OLR Bill Analysis

HB 6551



This bill requires each domestic (Connecticut) insurer to establish and maintain a framework to help it identify, assess, monitor, manage, and report on its material and relevant risks. The requirement may be satisfied if the insurance group of which the insurer is a member maintains a framework that applies to the insurer's operations.

It requires each insurer or its insurance group to conduct an Own Risk and Solvency Assessment (ORSA) at least annually. It requires, starting January 1, 2015, an insurer to submit to the insurance commissioner an ORSA summary report containing the information described in the ORSA Guidance Manual applicable to the insurer and its group. The commissioner must review the summary report.

The bill exempts certain insurers from these requirements and allows others to seek a waiver from the commissioner.

Under the bill, the ORSA summary report and related material in the Insurance Department's possession or control that are obtained by, created by, or disclosed to, the commissioner or any other person are generally confidential. It restricts the use of this material.

The bill gives the commissioner various powers and duties in administering these provisions.

EFFECTIVE DATE: January 1, 2015


Under the bill, an ORSA is a confidential internal assessment that an insurer or its insurance group conducts and that is appropriate to the nature, scale, and complexity of the insurer or group. The assessment must cover the material and relevant risks associated with the insurer or group's current business plan and the sufficiency of capital resources to support those risks.

The insurer or group must conduct the assessment consistent with procedures in the ORSA Guidance Manual, which the National Association of Insurance Commissioners (NAIC) produces. Under the bill, any change in the manual becomes effective January 1 following the calendar year when NAIC adopted the change. The insurer or group must conduct the ORSA at (1) least annually and (2) any time its risk profile changes significantly.


Starting January 1, 2015, the bill requires each insurer or its group to prepare an ORSA summary report consistent with the standards in the guidance manual. An insurer can comply with this requirement by providing the most recent and substantially similar reports that it or another member of its group gave to the insurance regulatory official of another jurisdiction. A non-English report must include an English translation.

The insurer must file the summary at the Connecticut insurance commissioner's request, which cannot be more than once each year. If the Connecticut commissioner is the lead commissioner for the insurer's group, the insurer must provide the summary report once per year without being requested.

The report must include the signature of the insurer's or group's chief risk officer or other executive responsible for overseeing the insurer's enterprise risk management process. This executive must attest, to the best of his or her belief and knowledge, that (1) the insurer applied the enterprise risk management process described in the summary report and (2) a copy of the report has been provided to the insurer's board of directors or appropriate committee of the board.

The insurer or group must (1) maintain documentation and supporting information of an ORSA and (2) make them available for examination at the commissioner's request. The commissioner or his designee must review the summary report and the documentation or information using procedures like those he uses to analyze and examine multistate or global insurers and insurance groups.

The commissioner, after notice and hearing, may impose a civil penalty on an insurer that fails, without just cause, to timely file a summary report. The penalty is $1,000 for each day the failure to file continues. The commissioner may reduce the penalty if the insurer demonstrates that it would constitute a financial hardship to the insurer.


The bill does not apply to agencies, authorities, or instrumentalities of (1) the federal government, (2) a state or its political subdivisions, (3) Puerto Rico, or (4) the District of Columbia.

An insurer is exempt from the bill's requirements if:

1. it has annual direct written and unaffiliated assumed premiums of less than $500 million, including international direct and assumed premiums but excluding premiums reinsured with the Federal Crop Insurance Corporation and the National Flood Insurance Program, and

2. its group has such premiums of less than $1 billion.

If an insurer qualifies for an exemption but its group does not, the summary report must include every insurer within the group. This requirement may be satisfied by submitting more than one ORSA summary report for any combination of insurers, so long as the combination of reports includes every insurer within the group. If the insurer does not qualify, but its group does, the only summary report that is required is that of the insurer.

If an insurer becomes ineligible for an exemption due to changes in its premium, as reflected in its most recent annual statement or those of the insurers in its group, it has one year following the year the threshold is exceeded to comply with the bill.

Notwithstanding the exemptions, the commissioner may require that an insurer comply with the bill:

1. based on unique circumstances, such as the type and volume of business written, the insurer's ownership and organizational structure, and requests from a federal agency or the insurance regulatory official of a foreign jurisdiction or

2. if it (a) has risk-based capital for a company action level event, as described in Connecticut law, (b) meets one or more of the standards for being considered to be in a hazardous financial condition, or (c) otherwise exhibits qualities of being a troubled insurer as determined by the commissioner.


An insurer subject to the bill can apply for a waiver based on unique circumstances. In deciding whether to grant a waiver, the commissioner may consider the type and volume of business written, the insurer's ownership and organizational structure, and any other factors he considers relevant to the insurer or its group. In considering whether to grant a waiver for an insurer that is part of a group with insurers domiciled in more than one state, the commissioner must coordinate with:

1. the lead state commissioner of the group, as determined by the procedures in NAIC's applicable financial analysis handbook, and

2. other insurance regulatory officials of member insurers' states of domicile.


Under the bill, the ORSA summary report and all the other documents, material, or information in the Insurance Department's possession or control that are obtained by, created by, or disclosed to the commissioner or any other person under the bill are:

1. confidential by law and privileged,

2. not subject to disclosure under the Freedom of Information Act,

3. not subject to subpoena or discovery, and

4. inadmissible in evidence in any civil action in Connecticut.

The bill allows the commissioner to use the information to further any regulatory or legal action brought as a part of his official duties. It prohibits the commissioner from making this information public without the insurer's prior written consent.

Neither the commissioner nor any one acting under his authority who obtains or creates this information or to whom it is disclosed, through examination or otherwise, may be permitted or required to testify in any civil action in Connecticut about it.



The bill allows the commissioner to share, upon request, summary reports and other information, documents, or material in his control, including those deemed confidential and privileged or not disclosable, with:

1. other state, federal, and international regulatory officials, including members of a supervisory college;

2. NAIC; and

3. any third-party consultants designated by the commissioner.

In each case, the recipient must agree, in writing, to maintain the confidentiality and privileged status of the information and must verify, in writing, its legal authority to maintain confidentiality. The commissioner must obtain the insurer's written consent before sharing any such information.

The commissioner may receive ORSA-related information, documents, material, or other information, including those that are confidential and privileged, from NAIC and the regulatory officials described above. The commissioner must maintain as confidential and privileged any documents, material, or information received with notice or the understanding that they are confidential and privileged under the laws of the jurisdiction that is their source.


The commissioner must enter into a written agreement with NAIC or the third-party consultant, governing the sharing and use of the above documents, material, and information. The agreement must:

1. specify procedures and protocols regarding the confidentiality and security of the information, documents, or material shared with NAIC or a third-party consultant, including procedures and protocols limiting sharing by NAIC to regulatory officials of states where other member insurers of the group of which a domestic insurer is a member are domiciled;

2. specify that the commissioner retains ownership of this information and has discretion over its use;

3. prohibit NAIC or the consultant from storing the information in a permanent database after completing the underlying analysis;

4. require that an insurer whose confidential information NAIC or the consultant possesses receive prompt notice if either entity is subject to a request or subpoena to disclose or produce such information; and

5. require NAIC or the consultant, if it is subject to disclosure of an insurer's confidential information in its possession, to allow the insurer to intervene in any judicial or administrative action regarding the disclosure.



NAIC is the standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia, and five U.S. territories. Through NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.


Insurance and Real Estate Committee

Joint Favorable