Administrator: means the same as that term is defined in Subsection (182). See Utah Code 31A-1-301
Affiliate: means a person who controls, is controlled by, or is under common control with, another person. See Utah Code 31A-1-301
Application: means a document:
(a)
(i)
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
Bail: Security given for the release of a criminal defendant or witness from legal custody (usually in the form of money) to secure his/her appearance on the day and time appointed.
Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
City: includes , depending on population, a metro township as defined in Section 10-3c-102. See Utah Code 68-3-12.5
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.
Health benefit plan: means a policy, contract, certificate, or agreement offered or issued by an insurer to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care, including major medical expense coverage. See Utah Code 31A-1-301
Indemnity: means the payment of an amount to offset all or part of an insured loss. See Utah Code 31A-1-301
Insurance: includes :
(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;
(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
(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
Insured: means a person to whom or for whose benefit an insurer makes a promise in an insurance policy and includes:
Insurer: is a s defined in Section 31A-1-301, except that the following persons or similar persons are not insurers for purposes of 7:
(a)
a risk retention group as defined in:
(i)
the Superfund Amendments and Reauthorization Act of 1986, Pub. See Utah Code 31A-23a-102
Managing general agent: means a person that:
(i)
manages all or part of the insurance business of an insurer, including the management of a separate division, department, or underwriting office;
(ii)
acts as an agent for the insurer whether it is known as a managing general agent, manager, or other similar term;
(iii)
produces and underwrites an amount of gross direct written premium equal to, or more than, 5% of the policyholder surplus as reported in the last annual statement of the insurer in any one quarter or year:
(A)
with or without the authority;
(B)
separately or together with an affiliate; and
(C)
directly or indirectly; and
(iv)
(A)
adjusts or pays claims in excess of an amount determined by the commissioner; or
producer: means a person licensed or required to be licensed under the laws of this state to sell, solicit, or negotiate insurance. See Utah Code 31A-1-301
Producer for the insured: means a producer who:
(A)
is compensated directly and only by an insurance customer or an insured; and
(B)
receives no compensation directly or indirectly from an insurer for selling, soliciting, or negotiating an insurance product of that insurer to an insurance customer or insured. See Utah Code 31A-1-301
Rate: means :
(i)
the cost of a given unit of insurance; or
(ii)
for property or casualty insurance, that cost of insurance per exposure unit either expressed as:
(A)
a single number; or
(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:
Signature: includes a name, mark, or sign written with the intent to authenticate an instrument or writing. See Utah Code 68-3-12.5
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
Statute: A law passed by a legislature.
Surplus: means the excess of assets over the sum of paid-in capital and liabilities. See Utah Code 31A-1-301
Town: includes , depending on population, a metro township as defined in Section 10-3c-102. See Utah Code 68-3-12.5
“Commission compensation” includes funds paid to or credited for the benefit of a licensee from:
(i)
commission amounts deducted from insurance premiums on insurance sold by or placed through the licensee;
(ii)
commission amounts received from an insurer or another licensee as a result of the sale or placement of insurance; or
(iii)
overrides, bonuses, contingent bonuses, or contingent commissions received from an insurer or another licensee as a result of the sale or placement of insurance.
(b)
(i)
“Compensation from an insurer or third party administrator” means commissions, fees, awards, overrides, bonuses, contingent commissions, loans, stock options, gifts, prizes, or any other form of valuable consideration:
(A)
whether or not payable pursuant to a written agreement; and
(B)
received from:
(I)
an insurer; or
(II)
a third party to the transaction for the sale or placement of insurance.
(ii)
“Compensation from an insurer or third party administrator” does not mean compensation from a customer that is:
(A)
a fee or pass-through costs as provided in Subsection (1)(e); or
(B)
a fee or amount collected by or paid to the producer that does not exceed an amount established by the commissioner by administrative rule.
(c)
(i)
“Customer” means:
(A)
the person signing the application or submission for insurance; or
(B)
the authorized representative of the insured actually negotiating the placement of insurance with the producer.
(ii)
“Customer” does not mean a person who is a participant or beneficiary of:
(A)
an employee benefit plan; or
(B)
a group or blanket insurance policy or group annuitycontract sold, solicited, or negotiated by the producer or affiliate.
(d)
(i)
“Noncommission compensation” includes all funds paid to or credited for the benefit of a licensee other than commission compensation.
(ii)
“Noncommission compensation” does not include charges for pass-through costs incurred by the licensee in connection with obtaining, placing, or servicing an insurance policy.
(e)
“Pass-through costs” include:
(i)
costs for copying documents to be submitted to the insurer; and
(ii)
bank costs for processing cash or credit card payments.
(2)
(a)
Except as provided in Subsection (3), a licensee may receive from an insured or from a person purchasing an insurance policy, noncommission compensation.
(b)
Noncommission compensation shall be:
(i)
limited to actual or reasonable expenses incurred for services; and
(ii)
uniformly applied to all insureds or prospective insureds in a class or classes of business or for a specific service or services.
(c)
The following additional noncommission compensation is authorized:
(i)
compensation a surety bond’s principal debtor pays, under procedures approved by a rule or order of the commissioner, to a producer of a compensation corporate surety for an extra service;
(ii)
compensation an insurance producer receives for services performed for an insured in connection with a claim adjustment, if the producer:
(A)
does not receive and is not promised compensation for aiding in the claim adjustment before the claim occurs; and
(B)
is also licensed as a public adjuster in accordance with Section 31A-26-203;
(iii)
compensation a consultant receives as a consulting fee, if the consultant complies with the requirements under Section 31A-23a-401; and
(iv)
a compensation arrangement that the commissioner approves after finding that the arrangement:
All accounting records relating to noncommission compensation shall be maintained in a manner that facilitates an audit.
(3)
(a)
A surplus lines producer may receive noncommission compensation when acting as a producer for the insured in a surplus lines transaction, if:
(i)
the producer and the insured have agreed on the producer’s noncommission compensation; and
(ii)
the producer has disclosed to the insured the existence and source of any other compensation that accrues to the producer as a result of the transaction.
(b)
The disclosure required by this Subsection (3) shall:
(i)
include the signature of the insured or prospective insured acknowledging the noncommission compensation;
(ii)
clearly specify:
(A)
the amount of any known noncommission compensation;
(B)
the type and amount, if known, of any potential and contingent noncommission compensation; and
(C)
the existence and source of any other compensation; and
(iii)
be provided to the insured or prospective insured before the performance of the service.
(4)
(a)
For purposes of this Subsection (4):
(i)
“Large customer” means an employer who, with respect to a calendar year and to a plan year:
(A)
employed an average of at least 100 eligible employees on each business day during the preceding calendar year; and
(B)
employs at least two employees on the first day of the plan year.
(ii)
“Producer” includes:
(A)
a producer;
(B)
an affiliate of a producer; or
(C)
a consultant.
(b)
A producer may not accept or receive any compensation from an insurer or third party administrator for the initial placement of a health benefit plan, other than a hospital confinement indemnity policy, unless prior to a large customer’s initial purchase of the health benefit plan the producer discloses in writing to the large customer that the producer will receive compensation from the insurer or third party administrator for the placement of insurance, including the amount or type of compensation known to the producer at the time of the disclosure.
(c)
A producer shall:
(i)
obtain the large customer’s signed acknowledgment that the disclosure under Subsection (4)(b) was made to the large customer; or
(ii)
(A)
sign a statement that the disclosure required by Subsection (4)(b) was made to the large customer; and
(B)
keep the signed statement on file in the producer’s office while the health benefit plan placed with the large customer is in force.
(d)
A licensee who collects or receives any part of the compensation from an insurer or third party administrator in a manner that facilitates an audit shall, while the health benefit plan placed with the large customer is in force, maintain a copy of:
(i)
the signed acknowledgment described in Subsection (4)(c)(i); or
(ii)
the signed statement described in Subsection (4)(c)(ii).
(e)
Subsection (4)(c) does not apply to:
(i)
a person licensed as a producer who acts only as an intermediary between an insurer and the customer’s producer, including a managing general agent; or
(ii)
the placement of insurance in a secondary or residual market.
(f)
(i)
A producer shall provide to a large customer listed in this Subsection (4)(f) an annual accounting, as defined by rule made by the department in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, of all amounts the producer receives in commission compensation from an insurer or third party administrator as a result of the sale or placement of a health benefit plan to a large customer that is:
(A)
the state;
(B)
a political subdivision or instrumentality of the state or a combination thereof primarily engaged in educational activities or the administration or servicing of educational activities, including the State Board of Education and its instrumentalities, an institution of higher education and its branches, a school district and its instrumentalities, a vocational and technical school, and an entity arising out of a consolidation agreement between entities described under this Subsection (4)(f)(i)(B);
a quasi-public corporation, that has the same meaning as defined in Section 63E-1-102.
(ii)
The department shall pattern the annual accounting required by this Subsection (4)(f) on the insurance related information on Internal Revenue Service Form 5500 and its relevant attachments.
(g)
At the request of the department, a producer shall provide the department a copy of:
(i)
a disclosure required by this Subsection (4); or
(ii)
an Internal Revenue Service Form 5500 and its relevant attachments.
(5)
This section does not alter the right of any licensee to recover from an insured the amount of any premium due for insurance effected by or through that licensee or to charge a reasonable rate of interest upon past-due accounts.
(6)
This section does not apply to bail bond producers or bail enforcement agents as defined in Section 31A-35-102.
(7)
A licensee may not receive noncommission compensation from an insurer, insured, or enrollee for providing a service or engaging in an act that is required to be provided or performed in order to receive commission compensation, except for the surplus lines transactions that do not receive commissions.
