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H.B. 170

This document includes House Floor Amendments incorporated into the bill on Wed, Feb 25, 2009 at 11:18 AM by jeyring. --> This document includes Senate Committee Amendments incorporated into the bill on Tue, Mar 3, 2009 at 12:46 PM by rday. -->              1     

INSURANCE AND LIFE SETTLEMENT

             2     
AMENDMENTS

             3     
2009 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: James A. Dunnigan

             6     
Senate Sponsor: Wayne L. Niederhauser

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies the Insurance Code and in particular the Viatical Settlements Act to
             11      change its terminology to Life Settlements Act and to make other substantive changes.
             12      Highlighted Provisions:
             13          This bill:
             14          .    addresses insurable interest;
             15          .    modifies the terminology related to a viatical settlement to terminology related to a
             16      life settlement;
             17          .    modifies definitions;
             18          .    defines "stranger-originated life insurance" and prohibits activities related to
             19      stranger-originated life insurance;
             20          .    prohibits a life settlement from requiring that the life settlement be construed
             21      according to the laws of another jurisdiction;
             22          .    prohibits a life settlement from removing jurisdiction from state courts;
             23          .    modifies requirements to obtain a life settlement provider license;
             24          .    expands the grounds for when a commissioner may refuse to issue, suspend, revoke,
             25      or refuse to renew a life settlement producer or provider license;
             26          .    modifies language related to reporting;
             27          .    addresses verification of coverage;


             28          .    modifies provisions related to rescission of a life settlement;
             29          .    addresses establishing when the requirements of a life settlement are met;
             30          .    modifies the process for holding the proceeds of a life settlement;
             31          .    modifies prohibited acts;
             32          .    modifies what constitutes fraud;
             33          .    modifies requirements related to reporting fraud and immunity for reporting fraud;
             34          .    limits imposition of criminal penalties on an owner; and
             35          .    makes technical and conforming amendments.
             36      Monies Appropriated in this Bill:
             37          None
             38      Other Special Clauses:
             39          This bill provides revisor instructions.
             40      Utah Code Sections Affected:
             41      AMENDS:
             42          31A-2-205, as last amended by Laws of Utah 2007, Chapter 307
             43          31A-21-104, as last amended by Laws of Utah 2008, Chapter 263
             44          31A-23a-105, as last amended by Laws of Utah 2008, Chapter 345
             45          31A-23a-111, as last amended by Laws of Utah 2008, Chapters 345 and 382
             46          31A-23a-117, as last amended by Laws of Utah 2007, Chapter 307
             47          31A-27a-104, as enacted by Laws of Utah 2007, Chapter 309
             48          31A-36-101, as enacted by Laws of Utah 2003, Chapter 81
             49          31A-36-102, as last amended by Laws of Utah 2007, Chapter 307
             50          31A-36-103, as enacted by Laws of Utah 2003, Chapter 81
             51          31A-36-104, as last amended by Laws of Utah 2008, Chapter 382
             52          31A-36-105, as last amended by Laws of Utah 2007, Chapter 307
             53          31A-36-106, as last amended by Laws of Utah 2007, Chapter 307
             54          31A-36-107, as last amended by Laws of Utah 2007, Chapter 307
             55          31A-36-108, as last amended by Laws of Utah 2007, Chapter 307
             56          31A-36-109, as last amended by Laws of Utah 2007, Chapter 307
             57          31A-36-110, as last amended by Laws of Utah 2007, Chapter 307
             58          31A-36-111, as last amended by Laws of Utah 2007, Chapter 307


             59          31A-36-112, as last amended by Laws of Utah 2007, Chapter 307
             60          31A-36-113, as last amended by Laws of Utah 2007, Chapter 307
             61          31A-36-114, as enacted by Laws of Utah 2003, Chapter 81
             62          31A-36-115, as last amended by Laws of Utah 2008, Chapter 382
             63          31A-36-116, as enacted by Laws of Utah 2003, Chapter 81
             64          31A-36-117, as last amended by Laws of Utah 2008, Chapter 382
             65          31A-36-118, as enacted by Laws of Utah 2003, Chapter 81
             66          31A-36-119, as last amended by Laws of Utah 2008, Chapter 382
             67          61-1-13, as last amended by Laws of Utah 2008, Chapter 382
             68          64-13-39.5, as last amended by Laws of Utah 2008, Chapter 382
             69     
             70      Be it enacted by the Legislature of the state of Utah:
             71          Section 1. Section 31A-2-205 is amended to read:
             72           31A-2-205. Examination costs.
             73          (1) (a) Except as provided in Subsection (3), an examinee that is one of the following
             74      shall reimburse the department for the reasonable costs of examinations made under Sections
             75      31A-2-203 and 31A-2-204 :
             76          (i) an insurer;
             77          (ii) a rate service organization;
             78          (iii) a subsidiary of an insurer or rate service organization; or
             79          (iv) a [viatical] life settlement provider.
             80          (b) The following costs shall be reimbursed under this Subsection (1):
             81          (i) actual travel expenses;
             82          (ii) reasonable living expense allowance;
             83          (iii) compensation at reasonable rates for all professionals reasonably employed for the
             84      examination under Subsection (4);
             85          (iv) the administration and supervisory expense of:
             86          (A) the department; and
             87          (B) the attorney general's office; and
             88          (v) an amount necessary to cover fringe benefits authorized by the commissioner or
             89      provided by law.


             90          (c) In determining rates, the commissioner shall consider the rates recommended and
             91      outlined in the examination manual sponsored by the National Association of Insurance
             92      Commissioners.
             93          (d) This Subsection (1) applies to a surplus lines producer to the extent that the
             94      examinations are of the surplus line producer's surplus lines business.
             95          (2) An insurer requesting the examination of one of its producers shall pay the cost of
             96      the examination. Otherwise, the department shall pay the cost of examining a licensee other
             97      than those specified under Subsection (1).
             98          (3) (a) On the examinee's request or at the commissioner's discretion, the department
             99      may pay all or part of the costs of an examination whenever the commissioner finds that
             100      because of the frequency of examinations or the financial condition of the examinee,
             101      imposition of the costs would place an unreasonable burden on the examinee.
             102          (b) The commissioner shall include in the commissioner's annual report information
             103      about any instance in which the commissioner has applied this Subsection (3).
             104          (4) (a) A technical expert employed under Subsection 31A-2-203 (3) shall present to the
             105      commissioner a statement of all expenses incurred by the technical expert in conjunction with
             106      an examination.
             107          (b) The examined insurer shall, at the commissioner's direction, pay to a technical
             108      expert:
             109          (i) (A) actual travel expenses;
             110          (B) reasonable living expenses; and
             111          (C) compensation; and
             112          (ii) for expenses necessarily incurred as approved by the commissioner.
             113          (c) The examined insurer shall reimburse the department for:
             114          (i) a department examiner's:
             115          (A) actual travel expenses; and
             116          (B) reasonable living expenses; and
             117          (ii) the compensation of department examiners involved in the examination.
             118          (d) (i) The examined insurer shall certify the consolidated account of all charges and
             119      expenses for the examination.
             120          (ii) The examined insurer shall:


             121          (A) retain a copy of the consolidated account; and
             122          (B) file a copy of the consolidated account with the department as a public record.
             123          (e) An annual report of examination charges paid by examined insurers directly to
             124      persons employed under Subsection 31A-2-203 (3) or to department examiners shall be
             125      included with the department's budget request.
             126          (f) Amounts paid directly by examined insurers to persons employed under Subsection
             127      31A-2-203 (3) or to department examiners may not be deducted from the department's
             128      appropriation.
             129          (5) (a) The amount payable under Subsection (1) is due ten days after the day on which
             130      the examinee is served with a detailed account of the costs.
             131          (b) Payments received by the department under this Subsection (5) shall be handled as
             132      provided by Section 31A-3-101 .
             133          (6) (a) The commissioner may require an examinee under Subsection (1), or an insurer
             134      requesting an examination under Subsection (2), either before or during an examination, to
             135      make deposits with the state treasurer to pay the costs of examination.
             136          (b) Any deposit made under this Subsection (6) shall be held in trust by the state
             137      treasurer until applied to pay the department the costs payable under this section.
             138          (c) If a deposit made under this Subsection (6) exceeds examination costs, the state
             139      treasurer shall refund the surplus.
             140          (7) A domestic insurer may offset the examination expenses paid under this section
             141      against premium taxes under Subsection 59-9-102 (2).
             142          Section 2. Section 31A-21-104 is amended to read:
             143           31A-21-104. Insurable interest and consent -- Scope.
             144          (1) As used in this chapter:
             145          (a) For purposes of this section, "exchange" means an exchange made pursuant to
             146      Section 1035, Internal Revenue Code, as may be amended.
             147          (b) "Insurable interest" in a person means the following, including a circumstance
             148      described in Subsection (3):
             149          (i) for a person closely related by blood or by law, a substantial interest engendered by
             150      love and affection; or
             151          (ii) in the case of a person not described in Subsection (1)(b)(i), a lawful and


             152      substantial interest in having the life, health, and bodily safety of the person insured continue.
             153          (c) "Insurable interest" in property or liability means any lawful and substantial
             154      economic interest in the nonoccurrence of the event insured against.
             155          (d) ["Viatical] "Life settlement" is as defined in Section 31A-36-102 .
             156          (2) (a) An insurer may not knowingly provide insurance to a person who does not have
             157      or expect to have an insurable interest in the subject of the insurance.
             158          (b) A person may not knowingly procure, directly, by assignment, or otherwise, an
             159      interest in the proceeds of an insurance policy unless that person has or expects to have an
             160      insurable interest in the subject of the insurance.
             161          (c) In the case of life insurance, the insurable interest requirements of Subsections
             162      (2)(a) and (b):
             163          (i) are satisfied if the requirements are met:
             164          (A) at the effective date of the insurance policy; and
             165          (B) at the time of a later procurement, if any, of an interest in the proceeds of an
             166      insurance policy; and
             167          (ii) do not need to be met at the time that proceeds of an insurance policy are payable if
             168      the requirements are met at the times specified in Subsection (2)(c)(i).
             169          (d) Except as provided in Subsections (7) and (8), insurance provided in violation of
             170      this Subsection (2) is subject to Subsection (6).
             171          (e) A policy holder in a group insurance policy does not need an insurable interest if a
             172      certificate holder or a person other than the group policyholder who is specified by the
             173      certificate holder is the recipient of the proceeds of the group insurance policy.
             174          (3) The following is a nonexhaustive list of insurable interests:
             175          (a) [Each] A person has an unlimited insurable interest in that person's own life and
             176      health.
             177          (b) A shareholder, member, or partner has an insurable interest in the life of another
             178      shareholder, member, or partner for purposes of an insurance contract that is an integral part of
             179      a legitimate buy-sell agreement respecting shares, membership interests, or partnership
             180      interests in the business.
             181          (c) (i) A trust has an insurable interest in the subject of the insurance to the extent that
             182      [a beneficiary] all beneficiaries of the trust [has the] have an insurable interest.


             183          (ii) A trust violates this section if the trust:
             184          (A) is created to give the appearance of an insurable interest, but an insurable interest
             185      does not exist; and
             186          (B) is used to initiate a policy for an investor or other person who has no insurable
             187      interest in the insured.
             188          (d) (i) Subject to Subsection (3)(d)(v), an employer or an employer sponsored trust:
             189          (A) has an insurable interest in the lives of the employer's:
             190          (I) directors;
             191          (II) officers;
             192          (III) managers;
             193          (IV) nonmanagement employees; and
             194          (V) retired employees; and
             195          (B) may insure a life listed in Subsection (3)(d)(i)(A):
             196          (I) on an individual or group basis; and
             197          (II) with the written consent of the insured.
             198          (ii) (A) A trustee of a trust established by an employer for the sole benefit of the
             199      employer has the same insurable interest in the life and health of any person as does the
             200      employer.
             201          (B) Without limiting the general principle in Subsection (3)(d)(ii)(A), a trustee of a
             202      trust established by an employer that provides life, health, disability, retirement, or similar
             203      benefits to an individual identified in Subsection (3)(d)(i)(A) has an insurable interest in the
             204      life of the individual described in Subsection (3)(d)(i)(A) for whom the benefits are provided.
             205          (iii) (A) For the purpose of exchanging life insurance, an individual described in
             206      Subsection (3)(d)(i)(A) includes an individual who was formerly included under Subsection
             207      (3)(d)(i)(A) if the life insurance to be exchanged:
             208          (I) is purchased or acquired while the individual is a current director, officer, manager,
             209      or employee; and
             210          (II) is exchanged for life insurance in an amount that does not exceed the amount of the
             211      insurance being exchanged.
             212          (B) Written consent of an individual described in this Subsection (3)(d)(iii) is not
             213      required at the time of the exchange of the life insurance.


             214          (C) This Subsection (3)(d)(iii) shall be interpreted in a manner consistent with
             215      Subsection (2)(c).
             216          (iv) (A) If an employer or trustee establishes an insurable interest as provided in this
             217      Subsection (3)(d) and all of the employer's business is acquired, purchased, merged into, or
             218      otherwise transferred to a subsequent employer, the insurable interest of the original employer
             219      or trustee in an individual described in Subsection (3)(d)(i)(A) is automatically transferred to:
             220          (I) the subsequent employer; or
             221          (II) the trustee of a trust established by the subsequent employer for the subsequent
             222      employer's sole benefit.
             223          (B) A subsequent employer or a trustee of a trust described in Subsection
             224      (3)(d)(iv)(A)(II) may exchange life insurance that is purchased or acquired in an individual
             225      described in Subsection (3)(d)(i)(A) by the original employer or trustee without establishing a
             226      new insurable interest at the time of the exchange of the insurance.
             227          (v) The extent of an employer's or employer sponsored trust's insurable interest for a
             228      nonmanagement or retired employee under Subsection (3)(d)(i) is limited to an amount
             229      commensurate with the employer's unfunded liabilities at the time insurance on the
             230      nonmanagement or retired employee is procured.
             231          (4) (a) Except as provided in Subsection (5), an insurer may not knowingly issue an
             232      individual life or accident and health insurance policy to a person other than the one whose life
             233      or health is at risk unless that person:
             234          (i) is 18 years of age or older;
             235          (ii) is not under guardianship under Title 75, Chapter 5, Protection of Persons Under
             236      Disability and Their Property; and
             237          (iii) gives written consent to the issuance of the policy.
             238          (b) A person shall express consent:
             239          (i) by signing an application for the insurance with knowledge of the nature of the
             240      document; or
             241          (ii) in any other reasonable way.
             242          (c) Insurance provided in violation of this Subsection (4) is subject to Subsection (6).
             243          (5) (a) A life or accident and health insurance policy may be taken out without consent
             244      in a circumstance described in this Subsection (5)(a).


             245          (i) A person may obtain insurance on a dependent who does not have legal capacity.
             246          (ii) A creditor may, at the creditor's expense, obtain insurance on the debtor in an
             247      amount reasonably related to the amount of the debt.
             248          (iii) A person may obtain life and accident and health insurance on an immediate
             249      family member who is living with or dependent on the person.
             250          (iv) A person may obtain an accident and health insurance policy on others that would
             251      merely indemnify the policyholder against expenses the person would be legally or morally
             252      obligated to pay.
             253          (v) The commissioner may adopt rules permitting issuance of insurance for a limited
             254      term on the life or health of a person serving outside the continental United States who is in the
             255      public service of the United States, if the policyholder is related within the second degree by
             256      blood or by marriage to the person whose life or health is insured.
             257          (b) Consent may be given by another in a circumstance described in this Subsection
             258      (5)(b).
             259          (i) A parent, a person having legal custody of a minor, or a guardian of a person under
             260      Title 75, Chapter 5, Protection of Persons Under Disability and Their Property, may consent to
             261      the issuance of a policy on a dependent child or on a person under guardianship under Title 75,
             262      Chapter 5, Protection of Persons Under Disability and Their Property.
             263          (ii) A grandparent may consent to the issuance of life or accident and health insurance
             264      on a grandchild.
             265          (iii) A court of general jurisdiction may give consent to the issuance of a life or
             266      accident and health insurance policy on an ex parte application showing facts the court
             267      considers sufficient to justify the issuance of that insurance.
             268          (6) (a) An insurance policy is not invalid because:
             269          (i) the insurance policy is issued or procured in violation of Subsection (2); or
             270          (ii) consent has not been given.
             271          (b) Notwithstanding Subsection (6)(a), a court with appropriate jurisdiction may:
             272          (i) order the proceeds to be paid to some person who is equitably entitled to the
             273      proceeds, other than the one to whom the policy is designated to be payable; or
             274          (ii) create a constructive trust in the proceeds or a part of the proceeds on behalf of a
             275      person who is equitably entitled to the proceeds, subject to all the valid terms and conditions of


             276      the policy other than those relating to insurable interest or consent.
             277          (7) This section does not prevent an organization described under Section 501(c)(3),
             278      (e), or (f), Internal Revenue Code, as amended, and the regulations made under this section,
             279      and which is regulated under Title 13, Chapter 22, Charitable Solicitations Act, from soliciting
             280      and procuring, by assignment or designation as beneficiary, a gift or assignment of an interest
             281      in life insurance on the life of the donor or assignor or from enforcing payment of proceeds
             282      from that interest.
             283          (8) (a) Subsection (8)(b) applies if:
             284          [(8) An] (i) an insurance policy is transferred pursuant to a life settlement in
             285      accordance with Chapter 36, [Viatical] Life Settlements Act[,]; and
             286          (ii) before the transfer described in Subsection (8)(a)(i) the insurable interest
             287      requirements of Subsection (2)(c)(i) are met for the insurance policy.
             288          (b) An insurance policy described in Subsection (8)(a) is not subject to Subsection
             289      (6)(b) and nothing [else] in this section [shall prevent] prevents:
             290          [(a) a policyholder] (i) an owner of life insurance, whether or not the [policyholder]
             291      owner is also the subject of the insurance, from entering into a [viatical] life settlement;
             292          [(b)] (ii) a [person] life settlement producer from soliciting a person to enter into a
             293      [viatical] life settlement;
             294          [(c)] (iii) a person from enforcing payment of proceeds from the interest obtained under
             295      a [viatical] life settlement; or
             296          [(d)] (iv) H. [ a [viatical] life settlement provider, a [viatical] life settlement purchaser, a
             297      financing entity, a related provider trust, or a special purpose entity from executing
] the execution:

             297a          (A) of .H any of the
             298      following with respect to the death benefit or ownership of any portion of a [viaticated] settled
             299      policy as provided for in Section 31A-36-109 :
             300          [(i)] H. [ (A) ] (I) .H an assignment;
             301          [(ii)] H. [ (B) ] (II) .H a sale;
             302          [(iii)] H. [ (C) ] (III) .H a transfer;
             303          [(iv)] H. [ (D) ] (IV) .H a devise; or
             304          [(v)] H. [ (E) ] (V) .H a bequest H. [ . ] ; and
             304a          (B) by any of the following:
             304b          (I) a life settlement provider;
             304c          (II) a life settlement purchaser;
             304d          (III) a financing entity;
             304e          (IV) a related provider trust;
             304f          (V) a special purpose entity; S. [ or ] .S
             304g          (VI) a qualified institutional buyer as defined in Rule 144A, 17 C.F.R.
             304h      Sec. 230.144A S. [ . ] ; or
             304i      (VII) an accredited investor as defined in Regulation D, Rule 501, 17 C.F.R. Sec. 230.501. .S .H
             305          (9) (a) The insurable interests described in this section:
             306          (i) are not exclusive;


             307          (ii) are cumulative of an insurable interest that is not expressly included in this section
             308      but exists in common law; and
             309          (iii) are not in lieu of an insurable interest that is not expressly included in this section
             310      but exists in common law.
             311          (b) The inclusion of an insurable interest in this section may not be considered to be
             312      excluding another insurable interest that is similar to the insurable interest included in this
             313      section.
             314          (c) (i) The recognition of an insurable interest in this section by Chapter 89, Laws of
             315      Utah 2007, does not imply or create a presumption that the insurable interest did not exist
             316      before April 30, 2007.
             317          (ii) An insurable interest shall be presumed with respect to a life insurance policy
             318      issued before April 30, 2007 to a person whose insurable interest is recognized in this section
             319      by Chapter 89, Laws of Utah 2007.
             320          Section 3. Section 31A-23a-105 is amended to read:
             321           31A-23a-105. General requirements for individual and agency license issuance
             322      and renewal.
             323          (1) The commissioner shall issue or renew a license to act as a producer, limited line
             324      producer, customer service representative, consultant, managing general agent, or reinsurance
             325      intermediary to any person who, as to the license type and line of authority classification
             326      applied for under Section 31A-23a-106 :
             327          (a) satisfies the application requirements under Section 31A-23a-104 ;
             328          (b) satisfies the character requirements under Section 31A-23a-107 ;
             329          (c) satisfies any applicable continuing education requirements under Section
             330      31A-23a-202 ;
             331          (d) satisfies any applicable examination requirements under Section 31A-23a-108 ;
             332          (e) satisfies any applicable training period requirements under Section 31A-23a-203 ;
             333          (f) if a nonresident:
             334          (i) complies with Section 31A-23a-109 ; and
             335          (ii) holds an active similar license in that person's state of residence;
             336          (g) if an applicant for a title insurance producer license, satisfies the requirements of
             337      Sections 31A-23a-203 and 31A-23a-204 ;


             338          (h) if an applicant for a license to act as a [viatical] life settlement provider or [viatical]
             339      life settlement producer, satisfies the requirements of Section 31A-23a-117 ; and
             340          (i) pays the applicable fees under Section 31A-3-103 .
             341          (2) (a) This Subsection (2) applies to the following persons:
             342          (i) an applicant for a pending:
             343          (A) individual or agency producer license;
             344          (B) limited line producer license;
             345          (C) customer service representative license;
             346          (D) consultant license;
             347          (E) managing general agent license; or
             348          (F) reinsurance intermediary license; or
             349          (ii) a licensed:
             350          (A) individual or agency producer;
             351          (B) limited line producer;
             352          (C) customer service representative;
             353          (D) consultant;
             354          (E) managing general agent; or
             355          (F) reinsurance intermediary.
             356          (b) A person described in Subsection (2)(a) shall report to the commissioner:
             357          (i) any administrative action taken against the person:
             358          (A) in another jurisdiction; or
             359          (B) by another regulatory agency in this state; and
             360          (ii) any criminal prosecution taken against the person in any jurisdiction.
             361          (c) The report required by Subsection (2)(b) shall:
             362          (i) be filed:
             363          (A) at the time the person files the application for an individual or agency license; and
             364          (B) for an action or prosecution that occurs on or after the day on which the person
             365      files the application:
             366          (I) for an administrative action, within 30 days of the final disposition of the
             367      administrative action; or
             368          (II) for a criminal prosecution, within 30 days of the initial appearance before a court;


             369      and
             370          (ii) include a copy of the complaint or other relevant legal documents related to the
             371      action or prosecution described in Subsection (2)(b).
             372          (3) (a) The department may require a person applying for a license or for consent to
             373      engage in the business of insurance to submit to a criminal background check as a condition of
             374      receiving a license or consent.
             375          (b) A person, if required to submit to a criminal background check under Subsection
             376      (3)(a), shall:
             377          (i) submit a fingerprint card in a form acceptable to the department; and
             378          (ii) consent to a fingerprint background check by:
             379          (A) the Utah Bureau of Criminal Identification; and
             380          (B) the Federal Bureau of Investigation.
             381          (c) For a person who submits a fingerprint card and consents to a fingerprint
             382      background check under Subsection (3)(b), the department may request:
             383          (i) criminal background information maintained pursuant to Title 53, Chapter 10, Part
             384      2, Bureau of Criminal Identification, from the Bureau of Criminal Identification; and
             385          (ii) complete Federal Bureau of Investigation criminal background checks through the
             386      national criminal history system.
             387          (d) Information obtained by the department from the review of criminal history records
             388      received under this Subsection (3) shall be used by the department for the purposes of:
             389          (i) determining if a person satisfies the character requirements under Section
             390      31A-23a-107 for issuance or renewal of a license;
             391          (ii) determining if a person has failed to maintain the character requirements under
             392      Section 31A-23a-107 ; and
             393          (iii) preventing persons who violate the federal Violent Crime Control and Law
             394      Enforcement Act of 1994, 18 U.S.C. Secs. 1033 and 1034, from engaging in the business of
             395      insurance in the state.
             396          (e) If the department requests the criminal background information, the department
             397      shall:
             398          (i) pay to the Department of Public Safety the costs incurred by the Department of
             399      Public Safety in providing the department criminal background information under Subsection


             400      (3)(c)(i);
             401          (ii) pay to the Federal Bureau of Investigation the costs incurred by the Federal Bureau
             402      of Investigation in providing the department criminal background information under
             403      Subsection (3)(c)(ii); and
             404          (iii) charge the person applying for a license, for renewal of a license, or for consent to
             405      engage in the business of insurance a fee equal to the aggregate of Subsections (3)(e)(i) and (ii).
             406          (4) To become a resident licensee in accordance with Section 31A-23a-104 and this
             407      section, a person licensed as one of the following in another state who moves to this state shall
             408      apply within 90 days of establishing legal residence in this state:
             409          (a) insurance producer;
             410          (b) limited line producer;
             411          (c) customer service representative;
             412          (d) consultant;
             413          (e) managing general agent; or
             414          (f) reinsurance intermediary.
             415          (5) Notwithstanding the other provisions of this section, the commissioner may:
             416          (a) issue a license to an applicant for a license for a title insurance line of authority only
             417      with the concurrence of the Title and Escrow Commission; and
             418          (b) renew a license for a title insurance line of authority only with the concurrence of
             419      the Title and Escrow Commission.
             420          Section 4. Section 31A-23a-111 is amended to read:
             421           31A-23a-111. Revocation, suspension, surrender, lapsing, limiting, or otherwise
             422      terminating a license -- Rulemaking for renewal or reinstatement.
             423          (1) A license type issued under this chapter remains in force until:
             424          (a) revoked or suspended under Subsection (5);
             425          (b) surrendered to the commissioner and accepted by the commissioner in lieu of
             426      administrative action;
             427          (c) the licensee dies or is adjudicated incompetent as defined under:
             428          (i) Title 75, Chapter 5, Part 3, Guardians of Incapacitated Persons; or
             429          (ii) Title 75, Chapter 5, Part 4, Protection of Property of Persons Under Disability and
             430      Minors;


             431          (d) lapsed under Section 31A-23a-113 ; or
             432          (e) voluntarily surrendered.
             433          (2) The following may be reinstated within one year after the day on which the license
             434      is inactivated:
             435          (a) a lapsed license; or
             436          (b) a voluntarily surrendered license.
             437          (3) Unless otherwise stated in the written agreement for the voluntary surrender of a
             438      license, submission and acceptance of a voluntary surrender of a license does not prevent the
             439      department from pursuing additional disciplinary or other action authorized under:
             440          (a) this title; or
             441          (b) rules made under this title in accordance with Title 63G, Chapter 3, Utah
             442      Administrative Rulemaking Act.
             443          (4) A line of authority issued under this chapter remains in force until:
             444          (a) the qualifications pertaining to a line of authority are no longer met by the licensee;
             445      or
             446          (b) the supporting license type:
             447          (i) is revoked or suspended under Subsection (5); or
             448          (ii) is surrendered to the commissioner and accepted by the commissioner in lieu of
             449      administrative action.
             450          (5) (a) If the commissioner makes a finding under Subsection (5)(b), after an
             451      adjudicative proceeding under Title 63G, Chapter 4, Administrative Procedures Act, the
             452      commissioner may:
             453          (i) revoke:
             454          (A) a license; or
             455          (B) a line of authority;
             456          (ii) suspend for a specified period of 12 months or less:
             457          (A) a license; or
             458          (B) a line of authority; or
             459          (iii) limit in whole or in part:
             460          (A) a license; or
             461          (B) a line of authority.


             462          (b) The commissioner may take an action described in Subsection (5)(a) if the
             463      commissioner finds that the licensee:
             464          (i) is unqualified for a license or line of authority under Sections 31A-23a-104 and
             465      31A-23a-105 ;
             466          (ii) violates:
             467          (A) an insurance statute;
             468          (B) a rule that is valid under Subsection 31A-2-201 (3); or
             469          (C) an order that is valid under Subsection 31A-2-201 (4);
             470          (iii) is insolvent or the subject of receivership, conservatorship, rehabilitation, or other
             471      delinquency proceedings in any state;
             472          (iv) fails to pay any final judgment rendered against the person in this state within 60
             473      days after the day on which the judgment became final;
             474          (v) fails to meet the same good faith obligations in claims settlement that is required of
             475      admitted insurers;
             476          (vi) is affiliated with and under the same general management or interlocking
             477      directorate or ownership as another insurance producer that transacts business in this state
             478      without a license;
             479          (vii) refuses:
             480          (A) to be examined; or
             481          (B) to produce its accounts, records, and files for examination;
             482          (viii) has an officer who refuses to:
             483          (A) give information with respect to the insurance producer's affairs; or
             484          (B) perform any other legal obligation as to an examination;
             485          (ix) provides information in the license application that is:
             486          (A) incorrect;
             487          (B) misleading;
             488          (C) incomplete; or
             489          (D) materially untrue;
             490          (x) violates an insurance law, valid rule, or valid order of another state's insurance
             491      department;
             492          (xi) obtains or attempts to obtain a license through misrepresentation or fraud;


             493          (xii) improperly withholds, misappropriates, or converts any monies or properties
             494      received in the course of doing insurance business;
             495          (xiii) intentionally misrepresents the terms of an actual or proposed:
             496          (A) insurance contract;
             497          (B) application for insurance; or
             498          (C) [viatical] life settlement;
             499          (xiv) is convicted of a felony;
             500          (xv) admits or is found to have committed an insurance unfair trade practice or fraud;
             501          (xvi) in the conduct of business in this state or elsewhere:
             502          (A) uses fraudulent, coercive, or dishonest practices; or
             503          (B) demonstrates incompetence, untrustworthiness, or financial irresponsibility;
             504          (xvii) has an insurance license, or its equivalent, denied, suspended, or revoked in
             505      another state, province, district, or territory;
             506          (xviii) forges another's name to:
             507          (A) an application for insurance; or
             508          (B) a document related to an insurance transaction;
             509          (xix) improperly uses notes or another reference material to complete an examination
             510      for an insurance license;
             511          (xx) knowingly accepts insurance business from an individual who is not licensed;
             512          (xxi) fails to comply with an administrative or court order imposing a child support
             513      obligation;
             514          (xxii) fails to:
             515          (A) pay state income tax; or
             516          (B) comply with an administrative or court order directing payment of state income
             517      tax;
             518          (xxiii) violates or permits others to violate the federal Violent Crime Control and Law
             519      Enforcement Act of 1994, 18 U.S.C. Secs. 1033 and 1034; or
             520          (xxiv) engages in a method or practice in the conduct of business that endangers the
             521      legitimate interests of customers and the public.
             522          (c) For purposes of this section, if a license is held by an agency, both the agency itself
             523      and any [natural person] individual named on the license are considered to be the holders of the


             524      license.
             525          (d) If [a natural person] an individual named on the agency license commits an act or
             526      fails to perform a duty that is a ground for suspending, revoking, or limiting the [natural
             527      person's] individual's license, the commissioner may suspend, revoke, or limit the license of:
             528          (i) the [natural person] individual;
             529          (ii) the agency, if the agency:
             530          (A) is reckless or negligent in its supervision of the [natural person] individual; or
             531          (B) knowingly participates in the act or failure to act that is the ground for suspending,
             532      revoking, or limiting the license; or
             533          (iii) (A) the [natural person] individual; and
             534          (B) the agency if the agency meets the requirements of Subsection (5)(d)(ii).
             535          (6) A licensee under this chapter is subject to the penalties for acting as a licensee
             536      without a license if:
             537          (a) the licensee's license is:
             538          (i) revoked;
             539          (ii) suspended;
             540          (iii) limited;
             541          (iv) surrendered in lieu of administrative action;
             542          (v) lapsed; or
             543          (vi) voluntarily surrendered; and
             544          (b) the licensee:
             545          (i) continues to act as a licensee; or
             546          (ii) violates the terms of the license limitation.
             547          (7) A licensee under this chapter shall immediately report to the commissioner:
             548          (a) a revocation, suspension, or limitation of the person's license in another state, the
             549      District of Columbia, or a territory of the United States;
             550          (b) the imposition of a disciplinary sanction imposed on that person by another state,
             551      the District of Columbia, or a territory of the United States; or
             552          (c) a judgment or injunction entered against that person on the basis of conduct
             553      involving:
             554          (i) fraud;


             555          (ii) deceit;
             556          (iii) misrepresentation; or
             557          (iv) a violation of an insurance law or rule.
             558          (8) (a) An order revoking a license under Subsection (5) or an agreement to surrender a
             559      license in lieu of administrative action may specify a time, not to exceed five years, within
             560      which the former licensee may not apply for a new license.
             561          (b) If no time is specified in the order or agreement described in Subsection (8)(a), the
             562      former licensee may not apply for a new license for five years from the day on which the order
             563      or agreement is made without the express approval by the commissioner.
             564          (9) The commissioner shall promptly withhold, suspend, restrict, or reinstate the use of
             565      a license issued under this part if so ordered by a court.
             566          (10) The commissioner shall by rule prescribe the license renewal and reinstatement
             567      procedures in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
             568          Section 5. Section 31A-23a-117 is amended to read:
             569           31A-23a-117. Special requirements for life settlement providers and producers.
             570          (1) A [viatical] life settlement provider or [viatical] life settlement producer shall be
             571      licensed in accordance with this title, with the additional requirements listed in this section.
             572          (2) A [viatical] life settlement provider shall provide to the commissioner:
             573          (a) a detailed plan of operation with the [viatical] life settlement provider's:
             574          (i) initial license application; and
             575          (ii) renewal application;
             576          (b) a copy of the [viatical] life settlement provider's most current audited financial
             577      statement; [and]
             578          (c) an antifraud plan that meets the requirements of Section 31A-36-117 [.]; and
             579          (d) a bond or other form of assurance of financial responsibility as provided under rules
             580      made in accordance with Section 31A-36-119 .
             581          (3) A [viatical] life settlement provider shall provide with the [viatical] life settlement
             582      provider's initial license application information describing the [viatical] life settlement
             583      provider's [viatical] life settlement experience, training, and education.
             584          (4) A [viatical] life settlement provider shall provide to the commissioner, within 30
             585      days after a change occurs, new or revised information concerning any of the following:


             586          (a) officers;
             587          (b) holders of more than 10% of its stock;
             588          (c) partners;
             589          (d) directors;
             590          (e) members; and
             591          (f) designated employees.
             592          Section 6. Section 31A-27a-104 is amended to read:
             593           31A-27a-104. Persons covered.
             594          (1) This chapter applies to:
             595          (a) an insurer who:
             596          (i) is doing, or has done, an insurance business in this state; and
             597          (ii) against whom a claim arising from that business may exist;
             598          (b) a person subject to examination by the commissioner;
             599          (c) an insurer who purports to do an insurance business in this state;
             600          (d) an insurer who has an insured who is resident in this state; and
             601          (e) in addition to Subsections (1)(a) through (d), a person doing business as follows:
             602          (i) under Chapter 6a, Service Contracts;
             603          (ii) under Chapter 7, Nonprofit Health Service Insurance Corporations;
             604          (iii) under Chapter 8a, Health Discount Program Consumer Protection Act;
             605          (iv) under Chapter 9, Insurance Fraternals;
             606          (v) under Chapter 11, Motor Clubs;
             607          (vi) under Chapter 13, Employee Welfare Funds and Plans;
             608          (vii) under Chapter 15, Unauthorized Insurers, Surplus Lines, and Risk Retention
             609      Groups;
             610          (viii) as a bail bond surety company under Chapter 35, Bail Bond Act;
             611          (ix) under Chapter 37, Captive Insurance Companies Act;
             612          (x) a title insurance company;
             613          (xi) a prepaid health care delivery plan; and
             614          (xii) a person not described in Subsections (1)(e)(i) through (xi) that is organized or
             615      doing insurance business, or in the process of organizing with the intent to do insurance
             616      business in this state.


             617          (2) Notwithstanding Sections 31A-1-301 and 31A-27a-102 , this chapter does not apply
             618      to a person licensed by the insurance commissioner as one or more of the following in this state
             619      unless the person engages in the business of insurance as an insurer:
             620          (a) an insurance agency;
             621          (b) an insurance producer;
             622          (c) a limited line producer;
             623          (d) a customer service representative;
             624          (e) an insurance consultant;
             625          (f) a managing general agent;
             626          (g) reinsurance intermediary;
             627          (h) a title insurance producer;
             628          (i) a third party administrator;
             629          (j) an insurance adjustor;
             630          (k) a [viatical] life settlement provider; or
             631          (l) a [viatical] life settlement producer.
             632          Section 7. Section 31A-36-101 is amended to read:
             633     
CHAPTER 36. LIFE SETTLEMENTS ACT

             634           31A-36-101. Title.
             635          This chapter is known as the ["Viatical] "Life Settlements Act."
             636          Section 8. Section 31A-36-102 is amended to read:
             637           31A-36-102. Definitions.
             638          As used in this chapter:
             639          (1) (a) "Advertising" means [any] a communication placed before the public to:
             640          (i) create an interest in [viatical settlements] a life settlement; or
             641          (ii) induce a person [to sell] pursuant to a life settlement to sell, assign, devise, bequest,
             642      or transfer the death benefit or ownership of:
             643          (A) a policy; or
             644          (B) an interest in a policy [pursuant to a viatical settlement].
             645          (b) "Advertising" includes the following, if the requirements of Subsection (1)(a) are
             646      met:
             647          (i) [any] a written, electronic, or printed communication;


             648          (ii) [any] a communication by means of a recorded telephone [messages] message;
             649          (iii) [any] a communication transmitted on radio, television, the Internet, or similar
             650      communications media; and
             651          (iv) a film [strips] strip, motion [pictures, and videos.] picture, or video.
             652          (2) "Business of [viatical] life settlements" includes the following:
             653          (a) offering a [viatical] life settlement;
             654          (b) soliciting a [viatical] life settlement;
             655          (c) negotiating a [viatical] life settlement;
             656          (d) procuring a [viatical] life settlement;
             657          (e) effectuating a [viatical] life settlement;
             658          (f) purchasing a [viatical] life settlement;
             659          (g) investing in a [viatical] life settlement;
             660          (h) financing a [viatical] life settlement;
             661          (i) monitoring a [viatical] life settlement;
             662          (j) tracking a [viatical] life settlement;
             663          (k) underwriting a [viatical] life settlement;
             664          (l) selling a [viatical] life settlement;
             665          (m) transferring a [viatical] life settlement;
             666          (n) assigning a [viatical] life settlement;
             667          (o) pledging a [viatical] life settlement; [and]
             668          (p) [otherwise] hypothecating a [viatical] life settlement[.]; or
             669          (q) in any other manner acquiring an interest in a policy by means of a life settlement.
             670          (3) "Chronically ill" means:
             671          (a) being unable to perform at least two activities of daily living, such as eating,
             672      toileting, moving from one place to another, bathing, dressing, or continence;
             673          (b) requiring substantial supervision for protection from threats to health and safety
             674      because of severe cognitive impairment; or
             675          (c) having a level of disability similar to that described in Subsection (3)(a).
             676          (4) "Depository institution" is as defined in Section 7-1-103 .
             677          [(4)] (5) (a) "Financing entity" means a person:
             678          (i) who has direct ownership in a policy that is the subject of a [viatical] life settlement;


             679          (ii) whose principal activity related to a [viatical] life settlement is providing money to
             680      effect the [viatical] life settlement or the purchase of one or more settled policies; and
             681          (iii) who has an agreement in writing with one or more licensed [viatical] life
             682      settlement providers to finance the acquisition of one or more [viatical] life settlements.
             683          (b) "Financing entity" includes, if the requirements of Subsection [(4)] (5)(a) are met,
             684      the following:
             685          (i) an underwriter;
             686          (ii) a placement agent;
             687          (iii) an enhancer of credit;
             688          (iv) a lender;
             689          (v) a purchaser of securities; and
             690          (vi) a purchaser of a policy from a [viatical] life settlement provider.
             691          (c) "Financing entity" does not include:
             692          (i) a nonaccredited investor; or
             693          (ii) a [viatical] life settlement purchaser.
             694          [(5)] (6) "Form" means, in addition to a form as defined in Section 31A-1-301 :
             695          (a) a [viatical] life settlement;
             696          (b) a disclosure to [a viator] an owner;
             697          (c) a notice of intent to [viaticate] settle; or
             698          (d) a verification of coverage.
             699          (7) "Life expectancy" means the mean number of months an individual insured under a
             700      policy to be settled can be expected to live considering medical records and appropriate
             701      experiential data.
             702          [(11)] (8) (a) ["Viatical] "Life settlement" means a written agreement:
             703          (i) between an owner and a life settlement provider; and
             704          (ii) for the payment of anything of value, [which] that is less than the expected death
             705      benefit of the policy, in exchange for the [viator's assignment, sale, transfer, devise, or bequest
             706      of] owner assigning, selling, transferring, devising, releasing, or bequeathing, at the time of or
             707      after the exchange, the death benefit or ownership of:
             708          (A) any portion of a policy[.]; or
             709          (B) a beneficial interest in the policy.


             710          (b) ["Viatical] "Life settlement" includes:
             711          [(i) an agreement with a viator for a loan or other financing secured primarily by a
             712      policy; and]
             713          [(ii) an agreement with a viator to transfer ownership or change the beneficiary in the
             714      future, regardless of the date of payment to the viator.]
             715          [(c) "Viatical]
             716          (i) the transfer for compensation or value of ownership or beneficial interest in a trust
             717      or other entity that owns a policy if the trust or other entity is formed or operated for the
             718      principal purpose of acquiring one or more policies; or
             719          (ii) a premium finance loan made for a policy by a lender to an owner on, before, or
             720      after the date of issuance of the policy if the owner:
             721          (A) receives on the date of the premium finance loan a guarantee of a future life
             722      settlement value of the policy; or
             723          (B) agrees on the date of the premium finance loan to sell the policy or any portion of
             724      the policy's death benefit on a date following the issuance of the policy.
             725          (c) An agreement described in Subsection (8)(a) is a "life settlement" even if it is
             726      referred to by a different name, including:
             727          (i) a "viatical settlement"; or
             728          (ii) a "senior settlement."
             729          (d) "Life settlement" does not include:
             730          (i) a loan or accelerated death benefit by an insurer pursuant to the terms of a policy;
             731      [or]
             732          [(ii) a loan secured by the cash value of a policy.]
             733          (ii) loan proceeds that are used solely to pay:
             734          (A) premiums for a policy; and
             735          (B) the loan costs or other expenses incurred by the lender, including:
             736          (I) interest;
             737          (II) an arrangement fee;
             738          (III) a use fee;
             739          (IV) closing costs;
             740          (V) attorney fees and expenses;


             741          (VI) trustee fees and expenses; and
             742          (VII) third party collateral provider fees and expenses, including fees payable to a letter
             743      of credit issuer;
             744          (iii) (A) a loan made by a licensed lender in which the licensed lender takes an interest
             745      in a policy solely to secure repayment of a loan; or
             746          (B) the transfer of a policy by a lender, if:
             747          (I) the loan is:
             748          (Aa) a loan described in Subsection (8)(d)(iii)(A); or
             749          (Ba) a premium finance loan that is not a life settlement;
             750          (II) the loan is defaulted on;
             751          (III) the policy is transferred; and
             752          (IV) neither the default itself nor the transfer of the policy in connection with the
             753      default is pursuant to an agreement with any other person for the purpose of evading regulation
             754      under this chapter;
             755          (iv) an agreement where all the participants in the agreement:
             756          (A) (I) are closely related to the insured by blood or law; or
             757          (II) have a lawful substantial economic interest in the continued life, health, and bodily
             758      safety of the person insured; and
             759          (B) are trusts established primarily for the benefit of the participants in the agreement;
             760          (v) a designation, consent, or agreement by an insured who is an employee of an
             761      employer in connection with the purchase by the employer, or trust established by the
             762      employer, of life insurance on the life of the employee; or
             763          (vi) a business succession planning arrangement not made for the purpose of evading
             764      regulation under this chapter:
             765          (A) (I) between one or more shareholders in a corporation; or
             766          (II) between a corporation and:
             767          (Aa) one or more of its shareholders; or
             768          (Bb) one or more trusts established by its shareholders;
             769          (B) (I) between one or more partners in a partnership; or
             770          (II) between a partnership and:
             771          (Aa) one or more of its partners; or


             772          (Bb) one or more trusts established by its partners; or
             773          (C) (I) between one or more members in a limited liability company; or
             774          (II) between a limited liability company and:
             775          (Aa) one or more of its members; or
             776          (Bb) one or more trusts established by its members.
             777          [(12)] (9) (a) ["Viatical] "Life settlement producer" means a person licensed in the state
             778      as a life insurance producer that on behalf of [a viator] an owner and for consideration offers or
             779      attempts to negotiate a [viatical] life settlement between the [viator] owner and one or more
             780      [viatical] life settlement providers.
             781          (b) ["Viatical] "Life settlement producer" does not include an attorney licensed to
             782      practice law in any state, a certified public accountant, or a financial planner accredited by a
             783      nationally recognized accrediting agency:
             784          (i) that is retained [by the viator] to represent an owner; and
             785          (ii) whose compensation is not paid directly or indirectly by:
             786          (A) a [viatical] life settlement provider; or
             787          (B) a [viatical] life settlement purchaser.
             788          [(13)] (10) (a) ["Viatical] "Life settlement provider" means a person other than [a
             789      viator] an owner that enters into or effectuates a [viatical] life settlement.
             790          (b) ["Viatical] "Life settlement provider" does not include:
             791          (i) a licensed lender that takes an assignment of a policy as security for a loan,
             792      including a:
             793          [(A) bank;]
             794          [(B) savings bank;]
             795          [(C) savings and loan association;]
             796          [(D) credit union; or]
             797          [(E) other licensed lender;]
             798          (A) depository institution; or
             799          (B) lender that makes a premium finance loan that is not described in Subsection
             800      (8)(b)(ii);
             801          (ii) the issuer of a policy [providing accelerated benefits pursuant to the policy];
             802          (iii) an authorized or eligible insurer that provides stop-loss coverage to:


             803          (A) a [viatical] life settlement provider;
             804          (B) a [viatical] life settlement purchaser;
             805          (C) a financing entity;
             806          (D) a special purpose entity; or
             807          (E) a related provider trust;
             808          [(iv) a natural person that enters or effectuates no more than one agreement in a
             809      calendar year for the transfer of policies for a value less than the expected death benefit;]
             810          [(v)] (iv) a financing entity;
             811          [(vi)] (v) a special purpose entity;
             812          [(vii)] (vi) a related provider trust;
             813          [(viii)] (vii) a [viatical] life settlement purchaser; or
             814          [(ix) any of the following that purchases a viaticated policy from a viatical settlement
             815      provider:]
             816          [(A) an accredited investor as defined in Regulation D, Rule 501, 17 C.F.R. Sec.
             817      230.501; or]
             818          [(B)] (viii) a qualified institutional buyer as defined in Rule 144A, 17 C.F.R. Sec.
             819      230.144A that purchases a settled policy from a life settlement provider.
             820          [(14)] (11) (a) ["Viatical] "Life settlement purchaser" means a person that, to derive an
             821      economic benefit:
             822          (i) [gives] provides a sum of money as consideration for a policy or an interest in the
             823      death benefits of a policy; or
             824          (ii) owns, acquires, or is entitled to a beneficial interest in a trust that:
             825          (A) owns a [viatical] life settlement [contract]; or
             826          (B) is the beneficiary of a policy that has been or will be the subject of a [viatical] life
             827      settlement.
             828          (b) ["Viatical] "Life settlement purchaser" does not include:
             829          (i) a [viatical] life settlement provider;
             830          (ii) a [viatical] life settlement producer;
             831          (iii) an accredited investor as defined in Regulation D, Rule 501, 17 C.F.R. Sec.
             832      230.501;
             833          (iv) a qualified institutional buyer as defined in Rule 144A, 17 C.F.R. Sec. 230.144A;


             834          (v) a financing entity;
             835          (vi) a special purpose entity; or
             836          (vii) a related provider trust.
             837          [(15)] (12) (a) ["Viator"] "Owner" means any of the following [that] who resides in this
             838      state and seeks to enter into a [viatical] life settlement:
             839          (i) the owner of a policy; or
             840          (ii) the holder of a certificate of insurance under a policy of group insurance.
             841          (b) ["Viator"] "Owner" is not limited to a person [that] who is terminally ill or
             842      chronically ill except [where that] when the limitation is expressly provided in this chapter.
             843          (c) ["Viator"] "Owner" does not include:
             844          (i) a [viatical] life settlement provider;
             845          (ii) a [viatical] life settlement producer;
             846          [(iii) an accredited investor as defined in Regulation D, Rule 501, 17 C.F.R. Sec.
             847      230.501;]
             848          [(iv)] (iii) a qualified institutional buyer as defined in Rule 144A, 17 C.F.R. Sec.
             849      230.144A;
             850          [(v)] (iv) a financing entity;
             851          [(vi)] (v) a special purpose entity; or
             852          [(vii)] (vi) a related provider trust.
             853          [(6)] (13) "Policy" means:
             854          (a) an individual or group life insurance policy;
             855          (b) a group certificate for life insurance; or
             856          (c) a contract or arrangement of life insurance, whether or not delivered or issued for
             857      delivery in Utah:
             858          (i) affecting the rights of a resident of Utah; or
             859          (ii) bearing a reasonable relation to Utah.
             860          (14) "Premium finance loan" is a loan made primarily for the purpose of making
             861      premium payments on a policy if the loan is secured by an interest in the policy.
             862          [(7)] (15) "Related provider trust" means a trust established by a licensed [viatical] life
             863      settlement provider or a financing entity solely to hold the ownership of or beneficial interests
             864      in purchased policies in connection with financing.


             865          [(10) "Viaticated] (16) "Settled policy" means a policy that [has been] is acquired by a
             866      H. [ viatical ] life .H settlement provider pursuant to a [viatical] life settlement.
             867          [(8)] (17) "Special purpose entity" means an [organization] entity formed by a licensed
             868      [viatical] life settlement provider solely to enable the life settlement provider to gain access to
             869      institutional markets for capital.
             870          (18) (a) "Stranger-originated life insurance" means an act, practice, or arrangement to
             871      initiate a policy for the benefit of a third party investor or other person who has no insurable
             872      interest in the insured resulting in the requirements of Section 31A-21-104 not being met.
             873          (b) "Stranger-originated life insurance" includes when:
             874          (i) a policy is purchased with resources or guarantees from or through a person who, at
             875      the time of policy origination, could not lawfully initiate the policy itself; and
             876          (ii) at the time of policy origination, there is an agreement, whether oral or written, to
             877      directly or indirectly transfer to a third party the ownership of a policy, policy benefits, or both.
             878          (c) "Stranger-originated life insurance" does not include:
             879          (i) a life settlement that complies with:
             880          (A) this chapter; and
             881          (B) Section 31A-21-104 ; or
             882          (ii) an act, practice, or arrangement described in Subsection (8)(d).
             883          [(9)] (19) "Terminally ill" means having a condition that reasonably may be expected
             884      to result in death within 24 months.
             885          Section 9. Section 31A-36-103 is amended to read:
             886           31A-36-103. Law governing.
             887          (1) If there is more than one [viator] owner on a single policy and the [viators] owners
             888      are residents of different states, the law of the state in which the [viator] owner having the
             889      largest percentage ownership resides governs the [viatical] life settlement. If the [viators]
             890      owners own equal fractions of a policy, the [viators] owners may agree in writing that the law
             891      of the state in which one resides governs the [viatical] life settlement.
             892          (2) A life settlement that is subject to this chapter may not:
             893          (a) require that the life settlement be construed according to the laws of another
             894      jurisdiction; or
             895          (b) deprive a court of competent jurisdiction in Utah to have jurisdiction over an


             896      action.
             897          Section 10. Section 31A-36-104 is amended to read:
             898           31A-36-104. License requirements, revocation, and denial.
             899          (1) (a) A person may not, without first obtaining a license from the commissioner,
             900      operate in or from this state as:
             901          (i) a [viatical] life settlement provider; or
             902          (ii) a [viatical] life settlement producer.
             903          (b) [Viatical settlements are] A life settlement is included within the scope of the life
             904      insurance producer line of authority.
             905          (2) (a) To obtain a license as a [viatical] life settlement provider, an applicant shall:
             906          (i) comply with Section 31A-23a-117 ;
             907          (ii) file an application; [and]
             908          (iii) pay the license fee[.]; and
             909          (iv) provide evidence of financial responsibility.
             910          (b) If an applicant for a life settlement provider license complies with Subsection (2)(a)
             911      and Section 31A-23a-117, the commissioner shall investigate the applicant and issue a life
             912      settlement provider license if the commissioner finds that the applicant is competent and
             913      trustworthy to engage in the business of providing [viatical] life settlements by experience,
             914      training, or education.
             915          (3) In addition to the requirements in Sections 31A-23a-111 , 31A-23a-112 and
             916      31A-23a-113 , the commissioner may refuse to issue, suspend, revoke, or refuse to renew the
             917      license of a [viatical] life settlement provider or [viatical] life settlement producer if the
             918      commissioner finds that:
             919          (a) a [viatical] life settlement provider demonstrates a pattern of unreasonable
             920      payments to [viators] owners;
             921          (b) the applicant, the licensee, an officer, partner, or member, or key management
             922      personnel:
             923          (i) [has] is, whether or not a judgment of conviction [has been] is entered by the court,
             924      [been] found guilty of, or [pleaded] pleads guilty or nolo contendere to:
             925          (A) a felony; or
             926          (B) a misdemeanor involving fraud or moral turpitude;


             927          (ii) [violated any provision of] violates this chapter; or
             928          (iii) [has been] is subject to a final administrative action by another state or federal
             929      jurisdiction.
             930          (c) a [viatical] life settlement provider [has entered] enters into a [viatical] life
             931      settlement not approved under this chapter;
             932          (d) a [viatical] life settlement provider [has failed] fails to honor obligations of a
             933      [viatical] life settlement;
             934          (e) a [viatical] life settlement provider [has assigned, transferred, or pledged a
             935      viaticated] assigns, transfers, or pledges a settled policy to a person other than:
             936          (i) a [viatical] life settlement provider licensed under this chapter;
             937          (ii) a [viatical] life settlement purchaser;
             938          (iii) an accredited investor as defined in Regulation D, Rule 501, 17 C.F.R. Sec.
             939      230.501;
             940          (iv) a qualified institutional buyer as defined in Rule 144A, 17 C.F.R. Sec. 230.144A;
             941          (v) a financing entity;
             942          (vi) a special purpose entity; or
             943          (vii) a related provider trust; [or]
             944          (f) a [viatical] life settlement provider [has failed] fails to maintain a standard set forth
             945      in Subsection (2)(b)[.];
             946          (g) an applicant or licensee has a material misrepresentation in an initial or renewal
             947      application for a license; or
             948          (h) the licensee engages in bad faith conduct with one or more owners.
             949          (4) If the commissioner denies a license application or suspends, revokes, or refuses to
             950      renew the license of a [viatical] life settlement provider or [viatical] life settlement producer,
             951      the commissioner shall conduct an adjudicative proceeding under Title 63G, Chapter 4,
             952      Administrative Procedures Act.
             953          Section 11. Section 31A-36-105 is amended to read:
             954           31A-36-105. Filing and use of forms for life settlement and disclosure.
             955          (1) A person may not use a form unless the form [has been] is filed with the
             956      commissioner under Subsection 31A-21-201 (1).
             957          (2) The commissioner may prohibit the use of a form submitted under Subsection (1)


             958      pursuant to Subsection 31A-21-201 (3).
             959          (3) The commissioner may require the submission of advertising material before its
             960      use.
             961          Section 12. Section 31A-36-106 is amended to read:
             962           31A-36-106. Reporting requirements and privacy.
             963          (1) (a) Subject to Subsection (1)(b), [each viatical] a life settlement provider shall file
             964      with the commissioner on or before March 1 of each year an annual [statement] report
             965      containing the information the commissioner prescribes under Section 31A-36-119 .
             966          (b) Notwithstanding Subsection (1)(a), the commissioner shall only require the
             967      information for those transactions [where the viator is a resident of Utah] that involve an
             968      owner.
             969          (2) Except as otherwise allowed or required by law, the following may not disclose the
             970      identity, financial information, or medical information of an insured to any other person:
             971          (a) a [viatical] life settlement provider;
             972          (b) a [viatical] life settlement producer;
             973          (c) a producer of insurance;
             974          (d) an information bureau;
             975          (e) a rating agency or company; or
             976          (f) any other person knowing the identity of an insured.
             977          (3) Notwithstanding Subsection (2), a person may disclose the identity of an insured if
             978      the disclosure is:
             979          (a) necessary to effect a [viatical] life settlement between [the viator] an owner and a
             980      [viatical] life settlement provider and both the [viator] owner and the insured [have given] give
             981      prior written consent to the disclosure;
             982          (b) furnished in response to an investigation or examination by the commissioner or
             983      another governmental officer or agency;
             984          (c) furnished pursuant to Section 31A-36-114 ;
             985          (d) a term of or condition to the transfer of a policy by one [viatical] life settlement
             986      provider to another [viatical] life settlement provider;
             987          (e) necessary to permit a financing entity, related provider trust, or special purpose
             988      entity to finance the purchase of a policy by a [viatical] life settlement provider and the insured


             989      [has given] gives prior written consent to the disclosure;
             990          (f) necessary to allow the [viatical] life settlement provider or [viatical] life settlement
             991      producer or the [viatical] life settlement provider's or [viatical] life settlement producer's
             992      authorized representatives to make [contacts] a contact to determine the health status of [the
             993      viator] an H. [ owner ] insured .H ; or
             994          (g) required to purchase stop-loss coverage.
             995          Section 13. Section 31A-36-107 is amended to read:
             996           31A-36-107. Examinations and retention of records.
             997          (1) The commissioner may conduct an examination of a [viatical] life settlement
             998      provider or [viatical] life settlement producer in accordance with Sections 31A-2-203 ,
             999      31A-2-203.5 , 31A-2-204 , and 31A-2-205 .
             1000          (2) A [viatical] life settlement provider or [viatical] life settlement producer shall retain
             1001      for five years copies of [all]:
             1002          (a) the following records, whether proposed, offered, or executed, from the later of the
             1003      date of the proposal, offer, or execution:
             1004          (i) contracts;
             1005          (ii) purchase agreements;
             1006          (iii) underwriting documents;
             1007          (iv) policy forms; and
             1008          (v) applications;
             1009          (b) checks, drafts, and other evidence or documentation relating to the payment,
             1010      transfer, or release of money, from the date of the transaction; and
             1011          (c) records and documents related to the requirements of this chapter.
             1012          (3) This section does not relieve a person of the obligation to produce a document
             1013      described in Subsection (2) to the commissioner after the expiration of the relevant period if
             1014      the person has retained the document.
             1015          (4) [Records] A record required by this section to be retained:
             1016          (a) must be legible and complete[. They]; and
             1017          (b) may be retained in any form or by any process that accurately reproduces or is a
             1018      durable medium for the reproduction of the record.
             1019          (5) An examiner may not be appointed by the commissioner if the examiner, either


             1020      directly or indirectly, has a conflict of interest or is affiliated with the management of or owns a
             1021      pecuniary interest in [any] a person subject to examination under this chapter. This Subsection
             1022      (5) does not automatically preclude an examiner from being:
             1023          (a) [a viator] an owner;
             1024          (b) an insured in a [viaticated] settled policy; or
             1025          (c) a beneficiary in a policy that is proposed to be [viaticated] settled.
             1026          (6) (a) [Examinees] An examinee under this section shall reimburse the cost of [any]
             1027      an examination to the department consistent with Section 31A-2-205 .
             1028          (b) Notwithstanding Subsection (6)(a), an individual [viatical] life settlement producer
             1029      is not subject to Section 31A-2-205 .
             1030          Section 14. Section 31A-36-108 is amended to read:
             1031           31A-36-108. Required disclosures.
             1032          (1) With [each] an application for a [viatical] life settlement, a [viatical] life settlement
             1033      provider or [viatical] life settlement producer shall furnish to the [viator any] owner the
             1034      disclosures the commissioner may require under Section 31A-36-119 , in a separate document
             1035      signed by the [viator] owner and the [viatical] life settlement provider or [viatical] life
             1036      settlement producer, no later than the time the application for the [viatical] life settlement is
             1037      signed by all the [parties] participants in the life settlement.
             1038          (2) A [viatical] life settlement provider shall furnish to the [viator any] owner the
             1039      disclosures the commissioner may require under Section 31A-36-119 , conspicuously displayed
             1040      in the [viatical] life settlement or in a separate document signed by the [viator] owner and the
             1041      [viatical] life settlement provider, no later than the time the [viatical] life settlement is signed
             1042      by all [parties] participants in the life settlement.
             1043          Section 15. Section 31A-36-109 is amended to read:
             1044           31A-36-109. General requirements.
             1045          (1) If a [viatical] life settlement provider transfers ownership or changes the beneficiary
             1046      of a [viaticated] settled policy, the [viatical] life settlement provider shall inform the insured of
             1047      the transfer or change within 20 calendar days.
             1048          (2) A [viatical] life settlement provider that enters a [viatical] life settlement shall first
             1049      obtain:
             1050          (a) if the [viator] owner is the insured, a written statement from a licensed attending


             1051      physician that the [viator] owner is of sound mind and under no constraint or undue influence
             1052      to enter a [viatical] life settlement;
             1053          (b) a witnessed document in which the [viator] owner represents that:
             1054          (i) the [viator] owner has a full and complete understanding of the [viatical] life
             1055      settlement and the benefits of the policy;
             1056          (ii) the [viator] owner has entered the [viatical] life settlement freely and voluntarily;
             1057      and
             1058          (iii) if applicable, the insured is terminally ill or chronically ill and that the illness was
             1059      diagnosed after the policy was issued; and
             1060          (c) a document in which the insured consents to the release of the insured's medical
             1061      records to:
             1062          (i) a [viatical] life settlement provider;
             1063          (ii) a [viatical] life settlement producer; and
             1064          (iii) the insurer that issued the policy covering the insured.
             1065          (3) Within 20 calendar days after [a viator] an owner executes documents necessary to
             1066      transfer rights under a policy, or enters into an agreement in any form, express or implied, to
             1067      [viaticate] settle the policy, the [viatical] life settlement provider shall give written notice to the
             1068      issuer of the policy that the policy has or will become [viaticated] settled. The notice must be
             1069      accompanied by a copy of the documents required by Subsection (4).
             1070          (4) The [viatical] life settlement provider shall deliver a copy of the following to the
             1071      insurer that issued the policy that is the subject of the [viatical] life settlement:
             1072          (a) the medical release required under Subsection (2)(c);
             1073          (b) a copy of the [viator's] owner's application for the [viatical] life settlement; and
             1074          (c) the notice required under Subsection (3).
             1075          (5) [The] (a) An insurer shall complete and return a request for verification of
             1076      coverage not later than 30 calendar days after the [date] day on which the request is received.
             1077      In its response, the insurer shall indicate whether the insurer intends to pursue an investigation
             1078      regarding the validity of the insurance contract.
             1079          (b) An insurer may not require that a person making request under Subsection (5)(a)
             1080      provide the insurer additional information in order for the insurer to comply with Subsection
             1081      (5)(a), if the person provides the insurer:


             1082          (i) a request for verification of coverage made on an original, facsimile, or electronic
             1083      copy of a verification of coverage for a policy document adopted by the commissioner by rule
             1084      made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act; and
             1085          (ii) an authorization that accompanies the verification described in Subsection (5)(b)(i)
             1086      signed by the owner.
             1087          (6) [All medical] Medical information solicited or obtained by a [viatical] life
             1088      settlement provider or [viatical] life settlement producer is subject to:
             1089          (a) other laws of this state relating to the confidentiality of the information; and
             1090          (b) a rule relating to privacy of medical or personal information promulgated by the
             1091      commissioner under Title V, Section 505 of the Gramm-Leach-Bliley Act of 1999, 15 U.S.C.
             1092      Sec. 6805.
             1093          (7) (a) (i) A [viatical] life settlement entered into in this state must reserve to the
             1094      [viator] owner an unconditional right to [terminate] rescind the [viatical] life settlement within
             1095      [15] the rescission period provided for in this Subsection (7).
             1096          (ii) The rescission period ends 15 calendar days after [the viator] the day on which the
             1097      owner receives the proceeds of the [viatical] life settlement.
             1098          (iii) Rescission by an owner may be conditioned on the owner giving notice and
             1099      repaying to the life settlement provider within the rescission period all proceeds of the life
             1100      settlement and any premium, loan, or loan interest paid by or on behalf of the life settlement
             1101      provider in connection with or as a consequence of the life settlement.
             1102          (b) If the insured dies during [that] the rescission period, the [viatical] life settlement is
             1103      [terminated and all] considered to be rescinded if the proceeds, premiums, loans, and loan
             1104      interest [that have been] paid by the [viatical] life settlement provider or [viatical] life
             1105      settlement purchaser [must be repaid to the viatical settlement provider or viatical settlement
             1106      purchaser] are repaid within 60 calendar days of the day on which the insured dies.
             1107          (8) (a) Contact with an insured to determine the health status of the insured after a
             1108      [viatical] life settlement may be made only by a [viatical] life settlement provider or [viatical]
             1109      life settlement producer that is licensed in this state, or its authorized representative, and no
             1110      more than:
             1111          (i) once every three months if the insured has a life expectancy of one year or more; or
             1112          (ii) once every month if the insured has a life expectancy of less than one year.


             1113          (b) [The viatical] A life settlement provider or [viatical] life settlement producer shall
             1114      explain the procedure for the contacts allowed under this Subsection (8) to the [viator] owner
             1115      when the application for the [viatical] life settlement is signed by all [parties] participants in
             1116      the life settlement.
             1117          (c) The limitations of this Subsection (8) do not apply to contacts for purposes other
             1118      than determining health status.
             1119          (d) A [viatical] life settlement provider or [viatical] life settlement producer is
             1120      responsible for the acts of its authorized representative in violation of this Subsection (8).
             1121          (9) The trustee of a related provider trust must agree in writing with the [viatical] life
             1122      settlement provider that:
             1123          (a) the [viatical] life settlement provider is responsible for ensuring compliance with all
             1124      statutory and regulatory requirements; and
             1125          (b) the trustee will make all records and files related to [viatical] life settlements
             1126      available to the commissioner as if those records and files were maintained directly by the
             1127      [viatical] life settlement provider.
             1128          (10) Regardless of the method of compensation, a [viatical] life settlement producer:
             1129          (a) represents only the [viator] owner; and
             1130          (b) owes a fiduciary duty to the [viator] owner to act according to the [viator's] owner's
             1131      instructions and in the best interest of the [viator.] owner.
             1132          Section 16. Section 31A-36-110 is amended to read:
             1133           31A-36-110. Payment and document requirements.
             1134          (1) (a) A [viatical] life settlement provider shall instruct the [viator] owner to send the
             1135      executed documents required to effect the change in ownership or assignment or change of
             1136      beneficiary of the affected policy to a designated independent escrow agent.
             1137          (b) Within three business days after the day on which the escrow agent receives the
             1138      documents, or within three business days after the day on which the [viatical] life settlement
             1139      provider receives the documents if by mistake they are sent directly to the [viatical] life
             1140      settlement provider, the [escrow agent] life settlement provider shall deposit the proceeds of
             1141      the life settlement into an escrow or trust account [maintained in a regulated financial
             1142      institution whose deposits are insured by a federal deposit insurer] of the escrow agent in a
             1143      federally insured depository institution.


             1144          (2) (a) Upon completion of the requirements of Subsection (1), the escrow agent shall
             1145      deliver [to the viatical settlement provider] the original documents executed by the [viator.]
             1146      owner to:
             1147          (i) the life settlement provider; or
             1148          (ii) a related provider trust or other designated representative of the life settlement
             1149      provider.
             1150          (b) Upon the [viatical] life settlement provider's receipt from the insurer of an
             1151      acknowledgment of the change in ownership or assignment or change of beneficiary of the
             1152      affected policy, the [viatical] life settlement provider shall instruct the escrow agent to pay the
             1153      proceeds of the life settlement to the [viator] owner.
             1154          (3) Payment to the [viator] owner must be made within three business days after the
             1155      day on which the [viatical] life settlement provider receives the acknowledgment from the
             1156      insurer. Failure to make the payment within that time makes the [viatical] life settlement
             1157      voidable by the [viator] owner for lack of consideration until payment is tendered to and
             1158      accepted by the [viator] owner.
             1159          Section 17. Section 31A-36-111 is amended to read:
             1160           31A-36-111. Prohibited acts.
             1161          (1) [A viator] An owner may not enter into a [viatical] life settlement at any time
             1162      before the application or issuance of a policy.
             1163          (2) An owner may not enter into a life settlement within two years after the date of
             1164      issuance of the policy to which the life settlement relates unless the [viator] owner certifies to
             1165      the [viatical] life settlement provider that one of the following is satisfied:
             1166          (a) the policy was issued upon the [viator's] owner's exercise of conversion rights
             1167      arising out of a group or individual policy[, provided] if:
             1168          (i) the total time covered under the conversion policy plus the time covered under the
             1169      prior policy is at least 24 months; and
             1170          (ii) the time covered under a group policy, calculated without regard to any change in
             1171      insurance carriers, [has been] is continuous and under the same group sponsorship; or
             1172          [(b) the viator is a charitable organization exempt from taxation under 26 U.S.C. Sec.
             1173      501(c)(3);]
             1174          [(c) the viator is not a natural person; or]


             1175          [(d)] (b) the [viator] owner submits to the [viatical] life settlement provider
             1176      independent evidence that within the two-year period:
             1177          (i) the [viator] owner or insured is terminally ill;
             1178          (ii) the [viator] owner or insured is chronically ill;
             1179          (iii) the spouse of the [viator has died] owner dies;
             1180          (iv) the [viator has divorced the viator's] owner divorces the owner's spouse;
             1181          (v) the [viator has retired] owner retires from full-time employment;
             1182          (vi) the [viator has become] owner becomes physically or mentally disabled and a
             1183      physician determines that the disability precludes the [viator] owner from maintaining full-time
             1184      employment;
             1185          [(vii) (A) the viator was the employer of the insured when the policy or certificate was
             1186      issued; and]
             1187          [(B) the employment relationship has terminated;]
             1188          [(viii)] (vii) a final judgment or order [has been] is entered or issued by a court of
             1189      competent jurisdiction, on the application of a creditor of the [viator] owner:
             1190          (A) adjudging the [viator] owner bankrupt or insolvent;
             1191          (B) approving a petition for reorganization of the [viator] owner; or
             1192          (C) appointing a receiver, trustee, or liquidator for all or a substantial part of the
             1193      [viator's] owner's assets;
             1194          [(ix) the viator] (viii) the owner experiences a significant decrease in income that is
             1195      unexpected and impairs the [viator's] owner's reasonable ability to pay the policy premium; or
             1196          [(x) the viator disposes of the viator's ownership in a closely held corporation; or]
             1197          [(xi) the insured disposes of the insured's ownership in a closely held corporation.]
             1198          [(2) When the viatical settlement provider submits a request to the insurer to verify
             1199      coverage, the viatical settlement provider shall submit to the insurer the following:]
             1200          [(a) copies of the independent evidence required under Subsection (1)(d); and]
             1201          [(b) documents required under Subsection 31A-36-109 (2).]
             1202          [(3) If a viatical settlement provider submits to an insurer a copy of the owner's or
             1203      insured's certification that one of the events described in Subsection (1)(d) has occurred, the
             1204      certification conclusively establishes that the viatical settlement satisfies the requirements of
             1205      this section, and the insurer shall timely respond to the viatical settlement provider's request to


             1206      effect a transfer of the policy.]
             1207          (ix) the owner or insured disposes of ownership interests in a closely held corporation,
             1208      pursuant to the terms of a buyout or other similar agreement in effect at the time the policy is
             1209      initially issued.
             1210          (3) An insurer may not, as a condition of responding to a request for verification of
             1211      coverage or effecting the transfer of a policy pursuant to a life settlement, require any of the
             1212      following to sign a form, disclosure, consent, or waiver that is not filed with the commissioner
             1213      for use in connection with a life settlement in this state:
             1214          (a) an owner;
             1215          (b) an insured;
             1216          (c) a life settlement provider; or
             1217          (d) a life settlement producer.
             1218          (4) (a) Upon receipt of a properly completed request for change of ownership or
             1219      beneficiary of a policy, an insurer shall respond in writing within 30 calendar days of the day of
             1220      receipt with written acknowledgment:
             1221          (i) confirming that the change is effective; or
             1222          (ii) specifying the reasons why the requested change cannot be processed.
             1223          (b) An insurer may not:
             1224          (i) unreasonably delay effecting a change of ownership or beneficiary; and
             1225          (ii) otherwise seek to interfere with a life settlement lawfully entered into in this state.
             1226          (5) A person may not issue, solicit, or market the purchase of a policy for the primary
             1227      purpose of or with a primary emphasis on settling the policy.
             1228          (6) (a) Unless disclosed to an owner before the execution of a life settlement by the
             1229      owner, a life settlement producer may not knowingly with respect to the life settlement solicit
             1230      an offer from, effectuate the life settlement with, or make a sale to any of the following that is
             1231      controlling, controlled by, or under common control with the life settlement producer:
             1232          (i) a life settlement provider;
             1233          (ii) a life settlement purchaser;
             1234          (iii) a financing entity; or
             1235          (iv) a related provider trust.
             1236          (b) Unless disclosed to an owner before the execution of a life settlement by the owner,


             1237      with respect to the life settlement, a life settlement provider may not knowingly enter into the
             1238      life settlement with the owner, if, in connection with the life settlement, anything of value will
             1239      be paid to a life settlement producer that is controlling, controlled by, or under common control
             1240      with:
             1241          (i) the life settlement provider;
             1242          (ii) the life settlement purchaser;
             1243          (iii) a financing entity; or
             1244          (iv) a related provider trust.
             1245          Section 18. Section 31A-36-112 is amended to read:
             1246           31A-36-112. Advertising regulations.
             1247          (1) (a) [Each viatical] A life settlement provider or [viatical] life settlement producer
             1248      shall establish and continuously maintain a system of control over the content, form, and
             1249      method of dissemination of [all] advertisements of the [viatical] life settlement provider's or
             1250      [viatical] life settlement producer's contracts and services.
             1251          (b) [Each] An advertisement is the responsibility of the [viatical] life settlement
             1252      provider or [viatical] life settlement producer as well as the person that creates or presents the
             1253      advertisement.
             1254          (c) A system of control must include at least annual notification to persons authorized
             1255      by the [viatical] life settlement provider or [viatical] life settlement producer that disseminate
             1256      advertisements of the requirements and procedures for approval before use of any
             1257      advertisements not furnished by the [viatical] life settlement provider or [viatical] life
             1258      settlement producer.
             1259          (2) An advertisement must be truthful and not misleading in fact or by implication, as
             1260      determined by the commissioner from the overall impression it may reasonably be expected to
             1261      create upon a person of average education or intelligence in the segment of the public to which
             1262      it is directed.
             1263          (3) [False] A false or misleading [statements are] statement is not remedied by:
             1264          (a) making a [viatical] life settlement available for inspection before it is
             1265      consummated; or
             1266          (b) offering to refund payment if the [viator] owner is not satisfied within the period
             1267      prescribed in Subsection 31A-36-109 (7).


             1268          Section 19. Section 31A-36-113 is amended to read:
             1269           31A-36-113. Fraud.
             1270          (1) As used in this section, "recklessly" means engaging in conduct:
             1271          (a) [where] when a person knows or should have known of a substantial likelihood of
             1272      the existence of the relevant facts or risks; and
             1273          (b) involving a significant deviation from acceptable standards of conduct.
             1274          (2) A person may not, knowingly or with intent to defraud, to deprive another of
             1275      property or for pecuniary gain, do or permit its employees or agents to engage in any of the
             1276      following acts:
             1277          (a) (i) present, cause to be presented or prepare with knowledge or belief that it will be
             1278      presented, false information to or by a [viatical] life settlement provider or [viatical] life
             1279      settlement producer, a financing entity, an insurer, a provider of insurance or any other person,
             1280      or to conceal information, as part of, in support of or concerning a fact material to:
             1281          [(i)] (A) an application for the issuance of a policy or [viatical] life settlement;
             1282          [(ii)] (B) the underwriting of a policy or [viatical] life settlement;
             1283          [(iii)] (C) a claim for payment or other benefit under a policy or [viatical] life
             1284      settlement;
             1285          [(iv)] (D) a premium paid on a policy;
             1286          [(v)] (E) a payment or change of beneficiary or ownership pursuant to a policy or
             1287      [viatical] life settlement;
             1288          [(vi)] (F) the reinstatement or conversion of a policy;
             1289          [(vii)] (G) the solicitation, offer, effectuation, or sale of a policy or [viatical] life
             1290      settlement;
             1291          [(viii)] (H) the issuance of written evidence of a policy or [viatical] life settlement; or
             1292          [(ix)] (I) a financing transaction;
             1293          (ii) employ a device, scheme, or artifice to defraud in the business of life settlements;
             1294          (iii) enter into any plan or practice that involves stranger-originated life insurance; or
             1295          (iv) employ a device, scheme, or artifice resulting in a violation of Section 31A-21-104
             1296      in the solicitation, application, or issuance of a policy that is the subject of a life settlement;
             1297          (b) in furtherance of a fraud or to prevent detection of a fraud:
             1298          (i) remove, conceal, alter, destroy, or sequester from the commissioner assets or


             1299      records of a person engaged in the business of [viatical] life settlements;
             1300          (ii) misrepresent or conceal the financial condition of a licensee, a financing entity, an
             1301      insurer, or other person;
             1302          (iii) transact the business of [viatical] life settlements in violation of this chapter; or
             1303          (iv) file with the commissioner or analogous officer of another jurisdiction a document
             1304      containing false information or otherwise conceal information about a material fact from the
             1305      commissioner or analogous officer;
             1306          (c) embezzle, steal, misappropriate, or convert money, premiums, credits, or other
             1307      property of a [viatical] life settlement provider, [a viator] an owner, an insurer, an insured, an
             1308      owner of a policy, or other person engaged in the business of [viatical] life settlements or
             1309      insurance;
             1310          (d) recklessly enter into, negotiate, or otherwise deal in a [viatical] life settlement, the
             1311      subject of which is a policy obtained [where the viator or the viator's agent intended] when one
             1312      or more persons intend to defraud the policy's issuer, the life settlement provider, or the owner
             1313      by:
             1314          (i) presenting false information concerning [any] a fact material to the policy; or
             1315          (ii) concealing, to mislead another, information concerning [any] a fact material to the
             1316      policy; [or]
             1317          (e) facilitate a change of the state or jurisdiction of ownership of a policy or the state of
             1318      residency of an owner to a state or jurisdiction that does not have a law similar to this chapter
             1319      for the express purpose of evading or avoiding this chapter; or
             1320          [(e)] (f) attempt to commit, assist, aid, abet, or conspire to commit an act or omission
             1321      described in this Subsection (2).
             1322          (3) A person may not knowingly or intentionally interfere with the enforcement of this
             1323      chapter or an investigation of a possible violation of this chapter.
             1324          (4) A person engaged in the business of [viatical] life settlements may not knowingly
             1325      or intentionally permit [any] a person convicted of a felony involving dishonesty or breach of
             1326      trust to participate in the business of [viatical] life settlements.
             1327          (5) (a) An application or contract for a [viatical] life settlement, however transmitted,
             1328      shall contain the following or a substantially similar statement: "A person that knowingly
             1329      presents false information in an application for insurance or a [viatical] life settlement is guilty


             1330      of a crime and may be subject to fines and confinement in prison."
             1331          (b) The lack of the statement described in Subsection (5)(a) is not a defense in a
             1332      prosecution for violation of this section.
             1333          Section 20. Section 31A-36-114 is amended to read:
             1334           31A-36-114. Reporting of fraud and immunity.
             1335          (1) A person engaged in the business of [viatical] life settlements that knows or
             1336      reasonably [believes] suspects that a violation of Section 31A-36-113 is being, has been, or
             1337      will be committed shall provide to the commissioner the information required by, and in a
             1338      manner prescribed by, the commissioner.
             1339          (2) [Any other] A person not engaged in the business of life settlements that knows or
             1340      reasonably believes that a violation of Section 31A-36-113 is being, has been, or will be
             1341      committed may furnish to the commissioner the information required by, and in a manner
             1342      prescribed by, the commissioner.
             1343          (3) Except as provided in Subsection (4), a person furnishing information of the kind
             1344      described in this section is immune from liability and civil action if the information is
             1345      furnished to or received from:
             1346          (a) the commissioner or the commissioner's employees, agents, or representatives;
             1347          (b) federal, state, or local law enforcement or regulatory officials or their employees,
             1348      agents, or representatives;
             1349          (c) another person involved in the prevention or detection of violations of Section
             1350      31A-36-113 or that person's employees, agents, or representatives;
             1351          (d) the following organizations or their employees, agents, or representatives:
             1352          (i) the National Association of Insurance Commissioners;
             1353          (ii) the [National Association of Securities Dealers] Financial Industry Regulatory
             1354      Authority;
             1355          (iii) the North American Securities Administrators Association; or
             1356          (iv) another regulatory body overseeing life insurance, [viatical] life settlements,
             1357      securities, or investment fraud; or
             1358          (e) the insurer that issued the policy concerned in the information.
             1359          (4) The immunity provided in Subsection (3) does not extend to a statement made with
             1360      actual malice. In an action brought against a person for filing a report or furnishing other


             1361      information concerning a violation of this section, the plaintiff must plead specifically that the
             1362      defendant acted with actual malice.
             1363          (5) A person furnishing information as identified in Subsection (3) [shall be] is entitled
             1364      to an award of [attorney's] attorney fees and costs if:
             1365          (a) the person is the prevailing party in a civil cause of action for libel, slander, or [any
             1366      other] another relevant tort arising out of activities in carrying out the provisions of this
             1367      chapter; and
             1368          (b) the action did not have a reasonable basis in law or fact at the time it was initiated.
             1369          (6) This section does not supplant or modify any other privilege or immunity at
             1370      common law or under another statute.
             1371          Section 21. Section 31A-36-115 is amended to read:
             1372           31A-36-115. Confidentiality.
             1373          (1) The following shall be classified as protected records under Title 63G, Chapter 2,
             1374      Government Records Access and Management Act:
             1375          (a) a document or information furnished pursuant to Section 31A-36-114 ; and
             1376          (b) a document or information obtained by the commissioner in an investigation of a
             1377      violation of Section 31A-36-113 .
             1378          (2) Subsection (1) does not prohibit the commissioner from disclosing documents or
             1379      evidence so furnished or obtained:
             1380          (a) in an administrative or judicial proceeding to enforce laws administered by the
             1381      commissioner;
             1382          (b) to federal, state, or local law enforcement or regulatory agencies;
             1383          (c) to an organization established to detect and prevent fraudulent [viatical] life
             1384      settlement acts;
             1385          (d) to the National Association of Insurance Commissioners; or
             1386          (e) to a person engaged in the business of [viatical] life settlements that is aggrieved by
             1387      the violation.
             1388          (3) Disclosure of a document or evidence under Subsection (2) does not abrogate or
             1389      modify the privilege granted in Subsection (1).
             1390          Section 22. Section 31A-36-116 is amended to read:
             1391           31A-36-116. Other law enforcement or regulatory authority.


             1392          This chapter does not:
             1393          (1) preempt the authority or relieve the duty of other law enforcement or regulatory
             1394      agencies to investigate, examine, and prosecute suspected violations of law;
             1395          (2) prevent or prohibit a person from disclosing voluntarily information concerning
             1396      [viatical] life settlement fraud to a law enforcement or regulatory agency other than the
             1397      insurance department; or
             1398          (3) limit the powers granted elsewhere by law to the commissioner or an insurance
             1399      fraud unit to investigate and examine possible violations of law and to take appropriate action.
             1400          Section 23. Section 31A-36-117 is amended to read:
             1401           31A-36-117. Antifraud initiatives.
             1402          (1) The following shall establish and maintain antifraud initiatives which are
             1403      reasonably calculated to prevent, detect, and assist in the prosecution of violations of Section
             1404      31A-36-113 :
             1405          (a) a [viatical] life settlement provider; and
             1406          (b) an agency that is a [viatical] life settlement producer.
             1407          (2) The commissioner may order, or a licensee may request and the commissioner may
             1408      approve, modifications of the measures otherwise required under this section, more or less
             1409      restrictive than those measures, as necessary to protect against fraud.
             1410          (3) Antifraud initiatives shall include:
             1411          (a) fraud investigators, that may be either:
             1412          (i) employees of a [viatical] life settlement provider or [viatical] life settlement
             1413      producer; or
             1414          (ii) independent contractors;
             1415          (b) an antifraud plan submitted to the commissioner, which shall include:
             1416          (i) a description of the procedures for:
             1417          (A) detecting and investigating possible violations of Section 31A-36-113 ; and
             1418          (B) resolving material inconsistencies between medical records and applications for
             1419      insurance;
             1420          (ii) a description of the procedures for reporting possible violations to the
             1421      commissioner;
             1422          (iii) a description of the plan for educating and training underwriters and other


             1423      personnel against fraud; and
             1424          (iv) a description or chart of the organizational arrangement of the personnel
             1425      responsible for detecting and investigating possible violations of Section 31A-36-113 and for
             1426      resolving material inconsistencies between medical records and applications for insurance.
             1427          (4) A plan submitted to the commissioner shall be classified as a protected record
             1428      under Title 63G, Chapter 2, Government Records Access and Management Act.
             1429          Section 24. Section 31A-36-118 is amended to read:
             1430           31A-36-118. Criminal penalties and restitution.
             1431          (1) [Persons] A person subject to this chapter [are] is subject to:
             1432          (a) [the enforcement penalties and procedures of] Section 31A-2-308 for an
             1433      administrative [violations] violation of this title;
             1434          (b) prosecution under Section 76-6-412 for a criminal [activities] activity involving
             1435      [viatical settlements] a life settlement; or
             1436          (c) prosecution under Section 31A-31-103 for insurance fraud involving [viatical
             1437      settlements] a life settlement.
             1438          (2) A person found to be in violation of this chapter may:
             1439          (a) be ordered to pay restitution to persons aggrieved by the violation;
             1440          (b) be ordered to pay a forfeiture; [or]
             1441          (c) be imprisoned if found guilty of [any] a criminal law by a court of competent
             1442      jurisdiction[.]; and
             1443          (d) be subject to a combination of the penalties described in this Subsection (2).
             1444          (3) Except for a fraudulent act committed by an owner, this section does not apply to
             1445      the owner.
             1446          Section 25. Section 31A-36-119 is amended to read:
             1447           31A-36-119. Authority to make rules.
             1448          In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             1449      commissioner may adopt rules to:
             1450          (1) establish the requirements for the annual [statement] report required under Section
             1451      31A-36-106 ;
             1452          (2) establish standards for evaluating the reasonableness of payments under [viatical]
             1453      life settlements;


             1454          (3) establish appropriate licensing requirements, fees, and standards for continued
             1455      licensure for:
             1456          (a) a [viatical] life settlement provider; and
             1457          (b) a [viatical] life settlement producer;
             1458          (4) [require] (a) determine the amount and conditions of a bond or [otherwise ensure]
             1459      other assurance of financial [accountability of: (a) a viatical] responsibility required under
             1460      Section 31A-23a-117 for a life settlement provider; and
             1461          (b) [a viatical] require, determine the amount, or determine the conditions of an
             1462      assurance of financial responsibility for a life settlement producer, including a bond or an
             1463      errors and omissions insurance policy;
             1464          (5) govern the relationship of insurers with a [viatical] life settlement provider or
             1465      [viatical] life settlement producer during the [viatication] settlement of a policy;
             1466          (6) determine the specific disclosures required under Section 31A-36-108 ;
             1467          (7) determine whether advertising for [viatical] life settlements violates Section
             1468      31A-36-112 ;
             1469          (8) determine the information to be provided to the commissioner under Section
             1470      31A-36-114 and the manner of providing the information;
             1471          (9) determine additional acts or practices that are prohibited under Section
             1472      31A-36-111 ;
             1473          (10) establish payment requirements for the payments in Section 31A-36-110 ; and
             1474          (11) establish the filing procedure for the forms listed in Subsection 31A-36-105 (1).
             1475          Section 26. Section 61-1-13 is amended to read:
             1476           61-1-13. Definitions.
             1477          (1) As used in this chapter:
             1478          (a) "Affiliate" means a person that, directly or indirectly, through one or more
             1479      intermediaries, controls or is controlled by, or is under common control with a person
             1480      specified.
             1481          (b) (i) "Agent" means any individual other than a broker-dealer who represents a
             1482      broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities.
             1483          (ii) "Agent" does not include an individual who represents:
             1484          (A) an issuer, who receives no commission or other remuneration, directly or


             1485      indirectly, for effecting or attempting to effect purchases or sales of securities in this state, and
             1486      who effects transactions:
             1487          (I) in securities exempted by Subsection 61-1-14 (1)(a), (b), (c), (i), or (j);
             1488          (II) exempted by Subsection 61-1-14 (2);
             1489          (III) in a covered security as described in Sections 18(b)(3) and 18(b)(4)(D) of the
             1490      Securities Act of 1933; or
             1491          (IV) with existing employees, partners, officers, or directors of the issuer; or
             1492          (B) a broker-dealer in effecting transactions in this state limited to those transactions
             1493      described in Section 15(h)(2) of the Securities Exchange Act of 1934.
             1494          (iii) A partner, officer, or director of a broker-dealer or issuer, or a person occupying a
             1495      similar status or performing similar functions, is an agent only if the partner, officer, director,
             1496      or person otherwise comes within the definition of "agent."
             1497          (iv) "Agent" does not include a person described in Subsection (3).
             1498          (c) (i) "Broker-dealer" means any person engaged in the business of effecting
             1499      transactions in securities for the account of others or for the person's own account.
             1500          (ii) "Broker-dealer" does not include:
             1501          (A) an agent;
             1502          (B) an issuer;
             1503          (C) a bank, savings institution, or trust company;
             1504          (D) a person who has no place of business in this state if:
             1505          (I) the person effects transactions in this state exclusively with or through:
             1506          (Aa) the issuers of the securities involved in the transactions;
             1507          (Bb) other broker-dealers; or
             1508          (Cc) banks, savings institutions, trust companies, insurance companies, investment
             1509      companies as defined in the Investment Company Act of 1940, pension or profit-sharing trusts,
             1510      or other financial institutions or institutional buyers, whether acting for themselves or as
             1511      trustees; or
             1512          (II) during any period of 12 consecutive months the person does not direct more than
             1513      15 offers to sell or buy into this state in any manner to persons other than those specified in
             1514      Subsection (1)(c)(ii)(D)(I), whether or not the offeror or any of the offerees is then present in
             1515      this state;


             1516          (E) a general partner who organizes and effects transactions in securities of three or
             1517      fewer limited partnerships, of which the person is the general partner, in any period of 12
             1518      consecutive months;
             1519          (F) a person whose participation in transactions in securities is confined to those
             1520      transactions made by or through a broker-dealer licensed in this state;
             1521          (G) a person who is a real estate broker licensed in this state and who effects
             1522      transactions in a bond or other evidence of indebtedness secured by a real or chattel mortgage
             1523      or deed of trust, or by an agreement for the sale of real estate or chattels, if the entire mortgage,
             1524      deed or trust, or agreement, together with all the bonds or other evidences of indebtedness
             1525      secured thereby, is offered and sold as a unit;
             1526          (H) a person effecting transactions in commodity contracts or commodity options;
             1527          (I) a person described in Subsection (3); or
             1528          (J) other persons as the division, by rule or order, may designate, consistent with the
             1529      public interest and protection of investors, as not within the intent of this Subsection (1)(c).
             1530          (d) "Buy" or "purchase" means every contract for purchase of, contract to buy, or
             1531      acquisition of a security or interest in a security for value.
             1532          (e) "Commodity" means, except as otherwise specified by the division by rule:
             1533          (i) any agricultural, grain, or livestock product or byproduct, except real property or
             1534      any timber, agricultural, or livestock product grown or raised on real property and offered or
             1535      sold by the owner or lessee of the real property;
             1536          (ii) any metal or mineral, including a precious metal, except a numismatic coin whose
             1537      fair market value is at least 15% greater than the value of the metal it contains;
             1538          (iii) any gem or gemstone, whether characterized as precious, semi-precious, or
             1539      otherwise;
             1540          (iv) any fuel, whether liquid, gaseous, or otherwise;
             1541          (v) any foreign currency; and
             1542          (vi) all other goods, articles, products, or items of any kind, except any work of art
             1543      offered or sold by art dealers, at public auction or offered or sold through a private sale by the
             1544      owner of the work.
             1545          (f) (i) "Commodity contract" means any account, agreement, or contract for the
             1546      purchase or sale, primarily for speculation or investment purposes and not for use or


             1547      consumption by the offeree or purchaser, of one or more commodities, whether for immediate
             1548      or subsequent delivery or whether delivery is intended by the parties, and whether characterized
             1549      as a cash contract, deferred shipment or deferred delivery contract, forward contract, futures
             1550      contract, installment or margin contract, leverage contract, or otherwise.
             1551          (ii) Any commodity contract offered or sold shall, in the absence of evidence to the
             1552      contrary, be presumed to be offered or sold for speculation or investment purposes.
             1553          (iii) (A) A commodity contract shall not include any contract or agreement which
             1554      requires, and under which the purchaser receives, within 28 calendar days from the payment in
             1555      good funds any portion of the purchase price, physical delivery of the total amount of each
             1556      commodity to be purchased under the contract or agreement.
             1557          (B) The purchaser is not considered to have received physical delivery of the total
             1558      amount of each commodity to be purchased under the contract or agreement when the
             1559      commodity or commodities are held as collateral for a loan or are subject to a lien of any
             1560      person when the loan or lien arises in connection with the purchase of each commodity or
             1561      commodities.
             1562          (g) (i) "Commodity option" means any account, agreement, or contract giving a party
             1563      to the option the right but not the obligation to purchase or sell one or more commodities or
             1564      one or more commodity contracts, or both whether characterized as an option, privilege,
             1565      indemnity, bid, offer, put, call, advance guaranty, decline guaranty, or otherwise.
             1566          (ii) "Commodity option" does not include an option traded on a national securities
             1567      exchange registered:
             1568          (A) with the United States Securities and Exchange Commission; or
             1569          (B) on a board of trade designated as a contract market by the Commodity Futures
             1570      Trading Commission.
             1571          (h) "Director" means the director of the Division of Securities charged with the
             1572      administration and enforcement of this chapter.
             1573          (i) "Division" means the Division of Securities established by Section 61-1-18 .
             1574          (j) "Executive director" means the executive director of the Department of Commerce.
             1575          (k) "Federal covered adviser" means a person who:
             1576          (i) is registered under Section 203 of the Investment Advisers Act of 1940; or
             1577          (ii) is excluded from the definition of "investment adviser" under Section 202(a)(11) of


             1578      the Investment Advisers Act of 1940.
             1579          (l) "Federal covered security" means any security that is a covered security under
             1580      Section 18(b) of the Securities Act of 1933 or rules or regulations promulgated under Section
             1581      18(b) of the Securities Act of 1933.
             1582          (m) "Fraud," "deceit," and "defraud" are not limited to their common-law meanings.
             1583          (n) "Guaranteed" means guaranteed as to payment of principal or interest as to debt
             1584      securities, or dividends as to equity securities.
             1585          (o) (i) "Investment adviser" means any person who:
             1586          (A) for compensation, engages in the business of advising others, either directly or
             1587      through publications or writings, as to the value of securities or as to the advisability of
             1588      investing in, purchasing, or selling securities; or
             1589          (B) for compensation and as a part of a regular business, issues or promulgates
             1590      analyses or reports concerning securities.
             1591          (ii) "Investment adviser" includes financial planners and other persons who:
             1592          (A) as an integral component of other financially related services, provide the
             1593      investment advisory services described in Subsection (1)(o)(i) to others for compensation and
             1594      as part of a business; or
             1595          (B) hold themselves out as providing the investment advisory services described in
             1596      Subsection (1)(o)(i) to others for compensation.
             1597          (iii) "Investment adviser" does not include:
             1598          (A) an investment adviser representative;
             1599          (B) a bank, savings institution, or trust company;
             1600          (C) a lawyer, accountant, engineer, or teacher whose performance of these services is
             1601      solely incidental to the practice of the profession;
             1602          (D) a broker-dealer or its agent whose performance of these services is solely
             1603      incidental to the conduct of its business as a broker-dealer and who receives no special
             1604      compensation for the services;
             1605          (E) a publisher of any bona fide newspaper, news column, news letter, news magazine,
             1606      or business or financial publication or service, of general, regular, and paid circulation, whether
             1607      communicated in hard copy form, or by electronic means, or otherwise, that does not consist of
             1608      the rendering of advice on the basis of the specific investment situation of each client;


             1609          (F) any person who is a federal covered adviser;
             1610          (G) a person described in Subsection (3); or
             1611          (H) such other persons not within the intent of this Subsection (1)(o) as the division
             1612      may by rule or order designate.
             1613          (p) (i) "Investment adviser representative" means any partner, officer, director of, or a
             1614      person occupying a similar status or performing similar functions, or other individual, except
             1615      clerical or ministerial personnel, who:
             1616          (A) (I) is employed by or associated with an investment adviser who is licensed or
             1617      required to be licensed under this chapter; or
             1618          (II) has a place of business located in this state and is employed by or associated with a
             1619      federal covered adviser; and
             1620          (B) does any of the following:
             1621          (I) makes any recommendations or otherwise renders advice regarding securities;
             1622          (II) manages accounts or portfolios of clients;
             1623          (III) determines which recommendation or advice regarding securities should be given;
             1624          (IV) solicits, offers, or negotiates for the sale of or sells investment advisory services;
             1625      or
             1626          (V) supervises employees who perform any of the acts described in this Subsection
             1627      (1)(p)(i)(B).
             1628          (ii) "Investment advisor representative" does not include a person described in
             1629      Subsection (3).
             1630          (q) (i) "Issuer" means any person who issues or proposes to issue any security or has
             1631      outstanding a security that it has issued.
             1632          (ii) With respect to a preorganization certificate or subscription, "issuer" means the
             1633      promoter or the promoters of the person to be organized.
             1634          (iii) "Issuer" means the person or persons performing the acts and assuming duties of a
             1635      depositor or manager under the provisions of the trust or other agreement or instrument under
             1636      which the security is issued with respect to:
             1637          (A) interests in trusts, including collateral trust certificates, voting trust certificates, and
             1638      certificates of deposit for securities; or
             1639          (B) shares in an investment company without a board of directors.


             1640          (iv) With respect to an equipment trust certificate, a conditional sales contract, or
             1641      similar securities serving the same purpose, "issuer" means the person by whom the equipment
             1642      or property is to be used.
             1643          (v) With respect to interests in partnerships, general or limited, "issuer" means the
             1644      partnership itself and not the general partner or partners.
             1645          (vi) With respect to certificates of interest or participation in oil, gas, or mining titles or
             1646      leases or in payment out of production under the titles or leases, "issuer" means the owner of
             1647      the title or lease or right of production, whether whole or fractional, who creates fractional
             1648      interests therein for the purpose of sale.
             1649          [(aa)] (r) (i) ["Viatical] "Life settlement interest" means the entire interest or any
             1650      fractional interest in any of the following that is the subject of a [viatical] life settlement:
             1651          (A) a [life insurance] policy; or
             1652          (B) the death benefit under a [life insurance] policy.
             1653          (ii) ["Viatical] "Life settlement interest" does not include the initial purchase from the
             1654      [viator] owner by a [viatical] life settlement provider.
             1655          [(r)] (s) "Nonissuer" means not directly or indirectly for the benefit of the issuer.
             1656          [(s)] (t) "Person" means:
             1657          (i) an individual;
             1658          (ii) a corporation;
             1659          (iii) a partnership;
             1660          (iv) a limited liability company;
             1661          (v) an association;
             1662          (vi) a joint-stock company;
             1663          (vii) a joint venture;
             1664          (viii) a trust where the interests of the beneficiaries are evidenced by a security;
             1665          (ix) an unincorporated organization;
             1666          (x) a government; or
             1667          (xi) a political subdivision of a government.
             1668          [(t)] (u) "Precious metal" means the following, whether in coin, bullion, or other form:
             1669          (i) silver;
             1670          (ii) gold;


             1671          (iii) platinum;
             1672          (iv) palladium;
             1673          (v) copper; and
             1674          (vi) such other substances as the division may specify by rule.
             1675          [(u)] (v) "Promoter" means any person who, acting alone or in concert with one or
             1676      more persons, takes initiative in founding or organizing the business or enterprise of a person.
             1677          [(v)] (w) (i) "Sale" or "sell" includes every contract for sale of, contract to sell, or
             1678      disposition of, a security or interest in a security for value.
             1679          (ii) "Offer" or "offer to sell" includes every attempt or offer to dispose of, or
             1680      solicitation of an offer to buy, a security or interest in a security for value.
             1681          (iii) The following are examples of the definitions in Subsection (1)[(v)](w)(i) or (ii):
             1682          (A) any security given or delivered with or as a bonus on account of any purchase of a
             1683      security or any other thing, is part of the subject of the purchase, and has been offered and sold
             1684      for value;
             1685          (B) a purported gift of assessable stock is an offer or sale as is each assessment levied
             1686      on the stock;
             1687          (C) an offer or sale of a security that is convertible into, or entitles its holder to acquire
             1688      or subscribe to another security of the same or another issuer is an offer or sale of that security,
             1689      and also an offer of the other security, whether the right to convert or acquire is exercisable
             1690      immediately or in the future;
             1691          (D) any conversion or exchange of one security for another shall constitute an offer or
             1692      sale of the security received in a conversion or exchange, and the offer to buy or the purchase
             1693      of the security converted or exchanged;
             1694          (E) securities distributed as a dividend wherein the person receiving the dividend
             1695      surrenders the right, or the alternative right, to receive a cash or property dividend is an offer or
             1696      sale;
             1697          (F) a dividend of a security of another issuer is an offer or sale; or
             1698          (G) the issuance of a security under a merger, consolidation, reorganization,
             1699      recapitalization, reclassification, or acquisition of assets shall constitute the offer or sale of the
             1700      security issued as well as the offer to buy or the purchase of any security surrendered in
             1701      connection therewith, unless the sole purpose of the transaction is to change the issuer's


             1702      domicile.
             1703          (iv) The terms defined in Subsections (1)[(v)](w)(i) and (ii) do not include:
             1704          (A) a good faith gift;
             1705          (B) a transfer by death;
             1706          (C) a transfer by termination of a trust or of a beneficial interest in a trust;
             1707          (D) a security dividend not within Subsection (1)[(v)](w)(iii)(E) or (F);
             1708          (E) a securities split or reverse split; or
             1709          (F) any act incident to a judicially approved reorganization in which a security is issued
             1710      in exchange for one or more outstanding securities, claims, or property interests, or partly in
             1711      such exchange and partly for cash.
             1712          [(w)] (x) "Securities Act of 1933," "Securities Exchange Act of 1934," "Public Utility
             1713      Holding Company Act of 1935," and "Investment Company Act of 1940" mean the federal
             1714      statutes of those names as amended before or after the effective date of this chapter.
             1715          [(x)] (y) (i) "Security" means any:
             1716          (A) note;
             1717          (B) stock;
             1718          (C) treasury stock;
             1719          (D) bond;
             1720          (E) debenture;
             1721          (F) evidence of indebtedness;
             1722          (G) certificate of interest or participation in any profit-sharing agreement;
             1723          (H) collateral-trust certificate;
             1724          (I) preorganization certificate or subscription;
             1725          (J) transferable share;
             1726          (K) investment contract;
             1727          (L) burial certificate or burial contract;
             1728          (M) voting-trust certificate;
             1729          (N) certificate of deposit for a security;
             1730          (O) certificate of interest or participation in an oil, gas, or mining title or lease or in
             1731      payments out of production under such a title or lease;
             1732          (P) commodity contract or commodity option;


             1733          (Q) interest in a limited liability company;
             1734          (R) [viatical] life settlement interest; or
             1735          (S) in general, any interest or instrument commonly known as a "security," or any
             1736      certificate of interest or participation in, temporary or interim certificate for, receipt for,
             1737      guarantee of, or warrant or right to subscribe to or purchase any of the foregoing.
             1738          (ii) "Security" does not include any:
             1739          (A) insurance or endowment policy or annuity contract under which an insurance
             1740      company promises to pay money in a lump sum or periodically for life or some other specified
             1741      period;
             1742          (B) interest in a limited liability company in which the limited liability company is
             1743      formed as part of an estate plan where all of the members are related by blood or marriage,
             1744      there are five or fewer members, or the person claiming this exception can prove that all of the
             1745      members are actively engaged in the management of the limited liability company; or
             1746          (C) (I) a whole long-term estate in real property;
             1747          (II) an undivided fractionalized long-term estate in real property that consists of ten or
             1748      fewer owners; or
             1749          (III) an undivided fractionalized long-term estate in real property that consists of more
             1750      than ten owners if, when the real property estate is subject to a management agreement:
             1751          (Aa) the management agreement permits a simple majority of owners of the real
             1752      property estate to not renew or to terminate the management agreement at the earlier of the end
             1753      of the management agreement's current term, or 180 days after the day on which the owners
             1754      give notice of termination to the manager;
             1755          (Bb) the management agreement prohibits, directly or indirectly, the lending of the
             1756      proceeds earned from the real property estate or the use or pledge of its assets to any person or
             1757      entity affiliated with or under common control of the manager; and
             1758          (Cc) the management agreement complies with any other requirement imposed by rule
             1759      by the Real Estate Commission under Section 61-2-26 .
             1760          (iii) For purposes of Subsection (1)[(x)](y)(ii)(B), evidence that members vote or have
             1761      the right to vote, or the right to information concerning the business and affairs of the limited
             1762      liability company, or the right to participate in management, shall not establish, without more,
             1763      that all members are actively engaged in the management of the limited liability company.


             1764          [(y)] (z) "State" means any state, territory, or possession of the United States, the
             1765      District of Columbia, and Puerto Rico.
             1766          [(z)] (aa) (i) "Undivided fractionalized long-term estate" means an ownership interest
             1767      in real property by two or more persons that is a:
             1768          (A) tenancy in common; or
             1769          (B) any other legal form of undivided estate in real property including:
             1770          (I) a fee estate;
             1771          (II) a life estate; or
             1772          (III) other long-term estate.
             1773          (ii) "Undivided fractionalized long-term estate" does not include a joint tenancy.
             1774          (bb) "Whole long-term estate" means a person or persons through joint tenancy owns
             1775      real property through:
             1776          (i) a fee estate;
             1777          (ii) a life estate; or
             1778          (iii) other long-term estate.
             1779          (cc) "Working days" means 8 a.m. to 5 p.m., Monday through Friday, exclusive of
             1780      legal holidays listed in Section 63G-1-301 .
             1781          (2) A term not defined in this section shall have the meaning as established by division
             1782      rule. The meaning of a term neither defined in this section nor by rule of the division shall be
             1783      the meaning commonly accepted in the business community.
             1784          (3) (a) This Subsection (3) applies to:
             1785          (i) the offer or sale of a real property estate exempted from the definition of security
             1786      under Subsection (1)[(x)](y)(ii)(C); or
             1787          (ii) the offer or sale of an undivided fractionalized long-term estate that is the offer of a
             1788      security.
             1789          (b) A person who, directly or indirectly receives compensation in connection with the
             1790      offer or sale as provided in this Subsection (3) of a real property estate is not an agent,
             1791      broker-dealer, investment adviser, or investor adviser representative under this chapter if that
             1792      person is licensed under Chapter 2, Division of Real Estate, as:
             1793          (i) a principal real estate broker;
             1794          (ii) an associate real estate broker; or


             1795          (iii) a real estate sales agent.
             1796          (4) The list of real property estates excluded from the definition of securities under
             1797      Subsection (1)[(x)](y)(ii)(C) is not an exclusive list of real property estates or interests that are
             1798      not a security.
             1799          Section 27. Section 64-13-39.5 is amended to read:
             1800           64-13-39.5. Definitions -- Health care for chronically or terminally ill offenders --
             1801      Notice to health care facility.
             1802          (1) As used in this section:
             1803          (a) "Department or agency" means the Utah Department of Corrections or a department
             1804      of corrections or government entity responsible for placing an offender in a facility located in
             1805      Utah.
             1806          (b) "Chronically ill" has the same meaning as in Section 31A-36-102 .
             1807          (c) "Facility" means an assisted living facility as defined in Subsection 26-21-2 (5) and a
             1808      nursing care facility as defined in Subsection 26-21-2 (17), except that transitional care units
             1809      and other long term care beds owned or operated on the premises of acute care hospitals or
             1810      critical care hospitals are not facilities for the purpose of this section.
             1811          (d) "Offender" means an inmate whom the department or agency has given an early
             1812      release, pardon, or parole due to a chronic or terminal illness.
             1813          (e) "Terminally ill" has the same meaning as in [Subsection] Section
             1814      31A-36-102 [(11)].
             1815          (2) If an offender from Utah or any other state is admitted as a resident of a facility due
             1816      to the chronic or terminal illness, the department or agency placing the offender shall:
             1817          (a) provide written notice to the administrator of the facility no later than 15 days prior
             1818      to the offender's admission as a resident of a facility, stating:
             1819          (i) the offense for which the offender was convicted and a description of the actual
             1820      offense;
             1821          (ii) the offender's status with the department or agency;
             1822          (iii) that the information provided by the department or agency regarding the offender
             1823      shall be provided to employees of the facility no later than ten days prior to the offender's
             1824      admission to the facility; and
             1825          (iv) the contact information for:


             1826          (A) the offender's parole officer and also a point of contact within the department or
             1827      agency, if the offender is on parole; and
             1828          (B) a point of contact within the department or agency, if the offender is not under
             1829      parole supervision but was given an early release or pardon due to a chronic or terminal illness;
             1830          (b) make available to the public on the Utah Department of Corrections' website and
             1831      upon request:
             1832          (i) the name and address of the facility where the offender resides; and
             1833          (ii) the date the offender was placed at the facility; and
             1834          (c) provide a training program for employees who work in a facility where offenders
             1835      reside, and if the offender is placed at the facility by:
             1836          (i) the Utah Department of Corrections, the department shall provide the training
             1837      program for the employees; and
             1838          (ii) by a department or agency from another state, that state's department or agency
             1839      shall arrange with the Utah Department of Corrections to provide the training required by this
             1840      Subsection (2), if training has not already been provided by the Utah Department of
             1841      Corrections, and shall provide to the Utah Department of Corrections any necessary
             1842      compensation for this service.
             1843          (3) The administrator of the facility shall:
             1844          (a) provide residents of the facility or their guardians notice that a convicted felon is
             1845      being admitted to the facility no later than ten days prior to the offender's admission to the
             1846      facility;
             1847          (b) advise potential residents or their guardians of persons under Subsection (2) who
             1848      are current residents of the facility; and
             1849          (c) provide training, offered by the Utah Department of Corrections, in the safe
             1850      management of offenders for all employees.
             1851          (4) The Utah Department of Corrections shall make rules under Title 63G, Chapter 3,
             1852      Utah Administrative Rulemaking Act, establishing:
             1853          (a) a consistent format and procedure for providing notification to facilities and
             1854      information to the public in compliance with Subsection (2); and
             1855          (b) a training program, in compliance with Subsection (3) for employees, who work at
             1856      facilities where offenders reside to ensure the safety of facility residents and employees.


             1857          Section 28. Revisor instructions.
             1858          It is the intent of the Legislature, that the Office of Legislative Research and General
             1859      Counsel, in preparing the Utah Code database for publication, replace references in the Utah
             1860      Code added during the 2009 General Session related to viatical settlements as follows:
             1861          (1) replace "viator" with "owner";
             1862          (2) replace "viaticate" with "settle" or "viaticated" with "settled"; and
             1863          (3) replace "viatical settlement" with "life settlement."




Legislative Review Note
    as of 2-9-09 3:16 PM


Office of Legislative Research and General Counsel


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