Substitute House Bill No. 6899
          Substitute House Bill No. 6899

              PUBLIC ACT NO. 97-125


AN   ACT   CONCERNING  THE  CONNECTICUT  INSURANCE
GUARANTY ASSOCIATION ACT.


    Be  it  enacted  by  the  Senate  and House of
Representatives in General Assembly convened:
    Section  1.  Section  38a-837  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    Sections  38a-836  to  38a-853,  inclusive, AS
AMENDED BY THIS ACT, shall apply to all  kinds  of
direct  insurance,  except:  [life, title, surety,
accident and health, credit,  financial  guaranty,
mortgage   guaranty,   ocean   marine,  and  flood
insurance pursuant to the federal  Flood  Disaster
Protection Act of 1973, as amended.]
    (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.
    Sec.   2.   Section  38a-838  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    The   following  terms  as  used  in  sections
38a-836 to 38a-853, inclusive, AS AMENDED BY  THIS
ACT,  unless  the  context otherwise requires or a
different  meaning  is  specifically   prescribed,
shall have the following meanings:
    (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, AS AMENDED BY THIS ACT,  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 [property from which the claim
arises is permanently located] 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 [amount
due] 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  [(a)]  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, AS AMENDED BY THIS
ACT, 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, AS AMENDED BY THIS ACT, 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" [has  the meaning assigned to it
by   section   38a-1]    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.
    Sec.   3.   Section  38a-841  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    (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;
(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, AS AMENDED BY
THIS ACT, and (iv)  such  other  expenses  as  are
authorized   by   sections   38a-836  to  38a-853,
inclusive, AS AMENDED BY THIS ACT. 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, AS AMENDED BY THIS ACT.
    (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,  AS
AMENDED  BY  THIS  ACT, 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; [(e)] (f) perform such other acts as are
necessary or proper to effectuate the  purpose  of
said  sections;  [(f)]  (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.
    Sec.   4.   Section  38a-844  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    (1)  Any  person  recovering  any moneys under
sections 38a-836 to 38a-853, inclusive, AS AMENDED
BY  THIS ACT, shall be deemed to have assigned his
rights under the policy [, in respect of which  he
is  recovering,] 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.
    (2)  The  receiver,  liquidator,  or statutory
successor of an insolvent insurer shall  be  bound
by   [settlements]   DETERMINATIONS   of   covered
[claims] CLAIM ELIGIBILITY UNDER SECTIONS  38a-836
TO 38a-853, INCLUSIVE, AS AMENDED BY THIS ACT, 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,  AS AMENDED BY THIS ACT: (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.
    Sec.   5.   Section  38a-845  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    (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, AS AMENDED
BY THIS ACT, shall exhaust first his rights  under
such policy. Any amount payable on a covered claim
under said sections shall be reduced by the amount
[of any recovery] RECOVERABLE under the claimant's
insurance policy or chapter 568.
    (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,  AS  AMENDED  BY  THIS  ACT,  shall  be
reduced  by  the  amount [of recovery] 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,  AS
AMENDED  BY  THIS  ACT,  SHALL  BE  REDUCED BY ANY
AMOUNT RECOVERABLE UNDER SUCH PROGRAM.
    Sec.   6.   Section  38a-846  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    To  aid  in  the  detection  and prevention of
insurer insolvencies:
    (1)  The  board  of  directors,  upon majority
vote,  shall  notify  the  commissioner   of   any
information  which  they  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  [subsection]
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.
    Sec.   7.   Section  38a-850  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    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, AS AMENDED
BY THIS ACT.
    Sec.   8.   Section  38a-851  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    (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.
    (b)  THE  LIQUIDATOR,  RECEIVER  OR  STATUTORY
SUCCESSOR  OF  AN  INSOLVENT  INSURER  COVERED  BY
SECTIONS 38a-836 TO 38a-853, INCLUSIVE, AS AMENDED
BY THIS ACT,  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.
    Sec.  9.  This  act  shall take effect July 1,
1997.

Approved June 6, 1997