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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
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:
38 Other Special Clauses:
39 This bill provides revisor instructions.
40 Utah Code Sections Affected:
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
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 [
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
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
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
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) [
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) [
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
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
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
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:
285 accordance with Chapter 36, [
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 [
291 owner is also the subject of the insurance, from entering into a [
295 a [
297 financing entity, a related provider trust, or a special purpose entity from executing
297a (A) of .H any of the
298 following with respect to the death benefit or ownership of any portion of a [
299 policy as provided for in Section 31A-36-109 :
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. [
304g (VI) a qualified institutional buyer as defined in Rule 144A, 17 C.F.R.
304h Sec. 230.144A S. [
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
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 [
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;
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
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
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
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;
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
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) [
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
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
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 [
525 (d) If [
526 fails to perform a duty that is a ground for suspending, revoking, or limiting the [
528 (i) the [
529 (ii) the agency, if the agency:
530 (A) is reckless or negligent in its supervision of the [
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 [
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
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 [
571 licensed in accordance with this title, with the additional requirements listed in this section.
572 (2) A [
573 (a) a detailed plan of operation with the [
574 (i) initial license application; and
575 (ii) renewal application;
576 (b) a copy of the [
577 statement; [
578 (c) an antifraud plan that meets the requirements of Section 31A-36-117 [
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 [
582 provider's initial license application information describing the [
583 provider's [
584 (4) A [
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
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 [
631 (l) a [
632 Section 7. Section 31A-36-101 is amended to read:
634 31A-36-101. Title.
635 This chapter is known as the [
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 [
640 (i) create an interest in [
641 (ii) induce a person [
642 or transfer the death benefit or ownership of:
643 (A) a policy; or
644 (B) an interest in a policy [
645 (b) "Advertising" includes the following, if the requirements of Subsection (1)(a) are
647 (i) [
648 (ii) [
649 (iii) [
650 communications media; and
651 (iv) a film [
652 (2) "Business of [
653 (a) offering a [
654 (b) soliciting a [
655 (c) negotiating a [
656 (d) procuring a [
657 (e) effectuating a [
658 (f) purchasing a [
659 (g) investing in a [
660 (h) financing a [
661 (i) monitoring a [
662 (j) tracking a [
663 (k) underwriting a [
664 (l) selling a [
665 (m) transferring a [
666 (n) assigning a [
667 (o) pledging a [
668 (p) [
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 .
678 (i) who has direct ownership in a policy that is the subject of a [
679 (ii) whose principal activity related to a [
680 effect the [
681 (iii) who has an agreement in writing with one or more licensed [
682 settlement providers to finance the acquisition of one or more [
683 (b) "Financing entity" includes, if the requirements of Subsection [
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 [
691 (c) "Financing entity" does not include:
692 (i) a nonaccredited investor; or
693 (ii) a [
695 (a) a [
696 (b) a disclosure to [
697 (c) a notice of intent to [
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.
703 (i) between an owner and a life settlement provider; and
704 (ii) for the payment of anything of value, [
705 benefit of the policy, in exchange for the [
707 after the exchange, the death benefit or ownership of:
708 (A) any portion of a policy[
709 (B) a beneficial interest in the policy.
710 (b) [
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;
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.
778 as a life insurance producer that on behalf of [
779 attempts to negotiate a [
781 (b) [
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 [
785 (ii) whose compensation is not paid directly or indirectly by:
786 (A) a [
787 (B) a [
790 (b) [
791 (i) a licensed lender that takes an assignment of a policy as security for a loan,
792 including a:
798 (A) depository institution; or
799 (B) lender that makes a premium finance loan that is not described in Subsection
801 (ii) the issuer of a policy [
802 (iii) an authorized or eligible insurer that provides stop-loss coverage to:
803 (A) a [
804 (B) a [
805 (C) a financing entity;
806 (D) a special purpose entity; or
807 (E) a related provider trust;
819 230.144A that purchases a settled policy from a life settlement provider.
821 economic benefit:
822 (i) [
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 [
826 (B) is the beneficiary of a policy that has been or will be the subject of a [
828 (b) [
829 (i) a [
830 (ii) a [
831 (iii) an accredited investor as defined in Regulation D, Rule 501, 17 C.F.R. Sec.
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.
838 state and seeks to enter into a [
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) [
842 chronically ill except [
843 (c) [
844 (i) a [
845 (ii) a [
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.
863 settlement provider or a financing entity solely to hold the ownership of or beneficial interests
864 in purchased policies in connection with financing.
866 H. [
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).
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 [
888 are residents of different states, the law of the state in which the [
889 largest percentage ownership resides governs the [
890 owners own equal fractions of a policy, the [
891 of the state in which one resides governs the [
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
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 [
902 (ii) a [
903 (b) [
904 insurance producer line of authority.
905 (2) (a) To obtain a license as a [
906 (i) comply with Section 31A-23a-117 ;
907 (ii) file an application; [
908 (iii) pay the license fee[
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 [
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 [
918 commissioner finds that:
919 (a) a [
920 payments to [
921 (b) the applicant, the licensee, an officer, partner, or member, or key management
923 (i) [
925 (A) a felony; or
926 (B) a misdemeanor involving fraud or moral turpitude;
927 (ii) [
928 (iii) [
930 (c) a [
931 settlement not approved under this chapter;
932 (d) a [
934 (e) a [
936 (i) a [
937 (ii) a [
938 (iii) an accredited investor as defined in Regulation D, Rule 501, 17 C.F.R. Sec.
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; [
944 (f) a [
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 [
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 [
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
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), [
964 with the commissioner on or before March 1 of each year an annual [
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 [
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 [
972 (b) a [
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 [
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 [
986 provider to another [
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 [
990 (f) necessary to allow the [
991 producer or the [
992 authorized representatives to make [
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 [
998 provider or [
999 31A-2-203.5 , 31A-2-204 , and 31A-2-205 .
1000 (2) A [
1001 for five years copies of [
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) [
1016 (a) must be legible and complete[
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 [
1022 (5) does not automatically preclude an examiner from being:
1023 (a) [
1024 (b) an insured in a [
1025 (c) a beneficiary in a policy that is proposed to be [
1026 (6) (a) [
1027 an examination to the department consistent with Section 31A-2-205 .
1028 (b) Notwithstanding Subsection (6)(a), an individual [
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 [
1033 provider or [
1034 disclosures the commissioner may require under Section 31A-36-119 , in a separate document
1035 signed by the [
1036 settlement producer, no later than the time the application for the [
1037 signed by all the [
1038 (2) A [
1039 disclosures the commissioner may require under Section 31A-36-119 , conspicuously displayed
1040 in the [
1042 by all [
1043 Section 15. Section 31A-36-109 is amended to read:
1044 31A-36-109. General requirements.
1045 (1) If a [
1046 of a [
1047 the transfer or change within 20 calendar days.
1048 (2) A [
1050 (a) if the [
1051 physician that the [
1052 to enter a [
1053 (b) a witnessed document in which the [
1054 (i) the [
1055 settlement and the benefits of the policy;
1056 (ii) the [
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 [
1063 (ii) a [
1064 (iii) the insurer that issued the policy covering the insured.
1065 (3) Within 20 calendar days after [
1066 transfer rights under a policy, or enters into an agreement in any form, express or implied, to
1068 issuer of the policy that the policy has or will become [
1069 accompanied by a copy of the documents required by Subsection (4).
1070 (4) The [
1071 insurer that issued the policy that is the subject of the [
1072 (a) the medical release required under Subsection (2)(c);
1073 (b) a copy of the [
1074 (c) the notice required under Subsection (3).
1075 (5) [
1076 coverage not later than 30 calendar days after the [
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) [
1088 settlement provider or [
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 [
1096 (ii) The rescission period ends 15 calendar days after [
1097 owner receives the proceeds of the [
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 [
1104 interest [
1105 settlement purchaser [
1107 (8) (a) Contact with an insured to determine the health status of the insured after a
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) [
1114 explain the procedure for the contacts allowed under this Subsection (8) to the [
1115 when the application for the [
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 [
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 [
1122 settlement provider that:
1123 (a) the [
1124 statutory and regulatory requirements; and
1125 (b) the trustee will make all records and files related to [
1126 available to the commissioner as if those records and files were maintained directly by the
1128 (10) Regardless of the method of compensation, a [
1129 (a) represents only the [
1130 (b) owes a fiduciary duty to the [
1131 instructions and in the best interest of the [
1132 Section 16. Section 31A-36-110 is amended to read:
1133 31A-36-110. Payment and document requirements.
1134 (1) (a) A [
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 [
1139 provider receives the documents if by mistake they are sent directly to the [
1140 settlement provider, the [
1141 the life settlement into an escrow or trust account [
1143 federally insured depository institution.
1144 (2) (a) Upon completion of the requirements of Subsection (1), the escrow agent shall
1145 deliver [
1146 owner to:
1147 (i) the life settlement provider; or
1148 (ii) a related provider trust or other designated representative of the life settlement
1150 (b) Upon the [
1151 acknowledgment of the change in ownership or assignment or change of beneficiary of the
1152 affected policy, the [
1153 proceeds of the life settlement to the [
1154 (3) Payment to the [
1155 day on which the [
1156 insurer. Failure to make the payment within that time makes the [
1157 voidable by the [
1158 accepted by the [
1159 Section 17. Section 31A-36-111 is amended to read:
1160 31A-36-111. Prohibited acts.
1161 (1) [
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 [
1165 the [
1166 (a) the policy was issued upon the [
1167 arising out of a group or individual policy[
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, [
1176 independent evidence that within the two-year period:
1177 (i) the [
1178 (ii) the [
1179 (iii) the spouse of the [
1180 (iv) the [
1181 (v) the [
1182 (vi) the [
1183 physician determines that the disability precludes the [
1189 competent jurisdiction, on the application of a creditor of the [
1190 (A) adjudging the [
1191 (B) approving a petition for reorganization of the [
1192 (C) appointing a receiver, trustee, or liquidator for all or a substantial part of the
1195 unexpected and impairs the [
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
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) [
1248 shall establish and continuously maintain a system of control over the content, form, and
1249 method of dissemination of [
1251 (b) [
1252 provider or [
1254 (c) A system of control must include at least annual notification to persons authorized
1255 by the [
1256 advertisements of the requirements and procedures for approval before use of any
1257 advertisements not furnished by the [
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) [
1264 (a) making a [
1265 consummated; or
1266 (b) offering to refund payment if the [
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) [
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 [
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:
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 [
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 [
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 [
1308 owner of a policy, or other person engaged in the business of [
1310 (d) recklessly enter into, negotiate, or otherwise deal in a [
1311 subject of which is a policy obtained [
1312 or more persons intend to defraud the policy's issuer, the life settlement provider, or the owner
1314 (i) presenting false information concerning [
1315 (ii) concealing, to mislead another, information concerning [
1316 policy; [
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
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 [
1325 or intentionally permit [
1326 trust to participate in the business of [
1327 (5) (a) An application or contract for a [
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 [
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 [
1336 reasonably [
1337 will be committed shall provide to the commissioner the information required by, and in a
1338 manner prescribed by, the commissioner.
1339 (2) [
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 [
1355 (iii) the North American Securities Administrators Association; or
1356 (iv) another regulatory body overseeing life insurance, [
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) [
1364 to an award of [
1365 (a) the person is the prevailing party in a civil cause of action for libel, slander, or [
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
1382 (b) to federal, state, or local law enforcement or regulatory agencies;
1383 (c) to an organization established to detect and prevent fraudulent [
1384 settlement acts;
1385 (d) to the National Association of Insurance Commissioners; or
1386 (e) to a person engaged in the business of [
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
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 [
1406 (b) an agency that is a [
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 [
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
1420 (ii) a description of the procedures for reporting possible violations to the
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) [
1432 (a) [
1433 administrative [
1434 (b) prosecution under Section 76-6-412 for a criminal [
1436 (c) prosecution under Section 31A-31-103 for insurance fraud involving [
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; [
1441 (c) be imprisoned if found guilty of [
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 [
1451 31A-36-106 ;
1452 (2) establish standards for evaluating the reasonableness of payments under [
1453 life settlements;
1454 (3) establish appropriate licensing requirements, fees, and standards for continued
1455 licensure for:
1456 (a) a [
1457 (b) a [
1458 (4) [
1459 other assurance of financial [
1460 Section 31A-23a-117 for a life settlement provider; and
1461 (b) [
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 [
1466 (6) determine the specific disclosures required under Section 31A-36-108 ;
1467 (7) determine whether advertising for [
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
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
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
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;
1626 (V) supervises employees who perform any of the acts described in this Subsection
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.
1650 fractional interest in any of the following that is the subject of a [
1651 (A) a [
1652 (B) the death benefit under a [
1653 (ii) [
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.
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.
1676 more persons, takes initiative in founding or organizing the business or enterprise of a person.
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)[
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
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
1703 (iv) The terms defined in Subsections (1)[
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)[
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.
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.
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) [
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
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)[
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.
1765 District of Columbia, and Puerto Rico.
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)[
1787 (ii) the offer or sale of an undivided fractionalized long-term estate that is the offer of a
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)[
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
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 [
1814 31A-36-102 [
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
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
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