles[,];
140 (f) articles of merger or consolidation[, trust instruments, and other constitutive
141 documents for trusts and other entities that are not corporations, and amendments to any of
142 these.];
143 (g) a trust instrument;
144 (h) another constitutive document for a trust or other entity that is not a corporation;
145 and
146 (i) an amendment to an item listed in Subsections (11)(a) through (h).
147 (12) "Bail bond insurance" means a guarantee that a person will attend court when
148 required, up to and including surrender of the person in execution of [any] a sentence imposed
149 under Subsection 77-20-7 (1), as a condition to the release of that person from confinement.
150 (13) "Binder" is defined in Section 31A-21-102 .
151 (14) "Blanket insurance policy" means a group policy covering [classes] a defined class

152 of persons:
153 (a) without individual underwriting[, where the persons insured are] or application; and
154 (b) that is determined by definition [of the class] with or without designating [the
155 persons] each person covered.
156 (15) "Board," "board of trustees," or "board of directors" means the group of persons
157 with responsibility over, or management of, a corporation, however designated.
158 (16) "Business entity" means:
159 (a) a corporation[,];
160 (b) an association[,];
161 (c) a partnership[,];
162 (d) a limited liability company[,];
163 (e) a limited liability partnership[,]; or [other]
164 (f) another legal entity.
165 (17) "Business of insurance" is defined in Subsection [(84)] (85).
166 (18) "Business plan" means the information required to be supplied to the
167 commissioner under Subsections 31A-5-204 (2)(i) and (j), including the information required
168 when these subsections [are applicable] apply by reference under:
169 (a) Section 31A-7-201 ;
170 (b) Section 31A-8-205 ; or
171 (c) Subsection 31A-9-205 (2).
172 (19) (a) "Bylaws" means the rules adopted for the regulation or management of a
173 corporation's affairs, however designated [and].
174 (b) "Bylaws" includes comparable rules for [trusts and other entities that are not
175 corporations] a trust or other entity that is not a corporation.
176 (20) "Captive insurance company" means:
177 (a) an [insurance company] insurer:
178 (i) owned by another organization; and
179 (ii) whose exclusive purpose is to insure risks of the parent organization and an
180 affiliated [companies] company; or
181 (b) in the case of [groups and associations, an insurance organization] a group or
182 association, an insurer:

183 (i) owned by the insureds; and
184 (ii) whose exclusive purpose is to insure risks of:
185 (A) a member [organizations] organization;
186 (B) a group [members; and] member; or
187 (C) [affiliates] an affiliate of:
188 (I) a member [organizations] organization; or
189 (II) a group [members] member.
190 (21) "Casualty insurance" means liability insurance as defined in Subsection [(96)]
191 (97).
192 (22) "Certificate" means evidence of insurance given to:
193 (a) an insured under a group insurance policy; or
194 (b) a third party.
195 (23) "Certificate of authority" is included within the term "license."
196 (24) "Claim," unless the context otherwise requires, means a request or demand on an
197 insurer for payment of [benefits] a benefit according to the terms of an insurance policy.
198 (25) "Claims-made coverage" means an insurance contract or provision limiting
199 coverage under a policy insuring against legal liability to claims that are first made against the
200 insured while the policy is in force.
201 (26) (a) "Commissioner" or "commissioner of insurance" means Utah's insurance
202 commissioner.
203 (b) When appropriate, the terms listed in Subsection (26)(a) apply to the equivalent
204 supervisory official of another jurisdiction.
205 (27) (a) "Continuing care insurance" means insurance that:
206 (i) provides board and lodging;
207 (ii) provides one or more of the following [services]:
208 (A) a personal [services] service;
209 (B) a nursing [services] service;
210 (C) a medical [services] service; or
211 (D) any other health-related [services] service; and
212 (iii) provides the coverage described in Subsection (27)(a)(i) under an agreement
213 effective:

214 (A) for the life of the insured; or
215 (B) for a period in excess of one year.
216 (b) Insurance is continuing care insurance regardless of whether or not the board and
217 lodging are provided at the same location as [the services] a service described in Subsection
218 (27)(a)(ii).
219 (28) (a) "Control," "controlling," "controlled," or "under common control" means the
220 direct or indirect possession of the power to direct or cause the direction of the management
221 and policies of a person. This control may be:
222 (i) by contract;
223 (ii) by common management;
224 (iii) through the ownership of voting securities; or
225 (iv) by a means other than those described in Subsections (28)(a)(i) through (iii).
226 (b) There is no presumption that an individual holding an official position with another
227 person controls that person solely by reason of the position.
228 (c) A person having a contract or arrangement giving control is considered to have
229 control despite the illegality or invalidity of the contract or arrangement.
230 (d) There is a rebuttable presumption of control in a person who directly or indirectly
231 owns, controls, holds with the power to vote, or holds proxies to vote 10% or more of the
232 voting securities of another person.
233 (29) "Controlled insurer" means a licensed insurer that is either directly or indirectly
234 controlled by a producer.
235 (30) "Controlling person" means [any] a person that directly or indirectly has the power
236 to direct or cause to be directed, the management, control, or activities of a reinsurance
237 intermediary.
238 (31) "Controlling producer" means a producer who directly or indirectly controls an
239 insurer.
240 (32) (a) "Corporation" means an insurance corporation, except when referring to:
241 (i) a corporation doing business:
242 (A) as:
243 (I) an insurance producer;
244 (II) a limited line producer;

245 (III) a consultant;
246 (IV) a managing general agent;
247 (V) a reinsurance intermediary;
248 (VI) a third party administrator; or
249 (VII) an adjuster; and
250 (B) under:
251 (I) Chapter 23a, Insurance Marketing - Licensing Producers, Consultants, and
252 Reinsurance Intermediaries;
253 (II) Chapter 25, Third Party Administrators; or
254 (III) Chapter 26, Insurance Adjusters; or
255 (ii) a noninsurer that is part of a holding company system under Chapter 16, Insurance
256 Holding Companies.
257 (b) "Stock corporation" means a stock insurance corporation.
258 (c) "Mutual" or "mutual corporation" means a mutual insurance corporation.
259 (33) "Creditable coverage" has the same meaning as provided in federal regulations
260 adopted pursuant to the Health Insurance Portability and Accountability Act of 1996, Pub. L.
261 104-191, 110 Stat. 1936.
262 (34) "Credit accident and health insurance" means insurance on a debtor to provide
263 indemnity for payments coming due on a specific loan or other credit transaction while the
264 debtor is disabled.
265 (35) (a) "Credit insurance" means insurance offered in connection with an extension of
266 credit that is limited to partially or wholly extinguishing that credit obligation.
267 (b) "Credit insurance" includes:
268 (i) credit accident and health insurance;
269 (ii) credit life insurance;
270 (iii) credit property insurance;
271 (iv) credit unemployment insurance;
272 (v) guaranteed automobile protection insurance;
273 (vi) involuntary unemployment insurance;
274 (vii) mortgage accident and health insurance;
275 (viii) mortgage guaranty insurance; and

276 (ix) mortgage life insurance.
277 (36) "Credit life insurance" means insurance on the life of a debtor in connection with
278 an extension of credit that pays a person if the debtor dies.
279 (37) "Credit property insurance" means insurance:
280 (a) offered in connection with an extension of credit; and
281 (b) that protects the property until the debt is paid.
282 (38) "Credit unemployment insurance" means insurance:
283 (a) offered in connection with an extension of credit; and
284 (b) that provides indemnity if the debtor is unemployed for payments coming due on a:
285 (i) specific loan; or
286 (ii) credit transaction.
287 (39) "Creditor" means a person, including an insured, having [any] a claim, whether:
288 (a) matured;
289 (b) unmatured;
290 (c) liquidated;
291 (d) unliquidated;
292 (e) secured;
293 (f) unsecured;
294 (g) absolute;
295 (h) fixed; or
296 (i) contingent.
297 (40) (a) "Customer service representative" means a person that provides an insurance
298 [services] service and insurance product information:
299 (i) for the customer service representative's:
300 (A) producer; or
301 (B) consultant employer; and
302 (ii) to the customer service representative's employer's:
303 (A) customer;
304 (B) client; or
305 (C) organization.
306 (b) A customer service representative may only operate within the scope of authority of

307 the customer service representative's producer or consultant employer.
308 (41) "Deadline" means the final date or time:
309 (a) imposed by:
310 (i) statute;
311 (ii) rule; or
312 (iii) order; and
313 (b) by which a required filing or payment must be received by the department.
314 (42) "Deemer clause" means a provision under this title under which upon the
315 occurrence of a condition precedent, the commissioner is [deemed] considered to have taken a
316 specific action. If the statute so provides, [the] a condition precedent may be the
317 commissioner's failure to take a specific action.
318 (43) "Degree of relationship" means the number of steps between two persons
319 determined by counting the generations separating one person from a common ancestor and
320 then counting the generations to the other person.
321 (44) "Department" means the Insurance Department.
322 (45) "Director" means a member of the board of directors of a corporation.
323 (46) "Disability" means a physiological or psychological condition that partially or
324 totally limits an individual's ability to:
325 (a) perform the duties of:
326 (i) that individual's occupation; or
327 (ii) any occupation for which the individual is reasonably suited by education, training,
328 or experience; or
329 (b) perform two or more of the following basic activities of daily living:
330 (i) eating;
331 (ii) toileting;
332 (iii) transferring;
333 (iv) bathing; or
334 (v) dressing.
335 (47) "Disability income insurance" is defined in Subsection [(75)] (76).
336 (48) "Domestic insurer" means an insurer organized under the laws of this state.
337 (49) "Domiciliary state" means the state in which an insurer:

338 (a) is incorporated;
339 (b) is organized; or
340 (c) in the case of an alien insurer, enters into the United States.
341 (50) (a) "Eligible employee" means:
342 (i) an employee who:
343 (A) works on a full-time basis; and
344 (B) has a normal work week of 30 or more hours; [or]
345 [(ii) a person described in Subsection (50) (b).]
346 [(b) "Eligible employee" includes, if the individual is included under a health benefit
347 plan of a small employer:]
348 [(i)] (ii) a sole proprietor;
349 [(ii)] (iii) a partner in a partnership; or
350 [(iii)] (iv) an independent contractor.
351 [(c)] (b) "Eligible employee" does not include[, unless eligible under Subsection
352 (50)(b): (i)] an individual who works on a temporary or substitute basis for a small employer[;].
353 [(ii) an employer's spouse; or]
354 [(iii) a dependent of an employer.]
355 (51) "Employee" means [any] an individual employed by an employer.
356 (52) "Employee benefits" means one or more benefits or services provided to:
357 (a) [employees] an employee; or
358 (b) [dependents of employees] a dependent of an employee.
359 (53) (a) "Employee welfare fund" means a fund:
360 (i) established or maintained, whether directly or through [trustees] a trustee, by:
361 (A) one or more employers;
362 (B) one or more labor organizations; or
363 (C) a combination of employers and labor organizations; and
364 (ii) that provides employee benefits paid or contracted to be paid, other than income
365 from investments of the fund[,]:
366 (A) by or on behalf of an employer doing business in this state; or
367 (B) for the benefit of [any] a person employed in this state.
368 (b) "Employee welfare fund" includes a plan funded or subsidized by a user [fees] fee

369 or tax revenues.
370 (54) "Endorsement" means a written agreement attached to a policy or certificate to
371 modify one or more of the provisions of the policy or certificate.
372 (55) "Enrollment date," with respect to a health benefit plan, means:
373 (a) the first day of coverage; or[,]
374 (b) if there is a waiting period, the first day of the waiting period.
375 (56) (a) "Escrow" means:
376 (i) a real estate settlement or real estate closing conducted by a third party pursuant to
377 the requirements of a written agreement between the parties in a real estate transaction; or
378 (ii) a settlement or closing involving:
379 (A) a mobile home;
380 (B) a grazing right;
381 (C) a water right; or
382 (D) other personal property authorized by the commissioner.
383 (b) "Escrow" includes the act of conducting a:
384 (i) real estate settlement; or
385 (ii) real estate closing.
386 (57) "Escrow agent" means:
387 (a) an insurance producer with:
388 (i) a title insurance line of authority; and
389 (ii) an escrow subline of authority; or
390 (b) a person defined as an escrow agent in Section 7-22-101 .
391 (58) (a) "Excludes" is not exhaustive and does not mean that [other things are] another
392 thing is not also excluded.
393 (b) The items listed in a list using the term "excludes" are representative examples for
394 use in interpretation of this title.
395 (59) "Exclusion" means for the purposes of accident and health insurance that an
396 insurer does not provide insurance coverage, for whatever reason, for one of the following:
397 (a) a specific physical condition;
398 (b) a specific medical procedure;
399 (c) a specific disease or disorder; or

400 (d) a specific prescription drug or class of prescription drugs.
401 [(59)] (60) "Expense reimbursement insurance" means insurance:
402 (a) written to provide [payments for expenses] a payment for an expense relating to
403 hospital [confinements] confinement resulting from illness or injury; and
404 (b) written:
405 (i) as a daily limit for a specific number of days in a hospital; and
406 (ii) to have a one or two day waiting period following a hospitalization.
407 [(60)] (61) "Fidelity insurance" means insurance guaranteeing the fidelity of [persons]
408 a person holding [positions] a position of public or private trust.
409 [(61)] (62) (a) "Filed" means that a filing is:
410 (i) submitted to the department as required by and in accordance with [any] applicable
411 statute, rule, or filing order;
412 (ii) received by the department within the time period provided in [the] applicable
413 statute, rule, or filing order; and
414 (iii) accompanied by the appropriate fee in accordance with:
415 (A) Section 31A-3-103 ; or
416 (B) rule.
417 (b) "Filed" does not include a filing that is rejected by the department because it is not
418 submitted in accordance with Subsection [(61)] (62)(a).
419 [(62)] (63) "Filing," when used as a noun, means an item required to be filed with the
420 department including:
421 (a) a policy;
422 (b) a rate;
423 (c) a form;
424 (d) a document;
425 (e) a plan;
426 (f) a manual;
427 (g) an application;
428 (h) a report;
429 (i) a certificate;
430 (j) an endorsement;

431 (k) an actuarial certification;
432 (l) a licensee annual statement;
433 (m) a licensee renewal application; [or]
434 (n) an advertisement; or
435 (o) an outline of coverage.
436 [(63)] (64) "First party insurance" means an insurance policy or contract in which the
437 insurer agrees to pay [claims] a claim submitted to it by the insured for the insured's losses.
438 [(64)] (65) "Foreign insurer" means an insurer domiciled outside of this state, including
439 an alien insurer.
440 [(65)] (66) (a) "Form" means one of the following prepared for general use:
441 (i) a policy;
442 (ii) a certificate;
443 (iii) an application; [or]
444 (iv) an outline of coverage; or
445 (v) an endorsement.
446 (b) "Form" does not include a document specially prepared for use in an individual
447 case.
448 [(66)] (67) "Franchise insurance" means an individual insurance [policies] policy
449 provided through a mass marketing arrangement involving a defined class of persons related in
450 some way other than through the purchase of insurance.
451 [(67)] (68) "General lines of authority" include:
452 (a) the general lines of insurance in Subsection [(68)] (69);
453 (b) title insurance under one of the following sublines of authority:
454 (i) search, including authority to act as a title marketing representative;
455 (ii) escrow, including authority to act as a title marketing representative;
456 (iii) search and escrow, including authority to act as a title marketing representative;
457 and
458 (iv) title marketing representative only;
459 (c) surplus lines;
460 (d) workers' compensation; and
461 (e) any other line of insurance that the commissioner considers necessary to recognize

462 in the public interest.
463 [(68)] (69) "General lines of insurance" include:
464 (a) accident and health;
465 (b) casualty;
466 (c) life;
467 (d) personal lines;
468 (e) property; and
469 (f) variable contracts, including variable life and annuity.
470 [(69)] (70) "Group health plan" means an employee welfare benefit plan to the extent
471 that the plan provides medical care:
472 (a) (i) to [employees] an employee; or
473 (ii) to a dependent of an employee; and
474 (b) (i) directly;
475 (ii) through insurance reimbursement; or
476 (iii) through [any other] another method.
477 [(70)] (71) (a) "Group insurance policy" means a policy covering a group of persons
478 that is issued:
479 (i) to a policyholder on behalf of the group; and
480 (ii) for the benefit of [group members who are] a member of the group who is selected
481 under [procedures] a procedure defined in:
482 (A) the policy; or
483 (B) [agreements which are] an agreement that is collateral to the policy.
484 (b) A group insurance policy may include [members] a member of the policyholder's
485 family or [dependents] a dependent.
486 [(71)] (72) "Guaranteed automobile protection insurance" means insurance offered in
487 connection with an extension of credit that pays the difference in amount between the
488 insurance settlement and the balance of the loan if the insured automobile is a total loss.
489 [(72)] (73) (a) Except as provided in Subsection [(72)] (73)(b), "health benefit plan"
490 means a policy or certificate that:
491 (i) provides health care insurance;
492 (ii) provides major medical expense insurance; or

493 (iii) is offered as a substitute for hospital or medical expense insurance such as:
494 (A) a hospital confinement indemnity; or
495 (B) a limited benefit plan.
496 (b) "Health benefit plan" does not include a policy or certificate that:
497 (i) provides benefits solely for:
498 (A) accident;
499 (B) dental;
500 (C) income replacement;
501 (D) long-term care;
502 (E) a Medicare supplement;
503 (F) a specified disease;
504 (G) vision; or
505 (H) a short-term limited duration; or
506 (ii) is offered and marketed as supplemental health insurance.
507 [(73)] (74) "Health care" means any of the following intended for use in the diagnosis,
508 treatment, mitigation, or prevention of a human ailment or impairment:
509 (a) a professional [services] service;
510 (b) a personal [services] service;
511 (c) [facilities] a facility;
512 (d) equipment;
513 (e) [devices] a device;
514 (f) supplies; or
515 (g) medicine.
516 [(74)] (75) (a) "Health care insurance" or "health insurance" means insurance
517 providing:
518 (i) a health care [benefits] benefit; or
519 (ii) payment of an incurred health care [expenses] expense.
520 (b) "Health care insurance" or "health insurance" does not include accident and health
521 insurance providing [benefits] a benefit for:
522 (i) replacement of income;
523 (ii) short-term accident;

524 (iii) fixed indemnity;
525 (iv) credit accident and health;
526 (v) supplements to liability;
527 (vi) workers' compensation;
528 (vii) automobile medical payment;
529 (viii) no-fault automobile;
530 (ix) equivalent self-insurance; or
531 (x) [any] a type of accident and health insurance coverage that is a part of or attached
532 to another type of policy.
533 [(75)] (76) "Income replacement insurance" or "disability income insurance" means
534 insurance written to provide payments to replace income lost from accident or sickness.
535 [(76)] (77) "Indemnity" means the payment of an amount to offset all or part of an
536 insured loss.
537 [(77)] (78) "Independent adjuster" means an insurance adjuster required to be licensed
538 under Section 31A-26-201 who engages in insurance adjusting as a representative of [insurers]
539 an insurer.
540 [(78)] (79) "Independently procured insurance" means insurance procured under
541 Section 31A-15-104 .
542 [(79)] (80) "Individual" means a natural person.
543 [(80)] (81) "Inland marine insurance" includes insurance covering:
544 (a) property in transit on or over land;
545 (b) property in transit over water by means other than boat or ship;
546 (c) bailee liability;
547 (d) fixed transportation property such as bridges, electric transmission systems, radio
548 and television transmission towers and tunnels; and
549 (e) personal and commercial property floaters.
550 [(81)] (82) "Insolvency" means that:
551 (a) an insurer is unable to pay its debts or meet its obligations as [they] the debts and
552 obligations mature;
553 (b) an insurer's total adjusted capital is less than the insurer's mandatory control level
554 RBC under Subsection 31A-17-601 (8)(c); or

555 (c) an insurer is determined to be hazardous under this title.
556 [(82)] (83) (a) "Insurance" means:
557 (i) an arrangement, contract, or plan for the transfer of a risk or risks from one or more
558 persons to one or more other persons; or
559 (ii) an arrangement, contract, or plan for the distribution of a risk or risks among a
560 group of persons that includes the person seeking to distribute that person's risk.
561 (b) "Insurance" includes:
562 (i) a risk distributing [arrangements] arrangement providing for compensation or
563 replacement for damages or loss through the provision of [services or benefits] a service or a
564 benefit in kind;
565 (ii) [contracts] a contract of guaranty or suretyship entered into by the guarantor or
566 surety as a business and not as merely incidental to a business transaction; and
567 (iii) [plans] a plan in which the risk does not rest upon the person who makes [the
568 arrangements] an arrangement, but with a class of persons who have agreed to share [it] the
569 risk.
570 [(83)] (84) "Insurance adjuster" means a person who directs the investigation,
571 negotiation, or settlement of a claim under an insurance policy other than life insurance or an
572 annuity, on behalf of an insurer, policyholder, or a claimant under an insurance policy.
573 [(84)] (85) "Insurance business" or "business of insurance" includes:
574 (a) providing health care insurance, as defined in Subsection [(74)] (75), by
575 [organizations that are] an organization that is or should be licensed under this title;
576 (b) providing [benefits to employees] a benefit to an employee in the event of
577 [contingencies] a contingency not within the control of the [employees] employee, in which the
578 [employees are] employee is entitled to the [benefits] benefit as a right, which [benefits] benefit
579 may be provided either:
580 (i) by a single [employers] employer or by multiple employer groups; or
581 (ii) through one or more trusts, associations, or other entities;
582 (c) providing [annuities,] an annuity:
583 (i) including [those] an annuity issued in return for [gifts,] a gift; and
584 (ii) except [those] an annuity provided by [persons] a person specified in Subsections
585 31A-22-1305 (2) and (3);

586 (d) providing the characteristic services of a motor [clubs] club as outlined in
587 Subsection [(112)] (113);
588 (e) providing [other persons] another person with insurance as defined in Subsection
589 [(82)] (83);
590 (f) making as insurer, guarantor, or surety, or proposing to make as insurer, guarantor,
591 or surety, [any] a contract or policy of title insurance;
592 (g) transacting or proposing to transact any phase of title insurance, including:
593 (i) solicitation;
594 (ii) negotiation preliminary to execution;
595 (iii) execution of a contract of title insurance;
596 (iv) insuring; and
597 (v) transacting matters subsequent to the execution of the contract and arising out of
598 the contract, including reinsurance; and
599 (h) doing, or proposing to do, any business in substance equivalent to Subsections
600 [(84)] (85)(a) through (g) in a manner designed to evade the provisions of this title.
601 [(85)] (86) "Insurance consultant" or "consultant" means a person who:
602 (a) advises [other persons] another person about insurance needs and coverages;
603 (b) is compensated by the person advised on a basis not directly related to the insurance
604 placed; and
605 (c) except as provided in Section 31A-23a-501 , is not compensated directly or
606 indirectly by an insurer or producer for advice given.
607 [(86)] (87) "Insurance holding company system" means a group of two or more
608 affiliated persons, at least one of whom is an insurer.
609 [(87)] (88) (a) "Insurance producer" or "producer" means a person licensed or required
610 to be licensed under the laws of this state to sell, solicit, or negotiate insurance.
611 (b) With regards to the selling, soliciting, or negotiating of an insurance product to an
612 insurance customer or an insured:
613 (i) "producer for the insurer" means a producer who is compensated directly or
614 indirectly by an insurer for selling, soliciting, or negotiating [any] a product of that insurer; and
615 (ii) "producer for the insured" means a producer who:
616 (A) is compensated directly and only by an insurance customer or an insured; and

617 (B) receives no compensation directly or indirectly from an insurer for selling,
618 soliciting, or negotiating [any] a product of that insurer to an insurance customer or insured.
619 [(88)] (89) (a) "Insured" means a person to whom or for whose benefit an insurer
620 makes a promise in an insurance policy and includes:
621 (i) [policyholders] a policyholder;
622 (ii) [subscribers] a subscriber;
623 (iii) [members] a member; and
624 (iv) [beneficiaries] a beneficiary.
625 (b) The definition in Subsection [(88)] (89)(a):
626 (i) applies only to this title; and
627 (ii) does not define the meaning of this word as used in an insurance [policies or
628 certificates] policy or certificate.
629 [(89)] (90) (a) (i) "Insurer" means [any] a person doing an insurance business as a
630 principal including:
631 (A) a fraternal benefit [societies] society;
632 (B) [issuers of gift annuities other than those] an issuer of a gift annuity other than an
633 annuity specified in Subsections 31A-22-1305 (2) and (3);
634 (C) a motor [clubs] club;
635 (D) an employee welfare [plans] plan; and
636 (E) [any] a person purporting or intending to do an insurance business as a principal on
637 that person's own account.
638 (ii) "Insurer" does not include a governmental entity to the extent [it] the governmental
639 entity is engaged in [the activities] an activity described in Section 31A-12-107 .
640 (b) "Admitted insurer" is defined in Subsection [(161)] (163)(b).
641 (c) "Alien insurer" is defined in Subsection (7).
642 (d) "Authorized insurer" is defined in Subsection [(161)] (163)(b).
643 (e) "Domestic insurer" is defined in Subsection (48).
644 (f) "Foreign insurer" is defined in Subsection [(64)] (65).
645 (g) "Nonadmitted insurer" is defined in Subsection [(161)] (163)(a).
646 (h) "Unauthorized insurer" is defined in Subsection [(161)] (163)(a).
647 [(90)] (91) "Interinsurance exchange" is defined in Subsection [(141)] (142).

648 [(91)] (92) "Involuntary unemployment insurance" means insurance:
649 (a) offered in connection with an extension of credit; and
650 (b) that provides indemnity if the debtor is involuntarily unemployed for payments
651 coming due on a:
652 (i) specific loan; or
653 (ii) credit transaction.
654 [(92)] (93) "Large employer," in connection with a health benefit plan, means an
655 employer who, with respect to a calendar year and to a plan year:
656 (a) employed an average of at least 51 eligible employees on each business day during
657 the preceding calendar year; and
658 (b) employs at least two employees on the first day of the plan year.
659 [(93)] (94) "Late enrollee," with respect to an employer health benefit plan, means an
660 individual whose enrollment is a late enrollment.
661 [(94)] (95) "Late enrollment," with respect to an employer health benefit plan, means
662 enrollment of an individual other than:
663 (a) on the earliest date on which coverage can become effective for the individual
664 under the terms of the plan; or
665 (b) through special enrollment.
666 [(95)] (96) (a) Except for a retainer contract or legal assistance described in Section
667 31A-1-103 , "legal expense insurance" means insurance written to indemnify or pay for a
668 specified legal [expenses] expense.
669 (b) "Legal expense insurance" includes [arrangements that create] an arrangement that
670 creates a reasonable [expectations of ] expectation of an enforceable [rights] right.
671 (c) "Legal expense insurance" does not include the provision of, or reimbursement for,
672 legal services incidental to other insurance [coverages] coverage.
673 [(96)] (97) (a) "Liability insurance" means insurance against liability:
674 (i) for death, injury, or disability of [any] a human being, or for damage to property,
675 exclusive of the coverages under:
676 (A) Subsection [(106)] (107) for medical malpractice insurance;
677 (B) Subsection [(133)] (134) for professional liability insurance; and
678 (C) Subsection [(166)] (168) for workers' compensation insurance;

679 (ii) for a medical, hospital, surgical, and funeral [benefits to persons] benefit to a
680 person other than the insured who [are] is injured, irrespective of legal liability of the insured,
681 when issued with or supplemental to insurance against legal liability for the death, injury, or
682 disability of a human [beings] being, exclusive of the coverages under:
683 (A) Subsection [(106)] (107) for medical malpractice insurance;
684 (B) Subsection [(133)] (134) for professional liability insurance; and
685 (C) Subsection [(166)] (168) for workers' compensation insurance;
686 (iii) for loss or damage to property resulting from [accidents to or explosions of boilers,
687 pipes, pressure containers] an accident to or explosion of a boiler, pipe, pressure container,
688 machinery, or apparatus;
689 (iv) for loss or damage to [any] property caused by:
690 (A) the breakage or leakage of [sprinklers, water pipes and containers, or by] a
691 sprinkler, water pipe, or water container; or
692 (B) water entering through [leaks or openings in buildings] a leak or opening in a
693 building; or
694 (v) for other loss or damage properly the subject of insurance not within [any other]
695 another kind [or kinds] of insurance as defined in this chapter, if [such] the insurance is not
696 contrary to law or public policy.
697 (b) "Liability insurance" includes:
698 (i) vehicle liability insurance as defined in Subsection [(163)] (165);
699 (ii) residential dwelling liability insurance as defined in Subsection [(144)] (145); and
700 (iii) making inspection of, and issuing [certificates] a certificate of inspection upon,
701 [elevators, boilers] an elevator, boiler, machinery, [and] or apparatus of any kind when done in
702 connection with insurance on [them] the elevator, boiler, machinery, or apparatus.
703 [(97)] (98) (a) "License" means the authorization issued by the commissioner to engage
704 in [some] an activity that is part of or related to the insurance business.
705 (b) "License" includes [certificates] a certificate of authority issued to [insurers] an
706 insurer.
707 [(98)] (99) (a) "Life insurance" means:
708 (i) insurance on a human [lives] life; and [insurances]
709 (ii) insurance pertaining to or connected with human life.

710 (b) The business of life insurance includes:
711 (i) granting a death [benefits] benefit;
712 (ii) granting an annuity [benefits] benefit;
713 (iii) granting an endowment [benefits] benefit;
714 (iv) granting an additional [benefits] benefit in the event of death by accident;
715 (v) granting an additional [benefits] benefit to safeguard the policy against lapse; and
716 (vi) providing an optional [methods] method of settlement of proceeds.
717 [(99)] (100) "Limited license" means a license that:
718 (a) is issued for a specific product of insurance; and
719 (b) limits an individual or agency to transact only for that product or insurance.
720 [(100)] (101) "Limited line credit insurance" includes the following forms of
721 insurance:
722 (a) credit life;
723 (b) credit accident and health;
724 (c) credit property;
725 (d) credit unemployment;
726 (e) involuntary unemployment;
727 (f) mortgage life;
728 (g) mortgage guaranty;
729 (h) mortgage accident and health;
730 (i) guaranteed automobile protection; and
731 (j) [any other] another form of insurance offered in connection with an extension of
732 credit that:
733 (i) is limited to partially or wholly extinguishing the credit obligation; and
734 (ii) the commissioner determines by rule should be designated as a form of limited line
735 credit insurance.
736 [(101)] (102) "Limited line credit insurance producer" means a person who sells,
737 solicits, or negotiates one or more forms of limited line credit insurance coverage to
738 [individuals] an individual through a master, corporate, group, or individual policy.
739 [(102)] (103) "Limited line insurance" includes:
740 (a) bail bond;

741 (b) limited line credit insurance;
742 (c) legal expense insurance;
743 (d) motor club insurance;
744 (e) rental car-related insurance;
745 (f) travel insurance; and
746 (g) [any other] another form of limited insurance that the commissioner determines by
747 rule should be designated a form of limited line insurance.
748 [(103)] (104) "Limited lines authority" includes:
749 (a) the lines of insurance listed in Subsection [(102)] (103); and
750 (b) a customer service representative.
751 [(104)] (105) "Limited lines producer" means a person who sells, solicits, or negotiates
752 limited lines insurance.
753 [(105)] (106) (a) "Long-term care insurance" means an insurance policy or rider
754 advertised, marketed, offered, or designated to provide coverage:
755 (i) in a setting other than an acute care unit of a hospital;
756 (ii) for not less than 12 consecutive months for [each] a covered person on the basis of:
757 (A) expenses incurred;
758 (B) indemnity;
759 (C) prepayment; or
760 (D) another method;
761 (iii) for one or more necessary or medically necessary services that are:
762 (A) diagnostic;
763 (B) preventative;
764 (C) therapeutic;
765 (D) rehabilitative;
766 (E) maintenance; or
767 (F) personal care; and
768 (iv) that may be issued by:
769 (A) an insurer;
770 (B) a fraternal benefit society;
771 (C) (I) a nonprofit health hospital; and

772 (II) a medical service corporation;
773 (D) a prepaid health plan;
774 (E) a health maintenance organization; or
775 (F) an entity similar to the entities described in Subsections [(105)] (106)(a)(iv)(A)
776 through (E) to the extent that the entity is otherwise authorized to issue life or health care
777 insurance.
778 (b) "Long-term care insurance" includes:
779 (i) any of the following that provide directly or supplement long-term care insurance:
780 (A) a group or individual annuity or rider; or
781 (B) a life insurance policy or rider;
782 (ii) a policy or rider that provides for payment of benefits [based on] on the basis of:
783 (A) cognitive impairment; or
784 (B) functional capacity; or
785 (iii) a qualified long-term care insurance contract.
786 (c) "Long-term care insurance" does not include:
787 (i) a policy that is offered primarily to provide basic Medicare supplement coverage;
788 (ii) basic hospital expense coverage;
789 (iii) basic medical/surgical expense coverage;
790 (iv) hospital confinement indemnity coverage;
791 (v) major medical expense coverage;
792 (vi) income replacement or related asset-protection coverage;
793 (vii) accident only coverage;
794 (viii) coverage for a specified:
795 (A) disease; or
796 (B) accident;
797 (ix) limited benefit health coverage; or
798 (x) a life insurance policy that accelerates the death benefit to provide the option of a
799 lump sum payment:
800 (A) if the following are not conditioned on the receipt of long-term care:
801 (I) benefits; or
802 (II) eligibility; and

803 (B) the coverage is for one or more the following qualifying events:
804 (I) terminal illness;
805 (II) medical conditions requiring extraordinary medical intervention; or
806 (III) permanent institutional confinement.
807 [(106)] (107) "Medical malpractice insurance" means insurance against legal liability
808 incident to the practice and provision of a medical [services] service other than the practice and
809 provision of a dental [services] service.
810 [(107)] (108) "Member" means a person having membership rights in an insurance
811 corporation.
812 [(108)] (109) "Minimum capital" or "minimum required capital" means the capital that
813 must be constantly maintained by a stock insurance corporation as required by statute.
814 [(109)] (110) "Mortgage accident and health insurance" means insurance offered in
815 connection with an extension of credit that provides indemnity for payments coming due on a
816 mortgage while the debtor is disabled.
817 [(110)] (111) "Mortgage guaranty insurance" means surety insurance under which
818 [mortgagees and other creditors are] a mortgagee or other creditor is indemnified against losses
819 caused by the default of [debtors] a debtor.
820 [(111)] (112) "Mortgage life insurance" means insurance on the life of a debtor in
821 connection with an extension of credit that pays if the debtor dies.
822 [(112)] (113) "Motor club" means a person:
823 (a) licensed under:
824 (i) Chapter 5, Domestic Stock and Mutual Insurance Corporations;
825 (ii) Chapter 11, Motor Clubs; or
826 (iii) Chapter 14, Foreign Insurers; and
827 (b) that promises for an advance consideration to provide for a stated period of time
828 one or more:
829 (i) legal services under Subsection 31A-11-102 (1)(b);
830 (ii) bail services under Subsection 31A-11-102 (1)(c); or
831 (iii) (A) trip reimbursement;
832 (B) towing services;
833 (C) emergency road services;

834 (D) stolen automobile services;
835 (E) a combination of the services listed in Subsections [(112)] (113)(b)(iii)(A) through
836 (D); or
837 (F) [any] other services given in Subsections 31A-11-102 (1)(b) through (f).
838 [(113)] (114) "Mutual" means a mutual insurance corporation.
839 [(114)] (115) "Network plan" means health care insurance:
840 (a) that is issued by an insurer; and
841 (b) under which the financing and delivery of medical care is provided, in whole or in
842 part, through a defined set of providers under contract with the insurer, including the financing
843 and delivery of [items] an item paid for as medical care.
844 [(115)] (116) "Nonparticipating" means a plan of insurance under which the insured is
845 not entitled to receive [dividends] a dividend representing [shares] a share of the surplus of the
846 insurer.
847 [(116)] (117) "Ocean marine insurance" means insurance against loss of or damage to:
848 (a) ships or hulls of ships;
849 (b) goods, freight, cargoes, merchandise, effects, disbursements, profits, moneys,
850 securities, choses in action, evidences of debt, valuable papers, bottomry, respondentia
851 interests, or other cargoes in or awaiting transit over the oceans or inland waterways;
852 (c) earnings such as freight, passage money, commissions, or profits derived from
853 transporting goods or people upon or across the oceans or inland waterways; or
854 (d) a vessel owner or operator as a result of liability to employees, passengers, bailors,
855 owners of other vessels, owners of fixed objects, customs or other authorities, or other persons
856 in connection with maritime activity.
857 [(117)] (118) "Order" means an order of the commissioner.
858 [(118)] (119) "Outline of coverage" means a summary that explains an accident and
859 health insurance policy.
860 [(119)] (120) "Participating" means a plan of insurance under which the insured is
861 entitled to receive [dividends] a dividend representing [shares] a share of the surplus of the
862 insurer.
863 [(120)] (121) "Participation," as used in a health benefit plan, means a requirement
864 relating to the minimum percentage of eligible employees that must be enrolled in relation to

865 the total number of eligible employees of an employer reduced by each eligible employee who
866 voluntarily declines coverage under the plan because the employee:
867 (a) has other group health care insurance coverage[.]; or
868 (b) receives:
869 (i) Medicare, under the Health Insurance for the Aged Act, Title XVIII of the Social
870 Security Amendments of 1965; or
871 (ii) another government health benefit.
872 [(121)] (122) "Person" includes:
873 (a) an individual[,];
874 (b) a partnership[,];
875 (c) a corporation[,];
876 (d) an incorporated or unincorporated association[,];
877 (e) a joint stock company[,];
878 (f) a trust[,];
879 (g) a limited liability company[,];
880 (h) a reciprocal[,];
881 (i) a syndicate[,]; or [any]
882 (j) another similar entity or combination of entities acting in concert.
883 [(122)] (123) "Personal lines insurance" means property and casualty insurance
884 coverage sold for primarily noncommercial purposes to:
885 (a) [individuals; and] an individual; or
886 (b) [families] a family.
887 [(123)] (124) "Plan sponsor" is as defined in 29 U.S.C. Sec. 1002(16)(B).
888 [(124)] (125) "Plan year" means:
889 (a) the year that is designated as the plan year in:
890 (i) the plan document of a group health plan; or
891 (ii) a summary plan description of a group health plan;
892 (b) if the plan document or summary plan description does not designate a plan year or
893 there is no plan document or summary plan description:
894 (i) the year used to determine deductibles or limits;
895 (ii) the policy year, if the plan does not impose deductibles or limits on a yearly basis;

896 or
897 (iii) the employer's taxable year if:
898 (A) the plan does not impose deductibles or limits on a yearly basis; and
899 (B) (I) the plan is not insured; or
900 (II) the insurance policy is not renewed on an annual basis; or
901 (c) in a case not described in Subsection [(124)] (125)(a) or (b), the calendar year.
902 [(125)] (126) (a) "Policy" means [any] a document, including any attached
903 [endorsements and riders, purporting] endorsement or application that:
904 (i) purports to be an enforceable contract[, which]; and
905 (ii) memorializes in writing some or all of the terms of an insurance contract.
906 (b) "Policy" includes a service contract issued by:
907 (i) a motor club under Chapter 11, Motor Clubs;
908 (ii) a service contract provided under Chapter 6a, Service Contracts; and
909 (iii) a corporation licensed under:
910 (A) Chapter 7, Nonprofit Health Service Insurance Corporations; or
911 (B) Chapter 8, Health Maintenance Organizations and Limited Health Plans.
912 (c) "Policy" does not include:
913 (i) a certificate under a group insurance contract; or
914 (ii) a document that does not purport to have legal effect.
915 [(126)] (127) "Policyholder" means the person who controls a policy, binder, or oral
916 contract by ownership, premium payment, or otherwise.
917 [(127)] (128) "Policy illustration" means a presentation or depiction that includes
918 nonguaranteed elements of a policy of life insurance over a period of years.
919 [(128)] (129) "Policy summary" means a synopsis describing the elements of a life
920 insurance policy.
921 [(129)] (130) "Preexisting condition," with respect to a health benefit plan:
922 (a) means a condition that was present before the effective date of coverage, whether or
923 not [any] medical advice, diagnosis, care, or treatment was recommended or received before
924 that day; and
925 (b) does not include a condition indicated by genetic information unless an actual
926 diagnosis of the condition by a physician has been made.

927 [(130)] (131) (a) "Premium" means the monetary consideration for an insurance policy.
928 (b) "Premium" includes, however designated:
929 (i) [assessments] an assessment;
930 (ii) a membership [fees] fee;
931 (iii) a required [contributions] contribution; or
932 (iv) monetary consideration.
933 (c) (i) [Consideration] "Premium" does not include consideration paid to a third party
934 [administrators for their services is not "premium."] administrator for the third party
935 administrator's services.
936 (ii) [Amounts] "Premium" includes an amount paid by a third party [administrators to
937 insurers] administrator to an insurer for insurance on the risks administered by the third party
938 [administrators are "premium."] administrator.
939 [(131)] (132) "Principal officers" of a corporation means the officers designated under
940 Subsection 31A-5-203 (3).
941 [(132) "Proceedings"] (133) "Proceeding" includes [actions and] an action or special
942 statutory [proceedings] proceeding.
943 [(133)] (134) "Professional liability insurance" means insurance against legal liability
944 incident to the practice of a profession and provision of [any] a professional [services] service.
945 [(134)] (135) (a) Except as provided in Subsection [(134)] (135)(b), "property
946 insurance" means insurance against loss or damage to real or personal property of every kind
947 and any interest in that property:
948 (i) from all hazards or causes; and
949 (ii) against loss consequential upon the loss or damage including vehicle
950 comprehensive and vehicle physical damage coverages.
951 (b) "Property insurance" does not include:
952 (i) inland marine insurance as defined in Subsection [(80)] (81); and
953 (ii) ocean marine insurance as defined under Subsection [(116)] (117).
954 [(135)] (136) "Qualified long-term care insurance contract" or "federally tax qualified
955 long-term care insurance contract" means:
956 (a) an individual or group insurance contract that meets the requirements of Section
957 7702B(b), Internal Revenue Code; or

958 (b) the portion of a life insurance contract that provides long-term care insurance:
959 (i) (A) by rider; or
960 (B) as a part of the contract; and
961 (ii) that satisfies the requirements of Sections 7702B(b) and (e), Internal Revenue
962 Code.
963 [(136)] (137) "Qualified United States financial institution" means an institution that:
964 (a) is:
965 (i) organized under the laws of the United States or any state; or
966 (ii) in the case of a United States office of a foreign banking organization, licensed
967 under the laws of the United States or any state;
968 (b) is regulated, supervised, and examined by a United States federal or state
969 [authorities] authority having regulatory authority over [banks and trust companies] a bank or
970 trust company; and
971 (c) meets the standards of financial condition and standing that are considered
972 necessary and appropriate to regulate the quality of a financial [institutions] institution whose
973 letters of credit will be acceptable to the commissioner as determined by:
974 (i) the commissioner by rule; or
975 (ii) the Securities Valuation Office of the National Association of Insurance
976 Commissioners.
977 [(137)] (138) (a) "Rate" means:
978 (i) the cost of a given unit of insurance; or
979 (ii) for property-casualty insurance, that cost of insurance per exposure unit either
980 expressed as:
981 (A) a single number; or
982 (B) a pure premium rate, adjusted before [any] the application of individual risk
983 variations based on loss or expense considerations to account for the treatment of:
984 (I) expenses;
985 (II) profit; and
986 (III) individual insurer variation in loss experience.
987 (b) "Rate" does not include a minimum premium.
988 [(138)] (139) (a) Except as provided in Subsection [(138)] (139)(b), "rate service

989 organization" means [any] a person who assists [insurers] an insurer in rate making or filing by:
990 (i) collecting, compiling, and furnishing loss or expense statistics;
991 (ii) recommending, making, or filing rates or supplementary rate information; or
992 (iii) advising about rate questions, except as an attorney giving legal advice.
993 (b) "Rate service organization" does not mean:
994 (i) an employee of an insurer;
995 (ii) a single insurer or group of insurers under common control;
996 (iii) a joint underwriting group; or
997 (iv) a natural person serving as an actuarial or legal consultant.
998 [(139)] (140) "Rating manual" means any of the following used to determine initial and
999 renewal policy premiums:
1000 (a) a manual of rates;
1001 (b) [classifications] a classification;
1002 (c) a rate-related underwriting [rules] rule; and
1003 (d) a rating [formulas that describe] formula that describes steps, policies, and
1004 procedures for determining initial and renewal policy premiums.
1005 [(140)] (141) "Received by the department" means:
1006 (a) except as provided in Subsection [(140)] (141)(b), the date delivered to and
1007 stamped received by the department, whether delivered:
1008 (i) in person; or
1009 (ii) electronically; and
1010 (b) if delivered to the department by a delivery service, the delivery service's postmark
1011 date or pick-up date unless otherwise stated in:
1012 (i) statute;
1013 (ii) rule; or
1014 (iii) a specific filing order.
1015 [(141)] (142) "Reciprocal" or "interinsurance exchange" means [any] an
1016 unincorporated association of persons:
1017 (a) operating through an attorney-in-fact common to all of [them] the persons; and
1018 (b) exchanging insurance contracts with one another that provide insurance coverage
1019 on each other.

1020 [(142)] (143) "Reinsurance" means an insurance transaction where an insurer, for
1021 consideration, transfers any portion of the risk it has assumed to another insurer. In referring to
1022 reinsurance transactions, this title sometimes refers to:
1023 (a) the insurer transferring the risk as the "ceding insurer"; and
1024 (b) the insurer assuming the risk as the:
1025 (i) "assuming insurer"; or
1026 (ii) "assuming reinsurer."
1027 [(143)] (144) "Reinsurer" means [any] a person licensed in this state as an insurer with
1028 the authority to assume reinsurance.
1029 [(144)] (145) "Residential dwelling liability insurance" means insurance against
1030 liability resulting from or incident to the ownership, maintenance, or use of a residential
1031 dwelling that is a detached single family residence or multifamily residence up to four units.
1032 [(145)] (146) (a) "Retrocession" means reinsurance with another insurer of a liability
1033 assumed under a reinsurance contract.
1034 (b) A reinsurer "retrocedes" when [it] the reinsurer reinsures with another insurer part
1035 of a liability assumed under a reinsurance contract.
1036 [(146)] (147) "Rider" means an endorsement to:
1037 (a) an insurance policy; or
1038 (b) an insurance certificate.
1039 [(147)] (148) (a) "Security" means [any] a:
1040 (i) note;
1041 (ii) stock;
1042 (iii) bond;
1043 (iv) debenture;
1044 (v) evidence of indebtedness;
1045 (vi) certificate of interest or participation in [any] a profit-sharing agreement;
1046 (vii) collateral-trust certificate;
1047 (viii) preorganization certificate or subscription;
1048 (ix) transferable share;
1049 (x) investment contract;
1050 (xi) voting trust certificate;

1051 (xii) certificate of deposit for a security;
1052 (xiii) certificate of interest of participation in an oil, gas, or mining title or lease or in
1053 payments out of production under such a title or lease;
1054 (xiv) commodity contract or commodity option;
1055 (xv) certificate of interest or participation in, temporary or interim certificate for, receipt
1056 for, guarantee of, or warrant or right to subscribe to or purchase any of the items listed in
1057 Subsections [(147)] (148)(a)(i) through (xiv); or
1058 (xvi) [other] another interest or instrument commonly known as a security.
1059 (b) "Security" does not include:
1060 (i) any of the following under which an insurance company promises to pay money in a
1061 specific lump sum or periodically for life or some other specified period:
1062 (A) insurance;
1063 (B) endowment policy; or
1064 (C) annuity contract; or
1065 (ii) a burial certificate or burial contract.
1066 (149) "Secondary medical condition" means a complication related to an exclusion
1067 from coverage in accident and health insurance.
1068 [(148)] (150) "Self-insurance" means [any] an arrangement under which a person
1069 provides for spreading its own risks by a systematic plan.
1070 (a) Except as provided in this Subsection [(148)] (150), "self-insurance" does not
1071 include an arrangement under which a number of persons spread their risks among themselves.
1072 (b) "Self-insurance" includes:
1073 (i) an arrangement by which a governmental entity undertakes to indemnify [its
1074 employees] an employee for liability arising out of the [employees'] employee's employment;
1075 and
1076 (ii) an arrangement by which a person with a managed program of self-insurance and
1077 risk management undertakes to indemnify its affiliates, subsidiaries, directors, officers, or
1078 employees for liability or risk which is related to the relationship or employment.
1079 (c) "Self-insurance" does not include [any] an arrangement with an independent
1080 [contractors] contractor.
1081 [(149)] (151) "Sell" means to exchange a contract of insurance:

1082 (a) by any means;
1083 (b) for money or its equivalent; and
1084 (c) on behalf of an insurance company.
1085 [(150)] (152) "Short-term care insurance" means [any] an insurance policy or rider
1086 advertised, marketed, offered, or designed to provide coverage that is similar to long-term care
1087 insurance, but that provides coverage for less than 12 consecutive months for each covered
1088 person.
1089 [(151)] (153) "Significant break in coverage" means a period of 63 consecutive days
1090 during each of which an individual does not have [any] creditable coverage.
1091 [(152)] (154) "Small employer," in connection with a health benefit plan, means an
1092 employer who, with respect to a calendar year and to a plan year:
1093 (a) employed an average of at least two employees but not more than 50 eligible
1094 employees on each business day during the preceding calendar year; and
1095 (b) employs at least two employees on the first day of the plan year.
1096 [(153)] (155) "Special enrollment period," in connection with a health benefit plan, has
1097 the same meaning as provided in federal regulations adopted pursuant to the Health Insurance
1098 Portability and Accountability Act of 1996, Pub. L. No. 104-191, 110 Stat. 1936.
1099 [(154)] (156) (a) "Subsidiary" of a person means an affiliate controlled by that person
1100 either directly or indirectly through one or more affiliates or intermediaries.
1101 (b) "Wholly owned subsidiary" of a person is a subsidiary of which all of the voting
1102 shares are owned by that person either alone or with its affiliates, except for the minimum
1103 number of shares the law of the subsidiary's domicile requires to be owned by directors or
1104 others.
1105 [(155)] (157) Subject to Subsection [(82)] (83)(b), "surety insurance" includes:
1106 (a) a guarantee against loss or damage resulting from the failure of [principals] a
1107 principal to pay or perform [their] the principal's obligations to a creditor or other obligee;
1108 (b) bail bond insurance; and
1109 (c) fidelity insurance.
1110 [(156)] (158) (a) "Surplus" means the excess of assets over the sum of paid-in capital
1111 and liabilities.
1112 (b) (i) "Permanent surplus" means the surplus of a mutual insurer that [has been] is

1113 designated by the insurer as permanent.
1114 (ii) Sections 31A-5-211 , 31A-7-201 , 31A-8-209 , 31A-9-209 , and 31A-14-209 require
1115 that mutuals doing business in this state maintain specified minimum levels of permanent
1116 surplus.
1117 (iii) Except for assessable mutuals, the minimum permanent surplus requirement is
1118 essentially the same as the minimum required capital requirement that applies to stock insurers.
1119 (c) "Excess surplus" means:
1120 (i) for [life or accident and health insurers, health organizations, and property and
1121 casualty insurers] a life insurer, accident and health insurer, health organization, or property
1122 and casualty insurer as defined in Section 31A-17-601 , the lesser of:
1123 (A) that amount of an insurer's or health organization's total adjusted capital, as defined
1124 in Subsection [(159)] (161), that exceeds the product of:
1125 (I) 2.5; and
1126 (II) the sum of the insurer's or health organization's minimum capital or permanent
1127 surplus required under Section 31A-5-211 , 31A-9-209 , or 31A-14-205 ; or
1128 (B) that amount of an insurer's or health organization's total adjusted capital, as defined
1129 in Subsection [(159)] (161), that exceeds the product of:
1130 (I) 3.0; and
1131 (II) the authorized control level RBC as defined in Subsection 31A-17-601 (8)(a); and
1132 (ii) for [monoline mortgage guaranty insurers, financial guaranty insurers, and title
1133 insurers,] a monoline mortgage guaranty insurer, financial guaranty insurer, or title insurer that
1134 amount of an insurer's paid-in-capital and surplus that exceeds the product of:
1135 (A) 1.5; and
1136 (B) the insurer's total adjusted capital required by Subsection 31A-17-609 (1).
1137 [(157)] (159) "Third party administrator" or "administrator" means [any] a person who
1138 collects charges or premiums from, or who, for consideration, adjusts or settles claims of
1139 residents of the state in connection with insurance coverage, annuities, or service insurance
1140 coverage, except:
1141 (a) a union on behalf of its members;
1142 (b) a person administering [any] a:
1143 (i) pension plan subject to the federal Employee Retirement Income Security Act of

1144 1974;
1145 (ii) governmental plan as defined in Section 414(d), Internal Revenue Code; or
1146 (iii) nonelecting church plan as described in Section 410(d), Internal Revenue Code;
1147 (c) an employer on behalf of the employer's employees or the employees of one or
1148 more of the subsidiary or affiliated corporations of the employer;
1149 (d) an insurer licensed under Chapter 5, 7, 8, 9, or 14, but only for a line of insurance
1150 for which the insurer holds a license in this state; or
1151 (e) a person:
1152 (i) licensed or exempt from licensing under:
1153 (A) Chapter 23a, Insurance Marketing - Licensing Producers, Consultants, and
1154 Reinsurance Intermediaries; or
1155 (B) Chapter 26, Insurance Adjusters; and
1156 (ii) whose activities are limited to those authorized under the license the person holds
1157 or for which the person is exempt.
1158 [(158)] (160) "Title insurance" means the insuring, guaranteeing, or indemnifying of
1159 [owners] an owner of real or personal property or the [holders] holder of liens or encumbrances
1160 on that property, or others interested in the property against loss or damage suffered by reason
1161 of liens or encumbrances upon, defects in, or the unmarketability of the title to the property, or
1162 invalidity or unenforceability of any liens or encumbrances on the property.
1163 [(159)] (161) "Total adjusted capital" means the sum of an insurer's or health
1164 organization's statutory capital and surplus as determined in accordance with:
1165 (a) the statutory accounting applicable to the annual financial statements required to be
1166 filed under Section 31A-4-113 ; and
1167 (b) [any other items] another item provided by the RBC instructions, as RBC
1168 instructions is defined in Section 31A-17-601 .
1169 [(160)] (162) (a) "Trustee" means "director" when referring to the board of directors of
1170 a corporation.
1171 (b) "Trustee," when used in reference to an employee welfare fund, means an
1172 individual, firm, association, organization, joint stock company, or corporation, whether acting
1173 individually or jointly and whether designated by that name or any other, that is charged with
1174 or has the overall management of an employee welfare fund.

1175 [(161)] (163) (a) "Unauthorized insurer," "unadmitted insurer," or "nonadmitted
1176 insurer" means an insurer:
1177 (i) not holding a valid certificate of authority to do an insurance business in this state;
1178 or
1179 (ii) transacting business not authorized by a valid certificate.
1180 (b) "Admitted insurer" or "authorized insurer" means an insurer:
1181 (i) holding a valid certificate of authority to do an insurance business in this state; and
1182 (ii) transacting business as authorized by a valid certificate.
1183 [(162)] (164) "Underwrite" means the authority to accept or reject risk on behalf of the
1184 insurer.
1185 [(163)] (165) "Vehicle liability insurance" means insurance against liability resulting
1186 from or incident to ownership, maintenance, or use of [any] a land vehicle or aircraft, exclusive
1187 of a vehicle comprehensive [and] or vehicle physical damage [coverages] coverage under
1188 Subsection [(134)] (135).
1189 [(164)] (166) "Voting security" means a security with voting rights, and includes [any]
1190 a security convertible into a security with a voting right associated with the security.
1191 [(165)] (167) "Waiting period" for a health benefit plan means the period that must
1192 pass before coverage for an individual, who is otherwise eligible to enroll under the terms of
1193 the health benefit plan, can become effective.
1194 [(166)] (168) "Workers' compensation insurance" means:
1195 (a) insurance for indemnification of [employers] an employer against liability for
1196 compensation based on:
1197 (i) a compensable accidental [injuries] injury; and
1198 (ii) occupational disease disability;
1199 (b) employer's liability insurance incidental to workers' compensation insurance and
1200 written in connection with workers' compensation insurance; and
1201 (c) insurance assuring to [the persons] a person entitled to workers' compensation
1202 benefits the compensation provided by law.
1203 Section 2. Section 31A-2-203 is amended to read:
1204 31A-2-203. Examinations and alternatives.
1205 (1) (a) Whenever the commissioner [considers it necessary in order to inform the

1206 commissioner about any] determines that information is needed about a matter related to the
1207 enforcement of this title, the commissioner may examine the affairs and condition of:
1208 (i) a licensee under this title;
1209 (ii) an applicant for a license under this title;
1210 (iii) a person or organization of persons doing or in process of organizing to do an
1211 insurance business in this state; or
1212 (iv) a person who is not, but should be, licensed under this title.
1213 (b) When reasonably necessary for an examination under Subsection (1)(a), the
1214 commissioner may examine:
1215 (i) so far as [they relate] it relates to the examinee, [the accounts, records, documents,
1216 or evidences of transactions] an account, record, document, or evidence of a transaction of:
1217 (A) the insurer or other licensee;
1218 (B) [any] an officer or other person who has executive authority over or is in charge of
1219 any segment of the examinee's affairs; or
1220 (C) [any] an affiliate of the examinee; or
1221 (ii) [any] a third party model or product used by the examinee.
1222 (c) (i) On demand, [each] an examinee under Subsection (1)(a) shall make available to
1223 the commissioner for examination:
1224 (A) [any of] the examinee's own [accounts, records, files, documents, or evidences of
1225 transactions] account, record, file, document, or evidence of a transaction; and
1226 (B) to the extent reasonably necessary for an examination, [the accounts, records, files,
1227 documents, or evidences of transactions of any persons] an account, record, file, document, or
1228 evidence of a transaction of a person described under Subsection (1)(b).
1229 (ii) Except as provided in Subsection (1)(c)(iii), failure to make [the documents] an
1230 item described in Subsection (1)(c)(i) available is concealment of records under Subsection
1231 31A-27a-207 (1)(e).
1232 (iii) If the examinee is unable to obtain [accounts, records, files, documents, or
1233 evidences of transactions from persons] an account, record, file, document, or evidence of a
1234 transaction from a person described under Subsection (1)(b), that failure is not concealment of
1235 records if the examinee immediately terminates the relationship with the other person.
1236 (d) (i) Neither the commissioner nor an examiner may remove [any] an account,

1237 record, file, document, evidence of a transaction, or other property of the examinee from the
1238 examinee's offices unless:
1239 (A) the examinee consents in writing; or
1240 (B) a court grants permission.
1241 (ii) The commissioner may make and remove [copies or abstracts] a copy or abstract of
1242 the following described in Subsection (1)(d)(i):
1243 (A) an account;
1244 (B) a record;
1245 (C) a file;
1246 (D) a document;
1247 (E) evidence of a transaction; or
1248 (F) other property.
1249 (2) (a) Subject to the other provisions of this section, the commissioner shall examine
1250 as needed and as otherwise provided by law:
1251 (i) every insurer, both domestic and nondomestic;
1252 (ii) every licensed rate service organization; and
1253 (iii) any other licensee.
1254 (b) The commissioner shall examine [insurers] an insurer, both domestic and
1255 nondomestic, no less frequently than once every five years, but the commissioner may use in
1256 lieu [examinations] an examination under Subsection (4) to satisfy this requirement.
1257 (c) The commissioner shall revoke the certificate of authority of an insurer or the
1258 license of a rate service organization that has not been examined, or submitted an acceptable in
1259 lieu report under Subsection (4), within the past five years.
1260 (d) (i) Any 25 persons who are policyholders, shareholders, or creditors of a domestic
1261 insurer may by verified petition demand a hearing under Section 31A-2-301 to determine
1262 whether the commissioner should conduct an unscheduled examination of the insurer.
1263 (ii) Persons demanding the hearing under this Subsection (2)(d) shall be given an
1264 opportunity in the hearing to present evidence that an examination of the insurer is necessary.
1265 (iii) If the evidence justifies an examination, the commissioner shall order an
1266 examination.
1267 (e) (i) [When] If the board of directors of a domestic insurer requests that the

1268 commissioner examine the insurer, the commissioner shall examine the insurer as soon as
1269 reasonably possible.
1270 (ii) If the examination requested under this Subsection (2)(e) is conducted within two
1271 years after completion of a comprehensive examination by the commissioner, costs of the
1272 requested examination may not be deducted from premium taxes under Section 59-9-102
1273 unless the commissioner's order specifically provides for the deduction.
1274 (f) [Bail] A bail bond surety [companies] company, as defined in Section 31A-35-102 ,
1275 [are exempted] is exempt from:
1276 (i) the five-year examination requirement in Subsection (2)(b);
1277 (ii) the revocation under Subsection (2)(c); and
1278 (iii) Subsections (2)(d) and (2)(e).
1279 (3) (a) The commissioner may order an independent audit or examination by one or
1280 more technical experts, including a certified public [accountants and actuaries] accountant or
1281 actuary:
1282 (i) in lieu of all or part of an examination under Subsection (1) or (2); or
1283 (ii) in addition to an examination under Subsection (1) or (2).
1284 (b) [Any] An audit or evaluation under this Subsection (3) is subject to Subsection (5),
1285 Section 31A-2-204 , and Subsection 31A-2-205 (4).
1286 (4) (a) In lieu of all or [any] a part of an examination under this section, the
1287 commissioner may accept the report of an examination made by:
1288 (i) the insurance department of another state; or
1289 (ii) another government agency in:
1290 (A) this state;
1291 (B) the federal government; or
1292 (C) another state.
1293 (b) An examination by the commissioner under Subsection (1) or (2) or accepted by the
1294 commissioner under this Subsection (4) may use:
1295 (i) an audit already made by a certified public accountant; or
1296 (ii) an actuarial evaluation made by an actuary approved by the commissioner.
1297 (5) (a) An examination may be comprehensive or limited with respect to the
1298 examinee's affairs and condition. The commissioner shall determine the nature and scope of

1299 each examination, taking into account all relevant factors, including:
1300 (i) the length of time the examinee has been licensed in this state;
1301 (ii) the nature of the business being examined;
1302 (iii) the nature of the accounting or other records available;
1303 (iv) one or more reports from:
1304 (A) independent auditors; and
1305 (B) self-certification entities; and
1306 (v) the nature of examinations performed elsewhere.
1307 (b) The examination of an alien insurer [shall be] is limited to one or more insurance
1308 transactions and assets in the United States, unless the commissioner orders otherwise after
1309 finding that extraordinary circumstances necessitate a broader examination.
1310 (6) To effectively administer this section, the commissioner:
1311 (a) shall:
1312 (i) maintain one or more effective financial condition and market regulation
1313 surveillance systems including:
1314 (A) financial and market analysis; and
1315 (B) a review of insurance regulatory information system reports;
1316 (ii) employ a priority scheduling method that focuses on insurers and other licensees
1317 most in need of examination; and
1318 (iii) use examination management techniques similar to those outlined in the Financial
1319 Condition Examination Handbook of the National Association of Insurance Commissioners;
1320 and
1321 (b) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
1322 may make rules pertaining to [the] a financial condition and market regulation surveillance
1323 [systems] system.
1324 Section 3. Section 31A-2-403 is amended to read:
1325 31A-2-403. Title and Escrow Commission created.
1326 (1) [(a)] There is created within the department the Title and Escrow Commission that
1327 is comprised of five members appointed by the governor with the consent of the Senate as
1328 follows:
1329 [(i)] (a) four members shall each:

1330 [(A)] (i) be or have been licensed under the title insurance line of authority; [and]
1331 [(B)] (ii) as of the day on which the member is appointed, be or have been licensed
1332 with the search or escrow subline of authority for at least five years; and
1333 (iii) as of the day on which the member is appointed, not be from the same county as
1334 another member appointed under this Subsection (1)(a); and
1335 [(ii)] (b) one member shall be a member of the general public from any county in the
1336 state.
1337 [(b) No more than one commission member may be appointed from:]
1338 [(i) any county in the state; or]
1339 [(ii) any single company.]
1340 (2) (a) Subject to Subsection (2)(c), [each] a member of the commission shall file with
1341 the department a disclosure of any position of employment or ownership interest that the
1342 member of the commission has with respect to [any] a person that is subject to the jurisdiction
1343 of the department.
1344 (b) The disclosure statement required by this Subsection (2) shall be:
1345 (i) filed by no later than the day on which the person begins that person's appointment;
1346 and
1347 (ii) amended when a significant change occurs in any matter required to be disclosed
1348 under this Subsection (2).
1349 (c) A member of the commission is not required to disclose an ownership interest that
1350 the member of the commission has if the ownership interest is held as part of a mutual fund,
1351 trust, or similar investment.
1352 (3) (a) Except as required by Subsection (3)(b), as terms of current commission
1353 members expire, the governor shall appoint each new member to a four-year term ending on
1354 June 30.
1355 (b) Notwithstanding the requirements of Subsection (3)(a), the governor shall, at the
1356 time of appointment, adjust the length of terms to ensure that the terms of the commission
1357 members are staggered so that approximately half of the commission is appointed every two
1358 years.
1359 (c) A commission member may not serve more than one consecutive term.
1360 (d) When a vacancy occurs in the membership for any reason, the governor, with the

1361 consent of the Senate, shall appoint a replacement [shall be appointed] for the unexpired term.
1362 (4) (a) A member of the commission may not receive compensation or benefits for the
1363 member's services, but may receive per diem and expenses incurred in the performance of the
1364 member's official duties at the rates established by the Division of Finance under Sections
1365 63A-3-106 and 63A-3-107 .
1366 (b) A member may decline to receive per diem and expenses for the member's service.
1367 (5) Members of the commission shall annually select one member to serve as chair.
1368 (6) (a) The commission shall meet at least monthly.
1369 (b) The commissioner may call additional meetings:
1370 (i) at the commissioner's discretion;
1371 (ii) upon the request of the chair of the commission; or
1372 (iii) upon the written request of three or more commission members.
1373 (c) (i) Three members of the commission constitute a quorum for the transaction of
1374 business.
1375 (ii) The action of a majority of the members when a quorum is present is the action of
1376 the commission.
1377 (7) The department shall staff the commission.
1378 Section 4. Section 31A-4-102 is amended to read:
1379 31A-4-102. Qualified insurers.
1380 (1) A person may not conduct an insurance business in Utah[, either] in person,
1381 through [agents or brokers, or] an agent, through a broker, through the mail, or [any other]
1382 through another method of communication, except:
1383 (a) an insurer:
1384 (i) authorized to do business in Utah under [Title 31A,] Chapter 5, 7, 8, 9, 10, 11, 13,
1385 or 14[,]; and
1386 (ii) within the limits of its certificate of authority;
1387 (b) a joint underwriting group under Section 31A-2-214 or 31A-20-102 ;
1388 (c) an insurer doing business under Section 31A-15-103 ;
1389 (d) a person who[, pursuant to Section 31A-1-105 ,] submits to the commissioner a
1390 certificate from the United States Department of Labor, or such other evidence as satisfies the
1391 commissioner, that the laws of Utah are preempted with respect to specified activities of that

1392 person by Section 514 of the Employee Retirement Income Security Act of 1974 or other
1393 federal law; or
1394 (e) a person exempt from [the application of the Insurance Code] this title under
1395 Section 31A-1-103 [and all other applicable statutes] or another applicable statute.
1396 (2) As used in this section, "insurer" includes a bail bond surety company, as defined in
1397 Section 31A-35-102 .
1398 Section 5. Section 31A-4-106 is amended to read:
1399 31A-4-106. Provision of health care.
1400 (1) As used in this section, "health care provider" has the same definition as in Section
1401 78-14-3 .
1402 (2) Except under Subsection (3) or (4), unless authorized to do so or employed by
1403 someone authorized to do so under Chapter 5, 7, 8, 9, or 14, a person may not:
1404 (a) directly or indirectly provide health care[, or];
1405 (b) arrange for[,] health care;
1406 (c) manage[,] or administer the provision or arrangement of[,] health care;
1407 (d) collect advance payments for[,] health care; or
1408 (e) compensate [providers] a provider of health care [unless authorized to do so or
1409 employed by someone authorized to do so under Chapter 5, 7, 8, 9, or 14].
1410 (3) Subsection (2) does not apply to:
1411 (a) a natural person or professional corporation that alone or with others professionally
1412 associated with the natural person or professional corporation, and without receiving
1413 consideration for services in advance of the need for a particular service, provides the service
1414 personally with the aid of nonprofessional assistants;
1415 (b) a health care facility as defined in Section 26-21-2 [which] that:
1416 (i) is licensed or exempt from licensing under Title 26, Chapter 21, Health Care
1417 Facility Licensing and Inspection Act; and
1418 (ii) does not engage in health care insurance as defined under Section 31A-1-301 ;
1419 (c) a person who files with the commissioner [under Section 31A-1-105 ] a certificate
1420 from the United States Department of Labor, or other evidence satisfactory to the
1421 commissioner, showing that the laws of Utah are preempted under Section 514 of the
1422 Employee Retirement Income Security Act of 1974 or other federal law;

1423 (d) a person licensed under Chapter 23a, Insurance Marketing - Licensing Producers,
1424 Consultants, and Reinsurance Intermediaries, who [has arranged]:
1425 (i) arranges for the insurance of all services under:
1426 [(i)] (A) Subsection (2) by an insurer authorized to do business in Utah; or
1427 [(ii)] (B) Section 31A-15-103 ; or
1428 [(iii)] (ii) works for an uninsured employer that complies with Chapter 13, Employee
1429 Welfare Funds and Plans; or
1430 (e) an employer that self-funds its obligations to provide health care services or
1431 indemnity for its employees if the employer complies with Chapter 13, Employee Welfare
1432 Funds and Plans.
1433 (4) A person may not provide administrative or management services for [any other]
1434 another person subject to Subsection (2) and not exempt under Subsection (3) unless the
1435 person:
1436 (a) is an authorized insurer under Chapter 5, 7, 8, 9, or 14[,]; or
1437 (b) complies with Chapter 25, Third Party Administrators.
1438 (5) [It is unlawful for any] An insurer or person [providing, administering, or
1439 managing] who provides, administers, or manages health care insurance under Chapter 5, 7, 8,
1440 9, or 14 [to] may not enter into a contract that limits a health care provider's ability to advise
1441 the health care provider's patients or clients fully about treatment options or other issues that
1442 affect the health care of the health care provider's patients or clients.
1443 Section 6. Section 31A-6a-103 is amended to read:
1444 31A-6a-103. Requirements for doing business.
1445 (1) A service contract may not be issued, sold, or offered for sale in this state unless the
1446 service contract is insured under a service contract reimbursement insurance policy issued by:
1447 (a) an insurer authorized to do business in this state; or
1448 (b) a recognized surplus lines carrier.
1449 (2) A captive insurance company may not write a reimbursement policy for a service
1450 contract provider that is subject to this chapter.
1451 [(2)] (3) (a) A service contract may not be issued, sold, or offered for sale unless [a true
1452 and correct copy of the service contract and the provider's reimbursement insurance policy have
1453 been filed with the commissioner. A copy of a contract and policy must be filed] the service

1454 contract provider completes the registration process described in this Subsection (3).
1455 (b) To register, a service contract provider shall submit to the department the
1456 following:
1457 (i) an application for registration;
1458 (ii) a fee established in accordance with Section 31A-3-103 ;
1459 (iii) a copy of any service contract that the service contract provider offers in this state;
1460 and
1461 (iv) a copy of the service contract provider's reimbursement insurance policy.
1462 (c) A service provider shall submit the information described in Subsection (3)(b) no
1463 less than 30 days [prior to the issuance, sale offering for sale, or use of the] before the day on
1464 which the service provider issues, sells, offers for sale, or uses a service contract or
1465 reimbursement insurance policy in this state.
1466 [(b) Each] (d) A service provider shall file any modification of the terms of [any] a
1467 service contract or reimbursement insurance policy [must also be filed] 30 days [prior to its
1468 use] before the day on which it is used in this state.
1469 [(c) Persons] (e) A person complying with this chapter [are] is not required to comply
1470 with:
1471 (i) Subsections 31A-21-201 (1) and 31A-23a-402 (3); or
1472 (ii) Chapter 19a, Utah Rate Regulation Act.
1473 [(3)] (4) (a) Premiums collected on a service [contracts] contract are not subject to
1474 premium taxes.
1475 (b) Premiums collected by [issuers] an issuer of a reimbursement insurance [policies]
1476 policy are subject to premium taxes.
1477 [(4)] (5) A person marketing, selling, or offering to sell a service [contracts] contract
1478 for a service contract [providers] provider that complies with this chapter is exempt from the
1479 licensing requirements of this title.
1480 [(5) Service] (6) A service contract [providers] provider complying with this chapter
1481 [are] is not required to comply with:
1482 (a) Chapter 5, Domestic Stock and Mutual Insurance Corporations;
1483 (b) Chapter 7, Nonprofit Health Service Insurance Corporations;
1484 (c) Chapter 8, Health Maintenance Organizations and Limited Health Plans;

1485 (d) Chapter 9, Insurance Fraternals;
1486 (e) Chapter 10, Annuities;
1487 (f) Chapter 11, Motor Clubs;
1488 (g) Chapter 12, State Risk Management Fund;
1489 (h) Chapter 13, Employee Welfare Funds and Plans;
1490 (i) Chapter 14, Foreign Insurers;
1491 (j) Chapter 19a, Utah Rate Regulation Act;
1492 (k) Chapter 25, Third Party Administrators; and
1493 (l) Chapter 28, Guaranty Associations.
1494 Section 7. Section 31A-6a-104 is amended to read:
1495 31A-6a-104. Required disclosures.
1496 (1) [All] A service contract reimbursement insurance [policies] policy insuring a
1497 service [contracts] contract that is issued, sold, or offered for sale in this state must
1498 conspicuously state that, upon failure of the service contract provider to perform under the
1499 contract, the issuer of the policy shall:
1500 (a) pay on behalf of the service contract provider any sums the service contract
1501 provider is legally obligated to pay according to the service contract provider's contractual
1502 obligations under the service contract issued or sold by the service contract provider; or [shall]
1503 (b) provide the service which the service contract provider is legally obligated to
1504 perform, according to the service contract provider's contractual obligations under the service
1505 [contracts] contract issued or sold by the service contract provider.
1506 (2) (a) A service contract may not be issued, sold, or offered for sale in this state unless
1507 the service contract contains [a statement] the following statements in substantially the
1508 following form[,]:
1509 (i) "Obligations of the provider under this service contract are guaranteed under a
1510 service contract reimbursement insurance policy. Should the provider fail to pay or provide
1511 service on any claim within 60 days after proof of loss has been filed, the contract holder is
1512 entitled to make a claim directly against the Insurance Company." [The]; and
1513 (ii) "This service contract or warranty is subject to limited regulation by the Utah
1514 Insurance Department. To file a complaint, contact the Utah Insurance Department."
1515 (b) A service contract or reimbursement insurance policy may not be issued, sold, or

1516 offered for sale in this state unless the contract contains a statement in substantially the
1517 following form, "Coverage afforded under this contract is not guaranteed by the Property and
1518 Casualty Guaranty Association."
1519 (3) A service contract shall [also]:
1520 (a) conspicuously state the name [and], address, and a toll free claims service telephone
1521 number of the reimbursement insurer[.];
1522 [(3) The contract must] (b) identify the service contract provider, the seller, and the
1523 service contract holder[.];
1524 [(4) The contract must]
1525 (c) conspicuously state the total purchase price and the terms under which [it] the
1526 service contract is to be paid[.];
1527 (d) conspicuously state the existence of any deductible amount;
1528 (e) specify the merchandise, service to be provided, and any limitation, exception, or
1529 exclusion;
1530 (f) state a term, restriction, or condition governing the transferability of the service
1531 contract; and
1532 (g) state a term, restriction, or condition that governs cancellation of the service
1533 contract as provided in Sections 31A-21-303 through 31A-21-305 by either the contract holder
1534 or service contract provider.
1535 [(5)] (4) If prior approval of repair work is required, [the] a service contract must
1536 conspicuously state the procedure for obtaining prior approval and for making a claim,
1537 including:
1538 (a) a toll free telephone number for claim service; and
1539 (b) a procedure for obtaining reimbursement for emergency repairs performed outside
1540 of normal business hours.
1541 [(6) The contract must conspicuously state the existence of any deductible amount.]
1542 [(7) The contract must specify the merchandise, services to be provided and any
1543 limitations, exceptions, or exclusions. Any preexisting conditions clause]
1544 (5) A preexisting condition clause in a service contract must specifically state which
1545 preexisting [conditions are] condition is excluded from coverage.
1546 [(8) The] (6) (a) Except as provided in Subsection (6)(c), a service contract must state

1547 the conditions upon which the use of a nonmanufacturers' [parts will be] part is allowed.
1548 [Conditions stated]
1549 (b) A condition described in Subsection (6)(a) must comply with applicable state and
1550 federal laws.
1551 [(9) The contract must state any terms, restrictions, or conditions governing the
1552 transferability of the service contract.]
1553 [(10) The contract must state the terms, restrictions, or conditions governing
1554 cancellation of the contract by either the contract holder or provider, and must satisfy the
1555 provisions of Sections 31A-21-303 through 31A-21-305 .]
1556 (c) This Subsection (6) does not apply to a home warranty contract.
1557 [(11) A service contract or reimbursement insurance policy may not be issued, sold, or
1558 offered for sale in this state unless the contract contains a statement in substantially the
1559 following form, "Coverage afforded under this contract is not guaranteed by the Property and
1560 Casualty Guaranty Association."]
1561 Section 8. Section 31A-6a-105 is amended to read:
1562 31A-6a-105. Prohibited acts.
1563 (1) Except as provided in Subsection 31A-6a-104 (2), a service contract provider may
1564 not use in its name, [contracts] a contract, or literature:
1565 (a) any of the following words:
1566 (i) "insurance[,]";
1567 (ii) "casualty[,]";
1568 (iii) "surety[,]";
1569 (iv) "mutual[,]"; or [any other words]
1570 (v) another word descriptive of the insurance, casualty, or surety business; or
1571 (b) a name deceptively similar to the name or description of [any]:
1572 (i) an insurance or surety corporation[,]; or [any other]
1573 (ii) another service contract provider.
1574 (2) A service contract provider or [his] the service contract provider's representative
1575 may not:
1576 (a) make, permit, or cause to be made [any] a false or misleading statement[, or] in
1577 connection with the sale, offer to sell, or advertisement of a service contract; or

1578 (b) deliberately omit [any] a material statement that would be considered misleading if
1579 omitted, in connection with the sale, offer to sell, or advertisement of a service contract.
1580 (3) A bank, savings and loan association, insurance company, or other lending
1581 institution may not require the purchase of a service contract as a condition of a loan.
1582 (4) A service contract provider may not sell, or be the obligated party for:
1583 (a) a guaranteed asset protection waiver; or
1584 (b) a debt cancellation agreement.
1585 Section 9. Section 31A-22-404 is amended to read:
1586 31A-22-404. Suicide.
1587 (1) (a) Suicide is not a defense to a claim under a life insurance policy that [has been]
1588 is in force as to a policyholder or certificate holder for two years from the date of issuance of
1589 the later of:
1590 (i) the policy; or
1591 (ii) the certificate.
1592 (b) Subsection (1)(a) applies whether:
1593 (i) the suicide [was] is voluntary or involuntary; or
1594 (ii) the insured [was] is sane or insane.
1595 (c) If a suicide occurs within the two-year period described in Subsection (1)(a), the
1596 insurer shall pay to the beneficiary an amount not less than the premium paid [for the life
1597 insurance policy.] less the following:
1598 (i) a dividend paid;
1599 (ii) an indebtedness; and
1600 (iii) a partial withdrawal.
1601 (2) (a) If after a life insurance policy is in effect the policy allows the insured to obtain
1602 a death benefit that is larger than when the policy was originally effective for an additional
1603 premium, the payment of the additional increment of benefit may be limited in the event of a
1604 suicide within a two-year period beginning on the [date] day on which the increment increase
1605 takes effect.
1606 (b) If a suicide occurs within the two-year period described in Subsection (2)(a), the
1607 insurer shall pay to the beneficiary an amount not less than the additional premium paid for the
1608 additional increment of benefit.

1609 (3) This section does not apply to:
1610 (a) a policy insuring against death by accident only; or
1611 (b) [the] an accident or double indemnity [provisions] provision of an insurance policy.
1612 Section 10. Section 31A-22-409 is amended to read:
1613 31A-22-409. Standard Nonforfeiture Law for Individual Deferred Annuities.
1614 (1) This section is known as the "Standard Nonforfeiture Law for Individual Deferred
1615 Annuities."
1616 (2) This section does not apply to:
1617 (a) [any] reinsurance;
1618 (b) a group annuity purchased under a retirement plan or plan of deferred
1619 compensation:
1620 (i) established or maintained by:
1621 (A) an employer, including a partnership or sole proprietorship;
1622 (B) an employee organization; or
1623 (C) both an employer and an employee organization; and
1624 (ii) other than a plan providing individual retirement accounts or individual retirement
1625 annuities under Section 408, Internal Revenue Code;
1626 (c) a premium deposit fund;
1627 (d) a variable annuity;
1628 (e) an investment annuity;
1629 (f) an immediate annuity;
1630 (g) a deferred annuity contract after annuity payments have commenced;
1631 (h) a reversionary annuity; or
1632 (i) [any] a contract that [shall be] is delivered outside this state through an agent or
1633 other representative of the company issuing the contract.
1634 (3) (a) If a policy is issued after this section takes effect as set forth in Subsection (15),
1635 a contract of annuity, except as stated in Subsection (2), may not be delivered or issued for
1636 delivery in this state unless the contract of annuity contains in substance:
1637 (i) the provisions described in Subsection (3)(b); or
1638 (ii) provisions corresponding to the provisions described in Subsection (3)(b) that in
1639 the opinion of the commissioner are at least as favorable to the contractholder, governing

1640 cessation of payment of consideration under the contract.
1641 (b) Subsection (3)(a)(i) requires the following provisions:
1642 (i) the company shall grant a paid-up annuity benefit on a plan stipulated in the contract
1643 of such a value as specified in Subsections (7), (8), (9), (10), and (12):
1644 (A) upon cessation of payment of consideration under a contract; or
1645 (B) upon a written request of the contract owner;
1646 (ii) if a contract provides for a lump-sum settlement at maturity, or at any other time,
1647 upon surrender of the contract at or before the commencement of any annuity payments, the
1648 company shall pay in lieu of any paid-up annuity benefit a cash surrender benefit of such
1649 amount as is specified in Subsections (7), (8), (10), and (12);
1650 (iii) a statement of the mortality table, if any, and interest rates used in calculating any
1651 of the following that are guaranteed under the contract:
1652 (A) minimum paid-up annuity [benefits] benefit;
1653 (B) cash surrender [benefits] benefit; or
1654 (C) death [benefits] benefit;
1655 (iv) sufficient information to determine the amounts of the benefits described in
1656 Subsection (3)(b)(iii);
1657 (v) a statement that any paid-up annuity, cash surrender, or death benefits that may be
1658 available under the contract are not less than the minimum benefits required by [any] a statute
1659 of the state in which the contract is delivered; and
1660 (vi) an explanation of the manner in which [the benefits] a benefit described in
1661 Subsection (3)(b)(v) [are] is altered by the existence of any:
1662 (A) additional amounts credited by the company to the contract;
1663 (B) indebtedness to the company on the contract; or
1664 (C) prior withdrawals from or partial surrender of the contract.
1665 (c) Notwithstanding the requirements of this Subsection (3), [any] a deferred annuity
1666 contract may provide that if no consideration [has been] is received under a contract for a
1667 period of two full years and the portion of the paid-up annuity benefit at maturity on the plan
1668 stipulated in the contract arising from consideration paid before the period would be less than
1669 $20 monthly:
1670 (i) the company may at the company's option terminate the contract by payment in cash

1671 of the then present value of such portion of the paid-up annuity benefit, calculated on the basis
1672 of the mortality table specified in the contract, if any, and the interest rate specified in the
1673 contract for determining the paid-up annuity benefit; and
1674 (ii) the payment described in Subsection (3)(c)(i), relieves the company of any further
1675 obligation under the contract.
1676 (d) A company may reserve the right to defer the payment of cash surrender benefit for
1677 a period not to exceed six months after demand for the payment of the cash surrender benefit
1678 with surrender of the contract.
1679 (4) For a policy issued before June 1, 2006, the minimum values as specified in
1680 Subsections (7), (8), (9), (10), and (12) of any paid-up annuity, cash surrender, or death benefits
1681 available under an annuity contract shall be based upon minimum nonforfeiture amounts as
1682 established in this Subsection (4).
1683 (a) (i) With respect to [contracts] a contract providing for flexible considerations, the
1684 minimum nonforfeiture amount at any time at or before the commencement of any annuity
1685 payments shall be equal to an accumulation up to such time, at a rate of interest of 3% per
1686 annum of percentages of the net considerations paid prior to such time:
1687 (A) decreased by the sum of:
1688 (I) any prior withdrawals from or partial surrenders of the contract accumulated at a
1689 rate of interest of 3% per annum; and
1690 (II) the amount of any indebtedness to the company on the contract, including interest
1691 due and accrued; and
1692 (B) increased by any existing additional amounts credited by the company to the
1693 contract.
1694 (ii) For purposes of this Subsection (4)(a), the net consideration for a given contract
1695 year used to define the minimum nonforfeiture amount shall be:
1696 (A) an amount not less than zero; and
1697 (B) equal to the corresponding gross considerations credited to the contract during that
1698 contract year less:
1699 (I) an annual contract charge of $30; and
1700 (II) a collection charge of $1.25 per consideration credited to the contract during that
1701 contract year.

1702 (iii) The percentages of net considerations shall be:
1703 (A) 65% of the net consideration for the first contract year; and
1704 (B) 87-1/2% of the net considerations for the second and later contract years.
1705 (iv) Notwithstanding Subsection (4)(a)(iii), the percentage shall be 65% of the portion
1706 of the total net consideration for any renewal contract year that exceeds by not more than two
1707 times the sum of those portions of the net considerations in all prior contract years for which
1708 the percentage was 65%.
1709 (b) (i) Except as provided in Subsections (4)(b)(ii) and (iii), with respect to [contracts]
1710 a contract providing for fixed scheduled consideration, minimum nonforfeiture amounts shall
1711 be:
1712 (A) calculated on the assumption that considerations are paid annually in advance; and
1713 (B) defined as for contracts with flexible considerations that are paid annually.
1714 (ii) The portion of the net consideration for the first contract year to be accumulated
1715 shall be equal to an amount that is the sum of:
1716 (A) 65% of the net consideration for the first contract year; and
1717 (B) 22-1/2% of the excess of the net consideration for the first contract year over the
1718 lesser of the net considerations for:
1719 (I) the second contract year; and
1720 (II) the third contract year.
1721 (iii) The annual contract charge shall be the lesser of $30 or 10% of the gross annual
1722 consideration.
1723 (c) With respect to [contracts] a contract providing for a single consideration payment,
1724 minimum nonforfeiture amounts shall be defined as for contracts with flexible considerations
1725 except that:
1726 (i) the percentage of net consideration used to determine the minimum nonforfeiture
1727 amount shall be equal to 90%; and
1728 (ii) the net consideration shall be the gross consideration less a contract charge of $75.
1729 (5) For a policy issued on or after June 1, 2006, the minimum values as specified in
1730 Subsections (7), (8), (9), (10), and (12) of any paid-up annuity, cash surrender, or death benefits
1731 available under an annuity contract shall be based upon minimum nonforfeiture amounts as
1732 established in this Subsection (5).

1733 (a) The minimum nonforfeiture amount at any time at or before the commencement of
1734 any annuity payments shall be equal to an accumulation up to such time, at rates of interest as
1735 indicated in Subsection (5)(b), of 87-1/2% of the gross considerations paid before such time
1736 decreased by the sum of:
1737 (i) any prior withdrawals from or partial surrenders of the contract accumulated at rates
1738 of interest as indicated in Subsection (5)(b);
1739 (ii) an annual contract charge of $50, accumulated at rates of interest as indicated in
1740 Subsection (5)(b);
1741 (iii) any premium tax paid by the company for the contract, accumulated at rates of
1742 interest as indicated in Subsection (5)(b); and
1743 (iv) the amount of any indebtedness to the company on the contract, including interest
1744 due and accrued.
1745 (b) (i) The interest rate used in determining minimum nonforfeiture amounts shall be
1746 an annual rate of interest determined as the lesser of:
1747 (A) 3% per annum; and
1748 (B) the five-year Constant Maturity Treasury Rate reported by the Federal Reserve,
1749 rounded to the nearest 1/20th of 1%, as of a date or average over a period no longer than 15
1750 months prior to the contract issue date or redetermination date under Subsection (5)(b)(iii):
1751 (I) reduced by 125 basis points; and
1752 (II) where the resulting interest rate is not less than 1%.
1753 (ii) The interest rate shall apply for an initial period and may be redetermined for
1754 additional periods.
1755 (iii) (A) If the interest rate will be reset, the contract shall state:
1756 (I) the initial period;
1757 (II) the redetermination date;
1758 (III) the redetermination basis; and
1759 (IV) the redetermination period.
1760 (B) The basis is the date or average over a specified period that produces the value of
1761 the five-year Constant Maturity Treasury Rate to be used at each redetermination date.
1762 (c) (i) During the period or term that a contract provides substantive participation in an
1763 equity indexed benefit, the reduction described in Subsection (5)(b)(i)(B)(I) may be increased

1764 by up to an additional 100 basis points to reflect the value of the equity index benefit.
1765 (ii) The present value of the additional reduction at the contract issue date and at each
1766 redetermination date may not exceed the market value of the benefit.
1767 (iii) (A) The commissioner may require a demonstration that the present value of the
1768 additional reduction does not exceed the market value of the benefit.
1769 (B) If the demonstration required under Subsection (5)(c)(iii)(A) is not made to the
1770 satisfaction of the commissioner, the commissioner may disallow or limit the additional
1771 reduction.
1772 (6) Notwithstanding Subsection (4), for a policy issued on or after June 1, 2004 and
1773 before June 1, 2006, at the election of a company, on a contract form-by-contract form basis,
1774 the minimum values as specified in Subsections (7), (8), (9), (10), and (12) of any paid-up
1775 annuity, cash surrender, or death benefits available under an annuity contract may be based
1776 upon minimum nonforfeiture amounts as established in Subsection (5).
1777 (7) (a) [Any] A paid-up annuity benefit available under a contract shall be such that the
1778 contract's present value on the date annuity payments are to commence is at least equal to the
1779 minimum nonforfeiture amount on that date.
1780 (b) The present value described in Subsection (7)(a) shall be computed using the
1781 mortality table, if any, and the interest rate specified in the contract for determining the
1782 minimum paid-up annuity benefits guaranteed in the contract.
1783 (8) (a) For [contracts] a contract that [provide] provides cash surrender benefits, the
1784 cash surrender benefits available before maturity may not be less than the present value as of
1785 the date of surrender of that portion of the cash surrender value that would be provided under
1786 the contract at maturity arising from considerations paid before the time of cash surrender:
1787 (i) decreased by the amount appropriate to reflect any prior withdrawals from or partial
1788 surrender of the contract;
1789 (ii) decreased by the amount of any indebtedness to the company on the contract,
1790 including interest due and accrued; and
1791 (iii) increased by any existing additional amounts credited by the company to the
1792 contract.
1793 (b) For purposes of this Subsection (8), the present value [being] is to be calculated on
1794 the basis of an interest rate not more than 1% higher than the interest rate specified in the

1795 contract for accumulating the net considerations to determine the maturity value.
1796 (c) In no event shall [any] a cash surrender benefit be less than the minimum
1797 nonforfeiture amount at that time.
1798 (d) The death benefit under a contract described in Subsection (8)(a) shall be at least
1799 equal to the cash surrender benefit.
1800 (9) (a) For [contracts] a contract that [do] does not provide cash surrender benefits, the
1801 present value of any paid-up annuity benefit available as a nonforfeiture option at any time
1802 prior to maturity may not be less than the present value of that portion of the maturity value of
1803 the paid-up annuity benefit provided under the contract arising from considerations paid before
1804 the time the contract is surrendered in exchange for, or changed to, a deferred paid-up annuity
1805 increased by any existing additional amounts credited by the company to the contract.
1806 (b) For purposes of [this] Subsection (9)(a), the present value [being calculated] for the
1807 period prior to the maturity date is to be calculated on the basis of the interest rate specified in
1808 the contract for accumulating the net considerations to determine maturity value.
1809 (c) For [contracts] a contract that [do] does not provide [any] a death [benefits] benefit
1810 before commencement of any annuity payments, the present values shall be calculated on the
1811 basis of the interest rate and the mortality table specified in the contract for determining the
1812 maturity value of the paid-up annuity benefit.
1813 (d) In no event shall the present value of a paid-up annuity benefit be less than the
1814 minimum nonforfeiture amount at that time.
1815 (10) (a) For the purpose of determining the benefits calculated under Subsections (8)
1816 and (9), the maturity date shall be considered to be [the latest date]:
1817 (i) in the case of an annuity contract issued on or before May 5, 2002, under which an
1818 election may be made to have an annuity payment commence at an optional maturity date, the
1819 latest date for which an election is permitted by the contract, except that it may not be
1820 considered to be later than the later of:
1821 [(i)] (A) the anniversary of the contract next following the [annuitant's 70th birthday]
1822 day on which the annuitant becomes 70 years of age; or
1823 [(ii)] (B) the tenth anniversary of the contract[.]; or
1824 (ii) in the case of an annuity contract issued on or after May 6, 2002, the latest date
1825 permitted by the contract, except that it may not be considered to be later than the later of:

1826 (A) the anniversary of the contract next following the day on which the annuitant
1827 becomes 70 years of age; or
1828 (B) the tenth anniversary of the contract.
1829 (b) In the case of an annuity contract issued on or after May 6, 2002:
1830 [(b) For] (i) for a contract that provides cash surrender benefits, the cash surrender
1831 value on or past the maturity date shall be equal to the amount used to determine the annuity
1832 benefit payments[.]; and
1833 [(c) A] (ii) a surrender charge may not be imposed on or past maturity.
1834 (11) [Any] A contract that does not provide cash surrender benefits or does not provide
1835 death benefits at least equal to the minimum nonforfeiture amount before the commencement
1836 of any annuity payments shall include a statement in a prominent place in the contract that
1837 these benefits are not provided.
1838 (12) [Any] A paid-up annuity, cash surrender, or death [benefits] benefit available at
1839 any time, other than on the contract anniversary under [any] a contract with fixed scheduled
1840 considerations, shall be calculated with allowance for the lapse of time and the payment of any
1841 scheduled considerations beyond the beginning of the contract year in which cessation of
1842 payment of considerations under the contract occurs.
1843 (13) (a) For [any] a contract that provides, within the same contract by rider or
1844 supplemental contract provisions, both annuity benefits and life insurance benefits that are in
1845 excess of the greater of cash surrender benefits or a return of the gross considerations with
1846 interest, the minimum nonforfeiture benefits shall:
1847 (i) be equal to the sum of:
1848 (A) the minimum nonforfeiture benefits for the annuity portion; and
1849 (B) the minimum nonforfeiture benefits, if any, for the life insurance portion; and
1850 (ii) computed as if each portion were a separate contract.
1851 (b) (i) Notwithstanding Subsections (7), (8), (9), (10), and (12), additional benefits
1852 payable, as described in Subsection (13)(b)(ii), and consideration for the additional benefits
1853 payable, shall be disregarded in ascertaining, if required by this section:
1854 (A) the minimum nonforfeiture amounts;
1855 (B) paid-up annuity;
1856 (C) cash surrender; and

1857 (D) death benefits.
1858 (ii) For purposes of this Subsection (13), an additional benefit is a benefit payable:
1859 (A) in the event of total and permanent disability;
1860 (B) as reversionary annuity or deferred reversionary annuity benefits; or
1861 (C) as other policy benefits additional to life insurance, endowment, and annuity
1862 benefits.
1863 (iii) The inclusion of the additional benefits described in this Subsection (13) may not
1864 be required in any paid-up benefits, unless the additional benefits separately would require:
1865 (A) minimum nonforfeiture amounts;
1866 (B) paid-up annuity;
1867 (C) cash surrender; and
1868 (D) death benefits.
1869 (14) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
1870 the commissioner may adopt rules necessary to implement this section, including:
1871 (a) ensuring that any additional reduction under Subsection (5)(c) is consistent with the
1872 requirements imposed by Subsection (5)(c); and
1873 (b) providing for adjustments in addition to the adjustments allowed under Subsection
1874 (5)(c) to the calculation of minimum nonforfeiture amounts for:
1875 (i) [contracts] a contract that [provide] provides substantive participation in an equity
1876 index benefit; and
1877 (ii) [other contracts] a contract for which the commissioner determines adjustments are
1878 justified.
1879 (15) (a) After this section takes effect, [any] a company may file with the
1880 commissioner a written notice of its election to comply with this section after a specified date
1881 before July 1, 1988.
1882 (b) This section applies to annuity contracts of a company issued on or after the date
1883 the company specifies in the notice.
1884 (c) If a company makes no election under Subsection (15)(a), the operative date of this
1885 section for such company is July 1, 1988.
1886 Section 11. Section 31A-22-428 is enacted to read:
1887 31A-22-428. Interest payable on life insurance proceeds.

1888 (1) For a life insurance policy delivered or issued for delivery in this state on or after
1889 May 5, 2008, the insurer shall pay interest on the death proceeds payable upon the death of the
1890 insured.
1891 (2) (a) For the period beginning on the date of death and ending the day before the day
1892 described in Subsection (3)(b), interest under Subsection (1) shall accrue at a rate no less than:
1893 (i) the rate applicable to policy funds left on deposit; or
1894 (ii) if there is no rate described in Subsection (2)(a)(i), at the Two Year Treasury
1895 Constant Maturity Rate as published by the Federal Reserve.
1896 (b) The rate described in Subsection (2)(a) is the rate in effect on the day on which the
1897 death occurs.
1898 (c) Interest is payable until the day on which the claim is paid.
1899 (3) (a) Unless the claim is paid, beginning on the day described in Subsection (3)(b)
1900 and ending the day on which the claim is paid, interest shall accrue at the rate in Subsection (2)
1901 plus additional interest at the rate of 10% annually.
1902 (b) Interest accrues under Subsection (3)(a) beginning with the day that is 31 days from
1903 the latest of:
1904 (i) the day on which the insurer receives proof of death;
1905 (ii) the day on which the insurer receives sufficient information to determine:
1906 (A) liability;
1907 (B) the extent of the liability; and
1908 (C) the appropriate payee legally entitled to the proceeds; and
1909 (iii) the day on which:
1910 (A) legal impediments to payment of proceeds that depend on the action of parties
1911 other than the insurer are resolved; and
1912 (B) the insurer receives sufficient evidence of the resolution of the legal impediments
1913 described in Subsection (3)(b)(iii)(A).
1914 Section 12. Section 31A-22-610.6 is enacted to read:
1915 31A-22-610.6. Special enrollment for individuals receiving premium assistance.
1916 (1) As used in this section:
1917 (a) "Premium assistance" means assistance under Title 26, Chapter 18, Medical
1918 Assistance Act, in the payment of premium.

1919 (b) "Qualified beneficiary" means an individual who is approved to receive a premium
1920 assistance.
1921 (2) Subject to the other provisions in this section, an individual may enroll under this
1922 section at a time outside of an employer health benefit plan open enrollment period, regardless
1923 of previously waiving coverage, if the individual is:
1924 (a) a qualified beneficiary who is eligible for coverage as an employee under the
1925 employer health benefit plan; or
1926 (b) a dependent of the qualified beneficiary who is eligible for coverage under the
1927 employer health benefit plan.
1928 (3) To be eligible to enroll outside of an open enrollment period, an individual
1929 described in Subsection (2) shall enroll in the employer health benefit plan by no later than 30
1930 days from the day on which the qualified beneficiary receives written notification that the
1931 qualified beneficiary is eligible to receive premium assistance.
1932 (4) An individual described in Subsection (2) may enroll under this section only in an
1933 employer health benefit plan that is available at the time of enrollment to similarly situated
1934 eligible employees or dependents of eligible employees.
1935 (5) Coverage under an employer health benefit plan for an individual described in
1936 Subsection (2) may begin as soon as the first day of the month immediately following
1937 enrollment of the individual in accordance with this section.
1938 (6) This section does not modify any requirement related to premiums that applies
1939 under an employer health benefit plan to a similarly situated eligible employee or dependent of
1940 an eligible employee under the employer health benefit plan.
1941 (7) An employer health benefit plan may require an individual described in Subsection
1942 (2) to satisfy a preexisting condition waiting period that:
1943 (a) is allowed under the Health Insurance Portability and Accountability Act of 1996,
1944 Pub. L. 104-191, 110 Stat. 1936; and
1945 (b) is not longer than 12 months.
1946 Section 13. Section 31A-22-613.5 is amended to read:
1947 31A-22-613.5. Price and value comparisons of health insurance -- Basic Health
1948 Care Plan.
1949 (1) This section applies generally to all health insurance policies and health

1950 maintenance organization contracts.
1951 (2) The commissioner shall adopt a Basic Health Care Plan consistent with this section
1952 to be offered under the open enrollment provisions of Chapter 30, Individual, Small Employer,
1953 and Group Health Insurance Act.
1954 (3) (a) The commissioner shall promote informed consumer behavior and responsible
1955 health insurance and health plans by requiring an insurer issuing health insurance policies or
1956 health maintenance organization contracts to provide to all enrollees, prior to enrollment in the
1957 health benefit plan or health insurance policy, written disclosure of:
1958 (i) restrictions or limitations on prescription drugs and biologics including the use of a
1959 formulary and generic substitution; and
1960 (ii) coverage limits under the plan.
1961 (b) In addition to the requirements of Subsections (3)(a) and (d), an insurer described
1962 in Subsection (3)(a) shall submit the written disclosure required by this Subsection (3) to the
1963 commissioner:
1964 (i) upon commencement of operations in the state; and
1965 (ii) anytime the insurer amends any of the following described in Subsection (3)(a):
1966 (A) treatment policies;
1967 (B) practice standards;
1968 (C) restrictions; or
1969 (D) coverage limits of the insurer's health benefit plan or health insurance policy.
1970 (c) The commissioner may adopt rules to implement the disclosure requirements of this
1971 Subsection (3), taking into account:
1972 (i) business confidentiality of the insurer;
1973 (ii) definitions of terms; and
1974 (iii) the method of disclosure to enrollees.
1975 (d) If under Subsection (3)(a)(i) a formulary is used, the insurer shall make available to
1976 prospective enrollees and maintain evidence of the fact of the disclosure of:
1977 (i) the drugs included;
1978 (ii) the patented drugs not included; and
1979 (iii) any conditions that exist as a precedent to coverage.
1980 (4) The Basic Health Care Plan adopted by the commissioner under this section shall

1981 provide for:
1982 (a) a lifetime maximum benefit per person not to exceed $1,000,000;
1983 (b) an annual maximum benefit per person not to exceed $300,000;
1984 (c) an out-of-pocket maximum [per person not to exceed $5,000,] of cost-sharing
1985 features:
1986 (i) including [the]:
1987 (A) a deductible;
1988 (B) a copayment; and
1989 (C) coinsurance;
1990 (ii) not to exceed $5,000 per person; and
1991 (iii) for family coverage, not to exceed three times the per person out-of-pocket
1992 maximum provided in Subsection (4)(c)(ii);
1993 (d) in relation to its cost-sharing features:
1994 (i) a deductible of:
1995 (A) not less than $1,500 per person for major medical expenses; and
1996 (B) for family coverage, not to exceed three times the per person deductible for major
1997 medical expenses under Subsection (4)(d)(i)(A); and
1998 (ii) (A) a copayment of not less than:
1999 (I) $25 per visit for office services; and
2000 (II) $150 per visit to an emergency room; or
2001 (B) coinsurance of not less than:
2002 (I) 20% per visit for office services; and
2003 (II) 20% per visit for an emergency room; and
2004 (e) in relation to cost-sharing features for prescription drugs:
2005 (i) (A) a deductible of not less than $500 per person; and
2006 (B) for family coverage, not to exceed three times the per person deductible provided
2007 in Subsection (4)(e)(i)(A); and
2008 (ii) (A) a copayment of not less than:
2009 (I) the lesser of the cost of the prescription drug or $15 for the lowest level of cost for
2010 prescription drugs;
2011 (II) the lesser of the cost of the prescription drug or $30 for the second level of cost for

2012 prescription drugs; and
2013 (III) the lesser of the cost of the prescription drug or $60 for the highest level of cost
2014 for prescription drugs; or
2015 (B) coinsurance of not less than:
2016 (I) the lesser of the cost of the prescription drug or 25% for the lowest level of cost for
2017 prescription drugs;
2018 (II) the lesser of the cost of the prescription drug or 40% for the second level of cost for
2019 prescription drugs; and
2020 (III) the lesser of the cost of the prescription drug or 60% for the highest level of cost
2021 for prescription drugs.
2022 Section 14. Section 31A-22-625 is amended to read:
2023 31A-22-625. Catastrophic coverage of mental health conditions.
2024 (1) As used in this section:
2025 (a) (i) "Catastrophic mental health coverage" means coverage in a health [insurance
2026 policy] benefit plan or health maintenance organization contract that does not impose [any] a
2027 lifetime limit, annual payment limit, episodic limit, inpatient or outpatient service limit, or
2028 maximum out-of-pocket limit that places a greater financial burden on an insured for the
2029 evaluation and treatment of a mental health condition than for the evaluation and treatment of a
2030 physical health condition.
2031 (ii) "Catastrophic mental health coverage" may include a restriction on cost sharing
2032 factors, such as deductibles, copayments, or coinsurance, prior to reaching any maximum
2033 out-of-pocket limit.
2034 (iii) "Catastrophic mental health coverage" may include one maximum out-of-pocket
2035 limit for physical health conditions and another maximum out-of-pocket limit for mental health
2036 conditions, provided that, if separate out-of-pocket limits are established, the out-of-pocket
2037 limit for mental health conditions may not exceed the out-of-pocket limit for physical health
2038 conditions.
2039 (b) (i) "50/50 mental health coverage" means coverage in a health [insurance policy]
2040 benefit plan or health maintenance organization contract that pays for at least 50% of covered
2041 services for the diagnosis and treatment of mental health conditions.
2042 (ii) "50/50 mental health coverage" may include a restriction on episodic limits,

2043 inpatient or outpatient service limits, or maximum out-of-pocket limits.
2044 (c) "Large employer" is as defined in Section 31A-1-301 .
2045 (d) (i) "Mental health condition" means any condition or disorder involving mental
2046 illness that falls under any of the diagnostic categories listed in the Diagnostic and Statistical
2047 Manual, as periodically revised.
2048 (ii) "Mental health condition" does not include the following when diagnosed as the
2049 primary or substantial reason or need for treatment:
2050 (A) marital or family problem;
2051 (B) social, occupational, religious, or other social maladjustment;
2052 (C) conduct disorder;
2053 (D) chronic adjustment disorder;
2054 (E) psychosexual disorder;
2055 (F) chronic organic brain syndrome;
2056 (G) personality disorder;
2057 (H) specific developmental disorder or learning disability; or
2058 (I) mental retardation.
2059 (e) "Small employer" is as defined in Section 31A-1-301.
2060 (2) (a) At the time of purchase and renewal, an insurer shall offer to each small
2061 employer that it insures or seeks to insure a choice between catastrophic mental health
2062 coverage and 50/50 mental health coverage.
2063 (b) In addition to Subsection (2)(a), an insurer may offer to provide:
2064 (i) catastrophic mental health coverage, 50/50 mental health coverage, or both at levels
2065 that exceed the minimum requirements of this section; or
2066 (ii) coverage that excludes benefits for mental health conditions.
2067 (c) A small employer may, at its option, choose either catastrophic mental health
2068 coverage, 50/50 mental health coverage, or coverage offered under Subsection (2)(b),
2069 regardless of the employer's previous coverage for mental health conditions.
2070 (d) An insurer is exempt from the 30% index rating restriction in Subsection
2071 31A-30-106 (1)(b) and, for the first year only that catastrophic mental health coverage is
2072 chosen, the 15% annual adjustment restriction in Subsection 31A-30-106 (1)(c)(ii), for any
2073 small employer with 20 or less enrolled employees who chooses coverage that meets or

2074 exceeds catastrophic mental health coverage.
2075 (3) (a) At the time of purchase and renewal of a health benefit plan, an insurer shall
2076 offer catastrophic mental health coverage to each large employer that it insures or seeks to
2077 insure.
2078 (b) In addition to Subsection (3)(a), an insurer may offer to provide catastrophic mental
2079 health coverage at levels that exceed the minimum requirements of this section.
2080 (c) A large employer may, at its option, choose either catastrophic mental health
2081 coverage, coverage that excludes benefits for mental health conditions, or coverage offered
2082 under Subsection (3)(b).
2083 (4) (a) An insurer may provide catastrophic mental health coverage through a managed
2084 care organization or system in a manner consistent with the provisions in Chapter 8, Health
2085 Maintenance Organizations and Limited Health Plans, regardless of whether the policy or
2086 contract uses a managed care organization or system for the treatment of physical health
2087 conditions.
2088 (b) (i) Notwithstanding any other provision of this title, an insurer may:
2089 (A) establish a closed panel of providers for catastrophic mental health coverage; and
2090 (B) refuse to provide any benefit to be paid for services rendered by a nonpanel
2091 provider unless:
2092 (I) the insured is referred to a nonpanel provider with the prior authorization of the
2093 insurer; and
2094 (II) the nonpanel provider agrees to follow the insurer's protocols and treatment
2095 guidelines.
2096 (ii) If an insured receives services from a nonpanel provider in the manner permitted by
2097 Subsection (4)(b)(i)(B), the insurer shall reimburse the insured for not less than 75% of the
2098 average amount paid by the insurer for comparable services of panel providers under a
2099 noncapitated arrangement who are members of the same class of health care providers.
2100 (iii) Nothing in this Subsection (4)(b) may be construed as requiring an insurer to
2101 authorize a referral to a nonpanel provider.
2102 (c) To be eligible for catastrophic mental health coverage, a diagnosis or treatment of a
2103 mental health condition must be rendered:
2104 (i) by a mental health therapist as defined in Section 58-60-102 ; or

2105 (ii) in a health care facility licensed or otherwise authorized to provide mental health
2106 services pursuant to Title 26, Chapter 21, Health Care Facility Licensing and Inspection Act, or
2107 Title 62A, Chapter 2, Licensure of Programs and Facilities, that provides a program for the
2108 treatment of a mental health condition pursuant to a written plan.
2109 (5) The commissioner may [disapprove any] prohibit a policy or contract that provides
2110 mental health coverage in a manner that is inconsistent with [the provisions of] this section.
2111 (6) The commissioner shall:
2112 (a) adopt rules as necessary to ensure compliance with this section; and
2113 (b) provide general figures on the percentage of contracts and policies that include no
2114 mental health coverage, 50/50 mental health coverage, catastrophic mental health coverage,
2115 and coverage that exceeds the minimum requirements of this section.
2116 (7) The Health and Human Services Interim Committee shall review:
2117 (a) the impact of this section on insurers, employers, providers, and consumers of
2118 mental health services before January 1, 2004; and
2119 (b) make a recommendation as to whether the provisions of this section should be
2120 modified and whether the cost-sharing requirements for mental health conditions should be the
2121 same as for physical health conditions.
2122 (8) (a) An insurer shall offer catastrophic mental health coverage as part of a health
2123 maintenance organization contract that is governed by Chapter 8, Health Maintenance
2124 Organizations and Limited Health Plans, that is in effect on or after January 1, 2001.
2125 (b) An insurer shall offer catastrophic mental health coverage as a part of a health
2126 [insurance policy] benefit plan that is not governed by Chapter 8, Health Maintenance
2127 Organizations and Limited Health Plans, that is in effect on or after July 1, 2001.
2128 (c) This section does not apply to the purchase or renewal of an individual insurance
2129 policy or contract.
2130 (d) Notwithstanding Subsection (8)(c), nothing in this section may be construed as
2131 discouraging or otherwise preventing insurers from continuing to provide mental health
2132 coverage in connection with an individual policy or contract.
2133 (9) This section shall be repealed in accordance with Section 63-55-231 .
2134 Section 15. Section 31A-22-807 is amended to read:
2135 31A-22-807. Filing and approval of forms -- Loss ratio standards.

2136 (1) [All forms of policies, certificates of insurance, statements of insurance,
2137 endorsements, and riders] A policy, certificate of insurance, statement of insurance, or
2138 endorsement form intended for use in Utah [are] is subject to Section 31A-21-201 .
2139 (2) In addition to the grounds for [disapproval] prohibiting use of a form under
2140 Subsection 31A-21-201 (3), it is a ground [for disapproval] to prohibit the use of a form that the
2141 benefits provided in the form are not reasonable in relation to the premium charge.
2142 (3) (a) In ascertaining whether the benefits are reasonable in relation to the premium
2143 charged, the commissioner shall consider:
2144 (i) the mortality cost of the life insurance [and];
2145 (ii) the morbidity cost of the accident and health insurance[,]; and
2146 (iii) the reserves set up for the payment of claims unreported or in the process of
2147 settlement. [The]
2148 (b) For purposes of this section, benefits are considered reasonable in relation to the
2149 premium charged if, given the costs described in this Subsection (3), the premium rate charged
2150 develops or may reasonably be expected to develop a loss ratio of:
2151 (i) not less than 50% for credit life insurance; and
2152 (ii) not less than 55% for credit accident and health insurance [given the above costs].
2153 (4) Benefits are considered reasonable in relation to premium charged if the ratio of
2154 claims incurred to premium earned during the most recent four-year period at the rates in use
2155 produces a loss ratio that is equal to or exceeds the minimum loss ratio standard specified in
2156 Subsection (3).
2157 (5) If the minimum loss ratio test produces a loss ratio that exceeds [Subsection (4)'s]
2158 the minimum loss ratio standard in Subsection (4) by five percentage points or more, the
2159 insurer may file for approval and use [rates] a rate that [are] is higher than the prima facie
2160 [rates] rate, if it can be expected that the use of [those] the higher [rates] rate will continue to
2161 produce a loss ratio for [the accounts to which they are] an account to which it is applied that
2162 will satisfy the minimum loss ratio test.
2163 (6) If the minimum loss ratio test produces a loss ratio that is lower than [Subsection
2164 (4)'s] the minimum loss standard in Subsection (4) by five percentage points or more, the
2165 commissioner may require that the insurer:
2166 (a) file an adjusted [rates] rate that can be expected to produce a loss ratio that will

2167 satisfy the minimum loss ratio test[,]; or [to]
2168 (b) submit reasons acceptable to the commissioner why the insurer should not be
2169 required to file [these adjusted rates] an adjusted rate.
2170 Section 16. Section 31A-23a-105 is amended to read:
2171 31A-23a-105. General requirements for individual and agency license issuance
2172 and renewal.
2173 (1) The commissioner shall issue or renew a license to act as a producer, limited line
2174 producer, customer service representative, consultant, managing general agent, or reinsurance
2175 intermediary to any person who, as to the license type and line of authority classification
2176 applied for under Section 31A-23a-106 :
2177 (a) [has satisfied] satisfies the application requirements under Section 31A-23a-104 ;
2178 (b) [has satisfied] satisfies the character requirements under Section 31A-23a-107 ;
2179 (c) [has satisfied] satisfies any applicable continuing education requirements under
2180 Section 31A-23a-202 ;
2181 (d) [has satisfied] satisfies any applicable examination requirements under Section
2182 31A-23a-108 ;
2183 (e) [has satisfied] satisfies any applicable training period requirements under Section
2184 31A-23a-203 ;
2185 (f) if a nonresident:
2186 (i) [has complied] complies with Section 31A-23a-109 ; and
2187 (ii) holds an active similar license in that person's state of residence;
2188 (g) if an applicant for a title insurance producer license, [has satisfied] satisfies the
2189 requirements of Sections 31A-23a-203 and 31A-23a-204 ;
2190 (h) if an applicant for a license to act as a viatical settlement provider or viatical
2191 settlement producer, [has satisfied] satisfies the requirements of Section 31A-23a-117 ; and
2192 (i) [has paid] pays the applicable fees under Section 31A-3-103 .
2193 (2) (a) This Subsection (2) applies to the following persons:
2194 (i) an applicant for a pending:
2195 (A) individual or agency producer license;
2196 (B) limited line producer license;
2197 (C) customer service representative license;

2198 (D) consultant license;
2199 (E) managing general agent license; or
2200 (F) reinsurance intermediary license; or
2201 (ii) a licensed:
2202 (A) individual or agency producer;
2203 (B) limited line producer;
2204 (C) customer service representative;
2205 (D) consultant;
2206 (E) managing general agent; or
2207 (F) reinsurance intermediary.
2208 (b) A person described in Subsection (2)(a) shall report to the commissioner:
2209 (i) any administrative action taken against the person:
2210 (A) in another jurisdiction; or
2211 (B) by another regulatory agency in this state; and
2212 (ii) any criminal prosecution taken against the person in any jurisdiction.
2213 (c) The report required by Subsection (2)(b) shall:
2214 (i) be filed:
2215 (A) at the time the person files the application for an individual or agency license; and
2216 (B) for an action or prosecution that occurs on or after the day on which the person
2217 files the application:
2218 (I) for an administrative action, within 30 days of the final disposition of the
2219 administrative action; or
2220 (II) for a criminal prosecution, within 30 days of the initial [pretrial hearing date]
2221 appearance before a court; and
2222 (ii) include a copy of the complaint or other relevant legal documents related to the
2223 action or prosecution described in Subsection (2)(b).
2224 (3) (a) The department may [request:] require a person applying for a license, for
2225 renewal of a license, or for consent to engage in the business of insurance to submit to a
2226 criminal background check as a condition of receiving a license, renewal, or consent.
2227 (b) A person, if required to submit to a criminal background check under Subsection
2228 (3)(a), shall:

2229 (i) submit a fingerprint card in a form acceptable to the department; and
2230 (ii) consent to a fingerprint background check by:
2231 (A) the Utah Bureau of Criminal Identification; and
2232 (B) the Federal Bureau of Investigation.
2233 (c) For a person who submits a fingerprint card and consents to a fingerprint
2234 background check under Subsection (3)(b), the department may request:
2235 (i) criminal background information maintained pursuant to Title 53, Chapter 10, Part
2236 2, Bureau of Criminal Identification, from the Bureau of Criminal Identification; and
2237 (ii) complete Federal Bureau of Investigation criminal background checks through the
2238 national criminal history system.
2239 [(b)] (d) Information obtained by the department from the review of criminal history
2240 records received under this Subsection (3)[(a)] shall be used by the department for the purposes
2241 of:
2242 (i) determining if a person satisfies the character requirements under Section
2243 31A-23a-107 for issuance or renewal of a license;
2244 (ii) determining if a person has failed to maintain the character requirements under
2245 Section 31A-23a-107 ; and
2246 (iii) preventing persons who violate the federal Violent Crime Control and Law
2247 Enforcement Act of 1994, 18 U.S.C. Secs. 1033 and 1034, from engaging in the business of
2248 insurance in the state.
2249 [(c)] (e) If the department requests the criminal background information, the
2250 department shall:
2251 (i) pay to the Department of Public Safety the costs incurred by the Department of
2252 Public Safety in providing the department criminal background information under Subsection
2253 (3)[(a)](c)(i);
2254 (ii) pay to the Federal Bureau of Investigation the costs incurred by the Federal Bureau
2255 of Investigation in providing the department criminal background information under
2256 Subsection (3)[(a)](c)(ii); and
2257 (iii) charge the person applying for a license [or], for renewal of a license, or for
2258 consent to engage in the business of insurance a fee equal to the aggregate of Subsections
2259 (3)[(c)](e)(i) and (ii).

2260 (4) To become a resident licensee in accordance with Section 31A-23a-104 and this
2261 section, a person licensed as one of the following in another state who moves to this state shall
2262 apply within 90 days of establishing legal residence in this state:
2263 (a) insurance producer;
2264 (b) limited line producer;
2265 (c) customer service representative;
2266 (d) consultant;
2267 (e) managing general agent; or
2268 (f) reinsurance intermediary.
2269 (5) Notwithstanding the other provisions of this section, the commissioner may:
2270 (a) issue a license to an applicant for a license for a title insurance line of authority only
2271 with the concurrence of the Title and Escrow Commission; and
2272 (b) renew a license for a title insurance line of authority only with the concurrence of
2273 the Title and Escrow Commission.
2274 Section 17. Section 31A-23a-110 is amended to read:
2275 31A-23a-110. Form and contents of license.
2276 (1) [Licenses] A license issued under this chapter shall be in the form the
2277 commissioner prescribes and shall set forth:
2278 (a) the name[,] and address[, and telephone number] of the licensee;
2279 (b) the license types and lines of authority under Section 31A-23a-106 ;
2280 (c) the date of license issuance; and
2281 (d) any other information the commissioner considers necessary.
2282 (2) A licensee under this chapter doing business under [any other] another name than
2283 the licensee's legal name shall notify the commissioner [prior to] before using the assumed
2284 name in this state.
2285 Section 18. Section 31A-23a-111 is amended to read:
2286 31A-23a-111. Revocation, suspension, surrender, lapsing, limiting, or otherwise
2287 terminating a license -- Rulemaking for renewal or reinstatement.
2288 (1) A license type issued under this chapter remains in force until:
2289 (a) revoked or suspended under Subsection (5);
2290 (b) surrendered to the commissioner and accepted by the commissioner in lieu of

2291 administrative action;
2292 (c) the licensee dies or is adjudicated incompetent as defined under:
2293 (i) Title 75, Chapter 5, Part 3, Guardians of Incapacitated Persons; or
2294 (ii) Title 75, Chapter 5, Part 4, Protection of Property of Persons Under Disability and
2295 Minors;
2296 (d) lapsed under Section 31A-23a-113 ; or
2297 (e) voluntarily surrendered.
2298 (2) The following may be reinstated within one year after the day on which the license
2299 is inactivated:
2300 (a) a lapsed license; or
2301 (b) a voluntarily surrendered license.
2302 (3) Unless otherwise stated in the written agreement for the voluntary surrender of a
2303 license, submission and acceptance of a voluntary surrender of a license does not prevent the
2304 department from pursuing additional disciplinary or other action authorized under:
2305 (a) this title; or
2306 (b) rules made under this title in accordance with Title 63, Chapter 46a, Utah
2307 Administrative Rulemaking Act.
2308 (4) A line of authority issued under this chapter remains in force until:
2309 (a) the qualifications pertaining to a line of authority are no longer met by the licensee;
2310 or
2311 (b) the supporting license type:
2312 (i) is revoked or suspended under Subsection (5); or
2313 (ii) is surrendered to the commissioner and accepted by the commissioner in lieu of
2314 administrative action.
2315 (5) (a) If the commissioner makes a finding under Subsection (5)(b), after an
2316 adjudicative proceeding under Title 63, Chapter 46b, Administrative Procedures Act, the
2317 commissioner may:
2318 (i) revoke:
2319 (A) a license; or
2320 (B) a line of authority;
2321 (ii) suspend for a specified period of 12 months or less:

2322 (A) a license; or
2323 (B) a line of authority; or
2324 (iii) limit in whole or in part:
2325 (A) a license; or
2326 (B) a line of authority.
2327 (b) The commissioner may take an action described in Subsection (5)(a) if the
2328 commissioner finds that the licensee:
2329 (i) is unqualified for a license or line of authority under Sections 31A-23a-104 and
2330 31A-23a-105 ;
2331 (ii) [has violated] violates:
2332 (A) an insurance statute;
2333 (B) a rule that is valid under Subsection 31A-2-201 (3); or
2334 (C) an order that is valid under Subsection 31A-2-201 (4);
2335 (iii) is insolvent or the subject of receivership, conservatorship, rehabilitation, or other
2336 delinquency proceedings in any state;
2337 (iv) fails to pay any final judgment rendered against the person in this state within 60
2338 days after the day on which the judgment became final;
2339 (v) fails to meet the same good faith obligations in claims settlement that is required of
2340 admitted insurers;
2341 (vi) is affiliated with and under the same general management or interlocking
2342 directorate or ownership as another insurance producer that transacts business in this state
2343 without a license;
2344 (vii) refuses:
2345 (A) to be examined; or
2346 (B) to produce its accounts, records, and files for examination;
2347 (viii) has an officer who refuses to:
2348 (A) give information with respect to the insurance producer's affairs; or
2349 (B) perform any other legal obligation as to an examination;
2350 (ix) provides information in the license application that is:
2351 (A) incorrect;
2352 (B) misleading;

2353 (C) incomplete; or
2354 (D) materially untrue;
2355 (x) [has violated any] violates an insurance law, valid rule, or valid order of another
2356 state's insurance department;
2357 (xi) [has obtained or attempted] obtains or attempts to obtain a license through
2358 misrepresentation or fraud;
2359 (xii) [has improperly withheld, misappropriated, or converted] improperly withholds,
2360 misappropriates, or converts any monies or properties received in the course of doing insurance
2361 business;
2362 (xiii) [has] intentionally [misrepresented] misrepresents the terms of an actual or
2363 proposed:
2364 (A) insurance contract; [or]
2365 (B) application for insurance; or
2366 (C) viatical settlement;
2367 (xiv) [has been] is convicted of a felony;
2368 (xv) [has admitted or been] admits or is found to have committed [any] an insurance
2369 unfair trade practice or fraud;
2370 (xvi) in the conduct of business in this state or elsewhere [has]:
2371 (A) [used] uses fraudulent, coercive, or dishonest practices; or
2372 (B) [demonstrated] demonstrates incompetence, untrustworthiness, or financial
2373 irresponsibility;
2374 (xvii) has [had] an insurance license, or its equivalent, denied, suspended, or revoked
2375 in [any other] another state, province, district, or territory;
2376 (xviii) [has forged] forges another's name to:
2377 (A) an application for insurance; or
2378 (B) a document related to an insurance transaction;
2379 (xix) [has] improperly [used] uses notes or [any other] another reference material to
2380 complete an examination for an insurance license;
2381 (xx) [has] knowingly [accepted] accepts insurance business from an individual who is
2382 not licensed;
2383 (xxi) [has failed] fails to comply with an administrative or court order imposing a child

2384 support obligation;
2385 (xxii) [has failed] fails to:
2386 (A) pay state income tax; or
2387 (B) comply with [any] an administrative or court order directing payment of state
2388 income tax;
2389 (xxiii) [has violated or permitted] violates or permits others to violate the federal
2390 Violent Crime Control and Law Enforcement Act of 1994, 18 U.S.C. Secs. 1033 and 1034; or
2391 (xxiv) [has engaged in methods and practices] engages in a method or practice in the
2392 conduct of business that [endanger] endangers the legitimate interests of customers and the
2393 public.
2394 (c) For purposes of this section, if a license is held by an agency, both the agency itself
2395 and any natural person named on the license are considered to be the holders of the license.
2396 (d) If a natural person named on the agency license commits [any] an act or fails to
2397 perform [any] a duty that is a ground for suspending, revoking, or limiting the natural person's
2398 license, the commissioner may suspend, revoke, or limit the license of:
2399 (i) the natural person;
2400 (ii) the agency, if the agency:
2401 (A) is reckless or negligent in its supervision of the natural person; or
2402 (B) knowingly [participated] participates in the act or failure to act that is the ground
2403 for suspending, revoking, or limiting the license; or
2404 (iii) (A) the natural person; and
2405 (B) the agency if the agency meets the requirements of Subsection (5)(d)(ii).
2406 (6) A licensee under this chapter is subject to the penalties for acting as a licensee
2407 without a license if:
2408 (a) the licensee's license is:
2409 (i) revoked;
2410 (ii) suspended;
2411 (iii) limited;
2412 (iv) surrendered in lieu of administrative action;
2413 (v) lapsed; or
2414 (vi) voluntarily surrendered; and

2415 (b) the licensee:
2416 (i) continues to act as a licensee; or
2417 (ii) violates the terms of the license limitation.
2418 (7) A licensee under this chapter shall immediately report to the commissioner:
2419 (a) a revocation, suspension, or limitation of the person's license in [any other] another
2420 state, the District of Columbia, or a territory of the United States;
2421 (b) the imposition of a disciplinary sanction imposed on that person by [any other]
2422 another state, the District of Columbia, or a territory of the United States; or
2423 (c) a judgment or injunction entered against that person on the basis of conduct
2424 involving:
2425 (i) fraud;
2426 (ii) deceit;
2427 (iii) misrepresentation; or
2428 (iv) a violation of an insurance law or rule.
2429 (8) (a) An order revoking a license under Subsection (5) or an agreement to surrender a
2430 license in lieu of administrative action may specify a time, not to exceed five years, within
2431 which the former licensee may not apply for a new license.
2432 (b) If no time is specified in the order or agreement described in Subsection (8)(a), the
2433 former licensee may not apply for a new license for five years from the day on which the order
2434 or agreement is made without the express approval by the commissioner.
2435 (9) The commissioner shall promptly withhold, suspend, restrict, or reinstate the use of
2436 a license issued under this part if so ordered by a court.
2437 (10) The commissioner shall by rule prescribe the license renewal and reinstatement
2438 procedures in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
2439 Section 19. Section 31A-23a-116 is amended to read:
2440 31A-23a-116. Services performed for unauthorized insurers.
2441 (1) A person licensed under Chapter 23a, Insurance Marketing - Licensing Producers,
2442 Consultants, and Reinsurance Intermediaries, may not perform [any] an act that assists [any] a
2443 person not authorized as an insurer to act as an insurer.
2444 (2) It is a violation of this section to assist [any] a person purporting to be exempt from
2445 state insurance regulation under Section 514 of the Employee Retirement Income Security Act

2446 of 1974, unless that person [has rebutted the presumption of jurisdiction under Section
2447 31A-1-105 ] submits to the commissioner a certificate from the United States Department of
2448 Labor, or other evidence satisfactory to the commissioner, showing that the laws of Utah are
2449 preempted under Section 514 of the Employee Retirement Income Security Act of 1974 or
2450 other federal law.
2451 (3) It is not a violation of this section:
2452 (a) to assist [persons] a person engaged in self insurance as defined under Section
2453 31A-1-301 ; or
2454 (b) for a surplus lines producer to engage in the placement of insurance under Section
2455 31A-15-103 .
2456 Section 20. Section 31A-25-203 is amended to read:
2457 31A-25-203. General requirements for license issuance.
2458 (1) The commissioner shall issue a license to act as a third party administrator to [any]
2459 a person who [has]:
2460 (a) [satisfied] satisfies the character requirements under Section 31A-25-204 ;
2461 (b) [satisfied] satisfies the financial responsibility requirement under Section
2462 31A-25-205 ;
2463 (c) if a nonresident, [complied] complies with Section 31A-25-206 ; and
2464 (d) [paid] pays the applicable fees under Section 31A-3-103 .
2465 (2) The license of [each] a third party administrator licensed under former Title 31,
2466 Chapter 15a, is continued under this chapter.
2467 (3) (a) This Subsection (3) applies to the following persons:
2468 (i) an applicant for a third party administrator's license; or
2469 (ii) a licensed third party administrator.
2470 (b) A person described in Subsection (3)(a) shall report to the commissioner:
2471 (i) [any] an administrative action taken against the person:
2472 (A) in another jurisdiction; or
2473 (B) by another regulatory agency in this state; and
2474 (ii) [any] a criminal prosecution taken against the person in any jurisdiction.
2475 (c) The report required by Subsection (3)(b) shall:
2476 (i) be filed:

2477 (A) at the time the person applies for a third party administrator's license; and
2478 (B) for an action or prosecution that occurs on or after the day on which the person
2479 applies for a third party administrator license:
2480 (I) for an administrative action, within 30 days of the final disposition of the
2481 administrative action; or
2482 (II) for a criminal prosecution, within 30 days of the initial [pretrial hearing]
2483 appearance before a court; and
2484 (ii) include a copy of the complaint or other relevant legal documents related to the
2485 action or prosecution described in Subsection (3)(b).
2486 (4) (a) The department may require a person applying for a license, for renewal of a
2487 license, or for consent to engage in the business of insurance to submit to a criminal
2488 background check as a condition of receiving a license, renewal, or consent.
2489 (b) A person, if required to submit to a criminal background check under Subsection
2490 (4)(a), shall:
2491 (i) submit a fingerprint card in a form acceptable to the department; and
2492 (ii) consent to a fingerprint background check by:
2493 (A) the Utah Bureau of Criminal Identification; and
2494 (B) the Federal Bureau of Investigation.
2495 [(4) (a) The] (c) For a person who submits a fingerprint card and consents to a
2496 fingerprint background check under Subsection (4)(b), the department may request concerning
2497 a person applying for a third party administrator's license:
2498 (i) criminal background information maintained pursuant to Title 53, Chapter 10, Part
2499 2, Bureau of Criminal Identification, from the Bureau of Criminal Identification; and
2500 (ii) complete Federal Bureau of Investigation criminal background checks through the
2501 national criminal history system.
2502 [(b)] (d) Information obtained by the department from the review of criminal history
2503 records received under this Subsection (4)[(a)] shall be used by the department for the purposes
2504 of:
2505 (i) determining if a person satisfies the character requirements under Section
2506 31A-25-204 for issuance or renewal of a license;
2507 (ii) determining if a person has failed to maintain the character requirements under

2508 Section 31A-25-204 ; and
2509 (iii) preventing persons who violate the federal Violent Crime Control and Law
2510 Enforcement Act of 1994, 18 U.S.C. Secs. 1033 and 1034, from engaging in the business of
2511 insurance in the state.
2512 [(c)] (e) If the department requests the criminal background information, the
2513 department shall:
2514 (i) pay to the Department of Public Safety the costs incurred by the Department of
2515 Public Safety in providing the department criminal background information under Subsection
2516 (4)[(a)](c)(i);
2517 (ii) pay to the Federal Bureau of Investigation the costs incurred by the Federal Bureau
2518 of Investigation in providing the department criminal background information under
2519 Subsection (4)[(a)](c)(ii); and
2520 (iii) charge the person applying for a license [or], for renewal of a license, or for
2521 consent to engage in the business of insurance a fee equal to the aggregate of Subsections
2522 (4)[(c)](e)(i) and (ii).
2523 Section 21. Section 31A-26-203 is amended to read:
2524 31A-26-203. Adjuster's license required.
2525 (1) The commissioner shall issue a license to act as an independent adjuster or public
2526 adjuster to [any] a person who, as to the license classification applied for under Section
2527 31A-26-204 [, has]:
2528 (a) [satisfied] satisfies the character requirements under Section 31A-26-205 ;
2529 (b) [satisfied] satisfies the applicable continuing education requirements under Section
2530 31A-26-206 ;
2531 (c) [satisfied] satisfies the applicable examination requirements under Section
2532 31A-26-207 ;
2533 (d) if a nonresident, [complied] complies with Section 31A-26-208 ; and
2534 (e) [paid] pays the applicable fees under Section 31A-3-103 .
2535 (2) (a) This Subsection (2) applies to the following persons:
2536 (i) an applicant for:
2537 (A) an independent adjuster's license; or
2538 (B) a public adjuster's license;

2539 (ii) a licensed independent adjuster; or
2540 (iii) a licensed public adjuster.
2541 (b) A person described in Subsection (2)(a) shall report to the commissioner:
2542 (i) [any] an administrative action taken against the person:
2543 (A) in another jurisdiction; or
2544 (B) by another regulatory agency in this state; and
2545 (ii) [any] a criminal prosecution taken against the person in any jurisdiction.
2546 (c) The report required by Subsection (2)(b) shall:
2547 (i) be filed:
2548 (A) at the time the person applies for an adjustor's license; and
2549 (B) for an action or prosecution that occurs on or after the day on which the person
2550 applies for an adjustor's license:
2551 (I) for an administrative action, within 30 days of the final disposition of the
2552 administrative action; or
2553 (II) for a criminal prosecution, within 30 days of the initial [pretrial hearing date]
2554 appearance before a court; and
2555 (ii) include a copy of the complaint or other relevant legal documents related to the
2556 action or prosecution described in Subsection (2)(b).
2557 (3) (a) The department may require a person applying for a license, for renewal of a
2558 license, or for consent to engage in the business of insurance to submit to a criminal
2559 background check as a condition of receiving a license, renewal, or consent.
2560 (b) A person, if required to submit to a criminal background check under Subsection
2561 (3)(a), shall:
2562 (i) submit a fingerprint card in a form acceptable to the department; and
2563 (ii) consent to a fingerprint background check by:
2564 (A) the Utah Bureau of Criminal Identification; and
2565 (B) the Federal Bureau of Investigation.
2566 [(3) (a) The] (c) For a person who submits a fingerprint card and consents to a
2567 fingerprint background check under Subsection (3)(b), the department may request concerning
2568 a person applying for an independent or public adjuster's license:
2569 (i) criminal background information maintained pursuant to Title 53, Chapter 10, Part

2570 2, Bureau of Criminal Identification, from the Bureau of Criminal Identification; and
2571 (ii) complete Federal Bureau of Investigation criminal background checks through the
2572 national criminal history system.
2573 [(b)] (d) Information obtained by the department from the review of criminal history
2574 records received under this Subsection (3)[(a)] shall be used by the department for the purposes
2575 of:
2576 (i) determining if a person satisfies the character requirements under Section
2577 31A-26-205 for issuance or renewal of a license;
2578 (ii) determining if a person has failed to maintain the character requirements under
2579 Section 31A-25-204 ; and
2580 (iii) preventing persons who violate the federal Violent Crime Control and Law
2581 Enforcement Act of 1994, 18 U.S.C. Secs. 1033 and 1034, from engaging in the business of
2582 insurance in the state.
2583 [(c)] (e) If the department requests the criminal background information, the
2584 department shall:
2585 (i) pay to the Department of Public Safety the costs incurred by the Department of
2586 Public Safety in providing the department criminal background information under Subsection
2587 (3)[(a)](c)(i);
2588 (ii) pay to the Federal Bureau of Investigation the costs incurred by the Federal Bureau
2589 of Investigation in providing the department criminal background information under
2590 Subsection (3)[(a)](c)(ii); and
2591 (iii) charge the person applying for a license [or], for renewal of a license, or for
2592 consent to engage in the business of insurance a fee equal to the aggregate of Subsections
2593 (3)[(c)](e)(i) and (ii).
2594 (4) Notwithstanding the other provisions of this section, the commissioner may:
2595 (a) issue a license to an applicant for a license for a title insurance classification only
2596 with the concurrence of the Title and Escrow Commission; or
2597 (b) renew a license for a title insurance classification only with the concurrence of the
2598 Title and Escrow Commission.
2599 Section 22. Section 31A-27a-513 is amended to read:
2600 31A-27a-513. Reinsurance continuation and termination.

2601 (1) For purposes of this section:
2602 (a) "Coverage date" is the day on which an order of liquidation is entered.
2603 (b) "Election date" is the day on which an affected guaranty association elects to
2604 assume under this section the rights and obligations of a ceding insurer that relate to a policy or
2605 annuity covered, in whole or in part, by the affected guaranty association.
2606 (2) A contract reinsuring a life insurance policy, disability income insurance policy,
2607 long-term care insurance policy, or an annuity issued by a ceding insurer that is placed in
2608 rehabilitation proceedings pursuant to this chapter shall be continued or terminated pursuant to:
2609 (a) the terms or conditions of each contract; and
2610 (b) this section.
2611 (3) A contract reinsuring a life insurance policy, disability income insurance policy,
2612 long-term care insurance policy, or an annuity issued by a ceding insurer that is placed into
2613 liquidation pursuant to this chapter shall be continued, subject to this section, unless:
2614 (a) the contract is terminated pursuant to the contract's terms before the coverage date;
2615 or
2616 (b) the contract is terminated pursuant to the order of liquidation, in which case
2617 Subsection (10) applies.
2618 (4) (a) (i) At any time within 180 days of the coverage date, an affected guaranty
2619 association covering a life insurance policy, disability income insurance policy, long-term care
2620 insurance policy, or an annuity, in whole or in part, may elect to assume the rights and
2621 obligations of the ceding insurer that relate to the policy or annuity covered, in whole or in part,
2622 by the affected guaranty association, under one or more reinsurance contracts between the
2623 insolvent insurer and the insolvent insurer's reinsurers selected by the affected guaranty
2624 association.
2625 (ii) An assumption under this Subsection (4)(a) is effective as of the coverage date.
2626 (iii) The election described in this Subsection (4)(a) is made by the affected guaranty
2627 association or a nationally recognized association of guaranty associations that is designated by
2628 the affected guaranty association to act on the affected guaranty association's behalf for
2629 purposes of this Subsection (4)(a) by sending written notice, return receipt requested, to the
2630 affected reinsurers.
2631 (b) (i) To facilitate the earliest practicable decision about whether to assume a contract

2632 of reinsurance and to protect the financial position of the estate, the receiver and each reinsurer
2633 of the ceding insurer shall make available the information described in Subsection (4)(b)(ii):
2634 (A) upon request to an affected guaranty association; or
2635 (B) to a nationally recognized association of guaranty associations that is designated by
2636 the affected guaranty association to act on behalf of the affected guaranty associations for
2637 purposes of this Subsection (4) as soon as possible after commencement of formal delinquency
2638 proceedings.
2639 (ii) The information described in Subsection (4)(b)(i) is:
2640 (A) copies of all in-force contracts of reinsurance;
2641 (B) all records related to in-force contracts of reinsurance relevant to the determination
2642 of whether the in-force contracts of reinsurance should be assumed; and
2643 (C) notice of:
2644 (I) [any] a default under the in-force contracts of reinsurance; or
2645 (II) [any] a known event or condition that with the passage of time could become a
2646 default under the in-force contracts of reinsurance.
2647 (c) Subsections (4)(c)(i) through (vi) apply to a reinsurance contract assumed by an
2648 affected guaranty association under this Subsection (4).
2649 (i) The guaranty association is responsible for the following that relates to a life
2650 insurance policy, disability income insurance policy, long-term care insurance policy, or an
2651 annuity covered, in whole or in part, by the guaranty association:
2652 (A) all unpaid premiums due under a reinsurance contract, for the periods both before
2653 and after the coverage date; and
2654 (B) the performance of all other obligations to be performed after the coverage date.
2655 (ii) The affected guaranty association:
2656 (A) may charge a policy of insurance or annuity covered in part by the affected
2657 guaranty association, through reasonable allocation methods, the costs for reinsurance in excess
2658 of the obligations of the affected guaranty association; and
2659 (B) if it imposes a charge under this Subsection (4)(c)(ii), shall provide notice and an
2660 accounting of the charge to the liquidator.
2661 (iii) The affected guaranty association is entitled to any amount payable by the
2662 reinsurer under the reinsurance contract with respect to a loss or event:

2663 (A) that:
2664 (I) occurs in a period on or after the coverage date; and
2665 (II) relates to a life insurance policy, disability income insurance policy, long-term care
2666 insurance policy, or an annuity covered, in whole or in part, by the affected guaranty
2667 association; and
2668 (B) except that upon receipt of the amount, the affected guaranty association is obliged
2669 to pay to the beneficiary under the insurance policy or annuity on account of which the amount
2670 is paid a portion of the amount equal to the lesser of:
2671 (I) the amount received by the affected guaranty association; and
2672 (II) an amount calculated by:
2673 (Aa) determining the excess of the amount received by the affected guaranty
2674 association over the amount equal to the benefits paid by the affected guaranty association on
2675 account of the policy or annuity; and
2676 (Bb) subtracting the retention of the insurer applicable to the loss or event.
2677 (iv) (A) Within 30 days following the election date, the affected guaranty association
2678 and each reinsurer under a contract assumed by the affected guaranty association shall calculate
2679 the net balance due to or from the affected guaranty association under each reinsurance contract
2680 as of the election date with respect to a policy or annuity covered, in whole or in part, by the
2681 affected guaranty association.
2682 (B) The calculation required by Subsection (4)(c)(iv)(A) shall give full credit to all
2683 items paid by the insurer, the insurer's receiver, or the reinsurer before the election date.
2684 (C) The reinsurer shall pay the receiver an amount due for a loss or event before the
2685 coverage date, subject to any setoff for premiums unpaid for periods before the coverage date.
2686 (D) Within five days of the completion of the calculation required by Subsection
2687 (4)(c)(iv)(A), the affected guaranty association or reinsurer shall pay any balance due the other
2688 after completion of the calculation.
2689 (E) A dispute over an amount due to either the affected guaranty association or the
2690 reinsurer shall be resolved by arbitration:
2691 (I) pursuant to the terms of the affected reinsurance contract; or
2692 (II) if the affected reinsurance contract contains no arbitration clause, as provided in
2693 Subsection (10)(d).

2694 (v) If the receiver receives an amount due the affected guaranty association pursuant to
2695 Subsection (4)(c)(iii), the receiver shall remit that amount to the affected guaranty association
2696 as promptly as practicable.
2697 (vi) If the affected guaranty association or the receiver on the affected guaranty
2698 association's behalf, within 60 days of the election date, pays the unpaid premiums due for
2699 periods both before and after the election date that relate to a life insurance policy, disability
2700 income insurance policy, long-term care insurance policy, or an annuity covered, in whole or in
2701 part, by the affected guaranty association, the reinsurer may not:
2702 (A) terminate the reinsurance contract for failure to pay premiums, insofar as the
2703 reinsurance contract relates to a life insurance policy, disability income insurance policy,
2704 long-term care insurance policy, or an annuity covered, in whole or in part, by the affected
2705 guaranty association; and
2706 (B) set off any unpaid amounts due under other contracts, or unpaid amounts due from
2707 parties other than the affected guaranty association, against amounts due the affected guaranty
2708 association.
2709 (5) (a) If pursuant to court approval under Section 31A-27a-402 a receiver continues a
2710 life insurance policy, disability income insurance policy, long-term care insurance policy, or an
2711 annuity in force following an order of liquidation, and the policy of insurance or annuity is not
2712 covered in whole or in part by one or more affected guaranty associations, the receiver may
2713 elect to assume the rights and obligations of the ceding insurer under one or more of the
2714 reinsurance contracts that relate to the policy or annuity:
2715 (i) within 180 days of the coverage date; and
2716 (ii) if the contract is not terminated as set forth in Subsection (2).
2717 (b) The election described in this Subsection (5) shall be made by sending written
2718 notice, return receipt requested, to the affected reinsurers.
2719 (c) If the election described in this Subsection (5) is made:
2720 (i) payment of premiums on the reinsurance contract for the policy or annuity, for
2721 periods both before and after the coverage date, shall be chargeable against the estate as a Class
2722 1 administrative expense; and
2723 (ii) amounts paid by the reinsurer on account of losses on the policy or annuity shall be
2724 to the estate of the insolvent insurer.

2725 (6) During the period beginning on the coverage date and ending on the election date:
2726 (a) (i) neither the affected guaranty association nor the reinsurer has any rights or
2727 obligations under a reinsurance contract that the affected guaranty association has the right to
2728 assume under Subsection (4), whether for a period before or after the coverage date;
2729 (ii) (A) with respect to the period after the coverage date, neither the receiver nor the
2730 reinsurer has any rights or obligations under a reinsurance contract that the receiver has the
2731 right to assume under Subsection (5); and
2732 (B) with respect to the period before the coverage date, the rights and obligations of the
2733 affected guaranty association and the reinsurer remain unchanged; and
2734 (iii) the reinsurer, the receiver, and an affected guaranty association shall, to the extent
2735 practicable, provide each other data and records reasonably requested; and
2736 (b) once the affected guaranty association or the receiver, as the case may be, elects or
2737 declines to elect to assume a reinsurance contract, the parties' rights and obligations are
2738 governed by Subsection (4), (5), or (10), as applicable.
2739 (7) (a) If an affected guaranty association does not elect to assume a reinsurance
2740 contract by the election date pursuant to Subsection (4), the affected guaranty association has
2741 no rights or obligations, in each case for periods both before and after the coverage date, with
2742 respect to the reinsurance contract.
2743 (b) If a receiver does not elect to assume a reinsurance contract by the election date
2744 pursuant to Subsection (5), the receiver and the reinsurer:
2745 (i) retain their respective rights and obligations with respect to the reinsurance contract
2746 for the period before the coverage date; and
2747 (ii) have no rights or obligations to each other for the period after the coverage date,
2748 except as provided in Subsection (10).
2749 (c) (i) If an affected guaranty association or the receiver, as the case may be, does not
2750 elect to assume a reinsurance contract by the election date, the reinsurance contract terminates
2751 retroactively effective on the coverage date.
2752 (ii) A reinsurance contract covering a life insurance policy, disability income insurance
2753 policy, long-term care insurance policy, or an annuity that is terminated pursuant to Section
2754 31A-27a-402 terminates effective on the coverage date.
2755 (iii) Subsection (10) applies to a reinsurance contract described in Subsection (7)(c)(i)

2756 or (ii).
2757 (8) (a) Subject to Subsection (8)(b), when a life insurance policy, disability income
2758 insurance policy, long-term care insurance policy, an annuity, or guaranty association
2759 obligation with respect to that policy or annuity is transferred to an assuming insurer,
2760 reinsurance on the policy or annuity may also be transferred:
2761 (i) by the affected guaranty association, in the case of a contract assumed under
2762 Subsection (4); or
2763 (ii) by the receiver, in the case of a contract assumed under Subsection (5).
2764 (b) A transfer under Subsection (8)(a), is subject to the following:
2765 (i) unless the reinsurer and the assuming insurer agree otherwise, the reinsurance
2766 contract transferred may not cover a new policy of insurance or new annuity in addition to
2767 those transferred;
2768 (ii) the obligations described in Subsections (4) and (5) do not apply with respect to
2769 matters arising after the effective date of the transfer; and
2770 (iii) notice shall be given in writing, return receipt requested, by the transferring party
2771 to the affected reinsurer not less than 30 days before the effective date of the transfer.
2772 (9) (a) This section shall, to the extent provided in this chapter, supersede a law or an
2773 affected reinsurance contract that provides for or requires a payment of reinsurance proceeds on
2774 account of a loss or event:
2775 (i) that occurs in a period after the coverage date; and
2776 (ii) to the receiver of the insolvent insurer or to any other person.
2777 (b) The receiver shall remain entitled to any amounts payable by the reinsurer under the
2778 reinsurance contract with respect to a loss or event that occurs in a period before the coverage
2779 date, subject to this chapter including applicable setoff provisions.
2780 (10) If a contract reinsuring a life insurance policy, disability income insurance policy,
2781 long-term care insurance policy, or an annuity is terminated pursuant to this chapter, the
2782 procedures of this Subsection (10) apply.
2783 (a) The reinsurer and the receiver shall, upon written notice to the other party to the
2784 reinsurance contract no later than 30 days after the receipt by the reinsurer of notice of
2785 termination, commence a mandatory negotiation and arbitration procedure in accordance with
2786 this Subsection (10).

2787 (b) (i) Each party shall appoint an actuary to determine an estimated sum due as a
2788 result of the termination of the reinsurance contract calculated in a way expected to make the
2789 parties economically indifferent as to whether the reinsurance contract continues or terminates,
2790 giving due regard to the economic effects of the insolvency.
2791 (ii) The estimated sum described in this Subsection (10)(b) shall:
2792 (A) take into account the present value of future cash flows expected under the
2793 reinsurance contract; and
2794 (B) be based on a gross premium valuation of net liability using current assumptions:
2795 (I) that reflect postinsolvency experience expectations, with no additional margins;
2796 (II) that are net of any amounts payable and receivable; and
2797 (III) with a market value adjustment to reflect premature sale of assets to fund the
2798 settlement.
2799 (c) (i) Within 90 days of the day on which the written request pursuant to Subsection
2800 (10)(a) is made, each party shall provide the other party with:
2801 (A) its estimate of the sum due as a result of the termination of the reinsurance
2802 contract; and
2803 (B) all relevant documents and other information supporting the estimate.
2804 (ii) The parties shall make a good faith effort to reach agreement on the sum due.
2805 (d) (i) If the parties are unable to reach agreement within 90 days following the day on
2806 which the materials required in Subsection (10)(c) are submitted, either party may initiate
2807 arbitration proceedings:
2808 (A) as provided in the reinsurance contract; or
2809 (B) if the reinsurance contract does not contain an arbitration clause, pursuant to this
2810 Subsection (10)(d) by providing the other party with a written demand for arbitration.
2811 (ii) Arbitration under Subsection (10)(d)(i)(B) shall be conducted pursuant to the
2812 following procedures:
2813 (A) Venue for the arbitration shall be within the county of the court's jurisdiction or
2814 another location agreed to by the parties.
2815 (B) Within 30 days of the responding party's receipt of the arbitration demand, each
2816 party shall appoint an arbitrator who is:
2817 (I) a disinterested active or retired officer or executive of a life insurance or reinsurance

2818 company; or
2819 (II) other professional with no less than ten years experience in or relating to the field
2820 of life insurance or life reinsurance.
2821 (C) The two arbitrators appointed under Subsection (10)(d)(ii)(B) shall appoint an
2822 independent, impartial, disinterested umpire who is an:
2823 (I) active or retired officer or executive of a life insurance or reinsurance company; or
2824 (II) other professional with no less than ten years experience in the field of life
2825 insurance or life reinsurance.
2826 (D) If the arbitrators appointed under Subsection (10)(d)(ii)(B) are unable to agree on
2827 an umpire:
2828 (I) each arbitrator shall provide the other with the names of three qualified individuals;
2829 (II) each arbitrator shall strike two names from the other's list; and
2830 (III) the umpire shall be chosen by drawing lots from the remaining individuals.
2831 (E) Within 60 days following the day on which the umpire is appointed, each party
2832 shall, unless otherwise ordered by the arbitration panel, submit to the arbitration panel:
2833 (I) the party's estimates of the sum due as a result of the termination of the reinsurance
2834 contract; and
2835 (II) all relevant documents and other information supporting the estimate.
2836 (F) The time periods set forth in this Subsection (10)(d)(ii) may be extended upon
2837 mutual agreement of the parties.
2838 (G) The arbitration panel has all powers necessary to conduct the arbitration
2839 proceedings in a fair and appropriate manner, including the power to:
2840 (I) request additional information from the parties;
2841 (II) authorize discovery;
2842 (III) hold hearings; and
2843 (IV) hear testimony.
2844 (H) The arbitration panel may, if the arbitration panel considers it necessary, appoint
2845 one or more independent actuarial experts, the expense of which shall be shared equally
2846 between the parties.
2847 (I) An arbitration panel considering the matters set forth in this Subsection (10)(d)
2848 shall:

2849 (I) apply the standards set forth in Subsection (10)(b); and
2850 (II) issue a written award specifying a net settlement amount due from one party or the
2851 other as a result of the termination of the reinsurance contract.
2852 (e) The supervising court shall confirm an award issued under Subsection (10)(d)(ii)(I)
2853 absent proof of statutory grounds for vacating or modifying arbitration awards under the
2854 Federal Arbitration Act, 9 U.S.C. Sec. 1 et seq.
2855 (f) (i) If the net settlement amount agreed or awarded pursuant to this Subsection (10)
2856 is payable by the reinsurer, the reinsurer shall pay the amount due to the estate subject to any
2857 applicable setoff under Section 31A-27a-510 .
2858 (ii) If the net settlement amount agreed or awarded pursuant to this Subsection (10) is
2859 payable by the insurer, the reinsurer is considered to have a timely filed claim against the estate
2860 for that amount, which claim shall be paid pursuant to the priority established in Subsection
2861 31A-27a-701 (2)(f).
2862 (iii) A guaranty association:
2863 (A) is not entitled to receive the net settlement amount, except to the extent it is
2864 entitled to share in the estate assets as creditors of the estate; and
2865 (B) has no responsibility for the net settlement amount.
2866 (11) (a) Except as otherwise provided in this section, this section does not alter or
2867 modify the terms and conditions of a reinsurance contract.
2868 (b) This section does not abrogate or limit any rights of a reinsurer to claim that it is
2869 entitled to rescind a reinsurance contract.
2870 (c) This section does not give a policyholder or beneficiary an independent cause of
2871 action against a reinsurer that is not otherwise set forth in the reinsurance contract.
2872 (d) This section does not limit or affect any guaranty association's rights as a creditor of
2873 the estate against the assets of the estate.
2874 (e) This section does not apply to a reinsurance agreement covering property or
2875 casualty risks.
2876 Section 23. Section 31A-27a-515 is amended to read:
2877 31A-27a-515. Commutation and release agreements.
2878 (1) For purposes of this section, "casualty claims" means the insurer's aggregate claims
2879 arising out of insurance contracts in the following lines:

2880 (a) farm owner multiperil;
2881 (b) homeowner multiperil;
2882 (c) commercial multiperil;
2883 (d) medical malpractice;
2884 (e) workers' compensation;
2885 (f) other liability;
2886 (g) products liability;
2887 (h) auto liability;
2888 (i) aircraft, all peril; and
2889 (j) international, for lines listed in Subsections (1)(a) through (i).
2890 (2) (a) Notwithstanding Section 31A-27a-512 , the liquidator and a reinsurer may
2891 negotiate a voluntary commutation and release of all obligations arising from a reinsurance
2892 agreement in which the insurer is the ceding party.
2893 (b) A commutation and release agreement voluntarily entered into by the parties shall
2894 be commercially reasonable, actuarially sound, and in the best interests of the creditors of the
2895 insurer.
2896 (c) (i) An agreement subject to this Subsection (2) that has a gross consideration in
2897 excess of $250,000 shall be submitted pursuant to Section 31A-27a-107 to the receivership
2898 court for approval.
2899 (ii) An agreement described in this Subsection (2)(c) shall be approved by the
2900 receivership court if it meets the standards described in this Subsection (2).
2901 (3) Without derogating from Section 31A-27a-512 , if the liquidator is unable to
2902 negotiate a voluntary commutation with a reinsurer with respect to a reinsurance agreement
2903 between the insurer and that reinsurer, the liquidator may, in addition to any other remedy
2904 available under applicable law, apply to the receivership court, with notice to the reinsurer, for
2905 an order requiring that the parties submit commutation proposals with respect to the
2906 reinsurance agreement to a panel of three arbitrators:
2907 (a) at any time after 75% of the actuarially estimated ultimate incurred liability for all
2908 of the casualty claims against the liquidation estate is reached by allowance of claims in the
2909 liquidation estate pursuant to Sections 31A-27a-603 and 31A-27a-605 , calculated:
2910 (i) as of the day on which the order of liquidation is entered by or at the instance of the

2911 liquidator; and
2912 (ii) for purposes of this Subsection (3), not performed during the five-year period
2913 subsequent to the day on which the order of liquidation is entered; or
2914 (b) at any time in regard to a reinsurer if that reinsurer has a total adjusted capital that
2915 is less than 250% of its authorized control level RBC as defined in Section 31A-17-601 .
2916 (4) Venue for the arbitration is within the district of the receivership court's jurisdiction
2917 or at another location agreed to by the parties.
2918 (5) (a) If the liquidator determines that commutation would be in the best interests of
2919 the creditors of the liquidation estate, the liquidator may petition the receivership court to order
2920 arbitration.
2921 (b) If the liquidator petitions the receivership court under Subsection (5)(a), the
2922 receivership court shall require that the liquidator and the reinsurer each appoint an arbitrator
2923 within 30 days after the day on which the order for arbitration is entered.
2924 (c) If either party fails to appoint an arbitrator within the 30-day period, the other party
2925 may appoint both arbitrators and the appointments are binding on the parties.
2926 (d) The two arbitrators shall be active or retired executive officers of insurance or
2927 reinsurance companies, not under the control of or affiliated with the insurer or the reinsurer.
2928 (e) (i) Within 30 days after the day on which both arbitrators have been appointed, the
2929 two arbitrators shall agree to the appointment of a third independent, impartial, disinterested
2930 arbitrator.
2931 (ii) If agreement to the disinterested arbitrator is not reached within the 30-day period,
2932 the third arbitrator shall be appointed by the receivership court.
2933 (f) The disinterested arbitrator shall be a person who:
2934 (i) is or, if retired, has been, an executive officer of a United States domiciled
2935 insurance or reinsurance company that is not under the control of or affiliated with either of the
2936 parties; and
2937 (ii) has at least 15 years experience in the reinsurance industry.
2938 (6) (a) The arbitration panel may choose to retain as an expert to assist the panel in its
2939 determinations, a retired, disinterested executive officer of a United States domiciled insurance
2940 or reinsurance company having at least 15 years loss reserving actuarial experience.
2941 (b) If the arbitration panel is unable to unanimously agree on the identity of the expert

2942 within 14 days of the day on which the disinterested arbitrator is appointed, the expert shall be:
2943 (i) designated by the commissioner:
2944 (A) by rule made in accordance with Title 63, Chapter 46a, Utah Administrative
2945 Rulemaking Act; and
2946 (B) on the basis of recommendations made by a nationally recognized society of
2947 actuaries; and
2948 (ii) a disinterested person that has knowledge, experience, and training applicable to
2949 the line of insurance that is the subject of the arbitration.
2950 (c) The expert:
2951 (i) may not vote in the proceeding; and
2952 (ii) shall issue a written report and recommendations to the arbitration panel within 60
2953 days after the day on which the arbitration panel receives the commutation proposals submitted
2954 by the parties pursuant to Subsection (7), which report shall:
2955 (A) be included as part of the arbitration record; and
2956 (B) accompany the award issued by the arbitration panel pursuant to Subsection (8).
2957 (d) The cost of the expert is to be paid equally by the parties.
2958 (7) Within 90 days after the day on which the disinterested arbitrator is appointed
2959 under Subsection (5), each party shall submit to the arbitration panel:
2960 (a) the party's commutation proposals; and
2961 (b) other documents and information relevant to the determination of the parties' rights
2962 and obligations under the reinsurance agreement to be commuted, including:
2963 (i) a written review of any disputed paid claim balances;
2964 (ii) any open claim files and related case reserves at net present value; and
2965 (iii) any actuarial estimates with the basis of computation of any other reserves and any
2966 incurred-but-not-reported losses at net present value.
2967 (8) (a) Within 90 days after the day on which the parties submit the information
2968 required by Subsection (7), the arbitration panel:
2969 (i) shall issue an award, determined by a majority of the arbitration panel, specifying
2970 the terms of a commercially reasonable and actuarially sound commutation agreement between
2971 the parties; or
2972 (ii) may issue an award declining commutation between the parties for a period not to

2973 exceed two years if a majority of the arbitration panel determines that it is unable to derive a
2974 commercially reasonable and actuarially sound commutation on the basis of:
2975 (A) the submissions of the parties; and
2976 (B) if applicable, the report and recommendation of the expert retained in accordance
2977 with Subsection (6).
2978 (b) Following the expiration of the two-year period described in Subsection (8)(a), the
2979 liquidator may again invoke arbitration in accordance with Subsection (2), in which event
2980 Subsections (2) through (9) apply to the renewed proceeding, except that the arbitration panel
2981 is obliged to issue an award under Subsection (8)(a).
2982 (9) Once an award is issued, the liquidator shall promptly submit the award to the
2983 receivership court for confirmation.
2984 (10) (a) Within 30 days of the day on which the receivership court confirms the award,
2985 the reinsurer shall give notice to the receiver that the reinsurer:
2986 (i) will commute the reinsurer's liabilities to the insurer for the amount of the award in
2987 return for a full and complete release of all liabilities between the parties, whether past, present,
2988 or future; or
2989 (ii) will not commute the reinsurer's liabilities to the insurer.
2990 (b) If the reinsurer's liabilities are not commuted under Subsection (10)(a), the
2991 reinsurer shall:
2992 (i) establish and maintain in accordance with Section 31A-27a-516 a reinsurance
2993 recoverable trust in the amount of 102% of the award; and
2994 (ii) pay the costs and fees associated with establishing and maintaining the trust
2995 established under this Subsection (10)(b).
2996 (11) (a) If the reinsurer notifies the liquidator that it will commute the reinsurer's
2997 liabilities pursuant to Subsection (10)(a)(i), the liquidator has 30 days from the day on which
2998 the reinsurer notifies the liquidator to:
2999 (i) tender to the reinsurer a proposed commutation and release agreement:
3000 (A) providing for a full and complete release of all liabilities between the parties,
3001 whether past, present, or future; and
3002 (B) that requires that the reinsurer make payment of the commutation amount within
3003 14 days from the day on which the agreement is consummated; or

3004 (ii) reject the commutation in writing, subject to receivership court approval.
3005 (b) If the liquidator rejects the commutation subject to approval of the receivership
3006 court in accordance with Subsection (11)(a)(ii), the reinsurer shall establish and maintain a
3007 reinsurance recoverable trust in accordance with Section 31A-27a-516 .
3008 (c) The liquidator and the reinsurer shall share equally in the costs and fees associated
3009 with establishing and maintaining the trust established under Subsection (11)(b).
3010 (12) Except for the period provided in Subsection (8)(b), the time periods established
3011 in Subsections (6), (7), (8), (10), and (11) may be extended:
3012 (a) upon the consent of the parties; or
3013 (b) by order of the receivership court, for good cause shown.
3014 (13) Subject to Subsection (14), this section may not be construed to supersede or
3015 impair any provision in a reinsurance agreement that establishes a commercially reasonable and
3016 actuarially sound method for valuing and commuting the obligations of the parties to the
3017 reinsurance agreement by providing in the contract the specific methodology to be used for
3018 valuing and commuting the obligations between the parties.
3019 (14) (a) A commutation provision in a reinsurance agreement is not effective if it is
3020 demonstrated to the receivership court that the provision is entered into in contemplation of the
3021 insolvency of one or more of the parties.
3022 (b) A contractual commutation provision entered into within one year of the day on
3023 which the liquidation order of the insurer is entered is rebuttably presumed to have been
3024 entered into in contemplation of insolvency.
3025 Section 24. Section 31A-27a-516 is amended to read:
3026 31A-27a-516. Reinsurance recoverable trust provisions.
3027 (1) As used in this section:
3028 (a) "Beneficiary" means the domiciliary insurance commissioner, as liquidator of the
3029 insurer for whose sole benefit a reinsurance recoverable trust is established.
3030 (b) "Grantor" means the reinsurer who has established a reinsurance recoverable trust
3031 for the sole benefit of the beneficiary.
3032 (c) "Qualified United States financial institution" means an institution that:
3033 (i) (A) is organized under the laws of the United States or any state of the United
3034 States; or

3035 (B) in the case of a United States branch or agency office of a foreign banking
3036 organization, licensed under the laws of the United States or any state of the United States;
3037 (ii) is granted authority to operate with fiduciary powers; and
3038 (iii) is regulated, supervised, and examined by federal or state authorities having
3039 regulatory authority over banks and trust companies.
3040 (d) "Reinsurance recoverable trust" means a trust established pursuant to Section
3041 31A-27a-515 .
3042 (2) (a) The trustee of a reinsurance recoverable trust shall be a qualified United States
3043 financial institution.
3044 (b) The trust agreement governing a reinsurance recoverable trust shall:
3045 (i) be entered into by the beneficiary, the grantor, and a trustee;
3046 (ii) create a trust account into which assets shall be deposited in accordance with
3047 Section 31A-27a-515 ;
3048 (iii) provide that the beneficiary may withdraw assets from the trust only:
3049 (A) (I) on the basis of a filed claim allowed pursuant to Section 31A-27a-603 or
3050 31A-27a-605 ;
3051 [(B)] (II) where the grantor is notified, in writing, of the allowance of the claim;
3052 [(C)] (III) to the extent that the amount to be withdrawn exceeds any setoff permitted
3053 by Section 31A-27a-510 due to the grantor; and
3054 [(D)] (IV) when 60 days expires during which the grantor fails to:
3055 [(I)] (Aa) pay the claim; or
3056 [(II)] (Bb) subject to and without derogation from Section 31A-27a-512 , which at all
3057 times governs and remains binding on the reinsurer, file notice of a written dispute with respect
3058 to the claim under and in terms of the reinsurance agreement; or
3059 [(E)] (B) if the beneficiary complies with any different or other terms and conditions
3060 mutually agreed to by the beneficiary and the grantor in the trust agreement;
3061 (iv) require the trustee to:
3062 (A) receive assets and hold all assets at the trustee's office in the United States in a safe
3063 place;
3064 (B) determine that all assets are in such form that the beneficiary, or the trustee upon
3065 direction by the beneficiary, may whenever necessary negotiate the assets, without consent or

3066 signature from the grantor or any other person;
3067 (C) furnish to the grantor and the beneficiary a statement of all assets in the trust
3068 account upon its inception and at intervals no less frequent than the end of each calendar
3069 quarter; and
3070 (D) notify the grantor and the beneficiary within ten days of a deposit to or withdrawal
3071 from the trust account;
3072 (v) be made subject to and governed by the laws of this state;
3073 (vi) prohibit the invasion of the trust corpus for the purpose of paying compensation to,
3074 or reimbursing the expenses of, the trustee;
3075 (vii) provide that the trustee is liable for the trustee's negligence, willful misconduct, or
3076 lack of good faith;
3077 (viii) subject to Subsection (2)(c), provide that the trustee may resign upon delivery of
3078 a written notice of resignation, effective not less than 90 days after the day on which the
3079 beneficiary and grantor receive the notice;
3080 (ix) subject to Subsection (2)(c), provide that the trustee may be removed by the
3081 grantor by delivery to the trustee and the beneficiary of a written notice of removal, effective
3082 not less than 90 days after the day on which the trustee and the beneficiary receive the notice;
3083 (x) provide that the grantor has the full and unqualified right to vote any shares of stock
3084 in the trust account except that, subject to other provisions of this section, an interest or
3085 dividend paid on shares of stock or other obligation in the trust account shall remain in the
3086 trust;
3087 (xi) specify categories of investments reasonably acceptable to the beneficiary;
3088 (xii) authorize the trustee to invest funds and to accept substitutions, by the grantor,
3089 that the trustee determines are at least equal in market value to the assets withdrawn provided
3090 that no investment or substitution shall be made without prior approval from the beneficiary,
3091 which may not be unreasonably or arbitrarily withheld;
3092 (xiii) subject to Subsection (2)(d), provide that the beneficiary may at any time
3093 designate a party to which all or part of the trust assets are to be transferred;
3094 (xiv) specify the types of assets that may be included in the trust account:
3095 (A) which shall consist only of:
3096 (I) cash in United States dollars;

3097 (II) certificates of deposit issued by a United States bank and payable in United States
3098 dollars;
3099 (III) investments permitted by this state's insurance law; or
3100 (IV) any combination of the types specified by this Subsection (2)(b)(xiv)(A);
3101 (B) except that if investments in or issued by an entity controlling, controlled by, or
3102 under common control with either the grantor or the beneficiary of the trust, may not exceed
3103 5% of total investments; and
3104 (C) subject to the assets deposited in the trust account being valued according to the
3105 asset's current fair market value;
3106 (xv) give the grantor the right to seek approval from the beneficiary, which may not be
3107 unreasonably or arbitrarily withheld, to withdraw from the trust account all or any part of the
3108 trust assets and transfer those assets to the grantor, if:
3109 (A) the grantor, at the time of withdrawal, replaces the withdrawn assets with other
3110 qualified assets so as to maintain at all times the deposit in the required amount; or
3111 (B) after withdrawal and transfer, the market value of the trust account is no less than
3112 102% of the award made pursuant to Subsection 31A-27a-515 [(7)] (8)(a);
3113 (xvi) provide for the return of any amount withdrawn in excess of the actual amounts
3114 required for:
3115 (A) payment of reported allowed claims under Subsection (2)(b)(iii); and
3116 (B) interest payments at a rate not in excess of the prime rate of interest on the excess
3117 amounts withdrawn; and
3118 (xvii) provide for termination of the reinsurance recoverable trust in accordance with
3119 Subsection (6).
3120 (c) Notwithstanding Subsection (2)(b)(viii) or (ix), a resignation or removal may not be
3121 effective until:
3122 (i) a successor trustee is appointed and approved by the beneficiary and the grantor;
3123 and
3124 (ii) all assets in the trust are transferred to the new trustee.
3125 (d) Notwithstanding Subsection (2)(b)(xiii), a transfer may be conditioned upon the
3126 trustee receiving, before or simultaneously with, other specified assets.
3127 (e) Subsection (2)(b) may not be construed to alter the rights or obligations of the

3128 parties pursuant to contractual and statutory provisions providing for notice and the
3129 determination of a claim.
3130 (3) The grantor shall, before depositing assets with the trustee, execute assignments or
3131 endorsements in blank, or transfer legal title to the trustee of all shares, obligations, or any
3132 other assets requiring assignments, in order that the beneficiary, or the trustee upon the
3133 direction of the beneficiary, may whenever necessary negotiate these assets without consent or
3134 signature from the grantor or any other person.
3135 (4) (a) Without derogating Section 31A-27a-512 , the grantor or the beneficiary may
3136 request that the receivership court review the amount held if:
3137 (i) the grantor and beneficiary fail to reach agreement on the extent, if any, to which
3138 supplementation or reduction of a reinsurance recoverable trust should be occasioned;
3139 (ii) (A) the reinsurance recoverable trust is exhausted; or
3140 (B) the reinsurance recoverable trust is insufficient to respond to claims allowed
3141 pursuant to Section 31A-27a-603 or 31A-27a-605 ; and
3142 (iii) the grantor or the beneficiary believe that the amount held in the reinsurance
3143 recoverable trust is either deficient or overstated.
3144 (b) The review described in this Subsection (4) shall be conducted applying procedures
3145 and terms as the receivership court shall, in its sole discretion, direct.
3146 (5) A reinsurance recoverable trust shall terminate upon the earlier of:
3147 (a) receivership court approval of a voluntary commutation between the grantor and the
3148 beneficiary pursuant to Subsection 31A-27a-515 [(1)] (2);
3149 (b) the mutual agreement of the grantor and the beneficiary; or
3150 (c) a finding by the receivership court that the grantor has discharged its liabilities to
3151 the beneficiary.
3152 (6) Upon termination of a reinsurance recoverable trust, all assets not previously
3153 withdrawn by the beneficiary, pursuant to Subsection (2)(b)(iii), shall, with written approval of
3154 the beneficiary, be delivered to the grantor.
3155 Section 25. Section 31A-30-102 is amended to read:
3156 31A-30-102. Purpose statement.
3157 The purpose of this chapter is to:
3158 (1) prevent abusive rating practices;

3159 (2) require disclosure of rating practices to purchasers;
3160 (3) establish rules regarding:
3161 (a) a universal individual and small group application; and
3162 (b) renewability of coverage;
3163 (4) improve the overall fairness and efficiency of the individual and small group
3164 insurance market; and
3165 (5) provide increased access for individuals and small employers to health insurance.
3166 Section 26. Section 31A-30-108 is amended to read:
3167 31A-30-108. Eligibility for small employer and individual market.
3168 (1) (a) Small employer carriers shall accept residents for small group coverage as set
3169 forth in the Health Insurance Portability and Accountability Act, P.L. 104-191, 110 Stat. 1962,
3170 Sec. 2701(f) and 2711(a).
3171 (b) Individual carriers shall accept residents for individual coverage pursuant:
3172 (i) to P.L. 104-191, 110 Stat. 1979, Sec. 2741(a)-(b); and
3173 (ii) Subsection (3).
3174 (2) (a) Small employer carriers shall offer to accept all eligible employees and their
3175 dependents at the same level of benefits under any health benefit plan provided to a small
3176 employer.
3177 (b) Small employer carriers may:
3178 (i) request a small employer to submit a copy of the small employer's quarterly income
3179 tax withholdings to determine whether the employees for whom coverage is provided or
3180 requested are bona fide employees of the small employer; and
3181 (ii) deny or terminate coverage if the small employer refuses to provide documentation
3182 requested under Subsection (2)(b)(i).
3183 (3) Except as provided in Subsections (5) and (6) and Section 31A-30-110 , individual
3184 carriers shall accept for coverage individuals to whom all of the following conditions apply:
3185 (a) the individual is not covered or eligible for coverage:
3186 (i) (A) as an employee of an employer;
3187 (B) as a member of an association; or
3188 (C) as a member of any other group; and
3189 (ii) under:

3190 (A) a health benefit plan; or
3191 (B) a self-insured arrangement that provides coverage similar to that provided by a
3192 health benefit plan as defined in Section 31A-1-301 ;
3193 (b) the individual is not covered and is not eligible for coverage under any public
3194 health benefits arrangement including:
3195 (i) the Medicare program established under Title XVIII of the Social Security Act;
3196 [(ii) the Medicaid program established under Title XIX of the Social Security Act;]
3197 [(iii)] (ii) any act of Congress or law of this or any other state that provides benefits
3198 comparable to the benefits provided under this chapter; or
3199 [(iv)] (iii) coverage under the Comprehensive Health Insurance Pool Act created in
3200 Chapter 29, Comprehensive Health Insurance Pool Act;
3201 (c) unless the maximum benefit has been reached the individual is not covered or
3202 eligible for coverage under any:
3203 (i) Medicare supplement policy;
3204 (ii) conversion option;
3205 (iii) continuation or extension under COBRA; or
3206 (iv) state extension;
3207 (d) the individual has not terminated or declined coverage described in Subsection
3208 (3)(a), (b), or (c) within 93 days of application for coverage, unless the individual is eligible for
3209 individual coverage under P.L. 104-191, 110 Stat. 1979, Sec. 2741(b), in which case, the
3210 requirement of this Subsection (3)(d) does not apply; and
3211 (e) the individual is certified as ineligible for the Health Insurance Pool if:
3212 (i) the individual applies for coverage with the Comprehensive Health Insurance Pool
3213 within 30 days after being rejected or refused coverage by the covered carrier and reapplies for
3214 coverage with that covered carrier within 30 days after the date of issuance of a certificate
3215 under Subsection 31A-29-111 (5)(c); or
3216 (ii) the individual applies for coverage with any individual carrier within 45 days after:
3217 (A) notice of cancellation of coverage under Subsection 31A-29-115 (1); or
3218 (B) the date of issuance of a certificate under Subsection 31A-29-111 (5)(c) if the
3219 individual applied first for coverage with the Comprehensive Health Insurance Pool.
3220 (4) (a) If coverage is obtained under Subsection (3)(e)(i) and the required premium is

3221 paid, the effective date of coverage shall be the first day of the month following the individual's
3222 submission of a completed insurance application to that covered carrier.
3223 (b) If coverage is obtained under Subsection (3)(e)(ii) and the required premium is
3224 paid, the effective date of coverage shall be the day following the:
3225 (i) cancellation of coverage under Subsection 31A-29-115 (1); or
3226 (ii) submission of a completed insurance application to the Comprehensive Health
3227 Insurance Pool.
3228 (5) (a) An individual carrier is not required to accept individuals for coverage under
3229 Subsection (3) if the carrier issues no new individual policies in the state after July 1, 1997.
3230 (b) A carrier described in Subsection (5)(a) may not issue new individual policies in
3231 the state for five years from July 1, 1997.
3232 (c) Notwithstanding Subsection (5)(b), a carrier may request permission to issue new
3233 policies after July 1, 1999, which may only be granted if:
3234 (i) the carrier accepts uninsurables as is required of a carrier entering the market under
3235 Subsection 31A-30-110 ; and
3236 (ii) the commissioner finds that the carrier's issuance of new individual policies:
3237 (A) is in the best interests of the state; and
3238 (B) does not provide an unfair advantage to the carrier.
3239 (6) (a) If the Comprehensive Health Insurance Pool as set forth under Title 31A,
3240 Chapter 29, is dissolved or discontinued, or if enrollment is capped or suspended, an individual
3241 carrier may decline to accept individuals applying for individual enrollment, other than
3242 individuals applying for coverage as set forth in P.L. 104-191, 110 Stat. 1979, Sec. 2741
3243 (a)-(b).
3244 (b) Within two calendar days of taking action under Subsection (6)(a), an individual
3245 carrier will provide written notice to the Utah Insurance Department.
3246 (7) (a) If a small employer carrier offers health benefit plans to small employers
3247 through a network plan, the small employer carrier may:
3248 (i) limit the employers that may apply for the coverage to those employers with eligible
3249 employees who live, reside, or work in the service area for the network plan; and
3250 (ii) within the service area of the network plan, deny coverage to an employer if the
3251 small employer carrier has demonstrated to the commissioner that the small employer carrier:

3252 (A) will not have the capacity to deliver services adequately to enrollees of any
3253 additional groups because of the small employer carrier's obligations to existing group contract
3254 holders and enrollees; and
3255 (B) applies this section uniformly to all employers without regard to:
3256 (I) the claims experience of an employer, an employer's employee, or a dependent of an
3257 employee; or
3258 (II) any health status-related factor relating to an employee or dependent of an
3259 employee.
3260 (b) (i) A small employer carrier that denies a health benefit product to an employer in
3261 any service area in accordance with this section may not offer coverage in the small employer
3262 market within the service area to any employer for a period of 180 days after the date the
3263 coverage is denied.
3264 (ii) This Subsection (7)(b) does not:
3265 (A) limit the small employer carrier's ability to renew coverage that is in force; or
3266 (B) relieve the small employer carrier of the responsibility to renew coverage that is in
3267 force.
3268 (c) Coverage offered within a service area after the 180-day period specified in
3269 Subsection (7)(b) is subject to the requirements of this section.
3270 Section 27. Section 31A-30-112 is amended to read:
3271 31A-30-112. Employee participation levels.
3272 (1) (a) Except as provided in Subsection (2), [requirements] a requirement used by a
3273 covered carrier in determining whether to provide coverage to a small employer, including
3274 [requirements] a requirement for minimum participation of eligible employees and minimum
3275 employer contributions, shall be applied uniformly among all small employers with the same
3276 number of eligible employees applying for coverage or receiving coverage from the covered
3277 carrier.
3278 (b) In addition to applying Subsection 31A-1-301 [(120)](121), a covered carrier may
3279 require that a small employer have a minimum of two eligible employees to meet participation
3280 requirements.
3281 (2) A covered carrier may not increase [any] a requirement for minimum employee
3282 participation or [any] a requirement for minimum employer contribution applicable to a small

3283 employer at any time after the small employer [has been] is accepted for coverage.




Legislative Review Note
as of 1-23-08 5:37 PM

Office of Legislative Research and General Counsel