No. 43429 (Amendment): Section R590-186-5. Company License Renewal

(Amendment)

DAR File No.: 43429
Filed: 12/07/2018 04:28:17 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

Section 31A-35-404, minimum financial requirements for bail bond agency license, was changed in 2016 to allow more flexibility in providing verification for each parcel of real property owned by the applicant and included in the net worth of the applicant.

Summary of the rule or change:

This change clarifies what verification can be provided for each parcel of real property owned by the applicant and included in the agency's net worth calculation at the time of renewal.

Statutory or constitutional authorization for this rule:

• Section 31A-35-104
• Section 31A-35-401
• Section 31A-35-406
• Section 31A-35-301

Anticipated cost or savings to:

the state budget:

There is no anticipated cost or savings to the state budget. This change merely clarifies the types of real property verification that bail bond agencies may provide at the time of renewal.

local governments:

There is no anticipated cost or savings to local governments. This change merely clarifies the types of real property verification that bail bond agencies may provide at the time of renewal.

small businesses:

Small businesses could see some savings or expense depending on which verification option they choose to provide. One option is significantly more expensive than the other two options, while another is significantly less expensive. The Insurance Department (Department) anticipates that most companies will see savings because they will likely choose to provide the less expensive option.

persons other than small businesses, businesses, or local governmental entities:

There is no anticipated cost or savings to any other person. This change merely clarifies the types of real property verification that bail bond agencies may provide at the time of renewal.

Compliance costs for affected persons:

Bail bond agencies are already required to provide real property verification for their annual license renewal. The change to this rule ultimately allows them to save money on that verification at their discretion.

Comments by the department head on the fiscal impact the rule may have on businesses:

I. WHETHER A FISCAL IMPACT TO BUSINESS IS EXPECTED AS A RESULT OF THE PROPOSED RULE AND, IF SO, A DESCRIPTION OF WHY: All bail bond agencies are required to provide property verification for their annual license renewal. This rule change allows the agencies to choose which verification method they will provide, rather than requiring a specific method. Agencies could see some savings or expenses depending on which verification option they choose to provide. One option is significantly more expensive than the other two options, while another is significantly less expensive. The Department anticipates that most companies will see savings because they will likely choose to provide the less expensive option. II. AN ESTIMATE OF THE TOTAL NUMBER OF BUSINESS ESTABLISHMENTS IN UTAH EXPECTED TO BE IMPACTED: There are 13 collaterally backed bail bond agencies in Utah that will be affected. III. AN ESTIMATE OF THE SMALL BUSINESS ESTABLISHMENTS IN UTAH EXPECTED TO BE IMPACTED: All of those 13 collaterally backed bail bond agencies in Utah are small businesses and will be affected. IV. A DESCRIPTION OF THE SOURCES OF COST OR SAVINGS AS WELL AS THE EXPECTED NET SAVINGS OR COST TO BUSINESS ESTABLISHMENTS AND SMALL BUSINESS ESTABLISHMENTS AS A RESULT OF THE PROPOSED RULE OVER A ONE-YEAR PERIOD, IDENTIFYING ONE-TIME AND ONGOING COSTS: The Insurance Department is not able to anticipate the expected net savings or costs to small businesses as a result of this rule change. The cost of the most expensive option ? a certified appraisal ? is negotiated between the small business and the appraiser and depends on several individual factors that the Department cannot know. The cost of the cheaper options ? the title letter or report, or a current abstract of title from a county recorder ? are similarly difficult to determine because they vary by county and provider. The Department expects that most affected small businesses will choose to use a cheaper option and will recognize ongoing savings. V. DEPARTMENT HEAD'S COMMENTS ON THE ANALYSIS: The above analysis represents the Insurance Department's best estimate of the fiscal impact this rule amendment will have on businesses.

Todd E. Kiser, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Steve Gooch at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

01/31/2019

This rule may become effective on:

02/07/2019

Authorized by:

Steve Gooch, Information Specialist

RULE TEXT

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs

FY 2019

FY 2020

FY 2021

State Government

$0

$0

$0

Local Government

$0

$0

$0

Small Businesses

$0

$0

$0

Non-Small Businesses

$0

$0

$0

Other Person

$0

$0

$0

Total Fiscal Costs:

$0

$0

$0

Fiscal Benefits

State Government

$0

$0

$0

Local Government

$0

$0

$0

Small Businesses

$0

$0

$0

Non-Small Businesses

$0

$0

$0

Other Persons

$0

$0

$0

Total Fiscal Benefits:

$0

$0

$0

Net Fiscal Benefits:

$0

$0

$0

 

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described in the narrative. Inestimable impacts for Non - Small Businesses are described in Appendix 2.

 

Appendix 2: Regulatory Impact to Non - Small Businesses

This rule change is not expected to have any fiscal impact on non-small businesses revenues or expenditures because none of the affected businesses are large. All 13 affected businesses are small businesses.

 

The head of the Insurance Department, Todd E. Kiser, has reviewed and approved this fiscal analysis.

 

 

R590. Insurance, Administration.

R590-186. Bail Bond Surety Business.

R590-186-5. Company License Renewal.

A licensed bail bond surety company shall renew its license on or before July 15 of each year by meeting the following requirements:

(1) file with the insurance commissioner a renewal application, pay the required renewal licensing fee set forth in R590-102, Insurance Department Fee Payment Deadlines, and provide the additional information described in this section.

(2) If the applicant relies on the ownership of real or personal property as the financial basis for issuing bail bonds the applicant must include the following with the renewal:

(a) a statement that no material changes have occurred negatively affecting the property's title, including any liens or encumbrances that have occurred since the last license renewal;

(b) a financial statement reviewed by a certified public accountant as of the end of the most current fiscal year showing a net worth of at least $300,000, at least $100,000 of which must consist of liquid assets and a copy of the applicant's federal income tax return for the prior year; and

(c) if the bail bond agency is in its second or subsequent year of licensure, the following items are required[ as indicated]:

(i) a certified appraisal report;

(ii) a current tax notice and a title letter or report; or

(iii) a current abstract of title from the county recorder.

[(i) renewal in 2002, 2008, and 2014: a preliminary title report dated not more than one month prior to the date of the renewal application for each parcel of real property owned by the applicant and included in the applicant's net worth calculation; or

(ii) renewal in 2005, 2011, and 2017: a preliminary title report and a current appraisal dated not more than one month prior to the date of the renewal application for each parcel of real property owned by the applicant and included in the applicant's net worth calculation.]

(3) Renewal applicants who were licensed as a bail bond surety company prior to December 31, 1999, may opt to apply under the lower limits in effect at that date.

(a) For renewal applicants relying on a letter of credit as the financial basis for issuing bail bonds, the amount is reduced to $250,000.

(b) For renewal applicants relying on real or personal property as the basis for issuing bail bonds, the amount is reduced to a net worth of at least $250,000, at least $50,000 of which must consist of liquid assets.

(c) Renewal applicants opting for lower limits are limited to the 5 to 1 ratio of outstanding bond obligations as shown in R590-186-9.

(4) When using a letter of credit at renewal the bail bond surety must follow R590-186-4(5).

 

KEY: insurance

Date of Enactment or Last Substantive Amendment: [March 26, 2014]2019

Notice of Continuation: July 10, 2018

Authorizing, and Implemented or Interpreted Law: 31A-35-104; 31A-35-301; 31A-35-401; 31A-35-406

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