Utah Insurance Department - Industry Resources

March 2005

Utah Insurance Industry
Newsletter

      Meet Commissioner Kent Michie
       We would like to introduce you to the new Insurance Commissioner, D. Kent Michie. He began his duties with the department January 5, 2005, the day Governor Huntsman announced his appointment.
       Commissioner Michie's background for the past 27 years is in investment banking. For twenty-one years during this period he was also financial advisor to the State of Utah and four of its governors.
       During his career Commissioner Michie worked exclusively with Utah local governments to finance the construction of important infrastructure projects. For example, he arranged financing for the construction of the Mattheson Courthouse, the Salt Lake County Center, the expansion of University of Utah Hospital, the renovation of the City & County Building and State Capitol, UTA's Light Rail System, and many public schools, highways, water and sewer projects throughout the state.
       In addition, Commissioner Michie developed the Utah School Bond Guaranty Program, which applies the state's AAA bond guaranty to the state's 40 school districts. As a result school districts are able to borrow money at a lower interest rate. Since 1997, when his program went into effect, Utah boards of education have issued $1.6 billion in bonds at a savings to property tax payers of $25 to $26 million dollars.
       Now, Commissioner Michie will turn his skills and creative thinking to the state's Insurance Department and insurance industry. There are a number of issues before us now that will need clear vision and creative thinking. It is Commissioner Michie's belief that: "Clear thinking takes educating oneself on the facts, hearing from all sides, and then the solutions will flow. And, the simpler the solution the better."
       As far as the Insurance Department goes Commissioner Michie is happy to see "dedicated, loyal professionals who are technically proficient in administering to the needs of the industry and the public." In addition, Commissioner Michie emphasized that department "Personnel need to understand the business they are in and give answers that are consistent with insurance laws and rules. We are the current custodians of this job. Our job is to serve the public in good faith and with an open ear." He concluded; "We must do the best we can."
       Commissioner Michie is married to former Barbara Gruman, originally of Schenectady, New York. They have four children and four grandchildren, all living in Utah.
       A condensed version of Commissioner Michie's BIO can be found at http://www.insurance.utah.gov/BIO.html.

Out-of-State Application

It has recently come to our attention that some Utah producers have taken Utah residents across state lines to sign annuity or insurance applications for policies not available in Utah. In some instances the insurer has issued the policy or contract to the Utah resident on the neighboring state’s policy form that was not filed in Utah.

The Utah Code Section 31A-21-201(1)(a) states, “...a form may not be used, sold, or offered for sale unless the form has been filed with the commissioner.” Additionally, Section 31A-21-101(1) states that this requirement applies "to all insurance policies, applications, and certificates:

Therefore, insurance companies and producers who use, sell, or offer for sale to persons residing in Utah, an insurance policy or annuity contract that has not been filed in Utah and is thus not available in Utah, do so in violation of Utah insurance law, even when the application is signed in another state.

The department is receiving calls from seniors with concerns about insurance producers who are using drug assistance programs in what may be fraudulent or less than honest ways.

Some producers are offering seniors drug assistance programs if they will first purchase an insurance policy. Drug assistance programs do not require the purchase of an insurance policy, however, these programs do require complete disclosure of the senior’s total income. Producers marketing policies in this fashion reportedly are filling in the drug assistance application with incomplete income information.

The Utah Code 31A-23a-111(4)(b)(xvi) states that a license may be revoked or suspended if the licensee, "in the conduct of business in this state...used fraudulent, coercive, or dishonest practices...."

"A licensee...or an officer or employee of a licensee may not induce any person to enter into or continue an insurance contract or to terminate an existing insurance contract by offering benefits not specified in the policy...."

If you would like to see a list of the insurance related bills that passed this year's legislature, just click HERE. Of the 23 insurance related bills filed with the legislature, 19 passed. Of these, nine are department bills. Along with the text of these nine bills is also included a summary.

The following are a couple of bills of note.
HB70, Health Discount Program Consumer Protection Act. This new law will help the department identify who is marketing health discount plans in Utah and gives the department greater authority to take action when violations occur. Because this is an area where so much fraud is taking place today, we would like to draw your attention to it.

2) a health discount plan must file disclosures with the commissioner prior to doing business;

3) an unlicensed health discount plan and any producer that markets its products is subject to "unauthorized insurance" and "insurance fraud" statutes;

HB121, Property Exempt from Execution. This new law exempts the proceeds or benefits of life insurance policies in force for over one year, from judgment execution.

The Interstate Insurance Product Regulation Compact, creates a multi-state commission to accept, review, and approve insurance product filings. The Compact will become operational when 26 states or states representing 40% of the premium volume for life, annuities, disability income and long-term care insurance join the Compact. To-date ten states have joined and 22 states are in the process of filing legislation to do so. Utah adopted the Compact in 2004.

Instead of insurers filing their forms in each state, the Compact will allow them to file their products in one central place, thereby speeding the process of getting their products to market.

The Compact is initially focusing on life, annuity, disability income and long-term care insurance products. These products have a long life and are not affected when their owner moves across state lines. They are not sensitive to local costs and conditions like auto, homeowner and health insurance.

The Compact is in the process of developing product standards for the four product lines and standards for the filing process. Filing fees paid by insurance companies will fund the commission’s activities.

Filings to the Compact will be made electronically through SERFF (System for Electronic Rate and Forms Filing). Currently 49 states, the District of Columbia, Puerto Rico and over 1,500 insurers are licensed to use SERFF. In 2004, more than 150,000 filings were submitted through SERFF, doubling the amount filed in 2003.
What happens if a state wants to withdraw from the Compact? They repeal their Compact statute. Products approved by the Compact can be left unaffected.

         March 13, 2005, Commissioner Kent Michie welcomed
                the National Association of Insurance Commissioners
                to their Spring Meeting in Salt Lake City at the Grand

We would like to remind you that a list of current insurance rules, as well as proposed, amended and repealed rules are available on our website.

If a rule you are interested in is in the process of being approved or repealed, you can file your comments with us by going to our site. Just click on the link to the "Insurance Department" that is under the heading, "New Rules Being Proposed or Current Rules Being Changed" and file your comment by email. Your comments will be made a part of the official rule file and will be carefully reviewed during the Department’s rule making process.



	March 2005 Utah Insurance Industry Newsletter Meet Commissioner Kent Michie We would like to introduce you to the new Insurance Commissioner, D. Kent Michie. He began his duties with the department January 5, 2005, the day Governor Huntsman announced his appointment. Commissioner Michie's background for the past 27 years is in investment banking. For twenty-one years during this period he was also financial advisor to the State of Utah and four of its governors. During his career Commissioner Michie worked exclusively with Utah local governments to finance the construction of important infrastructure projects. For example, he arranged financing for the construction of the Mattheson Courthouse, the Salt Lake County Center, the expansion of University of Utah Hospital, the renovation of the City & County Building and State Capitol, UTA's Light Rail System, and many public schools, highways, water and sewer projects throughout the state. In addition, Commissioner Michie developed the Utah School Bond Guaranty Program, which applies the state's AAA bond guaranty to the state's 40 school districts. As a result school districts are able to borrow money at a lower interest rate. Since 1997, when his program went into effect, Utah boards of education have issued $1.6 billion in bonds at a savings to property tax payers of $25 to $26 million dollars. Now, Commissioner Michie will turn his skills and creative thinking to the state's Insurance Department and insurance industry. There are a number of issues before us now that will need clear vision and creative thinking. It is Commissioner Michie's belief that: "Clear thinking takes educating oneself on the facts, hearing from all sides, and then the solutions will flow. And, the simpler the solution the better." As far as the Insurance Department goes Commissioner Michie is happy to see "dedicated, loyal professionals who are technically proficient in administering to the needs of the industry and the public." In addition, Commissioner Michie emphasized that department "Personnel need to understand the business they are in and give answers that are consistent with insurance laws and rules. We are the current custodians of this job. Our job is to serve the public in good faith and with an open ear." He concluded; "We must do the best we can." Commissioner Michie is married to former Barbara Gruman, originally of Schenectady, New York. They have four children and four grandchildren, all living in Utah. A condensed version of Commissioner Michie's BIO can be found at http://www.insurance.utah.gov/BIO.html. Out-of-State Application It has recently come to our attention that some Utah producers have taken Utah residents across state lines to sign annuity or insurance applications for policies not available in Utah. In some instances the insurer has issued the policy or contract to the Utah resident on the neighboring state’s policy form that was not filed in Utah. The Utah Code Section 31A-21-201(1)(a) states, “...a form may not be used, sold, or offered for sale unless the form has been filed with the commissioner.” Additionally, Section 31A-21-101(1) states that this requirement applies "to all insurance policies, applications, and certificates: (a) delivered or issued for delivery in this state; (b) on property ordinarily located in this state; (c) on persons residing in this state when the policy is issued; and (d) on business operations in this state”. Therefore, insurance companies and producers who use, sell, or offer for sale to persons residing in Utah, an insurance policy or annuity contract that has not been filed in Utah and is thus not available in Utah, do so in violation of Utah insurance law, even when the application is signed in another state. Drug Assistance Programs The department is receiving calls from seniors with concerns about insurance producers who are using drug assistance programs in what may be fraudulent or less than honest ways. Some producers are offering seniors drug assistance programs if they will first purchase an insurance policy. Drug assistance programs do not require the purchase of an insurance policy, however, these programs do require complete disclosure of the senior’s total income. Producers marketing policies in this fashion reportedly are filling in the drug assistance application with incomplete income information. The Utah Code 31A-23a-111(4)(b)(xvi) states that a license may be revoked or suspended if the licensee, "in the conduct of business in this state...used fraudulent, coercive, or dishonest practices...." Also, Section 31A-23a-402(2)(a)(i) states that: "A licensee...or an officer or employee of a licensee may not induce any person to enter into or continue an insurance contract or to terminate an existing insurance contract by offering benefits not specified in the policy...." Marketing insurance as outlined above could be considered a dishonest practice and/or inducement and such practices will put licenses in jeopardy. If you have any questions or concerns, please call Brian Hansen, Market Conduct Examiner, at 801-538-3763. Is it complete? Is it the best you can do? Is there anything else you can add? Does it include your creativity? Henry Kissinger 2005 Insurance Related Legislation If you would like to see a list of the insurance related bills that passed this year's legislature, just click HERE. Of the 23 insurance related bills filed with the legislature, 19 passed. Of these, nine are department bills. Along with the text of these nine bills is also included a summary. The following are a couple of bills of note. HB70, Health Discount Program Consumer Protection Act. This new law will help the department identify who is marketing health discount plans in Utah and gives the department greater authority to take action when violations occur. Because this is an area where so much fraud is taking place today, we would like to draw your attention to it. The major provisions of this act are that: 1) a health discount program must be licensed to market in Utah; 2) a health discount plan must file disclosures with the commissioner prior to doing business; 3) an unlicensed health discount plan and any producer that markets its products is subject to "unauthorized insurance" and "insurance fraud" statutes; 4) advertising terminology is restrictive; and 5) it is a felony to intentionally violate this act. HB121, Property Exempt from Execution. This new law exempts the proceeds or benefits of life insurance policies in force for over one year, from judgment execution. Accessing Insurance Information The National Association of Insurance Commissioners’ (NAIC) has a new web search program called "National Portal Search." You can access this search by going to www.naic.org. At this stage, the Portal is a search engine that allows users to retrieve publicly available information from the NAIC and individual state insurance department Web sites. In order to maintain the accuracy of the search engine, the Portal is scheduled to check for updates on state insurance department Web sites at weekly intervals. Streamlining the Filing Process The Interstate Insurance Product Regulation Compact, creates a multi-state commission to accept, review, and approve insurance product filings. The Compact will become operational when 26 states or states representing 40% of the premium volume for life, annuities, disability income and long-term care insurance join the Compact. To-date ten states have joined and 22 states are in the process of filing legislation to do so. Utah adopted the Compact in 2004. Instead of insurers filing their forms in each state, the Compact will allow them to file their products in one central place, thereby speeding the process of getting their products to market. The Compact is initially focusing on life, annuity, disability income and long-term care insurance products. These products have a long life and are not affected when their owner moves across state lines. They are not sensitive to local costs and conditions like auto, homeowner and health insurance. The Compact is in the process of developing product standards for the four product lines and standards for the filing process. Filing fees paid by insurance companies will fund the commission’s activities. Filings to the Compact will be made electronically through SERFF (System for Electronic Rate and Forms Filing). Currently 49 states, the District of Columbia, Puerto Rico and over 1,500 insurers are licensed to use SERFF. In 2004, more than 150,000 filings were submitted through SERFF, doubling the amount filed in 2003. What happens if a state wants to withdraw from the Compact? They repeal their Compact statute. Products approved by the Compact can be left unaffected. March 13, 2005, Commissioner Kent Michie welcomed the National Association of Insurance Commissioners to their Spring Meeting in Salt Lake City at the Grand American. Rule Updates We would like to remind you that a list of current insurance rules, as well as proposed, amended and repealed rules are available on our website. If a rule you are interested in is in the process of being approved or repealed, you can file your comments with us by going to our site. Just click on the link to the "Insurance Department" that is under the heading, "New Rules Being Proposed or Current Rules Being Changed" and file your comment by email. Your comments will be made a part of the official rule file and will be carefully reviewed during the Department’s rule making process. [Back to Top]