No. 41136 (5-year Review): Rule R590-114. Letters of Credit

DAR File No.: 41136
Filed: 01/09/2017 11:28:36 AM

NOTICE OF REVIEW AND STATEMENT OF CONTINUATION

Concise explanation of the particular statutory provisions under which the rule is enacted and how these provisions authorize or require the rule:

Subsection 31A-2-201(3) provides broad rulemaking authority to implement the provisions of the Utah Insurance Code, Title 31A. Subsection 31A-17-404(3) provides for a rule to determine the form that letters of credit must take to be used as security to protect a ceding insurer in a transaction of reinsurance. This rule sets the standards and form for letters of credit.

Summary of written comments received during and since the last five-year review of the rule from interested persons supporting or opposing the rule:

The department has received no written comments regarding this rule during the past five years.

Reasoned justification for continuation of the rule, including reasons why the agency disagrees with comments in opposition to the rule, if any:

Without Rule R590-114, letters of credit may not be of adequate quality to ensure the effectiveness of certain reinsurance agreements. The rule protects the ceding insurer's security interest in reinsurance ceded by means of the letter of credit. The rule may also affect other areas of statutory accounting, such as credit for reinsurance ceded. Therefore, this rule should be continued.

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]

Effective:

01/09/2017

Authorized by:

Steve Gooch, Information Specialist

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