CHAPTER 701a
INSURANCE PRODUCERS, AGENTS AND
THIRD-PARTY ADMINISTRATORS

Table of Contents

Sec. 38a-720. Definitions.
Sec. 38a-720a. License. Exemptions. Written agreement required.
Sec. 38a-720b. Payments of premiums or charges to a third-party administrator.
Sec. 38a-720c. Maintenance of and access to books and records. Examination, audit and inspection. Confidentiality of information.
Sec. 38a-720d. Advertising.
Sec. 38a-720e. Responsibilities of insurer or other person utilizing a third-party administrator.
Sec. 38a-720f. Collection of premiums or charges. Payment of claims.
Sec. 38a-720g. Compensation prohibitions.
Sec. 38a-720h. Disclosures.
Sec. 38a-720i. Delivery of written communications to insureds.
Sec. 38a-720j. Surety bond required. Audited annual financial statements in lieu of bond. Application. License renewal.
Sec. 38a-720k. Registration of certain persons not required to be licensed as third-party administrator.
Sec. 38a-720l. Annual report.
Sec. 38a-720m. Suspension or revocation of license.
Sec. 38a-720n. Regulations.

PART II
THIRD-PARTY ADMINISTRATORS

      Sec. 38a-720. Definitions. As used in sections 38a-720 to 38a-720n, inclusive:

      (1) "Adjuster" means an independent or contracted individual who investigates or settles loss claims. "Adjuster" does not include an employee of an insurer who investigates or settles claims incurred under insurance contracts written by the insurer or an affiliated insurer.

      (2) "Affiliate" or "affiliated" has the same meaning as provided in section 38a-1.

      (3) "Business entity" means a corporation, a limited liability company or any other similar form of business organization, whether for profit or nonprofit.

      (4) "Commissioner" means the Insurance Commissioner.

      (5) "Control" or "controlled by" has the same meaning as provided in section 38a-1.

      (6) "Insurance producer" has the same meaning as provided in section 38a-702a.

      (7) "Insurer" or "insurance company" means any person or combination of persons doing any kind or form of insurance business other than a fraternal benefit society, and includes a captive insurance company, as defined in section 38a-91aa, a captive insurer, as defined in section 38a-91k, a licensed insurance company, a medical service corporation, a hospital service corporation, a health care center, and a consumer dental plan that provides employee welfare benefits on a self-funded basis or as defined in section 38a-577.

      (8) "NAIC" means the National Association of Insurance Commissioners.

      (9) "Person" has the same meaning as provided in section 38a-1.

      (10) "Sell" means the exchange of an insurance contract for money or other consideration, by any means, on behalf of an insurance company.

      (11) "Third-party administrator" means any person who directly or indirectly underwrites, collects premiums or charges from, or adjusts or settles claims on, residents of this state in connection with life, annuity or health coverage offered or provided by an insurer. "Third-party administrator" does not include:

      (A) An employer administering its employee benefit plan or the benefit plan of an affiliated employer under common management and control;

      (B) A union administering a benefit plan on behalf of its members;

      (C) An insurer that is licensed in this state or is acting as an authorized insurer with respect to insurance lawfully issued to cover a Connecticut resident, and sales representatives thereof;

      (D) An insurance producer who is licensed to sell life, annuity or health coverage in this state, whose activities are limited exclusively to the sale of insurance;

      (E) A creditor acting on behalf of its debtors with respect to insurance covering a debt between the creditor and its debtors;

      (F) A trust and its trustees, agents and employees acting pursuant to such trust established in conformity with 29 USC Section 186, as amended from time to time;

      (G) A trust exempt from taxation under Section 501(a) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, and its trustees and employees acting pursuant to such trust, or a custodian and the custodian's agents and employees acting pursuant to a custodian account that meets the requirements of Section 401(f) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time;

      (H) A credit union or a financial institution that is subject to supervision or examination by federal or state banking authorities, or a mortgage lender, to the extent such credit union, financial institution or mortgage lender collects or remits premiums to licensed insurance producers or limited lines producers or to authorized insurers, in connection with loan payments;

      (I) A credit card issuing company that advances or collects premiums or charges from its credit cardholders who have authorized collection;

      (J) An attorney-at-law who adjusts or settles claims in the normal course of such attorney's practice or employment and who does not collect premiums or charges in connection with life, annuity or health coverage;

      (K) An adjuster who is licensed in this state or is not subject to the licensure requirements of chapter 702 and whose activities are limited to adjusting claims;

      (L) An insurance producer who is licensed in this state and acting as a managing general agent, as defined in section 38a-90a, whose activities are limited exclusively to those specified in said section;

      (M) A business entity that is affiliated with an insurer licensed in this state and that undertakes activities as a third-party administrator only for the direct and assumed insurance business of the affiliated insurer;

      (N) A consortium of federally qualified health centers funded by the state, providing services only to the recipients of programs administered by the Department of Social Services;

      (O) A pharmacy benefits manager registered under section 38a-479bbb;

      (P) An entity providing administrative services to the Health Reinsurance Association established under section 38a-556; or

      (Q) A nonprofit association or one of its direct subsidiaries that provides access to insurance as part of the benefits or services such association or subsidiary makes available to its members.

      (12) "Underwrites" or "underwriting" means the acceptance of employer or individual applications for coverage of individuals in accordance with the written rules of the insurer or self-funded plan, and the overall planning and coordination of a benefits program.

      (13) "Uniform application" means the current version of the National Association of Insurance Commissioners' Uniform Application for Third-Party Administrators.

      (P.A. 11-58, S. 20.)

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      Sec. 38a-720a. License. Exemptions. Written agreement required. (a) No person shall offer to act as or hold himself out to be a third-party administrator in this state unless such person is licensed pursuant to section 38a-720j, or is exempt from licensure pursuant to subsection (b) of this section. This requirement shall not apply to a person employed by a third-party administrator to the extent that such person's activities are under the supervision and control of the third-party administrator. The authority granted to a third-party administrator pursuant to sections 38a-720 to 38a-720i, inclusive, shall not exempt such third-party administrator's employees from the licensing requirements of chapters 701b and 702.

      (b) (1) Any insurer licensed in this state that directly or indirectly underwrites, collects premiums or charges from, or adjusts or settles claims for other than its policyholders, subscribers and certificate holders shall be exempt from sections 38a-720 to 38a-720n, inclusive, provided such activities only involve the lines of insurance for which such insurer is licensed in this state. Any such insurer shall (A) be subject to the provisions of chapter 704, (B) respond to all complaint inquiries received from the Insurance Department, not later than ten calendar days after the date a complaint is received by the insurer, and (C) with respect to any advertising that mentions any customer, obtain such customer's prior written consent.

      (2) Nothing in this section shall authorize the commissioner to regulate a self-insured health plan subject to the Employee Retirement Income Security Act of 1974. The commissioner is authorized to regulate those activities an insurer undertakes for the administration of a self-insured health plan that do not relate to the health benefit plan and that comport with the commissioner's statutory authority to regulate insurance and the business of insurance as provided for in 29 USC 1144, as amended from time to time.

      (c) No third-party administrator shall act as such without a written agreement between such third-party administrator and an insurer or other person utilizing the services of the third-party administrator, which shall be retained as part of the official records of both the third-party administrator and such insurer or other person for the duration of such agreement and for five years thereafter. The agreement shall contain all provisions required by this section, except insofar as those provisions that do not apply to the activities performed by the third-party administrator.

      (d) The written agreement set forth in subsection (c) of this section shall include, but not be limited to:

      (1) A statement of activities that the third-party administrator shall undertake on behalf of the insurer or other person utilizing the services of the third-party administrator, and the lines, classes or types of insurance such third-party administrator is authorized to administer;

      (2) A statement of the activities and responsibilities of the third-party administrator regarding the administration of or any standards pertaining to business underwritten by the insurer, benefits, premium rates, underwriting criteria or claims payment;

      (3) A provision requiring the third-party administrator to render an accounting, on such frequency as the parties agree, that details all transactions performed by the third-party administrator pertaining to the business underwritten by the insurer or the business of the person utilizing the services of the third-party administrator;

      (4) The procedures for any withdrawals to be made by the third-party administrator from the fiduciary account established under section 38a-720f. Such procedures shall address, but not be limited to: (A) Remittance to an insurer or other person utilizing the services of the third-party administrator who is entitled to remittance, (B) deposit in an account maintained in the name of the insurer or other person utilizing the services of the third-party administrator, (C) transfer to and deposit in a claims-paying account, with claims to be paid as provided for in subsection (d) of section 38a-720f, (D) payment to a group policyholder for remittance to the insurer or other person utilizing the services of the third-party administrator entitled to such remittance, (E) payment to the third-party administrator for its commissions, fees or charges, and (F) remittance of return premiums to the person or persons entitled to such return premiums;

      (5) Procedures and requirements for the disclosures required to be made by the third-party administrator under section 38a-720h; and

      (6) A termination provision, by which either party to the written agreement may terminate such agreement for cause, that includes a procedure to resolve any disputes regarding the cause for termination of such agreement.

      (e) A third-party administrator or insurer or other person utilizing the services of the third-party administrator may, with written notice, terminate the written agreement for cause as provided in such written agreement. The insurer may suspend the underwriting authority of the third-party administrator during the pendency of any dispute regarding the cause for termination of the written agreement. The insurer or other person utilizing the services of the third-party administrator shall fulfill any legal obligations with respect to policies or plans affected by the written agreement, regardless of any dispute between the third-party administrator and the insurer or other person utilizing the services of the third-party administrator.

      (P.A. 11-58, S. 21.)

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      Sec. 38a-720b. Payments of premiums or charges to a third-party administrator. (a) If an insurer or other person utilizes the services of a third-party administrator, the payment of any premiums or charges by or on behalf of an insured to the third-party administrator shall be deemed to have been received by the insurer or other person utilizing the services of the third-party administrator.

      (b) Return premium payments or claim payments forwarded by the insurer or other person utilizing the services of the third-party administrator to the third-party administrator shall not be deemed to have been paid to the insured or claimant until such payments are received by such insured or claimant.

      (c) Nothing in this section shall limit any right of an insurer or other person utilizing the services of a third-party administrator to bring a cause of action arising from the failure of such third-party administrator to make payments to the insurer, other person utilizing the services of the third-party administrator, insureds or claimants.

      (P.A. 11-58, S. 22.)

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      Sec. 38a-720c. Maintenance of and access to books and records. Examination, audit and inspection. Confidentiality of information. (a)(1) Each third-party administrator shall maintain and make available to the insurer or other person utilizing the services of the third-party administrator complete books and records of all transactions performed on behalf of the insurer or other person utilizing the services of the third-party administrator. Each third-party administrator shall (A) maintain such books and records in accordance with prudent standards of insurance record keeping, and (B) retain such books and records for a period of not less than five years from the date of their creation.

      (2) The insurer or other person utilizing the services of a third-party administrator shall own any records generated by such third-party administrator pertaining to such insurer or other person utilizing the services of such third-party administrator. The third-party administrator shall retain the right to maintain continued access to books and records to permit the third-party administrator to fulfill all of its contractual obligations to the insurer, other person utilizing the services of the third-party administrator, insureds or claimants.

      (b) An insurer that is affiliated with a business entity as set forth in subparagraph (M) of subdivision (11) of section 38a-720 shall be responsible for the acts of such business entity to the extent of such business entity's activities as a third-party administrator for such insurer. Such insurer shall be responsible for furnishing the books and records of all transactions performed on behalf of the insurer to the commissioner upon the commissioner's request.

      (c) The commissioner shall have access for the purposes of examination, audit and inspection to books and records maintained by a third-party administrator. Any documents, materials or other information in the possession or control of the commissioner that are obtained by the commissioner from a third-party administrator, insurer, insurance producer or employee or agent thereof acting on behalf of such third-party administrator, insurer or insurance producer, in an investigation, examination or audit shall (1) be confidential by law and privileged; (2) not be subject to disclosure under section 1-210; (3) not be subject to subpoena; and (4) not be subject to discovery or admissible in evidence in any private civil action. The commissioner may use such documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner's official duties.

      (d) Neither the commissioner nor any person who receives documents, materials or other information as set forth in subsection (c) of this section while acting under the authority of the commissioner shall testify or be required to testify in any private civil action concerning such documents, materials or information.

      (e) To assist the commissioner in the performance of the commissioner's duties, the commissioner may:

      (1) Share documents, materials or other information, including documents, materials or other information deemed confidential and privileged pursuant to subsection (c) of this section, with other state, federal and international regulatory agencies, the National Association of Insurance Commissioners or its affiliates or subsidiaries and state, federal and international law enforcement authorities, provided the recipient of such documents, materials or other information agrees to maintain the confidentiality and privileged status of such documents, materials or other information;

      (2) Receive documents, materials or other information, including confidential and privileged documents, materials or other information from the National Association of Insurance Commissioners or its affiliates or subsidiaries and from regulatory and law enforcement officials of foreign or domestic jurisdictions. The commissioner shall maintain as confidential or privileged any documents, materials or other information received with notice or the understanding that such documents, materials or other information are confidential or privileged under the laws of the jurisdiction that is the source of such documents, materials or other information; and

      (3) Enter into agreements governing the sharing and use of information consistent with this subsection.

      (f) No waiver of any applicable privilege or claim of confidentiality in any documents, materials or other information shall occur as a result of disclosure to the commissioner or of sharing in accordance with subsection (e) of this section.

      (g) Nothing in sections 38a-720 to 38a-720n, inclusive, shall prohibit the commissioner from releasing final, adjudicated actions, including for cause terminations of licenses issued to third-party administrators, to a database or other clearinghouse service maintained by the National Association of Insurance Commissioners or its affiliates or subsidiaries.

      (h) Notwithstanding the provisions of subparagraph (B) of subdivision (1) of subsection (a) of this section, if a written agreement set forth in subsection (c) of this section is terminated, the third-party administrator may, by a separate written agreement with the insurer or other person utilizing the services of the third-party administrator, transfer all books and records to a new third-party administrator. Such new third-party administrator shall acknowledge to the insurer or other person utilizing the services of the new third-party administrator, in writing, that the new third-party administrator shall be responsible for retaining the books and records of the prior third-party administrator as required under subparagraph (B) of subdivision (1) of subsection (a) of this section.

      (P.A. 11-58, S. 23.)

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      Sec. 38a-720d. Advertising. A third-party administrator shall only use advertising pertaining to the business underwritten by an insurer that has been approved, in writing, by the insurer prior to its use. A third-party administrator that mentions any customer or person utilizing the services of the third-party administrator in its advertising shall obtain such customer's or person's prior written consent.

      (P.A. 11-58, S. 24.)

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      Sec. 38a-720e. Responsibilities of insurer or other person utilizing a third-party administrator. (a) Each insurer or other person utilizing the services of a third-party administrator shall be responsible for determining the benefits, premium rates, underwriting criteria and claims payment procedures for the lines, classes or types of insurance such third-party administrator is authorized to administer, and for securing reinsurance, if any. The insurer or other person utilizing the services of a third-party administrator shall provide to such third-party administrator, in writing, procedures pertaining to such third-party administrator's administration of benefits, premium rates, underwriting criteria and claims payment. Each insurer or other person utilizing the services of a third-party administrator shall be responsible for the competent administration of such insurer's or other person's benefit and service programs.

      (b) If a third-party administrator administers benefits for more than one hundred certificate holders on behalf of an insurer or other person utilizing the services of a third-party administrator, such insurer or other person shall, at least semiannually, conduct a review of the operations of the third-party administrator. At least one such review shall be an on-site audit of the operations of the third-party administrator.

      (P.A. 11-58, S. 25.)

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      Sec. 38a-720f. Collection of premiums or charges. Payment of claims. (a) All premiums or charges collected by a third-party administrator on behalf of or for an insurer or other person utilizing the services of a third-party administrator, and the return of premiums received from such insurer or other person, shall be held by the third-party administrator in a fiduciary capacity. The funds shall be immediately remitted to the person entitled to them or deposited promptly in a fiduciary account established and maintained by the third-party administrator in a federal or state chartered, federally insured financial institution. The third-party administrator shall render an accounting to the insurer or other person utilizing the services of a third-party administrator that details all transactions performed by the third-party administrator pertaining to the business underwritten by the insurer or the business of the person utilizing the services of a third-party administrator.

      (b) Each third-party administrator that deposits in a fiduciary account charges or premiums collected on behalf of or for one or more insurers or other persons utilizing the services of the third-party administrator shall keep clear records of the deposits in and withdrawals from the account on behalf of each insurer or other person utilizing the services of the third-party administrator. The third-party administrator shall keep copies of all the records and, upon request by the insurer or other person utilizing the services of the third-party administrator, shall furnish such insurer or other person with a copy of the records of the deposits and withdrawals pertaining to such insurer or other person.

      (c) A third-party administrator shall not pay any claim by making withdrawals from a fiduciary account in which premiums or charges are deposited. Withdrawals from the account shall be made as provided in the written agreement set forth in subsection (c) of section 38a-720a.

      (d) All claims paid by the third-party administrator from funds collected on behalf of or for an insurer or other person utilizing the services of the third-party administrator shall be paid only by drafts or checks of, and as authorized by, such insurer or other person.

      (P.A. 11-58, S. 26.)

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      Sec. 38a-720g. Compensation prohibitions. (a) A third-party administrator shall not enter into any written or oral agreement or understanding with an insurer or other person utilizing the services of the third-party administrator that makes or has the effect of making the amount of the third-party administrator's commissions, fees, or charges contingent upon savings effected in the adjustment, settlement or payment of losses covered by the insurer's or other person utilizing the services of the third-party administrator's obligations. This provision shall not prohibit a third-party administrator from receiving performance-based compensation for providing hospital auditing or other auditing services.

      (b) This section shall not prevent the compensation of a third-party administrator from being based on premiums or charges collected or the number of claims paid or processed.

      (P.A. 11-58, S. 27.)

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      Sec. 38a-720h. Disclosures. (a) When the services of a third-party administrator are utilized, such third-party administrator shall issue a benefits identification card to each insured that includes disclosure of, and relationship among, the third-party administrator, the policyholder and the insurer or other person utilizing the services of the third-party administrator.

      (b) When a third-party administrator collects premiums, charges or fees, the reason for collection of each item shall be identified to the insured and each item shall be shown separately. Additional charges shall not be made for services to the extent the services have been paid for by the insurer or other person utilizing the services of the third-party administrator.

      (c) The third-party administrator shall disclose to the insurer or other person utilizing the services of the third-party administrator all charges, fees and commissions that the third-party administrator receives arising from services it provides for the insurer or other person utilizing the services of the third-party administrator, including any fees or commissions paid by insurers providing reinsurance or stop loss coverage.

      (P.A. 11-58, S. 28.)

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      Sec. 38a-720i. Delivery of written communications to insureds. Any policies, certificates, booklets, termination notices or other written communications delivered by an insurer or other person utilizing the services of a third-party administrator to such third-party administrator for delivery to such insurer's or other person's insureds shall be delivered by the third-party administrator promptly after receipt of instructions to deliver them from an insurer or other person utilizing the services of the third-party administrator.

      (P.A. 11-58, S. 29.)

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      Sec. 38a-720j. Surety bond required. Audited annual financial statements in lieu of bond. Application. License renewal. (a)(1) A third-party administrator applying for licensure shall execute a surety bond in an amount determined by the commissioner to be sufficient to protect insurers and other persons utilizing the services of the third-party administrator, but not less than the penal sum of five hundred thousand dollars. A third-party administrator licensed under this section shall maintain such surety bond as a condition for renewal of such license.

      (2) The commissioner may waive the requirement to execute such surety bond if the applicant submits audited annual financial statements or reports for the two most recent fiscal years that prove the applicant has a positive net worth. An audited annual financial statement or report prepared on a consolidated basis shall include a columnar consolidating or combining worksheet that shall be filed with the report and include the following: (A) Amounts shown on the consolidated audited financial report shall be shown on the worksheet, (B) amounts for each entity shall be stated separately, and (C) explanations of consolidating and eliminating entries shall be included. A third-party administrator who has submitted such statements or reports in lieu of executing a surety bond and who is renewing such administrator's license shall submit the most recent audited annual financial statement or report.

      (b) A third-party administrator applying for licensure shall submit an application to the commissioner by using the uniform application and paying a fee pursuant to section 38a-11. The uniform application shall include or be accompanied by the following information and documents: (1) All basic organizational documents of the applicant, including any articles of incorporation, articles of association, partnership agreement, trade name certificate, trust agreement, shareholder agreement and other applicable documents and all amendments to such documents; (2) the bylaws, rules, regulations or similar documents regulating the internal affairs of the applicant; (3) a NAIC biographical affidavit for the individuals responsible for the conduct of affairs of the applicant, including (A) all members of the board of directors, board of trustees, executive committee or other governing board or committee, (B) the principal officers in the case of a corporation or the partners or members in the case of a partnership, association or limited liability company, (C) any shareholders or member holding directly or indirectly ten per cent or more of the voting stock, voting securities or voting interest of the applicant, and (D) any other person who exercises control or influence over the affairs of the applicant; (4) a statement describing the business plan including information on staffing levels and activities proposed in this state and nationwide. The plan shall provide details setting forth the applicant's capability for providing a sufficient number of experienced and qualified personnel in the areas of claims processing, recordkeeping and underwriting; and (5) such other pertinent information as may be required by the commissioner.

      (c) A third-party administrator applying for licensure shall make available for inspection by the commissioner copies of all written agreements with insurers or other persons utilizing the services of the third-party administrator.

      (d) A third-party administrator applying for licensure shall produce its accounts, records and files for examination and shall make its officers available to give information with respect to its affairs, as often as is reasonably required by the commissioner.

      (e) The commissioner may refuse to issue a license if the commissioner determines that the third-party administrator or any individual responsible for the conduct of the affairs of the third-party administrator is not competent, trustworthy, financially responsible or of good personal and business reputation, or has had an insurance or a third-party administrator certificate of authority or license denied or revoked for cause by any jurisdiction, or if the commissioner determines that any of the grounds set forth in section 38a-720m exists with respect to the third-party administrator.

      (f) Any license issued to a third-party administrator shall be in force until September thirtieth of each year, unless sooner revoked or suspended as provided in this section. The license may be renewed, at the discretion of the commissioner, upon payment of the fee specified in section 38a-11 without the resubmission of the detailed information required in the original application.

      (g) A third-party administrator licensed or applying for licensure under this section shall notify the commissioner immediately of any material change in its ownership, control or other fact or circumstance affecting its qualification for a license in this state.

      (h) In addition to the surety bond required under subsection (a) of this section, a third-party administrator licensed or applying for a license under this section that administers or will administer governmental or church self-insured plans in this state or any other state shall execute and maintain a surety bond, for use by the commissioner and the insurance regulatory authority of any additional state in which the third-party administrator is authorized to conduct business, to cover individuals and persons who have remitted premiums, charges or fees to the third-party administrator in the course of the third-party administrator's business, in the greater of the following amounts: (1) One hundred thousand dollars; or (2) ten per cent of the aggregate total amount of self-funded coverage under governmental plans or church plans handled in this state and all additional states in which the third-party administrator is authorized to conduct business.

      (P.A. 11-58, S. 30.)

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      Sec. 38a-720k. Registration of certain persons not required to be licensed as third-party administrator. A person who is not required to be licensed as a third-party administrator under subdivision (11) of section 38a-720 or section 38a-720a and who directly or indirectly underwrites, collects charges or premiums from, or adjusts or settles claims on residents of this state, only in connection with life, annuity or health coverage provided by a self-funded plan other than governmental or church plans, shall register annually with the commissioner not later than October first on a form designated by the commissioner.

      (P.A. 11-58, S. 31.)

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      Sec. 38a-720l. Annual report. (a) Each third-party administrator licensed under section 38a-720j shall file an annual report for the preceding calendar year with the commissioner on or before July first of each year or within such extension of time as the commissioner may grant for good cause. The annual report shall be in the form and contain such information as the commissioner prescribes, including evidence that the surety bond required under subdivision (1) of subsection (a) of this section and, if applicable, subsection (h) of section 38a-720j, remain in force. The information contained in such report shall be verified by at least two officers of the third-party administrator.

      (b) The annual report shall include the complete names and addresses of all insurers or other persons with which the third-party administrator had written agreements during the preceding fiscal year.

      (c) At the time of filing the annual report, the third-party administrator shall pay a filing fee as specified in section 38a-11.

      (d) The commissioner shall review the most recently filed annual report of each third-party administrator on or before September first of each year. Upon completion of its review, the commissioner shall: (1) Issue a certification to the third-party administrator that the annual report shows the third-party administrator is currently licensed and in good standing, or noting any deficiencies found in such annual report; or (2) update any electronic database maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries, indicating that the annual report shows the third-party administrator is compliant with existing law, or noting any deficiencies found in such annual report.

      (P.A. 11-58, S. 32.)

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      Sec. 38a-720m. Suspension or revocation of license. (a) The commissioner shall suspend or revoke the license of a third-party administrator, or shall issue a cease and desist order if the third-party administrator does not have a license if, after notice and hearing, the commissioner finds that the third-party administrator: (1) Is in an unsound financial condition; (2) is using such methods or practices in the conduct of its business so as to render its further transaction of business in this state hazardous or injurious to insured persons or the public; or (3) has failed to pay any judgment rendered against it in this state within sixty days after the judgment has become final.

      (b) The commissioner may suspend or revoke the license of a third-party administrator, or may issue a cease and desist order if the third-party administrator does not have a license if, after notice and hearing, the commissioner finds that the third-party administrator: (1) Has violated any lawful rule or order of the commissioner or any provision of the insurance laws of this state; (2) (A) has refused to be examined or to produce its accounts, records and files for examination, or (B) if any individual responsible for the conduct of the affairs of the third-party administrator, including (i) members of the board of directors, board of trustees, executive committee or other governing board or committee, (ii) the principal officers in the case of a corporation or the partners or members in the case of a partnership, association or limited liability company, (iii) any shareholder or member holding directly or indirectly ten per cent or more of the voting stock, voting securities or voting interest of the third-party administrator, and (iv) any other person who exercises control or influence over the affairs of the third-party administrator, has refused to provide information with respect to its affairs or to perform other legal obligations as to an examination, when required by the commissioner; (3) has, without just cause, refused to pay proper claims or perform services arising under its contracts or has, without just cause, caused insureds to accept less than the amount due or caused insureds to employ attorneys or bring suit against the third-party administrator to secure full payment or settlement of such claims; (4) fails at any time to meet any qualification for which issuance of a license could have been refused had the failure then existed and been known to the commissioner; (5) has any individual who is responsible for the conduct of its affairs, including (A) members of the board of directors, board of trustees, executive committee or other governing board or committee, (B) the principal officers in the case of a corporation or the partners or members in the case of a partnership, association or limited liability company, (C) any shareholder or member holding directly or indirectly ten per cent or more of its voting stock, voting securities or voting interest, and (D) any other person who exercises control or influence over its affairs, who has been convicted of or has entered a plea of guilty or nolo contendere to a felony, without regard to whether adjudication was withheld; (6) is under suspension or revocation in another state; or (7) has failed to file a timely annual report pursuant to section 38a-720l.

      (c) (1) The commissioner may, without advance notice and before a hearing, issue an order immediately suspending the license of a third-party administrator, or may issue a cease and desist order if the third-party administrator does not have a license, if the commissioner finds that one or more of the following circumstances exist: (A) The third-party administrator is insolvent or impaired, (B) a proceeding for receivership, conservatorship, rehabilitation or other delinquency proceeding regarding the third-party administrator has been commenced in any state, or (C) the financial condition or business practices of the third-party administrator otherwise pose an imminent threat to the public health, safety or welfare of the residents of this state.

      (2) At the time the commissioner issues an order pursuant to subdivision (1) of this subsection, the commissioner shall serve notice to the third-party administrator that such third-party administrator may request a hearing not later than ten business days after the receipt of the order. If a hearing is requested, the commissioner shall schedule a hearing not later than ten business days after receipt of the request. If a hearing is not requested and the commissioner does not choose to hold one, the order shall remain in effect until modified or vacated by the commissioner.

      (P.A. 11-58, S. 33.)

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      Sec. 38a-720n. Regulations. The Insurance Commissioner may adopt regulations, in accordance with chapter 54, to implement the provisions of sections 38a-720 to 38a-720m, inclusive.

      (P.A. 11-58, S. 34.)

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