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7 LONG TITLE
8 General Description:
9 This bill amends the Insurance Code.
10 Highlighted Provisions:
11 This bill:
12 ▸ amends references to "blanket insurance policy" for consistency;
13 ▸ amends the definition of "captive insurance company";
14 ▸ permits credit to a ceding insurer ceding to a foreign captive insurer under certain
15 conditions;
16 ▸ provides that inland marine insurance that includes accident and health insurance is
17 subject to Title 31A, Chapter 22, Contracts in Specific Lines;
18 ▸ removes provisions that the Utah Insurance Commissioner define "conspicuously"
19 in regards to certain forms;
20 ▸ amend provisions related to mass marketed life or accident and health insurance;
21 ▸ amends the scope of Title 31A, Chapter 22, Part 6, Accident and Health Insurance;
22 ▸ allows reinstatement language of individual or franchise accident and health
23 insurance policies to be substantially, rather than verbatim, as provided in statute;
24 ▸ amends provisions related to the coverage of emergency medical services;
25 ▸ amends provisions related to notice of discontinuance of a group health benefit
26 plan;
27 ▸ amends the minimum nonforfeiture amounts under the standard nonforfeiture law
28 for individual deferred annuities;
29 ▸ amends reporting provisions related to the study of coverage for in vitro fertilization
30 and genetic testings;
31 ▸ amends provisions related to the issuance of a group insurance policy for life
32 insurance to an association group;
33 ▸ amends provisions regarding an association group to whom a group accident and
34 health insurance policy may be issued;
35 ▸ permits the Utah Insurance Commissioner to adopt rules permitting or including
36 independent review of benefit determinations for long-term care insurance;
37 ▸ amends the definition of "limited long-term care insurance" under the Limited
38 Long-term Care Insurance Act;
39 ▸ amends provisions related to the lapse of a license under Title 31A, Chapter 23a,
40 Insurance Marketing - Licensing Producers, Consultants, and Reinsurance
41 Intermediaries;
42 ▸ amends provisions regarding a title insurance producer's business;
43 ▸ amends provisions related to certain trust obligations for a person authorized to
44 engage in the insurance business;
45 ▸ amends the definition of "company adjuster";
46 ▸ amends the coverage and limitations of guaranty association coverage;
47 ▸ amends the minimum financial requirements for a bail bond agency license;
48 ▸ amends the requirements for initial licensure and license renewal of a bail bond
49 agency license;
50 ▸ amends required unimpaired paid-in capital and other capital for capital insurance
51 companies;
52 ▸ permits a captive insurance company to provide coverage for punitive damages
53 awarded under certain conditions;
54 ▸ amends provisions allowing a captive insurance company to reinsure risks;
55 ▸ amends provisions related to a captive insurance company's certificate of dormancy;
56 ▸ amends the repeal date of the Health Reform Task Force and the task force's
57 reporting deadlines; and
58 ▸ makes technical and conforming changes.
59 Money Appropriated in this Bill:
60 None
61 Other Special Clauses:
62 None
63 Utah Code Sections Affected:
64 AMENDS:
65 31A-1-103, as last amended by Laws of Utah 2020, Chapter 32
66 31A-1-301, as last amended by Laws of Utah 2020, Chapter 32
67 31A-17-404, as last amended by Laws of Utah 2020, Chapter 32
68 31A-21-101, as last amended by Laws of Utah 2017, Chapter 363
69 31A-21-201, as last amended by Laws of Utah 2020, Chapter 32
70 31A-21-402, as last amended by Laws of Utah 2001, Chapter 116
71 31A-21-404, as last amended by Laws of Utah 2011, Chapter 62
72 31A-22-409, as last amended by Laws of Utah 2008, Chapters 345 and 382
73 31A-22-501, as last amended by Laws of Utah 2019, Chapter 193
74 31A-22-505, as last amended by Laws of Utah 2020, Chapter 32
75 31A-22-522, as last amended by Laws of Utah 2002, Chapter 308
76 31A-22-600, as last amended by Laws of Utah 2001, Chapter 116
77 31A-22-607, as last amended by Laws of Utah 2011, Chapter 284
78 31A-22-608, as last amended by Laws of Utah 2001, Chapter 116
79 31A-22-612, as last amended by Laws of Utah 2018, Chapter 319
80 31A-22-618.6, as last amended by Laws of Utah 2018, Chapter 319
81 31A-22-618.7, as last amended by Laws of Utah 2017, Chapter 168 and renumbered
82 and amended by Laws of Utah 2017, Chapter 292
83 31A-22-618.8, as renumbered and amended by Laws of Utah 2017, Chapter 292
84 31A-22-627, as last amended by Laws of Utah 2019, Chapter 193
85 31A-22-654, as enacted by Laws of Utah 2020, Chapter 187
86 31A-22-701, as last amended by Laws of Utah 2019, Chapter 193
87 31A-22-716, as last amended by Laws of Utah 2017, Chapter 168
88 31A-22-717, as last amended by Laws of Utah 2004, Chapter 108
89 31A-22-1404, as last amended by Laws of Utah 1995, Chapter 344
90 31A-22-2002, as enacted by Laws of Utah 2020, Chapter 32
91 31A-23a-113, as last amended by Laws of Utah 2015, Chapter 244
92 31A-23a-201, as renumbered and amended by Laws of Utah 2003, Chapter 298
93 31A-23a-406, as last amended by Laws of Utah 2019, Chapter 231
94 31A-23a-409, as last amended by Laws of Utah 2012, Chapter 253
95 31A-26-102, as last amended by Laws of Utah 2018, Chapter 319
96 31A-28-103, as last amended by Laws of Utah 2018, Chapter 391
97 31A-35-404, as last amended by Laws of Utah 2016, Chapter 234
98 31A-35-406, as last amended by Laws of Utah 2016, Chapter 234
99 31A-37-102, as last amended by Laws of Utah 2019, Chapter 193
100 31A-37-202, as repealed and reenacted by Laws of Utah 2019, Chapter 193
101 31A-37-204, as last amended by Laws of Utah 2017, Chapter 168
102 31A-37-303, as last amended by Laws of Utah 2020, Chapter 32
103 31A-37-701, as last amended by Laws of Utah 2020, Chapter 32
104 31A-45-501, as renumbered and amended by Laws of Utah 2017, Chapter 292
105 36-29-106, as last amended by Laws of Utah 2020, Chapter 32
106 63I-1-236, as last amended by Laws of Utah 2020, Fifth Special Session, Chapter 19
107
108 Be it enacted by the Legislature of the state of Utah:
109 Section 1. Section 31A-1-103 is amended to read:
110 31A-1-103. Scope and applicability of title.
111 (1) This title does not apply to:
112 (a) a retainer contract made by an attorney-at-law:
113 (i) with an individual client; and
114 (ii) under which fees are based on estimates of the nature and amount of services to be
115 provided to the specific client;
116 (b) a contract similar to a contract described in Subsection (1)(a) made with a group of
117 clients involved in the same or closely related legal matters;
118 (c) an arrangement for providing benefits that do not exceed a limited amount of
119 consultations, advice on simple legal matters, either alone or in combination with referral
120 services, or the promise of fee discounts for handling other legal matters;
121 (d) limited legal assistance on an informal basis involving neither an express
122 contractual obligation nor reasonable expectations, in the context of an employment,
123 membership, educational, or similar relationship;
124 (e) legal assistance by employee organizations to their members in matters relating to
125 employment;
126 (f) death, accident, health, or disability benefits provided to a person by an organization
127 or its affiliate if:
128 (i) the organization is tax exempt under Section 501(c)(3) of the Internal Revenue
129 Code and has had its principal place of business in Utah for at least five years;
130 (ii) the person is not an employee of the organization; and
131 (iii) (A) substantially all the person's time in the organization is spent providing
132 voluntary services:
133 (I) in furtherance of the organization's purposes;
134 (II) for a designated period of time; and
135 (III) for which no compensation, other than expenses, is paid; or
136 (B) the time since the service under Subsection (1)(f)(iii)(A) was completed is no more
137 than 18 months; or
138 (g) a prepaid contract of limited duration that provides for scheduled maintenance only.
139 (2) (a) This title restricts otherwise legitimate business activity.
140 (b) What this title does not prohibit is permitted unless contrary to other provisions of
141 Utah law.
142 (3) Except as otherwise expressly provided, this title does not apply to:
143 (a) those activities of an insurer where state jurisdiction is preempted by Section 514 of
144 the federal Employee Retirement Income Security Act of 1974, as amended;
145 (b) ocean marine insurance;
146 (c) death, accident, health, or disability benefits provided by an organization if the
147 organization:
148 (i) has as the organization's principal purpose to achieve charitable, educational, social,
149 or religious objectives rather than to provide death, accident, health, or disability benefits;
150 (ii) does not incur a legal obligation to pay a specified amount; and
151 (iii) does not create reasonable expectations of receiving a specified amount on the part
152 of an insured person;
153 (d) other business specified in rules adopted by the commissioner on a finding that:
154 (i) the transaction of the business in this state does not require regulation for the
155 protection of the interests of the residents of this state; or
156 (ii) it would be impracticable to require compliance with this title;
157 (e) except as provided in Subsection (4), a transaction independently procured through
158 negotiations under Section 31A-15-104;
159 (f) self-insurance;
160 (g) reinsurance;
161 (h) subject to Subsection (5), an employee [
162 policy covering risks in this state or an employee or labor union blanket insurance policy
163 covering risks in this state, if:
164 (i) the policyholder exists primarily for purposes other than to procure insurance;
165 (ii) the policyholder:
166 (A) is not a resident of this state;
167 (B) is not a domestic corporation; or
168 (C) does not have the policyholder's principal office in this state;
169 (iii) no more than 25% of the certificate holders or insureds are residents of this state;
170 (iv) on request of the commissioner, the insurer files with the department a copy of the
171 policy and a copy of each form or certificate; and
172 (v) (A) the insurer agrees to pay premium taxes on the Utah portion of the insurer's
173 business, as if the insurer were authorized to do business in this state; and
174 (B) the insurer provides the commissioner with the security the commissioner
175 considers necessary for the payment of premium taxes under Title 59, Chapter 9, Taxation of
176 Admitted Insurers;
177 (i) to the extent provided in Subsection (6):
178 (i) a manufacturer's or seller's warranty; and
179 (ii) a manufacturer's or seller's service contract;
180 (j) except to the extent provided in Subsection (7), a public agency insurance mutual;
181 or
182 (k) except as provided in Chapter 6b, Guaranteed Asset Protection Waiver Act, a
183 guaranteed asset protection waiver.
184 (4) A transaction described in Subsection (3)(e) is subject to taxation under Section
185 31A-3-301.
186 (5) (a) After a hearing, the commissioner may order an insurer of certain group
187 insurance policies or blanket [
188 business otherwise exempted under Subsection (3)(h) to an authorized insurer if the contracts
189 have been written by an unauthorized insurer.
190 (b) If the commissioner finds that the conditions required for the exemption of a group
191 or blanket insurer are not satisfied or that adequate protection to residents of this state is not
192 provided, the commissioner may require:
193 (i) the insurer to be authorized to do business in this state; or
194 (ii) that any of the insurer's transactions be subject to this title.
195 (c) Subsection (3)(h) does not apply to a blanket insurance policy offering accident and
196 health insurance.
197 (6) (a) As used in Subsection (3)(i) and this Subsection (6):
198 (i) "manufacturer's or seller's service contract" means a service contract:
199 (A) made available by:
200 (I) a manufacturer of a product;
201 (II) a seller of a product; or
202 (III) an affiliate of a manufacturer or seller of a product;
203 (B) made available:
204 (I) on one or more specific products; or
205 (II) on products that are components of a system; and
206 (C) under which the person described in Subsection (6)(a)(i)(A) is liable for services to
207 be provided under the service contract including, if the manufacturer's or seller's service
208 contract designates, providing parts and labor;
209 (ii) "manufacturer's or seller's warranty" means the guaranty of:
210 (A) (I) the manufacturer of a product;
211 (II) a seller of a product; or
212 (III) an affiliate of a manufacturer or seller of a product;
213 (B) (I) on one or more specific products; or
214 (II) on products that are components of a system; and
215 (C) under which the person described in Subsection (6)(a)(ii)(A) is liable for services
216 to be provided under the warranty, including, if the manufacturer's or seller's warranty
217 designates, providing parts and labor; and
218 (iii) "service contract" means the same as that term is defined in Section 31A-6a-101.
219 (b) A manufacturer's or seller's warranty may be designated as:
220 (i) a warranty;
221 (ii) a guaranty; or
222 (iii) a term similar to a term described in Subsection (6)(b)(i) or (ii).
223 (c) This title does not apply to:
224 (i) a manufacturer's or seller's warranty;
225 (ii) a manufacturer's or seller's service contract paid for with consideration that is in
226 addition to the consideration paid for the product itself; and
227 (iii) a service contract that is not a manufacturer's or seller's warranty or manufacturer's
228 or seller's service contract if:
229 (A) the service contract is paid for with consideration that is in addition to the
230 consideration paid for the product itself;
231 (B) the service contract is for the repair or maintenance of goods;
232 (C) the purchase price of the product is $3,700 or less;
233 (D) the product is not a motor vehicle; and
234 (E) the product is not the subject of a home warranty service contract.
235 (d) This title does not apply to a manufacturer's or seller's warranty or service contract
236 paid for with consideration that is in addition to the consideration paid for the product itself
237 regardless of whether the manufacturer's or seller's warranty or service contract is sold:
238 (i) at the time of the purchase of the product; or
239 (ii) at a time other than the time of the purchase of the product.
240 (7) (a) For purposes of this Subsection (7), "public agency insurance mutual" means an
241 entity formed by two or more political subdivisions or public agencies of the state:
242 (i) under Title 11, Chapter 13, Interlocal Cooperation Act; and
243 (ii) for the purpose of providing for the political subdivisions or public agencies:
244 (A) subject to Subsection (7)(b), insurance coverage; or
245 (B) risk management.
246 (b) Notwithstanding Subsection (7)(a)(ii)(A), a public agency insurance mutual may
247 not provide health insurance unless the public agency insurance mutual provides the health
248 insurance using:
249 (i) a third party administrator licensed under Chapter 25, Third Party Administrators;
250 (ii) an admitted insurer; or
251 (iii) a program authorized by Title 49, Chapter 20, Public Employees' Benefit and
252 Insurance Program Act.
253 (c) Except for this Subsection (7), a public agency insurance mutual is exempt from
254 this title.
255 (d) A public agency insurance mutual is considered to be a governmental entity and
256 political subdivision of the state with all of the rights, privileges, and immunities of a
257 governmental entity or political subdivision of the state including all the rights and benefits of
258 Title 63G, Chapter 7, Governmental Immunity Act of Utah.
259 Section 2. Section 31A-1-301 is amended to read:
260 31A-1-301. Definitions.
261 As used in this title, unless otherwise specified:
262 (1) (a) "Accident and health insurance" means insurance to provide protection against
263 economic losses resulting from:
264 (i) a medical condition including:
265 (A) a medical care expense; or
266 (B) the risk of disability;
267 (ii) accident; or
268 (iii) sickness.
269 (b) "Accident and health insurance":
270 (i) includes a contract with disability contingencies including:
271 (A) an income replacement contract;
272 (B) a health care contract;
273 (C) an expense reimbursement contract;
274 (D) a credit accident and health contract;
275 (E) a continuing care contract; and
276 (F) a long-term care contract; and
277 (ii) may provide:
278 (A) hospital coverage;
279 (B) surgical coverage;
280 (C) medical coverage;
281 (D) loss of income coverage;
282 (E) prescription drug coverage;
283 (F) dental coverage; or
284 (G) vision coverage.
285 (c) "Accident and health insurance" does not include workers' compensation insurance.
286 (d) For purposes of a national licensing registry, "accident and health insurance" is the
287 same as "accident and health or sickness insurance."
288 (2) "Actuary" is as defined by the commissioner by rule, made in accordance with Title
289 63G, Chapter 3, Utah Administrative Rulemaking Act.
290 (3) "Administrator" means the same as that term is defined in Subsection [
291 (4) "Adult" means an individual who has attained the age of at least 18 years.
292 (5) "Affiliate" means a person who controls, is controlled by, or is under common
293 control with, another person. A corporation is an affiliate of another corporation, regardless of
294 ownership, if substantially the same group of individuals manage the corporations.
295 (6) "Agency" means:
296 (a) a person other than an individual, including a sole proprietorship by which an
297 individual does business under an assumed name; and
298 (b) an insurance organization licensed or required to be licensed under Section
299 31A-23a-301, 31A-25-207, or 31A-26-209.
300 (7) "Alien insurer" means an insurer domiciled outside the United States.
301 (8) "Amendment" means an endorsement to an insurance policy or certificate.
302 (9) "Annuity" means an agreement to make periodical payments for a period certain or
303 over the lifetime of one or more individuals if the making or continuance of all or some of the
304 series of the payments, or the amount of the payment, is dependent upon the continuance of
305 human life.
306 (10) "Application" means a document:
307 (a) (i) completed by an applicant to provide information about the risk to be insured;
308 and
309 (ii) that contains information that is used by the insurer to evaluate risk and decide
310 whether to:
311 (A) insure the risk under:
312 (I) the coverage as originally offered; or
313 (II) a modification of the coverage as originally offered; or
314 (B) decline to insure the risk; or
315 (b) used by the insurer to gather information from the applicant before issuance of an
316 annuity contract.
317 (11) "Articles" or "articles of incorporation" means:
318 (a) the original articles;
319 (b) a special law;
320 (c) a charter;
321 (d) an amendment;
322 (e) restated articles;
323 (f) articles of merger or consolidation;
324 (g) a trust instrument;
325 (h) another constitutive document for a trust or other entity that is not a corporation;
326 and
327 (i) an amendment to an item listed in Subsections (11)(a) through (h).
328 (12) "Bail bond insurance" means a guarantee that a person will attend court when
329 required, up to and including surrender of the person in execution of a sentence imposed under
330 Subsection 77-20-7(1), as a condition to the release of that person from confinement.
331 (13) "Binder" means the same as that term is defined in Section 31A-21-102.
332 (14) "Blanket insurance policy" or "blanket contract" means a group insurance policy
333 covering a defined class of persons:
334 (a) without individual underwriting or application; and
335 (b) that is determined by definition without designating each person covered.
336 (15) "Board," "board of trustees," or "board of directors" means the group of persons
337 with responsibility over, or management of, a corporation, however designated.
338 (16) "Bona fide office" means a physical office in this state:
339 (a) that is open to the public;
340 (b) that is staffed during regular business hours on regular business days; and
341 (c) at which the public may appear in person to obtain services.
342 (17) "Business entity" means:
343 (a) a corporation;
344 (b) an association;
345 (c) a partnership;
346 (d) a limited liability company;
347 (e) a limited liability partnership; or
348 (f) another legal entity.
349 (18) "Business of insurance" means the same as that term is defined in Subsection (94).
350 (19) "Business plan" means the information required to be supplied to the
351 commissioner under Subsections 31A-5-204(2)(i) and (j), including the information required
352 when these subsections apply by reference under:
353 (a) Section 31A-8-205; or
354 (b) Subsection 31A-9-205(2).
355 (20) (a) "Bylaws" means the rules adopted for the regulation or management of a
356 corporation's affairs, however designated.
357 (b) "Bylaws" includes comparable rules for a trust or other entity that is not a
358 corporation.
359 (21) "Captive insurance company" means:
360 (a) an insurer:
361 (i) owned by [
362 (ii) whose [
363
364 (A) Chapter 37, Captive Insurance Companies Act; and
365 (B) Chapter 37a, Special Purpose Financial Captive Insurance Company Act; or
366 (b) in the case of a group or association, an insurer:
367 (i) owned by the insureds; and
368 (ii) whose [
369 (A) a member organization;
370 (B) a group member; or
371 (C) an affiliate of:
372 (I) a member organization; or
373 (II) a group member.
374 (22) "Casualty insurance" means liability insurance.
375 (23) "Certificate" means evidence of insurance given to:
376 (a) an insured under a group insurance policy; or
377 (b) a third party.
378 (24) "Certificate of authority" is included within the term "license."
379 (25) "Claim," unless the context otherwise requires, means a request or demand on an
380 insurer for payment of a benefit according to the terms of an insurance policy.
381 (26) "Claims-made coverage" means an insurance contract or provision limiting
382 coverage under a policy insuring against legal liability to claims that are first made against the
383 insured while the policy is in force.
384 (27) (a) "Commissioner" or "commissioner of insurance" means Utah's insurance
385 commissioner.
386 (b) When appropriate, the terms listed in Subsection (27)(a) apply to the equivalent
387 supervisory official of another jurisdiction.
388 (28) (a) "Continuing care insurance" means insurance that:
389 (i) provides board and lodging;
390 (ii) provides one or more of the following:
391 (A) a personal service;
392 (B) a nursing service;
393 (C) a medical service; or
394 (D) any other health-related service; and
395 (iii) provides the coverage described in this Subsection (28)(a) under an agreement
396 effective:
397 (A) for the life of the insured; or
398 (B) for a period in excess of one year.
399 (b) Insurance is continuing care insurance regardless of whether or not the board and
400 lodging are provided at the same location as a service described in Subsection (28)(a)(ii).
401 (29) (a) "Control," "controlling," "controlled," or "under common control" means the
402 direct or indirect possession of the power to direct or cause the direction of the management
403 and policies of a person. This control may be:
404 (i) by contract;
405 (ii) by common management;
406 (iii) through the ownership of voting securities; or
407 (iv) by a means other than those described in Subsections (29)(a)(i) through (iii).
408 (b) There is no presumption that an individual holding an official position with another
409 person controls that person solely by reason of the position.
410 (c) A person having a contract or arrangement giving control is considered to have
411 control despite the illegality or invalidity of the contract or arrangement.
412 (d) There is a rebuttable presumption of control in a person who directly or indirectly
413 owns, controls, holds with the power to vote, or holds proxies to vote 10% or more of the
414 voting securities of another person.
415 (30) "Controlled insurer" means a licensed insurer that is either directly or indirectly
416 controlled by a producer.
417 (31) "Controlling person" means a person that directly or indirectly has the power to
418 direct or cause to be directed, the management, control, or activities of a reinsurance
419 intermediary.
420 (32) "Controlling producer" means a producer who directly or indirectly controls an
421 insurer.
422 (33) "Corporate governance annual disclosure" means a report an insurer or insurance
423 group files in accordance with the requirements of Chapter 16b, Corporate Governance Annual
424 Disclosure Act.
425 (34) (a) "Corporation" means an insurance corporation, except when referring to:
426 (i) a corporation doing business:
427 (A) as:
428 (I) an insurance producer;
429 (II) a surplus lines producer;
430 (III) a limited line producer;
431 (IV) a consultant;
432 (V) a managing general agent;
433 (VI) a reinsurance intermediary;
434 (VII) a third party administrator; or
435 (VIII) an adjuster; and
436 (B) under:
437 (I) Chapter 23a, Insurance Marketing - Licensing Producers, Consultants, and
438 Reinsurance Intermediaries;
439 (II) Chapter 25, Third Party Administrators; or
440 (III) Chapter 26, Insurance Adjusters; or
441 (ii) a noninsurer that is part of a holding company system under Chapter 16, Insurance
442 Holding Companies.
443 (b) "Mutual" or "mutual corporation" means a mutual insurance corporation.
444 (c) "Stock corporation" means a stock insurance corporation.
445 (35) (a) "Creditable coverage" has the same meaning as provided in federal regulations
446 adopted pursuant to the Health Insurance Portability and Accountability Act.
447 (b) "Creditable coverage" includes coverage that is offered through a public health plan
448 such as:
449 (i) the Primary Care Network Program under a Medicaid primary care network
450 demonstration waiver obtained subject to Section 26-18-3;
451 (ii) the Children's Health Insurance Program under Section 26-40-106; or
452 (iii) the Ryan White Program Comprehensive AIDS Resources Emergency Act, Pub. L.
453 No. 101-381, and Ryan White HIV/AIDS Treatment Modernization Act of 2006, Pub. L. No.
454 109-415.
455 (36) "Credit accident and health insurance" means insurance on a debtor to provide
456 indemnity for payments coming due on a specific loan or other credit transaction while the
457 debtor has a disability.
458 (37) (a) "Credit insurance" means insurance offered in connection with an extension of
459 credit that is limited to partially or wholly extinguishing that credit obligation.
460 (b) "Credit insurance" includes:
461 (i) credit accident and health insurance;
462 (ii) credit life insurance;
463 (iii) credit property insurance;
464 (iv) credit unemployment insurance;
465 (v) guaranteed automobile protection insurance;
466 (vi) involuntary unemployment insurance;
467 (vii) mortgage accident and health insurance;
468 (viii) mortgage guaranty insurance; and
469 (ix) mortgage life insurance.
470 (38) "Credit life insurance" means insurance on the life of a debtor in connection with
471 an extension of credit that pays a person if the debtor dies.
472 (39) "Creditor" means a person, including an insured, having a claim, whether:
473 (a) matured;
474 (b) unmatured;
475 (c) liquidated;
476 (d) unliquidated;
477 (e) secured;
478 (f) unsecured;
479 (g) absolute;
480 (h) fixed; or
481 (i) contingent.
482 (40) "Credit property insurance" means insurance:
483 (a) offered in connection with an extension of credit; and
484 (b) that protects the property until the debt is paid.
485 (41) "Credit unemployment insurance" means insurance:
486 (a) offered in connection with an extension of credit; and
487 (b) that provides indemnity if the debtor is unemployed for payments coming due on a:
488 (i) specific loan; or
489 (ii) credit transaction.
490 (42) (a) "Crop insurance" means insurance providing protection against damage to
491 crops from unfavorable weather conditions, fire or lightning, flood, hail, insect infestation,
492 disease, or other yield-reducing conditions or perils that is:
493 (i) provided by the private insurance market; or
494 (ii) subsidized by the Federal Crop Insurance Corporation.
495 (b) "Crop insurance" includes multiperil crop insurance.
496 (43) (a) "Customer service representative" means a person that provides an insurance
497 service and insurance product information:
498 (i) for the customer service representative's:
499 (A) producer;
500 (B) surplus lines producer; or
501 (C) consultant employer; and
502 (ii) to the customer service representative's employer's:
503 (A) customer;
504 (B) client; or
505 (C) organization.
506 (b) A customer service representative may only operate within the scope of authority of
507 the customer service representative's producer, surplus lines producer, or consultant employer.
508 (44) "Deadline" means a final date or time:
509 (a) imposed by:
510 (i) statute;
511 (ii) rule; or
512 (iii) order; and
513 (b) by which a required filing or payment must be received by the department.
514 (45) "Deemer clause" means a provision under this title under which upon the
515 occurrence of a condition precedent, the commissioner is considered to have taken a specific
516 action. If the statute so provides, a condition precedent may be the commissioner's failure to
517 take a specific action.
518 (46) "Degree of relationship" means the number of steps between two persons
519 determined by counting the generations separating one person from a common ancestor and
520 then counting the generations to the other person.
521 (47) "Department" means the Insurance Department.
522 (48) "Director" means a member of the board of directors of a corporation.
523 (49) "Disability" means a physiological or psychological condition that partially or
524 totally limits an individual's ability to:
525 (a) perform the duties of:
526 (i) that individual's occupation; or
527 (ii) an occupation for which the individual is reasonably suited by education, training,
528 or experience; or
529 (b) perform two or more of the following basic activities of daily living:
530 (i) eating;
531 (ii) toileting;
532 (iii) transferring;
533 (iv) bathing; or
534 (v) dressing.
535 (50) "Disability income insurance" means the same as that term is defined in
536 Subsection (85).
537 (51) "Domestic insurer" means an insurer organized under the laws of this state.
538 (52) "Domiciliary state" means the state in which an insurer:
539 (a) is incorporated;
540 (b) is organized; or
541 (c) in the case of an alien insurer, enters into the United States.
542 (53) (a) "Eligible employee" means:
543 (i) an employee who:
544 (A) works on a full-time basis; and
545 (B) has a normal work week of 30 or more hours; or
546 (ii) a person described in Subsection (53)(b).
547 (b) "Eligible employee" includes:
548 (i) an owner who:
549 (A) works on a full-time basis;
550 (B) has a normal work week of 30 or more hours; and
551 (C) employs at least one common employee; and
552 (ii) if the individual is included under a health benefit plan of a small employer:
553 (A) a sole proprietor;
554 (B) a partner in a partnership; or
555 (C) an independent contractor.
556 (c) "Eligible employee" does not include, unless eligible under Subsection (53)(b):
557 (i) an individual who works on a temporary or substitute basis for a small employer;
558 (ii) an employer's spouse who does not meet the requirements of Subsection (53)(a)(i);
559 or
560 (iii) a dependent of an employer who does not meet the requirements of Subsection
561 (53)(a)(i).
562 (54) "Employee" means:
563 (a) an individual employed by an employer; and
564 (b) an owner who meets the requirements of Subsection (53)(b)(i).
565 (55) "Employee benefits" means one or more benefits or services provided to:
566 (a) an employee; or
567 (b) a dependent of an employee.
568 (56) (a) "Employee welfare fund" means a fund:
569 (i) established or maintained, whether directly or through a trustee, by:
570 (A) one or more employers;
571 (B) one or more labor organizations; or
572 (C) a combination of employers and labor organizations; and
573 (ii) that provides employee benefits paid or contracted to be paid, other than income
574 from investments of the fund:
575 (A) by or on behalf of an employer doing business in this state; or
576 (B) for the benefit of a person employed in this state.
577 (b) "Employee welfare fund" includes a plan funded or subsidized by a user fee or tax
578 revenues.
579 (57) "Endorsement" means a written agreement attached to a policy or certificate to
580 modify the policy or certificate coverage.
581 (58) (a) "Enrollee" means:
582 (i) a policyholder;
583 (ii) a certificate holder;
584 (iii) a subscriber; or
585 (iv) a covered individual:
586 (A) who has entered into a contract with an organization for health care; or
587 (B) on whose behalf an arrangement for health care has been made.
588 (b) "Enrollee" includes an insured.
589 (59) "Enrollment date," with respect to a health benefit plan, means:
590 (a) the first day of coverage; or
591 (b) if there is a waiting period, the first day of the waiting period.
592 (60) "Enterprise risk" means an activity, circumstance, event, or series of events
593 involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a
594 material adverse effect upon the financial condition or liquidity of the insurer or its insurance
595 holding company system as a whole, including anything that would cause:
596 (a) the insurer's risk-based capital to fall into an action or control level as set forth in
597 Sections 31A-17-601 through 31A-17-613; or
598 (b) the insurer to be in hazardous financial condition set forth in Section 31A-27a-101.
599 (61) (a) "Escrow" means:
600 (i) a transaction that effects the sale, transfer, encumbering, or leasing of real property,
601 when a person not a party to the transaction, and neither having nor acquiring an interest in the
602 title, performs, in accordance with the written instructions or terms of the written agreement
603 between the parties to the transaction, any of the following actions:
604 (A) the explanation, holding, or creation of a document; or
605 (B) the receipt, deposit, and disbursement of money;
606 (ii) a settlement or closing involving:
607 (A) a mobile home;
608 (B) a grazing right;
609 (C) a water right; or
610 (D) other personal property authorized by the commissioner.
611 (b) "Escrow" does not include:
612 (i) the following notarial acts performed by a notary within the state:
613 (A) an acknowledgment;
614 (B) a copy certification;
615 (C) jurat; and
616 (D) an oath or affirmation;
617 (ii) the receipt or delivery of a document; or
618 (iii) the receipt of money for delivery to the escrow agent.
619 (62) "Escrow agent" means an agency title insurance producer meeting the
620 requirements of Sections 31A-4-107, 31A-14-211, and 31A-23a-204, who is acting through an
621 individual title insurance producer licensed with an escrow subline of authority.
622 (63) (a) "Excludes" is not exhaustive and does not mean that another thing is not also
623 excluded.
624 (b) The items listed in a list using the term "excludes" are representative examples for
625 use in interpretation of this title.
626 (64) "Exclusion" means for the purposes of accident and health insurance that an
627 insurer does not provide insurance coverage, for whatever reason, for one of the following:
628 (a) a specific physical condition;
629 (b) a specific medical procedure;
630 (c) a specific disease or disorder; or
631 (d) a specific prescription drug or class of prescription drugs.
632 (65) "Expense reimbursement insurance" means insurance:
633 (a) written to provide a payment for an expense relating to hospital confinement
634 resulting from illness or injury; and
635 (b) written:
636 (i) as a daily limit for a specific number of days in a hospital; and
637 (ii) to have a one or two day waiting period following a hospitalization.
638 (66) "Fidelity insurance" means insurance guaranteeing the fidelity of a person holding
639 a position of public or private trust.
640 (67) (a) "Filed" means that a filing is:
641 (i) submitted to the department as required by and in accordance with applicable
642 statute, rule, or filing order;
643 (ii) received by the department within the time period provided in applicable statute,
644 rule, or filing order; and
645 (iii) accompanied by the appropriate fee in accordance with:
646 (A) Section 31A-3-103; or
647 (B) rule.
648 (b) "Filed" does not include a filing that is rejected by the department because it is not
649 submitted in accordance with Subsection (67)(a).
650 (68) "Filing," when used as a noun, means an item required to be filed with the
651 department including:
652 (a) a policy;
653 (b) a rate;
654 (c) a form;
655 (d) a document;
656 (e) a plan;
657 (f) a manual;
658 (g) an application;
659 (h) a report;
660 (i) a certificate;
661 (j) an endorsement;
662 (k) an actuarial certification;
663 (l) a licensee annual statement;
664 (m) a licensee renewal application;
665 (n) an advertisement;
666 (o) a binder; or
667 (p) an outline of coverage.
668 (69) "First party insurance" means an insurance policy or contract in which the insurer
669 agrees to pay a claim submitted to it by the insured for the insured's losses.
670 (70) "Foreign insurer" means an insurer domiciled outside of this state, including an
671 alien insurer.
672 (71) (a) "Form" means one of the following prepared for general use:
673 (i) a policy;
674 (ii) a certificate;
675 (iii) an application;
676 (iv) an outline of coverage; or
677 (v) an endorsement.
678 (b) "Form" does not include a document specially prepared for use in an individual
679 case.
680 (72) "Franchise insurance" means an individual insurance policy provided through a
681 mass marketing arrangement involving a defined class of persons related in some way other
682 than through the purchase of insurance.
683 (73) "General lines of authority" include:
684 (a) the general lines of insurance in Subsection (74);
685 (b) title insurance under one of the following sublines of authority:
686 (i) title examination, including authority to act as a title marketing representative;
687 (ii) escrow, including authority to act as a title marketing representative; and
688 (iii) title marketing representative only;
689 (c) surplus lines;
690 (d) workers' compensation; and
691 (e) another line of insurance that the commissioner considers necessary to recognize in
692 the public interest.
693 (74) "General lines of insurance" include:
694 (a) accident and health;
695 (b) casualty;
696 (c) life;
697 (d) personal lines;
698 (e) property; and
699 (f) variable contracts, including variable life and annuity.
700 (75) "Group health plan" means an employee welfare benefit plan to the extent that the
701 plan provides medical care:
702 (a) (i) to an employee; or
703 (ii) to a dependent of an employee; and
704 (b) (i) directly;
705 (ii) through insurance reimbursement; or
706 (iii) through another method.
707 (76) (a) "Group insurance policy" means a policy covering a group of persons that is
708 issued:
709 (i) to a policyholder on behalf of the group; and
710 (ii) for the benefit of a member of the group who is selected under a procedure defined
711 in:
712 (A) the policy; or
713 (B) an agreement that is collateral to the policy.
714 (b) A group insurance policy may include a member of the policyholder's family or a
715 dependent.
716 (77) "Group-wide supervisor" means the commissioner or other regulatory official
717 designated as the group-wide supervisor for an internationally active insurance group under
718 Section 31A-16-108.6.
719 (78) "Guaranteed automobile protection insurance" means insurance offered in
720 connection with an extension of credit that pays the difference in amount between the
721 insurance settlement and the balance of the loan if the insured automobile is a total loss.
722 (79) (a) "Health benefit plan" means, except as provided in Subsection (79)(b), a
723 policy, contract, certificate, or agreement offered or issued by a health carrier to provide,
724 deliver, arrange for, pay for, or reimburse any of the costs of health care.
725 (b) "Health benefit plan" does not include:
726 (i) coverage only for accident or disability income insurance, or any combination
727 thereof;
728 (ii) coverage issued as a supplement to liability insurance;
729 (iii) liability insurance, including general liability insurance and automobile liability
730 insurance;
731 (iv) workers' compensation or similar insurance;
732 (v) automobile medical payment insurance;
733 (vi) credit-only insurance;
734 (vii) coverage for on-site medical clinics;
735 (viii) other similar insurance coverage, specified in federal regulations issued pursuant
736 to Pub. L. No. 104-191, under which benefits for health care services are secondary or
737 incidental to other insurance benefits;
738 (ix) the following benefits if they are provided under a separate policy, certificate, or
739 contract of insurance or are otherwise not an integral part of the plan:
740 (A) limited scope dental or vision benefits;
741 (B) benefits for long-term care, nursing home care, home health care,
742 community-based care, or any combination thereof; or
743 (C) other similar limited benefits, specified in federal regulations issued pursuant to
744 Pub. L. No. 104-191;
745 (x) the following benefits if the benefits are provided under a separate policy,
746 certificate, or contract of insurance, there is no coordination between the provision of benefits
747 and any exclusion of benefits under any health plan, and the benefits are paid with respect to an
748 event without regard to whether benefits are provided under any health plan:
749 (A) coverage only for specified disease or illness; or
750 (B) hospital indemnity or other fixed indemnity insurance;
751 (xi) the following if offered as a separate policy, certificate, or contract of insurance:
752 (A) Medicare supplemental health insurance as defined under the Social Security Act,
753 42 U.S.C. Sec. 1395ss(g)(1);
754 (B) coverage supplemental to the coverage provided under United States Code, Title
755 10, Chapter 55, Civilian Health and Medical Program of the Uniformed Services
756 (CHAMPUS); or
757 (C) similar supplemental coverage provided to coverage under a group health insurance
758 plan;
759 (xii) short-term[
760 (xiii) student health insurance, except as required under 45 C.F.R. Sec. 147.145.
761 (80) "Health care" means any of the following intended for use in the diagnosis,
762 treatment, mitigation, or prevention of a human ailment or impairment:
763 (a) a professional service;
764 (b) a personal service;
765 (c) a facility;
766 (d) equipment;
767 (e) a device;
768 (f) supplies; or
769 (g) medicine.
770 (81) (a) "Health care insurance" or "health insurance" means insurance providing:
771 (i) a health care benefit; or
772 (ii) payment of an incurred health care expense.
773 (b) "Health care insurance" or "health insurance" does not include accident and health
774 insurance providing a benefit for:
775 (i) replacement of income;
776 (ii) short-term accident;
777 (iii) fixed indemnity;
778 (iv) credit accident and health;
779 (v) supplements to liability;
780 (vi) workers' compensation;
781 (vii) automobile medical payment;
782 (viii) no-fault automobile;
783 (ix) equivalent self-insurance; or
784 (x) a type of accident and health insurance coverage that is a part of or attached to
785 another type of policy.
786 (82) "Health care provider" means the same as that term is defined in Section
787 78B-3-403.
788 (83) "Health insurance exchange" means an exchange as defined in 45 C.F.R. Sec.
789 155.20.
790 (84) "Health Insurance Portability and Accountability Act" means the Health Insurance
791 Portability and Accountability Act of 1996, Pub. L. No. 104-191, 110 Stat. 1936, as amended.
792 (85) "Income replacement insurance" or "disability income insurance" means insurance
793 written to provide payments to replace income lost from accident or sickness.
794 (86) "Indemnity" means the payment of an amount to offset all or part of an insured
795 loss.
796 (87) "Independent adjuster" means an insurance adjuster required to be licensed under
797 Section 31A-26-201 who engages in insurance adjusting as a representative of an insurer.
798 (88) "Independently procured insurance" means insurance procured under Section
799 31A-15-104.
800 (89) "Individual" means a natural person.
801 (90) "Inland marine insurance" includes insurance covering:
802 (a) property in transit on or over land;
803 (b) property in transit over water by means other than boat or ship;
804 (c) bailee liability;
805 (d) fixed transportation property such as bridges, electric transmission systems, radio
806 and television transmission towers and tunnels; and
807 (e) personal and commercial property floaters.
808 (91) "Insolvency" or "insolvent" means that:
809 (a) an insurer is unable to pay the insurer's obligations as the obligations are due;
810 (b) an insurer's total adjusted capital is less than the insurer's mandatory control level
811 RBC under Subsection 31A-17-601(8)(c); or
812 (c) an insurer's admitted assets are less than the insurer's liabilities.
813 (92) (a) "Insurance" means:
814 (i) an arrangement, contract, or plan for the transfer of a risk or risks from one or more
815 persons to one or more other persons; or
816 (ii) an arrangement, contract, or plan for the distribution of a risk or risks among a
817 group of persons that includes the person seeking to distribute that person's risk.
818 (b) "Insurance" includes:
819 (i) a risk distributing arrangement providing for compensation or replacement for
820 damages or loss through the provision of a service or a benefit in kind;
821 (ii) a contract of guaranty or suretyship entered into by the guarantor or surety as a
822 business and not as merely incidental to a business transaction; and
823 (iii) a plan in which the risk does not rest upon the person who makes an arrangement,
824 but with a class of persons who have agreed to share the risk.
825 (93) "Insurance adjuster" means a person who directs or conducts the investigation,
826 negotiation, or settlement of a claim under an insurance policy other than life insurance or an
827 annuity, on behalf of an insurer, policyholder, or a claimant under an insurance policy.
828 (94) "Insurance business" or "business of insurance" includes:
829 (a) providing health care insurance by an organization that is or is required to be
830 licensed under this title;
831 (b) providing a benefit to an employee in the event of a contingency not within the
832 control of the employee, in which the employee is entitled to the benefit as a right, which
833 benefit may be provided either:
834 (i) by a single employer or by multiple employer groups; or
835 (ii) through one or more trusts, associations, or other entities;
836 (c) providing an annuity:
837 (i) including an annuity issued in return for a gift; and
838 (ii) except an annuity provided by a person specified in Subsections 31A-22-1305(2)
839 and (3);
840 (d) providing the characteristic services of a motor club as outlined in Subsection
841 (125);
842 (e) providing another person with insurance;
843 (f) making as insurer, guarantor, or surety, or proposing to make as insurer, guarantor,
844 or surety, a contract or policy of title insurance;
845 (g) transacting or proposing to transact any phase of title insurance, including:
846 (i) solicitation;
847 (ii) negotiation preliminary to execution;
848 (iii) execution of a contract of title insurance;
849 (iv) insuring; and
850 (v) transacting matters subsequent to the execution of the contract and arising out of
851 the contract, including reinsurance;
852 (h) transacting or proposing a life settlement; and
853 (i) doing, or proposing to do, any business in substance equivalent to Subsections
854 (94)(a) through (h) in a manner designed to evade this title.
855 (95) "Insurance consultant" or "consultant" means a person who:
856 (a) advises another person about insurance needs and coverages;
857 (b) is compensated by the person advised on a basis not directly related to the insurance
858 placed; and
859 (c) except as provided in Section 31A-23a-501, is not compensated directly or
860 indirectly by an insurer or producer for advice given.
861 (96) "Insurance group" means the persons that comprise an insurance holding company
862 system.
863 (97) "Insurance holding company system" means a group of two or more affiliated
864 persons, at least one of whom is an insurer.
865 (98) (a) "Insurance producer" or "producer" means a person licensed or required to be
866 licensed under the laws of this state to sell, solicit, or negotiate insurance.
867 (b) (i) "Producer for the insurer" means a producer who is compensated directly or
868 indirectly by an insurer for selling, soliciting, or negotiating an insurance product of that
869 insurer.
870 (ii) "Producer for the insurer" may be referred to as an "agent."
871 (c) (i) "Producer for the insured" means a producer who:
872 (A) is compensated directly and only by an insurance customer or an insured; and
873 (B) receives no compensation directly or indirectly from an insurer for selling,
874 soliciting, or negotiating an insurance product of that insurer to an insurance customer or
875 insured.
876 (ii) "Producer for the insured" may be referred to as a "broker."
877 (99) (a) "Insured" means a person to whom or for whose benefit an insurer makes a
878 promise in an insurance policy and includes:
879 (i) a policyholder;
880 (ii) a subscriber;
881 (iii) a member; and
882 (iv) a beneficiary.
883 (b) The definition in Subsection (99)(a):
884 (i) applies only to this title;
885 (ii) does not define the meaning of "insured" as used in an insurance policy or
886 certificate; and
887 (iii) includes an enrollee.
888 (100) (a) "Insurer" means a person doing an insurance business as a principal
889 including:
890 (i) a fraternal benefit society;
891 (ii) an issuer of a gift annuity other than an annuity specified in Subsections
892 31A-22-1305(2) and (3);
893 (iii) a motor club;
894 (iv) an employee welfare plan;
895 (v) a person purporting or intending to do an insurance business as a principal on that
896 person's own account; and
897 (vi) a health maintenance organization.
898 (b) "Insurer" does not include a governmental entity.
899 (101) "Interinsurance exchange" means the same as that term is defined in Subsection
900 (160).
901 (102) "Internationally active insurance group" means an insurance holding company
902 system:
903 (a) that includes an insurer registered under Section 31A-16-105;
904 (b) that has premiums written in at least three countries;
905 (c) whose percentage of gross premiums written outside the United States is at least
906 10% of its total gross written premiums; and
907 (d) that, based on a three-year rolling average, has:
908 (i) total assets of at least $50,000,000,000; or
909 (ii) total gross written premiums of at least $10,000,000,000.
910 (103) "Involuntary unemployment insurance" means insurance:
911 (a) offered in connection with an extension of credit; and
912 (b) that provides indemnity if the debtor is involuntarily unemployed for payments
913 coming due on a:
914 (i) specific loan; or
915 (ii) credit transaction.
916 (104) "Large employer," in connection with a health benefit plan, means an employer
917 who, with respect to a calendar year and to a plan year:
918 (a) employed an average of at least 51 employees on business days during the
919 preceding calendar year; and
920 (b) employs at least one employee on the first day of the plan year.
921 (105) "Late enrollee," with respect to an employer health benefit plan, means an
922 individual whose enrollment is a late enrollment.
923 (106) "Late enrollment," with respect to an employer health benefit plan, means
924 enrollment of an individual other than:
925 (a) on the earliest date on which coverage can become effective for the individual
926 under the terms of the plan; or
927 (b) through special enrollment.
928 (107) (a) Except for a retainer contract or legal assistance described in Section
929 31A-1-103, "legal expense insurance" means insurance written to indemnify or pay for a
930 specified legal expense.
931 (b) "Legal expense insurance" includes an arrangement that creates a reasonable
932 expectation of an enforceable right.
933 (c) "Legal expense insurance" does not include the provision of, or reimbursement for,
934 legal services incidental to other insurance coverage.
935 (108) (a) "Liability insurance" means insurance against liability:
936 (i) for death, injury, or disability of a human being, or for damage to property,
937 exclusive of the coverages under:
938 (A) medical malpractice insurance;
939 (B) professional liability insurance; and
940 (C) workers' compensation insurance;
941 (ii) for a medical, hospital, surgical, and funeral benefit to a person other than the
942 insured who is injured, irrespective of legal liability of the insured, when issued with or
943 supplemental to insurance against legal liability for the death, injury, or disability of a human
944 being, exclusive of the coverages under:
945 (A) medical malpractice insurance;
946 (B) professional liability insurance; and
947 (C) workers' compensation insurance;
948 (iii) for loss or damage to property resulting from an accident to or explosion of a
949 boiler, pipe, pressure container, machinery, or apparatus;
950 (iv) for loss or damage to property caused by:
951 (A) the breakage or leakage of a sprinkler, water pipe, or water container; or
952 (B) water entering through a leak or opening in a building; or
953 (v) for other loss or damage properly the subject of insurance not within another kind
954 of insurance as defined in this chapter, if the insurance is not contrary to law or public policy.
955 (b) "Liability insurance" includes:
956 (i) vehicle liability insurance;
957 (ii) residential dwelling liability insurance; and
958 (iii) making inspection of, and issuing a certificate of inspection upon, an elevator,
959 boiler, machinery, or apparatus of any kind when done in connection with insurance on the
960 elevator, boiler, machinery, or apparatus.
961 (109) (a) "License" means authorization issued by the commissioner to engage in an
962 activity that is part of or related to the insurance business.
963 (b) "License" includes a certificate of authority issued to an insurer.
964 (110) (a) "Life insurance" means:
965 (i) insurance on a human life; and
966 (ii) insurance pertaining to or connected with human life.
967 (b) The business of life insurance includes:
968 (i) granting a death benefit;
969 (ii) granting an annuity benefit;
970 (iii) granting an endowment benefit;
971 (iv) granting an additional benefit in the event of death by accident;
972 (v) granting an additional benefit to safeguard the policy against lapse; and
973 (vi) providing an optional method of settlement of proceeds.
974 (111) "Limited license" means a license that:
975 (a) is issued for a specific product of insurance; and
976 (b) limits an individual or agency to transact only for that product or insurance.
977 (112) "Limited line credit insurance" includes the following forms of insurance:
978 (a) credit life;
979 (b) credit accident and health;
980 (c) credit property;
981 (d) credit unemployment;
982 (e) involuntary unemployment;
983 (f) mortgage life;
984 (g) mortgage guaranty;
985 (h) mortgage accident and health;
986 (i) guaranteed automobile protection; and
987 (j) another form of insurance offered in connection with an extension of credit that:
988 (i) is limited to partially or wholly extinguishing the credit obligation; and
989 (ii) the commissioner determines by rule should be designated as a form of limited line
990 credit insurance.
991 (113) "Limited line credit insurance producer" means a person who sells, solicits, or
992 negotiates one or more forms of limited line credit insurance coverage to an individual through
993 a master, corporate, group, or individual policy.
994 (114) "Limited line insurance" includes:
995 (a) bail bond;
996 (b) limited line credit insurance;
997 (c) legal expense insurance;
998 (d) motor club insurance;
999 (e) car rental related insurance;
1000 (f) travel insurance;
1001 (g) crop insurance;
1002 (h) self-service storage insurance;
1003 (i) guaranteed asset protection waiver;
1004 (j) portable electronics insurance; and
1005 (k) another form of limited insurance that the commissioner determines by rule should
1006 be designated a form of limited line insurance.
1007 (115) "Limited lines authority" includes the lines of insurance listed in Subsection
1008 (114).
1009 (116) "Limited lines producer" means a person who sells, solicits, or negotiates limited
1010 lines insurance.
1011 (117) (a) "Long-term care insurance" means an insurance policy or rider advertised,
1012 marketed, offered, or designated to provide coverage:
1013 (i) in a setting other than an acute care unit of a hospital;
1014 (ii) for not less than 12 consecutive months for a covered person on the basis of:
1015 (A) expenses incurred;
1016 (B) indemnity;
1017 (C) prepayment; or
1018 (D) another method;
1019 (iii) for one or more necessary or medically necessary services that are:
1020 (A) diagnostic;
1021 (B) preventative;
1022 (C) therapeutic;
1023 (D) rehabilitative;
1024 (E) maintenance; or
1025 (F) personal care; and
1026 (iv) that may be issued by:
1027 (A) an insurer;
1028 (B) a fraternal benefit society;
1029 (C) (I) a nonprofit health hospital; and
1030 (II) a medical service corporation;
1031 (D) a prepaid health plan;
1032 (E) a health maintenance organization; or
1033 (F) an entity similar to the entities described in Subsections (117)(a)(iv)(A) through (E)
1034 to the extent that the entity is otherwise authorized to issue life or health care insurance.
1035 (b) "Long-term care insurance" includes:
1036 (i) any of the following that provide directly or supplement long-term care insurance:
1037 (A) a group or individual annuity or rider; or
1038 (B) a life insurance policy or rider;
1039 (ii) a policy or rider that provides for payment of benefits on the basis of:
1040 (A) cognitive impairment; or
1041 (B) functional capacity; or
1042 (iii) a qualified long-term care insurance contract.
1043 (c) "Long-term care insurance" does not include:
1044 (i) a policy that is offered primarily to provide basic Medicare supplement coverage;
1045 (ii) basic hospital expense coverage;
1046 (iii) basic medical/surgical expense coverage;
1047 (iv) hospital confinement indemnity coverage;
1048 (v) major medical expense coverage;
1049 (vi) income replacement or related asset-protection coverage;
1050 (vii) accident only coverage;
1051 (viii) coverage for a specified:
1052 (A) disease; or
1053 (B) accident;
1054 (ix) limited benefit health coverage; or
1055 (x) a life insurance policy that accelerates the death benefit to provide the option of a
1056 lump sum payment:
1057 (A) if the following are not conditioned on the receipt of long-term care:
1058 (I) benefits; or
1059 (II) eligibility; and
1060 (B) the coverage is for one or more the following qualifying events:
1061 (I) terminal illness;
1062 (II) medical conditions requiring extraordinary medical intervention; or
1063 (III) permanent institutional confinement.
1064 (118) "Managed care organization" means a person:
1065 (a) licensed as a health maintenance organization under Chapter 8, Health Maintenance
1066 Organizations and Limited Health Plans; or
1067 (b) (i) licensed under:
1068 (A) Chapter 5, Domestic Stock and Mutual Insurance Corporations;
1069 (B) Chapter 7, Nonprofit Health Service Insurance Corporations; or
1070 (C) Chapter 14, Foreign Insurers; and
1071 (ii) that requires an enrollee to use, or offers incentives, including financial incentives,
1072 for an enrollee to use, network providers.
1073 (119) "Medical malpractice insurance" means insurance against legal liability incident
1074 to the practice and provision of a medical service other than the practice and provision of a
1075 dental service.
1076 (120) "Member" means a person having membership rights in an insurance
1077 corporation.
1078 (121) "Minimum capital" or "minimum required capital" means the capital that must be
1079 constantly maintained by a stock insurance corporation as required by statute.
1080 (122) "Mortgage accident and health insurance" means insurance offered in connection
1081 with an extension of credit that provides indemnity for payments coming due on a mortgage
1082 while the debtor has a disability.
1083 (123) "Mortgage guaranty insurance" means surety insurance under which a mortgagee
1084 or other creditor is indemnified against losses caused by the default of a debtor.
1085 (124) "Mortgage life insurance" means insurance on the life of a debtor in connection
1086 with an extension of credit that pays if the debtor dies.
1087 (125) "Motor club" means a person:
1088 (a) licensed under:
1089 (i) Chapter 5, Domestic Stock and Mutual Insurance Corporations;
1090 (ii) Chapter 11, Motor Clubs; or
1091 (iii) Chapter 14, Foreign Insurers; and
1092 (b) that promises for an advance consideration to provide for a stated period of time
1093 one or more:
1094 (i) legal services under Subsection 31A-11-102(1)(b);
1095 (ii) bail services under Subsection 31A-11-102(1)(c); or
1096 (iii) (A) trip reimbursement;
1097 (B) towing services;
1098 (C) emergency road services;
1099 (D) stolen automobile services;
1100 (E) a combination of the services listed in Subsections (125)(b)(iii)(A) through (D); or
1101 (F) other services given in Subsections 31A-11-102(1)(b) through (f).
1102 (126) "Mutual" means a mutual insurance corporation.
1103 (127) "Network plan" means health care insurance:
1104 (a) that is issued by an insurer; and
1105 (b) under which the financing and delivery of medical care is provided, in whole or in
1106 part, through a defined set of providers under contract with the insurer, including the financing
1107 and delivery of an item paid for as medical care.
1108 (128) "Network provider" means a health care provider who has an agreement with a
1109 managed care organization to provide health care services to an enrollee with an expectation of
1110 receiving payment, other than coinsurance, copayments, or deductibles, directly from the
1111 managed care organization.
1112 (129) "Nonparticipating" means a plan of insurance under which the insured is not
1113 entitled to receive a dividend representing a share of the surplus of the insurer.
1114 (130) "Ocean marine insurance" means insurance against loss of or damage to:
1115 (a) ships or hulls of ships;
1116 (b) goods, freight, cargoes, merchandise, effects, disbursements, profits, money,
1117 securities, choses in action, evidences of debt, valuable papers, bottomry, respondentia
1118 interests, or other cargoes in or awaiting transit over the oceans or inland waterways;
1119 (c) earnings such as freight, passage money, commissions, or profits derived from
1120 transporting goods or people upon or across the oceans or inland waterways; or
1121 (d) a vessel owner or operator as a result of liability to employees, passengers, bailors,
1122 owners of other vessels, owners of fixed objects, customs or other authorities, or other persons
1123 in connection with maritime activity.
1124 (131) "Order" means an order of the commissioner.
1125 (132) "ORSA guidance manual" means the current version of the Own Risk and
1126 Solvency Assessment Guidance Manual developed and adopted by the National Association of
1127 Insurance Commissioners and as amended from time to time.
1128 (133) "ORSA summary report" means a confidential high-level summary of an insurer
1129 or insurance group's own risk and solvency assessment.
1130 (134) "Outline of coverage" means a summary that explains an accident and health
1131 insurance policy.
1132 (135) "Own risk and solvency assessment" means an insurer or insurance group's
1133 confidential internal assessment:
1134 (a) (i) of each material and relevant risk associated with the insurer or insurance group;
1135 (ii) of the insurer or insurance group's current business plan to support each risk
1136 described in Subsection (135)(a)(i); and
1137 (iii) of the sufficiency of capital resources to support each risk described in Subsection
1138 (135)(a)(i); and
1139 (b) that is appropriate to the nature, scale, and complexity of an insurer or insurance
1140 group.
1141 (136) "Participating" means a plan of insurance under which the insured is entitled to
1142 receive a dividend representing a share of the surplus of the insurer.
1143 (137) "Participation," as used in a health benefit plan, means a requirement relating to
1144 the minimum percentage of eligible employees that must be enrolled in relation to the total
1145 number of eligible employees of an employer reduced by each eligible employee who
1146 voluntarily declines coverage under the plan because the employee:
1147 (a) has other group health care insurance coverage; or
1148 (b) receives:
1149 (i) Medicare, under the Health Insurance for the Aged Act, Title XVIII of the Social
1150 Security Amendments of 1965; or
1151 (ii) another government health benefit.
1152 (138) "Person" includes:
1153 (a) an individual;
1154 (b) a partnership;
1155 (c) a corporation;
1156 (d) an incorporated or unincorporated association;
1157 (e) a joint stock company;
1158 (f) a trust;
1159 (g) a limited liability company;
1160 (h) a reciprocal;
1161 (i) a syndicate; or
1162 (j) another similar entity or combination of entities acting in concert.
1163 (139) "Personal lines insurance" means property and casualty insurance coverage sold
1164 for primarily noncommercial purposes to:
1165 (a) an individual; or
1166 (b) a family.
1167 (140) "Plan sponsor" means the same as that term is defined in 29 U.S.C. Sec.
1168 1002(16)(B).
1169 (141) "Plan year" means:
1170 (a) the year that is designated as the plan year in:
1171 (i) the plan document of a group health plan; or
1172 (ii) a summary plan description of a group health plan;
1173 (b) if the plan document or summary plan description does not designate a plan year or
1174 there is no plan document or summary plan description:
1175 (i) the year used to determine deductibles or limits;
1176 (ii) the policy year, if the plan does not impose deductibles or limits on a yearly basis;
1177 or
1178 (iii) the employer's taxable year if:
1179 (A) the plan does not impose deductibles or limits on a yearly basis; and
1180 (B) (I) the plan is not insured; or
1181 (II) the insurance policy is not renewed on an annual basis; or
1182 (c) in a case not described in Subsection (141)(a) or (b), the calendar year.
1183 (142) (a) "Policy" means a document, including an attached endorsement or application
1184 that:
1185 (i) purports to be an enforceable contract; and
1186 (ii) memorializes in writing some or all of the terms of an insurance contract.
1187 (b) "Policy" includes a service contract issued by:
1188 (i) a motor club under Chapter 11, Motor Clubs;
1189 (ii) a service contract provided under Chapter 6a, Service Contracts; and
1190 (iii) a corporation licensed under:
1191 (A) Chapter 7, Nonprofit Health Service Insurance Corporations; or
1192 (B) Chapter 8, Health Maintenance Organizations and Limited Health Plans.
1193 (c) "Policy" does not include:
1194 (i) a certificate under a group insurance contract; or
1195 (ii) a document that does not purport to have legal effect.
1196 (143) "Policyholder" means a person who controls a policy, binder, or oral contract by
1197 ownership, premium payment, or otherwise.
1198 (144) "Policy illustration" means a presentation or depiction that includes
1199 nonguaranteed elements of a policy of life insurance over a period of years.
1200 (145) "Policy summary" means a synopsis describing the elements of a life insurance
1201 policy.
1202 (146) "PPACA" means the Patient Protection and Affordable Care Act, Pub. L. No.
1203 111-148 and the Health Care Education Reconciliation Act of 2010, Pub. L. No. 111-152, and
1204 related federal regulations and guidance.
1205 (147) "Preexisting condition," with respect to health care insurance:
1206 (a) means a condition that was present before the effective date of coverage, whether or
1207 not medical advice, diagnosis, care, or treatment was recommended or received before that day;
1208 and
1209 (b) does not include a condition indicated by genetic information unless an actual
1210 diagnosis of the condition by a physician has been made.
1211 (148) (a) "Premium" means the monetary consideration for an insurance policy.
1212 (b) "Premium" includes, however designated:
1213 (i) an assessment;
1214 (ii) a membership fee;
1215 (iii) a required contribution; or
1216 (iv) monetary consideration.
1217 (c) (i) "Premium" does not include consideration paid to a third party administrator for
1218 the third party administrator's services.
1219 (ii) "Premium" includes an amount paid by a third party administrator to an insurer for
1220 insurance on the risks administered by the third party administrator.
1221 (149) "Principal officers" for a corporation means the officers designated under
1222 Subsection 31A-5-203(3).
1223 (150) "Proceeding" includes an action or special statutory proceeding.
1224 (151) "Professional liability insurance" means insurance against legal liability incident
1225 to the practice of a profession and provision of a professional service.
1226 (152) (a) Except as provided in Subsection (152)(b), "property insurance" means
1227 insurance against loss or damage to real or personal property of every kind and any interest in
1228 that property:
1229 (i) from all hazards or causes; and
1230 (ii) against loss consequential upon the loss or damage including vehicle
1231 comprehensive and vehicle physical damage coverages.
1232 (b) "Property insurance" does not include:
1233 (i) inland marine insurance; and
1234 (ii) ocean marine insurance.
1235 (153) "Qualified long-term care insurance contract" or "federally tax qualified
1236 long-term care insurance contract" means:
1237 (a) an individual or group insurance contract that meets the requirements of Section
1238 7702B(b), Internal Revenue Code; or
1239 (b) the portion of a life insurance contract that provides long-term care insurance:
1240 (i) (A) by rider; or
1241 (B) as a part of the contract; and
1242 (ii) that satisfies the requirements of Sections 7702B(b) and (e), Internal Revenue
1243 Code.
1244 (154) "Qualified United States financial institution" means an institution that:
1245 (a) is:
1246 (i) organized under the laws of the United States or any state; or
1247 (ii) in the case of a United States office of a foreign banking organization, licensed
1248 under the laws of the United States or any state;
1249 (b) is regulated, supervised, and examined by a United States federal or state authority
1250 having regulatory authority over a bank or trust company; and
1251 (c) meets the standards of financial condition and standing that are considered
1252 necessary and appropriate to regulate the quality of a financial institution whose letters of credit
1253 will be acceptable to the commissioner as determined by:
1254 (i) the commissioner by rule; or
1255 (ii) the Securities Valuation Office of the National Association of Insurance
1256 Commissioners.
1257 (155) (a) "Rate" means:
1258 (i) the cost of a given unit of insurance; or
1259 (ii) for property or casualty insurance, that cost of insurance per exposure unit either
1260 expressed as:
1261 (A) a single number; or
1262 (B) a pure premium rate, adjusted before the application of individual risk variations
1263 based on loss or expense considerations to account for the treatment of:
1264 (I) expenses;
1265 (II) profit; and
1266 (III) individual insurer variation in loss experience.
1267 (b) "Rate" does not include a minimum premium.
1268 (156) (a) Except as provided in Subsection (156)(b), "rate service organization" means
1269 a person who assists an insurer in rate making or filing by:
1270 (i) collecting, compiling, and furnishing loss or expense statistics;
1271 (ii) recommending, making, or filing rates or supplementary rate information; or
1272 (iii) advising about rate questions, except as an attorney giving legal advice.
1273 (b) "Rate service organization" does not mean:
1274 (i) an employee of an insurer;
1275 (ii) a single insurer or group of insurers under common control;
1276 (iii) a joint underwriting group; or
1277 (iv) an individual serving as an actuarial or legal consultant.
1278 (157) "Rating manual" means any of the following used to determine initial and
1279 renewal policy premiums:
1280 (a) a manual of rates;
1281 (b) a classification;
1282 (c) a rate-related underwriting rule; and
1283 (d) a rating formula that describes steps, policies, and procedures for determining
1284 initial and renewal policy premiums.
1285 (158) (a) "Rebate" means a licensee paying, allowing, giving, or offering to pay, allow,
1286 or give, directly or indirectly:
1287 (i) a refund of premium or portion of premium;
1288 (ii) a refund of commission or portion of commission;
1289 (iii) a refund of all or a portion of a consultant fee; or
1290 (iv) providing services or other benefits not specified in an insurance or annuity
1291 contract.
1292 (b) "Rebate" does not include:
1293 (i) a refund due to termination or changes in coverage;
1294 (ii) a refund due to overcharges made in error by the licensee; or
1295 (iii) savings or wellness benefits as provided in the contract by the licensee.
1296 (159) "Received by the department" means:
1297 (a) the date delivered to and stamped received by the department, if delivered in
1298 person;
1299 (b) the post mark date, if delivered by mail;
1300 (c) the delivery service's post mark or pickup date, if delivered by a delivery service;
1301 (d) the received date recorded on an item delivered, if delivered by:
1302 (i) facsimile;
1303 (ii) email; or
1304 (iii) another electronic method; or
1305 (e) a date specified in:
1306 (i) a statute;
1307 (ii) a rule; or
1308 (iii) an order.
1309 (160) "Reciprocal" or "interinsurance exchange" means an unincorporated association
1310 of persons:
1311 (a) operating through an attorney-in-fact common to all of the persons; and
1312 (b) exchanging insurance contracts with one another that provide insurance coverage
1313 on each other.
1314 (161) "Reinsurance" means an insurance transaction where an insurer, for
1315 consideration, transfers any portion of the risk it has assumed to another insurer. In referring to
1316 reinsurance transactions, this title sometimes refers to:
1317 (a) the insurer transferring the risk as the "ceding insurer"; and
1318 (b) the insurer assuming the risk as the:
1319 (i) "assuming insurer"; or
1320 (ii) "assuming reinsurer."
1321 (162) "Reinsurer" means a person licensed in this state as an insurer with the authority
1322 to assume reinsurance.
1323 (163) "Residential dwelling liability insurance" means insurance against liability
1324 resulting from or incident to the ownership, maintenance, or use of a residential dwelling that is
1325 a detached single family residence or multifamily residence up to four units.
1326 (164) (a) "Retrocession" means reinsurance with another insurer of a liability assumed
1327 under a reinsurance contract.
1328 (b) A reinsurer "retrocedes" when the reinsurer reinsures with another insurer part of a
1329 liability assumed under a reinsurance contract.
1330 (165) "Rider" means an endorsement to:
1331 (a) an insurance policy; or
1332 (b) an insurance certificate.
1333 (166) "Secondary medical condition" means a complication related to an exclusion
1334 from coverage in accident and health insurance.
1335 (167) (a) "Security" means a:
1336 (i) note;
1337 (ii) stock;
1338 (iii) bond;
1339 (iv) debenture;
1340 (v) evidence of indebtedness;
1341 (vi) certificate of interest or participation in a profit-sharing agreement;
1342 (vii) collateral-trust certificate;
1343 (viii) preorganization certificate or subscription;
1344 (ix) transferable share;
1345 (x) investment contract;
1346 (xi) voting trust certificate;
1347 (xii) certificate of deposit for a security;
1348 (xiii) certificate of interest of participation in an oil, gas, or mining title or lease or in
1349 payments out of production under such a title or lease;
1350 (xiv) commodity contract or commodity option;
1351 (xv) certificate of interest or participation in, temporary or interim certificate for,
1352 receipt for, guarantee of, or warrant or right to subscribe to or purchase any of the items listed
1353 in Subsections (167)(a)(i) through (xiv); or
1354 (xvi) another interest or instrument commonly known as a security.
1355 (b) "Security" does not include:
1356 (i) any of the following under which an insurance company promises to pay money in a
1357 specific lump sum or periodically for life or some other specified period:
1358 (A) insurance;
1359 (B) an endowment policy; or
1360 (C) an annuity contract; or
1361 (ii) a burial certificate or burial contract.
1362 (168) "Securityholder" means a specified person who owns a security of a person,
1363 including:
1364 (a) common stock;
1365 (b) preferred stock;
1366 (c) debt obligations; and
1367 (d) any other security convertible into or evidencing the right of any of the items listed
1368 in this Subsection (168).
1369 (169) (a) "Self-insurance" means an arrangement under which a person provides for
1370 spreading its own risks by a systematic plan.
1371 (b) Except as provided in this Subsection (169), "self-insurance" does not include an
1372 arrangement under which a number of persons spread their risks among themselves.
1373 (c) "Self-insurance" includes:
1374 (i) an arrangement by which a governmental entity undertakes to indemnify an
1375 employee for liability arising out of the employee's employment; and
1376 (ii) an arrangement by which a person with a managed program of self-insurance and
1377 risk management undertakes to indemnify its affiliates, subsidiaries, directors, officers, or
1378 employees for liability or risk that is related to the relationship or employment.
1379 (d) "Self-insurance" does not include an arrangement with an independent contractor.
1380 (170) "Sell" means to exchange a contract of insurance:
1381 (a) by any means;
1382 (b) for money or its equivalent; and
1383 (c) on behalf of an insurance company.
1384 [
1385
1386
1387 [
1388 a health benefit product that:
1389 (a) after taking into account any renewals or extensions, has a total duration of no more
1390 than 36 months; and
1391 (b) has an expiration date specified in the contract that is less than 12 months after the
1392 original effective date of coverage under the health benefit product.
1393 [
1394 during each of which an individual does not have creditable coverage.
1395 [
1396 with respect to a calendar year and to a plan year, an employer who:
1397 (i) (A) employed at least one but not more than 50 eligible employees on business days
1398 during the preceding calendar year; or
1399 (B) if the employer did not exist for the entirety of the preceding calendar year,
1400 reasonably expects to employ an average of at least one but not more than 50 eligible
1401 employees on business days during the current calendar year;
1402 (ii) employs at least one employee on the first day of the plan year; and
1403 (iii) for an employer who has common ownership with one or more other employers, is
1404 treated as a single employer under 26 U.S.C. Sec. 414(b), (c), (m), or (o).
1405 (b) "Small employer" does not include a sole proprietor that does not employ at least
1406 one employee.
1407 [
1408 the same meaning as provided in federal regulations adopted pursuant to the Health Insurance
1409 Portability and Accountability Act.
1410 [
1411 either directly or indirectly through one or more affiliates or intermediaries.
1412 (b) "Wholly owned subsidiary" of a person is a subsidiary of which all of the voting
1413 shares are owned by that person either alone or with its affiliates, except for the minimum
1414 number of shares the law of the subsidiary's domicile requires to be owned by directors or
1415 others.
1416 [
1417 (a) a guarantee against loss or damage resulting from the failure of a principal to pay or
1418 perform the principal's obligations to a creditor or other obligee;
1419 (b) bail bond insurance; and
1420 (c) fidelity insurance.
1421 [
1422 and liabilities.
1423 (b) (i) "Permanent surplus" means the surplus of an insurer or organization that is
1424 designated by the insurer or organization as permanent.
1425 (ii) Sections 31A-5-211, 31A-7-201, 31A-8-209, 31A-9-209, and 31A-14-205 require
1426 that insurers or organizations doing business in this state maintain specified minimum levels of
1427 permanent surplus.
1428 (iii) Except for assessable mutuals, the minimum permanent surplus requirement is the
1429 same as the minimum required capital requirement that applies to stock insurers.
1430 (c) "Excess surplus" means:
1431 (i) for a life insurer, accident and health insurer, health organization, or property and
1432 casualty insurer as defined in Section 31A-17-601, the lesser of:
1433 (A) that amount of an insurer's or health organization's total adjusted capital that
1434 exceeds the product of:
1435 (I) 2.5; and
1436 (II) the sum of the insurer's or health organization's minimum capital or permanent
1437 surplus required under Section 31A-5-211, 31A-9-209, or 31A-14-205; or
1438 (B) that amount of an insurer's or health organization's total adjusted capital that
1439 exceeds the product of:
1440 (I) 3.0; and
1441 (II) the authorized control level RBC as defined in Subsection 31A-17-601(8)(a); and
1442 (ii) for a monoline mortgage guaranty insurer, financial guaranty insurer, or title insurer
1443 that amount of an insurer's paid-in-capital and surplus that exceeds the product of:
1444 (A) 1.5; and
1445 (B) the insurer's total adjusted capital required by Subsection 31A-17-609(1).
1446 [
1447 collects charges or premiums from, or who, for consideration, adjusts or settles claims of
1448 residents of the state in connection with insurance coverage, annuities, or service insurance
1449 coverage, except:
1450 (a) a union on behalf of its members;
1451 (b) a person administering a:
1452 (i) pension plan subject to the federal Employee Retirement Income Security Act of
1453 1974;
1454 (ii) governmental plan as defined in Section 414(d), Internal Revenue Code; or
1455 (iii) nonelecting church plan as described in Section 410(d), Internal Revenue Code;
1456 (c) an employer on behalf of the employer's employees or the employees of one or
1457 more of the subsidiary or affiliated corporations of the employer;
1458 (d) an insurer licensed under the following, but only for a line of insurance for which
1459 the insurer holds a license in this state:
1460 (i) Chapter 5, Domestic Stock and Mutual Insurance Corporations;
1461 (ii) Chapter 7, Nonprofit Health Service Insurance Corporations;
1462 (iii) Chapter 8, Health Maintenance Organizations and Limited Health Plans;
1463 (iv) Chapter 9, Insurance Fraternals; or
1464 (v) Chapter 14, Foreign Insurers;
1465 (e) a person:
1466 (i) licensed or exempt from licensing under:
1467 (A) Chapter 23a, Insurance Marketing - Licensing Producers, Consultants, and
1468 Reinsurance Intermediaries; or
1469 (B) Chapter 26, Insurance Adjusters; and
1470 (ii) whose activities are limited to those authorized under the license the person holds
1471 or for which the person is exempt; or
1472 (f) an institution, bank, or financial institution:
1473 (i) that is:
1474 (A) an institution whose deposits and accounts are to any extent insured by a federal
1475 deposit insurance agency, including the Federal Deposit Insurance Corporation or National
1476 Credit Union Administration; or
1477 (B) a bank or other financial institution that is subject to supervision or examination by
1478 a federal or state banking authority; and
1479 (ii) that does not adjust claims without a third party administrator license.
1480 [
1481 owner of real or personal property or the holder of liens or encumbrances on that property, or
1482 others interested in the property against loss or damage suffered by reason of liens or
1483 encumbrances upon, defects in, or the unmarketability of the title to the property, or invalidity
1484 or unenforceability of any liens or encumbrances on the property.
1485 [
1486 organization's statutory capital and surplus as determined in accordance with:
1487 (a) the statutory accounting applicable to the annual financial statements required to be
1488 filed under Section 31A-4-113; and
1489 (b) another item provided by the RBC instructions, as RBC instructions is defined in
1490 Section 31A-17-601.
1491 [
1492 a corporation.
1493 (b) "Trustee," when used in reference to an employee welfare fund, means an
1494 individual, firm, association, organization, joint stock company, or corporation, whether acting
1495 individually or jointly and whether designated by that name or any other, that is charged with
1496 or has the overall management of an employee welfare fund.
1497 [
1498 insurer" means an insurer:
1499 (i) not holding a valid certificate of authority to do an insurance business in this state;
1500 or
1501 (ii) transacting business not authorized by a valid certificate.
1502 (b) "Admitted insurer" or "authorized insurer" means an insurer:
1503 (i) holding a valid certificate of authority to do an insurance business in this state; and
1504 (ii) transacting business as authorized by a valid certificate.
1505 [
1506 insurer.
1507 [
1508 from or incident to ownership, maintenance, or use of a land vehicle or aircraft, exclusive of a
1509 vehicle comprehensive or vehicle physical damage coverage under Subsection (152).
1510 [
1511 security convertible into a security with a voting right associated with the security.
1512 [
1513 pass before coverage for an individual, who is otherwise eligible to enroll under the terms of
1514 the health benefit plan, can become effective.
1515 [
1516 (a) insurance for indemnification of an employer against liability for compensation
1517 based on:
1518 (i) a compensable accidental injury; and
1519 (ii) occupational disease disability;
1520 (b) employer's liability insurance incidental to workers' compensation insurance and
1521 written in connection with workers' compensation insurance; and
1522 (c) insurance assuring to a person entitled to workers' compensation benefits the
1523 compensation provided by law.
1524 Section 3. Section 31A-17-404 is amended to read:
1525 31A-17-404. Credit allowed a domestic ceding insurer against reserves for
1526 reinsurance.
1527 (1) (a) [
1528 credit for reinsurance as either an asset or a reduction from liability for reinsurance ceded only
1529 if the reinsurer meets the requirements of Subsection (3), (4), (5), (6), (7), (8), or (9) [
1530
1531 [
1532 cession of a kind or class of business that the assuming insurer is licensed or otherwise
1533 permitted to write or assume:
1534 (i) in [
1535 (ii) in the case of a United States branch of an alien assuming insurer, in the state
1536 through which [
1537 reinsurance.
1538 [
1539 requirements of Subsection (11) are met.
1540 (2) A domestic ceding insurer is allowed credit for reinsurance ceded:
1541 (a) only if the reinsurance is payable in a manner consistent with Section 31A-22-1201;
1542 (b) only to the extent that the accounting:
1543 (i) is consistent with the terms of the reinsurance contract; and
1544 (ii) clearly reflects:
1545 (A) the amount and nature of risk transferred; and
1546 (B) liability, including contingent liability, of the ceding insurer;
1547 (c) only to the extent the reinsurance contract shifts insurance policy risk from the
1548 ceding insurer to the assuming reinsurer in fact and not merely in form; and
1549 (d) only if the reinsurance contract contains a provision placing on the reinsurer the
1550 credit risk of all dealings with intermediaries regarding the reinsurance contract.
1551 (3) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to an
1552 assuming insurer that is licensed to transact insurance or reinsurance in this state.
1553 (4) (a) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to an
1554 assuming insurer that is accredited by the commissioner as a reinsurer in this state.
1555 (b) An insurer is accredited as a reinsurer if the insurer:
1556 (i) files with the commissioner evidence of the insurer's submission to this state's
1557 jurisdiction;
1558 (ii) submits to the commissioner's authority to examine the insurer's books and records;
1559 (iii) (A) is licensed to transact insurance or reinsurance in at least one state; or
1560 (B) in the case of a United States branch of an alien assuming insurer, is entered
1561 through and licensed to transact insurance or reinsurance in at least one state;
1562 (iv) files annually with the commissioner a copy of the insurer's:
1563 (A) annual statement filed with the insurance department of [
1564 domicile; and
1565 (B) most recent audited financial statement; and
1566 (v) (A) (I) has not had [
1567 within 90 days after the day on which the insurer submits the information required by this
1568 Subsection (4); and
1569 (II) maintains a surplus with regard to policyholders in an amount not less than
1570 $20,000,000; or
1571 (B) (I) has [
1572 (II) maintains a surplus with regard to policyholders in an amount less than
1573 $20,000,000.
1574 (c) Credit may not be allowed a domestic ceding insurer if the assuming insurer's
1575 accreditation is revoked by the commissioner after a notice and hearing.
1576 (5) (a) A domestic ceding insurer is allowed a credit if:
1577 (i) the reinsurance is ceded to an assuming insurer that is:
1578 (A) domiciled in a state meeting the requirements of Subsection (5)(a)(ii); or
1579 (B) in the case of a United States branch of an alien assuming insurer, is entered
1580 through a state meeting the requirements of Subsection (5)(a)(ii);
1581 (ii) the state described in Subsection (5)(a)(i) employs standards regarding credit for
1582 reinsurance substantially similar to those applicable under this section; and
1583 (iii) the assuming insurer or United States branch of an alien assuming insurer:
1584 (A) maintains a surplus with regard to policyholders in an amount not less than
1585 $20,000,000; and
1586 (B) submits to the authority of the commissioner to examine [
1587 and records.
1588 (b) The requirements of Subsections (5)(a)(i) and (ii) do not apply to reinsurance ceded
1589 and assumed pursuant to a pooling arrangement among insurers in the same holding company
1590 system.
1591 (6) (a) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to an
1592 assuming insurer that maintains a trust fund:
1593 (i) created in accordance with rules made by the commissioner pursuant to Title 63G,
1594 Chapter 3, Utah Administrative Rulemaking Act; and
1595 (ii) in a qualified United States financial institution for the payment of a valid claim of:
1596 (A) a United States ceding insurer of the assuming insurer;
1597 (B) an assign of the United States ceding insurer; and
1598 (C) a successor in interest to the United States ceding insurer.
1599 (b) To enable the commissioner to determine the sufficiency of the trust fund described
1600 in Subsection (6)(a), the assuming insurer shall:
1601 (i) report annually to the commissioner information substantially the same as that
1602 required to be reported on the National Association of Insurance Commissioners Annual
1603 Statement form by a licensed insurer; and
1604 (ii) (A) submit to examination of its books and records by the commissioner; and
1605 (B) pay the cost of an examination.
1606 (c) (i) Credit for reinsurance may not be granted under this Subsection (6) unless the
1607 form of the trust and any amendment to the trust is approved by:
1608 (A) the commissioner of the state where the trust is domiciled; or
1609 (B) the commissioner of another state who, pursuant to the terms of the trust
1610 instrument, accepts principal regulatory oversight of the trust.
1611 (ii) The form of the trust and an amendment to the trust shall be filed with the
1612 commissioner of every state in which a ceding insurer beneficiary of the trust is domiciled.
1613 (iii) The trust instrument shall provide that a contested claim is valid and enforceable
1614 upon the final order of a court of competent jurisdiction in the United States.
1615 (iv) The trust shall vest legal title to [
1616 trust's trustees for the benefit of:
1617 (A) a United States ceding insurer of the assuming insurer;
1618 (B) an assign of the United States ceding insurer; or
1619 (C) a successor in interest to the United States ceding insurer.
1620 (v) The trust and the assuming insurer are subject to examination as determined by the
1621 commissioner.
1622 (vi) The trust shall remain in effect for as long as the assuming insurer has an
1623 outstanding obligation due under a reinsurance agreement subject to the trust.
1624 (vii) No later than February 28 of each year, the trustee of the trust shall:
1625 (A) report to the commissioner in writing the balance of the trust;
1626 (B) list the trust's investments at the end of the preceding calendar year; and
1627 (C) (I) certify the date of termination of the trust, if so planned; or
1628 (II) certify that the trust will not expire before the following December 31.
1629 (d) The following requirements apply to the following categories of assuming insurer:
1630 (i) For a single assuming insurer:
1631 (A) the trust fund shall consist of funds in trust in an amount not less than the assuming
1632 insurer's liabilities attributable to reinsurance ceded by United States ceding insurers; and
1633 (B) the assuming insurer shall maintain a trusteed surplus of not less than $20,000,000,
1634 except as provided in Subsection (6)(d)(ii).
1635 (ii) (A) At any time after the assuming insurer has permanently discontinued
1636 underwriting new business secured by the trust for at least three full years, the commissioner
1637 with principal regulatory oversight of the trust may authorize a reduction in the required
1638 trusteed surplus, but only after a finding, based on an assessment of the risk, that the new
1639 required surplus level is adequate for the protection of United States ceding insurers,
1640 policyholders, and claimants in light of reasonably foreseeable adverse loss development.
1641 (B) The risk assessment may involve an actuarial review, including an independent
1642 analysis of reserves and cash flows, and shall consider all material risk factors, including, when
1643 applicable, the lines of business involved, the stability of the incurred loss estimates, and the
1644 effect of the surplus requirements on the assuming insurer's liquidity or solvency.
1645 (C) The minimum required trusteed surplus may not be reduced to an amount less than
1646 30% of the assuming insurer's liabilities attributable to reinsurance ceded by United States
1647 ceding insurers covered by the trust.
1648 (iii) For a group acting as assuming insurer, including incorporated and individual
1649 unincorporated underwriters:
1650 (A) for reinsurance ceded under a reinsurance agreement with an inception,
1651 amendment, or renewal date on or after August 1, 1995, the trust shall consist of a trusteed
1652 account in an amount not less than the respective underwriters' several liabilities attributable to
1653 business ceded by the one or more United States domiciled ceding insurers to an underwriter of
1654 the group;
1655 (B) for reinsurance ceded under a reinsurance agreement with an inception date on or
1656 before July 31, 1995, and not amended or renewed after July 31, 1995, notwithstanding the
1657 other provisions of this chapter, the trust shall consist of a trusteed account in an amount not
1658 less than the respective underwriters' several insurance and reinsurance liabilities attributable to
1659 business written in the United States;
1660 (C) in addition to a trust described in Subsection (6)(d)(iii)(A) or (B), the group shall
1661 maintain in trust a trusteed surplus of which $100,000,000 is held jointly for the benefit of the
1662 one or more United States domiciled ceding insurers of a member of the group for all years of
1663 account;
1664 (D) the incorporated members of the group:
1665 (I) may not be engaged in a business other than underwriting as a member of the group;
1666 and
1667 (II) are subject to the same level of regulation and solvency control by the group's
1668 domiciliary regulator as are the unincorporated members; and
1669 (E) within 90 days after the day on which the group's financial statements are due to be
1670 filed with the group's domiciliary regulator, the group shall provide to the commissioner:
1671 (I) an annual certification by the group's domiciliary regulator of the solvency of each
1672 underwriter member; or
1673 (II) if a certification is unavailable, a financial statement, prepared by an independent
1674 public accountant, of each underwriter member of the group.
1675 (iv) For a group of incorporated underwriters under common administration, the group
1676 shall:
1677 (A) have continuously transacted an insurance business outside the United States for at
1678 least three years immediately preceding the day on which the group makes application for
1679 accreditation;
1680 (B) maintain aggregate policyholders' surplus of at least $10,000,000,000;
1681 (C) maintain a trust fund in an amount not less than the group's several liabilities
1682 attributable to business ceded by the one or more United States domiciled ceding insurers to a
1683 member of the group pursuant to a reinsurance contract issued in the name of the group;
1684 (D) in addition to complying with the other provisions of this Subsection (6)(d)(iv),
1685 maintain a joint trusteed surplus of which $100,000,000 is held jointly for the benefit of the one
1686 or more United States domiciled ceding insurers of a member of the group as additional
1687 security for these liabilities; and
1688 (E) within 90 days after the day on which the group's financial statements are due to be
1689 filed with the group's domiciliary regulator, make available to the commissioner:
1690 (I) an annual certification of each underwriter member's solvency by the member's
1691 domiciliary regulator; and
1692 (II) a financial statement of each underwriter member of the group prepared by an
1693 independent public accountant.
1694 (7) A domestic ceding insurer is allowed a credit if the reinsurance is ceded to an
1695 assuming insurer that secures [
1696 Subsection (7):
1697 (a) The insurer shall be certified by the commissioner as a reinsurer in this state.
1698 (b) To be eligible for certification, the assuming insurer shall:
1699 (i) be domiciled and licensed to transact insurance or reinsurance in a qualified
1700 jurisdiction, as determined by the commissioner pursuant to Subsection (7)(d);
1701 (ii) maintain minimum capital and surplus, or its equivalent, in an amount to be
1702 determined by the commissioner pursuant to rules made in accordance with Title 63G, Chapter
1703 3, Utah Administrative Rulemaking Act;
1704 (iii) maintain financial strength ratings from two or more rating agencies considered
1705 acceptable by the commissioner pursuant to rules made in accordance with Title 63G, Chapter
1706 3, Utah Administrative Rulemaking Act; and
1707 (iv) agree to:
1708 (A) submit to the jurisdiction of this state;
1709 (B) appoint the commissioner as [
1710 process in this state;
1711 (C) provide security for 100% of the assuming insurer's liabilities attributable to
1712 reinsurance ceded by United States ceding insurers if [
1713 enforcement of a final United States judgment;
1714 (D) agree to meet applicable information filing requirements as determined by the
1715 commissioner including an application for certification, a renewal and on an ongoing basis; and
1716 (E) any other requirements for certification considered relevant by the commissioner.
1717 (c) An association, including incorporated and individual unincorporated underwriters,
1718 may be a certified reinsurer[
1719
1720 (i) satisfies the requirements of Subsections (7)(a) and (b);
1721 [
1722 requirements through the capital and surplus equivalents, net of liabilities, of the association
1723 and [
1724 to any unsatisfied obligation of the association or any of [
1725 amount determined by the commissioner to provide adequate protection;
1726 [
1727 business other than underwriting as a member of the association;
1728 [
1729 the incorporated members of the association by the association's domiciliary regulator as are
1730 the unincorporated members; and
1731 [
1732 statements are due to be filed with the association's domiciliary regulator [
1733 provides to the commissioner:
1734 (A) an annual certification by the association's domiciliary regulator of the solvency of
1735 each underwriter member; or
1736 (B) if a certification described in Subsection (7)(c)(v)(A) is unavailable, financial
1737 statements prepared by independent public accountants, of each underwriter member of the
1738 association.
1739 (d) (i) The commissioner shall create and publish a list of qualified jurisdictions under
1740 which an assuming insurer licensed and domiciled in the jurisdiction is eligible to be
1741 considered for certification by the commissioner as a certified reinsurer.
1742 [
1743 assuming insurer is eligible to be recognized as a qualified jurisdiction, the commissioner:
1744 (A) shall evaluate the appropriateness and effectiveness of the reinsurance supervisory
1745 system of the jurisdiction, both initially and on an ongoing basis;
1746 (B) shall consider the rights, the benefits, and the extent of reciprocal recognition
1747 afforded by the non-United States jurisdiction to reinsurers licensed and domiciled in the
1748 United States;
1749 (C) shall require the qualified jurisdiction to share information and cooperate with the
1750 commissioner with respect to all certified reinsurers domiciled within that jurisdiction; and
1751 (D) may not recognize a jurisdiction as a qualified jurisdiction if the commissioner has
1752 determined that the jurisdiction does not adequately and promptly enforce final United States
1753 judgments and arbitration awards.
1754 [
1755 jurisdiction.
1756 [
1757 Association of Insurance Commissioners' Committee Process [
1758 (v) The commissioner shall:
1759 (A) consider [
1760 qualified jurisdictions in determining qualified jurisdictions; and
1761 (B) if the commissioner approves a jurisdiction as qualified that does not appear on the
1762 National Association of Insurance [
1763 jurisdictions, provide thoroughly documented justification in accordance with criteria to be
1764 developed by rule made in accordance with Title 63G, Chapter 3, Utah Administrative
1765 Rulemaking Act.
1766 [
1767 the National Association of Insurance Commissioners' financial standards and accreditation
1768 program shall be recognized as qualified jurisdictions.
1769 [
1770 jurisdiction, the commissioner may suspend the reinsurer's certification indefinitely, in lieu of
1771 revocation.
1772 (e) The commissioner shall:
1773 (i) assign a rating to each certified reinsurer, giving due consideration to the financial
1774 strength ratings that have been assigned by rating agencies considered acceptable to the
1775 commissioner by rule made in accordance with Title 63G, Chapter 3, Utah Administrative
1776 Rulemaking Act; and
1777 (ii) publish a list of all certified reinsurers and their ratings.
1778 (f) A certified reinsurer shall secure obligations assumed from United States ceding
1779 insurers under this Subsection (7) at a level consistent with [
1780 as specified in rules made by the commissioner in accordance with Title 63G, Chapter 3, Utah
1781 Administrative Rulemaking Act.
1782 (i) For a domestic ceding insurer to qualify for full financial statement credit for
1783 reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a
1784 form acceptable to the commissioner and consistent with Section 31A-17-404.1, or in a
1785 multibeneficiary trust in accordance with Subsections (5), (6), and (9), except as otherwise
1786 provided in this Subsection (7).
1787 (ii) If a certified reinsurer maintains a trust to fully secure [
1788 obligations subject to Subsections (5), (6), and (9), and chooses to secure [
1789 reinsurer's obligations incurred as a certified reinsurer in the form of a multibeneficiary trust,
1790 the certified reinsurer shall maintain separate trust accounts for [
1791 obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer
1792 with reduced security as permitted by this Subsection (7) or comparable laws of other United
1793 States jurisdictions and for [
1794 (6), and (9).
1795 (iii) It shall be a condition to the grant of certification under this Subsection (7) that the
1796 certified reinsurer shall have bound itself:
1797 (A) by the language of the trust and agreement with the commissioner with principal
1798 regulatory oversight of the trust account; and
1799 (B) upon termination of the trust account, to fund, out of the remaining surplus of the
1800 trust, any deficiency of any other trust account.
1801 (iv) The minimum trusteed surplus requirements provided in Subsections (5), (6), and
1802 (9) are not applicable with respect to a multibeneficiary trust maintained by a certified reinsurer
1803 for the purpose of securing obligations incurred under this Subsection (7), except that the trust
1804 shall maintain a minimum trusteed surplus of $10,000,000.
1805 (v) With respect to obligations incurred by a certified reinsurer under this Subsection
1806 (7), if the security is insufficient, the commissioner:
1807 (A) shall reduce the allowable credit by an amount proportionate to the deficiency; and
1808 (B) may impose further reductions in allowable credit upon finding that there is a
1809 material risk that the certified reinsurer's obligations will not be paid in full when due.
1810 (vi) (A) For purposes of this Subsection (7), a certified reinsurer whose certification
1811 has been terminated for any reason shall be treated as a certified reinsurer required to secure
1812 100% of [
1813 [
1814 suspension, voluntary surrender, and inactive status.
1815 [
1816 provisions of this section, the requirement under this Subsection (7)(f)(vi) does not apply to a
1817 certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.
1818 (g) If an applicant for certification has been certified as a reinsurer in a National
1819 Association of Insurance Commissioners' accredited jurisdiction, the commissioner may:
1820 (i) defer to that jurisdiction's certification;
1821 (ii) defer to the rating assigned by that jurisdiction; and
1822 (iii) consider such reinsurer to be a certified reinsurer in this state.
1823 (h) (i) A certified reinsurer that ceases to assume new business in this state may request
1824 to maintain [
1825 qualify for a reduction in security for its in-force business.
1826 (ii) An inactive certified reinsurer shall continue to comply with all applicable
1827 requirements of this Subsection (7).
1828 (iii) The commissioner shall assign a rating to a reinsurer that qualifies under this
1829 Subsection (7)(h), that takes into account, if relevant, the reasons why the reinsurer is not
1830 assuming new business.
1831 (8) (a) As used in this Subsection (8):
1832 (i) "Covered agreement" means an agreement entered into pursuant to Dodd-Frank
1833 Wall Street Reform and Consumer Protection Act, 31 U.S.C. Sections 313 and 314, that:
1834 (A) is currently in effect or in a period of provisional application; and
1835 (B) addresses the elimination, under specified conditions, of collateral requirements as
1836 a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this
1837 state or for allowing the ceding insurer to recognize credit for reinsurance.
1838 (ii) "Reciprocal jurisdiction" means a jurisdiction that is:
1839 (A) a non-United States jurisdiction that is subject to an in-force covered agreement
1840 with the United States, each within its legal authority, or, in the case of a covered agreement
1841 between the United States and European Union, is a member state of the European Union;
1842 (B) a United States jurisdiction that meets the requirements for accreditation under the
1843 National Association of Insurance Commissioners' financial standards and accreditation
1844 program; or
1845 (C) a qualified jurisdiction, as determined by the commissioner in accordance with
1846 Subsection (7)(d), that is not otherwise described in this Subsection (8)(a)(ii) and meets certain
1847 additional requirements, consistent with the terms and conditions of in-force covered
1848 agreements, as specified by the commissioner in rule made in accordance with Title 63G,
1849 Chapter 3, Utah Administrative Rulemaking Act.
1850 (b) (i) Credit [
1851 meeting each of the conditions set forth in this Subsection (8)(b).
1852 (ii) The assuming insurer must have [
1853 domiciled in, as applicable, and be licensed in a reciprocal jurisdiction.
1854 (iii) (A) The assuming insurer [
1855 minimum capital and surplus, or its equivalent, calculated according to the methodology of
1856 [
1857 (B) If the assuming insurer is an association, including incorporated and individual
1858 unincorporated underwriters, [
1859 ongoing basis, minimum capital and surplus equivalents (net of liabilities), calculated
1860 according to the methodology applicable in [
1861 and a central fund containing a balance in amounts [
1862 (iv) (A) The assuming insurer must have and maintain, on an ongoing basis, a
1863 minimum solvency or capital ration, as applicable, which will be set forth in regulation.
1864 (B) If the assuming insurer is an association, including incorporated and individual
1865 unincorporated underwriters, [
1866 basis, a minimum solvency or capital ratio in the reciprocal jurisdiction where the assuming
1867 insurer has [
1868 licensed.
1869 (v) The assuming insurer must agree and provide adequate assurance to the
1870 commissioner, in a form specified by the commissioner by rule made in accordance with Title
1871 63G, Chapter 3, Utah Administrative Rulemaking Act, as follows:
1872 (A) the assuming insurer must provide prompt written notice and explanation to the
1873 commissioner if [
1874 [
1875 assuming insurer for serious noncompliance with applicable law;
1876 (B) the assuming insurer must consent in writing to the jurisdiction of the courts of this
1877 state and to the appointment of the commissioner as agent for service of process, however the
1878 commissioner may require that consent for service of process be provided to the commissioner
1879 and included in each reinsurance agreement and nothing in this provision shall limit, or in any
1880 way alter, the capacity of parties to a reinsurance agreement to agree to alternative dispute
1881 resolution mechanisms, except to the extent such agreements are unenforceable under
1882 applicable insolvency or delinquency laws;
1883 (C) the assuming insurer must consent in writing to pay all final judgments, wherever
1884 enforcement is sought, obtained by a ceding insurer or [
1885 that have been declared enforceable in the jurisdiction where the judgment was obtained;
1886 (D) each reinsurance agreement must include a provision requiring the assuming
1887 insurer to provide security in an amount equal to 100% of the assuming insurer's liabilities
1888 attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists
1889 enforcement of a final judgment that is enforceable under the law of the jurisdiction in which
1890 [
1891 obtained by the ceding insurer or by [
1892 the ceding insurer's resolution estate; and
1893 (E) the assuming insurer must confirm that [
1894 participating in any solvent scheme of arrangement which involved this state's ceding insurers,
1895 and agree to notify the ceding insurer and the commissioner and to provide security:
1896 (I) in an amount equal to 100% of the assuming insurer's liabilities to the ceding
1897 insurer, should the assuming insurer enter into such a solvent scheme of arrangement; and
1898 (II) in a form consistent with the provisions of Subsections (7) and (10) and as
1899 specified by the commissioner in regulation.
1900 (vi) The assuming insurer or [
1901 if requested by the commissioner, on behalf of [
1902 predecessors, certain documentation to the commissioner, as specified by the commissioner by
1903 rule made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
1904 (vii) The assuming insurer must maintain a practice of prompt payment of claims under
1905 reinsurance agreements, pursuant to criteria set forth in rule made in accordance with Title
1906 63G, Chapter 3, Utah Administrative Rulemaking Act.
1907 (viii) The assuming insurer's supervisory authority must confirm to the commissioner
1908 on an annual basis, as of the preceding December 31 or at the annual date otherwise statutorily
1909 reported to the reciprocal jurisdiction, that the assuming insurer complies with the requirements
1910 set forth in Subsections (8)(c) and (d).
1911 (ix) Nothing in this provision precludes an assuming insurer from providing the
1912 commissioner with information on a voluntary basis.
1913 (c) (i) The commissioner shall timely create and publish a list of reciprocal
1914 jurisdictions.
1915 (ii) (A) A list of reciprocal jurisdictions is published through the National Association
1916 of Insurance Commissioners' Committee Process.
1917 (B) The commissioner's list of reciprocal jurisdictions shall include any reciprocal
1918 jurisdiction as defined in this Subsection (8), and shall consider any other reciprocal
1919 jurisdictions in accordance with the criteria developed under rule made in accordance with
1920 Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
1921 (iii) (A) The commissioner may remove a jurisdiction from the list of reciprocal
1922 jurisdictions upon a determination that the jurisdiction no longer meets the requirements of a
1923 reciprocal jurisdiction, in accordance with a process set forth in rule made in accordance with
1924 Title 63G, Chapter 3, Utah Administrative Rulemaking Act, except that the commissioner
1925 [
1926 (B) Upon removal of a reciprocal jurisdiction from this list, credit for reinsurance
1927 ceded to an assuming insurer [
1928 that jurisdiction [
1929 (d) (i) The commissioner shall timely create and publish a list of assuming insurers that
1930 have satisfied the conditions set forth in this subsection and to which cessions shall be granted
1931 credit in accordance with this Subsection (8).
1932 (ii) The commissioner may add an assuming insurer to such list if a National
1933 Association of Insurance Commissioners accredited jurisdiction has added such assuming
1934 insurer to a list of such assuming insurers or if, upon initial eligibility, the assuming insurer
1935 submits the information to the commissioner as required under this Subsection (8) and
1936 complies with any additional requirements that the commissioner may impose by rule made in
1937 accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, except to the
1938 extent that they conflict with an applicable covered agreement.
1939 (e) (i) If the commissioner determines that an assuming insurer no longer meets one or
1940 more of the requirements under this Subsection (8), the commissioner may revoke or suspend
1941 the eligibility of the assuming insurer for recognition under this Subsection (8) in accordance
1942 with procedures established in rule made in accordance with Title 63G, Chapter 3, Utah
1943 Administrative Rulemaking Act.
1944 (ii) (A) While an assuming insurer's eligibility is suspended, no reinsurance agreement
1945 issued, amended, or renewed after the [
1946 suspension is effective qualifies for credit except to the extent that the assuming insurer's
1947 obligations under the contract are secured in accordance with Subsection (10).
1948 (B) If an assuming insurer's eligibility is revoked, no credit for reinsurance may be
1949 granted after the [
1950 respect to any reinsurance agreements entered into by the assuming insurer, including
1951 reinsurance agreements entered into [
1952 revocation is effective, except to the extent that the assuming insurer's obligations under the
1953 contract are secured in a form acceptable to the commissioner and consistent with the
1954 provisions of Subsection (10).
1955 (f) If subject to a legal process of rehabilitation, liquidation, or conservation, as
1956 applicable, the ceding insurer, or [
1957 determined appropriate by the court in which the proceedings are pending, may obtain an order
1958 requiring that the assuming insurer post security for all outstanding ceded liabilities.
1959 (g) Nothing in this Subsection (8) limits or in any way alters the capacity of parties to a
1960 reinsurance agreement to agree on requirements for security or other terms in that reinsurance
1961 agreement, except as expressly prohibited by this chapter or other applicable law or regulation.
1962 (h) (i) Credit may be taken under this Subsection (8) only for reinsurance agreements
1963 entered into, amended, or renewed on or after the effective date of the statute adding this
1964 Subsection (8), and only with respect to losses incurred and reserves reported on or after the
1965 later of:
1966 (A) the [
1967 pursuant to Subsection (8)(b); and
1968 [
1969 (B) the day on which the new reinsurance agreement, amendment, or renewal is
1970 effective.
1971 (ii) This Subsection (8) does not alter or impair a ceding insurer's right to take credit
1972 for reinsurance, to the extent that credit is not available under this Subsection (8), as long as the
1973 reinsurance qualifies for credit under any other applicable provision of this chapter.
1974 (iii) Nothing in this Subsection (8) authorizes an assuming insurer to withdraw or
1975 reduce the security provided under any reinsurance agreement except as permitted by the terms
1976 of the agreement.
1977 (iv) Nothing in this Subsection (8) limits, or in any way alters, the capacity of parties to
1978 any reinsurance agreement to renegotiate the agreement.
1979 (9) If reinsurance is ceded to an assuming insurer not meeting the requirements of
1980 Subsection (3), (4), (5), (6), (7), or (8), a domestic ceding insurer is allowed credit only as to
1981 the insurance of a risk located in a jurisdiction where the reinsurance is required by applicable
1982 law or regulation of that jurisdiction.
1983 (10) (a) An asset or a reduction from liability for the reinsurance ceded by a domestic
1984 insurer to an assuming insurer not meeting the requirements of Subsection (3), (4), (5), (6), (7),
1985 or (8) shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer.
1986 (b) The commissioner may adopt by rule made in accordance with Title 63G, Chapter
1987 3, Utah Administrative Rulemaking Act, specific additional requirements relating to or setting
1988 forth:
1989 (i) the valuation of assets or reserve credits;
1990 (ii) the amount and forms of security supporting reinsurance arrangements; and
1991 (iii) the circumstances pursuant to which credit will be reduced or eliminated.
1992 (c) (i) The reduction shall be in the amount of funds held by or on behalf of the ceding
1993 insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with
1994 the assuming insurer as security for the payment of obligations thereunder, if the security is:
1995 (A) held in the United States subject to withdrawal solely by, and under the exclusive
1996 control of, the ceding insurer; or
1997 (B) in the case of a trust, held in a qualified United States financial institution.
1998 (ii) The security described in this Subsection (10)(c) may be in the form of:
1999 (A) cash;
2000 (B) securities listed by the Securities Valuation Office of the National Association of
2001 Insurance Commissioners, including those deemed exempt from filing as defined by the
2002 Purposes and Procedures Manual of the Securities Valuation Office, and qualifying as admitted
2003 assets;
2004 (C) clean, irrevocable, unconditional letters of credit, issued or confirmed by a
2005 qualified United States financial institution effective no later than December 31 of the year for
2006 which the filing is being made, and in the possession of, or in trust for, the ceding insurer on or
2007 before the filing date of its annual statement;
2008 (D) letters of credit meeting applicable standards of issuer acceptability as of the dates
2009 of their issuance or confirmation shall, notwithstanding the issuing or confirming institution's
2010 subsequent failure to meet applicable standards of issuer acceptability, continue to be
2011 acceptable as security until their expiration, extension, renewal, modification or amendment,
2012 whichever first occurs; or
2013 (E) any other form of security acceptable to the commissioner.
2014 (11) Reinsurance credit [
2015 the assuming insurer under the reinsurance contract submits to the jurisdiction of Utah courts
2016 by:
2017 (a) (i) being an admitted insurer; and
2018 (ii) submitting to jurisdiction under Section 31A-2-309;
2019 (b) having irrevocably appointed the commissioner as the domestic ceding insurer's
2020 agent for service of process in an action arising out of or in connection with the reinsurance,
2021 which appointment is made under Section 31A-2-309; or
2022 (c) agreeing in the reinsurance contract:
2023 (i) that if the assuming insurer fails to perform [
2024 under the terms of the reinsurance contract, the assuming insurer, at the request of the ceding
2025 insurer, shall:
2026 (A) submit to the jurisdiction of a court of competent jurisdiction in a state of the
2027 United States;
2028 (B) comply with all requirements necessary to give the court jurisdiction; and
2029 (C) abide by the final decision of the court or of an appellate court in the event of an
2030 appeal; and
2031 (ii) to designate the commissioner or a specific attorney licensed to practice law in this
2032 state as its attorney upon whom may be served lawful process in an action, suit, or proceeding
2033 instituted by or on behalf of the ceding company.
2034 (12) Submitting to the jurisdiction of Utah courts under Subsection (11) does not
2035 override a duty or right of a party under the reinsurance contract, including a requirement that
2036 the parties arbitrate their disputes.
2037 (13) (a) If an assuming insurer does not meet the requirements of Subsection (3), (4),
2038 (5), or (8), the credit permitted by Subsection (6) or (7) may not be allowed unless the
2039 assuming insurer agrees in the trust instrument to the [
2040 described in Subsections (13)(b) through (e).
2041 [
2042 described in Subsection (13)[
2043 (A) an order of the commissioner with regulatory oversight over the trust; or
2044 (B) an order of a court of competent jurisdiction directing the trustee to transfer to the
2045 commissioner with regulatory oversight all of the assets of the trust fund.
2046 (ii) This Subsection (13)[
2047 (A) the trust fund is inadequate because the trust contains an amount less than the
2048 amount required by Subsection (6)(d); or
2049 (B) the grantor of the trust is:
2050 (I) declared insolvent; or
2051 (II) placed into receivership, rehabilitation, liquidation, or similar proceeding under the
2052 laws of its state or country of domicile.
2053 [
2054 distributed by and a claim shall be filed with and valued by the commissioner with regulatory
2055 oversight in accordance with the laws of the state in which the trust is domiciled that are
2056 applicable to the liquidation of a domestic insurance company.
2057 [
2058 trust fund, or any part of the assets, are not necessary to satisfy the claims of the one or more
2059 United States ceding insurers of the grantor of the trust, the assets, or a part of the assets, shall
2060 be returned by the commissioner with regulatory oversight to the trustee for distribution in
2061 accordance with the trust instrument.
2062 [
2063 United States law that is inconsistent with this Subsection (13).
2064 (14) (a) If an accredited or certified reinsurer ceases to meet the requirements for
2065 accreditation or certification, the commissioner may suspend or revoke the reinsurer's
2066 accreditation or certification.
2067 [
2068 [
2069 [
2070 (i) the reinsurer waives [
2071 (ii) the commissioner's order is based on:
2072 (A) regulatory action by the reinsurer's domiciliary jurisdiction; or
2073 (B) the voluntary surrender or termination of the reinsurer's eligibility to transact
2074 insurance or reinsurance business in its domiciliary jurisdiction or primary certifying state
2075 under Subsection (7)(g); or
2076 (iii) the commissioner's finding that an emergency requires immediate action and a
2077 court of competent jurisdiction has not stayed the commissioner's action.
2078 [
2079 contract issued or renewed after the effective date of the suspension qualifies for credit except
2080 to the extent that the reinsurer's obligations under the contract are secured in accordance with
2081 Section 31A-17-404.1.
2082 [
2083 reinsurance may be granted after the effective date of the revocation except to the extent that
2084 the reinsurer's obligations under the contract are secured in accordance with Subsection (7)(f)
2085 or Section 31A-17-404.1.
2086 (15) (a) A ceding insurer shall take steps to manage [
2087 reinsurance recoverables proportionate to [
2088 (b) (i) A domestic ceding insurer shall notify the commissioner within 30 days after the
2089 day on which reinsurance recoverables from any single assuming insurer, or group of affiliated
2090 assuming insurers:
2091 (A) exceeds 50% of the domestic ceding insurer's last reported surplus to
2092 policyholders; or
2093 (B) after it is determined that reinsurance recoverables from any single assuming
2094 insurer, or group of affiliated assuming insurers, is likely to exceed 50% of the domestic ceding
2095 insurer's last reported surplus to policyholders.
2096 (ii) The notification required by Subsection (15)(b)(i) shall demonstrate that the
2097 exposure is safely managed by the domestic ceding insurer.
2098 (c) A ceding insurer shall take steps to diversify [
2099 program.
2100 (d) (i) A domestic ceding insurer shall notify the commissioner within 30 days after
2101 [
2102 more than 20% of the ceding insurer's gross written premium in the prior calendar year to any:
2103 (A) single assuming insurer; or
2104 (B) group of affiliated assuming insurers.
2105 (ii) The notification shall demonstrate that the exposure is safely managed by the
2106 domestic ceding insurer.
2107 (16) A ceding insurer licensed under Chapter 5, Domestic Stock and Mutual Insurance
2108 Corporations, Chapter 7, Nonprofit Health Service Insurance Corporations, Chapter 8, Health
2109 Maintenance Organizations and Limited Health Plans, Chapter 9, Insurance Fraternals, or
2110 Chapter 14, Foreign Insurers is not allowed credit if the reinsurance is ceded to an assuming
2111 domestic or foreign captive insurer, unless the assuming domestic or foreign captive insurer
2112 complies with:
2113 (a) Chapter 4, Insurers in General;
2114 (b) Chapter 16, Insurance Holding Companies;
2115 (c) Chapter 16a, Risk Management and Own Risk and Solvency Assessment Act;
2116 (d) Chapter 17, Determination of Financial Condition; and
2117 (e) Chapter 18, Investments.
2118 Section 4. Section 31A-21-101 is amended to read:
2119 31A-21-101. Scope of Chapters 21 and 22.
2120 (1) Except as provided in Subsections (2) through (6), this chapter and Chapter 22,
2121 Contracts in Specific Lines, apply to all insurance policies, applications, and certificates:
2122 (a) delivered or issued for delivery in this state;
2123 (b) on property ordinarily located in this state;
2124 (c) on persons residing in this state when the policy is issued; or
2125 (d) on business operations in this state.
2126 (2) This chapter and Chapter 22, Contracts in Specific Lines, do not apply to:
2127 (a) an exemption provided in Section 31A-1-103;
2128 (b) an insurance policy procured under Sections 31A-15-103 and 31A-15-104;
2129 (c) an insurance policy on business operations in this state:
2130 (i) if:
2131 (A) the contract is negotiated primarily outside this state; and
2132 (B) the operations in this state are incidental or subordinate to operations outside this
2133 state; and
2134 (ii) except that insurance required by a Utah statute shall conform to the statutory
2135 requirements; or
2136 (d) other exemptions provided in this title.
2137 (3) (a) Sections 31A-21-102, 31A-21-103, 31A-21-104, Subsections 31A-21-107(1)
2138 and (3), and Sections 31A-21-306, 31A-21-308, 31A-21-312, and 31A-21-314 apply to ocean
2139 marine and inland marine insurance.
2140 (b) Section 31A-21-201 applies to inland marine insurance that is written according to
2141 manual rules or rating plans.
2142 (c) Inland marine insurance that includes accident and health insurance is subject to
2143 Chapter 22, Contracts in Specific Lines.
2144 (4) A group insurance policy or a blanket insurance policy is subject to this chapter and
2145 Chapter 22, Contracts in Specific Lines, except:
2146 (a) a group [
2147 Subsection 31A-1-103(3)(h);
2148 (b) a blanket insurance policy outside the scope of this title under Subsection
2149 31A-1-103(3)(h); and
2150 [
2151 (5) The commissioner may by rule exempt any class of insurance contract or class of
2152 insurer from any or all of the provisions of this chapter and Chapter 22, Contracts in Specific
2153 Lines, if the interests of the Utah insureds, creditors, or the public would not be harmed by the
2154 exemption.
2155 (6) Workers' compensation insurance is subject to this chapter and Chapter 22,
2156 Contracts in Specific Lines.
2157 (7) Unless clearly inapplicable, any provision of this chapter or Chapter 22, Contracts
2158 in Specific Lines, applicable to either a policy or a contract is applicable to both.
2159 Section 5. Section 31A-21-201 is amended to read:
2160 31A-21-201. Filing of forms.
2161 (1) (a) Except as exempted under Subsections 31A-21-101(2) through (6), a form may
2162 not be used, sold, or offered for sale until the form is filed with the commissioner.
2163 (b) A form is considered filed with the commissioner when the commissioner receives:
2164 (i) the form;
2165 (ii) the applicable filing fee as prescribed under Section 31A-3-103; and
2166 (iii) the applicable transmittal forms as required by the commissioner.
2167 (2) In filing a form for use in this state the insurer is responsible for assuring that the
2168 form is in compliance with this title and rules adopted by the commissioner.
2169 (3) (a) The commissioner may prohibit the use of a form at any time upon a finding
2170 that:
2171 (i) the form:
2172 (A) is inequitable;
2173 (B) is unfairly discriminatory;
2174 (C) is misleading;
2175 (D) is deceptive;
2176 (E) is obscure;
2177 (F) is unfair;
2178 (G) encourages misrepresentation; or
2179 (H) is not in the public interest;
2180 (ii) the form provides benefits or contains another provision that endangers the solidity
2181 of the insurer;
2182 (iii) except for a life or accident and health insurance policy form, the form is an
2183 insurance policy or application for an insurance policy, that fails to conspicuously[
2184
2185 (A) the exact name of the insurer; and
2186 (B) the state of domicile of the insurer filing the insurance policy or application for the
2187 insurance policy;
2188 (iv) except an application required by Section 31A-22-635, the form is a life or
2189 accident and health insurance policy form that fails to conspicuously[
2190 provide:
2191 (A) the exact name of the insurer;
2192 (B) the state of domicile of the insurer filing the insurance policy or application for the
2193 insurance policy; and
2194 (C) for a life insurance policy only, the address of the administrative office of the
2195 insurer filing the form;
2196 (v) the form violates a statute or a rule adopted by the commissioner; or
2197 (vi) the form is otherwise contrary to law.
2198 (b) (i) When the commissioner prohibits the use of a form under Subsection (3)(a), the
2199 commissioner may order that, on or before a date not less than 15 days after the day on which
2200 the commissioner issues the order, the use of the form be discontinued.
2201 (ii) Once use of a form is prohibited, the form may not be used until appropriate
2202 changes are filed with and reviewed by the commissioner.
2203 (iii) When the commissioner prohibits the use of a form under Subsection (3)(a), the
2204 commissioner may require the insurer to disclose contract deficiencies to the existing
2205 policyholders.
2206 (c) If the commissioner prohibits use of a form under this Subsection (3), the
2207 prohibition shall:
2208 (i) be in writing;
2209 (ii) constitute an order; and
2210 (iii) state the reasons for the prohibition.
2211 (4) (a) If, after a hearing, the commissioner determines that it is in the public interest,
2212 the commissioner may require by rule or order that a form be subject to the commissioner's
2213 approval before [
2214 (b) The rule or order described in Subsection (4)(a) shall prescribe the filing
2215 procedures for a form if the procedures are different from the procedures stated in this section.
2216 (c) The type of form that under Subsection (4)(a) the commissioner may require
2217 approval of before use includes:
2218 (i) a form for a particular class of insurance;
2219 (ii) a form for a specific line of insurance;
2220 (iii) a specific type of form; or
2221 (iv) a form for a specific market segment.
2222 (5) (a) An insurer shall maintain a complete and accurate record of the following for
2223 the time period described in Subsection (5)(b):
2224 (i) a form:
2225 (A) filed under this section for use; or
2226 (B) that is in use; and
2227 (ii) a document filed under this section with a form described in Subsection (5)(a)(i).
2228 (b) The insurer shall maintain a record required under Subsection (5)(a) for the balance
2229 of the current year, plus five years from:
2230 (i) the last day on which the form is used; or
2231 (ii) the last day an insurance policy that is issued using the form is in effect.
2232 Section 6. Section 31A-21-402 is amended to read:
2233 31A-21-402. Definitions.
2234 As used in this part:
2235 (1) (a) "Direct response solicitation" means any offer [
2236 in this state, either directly or through a third party, to effect life or accident and health
2237 insurance coverage which enables the individual to apply or enroll for the insurance on the
2238 basis of the offer.
2239 (b) "Direct response solicitation" does not include:
2240 (i) solicitations for insurance through an employee benefit plan exempt from state
2241 regulation under preemptive federal law[
2242 (ii) solicitations through [
2243 credit accident and health insurance.
2244 (2) "Mass marketed life or accident and health insurance" means the insurance under
2245 any individual, franchise, group, or blanket insurance policy of life or accident and health
2246 insurance [
2247 (a) that is offered by means of direct response solicitation through:
2248 (i) a sponsoring organization; or [
2249 (ii) the mails or other mass communications media; and
2250 (b) under which the person insured pays all or substantially all of the cost of [
2251 person's insurance.
2252 Section 7. Section 31A-21-404 is amended to read:
2253 31A-21-404. Out-of-state insurers.
2254 [
2255 marketed life or accident and health insurance under a group insurance policy issued outside of
2256 this state to residents of this state or a blanket insurance policy issued outside of this state to
2257 residents of this state shall, with respect to the mass marketed life or accident and health
2258 insurance policy:
2259 (1) comply with:
2260 (a) Sections 31A-23a-402, 31A-23a-402.5, and 31A-23a-403; and
2261 (b) Chapter 26, Part 3, Claim Practices; and
2262 (2) upon the commissioner's request, deliver to the commissioner a copy of:
2263 (a) any mass marketed life or accident and health insurance policy[
2264
2265 (b) a certificate issued under a mass marketed life or accident and health insurance
2266 policy;
2267 (c) an application for a mass marketed life or accident and health insurance policy;
2268 (d) an enrollment form for a mass marketed life or accident and health insurance
2269 policy; and
2270 (e) advertising material used in this state in connection with [
2271 or accident and health insurance policy.
2272 Section 8. Section 31A-22-409 is amended to read:
2273 31A-22-409. Standard Nonforfeiture Law for Individual Deferred Annuities.
2274 (1) This section is known as the "Standard Nonforfeiture Law for Individual Deferred
2275 Annuities."
2276 (2) This section does not apply to:
2277 (a) reinsurance;
2278 (b) a group annuity purchased under a retirement plan or plan of deferred
2279 compensation:
2280 (i) established or maintained by:
2281 (A) an employer, including a partnership or sole proprietorship;
2282 (B) an employee organization; or
2283 (C) both an employer and an employee organization; and
2284 (ii) other than a plan providing individual retirement accounts or individual retirement
2285 annuities under Section 408, Internal Revenue Code;
2286 (c) a premium deposit fund;
2287 (d) a variable annuity;
2288 (e) an investment annuity;
2289 (f) an immediate annuity;
2290 (g) a deferred annuity contract after annuity payments have commenced;
2291 (h) a reversionary annuity; or
2292 (i) a contract that is delivered outside this state through an agent or other representative
2293 of the company issuing the contract.
2294 (3) (a) If a policy is issued after this section takes effect as set forth in Subsection (15),
2295 a contract of annuity, except as stated in Subsection (2), may not be delivered or issued for
2296 delivery in this state unless the contract of annuity contains in substance:
2297 (i) the provisions described in Subsection (3)(b); or
2298 (ii) provisions corresponding to the provisions described in Subsection (3)(b) that in
2299 the opinion of the commissioner are at least as favorable to the contractholder, governing
2300 cessation of payment of consideration under the contract.
2301 (b) Subsection (3)(a)(i) requires the following provisions:
2302 (i) the company shall grant a paid-up annuity benefit on a plan stipulated in the contract
2303 of such a value as specified in Subsections (7), (8), (9), (10), and (12):
2304 (A) upon cessation of payment of consideration under a contract; or
2305 (B) upon a written request of the contract owner;
2306 (ii) if a contract provides for a lump-sum settlement at maturity, or at any other time,
2307 upon surrender of the contract at or before the commencement of any annuity payments, the
2308 company shall pay in lieu of any paid-up annuity benefit a cash surrender benefit of such
2309 amount as is specified in Subsections (7), (8), (10), and (12);
2310 (iii) a statement of the mortality table, if any, and interest rates used in calculating any
2311 of the following that are guaranteed under the contract:
2312 (A) minimum paid-up annuity benefit;
2313 (B) cash surrender benefit; or
2314 (C) death benefit;
2315 (iv) sufficient information to determine the amounts of the benefits described in
2316 Subsection (3)(b)(iii);
2317 (v) a statement that any paid-up annuity, cash surrender, or death benefits that may be
2318 available under the contract are not less than the minimum benefits required by a statute of the
2319 state in which the contract is delivered; and
2320 (vi) an explanation of the manner in which a benefit described in Subsection (3)(b)(v)
2321 is altered by the existence of any:
2322 (A) additional amounts credited by the company to the contract;
2323 (B) indebtedness to the company on the contract; or
2324 (C) prior withdrawals from or partial surrender of the contract.
2325 (c) Notwithstanding the requirements of this Subsection (3), a deferred annuity contract
2326 may provide that if no consideration is received under a contract for a period of two full years
2327 and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract
2328 arising from consideration paid before the period would be less than $20 monthly:
2329 (i) the company may at the company's option terminate the contract by payment in cash
2330 of the then present value of such portion of the paid-up annuity benefit, calculated on the basis
2331 of the mortality table specified in the contract, if any, and the interest rate specified in the
2332 contract for determining the paid-up annuity benefit; and
2333 (ii) the payment described in Subsection (3)(c)(i), relieves the company of any further
2334 obligation under the contract.
2335 (d) A company may reserve the right to defer the payment of cash surrender benefit for
2336 a period not to exceed six months after demand for the payment of the cash surrender benefit
2337 with surrender of the contract.
2338 (4) For a policy issued before June 1, 2006, the minimum values as specified in
2339 Subsections (7), (8), (9), (10), and (12) of any paid-up annuity, cash surrender, or death benefits
2340 available under an annuity contract shall be based upon minimum nonforfeiture amounts as
2341 established in this Subsection (4).
2342 (a) (i) With respect to a contract providing for flexible considerations, the minimum
2343 nonforfeiture amount at any time at or before the commencement of any annuity payments shall
2344 be equal to an accumulation up to such time, at a rate of interest of 3% per annum of
2345 percentages of the net considerations paid [
2346 (A) decreased by the sum of:
2347 (I) any prior withdrawals from or partial surrenders of the contract accumulated at a
2348 rate of interest of 3% per annum; and
2349 (II) the amount of any indebtedness to the company on the contract, including interest
2350 due and accrued; and
2351 (B) increased by any existing additional amounts credited by the company to the
2352 contract.
2353 (ii) For purposes of this Subsection (4)(a), the net consideration for a given contract
2354 year used to define the minimum nonforfeiture amount shall be:
2355 (A) an amount not less than zero; and
2356 (B) equal to the corresponding gross considerations credited to the contract during that
2357 contract year less:
2358 (I) an annual contract charge of $30; and
2359 (II) a collection charge of $1.25 per consideration credited to the contract during that
2360 contract year.
2361 (iii) The percentages of net considerations shall be:
2362 (A) 65% of the net consideration for the first contract year; and
2363 (B) 87-1/2% of the net considerations for the second and later contract years.
2364 (iv) Notwithstanding Subsection (4)(a)(iii), the percentage shall be 65% of the portion
2365 of the total net consideration for any renewal contract year that exceeds by not more than two
2366 times the sum of those portions of the net considerations in all prior contract years for which
2367 the percentage was 65%.
2368 (b) (i) Except as provided in Subsections (4)(b)(ii) and (iii), with respect to a contract
2369 providing for fixed scheduled consideration, minimum nonforfeiture amounts shall be:
2370 (A) calculated on the assumption that considerations are paid annually in advance; and
2371 (B) defined as for contracts with flexible considerations that are paid annually.
2372 (ii) The portion of the net consideration for the first contract year to be accumulated
2373 shall be equal to an amount that is the sum of:
2374 (A) 65% of the net consideration for the first contract year; and
2375 (B) 22-1/2% of the excess of the net consideration for the first contract year over the
2376 lesser of the net considerations for:
2377 (I) the second contract year; and
2378 (II) the third contract year.
2379 (iii) The annual contract charge shall be the lesser of $30 or 10% of the gross annual
2380 consideration.
2381 (c) With respect to a contract providing for a single consideration payment, minimum
2382 nonforfeiture amounts shall be defined as for contracts with flexible considerations except that:
2383 (i) the percentage of net consideration used to determine the minimum nonforfeiture
2384 amount shall be equal to 90%; and
2385 (ii) the net consideration shall be the gross consideration less a contract charge of $75.
2386 (5) (a) For a policy issued on or after June 1, 2006, the minimum values as specified in
2387 Subsections (7), (8), (9), (10), and (12) of any paid-up annuity, cash surrender, or death benefits
2388 available under an annuity contract shall be based upon minimum nonforfeiture amounts as
2389 established in this Subsection (5).
2390 [
2391 commencement of any annuity payments shall be equal to an accumulation up to such time, at
2392 rates of interest as indicated in Subsection (5)[
2393 paid before such time decreased by the sum of:
2394 (i) any prior withdrawals from or partial surrenders of the contract accumulated at rates
2395 of interest as indicated in Subsection (5)[
2396 (ii) an annual contract charge of $50, accumulated at rates of interest as indicated in
2397 Subsection (5)[
2398 (iii) any premium tax paid by the company for the contract, accumulated at rates of
2399 interest as indicated in Subsection (5)[
2400 (iv) the amount of any indebtedness to the company on the contract, including interest
2401 due and accrued.
2402 [
2403 be an annual rate of interest determined as the lesser of:
2404 (A) 3% per annum; [
2405 (B) the five-year Constant Maturity Treasury Rate reported by the Federal Reserve,
2406 rounded to the nearest 1/20th of 1%, as of a date or average over a period no longer than 15
2407 months [
2408 (5)[
2409 (I) reduced by 125 basis points; and
2410 (II) where the resulting interest rate is not less than 100 basis points, 1% for a policy
2411 issued on or after June 1, 2006, and before June 1, 2021, or where the resulting interest rate is
2412 not less than 15 basis points, 0.15% for a policy issued on or after June 1, 2021.
2413 (ii) The interest rate shall apply for an initial period and may be redetermined for
2414 additional periods.
2415 (iii) (A) If the interest rate will be reset, the contract shall state:
2416 (I) the initial period;
2417 (II) the redetermination date;
2418 (III) the redetermination basis; and
2419 (IV) the redetermination period.
2420 (B) The basis is the date or average over a specified period that produces the value of
2421 the five-year Constant Maturity Treasury Rate to be used at each redetermination date.
2422 [
2423 in an equity indexed benefit, the reduction described in Subsection (5)[
2424 increased by up to an additional 100 basis points to reflect the value of the equity index benefit.
2425 (ii) The present value of the additional reduction at the contract issue date and at each
2426 redetermination date may not exceed the market value of the benefit.
2427 (iii) (A) The commissioner may require a demonstration that the present value of the
2428 additional reduction does not exceed the market value of the benefit.
2429 (B) If the demonstration required under Subsection (5)[
2430 satisfaction of the commissioner, the commissioner may disallow or limit the additional
2431 reduction.
2432 (6) Notwithstanding Subsection (4), for a policy issued on or after June 1, 2004 and
2433 before June 1, 2006, at the election of a company, on a contract form-by-contract form basis,
2434 the minimum values as specified in Subsections (7), (8), (9), (10), and (12) of any paid-up
2435 annuity, cash surrender, or death benefits available under an annuity contract may be based
2436 upon minimum nonforfeiture amounts as established in Subsection (5).
2437 (7) (a) A paid-up annuity benefit available under a contract shall be such that the
2438 contract's present value on the date annuity payments are to commence is at least equal to the
2439 minimum nonforfeiture amount on that date.
2440 (b) The present value described in Subsection (7)(a) shall be computed using the
2441 mortality table, if any, and the interest rate specified in the contract for determining the
2442 minimum paid-up annuity benefits guaranteed in the contract.
2443 (8) (a) For a contract that provides cash surrender benefits, the cash surrender benefits
2444 available before maturity may not be less than the present value as of the date of surrender of
2445 that portion of the cash surrender value that would be provided under the contract at maturity
2446 arising from considerations paid before the time of cash surrender:
2447 (i) decreased by the amount appropriate to reflect any prior withdrawals from or partial
2448 surrender of the contract;
2449 (ii) decreased by the amount of any indebtedness to the company on the contract,
2450 including interest due and accrued; and
2451 (iii) increased by any existing additional amounts credited by the company to the
2452 contract.
2453 (b) For purposes of this Subsection (8), the present value is to be calculated on the
2454 basis of an interest rate not more than 1% higher than the interest rate specified in the contract
2455 for accumulating the net considerations to determine the maturity value.
2456 (c) In no event shall a cash surrender benefit be less than the minimum nonforfeiture
2457 amount at that time.
2458 (d) The death benefit under a contract described in Subsection (8)(a) shall be at least
2459 equal to the cash surrender benefit.
2460 (9) (a) For a contract that does not provide cash surrender benefits, the present value of
2461 any paid-up annuity benefit available as a nonforfeiture option at any time [
2462 maturity may not be less than the present value of that portion of the maturity value of the
2463 paid-up annuity benefit provided under the contract arising from considerations paid before the
2464 time the contract is surrendered in exchange for, or changed to, a deferred paid-up annuity
2465 increased by any existing additional amounts credited by the company to the contract.
2466 (b) For purposes of Subsection (9)(a), the present value for the period [
2467 the maturity date is to be calculated on the basis of the interest rate specified in the contract for
2468 accumulating the net considerations to determine maturity value.
2469 (c) For a contract that does not provide a death benefit before commencement of any
2470 annuity payments, the present values shall be calculated on the basis of the interest rate and the
2471 mortality table specified in the contract for determining the maturity value of the paid-up
2472 annuity benefit.
2473 (d) In no event shall the present value of a paid-up annuity benefit be less than the
2474 minimum nonforfeiture amount at that time.
2475 (10) (a) For the purpose of determining the benefits calculated under Subsections (8)
2476 and (9), the maturity date shall be considered to be:
2477 (i) in the case of an annuity contract issued on or before May 5, 2002, under which an
2478 election may be made to have an annuity payment commence at an optional maturity date, the
2479 latest date for which an election is permitted by the contract, except that it may not be
2480 considered to be later than the later of:
2481 (A) the anniversary of the contract next following the day on which the annuitant
2482 becomes 70 years [
2483 (B) the tenth anniversary of the contract; or
2484 (ii) in the case of an annuity contract issued on or after May 6, 2002, the latest date
2485 permitted by the contract, except that [
2486 than the later of:
2487 (A) the anniversary of the contract next following the day on which the annuitant
2488 becomes 70 years [
2489 (B) the tenth anniversary of the contract.
2490 (b) In the case of an annuity contract issued on or after May 6, 2002:
2491 (i) for a contract that provides cash surrender benefits, the cash surrender value on or
2492 past the maturity date shall be equal to the amount used to determine the annuity benefit
2493 payments; and
2494 (ii) a surrender charge may not be imposed on or past maturity.
2495 (11) A contract that does not provide cash surrender benefits or does not provide death
2496 benefits at least equal to the minimum nonforfeiture amount before the commencement of any
2497 annuity payments shall include a statement in a prominent place in the contract that these
2498 benefits are not provided.
2499 (12) A paid-up annuity, cash surrender, or death benefit available at any time, other than
2500 on the contract anniversary under a contract with fixed scheduled considerations, shall be
2501 calculated with allowance for the lapse of time and the payment of any scheduled
2502 considerations beyond the beginning of the contract year in which cessation of payment of
2503 considerations under the contract occurs.
2504 (13) (a) For a contract that provides, within the same contract by rider or supplemental
2505 contract provisions, both annuity benefits and life insurance benefits that are in excess of the
2506 greater of cash surrender benefits or a return of the gross considerations with interest, the
2507 minimum nonforfeiture benefits shall:
2508 (i) be equal to the sum of:
2509 (A) the minimum nonforfeiture benefits for the annuity portion; and
2510 (B) the minimum nonforfeiture benefits, if any, for the life insurance portion; and
2511 (ii) computed as if each portion were a separate contract.
2512 (b) (i) Notwithstanding Subsections (7), (8), (9), (10), and (12), additional benefits
2513 payable, as described in Subsection (13)(b)(ii), and consideration for the additional benefits
2514 payable, shall be disregarded in ascertaining, if required by this section:
2515 (A) the minimum nonforfeiture amounts;
2516 (B) paid-up annuity;
2517 (C) cash surrender; and
2518 (D) death benefits.
2519 (ii) For purposes of this Subsection (13), an additional benefit is a benefit payable:
2520 (A) in the event of total and permanent disability;
2521 (B) as reversionary annuity or deferred reversionary annuity benefits; or
2522 (C) as other policy benefits additional to life insurance, endowment, and annuity
2523 benefits.
2524 (iii) The inclusion of the additional benefits described in this Subsection (13) may not
2525 be required in any paid-up benefits, unless the additional benefits separately would require:
2526 (A) minimum nonforfeiture amounts;
2527 (B) paid-up annuity;
2528 (C) cash surrender; and
2529 (D) death benefits.
2530 (14) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
2531 the commissioner may adopt rules necessary to implement this section, including:
2532 (a) ensuring that any additional reduction under Subsection (5)[
2533 with the requirements imposed by Subsection (5)[
2534 (b) providing for adjustments in addition to the adjustments allowed under Subsection
2535 (5)[
2536 (i) a contract that provides substantive participation in an equity index benefit; and
2537 (ii) a contract for which the commissioner determines adjustments are justified.
2538 (15) (a) After this section takes effect, a company may file with the commissioner a
2539 written notice of [
2540 before July 1, 1988.
2541 (b) This section applies to annuity contracts of a company issued on or after the date
2542 the company specifies in the notice.
2543 (c) If a company makes no election under Subsection (15)(a), the operative date of this
2544 section for such company is July 1, 1988.
2545 Section 9. Section 31A-22-501 is amended to read:
2546 31A-22-501. Eligible groups.
2547 A group insurance policy of life insurance or a blanket insurance policy of life
2548 insurance may not be delivered in Utah unless the insured group:
2549 (1) falls within at least one of the classifications under Sections 31A-22-501.1 through
2550 31A-22-509; and
2551 (2) is formed and maintained in good faith for purposes other than obtaining insurance.
2552 Section 10. Section 31A-22-505 is amended to read:
2553 31A-22-505. Association groups.
2554 [
2555
2556
2557 [
2558 [
2559 [
2560 [
2561 [
2562
2563 [
2564 (1) An insurer may issue a group insurance policy for life insurance to an association
2565 group if:
2566 (a) the commissioner authorizes the association group;
2567 (b) the benefits of the group insurance policy are reasonable in relation to the
2568 premiums charged for the policy; and
2569 (c) the association group:
2570 (i) purchases insurance on a group basis on behalf of the association group's members;
2571 (ii) is formed and maintained for a shared substantially common purpose that:
2572 (A) is not related to obtaining insurance; and
2573 (B) is the same profession, trade, or occupation or has some common economic,
2574 representation of interest, or genuine organizational relationship;
2575 (iii) has at least 100 members;
2576 (iv) has been actively in existence for at least five years;
2577 (v) has a constitution and bylaws that require:
2578 (A) the association to hold regular meetings not less than annually to further the
2579 purpose of the association's members; and
2580 (B) members of the association to have voting privileges and representation on any
2581 governing board or committee;
2582 (vi) does not condition membership in the association group on any health
2583 status-related factor;
2584 (vii) makes insurance offered through the association group available exclusively to a
2585 member of the association; and
2586 (viii) only offers insurance through the association group in connection with a member
2587 of the association group.
2588 (2) [
2589 association group may insure members and employees of the association, employees of the
2590 members, one or more of the preceding entities, or all of any classes of these named entities for
2591 the benefit of persons other than the employees' employer, or any officials, representatives,
2592 trustees, or agents of the employer or association.
2593 (3) (a) The [
2594 insurance policy for life insurance that an insurer issues to an association group:
2595 (i) the policyholder from funds contributed by the [
2596 (ii) employer members, from funds contributed by the covered persons; or
2597 (iii) from any combination of Subsections (3)(a)(i) and (ii).
2598 (b) Except as provided under Section 31A-22-512, a policy on which no part of the
2599 premium is contributed by the covered persons, specifically for their insurance, is required to
2600 insure all eligible persons.
2601 (4) (a) An association group that meets the requirements described under Subsection
2602 (1) shall disclose the following to each insured member:
2603 (i) each cost related to joining and maintaining membership in the association;
2604 (ii) that membership fees or dues are in addition to the policy premium;
2605 (iii) that the association group holds the master group insurance policy;
2606 (iv) that the association group and insurer determine the amount of the premium
2607 charged and the terms and conditions of coverage under the group insurance policy; and
2608 (v) that the association group policyholder and insurer may change the premium and
2609 terms and conditions of coverage under the insurance policy:
2610 (A) through agreement; and
2611 (B) without the consent of the individual certificate holder.
2612 (b) If an insurer collects membership fees or dues on behalf of an association, the
2613 insurer shall disclose to each member of the association that the insurer is billing and collecting
2614 membership fees and dues on behalf of the association.
2615 Section 11. Section 31A-22-522 is amended to read:
2616 31A-22-522. Required provision for notice of termination.
2617 (1) [
2618 insurance policy for life insurance coverage [
2619 include a provision that obligates the policyholder to notify each employee or group member:
2620 (a) in writing;
2621 (b) 30 days before the [
2622 (c) (i) that the group insurance policy for life insurance coverage or blanket insurance
2623 policy for life insurance coverage is being terminated; and
2624 (ii) the rights the employee or group member has to convert coverage upon
2625 termination.
2626 (2) For a [
2627 insurance policy for life insurance coverage described in Subsection (1), an insurer shall:
2628 (a) include a statement of a policyholder's obligations under Subsection (1) in the
2629 insurer's monthly notice to the policyholder of premium payments due; and
2630 (b) provide a sample notice to the policyholder at least once a year.
2631 Section 12. Section 31A-22-600 is amended to read:
2632 31A-22-600. Scope of Part 6.
2633 (1) Except where a provision's application is otherwise specifically limited, this part
2634 applies to all:
2635 (a) accident and health insurance contracts, including credit accident and health;
2636 (b) franchise;
2637 (c) group contracts; and
2638 (d) [
2639 rider provide:
2640 [
2641 (i) accident and health insurance benefits; or
2642 (ii) accelerated benefits where the receipt of benefits is contingent on morbidity
2643 requirements.
2644 (2) Nothing in this part applies to or affects:
2645 (a) workers' compensation insurance;
2646 (b) reinsurance; or
2647 (c) accident and health insurance when it is part of or supplemental to liability, steam
2648 boiler, elevator, automobile, or other insurance covering loss of or damage to property,
2649 provided the loss, damage, or expense arises out of a hazard directly related to the other
2650 insurance.
2651 (3) Except as provided in Subsection (1), this part does not apply to or affect a life
2652 insurance or annuity policy including a life insurance policy:
2653 (a) with a rider or supplemental benefit that accelerates the death benefit contingent
2654 upon a mortality risk specifically for one or more of the qualifying events of:
2655 (i) terminal illness;
2656 (ii) medical conditions requiring extraordinary medical intervention; or
2657 (iii) permanent institutional confinement; and
2658 (b) that provides the option of a lump-sum payment for those benefits.
2659 Section 13. Section 31A-22-607 is amended to read:
2660 31A-22-607. Grace period.
2661 (1) (a) An individual or franchise accident and health insurance policy shall contain
2662 one or more clauses providing for a grace period for premium payment only of:
2663 (i) at least 15 days for a weekly or monthly premium policy; and
2664 (ii) 30 days for a policy that is not a weekly or monthly premium policy, for each
2665 premium after the first premium payment.
2666 (b) An insurer may elect to include a grace period that is longer than 15 days for a
2667 weekly or monthly policy.
2668 (c) An individual or franchise accident and health insurance policy is not in force
2669 during a grace period.
2670 (d) If an insurer receives payment before the day on which a grace period expires, the
2671 individual or franchise accident and health insurance policy continues in force with no gap in
2672 coverage.
2673 (e) If an insurer does not receive payment before the day on which a grace period
2674 expires, the individual or franchise accident and health insurance policy [
2675 terminates as of the last date for which the premium is paid in full.
2676 (f) A grace period is not required if the policyholder has requested that the individual
2677 or franchise accident and health insurance policy be discontinued.
2678 (2) (a) A group insurance policy for accident and health insurance or a blanket
2679 insurance policy for accident and health insurance [
2680 least 30 days, unless the policyholder gives written notice of discontinuance before the [
2681
2682 (b) A group insurance policy for accident and health insurance or a blanket insurance
2683 policy for accident and health insurance [
2684 (c) If an insurer does not receive payment before the day on which a grace period
2685 expires, the group insurance policy for accident and health insurance or blanket insurance
2686 policy for accident and health insurance [
2687 on which the grace period is in effect.
2688 (d) A group insurance policy for accident and health insurance or a blanket insurance
2689 policy for accident and health insurance [
2690 premium for the period the [
2691 during a grace period under this Subsection (2).
2692 (3) If an insurer has not guaranteed the insured a right to renew an accident and health
2693 insurance policy, a grace period beyond the expiration or anniversary date may, if provided in
2694 the accident and health insurance policy, be cut off by compliance with the notice provision
2695 under Subsection 31A-21-303(4)(b).
2696 (4) (a) An insurer shall send a written renewal notice to the policyholder:
2697 (i) no sooner than 90 days before, and no later than 14 days before, the day on which an
2698 accident and health insurance policy renews; or
2699 (ii) if the renewal notice includes a change in premium, at least 45 days before the day
2700 on which an accident and health insurance policy renews.
2701 (b) The renewal notice described in Subsection (4)(a) shall clearly state:
2702 (i) the renewal amount;
2703 (ii) how the policyholder may pay the renewal premium, including the day on which
2704 the renewal premium is due; and
2705 (iii) that failure of the policyholder to pay the renewal premium extinguishes the
2706 policyholder's right to renew.
2707 (5) The extinguishment of a policyholder's right to renew for nonpayment of premium
2708 is effective no sooner than 10 days after the day on which the policyholder receives written
2709 notice that the policyholder has failed to pay the premium when due.
2710 Section 14. Section 31A-22-608 is amended to read:
2711 31A-22-608. Reinstatement of individual or franchise accident and health
2712 insurance policies.
2713 (1) Every individual or franchise accident and health insurance policy shall contain a
2714 provision which reads substantially as follows:
2715 "REINSTATEMENT: If any renewal premium is not paid within the time granted the
2716 insured for payment, a subsequent acceptance of premium by the insurer or by any agent duly
2717 authorized by the insurer to accept the premium, without also requiring an application for
2718 reinstatement, shall reinstate the policy. However, if the insurer or agent requires an
2719 application for reinstatement and issues a conditional receipt for the premium tendered, the
2720 policy shall be reinstated upon approval of this application from the insurer or, lacking this
2721 approval, upon the 45th day following the date of the conditional receipt, unless the insurer has
2722 previously notified the insured in writing of its disapproval of the application. The reinstated
2723 policy shall cover only loss resulting from such accidental injury as may be sustained after the
2724 date of reinstatement and loss due to such sickness as may begin more than 10 days after that
2725 date. In all other respects the insured and insurer have the same rights under the reinstated
2726 policy as they had under the policy immediately before the due date of the defaulted premium,
2727 subject to any provisions endorsed on or attached to this policy in connection with the
2728 reinstatement. Any premium accepted in connection with a reinstatement shall be applied to a
2729 period for which premium has not been previously paid, but not to any period more than 60
2730 days prior to the date of reinstatement."
2731 (2) The last sentence of the provision [
2732 omitted from any policy that the insured has the right to continue in force subject to [
2733 policy's terms by the timely payment of premiums until at least age 50, or in the case of a
2734 policy issued after age 44, for at least five years from [
2735 insurer issues the policy.
2736 Section 15. Section 31A-22-612 is amended to read:
2737 31A-22-612. Conversion privileges for insured former spouse.
2738 (1) An accident and health insurance policy, [
2739 insured also provides coverage to the spouse of the insured, may not contain a provision for
2740 termination of coverage of a spouse covered under the policy, except by entry of a valid decree
2741 of divorce, legal separation, or annulment between the parties.
2742 (2) Every policy [
2743 Subsection (1) shall provide that:
2744 (a) upon the entry of the divorce decree the spouse is entitled to have issued an
2745 individual policy of accident and health insurance without evidence of insurability, upon
2746 application to the company and payment of the appropriate premium[
2747 (b) the individual policy described in Subsection (2)(a) shall:
2748 (i) provide the coverage [
2749 terminated coverage[
2750 (ii) consider a probationary or waiting period satisfied to the extent the coverage was in
2751 force under the prior policy.
2752 (3) (a) When [
2753 be terminated because of a divorce, legal separation, or annulment, the insurer shall promptly
2754 provide the spouse written notification of the right to obtain individual coverage as provided in
2755 Subsection (2), the premium amounts required, and the manner, place, and time in which
2756 premiums may be paid.
2757 (b) The premium is determined in accordance with the insurer's table of premium rates
2758 applicable to the age and class of risk of the persons to be covered and to the type and amount
2759 of coverage provided.
2760 (c) If [
2761 30 days after [
2762 Subsection (3), the spouse shall receive individual coverage that commences immediately upon
2763 termination of coverage under the insured's policy.
2764 (4) This section does not apply to:
2765 (a) a blanket insurance policy providing accident and health insurance [
2766
2767 (b) a health benefit plan.
2768 Section 16. Section 31A-22-618.6 is amended to read:
2769 31A-22-618.6. Discontinuance, nonrenewal, or changes to group health benefit
2770 plans.
2771 (1) Except as otherwise provided in this section, a group health benefit plan for a plan
2772 sponsor is renewable and continues in force:
2773 (a) with respect to all eligible employees and dependents; and
2774 (b) at the option of the plan sponsor.
2775 (2) A health benefit plan for a plan sponsor may be discontinued or nonrenewed:
2776 (a) for noncompliance with the insurer's employer contribution requirements;
2777 (b) if there is no longer any enrollee under the group health plan who lives, resides, or
2778 works in:
2779 (i) the service area of the insurer; or
2780 (ii) the area for which the insurer is authorized to do business;
2781 (c) for coverage made available in the small or large employer market only through an
2782 association, if:
2783 (i) the employer's membership in the association ceases; and
2784 (ii) the coverage is terminated uniformly without regard to any health status-related
2785 factor relating to any covered individual; or
2786 (d) for noncompliance with the insurer's minimum employee participation
2787 requirements, except as provided in Subsection (3).
2788 (3) If a small employer no longer employs at least one eligible employee, a carrier may
2789 not discontinue or not renew the health benefit plan until the first renewal date following the
2790 beginning of a new plan year, even if the carrier knows at the beginning of the plan year that
2791 the employer no longer has at least one eligible employee.
2792 (4) (a) A small employer that, after purchasing a health benefit plan in the small group
2793 market, employs on average more than 50 eligible employees on each business day in a
2794 calendar year may continue to renew the health benefit plan purchased in the small group
2795 market.
2796 (b) A large employer that, after purchasing a health benefit plan in the large group
2797 market, employs on average fewer than 51 eligible employees on each business day in a
2798 calendar year may continue to renew the health benefit plan purchased in the large group
2799 market.
2800 (5) A health benefit plan for a plan sponsor may be discontinued if:
2801 (a) a condition described in Subsection (2) exists;
2802 (b) the plan sponsor fails to pay premiums or contributions in accordance with the
2803 terms of the contract;
2804 (c) the plan sponsor:
2805 (i) performs an act or practice that constitutes fraud; or
2806 (ii) makes an intentional misrepresentation of material fact under the terms of the
2807 coverage;
2808 (d) the insurer:
2809 (i) elects to discontinue offering a particular health benefit plan [
2810 issued for delivery in this state; [
2811 (ii) [
2812 employee, [
2813 [
2814 [
2815 least three working days before the [
2816 plan [
2817 employee, and dependent of an employee;
2818 [
2819 purchase all other health benefit plans currently being offered by the insurer in the market or, in
2820 the case of a large employer, any other health benefit plans currently being offered in that
2821 market; and
2822 [
2823 the option of coverage in this section, acts uniformly without regard to the claims experience of
2824 a plan sponsor, any health status-related factor relating to any covered participant or
2825 beneficiary, or any health status-related factor relating to any new participant or beneficiary
2826 who may become eligible for the coverage; or
2827 (e) the insurer:
2828 (i) elects to discontinue all of the insurer's health benefit plans in:
2829 (A) the small employer market;
2830 (B) the large employer market; or
2831 (C) both the small employer and large employer markets; [
2832 (ii) [
2833 employee, [
2834 [
2835 [
2836 state in which an affected insured individual is known to reside and, at least 30 working days
2837 before the [
2838
2839 dependent of an employee;
2840 [
2841 market described in Subsection (5)(e)(i) ; and
2842 [
2843 (6) (a) Except as provided in Subsection (6)(d), an eligible employee may be
2844 discontinued if after issuance of coverage the eligible employee:
2845 (i) engages in an act or practice in connection with the coverage that constitutes fraud;
2846 or
2847 (ii) makes an intentional misrepresentation of material fact in connection with the
2848 coverage.
2849 (b) An eligible employee [
2850 (6)(a) may reenroll:
2851 (i) 12 months after the [
2852 discontinues; and
2853 (ii) if the plan sponsor's coverage is in effect at the time the eligible employee applies
2854 to reenroll.
2855 (c) At the time the eligible employee's coverage [
2856 Subsection (6)(a), the insurer shall notify the eligible employee of the right to reenroll [
2857
2858 (d) An eligible [
2859 Subsection (6) because of a fraud or misrepresentation that relates to health status.
2860 (7) For purposes of this section, a reference to "plan sponsor" includes a reference to
2861 the employer:
2862 (a) with respect to coverage provided to an employer member of the association; and
2863 (b) if the health benefit plan is made available by an insurer in the employer market
2864 only through:
2865 (i) an association;
2866 (ii) a trust; or
2867 (iii) a discretionary group.
2868 (8) An insurer may modify a health benefit plan for a plan sponsor only:
2869 (a) at the time of coverage renewal; and
2870 (b) if the modification is effective uniformly among all plans with that product.
2871 Section 17. Section 31A-22-618.7 is amended to read:
2872 31A-22-618.7. Discontinuance, nonrenewal, and modification for individual
2873 health benefit plans.
2874 (1) (a) Except as otherwise provided in this section, a health benefit plan offered on an
2875 individual basis is renewable and continues in force:
2876 (i) with respect to all enrollees or dependents; and
2877 (ii) at the option of the enrollee.
2878 (b) Subsection (1)(a) applies regardless of:
2879 (i) whether the contract is issued through:
2880 (A) a trust;
2881 (B) an association;
2882 (C) a discretionary group; or
2883 (D) other similar grouping; or
2884 (ii) the situs of delivery of the policy or contract.
2885 (2) An individual health benefit plan may be discontinued or nonrenewed:
2886 (a) if:
2887 (i) there is no longer an enrollee under the individual health benefit plan who lives,
2888 resides, or works in:
2889 (A) the service area of the insurer; or
2890 (B) the area for which the insurer is authorized to do business; and
2891 (ii) coverage is terminated uniformly without regard to any health status-related factor
2892 relating to any covered enrollee; or
2893 (b) for coverage made available through an association, if:
2894 (i) the enrollee's membership in the association ceases; and
2895 (ii) the coverage is terminated uniformly without regard to any health status-related
2896 factor relating to any covered enrollee.
2897 (3) An individual health benefit plan may be discontinued if:
2898 (a) a condition described in Subsection (2) exists;
2899 (b) the enrollee fails to pay premiums or contributions in accordance with the terms of
2900 the health benefit plan, including any timeliness requirements;
2901 (c) the enrollee:
2902 (i) performs an act or practice in connection with the coverage that constitutes fraud; or
2903 (ii) makes an intentional misrepresentation of material fact under the terms of the
2904 coverage;
2905 (d) the insurer:
2906 (i) elects to discontinue offering a particular health benefit plan product delivered or
2907 issued for delivery in this state; and
2908 (ii) (A) provides notice of the discontinuation in writing to each enrollee provided
2909 coverage at least 90 days before the [
2910 discontinues;
2911 (B) provides notice of the discontinuation in writing to the commissioner and, at least
2912 three working days before the [
2913 each affected enrollee;
2914 (C) offers to each covered enrollee on a guaranteed issue basis the option to purchase
2915 all other individual health benefit plans currently being offered by the insurer for individuals in
2916 that market; and
2917 (D) acts uniformly without regard to any health status-related factor of covered
2918 enrollees or dependents of covered enrollees who may become eligible for coverage; or
2919 (e) the insurer:
2920 (i) elects to discontinue all of the insurer's health benefit plans in the individual market;
2921 and
2922 (ii) (A) provides notice of the discontinuation in writing to each enrollee provided
2923 coverage at least 180 days before the [
2924 discontinues;
2925 (B) provides notice of the discontinuation in writing to the commissioner in each state
2926 in which an affected enrollee is known to reside and, at least 30 working days before the [
2927 day on which the insurer sends the notice [
2928 enrollee;
2929 (C) discontinues and nonrenews all health benefit plans the insurer issues or delivers
2930 for issuance in the individual market; and
2931 (D) acts uniformly without regard to any health status-related factor of covered
2932 enrollees or dependents of covered enrollees who may become eligible for coverage.
2933 (4) An insurer may modify an individual health benefit plan only:
2934 (a) at the time of coverage renewal; and
2935 (b) if the modification is effective uniformly among all health benefit plans.
2936 Section 18. Section 31A-22-618.8 is amended to read:
2937 31A-22-618.8. Discontinuance and nonrenewal limitations for health benefit
2938 plans.
2939 (1) Subject to Section 31A-4-115, an insurer that elects to discontinue offering a health
2940 benefit plan under Subsections 31A-22-618.6(5)(e) and 31A-22-618.7(3)(e) is prohibited from
2941 writing new business:
2942 (a) in the market in this state for which the insurer discontinues or does not renew; and
2943 (b) for a period of five years beginning on the [
2944 which the last coverage that is discontinued.
2945 (2) If an insurer is doing business in one established geographic service area of the
2946 state, Sections 31A-22-618.6 and 31A-22-618.7 apply only to the insurer's operations in that
2947 service area.
2948 (3) The commissioner may, by rule or order, define the scope of service area.
2949 Section 19. Section 31A-22-627 is amended to read:
2950 31A-22-627. Coverage of emergency medical services.
2951 (1) A health insurance policy or managed care organization contract:
2952 (a) shall provide[
2953
2954 (b) may not:
2955 (i) require any form of preauthorization for treatment of an emergency medical
2956 condition until after the insured's condition has been stabilized; [
2957 (ii) deny a claim for any covered evaluation, covered diagnostic test, or other covered
2958 treatment considered medically necessary to stabilize the emergency medical condition of an
2959 insured[
2960 (iii) impose any cost-sharing requirement for out-of-network that exceed the
2961 cost-sharing requirement imposed for in-network.
2962 (2) (a) A health insurance policy or managed care organization contract may require
2963 authorization for the continued treatment of an emergency medical condition after the insured's
2964 condition has been stabilized.
2965 (b) If [
2966 does not accept or reject a request for authorization may not deny a claim for any evaluation,
2967 diagnostic testing, or other treatment considered medically necessary that occurred between the
2968 time the request was received and the time the insurer rejected the request for authorization.
2969 (3) For purposes of this section:
2970 (a) "Emergency medical condition" means a medical condition manifesting itself by
2971 acute symptoms of sufficient severity, including severe pain, such that a prudent layperson,
2972 who possesses an average knowledge of medicine and health, would reasonably expect the
2973 absence of immediate medical attention through a hospital emergency department to result in:
2974 (i) placing the insured's health, or with respect to a pregnant woman, the health of the
2975 woman or her unborn child, in serious jeopardy;
2976 (ii) serious impairment to bodily functions; or
2977 (iii) serious dysfunction of any bodily organ or part.
2978 (b) "Hospital emergency department" means that area of a hospital in which emergency
2979 services are provided on a 24-hour-a-day basis.
2980 (c) "Stabilize" means the same as that term is defined in 42 U.S.C. Sec. 1395dd(e)(3).
2981 (4) Nothing in this section may be construed as:
2982 (a) altering the level or type of benefits that are provided under the terms of a contract
2983 or policy; or
2984 (b) restricting a policy or contract from providing enhanced benefits for certain
2985 emergency medical conditions that are identified in the policy or contract.
2986 (5) Notwithstanding Section 31A-2-308, if the commissioner finds an insurer has
2987 violated this section, the commissioner may:
2988 (a) work with the insurer to improve the insurer's compliance with this section; or
2989 (b) impose the following fines:
2990 (i) not more than $5,000; or
2991 (ii) twice the amount of any profit gained from violations of this section.
2992 Section 20. Section 31A-22-654 is amended to read:
2993 31A-22-654. Study of coverage for in vitro fertilization and genetic testing --
2994 Reporting -- Coverage requirements.
2995 (1) As used in this section:
2996 (a) "Qualified condition" means the same as that term is defined in Section 49-20-420.
2997 (b) "Qualified insurer" means an insurer that provides a health benefit plan [
2998 as defined in Section [
2999 December 31 of the preceding reporting year.
3000 (c) "Qualified enrollee" means an enrollee of a qualified insurer who:
3001 (i) has been diagnosed by a physician as having a genetic trait associated with a
3002 qualified condition; and
3003 (ii) intends to get pregnant with a partner who is diagnosed by a physician as having a
3004 genetic trait associated with the same qualified condition as the enrollee.
3005 (2) (a) A qualified insurer shall submit the information described in this Subsection (2)
3006 to the department [
3007 for a plan year beginning:
3008 (i) on or after January 1, 2022, but before December 31, 2022; and
3009 (ii) on or after January 1, 2025, but before December 31, 2025.
3010 (b) A qualified insurer shall study whether providing the coverage for the services
3011 described in Subsections (3)(a) and (b) for qualified enrollees will result in cost savings for the
3012 qualified insurer.
3013 (c) (i) If a qualified insurer determines that providing the coverage described in
3014 Subsection (3) for qualified enrollees will result in cost savings for the qualified insurer, the
3015 qualified insurer shall submit a summary of the results of the study described in Subsection
3016 (2)(b), and:
3017 (A) describe how the qualified insurer intends to provide the coverage described in
3018 Subsection (3); or
3019 (B) submit an explanation of why the insurer will not provide the coverage described in
3020 Subsection (3).
3021 (ii) If a qualified insurer determines that providing the coverage described in
3022 Subsection (3) will not result in cost savings to the qualified insurer, the qualified insurer shall
3023 submit a summary of the results of the study described in Subsection (2)(b).
3024 (d) A qualified insurer shall provide the information required under this Subsection (2)
3025 to the department no later than:
3026 (i) January 1, 2022, for a plan year beginning on or after January 1, 2022, but before
3027 December 31, 2022; and
3028 (ii) January 1, 2025, for a plan year beginning on or after January 1, 2025, but before
3029 December 31, 2025.
3030 (3) A qualified insurer shall consider coverage for:
3031 (a) in vitro fertilization services for a qualified enrollee; and
3032 (b) genetic testing of a qualified enrollee who received in vitro fertilization services
3033 under Subsection (3)(a).
3034 (4) The department shall report the information received under Subsection (2) to the
3035 Health and Human Services Interim Committee on or before:
3036 (a) for information submitted under Subsection (2)(a)(i), November 1, 2022; and
3037 (b) for information submitted under Subsection (2)(a)(ii), November 1, 2025.
3038 Section 21. Section 31A-22-701 is amended to read:
3039 31A-22-701. Groups eligible for group or blanket insurance.
3040 [
3041
3042 [
3043 [
3044
3045 [
3046 insurance may be issued to:
3047 (a) a group:
3048 (i) to which a group life insurance policy may be issued under Section 31A-22-502,
3049 31A-22-503, 31A-22-504, 31A-22-505, 31A-22-506, or 31A-22-507; and
3050 (ii) that is formed and maintained in good faith for a purpose other than obtaining
3051 insurance;
3052 [
3053 [
3054 [
3055 [
3056
3057 [
3058
3059 [
3060
3061
3062 [
3063
3064
3065 [
3066
3067
3068 [
3069 [
3070 (i) authorization is not contrary to the public interest;
3071 (ii) the group is actuarially sound;
3072 (iii) formation of the proposed group may result in economies of scale in acquisition,
3073 administrative, marketing, and brokerage costs;
3074 (iv) the insurance policy, insurance certificate, or other indicia of coverage that will be
3075 offered to the proposed group is substantially equivalent to insurance policies that are
3076 otherwise available to similar groups;
3077 (v) the group would not present hazards of adverse selection;
3078 (vi) the premiums for the insurance policy and any contributions by or on behalf of the
3079 insured persons are reasonable in relation to the benefits provided; and
3080 (vii) the group is formed and maintained in good faith for a purpose other than
3081 obtaining insurance[
3082 (c) a postsecondary educational institution covering students, upon a finding that:
3083 (i) the policy provides standards for financial soundness;
3084 (ii) the policy protects the students covered;
3085 (iii) the policy provides for the establishment of a financially viable alternative to
3086 traditional health care plans;
3087 (iv) authorization is not contrary to the public interest;
3088 (v) the policy would not present hazards of adverse selection; and
3089 (vi) the premiums for the policy and any contributions by or on behalf of the insured
3090 persons are reasonable in relation to the benefits provided.
3091 [
3092 (a) covers a defined class of persons;
3093 (b) may not be offered or underwritten on an individual basis;
3094 (c) shall cover only a group that is:
3095 (i) actuarially sound; and
3096 (ii) formed and maintained in good faith for a purpose other than obtaining insurance;
3097 and
3098 (d) may be issued only to:
3099 (i) a common carrier or an operator, owner, or lessee of a means of transportation, as
3100 policyholder, covering persons who may become passengers as defined by reference to the
3101 person's travel status;
3102 (ii) an employer, as policyholder, covering any group of employees, dependents, or
3103 guests, as defined by reference to specified hazards incident to any activities of the
3104 policyholder;
3105 (iii) an institution of learning, including a school district, a school jurisdictional unit, or
3106 the head, principal, or governing board of a school jurisdictional unit, as policyholder, covering
3107 students, teachers, or employees;
3108 (iv) a religious, charitable, recreational, educational, or civic organization, or branch of
3109 one of those organizations, as policyholder, covering a group of members or participants as
3110 defined by reference to specified hazards incident to the activities sponsored or supervised by
3111 the policyholder;
3112 (v) a sports team, camp, or sponsor of a sports team or camp, as policyholder, covering
3113 members, campers, employees, officials, or supervisors;
3114 (vi) a volunteer fire department, first aid, civil defense, or other similar volunteer
3115 organization, as policyholder, covering a group of members or participants as defined by
3116 reference to specified hazards incident to activities sponsored, supervised, or participated in by
3117 the policyholder;
3118 (vii) a newspaper or other publisher, as policyholder, covering its carriers;
3119 (viii) a labor union, as a policyholder, covering a group of members or participants as
3120 defined by reference to specified hazards incident to the activities or operations sponsored or
3121 supervised by the policyholder;
3122 (ix) an association that has a constitution and bylaws covering a group of members or
3123 participants as defined by reference to specified hazards incident to the activities or operations
3124 sponsored or supervised by the policyholder; or
3125 (x) any other class of risks that, in the judgment of the commissioner, may be properly
3126 eligible for a blanket insurance policy offering accident and health insurance.
3127 [
3128 (a) individual risks;
3129 (b) a class of risks; or
3130 (c) both Subsections [
3131 Section 22. Section 31A-22-716 is amended to read:
3132 31A-22-716. Required provision for notice of termination.
3133 (1) [
3134 blanket insurance policy offering accident and health [
3135
3136 (a) to give [
3137 member 30 days before the day on which the policy terminates; and
3138 (b) to notify each employee or group member of the employee's or group member's
3139 rights to continue coverage upon termination.
3140 (2) (a) An insurer's monthly notice to the policyholder of premium payments due shall
3141 include a statement of the policyholder's obligations as set forth in Subsection (1).
3142 (b) Insurers shall provide a sample notice to the policyholder at least once a year.
3143 Section 23. Section 31A-22-717 is amended to read:
3144 31A-22-717. Provisions pertaining to service members and their families affected
3145 by mobilization into the armed forces.
3146 For [
3147 insurance policy offering accident and health [
3148 (1) may not refuse to reinstate an insured or [
3149 lapsed due to the insured's mobilization into the United States armed forces provided
3150 application is made within 180 days [
3151 from active duty;
3152 (2) shall reinstate an insured in full upon payment of the first premium without the
3153 requirement of a waiting period or exclusion for preexisting conditions or any other
3154 underwriting requirements that were covered previously; and
3155 (3) may not increase the insured's premium in excess of what [
3156 have been increased to in the normal course of time had the insured not been mobilized into the
3157 United States armed forces.
3158 Section 24. Section 31A-22-1404 is amended to read:
3159 31A-22-1404. Rulemaking authority.
3160 The commissioner may adopt rules that may permit or include:
3161 (1) the increase of benefits over time;
3162 (2) standards for full and fair disclosure of the manner, content, and required
3163 disclosures for the sale of long-term care insurance policies;
3164 (3) terms of renewability;
3165 (4) initial and subsequent conditions of eligibility;
3166 (5) nonduplication of coverage provisions;
3167 (6) coverage of dependents;
3168 (7) termination of coverage;
3169 (8) continuation or conversion;
3170 (9) probationary periods;
3171 (10) limitations, exceptions, and reductions of coverage;
3172 (11) preexisting conditions;
3173 (12) elimination and waiting periods;
3174 (13) requirements for replacement;
3175 (14) recurrent conditions;
3176 (15) definition of terms;
3177 (16) loss ratio requirements;
3178 (17) post claim underwriting;
3179 (18) waiver of premium;
3180 (19) independent review of benefit determinations;
3181 [
3182 [
3183 Section 25. Section 31A-22-2002 is amended to read:
3184 31A-22-2002. Definitions.
3185 As used in this part:
3186 (1) "Applicant" means:
3187 (a) when referring to an individual limited long-term care insurance policy, the person
3188 who seeks to contract for benefits; and
3189 (b) when referring to a group limited long-term care insurance policy, the proposed
3190 certificate holder.
3191 (2) "Elimination period" means the length of time between meeting the eligibility for
3192 benefit payment and receiving benefit payments from an insurer.
3193 (3) "Group limited long-term care insurance" means a limited long-term care insurance
3194 policy that is delivered or issued for delivery:
3195 (a) in this state; and
3196 (b) to an eligible group, as described under Subsection 31A-22-701(2).
3197 (4) (a) "Limited long-term care insurance" means an insurance[
3198 endorsement, or rider that is advertised, marketed, offered, or designed to provide coverage:
3199 [
3200 [
3201 [
3202 therapeutic, rehabilitative, maintenance, or personal care services that is provided in a setting
3203 other than an acute care unit of a hospital[
3204 [
3205 Subsection (4)(a) that provides for payment of benefits based on cognitive impairment or the
3206 loss of functional capacity.
3207 [
3208 is offered primarily to provide:
3209 (i) basic Medicare supplement coverage;
3210 (ii) basic hospital expense coverage;
3211 (iii) basic medical-surgical expense coverage;
3212 (iv) hospital confinement indemnity coverage;
3213 (v) major medical expense coverage;
3214 (vi) disability income or related asset-protection coverage;
3215 (vii) accidental only coverage;
3216 (viii) specified disease or specified accident coverage; or
3217 (ix) limited benefit health coverage.
3218 (5) "Preexisting condition" means a condition for which medical advice or treatment is
3219 recommended:
3220 (a) by, or received from, a provider of health care services; and
3221 (b) within six months before the day on which the coverage of an insured person
3222 becomes effective.
3223 (6) "Waiting period" means the time an insured waits before some or all of the
3224 insured's coverage becomes effective.
3225 Section 26. Section 31A-23a-113 is amended to read:
3226 31A-23a-113. License lapse and voluntary surrender.
3227 (1) (a) A license issued under this chapter, including a line of authority, shall lapse if
3228 the licensee fails to:
3229 (i) pay when due a fee under Section 31A-3-103;
3230 (ii) complete continuing education requirements under Section 31A-23a-202 before
3231 submitting the license renewal application;
3232 (iii) submit a completed renewal application as required by Section 31A-23a-104;
3233 (iv) submit additional documentation required to complete the licensing process as
3234 related to a specific license type or line of authority; or
3235 (v) maintain an active license in a licensee's home state if the licensee is a nonresident
3236 licensee.
3237 (b) A license that lapses shall expire effective at midnight on the day on which the
3238 license expires.
3239 [
3240 and line of authority no more than one year after the day on which the license lapses.
3241 (ii) A licensee whose license lapses due to the following may request an action
3242 described in Subsection (1)[
3243 (A) military service;
3244 (B) voluntary service for a period of time designated by the person for whom the
3245 licensee provides voluntary service; or
3246 (C) some other extenuating circumstances, [
3247 disability.
3248 (iii) A licensee described in Subsection (1)[
3249 (A) reinstatement of the license and line of authority no later than one year after the
3250 day on which the license lapses; and
3251 (B) waiver of any of the following imposed for failure to comply with renewal
3252 procedures:
3253 (I) an examination requirement;
3254 (II) reinstatement fees set under Section 31A-3-103;
3255 (III) continuing education requirements; or
3256 (IV) other sanction imposed for failure to comply with renewal procedures.
3257 (2) If a license or line of authority issued under this chapter is voluntarily surrendered,
3258 the license or line of authority may be reinstated:
3259 (a) during the license period in which the license or line of authority is voluntarily
3260 surrendered; and
3261 (b) no later than one year after the day on which the license or line of authority is
3262 voluntarily surrendered.
3263 Section 27. Section 31A-23a-201 is amended to read:
3264 31A-23a-201. Exceptions to producer licensing.
3265 (1) The commissioner may not require a license as an insurance producer of:
3266 (a) an officer, director, or employee of an insurer or of an insurance producer if:
3267 (i) the officer, director, or employee does not receive any commission on a policy
3268 written or sold to insure risks residing, located, or to be performed in this state; and
3269 (ii) (A) the officer's, director's, or employee's activities are:
3270 (I) executive, administrative, managerial, clerical, or a combination of these activities;
3271 and
3272 (II) only indirectly related to the sale, solicitation, or negotiation of insurance;
3273 (B) the officer's, director's, or employee's function relates to:
3274 (I) underwriting;
3275 (II) loss control;
3276 (III) inspection; or
3277 (IV) the processing, adjusting, investigating or settling of a claim on a contract of
3278 insurance; or
3279 (C) (I) the officer, director, or employee is acting in the capacity of a special agent or
3280 agency supervisor assisting an insurance producer;
3281 (II) the officer's, director's, or employee's activities are limited to providing technical
3282 advice and assistance to a licensed insurance producer; and
3283 (III) the officer's, director's, or employee's activities do not include the sale, solicitation,
3284 or negotiation of insurance;
3285 (b) a person who:
3286 (i) is paid no commission for the services described in Subsection (1)(b)(ii); and
3287 (ii) secures and furnishes information for the purpose of:
3288 (A) group life insurance;
3289 (B) group property and casualty insurance;
3290 (C) group annuities;
3291 (D) a group insurance policy for accident and health insurance or a blanket insurance
3292 policy for accident and health insurance;
3293 (E) enrolling individuals under plans;
3294 (F) issuing certificates under plans; or
3295 (G) otherwise assisting in administering plans;
3296 (c) a person who:
3297 (i) is paid no commission for the services described in Subsection (1)(c)(ii); and
3298 (ii) performs administrative services related to mass marketed property and casualty
3299 insurance;
3300 (d) (i) any of the following if the conditions of Subsection (1)(d)(ii) are met:
3301 (A) an employer or association; or
3302 (B) an officer, director, employee, or trustee of an employee trust plan;
3303 (ii) a person listed in Subsection (1)(d)(i):
3304 (A) to the extent that the employer, officer, employee, director, or trustee is engaged in
3305 the administration or operation of a program of employee benefits for:
3306 (I) the employer's or association's own employees; or
3307 (II) the employees of a subsidiary or affiliate of an employer or association;
3308 (B) the program involves the use of insurance issued by an insurer; and
3309 (C) the employer, association, officer, director, employee, or trustee is not in any
3310 manner compensated, directly or indirectly, by the company issuing the contract;
3311 (e) an employee of an insurer or organization employed by an insurer who:
3312 (i) is engaging in:
3313 (A) the inspection, rating, or classification of risks; or
3314 (B) the supervision of the training of insurance producers; and
3315 (ii) is not individually engaged in the sale, solicitation, or negotiation of insurance;
3316 (f) a person whose activities in this state are limited to advertising:
3317 (i) without the intent to solicit insurance in this state;
3318 (ii) through communications in mass media including:
3319 (A) a printed publication; or
3320 (B) a form of electronic mass media;
3321 (iii) that is distributed to residents outside of the state; and
3322 (iv) if the person does not sell, solicit, or negotiate insurance that would insure risks
3323 residing, located, or to be performed in this state;
3324 (g) a person who:
3325 (i) is not a resident of this state;
3326 (ii) sells, solicits, or negotiates a contract of insurance:
3327 (A) for commercial property and casualty risks to an insured with risks located in more
3328 than one state insured under that contract; and
3329 (B) insures risks located in a state in which the person is licensed as provided in
3330 Subsection (1)(g)(iii); and
3331 (iii) is licensed as an insurance producer to sell, solicit, or negotiate that insurance in
3332 the state where the insured maintains its principal place of business; or
3333 (h) if the employee does not sell, solicit, or receive a commission for a contract of
3334 insurance, a salaried full-time employee who counsels or advises the employee's employer
3335 relating to the insurance interests of:
3336 (i) the employer; or
3337 (ii) a subsidiary or business affiliate of the employer.
3338 (2) The commissioner may by rule exempt a class of persons from the license
3339 requirement of Subsection 31A-23a-103(1) if:
3340 (a) the functions performed by the class of persons does not require:
3341 (i) special competence;
3342 (ii) special trustworthiness; or
3343 (iii) regulatory surveillance made possible by licensing; or
3344 (b) other existing safeguards make regulation unnecessary.
3345 Section 28. Section 31A-23a-406 is amended to read:
3346 31A-23a-406. Title insurance producer's business.
3347 (1) An individual title insurance producer or agency title insurance producer may do
3348 escrow involving real property transactions if all of the following exist:
3349 (a) the individual title insurance producer or agency title insurance producer is licensed
3350 with:
3351 (i) the title line of authority; and
3352 (ii) the escrow subline of authority;
3353 (b) the individual title insurance producer or agency title insurance producer is
3354 appointed by a title insurer authorized to do business in the state;
3355 (c) except as provided in Subsection (3), the individual title insurance producer or
3356 agency title insurance producer issues one or more of the following as part of the transaction:
3357 (i) an owner's policy of title insurance;
3358 (ii) a lender's policy of title insurance; or
3359 (iii) if the transaction does not involve a transfer of ownership, an endorsement to an
3360 owner's or a lender's policy of title insurance;
3361 (d) money deposited with the individual title insurance producer or agency title
3362 insurance producer in connection with any escrow[
3363 [
3364 7-1-103, that:
3365 (A) has an office in this state, if the individual title insurance producer or agency title
3366 insurance producer depositing the money is a resident licensee; and
3367 (B) is authorized by the depository institution's primary regulator to engage in trust
3368 business, as defined in Section 7-5-1, in this state; and
3369 [
3370 not related to real estate transactions;
3371 [
3372 insurance producer in connection with any escrow is the property of the one or more persons
3373 entitled to the money under the provisions of the escrow; and
3374 [
3375 insurance producer in connection with an escrow is segregated escrow by escrow in the records
3376 of the individual title insurance producer or agency title insurance producer;
3377 [
3378 any person in accordance with the conditions of the escrow;
3379 [
3380 title insurance producer to hold:
3381 (i) construction money; or
3382 (ii) money held for exchange under Section 1031, Internal Revenue Code; and
3383 [
3384 maintain a physical office in Utah staffed by a person with an escrow subline of authority who
3385 processes the escrow.
3386 (2) Notwithstanding Subsection (1), an individual title insurance producer or agency
3387 title insurance producer may engage in the escrow business if:
3388 (a) the escrow involves:
3389 (i) a mobile home;
3390 (ii) a grazing right;
3391 (iii) a water right; or
3392 (iv) other personal property authorized by the commissioner; and
3393 (b) the individual title insurance producer or agency title insurance producer complies
3394 with this section except for Subsection (1)(c).
3395 (3) (a) Subsection (1)(c) does not apply if the transaction is for the transfer of real
3396 property from the School and Institutional Trust Lands Administration.
3397 (b) This subsection does not prohibit an individual title insurance producer or agency
3398 title insurance producer from issuing a policy described in Subsection (1)(c) as part of a
3399 transaction described in Subsection (3)(a).
3400 (4) Money held in escrow:
3401 (a) is not subject to any debts of the individual title insurance producer or agency title
3402 insurance producer;
3403 (b) may only be used to fulfill the terms of the individual escrow under which the
3404 money is accepted; and
3405 (c) may not be used until the conditions of the escrow are met.
3406 (5) Assets or property other than escrow money received by an individual title
3407 insurance producer or agency title insurance producer in accordance with an escrow shall be
3408 maintained in a manner that will:
3409 (a) reasonably preserve and protect the asset or property from loss, theft, or damages;
3410 and
3411 (b) otherwise comply with the general duties and responsibilities of a fiduciary or
3412 bailee.
3413 (6) (a) A check from the trust account described in Subsection (1)(d) may not be
3414 drawn, executed, or dated, or money otherwise disbursed unless the segregated escrow account
3415 from which money is to be disbursed contains a sufficient credit balance consisting of collected
3416 and cleared money at the time the check is drawn, executed, or dated, or money is otherwise
3417 disbursed.
3418 (b) As used in this Subsection (6), money is considered to be "collected and cleared,"
3419 and may be disbursed as follows:
3420 (i) cash may be disbursed on the same day the cash is deposited;
3421 (ii) a wire transfer may be disbursed on the same day the wire transfer is deposited; and
3422 (iii) the proceeds of one or more of the following financial instruments may be
3423 disbursed on the same day the financial instruments are deposited if received from a single
3424 party to the real estate transaction and if the aggregate of the financial instruments for the real
3425 estate transaction is less than $10,000:
3426 (A) a cashier's check, certified check, or official check that is drawn on an existing
3427 account at a federally insured financial institution;
3428 (B) a check drawn on the trust account of a principal broker or associate broker
3429 licensed under Title 61, Chapter 2f, Real Estate Licensing and Practices Act, if the individual
3430 title insurance producer or agency title insurance producer has reasonable and prudent grounds
3431 to believe sufficient money will be available from the trust account on which the check is
3432 drawn at the time of disbursement of proceeds from the individual title insurance producer or
3433 agency title insurance producer's escrow account;
3434 (C) a personal check not to exceed $500 per closing; or
3435 (D) a check drawn on the escrow account of another individual title insurance producer
3436 or agency title insurance producer, if the individual title insurance producer or agency title
3437 insurance producer in the escrow transaction has reasonable and prudent grounds to believe
3438 that sufficient money will be available for withdrawal from the account upon which the check
3439 is drawn at the time of disbursement of money from the escrow account of the individual title
3440 insurance producer or agency title insurance producer in the escrow transaction.
3441 (c) A check or deposit not described in Subsection (6)(b) may be disbursed:
3442 (i) within the time limits provided under the Expedited Funds Availability Act, 12
3443 U.S.C. Sec. 4001 et seq., as amended, and related regulations of the Federal Reserve System; or
3444 (ii) upon notification from the financial institution to which the money has been
3445 deposited that final settlement has occurred on the deposited financial instrument.
3446 (7) An individual title insurance producer or agency title insurance producer shall
3447 maintain a record of a receipt or disbursement of escrow money.
3448 (8) An individual title insurance producer or agency title insurance producer shall
3449 comply with:
3450 (a) Section 31A-23a-409;
3451 (b) Title 46, Chapter 1, Notaries Public Reform Act; and
3452 (c) any rules adopted by the Title and Escrow Commission, subject to Section
3453 31A-2-404, that govern escrows.
3454 (9) If an individual title insurance producer or agency title insurance producer conducts
3455 a search for real estate located in the state, the individual title insurance producer or agency
3456 title insurance producer shall conduct a reasonable search of the public records.
3457 Section 29. Section 31A-23a-409 is amended to read:
3458 31A-23a-409. Trust obligation for money collected.
3459 (1) (a) Subject to Subsection (7), a licensee is a trustee for money that is paid to,
3460 received by, or collected by a licensee for forwarding to insurers or to insureds.
3461 (b) (i) Except as provided in Subsection (1)(b)(ii), a licensee may not commingle trust
3462 funds with:
3463 (A) the licensee's own money; or
3464 (B) money held in any other capacity.
3465 (ii) This Subsection (1)(b) does not apply to:
3466 (A) amounts necessary to pay bank charges; and
3467 (B) money paid by insureds and belonging in part to the licensee as a fee or
3468 commission.
3469 (c) Except as provided under Subsection (4), a licensee owes to insureds and insurers
3470 the fiduciary duties of a trustee with respect to money to be forwarded to insurers or insureds
3471 through the licensee.
3472 (d) (i) Unless money is sent to the appropriate payee by the close of the next business
3473 day after their receipt, the licensee shall deposit them in an account authorized under
3474 Subsection (2).
3475 (ii) Money deposited under this Subsection (1)(d) shall remain in an account
3476 authorized under Subsection (2) until sent to the appropriate payee.
3477 (2) Money required to be deposited under Subsection (1) shall be deposited:
3478 (a) in a federally insured trust account in a depository institution, as defined in Section
3479 7-1-103, which:
3480 (i) has an office in this state, if the licensee depositing the money is a resident licensee;
3481 (ii) has federal deposit insurance; and
3482 (iii) is authorized by its primary regulator to engage in the trust business, as defined by
3483 Section 7-5-1, in this state; or
3484 (b) in some other account, [
3485 (i) the commissioner approves by rule or order[
3486 (ii) provides safety comparable to [
3487 described in Subsection (2)(a).
3488 (3) It is not a violation of Subsection (2)(a) if the amounts in the accounts exceed the
3489 amount of the federal insurance on the accounts.
3490 (4) A trust account into which money is deposited may be interest bearing. The
3491 interest accrued on the account may be paid to the licensee, so long as the licensee otherwise
3492 complies with this section and with the contract with the insurer.
3493 (5) A depository institution or other organization holding trust funds under this section
3494 may not offset or impound trust account funds against debts and obligations incurred by the
3495 licensee.
3496 (6) A licensee who, not being lawfully entitled to do so, diverts or appropriates any
3497 portion of the money held under Subsection (1) to the licensee's own use, is guilty of theft
3498 under Title 76, Chapter 6, Part 4, Theft. Section 76-6-412 applies in determining the
3499 classification of the offense. Sanctions under Section 31A-2-308 also apply.
3500 (7) A nonresident licensee:
3501 (a) shall comply with Subsection (1)(a) by complying with the trust account
3502 requirements of the nonresident licensee's home state; and
3503 (b) is not required to comply with the other provisions of this section.
3504 Section 30. Section 31A-26-102 is amended to read:
3505 31A-26-102. Definitions.
3506 As used in this chapter, unless expressly provided otherwise:
3507 (1) "Company adjuster" means a person employed by an insurer[
3508
3509 the [
3510 (2) "Designated home state" means the state or territory of the United States or the
3511 District of Columbia:
3512 (a) in which an insurance adjuster does not maintain the adjuster's principal:
3513 (i) place of residence; or
3514 (ii) place of business;
3515 (b) if the resident state, territory, or District of Columbia of the adjuster does not
3516 license adjusters for the line of authority sought, the adjuster has qualified for the license as if
3517 the person were a resident in the state, territory, or District of Columbia described in
3518 Subsection (2)(a), including an applicable:
3519 (i) examination requirement;
3520 (ii) fingerprint background check requirement; and
3521 (iii) continuing education requirement; and
3522 (c) that the adjuster has designated [
3523 insurance adjuster's designated home state.
3524 (3) "Home state" means:
3525 (a) a state or territory of the United States or the District of Columbia in which an
3526 insurance adjuster:
3527 (i) maintains the adjuster's principal:
3528 (A) place of residence; or
3529 (B) place of business; and
3530 (ii) is licensed to act as a resident adjuster; or
3531 (b) if the resident state, territory, or the District of Columbia described in Subsection
3532 (3)(a) does not license adjusters for the line of authority sought, a state, territory, or the District
3533 of Columbia:
3534 (i) in which the adjuster is licensed;
3535 (ii) in which the adjuster is in good standing; and
3536 (iii) that the adjuster has designated as the adjuster's designated home state.
3537 (4) "Independent adjuster" means an insurance adjuster required to be licensed under
3538 Section 31A-26-201, who engages in insurance adjusting as a representative of one or more
3539 insurers.
3540 (5) "Insurance adjusting" or "adjusting" means directing or conducting the
3541 investigation, negotiation, or settlement of a claim under an insurance policy, on behalf of an
3542 insurer, policyholder, or a claimant under an insurance policy.
3543 (6) (a) "Organization" means a person other than a natural person[
3544 (b) "Organization" includes a sole proprietorship by which a natural person does
3545 business under an assumed name.
3546 (7) "Portable electronics insurance" [
3547 Section 31A-22-1802.
3548 (8) "Public adjuster" means a person required to be licensed under Section
3549 31A-26-201, who engages in insurance adjusting as a representative of insureds and claimants
3550 under insurance policies.
3551 Section 31. Section 31A-28-103 is amended to read:
3552 31A-28-103. Coverage and limitations.
3553 (1) This part provides coverage for a policy or contract specified in Subsections (6) and
3554 (7) to a person who is:
3555 (a) except for a nonresident certificate holder under a group policy or contract, a
3556 beneficiary, assignee, or payee of a person covered by Subsection (1)(b), including a health
3557 care provider rendering services covered under an accident and health insurance policy or
3558 certificate, regardless of where that person resides; or
3559 (b) an owner of or a certificate holder or enrollee under a policy or contract, other than
3560 an unallocated annuity contract or structured settlement annuity, if the owner, enrollee, or
3561 certificate holder is:
3562 (i) a resident of Utah; or
3563 (ii) not a resident of Utah, but only if:
3564 (A) the member insurer that issued the policy or contract is domiciled in this state;
3565 (B) the state in which the person resides has an association similar to the association
3566 created by this part; and
3567 (C) the person is not eligible for coverage by an association in any other state because
3568 the insurer was not licensed in the other states at the time specified in the other states' guaranty
3569 association's laws.
3570 (2) For an unallocated annuity contract specified in Subsections (6) and (7):
3571 (a) Subsection (1) does not apply; and
3572 (b) except as provided in Subsections (4) and (5), this part provides coverage for the
3573 unallocated annuity contract specified in Subsection (2) to a person who is:
3574 (i) the owner of the unallocated annuity contract if the contract is issued to or in
3575 connection with a specific benefit plan whose plan sponsor has its principal place of business
3576 in this state; or
3577 (ii) an owner of an unallocated annuity contract issued to or in connection with a
3578 government lottery if the owner is a resident.
3579 (3) For a structured settlement annuity specified in Subsections (6) and (7):
3580 (a) Subsection (1) does not apply; and
3581 (b) except as provided in Subsections (4) and (5), this part provides coverage for the
3582 structured settlement annuity specified in Subsections (6) and (7) to a person who is a payee
3583 under a structured settlement annuity, or beneficiary of a payee if the payee is deceased, if the
3584 payee:
3585 (i) is a resident, regardless of where the contract owner resides;
3586 (ii) is not a resident, but only if one or more of the contract owners of the structured
3587 settlement annuity is a resident, and the payee, beneficiary, or contract owner is not eligible for
3588 coverage by the association of the state in which the payee or contract owner resides; or
3589 (iii) is not a resident, but only if:
3590 (A) no contract owner of the structured settlement annuity is a resident;
3591 (B) the insurer that issued the structured settlement annuity is domiciled in this state;
3592 (C) the state in which the contract owner resides has an association similar to the
3593 association created by this part; and
3594 (D) the payee, beneficiary, or the contract owner is not eligible for coverage by the
3595 association of the state in which the payee or contract owner resides.
3596 (4) This part may not provide coverage for a policy or contract specified in Subsections
3597 (6) and (7) to a person who:
3598 (a) is a payee or beneficiary of a contract owner resident of this state, if the payee or
3599 beneficiary is afforded any coverage by the association of another state;
3600 (b) is covered under Subsection (2), if any coverage is provided to the person by the
3601 association of another state; or
3602 (c) acquires rights to receive payments through a structured settlement factoring
3603 transaction, regardless of whether the transaction occurred before or after 26 U.S.C. Sec.
3604 5891(c)(3)(A) became effective.
3605 (5) (a) This part provides coverage for a policy or contract specified in Subsections (6)
3606 and (7) to a person who is a resident of this state and, in special circumstances, to a
3607 nonresident.
3608 (b) To avoid duplicate coverage, if a person who would otherwise receive coverage
3609 under this part is provided coverage under the laws of any other state, the person may not be
3610 provided coverage under this part.
3611 (c) In determining the application of this Subsection (5) when a person could be
3612 covered by the association of more than one state, whether as an owner, payee, enrollee,
3613 beneficiary, or assignee, this part shall be construed in conjunction with other state laws to
3614 result in coverage by only one association.
3615 (6) (a) Except as limited by this part, this part provides coverage to a person specified
3616 in Subsections (1) through (5) for:
3617 (i) a direct nongroup life insurance, direct accident and health insurance, or direct
3618 annuity policy or contract;
3619 (ii) a supplemental contract to a policy or contract described in Subsection (6)(a)(i);
3620 (iii) a certificate under a direct group policy or contract; and
3621 (iv) an unallocated annuity contract issued by a member insurer.
3622 (b) For purposes of Subsection (6)(a), an annuity contract and a certificate under a
3623 group annuity contract includes:
3624 (i) a guaranteed investment contract;
3625 (ii) a deposit administration contract;
3626 (iii) an unallocated funding agreement;
3627 (iv) an allocated funding agreement;
3628 (v) a structured settlement annuity;
3629 (vi) an annuity issued to or in connection with a government lottery; and
3630 (vii) an immediate or deferred annuity contract.
3631 (7) This part does not provide coverage for:
3632 (a) a portion of a policy or contract:
3633 (i) not guaranteed by the member insurer; or
3634 (ii) under which the risk is borne by the policy or contract owner;
3635 (b) a policy or contract of reinsurance, unless:
3636 (i) an assumption certificate is issued before the coverage date;
3637 (ii) the assumption certificate required by Subsection (7)(b)(i) is in effect pursuant to
3638 the reinsurance policy or contract; and
3639 (iii) the reinsurance contract is approved by the appropriate regulatory authorities;
3640 (c) except as provided in Subsection (11)(e), a portion of a policy or contract to the
3641 extent that the rate of interest on which the policy or contract is based, or the interest rate,
3642 crediting rate, or similar factor determined by use of an index or other external reference stated
3643 in the policy or contract employed in calculating returns or changes in value exceeds:
3644 (i) a rate of interest determined by subtracting two percentage points from Moody's
3645 Corporate Bond Yield Average averaged:
3646 (A) over the period of four years before the coverage date with respect to the policy or
3647 contract; or
3648 (B) for the corresponding lesser period if the policy or contract was issued less than
3649 four years before the association became obligated; or
3650 (ii) a rate of interest determined by subtracting three percentage points from Moody's
3651 Corporate Bond Yield Average as most recently available as determined on or after the earlier
3652 of:
3653 (A) the day on which the member insurer becomes an impaired insurer; or
3654 (B) the day on which the member insurer becomes an insolvent insurer;
3655 (d) a portion of a policy or contract issued to a plan or program of an employer,
3656 association, or other person to provide life, accident and health, or annuity benefits to its
3657 employees, members, or others, to the extent that the plan or program is self-funded or
3658 uninsured, including benefits payable by an employer, association, or other person under:
3659 (i) a multiple employer welfare arrangement, as that term is defined in 29 U.S.C. Sec.
3660 1002;
3661 (ii) a minimum premium group insurance plan;
3662 (iii) a stop-loss group insurance plan; or
3663 (iv) an administrative services only contract;
3664 (e) a portion of a policy or contract to the extent that it provides:
3665 (i) a dividend;
3666 (ii) an experience rating credit;
3667 (iii) voting rights; or
3668 (iv) payment of a fee or allowance to any person, including the policy or contract
3669 owner, in connection with the service to or administration of the policy or contract;
3670 (f) an unallocated annuity contract issued to or in connection with a benefit plan
3671 protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the
3672 federal Pension Benefit Guaranty Corporation has yet become liable to make any payment with
3673 respect to the benefit plan;
3674 (g) a portion of an unallocated annuity contract that is not issued to or in connection
3675 with:
3676 (i) a specific benefit plan of:
3677 (A) employees;
3678 (B) a union; or
3679 (C) an association of natural persons; or
3680 (ii) a government lottery;
3681 (h) a portion of a policy or contract to the extent that the assessment required by
3682 Section 31A-28-109 that applies to the policy or contract is preempted by federal or state law;
3683 (i) an obligation that does not arise under the express written terms of the policy or
3684 contract issued by a member insurer to the enrollee, certificate holder, contract owner, or policy
3685 owner, including:
3686 (i) a claim based on marketing materials;
3687 (ii) a claim based on a side letter, rider, or other document that is issued by the member
3688 insurer without meeting applicable policy or contract form filing or approval requirements;
3689 (iii) a misrepresentation regarding a policy or contract benefit;
3690 (iv) an extra-contractual claim;
3691 (v) a claim for penalties; or
3692 (vi) a claim for consequential or incidental damages;
3693 (j) a contract that establishes the member insurer's obligations to provide a book value
3694 accounting guaranty for defined contribution benefit plan participants by reference to a
3695 portfolio of assets that is owned by a person that is:
3696 (i) (A) the benefit plan; or
3697 (B) the benefit plan's trustee; and
3698 (ii) not an affiliate of the member insurer;
3699 (k) a portion of a policy or contract to the extent it provides for interest or other
3700 changes in value:
3701 (i) to be determined by the use of an index or other external reference stated in the
3702 policy or contract; and
3703 (ii) as of the date the member insurer becomes an impaired or insolvent insurer,
3704 whichever occurs earlier:
3705 (A) that have not been credited to the policy or contract; or
3706 (B) as to which the policy or contract owner's rights are subject to forfeiture;
3707 (l) a policy or contract providing hospital, medical, prescription drug, or other health
3708 care benefit pursuant to:
3709 (i) Part C or D of Title XVIII of the Social Security Act, 42 U.S.C. 1395 et seq.; [
3710 (ii) Title XIX of the Social Security Act, 42 U.S.C. Sec. 1396 et seq.; or
3711 (iii) Title XXI of the Social Security Act, 42 U.S.C. Sec. 1397aa et seq.; or
3712 (m) a structured settlement annuity benefit to which a payee or beneficiary has
3713 transferred the payee or beneficiary's rights in a structured settlement factoring transaction,
3714 regardless of whether the transaction occurred before or after 26 U.S.C. Sec. 5891(c)(3)(A)
3715 became effective.
3716 (8) The benefits for which the association may become liable may not exceed the lesser
3717 of:
3718 (a) the contractual obligations for which the member insurer is liable or would have
3719 been liable if it were not an impaired or insolvent insurer;
3720 (b) with respect to one life, regardless of the number of policies or contracts:
3721 (i) for a life insurance policy:
3722 (A) if the insured died before the coverage date, $500,000 of the death benefit;
3723 (B) if the insurer received a valid request for cash surrender before the coverage date
3724 but has not paid the cash surrender value before the coverage date, $200,000 of cash surrender
3725 benefits; or
3726 (C) if neither Subsection (8)(b)(i)(A) nor (B) applies, the covered portion of each
3727 benefit provided under the policy;
3728 (ii) for an annuity contract, the covered portion of each benefit provided under the
3729 contract; and
3730 (iii) for an accident and health insurance policy or contract:
3731 (A) classified as a health benefit plan, $500,000; or
3732 (B) not classified as a health benefit plan, the covered portion of each benefit provided
3733 under the policy;
3734 (c) for an individual participating in a governmental retirement plan established under
3735 Section 401, 403(b), or 457, Internal Revenue Code, covered by an unallocated annuity
3736 contract, or a beneficiary of that individual if the individual is deceased, $250,000 in present
3737 value of annuity benefits, in the aggregate, including:
3738 (i) net cash surrender; and
3739 (ii) net cash withdrawal values; or
3740 (d) for a payee of a structured settlement annuity or a beneficiary of the payee if the
3741 payee is deceased, the limits set forth in Subsection (8)(b).
3742 (9) Notwithstanding Subsection (8), the association may not be obligated to cover more
3743 than:
3744 (a) an aggregate of $500,000 in benefits for any one life under:
3745 (i) Subsection (8)(b)(i)(A);
3746 (ii) Subsection (8)(b)(i)(B);
3747 (iii) Subsection (8)(b)(ii); and
3748 (iv) Subsection (8)(b)(iii)(B);
3749 (b) $5,000,000 in benefits for one owner of multiple nongroup policies of life
3750 insurance:
3751 (i) whether the policy or contract owner is an individual, firm, corporation, or other
3752 person;
3753 (ii) whether the persons insured are officers, managers, employees, or other persons;
3754 and
3755 (iii) regardless of the number of policies and contracts held by the owner; and
3756 (c) $5,000,000 in benefits, regardless of the number of contracts held by the contract
3757 owner or plan sponsor, for:
3758 (i) one contract owner provided coverage under Subsection (2)(b)(ii); or
3759 (ii) one plan sponsor whose plans own, directly or in trust, one or more unallocated
3760 annuity contracts not included in Subsection (8)(b)(ii).
3761 (10) (a) Notwithstanding Subsection (9)(c) and except as provided in Subsection
3762 (10)(b), the association shall provide coverage if one or more unallocated annuity contracts are:
3763 (i) covered contracts under this part;
3764 (ii) owned by a trust or other entity for the benefit of two or more plan sponsors; and
3765 (iii) the largest interest in the trust or entity owning the contract or contracts is held by
3766 a plan sponsor whose principal place of business is in the state.
3767 (b) The association may not be obligated to cover more than $5,000,000 in benefits
3768 with respect to the unallocated contracts described in Subsection (10)(a).
3769 (11) (a) The limitations set forth in Subsections (8) and (9) are limitations on the
3770 benefits for which the association is obligated before taking into account:
3771 (i) the association's subrogation and assignment rights; or
3772 (ii) the extent to which those benefits could be provided out of the assets of the
3773 impaired or insolvent insurer attributable to covered policies.
3774 (b) The costs of the association's obligations under this part may be met by the use of
3775 assets:
3776 (i) attributable to covered policies, as described in Subsection 31A-28-114(3)(c); or
3777 (ii) reimbursed to the association pursuant to the association's subrogation and
3778 assignment rights.
3779 (c) Benefits provided by a long-term care rider to a life insurance policy or annuity
3780 contract shall be considered the same type of benefits as the base life insurance policy or
3781 annuity contract to which the long-term care rider relates.
3782 (d) In performing [
3783 31A-28-108, the association may not be required to guarantee, assume, reinsure, reissue,
3784 perform, or cause to be guaranteed, assumed, reinsured, reissued, or performed a contractual
3785 obligation of the insolvent or impaired insurer under a covered policy or contract that does not
3786 materially affect the economic values or economic benefits of the covered policy or contract.
3787 (e) The exclusion from coverage described in Subsection (7)(c) does not apply to any
3788 portion of a policy or contract, including a rider, that provides long-term care or any other
3789 accident and health insurance benefit.
3790 Section 32. Section 31A-35-404 is amended to read:
3791 31A-35-404. Minimum financial requirements for bail bond agency license.
3792 (1) (a) A bail bond agency that pledges the assets of a letter of credit from a Utah
3793 depository institution in connection with a judicial proceeding shall maintain an irrevocable
3794 letter of credit with a minimum face value of $300,000 assigned to the state from a Utah
3795 depository institution.
3796 (b) Notwithstanding Subsection (1)(a), a bail bond agency described in Subsection
3797 (1)(a) that is licensed under this chapter [
3798 an irrevocable letter of credit with a minimum face value of $250,000 assigned to the state
3799 from a Utah depository institution.
3800 (2) (a) A bail bond agency that pledges personal or real property, or both, as security
3801 for a bail bond in connection with a judicial proceeding shall maintain[
3802 financial statement for the current year:
3803 [
3804 [
3805 (A) $300,000, at least $100,000 of which is in liquid assets; or
3806 (B) if the bail bond agency is licensed under this chapter on or before December 31,
3807 1999, $250,000, at least $50,000 of which is in liquid assets.
3808 [
3809
3810 [
3811 [
3812
3813 [
3814
3815 [
3816
3817 [
3818
3819 [
3820
3821
3822 [
3823
3824
3825 (b) For purposes of this Subsection (2), only real or personal property located in Utah
3826 may be included in the net worth of the bail bond agency.
3827 (3) A bail bond agency shall maintain a qualifying power of attorney issued by a surety
3828 insurer if:
3829 (a) the bail bond agency is the agent of the surety insurer; and
3830 (b) the surety insurer:
3831 (i) sells bail bonds;
3832 (ii) is in good standing in its state of domicile; and
3833 (iii) is granted a certificate to write bail bonds in Utah.
3834 (4) The commissioner may revoke the license of a bail bond agency that fails to
3835 maintain the minimum financial requirements required under this section.
3836 (5) The commissioner may set by rule the limits on the aggregate amounts of bail
3837 bonds issued by a bail bond agency.
3838 Section 33. Section 31A-35-406 is amended to read:
3839 31A-35-406. Initial licensing, license renewal, and license reinstatement.
3840 (1) An applicant for an initial bail bond agency license shall:
3841 (a) complete and submit to the department an application;
3842 (b) submit to the department, as applicable, a copy of the applicant's:
3843 (i) irrevocable letter of credit, as required under Subsection 31A-35-404(1);
3844 (ii) verified financial statement, as required under Subsection 31A-35-404(2); or
3845 (iii) qualifying power of attorney, as required under Subsection 31A-35-404(3); and
3846 (c) pay the department the applicable renewal fee established in accordance with
3847 Section 31A-3-103.
3848 [
3849 August 14.
3850 (b) To renew [
3851 July 15, [
3852 (i) complete and submit to the department a renewal application [
3853 that includes certification that:
3854 [
3855
3856 (A) a principal of the agency attended or participated by telephone in at least one entire
3857 board meeting during the 12-month period before July 15; and
3858 (B) as of May 1, the agency complies with aggregate bond limits established by rule
3859 made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act;
3860 (ii) submit to the department, as applicable, a copy of the applicant's:
3861 (A) irrevocable letter of credit, as required under Subsection 31A-35-404(1);
3862 (B) verified financial statement, as required under Subsection 31A-35-404(2); or
3863 (C) qualifying power of attorney, as required under Subsection 31A-35-404(3); and
3864 (iii) pay the department the applicable renewal fee established in accordance with
3865 Section 31A-3-103.
3866 [
3867 chapter annually as established by department rule, regardless of when the license is issued.
3868 [
3869 agency license within one year [
3870
3871 described in Subsection (2).
3872 [
3873 [
3874
3875 [
3876 person applying for reinstatement of the bail bond agency license shall[
3877 initial licensing requirements described in Subsection (1).
3878 [
3879 [
3880 (4) If a bail bond agency license is suspended, the applicant may not submit an
3881 application for a bail bond agency license until after [
3882 suspension ends.
3883 (5) [
3884
3885 Section 34. Section 31A-37-102 is amended to read:
3886 31A-37-102. Definitions.
3887 As used in this chapter:
3888 (1) (a) "Affiliated company" means a business entity that because of common
3889 ownership, control, operation, or management is in the same corporate or limited liability
3890 company system as:
3891 (i) a parent;
3892 (ii) an industrial insured; or
3893 (iii) a member organization.
3894 (b) [
3895 company" does not include a business entity for which the commissioner issues an order
3896 finding that [
3897 (2) "Alien captive insurance company" means an insurer:
3898 (a) formed to write insurance business for a parent or affiliate of the insurer; and
3899 (b) licensed pursuant to the laws of an alien or foreign jurisdiction that imposes
3900 statutory or regulatory standards:
3901 (i) on a business entity transacting the business of insurance in the alien or foreign
3902 jurisdiction; and
3903 (ii) in a form acceptable to the commissioner.
3904 (3) "Applicant captive insurance company" means an entity that has submitted an
3905 application for a certificate of authority for a captive insurance company, unless the application
3906 has been denied or withdrawn.
3907 (4) "Association" means a legal association of two or more persons that has been in
3908 continuous existence for at least one year if:
3909 (a) the association or its member organizations:
3910 (i) own, control, or hold with power to vote all of the outstanding voting securities of
3911 an association captive insurance company incorporated as a stock insurer; or
3912 (ii) have complete voting control over an association captive insurance company
3913 incorporated as a mutual insurer;
3914 (b) the association's member organizations collectively constitute all of the subscribers
3915 of an association captive insurance company formed as a reciprocal insurer; or
3916 (c) the association or [
3917 control over an association captive insurance company formed as a limited liability company.
3918 (5) "Association captive insurance company" means a business entity that insures risks
3919 of:
3920 (a) a member organization of the association;
3921 (b) an affiliate of a member organization of the association; and
3922 (c) the association.
3923 (6) "Branch business" means an insurance business transacted by a branch captive
3924 insurance company in this state.
3925 (7) "Branch captive insurance company" means an alien captive insurance company
3926 that has a certificate of authority from the commissioner to transact the business of insurance in
3927 this state through a captive insurance company that is domiciled outside of this state.
3928 (8) "Branch operation" means a business operation of a branch captive insurance
3929 company in this state.
3930 (9) (a) "Captive insurance company" means the same as that term is defined in Section
3931 31A-1-301.
3932 (b) "Captive insurance company" includes any of the following formed or holding a
3933 certificate of authority under this chapter:
3934 [
3935 [
3936 [
3937 [
3938 [
3939 insured captive insurance company formed as a risk retention group captive in this state
3940 pursuant to the provisions of the Federal Liability Risk Retention Act of 1986;
3941 [
3942 [
3943 (10) "Commissioner" means Utah's Insurance Commissioner or the commissioner's
3944 designee.
3945 (11) "Common ownership and control" means that two or more captive insurance
3946 companies are owned or controlled by the same person or group of persons as follows:
3947 (a) in the case of a captive insurance company that is a stock corporation, the direct or
3948 indirect ownership of 80% or more of the outstanding voting stock of the stock corporation;
3949 (b) in the case of a captive insurance company that is a mutual corporation, the direct
3950 or indirect ownership of 80% or more of the surplus and the voting power of the mutual
3951 corporation;
3952 (c) in the case of a captive insurance company that is a limited liability company, the
3953 direct or indirect ownership by the same member or members of 80% or more of the
3954 membership interests in the limited liability company; or
3955 (d) in the case of a sponsored captive insurance company, a protected cell is a separate
3956 captive insurance company owned and controlled by the protected cell's participant, only if:
3957 (i) the participant is the only participant with respect to the protected cell; and
3958 (ii) the participant is the sponsor or is affiliated with the sponsor of the sponsored
3959 captive insurance company through common ownership and control.
3960 (12) "Consolidated debt to total capital ratio" means the ratio of Subsection (12)(a) to
3961 (b).
3962 (a) This Subsection (12)(a) is an amount equal to the sum of all debts and hybrid
3963 capital instruments including:
3964 (i) all borrowings from depository institutions;
3965 (ii) all senior debt;
3966 (iii) all subordinated debts;
3967 (iv) all trust preferred shares; and
3968 (v) all other hybrid capital instruments that are not included in the determination of
3969 consolidated GAAP net worth issued and outstanding.
3970 (b) This Subsection (12)(b) is an amount equal to the sum of:
3971 (i) total capital consisting of all debts and hybrid capital instruments as described in
3972 Subsection (12)(a); and
3973 (ii) shareholders' equity determined in accordance with generally accepted accounting
3974 principles for reporting to the United States Securities and Exchange Commission.
3975 (13) "Consolidated GAAP net worth" means the consolidated shareholders' or
3976 members' equity determined in accordance with generally accepted accounting principles for
3977 reporting to the United States Securities and Exchange Commission.
3978 (14) "Controlled unaffiliated business" means a business entity:
3979 (a) (i) in the case of a pure captive insurance company, that is not in the corporate or
3980 limited liability company system of a parent or the parent's affiliate; or
3981 (ii) in the case of an industrial insured captive insurance company, that is not in the
3982 corporate or limited liability company system of an industrial insured or an affiliated company
3983 of the industrial insured;
3984 (b) (i) in the case of a pure captive insurance company, that has a contractual
3985 relationship with a parent or affiliate; or
3986 (ii) in the case of an industrial insured captive insurance company, that has a
3987 contractual relationship with an industrial insured or an affiliated company of the industrial
3988 insured; and
3989 (c) whose risks that are or will be insured by a pure captive insurance company, an
3990 industrial insured captive insurance company, or both, are managed in accordance with
3991 Subsection 31A-37-106(1)(j) by:
3992 (i) (A) a pure captive insurance company; or
3993 (B) an industrial insured captive insurance company; or
3994 (ii) a parent or affiliate of:
3995 (A) a pure captive insurance company; or
3996 (B) an industrial insured captive insurance company.
3997 (15) "Criminal act" means an act for which a person receives a verdict or finding of
3998 guilt after a criminal trial or a plea of guilty or nolo contendere to a criminal charge.
3999 [
4000 [
4001 direct and manage the affairs of an entity.
4002 [
4003 (a) that produces insurance:
4004 (i) by the services of a full-time employee acting as a risk manager or insurance
4005 manager; or
4006 (ii) using the services of a regularly and continuously qualified insurance consultant;
4007 (b) whose aggregate annual premiums for insurance on all risks total at least $25,000;
4008 and
4009 (c) that has at least 25 full-time employees.
4010 [
4011 that:
4012 (a) insures risks of the industrial insureds that comprise the industrial insured group;
4013 and
4014 (b) may insure the risks of:
4015 (i) an affiliated company of an industrial insured; or
4016 (ii) a controlled unaffiliated business of:
4017 (A) an industrial insured; or
4018 (B) an affiliated company of an industrial insured.
4019 [
4020 (a) a group of industrial insureds that collectively:
4021 (i) own, control, or hold with power to vote all of the outstanding voting securities of
4022 an industrial insured captive insurance company incorporated or organized as a limited liability
4023 company as a stock insurer; or
4024 (ii) have complete voting control over an industrial insured captive insurance company
4025 incorporated or organized as a limited liability company as a mutual insurer;
4026 (b) a group that is:
4027 (i) created under the Product Liability Risk Retention Act of 1981, 15 U.S.C. Sec. 3901
4028 et seq., as amended, as a corporation or other limited liability association; and
4029 (ii) taxable under this title as a:
4030 (A) stock corporation; or
4031 (B) mutual insurer; or
4032 (c) a group that has complete voting control over an industrial captive insurance
4033 company formed as a limited liability company.
4034 [
4035 [
4036 with power to vote more than 50% of the outstanding securities of an organization.
4037 [
4038 insurance company:
4039 (a) if the losses of the participant are limited through a participant contract to the assets
4040 of a protected cell; and
4041 (b) (i) the entity is permitted to be a participant under Section 31A-37-403; or
4042 (ii) the entity is an affiliate of an entity permitted to be a participant under Section
4043 31A-37-403.
4044 [
4045 insurance company:
4046 (a) insures the risks of a participant; and
4047 (b) limits the losses of the participant to the assets of a protected cell.
4048 [
4049 sponsored captive insurance company for one participant.
4050 [
4051 of a parent or affiliate of the business entity.
4052 [
4053 same as that term is defined in Section 31A-37a-102.
4054 [
4055 (a) meets the requirements of Section 31A-37-402; and
4056 (b) is approved by the commissioner to:
4057 (i) provide all or part of the capital and surplus required by applicable law in an amount
4058 of not less than $350,000, which amount the commissioner may increase by order if the
4059 commissioner considers it necessary; and
4060 (ii) organize and operate a sponsored captive insurance company.
4061 [
4062 company:
4063 (a) in which the minimum capital and surplus required by applicable law is provided by
4064 one or more sponsors;
4065 (b) that is formed or holding a certificate of authority under this chapter;
4066 (c) that insures the risks of a separate participant through the contract; and
4067 (d) that segregates each participant's liability through one or more protected cells.
4068 [
4069 published in the Wall Street Journal as of a balance sheet date.
4070 Section 35. Section 31A-37-202 is amended to read:
4071 31A-37-202. Permissive areas of insurance.
4072 (1) Except as provided in Subsections (2) and (3), a captive insurance company may
4073 not directly insure a risk other than the risk of the captive insurance company's parent or
4074 affiliated company.
4075 (2) In addition to the risks described in Subsection (1), an association captive insurance
4076 company may insure the risk of:
4077 (a) a member organization of the association captive insurance company's association;
4078 or
4079 (b) an affiliate of a member organization of the association captive insurance
4080 company's association.
4081 (3) The following may insure a risk of a controlled unaffiliated business:
4082 (a) an industrial insured captive insurance company;
4083 (b) a protected cell;
4084 (c) a pure captive insurance company; or
4085 (d) a sponsored captive insurance company.
4086 (4) To the extent allowed by a captive insurance company's organizational charter, a
4087 captive insurance company may provide any type of insurance described in this title, except:
4088 (a) workers' compensation insurance;
4089 (b) personal motor vehicle insurance;
4090 (c) homeowners' insurance; and
4091 (d) any component of the types of insurance described in Subsections (4)(a) through
4092 (c).
4093 (5) A captive insurance company may not provide coverage for:
4094 (a) a wager or gaming risk;
4095 (b) loss of an election; or
4096 (c) the penal consequences of a crime[
4097 [
4098 (6) Unless the punitive damages award arises out of a criminal act of an insured, a
4099 captive insurance company may provide coverage for punitive damages awarded, including
4100 through adjudication or compromise, against the captive insurance company's:
4101 (a) parent;
4102 (b) affiliated company; or
4103 (c) controlled unaffiliated business.
4104 [
4105 insurance company may insure as a reimbursement a limited layer or deductible of workers'
4106 compensation coverage.
4107 Section 36. Section 31A-37-204 is amended to read:
4108 31A-37-204. Paid-in capital -- Other capital.
4109 (1) (a) The commissioner may not issue a certificate of authority to a company
4110 described in Subsection (1)(c) unless the company possesses and thereafter maintains
4111 unimpaired paid-in capital and unimpaired paid-in surplus of:
4112 (i) in the case of a pure captive insurance company, not less than $250,000;
4113 (ii) in the case of an association captive insurance company, not less than $750,000;
4114 (iii) in the case of an industrial insured captive insurance company incorporated as a
4115 stock insurer, not less than $700,000;
4116 (iv) in the case of a sponsored captive insurance company, not less than [
4117 $500,000, of which a minimum of [
4118 (v) in the case of a special purpose captive insurance company, an amount determined
4119 by the commissioner after giving due consideration to the company's business plan, feasibility
4120 study, and pro-formas, including the nature of the risks to be insured.
4121 (b) The paid-in capital and surplus required under this Subsection (1) may be in the
4122 form of:
4123 (i) (A) cash; or
4124 (B) cash equivalent;
4125 (ii) an irrevocable letter of credit:
4126 (A) issued by:
4127 (I) a bank chartered by this state; or
4128 (II) a member bank of the Federal Reserve System; and
4129 (B) approved by the commissioner;
4130 (iii) marketable securities as determined by Subsection (5); or
4131 (iv) some other thing of value approved by the commissioner, for a period not to
4132 exceed 45 days, to facilitate the formation of a captive insurance company in this state pursuant
4133 to an approved plan of liquidation and reorganization of another captive insurance company or
4134 alien captive insurance company in another jurisdiction.
4135 (c) This Subsection (1) applies to:
4136 (i) a pure captive insurance company;
4137 (ii) a sponsored captive insurance company;
4138 (iii) a special purpose captive insurance company;
4139 (iv) an association captive insurance company; or
4140 (v) an industrial insured captive insurance company.
4141 (2) (a) The commissioner may, under Section 31A-37-106, prescribe additional capital
4142 based on the type, volume, and nature of insurance business transacted.
4143 (b) The capital prescribed by the commissioner under this Subsection (2) may be in the
4144 form of:
4145 (i) cash;
4146 (ii) an irrevocable letter of credit issued by:
4147 (A) a bank chartered by this state; or
4148 (B) a member bank of the Federal Reserve System; or
4149 (iii) marketable securities as determined by Subsection (5).
4150 (3) (a) Except as provided in Subsection (3)(c), a branch captive insurance company, as
4151 security for the payment of liabilities attributable to branch operations, shall, through its branch
4152 operations, establish and maintain a trust fund:
4153 (i) funded by an irrevocable letter of credit or other acceptable asset; and
4154 (ii) in the United States for the benefit of:
4155 (A) United States policyholders; and
4156 (B) United States ceding insurers under:
4157 (I) insurance policies issued; or
4158 (II) reinsurance contracts issued or assumed.
4159 (b) The amount of the security required under this Subsection (3) shall be no less than:
4160 (i) the capital and surplus required by this chapter; and
4161 (ii) the reserves on the insurance policies or reinsurance contracts, including:
4162 (A) reserves for losses;
4163 (B) allocated loss adjustment expenses;
4164 (C) incurred but not reported losses; and
4165 (D) unearned premiums with regard to business written through branch operations.
4166 (c) Notwithstanding the other provisions of this Subsection (3):
4167 (i) the commissioner may permit a branch captive insurance company that is required
4168 to post security for loss reserves on branch business by its reinsurer to reduce the funds in the
4169 trust account required by this section by the same amount as the security posted if the security
4170 remains posted with the reinsurer; and
4171 (ii) a branch captive insurance company that is the result of the licensure of an alien
4172 captive insurance company that is not formed in an alien jurisdiction is not subject to the
4173 requirements of this Subsection (3).
4174 (4) (a) A captive insurance company may not pay the following without the prior
4175 approval of the commissioner:
4176 (i) a dividend out of capital or surplus in excess of the limits under Section
4177 16-10a-640; or
4178 (ii) a distribution with respect to capital or surplus in excess of the limits under Section
4179 16-10a-640.
4180 (b) The commissioner shall condition approval of an ongoing plan for the payment of
4181 dividends or other distributions on the retention, at the time of each payment, of capital or
4182 surplus in excess of:
4183 (i) amounts specified by the commissioner under Section 31A-37-106; or
4184 (ii) determined in accordance with formulas approved by the commissioner under
4185 Section 31A-37-106.
4186 (5) For purposes of this section, marketable securities means:
4187 (a) a bond or other evidence of indebtedness of a governmental unit in the United
4188 States or Canada or any instrumentality of the United States or Canada; or
4189 (b) securities:
4190 (i) traded on one or more of the following exchanges in the United States:
4191 (A) New York;
4192 (B) American; or
4193 (C) NASDAQ;
4194 (ii) when no particular security, or a substantially related security, applied toward the
4195 required minimum capital and surplus requirement of Subsection (1) represents more than 50%
4196 of the minimum capital and surplus requirement; and
4197 (iii) when no group of up to four particular securities, consolidating substantially
4198 related securities, applied toward the required minimum capital and surplus requirement of
4199 Subsection (1) represents more than 90% of the minimum capital and surplus requirement.
4200 (6) Notwithstanding Subsection (5), to protect the solvency and liquidity of a captive
4201 insurance company, the commissioner may reject the application of specific assets or amounts
4202 of specific assets to satisfying the requirement of Subsection (1).
4203 Section 37. Section 31A-37-303 is amended to read:
4204 31A-37-303. Reinsurance.
4205 (1) (a) A captive insurance company may cede risks to any insurance company
4206 approved by the commissioner.
4207 (b) [
4208 provide reinsurance[
4209 approval of the commissioner.
4210 (c) A captive insurance company may not provide reinsurance on a punitive damages
4211 risk ceded by an insurer, unless the punitive damages risk is the risk of the captive insurance
4212 company's:
4213 (i) parent;
4214 (ii) affiliated company; or
4215 (iii) controlled unaffiliated business.
4216 (2) (a) A captive insurance company may take credit for reserves on risks or portions of
4217 risks ceded to reinsurers if the captive insurance company complies with:
4218 (i) Section 31A-17-404, 31A-17-404.1, 31A-17-404.3, or 31A-17-404.4; or [
4219
4220 (ii) other requirements as the commissioner may establish by rule made in accordance
4221 with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
4222 (b) Unless the reinsurer is in compliance with Section 31A-17-404, 31A-17-404.1,
4223 31A-17-404.3, or 31A-17-404.4 or a rule adopted under Subsection (2)(a)(ii), a captive
4224 insurance company may not take credit for:
4225 (i) reserves on risks ceded to a reinsurer; or
4226 (ii) portions of risks ceded to a reinsurer.
4227 Section 38. Section 31A-37-701 is amended to read:
4228 31A-37-701. Certificate of dormancy.
4229 (1) In accordance with the provisions of this section, a captive insurance company,
4230 other than a risk retention group, may apply, without fee, to the commissioner for a certificate
4231 of dormancy.
4232 (2) (a) A captive insurance company, other than a risk retention group, is eligible for a
4233 certificate of dormancy if the captive insurance company:
4234 (i) has ceased transacting the business of insurance, including the issuance of insurance
4235 policies; and
4236 (ii) has no remaining insurance liabilities or obligations associated with insurance
4237 business transactions or insurance policies.
4238 (b) For purposes of Subsection (2)(a)(ii), the commissioner may disregard liabilities or
4239 obligations for which the captive insurance company has withheld sufficient funds or that are
4240 otherwise sufficiently secured.
4241 (3) Except as provided in Subsection [
4242 a certificate of dormancy is subject to all requirements of this chapter.
4243 (4) A captive insurance company that holds a certificate of dormancy:
4244 (a) shall possess and maintain unimpaired paid-in capital and unimpaired paid-in
4245 surplus of:
4246 (i) in the case of a pure captive insurance company or a special purpose captive
4247 insurance company, not less than $25,000;
4248 (ii) in the case of an association captive insurance company, not less than $75,000; or
4249 (iii) in the case of a sponsored captive insurance company, not less than [
4250 $50,000, of which the sponsor provides at least [
4251 and
4252 (b) is not required to:
4253 (i) subject to Subsection (5), submit an annual audit or statement of actuarial opinion;
4254 (ii) maintain an active agreement with an independent auditor or actuary; or
4255 (iii) hold an annual meeting of the captive insurance company in the state.
4256 (5) The commissioner may require a captive insurance company that holds a certificate
4257 of dormancy to submit an annual audit if the commissioner determines that there are concerns
4258 regarding the captive insurance company's solvency or liquidity.
4259 (6) To maintain a certificate of dormancy and in lieu of a certificate of authority
4260 renewal fee, no later than July 1 of each year, a captive insurance company shall pay an annual
4261 dormancy renewal fee that is equal to 50% of the captive insurance's company's certificate of
4262 authority renewal fee.
4263 (7) A captive insurance company may consecutively renew a certificate of dormancy
4264 no more than five times.
4265 Section 39. Section 31A-45-501 is amended to read:
4266 31A-45-501. Access to health care providers.
4267 (1) As used in this section:
4268 (a) "Class of health care provider" means a health care provider or a health care facility
4269 regulated by the state within the same professional, trade, occupational, or certification
4270 category established under Title 58, Occupations and Professions, or within the same facility
4271 licensure category established under Title 26, Chapter 21, Health Care Facility Licensing and
4272 Inspection Act.
4273 (b) "Covered health care services" or "covered services" means health care services for
4274 which an enrollee is entitled to receive under the terms of a [
4275 organization contract.
4276 (c) "Credentialed staff member" means a health care provider with active staff
4277 privileges at an independent hospital or federally qualified health center.
4278 (d) "Federally qualified health center" means as defined in the Social Security Act, 42
4279 U.S.C. Sec. 1395x.
4280 (e) "Independent hospital" means a general acute hospital or a critical access hospital
4281 that:
4282 (i) is either:
4283 (A) located 20 miles or more from any other general acute hospital or critical access
4284 hospital; or
4285 (B) licensed as of January 1, 2004;
4286 (ii) is licensed pursuant to Title 26, Chapter 21, Health Care Facility Licensing and
4287 Inspection Act; [
4288 (iii) is controlled by a board of directors of which 51% or more reside in the county
4289 where the hospital is located; and[
4290 (iv) (A) the hospital's board of directors is ultimately responsible for the policy and
4291 financial decisions of the hospital; or
4292 (B) the hospital is licensed for 60 or fewer beds and is not owned, in whole or in part,
4293 by an entity that owns or controls a health maintenance organization if the hospital is a
4294 contracting facility of the organization.
4295 (f) "Noncontracting provider" means an independent hospital, federally qualified health
4296 center, or credentialed staff member that has not contracted with a managed care organization
4297 to provide health care services to enrollees of the managed care organization.
4298 (2) Except for a managed care organization that is under the common ownership or
4299 control of an entity with a hospital located within 10 paved road miles of an independent
4300 hospital, a managed care organization shall pay for covered health care services rendered to an
4301 enrollee by an independent hospital, a credentialed staff member at an independent hospital, or
4302 a credentialed staff member at his local practice location if:
4303 (a) the enrollee:
4304 (i) lives or resides within 30 paved road miles of the independent hospital; or
4305 (ii) if Subsection (2)(a)(i) does not apply, lives or resides in closer proximity to the
4306 independent hospital than a contracting hospital;
4307 (b) the independent hospital is located prior to December 31, 2000 in a county with a
4308 population density of less than 100 people per square mile, or the independent hospital is
4309 located in a county with a population density of less than 30 people per square mile; and
4310 (c) the enrollee has complied with the prior authorization and utilization review
4311 requirements otherwise required by the managed care organization contract.
4312 (3) A managed care organization shall pay for covered health care services rendered to
4313 an enrollee at a federally qualified health center if:
4314 (a) the enrollee:
4315 (i) lives or resides within 30 paved road miles of the federally qualified health center;
4316 or
4317 (ii) if Subsection (3)(a)(i) does not apply, lives or resides in closer proximity to the
4318 federally qualified health center than a contracting provider;
4319 (b) the federally qualified health center is located in a county with a population density
4320 of less than 30 people per square mile; and
4321 (c) the enrollee has complied with the prior authorization and utilization review
4322 requirements otherwise required by the managed care organization contract.
4323 (4) (a) A managed care organization shall reimburse a noncontracting provider or the
4324 enrollee for covered services rendered pursuant to Subsection (2) a like dollar amount as [
4325 the managed care organization pays to contracting providers under a noncapitated arrangement
4326 for comparable services.
4327 (b) A managed care organization shall reimburse a federally qualified health center or
4328 the enrollee for covered services rendered pursuant to Subsection (3) a like amount as paid by
4329 the managed care organization under a noncapitated arrangement for comparable services to a
4330 contracting provider in the same class of health care providers as the provider who rendered the
4331 service.
4332 (5) (a) A noncontracting independent hospital may not balance bill a patient when the
4333 [
4334 hospital or an enrollee in accordance with Subsection (4)(a).
4335 (b) A noncontracting federally qualified health center may not balance bill a patient
4336 when the federally qualified health center or the enrollee receives reimbursement in accordance
4337 with Subsection (4)(b).
4338 (6) A noncontracting provider may only refer an enrollee to another noncontracting
4339 provider so as to obligate the enrollee's managed care organization to pay for the resulting
4340 services if:
4341 (a) the noncontracting provider making the referral or the enrollee has received prior
4342 authorization from the organization for the referral; or
4343 (b) the practice location of the noncontracting provider to whom the referral is made:
4344 (i) is located in a county with a population density of less than 25 people per square
4345 mile; and
4346 (ii) is within 30 paved road miles of:
4347 (A) the place where the enrollee lives or resides; or
4348 (B) the independent hospital or federally qualified health center at which the enrollee
4349 may receive covered services pursuant to Subsection (2) or (3).
4350 (7) Notwithstanding this section, a managed care organization may contract directly
4351 with an independent hospital, federally qualified health center, or credentialed staff member.
4352 (8) (a) A managed care organization that violates any provision of this section is
4353 subject to sanctions as determined by the commissioner in accordance with Section 31A-2-308.
4354 (b) Violations of this section include:
4355 (i) failing to provide the notice required by Subsection (8)(d) by placing the notice in
4356 any managed care organization's provider list that is supplied to enrollees, including any
4357 website maintained by the managed care organization;
4358 (ii) failing to provide notice of an enrollee's rights under this section when:
4359 (A) an enrollee makes personal contact with the managed care organization by
4360 telephone, electronic transaction, or in person; and
4361 (B) the enrollee inquires about the enrollee's rights to access an independent hospital or
4362 federally qualified health center; and
4363 (iii) refusing to reprocess or reconsider a claim, initially denied by the managed care
4364 organization, when the provisions of this section apply to the claim.
4365 (c) The commissioner shall, pursuant to Chapter 2, Part 2, Duties and Powers of
4366 Commissioner:
4367 (i) adopt rules as necessary to implement this section;
4368 (ii) identify in rule:
4369 (A) the counties with a population density of less than 100 people per square mile;
4370 (B) independent hospitals as defined in Subsection (1)(e); and
4371 (C) federally qualified health centers as defined in Subsection (1)(d).
4372 (d) (i) A managed care organization shall:
4373 (A) use the information developed by the commissioner under Subsection (8)(c) to
4374 identify the rural counties, independent hospitals, and federally qualified health centers that are
4375 located in the managed care organization's service area; and
4376 (B) include the providers identified under Subsection (8)(d)(i)(A) in the notice required
4377 in Subsection (8)(d)(ii).
4378 (ii) The managed care organization shall provide the following notice, in bold type, to
4379 enrollees as specified under Subsection (8)(b)(i), and shall keep the notice current:
4380 "You may be entitled to coverage for health care services from the following
4381 noncontracted providers if you live or reside within 30 paved road miles of the listed providers,
4382 or if you live or reside in closer proximity to the listed providers than to your contracted
4383 providers:
4384 This list may change periodically, please check on our website or call for verification.
4385 Please be advised that if you choose a noncontracted provider you will be responsible for any
4386 charges not covered by your health insurance plan.
4387 If you have questions concerning your rights to see a provider on this list you may
4388 contact your managed care organization at ________. If the managed care organization does
4389 not resolve your problem, you may contact the Office of Consumer Health Assistance in the
4390 Insurance Department, toll free."
4391 (e) A person whose interests are affected by an alleged violation of this section may
4392 contact the Office of Consumer Health Assistance and request assistance, or file a complaint as
4393 provided in Section 31A-2-216.
4394 Section 40. Section 36-29-106 is amended to read:
4395 36-29-106. Health Reform Task Force.
4396 (1) There is created the Health Reform Task Force consisting of the following 11
4397 members:
4398 (a) four members of the Senate appointed by the president of the Senate, no more than
4399 three of whom are from the same political party; and
4400 (b) seven members of the House of Representatives appointed by the speaker of the
4401 House of Representatives, no more than five of whom are from the same political party.
4402 (2) (a) The president of the Senate shall designate a member of the Senate appointed
4403 under Subsection (1)(a) as a cochair of the task force.
4404 (b) The speaker of the House of Representatives shall designate a member of the House
4405 of Representatives appointed under Subsection (1)(b) as a cochair of the task force.
4406 (3) Salaries and expenses of the members of the task force shall be paid in accordance
4407 with Section 36-2-2 and Legislative Joint Rules, Title 5, Chapter 3, Legislator Compensation.
4408 (4) The Office of Legislative Research and General Counsel shall provide staff support
4409 to the task force.
4410 (5) The task force shall review and make recommendations on health system reform,
4411 including the following issues:
4412 (a) the need for state statutory and regulatory changes in response to federal actions
4413 affecting health care;
4414 (b) Medicaid and reforms to the Medicaid program;
4415 (c) options for increasing state flexibility, including the use of federal waivers;
4416 (d) the state's health insurance marketplace;
4417 (e) health insurance code modifications;
4418 (f) insurance network adequacy standards and balance billing; and
4419 (g) rising health care costs.
4420 (6) A final report, including any proposed legislation, shall be presented to the
4421 Business and Labor Interim Committee and Health and Human Services Interim Committee
4422 before November 30, [
4423 Section 41. Section 63I-1-236 is amended to read:
4424 63I-1-236. Repeal dates, Title 36.
4425 (1) Title 36, Chapter 17, Legislative Process Committee, is repealed January 1, 2023.
4426 (2) Section 36-12-20 is repealed June 30, 2023.
4427 (3) Title 36, Chapter 28, Veterans and Military Affairs Commission, is repealed
4428 January 1, 2025.
4429 [
4430 [
4431 [
4432 Committee, is repealed January 1, 2022.