Enrolled Copy H.B. 410
1 INSURANCE AMENDMENTS
2 2023 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: James A. Dunnigan
5 Senate Sponsor: Curtis S. Bramble
6
7 LONG TITLE
8 General Description:
9 This bill amends the Insurance Code, the Public Employees' Benefit and Insurance
10 Program Act, and related provisions.
11 Highlighted Provisions:
12 This bill:
13 < makes changes to provisions of the Insurance Code to:
14 C amend what is considered protected work papers when the commissioner
15 conducts an examination;
16 C amend requirements for service of process;
17 C increase the amount of the annual appropriation for the Captive Insurance
18 Division;
19 C amend the required process for insurers to file certain documents;
20 C specify the filing requirements for insurers to submit annual statements with the
21 National Association of Insurance Commissioners;
22 C prohibit insurance credit when a risk is ceded to an out-of-state captive;
23 C eliminate certain requirements for a title insurance licensee to submit certain
24 filings;
25 C enacts provisions requiring certain reporting for insurers that offer large
26 employer health benefit plans;
27 C add a limited line insurance producer license for pet insurance;
28 C permit the Department of Insurance (department) to take action against licensees
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29 if the licensee enters a plea in abeyance to certain crimes;
30 C clarify provisions related to title insurance companies' deposit of trust money in
31 federally-insured depository institutions in Utah;
32 C eliminate the requirement that the Title and Escrow Commission (commission)
33 establish in rule an amount of costs and expenses that are covered by the annual
34 assessment on agency title insurance producers and title insurers (annual
35 assessment);
36 C allow the commission to approve costs and expenses covered by the annual
37 assessment for the prior fiscal year;
38 C eliminate the limitation on the amount of costs covered by the annual
39 assessment;
40 C create the State Mandated Insurer Payments Restricted Account (account) and
41 provide that appropriations from the account are nonlapsing;
42 C amend requirements for the method of reporting insurance fraud;
43 C eliminate the requirement that an association of captives be in continuous
44 existence for at least one year;
45 C change requirements for a captive insurer's paid-in capital;
46 C prohibit insuring an award of punitive damages against a third party; and
47 C amend the requirements for pure captive insurance companies to which the
48 commissioner issues a certificate of authority;
49 < amends provisions related to certain recommendations for benefit and rate
50 adjustments for state employees that the Public Employees' Benefit and Insurance
51 Program is required to submit;
52 < makes technical and conforming changes; and
53 < defines terms.
54 Money Appropriated in this Bill:
55 None
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56 Other Special Clauses:
57 None
58 Utah Code Sections Affected:
59 AMENDS:
60 31A-2-204, as last amended by Laws of Utah 2018, Chapter 319
61 31A-2-310, as last amended by Laws of Utah 1995, Chapter 20
62 31A-3-304, as last amended by Laws of Utah 2019, Chapter 193
63 31A-4-113.5, as last amended by Laws of Utah 2003, Chapter 252
64 31A-16-103, as last amended by Laws of Utah 2018, Chapter 319
65 31A-17-404, as last amended by Laws of Utah 2021, Chapter 252
66 31A-19a-209, as last amended by Laws of Utah 2015, Chapters 312, 330
67 31A-23a-106, as last amended by Laws of Utah 2015, Chapter 330
68 31A-23a-111, as last amended by Laws of Utah 2022, Chapter 198
69 31A-23a-406, as last amended by Laws of Utah 2021, Chapter 252
70 31A-23a-409, as last amended by Laws of Utah 2021, Chapter 252
71 31A-23a-415, as last amended by Laws of Utah 2020, Chapter 32
72 31A-23b-401, as last amended by Laws of Utah 2020, Chapter 32
73 31A-25-208, as last amended by Laws of Utah 2020, Chapter 32
74 31A-26-213, as last amended by Laws of Utah 2020, Chapter 32
75 31A-30-118, as last amended by Laws of Utah 2020, Chapter 32
76 31A-31-110, as last amended by Laws of Utah 2008, Chapter 150
77 31A-35-504, as last amended by Laws of Utah 2021, Second Special Session, Chapter 4
78 31A-37-102, as last amended by Laws of Utah 2021, Chapter 252
79 31A-37-202, as last amended by Laws of Utah 2021, Chapter 252
80 31A-37-204, as last amended by Laws of Utah 2021, Chapter 252
81 49-20-401, as last amended by Laws of Utah 2022, Chapter 302
82 63J-1-602.1, as last amended by Laws of Utah 2022, Chapters 48, 191, 255, 335, 415,
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83 and 451
84 ENACTS:
85 31A-22-728, Utah Code Annotated 1953
86
87 Be it enacted by the Legislature of the state of Utah:
88 Section 1. Section 31A-2-204 is amended to read:
89 31A-2-204. Conducting examinations.
90 (1) As used in this section, "work papers" means a record that is created or relied upon:
91 (a) during the course of an examination conducted under Section 31A-2-203; [or]
92 (b) in drafting an examination report[.]; or
93 (c) in requesting, responding to a request, or reviewing a response to a request under
94 Section 31A-2-202.
95 (2) (a) For each examination under Section 31A-2-203, the commissioner shall issue an
96 order:
97 (i) stating the scope of the examination; and
98 (ii) designating the examiner in charge.
99 (b) The commissioner need not give advance notice of an examination to an examinee.
100 (c) The examiner in charge shall give the examinee a copy of the order issued under
101 this Subsection (2).
102 (d) (i) The commissioner may alter the scope or nature of an examination at any time
103 without advance notice to the examinee.
104 (ii) If the commissioner amends an order described in this Subsection (2), the
105 commissioner shall provide a copy of any amended order to the examinee.
106 (e) Statements in the commissioner's examination order concerning examination scope
107 are for the examiner's guidance only.
108 (f) Examining relevant matters not mentioned in an order issued under this Subsection
109 (2) is not a violation of this title.
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110 (3) The commissioner shall, whenever practicable, cooperate with the insurance
111 regulators of other states by conducting joint examinations of:
112 (a) multistate insurers doing business in this state; or
113 (b) other multistate licensees doing business in this state.
114 (4) An examiner authorized by the commissioner shall, when necessary to the purposes
115 of the examination, have access at all reasonable hours to the premises and to any books,
116 records, files, securities, documents, or property of:
117 (a) the examinee; and
118 (b) any of the following if the premises, books, records, files, securities, documents, or
119 property relate to the affairs of the examinee:
120 (i) an officer of the examinee;
121 (ii) any other person who:
122 (A) has executive authority over the examinee; or
123 (B) is in charge of any segment of the examinee's affairs; or
124 (iii) any affiliate of the examinee under Subsection 31A-2-203(1)(b).
125 (5) (a) The officers, employees, and agents of the examinee and of persons under
126 Subsection 31A-2-203(1)(b) shall comply with every reasonable request of the examiners for
127 assistance in any matter relating to the examination.
128 (b) A person may not obstruct or interfere with the examination except by legal
129 process.
130 (6) If the commissioner finds the accounts or records to be inadequate for proper
131 examination of the condition and affairs of the examinee or improperly kept or posted, the
132 commissioner may employ experts to rewrite, post, or balance the accounts or records at the
133 expense of the examinee.
134 (7) (a) The examiner in charge of an examination shall make a report of the
135 examination no later than 60 days after the completion of the examination that shall include:
136 (i) the information and analysis ordered under Subsection (2); and
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137 (ii) the examiner's recommendations.
138 (b) At the option of the examiner in charge, preparation of the report may include
139 conferences with the examinee or representatives of the examinee.
140 (c) The report is confidential until the report becomes a public document under
141 Subsection (8), except the commissioner may use information from the report as a basis for
142 action under Chapter 27a, Insurer Receivership Act.
143 (8) (a) The commissioner shall serve a copy of the examination report described in
144 Subsection (7) upon the examinee.
145 (b) Within 20 days after service, the examinee shall:
146 (i) accept the examination report as written; or
147 (ii) request agency action to modify the examination report.
148 (c) The report is considered accepted under this Subsection (8) if the examinee does
149 not file a request for agency action to modify the report within 20 days after service of the
150 report.
151 (d) If the examination report is accepted:
152 (i) the examination report immediately becomes a public document; and
153 (ii) the commissioner shall distribute the examination report to all jurisdictions in
154 which the examinee is authorized to do business.
155 (e) (i) Any adjudicative proceeding held as a result of the examinee's request for
156 agency action shall, upon the examinee's demand, be closed to the public, except that the
157 commissioner need not exclude any participating examiner from this closed hearing.
158 (ii) Within 20 days after the hearing held under this Subsection (8)(e), the
159 commissioner shall:
160 (A) adopt the examination report with any necessary modifications; and
161 (B) serve a copy of the adopted report upon the examinee.
162 (iii) Unless the examinee seeks judicial relief, the adopted examination report:
163 (A) shall become a public document 10 days after service; and
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164 (B) may be distributed as described in this section.
165 (f) Notwithstanding Title 63G, Chapter 4, Administrative Procedures Act, to the extent
166 that this section is in conflict with Title 63G, Chapter 4, Administrative Procedures Act, this
167 section governs:
168 (i) a request for agency action under this section; or
169 (ii) adjudicative proceeding under this section.
170 (9) The examinee shall promptly furnish copies of the adopted examination report
171 described in Subsection (8) to each member of the examinee's board.
172 (10) After an examination report becomes a public document under Subsection (8), the
173 commissioner may furnish, without cost or at a reasonable price set under Section 31A-3-103,
174 a copy of the examination report to interested persons, including:
175 (a) a member of the board of the examinee; or
176 (b) one or more newspapers in this state.
177 (11) (a) In a proceeding by or against the examinee, or any officer or agent of the
178 examinee, the examination report as adopted by the commissioner is admissible as evidence of
179 the facts stated in the report.
180 (b) In any proceeding commenced under Chapter 27a, Insurer Receivership Act, the
181 examination report, whether adopted by the commissioner or not, is admissible as evidence of
182 the facts stated in the examination report.
183 (12) Work papers are protected records under Title 63G, Chapter 2, Government
184 Records Access and Management Act.
185 Section 2. Section 31A-2-310 is amended to read:
186 31A-2-310. Procedure for service of process through state officer.
187 (1) Service upon the commissioner or lieutenant governor under Section 31A-2-309 is
188 service on the principal, if:
189 (a) [two copies of the process] the following are delivered personally or to the office of
190 the official designated in Section 31A-2-309[, and]:
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191 (i) two copies of the process to be served; and
192 (ii) a certificate of proof of service that meets the requirements of Subsection (3), dated
193 and signed by the official designated in Section 31A-2-309; and
194 (b) that official mails a copy of the process to the person to be served according to
195 Subsection (2)(b).
196 (2) (a) The commissioner and the lieutenant governor shall give receipts for and keep
197 records of all process served through them.
198 (b) The commissioner or the lieutenant governor shall immediately send by certified
199 mail one copy of the process received to the person to be served at that person's last known
200 principal place of business, residence, or post-office address. The commissioner or the
201 lieutenant governor shall retain the other copy for his files.
202 (c) No plaintiff or complainant may take a judgment by default in any proceeding in
203 which process is served under this section and Section 31A-2-309 until the expiration of 40
204 days from the date of service of process under Subsection (2)(b).
205 (3) Proof of service shall be evidenced by a certificate by the official designated in
206 Section 31A-2-309, showing service made upon him and mailing by him, and attached to a
207 copy of the process presented to him for that purpose.
208 (4) When process is served under this section, the words "twenty days" in the first
209 sentence of Rule 12(a) of the Utah Rules of Civil Procedure shall be changed to read "forty
210 days."
211 Section 3. Section 31A-3-304 is amended to read:
212 31A-3-304. Annual fees -- Other taxes or fees prohibited -- Captive Insurance
213 Restricted Account.
214 (1) (a) A captive insurance company shall pay an annual fee imposed under this section
215 to obtain or renew a certificate of authority.
216 (b) The commissioner shall:
217 (i) determine the annual fee pursuant to Section 31A-3-103; and
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218 (ii) consider whether the annual fee is competitive with fees imposed by other states on
219 captive insurance companies.
220 (2) A captive insurance company that fails to pay the fee required by this section is
221 subject to the relevant sanctions of this title.
222 (3) (a) A captive insurance company that pays one of the following fees is exempt from
223 Title 59, Chapter 7, Corporate Franchise and Income Taxes, and Title 59, Chapter 9, Taxation
224 of Admitted Insurers:
225 (i) a fee under this section;
226 (ii) a fee under Chapter 37, Captive Insurance Companies Act; or
227 (iii) a fee under Chapter 37a, Special Purpose Financial Captive Insurance Company
228 Act.
229 (b) The state or a county, city, or town within the state may not levy or collect an
230 occupation tax or other fee or charge not described in Subsections (3)(a)(i) through (iii) against
231 a captive insurance company.
232 (c) The state may not levy, assess, or collect a withdrawal fee under Section 31A-4-115
233 against a captive insurance company.
234 (4) A captive insurance company shall pay the fee imposed by this section to the
235 commissioner by June 1 of each year.
236 (5) (a) Money received pursuant to a fee described in Subsection (3)(a) shall be
237 deposited into the Captive Insurance Restricted Account.
238 (b) There is created in the General Fund a restricted account known as the "Captive
239 Insurance Restricted Account."
240 (c) The Captive Insurance Restricted Account shall consist of the fees described in
241 Subsection (3)(a).
242 (d) The commissioner shall administer the Captiv