Representative Brian S. King proposes the following substitute bill:




Chief Sponsor: Lincoln Fillmore

House Sponsor: Brian S. King

6     Cosponsors:
7     Jacob L. Anderegg
8     Allen M. Christensen
9     Jim Dabakis
10     Gene Davis
Luz Escamilla
Deidre M. Henderson
Lyle W. Hillyard
Jani Iwamoto
Peter C. Knudson
Karen Mayne
Evan J. Vickers
Brian Zehnder

13     General Description:
14           This bill amends provisions related to insurance contracts.
15     Highlighted Provisions:
16          This bill:
17          ▸      prohibits discretionary clauses in certain insurance contracts; and
18          ▸     makes technical and conforming changes.
19     Money Appropriated in this Bill:
20          None
21     Other Special Clauses:
22          None
23     Utah Code Sections Affected:
24     AMENDS:

25          31A-21-314, as last amended by Laws of Utah 2015, Chapter 244

27     Be it enacted by the Legislature of the state of Utah:
28          Section 1. Section 31A-21-314 is amended to read:
29          31A-21-314. Prohibited provisions.
30          (1) As used in this section:
31          (a) "Reserving discretionary authority" means a policy provision that:
32          (i) has the effect of conferring discretion on an insurer, or other claim administrator, to:
33          (A) determine eligibility for benefits; or
34          (B) interpret the terms or provisions of the policy, contract, certificate, or agreement;
35     and
36          (ii) could lead to a deferential standard of review by a reviewing court.
37          (b) "Reserving discretionary authority" does not include a policy provision that:
38          (i) informs an insured that, as part of the insurer's routine operations, the insurer
39     applies the terms of the contract for:
40          (A) making a decision, including making a determination regarding eligibility, or
41     receipt of benefits or claims; or
42          (B) explaining the insurer's policies and procedures; and
43          (ii) does not give rise to a deferential standard of review by a reviewing court.
44          [(1)] (2) An insurance policy subject to this chapter may not contain [any] a provision:
45          (a) requiring [it] the insurance policy to be construed according to the laws of another
46     jurisdiction except as necessary to meet the requirements of compulsory insurance laws of
47     other jurisdictions;
48          (b) depriving Utah courts of jurisdiction over an action against the insurer, except as
49     provided in permissible arbitration provisions; [or]
50          (c) limiting the right of action against the insurer to less than three years from the date
51     the cause of action accrues[.]; or
52          (d) for life insurance or accident and health insurance, reserving discretionary
53     authority.
54          [(2)] (3) For purposes of Subsection [(1)] (2)(c), the cause of action accrues on a
55     fidelity bond on the date the insurer first denies all or part of a claim made under the fidelity

56     bond.