Representative James A. Dunnigan proposes the following substitute bill:


1     
UTAH LIFE AND HEALTH INSURANCE GUARANTY

2     
ASSOCIATION AMENDMENTS

3     
2018 GENERAL SESSION

4     
STATE OF UTAH

5     
Chief Sponsor: James A. Dunnigan

6     
Senate Sponsor: Curtis S. Bramble

7     

8     LONG TITLE
9     General Description:
10          This bill amends provisions relating to the Utah Life and Health Insurance Guaranty
11     Association.
12     Highlighted Provisions:
13          This bill:
14          ▸     extends guaranty association membership and coverage to health maintenance
15     organizations;
16          ▸     excludes structured settlement factoring transactions and Medicaid from guaranty
17     association coverage;
18          ▸     specifies that benefits provided by a long-term care rider to a life insurance policy or
19     annuity contract shall be considered the same type of benefits as the base life
20     insurance policy or annuity contract to which the rider relates;
21          ▸     excludes a policy or contract for an accident and health insurance benefit from the
22     "Moody's rollback" limitation on interest rates, credit rates, and other similar
23     factors;
24          ▸     increases the number of members on the guaranty association board of directors;
25          ▸     allows the guaranty association to file for justified rate increases;

26          ▸     addresses substitute coverage provided by the guaranty association for an indexed
27     policy or contract;
28          ▸     removes the $300 limit on Class A assessments;
29          ▸     provides that assessments for a long-term care insurer insolvency be shared with a
30     split of:
31               •     25% to accident and health member insurers; and
32               •     75% to the life insurance and annuity member insurers;
33          ▸     exempts a health maintenance organization from liability or assessment for a
34     long-term care insurer that becomes impaired or insolvent before July 1, 2020;
35          ▸     provides for the recoupment of assessments; and
36          ▸     makes technical and conforming changes.
37     Money Appropriated in this Bill:
38          None
39     Other Special Clauses:
40          None
41     Utah Code Sections Affected:
42     AMENDS:
43          31A-8-103, as last amended by Laws of Utah 2017, Chapter 292
44          31A-27a-403, as enacted by Laws of Utah 2007, Chapter 309
45          31A-27a-701, as last amended by Laws of Utah 2014, Chapters 290 and 300
46          31A-27a-702, as enacted by Laws of Utah 2007, Chapter 309
47          31A-28-102, as last amended by Laws of Utah 2001, Chapters 116 and 161
48          31A-28-103, as last amended by Laws of Utah 2010, Chapter 292
49          31A-28-105, as last amended by Laws of Utah 2010, Chapter 292
50          31A-28-106, as last amended by Laws of Utah 2006, Chapter 320
51          31A-28-107, as last amended by Laws of Utah 2011, Chapter 284
52          31A-28-108, as last amended by Laws of Utah 2010, Chapter 292
53          31A-28-109, as last amended by Laws of Utah 2010, Chapter 292
54          31A-28-111, as last amended by Laws of Utah 2010, Chapter 292
55          31A-28-112, as last amended by Laws of Utah 2010, Chapter 292
56          31A-28-113, as last amended by Laws of Utah 2011, Chapter 342

57          31A-28-114, as last amended by Laws of Utah 2010, Chapter 292
58          31A-28-119, as last amended by Laws of Utah 2010, Chapter 292
59          31A-28-120, as last amended by Laws of Utah 2010, Chapter 292
60     ENACTS:
61          59-7-623, Utah Code Annotated 1953
62     

63     Be it enacted by the Legislature of the state of Utah:
64          Section 1. Section 31A-8-103 is amended to read:
65          31A-8-103. Applicability to other provisions of law.
66          (1) (a) Except for exemptions specifically granted under this title, an organization is
67     subject to regulation under all of the provisions of this title.
68          (b) Notwithstanding any provision of this title, an organization licensed under this
69     chapter:
70          (i) is wholly exempt from:
71          (A) Chapter 7, Nonprofit Health Service Insurance Corporations;
72          (B) Chapter 9, Insurance Fraternals;
73          (C) Chapter 10, Annuities;
74          (D) Chapter 11, Motor Clubs;
75          (E) Chapter 12, State Risk Management Fund; and
76          (F) Chapter 19a, Utah Rate Regulation Act; and
77          [(G) Chapter 28, Part 1, Utah Life and Health Insurance Guaranty Association Act;
78     and]
79          (ii) is not subject to:
80          (A) Chapter 3, Department Funding, Fees, and Taxes, except for Part 1, Funding the
81     Insurance Department;
82          (B) Section 31A-4-107;
83          (C) Chapter 5, Domestic Stock and Mutual Insurance Corporations, except for
84     provisions specifically made applicable by this chapter;
85          (D) Chapter 14, Foreign Insurers, except for provisions specifically made applicable by
86     this chapter;
87          (E) Chapter 17, Determination of Financial Condition, except:

88          (I) Part 2, Qualified Assets, and Part 6, Risk-Based Capital; or
89          (II) as made applicable by the commissioner by rule consistent with this chapter;
90          (F) Chapter 18, Investments, except as made applicable by the commissioner by rule
91     consistent with this chapter; and
92          (G) Chapter 22, Contracts in Specific Lines, except for Part 6, Accident and Health
93     Insurance, Part 7, Group Accident and Health Insurance, and Part 12, Reinsurance.
94          (2) The commissioner may by rule waive other specific provisions of this title that the
95     commissioner considers inapplicable to limited health plans, upon a finding that the waiver
96     will not endanger the interests of:
97          (a) enrollees;
98          (b) investors; or
99          (c) the public.
100          (3) Title 16, Chapter 6a, Utah Revised Nonprofit Corporation Act, and Title 16,
101     Chapter 10a, Utah Revised Business Corporation Act, do not apply to an organization except as
102     specifically made applicable by:
103          (a) this chapter;
104          (b) a provision referenced under this chapter; or
105          (c) a rule adopted by the commissioner to deal with corporate law issues of health
106     maintenance organizations that are not settled under this chapter.
107          (4) (a) Whenever in this chapter, Chapter 5, Domestic Stock and Mutual Insurance
108     Corporations, or Chapter 14, Foreign Insurers, is made applicable to an organization, the
109     application is:
110          (i) of those provisions that apply to a mutual corporation if the organization is
111     nonprofit; and
112          (ii) of those that apply to a stock corporation if the organization is for profit.
113          (b) When Chapter 5, Domestic Stock and Mutual Insurance Corporations, or Chapter
114     14, Foreign Insurers, is made applicable to an organization under this chapter, "mutual" means
115     nonprofit organization.
116          (5) Solicitation of enrollees by an organization is not a violation of any provision of
117     law relating to solicitation or advertising by health professionals if that solicitation is made in
118     accordance with:

119          (a) this chapter; and
120          (b) Chapter 23a, Insurance Marketing - Licensing Producers, Consultants, and
121     Reinsurance Intermediaries.
122          (6) This title does not prohibit any health maintenance organization from meeting the
123     requirements of any federal law that enables the health maintenance organization to:
124          (a) receive federal funds; or
125          (b) obtain or maintain federal qualification status.
126          (7) Except as provided in Chapter 45, Managed Care Organizations, an organization is
127     exempt from statutes in this title or department rules that restrict or limit the organization's
128     freedom of choice in contracting with or selecting health care providers, including Section
129     31A-22-618.
130          (8) An organization is exempt from the assessment or payment of premium taxes
131     imposed by Sections 59-9-101 through 59-9-104.
132          Section 2. Section 31A-27a-403 is amended to read:
133          31A-27a-403. Continuance of coverage -- Health maintenance organizations.
134          (1) As used in this section:
135          (a) "Basic health care services" is as defined in Section 31A-8-101.
136          (b) "Enrollee" is as defined in Section 31A-8-101.
137          (c) "Health care" is as defined in Section 31A-1-301.
138          (d) "Health maintenance organization" is as defined in Section 31A-8-101.
139          (e) "Limited health plan" is as defined in Section 31A-8-101.
140          (f) (i) "Managed care organization" means an entity licensed by, or holding a certificate
141     of authority from, the department to furnish health care services or health insurance.
142          (ii) "Managed care organization" includes:
143          (A) a limited health plan;
144          (B) a health maintenance organization;
145          (C) a preferred provider organization;
146          (D) a fraternal benefit society; or
147          (E) an entity similar to an entity described in Subsections (1)(f)(ii)(A) through (D).
148          (iii) "Managed care organization" does not include:
149          (A) an insurer or other person that is eligible for membership in a guaranty association

150     under Chapter 28, Guaranty Associations;
151          (B) a mandatory state pooling plan;
152          (C) a mutual assessment company or an entity that operates on an assessment basis; or
153          (D) an entity similar to an entity described in Subsections (1)(f)(iii)(A) through (C).
154          (g) "Participating provider" means a provider who, under a contract with a managed
155     care organization authorized under Section 31A-8-407, agrees to provide health care services to
156     enrollees with an expectation of receiving payment:
157          (i) directly or indirectly, from the managed care organization; and
158          (ii) other than a copayment.
159          (h) "Participating provider contract" means the agreement between a participating
160     provider and a managed care organization authorized under Section 31A-8-407.
161          (i) "Preferred provider" means a provider who agrees to provide health care services
162     under an agreement authorized under Subsection 31A-22-617(1).
163          (j) "Preferred provider contract" means the written agreement between a preferred
164     provider and a managed care organization authorized under Subsection 31A-22-617(1).
165          (k) (i) Except as provided in Subsection (1)(k)(ii), "preferred provider organization"
166     means a person that:
167          (A) furnishes at a minimum, through a preferred provider, basic health care services to
168     an enrollee in return for prepaid periodic payments in an amount agreed to before the time
169     during which the health care may be furnished;
170          (B) is obligated to the enrollee to arrange for the services described in Subsection
171     (1)(k)(i)(A); and
172          (C) permits the enrollee to obtain health care services from a provider who is not a
173     preferred provider.
174          (ii) "Preferred provider organization" does not include:
175          (A) an insurer licensed under Chapter 7, Nonprofit Health Service Insurance
176     Corporations; or
177          (B) an individual who contracts to render professional or personal services that the
178     individual performs.
179          (l) "Provider" is as defined in Section 31A-8-101.
180          (m) "Uncovered expenditure" means a cost of health care services that is covered by an

181     organization for which an enrollee is liable in the event of the managed care organization's
182     insolvency.
183          (2) The rehabilitator or liquidator may take one or more of the actions described in
184     Subsections (2)(a) through (g) to assure continuation of health care coverage for enrollees of an
185     insolvent managed care organization.
186          (a) (i) Subject to Subsection (2)(a)(ii), a rehabilitator or liquidator may require a
187     participating provider or preferred provider to continue to provide the health care services the
188     provider is required to provide under the provider's participating provider contract or preferred
189     provider contract until the earlier of:
190          (A) 90 days after the day on which the following is filed:
191          (I) a petition for rehabilitation; or
192          (II) a petition for liquidation; or
193          (B) the day on which the term of the contract ends.
194          (ii) A requirement by the rehabilitator or liquidator under Subsection (2)(a)(i) that a
195     participating provider or preferred provider continue to provide health care services under the
196     provider's participating provider contract or preferred provider contract expires when health
197     care coverage for all enrollees of the insolvent managed care organization is obtained from
198     another managed care organization or insurer.
199          (b) (i) Subject to Subsection (2)(b)(ii), a rehabilitator or liquidator may reduce the fees
200     a participating provider or preferred provider is otherwise entitled to receive from the managed
201     care organization under the provider's participating provider contract or preferred provider
202     contract during the time period in Subsection (2)(a)(i).
203          (ii) Notwithstanding Subsection (2)(b)(i), a rehabilitator or liquidator may not reduce a
204     fee to less than 75% of the regular fee set forth in the provider's participating provider contract
205     or preferred provider contract.
206          (iii) An enrollee shall continue to pay the same copayments, deductibles, and other
207     payments for services received from a participating provider or preferred provider that the
208     enrollee is required to pay before the day on which the following is filed:
209          (A) the petition for rehabilitation; or
210          (B) the petition for liquidation.
211          (c) A participating provider or preferred provider shall:

212          (i) accept the amounts specified in Subsection (2)(b) as payment in full; and
213          (ii) relinquish the right to collect additional amounts from the insolvent managed care
214     organization's enrollee.
215          (d) Subsections (2)(b) and (c) apply to the fees paid to a provider who agrees to
216     provide health care services to an enrollee but is not a preferred or participating provider.
217          [(e) If the managed care organization is a health maintenance organization, Subsections
218     (2)(e)(i) through (vi) apply.]
219          (e) This subsection (2)(e) applies to a managed care organization that is a health
220     maintenance organization for a delinquency proceeding under this chapter that is initiated
221     before May 8, 2018.
222          (i) A solvent health maintenance organization licensed under Chapter 8, Health
223     Maintenance Organizations and Limited Health Plans, shall extend to the enrollees of an
224     insolvent health maintenance organization all rights, privileges, and obligations of being an
225     enrollee in the accepting health maintenance organization:
226          (A) subject to Subsections (2)(e)(ii), (iii), and (v);
227          (B) upon notification from and subject to the direction of the rehabilitator or liquidator
228     of an insolvent health maintenance organization licensed under Chapter 8, Health Maintenance
229     Organizations and Limited Health Plans; and
230          (C) if the solvent health maintenance organization operates within a portion of the
231     insolvent health maintenance organization's service area.
232          (ii) Notwithstanding Subsection (2)(e)(i), the accepting health maintenance
233     organization shall give credit to an enrollee for any waiting period already satisfied under the
234     enrollee's contract with the insolvent health maintenance organization.
235          (iii) A health maintenance organization accepting an enrollee of an insolvent health
236     maintenance organization under Subsection (2)(e)(i) shall charge the enrollee the premiums
237     applicable to the existing business of the accepting health maintenance organization.
238          (iv) A health maintenance organization's obligation to accept an enrollee under
239     Subsection (2)(e)(i) is limited in number to the accepting health maintenance organization's pro
240     rata share of all health maintenance organization enrollees in this state, as determined after
241     excluding the enrollees of the insolvent insurer.
242          (v) (A) The rehabilitator or liquidator of an insolvent health maintenance organization

243     shall take those measures that are possible to ensure that no health maintenance organization is
244     required to accept more than its pro rata share of the adverse risk represented by the enrollees
245     of the insolvent health maintenance organization.
246          (B) If the methodology used by the rehabilitator or liquidator to assign an enrollee is
247     one that can be expected to produce a reasonably equitable distribution of adverse risk, that
248     methodology and its results are acceptable under this Subsection (2)(e)(v).
249          (vi) (A) Notwithstanding Section 31A-27a-402, the rehabilitator or liquidator may
250     require all solvent health maintenance organizations to pay for the covered claims incurred by
251     the enrollees of the insolvent health maintenance organization.
252          (B) As determined by the rehabilitator or liquidator, payments required under this
253     Subsection (2)(e)(vi) may:
254          (I) begin as of the day on which the following is filed:
255          (Aa) the petition for rehabilitation; or
256          (Bb) the petition for liquidation; and
257          (II) continue for a maximum period through the time all enrollees are assigned pursuant
258     to this section.
259          (C) If the rehabilitator or liquidator makes an assessment under this Subsection
260     (2)(e)(vi), the rehabilitator or liquidator shall assess each solvent health maintenance
261     organization its pro rata share of the total assessment based upon its premiums from the
262     previous calendar year.
263          (D) (I) A solvent health maintenance organization required to pay for covered claims
264     under this Subsection (2)(e)(vi) may file a claim against the estate of the insolvent health
265     maintenance organization.
266          (II) Any claim described in Subsection (2)(e)(vi)(D)(I), if allowed by the rehabilitator
267     or liquidator, shall share in any distributions from the estate of the insolvent health
268     maintenance organization as a Class 3 claim.
269          (f) (i) A rehabilitator or liquidator may transfer, through sale or otherwise, the group
270     and individual health care obligations of the insolvent managed care organization to one or
271     more other managed care organizations or other insurers, if those other managed care
272     organizations and other insurers:
273          (A) are licensed to provide the same health care services in this state that are held by

274     the insolvent managed care organization; or
275          (B) have a certificate of authority to provide the same health care services in this state
276     that is held by the insolvent managed care organization.
277          (ii) The rehabilitator or liquidator may combine group and individual health care
278     obligations of the insolvent managed care organization in any manner the rehabilitator or
279     liquidator considers best to provide for continuous health care coverage for the maximum
280     number of enrollees of the insolvent managed care organization.
281          (iii) If the terms of a proposed transfer of the same combination of group and
282     individual policy obligations to more than one other managed care organization or insurer are
283     otherwise equal, the rehabilitator or liquidator shall give preference to the transfer of the group
284     and individual policy obligations of an insolvent managed care organization as follows:
285          (A) from one category of managed care organization to another managed care
286     organization of the same category, as follows:
287          (I) from a limited health plan to a limited health plan;
288          (II) from a health maintenance organization to a health maintenance organization;
289          (III) from a preferred provider organization to a preferred provider organization;
290          (IV) from a fraternal benefit society to a fraternal benefit society; and
291          (V) from an entity similar to an entity described in this Subsection (2)(f)(iii)(A) to a
292     category that is similar;
293          (B) from one category of managed care organization to another managed care
294     organization, regardless of the category of the transferee managed care organization; and
295          (C) from a managed care organization to a nonmanaged care provider of health care
296     coverage, including insurers.
297          (g) If an insolvent managed care organization has required surplus, a rehabilitator or
298     liquidator may use the insolvent managed care organization's required surplus to continue to
299     provide coverage for the insolvent managed care organization's enrollees, including paying
300     uncovered expenditures.
301          Section 3. Section 31A-27a-701 is amended to read:
302          31A-27a-701. Priority of distribution.
303          (1) (a) The priority of payment of distributions on unsecured claims shall be in
304     accordance with the order in which each class of claim is set forth in this section except as

305     provided in Section 31A-27a-702.
306          (b) All claims in each class shall be paid in full or adequate funds retained for the
307     claim's payment before a member of the next class receives payment.
308          (c) All claims within a class shall be paid substantially the same percentage.
309          (d) Except as provided in Subsections (2)(a)(i)(E), (2)(k), and (2)(m), subclasses may
310     not be established within a class.
311          (e) A claim by a shareholder, policyholder, or other creditor may not be permitted to
312     circumvent the priority classes through the use of equitable remedies.
313          (2) The order of distribution of claims shall be as follows:
314          (a) a Class 1 claim, which:
315          (i) is a cost or expense of administration expressly approved or ratified by the
316     liquidator, including the following:
317          (A) the actual and necessary costs of preserving or recovering the property of the
318     insurer;
319          (B) reasonable compensation for all services rendered on behalf of the administrative
320     supervisor or receiver;
321          (C) a necessary filing fee;
322          (D) the fees and mileage payable to a witness;
323          (E) an unsecured loan obtained by the receiver, which:
324          (I) unless its terms otherwise provide, has priority over all other costs of
325     administration; and
326          (II) absent agreement to the contrary, shares pro rata with all other claims described in
327     this Subsection (2)(a)(i)(E); and
328          (F) an expense approved by the rehabilitator of the insurer, if any, incurred in the
329     course of the rehabilitation that is unpaid at the time of the entry of the order of liquidation; and
330          (ii) except as expressly approved by the receiver, excludes any expense arising from a
331     duty to indemnify a director, officer, or employee of the insurer which expense, if allowed, is a
332     Class 7 claim;
333          (b) a Class 2 claim, which:
334          (i) is a reasonable expense of a guaranty association, including overhead, salaries, or
335     other general administrative expenses allocable to the receivership such as:

336          (A) an administrative or claims handling expense;
337          (B) an expense in connection with arrangements for ongoing coverage; and
338          (C) in the case of a property and casualty guaranty association, a loss adjustment
339     expense, including:
340          (I) an adjusting or other expense; and
341          (II) a defense or cost containment expense; and
342          (ii) excludes an expense incurred in the performance of duties under Section
343     31A-28-112 or similar duties under the statute governing a similar organization in another
344     state;
345          (c) a Class 3 claim, which:
346          (i) is:
347          (A) a claim under a policy of insurance including a third party claim;
348          (B) a claim under an annuity contract or funding agreement;
349          (C) a claim under a nonassessable policy for unearned premium;
350          (D) a claim of an obligee and, subject to the discretion of the receiver, a completion
351     contractor under a surety bond or surety undertaking, except for:
352          (I) a bail bond;
353          (II) a mortgage guaranty;
354          (III) a financial guaranty; or
355          (IV) other form of insurance offering protection against investment risk or warranties;
356          (E) a claim by a principal under a surety bond or surety undertaking for wrongful
357     dissipation of collateral by the insurer or its agents;
358          (F) an indemnity payment on:
359          (I) a covered claim; or
360          (II) for a delinquency proceeding under this chapter that is initiated before May 8,
361     2018, a payment for the continuation of coverage made by an entity responsible for the
362     payment of a claim or continuation of coverage of an insolvent health maintenance
363     organization;
364          (G) a claim for unearned premium;
365          (H) a claim incurred during the extension of coverage provided for in Sections
366     31A-27a-402 and 31A-27a-403; or

367          (I) all other claims incurred in fulfilling the statutory obligations of a guaranty
368     association not included in Class 2, including:
369          (I) an indemnity payment on covered claims; and
370          (II) in the case of a life and health guaranty association, a claim:
371          (Aa) as a creditor of the impaired or insolvent insurer for a payment of and liabilities
372     incurred on behalf of a covered claim or covered obligation of the insurer; and
373          (Bb) for the funds needed to reinsure the obligations described under this Subsection
374     (2)(c)(i)(I)(II) with a solvent insurer; and
375          (ii) notwithstanding any other provision of this chapter, excludes the following which
376     shall be paid under Class 7, except as provided in this section:
377          (A) an obligation of the insolvent insurer arising out of a reinsurance contract;
378          (B) an obligation that is incurred pursuant to an occurrence policy or reported pursuant
379     to a claims made policy after:
380          (I) the expiration date of the policy;
381          (II) the policy is replaced by the insured;
382          (III) the policy is canceled at the insured's request; or
383          (IV) the policy is canceled as provided in this chapter;
384          (C) an obligation to an insurer, insurance pool, or underwriting association and the
385     insurer's, insurance pool's, or underwriting association's claim for contribution, indemnity, or
386     subrogation, equitable or otherwise, except for direct claims under a policy where the insurer is
387     the named insured;
388          (D) an amount accrued as punitive or exemplary damages unless expressly covered
389     under the terms of the policy, which shall be paid as a claim in Class 9;
390          (E) a tort claim of any kind against the insurer;
391          (F) a claim against the insurer for bad faith or wrongful settlement practices; and
392          (G) a claim of a guaranty association for assessments not paid by the insurer, which
393     claims shall be paid as claims in Class 7; and
394          (iii) notwithstanding Subsection (2)(c)(ii)(B), does not exclude an unearned premium
395     claim on a policy, other than a reinsurance agreement;
396          (d) a Class 4 claim, which is a claim under a policy for mortgage guaranty, financial
397     guaranty, or other forms of insurance offering protection against investment risk or warranties;

398          (e) a Class 5 claim, which is a claim of the federal government not included in Class 3
399     or 4;
400          (f) a Class 6 claim, which is a debt due an employee for services or benefits:
401          (i) to the extent that the expense:
402          (A) does not exceed the lesser of:
403          (I) $5,000; or
404          (II) two months' salary; and
405          (B) represents payment for services performed within one year before the day on which
406     the initial order of receivership is issued; and
407          (ii) which priority is in lieu of any other similar priority that may be authorized by law
408     as to wages or compensation of employees;
409          (g) a Class 7 claim, which is a claim of an unsecured creditor not included in Classes 1
410     through 6, including:
411          (i) a claim under a reinsurance contract;
412          (ii) a claim of a guaranty association for an assessment not paid by the insurer; and
413          (iii) other claims excluded from Class 3 or 4, unless otherwise assigned to Classes 8
414     through 13;
415          (h) subject to Subsection (3), a Class 8 claim, which is:
416          (i) a claim of a state or local government, except a claim specifically classified
417     elsewhere in this section; or
418          (ii) a claim for services rendered and expenses incurred in opposing a formal
419     delinquency proceeding;
420          (i) a Class 9 claim, which is a claim for penalties, punitive damages, or forfeitures,
421     unless expressly covered under the terms of a policy of insurance;
422          (j) a Class 10 claim, which is, except as provided in Subsections 31A-27a-601(2) and
423     31A-27a-601(3), a late filed claim that would otherwise be classified in Classes 3 through 9;
424          (k) subject to Subsection (4), a Class 11 claim, which is:
425          (i) a surplus note;
426          (ii) a capital note;
427          (iii) a contribution note;
428          (iv) a similar obligation;

429          (v) a premium refund on an assessable policy; or
430          (vi) any other claim specifically assigned to this class;
431          (l) a Class 12 claim, which is a claim for interest on an allowed claim of Classes 1
432     through 11, according to the terms of a plan to pay interest on allowed claims proposed by the
433     liquidator and approved by the receivership court; and
434          (m) subject to Subsection (4), a Class 13 claim, which is a claim of a shareholder or
435     other owner arising out of:
436          (i) the shareholder's or owner's capacity as shareholder or owner or any other capacity;
437     and
438          (ii) except as the claim may be qualified in Class 3, 4, 7, or 12.
439          (3) To prove a claim described in Class 8, the claimant shall show that:
440          (a) the insurer that is the subject of the delinquency proceeding incurred the fee or
441     expense on the basis of the insurer's best knowledge, information, and belief:
442          (i) formed after reasonable inquiry indicating opposition is in the best interests of the
443     insurer;
444          (ii) that is well grounded in fact; and
445          (iii) is warranted by existing law or a good faith argument for the extension,
446     modification, or reversal of existing law; and
447          (b) opposition is not pursued for any improper purpose, such as to harass, to cause
448     unnecessary delay, or to cause needless increase in the cost of the litigation.
449          (4) (a) A claim in Class 11 is subject to a subordination agreement related to other
450     claims in Class 11 that exist before the entry of a liquidation order.
451          (b) A claim in Class 13 is subject to a subordination agreement, related to other claims
452     in Class 13 that exist before the entry of a liquidation order.
453          Section 4. Section 31A-27a-702 is amended to read:
454          31A-27a-702. Health maintenance organization claims.
455          (1) [In] For a delinquency proceeding under this chapter that is initiated before May 8,
456     2018, in the liquidation of a health maintenance organization, a claim for uncovered
457     expenditures has priority over a Class 3 claim as provided for in Section 31A-27a-701.
458          (2) A claim other than one described in Subsection (1) shall follow the priority of
459     distribution outlined in Section 31A-27a-701.

460          Section 5. Section 31A-28-102 is amended to read:
461          31A-28-102. Purpose.
462          (1) The purpose of this part is to protect, subject to certain limitations, the persons
463     specified in [Subsection] Subsections 31A-28-103(1) through (5) against failure in the
464     performance of contractual obligations, under a life [and] insurance, accident and health
465     insurance [policy], or annuity policy or contract specified in [Subsection] Subsections
466     31A-28-103[(2)](6) and (7), because of the impairment or insolvency of the member insurer
467     that issued the policy or contract.
468          (2) To provide the protection described in Subsection (1):
469          (a) the Utah Life and Health Insurance Guaranty Association, which currently exists, is
470     continued to pay benefits and to continue coverages as limited by this part; and
471          (b) members of the association are subject to assessment to provide funds to carry out
472     the purpose of this part.
473          Section 6. Section 31A-28-103 is amended to read:
474          31A-28-103. Coverage and limitations.
475          (1) [(a)] This part provides coverage for a policy or contract specified in [Subsection
476     (2)] Subsections (6) and (7) to a person who is:
477          [(i)] (a) except for a nonresident certificate holder under a group policy or contract, a
478     beneficiary, assignee, or payee of a person covered by Subsection [(1)(a)(ii)] (1)(b), including a
479     health care provider rendering services covered under an accident and health insurance policy
480     or certificate, regardless of where that person resides[, except for a nonresident certificate
481     holder under a group policy or contract]; or
482          [(ii)] (b) an owner of or a certificate holder or enrollee under a policy or contract, other
483     than an unallocated annuity contract or structured settlement annuity, if the owner, enrollee, or
484     certificate holder is:
485          [(A)] (i) a resident of Utah; or
486          [(B)] (ii) not a resident of Utah, but only if:
487          [(I)] (A) the member insurer that issued the policy or contract is domiciled in this state;
488          [(II)] (B) the state in which the person resides has an association similar to the
489     association created by this part; and
490          [(III)] (C) the person is not eligible for coverage by an association in any other state

491     because the insurer was not licensed in the [state] other states at the time specified in the
492     [state's] other states' guaranty association's [law] laws.
493          [(b)] (2) For an unallocated annuity contract specified in [Subsection (2)] Subsections
494     (6) and (7):
495          [(i)] (a) Subsection (1)[(a)] does not apply; and
496          [(ii)] (b) except as provided in Subsections [(1)(d) and (1)(e)] (4) and (5), this part
497     provides coverage for the unallocated annuity contract specified in Subsection (2) to a person
498     who is:
499          [(A)] (i) the owner of the unallocated annuity contract if the contract is issued to or in
500     connection with a specific benefit plan whose plan sponsor has its principal place of business
501     in this state; [and] or
502          [(B)] (ii) an owner of an unallocated annuity contract issued to or in connection with a
503     government lottery if the owner is a resident.
504          [(c)] (3) For a structured settlement annuity specified in [Subsection (2)] Subsections
505     (6) and (7):
506          [(i)] (a) Subsection (1)[(a)] does not apply; and
507          [(ii)] (b) except as provided in Subsections [(1)(d) and (1)(e)] (4) and (5), this part
508     provides coverage for the structured settlement annuity specified in [Subsection (2)]
509     Subsections (6) and (7) to a person who is a payee under a structured settlement annuity, or
510     beneficiary of a payee if the payee is deceased, if the payee:
511          [(A)] (i) is a resident, regardless of where the contract owner resides; [or]
512          [(B)] (ii) is not a resident, but only if one or more of the contract owners of the
513     structured settlement annuity is a resident, and the payee, beneficiary, or contract owner is not
514     eligible for coverage by the association of the state in which the payee or contract owner
515     resides; or
516          (iii) is not a resident, but only if:
517          (A) no contract owner of the structured settlement annuity is a resident[, but:];
518          [(I)] (B) the insurer that issued the structured settlement annuity is domiciled in this
519     state;
520          [(II)] (C) the state in which the contract owner resides has an association similar to the
521     association created by this part; and

522          [(III)] (D) the payee, beneficiary, or the contract owner is not eligible for coverage by
523     the association of the state in which the payee or contract owner resides.
524          [(d)] (4) This part may not provide coverage for a policy or contract specified in
525     [Subsection (2) to] Subsections (6) and (7) to a person who:
526          [(i)] (a) [a person who] is a payee or beneficiary of a contract owner resident of this
527     state, if the payee or beneficiary is afforded any coverage by the association of another state;
528     [or]
529          [(ii)] (b) [a person] is covered under Subsection [(1)(b)] (2), if any coverage is
530     provided to the person by the association of another state[.]; or
531          (c) acquires rights to receive payments through a structured settlement factoring
532     transaction, regardless of whether the transaction occurred before or after 26 U.S.C. Sec.
533     5891(c)(3)(A) became effective.
534          [(e) (i)] (5) (a) This part provides coverage for a policy or contract specified in
535     [Subsection (2)] Subsections (6) and (7) to a person who is a resident of this state and, in
536     special circumstances, to a nonresident.
537          [(ii)] (b) To avoid duplicate coverage, if a person who would otherwise receive
538     coverage under this part is provided coverage under the laws of any other state, the person may
539     not be provided coverage under this part.
540          [(iii)] (c) In determining the application of this Subsection [(1)(e)] (5) when a person
541     could be covered by the association of more than one state, whether as an owner, payee,
542     enrollee beneficiary, or assignee, this part shall be construed in conjunction with other state
543     laws to result in coverage by only one association.
544          [(2) (a) (i)] (6) (a) Except as limited by this part, this part provides coverage to a person
545     specified in [Subsection (1)] Subsections (1) through (5) for:
546          [(A)] (i) a direct[,] nongroup life insurance, direct accident and health insurance, or
547     direct annuity policy or contract;
548          [(B)] (ii) a supplemental contract to a policy or contract described in Subsection
549     [(2)(a)(i)(A)] (6)(a)(i);
550          [(C)] (iii) a certificate under a direct group policy or contract; and
551          [(D)] (iv) an unallocated annuity contract issued by a member insurer.
552          [(ii)] (b) For purposes of Subsection [(2)(a)(i)] (6)(a), an annuity contract and a

553     certificate under a group annuity contract includes:
554          [(A)] (i) a guaranteed investment contract;
555          [(B)] (ii) a deposit administration contract;
556          [(C)] (iii) an unallocated funding agreement;
557          [(D)] (iv) an allocated funding agreement;
558          [(E)] (v) a structured settlement annuity;
559          [(F)] (vi) an annuity issued to or in connection with a government lottery; and
560          [(G)] (vii) an immediate or deferred annuity contract.
561          [(b)] (7) This part does not provide coverage for:
562          [(i)] (a) a portion of a policy or contract:
563          [(A)] (i) not guaranteed by the member insurer; or
564          [(B)] (ii) under which the risk is borne by the policy or contract owner;
565          [(ii)] (b) a policy or contract of reinsurance, unless:
566          [(A)] (i) an assumption certificate is issued before the coverage date;
567          [(B)] (ii) the assumption certificate required by Subsection [(2)(b)(ii)(A)] (7)(b)(i) is in
568     effect pursuant to the reinsurance policy or contract; and
569          [(C)] (iii) the reinsurance contract is approved by the appropriate regulatory authorities;
570          [(iii)] (c) except as provided in Subsection (11)(e), a portion of a policy or contract to
571     the extent that the rate of interest on which [it] the policy or contract is based, or the interest
572     rate, crediting rate, or similar factor determined by use of an index or other external reference
573     stated in the policy or contract employed in calculating returns or changes in value[, if the
574     interest rate, crediting rate, or similar factor] exceeds:
575          [(A) is not excluded from coverage by Subsection (2)(b)(xi);]
576          [(B) averaged over the period of four years before the date on which the association
577     becomes obligated with respect to the policy or contract, exceeds]
578          (i) a rate of interest determined by subtracting two percentage points from Moody's
579     Corporate Bond Yield Average averaged:
580          [(I) for that same four-year period; or]
581          (A) over the period of four years before the coverage date with respect to the policy or
582     contract; or
583          [(II)] (B) for the corresponding lesser period if the policy or contract was issued less

584     than four years before the association became obligated; [and] or
585          [(C)] (ii) [exceeds the] a rate of interest determined by subtracting three percentage
586     points from Moody's Corporate Bond Yield Average as most recently available as determined
587     on or after the earlier of [the day on which the member insurer becomes]:
588          [(I)] (A) the day on which the member insurer becomes an impaired insurer [under this
589     part]; or
590          [(II)] (B) the day on which the member insurer becomes an insolvent insurer [under
591     this part];
592          [(iv)] (d) a portion of a policy or contract issued to a plan or program of an employer,
593     association, or other person to provide life, accident and health, or annuity benefits to its
594     employees, members, or others, to the extent that the plan or program is self-funded or
595     uninsured, including benefits payable by an employer, association, or other person under:
596          [(A)] (i) a multiple employer welfare arrangement, as that term is defined in 29 U.S.C.
597     Sec. [1144] 1002;
598          [(B)] (ii) a minimum premium group insurance plan;
599          [(C)] (iii) a stop-loss group insurance plan; or
600          [(D)] (iv) an administrative services only contract;
601          [(v)] (e) a portion of a policy or contract to the extent that it provides:
602          [(A)] (i) a dividend;
603          [(B)] (ii) an experience rating credit;
604          [(C)] (iii) voting rights; or
605          [(D)] (iv) payment of a fee or allowance to any person, including the policy or contract
606     owner, in connection with the service to or administration of the policy or contract;
607          [(vi)] (f) an unallocated annuity contract issued to or in connection with a benefit plan
608     protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the
609     federal Pension Benefit Guaranty Corporation has yet become liable to make any payment with
610     respect to the benefit plan;
611          [(vii)] (g) a portion of an unallocated annuity contract that is not issued to or in
612     connection with:
613          [(A)] (i) a specific benefit plan of:
614          [(I)] (A) employees;

615          [(II)] (B) a union; or
616          [(III)] (C) an association of natural persons; or
617          [(B)] (ii) a government lottery;
618          [(viii)] (h) a portion of a policy or contract to the extent that the assessment required by
619     Section 31A-28-109 that applies to the policy or contract is preempted by federal or state law;
620          [(ix)] (i) an obligation that does not arise under the express written terms of the policy
621     or contract issued by [an] a member insurer to the enrollee, certificate holder, contract owner,
622     or policy owner, including:
623          [(A)] (i) a claim based on marketing materials;
624          [(B)] (ii) a claim based on a side letter, rider, or other document that is issued by the
625     member insurer without meeting applicable policy or contract form filing or approval
626     requirements;
627          [(C)] (iii) a misrepresentation regarding a policy or contract benefit;
628          [(D)] (iv) an extra-contractual claim;
629          [(E)] (v) a claim for penalties; or
630          [(F)] (vi) a claim for consequential or incidental damages;
631          [(x)] (j) a contract that establishes the member insurer's obligations to provide a book
632     value accounting guaranty for defined contribution benefit plan participants by reference to a
633     portfolio of assets that is owned by a person that is:
634          [(A) (I)] (i) (A) the benefit plan; or
635          [(II)] (B) the benefit plan's trustee; and
636          [(B)] (ii) not an affiliate of the member insurer;
637          [(xi)] (k) a portion of a policy or contract to the extent it provides for interest or other
638     changes in value:
639          [(A)] (i) to be determined by the use of an index or other external reference stated in
640     the policy or contract; and
641          (ii) as of the date the member insurer becomes an impaired or insolvent insurer,
642     whichever occurs earlier:
643          [(B) (I)] (A) that have not been credited to the policy or contract; or
644          [(II)] (B) as to which the policy or contract owner's rights are subject to forfeiture [as of
645     the date the member insurer becomes an impaired or insolvent insurer under this part; and];

646          [(xii)] (l) a policy or contract providing hospital, medical, prescription drug, or other
647     health care benefit pursuant to [United States Code, Title 42, Subchapter XVIII, Chapter 7, Part
648     C or D, or federal regulations issued under Part C or D.]:
649          (i) Part C or D of Title XVIII of the Social Security Act, 42 U.S.C. 1395 et seq.; or
650          (ii) Title XIX of the Social Security Act, 42 U.S.C. Sec. 1396 et seq.; or
651          (m) a structured settlement annuity benefit to which a payee or beneficiary has
652     transferred the payee or beneficiary's rights in a structured settlement factoring transaction,
653     regardless of whether the transaction occurred before or after 26 U.S.C. Sec. 5891(c)(3)(A)
654     became effective.
655          [(3)] (8) [Subject to Subsection (4), the] The benefits for which the association may
656     become liable may not exceed the lesser of:
657          (a) the contractual obligations for which the member insurer is liable or would have
658     been liable if it were not an impaired or insolvent insurer;
659          (b) with respect to one life, regardless of the number of policies or contracts:
660          (i) for a life insurance policy:
661          (A) if the insured died before the coverage date, $500,000 of the death benefit;
662          (B) if the insurer received a valid request for cash surrender before the coverage date
663     but has not paid the cash surrender value before the coverage date, $200,000 of cash surrender
664     benefits; or
665          (C) if neither Subsection [(3)] (8)(b)(i)(A) nor (B) [apply] applies, the covered portion
666     of each benefit provided under the policy;
667          (ii) for an annuity contract, the covered portion of each benefit provided under the
668     contract; and
669          (iii) for an accident and health insurance policy or contract:
670          (A) classified as [health insurance] a health benefit plan, $500,000; or
671          (B) not classified as [health insurance] a health benefit plan, the covered portion of
672     each benefit provided under the policy;
673          (c) for an individual[, or a beneficiary of that individual if the individual is deceased,]
674     participating in a governmental retirement plan established under Section 401, 403(b), or 457,
675     Internal Revenue Code, covered by an unallocated annuity contract, [in the aggregate] or a
676     beneficiary of that individual if the individual is deceased, $250,000 in present value of annuity

677     benefits, in the aggregate, including:
678          (i) net cash surrender; and
679          (ii) net cash withdrawal values; or
680          (d) for a payee of a structured settlement annuity or a beneficiary of the payee if the
681     payee is deceased, the limits set forth in Subsection [(3)] (8)(b).
682          [(4)] (9) Notwithstanding [Subsections (3)(a) through (d)] Subsection (8), the
683     association may not be obligated to cover more than:
684          (a) an aggregate of $500,000 in benefits for any one life under:
685          (i) Subsection [(3)] (8)(b)(i)(A);
686          (ii) Subsection [(3)] (8)(b)(i)(B);
687          (iii) Subsection [(3)] (8)(b)(ii); and
688          (iv) Subsection [(3)] (8)(b)(iii)(B);
689          (b) $5,000,000 in benefits for one owner of multiple nongroup policies of life
690     insurance:
691          (i) whether the policy or contract owner is an individual, firm, corporation, or other
692     person;
693          (ii) whether the persons insured are officers, managers, employees, or other persons;
694     and
695          (iii) regardless of the number of policies and contracts held by the owner; and
696          (c) $5,000,000 in benefits, regardless of the number of contracts held by the contract
697     owner or plan sponsor, for:
698          (i) one contract owner provided coverage under Subsection [(1)(b)(ii)(B)] (2)(b)(ii); or
699          (ii) one plan sponsor whose plans own, directly or in trust, one or more unallocated
700     annuity contracts not included in Subsection [(3)] (8)(b)(ii).
701          [(5)] (10) (a) Notwithstanding Subsection [(4)] (9)(c) and except as provided in
702     Subsection [(5)] (10)(b), the association shall provide coverage if one or more unallocated
703     annuity contracts are:
704          (i) covered contracts under this part;
705          (ii) owned by a trust or other entity for the benefit of two or more plan sponsors; and
706          (iii) the largest interest in the trust or entity owning the contract or contracts is held by
707     a plan sponsor whose principal place of business is in the state.

708          (b) [Notwithstanding Subsection (5)(a) the] The association may not be obligated to
709     cover more than $5,000,000 in benefits with respect to the unallocated contracts described in
710     Subsection [(5)] (10)(a).
711          [(6)] (11) (a) The limitations set forth in Subsections [(3) and (4)] (8) and (9) are
712     limitations on the benefits for which the association is obligated before taking into account:
713          (i) the association's subrogation and assignment rights; or
714          (ii) the extent to which those benefits could be provided out of the assets of the
715     impaired or insolvent insurer attributable to covered policies.
716          (b) The costs of the association's obligations under this part may be met by the use of
717     assets:
718          (i) attributable to covered policies, as described in Subsection 31A-28-114(3)(c); or
719          (ii) reimbursed to the association pursuant to the association's subrogation and
720     assignment rights.
721          [(c) On and after the date on which the association becomes obligated for a covered
722     policy, the association may not be obligated to provide benefits to the extent that the benefits
723     are based on an interest rate, crediting rate, or similar factor determined by use of an index or
724     other external reference stated in the policy or contract employed in calculating returns or
725     changes in value if the interest rate, crediting rate, or similar factor exceeds the rate of interest
726     determined by subtracting three percentage points from Moody's Corporate Bond Yield
727     Average as most recently available on each date on which interest is credited or attributed to
728     the covered policy.]
729          (c) Benefits provided by a long-term care rider to a life insurance policy or annuity
730     contract shall be considered the same type of benefits as the base life insurance policy or
731     annuity contract to which the long-term care rider relates.
732          (d) In performing its obligations to provide coverage under Section 31A-28-108, the
733     association may not be required to guarantee, assume, reinsure, reissue, perform, or cause to be
734     guaranteed, assumed, reinsured, reissued, or performed a contractual obligation of the insolvent
735     or impaired insurer under a covered policy or contract that does not materially affect the
736     economic values or economic benefits of the covered policy or contract.
737          (e) The exclusion from coverage described in Subsection (7)(c) does not apply to any
738     portion of a policy or contract, including a rider, that provides long-term care or any other

739     accident and health insurance benefit.
740          Section 7. Section 31A-28-105 is amended to read:
741          31A-28-105. Definitions.
742          As used in this part:
743          (1) "Association" means the Utah Life and Health Insurance Guaranty Association
744     continued under Section 31A-28-106.
745          (2) (a) "Authorized assessment" or "authorized," when used in the context of
746     assessments, means that the board of directors passed a resolution [whereby] by which an
747     assessment will be called immediately or in the future from member insurers for an amount [set
748     forth] specified in the resolution.
749          (b) An assessment is authorized when the resolution is passed.
750          (3) "Benefit plan" means a specific benefit plan of:
751          (a) employees;
752          (b) a union; or
753          (c) an association of natural persons.
754          (4) "Board of directors" means the board of directors established under Section
755     31A-28-107.
756          [(4)] (5) (a) "Called assessment" or "called," when used in the context of assessments,
757     means that the association issued a notice to member insurers requiring that an authorized
758     assessment be paid within the time frame set forth in the notice.
759          (b) All or part of an authorized assessment becomes a called assessment when notice is
760     mailed by the association to member insurers.
761          [(5)] (6) "Cash surrender value" means the cash surrender value without reduction for
762     an outstanding policy loan or surrender charge.
763          [(6)] (7) "Contractual obligation" means an obligation under any of the following for
764     which coverage is provided under Section 31A-28-103:
765          (a) a policy or contract;
766          (b) a certificate under a group policy or contract; or
767          (c) a portion of a policy or contract.
768          [(7)] (8) "Coverage date" means the date on which the association becomes responsible
769     for the obligations of a member insurer.

770          [(8)] (9) "Covered policy" or "covered contract" means any of the following for which
771     coverage is provided in Section 31A-28-103:
772          (a) a policy or contract; or
773          (b) a portion of a policy or contract.
774          [(9)] (10) (a) "Covered portion" means:
775          (i) for a covered policy that has a cash surrender value, a fraction calculated with:
776          (A) the numerator being the lesser of:
777          (I) (Aa) $200,000 for a life insurance policy; [and] or
778          (Bb) $250,000 for a covered policy that is not a life insurance policy; or
779          (II) the cash surrender value of the policy; and
780          (B) the denominator being the cash surrender value of the policy; and
781          (ii) for a covered policy that does not have a cash surrender value, a fraction calculated
782     with:
783          (A) the numerator being the lesser of:
784          (I) (Aa) $200,000 for a life insurance policy; [or] and
785          (Bb) $250,000 for a covered policy that is not a life insurance policy; or
786          (II) the policy's minimum statutory reserve; and
787          (B) the denominator being the policy's minimum statutory reserve.
788          (b) [The] For purposes of this Subsection (10)(b), the cash surrender value and the
789     minimum statutory reserve are determined as of the coverage date in accordance with the
790     exclusions in Subsection 31A-28-103[(2)(b)(iii)](7)(c).
791          [(10)] (11) "Extra-contractual claim" includes a claim relating to:
792          (a) bad faith in the payment of a claim;
793          (b) punitive or exemplary damages; or
794          (c) attorney fees and costs.
795          [(11)] (12) "Impaired insurer" means a member insurer that is not an insolvent insurer
796     and:
797          (a) is considered by the commissioner to be hazardous pursuant to this title; or
798          (b) is placed under an order of rehabilitation or conservation by a court of competent
799     jurisdiction.
800          [(12)] (13) "Insolvent insurer" means a member insurer that is placed under an order of

801     liquidation by a court of competent jurisdiction with a finding of insolvency.
802          [(13)] (14) (a) "Member insurer" means an insurer that holds a certificate of authority
803     to transact in this state any kind of insurance for which coverage is provided under Section
804     31A-28-103.
805          (b) "Member insurer" includes an insurer whose license or certificate of authority in
806     this state may have been:
807          (i) suspended;
808          (ii) revoked;
809          (iii) not renewed; or
810          (iv) voluntarily withdrawn.
811          (c) "Member insurer" does not include:
812          (i) a for-profit or nonprofit:
813          (A) hospital;
814          (B) hospital service organization; or
815          (C) medical service organization;
816          [(ii) a health maintenance organization;]
817          [(iii)] (ii) a fraternal benefit society;
818          [(iv)] (iii) a mandatory state pooling plan;
819          [(v)] (iv) a mutual assessment company or other person that operates on an assessment
820     basis;
821          [(vi)] (v) an insurance exchange;
822          [(vii)] (vi) an organization described in Subsection 31A-22-1305(2); or
823          [(viii)] (vii) an entity similar to an entity described in Subsections [(13)] (14)(c)(i)
824     through [(vii)] (vi).
825          [(14)] (15) "Moody's Corporate Bond Yield Average" means the Monthly Average
826     Corporates as published by Moody's Investors Service, Inc., or any successor to Moody's
827     Investors Service, Inc.
828          [(15)] (16) (a) "Owner" of a policy or contract, "policyholder," "policy owner," or
829     "contract owner" means a person who:
830          (i) is identified as the legal owner under the terms of the policy or contract; or
831          (ii) is otherwise vested with legal title to the policy or contract through a valid

832     assignment:
833          (A) completed in accordance with the terms of the policy or contract; and
834          (B) properly recorded as the owner on the books of the insurer.
835          (b) "Owner," "policyholder," "policy owner," or "contract owner" does not include a
836     person with only a beneficial interest in a policy or contract.
837          [(16) "Person" means:]
838          [(a) an individual;]
839          [(b) a corporation;]
840          [(c) a limited liability company;]
841          [(d) a partnership;]
842          [(e) an association;]
843          [(f) a governmental body or entity;]
844          [(g) a trust; or]
845          [(h) a voluntary organization.]
846          [(17) "Plan sponsor" means:]
847          [(a) the employer, in the case of a benefit plan established or maintained by a single
848     employer;]
849          [(b) the employee organization, in the case of a benefit plan established or maintained
850     by an employee organization; or]
851          [(c) the association, committee, joint board of trustees, or other similar group of
852     representatives of the parties who establish or maintain a benefit plan, in the case of a benefit
853     plan established or maintained by:]
854          [(i) two or more employers; or]
855          [(ii) jointly by:]
856          [(A) one or more employers; and]
857          [(B) one or more employee organizations.]
858          [(18)] (17) (a) ["Premiums"] Notwithstanding Section 31A-1-301, "premiums" means
859     an amount or consideration received on covered policies or contracts, less:
860          (i) returned:
861          (A) premiums;
862          (B) considerations; and

863          (C) deposits; and
864          (ii) dividends and experience credits.
865          (b) (i) "Premiums" does not include an amount or consideration received for:
866          (A) a policy or contract for which coverage is not provided under [Subsection
867     31A-28-103(2)] Subsections 31A-28-103(6) and (7); or
868          (B) the portion of a policy or contract for which coverage is not provided under
869     [Subsection 31A-28-103(2)] Subsections 31A-28-103(6) and (7).
870          (ii) Notwithstanding Subsection [(18)] (17)(b)(i), an assessable premium may not be
871     reduced on account of:
872          (A) Subsection 31A-28-103[(2)(b)(iii)](7)(c) relating to interest limitations; [and] or
873          (B) Subsection 31A-28-103[(3)](8) relating to limitations for:
874          (I) one individual;
875          (II) any one participant; [and] or
876          (III) any one policy or contract owner.
877          (c) "Premiums" does not include premiums in excess of $5,000,000:
878          (i) on an unallocated annuity contract not issued under a governmental retirement plan
879     established under Section 401, 403(b), or 457, Internal Revenue Code; or
880          (ii) for multiple nongroup policies of life insurance owned by one owner:
881          (A) whether the policy or contract owner is an individual, firm, corporation, or other
882     person;
883          (B) whether the persons insured are officers, managers, employees, or other persons;
884     and
885          (C) regardless of the number of policies or contracts held by the owner.
886          [(19)] (18) (a) [Except as provided in Subsection (19)(b), "principal] "Principal place
887     of business" of a plan sponsor or a person other than a natural person means the single state:
888          (i) in which the natural persons who establish policy for the direction, control, and
889     coordination of the operations of the entity as a whole primarily exercise the function; and
890          (ii) determined by the association in its reasonable judgment by considering the
891     following factors:
892          (A) the state in which the primary executive and administrative headquarters of the
893     entity are located;

894          (B) the state in which the principal office of the chief executive officer of the entity is
895     located;
896          (C) the state in which the board of directors, or similar governing person or persons, of
897     the entity conducts the majority of its meetings;
898          (D) the state in which the executive or management committee of the board of
899     directors, or similar governing person, of the entity conducts the majority of its meetings;
900          (E) the state from which the management of the overall operations of the entity is
901     directed; and
902          (F) in the case of a benefit plan sponsored by affiliated companies comprising a
903     consolidated corporation, the state in which the holding company or controlling affiliate has its
904     principal place of business as determined using the factors described in Subsections [(19)]
905     (18)(a)(ii)(A) through (E).
906          (b) Notwithstanding Subsection [(19)] (18)(a), in the case of a plan sponsor, if more
907     than 50% of the participants in the benefit plan are employed in a single state, the state where
908     more than 50% of the participants are employed is considered to be the principal place of
909     business of the plan sponsor.
910          (c) (i) The principal place of business of a plan sponsor of a benefit plan [described in
911     Subsection (3)] is considered to be the principal place of business of the association,
912     committee, joint board of trustees, or other similar group of representatives of the parties who
913     establish or maintain the benefit plan.
914          (ii) If [for a benefit plan described in Subsection (3)] there is not a specific or clear
915     designation of a principal place of business under Subsection [(19)] (18)(c)(i) for a benefit
916     plan, the principal place of business is considered to be the principal place of business of the
917     employer or employee organization that has the largest investment in the benefit plan.
918          [(20)] (19) "Receiver" means, as the context requires:
919          (a) a rehabilitator;
920          (b) a liquidator;
921          (c) an ancillary receiver; or
922          (d) a conservator.
923          [(21)] (20) "Receivership court" means the court in the insolvent or impaired insurer's
924     state having jurisdiction over the conservation, rehabilitation, or liquidation of the member

925     insurer.
926          [(22)] (21) (a) "Resident" means a person:
927          (i) to whom a contractual obligation is owed; and
928          (ii) who resides in this state on the earlier of the date a member insurer is an:
929          (A) impaired insurer; or
930          (B) insolvent insurer.
931          (b) A person may be a resident of only one state, which in the case of a person other
932     than a natural person is where its principal place of business is located.
933          (c) A citizen of the United States that is either a resident of a foreign country or a
934     resident of a United States possession, territory, or protectorate that does not have an
935     association similar to the association created by this part, is considered a resident of the state of
936     domicile of the member insurer that issued the policy or contract.
937          [(23) "State" means:]
938          [(a) a state;]
939          [(b) the District of Columbia;]
940          [(c) Puerto Rico; and]
941          [(d) a United States possession, territory, or protectorate.]
942          [(24)] (22) "Structured settlement annuity" means an annuity purchased to fund
943     periodic payments for a plaintiff or other claimant in payment for personal injury suffered by
944     the plaintiff or other claimant.
945          (23) "Structured settlement factoring transaction" means the same as that term is
946     defined in 26 U.S.C. Sec. 5891(c)(3)(A).
947          [(25)] (24) "Supplemental contract" means a written agreement entered into for the
948     distribution of proceeds under a policy or contract for:
949          (a) life insurance;
950          (b) accident and health insurance; or
951          (c) annuity.
952          [(26)] (25) "Unallocated annuity contract" means an annuity contract or group annuity
953     certificate that is not issued to and owned by an individual, except to the extent of any annuity
954     benefits guaranteed to an individual by an insurer under the contract or certificate.
955          Section 8. Section 31A-28-106 is amended to read:

956          31A-28-106. Continuation of the association -- Association duties -- Allocation of
957     assessments -- Not agency of state.
958          (1) (a) There is continued under this part the nonprofit legal entity known as the Utah
959     Life and Health Insurance Guaranty Association created under former provisions of this title.
960          (b) All member insurers shall be and remain members of the association as a condition
961     of their authority to transact insurance in this state.
962          (c) The association shall:
963          (i) perform its functions under the plan of operation established and approved under
964     Section 31A-28-110; and
965          (ii) exercise [its] the association's powers through [a] the board of directors
966     [established under Section 31A-28-107].
967          (d) The association shall allocate assessments among the following classes or
968     subclasses:
969          (i) the life insurance and annuity class, which includes the following subclasses:
970          (A) the life insurance subclass;
971          (B) the annuity subclass:
972          (I) which includes annuity contracts owned by a governmental retirement plan, or its
973     trustee, established under Section 401, 403(b), or 457, Internal Revenue Code; and
974          (II) otherwise excludes unallocated annuities; and
975          (C) the unallocated annuity subclass, which excludes contracts owned by a
976     governmental retirement benefit plan, or its trustee, established under Sections 401, 403(b), or
977     457, Internal Revenue Code; and
978          (ii) the accident and health insurance class.
979          (2) (a) The association shall:
980          (i) come under the immediate supervision of the commissioner; and
981          (ii) be subject to the applicable provisions of the insurance laws of this state.
982          (b) Meetings or records of the association may be opened to the public upon majority
983     vote of the board of directors [of the association].
984          (3) The association is not an agency of the state.
985          Section 9. Section 31A-28-107 is amended to read:
986          31A-28-107. Board of directors.

987          (1) (a) The board of directors of the association shall consist of:
988          (i) at least [five] seven but not more than [nine] eleven member insurers who:
989          (A) [subject to Subsection (1)(e),] serve terms as established in the plan of operation;
990     and
991          (B) are selected by member insurers, subject to the approval of the commissioner; and
992          (ii) two public representatives appointed by the commissioner.
993          (b) (i) The commissioner shall make the appointment of a public representative
994     coincide with the association's annual meeting at which the association's board of directors is
995     elected.
996          (ii) A public representative may not be:
997          (A) an officer, director, or employee of an insurer; or
998          (B) a person engaged in the business of insurance.
999          (iii) [Subject to Subsection (1)(e), a] A public representative shall serve a term of three
1000     years.
1001          (c) When a vacancy occurs in the membership of the board of directors for any reason:
1002          (i) if the vacancy is of a member insurer, a replacement may be elected for the
1003     unexpired term by a majority vote of the remaining board members, subject to the approval of
1004     the commissioner; and
1005          (ii) if the vacancy is of a public representative, the commissioner shall appoint a
1006     replacement for the unexpired term.
1007          (d) In approving a selection or in appointing a member to the board of directors, the
1008     commissioner shall consider, among other things, whether all member insurers are fairly
1009     represented.
1010          (e) Notwithstanding Subsections (1)(a) and (b), the commissioner shall, at the time of
1011     election, reelection, appointment, or reappointment adjust the length of terms to ensure that the
1012     terms of board members are staggered so that approximately half of the board of directors is
1013     selected during any two-year period.
1014          (2) (a) A member of the board of directors may be reimbursed from the assets of the
1015     association for expenses incurred by the member as a member of the board of directors.
1016          (b) A public representative appointed under Subsection (1)(a)(ii) may not receive
1017     compensation or benefits for the public representative's service, but in addition to

1018     reimbursement under Subsection (2)(a), a public representative may receive per diem and
1019     travel expenses established by the board with the approval of the commissioner.
1020          (c) Except as provided in Subsections (2)(a) and (b), a member of the board of
1021     directors may not be compensated by the association for the member's services.
1022          Section 10. Section 31A-28-108 is amended to read:
1023          31A-28-108. Powers and duties of the association.
1024          (1) (a) If a member insurer is an impaired insurer, subject to any conditions imposed by
1025     the association that do not impair the contractual obligations of the impaired insurer, the
1026     association may provide the protections provided by this part.
1027          (b) If the association makes the election described in Subsection (1)(a), the association
1028     may proceed under one or more of the options described in Subsection (3).
1029          (2) If a member insurer is an insolvent insurer, the association shall provide the
1030     protections provided by this part by electing in its discretion to proceed under one or more of
1031     the options in Subsection (3).
1032          (3) With respect to the covered portions of covered policies of an [impaired or]
1033     insolvent insurer, the association may:
1034          (a) (i) (A) guaranty, assume, reissue, or reinsure, or cause to be guaranteed, assumed,
1035     reissued, or reinsured, the policies or contracts of the insolvent insurer; or
1036          (B) assure payment of the contractual obligations of the insolvent insurer; and
1037          (ii) provide the money, pledges, loans, notes, guarantees, or other means as are
1038     reasonably necessary to discharge such duties; or
1039          (b) provide benefits and coverages in accordance with Subsection (4).
1040          (4) (a) [In accordance with Subsection (3)(b), the] The association may proceed under
1041     Subsection (3)(b) by:
1042          (i) [assure] ensuring payment of benefits [for premiums identical to the premiums and
1043     benefits, except for terms of conversion and renewability,] that would have been payable under
1044     the policies or contracts of the insurer, for claims incurred:
1045          (A) with respect to group policies or contracts:
1046          (I) not later than the earlier of the next renewal date under the policies or contracts or
1047     45 days after the coverage date; and
1048          (II) in no event less than 30 days after the coverage date; or

1049          (B) with respect to nongroup policies or contracts:
1050          (I) not later than the earlier of the next renewal date, if any, under the policies or
1051     contracts or one year from the coverage date; and
1052          (II) in no event less than 30 days from the coverage date;
1053          (ii) [make] making diligent efforts to notify the following 30 days before any
1054     termination of the benefits that are provided under a policy or contract of the insurer:
1055          (A) the known insureds, enrollees, or annuitants for nongroup policies and contracts;
1056          (B) owners if other than an insured, enrollee, or annuitant; or
1057          (C) group policy or contract owners for group policies and contracts; and
1058          (iii) with respect to nongroup [life and accident and health insurance policies and
1059     annuities, make] policies and contracts, making available substitute coverage on an individual
1060     basis, in accordance with Subsection (4)(b), to each known insured, enrollee annuitant, or
1061     owner and to each individual formerly an insured, enrollee, or [formerly an] annuitant under a
1062     group policy or contract who is not eligible for replacement group coverage on an individual
1063     basis in accordance with Subsection (4)(b), if the insured, enrollee, or annuitant had a right
1064     under law or the terminated policy, contract, or annuity [contract] to:
1065          (A) convert coverage to individual coverage; or
1066          (B) continue an individual policy or contract in force until a specified age or for a
1067     specified time during which the insurer had:
1068          (I) no right unilaterally to make changes in any provision of the policy or contract; or
1069          (II) a right only to make changes in premium by class of risk.
1070          (b) (i) In providing the substitute coverage required under Subsection (4)(a)(iii), the
1071     association may offer to:
1072          (A) reissue the terminated coverage; or
1073          (B) issue an alternative policy or contract at actuarially justified rates.
1074          (ii) An alternative or reissued policy or contract under Subsection (4)(b)(i):
1075          (A) shall be offered without requiring evidence of insurability; and
1076          (B) may not provide for any waiting period or exclusion that would not have applied
1077     under the terminated policy or contract.
1078          (iii) The association may reinsure an alternative or reissued policy or contract.
1079          (c) (i) An alternative policy or contract adopted by the association is subject to the

1080     approval of the commissioner.
1081          (ii) The association may adopt alternative policies or contracts of various types for
1082     future issuance without regard to any particular impairment or insolvency.
1083          (iii) An alternative policy or contract:
1084          (A) shall contain at least the minimum statutory provisions required in this state; and
1085          (B) provide benefits that are not unreasonable in relation to the premium charged.
1086          (iv) The association shall set the premium for an alternative policy or contract in
1087     accordance with a table of rates that the association adopts.
1088          (v) The premium described in Subsection (4)(c)(iv) shall reflect:
1089          (A) the amount of insurance or coverage to be provided; and
1090          (B) the age and class of risk of each insured.
1091          [(v)] (vi) For an alternative policy or contract issued under an individual policy or
1092     contract of the impaired or insolvent insurer:
1093          (A) age shall be determined in accordance with the original policy or contract
1094     provisions; and
1095          (B) class of risk is the class of risk under the original policy or contract.
1096          [(vi)] (vii) For an alternative policy or contract issued to individuals insured or covered
1097     under a group policy or contract:
1098          (A) age and class of risk shall be determined by the association in accordance with the
1099     alternative policy or contract provisions and risk classification standards approved by the
1100     commissioner; and
1101          (B) the premium may not reflect any changes in the health of the insured after the
1102     original policy or contract was last underwritten.
1103          [(vii)] (viii) An alternative policy or contract issued by the association shall provide
1104     coverage of a type similar to that of the policy or contract issued by the impaired or insolvent
1105     insurer, as determined by the association.
1106          (d) If the association elects to reissue terminated coverage at a premium rate different
1107     from that charged under the terminated policy or contract, the association shall set the premium
1108     in a manner that is actuarially justified and in accordance with the amount of insurance or
1109     coverage provided and the age and class of risk, subject to the prior approval of the
1110     commissioner or by a court of competent jurisdiction.

1111          (e) The association's obligations with respect to coverage under any policy or contract
1112     of the impaired or insolvent insurer or under any reissued or alternative policy or contract
1113     ceases on the date the coverage [or], policy, or contract is replaced by another similar coverage,
1114     policy, or contract by:
1115          (i) the enrollee;
1116          (ii) the owner;
1117          [(ii)] (iii) the insured; or
1118          [(iii)] (iv) the association.
1119          (f) (i) With respect to a claim unpaid as of the coverage date and [a] an accident and
1120     health claim incurred during the period defined in Subsection (4)(a)(i), a provider of health care
1121     services, by accepting a payment from the association upon a claim of the provider against an
1122     insured or enrollee whose [health care] insurer is an insolvent [member] insurer, agrees to
1123     forgive the insured or enrollee of 20% of the debt [which] that otherwise would be paid by the
1124     insolvent insurer had [it] the insurer not been insolvent[, subject to a maximum of $8,000 being
1125     required to be forgiven by any one provider as to each claimant].
1126          (ii) The obligations of a solvent insurer to pay all or part of the covered claim are not
1127     diminished by the forgiveness provided for in this section.
1128          (5) When proceeding under Subsection (3)(b) with respect to any policy or contract
1129     carrying guaranteed minimum interest rates, the association shall assure the payment or
1130     crediting of a rate of interest consistent with Subsection 31A-28-103[(2)(b)(iii)](7)(c).
1131          (6) Nonpayment of premiums within 31 days after the date required under the terms of
1132     any guaranteed, assumed, alternative, or reissued policy or contract or substitute coverage
1133     terminates the association's obligations under the policy, contract, or coverage under this part
1134     with respect to the policy, contract, or coverage, except with respect to any claims incurred or
1135     any net cash surrender value that may be due in accordance with this part.
1136          (7) (a) Premium due after the coverage date with respect to the covered portion of a
1137     policy or contract of an impaired or insolvent insurer belongs to and is payable at the direction
1138     of the association. If a liquidator of an insolvent insurer requests the report, the association
1139     shall report to the liquidator the premium collected by the association.
1140          (b) The association is liable to a policy or contract owner for unearned premiums due
1141     to the policy or contract owner arising after the coverage date with respect to the covered

1142     portion of the policy or contract.
1143          (8) The protection provided by this part does not apply if any guaranty protection is
1144     provided to residents of this state by laws of the domiciliary state or jurisdiction of the
1145     impaired or insolvent insurer other than this state.
1146          (9) In carrying out its duties under Subsection (2), and subject to approval by a court in
1147     this state, the association may:
1148          (a) impose permanent policy or contract liens in connection with a guarantee,
1149     assumption, or reinsurance agreement, if the association finds that:
1150          (i) the amounts that can be assessed under this part are less than the amounts needed to
1151     assure full and prompt performance of the association's duties under this part; or
1152          (ii) the economic or financial conditions as they affect member insurers are sufficiently
1153     adverse to render the imposition of the permanent policy or contract liens to be in the public
1154     interest;
1155          (b) impose temporary moratoriums or liens on payments of cash values and policy
1156     loans, or any other right to withdraw funds held in conjunction with policies or contracts, in
1157     addition to any contractual provisions for deferral of cash or policy loan value; and
1158          (c) if the receivership court imposes a temporary moratorium or moratorium charge on
1159     payment of cash values or policy loans, or on any other right to withdraw funds held in
1160     conjunction with policies or contracts, out of the assets of the impaired or insolvent insurer,
1161     defer the payment of cash values, policy loans, or other rights by the association for the period
1162     of the moratorium or moratorium charge imposed by the receivership court, except for claims
1163     covered by the association to be paid in accordance with a hardship procedure:
1164          (i) established by the receiver; and
1165          (ii) approved by the receivership court.
1166          (10) (a) A special deposit in this state held pursuant to law or required by the
1167     commissioner for the benefit of creditors, including policy or contract owners, that is not
1168     turned over to the domiciliary receiver upon the entry of a final order of liquidation or order
1169     approving a rehabilitation plan of [an] a member insurer domiciled in any state shall be
1170     promptly paid to the association.
1171          (b) Any amount paid under Subsection (10)(a) to the association less the amount
1172     retained by the association shall be treated as a distribution of estate assets pursuant to Sections

1173     31A-27a-601, 31A-27a-602, and 31A-27a-701.
1174          (11) If the association fails to act within a reasonable period of time as provided in this
1175     section, the commissioner has the powers and duties of the association under this part with
1176     respect to an impaired or insolvent insurer.
1177          (12) The association may assist or advise the commissioner, upon the commissioner's
1178     request, concerning:
1179          (a) rehabilitation;
1180          (b) payment of claims;
1181          (c) continuance of coverage; or
1182          (d) the performance of other contractual obligations of any impaired or insolvent
1183     insurer.
1184          (13) (a) The association has standing to appear or intervene before a court or agency in
1185     this state with jurisdiction over:
1186          (i) an impaired or insolvent insurer concerning which the association is or may become
1187     obligated under this part; or
1188          (ii) any person or property against which the association may have rights through
1189     subrogation or otherwise.
1190          (b) The standing referred to in Subsection (13)(a) extends to all matters germane to the
1191     powers and duties of the association, including:
1192          (i) proposals for reinsuring, reissuing, modifying, or guaranteeing the policies or
1193     contracts of the impaired or insolvent insurer; and
1194          (ii) the determination of the policies or contracts and contractual obligations.
1195          (c) The association has the right to appear or intervene before a court in another state
1196     with jurisdiction over:
1197          (i) an impaired or insolvent insurer for which the association is or may become
1198     obligated; or
1199          (ii) any person or property against which the association may have rights through
1200     subrogation of the insurer's [policyowners] policy owners or contract owners.
1201          (14) (a) A person receiving benefits under this part is considered to have assigned the
1202     rights under, and any causes of action against any person for losses arising under, resulting
1203     from, or otherwise relating to the covered policy or contract to the association to the extent of

1204     the benefits received because of this part, whether the benefits are payments of, or on account
1205     of:
1206          (i) contractual obligations;
1207          (ii) continuation of coverage; or
1208          (iii) provision of substitute or alternative policies, contracts, or coverages.
1209          (b) As a condition precedent to the receipt of any right or benefits conferred by this part
1210     upon that person, the association may require an assignment to it of the rights and causes of
1211     action described in Subsection (14)(a) by any:
1212          (i) payee;
1213          (ii) policy or contract owner;
1214          (iii) beneficiary;
1215          (iv) insured; [or]
1216          (v) enrollee; or
1217          [(v)] (vi) annuitant.
1218          (c) The subrogation rights obtained by the association under this Subsection (14) have
1219     the same priority against the assets of the impaired or insolvent insurer as that possessed by the
1220     person entitled to receive benefits under this part.
1221          (d) In addition to Subsections (14)(a) through (c), the association has the common law
1222     rights of subrogation and any other equitable or legal remedy that would have been available to
1223     the impaired or insolvent insurer or owner, beneficiary, enrollee, or payee of a policy or
1224     contract with respect to the policy or contract, including in the case of a structured settlement
1225     annuity any rights of the owner, beneficiary, or payee of the annuity to the extent of benefits
1226     received pursuant to this part against a person originally or by succession responsible for the
1227     losses arising from the personal injury relating to the annuity or payment of the annuity.
1228          (e) If a provision of this Subsection (14) is invalid or ineffective with respect to a
1229     person or claim for any reason, the amount payable by the association with respect to the
1230     related covered obligations shall be reduced by the amount realized by any other person with
1231     respect to the person or claim that is attributable to the policies, or portion of the policies,
1232     covered by the association.
1233          (f) If the association has provided benefits with respect to a covered policy or contract
1234     and a person recovers amounts as to which the association has rights as described in this

1235     Subsection (14), the person shall pay to the association the portion of the recovery attributable
1236     to the covered [policies] policy or contract.
1237          (15) (a) In addition to the rights and powers elsewhere in this part, the association may:
1238          (i) enter into a contract that is necessary or proper to carry out the provisions and
1239     purposes of this part;
1240          (ii) sue or be sued, including taking any legal actions necessary or proper to:
1241          (A) recover any unpaid assessments under Section 31A-28-109; and
1242          (B) settle claims or potential claims against the association;
1243          (iii) borrow money to effect the purposes of this part;
1244          (iv) employ or retain the persons necessary or the appropriate staff members to:
1245          (A) handle the financial transactions of the association; and
1246          (B) perform other functions as become necessary or proper under this part;
1247          (v) take necessary or appropriate legal action to avoid or recover payment of improper
1248     claims;
1249          (vi) exercise, for the purposes of this part and to the extent approved by the
1250     commissioner, the powers of a domestic [life or health] insurer providing life insurance or
1251     accident and health insurance, but in no case may the association issue [insurance] policies or
1252     [annuity] contracts other than those issued to perform [its] the association's obligation under
1253     this part;
1254          (vii) request information from a person seeking coverage from the association to aid
1255     the association in determining the association's obligations under this part with respect to the
1256     person;
1257          (viii) unless prohibited by law, in accordance with the terms and conditions of the
1258     policy or contract, file for actuarially justified rate or premium increases for any policy or
1259     contract for which the association provides coverage under this part;
1260          [(viii)] (ix) take other necessary or appropriate action to discharge the association's
1261     duties and obligations under this part or to exercise the association's powers under this part;
1262     and
1263          [(ix)] (x) act as a special deputy receiver if appointed by the commissioner.
1264          (b) Any note or other evidence of indebtedness of the association under Subsection
1265     (15)(a)(iii) that is not in default:

1266          (i) is a legal investment for a domestic member insurer; and
1267          (ii) may be carried as admitted assets.
1268          (c) A person seeking coverage from the association shall promptly comply with a
1269     request for information by the association under Subsection (15)(a)(vii).
1270          (16) The association may join an organization of one or more other state associations
1271     of similar purposes to further the purposes and administer the powers and duties of the
1272     association.
1273          (17) (a) At any time within 180 days after the coverage date, the association may elect
1274     to succeed to the rights and obligations of the member insurer that:
1275          (i) accrue on or after the coverage date; and
1276          (ii) relate to covered policies or contracts under any one or more indemnity reinsurance
1277     agreements:
1278          (A) entered into by the member insurer as a ceding insurer and its reinsurer; and
1279          (B) selected by the association.
1280          (b) An election made pursuant to Subsection (17)(a) is effective as of the date of the
1281     order of liquidation.
1282          (c) The association may make an election described in Subsection (17)(a) by notifying
1283     an affected reinsurer in writing, with verification of receipt, through:
1284          (i) the association; or
1285          (ii) a nationally recognized association representing state guaranty associations that is
1286     approved by the commissioner, that provides notice on behalf of the association.
1287          (d) The association shall provide a copy of the notice described in Subsection (17)(c) to
1288     the receiver.
1289          (e) (i) The receiver of an insolvent insurer and each reinsurer of the ceding member
1290     insurers shall make available as soon as possible after commencement of formal delinquency
1291     proceedings the information described in Subsection (17)(e)(ii) to:
1292          (A) the association; or
1293          (B) a nationally recognized association representing state guaranty associations that is
1294     approved by the commissioner, on behalf of the association.
1295          (ii) This Subsection (17)(e) applies to:
1296          (A) copies of in-force contracts of reinsurance and the related records relevant to the

1297     determination of whether the in-force contracts of reinsurance should be assumed;
1298          (B) notices of any default under a reinsurance contract; or
1299          (C) any known event or condition that with the passage of time could become a default
1300     under a reinsurance contract.
1301          (f) If the association makes an election under Subsection (17)(a), the association shall
1302     comply with Subsections (17)(f)(i) through (vii) with respect to the agreements selected by the
1303     association.
1304          (i) For a policy or contract covered, in whole or in part, by the association, the
1305     association is responsible for:
1306          (A) the unpaid premiums due under the agreements for periods both before and after
1307     the coverage date; and
1308          (B) the performance of the other obligations to be performed after the coverage date.
1309          (ii) The association may charge a policy or contract covered in part by the association
1310     the costs for reinsurance in excess of the obligations of the association, through reasonable
1311     allocation methods.
1312          (iii) The association shall provide notice and an accounting to the receiver of a charge
1313     made pursuant to Subsection (17)(f)(ii).
1314          (iv) The association is entitled to any amounts payable by the reinsurer under the
1315     agreements with respect to a loss or event that:
1316          (A) occurs after the coverage date; and
1317          (B) relates to a policy or a contract covered by the association, in whole or in part.
1318          (v) On receipt of any amounts under Subsection (17)(f)(iv), the association shall pay to
1319     the beneficiary under the policy or contract on account of which the amounts were paid an
1320     amount equal to the lesser of:
1321          (A) the amount received by the association; and
1322          (B) the excess of the amount received by the association over the benefits paid or
1323     payable by the association on account of the policy or contract less the retention of the insurer
1324     applicable to the loss or event.
1325          (vi) (A) Within 30 days following the association's election, the association and each
1326     indemnity reinsurer shall calculate the net balance due to or from the association under each
1327     reinsurance agreement as of the date of the association's election, giving full credit to the items

1328     paid by either the member insurer, its receiver, or the indemnity reinsurer before the date of the
1329     association's election.
1330          (B) Within five days of the completion of the calculation under Subsection
1331     (17)(f)(vi)(A):
1332          (I) the reinsurer shall pay the receiver the amounts due for a loss or event before the
1333     coverage date, subject to any set-off for premiums unpaid for a period before the coverage date;
1334     and
1335          (II) the association or the reinsurer shall pay any remaining balance due the other.
1336          (C) A dispute over an amount due to either party shall be resolved:
1337          (I) by arbitration pursuant to the terms of the affected reinsurance contract; or
1338          (II) if the reinsurance contract contains no arbitration clause, as otherwise provided by
1339     law.
1340          (D) If the receiver receives an amount due the association pursuant to Subsection
1341     (17)(f)(iv), the receiver shall remit that amount to the association as promptly as practicable.
1342          (vii) If the association, or the receiver on behalf of the association, within 60 days of
1343     the election, pays the premiums due for periods both before and after the coverage date that
1344     relate to policies or contracts covered by the association, in whole or in part, the reinsurer may
1345     not:
1346          (A) terminate the reinsurance agreement for failure to pay premium, to the extent the
1347     reinsurance agreement relates to a policy or contract covered by the association, in whole or in
1348     part; and
1349          (B) set off against amounts due the association an amount due:
1350          (I) under another policy or contract; or
1351          (II) as an unpaid amount due from a person other than the association.
1352          (g) (i) This Subsection (17)(g) applies during the period that:
1353          (A) begins on the coverage date; and
1354          (B) ends:
1355          (I) on the election date; or
1356          (II) if no election date occurs, 180 days after the coverage date.
1357          (ii) During the period described in Subsection (17)(g)(i):
1358          (A) neither the association nor the reinsurer have a right or obligation under a

1359     reinsurance contract that the association may assume under Subsection (17)(a), whether for a
1360     period before or after the coverage date; and
1361          (B) the reinsurer, the receiver, and the association, to the extent practicable, shall
1362     provide each other data and records reasonably requested.
1363          (iii) Notwithstanding Subsection (17)(g)(ii), once the association elects to assume a
1364     reinsurance contract, the parties' rights and obligations are governed by Subsections (17)(f)(i)
1365     through (vi).
1366          (h) If the association does not elect to assume a reinsurance contract by the election
1367     date pursuant to Subsection (17)(a), the association has no right or obligation with respect to
1368     the reinsurance contract, whether for a period before or after the coverage date.
1369          (i) An insurer other than the association succeeds to the rights and obligations of the
1370     association under Subsections (17)(a) through (f) effective as of the date agreed upon by the
1371     association and the other insurer and regardless of whether the association has made the
1372     election referred to in Subsections (17)(a) through (f) provided that:
1373          (i) the association transfers its obligations to the other insurer;
1374          (ii) the association and the other insurer agree to the transfer;
1375          (iii) the indemnity reinsurance agreements automatically terminate for new reinsurance
1376     unless the indemnity reinsurer and the other insurer agree to the contrary;
1377          (iv) the obligations described in Subsection (17)(f)(v) may not apply on and after the
1378     date the indemnity reinsurance agreement is transferred to the third party insurer;
1379          (v) the transferring party shall give notice in writing, with verification of receipt, to the
1380     affected reinsurer not less than 30 days before the effective date of the transfer; and
1381          (vi) this Subsection (17)(i) may not apply if the association has previously expressly
1382     determined in writing that the association will not exercise the election referred to in
1383     Subsections (17)(a) through (f).
1384          (j) (i) This Subsection (17) supersedes the provisions of any law of this state or of any
1385     affected reinsurance agreement that provides for or requires any payment of reinsurance
1386     proceeds on account of losses or events that occur in periods after the coverage date, to:
1387          (A) the receiver of an insolvent member insurer; or
1388          (B) another person.
1389          (ii) The receiver is entitled to any amounts payable by the reinsurer under the

1390     reinsurance agreement with respect to a loss or event that occurs before the coverage date,
1391     subject to applicable setoff provisions.
1392          (k) Except as otherwise expressly provided in Subsections (17)(a) through (j), this
1393     Subsection (17) does not:
1394          (i) alter or modify the terms and conditions of a reinsurance agreement of the insolvent
1395     member insurer;
1396          (ii) abrogate or limit a right any reinsurer to claim that it is entitled to rescind a
1397     reinsurance agreement;
1398          (iii) give a policy owner, policy holder, contract owner, enrollee, certificate holder, or
1399     beneficiary an independent cause of action against a reinsurer that is not otherwise set forth in
1400     the reinsurance agreement;
1401          (iv) limit or affect the association's rights as a creditor of the estate of an insolvent
1402     insurer against the assets of the estate; or
1403          (v) apply to a reinsurance agreement that covers property or casualty risks.
1404          (18) The board of directors of the association has discretion and may exercise
1405     reasonable business judgment to determine the means by which the association is to provide
1406     the benefits of this part in an economical and efficient manner.
1407          (19) If the association arranges or offers to provide the benefits of this part to a covered
1408     person under a plan or arrangement that fulfills the association's obligations under this part, the
1409     person is not entitled to benefits from the association in addition to or other than those
1410     provided under the plan or arrangement.
1411          (20) (a) Venue in a suit against the association arising under this part is Salt Lake
1412     County.
1413          (b) The association may not be required to give an appeal bond in an appeal that relates
1414     to a cause of action arising under this part.
1415          Section 11. Section 31A-28-109 is amended to read:
1416          31A-28-109. Assessments.
1417          (1) (a) For the purpose of providing the funds necessary to carry out the powers and
1418     duties of the association, the board of directors shall assess the member insurers, separately for
1419     each class or subclass, at the time and for the amounts that the board of directors finds
1420     necessary.

1421          (b) Member insurer liability for an assessment is established [as of] beginning on the
1422     coverage date, regardless of when the assessment is called.
1423          (c) [Subject to Subsection (1)(d), a] A called assessment:
1424          (i) is due not less than 30 days after prior written notice to the member insurer; and
1425          (ii) shall accrue interest at 10% per annum on and after the due date.
1426          (d) Notwithstanding Subsection (1)(c), the association may:
1427          (i) assess the association's members as of the coverage date; and
1428          (ii) defer the collection of the assessment described in Subsection (1)(d)(i).
1429          (e) An assessment:
1430          (i) has the force and effect of a judgment lien against the member insurer; and
1431          (ii) may not be extinguished until paid.
1432          (2) [The] There are two classes of [assessment are described in Subsections (2)(a) and
1433     (2)(b).] assessments:
1434          (a) [A] a Class A assessment [shall be]:
1435          (i) shall be authorized and called for the purpose of meeting administrative and legal
1436     costs and other expenses[. A Class A assessment]; and
1437          (ii) may be authorized and called regardless of whether [or not] the assessment is
1438     related to a particular impaired or insolvent insurer[.]; and
1439          (b) [A] a Class B assessment shall be authorized and called to the extent necessary to
1440     carry out the powers and duties of the association under Section 31A-28-108 with regard to an
1441     impaired or an insolvent insurer.
1442          (3) (a) (i) The amount of a Class A assessment:
1443          (A) shall be determined by the board of directors; and
1444          (B) may be authorized and called on a pro rata or non-pro rata basis.
1445          (ii) If the Class A assessment is pro rata, the board of directors may credit the
1446     assessment against future Class B assessments.
1447          [(iii) The total of the non-pro rata assessments may not exceed $300 per member
1448     insurer in any one calendar year.]
1449          (b) (i) [The] Except as provided in Subsection (3)(c)(i), the amount of a Class B
1450     assessment shall be allocated for assessment purposes [among subclasses]:
1451          (A) between the life insurance and annuity class and the accident and health insurance

1452     class; and
1453          (B) among the subclasses of the life insurance and annuity class.
1454          (ii) An allocation of a Class B assessment under Subsection (3)(b)(i) shall be made
1455     pursuant to an allocation formula that may be based on:
1456          [(i)] (A) the premiums or reserves of the impaired or insolvent insurer; or
1457          [(ii)] (B) any other standard determined by the board of directors in the board of
1458     directors' sole discretion as being fair and reasonable under the circumstances.
1459          (c) (i) For a Class B assessment for the long-term care insurance written by an impaired
1460     or insolvent insurer, the association:
1461          (A) shall, except as prohibited in Subsection (3)(c)(i)(B), allocate the amount of the
1462     Class B assessment according to a methodology that provides for 25% of the assessment to be
1463     allocated to accident and health member insurers and 75% of the assessment to be allocated to
1464     life insurance and annuity member insurers;
1465          (B) may not impose liability on a member insurer that is a health maintenance
1466     organization for an assessment with a coverage date before July 1, 2020;
1467          (C) may not consider the premiums from a health maintenance organization contract
1468     when calculating the share of an assessment with a coverage date before July 1, 2020, allocated
1469     to accident and health member insurers; and
1470          (D) shall include the methodology described in Subsection (3)(c)(i)(A) in the plan of
1471     operation established and approved under Section 31A-28-110.
1472          [(c) (i)] (ii) A Class B assessment against a member insurer for the life insurance
1473     subclass, the annuity subclass, and the unallocated annuity subclass shall be in the proportion
1474     that the premiums received on business in [this] the state by the member insurer on policies or
1475     contracts included in the class or subclass for the three most recent calendar years for which
1476     information is available preceding the year which includes the coverage date bears to the
1477     premiums received on business in [this state for] the state during the same three-calendar-year
1478     period by [the] all assessed member insurers on policies or contracts included in the class or
1479     subclass.
1480          [(ii)] (iii) A Class B assessment against a member insurer for an accident and health
1481     insurance [subclass] class shall be in the proportion that the premiums received on business in
1482     [this] the state by each assessed member insurer on policies or contracts included in the

1483     [subclass] class for the most recent calendar year for which information is available preceding
1484     the year in which the assessment is made bears to the premiums received on business in this
1485     state on policies or contracts included in the [subclass] class for that calendar year by [the] all
1486     assessed member insurers.
1487          (d) Assessments for funds to meet the requirements of the association with respect to
1488     an impaired or insolvent insurer may not be authorized or called until necessary to implement
1489     the purposes of this part.
1490          (e) Classification and computation of assessments and premiums [under Subsection
1491     (3)(b) and computation of assessments under this Subsection (3)] under this section shall be
1492     made with a reasonable degree of accuracy, recognizing that exact determinations may not
1493     always be possible.
1494          (f) The association shall notify each member insurer of [its] the member insurer's
1495     anticipated pro rata share of an authorized assessment not yet called within 180 days after the
1496     day on which the assessment is authorized.
1497          (4) (a) The association may abate or defer, in whole or in part, the assessment of a
1498     member insurer if, in the opinion of the board of directors, payment of the assessment would
1499     endanger the ability of the member insurer to fulfill its contractual obligations.
1500          (b) If an assessment against a member insurer is abated or deferred in whole or in part
1501     under Subsection (4)(a), the amount by which the assessment is abated or deferred may be
1502     assessed against the other member insurers in a manner consistent with the basis for
1503     assessments set forth in this section.
1504          (c) Once a condition that caused a deferral is removed or rectified, the member insurer
1505     shall pay the assessments that were deferred pursuant to a repayment plan approved by the
1506     association.
1507          (5) (a) (i) Subject to Subsection (5)(b), the total of the assessments authorized by the
1508     association on a member insurer for each class or subclass may not in any one calendar year
1509     exceed 2% of [that member's total] the member insurer's average annual assessable premium in
1510     that class or subclass as defined in Subsection (3).
1511          (ii) If two or more assessments are authorized in one calendar year with respect to
1512     [one] two or more member insurers that become impaired or insolvent in different calendar
1513     years, the average annual assessable premiums for purposes of the aggregate assessment

1514     percentage limitation [in] calculated for each subclass or class under Subsection (5)(a)(i) shall
1515     be equal and limited to the highest of the total average annual assessable [premiums of]
1516     premium averages for the different calendar year periods involved in the assessment or
1517     assessments.
1518          (iii) If the maximum assessment together with the other assets of the association do not
1519     provide in one year an amount sufficient to carry out the responsibilities of the association, the
1520     necessary additional funds shall be assessed as soon after as permitted by this part.
1521          (b) The board of directors may provide in the plan of operation a method of allocating
1522     funds among claims, whether relating to one or more impaired or insolvent insurers, when the
1523     maximum assessment will be insufficient to cover anticipated claims.
1524          (c) If the maximum assessment for the life insurance subclass or the annuity subclass in
1525     any one year does not provide an amount sufficient to carry out the responsibilities of the
1526     association, the board of directors shall assess the other of the subclasses of the life insurance
1527     and annuity class for the necessary additional amount:
1528          (i) pursuant to Subsection (3)(b); and
1529          (ii) subject to the maximum stated in Subsection (5)(a).
1530          (6) (a) The board of directors may, by an equitable method established in the plan of
1531     operation, refund to member insurers in proportion to the contribution of each member insurer
1532     to that subclass the amount by which the assets of the subclass exceed the amount the board of
1533     directors finds is necessary to carry out the obligations of the association with regard to that
1534     subclass, including assets accruing from:
1535          (i) assignment;
1536          (ii) subrogation;
1537          (iii) net realized gains; and
1538          (iv) income from investments.
1539          (b) Notwithstanding Subsection (6)(a), a reasonable amount may be retained to provide
1540     funds for the continuing expenses of the association and for future losses.
1541          (7) A member insurer, in determining its premium rates and policyowner dividends as
1542     to any kind of insurance within the scope of this part, may consider the amount reasonably
1543     necessary to meet its assessment obligations under this part.
1544          (8) (a) The association shall issue to each member insurer paying an assessment under

1545     this part, other than a Class A assessment, a certificate of contribution, in a form approved by
1546     the commissioner, for the amount of the assessment paid.
1547          (b) The outstanding certificates described in Subsection (8)(a) shall be of equal dignity
1548     and priority without reference to amounts or dates of issue.
1549          (c) (i) A certificate of contribution described in Subsection (8)(a) may be shown by the
1550     member insurer in its financial statement as an asset in the amount of the certificate of
1551     contribution less the amount by which the insurer's premium taxes have already been reduced
1552     with respect to the certificate.
1553          (ii) For good cause shown, the commissioner may order the insurer to show a different
1554     amount in its financial statement than the amount under Subsection (8)(c)(i).
1555          (9) (a) (i) A member insurer that wishes to protest all or part of an assessment shall
1556     pay, when due, the full amount of the assessment as specified in the notice provided by the
1557     association.
1558          (ii) The payment shall be available to meet association obligations during the pendency
1559     of the protest or any subsequent appeal.
1560          (iii) The payment shall be accompanied by a statement in writing:
1561          (A) that the payment is made under protest; and
1562          (B) giving a brief description of the grounds for the protest.
1563          (b) (i) The association shall notify the member insurer, in writing, of the association's
1564     determination with respect to the protest within 60 days after the day on which the payment of
1565     an assessment is made under protest by a member insurer, unless the association notifies the
1566     member insurer that additional time is required to resolve the issues raised by the protest.
1567          (ii) The association shall notify the protesting member insurer in writing of the final
1568     decision within 30 days after the day on which a final decision is made by the association.
1569          (iii) The protesting member insurer may appeal the final action of the association to the
1570     commissioner within 60 days after the day on which the protesting member insurer receives a
1571     notice of the final decision from the association.
1572          (c) The association may refer protests to the commissioner for a final decision, with or
1573     without a recommendation from the association.
1574          (d) (i) If a protest or appeal on an assessment concludes that an amount was paid in
1575     error or excess by a member insurer, the association shall return the amount paid in error or

1576     excess to the member insurer.
1577          (ii) The association shall pay interest on a refund due to a protesting member insurer at
1578     the rate actually earned by the association.
1579          [(9)] (10) (a) The association may request information from a member insurer to aid in
1580     the exercise of the association's power under this part.
1581          (b) A member insurer shall comply promptly with a request of the association under
1582     this Subsection [(9)] (10).
1583          Section 12. Section 31A-28-111 is amended to read:
1584          31A-28-111. Duties and powers under this part.
1585          [In] The duties and powers described in this section are in addition to the duties and
1586     powers enumerated elsewhere in this part[, the persons described in this section have the duties
1587     and powers described in Subsections (1) through (6)].
1588          (1) The commissioner shall:
1589          (a) upon request of the board of directors, provide the association with a statement of
1590     the premiums for each member insurer:
1591          (i) in this state; and
1592          (ii) any other appropriate state; and
1593          (b) if an impairment is declared and the amount of the impairment is determined, serve
1594     a demand upon the impaired insurer to make good the impairment within a reasonable time.
1595          (2) Notice to the impaired insurer under Subsection (1)(b) constitutes notice to the
1596     shareholders of the impaired insurer if the impaired insurer has shareholders.
1597          (3) The failure of the impaired insurer to promptly comply with the commissioner's
1598     demand under Subsection (1)(b) does not excuse the association from the performance of its
1599     powers and duties under this part.
1600          (4) (a) After notice and hearing, the commissioner may suspend or revoke the
1601     certificate of authority to transact [insurance] business in this state of a member insurer not
1602     domiciled in this state that fails to:
1603          (i) pay an assessment when due; or
1604          (ii) comply with the plan of operation.
1605          (b) (i) As an alternative to suspending or revoking a certificate of authority under
1606     Subsection (4)(a), the commissioner may levy a forfeiture on any member insurer that fails to

1607     pay an assessment when due.
1608          (ii) A forfeiture described in Subsection (4)(b)(i):
1609          (A) may not exceed 5% of the unpaid assessment per month; and
1610          (B) may not be less than $100 per month.
1611          (5) (a) A final action of the board of directors or the association may be appealed to the
1612     commissioner by any member insurer if appeal is taken within 60 days of the date the member
1613     insurer received notice of the final action being appealed.
1614          (b) If a member insurer is appealing an assessment, the amount assessed shall be:
1615          (i) paid to the association; and
1616          (ii) made available to meet association obligations during the pendency of an appeal.
1617          (c) If the appeal on the assessment described in Subsection (5)(b) is upheld, the amount
1618     paid in error or excess shall be returned to the member insurer.
1619          (d) Any final action or order of the commissioner is subject to judicial review in a court
1620     of competent jurisdiction in accordance with the laws of this state that apply to the actions or
1621     orders of the commissioner.
1622          (6) The receiver of an impaired insurer shall notify the interested persons of the effect
1623     of this part.
1624          Section 13. Section 31A-28-112 is amended to read:
1625          31A-28-112. Reports.
1626          (1) The commissioner shall:
1627          (a) report to the board of directors when:
1628          (i) the commissioner takes an action set forth in Section 31A-27a-201;
1629          (ii) an event described in Section 31A-17-603, 31A-17-604, or 31A-17-605 occurs; or
1630          (iii) the commissioner receives a report from any other commissioner indicating that an
1631     action described in Subsection (1)(a)(i) has been taken in another state;
1632          (b) include in the report to the board of directors required by Subsection (1)(a):
1633          (i) the significant details of the action taken;
1634          (ii) the significant details of an event described in Subsection (1)(a)(ii); or
1635          (iii) the report received from another commissioner;
1636          (c) promptly report to the board of directors when the commissioner has reasonable
1637     cause to believe from an examination of any member insurer, whether completed or in process,

1638     that the member insurer may be an impaired or insolvent insurer; and
1639          (d) furnish to the board of directors the National Association of Insurance
1640     Commissioners Insurance Regulatory Information System ratios and listings of companies not
1641     included in the ratios developed by the National Association of Insurance Commissioners.
1642          (2) (a) The board of directors may use the information contained in the ratios and
1643     listings described in Subsection (1)(d) in carrying out the board of directors' duties and
1644     responsibilities under this part.
1645          (b) The board of directors shall keep the report and the information contained in the
1646     ratios and listings confidential until the commissioner or other lawful authority publishes the
1647     information.
1648          (3) The commissioner may seek the advice and recommendations of the board of
1649     directors concerning any matter affecting the commissioner's duties and responsibilities
1650     regarding the financial condition of member insurers and companies seeking admission to
1651     transact insurance business in this state.
1652          (4) (a) The board of directors may make reports and recommendations to the
1653     commissioner upon any matter germane to:
1654          (i) the solvency, liquidation, rehabilitation, or conservation of any member insurer; or
1655          (ii) the solvency of any [company] insurer seeking to do [an insurance] business in this
1656     state.
1657          (b) The reports and recommendations of the board of directors described in Subsection
1658     (4)(a) are not public documents.
1659          (5) The board of directors may, upon majority vote, notify the commissioner of any
1660     information indicating that a member insurer may be an impaired or insolvent insurer.
1661          (6) The board of directors may make recommendations to the commissioner for the
1662     detection and prevention of member insurer insolvencies.
1663          (7) (a) At the conclusion of any member insurer insolvency in which the association
1664     was obligated to pay covered claims, the board of directors shall prepare a report to the
1665     commissioner containing the information the board of directors has in its possession bearing on
1666     the history and causes of the insolvency.
1667          (b) In preparing a report on the history and causes of insolvency of a particular member
1668     insurer, the board of directors may cooperate with:

1669          (i) the board of directors of a guaranty association in another state; or
1670          (ii) an organization described in Subsection 31A-28-108(16).
1671          (c) The board of directors may adopt by reference any report prepared by:
1672          (i) a guaranty association in another state; or
1673          (ii) an organization described in Subsection 31A-28-108(16).
1674          Section 14. Section 31A-28-113 is amended to read:
1675          31A-28-113. Credit for assessments paid.
1676          (1) (a) A member insurer may offset against its premium tax, income tax, or franchise
1677     tax liability to this state an assessment described in Subsection 31A-28-109(2)(b) to the extent
1678     of 20% of the amount of the assessment for each of the five calendar years following the year
1679     in which the assessment was paid.
1680          (b) To the extent that the offsets described in Subsection (1)(a) exceed premium tax
1681     liability, the offsets may be carried forward and used to offset premium tax liability in future
1682     years.
1683          (c) If a member insurer ceases doing business, all uncredited assessments may be
1684     credited against its premium tax liability for the year it ceases doing business.
1685          (2) (a) A member insurer that is exempt from taxes described in Subsection (1) may
1686     recoup the member insurer's assessment by a surcharge on premiums in a sum reasonably
1687     calculated to recoup the assessments over a reasonable period of time, as approved by the
1688     commissioner.
1689          (b) Amounts recouped shall not be considered premiums for any other purpose,
1690     including the computation of gross premium tax, income tax, franchise tax, producer
1691     commission, or, to the extent allowed under federal law, medical loss ratio.
1692          (c) If a member insurer collects excess surcharges, the member insurer shall remit the
1693     excess amount to the association, and the excess amount shall be applied to reduce future
1694     assessments in the appropriate account.
1695          [(2)] (3) (a) Money shall be paid by the member insurers to the state in a manner
1696     required by the State Tax Commission if the money:
1697          (i) is acquired by refund in accordance with Subsection 31A-28-109(6) from the
1698     association by member insurers; and
1699          (ii) has been offset against premium taxes as provided in Subsection (1).

1700          (b) The association shall notify the commissioner that the refunds described in
1701     Subsection [(2)] (3)(a) have been made.
1702          Section 15. Section 31A-28-114 is amended to read:
1703          31A-28-114. Miscellaneous provisions.
1704          (1) Nothing in this part shall be construed to reduce the liability for unpaid assessments
1705     of the insureds of an impaired or insolvent insurer operating under a plan with assessment
1706     liability.
1707          (2) (a) The board of directors shall keep a record of a meeting of the board of directors
1708     to discuss the activities of the association in carrying out its powers and duties under Section
1709     31A-28-108.
1710          (b) A record of the association with respect to an impaired or insolvent insurer may not
1711     be disclosed before the earlier of:
1712          (i) the termination of a liquidation, rehabilitation, or conservation proceeding involving
1713     the impaired or insolvent insurer;
1714          (ii) the termination of the impairment or insolvency of the insurer; or
1715          (iii) upon the order of a court of competent jurisdiction.
1716          (c) Nothing in this Subsection (2) limits the duty of the association to render a report of
1717     its activities under Section 31A-28-115.
1718          (3) (a) For the purpose of carrying out its obligations under this part, the association is
1719     considered to be a creditor of an impaired or insolvent insurer to the extent of assets
1720     attributable to covered policies or contracts reduced by any amounts to which the association is
1721     entitled as subrogee pursuant to Subsection 31A-28-108(14).
1722          (b) Assets of the impaired or insolvent insurer attributable to covered policies or
1723     contracts shall be used to continue the covered policies and pay the contractual obligations of
1724     the impaired or insolvent insurer as required by this part.
1725          (c) As used in this Subsection (3), assets attributable to covered policies or contracts
1726     are that proportion of the assets which the reserves that should have been established for
1727     covered policies or contracts bear to the reserves that should have been established for all
1728     policies of insurance written by the impaired or insolvent insurer.
1729          (4) (a) As a creditor of the impaired or insolvent insurer under Subsection (3) and
1730     consistent with Section 31A-27a-701, the association and any other similar association are

1731     entitled to receive a disbursement of assets out of the marshaled assets, from time to time as the
1732     assets become available to reimburse the association and any other similar association.
1733          (b) If, within 180 days of a final determination of insolvency of [an] a member insurer
1734     by the receivership court, the receiver has not made an application to the court for the approval
1735     of a proposal to disburse assets out of marshaled assets to the guaranty associations having
1736     obligations because of the insolvency, the association is entitled to make application to the
1737     receivership court for approval of the association's proposal for disbursement of these assets.
1738          (5) (a) Before the termination of a liquidation, rehabilitation, or conservation
1739     proceeding, when making an equitable distribution of the ownership rights of the insolvent
1740     insurer, the court may take into consideration the contributions of the respective parties,
1741     including:
1742          (i) the association;
1743          (ii) the shareholders;
1744          (iii) [policyowners] policy owners, contract owners, certificate holders, and enrollees
1745     of the insolvent insurer; and
1746          (iv) any other party with a bona fide interest in making an equitable distribution of the
1747     ownership rights of the insolvent insurer.
1748          (b) In making a determination under Subsection (5)(a), the court shall consider the
1749     welfare of the [policyowners] policy owners, contract owners, certificate holders, and enrollees
1750     of the continuing or successor member insurer.
1751          (c) A distribution to any stockholder of an impaired or insolvent insurer may not be
1752     made until and unless the total amount of valid claims of the association with interest has been
1753     fully recovered by the association for funds expended in carrying out its powers and duties
1754     under Section 31A-28-108 with respect to the member insurer.
1755          Section 16. Section 31A-28-119 is amended to read:
1756          31A-28-119. Prohibited advertisement of the association -- Notice to owners of
1757     policies and contracts.
1758          (1) (a) Except as provided in Subsection (1)(b), a person, including [an] a member
1759     insurer, [agent] producer, or affiliate of [an] a member insurer may not make, publish,
1760     disseminate, circulate, or place before the public, or cause directly or indirectly to be made,
1761     published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or

1762     other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over a radio
1763     station or television station, or in any other way, any advertisement, announcement, or
1764     statement written or oral, that uses the existence of the association for the purpose of sales,
1765     solicitation, or inducement to purchase any form of insurance or coverage for which the
1766     guaranty association provides coverage under this part.
1767          (b) [Notwithstanding Subsection (1)(a), this] This section does not apply to:
1768          (i) the association; or
1769          (ii) another entity that does not sell or solicit insurance.
1770          (2) (a) The association shall:
1771          (i) have a summary document describing the general purposes and current limitations
1772     of this part that complies with Subsection (3); and
1773          (ii) submit the summary document described in Subsection (2)(a)(i) to the
1774     commissioner for approval.
1775          (b) [An] A member insurer may not deliver a policy or contract to a policy [or] owner,
1776     contract owner, certificate holder, or enrollee unless the summary document is also delivered to
1777     the policy [or] owner, contract owner, certificate holder, or enrollee before, or at the time of,
1778     delivery of the policy or contract.
1779          (c) The summary document shall be available upon request by a policy owner, contract
1780     owner, certificate holder, or enrollee.
1781          (d) The distribution, delivery, or contents or interpretation of the summary document
1782     does not guarantee that:
1783          (i) the policy or the contract is covered in the event of the impairment or insolvency of
1784     a member insurer; or
1785          (ii) the [owner of the policy or] policy owner, contract owner, certificate holder, or
1786     enrollee is covered in the event of the impairment or insolvency of a member insurer.
1787          (e) The summary document shall be revised by the association as amendments to this
1788     part may require.
1789          (f) Failure to receive the summary document as required in Subsection (2)(b) does not
1790     give the [owner of a policy or] policy owner, contract owner, certificate holder, enrollee or
1791     insured any greater rights than those stated in this part.
1792          (3) (a) The summary document described in Subsection (2) shall contain a clear and

1793     conspicuous disclaimer on its face.
1794          (b) The commissioner shall, by rule, establish the form and content of the disclaimer
1795     described in Subsection (3)(a), except that the disclaimer shall:
1796          (i) state the name and address of:
1797          (A) the association; and
1798          (B) the department;
1799          (ii) prominently warn a policy [or] owner, contract owner, certificate holder, or
1800     enrollee that:
1801          (A) the association may not cover the policy or contract; or
1802          (B) if coverage is available, it is:
1803          (I) subject to substantial limitations and exclusions; and
1804          (II) conditioned on continued residence in the state;
1805          (iii) state the types of policies or contracts for which the association will provide
1806     coverage;
1807          (iv) state that the member insurer and [its agents] the member insurer's producers are
1808     prohibited by law from using the existence of the association for the purpose of sales,
1809     solicitation, or inducement to purchase any form of insurance;
1810          (v) state that the policy [or] owner, contract owner, certificate holder, or enrollee
1811     should not rely on coverage under the association when selecting an insurer;
1812          (vi) explain the rights available and procedures for filing a complaint to allege a
1813     violation of this part; and
1814          (vii) provide other information as directed by the commissioner including sources for
1815     information about the financial condition of insurers provided that the information:
1816          (A) is not proprietary; and
1817          (B) is subject to disclosure under public records laws.
1818          (4) (a) An insurer, or [agent] the insurer's producer, may not deliver a policy or contract
1819     described in Subsection 31A-28-103[(2)(a)](6) and wholly excluded under Subsection
1820     31A-28-103[(2)(b)(i)](7)(a) from coverage under this part unless the insurer or [agent] the
1821     insurer's producer, prior to or at the time of delivery, gives the policy [or] owner, contract
1822     owner, certificate holder, or enrollee a separate written notice that clearly and conspicuously
1823     discloses that the policy or contract is not covered by the association.

1824          (b) The commissioner shall by rule specify the form and content of the notice required
1825     by Subsection (4)(a).
1826          (5) A member insurer shall retain evidence of compliance with Subsection (2) for the
1827     later of:
1828          (a) three years; or
1829          (b) until the conclusion of the next market conduct examination by the department of
1830     insurance where the member insurer is domiciled.
1831          Section 17. Section 31A-28-120 is amended to read:
1832          31A-28-120. Prospective application.
1833          Notwithstanding any prior or subsequent law, the provisions of this part that are in
1834     effect on the date on which the association first becomes obligated for the policies or contracts
1835     of an insolvent or impaired [member] insurer govern the association's rights and obligations to
1836     the [policyowners] policy owners, contract owners, certificate holders, and enrollees of the
1837     insolvent or impaired [member] insurer.
1838          Section 18. Section 59-7-623 is enacted to read:
1839          59-7-623. Nonrefundable guaranty association assessment tax credit.
1840          (1) As used in this section:
1841          (a) "Guaranty association assessment" means the amount of any assessments paid by a
1842     qualified insurer under the guaranty association established under Title 31A, Chapter 28, Part
1843     1, Utah Life and Health Insurance Guaranty Association Act, in the manner provided by
1844     Section 31A-28-113.
1845          (b) "Qualified insurer" means an insurer, as defined in Section 31A-1-301, that is not
1846     subject to the premium tax on health care insurance under Section 59-9-101.
1847          (2) For a taxable year beginning on or after January 1, 2019, a qualified insurer may
1848     claim a nonrefundable tax credit equal to 20% of the assessment for each of the five years
1849     following the year the qualified insurer pays a guaranty association assessment, in accordance
1850     with Section 31A-28-113.
1851          (3) (a) A qualified insurer may carry forward the portion of the tax credit that exceeds
1852     the qualified insurer's tax liability for the taxable year in accordance with Section 31A-28-113.
1853          (b) A qualified insurer may not carry back the portion of the tax credit that exceeds the
1854     qualified insurer's tax liability for the taxable year.