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 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: (1) The workers' compensation insurance account; (2) the automobile insurance account; and (3) an account for
all other insurance to which sections 38a-836 to 38a-853, inclusive, apply.
(1971, P.A. 466, S. 4; P.A. 79-376, S. 63; P.A. 87-290, S. 2, 8; P.A. 10-5, S. 38; P.A. 11-19, S. 17.)
History: P.A. 79-376 substituted "workers' compensation" for "workmen's compensation"; P.A. 87-290 made a technical change, substituting reference to 38-275(8) for reference to Sec. 38-275(6); Sec. 38-276 transferred to Sec. 38a-839 in
1991; P.A. 10-5 made technical changes, effective May 5, 2010; P.A. 11-19 made a technical change.
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Sec. 38a-841. (Formerly Sec. 38-278). Obligations and rights of association.
Limitations. Assessments. Investigation of claims. Right to intervene in court proceedings. (a) Said association shall: (1) 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: (A) 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; (B) 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 for claims arising
under policies of insurers determined to be insolvent prior to October 1, 2007, and four
hundred thousand dollars for claims arising under policies of insurers determined to be
insolvent on or after October 1, 2007, 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 said association be obligated (i) 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 (ii) 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; (2) 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; (3) allocate claims paid and expenses incurred
among the three accounts, created by section 38a-839, separately, and assess member
insurers separately (A) in respect of each such account for such amounts as shall be
necessary to pay the obligations of said association under subdivision (1) of this subsection subsequent to an insolvency; (B) the expenses of handling covered claims subsequent to an insolvency; (C) the cost of examinations under section 38a-846; and (D)
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 (3) 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; (4) 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; (5) notify such persons as the commissioner
may direct under subdivision (1) of subsection (b) of section 38a-843; (6) 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; (7) 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.
(b) Said association may: (1) Employ or retain such persons as are necessary to
handle claims and perform other duties of said association; (2) 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; (3) sue or
be sued; (4) 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; (5) negotiate and become a party to such contracts as are necessary to carry out
the purpose of sections 38a-836 to 38a-853, inclusive; (6) perform such other acts as
are necessary or proper to effectuate the purpose of said sections; (7) 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.
(c) (1) 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 to which has been refunded by the association, pursuant to subsection (b) of this
section, all or a portion of an assessment previously paid to the association by the insurer
shall be required to pay to the Department of Revenue Services an amount equal to the
total amount that has been claimed as an offset against the premiums tax liability on the
premiums tax return or returns, as the case may be, filed by such insurer and that is
attributable to such refunded assessment, provided the amount required to be paid to
said department shall not exceed the amount of the refunded assessment. If the amount
of the refunded assessment exceeds the total amount that has been claimed as an offset
against the premiums tax liability on the premiums tax return or returns filed by such
insurer and that is attributable to such refunded assessment, such excess may not be
claimed as an offset against the premiums tax liability on a premiums tax return or
returns filed by such insurer or, if the offset has been transferred to another person
pursuant to subdivision (2) of this subsection, by such other person. For purposes of
this subparagraph, if the offset has been transferred to another person pursuant to subdivision (2) of this subsection, the total amount that has been claimed as an offset against
the premiums tax liability on the premiums tax return or returns filed by such insurer
includes the total amount that has been claimed as an offset against the premiums tax
liability on the premiums tax return or returns filed by such other person. The association
shall promptly notify the Commissioner of Revenue Services 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 forty-fifth 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 forty-fifth day to the date of payment.
(2) An insurer, in this subparagraph called "the transferor", may transfer any offset
provided under subdivision (1) of this subsection to an affiliate, as defined in section 38a-1, of the transferor. Any such transfer of the offset by the transferor and any subsequent
transfer or transfers of the same offset shall not affect the obligation of the transferor
to pay to the Department of Revenue Services any sums which are acquired by refund
from the association pursuant to subsection (b) of this section and which are required
to be paid to the Department of Revenue Services pursuant to subdivision (1) of this
subsection. Such offset may be taken by any transferee only against the transferee's
premium tax liability to this state under chapter 207. The Commissioner of Revenue
Services shall not allow such offset to a transferee against its premium tax liability unless
the transferor, the affiliate to which the offset was originally transferred, each subsequent
transferor and each subsequent transferee have filed such information as may be required
on forms provided by said commissioner with respect to any such transfer or transfers
on or before the due date of the premium tax return on which such offset would have
been taken by the transferor if no transfer had been made by the transferor.
(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; June Sp. Sess. P.A. 01-6, S. 40, 41, 85; P.A. 07-21, S. 1; P.A. 10-5, S. 40; P.A. 11-19,
S. 18.)
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 $1,000 to $2,000; 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; June Sp. Sess. P.A. 01-6 amended Subdiv. (3)(A) to specify procedures for tax
treatment of refunds of assessments of association members, effective July 1, 2001, and amended Subdiv. (3)(B) to add
procedures for the transfer to affiliates of tax offsets for association assessments, effective July 1, 2001, and applicable to
calendar years commencing on or after January 1, 2001; P.A. 07-21 amended Subdiv. (l)(a)(ii) to provide that coverage
limit of $300,000 is applicable to claims arising under policies of insurers determined to be insolvent prior to October 1,
2007, and that coverage limit of $400,000 is applicable to claims arising under policies of insurers determined to be
insolvent on or after October 1, 2007; P.A. 10-5 made technical changes, effective May 5, 2010; P.A. 11-19 made technical
changes in Subsecs. (a) and (b).
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Sec. 38a-843. (Formerly Sec. 38-280). Insolvent insurers. Penalty. Petition to
show cause. (a) The commissioner shall: (1) 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; (2) upon request of the board of directors, provide said association
with a statement of the net direct written premiums of each member insurer.
(b) The commissioner may: (1) 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; (2) suspend or revoke, after notice and hearing, the certificate of
authority to transact insurance in this state of any member insurer that fails to pay an
assessment when due or which fails to comply with said plan of operation. In lieu of
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 five
hundred dollars per month; (3) revoke the designation of any servicing facility if the
commissioner finds claims are being handled unsatisfactorily.
(c) Any person aggrieved by any final action or order of the commissioner under
sections 38a-836 to 38a-853, inclusive, may, not later than 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 such 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; P.A. 08-178, S. 42; P.A. 10-5, S. 42; P.A. 11-19, S. 19.)
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; P.A. 08-178 amended Subsec. (2) by making technical changes and increasing per month
minimum fine from $100 to $500; P.A. 10-5 made technical changes, effective May 5, 2010; P.A. 11-19 made a technical
change in Subsec. (c).
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