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7 LONG TITLE
8 General Description:
9 This bill modifies provisions related to insurance adjuster claim practices.
10 Highlighted Provisions:
11 This bill:
12 ▸ defines terms;
13 ▸ adds to the type of actions that are considered an unfair claim settlement practice by
14 an insurance adjuster; and
15 ▸ makes technical and conforming changes.
16 Money Appropriated in this Bill:
17 None
18 Other Special Clauses:
19 None
20 Utah Code Sections Affected:
21 AMENDS:
22 31A-26-102, as last amended by Laws of Utah 2021, Chapter 252
23 31A-26-303, as last amended by Laws of Utah 1987, Chapter 91
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25 Be it enacted by the Legislature of the state of Utah:
26 Section 1. Section 31A-26-102 is amended to read:
27 31A-26-102. Definitions.
28 As used in this chapter, unless expressly provided otherwise:
29 (1) "Company adjuster" means a person employed by an insurer who negotiates or
30 settles claims on behalf of the insurer or an affiliated insurer.
31 (2) "Designated home state" means the state or territory of the United States or the
32 District of Columbia:
33 (a) in which an insurance adjuster does not maintain the adjuster's principal:
34 (i) place of residence; or
35 (ii) place of business;
36 (b) if the resident state, territory, or District of Columbia of the adjuster does not
37 license adjusters for the line of authority sought, the adjuster has qualified for the license as if
38 the person were a resident in the state, territory, or District of Columbia described in
39 Subsection (2)(a), including an applicable:
40 (i) examination requirement;
41 (ii) fingerprint background check requirement; and
42 (iii) continuing education requirement; and
43 (c) that the adjuster has designated as the insurance adjuster's designated home state.
44 (3) "Home state" means:
45 (a) a state or territory of the United States or the District of Columbia in which an
46 insurance adjuster:
47 (i) maintains the adjuster's principal:
48 (A) place of residence; or
49 (B) place of business; and
50 (ii) is licensed to act as a resident adjuster; or
51 (b) if the resident state, territory, or the District of Columbia described in Subsection
52 (3)(a) does not license adjusters for the line of authority sought, a state, territory, or the District
53 of Columbia:
54 (i) in which the adjuster is licensed;
55 (ii) in which the adjuster is in good standing; and
56 (iii) that the adjuster has designated as the adjuster's designated home state.
57 (4) "Independent adjuster" means an insurance adjuster required to be licensed under
58 Section 31A-26-201, who engages in insurance adjusting as a representative of one or more
59 insurers.
60 (5) "Insurance adjusting" or "adjusting" means directing or conducting the
61 investigation, negotiation, or settlement of a claim under an insurance policy, on behalf of an
62 insurer, policyholder, or a claimant under an insurance policy.
63 (6) (a) "Organization" means a person other than a natural person.
64 (b) "Organization" includes a sole proprietorship by which a natural person does
65 business under an assumed name.
66 (7) "Portable electronics insurance" means the same as that term is defined in Section
67 31A-22-1802.
68 (8) "Public adjuster" means a person required to be licensed under Section
69 31A-26-201, who engages in insurance adjusting as a representative of insureds and claimants
70 under insurance policies.
71 (9) (a) "Subrogation" means the assumption of the right to pursue an obligation owed
72 by a debtor to the original creditor.
73 (b) "Subrogation" does not include:
74 (i) a claim under a contract to repay benefits from compensation received from a
75 responsible third party; or
76 (ii) a lien created under applicable statute or a contract.
77 Section 2. Section 31A-26-303 is amended to read:
78 31A-26-303. Unfair claim settlement practices.
79 (1) [
80 claim settlement practice under [
81 (2) Each of the following acts is an unfair claim settlement practice:
82 (a) knowingly misrepresenting material facts or the contents of insurance policy
83 provisions at issue in connection with a claim under an insurance contract; however, this
84 provision does not include the failure to disclose information;
85 (b) attempting to use a policy application which was altered by the insurer without
86 notice to, or knowledge, or consent of, the insured as the basis for settling or refusing to settle a
87 claim; [
88 (c) failing to settle a claim promptly under one portion of the insurance policy
89 coverage, where liability and the amount of loss are reasonably clear, in order to influence
90 settlements under other portions of the insurance policy coverage, but this Subsection (2)(c)
91 applies only to claims made by persons in direct privity of contract with the insurer[
92 (d) separately paying a portion of settlement funds other than by subrogation to a
93 lienholder or a party claiming entitlement to reimbursement;
94 (e) insisting on including a lienholder or party claiming entitlement to reimbursement
95 other than by subrogation as a payee on instruments used to pay settlement funds; or
96 (f) refusing to promptly issue settlement funds without naming a lienholder or party
97 claiming entitlement to reimbursement other than by subrogation if the person receiving the
98 settlement:
99 (i) accepts liability for the satisfaction of liens or claims of entitlement to
100 reimbursement; and
101 (ii) agrees to hold the insurer and insured harmless from the liens and claims.
102 (3) Each of the following is an unfair claim settlement practice if committed or
103 performed with such frequency as to indicate a general business practice by an insurer or
104 persons representing an insurer:
105 (a) failing to acknowledge and act promptly upon communications about claims under
106 insurance policies;
107 (b) failing to adopt and implement reasonable standards for the prompt investigation
108 and processing of claims under insurance policies;
109 (c) compelling insureds to institute litigation to recover amounts due under an
110 insurance policy by offering substantially less than the amounts ultimately recovered in actions
111 brought by those insureds when the amounts claimed were reasonably near to the amounts
112 recovered;
113 (d) failing, after payment of a claim, to inform insureds or beneficiaries, upon request
114 by them, of the coverage under which payment was made;
115 (e) failing to promptly provide to the insured a reasonable explanation of the basis for
116 denial of a claim or for the offer of a compromise settlement;
117 (f) appealing from substantially all arbitration awards in favor of insureds for the
118 purpose of compelling them to accept settlements or compromises for less than the amount
119 awarded in arbitration;
120 (g) delaying the investigation or payment of claims by requiring an insured, claimant,
121 or the physician of either to submit a preliminary claim report and then requiring the
122 subsequent submission of formal proof of loss forms which contain substantially the same
123 information; or
124 (h) not attempting in good faith to effectuate a prompt, fair, and equitable settlement of
125 claims in which liability is reasonably clear.
126 (4) The commissioner may define by rule[
127 Chapter 3, Utah Administrative Rulemaking Act, acts or general business practices which are
128 unfair claim settlement practices, after a finding that those practices are misleading, deceptive,
129 unfairly discriminatory, overreaching, or an unreasonable restraint on competition.
130 (5) This section does not create any private cause of action.