CHAPTER 698
INSURERS

PART I
IN GENERAL. COSTS

Sec. 38a-41. (Formerly Sec. 38-20). Authority to do business. Revocation. Fines. Company owned by foreign state or company controlled by insureds not to be licensed. Appeals. Plan of operations. Type of business to be conducted. (a) No insurance company or health care center shall do any insurance business or health care center business within this state until and except while it is permitted to do so under the terms of a license issued by the commissioner. Any such company desiring to obtain such a license shall make application to the commissioner, setting forth the line or lines of business which it is seeking authorization to write. It shall file with the commissioner a certified copy of its charter or articles of association and evidence satisfactory to the commissioner that it has complied with the laws of the jurisdiction under which it is organized, a statement of its financial condition in such form as is required by the commissioner, together with such evidence of its correctness as the commissioner requires and evidence of good management in such form as is required by the commissioner. Applicant companies licensed in and operated from administrative offices in one state but domiciled in another state, as permitted by the applicable state law, shall provide justification of such arrangement, satisfactory to the commissioner, which shall demonstrate that regulatory influence of the domiciliary supervisory official has not been diminished as a result of such arrangement. An applicant shall demonstrate an orderly pattern of growth in its marketing territories in the geographic region, with the exception of a newly formed health care center, and an expertise in marketing and servicing the lines of insurance or the health care center business it desires to write. It shall submit evidence of its ability to provide continuant and timely claims settlement. If the information furnished is satisfactory to the commissioner and if all other requirements of law have been complied with, he may issue to such company a license permitting it to do business in this state. Each such license shall expire on the first day of May succeeding the date of its issuance, but may be renewed without any formalities except as required by the commissioner. Failure of a licensed company to exercise its authority to write a particular line or lines of business in this state for two consecutive calendar years may constitute sufficient cause for revocation of the company's authority to write those lines of business.
(b) The commissioner shall adopt regulations in accordance with the provisions of chapter 54 specifying the information and evidence that an insurance company or health care center desiring to obtain or renew a license to do an insurance business or health care center business shall submit and the requirements with which it shall comply.
(c) The commissioner may, at any time, for cause, suspend, revoke or reissue any such license or in lieu of or in addition to suspension or revocation of such license the commissioner, after reasonable notice to and hearing of any holder of such license, may impose a fine not to exceed ten thousand dollars. Such hearings may be held by the commissioner or any person designated by the commissioner. Whenever a person other than the commissioner acts as the hearing officer, he shall submit to the commissioner a memorandum of his findings and recommendations upon which the commissioner may base his decision. The commissioner may, if the commissioner deems it in the interest of the public, publish in one or more newspapers of the state a statement that, under the provisions of this section, the commissioner has suspended or revoked the license of any insurance company or health care center to do business in this state.
(d) No license to do an insurance business within this state shall be issued to a foreign insurance company owned or financially controlled by another state of the United States or to an alien insurance company owned or financially controlled by a foreign nation or any state or province thereof.
(e) No license to do an insurance business within this state shall be issued to any company which insures or plans to insure the separate risks of the employees of an employer that directly or indirectly controls the insurer by stock ownership or otherwise or exercises control of the operations of the insurer where the premiums written annually by the insurer on the separate risks of such employees exceed or will exceed ten per cent of the total premiums which the insurer writes or will write annually or where the commissions payable, if any, on premiums covering the risks of such employees written by the insurer annually exceed or will exceed ten per cent of the total commissions to agents which are or will be paid annually by the insurer.
(f) Any company aggrieved by the action of the commissioner in revoking, suspending or refusing to reissue a license or in imposing a fine may appeal therefrom, in accordance with the provisions of section 4-183, except venue for such appeal shall be in the judicial district of New Britain. Appeals under this section shall be privileged in respect to the order of trial assignment.
(g) Except as provided in section 38a-92l an insurer shall be required to be licensed to transact financial guaranty insurance in this state, as defined in subdivision (1) of section 38a-92a. Prior to the issuance of a license to transact financial guaranty insurance business, an insurer shall submit for the approval of the commissioner a plan of operation detailing the types and projected diversification of guaranties that will be issued, the underwriting procedures that will be followed, managerial oversight methods, investment policies and other matters as may be prescribed by the commissioner. An insurer licensed to transact the business of financial guaranty insurance may also be licensed to transact the business of surety, credit and residual value insurance, but may not be licensed to transact any other lines of insurance in this state.
(1949 Rev., S. 6045, 6175; 1955, S. 2786d; 1967, P.A. 159; 1969, P.A. 480, S. 1; 1971, P.A. 870, S. 95; P.A. 76-436, S. 628, 681; P.A. 77-603, S. 25, 125; P.A. 78-280, S. 5, 6, 127; P.A. 81-101, S. 7; P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; 90-243, S. 6; P.A. 93-136, S. 16; 93-142, S. 4, 7, 8; P.A. 95-220, S. 4−6; P.A. 99-9, S. 2, 6; 99-215, S. 24, 29.)
History: 1967 act authorized imposition of fine, added hearing provisions and provisions re petitions to court; 1969 act added provision prohibiting issuance of license to company which insures or plans to insure employees of employer which directly or indirectly controls insurer by stock ownership, etc.; 1971 act replaced superior court with court of common pleas, effective September 1, 1971, except that courts with cases pending retain jurisdiction unless pending matters deemed transferable; P.A. 76-436 replaced court of common pleas with superior court, effective July 1, 1978; P.A. 77-603 replaced previous provisions re petitions to court with provision re appeals in accordance with Sec. 4-183; P.A. 78-280 substituted "judicial district of Hartford-New Britain" for "Hartford county"; P.A. 81-101 divided section into Subsecs., required that insurance companies desiring to obtain a license submit evidence of good management to the commissioner, specified requirements for applicant companies licensed in one state and domiciled in another and provided that commissioner adopt regulations concerning requirements for licensure; P.A. 88-230 replaced "judicial district of Hartford-New Britain" with "judicial district of Hartford", effective September 1, 1991; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 90-243 added a provision re revocation of an insurance company's authority and inserted references to "foreign" and "alien" insurance companies; Sec. 38-20 transferred to Sec. 38a-41 in 1991; P.A. 93-136 added new Subsec. (g) re transaction of financial guaranty insurance business; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 95-220 changed the effective date of P.A. 88-230 from September 1, 1996, to September 1, 1998, effective July 1, 1995; P.A. 99-9 amended section to add references to "health care centers" and "health care center business", amended Subsec. (a) to substitute "line or lines of business which it is seeking authorization to write" for "lines of insurance which it desires to write", to add "as permitted by the applicable state law" re justification provided by applicant companies domiciled in another state, to except newly formed health care centers from required demonstration of orderly pattern of growth, and to substitute "business" for "insurance", and amended Subsec. (c) to substitute "the commissioner" for "he" and to make a technical change, effective May 12, 1999; P.A. 99-215 replaced "judicial district of Hartford" with "judicial district of New Britain" in Subsec. (f), effective June 29, 1999.
Annotations to former section 38-20:
Powers of the insurance commissioner are discretionary or quasi-judicial, rather than ministerial. 60 C. 448. Courts will not interfere with the exercise of the insurance commissioner's discretion. Id. Mandamus will not lie to control action of insurance commissioner under this section. Id. Cited. 122 C. 295. Cited. 188 C. 152, 153−158, 160.
Subsec. (a):
Cited. 188 C. 152, 157, 158, 160.
Subsec. (b):
Cited. 188 C. 152, 157, 158, 160.

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Sec. 38a-41a. Certificate authorizing formation of insurance company or health care center. Information required by commissioner. Costs. (a) A certificate authorizing the formation of a corporation to transact the business of an insurance company or a health care center shall be issued by the commissioner if the following is submitted to the commissioner by the incorporators and is deemed to be satisfactory: (1) The proposed articles of incorporation, which shall state that the corporation has, as a purpose, the doing of an insurance business or health care center business; (2) the proposed bylaws of the corporation; and (3) such information as the commissioner shall require to evaluate the objectives, management and control of the proposed corporation, pursuant to the provisions of chapter 54.
(b) All expenses incurred by the commissioner in connection with proceedings under this section shall be paid by the person filing the application.
(P.A. 96-106, S. 3; P.A. 99-9, S. 3, 6.)
History: P.A. 99-9 amended Subsec. (a) to add reference to a "health care center" and "health care center business" and to substitute "commissioner" for "him" and "Insurance Commissioner", effective May 12, 1999.

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Sec. 38a-42. (Formerly Sec. 38-20b). Contracts with producers. (a) Except as provided in subsection (b), no insurance company shall enter into any contract of remuneration with any life or accident and health insurance producer, where the initial or any renewal commission is contingent upon (1) such contract being in effect more than two years or (2) any continuing premium or other volume requirement contained in such contract.
(b) Any insurance company may enter into a contract of remuneration of the kind prohibited in subsection (a) with any such insurance producer if the company shall have offered to such producer a contract which contains no such contingent provisions as described in subdivisions (1) and (2) of subsection (a) and which provides actuarially equivalent remuneration to that contract containing such contingent provisions.
(1969, P.A. 263, S. 1, 2; P.A. 96-193, S. 1, 36.)
History: Sec. 38-20b transferred to Sec. 38a-42 in 1991; P.A. 96-193 substituted "producer" for "agent" and "broker", effective June 3, 1996.

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Sec. 38a-43. (Formerly Sec. 38-22). Foreign and alien insurance companies may be prohibited from transacting business in this state. Whenever it appears to the commissioner that permission to transact business within any state of the United States or within any foreign country has been refused to any domestic insurance company after a certificate of the solvency and good management of such company has been issued to it by the commissioner and after such company has complied with any reasonable laws of such state or foreign country requiring deposits of money or securities with the government of such state or country, the commissioner may forthwith cancel the authority of each company organized under the laws of such state or foreign government and licensed to do business in this state and may refuse a certificate of authority to each such company thereafter applying to him for authority to do business in this state, until his certificate has been recognized by the government of such state or country.
(1949 Rev., S. 6053.)
History: Sec. 38-22 transferred to Sec. 38a-43 in 1991.
Annotation to former section 38-22:
Cited. 122 C. 295.

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Sec. 38a-44. (Formerly Sec. 38-64b). Notice to commissioner of intent to discontinue line of insurance. Any insurer licensed to do business in this state, or authorized to do business on a nonadmitted basis, which intends to discontinue offering or substantially reduce its writings in a line or subline of insurance in this state shall send, by registered or certified mail, or deliver to the Insurance Commissioner written notice of its intent to take such action at least sixty days before the initial notice of cancellation or nonrenewal is delivered or mailed to the insureds. This section shall not apply to life insurance policies or annuity contracts.
(P.A. 86-98, S. 4, 6; P.A. 93-273, S. 1.)
History: Sec. 38-64b transferred to Sec. 38a-44 in 1991; P.A. 93-273 required notification of commissioner sixty days before the initial notice of cancellation or nonrenewal is delivered or mailed to the insureds, rather than sixty days before effective date of action to discontinue offerings of insurance lines or sublines, and added provision specifically excluding life insurance policies or annuity contracts from section provisions.
Annotation to former section 38-64b:
Sec. 38-62 et seq. cited. 207 C. 77, 87.

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Sec. 38a-45. (Formerly Sec. 38-29). Limitation on title insurance and mortgage guaranty insurance. No corporation shall insure or guarantee titles to real estate situated in this state except subject to and in accordance with all laws of this state relating to insurance or insurance companies generally or relating to the powers or duties of the commissioner. No corporation doing title insurance business may do any other line of insurance business. No corporation doing mortgage guaranty insurance business may do any other line of insurance business. The commissioner may issue regulations which set requirements concerning the amount of deposits and the establishment and maintenance of unearned premium and loss reserves and other liabilities of domestic title insurance companies and foreign mortgage guaranty insurance companies for the purpose of protecting their policyholders.
(1949 Rev., S. 6087; February, 1965, P.A. 530; P.A. 77-23; P.A. 90-243, S. 11.)
History: 1965 act added provision re commissioner's power to regulate deposit amounts, unearned premium and loss reserves, etc.; P.A. 77-23 prohibited corporations doing title insurance business or mortgage guaranty insurance business from engaging in any other business; P.A. 90-243 substituted "foreign" for "nonresident" companies; Sec. 38-29 transferred to Sec. 38a-45 in 1991.

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Sec. 38a-46. (Formerly Sec. 38-30). Writing of participating and nonparticipating insurance by domestic stock and mutual insurance companies. Any domestic insurance company, either mutual or having capital stock, empowered to write fire, marine, casualty, fidelity and surety or boiler and machinery insurance, may issue any or all of its policies with or without participation in profits, savings or unabsorbed portions of premiums, may classify policies issued on a participating or nonparticipating basis and may determine the right to participate and the extent of participation of any class or classes of policies.
(1949 Rev., S. 6089.)
History: Sec. 38-30 transferred to Sec. 38a-46 in 1991.

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Sec. 38a-47. (Formerly Sec. 38-53a). Payments by domestic insurance companies for expenditures of Insurance Department. All domestic insurance companies and other domestic entities subject to taxation under chapter 207 shall, in accordance with section 38a-48, annually pay to the Insurance Commissioner, for deposit in the Insurance Fund established under section 38a-52a, an amount equal to the actual expenditures made by the Insurance Department during each fiscal year, including the cost of fringe benefits for department personnel as estimated by the Comptroller, plus the expenditures made on behalf of the department from the Capital Equipment Purchase Fund pursuant to section 4a-9 for such year, but excluding expenditures paid for by fraternal benefit societies, foreign and alien insurance companies and other foreign and alien entities under sections 38a-49 and 38a-50. Payments shall be made by assessment of all such domestic insurance companies and other domestic entities calculated and collected in accordance with the provisions of section 38a-48. Any such domestic insurance company or other domestic entity aggrieved because of any assessment levied under this section may appeal therefrom in accordance with the provisions of section 38a-52.
(P.A. 80-482, S. 280, 345, 348; P.A. 82-26, S. 1; 82-456, S. 1, 2; P.A. 85-185, S. 1, 3; P.A. 86-265, S. 1, 2; P.A. 87- 515, S. 3, 4; P.A. 89-165, S. 1, 3; P.A. 90-148, S. 25, 34; 90-243, S. 20; June Sp. Sess. P.A. 91-14, S. 12, 30.)
History: P.A. 82-26 provided that the comptroller rather than administrative services department estimate fringe benefit costs for insurance department personnel; P.A. 82-456 increased the percentage of expenditures of the insurance department paid by companies from seventy to one hundred and eliminated the eight per cent of taxes and charges option, replacing it with various dollar amounts per fiscal year; P.A. 85-185 provided the method of calculation of the proper amount for the fiscal year commencing July 1, 1984; P.A. 86-265 added Subsec. (b), providing for an assessment for the fiscal year ending June 30, 1987, covering the total expenditures of the department in that year, and amended Subsec. (a) to provide that the amount assessed pursuant to Subsec. (b) shall be used as the basis for the calculation of the assessments for the following years; P.A. 87-515 provided that domestic insurance companies shall be assessed for the actual expenditures made by the department during each fiscal year, and removed prior limitations on the total assessment amount; P.A. 89- 165 provided that domestic insurance companies shall be assessed for the expenditures made on behalf of the department from the capital equipment purchase fund; P.A. 90-148 inserted reference to Sec. 38-53b as a technical change related to certain procedural amendments occurring in said Sec. 38-53b; P.A. 90-243 inserted references to "foreign" and "alien" insurance companies to replace references to "nonresident" and "foreign" companies; Sec. 38-53a transferred to Sec. 38a- 47 in 1991; June Sp. Sess. P.A. 91-14 deleted reference to deposit general fund and substituted reference to insurance fund deposits.

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Sec. 38a-48. (Formerly Sec. 38-53b). Assessment of payments by domestic insurance companies. Adjustments. Penalty. Interest. Payments credited to Insurance Fund. Allocation of assessments. (a) On or before June thirtieth, annually, the Commissioner of Revenue Services shall render to the Insurance Commissioner a statement certifying the amount of taxes or charges imposed on each domestic insurance company or other domestic entity under chapter 207 on business done in this state during the preceding calendar year; the statement for local domestic insurance companies shall set forth the amount of taxes and charges before any tax credits allowed as provided in section 12-202.
(b) On or before July thirty-first, annually, the Insurance Commissioner shall render to each domestic insurance company or other domestic entity liable for payment under section 38a-47, (1) a statement which includes the amount appropriated to the Insurance Department for the fiscal year beginning July first of the same year, the cost of fringe benefits for department personnel for such year, as estimated by the Comptroller, and the estimated expenditures on behalf of the department from the Capital Equipment Purchase Fund pursuant to section 4a-9 for such year, (2) a statement of the total taxes imposed on all domestic insurance companies and domestic insurance entities under chapter 207 on business done in this state during the preceding calendar year and (3) the proposed assessment against that company or entity, calculated in accordance with the provisions of subsection (c) of this section, provided that for the purposes of this calculation the amount appropriated to the Insurance Department plus the cost of fringe benefits for department personnel and the estimated expenditures on behalf of the department from the Capital Equipment Purchase Fund pursuant to section 4a-9 shall be deemed to be the actual expenditures of the department.
(c) (1) The proposed assessments for each domestic insurance company or other domestic entity shall be calculated by (A) allocating twenty per cent of the amount to be paid under section 38a-47 among the domestic entities organized under sections 38a- 199 to 38a-209, inclusive, and 38a-214 to 38a-225, inclusive, in proportion to their respective shares of the total taxes and charges imposed under chapter 207 on such entities on business done in this state during the preceding calendar year, and (B) allocating eighty per cent of the amount to be paid under section 38a-47 among all domestic insurance companies and domestic entities other than those organized under sections 38a-199 to 38a-209, inclusive, and 38a-214 to 38a-225, inclusive, in proportion to their respective shares of the total taxes and charges imposed under chapter 207 on such domestic insurance companies and domestic entities on business done in this state during the preceding calendar year, provided if there are no domestic entities organized under sections 38a-199 to 38a-209, inclusive, and 38a-214 to 38a-225, inclusive, at the time of assessment, one hundred per cent of the amount to be paid under section 38a-47 shall be allocated among such domestic insurance companies and domestic entities. (2) When the amount any such company or entity is assessed pursuant to this section exceeds twenty-five per cent of the actual expenditures of the Insurance Department, such excess amount shall not be paid by such company or entity but rather shall be assessed against and paid by all other such companies and entities in proportion to their respective shares of the total taxes and charges imposed under chapter 207 on business done in this state during the preceding calendar year. The provisions of this subdivision shall not be applicable to any corporation which has converted to a domestic mutual insurance company pursuant to section 38a-155 upon the effective date of any public act which amends said section to modify or remove any restriction on the business such a company may engage in, for purposes of any assessment due from such company on and after such effective date.
(d) For purposes of calculating the amount of payment under section 38a-47, as well as the amount of the assessments under this section, the "total taxes imposed on all domestic insurance companies and other domestic entities under chapter 207" shall be based upon the amounts shown as payable to the state for the calendar year on the returns filed with the Commissioner of Revenue Services pursuant to chapter 207; with respect to calculating the amount of payment and assessment for local domestic insurance companies, the amount used shall be the taxes and charges imposed before any tax credits allowed as provided in section 12-202.
(e) On or before September thirtieth, annually, for each fiscal year ending prior to July 1, 1990, the Insurance Commissioner, after receiving any objections to the proposed assessments and making such adjustments as in his opinion may be indicated, shall assess each such domestic insurance company or other domestic entity an amount equal to its proposed assessment as so adjusted. Each domestic insurance company or other domestic entity shall pay to the Insurance Commissioner on or before October thirty- first an amount equal to fifty per cent of its assessment adjusted to reflect any credit or amount due from the preceding fiscal year as determined by the commissioner under subsection (g) of this section. Each domestic insurance company or other domestic entity shall pay to the Insurance Commissioner on or before the following April thirtieth, the remaining fifty per cent of its assessment.
(f) On or before September first, annually, for each fiscal year ending after July 1, 1990, the Insurance Commissioner, after receiving any objections to the proposed assessments and making such adjustments as in his opinion may be indicated, shall assess each such domestic insurance company or other domestic entity an amount equal to its proposed assessment as so adjusted. Each domestic insurance company or other domestic entity shall pay to the Insurance Commissioner (1) on or before June 30, 1990, and on or before June thirtieth annually thereafter, an estimated payment against its assessment for the following year equal to twenty-five per cent of its assessment for the fiscal year ending such June thirtieth, (2) on or before September thirtieth, annually, twenty-five per cent of its assessment adjusted to reflect any credit or amount due from the preceding fiscal year as determined by the commissioner under subsection (g) of this section, and (3) on or before the following December thirty-first and March thirty- first, annually, each domestic insurance company or other domestic entity shall pay to the Insurance Commissioner the remaining fifty per cent of its proposed assessment to the department in two equal installments.
(g) Immediately following the close of the fiscal year, the Insurance Commissioner shall recalculate the proposed assessment for each domestic insurance company or other domestic entity in accordance with subsection (c) of this section using the actual expenditures made by the Insurance Department during that fiscal year and the actual expenditures made on behalf of the department from the Capital Equipment Purchase Fund pursuant to section 4a-9. On or before July thirty-first, the Insurance Commissioner shall render to each such domestic insurance company and other domestic entity a statement showing the difference between their respective recalculated assessments and the amount they have previously paid. On or before August thirty-first, the Insurance Commissioner, after receiving any objections to such statements, shall make such adjustments which in his opinion may be indicated, and shall render an adjusted assessment, if any, to the affected companies.
(h) If any assessment is not paid when due, a penalty of ten dollars shall be added thereto, and interest at the rate of six per cent per annum shall be paid thereafter on such assessment and penalty.
(i) The commissioner shall deposit all payments made under this section with the State Treasurer. On and after June 6, 1991, the moneys so deposited shall be credited to the Insurance Fund established under section 38a-52a and shall be accounted for as expenses recovered from insurance companies.
(P.A. 80-482, S. 281, 345, 348; P.A. 82-26, S. 2; P.A. 84-185, S. 1; P.A. 88-326, S. 1, 11; P.A. 89-165, S. 2, 3; P.A. 90-148, S. 26, 34; June Sp. Sess. P.A. 91-14, S. 13, 30; P.A. 92-60, S. 5.)
History: P.A. 82-26 amended Subsec. (b) to provide that the comptroller rather than administrative services department estimate fringe benefit costs for insurance department personnel; P.A. 84-185 amended Subsec. (g) to provide for a ten- dollar penalty on overdue assessments and to provide the interest charges shall accrue on both the assessment and penalty; P.A. 88-326 inserted a new Subdiv. (2) in Subsec. (c) concerning assessments which exceed twenty-five per cent of the expenditures of the insurance department; P.A. 89-165 amended Subdiv. (1) of Subsec. (b) to provide that the statement rendered to each insurance company include the estimated expenditures on behalf of the department from the capital equipment purchase fund, amended Subdiv. (3) of Subsec. (b) to provide that the proposed assessment against each company be calculated to include such estimated expenditures, amended Subsec. (f) to provide that when the proposed assessment is recalculated the actual expenditures from such fund shall be used and deleted Subsec. (i); P.A. 90-148 (1) amended Subsec. (e) to make assessment procedure therein applicable to state fiscal years ending prior to July 1, 1990, and (2) inserted a new Subsec. (f), with appropriate changes in lettering for succeeding subsections, applicable to state fiscal years ending after July 1, 1990, providing for assessment procedures very similar to those in Subsec. (e) except that on June thirtieth annually, first payable June 30, 1990, each domestic company shall make an estimated payment for the following year, such payment being in addition to payments of twenty-five per cent of the company's assessment for the year in each of September, December and March following; Sec. 38-53b transferred to Sec. 38a-48 in 1991; June Sp. Sess. P.A. 91-14 amended Subsec. (i) to provide that on and after June 6, 1991, moneys deposited with treasurer shall be credited to insurance fund, rather than general fund; P.A. 92-60 amended Subsec. (c) by changing the manner of assessment for domestic entities organized under certain sections of the insurance statutes; (Revisor's note: In 1997 in Subsec. (i) the phrase "... the Insurance Fund and established under section 38a-52a ..." was changed editorially by the Revisors to "... the Insurance Fund established under section 38a-52a and ..." thereby correcting an error in the codification of June Sp. Sess. P.A. 91-14, S. 13).

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Sec. 38a-49. (Formerly Sec. 38-51). Fraternal benefit societies and foreign or alien companies to reimburse state for costs of examination. All fraternal benefit societies and all foreign and alien insurance companies and other entities examined by the Insurance Commissioner shall annually reimburse the state for the costs of such examinations. The total cost of all examinations conducted during the fiscal year, including supervision and other overhead, shall be one hundred and thirty-five per cent of the total salaries paid to the examining personnel of the Insurance Department engaged in such examinations less any salary reimbursements. The commissioner shall apportion such total cost of examinations for the fiscal year among such insurance companies and other entities examined during such fiscal year on the basis of time involved in the several examinations and shall assess such fraternal benefit societies, foreign and alien insurance companies and other foreign and alien entities for their respective apportionments of the total cost. Such assessments shall be in addition to any taxes and fees otherwise payable to the state.
(1953, S. 2808d; 1959, P.A. 687, S. 1; P.A. 75-290, S. 1; P.A. 77-614, S. 163, 587, 610; P.A. 78-303, S. 85, 136; P.A. 80-482, S. 277, 345, 348; P.A. 90-243, S. 18.)
History: 1959 act increased the cost of examinations to 135%; P.A. 75-290 deleted "domestic" where the word precedes references to companies and entities; P.A. 77-614 and 78-303 placed insurance commissioner within the department of business regulation and made insurance department a division within that department, effective January 1, 1979; P.A. 80- 482 restored insurance commissioner and division to prior independent status and abolished the department of business regulation; P.A. 90-243 inserted references to "foreign" and "alien" insurance companies replacing references to "nonresident" and "foreign" companies; Sec. 38-51 transferred to Sec. 38a-49 in 1991.

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Sec. 38a-50. (Formerly Sec. 38-52). Fraternal, foreign and alien life insurers to reimburse state for costs of valuation. All fraternal benefit societies and all foreign and alien life insurance companies and other foreign and alien life insurers whose policy or contract reserves are valued by the Insurance Commissioner shall annually reimburse the state for the costs of such valuations. The total cost of all valuations during the fiscal year, including supervision and other overhead, shall be one hundred and thirty-five per cent of the total salaries paid to the valuation personnel of the Insurance Department engaged in valuing such policy and contract reserves less any salary reimbursements. The commissioner shall apportion such total cost of valuations for the fiscal year among such life insurance companies and other life insurers whose policy or contract reserves are valued during such fiscal year on the basis of time involved in the several valuations and shall assess such fraternal benefit societies, foreign and alien insurance companies and other foreign and alien entities for their respective apportionments of the total cost. Such assessments shall be in addition to any other taxes and fees otherwise payable to the state.
(1953, S. 2809d; 1959, P.A. 687, S. 2; P.A. 75-290, S. 2; P.A. 77-614, S. 163, 587, 610; P.A. 78-303, S. 85, 136; P.A. 80-482, S. 278, 345, 348; P.A. 90-243, S. 19.)
History: 1959 act increased the cost of valuations to 135% of salaries and added the provision for charges in punchcard machine rentals; P.A. 75-290 made provisions applicable to all insurance companies and other life insurers where previously applicable to "domestic" companies and other insurers; P.A. 77-614 and 78-303 placed insurance commissioner within the department of business regulation and made insurance department a division within that department, effective January 1, 1979; P.A. 80-482 restored insurance commissioner and division to prior independent status and abolished the department of business regulation; P.A. 90-243 inserted references to "foreign" and "alien" insurance companies and deleted the provision for charges in punchcard machine rentals; Sec. 38-52 transferred to Sec. 38a-50 in 1991.

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Sec. 38a-51. (Formerly Sec. 38-53). Assessment of costs of examination and valuation. Payments credited to Insurance Fund. On or before August first, annually, the commissioner shall render to each insurance company or other entity liable to assessment under section 38a-49 or 38a-50 a statement of the total cost of examinations or valuations, as the case may be, for the preceding fiscal year ending June thirtieth, together with proposed assessments against each of the several such companies and other entities. On September first annually, the commissioner, after receiving any objections to the proposed assessments and making such changes as in his opinion may be indicated, shall assess each such insurance company or other entity for the costs of examinations and valuations. Each such insurance company or other entity shall pay to the commissioner the amount assessed against it within twenty days from date of invoice, with interest at the rate of six per cent per annum if the assessment is unpaid at the end of such twenty-day period. The commissioner shall deposit such receipts with the State Treasurer. On and after June 6, 1991, the moneys so deposited with the State Treasurer shall be credited to the Insurance Fund established under section 38a-52a and shall be accounted for as expenses recovered from insurance companies.
(1953, S. 2810d; 1959, P.A. 687, S. 3; 1967, P.A. 88; P.A. 75-290, S. 3; P.A. 79-109, S. 1; June Sp. Sess. P.A. 91-14, S. 14, 30.)
History: 1959 act increased the maximum assessment to $300,000; 1967 act deleted provision setting maximum assessments under Sec. 38-51, 38-52 and this section at $300,000 and providing for pro rata deduction in assessments which would otherwise exceed that amount; P.A. 75-290 made provisions applicable to insurance companies and entities generally where previously applicable to "domestic" companies and entities; P.A. 79-109 required that assessments be made on September first rather than "during the month of September" and required payment within twenty days "from date of invoice" rather than within twenty days "after receipt of a statement of the amount due"; Sec. 38-53 transferred to Sec. 38a-51 in 1991; June Sp. Sess. P.A. 91-14 provided that on and after June 6, 1991, moneys deposited with treasurer shall be credited to insurance fund, rather than general fund.

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Sec. 38a-52. (Formerly Sec. 38-54). Appeal from assessment. Any domestic insurance company or other domestic entity aggrieved because of any assessment levied under section 38a-48, or any fraternal benefit society or foreign or alien insurance company or other entity aggrieved because of any assessment levied under the provisions of sections 38a-49 to 38a-51, inclusive, may, within one month from the time provided for the payment of such assessment, appeal therefrom to the superior court for the judicial district of New Britain, which appeal shall be accompanied by a citation to the commissioner to appear before said court. Such citation shall be signed by the same authority, and such appeal shall be returnable at the same time and served and returned in the same manner, as is required in case of a summons in a civil action. The authority issuing the citation shall take from the appellant a bond or recognizance to the state, with surety to prosecute the appeal to effect and to comply with the orders and decrees of the court in the premises. Such appeals shall be preferred cases, to be heard, unless cause appears to the contrary, at the first session, by the court or by a committee appointed by the court. Said court may grant such relief as may be equitable, and, if such assessment has been paid prior to the granting of such relief, may order the Treasurer to pay the amount of such relief, with interest at the rate of six per cent per annum, to the aggrieved company. If the appeal has been taken without probable cause, the court may tax double or triple costs, as the case demands; and, upon all such appeals which may be denied, costs may be taxed against the appellant at the discretion of the court, but no costs shall be taxed against the state.
(1953, S. 2811d; P.A. 75-290, S. 4; P.A. 78-280, S. 6, 127; P.A. 80-482, S. 279, 348; P.A. 88-230, S. 1, 12; P.A. 90- 98, S. 1, 2; 90-243, S. 21; P.A. 93-142, S. 4, 7, 8; P.A. 95-220, S. 4−6; P.A. 99-215, S. 24, 29.)
History: P.A. 75-290 made provisions applicable to insurance companies and entities generally where previously applicable to "domestic" companies and entities; P.A. 78-280 replaced "Hartford county" with "judicial district of Hartford- New Britain"; P.A. 80-482 specified applicability to domestic and nonresident or foreign insurance companies and entities and to fraternal benefit societies and added reference to Sec. 38-53b; P.A. 88-230 replaced "judicial district of Hartford- New Britain" with "judicial district of Hartford", effective September 1, 1991; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 90-243 inserted references to "foreign" and "alien" insurance companies; Sec. 38-54 transferred to Sec. 38a-52 in 1991; P.A. 93-142 changed the effective date of P.A. 88- 230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 95-220 changed the effective date of P.A. 88-230 from September 1, 1996, to September 1, 1998, effective July 1, 1995; P.A. 99-215 replaced "judicial district of Hartford" with "judicial district of New Britain", effective June 29, 1999.

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Sec. 38a-52a. Insurance Fund established. There is established a fund to be known as the "Insurance Fund". The fund may contain any moneys required by law to be deposited in the fund and shall be held by the Treasurer separate and apart from all other moneys, funds and accounts. The interest derived from the investment of the fund shall be credited to the fund. Amounts in the fund may be expended only pursuant to appropriation by the General Assembly. Any balance remaining in the fund at the end of any fiscal year shall be carried forward in the fund for the fiscal year next succeeding.
(June Sp. Sess. P.A. 91-14, S. 11, 30.)

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Sec. 38a-53. (Formerly Sec. 38-24). Requirements re filing of annual reports and financial statements by company. Late filing fee. (a) Each insurance company or health care center doing business in this state shall, annually, on or before the first day of March, render to the commissioner a true report, signed and sworn to by its president or a vice president, and secretary or an assistant secretary, of its financial condition on the thirty-first day of December next preceding, prepared in accordance with the National Association of Insurance Commissioners annual statement instructions handbook and following those accounting procedures and practices prescribed by the National Association of Insurance Commissioners accounting practices and procedures manual, subject to any deviations in form and detail as may be prescribed by the commissioner.
(b) In addition to such annual report, the commissioner, when he deems it necessary, may require any insurance company or health care center doing business in this state to file financial statements on a quarterly basis.
(c) In addition to such annual report and the quarterly report required under subsection (b), the commissioner, whenever he determines that more frequent reports are required because of certain factors or trends affecting companies writing a particular class or classes of business or because of changes in the company's management or financial or operating condition, may require any insurance company or health care center doing business in this state to file financial statements on other than an annual or quarterly basis.
(d) Any insurance company or health care center doing business in this state which fails to file any report or statement required under this section shall pay a late filing fee of one hundred dollars per day for each day from the due date of such report or statement to the date of filing.
(e) Each insurance company or health care center doing business in this state shall include in all reports required to be filed with the commissioner under this section a certification by an actuary or reserve specialist of all reserve liabilities prepared in accordance with regulations which shall be adopted by the commissioner in accordance with chapter 54. The regulations shall: (1) Specify the contents and scope of the certification; (2) provide for the availability to the commissioner of the workpapers of the actuary or loss reserve specialist; and (3) provide for exemptions to the companies or centers from compliance with the requirements of this subsection.
(1949 Rev., S. 6077; P.A. 76-167, S. 1; P.A. 88-326, S. 2; P.A. 90-243, S. 9; P.A. 92-112, S. 3.)
History: P.A. 76-167 added Subsecs. (b) and (c) re quarterly financial reports and other reports; P.A. 88-326 added a new Subsec. (d) imposing a late filing fee of one hundred dollars per day; P.A. 90-243 added references to health care centers re filing of financial statements with the commissioner and added Subsec. (e) re certification of the disclosure of reserve liabilities; Sec. 38-24 transferred to Sec. 38a-53 in 1991; P.A. 92-112 amended Subsec. (a) to require that reports be filed in accordance with standards set by the National Association of Insurance Commissioners.
Annotations to former section 38-24:
Unpaid stock subscription notes form part of the assets of a company. 65 C. 471. Cited. 113 C. 18.

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Sec. 38a-54. Audited reports. (a) On or after December 31, 1990, each insurance company, health care center or fraternal benefit society doing business in this state shall have an annual audit conducted by an independent certified public accountant and shall annually file an audited financial report with the commissioner on or before the first day of June for the year ending the preceding December thirty-first.
(b) The commissioner shall adopt regulations in accordance with the provisions of chapter 54 to: (1) Specify the scope of the examination required by this section; (2) specify the contents and scope of the annual audited financial report, provided such report shall include all incurred losses; (3) provide for the review of the controls; (4) provide for the availability to the commissioner of the workpapers of the certified public accountant; and (5) provide exemptions from compliance with the requirements of this section.
(P.A. 90-243, S. 168; P.A. 91-276, S. 3; P.A. 98-98, S. 4.)
History: P.A. 91-276 added a provision requiring the inclusion of all incurred losses in the annual audited financial report; P.A. 98-98 amended Subsec. (a) to substitute "first day of June" for "thirtieth day of June" re the deadline for filing financial reports, and substituted "the preceding December thirty-first" for "the thirty-first day of December next preceding".

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Sec. 38a-55. Hypothecation of assets. (a) No domestic insurer, health care center or fraternal benefit society may pledge, hypothecate or otherwise encumber its assets to secure the debt, guaranty or obligations of any other person without the prior written consent of the Insurance Commissioner. This prohibition shall not apply to obligations of the insurer under surety bonds or insurance contracts issued in the regular course of business.
(b) (1) No domestic insurer, health care center or fraternal benefit society may, without the prior written consent of the Insurance Commissioner, pledge, hypothecate or otherwise encumber its assets to secure its own debt, guaranty or obligations if the amount of the assets pledged, hypothecated or otherwise encumbered, when the pledge, hypothecation or encumbrance is made, together with the aggregate amount of assets pledged, hypothecated or encumbered to secure all such debts, guarantees and obligations, exceeds the lesser of five per cent of admitted assets or twenty-five per cent of surplus as regards policyholders as reported in its last financial statement filed with the commissioner pursuant to section 38a-53 or 38a-614.
(2) Nothing in this subsection shall be construed as prohibiting a domestic insurer, health care center or fraternal benefit society from pledging, hypothecating or encumbering any assets in connection with: (A) Transactions in the ordinary course of business, including, but not limited to: (i) Complying with any statutory requirement, (ii) reinsurance transactions otherwise in compliance with applicable statutory requirements, or (iii) investments or investment practices otherwise in compliance with applicable statutory requirements, including, but not limited to, securities lending, repurchase transactions, reverse repurchase transactions, swap, futures and options transactions, and any other transactions which are not prohibited by the investment law and regulations of this state; (B) transactions subject to the provisions of sections 38a-129 to 38a-140, inclusive; or (C) any other transaction deemed excluded by the Insurance Commissioner. Assets pledged, hypothecated or encumbered pursuant to subparagraph (A), (B) or (C) of this subsection, shall not be charged against the limits set forth in subdivision (1) of this subsection.
(3) In the case of a domestic life insurance company, the provisions of this subsection shall apply to a separate account only to the extent that reserves for guarantees with respect to (A) benefits guaranteed as to dollar amount and duration or (B) funds guaranteed as to principal amount or stated rate of interest are held in a separate account in accordance with subdivision (iii) of subsection (a) of section 38a-433.
(P.A. 90-243, S. 167; P.A. 98-60.)
History: P.A. 98-60 designated existing language as Subsec. (a) and substituted "domestic" for "licensed" re insurers and "shall" for "does" re prohibition, and added new Subsec. (b) re assets of domestic companies.

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Sec. 38a-56. (Formerly Sec. 38-19). False returns to commissioner. Any person who wilfully makes any false report to the commissioner or testifies or affirms falsely to any material fact in any matter wherein an oath or affirmation is required or authorized or makes any false entry or memorandum upon any book, paper, report or statement of any insurance company, with intent to deceive the commissioner or any agent appointed to examine the affairs of any such company or to deceive the stockholders or policyholders or any officer of any such insurance company or to injure or defraud any such company, and any person who, with like intent, aids or abets another in any violation of any provision of this section, shall be imprisoned not more than five years.
(1949 Rev., S. 8708.)
History: Sec. 38-19 transferred to Sec. 38a-56 in 1991.

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Sec. 38a-57. (Formerly Sec. 38-26a). Retention of records and assets in state. Each domestic insurance company shall maintain, within the state, such records as the commissioner may require and such portion of its assets as the commissioner may deem necessary for the purpose of adequately protecting the insured.
(1967, P.A. 37.)
History: Sec. 38-26a transferred to Sec. 38a-57 in 1991.

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Sec. 38a-58. (Formerly Sec. 38-40). Change of location of domestic insurance company. Any domestic insurance company may change its location from one town to another within this state, notwithstanding any inconsistent provision in its charter.
(1949 Rev., S. 6096; 1953, S. 2792d.)
History: Sec. 38-40 transferred to Sec. 38a-58 in 1991.

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Sec. 38a-58a. Transfer of domicile: By foreign insurance company to this state; by domestic insurance company to another state. Procedures. (a) Any insurer which is organized under the laws of any other state and is admitted to do business in this state for the purpose of writing insurance may become a domestic insurer by complying with all of the requirements of law relative to the organization and licensing of a domestic insurer of the same type and by designating its principal place of business at a location in this state. The domestic insurer shall be entitled to like certificates and licenses to transact business in this state and shall be subject to the authority and jurisdiction of this state. The articles of incorporation of the domestic insurer may be amended to provide that the corporation is a continuation of the corporate existence of the original foreign corporation through adoption of this state as its corporate domicile and that the original date of incorporation in its original domiciliary state is the date of incorporation of the domestic insurer.
(b) Any domestic insurer may, upon the approval of the Insurance Commissioner, transfer its domicile to any other state in which it is admitted to transact the business of insurance, and upon such a transfer shall cease to be a domestic insurer, and shall be admitted to this state, if qualified, as a foreign insurer. The Insurance Commissioner may approve the proposed transfer if he determines that the transfer is in the interest of the policyholders of this state or in the public interest.
(c) The certificate of authority, agents' appointments and licenses, rates and other criteria within the discretion of the Insurance Commissioner which are in existence at the time any insurer licensed to transact the business of insurance in this state transfers its corporate domicile to this state or any other state by merger, consolidation or any other lawful method shall continue in full force and effect upon the transfer if the insurer remains duly qualified to transact the business of insurance in this state. All outstanding policies of any transferring insurer shall be given full force and effect and need not be endorsed as to the new name of the company or its new location unless ordered by the Insurance Commissioner. Each transferring insurer shall file new policy forms with the Insurance Commissioner on or before the effective date of the transfer, but may use existing policy forms with appropriate endorsements if allowed by, and under such conditions as approved by, the Insurance Commissioner. Each transferring insurer shall notify the Insurance Commissioner of the details of the proposed transfer and shall file promptly any resulting amendments to corporate documents filed or required to be filed with the Insurance Department. Each such insurer, upon the transfer of its domicile to this state, shall file with the Secretary of the State a true copy of its original articles of incorporation, duly certified by the proper official of the state and a certificate in such form as prescribed by the Secretary of the State and approved by the Insurance Commissioner.
(P.A. 91-232, S. 1, 2.)

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Sec. 38a-59. (Formerly Sec. 38-42a). Change of name of domestic insurance company. An amendment to the certificate of incorporation of a domestic insurance company with capital stock which changes the name of the company shall not become effective until approved by the Insurance Commissioner after reasonable notice and a public hearing, if such notice and hearing are deemed by him to be in the public interest. A certificate of amendment conforming to the requirements of section 33-800 shall be filed in the office of the Insurance Commissioner before any amendment to the certificate of incorporation of a domestic insurance company with capital stock shall become effective.
(February, 1965, P.A. 71; P.A. 77-614, S. 163, 610; P.A. 80-482, S. 276, 348; P.A. 96-271, S. 210, 254.)
History: P.A. 77-614 placed insurance commissioner within the department of business regulation and made insurance department a division within that department, effective January 1, 1979; P.A. 80-482 restored insurance commissioner and division to prior independent status and abolished the department of business regulation; Sec. 38-42a transferred to Sec. 38a-59 in 1991; P.A. 96-271 replaced reference to Sec. 33-360 with Sec. 33-800, effective January 1, 1997.

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Sec. 38a-60. (Formerly Sec. 38-27a). Continuity of management during national emergencies. (a) The board of directors of a domestic insurance company may at any time, and from time to time, by resolution or amendment to the company's bylaws, provide for an emergency management plan as they consider necessary or appropriate, subject to repeal or change by action of those having power to adopt bylaws for the company.
(b) If such emergency plan has not been adopted by any such corporation upon the occurrence of a national emergency caused by an attack on the United States or by a nuclear, atomic or other disaster, the following provisions shall automatically become effective and shall remain effective throughout the emergency or until superseded by such emergency plan: (1) Two directors shall constitute a quorum for the transaction of business at all meetings of the board. (2) Notice of any meeting of the board need be given only to such of the directors as it may be practical to reach at the time and by such means as may be practical at the time, including publication or radio broadcast. (3) Any vacancy in the board may be filled by a majority of the remaining directors, even if less than a quorum, or by the sole remaining director. (4) If there are no surviving directors able and willing to serve, or if no surviving directors can be located, all directorships shall be presumed to be vacant. Such vacancies in the board of directors, not to exceed three, shall be filled by the most senior surviving officers of the company able and willing to serve; seniority to be determined by rank and, within rank, first, by year of appointment to that rank and, second, by birth date. If thereafter a surviving director able and willing to serve is located, he shall automatically resume his position on the board of directors and the most junior officer serving as a director under the authority of this subdivision shall thereupon be considered to have resigned. In addition, if there are no surviving directors, one vacancy may be filled by the Insurance Commissioner or other person authorized to exercise his powers.
(c) If such emergency plan is adopted, it may provide that it will become operative automatically during any such national emergency and, notwithstanding any contrary provision of the law or the charter or bylaws of the company, may contain any provisions reasonably necessary for the operation of the company during any such national emergency. Such provisions need not be consistent with the comparable provisions stated in subsection (b) above. Such provisions may provide, among other things, for (1) the designation of persons who may call a meeting of the board of directors; (2) the quorum and notice requirements for, and location of, any such meeting; (3) the filling of vacancies on the board of directors; (4) a succession list of persons by name or title who will succeed to positions of higher rank; (5) the establishment of the principal office of the company at a new location in or out of the state.
(1963, P.A. 451, S. 1, 2, 3; P.A. 77-614, S. 163, 610; P.A. 80-482, S. 272, 348.)
History: P.A. 77-614 placed insurance commissioner within the department of business regulation and made insurance department a division within that department, effective January 1, 1979; P.A. 80-482 restored insurance commissioner and division to prior independent status and abolished the department of business regulation; Sec. 38-27a transferred to Sec. 38a-60 in 1991.

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Sec. 38a-61. (Formerly Sec. 38-134). Limitation of use of power of attorney. No power of attorney to vote at any meeting of any licensed insurance company shall be used at more than one meeting of such corporation. No power of attorney may be voted later than thirty-six months from the time it was granted.
(1949 Rev., S. 6154; P.A. 77-65.)
History: P.A. 77-65 made provisions applicable to "any licensed" insurance company rather than to "a life" insurance company and prohibited voting power of attorney later than thirty-six months from time it was granted; Sec. 38-134 transferred to Sec. 38a-61 in 1991.

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Sec. 38a-63. Limitation of liability of director of mutual insurance company. (a) The personal liability of a director of a mutual insurance company to the company or its members for monetary damages for breach of duty as a director may be limited by the board to an amount that is not less than the compensation received by the director for serving the company during the year of the violation, provided such breach did not (1) involve a knowing and culpable violation of law by the director, (2) enable the director or an associate, as defined solely for the purposes of this section in subdivision (3) of section 33-843, to receive an improper personal economic gain, (3) show a lack of good faith and a conscious disregard for the duty of the director to the company under circumstances in which the director was aware that his conduct or omission created an unjustifiable risk of serious injury to the company, or (4) constitute a sustained and unexcused pattern of inattention that amounted to an abdication of the director's duty to the company, provided further no director who is a defendant in a lawsuit shall participate in the discussion or vote on such limitation of liability if it will affect his potential liability in such lawsuit. No such limitation shall limit or preclude the liability of a director for any act or omission occurring prior to the effective date of such provision.
(b) Notwithstanding any inconsistent provision in the charter of a domestic mutual insurance company or in the general statutes, the provisions of this section shall become effective on the date it is approved by a majority of the members present and voting, in the manner customary for such company's meetings, in person or by proxy at an annual or other meeting of such domestic mutual insurance company.
(P.A. 89-322, S. 3; P.A. 96-271, S. 211, 254.)
History: P.A. 96-271 amended Subsec. (a) to replace reference to Sec. 33-374d with Sec. 33-843, effective January 1, 1997.

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Sec. 38a-64. (Formerly Sec. 38-41). Donations by domestic mutual companies. Each domestic mutual insurance company, in addition to all other powers specially granted to it by law, shall have power, subject to such provisions and limitations as may be contained in its charter, certificate of incorporation or bylaws, or in any statute affecting it, to make donations for the public welfare or for charitable or educational purposes.
(1953, S. 2812d.)
History: Sec. 38-41 transferred to Sec. 38a-64 in 1991.

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Sec. 38a-65. (Formerly Sec. 38-48). Disposition of unclaimed dividends of insolvent company. Section 38a-65 is repealed, effective October 1, 1998.
(1949 Rev., S. 6051; 1961, P.A. 540, S. 25; P.A. 98-214, S. 32.)

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Sec. 38a-66. Reinsurance of insurance business with other insurers by agreement of bulk reinsurance. (a) Any insurance company authorized to do business in this state may, with respect to subjects of insurance resident, located or to be performed in this state, reinsure all or substantially all of its insurance business in force, or all or substantially all of a major class thereof, with another insurer by agreement of bulk reinsurance after compliance with this section. Each such agreement shall be filed with the Insurance Commissioner and shall become effective upon the expiration of twenty days after the date of filing unless disapproved by the commissioner.
(b) The Insurance Commissioner shall disapprove such an agreement within twenty days after filing if it is found:
(1) That the agreement is unfair and inequitable to any insurer or to any policyholder involved;
(2) That the reinsurance, if effectuated, would reduce the provision of service to policyholders of any insurer involved;
(3) That the agreement does not embody adequate provisions by which the reinsuring insurer becomes liable to the original insureds for any loss or damage occurring under the policies reinsured in accordance with the original terms of such policies or does not require the reinsuring insurer to furnish each such insured with a certificate evidencing such assumption of liability;
(4) That the assuming reinsurer is not authorized to transact such insurance in this state;
(5) That the assuming reinsurer will not appoint the commissioner or his successors as its irrevocable attorney for service of process, so long as any policy so reinsured or claim thereunder remains in force or outstanding;
(6) That such reinsurance would materially tend to lessen competition in the insurance business in this state or elsewhere as to the kinds of insurance involved or would materially tend to create a monopoly as to such business; or
(7) That the proposed bulk reinsurance is not free of other reasonable objections.
(c) If the Insurance Commissioner disapproves the agreement, he shall notify in writing each insurer involved specifying his reasons for doing so.
(P.A. 91-41.)

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Sec. 38a-67. Reporting requirement for cancellations and revisions of ceded reinsurance agreements. (a) Every insurer domiciled in this state shall file a report with the commissioner disclosing material acquisitions and dispositions of assets or material nonrenewals, cancellations or revisions of ceded reinsurance agreements unless such material acquisitions and dispositions of assets or material nonrenewals, cancellations or revisions of ceded reinsurance agreements have been submitted to the commissioner for review, approval or information purposes pursuant to other provisions of the insurance code, laws, regulations or other requirements.
(b) The report required in subsection (a) of this section is due within fifteen days after the end of the calendar month in which any of the foregoing transactions occur.
(c) One complete copy of the report, including any exhibits or other attachments filed as part thereof, shall be filed with:
(1) The insurance department of the insurer's state of domicile; and
(2) The National Association of Insurance Commissioners.
(d) All reports obtained by or disclosed to the commissioner pursuant to the provisions of this section and sections 38a-67a and 38a-67b shall be given confidential treatment, shall not be subject to subpoena and shall not be made public by the commissioner, the National Association of Insurance Commissioners or any other person, except to insurance regulatory officials of other states or countries so long as the commissioner determines that such officials agree to maintain the same level of confidentiality in their jurisdiction as is available in this state, without the prior written consent of the insurer to which it pertains unless the commissioner, after giving the insurer who would be affected thereby, notice and an opportunity to be heard, determines that the interest of policyholders, shareholders or the public will be served by the publication thereof, in which event the commissioner may publish all or any part thereof in such manner as he may deem appropriate.
(P.A. 95-168, S. 5; P.A. 98-57, S. 2.)
History: P.A. 98-57 amended Subsec. (d) to substitute "insurance regulatory officials of other states or countries" for "insurance departments of other states" and added condition re disclosure of information by commissioner that he determine that officials agree to maintain the same level of confidentiality as is available in this state.

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Sec. 38a-67a. Acquisitions and dispositions of assets, reporting requirement waived, when. Asset acquisitions and dispositions, defined. Information required to be disclosed. (a) No acquisitions or dispositions of assets need be reported pursuant to section 38a-67 if the acquisitions or dispositions are not material. For purposes of sections 38a-67 to 38a-67b, inclusive, a material acquisition, or the aggregate of any series of related acquisitions during any thirty-day period or disposition, or the aggregate of any series of related dispositions during any thirty-day period, is one that is nonrecurring and not in the ordinary course of business and involves more than five per cent of the reporting insurer's total admitted assets as reported in its most recent statutory statement filed with the insurance department of the insurer's state of domicile.
(b) (1) Asset acquisitions subject to sections 38a-67 to 38a-67b, inclusive, include every purchase, lease, exchange, merger, consolidation, succession or other acquisition other than the construction or development of real property by or for the reporting insurer or the acquisition of materials for such purpose.
(2) Asset dispositions subject to sections 38a-67 to 38a-67b, inclusive, include every sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment, whether for the benefit of creditors or otherwise, abandonment, destruction or other disposition.
(c) (1) The following information shall be disclosed in any report of a material acquisition or disposition of assets:
(A) Date of the transaction;
(B) Manner of acquisition or disposition;
(C) Description of the assets involved;
(D) Nature and amount of the consideration given or received;
(E) Purpose of, or reason for, the transaction;
(F) Manner by which the amount of consideration was determined;
(G) Gain or loss recognized or realized as a result of the transaction; and
(H) Name of the person or persons from whom the assets were acquired or to whom they were disposed.
(2) Insurers are required to report material acquisitions and dispositions on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which utilizes a pooling arrangement or one hundred per cent reinsurance agreement that affects the solvency and integrity of the insurer's reserves and such insurer has ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than one million dollars in total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than five per cent of the insurer's capital and surplus.
(P.A. 95-168, S. 6.)

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Sec. 38a-67b. Nonrenewals, cancellations or revisions, reporting requirement waived, when. Information required to be disclosed. (a)(1) Nonrenewals, cancellations or revisions of ceded reinsurance agreements need not be reported pursuant to section 38a-67 if the nonrenewals, cancellations or revisions are not material. For purposes of sections 38a-67 to 38a-67b, inclusive, a material nonrenewal, cancellation or revision is one that affects: (A) With respect to property and casualty business, including accident and health business written by a property and casualty insurer: (i) More than fifty per cent of an insurer's ceded written premium; or (ii) more than fifty per cent of the insurer's total ceded indemnity and loss adjustment reserves; (B) with respect to life, annuity and accident and health business: More than fifty per cent of the total reserve credit taken for business ceded, on an annualized basis, as indicated in the insurer's most recent annual statement; (C) with respect either to property and casualty or life, annuity and accident and health business, either of the following events shall constitute a material revision which shall be reported: (i) An authorized reinsurer representing more than ten per cent of a total cession is replaced by one or more unauthorized reinsurers; or (ii) previously established collateral requirements have been reduced or waived with respect to one or more unauthorized reinsurers representing collectively more than ten per cent of a total cession.
(2) However, no filing shall be required if: (A) With respect to property and casualty business, including accident and health business written by a property and casualty insurer: The insurer's total ceded written premium represents, on an annualized basis, less than ten per cent of its total written premium for direct and assumed business; or (B) with respect to life, annuity and accident and health business: The total reserve credit taken for business ceded represents, on an annualized basis, less than ten per cent of the statutory reserve requirement prior to any cession.
(b) (1) The following information shall be disclosed in any report of a material nonrenewal, cancellation or revision of ceded reinsurance agreements:
(A) Effective date of the nonrenewal, cancellation or revision;
(B) The description of the transaction with an identification of the initiator thereof;
(C) Purpose of, or reason for, the transaction; and
(D) If applicable, the identity of the replacement reinsurers.
(2) Insurers shall report all material nonrenewals, cancellations or revisions of ceded reinsurance agreements on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which utilizes a pooling arrangement or one hundred per cent reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer has ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than one million dollars total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than five per cent of the insurer's capital and surplus.
(P.A. 95-168, S. 7.)

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Sec. 38a-68. Reserved for future use.
*Former Ch. 681 cited. 219 C. 391, 401.
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PART II*
FINANCIAL REQUIREMENTS

Sec. 38a-69. Scope of provisions. Except as otherwise provided in title 38a, sections 38a-11, 38a-50, 38a-52, 38a-70 to 38a-76, inclusive, 38a-81 to 38a-83, inclusive, and 38a-153, and the regulations adopted to implement said sections apply to all insurers, including reinsurers, licensed to do business in this state.
(P.A. 90-243, S. 43; P.A. 98-214, S. 29.)
History: (Revisor's note: In 1995 a reference to Sec. 38a-79 was deleted editorially by the Revisors, that section having been repealed by P.A. 94-39); P.A. 98-214 deleted reference to Sec. 38a-65.

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Sec. 38a-69a. Confidentiality of financial workpapers and operating and financial condition reports. All financial analyses, financial examination workpapers, operating and financial condition reports concerning any insurance company, fraternal benefit society or health care center prepared by or on behalf of or for the use of the Insurance Commissioner or the Insurance Department examiner, shall be confidential unless such documents are otherwise a matter of public record, or the commissioner, in his opinion deems it in the public interest to disclose or otherwise make available for public inspection the information contained in such documents.
(P.A. 92-95.)

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Sec. 38a-70. Accounting standards. When adopting accounting rules, the commissioner shall follow those accounting procedures and practices published in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions, and the National Association of Insurance Commissioners Annual Statement Instructions Manual, subject to any deviations the commissioner may prescribe.
(P.A. 90-243, S. 44; P.A. 92-112, S. 4; P.A. 00-30, S. 1, 14.)
History: P.A. 92-112 amended section to require that accounting rules be filed in accordance with standards set by the National Association of Insurance Commissioners; P.A. 00-30 substituted "published in" for "prescribed by", inserted "version effective January 1, 2001, and subsequent revisions" re the practices and procedures manual, and made technical changes for purposes of gender neutrality, effective January 1, 2001.

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Sec. 38a-71. Minimum asset requirements. Minimum capital and minimum surplus requirements. (a) As used in this section:
(1) "Qualified assets" means:
(A) Investments, securities, properties and loans permitted or authorized by law, and the income due thereon;
(B) The net amount of uncollected and deferred premiums for a life insurer which carries the full annual mean tabular reserve liability;
(C) Premiums in the course of collection, other than for life insurance, not more than ninety days past due, with the ninety-day limitation being inapplicable to premiums payable directly or indirectly by the United States government or any of its instrumentalities;
(D) Instalment premiums, other than life insurance premiums, in accordance with the regulations adopted by the commissioner in accordance with the provisions of chapter 54, or in the absence of these regulations then in accordance with practices formulated or adopted by the National Association of Insurance Commissioners;
(E) Notes and similar written obligations which are not past due, taken for premiums other than life insurance premiums, on policies permitted to be issued on that basis, to the extent of the unearned premium reserves carried on the policies;
(F) Amounts recoverable or receivable from reinsurers under a reinsurance contract;
(G) Tangible components of health care delivery systems for health care centers governed by sections 38a-175 to 38a-192, inclusive, with the cost of these assets having a finite useful life being depreciated in full over periods provided by regulations adopted by the commissioner in accordance with the provisions of chapter 54;
(H) Electronic data processing equipment and operating software, the cost of which is depreciated in full over a period not to exceed three years;
(I) Tangible components of the service delivery systems of legal service corporations governed by sections 38a-230 to 38a-245, inclusive, with the cost of these assets having a finite useful life being depreciated in full over periods provided by regulations adopted by the commissioner in accordance with the provisions of chapter 54;
(J) Cash or currency; and
(K) Other assets authorized by regulations adopted by the commissioner in accordance with the provisions of chapter 54.
(2) "Minimum capital and minimum surplus" means the capital and surplus that must constantly be maintained by a stock insurance company as required by section 38a-72.
(3) "Surplus" means total statutory surplus less capital stock, adjusted for the par value of any treasury stock, calculated in accordance with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions. Except for assessable mutuals, the minimum surplus of a mutual insurer is essentially the same as the minimum required capital requirement which applies to stock-insurers.
(4) "Capital" means the capital stock component of statutory surplus, as defined in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions.
(b) Each insurer authorized to do business in this state shall maintain qualified assets in the amount equal to the total of the insurer's (1) liabilities, and (2) minimum capital and minimum surplus required under section 38a-72.
(P.A. 90-243, S. 45; P.A. 93-239, S. 2; P.A. 00-30, S. 2, 14.)
History: P.A. 93-239 deleted former Subsecs. (c) and (d) re the commissioner's determination of the sufficiency of surplus and the evidence used to evaluate such sufficiency, respectively; P.A. 00-30 amended definition of "qualified assets" in Subsec. (a) to revise the calculation of premium in Subpara. (a)(1)(C) to delete reductio

CHAPTER 698INSURERS

PART IIN GENERAL. COSTS

PART II*FINANCIAL REQUIREMENTS

CHAPTER 698
INSURERS

PART I
IN GENERAL. COSTS

PART II*
FINANCIAL REQUIREMENTS