One or more sponsors may form a sponsored captive insurance company under this chapter.
Terms Used In Utah Code 31A-37-401
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
Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
Captive insurance company: includes any of the following formed or holding a certificate of authority under this chapter:
(i)
a branch captive insurance company;
(ii)
a pure captive insurance company;
(iii)
an association captive insurance company;
(iv)
a sponsored captive insurance company;
(v)
an industrial insured captive insurance company, including an industrial insured captive insurance company formed as a risk retention group captive in this state pursuant to the provisions of the Federal Liability Risk Retention Act of 1986;
an insurer is unable to pay the insurer's obligations as the obligations are due;
(b)
an insurer's total adjusted capital is less than the insurer's mandatory control level RBC under Subsection 31A-17-601(8)(c); or
(c)
an insurer's admitted assets are less than the insurer's liabilities. 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
insurance company: means a person doing an insurance business as a principal including:
(i)
a fraternal benefit society;
(ii)
an issuer of a gift annuity other than an annuity specified in Subsections 31A-22-1305(2) and (3);
(iii)
a motor club;
(iv)
an employee welfare plan;
(v)
a person purporting or intending to do an insurance business as a principal on that person's own account; and
Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
Participant: means an entity that is insured by a sponsored captive insurance company:
(a)
if the losses of the participant are limited through a participant contract to the assets of a protected cell; and
(b)
(i)
the entity is permitted to be a participant under Section 31A-37-403; or
(ii)
the entity is an affiliate of an entity permitted to be a participant under Section 31A-37-403. See Utah Code 31A-37-102
Participant contract: means a contract by which a sponsored captive insurance company:
(a)
insures the risks of a participant; and
(b)
limits the losses of the participant to the assets of a protected cell. See Utah Code 31A-37-102
Protected cell: means a separate account established and maintained by a sponsored captive insurance company for one participant. See Utah Code 31A-37-102
provide all or part of the capital and surplus required by applicable law in an amount of not less than $350,000, which amount the commissioner may increase by order if the commissioner considers it necessary; and
(ii)
organize and operate a sponsored captive insurance company. See Utah Code 31A-37-102
Sponsored captive insurance company: means a captive insurance company:
(a)
in which the minimum capital and surplus required by applicable law is provided by one or more sponsors;
(b)
that is formed or holding a certificate of authority under this chapter;
(c)
that insures the risks of a separate participant through the contract; and
(d)
that segregates each participant's liability through one or more protected cells. See Utah Code 31A-37-102
A sponsored captive insurance company formed under this chapter may establish and maintain a protected cell to insure risks of a participant if:
(a)
the interest holders of a sponsored captive insurance company are limited to:
(i)
the participants of the sponsored captive insurance company; and
(ii)
the sponsors of the sponsored captive insurance company;
(b)
each protected cell is accounted for separately on the books and records of the sponsored cell captive insurance company to reflect:
(i)
the financial condition of each individual protected cell;
(ii)
the results of operations of each individual protected cell;
(iii)
the net income or loss of each individual protected cell;
(iv)
the dividends or other distributions to participants of each individual protected cell; and
(v)
other factors that may be:
(A)
provided in the participant contract; or
(B)
required by the commissioner;
(c)
the assets of a protected cell are not chargeable with liabilities arising out of any other insurance business the sponsored captive insurance company may conduct;
(d)
a sale, exchange, or other transfer of assets is not made by the sponsored captive insurance company between or among any of the protected cells of the sponsored captive insurance company without the consent of the protected cells;
(e)
a sale, exchange, transfer of assets, dividend, or distribution is not made from a protected cell to a sponsor or participant without the commissioner’s approval, which may not be given if the sale, exchange, transfer, dividend, or distribution would result in insolvency or impairment with respect to a protected cell;
(f)
a sponsored captive insurance company annually files with the commissioner financial reports the commissioner requires under Section 31A-37-106, including accounting statements detailing the financial experience of each protected cell;
(g)
a sponsored captive insurance company notifies the commissioner in writing within 10 business days of a protected cell that is insolvent or otherwise unable to meet the claim or expense obligations of the protected cell;
(h)
a participant contract does not take effect without the commissioner’s prior written approval;
(i)
the addition of each new protected cell and withdrawal of a participant of any existing protected cell does not take effect without the commissioner’s prior written approval; and
(j)
(i)
a protected cell captive insurance company shall pay to the department the following nonrefundable fees established by the department under Sections 31A-3-103, 31A-3-304, and 63J-1-504:
(A)
a fee for examining, investigating, and processing by a department employee of an application for a certificate of authority made by a protected cell captive insurance company;
(B)
a fee for obtaining a certificate of authority for the year the protected cell captive insurance company is issued a certificate of authority by the department; and
(C)
a certificate of authority renewal fee; and
(ii)
a protected cell may be created by the sponsor or the sponsor may create a pooling insurance arrangement to provide for pooling of risks to allow for risk distribution upon written approval from every protected cell under the sponsor and written approval of the commissioner.
