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House adopts compromise on insurers’ rehabilitation and liquidation after multiple revisions
Summary
After extensive negotiations and multiple circlings, the House approved a third substitute to HB 263 creating mandatory mediation followed by arbitration, lengthening the trigger period, and balancing reinsurers’ and policyholders’ interests; the third substitute passed 72–0 and is referred to the Senate.
The House passed a third substitute to House Bill 263, which addresses insurers’ rehabilitation and liquidation and the role of reinsurers when an insurer becomes insolvent.
Representative Dunnegan, sponsor of the substitute, described the changes as a compromise between reinsurers and the state liquidator. Key elements include lengthening a previously proposed five-year trigger to eight years, mandatory mediation followed by mandatory arbitration for recalcitrant reinsurers, and arbitration standards requested by reinsurers. "We have increased that to 8 years, and then we put in a mandatory mediation," Dunnegan said.
Representative Duval and others argued the original bill favored contract law and the liquidator’s authority and voiced concerns about moving too far from the current statutory approach. The state insurance department told the House the third substitute is a reasonable compromise and that it preferred the substitute to the original bill as proposed.
House members said the compromise preserves protections for Utah policyholders while addressing reinsurers’ concerns about excessive unilateral state authority. The third substitute passed the House 72 yes, 0 no and is referred to the Senate for further action.
Next steps: the bill goes to the Senate; the transcript records floor statements from insurance stakeholders and multiple rounds of amendment and substitution before final passage in the House.
