PA 17-187—HB 7024
Insurance and Real Estate Committee
AN ACT REGULATING THE OFFER AND DISSEMINATION OF TRAVEL INSURANCE
SUMMARY: This act establishes licensing and regulatory requirements for people and businesses engaged in the travel insurance businesses. It requires limited lines travel insurance producers (i.e., individuals and businesses selling, soliciting, or negotiating travel insurance in Connecticut) to obtain a license from the insurance commissioner. The act establishes a $100 initial application fee, $650 license fee, and $650 license renewal fee. (It does not specify for how long a license is valid before it must be renewed.)
The act imposes certain restrictions and requirements on travel retailers (i.e., businesses making, arranging, or offering travel services) that offer and disseminate travel insurance to Connecticut residents. These include requiring them to (1) be designated by a licensed producer if they do not employ a licensed producer or are not licensed to sell insurance in Connecticut and (2) make certain travel insurance brochures or other written material available to prospective insureds.
The act also establishes certain requirements for travel insurance producers that are businesses. These include requiring them to (1) maintain a registry of their designated travel retailers and (2) impose certain disclosure and training requirements on employees and representatives of their designated travel retailers. These requirements do not apply to individuals licensed as producers.
A violation of the act by an individual or business entity licensed as a producer is deemed an unfair or deceptive insurance practice; a violation by a travel retailer is an unfair or deceptive trade practice (see BACKGROUND).
EFFECTIVE DATE: October 1, 2017
LIMITED LINES TRAVEL INSURANCE LICENSE
The act allows an individual or business entity to apply to the insurance commissioner for authorization to act as a limited lines travel insurance producer and sell, solicit, or negotiate travel insurance through an insurance company licensed or authorized to conduct business in Connecticut. Under the act, travel insurance is an individual, group, or master insurance policy that covers the following personal risks incident to planned travel:
1. interruption or cancellation of a trip or an event;
2. loss of baggage or personal effects;
3. damage to accommodations or rental vehicles; or
4. sickness, accident, disability, or death occurring during travel.
Individuals and businesses must submit an application to the commissioner, along with the required fee, on a form and in a manner the commissioner prescribes. The commissioner may not approve an application unless the applicant has paid all applicable licensing and filing fees. A business applicant must have complied with any insurance producer fingerprinting requirements of its state of residence for its president, secretary, treasurer, designated compliance employee (described below), and any other officer or person directing or controlling the applicantʼs insurance operations.
The act authorizes the commissioner to approve or deny applications. An authorization remains in force until she (1) suspends or revokes it or (2) suspends, revokes, or refuses to renew the individualʼs or insurance companyʼs business license or authorization.
Requirements for Offering and Disseminating Travel Insurance
The act imposes certain restrictions and requirements on travel retailers (e.g., travel agents) that offer and disseminate travel insurance to Connecticut residents. The act defines “offer and disseminate,” as it relates to travel insurance, as giving general travel insurance information or providing general travel insurance services, including the following:
1. providing descriptions of the coverage and price of travel insurance,
2. processing policy applications,
3. collecting policy premiums, or
4. performing other travel insurance activities allowed in Connecticut that do not require a license.
Under the act, a travel retailer that (1) is not licensed or authorized to conduct insurance business in Connecticut or (2) does not employ a licensed insurance producer may offer and disseminate travel insurance to Connecticut residents only if it is designated by a licensed producer to offer and disseminate travel insurance on the producerʼs behalf and its travel insurance-related activities are limited to those authorized by the act.
The act specifies that employees or authorized representatives of travel retailers do not have to be licensed as insurance producers as long as they do not (1) evaluate or interpret a policyʼs terms, benefits, or conditions; (2) evaluate or provide advice on a prospective customerʼs existing insurance coverage; or (3) hold themselves out as licensed insurance producers or insurance experts.
Required Information Disclosures to Prospective Insureds
The act requires a travel retailer to make available to prospective insureds brochures or other written materials that provide the insurerʼs and producerʼs identity and contact information and explain that:
1. it is not necessary to purchase travel insurance in order to buy any of the travel retailerʼs other products or services and
2. the travel retailer may provide general travel insurance information, including a description of the coverage and price, but is not qualified or authorized to answer questions about the policyʼs terms and conditions or evaluate the adequacy of the customerʼs existing insurance.
The act also requires designated travel retailers to disclose additional information to policy purchasers, as described below.
The act allows designated travel retailers to receive compensation from a producer or insurer issuing a travel insurance policy for services related to offering and disseminating travel insurance, as agreed to by the retailer and producer or insurer.
REQUIREMENTS APPLICABLE TO LIMITED LINES TRAVEL PRODUCERS THAT ARE BUSINESS ENTITIES
Designated Travel Retailer Registry
Under the act, a limited lines travel producer that is a business entity must establish and maintain, on a form prescribed by the commissioner, a registry of its designated travel retailers at the time its license application is approved. The producer must update the registry annually and include the names, addresses, and contact information of (1) each designated travel retailer and (2) the officers or individuals directing or controlling its designated travel retailersʼ operations. The registry must also include (1) each designated travel retailerʼs federal tax identification number and (2) the producerʼs certification that the designated travel retailer has not engaged in certain conduct prohibited by federal law (e.g., falsifying insurance records). Upon the commissionerʼs request, the producer must make the registry available during its regular business hours to her or her designee for inspection and examination.
The producer is responsible for its designated travel retailersʼ actions and must use reasonable means to ensure that producers comply with the act. Producers must also designate an employee, who is also a licensed insurance producer, as the individual responsible for ensuring such compliance, including supervising the producerʼs designated travel retailers.
Under the act, limited lines travel insurance producers that are business entities must require employees and authorized representatives of their designated travel retailers to receive instruction or training on offering and disseminating travel insurance. The instruction or training may be reviewed by the commissioner and must include, at a minimum, information about the types of travel insurance the retailer offers, ethical sales practices, and required disclosures to prospective customers.
Required Disclosure to Policy Purchasers
Producers that are business entities, as well as designated travel retailers, must provide to travel insurance policy purchasers (1) a description or copy of the policyʼs material terms, claim filing process, and review or cancellation process and (2) the insurerʼs and producerʼs identity and contact information.
Connecticut Unfair Insurance Practices Act (CUIPA)
CUIPA (1) prohibits engaging in unfair or deceptive insurance acts or practices and (2) 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 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 in any six-month period if knowingly committed. The law also imposes a fine of up to $50,000, in addition to or instead of a license suspension or revocation, for violating a cease and desist order.
Connecticut Unfair Trade Practices Act (CUTPA)
CUTPA (1) prohibits businesses from engaging in unfair and deceptive acts or practices and (2) allows the consumer protection commissioner to issue regulations defining what constitutes an unfair trade practice, investigate complaints, issue cease and desist orders, order restitution in cases involving less than $10,000, enter into consent agreements, ask the attorney general to seek injunctive relief, and accept voluntary statements of compliance. It also allows individuals to sue. Courts may issue restraining orders; award actual and punitive damages, costs, and reasonable attorneyʼs fees; and impose civil penalties of up to $5,000 for willful violations and $25,000 for violation of a restraining order.