Table of Contents
Sec. 38a-836. (Formerly Sec. 38-273). Short title: Connecticut Insurance Guaranty Association Act.
Sec. 38a-837. (Formerly Sec. 38-274). Application of chapter.
Sec. 38a-838. (Formerly Sec. 38-275). Definitions.
Sec. 38a-839. (Formerly Sec. 38-276). Connecticut Insurance Guaranty Association created.
Membership. Function. Accounts.
Sec. 38a-840. (Formerly Sec. 38-277). Board of directors. Selection. Reimbursement for
expenses.
Sec. 38a-842. (Formerly Sec. 38-279). Plan of operation.
Sec. 38a-843. (Formerly Sec. 38-280). Insolvent insurers.
Sec. 38a-844. (Formerly Sec. 38-281). Assignment of rights under policy. Receiver or liquidator bound by settlements. Preservation of rights of association. Right of recovery.
Sec. 38a-845. (Formerly Sec. 38-282). Exhaustion of rights under policy prior to claim
against association. Claims recoverable from more than one association. Persons required
to exhaust rights under governmental insurance or guaranty program.
Sec. 38a-846. (Formerly Sec. 38-283). Detection and prevention of insurer insolvencies.
Sec. 38a-847. (Formerly Sec. 38-284). Association subject to examination and regulation
by commissioner. Annual financial report.
Sec. 38a-848. (Formerly Sec. 38-285). Exemption from fees and taxes. Exception.
Sec. 38a-849. (Formerly Sec. 38-286). Rates and premiums to include recoupment of assessments.
Sec. 38a-850. (Formerly Sec. 38-287). No liability for action taken in performance of
powers and duties. No liability for failure to act.
Sec. 38a-851. (Formerly Sec. 38-288). Association rights in proceedings to which insolvent insurer is party. Access to insolvent insurer's records.
Sec. 38a-852. (Formerly Sec. 38-288a). Prohibited unfair trade practice.
Sec. 38a-853. (Formerly Sec. 38-289). Regulations.
Secs. 38a-854 to 38a-857.
Sec. 38a-858. (Formerly Sec. 38-301). Short title: Connecticut Life and Health Insurance
Guaranty Association Act.
Sec. 38a-859. (Formerly Sec. 38-302). Association of insurers.
Sec. 38a-860. (Formerly Sec. 38-303). Application of chapter.
Sec. 38a-861. (Formerly Sec. 38-304). Liberal construction.
Sec. 38a-862. (Formerly Sec. 38-305). Definitions.
Sec. 38a-863. (Formerly Sec. 38-306). Creation of association. Accounts. Supervision.
Sec. 38a-864. (Formerly Sec. 38-307). Board of directors.
Sec. 38a-865. (Formerly Sec. 38-308). Powers.
Sec. 38a-866. (Formerly Sec. 38-309). Assessments.
Sec. 38a-867. (Formerly Sec. 38-310). Plan of operation.
Sec. 38a-868. (Formerly Sec. 38-311). Duties of commissioner.
Sec. 38a-869. (Formerly Sec. 38-312). Action by board of directors. Examination of insurer.
Sec. 38a-870. (Formerly Sec. 38-313). Special deputy to supervise liquidation, rehabilitation or conservation.
Sec. 38a-871. (Formerly Sec. 38-314). Liability for unpaid assessments. Records. Use of
assets of impaired insurer. Distributions.
Sec. 38a-872. (Formerly Sec. 38-315). Examination and regulation of association. Reports.
Sec. 38a-873. (Formerly Sec. 38-316). Exemption from fees and taxes.
Sec. 38a-874. (Formerly Sec. 38-317). Immunity.
Sec. 38a-875. (Formerly Sec. 38-318). Stay of proceedings in which impaired insurer a
party.
Secs. 38a-876 to 38a-879.
Sec. 38a-880. Brokered Transactions Guaranty Fund.
Sec. 38a-881. Fee payable to fund.
Sec. 38a-882. Level of guaranty fund. Credits to General Fund. Assessment of additional
fee.
Sec. 38a-883. Limitation of actions.
Sec. 38a-884. Procedure.
Sec. 38a-885. Penalty for false or untrue claim.
Sec. 38a-886. Procedure. Application to the Superior Court.
Sec. 38a-887. Payment from guaranty fund.
Sec. 38a-888. Regulations.
Sec. 38a-889. Department rulings: Appeal.
Secs. 38a-890 to 38a-893.
CONNECTICUT INSURANCE GUARANTY ASSOCIATION ACT
Sec. 38a-836. (Formerly Sec. 38-273). Short title: Connecticut Insurance
Guaranty Association Act. Sections 38a-836 to 38a-853, inclusive, shall be known
and may be cited as the "Connecticut Insurance Guaranty Association Act". Sec. 38a-837. (Formerly Sec. 38-274). Application of chapter. Sections 38a-836
to 38a-853, inclusive, shall apply to all kinds of direct insurance, except: Sec. 38a-838. (Formerly Sec. 38-275). Definitions. The following terms as used
in sections 38a-836 to 38a-853, inclusive, unless the context otherwise requires or a
different meaning is specifically prescribed, shall have the following meanings: Sec. 38a-839. (Formerly Sec. 38-276). Connecticut Insurance Guaranty Association created. Membership. Function. Accounts. There is created a nonprofit unincorporated legal entity to be known as the Connecticut Insurance Guaranty Association.
All insurers defined as member insurers in subdivision (8) of section 38a-838 shall be
members of said association as a condition of their authority to transact insurance in
this state. Said association shall perform its functions under a plan of operation established and approved under section 38a-842 and shall exercise its powers through a board
of directors established under section 38a-840. For the purposes of administration and
assessment, said association shall be divided into three separate accounts: (a) The workers' compensation insurance account; (b) the automobile insurance account; and (c) an
account for all other insurance to which sections 38a-836 to 38a-853, inclusive, apply. Sec. 38a-840. (Formerly Sec. 38-277). Board of directors. Selection. Reimbursement for expenses. (1) The board of directors of said association shall consist of
not less than five nor more than nine persons serving terms as established in the plan
of operation under section 38a-842. The members of the board of directors shall be
selected by member insurers subject to the approval of the commissioner. Vacancies
on the board shall be filled for the remaining period of the term by a majority vote of
the remaining members, subject to the approval of the commissioner. If no members
are selected within sixty days after October 1, 1971, the commissioner may appoint the
initial members of the board of directors. Sec. 38a-841. (Formerly Sec. 38-278). Obligations and rights of association.
Limitations. Assessments. Investigation of claims. Right to intervene in court proceedings. (1) Said association shall: (a) Be obligated to the extent of the covered claims
existing prior to the determination of insolvency and arising within thirty days after the
determination of insolvency, or before the policy expiration date if less than thirty days
after the determination, or before the insured replaces the policy or causes its cancellation, if he does so within thirty days of such determination, provided such obligation
shall be limited as follows: (i) With respect to covered claims for unearned premiums, to
one-half of the unearned premium on any policy, subject to a maximum of two thousand
dollars per policy; (ii) with respect to covered claims other than for unearned premiums,
such obligation shall include only that amount of each such claim which is in excess of
one hundred dollars and is less than three hundred thousand dollars, except that said
association shall pay the full amount of any such claim arising out of a workers' compensation policy, provided in no event shall (A) said association be obligated to any claimant
in an amount in excess of the obligation of the insolvent insurer under the policy form
or coverage from which the claim arises, or (B) said association be obligated for any
claim filed with the association after the expiration of two years from the date of the
declaration of insolvency unless such claim arose out of a workers' compensation policy
and was timely filed in accordance with section 31-294c; (b) be deemed the insurer to
the extent of its obligations on the covered claims and to such extent shall have all rights,
duties, and obligations of the insolvent insurer as if the insurer had not become insolvent;
(c) allocate claims paid and expenses incurred among the three accounts, created by
section 38a-839, separately, and assess member insurers separately (i) in respect of each
such account for such amounts as shall be necessary to pay the obligations of said
association under subdivision (a) of subsection (1) of this section subsequent to an
insolvency; (ii) the expenses of handling covered claims subsequent to an insolvency;
(iii) the cost of examinations under section 38a-846; and (iv) such other expenses as are
authorized by sections 38a-836 to 38a-853, inclusive. The assessments of each member
insurer shall be in the proportion that the net direct written premiums of such member
insurer for the calendar year preceding the assessment on the kinds of insurance in such
account bears to the net direct written premiums of all member insurers for the calendar
year preceding the assessment on the kinds of insurance in such account. Each member
insurer shall be notified of its assessment not later than thirty days before it is due. No
member insurer may be assessed in any year on any account an amount greater than
two per cent of that member insurer's net direct written premiums for the calendar year
preceding the assessment on the kinds of insurance in said account, provided if, at the
time an assessment is levied on the "all other insurance" account, as defined in subdivision (c) of section 38a-839, the board of directors finds that at least fifty per cent of the
total net direct written premiums of a member insurer and all its affiliates, for the year
on which such assessment is based, were from policies issued or delivered in Connecticut, on risks located in this state, such member insurer shall be assessed only on such
member insurer's net direct written premium that is attributable to the kind of insurance
that gives rise to each covered claim. If the maximum assessment, together with the
other assets of said association in any account, does not provide in any one year in any
account an amount sufficient to make all necessary payments from that account, the
funds available may be prorated and the unpaid portion shall be paid as soon thereafter
as funds become available. Said association may defer, in whole or in part, the assessment of any member insurer, if the assessment would cause the member insurer's financial statement to reflect amounts of capital or surplus less than the minimum amounts
required for a certificate of authority by any jurisdiction in which the member insurer
is authorized to transact insurance provided that during the period of deferment, no
dividends shall be paid to shareholders or policyholders. Deferred assessments shall be
paid when such payment will not reduce capital or surplus below the minimum amounts
required for a certificate of authority. Such payments shall be refunded to those insurers
receiving greater assessments because of such deferment or, at the election of the insurer,
be credited against future assessments. Each member insurer serving as a servicing
facility may set off against any assessment, authorized payments made on covered claims
and expenses incurred in the payment of such claims by such member insurer if they
are chargeable to the account in respect of which the assessment is made; (d) investigate
claims brought against said association and adjust, compromise, settle, and pay covered
claims to the extent of said association's obligations, and deny all other claims. The
association shall pay claims in any order it deems reasonable, including but not limited
to, payment in the order of receipt or by classification. It may review settlements, releases
and judgments to which the insolvent insurer or its insureds were parties to determine
the extent to which such settlements, releases and judgments may be properly contested;
(e) notify such persons as the commissioner may direct under subdivision (a) of subsection (2) of section 38a-843; (f) handle claims through its employees or through one or
more insurers or other persons designated by said association as servicing facilities,
provided such designation of a servicing facility shall be subject to the approval of the
commissioner, and may be declined by a member insurer; (g) reimburse each such
servicing facility for obligations of said association paid by such facility and for expenses
incurred by such facility while handling claims on behalf of said association and shall
pay such other expenses of said association as are authorized by sections 38a-836 to
38a-853, inclusive. Sec. 38a-842. (Formerly Sec. 38-279). Plan of operation. (1) (a) Said association
shall submit to the commissioner a plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of said association. The plan of operation and any amendments thereto shall become effective upon
approval in writing by the commissioner. (b) If said association fails to submit a suitable
plan of operation within ninety days following October 1, 1971, or if at any time thereafter said association fails to submit suitable amendments to the plan, the commissioner
shall, after notice and hearing, adopt and promulgate such reasonable regulations as
are necessary or advisable to effectuate the provisions of sections 38a-836 to 38a-853,
inclusive. Such regulations shall continue in force until modified by the commissioner or
superseded by a plan submitted by said association and approved by the commissioner. Sec. 38a-843. (Formerly Sec. 38-280). Insolvent insurers. (1) The commissioner
shall: (a) Notify said association of the existence of an insolvent insurer, and notify the
chairman of the Workers' Compensation Commission and the State Treasurer of the
existence of an insolvent workers' compensation insurer, not later than three days after
he receives notice of the determination of any such insolvency; (b) upon request of the
board of directors, provide said association with a statement of the net direct written
premiums of each member insurer. Sec. 38a-844. (Formerly Sec. 38-281). Assignment of rights under policy. Receiver or liquidator bound by settlements. Preservation of rights of association.
Right of recovery. (1) Any person recovering any moneys under sections 38a-836 to
38a-853, inclusive, shall be deemed to have assigned his rights under the policy to said
association to the extent of his recovery from said association. Every insured or claimant
seeking the protection of said sections shall cooperate with said association to the same
extent as such person would have been required to cooperate with the insolvent insurer.
Said association shall have no cause of action against any insured of the insolvent insurer
for any sums it has paid out to such insured except such causes of action as the insolvent
insurer would have had if such sums had been paid by the insolvent insurer. In the case
of an insolvent insurer operating on a plan with assessment liability, payments of claims
of said association shall not operate to reduce the liability of insureds to the receiver,
liquidator, or statutory successor for unpaid assessments. Sec. 38a-845. (Formerly Sec. 38-282). Exhaustion of rights under policy prior
to claim against association. Claims recoverable from more than one association.
Persons required to exhaust rights under governmental insurance or guaranty
program. (1) Any person having a claim against an insurer under any provision in an
insurance policy, other than a policy of an insolvent insurer, which is also a covered
claim under sections 38a-836 to 38a-853, inclusive, shall exhaust first his rights under
such policy. Any amount payable on a covered claim under said sections shall be reduced
by the amount recoverable under the claimant's insurance policy or chapter 568. Sec. 38a-846. (Formerly Sec. 38-283). Detection and prevention of insurer insolvencies. To aid in the detection and prevention of insurer insolvencies: Sec. 38a-847. (Formerly Sec. 38-284). Association subject to examination and
regulation by commissioner. Annual financial report. Said association shall be subject to examination and regulation by the commissioner. The board of directors shall
submit, not later than March thirtieth of each year, a financial report for the preceding
calendar year in a form approved by the commissioner. Sec. 38a-848. (Formerly Sec. 38-285). Exemption from fees and taxes. Exception. Said association shall be exempt from payment of all fees and all taxes levied by
the state or any of its subdivisions provided it shall not be exempt from the payment of
real or personal property taxes. Sec. 38a-849. (Formerly Sec. 38-286). Rates and premiums to include recoupment of assessments. Section 38a-849 is repealed, effective July 1, 2000. Sec. 38a-850. (Formerly Sec. 38-287). No liability for action taken in performance of powers and duties. No liability for failure to act. There shall be no liability
on the part of and no cause of action of any nature shall arise against any member insurer,
said association or its agents or employees, the board of directors, or any person serving
as an alternate or substitute representative of any director or the commissioner or his
representatives for any action taken or any failure to act by them in the performance of
their powers and duties under sections 38a-836 to 38a-853, inclusive. Sec. 38a-851. (Formerly Sec. 38-288). Association rights in proceedings to
which insolvent insurer is party. Access to insolvent insurer's records. (a) All proceedings in which an insolvent insurer is a party or is obligated to defend an insured as
a party in any court in this state shall be stayed for up to six months and for such additional
time thereafter as may be determined by the court from the date of declaration of insolvency or from the time an ancillary proceeding is instituted in the state, whichever is
later, to permit proper defense by said association of all pending causes of action in the
case. Whenever any covered claims arise from a judgment under any decision, verdict
or finding based on the default of an insolvent insurer or based on such insolvent insurer's
failure to defend an insured, said association, either on its own behalf or on behalf of
such insured, may apply to have such judgment, order, decision, verdict or finding set
aside by the same court or administrator that made such judgment, order, decision,
verdict or finding and said association may defend against any such claim on the merits
of the case. Sec. 38a-852. (Formerly Sec. 38-288a). Prohibited unfair trade practice. It
shall be a prohibited unfair trade practice and a violation of section 38a-815 for any
person to make use in any manner of the protection afforded by sections 38a-836 to 38a-
853, inclusive, in the solicitation, negotiation, procurement or effectuation of insurance
provided, this section shall not apply to the distribution of any publication approved by
the commissioner and describing the general purposes and current limitations of sections
38a-836 to 38a-853, inclusive. Violations of this section shall be subject to the provisions
of section 38a-817. Sec. 38a-853. (Formerly Sec. 38-289). Regulations. The commissioner may promulgate such reasonable regulations as he deems necessary to carry out the intent of
sections 38a-836 to 38a-853, inclusive. Such regulations may include definitions of the
kinds of insurance specified in section 38a-837. Secs. 38a-854 to 38a-857. Reserved for future use. Sec. 38a-858. (Formerly Sec. 38-301). Short title: Connecticut Life and Health
Insurance Guaranty Association Act. Sections 38a-858 to 38a-875, inclusive, shall
be known and may be cited as the "Connecticut Life and Health Insurance Guaranty
Association Act". Sec. 38a-859. (Formerly Sec. 38-302). Association of insurers. To provide protection for policyowners, insureds, beneficiaries, annuitants, payees and assignees of
life insurance policies, health insurance policies, annuity contracts, and supplemental
contracts, subject to certain limitations, against failure in the performance of contractual
obligations due to the impairment of the insurer issuing such policies or contracts, an
association of insurers is created to enable the guaranty of payment of benefits and of
continuation of coverages. Members of the association are subject to assessment to
provide funds to carry out the purpose of sections 38a-858 to 38a-875, inclusive, and
the association is authorized to assist the commissioner in the prescribed manner in the
detection and prevention of insurer impairments. Sec. 38a-860. (Formerly Sec. 38-303). Application of chapter. (a) Sections 38a-
858 to 38a-875, inclusive, shall provide coverage for the policies and contracts specified
in subsection (b) of this section: (1) To persons who, regardless of where they reside,
except for nonresident certificate holders under group policies or contracts, are the beneficiaries, assignees or payees of the persons covered under subdivision (2), and (2) to
persons who are owners of or certificate holders under such policies or contracts or, in
the case of unallocated annuity contracts, to the persons who are the contract holders,
and who (A) are residents, or (B) are not residents, but only under all of the following
conditions: (i) The insurers which issued such policies or contracts are domiciled in this
state; (ii) such insurers never held a license or certificate or authority in the states in
which such persons reside; (iii) such states have associations similar to the association
created by this section and sections 38a-837, 38a-838, 38a-845, 38a-853, 38a-862, 38a-
863, 38a-865 and 38a-866 and (iv) such persons are not eligible for coverage by such
associations. Sec. 38a-861. (Formerly Sec. 38-304). Liberal construction. Sections 38a-858
to 38a-875, inclusive, shall be liberally construed to effect the purpose under section
38a-859 which shall constitute an aid and guide to interpretation. Sec. 38a-862. (Formerly Sec. 38-305). Definitions. As used in sections 38a-858
to 38a-875, inclusive: Sec. 38a-863. (Formerly Sec. 38-306). Creation of association. Accounts. Supervision. (a) There is created a nonprofit legal entity to be known as the Connecticut
Life and Health Insurance Guaranty Association. All member insurers shall be and
remain members of the association as a condition of their authority to transact insurance
in this state. The association shall perform its functions under the plan of operation
established and approved under section 38a-867 and shall exercise its powers through
a board of directors established under section 38a-864. For purposes of administration
and assessment, the association shall maintain two accounts: (1) The life insurance and
annuity account which includes the following subaccounts: (A) Life insurance account;
(B) annuity account; and (C) unallocated annuity account which shall include contracts
qualified under Section 403(b) of the United States Internal Revenue Code; and (2) the
health insurance account. Sec. 38a-864. (Formerly Sec. 38-307). Board of directors. (a) The board of directors of the association shall consist of not less than five nor more than nine members
serving terms as established in the plan of operation. The members of the board shall
be selected by member insurers subject to the approval of the commissioner. Vacancies
on the board shall be filled for the remaining period of the term in the manner described
in the plan of operation. To select the initial board of directors, and initially organize
the association, the commissioner shall give notice to all member insurers of the time and
place of the organizational meeting. In determining voting rights at the organizational
meeting each member insurer shall be entitled to one vote in person or by proxy. If the
board of directors is not selected within sixty days after notice of the organizational
meeting, the commissioner may appoint the initial members. Sec. 38a-865. (Formerly Sec. 38-308). Powers. In addition to the powers and
duties enumerated in sections 38a-858 to 38a-875, inclusive: Sec. 38a-866. (Formerly Sec. 38-309). Assessments. (a) For the purpose of providing the funds necessary to carry out the powers and duties of the association, the
board of directors shall assess the member insurers, separately for each account, at such
times and for such amounts as the board finds necessary. The board shall collect the
assessments after thirty days' written notice to the member insurers before payment
is due. Sec. 38a-867. (Formerly Sec. 38-310). Plan of operation. (a) (1) The association
shall submit to the commissioner a plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable and equitable administration of the association. The plan of operation and any amendments thereto shall become effective upon
approval in writing by the commissioner. (2) If the association fails to submit a suitable
plan of operation within one hundred and eighty days following October 1, 1972, or if
at any time thereafter the association fails to submit suitable amendments to the plan,
the commissioner shall, after notice and hearing, adopt and promulgate such reasonable
rules as are necessary or advisable to effectuate the provisions of sections 38a-858 to
38a-875, inclusive. Such rules shall continue in force until modified by the commissioner
or superseded by a plan submitted by the association and approved by the commissioner. Sec. 38a-868. (Formerly Sec. 38-311). Duties of commissioner. In addition to
the duties and powers enumerated elsewhere in sections 38a-858 to 38a-875, inclusive: Sec. 38a-869. (Formerly Sec. 38-312). Action by board of directors. Examination of insurer. To aid in the detection and prevention of insurer impairments: Sec. 38a-870. (Formerly Sec. 38-313). Special deputy to supervise liquidation,
rehabilitation or conservation. The association may recommend a natural person to
serve as a special deputy to act for the commissioner and under his supervision in the
liquidation, rehabilitation or conservation of any member insurer. Sec. 38a-871. (Formerly Sec. 38-314). Liability for unpaid assessments. Records. Use of assets of impaired insurer. Distributions. (a) Nothing in sections 38a-858
to 38a-875, inclusive, shall be construed to reduce the liability for unpaid assessments of
the insureds of an impaired insurer operating under a plan with assessment liability. Sec. 38a-872. (Formerly Sec. 38-315). Examination and regulation of association. Reports. The association shall be subject to examination and regulation by the
commissioner. The board of directors shall submit to the commissioner, not later than
May first of each year, a financial report for the preceding calendar year in a form
approved by the commissioner and a report of its activities during the preceding calendar year. Sec. 38a-873. (Formerly Sec. 38-316). Exemption from fees and taxes. The association shall be exempt from payment of all fees and all taxes levied by this state or
any of its subdivisions, except taxes levied on real or personal property. Sec. 38a-874. (Formerly Sec. 38-317). Immunity. There shall be no liability on
the part of, and no cause of action of any nature shall arise against, any member insurer
or its agents or employees, the association or its agents or employees, members of the
board of directors, or the commissioner or his representatives, for any action taken by
them in the performance of their powers and duties under sections 38a-858 to 38a-875,
inclusive. Sec. 38a-875. (Formerly Sec. 38-318). Stay of proceedings in which impaired
insurer a party. All proceedings in which the impaired insurer is a party in any court
in this state shall be stayed one hundred eighty days from the date an order of liquidation,
rehabilitation or conservation is final to permit proper legal action by the association
on any matters germane to its powers or duties. The association may apply to have any
judgment under any decision, order, verdict, or finding based on default set aside by
the same court that made such judgment and shall be permitted to defend against such
suit on the merits. Secs. 38a-876 to 38a-879. Reserved for future use. Sec. 38a-880. Brokered Transactions Guaranty Fund. The Insurance Department shall establish and maintain a Brokered Transactions Guaranty Fund from which
any resident aggrieved by an action of an insurance producer duly licensed in this state
under section 38a-769, or an unlicensed person acting as a producer engaged in the
business of insurance, concerning the business of insurance, by reason of the embezzlement of money or property, or the unlawful obtainment of money or property from
any person by false pretenses, artifice, trickery or forgery, or by reason of any fraud,
misrepresentation or deceit, by or on the part of any such producer or unlicensed person
acting as a producer engaged in the business of insurance, excluding the failure in performance of contractual obligations due to the impairment of an insurer, may recover,
upon approval by the department of an application brought pursuant to section 38a-884,
compensation in an amount not exceeding in the aggregate the sum of ten thousand
dollars. Sec. 38a-881. Fee payable to fund. Any individual who is licensed as an insurance
broker or an insurance agent on October 1, 1989, shall pay a fee of ten dollars which
shall be credited to the Brokered Transactions Guaranty Fund. Any individual who
receives an insurance broker's license or an insurance agent's license for the first time
prior to June 3, 1996, or an insurance producer's license for the first time on or after
June 3, 1996, shall pay a fee of ten dollars, in addition to all other fees payable, to be
credited to the Brokered Transactions Guaranty Fund. Sec. 38a-882. Level of guaranty fund. Credits to General Fund. Assessment of
additional fee. (a) The Insurance Department shall maintain the Brokered Transactions
Guaranty Fund at a level not to exceed five hundred thousand dollars and to this intent
moneys received under section 38a-881 shall be credited to such guaranty fund whenever
the fund balance is below five hundred thousand dollars and any such moneys may be
invested or reinvested in the same manner as funds of the state employees retirement
system, and the interest arising from such investments shall be credited to the General
Fund. Any moneys received under section 38a-881 not required to maintain such guaranty fund balance shall be deposited to the General Fund. All moneys in such guaranty
fund in excess of five hundred thousand dollars shall be transferred by the Treasurer to
the General Fund. Sec. 38a-883. Limitation of actions. No application to recover compensation under sections 38a-880 to 38a-889, inclusive, which might subsequently result in an order
for collection from the Brokered Transactions Guaranty Fund shall be brought later than
two years from the action of an insurance producer duly licensed in this state under
section 38a-769, or an unlicensed person acting as a producer engaged in the business
of insurance, by reason of the embezzlement of money or property, or the unlawful
obtainment of money or property from any person by false pretenses, artifice, trickery
or forgery, or by reason of any fraud, misrepresentation or deceit by or on the part of
any such producer or unlicensed person acting as a producer engaged in the business
of insurance, excluding the failure in performance of contractual obligations due to the
impairment of an insurer. Sec. 38a-884. Procedure. (a) Any person aggrieved under section 38a-880 may
apply to the Insurance Department for an order directing payment out of the Brokered
Transactions Guaranty Fund subject to the limitations stated in said section and the
limitations specified in this section. Sec. 38a-885. Penalty for false or untrue claim. Any person filing with the department any notice, statement or other document required under the provisions of section 38a-884, which is false or untrue or contains any material misstatement of fact shall
be fined not less than two hundred dollars. Sec. 38a-886. Procedure. Application to the Superior Court. When the department receives an application, as provided in section 38a-884, the Attorney General, at
the request of the commissioner, may apply in the name of the state of Connecticut to
the Superior Court for an order temporarily or permanently restraining and enjoining
the continuance of such act or acts, for an order directing restitution to any aggrieved
person, payment to the guaranty fund for any payments the fund made to aggrieved
persons, attorney's fees, costs, a civil penalty of not more than one thousand dollars per
violation and such other relief as may be granted in equity. Sec. 38a-887. Payment from guaranty fund. When the commissioner has caused
to be paid from the Brokered Transactions Guaranty Fund any sum to the aggrieved
person, the department shall be subrogated to all of the rights of the aggrieved person
up to the amount paid, and the aggrieved person shall assign all of his right, title and
interest in the claim. By accepting payment from the guaranty fund the aggrieved person
shall agree to cooperate with the department in any action it takes against the licensed
insurance producer or unlicensed person acting as a producer engaged in the business
of insurance. Any amount and interest recovered by the department shall be deposited
to said guaranty fund. Sec. 38a-888. Regulations. The Insurance Commissioner may adopt such regulations as he deems necessary, in accordance with chapter 54, to carry out the purposes
of sections 38a-880 to 38a-889, inclusive. Sec. 38a-889. Department rulings: Appeal. Any person aggrieved by any decision, order or regulation of the department under sections 38a-880 to 38a-888, inclusive,
may appeal in accordance with the provisions of section 38a-19.
(1971, P.A. 466, S. 1.)
History: Sec. 38-273 transferred to Sec. 38a-836 in 1991.
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(1) Life, annuity, health or disability insurance;
(2) Mortgage guaranty, financial guaranty or other forms of insurance offering protection against investment risks;
(3) Fidelity or surety or any bonding obligations;
(4) Credit insurance, vendors' single interest insurance, or collateral protection insurance or any similar insurance protecting the interests of a creditor arising out of a
creditor-debtor transaction;
(5) Insurance of warranties or service contracts, including insurance that provides
for the repair, replacement or service of goods or property, or indemnification for repair,
replacement or service, for the operational or structural failure of the goods or property
due to a defect in materials, workmanship or normal wear and tear, or that provides
reimbursement for the liability incurred by the issuer of agreements or service contracts
that provide such benefits;
(6) Title insurance;
(7) Ocean marine insurance;
(8) Any transaction or combination of transactions between a person, including
affiliates of such person, and an insurer, including affiliates of such insurer, which involves the transfer of investment or credit risk unaccompanied by transfer of insurance risk;
(9) Any insurance provided by or guaranteed by government; or
(10) Flood insurance pursuant to the federal Flood Disaster Protection Act of 1973,
as amended, 42 USC Section 4001, et seq.
(1971, P.A. 466, S. 2; P.A. 86-63; P.A. 88-76, S. 1, 10; P.A. 97-125, S. 1, 9.)
History: P.A. 86-63 provided that certain types of flood insurance shall not be subject to the provisions of chapter 687;
P.A. 88-76 excepted financial guaranty insurance from the provisions of this chapter; Sec. 38-274 transferred to Sec. 38a-
837 in 1991; P.A. 97-125 reorganized section by expending types of excepted insurance and adding Subdiv. designators,
effective July 1, 1997.
Annotations to former section 38-274:
Cited. 217 C. 371, 376.
Annotations to present section:
Cited. 217 C. 371, 376.
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(1) "Account" means any one of the three accounts created by section 38a-839;
(2) "Affiliate" means any affiliate, as defined in section 38a-1, of an insolvent insurer on December thirty-first of the year next preceding the date the insurer becomes
an insolvent insurer;
(3) "Association" means the Connecticut Insurance Guaranty Association created
under section 38a-839;
(4) "Claimant" means any person filing a first party or liability claim against the
association, provided no person who is an affiliate of the insolvent insurer at the time
the policy was issued or at the time of the insured event may be a claimant;
(5) "Commissioner" means the Insurance Commissioner;
(6) "Covered claim" means an unpaid claim, including, but not limited to, one for
unearned premiums, which arises out of and is within the coverage and subject to the
applicable limits of an insurance policy to which sections 38a-836 to 38a-853, inclusive,
apply issued by an insurer, if such insurer becomes an insolvent insurer after October
1, 1971, and (a) the claimant is a resident of this state at the time of the insured event;
or (b) the claimant is not a resident of this state, but only under all of the following
conditions: (i) The insured is a resident of this state at the time of the insured event; (ii)
the insolvent insurer is licensed to do business in this state at the time of the insured
event; (iii) the state of the claimant's residence has an association similar to the association created by said sections; and (iv) such claimant is refused coverage by such association because the insolvent insurer is not licensed to do business in the state of the claimant's residence at the time of the insured event; or (c) the claim is a first party claim for
damage to property with a permanent location in this state, provided the term "covered
claim" shall not include any claim by or for the benefit of any reinsurer, insurer, insurance
pool, or underwriting association, as subrogation recoveries or otherwise; provided that
a claim for any such amount, asserted against a person insured under a policy issued by
an insurer which has become an insolvent insurer, which, if it were not a claim by or
for the benefit of a reinsurer, insurer, insurance pool or underwriting association, would
be a "covered claim" may be filed directly with the receiver of the insolvent insurer but
in no event shall any such claim be asserted against the insured of such insolvent insurer.
A claim shall not be a "covered claim" if it is filed by or on behalf of an individual who
is neither a citizen of the United States nor an alien legally resident in the United States
at the time of the insured event, or an entity other than an individual whose principal
place of business is not in the United States at the time of the insured event, and it arises
out of an accident, occurrence, offense, act, error or omission that takes place outside
of the United States, or a loss to property normally located outside of the United States
or, if a workers' compensation claim, it arises out of employment outside of the United
States;
(7) "Insolvent insurer" means an insurer (a) licensed to transact insurance in this
state either at the time the policy was issued or when the insured event occurred and
(b) determined to be insolvent by a court of competent jurisdiction, provided the term
"insolvent insurer" shall not be construed to mean any insurer with respect to which an
order, decree, judgment or finding of insolvency, whether permanent or temporary in
nature, or order of rehabilitation or conservation has been issued by a court of competent
jurisdiction prior to October 1, 1971;
(8) "Member insurer" means any person who (a) writes any kind of insurance to
which sections 38a-836 to 38a-853, inclusive, apply under section 38a-837, including
but not limited to the exchange of reciprocal or interinsurance contracts, and (b) is
licensed to transact insurance in this state. An insurer shall cease to be a member insurer
effective on the day following the termination or expiration of its license to transact the
kinds of insurance to which said sections 38a-836 to 38a-853, inclusive, apply, however
such insurer shall remain liable as a member insurer for any obligations, including obligations for assessments levied prior to the termination or expiration of the insurer's
license and for assessments levied after the termination or expiration which relate to
any insurer which became an insolvent insurer prior to the termination or expiration of
such insurer's license. In the case of such insurer, the average of its net direct written
premium for the five calendar years prior to expiration or termination of its license,
whether or not the insurer has net direct written premium in the year preceding such
expiration or termination, shall be used as its assessment base for any year following
such expiration or termination in which the insurer has no direct written premium;
(9) "Net direct written premiums" means direct gross premiums written in this state
on insurance policies to which sections 38a-836 to 38a-853, inclusive, apply, less return
premiums thereon and dividends paid or credited to policyholders on such direct business, provided the term "net direct written premiums" shall not include premiums on
any contract between insurers or reinsurers;
(10) "Person" means an individual, corporation, partnership, association, joint stock
company, business trust, limited liability company, unincorporated organization, voluntary organization, governmental entity or other legal entity;
(11) "Residence" means, when used in reference to a corporation, its principal place
of business;
(12) "United States" has the meaning assigned to it by section 38a-1.
(1971, P.A. 466, S. 3; P.A. 77-614, S. 163, 610; P.A. 80-482, S. 321, 345, 348; P.A. 81-83, S. 1; P.A. 87-290, S. 1, 8;
P.A. 88-76, S. 2, 10; P.A. 90-243, S. 151; P.A. 97-125, S. 2, 9.)
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. 81-83 added Subdiv. (9)
defining "residence" and replaced "authorized" with "licensed" in Subdiv. (5); P.A. 87-290 added definitions of "affiliate",
"claimant", and "United States", and amended the definition of "covered claim" to limit its application to nonresidents of
this state, renumbering previous Subdivs. as necessary; P.A. 88-76 clarified the definition of "covered claim"; P.A. 90-
243 amended the definitions for "affiliate", "affiliated", "person" and "United States"; Sec. 38-275 transferred to Sec. 38a-
838 in 1991; P.A. 97-125 amended Subdiv. (4) re time when a claimant files a claim, amended Subdiv. (6)(c) to require
the claim to be a first party claim for damage to property with a permanent location and to exclude any claim by or for the
benefit of any reinsurer, insurance pool or underwriting association, amended Subdiv. (8) re when an insurer ceases to be
a member and such member's liability for obligations and amended Subdiv. (10) to redefine "person", effective July 1, 1997.
Annotation to former section 38-275:
Subdiv. (4):
Cited. 217 C. 371−373, 378, 380.
Subdiv. (6):
Cited. 215 C. 224, 226.
Annotations to present section:
Subdiv. (6):
Cited. 217 C. 371−373, 378, 380. All claims by insurers are excluded from definition of "covered claim". 243 C. 438.
Employer that is self-insurer under Workers' Compensation Act is not an "insurer" under definition of "covered claim".
247 C. 442.
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(1971, P.A. 466, S. 4; P.A. 79-376, S. 63; P.A. 87-290, S. 2, 8.)
History: P.A. 79-376 substituted "workers' compensation" for "workmen's compensation"; P.A. 87-290 made a technical change, substituting reference to Subdiv. (8) for reference to Subdiv. (6) of Sec. 38-275; Sec. 38-276 transferred to
Sec. 38a-839 in 1991.
Annotation to former section 38-276:
Cited. 215 C. 224, 225. Cited. 217 C. 371, 375.
Annotations to present section:
Cited. 217 C. 371, 375.
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(2) In approving selections to said board, the commissioner shall consider among
other things whether all member insurers are fairly represented.
(3) Members of said board shall receive no compensation as such but shall be reimbursed from the assets of said association for actual and necessary expenses incurred
by them in carrying out their official duties as members of the board of directors.
(1971, P.A. 466, S. 5; P.A. 81-83, S. 2.)
History: P.A. 81-83 required that vacancies on the board be filled by majority vote of remaining members rather than
"in the same manner as initial appointments" under Subsec. (1); Sec. 38-277 transferred to Sec. 38a-840 in 1991.
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(2) Said association may: (a) Employ or retain such persons as are necessary to
handle claims and perform other duties of said association; (b) borrow such funds as
may be necessary from time to time to effect the purposes of sections 38a-836 to 38a-
853, inclusive, in accord with the plan of operation under section 38a-842; (c) sue or
be sued; (d) intervene as a matter of right as a party in any proceeding before any court
in this state that has jurisdiction over an insolvent insurer, as defined in section 38a-
838; (e) negotiate and become a party to such contracts as are necessary to carry out the
purpose of said sections; (f) perform such other acts as are necessary or proper to effectuate the purpose of said sections; (g) refund to the member insurers in proportion to the
contribution of each such member insurer to that account, that amount by which the
assets of the account exceed the liabilities, if, at the end of any calendar year, the board
of directors finds that the assets of said association in any account exceed the liabilities
of that account as estimated by the board of directors for the coming year.
(3) (A) Each insurer paying an assessment under sections 38a-836 to 38a-853, inclusive, may offset one hundred per cent of the amount of such assessment against its
premium tax liability to this state under chapter 207. Such offset shall be taken over a
period of the five successive tax years following the year of payment of the assessment,
at the rate of twenty per cent per year of the assessment paid to the association. Each
insurer which has offset assessments paid to the association from its premium tax liability
to the state shall pay to the state one hundred per cent of any sums which are acquired
by refund from the association pursuant to subdivision (2) of this section. The association
shall notify the commissioner that such refunds have been made.
(B) An insurer may transfer any offset provided under this subdivision to an affiliate,
as defined in section 38a-1, of that insurer.
(1971, P.A. 466, S. 6; P.A. 79-376, S. 64; P.A. 81-83, S. 3; P.A. 87-290, S. 3, 8; P.A. 90-50, S. 1, 3; P.A. 97-43; 97-
125, S. 3, 9; P.A. 00-174, S. 77, 83.)
History: P.A. 79-376 substituted "workers' compensation" for "workmen's compensation"; P.A. 81-83 specified that
associations are not obligated for claims filed more than two years from date of declaration of insolvency, provided for
permissive rather than mandatory proration of funds in account, prohibited payment of dividends during deferment period,
added provisions re payment of deferred assessments and refunds and authorized payment of claims "in any order it deems
reasonable, including but not limited to, payment in the order of receipt or by classification" in Subsec. (1); P.A. 87-290
amended Subsec. (1) to limit the assessment levied on the "all other insurance account" of a member insurer whenever
over half the premiums received by the insurer were for policies issued in the state for risks in the state; P.A. 90-50 amended
Subsec. (1)(a)(i) to raise the per policy maximum for covered claims for unearned premiums from one thousand dollars
to two thousand dollars; Sec. 38-278 transferred to Sec. 38a-841 in 1991; P.A. 97-43 amended Subsec. (1) to exclude
timely filed workers' compensation claims from two-year filing deadline; P.A. 97-125 added new Subdiv. in Subsec. (2)
to allow the association to intervene in proceedings before any court with jurisdiction over an insolvent insurer, relettering
remaining Subdivs. accordingly, effective July 1, 1997; P.A. 00-174 added Subdiv. (3) re offsets against premium tax
liability for amounts assessed under this chapter, and to allow transfer of the offset to an affiliate, effective May 26, 2000,
and applicable to income years commencing on and after January 1, 2000.
Annotation to former section 38-278:
Cited. 215 C. 224, 226−228. Cited. 217 C. 371, 383.
Subsec. (1):
Cited. 217 C. 371, 372. Subdiv. (a)(ii) cited. Id., 371, 374, 375, 381, 382, 384, 392. Subdiv. (b) cited. Id., 371, 377,
385. Subdiv. (a) cited. Id., 371, 378.
Annotations to present section:
Cited. 217 C. 371, 383.
Subsec. (1):
Cited. 217 C. 371, 372. Subdiv. (a)(ii) cited. Id., 371, 374, 375, 381, 382, 384, 392. Subdiv. (b) cited. Id., 371, 377,
385. Subdiv. (a) cited. Id., 371, 378.
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(2) All member insurers shall comply with the plan of operation.
(3) The plan of operation shall: (a) Establish the procedures whereby all the powers
and duties of said association under section 38a-841 shall be performed; (b) establish
procedures for handling the assets of said association; (c) establish the number, the terms
of office and the amount and method of reimbursing members of the board of directors
under section 38a-840; (d) establish procedures by which claims may be filed with said
association and establish acceptable forms of proof of covered claims. Notice of claims
to the receiver or liquidator of the insolvent insurer shall be deemed notice to said association or its agent and a list of such claims shall be periodically submitted to said association or similar organization having a like function to that of said association in another
state by the receiver or liquidator; (e) establish regular places and times for meetings
of the board of directors; (f) establish procedures for records to be kept of all financial
transactions of said association, its agents, and the board of directors; (g) provide that
any member insurer aggrieved by any final action or decision of said association may
appeal to the commissioner within thirty days after such action or decision; (h) establish
the procedures whereby selections for the board of directors shall be submitted to the
commissioner; (i) contain such additional provisions as may be necessary or proper for
the execution of the powers and duties of said association under sections 38a-836 to
38a-853, inclusive.
(4) The plan of operation may delegate any or all powers and duties of said association, except those under subdivision (c) of subsection (1) of section 38a-841 and subdivision (b) of subsection (2) of section 38a-841 to a corporation, association, or other
organization which performs or will perform functions similar to those of said association, or its equivalent having a like function to that of said association, in two or more
states. Such a corporation, association or organization shall be reimbursed by said association as a servicing facility would be reimbursed and shall be paid by said association
for its performance of any other functions of said association. Any delegation under this
subsection shall take effect only with the approval of both the board of directors and
the commissioner, and may be made only to a corporation, association, or organization
which extends protection not substantially less favorable and effective than that provided
by sections 38a-836 to 38a-853, inclusive.
(1971, P.A. 466, S. 7.)
History: Sec. 38-279 transferred to Sec. 38a-842 in 1991.
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(2) The commissioner may: (a) Require that said association notify those persons
insured by the insolvent insurer, and any other interested parties, of the determination
of insolvency and of their rights under sections 38a-836 to 38a-853, inclusive. Such
notification shall be by mail sent to their last known address, where available, provided
if sufficient information for such notification by mail is not available, notice by publication in a newspaper of general circulation shall be sufficient to satisfy the requirements
of this subsection; (b) suspend or revoke, after notice and hearing, the certificate of
authority to transact insurance in this state of any member insurer which fails to pay an
assessment when due or which fails to comply with said plan of operation. In lieu of
any such suspension or revocation, the commissioner may levy a fine on any member
insurer which fails to pay an assessment when due, provided no such fine shall exceed
five per cent of the unpaid assessment per month, and provided no fine shall be less
than one hundred dollars per month; (c) revoke the designation of any servicing facility
if he finds claims are being handled unsatisfactorily.
(3) Any person aggrieved by any final action or order of the commissioner under
sections 38a-836 to 38a-853, inclusive, may within thirty days from the date of such
action or order petition the superior court for the judicial district of Hartford to require
the commissioner to show cause why said action or order should not be reversed or
eliminated, and, if said court finds that the action or order of the commissioner was
arbitrary and unjustified it shall take such action in the premises as may seem equitable.
The pendency of any such petitions to show cause shall act as a stay of execution of any
such order. Petitions under this section shall be privileged in respect of trial assignment.
(1971, P.A. 466, S. 8; P.A. 78-280, S. 6, 127; P.A. 86-35, S. 2; P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142,
S. 4, 7, 8; P.A. 95-220, S. 4−6.)
History: P.A. 78-280 substituted "judicial district of Hartford-New Britain" for "Hartford county" in Subsec. (3); P.A.
86-35 amended Subsec.(1) to require the insurance commissioner to notify the chairman of the workers' compensation
commission and the state treasurer whenever a workers' compensation insurer becomes insolvent; 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; Sec. 38-280 transferred to Sec.
38a-843 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.
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(2) The receiver, liquidator, or statutory successor of an insolvent insurer shall be
bound by determinations of covered claim eligibility under sections 38a-836 to 38a-
853, inclusive, and by settlements of claims made by said association or any similar
organization having a like function to that of said association in another state. The court
having jurisdiction shall grant such claims priority equal to that to which the claimant
would have been entitled in the absence of said sections 38a-836 to 38a-853, inclusive,
against the assets of the insolvent insurer. The expenses of said association or any similar
organization having a like function to that of said association in handling claims shall
be accorded the same priority as the receiver's or liquidator's expenses.
(3) Said association shall periodically file with the receiver or liquidator of the
insolvent insurer statements of the covered claims paid by said association, the expenses
paid for the processing of covered claims paid or contested and estimates of anticipated
claims on said association, and expenses of processing such claims which shall preserve
the rights of said association against the assets of the insolvent insurer.
(4) The association shall have the right to recover from the following persons the
amount of any covered claim paid on behalf of such person pursuant to sections 38a-
836 to 38a-853, inclusive: (a) Any person who is an affiliate of the insolvent insurer
and whose liability obligations to other persons are satisfied in whole or in part by
payments made under this chapter; and (b) any insured whose net worth on December
thirty-first of the year next preceding the date the insurer becomes an insolvent insurer
exceeds fifty million dollars and whose liability obligations to other persons are satisfied
in whole or in part by payments made under said sections.
(1971, P.A. 466, S. 9; P.A. 81-83, S. 4; P.A. 87-290, S. 4, 8; P.A. 97-125, S. 4, 9.)
History: P.A. 81-83 required that association file statements of expenses paid for processing paid or contested claims
in Subsec. (3); P.A. 87-290 added Subsec. (4) describing the persons from whom the association has the right to recover;
Sec. 38-281 transferred to Sec. 38a-844 in 1991; P.A. 97-125 made a technical change in Subsec. (1) and amended Subsec.
(2) re determinations of covered claim eligibility and settlements of claims made by the association, effective July 1, 1997.
Annotations to former section 38-281:
Subsec. (1):
Cited. 217 C. 371, 381.
Annotations to present section:
Subsec. (1):
Cited. 217 C. 371, 381.
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(2) Any person having a claim which may be recovered under more than one insurance guaranty association or its equivalent having a like function to that of said association shall seek recovery first from the association operating in the area of the residence
of the claimant except that if it is a first party claim for damage to property with a
permanent location, such person shall seek recovery first from the association operating
in the location of the property. Any recovery under sections 38a-836 to 38a-853, inclusive, shall be reduced by the amount recoverable from any other insurance guaranty
association or its equivalent having a like function to that of said association.
(3) Any person having a claim under any governmental insurance or guaranty program which such claim is also a covered claim shall be required to first exhaust his
rights under such program. Any amount payable on a covered claim under sections
38a-836 to 38a-853, inclusive, shall be reduced by any amount recoverable under such
program.
(1971, P.A. 466, S. 10; P.A. 79-376, S. 65; P.A. 87-290, S. 5, 8; P.A. 88-76, S. 3, 10; P.A. 97-125, S. 5, 9.)
History: P.A. 79-376 replaced "workmen's compensation" with "workers' compensation"; P.A. 87-290 amended Subsec. (2) to delete references to the procedure for the recovery of a workers' compensation claim from more than one
association; P.A. 88-76 amended Subsec. (1) to reduce the amount payable to a claimant by the amount of recovery under
the claimant's insurance or workers' compensation; Sec. 38-282 transferred to Sec. 38a-845 in 1991; P.A. 97-125 substituted
"amount recoverable" for "amount of any recovery" in Subsecs. (1) and (2), and added new Subsec. (3) re exhaustion of
claims under governmental insurance or guaranty programs, effective July 1, 1997.
Annotation to former section 38-282:
Cited. 215 C. 224, 226, 228. Cited. 217 C. 371, 389.
Subsec. (1):
Cited. 217 C. 371, 372, 375, 387−390.
Subsec. (2):
Cited. 217 C. 371, 391.
Annotations to present section:
Cited. 217 C. 371, 389. Section inapplicable where plaintiff does not have claim against an insurer under an insurance
policy. 247 C. 442.
Subsec. (1):
Cited. 217 C. 371, 372, 375, 387−390.
Subsec. (2):
Cited. 217 C. 371, 391.
(Return to TOC) (Return to Chapters) (Return to Titles)
(1) The board of directors, upon majority vote, shall notify the commissioner of
any information which it may have indicating any member insurer may be insolvent or
in a financial condition hazardous to its policyholders or the public.
(2) The board of directors may, upon majority vote, request that the commissioner
order an examination of any member insurer which the board in good faith believes may
be in a financial condition hazardous to its policyholders or the public. Within thirty
days of the receipt of such request, the commissioner shall begin such examination. The
examination may be conducted as a National Association of Insurance Commissioners
examination or may be conducted by the commissioner or by such persons as the commissioner may designate. The cost of such examination shall be paid by said association.
In no event shall such examination report be released to the board of directors prior to
its release to the public, provided this shall not preclude the commissioner from complying with subdivision (3) of this section. The commissioner shall notify the board of
directors when the examination is completed. The request for an examination shall be
kept on file by the commissioner but it shall not be open to public inspection prior to
the release of the examination report to the public.
(3) The commissioner shall report to the board of directors when he has reasonable
cause to believe that any member insurer examined or being examined at the request of
the board of directors may be insolvent or in a financial condition hazardous to its
policyholders or the public.
(4) The board of directors may, upon majority vote, make reports and recommendations to the commissioner and the chief insurance regulatory official in any jurisdiction
upon any matter germane to the solvency, liquidation, rehabilitation or conservation of
any member insurer. Such reports and recommendations shall not be considered public
documents.
(5) The board of directors may, upon majority vote, make recommendations to the
commissioner and any other public official in any jurisdiction for the detection and
prevention of insurer insolvencies.
(6) At the request of the commissioner, the board of directors shall, at the conclusion
of any insurer insolvency in which said association was obligated to pay any covered
claim, prepare a report on the history and causes of such insolvency, based on the information available to said association, and submit such report to the commissioner.
(1971, P.A. 466, S. 11; P.A. 81-83, S. 5; P.A. 97-125, S. 6, 9; P.A. 98-27, S. 18.)
History: P.A. 81-83 provided that the board shall prepare report "at the request of the commissioner" in Subsec. (6);
Sec. 38-283 transferred to Sec. 38a-846 in 1991; P.A. 97-125 made a technical change in Subdiv. (2), amended Subdiv.
(4) re recommendations to chief insurance regulatory officials and amended Subdiv. (5) re recommendations to any other
public official, effective July 1, 1997; P.A. 98-27 amended Subdiv. (1) to substitute "it" for "they".
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(1971, P.A. 466, S. 12.)
History: Sec. 38-284 transferred to Sec. 38a-847 in 1991.
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(1971, P.A. 466, S. 13.)
History: Sec. 38-285 transferred to Sec. 38a-848 in 1991.
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(1971, P.A. 466, S. 14; P.A. 00-174, S. 82, 83.)
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(1971, P.A. 466, S. 15; P.A. 97-125, S. 7, 9.)
History: Sec. 38-287 transferred to Sec. 38a-850 in 1991; P.A. 97-125 extended "no liability" provision to any person
serving as an alternate or substitute representative of any director, and to any failure to act, effective July 1, 1997.
(Return to TOC) (Return to Chapters) (Return to Titles)
(b) The liquidator, receiver or statutory successor of an insolvent insurer covered by
sections 38a-836 to 38a-853, inclusive, shall permit access by the board or its authorized
representative to such insolvent insurer's records which the board determines are necessary for the board to carry out its functions under said sections 38a-836 to 38a-853,
inclusive, with regard to covered claims. The liquidator, receiver or statutory successor
shall provide the board or its representative with copies of such records upon the request
of the board.
(1971, P.A. 466, S. 16; P.A. 81-83, S. 6; P.A. 86-403, S. 80, 132; P.A. 97-125, S. 8, 9.)
History: P.A. 81-83 required that proceedings be stayed for up to six months and for additional time as determined by
the court, eliminating requirement of stay of sixty days from insolvency determination; P.A. 86-403 made technical change;
Sec. 38-288 transferred to Sec. 38a-851 in 1991; P.A. 97-125 designated existing provisions as Subsec. (a) and added
Subsec. (b) re access to insolvent insurer's records, effective July 1, 1997.
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(P.A. 85-105, S. 1; P.A. 92-60, S. 22.)
History: Sec. 38-288a transferred to Sec. 38a-852 in 1991; P.A. 92-60 included the provisions of this section as a
violation of Sec. 38a-815 and excluded its effect from the distribution of publications approved by the insurance commissioner describing the general purposes or current limitations of the Connecticut Insurance Guaranty Association Act.
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(1971, P.A. 466, S. 17; P.A. 88-76, S. 4, 10.)
History: P.A. 88-76 authorized the commissioner to adopt regulations defining the kinds of insurance specified in Sec.
38a-274; Sec. 38-289 transferred to Sec. 38a-853 in 1991.
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CONNECTICUT LIFE AND HEALTH INSURANCE
GUARANTY ASSOCIATION ACT
Cited. 173 C. 352, 353.
(1972, P.A. 280, S. 1.)
History: Sec. 38-301 transferred to Sec. 38a-858 in 1991.
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(1972, P.A. 280, S. 2.)
History: Sec. 38-302 transferred to Sec. 38a-859 in 1991.
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(b) (1) Sections 38a-858 to 38a-875, inclusive, shall provide coverage to the persons specified in subsection (a) for direct, nongroup life, health, annuity and supplemental policies or contracts, for certificates under direct group policies and contracts, and
for unallocated annuity contracts issued by member insurers, except as limited by said
sections. Annuity contracts and certificates under group annuity contracts include but
are not limited to guaranteed investment contracts, deposit administration contracts,
unallocated funding agreements, structured settlement agreements, lottery contracts and
any immediate or deferred annuity contracts. (2) Said sections shall not provide coverage
for: (A) Any portion of a policy or contract not guaranteed by the insurer, or under which
the risk is borne by the policy or contract holder; (B) any policy or contract of reinsurance,
unless assumption certificates have been issued; (C) any portion of a policy or contract
to the extent that the rate of interest on which it is based (i) averaged over the period of
four years prior to the date on which the association becomes obligated with respect to
such policy or contract, exceeds a rate of interest determined by subtracting two percentage points from Moody's corporate bond yield average averaged for that same four-
year period or for such lesser period if the policy or contract was issued less than four
years before the association became obligated; and (ii) on and after the date on which
the association becomes obligated with respect to such policy or contract, exceeds the
rate of interest determined by subtracting three percentage points from Moody's corporate bond yield average as most recently available; (D) any plan or program of an employer, association or similar entity to provide life, health or annuity benefits to its
employees or members to the extent that such plan or program is self-funded or uninsured, including but not limited to benefits payable by an employer, association or similar
entity under (i) a multiple employer welfare arrangement as defined in Section 514 of
the Employee Retirement Income Security Act of 1974, as amended; (ii) a minimum
premium group insurance plan; (iii) a stop-loss group insurance plan; or (iv) an administrative services only contract; (E) any portion of a policy or contract to the extent that
it provides dividends or experience rating credits, or provides that any fees or allowances
be paid to any person, including the policy or contract holder, in connection with the
service to or administration of such policy or contract; (F) any policy or contract issued
in this state by a member insurer at a time when it was not licensed or did not have a
certificate of authority to issue such policy or contract in this state; (G) any unallocated
annuity contract issued to an employee benefit plan protected under the federal Pension
Benefit Guaranty Corporation; (H) any portion of any unallocated annuity contract
which is not issued to or in connection with a specific employee, union or association
of natural persons benefit plan or a government lottery; (I) any subscriber contract issued
by a health care center; and (J) a contractual agreement that establishes the insurer's
obligation by reference to a portfolio of assets that is not owned or possessed by the
insurance company.
(c) The benefits for which the association may become liable shall in no event
exceed the lesser of: (1) The contractual obligations for which the insurer is liable or
would have been liable if it were not an impaired insurer, or (2) (A) with respect to any
one life, regardless of the number of policies or contracts: (i) Three hundred thousand
dollars in life insurance death benefits, but no more than one hundred thousand dollars
in net cash surrender and net cash withdrawal values for life insurance; (ii) five hundred
thousand dollars in health insurance benefits, including any net cash surrender and net
cash withdrawal values; (iii) one hundred thousand dollars in the present value of annuity
benefits, including net cash surrender and net cash withdrawal values; (B) with respect
to each individual participating in a governmental retirement plan established under
Section 401(k), 403(b) or 457 of the United States Internal Revenue Code covered by
an unallocated annuity contract or the beneficiaries of each such individual if deceased,
in the aggregate, one hundred thousand dollars in present value annuity benefits, including net cash surrender and net cash withdrawal values; provided, however, that in no
event shall the association be liable to expend more than the five hundred thousand
dollars in the aggregate with respect to any one individual under subparagraphs (A) and
(B) of this subsection. (C) With respect to any one contract holder covered by any
unallocated annuity contract not included in subparagraph (B) of this subsection, five
million dollars in benefits, irrespective of the number of such contracts held by that
contract holder.
(1972, P.A. 280, S. 3; P.A. 75-224; P.A. 87-290, S. 6, 8; P.A. 88-76, S. 5, 10; P.A. 90-243, S. 152; P.A. 97-108, S. 4;
P.A. 98-19, S. 1, 2.)
History: P.A. 75-224 divided section into Subsecs., rephrased provisions re applicability of chapter, now Subsec. (b),
specifically exempted variable life insurance or annuity contract not guaranteed by an insurer and added reference to
"insolvent" insurers; P.A. 87-290 amended Subsec. (a) to limit the chapter's application to policies and contracts issued
to residents of this state; P.A. 88-76 rewrote section entirely, describing the limits of coverage in greater detail; P.A. 90-
243 amended Subsec. (b) to exempt coverage for subscriber contracts issued by a health care center; Sec. 38-303 transferred
to Sec. 38a-860 in 1991; P.A. 97-108 amended Subsec. (b) by adding new Subpara. (J) re a contractual agreement that
establishes the insurer's obligation by reference to a portfolio not owned by the insurer; P.A. 98-19 amended Subsec.
(c)(2)(A)(ii) to substitute "five hundred thousand" for "three hundred thousand" re health insurance, and amended Subsec.
(c)(2)(B) to substitute "five hundred thousand" for "three hundred thousand" re aggregate with respect to any individual
under Subparas. (A) and (B), effective April 24, 1998.
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(1972, P.A. 280, S. 4.)
History: Sec. 38-304 transferred to Sec. 38a-861 in 1991.
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(a) "Account" means either of the two accounts created under section 38a-863;
(b) "Association" means the Connecticut Life and Health Insurance Guaranty Association created under said section 38a-863;
(c) "Commissioner" means the Insurance Commissioner of this state;
(d) "Contractual obligation" means any obligation under a policy or contract or
certificate under a group policy or contract, or portion thereof for which coverage is
provided under section 38a-860;
(e) "Covered policy" means any policy or contract within the scope of section
38a-860;
(f) "Impaired insurer" means: (1) A licensed insurer which, after October 1, 1972,
becomes insolvent and is placed under a final order of liquidation, rehabilitation, or
conservation by a court of competent jurisdiction, or (2) an insurer deemed by the commissioner after October 1, 1972, to be unable or potentially unable to fulfill its contractual
obligations;
(g) "Member insurer" means any insurer licensed or who holds a certificate of authority to issue in this state any kind of insurance to which sections 38a-858 to 38a-875,
inclusive, apply under section 38a-860, and may include an insurer whose license in
this state has been suspended, revoked or voluntarily withdrawn. "Member insurer"
shall not include a health care center;
(h) "Moody's corporate bond yield average" means the monthly average corporates
as published by Moody's Investors Service, Inc., or any successor thereto;
(i) "Premiums" means amounts received on covered policies or contracts less premiums, considerations and deposits returned thereon, and less dividends and experience
credits thereon. "Premiums" does not include any amounts received for any policies or
contracts or for the portions of any policies or contracts for which coverage is not provided under subsection (b) of section 38a-860, except that assessable premium shall not
be reduced on account of subparagraph (C) of subdivision (2) of subsection (b) of section
38a-860, relating to interest limitations, and subdivision (2) of subsection (c) of section
38a-860, relating to limitations with respect to any one individual, any one participant
and any one contract holder; provided that "premiums" shall not include any premiums
in excess of five million dollars on any unallocated annuity contract not issued under a
governmental retirement plan established under Section 401(k), 403(b) or 457 of the
United States Internal Revenue Code;
(j) "Person" means any individual, corporation, limited liability company, partnership, association or voluntary organization;
(k) "Resident" means any person who resides in this state at the time a member
insurer is determined to be an impaired insurer and to whom a contractual obligation is
owed. A person may be a resident of only one state, which in the case of a person other
than a natural person shall be its principal place of business;
(l) "Supplemental contract" means any agreement entered into for the distribution
of policy or contract proceeds; and
(m) "Unallocated annuity contract" means any annuity contract or group annuity
certificate which is not issued to and owned by an individual, except to the extent of
any annuity benefits guaranteed to an individual by an insurer under such contract or
certificate.
(1972, P.A. 280, S. 5; P.A. 77-614, S. 163, 610; P.A. 80-482, S. 323, 345, 348; P.A. 88-76, S. 6, 10; P.A. 90-243, S.
153; P.A. 93-57, S. 11; P.A. 95-79, S. 151, 189.)
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. 88-76 revised the
definitions of "account", "contractual obligation", "premiums" and "resident", and added definitions of "Moody's corporate
bond yield average", "supplemental contract" and "unallocated annuity contract"; P.A. 90-243 amended the definition of
"member insurer" to exclude "health care center"; Sec. 38-305 transferred to Sec. 38a-862 in 1991; P.A. 93-57 redefined
"member insurer"; P.A. 95-79 redefined "person" to include a limited liability company, effective May 31, 1995.
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(b) The association shall come under the immediate supervision of the commissioner and shall be subject to the applicable provisions of the insurance laws of this state.
(1972, P.A. 280, S. 6; P.A. 88-76, S. 7, 10.)
History: P.A. 88-76 amended Subsec. (a) restructuring the accounts to be maintained by the association by reducing
their number from three to two, combining the life insurance account and the annuity account, and creating three subaccounts
under such combined account; Sec. 38-306 transferred to Sec. 38a-863 in 1991.
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(b) In approving selections or in appointing members to the board, the commissioner
shall consider, among other things, whether all member insurers are fairly represented.
(c) Members of the board may be reimbursed from the assets of the association for
expenses incurred by them as members of the board of directors but members of the
board shall not otherwise be compensated by the association for their services.
(1972, P.A. 280, S. 7.)
History: Sec. 38-307 transferred to Sec. 38a-864 in 1991.
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(a) If a domestic insurer is an impaired insurer, the association may, prior to an
order of liquidation or rehabilitation, and subject to any conditions imposed by the
association other than those which impair the contractual obligations of the impaired
insurer, and approved by the impaired insurer and the commissioner: (1) Guarantee or
reinsure, or cause to be guaranteed, assumed or reinsured, all the covered policies of
the impaired insurer; (2) provide such moneys, pledges, notes, guarantees or other means
as are proper to effectuate subdivision (1) of this subsection and assure payment of the
contractual obligations of the impaired insurer pending action under subdivision (1) of
this subsection; (3) loan money to the impaired insurer.
(b) If a foreign or alien insurer is an impaired insurer, the association may, prior to
an order of liquidation, rehabilitation, or conservation, with respect to the covered policies of residents and subject to any conditions imposed by the association other than
those which impair the contractual obligations of the impaired insurer, and approved
by the impaired insurer and the commissioner: (1) Guarantee or reinsure, or cause to
be guaranteed, assumed or reinsured, the impaired insurer's covered policies of residents; (2) provide such moneys, pledges, notes, guarantees or other means as are proper
to effectuate subdivision (1) of this subsection, and assure payment of the impaired
insurer's contractual obligations to residents pending action under subdivision (1) of
this subsection; (3) loan money to the impaired insurer.
(c) If a domestic insurer is an impaired insurer under an order of liquidation or
rehabilitation, the association shall, subject to the approval of the commissioner: (1)
Guarantee, assume or reinsure, or cause to be guaranteed, assumed or reinsured the
covered policies of the impaired insurer; (2) assure payment of the contractual obligations of the impaired insurer; and (3) provide such moneys, pledges, notes, guarantees
or other means as are reasonably necessary to discharge such duties. If the association
fails to act within a reasonable period of time, the commissioner shall have the powers
and duties of the association under sections 38a-858 to 38a-875, inclusive, with respect
to such domestic impaired insurer.
(d) If a foreign or alien insurer is an impaired insurer under an order of liquidation,
rehabilitation or conservation, the association shall, subject to the approval of the commissioner, (1) guarantee, assume or reinsure or cause to be guaranteed, assumed or
reinsured the covered policies of residents; (2) assure payment of the contractual obligations of the impaired insurer to residents; and (3) provide such moneys, pledges, notes,
guarantees or other means as are reasonably necessary to discharge such duties. If the
association fails to act within a reasonable period of time, the commissioner shall have
the powers and duties of the association under sections 38a-858 to 38a-875, inclusive,
with respect to such foreign or alien impaired insurer.
(e) (1) In carrying out its duties under subsections (c) and (d), the association may
request that there be imposed policy liens, contract liens, moratoriums on payments or
other similar means and such liens, moratoriums or similar means may be imposed if
the commissioner finds that the amounts which can be assessed under sections 38a-
858 to 38a-875, inclusive, are less than the amounts needed to assure full and prompt
performance of the impaired insurer's contractual obligations, or that the economic or
financial conditions as they affect member insurers are sufficiently adverse to render
the imposition of policy or contract liens, moratoriums, or similar means to be in the
public interest, and approves the specific policy liens, contract liens, moratoriums or
similar means to be used. (2) Before being obligated under subsections (c) and (d) the
association may request that there be imposed temporary moratoriums or liens on projects of cash values and policy loans and such temporary moratoriums and liens may be
imposed if they are approved by the commissioner.
(f) Repealed by P.A. 87-290, S. 7, 8.
(g) The association may render assistance and advice to the commissioner, upon
his request, concerning rehabilitation, payment of claims, continuations of coverage or
the performance of other contractual obligations of any impaired insurer.
(h) The association shall have standing to appear before any court in this state with
jurisdiction over an impaired insurer concerning which the association is or may become
obligated under sections 38a-858 to 38a-875, inclusive. Such standing shall extend to
all matters germane to the powers and duties of the association, including, but not limited
to, proposals for reinsuring or guaranteeing the covered policies of the impaired insurer
and the determination of the covered policies and contractual obligations.
(i) (1) Any person receiving benefits under sections 38a-858 to 38a-875, inclusive,
shall be deemed to have assigned his rights under the covered policy to the association
to the extent of the benefits received because of said sections, whether the benefits are
payments of contractual obligations or continuation of coverage. The association may
require an assignment to it of such rights by any payee, policy or contract owner, beneficiary, insured or annuitant as a condition precedent to the receipt of any rights or benefits
conferred by said sections upon such person. The association shall be subrogated to
these rights against the assets of any impaired insurer. (2) The subrogation rights of the
association under this subsection shall have the same priority against the assets of the
impaired insurer as that possessed by the person entitled to receive benefits under said
sections.
(j) The association may (1) enter into such contracts as are necessary or proper to
carry out the provisions and purposes of sections 38a-858 to 38a-875, inclusive; (2) sue
or be sued, including taking any legal actions necessary or proper for recovery of any
unpaid assessments under section 38a-866; (3) borrow money to effect the purposes of
sections 38a-858 to 38a-875, inclusive. Any notes or other evidence of indebtedness of
the association not in default shall be legal investments for domestic insurers and may
be carried as admitted assets; (4) employ or retain such persons as are necessary to
handle the financial transactions of the association, and to perform such other functions
as become necessary or proper under said sections; (5) negotiate and contract with any
liquidator, rehabilitator, conservator or ancillary receiver to carry out the powers and
duties of the association; (6) take such legal action as may be necessary to avoid payment
of improper claims; (7) exercise, for the purposes of said sections and to the extent
approved by the commissioner, the powers of a domestic life or health insurer, but in
no case may the association issue insurance policies or annuity contracts other than
those issued to perform the contractual obligations of the impaired insurer.
(k) When proceeding under subsection (c) or (d) of this section with respect to any
policy or contract carrying guaranteed minimum interest rates, the association shall
assure the payment or crediting rate of interest consistent with subparagraph (C) of
subdivision (2) of subsection (b) of section 38a-860.
(l) The protection provided by sections 38a-858 to 38a-875, inclusive, shall not
apply where any guaranty protection is provided to residents of this state by the laws
of the domiciliary state or jurisdiction of the impaired insurer other than this state.
(1972, P.A. 280, S. 8; P.A. 75-18; P.A. 78-58, S. 1; P.A. 87-290, S. 7, 8; P.A. 88-76, S. 8, 10.)
History: P.A. 75-18 raised liability limit in Subsec. (j) from twenty-five thousand to three hundred thousand dollars;
P.A. 78-58 imposed new liability limits in Subsec. (j); P.A. 87-290 repealed Subsec. (f) which specified that association
had no liability under the section for covered policies of a lien or foreign insurers whose domiciliary jurisdiction or state
of entry provides for Connecticut residents, similar protection provided by the chapter to other states' residents; P.A. 88-
76 deleted Subsec. (j) and transferred its provisions to Subsec. (c) of Sec. 38-303, relettered Subsec. (k) as (j), and added
new Subsecs. (k) and (l); Sec. 38-308 transferred to Sec. 38a-865 in 1991.
Annotations to former section 38-308:
Subsec. (j):
Cited. 173 C. 352−355.
Cited. 35 CS 13, 14, 17, 18; id., 186, 189.
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(b) There shall be three classes of assessments, as follows: (1) Class A assessments
shall be made for the purpose of meeting administrative costs and other general expenses
not related to a particular impaired insurer; (2) Class B assessments shall be made to
the extent necessary to carry out the powers and duties of the association under section
38a-865 with regard to an impaired domestic insurer; (3) Class C assessments shall be
made to the extent necessary to carry out the powers and duties of the association under
said section 38a-865, with regard to an impaired foreign or alien insurer.
(c) (1) The amount of any Class A assessment for each account shall be determined
by the board and may be made on a non-pro-rata basis. The amount of any Class B or
C assessment shall be divided among the accounts in the proportion that the premiums
received by the impaired insurer on the policies covered by each account bears to the
premiums received by such insurer on all covered policies; (2) Class C assessments
against member insurers for each account shall be in the proportion that the premiums
received on business in this state by each assessed member insurer on policies covered
by each account bears to such premiums received on business in this state by all assessed
member insurers; (3) Class B assessments for each account shall be made separately for
each state in which the impaired domestic insurer was authorized to transact insurance at
any time, in the proportion that the premiums received on business in such state by the
impaired insurer on policies covered by such account bears to such premiums received
in all such states by the impaired insurer. The assessments against member insurers shall
be in the proportion that the premiums received on business in each such state by each
assessed member insurer on policies covered by each account bears to such premiums
received on business in each state by all assessed member insurers; (4) assessments for
funds to meet the requirements of the association with respect to an impaired insurer
shall not be made until necessary to implement the purposes of sections 38a-858 to 38a-
875, inclusive. Classification of assessments under subsection (b) of this section and
computation of assessments under this subsection shall be made with a reasonable degree
of accuracy, recognizing that exact determinations may not always be possible.
(d) The association may abate or defer, in whole or in part, the assessment of a
member insurer if, in the opinion of the board, payment of the assessment would endanger the ability of the member insurer to fulfill its contractual obligations. In the event
an assessment against a member insurer is abated, or deferred in whole or in part, the
amount by which such assessment is abated or deferred may be assessed against the
other member insurers in a manner consistent with the basis for assessments set forth
in this section.
(e) (1) The total of all assessments upon a member insurer for the life and annuity
account and for each subaccount thereunder shall not in any one calendar year exceed
two per cent and for the health account shall not in any one calendar year exceed two
per cent of such insurer's average premiums received in this state on the policies and
contracts covered by the account during the three calendar years preceding the year in
which the insurer became an impaired insurer. If the maximum assessment, together
with the other assets of the association in any account, does not provide in any one year
in either account an amount sufficient to carry out the responsibilities of the association,
the necessary additional funds shall be assessed as soon thereafter as permitted by sections 38a-858 to 38a-875, inclusive.
(2) The board may provide in the plan of operation a method of allocating funds
among claims, whether relating to one or more impaired insurers, when the maximum
assessment will be insufficient to cover anticipated claims.
(3) If a one per cent assessment for any subaccount of the life and annuity account
in any one year does not provide an amount sufficient to carry out the responsibilities
of the association, then pursuant to subsection (c) of this section, the board shall access
all subaccounts of the life and annuity account for the necessary additional amount,
subject to the maximum stated in subdivision (1) of this subsection.
(f) The board may, by an equitable method as established in the plan of operation,
refund to member insurers, in proportion to the contribution of each insurer to that
account, the amount by which the assets of the account exceed the amount the board
finds is necessary to carry out during the coming year the obligations of the association
with regard to that amount, including assets accruing from net realized gains and income
from investments. A reasonable amount may be retained in any account to provide
funds for the continuing expenses of the association and for future losses if refunds are
impractical.
(g) It shall be proper for any member insurer, in determining its premium rates and
policy owner dividends as to any kind of insurance within the scope of sections 38a-
858 to 38a-875, inclusive, to consider the amount reasonably necessary to meet its assessment obligations under said sections.
(h) (1) Each insurer paying an assessment under sections 38a-858 to 38a-875, inclusive, may offset one hundred per cent of the amount of such assessment against its
premium tax liability to this state under chapter 207. Such offset shall be taken over a
period of the five successive tax years following the year of payment of the assessment,
at the rate of twenty per cent per year of the assessment paid to the association. Each
insurer which has offset assessments paid to the association against its premium tax
liability to the state shall pay to the Department of Revenue Services one hundred per cent
of any sums which are acquired by refund from the association pursuant to subsection (f)
of this section. The association shall promptly notify the commissioner of the name and
address of the insurers to which such refunds have been made, the amount of such
refunds, and the date on which such refunds were mailed to such insurer. If the amount
that an insurer is required to pay to the Department of Revenue Services has not been
so paid on or before the thirtieth day after the date of mailing of such refunds, the insurer
shall be liable for interest on such amount at the rate of one per cent per month or fraction
thereof from such thirtieth day to the date of payment.
(2) An insurer may transfer any offset provided under this subsection to an affiliate,
as defined in section 38a-1, of that insurer.
(1972, P.A. 280, S. 9; P.A. 78-58, S. 2; P.A. 81-101, S. 9; P.A. 88-76, S. 9, 10; P.A. 93-239, S. 8; P.A. 00-174, S. 50,
76, 83.)
History: P.A. 78-58 authorized making Class A assessments on non pro rata basis in Subsec. (c)(1) and removed
Class A assessments from provisions of Subsec. (c)(2); P.A. 81-101 deleted Subsec. (h) re certificates of contribution and
relettered Subsec. (i) as (h), substituting "this chapter" for reference to repealed Subsec. (h); P.A. 88-76 amended Subsecs.
(d) and (e) revising the methods by which the association may assess member insurers and subaccounts for amounts abated
or deferred; Sec. 38-309 transferred to Sec. 38a-866 in 1991; P.A. 93-239 amended Subsec. (h) re refunds paid due to
offset assessments made to the Connecticut Life and Health Insurance Guaranty Association from the insurer's premium
tax liability; P.A. 00-174 amended Subsec. (h) to require specific details from the association in reports to the Department
of Revenue Services re refunds under Subsec. (f), to provide for interest on late payments under this section, to allow one
hundred per cent of an assessment to be offset from the premium tax liability, to require the offset to be taken over five
years and to allow transfer of the offset to an affiliate, effective May 26, 2000, and applicable to income years commencing
on and after January 1, 2000, and to refunds made on or after July 1, 2000.
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(b) All member insurers shall comply with the plan of operation.
(c) The plan of operation shall, in addition to requirements enumerated elsewhere
in sections 38a-858 to 38a-875, inclusive: (1) Establish procedures for handling the
assets of the association; (2) establish the amount and method of reimbursing members
of the board of directors under section 38a-864; (3) establish regular places and times
for meetings of the board of directors; (4) establish procedures for records to be kept
of all financial transactions of the association, its agents and the board of directors; (5)
establish the procedures whereby selections for the board of directors will be made and
submitted to the commissioner; (6) establish any additional procedures for assessments
under section 38a-866; (7) contain additional provisions necessary or proper for the
execution of the powers and duties of the association.
(d) The plan of operation may provide that any or all powers and duties of the
association except those under subdivision (3) of subsection (k) of section 38a-865 and
section 38a-866, are delegated to a corporation, association or other organization which
performs or will perform functions similar to those of this association, or its equivalent,
in two or more states. Such a corporation, association or organization shall be reimbursed
for any payments made on behalf of the association and shall be paid for its performance
of any function of the association. A delegation under this subsection shall take effect
only with the approval of both the board of directors and the commissioner, and may
be made only to a corporation, association or organization which extends protection not
substantially less favorable and effective than that provided by sections 38a-858 to 38a-
875, inclusive.
(1972, P.A. 280, S. 10.)
History: Sec. 38-310 transferred to Sec. 38a-867 in 1991.
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(a) The commissioner shall: (1) Notify the board of directors of the existence of an
impaired insurer not later than three days after a determination of impairment is made
or he receives notice of impairment; (2) upon request of the board of directors, provide
the association with a statement of the premiums in the appropriate states for each member insurer; (3) when an impairment is declared and the amount of the impairment is
determined, serve a demand upon the impaired insurer to make good the impairment
within a reasonable time. Notice to the impaired insurer shall constitute notice to its
shareholders, if any. The failure of the insurer to promptly comply with such demand
shall not excuse the association from the performance of its powers and duties under
sections 38a-858 to 38a-875, inclusive; (4) in any liquidation or rehabilitation proceeding involving a domestic insurer, be appointed as the liquidator or rehabilitator. If a
foreign or alien member insurer is subject to a liquidation proceeding in its domiciliary
jurisdiction or state of entry, the commissioner shall be appointed conservator.
(b) The commissioner may suspend or revoke, after notice and hearing, the certificate of authority issued by this state to any member insurer which fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative the
commissioner may levy a forfeiture on any member insurer which fails to pay an assessment when due. Such forfeiture shall not exceed five per cent of the unpaid assessment
per month, but no forfeiture shall be less than one hundred dollars per month.
(c) Any action of the board of directors or the association may be appealed to the
commissioner by any member insurer if such appeal is taken within thirty days of the
action being appealed. Any final action or order of the commissioner shall be subject
to judicial review in the superior court for the judicial district of Hartford.
(d) The liquidator, rehabilitator or conservator of any impaired insurer may notify
all interested persons of the effect of sections 38a-858 to 38a-875, inclusive.
(1972, P.A. 280, S. 11; P.A. 76-436, S. 635, 681; P.A. 78-280, S. 5, 127; P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2;
P.A. 93-142, S. 4, 7, 8; P.A. 95-220, S. 4−6.)
History: P.A. 76-436 replaced court of common pleas with superior court in Subsec. (c), effective July 1, 1978; P.A.
78-280 substituted "judicial district of Hartford-New Britain" for "Hartford county" in Subsec. (c); 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; Sec. 38-311 transferred to Sec.
38a-868 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.
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(a) The board of directors shall, upon majority vote, notify the commissioner of any
information indicating any member insurer may be unable or potentially unable to fulfill
its contractual obligations.
(b) The board of directors may, upon majority vote, request that the commissioner
order an examination of any member insurer which the board in good faith believes may
be unable or potentially unable to fulfill its contractual obligations. The commissioner
may conduct such examination. The examination may be conducted as a National Association of Insurance Commissioners examination or may be conducted by such persons
as the commissioner designates. The cost of such examination shall be paid by the
association and the examination report shall be treated as are other examination reports.
In no event shall such examination report be released to the board of directors of the
association prior to its release to the public, but this shall not excuse the commissioner
from his obligation to comply with subsection (c) of this section. The commissioner
shall notify the board of directors when the examination is completed. The request for
an examination shall be kept on file by the commissioner but it shall not be open to
public inspection prior to the release of the examination report to the public and shall
be released at that time only if the examination discloses that the examined insurer is
unable or potentially unable to meet its contractual obligations.
(c) The commissioner shall report to the board of directors when he has reasonable
cause to believe that any member insurer examined at the request of the board of directors
may be unable or potentially unable to fulfill its contractual obligations.
(d) The board of directors may, upon majority vote, make reports and recommendations to the commissioner upon any matter germane to the solvency, liquidation, rehabilitation or conservation of any member insurer. Such reports and recommendations shall
not be considered public documents.
(e) The board of directors may, upon majority vote, make recommendations to the
commissioner for the detection and prevention of insurer impairments.
(f) The board of directors shall, at the conclusion of any insurer impairment in which
the association carried out its duties under sections 38a-858 to 38a-875, inclusive, or
exercised any of its powers under said sections, prepare a report on the history and
causes of such impairment, based on the information available to the association, and
submit such report to the commissioner.
(1972, P.A. 280, S. 12.)
History: Sec. 38-312 transferred to Sec. 38a-869 in 1991.
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(1972, P.A. 280, S. 13.)
History: Sec. 38-313 transferred to Sec. 38a-870 in 1991.
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(b) Records shall be kept of all negotiations and meetings in which the association
or its representatives are involved to discuss the activities of the association in carrying
out its powers and duties under section 38a-865. Records of such negotiations or meetings shall be made public only upon the termination of a liquidation, rehabilitation, or
conservation proceeding involving the impaired insurer, upon the termination of the
impairment of the insurer, or upon the order of a court of competent jurisdiction. Nothing
in this subsection shall limit the duty of the association to render a report of its activities
under section 38a-872.
(c) For the purpose of carrying out its obligations under sections 38a-858 to 38a-
875, inclusive, the association shall be deemed to be a creditor of the impaired insurer
to the extent of assets attributable to covered policies reduced by any amounts to which
the association is entitled as subrogee pursuant to subdivision (i) of section 38a-865.
All assets of the impaired insurer attributable to covered policies shall be used to continue
all covered policies and pay all contractual obligations of the impaired insurer as required
by sections 38a-858 to 38a-875, inclusive. Assets attributable to covered policies, as
used in this subsection, is that proportion of the assets which the reserves that should
have been established for such policies bear to the reserve that should have been established for all policies of insurance written by the impaired insurer.
(d) (1) Prior to the termination of any liquidation, rehabilitation or conservation
proceeding, the court may take into consideration the contributions of the respective
parties, including the association, the shareholders and policyowners of the impaired
insurer, and any other party with a bona fide interest, in making an equitable distribution
of the ownership rights of such impaired insurer. In such a determination, consideration
shall be given to the welfare of the policyholders of the continuing or successor insurer.
(2) No distribution to stockholders, if any, of an impaired insurer shall be made until
and unless the total amount of assessments levied by the association with respect to
such insurer has been fully recovered by the commission.
(e) It shall be a prohibited unfair trade practice and a violation of section 38a-815
for any person to make use in any manner of the protection afforded by sections 38a-
858 to 38a-875, inclusive, in the solicitation, negotiation, procurement or effectuation of
insurance provided, this subsection shall not apply to the distribution of any publication
approved by the commissioner and describing the general purposes and current limitations of sections 38a-858 to 38a-874, inclusive. Violations of this section shall be subject
to the provisions of section 38a-817.
(f) (1) If an order for liquidation or rehabilitation of an insurer domiciled in this
state has been entered, the receiver appointed under such order shall have a right to
recover on behalf of the insurer, from any affiliate that controlled it, the amount of
distributions, other than stock dividends paid by the insurer on its capital stock, made
at any time during the five years preceding the petition for liquidation or rehabilitation
subject to the limitations of subdivisions (2) to (4), inclusive. (2) No such dividend
shall be recoverable if the insurer shows that when paid the distribution was lawful and
reasonable, and that the insurer did not know and could not reasonably have known that
the distribution might adversely affect the ability of the insurer to fulfill its contractual
obligations. (3) Any person who was an affiliate that controlled the insurer at the time
the distributions were paid shall be liable up to the amount of distributions he received.
Any person who was an affiliate that controlled the insurer at the time the distributions
were declared shall be liable up to the amount of distributions he would have received
if they had been paid immediately. If two persons are liable with respect to the same
distributions, they shall be jointly and severally liable. (4) The maximum amount recoverable under this subsection shall be the amount needed in excess of all other available
assets of the impaired insurer to pay the contractual obligations of the impaired insurer.
(5) If any person liable under subdivision (3) of this subsection is insolvent, all its
affiliates that controlled it at the time the dividend was paid shall be jointly and severally
liable for any resulting deficiency in the amount recovered from the insolvent affiliate.
(1972, P.A. 280, S. 14; P.A. 85-105, S. 2; P.A. 92-60, S. 23.)
History: P.A. 85-105 amended Subsec. (e) to expand the prohibition to any "solicitation, negotiation, procurement or
effectuation" of insurance, rather than the "sale" of insurance; Sec. 38-314 transferred to Sec. 38a-871 in 1991; P.A. 92-
60 amended Subsec. (e) making the provisions of this section a violation of Sec. 38a-815 and excluding its effect from the
distribution of publications approved by the insurance commissioner describing the general purposes or current limitations
of the Connecticut Insurance Guaranty Association Act.
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(1972, P.A. 280, S. 15.)
History: Sec. 38-315 transferred to Sec. 38a-872 in 1991.
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(1972, P.A. 280, S. 16.)
History: Sec. 38-316 transferred to Sec. 38a-873 in 1991.
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(1972, P.A. 280, S. 17.)
History: Sec. 38-317 transferred to Sec. 38a-874 in 1991.
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(1972, P.A. 280, S. 18.)
History: Sec. 38-318 transferred to Sec. 38a-875 in 1991.
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BROKERED TRANSACTIONS GUARANTY FUND
(P.A. 89-106, S. 1; P.A. 93-236, S. 1; P.A. 96-193, S. 24, 36.)
History: P.A. 93-236 clarified that an "unlicensed person" would be a person acting as an insurance agent or broker,
allowed payment from the guaranty fund except in cases when the insurer is impaired and decreased the compensation
allowed from the guaranty fund from "twenty-five thousand dollars" to "ten thousand dollars"; P.A. 96-193 substituted
"producer" for "agent" and "broker", effective June 3, 1996.
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(P.A. 89-106, S. 2; P.A. 96-193, S. 25, 36.)
History: P.A. 96-193 substituted "producer" for "agent" and "broker" re licenses, effective June 3, 1996.
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(b) If, at any time, the amount deposited in the Brokered Transactions Guaranty
Fund is under one hundred thousand dollars, the department, in its discretion, may assess
all persons licensed as insurance producers a fee not to exceed ten dollars which shall
be credited to said guaranty fund.
(P.A. 89-106, S. 3; P.A. 96-193, S. 26, 36; P.A. 98-27, S. 9.)
History: P.A. 96-193 amended Subsec. (b) to substitute "producer" for "agent" and "broker", effective June 3, 1996;
P.A. 98-27 amended Subsec. (b) to substitute "said" for "such".
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(P.A. 89-106, S. 4; P.A. 93-236, S. 2; P.A. 96-193, S. 27, 36; P.A. 98-27, S. 8.)
History: P.A. 93-236 deleted ambiguous language and substituted clear language regarding the limitation of actions
which may be brought and outlined the specific actions covered by the limitation; P.A. 96-193 substituted "producer" for
"agent" and "broker", effective June 3, 1996; P.A. 98-27 substituted "the Brokered Transactions Guaranty Fund" for "such
guaranty fund".
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(b) The department shall proceed upon such application in a summary manner,
after giving reasonable notice to such producer pursuant to section 38a-774, or to an
unlicensed person acting as a producer engaged in the business of insurance, alleged to
have caused the aggrieved person's loss or damages and, upon the hearing thereof, the
aggrieved person shall be required to show: (1) He is not a spouse of the debtor, or the
personal representative of such spouse; (2) he is aggrieved by the action of such insurance
producer duly licensed in this state under section 38a-769, or that he is aggrieved by
the action of such unlicensed person acting as a producer engaged in the business of
insurance, by reason of the embezzlement of money or property, or the unlawful obtainment of money or property by false pretenses, artifice, trickery or forgery, or by
reason of any fraud, misrepresentation or deceit; and (3) the aggrieved person's loss or
damages are equivalent to either the amount of unearned premium or the expense of
obtaining duplicate coverage, or the amount of unpaid claims in conformance with the
aggrieved person's insurance contract applying any deductibles, copayment requirements or exclusions.
(c) The commissioner shall make an order requiring payment from the Brokered
Transactions Guaranty Fund of whatever sum he shall find to be payable upon the claim,
pursuant to the provisions of and in accordance with the limitations contained in this
section and section 38a-880, if the commissioner is satisfied, upon the hearing, of the
truth of all matters required to be shown by the aggrieved person by subsection (b) of
this section.
(d) The payment from said fund of any amount in settlement of a claim against a
licensed insurance producer or an unlicensed person acting as a producer engaged in
the business of insurance pursuant to an order under subsection (c), shall constitute
cause for the suspension or revocation of any license issued by the commissioner or for
the imposition of a fine pursuant to section 38a-774 and for an order of restitution to
the fund in the amount it has paid, and such producer or unlicensed person shall not be
eligible to apply for a license until he has repaid in full, plus interest at a rate to be
determined by the department and which shall reflect current market rates, the amount
paid from said guaranty fund on his account. A discharge in bankruptcy shall not relieve
a person from the penalties and disabilities provided in this subsection.
(e) If, at any time, the money deposited in said guaranty fund is insufficient to satisfy
any duly authorized claim or portion thereof, the department shall, when sufficient
money has been deposited in said guaranty fund, satisfy such unpaid claims or portions
thereof, in the order that such claims or portions thereof were originally filed, plus
accumulated interest at the rate of four per cent a year.
(P.A. 89-106, S. 5; P.A. 93-236, S. 3; P.A. 96-193, S. 28, 36; P.A. 98-27, S. 5−7.)
History: P.A. 93-236 substantially revised procedure to secure payment from the guaranty fund, deleting Subsecs. (a)
and (b), which had required aggrieved person to notify department of commencement of action and had detailed circumstances for payment from fund of amounts unpaid after judgment, substituting new Subsec. (a) re application for payment
from fund, rewrote Subsec. (c), relettered as Subsec. (b), to provide notice requirements to the agent or broker or unlicensed
agent or broker engaged in the business of insurance and to outline the showing required to state a claim against the guaranty
fund, deleted Subsec. (d) re waiver of compliance with certain requirements by aggrieved person, relettered Subsec. (e)
as (c), substituting "commissioner" for "department" and making certain technical changes for accuracy, relettered Subsec.
(f) as (d) and made provision for suspension or revocation of license or imposition of a fine and relettered Subsec. (g) as
(e) (Revisor's note: The Revisors deleted the word "that" from the beginning of Subdivs. (2) and (3) of Subsec. (b) for
consistency with Subdiv. (1)); P.A. 96-193 substituted "producer" for "agent" and "broker", effective June 3, 1996; P.A.
98-27 amended Subsec. (a) to substitute "the Brokered Transactions Guaranty Fund" for "such guaranty fund", amended
Subsec. (d) to substitute "said" for "such" and amended Subsec. (e) to substitute "said" for "such"; (Revisor's note: A
missed reference in Subsec. (e) to "such guaranty fund" was changed editorially by the Revisors to "said guaranty fund").
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(P.A. 89-106, S. 6.)
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(P.A. 89-106, S. 7; P.A. 93-236, S. 4.)
History: P.A. 93-236 replaced prior general provisions re attorney general's authority with more specific provisions.
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(P.A. 89-106, S. 8; P.A. 93-236, S. 5; P.A. 96-193, S. 29, 36; P.A. 98-27, S. 4.)
History: P.A. 93-236 substituted "commissioner" for "department" and "aggrieved person" for "judgment creditor"
and clarified the procedures in accepting payment from the guaranty fund; P.A. 96-193 substituted "producer" for "agent"
and "broker", effective June 3, 1996; P.A. 98-27 substituted "the Brokered Transactions Guaranty Fund" for "such guaranty
fund" and substituted "said" for "such".
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(P.A. 89-106, S. 9.)
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(P.A. 89-106, S. 10.)
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