AN ACT CONCERNING MINOR CHANGES TO THE INSURANCE AND RELATED STATUTES.

1. broadens the applicability of several health insurance benefits;

2. specifies penalties for, and expands the Department of Motor Vehicles (DMV) commissioner's authority regarding, violations of the motor vehicle repair shop notice and customer acknowledgement requirements;

3. makes the insurance commissioner the agent to receive legal service of process for captive insurers domiciled in Connecticut, instead of all captive insurers;

4. requires all Connecticut-domiciled captive insurers to file a certificate of general good and articles of incorporation, if applicable, with the secretary of the state, instead of only those formed as a corporation; and

5. makes other minor, technical, and conforming changes.

EFFECTIVE DATE: Upon passage, except for the provisions extending the applicability of certain insurance benefit requirements, which are effective January 1, 2010.

The bill broadens the applicability of several health insurance benefits required by law, as described below. Due to federal law (ERISA), state insurance benefit mandates do not apply to self-insured benefit plans.

The bill requires individual and group health insurance policies amended in Connecticut on and after January 1, 2010 to cover medically necessary ostomy appliances and supplies, including collection devices, irrigation equipment and supplies, and skin barriers and protectors, up to $ 1,000 annually. The law already requires policies delivered, issued, renewed, or continued in Connecticut to cover ostomy-related supplies.

Both the bill and current law apply to policies that cover (1) basic hospital expenses; (2) basic medical-surgical expenses; (3) major medical expenses; and (4) hospital or medical services, including coverage under an HMO plan.

The bill requires individual and group health insurance policies renewed, amended, or continued in Connecticut on and after January 1, 2010 to provide certain benefits for the treatment of tumors and leukemia, reconstructive surgery, nondental prosthesis, chemotherapy, and wigs for chemotherapy patients. The law already requires policies issued or delivered in Connecticut to provide these benefits.

Coverage must be subject to the same terms and conditions applicable to other policy benefits. But the policy must provide at least a yearly benefit of $ 500 for the surgical removal of tumors; $ 500 for reconstructive surgery; $ 500 for outpatient chemotherapy; $ 350 for a wig; and $ 300 for a nondental prosthesis unless the prosthesis is due to the surgical removal of breasts because of tumors, in which case the yearly benefit must be at least $ 300 for each breast.

Both the bill and current law apply to (1) individual or group health insurance policies that cover (a) basic hospital expenses; (b) basic medical-surgical expenses; (c) major medical expenses; and (d) hospital or medical services, including coverage under an HMO plan, and (2) individual health insurance policies that provide limited benefit health coverage.

The bill requires group health insurance policies amended in Connecticut on and after January 1, 2010 to cover medically necessary general anesthesia, nursing, and related hospital services provided to a patient with a (1) complex dental condition that requires the procedure to be performed in a hospital or (2) developmental disability that places them at serious risk. The law already requires policies delivered, issued, renewed, or continued in Connecticut to cover these services.

Both the bill and current law apply to group health insurance policies that cover (1) basic hospital expenses; (2) basic medical-surgical expenses; (3) major medical expenses; and (4) hospital or medical services, including coverage under an HMO plan.

The bill does not make a corresponding change to the individual insurance statute, CGS § 38a-491a. By law, individual health insurance policies delivered, issued, renewed, or continued in Connecticut must cover the same dental-related services.

The bill allows the DMV commissioner to impose penalties for violations of the motor vehicle repair shop notice and customer acknowledgement requirements under PA 08-146 (see BACKGROUND). It authorizes the commissioner to suspend or revoke a repair shop's license, fine the shop up to $ 1,000 for each violation, or both. In addition, or in lieu of these penalties, the commissioner may order the licensee to make restitution to an aggrieved customer. By law, the commissioner may impose these penalties for violations of other repair shop laws.

By law, a repair shop customer may waive, in writing, his or her right to a repair estimate. The bill prohibits a repair shop from using waivers to evade its duties under PA 08-146. The law already prohibits waivers to evade duties under other repair shop laws.

The bill authorizes the DMV commissioner to conduct investigations and hearings regarding a repair shop's compliance with PA 08-146. He currently has this authority with respect to other motor vehicle dealer and repairer laws. The bill also allows the attorney general, at the DMV commissioner's request, to seek a restraining order requiring a repair shop to cease violating PA 08-146, a power he has with respect to other repair shop laws.

The bill makes the insurance commissioner the agent to receive legal service of process for captive insurers domiciled in Connecticut. Current law makes him agent for captives regardless of the state of domicile. Thus, it is unclear whether the insurance commissioner may still receive service of process for out-of-state captives doing business in Connecticut.

The bill requires a captive insurance company formed as a reciprocal insurer or LLC to give the secretary of the state, along with any required filing fee, a certificate of general good from the insurance commissioner and the insurer's articles of incorporation, if applicable. By law, a captive formed as a corporation must already do this.

The bill resolves a statutory conflict within the license expiration and renewal requirements for life settlement producers and brokers. PA 08-175 both retained the former law's requirements and added new, conflicting ones. The bill retains the former law, specifying that provider and broker licenses expire on March 31 in each year, but may be renewed annually. If a provider or broker fails to pay the renewal fee on time, the commissioner must revoke his or her license, unless he or she pays within five days after the commissioner sends, by first class mail, a written notice of nonrenewal after March 31.

The bill deletes the following provisions: (1) the term of a (a) producer license is equal to that of a domestic stock life insurance company (annual renewal) and (b) broker license is equal to that of an insurance producer (if an individual, renewal is every other year on the person's birth date, and if an entity, February 1 of even-numbered years) and (2) licenses must be renewed on their anniversary dates and that failure to pay the renewal fee by that date results in license expiration.

The bill deletes another confusing and apparently erroneous provision from PA 08-175. The provision specifies that if a broker verifies the existence of a life insurance policy, then a life settlement provider is deemed to have fulfilled the law's extensive disclosure requirements.

By law, a life settlement provider, within 20 days after a life insurance policy owner executes a life settlement contract, must give the insurer that issued the policy written notice that the policy has become subject to a life settlement contract. The bill requires the provider to send the notice with a copy of the insured's (1) required medical records release form and (2) application for the life settlement contract, instead of with optional disclosure documents.

The bill authorizes the insurance commissioner to adopt regulations to establish an electronic filing process, instead of an electronic filing and acknowledgement process, for a medical discount plan organization (MDPO) to follow when updating its filed list of Connecticut marketers operating under a different name from its own.

The bill eliminates the class D felony penalty for the insurance commissioner's failure to provide courts and police departments a list of surety bail bond agents or changes to the list.

Effective January 1, 2009, the law requires automobile physical damage appraisals or estimates written on an insurer's or a motor vehicle repair shop's behalf to include the following notice in at least 10-point boldface type: NOTICE: YOU HAVE THE RIGHT TO CHOOSE THE LICENSED REPAIR SHOP WHERE THE DAMAGE TO YOUR MOTOR VEHICLE WILL BE REPAIRED (CGS § 14-65l).

The law prohibits a motor vehicle repair shop participating in an insurer's vehicle repair program from repairing a vehicle under that program unless the claimant (i. e. , person whose insured vehicle needs repairs) acknowledges in writing that he or she is aware of the right to have the vehicle repaired at a shop he or she chooses (CGS § 14-65m). The acknowledgement may be (1) included in the repair authorization, which a customer signs before repairs are made, or in a separate document and (2) faxed or e-mailed. The acknowledgement must state: “I am aware of my right to choose the licensed repair shop where the damage to the motor vehicle will be repaired. ”

Licensed Repair Shops. By law, no one may operate a motor vehicle repair shop without a DMV-issued new car dealer's, used car dealer's, repairer's, or limited repairer's license (CGS § 14-52). A “motor vehicle repair shop” means a new car dealer, a used car dealer, a repairer, or a limited repairer (CGS § 14-65e).

Effective January 1, 2009, the law permits a captive insurance company to be licensed and domiciled in Connecticut to transact life insurance, annuity, health insurance, and commercial risk insurance business. A captive insurance company is, in its simplest form, an insurance company that is a wholly-owned subsidiary whose primary function is to insure all or part of the risks of its parent company.

The law enumerates requirements for a Connecticut-domiciled captive's formation, capital and surplus, local office presence, ability to meet policy obligations, payment of certain fees and premium taxes, and annual reporting, among other things.

A captive domiciled outside of Connecticut may conduct business in Connecticut, subject to conditions specified in federal and state laws.

Domicile. A company's domicile is the jurisdiction under whose laws the company is organized and in which it has its principal place of business.

sHB 5021. The Insurance and Real Estate Committee favorably reported sHB 5021 (File 34), which (1) increases the annual coverage maximum for ostomy-related supplies to $ 5,000 from $ 1,000 and (2) as with this bill, extends the requirement to policies amended in Connecticut.

sHB 5673. The Insurance and Real Estate Committee favorably reported sHB 5673 (File 11), which (1) expands current law regarding health insurance coverage for wigs and (2) as with this bill, applies certain insurance coverage requirements (i. e. , treatment of tumors and leukemia, reconstructive surgery, nondental prosthesis, chemotherapy, and wigs for chemotherapy patients) to policies renewed, amended, or continued in Connecticut.

sSB 457. The Insurance and Real Estate Committee favorably reported sSB 457 (File 241), which requires all repair shops to obtain a customer's written acknowledgement that he or she is aware of his or her right to choose the licensed repair shop that will repair his or her vehicle.

sHB 6354. The Insurance and Real Estate Committee favorably reported sHB 6354 (File 260), which (1) requires the insurance commissioner to notify the courts and police departments of any change in a surety bail bond agent's principal business address or telephone number and (2) as with this bill, eliminates the class D felony penalty if the commissioner fails to provide them a list of surety bail bond agents or changes to the list.

Yea

Nay

(03/12/2009)