PA 15-70—HB 6952

Insurance and Real Estate Committee

Veterans' Affairs Committee

AN ACT PROHIBITING CERTAIN LIFE INSURANCE POLICY EXCLUSIONS FOR ACTIVE MEMBERS OF THE ARMED FORCES AND THE NATIONAL GUARD

SUMMARY: This act prohibits issuing or delivering life insurance or annuities that eliminate or otherwise reduce an insurer's liability if the insured's death is related to military service to a known active member of the U. S. Army, Navy, Air Force, Marine Corps, Coast Guard, or National Guard. Under the act, a life insurance or annuity policy, contract, and any related application, rider, or endorsement cannot exclude coverage if the insured's death is related to (1) a declared or undeclared war or (2) military service, except accidental death coverage such as double indemnity may be excluded (i. e. , paying a multiple of the policy's value if death results from an accident).

Existing Insurance Department regulations prohibit such actions but do not cover National Guard members (Conn. Agencies Reg. 38a-819-74(h)(5)). A violation of the act is subject to a fine of up to $15,000 (CGS 38a-2) and a violation of the regulations is an unfair and deceptive insurance practice.

EFFECTIVE DATE: October 1, 2015

BACKGROUND

Connecticut Unfair Insurance Practices Act (CUIPA)

The law prohibits engaging in unfair or deceptive insurance acts or practices. CUIPA authorizes the insurance commissioner to issue regulations, conduct investigations and hearings, issue cease and desist orders, ask the Attorney General to seek injunctive relief in Superior Court, impose fines, revoke or suspend licenses, and order restitution.

Fines for knowingly-committed CUIPA violations, in any six month period, may be up to (1) $5,000 per violation to a $50,000 maximum or (2) $25,000 per violation to a $250,000 maximum. The law also imposes a fine of up to $50,000, in addition to or in lieu of a license suspension or revocation, for violating a cease and desist order.

OLR Tracking: AR: DC: MS: cmg