completed by an applicant to provide information about the risk to be insured; and
(ii)
that contains information that is used by the insurer to evaluate risk and decide whether to:
(A)
insure the risk under:
(I)
the coverage as originally offered; or
(II)
a modification of the coverage as originally offered; or
(B)
decline to insure the risk; or
(b)
used by the insurer to gather information from the applicant before issuance of an annuity contract. See Utah Code 31A-1-301
Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
Attorney-in-fact: A person who, acting as an agent, is given written authorization by another person to transact business for him (her) out of court.
board of directors: means the group of persons with responsibility over, or management of, a corporation, however designated. See Utah Code 31A-1-301
commissioner: means the insurance commissioner of Utah or the commissioner, director, or superintendent of insurance in another state. See Utah Code 31A-15-202
consultant: means a person who:
(a)
advises another person about insurance needs and coverages;
(b)
is compensated by the person advised on a basis not directly related to the insurance placed; and
(c)
except as provided in Section 31A-23a-501, is not compensated directly or indirectly by an insurer or producer for advice given. See Utah Code 31A-1-301
Contract: A legal written agreement that becomes binding when signed.
Director: means a member of the board of directors of a corporation. See Utah Code 31A-1-301
Employee: means :
(a)
an individual employed by an employer; or
(b)
an individual who meets the requirements of Subsection (53)(b). See Utah Code 31A-1-301
Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
feasibility study: means an analysis that presents the expected activities and results of a risk retention group, including at a minimum:
(a)
information sufficient to verify that its members are engaged in businesses or activities similar or related with respect to the liability to which the members are exposed by virtue of any related, similar or common business, trade, product, services, premises or operations;
(b)
for each state in which it intends to operate, the coverages, deductibles, coverage limits, rates, and rating classification systems for each line of insurance the group intends to offer;
(c)
historical and expected loss experience of the proposed members and national experience of similar exposures to the extent that this experience is reasonably available;
(d)
pro forma financial statements and projections;
(e)
appropriate opinions by a qualified, independent casualty actuary, including a determination of minimum premium or participation levels required to commence operations and to prevent a hazardous financial condition;
(f)
identification of management, underwriting and claims procedures, marketing methods, managerial oversight methods, investment policies, and reinsurance agreements;
(g)
identification of each state in which the risk retention group has obtained, or sought to obtain, a charter and license, and a description of its status in each such state; and
(h)
any other matters required by the commissioner of the state in which the risk retention group is chartered for liability insurance companies authorized by the insurance laws of that state. See Utah Code 31A-15-202
Filing: when used as a noun, means an item required to be filed with the department including:
Insurance: means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk which is determined to be insurance under the laws of this state. See Utah Code 31A-15-202
Insured: means a person to whom or for whose benefit an insurer makes a promise in an insurance policy and includes:
Liability: means legal liability for damages, including costs of defense, legal costs and fees, and other claims expenses because of injuries to other persons, damage to their property, or other damage or loss to other persons resulting from or arising out of:
(i)
any business, whether profit or nonprofit, trade, product, services, including professional services, premises, or operations; or
(ii)
any activity of any state or local government or any agency or political subdivision of any state or local government. See Utah Code 31A-15-202
Liability insurance: includes :
(i)
vehicle liability insurance;
(ii)
residential dwelling liability insurance; and
(iii)
making inspection of, and issuing a certificate of inspection upon, an elevator, boiler, machinery, or apparatus of any kind when done in connection with insurance on the elevator, boiler, machinery, or apparatus. See Utah Code 31A-1-301
Member: means a person having membership rights in an insurance corporation. See Utah Code 31A-1-301
Oversight: Committee review of the activities of a Federal agency or program.
Person: includes :
(a)
an individual;
(b)
a partnership;
(c)
a corporation;
(d)
an incorporated or unincorporated association;
(e)
a joint stock company;
(f)
a trust;
(g)
a limited liability company;
(h)
a reciprocal;
(i)
a syndicate; or
(j)
another similar entity or combination of entities acting in concert. See Utah Code 31A-1-301
Process: means a writ or summons issued in the course of a judicial proceeding. See Utah Code 68-3-12.5
Risk retention group: means any corporation or other limited liability association:
(a)
whose primary activity consists of assuming and spreading all, or any portion of, the liability exposure of its group members;
(b)
which is organized for the primary purpose of conducting the activity described under Subsection (11)(a);
(c)
that:
(i)
is chartered and licensed as a liability insurance company and authorized to engage in the business of insurance under the laws of any state; or
(ii)
(A)
before January 1, 1985, was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before January 1, 1985, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of that state;
(B)
except that any group as described in Subsection (11)(c)(ii)(A) shall be considered to be a risk retention group only if it has been engaged in business continuously since January 1, 1985, and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability, as these terms were defined in the Product Liability Risk Retention Act of 1981 before the date of the enactment of the Liability Risk Retention Act of 1986;
(d)
that does not exclude any person from membership in the group solely to provide for members of the group a competitive advantage over the excluded person;
(e)
that:
(i)
has as its owners only persons who comprise the membership of the risk retention group and who are provided insurance by the group; or
(ii)
has as its sole owner an organization that has as:
(A)
its members only persons who comprise the membership of the risk retention group; and
(B)
its owners only persons who comprise the membership of the risk retention group and who are provided insurance by the group;
(f)
whose members are engaged in businesses or activities similar or related with respect to the liability to which the members are exposed by virtue of any related, similar, or common business trade, products, services, premises or operations;
(g)
whose activities do not include providing insurance other than:
(i)
liability insurance for assuming and spreading all or any portion of the liability of its group members; and
(ii)
reinsurance with respect to the liability of any other risk retention group, or any members of the other group, which is engaged in businesses or activities so that the group or member meets the requirement described in Subsection (11)(f) for membership in the risk retention group which provides the reinsurance; and
(h)
the name of which includes the phrase "risk retention group. See Utah Code 31A-15-202
“Board of directors” or “board” means the governing body of the risk retention group elected by the shareholders or members to establish policy, elect or appoint officers and committees, and make other governing decisions.
(b)
“Director” means a natural person designated in the articles of the risk retention group, or designated, elected, or appointed by any other manner, name, or title to act as a director.
(2)
(a)
A risk retention group under this part shall be chartered and licensed to write only liability insurance pursuant to this part and, except as provided elsewhere in this part, shall comply with all of the laws, rules, and requirements that apply to liability insurers chartered and licensed in this state, and with Section 31A-15-204 to the extent the requirements are not a limitation on other laws, rules, or requirements of this state.
(b)
Notwithstanding any other provision to the contrary, all risk retention groups chartered in this state shall file with the commissioner and the National Association of Insurance Commissioners an annual statement in a form prescribed by the commissioner and completed in accordance with the statement instructions and the National Association of Insurance Commissioners Accounting Practices and Procedures Manual.
(3)
Before it may offer insurance in any state, each risk retention group shall also submit for approval to the commissioner of this state a plan of operation or feasibility study. The risk retention group shall submit an appropriate revision of the plan or study in the event of any subsequent material change in any item of the plan of operation or feasibility study within 10 days of any change. The group may not offer any additional kinds of liability insurance, in this state or in any other state, until any revision of the plan or study is approved by the commissioner.
(4)
(a)
At the time of filing its application for charter, the risk retention group shall provide to the commissioner in summary form the following information:
(i)
the identity of the initial members of the group;
(ii)
the identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group;
(iii)
the amount and nature of initial capitalization;
(iv)
the coverages to be afforded; and
(v)
the states in which the group intends to operate.
(b)
Upon receipt of this information, the commissioner shall forward the information to the National Association of Insurance Commissioners. Providing notification to the National Association of Insurance Commissioners is in addition to, and may not be sufficient to satisfy, the requirements of Section 31A-15-204 or any other sections of this part.
(5)
The governance standards for risk retention groups are as follows:
(a)
A risk retention group that exists as of May 10, 2016, shall be in compliance with the governance standards described in this Subsection (5) by no later than May 10, 2017. A risk retention group licensed on or after May 10, 2016, shall be in compliance with the governance standards described in this Subsection (5) at the time of licensure.
(b)
The board of directors of a risk retention group shall have a majority of independent directors. If the risk retention group is a reciprocal:
(i)
the attorney-in-fact is required to adhere to the same standards regarding independence of operation and governance as imposed on the risk retention group’s board of directors and subscribers advisory committee under these standards; and
(ii)
to the extent permissible under state law, service providers of a reciprocal risk retention group shall contract with the risk retention group and not the attorney-in-fact.
(c)
A director does not qualify as independent unless the board of directors affirmatively determines that the director has no material relationship with the risk retention group. Each risk retention group shall disclose these determinations to its domestic regulator, at least annually. For this purpose, any person who is a direct or indirect owner of, or subscriber in, the risk retention group or is an officer, director, or employee of the owner and insured, is considered to be independent, unless some other position of the officer, director, or employee constitutes a material relationship, as contemplated by Section 3901(a)(4)(E)(ii) of the Liability Risk Retention Act.
(d)
Material relationship of a person with the risk retention group includes the following:
(i)
A material relationship exists if the person receives in any one 12-month period compensation or payment of any other item of value by the person, a member of the person’s immediate family, or a business with which the person is affiliated, from the risk retention group or a consultant or service provider to the risk retention group is greater than the greater of the following as measured at the end of any fiscal quarter falling in the 12-month period:
(A)
5% of the risk retention group’s gross written premium for the 12-month period; or
(B)
2% of the risk retention group’s surplus.
(ii)
The person or immediate family member of the person is not independent until one year after the person’s compensation from the risk retention group falls below the threshold outlined in Subsection (5)(d)(i).
(iii)
A material relationship exists if a director or an immediate family member of a director is affiliated with or employed in a professional capacity by a present or former internal or external auditor of the risk retention group.
(iv)
The director or immediate family member of a director described in Subsection (5)(d)(iii) is not independent until one year after the end of the affiliation, employment, or auditing relationship.
(v)
A material relationship exists if the director or immediate family member of a director who is employed as an executive officer of another company where any of the risk retention group’s present executives serve on that other company’s board of directors is not independent until one year after the end of the service or the employment relationship.
(e)
(i)
The term of any material service provider contract with the risk retention group may not exceed five years. A material service provider contract, or its renewal, shall require the approval of the majority of the risk retention group’s independent directors. The service provider contract is considered material if the amount to be paid for the contract is greater than or equal to the greater of:
(A)
5% of the risk retention group’s annual gross written premium; or
(B)
2% of the risk retention group’s surplus.
(ii)
For purposes of Subsection (5)(e)(i), “service provider” includes a captive manager, auditor, accountant, actuary, investment advisor, lawyer, managing general underwriter, or other party responsible for underwriting, determining rates, collecting premiums, adjusting and settling claims, or preparing financial statements. A reference to “lawyer” in this Subsection (5)(e)(ii) does not include defense counsel retained by the risk retention group to defend claims, unless the amount of fees paid to the lawyer is “material” as referenced in Section (5)(e)(i).
(iii)
A service provider contract meeting the definition of material relationship contained in Section (5)(d) may not be entered into unless the risk retention group has, at least 30 days before entering into the service provider contract, notified the commissioner in writing of its intention to enter into the transaction and the commissioner has not disapproved it within the 30-day period.
(iv)
The risk retention group’s board of directors shall have the right to terminate any service provider, audit contract, or actuarial contract at any time for cause after providing adequate notice as defined in the contract.
(f)
The risk retention group’s board of directors shall adopt a written policy in the plan of operation as approved by the board that requires the board to:
(i)
assure that an owner of the risk retention group receive evidence of ownership interest;
(ii)
develop a set of governance standards applicable to the risk retention group;
(iii)
oversee the evaluation of the risk retention group’s management including the performance of the captive manager, managing general underwriter, or one or more other parties responsible for underwriting, determining rates, collecting premiums, adjusting or settling claims, or preparing financial statements;
(iv)
review and approve the amount to be paid for all material service providers; and
(v)
review and approve at least annually:
(A)
the risk retention group’s goals and objectives relevant to the compensation of officers and service providers;
(B)
the officers’ and service providers’ performance in light of those goals and objectives; and
(C)
the continued engagement of the officers and material service providers.
(g)
(i)
A risk retention group shall have an audit committee composed of at least three independent board members as defined in Subsection (5)(c). A non-independent board member may participate in the activities of the audit committee, if invited by the members of the audit committee, but cannot be a member of the audit committee.
(ii)
The audit committee shall have a written charter that defines the audit committee’s purpose, which, at a minimum, shall be to:
(A)
assist the board’s oversight of the integrity of the financial statements, the compliance with legal and regulatory requirements, and the qualifications, independence, and performance of the independent auditor and actuary;
(B)
discuss the annual audited financial statements and quarterly financial statements with management;
(C)
discuss the annual audited financial statements with its independent auditor and, if advisable, discuss its quarterly financial statements with its independent auditor;
(D)
discuss policies with respect to risk assessment and risk management;
(E)
meet separately and periodically, either directly or through a designated representative of the committee, with management and the independent auditor;
(F)
review with the independent auditor any audit problems or difficulties and management’s response;
(G)
set clear hiring policies of the risk retention group as to the hiring of employees or former employees of the independent auditor;
(H)
require the external auditor to rotate the lead or coordinating audit partner having primary responsibility for the risk retention group’s audit as well as the audit partner responsible for reviewing that audit so that neither individual performs audit services for more than five consecutive fiscal years; and
(I)
report regularly to the board of directors.
(iii)
The domestic regulator may waive the requirement to establish an audit committee composed of independent board members if the risk retention group is able to demonstrate to the domestic regulator that it is impracticable to do so and the risk retention group’s board of directors itself is otherwise able to accomplish the purposes of an audit committee, as described in this Section (5)(g).
(h)
The board of directors shall adopt and disclose governance standards, where “disclose” means making such information available through election, including posting the information on the risk retention group’s website or other means, and providing such information to owners upon request, which shall include:
(i)
a process by which the directors are elected by the owners;
(ii)
director qualification standards;
(iii)
director responsibilities;
(iv)
director access to management and, as necessary and appropriate, independent advisors;
(v)
director compensation;
(vi)
director orientation and continuing education;
(vii)
the policies and procedures that are followed for management succession; and
(viii)
the policies and procedures that are followed for annual performance evaluation of the board.
(i)
The board of directors shall adopt and disclose a code of business conduct and ethics for directors, officers, and employees and promptly disclose to the board of directors any waivers of the code for directors or executive officers, which shall include the following topics:
(i)
conflicts of interest;
(ii)
matters covered under the corporate opportunities doctrine under the state of domicile;
(iii)
confidentiality;
(iv)
fair dealing;
(v)
protection and proper use of risk retention group assets;
(vi)
compliance with all applicable laws, rules, and regulations; and
(vii)
requiring the reporting of any illegal or unethical behavior that affects the operation of the risk retention group.
(j)
A captive manager, president, or chief executive officer of a risk retention group shall promptly notify the domestic regulator in writing if the captive manager, president, or chief executive officer becomes aware of any material non-compliance with any of the governance standards in this Subsection (5).
