Utah Code 31A-28-109. Assessments

(1)

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Terms Used In Utah Code 31A-28-109

Accident and health insurance: means insurance to provide protection against economic losses resulting from:
          (1)(a)(i) a medical condition including:
               (1)(a)(i)(A) a medical care expense; or
               (1)(a)(i)(B) the risk of disability;
          (1)(a)(ii) accident; or
          (1)(a)(iii) sickness. See Utah Code 31A-1-301
Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
Annuity: means an agreement to make periodical payments for a period certain or over the lifetime of one or more individuals if the making or continuance of all or some of the series of the payments, or the amount of the payment, is dependent upon the continuance of human life. See Utah Code 31A-1-301
Appeal: A request made after a trial, asking another court (usually the court of appeals) to decide whether the trial was conducted properly. To make such a request is "to appeal" or "to take an appeal." One who appeals is called the appellant.
Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
Association: means the Utah Life and Health Insurance Guaranty Association continued under Section 31A-28-106. See Utah Code 31A-28-105
authorized: when used in the context of assessments, means that the board of directors passed a resolution by which an assessment will be called immediately or in the future from member insurers for an amount specified in the resolution. See Utah Code 31A-28-105
Board of directors: means the board of directors established under Section 31A-28-107. See Utah Code 31A-28-105
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. See Utah Code 31A-28-105
Certificate: means evidence of insurance given to:
(23)(a) an insured under a group insurance policy; or
(23)(b) a third party. See Utah Code 31A-1-301
Contract: A legal written agreement that becomes binding when signed.
Coverage date: means the date on which the association becomes responsible for the obligations of a member insurer. See Utah Code 31A-28-105
Equal: means , with respect to biological sex, of the same value. See Utah Code 68-3-12.5
Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. ^{Source: U.S. Courts}
Form: means one of the following prepared for general use:
          (74)(a)(i) a policy;
          (74)(a)(ii) a certificate;
          (74)(a)(iii) an application;
          (74)(a)(iv) an outline of coverage; or
          (74)(a)(v) an endorsement. See Utah Code 31A-1-301
health insurance: means insurance providing:
(84)(a)(i) a health care benefit; or
(84)(a)(ii) payment of an incurred health care expense. See Utah Code 31A-1-301
insolvent: means that:
     (95)(a) an insurer is unable to pay the insurer's obligations as the obligations are due;
     (95)(b) an insurer's total adjusted capital is less than the insurer's mandatory control level RBC under Subsection 31A-17-601(8)(c); or
     (95)(c) an insurer's admitted assets are less than the insurer's liabilities. See Utah Code 31A-1-301
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. See Utah Code 31A-28-105
Insurance: includes :
          (96)(b)(i) a risk distributing arrangement providing for compensation or replacement for damages or loss through the provision of a service or a benefit in kind;
          (96)(b)(ii) a contract of guaranty or suretyship entered into by the guarantor or surety as a business and not as merely incidental to a business transaction; and
          (96)(b)(iii) a plan in which the risk does not rest upon the person who makes an arrangement, but with a class of persons who have agreed to share the risk. See Utah Code 31A-1-301
Lien: A claim against real or personal property in satisfaction of a debt.
Life insurance: means :
(114)(a)(i) insurance on a human life; and
(114)(a)(ii) insurance pertaining to or connected with human life. See Utah Code 31A-1-301
Long-term care insurance: includes :
          (121)(b)(i) any of the following that provide directly or supplement long-term care insurance:
               (121)(b)(i)(A) a group or individual annuity or rider; or
               (121)(b)(i)(B) a life insurance policy or rider;
          (121)(b)(ii) a policy or rider that provides for payment of benefits on the basis of:
               (121)(b)(ii)(A) cognitive impairment; or
               (121)(b)(ii)(B) functional capacity; or
          (121)(b)(iii) a qualified long-term care insurance contract. See Utah Code 31A-1-301
Member: means a person having membership rights in an insurance corporation. See Utah Code 31A-1-301
Member insurer: includes an insurer whose license or certificate of authority in this state may have been:
          (14)(b)(i) suspended;
          (14)(b)(ii) revoked;
          (14)(b)(iii) not renewed; or
          (14)(b)(iv) voluntarily withdrawn. See Utah Code 31A-28-105
Order: means an order of the commissioner. See Utah Code 31A-1-301
Premium: includes , however designated:
          (156)(b)(i) an assessment;
          (156)(b)(ii) a membership fee;
          (156)(b)(iii) a required contribution; or
          (156)(b)(iv) monetary consideration. See Utah Code 31A-1-301
premiums: means an amount or consideration received on covered policies or contracts, less:
          (17)(a)(i) returned:
               (17)(a)(i)(A) premiums;
               (17)(a)(i)(B) considerations; and
               (17)(a)(i)(C) deposits; and
          (17)(a)(ii) dividends and experience credits. See Utah Code 31A-28-105
Rate: means :
          (163)(a)(i) the cost of a given unit of insurance; or
          (163)(a)(ii) for property or casualty insurance, that cost of insurance per exposure unit either expressed as:
               (163)(a)(ii)(A) a single number; or
               (163)(a)(ii)(B) a pure premium rate, adjusted before the application of individual risk variations based on loss or expense considerations to account for the treatment of:
                    (163)(a)(ii)(B)(I) expenses;
                    (163)(a)(ii)(B)(II) profit; and
                    (163)(a)(ii)(B)(III) individual insurer variation in loss experience. See Utah Code 31A-1-301
State: when applied to the different parts of the United States, includes a state, district, or territory of the United States. See Utah Code 68-3-12.5
Writing: includes :
     (48)(a) printing;
     (48)(b) handwriting; and
     (48)(c) information stored in an electronic or other medium if the information is retrievable in a perceivable format. See Utah Code 68-3-12.5

(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.

(1)(b) Member insurer liability for an assessment is established beginning on the coverage date, regardless of when the assessment is called.

(1)(c) A called assessment:

(1)(c)(i) is due not less than 30 days after prior written notice to the member insurer; and

(1)(c)(ii) shall accrue interest at 10% per annum on and after the due date.

(1)(d) Notwithstanding Subsection (1)(c), the association may:

(1)(d)(i) assess the association’s members as of the coverage date; and

(1)(d)(ii) defer the collection of the assessment described in Subsection (1)(d)(i).

(1)(e) An assessment:

(1)(e)(i) has the force and effect of a judgment lien against the member insurer; and

(1)(e)(ii) may not be extinguished until paid.

(2) There are two classes of assessments:

(2)(a) a Class A assessment:

(2)(a)(i) shall be authorized and called for the purpose of meeting administrative and legal costs and other expenses; and

(2)(a)(ii) may be authorized and called regardless of whether the assessment is related to a particular impaired or insolvent insurer; and

(2)(b) 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)

(3)(a)

(3)(a)(i) The amount of a Class A assessment:

(3)(a)(i)(A) shall be determined by the board of directors; and

(3)(a)(i)(B) may be authorized and called on a pro rata or non-pro rata basis.

(3)(a)(ii) If the Class A assessment is pro rata, the board of directors may credit the assessment against future Class B assessments.

(3)(b)

(3)(b)(i) Except as provided in Subsection (3)(c)(i), the amount of a Class B assessment shall be allocated for assessment purposes:

(3)(b)(i)(A) between the life insurance and annuity class and the accident and health insurance class; and

(3)(b)(i)(B) among the subclasses of the life insurance and annuity class.

(3)(b)(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:

(3)(b)(ii)(A) the premiums or reserves of the impaired or insolvent insurer; or

(3)(b)(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.

(3)(c)

(3)(c)(i) For a Class B assessment for the long-term care insurance written by an impaired or insolvent insurer, the association:

(3)(c)(i)(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;

(3)(c)(i)(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;

(3)(c)(i)(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

(3)(c)(i)(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.

(3)(c)(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 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 the state during the same three-calendar-year period by all assessed member insurers on policies or contracts included in the class or subclass.

(3)(c)(iii) A Class B assessment against a member insurer for an accident and health insurance class shall be in the proportion that the premiums received on business in the state by each assessed member insurer on policies or contracts included in the 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 class for that calendar year by all assessed member insurers.

(3)(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.

(3)(e) Classification and computation of assessments and premiums under this section shall be made with a reasonable degree of accuracy, recognizing that exact determinations may not always be possible.

(3)(f) The association shall notify each member insurer of 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)

(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.

(4)(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.

(4)(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)

(5)(a)

(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 the member insurer’s average annual assessable premium in that class or subclass as defined in Subsection (3).

(5)(a)(ii) If two or more assessments are authorized in one calendar year with respect to 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 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 premium averages for the different calendar year periods involved in the assessment or assessments.

(5)(a)(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.

(5)(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.

(5)(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:

(5)(c)(i) pursuant to Subsection (3)(b); and

(5)(c)(ii) subject to the maximum stated in Subsection (5)(a).

(6)

(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:

(6)(a)(i) assignment;

(6)(a)(ii) subrogation;

(6)(a)(iii) net realized gains; and

(6)(a)(iv) income from investments.

(6)(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)

(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.

(8)(b) The outstanding certificates described in Subsection (8)(a) shall be of equal dignity and priority without reference to amounts or dates of issue.

(8)(c)

(8)(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.

(8)(c)(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)

(9)(a)

(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.

(9)(a)(ii) The payment shall be available to meet association obligations during the pendency of the protest or any subsequent appeal.

(9)(a)(iii) The payment shall be accompanied by a statement in writing:

(9)(a)(iii)(A) that the payment is made under protest; and

(9)(a)(iii)(B) giving a brief description of the grounds for the protest.

(9)(b)

(9)(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.

(9)(b)(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.

(9)(b)(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.

(9)(c) The association may refer protests to the commissioner for a final decision, with or without a recommendation from the association.

(9)(d)

(9)(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.

(9)(d)(ii) The association shall pay interest on a refund due to a protesting member insurer at the rate actually earned by the association.

(10)

(10)(a) The association may request information from a member insurer to aid in the exercise of the association’s power under this part.

(10)(b) A member insurer shall comply promptly with a request of the association under this Subsection (10).

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