State Codes and Statutes
Statutes > Utah > Title-31a > Chapter-37 > 31a-37-20231A-37-202. Permissive areas of insurance.
(1) (a) Except as provided in Subsection (1)(b), when permitted by its articles ofincorporation or charter, a captive insurance company may apply to the commissioner for acertificate of authority to do all insurance authorized by this title except workers' compensationinsurance.
(b) Notwithstanding Subsection (1)(a):
(i) a pure captive insurance company may not insure a risk other than a risk of:
(A) its parent or affiliate;
(B) a controlled unaffiliated business; or
(C) a combination of Subsections (1)(b)(i)(A) and (B);
(ii) an association captive insurance company may not insure a risk other than a risk of:
(A) an affiliate;
(B) a member organization of its association; and
(C) an affiliate of a member organization of its association;
(iii) an industrial insured captive insurance company may not insure a risk other than arisk of:
(A) an industrial insured that is part of the industrial insured group;
(B) an affiliate of an industrial insured that is part of the industrial insured group; and
(C) a controlled unaffiliated business of:
(I) an industrial insured that is part of the industrial insured group; or
(II) an affiliate of an industrial insured that is part of the industrial insured group;
(iv) a special purpose captive insurance company may only insure a risk of its parent;
(v) a captive insurance company may not provide:
(A) personal motor vehicle insurance coverage;
(B) homeowner's insurance coverage; or
(C) a component of a coverage described in this Subsection (1)(b)(v); and
(vi) a captive insurance company may not accept or cede reinsurance except as providedin Section 31A-37-303.
(c) Notwithstanding Subsection (1)(b)(iv), for a risk approved by the commissioner aspecial purpose captive insurance company may provide:
(i) insurance;
(ii) reinsurance; or
(iii) both insurance and reinsurance.
(2) To conduct insurance business in this state a captive insurance company shall:
(a) obtain from the commissioner a certificate of authority authorizing it to conductinsurance business in this state;
(b) hold at least once each year in this state:
(i) a board of directors meeting; or
(ii) in the case of a reciprocal insurer, a subscriber's advisory committee meeting;
(c) maintain in this state:
(i) the principal place of business of the captive insurance company; or
(ii) in the case of a branch captive insurance company, the principal place of business forthe branch operations of the branch captive insurance company; and
(d) except as provided in Subsection (3), appoint a resident registered agent to acceptservice of process and to otherwise act on behalf of the captive insurance company in this state.
(3) Notwithstanding Subsection (2)(d), in the case of a captive insurance companyformed as a corporation or a reciprocal insurer, if the registered agent cannot with reasonablediligence be found at the registered office of the captive insurance company, the commissioner isthe agent of the captive insurance company upon whom process, notice, or demand may beserved.
(4) (a) Before receiving a certificate of authority, a captive insurance company:
(i) formed as a corporation shall file with the commissioner:
(A) a certified copy of:
(I) articles of incorporation or the charter of the corporation; and
(II) bylaws of the corporation;
(B) a statement under oath of the president and secretary of the corporation showing thefinancial condition of the corporation; and
(C) any other statement or document required by the commissioner under Section31A-37-106;
(ii) formed as a reciprocal shall:
(A) file with the commissioner:
(I) a certified copy of the power of attorney of the attorney-in-fact of the reciprocal;
(II) a certified copy of the subscribers' agreement of the reciprocal;
(III) a statement under oath of the attorney-in-fact of the reciprocal showing the financialcondition of the reciprocal; and
(IV) any other statement or document required by the commissioner under Section31A-37-106; and
(B) submit to the commissioner for approval a description of the:
(I) coverages;
(II) deductibles;
(III) coverage limits;
(IV) rates; and
(V) any other information the commissioner requires under Section 31A-37-106.
(b) (i) If there is a subsequent material change in an item in the description requiredunder Subsection (4)(a)(ii)(B) for a reciprocal captive insurance company, the reciprocal captiveinsurance company shall submit to the commissioner for approval an appropriate revision to thedescription required under Subsection (4)(a)(ii)(B).
(ii) A reciprocal captive insurance company that is required to submit a revision underSubsection (4)(b)(i) may not offer any additional types of insurance until the commissionerapproves a revision of the description.
(iii) A reciprocal captive insurance company shall inform the commissioner of a materialchange in a rate within 30 days of the adoption of the change.
(c) In addition to the information required by Subsection (4)(a), an applicant captiveinsurance company shall file with the commissioner evidence of:
(i) the amount and liquidity of the assets of the applicant captive insurance companyrelative to the risks to be assumed by the applicant captive insurance company;
(ii) the adequacy of the expertise, experience, and character of the person who willmanage the applicant captive insurance company;
(iii) the overall soundness of the plan of operation of the applicant captive insurancecompany;
(iv) the adequacy of the loss prevention programs for the following of the applicantcaptive insurance company:
(A) a parent;
(B) a member organization; or
(C) an industrial insured; and
(v) any other factor the commissioner:
(A) adopts by rule under Section 31A-37-106; and
(B) considers relevant in ascertaining whether the applicant captive insurance companywill be able to meet the policy obligations of the applicant captive insurance company.
(d) In addition to the information required by Subsections (4)(a), (b), and (c), anapplicant sponsored captive insurance company shall file with the commissioner:
(i) a business plan at the level of detail required by the commissioner under Section31A-37-106 demonstrating:
(A) the manner in which the applicant sponsored captive insurance company will accountfor the losses and expenses of each protected cell; and
(B) the manner in which the applicant sponsored captive insurance company will reportto the commissioner the financial history, including losses and expenses, of each protected cell;
(ii) a statement acknowledging that the applicant sponsored captive insurance companywill make all financial records of the applicant sponsored captive insurance company, includingrecords pertaining to a protected cell, available for inspection or examination by thecommissioner;
(iii) a contract or sample contract between the applicant sponsored captive insurancecompany and a participant; and
(iv) evidence that expenses will be allocated to each protected cell in an equitablemanner.
(5) (a) Information submitted pursuant to Subsection (4) is classified as a protectedrecord under Title 63G, Chapter 2, Government Records Access and Management Act.
(b) Notwithstanding Title 63G, Chapter 2, Government Records Access andManagement Act, the commissioner may disclose information submitted pursuant to Subsection(4) to a public official having jurisdiction over the regulation of insurance in another state if:
(i) the public official receiving the information agrees in writing to maintain theconfidentiality of the information; and
(ii) the laws of the state in which the public official serves require the information to beconfidential.
(c) This Subsection (5) does not apply to information provided by an industrial insuredcaptive insurance company insuring the risks of an industrial insured group.
(6) (a) A captive insurance company shall pay to the department the followingnonrefundable fees established by the department under Sections 31A-3-103 and 63J-1-504:
(i) a fee for examining, investigating, and processing, by a department employee, of anapplication for a certificate of authority made by a captive insurance company;
(ii) a fee for obtaining a certificate of authority for the year the captive insurancecompany is issued a certificate of authority by the department; and
(iii) a certificate of authority renewal fee.
(b) The commissioner may:
(i) retain legal, financial, and examination services from outside the department to
perform the services described in:
(A) Subsection (6)(a); and
(B) Section 31A-37-502; and
(ii) charge the reasonable cost of services described in Subsection (6)(b)(i) to theapplicant captive insurance company.
(7) If the commissioner is satisfied that the documents and statements filed by theapplicant captive insurance company comply with this chapter, the commissioner may grant acertificate of authority authorizing the company to do insurance business in this state.
(8) A certificate of authority granted under this section expires annually and must berenewed by July 1 of each year.
Amended by Chapter 183, 2009 General Session
