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7 LONG TITLE
8 Committee Note:
9 The Business and Labor Interim Committee recommended this bill.
10 Legislative Vote: 15 voting for 0 voting against 5 absent
11 General Description:
12 This bill amends the Insurance Code.
13 Highlighted Provisions:
14 This bill:
15 ▸ amends references to "blanket insurance policy" for consistency;
16 ▸ amends the definition of "captive insurance company";
17 ▸ permits credit to a ceding insurer ceding to a foreign captive insurer under certain
18 conditions;
19 ▸ provides that inland marine insurance that includes accident and health insurance is
20 subject to Title 31A, Chapter 22, Contracts in Specific Lines;
21 ▸ removes provisions that the Utah Insurance Commissioner define "conspicuously"
22 in regards to certain forms;
23 ▸ amend provisions related to mass marketed life or accident and health insurance;
24 ▸ amends the scope of Title 31A, Chapter 22, Part 6, Accident and Health Insurance;
25 ▸ allows reinstatement language of individual or franchise accident and health
26 insurance policies to be substantially, rather than verbatim, as provided in statute;
27 ▸ amends provisions related to the coverage of emergency medical services;
28 ▸ amends provisions related to notice of discontinuance of a group health benefit
29 plan;
30 ▸ enacts provisions prohibiting termination of certain policies unless certain
31 conditions are met;
32 ▸ amends provisions regarding an association group to whom a group accident and
33 health insurance policy may be issued;
34 ▸ permits the Utah Insurance Commissioner to adopt rules permitting or including
35 independent review of benefit determinations for long-term care insurance;
36 ▸ amends provisions related to the lapse of a license under Title 31A, Chapter 23a,
37 Insurance Marketing - Licensing Producers, Consultants, and Reinsurance
38 Intermediaries;
39 ▸ amends provisions regarding a title insurance producer's business;
40 ▸ amends provisions related to certain trust obligations for a person authorized to
41 engage in the insurance business;
42 ▸ amends the definition of "company adjuster";
43 ▸ amends the coverage and limitations of guaranty association coverage;
44 ▸ amends the minimum financial requirements for a bail bond agency license;
45 ▸ amends the requirements for initial licensure and license renewal of a bail bond
46 agency license;
47 ▸ amends required unimpaired paid-in capital and other capital for capital insurance
48 companies;
49 ▸ amends provisions allowing a captive insurance company to reinsure risks; and
50 ▸ makes technical and conforming changes.
51 Money Appropriated in this Bill:
52 None
53 Other Special Clauses:
54 None
55 Utah Code Sections Affected:
56 AMENDS:
57 31A-1-103, as last amended by Laws of Utah 2020, Chapter 32
58 31A-1-301, as last amended by Laws of Utah 2020, Chapter 32
59 31A-17-404, as last amended by Laws of Utah 2020, Chapter 32
60 31A-21-101, as last amended by Laws of Utah 2017, Chapter 363
61 31A-21-201, as last amended by Laws of Utah 2020, Chapter 32
62 31A-21-402, as last amended by Laws of Utah 2001, Chapter 116
63 31A-21-404, as last amended by Laws of Utah 2011, Chapter 62
64 31A-22-501, as last amended by Laws of Utah 2019, Chapter 193
65 31A-22-522, as last amended by Laws of Utah 2002, Chapter 308
66 31A-22-600, as last amended by Laws of Utah 2001, Chapter 116
67 31A-22-607, as last amended by Laws of Utah 2011, Chapter 284
68 31A-22-608, as last amended by Laws of Utah 2001, Chapter 116
69 31A-22-612, as last amended by Laws of Utah 2018, Chapter 319
70 31A-22-618.6, as last amended by Laws of Utah 2018, Chapter 319
71 31A-22-618.7, as last amended by Laws of Utah 2017, Chapter 168 and renumbered
72 and amended by Laws of Utah 2017, Chapter 292
73 31A-22-618.8, as renumbered and amended by Laws of Utah 2017, Chapter 292
74 31A-22-627, as last amended by Laws of Utah 2019, Chapter 193
75 31A-22-701, as last amended by Laws of Utah 2019, Chapter 193
76 31A-22-716, as last amended by Laws of Utah 2017, Chapter 168
77 31A-22-717, as last amended by Laws of Utah 2004, Chapter 108
78 31A-22-1404, as last amended by Laws of Utah 1995, Chapter 344
79 31A-23a-113, as last amended by Laws of Utah 2015, Chapter 244
80 31A-23a-201, as renumbered and amended by Laws of Utah 2003, Chapter 298
81 31A-23a-406, as last amended by Laws of Utah 2019, Chapter 231
82 31A-23a-409, as last amended by Laws of Utah 2012, Chapter 253
83 31A-26-102, as last amended by Laws of Utah 2018, Chapter 319
84 31A-28-103, as last amended by Laws of Utah 2018, Chapter 391
85 31A-35-404, as last amended by Laws of Utah 2016, Chapter 234
86 31A-35-406, as last amended by Laws of Utah 2016, Chapter 234
87 31A-37-102, as last amended by Laws of Utah 2019, Chapter 193
88 31A-37-204, as last amended by Laws of Utah 2017, Chapter 168
89 31A-37-303, as last amended by Laws of Utah 2020, Chapter 32
90 31A-45-501, as renumbered and amended by Laws of Utah 2017, Chapter 292
91 ENACTS:
92 31A-22-618.9, Utah Code Annotated 1953
93
94 Be it enacted by the Legislature of the state of Utah:
95 Section 1. Section 31A-1-103 is amended to read:
96 31A-1-103. Scope and applicability of title.
97 (1) This title does not apply to:
98 (a) a retainer contract made by an attorney-at-law:
99 (i) with an individual client; and
100 (ii) under which fees are based on estimates of the nature and amount of services to be
101 provided to the specific client;
102 (b) a contract similar to a contract described in Subsection (1)(a) made with a group of
103 clients involved in the same or closely related legal matters;
104 (c) an arrangement for providing benefits that do not exceed a limited amount of
105 consultations, advice on simple legal matters, either alone or in combination with referral
106 services, or the promise of fee discounts for handling other legal matters;
107 (d) limited legal assistance on an informal basis involving neither an express
108 contractual obligation nor reasonable expectations, in the context of an employment,
109 membership, educational, or similar relationship;
110 (e) legal assistance by employee organizations to their members in matters relating to
111 employment;
112 (f) death, accident, health, or disability benefits provided to a person by an organization
113 or its affiliate if:
114 (i) the organization is tax exempt under Section 501(c)(3) of the Internal Revenue
115 Code and has had its principal place of business in Utah for at least five years;
116 (ii) the person is not an employee of the organization; and
117 (iii) (A) substantially all the person's time in the organization is spent providing
118 voluntary services:
119 (I) in furtherance of the organization's purposes;
120 (II) for a designated period of time; and
121 (III) for which no compensation, other than expenses, is paid; or
122 (B) the time since the service under Subsection (1)(f)(iii)(A) was completed is no more
123 than 18 months; or
124 (g) a prepaid contract of limited duration that provides for scheduled maintenance only.
125 (2) (a) This title restricts otherwise legitimate business activity.
126 (b) What this title does not prohibit is permitted unless contrary to other provisions of
127 Utah law.
128 (3) Except as otherwise expressly provided, this title does not apply to:
129 (a) those activities of an insurer where state jurisdiction is preempted by Section 514 of
130 the federal Employee Retirement Income Security Act of 1974, as amended;
131 (b) ocean marine insurance;
132 (c) death, accident, health, or disability benefits provided by an organization if the
133 organization:
134 (i) has as the organization's principal purpose to achieve charitable, educational, social,
135 or religious objectives rather than to provide death, accident, health, or disability benefits;
136 (ii) does not incur a legal obligation to pay a specified amount; and
137 (iii) does not create reasonable expectations of receiving a specified amount on the part
138 of an insured person;
139 (d) other business specified in rules adopted by the commissioner on a finding that:
140 (i) the transaction of the business in this state does not require regulation for the
141 protection of the interests of the residents of this state; or
142 (ii) it would be impracticable to require compliance with this title;
143 (e) except as provided in Subsection (4), a transaction independently procured through
144 negotiations under Section 31A-15-104;
145 (f) self-insurance;
146 (g) reinsurance;
147 (h) subject to Subsection (5), an employee [
148 policy covering risks in this state or an employee or labor union blanket insurance policy
149 covering risks in this state, if:
150 (i) the policyholder exists primarily for purposes other than to procure insurance;
151 (ii) the policyholder:
152 (A) is not a resident of this state;
153 (B) is not a domestic corporation; or
154 (C) does not have the policyholder's principal office in this state;
155 (iii) no more than 25% of the certificate holders or insureds are residents of this state;
156 (iv) on request of the commissioner, the insurer files with the department a copy of the
157 policy and a copy of each form or certificate; and
158 (v) (A) the insurer agrees to pay premium taxes on the Utah portion of the insurer's
159 business, as if the insurer were authorized to do business in this state; and
160 (B) the insurer provides the commissioner with the security the commissioner
161 considers necessary for the payment of premium taxes under Title 59, Chapter 9, Taxation of
162 Admitted Insurers;
163 (i) to the extent provided in Subsection (6):
164 (i) a manufacturer's or seller's warranty; and
165 (ii) a manufacturer's or seller's service contract;
166 (j) except to the extent provided in Subsection (7), a public agency insurance mutual;
167 or
168 (k) except as provided in Chapter 6b, Guaranteed Asset Protection Waiver Act, a
169 guaranteed asset protection waiver.
170 (4) A transaction described in Subsection (3)(e) is subject to taxation under Section
171 31A-3-301.
172 (5) (a) After a hearing, the commissioner may order an insurer of certain group
173 insurance policies or blanket [
174 business otherwise exempted under Subsection (3)(h) to an authorized insurer if the contracts
175 have been written by an unauthorized insurer.
176 (b) If the commissioner finds that the conditions required for the exemption of a group
177 or blanket insurer are not satisfied or that adequate protection to residents of this state is not
178 provided, the commissioner may require:
179 (i) the insurer to be authorized to do business in this state; or
180 (ii) that any of the insurer's transactions be subject to this title.
181 (c) Subsection (3)(h) does not apply to a blanket insurance policy offering accident and
182 health insurance.
183 (6) (a) As used in Subsection (3)(i) and this Subsection (6):
184 (i) "manufacturer's or seller's service contract" means a service contract:
185 (A) made available by:
186 (I) a manufacturer of a product;
187 (II) a seller of a product; or
188 (III) an affiliate of a manufacturer or seller of a product;
189 (B) made available:
190 (I) on one or more specific products; or
191 (II) on products that are components of a system; and
192 (C) under which the person described in Subsection (6)(a)(i)(A) is liable for services to
193 be provided under the service contract including, if the manufacturer's or seller's service
194 contract designates, providing parts and labor;
195 (ii) "manufacturer's or seller's warranty" means the guaranty of:
196 (A) (I) the manufacturer of a product;
197 (II) a seller of a product; or
198 (III) an affiliate of a manufacturer or seller of a product;
199 (B) (I) on one or more specific products; or
200 (II) on products that are components of a system; and
201 (C) under which the person described in Subsection (6)(a)(ii)(A) is liable for services
202 to be provided under the warranty, including, if the manufacturer's or seller's warranty
203 designates, providing parts and labor; and
204 (iii) "service contract" means the same as that term is defined in Section 31A-6a-101.
205 (b) A manufacturer's or seller's warranty may be designated as:
206 (i) a warranty;
207 (ii) a guaranty; or
208 (iii) a term similar to a term described in Subsection (6)(b)(i) or (ii).
209 (c) This title does not apply to:
210 (i) a manufacturer's or seller's warranty;
211 (ii) a manufacturer's or seller's service contract paid for with consideration that is in
212 addition to the consideration paid for the product itself; and
213 (iii) a service contract that is not a manufacturer's or seller's warranty or manufacturer's
214 or seller's service contract if:
215 (A) the service contract is paid for with consideration that is in addition to the
216 consideration paid for the product itself;
217 (B) the service contract is for the repair or maintenance of goods;
218 (C) the purchase price of the product is $3,700 or less;
219 (D) the product is not a motor vehicle; and
220 (E) the product is not the subject of a home warranty service contract.
221 (d) This title does not apply to a manufacturer's or seller's warranty or service contract
222 paid for with consideration that is in addition to the consideration paid for the product itself
223 regardless of whether the manufacturer's or seller's warranty or service contract is sold:
224 (i) at the time of the purchase of the product; or
225 (ii) at a time other than the time of the purchase of the product.
226 (7) (a) For purposes of this Subsection (7), "public agency insurance mutual" means an
227 entity formed by two or more political subdivisions or public agencies of the state:
228 (i) under Title 11, Chapter 13, Interlocal Cooperation Act; and
229 (ii) for the purpose of providing for the political subdivisions or public agencies:
230 (A) subject to Subsection (7)(b), insurance coverage; or
231 (B) risk management.
232 (b) Notwithstanding Subsection (7)(a)(ii)(A), a public agency insurance mutual may
233 not provide health insurance unless the public agency insurance mutual provides the health
234 insurance using:
235 (i) a third party administrator licensed under Chapter 25, Third Party Administrators;
236 (ii) an admitted insurer; or
237 (iii) a program authorized by Title 49, Chapter 20, Public Employees' Benefit and
238 Insurance Program Act.
239 (c) Except for this Subsection (7), a public agency insurance mutual is exempt from
240 this title.
241 (d) A public agency insurance mutual is considered to be a governmental entity and
242 political subdivision of the state with all of the rights, privileges, and immunities of a
243 governmental entity or political subdivision of the state including all the rights and benefits of
244 Title 63G, Chapter 7, Governmental Immunity Act of Utah.
245 Section 2. Section 31A-1-301 is amended to read:
246 31A-1-301. Definitions.
247 As used in this title, unless otherwise specified:
248 (1) (a) "Accident and health insurance" means insurance to provide protection against
249 economic losses resulting from:
250 (i) a medical condition including:
251 (A) a medical care expense; or
252 (B) the risk of disability;
253 (ii) accident; or
254 (iii) sickness.
255 (b) "Accident and health insurance":
256 (i) includes a contract with disability contingencies including:
257 (A) an income replacement contract;
258 (B) a health care contract;
259 (C) an expense reimbursement contract;
260 (D) a credit accident and health contract;
261 (E) a continuing care contract; and
262 (F) a long-term care contract; and
263 (ii) may provide:
264 (A) hospital coverage;
265 (B) surgical coverage;
266 (C) medical coverage;
267 (D) loss of income coverage;
268 (E) prescription drug coverage;
269 (F) dental coverage; or
270 (G) vision coverage.
271 (c) "Accident and health insurance" does not include workers' compensation insurance.
272 (d) For purposes of a national licensing registry, "accident and health insurance" is the
273 same as "accident and health or sickness insurance."
274 (2) "Actuary" is as defined by the commissioner by rule, made in accordance with Title
275 63G, Chapter 3, Utah Administrative Rulemaking Act.
276 (3) "Administrator" means the same as that term is defined in Subsection [
277 (4) "Adult" means an individual who has attained the age of at least 18 years.
278 (5) "Affiliate" means a person who controls, is controlled by, or is under common
279 control with, another person. A corporation is an affiliate of another corporation, regardless of
280 ownership, if substantially the same group of individuals manage the corporations.
281 (6) "Agency" means:
282 (a) a person other than an individual, including a sole proprietorship by which an
283 individual does business under an assumed name; and
284 (b) an insurance organization licensed or required to be licensed under Section
285 31A-23a-301, 31A-25-207, or 31A-26-209.
286 (7) "Alien insurer" means an insurer domiciled outside the United States.
287 (8) "Amendment" means an endorsement to an insurance policy or certificate.
288 (9) "Annuity" means an agreement to make periodical payments for a period certain or
289 over the lifetime of one or more individuals if the making or continuance of all or some of the
290 series of the payments, or the amount of the payment, is dependent upon the continuance of
291 human life.
292 (10) "Application" means a document:
293 (a) (i) completed by an applicant to provide information about the risk to be insured;
294 and
295 (ii) that contains information that is used by the insurer to evaluate risk and decide
296 whether to:
297 (A) insure the risk under:
298 (I) the coverage as originally offered; or
299 (II) a modification of the coverage as originally offered; or
300 (B) decline to insure the risk; or
301 (b) used by the insurer to gather information from the applicant before issuance of an
302 annuity contract.
303 (11) "Articles" or "articles of incorporation" means:
304 (a) the original articles;
305 (b) a special law;
306 (c) a charter;
307 (d) an amendment;
308 (e) restated articles;
309 (f) articles of merger or consolidation;
310 (g) a trust instrument;
311 (h) another constitutive document for a trust or other entity that is not a corporation;
312 and
313 (i) an amendment to an item listed in Subsections (11)(a) through (h).
314 (12) "Bail bond insurance" means a guarantee that a person will attend court when
315 required, up to and including surrender of the person in execution of a sentence imposed under
316 Subsection 77-20-7(1), as a condition to the release of that person from confinement.
317 (13) "Binder" means the same as that term is defined in Section 31A-21-102.
318 (14) "Blanket insurance policy" or "blanket contract" means a group insurance policy
319 covering a defined class of persons:
320 (a) without individual underwriting or application; and
321 (b) that is determined by definition without designating each person covered.
322 (15) "Board," "board of trustees," or "board of directors" means the group of persons
323 with responsibility over, or management of, a corporation, however designated.
324 (16) "Bona fide office" means a physical office in this state:
325 (a) that is open to the public;
326 (b) that is staffed during regular business hours on regular business days; and
327 (c) at which the public may appear in person to obtain services.
328 (17) "Business entity" means:
329 (a) a corporation;
330 (b) an association;
331 (c) a partnership;
332 (d) a limited liability company;
333 (e) a limited liability partnership; or
334 (f) another legal entity.
335 (18) "Business of insurance" means the same as that term is defined in Subsection (94).
336 (19) "Business plan" means the information required to be supplied to the
337 commissioner under Subsections 31A-5-204(2)(i) and (j), including the information required
338 when these subsections apply by reference under:
339 (a) Section 31A-8-205; or
340 (b) Subsection 31A-9-205(2).
341 (20) (a) "Bylaws" means the rules adopted for the regulation or management of a
342 corporation's affairs, however designated.
343 (b) "Bylaws" includes comparable rules for a trust or other entity that is not a
344 corporation.
345 (21) "Captive insurance company" means:
346 (a) an insurer:
347 (i) owned by [
348 (ii) whose [
349
350 (b) in the case of a group or association, an insurer:
351 (i) owned by the insureds; and
352 (ii) whose [
353 (A) a member organization;
354 (B) a group member; or
355 (C) an affiliate of:
356 (I) a member organization; or
357 (II) a group member.
358 (22) "Casualty insurance" means liability insurance.
359 (23) "Certificate" means evidence of insurance given to:
360 (a) an insured under a group insurance policy; or
361 (b) a third party.
362 (24) "Certificate of authority" is included within the term "license."
363 (25) "Claim," unless the context otherwise requires, means a request or demand on an
364 insurer for payment of a benefit according to the terms of an insurance policy.
365 (26) "Claims-made coverage" means an insurance contract or provision limiting
366 coverage under a policy insuring against legal liability to claims that are first made against the
367 insured while the policy is in force.
368 (27) (a) "Commissioner" or "commissioner of insurance" means Utah's insurance
369 commissioner.
370 (b) When appropriate, the terms listed in Subsection (27)(a) apply to the equivalent
371 supervisory official of another jurisdiction.
372 (28) (a) "Continuing care insurance" means insurance that:
373 (i) provides board and lodging;
374 (ii) provides one or more of the following:
375 (A) a personal service;
376 (B) a nursing service;
377 (C) a medical service; or
378 (D) any other health-related service; and
379 (iii) provides the coverage described in this Subsection (28)(a) under an agreement
380 effective:
381 (A) for the life of the insured; or
382 (B) for a period in excess of one year.
383 (b) Insurance is continuing care insurance regardless of whether or not the board and
384 lodging are provided at the same location as a service described in Subsection (28)(a)(ii).
385 (29) (a) "Control," "controlling," "controlled," or "under common control" means the
386 direct or indirect possession of the power to direct or cause the direction of the management
387 and policies of a person. This control may be:
388 (i) by contract;
389 (ii) by common management;
390 (iii) through the ownership of voting securities; or
391 (iv) by a means other than those described in Subsections (29)(a)(i) through (iii).
392 (b) There is no presumption that an individual holding an official position with another
393 person controls that person solely by reason of the position.
394 (c) A person having a contract or arrangement giving control is considered to have
395 control despite the illegality or invalidity of the contract or arrangement.
396 (d) There is a rebuttable presumption of control in a person who directly or indirectly
397 owns, controls, holds with the power to vote, or holds proxies to vote 10% or more of the
398 voting securities of another person.
399 (30) "Controlled insurer" means a licensed insurer that is either directly or indirectly
400 controlled by a producer.
401 (31) "Controlling person" means a person that directly or indirectly has the power to
402 direct or cause to be directed, the management, control, or activities of a reinsurance
403 intermediary.
404 (32) "Controlling producer" means a producer who directly or indirectly controls an
405 insurer.
406 (33) "Corporate governance annual disclosure" means a report an insurer or insurance
407 group files in accordance with the requirements of Chapter 16b, Corporate Governance Annual
408 Disclosure Act.
409 (34) (a) "Corporation" means an insurance corporation, except when referring to:
410 (i) a corporation doing business:
411 (A) as:
412 (I) an insurance producer;
413 (II) a surplus lines producer;
414 (III) a limited line producer;
415 (IV) a consultant;
416 (V) a managing general agent;
417 (VI) a reinsurance intermediary;
418 (VII) a third party administrator; or
419 (VIII) an adjuster; and
420 (B) under:
421 (I) Chapter 23a, Insurance Marketing - Licensing Producers, Consultants, and
422 Reinsurance Intermediaries;
423 (II) Chapter 25, Third Party Administrators; or
424 (III) Chapter 26, Insurance Adjusters; or
425 (ii) a noninsurer that is part of a holding company system under Chapter 16, Insurance
426 Holding Companies.
427 (b) "Mutual" or "mutual corporation" means a mutual insurance corporation.
428 (c) "Stock corporation" means a stock insurance corporation.
429 (35) (a) "Creditable coverage" has the same meaning as provided in federal regulations
430 adopted pursuant to the Health Insurance Portability and Accountability Act.
431 (b) "Creditable coverage" includes coverage that is offered through a public health plan
432 such as:
433 (i) the Primary Care Network Program under a Medicaid primary care network
434 demonstration waiver obtained subject to Section 26-18-3;
435 (ii) the Children's Health Insurance Program under Section 26-40-106; or
436 (iii) the Ryan White Program Comprehensive AIDS Resources Emergency Act, Pub. L.
437 No. 101-381, and Ryan White HIV/AIDS Treatment Modernization Act of 2006, Pub. L. No.
438 109-415.
439 (36) "Credit accident and health insurance" means insurance on a debtor to provide
440 indemnity for payments coming due on a specific loan or other credit transaction while the
441 debtor has a disability.
442 (37) (a) "Credit insurance" means insurance offered in connection with an extension of
443 credit that is limited to partially or wholly extinguishing that credit obligation.
444 (b) "Credit insurance" includes:
445 (i) credit accident and health insurance;
446 (ii) credit life insurance;
447 (iii) credit property insurance;
448 (iv) credit unemployment insurance;
449 (v) guaranteed automobile protection insurance;
450 (vi) involuntary unemployment insurance;
451 (vii) mortgage accident and health insurance;
452 (viii) mortgage guaranty insurance; and
453 (ix) mortgage life insurance.
454 (38) "Credit life insurance" means insurance on the life of a debtor in connection with
455 an extension of credit that pays a person if the debtor dies.
456 (39) "Creditor" means a person, including an insured, having a claim, whether:
457 (a) matured;
458 (b) unmatured;
459 (c) liquidated;
460 (d) unliquidated;
461 (e) secured;
462 (f) unsecured;
463 (g) absolute;
464 (h) fixed; or
465 (i) contingent.
466 (40) "Credit property insurance" means insurance:
467 (a) offered in connection with an extension of credit; and
468 (b) that protects the property until the debt is paid.
469 (41) "Credit unemployment insurance" means insurance:
470 (a) offered in connection with an extension of credit; and
471 (b) that provides indemnity if the debtor is unemployed for payments coming due on a:
472 (i) specific loan; or
473 (ii) credit transaction.
474 (42) (a) "Crop insurance" means insurance providing protection against damage to
475 crops from unfavorable weather conditions, fire or lightning, flood, hail, insect infestation,
476 disease, or other yield-reducing conditions or perils that is:
477 (i) provided by the private insurance market; or
478 (ii) subsidized by the Federal Crop Insurance Corporation.
479 (b) "Crop insurance" includes multiperil crop insurance.
480 (43) (a) "Customer service representative" means a person that provides an insurance
481 service and insurance product information:
482 (i) for the customer service representative's:
483 (A) producer;
484 (B) surplus lines producer; or
485 (C) consultant employer; and
486 (ii) to the customer service representative's employer's:
487 (A) customer;
488 (B) client; or
489 (C) organization.
490 (b) A customer service representative may only operate within the scope of authority of
491 the customer service representative's producer, surplus lines producer, or consultant employer.
492 (44) "Deadline" means a final date or time:
493 (a) imposed by:
494 (i) statute;
495 (ii) rule; or
496 (iii) order; and
497 (b) by which a required filing or payment must be received by the department.
498 (45) "Deemer clause" means a provision under this title under which upon the
499 occurrence of a condition precedent, the commissioner is considered to have taken a specific
500 action. If the statute so provides, a condition precedent may be the commissioner's failure to
501 take a specific action.
502 (46) "Degree of relationship" means the number of steps between two persons
503 determined by counting the generations separating one person from a common ancestor and
504 then counting the generations to the other person.
505 (47) "Department" means the Insurance Department.
506 (48) "Director" means a member of the board of directors of a corporation.
507 (49) "Disability" means a physiological or psychological condition that partially or
508 totally limits an individual's ability to:
509 (a) perform the duties of:
510 (i) that individual's occupation; or
511 (ii) an occupation for which the individual is reasonably suited by education, training,
512 or experience; or
513 (b) perform two or more of the following basic activities of daily living:
514 (i) eating;
515 (ii) toileting;
516 (iii) transferring;
517 (iv) bathing; or
518 (v) dressing.
519 (50) "Disability income insurance" means the same as that term is defined in
520 Subsection (85).
521 (51) "Domestic insurer" means an insurer organized under the laws of this state.
522 (52) "Domiciliary state" means the state in which an insurer:
523 (a) is incorporated;
524 (b) is organized; or
525 (c) in the case of an alien insurer, enters into the United States.
526 (53) (a) "Eligible employee" means:
527 (i) an employee who:
528 (A) works on a full-time basis; and
529 (B) has a normal work week of 30 or more hours; or
530 (ii) a person described in Subsection (53)(b).
531 (b) "Eligible employee" includes:
532 (i) an owner who:
533 (A) works on a full-time basis;
534 (B) has a normal work week of 30 or more hours; and
535 (C) employs at least one common employee; and
536 (ii) if the individual is included under a health benefit plan of a small employer:
537 (A) a sole proprietor;
538 (B) a partner in a partnership; or
539 (C) an independent contractor.
540 (c) "Eligible employee" does not include, unless eligible under Subsection (53)(b):
541 (i) an individual who works on a temporary or substitute basis for a small employer;
542 (ii) an employer's spouse who does not meet the requirements of Subsection (53)(a)(i);
543 or
544 (iii) a dependent of an employer who does not meet the requirements of Subsection
545 (53)(a)(i).
546 (54) "Employee" means:
547 (a) an individual employed by an employer; and
548 (b) an owner who meets the requirements of Subsection (53)(b)(i).
549 (55) "Employee benefits" means one or more benefits or services provided to:
550 (a) an employee; or
551 (b) a dependent of an employee.
552 (56) (a) "Employee welfare fund" means a fund:
553 (i) established or maintained, whether directly or through a trustee, by:
554 (A) one or more employers;
555 (B) one or more labor organizations; or
556 (C) a combination of employers and labor organizations; and
557 (ii) that provides employee benefits paid or contracted to be paid, other than income
558 from investments of the fund:
559 (A) by or on behalf of an employer doing business in this state; or
560 (B) for the benefit of a person employed in this state.
561 (b) "Employee welfare fund" includes a plan funded or subsidized by a user fee or tax
562 revenues.
563 (57) "Endorsement" means a written agreement attached to a policy or certificate to
564 modify the policy or certificate coverage.
565 (58) (a) "Enrollee" means:
566 (i) a policyholder;
567 (ii) a certificate holder;
568 (iii) a subscriber; or
569 (iv) a covered individual:
570 (A) who has entered into a contract with an organization for health care; or
571 (B) on whose behalf an arrangement for health care has been made.
572 (b) "Enrollee" includes an insured.
573 (59) "Enrollment date," with respect to a health benefit plan, means:
574 (a) the first day of coverage; or
575 (b) if there is a waiting period, the first day of the waiting period.
576 (60) "Enterprise risk" means an activity, circumstance, event, or series of events
577 involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a
578 material adverse effect upon the financial condition or liquidity of the insurer or its insurance
579 holding company system as a whole, including anything that would cause:
580 (a) the insurer's risk-based capital to fall into an action or control level as set forth in
581 Sections 31A-17-601 through 31A-17-613; or
582 (b) the insurer to be in hazardous financial condition set forth in Section 31A-27a-101.
583 (61) (a) "Escrow" means:
584 (i) a transaction that effects the sale, transfer, encumbering, or leasing of real property,
585 when a person not a party to the transaction, and neither having nor acquiring an interest in the
586 title, performs, in accordance with the written instructions or terms of the written agreement
587 between the parties to the transaction, any of the following actions:
588 (A) the explanation, holding, or creation of a document; or
589 (B) the receipt, deposit, and disbursement of money;
590 (ii) a settlement or closing involving:
591 (A) a mobile home;
592 (B) a grazing right;
593 (C) a water right; or
594 (D) other personal property authorized by the commissioner.
595 (b) "Escrow" does not include:
596 (i) the following notarial acts performed by a notary within the state:
597 (A) an acknowledgment;
598 (B) a copy certification;
599 (C) jurat; and
600 (D) an oath or affirmation;
601 (ii) the receipt or delivery of a document; or
602 (iii) the receipt of money for delivery to the escrow agent.
603 (62) "Escrow agent" means an agency title insurance producer meeting the
604 requirements of Sections 31A-4-107, 31A-14-211, and 31A-23a-204, who is acting through an
605 individual title insurance producer licensed with an escrow subline of authority.
606 (63) (a) "Excludes" is not exhaustive and does not mean that another thing is not also
607 excluded.
608 (b) The items listed in a list using the term "excludes" are representative examples for
609 use in interpretation of this title.
610 (64) "Exclusion" means for the purposes of accident and health insurance that an
611 insurer does not provide insurance coverage, for whatever reason, for one of the following:
612 (a) a specific physical condition;
613 (b) a specific medical procedure;
614 (c) a specific disease or disorder; or
615 (d) a specific prescription drug or class of prescription drugs.
616 (65) "Expense reimbursement insurance" means insurance:
617 (a) written to provide a payment for an expense relating to hospital confinement
618 resulting from illness or injury; and
619 (b) written:
620 (i) as a daily limit for a specific number of days in a hospital; and
621 (ii) to have a one or two day waiting period following a hospitalization.
622 (66) "Fidelity insurance" means insurance guaranteeing the fidelity of a person holding
623 a position of public or private trust.
624 (67) (a) "Filed" means that a filing is:
625 (i) submitted to the department as required by and in accordance with applicable
626 statute, rule, or filing order;
627 (ii) received by the department within the time period provided in applicable statute,
628 rule, or filing order; and
629 (iii) accompanied by the appropriate fee in accordance with:
630 (A) Section 31A-3-103; or
631 (B) rule.
632 (b) "Filed" does not include a filing that is rejected by the department because it is not
633 submitted in accordance with Subsection (67)(a).
634 (68) "Filing," when used as a noun, means an item required to be filed with the
635 department including:
636 (a) a policy;
637 (b) a rate;
638 (c) a form;
639 (d) a document;
640 (e) a plan;
641 (f) a manual;
642 (g) an application;
643 (h) a report;
644 (i) a certificate;
645 (j) an endorsement;
646 (k) an actuarial certification;
647 (l) a licensee annual statement;
648 (m) a licensee renewal application;
649 (n) an advertisement;
650 (o) a binder; or
651 (p) an outline of coverage.
652 (69) "First party insurance" means an insurance policy or contract in which the insurer
653 agrees to pay a claim submitted to it by the insured for the insured's losses.
654 (70) "Foreign insurer" means an insurer domiciled outside of this state, including an
655 alien insurer.
656 (71) (a) "Form" means one of the following prepared for general use:
657 (i) a policy;
658 (ii) a certificate;
659 (iii) an application;
660 (iv) an outline of coverage; or
661 (v) an endorsement.
662 (b) "Form" does not include a document specially prepared for use in an individual
663 case.
664 (72) "Franchise insurance" means an individual insurance policy provided through a
665 mass marketing arrangement involving a defined class of persons related in some way other
666 than through the purchase of insurance.
667 (73) "General lines of authority" include:
668 (a) the general lines of insurance in Subsection (74);
669 (b) title insurance under one of the following sublines of authority:
670 (i) title examination, including authority to act as a title marketing representative;
671 (ii) escrow, including authority to act as a title marketing representative; and
672 (iii) title marketing representative only;
673 (c) surplus lines;
674 (d) workers' compensation; and
675 (e) another line of insurance that the commissioner considers necessary to recognize in
676 the public interest.
677 (74) "General lines of insurance" include:
678 (a) accident and health;
679 (b) casualty;
680 (c) life;
681 (d) personal lines;
682 (e) property; and
683 (f) variable contracts, including variable life and annuity.
684 (75) "Group health plan" means an employee welfare benefit plan to the extent that the
685 plan provides medical care:
686 (a) (i) to an employee; or
687 (ii) to a dependent of an employee; and
688 (b) (i) directly;
689 (ii) through insurance reimbursement; or
690 (iii) through another method.
691 (76) (a) "Group insurance policy" means a policy covering a group of persons that is
692 issued:
693 (i) to a policyholder on behalf of the group; and
694 (ii) for the benefit of a member of the group who is selected under a procedure defined
695 in:
696 (A) the policy; or
697 (B) an agreement that is collateral to the policy.
698 (b) A group insurance policy may include a member of the policyholder's family or a
699 dependent.
700 (77) "Group-wide supervisor" means the commissioner or other regulatory official
701 designated as the group-wide supervisor for an internationally active insurance group under
702 Section 31A-16-108.6.
703 (78) "Guaranteed automobile protection insurance" means insurance offered in
704 connection with an extension of credit that pays the difference in amount between the
705 insurance settlement and the balance of the loan if the insured automobile is a total loss.
706 (79) (a) "Health benefit plan" means, except as provided in Subsection (79)(b), a
707 policy, contract, certificate, or agreement offered or issued by a health carrier to provide,
708 deliver, arrange for, pay for, or reimburse any of the costs of health care.
709 (b) "Health benefit plan" does not include:
710 (i) coverage only for accident or disability income insurance, or any combination
711 thereof;
712 (ii) coverage issued as a supplement to liability insurance;
713 (iii) liability insurance, including general liability insurance and automobile liability
714 insurance;
715 (iv) workers' compensation or similar insurance;
716 (v) automobile medical payment insurance;
717 (vi) credit-only insurance;
718 (vii) coverage for on-site medical clinics;
719 (viii) other similar insurance coverage, specified in federal regulations issued pursuant
720 to Pub. L. No. 104-191, under which benefits for health care services are secondary or
721 incidental to other insurance benefits;
722 (ix) the following benefits if they are provided under a separate policy, certificate, or
723 contract of insurance or are otherwise not an integral part of the plan:
724 (A) limited scope dental or vision benefits;
725 (B) benefits for long-term care, nursing home care, home health care,
726 community-based care, or any combination thereof; or
727 (C) other similar limited benefits, specified in federal regulations issued pursuant to
728 Pub. L. No. 104-191;
729 (x) the following benefits if the benefits are provided under a separate policy,
730 certificate, or contract of insurance, there is no coordination between the provision of benefits
731 and any exclusion of benefits under any health plan, and the benefits are paid with respect to an
732 event without regard to whether benefits are provided under any health plan:
733 (A) coverage only for specified disease or illness; or
734 (B) hospital indemnity or other fixed indemnity insurance;
735 (xi) the following if offered as a separate policy, certificate, or contract of insurance:
736 (A) Medicare supplemental health insurance as defined under the Social Security Act,
737 42 U.S.C. Sec. 1395ss(g)(1);
738 (B) coverage supplemental to the coverage provided under United States Code, Title
739 10, Chapter 55, Civilian Health and Medical Program of the Uniformed Services
740 (CHAMPUS); or
741 (C) similar supplemental coverage provided to coverage under a group health insurance
742 plan;
743 (xii) short-term[
744 (xiii) student health insurance, except as required under 45 C.F.R. Sec. 147.145.
745 (80) "Health care" means any of the following intended for use in the diagnosis,
746 treatment, mitigation, or prevention of a human ailment or impairment:
747 (a) a professional service;
748 (b) a personal service;
749 (c) a facility;
750 (d) equipment;
751 (e) a device;
752 (f) supplies; or
753 (g) medicine.
754 (81) (a) "Health care insurance" or "health insurance" means insurance providing:
755 (i) a health care benefit; or
756 (ii) payment of an incurred health care expense.
757 (b) "Health care insurance" or "health insurance" does not include accident and health
758 insurance providing a benefit for:
759 (i) replacement of income;
760 (ii) short-term accident;
761 (iii) fixed indemnity;
762 (iv) credit accident and health;
763 (v) supplements to liability;
764 (vi) workers' compensation;
765 (vii) automobile medical payment;
766 (viii) no-fault automobile;
767 (ix) equivalent self-insurance; or
768 (x) a type of accident and health insurance coverage that is a part of or attached to
769 another type of policy.
770 (82) "Health care provider" means the same as that term is defined in Section
771 78B-3-403.
772 (83) "Health insurance exchange" means an exchange as defined in 45 C.F.R. Sec.
773 155.20.
774 (84) "Health Insurance Portability and Accountability Act" means the Health Insurance
775 Portability and Accountability Act of 1996, Pub. L. No. 104-191, 110 Stat. 1936, as amended.
776 (85) "Income replacement insurance" or "disability income insurance" means insurance
777 written to provide payments to replace income lost from accident or sickness.
778 (86) "Indemnity" means the payment of an amount to offset all or part of an insured
779 loss.
780 (87) "Independent adjuster" means an insurance adjuster required to be licensed under
781 Section 31A-26-201 who engages in insurance adjusting as a representative of an insurer.
782 (88) "Independently procured insurance" means insurance procured under Section
783 31A-15-104.
784 (89) "Individual" means a natural person.
785 (90) "Inland marine insurance" includes insurance covering:
786 (a) property in transit on or over land;
787 (b) property in transit over water by means other than boat or ship;
788 (c) bailee liability;
789 (d) fixed transportation property such as bridges, electric transmission systems, radio
790 and television transmission towers and tunnels; and
791 (e) personal and commercial property floaters.
792 (91) "Insolvency" or "insolvent" means that:
793 (a) an insurer is unable to pay the insurer's obligations as the obligations are due;
794 (b) an insurer's total adjusted capital is less than the insurer's mandatory control level
795 RBC under Subsection 31A-17-601(8)(c); or
796 (c) an insurer's admitted assets are less than the insurer's liabilities.
797 (92) (a) "Insurance" means:
798 (i) an arrangement, contract, or plan for the transfer of a risk or risks from one or more
799 persons to one or more other persons; or
800 (ii) an arrangement, contract, or plan for the distribution of a risk or risks among a
801 group of persons that includes the person seeking to distribute that person's risk.
802 (b) "Insurance" includes:
803 (i) a risk distributing arrangement providing for compensation or replacement for
804 damages or loss through the provision of a service or a benefit in kind;
805 (ii) a contract of guaranty or suretyship entered into by the guarantor or surety as a
806 business and not as merely incidental to a business transaction; and
807 (iii) a plan in which the risk does not rest upon the person who makes an arrangement,
808 but with a class of persons who have agreed to share the risk.
809 (93) "Insurance adjuster" means a person who directs or conducts the investigation,
810 negotiation, or settlement of a claim under an insurance policy other than life insurance or an
811 annuity, on behalf of an insurer, policyholder, or a claimant under an insurance policy.
812 (94) "Insurance business" or "business of insurance" includes:
813 (a) providing health care insurance by an organization that is or is required to be
814 licensed under this title;
815 (b) providing a benefit to an employee in the event of a contingency not within the
816 control of the employee, in which the employee is entitled to the benefit as a right, which
817 benefit may be provided either:
818 (i) by a single employer or by multiple employer groups; or
819 (ii) through one or more trusts, associations, or other entities;
820 (c) providing an annuity:
821 (i) including an annuity issued in return for a gift; and
822 (ii) except an annuity provided by a person specified in Subsections 31A-22-1305(2)
823 and (3);
824 (d) providing the characteristic services of a motor club as outlined in Subsection
825 (125);
826 (e) providing another person with insurance;
827 (f) making as insurer, guarantor, or surety, or proposing to make as insurer, guarantor,
828 or surety, a contract or policy of title insurance;
829 (g) transacting or proposing to transact any phase of title insurance, including:
830 (i) solicitation;
831 (ii) negotiation preliminary to execution;
832 (iii) execution of a contract of title insurance;
833 (iv) insuring; and
834 (v) transacting matters subsequent to the execution of the contract and arising out of
835 the contract, including reinsurance;
836 (h) transacting or proposing a life settlement; and
837 (i) doing, or proposing to do, any business in substance equivalent to Subsections
838 (94)(a) through (h) in a manner designed to evade this title.
839 (95) "Insurance consultant" or "consultant" means a person who:
840 (a) advises another person about insurance needs and coverages;
841 (b) is compensated by the person advised on a basis not directly related to the insurance
842 placed; and
843 (c) except as provided in Section 31A-23a-501, is not compensated directly or
844 indirectly by an insurer or producer for advice given.
845 (96) "Insurance group" means the persons that comprise an insurance holding company
846 system.
847 (97) "Insurance holding company system" means a group of two or more affiliated
848 persons, at least one of whom is an insurer.
849 (98) (a) "Insurance producer" or "producer" means a person licensed or required to be
850 licensed under the laws of this state to sell, solicit, or negotiate insurance.
851 (b) (i) "Producer for the insurer" means a producer who is compensated directly or
852 indirectly by an insurer for selling, soliciting, or negotiating an insurance product of that
853 insurer.
854 (ii) "Producer for the insurer" may be referred to as an "agent."
855 (c) (i) "Producer for the insured" means a producer who:
856 (A) is compensated directly and only by an insurance customer or an insured; and
857 (B) receives no compensation directly or indirectly from an insurer for selling,
858 soliciting, or negotiating an insurance product of that insurer to an insurance customer or
859 insured.
860 (ii) "Producer for the insured" may be referred to as a "broker."
861 (99) (a) "Insured" means a person to whom or for whose benefit an insurer makes a
862 promise in an insurance policy and includes:
863 (i) a policyholder;
864 (ii) a subscriber;
865 (iii) a member; and
866 (iv) a beneficiary.
867 (b) The definition in Subsection (99)(a):
868 (i) applies only to this title;
869 (ii) does not define the meaning of "insured" as used in an insurance policy or
870 certificate; and
871 (iii) includes an enrollee.
872 (100) (a) "Insurer" means a person doing an insurance business as a principal
873 including:
874 (i) a fraternal benefit society;
875 (ii) an issuer of a gift annuity other than an annuity specified in Subsections
876 31A-22-1305(2) and (3);
877 (iii) a motor club;
878 (iv) an employee welfare plan;
879 (v) a person purporting or intending to do an insurance business as a principal on that
880 person's own account; and
881 (vi) a health maintenance organization.
882 (b) "Insurer" does not include a governmental entity.
883 (101) "Interinsurance exchange" means the same as that term is defined in Subsection
884 (160).
885 (102) "Internationally active insurance group" means an insurance holding company
886 system:
887 (a) that includes an insurer registered under Section 31A-16-105;
888 (b) that has premiums written in at least three countries;
889 (c) whose percentage of gross premiums written outside the United States is at least
890 10% of its total gross written premiums; and
891 (d) that, based on a three-year rolling average, has:
892 (i) total assets of at least $50,000,000,000; or
893 (ii) total gross written premiums of at least $10,000,000,000.
894 (103) "Involuntary unemployment insurance" means insurance:
895 (a) offered in connection with an extension of credit; and
896 (b) that provides indemnity if the debtor is involuntarily unemployed for payments
897 coming due on a:
898 (i) specific loan; or
899 (ii) credit transaction.
900 (104) "Large employer," in connection with a health benefit plan, means an employer
901 who, with respect to a calendar year and to a plan year:
902 (a) employed an average of at least 51 employees on business days during the
903 preceding calendar year; and
904 (b) employs at least one employee on the first day of the plan year.
905 (105) "Late enrollee," with respect to an employer health benefit plan, means an
906 individual whose enrollment is a late enrollment.
907 (106) "Late enrollment," with respect to an employer health benefit plan, means
908 enrollment of an individual other than:
909 (a) on the earliest date on which coverage can become effective for the individual
910 under the terms of the plan; or
911 (b) through special enrollment.
912 (107) (a) Except for a retainer contract or legal assistance described in Section
913 31A-1-103, "legal expense insurance" means insurance written to indemnify or pay for a
914 specified legal expense.
915 (b) "Legal expense insurance" includes an arrangement that creates a reasonable
916 expectation of an enforceable right.
917 (c) "Legal expense insurance" does not include the provision of, or reimbursement for,
918 legal services incidental to other insurance coverage.
919 (108) (a) "Liability insurance" means insurance against liability:
920 (i) for death, injury, or disability of a human being, or for damage to property,
921 exclusive of the coverages under:
922 (A) medical malpractice insurance;
923 (B) professional liability insurance; and
924 (C) workers' compensation insurance;
925 (ii) for a medical, hospital, surgical, and funeral benefit to a person other than the
926 insured who is injured, irrespective of legal liability of the insured, when issued with or
927 supplemental to insurance against legal liability for the death, injury, or disability of a human
928 being, exclusive of the coverages under:
929 (A) medical malpractice insurance;
930 (B) professional liability insurance; and
931 (C) workers' compensation insurance;
932 (iii) for loss or damage to property resulting from an accident to or explosion of a
933 boiler, pipe, pressure container, machinery, or apparatus;
934 (iv) for loss or damage to property caused by:
935 (A) the breakage or leakage of a sprinkler, water pipe, or water container; or
936 (B) water entering through a leak or opening in a building; or
937 (v) for other loss or damage properly the subject of insurance not within another kind
938 of insurance as defined in this chapter, if the insurance is not contrary to law or public policy.
939 (b) "Liability insurance" includes:
940 (i) vehicle liability insurance;
941 (ii) residential dwelling liability insurance; and
942 (iii) making inspection of, and issuing a certificate of inspection upon, an elevator,
943 boiler, machinery, or apparatus of any kind when done in connection with insurance on the
944 elevator, boiler, machinery, or apparatus.
945 (109) (a) "License" means authorization issued by the commissioner to engage in an
946 activity that is part of or related to the insurance business.
947 (b) "License" includes a certificate of authority issued to an insurer.
948 (110) (a) "Life insurance" means:
949 (i) insurance on a human life; and
950 (ii) insurance pertaining to or connected with human life.
951 (b) The business of life insurance includes:
952 (i) granting a death benefit;
953 (ii) granting an annuity benefit;
954 (iii) granting an endowment benefit;
955 (iv) granting an additional benefit in the event of death by accident;
956 (v) granting an additional benefit to safeguard the policy against lapse; and
957 (vi) providing an optional method of settlement of proceeds.
958 (111) "Limited license" means a license that:
959 (a) is issued for a specific product of insurance; and
960 (b) limits an individual or agency to transact only for that product or insurance.
961 (112) "Limited line credit insurance" includes the following forms of insurance:
962 (a) credit life;
963 (b) credit accident and health;
964 (c) credit property;
965 (d) credit unemployment;
966 (e) involuntary unemployment;
967 (f) mortgage life;
968 (g) mortgage guaranty;
969 (h) mortgage accident and health;
970 (i) guaranteed automobile protection; and
971 (j) another form of insurance offered in connection with an extension of credit that:
972 (i) is limited to partially or wholly extinguishing the credit obligation; and
973 (ii) the commissioner determines by rule should be designated as a form of limited line
974 credit insurance.
975 (113) "Limited line credit insurance producer" means a person who sells, solicits, or
976 negotiates one or more forms of limited line credit insurance coverage to an individual through
977 a master, corporate, group, or individual policy.
978 (114) "Limited line insurance" includes:
979 (a) bail bond;
980 (b) limited line credit insurance;
981 (c) legal expense insurance;
982 (d) motor club insurance;
983 (e) car rental related insurance;
984 (f) travel insurance;
985 (g) crop insurance;
986 (h) self-service storage insurance;
987 (i) guaranteed asset protection waiver;
988 (j) portable electronics insurance; and
989 (k) another form of limited insurance that the commissioner determines by rule should
990 be designated a form of limited line insurance.
991 (115) "Limited lines authority" includes the lines of insurance listed in Subsection
992 (114).
993 (116) "Limited lines producer" means a person who sells, solicits, or negotiates limited
994 lines insurance.
995 (117) (a) "Long-term care insurance" means an insurance policy or rider advertised,
996 marketed, offered, or designated to provide coverage:
997 (i) in a setting other than an acute care unit of a hospital;
998 (ii) for not less than 12 consecutive months for a covered person on the basis of:
999 (A) expenses incurred;
1000 (B) indemnity;
1001 (C) prepayment; or
1002 (D) another method;
1003 (iii) for one or more necessary or medically necessary services that are:
1004 (A) diagnostic;
1005 (B) preventative;
1006 (C) therapeutic;
1007 (D) rehabilitative;
1008 (E) maintenance; or
1009 (F) personal care; and
1010 (iv) that may be issued by:
1011 (A) an insurer;
1012 (B) a fraternal benefit society;
1013 (C) (I) a nonprofit health hospital; and
1014 (II) a medical service corporation;
1015 (D) a prepaid health plan;
1016 (E) a health maintenance organization; or
1017 (F) an entity similar to the entities described in Subsections (117)(a)(iv)(A) through (E)
1018 to the extent that the entity is otherwise authorized to issue life or health care insurance.
1019 (b) "Long-term care insurance" includes:
1020 (i) any of the following that provide directly or supplement long-term care insurance:
1021 (A) a group or individual annuity or rider; or
1022 (B) a life insurance policy or rider;
1023 (ii) a policy or rider that provides for payment of benefits on the basis of:
1024 (A) cognitive impairment; or
1025 (B) functional capacity; or
1026 (iii) a qualified long-term care insurance contract.
1027 (c) "Long-term care insurance" does not include:
1028 (i) a policy that is offered primarily to provide basic Medicare supplement coverage;
1029 (ii) basic hospital expense coverage;
1030 (iii) basic medical/surgical expense coverage;
1031 (iv) hospital confinement indemnity coverage;
1032 (v) major medical expense coverage;
1033 (vi) income replacement or related asset-protection coverage;
1034 (vii) accident only coverage;
1035 (viii) coverage for a specified:
1036 (A) disease; or
1037 (B) accident;
1038 (ix) limited benefit health coverage; or
1039 (x) a life insurance policy that accelerates the death benefit to provide the option of a
1040 lump sum payment:
1041 (A) if the following are not conditioned on the receipt of long-term care:
1042 (I) benefits; or
1043 (II) eligibility; and
1044 (B) the coverage is for one or more the following qualifying events:
1045 (I) terminal illness;
1046 (II) medical conditions requiring extraordinary medical intervention; or
1047 (III) permanent institutional confinement.
1048 (118) "Managed care organization" means a person:
1049 (a) licensed as a health maintenance organization under Chapter 8, Health Maintenance
1050 Organizations and Limited Health Plans; or
1051 (b) (i) licensed under:
1052 (A) Chapter 5, Domestic Stock and Mutual Insurance Corporations;
1053 (B) Chapter 7, Nonprofit Health Service Insurance Corporations; or
1054 (C) Chapter 14, Foreign Insurers; and
1055 (ii) that requires an enrollee to use, or offers incentives, including financial incentives,
1056 for an enrollee to use, network providers.
1057 (119) "Medical malpractice insurance" means insurance against legal liability incident
1058 to the practice and provision of a medical service other than the practice and provision of a
1059 dental service.
1060 (120) "Member" means a person having membership rights in an insurance
1061 corporation.
1062 (121) "Minimum capital" or "minimum required capital" means the capital that must be
1063 constantly maintained by a stock insurance corporation as required by statute.
1064 (122) "Mortgage accident and health insurance" means insurance offered in connection
1065 with an extension of credit that provides indemnity for payments coming due on a mortgage
1066 while the debtor has a disability.
1067 (123) "Mortgage guaranty insurance" means surety insurance under which a mortgagee
1068 or other creditor is indemnified against losses caused by the default of a debtor.
1069 (124) "Mortgage life insurance" means insurance on the life of a debtor in connection
1070 with an extension of credit that pays if the debtor dies.
1071 (125) "Motor club" means a person:
1072 (a) licensed under:
1073 (i) Chapter 5, Domestic Stock and Mutual Insurance Corporations;
1074 (ii) Chapter 11, Motor Clubs; or
1075 (iii) Chapter 14, Foreign Insurers; and
1076 (b) that promises for an advance consideration to provide for a stated period of time
1077 one or more:
1078 (i) legal services under Subsection 31A-11-102(1)(b);
1079 (ii) bail services under Subsection 31A-11-102(1)(c); or
1080 (iii) (A) trip reimbursement;
1081 (B) towing services;
1082 (C) emergency road services;
1083 (D) stolen automobile services;
1084 (E) a combination of the services listed in Subsections (125)(b)(iii)(A) through (D); or
1085 (F) other services given in Subsections 31A-11-102(1)(b) through (f).
1086 (126) "Mutual" means a mutual insurance corporation.
1087 (127) "Network plan" means health care insurance:
1088 (a) that is issued by an insurer; and
1089 (b) under which the financing and delivery of medical care is provided, in whole or in
1090 part, through a defined set of providers under contract with the insurer, including the financing
1091 and delivery of an item paid for as medical care.
1092 (128) "Network provider" means a health care provider who has an agreement with a
1093 managed care organization to provide health care services to an enrollee with an expectation of
1094 receiving payment, other than coinsurance, copayments, or deductibles, directly from the
1095 managed care organization.
1096 (129) "Nonparticipating" means a plan of insurance under which the insured is not
1097 entitled to receive a dividend representing a share of the surplus of the insurer.
1098 (130) "Ocean marine insurance" means insurance against loss of or damage to:
1099 (a) ships or hulls of ships;
1100 (b) goods, freight, cargoes, merchandise, effects, disbursements, profits, money,
1101 securities, choses in action, evidences of debt, valuable papers, bottomry, respondentia
1102 interests, or other cargoes in or awaiting transit over the oceans or inland waterways;
1103 (c) earnings such as freight, passage money, commissions, or profits derived from
1104 transporting goods or people upon or across the oceans or inland waterways; or
1105 (d) a vessel owner or operator as a result of liability to employees, passengers, bailors,
1106 owners of other vessels, owners of fixed objects, customs or other authorities, or other persons
1107 in connection with maritime activity.
1108 (131) "Order" means an order of the commissioner.
1109 (132) "ORSA guidance manual" means the current version of the Own Risk and
1110 Solvency Assessment Guidance Manual developed and adopted by the National Association of
1111 Insurance Commissioners and as amended from time to time.
1112 (133) "ORSA summary report" means a confidential high-level summary of an insurer
1113 or insurance group's own risk and solvency assessment.
1114 (134) "Outline of coverage" means a summary that explains an accident and health
1115 insurance policy.
1116 (135) "Own risk and solvency assessment" means an insurer or insurance group's
1117 confidential internal assessment:
1118 (a) (i) of each material and relevant risk associated with the insurer or insurance group;
1119 (ii) of the insurer or insurance group's current business plan to support each risk
1120 described in Subsection (135)(a)(i); and
1121 (iii) of the sufficiency of capital resources to support each risk described in Subsection
1122 (135)(a)(i); and
1123 (b) that is appropriate to the nature, scale, and complexity of an insurer or insurance
1124 group.
1125 (136) "Participating" means a plan of insurance under which the insured is entitled to
1126 receive a dividend representing a share of the surplus of the insurer.
1127 (137) "Participation," as used in a health benefit plan, means a requirement relating to
1128 the minimum percentage of eligible employees that must be enrolled in relation to the total
1129 number of eligible employees of an employer reduced by each eligible employee who
1130 voluntarily declines coverage under the plan because the employee:
1131 (a) has other group health care insurance coverage; or
1132 (b) receives:
1133 (i) Medicare, under the Health Insurance for the Aged Act, Title XVIII of the Social
1134 Security Amendments of 1965; or
1135 (ii) another government health benefit.
1136 (138) "Person" includes:
1137 (a) an individual;
1138 (b) a partnership;
1139 (c) a corporation;
1140 (d) an incorporated or unincorporated association;
1141 (e) a joint stock company;
1142 (f) a trust;
1143 (g) a limited liability company;
1144 (h) a reciprocal;
1145 (i) a syndicate; or
1146 (j) another similar entity or combination of entities acting in concert.
1147 (139) "Personal lines insurance" means property and casualty insurance coverage sold
1148 for primarily noncommercial purposes to:
1149 (a) an individual; or
1150 (b) a family.
1151 (140) "Plan sponsor" means the same as that term is defined in 29 U.S.C. Sec.
1152 1002(16)(B).
1153 (141) "Plan year" means:
1154 (a) the year that is designated as the plan year in:
1155 (i) the plan document of a group health plan; or
1156 (ii) a summary plan description of a group health plan;
1157 (b) if the plan document or summary plan description does not designate a plan year or
1158 there is no plan document or summary plan description:
1159 (i) the year used to determine deductibles or limits;
1160 (ii) the policy year, if the plan does not impose deductibles or limits on a yearly basis;
1161 or
1162 (iii) the employer's taxable year if:
1163 (A) the plan does not impose deductibles or limits on a yearly basis; and
1164 (B) (I) the plan is not insured; or
1165 (II) the insurance policy is not renewed on an annual basis; or
1166 (c) in a case not described in Subsection (141)(a) or (b), the calendar year.
1167 (142) (a) "Policy" means a document, including an attached endorsement or application
1168 that:
1169 (i) purports to be an enforceable contract; and
1170 (ii) memorializes in writing some or all of the terms of an insurance contract.
1171 (b) "Policy" includes a service contract issued by:
1172 (i) a motor club under Chapter 11, Motor Clubs;
1173 (ii) a service contract provided under Chapter 6a, Service Contracts; and
1174 (iii) a corporation licensed under:
1175 (A) Chapter 7, Nonprofit Health Service Insurance Corporations; or
1176 (B) Chapter 8, Health Maintenance Organizations and Limited Health Plans.
1177 (c) "Policy" does not include:
1178 (i) a certificate under a group insurance contract; or
1179 (ii) a document that does not purport to have legal effect.
1180 (143) "Policyholder" means a person who controls a policy, binder, or oral contract by
1181 ownership, premium payment, or otherwise.
1182 (144) "Policy illustration" means a presentation or depiction that includes
1183 nonguaranteed elements of a policy of life insurance over a period of years.
1184 (145) "Policy summary" means a synopsis describing the elements of a life insurance
1185 policy.
1186 (146) "PPACA" means the Patient Protection and Affordable Care Act, Pub. L. No.
1187 111-148 and the Health Care Education Reconciliation Act of 2010, Pub. L. No. 111-152, and
1188 related federal regulations and guidance.
1189 (147) "Preexisting condition," with respect to health care insurance:
1190 (a) means a condition that was present before the effective date of coverage, whether or
1191 not medical advice, diagnosis, care, or treatment was recommended or received before that day;
1192 and
1193 (b) does not include a condition indicated by genetic information unless an actual
1194 diagnosis of the condition by a physician has been made.
1195 (148) (a) "Premium" means the monetary consideration for an insurance policy.
1196 (b) "Premium" includes, however designated:
1197 (i) an assessment;
1198 (ii) a membership fee;
1199 (iii) a required contribution; or
1200 (iv) monetary consideration.
1201 (c) (i) "Premium" does not include consideration paid to a third party administrator for
1202 the third party administrator's services.
1203 (ii) "Premium" includes an amount paid by a third party administrator to an insurer for
1204 insurance on the risks administered by the third party administrator.
1205 (149) "Principal officers" for a corporation means the officers designated under
1206 Subsection 31A-5-203(3).
1207 (150) "Proceeding" includes an action or special statutory proceeding.
1208 (151) "Professional liability insurance" means insurance against legal liability incident
1209 to the practice of a profession and provision of a professional service.
1210 (152) (a) Except as provided in Subsection (152)(b), "property insurance" means
1211 insurance against loss or damage to real or personal property of every kind and any interest in
1212 that property:
1213 (i) from all hazards or causes; and
1214 (ii) against loss consequential upon the loss or damage including vehicle
1215 comprehensive and vehicle physical damage coverages.
1216 (b) "Property insurance" does not include:
1217 (i) inland marine insurance; and
1218 (ii) ocean marine insurance.
1219 (153) "Qualified long-term care insurance contract" or "federally tax qualified
1220 long-term care insurance contract" means:
1221 (a) an individual or group insurance contract that meets the requirements of Section
1222 7702B(b), Internal Revenue Code; or
1223 (b) the portion of a life insurance contract that provides long-term care insurance:
1224 (i) (A) by rider; or
1225 (B) as a part of the contract; and
1226 (ii) that satisfies the requirements of Sections 7702B(b) and (e), Internal Revenue
1227 Code.
1228 (154) "Qualified United States financial institution" means an institution that:
1229 (a) is:
1230 (i) organized under the laws of the United States or any state; or
1231 (ii) in the case of a United States office of a foreign banking organization, licensed
1232 under the laws of the United States or any state;
1233 (b) is regulated, supervised, and examined by a United States federal or state authority
1234 having regulatory authority over a bank or trust company; and
1235 (c) meets the standards of financial condition and standing that are considered
1236 necessary and appropriate to regulate the quality of a financial institution whose letters of credit
1237 will be acceptable to the commissioner as determined by:
1238 (i) the commissioner by rule; or
1239 (ii) the Securities Valuation Office of the National Association of Insurance
1240 Commissioners.
1241 (155) (a) "Rate" means:
1242 (i) the cost of a given unit of insurance; or
1243 (ii) for property or casualty insurance, that cost of insurance per exposure unit either
1244 expressed as:
1245 (A) a single number; or
1246 (B) a pure premium rate, adjusted before the application of individual risk variations
1247 based on loss or expense considerations to account for the treatment of:
1248 (I) expenses;
1249 (II) profit; and
1250 (III) individual insurer variation in loss experience.
1251 (b) "Rate" does not include a minimum premium.
1252 (156) (a) Except as provided in Subsection (156)(b), "rate service organization" means
1253 a person who assists an insurer in rate making or filing by:
1254 (i) collecting, compiling, and furnishing loss or expense statistics;
1255 (ii) recommending, making, or filing rates or supplementary rate information; or
1256 (iii) advising about rate questions, except as an attorney giving legal advice.
1257 (b) "Rate service organization" does not mean:
1258 (i) an employee of an insurer;
1259 (ii) a single insurer or group of insurers under common control;
1260 (iii) a joint underwriting group; or
1261 (iv) an individual serving as an actuarial or legal consultant.
1262 (157) "Rating manual" means any of the following used to determine initial and
1263 renewal policy premiums:
1264 (a) a manual of rates;
1265 (b) a classification;
1266 (c) a rate-related underwriting rule; and
1267 (d) a rating formula that describes steps, policies, and procedures for determining
1268 initial and renewal policy premiums.
1269 (158) (a) "Rebate" means a licensee paying, allowing, giving, or offering to pay, allow,
1270 or give, directly or indirectly:
1271 (i) a refund of premium or portion of premium;
1272 (ii) a refund of commission or portion of commission;
1273 (iii) a refund of all or a portion of a consultant fee; or
1274 (iv) providing services or other benefits not specified in an insurance or annuity
1275 contract.
1276 (b) "Rebate" does not include:
1277 (i) a refund due to termination or changes in coverage;
1278 (ii) a refund due to overcharges made in error by the licensee; or
1279 (iii) savings or wellness benefits as provided in the contract by the licensee.
1280 (159) "Received by the department" means:
1281 (a) the date delivered to and stamped received by the department, if delivered in
1282 person;
1283 (b) the post mark date, if delivered by mail;
1284 (c) the delivery service's post mark or pickup date, if delivered by a delivery service;
1285 (d) the received date recorded on an item delivered, if delivered by:
1286 (i) facsimile;
1287 (ii) email; or
1288 (iii) another electronic method; or
1289 (e) a date specified in:
1290 (i) a statute;
1291 (ii) a rule; or
1292 (iii) an order.
1293 (160) "Reciprocal" or "interinsurance exchange" means an unincorporated association
1294 of persons:
1295 (a) operating through an attorney-in-fact common to all of the persons; and
1296 (b) exchanging insurance contracts with one another that provide insurance coverage
1297 on each other.
1298 (161) "Reinsurance" means an insurance transaction where an insurer, for
1299 consideration, transfers any portion of the risk it has assumed to another insurer. In referring to
1300 reinsurance transactions, this title sometimes refers to:
1301 (a) the insurer transferring the risk as the "ceding insurer"; and
1302 (b) the insurer assuming the risk as the:
1303 (i) "assuming insurer"; or
1304 (ii) "assuming reinsurer."
1305 (162) "Reinsurer" means a person licensed in this state as an insurer with the authority
1306 to assume reinsurance.
1307 (163) "Residential dwelling liability insurance" means insurance against liability
1308 resulting from or incident to the ownership, maintenance, or use of a residential dwelling that is
1309 a detached single family residence or multifamily residence up to four units.
1310 (164) (a) "Retrocession" means reinsurance with another insurer of a liability assumed
1311 under a reinsurance contract.
1312 (b) A reinsurer "retrocedes" when the reinsurer reinsures with another insurer part of a
1313 liability assumed under a reinsurance contract.
1314 (165) "Rider" means an endorsement to:
1315 (a) an insurance policy; or
1316 (b) an insurance certificate.
1317 (166) "Secondary medical condition" means a complication related to an exclusion
1318 from coverage in accident and health insurance.
1319 (167) (a) "Security" means a:
1320 (i) note;
1321 (ii) stock;
1322 (iii) bond;
1323 (iv) debenture;
1324 (v) evidence of indebtedness;
1325 (vi) certificate of interest or participation in a profit-sharing agreement;
1326 (vii) collateral-trust certificate;
1327 (viii) preorganization certificate or subscription;
1328 (ix) transferable share;
1329 (x) investment contract;
1330 (xi) voting trust certificate;
1331 (xii) certificate of deposit for a security;
1332 (xiii) certificate of interest of participation in an oil, gas, or mining title or lease or in
1333 payments out of production under such a title or lease;
1334 (xiv) commodity contract or commodity option;
1335 (xv) certificate of interest or participation in, temporary or interim certificate for,
1336 receipt for, guarantee of, or warrant or right to subscribe to or purchase any of the items listed
1337 in Subsections (167)(a)(i) through (xiv); or
1338 (xvi) another interest or instrument commonly known as a security.
1339 (b) "Security" does not include:
1340 (i) any of the following under which an insurance company promises to pay money in a
1341 specific lump sum or periodically for life or some other specified period:
1342 (A) insurance;
1343 (B) an endowment policy; or
1344 (C) an annuity contract; or
1345 (ii) a burial certificate or burial contract.
1346 (168) "Securityholder" means a specified person who owns a security of a person,
1347 including:
1348 (a) common stock;
1349 (b) preferred stock;
1350 (c) debt obligations; and
1351 (d) any other security convertible into or evidencing the right of any of the items listed
1352 in this Subsection (168).
1353 (169) (a) "Self-insurance" means an arrangement under which a person provides for
1354 spreading its own risks by a systematic plan.
1355 (b) Except as provided in this Subsection (169), "self-insurance" does not include an
1356 arrangement under which a number of persons spread their risks among themselves.
1357 (c) "Self-insurance" includes:
1358 (i) an arrangement by which a governmental entity undertakes to indemnify an
1359 employee for liability arising out of the employee's employment; and
1360 (ii) an arrangement by which a person with a managed program of self-insurance and
1361 risk management undertakes to indemnify its affiliates, subsidiaries, directors, officers, or
1362 employees for liability or risk that is related to the relationship or employment.
1363 (d) "Self-insurance" does not include an arrangement with an independent contractor.
1364 (170) "Sell" means to exchange a contract of insurance:
1365 (a) by any means;
1366 (b) for money or its equivalent; and
1367 (c) on behalf of an insurance company.
1368 [
1369
1370
1371 [
1372 a health benefit product that:
1373 (a) after taking into account any renewals or extensions, has a total duration of no more
1374 than 36 months; and
1375 (b) has an expiration date specified in the contract that is less than 12 months after the
1376 original effective date of coverage under the health benefit product.
1377 [
1378 during each of which an individual does not have creditable coverage.
1379 [
1380 with respect to a calendar year and to a plan year, an employer who:
1381 (i) (A) employed at least one but not more than 50 eligible employees on business days
1382 during the preceding calendar year; or
1383 (B) if the employer did not exist for the entirety of the preceding calendar year,
1384 reasonably expects to employ an average of at least one but not more than 50 eligible
1385 employees on business days during the current calendar year;
1386 (ii) employs at least one employee on the first day of the plan year; and
1387 (iii) for an employer who has common ownership with one or more other employers, is
1388 treated as a single employer under 26 U.S.C. Sec. 414(b), (c), (m), or (o).
1389 (b) "Small employer" does not include a sole proprietor that does not employ at least
1390 one employee.
1391 [
1392 the same meaning as provided in federal regulations adopted pursuant to the Health Insurance
1393 Portability and Accountability Act.
1394 [
1395 either directly or indirectly through one or more affiliates or intermediaries.
1396 (b) "Wholly owned subsidiary" of a person is a subsidiary of which all of the voting
1397 shares are owned by that person either alone or with its affiliates, except for the minimum
1398 number of shares the law of the subsidiary's domicile requires to be owned by directors or
1399 others.
1400 [
1401 (a) a guarantee against loss or damage resulting from the failure of a principal to pay or
1402 perform the principal's obligations to a creditor or other obligee;
1403 (b) bail bond insurance; and
1404 (c) fidelity insurance.
1405 [
1406 and liabilities.
1407 (b) (i) "Permanent surplus" means the surplus of an insurer or organization that is
1408 designated by the insurer or organization as permanent.
1409 (ii) Sections 31A-5-211, 31A-7-201, 31A-8-209, 31A-9-209, and 31A-14-205 require
1410 that insurers or organizations doing business in this state maintain specified minimum levels of
1411 permanent surplus.
1412 (iii) Except for assessable mutuals, the minimum permanent surplus requirement is the
1413 same as the minimum required capital requirement that applies to stock insurers.
1414 (c) "Excess surplus" means:
1415 (i) for a life insurer, accident and health insurer, health organization, or property and
1416 casualty insurer as defined in Section 31A-17-601, the lesser of:
1417 (A) that amount of an insurer's or health organization's total adjusted capital that
1418 exceeds the product of:
1419 (I) 2.5; and
1420 (II) the sum of the insurer's or health organization's minimum capital or permanent
1421 surplus required under Section 31A-5-211, 31A-9-209, or 31A-14-205; or
1422 (B) that amount of an insurer's or health organization's total adjusted capital that
1423 exceeds the product of:
1424 (I) 3.0; and
1425 (II) the authorized control level RBC as defined in Subsection 31A-17-601(8)(a); and
1426 (ii) for a monoline mortgage guaranty insurer, financial guaranty insurer, or title insurer
1427 that amount of an insurer's paid-in-capital and surplus that exceeds the product of:
1428 (A) 1.5; and
1429 (B) the insurer's total adjusted capital required by Subsection 31A-17-609(1).
1430 [
1431 collects charges or premiums from, or who, for consideration, adjusts or settles claims of
1432 residents of the state in connection with insurance coverage, annuities, or service insurance
1433 coverage, except:
1434 (a) a union on behalf of its members;
1435 (b) a person administering a:
1436 (i) pension plan subject to the federal Employee Retirement Income Security Act of
1437 1974;
1438 (ii) governmental plan as defined in Section 414(d), Internal Revenue Code; or
1439 (iii) nonelecting church plan as described in Section 410(d), Internal Revenue Code;
1440 (c) an employer on behalf of the employer's employees or the employees of one or
1441 more of the subsidiary or affiliated corporations of the employer;
1442 (d) an insurer licensed under the following, but only for a line of insurance for which
1443 the insurer holds a license in this state:
1444 (i) Chapter 5, Domestic Stock and Mutual Insurance Corporations;
1445 (ii) Chapter 7, Nonprofit Health Service Insurance Corporations;
1446 (iii) Chapter 8, Health Maintenance Organizations and Limited Health Plans;
1447 (iv) Chapter 9, Insurance Fraternals; or
1448 (v) Chapter 14, Foreign Insurers;
1449 (e) a person:
1450 (i) licensed or exempt from licensing under:
1451 (A) Chapter 23a, Insurance Marketing - Licensing Producers, Consultants, and
1452 Reinsurance Intermediaries; or
1453 (B) Chapter 26, Insurance Adjusters; and
1454 (ii) whose activities are limited to those authorized under the license the person holds
1455 or for which the person is exempt; or
1456 (f) an institution, bank, or financial institution:
1457 (i) that is:
1458 (A) an institution whose deposits and accounts are to any extent insured by a federal
1459 deposit insurance agency, including the Federal Deposit Insurance Corporation or National
1460 Credit Union Administration; or
1461 (B) a bank or other financial institution that is subject to supervision or examination by
1462 a federal or state banking authority; and
1463 (ii) that does not adjust claims without a third party administrator license.
1464 [
1465 owner of real or personal property or the holder of liens or encumbrances on that property, or
1466 others interested in the property against loss or damage suffered by reason of liens or
1467 encumbrances upon, defects in, or the unmarketability of the title to the property, or invalidity
1468 or unenforceability of any liens or encumbrances on the property.
1469 [
1470 organization's statutory capital and surplus as determined in accordance with:
1471 (a) the statutory accounting applicable to the annual financial statements required to be
1472 filed under Section 31A-4-113; and
1473 (b) another item provided by the RBC instructions, as RBC instructions is defined in
1474 Section 31A-17-601.
1475 [
1476 a corporation.
1477 (b) "Trustee," when used in reference to an employee welfare fund, means an
1478 individual, firm, association, organization, joint stock company, or corporation, whether acting
1479 individually or jointly and whether designated by that name or any other, that is charged with
1480 or has the overall management of an employee welfare fund.
1481 [
1482 insurer" means an insurer:
1483 (i) not holding a valid certificate of authority to do an insurance business in this state;
1484 or
1485 (ii) transacting business not authorized by a valid certificate.
1486 (b) "Admitted insurer" or "authorized insurer" means an insurer:
1487 (i) holding a valid certificate of authority to do an insurance business in this state; and
1488 (ii) transacting business as authorized by a valid certificate.
1489 [
1490 insurer.
1491 [
1492 from or incident to ownership, maintenance, or use of a land vehicle or aircraft, exclusive of a
1493 vehicle comprehensive or vehicle physical damage coverage under Subsection (152).
1494 [
1495 security convertible into a security with a voting right associated with the security.
1496 [
1497 pass before coverage for an individual, who is otherwise eligible to enroll under the terms of
1498 the health benefit plan, can become effective.
1499 [
1500 (a) insurance for indemnification of an employer against liability for compensation
1501 based on:
1502 (i) a compensable accidental injury; and
1503 (ii) occupational disease disability;
1504 (b) employer's liability insurance incidental to workers' compensation insurance and
1505 written in connection with workers' compensation insurance; and
1506 (c) insurance assuring to a person entitled to workers' compensation benefits the
1507 compensation provided by law.
1508 Section 3. Section 31A-17-404 is amended to read:
1509 31A-17-404. Credit allowed a domestic ceding insurer against reserves for
1510 reinsurance.
1511 (1) (a) [
1512 credit for reinsurance as either an asset or a reduction from liability for reinsurance ceded only
1513 if the reinsurer meets the requirements of Subsection (3), (4), (5), (6), (7), (8), or (9) [
1514
1515 [
1516 cession of a kind or class of business that the assuming insurer is licensed or otherwise
1517 permitted to write or assume:
1518 (i) in [
1519 (ii) in the case of a United States branch of an alien assuming insurer, in the state
1520 through which [
1521 reinsurance.
1522 [
1523 requirements of Subsection (11) are met.
1524 (2) A domestic ceding insurer is allowed credit for reinsurance ceded:
1525 (a) only if the reinsurance is payable in a manner consistent with Section 31A-22-1201;
1526 (b) only to the extent that the accounting:
1527 (i) is consistent with the terms of the reinsurance contract; and
1528 (ii) clearly reflects:
1529 (A) the amount and nature of risk transferred; and
1530 (B) liability, including contingent liability, of the ceding insurer;
1531 (c) only to the extent the reinsurance contract shifts insurance policy risk from the
1532 ceding insurer to the assuming reinsurer in fact and not merely in form; and
1533 (d) only if the reinsurance contract contains a provision placing on the reinsurer the
1534 credit risk of all dealings with intermediaries regarding the reinsurance contract.
1535 (3) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to an
1536 assuming insurer that is licensed to transact insurance or reinsurance in this state.
1537 (4) (a) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to an
1538 assuming insurer that is accredited by the commissioner as a reinsurer in this state.
1539 (b) An insurer is accredited as a reinsurer if the insurer:
1540 (i) files with the commissioner evidence of the insurer's submission to this state's
1541 jurisdiction;
1542 (ii) submits to the commissioner's authority to examine the insurer's books and records;
1543 (iii) (A) is licensed to transact insurance or reinsurance in at least one state; or
1544 (B) in the case of a United States branch of an alien assuming insurer, is entered
1545 through and licensed to transact insurance or reinsurance in at least one state;
1546 (iv) files annually with the commissioner a copy of the insurer's:
1547 (A) annual statement filed with the insurance department of [
1548 domicile; and
1549 (B) most recent audited financial statement; and
1550 (v) (A) (I) has not had [
1551 within 90 days after the day on which the insurer submits the information required by this
1552 Subsection (4); and
1553 (II) maintains a surplus with regard to policyholders in an amount not less than
1554 $20,000,000; or
1555 (B) (I) has [
1556 (II) maintains a surplus with regard to policyholders in an amount less than
1557 $20,000,000.
1558 (c) Credit may not be allowed a domestic ceding insurer if the assuming insurer's
1559 accreditation is revoked by the commissioner after a notice and hearing.
1560 (5) (a) A domestic ceding insurer is allowed a credit if:
1561 (i) the reinsurance is ceded to an assuming insurer that is:
1562 (A) domiciled in a state meeting the requirements of Subsection (5)(a)(ii); or
1563 (B) in the case of a United States branch of an alien assuming insurer, is entered
1564 through a state meeting the requirements of Subsection (5)(a)(ii);
1565 (ii) the state described in Subsection (5)(a)(i) employs standards regarding credit for
1566 reinsurance substantially similar to those applicable under this section; and
1567 (iii) the assuming insurer or United States branch of an alien assuming insurer:
1568 (A) maintains a surplus with regard to policyholders in an amount not less than
1569 $20,000,000; and
1570 (B) submits to the authority of the commissioner to examine [
1571 and records.
1572 (b) The requirements of Subsections (5)(a)(i) and (ii) do not apply to reinsurance ceded
1573 and assumed pursuant to a pooling arrangement among insurers in the same holding company
1574 system.
1575 (6) (a) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to an
1576 assuming insurer that maintains a trust fund:
1577 (i) created in accordance with rules made by the commissioner pursuant to Title 63G,
1578 Chapter 3, Utah Administrative Rulemaking Act; and
1579 (ii) in a qualified United States financial institution for the payment of a valid claim of:
1580 (A) a United States ceding insurer of the assuming insurer;
1581 (B) an assign of the United States ceding insurer; and
1582 (C) a successor in interest to the United States ceding insurer.
1583 (b) To enable the commissioner to determine the sufficiency of the trust fund described
1584 in Subsection (6)(a), the assuming insurer shall:
1585 (i) report annually to the commissioner information substantially the same as that
1586 required to be reported on the National Association of Insurance Commissioners Annual
1587 Statement form by a licensed insurer; and
1588 (ii) (A) submit to examination of its books and records by the commissioner; and
1589 (B) pay the cost of an examination.
1590 (c) (i) Credit for reinsurance may not be granted under this Subsection (6) unless the
1591 form of the trust and any amendment to the trust is approved by:
1592 (A) the commissioner of the state where the trust is domiciled; or
1593 (B) the commissioner of another state who, pursuant to the terms of the trust
1594 instrument, accepts principal regulatory oversight of the trust.
1595 (ii) The form of the trust and an amendment to the trust shall be filed with the
1596 commissioner of every state in which a ceding insurer beneficiary of the trust is domiciled.
1597 (iii) The trust instrument shall provide that a contested claim is valid and enforceable
1598 upon the final order of a court of competent jurisdiction in the United States.
1599 (iv) The trust shall vest legal title to [
1600 trust's trustees for the benefit of:
1601 (A) a United States ceding insurer of the assuming insurer;
1602 (B) an assign of the United States ceding insurer; or
1603 (C) a successor in interest to the United States ceding insurer.
1604 (v) The trust and the assuming insurer are subject to examination as determined by the
1605 commissioner.
1606 (vi) The trust shall remain in effect for as long as the assuming insurer has an
1607 outstanding obligation due under a reinsurance agreement subject to the trust.
1608 (vii) No later than February 28 of each year, the trustee of the trust shall:
1609 (A) report to the commissioner in writing the balance of the trust;
1610 (B) list the trust's investments at the end of the preceding calendar year; and
1611 (C) (I) certify the date of termination of the trust, if so planned; or
1612 (II) certify that the trust will not expire before the following December 31.
1613 (d) The following requirements apply to the following categories of assuming insurer:
1614 (i) For a single assuming insurer:
1615 (A) the trust fund shall consist of funds in trust in an amount not less than the assuming
1616 insurer's liabilities attributable to reinsurance ceded by United States ceding insurers; and
1617 (B) the assuming insurer shall maintain a trusteed surplus of not less than $20,000,000,
1618 except as provided in Subsection (6)(d)(ii).
1619 (ii) (A) At any time after the assuming insurer has permanently discontinued
1620 underwriting new business secured by the trust for at least three full years, the commissioner
1621 with principal regulatory oversight of the trust may authorize a reduction in the required
1622 trusteed surplus, but only after a finding, based on an assessment of the risk, that the new
1623 required surplus level is adequate for the protection of United States ceding insurers,
1624 policyholders, and claimants in light of reasonably foreseeable adverse loss development.
1625 (B) The risk assessment may involve an actuarial review, including an independent
1626 analysis of reserves and cash flows, and shall consider all material risk factors, including, when
1627 applicable, the lines of business involved, the stability of the incurred loss estimates, and the
1628 effect of the surplus requirements on the assuming insurer's liquidity or solvency.
1629 (C) The minimum required trusteed surplus may not be reduced to an amount less than
1630 30% of the assuming insurer's liabilities attributable to reinsurance ceded by United States
1631 ceding insurers covered by the trust.
1632 (iii) For a group acting as assuming insurer, including incorporated and individual
1633 unincorporated underwriters:
1634 (A) for reinsurance ceded under a reinsurance agreement with an inception,
1635 amendment, or renewal date on or after August 1, 1995, the trust shall consist of a trusteed
1636 account in an amount not less than the respective underwriters' several liabilities attributable to
1637 business ceded by the one or more United States domiciled ceding insurers to an underwriter of
1638 the group;
1639 (B) for reinsurance ceded under a reinsurance agreement with an inception date on or
1640 before July 31, 1995, and not amended or renewed after July 31, 1995, notwithstanding the
1641 other provisions of this chapter, the trust shall consist of a trusteed account in an amount not
1642 less than the respective underwriters' several insurance and reinsurance liabilities attributable to
1643 business written in the United States;
1644 (C) in addition to a trust described in Subsection (6)(d)(iii)(A) or (B), the group shall
1645 maintain in trust a trusteed surplus of which $100,000,000 is held jointly for the benefit of the
1646 one or more United States domiciled ceding insurers of a member of the group for all years of
1647 account;
1648 (D) the incorporated members of the group:
1649 (I) may not be engaged in a business other than underwriting as a member of the group;
1650 and
1651 (II) are subject to the same level of regulation and solvency control by the group's
1652 domiciliary regulator as are the unincorporated members; and
1653 (E) within 90 days after the day on which the group's financial statements are due to be
1654 filed with the group's domiciliary regulator, the group shall provide to the commissioner:
1655 (I) an annual certification by the group's domiciliary regulator of the solvency of each
1656 underwriter member; or
1657 (II) if a certification is unavailable, a financial statement, prepared by an independent
1658 public accountant, of each underwriter member of the group.
1659 (iv) For a group of incorporated underwriters under common administration, the group
1660 shall:
1661 (A) have continuously transacted an insurance business outside the United States for at
1662 least three years immediately preceding the day on which the group makes application for
1663 accreditation;
1664 (B) maintain aggregate policyholders' surplus of at least $10,000,000,000;
1665 (C) maintain a trust fund in an amount not less than the group's several liabilities
1666 attributable to business ceded by the one or more United States domiciled ceding insurers to a
1667 member of the group pursuant to a reinsurance contract issued in the name of the group;
1668 (D) in addition to complying with the other provisions of this Subsection (6)(d)(iv),
1669 maintain a joint trusteed surplus of which $100,000,000 is held jointly for the benefit of the one
1670 or more United States domiciled ceding insurers of a member of the group as additional
1671 security for these liabilities; and
1672 (E) within 90 days after the day on which the group's financial statements are due to be
1673 filed with the group's domiciliary regulator, make available to the commissioner:
1674 (I) an annual certification of each underwriter member's solvency by the member's
1675 domiciliary regulator; and
1676 (II) a financial statement of each underwriter member of the group prepared by an
1677 independent public accountant.
1678 (7) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to an
1679 assuming insurer that secures [
1680 Subsection (7):
1681 (a) The insurer shall be certified by the commissioner as a reinsurer in this state.
1682 (b) To be eligible for certification, the assuming insurer shall:
1683 (i) be domiciled and licensed to transact insurance or reinsurance in a qualified
1684 jurisdiction, as determined by the commissioner pursuant to Subsection (7)(d);
1685 (ii) maintain minimum capital and surplus, or its equivalent, in an amount to be
1686 determined by the commissioner pursuant to rules made in accordance with Title 63G, Chapter
1687 3, Utah Administrative Rulemaking Act;
1688 (iii) maintain financial strength ratings from two or more rating agencies considered
1689 acceptable by the commissioner pursuant to rules made in accordance with Title 63G, Chapter
1690 3, Utah Administrative Rulemaking Act; and
1691 (iv) agree to:
1692 (A) submit to the jurisdiction of this state;
1693 (B) appoint the commissioner as [
1694 process in this state;
1695 (C) provide security for 100% of the assuming insurer's liabilities attributable to
1696 reinsurance ceded by United States ceding insurers if [
1697 enforcement of a final United States judgment;
1698 (D) agree to meet applicable information filing requirements as determined by the
1699 commissioner including an application for certification, a renewal and on an ongoing basis; and
1700 (E) any other requirements for certification considered relevant by the commissioner.
1701 (c) An association, including incorporated and individual unincorporated underwriters,
1702 may be a certified reinsurer[
1703
1704 (i) satisfies the requirements of Subsections (7)(a) and (b);
1705 [
1706 requirements through the capital and surplus equivalents, net of liabilities, of the association
1707 and [
1708 to any unsatisfied obligation of the association or any of [
1709 amount determined by the commissioner to provide adequate protection;
1710 [
1711 business other than underwriting as a member of the association;
1712 [
1713 the incorporated members of the association by the association's domiciliary regulator as are
1714 the unincorporated members; and
1715 [
1716 statements are due to be filed with the association's domiciliary regulator [
1717 provides to the commissioner:
1718 (A) an annual certification by the association's domiciliary regulator of the solvency of
1719 each underwriter member; or
1720 (B) if a certification described in Subsection (7)(c)(v)(A) is unavailable, financial
1721 statements prepared by independent public accountants, of each underwriter member of the
1722 association.
1723 (d) (i) The commissioner shall create and publish a list of qualified jurisdictions under
1724 which an assuming insurer licensed and domiciled in the jurisdiction is eligible to be
1725 considered for certification by the commissioner as a certified reinsurer.
1726 [
1727 assuming insurer is eligible to be recognized as a qualified jurisdiction, the commissioner:
1728 (A) shall evaluate the appropriateness and effectiveness of the reinsurance supervisory
1729 system of the jurisdiction, both initially and on an ongoing basis;
1730 (B) shall consider the rights, the benefits, and the extent of reciprocal recognition
1731 afforded by the non-United States jurisdiction to reinsurers licensed and domiciled in the
1732 United States;
1733 (C) shall require the qualified jurisdiction to share information and cooperate with the
1734 commissioner with respect to all certified reinsurers domiciled within that jurisdiction; and
1735 (D) may not recognize a jurisdiction as a qualified jurisdiction if the commissioner has
1736 determined that the jurisdiction does not adequately and promptly enforce final United States
1737 judgments and arbitration awards.
1738 [
1739 jurisdiction.
1740 [
1741 Association of Insurance Commissioners' Committee Process [
1742 (v) The commissioner shall:
1743 (A) consider [
1744 qualified jurisdictions in determining qualified jurisdictions; and
1745 (B) if the commissioner approves a jurisdiction as qualified that does not appear on the
1746 National Association of Insurance [
1747 jurisdictions, provide thoroughly documented justification in accordance with criteria to be
1748 developed by rule made in accordance with Title 63G, Chapter 3, Utah Administrative
1749 Rulemaking Act.
1750 [
1751 the National Association of Insurance Commissioners' financial standards and accreditation
1752 program shall be recognized as qualified jurisdictions.
1753 [
1754 jurisdiction, the commissioner may suspend the reinsurer's certification indefinitely, in lieu of
1755 revocation.
1756 (e) The commissioner shall:
1757 (i) assign a rating to each certified reinsurer, giving due consideration to the financial
1758 strength ratings that have been assigned by rating agencies considered acceptable to the
1759 commissioner by rule made in accordance with Title 63G, Chapter 3, Utah Administrative
1760 Rulemaking Act; and
1761 (ii) publish a list of all certified reinsurers and their ratings.
1762 (f) A certified reinsurer shall secure obligations assumed from United States ceding
1763 insurers under this Subsection (7) at a level consistent with [
1764 as specified in rules made by the commissioner in accordance with Title 63G, Chapter 3, Utah
1765 Administrative Rulemaking Act.
1766 (i) For a domestic ceding insurer to qualify for full financial statement credit for
1767 reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a
1768 form acceptable to the commissioner and consistent with Section 31A-17-404.1, or in a
1769 multibeneficiary trust in accordance with Subsections (5), (6), and (9), except as otherwise
1770 provided in this Subsection (7).
1771 (ii) If a certified reinsurer maintains a trust to fully secure [
1772 obligations subject to Subsections (5), (6), and (9), and chooses to secure [
1773 reinsurer's obligations incurred as a certified reinsurer in the form of a multibeneficiary trust,
1774 the certified reinsurer shall maintain separate trust accounts for [
1775 obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer
1776 with reduced security as permitted by this Subsection (7) or comparable laws of other United
1777 States jurisdictions and for [
1778 (6), and (9).
1779 (iii) It shall be a condition to the grant of certification under this Subsection (7) that the
1780 certified reinsurer shall have bound itself:
1781 (A) by the language of the trust and agreement with the commissioner with principal
1782 regulatory oversight of the trust account; and
1783 (B) upon termination of the trust account, to fund, out of the remaining surplus of the
1784 trust, any deficiency of any other trust account.
1785 (iv) The minimum trusteed surplus requirements provided in Subsections (5), (6), and
1786 (9) are not applicable with respect to a multibeneficiary trust maintained by a certified reinsurer
1787 for the purpose of securing obligations incurred under this Subsection (7), except that the trust
1788 shall maintain a minimum trusteed surplus of $10,000,000.
1789 (v) With respect to obligations incurred by a certified reinsurer under this Subsection
1790 (7), if the security is insufficient, the commissioner:
1791 (A) shall reduce the allowable credit by an amount proportionate to the deficiency; and
1792 (B) may impose further reductions in allowable credit upon finding that there is a
1793 material risk that the certified reinsurer's obligations will not be paid in full when due.
1794 (vi) (A) For purposes of this Subsection (7), a certified reinsurer whose certification
1795 has been terminated for any reason shall be treated as a certified reinsurer required to secure
1796 100% of [
1797 [
1798 suspension, voluntary surrender, and inactive status.
1799 [
1800 provisions of this section, the requirement under this Subsection (7)(f)(vi) does not apply to a
1801 certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.
1802 (g) If an applicant for certification has been certified as a reinsurer in a National
1803 Association of Insurance Commissioners' accredited jurisdiction, the commissioner may:
1804 (i) defer to that jurisdiction's certification;
1805 (ii) defer to the rating assigned by that jurisdiction; and
1806 (iii) consider such reinsurer to be a certified reinsurer in this state.
1807 (h) (i) A certified reinsurer that ceases to assume new business in this state may request
1808 to maintain [
1809 qualify for a reduction in security for its in-force business.
1810 (ii) An inactive certified reinsurer shall continue to comply with all applicable
1811 requirements of this Subsection (7).
1812 (iii) The commissioner shall assign a rating to a reinsurer that qualifies under this
1813 Subsection (7)(h), that takes into account, if relevant, the reasons why the reinsurer is not
1814 assuming new business.
1815 (8) (a) As used in this Subsection (8):
1816 (i) "Covered agreement" means an agreement entered into pursuant to Dodd-Frank
1817 Wall Street Reform and Consumer Protection Act, 31 U.S.C. Sections 313 and 314, that:
1818 (A) is currently in effect or in a period of provisional application; and
1819 (B) addresses the elimination, under specified conditions, of collateral requirements as
1820 a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this
1821 state or for allowing the ceding insurer to recognize credit for reinsurance.
1822 (ii) "Reciprocal jurisdiction" means a jurisdiction that is:
1823 (A) a non-United States jurisdiction that is subject to an in-force covered agreement
1824 with the United States, each within its legal authority, or, in the case of a covered agreement
1825 between the United States and European Union, is a member state of the European Union;
1826 (B) a United States jurisdiction that meets the requirements for accreditation under the
1827 National Association of Insurance Commissioners' financial standards and accreditation
1828 program; or
1829 (C) a qualified jurisdiction, as determined by the commissioner in accordance with
1830 Subsection (7)(d), that is not otherwise described in this Subsection (8)(a)(ii) and meets certain
1831 additional requirements, consistent with the terms and conditions of in-force covered
1832 agreements, as specified by the commissioner in rule made in accordance with Title 63G,
1833 Chapter 3, Utah Administrative Rulemaking Act.
1834 (b) (i) Credit [
1835 meeting each of the conditions set forth in this Subsection (8)(b).
1836 (ii) The assuming insurer must have [
1837 domiciled in, as applicable, and be licensed in a reciprocal jurisdiction.
1838 (iii) (A) The assuming insurer [
1839 minimum capital and surplus, or its equivalent, calculated according to the methodology of
1840 [
1841 (B) If the assuming insurer is an association, including incorporated and individual
1842 unincorporated underwriters, [
1843 ongoing basis, minimum capital and surplus equivalents (net of liabilities), calculated
1844 according to the methodology applicable in [
1845 and a central fund containing a balance in amounts [
1846 (iv) (A) The assuming insurer must have and maintain, on an ongoing basis, a
1847 minimum solvency or capital ration, as applicable, which will be set forth in regulation.
1848 (B) If the assuming insurer is an association, including incorporated and individual
1849 unincorporated underwriters, [
1850 basis, a minimum solvency or capital ratio in the reciprocal jurisdiction where the assuming
1851 insurer has [
1852 licensed.
1853 (v) The assuming insurer must agree and provide adequate assurance to the
1854 commissioner, in a form specified by the commissioner by rule made in accordance with Title
1855 63G, Chapter 3, Utah Administrative Rulemaking Act, as follows:
1856 (A) the assuming insurer must provide prompt written notice and explanation to the
1857 commissioner if [
1858 [
1859 assuming insurer for serious noncompliance with applicable law;
1860 (B) the assuming insurer must consent in writing to the jurisdiction of the courts of this
1861 state and to the appointment of the commissioner as agent for service of process, however the
1862 commissioner may require that consent for service of process be provided to the commissioner
1863 and included in each reinsurance agreement and nothing in this provision shall limit, or in any
1864 way alter, the capacity of parties to a reinsurance agreement to agree to alternative dispute
1865 resolution mechanisms, except to the extent such agreements are unenforceable under
1866 applicable insolvency or delinquency laws;
1867 (C) the assuming insurer must consent in writing to pay all final judgments, wherever
1868 enforcement is sought, obtained by a ceding insurer or [
1869 that have been declared enforceable in the jurisdiction where the judgment was obtained;
1870 (D) each reinsurance agreement must include a provision requiring the assuming
1871 insurer to provide security in an amount equal to 100% of the assuming insurer's liabilities
1872 attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists
1873 enforcement of a final judgment that is enforceable under the law of the jurisdiction in which
1874 [
1875 obtained by the ceding insurer or by [
1876 the ceding insurer's resolution estate; and
1877 (E) the assuming insurer must confirm that [
1878 participating in any solvent scheme of arrangement which involved this state's ceding insurers,
1879 and agree to notify the ceding insurer and the commissioner and to provide security:
1880 (I) in an amount equal to 100% of the assuming insurer's liabilities to the ceding
1881 insurer, should the assuming insurer enter into such a solvent scheme of arrangement; and
1882 (II) in a form consistent with the provisions of Subsections (7) and (10) and as
1883 specified by the commissioner in regulation.
1884 (vi) The assuming insurer or [
1885 if requested by the commissioner, on behalf of [
1886 predecessors, certain documentation to the commissioner, as specified by the commissioner by
1887 rule made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
1888 (vii) The assuming insurer must maintain a practice of prompt payment of claims under
1889 reinsurance agreements, pursuant to criteria set forth in rule made in accordance with Title
1890 63G, Chapter 3, Utah Administrative Rulemaking Act.
1891 (viii) The assuming insurer's supervisory authority must confirm to the commissioner
1892 on an annual basis, as of the preceding December 31 or at the annual date otherwise statutorily
1893 reported to the reciprocal jurisdiction, that the assuming insurer complies with the requirements
1894 set forth in Subsections (8)(c) and (d).
1895 (ix) Nothing in this provision precludes an assuming insurer from providing the
1896 commissioner with information on a voluntary basis.
1897 (c) (i) The commissioner shall timely create and publish a list of reciprocal
1898 jurisdictions.
1899 (ii) (A) A list of reciprocal jurisdictions is published through the National Association
1900 of Insurance Commissioners' Committee Process.
1901 (B) The commissioner's list of reciprocal jurisdictions shall include any reciprocal
1902 jurisdiction as defined in this Subsection (8), and shall consider any other reciprocal
1903 jurisdictions in accordance with the criteria developed under rule made in accordance with
1904 Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
1905 (iii) (A) The commissioner may remove a jurisdiction from the list of reciprocal
1906 jurisdictions upon a determination that the jurisdiction no longer meets the requirements of a
1907 reciprocal jurisdiction, in accordance with a process set forth in rule made in accordance with
1908 Title 63G, Chapter 3, Utah Administrative Rulemaking Act, except that the commissioner
1909 [
1910 (B) Upon removal of a reciprocal jurisdiction from this list, credit for reinsurance
1911 ceded to an assuming insurer [
1912 that jurisdiction [
1913 (d) (i) The commissioner shall timely create and publish a list of assuming insurers that
1914 have satisfied the conditions set forth in this subsection and to which cessions shall be granted
1915 credit in accordance with this Subsection (8).
1916 (ii) The commissioner may add an assuming insurer to such list if a National
1917 Association of Insurance Commissioners accredited jurisdiction has added such assuming
1918 insurer to a list of such assuming insurers or if, upon initial eligibility, the assuming insurer
1919 submits the information to the commissioner as required under this Subsection (8) and
1920 complies with any additional requirements that the commissioner may impose by rule made in
1921 accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, except to the
1922 extent that they conflict with an applicable covered agreement.
1923 (e) (i) If the commissioner determines that an assuming insurer no longer meets one or
1924 more of the requirements under this Subsection (8), the commissioner may revoke or suspend
1925 the eligibility of the assuming insurer for recognition under this Subsection (8) in accordance
1926 with procedures established in rule made in accordance with Title 63G, Chapter 3, Utah
1927 Administrative Rulemaking Act.
1928 (ii) (A) While an assuming insurer's eligibility is suspended, no reinsurance agreement
1929 issued, amended, or renewed after the [
1930 suspension is effective qualifies for credit except to the extent that the assuming insurer's
1931 obligations under the contract are secured in accordance with Subsection (10).
1932 (B) If an assuming insurer's eligibility is revoked, no credit for reinsurance may be
1933 granted after the [
1934 respect to any reinsurance agreements entered into by the assuming insurer, including
1935 reinsurance agreements entered into [
1936 revocation is effective, except to the extent that the assuming insurer's obligations under the
1937 contract are secured in a form acceptable to the commissioner and consistent with the
1938 provisions of Subsection (10).
1939 (f) If subject to a legal process of rehabilitation, liquidation, or conservation, as
1940 applicable, the ceding insurer, or [
1941 determined appropriate by the court in which the proceedings are pending, may obtain an order
1942 requiring that the assuming insurer post security for all outstanding ceded liabilities.
1943 (g) Nothing in this Subsection (8) limits or in any way alters the capacity of parties to a
1944 reinsurance agreement to agree on requirements for security or other terms in that reinsurance
1945 agreement, except as expressly prohibited by this chapter or other applicable law or regulation.
1946 (h) (i) Credit may be taken under this Subsection (8) only for reinsurance agreements
1947 entered into, amended, or renewed on or after the effective date of the statute adding this
1948 Subsection (8), and only with respect to losses incurred and reserves reported on or after the
1949 later of:
1950 (A) the [
1951 pursuant to Subsection (8)(b); and
1952 [
1953 (B) the day on which the new reinsurance agreement, amendment, or renewal is
1954 effective.
1955 (ii) This Subsection (8) does not alter or impair a ceding insurer's right to take credit
1956 for reinsurance, to the extent that credit is not available under this Subsection (8), as long as the
1957 reinsurance qualifies for credit under any other applicable provision of this chapter.
1958 (iii) Nothing in this Subsection (8) authorizes an assuming insurer to withdraw or
1959 reduce the security provided under any reinsurance agreement except as permitted by the terms
1960 of the agreement.
1961 (iv) Nothing in this Subsection (8) limits, or in any way alters, the capacity of parties to
1962 any reinsurance agreement to renegotiate the agreement.
1963 (9) If reinsurance is ceded to an assuming insurer not meeting the requirements of
1964 Subsection (3), (4), (5), (6), (7), or (8), a domestic ceding insurer is allowed credit only as to
1965 the insurance of a risk located in a jurisdiction where the reinsurance is required by applicable
1966 law or regulation of that jurisdiction.
1967 (10) (a) An asset or a reduction from liability for the reinsurance ceded by a domestic
1968 insurer to an assuming insurer not meeting the requirements of Subsection (3), (4), (5), (6), (7),
1969 or (8) shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer.
1970 (b) The commissioner may adopt by rule made in accordance with Title 63G, Chapter
1971 3, Utah Administrative Rulemaking Act, specific additional requirements relating to or setting
1972 forth:
1973 (i) the valuation of assets or reserve credits;
1974 (ii) the amount and forms of security supporting reinsurance arrangements; and
1975 (iii) the circumstances pursuant to which credit will be reduced or eliminated.
1976 (c) (i) The reduction shall be in the amount of funds held by or on behalf of the ceding
1977 insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with
1978 the assuming insurer as security for the payment of obligations thereunder, if the security is:
1979 (A) held in the United States subject to withdrawal solely by, and under the exclusive
1980 control of, the ceding insurer; or
1981 (B) in the case of a trust, held in a qualified United States financial institution.
1982 (ii) The security described in this Subsection (10)(c) may be in the form of:
1983 (A) cash;
1984 (B) securities listed by the Securities Valuation Office of the National Association of
1985 Insurance Commissioners, including those deemed exempt from filing as defined by the
1986 Purposes and Procedures Manual of the Securities Valuation Office, and qualifying as admitted
1987 assets;
1988 (C) clean, irrevocable, unconditional letters of credit, issued or confirmed by a
1989 qualified United States financial institution effective no later than December 31 of the year for
1990 which the filing is being made, and in the possession of, or in trust for, the ceding insurer on or
1991 before the filing date of its annual statement;
1992 (D) letters of credit meeting applicable standards of issuer acceptability as of the dates
1993 of their issuance or confirmation shall, notwithstanding the issuing or confirming institution's
1994 subsequent failure to meet applicable standards of issuer acceptability, continue to be
1995 acceptable as security until their expiration, extension, renewal, modification or amendment,
1996 whichever first occurs; or
1997 (E) any other form of security acceptable to the commissioner.
1998 (11) Reinsurance credit [
1999 the assuming insurer under the reinsurance contract submits to the jurisdiction of Utah courts
2000 by:
2001 (a) (i) being an admitted insurer; and
2002 (ii) submitting to jurisdiction under Section 31A-2-309;
2003 (b) having irrevocably appointed the commissioner as the domestic ceding insurer's
2004 agent for service of process in an action arising out of or in connection with the reinsurance,
2005 which appointment is made under Section 31A-2-309; or
2006 (c) agreeing in the reinsurance contract:
2007 (i) that if the assuming insurer fails to perform [
2008 under the terms of the reinsurance contract, the assuming insurer, at the request of the ceding
2009 insurer, shall:
2010 (A) submit to the jurisdiction of a court of competent jurisdiction in a state of the
2011 United States;
2012 (B) comply with all requirements necessary to give the court jurisdiction; and
2013 (C) abide by the final decision of the court or of an appellate court in the event of an
2014 appeal; and
2015 (ii) to designate the commissioner or a specific attorney licensed to practice law in this
2016 state as its attorney upon whom may be served lawful process in an action, suit, or proceeding
2017 instituted by or on behalf of the ceding company.
2018 (12) Submitting to the jurisdiction of Utah courts under Subsection (11) does not
2019 override a duty or right of a party under the reinsurance contract, including a requirement that
2020 the parties arbitrate their disputes.
2021 (13) (a) If an assuming insurer does not meet the requirements of Subsection (3), (4),
2022 (5), or (8), the credit permitted by Subsection (6) or (7) may not be allowed unless the
2023 assuming insurer agrees in the trust instrument to the [
2024 described in Subsections (13)(b) through (e).
2025 [
2026 described in Subsection (13)[
2027 (A) an order of the commissioner with regulatory oversight over the trust; or
2028 (B) an order of a court of competent jurisdiction directing the trustee to transfer to the
2029 commissioner with regulatory oversight all of the assets of the trust fund.
2030 (ii) This Subsection (13)[
2031 (A) the trust fund is inadequate because the trust contains an amount less than the
2032 amount required by Subsection (6)(d); or
2033 (B) the grantor of the trust is:
2034 (I) declared insolvent; or
2035 (II) placed into receivership, rehabilitation, liquidation, or similar proceeding under the
2036 laws of its state or country of domicile.
2037 [
2038 distributed by and a claim shall be filed with and valued by the commissioner with regulatory
2039 oversight in accordance with the laws of the state in which the trust is domiciled that are
2040 applicable to the liquidation of a domestic insurance company.
2041 [
2042 trust fund, or any part of the assets, are not necessary to satisfy the claims of the one or more
2043 United States ceding insurers of the grantor of the trust, the assets, or a part of the assets, shall
2044 be returned by the commissioner with regulatory oversight to the trustee for distribution in
2045 accordance with the trust instrument.
2046 [
2047 United States law that is inconsistent with this Subsection (13).
2048 (14) (a) If an accredited or certified reinsurer ceases to meet the requirements for
2049 accreditation or certification, the commissioner may suspend or revoke the reinsurer's
2050 accreditation or certification.
2051 [
2052 [
2053 [
2054 (i) the reinsurer waives [
2055 (ii) the commissioner's order is based on:
2056 (A) regulatory action by the reinsurer's domiciliary jurisdiction; or
2057 (B) the voluntary surrender or termination of the reinsurer's eligibility to transact
2058 insurance or reinsurance business in its domiciliary jurisdiction or primary certifying state
2059 under Subsection (7)(g); or
2060 (iii) the commissioner's finding that an emergency requires immediate action and a
2061 court of competent jurisdiction has not stayed the commissioner's action.
2062 [
2063 contract issued or renewed after the effective date of the suspension qualifies for credit except
2064 to the extent that the reinsurer's obligations under the contract are secured in accordance with
2065 Section 31A-17-404.1.
2066 [
2067 reinsurance may be granted after the effective date of the revocation except to the extent that
2068 the reinsurer's obligations under the contract are secured in accordance with Subsection (7)(f)
2069 or Section 31A-17-404.1.
2070 (15) (a) A ceding insurer shall take steps to manage [
2071 reinsurance recoverables proportionate to [
2072 (b) (i) A domestic ceding insurer shall notify the commissioner within 30 days after the
2073 day on which reinsurance recoverables from any single assuming insurer, or group of affiliated
2074 assuming insurers:
2075 (A) exceeds 50% of the domestic ceding insurer's last reported surplus to
2076 policyholders; or
2077 (B) after it is determined that reinsurance recoverables from any single assuming
2078 insurer, or group of affiliated assuming insurers, is likely to exceed 50% of the domestic ceding
2079 insurer's last reported surplus to policyholders.
2080 (ii) The notification required by Subsection (15)(b)(i) shall demonstrate that the
2081 exposure is safely managed by the domestic ceding insurer.
2082 (c) A ceding insurer shall take steps to diversify [
2083 program.
2084 (d) (i) A domestic ceding insurer shall notify the commissioner within 30 days after
2085 [
2086 more than 20% of the ceding insurer's gross written premium in the prior calendar year to any:
2087 (A) single assuming insurer; or
2088 (B) group of affiliated assuming insurers.
2089 (ii) The notification shall demonstrate that the exposure is safely managed by the
2090 domestic ceding insurer.
2091 (16) A ceding insurer licensed under Chapter 5, Domestic Stock and Mutual Insurance
2092 Corporations, Chapter 7, Nonprofit Health Service Insurance Corporations, Chapter 8, Health
2093 Maintenance Organizations and Limited Health Plans, Chapter 9, Insurance Fraternals, or
2094 Chapter 14, Foreign Insurers is not allowed credit if the reinsurance is ceded to an assuming
2095 domestic or foreign captive insurer, unless the assuming domestic or foreign captive insurer
2096 complies with:
2097 (a) Chapter 4, Insurers in General;
2098 (b) Chapter 16, Insurance Holding Companies;
2099 (c) Chapter 16a, Risk Management and Own Risk and Solvency Assessment Act;
2100 (d) Chapter 17, Determination of Financial Condition; and
2101 (e) Chapter 18, Investments.
2102 Section 4. Section 31A-21-101 is amended to read:
2103 31A-21-101. Scope of Chapters 21 and 22.
2104 (1) Except as provided in Subsections (2) through (6), this chapter and Chapter 22,
2105 Contracts in Specific Lines, apply to all insurance policies, applications, and certificates:
2106 (a) delivered or issued for delivery in this state;
2107 (b) on property ordinarily located in this state;
2108 (c) on persons residing in this state when the policy is issued; or
2109 (d) on business operations in this state.
2110 (2) This chapter and Chapter 22, Contracts in Specific Lines, do not apply to:
2111 (a) an exemption provided in Section 31A-1-103;
2112 (b) an insurance policy procured under Sections 31A-15-103 and 31A-15-104;
2113 (c) an insurance policy on business operations in this state:
2114 (i) if:
2115 (A) the contract is negotiated primarily outside this state; and
2116 (B) the operations in this state are incidental or subordinate to operations outside this
2117 state; and
2118 (ii) except that insurance required by a Utah statute shall conform to the statutory
2119 requirements; or
2120 (d) other exemptions provided in this title.
2121 (3) (a) Sections 31A-21-102, 31A-21-103, 31A-21-104, Subsections 31A-21-107(1)
2122 and (3), and Sections 31A-21-306, 31A-21-308, 31A-21-312, and 31A-21-314 apply to ocean
2123 marine and inland marine insurance.
2124 (b) Section 31A-21-201 applies to inland marine insurance that is written according to
2125 manual rules or rating plans.
2126 (c) Inland marine insurance that includes accident and health insurance is subject to
2127 Chapter 22, Contracts in Specific Lines.
2128 (4) A group insurance policy or a blanket insurance policy is subject to this chapter and
2129 Chapter 22, Contracts in Specific Lines, except:
2130 (a) a group [
2131 Subsection 31A-1-103(3)(h);
2132 (b) a blanket insurance policy outside the scope of this title under Subsection
2133 31A-1-103(3)(h); and
2134 [
2135 (5) The commissioner may by rule exempt any class of insurance contract or class of
2136 insurer from any or all of the provisions of this chapter and Chapter 22, Contracts in Specific
2137 Lines, if the interests of the Utah insureds, creditors, or the public would not be harmed by the
2138 exemption.
2139 (6) Workers' compensation insurance is subject to this chapter and Chapter 22,
2140 Contracts in Specific Lines.
2141 (7) Unless clearly inapplicable, any provision of this chapter or Chapter 22, Contracts
2142 in Specific Lines, applicable to either a policy or a contract is applicable to both.
2143 Section 5. Section 31A-21-201 is amended to read:
2144 31A-21-201. Filing of forms.
2145 (1) (a) Except as exempted under Subsections 31A-21-101(2) through (6), a form may
2146 not be used, sold, or offered for sale until the form is filed with the commissioner.
2147 (b) A form is considered filed with the commissioner when the commissioner receives:
2148 (i) the form;
2149 (ii) the applicable filing fee as prescribed under Section 31A-3-103; and
2150 (iii) the applicable transmittal forms as required by the commissioner.
2151 (2) In filing a form for use in this state the insurer is responsible for assuring that the
2152 form is in compliance with this title and rules adopted by the commissioner.
2153 (3) (a) The commissioner may prohibit the use of a form at any time upon a finding
2154 that:
2155 (i) the form:
2156 (A) is inequitable;
2157 (B) is unfairly discriminatory;
2158 (C) is misleading;
2159 (D) is deceptive;
2160 (E) is obscure;
2161 (F) is unfair;
2162 (G) encourages misrepresentation; or
2163 (H) is not in the public interest;
2164 (ii) the form provides benefits or contains another provision that endangers the solidity
2165 of the insurer;
2166 (iii) except for a life or accident and health insurance policy form, the form is an
2167 insurance policy or application for an insurance policy, that fails to conspicuously[
2168
2169 (A) the exact name of the insurer; and
2170 (B) the state of domicile of the insurer filing the insurance policy or application for the
2171 insurance policy;
2172 (iv) except an application required by Section 31A-22-635, the form is a life or
2173 accident and health insurance policy form that fails to conspicuously[
2174 provide:
2175 (A) the exact name of the insurer;
2176 (B) the state of domicile of the insurer filing the insurance policy or application for the
2177 insurance policy; and
2178 (C) for a life insurance policy only, the address of the administrative office of the
2179 insurer filing the form;
2180 (v) the form violates a statute or a rule adopted by the commissioner; or
2181 (vi) the form is otherwise contrary to law.
2182 (b) (i) When the commissioner prohibits the use of a form under Subsection (3)(a), the
2183 commissioner may order that, on or before a date not less than 15 days after the day on which
2184 the commissioner issues the order, the use of the form be discontinued.
2185 (ii) Once use of a form is prohibited, the form may not be used until appropriate
2186 changes are filed with and reviewed by the commissioner.
2187 (iii) When the commissioner prohibits the use of a form under Subsection (3)(a), the
2188 commissioner may require the insurer to disclose contract deficiencies to the existing
2189 policyholders.
2190 (c) If the commissioner prohibits use of a form under this Subsection (3), the
2191 prohibition shall:
2192 (i) be in writing;
2193 (ii) constitute an order; and
2194 (iii) state the reasons for the prohibition.
2195 (4) (a) If, after a hearing, the commissioner determines that it is in the public interest,
2196 the commissioner may require by rule or order that a form be subject to the commissioner's
2197 approval before [
2198 (b) The rule or order described in Subsection (4)(a) shall prescribe the filing
2199 procedures for a form if the procedures are different from the procedures stated in this section.
2200 (c) The type of form that under Subsection (4)(a) the commissioner may require
2201 approval of before use includes:
2202 (i) a form for a particular class of insurance;
2203 (ii) a form for a specific line of insurance;
2204 (iii) a specific type of form; or
2205 (iv) a form for a specific market segment.
2206 (5) (a) An insurer shall maintain a complete and accurate record of the following for
2207 the time period described in Subsection (5)(b):
2208 (i) a form:
2209 (A) filed under this section for use; or
2210 (B) that is in use; and
2211 (ii) a document filed under this section with a form described in Subsection (5)(a)(i).
2212 (b) The insurer shall maintain a record required under Subsection (5)(a) for the balance
2213 of the current year, plus five years from:
2214 (i) the last day on which the form is used; or
2215 (ii) the last day an insurance policy that is issued using the form is in effect.
2216 Section 6. Section 31A-21-402 is amended to read:
2217 31A-21-402. Definitions.
2218 As used in this part:
2219 (1) (a) "Direct response solicitation" means any offer [
2220 in this state, either directly or through a third party, to effect life or accident and health
2221 insurance coverage which enables the individual to apply or enroll for the insurance on the
2222 basis of the offer.
2223 (b) "Direct response solicitation" does not include:
2224 (i) solicitations for insurance through an employee benefit plan exempt from state
2225 regulation under preemptive federal law[
2226 (ii) solicitations through [
2227 credit accident and health insurance.
2228 (2) "Mass marketed life or accident and health insurance" means the insurance under
2229 any individual, franchise, group, or blanket insurance policy of life or accident and health
2230 insurance [
2231 (a) that is offered by means of direct response solicitation through:
2232 (i) a sponsoring organization; or [
2233 (ii) the mails or other mass communications media; and
2234 (b) under which the person insured pays all or substantially all of the cost of [
2235 person's insurance.
2236 Section 7. Section 31A-21-404 is amended to read:
2237 31A-21-404. Out-of-state insurers.
2238 [
2239 marketed life or accident and health insurance under a group insurance policy issued outside of
2240 this state to residents of this state or a blanket insurance policy issued outside of this state to
2241 residents of this state shall, with respect to the mass marketed life or accident and health
2242 insurance policy:
2243 (1) comply with:
2244 (a) Sections 31A-23a-402, 31A-23a-402.5, and 31A-23a-403; and
2245 (b) Chapter 26, Part 3, Claim Practices; and
2246 (2) upon the commissioner's request, deliver to the commissioner a copy of:
2247 (a) any mass marketed life or accident and health insurance policy[
2248
2249 (b) a certificate issued under a mass marketed life or accident and health insurance
2250 policy;
2251 (c) an application for a mass marketed life or accident and health insurance policy;
2252 (d) an enrollment form for a mass marketed life or accident and health insurance
2253 policy; and
2254 (e) advertising material used in this state in connection with [
2255 or accident and health insurance policy.
2256 Section 8. Section 31A-22-501 is amended to read:
2257 31A-22-501. Eligible groups.
2258 A group insurance policy of life insurance or a blanket insurance policy of life
2259 insurance may not be delivered in Utah unless the insured group:
2260 (1) falls within at least one of the classifications under Sections 31A-22-501.1 through
2261 31A-22-509; and
2262 (2) is formed and maintained in good faith for purposes other than obtaining insurance.
2263 Section 9. Section 31A-22-522 is amended to read:
2264 31A-22-522. Required provision for notice of termination.
2265 (1) [
2266 insurance policy for life insurance coverage [
2267 include a provision that obligates the policyholder to notify each employee or group member:
2268 (a) in writing;
2269 (b) 30 days before the [
2270 (c) (i) that the group insurance policy for life insurance coverage or blanket insurance
2271 policy for life insurance coverage is being terminated; and
2272 (ii) the rights the employee or group member has to convert coverage upon
2273 termination.
2274 (2) For a [
2275 insurance policy for life insurance coverage described in Subsection (1), an insurer shall:
2276 (a) include a statement of a policyholder's obligations under Subsection (1) in the
2277 insurer's monthly notice to the policyholder of premium payments due; and
2278 (b) provide a sample notice to the policyholder at least once a year.
2279 Section 10. Section 31A-22-600 is amended to read:
2280 31A-22-600. Scope of Part 6.
2281 (1) Except where a provision's application is otherwise specifically limited, this part
2282 applies to all:
2283 (a) accident and health insurance contracts, including credit accident and health;
2284 (b) franchise;
2285 (c) group contracts; and
2286 (d) [
2287 rider provide:
2288 [
2289 (i) accident and health insurance benefits; or
2290 (ii) accelerated benefits where the receipt of benefits is contingent on morbidity
2291 requirements.
2292 (2) Nothing in this part applies to or affects:
2293 (a) workers' compensation insurance;
2294 (b) reinsurance; or
2295 (c) accident and health insurance when it is part of or supplemental to liability, steam
2296 boiler, elevator, automobile, or other insurance covering loss of or damage to property,
2297 provided the loss, damage, or expense arises out of a hazard directly related to the other
2298 insurance.
2299 (3) Except as provided in Subsection (1), this part does not apply to or affect a life
2300 insurance or annuity policy including a life insurance policy:
2301 (a) with a rider or supplemental benefit that accelerates the death benefit contingent
2302 upon a mortality risk specifically for one or more of the qualifying events of:
2303 (i) terminal illness;
2304 (ii) medical conditions requiring extraordinary medical intervention; or
2305 (iii) permanent institutional confinement; and
2306 (b) that provides the option of a lump-sum payment for those benefits.
2307 Section 11. Section 31A-22-607 is amended to read:
2308 31A-22-607. Grace period.
2309 (1) (a) An individual or franchise accident and health insurance policy shall contain
2310 one or more clauses providing for a grace period for premium payment only of:
2311 (i) at least 15 days for a weekly or monthly premium policy; and
2312 (ii) 30 days for a policy that is not a weekly or monthly premium policy, for each
2313 premium after the first premium payment.
2314 (b) An insurer may elect to include a grace period that is longer than 15 days for a
2315 weekly or monthly policy.
2316 (c) An individual or franchise accident and health insurance policy is not in force
2317 during a grace period.
2318 (d) If an insurer receives payment before the day on which a grace period expires, the
2319 individual or franchise accident and health insurance policy continues in force with no gap in
2320 coverage.
2321 (e) If an insurer does not receive payment before the day on which a grace period
2322 expires, the individual or franchise accident and health insurance policy [
2323 terminates as of the last date for which the premium is paid in full.
2324 (f) A grace period is not required if the policyholder has requested that the individual
2325 or franchise accident and health insurance policy be discontinued.
2326 (2) (a) A group insurance policy for accident and health insurance or a blanket
2327 insurance policy for accident and health insurance [
2328 least 30 days, unless the policyholder gives written notice of discontinuance before the [
2329
2330 (b) A group insurance policy for accident and health insurance or a blanket insurance
2331 policy for accident and health insurance [
2332 (c) If an insurer does not receive payment before the day on which a grace period
2333 expires, the group insurance policy for accident and health insurance or blanket insurance
2334 policy for accident and health insurance [
2335 on which the grace period is in effect.
2336 (d) A group insurance policy for accident and health insurance or a blanket insurance
2337 policy for accident and health insurance [
2338 premium for the period the [
2339 during a grace period under this Subsection (2).
2340 (3) If an insurer has not guaranteed the insured a right to renew an accident and health
2341 insurance policy, a grace period beyond the expiration or anniversary date may, if provided in
2342 the accident and health insurance policy, be cut off by compliance with the notice provision
2343 under [
2344 (4) (a) An insurer shall send a written renewal notice to the policyholder:
2345 (i) no sooner than 60 days before, and no later than 14 days before, the day on which an
2346 accident and health insurance policy renews; or
2347 (ii) if the renewal notice includes a change in premium, at least 45 days before the day
2348 on which an accident and health insurance policy renews.
2349 (b) The renewal notice described in Subsection (4)(a) shall clearly state:
2350 (i) the renewal amount;
2351 (ii) how the policyholder may pay the renewal premium, including the day on which
2352 the renewal premium is due; and
2353 (iii) that failure of the policyholder to pay the renewal premium extinguishes the
2354 policyholder's right to renew.
2355 (5) The extinguishment of a policyholder's right to renew for nonpayment of premium
2356 is effective no sooner than 10 days after the day on which the policyholder receives written
2357 notice that the policyholder has failed to pay the premium when due.
2358 Section 12. Section 31A-22-608 is amended to read:
2359 31A-22-608. Reinstatement of individual or franchise accident and health
2360 insurance policies.
2361 (1) Every individual or franchise accident and health insurance policy shall contain a
2362 provision which reads substantially as follows:
2363 "REINSTATEMENT: If any renewal premium is not paid within the time granted the
2364 insured for payment, a subsequent acceptance of premium by the insurer or by any agent duly
2365 authorized by the insurer to accept the premium, without also requiring an application for
2366 reinstatement, shall reinstate the policy. However, if the insurer or agent requires an
2367 application for reinstatement and issues a conditional receipt for the premium tendered, the
2368 policy shall be reinstated upon approval of this application from the insurer or, lacking this
2369 approval, upon the 45th day following the date of the conditional receipt, unless the insurer has
2370 previously notified the insured in writing of its disapproval of the application. The reinstated
2371 policy shall cover only loss resulting from such accidental injury as may be sustained after the
2372 date of reinstatement and loss due to such sickness as may begin more than 10 days after that
2373 date. In all other respects the insured and insurer have the same rights under the reinstated
2374 policy as they had under the policy immediately before the due date of the defaulted premium,
2375 subject to any provisions endorsed on or attached to this policy in connection with the
2376 reinstatement. Any premium accepted in connection with a reinstatement shall be applied to a
2377 period for which premium has not been previously paid, but not to any period more than 60
2378 days prior to the date of reinstatement."
2379 (2) The last sentence of the provision [
2380 omitted from any policy that the insured has the right to continue in force subject to [
2381 policy's terms by the timely payment of premiums until at least age 50, or in the case of a
2382 policy issued after age 44, for at least five years from [
2383 insurer issues the policy.
2384 Section 13. Section 31A-22-612 is amended to read:
2385 31A-22-612. Conversion privileges for insured former spouse.
2386 (1) An accident and health insurance policy, [
2387 insured also provides coverage to the spouse of the insured, may not contain a provision for
2388 termination of coverage of a spouse covered under the policy, except by entry of a valid decree
2389 of divorce, legal separation, or annulment between the parties.
2390 (2) Every policy [
2391 Subsection (1) shall provide that:
2392 (a) upon the entry of the divorce decree the spouse is entitled to have issued an
2393 individual policy of accident and health insurance without evidence of insurability, upon
2394 application to the company and payment of the appropriate premium[
2395 (b) the individual policy described in Subsection (2)(a) shall:
2396 (i) provide the coverage [
2397 terminated coverage[
2398 (ii) consider a probationary or waiting period satisfied to the extent the coverage was in
2399 force under the prior policy.
2400 (3) (a) When [
2401 be terminated because of a divorce, legal separation, or annulment, the insurer shall promptly
2402 provide the spouse written notification of the right to obtain individual coverage as provided in
2403 Subsection (2), the premium amounts required, and the manner, place, and time in which
2404 premiums may be paid.
2405 (b) The premium is determined in accordance with the insurer's table of premium rates
2406 applicable to the age and class of risk of the persons to be covered and to the type and amount
2407 of coverage provided.
2408 (c) If [
2409 30 days after [
2410 Subsection (3), the spouse shall receive individual coverage that commences immediately upon
2411 termination of coverage under the insured's policy.
2412 (4) This section does not apply to:
2413 (a) a blanket insurance policy providing accident and health insurance [
2414
2415 (b) a health benefit plan.
2416 Section 14. Section 31A-22-618.6 is amended to read:
2417 31A-22-618.6. Discontinuance, nonrenewal, or changes to group health benefit
2418 plans.
2419 (1) Except as otherwise provided in this section, a group health benefit plan for a plan
2420 sponsor is renewable and continues in force:
2421 (a) with respect to all eligible employees and dependents; and
2422 (b) at the option of the plan sponsor.
2423 (2) A health benefit plan for a plan sponsor may be discontinued or nonrenewed:
2424 (a) for noncompliance with the insurer's employer contribution requirements;
2425 (b) if there is no longer any enrollee under the group health plan who lives, resides, or
2426 works in:
2427 (i) the service area of the insurer; or
2428 (ii) the area for which the insurer is authorized to do business;
2429 (c) for coverage made available in the small or large employer market only through an
2430 association, if:
2431 (i) the employer's membership in the association ceases; and
2432 (ii) the coverage is terminated uniformly without regard to any health status-related
2433 factor relating to any covered individual; or
2434 (d) for noncompliance with the insurer's minimum employee participation
2435 requirements, except as provided in Subsection (3).
2436 (3) If a small employer no longer employs at least one eligible employee, a carrier may
2437 not discontinue or not renew the health benefit plan until the first renewal date following the
2438 beginning of a new plan year, even if the carrier knows at the beginning of the plan year that
2439 the employer no longer has at least one eligible employee.
2440 (4) (a) A small employer that, after purchasing a health benefit plan in the small group
2441 market, employs on average more than 50 eligible employees on each business day in a
2442 calendar year may continue to renew the health benefit plan purchased in the small group
2443 market.
2444 (b) A large employer that, after purchasing a health benefit plan in the large group
2445 market, employs on average fewer than 51 eligible employees on each business day in a
2446 calendar year may continue to renew the health benefit plan purchased in the large group
2447 market.
2448 (5) A health benefit plan for a plan sponsor may be discontinued if:
2449 (a) a condition described in Subsection (2) exists;
2450 (b) the plan sponsor fails to pay premiums or contributions in accordance with the
2451 terms of the contract;
2452 (c) the plan sponsor:
2453 (i) performs an act or practice that constitutes fraud; or
2454 (ii) makes an intentional misrepresentation of material fact under the terms of the
2455 coverage;
2456 (d) the insurer:
2457 (i) elects to discontinue offering a particular health benefit plan [
2458 issued for delivery in this state; [
2459 (ii) [
2460
2461 days before the [
2462 [
2463 least three working days before the [
2464 plan [
2465 certificate holder;
2466 [
2467 purchase all other health benefit plans currently being offered by the insurer in the market or, in
2468 the case of a large employer, any other health benefit plans currently being offered in that
2469 market; and
2470 [
2471 the option of coverage in this section, acts uniformly without regard to the claims experience of
2472 a plan sponsor, any health status-related factor relating to any covered participant or
2473 beneficiary, or any health status-related factor relating to any new participant or beneficiary
2474 who may become eligible for the coverage; or
2475 (e) the insurer:
2476 (i) elects to discontinue all of the insurer's health benefit plans in:
2477 (A) the small employer market;
2478 (B) the large employer market; or
2479 (C) both the small employer and large employer markets; [
2480 (ii) [
2481
2482 days before the [
2483 [
2484 state in which an affected insured individual is known to reside and, at least 30 working days
2485 before the [
2486
2487 insured individual;
2488 [
2489 market described in Subsection (5)(e)(i) ; and
2490 [
2491 (6) (a) Except as provided in Subsection (6)(d), an eligible employee may be
2492 discontinued if after issuance of coverage the eligible employee:
2493 (i) engages in an act or practice in connection with the coverage that constitutes fraud;
2494 or
2495 (ii) makes an intentional misrepresentation of material fact in connection with the
2496 coverage.
2497 (b) An eligible employee [
2498 (6)(a) may reenroll:
2499 (i) 12 months after the [
2500 discontinues; and
2501 (ii) if the plan sponsor's coverage is in effect at the time the eligible employee applies
2502 to reenroll.
2503 (c) At the time the eligible employee's coverage [
2504 Subsection (6)(a), the insurer shall notify the eligible employee of the right to reenroll [
2505
2506 (d) An eligible [
2507 Subsection (6) because of a fraud or misrepresentation that relates to health status.
2508 (7) For purposes of this section, a reference to "plan sponsor" includes a reference to
2509 the employer:
2510 (a) with respect to coverage provided to an employer member of the association; and
2511 (b) if the health benefit plan is made available by an insurer in the employer market
2512 only through:
2513 (i) an association;
2514 (ii) a trust; or
2515 (iii) a discretionary group.
2516 (8) An insurer may modify a health benefit plan for a plan sponsor only:
2517 (a) at the time of coverage renewal; and
2518 (b) if the modification is effective uniformly among all plans with that product.
2519 Section 15. Section 31A-22-618.7 is amended to read:
2520 31A-22-618.7. Discontinuance, nonrenewal, and modification for individual
2521 health benefit plans.
2522 (1) (a) Except as otherwise provided in this section, a health benefit plan offered on an
2523 individual basis is renewable and continues in force:
2524 (i) with respect to all enrollees or dependents; and
2525 (ii) at the option of the enrollee.
2526 (b) Subsection (1)(a) applies regardless of:
2527 (i) whether the contract is issued through:
2528 (A) a trust;
2529 (B) an association;
2530 (C) a discretionary group; or
2531 (D) other similar grouping; or
2532 (ii) the situs of delivery of the policy or contract.
2533 (2) An individual health benefit plan may be discontinued or nonrenewed:
2534 (a) if:
2535 (i) there is no longer an enrollee under the individual health benefit plan who lives,
2536 resides, or works in:
2537 (A) the service area of the insurer; or
2538 (B) the area for which the insurer is authorized to do business; and
2539 (ii) coverage is terminated uniformly without regard to any health status-related factor
2540 relating to any covered enrollee; or
2541 (b) for coverage made available through an association, if:
2542 (i) the enrollee's membership in the association ceases; and
2543 (ii) the coverage is terminated uniformly without regard to any health status-related
2544 factor relating to any covered enrollee.
2545 (3) An individual health benefit plan may be discontinued if:
2546 (a) a condition described in Subsection (2) exists;
2547 (b) the enrollee fails to pay premiums or contributions in accordance with the terms of
2548 the health benefit plan, including any timeliness requirements;
2549 (c) the enrollee:
2550 (i) performs an act or practice in connection with the coverage that constitutes fraud; or
2551 (ii) makes an intentional misrepresentation of material fact under the terms of the
2552 coverage;
2553 (d) the insurer:
2554 (i) elects to discontinue offering a particular health benefit plan product delivered or
2555 issued for delivery in this state; and
2556 (ii) (A) provides notice of the discontinuation in writing to each enrollee provided
2557 coverage at least 90 days before the [
2558 discontinues;
2559 (B) provides notice of the discontinuation in writing to the commissioner and, at least
2560 three working days before the [
2561 each affected enrollee;
2562 (C) offers to each covered enrollee on a guaranteed issue basis the option to purchase
2563 all other individual health benefit plans currently being offered by the insurer for individuals in
2564 that market; and
2565 (D) acts uniformly without regard to any health status-related factor of covered
2566 enrollees or dependents of covered enrollees who may become eligible for coverage; or
2567 (e) the insurer:
2568 (i) elects to discontinue all of the insurer's health benefit plans in the individual market;
2569 and
2570 (ii) (A) provides notice of the discontinuation in writing to each enrollee provided
2571 coverage at least 180 days before the [
2572 discontinues;
2573 (B) provides notice of the discontinuation in writing to the commissioner in each state
2574 in which an affected enrollee is known to reside and, at least 30 working days before the [
2575 day on which the insurer sends the notice [
2576 enrollee;
2577 (C) discontinues and nonrenews all health benefit plans the insurer issues or delivers
2578 for issuance in the individual market; and
2579 (D) acts uniformly without regard to any health status-related factor of covered
2580 enrollees or dependents of covered enrollees who may become eligible for coverage.
2581 (4) An insurer may modify an individual health benefit plan only:
2582 (a) at the time of coverage renewal; and
2583 (b) if the modification is effective uniformly among all health benefit plans.
2584 Section 16. Section 31A-22-618.8 is amended to read:
2585 31A-22-618.8. Discontinuance and nonrenewal limitations for health benefit
2586 plans.
2587 (1) Subject to Section 31A-4-115, an insurer that elects to discontinue offering a health
2588 benefit plan under Subsections 31A-22-618.6(5)(e) and 31A-22-618.7(3)(e) is prohibited from
2589 writing new business:
2590 (a) in the market in this state for which the insurer discontinues or does not renew; and
2591 (b) for a period of five years beginning on the [
2592 which the last coverage that is discontinued.
2593 (2) If an insurer is doing business in one established geographic service area of the
2594 state, Sections 31A-22-618.6 and 31A-22-618.7 apply only to the insurer's operations in that
2595 service area.
2596 (3) The commissioner may, by rule or order, define the scope of service area.
2597 Section 17. Section 31A-22-618.9 is enacted to read:
2598 31A-22-618.9. Discontinuance, nonrenewal, and changes to accident and health
2599 insurance coverage.
2600 (1) As used in this section:
2601 (a) "Conditionally renewable policy" means an accident and health insurance policy
2602 that an insurer may decline to renew because of class, geographic area, or for a stated reason
2603 other than deterioration of health.
2604 (b) "Guaranteed renewable policy" means an accident and health insurance policy that
2605 an insurer:
2606 (i) may not refuse to renew for any reason; and
2607 (ii) may revise the rates of on a class basis.
2608 (c) "Non-cancelable policy" means an accident and health insurance policy that an
2609 insurer may not:
2610 (i) refuse to renew for any reason; or
2611 (ii) revise the rates of for any reason.
2612 (d) "Optionally renewable policy" means an accident and health insurance policy that
2613 the insurer has the option of renewing.
2614 (2) Except as provided in Sections 31A-22-618.6 and 31A-22-618.7, an insurer may
2615 decline to renew a conditionally renewable policy, a guaranteed renewable policy, or an
2616 optionally renewable policy on the day on which:
2617 (a) the agreed upon policy term expires; or
2618 (b) the policy renews, if the insurer provides notice of nonrenewal at least 90 days
2619 before the day on which the nonrenewal takes effect.
2620 (3) Notwithstanding Subsection (2), an insurer may cancel a conditionally renewable
2621 policy, a guaranteed renewable policy, a non-cancelable policy, or an optionally renewable
2622 policy for:
2623 (a) nonpayment of a premium when due, including timeliness requirements;
2624 (b) intentional material misrepresentation of a material fact in connection with the
2625 coverage;
2626 (c) performance of an act or practice that constitutes fraud in connection with the
2627 coverage; or
2628 (d) noncompliance with employer eligibility provisions.
2629 (4) Except for a modification required by law, an insurer may only modify a
2630 conditionally renewable policy, a guaranteed renewable policy, or an optionally renewable
2631 policy:
2632 (a) at the time of coverage renewal; and
2633 (b) if the modification is effective uniformly among similar policies.
2634 (5) (a) Subject to Subsection (5)(b), an insurer shall obtain the policyholder's signed
2635 acceptance for an endorsement:
2636 (i) that reduces or eliminates benefits or coverage of a policy; and
2637 (ii) added to a policy:
2638 (A) after the day on which the insurer issues the policy; or
2639 (B) at reinstatement or renewal of the policy.
2640 (b) Subsection (5)(a) does not apply to an endorsement by which the insurer:
2641 (i) effectuates a request the policyholder made in writing; or
2642 (ii) exercises a specifically reserved right under the policy.
2643 Section 18. Section 31A-22-627 is amended to read:
2644 31A-22-627. Coverage of emergency medical services.
2645 (1) A health insurance policy or managed care organization contract:
2646 (a) shall provide[
2647
2648 (b) may not:
2649 (i) require any form of preauthorization for treatment of an emergency medical
2650 condition until after the insured's condition has been stabilized; [
2651 (ii) deny a claim for any covered evaluation, covered diagnostic test, or other covered
2652 treatment considered medically necessary to stabilize the emergency medical condition of an
2653 insured[
2654 (iii) impose any cost-sharing requirement for out-of-network that exceed the
2655 cost-sharing requirement imposed for in-network.
2656 (2) (a) A health insurance policy or managed care organization contract may require
2657 authorization for the continued treatment of an emergency medical condition after the insured's
2658 condition has been stabilized.
2659 (b) If [
2660 does not accept or reject a request for authorization may not deny a claim for any evaluation,
2661 diagnostic testing, or other treatment considered medically necessary that occurred between the
2662 time the request was received and the time the insurer rejected the request for authorization.
2663 (3) For purposes of this section:
2664 (a) "Emergency medical condition" means a medical condition manifesting itself by
2665 acute symptoms of sufficient severity, including severe pain, such that a prudent layperson,
2666 who possesses an average knowledge of medicine and health, would reasonably expect the
2667 absence of immediate medical attention through a hospital emergency department to result in:
2668 (i) placing the insured's health, or with respect to a pregnant woman, the health of the
2669 woman or her unborn child, in serious jeopardy;
2670 (ii) serious impairment to bodily functions; or
2671 (iii) serious dysfunction of any bodily organ or part.
2672 (b) "Hospital emergency department" means that area of a hospital in which emergency
2673 services are provided on a 24-hour-a-day basis.
2674 (c) "Stabilize" means the same as that term is defined in 42 U.S.C. Sec. 1395dd(e)(3).
2675 (4) Nothing in this section may be construed as:
2676 (a) altering the level or type of benefits that are provided under the terms of a contract
2677 or policy; or
2678 (b) restricting a policy or contract from providing enhanced benefits for certain
2679 emergency medical conditions that are identified in the policy or contract.
2680 (5) Notwithstanding Section 31A-2-308, if the commissioner finds an insurer has
2681 violated this section, the commissioner may:
2682 (a) work with the insurer to improve the insurer's compliance with this section; or
2683 (b) impose the following fines:
2684 (i) not more than $5,000; or
2685 (ii) twice the amount of any profit gained from violations of this section.
2686 Section 19. Section 31A-22-701 is amended to read:
2687 31A-22-701. Groups eligible for group or blanket insurance.
2688 (1) As used in this section, "association group" means a lawfully formed association of
2689 individuals or business entities that:
2690 (a) purchases insurance on a group basis on behalf of members; and
2691 (b) is formed and maintained in good faith for purposes other than obtaining insurance.
2692 (2) A group [
2693 may be issued to:
2694 (a) a group:
2695 (i) to which a group life insurance policy may be issued under Section 31A-22-502,
2696 31A-22-503, 31A-22-504, 31A-22-506, or 31A-22-507; and
2697 (ii) that is formed and maintained in good faith for a purpose other than obtaining
2698 insurance;
2699 (b) an association group authorized by the commissioner that:
2700 (i) has been actively in existence for at least five years;
2701 (ii) has a constitution and bylaws;
2702 (iii) has a shared [
2703
2704 (A) is the same profession, trade, occupation, or similar; or
2705 (B) is unrelated to the provision of benefits, by some common economic,
2706 representation of interest, or genuine organizational relationship;
2707 (iv) is formed and maintained in good faith for purposes other than obtaining
2708 insurance;
2709 (v) does not condition membership in the association group on any health status-related
2710 factor relating to an individual, including an employee of an employer or a dependent of an
2711 employee;
2712 (vi) makes accident and health insurance coverage offered through the association
2713 group available to all members regardless of any health status-related factor relating to the
2714 members or individuals eligible for coverage through a member;
2715 (vii) does not make accident and health insurance coverage offered through the
2716 association group available other than in connection with a member of the association group;
2717 and
2718 (viii) is actuarially sound; [
2719 (c) a group specifically authorized by the commissioner, upon a finding that:
2720 (i) authorization is not contrary to the public interest;
2721 (ii) the group is actuarially sound;
2722 (iii) formation of the proposed group may result in economies of scale in acquisition,
2723 administrative, marketing, and brokerage costs;
2724 (iv) the insurance policy, insurance certificate, or other indicia of coverage that will be
2725 offered to the proposed group is substantially equivalent to insurance policies that are
2726 otherwise available to similar groups;
2727 (v) the group would not present hazards of adverse selection;
2728 (vi) the premiums for the insurance policy and any contributions by or on behalf of the
2729 insured persons are reasonable in relation to the benefits provided; and
2730 (vii) the group is formed and maintained in good faith for a purpose other than
2731 obtaining insurance[
2732 (d) a postsecondary educational institution covering students, upon a finding that:
2733 (i) the policy provides standards for financial soundness;
2734 (ii) the policy protects the students covered;
2735 (iii) the policy provides for the establishment of a financially viable alternative to
2736 traditional health care plans;
2737 (iv) authorization is not contrary to the public interest;
2738 (v) the policy would not present hazards of adverse selection; and
2739 (vi) the premiums for the policy and any contributions by or on behalf of the insured
2740 persons are reasonable in relation to the benefits provided.
2741 (3) A blanket insurance policy offering accident and health insurance [
2742 (a) covers a defined class of persons;
2743 (b) may not be offered or underwritten on an individual basis;
2744 (c) shall cover only a group that is:
2745 (i) actuarially sound; and
2746 (ii) formed and maintained in good faith for a purpose other than obtaining insurance;
2747 and
2748 (d) may be issued only to:
2749 (i) a common carrier or an operator, owner, or lessee of a means of transportation, as
2750 policyholder, covering persons who may become passengers as defined by reference to the
2751 person's travel status;
2752 (ii) an employer, as policyholder, covering any group of employees, dependents, or
2753 guests, as defined by reference to specified hazards incident to any activities of the
2754 policyholder;
2755 (iii) an institution of learning, including a school district, a school jurisdictional unit, or
2756 the head, principal, or governing board of a school jurisdictional unit, as policyholder, covering
2757 students, teachers, or employees;
2758 (iv) a religious, charitable, recreational, educational, or civic organization, or branch of
2759 one of those organizations, as policyholder, covering a group of members or participants as
2760 defined by reference to specified hazards incident to the activities sponsored or supervised by
2761 the policyholder;
2762 (v) a sports team, camp, or sponsor of a sports team or camp, as policyholder, covering
2763 members, campers, employees, officials, or supervisors;
2764 (vi) a volunteer fire department, first aid, civil defense, or other similar volunteer
2765 organization, as policyholder, covering a group of members or participants as defined by
2766 reference to specified hazards incident to activities sponsored, supervised, or participated in by
2767 the policyholder;
2768 (vii) a newspaper or other publisher, as policyholder, covering its carriers;
2769 (viii) a labor union, as a policyholder, covering a group of members or participants as
2770 defined by reference to specified hazards incident to the activities or operations sponsored or
2771 supervised by the policyholder;
2772 (ix) an association that has a constitution and bylaws covering a group of members or
2773 participants as defined by reference to specified hazards incident to the activities or operations
2774 sponsored or supervised by the policyholder; or
2775 (x) any other class of risks that, in the judgment of the commissioner, may be properly
2776 eligible for a blanket insurance policy offering accident and health insurance.
2777 (4) The judgment of the commissioner may be exercised on the basis of:
2778 (a) individual risks;
2779 (b) a class of risks; or
2780 (c) both Subsections (4)(a) and (b).
2781 Section 20. Section 31A-22-716 is amended to read:
2782 31A-22-716. Required provision for notice of termination.
2783 (1) [
2784 blanket insurance policy offering accident and health [
2785
2786 (a) to give [
2787 member 30 days before the day on which the policy terminates; and
2788 (b) to notify each employee or group member of the employee's or group member's
2789 rights to continue coverage upon termination.
2790 (2) (a) An insurer's monthly notice to the policyholder of premium payments due shall
2791 include a statement of the policyholder's obligations as set forth in Subsection (1).
2792 (b) Insurers shall provide a sample notice to the policyholder at least once a year.
2793 Section 21. Section 31A-22-717 is amended to read:
2794 31A-22-717. Provisions pertaining to service members and their families affected
2795 by mobilization into the armed forces.
2796 For [
2797 insurance policy offering accident and health [
2798 (1) may not refuse to reinstate an insured or [
2799 lapsed due to the insured's mobilization into the United States armed forces provided
2800 application is made within 180 days [
2801 from active duty;
2802 (2) shall reinstate an insured in full upon payment of the first premium without the
2803 requirement of a waiting period or exclusion for preexisting conditions or any other
2804 underwriting requirements that were covered previously; and
2805 (3) may not increase the insured's premium in excess of what [
2806 have been increased to in the normal course of time had the insured not been mobilized into the
2807 United States armed forces.
2808 Section 22. Section 31A-22-1404 is amended to read:
2809 31A-22-1404. Rulemaking authority.
2810 The commissioner may adopt rules that may permit or include:
2811 (1) the increase of benefits over time;
2812 (2) standards for full and fair disclosure of the manner, content, and required
2813 disclosures for the sale of long-term care insurance policies;
2814 (3) terms of renewability;
2815 (4) initial and subsequent conditions of eligibility;
2816 (5) nonduplication of coverage provisions;
2817 (6) coverage of dependents;
2818 (7) termination of coverage;
2819 (8) continuation or conversion;
2820 (9) probationary periods;
2821 (10) limitations, exceptions, and reductions of coverage;
2822 (11) preexisting conditions;
2823 (12) elimination and waiting periods;
2824 (13) requirements for replacement;
2825 (14) recurrent conditions;
2826 (15) definition of terms;
2827 (16) loss ratio requirements;
2828 (17) post claim underwriting;
2829 (18) waiver of premium;
2830 (19) independent review of benefit determinations;
2831 [
2832 [
2833 Section 23. Section 31A-23a-113 is amended to read:
2834 31A-23a-113. License lapse and voluntary surrender.
2835 (1) (a) A license issued under this chapter, including a line of authority, shall lapse if
2836 the licensee fails to:
2837 (i) pay when due a fee under Section 31A-3-103;
2838 (ii) complete continuing education requirements under Section 31A-23a-202 before
2839 submitting the license renewal application;
2840 (iii) submit a completed renewal application as required by Section 31A-23a-104;
2841 (iv) submit additional documentation required to complete the licensing process as
2842 related to a specific license type or line of authority; or
2843 (v) maintain an active license in a licensee's home state if the licensee is a nonresident
2844 licensee.
2845 (b) A license that lapses shall expire effective at midnight on the day on which the
2846 license expires.
2847 [
2848 and line of authority no more than one year after the day on which the license lapses.
2849 (ii) A licensee whose license lapses due to the following may request an action
2850 described in Subsection (1)[
2851 (A) military service;
2852 (B) voluntary service for a period of time designated by the person for whom the
2853 licensee provides voluntary service; or
2854 (C) some other extenuating circumstances, [
2855 disability.
2856 (iii) A licensee described in Subsection (1)[
2857 (A) reinstatement of the license and line of authority no later than one year after the
2858 day on which the license lapses; and
2859 (B) waiver of any of the following imposed for failure to comply with renewal
2860 procedures:
2861 (I) an examination requirement;
2862 (II) reinstatement fees set under Section 31A-3-103;
2863 (III) continuing education requirements; or
2864 (IV) other sanction imposed for failure to comply with renewal procedures.
2865 (2) If a license or line of authority issued under this chapter is voluntarily surrendered,
2866 the license or line of authority may be reinstated:
2867 (a) during the license period in which the license or line of authority is voluntarily
2868 surrendered; and
2869 (b) no later than one year after the day on which the license or line of authority is
2870 voluntarily surrendered.
2871 Section 24. Section 31A-23a-201 is amended to read:
2872 31A-23a-201. Exceptions to producer licensing.
2873 (1) The commissioner may not require a license as an insurance producer of:
2874 (a) an officer, director, or employee of an insurer or of an insurance producer if:
2875 (i) the officer, director, or employee does not receive any commission on a policy
2876 written or sold to insure risks residing, located, or to be performed in this state; and
2877 (ii) (A) the officer's, director's, or employee's activities are:
2878 (I) executive, administrative, managerial, clerical, or a combination of these activities;
2879 and
2880 (II) only indirectly related to the sale, solicitation, or negotiation of insurance;
2881 (B) the officer's, director's, or employee's function relates to:
2882 (I) underwriting;
2883 (II) loss control;
2884 (III) inspection; or
2885 (IV) the processing, adjusting, investigating or settling of a claim on a contract of
2886 insurance; or
2887 (C) (I) the officer, director, or employee is acting in the capacity of a special agent or
2888 agency supervisor assisting an insurance producer;
2889 (II) the officer's, director's, or employee's activities are limited to providing technical
2890 advice and assistance to a licensed insurance producer; and
2891 (III) the officer's, director's, or employee's activities do not include the sale, solicitation,
2892 or negotiation of insurance;
2893 (b) a person who:
2894 (i) is paid no commission for the services described in Subsection (1)(b)(ii); and
2895 (ii) secures and furnishes information for the purpose of:
2896 (A) group life insurance;
2897 (B) group property and casualty insurance;
2898 (C) group annuities;
2899 (D) a group insurance policy for accident and health insurance or a blanket insurance
2900 policy for accident and health insurance;
2901 (E) enrolling individuals under plans;
2902 (F) issuing certificates under plans; or
2903 (G) otherwise assisting in administering plans;
2904 (c) a person who:
2905 (i) is paid no commission for the services described in Subsection (1)(c)(ii); and
2906 (ii) performs administrative services related to mass marketed property and casualty
2907 insurance;
2908 (d) (i) any of the following if the conditions of Subsection (1)(d)(ii) are met:
2909 (A) an employer or association; or
2910 (B) an officer, director, employee, or trustee of an employee trust plan;
2911 (ii) a person listed in Subsection (1)(d)(i):
2912 (A) to the extent that the employer, officer, employee, director, or trustee is engaged in
2913 the administration or operation of a program of employee benefits for:
2914 (I) the employer's or association's own employees; or
2915 (II) the employees of a subsidiary or affiliate of an employer or association;
2916 (B) the program involves the use of insurance issued by an insurer; and
2917 (C) the employer, association, officer, director, employee, or trustee is not in any
2918 manner compensated, directly or indirectly, by the company issuing the contract;
2919 (e) an employee of an insurer or organization employed by an insurer who:
2920 (i) is engaging in:
2921 (A) the inspection, rating, or classification of risks; or
2922 (B) the supervision of the training of insurance producers; and
2923 (ii) is not individually engaged in the sale, solicitation, or negotiation of insurance;
2924 (f) a person whose activities in this state are limited to advertising:
2925 (i) without the intent to solicit insurance in this state;
2926 (ii) through communications in mass media including:
2927 (A) a printed publication; or
2928 (B) a form of electronic mass media;
2929 (iii) that is distributed to residents outside of the state; and
2930 (iv) if the person does not sell, solicit, or negotiate insurance that would insure risks
2931 residing, located, or to be performed in this state;
2932 (g) a person who:
2933 (i) is not a resident of this state;
2934 (ii) sells, solicits, or negotiates a contract of insurance:
2935 (A) for commercial property and casualty risks to an insured with risks located in more
2936 than one state insured under that contract; and
2937 (B) insures risks located in a state in which the person is licensed as provided in
2938 Subsection (1)(g)(iii); and
2939 (iii) is licensed as an insurance producer to sell, solicit, or negotiate that insurance in
2940 the state where the insured maintains its principal place of business; or
2941 (h) if the employee does not sell, solicit, or receive a commission for a contract of
2942 insurance, a salaried full-time employee who counsels or advises the employee's employer
2943 relating to the insurance interests of:
2944 (i) the employer; or
2945 (ii) a subsidiary or business affiliate of the employer.
2946 (2) The commissioner may by rule exempt a class of persons from the license
2947 requirement of Subsection 31A-23a-103(1) if:
2948 (a) the functions performed by the class of persons does not require:
2949 (i) special competence;
2950 (ii) special trustworthiness; or
2951 (iii) regulatory surveillance made possible by licensing; or
2952 (b) other existing safeguards make regulation unnecessary.
2953 Section 25. Section 31A-23a-406 is amended to read:
2954 31A-23a-406. Title insurance producer's business.
2955 (1) An individual title insurance producer or agency title insurance producer may do
2956 escrow involving real property transactions if all of the following exist:
2957 (a) the individual title insurance producer or agency title insurance producer is licensed
2958 with:
2959 (i) the title line of authority; and
2960 (ii) the escrow subline of authority;
2961 (b) the individual title insurance producer or agency title insurance producer is
2962 appointed by a title insurer authorized to do business in the state;
2963 (c) except as provided in Subsection (3), the individual title insurance producer or
2964 agency title insurance producer issues one or more of the following as part of the transaction:
2965 (i) an owner's policy of title insurance;
2966 (ii) a lender's policy of title insurance; or
2967 (iii) if the transaction does not involve a transfer of ownership, an endorsement to an
2968 owner's or a lender's policy of title insurance;
2969 (d) money deposited with the individual title insurance producer or agency title
2970 insurance producer in connection with any escrow[
2971 [
2972 7-1-103, that:
2973 (A) has an office in this state, if the person depositing the money is a resident of this
2974 state; and
2975 (B) is authorized by the depository institution's primary regulator to engage in trust
2976 business, as defined in Section 7-5-1, in this state; and
2977 [
2978 not related to real estate transactions;
2979 [
2980 insurance producer in connection with any escrow is the property of the one or more persons
2981 entitled to the money under the provisions of the escrow; and
2982 [
2983 insurance producer in connection with an escrow is segregated escrow by escrow in the records
2984 of the individual title insurance producer or agency title insurance producer;
2985 [
2986 any person in accordance with the conditions of the escrow;
2987 [
2988 title insurance producer to hold:
2989 (i) construction money; or
2990 (ii) money held for exchange under Section 1031, Internal Revenue Code; and
2991 [
2992 maintain a physical office in Utah staffed by a person with an escrow subline of authority who
2993 processes the escrow.
2994 (2) Notwithstanding Subsection (1), an individual title insurance producer or agency
2995 title insurance producer may engage in the escrow business if:
2996 (a) the escrow involves:
2997 (i) a mobile home;
2998 (ii) a grazing right;
2999 (iii) a water right; or
3000 (iv) other personal property authorized by the commissioner; and
3001 (b) the individual title insurance producer or agency title insurance producer complies
3002 with this section except for Subsection (1)(c).
3003 (3) (a) Subsection (1)(c) does not apply if the transaction is for the transfer of real
3004 property from the School and Institutional Trust Lands Administration.
3005 (b) This subsection does not prohibit an individual title insurance producer or agency
3006 title insurance producer from issuing a policy described in Subsection (1)(c) as part of a
3007 transaction described in Subsection (3)(a).
3008 (4) Money held in escrow:
3009 (a) is not subject to any debts of the individual title insurance producer or agency title
3010 insurance producer;
3011 (b) may only be used to fulfill the terms of the individual escrow under which the
3012 money is accepted; and
3013 (c) may not be used until the conditions of the escrow are met.
3014 (5) Assets or property other than escrow money received by an individual title
3015 insurance producer or agency title insurance producer in accordance with an escrow shall be
3016 maintained in a manner that will:
3017 (a) reasonably preserve and protect the asset or property from loss, theft, or damages;
3018 and
3019 (b) otherwise comply with the general duties and responsibilities of a fiduciary or
3020 bailee.
3021 (6) (a) A check from the trust account described in Subsection (1)(d) may not be
3022 drawn, executed, or dated, or money otherwise disbursed unless the segregated escrow account
3023 from which money is to be disbursed contains a sufficient credit balance consisting of collected
3024 and cleared money at the time the check is drawn, executed, or dated, or money is otherwise
3025 disbursed.
3026 (b) As used in this Subsection (6), money is considered to be "collected and cleared,"
3027 and may be disbursed as follows:
3028 (i) cash may be disbursed on the same day the cash is deposited;
3029 (ii) a wire transfer may be disbursed on the same day the wire transfer is deposited; and
3030 (iii) the proceeds of one or more of the following financial instruments may be
3031 disbursed on the same day the financial instruments are deposited if received from a single
3032 party to the real estate transaction and if the aggregate of the financial instruments for the real
3033 estate transaction is less than $10,000:
3034 (A) a cashier's check, certified check, or official check that is drawn on an existing
3035 account at a federally insured financial institution;
3036 (B) a check drawn on the trust account of a principal broker or associate broker
3037 licensed under Title 61, Chapter 2f, Real Estate Licensing and Practices Act, if the individual
3038 title insurance producer or agency title insurance producer has reasonable and prudent grounds
3039 to believe sufficient money will be available from the trust account on which the check is
3040 drawn at the time of disbursement of proceeds from the individual title insurance producer or
3041 agency title insurance producer's escrow account;
3042 (C) a personal check not to exceed $500 per closing; or
3043 (D) a check drawn on the escrow account of another individual title insurance producer
3044 or agency title insurance producer, if the individual title insurance producer or agency title
3045 insurance producer in the escrow transaction has reasonable and prudent grounds to believe
3046 that sufficient money will be available for withdrawal from the account upon which the check
3047 is drawn at the time of disbursement of money from the escrow account of the individual title
3048 insurance producer or agency title insurance producer in the escrow transaction.
3049 (c) A check or deposit not described in Subsection (6)(b) may be disbursed:
3050 (i) within the time limits provided under the Expedited Funds Availability Act, 12
3051 U.S.C. Sec. 4001 et seq., as amended, and related regulations of the Federal Reserve System; or
3052 (ii) upon notification from the financial institution to which the money has been
3053 deposited that final settlement has occurred on the deposited financial instrument.
3054 (7) An individual title insurance producer or agency title insurance producer shall
3055 maintain a record of a receipt or disbursement of escrow money.
3056 (8) An individual title insurance producer or agency title insurance producer shall
3057 comply with:
3058 (a) Section 31A-23a-409;
3059 (b) Title 46, Chapter 1, Notaries Public Reform Act; and
3060 (c) any rules adopted by the Title and Escrow Commission, subject to Section
3061 31A-2-404, that govern escrows.
3062 (9) If an individual title insurance producer or agency title insurance producer conducts
3063 a search for real estate located in the state, the individual title insurance producer or agency
3064 title insurance producer shall conduct a reasonable search of the public records.
3065 Section 26. Section 31A-23a-409 is amended to read:
3066 31A-23a-409. Trust obligation for money collected.
3067 (1) (a) Subject to Subsection (7), a licensee is a trustee for money that is paid to,
3068 received by, or collected by a licensee for forwarding to insurers or to insureds.
3069 (b) (i) Except as provided in Subsection (1)(b)(ii), a licensee may not commingle trust
3070 funds with:
3071 (A) the licensee's own money; or
3072 (B) money held in any other capacity.
3073 (ii) This Subsection (1)(b) does not apply to:
3074 (A) amounts necessary to pay bank charges; and
3075 (B) money paid by insureds and belonging in part to the licensee as a fee or
3076 commission.
3077 (c) Except as provided under Subsection (4), a licensee owes to insureds and insurers
3078 the fiduciary duties of a trustee with respect to money to be forwarded to insurers or insureds
3079 through the licensee.
3080 (d) (i) Unless money is sent to the appropriate payee by the close of the next business
3081 day after their receipt, the licensee shall deposit them in an account authorized under
3082 Subsection (2).
3083 (ii) Money deposited under this Subsection (1)(d) shall remain in an account
3084 authorized under Subsection (2) until sent to the appropriate payee.
3085 (2) Money required to be deposited under Subsection (1) shall be deposited:
3086 (a) in a federally insured trust account in a depository institution, as defined in Section
3087 7-1-103, which:
3088 (i) has an office in this state, if the licensee depositing the money is a resident licensee;
3089 (ii) has federal deposit insurance; and
3090 (iii) is authorized by its primary regulator to engage in the trust business, as defined by
3091 Section 7-5-1, in this state; or
3092 (b) in some other account, [
3093 (i) the commissioner approves by rule or order[
3094 (ii) provides safety comparable to [
3095 described in Subsection (2)(a).
3096 (3) It is not a violation of Subsection (2)(a) if the amounts in the accounts exceed the
3097 amount of the federal insurance on the accounts.
3098 (4) A trust account into which money is deposited may be interest bearing. The
3099 interest accrued on the account may be paid to the licensee, so long as the licensee otherwise
3100 complies with this section and with the contract with the insurer.
3101 (5) A depository institution or other organization holding trust funds under this section
3102 may not offset or impound trust account funds against debts and obligations incurred by the
3103 licensee.
3104 (6) A licensee who, not being lawfully entitled to do so, diverts or appropriates any
3105 portion of the money held under Subsection (1) to the licensee's own use, is guilty of theft
3106 under Title 76, Chapter 6, Part 4, Theft. Section 76-6-412 applies in determining the
3107 classification of the offense. Sanctions under Section 31A-2-308 also apply.
3108 (7) A nonresident licensee:
3109 (a) shall comply with Subsection (1)(a) by complying with the trust account
3110 requirements of the nonresident licensee's home state; and
3111 (b) is not required to comply with the other provisions of this section.
3112 Section 27. Section 31A-26-102 is amended to read:
3113 31A-26-102. Definitions.
3114 As used in this chapter, unless expressly provided otherwise:
3115 (1) "Company adjuster" means a person employed by an insurer[
3116
3117 the [
3118 (2) "Designated home state" means the state or territory of the United States or the
3119 District of Columbia:
3120 (a) in which an insurance adjuster does not maintain the adjuster's principal:
3121 (i) place of residence; or
3122 (ii) place of business;
3123 (b) if the resident state, territory, or District of Columbia of the adjuster does not
3124 license adjusters for the line of authority sought, the adjuster has qualified for the license as if
3125 the person were a resident in the state, territory, or District of Columbia described in
3126 Subsection (2)(a), including an applicable:
3127 (i) examination requirement;
3128 (ii) fingerprint background check requirement; and
3129 (iii) continuing education requirement; and
3130 (c) that the adjuster has designated [
3131 insurance adjuster's designated home state.
3132 (3) "Home state" means:
3133 (a) a state or territory of the United States or the District of Columbia in which an
3134 insurance adjuster:
3135 (i) maintains the adjuster's principal:
3136 (A) place of residence; or
3137 (B) place of business; and
3138 (ii) is licensed to act as a resident adjuster; or
3139 (b) if the resident state, territory, or the District of Columbia described in Subsection
3140 (3)(a) does not license adjusters for the line of authority sought, a state, territory, or the District
3141 of Columbia:
3142 (i) in which the adjuster is licensed;
3143 (ii) in which the adjuster is in good standing; and
3144 (iii) that the adjuster has designated as the adjuster's designated home state.
3145 (4) "Independent adjuster" means an insurance adjuster required to be licensed under
3146 Section 31A-26-201, who engages in insurance adjusting as a representative of one or more
3147 insurers.
3148 (5) "Insurance adjusting" or "adjusting" means directing or conducting the
3149 investigation, negotiation, or settlement of a claim under an insurance policy, on behalf of an
3150 insurer, policyholder, or a claimant under an insurance policy.
3151 (6) (a) "Organization" means a person other than a natural person[
3152 (b) "Organization" includes a sole proprietorship by which a natural person does
3153 business under an assumed name.
3154 (7) "Portable electronics insurance" [
3155 Section 31A-22-1802.
3156 (8) "Public adjuster" means a person required to be licensed under Section
3157 31A-26-201, who engages in insurance adjusting as a representative of insureds and claimants
3158 under insurance policies.
3159 Section 28. Section 31A-28-103 is amended to read:
3160 31A-28-103. Coverage and limitations.
3161 (1) This part provides coverage for a policy or contract specified in Subsections (6) and
3162 (7) to a person who is:
3163 (a) except for a nonresident certificate holder under a group policy or contract, a
3164 beneficiary, assignee, or payee of a person covered by Subsection (1)(b), including a health
3165 care provider rendering services covered under an accident and health insurance policy or
3166 certificate, regardless of where that person resides; or
3167 (b) an owner of or a certificate holder or enrollee under a policy or contract, other than
3168 an unallocated annuity contract or structured settlement annuity, if the owner, enrollee, or
3169 certificate holder is:
3170 (i) a resident of Utah; or
3171 (ii) not a resident of Utah, but only if:
3172 (A) the member insurer that issued the policy or contract is domiciled in this state;
3173 (B) the state in which the person resides has an association similar to the association
3174 created by this part; and
3175 (C) the person is not eligible for coverage by an association in any other state because
3176 the insurer was not licensed in the other states at the time specified in the other states' guaranty
3177 association's laws.
3178 (2) For an unallocated annuity contract specified in Subsections (6) and (7):
3179 (a) Subsection (1) does not apply; and
3180 (b) except as provided in Subsections (4) and (5), this part provides coverage for the
3181 unallocated annuity contract specified in Subsection (2) to a person who is:
3182 (i) the owner of the unallocated annuity contract if the contract is issued to or in
3183 connection with a specific benefit plan whose plan sponsor has its principal place of business
3184 in this state; or
3185 (ii) an owner of an unallocated annuity contract issued to or in connection with a
3186 government lottery if the owner is a resident.
3187 (3) For a structured settlement annuity specified in Subsections (6) and (7):
3188 (a) Subsection (1) does not apply; and
3189 (b) except as provided in Subsections (4) and (5), this part provides coverage for the
3190 structured settlement annuity specified in Subsections (6) and (7) to a person who is a payee
3191 under a structured settlement annuity, or beneficiary of a payee if the payee is deceased, if the
3192 payee:
3193 (i) is a resident, regardless of where the contract owner resides;
3194 (ii) is not a resident, but only if one or more of the contract owners of the structured
3195 settlement annuity is a resident, and the payee, beneficiary, or contract owner is not eligible for
3196 coverage by the association of the state in which the payee or contract owner resides; or
3197 (iii) is not a resident, but only if:
3198 (A) no contract owner of the structured settlement annuity is a resident;
3199 (B) the insurer that issued the structured settlement annuity is domiciled in this state;
3200 (C) the state in which the contract owner resides has an association similar to the
3201 association created by this part; and
3202 (D) the payee, beneficiary, or the contract owner is not eligible for coverage by the
3203 association of the state in which the payee or contract owner resides.
3204 (4) This part may not provide coverage for a policy or contract specified in Subsections
3205 (6) and (7) to a person who:
3206 (a) is a payee or beneficiary of a contract owner resident of this state, if the payee or
3207 beneficiary is afforded any coverage by the association of another state;
3208 (b) is covered under Subsection (2), if any coverage is provided to the person by the
3209 association of another state; or
3210 (c) acquires rights to receive payments through a structured settlement factoring
3211 transaction, regardless of whether the transaction occurred before or after 26 U.S.C. Sec.
3212 5891(c)(3)(A) became effective.
3213 (5) (a) This part provides coverage for a policy or contract specified in Subsections (6)
3214 and (7) to a person who is a resident of this state and, in special circumstances, to a
3215 nonresident.
3216 (b) To avoid duplicate coverage, if a person who would otherwise receive coverage
3217 under this part is provided coverage under the laws of any other state, the person may not be
3218 provided coverage under this part.
3219 (c) In determining the application of this Subsection (5) when a person could be
3220 covered by the association of more than one state, whether as an owner, payee, enrollee,
3221 beneficiary, or assignee, this part shall be construed in conjunction with other state laws to
3222 result in coverage by only one association.
3223 (6) (a) Except as limited by this part, this part provides coverage to a person specified
3224 in Subsections (1) through (5) for:
3225 (i) a direct nongroup life insurance, direct accident and health insurance, or direct
3226 annuity policy or contract;
3227 (ii) a supplemental contract to a policy or contract described in Subsection (6)(a)(i);
3228 (iii) a certificate under a direct group policy or contract; and
3229 (iv) an unallocated annuity contract issued by a member insurer.
3230 (b) For purposes of Subsection (6)(a), an annuity contract and a certificate under a
3231 group annuity contract includes:
3232 (i) a guaranteed investment contract;
3233 (ii) a deposit administration contract;
3234 (iii) an unallocated funding agreement;
3235 (iv) an allocated funding agreement;
3236 (v) a structured settlement annuity;
3237 (vi) an annuity issued to or in connection with a government lottery; and
3238 (vii) an immediate or deferred annuity contract.
3239 (7) This part does not provide coverage for:
3240 (a) a portion of a policy or contract:
3241 (i) not guaranteed by the member insurer; or
3242 (ii) under which the risk is borne by the policy or contract owner;
3243 (b) a policy or contract of reinsurance, unless:
3244 (i) an assumption certificate is issued before the coverage date;
3245 (ii) the assumption certificate required by Subsection (7)(b)(i) is in effect pursuant to
3246 the reinsurance policy or contract; and
3247 (iii) the reinsurance contract is approved by the appropriate regulatory authorities;
3248 (c) except as provided in Subsection (11)(e), a portion of a policy or contract to the
3249 extent that the rate of interest on which the policy or contract is based, or the interest rate,
3250 crediting rate, or similar factor determined by use of an index or other external reference stated
3251 in the policy or contract employed in calculating returns or changes in value exceeds:
3252 (i) a rate of interest determined by subtracting two percentage points from Moody's
3253 Corporate Bond Yield Average averaged:
3254 (A) over the period of four years before the coverage date with respect to the policy or
3255 contract; or
3256 (B) for the corresponding lesser period if the policy or contract was issued less than
3257 four years before the association became obligated; or
3258 (ii) a rate of interest determined by subtracting three percentage points from Moody's
3259 Corporate Bond Yield Average as most recently available as determined on or after the earlier
3260 of:
3261 (A) the day on which the member insurer becomes an impaired insurer; or
3262 (B) the day on which the member insurer becomes an insolvent insurer;
3263 (d) a portion of a policy or contract issued to a plan or program of an employer,
3264 association, or other person to provide life, accident and health, or annuity benefits to its
3265 employees, members, or others, to the extent that the plan or program is self-funded or
3266 uninsured, including benefits payable by an employer, association, or other person under:
3267 (i) a multiple employer welfare arrangement, as that term is defined in 29 U.S.C. Sec.
3268 1002;
3269 (ii) a minimum premium group insurance plan;
3270 (iii) a stop-loss group insurance plan; or
3271 (iv) an administrative services only contract;
3272 (e) a portion of a policy or contract to the extent that it provides:
3273 (i) a dividend;
3274 (ii) an experience rating credit;
3275 (iii) voting rights; or
3276 (iv) payment of a fee or allowance to any person, including the policy or contract
3277 owner, in connection with the service to or administration of the policy or contract;
3278 (f) an unallocated annuity contract issued to or in connection with a benefit plan
3279 protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the
3280 federal Pension Benefit Guaranty Corporation has yet become liable to make any payment with
3281 respect to the benefit plan;
3282 (g) a portion of an unallocated annuity contract that is not issued to or in connection
3283 with:
3284 (i) a specific benefit plan of:
3285 (A) employees;
3286 (B) a union; or
3287 (C) an association of natural persons; or
3288 (ii) a government lottery;
3289 (h) a portion of a policy or contract to the extent that the assessment required by
3290 Section 31A-28-109 that applies to the policy or contract is preempted by federal or state law;
3291 (i) an obligation that does not arise under the express written terms of the policy or
3292 contract issued by a member insurer to the enrollee, certificate holder, contract owner, or policy
3293 owner, including:
3294 (i) a claim based on marketing materials;
3295 (ii) a claim based on a side letter, rider, or other document that is issued by the member
3296 insurer without meeting applicable policy or contract form filing or approval requirements;
3297 (iii) a misrepresentation regarding a policy or contract benefit;
3298 (iv) an extra-contractual claim;
3299 (v) a claim for penalties; or
3300 (vi) a claim for consequential or incidental damages;
3301 (j) a contract that establishes the member insurer's obligations to provide a book value
3302 accounting guaranty for defined contribution benefit plan participants by reference to a
3303 portfolio of assets that is owned by a person that is:
3304 (i) (A) the benefit plan; or
3305 (B) the benefit plan's trustee; and
3306 (ii) not an affiliate of the member insurer;
3307 (k) a portion of a policy or contract to the extent it provides for interest or other
3308 changes in value:
3309 (i) to be determined by the use of an index or other external reference stated in the
3310 policy or contract; and
3311 (ii) as of the date the member insurer becomes an impaired or insolvent insurer,
3312 whichever occurs earlier:
3313 (A) that have not been credited to the policy or contract; or
3314 (B) as to which the policy or contract owner's rights are subject to forfeiture;
3315 (l) a policy or contract providing hospital, medical, prescription drug, or other health
3316 care benefit pursuant to:
3317 (i) Part C or D of Title XVIII of the Social Security Act, 42 U.S.C. 1395 et seq.; [
3318 (ii) Title XIX of the Social Security Act, 42 U.S.C. Sec. 1396 et seq.; or
3319 (iii) Title XXI of the Social Security Act, 42 U.S.C. Sec. 1397aa et seq.; or
3320 (m) a structured settlement annuity benefit to which a payee or beneficiary has
3321 transferred the payee or beneficiary's rights in a structured settlement factoring transaction,
3322 regardless of whether the transaction occurred before or after 26 U.S.C. Sec. 5891(c)(3)(A)
3323 became effective.
3324 (8) The benefits for which the association may become liable may not exceed the lesser
3325 of:
3326 (a) the contractual obligations for which the member insurer is liable or would have
3327 been liable if it were not an impaired or insolvent insurer;
3328 (b) with respect to one life, regardless of the number of policies or contracts:
3329 (i) for a life insurance policy:
3330 (A) if the insured died before the coverage date, $500,000 of the death benefit;
3331 (B) if the insurer received a valid request for cash surrender before the coverage date
3332 but has not paid the cash surrender value before the coverage date, $200,000 of cash surrender
3333 benefits; or
3334 (C) if neither Subsection (8)(b)(i)(A) nor (B) applies, the covered portion of each
3335 benefit provided under the policy;
3336 (ii) for an annuity contract, the covered portion of each benefit provided under the
3337 contract; and
3338 (iii) for an accident and health insurance policy or contract:
3339 (A) classified as a health benefit plan, $500,000; or
3340 (B) not classified as a health benefit plan, the covered portion of each benefit provided
3341 under the policy;
3342 (c) for an individual participating in a governmental retirement plan established under
3343 Section 401, 403(b), or 457, Internal Revenue Code, covered by an unallocated annuity
3344 contract, or a beneficiary of that individual if the individual is deceased, $250,000 in present
3345 value of annuity benefits, in the aggregate, including:
3346 (i) net cash surrender; and
3347 (ii) net cash withdrawal values; or
3348 (d) for a payee of a structured settlement annuity or a beneficiary of the payee if the
3349 payee is deceased, the limits set forth in Subsection (8)(b).
3350 (9) Notwithstanding Subsection (8), the association may not be obligated to cover more
3351 than:
3352 (a) an aggregate of $500,000 in benefits for any one life under:
3353 (i) Subsection (8)(b)(i)(A);
3354 (ii) Subsection (8)(b)(i)(B);
3355 (iii) Subsection (8)(b)(ii); and
3356 (iv) Subsection (8)(b)(iii)(B);
3357 (b) $5,000,000 in benefits for one owner of multiple nongroup policies of life
3358 insurance:
3359 (i) whether the policy or contract owner is an individual, firm, corporation, or other
3360 person;
3361 (ii) whether the persons insured are officers, managers, employees, or other persons;
3362 and
3363 (iii) regardless of the number of policies and contracts held by the owner; and
3364 (c) $5,000,000 in benefits, regardless of the number of contracts held by the contract
3365 owner or plan sponsor, for:
3366 (i) one contract owner provided coverage under Subsection (2)(b)(ii); or
3367 (ii) one plan sponsor whose plans own, directly or in trust, one or more unallocated
3368 annuity contracts not included in Subsection (8)(b)(ii).
3369 (10) (a) Notwithstanding Subsection (9)(c) and except as provided in Subsection
3370 (10)(b), the association shall provide coverage if one or more unallocated annuity contracts are:
3371 (i) covered contracts under this part;
3372 (ii) owned by a trust or other entity for the benefit of two or more plan sponsors; and
3373 (iii) the largest interest in the trust or entity owning the contract or contracts is held by
3374 a plan sponsor whose principal place of business is in the state.
3375 (b) The association may not be obligated to cover more than $5,000,000 in benefits
3376 with respect to the unallocated contracts described in Subsection (10)(a).
3377 (11) (a) The limitations set forth in Subsections (8) and (9) are limitations on the
3378 benefits for which the association is obligated before taking into account:
3379 (i) the association's subrogation and assignment rights; or
3380 (ii) the extent to which those benefits could be provided out of the assets of the
3381 impaired or insolvent insurer attributable to covered policies.
3382 (b) The costs of the association's obligations under this part may be met by the use of
3383 assets:
3384 (i) attributable to covered policies, as described in Subsection 31A-28-114(3)(c); or
3385 (ii) reimbursed to the association pursuant to the association's subrogation and
3386 assignment rights.
3387 (c) Benefits provided by a long-term care rider to a life insurance policy or annuity
3388 contract shall be considered the same type of benefits as the base life insurance policy or
3389 annuity contract to which the long-term care rider relates.
3390 (d) In performing [
3391 31A-28-108, the association may not be required to guarantee, assume, reinsure, reissue,
3392 perform, or cause to be guaranteed, assumed, reinsured, reissued, or performed a contractual
3393 obligation of the insolvent or impaired insurer under a covered policy or contract that does not
3394 materially affect the economic values or economic benefits of the covered policy or contract.
3395 (e) The exclusion from coverage described in Subsection (7)(c) does not apply to any
3396 portion of a policy or contract, including a rider, that provides long-term care or any other
3397 accident and health insurance benefit.
3398 Section 29. Section 31A-35-404 is amended to read:
3399 31A-35-404. Minimum financial requirements for bail bond agency license.
3400 (1) (a) A bail bond agency that pledges the assets of a letter of credit from a Utah
3401 depository institution in connection with a judicial proceeding shall maintain an irrevocable
3402 letter of credit with a minimum face value of $300,000 assigned to the state from a Utah
3403 depository institution.
3404 (b) Notwithstanding Subsection (1)(a), a bail bond agency described in Subsection
3405 (1)(a) that is licensed under this chapter [
3406 an irrevocable letter of credit with a minimum face value of $250,000 assigned to the state
3407 from a Utah depository institution.
3408 (2) (a) A bail bond agency that pledges personal or real property, or both, as security
3409 for a bail bond in connection with a judicial proceeding shall maintain[
3410 financial statement for the current year:
3411 [
3412 [
3413 (A) $300,000, at least $100,000 of which is in liquid assets; or
3414 (B) if the bail bond agency is licensed under this chapter on or before December 31,
3415 1999, $250,000, at least $50,000 of which is in liquid assets.
3416 [
3417
3418 [
3419 [
3420
3421 [
3422
3423 [
3424
3425 [
3426
3427 [
3428
3429
3430 [
3431
3432
3433 (b) For purposes of this Subsection (2), only real or personal property located in Utah
3434 may be included in the net worth of the bail bond agency.
3435 (3) A bail bond agency shall maintain a qualifying power of attorney issued by a surety
3436 insurer if:
3437 (a) the bail bond agency is the agent of the surety insurer; and
3438 (b) the surety insurer:
3439 (i) sells bail bonds;
3440 (ii) is in good standing in its state of domicile; and
3441 (iii) is granted a certificate to write bail bonds in Utah.
3442 (4) The commissioner may revoke the license of a bail bond agency that fails to
3443 maintain the minimum financial requirements required under this section.
3444 (5) The commissioner may set by rule the limits on the aggregate amounts of bail
3445 bonds issued by a bail bond agency.
3446 Section 30. Section 31A-35-406 is amended to read:
3447 31A-35-406. Initial licensing, license renewal, and license reinstatement.
3448 (1) An applicant for an initial bail bond agency license shall:
3449 (a) complete and submit to the department an application;
3450 (b) submit to the department, as applicable, a copy of the applicant's:
3451 (i) irrevocable letter of credit, as required under Subsection 31A-35-404(1);
3452 (ii) verified financial statement, as required under Subsection 31A-35-404(2); or
3453 (iii) qualifying power of attorney, as required under Subsection 31A-35-404(3); and
3454 (c) pay the department the applicable renewal fee established in accordance with
3455 Section 31A-3-103.
3456 [
3457 August 14.
3458 (b) To renew [
3459 July 15, [
3460 (i) complete and submit to the department a renewal application [
3461 that includes certification that:
3462 [
3463
3464 (A) a principal of the agency attended or participated by telephone in at least one entire
3465 board meeting during the 12-month period before July 15; and
3466 (B) as of May 1, the agency complies with aggregate bond limits established by rule
3467 made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act;
3468 (ii) submit to the department, as applicable, a copy of the applicant's:
3469 (A) irrevocable letter of credit, as required under Subsection 31A-35-404(1);
3470 (B) verified financial statement, as required under Subsection 31A-35-404(2); or
3471 (C) qualifying power of attorney, as required under Subsection 31A-35-404(3); and
3472 (iii) pay the department the applicable renewal fee established in accordance with
3473 Section 31A-3-103.
3474 [
3475 chapter annually as established by department rule, regardless of when the license is issued.
3476 [
3477 agency license within one year [
3478
3479 described in Subsection (2).
3480 [
3481 [
3482
3483 [
3484 person applying for reinstatement of the bail bond agency license shall[
3485 initial licensing requirements described in Subsection (1).
3486 [
3487 [
3488 (4) If a bail bond agency license is suspended, the applicant may not submit an
3489 application for a bail bond agency license until after [
3490 suspension ends.
3491 (5) [
3492
3493 Section 31. Section 31A-37-102 is amended to read:
3494 31A-37-102. Definitions.
3495 As used in this chapter:
3496 (1) (a) "Affiliated company" means a business entity that because of common
3497 ownership, control, operation, or management is in the same corporate or limited liability
3498 company system as:
3499 (i) a parent;
3500 (ii) an industrial insured; or
3501 (iii) a member organization.
3502 (b) [
3503 company" does not include a business entity for which the commissioner issues an order
3504 finding that [
3505 (2) "Alien captive insurance company" means an insurer:
3506 (a) formed to write insurance business for a parent or affiliate of the insurer; and
3507 (b) licensed pursuant to the laws of an alien or foreign jurisdiction that imposes
3508 statutory or regulatory standards:
3509 (i) on a business entity transacting the business of insurance in the alien or foreign
3510 jurisdiction; and
3511 (ii) in a form acceptable to the commissioner.
3512 (3) "Applicant captive insurance company" means an entity that has submitted an
3513 application for a certificate of authority for a captive insurance company, unless the application
3514 has been denied or withdrawn.
3515 (4) "Association" means a legal association of two or more persons that has been in
3516 continuous existence for at least one year if:
3517 (a) the association or its member organizations:
3518 (i) own, control, or hold with power to vote all of the outstanding voting securities of
3519 an association captive insurance company incorporated as a stock insurer; or
3520 (ii) have complete voting control over an association captive insurance company
3521 incorporated as a mutual insurer;
3522 (b) the association's member organizations collectively constitute all of the subscribers
3523 of an association captive insurance company formed as a reciprocal insurer; or
3524 (c) the association or [
3525 control over an association captive insurance company formed as a limited liability company.
3526 (5) "Association captive insurance company" means a business entity that insures risks
3527 of:
3528 (a) a member organization of the association;
3529 (b) an affiliate of a member organization of the association; and
3530 (c) the association.
3531 (6) "Branch business" means an insurance business transacted by a branch captive
3532 insurance company in this state.
3533 (7) "Branch captive insurance company" means an alien captive insurance company
3534 that has a certificate of authority from the commissioner to transact the business of insurance in
3535 this state through a captive insurance company that is domiciled outside of this state.
3536 (8) "Branch operation" means a business operation of a branch captive insurance
3537 company in this state.
3538 (9) (a) "Captive insurance company" means the same as that term is defined in Section
3539 31A-1-301.
3540 (b) "Captive insurance company" includes any of the following formed or holding a
3541 certificate of authority under this chapter:
3542 [
3543 [
3544 [
3545 [
3546 [
3547 insured captive insurance company formed as a risk retention group captive in this state
3548 pursuant to the provisions of the Federal Liability Risk Retention Act of 1986;
3549 [
3550 [
3551 (10) "Commissioner" means Utah's Insurance Commissioner or the commissioner's
3552 designee.
3553 (11) "Common ownership and control" means that two or more captive insurance
3554 companies are owned or controlled by the same person or group of persons as follows:
3555 (a) in the case of a captive insurance company that is a stock corporation, the direct or
3556 indirect ownership of 80% or more of the outstanding voting stock of the stock corporation;
3557 (b) in the case of a captive insurance company that is a mutual corporation, the direct
3558 or indirect ownership of 80% or more of the surplus and the voting power of the mutual
3559 corporation;
3560 (c) in the case of a captive insurance company that is a limited liability company, the
3561 direct or indirect ownership by the same member or members of 80% or more of the
3562 membership interests in the limited liability company; or
3563 (d) in the case of a sponsored captive insurance company, a protected cell is a separate
3564 captive insurance company owned and controlled by the protected cell's participant, only if:
3565 (i) the participant is the only participant with respect to the protected cell; and
3566 (ii) the participant is the sponsor or is affiliated with the sponsor of the sponsored
3567 captive insurance company through common ownership and control.
3568 (12) "Consolidated debt to total capital ratio" means the ratio of Subsection (12)(a) to
3569 (b).
3570 (a) This Subsection (12)(a) is an amount equal to the sum of all debts and hybrid
3571 capital instruments including:
3572 (i) all borrowings from depository institutions;
3573 (ii) all senior debt;
3574 (iii) all subordinated debts;
3575 (iv) all trust preferred shares; and
3576 (v) all other hybrid capital instruments that are not included in the determination of
3577 consolidated GAAP net worth issued and outstanding.
3578 (b) This Subsection (12)(b) is an amount equal to the sum of:
3579 (i) total capital consisting of all debts and hybrid capital instruments as described in
3580 Subsection (12)(a); and
3581 (ii) shareholders' equity determined in accordance with generally accepted accounting
3582 principles for reporting to the United States Securities and Exchange Commission.
3583 (13) "Consolidated GAAP net worth" means the consolidated shareholders' or
3584 members' equity determined in accordance with generally accepted accounting principles for
3585 reporting to the United States Securities and Exchange Commission.
3586 (14) "Controlled unaffiliated business" means a business entity:
3587 (a) (i) in the case of a pure captive insurance company, that is not in the corporate or
3588 limited liability company system of a parent or the parent's affiliate; or
3589 (ii) in the case of an industrial insured captive insurance company, that is not in the
3590 corporate or limited liability company system of an industrial insured or an affiliated company
3591 of the industrial insured;
3592 (b) (i) in the case of a pure captive insurance company, that has a contractual
3593 relationship with a parent or affiliate; or
3594 (ii) in the case of an industrial insured captive insurance company, that has a
3595 contractual relationship with an industrial insured or an affiliated company of the industrial
3596 insured; and
3597 (c) whose risks that are or will be insured by a pure captive insurance company, an
3598 industrial insured captive insurance company, or both, are managed in accordance with
3599 Subsection 31A-37-106(1)(j) by:
3600 (i) (A) a pure captive insurance company; or
3601 (B) an industrial insured captive insurance company; or
3602 (ii) a parent or affiliate of:
3603 (A) a pure captive insurance company; or
3604 (B) an industrial insured captive insurance company.
3605 (15) "Establisher" means a person who establishes a business entity or a trust.
3606 (16) "Governing body" means the persons who hold the ultimate authority to direct and
3607 manage the affairs of an entity.
3608 (17) "Industrial insured" means an insured:
3609 (a) that produces insurance:
3610 (i) by the services of a full-time employee acting as a risk manager or insurance
3611 manager; or
3612 (ii) using the services of a regularly and continuously qualified insurance consultant;
3613 (b) whose aggregate annual premiums for insurance on all risks total at least $25,000;
3614 and
3615 (c) that has at least 25 full-time employees.
3616 (18) "Industrial insured captive insurance company" means a business entity that:
3617 (a) insures risks of the industrial insureds that comprise the industrial insured group;
3618 and
3619 (b) may insure the risks of:
3620 (i) an affiliated company of an industrial insured; or
3621 (ii) a controlled unaffiliated business of:
3622 (A) an industrial insured; or
3623 (B) an affiliated company of an industrial insured.
3624 (19) "Industrial insured group" means:
3625 (a) a group of industrial insureds that collectively:
3626 (i) own, control, or hold with power to vote all of the outstanding voting securities of
3627 an industrial insured captive insurance company incorporated or organized as a limited liability
3628 company as a stock insurer; or
3629 (ii) have complete voting control over an industrial insured captive insurance company
3630 incorporated or organized as a limited liability company as a mutual insurer;
3631 (b) a group that is:
3632 (i) created under the Product Liability Risk Retention Act of 1981, 15 U.S.C. Sec. 3901
3633 et seq., as amended, as a corporation or other limited liability association; and
3634 (ii) taxable under this title as a:
3635 (A) stock corporation; or
3636 (B) mutual insurer; or
3637 (c) a group that has complete voting control over an industrial captive insurance
3638 company formed as a limited liability company.
3639 (20) "Member organization" means a person that belongs to an association.
3640 (21) "Parent" means a person that directly or indirectly owns, controls, or holds with
3641 power to vote more than 50% of the outstanding securities of an organization.
3642 (22) "Participant" means an entity that is insured by a sponsored captive insurance
3643 company:
3644 (a) if the losses of the participant are limited through a participant contract to the assets
3645 of a protected cell; and
3646 (b)(i) the entity is permitted to be a participant under Section 31A-37-403; or
3647 (ii) the entity is an affiliate of an entity permitted to be a participant under Section
3648 31A-37-403.
3649 (23) "Participant contract" means a contract by which a sponsored captive insurance
3650 company:
3651 (a) insures the risks of a participant; and
3652 (b) limits the losses of the participant to the assets of a protected cell.
3653 (24) "Protected cell" means a separate account established and maintained by a
3654 sponsored captive insurance company for one participant.
3655 (25) "Pure captive insurance company" means a business entity that insures risks of a
3656 parent or affiliate of the business entity.
3657 (26) "Special purpose financial captive insurance company" [
3658 that term is defined in Section 31A-37a-102.
3659 (27) "Sponsor" means an entity that:
3660 (a) meets the requirements of Section 31A-37-402; and
3661 (b) is approved by the commissioner to:
3662 (i) provide all or part of the capital and surplus required by applicable law in an amount
3663 of not less than $350,000, which amount the commissioner may increase by order if the
3664 commissioner considers it necessary; and
3665 (ii) organize and operate a sponsored captive insurance company.
3666 (28) "Sponsored captive insurance company" means a captive insurance company:
3667 (a) in which the minimum capital and surplus required by applicable law is provided by
3668 one or more sponsors;
3669 (b) that is formed or holding a certificate of authority under this chapter;
3670 (c) that insures the risks of a separate participant through the contract; and
3671 (d) that segregates each participant's liability through one or more protected cells.
3672 (29) "Treasury rates" means the United States Treasury strip asked yield as published
3673 in the Wall Street Journal as of a balance sheet date.
3674 Section 32. Section 31A-37-204 is amended to read:
3675 31A-37-204. Paid-in capital -- Other capital.
3676 (1) (a) The commissioner may not issue a certificate of authority to a company
3677 described in Subsection (1)(c) unless the company possesses and thereafter maintains
3678 unimpaired paid-in capital and unimpaired paid-in surplus of:
3679 (i) in the case of a pure captive insurance company, not less than $250,000;
3680 (ii) in the case of an association captive insurance company, not less than $750,000;
3681 (iii) in the case of an industrial insured captive insurance company incorporated as a
3682 stock insurer, not less than $700,000;
3683 (iv) in the case of a sponsored captive insurance company, not less than [
3684 $500,000, of which a minimum of [
3685 (v) in the case of a special purpose captive insurance company, an amount determined
3686 by the commissioner after giving due consideration to the company's business plan, feasibility
3687 study, and pro-formas, including the nature of the risks to be insured.
3688 (b) The paid-in capital and surplus required under this Subsection (1) may be in the
3689 form of:
3690 (i) (A) cash; or
3691 (B) cash equivalent;
3692 (ii) an irrevocable letter of credit:
3693 (A) issued by:
3694 (I) a bank chartered by this state; or
3695 (II) a member bank of the Federal Reserve System; and
3696 (B) approved by the commissioner;
3697 (iii) marketable securities as determined by Subsection (5); or
3698 (iv) some other thing of value approved by the commissioner, for a period not to
3699 exceed 45 days, to facilitate the formation of a captive insurance company in this state pursuant
3700 to an approved plan of liquidation and reorganization of another captive insurance company or
3701 alien captive insurance company in another jurisdiction.
3702 (c) This Subsection (1) applies to:
3703 (i) a pure captive insurance company;
3704 (ii) a sponsored captive insurance company;
3705 (iii) a special purpose captive insurance company;
3706 (iv) an association captive insurance company; or
3707 (v) an industrial insured captive insurance company.
3708 (2) (a) The commissioner may, under Section 31A-37-106, prescribe additional capital
3709 based on the type, volume, and nature of insurance business transacted.
3710 (b) The capital prescribed by the commissioner under this Subsection (2) may be in the
3711 form of:
3712 (i) cash;
3713 (ii) an irrevocable letter of credit issued by:
3714 (A) a bank chartered by this state; or
3715 (B) a member bank of the Federal Reserve System; or
3716 (iii) marketable securities as determined by Subsection (5).
3717 (3) (a) Except as provided in Subsection (3)(c), a branch captive insurance company, as
3718 security for the payment of liabilities attributable to branch operations, shall, through its branch
3719 operations, establish and maintain a trust fund:
3720 (i) funded by an irrevocable letter of credit or other acceptable asset; and
3721 (ii) in the United States for the benefit of:
3722 (A) United States policyholders; and
3723 (B) United States ceding insurers under:
3724 (I) insurance policies issued; or
3725 (II) reinsurance contracts issued or assumed.
3726 (b) The amount of the security required under this Subsection (3) shall be no less than:
3727 (i) the capital and surplus required by this chapter; and
3728 (ii) the reserves on the insurance policies or reinsurance contracts, including:
3729 (A) reserves for losses;
3730 (B) allocated loss adjustment expenses;
3731 (C) incurred but not reported losses; and
3732 (D) unearned premiums with regard to business written through branch operations.
3733 (c) Notwithstanding the other provisions of this Subsection (3):
3734 (i) the commissioner may permit a branch captive insurance company that is required
3735 to post security for loss reserves on branch business by its reinsurer to reduce the funds in the
3736 trust account required by this section by the same amount as the security posted if the security
3737 remains posted with the reinsurer; and
3738 (ii) a branch captive insurance company that is the result of the licensure of an alien
3739 captive insurance company that is not formed in an alien jurisdiction is not subject to the
3740 requirements of this Subsection (3).
3741 (4) (a) A captive insurance company may not pay the following without the prior
3742 approval of the commissioner:
3743 (i) a dividend out of capital or surplus in excess of the limits under Section
3744 16-10a-640; or
3745 (ii) a distribution with respect to capital or surplus in excess of the limits under Section
3746 16-10a-640.
3747 (b) The commissioner shall condition approval of an ongoing plan for the payment of
3748 dividends or other distributions on the retention, at the time of each payment, of capital or
3749 surplus in excess of:
3750 (i) amounts specified by the commissioner under Section 31A-37-106; or
3751 (ii) determined in accordance with formulas approved by the commissioner under
3752 Section 31A-37-106.
3753 (5) For purposes of this section, marketable securities means:
3754 (a) a bond or other evidence of indebtedness of a governmental unit in the United
3755 States or Canada or any instrumentality of the United States or Canada; or
3756 (b) securities:
3757 (i) traded on one or more of the following exchanges in the United States:
3758 (A) New York;
3759 (B) American; or
3760 (C) NASDAQ;
3761 (ii) when no particular security, or a substantially related security, applied toward the
3762 required minimum capital and surplus requirement of Subsection (1) represents more than 50%
3763 of the minimum capital and surplus requirement; and
3764 (iii) when no group of up to four particular securities, consolidating substantially
3765 related securities, applied toward the required minimum capital and surplus requirement of
3766 Subsection (1) represents more than 90% of the minimum capital and surplus requirement.
3767 (6) Notwithstanding Subsection (5), to protect the solvency and liquidity of a captive
3768 insurance company, the commissioner may reject the application of specific assets or amounts
3769 of specific assets to satisfying the requirement of Subsection (1).
3770 Section 33. Section 31A-37-303 is amended to read:
3771 31A-37-303. Reinsurance.
3772 (1) (a) A captive insurance company may cede risks to any insurance company
3773 approved by the commissioner.
3774 (b) A captive insurance company may provide reinsurance[
3775 on risks ceded by any other insurer with prior approval of the commissioner.
3776 (2) (a) A captive insurance company may take credit for reserves on risks or portions of
3777 risks ceded to reinsurers if the captive insurance company complies with:
3778 (i) Section 31A-17-404, 31A-17-404.1, 31A-17-404.3, or 31A-17-404.4; or [
3779
3780 (ii) other requirements as the commissioner may establish by rule made in accordance
3781 with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
3782 (b) Unless the reinsurer is in compliance with Section 31A-17-404, 31A-17-404.1,
3783 31A-17-404.3, or 31A-17-404.4 or a rule adopted under Subsection (2)(a)(ii), a captive
3784 insurance company may not take credit for:
3785 (i) reserves on risks ceded to a reinsurer; or
3786 (ii) portions of risks ceded to a reinsurer.
3787 Section 34. Section 31A-45-501 is amended to read:
3788 31A-45-501. Access to health care providers.
3789 (1) As used in this section:
3790 (a) "Class of health care provider" means a health care provider or a health care facility
3791 regulated by the state within the same professional, trade, occupational, or certification
3792 category established under Title 58, Occupations and Professions, or within the same facility
3793 licensure category established under Title 26, Chapter 21, Health Care Facility Licensing and
3794 Inspection Act.
3795 (b) "Covered health care services" or "covered services" means health care services for
3796 which an enrollee is entitled to receive under the terms of a [
3797 organization contract.
3798 (c) "Credentialed staff member" means a health care provider with active staff
3799 privileges at an independent hospital or federally qualified health center.
3800 (d) "Federally qualified health center" means as defined in the Social Security Act, 42
3801 U.S.C. Sec. 1395x.
3802 (e) "Independent hospital" means a general acute hospital or a critical access hospital
3803 that:
3804 (i) is either:
3805 (A) located 20 miles or more from any other general acute hospital or critical access
3806 hospital; or
3807 (B) licensed as of January 1, 2004;
3808 (ii) is licensed pursuant to Title 26, Chapter 21, Health Care Facility Licensing and
3809 Inspection Act; [
3810 (iii) is controlled by a board of directors of which 51% or more reside in the county
3811 where the hospital is located; and[
3812 (iv) (A) the hospital's board of directors is ultimately responsible for the policy and
3813 financial decisions of the hospital; or
3814 (B) the hospital is licensed for 60 or fewer beds and is not owned, in whole or in part,
3815 by an entity that owns or controls a health maintenance organization if the hospital is a
3816 contracting facility of the organization.
3817 (f) "Noncontracting provider" means an independent hospital, federally qualified health
3818 center, or credentialed staff member that has not contracted with a managed care organization
3819 to provide health care services to enrollees of the managed care organization.
3820 (2) Except for a managed care organization that is under the common ownership or
3821 control of an entity with a hospital located within 10 paved road miles of an independent
3822 hospital, a managed care organization shall pay for covered health care services rendered to an
3823 enrollee by an independent hospital, a credentialed staff member at an independent hospital, or
3824 a credentialed staff member at his local practice location if:
3825 (a) the enrollee:
3826 (i) lives or resides within 30 paved road miles of the independent hospital; or
3827 (ii) if Subsection (2)(a)(i) does not apply, lives or resides in closer proximity to the
3828 independent hospital than a contracting hospital;
3829 (b) the independent hospital is located prior to December 31, 2000 in a county with a
3830 population density of less than 100 people per square mile, or the independent hospital is
3831 located in a county with a population density of less than 30 people per square mile; and
3832 (c) the enrollee has complied with the prior authorization and utilization review
3833 requirements otherwise required by the managed care organization contract.
3834 (3) A managed care organization shall pay for covered health care services rendered to
3835 an enrollee at a federally qualified health center if:
3836 (a) the enrollee:
3837 (i) lives or resides within 30 paved road miles of the federally qualified health center;
3838 or
3839 (ii) if Subsection (3)(a)(i) does not apply, lives or resides in closer proximity to the
3840 federally qualified health center than a contracting provider;
3841 (b) the federally qualified health center is located in a county with a population density
3842 of less than 30 people per square mile; and
3843 (c) the enrollee has complied with the prior authorization and utilization review
3844 requirements otherwise required by the managed care organization contract.
3845 (4) (a) A managed care organization shall reimburse a noncontracting provider or the
3846 enrollee for covered services rendered pursuant to Subsection (2) a like dollar amount as [
3847 the managed care organization pays to contracting providers under a noncapitated arrangement
3848 for comparable services.
3849 (b) A managed care organization shall reimburse a federally qualified health center or
3850 the enrollee for covered services rendered pursuant to Subsection (3) a like amount as paid by
3851 the managed care organization under a noncapitated arrangement for comparable services to a
3852 contracting provider in the same class of health care providers as the provider who rendered the
3853 service.
3854 (5) (a) A noncontracting independent hospital may not balance bill a patient when the
3855 [
3856 hospital or an enrollee in accordance with Subsection (4)(a).
3857 (b) A noncontracting federally qualified health center may not balance bill a patient
3858 when the federally qualified health center or the enrollee receives reimbursement in accordance
3859 with Subsection (4)(b).
3860 (6) A noncontracting provider may only refer an enrollee to another noncontracting
3861 provider so as to obligate the enrollee's managed care organization to pay for the resulting
3862 services if:
3863 (a) the noncontracting provider making the referral or the enrollee has received prior
3864 authorization from the organization for the referral; or
3865 (b) the practice location of the noncontracting provider to whom the referral is made:
3866 (i) is located in a county with a population density of less than 25 people per square
3867 mile; and
3868 (ii) is within 30 paved road miles of:
3869 (A) the place where the enrollee lives or resides; or
3870 (B) the independent hospital or federally qualified health center at which the enrollee
3871 may receive covered services pursuant to Subsection (2) or (3).
3872 (7) Notwithstanding this section, a managed care organization may contract directly
3873 with an independent hospital, federally qualified health center, or credentialed staff member.
3874 (8) (a) A managed care organization that violates any provision of this section is
3875 subject to sanctions as determined by the commissioner in accordance with Section 31A-2-308.
3876 (b) Violations of this section include:
3877 (i) failing to provide the notice required by Subsection (8)(d) by placing the notice in
3878 any managed care organization's provider list that is supplied to enrollees, including any
3879 website maintained by the managed care organization;
3880 (ii) failing to provide notice of an enrollee's rights under this section when:
3881 (A) an enrollee makes personal contact with the managed care organization by
3882 telephone, electronic transaction, or in person; and
3883 (B) the enrollee inquires about the enrollee's rights to access an independent hospital or
3884 federally qualified health center; and
3885 (iii) refusing to reprocess or reconsider a claim, initially denied by the managed care
3886 organization, when the provisions of this section apply to the claim.
3887 (c) The commissioner shall, pursuant to Chapter 2, Part 2, Duties and Powers of
3888 Commissioner:
3889 (i) adopt rules as necessary to implement this section;
3890 (ii) identify in rule:
3891 (A) the counties with a population density of less than 100 people per square mile;
3892 (B) independent hospitals as defined in Subsection (1)(e); and
3893 (C) federally qualified health centers as defined in Subsection (1)(d).
3894 (d) (i) A managed care organization shall:
3895 (A) use the information developed by the commissioner under Subsection (8)(c) to
3896 identify the rural counties, independent hospitals, and federally qualified health centers that are
3897 located in the managed care organization's service area; and
3898 (B) include the providers identified under Subsection (8)(d)(i)(A) in the notice required
3899 in Subsection (8)(d)(ii).
3900 (ii) The managed care organization shall provide the following notice, in bold type, to
3901 enrollees as specified under Subsection (8)(b)(i), and shall keep the notice current:
3902 "You may be entitled to coverage for health care services from the following
3903 noncontracted providers if you live or reside within 30 paved road miles of the listed providers,
3904 or if you live or reside in closer proximity to the listed providers than to your contracted
3905 providers:
3906 This list may change periodically, please check on our website or call for verification.
3907 Please be advised that if you choose a noncontracted provider you will be responsible for any
3908 charges not covered by your health insurance plan.
3909 If you have questions concerning your rights to see a provider on this list you may
3910 contact your managed care organization at ________. If the managed care organization does
3911 not resolve your problem, you may contact the Office of Consumer Health Assistance in the
3912 Insurance Department, toll free."
3913 (e) A person whose interests are affected by an alleged violation of this section may
3914 contact the Office of Consumer Health Assistance and request assistance, or file a complaint as
3915 provided in Section 31A-2-216.