Substitute House Bill No. 5779

Public Act No. 99-257

An Act Concerning the Insurance Mass Marketing Law.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 38a-802 of the general statutes is repealed and the following is substituted in lieu thereof:

The following terms as used in sections 38a-802 to 38a-810, inclusive, as amended by this act, unless the context otherwise requires or a different meaning is specifically prescribed, shall have the following meanings:

[(1) "Policy" means an automobile liability, automobile physical damage or automobile collision policy, or any combination thereof, delivered or issued for delivery in this state, insuring a natural person as named insured, or one or more related individual residents of the same household, and under which the insured vehicle or vehicles therein designated are of the following types only: (i) A motor vehicle of the private passenger or station wagon type that is not used as a public or livery conveyance for passengers, nor rented to others, or (ii) any other four-wheeled motor vehicle with a load capacity of fifteen hundred pounds or less which is not used in the occupation, profession or business of the insured; and any other insurance policy, other than automobile insurance, on risks located or resident in this state which is issued insuring any of the following contingencies or combinations thereof: (a) Loss or damage to real property used predominantly for residential purposes, other than hotels and motels; (b) loss of or damage to personal property in which natural persons have an insurable interest, except personal property used in the conduct of a commercial or industrial enterprise; (c) legal liability for loss of, damage to or injury to persons or property, not arising from the conduct of a commercial or industrial enterprise;]

[(2)] (1) "Eligible members" means all natural persons who are [actively employed or who were immediately prior to retirement actively employed by the same employer, or persons who are members of a labor union, members of a credit union, members of any association whose principal purpose is the furtherance of the professional interests of its members, association of employees or association of employers] (A) employees of particular employers or persons who, immediately prior to retirement, were actively employed by the same employer, (B) members of particular associations or organizations, or (C) members of a labor union or members of a credit union; provided the employer, person, association, organization, labor union or credit union has agreed to or has otherwise affiliated itself with the sale of insurance to its employees or members. The term "eligible members" shall also include the officers and directors of a corporate employer, the partners in an employer firm and the individual employer;

[(3)] (2) "Mass marketing plan" means a plan for the issuance of personal [lines of automobile casualty insurance or property insurance] risk insurance as defined in section 38a-663 including, but not limited to, franchise marketing plans, group marketing plans, collective marketing plans, or any plans of similar designation, whereby eligible members are insured under individual policies. [or certificates of insurance under the provisions of said sections;]

[(4) "Automobile casualty insurance" means automobile liability coverage, automobile physical damage coverage, or automobile collision coverage, or any combination thereof; (i) "automobile liability coverage" includes only coverage of bodily injury and property damage liability, medical payments and uninsured motorists coverage; (ii) "automobile physical damage coverage" includes all coverage of loss or damage to an automobile insured under the policy except loss or damage resulting from collision or upset; (iii) "automobile collision coverage" includes all coverage of loss or damage to an automobile insured under the policy resulting from collision or upset;

(5) "Automobile" means a private passenger motor vehicle, not rented or leased to others, and not used for the public or livery conveyance of passengers, or any other four-wheeled motor vehicle with a load capacity not in excess of fifteen hundred pounds which is not used in the occupation, profession or business of the insured;

(6) "Property insurance" means coverage for loss or damage to real property used predominantly for residential purposes, other than hotels or motels, or coverage for loss of or damage to personal property in which natural persons have an insurable interest, except personal property used in the conduct of a commercial or industrial enterprise; or, coverage for legal liability for loss of, damage to or injury to persons or property, not arising from the conduct of a commercial or industrial enterprise;

(7) "Guaranteed issue basis" means the acceptance by the insurer of all applications by eligible members for the kinds of insurance offered under a mass marketing plan on a basis which precludes individual selection of risks or property except as otherwise provided in sections 38a-802 to 38a-810, inclusive.]

Sec. 2. Section 38a-803 of the general statutes is repealed and the following is substituted in lieu thereof:

An insurance policy may be issued in this state to eligible members pursuant to a mass marketing plan provided the following conditions are complied with: (1) Mandatory participation in the plan shall not be required as a condition of employment or as a condition of membership in an association, organization or other group, nor shall any member not participating therein be coerced, intimidated or discriminated against because he is not participating; (2) the insurer shall issue an individual policy or certificate of insurance to all members [applying] who qualify for coverage without discrimination as to form or coverage; [(3) the premium for such policy shall be paid on a periodic basis by payroll deduction or other remittance agreement; (4) no policy renewal shall be refused except for nonpayment of premium, fraud, misrepresentation, termination of all members employed by the employer or for a reason set forth in section 38a-806 as an exception to guaranteed issue. An insurance policy may be cancelled only in accordance with the provisions of subsection (a) of section 38a-342; (5)] (3) eligible members shall have the option of deciding which coverages offered by the insurer under the mass marketing plan they desire to purchase; [and (6)] (4) premium rates under a plan shall comply with the standards of this title, including the standards that rates not be excessive, inadequate or unfairly discriminatory. Rates shall not be deemed to be unfairly discriminatory because different premiums result for policyholders with like loss exposures but different expense factors, or like expense factors but different loss exposures, so long as the rates reflect the differences with reasonable accuracy. Rates shall not be deemed to be unfairly discriminatory if they are averaged broadly among persons insured under a plan; (5) no insurer shall, without the prior written approval of the commissioner, sell insurance pursuant to a mass marketing plan to members of an association or organization formed principally for the purpose of obtaining such insurance; (6) no person shall act as an insurance producer in connection with a mass marketing plan for any kind of insurance unless such person is duly licensed under section 38a-769; and (7) an insurer or producer selling insurance pursuant to a mass marketing plan shall, with respect to any employees or members who apply for but are denied insurance under such plan, inform such persons about the availability of the fire, liability and allied lines underwriting facility established pursuant to section 38a-328 and the residual market plan established pursuant to sections 38a-329 and 38a-670.

Sec. 3. Section 38a-805 of the general statutes is repealed and the following is substituted in lieu thereof:

An insurer issuing policies under a mass marketing plan shall maintain separate [experience data, on an annual basis, on each plan and each type of business written, including but not limited to complete records of premium income, loss and expense experience statements for each plan and each type of business written, in order to ascertain the experience of such plan and the type of business written. Annually, on or before March thirty-first, each such insurer shall file such experience data, for the previous calendar year on each mass marketing plan, with the commissioner who shall review such data and determine whether the rates are excessive, inadequate or discriminatory. The commissioner shall make the results of his review and any action taken a matter of public record, not later than September thirtieth in the year in which such data is filed] statistics as to loss and expense experience pertinent thereto. Such data shall be available for inspection by the Insurance Commissioner upon request.

Sec. 4. Section 38a-806 of the general statutes is repealed and the following is substituted in lieu thereof:

[An insurer shall issue each policy under a mass marketing plan on a guaranteed issue basis except: (a) In cases of casualty insurance, if the applicant has been convicted of violating subsection (d) of section 14-12, section 14-43, 14-222 or 14-222a, or subsection (a) of section 14-224 or section 14-227a within three years of his application, or convicted within three years of his application of operating a motor vehicle while his operator's license was suspended or revoked; (b) in cases of property insurance.]

(a) No insurer shall use underwriting standards for individual risk selection in a mass marketing plan which are significantly more restrictive than the standards used by such insurer for individual risk selection in the sale of the same kind of insurance in this state other than pursuant to mass marketing plans. In the event the insurer does not sell such kind of insurance in this state other than pursuant to a mass marketing plan, its underwriting standards for individual risk selection in such plans shall not be significantly more restrictive than the standards used by its principal affiliate, if any, for individual risk selection in the sale of such kind of insurance in this state other than pursuant to mass marketing plans. The principal affiliate shall be considered the affiliate with the largest premium volume for such kind of insurance in this state.

(b) No insurer shall sell insurance pursuant to a mass marketing plan if (1) the purchase of insurance available under such plan is contingent upon the purchase of any other insurance, product or service, or (2) the purchase or price of any other insurance, product or service is contingent upon the purchase of insurance available under such plan. The provisions of this subsection shall not be construed to prohibit a requirement that a person purchase underlying liability insurance as a condition to the purchase of personal umbrella or excess liability insurance. The provisions of this subsection shall not be construed to prohibit the reasonable requirement of safety devices, including, but not limited to, fire or heat detectors, lightning rods or theft prevention equipment.

(c) Each policy in force under a mass marketing plan on or before October 1, 1999, shall be eligible for issue on a guaranteed issue basis for one year after October 1, 1999, except if the applicant has been convicted of violating any provision of subsection (d) of section 14-12, section 14-43, 14-222 or 14-222a, or subsection (a) of section 14-224 or 14-227a within three years of the applicant's application, or convicted within three years of the applicant's application of operating a motor vehicle while the applicant's operator's license was suspended or revoked.

Sec. 5. Section 38a-807 of the general statutes is repealed and the following is substituted in lieu thereof:

An insurer or producer issuing a policy under a mass marketing plan shall, prior to the issuance of such policy, make a full and fair disclosure to the prospective insured of all the conditions and other terms of the policy to be issued, including, but not limited to, such items as rates, type and extent of coverage, benefits, duration of coverage and services to the insured. The sponsoring employer, association, organization or group shall make a full and fair disclosure to the eligible members of its financial interests in the plan, if any.

Sec. 6. Section 38a-808 of the general statutes is repealed and the following is substituted in lieu thereof:

On and after July 1, 1971, no insurer shall issue a policy to an eligible member under a mass marketing plan unless such plan complies with the provisions of sections 38a-802 to 38a-810, inclusive, [;] as amended by this act, provided said sections shall not apply to a premium remittance plan administered by an employer who collects premiums for insured employees by means of a payroll deduction system or administered by some other collection system which offers no inducement other than the convenience of collection of premiums. The requirements of sections 38a-802 to 38a-810, inclusive, as amended by this act, are in addition to, and not in substitution for, other applicable requirements of title 38a.

Approved June 29, 1999

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