PA 10-5—HB 5006

Insurance and Real Estate Committee

Transportation Committee

Judiciary Committee

AN ACT CONCERNING THE LEGISLATIVE COMMISSIONERS' RECOMMENDATIONS FOR TECHNICAL REVISIONS AND MINOR CHANGES TO THE INSURANCE AND RELATED STATUTES

SUMMARY: This act makes changes in various insurance and transportation statutes. It:

1. broadens the applicability of several health insurance benefits;

2. specifies penalties for, and expands the Department of Motor Vehicles (DMV) commissioner's authority regarding, violations of the motor vehicle repair shop notice requirements;

3. makes the insurance commissioner the agent to receive legal service of process for captive insurance companies domiciled in Connecticut if a registered agent cannot be found with reasonable diligence at the registered office;

4. requires all Connecticut-domiciled captive insurers, not just those formed as a corporation, to file a certificate of general good and articles of incorporation, if applicable, with the secretary of the state;

5. resolves a statutory conflict within the license expiration and renewal requirements for life settlement producers and brokers; and

6. makes other minor, technical, and conforming changes.

EFFECTIVE DATE: Upon passage, except for the provisions extending the applicability of certain insurance benefit requirements, which are effective January 1, 2011.

20-21, 23-24, 27-29, & 31-32 — HEALTH INSURANCE BENEFITS

The act broadens the applicability of several health insurance benefits required by law, as described below. (Due to federal law (ERISA), state insurance benefit mandates do not apply to self-insured benefit plans. )

General Anesthesia Relating to Dental Services ( 20 & 27)

The act requires individual and group health insurance policies amended in Connecticut on or after January 1, 2011 to cover medically necessary general anesthesia, nursing, and related hospital services provided to patients with (1) complex dental conditions that require procedures to be performed in a hospital or (2) developmental disabilities that place them at serious risk. The law already requires policies delivered, issued, renewed, or continued in Connecticut to cover these services.

Both the act and existing law apply to policies that cover (1) basic hospital expenses; (2) basic medical-surgical expenses; (3) major medical expenses; or (4) hospital or medical services, including coverage under an HMO plan.

Ostomy Appliances and Supplies ( 21 & 28)

The act requires individual and group health insurance policies amended in Connecticut on or after January 1, 2011 to cover medically necessary ostomy appliances and supplies, including collection devices, irrigation equipment and supplies, and skin barriers and protectors, up to $1,000 annually. The law already requires policies delivered, issued, renewed, or continued in Connecticut to cover ostomy-related supplies.

Both the act and existing law apply to policies that cover (1) basic hospital expenses; (2) basic medical-surgical expenses; (3) major medical expenses; or (4) hospital or medical services, including coverage under an HMO plan.

Bodily Injury ( 23 & 29)

The act prohibits individual and group health insurance policies continued in Connecticut on or after January 1, 2011 from excluding coverage for a bodily injury solely because it was caused by a work-related accident to a person who is not covered by the workers' compensation law. The law already applies to policies delivered, issued, amended, or renewed in Connecticut.

Both the act and existing law apply to (1) individual or group health insurance policies that cover (a) basic hospital expenses; (b) basic medical-surgical expenses; (c) major medical expenses; (d) accident only coverage; or (e) hospital or medical services, including coverage under an HMO plan, and (2) individual health insurance policies that provide limited benefit health coverage.

Treatment of Tumors and Leukemia and Related Benefits ( 24 & 31)

The act requires individual and group health insurance policies renewed, amended, or continued in Connecticut on or after January 1, 2011 to provide certain benefits for the treatment of tumors and leukemia, reconstructive surgery, nondental prosthesis, chemotherapy, and wigs for chemotherapy patients. The law already requires policies issued or delivered in Connecticut to provide these benefits.

Coverage must be subject to the same terms and conditions applicable to other policy benefits. But the policy must provide at least a yearly benefit of $500 for the surgical removal of tumors; $500 for reconstructive surgery; $500 for outpatient chemotherapy; $350 for a wig; and $300 for a nondental prosthesis, unless the prosthesis is due to the surgical removal of breasts because of tumors, in which case the yearly benefit must be at least $300 for each breast.

Both the act and existing law apply to (1) individual or group health insurance policies that cover (a) basic hospital expenses; (b) basic medical-surgical expenses; (c) major medical expenses; or (d) hospital or medical services, including coverage under an HMO plan, and (2) individual health insurance policies that provide limited benefit health coverage.

Continuation of Coverage ( 32)

The act requires group health insurance policies amended in Connecticut on or after January 1, 2011, regardless of the number of insureds, to contain state continuation of coverage (“mini-COBRA”) provisions. The law already requires policies delivered, issued, renewed, or continued in Connecticut to contain those provisions.

Both the act and existing law apply to group health insurance policies that cover (1) basic hospital expenses; (2) basic medical-surgical expenses; (3) hospital confinement indemnity coverage; (4) major medical expenses; or (5) hospital or medical services, including coverage under an HMO plan

48-50 — MOTOR VEHICLE REPAIR SHOP NOTICE REQUIREMENT

The act allows the DMV commissioner to impose penalties for violations of the motor vehicle repair shop notice requirements under PA 08-146 (see BACKGROUND). It authorizes the commissioner to suspend or revoke a repair shop's license, fine the shop up to $1,000 for each violation, or both. In addition to, or in lieu of these penalties, the commissioner may order the licensee to make restitution to an aggrieved customer. By law, the commissioner may impose these penalties for violations of other repair shop laws.

By law, a repair shop customer may waive, in writing, his or her right to a repair estimate. The act prohibits a repair shop from using waivers to evade its repair shop notice requirements. The law already prohibits waivers to evade duties under other repair shop laws.

The act authorizes the DMV commissioner to conduct investigations and hearings regarding a repair shop's compliance with the notice requirements. He currently has this authority with respect to other motor vehicle dealer and repairer laws. The act also allows the attorney general, at the commissioner's request, to seek a restraining order requiring a repair shop to cease violating PA 08-146, a power he has with respect to other repair shop laws.

2, 5, & 6 — CAPTIVE INSURERS

The act names the insurance commissioner the agent to receive legal service of process for captive insurance companies domiciled in Connecticut if a registered agent cannot be found with reasonable diligence at the captive's registered office. By law, the commissioner is already the agent for captive insurers domiciled outside of Connecticut that do business here.

The act requires a captive insurance company formed as a reciprocal insurer or limited liability company to give the secretary of the state, along with any required filing fee, a certificate of general good from the insurance commissioner and the insurer's articles of incorporation, if applicable. By law, a captive formed as a corporation must already do this.

The act also makes technical and conforming changes in the captive laws.

13 & 15 — LIFE SETTLEMENT STATUTES

The act resolves a statutory conflict within the license expiration and renewal requirements for life settlement producers and brokers. PA 08-175 both retained the prior law's requirements and added new, conflicting ones. This act retains the prior law, specifying that provider and broker licenses expire on March 31 in each year, but may be renewed annually. If a provider or broker fails to pay the renewal fee on time, the commissioner must revoke his or her license, unless he or she pays within five days after the commissioner sends a written notice of nonrenewal, by first class mail, after March 31.

The act deletes the following provisions: (1) the term of a (a) producer license is equal to that of a domestic stock life insurance company (annual renewal) and (b) broker license is equal to that of an insurance producer (if an individual, renewal is every other year on the person's birth date, and if an entity, February 1 of even-numbered years) and (2) licenses must be renewed on their anniversary dates and failure to pay the renewal fee by that date results in license expiration.

The act deletes another provision from PA 08-175. The provision specified that if a broker verifies the existence of a life insurance policy, then a life settlement provider is deemed to have fulfilled the law's extensive disclosure requirements.

By law, a life settlement provider, within 20 days after a life insurance policy owner executes a life settlement contract, must give the insurer that issued the policy written notice that the policy has become subject to a life settlement contract. The act requires the provider to send the notice with a copy of the insured's (1) required medical records release form and (2) application for the life settlement contract, instead of with optional disclosure documents.

26 — PREMIUM PAYMENTS FOR TERMINATED EMPLOYEES

PA 09-126 allows an employer, with certain exceptions, to elect to stop paying group health insurance premiums for an employee and his or her dependents as of 72 hours after the employee quits or is terminated for any reason except layoff. This act adds another exception: relocation or closing of a “covered establishment” (i. e. , an industrial, commercial, or business facility that employs, or has employed in the preceding 12 months, 100 or more people).

The act specifies that an employee's or dependent's right to continue coverage after a covered establishment relocates or closes is not affected by PA 09-126. By law, when a covered establishment relocates or closes, the employer must pay for continued insurance coverage for affected employees and dependents for 120 days or until the employee becomes eligible for other coverage (CGS 31-51o).

52 — NOTICE TO COURTS AND POLICE DEPARTMENTS

The act eliminates the class D felony penalty (see Table on Penalties) for the insurance commissioner's failure to provide courts and police departments a list of surety bail bond agents or changes to the list.

BACKGROUND

Repair Shop Notice and Acknowledgment (PA 08-146, as amended by PA 09-237)

The law requires automobile physical damage appraisals or estimates written on an insurer's or a motor vehicle repair shop's behalf to include the following notice in at least 10-point boldface type: NOTICE: YOU HAVE THE RIGHT TO CHOOSE THE LICENSED REPAIR SHOP WHERE THE DAMAGE TO YOUR MOTOR VEHICLE WILL BE REPAIRED (CGS 14-65l).

The law prohibits a motor vehicle repair shop from repairing a vehicle unless the claimant (i. e. , person whose insured vehicle needs repairs) acknowledges in writing that he or she is aware of the right to have the vehicle repaired at a shop he or she chooses (CGS 14-65f). The acknowledgement may be (1) included in the repair authorization, which a customer signs before repairs are made, or in a separate document and (2) faxed or e-mailed. The acknowledgement must state: “I am aware of my right to choose the licensed repair shop where the motor vehicle will be repaired.

By law, a “motor vehicle repair shop” means a new car dealer, a used car dealer, a repairer, or a limited repairer (CGS 14-65e). No one may operate such a shop without a DMV-issued new car dealer's, used car dealer's, repairer's, or limited repairer's license (CGS 14-52).

Captive Insurance Company (PA 08-127)

Effective January 1, 2009, the law permits a captive insurance company to be licensed and domiciled in Connecticut to transact life insurance, annuity, health insurance, and commercial risk insurance business. A captive insurance company is, in its simplest form, an insurance company that is a wholly-owned subsidiary whose primary function is to insure all or part of the risks of its parent company.

The law enumerates requirements for a Connecticut-domiciled captive's formation, capital and surplus, local office presence, ability to meet policy obligations, payment of certain fees and premium taxes, and annual reporting, among other things.

A captive domiciled outside of Connecticut may conduct business in Connecticut, subject to conditions specified in federal and state laws. A company's domicile is the jurisdiction under whose laws the company is organized and in which it has its principal place of business.

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