No. 28269 (Amendment): R590-166-4. Rule

DAR File No.: 28269
Filed: 09/30/2005, 11:40
Received by: NL

 

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is being changed to comply with changes made to department fees in S.B. 122 that passed the 2003 Legislature. (DAR NOTE: S.B. 122 (2003) is found at UT L 2003 Ch 65, and was effective 05/05/2003.)

 

Summary of the rule or change:

In Section R590-166-4 of the rule, the wording "and pay filing fees" is being eliminated since there is no longer a requirement to pay a filing fee with each rate and form filing. It is now done once a year as a part of the renewal.

 

State statutory or constitutional authorization for this rule:

Sections 31A-2-201 and 31A-6a-110

 

Anticipated cost or savings to:

the state budget:

The changes to this rule actually took effect two years ago. It had the effect of no longer requiring the insurer to cut a check whenever they filed a form or rate filing and eliminated the need for the department to account for and deposit money with each filing. The revenue impact was designed to be neutral as a result of this change. Currently there are 84 service contract providers. Before the change in the filing fee, these providers paid $25 per filing. Now they pay an annual fee of $200. Whether or not this increases or decreases the state budget will depend on the number of filings each made during the year. That number will change from year to year.

 

local governments:

The changes to this rule will not affect local government since the rule and the changes only deal with the relationship between the insurer, their insureds, and the Insurance Department.

 

other persons:

The change to this rule eliminates the wording that a filing fee payment will accompany the filing of a provider contract or change to that contract. Since the change in 2003, fees for rate and form filings are now included in the annual service fee paid at renewal. This eliminates the cost and time required for service contract providers to cut a check for each filing and then to put it through the system. Currently there are 84 service contract providers. Before the change in the filing fee these providers paid $25 per filing. Now they pay an annual fee of $200. Whether or not this increases or decreases costs to them depends on the number of filings each provider makes each year. That number will change from year to year.

 

Compliance costs for affected persons:

The change to this rule eliminates the wording that a filing fee payment will accompany the filing of a provider contract or change to that contract. Since the change in 2003, fees for rate and form filings are now included in the annual service fee paid at renewal. This eliminates the cost and time required for service contract providers to cut a check for each filing and then to put it through the system. Currently there are 84 service contract providers. Before the change in the filing fee these providers paid $25 per filing. Now they pay an annual fee of $200. Whether or not this increases or decreases costs to them depends on the number of filings each provider makes each year. That number will change from year to year.

 

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

This rule will create no fiscal impact on Utah businesses at this time. The impact of the annual service and filing fee payment would have been felt one to two years ago when S.B. 122 went into effect. D. Kent Michie, Commissioner

 

The full text of this rule may be inspected, during regular business hours, at the Division 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:

Jilene Whitby 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:

11/14/2005

 

This rule may become effective on:

11/15/2005

 

Authorized by:

Jilene Whitby, Information Specialist

 

 

RULE TEXT

R590. Insurance, Administration.

R590-166. Home Protection Service Contract Rule.

R590-166-4. Rule.

A. Upon prior written notification to the commissioner, home protection companies doing business in this state who are, at the time of notification, in compliance with all the terms and provisions set forth in this rule and are in compliance with all of the terms and provisions of Chapter 6a of Title 31A, except those terms and provisions specifically exempted herein, shall be exempt from the requirements of Subsections 31A-6a-103(1), 31A-6a-103(2)(a) and 31A-6a-103 (2)(b) and the requirements of Subsections 31A-6a-104(2) and (8); provided, however, that nothing herein shall abrogate the requirement that home protection companies file copies of the service contracts to be used in this state, and any modifications thereto[, and pay filing fees] as would otherwise be required pursuant to Subsections 31A-6a-103(2)(a) and (b). So long as a home protection company remains in compliance with this rule, the home protection company's election to be subject to this rule shall remain in effect until written notification to the commissioner by the company of the company's withdrawal of its election. Notwithstanding the foregoing, home protection companies who are doing business in this state prior to the effective date of this rule and who elect to be subject to this rule as of the rule's effective date shall have until 60 days from the rule's effective date to attain compliance with all the terms and provisions of the rule.

B. To assure the faithful performance of its obligations to its contract holders the home protection company shall deposit in accordance with Section 31A-2-206 an amount not less than $10,000 for each 500 home protection service contracts in force in this state, but not to exceed $100,000. In the event of any failure of the home protection company to perform its obligations to its contract holders, the commissioner may make equitable distributions to contract-holders from funds held on deposit.

C. In lieu of the deposit required in paragraph B above, a surety bond or irrevocable letter of credit in favor of the commissioner for $50,000 may be filed by the home protection company. When, based on the home protection company's annual report pursuant to Section 5(A) hereof, the number of home protection service contracts issued by a protection company then in force in this state exceeds 2,500, the amount of the surety bond or letter of credit shall be increased to $100,000. The bond shall be issued by an insurer authorized to transact surety business in this state. Any letter of credit shall be from a bank approved by the commissioner and in a form acceptable to the commissioner. The surety bond or letter of credit shall be held for the same purpose as the deposit in lieu of which it is filed. No bond or letter of credit shall be cancelled or subject to cancellation unless at least 30 days advance notice, in writing, thereof is filed with the commissioner and evidence of other security is provided.

D. The securities, bond or letter of credit of a home protection company deposited as required by this rule shall constitute a claim fund to be administered by the commissioner for the benefit of persons sustaining actionable injury due to the insolvency or impairment of the home protection company. The commissioner may, at his option, seek assumption of an insolvent home protection company's obligations and business by a solvent company, and apply the insolvent home protection company's deposit or proceeds of any surety bond or letter of credit to this purpose.

E. Any deposit, surety bond or letter of credit shall be maintained unimpaired as long as the home protection company continues to do business in this state. Whenever the home protection company ceases to do business in this state and furnishes the commissioner proof that it has discharged or otherwise adequately provided for all its obligations to its home protection service contract holders in this state, the commissioner shall authorize release of the deposited securities, surety bond or letter of credit on file at that time.

 

KEY: insurance

[1994]2005

Notice of Continuation April 28, 2004

31A-2-201

31A-6a-110