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S.B. 14
Senator Gregory S. Bell proposes the following substitute bill:
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INSURANCE CODE EXEMPTION
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2004 GENERAL SESSION
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STATE OF UTAH
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Sponsor: Gregory S. Bell
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LONG TITLE
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General Description:
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This bill exempts specified activities from the insurance code.
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Highlighted Provisions:
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This bill:
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. provides an exemption from the insurance code for death, accident, health, and
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disability benefits provided by an Internal Revenue Code Section 501(c)(3)
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organization to its volunteers under specified circumstances; and
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. makes technical corrections.
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Monies Appropriated in this Bill:
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None
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Other Special Clauses:
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None
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Utah Code Sections Affected:
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AMENDS:
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31A-1-103, as last amended by Chapters 71 and 308, Laws of Utah 2002
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
31A-1-103
is amended to read:
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31A-1-103. Scope and applicability of title.
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(1) This title does not apply to:
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(a) a retainer contract made by an attorney-at-law:
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(i) with an individual client; and
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(ii) under which fees are based on estimates of the nature and amount of services to be
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provided to the specific client;
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(b) a contract similar to a contract described in Subsection (1)(a) made with a group of
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clients involved in the same or closely related legal matters;
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(c) an arrangement for providing benefits that do not exceed a limited amount of
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consultations, advice on simple legal matters, either alone or in combination with referral
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services, or the promise of fee discounts for handling other legal matters;
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(d) limited legal assistance on an informal basis involving neither an express
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contractual obligation nor reasonable expectations, in the context of an employment,
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membership, educational, or similar relationship; [or]
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(e) legal assistance by employee organizations to their members in matters relating to
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employment[.]; or
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(f) death, accident, health, or disability benefits provided to a person by an organization
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or its affiliate if:
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(i) the organization is tax exempt under Section 501(c)(3) of the Internal Revenue
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Code and has had its principal place of business in Utah for at least five years;
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(ii) the person is not an employee of the organization; and
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(iii) (A) the person's sole function in the organization is to provide voluntary services:
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(I) in furtherance of the organization's purposes;
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(II) for a designated period of time; and
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(III) for which no compensation, other than expenses, is paid; or
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(B) the time since the service under Subsection (1)(f)(iii)(A) was completed is no more
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than 18 months.
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(2) (a) This title restricts otherwise legitimate business activity.
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(b) What this title does not prohibit is permitted unless contrary to other provisions of
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Utah law.
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(3) Except as otherwise expressly provided, this title does not apply to:
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(a) those activities of an insurer where state jurisdiction is preempted by Section 514 of
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the federal Employee Retirement Income Security Act of 1974, as amended;
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(b) ocean marine insurance;
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(c) death [and], accident [and], health, or disability benefits provided by an
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organization if the organization:
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(i) has as its principal purpose to achieve charitable, educational, social, or religious
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objectives rather than to provide death [and], accident [and], health, or disability benefits;
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(ii) does not incur a legal obligation to pay a specified amount; and
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(iii) does not create reasonable expectations of receiving a specified amount on the part
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of an insured person;
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(d) other business specified in rules adopted by the commissioner on a finding that:
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(i) the transaction of the business in this state does not require regulation for the
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protection of the interests of the residents of this state; or
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(ii) it would be impracticable to require compliance with this title;
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(e) except as provided in Subsection (4), a transaction independently procured through
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negotiations under Section
31A-15-104
;
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(f) self-insurance;
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(g) reinsurance;
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(h) subject to Subsection (5), employee and labor union group or blanket insurance
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covering risks in this state if:
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(i) the policyholder exists primarily for purposes other than to procure insurance;
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(ii) the policyholder:
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(A) is not a resident of this state;
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(B) is not a domestic corporation; or
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(C) does not have its principal office in this state;
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(iii) no more than 25% of the certificate holders or insureds are residents of this state;
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(iv) on request of the commissioner, the insurer files with the department a copy of the
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policy and a copy of each form or certificate; and
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(v) (A) the insurer agrees to pay premium taxes on the Utah portion of its business, as
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if it were authorized to do business in this state; and
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(B) the insurer provides the commissioner with the security the commissioner
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considers necessary for the payment of premium taxes under Title 59, Chapter 9, Taxation of
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Admitted Insurers;
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(i) to the extent provided in Subsection (6):
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(i) a manufacturer's or seller's warranty; and
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(ii) a manufacturer's or seller's service contract; or
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(j) except to the extent provided in Subsection (7), a public agency insurance mutual.
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(4) A transaction described in Subsection (3)(e) is subject to taxation under Section
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31A-3-301
.
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(5) (a) After a hearing, the commissioner may order an insurer of certain group or
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blanket contracts to transfer the Utah portion of the business otherwise exempted under
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Subsection (3)(h) to an authorized insurer if the contracts have been written by an unauthorized
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insurer.
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(b) If the commissioner finds that the conditions required for the exemption of a group
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or blanket insurer are not satisfied or that adequate protection to residents of this state is not
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provided, the commissioner may require:
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(i) the insurer to be authorized to do business in this state; or
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(ii) that any of the insurer's transactions be subject to this title.
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(6) (a) As used in Subsection (3)(i) and this Subsection (6):
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(i) "manufacturer's or seller's service contract" means a service contract:
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(A) made available by:
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(I) a manufacturer of a product;
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(II) a seller of a product; or
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(III) an affiliate of a manufacturer or seller of a product;
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(B) made available:
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(I) on one or more specific products; or
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(II) on products that are components of a system; and
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(C) under which the person described in Subsection (6)(a)(i)(A) is liable for services to
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be provided under the service contract including, if the manufacturer's or seller's service
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contract designates, providing parts and labor;
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(ii) "manufacturer's or seller's warranty" means the guaranty of:
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(A) (I) the manufacturer of a product;
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(II) a seller of a product; or
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(III) an affiliate of a manufacturer or seller of a product;
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(B) (I) on one or more specific products; or
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(II) on products that are components of a system; and
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(C) under which the person described in Subsection (6)(a)(ii)(A) is liable for services
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to be provided under the warranty, including, if the manufacturer's or seller's warranty
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designates, providing parts and labor; and
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(iii) "service contract" is as defined in Section
31A-6a-101
.
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(b) A manufacturer's or seller's warranty may be designated as:
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(i) a warranty;
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(ii) a guaranty; or
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(iii) a term similar to a term described in Subsection (6)(b)(i) or (ii).
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(c) This title does not apply to:
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(i) a manufacturer's or seller's warranty;
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(ii) a manufacturer's or seller's service contract paid for with consideration that is in
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addition to the consideration paid for the product itself; and
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(iii) a service contract that is not a manufacturer's or seller's warranty or manufacturer's
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or seller's service contract if:
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(A) the service contract is paid for with consideration that is in addition to the
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consideration paid for the product itself;
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(B) the service contract is for the repair or maintenance of goods;
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(C) the cost of the product is equal to an amount determined in accordance with
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Subsection (6)(e); and
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(D) the product is not a motor vehicle.
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(d) This title does not apply to a manufacturer's or seller's warranty or service contract
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paid for with consideration that is in addition to the consideration paid for the product itself
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regardless of whether the manufacturer's or seller's warranty or service contract is sold:
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(i) at the time of the purchase of the product; or
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(ii) at a time other than the time of the purchase of the product.
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(e) (i) For fiscal year 2001-02, the amount described in Subsection (6)(c)(iii)(C) shall
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be equal to $3,700 or less.
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(ii) For each fiscal year after fiscal year 2001-02, the commissioner shall annually
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determine whether the amount described in Subsection (6)(c)(iii)(C) should be adjusted in
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accordance with changes in the Consumer Price Index published by the United States Bureau
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of Labor Statistics selected by the commissioner by rule, between:
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(A) the Consumer Price Index for the February immediately preceding the adjustment;
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and
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(B) the Consumer Price Index for February 2001.
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(iii) If under Subsection (6)(e)(ii) the commissioner determines that an adjustment
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should be made, the commissioner shall make the adjustment by rule.
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(7) (a) For purposes of this Subsection (7), "public agency insurance mutual" means an
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entity formed by two or more political subdivisions or public agencies of the state:
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(i) under Title 11, Chapter 13, Interlocal Cooperation Act; and
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(ii) for the purpose of providing for the political subdivisions or public agencies:
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(A) subject to Subsection (7)(b), insurance coverage; or
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(B) risk management.
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(b) Notwithstanding Subsection (7)(a)(ii)(A), a public agency insurance mutual may
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not provide health insurance unless the public agency insurance mutual provides the health
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insurance using:
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(i) a third party administrator licensed under Chapter 25, Third Party Administrators;
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(ii) an admitted insurer; or
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(iii) a program authorized by Title 49, Chapter 20, Public Employees' Benefit and
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Insurance Program Act.
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(c) Except for this Subsection (7), a public agency insurance mutual is exempt from
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this title.
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(d) A public agency insurance mutual is considered to be a governmental entity and
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political subdivision of the state with all of the rights, privileges, and immunities of a
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governmental entity or political subdivision of the state including all the rights and benefits of
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Title 63, Chapter 30, Governmental Immunity Act.
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