Connecticut Seal

General Assembly

File No. 233

    February Session, 2018

Substitute House Bill No. 5206

House of Representatives, April 5, 2018

The Committee on Insurance and Real Estate reported through REP. SCANLON of the 98th Dist., Chairperson of the Committee on the part of the House, that the substitute bill ought to pass.

AN ACT CONCERNING INSURANCE ISSUES.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective from passage) (a) Notwithstanding any provision of the general statutes, the Insurance Commissioner may require that any person required by any provision of title 38a of the general statutes to make a filing or submission to the commissioner make such filing or submission to the commissioner by electronic means.

(b) Any person required to make a filing or submission to the commissioner by electronic means pursuant to subsection (a) of this section may submit a request to the commissioner seeking an exception to the requirement.

(c) The commissioner shall grant a request submitted pursuant to subsection (b) of this section if the commissioner determines that compliance with the requirement imposed pursuant to subsection (a) of this section is impractical, would cause the person seeking the exception to suffer undue hardship or that good cause exists to grant the requested exception.

Sec. 2. Subsection (a) of section 38a-58a of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2018):

(a) Any insurer [which] that is organized under the laws of any other state and is admitted to do business in this state for the purpose of writing insurance may, upon approval of the commissioner in accordance with all applicable provisions of the general statutes, become a domestic insurer. [by complying] Such insurer shall comply with all of the requirements of law relative to the organization and licensing of a domestic insurer of the same type, [and by designating] designate its principal place of business at a location in this state [. The domestic insurer shall be entitled to like certificates and licenses to transact business in this state] and provide to the commissioner such documents and information the commissioner may reasonably require. After such insurer demonstrates, to the satisfaction of the commissioner, that, upon becoming a domestic insurer, such insurer will be in compliance with all requirements of law and its business will be consistent with the interests of prospective insureds and the public, the commissioner may, in accordance with section 38a-41, issue a new license to such insurer to reflect the change in such insurer's domiciliary state and such insurer shall be subject to the authority and jurisdiction of this state. The articles of incorporation of the domestic insurer may be amended to provide that the corporation is a continuation of the corporate existence of the original foreign corporation through adoption of this state as its corporate domicile and that the original date of incorporation in its original domiciliary state is the date of incorporation of the domestic insurer.

Sec. 3. Subparagraph (A) of subdivision (2) of subsection (a) of section 38a-78 of the 2018 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2018):

(2) (A) The provisions of this subdivision shall apply to policies and contracts issued on or after the operative date of the Valuation Manual, as set forth in section 38a-78a. [The provisions of this subdivision shall not apply to a society subject to section 38a-614, unless such society elects to use the standards pursuant to subdivision (9) of subsection (a) of section 38a-614.]

Sec. 4. Subsection (a) of section 38a-440 of the 2018 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2018):

(a) This section shall not apply to any reinsurance, group annuity purchased under a retirement plan or plan of deferred compensation established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, premium deposit fund, variable annuity, investment annuity, immediate annuity, contingent deferred annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, nor to any contract that is delivered outside this state through an agent or other representative of the company issuing the contract.

Sec. 5. Subsection (m) of section 38a-440 of the 2018 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2018):

(m) The commissioner may adopt regulations, in accordance with chapter 54, to (1) implement the provisions of this section, and (2) notwithstanding subsection (a) of this section, prescribe nonforfeiture benefits for contingent deferred annuities that are, in the opinion of the commissioner, (A) equitable to the holders of such annuities, (B) appropriate given the risks insured, and (C) to the extent possible, consistent with the general intent of this section.

Sec. 6. Subsection (a) of section 38a-11 of the 2018 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2018):

(a) The commissioner shall demand and receive the following fees: (1) For the annual fee for each license issued to a domestic insurance company, two hundred dollars; (2) for receiving and filing annual reports of domestic insurance companies, fifty dollars; (3) for filing all documents prerequisite to the issuance of a license to an insurance company, two hundred twenty dollars, except that the fee for such filings by any health care center, as defined in section 38a-175, shall be one thousand three hundred fifty dollars; (4) for filing any additional paper required by law, thirty dollars; (5) for each certificate of valuation, organization, reciprocity or compliance, forty dollars; (6) for each certified copy of a license to a company, forty dollars; (7) for each certified copy of a report or certificate of condition of a company to be filed in any other state, forty dollars; (8) for amending a certificate of authority, two hundred dollars; (9) for each license issued to a rating organization, two hundred dollars. In addition, insurance companies shall pay any fees imposed under section 12-211; (10) a filing fee of fifty dollars for each initial application for a license made pursuant to section 38a-769; (11) with respect to insurance agents' appointments: (A) A filing fee of fifty dollars for each request for any agent appointment, except that no filing fee shall be payable for a request for agent appointment by an insurance company domiciled in a state or foreign country which does not require any filing fee for a request for agent appointment for a Connecticut insurance company; (B) a fee of one hundred dollars for each appointment issued to an agent of a domestic insurance company or for each appointment continued; and (C) a fee of eighty dollars for each appointment issued to an agent of any other insurance company or for each appointment continued, except that (i) no fee shall be payable for an appointment issued to an agent of an insurance company domiciled in a state or foreign country which does not require any fee for an appointment issued to an agent of a Connecticut insurance company, and (ii) the fee shall be twenty dollars for each appointment issued or continued to an agent of an insurance company domiciled in a state or foreign country with a premium tax rate below Connecticut's premium tax rate; (12) with respect to insurance producers: (A) An examination fee of fifteen dollars for each examination taken, except when a testing service is used, the testing service shall pay a fee of fifteen dollars to the commissioner for each examination taken by an applicant; (B) a fee of eighty dollars for each license issued; (C) a fee of eighty dollars per year, or any portion thereof, for each license renewed; and (D) a fee of eighty dollars for any license renewed under the transitional process established in section 38a-784; (13) with respect to public adjusters: (A) An examination fee of fifteen dollars for each examination taken, except when a testing service is used, the testing service shall pay a fee of fifteen dollars to the commissioner for each examination taken by an applicant; and (B) a fee of two hundred fifty dollars for each license issued or renewed; (14) with respect to casualty claims adjusters: (A) An examination fee of twenty dollars for each examination taken, except when a testing service is used, the testing service shall pay a fee of twenty dollars to the commissioner for each examination taken by an applicant; (B) a fee of eighty dollars for each license issued or renewed; and (C) the expense of any examination administered outside the state shall be the responsibility of the entity making the request and such entity shall pay to the commissioner two hundred dollars for such examination and the actual traveling expenses of the examination administrator to administer such examination; (15) with respect to motor vehicle physical damage appraisers: (A) An examination fee of eighty dollars for each examination taken, except when a testing service is used, the testing service shall pay a fee of eighty dollars to the commissioner for each examination taken by an applicant; (B) a fee of eighty dollars for each license issued or renewed; and (C) the expense of any examination administered outside the state shall be the responsibility of the entity making the request and such entity shall pay to the commissioner two hundred dollars for such examination and the actual traveling expenses of the examination administrator to administer such examination; (16) with respect to certified insurance consultants: (A) An examination fee of twenty-six dollars for each examination taken, except when a testing service is used, the testing service shall pay a fee of twenty-six dollars to the commissioner for each examination taken by an applicant; (B) a fee of two hundred fifty dollars for each license issued; and (C) a fee of two hundred fifty dollars for each license renewed; (17) with respect to surplus lines brokers: (A) An examination fee of twenty dollars for each examination taken, except when a testing service is used, the testing service shall pay a fee of twenty dollars to the commissioner for each examination taken by an applicant; and (B) a fee of six hundred twenty-five dollars for each license issued or renewed; (18) with respect to fraternal agents, a fee of eighty dollars for each license issued or renewed; (19) a fee of twenty-six dollars for each license certificate requested, whether or not a license has been issued; (20) with respect to domestic and foreign benefit societies shall pay: (A) For service of process, fifty dollars for each person or insurer to be served; (B) for filing a certified copy of its charter or articles of association, fifteen dollars; (C) for filing [the] an annual statement or report, twenty dollars; and (D) for filing any additional paper required by law, fifteen dollars; (21) with respect to foreign benefit societies: (A) For each certificate of organization or compliance, fifteen dollars; (B) for each certified copy of permit, fifteen dollars; and (C) for each copy of a report or certificate of condition of a society to be filed in any other state, fifteen dollars; (22) with respect to reinsurance intermediaries, a fee of six hundred twenty-five dollars for each license issued or renewed; (23) with respect to life settlement providers: (A) A filing fee of twenty-six dollars for each initial application for a license made pursuant to section 38a-465a; and (B) a fee of forty dollars for each license issued or renewed; (24) with respect to life settlement brokers: (A) A filing fee of twenty-six dollars for each initial application for a license made pursuant to section 38a-465a; and (B) a fee of forty dollars for each license issued or renewed; (25) with respect to preferred provider networks, a fee of two thousand seven hundred fifty dollars for each license issued or renewed; (26) with respect to rental companies, as defined in section 38a-799, a fee of eighty dollars for each permit issued or renewed; (27) with respect to medical discount plan organizations licensed under section 38a-479rr, a fee of six hundred twenty-five dollars for each license issued or renewed; (28) with respect to pharmacy benefits managers, an application fee of one hundred dollars for each registration issued or renewed; (29) with respect to captive insurance companies, as defined in section 38a-91aa, a fee of three hundred seventy-five dollars for each license issued or renewed; (30) with respect to each duplicate license issued a fee of fifty dollars for each license issued; (31) with respect to surety bail bond agents, as defined in section 38a-660, (A) a filing fee of one hundred fifty dollars for each initial application for a license, and (B) a fee of one hundred dollars for each license issued or renewed; (32) with respect to third-party administrators, as defined in section 38a-720, (A) a fee of five hundred dollars for each license issued, and (B) a fee of four hundred fifty dollars for each license renewed; (33) with respect to portable electronics insurance licenses under section 38a-397, (A) a filing fee of one hundred dollars for each initial application for a license, (B) a fee of five hundred dollars for each license issued, and (C) a fee of four hundred fifty dollars for each license renewed; and (34) with respect to limited lines travel insurance producer licenses under section 38a-398, (A) a filing fee of one hundred dollars for each initial application for a license, (B) a fee of six hundred fifty dollars for each license issued, and (C) a fee of six hundred fifty dollars for each license renewed.

Sec. 7. Subdivisions (1) and (2) of subsection (a) of section 38a-614 of the general statutes are repealed and the following is substituted in lieu thereof (Effective October 1, 2018):

(1) Each domestic society transacting business in this state shall, annually, on or before the first day of March, unless the commissioner has extended such time for cause shown, file with the commissioner, and electronically to the National Association of Insurance Commissioners, a true and complete statement of its financial condition, transactions and affairs for the preceding calendar year and pay [a] the fee [of ten dollars] specified in section 38a-11, as amended by this act, for filing [the same] such annual statement. The statement shall be in general form and context as approved by the National Association of Insurance Commissioners for fraternal benefit societies and as supplemented by additional information required by the commissioner. An electronically filed true and complete report filed in accordance with section 38a-53a that is timely submitted to the National Association of Insurance Commissioners shall not exempt a domestic society from timely filing a true and complete paper copy with the commissioner.

(2) Each foreign society transacting business in this state shall, annually, on or before the first day of March, unless the commissioner has extended such time for cause shown, file with the commissioner, and electronically to the National Association of Insurance Commissioners, a true and complete statement of its financial condition, transactions and affairs for the preceding calendar year and pay [a] the fee [of ten dollars] specified in section 38a-11, as amended by this act, for filing [the same] such annual statement. The statement shall be in general form and context as approved by the National Association of Insurance Commissioners for fraternal benefit societies and as supplemented by additional information required by the commissioner. An electronically filed true and complete report filed in accordance with section 38a-53a that is timely submitted to the National Association of Insurance Commissioners shall be deemed to have been submitted to the commissioner in accordance with this subsection.

Sec. 8. Subsection (b) of section 38a-614 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2018):

(b) Each association that is (1) a tax-exempt organization under Section 501(c)(23) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, (2) doing business in this state, and (3) not licensed under sections 38a-595 to 38a-626, inclusive, 38a-631 to 38a-640, inclusive, and 38a-800, shall, annually, on or before the first day of May, file with the commissioner a true and complete financial statement audited by an independent certified public accountant or accounting firm of its financial condition, transactions and affairs for the preceding calendar year and pay [a] the fee [of ten dollars] specified in section 38a-11, as amended by this act, for filing [the same] such annual statement.

Sec. 9. Subsection (a) of section 38a-908 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2018):

(a) Any present or former officer, manager, director, trustee, owner, employee or agent of any insurer, or any other persons with authority over or in charge of any segment of the insurer's affairs, shall cooperate with the commissioner in any proceeding under this chapter or any investigation preliminary to the proceeding. [The term "person" as used in this section shall include] As used in this section, "person" includes any person who exercises control directly or indirectly over activities of the insurer through any holding company or other affiliate of the insurer; [. "To cooperate" shall include,] and "to cooperate" includes, but [shall] is not [be] limited to, the following: (1) To reply promptly in writing to any inquiry from the commissioner requesting such a reply; and (2) to make available to the commissioner any books, accounts, documents, or other records or information or property of or pertaining to the insurer and in [his] the person's possession, custody or control.

Sec. 10. Section 38a-925 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2018):

(a) [Every] Each person who receives notice in the form prescribed in section 38a-924 [,] that an insurer [which he] such person represents as an agent is the subject of a liquidation order [,] shall, within thirty days of such notice, provide to the liquidator, in addition to the information [he] the agent may be required to provide pursuant to section 38a-908, as amended by this act, the information in the agent's records related to any policy issued by the insurer through the agent, and if the agent is a general agent, the information in the general agent's records related to any policy issued by the insurer through an agent under contract to [him] the general agent, including the name and address of such subagent. A policy shall be deemed issued through an agent if the agent has a property interest in the expiration of the policy, or if the agent has had in [his] the agent's possession a copy of the declarations of the policy at any time during the life of the policy, except where the ownership of the expiration of the policy has been transferred to another. [The written notice shall include the name and address of the insurer, the name and address of the agent, identification of the policy impaired and the nature of the impairment including termination of coverage, as described in section 38a-921. Notice by a general agent satisfies the notice requirement for any agents under contract to him. Each agent obligated to give notice under this section shall file a report of compliance with the liquidator.]

(b) Any agent [failing to give notice or file a report of compliance] who fails to provide information to the liquidator as required in subsection (a) of this section may be subject to a penalty of not more than two thousand five hundred dollars and may have [his] such agent's license suspended, said penalty to be imposed after a hearing held by the commissioner.

Sec. 11. Section 38a-910 of the general statutes is repealed. (Effective October 1, 2018)

This act shall take effect as follows and shall amend the following sections:

Section 1

from passage

New section

Sec. 2

July 1, 2018

38a-58a(a)

Sec. 3

October 1, 2018

38a-78(a)(2)(A)

Sec. 4

October 1, 2018

38a-440(a)

Sec. 5

October 1, 2018

38a-440(m)

Sec. 6

October 1, 2018

38a-11(a)

Sec. 7

October 1, 2018

38a-614(a)(1) and (2)

Sec. 8

October 1, 2018

38a-614(b)

Sec. 9

October 1, 2018

38a-908(a)

Sec. 10

October 1, 2018

38a-925

Sec. 11

October 1, 2018

Repealer section

INS

Joint Favorable Subst.

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact: None

Municipal Impact: None

Explanation

The bill makes several changes to the insurance statutes with no fiscal impact.

Section 1 allows the Insurance Commissioner to require electronic filing and has no fiscal impact because electronic filing is already in use at the Insurance Department.

Section 2 requires a non-domestic insurer to obtain the Insurance Commissioner's approval to transfer its domicile to Connecticut. The fees charged to the insurer seeking approval according to the bill will be consistent with existing practice so there is no fiscal impact to the Insurance Department.

Sections 3, 4, 5 and 9 make changes that only impact private parties, resulting in no fiscal impact to the state.

Sections 6, 7 and 8 clarify that the filing fee for a fraternal benefit society's annual statement is $20, which has no fiscal impact because $20 is the fee in current practice.

Sections 10 and 11 make technical changes and delete obsolete provisions in the receivership statutes which have no fiscal impact.

The Out Years

State Impact: None

Municipal Impact: None

Sources:

Connecticut Insurance Department

OLR Bill Analysis

sHB 5206

AN ACT CONCERNING INSURANCE ISSUES.

SUMMARY

This bill makes numerous unrelated changes to the insurance statutes. Specifically, it:

EFFECTIVE DATE: October 1, 2018, except the section on electronic filings is effective upon passage and the section on insurer redomestication is effective July 1, 2018.

1 — ELECTRONIC FILINGS

The bill authorizes the insurance commissioner to require any person who must file or submit documents to her to do so electronically. A person may request an exception to the requirement and the commissioner must grant it if she determines that good cause exists or filing electronically is impractical or would cause undue hardship for the person.

2 — INSURER REDOMESTICATION

Under the bill, a non-domestic insurer (i.e., one organized under the laws of another state) that is admitted to do business in Connecticut may become a domestic insurer only with the insurance commissioner's approval. Currently, an insurer may redomesticate by complying with applicable Connecticut laws and designating a principal place of business in the state.

The bill requires an insurer who, with the commissioner's approval, redomesticates to Connecticut to (1) comply with all applicable Connecticut laws, (2) designate a principal place of business in the state, and (3) provide the commissioner with any documents or information she may reasonably require.

If the commissioner is satisfied that the insurer will be in compliance with state laws and its business is consistent with prospective insureds' and the public's interests, she may issue a new license to the insurer to reflect the change in domicile. At that point, the insurer will be subject to the state's authority and jurisdiction and may amend its articles of incorporation accordingly.

3 — NAIC VALUATION MANUAL

The bill requires fraternal benefit societies to comply with the NAIC valuation manual. Currently, a fraternal benefit society is exempt from the requirement, unless it chooses to abide by it.

By law, accident and health and life insurers and those that write or have authority to write deposit-type contracts must use the NAIC valuation manual for determining the value of their reserves.

4 & 5 — CONTINGENT DEFERRED ANNUITIES

The bill exempts contingent deferred annuities (CDAs) from the current nonforfeiture requirements to be consistent with the NAIC's Standard Nonforfeiture Law for Individual and Deferred Annuities. It authorizes the commissioner to prescribe nonforfeiture requirements for CDAs by regulation that, in her opinion, are equitable to the annuity holders; appropriate given the risks insured; and, to the extent possible, consistent with the general intent of the standard nonforfeiture law.

A CDA is a new annuity product designed to offer longevity risk protection, for which the policyholder, instead of the insurer, chooses the underlying investment vehicle.

A nonforfeiture benefit is generally the benefit that accrues to an insured or annuity contract holder when a policy or annuity lapses from nonpayment of premium or other consideration.

6-8 — FRATERNAL BENEFIT SOCIETY ANNUAL STATEMENT FILING FEE

Current statutes conflict with respect to the filing fee a fraternal benefit society must pay when filing its annual statement with the insurance commissioner. The bill removes the inconsistency and provides that the fee is $20, not $10. In practice, the department collects a $20 fee.

9 — COOPERATION OF OFFICERS DURING RECEIVERSHIP

By law, officers, managers, directors, trustees, owners, employees, or agents of an insurer and other people with authority over the insurer's affairs must cooperate with the commissioner during a receivership proceeding or related preliminary proceeding. The bill expressly provides that people who presently or formerly held such positions must cooperate.

The law defines cooperation as replying promptly in writing to the commissioner's inquiry and making available any books, accounts, documents, or other information or records pertaining to the insurer that are in the person's possession.

By law, anyone who does not cooperate as required may be fined up to $10,000, imprisoned up to one year, or both. Also, after a hearing, a person who does not cooperate may be subject to a civil penalty of up to $25,000 and the revocation or suspension of any insurance licenses issued by the commissioner.

COMMITTEE ACTION

Insurance and Real Estate Committee

Joint Favorable Substitute

Yea

21

Nay

0

(03/20/2018)

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