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6 Cosponsors:
7 Jon Hawkins
Marc K. Roberts
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9 LONG TITLE
10 General Description:
11 This bill modifies provisions related to the Department of Insurance.
12 Highlighted Provisions:
13 This bill:
14 ▸ defines terms;
15 ▸ creates an insurance regulatory sandbox program in the Department of Insurance,
16 which allows a participant to temporarily test innovative insurance products or
17 services on a limited basis without otherwise being licensed or authorized to act
18 under the laws of the state;
19 ▸ describes the application process and the conditions of participating in the program;
20 ▸ describes the responsibilities of the Department of Insurance in administering the
21 program; and
22 ▸ describes reporting requirements for participants in the program and for the
23 Department of Insurance.
24 Money Appropriated in this Bill:
25 None
26 Other Special Clauses:
27 None
28 Utah Code Sections Affected:
29 ENACTS:
30 31A-47-101, Utah Code Annotated 1953
31 31A-47-102, Utah Code Annotated 1953
32 31A-47-103, Utah Code Annotated 1953
33 31A-47-104, Utah Code Annotated 1953
34 31A-47-105, Utah Code Annotated 1953
35 31A-47-106, Utah Code Annotated 1953
36 31A-47-107, Utah Code Annotated 1953
37 31A-47-108, Utah Code Annotated 1953
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39 Be it enacted by the Legislature of the state of Utah:
40 Section 1. Section 31A-47-101 is enacted to read:
41
42 31A-47-101. Title.
43 This chapter is known as the "Insurance Regulatory Sandbox Program."
44 Section 2. Section 31A-47-102 is enacted to read:
45 31A-47-102. Definitions.
46 As used in this chapter:
47 (1) "Applicable agency" means a department or agency of the state, including the
48 department and the Department of Commerce, that by law regulates certain types of
49 insurance-related business activity in the state and persons engaged in such insurance-related
50 business activity, including the issuance of licenses or other types of authorization, which the
51 department determines would otherwise regulate an insurance sandbox participant.
52 (2) "Applicant" means an individual or entity that is applying to participate in the
53 insurance regulatory sandbox.
54 (3) "Blockchain technology" means the use of a digital database containing records of
55 financial transactions, which can be simultaneously used and shared within a decentralized,
56 publicly accessible network and can record transactions between two parties in a verifiable and
57 permanent way.
58 (4) "Consumer" means a person that purchases or otherwise enters into a transaction or
59 agreement to receive an innovative insurance product or service that is being tested by an
60 insurance sandbox participant.
61 (5) "Department" means the Department of Insurance.
62 (6) "Innovation" means the use or incorporation of a new or emerging technology or a
63 new use of existing technology, including blockchain technology, to address a problem,
64 provide a benefit, or otherwise offer a product, service, business model, or delivery mechanism
65 that is not known by the department to have a comparable widespread offering in the state.
66 (7) "Innovative insurance product or service" means an insurance product or service
67 that includes an innovation.
68 (8) (a) "Insurance product or service" means an insurance product or insurance service
69 that requires state licensure, registration, or other authorization as regulated by Title 31A,
70 Insurance Code, including an insurance product or insurance service that includes a business
71 model, delivery mechanism, or element that requires a license, registration, or other
72 authorization to do an insurance business, act as an insurance producer or consultant, or engage
73 in insurance adjusting as regulated by Title 31A, Insurance Code.
74 (b) "Insurance product or service" does not include a product or service that is
75 governed by Title 61, Chapter 1, Utah Uniform Securities Act.
76 (9) "Insurance regulatory sandbox" means the Insurance Regulatory Sandbox Program
77 created by Section 31A-47-103, which allows a person to temporarily test an innovative
78 insurance product or service on a limited basis without otherwise being licensed or authorized
79 to act under the laws of the state.
80 (10) "Insurance sandbox participant" means a person whose application to participate
81 in the insurance regulatory sandbox is approved in accordance with the provisions of this
82 chapter.
83 (11) "Test" means to provide an innovative insurance product or service in accordance
84 with the provisions of this chapter.
85 Section 3. Section 31A-47-103 is enacted to read:
86 31A-47-103. Insurance Regulatory Sandbox Program -- Application
87 requirements.
88 (1) There is created in the department the Insurance Regulatory Sandbox Program.
89 (2) In administering the insurance regulatory sandbox, the department:
90 (a) shall consult with each applicable agency;
91 (b) shall establish a program to enable a person to obtain limited access to the market
92 in the state to test an innovative insurance product or service without obtaining a license or
93 other authorization that might otherwise be required; and
94 (c) may enter into agreements with or follow the best practices of the Consumer
95 Financial Protection Bureau or other states that are administering similar programs.
96 (3) An applicant for the insurance regulatory sandbox shall provide to the department
97 an application in a form prescribed by the department that:
98 (a) includes a nonrefundable application fee of $4,500;
99 (b) demonstrates the applicant is subject to the jurisdiction of the state;
100 (c) demonstrates the applicant has established a physical location in the state, from
101 which testing will be developed and performed and where all required records, documents, and
102 data will be maintained;
103 (d) contains relevant personal and contact information for the applicant, including legal
104 names, addresses, telephone numbers, email addresses, website addresses, and other
105 information required by the department;
106 (e) discloses criminal convictions of the applicant or other participating personnel, if
107 any;
108 (f) demonstrates that the applicant has the necessary personnel, financial and technical
109 expertise, access to capital, and developed plan to test, monitor, and assess the innovative
110 insurance product or service;
111 (g) contains a description of the innovative insurance product or service to be tested,
112 including statements regarding all of the following:
113 (i) how the innovative insurance product or service is subject to licensing or other
114 authorization requirements outside of the insurance regulatory sandbox, including a specific list
115 of all state laws, regulations, and licensing or other requirements that the applicant is seeking to
116 have waived during the testing period;
117 (ii) how the innovative insurance product or service would benefit consumers;
118 (iii) how the innovative insurance product or service is different from other insurance
119 products or services available in the state;
120 (iv) what risks may confront consumers that use or purchase the innovative insurance
121 product or service;
122 (v) how participating in the insurance regulatory sandbox would enable a successful
123 test of the innovative insurance product or service;
124 (vi) a description of the proposed testing plan, including estimated time periods for
125 beginning the test, ending the test, and obtaining necessary licensure or authorizations after the
126 testing is complete;
127 (vii) a description of how the applicant will perform ongoing duties after the test; and
128 (viii) how the applicant will end the test and protect consumers if the test fails,
129 including providing evidence of sufficient liability coverage and financial reserves to protect
130 consumers and to protect against insolvency by the applicant; and
131 (h) provides any other required information as determined by the department.
132 (4) An applicant shall file a separate application for each innovative insurance product
133 or service that the applicant wants to test.
134 (5) After an application is filed and before approving an application, the department
135 may seek any additional information from the applicant and from the department's own
136 research that the department determines is necessary, including:
137 (a) proof of sufficient assets, accounts, and liability coverage by the applicant to ensure
138 that consumers are protected and that the applicant will be able to cover ongoing duties when
139 the test ends or if the test ends early; and
140 (b) industry ratings and past performance of the applicant.
141 (6) Subject to Subsection (7), not later than 90 days after the day on which a complete
142 application is received by the department, the department shall inform the applicant as to
143 whether the application is approved for entry into the insurance regulatory sandbox.
144 (7) The department and an applicant may mutually agree to extend the 90-day time
145 period described in Subsection (6) for the department to determine whether an application is
146 approved for entry into the insurance regulatory sandbox.
147 (8) (a) In reviewing an application under this section, the department shall consult
148 with, and get approval from, each applicable agency before admitting an applicant into the
149 insurance regulatory sandbox.
150 (b) The consultation with an applicable agency may include seeking information about
151 whether:
152 (i) the applicable agency has previously issued a license or other authorization to the
153 applicant;
154 (ii) the applicable agency has previously investigated, sanctioned, or pursued legal
155 action against the applicant;
156 (iii) whether the applicant could obtain a license or other authorization from the
157 applicable agency after exiting the insurance regulatory sandbox; and
158 (iv) whether certain licensure or other regulations should not be waived even if the
159 applicant is accepted into the insurance regulatory sandbox.
160 (9) In reviewing an application under this section, the department shall consider
161 whether a competitor to the applicant is or has been an insurance sandbox participant and, if so,
162 weigh that as a factor in favor of allowing the applicant to also become an insurance sandbox
163 participant.
164 (10) If the department and each applicable agency approve admitting an applicant into
165 the insurance regulatory sandbox an applicant may become an insurance sandbox participant.
166 (11) The department may deny any application submitted under this section, for any
167 reason, at the department's discretion.
168 (12) If the department denies an application submitted under this section, the
169 department shall provide to the applicant a written description of the reasons for the denial as
170 an insurance sandbox participant.
171 Section 4. Section 31A-47-104 is enacted to read:
172 31A-47-104. Scope of the insurance regulatory sandbox.
173 (1) If the department approves an application under Section 31A-47-103, the insurance
174 sandbox participant has 12 months after the day on which the application was approved to test
175 the innovative insurance product or service described in the insurance sandbox participant's
176 application.
177 (2) An insurance sandbox participant testing an innovative insurance product or service
178 within the insurance regulatory sandbox is subject to the following:
179 (a) consumers shall be residents of the state;
180 (b) the department may, on a case by case basis, specify the maximum number of
181 consumers that may enter into an agreement with the insurance sandbox participant to use the
182 innovative insurance product or service;
183 (c) the department may, if applicable and on a case by case basis, specify the maximum
184 number of items and the maximum coverage amount for each item that may be offered by an
185 insurance sandbox participant during the testing of the innovative insurance product or service;
186 and
187 (d) the department may, on a case by case basis, specify liability coverage requirements
188 and minimum financial reserves requirements that the insurance sandbox participant shall meet
189 during the testing of the innovative insurance product or service.
190 (3) This section does not restrict an insurance sandbox participant who holds a license
191 or other authorization in another jurisdiction from acting in accordance with that license or
192 other authorization.
193 (4) An insurance sandbox participant is deemed to possess an appropriate license under
194 the laws of the state for the purposes of any provision of federal law requiring state licensure or
195 authorization.
196 (5) An insurance sandbox participant that is testing an innovative insurance product or
197 service is not subject to state laws, regulations, licensing requirements, or authorization
198 requirements that were identified by the insurance sandbox participant in the insurance
199 sandbox participant's application and have been waived in writing by the department.
200 (6) Notwithstanding any other provision of this chapter, an insurance sandbox
201 participant does not have immunity related to any criminal offense committed during the
202 insurance sandbox participant's participation in the insurance regulatory sandbox.
203 (7) By written notice, the department may end an insurance sandbox participant's
204 participation in the insurance regulatory sandbox at any time and for any reason, including if
205 the department determines an insurance sandbox participant is not operating in good faith to
206 bring an innovative insurance product or service to market.
207 (8) The department and the department's employees are not liable for any business
208 losses or the recouping of application expenses related to the insurance regulatory sandbox,
209 including for:
210 (a) denying an applicant's application to participate in the insurance regulatory sandbox
211 for any reason; or
212 (b) ending an insurance sandbox participant's participation in the insurance regulatory
213 sandbox at any time and for any reason.
214 Section 5. Section 31A-47-105 is enacted to read:
215 31A-47-105. Consumer protection for insurance regulatory sandbox.
216 (1) Before providing an innovative insurance product or service to a consumer, an
217 insurance sandbox participant shall disclose the following to the consumer:
218 (a) the name and contact information of the insurance sandbox participant;
219 (b) that the innovative insurance product or service is authorized pursuant to the
220 insurance regulatory sandbox and, if applicable, that the insurance sandbox participant does not
221 have a license or other authorization to provide an insurance product or service under state laws
222 that regulate insurance products or services outside the insurance regulatory sandbox;
223 (c) that the innovative insurance product or service is undergoing testing and may not
224 function as intended and may expose the customer to financial risk;
225 (d) that the provider of the innovative insurance product or service is not immune from
226 civil liability for any losses or damages caused by the innovative insurance product or service;
227 (e) that the state does not endorse or recommend the innovative insurance product or
228 service;
229 (f) that the innovative insurance product or service is a temporary test that may be
230 discontinued at the end of the testing period;
231 (g) the expected end date of the testing period; and
232 (h) that a consumer may contact the department to file a complaint regarding the
233 innovative insurance product or service being tested and provide the department's telephone
234 number and website address where a complaint may be filed.
235 (2) The disclosures required by Subsection (1) shall be provided to a consumer in a
236 clear and conspicuous form and, for an Internet or application-based innovative insurance
237 product or service, a consumer shall acknowledge receipt of the disclosure before a transaction
238 may be completed.
239 (3) The department may require that an insurance sandbox participant make additional
240 disclosures to a consumer.
241 Section 6. Section 31A-47-106 is enacted to read:
242 31A-47-106. Requirements for exiting insurance regulatory sandbox.
243 (1) At least 30 days before the end of the 12-month insurance regulatory sandbox
244 testing period, an insurance sandbox participant shall:
245 (a) notify the department that the insurance sandbox participant will exit the insurance
246 regulatory sandbox, discontinue the insurance sandbox participant's test, and will stop offering
247 any innovative insurance product or service in the insurance regulatory sandbox within 60 days
248 after the day on which the 12-month testing period ends; or
249 (b) seek an extension in accordance with Section 31A-47-107.
250 (2) Subject to Subsection (3), if the department does not receive notification as
251 required by Subsection (1), the insurance regulatory sandbox testing period ends at the end of
252 the 12-month testing period and the insurance sandbox participant shall immediately stop
253 offering each innovative insurance product or service being tested.
254 (3) If a test includes offering an innovative insurance product or service that requires
255 ongoing duties, the insurance sandbox participant shall continue to fulfill those duties or
256 arrange for another person to fulfill those duties after the date on which the insurance sandbox
257 participant exits the insurance regulatory sandbox.
258 Section 7. Section 31A-47-107 is enacted to read:
259 31A-47-107. Extensions.
260 (1) Not later than 30-days before the end of the 12-month regulatory insurance sandbox
261 testing period, an insurance sandbox participant may request an extension of the insurance
262 regulatory sandbox testing period for the purpose of obtaining a license or other authorization
263 required by law.
264 (2) The department shall grant or deny a request for an extension in accordance with
265 Subsection (1) by the end of the 12-month insurance regulatory sandbox testing period.
266 (3) The department may grant an extension in accordance with this section for not
267 more than six months after the end of the insurance regulatory sandbox testing period.
268 (4) An insurance sandbox participant that obtains an extension in accordance with this
269 section shall provide the department with a written report every three months that provides an
270 update on efforts to obtain a license or other authorization required by law, including any
271 submitted applications for licensure or other authorization, rejected applications, or issued
272 licenses or other authorization.
273 Section 8. Section 31A-47-108 is enacted to read:
274 31A-47-108. Record keeping and reporting requirements.
275 (1) An insurance sandbox participant shall retain records, documents, and data
276 produced in the ordinary course of business regarding an innovative insurance product or
277 service tested in the insurance regulatory sandbox.
278 (2) If an innovative insurance product or service fails before the end of a testing period,
279 the insurance sandbox participant shall notify the department and report on actions taken by the
280 insurance sandbox participant to ensure consumers have not been harmed as a result of the
281 failure.
282 (3) The department shall establish quarterly reporting requirements for an insurance
283 sandbox participant, including information about any customer complaints.
284 (4) The department may request records, documents, and data from an insurance
285 sandbox participant and, upon the department's request, an insurance sandbox participant shall
286 make such records, documents, and data available for inspection by the department.
287 (5) If the department determines that an insurance sandbox participant has engaged in,
288 is engaging in, or is about to engage in any practice or transaction that is in violation of this
289 chapter or that constitutes a violation of a state or federal criminal law, the department may
290 remove an insurance sandbox participant from the insurance regulatory sandbox.
291 (6) By October 1, the department shall provide an annual written report to the Business
292 and Labor Interim Committee that provides information regarding each insurance sandbox
293 participant and that provides recommendations regarding the effectiveness of the Insurance
294 Regulatory Sandbox Program.