Bill Text: CT SB00395 | 2014 | General Assembly | Introduced
Bill Title: An Act Authorizing Domestic Surplus Lines Insurers And The Insurance Department's Financial Regulatory Oversight Of Insurance Companies.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2014-03-07 - Public Hearing 03/13 [SB00395 Detail]
Download: Connecticut-2014-SB00395-Introduced.html
General Assembly |
Raised Bill No. 395 | ||
February Session, 2014 |
LCO No. 1809 | ||
*01809_______INS* | |||
Referred to Committee on INSURANCE AND REAL ESTATE |
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Introduced by: |
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(INS) |
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AN ACT AUTHORIZING DOMESTIC SURPLUS LINES INSURERS AND THE INSURANCE DEPARTMENT'S FINANCIAL REGULATORY OVERSIGHT OF INSURANCE COMPANIES.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. Section 38a-1 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2014):
Terms used in this title, unless it appears from the context to the contrary, shall have a scope and meaning as set forth in this section.
(1) "Affiliate" or "affiliated" means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with another person.
(2) "Alien insurer" [is defined in subparagraph (A) of subdivision (11) of this section] means any insurer that has been chartered by or organized or constituted within or under the laws of any jurisdiction or country without the United States.
(3) "Annuities" means all agreements to make periodical payments where the making or continuance of all or some of the series of the payments, or the amount of the payment, is dependent upon the continuance of human life or is for a specified term of years. This definition does not apply to payments made under a policy of life insurance.
(4) "Commissioner" means the Insurance Commissioner.
(5) "Control", "controlled by" or "under common control with" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with the person.
(6) "Domestic insurer" [is defined in subparagraph (B) of subdivision (11) of this section] means any insurer that has been chartered by, incorporated, organized or constituted within or under the laws of this state.
(7) "Domestic surplus insurer" means any domestic insurer that has been authorized to be an eligible surplus lines insurer by the commissioner.
[(7)] (8) "Foreign country" means any jurisdiction not in any state, district or territory of the United States.
[(8)] (9) "Foreign insurer" [is defined in subparagraph (C) of subdivision (11) of this section] means any insurer that has been chartered by or organized or constituted within or under the laws of another state or a territory of the United States.
[(9)] (10) "Insolvency" or "insolvent" means, for any insurer, that it is unable to pay its obligations when they are due, or when its admitted assets do not exceed its liabilities plus the greater of: (A) Capital and surplus required by law for its organization and continued operation; or (B) the total par or stated value of its authorized and issued capital stock. For purposes of this subdivision "liabilities" shall include but not be limited to reserves required by statute or by regulations adopted by the commissioner in accordance with the provisions of chapter 54 or specific requirements imposed by the commissioner upon a subject company at the time of admission or subsequent thereto.
[(10)] (11) "Insurance" means any agreement to pay a sum of money, provide services or any other thing of value on the happening of a particular event or contingency or to provide indemnity for loss in respect to a specified subject by specified perils in return for a consideration. In any contract of insurance, an insured shall have an interest which is subject to a risk of loss through destruction or impairment of that interest, which risk is assumed by the insurer and such assumption shall be part of a general scheme to distribute losses among a large group of persons bearing similar risks in return for a ratable contribution or other consideration.
[(11)] (12) "Insurer" or "insurance company" includes any person or combination of persons doing any kind or form of insurance business other than a fraternal benefit society, and shall include a receiver of any insurer when the context reasonably permits. [When modified as follows, the term has the following meanings:
(A) "Alien insurer" means any insurer that has been chartered by or organized or constituted within or under the laws of any state or country without the United States.
(B) "Domestic insurer" means any insurer that has been chartered by, incorporated, organized or constituted within or under the laws of this state.
(C) "Foreign insurer" means any insurer that has been chartered by or organized or constituted within or under the laws of another state or a territory of the United States.
(D) "Mutual insurer" means any insurance company without capital stock, the managing directors or officers of which are elected by its members.
(E) "Unauthorized insurer" or "nonadmitted insurer" means an insurer that has not been granted a certificate of authority by the commissioner to transact the business of insurance in this state or an insurer transacting business not authorized by a valid certificate.]
[(12)] (13) "Insured" means a person to whom or for whose benefit an insurer makes a promise in an insurance policy. The term includes policyholders, subscribers, members and beneficiaries. This definition applies only to the provisions of this title and does not define the meaning of this word as used in insurance policies or certificates.
[(13)] (14) "Life insurance" means insurance on human lives and insurances pertaining to or connected with human life. The business of life insurance includes granting endowment benefits, granting additional benefits in the event of death by accident or accidental means, granting additional benefits in the event of the total and permanent disability of the insured, and providing optional methods of settlement of proceeds. Life insurance includes burial contracts to the extent provided by section 38a-464.
(15) "Mutual insurer" means any insurance company without capital stock, the managing directors or officers of which are elected by its members.
[(14)] (16) "Person" means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a business trust, an unincorporated organization or other legal entity.
[(15)] (17) "Policy" means any document, including attached endorsements and riders, purporting to be an enforceable contract, which memorializes in writing some or all of the terms of an insurance contract.
[(16)] (18) "State" means any state, district, or territory of the United States.
[(17)] (19) "Subsidiary" of a specified person means an affiliate controlled by the person directly, or indirectly through one or more intermediaries.
[(18)] (20) "Unauthorized insurer" [is defined in subparagraph (E) of subdivision (11) of this section] or "nonadmitted insurer" means an insurer that has not been granted a certificate of authority by the commissioner to transact the business of insurance in this state or an insurer transacting business not authorized by a valid certificate.
[(19)] (21) "United States" means the United States of America, its territories and possessions, the Commonwealth of Puerto Rico and the District of Columbia.
Sec. 2. (NEW) (Effective July 1, 2014) (a) (1) A domestic insurer may issue surplus lines insurance policies in this state, provided such insurer has been authorized to write such policies by the commissioner.
(2) A domestic surplus lines insurer may issue insurance policies against any loss from any contingency as provided under the insurance laws of this state, except for any coverage that may be placed through a residual market mechanism, as defined in section 38a-976 of the general statutes.
(b) Unless otherwise provided, no provision of this title shall apply to a domestic surplus lines insurer except for the following: Sections 38a-11, 38a-41, 38a-663 to 38a-691, inclusive, 38a-695, 38a-741 to 38a-743, as amended by this act, 38a-745 and 38a-836 to 38a-902, inclusive, of the general statutes, except that this subsection shall not exempt a domestic insurer authorized to write other lines of insurance in this state from provisions in this title applicable to domestic insurers.
Sec. 3. Section 38a-740 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2014):
The commissioner may by regulation adopted in accordance with the provisions of chapter 54: (1) Establish such proper standards as [he] the commissioner may deem necessary to guide surplus lines brokers procuring any such policy of insurance, as is permitted under subsection (a) of section 38a-794, as amended by this act, from any such [unauthorized] nonadmitted insurer; (2) require any [unauthorized] nonadmitted insurer from which any surplus lines broker has procured or intends to procure any policy of insurance, as is permitted under subsection (a) of section 38a-794, as amended by this act, to file with [him] the commissioner such evidence and in such form as [he may prescribe so as] the commissioner prescribes to enable [him] the commissioner to establish the financial stability, qualifications and general suitability of such [unauthorized] nonadmitted insurer to issue any policy of insurance through any surplus lines broker, under section 38a-794, as amended by this act; and (3) establish such reasonable filing fees as may be necessary to defray the cost [to him] of examining evidence filed with [him by an unauthorized] the commissioner by a nonadmitted insurer either voluntarily or pursuant to the provisions of this section.
Sec. 4. Section 38a-741 of the 2014 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2014):
(a) The commissioner shall maintain on a current basis a list of those lines of insurance or their components for which coverages are believed by the commissioner to be generally unavailable from licensed insurers. The commissioner shall republish the list and make it available to all licensees every six months. Any person may request in writing that the commissioner add or remove a line of insurance or its component from the current list at the next publication of the list. The commissioner's determinations of lines of insurance or their components to be added to or removed from the list shall not be subject to chapter 54 provided prior to making determinations, the commissioner shall provide opportunity for comments from interested persons.
(b) (1) When any policy of insurance is procured or renewed under the authority of such license providing a line of insurance or its component that does not, on the effective date of coverage, appear on the current published list, both the licensee and the insured shall write signed statements setting forth facts showing that such licensee and such insured were unable after diligent effort to procure, from any authorized insurer or insurers, the full amount of insurance required to protect the interest of such insured, and further showing (A) that the amount of insurance procured from [an unauthorized] a nonadmitted or domestic surplus lines insurer or insurers is only the excess over the amount so procurable from authorized insurers, (B) the type of policy, and (C) if such policy is for real property, the location of such property. Such licensee shall file such signed statements in electronic format with the commissioner on February fifteenth, May fifteenth, August fifteenth and November fifteenth of each year.
(2) The provisions of subdivision (1) of this subsection shall not apply to any policy of insurance procured under the authority of such license for an insured that is an exempt commercial purchaser, as defined in Section 527 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, P.L. 111-203, as amended from time to time, provided (A) the surplus lines broker has disclosed to such exempt commercial purchaser that such insurance may or may not be available from an authorized insurer, that may provide greater protection with more regulatory oversight, and (B) such exempt commercial purchaser has subsequently requested such broker, in writing, to procure such policy from [an unauthorized] a nonadmitted or domestic surplus lines insurer.
Sec. 5. Section 38a-742 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2014):
The licensee shall keep a complete and separate record of all surplus lines insurance policies procured from [unauthorized] nonadmitted or domestic insurers under such license. Such records shall be open to the examination of the commissioner at all reasonable times and shall show: (1) The exact amount of each kind of insurance permitted under sections 38a-741 to 38a-744, inclusive, as amended by this act, and 38a-794, as amended by this act, that has been procured for each insured; (2) the gross premiums charged by the insurers for each kind of insurance permitted under section 38a-794, as amended by this act; (3) the amount of each kind of premiums of insurance permitted by section 38a-794, [which] as amended by this act, that were returned to each insured; (4) the name of the insurer or insurers [which] that issued each of such policies; (5) the effective dates of such policies; and (6) the terms for which they were issued.
Sec. 6. Section 38a-743 of the general statutes is repealed and the following is repealed and the following is substituted in lieu thereof (Effective July 1, 2014):
(a) Every person, firm, association or corporation licensed pursuant to the provisions of sections 38a-741 to 38a-744, as amended by this act, inclusive, and 38a-794, as amended by this act, shall pay to the commissioner on May first of each year a sum equal to four per cent of the gross premiums charged the insureds by the insurers during the period from January first to March thirty-first of that year, and on August first of each year a sum equal to four per cent of the gross premiums charged the insured by the insurers during the period from April first to June thirtieth of that year, on November first of each year a sum equal to four per cent of the gross premiums charged the insureds by the insurers during the period from July first to September thirtieth of that year and on February first of each year a sum equal to four per cent of the gross premiums charged the insureds by the insurers during the period from October first to December thirty-first of the preceding year, for insurance procured by such licensee pursuant to such license, less the amount of such premiums returned to such insureds, except that the premium tax shall not apply to any policy issued to the state of Connecticut or any agency of the state or to any policy issued to any town, or agency of such town or special taxing district when such town, agency or department thereof or special taxing district appears in the policy as the named insured and as such is responsible for the payment of premiums shown on such policy. Each licensee shall also file on May first, August first, November first, and February first a return, in the form described by the commissioner, showing such information as the commissioner deems necessary. The provisions of this subsection shall not apply to nonadmitted insurance, as defined in subsection (b) of this section, that is procured, continued or renewed on or after July 1, 2011.
(b) For purposes of this subsection and subsections (c) to (g), inclusive, of this section:
(1) "Home state" means home state, as defined in Section 527 of the Nonadmitted and Reinsurance Reform Act of 2010;
(2) "Licensee" means a person, firm, association or corporation that is licensed pursuant to the provisions of sections 38a-741 to 38a-744, as amended by this act, inclusive, and 38a-794, as amended by this act, and that is a surplus lines broker, as defined in Section 527 of the Nonadmitted and Reinsurance Reform Act of 2010;
(3) "Nonadmitted and Reinsurance Reform Act of 2010" means Sections 511 to 542, inclusive, of the Dodd-Frank Wall Street Reform and Consumer Protection Act, P.L. 111-203, as amended from time to time;
(4) "Nonadmitted insurance" means nonadmitted insurance, as defined in Section 527 of the Nonadmitted and Reinsurance Reform Act of 2010; and
(5) "Nonadmitted insurer" means a nonadmitted insurer, as defined in Section 527 of the Nonadmitted and Reinsurance Reform Act of 2010.
(c) (1) With respect to nonadmitted insurance, where such coverage is procured, continued or renewed for an insured by a licensee on or after July 1, 2011, and where this state is an insured's home state, such licensee shall pay a tax equal to the sum of four per cent of the gross premiums charged such insureds by nonadmitted insurers, irrespective of the fact that the insurance policy may cover properties, risks or exposures located or to be performed both within and without this state.
(2) (A) For the period beginning on July 1, 2011, and ending September 30, 2011, each licensee shall pay to the Insurance Commissioner, on or before November 15, 2011, in accordance with procedures established and on forms provided by said commissioner, a tax on nonadmitted insurance equal to the sum of four per cent of the gross premiums charged insureds by nonadmitted insurers during such period.
(B) For the period beginning on October 1, 2011, and ending December 31, 2011, each licensee shall pay to the Insurance Commissioner, on or before February 15, 2012, in accordance with procedures established and on forms provided by said commissioner, a tax on nonadmitted insurance equal to the sum of four per cent of the gross premiums charged insureds by nonadmitted insurers during such period.
(3) For calendar years beginning on or after January 1, 2012, each licensee shall pay to the Insurance Commissioner, in accordance with procedures established and on forms provided by said commissioner, (A) on or before May fifteenth of each year in which nonadmitted insurance was procured, continued or renewed, a tax on such insurance equal to the sum of four per cent of the gross premiums charged insureds by nonadmitted insurers during the period from January first to March thirty-first of that year; (B) on or before August fifteenth of each year in which nonadmitted insurance was procured, continued or renewed, a tax on such insurance equal to the sum of four per cent of the gross premiums charged insureds by nonadmitted insurers during the period from April first to June thirtieth of that year; (C) on or before November fifteenth of each year in which nonadmitted insurance was procured, continued or renewed, a tax on such insurance equal to the sum of four per cent of the gross premiums charged insureds by nonadmitted insurers during the period from July first to September thirtieth of that year; and (D) on or before February fifteenth of each year succeeding a year in which nonadmitted insurance was procured, continued or renewed, a tax on such insurance equal to the sum of four per cent of the gross premiums charged insureds by nonadmitted insurers during the period from October first to December thirty-first of the preceding year.
(4) In the event of cancellation and rewriting of any nonadmitted insurance contract, the premium for purposes of this subsection shall be the premium in excess of the unearned premium of the cancelled insurance contract.
(5) If, pursuant to subsection (g) of this section, the Insurance Commissioner enters into a cooperative or reciprocal agreement with another state or states, and if the provisions set forth in such agreement are different from provisions prescribed by this subsection, then the provisions set forth in such agreement shall prevail.
(d) Upon failure of any person to pay the premium tax due the commissioner on its due date, there shall be added thereto a penalty and interest, which interest shall be at the rate of one per cent per month or fraction of a month which elapses from the due date of such premium tax to the date of payment, and which penalty shall be in the amount of ten per cent of the whole or such part of the principal of the premium tax as is unpaid.
(e) This section shall be construed in such a manner as to avoid preemption under the Nonadmitted and Reinsurance Reform Act of 2010.
(f) This section shall not apply to any policy issued to the state of Connecticut or any agency of the state, or to any policy issued to any Connecticut town, or agency of such town or special taxing district when such town, agency or department thereof or special taxing district appears in the policy as the named insured and as such is responsible for the payment of premiums shown on such policy.
(g) (1) The Insurance Commissioner may enter into a cooperative or reciprocal agreement with another state or states to allocate among the states the nonadmitted insurance premiums taxes paid to an insured's home state, as provided by Section 521 of the Nonadmitted and Reinsurance Reform Act of 2010.
(2) The agreement that the Insurance Commissioner is authorized to enter into under this subsection shall include, but shall not be limited to, the National Association of Insurance Commissioners' Nonadmitted Insurance Multistate Agreement.
(3) The agreement that the Insurance Commissioner is authorized to enter into under this subsection may provide that, where this state is an insured's home state and where the nonadmitted insurance covers properties, risks or exposures located or to be performed both within and without this state, (A) the sum payable by a licensee to this state under this section shall be computed based on that portion of the gross premiums allocated to this state, based on a standardized premium allocation adopted by the states under such agreement, multiplied by four per cent, (B) the sum payable by the licensee to another state shall be computed based on that portion of the gross premiums allocated to such state, based on a standardized premium allocation adopted by the states under such agreement, multiplied by such state's tax rate, and (C) to the extent that another state where properties, risks or exposures are located has failed to enter into an agreement with this state, the portion of the gross premiums otherwise allocable to such other state shall be allocated to this state.
(4) The agreement that the Insurance Commissioner is authorized to enter into under this subsection may provide for (A) record-keeping requirements, (B) audit procedures, (C) exchange of information, (D) collection of taxes not paid by licensees within the time required under subsection (c) of this section, (E) disbursements of funds to other states that are parties to such agreement, and (F) any additional provisions that will facilitate the administration of the agreement.
(5) Notwithstanding any provision of section 12-15, the Insurance Commissioner may, under the terms of the agreement entered into under this subsection, disclose information relating to surplus lines brokers or nonadmitted insurance permitted to be placed through surplus lines brokers to any official of another state that is a party to such agreement whose official duties require such disclosure.
(6) The Insurance Commissioner may enter into cooperative agreements with processing entities located in this state or other states related to the capturing and processing of nonadmitted insurance premiums and nonadmitted insurance premiums tax data. Notwithstanding any provision of section 12-15, the Insurance Commissioner may, under the terms of any such cooperative agreement, disclose information relating to surplus lines brokers or nonadmitted insurance permitted to be placed through surplus lines brokers to any official of the processing entity whose duties require such disclosure.
(h) With respect to surplus lines insurance written by a domestic surplus lines insurer where such coverage is procured, continued or renewed for an insured by a licensee on or after July 1, 2014, and where this state is an insured's home state, the provisions of subdivisions (1), (3) and (4) of subsection (c) of this section and subsections (d) and (e) of this section shall apply to such insurance and licensee.
Sec. 7. Subsection (a) of section 38a-794 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2014):
(a) Any applicant for a surplus lines broker's license shall be a person, firm, association or corporation who or which is domiciled and maintains an office in this state or a nonresident who or which desires to act within this state, and is licensed as an insurance producer. A surplus lines broker's license shall authorize the licensee to procure, from insurers not [authorized] admitted to transact business in this state, subject to the restrictions herein provided, policies of insurance against loss from any contingency as provided by the insurance laws of this state, except any insurance coverage [which] that can be placed through a residual market mechanism, as defined in [subsection (x) of] section 38a-976.
Sec. 8. Subsection (e) of section 38a-14 of the 2014 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2014):
(e) (1) Nothing contained in this section shall be construed to limit the commissioner's authority to terminate or suspend any examination in order to pursue legal or regulatory action pursuant to the insurance laws of this state. Findings of fact and conclusions made pursuant to any examination shall be prima facie evidence in any legal or regulatory action.
(2) Nothing contained in this section shall be construed to limit the commissioner's authority in such legal or regulatory action to use and, if appropriate, to make public any final or preliminary examination report, any examiner or company workpapers or other documents, or any other information discovered or developed during the course of any examination.
(3) Not later than sixty days following completion of the examination, the examiner in charge shall file, under oath, with the Insurance Department a verified written report of examination. Upon receipt of the verified report, the Insurance Department shall transmit the report to the entity examined, together with a notice that shall afford the entity examined a reasonable opportunity, not to exceed thirty days, to make a written submission or rebuttal with respect to any matters contained in the examination report. Not later than thirty days after the period allowed for the receipt of written submissions or rebuttals, the commissioner shall fully consider and review the report, together with any written submissions or rebuttals and any relevant portions of the examiner's workpapers and enter an order: (A) Adopting the examination report as filed or with modification or corrections. If the examination report reveals that the entity is operating in violation of any law, regulation or prior order of the commissioner, the commissioner may order the company to take any action the commissioner considers necessary and appropriate to cure such violation; (B) rejecting the examination report with directions to the examiners to reopen the examination for purposes of obtaining additional data, documentation or information, and refiling pursuant to this subdivision; or (C) calling for an investigatory hearing with not less than twenty days' notice to the company for purposes of obtaining additional documentation, data, information and testimony.
(4) (A) The commissioner shall transmit the examination report adopted pursuant to subparagraph (A) of subdivision (3) of this subsection or a summary thereof to the entity examined, together with any recommendations or written statements from the commissioner or the examiner. The secretary of the board of directors or similar governing body of the entity shall provide a copy of the report or summary to each director and shall certify to the commissioner, in writing, that a copy of the report or summary has been provided to each director.
(B) Not later than one hundred twenty days after receiving the report or summary, the chief executive officer or the chief financial officer of the entity examined shall present the report or summary to the entity's board of directors or similar governing body at a regular or special meeting.
Sec. 9. Subsection (e) of section 38a-53 of the 2014 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2014):
(e) Any insurance company or health care center doing business in this state that fails to file any report or statement required under this section shall pay a late filing fee of one hundred seventy-five dollars per day for each day from the due date of such report or statement to the date of filing. The commissioner may waive the late filing fee if (1) the insurance company or health care center cannot file such report or statement because the governor of such company's or center's state of domicile has proclaimed a state of emergency in such state and such state of emergency impairs the company's or center's ability to file the report or statement, or (2) the insurance regulatory official of the state of domicile of a foreign insurance company has permitted such company, or the commissioner has permitted a domestic insurance company or health care center, to file such report or statement late.
Sec. 10. Subparagraph (A) of subdivision (3) of subsection (e) of section 38a-85 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2014):
(3) (A) (i) In the case of a single assuming insurer, the trust shall consist of a trusteed account with funds in an amount not less than the assuming insurer's liabilities attributable to reinsurance ceded by domestic and foreign ceding insurers and, unless otherwise provided in subparagraph (A)(ii) of this subdivision, the assuming insurer shall maintain a trusteed surplus of not less than twenty million dollars.
(ii) (I) The insurance regulatory official with principal oversight of the trust may authorize a reduction in the required trusteed surplus.
[(ii)] (II) For a trust over which the commissioner has principal regulatory oversight, at any time after the assuming insurer has permanently discontinued for at least three full years underwriting new business secured by the trust, the commissioner may authorize a reduction in the required trusteed surplus. Such reduction shall be made only after the commissioner finds, based on a risk assessment, that the reduced surplus level is adequate to protect domestic and foreign policyholders and ceding insurers and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider all material risk factors, including, when applicable, the lines of business involved, the stability of the incurred loss estimates and the effect of the surplus requirements on the assuming insurer's liquidity or solvency. The minimum required surplus shall not be reduced to an amount less than thirty per cent of the assuming insurer's liabilities attributable to reinsurance ceded by domestic and foreign ceding insurers covered by the trust.
Sec. 11. Subsection (b) of section 38a-136 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2014):
(b) (1) The following transactions involving a domestic insurance company and any person in its holding company system, including amendments to or modifications of affiliate agreements previously filed pursuant to this section and that are subject to any materiality standards specified in subparagraphs (A) to (G), inclusive, of this subdivision, may not be entered into unless the insurance company has notified the commissioner in writing of its intention to enter into such transaction at least thirty days prior thereto, or such shorter period as the commissioner may permit, and the commissioner has approved or not disapproved it within such period. The written notice for such amendments or modifications shall specify the reasons for the change and the financial impact on the domestic insurance company. Not later than thirty days after the termination of a previously filed agreement, the domestic insurance company shall notify the commissioner of such termination for the commissioner's determination of what written notice or filing shall be required, if any:
(A) Sales, purchases, exchanges, loans or extensions of credit, or investments, provided such transactions are equal to or exceed: (i) With respect to nonlife insurance companies, the lesser of three per cent of the insurance company's admitted assets or twenty-five per cent of surplus; or (ii) with respect to life insurance companies, three per cent of the insurance company's admitted assets; each as of the thirty-first day of December next preceding;
(B) Loans or extensions of credit to any person who is not an affiliate, where the insurance company makes such loans or extensions of credit with the agreement or understanding that the proceeds of such transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the insurance company making such loans or extensions of credit, provided such transactions are equal to or exceed: (i) With respect to nonlife insurance companies, the lesser of three per cent of the insurance company's admitted assets or twenty-five per cent of surplus; or (ii) with respect to life insurance companies, three per cent of the insurance company's admitted assets; each as of the thirty-first day of December next preceding;
(C) Reinsurance agreements or modifications thereto, including (i) all reinsurance pooling agreements, and (ii) agreements in which the reinsurance premium or a change in the insurance company's liabilities, or the projected reinsurance premium or a projected change in the insurance company's liabilities in any of the next three years, equals or exceeds five per cent of the insurance company's surplus, as of the thirty-first day of December next preceding, including those agreements that may require as consideration the transfer of assets from an insurance company to a nonaffiliate, if an agreement or understanding exists between the insurance company and nonaffiliate that any portion of such assets will be transferred to one or more affiliates of the insurance company;
(D) All management agreements, service contracts, tax allocation agreements and cost-sharing arrangements;
(E) Guarantees by a domestic insurance company, except that a guarantee that is (i) quantifiable as to amount, and (ii) does not exceed the lesser of one-half of one per cent of the insurance company's admitted assets or ten per cent of surplus with regard to policyholders, as of the thirty-first day of December next preceding, shall not be subject to the notice requirement of this subsection;
(F) Direct or indirect acquisitions or investments in a person that controls the domestic insurance company or in an affiliate of the insurance company in an amount that, together with the insurance company's present holdings in such investments, exceeds two and one-half per cent of the insurance company's surplus with regard to policyholders. This subsection shall not apply to direct or indirect acquisitions of or investments in (i) subsidiaries acquired pursuant to section 38a-102d or authorized pursuant to any section of this title other than sections 38a-129 to 38a-140, inclusive, or (ii) nonsubsidiary affiliates that are subject to the provisions of sections 38a-129 to 38a-140, inclusive; and
(G) Any material transactions, specified by regulation, that the commissioner determines may adversely affect the interests of the insurance company's policyholders.
(2) Nothing contained in this section shall be deemed to authorize or permit any transactions that, in the case of an insurance company not a member of the same insurance holding company system, would be otherwise contrary to law.
Sec. 12. Subsection (a) of section 38a-188 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2014):
Each health care center governed by sections 38a-175 to 38a-192, inclusive, shall be exempt from the provisions of the general statutes relating to insurance in the conduct of its operations under said sections and in such other activities as do constitute the business of insurance, unless expressly included therein, and except for the following: Sections 38a-11, as amended by this act, 38a-14a, 38a-17, 38a-51, 38a-52, 38a-56, 38a-57, 38a-129 to 38a-140, inclusive, 38a-147 and 38a-815 to 38a-819, inclusive, provided a health care center shall not be deemed in violation of sections 38a-815 to 38a-819, inclusive, solely by virtue of such center selectively contracting with certain providers in one or more specialties, and sections 38a-80, 38a-492b, 38a-518b, 38a-543, 38a-702j, 38a-703 to 38a-718, inclusive, 38a-731 to 38a-735, inclusive, 38a-741 to 38a-745, inclusive, as amended by this act, 38a-769, 38a-770, 38a-772 to 38a-776, inclusive, 38a-786, 38a-790, 38a-792 and 38a-794, as amended by this act, provided a health care center organized as a nonprofit, nonstock corporation shall be exempt from sections 38a-146, 38a-702j, 38a-703 to 38a-718, inclusive, 38a-731 to 38a-735, inclusive, 38a-741 to 38a-745, inclusive, as amended by this act, 38a-769, 38a-770, 38a-772 to 38a-776, inclusive, 38a-786, 38a-790, 38a-792 and 38a-794, as amended by this act. If a health care center is operated as a line of business, the foregoing provisions shall, where possible, be applied only to that line of business and not to the organization as a whole. The commissioner may adopt regulations, in accordance with chapter 54, stating the circumstances under which the resources of a person which controls a health care center, or operates a health care center as a line of business will be considered in evaluating the financial condition of a health care center. Such regulations, if adopted, shall require as a condition to the consideration of the resources of such person which controls a health care center, or operates a health care center as a line of business to provide satisfactory assurances to the commissioner that such person will assume the financial obligations of the health care center. During the period prior to the effective date of regulations issued under this section, the commissioner shall, upon request, consider the resources of a person which controls a health care center, or operates a health care center as a line of business, if the commissioner receives satisfactory assurances from such person that it will assume the financial obligations of the health care center and determines that such person meets such other requirements as the commissioner determines are necessary. A health care center organized as a nonprofit, nonstock corporation shall be exempt from the sales and use tax and all property of each such corporation shall be exempt from state, district and municipal taxes. Each corporation governed by sections 38a-175 to 38a-192, inclusive, shall be subject to the provisions of sections 38a-903 to 38a-961, inclusive. Nothing in this section shall be construed to override contractual and delivery system arrangements governing a health care center's provider relationships.
This act shall take effect as follows and shall amend the following sections: | ||
Section 1 |
July 1, 2014 |
38a-1 |
Sec. 2 |
July 1, 2014 |
New section |
Sec. 3 |
July 1, 2014 |
38a-740 |
Sec. 4 |
July 1, 2014 |
38a-741 |
Sec. 5 |
July 1, 2014 |
38a-742 |
Sec. 6 |
July 1, 2014 |
38a-743 |
Sec. 7 |
July 1, 2014 |
38a-794(a) |
Sec. 8 |
July 1, 2014 |
38a-14(e) |
Sec. 9 |
July 1, 2014 |
38a-53(e) |
Sec. 10 |
July 1, 2014 |
38a-85(e)(3)(A) |
Sec. 11 |
July 1, 2014 |
38a-136(b) |
Sec. 12 |
July 1, 2014 |
38a-188(a) |
Statement of Purpose:
To permit a domestic insurer to write surplus lines insurance policies in this state and to expand the Insurance Department's financial regulatory oversight authority over insurance companies.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]