Rep. Norm Thurston — Voting Record

Bill

Number

H.B. 409 First Substitute (2018GS)

Sponsor

Rep. Dunnigan, J.

Final action

Governor Signed 3/21/2018

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• extends guaranty association membership and coverage to health maintenance organizations;
• excludes structured settlement factoring transactions and Medicaid from guaranty association coverage;
• specifies that benefits provided by a long-term care rider to a life insurance policy or annuity contract shall be considered the same type of benefits as the base life insurance policy or annuity contract to which the rider relates;
• excludes a policy or contract for an accident and health insurance benefit from the "Moody's rollback" limitation on interest rates, credit rates, and other similar factors;
• increases the number of members on the guaranty association board of directors;
• allows the guaranty association to file for justified rate increases;
• addresses substitute coverage provided by the guaranty association for an indexed policy or contract;
• removes the $300 limit on Class A assessments;
• provides that assessments for a long-term care insurer insolvency be shared with a split of:
• 25% to accident and health member insurers; and
• 75% to the life insurance and annuity member insurers;
• exempts a health maintenance organization from liability or assessment for a long-term care insurer that becomes impaired or insolvent before January 1, 2021;
• provides for the recoupment of assessments; and

Every vote on this bill

Bill text

UTAH LIFE AND HEALTH INSURANCE GUARANTY
ASSOCIATION AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: James A. Dunnigan
Senate Sponsor: 
Curtis S. Bramble
LONG TITLE
General Description:
This bill amends provisions relating to the Utah Life and Health Insurance Guaranty
Association.
Highlighted Provisions:
This bill:
▸ extends guaranty association membership and coverage to health maintenance
organizations;
▸ excludes structured settlement factoring transactions and Medicaid from guaranty
association coverage;
▸ specifies that benefits provided by a long-term care rider to a life insurance policy or
annuity contract shall be considered the same type of benefits as the base life
insurance policy or annuity contract to which the rider relates;
▸ excludes a policy or contract for an accident and health insurance benefit from the
"Moody's rollback" limitation on interest rates, credit rates, and other similar
factors;
▸ increases the number of members on the guaranty association board of directors;
▸ allows the guaranty association to file for justified rate increases;
▸ addresses substitute coverage provided by the guaranty association for an indexed
policy or contract;
▸ removes the $300 limit on Class A assessments;
▸ provides that assessments for a long-term care insurer insolvency be shared with a
split of:
• 25% to accident and health member insurers; and
• 75% to the life insurance and annuity member insurers;
▸ exempts a health maintenance organization from liability or assessment for a
long-term care insurer that becomes impaired or insolvent before January 1, 2021;
▸ provides for the recoupment of assessments; and
▸ makes technical and conforming changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides a special effective date.
Utah Code Sections Affected:
AMENDS:
31A-8-103
, as last amended by Laws of Utah 2017, Chapter 292
31A-27a-403
, as enacted by Laws of Utah 2007, Chapter 309
31A-27a-701
, as last amended by Laws of Utah 2014, Chapters 290 and 300
31A-27a-702
, as enacted by Laws of Utah 2007, Chapter 309
31A-28-102
, as last amended by Laws of Utah 2001, Chapters 116 and 161
31A-28-103
, as last amended by Laws of Utah 2010, Chapter 292
31A-28-105
, as last amended by Laws of Utah 2010, Chapter 292
31A-28-106
, as last amended by Laws of Utah 2006, Chapter 320
31A-28-107
, as last amended by Laws of Utah 2011, Chapter 284
31A-28-108
, as last amended by Laws of Utah 2010, Chapter 292
31A-28-109
, as last amended by Laws of Utah 2010, Chapter 292
31A-28-111
, as last amended by Laws of Utah 2010, Chapter 292
31A-28-112
, as last amended by Laws of Utah 2010, Chapter 292
31A-28-113
, as last amended by Laws of Utah 2011, Chapter 342
31A-28-114
, as last amended by Laws of Utah 2010, Chapter 292
31A-28-119
, as last amended by Laws of Utah 2010, Chapter 292
31A-28-120
, as last amended by Laws of Utah 2010, Chapter 292
ENACTS:
59-7-623
, Utah Code Annotated 1953
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
31A-8-103
 is amended to read:
31A-8-103.
Applicability to other provisions of law.
(1) (a) Except for exemptions specifically granted under this title, an organization is
subject to regulation under all of the provisions of this title.
(b) Notwithstanding any provision of this title, an organization licensed under this
chapter:
(i) is wholly exempt from:
(A) Chapter 7, Nonprofit Health Service Insurance Corporations;
(B) Chapter 9, Insurance Fraternals;
(C) Chapter 10, Annuities;
(D) Chapter 11, Motor Clubs;
(E) Chapter 12, State Risk Management Fund; 
and
(F) Chapter 19a, Utah Rate Regulation Act; and
[
(G) Chapter 28, Part 1, Utah Life and Health Insurance Guaranty Association Act;
and
]
(ii) is not subject to:
(A) Chapter 3, Department Funding, Fees, and Taxes, except for Part 1, Funding the
Insurance Department;
(B) Section 
31A-4-107
;
(C) Chapter 5, Domestic Stock and Mutual Insurance Corporations, except for
provisions specifically made applicable by this chapter;
(D) Chapter 14, Foreign Insurers, except for provisions specifically made applicable by
this chapter;
(E) Chapter 17, Determination of Financial Condition, except:
(I) Part 2, Qualified Assets, and Part 6, Risk-Based Capital; or
(II) as made applicable by the commissioner by rule consistent with this chapter;
(F) Chapter 18, Investments, except as made applicable by the commissioner by rule
consistent with this chapter; and
(G) Chapter 22, Contracts in Specific Lines, except for Part 6, Accident and Health
Insurance, Part 7, Group Accident and Health Insurance, and Part 12, Reinsurance.
(2) The commissioner may by rule waive other specific provisions of this title that the
commissioner considers inapplicable to limited health plans, upon a finding that the waiver
will not endanger the interests of:
(a) enrollees;
(b) investors; or
(c) the public.
(3) Title 16, Chapter 6a, Utah Revised Nonprofit Corporation Act, and Title 16,
Chapter 10a, Utah Revised Business Corporation Act, do not apply to an organization except as
specifically made applicable by:
(a) this chapter;
(b) a provision referenced under this chapter; or
(c) a rule adopted by the commissioner to deal with corporate law issues of health
maintenance organizations that are not settled under this chapter.
(4) (a) Whenever in this chapter, Chapter 5, Domestic Stock and Mutual Insurance
Corporations, or Chapter 14, Foreign Insurers, is made applicable to an organization, the
application is:
(i) of those provisions that apply to a mutual corporation if the organization is
nonprofit; and
(ii) of those that apply to a stock corporation if the organization is for profit.
(b) When Chapter 5, Domestic Stock and Mutual Insurance Corporations, or Chapter
14, Foreign Insurers, is made applicable to an organization under this chapter, "mutual" means
nonprofit organization.
(5) Solicitation of enrollees by an organization is not a violation of any provision of
law relating to solicitation or advertising by health professionals if that solicitation is made in
accordance with:
(a) this chapter; and
(b) Chapter 23a, Insurance Marketing - Licensing Producers, Consultants, and
Reinsurance Intermediaries.
(6) This title does not prohibit any health maintenance organization from meeting the
requirements of any federal law that enables the health maintenance organization to:
(a) receive federal funds; or
(b) obtain or maintain federal qualification status.
(7) Except as provided in Chapter 45, Managed Care Organizations, an organization is
exempt from statutes in this title or department rules that restrict or limit the organization's
freedom of choice in contracting with or selecting health care providers, including Section
31A-22-618
.
(8) An organization is exempt from the assessment or payment of premium taxes
imposed by Sections 
59-9-101
 through 
59-9-104
.
Section 2. Section 
31A-27a-403
 is amended to read:
31A-27a-403.
Continuance of coverage -- Health maintenance organizations.
(1) As used in this section:
(a) "Basic health care services" is as defined in Section 
31A-8-101
.
(b) "Enrollee" is as defined in Section 
31A-8-101
.
(c) "Health care" is as defined in Section 
31A-1-301
.
(d) "Health maintenance organization" is as defined in Section 
31A-8-101
.
(e) "Limited health plan" is as defined in Section 
31A-8-101
.
(f) (i) "Managed care organization" means an entity licensed by, or holding a certificate
of authority from, the department to furnish health care services or health insurance.
(ii) "Managed care organization" includes:
(A) a limited health plan;
(B) a health maintenance organization;
(C) a preferred provider organization;
(D) a fraternal benefit society; or
(E) an entity similar to an entity described in Subsections (1)(f)(ii)(A) through (D).
(iii) "Managed care organization" does not include:
(A) an insurer or other person that is eligible for membership in a guaranty association
under Chapter 28, Guaranty Associations;
(B) a mandatory state pooling plan;
(C) a mutual assessment company or an entity that operates on an assessment basis; or
(D) an entity similar to an entity described in Subsections (1)(f)(iii)(A) through (C).
(g) "Participating provider" means a provider who, under a contract with a managed
care organization authorized under Section 
31A-8-407
, agrees to provide health care services to
enrollees with an expectation of receiving payment:
(i) directly or indirectly, from the managed care organization; and
(ii) other than a copayment.
(h) "Participating provider contract" means the agreement between a participating
provider and a managed care organization authorized under Section 
31A-8-407
.
(i) "Preferred provider" means a provider who agrees to provide health care services
under an agreement authorized under Subsection 
31A-22-617
(1).
(j) "Preferred provider contract" means the written agreement between a preferred
provider and a managed care organization authorized under Subsection 
31A-22-617
(1).
(k) (i) Except as provided in Subsection (1)(k)(ii), "preferred provider organization"
means a person that:
(A) furnishes at a minimum, through a preferred provider, basic health care services to
an enrollee in return for prepaid periodic payments in an amount agreed to before the time
during which the health care may be furnished;
(B) is obligated to the enrollee to arrange for the services described in Subsection
(1)(k)(i)(A); and
(C) permits the enrollee to obtain health care services from a provider who is not a
preferred provider.
(ii) "Preferred provider organization" does not include:
(A) an insurer licensed under Chapter 7, Nonprofit Health Service Insurance
Corporations; or
(B) an individual who contracts to render professional or personal services that the
individual performs.
(l) "Provider" is as defined in Section 
31A-8-101
.
(m) "Uncovered expenditure" means a cost of health care services that is covered by an
organization for which an enrollee is liable in the event of the managed care organization's
insolvency.
(2) The rehabilitator or liquidator may take one or more of the actions described in
Subsections (2)(a) through (g) to assure continuation of health care coverage for enrollees of an
insolvent managed care organization.
(a) (i) Subject to Subsection (2)(a)(ii), a rehabilitator or liquidator may require a
participating provider or preferred provider to continue to provide the health care services the
provider is required to provide under the provider's participating provider contract or preferred
provider contract until the earlier of:
(A) 90 days after the day on which the following is filed:
(I) a petition for rehabilitation; or
(II) a petition for liquidation; or
(B) the day on which the term of the contract ends.
(ii) A requirement by the rehabilitator or liquidator under Subsection (2)(a)(i) that a
participating provider or preferred provider continue to provide health care services under the
provider's participating provider contract or preferred provider contract expires when health
care coverage for all enrollees of the insolvent managed care organization is obtained from
another managed care organization or insurer.
(b) (i) Subject to Subsection (2)(b)(ii), a rehabilitator or liquidator may reduce the fees
a participating provider or preferred provider is otherwise entitled to receive from the managed
care organization under the provider's participating provider contract or preferred provider
contract during the time period in Subsection (2)(a)(i).
(ii) Notwithstanding Subsection (2)(b)(i), a rehabilitator or liquidator may not reduce a
fee to less than 75% of the regular fee set forth in the provider's participating provider contract
or preferred provider contract.
(iii) An enrollee shall continue to pay the same copayments, deductibles, and other
payments for services received from a participating provider or preferred provider that the
enrollee is required to pay before the day on which the following is filed:
(A) the petition for rehabilitation; or
(B) the petition for liquidation.
(c) A participating provider or preferred provider shall:
(i) accept the amounts specified in Subsection (2)(b) as payment in full; and
(ii) relinquish the right to collect additional amounts from the insolvent managed care
organization's enrollee.
(d) Subsections (2)(b) and (c) apply to the fees paid to a provider who agrees to
provide health care services to an enrollee but is not a preferred or participating provider.
[
(e) If the managed care organization is a health maintenance organization, Subsections
(2)(e)(i) through (vi) apply.
]
(e) This Subsection (2)(e) applies to a managed care organization that is a health
maintenance organization for a delinquency proceeding under this chapter that is initiated
before May 8, 2018.
(i) A solvent health maintenance organization licensed under Chapter 8, Health
Maintenance Organizations and Limited Health Plans, shall extend to the enrollees of an
insolvent health maintenance organization all rights, privileges, and obligations of being an
enrollee in the accepting health maintenance organization:
(A) subject to Subsections (2)(e)(ii), (iii), and (v);
(B) upon notification from and subject to the direction of the rehabilitator or liquidator
of an insolvent health maintenance organization licensed under Chapter 8, Health Maintenance
Organizations and Limited Health Plans; and
(C) if the solvent health maintenance organization operates within a portion of the
insolvent health maintenance organization's service area.
(ii) Notwithstanding Subsection (2)(e)(i), the accepting health maintenance
organization shall give credit to an enrollee for any waiting period already satisfied under the
enrollee's contract with the insolvent health maintenance organization.
(iii) A health maintenance organization accepting an enrollee of an insolvent health
maintenance organization under Subsection (2)(e)(i) shall charge the enrollee the premiums
applicable to the existing business of the accepting health maintenance organization.
(iv) A health maintenance organization's obligation to accept an enrollee under
Subsection (2)(e)(i) is limited in number to the accepting health maintenance organization's pro
rata share of all health maintenance organization enrollees in this state, as determined after
excluding the enrollees of the insolvent insurer.
(v) (A) The rehabilitator or liquidator of an insolvent health maintenance organization
shall take those measures that are possible to ensure that no health maintenance organization is
required to accept more than its pro rata share of the adverse risk represented by the enrollees
of the insolvent health maintenance organization.
(B) If the methodology used by the rehabilitator or liquidator to assign an enrollee is
one that can be expected to produce a reasonably equitable distribution of adverse risk, that
methodology and its results are acceptable under this Subsection (2)(e)(v).
(vi) (A) Notwithstanding Section 
31A-27a-402
, the rehabilitator or liquidator may
require all solvent health maintenance organizations to pay for the covered claims incurred by
the enrollees of the insolvent health maintenance organization.
(B) As determined by the rehabilitator or liquidator, payments required under this
Subsection (2)(e)(vi) may:
(I) begin as of the day on which the following is filed:
(Aa) the petition for rehabilitation; or
(Bb) the petition for liquidation; and
(II) continue for a maximum period through the time all enrollees are assigned pursuant
to this section.
(C) If the rehabilitator or liquidator makes an assessment under this Subsection
(2)(e)(vi), the rehabilitator or liquidator shall assess each solvent health maintenance
organization its pro rata share of the total assessment based upon its premiums from the
previous calendar year.
(D) (I) A solvent health maintenance organization required to pay for covered claims
under this Subsection (2)(e)(vi) may file a claim against the estate of the insolvent health
maintenance organization.
(II) Any claim described in Subsection (2)(e)(vi)(D)(I), if allowed by the rehabilitator
or liquidator, shall share in any distributions from the estate of the insolvent health
maintenance organization as a Class 3 claim.
(f) (i) A rehabilitator or liquidator may transfer, through sale or otherwise, the group
and individual health care obligations of the insolvent managed care organization to one or
more other managed care organizations or other insurers, if those other managed care
organizations and other insurers:
(A) are licensed to provide the same health care services in this state that are held by
the insolvent managed care organization; or
(B) have a certificate of authority to provide the same health care services in this state
that is held by the insolvent managed care organization.
(ii) The rehabilitator or liquidator may combine group and individual health care
obligations of the insolvent managed care organization in any manner the rehabilitator or
liquidator considers best to provide for continuous health care coverage for the maximum
number of enrollees of the insolvent managed care organization.
(iii) If the terms of a proposed transfer of the same combination of group and
individual policy obligations to more than one other managed care organization or insurer are
otherwise equal, the rehabilitator or liquidator shall give preference to the transfer of the group
and individual policy obligations of an insolvent managed care organization as follows:
(A) from one category of managed care organization to another managed care
organization of the same category, as follows:
(I) from a limited health plan to a limited health plan;
(II) from a health maintenance organization to a health maintenance organization;
(III) from a preferred provider organization to a preferred provider organization;
(IV) from a fraternal benefit society to a fraternal benefit society; and
(V) from an entity similar to an entity described in this Subsection (2)(f)(iii)(A) to a
category that is similar;
(B) from one category of managed care organization to another managed care
organization, regardless of the category of the transferee managed care organization; and
(C) from a managed care organization to a nonmanaged care provider of health care
coverage, including insurers.
(g) If an insolvent managed care organization has required surplus, a rehabilitator or
liquidator may use the insolvent managed care organization's required surplus to continue to
provide coverage for the insolvent managed care organization's enrollees, including paying
uncovered expenditures.
Section 3. Section 
31A-27a-701
 is amended to read:
31A-27a-701.
Priority of distribution.
(1) (a) The priority of payment of distributions on unsecured claims shall be in
accordance with the order in which each class of claim is set forth in this section except as
provided in Section 
31A-27a-702
.
(b) All claims in each class shall be paid in full or adequate funds retained for the
claim's payment before a member of the next class receives payment.
(c) All claims within a class shall be paid substantially the same percentage.
(d) Except as provided in Subsections (2)(a)(i)(E), (2)(k), and (2)(m), subclasses may
not be established within a class.
(e) A claim by a shareholder, policyholder, or other creditor may not be permitted to
circumvent the priority classes through the use of equitable remedies.
(2) The order of distribution of claims shall be as follows:
(a) a Class 1 claim, which:
(i) is a cost or expense of administration expressly approved or ratified by the
liquidator, including the following:
(A) the actual and necessary costs of preserving or recovering the property of the
insurer;
(B) reasonable compensation for all services rendered on behalf of the administrative
supervisor or receiver;
(C) a necessary filing fee;
(D) the fees and mileage payable to a witness;
(E) an unsecured loan obtained by the receiver, which:
(I) unless its terms otherwise provide, has priority over all other costs of
administration; and
(II) absent agreement to the contrary, shares pro rata with all other claims described in
this Subsection (2)(a)(i)(E); and
(F) an expense approved by the rehabilitator of the insurer, if any, incurred in the
course of the rehabilitation that is unpaid at the time of the entry of the order of liquidation; and
(ii) except as expressly approved by the receiver, excludes any expense arising from a
duty to indemnify a director, officer, or employee of the insurer which expense, if allowed, is a
Class 7 claim;
(b) a Class 2 claim, which:
(i) is a reasonable expense of a guaranty association, including overhead, salaries, or
other general administrative expenses allocable to the receivership such as:
(A) an administrative or claims handling expense;
(B) an expense in connection with arrangements for ongoing coverage; and
(C) in the case of a property and casualty guaranty association, a loss adjustment
expense, including:
(I) an adjusting or other expense; and
(II) a defense or cost containment expense; and
(ii) excludes an expense incurred in the performance of duties under Section
31A-28-112
 or similar duties under the statute governing a similar organization in another
state;
(c) a Class 3 claim, which:
(i) is:
(A) a claim under a policy of insurance including a third party claim;
(B) a claim under an annuity contract or funding agreement;
(C) a claim under a nonassessable policy for unearned premium;
(D) a claim of an obligee and, subject to the discretion of the receiver, a completion
contractor under a surety bond or surety undertaking, except for:
(I) a bail bond;
(II) a mortgage guaranty;
(III) a financial guaranty; or
(IV) other form of insurance offering protection against investment risk or warranties;
(E) a claim by a principal under a surety bond or surety undertaking for wrongful
dissipation of collateral by the insurer or its agents;
(F) an indemnity payment on:
(I) a covered claim; or
(II) 
for a delinquency proceeding under this chapter that is initiated before May 8,
2018,
 a payment for the continuation of coverage made by an entity responsible for the
payment of a claim or continuation of coverage of an insolvent health maintenance
organization;
(G) a claim for unearned premium;
(H) a claim incurred during the extension of coverage provided for in Sections
31A-27a-402
 and 
31A-27a-403
; or
(I) all other claims incurred in fulfilling the statutory obligations of a guaranty
association not included in Class 2, including:
(I) an indemnity payment on covered claims; and
(II) in the case of a life and health guaranty association, a claim:
(Aa) as a creditor of the impaired or insolvent insurer for a payment of and liabilities
incurred on behalf of a covered claim or covered obligation of the insurer; and
(Bb) for the funds needed to reinsure the obligations described under this Subsection
(2)(c)(i)(I)(II) with a solvent insurer; and
(ii) notwithstanding any other provision of this chapter, excludes the following which
shall be paid under Class 7, except as provided in this section:
(A) an obligation of the insolvent insurer arising out of a reinsurance contract;
(B) an obligation that is incurred pursuant to an occurrence policy or reported pursuant
to a claims made policy after:
(I) the expiration date of the policy;
(II) the policy is replaced by the insured;
(III) the policy is canceled at the insured's request; or
(IV) the policy is canceled as provided in this chapter;
(C) an obligation to an insurer, insurance pool, or underwriting association and the
insurer's, insurance pool's, or underwriting association's claim for contribution, indemnity, or
subrogation, equitable or otherwise, except for direct claims under a policy where the insurer is
the named insured;
(D) an amount accrued as punitive or exemplary damages unless expressly covered
under the terms of the policy, which shall be paid as a claim in Class 9;
(E) a tort claim of any kind against the insurer;
(F) a claim against the insurer for bad faith or wrongful settlement practices; and
(G) a claim of a guaranty association for assessments not paid by the insurer, which
claims shall be paid as claims in Class 7; and
(iii) notwithstanding Subsection (2)(c)(ii)(B), does not exclude an unearned premium
claim on a policy, other than a reinsurance agreement;
(d) a Class 4 claim, which is a claim under a policy for mortgage guaranty, financial
guaranty, or other forms of insurance offering protection against investment risk or warranties;
(e) a Class 5 claim, which is a claim of the federal government not included in Class 3
or 4;
(f) a Class 6 claim, which is a debt due an employee for services or benefits:
(i) to the extent that the expense:
(A) does not exceed the lesser of:
(I) $5,000; or
(II) two months' salary; and
(B) represents payment for services performed within one year before the day on which
the initial order of receivership is issued; and
(ii) which priority is in lieu of any other similar priority that may be authorized by law
as to wages or compensation of employees;
(g) a Class 7 claim, which is a claim of an unsecured creditor not included in Classes 1
through 6, including:
(i) a claim under a reinsurance contract;
(ii) a claim of a guaranty association for an assessment not paid by the insurer; and
(iii) other claims excluded from Class 3 or 4, unless otherwise assigned to Classes 8
through 13;
(h) subject to Subsection (3), a Class 8 claim, which is:
(i) a claim of a state or local government, except a claim specifically classified
elsewhere in this section; or
(ii) a claim for services rendered and expenses incurred in opposing a formal
delinquency proceeding;
(i) a Class 9 claim, which is a claim for penalties, punitive damages, or forfeitures,
unless expressly covered under the terms of a policy of insurance;
(j) a Class 10 claim, which is, except as provided in Subsections 
31A-27a-601
(2) and
31A-27a-601
(3), a late filed claim that would otherwise be classified in Classes 3 through 9;
(k) subject to Subsection (4), a Class 11 claim, which is:
(i) a surplus note;
(ii) a capital note;
(iii) a contribution note;
(iv) a similar obligation;
(v) a premium refund on an assessable policy; or
(vi) any other claim specifically assigned to this class;
(l) a Class 12 claim, which is a claim for interest on an allowed claim of Classes 1
through 11, according to the terms of a plan to pay interest on allowed claims proposed by the
liquidator and approved by the receivership court; and
(m) subject to Subsection (4), a Class 13 claim, which is a claim of a shareholder or
other owner arising out of:
(i) the shareholder's or owner's capacity as shareholder or owner or any other capacity;
and
(ii) except as the claim may be qualified in Class 3, 4, 7, or 12.
(3) To prove a claim described in Class 8, the claimant shall show that:
(a) the insurer that is the subject of the delinquency proceeding incurred the fee or
expense on the basis of the insurer's best knowledge, information, and belief:
(i) formed after reasonable inquiry indicating opposition is in the best interests of the
insurer;
(ii) that is well grounded in fact; and
(iii) is warranted by existing law or a good faith argument for the extension,
modification, or reversal of existing law; and
(b) opposition is not pursued for any improper purpose, such as to harass, to cause
unnecessary delay, or to cause needless increase in the cost of the litigation.
(4) (a) A claim in Class 11 is subject to a subordination agreement related to other
claims in Class 11 that exist before the entry of a liquidation order.
(b) A claim in Class 13 is subject to a subordination agreement, related to other claims
in Class 13 that exist before the entry of a liquidation order.
Section 4. Section 
31A-27a-702
 is amended to read:
31A-27a-702.
Health maintenance organization claims.
(1) [
In
] 
For a delinquency proceeding under this chapter that is initiated before May 8,
2018, in
 the liquidation of a health maintenance organization, a claim for uncovered
expenditures has priority over a Class 3 claim as provided for in Section 
31A-27a-701
.
(2) A claim other than one described in Subsection (1) shall follow the priority of
distribution outlined in Section 
31A-27a-701
.
Section 5. Section 
31A-28-102
 is amended to read:
31A-28-102.
Purpose.
(1) The purpose of this part is to protect, subject to certain limitations, the persons
specified in [
Subsection
] 
Subsections
31A-28-103
(1) 
through (5)
 against failure in the
performance of contractual obligations, under a life [
and
] 
insurance,
 accident and health
insurance [
policy
]
,
 or annuity 
policy or
 contract specified in [
Subsection
] 
Subsections
31A-28-103
[
(2)
]
(6) and (7)
, because of the impairment or insolvency of the member insurer
that issued the policy or contract.
(2) To provide the protection described in Subsection (1):
(a) the Utah Life and Health Insurance Guaranty Association, which currently exists, is
continued to pay benefits and to continue coverages as limited by this part; and
(b) members of the association are subject to assessment to provide funds to carry out
the purpose of this part.
Section 6. Section 
31A-28-103
 is amended to read:
31A-28-103.
Coverage and limitations.
(1) [
(a)
] This part provides coverage for a policy or contract specified in [
Subsection
(2)
] 
Subsections (6) and (7)
 to a person who is:
[
(i)
] 
(a) except for a nonresident certificate holder under a group policy or contract,
 a
beneficiary, assignee, or payee of a person covered by Subsection [
(1)(a)(ii)
] 
(1)(b), including a
health care provider rendering services covered under an accident and health insurance policy
or certificate,
 regardless of where that person resides[
, except for a nonresident certificate
holder under a group policy or contract
]; or
[
(ii)
] 
(b)
 an owner of or a certificate holder 
or enrollee
 under a policy or contract, other
than an unallocated annuity contract or structured settlement annuity, if the owner
, enrollee,
 or
certificate holder is:
[
(A)
] 
(i)
 a resident of Utah; or
[
(B)
] 
(ii)
 not a resident of Utah, but only if:
[
(I)
] 
(A)
 the 
member
 insurer that issued the policy or contract is domiciled in this state;
[
(II)
] 
(B)
 the state in which the person resides has an association similar to the
association created by this part; and
[
(III)
] 
(C)
 the person is not eligible for coverage by an association in any other state
because the insurer was not licensed in the [
state
] 
other states
 at the time specified in the
[
state's
] 
other states'
 guaranty association's [
law
] 
laws
.
[
(b)
] 
(2)
 For an unallocated annuity contract specified in [
Subsection (2)
] 
Subsections
(6) and (7)
:
[
(i)
] 
(a)
 Subsection (1)[
(a)
] does not apply; and
[
(ii)
] 
(b)
 except as provided in Subsections [
(1)(d) and (1)(e)
] 
(4) and (5)
, this part
provides coverage for the unallocated annuity contract specified in Subsection (2) to a person
who is:
[
(A)
] 
(i)
 the owner of the unallocated annuity contract if the contract is issued to or in
connection with a specific benefit plan whose plan sponsor has its principal place of business
in this state; [
and
] 
or
[
(B)
] 
(ii)
 an owner of an unallocated annuity contract issued to or in connection with a
government lottery if the owner is a resident.
[
(c)
] 
(3)
 For a structured settlement annuity specified in [
Subsection (2)
] 
Subsections
(6) and (7)
:
[
(i)
] 
(a)
 Subsection (1)[
(a)
] does not apply; and
[
(ii)
] 
(b)
 except as provided in Subsections [
(1)(d) and (1)(e)
] 
(4) and (5)
, this part
provides coverage for the structured settlement annuity specified in [
Subsection (2)
]
Subsections (6) and (7)
 to a person who is a payee under a structured settlement annuity, or
beneficiary of a payee if the payee is deceased, if the payee:
[
(A)
] 
(i)
 is a resident, regardless of where the contract owner resides; [
or
]
[
(B)
] 
(ii)
 is not a resident, but only if one or more of the contract owners of the
structured settlement annuity is a resident, 
and the payee, beneficiary, or contract owner is not
eligible for coverage by the association of the state in which the payee or contract owner
resides;
 or
(iii) is not a resident, but only if:
(A)
 no contract owner of the structured settlement annuity is a resident[
, but:
]
;
[
(I)
] 
(B)
 the insurer that issued the structured settlement annuity is domiciled in this
state;
[
(II)
] 
(C)
 the state in which the contract owner resides has an association similar to the
association created by this part; and
[
(III)
] 
(D)
 the payee, beneficiary, or the contract owner is not eligible for coverage by
the association of the state in which the payee or contract owner resides.
[
(d)
] 
(4)
 This part may not provide coverage for a policy or contract specified in
[
Subsection (2) to
] 
Subsections (6) and (7) to a person who
:
[
(i)
] 
(a)
 [
a person who
] is a payee or beneficiary of a contract owner resident of this
state, if the payee or beneficiary is afforded any coverage by the association of another state;
[
or
]
[
(ii)
] 
(b)
 [
a person
] 
is
 covered under Subsection [
(1)(b)
] 
(2)
, if any coverage is
provided to the person by the association of another state[
.
]
; or
(c) acquires rights to receive payments through a structured settlement factoring
transaction, regardless of whether the transaction occurred before or after 26 U.S.C. Sec.
5891(c)(3)(A) became effective.
[
(e) (i)
] 
(5) (a)
 This part provides coverage for a policy or contract specified in
[
Subsection (2)
] 
Subsections (6) and (7)
 to a person who is a resident of this state and, in
special circumstances, to a nonresident.
[
(ii)
] 
(b)
 To avoid duplicate coverage, if a person who would otherwise receive
coverage under this part is provided coverage under the laws of any other state, the person may
not be provided coverage under this part.
[
(iii)
] 
(c)
 In determining the application of this Subsection [
(1)(e)
] 
(5)
 when a person
could be covered by the association of more than one state, whether as an owner, payee,
enrollee,
 beneficiary, or assignee, this part shall be construed in conjunction with other state
laws to result in coverage by only one association.
[
(2) (a) (i)
] 
(6) (a)
 Except as limited by this part, this part provides coverage to a person
specified in [
Subsection (1)
] 
Subsections (1) through (5)
 for:
[
(A)
] 
(i)
 a direct[
,
] nongroup life 
insurance
, 
direct
 accident and health 
insurance
, or
direct
 annuity policy or contract;
[
(B)
] 
(ii)
 a supplemental contract to a policy or contract described in Subsection
[
(2)(a)(i)(A)
] 
(6)(a)(i)
;
[
(C)
] 
(iii)
 a certificate under a direct group policy or contract; and
[
(D)
] 
(iv)
 an unallocated annuity contract issued by a member insurer.
[
(ii)
] 
(b)
 For purposes of Subsection [
(2)(a)(i)
] 
(6)(a)
, an annuity contract and a
certificate under a group annuity contract includes:
[
(A)
] 
(i)
 a guaranteed investment contract;
[
(B)
] 
(ii)
 a deposit administration contract;
[
(C)
] 
(iii)
 an unallocated funding agreement;
[
(D)
] 
(iv)
 an allocated funding agreement;
[
(E)
] 
(v)
 a structured settlement annuity;
[
(F)
] 
(vi)
 an annuity issued to or in connection with a government lottery; and
[
(G)
] 
(vii)
 an immediate or deferred annuity contract.
[
(b)
] 
(7)
 This part does not provide coverage for:
[
(i)
] 
(a)
 a portion of a policy or contract:
[
(A)
] 
(i)
 not guaranteed by the 
member
 insurer; or
[
(B)
] 
(ii)
 under which the risk is borne by the policy or contract owner;
[
(ii)
] 
(b)
 a policy or contract of reinsurance, unless:
[
(A)
] 
(i)
 an assumption certificate is issued before the coverage date;
[
(B)
] 
(ii)
 the assumption certificate required by Subsection [
(2)(b)(ii)(A)
] 
(7)(b)(i)
 is in
effect pursuant to the reinsurance policy or contract; and
[
(C)
] 
(iii)
 the reinsurance contract is approved by the appropriate regulatory authorities;
[
(iii)
] 
(c) except as provided in Subsection (11)(e),
 a portion of a policy or contract to
the extent that the rate of interest on which [
it
] 
the policy or contract
 is based
,
 or the interest
rate, crediting rate, or similar factor determined by use of an index or other external reference
stated in the policy or contract employed in calculating returns or changes in value[
, if the
interest rate, crediting rate, or similar factor
] 
exceeds
:
[
(A) is not excluded from coverage by Subsection (2)(b)(xi);
]
[
(B) averaged over the period of four years before the date on which the association
becomes obligated with respect to the policy or contract, exceeds
]
(i)
 a rate of interest determined by subtracting two percentage points from Moody's
Corporate Bond Yield Average averaged:
[
(I) for that same four-year period; or
]
(A) over the period of four years before the coverage date with respect to the policy or
contract; or
[
(II)
] 
(B)
 for the corresponding lesser period if the policy or contract was issued less
than four years before the association became obligated; [
and
] 
or
[
(C)
] 
(ii)
 [
exceeds the
] 
a
 rate of interest determined by subtracting three percentage
points from Moody's Corporate Bond Yield Average as most recently available as determined
on or after the earlier of [
the day on which the member insurer becomes
]:
[
(I)
] 
(A) the day on which the member insurer becomes
 an impaired insurer [
under this
part
]; or
[
(II)
] 
(B) the day on which the member insurer becomes
 an insolvent insurer [
under
this part
];
[
(iv)
] 
(d)
 a portion of a policy or contract issued to a plan or program of an employer,
association, or other person to provide life, accident and health, or annuity benefits to its
employees, members, or others, to the extent that the plan or program is self-funded or
uninsured, including benefits payable by an employer, association, or other person under:
[
(A)
] 
(i)
 a multiple employer welfare arrangement
,
 as 
that term is
 defined in 29 U.S.C.
Sec. [
] 
;
[
(B)
] 
(ii)
 a minimum premium group insurance plan;
[
(C)
] 
(iii)
 a stop-loss group insurance plan; or
[
(D)
] 
(iv)
 an administrative services only contract;
[
(v)
] 
(e)
 a portion of a policy or contract to the extent that it provides:
[
(A)
] 
(i)
 a dividend;
[
(B)
] 
(ii)
 an experience rating credit;
[
(C)
] 
(iii)
 voting rights; or
[
(D)
] 
(iv)
 payment of a fee or allowance to any person, including the policy or contract
owner, in connection with the service to or administration of the policy or contract;
[
(vi)
] 
(f)
 an unallocated annuity contract issued to or in connection with a benefit plan
protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the
federal Pension Benefit Guaranty Corporation has yet become liable to make any payment with
respect to the benefit plan;
[
(vii)
] 
(g)
 a portion of an unallocated annuity contract that is not issued to or in
connection with:
[
(A)
] 
(i)
 a specific benefit plan of:
[
(I)
] 
(A)
 employees;
[
(II)
] 
(B)
 a union; or
[
(III)
] 
(C)
 an association of natural persons; or
[
(B)
] 
(ii)
 a government lottery;
[
(viii)
] 
(h)
 a portion of a policy or contract to the extent that the assessment required by
Section 
31A-28-109
 that applies to the policy or contract is preempted by federal or state law;
[
(ix)
] 
(i)
 an obligation that does not arise under the express written terms of the policy
or contract issued by [
an
] 
a member
 insurer to the 
enrollee, certificate holder,
 contract owner
,
or policy owner, including:
[
(A)
] 
(i)
 a claim based on marketing materials;
[
(B)
] 
(ii)
 a claim based on a side letter, rider, or other document that is issued by the
member
 insurer without meeting applicable policy 
or contract
 form filing or approval
requirements;
[
(C)
] 
(iii)
 a misrepresentation regarding a policy 
or contract
 benefit;
[
(D)
] 
(iv)
 an extra-contractual claim;
[
(E)
] 
(v)
 a claim for penalties; or
[
(F)
] 
(vi)
 a claim for consequential or incidental damages;
[
(x)
] 
(j)
 a contract that establishes the member insurer's obligations to provide a book
value accounting guaranty for defined contribution benefit plan participants by reference to a
portfolio of assets that is owned by a person that is:
[
(A) (I)
] 
(i) (A)
 the benefit plan; or
[
(II)
] 
(B)
 the benefit plan's trustee; and
[
(B)
] 
(ii)
 not an affiliate of the member insurer;
[
(xi)
] 
(k)
 a portion of a policy or contract to the extent it provides for interest or other
changes in value:
[
(A)
] 
(i)
 to be determined by the use of an index or other external reference stated in
the policy or contract; and
(ii) as of the date the member insurer becomes an impaired or insolvent insurer,
whichever occurs earlier:
[
(B) (I)
] 
(A)
 that have not been credited to the policy or contract; or
[
(II)
] 
(B)
 as to which the policy or contract owner's rights are subject to forfeiture [
as of
the date the member insurer becomes an impaired or insolvent insurer under this part; and
]
;
[
(xii)
] 
(l)
 a policy 
or contract
 providing hospital, medical, prescription drug, or other
health care benefit pursuant to [
United States Code, Title 42, Subchapter XVIII, Chapter 7, Part
C or D, or federal regulations issued under Part C or D.
]
:
(i) Part C or D of Title XVIII of the Social Security Act, 42 U.S.C. 1395 et seq.; or
(ii) Title XIX of the Social Security Act, 42 U.S.C. Sec. 1396 et seq.; or
(m) a structured settlement annuity benefit to which a payee or beneficiary has
transferred the payee or beneficiary's rights in a structured settlement factoring transaction,
regardless of whether the transaction occurred before or after 26 U.S.C. Sec. 5891(c)(3)(A)
became effective.
[
(3)
] 
(8)
 [
Subject to Subsection (4), the
] 
The
 benefits for which the association may
become liable may not exceed the lesser of:
(a) the contractual obligations for which the 
member
 insurer is liable or would have
been liable if it were not an impaired or insolvent insurer;
(b) with respect to one life, regardless of the number of policies or contracts:
(i) for a life insurance policy:
(A) if the insured died before the coverage date, $500,000 of the death benefit;
(B) if the insurer received a valid request for cash surrender before the coverage date
but has not paid the cash surrender value before the coverage date, $200,000 of cash surrender
benefits; or
(C) if neither Subsection [
(3)
] 
(8)
(b)(i)(A) nor (B) [
apply
] 
applies
, the covered portion
of each benefit provided under the policy;
(ii) for an annuity contract, the covered portion of each benefit provided under the
contract; 
and
(iii) for an accident and health 
insurance
 policy 
or contract
:
(A) classified as [
health insurance
] 
a health benefit plan
, $500,000; or
(B) not classified as [
health insurance
] 
a health benefit plan
, the covered portion of
each benefit provided under the policy;
(c) for an individual[
, or a beneficiary of that individual if the individual is deceased,
]
participating in a governmental retirement plan established under Section 401, 403(b), or 457,
Internal Revenue Code, covered by an unallocated annuity contract, [
in the aggregate
] 
or a
beneficiary of that individual if the individual is deceased
, $250,000 in present value of annuity
benefits, 
in the aggregate,
 including:
(i) net cash surrender; and
(ii) net cash withdrawal values; or
(d) for a payee of a structured settlement annuity or a beneficiary of the payee if the
payee is deceased, the limits set forth in Subsection [
(3)
] 
(8)
(b).
[
(4)
] 
(9)
 Notwithstanding [
Subsections (3)(a) through (d)
] 
Subsection (8)
, the
association may not be obligated to cover more than:
(a) an aggregate of $500,000 in benefits for any one life under:
(i) Subsection [
(3)
] 
(8)
(b)(i)(A);
(ii) Subsection [
(3)
] 
(8)
(b)(i)(B);
(iii) Subsection [
(3)
] 
(8)
(b)(ii); and
(iv) Subsection [
(3)
] 
(8)
(b)(iii)(B);
(b) $5,000,000 in benefits for one owner of multiple nongroup policies of life
insurance:
(i) whether the policy 
or contract
 owner is an individual, firm, corporation, or other
person;
(ii) whether the persons insured are officers, managers, employees, or other persons;
and
(iii) regardless of the number of policies and contracts held by the owner; and
(c) $5,000,000 in benefits, regardless of the number of contracts held by the contract
owner or plan sponsor, for:
(i) one contract owner provided coverage under Subsection [
(1)(b)(ii)(B)
] 
(2)(b)(ii)
; or
(ii) one plan sponsor whose plans own, directly or in trust, one or more unallocated
annuity contracts not included in Subsection [
(3)
] 
(8)
(b)(ii).
[
(5)
] 
(10)
 (a) Notwithstanding Subsection [
(4)
] 
(9)
(c) and except as provided in
Subsection [
(5)
] 
(10)
(b), the association shall provide coverage if one or more unallocated
annuity contracts are:
(i) covered contracts under this part;
(ii) owned by a trust or other entity for the benefit of two or more plan sponsors; and
(iii) the largest interest in the trust or entity owning the contract or contracts is held by
a plan sponsor whose principal place of business is in the state.
(b) [
Notwithstanding Subsection (5)(a) the
] 
The
 association may not be obligated to
cover more than $5,000,000 in benefits with respect to the unallocated contracts described in
Subsection [
(5)
] 
(10)
(a).
[
(6)
] 
(11)
 (a) The limitations set forth in Subsections [
(3) and (4)
] 
(8) and (9)
 are
limitations on the benefits for which the association is obligated before taking into account:
(i) the association's subrogation and assignment rights; or
(ii) the extent to which those benefits could be provided out of the assets of the
impaired or insolvent insurer attributable to covered policies.
(b) The costs of the association's obligations under this part may be met by the use of
assets:
(i) attributable to covered policies, as described in Subsection 
31A-28-114
(3)(c); or
(ii) reimbursed to the association pursuant to the association's subrogation and
assignment rights.
[
(c) On and after the date on which the association becomes obligated for a covered
policy, the association may not be obligated to provide benefits to the extent that the benefits
are based on an interest rate, crediting rate, or similar factor determined by use of an index or
other external reference stated in the policy or contract employed in calculating returns or
changes in value if the interest rate, crediting rate, or similar factor exceeds the rate of interest
determined by subtracting three percentage points from Moody's Corporate Bond Yield
Average as most recently available on each date on which interest is credited or attributed to
the covered policy.
]
(c) Benefits provided by a long-term care rider to a life insurance policy or annuity
contract shall be considered the same type of benefits as the base life insurance policy or
annuity contract to which the long-term care rider relates.
(d) In performing its obligations to provide coverage under Section 
31A-28-108
, the
association may not be required to guarantee, assume, reinsure, 
reissue,
 perform, or cause to be
guaranteed, assumed, reinsured, 
reissued,
 or performed a contractual obligation of the insolvent
or impaired insurer under a covered policy or contract that does not materially affect the
economic values or economic benefits of the covered policy or contract.
(e) The exclusion from coverage described in Subsection (7)(c) does not apply to any
portion of a policy or contract, including a rider, that provides long-term care or any other
accident and health insurance benefit.
Section 7. Section 
31A-28-105
 is amended to read:
31A-28-105.
Definitions.
As used in this part:
(1) "Association" means the Utah Life and Health Insurance Guaranty Association
continued under Section 
31A-28-106
.
(2) (a) "Authorized assessment" or "authorized," when used in the context of
assessments, means that the board of directors passed a resolution [
whereby
] 
by which
 an
assessment will be called immediately or in the future from member insurers for an amount [
set
forth
] 
specified
 in the resolution.
(b) An assessment is authorized when the resolution is passed.
(3) "Benefit plan" means a specific benefit plan of:
(a) employees;
(b) a union; or
(c) an association of natural persons.
(4) "Board of directors" means the board of directors established under Section
31A-28-107
.
[
(4)
] 
(5)
 (a) "Called assessment" or "called," when used in the context of assessments,
means that the association issued a notice to member insurers requiring that an authorized
assessment be paid within the time frame set forth in the notice.
(b) All or part of an authorized assessment becomes a called assessment when notice is
mailed by the association to member insurers.
[
(5)
] 
(6)
 "Cash surrender value" means the cash surrender value without reduction for
an outstanding policy loan or surrender charge.
[
(6)
] 
(7)
 "Contractual obligation" means an obligation under any of the following for
which coverage is provided under Section 
31A-28-103
:
(a) a policy or contract;
(b) a certificate under a group policy or contract; or
(c) a portion of a policy or contract.
[
(7)
] 
(8)
 "Coverage date" means the date on which the association becomes responsible
for the obligations of a member insurer.
[
(8)
] 
(9)
 "Covered policy" 
or "covered contract"
 means any of the following for which
coverage is provided in Section 
31A-28-103
:
(a) a policy or contract; or
(b) a portion of a policy or contract.
[
(9)
] 
(10)
 (a) "Covered portion" means:
(i) for a covered policy that has a cash surrender value, a fraction calculated with:
(A) the numerator being the lesser of:
(I) (Aa) $200,000 for a life insurance policy; [
and
] 
or
(Bb) $250,000 for a covered policy that is not a life insurance policy; or
(II) the cash surrender value of the policy; and
(B) the denominator being the cash surrender value of the policy; and
(ii) for a covered policy that does not have a cash surrender value, a fraction calculated
with:
(A) the numerator being the lesser of:
(I) (Aa) $200,000 for a life insurance policy; [
or
] 
and
(Bb) $250,000 for a covered policy that is not a life insurance policy; or
(II) the policy's minimum statutory reserve; and
(B) the denominator being the policy's minimum statutory reserve.
(b) [
The
] 
For purposes of this Subsection (10)(b), the
 cash surrender value and the
minimum statutory reserve are determined as of the coverage date in accordance with the
exclusions in Subsection 
31A-28-103
[
(2)(b)(iii)
]
(7)(c)
.
[
(10)
] 
(11)
 "Extra-contractual claim" includes a claim relating to:
(a) bad faith in the payment of a claim;
(b) punitive or exemplary damages; or
(c) attorney fees and costs.
[
(11)
] 
(12)
 "Impaired insurer" means a member insurer that is not an insolvent insurer
and:
(a) is considered by the commissioner to be hazardous pursuant to this title; or
(b) is placed under an order of rehabilitation or conservation by a court of competent
jurisdiction.
[
(12)
] 
(13)
 "Insolvent insurer" means a member insurer that is placed under an order of
liquidation by a court of competent jurisdiction with a finding of insolvency.
[
(13)
] 
(14)
 (a) "Member insurer" means an insurer that holds a certificate of authority
to transact in this state any kind of insurance for which coverage is provided under Section
31A-28-103
.
(b) "Member insurer" includes an insurer whose license or certificate of authority in
this state may have been:
(i) suspended;
(ii) revoked;
(iii) not renewed; or
(iv) voluntarily withdrawn.
(c) "Member insurer" does not include:
(i) a for-profit or nonprofit:
(A) hospital;
(B) hospital service organization; or
(C) medical service organization;
[
(ii) a health maintenance organization;
]
[
(iii)
] 
(ii)
 a fraternal benefit society;
[
(iv)
] 
(iii)
 a mandatory state pooling plan;
[
(v)
] 
(iv)
 a mutual assessment company or other person that operates on an assessment
basis;
[
(vi)
] 
(v)
 an insurance exchange;
[
(vii)
] 
(vi)
 an organization described in Subsection 
31A-22-1305
(2); or
[
(viii)
] 
(vii)
 an entity similar to an entity described in Subsections [
(13)
] 
(14)
(c)(i)
through [
(vii)
] 
(vi)
.
[
(14)
] 
(15)
 "Moody's Corporate Bond Yield Average" means the Monthly Average
Corporates as published by Moody's Investors Service, Inc., or any successor to Moody's
Investors Service, Inc.
[
(15)
] 
(16)
 (a) "Owner" of a policy or contract, "policy
holder," "policy
 owner," or
"contract owner" means a person who:
(i) is identified as the legal owner under the terms of the policy or contract; or
(ii) is otherwise vested with legal title to the policy or contract through a valid
assignment:
(A) completed in accordance with the terms of the policy or contract; and
(B) properly recorded as the owner on the books of the insurer.
(b) "Owner," "policy
holder," "policy
 owner," or "contract owner" does not include a
person with only a beneficial interest in a policy or contract.
[
(16) "Person" means:
]
[
(a) an individual;
]
[
(b) a corporation;
]
[
(c) a limited liability company;
]
[
(d) a partnership;
]
[
(e) an association;
]
[
(f) a governmental body or entity;
]
[
(g) a trust; or
]
[
(h) a voluntary organization.
]
[
(17) "Plan sponsor" means:
]
[
(a) the employer, in the case of a benefit plan established or maintained by a single
employer;
]
[
(b) the employee organization, in the case of a benefit plan established or maintained
by an employee organization; or
]
[
(c) the association, committee, joint board of trustees, or other similar group of
representatives of the parties who establish or maintain a benefit plan, in the case of a benefit
plan established or maintained by:
]
[
(i) two or more employers; or
]
[
(ii) jointly by:
]
[
(A) one or more employers; and
]
[
(B) one or more employee organizations.
]
[
(18)
] 
(17)
 (a) [
"Premiums"
] 
Notwithstanding Section 31A-1-301, "premiums"
 means
an amount or consideration received on covered policies or contracts, less:
(i) returned:
(A) premiums;
(B) considerations; and
(C) deposits; and
(ii) dividends and experience credits.
(b) (i) "Premiums" does not include an amount or consideration received for:
(A) a policy or contract for which coverage is not provided under [
Subsection
31A-28-103
(2)
] 
Subsections 
31A-28-103
(6) and (7)
; or
(B) the portion of a policy or contract for which coverage is not provided under
[
Subsection 
31A-28-103
(2)
] 
Subsections 
31A-28-103
(6) and (7)
.
(ii) Notwithstanding Subsection [
(18)
] 
(17)
(b)(i), an assessable premium may not be
reduced on account of:
(A) Subsection 
31A-28-103
[
(2)(b)(iii)
]
(7)(c)
 relating to interest limitations; [
and
] 
or
(B) Subsection 
31A-28-103
[
(3)
]
(8)
 relating to limitations for:
(I) one individual;
(II) any one participant; [
and
] 
or
(III) any one 
policy or
 contract owner.
(c) "Premiums" does not include premiums in excess of $5,000,000:
(i) on an unallocated annuity contract not issued under a governmental retirement plan
established under Section 401, 403(b), or 457, Internal Revenue Code; or
(ii) for multiple nongroup policies of life insurance owned by one owner:
(A) whether the policy 
or contract
 owner is an individual, firm, corporation, or other
person;
(B) whether the persons insured are officers, managers, employees, or other persons;
and
(C) regardless of the number of policies or contracts held by the owner.
[
(19)
] 
(18)
 (a) [
Except as provided in Subsection (19)(b), "principal
] 
"Principal
 place
of business" of a plan sponsor or a person other than a natural person means the single state:
(i) in which the natural persons who establish policy for the direction, control, and
coordination of the operations of the entity as a whole primarily exercise the function; and
(ii) determined by the association in its reasonable judgment by considering the
following factors:
(A) the state in which the primary executive and administrative headquarters of the
entity are located;
(B) the state in which the principal office of the chief executive officer of the entity is
located;
(C) the state in which the board of directors, or similar governing person or persons, of
the entity conducts the majority of its meetings;
(D) the state in which the executive or management committee of the board of
directors, or similar governing person, of the entity conducts the majority of its meetings;
(E) the state from which the management of the overall operations of the entity is
directed; and
(F) in the case of a benefit plan sponsored by affiliated companies comprising a
consolidated corporation, the state in which the holding company or controlling affiliate has its
principal place of business as determined using the factors described in Subsections [
(19)
]
(18)
(a)(ii)(A) through (E).
(b) Notwithstanding Subsection [
(19)
] 
(18)
(a), in the case of a plan sponsor, if more
than 50% of the participants in the benefit plan are employed in a single state, the state where
more than 50% of the participants are employed is considered to be the principal place of
business of the plan sponsor.
(c) (i) The principal place of business of a plan sponsor of a benefit plan [
described in
Subsection (3)
] is considered to be the principal place of business of the association,
committee, joint board of trustees, or other similar group of representatives of the parties who
establish or maintain the benefit plan.
(ii) If [
for a benefit plan described in Subsection (3)
] there is not a specific or clear
designation of a principal place of business under Subsection [
(19)
] 
(18)
(c)(i) 
for a benefit
plan
, the principal place of business is considered to be the principal place of business of the
employer or employee organization that has the largest investment in the benefit plan.
[
(20)
] 
(19)
 "Receiver" means, as the context requires:
(a) a rehabilitator;
(b) a liquidator;
(c) an ancillary receiver; or
(d) a conservator.
[
(21)
] 
(20)
 "Receivership court" means the court in the insolvent or impaired insurer's
state having jurisdiction over the conservation, rehabilitation, or liquidation of the 
member
insurer.
[
(22)
] 
(21)
 (a) "Resident" means a person:
(i) to whom a contractual obligation is owed; and
(ii) who resides in this state on the earlier of the date a member insurer is an:
(A) impaired insurer; or
(B) insolvent insurer.
(b) A person may be a resident of only one state, which in the case of a person other
than a natural person is where its principal place of business is located.
(c) A citizen of the United States that is either a resident of a foreign country or a
resident of a United States possession, territory, or protectorate that does not have an
association similar to the association created by this part, is considered a resident of the state of
domicile of the 
member
 insurer that issued the policy or contract.
[
(23) "State" means:
]
[
(a) a state;
]
[
(b) the District of Columbia;
]
[
(c) Puerto Rico; and
]
[
(d) a United States possession, territory, or protectorate.
]
[
(24)
] 
(22)
 "Structured settlement annuity" means an annuity purchased to fund
periodic payments for a plaintiff or other claimant in payment for personal injury suffered by
the plaintiff or other claimant.
(23) "Structured settlement factoring transaction" means the same as that term is
defined in 26 U.S.C. Sec. 5891(c)(3)(A).
[
(25)
] 
(24)
 "Supplemental contract" means a written agreement entered into for the
distribution of proceeds under a policy or contract for:
(a) life 
insurance
;
(b) accident and health 
insurance
; or
(c) annuity.
[
(26)
] 
(25)
 "Unallocated annuity contract" means an annuity contract or group annuity
certificate that is not issued to and owned by an individual, except to the extent of any annuity
benefits guaranteed to an individual by an insurer under the contract or certificate.
Section 8. Section 
31A-28-106
 is amended to read:
31A-28-106.
Continuation of the association -- Association duties -- Allocation of
assessments -- Not agency of state.
(1) (a) There is continued under this part the nonprofit legal entity known as the Utah
Life and Health Insurance Guaranty Association created under former provisions of this title.
(b) All member insurers shall be and remain members of the association as a condition
of their authority to transact insurance in this state.
(c) The association shall:
(i) perform its functions under the plan of operation established and approved under
Section 
31A-28-110
; and
(ii) exercise [
its
] 
the association's
 powers through [
a
] 
the
 board of directors
[
established under Section 
31A-28-107
].
(d) The association shall allocate assessments among the following classes or
subclasses:
(i) the life insurance and annuity class, which includes the following subclasses:
(A) the life insurance subclass;
(B) the annuity subclass:
(I) which includes annuity contracts owned by a governmental retirement plan, or its
trustee, established under Section 401, 403(b), or 457, Internal Revenue Code; and
(II) otherwise excludes unallocated annuities; and
(C) the unallocated annuity subclass, which excludes contracts owned by a
governmental retirement benefit plan, or its trustee, established under Sections 401, 403(b), or
457, Internal Revenue Code; and
(ii) the accident and health insurance class.
(2) (a) The association shall:
(i) come under the immediate supervision of the commissioner; and
(ii) be subject to the applicable provisions of the insurance laws of this state.
(b) Meetings or records of the association may be opened to the public upon majority
vote of the board of directors [
of the association
].
(3) The association is not an agency of the state.
Section 9. Section 
31A-28-107
 is amended to read:
31A-28-107.
Board of directors.
(1) (a) The board of directors of the association shall consist of:
(i) at least [
five
] 
seven
 but not more than [
nine
] 
eleven
 member insurers who:
(A) [
subject to Subsection (1)(e),
] serve terms as established in the plan of operation;
and
(B) are selected by member insurers, subject to the approval of the commissioner; and
(ii) two public representatives appointed by the commissioner.
(b) (i) The commissioner shall make the appointment of a public representative
coincide with the association's annual meeting at which the association's board of directors is
elected.
(ii) A public representative may not be:
(A) an officer, director, or employee of an insurer; or
(B) a person engaged in the business of insurance.
(iii) [
Subject to Subsection (1)(e), a
] 
A
 public representative shall serve a term of three
years.
(c) When a vacancy occurs in the membership of the board of directors for any reason:
(i) if the vacancy is of a member insurer, a replacement may be elected for the
unexpired term by a majority vote of the remaining board members, subject to the approval of
the commissioner; and
(ii) if the vacancy is of a public representative, the commissioner shall appoint a
replacement for the unexpired term.
(d) In approving a selection or in appointing a member to the board of directors, the
commissioner shall consider, among other things, whether all member insurers are fairly
represented.
(e) Notwithstanding Subsections (1)(a) and (b), the commissioner shall, at the time of
election, reelection, appointment, or reappointment adjust the length of terms to ensure that the
terms of board members are staggered so that approximately half of the board of directors is
selected during any two-year period.
(2) (a) A member of the board of directors may be reimbursed from the assets of the
association for expenses incurred by the member as a member of the board of directors.
(b) A public representative appointed under Subsection (1)(a)(ii) may not receive
compensation or benefits for the public representative's service, but in addition to
reimbursement under Subsection (2)(a), a public representative may receive per diem and
travel expenses established by the board with the approval of the commissioner.
(c) Except as provided in Subsections (2)(a) and (b), a member of the board of
directors may not be compensated by the association for the member's services.
Section 10. Section 
31A-28-108
 is amended to read:
31A-28-108.
Powers and duties of the association.
(1) (a) If a member insurer is an impaired insurer, subject to any conditions imposed by
the association that do not impair the contractual obligations of the impaired insurer, the
association may provide the protections provided by this part.
(b) If the association makes the election described in Subsection (1)(a), the association
may proceed under one or more of the options described in Subsection (3).
(2) If a member insurer is an insolvent insurer, the association shall provide the
protections provided by this part by electing in its discretion to proceed under one or more of
the options in Subsection (3).
(3) With respect to the covered portions of covered policies of an [
impaired or
]
insolvent insurer, the association may:
(a) (i) (A) guaranty, assume, 
reissue,
 or reinsure, or cause to be guaranteed, assumed,
reissued,
 or reinsured, the policies or contracts of the 
insolvent
 insurer; or
(B) assure payment of the contractual obligations of the insolvent insurer; and
(ii) provide the money, pledges, 
loans, notes,
 guarantees, or other means as are
reasonably necessary to discharge such duties; or
(b) provide benefits and coverages in accordance with Subsection (4).
(4) (a) [
In accordance with Subsection (3)(b), the
] 
The
 association may 
proceed under
Subsection (3)(b) by
:
(i) [
assure
] 
ensuring
 payment of benefits [
for premiums identical to the premiums and
benefits, except for terms of conversion and renewability,
] that would have been payable under
the policies or contracts of the insurer, for claims incurred:
(A) with respect to group policies 
or contracts
:
(I) not later than the earlier of the next renewal date under the policies or contracts or
45 days after the coverage date; and
(II) in no event less than 30 days after the coverage date; or
(B) with respect to nongroup policies or contracts:
(I) not later than the earlier of the next renewal date, if any, under the policies or
contracts or one year from the coverage date; and
(II) in no event less than 30 days from the coverage date;
(ii) [
make
] 
making
 diligent efforts to notify the following 30 days before any
termination of the benefits that are provided under a policy or contract of the insurer:
(A) the known insureds
, enrollees,
 or annuitants for nongroup policies and contracts;
(B) owners if other than an insured
, enrollee,
 or annuitant; or
(C) group policy 
or contract
 owners for group policies and contracts; and
(iii) with respect to nongroup [
life and accident and health insurance policies and
annuities, make
] 
policies and contracts, making
 available substitute coverage on an individual
basis, in accordance with Subsection (4)(b), to each known insured, 
enrollee,
 annuitant, or
owner and to each individual formerly 
an
 insured
, enrollee,
 or [
formerly an
] annuitant under a
group policy 
or contract
 who is not eligible for replacement group coverage on an individual
basis in accordance with Subsection (4)(b), if the insured
, enrollee,
 or annuitant had a right
under law or the terminated policy
, contract,
 or annuity [
contract
] to:
(A) convert coverage to individual coverage; or
(B) continue an individual policy 
or contract
 in force until a specified age or for a
specified time during which the insurer had:
(I) no right unilaterally to make changes in any provision of the policy 
or contract
; or
(II) a right only to make changes in premium by class 
of risk
.
(b) (i) In providing the substitute coverage required under Subsection (4)(a)(iii), the
association may offer to:
(A) reissue the terminated coverage; or
(B) issue an alternative policy 
or contract at actuarially justified rates
.
(ii) An alternative or reissued policy 
or contract
 under Subsection (4)(b)(i):
(A) shall be offered without requiring evidence of insurability; and
(B) may not provide for any waiting period or exclusion that would not have applied
under the terminated policy 
or contract
.
(iii) The association may reinsure an alternative or reissued policy 
or contract
.
(c) (i) An alternative policy 
or contract
 adopted by the association is subject to the
approval of the commissioner.
(ii) The association may adopt alternative policies 
or contracts
 of various types for
future issuance without regard to any particular impairment or insolvency.
(iii) An alternative policy 
or contract
:
(A) shall contain at least the minimum statutory provisions required in this state; and
(B) provide benefits that are not unreasonable in relation to the premium charged.
(iv) The association shall set the premium for an alternative policy 
or contract
 in
accordance with a table of rates that the association adopts.
(v)
 The premium 
described in Subsection (4)(c)(iv)
 shall reflect:
(A) the amount of insurance 
or coverage
 to be provided; and
(B) the age and class of risk of each insured.
[
(v)
] 
(vi)
 For an alternative policy 
or contract
 issued under an individual policy 
or
contract
 of the impaired or insolvent insurer:
(A) age shall be determined in accordance with the original policy 
or contract
provisions; and
(B) class of risk is the class of risk under the original policy 
or contract
.
[
(vi)
] 
(vii)
 For an alternative policy 
or contract
 issued to individuals insured 
or covered
under a group policy 
or contract
:
(A) age and class of risk shall be determined by the association in accordance with the
alternative policy 
or contract
 provisions and risk classification standards approved by the
commissioner; and
(B) the premium may not reflect any changes in the health of the insured after the
original policy 
or contract
 was last underwritten.
[
(vii)
] 
(viii)
 An alternative policy 
or contract
 issued by the association shall provide
coverage of a type similar to that of the policy 
or contract
 issued by the impaired or insolvent
insurer, as determined by the association.
(d) If the association elects to reissue terminated coverage at a premium rate different
from that charged under the terminated policy 
or contract
, the association shall set the premium
in a manner that is actuarially justified and
 in accordance with the amount of insurance 
or
coverage
 provided and the age and class of risk, subject to the 
prior
 approval of the
commissioner or by a court of competent jurisdiction.
(e) The association's obligations with respect to coverage under any policy 
or contract
of the impaired or insolvent insurer or under any reissued or alternative policy 
or contract
ceases on the date the coverage [
or
]
,
 policy
, or contract
 is replaced by another similar 
coverage,
policy
, or contract
 by:
(i) 
the enrollee;
(ii)
 the owner;
[
(ii)
] 
(iii)
 the insured; or
[
(iii)
] 
(iv)
 the association.
(f) (i) With respect to a claim unpaid as of the coverage date and [
a
] 
an accident and
health
 claim incurred during the period defined in Subsection (4)(a)(i), a provider of health care
services, by accepting a payment from the association upon a claim of the provider against an
insured 
or enrollee
 whose [
health care
] insurer is an insolvent [
member
] insurer, agrees to
forgive the insured 
or enrollee
 of 20% of the debt [
which
] 
that
 otherwise would be paid by the
insolvent
 insurer had [
it
] 
the insurer
 not been insolvent[
, subject to a maximum of $8,000 being
required to be forgiven by any one provider as to each claimant
].
(ii) The obligations of a solvent insurer to pay all or part of the covered claim are not
diminished by the forgiveness provided for in this section.
(5) When proceeding under Subsection (3)(b) with respect to any policy or contract
carrying guaranteed minimum interest rates, the association shall assure the payment or
crediting of a rate of interest consistent with Subsection 
31A-28-103
[
(2)(b)(iii)
]
(7)(c)
.
(6) Nonpayment of premiums within 31 days after the date required under the terms of
any guaranteed, assumed, alternative, or reissued policy or contract or substitute coverage
terminates the association's obligations under the policy
, contract,
 or coverage under this part
with respect to the policy
, contract,
 or coverage, except with respect to any claims incurred or
any net cash surrender value that may be due in accordance with this part.
(7) (a) Premium due after the coverage date with respect to the covered portion of a
policy or contract of an impaired or insolvent insurer belongs to and is payable at the direction
of the association. If a liquidator of an insolvent insurer requests the report, the association
shall report to the liquidator the premium collected by the association.
(b) The association is liable to a policy or contract owner for unearned premiums due
to the policy or contract owner arising after the coverage date with respect to the covered
portion of the policy or contract.
(8) The protection provided by this part does not apply if any guaranty protection is
provided to residents of this state by laws of the domiciliary state or jurisdiction of the
impaired or insolvent insurer other than this state.
(9) In carrying out its duties under Subsection (2), and subject to approval by a court in
this state, the association may:
(a) impose permanent policy or contract liens in connection with a guarantee,
assumption, or reinsurance agreement, if the association finds that:
(i) the amounts that can be assessed under this part are less than the amounts needed to
assure full and prompt performance of the association's duties under this part; or
(ii) the economic or financial conditions as they affect member insurers are sufficiently
adverse to render the imposition of the permanent policy or contract liens to be in the public
interest;
(b) impose temporary moratoriums or liens on payments of cash values and policy
loans, or any other right to withdraw funds held in conjunction with policies or contracts, in
addition to any contractual provisions for deferral of cash or policy loan value; and
(c) if the receivership court imposes a temporary moratorium or moratorium charge on
payment of cash values or policy loans, or on any other right to withdraw funds held in
conjunction with policies or contracts, out of the assets of the impaired or insolvent insurer,
defer the payment of cash values, policy loans, or other rights by the association for the period
of the moratorium or moratorium charge imposed by the receivership court, except for claims
covered by the association to be paid in accordance with a hardship procedure:
(i) established by the receiver; and
(ii) approved by the receivership court.
(10) (a) A special deposit in this state held pursuant to law or required by the
commissioner for the benefit of creditors, including policy 
or contract
 owners, that is not
turned over to the domiciliary receiver upon the entry of a final order of liquidation or order
approving a rehabilitation plan of [
an
] 
a member
 insurer domiciled in any state shall be
promptly paid to the association.
(b) Any amount paid under Subsection (10)(a) to the association less the amount
retained by the association shall be treated as a distribution of estate assets pursuant to Sections
31A-27a-601
, 
31A-27a-602
, and 
31A-27a-701
.
(11) If the association fails to act within a reasonable period of time as provided in this
section, the commissioner has the powers and duties of the association under this part with
respect to an impaired or insolvent insurer.
(12) The association may assist or advise the commissioner, upon the commissioner's
request, concerning:
(a) rehabilitation;
(b) payment of claims;
(c) continuance of coverage; or
(d) the performance of other contractual obligations of any impaired or insolvent
insurer.
(13) (a) The association has standing to appear or intervene before a court or agency in
this state with jurisdiction over:
(i) an impaired or insolvent insurer concerning which the association is or may become
obligated under this part; or
(ii) any person or property against which the association may have rights through
subrogation or otherwise.
(b) The standing referred to in Subsection (13)(a) extends to all matters germane to the
powers and duties of the association, including:
(i) proposals for reinsuring, 
reissuing,
 modifying, or guaranteeing the policies or
contracts of the impaired or insolvent insurer; and
(ii) the determination of the policies or contracts and contractual obligations.
(c) The association has the right to appear or intervene before a court in another state
with jurisdiction over:
(i) an impaired or insolvent insurer for which the association is or may become
obligated; or
(ii) any person or property against which the association may have rights through
subrogation of the insurer's [
policyowners
] 
policy owners or contract owners
.
(14) (a) A person receiving benefits under this part is considered to have assigned the
rights under, and any causes of action against any person for losses arising under, resulting
from, or otherwise relating to the covered policy or contract to the association to the extent of
the benefits received because of this part, whether the benefits are payments of, or on account
of:
(i) contractual obligations;
(ii) continuation of coverage; or
(iii) provision of substitute or alternative 
policies, contracts, or
 coverages.
(b) As a condition precedent to the receipt of any right or benefits conferred by this part
upon that person, the association may require an assignment to it of the rights and causes of
action described in Subsection (14)(a) by any:
(i) payee;
(ii) policy or contract owner;
(iii) beneficiary;
(iv) insured; [
or
]
(v) enrollee; or
[
(v)
] 
(vi)
 annuitant.
(c) The subrogation rights obtained by the association under this Subsection (14) have
the same priority against the assets of the impaired or insolvent insurer as that possessed by the
person entitled to receive benefits under this part.
(d) In addition to Subsections (14)(a) through (c), the association has the common law
rights of subrogation and any other equitable or legal remedy that would have been available to
the impaired or insolvent insurer or owner, beneficiary, 
enrollee,
 or payee of a policy or
contract with respect to the policy or contract, including in the case of a structured settlement
annuity any rights of the owner, beneficiary, or payee of the annuity to the extent of benefits
received pursuant to this part against a person originally or by succession responsible for the
losses arising from the personal injury relating to the annuity or payment of the annuity.
(e) If a provision of this Subsection (14) is invalid or ineffective with respect to a
person or claim for any reason, the amount payable by the association with respect to the
related covered obligations shall be reduced by the amount realized by any other person with
respect to the person or claim that is attributable to the policies, or portion of the policies,
covered by the association.
(f) If the association has provided benefits with respect to a covered policy 
or contract
and a person recovers amounts as to which the association has rights as described in this
Subsection (14), the person shall pay to the association the portion of the recovery attributable
to the covered [
policies
] 
policy or contract
.
(15) (a) In addition to the rights and powers elsewhere in this part, the association may:
(i) enter into a contract that is necessary or proper to carry out the provisions and
purposes of this part;
(ii) sue or be sued, including taking any legal actions necessary or proper to:
(A) recover any unpaid assessments under Section 
31A-28-109
; and
(B) settle claims or potential claims against the association;
(iii) borrow money to effect the purposes of this part;
(iv) employ or retain the persons necessary or the appropriate staff members to:
(A) handle the financial transactions of the association; and
(B) perform other functions as become necessary or proper under this part;
(v) take necessary or appropriate legal action to avoid or recover payment of improper
claims;
(vi) exercise, for the purposes of this part and to the extent approved by the
commissioner, the powers of a domestic [
life or health
] insurer 
providing life insurance or
accident and health insurance
, but in no case may the association issue [
insurance
] policies or
[
annuity
] contracts other than those issued to perform [
its
] 
the association's
 obligation under
this part;
(vii) request information from a person seeking coverage from the association to aid
the association in determining the association's obligations under this part with respect to the
person;
(viii) unless prohibited by law, in accordance with the terms and conditions of the
policy or contract, file for actuarially justified rate or premium increases for any policy or
contract for which the association provides coverage under this part;
[
(viii)
] 
(ix)
 take other necessary or appropriate action to discharge the association's
duties and obligations under this part or to exercise the association's powers under this part;
and
[
(ix)
] 
(x)
 act as a special deputy receiver if appointed by the commissioner.
(b) Any note or other evidence of indebtedness of the association under Subsection
(15)(a)(iii) that is not in default:
(i) is a legal investment for a domestic 
member
 insurer; and
(ii) may be carried as admitted assets.
(c) A person seeking coverage from the association shall promptly comply with a
request for information by the association under Subsection (15)(a)(vii).
(16) The association may join an organization of one or more other state associations
of similar purposes to further the purposes and administer the powers and duties of the
association.
(17) (a) At any time within 180 days after the coverage date, the association may elect
to succeed to the rights and obligations of the member insurer that:
(i) accrue on or after the coverage date; and
(ii) relate to covered policies 
or contracts
 under any one or more indemnity reinsurance
agreements:
(A) entered into by the member insurer as a ceding insurer and its reinsurer; and
(B) selected by the association.
(b) An election made pursuant to Subsection (17)(a) is effective as of the date of the
order of liquidation.
(c) The association may make an election described in Subsection (17)(a) by notifying
an affected reinsurer in writing, with verification of receipt, through:
(i) the association; or
(ii) a nationally recognized association representing state guaranty associations that is
approved by the commissioner, that provides notice on behalf of the association.
(d) The association shall provide a copy of the notice described in Subsection (17)(c) to
the receiver.
(e) (i) The receiver of an insolvent insurer and each reinsurer of the ceding member
insurers shall make available as soon as possible after commencement of formal delinquency
proceedings the information described in Subsection (17)(e)(ii) to:
(A) the association; or
(B) a nationally recognized association representing state guaranty associations that is
approved by the commissioner, on behalf of the association.
(ii) This Subsection (17)(e) applies to:
(A) copies of in-force contracts of reinsurance and the related records relevant to the
determination of whether the in-force contracts of reinsurance should be assumed;
(B) notices of any default under a reinsurance contract; or
(C) any known event or condition that with the passage of time could become a default
under a reinsurance contract.
(f) If the association makes an election under Subsection (17)(a), the association shall
comply with Subsections (17)(f)(i) through (vii) with respect to the agreements selected by the
association.
(i) For a 
policy or
 contract covered, in whole or in part, by the association, the
association is responsible for:
(A) the unpaid premiums due under the agreements for periods both before and after
the coverage date; and
(B) the performance of the other obligations to be performed after the coverage date.
(ii) The association may charge a 
policy or
 contract covered in part by the association
the costs for reinsurance in excess of the obligations of the association, through reasonable
allocation methods.
(iii) The association shall provide notice and an accounting to the receiver of a charge
made pursuant to Subsection (17)(f)(ii).
(iv) The association is entitled to any amounts payable by the reinsurer under the
agreements with respect to a loss or event that:
(A) occurs after the coverage date; and
(B) relates to 
a policy or
 a contract covered by the association, in whole or in part.
(v) On receipt of any amounts under Subsection (17)(f)(iv), the association shall pay to
the beneficiary under the policy or contract on account of which the amounts were paid an
amount equal to the lesser of:
(A) the amount received by the association; and
(B) the excess of the amount received by the association over the benefits paid or
payable by the association on account of the policy or contract less the retention of the insurer
applicable to the loss or event.
(vi) (A) Within 30 days following the association's election, the association and each
indemnity reinsurer shall calculate the net balance due to or from the association under each
reinsurance agreement as of the date of the association's election, giving full credit to the items
paid by either the member insurer, its receiver, or the indemnity reinsurer before the date of the
association's election.
(B) Within five days of the completion of the calculation under Subsection
(17)(f)(vi)(A):
(I) the reinsurer shall pay the receiver the amounts due for a loss or event before the
coverage date, subject to any set-off for premiums unpaid for a period before the coverage date;
and
(II) the association or the reinsurer shall pay any remaining balance due the other.
(C) A dispute over an amount due to either party shall be resolved:
(I) by arbitration pursuant to the terms of the affected reinsurance contract; or
(II) if the reinsurance contract contains no arbitration clause, as otherwise provided by
law.
(D) If the receiver receives an amount due the association pursuant to Subsection
(17)(f)(iv), the receiver shall remit that amount to the association as promptly as practicable.
(vii) If the association, or the receiver on behalf of the association, within 60 days of
the election, pays the premiums due for periods both before and after the coverage date that
relate to 
policies or
 contracts covered by the association, in whole or in part, the reinsurer may
not:
(A) terminate the reinsurance agreement for failure to pay premium, to the extent the
reinsurance agreement relates to a policy or contract covered by the association, in whole or in
part; and
(B) set off against amounts due the association an amount due:
(I) under another 
policy or
 contract; or
(II) as an unpaid amount due from a person other than the association.
(g) (i) This Subsection (17)(g) applies during the period that:
(A) begins on the coverage date; and
(B) ends:
(I) on the election date; or
(II) if no election date occurs, 180 days after the coverage date.
(ii) During the period described in Subsection (17)(g)(i):
(A) neither the association nor the reinsurer have a right or obligation under a
reinsurance contract that the association may assume under Subsection (17)(a), whether for a
period before or after the coverage date; and
(B) the reinsurer, the receiver, and the association, to the extent practicable, shall
provide each other data and records reasonably requested.
(iii) Notwithstanding Subsection (17)(g)(ii), once the association elects to assume a
reinsurance contract, the parties' rights and obligations are governed by Subsections (17)(f)(i)
through (vi).
(h) If the association does not elect to assume a reinsurance contract by the election
date pursuant to Subsection (17)(a), the association has no right or obligation with respect to
the reinsurance contract, whether for a period before or after the coverage date.
(i) An insurer other than the association succeeds to the rights and obligations of the
association under Subsections (17)(a) through (f) effective as of the date agreed upon by the
association and the other insurer and regardless of whether the association has made the
election referred to in Subsections (17)(a) through (f) provided that:
(i) the association transfers its obligations to the other insurer;
(ii) the association and the other insurer agree to the transfer;
(iii) the indemnity reinsurance agreements automatically terminate for new reinsurance
unless the indemnity reinsurer and the other insurer agree to the contrary;
(iv) the obligations described in Subsection (17)(f)(v) may not apply on and after the
date the indemnity reinsurance agreement is transferred to the third party insurer;
(v) the transferring party shall give notice in writing, with verification of receipt, to the
affected reinsurer not less than 30 days before the effective date of the transfer; and
(vi) this Subsection (17)(i) may not apply if the association has previously expressly
determined in writing that the association will not exercise the election referred to in
Subsections (17)(a) through (f).
(j) (i) This Subsection (17) supersedes the provisions of any law of this state or of any
affected reinsurance agreement that provides for or requires any payment of reinsurance
proceeds on account of losses or events that occur in periods after the coverage date, to:
(A) the receiver of an insolvent member insurer; or
(B) another person.
(ii) The receiver is entitled to any amounts payable by the reinsurer under the
reinsurance agreement with respect to a loss or event that occurs before the coverage date,
subject to applicable setoff provisions.
(k) Except as otherwise expressly provided in Subsections (17)(a) through (j), this
Subsection (17) does not:
(i) alter or modify the terms and conditions of a reinsurance agreement of the insolvent
member insurer;
(ii) abrogate or limit a right any reinsurer to claim that it is entitled to rescind a
reinsurance agreement;
(iii) give a policy owner
, policy holder, contract owner, enrollee, certificate holder,
 or
beneficiary an independent cause of action against a reinsurer that is not otherwise set forth in
the reinsurance agreement;
(iv) limit or affect the association's rights as a creditor of the estate of an insolvent
insurer against the assets of the estate; or
(v) apply to a reinsurance agreement that covers property or casualty risks.
(18) The board of directors of the association has discretion and may exercise
reasonable business judgment to determine the means by which the association is to provide
the benefits of this part in an economical and efficient manner.
(19) If the association arranges or offers to provide the benefits of this part to a covered
person under a plan or arrangement that fulfills the association's obligations under this part, the
person is not entitled to benefits from the association in addition to or other than those
provided under the plan or arrangement.
(20) (a) Venue in a suit against the association arising under this part is Salt Lake
County.
(b) The association may not be required to give an appeal bond in an appeal that relates
to a cause of action arising under this part.
Section 11. Section 
31A-28-109
 is amended to read:
31A-28-109.
Assessments.
(1) (a) For the purpose of providing the funds necessary to carry out the powers and
duties of the association, the board of directors shall assess the member insurers, separately for
each class or subclass, at the time and for the amounts that the board of directors finds
necessary.
(b) Member insurer liability for an assessment is established [
as of
] 
beginning on
 the
coverage date
, regardless of when the assessment is called
.
(c) [
Subject to Subsection (1)(d), a
] 
A
 called assessment:
(i) is due not less than 30 days after prior written notice to the member insurer; and
(ii) shall accrue interest at 10% per annum on and after the due date.
(d) Notwithstanding Subsection (1)(c), the association may:
(i) assess the association's members as of the coverage date; and
(ii) defer the collection of the assessment described in Subsection (1)(d)(i).
(e) An assessment:
(i) has the force and effect of a judgment lien against the member insurer; and
(ii) may not be extinguished until paid.
(2) [
The
] 
There are
 two classes of [
assessment are described in Subsections (2)(a) and
(2)(b).
] 
assessments:
(a) [
A
] 
a
 Class A assessment [
shall be
]
:
(i) shall be
 authorized and called for the purpose of meeting administrative and legal
costs and other expenses[
. A Class A assessment
]
; and
(ii)
 may be authorized and called 
regardless of
 whether [
or not
] 
the assessment is
related to a particular impaired or insolvent insurer[
.
]
; and
(b) [
A
] 
a
 Class B assessment shall be authorized and called to the extent necessary to
carry out the powers and duties of the association under Section 
31A-28-108
 with regard to an
impaired or an insolvent insurer.
(3) (a) (i) The amount of a Class A assessment:
(A) shall be determined by the board of directors; and
(B) may be authorized and called on a pro rata or non-pro rata basis.
(ii) If the Class A assessment is pro rata, the board of directors may credit the
assessment against future Class B assessments.
[
(iii) The total of the non-pro rata assessments may not exceed $300 per member
insurer in any one calendar year.
]
(b) 
(i)
 [
The
] 
Except as provided in Subsection (3)(c)(i), the
 amount of a Class B
assessment shall be allocated for assessment purposes [
among subclasses
]
:
(A) between the life insurance and annuity class and the accident and health insurance
class; and
(B) among the subclasses of the life insurance and annuity class.
(ii) An allocation of a Class B assessment under Subsection (3)(b)(i) shall be made
pursuant to an allocation formula that may be based on:
[
(i)
] 
(A)
 the premiums or reserves of the impaired or insolvent insurer; or
[
(ii)
] 
(B)
 any other standard determined by the board of directors in the board of
directors' sole discretion as being fair and reasonable under the circumstances.
(c) (i) For a Class B assessment for the long-term care insurance written by an impaired
or insolvent insurer, the association:
(A) shall, except as prohibited in Subsection (3)(c)(i)(B), allocate the amount of the
Class B assessment according to a methodology that provides for 25% of the assessment to be
allocated to accident and health member insurers and 75% of the assessment to be allocated to
life insurance and annuity member insurers;
(B) may not impose liability on a member insurer that is a health maintenance
organization for an assessment with a coverage date before January 1, 2021;
(C) may not consider the premiums from a health maintenance organization contract
when calculating the share of an assessment with a coverage date before January 1, 2021,
allocated to accident and health member insurers; and
(D) shall include the methodology described in Subsection (3)(c)(i)(A) in the plan of
operation established and approved under Section 
31A-28-110
.
[
(c) (i)
] 
(ii)
 A Class B assessment against a member insurer for the life insurance
subclass, the annuity subclass, and the unallocated annuity subclass shall be in the proportion
that the premiums received on business in [
this
] 
the
 state by the member insurer on policies or
contracts included in the 
class or
 subclass for the three most recent calendar years for which
information is available preceding the year which includes the coverage date bears to the
premiums received on business in [
this state for
] 
the state during
 the same 
three-calendar-year
period by [
the
] 
all
 assessed member insurers 
on policies or contracts included in the class or
subclass
.
[
(ii)
] 
(iii)
 A Class B assessment against a member insurer for an accident and health
insurance [
subclass
] 
class
 shall be in the proportion that the premiums received on business in
[
this
] 
the
 state by each assessed member insurer on policies or contracts included in the
[
subclass
] 
class
 for the most recent calendar year for which information is available preceding
the year in which the assessment is made bears to the premiums received on business in this
state on policies or contracts included in the [
subclass
] 
class
 for that calendar year by [
the
] 
all
assessed member insurers.
(d) Assessments for funds to meet the requirements of the association with respect to
an impaired or insolvent insurer may not be authorized or called until necessary to implement
the purposes of this part.
(e) Classification 
and computation
 of assessments and premiums [
under Subsection
(3)(b) and computation of assessments under this Subsection (3)
] 
under this section
 shall be
made with a reasonable degree of accuracy, recognizing that exact determinations may not
always be possible.
(f) The association shall notify each member insurer of [
its
] 
the member insurer's
anticipated pro rata share of an authorized assessment not yet called within 180 days after the
day on which the assessment is authorized.
(4) (a) The association may abate or defer, in whole or in part, the assessment of a
member insurer if, in the opinion of the board of directors, payment of the assessment would
endanger the ability of the member insurer to fulfill its contractual obligations.
(b) If an assessment against a member insurer is abated or deferred in whole or in part
under Subsection (4)(a), the amount by which the assessment is abated or deferred may be
assessed against the other member insurers in a manner consistent with the basis for
assessments set forth in this section.
(c) Once a condition that caused a deferral is removed or rectified, the member insurer
shall pay the assessments that were deferred pursuant to a repayment plan approved by the
association.
(5) (a) (i) Subject to Subsection (5)(b), the total of the assessments authorized by the
association on a member insurer for each 
class or
 subclass may not in any one calendar year
exceed 2% of [
that member's total
] 
the member insurer's
 average annual assessable premium in
that 
class or
 subclass as defined in Subsection (3).
(ii) If two or more assessments are authorized in one calendar year with respect to
[
one
] 
two
 or more 
member
 insurers that become impaired or insolvent in different calendar
years, the average annual 
assessable
 premiums for purposes of the aggregate assessment
percentage limitation [
in
] 
calculated for each subclass or class under
 Subsection (5)(a)(i) shall
be equal and limited to the highest of the total average annual assessable [
premiums of
]
premium averages for
 the different calendar year periods involved in the assessment or
assessments.
(iii) If the maximum assessment together with the other assets of the association do not
provide in one year an amount sufficient to carry out the responsibilities of the association, the
necessary additional funds shall be assessed as soon after as permitted by this part.
(b) The board of directors may provide in the plan of operation a method of allocating
funds among claims, whether relating to one or more impaired or insolvent insurers, when the
maximum assessment will be insufficient to cover anticipated claims.
(c) If the maximum assessment for the life insurance 
subclass
 or 
the
 annuity subclass in
any one year does not provide an amount sufficient to carry out the responsibilities of the
association, the board of directors shall assess the other of the subclasses of the life insurance
and annuity class for the necessary additional amount:
(i) pursuant to Subsection (3)(b); and
(ii) subject to the maximum stated in Subsection (5)(a).
(6) (a) The board of directors may, by an equitable method established in the plan of
operation, refund to member insurers in proportion to the contribution of each 
member
 insurer
to that subclass the amount by which the assets of the subclass exceed the amount the board of
directors finds is necessary to carry out the obligations of the association with regard to that
subclass, including assets accruing from:
(i) assignment;
(ii) subrogation;
(iii) net realized gains; and
(iv) income from investments.
(b) Notwithstanding Subsection (6)(a), a reasonable amount may be retained to provide
funds for the continuing expenses of the association and for future losses.
(7) A member insurer, in determining its premium rates and policyowner dividends as
to any kind of insurance within the scope of this part, may consider the amount reasonably
necessary to meet its assessment obligations under this part.
(8) (a) The association shall issue to each 
member
 insurer paying an assessment under
this part, other than a Class A assessment, a certificate of contribution, in a form approved by
the commissioner, for the amount of the assessment paid.
(b) The outstanding certificates described in Subsection (8)(a) shall be of equal dignity
and priority without reference to amounts or dates of issue.
(c) (i) A certificate of contribution described in Subsection (8)(a) may be shown by the
member
 insurer in its financial statement as an asset in the amount of the certificate of
contribution less the amount by which the insurer's premium taxes have already been reduced
with respect to the certificate.
(ii) For good cause shown, the commissioner may order the insurer to show a different
amount in its financial statement than the amount under Subsection (8)(c)(i).
(9) (a) (i) A member insurer that wishes to protest all or part of an assessment shall
pay, when due, the full amount of the assessment as specified in the notice provided by the
association.
(ii) The payment shall be available to meet association obligations during the pendency
of the protest or any subsequent appeal.
(iii) The payment shall be accompanied by a statement in writing:
(A) that the payment is made under protest; and
(B) giving a brief description of the grounds for the protest.
(b) (i) The association shall notify the member insurer, in writing, of the association's
determination with respect to the protest within 60 days after the day on which the payment of
an assessment is made under protest by a member insurer, unless the association notifies the
member insurer that additional time is required to resolve the issues raised by the protest.
(ii) The association shall notify the protesting member insurer in writing of the final
decision within 30 days after the day on which a final decision is made by the association.
(iii) The protesting member insurer may appeal the final action of the association to the
commissioner within 60 days after the day on which the protesting member insurer receives a
notice of the final decision from the association.
(c) The association may refer protests to the commissioner for a final decision, with or
without a recommendation from the association.
(d) (i) If a protest or appeal on an assessment concludes that an amount was paid in
error or excess by a member insurer, the association shall return the amount paid in error or
excess to the member insurer.
(ii) The association shall pay interest on a refund due to a protesting member insurer at
the rate actually earned by the association.
[
(9)
] 
(10)
 (a) The association may request information from a member insurer to aid in
the exercise of the association's power under this part.
(b) A member insurer shall comply promptly with a request of the association under
this Subsection [
(9)
] 
(10)
.
Section 12. Section 
31A-28-111
 is amended to read:
31A-28-111.
Duties and powers under this part.
[
In
] 
The duties and powers described in this section are in
 addition to the duties and
powers enumerated elsewhere in this part[
, the persons described in this section have the duties
and powers described in Subsections (1) through (6)
].
(1) The commissioner shall:
(a) upon request of the board of directors, provide the association with a statement of
the premiums for each member insurer:
(i) in this state; and
(ii) any other appropriate state; and
(b) if an impairment is declared and the amount of the impairment is determined, serve
a demand upon the impaired insurer to make good the impairment within a reasonable time.
(2) Notice to the impaired insurer under Subsection (1)(b) constitutes notice to the
shareholders of the impaired insurer if the impaired insurer has shareholders.
(3) The failure of the 
impaired
 insurer to promptly comply with the commissioner's
demand under Subsection (1)(b) does not excuse the association from the performance of its
powers and duties under this part.
(4) (a) After notice and hearing, the commissioner may suspend or revoke the
certificate of authority to transact [
insurance
] 
business
 in this state of a member insurer not
domiciled in this state that fails to:
(i) pay an assessment when due; or
(ii) comply with the plan of operation.
(b) (i) As an alternative to suspending or revoking a certificate of authority under
Subsection (4)(a), the commissioner may levy a forfeiture on any member insurer that fails to
pay an assessment when due.
(ii) A forfeiture described in Subsection (4)(b)(i):
(A) may not exceed 5% of the unpaid assessment per month; and
(B) may not be less than $100 per month.
(5) (a) A final action of the board of directors or the association may be appealed to the
commissioner by any member insurer if appeal is taken within 60 days of the date the member
insurer received notice of the final action being appealed.
(b) If a member insurer is appealing an assessment, the amount assessed shall be:
(i) paid to the association; and
(ii) made available to meet association obligations during the pendency of an appeal.
(c) If the appeal on the assessment described in Subsection (5)(b) is upheld, the amount
paid in error or excess shall be returned to the member insurer.
(d) Any final action or order of the commissioner is subject to judicial review in a court
of competent jurisdiction in accordance with the laws of this state that apply to the actions or
orders of the commissioner.
(6) The receiver of an impaired insurer shall notify the interested persons of the effect
of this part.
Section 13. Section 
31A-28-112
 is amended to read:
31A-28-112.
Reports.
(1) The commissioner shall:
(a) report to the board of directors when:
(i) the commissioner takes an action set forth in Section 
31A-27a-201
;
(ii) an event described in Section 
31A-17-603
, 
31A-17-604
, or 
31A-17-605
 occurs; or
(iii) the commissioner receives a report from any other commissioner indicating that an
action described in Subsection (1)(a)(i) has been taken in another state;
(b) include in the report to the board of directors required by Subsection (1)(a):
(i) the significant details of the action taken;
(ii) the significant details of an event described in Subsection (1)(a)(ii); or
(iii) the report received from another commissioner;
(c) promptly report to the board of directors when the commissioner has reasonable
cause to believe from an examination of any member insurer, whether completed or in process,
that the 
member
 insurer may be an impaired or insolvent insurer; and
(d) furnish to the board of directors the National Association of Insurance
Commissioners Insurance Regulatory Information System ratios and listings of companies not
included in the ratios developed by the National Association of Insurance Commissioners.
(2) (a) The board of directors may use the information contained in the ratios and
listings described in Subsection (1)(d) in carrying out the board of directors' duties and
responsibilities under this part.
(b) The board of directors shall keep the report and the information contained in the
ratios and listings confidential until the commissioner or other lawful authority publishes the
information.
(3) The commissioner may seek the advice and recommendations of the board of
directors concerning any matter affecting the commissioner's duties and responsibilities
regarding the financial condition of member insurers and companies seeking admission to
transact insurance business in this state.
(4) (a) The board of directors may make reports and recommendations to the
commissioner upon any matter germane to:
(i) the solvency, liquidation, rehabilitation, or conservation of any member insurer; or
(ii) the solvency of any [
company
] 
insurer
 seeking to do [
an insurance
] business in this
state.
(b) The reports and recommendations of the board of directors described in Subsection
(4)(a) are not public documents.
(5) The board of directors may, upon majority vote, notify the commissioner of any
information indicating 
that
 a member insurer may be an impaired or insolvent insurer.
(6) The board of directors may make recommendations to the commissioner for the
detection and prevention of 
member
 insurer insolvencies.
(7) (a) At the conclusion of any 
member
 insurer insolvency in which the association
was obligated to pay covered claims, the board of directors shall prepare a report to the
commissioner containing the information the board of directors has in its possession bearing on
the history and causes of the insolvency.
(b) In preparing a report on the history and causes of insolvency of a particular 
member
insurer, the board of directors may cooperate with:
(i) the board of directors of a guaranty association in another state; or
(ii) an organization described in Subsection 
31A-28-108
(16).
(c) The board of directors may adopt by reference any report prepared by:
(i) a guaranty association in another state; or
(ii) an organization described in Subsection 
31A-28-108
(16).
Section 14. Section 
31A-28-113
 is amended to read:
31A-28-113.
Credit for assessments paid.
(1) (a) A member insurer may offset against its premium tax
, income tax, or franchise
tax
 liability to this state an assessment described in Subsection 
31A-28-109
(2)(b) to the extent
of 20% of the amount of the assessment for each of the five calendar years following the year
in which the assessment was paid.
(b) To the extent that the offsets described in Subsection (1)(a) exceed premium tax
liability, the offsets may be carried forward and used to offset premium tax liability in future
years.
(c) If a member insurer ceases doing business, all uncredited assessments may be
credited against its premium tax liability for the year it ceases doing business.
(2) (a) A member insurer that is exempt from taxes described in Subsection (1) may
recoup the member insurer's assessment by a surcharge on premiums in a sum reasonably
calculated to recoup the assessments over a reasonable period of time, as approved by the
commissioner.
(b) Amounts recouped shall not be considered premiums for any other purpose,
including the computation of gross premium tax, income tax, franchise tax, producer
commission, or, to the extent allowed under federal law, medical loss ratio.
(c) If a member insurer collects excess surcharges, the member insurer shall remit the
excess amount to the association, and the excess amount shall be applied to reduce future
assessments in the appropriate account.
[
(2)
] 
(3)
 (a) Money shall be paid by the 
member
 insurers to the state in a manner
required by the State Tax Commission if the money:
(i) is acquired by refund in accordance with Subsection 
31A-28-109
(6) from the
association by member insurers; and
(ii) has been offset against premium taxes as provided in Subsection (1).
(b) The association shall notify the commissioner that the refunds described in
Subsection [
(2)
] 
(3)
(a) have been made.
Section 15. Section 
31A-28-114
 is amended to read:
31A-28-114.
Miscellaneous provisions.
(1) Nothing in this part shall be construed to reduce the liability for unpaid assessments
of the insureds of an impaired or insolvent insurer operating under a plan with assessment
liability.
(2) (a) The board of directors shall keep a record of a meeting of the board of directors
to discuss the activities of the association in carrying out its powers and duties under Section
31A-28-108
.
(b) A record of the association with respect to an impaired or insolvent insurer may not
be disclosed before the earlier of:
(i) the termination of a liquidation, rehabilitation, or conservation proceeding involving
the impaired or insolvent insurer;
(ii) the termination of the impairment or insolvency of the insurer; or
(iii) upon the order of a court of competent jurisdiction.
(c) Nothing in this Subsection (2) limits the duty of the association to render a report of
its activities under Section 
31A-28-115
.
(3) (a) For the purpose of carrying out its obligations under this part, the association is
considered to be a creditor of an impaired or insolvent insurer to the extent of assets
attributable to covered policies 
or contracts
 reduced by any amounts to which the association is
entitled as subrogee pursuant to Subsection 
31A-28-108
(14).
(b) Assets of the impaired or insolvent insurer attributable to covered policies 
or
contracts
 shall be used to continue the covered policies and pay the contractual obligations of
the impaired or insolvent insurer as required by this part.
(c) As used in this Subsection (3), assets attributable to covered policies 
or contracts
are that proportion of the assets which the reserves that should have been established for
covered policies 
or contracts
 bear to the reserves that should have been established for all
policies of insurance written by the impaired or insolvent insurer.
(4) (a) As a creditor of the impaired or insolvent insurer under Subsection (3) and
consistent with Section 
31A-27a-701
, the association and any other similar association are
entitled to receive a disbursement of assets out of the marshaled assets, from time to time as the
assets become available to reimburse the association and any other similar association.
(b) If, within 180 days of a final determination of insolvency of [
an
] 
a member
 insurer
by the receivership court, the receiver has not made an application to the court for the approval
of a proposal to disburse assets out of marshaled assets to the guaranty associations having
obligations because of the insolvency, the association is entitled to make application to the
receivership court for approval of the association's proposal for disbursement of these assets.
(5) (a) Before the termination of a liquidation, rehabilitation, or conservation
proceeding, 
when making an equitable distribution of the ownership rights of the insolvent
insurer,
 the court may take into consideration the contributions of the respective parties,
including:
(i) the association;
(ii) the shareholders;
(iii) [
policyowners
] 
policy owners, contract owners, certificate holders, and enrollees
of the insolvent insurer; and
(iv) any other party with a bona fide interest in making an equitable distribution of the
ownership rights of the insolvent insurer.
(b) In making a determination under Subsection (5)(a), the court shall consider the
welfare of the [
policyowners
] 
policy owners, contract owners, certificate holders, and enrollees
of the continuing or successor 
member
 insurer.
(c) A distribution to any stockholder of an impaired or insolvent insurer may not be
made until and unless the total amount of valid claims of the association with interest has been
fully recovered by the association for funds expended in carrying out its powers and duties
under Section 
31A-28-108
 with respect to the 
member
 insurer.
Section 16. Section 
31A-28-119
 is amended to read:
31A-28-119.
Prohibited advertisement of the association -- Notice to owners of
policies and contracts.
(1) (a) Except as provided in Subsection (1)(b), a person, including [
an
] 
a member
insurer, [
agent
] 
producer
, or affiliate of [
an
] 
a member
 insurer may not make, publish,
disseminate, circulate, or place before the public, or cause directly or indirectly to be made,
published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or
other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over a radio
station or television station, or in any other way, any advertisement, announcement, or
statement written or oral, that uses the existence of the association for the purpose of sales,
solicitation, or inducement to purchase any form of insurance 
or coverage for which the
guaranty association provides coverage under this part
.
(b) [
Notwithstanding Subsection (1)(a), this
] 
This
 section does not apply to:
(i) the association; or
(ii) another entity that does not sell or solicit insurance.
(2) (a) The association shall:
(i) have a summary document describing the general purposes and current limitations
of this part that complies with Subsection (3); and
(ii) submit the summary document described in Subsection (2)(a)(i) to the
commissioner for approval.
(b) [
An
] 
A member
 insurer may not deliver a policy or contract to a policy [
or
] 
owner,
contract owner
, certificate holder, or enrollee
 unless the summary document is also delivered to
the policy [
or
] 
owner,
 contract owner
, certificate holder, or enrollee
 before, or at the time of,
delivery of the policy or contract.
(c) The summary document shall be available upon request by a policy owner
, contract
owner, certificate holder, or enrollee
.
(d) The distribution, delivery, or contents or interpretation of the summary document
does not guarantee that:
(i) the policy or the contract is covered in the event of the impairment or insolvency of
a member insurer; or
(ii) the [
owner of the policy or
] 
policy owner,
 contract 
owner, certificate holder, or
enrollee
 is covered in the event of the impairment or insolvency of a member insurer.
(e) The summary document shall be revised by the association as amendments to this
part may require.
(f) Failure to receive the summary document as required in Subsection (2)(b) does not
give the [
owner of a policy or
] 
policy owner,
 contract 
owner
, certificate holder, 
enrollee,
 or
insured any greater rights than those stated in this part.
(3) (a) The summary document described in Subsection (2) shall contain a clear and
conspicuous disclaimer on its face.
(b) The commissioner shall, by rule, establish the form and content of the disclaimer
described in Subsection (3)(a), except that the disclaimer shall:
(i) state the name and address of:
(A) the association; and
(B) the department;
(ii) prominently warn a policy [
or
] 
owner,
 contract owner
, certificate holder, or
enrollee
 that:
(A) the association may not cover the policy or contract; or
(B) if coverage is available, it is:
(I) subject to substantial limitations and exclusions; and
(II) conditioned on continued residence in the state;
(iii) state the types of policies or contracts for which the association will provide
coverage;
(iv) state that the 
member
 insurer and [
its agents
] 
the member insurer's producers
 are
prohibited by law from using the existence of the association for the purpose of sales,
solicitation, or inducement to purchase any form of insurance;
(v) state that the policy [
or
] 
owner,
 contract owner
, certificate holder, or enrollee
should not rely on coverage under the association when selecting an insurer;
(vi) explain the rights available and procedures for filing a complaint to allege a
violation of this part; and
(vii) provide other information as directed by the commissioner including sources for
information about the financial condition of insurers provided that the information:
(A) is not proprietary; and
(B) is subject to disclosure under public records laws.
(4) (a) An insurer
,
 or [
agent
] 
the insurer's producer,
 may not deliver a policy or contract
described in Subsection 
31A-28-103
[
(2)(a)
]
(6)
 and wholly excluded under Subsection
31A-28-103
[
(2)(b)(i)
]
(7)(a)
 from coverage under this part unless the insurer or [
agent
] 
the
insurer's producer
, prior to or at the time of delivery, gives the policy [
or
] 
owner,
 contract
owner, certificate
 holder
, or enrollee
 a separate written notice that clearly and conspicuously
discloses that the policy or contract is not covered by the association.
(b) The commissioner shall by rule specify the form and content of the notice required
by Subsection (4)(a).
(5) A member insurer shall retain evidence of compliance with Subsection (2) for the
later of:
(a) three years; or
(b) until the conclusion of the next market conduct examination by the department of
insurance where the member insurer is domiciled.
Section 17. Section 
31A-28-120
 is amended to read:
31A-28-120.
Prospective application.
Notwithstanding any prior or subsequent law, the provisions of this part that are in
effect on the date on which the association first becomes obligated for the policies or contracts
of an insolvent or impaired [
member
] 
insurer
 govern the association's rights and obligations to
the [
policyowners
] 
policy owners, contract owners, certificate holders, and enrollees
 of the
insolvent or impaired [
member
] 
insurer
.
Section 18. Section 
59-7-623
 is enacted to read:
 59-7-623.
Nonrefundable guaranty association assessment tax credit.
(1) As used in this section:
(a) "Guaranty association assessment" means the amount of any assessments paid by a
qualified insurer under the guaranty association established under Title 31A, Chapter 28, Part
1, Utah Life and Health Insurance Guaranty Association Act, in the manner provided by
Section 
31A-28-113
.
(b) "Qualified insurer" means an insurer, as defined in Section 
31A-1-301
, that is not
subject to the premium tax on health care insurance under Section 
59-9-101
.
(2) For a taxable year beginning on or after January 1, 2019, a qualified insurer may
claim a nonrefundable tax credit equal to 20% of the assessment for each of the five years
following the year the qualified insurer pays a guaranty association assessment, in accordance
with Section 
31A-28-113
.
(3) (a) A qualified insurer may carry forward the portion of the tax credit that exceeds
the qualified insurer's tax liability for the taxable year in accordance with Section 
31A-28-113
.
(b) A qualified insurer may not carry back the portion of the tax credit that exceeds the
qualified insurer's tax liability for the taxable year.
Section 19. 
Effective date.
This bill takes effect on January 1, 2019.