a similar mechanism in another state that is created for the payment of claims or continuation of policy obligations of a financially impaired or insolvent insurer. See Utah Code 31A-27a-102
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
insurer: means a person who:
(a)
is doing, has done, purports to do, or is licensed to do the business of insurance;
(b)
is or has been subject to the authority of, or to rehabilitation, liquidation, reorganization, supervision, or conservation by an insurance commissioner; or
a nondomiciliary commissioner in whose state the insurer has outstanding claims liabilities;
(c)
an affected guaranty association; and
(d)
the following parties if the party files a request with the receivership court for inclusion as a party in interest and to be on the service list:
(i)
an insurer that ceded to or assumed business from the insurer;
(ii)
a policyholder;
(iii)
a third party claimant;
(iv)
a creditor;
(v)
a 10% or greater equity security holder in the insolvent insurer; and
(vi)
a person, including an indenture trustee, with a financial or regulatory interest in the delinquency proceeding. See Utah Code 31A-27a-102
Policy: includes all clauses, riders, endorsements, and papers that are a part of a policy. See Utah Code 31A-27a-102
receiver: means the commissioner or the commissioner's designee, including a rehabilitator, liquidator, or ancillary receiver. See Utah Code 31A-27a-102
receivership: means a rehabilitation, liquidation, or ancillary receivership. See Utah Code 31A-27a-102
receivership court: refers to the court in which a delinquency proceeding is pending. See Utah Code 31A-27a-102
Reinsurance: means a transaction or contract under which an assuming insurer agrees to indemnify a ceding insurer against all, or a part, of a loss that the ceding insurer may sustain under the one or more policies that the ceding insurer issues or will issue. See Utah Code 31A-27a-102
State: means a state, district, or territory of the United States. See Utah Code 31A-27a-102
(a)
The rehabilitator shall prepare and file a plan to effect rehabilitation with the receivership court within:
(i)
one year after the day on which the rehabilitation order is entered; or
(ii)
such further time as the receivership court may allow.
(b)
The receivership court may take an action described in Subsection (1)(c):
(i)
upon application of the rehabilitator for approval of a plan; and
(ii)
after the notice and hearings the receivership court may prescribe.
(c)
If the conditions of Subsection (1)(b) are met, the receivership court may:
(i)
approve the plan proposed;
(ii)
disapprove the plan proposed; or
(iii)
(A)
modify the plan proposed; and
(B)
approve the plan as modified.
(d)
If the plan is approved, the rehabilitator shall carry out the plan.
(e)
In the case of a life insurer, the plan proposed may:
(i)
include the imposition of a lien upon a policy of the insurer, if all rights of shareholders are relinquished; and
(ii)
propose imposition of a moratorium upon loan and cash surrender rights under a policy for a period not to exceed one year from the day on which the order approving the rehabilitation plan is entered, unless the receivership court, for good cause shown, extends the moratorium.
(2)
Once a plan is filed, any party in interest may object to the plan.
(3)
A plan shall:
(a)
except as provided in Subsection (5), provide no less favorable treatment of a claim or class of claims than would occur in liquidation, unless the holder of a particular claim or interest agrees to a less favorable treatment of that particular claim or interest;
(b)
provide adequate means for the plan’s implementation;
(c)
contain information concerning the financial condition of the insurer and the operation and effect of the plan, as far as is reasonably practicable in light of:
(i)
the nature and history of the insurer;
(ii)
the condition of the insurer’s records; and
(iii)
the nature of the plan; and
(d)
provide for the disposition of the records relevant to the duties and obligations covered by the plan.
(4)
A plan may include any other provisions not inconsistent with this chapter, including:
(a)
payment of distributions;
(b)
(i)
assumption or reinsurance of all or a portion of the insurer’s remaining liabilities by a licensed insurer or other entity; and
(ii)
transfer of assets and related records to the licensed insurer or other entity;
(c)
to the extent appropriate, application of insurance company regulatory market conduct standards to any entity administering claims on behalf of the receiver or assuming direct liabilities of the insurer;
(d)
contracting with a guaranty association or any other qualified entity to perform the administration of claims;
(e)
annual independent financial and performance audits of any entity administering claims on behalf of the receiver that is not otherwise subject to examination pursuant to state insurance law; and
(f)
termination of the insurer’s liabilities other than those under policies of insurance as of a date certain.
(5)
(a)
A plan may designate and separately treat one or more separate subclasses consisting only of those claims within the subclasses that are for or reduced to de minimis amounts.
(b)
For purposes of this Subsection (5), a “de minimis amount” is an amount equal to or less than a maximum de minimis amount approved by the receivership court as being reasonable and necessary for administrative convenience.
