Bill Summary – FastDemocracy

Enrolled Copy                                                                       H.B. 50
                      GOVERNMENT INSURANCE AMENDMENTS
                                       2021 GENERAL SESSION
                                           STATE OF UTAH
                              Chief Sponsor: James A. Dunnigan
                                Senate Sponsor: Curtis S. Bramble
 6
 LONG TITLE
 General Description:
        This bill makes changes to the Administrative Services Code, Independent Entities
 Code, and Independent State Entities relating to risk management.
 Highlighted Provisions:
        This bill:
        < defines terms;
        < authorizes the state risk manager to create one or more captive insurance
 companies;
        < requires the risk manager to coordinate and cooperate with any covered entity
 having responsibility for risk control and safety of school districts and charter
 schools;
        < authorizes school districts, charter schools, the Utah Communications Authority,
 and the Utah State Fair Corporation to participate in any captive insurance company
 created by the risk manager; and
        < makes technical changes.
 Money Appropriated in this Bill:
        None
 Other Special Clauses:
        None
 Utah Code Sections Affected:
 AMENDS:
        31A-12-101, as last amended by Laws of Utah 1993, Chapter 212
       H.B. 50                                                                   Enrolled Copy
        51-7-2, as last amended by Laws of Utah 2018, Chapters 207 and 404
        63A-4-102, as last amended by Laws of Utah 2009, Chapter 183
        63A-4-103, as last amended by Laws of Utah 2020, Chapter 365
        63A-4-201, as last amended by Laws of Utah 2011, Chapter 303
        63A-4-202, as renumbered and amended by Laws of Utah 1993, Chapter 212
        63A-4-204, as last amended by Laws of Utah 2018, Chapter 415
        63A-4-204.5, as last amended by Laws of Utah 2018, Chapter 415
        63A-4-205.5, as last amended by Laws of Utah 2015, Chapter 411
        63E-1-304, as enacted by Laws of Utah 2013, Chapter 220
        63G-7-605, as last amended by Laws of Utah 2018, Second Special Session, Chapter 9
        63G-10-501, as enacted by Laws of Utah 2015, Chapter 355
        63H-6-103, as last amended by Laws of Utah 2020, Chapter 152
 ENACTS:
        63A-4-101.1, Utah Code Annotated 1953
        63A-4-208, Utah Code Annotated 1953
 RENUMBERS AND AMENDS:
        63A-4-101.5, (Renumbered from 63A-4-101, as last amended by Laws of Utah 2006,
 Chapter 275)
48
 Be it enacted by the Legislature of the state of Utah:
        Section 1. Section 31A-12-101 is amended to read:
        31A-12-101. Definitions.
        As used in this chapter:
        (1) "Risk Management Fund" means the fund created under Section 63A-4-201.
        (2) "Risk manager" means the person appointed under Section [63A-4-101]
 63A-4-101.5.
        Section 2. Section 51-7-2 is amended to read:
        51-7-2. Exemptions from chapter.
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      Enrolled Copy                                                                           H.B. 50
        The following funds are exempt from this chapter:
        (1) funds invested in accordance with the participating employees' designation or
 direction pursuant to a public employees' deferred compensation plan established and operated
 in compliance with Section 457 of the Internal Revenue Code of 1986, as amended;
        (2) funds of the Utah State Retirement Board;
        (3) funds of the Utah Housing Corporation;
        (4) endowment funds of higher education institutions;
        (5) permanent and other land grant trust funds established pursuant to the Utah
 Enabling Act and the Utah Constitution;
        (6) the State Post-Retirement Benefits Trust Fund;
        (7) the funds of the Utah Educational Savings Plan;
        (8) funds of the permanent state trust fund created by and operated under Utah
 Constitution, Article XXII, Section 4;
        (9) the funds in the Navajo Trust Fund;
        (10) the funds in the Radioactive Waste Perpetual Care and Maintenance Account;
        (11) the funds in the Employers' Reinsurance Fund;
        (12) the funds in the Uninsured Employers' Fund; [and]
        (13) the Utah State Developmental Center Long-Term Sustainability Fund, created in
 Section 62A-5-206.7[.]; and
        (14) the funds in the Risk Management Fund created in Section 63A-4-201.
        Section 3. Section 63A-4-101.1 is enacted to read:
        63A-4-101.1. Definitions.
        As used in this chapter:
        (1) "Captive insurance company" means the same as that term is defined in Section
 31A-37-102.
        (2) "Covered entity" means a participating entity of:
        (a) the Risk Management Fund; or
        (b) any captive insurance company created by the risk manager.
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        H.B. 50                                                                          Enrolled Copy
         Section 4. Section 63A-4-101.5, which is renumbered from Section 63A-4-101 is
 renumbered and amended to read:
         [63A-4-101].           63A-4-101.5. Risk manager -- Appointment -- Duties.
         (1) The executive director shall appoint a risk manager, who shall be qualified by
 education and experience in the management of general property and casualty insurance.
         (2) The risk manager shall:
         (a) except as provided in Subsection (4), acquire and administer the following
 purchased by the state or any captive insurance company created by the risk manager:
         [(i) all property, casualty insurance; and]
         (i) all property and casualty insurance;
         (ii) reinsurance of property and casualty insurance; and
         [(ii)] (iii) subject to Section 34A-2-203, workers' compensation insurance;
         (b) recommend that the executive director make rules:
         (i) prescribing reasonable and objective underwriting and risk control standards for
 [state agencies;]:
         (A) all covered entities of the Risk Management Fund; and
         (B) any captive insurance company created by the risk manager;
         (ii) prescribing the risks to be covered by the Risk Management Fund and the extent to
 which these risks will be covered;
         (iii) prescribing the properties, risks, deductibles, and amount limits eligible for
 payment out of the [fund] Risk Management Fund;
         (iv) prescribing procedures for making claims and proof of loss; and
         (v) establishing procedures for the resolution of disputes relating to coverage or claims,
 which may include binding arbitration;
         (c) implement a risk management and loss prevention program for [state agencies]
 covered entities for the purpose of reducing risks, accidents, and losses to assist [state officers
 and employees] covered entities in fulfilling their responsibilities for risk control and safety;
         (d) coordinate and cooperate with any [state agency] covered entity having
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        Enrolled Copy                                                                          H.B. 50
 responsibility to manage and protect state properties, including:
        (i) the state fire marshal;
        (ii) the director of the Division of Facilities Construction and Management;
        (iii) the Department of Public Safety; [and]
        (iv) institutions of higher education;
        (v) school districts; and
        (vi) charter schools;
        (e) maintain records necessary to fulfill the requirements of this section;
        (f) manage the [fund] Risk Management Fund and any captive insurance company
 created by the risk manager in accordance with economically and actuarially sound principles
 to produce adequate reserves for the payment of contingencies, including unpaid and
 unreported claims, and may purchase any insurance or reinsurance considered necessary to
 accomplish this objective; and
        (g) inform the [agency's] covered entity's governing body and the governor when any
 [agency] covered entity fails or refuses to comply with reasonable risk control
 recommendations made by the risk manager.
        (3) Before the effective date of any rule, the risk manager shall provide a copy of the
 rule to each [agency] covered entity affected by it.
        (4) The risk manager may not use a captive insurance company created by the risk
 manager to purchase:
        (a) workers' compensation insurance;
        (b) health insurance; or
        (c) life insurance.
        Section 5. Section 63A-4-102 is amended to read:
        63A-4-102. Risk manager -- Powers.
        (1) The risk manager may:
        (a) enter into contracts;
        (b) form one or more captive insurance companies authorized under Title 31A, Chapter
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        H.B. 50                                                                           Enrolled Copy
 37, Captive Insurance Companies Act;
         [(b)] (c) purchase insurance or reinsurance;
         [(c)] (d) adjust, settle, and pay claims;
         [(d)] (e) pay expenses and costs;
         [(e)] (f) study the risks of all [state agencies] covered entities and properties;
         [(f)] (g) issue certificates of coverage [to state agencies for] or insurance for covered
 entities with respect to any risks covered by the Risk Management Fund or any captive
 insurance company created by the risk manager;
         [(g)] (h) make recommendations about risk management and risk reduction strategies
 to [state agencies] covered entities;
         [(h)] (i) in consultation with the attorney general, prescribe insurance, indemnification,
 and liability provisions to be included in all state contracts;
         [(i)] (j) review [agency] covered entity building construction, major remodeling plans,
 agency program plans, and make recommendations to the agency about needed changes to
 address risk considerations;
         [(j)] (k) attend agency planning and management meetings when necessary;
         [(k)] (l) review any proposed legislation and communicate with legislators and
 legislative committees about the liability or risk management issues connected with any
 legislation; and
         [(l)] (m) solicit any needed information about agency plans, agency programs, or
 agency risks necessary to perform the risk manager's responsibilities under this part.
         (2) (a) The risk manager may expend money from the Risk Management Fund to
 procure and provide coverage to all [state agencies] covered entities and their indemnified
 employees, except those [agencies] entities or employees specifically exempted by statute.
         (b) The risk manager shall apportion the costs of that coverage according to the
 requirements of this part.
         (3) Before charging a rate, fee, or other amount to an executive branch agency, or to a
 subscriber of services other than an executive branch agency, the director shall:
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        Enrolled Copy                                                                             H.B. 50
        (a) submit the proposed rates, fees, or other amount and cost analysis to the Rate
 Committee established in Section 63A-1-114; and
        (b) obtain the approval of the Legislature as required by Section 63J-1-410.
        (4) The director shall conduct a market analysis by July 1, 2005, and periodically
 thereafter, of proposed rates and fees, which analysis shall include a comparison of the
 division's rates and fees with the fees of other public or private sector providers where
 comparable services and rates are reasonably available.
        Section 6. Section 63A-4-103 is amended to read:
        63A-4-103. Risk management -- Duties of covered entities.
        (1) (a) Unless [specifically] expressly authorized by statute [to do so, a state agency], a
 covered entity may not:
        (i) purchase insurance or self-fund any risk unless authorized by the risk manager; or
        (ii) procure or provide liability insurance for the state.
        (b) (i) Notwithstanding the provisions of Subsection (1)(a), the Utah Board of Higher
 Education may authorize higher education institutions to purchase insurance for, or self-fund,
 risks associated with their programs and activities that are not covered through the risk
 manager.
        (ii) The Utah Board of Higher Education shall provide copies of those purchased
 policies to the risk manager.
        (iii) The Utah Board of Higher Education shall ensure that the state is named as
 additional insured on any of those policies.
        (2) Each [state agency] covered entity shall:
        (a) comply with reasonable risk related recommendations made by the risk manager;
        (b) participate in risk management training activities conducted or sponsored by the
 risk manager;
        (c) include the insurance, indemnification, and liability provisions prescribed by the
 risk manager in all state contracts, together with a statement certifying to the other party to the
 contract that the insurance and liability provisions in the contract are those prescribed by the
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        H.B. 50                                                                         Enrolled Copy
 risk manager;
        (d) [at each principal design stage,] upon request of the risk manager, provide written
 notice to the risk manager that construction and major remodeling plans relating to [agency]
 covered entity buildings and facilities to be covered by the [fund] Risk Management Fund are
 available for review at each principal design stage, for risk control purposes, and make them
 available to the risk manager for [his] review and to provide recommendations; and
        (e) cooperate fully with requests from the risk manager for [agency] covered entity
 planning, program, or risk related information, and allow the risk manager to attend [agency]
 covered entity planning and management meetings.
        (3) Failure to include in the contract the provisions required by Subsection (2)(c) does
 not make the contract unenforceable by the state.
        Section 7. Section 63A-4-201 is amended to read:
        63A-4-201. Risk Management Fund created -- Administration -- Use.
        (1) (a) There is created the Risk Management Fund, which shall be administered by the
 risk manager.
        (b) The fund shall cover property, liability, fidelity, and other risks as determined by
 the risk manager in consultation with the executive director.
        (2) The risk manager may only use the [fund] Risk Management Fund to pay:
        (a) insurance or reinsurance premiums;
        (b) costs of administering the [fund] Risk Management Fund and any captive insurance
 companies created by the risk manager;
        (c) loss adjustment expenses;
        (d) risk control and related educational and training expenses; and
        (e) loss costs which at the time of loss were eligible for payment under rules previously
 issued by the executive director under the authority of Section [63A-4-101] 63A-4-101.5.
        (3) In addition to any money appropriated to the [fund] Risk Management Fund by the
 Legislature, the risk manager shall deposit with the state treasurer for credit to the [fund] Risk
 Management Fund:
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        Enrolled Copy                                                                             H.B. 50
          (a) any insured loss or loss expenses paid by insurance or reinsurance companies;
          (b) the gross amount of all premiums and surcharges received under Section
 63A-4-202;
          (c) the net refunds from cancelled insurance policies necessary to self-insure previously
 insured risks, with the balance of the proceeds to be refunded to the previously insured
 [agencies] entities;
          (d) all refunds, returns, or dividends from insurance carriers not specifically covered in
 Subsections (3)(a), (b), and (c);
          (e) savings from amounts otherwise appropriated for participation in the fund; and
          (f) all net proceeds from sale of salvage and subrogation recoveries from adverse
 parties related to losses paid out of the fund.
          [(4) (a) Pending disbursement, the risk manager shall provide surplus money in the
 fund to the state treasurer for investment as provided in Title 51, Chapter 7, State Money
 Management Act.]
          [(b) The state treasurer shall deposit all interest earned on invested fund money into the
 fund.]
          (4) The state treasurer shall invest the Risk Management Fund in accordance with
 Section 63A-4-208 and deposit all interest or other income earned from investments into the
 Risk Management Fund.
          Section 8. Section 63A-4-202 is amended to read:
          63A-4-202. Determination of insurance premiums -- Information furnished by
 covered entities -- Notice to covered entities.
          (1) Each [agency] covered entity shall provide the risk manager wi