Substitute Senate Bill No. 1096

Public Act No. 01-113

AN ACT CONCERNING THE LICENSING OF INSURANCE PRODUCERS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) As used in sections 1 to 18, inclusive, of this act and chapters 701a and 702 of the general statutes, unless the context or subject matter otherwise require:

(1) "Agent" or "insurance agent" means an insurance producer appointed by an insurer to act on the insurer's behalf pursuant to section 13 of this act.

(2) "Business entity" means a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity.

(3) "Commissioner" means the Insurance Commissioner.

(4) "Home state" means any state or territory of the United States, including, but not limited to, the District of Columbia, in which an insurance producer maintains the producer's principal place of residence or principal place of business and is licensed to act as an insurance producer.

(5) "Insurance" means any of the lines of authority contained in title 38a of the general statutes.

(6) "Insurance producer" or "producer" means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance.

(7) "Insurer" means "insurer", as defined in section 38a-1 of the general statutes.

(8) "License" means a document issued by the commissioner authorizing a person to act as an insurance producer for the lines of authority specified in the document. The license itself does not create any authority, actual, apparent or inherent, in the holder to represent or commit an insurance carrier.

(9) "Limited line credit insurance" includes credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection insurance and any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation that the commissioner determines should be designated a form of limited line credit insurance.

(10) "Limited line credit insurance producer" means a person who sells, solicits or negotiates one or more forms of limited line credit insurance coverage to individuals through a master, corporate, group or individual policy.

(11) "Limited lines insurance" means those lines of insurance referred to in section 38a-782 of the general statutes, as amended by this act, or any other line of insurance that the commissioner deems necessary to recognize for the purpose of complying with section 7 of this act.

(12) "Limited lines producer" means a person authorized by the commissioner to sell, solicit or negotiate limited lines insurance.

(13) "Negotiate" means the act of conferring directly with, or offering advice directly to, a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract, provided the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers.

(14) "Person" means an individual or a business entity.

(15) "Sell" means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company.

(16) "Solicit" means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company.

(17) "Terminate" means the cancellation of the relationship between an insurance producer and the insurer or the termination of a producer's authority to transact insurance.

(18) "Uniform business entity application" means the National Association of Insurance Commissioners uniform business entity application for resident and nonresident business entities, as amended from time to time.

(19) "Uniform application" means the National Association of Insurance Commissioners uniform application for resident and nonresident producer licensing, as amended from time to time.

Sec. 2. (NEW) A person shall not sell, solicit or negotiate insurance in this state for any class or classes of insurance unless the person is licensed for that line of authority in accordance with sections 1 to 18, inclusive, of this act.

Sec. 3. (NEW) (a) Nothing in sections 1 to 18, inclusive, of this act shall be construed to require an insurer to obtain an insurance producer license. As used in this section, "insurer" does not include an insurer's officers, directors, employees, subsidiaries or affiliates.

(b) A license as an insurance producer shall not be required of the following: (1) An officer, director or employee of an insurer or of an insurance producer, provided the officer, director or employee does not receive any commission on policies written or sold to insure risks residing, located or to be performed in this state and (A) the officer's, director's or employee's activities are executive, administrative, managerial, clerical or a combination thereof, and are only indirectly related to the sale, solicitation or negotiation of insurance; or (B) the officer's, director's or employee's functions relate to underwriting, loss control, inspection or the processing, adjusting, investigating or settling of a claim on a contract of insurance; or (C) the officer, director or employee is acting in the capacity of a special agent or agency supervisor assisting insurance producers where the person's activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation or negotiation of insurance; (2) a person who (A) secures and furnishes information for the purpose of (i) group life insurance, group property and casualty insurance, group annuities, group or blanket accident and health insurance, (ii) enrolling individuals under plans, or (iii) issuing certificates under plans or otherwise assisting in administering plans; or (B) performs administrative services related to mass marketed property and casualty insurance; provided no commission is paid to the person for the services performed under subparagraphs (A) and (B) of this subdivision; (3) an employer or association or its officers, directors, employees, or the trustees of an employee trust plan, to the extent that the employer, association officer, employee, director or trustee is engaged in the administration or operation of a program of employee benefits for the employer's or association's own employees or the employees of its subsidiaries or affiliates, which program involves the use of insurance issued by an insurer, provided the employer, association, officer, director, employee or trustee is not in any manner compensated, directly or indirectly, by the company issuing the contracts; (4) an employee of an insurer, or an organization employed by an insurer, that is engaged in the inspection, rating or classification of risks, or in the supervision of the training of insurance producers and who is not individually engaged in the sale, solicitation or negotiation of insurance; (5) a person whose activities in this state are limited to advertising without the intent to solicit insurance in this state through communications in printed publications or other forms of electronic mass media whose distribution is not limited to residents of the state, provided the person does not sell, solicit or negotiate insurance that would insure risks residing, located or to be performed in this state; (6) a person who is not a resident of this state who sells, solicits or negotiates a contract of insurance for commercial property and casualty risks to an insured with risks located in more than one state insured under the contract, provided the person is otherwise licensed as an insurance producer to sell, solicit or negotiate such insurance in the state where the insured maintains its principal place of business and the contract of insurance insures risks located in that state; or (7) a salaried full-time employee who counsels or advises his or her employer relative to the insurance interests of the employer or of the subsidiaries or business affiliates of the employer provided the employee does not sell or solicit insurance or receive a commission.

Sec. 4. (NEW) (a) A resident individual applying for an insurance producer license shall pass a written examination unless exempt under section 8 of this act. The examination shall test the knowledge of the individual concerning the lines of authority for which application is made, the duties and responsibilities of an insurance producer and the insurance laws and regulations of this state, except that no additional course or examination shall be required for the line of variable life and variable annuity products. Examinations required by this section shall be developed and conducted under rules prescribed by the commissioner, or regulations which the commissioner may adopt pursuant to section 16 of this act.

(b) The commissioner may make arrangements, including, but not limited to, contracting with an outside testing service, for administering examinations and collecting the nonrefundable fee set forth in section 38a-11 of the general statutes.

(c) Each individual applying for an examination shall remit a nonrefundable fee as set forth in section 38a-11 of the general statutes.

(d) An individual who fails to appear for the examination as scheduled or fails to pass the examination shall reapply for an examination and remit all required fees and forms before being scheduled for another examination.

Sec. 5. (NEW) (a) A person applying for a resident insurance producer license shall make application to the commissioner on the uniform application and declare under penalty of refusal, suspension or revocation of the license that the statements made in the application are true, correct and complete to the best of the individual's knowledge and belief. The commissioner shall not approve the application unless the commissioner finds that the individual (1) is at least eighteen years of age; (2) has not committed any act that is a ground for denial, suspension or revocation set forth in section 11 of this act; (3) has completed, where required by the commissioner, a prelicensing course of study for the lines of authority for which the person has applied; (4) has paid the fees set forth in section 38a-11 of the general statutes; and (5) has successfully passed the examinations for the lines of authority for which the person has applied.

(b) A business entity acting as an insurance producer shall obtain an insurance producer license. Application shall be made using the uniform business entity application. The commissioner shall not approve the application unless the commissioner finds that (1) the business entity has paid the fees set forth in section 38a-11 of the general statutes; and (2) the business entity has designated a licensed producer responsible for the business entity's compliance with the insurance laws, rules and regulations of this state.

(c) The commissioner may require the applicant to submit any documents reasonably necessary to verify the information contained in an application.

(d) Each insurer that sells, solicits or negotiates any form of limited line credit insurance shall provide to each individual whose duties will include selling, soliciting or negotiating limited line credit insurance a program of instruction that may be approved by the commissioner.

Sec. 6. (NEW) (a) Unless a person is denied a license pursuant to section 11 of this act, any person who has met the requirements of sections 4 and 5 of this act shall be issued an insurance producer license. An insurance producer may receive qualification for a license in one or more of the following lines of authority (1) life: insurance coverage on human lives including benefits of endowment and annuities, which may include benefits in the event of death or dismemberment by accident and benefits for disability income; (2) accident and health or sickness: insurance coverage for sickness, bodily injury or accidental death which may include benefits for disability income; (3) property: insurance coverage for the direct or consequential loss or damage to property of every kind; (4) casualty: insurance coverage against legal liability, including legal liability for death, injury or disability or damage to real or personal property; (5) variable life and variable annuity products: insurance coverage provided under variable life insurance contracts and variable annuities; (6) personal lines: property and casualty coverage sold to individuals and families for noncommercial purposes; (7) credit: limited line credit insurance; and (8) any other line of insurance permitted under this state's laws or regulations.

(b) An insurance producer license shall remain in effect unless revoked or suspended provided the fee specified in section 38a-11 of the general statutes is paid and the continuing education requirements for resident individual producers are met by the due date.

(c) An individual insurance producer who allows an insurance producer's license to lapse may, not later than twelve months after the due date of the renewal fee, reinstate the same license without being required to pass a written examination, except that a penalty in the amount of double the unpaid renewal fee shall be required for any renewal fee received after the due date.

(d) A licensed insurance producer who is unable to comply with license renewal procedures due to military service or some other extenuating circumstance, such as a long-term medical disability, may request a waiver of those procedures. The producer may also request a waiver of any examination requirement or any other fine or sanction imposed for failure to comply with renewal procedures.

(e) The license shall contain the licensee's name, address, personal identification number, and the date of issuance, the lines of authority, the expiration date and any other information the commissioner deems necessary.

(f) Licensees shall inform the commissioner by any means acceptable to the commissioner of any change of licensee information as required under section 38a-771 of the general statutes, as amended by this act. If, upon investigation, the commissioner determines that a licensee has failed to timely inform the commissioner of a change in legal name or address, the commissioner shall impose a penalty pursuant to section 38a-774 of the general statutes.

(g) The commissioner may contract with nongovernmental entities, including, but not limited to, the National Association of Insurance Commissioners or any of its affiliates or subsidiaries, to perform any ministerial functions related to producer licensing that the commissioner deems appropriate. Such ministerial functions may include the collection of licensing fees.

Sec. 7. (NEW) (a) Unless a person is denied a license pursuant to section 11 of this act, a nonresident person shall receive a nonresident producer license if: (1) The person is currently licensed as a resident and in good standing in the person's home state; (2) the person has submitted the proper request for licensure and has paid the fees required under section 38a-11 of the general statutes; (3) the person has submitted or transmitted to the commissioner the application for licensure that the person submitted to the person's home state, or in lieu of the same, a completed uniform application, provided an applicant for a surplus lines brokers license or limited lines credit insurance producer license may submit any other application acceptable to the commissioner; and (4) the person's home state awards nonresident producer licenses to residents of this state on the same basis.

(b) The commissioner may verify the producer's licensing status through the producer database maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries.

(c) A nonresident producer who moves to this state from another state or a resident producer who moves from this state to another state shall file a change of address and provide certification from the new resident state not later than thirty days after the change of legal residence. No licensing fee or application shall be required from a producer moving to this state pursuant to this section.

(d) Notwithstanding any other provision of sections 1 to 18, inclusive, of this act, a person licensed as a surplus lines broker in the person's home state shall receive a nonresident surplus lines broker license pursuant to subsection (a) of this section. Except as provided in subsection (a) of this section, nothing in this section otherwise amends or supercedes any provision of sections 38a-740 to 38a-745, inclusive, of the general statutes, as amended by this act.

(e) Notwithstanding any other provision of sections 1 to 18, inclusive, of this act, a person licensed as a limited line credit insurance producer or other type of limited lines producer in the producer's home state shall receive a nonresident limited lines producer license, pursuant to subsection (a) of this section, granting the same scope of authority as granted under the license issued by the producer's home state. For the purpose of this section, limited line insurance is any authority granted by the home state which restricts the authority of the license to less than the total authority prescribed in the associated major lines pursuant to subdivisions (1) to (6), inclusive, of subsection (a) of section 6 of this act.

Sec. 8. (NEW) (a) Except as provided in section 7 or 14 of this act, an individual who applies for an insurance producer license in this state and who was previously licensed for the same lines of authority in another state shall not be required to complete any prelicensing education or examination if the application is received not later than ninety days after the cancellation of the applicant's previous license and if the prior state issues a certification that, at the time of cancellation, the applicant was in good standing in that state or the state's producer database records, maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries, indicate that the producer is or was licensed in good standing for the line of authority requested.

(b) A person licensed as an insurance producer in another state who moves to this state shall make application not later than ninety days after establishing legal residence to become a resident licensee pursuant to section 5 of this act. No prelicensing education or examination shall be required of such person for any line of authority previously held in the prior state except where the commissioner determines otherwise by regulation, which the commissioner may adopt in accordance with chapter 54 of the general statutes.

Sec. 9. (NEW) An insurance producer doing business under any name other than the producer's legal name shall notify the commissioner prior to using the assumed name.

Sec. 10. (NEW) (a) The commissioner may issue a temporary insurance producer license for a period not to exceed one hundred eighty days without requiring an examination if the commissioner deems that the temporary license is necessary for the servicing of an insurance business in the following cases: (1) To the surviving spouse or court-appointed personal representative of a licensed insurance producer who dies or becomes mentally or physically disabled to allow adequate time for the sale of the insurance business owned by the producer or for the recovery or return of the producer to the business or to provide for the training and licensing of new personnel to operate the producer's business; (2) to a member or employee of a business entity licensed as an insurance producer, upon the death or disability of an individual designated in the business entity application or the license; (3) to the designee of a licensed insurance producer entering active service in the armed forces of the United States; or (4) in any other circumstance where the commissioner deems that the public interest will best be served by the issuance of the license.

(b) The commissioner may limit the authority of any temporary licensee in any way deemed necessary to protect insureds and the public. The commissioner may require the temporary licensee to have a suitable sponsor who is a licensed producer or insurer and who assumes responsibility for all acts of the temporary licensee and may impose other similar requirements designed to protect insureds and the public. The commissioner may revoke a temporary license if the interests of insureds or the public are endangered. A temporary license may not continue after the owner or the personal representative disposes of the business.

Sec. 11. (NEW) (a) The commissioner may place on probation, suspend, revoke or refuse to issue or renew an insurance producer's license or may levy a civil penalty in accordance with the provisions of title 38a of the general statutes, or may take any combination of such actions, for any one or more of the following causes: (1) Providing incorrect, misleading, incomplete or materially untrue information in the license application; (2) violating any insurance laws, or violating any regulation, subpoena or order of the commissioner or of another state's commissioner; (3) obtaining or attempting to obtain a license through misrepresentation or fraud; (4) improperly withholding, misappropriating or converting any moneys or properties received in the course of doing an insurance business; (5) intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance; (6) having been convicted of a felony; (7) having admitted or been found to have committed any insurance unfair trade practice or fraud; (8) using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere; (9) having an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory; (10) forging another's name to an application for insurance or to any document related to an insurance transaction; (11) improperly using notes or any other reference material to complete an examination for an insurance license; (12) knowingly accepting insurance business from an individual who is not licensed; (13) failing to comply with an administrative or court order imposing a child support obligation; or (14) failing to pay state income tax or comply with any administrative or court order directing payment of state income tax.

(b) If the action by the commissioner is to nonrenew a license or to deny an application for a license, the commissioner shall notify the applicant or licensee and advise, in writing, the applicant or licensee of the reason for the denial or nonrenewal of the applicant's or licensee's license. The applicant or licensee may make written demand upon the commissioner, not later than thirty days after the notice, for a hearing before the commissioner to determine the reasonableness of the commissioner's action. The hearing shall be held not later than twenty days after receipt of such request and shall be held pursuant to section 38a-19 of the general statutes.

(c) The license of a business entity may be suspended, revoked or refused if the commissioner finds, after hearing, that an individual licensee's violation was known or should have been known by one or more of the partners, officers or managers acting on behalf of the partnership or corporation and the violation was neither reported to the commissioner nor corrective action taken.

(d) In addition to or in lieu of any applicable denial, suspension or revocation of a license, a person may, after hearing, be subject to a civil fine pursuant to section 38a-774 of the general statutes.

(e) The commissioner shall retain the authority to enforce the provisions of, and impose any penalty or remedy authorized by, sections 1 to 18, inclusive, of this act or title 38a of the general statutes against any person who is under investigation for or charged with a violation of sections 1 to 18, inclusive, of this act or title 38a of the general statutes even if the person's license or registration has been surrendered or has lapsed by operation of law.

Sec. 12. (NEW) (a) An insurance company or insurance producer shall not pay a commission, service fee, brokerage or other valuable consideration to a person for selling, soliciting or negotiating insurance in this state if the person is required to be licensed under sections 1 to 18, inclusive, of this act and is not so licensed.

(b) A person shall not accept a commission, service fee, brokerage or other valuable consideration for selling, soliciting or negotiating insurance in this state if the person is required to be licensed under sections 1 to 18, inclusive, of this act and is not so licensed.

(c) Renewal or other deferred commissions may be paid to a person for selling, soliciting or negotiating insurance in this state if the person was required to be licensed under sections 1 to 18, inclusive, of this act at the time of the sale, solicitation or negotiation and was so licensed at that time.

(d) An insurer or insurance producer may pay or assign commissions, service fees, brokerages or other valuable consideration to an insurance agency or to persons who do not sell, solicit or negotiate insurance in this state, unless the payment would violate section 38a-825 of the general statutes.

Sec. 13. (NEW) (a) An insurance producer shall not act as an agent of an insurer unless the insurance producer becomes an appointed agent of the insurer. An insurance producer who is not acting as an agent of an insurer is not required to become appointed.

(b) To appoint a producer as its agent, the appointing insurer shall file, in a form approved by the commissioner, a notice of appointment not later than fifteen days after the date the agency contract is executed or the first insurance application is submitted. An insurer may elect to appoint a producer to all or some of the affiliated companies within the insurer's holding company system or group by filing a single appointment request, provided the commissioner (1) has implemented an electronic system capable of processing such filings; and (2) has previously notified insurers doing business in this state that such filings are acceptable. An insurer that appoints a producer to more than one affiliated company within the insurer's holding company or system shall pay the fee specified by section 38a-11 of the general statutes for each affiliated company to which the producer is appointed.

(c) Upon receipt of the notice of appointment, the commissioner shall verify within a reasonable time not to exceed thirty days that the insurance producer is eligible for appointment. If the insurance producer is determined to be ineligible for appointment, the commissioner shall notify the insurer not later than five days after the commissioner's determination.

(d) An insurer shall pay an appointment fee, in the amount set forth in section 38a-11 of the general statutes, for each insurance producer appointed by the insurer.

(e) An insurer shall remit, in a manner prescribed by the commissioner, a renewal appointment fee in the amount set forth in section 38a-11 of the general statutes.

Sec. 14. (NEW) (a) The commissioner shall waive any prelicensing requirements, except the requirements imposed by section 7 of this act, for a nonresident license applicant with a valid license from the applicant's home state if the applicant's home state awards nonresident licenses to residents of this state on the same basis.

(b) A nonresident producer's satisfaction of the producer's home state's continuing education requirements for licensed insurance producers shall constitute satisfaction of this state's continuing education requirements if the nonresident producer's home state recognizes the satisfaction of its continuing education requirements imposed upon producers from this state on the same basis.

Sec. 15. (NEW) (a) A producer shall report to the commissioner any administrative action taken against the producer in another jurisdiction or by another governmental agency in this state not later than thirty days after the final disposition of the matter. The report shall include a copy of the order, consent to order or other relevant legal documents.

(b) Not later than thirty days after the initial pretrial hearing date, a producer shall report to the commissioner any criminal prosecution taken against the producer in any jurisdiction. The report shall include a copy of the initial complaint filed, the order resulting from the hearing and any other relevant legal documents.

Sec. 16. (NEW) The commissioner may adopt regulations, in accordance with chapter 54 of the general statutes, to implement the provisions of sections 1 to 18, inclusive, of this act.

Sec. 17. (NEW) Except as provided in section 7 and section 14 of this act, sections 1 to 18, inclusive, of this act shall not apply to excess and surplus lines agents and brokers licensed pursuant to sections 38a-740 to 38a-745, inclusive, of the general statutes, as amended by this act, and section 38a-794 of the general statutes.

Sec. 18. (NEW) Nothing in sections 1 to 17, inclusive, of this act shall be construed as applicable to bail bond insurance under chapter 700f of the general statutes, or title insurance under chapter 700a of the general statutes.

Sec. 19. Section 38a-704 of the general statutes is repealed and the following is substituted in lieu thereof:

Any person, partnership, association, limited liability company or corporation, or any person, partnership, association, limited liability company or corporation acting under a trade name, who acts within this state, either on [his] the person's own behalf or as a representative or agent of any other person or partnership, association, limited liability company or corporation or any other person, partnership, association, limited liability company or corporation acting under a trade name, as an insurance producer, as defined in [subsection (1) of section 38a-702] section 1 of this act, unless such person holds an insurance producer license then in force from the commissioner authorizing [him] the person so to act, shall be fined not more than five hundred dollars or imprisoned not more than three months or both.

Sec. 20. Section 38a-769 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Any person, partnership, association or corporation, resident, or with its principal place of business in this state, or a nonresident of this state who is not licensed in any other state, desiring to act within this state as [an insurance producer,] a public adjuster, casualty adjuster, motor vehicle physical damage appraiser, certified insurance consultant, surplus lines broker or desiring to engage in any insurance-related occupation for which a license is deemed necessary by the commissioner, shall make a written application to the commissioner for a resident license. Any other person, partnership, association or corporation desiring to so act or to engage in any insurance-related occupation for which a license is deemed necessary by the commissioner, shall make a written application to the commissioner for a nonresident license. No application for a nonresident license shall be granted unless the applicant holds an equivalent license from any other state. Any application for a resident or nonresident license shall be made for each name or designation under which such business shall be conducted, in such form as the commissioner prescribes, stating the line or lines of insurance for which the applicant desires such license and any other business which [he] the applicant desires also to transact. All initial applications shall be accompanied by a nonrefundable filing fee specified in section 38a-11. The commissioner shall cause to be made such inquiry and examination as to the qualifications of each such applicant as [he] the commissioner deems necessary.

(b) Each application for a license shall be signed by: The applicant, if the application is for an individual; a licensed officer, if the application is for a corporation; a licensed partner, if the application is for a partnership; and a licensed principal, if the application is for any other applicant.

(c) Each applicant for a license shall furnish satisfactory evidence to the commissioner that [he] the applicant is a person of good moral character and that [he] the applicant is financially responsible. [, provided each applicant for a title insurance license, except any such applicant who held a valid title insurance license on June 12, 1984, shall also furnish satisfactory evidence that he is a commissioner of the Superior Court in good standing.] In order to determine the trustworthiness and competency of an applicant the commissioner shall subject [him] the applicant to personal written examination as to [his] the applicant's competency to act as a licensee for each line of insurance for which [he] the applicant desires to be licensed. The commissioner may, at [his] the commissioner's discretion, designate an independent testing service to prepare and administer such examination, provided any examination fees charged by such service shall be paid by the applicant. The commissioner shall collect the appropriate examination fee as specified in section 38a-11, which shall entitle the applicant to take the examination for the license desired, except that when a testing service is used, the testing service shall pay such fee to the commissioner for each examination taken by an applicant. In either case, each such examination shall be as the commissioner prescribes and shall be of sufficient scope to test the applicant's knowledge of insurance, the duties and responsibilities of a licensee and the laws of this state applicable to insurance. The commissioner may require a waiting period not exceeding six months, before reexamining any applicant who has failed to pass any such examination.

(d) Upon [satisfying himself] finding that an applicant meets the licensing requirements of this title and is in all respects properly qualified and trustworthy and that the granting of such license is not against the public interest, the commissioner may issue to such applicant the license applied for, in such form as [he] the commissioner may adopt, to act within this state to the extent therein specified.

(e) The commissioner may [make and enforce such reasonable regulations as he may deem necessary relating to] adopt regulations, in accordance with chapter 54, concerning the approval of schools offering courses in insurance, the content of such courses and the advertising to the public of the services of these schools.

(f) To further the enforcement of this section and to determine the eligibility of any licensee, the commissioner may, as often as [he] the commissioner deems necessary, examine the books and records of any such licensee.

(g) A license may, in the discretion of the commissioner, be renewed or continued upon payment of the appropriate fee as specified in section 38a-11, without the resubmittal of the detailed information required in the original application.

[(h) No license as an insurance producer shall be required of the following: (1) Any regularly salaried officer or employee of an insurance company, who is engaged in the performance of usual and customary executive, technical, administrative or clerical duties and which duties do not include the negotiation or solicitation of insurance; such employees shall not solicit, negotiate or effect any new contractual agreement or change or modify any terms, conditions or exposure of an existing contractual agreement not provided for in the original contract, (2) salaried employees in the office of an insurance producer or company, who devote their full time to clerical and administrative services, including the receipt of premiums in the office of their employer, as long as such employees do not receive any commission and their compensation is not varied by the volume of premiums taken or received. Such employees shall not solicit, negotiate or effect any new contractual agreement or change or modify any terms, conditions or exposure of an existing contractual agreement not provided for in the original contract.]

Sec. 21. Section 38a-771 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Any person, firm, partnership, association or corporation holding a license issued pursuant to sections [38a-702 to 38a-717] 38a-703 to 38a-716, inclusive, as amended by this act, 38a-731 to 38a-735, inclusive, 38a-741 to 38a-745, inclusive, as amended by this act, 38a-769 to 38a-777, inclusive, as amended by this act, [38a-783] section 10 of this act, 38a-786, 38a-790, 38a-792 [, 38a-794 and 38a-795] and 38a-794 or holding a license in the name of a trade name shall notify the Insurance Commissioner, in writing, [within thirty days of] not later than thirty days after any: (1) Change in business or residence address; (2) change in employer; (3) change in name; or (4) change in licensed members of a firm, partnership, association or officers of a corporation as stated in the application for license.

(b) Any person, firm, partnership, association or corporation, or any person, firm, partnership, association or corporation acting as a trade name, holding a license issued pursuant to sections [38a-702] 38a-703 to 38a-718, inclusive, as amended by this act, 38a-731 to 38a-735, inclusive, 38a-741 to 38a-745, inclusive, as amended by this act, 38a-769 to 38a-777, inclusive, as amended by this act, [38a-783] section 10 of this act, 38a-786, 38a-790, 38a-792 [, 38a-794, and 38a-795] and 38a-794, shall notify the Insurance Commissioner, in writing, [within thirty days of] not later than thirty days after any bankruptcy proceeding or the conviction of a felony, or any administrative action taken against such licensee in another state [within thirty days of] not later than thirty days after the entering of the administrative order in that state. Such notification shall be accompanied by all supporting documentation.

(c) If, upon investigation, the commissioner determines that a producer has violated the provisions of subsection (b) of this section, [he] the commissioner may, following a hearing as specified in section 38a-774, impose a fine upon and suspend or revoke the license of the producer.

Sec. 22. Section 38a-782 of the general statutes is repealed and the following is substituted in lieu thereof:

[(a) Any applicant for a license as an insurance producer shall submit written application to the commissioner.]

[(b)] (a) A producer license shall indicate the lines of authority granted to the applicant by examination qualification.

[(c) A producer's authority to act as an agent shall be activated on the date the insurer's authorized licensing representative signs a written appointment form if the representative sends such form to the commissioner within three business days of signing and retains proof of mailing satisfactory to the commissioner, unless the commissioner determines the appointment is invalid. An insurer shall be responsible for the actions of the producer that relate to such appointment. As used in this section, "authorized licensing representative" means an individual whose name is on file at the Insurance Department as being authorized to appoint producers.

(d) The commissioner may waive the requirement for examination in the case of (1) any applicant for an insurance producer's license who is a nonresident of this state and who holds an equivalent license from any other state. The commissioner of this state shall make such determination; (2) any applicant for a travel accident or baggage agent's license; (3) any applicant who at any time within two years next preceding the date of application has been licensed in this state under a license of the same type as the license applied for; (4) an applicant for a temporary producer's license provided for in section 38a-783; (5) any applicant for a life producer's license who has been awarded the professional designation of Chartered Life Underwriter; (6) any applicant for a property or casualty producer's license who has been awarded the professional designation of Chartered Property and Casualty Underwriter; (7) an applicant for a producer's license to sell home warranty contracts or home warranty service agreements as defined in subsection (a) of section 38a-320; (8) any applicant for a producer's license to sell automobile mechanical breakdown insurance; (9) any applicant for a producer's license to sell (A) policies covering property sold under a conditional bill of sale or installment sales contract where the premium for such coverage is included as an item in such sales or financing contracts, or (B) policies insuring the life or health of a purchaser or borrower if the premium for such coverage is included in the financing or mortgaging agreement; (10) any applicant for a license to sell title insurance; or (11) any miscellaneous line of insurance designated by the commissioner pursuant to regulations adopted in accordance with chapter 54.

(e) Each applicant for an insurance producer's license shall, before being admitted to such examination, prove to the satisfaction of the commissioner that he meets one of the following alternative prerequisites: (1) That he has successfully completed a course approved by the Insurance Commissioner requiring not less than forty hours for each line of insurance for which he desires to be licensed; (2) that he has equivalent experience or training as determined by the Insurance Commissioner. No additional course or examination shall be required for the line of variable products.]

[(f)] (b) An applicant for a license as an insurance producer shall hold himself or herself out to the public in good faith and the license shall not be used or intended to be used principally for the purpose of obtaining commissions on policies or bonds on which [he] the producer, on [his] the producer's own account, pays or is to pay the premium or on which the premiums are paid or are to be paid by [his] the producer's spouse, [his] the producer's employer, whether or not [his] the producer's employment is on a part or full-time basis, or any corporation of which [he] the producer has stock control, or of which the stock control is held by any combination of himself or herself, [his] the producer's employer and [his] the producer's spouse. If the premiums on policies or bonds intended to be written, or written, by any such applicant for the general public do not exceed nine times the premiums on policies or bonds intended to be written, or written, by [him] the producer for the purpose of obtaining commissions on premiums paid or to be paid by [him] the producer, [his] the producer's spouse, [his] the producer's employer and any corporation of which [he] the producer has stock control or of which the stock control is held by any combination of himself or herself, [his] the producer's spouse and [his] the producer's employer, as aforesaid, it shall be conclusively presumed that the license is intended to be used or is being used principally for such purpose.

Sec. 23. Subdivision (7) of section 38a-91 of the general statutes is repealed and the following is substituted in lieu thereof:

(7) "Producer" shall have the same meaning as "insurance producer", as defined in section [38a-702] 1 of this act.

Sec. 24. Subsection (g) of section 38a-155 of the general statutes is repealed and the following is substituted in lieu thereof:

(g) All insurance products sold through the insurance companies authorized by this section and the insurance company authorized by section 4 of public act 84-323* shall be available to be sold by any licensed independent agent, as provided in sections [38a-702] 38a-703 to 38a-718, inclusive, as amended by this act, 38a-731 to 38a-735, inclusive, 38a-741 to 38a-745, inclusive, as amended by this act, 38a-769 to 38a-777, inclusive, as amended by this act, [38a-783] section 10 of this act, 38a-786, 38a-790, 38a-792 [, 38a-794 and 38a-795] and 38a-794 and so authorized by such insurance company.

Sec. 25. Section 38a-188 of the general statutes is repealed and the following is substituted in lieu thereof:

A health care center governed by sections 38a-175 to 38a-192, inclusive, shall be exempt from the provisions of the general statutes relating to insurance in the conduct of its operations under said sections and in such other activities as do constitute the business of insurance, unless expressly included therein, and except for the following: Sections 38a-11, 38a-17, 38a-51, 38a-52, 38a-56, 38a-57, 38a-129 to 38a-140, inclusive, 38a-147 and 38a-815 to 38a-819, inclusive, provided a health care center shall not be deemed in violation of sections 38a-815 to 38a-819, inclusive, solely by virtue of such center selectively contracting with certain providers in one or more specialties, and sections 38a-80, 38a-543, [38a-702] 38a-703 to 38a-718, inclusive, as amended by this act, 38a-731 to 38a-735, inclusive, 38a-741 to 38a-745, inclusive, as amended by this act, 38a-769, as amended by this act, 38a-770, as amended by this act, 38a-772 to 38a-777, inclusive, as amended by this act, [38a-783] section 10 of this act, 38a-786, 38a-790, 38a-792 [, 38a-794 and 38a-795] and 38a-794, provided a health care center organized as a nonprofit, nonstock corporation shall be exempt from sections 38a-146, [38a-702] 38a-703 to 38a-718, inclusive, as amended by this act, 38a-731 to 38a-735, inclusive, 38a-741 to 38a-745, inclusive, as amended by this act, 38a-769, as amended by this act, 38a-770, as amended by this act, 38a-772 to 38a-777, inclusive, as amended by this act, [38a-783] section 10 of this act, 38a-786, 38a-790, 38a-792 [, 38a-794 and 38a-795] and 38a-794. If a health care center is operated as a line of business, the foregoing provisions shall, where possible, be applied only to that line of business and not to the organization as a whole. The commissioner may adopt regulations, in accordance with the provisions of chapter 54, stating the circumstances under which the resources of a person which controls a health care center, or operates a health care center as a line of business will be considered in evaluating the financial condition of a health care center. Such regulations, if adopted, shall require as a condition to the consideration of the resources of such person which controls a health care center, or operates a health care center as a line of business to provide satisfactory assurances to the commissioner that it will assume the financial obligations of the health care center. During the period prior to the effective date of regulations issued under this section, the commissioner shall, upon request, consider the resources of a person which controls a health care center, or operates a health care center as a line of business, if the commissioner receives satisfactory assurances from such person that it will assume the financial obligations of the health care center and determines that such person meets such other requirements as the commissioner determines are necessary. A health care center organized as a nonprofit, nonstock corporation shall be exempt from the sales and use tax and all property of each such corporation shall be exempt from state, district and municipal taxes. Each corporation governed by sections 38a-175 to 38a-192, inclusive, shall be subject to the provisions of sections 38a-903 to 38a-961, inclusive. Nothing in this section shall be construed to override contractual and delivery system arrangements governing a health care center's provider relationships.

Sec. 26. Section 38a-770 of the general statutes is repealed and the following is substituted in lieu thereof:

Whenever the Insurance Commissioner receives an application for an initial license or license renewal, pursuant to the requirements of sections [38a-702] 38a-703 to 38a-718, inclusive, as amended by this act, 38a-731 to 38a-735, inclusive, 38a-741 to 38a-745, inclusive, as amended by this act, 38a-769, as amended by this act, 38a-771 to 38a-777, inclusive, as amended by this act, [38a-783] section 10 of this act, 38a-786, 38a-790, 38a-792 [, 38a-794 and 38a-795] and 38a-794, which is not accompanied by the required fees, the commissioner shall return such application together with all accompanying fees. Whenever the Insurance Commissioner receives an application accompanied by the required fees accepted by the commissioner, all examination and filing fees are deemed earned.

Sec. 27. Section 38a-772 of the general statutes is repealed and the following is substituted in lieu thereof:

Any person wilfully misrepresenting any fact required to be disclosed in any application or in any other form, paper or document required to be filed with the commissioner in connection with an application for any license issued by the commissioner pursuant to sections [38a-702] 38a-703 to 38a-718, inclusive, as amended by this act, 38a-731 to 38a-735, inclusive, 38a-741 to 38a-745, inclusive, as amended by this act, 38a-769 to 38a-777, inclusive, as amended by this act, [38a-783] section 10 of this act, 38a-786, 38a-790, 38a-792 [, 38a-794 and 38a-795] and 38a-794 shall be fined not more than five hundred dollars or imprisoned not more than six months or both.

Sec. 28. Subdivision (7) of subsection (a) of section 38a-775 of the general statutes is repealed and the following is substituted in lieu thereof:

(7) "Insurance producer" has the same meaning as set forth in section [38a-702] 1 of this act.

Sec. 29. Subsection (c) of section 38a-976 of the general statutes is repealed and the following is substituted in lieu thereof:

(c) "Agent" shall have the same meaning as ["insurance agent" and] "insurance producer", as defined in section [38a-702] 1 of this act.

Sec. 30. Subsection (c) of section 38a-458 of the general statutes is repealed and the following is substituted in lieu thereof:

(c) No insurance [agent] producer shall sell any such policy, certificate, rider or endorsement unless the [agent] producer is licensed to sell both life and health insurance in this state.

Sec. 31. Section 38a-713 of the general statutes is repealed and the following is substituted in lieu thereof:

Any insurance [agent] producer who signs or countersigns any policy of insurance or countersigns any endorsement thereon in blank shall be fined not more than one hundred dollars, and the commissioner shall revoke [his] the producer's license.

Sec. 32. Subsection (f) of section 38a-323 of the general statutes is repealed and the following is substituted in lieu thereof:

(f) (1) No surplus lines insurer shall be deemed eligible to write coverage for risks as provided in sections 38a-741 to 38a-744, inclusive, as amended by this act, 38a-777, as amended by this act, [38a-794 and 38a-795] and 38a-794, unless such surplus lines insurer complies with the requirements of this section. (2) Notwithstanding the provisions of subsection (b) of this section, premium billing notices shall be provided by any surplus lines insurer to the insured at least sixty days in advance of the renewal or anniversary date of the policy. Notices of nonrenewal or premium billing required by this section shall be provided by the surplus lines insurer or its duly authorized representative to the insured. (3) Notwithstanding the provisions of subsection (c) of this section, failure of any surplus lines insurer to provide the insured with the required notice of nonrenewal or premium billing shall entitle the insured to an extension of the policy for a period of ninety days after the renewal or anniversary date of such policy, provided if the surplus lines insurer fails to provide the required notice on or before the renewal or anniversary date of such policy, the provisions of subsection (c) of this section shall apply. In the event of such a ninety-day extension of coverage, the premium for the extended period of coverage shall be the current rate or the previous rate, whichever is lower.

Sec. 33. Subsection (b) of section 38a-324 of the general statutes is repealed and the following is substituted in lieu thereof:

(b) No surplus lines insurer shall be deemed to be eligible to write coverage for risks as provided in sections 38a-741 to 38a-744, inclusive, as amended by this act, 38a-777, as amended by this act, [38a-794 and 38a-795] and 38a-794, unless such insurer complies with the requirements of subsection (a) of this section.

Sec. 34. Section 38a-742 of the general statutes is repealed and the following is substituted in lieu thereof:

The licensee shall keep a complete and separate record of all policies procured from unauthorized insurers under such license. Such records shall be open to the examination of the commissioner at all reasonable times and shall show: [(a)] (1) The exact amount of each kind of insurance permitted under sections 38a-741 to 38a-744, inclusive, as amended by this act, and 38a-794 [and 38a-795 which] that has been procured for each insured; [(b)] (2) the gross premiums charged by the insurers for each kind of insurance permitted under section 38a-794; [(c)] (3) the amount of each kind of premiums of insurance permitted by section 38a-794 which were returned to each insured; [(d)] (4) the name of the insurer or insurers which issued each of such policies; [(e)] (5) the effective dates of such policies; [(f)] (6) the terms for which they were issued.

Sec. 35. Subsection (a) of section 38a-743 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Every person, firm, association or corporation licensed pursuant to the provisions of sections 38a-741 to 38a-744, inclusive, as amended by this act, 38a-777, as amended by this act, [38a-794 and 38a-795] and 38a-794 shall pay to the commissioner on May first of each year a sum equal to four per cent of the gross premiums charged the insureds by the insurers during the period from January first to March thirty-first of that year, and on August first of each year a sum equal to four per cent of the gross premiums charged the insured by the insurers during the period from April first to June thirtieth of that year, on November first of each year a sum equal to four per cent of the gross premiums charged the insureds by the insurers during the period from July first to September thirtieth of that year and on February first of each year a sum equal to four per cent of the gross premiums charged the insureds by the insurers during the period from October first to December thirty-first of the preceding year, for insurance procured by such licensee pursuant to such license, less the amount of such premiums returned to such insureds, except that the premium tax shall not apply to any policy issued to the state of Connecticut or any agency thereof or to any policy issued to any town, or agency of such town or special taxing district when said town, agency or department thereof or special taxing district appears in the policy as the named insured and as such is responsible for the payment of premiums shown on said policy. Each licensee shall also file on May first, August first, November first, and February first a return, in the form described by the commissioner, showing such information as the commissioner deems necessary.

Sec. 36. Section 38a-744 of the general statutes is repealed and the following is substituted in lieu thereof:

Any licensee acting in conformance with sections 38a-741 to 38a-744, inclusive, as amended by this act, 38a-777, as amended by this act, [38a-794 and 38a-795] and 38a-794 shall not be subject to personal liability as set forth in section 38a-714.

Sec. 37. Section 38a-745 of the general statutes is repealed and the following is substituted in lieu thereof:

Each insurance policy issued pursuant to sections 38a-741 to 38a-744, inclusive, as amended by this act, 38a-777, as amended by this act, [38a-794 and 38a-795] and 38a-794 by a surplus lines insurer shall bear on its cover, in not less than ten point bold red type, the following:

NOTICE

This policy is not protected by the Connecticut Insurance Guaranty Association.

Sec. 38. Section 38a-777 of the general statutes is repealed and the following is substituted in lieu thereof:

Any licensee under sections 38a-741 to 38a-744, inclusive, as amended by this act, 38a-777, as amended by this act, [38a-794 and 38a-795] and 38a-794 who negotiates, continues or renews any contract for insurance in any unauthorized company, and who neglects to make and file the affidavit and statements required by said sections, or who wilfully makes a false affidavit or statement, or who negotiates, continues or renews any such contract of insurance after the revocation or during the suspension of [his] the licensee's license, shall forfeit [his] the license if not previously revoked and shall be fined not more than five hundred dollars or imprisoned not more than six months or both.

Sec. 39. Subsection (a) of section 38a-784 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Any license issued for an insurance producer by the commissioner shall be in force only until the first day of February in each even-numbered year, but may be renewed by the commissioner, in [his] the commissioner's discretion and without formality other than proper application and satisfactory proof that such applicant at that time possesses the required qualifications for license and that the issuance of such license will not be contrary to the licensing provisions of this title, provided any producer's license issued by the commissioner, except a temporary producer's license provided for in section [38a-783] 10 of this act, shall continue in force until cancelled, suspended or revoked and provided the insurance company represented by any licensee or licensees shall furnish the commissioner, prior to May first, biennially, the names of its agents whose appointments it wishes to continue. The fees for producer licenses and agent appointments shall be assessed biennially as provided in section 38a-11.

Sec. 40. Section 53-323 of the general statutes is repealed and the following is substituted in lieu thereof:

No person, firm or corporation selling real or personal property or engaged in the business of financing the purchase of real or personal property or of lending money on the security of real or personal property shall require, as a condition to such sale, financing or lending, or as a condition to the renewal or extension of any such loan or to the performance of any other act in connection with such sale, financing or lending, that the purchaser or borrower, or [his] the purchaser's or borrower's successors, shall negotiate through a particular insurance company, or insurance [agent or broker] producer, any policy of insurance or renewal thereof. No person, firm or corporation named as a loss payee or having an interest under any mortgagee provision of any insurance policy issued in connection with the sale of real or personal property or the financing of the purchase of real or personal property, shall require as a condition to releasing or endorsing any claim settlement payment that the property insured be inspected by such loss payee or mortgagee or its designee, unless it is inspected or approved at such loss payee's or mortgagee's own effort and expense. If such inspection is required, it shall be completed, with respect to personal property, within two days, excluding Saturdays, Sundays and legal holidays, of notification of the availability of such property and, with respect to real property, within thirty days, excluding Saturdays, Sundays, and legal holidays, of such notification. If any loss payee chooses to inspect any personal property pursuant to this section, such loss payee or the designee of such loss payee shall be authorized to endorse at the time of such inspection any such claim settlement payment. If an agreement is reached concerning the amount of the settlement at the time of such inspection, such loss payee or designee shall endorse at that time any such claim settlement payment. Any person, firm or corporation, whether as principal, agent, officer or director, for [himself] the person or itself, or for another person, firm or corporation, violating the provisions of this section shall be fined not more than one hundred dollars.

Sec. 41. Sections 38a-702, 38a-706, 38a-711, 38a-717, 38a-783 and 38a-795 of the general statutes are repealed.

Sec. 42. This act shall take effect September 1, 2002.

Approved June 20, 2001