Sec. 38a-62. (Formerly Sec. 38-27b). Indemnification of directors, officers and
employees of mutual insurance companies. (a) Except as otherwise provided in this
section, a domestic mutual insurance company shall indemnify any person who was or
is a party, or was threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or investigative, other
than an action by or in the right of the mutual insurance company, by reason of the fact
that he, or the person whose legal representative he is, (1) is or was a director, officer
or employee of the mutual insurance company, or (2) is or was serving at the request
of the mutual insurance company (A) as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise or (B) as an agent of such
other corporation, partnership, joint venture, trust, or other enterprise other than an
employee benefit plan or trust, or (3) is or was a director, officer or employee of the
mutual insurance company serving at the request of the mutual insurance company as
a fiduciary of an employee benefit plan or trust maintained for the benefit of employees
of the mutual insurance company or employees of any such other corporation, partnership, joint venture, trust, or other enterprise, against judgments, fines, penalties, amounts
paid in settlement and expenses, including attorneys' fees, actually and reasonably incurred by him and the person whose legal representative he is, in connection with such
action, suit or proceeding, or any appeal therein. The mutual insurance company shall
not so indemnify any such person unless it shall be concluded as provided in subsection
(c) of this section that such person, and the person whose legal representative he is,
acted in good faith and in a manner he reasonably believed to be in the best interests of
the mutual insurance company or, in the case of a person serving as a fiduciary of an
employee benefit plan or trust, either in the best interests of the mutual insurance company or in the best interests of the participants and beneficiaries of such employee benefit
plan or trust and consistent with the provisions of such employee benefit plan or trust
and, with respect to any criminal action or proceeding, that he had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the person did not act in good
faith or in a manner which he did not reasonably believe to be in the best interests of
the mutual insurance company or of the participants and beneficiaries of such employee
benefit plan or trust and consistent with the provisions of such employee benefit plan
or trust, or, with respect to any criminal action or proceeding, that he had reasonable
cause to believe that his conduct was unlawful.
(b) Except as otherwise provided in this section, a domestic mutual insurance company shall indemnify any person who was or is a party, or was threatened to be made
a party, to any action, suit or proceeding, by or in the right of the mutual insurance
company to procure a judgment in its favor by reason of the fact that he, or the person
whose legal representative he is, (1) is or was a director, officer or employee of the
mutual insurance company, or (2) is or was serving at the request of the mutual insurance
company (A) as a director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise or (B) as an agent of such other corporation, partnership,
joint venture, trust, or other enterprise other than an employee benefit plan or trust, or
(3) is or was a director, officer, or employee of the mutual insurance company serving
as a fiduciary of an employee benefit plan or trust maintained for the benefit of employees
of the mutual insurance company or employees of any such other corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with such action, suit or proceeding, or any appeal therein, in relation to matters as to which such person, or the person
whose legal representative he is, is finally adjudged not to have breached his duty to
the mutual insurance company, or where the court, on application as provided in subsection (d) of this section, shall have determined that in view of all the circumstances such
person is fairly and reasonably entitled to be indemnified, and then for such amount as
the court shall determine. The mutual insurance company shall not so indemnify any
such person for amounts paid to the mutual insurance company, to a plaintiff or to
counsel for a plaintiff in settling or otherwise disposing of a threatened action or a
pending action, with or without court approval; or for expenses incurred in defending
a threatened action or a pending action which is settled or otherwise disposed of without
court approval.
(c) The conclusion provided for in subsection (a) of this section may be reached by
any one of the following: (1) The board of directors of the mutual insurance company
by a consent in writing signed by a majority of those directors who were not parties to
such action, suit or proceeding; (2) independent legal counsel selected by a consent in
writing signed by a majority of those directors who were not parties to such action, suit
or proceeding; or (3) the members of the mutual insurance company entitled to vote at
annual meetings, by the affirmative vote of at least a majority of such members who
were not parties to such action, suit or proceeding, represented at an annual or a special
meeting of voting members, duly called with notice of such purpose stated. Such person
shall also be entitled to apply to a court for such conclusion, upon application as provided
in subsection (d), even though the conclusion reached by any of the foregoing shall have
been adverse to him or to the person whose legal representative he is.
(d) An application for indemnification or for a conclusion as provided in this section
shall be made to the court in which the action is pending or, in the absence thereof, to
the superior court for the judicial district where the principal office of the domestic
mutual insurance company is located. The application shall be made in such manner
and form as may be required by the applicable rules of the court or, in the absence
thereof, by direction of the court. The court may also direct that notice be given in such
manner as it may require at the expense of the mutual insurance company to the members
of the mutual insurance company and to such other persons as the court may designate.
(e) Expenses which may be indemnifiable under this section incurred in defending
an action, suit or proceeding may be paid by the domestic mutual insurance company
in advance of the final disposition of such action, suit or proceeding as authorized by
the board of directors upon agreement by or on behalf of the director, officer, employee
or agent, or his legal representative, to repay such amount if he is later found not entitled
to be indemnified by the mutual insurance company as authorized in this section.
(f) A domestic mutual insurance company shall not indemnify any director, officer,
employee or agent or any director, officer, or employee serving at the request of the
corporation as a fiduciary of an employee benefit plan or trust, against judgments, fines,
amounts paid in settlement and expenses, including attorneys' fees, to an extent greater
than that authorized by this section, but the mutual insurance company may procure
insurance providing greater indemnification and may share the premium cost with any
director, officer, employee or agent on such basis as may be agreed upon.
(1971, P.A. 293; P.A. 76-299; P.A. 78-204, S. 16, 17; 78-280, S. 2, 127.)
History: P.A. 76-299 made provisions applicable to agents of other corporations, partnerships, trusts etc. other than
employee benefit plans or trusts and to directors, officers and employees of mutual insurance companies serving as fiduciaries of employee benefit plans or trusts; P.A. 78-204 added "penalties" in Subsec. (a)(3) and, with P.A. 78-280, substituted
"judicial district" for "county" in Subsec. (d); Sec. 38-27b transferred to Sec. 38a-62 in 1991.
Sec. 38a-63. Limitation of liability of director of mutual insurance company.
(a) The personal liability of a director of a mutual insurance company to the company
or its members for monetary damages for breach of duty as a director may be limited
by the board to an amount that is not less than the compensation received by the director
for serving the company during the year of the violation, provided such breach did not
(1) involve a knowing and culpable violation of law by the director, (2) enable the
director or an associate, as defined solely for the purposes of this section in subdivision
(3) of section 33-843, to receive an improper personal economic gain, (3) show a lack
of good faith and a conscious disregard for the duty of the director to the company under
circumstances in which the director was aware that his conduct or omission created an
unjustifiable risk of serious injury to the company, or (4) constitute a sustained and
unexcused pattern of inattention that amounted to an abdication of the director's duty
to the company, provided further no director who is a defendant in a lawsuit shall participate in the discussion or vote on such limitation of liability if it will affect his potential
liability in such lawsuit. No such limitation shall limit or preclude the liability of a
director for any act or omission occurring prior to the effective date of such provision.
(b) Notwithstanding any inconsistent provision in the charter of a domestic mutual
insurance company or in the general statutes, the provisions of this section shall become
effective on the date it is approved by a majority of the members present and voting, in
the manner customary for such company's meetings, in person or by proxy at an annual
or other meeting of such domestic mutual insurance company.
(P.A. 89-322, S. 3; P.A. 96-271, S. 211, 254.)
History: P.A. 96-271 amended Subsec. (a) to replace reference to Sec. 33-374d with Sec. 33-843, effective January
1, 1997.
Sec. 38a-64. (Formerly Sec. 38-41). Donations by domestic mutual companies.
Each domestic mutual insurance company, in addition to all other powers specially
granted to it by law, shall have power, subject to such provisions and limitations as
may be contained in its charter, certificate of incorporation or bylaws, or in any statute
affecting it, to make donations for the public welfare or for charitable or educational
purposes.
(1953, S. 2812d.)
History: Sec. 38-41 transferred to Sec. 38a-64 in 1991.
Sec. 38a-65. (Formerly Sec. 38-48). Disposition of unclaimed dividends of insolvent company. Section 38a-65 is repealed, effective October 1, 1998.
(1949 Rev., S. 6051; 1961, P.A. 540, S. 25; P.A. 98-214, S. 32.)
Sec. 38a-66. Reinsurance of insurance business with other insurers by
agreement of bulk reinsurance. (a) Any insurance company authorized to do business
in this state may, with respect to subjects of insurance resident, located or to be performed
in this state, reinsure all or substantially all of its insurance business in force, or all or
substantially all of a major class thereof, with another insurer by agreement of bulk
reinsurance after compliance with this section. Each such agreement shall be filed with
the Insurance Commissioner and shall become effective upon the expiration of twenty
days after the date of filing unless disapproved by the commissioner.
(b) The Insurance Commissioner shall disapprove such an agreement within twenty
days after filing if it is found:
(1) That the agreement is unfair and inequitable to any insurer or to any policyholder
involved;
(2) That the reinsurance, if effectuated, would reduce the provision of service to
policyholders of any insurer involved;
(3) That the agreement does not embody adequate provisions by which the reinsuring insurer becomes liable to the original insureds for any loss or damage occurring
under the policies reinsured in accordance with the original terms of such policies or
does not require the reinsuring insurer to furnish each such insured with a certificate
evidencing such assumption of liability;
(4) That the assuming reinsurer is not authorized to transact such insurance in
this state;
(5) That the assuming reinsurer will not appoint the commissioner or his successors
as its irrevocable attorney for service of process, so long as any policy so reinsured or
claim thereunder remains in force or outstanding;
(6) That such reinsurance would materially tend to lessen competition in the insurance business in this state or elsewhere as to the kinds of insurance involved or would
materially tend to create a monopoly as to such business; or
(7) That the proposed bulk reinsurance is not free of other reasonable objections.
(c) If the Insurance Commissioner disapproves the agreement, he shall notify in
writing each insurer involved specifying his reasons for doing so.
(P.A. 91-41.)
Sec. 38a-67. Reporting requirement for cancellations and revisions of ceded
reinsurance agreements. (a) Every insurer domiciled in this state shall file a report
with the commissioner disclosing material acquisitions and dispositions of assets or
material nonrenewals, cancellations or revisions of ceded reinsurance agreements unless
such material acquisitions and dispositions of assets or material nonrenewals, cancellations or revisions of ceded reinsurance agreements have been submitted to the commissioner for review, approval or information purposes pursuant to other provisions of the
insurance code, laws, regulations or other requirements.
(b) The report required in subsection (a) of this section is due within fifteen days
after the end of the calendar month in which any of the foregoing transactions occur.
(c) One complete copy of the report, including any exhibits or other attachments
filed as part thereof, shall be filed with:
(1) The insurance department of the insurer's state of domicile; and
(2) The National Association of Insurance Commissioners.
(d) All reports obtained by or disclosed to the commissioner pursuant to the provisions of this section and sections 38a-67a and 38a-67b shall be given confidential treatment, shall not be subject to subpoena and shall not be made public by the commissioner,
the National Association of Insurance Commissioners or any other person, except to
insurance regulatory officials of other states or countries so long as the commissioner
determines that such officials agree to maintain the same level of confidentiality in their
jurisdiction as is available in this state, without the prior written consent of the insurer
to which it pertains unless the commissioner, after giving the insurer who would be
affected thereby, notice and an opportunity to be heard, determines that the interest of
policyholders, shareholders or the public will be served by the publication thereof, in
which event the commissioner may publish all or any part thereof in such manner as he
may deem appropriate.
(P.A. 95-168, S. 5; P.A. 98-57, S. 2.)
History: P.A. 98-57 amended Subsec. (d) to substitute "insurance regulatory officials of other states or countries" for
"insurance departments of other states" and added condition re disclosure of information by commissioner that he determine
that officials agree to maintain the same level of confidentiality as is available in this state.