CHAPTER 701a
INSURANCE PRODUCERS AND AGENTS

Sec. 38a-703. (Formerly Sec. 38-70). Soliciting business for unlicensed insurance or surety company prohibited. No person shall, within this state, solicit or procure insurance, except with regard to his own property or person, with or by any insurance company which does not hold a certificate then in force from the commissioner authorizing such insurance company to do such insurance business in this state, or deliver policies or collect premiums of or for any such company; nor shall any person aid in any way in the transaction in this state of any insurance business with or by any insurance company not thus authorized, except to obtain insurance upon his own property or person. Any person who aids any corporation, association or person not authorized to do insurance business in this state in soliciting such business from residents of this state, by means of any advertisement published in this state or by any other means, shall be fined not more than one hundred dollars or imprisoned not more than six months or both.
(1949 Rev., S. 6058.)
History: Sec. 38-70 transferred to Sec. 38a-703 in 1991.
Annotation to former section 38-70:
Cited. 9 CA 622, 623.

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Sec. 38a-704. (Formerly Sec. 38-71). Penalty for acting as insurance producer without license. 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 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, unless such person holds an insurance producer license then in force from the commissioner authorizing him so to act, shall be fined not more than five hundred dollars or imprisoned not more than three months or both.
(1949 Rev., S. 6059, 6066; P.A. 90-243, S. 24; P.A. 94-160, S. 4, 24; P.A. 95-79, S. 187−189.)
History: P.A. 90-243 removed public adjusters from purview of section; Sec. 38-71 transferred to Sec. 38a-704 in 1991; P.A. 94-160 amended the section to include partnerships, associations or corporations or any of such acting under a trade name to more accurately reflect the current modernization and nomenclature of the industry, effective January 1, 1996; P.A. 95-79 included a person who acts as representative of a limited liability company, effective May 31, 1995.
See Sec. 38a-413 re title agent and title insurer exemption.
Annotations to former section 38-71:
Cited. 162 C. 508.
Cited. 5 CA 616, 618, 619.

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Sec. 38a-705. (Formerly Sec. 38-73). Exemption of fraternal benefit societies. The provisions of sections 38a-703, 38a-704 and 38a-769 shall not apply to any otherwise lawful activities of fraternal benefit societies.
(1949 Rev., S. 6065; 1957, P.A. 448, S. 45.)
History: Sec. 38-73 transferred to Sec. 38a-705 in 1991.

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Sec. 38a-706. (Formerly Sec. 38-75). Sharing commission. Any licensed producer may share with any other licensed producer his commission on insurance business brought to him by such other licensed producer, provided such insurance business shall be of such character as such other licensed producer is licensed to transact.
(1949 Rev., S. 6063; P.A. 94-160, S. 5, 24.)
History: Sec. 38-75 transferred to Sec. 38a-706 in 1991; P.A. 94-160 substituted "producer" for "agent" to more accurately reflect the modernization and nomenclature of the industry, effective January 1, 1996.
Annotation to former section 38-75:
Cited. 162 C. 511.

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Sec. 38a-707. (Formerly Sec. 38-75a). Producer service fees and commissions limited. Exemption for registration under the federal Investment Advisers Act. Disclosures. (a) No insurance producer shall have any right to compensation, other than commissions deductible from premiums on insurance policies or contracts, from any insured or prospective insured for or on account of the negotiation or procurement of, or other services in connection with, any contract of insurance made or negotiated in this state or for any other services on account of any such insurance policies or contracts, including, but not limited to, adjustment of claims arising therefrom, unless such right to compensation is based upon a written memorandum, signed by the party to be charged, and specifying or clearly defining the amount or extent of such compensation, provided such compensation is in compliance with regulations adopted pursuant to subsection (b) of this section.
(b) The Insurance Commissioner may, by regulation, establish a reasonable schedule of maximum fees which may be charged by insurance producers or he may regulate such fees on an individual basis.
(c) Nothing herein contained shall affect the right of any such producer to recover from the insured the amount of any premium or premiums for insurance effected by or through such producer.
(d) The provisions of this section shall not apply to an insurance producer who is an advisory representative of a registered investment adviser registered pursuant to the Investment Advisers Act of 1940, 15 USC 80b-1, et seq., provided the insurance producer makes full disclosure in a written memorandum, signed by the party to be charged, which specifies the amount of such fee or compensation for services performed pursuant to the Investment Advisers Act of 1940 and which also discloses that a commission may be paid to the insurance producer from the sale of any insurance.
(1969, P.A. 738; P.A. 77-614, S. 163, 610; P.A. 80-482, S. 286, 348; P.A. 90-243, S. 32; P.A. 94-160, S. 6, 24; P.A. 96-48, S. 1.)
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; P.A. 90-243 divided section into Subsecs. and rephrased provision re commissioner's power to establish a maximum fee schedule which may be charged by insurance agents or brokers; Sec. 38-75a transferred to Sec. 38a-707 in 1991; P.A. 94-160 substituted "producer" for "agent or broker" to accurately reflect the modernization and nomenclature of the industry and added provision in Subsec. (a) re compliance with regulations pursuant to Subsec. (b), effective January 1, 1996; P.A. 96-48 added Subsec. (d) to exempt producers who provide the prescribed disclosures and are advisory representatives of an investment advisor registered under the federal Investment Advisers Act.

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Sec. 38a-708. (Formerly Sec. 38-76a). Company to furnish facts relative to termination of agent's appointment. False statement sole grounds for cause of action by agent. Upon the request of the Insurance Commissioner, any insurance company shall furnish to the Insurance Department the facts relative to the termination of an agent's appointment and the causes thereof. No agent shall have a cause of action against any insurance company as a result of such company's having furnished to said department pursuant to this section any statement, oral or written, unless such statement is false and was known by such company to be false when made.
(1961, P.A. 85; P.A. 77-614, S. 163, 610; P.A. 79-173; P.A. 80-482, S. 287, 345, 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. 79-173 replaced provision which had deemed every statement made pursuant to this section a privileged communication and had prohibited statements use as evidence in court action or proceedings with provision re agents cause of action; P.A. 80-482 restored insurance commissioner and division to prior independent status and abolished the department of business regulation; Sec. 38-76a transferred to Sec. 38a-708 in 1991.

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Sec. 38a-709. (Formerly Sec. 38-76b). Termination of producer's appointment and contract. (a) Any insurance company authorized to transact fire or casualty business in this state shall, upon termination of a producer's appointment by said company, permit the renewal of all contracts of insurance written by such producer for a period of eighteen months from the date of such termination, as determined by the individual underwriting requirements of said company, provided, in the event of any contract not meeting such underwriting requirements, the company shall give the producer sixty days' notice of its intention not to renew said contract, and provided further that such period of time may be reduced, in whole or in part, as the commissioner may deem necessary for the purpose of adequately protecting the insured or securing the solvency of such company.
(b) No insurance agency contract entered into in this state, by a licensed insurer with an insurance producer licensed under section 38a-769, shall be terminated by the licensed insurer appointing such producer unless the licensed insurer upon terminating such contract shall give not less than ninety days' written notice in advance to the other party unless the contract shall be terminated by the licensed insurer for failure of the producer, after receiving a written demand, to pay over moneys due to such insurer, provided during said ninety-day period after any such notice, the producer shall not write or bind any new business on behalf of the licensed insurer without the specific written approval by such insurer of such business.
(c) Any insurance company renewing contracts of insurance in accordance with this section shall pay commissions for such renewals to the terminated producer in the same amount as had been paid to him on similar policies during the twelve months immediately preceding the notice of termination.
(d) The provisions of this section shall not apply to any contract with a producer for the sale of life or accident and health insurance.
(1969, P.A. 485, S. 1, 2; 1971, P.A. 176; P.A. 77-199, S. 1, 12; P.A. 85-102, S. 2; P.A. 96-193, S. 15, 36.)
History: 1971 act inserted new Subsec. (c) concerning renewal commissions and relettered former Subsec. (c) accordingly; P.A. 77-199 authorized renewals for eighteen months rather than one year and added proviso re reduction of time period to protect insured or secure company's solvency in Subsec. (a); P.A. 85-102 amended Subsec. (d) to specifically exclude accident and health insurance from the provisions of the section; Sec. 38-76b transferred to Sec. 38a-709 in 1991; P.A. 96-193 substituted "producer" for "agent", effective June 3, 1996.
See Sec. 38a-710 re protection of independent insurance producers from cancellation of contract because of adverse underwriting experience.

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Sec. 38a-710. (Formerly Sec. 38-76d). Insurers prohibited from cancelling or amending contract of independent producer solely because of adverse underwriting experience. No company shall cancel or amend the contract of an independent insurance producer for property or casualty insurance, solely because of adverse underwriting experience for the two years preceding the date of such cancellation or amendment on such lines of insurance for which the company requires submission of an application for approval or for which the company accepts without approval policies issued by its appointed producers, if the information on any such application or on the company copy of any policy issued by an appointed producer is substantially complete and not intentionally or substantially incorrect or misleading. In calculating the average loss ratio for purposes of determining adverse underwriting experience for such preceding two years, reserves against claims pending shall not be included.
(P.A. 79-277; P.A. 90-243, S. 33; P.A. 92-53, S. 1, 2; P.A. 96-193, S. 16, 36.)
History: P.A. 90-243 substituted "property" for "fire" insurance; Sec. 38-76d transferred to Sec. 38a-710 in 1991; P.A. 92-53 prohibited amending the contract of an independent insurance agent because of adverse underwriting experience; P.A. 96-193 substituted "producer" for "agent" and "appointed" for "licensed", effective June 3, 1996.
See Sec. 38a-709 re termination of producer's appointment and agency contracts.

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Sec. 38a-711. (Formerly Sec. 38-92). Payment of commissions to unlicensed persons. No insurance company or producer shall pay, directly or indirectly, any commission or other valuable consideration to any person, partnership or corporation for services performed within this state as an insurance producer unless such person, partnership or corporation holds a license to act as an insurance producer in this state, provided the provisions of this section shall not prevent the payment of renewal or other deferred commissions to formerly licensed insurance agents, brokers or producers or the heirs or assigns of such agents, brokers or producers, nor shall this section apply to persons acting as executive officers or traveling salaried employees of an insurance company authorized to transact business in this state. Any person, partnership or corporation which violates any provision of this section shall be fined not more than five hundred dollars.
(1949, S. 2797d; P.A. 94-160, S. 7, 24; P.A. 98-72.)
History: Sec. 38-92 transferred to Sec. 38a-711 in 1991; P.A. 94-160 substituted "producer" for "agent or broker" to accurately reflect the modernization and nomenclature of the industry, effective January 1, 1996; P.A. 98-72 added "or the heirs or assigns of such agents, brokers or producers" re permitted payments of renewal or other deferred commissions.

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Sec. 38a-712. (Formerly Sec. 38-92a). Report of failure of producer to remit premiums and of checks returned for insufficient funds or otherwise dishonored. (a) Each insurance company authorized or permitted to do business in this state and each residual market mechanism established pursuant to section 38a-329 shall report to the Insurance Commissioner (1) any failure on the part of an insurance producer or excess line broker to remit premiums for policies or endorsements issued to insureds directly or through the producer within thirty days following the due date of the account of the producer with the company, its state agent or managing general agent or (2) whenever a check issued by such producer to the company or residual market mechanism is returned for insufficient funds or otherwise dishonored and remains outstanding fifteen days following receipt of such return.
(b) If, upon investigation of a report concerning a failure to remit premiums, the commissioner determines that a producer has received premiums directly or indirectly from insureds and has failed to remit them to the proper company, its state agent or managing general agent, he may, following a hearing as specified in section 38a-774, suspend or revoke the license of the producer. Upon receipt of a report concerning a dishonored check or upon dishonor of a check issued by a producer to the Insurance Department of the state of Connecticut, the commissioner shall notify the producer issuing such check of the report. If an arrangement for payment of such funds is not made to the satisfaction of the commissioner by the producer within fifteen days of receipt of such notice, the license of the producer shall be automatically suspended. Within sixty days of receipt of such notice the producer may make written demand upon the commissioner for a hearing to show cause why the suspension should be terminated. Such hearing shall be held within thirty days from the date of receipt of the written demand. If by the end of the sixty-day demand period no hearing has been demanded, the license of the producer shall be revoked. The commissioner may institute procedures for the restoration of the licensee's insurance accounts to best protect the interests of all parties concerned.
(c) The commissioner may adopt such reasonable regulations as he deems necessary for the implementation of this section and specifically to provide procedures for continuing, terminating or restoring the licenses affected.
(1967, P.A. 250; P.A. 77-614, S. 163, 610; P.A. 80-482, S. 289, 348; P.A. 86-36; P.A. 89-63; P.A. 90-243, S. 39; P.A. 94-39, S. 7; 94-160, S. 8, 24; P.A. 95-136, S. 4, 8.)
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; P.A. 86-36 provided that the insurance company and the agent or broker shall each conduct upon the request of the commissioner, an audit of the disputed accounts, the results of which shall be sent to the commissioner, who may then conduct further investigations; P.A. 89-63 required residual market mechanisms to report failure of agent or broker to remit premiums, required a report be made when a check issued by an agent or broker to a company or residual market mechanism is returned for insufficient funds and remains outstanding fifteen days, provided for automatic suspension of license if no arrangement for payment of outstanding sum is made to the satisfaction of the commissioner and deleted provisions requiring companies, agents and brokers to conduct audits upon the commissioner's request; P.A. 90-243 made technical changes and divided section into Subsecs.; Sec. 38-92a transferred to Sec. 38a-712 in 1991; P.A. 94-39 added the phrase "or otherwise dishonored" to trigger the reporting requirement when a check issued by an agent or broker to a company or residual market mechanism is dishonored for any reason; P.A. 94-160 substituted "producer" for "agent or broker" to accurately reflect the modernization and nomenclature of the industry and added "or otherwise dishonored" as a criteria to report when a check issued by a producer is returned for insufficient funds or otherwise dishonored, effective January 1, 1996; P.A. 95-136 added provision in Subsec. (b) to require the Insurance Commissioner to notify a producer of a dishonored check when such check is presented to the state Insurance Department and added provision regarding the suspension of a producer and the subsequent revocation of license, if a producer fails to make arrangements for the payment of funds related to a dishonored check or fails to demand a hearing to show cause why such suspension should be terminated, effective January 1, 1996; (Revisor's note: In 1999 a repetition of "suspended." in Subsec. (b) before the phrase "Within sixty days of ..." was deleted editorially to correct a clerical error).

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Sec. 38a-713. (Formerly Sec. 38-89). Signing or countersigning insurance policies in blank. Any insurance agent 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 license.
(1949 Rev., S. 6074.)
History: Sec. 38-89 transferred to Sec. 38a-713 in 1991.
See Sec. 38a-774 re suspension or revocation of license.

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Sec. 38a-714. (Formerly Sec. 38-90). Personal liability of agent or broker acting on behalf of insurance company not licensed to do business in this state. Any person making within this state directly or indirectly any contract of insurance in behalf of any insurance company which is not licensed to do business in this state shall be personally liable to the insured for the performance of such contract by the insurance company.
(1949 Rev., S. 6075.)
History: Sec. 38-90 transferred to Sec. 38a-714 in 1991.
See Sec. 38a-744 re liability of licensee.
Annotation to former section 38-90:
Cause of action founded on this statute is of a contractual nature. 2 CS 50.

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Sec. 38a-715. (Formerly Sec. 38-90a). Payment by insured to producer as payment to company. Any payment made by or on behalf of an insured to any producer for policies of insurance which have been issued to such producer for delivery to the insured or issued directly to the insured on the order of such producer shall, in controversies between the insured and the company, be deemed to have been paid to the company.
(1963, P.A. 142; P.A. 94-160, S. 9, 24.)
History: Sec. 38-90a transferred to Sec. 38a-715 in 1991; P.A. 94-160 substituted "producer" for "broker" to accurately reflect the modernization and nomenclature of the industry, effective January 1, 1996.

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Sec. 38a-716. (Formerly Sec. 38a-716). Premium advancing by producer. Cancellation of policy. (a) If any insurance producer advances premium for a policy to an insurer, on behalf of an insured, with respect to any property or casualty insurance policy other than one providing coverage for homeowners, tenants, private passenger nonfleet automobile, mobile manufactured home and other property and casualty insurance for personal, family or household needs and such insured has not paid the premium due, the producer may request cancellation of such policy by the insurer, provided that the producer has sent, by certified or registered mail, return receipt requested, to the insured at the address shown on the policy, written notice which shall include: (1) The name and address of the insured and the insurer, (2) policy number, (3) an itemization of the premium due the insurance producer stated separately for each policy or endorsement, including separate itemization of all payments received for and credits applied to, each policy, (4) a statement of the insurance producer's intent to request, in writing, cancellation of the policy by the insurer for nonpayment of premium, unless the default is cured within fifteen days from the date the notice is postmarked, (5) a statement specifying that in the event the insured submits any written response to the notice, it shall be forwarded to the insurer with the request for cancellation. If written response is received following submission of written request for cancellation, it shall be immediately forwarded to the insurer by the insurance producer. The insurer shall reply directly to the insured within ten days following receipt of the insured's response and forward a copy of its response to the producer.
(b) If upon receipt of the written request from the insurance producer, the insurer cancels the policy, such cancellation shall be made in accordance with the policy provisions regarding cancellation for nonpayment of premium and on a pro-rata basis. The producer is entitled to and has a lien on any return premium for the policy, to the extent of the amount owed by the insured to the producer, for such policy.
(c) Any insurance producer or insurer who violates any provisions of this section shall be subject to the provisions of section 38a-817.
(P.A. 82-59; June Sp. Sess. P.A. 83-3, S. 1; P.A. 94-160, S. 10, 24.)
History: June Sp. Sess. 83-3 changed term "mobile home" to "mobile manufactured home" in Subsec. (a); Sec. 38-90b transferred to Sec. 38a-716 in 1991; P.A. 94-160 substituted "producer" for "agent or insurance broker" to accurately reflect the modernization and nomenclature of the industry, effective January 1, 1996.
See Sec. 1-2a re construing of references to "United States mail" or "postmark" to include references to any delivery service designated by the Secretary of the Treasury pursuant to Section 7502 of the Internal Revenue Code of 1986 or any successor to the code, as amended, and to any date recorded or marked as described in said Section 7502 by a designated delivery service and construing of "registered or certified mail" to include any equivalent designated by the Secretary of the Treasury pursuant to said Section 7502.

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Sec. 38a-717. (Formerly Sec. 38-91). Payment of commissions to producers. An insurance company or producer may pay compensation to a licensed producer, for or on account of such producer's solicitation or negotiation of contracts for insurance or suretyship which such company is authorized to write. No insurance company or producer authorized to do business in this state, shall pay compensation to any person, partnership, association or corporation of another state, to effect contracts of insurance as to which a producer's license is required to be held by any person, partnership, association or corporation of this state, unless such person, partnership, association or corporation of such other state has a producer's license in this state.
(1949 Rev., S. 6076; 1961, P.A. 7; 1967, P.A. 11; P.A. 94-160, S. 11, 24.)
History: 1961 act required that fees be not less than twenty dollars annually in the aggregate; 1967 act deleted provision which required person, partnership, association or corporation of another state to "pay the same fees as are required in like cases by such other state" totaling at least twenty dollars annually; Sec. 38-91 transferred to Sec. 38a-717 in 1991; P.A. 94-160 substituted "producer" for "agent and broker" to accurately reflect the modernization and nomenclature of the industry and substituted "compensation" for "anything of value", effective January 1, 1996.

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Sec. 38a-718. (Formerly Sec. 38-76c). Restrictions on negotiation of insurance incidental to extension of credit. (a) As used in this section (A) "bank holding company" shall have the same meaning as that contained in section 36-419; (B) "lending institution" shall include, but shall not be limited to, banks, savings and loan associations and credit unions.
(b) No person, partnership, association or corporation licensed under the provisions of section 38a-769, which is owned or controlled, directly or indirectly, by a bank holding company or lending institution, shall negotiate any policy of insurance applicable to any real or personal property which is security for an extension of credit by any lending institution, if approval of the transaction is contingent on the purchase of said insurance.
(c) The terms of this section shall not be construed to apply to any person, partnership, association or corporation owned or controlled by a bank holding company or any lending institution engaged in the activity prohibited hereby on December 31, 1971.
(1972, P.A. 109, S. 1−3.)
History: Sec. 38-76c transferred to Sec. 38a-718 in 1991.

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Secs. 38a-719 to 38a-722. Reserved for future use.

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CHAPTER 701aINSURANCE PRODUCERS AND AGENTS

CHAPTER 701a
INSURANCE PRODUCERS AND AGENTS