Substitute House Bill No. 6643
          Substitute House Bill No. 6643

               PUBLIC ACT NO. 97-43


    Be  it  enacted  by  the  Senate  and House of
Representatives in General Assembly convened:
    Subsection  (1)  of  section  38a-841  of  the
general statutes is repealed and the following  is
substituted in lieu thereof:
    (1)  Said  association shall: (a) Be obligated
to the extent of the covered claims existing prior
to  the  determination  of  insolvency and arising
within thirty  days  after  the  determination  of
insolvency,  or  before the policy expiration date
if less than thirty days after the  determination,
or  before  the  insured  replaces  the  policy or
causes its cancellation,  if  he  does  so  within
thirty  days  of such determination, provided such
obligation shall be limited as follows:  (i)  With
respect  to  covered claims for unearned premiums,
to one-half of the unearned premium on any policy,
subject  to  a maximum of two thousand dollars per
policy; (ii) with respect to covered claims  other
than  for unearned premiums, such obligation shall
include only that amount of each such claim  which
is  in  excess  of one hundred dollars and is less
than three hundred thousand dollars,  except  that
said  association shall pay the full amount of any
such claim arising out of a workers'  compensation
policy,  provided  in  no  event  shall  (A)  said
association be obligated to  any  claimant  in  an
amount   in   excess  of  the  obligation  of  the
insolvent  insurer  under  the  policy   form   or
coverage  from which the claim arises, or (B) said
association be obligated for any claim filed  with
the  association after the expiration of two years
from the date of  the  declaration  of  insolvency
ACCORDANCE WITH SECTION 31-294c; (b) be deemed the
insurer to the extent of its  obligations  on  the
covered  claims  and to such extent shall have all
rights, duties, and obligations of  the  insolvent
insurer   as   if   the  insurer  had  not  become
insolvent; (c) allocate claims paid  and  expenses
incurred  among  the  three  accounts,  created by
section 38a-839,  separately,  and  assess  member
insurers  separately  (i)  in respect of each such
account for such amounts as shall be necessary  to
pay  the  obligations  of  said  association under
subdivision (a) of subsection (1) of this  section
subsequent  to an insolvency; (ii) the expenses of
handling   covered   claims   subsequent   to   an
insolvency;  (iii)  the cost of examinations under
section 38a-846 and (iv) such  other  expenses  as
are  authorized  by  sections  38a-836 to 38a-853,
inclusive. The assessments of each member  insurer
shall  be  in  the  proportion that the net direct
written premiums of such member  insurer  for  the
calendar  year  preceding  the  assessment  on the
kinds of insurance in such account  bears  to  the
net direct written premiums of all member insurers
for the calendar year preceding the assessment  on
the  kinds  of  insurance  in  such  account. Each
member insurer shall be notified of its assessment
not  later  than  thirty days before it is due. No
member insurer may be assessed in any year on  any
account  an  amount  greater  than two per cent of
that member insurer's net direct written  premiums
for  the calendar year preceding the assessment on
the kinds of insurance in said  account,  provided
if,  at  the  time  an assessment is levied on the
"all  other  insurance"  account,  as  defined  in
subdivision  (c)  of section 38a-839, the board of
directors finds that at least fifty  per  cent  of
the  total net direct written premiums of a member
insurer and all its affiliates, for  the  year  on
which such assessment is based, were from policies
issued  or  delivered  in  Connecticut,  on  risks
located  in  this state, such member insurer shall
be assessed only  on  such  member  insurer's  net
direct written premium that is attributable to the
kind of insurance that gives rise to each  covered
claim.  If  the  maximum assessment, together with
the  other  assets  of  said  association  in  any
account,  does  not provide in any one year in any
account an amount sufficient to make all necessary
payments  from  that  account, the funds available
may be prorated and the unpaid  portion  shall  be
paid as soon thereafter as funds become available.
Said association may defer, in whole or  in  part,
the  assessment  of  any  member  insurer,  if the
assessment  would  cause  the   member   insurer's
financial  statement to reflect amounts of capital
or surplus less than the minimum amounts  required
for a certificate of authority by any jurisdiction
in which  the  member  insurer  is  authorized  to
transact insurance provided that during the period
of  deferment,  no  dividends  shall  be  paid  to
shareholders     or     policyholders.    Deferred
assessments shall be paid when such  payment  will
not  reduce  capital  or surplus below the minimum
amounts required for a certificate  of  authority.
Such  payments shall be refunded to those insurers
receiving  greater  assessments  because  of  such
deferment  or,  at the election of the insurer, be
credited against future assessments.  Each  member
insurer  serving  as  a servicing facility may set
off against any  assessment,  authorized  payments
made  on  covered  claims and expenses incurred in
the payment of such claims by such member  insurer
if  they  are chargeable to the account in respect
of which the assessment is made;  (d)  investigate
claims   brought   against  said  association  and
adjust, compromise, settle, and pay covered claims
to  the  extent of said association's obligations,
and deny all other claims. The  association  shall
pay  claims  in  any  order  it  deems reasonable,
including but not limited to, payment in the order
of  receipt  or  by  classification. It may review
settlements, releases and judgments to  which  the
insolvent  insurer or its insureds were parties to
determine the extent to  which  such  settlements,
releases  and judgments may be properly contested;
(e) notify such persons as  the  commissioner  may
direct  under subdivision (a) of subsection (2) of
section 38a-843; (f)  handle  claims  through  its
employees or through one or more insurers or other
persons  designated   by   said   association   as
servicing facilities, provided such designation of
a servicing  facility  shall  be  subject  to  the
approval  of the commissioner, and may be declined
by a  member  insurer;  (g)  reimburse  each  such
servicing   facility   for   obligations  of  said
association paid by such facility and for expenses
incurred by such facility while handling claims on
behalf of said  association  and  shall  pay  such
other   expenses   of   said  association  as  are
authorized  by  sections   38a-836   to   38a-853,

Approved May 14, 1997