State Codes and Statutes

Statutes > Utah > Title-31a > Chapter-15 > 31a-15-103

31A-15-103. Surplus lines insurance -- Unauthorized insurers.
(1) Notwithstanding Section 31A-15-102, a foreign insurer that has not obtained acertificate of authority to do business in this state under Section 31A-14-202 may negotiate forand make an insurance contract with a person in this state and on a risk located in this state,subject to the limitations and requirements of this section.
(2) (a) For a contract made under this section, the insurer may, in this state:
(i) inspect the risks to be insured;
(ii) collect premiums;
(iii) adjust losses; and
(iv) do another act reasonably incidental to the contract.
(b) An act described in Subsection (2)(a) may be done through:
(i) an employee; or
(ii) an independent contractor.
(3) (a) Subsections (1) and (2) do not permit a person to solicit business in this state onbehalf of an insurer that has no certificate of authority.
(b) Insurance placed with a nonadmitted insurer shall be placed with a surplus linesproducer licensed under Chapter 23a, Insurance Marketing - Licensing Producers, Consultants,and Reinsurance Intermediaries.
(c) The commissioner may by rule prescribe how a surplus lines producer may:
(i) pay or permit the payment, commission, or other remuneration on insurance placed bythe surplus lines producer under authority of the surplus lines producer's license to one holding alicense to act as an insurance producer; and
(ii) advertise the availability of the surplus lines producer's services in procuring, onbehalf of a person seeking insurance, a contract with a nonadmitted insurer.
(4) For a contract made under this section, a nonadmitted insurer is subject to Sections31A-23a-402 and 31A-23a-403 and the rules adopted under those sections.
(5) A nonadmitted insurer may not issue workers' compensation insurance coverage to anemployer located in this state, except for stop loss coverage issued to an employer securingworkers' compensation under Subsection 34A-2-201(3).
(6) (a) The commissioner may by rule prohibit making a contract under Subsection (1)for a specified class of insurance if authorized insurers provide an established market for theclass in this state that is adequate and reasonably competitive.
(b) The commissioner may by rule place a restriction or a limitation on and create specialprocedures for making a contract under Subsection (1) for a specified class of insurance if:
(i) there have been abuses of placements in the class; or
(ii) the policyholders in the class, because of limited financial resources, businessexperience, or knowledge, cannot protect their own interests adequately.
(c) The commissioner may prohibit an individual insurer from making a contract underSubsection (1) and all insurance producers from dealing with the insurer if:
(i) the insurer willfully violates:
(A) this section;
(B) Section 31A-4-102, 31A-23a-402, or 31A-26-303; or
(C) a rule adopted under a section listed in Subsection (6)(c)(i)(A) or (B);
(ii) the insurer fails to pay the fees and taxes specified under Section 31A-3-301; or
(iii) the commissioner has reason to believe that the insurer is:

(A) in an unsound condition;
(B) operated in a fraudulent, dishonest, or incompetent manner; or
(C) in violation of the law of its domicile.
(d) (i) The commissioner may issue one or more lists of unauthorized foreign insurerswhose:
(A) solidity the commissioner doubts; or
(B) practices the commissioner considers objectionable.
(ii) The commissioner shall issue one or more lists of unauthorized foreign insurers thecommissioner considers to be reliable and solid.
(iii) In addition to the lists described in Subsections (6)(d)(i) and (ii), the commissionermay issue other relevant evaluations of unauthorized insurers.
(iv) An action may not lie against the commissioner or an employee of the departmentfor a written or oral communication made in, or in connection with the issuance of, a list orevaluation described in this Subsection (6)(d).
(e) A foreign unauthorized insurer shall be listed on the commissioner's "reliable" listonly if the unauthorized insurer:
(i) delivers a request to the commissioner to be on the list;
(ii) establishes satisfactory evidence of good reputation and financial integrity;
(iii) (A) delivers to the commissioner a copy of the unauthorized insurer's current annualstatement certified by the insurer; and
(B) continues each subsequent year to file its annual statements with the commissionerwithin 60 days of the day on which it is filed with the insurance regulatory authority where theinsurer is domiciled;
(iv) (A) (I) is in substantial compliance with the solvency standards in Chapter 17, Part 6,Risk-Based Capital, or maintains capital and surplus of at least $15,000,000, whichever isgreater; and
(II) maintains in the United States an irrevocable trust fund in either a national bank or amember of the Federal Reserve System, or maintains a deposit meeting the statutory depositrequirements for insurers in the state where it is made, which trust fund or deposit:
(Aa) shall be in an amount not less than $2,500,000 for the protection of all of theinsurer's policyholders in the United States;
(Bb) may consist of cash, securities, or investments of substantially the same characterand quality as those which are "qualified assets" under Section 31A-17-201; and
(Cc) may include as part of the trust arrangement a letter of credit that qualifies asacceptable security under Section 31A-17-404.1; or
(B) in the case of any "Lloyd's" or other similar incorporated or unincorporated group ofalien individual insurers, maintains a trust fund that:
(I) shall be in an amount not less than $50,000,000 as security to its full amount for allpolicyholders and creditors in the United States of each member of the group;
(II) may consist of cash, securities, or investments of substantially the same character andquality as those which are "qualified assets" under Section 31A-17-201; and
(III) may include as part of this trust arrangement a letter of credit that qualifies asacceptable security under Section 31A-17-404.1; and
(v) for an alien insurer not domiciled in the United States or a territory of the UnitedStates, is listed on the Quarterly Listing of Alien Insurers maintained by the National Association

of Insurance Commissioners International Insurers Department.
(7) (a) Subject to Subsection (7)(b), a surplus lines producer may not, either knowinglyor without reasonable investigation of the financial condition and general reputation of theinsurer, place insurance under this section with:
(i) a financially unsound insurer;
(ii) an insurer engaging in unfair practices; or
(iii) an otherwise substandard insurer.
(b) A surplus line producer may place insurance under this section with an insurerdescribed in Subsection (7)(a) if the surplus line producer:
(i) gives the applicant notice in writing of the known deficiencies of the insurer or thelimitations on the surplus line producer's investigation; and
(ii) explains the need to place the business with that insurer.
(c) A copy of the notice described in Subsection (7)(b) shall be kept in the office of thesurplus line producer for at least five years.
(d) To be financially sound, an insurer shall satisfy standards that are comparable tothose applied under the laws of this state to an authorized insurer.
(e) An insurer on the "doubtful or objectionable" list under Subsection (6)(d) or aninsurer not on the commissioner's "reliable" list under Subsection (6)(e) is presumed substandard.
(8) (a) A policy issued under this section shall:
(i) include a description of the subject of the insurance; and
(ii) indicate:
(A) the coverage, conditions, and term of the insurance;
(B) the premium charged the policyholder;
(C) the premium taxes to be collected from the policyholder; and
(D) the name and address of the policyholder and insurer.
(b) If the direct risk is assumed by more than one insurer, the policy shall state:
(i) the names and addresses of all insurers; and
(ii) the portion of the entire direct risk each assumes.
(c) A policy issued under this section shall have attached or affixed to the policy thefollowing statement: "The insurer issuing this policy does not hold a certificate of authority to dobusiness in this state and thus is not fully subject to regulation by the Utah insurancecommissioner. This policy receives no protection from any of the guaranty associations createdunder Title 31A, Chapter 28."
(9) Upon placing a new or renewal coverage under this section, a surplus lines producershall promptly deliver to the policyholder or the policyholder's agent evidence of the insuranceconsisting either of:
(a) the policy as issued by the insurer; or
(b) if the policy is not available upon placing the coverage, a certificate, cover note, orother confirmation of insurance complying with Subsection (8).
(10) If the commissioner finds it necessary to protect the interests of insureds and thepublic in this state, the commissioner may by rule subject a policy issued under this section to asmuch of the regulation provided by this title as is required for a comparable policy written by anauthorized foreign insurer.
(11) (a) A surplus lines transaction in this state shall be examined to determine whether itcomplies with:

(i) the surplus lines tax levied under Chapter 3, Department Funding, Fees, and Taxes;
(ii) the solicitation limitations of Subsection (3);
(iii) the requirement of Subsection (3) that placement be through a surplus linesproducer;
(iv) placement limitations imposed under Subsections (6)(a), (b), and (c); and
(v) the policy form requirements of Subsections (8) and (10).
(b) The examination described in Subsection (11)(a) shall take place as soon aspracticable after the transaction. The surplus lines producer shall submit to the examinerinformation necessary to conduct the examination within a period specified by rule.
(c) (i) The examination described in Subsection (11)(a) may be conducted by thecommissioner or by an advisory organization created under Section 31A-15-111 and authorizedby the commissioner to conduct these examinations. The commissioner is not required toauthorize an additional advisory organization to conduct an examination under this Subsection(11)(c).
(ii) The commissioner's authorization of one or more advisory organizations to act asexaminers under this Subsection (11)(c) shall be:
(A) by rule; and
(B) evidenced by a contract, on a form provided by the commissioner, between theauthorized advisory organization and the department.
(d) (i) (A) A person conducting the examination described in Subsection (11)(a) shallcollect a stamping fee of an amount not to exceed 1% of the policy premium payable inconnection with the transaction.
(B) A stamping fee collected by the commissioner shall be deposited in the GeneralFund.
(C) The commissioner shall establish a stamping fee by rule.
(ii) A stamping fee collected by an advisory organization is the property of the advisoryorganization to be used in paying the expenses of the advisory organization.
(iii) Liability for paying a stamping fee is as required under Subsection 31A-3-303(1) fortaxes imposed under Section 31A-3-301.
(iv) The commissioner shall adopt a rule dealing with the payment of stamping fees. If astamping fee is not paid when due, the commissioner or advisory organization may impose apenalty of 25% of the stamping fee due, plus 1-1/2% per month from the time of default until fullpayment of the stamping fee.
(v) A stamping fee relative to a policy covering a risk located partially in this state shallbe allocated in the same manner as under Subsection 31A-3-303(4).
(e) The commissioner, representatives of the department, advisory organizations,representatives and members of advisory organizations, authorized insurers, and surplus linesinsurers are not liable for damages on account of statements, comments, or recommendationsmade in good faith in connection with their duties under this Subsection (11)(e) or under Section31A-15-111.
(f) An examination conducted under this Subsection (11) and a document or materialsrelated to the examination are confidential.

Amended by Chapter 257, 2008 General Session

State Codes and Statutes

Statutes > Utah > Title-31a > Chapter-15 > 31a-15-103

31A-15-103. Surplus lines insurance -- Unauthorized insurers.
(1) Notwithstanding Section 31A-15-102, a foreign insurer that has not obtained acertificate of authority to do business in this state under Section 31A-14-202 may negotiate forand make an insurance contract with a person in this state and on a risk located in this state,subject to the limitations and requirements of this section.
(2) (a) For a contract made under this section, the insurer may, in this state:
(i) inspect the risks to be insured;
(ii) collect premiums;
(iii) adjust losses; and
(iv) do another act reasonably incidental to the contract.
(b) An act described in Subsection (2)(a) may be done through:
(i) an employee; or
(ii) an independent contractor.
(3) (a) Subsections (1) and (2) do not permit a person to solicit business in this state onbehalf of an insurer that has no certificate of authority.
(b) Insurance placed with a nonadmitted insurer shall be placed with a surplus linesproducer licensed under Chapter 23a, Insurance Marketing - Licensing Producers, Consultants,and Reinsurance Intermediaries.
(c) The commissioner may by rule prescribe how a surplus lines producer may:
(i) pay or permit the payment, commission, or other remuneration on insurance placed bythe surplus lines producer under authority of the surplus lines producer's license to one holding alicense to act as an insurance producer; and
(ii) advertise the availability of the surplus lines producer's services in procuring, onbehalf of a person seeking insurance, a contract with a nonadmitted insurer.
(4) For a contract made under this section, a nonadmitted insurer is subject to Sections31A-23a-402 and 31A-23a-403 and the rules adopted under those sections.
(5) A nonadmitted insurer may not issue workers' compensation insurance coverage to anemployer located in this state, except for stop loss coverage issued to an employer securingworkers' compensation under Subsection 34A-2-201(3).
(6) (a) The commissioner may by rule prohibit making a contract under Subsection (1)for a specified class of insurance if authorized insurers provide an established market for theclass in this state that is adequate and reasonably competitive.
(b) The commissioner may by rule place a restriction or a limitation on and create specialprocedures for making a contract under Subsection (1) for a specified class of insurance if:
(i) there have been abuses of placements in the class; or
(ii) the policyholders in the class, because of limited financial resources, businessexperience, or knowledge, cannot protect their own interests adequately.
(c) The commissioner may prohibit an individual insurer from making a contract underSubsection (1) and all insurance producers from dealing with the insurer if:
(i) the insurer willfully violates:
(A) this section;
(B) Section 31A-4-102, 31A-23a-402, or 31A-26-303; or
(C) a rule adopted under a section listed in Subsection (6)(c)(i)(A) or (B);
(ii) the insurer fails to pay the fees and taxes specified under Section 31A-3-301; or
(iii) the commissioner has reason to believe that the insurer is:

(A) in an unsound condition;
(B) operated in a fraudulent, dishonest, or incompetent manner; or
(C) in violation of the law of its domicile.
(d) (i) The commissioner may issue one or more lists of unauthorized foreign insurerswhose:
(A) solidity the commissioner doubts; or
(B) practices the commissioner considers objectionable.
(ii) The commissioner shall issue one or more lists of unauthorized foreign insurers thecommissioner considers to be reliable and solid.
(iii) In addition to the lists described in Subsections (6)(d)(i) and (ii), the commissionermay issue other relevant evaluations of unauthorized insurers.
(iv) An action may not lie against the commissioner or an employee of the departmentfor a written or oral communication made in, or in connection with the issuance of, a list orevaluation described in this Subsection (6)(d).
(e) A foreign unauthorized insurer shall be listed on the commissioner's "reliable" listonly if the unauthorized insurer:
(i) delivers a request to the commissioner to be on the list;
(ii) establishes satisfactory evidence of good reputation and financial integrity;
(iii) (A) delivers to the commissioner a copy of the unauthorized insurer's current annualstatement certified by the insurer; and
(B) continues each subsequent year to file its annual statements with the commissionerwithin 60 days of the day on which it is filed with the insurance regulatory authority where theinsurer is domiciled;
(iv) (A) (I) is in substantial compliance with the solvency standards in Chapter 17, Part 6,Risk-Based Capital, or maintains capital and surplus of at least $15,000,000, whichever isgreater; and
(II) maintains in the United States an irrevocable trust fund in either a national bank or amember of the Federal Reserve System, or maintains a deposit meeting the statutory depositrequirements for insurers in the state where it is made, which trust fund or deposit:
(Aa) shall be in an amount not less than $2,500,000 for the protection of all of theinsurer's policyholders in the United States;
(Bb) may consist of cash, securities, or investments of substantially the same characterand quality as those which are "qualified assets" under Section 31A-17-201; and
(Cc) may include as part of the trust arrangement a letter of credit that qualifies asacceptable security under Section 31A-17-404.1; or
(B) in the case of any "Lloyd's" or other similar incorporated or unincorporated group ofalien individual insurers, maintains a trust fund that:
(I) shall be in an amount not less than $50,000,000 as security to its full amount for allpolicyholders and creditors in the United States of each member of the group;
(II) may consist of cash, securities, or investments of substantially the same character andquality as those which are "qualified assets" under Section 31A-17-201; and
(III) may include as part of this trust arrangement a letter of credit that qualifies asacceptable security under Section 31A-17-404.1; and
(v) for an alien insurer not domiciled in the United States or a territory of the UnitedStates, is listed on the Quarterly Listing of Alien Insurers maintained by the National Association

of Insurance Commissioners International Insurers Department.
(7) (a) Subject to Subsection (7)(b), a surplus lines producer may not, either knowinglyor without reasonable investigation of the financial condition and general reputation of theinsurer, place insurance under this section with:
(i) a financially unsound insurer;
(ii) an insurer engaging in unfair practices; or
(iii) an otherwise substandard insurer.
(b) A surplus line producer may place insurance under this section with an insurerdescribed in Subsection (7)(a) if the surplus line producer:
(i) gives the applicant notice in writing of the known deficiencies of the insurer or thelimitations on the surplus line producer's investigation; and
(ii) explains the need to place the business with that insurer.
(c) A copy of the notice described in Subsection (7)(b) shall be kept in the office of thesurplus line producer for at least five years.
(d) To be financially sound, an insurer shall satisfy standards that are comparable tothose applied under the laws of this state to an authorized insurer.
(e) An insurer on the "doubtful or objectionable" list under Subsection (6)(d) or aninsurer not on the commissioner's "reliable" list under Subsection (6)(e) is presumed substandard.
(8) (a) A policy issued under this section shall:
(i) include a description of the subject of the insurance; and
(ii) indicate:
(A) the coverage, conditions, and term of the insurance;
(B) the premium charged the policyholder;
(C) the premium taxes to be collected from the policyholder; and
(D) the name and address of the policyholder and insurer.
(b) If the direct risk is assumed by more than one insurer, the policy shall state:
(i) the names and addresses of all insurers; and
(ii) the portion of the entire direct risk each assumes.
(c) A policy issued under this section shall have attached or affixed to the policy thefollowing statement: "The insurer issuing this policy does not hold a certificate of authority to dobusiness in this state and thus is not fully subject to regulation by the Utah insurancecommissioner. This policy receives no protection from any of the guaranty associations createdunder Title 31A, Chapter 28."
(9) Upon placing a new or renewal coverage under this section, a surplus lines producershall promptly deliver to the policyholder or the policyholder's agent evidence of the insuranceconsisting either of:
(a) the policy as issued by the insurer; or
(b) if the policy is not available upon placing the coverage, a certificate, cover note, orother confirmation of insurance complying with Subsection (8).
(10) If the commissioner finds it necessary to protect the interests of insureds and thepublic in this state, the commissioner may by rule subject a policy issued under this section to asmuch of the regulation provided by this title as is required for a comparable policy written by anauthorized foreign insurer.
(11) (a) A surplus lines transaction in this state shall be examined to determine whether itcomplies with:

(i) the surplus lines tax levied under Chapter 3, Department Funding, Fees, and Taxes;
(ii) the solicitation limitations of Subsection (3);
(iii) the requirement of Subsection (3) that placement be through a surplus linesproducer;
(iv) placement limitations imposed under Subsections (6)(a), (b), and (c); and
(v) the policy form requirements of Subsections (8) and (10).
(b) The examination described in Subsection (11)(a) shall take place as soon aspracticable after the transaction. The surplus lines producer shall submit to the examinerinformation necessary to conduct the examination within a period specified by rule.
(c) (i) The examination described in Subsection (11)(a) may be conducted by thecommissioner or by an advisory organization created under Section 31A-15-111 and authorizedby the commissioner to conduct these examinations. The commissioner is not required toauthorize an additional advisory organization to conduct an examination under this Subsection(11)(c).
(ii) The commissioner's authorization of one or more advisory organizations to act asexaminers under this Subsection (11)(c) shall be:
(A) by rule; and
(B) evidenced by a contract, on a form provided by the commissioner, between theauthorized advisory organization and the department.
(d) (i) (A) A person conducting the examination described in Subsection (11)(a) shallcollect a stamping fee of an amount not to exceed 1% of the policy premium payable inconnection with the transaction.
(B) A stamping fee collected by the commissioner shall be deposited in the GeneralFund.
(C) The commissioner shall establish a stamping fee by rule.
(ii) A stamping fee collected by an advisory organization is the property of the advisoryorganization to be used in paying the expenses of the advisory organization.
(iii) Liability for paying a stamping fee is as required under Subsection 31A-3-303(1) fortaxes imposed under Section 31A-3-301.
(iv) The commissioner shall adopt a rule dealing with the payment of stamping fees. If astamping fee is not paid when due, the commissioner or advisory organization may impose apenalty of 25% of the stamping fee due, plus 1-1/2% per month from the time of default until fullpayment of the stamping fee.
(v) A stamping fee relative to a policy covering a risk located partially in this state shallbe allocated in the same manner as under Subsection 31A-3-303(4).
(e) The commissioner, representatives of the department, advisory organizations,representatives and members of advisory organizations, authorized insurers, and surplus linesinsurers are not liable for damages on account of statements, comments, or recommendationsmade in good faith in connection with their duties under this Subsection (11)(e) or under Section31A-15-111.
(f) An examination conducted under this Subsection (11) and a document or materialsrelated to the examination are confidential.

Amended by Chapter 257, 2008 General Session


State Codes and Statutes


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State Codes and Statutes

Statutes > Utah > Title-31a > Chapter-15 > 31a-15-103

31A-15-103. Surplus lines insurance -- Unauthorized insurers.
(1) Notwithstanding Section 31A-15-102, a foreign insurer that has not obtained acertificate of authority to do business in this state under Section 31A-14-202 may negotiate forand make an insurance contract with a person in this state and on a risk located in this state,subject to the limitations and requirements of this section.
(2) (a) For a contract made under this section, the insurer may, in this state:
(i) inspect the risks to be insured;
(ii) collect premiums;
(iii) adjust losses; and
(iv) do another act reasonably incidental to the contract.
(b) An act described in Subsection (2)(a) may be done through:
(i) an employee; or
(ii) an independent contractor.
(3) (a) Subsections (1) and (2) do not permit a person to solicit business in this state onbehalf of an insurer that has no certificate of authority.
(b) Insurance placed with a nonadmitted insurer shall be placed with a surplus linesproducer licensed under Chapter 23a, Insurance Marketing - Licensing Producers, Consultants,and Reinsurance Intermediaries.
(c) The commissioner may by rule prescribe how a surplus lines producer may:
(i) pay or permit the payment, commission, or other remuneration on insurance placed bythe surplus lines producer under authority of the surplus lines producer's license to one holding alicense to act as an insurance producer; and
(ii) advertise the availability of the surplus lines producer's services in procuring, onbehalf of a person seeking insurance, a contract with a nonadmitted insurer.
(4) For a contract made under this section, a nonadmitted insurer is subject to Sections31A-23a-402 and 31A-23a-403 and the rules adopted under those sections.
(5) A nonadmitted insurer may not issue workers' compensation insurance coverage to anemployer located in this state, except for stop loss coverage issued to an employer securingworkers' compensation under Subsection 34A-2-201(3).
(6) (a) The commissioner may by rule prohibit making a contract under Subsection (1)for a specified class of insurance if authorized insurers provide an established market for theclass in this state that is adequate and reasonably competitive.
(b) The commissioner may by rule place a restriction or a limitation on and create specialprocedures for making a contract under Subsection (1) for a specified class of insurance if:
(i) there have been abuses of placements in the class; or
(ii) the policyholders in the class, because of limited financial resources, businessexperience, or knowledge, cannot protect their own interests adequately.
(c) The commissioner may prohibit an individual insurer from making a contract underSubsection (1) and all insurance producers from dealing with the insurer if:
(i) the insurer willfully violates:
(A) this section;
(B) Section 31A-4-102, 31A-23a-402, or 31A-26-303; or
(C) a rule adopted under a section listed in Subsection (6)(c)(i)(A) or (B);
(ii) the insurer fails to pay the fees and taxes specified under Section 31A-3-301; or
(iii) the commissioner has reason to believe that the insurer is:

(A) in an unsound condition;
(B) operated in a fraudulent, dishonest, or incompetent manner; or
(C) in violation of the law of its domicile.
(d) (i) The commissioner may issue one or more lists of unauthorized foreign insurerswhose:
(A) solidity the commissioner doubts; or
(B) practices the commissioner considers objectionable.
(ii) The commissioner shall issue one or more lists of unauthorized foreign insurers thecommissioner considers to be reliable and solid.
(iii) In addition to the lists described in Subsections (6)(d)(i) and (ii), the commissionermay issue other relevant evaluations of unauthorized insurers.
(iv) An action may not lie against the commissioner or an employee of the departmentfor a written or oral communication made in, or in connection with the issuance of, a list orevaluation described in this Subsection (6)(d).
(e) A foreign unauthorized insurer shall be listed on the commissioner's "reliable" listonly if the unauthorized insurer:
(i) delivers a request to the commissioner to be on the list;
(ii) establishes satisfactory evidence of good reputation and financial integrity;
(iii) (A) delivers to the commissioner a copy of the unauthorized insurer's current annualstatement certified by the insurer; and
(B) continues each subsequent year to file its annual statements with the commissionerwithin 60 days of the day on which it is filed with the insurance regulatory authority where theinsurer is domiciled;
(iv) (A) (I) is in substantial compliance with the solvency standards in Chapter 17, Part 6,Risk-Based Capital, or maintains capital and surplus of at least $15,000,000, whichever isgreater; and
(II) maintains in the United States an irrevocable trust fund in either a national bank or amember of the Federal Reserve System, or maintains a deposit meeting the statutory depositrequirements for insurers in the state where it is made, which trust fund or deposit:
(Aa) shall be in an amount not less than $2,500,000 for the protection of all of theinsurer's policyholders in the United States;
(Bb) may consist of cash, securities, or investments of substantially the same characterand quality as those which are "qualified assets" under Section 31A-17-201; and
(Cc) may include as part of the trust arrangement a letter of credit that qualifies asacceptable security under Section 31A-17-404.1; or
(B) in the case of any "Lloyd's" or other similar incorporated or unincorporated group ofalien individual insurers, maintains a trust fund that:
(I) shall be in an amount not less than $50,000,000 as security to its full amount for allpolicyholders and creditors in the United States of each member of the group;
(II) may consist of cash, securities, or investments of substantially the same character andquality as those which are "qualified assets" under Section 31A-17-201; and
(III) may include as part of this trust arrangement a letter of credit that qualifies asacceptable security under Section 31A-17-404.1; and
(v) for an alien insurer not domiciled in the United States or a territory of the UnitedStates, is listed on the Quarterly Listing of Alien Insurers maintained by the National Association

of Insurance Commissioners International Insurers Department.
(7) (a) Subject to Subsection (7)(b), a surplus lines producer may not, either knowinglyor without reasonable investigation of the financial condition and general reputation of theinsurer, place insurance under this section with:
(i) a financially unsound insurer;
(ii) an insurer engaging in unfair practices; or
(iii) an otherwise substandard insurer.
(b) A surplus line producer may place insurance under this section with an insurerdescribed in Subsection (7)(a) if the surplus line producer:
(i) gives the applicant notice in writing of the known deficiencies of the insurer or thelimitations on the surplus line producer's investigation; and
(ii) explains the need to place the business with that insurer.
(c) A copy of the notice described in Subsection (7)(b) shall be kept in the office of thesurplus line producer for at least five years.
(d) To be financially sound, an insurer shall satisfy standards that are comparable tothose applied under the laws of this state to an authorized insurer.
(e) An insurer on the "doubtful or objectionable" list under Subsection (6)(d) or aninsurer not on the commissioner's "reliable" list under Subsection (6)(e) is presumed substandard.
(8) (a) A policy issued under this section shall:
(i) include a description of the subject of the insurance; and
(ii) indicate:
(A) the coverage, conditions, and term of the insurance;
(B) the premium charged the policyholder;
(C) the premium taxes to be collected from the policyholder; and
(D) the name and address of the policyholder and insurer.
(b) If the direct risk is assumed by more than one insurer, the policy shall state:
(i) the names and addresses of all insurers; and
(ii) the portion of the entire direct risk each assumes.
(c) A policy issued under this section shall have attached or affixed to the policy thefollowing statement: "The insurer issuing this policy does not hold a certificate of authority to dobusiness in this state and thus is not fully subject to regulation by the Utah insurancecommissioner. This policy receives no protection from any of the guaranty associations createdunder Title 31A, Chapter 28."
(9) Upon placing a new or renewal coverage under this section, a surplus lines producershall promptly deliver to the policyholder or the policyholder's agent evidence of the insuranceconsisting either of:
(a) the policy as issued by the insurer; or
(b) if the policy is not available upon placing the coverage, a certificate, cover note, orother confirmation of insurance complying with Subsection (8).
(10) If the commissioner finds it necessary to protect the interests of insureds and thepublic in this state, the commissioner may by rule subject a policy issued under this section to asmuch of the regulation provided by this title as is required for a comparable policy written by anauthorized foreign insurer.
(11) (a) A surplus lines transaction in this state shall be examined to determine whether itcomplies with:

(i) the surplus lines tax levied under Chapter 3, Department Funding, Fees, and Taxes;
(ii) the solicitation limitations of Subsection (3);
(iii) the requirement of Subsection (3) that placement be through a surplus linesproducer;
(iv) placement limitations imposed under Subsections (6)(a), (b), and (c); and
(v) the policy form requirements of Subsections (8) and (10).
(b) The examination described in Subsection (11)(a) shall take place as soon aspracticable after the transaction. The surplus lines producer shall submit to the examinerinformation necessary to conduct the examination within a period specified by rule.
(c) (i) The examination described in Subsection (11)(a) may be conducted by thecommissioner or by an advisory organization created under Section 31A-15-111 and authorizedby the commissioner to conduct these examinations. The commissioner is not required toauthorize an additional advisory organization to conduct an examination under this Subsection(11)(c).
(ii) The commissioner's authorization of one or more advisory organizations to act asexaminers under this Subsection (11)(c) shall be:
(A) by rule; and
(B) evidenced by a contract, on a form provided by the commissioner, between theauthorized advisory organization and the department.
(d) (i) (A) A person conducting the examination described in Subsection (11)(a) shallcollect a stamping fee of an amount not to exceed 1% of the policy premium payable inconnection with the transaction.
(B) A stamping fee collected by the commissioner shall be deposited in the GeneralFund.
(C) The commissioner shall establish a stamping fee by rule.
(ii) A stamping fee collected by an advisory organization is the property of the advisoryorganization to be used in paying the expenses of the advisory organization.
(iii) Liability for paying a stamping fee is as required under Subsection 31A-3-303(1) fortaxes imposed under Section 31A-3-301.
(iv) The commissioner shall adopt a rule dealing with the payment of stamping fees. If astamping fee is not paid when due, the commissioner or advisory organization may impose apenalty of 25% of the stamping fee due, plus 1-1/2% per month from the time of default until fullpayment of the stamping fee.
(v) A stamping fee relative to a policy covering a risk located partially in this state shallbe allocated in the same manner as under Subsection 31A-3-303(4).
(e) The commissioner, representatives of the department, advisory organizations,representatives and members of advisory organizations, authorized insurers, and surplus linesinsurers are not liable for damages on account of statements, comments, or recommendationsmade in good faith in connection with their duties under this Subsection (11)(e) or under Section31A-15-111.
(f) An examination conducted under this Subsection (11) and a document or materialsrelated to the examination are confidential.

Amended by Chapter 257, 2008 General Session


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