Connecticut Seal

General Assembly



January Session, 2009

LCO No. 7024



Offered by:


SEN. WILLIAMS, 29th Dist.

SEN. LOONEY, 11th Dist.

SEN. GAFFEY, 13th Dist.

SEN. HANDLEY, 4th Dist.

SEN. MCDONALD, 27th Dist.

SEN. STILLMAN, 20th Dist.

SEN. SLOSSBERG, 14th Dist.

SEN. CRISCO, 17th Dist.

To: Subst. House Bill No. 5436

File No. 878

Cal. No. 582

After the last section, add the following and renumber sections and internal references accordingly:

"Sec. 501. Section 38a-686 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2009):

The following standards, methods and criteria shall apply to the making and use of rates pertaining to personal risk insurance:

(a) Rates shall not be excessive, inadequate or unfairly discriminatory.

(1) A rate in a competitive market is not excessive. A rate in a noncompetitive market including a rate for insurance provided pursuant to sections 38a-328, 38a-329 and 38a-670 is excessive if it is unreasonably high for the insurance provided.

(2) No rate shall be held inadequate unless (A) it is unreasonably low for the insurance provided, and (B) continued use of it would endanger solvency of the insurer, or unless (C) such rate is unreasonably low for the insurance provided and the use of such rate by the insurer using same has, or, if continued will have, the effect of destroying competition or creating a monopoly.

(b) In determining whether rates comply with the excessiveness standard in a noncompetitive market under subdivision (1) of subsection (a) of this section, the inadequacy standard under subdivision (2) of subsection (a) of this section and the requirement that rates not be unfairly discriminatory, the following criteria shall apply:

(1) Consideration may be given, to the extent possible, to past and prospective loss experience within and outside this state, to conflagration and catastrophe hazards, to a reasonable margin for underwriting profit and contingencies, to past and prospective expenses both country-wide and those specially applicable to this state, to investment income earned or realized by insurers both from their unearned premium and loss reserve funds, and to all other factors, including judgment factors, deemed relevant within and outside this state and in the case of fire insurance rates, consideration may be given to the experience of the fire insurance business during the most recent five-year period for which such experience is available. Consideration may be given in the making and use of rates to dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers.

(2) The systems of expense provisions included in the rates for use by an insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the operating methods of any such insurer or group with respect to any kind of insurance, or with respect to any subdivision or combination thereof.

(3) Risks may be grouped by classifications for the establishment of rates and minimum premiums, provided that with respect to private passenger nonfleet automobile insurance, any change in territorial classifications shall be subject to prior approval by the Insurance Commissioner, and provided no surcharge on any motor vehicle liability or physical damage insurance premium may be assigned for (A) any accident involving only property damage of one thousand dollars or less, or (B) the first accident involving only property damage of more than one thousand dollars which would otherwise result in a surcharge to the policy of the insured, within the experience period set forth in the insurer's safe driver classification plan, or (C) any violation of section 14-219 unless such violation results in the suspension or revocation of the operator's license under section 14-111b, or (D) less than three violations of section 14-218a within any one-year period, or (E) any accident caused by an operator other than the named insured, a relative residing in the named insured's household, or a person who customarily operates the insured vehicle, or (F) the first or second accident within the current experience period in relation to which the insured was not convicted of a moving traffic violation and was not at fault, or (G) any motor vehicle infraction. Subparagraph (G) of this subdivision shall not be applicable to any plan established pursuant to section 38a-329. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which provide for recognition of variations in hazards or expense provisions or both. Such rating plans may include application of the judgment of the insurer and may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses.

(4) Each rating plan shall establish appropriate eligibility criteria for determining significant risks which are to qualify under the plan. Rating plans [which] that comply with the provisions of this subdivision shall be deemed to produce rates [which] that are not unfairly discriminatory.

(c) Notwithstanding the provisions of subsections (a) and (b) of this section, no rate shall include any adjustment designed to recover underwriting or operating losses incurred out-of-state.

(d) With respect to a homeowners insurance policy, an insurer shall not cancel or refuse to (1) deliver, (2) issue for delivery, (3) renew, (4) amend, or (5) continue such policy solely on the basis of the homeowner's ownership of a dog that has bitten a person or animal or solely on the basis of the breed of dog owned by the homeowner. At the homeowner's election, the insurer shall offer to such owner the option of excluding liability for such dog from such policy or a rider for such dog. The rate for such rider shall not be excessive, inadequate or unfairly discriminatory. If a homeowner elects to exclude liability for such dog from such owner's homeowners insurance policy, the insurer shall not be held strictly liable under section 38a-321, as amended by this act.

[(d)] (e) The commissioner may adopt regulations, in accordance with the provisions of chapter 54, concerning rating plans to effectuate the provisions of this section.

Sec. 502. Section 38a-321 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2009):

[Each] Except as provided in subsection (d) of section 38a-686, as amended by this act, each insurance company [which] that issues a policy to any person, firm or corporation, insuring against loss or damage on account of the bodily injury or death by accident of any person, or damage to the property of any person, for which loss or damage such person, firm or corporation is legally responsible, shall, whenever a loss occurs under such policy, become [absolutely] strictly liable, and the payment of such loss shall not depend upon the satisfaction by the assured of a final judgment against him for loss, damage or death occasioned by such casualty. No such contract of insurance shall be cancelled or annulled by any agreement between the insurance company and the assured after the assured has become responsible for such loss or damage, and any such cancellation or annulment shall be void. Upon the recovery of a final judgment against any person, firm or corporation by any person, including administrators or executors, for loss or damage on account of bodily injury or death or damage to property, if the defendant in such action was insured against such loss or damage at the time when the right of action arose and if such judgment is not satisfied within thirty days after the date when it was rendered, such judgment creditor shall be subrogated to all the rights of the defendant and shall have a right of action against the insurer to the same extent that the defendant in such action could have enforced his claim against such insurer had such defendant paid such judgment. "