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Souse Bill No. 5363

PUBLIC ACT NO. 96-193

AN ACT CONCERNING PRODUCER LICENSING AND TITLE INSURANCE.

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

Section 1. Section 38a-42 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Except as provided in subsection (b), no insurance company shall enter into any contract of remuneration with any life or accident and health insurance [agent, or any life or accident and health insurance broker] PRODUCER, where the initial or any renewal commission is contingent upon (1) such contract being in effect more than two years or (2) any continuing premium or other volume requirement contained in such contract.

(b) Any insurance company may enter into a contract of remuneration of the kind prohibited in subsection (a) with any such insurance [agent or any such insurance broker] PRODUCER if the company shall have offered to such [agent or broker] PRODUCER a contract which contains no such contingent provisions as described in subdivisions (1) and (2) of subsection (a) and which provides actuarially equivalent remuneration to that contract containing such contingent provisions.

Sec. 2. Subsection (a) of section 38a-90f of the general statutes is repealed and the following is substituted in lieu thereof:

(a) If the commissioner finds after reasonable notice and hearing that the managing general agent or any other person has not materially complied with any provision of sections 38a-90 to 38a-90h, inclusive, or any regulation or order promulgated thereunder, the commissioner may order: (1) For each separate violation, a penalty in an amount of ten thousand dollars and (2) revocation or suspension of the [agent's] PERSON'S INSURANCE license.

Sec. 3. Subdivision (7) of section 38a-91 of the general statutes is repealed and the following is substituted in lieu thereof:

(7) "Producer" [means an insurance broker or brokers or any other person, firm, association or corporation, when, for any compensation, commission or other thing of value, such person, firm, association or corporation acts or aids in any manner in soliciting, negotiating or procuring the making of any insurance contract on behalf of an insured other than the person, firm, association or corporation] SHALL HAVE THE SAME MEANING AS "INSURANCE PRODUCER" AS DEFINED IN SECTION 38a-702, AS AMENDED.

Sec. 4. Subdivision (2) of section 38a-161 of the general statutes is repealed and the following is substituted in lieu thereof:

(2) "Insurance premium finance agreement" means an agreement by which an insured or prospective insured promises to pay to an insurance premium finance company the amount advanced or to be advanced under the agreement to an insurer or to an insurance [agent or broker] PRODUCER in payment of premiums on an insurance contract together with a service charge as authorized and limited by sections 38a-160 to 38a-170, inclusive AS AMENDED.

Sec. 5. Section 38a-256 of the general statutes is repealed and the following is substituted in lieu thereof:

No risk retention group [, agent or broker] OR PRODUCER shall solicit or sell insurance if the risk retention group is in a hazardous financial condition or is financially impaired.

Sec. 6. Section 38a-257 of the general statutes is repealed and the following is substituted in lieu thereof:

No risk retention group, purchasing group [, agent or broker] OR PRODUCER shall solicit or sell insurance to any person who is not eligible for membership in such group.

Sec. 7. Section 38a-260 of the general statutes, as amended by section 4 of public act 95-168, is repealed and the following is substituted in lieu thereof:

Any purchasing group meeting the criteria established under the provisions of the Liability Risk Retention Act of 1986 shall be exempt from any law of this state relating to the creation of groups for the purchase of insurance, prohibition of group purchasing or any law that would discriminate against a purchasing group or its members. Any insurer shall be exempt from any law of this state which prohibits providing, or offering to provide, to a purchasing group or its members advantages based on their loss and expense experience not afforded to other persons with respect to rates, policy forms, coverage or other matters. Any purchasing group shall be subject to all other applicable laws of this state. Any purchasing group may not purchase insurance from a risk retention group that is not chartered in a state or from an insurer not admitted in this state, unless the purchase is effected through a licensed [agent or broker] PRODUCER acting pursuant to the surplus lines, laws and regulations of this state. A purchasing group which obtains liability insurance from a risk retention group or an insurer not admitted in this state shall inform each of the members of the group which have a risk resident or located in this state that the risk is not protected by the Connecticut Insurance Guaranty Association, and that the risk retention group or insurer may not be subject to all insurance laws and regulations of this state. No purchasing group may purchase insurance providing for a deductible or self-insured retention applicable to the group as a whole; however, such coverage may provide for a deductible or self-insured retention applicable to individual members.

Sec. 8. Section 38a-263 of the general statutes is repealed and the following is substituted in lieu thereof:

Any person acting, or offering to act, as [an agent or broker] A PRODUCER for a risk retention group or purchasing group which solicits members, sells insurance coverage, purchases coverage for its members located within the state or otherwise does business in this state shall, before commencing any such activity, obtain a license from the Insurance Commissioner in such form as the commissioner prescribes in accordance with the provisions of section 38a-769.

Sec. 9. Subsection (a) of section 38a-326 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Whenever a policy for commercial automobile insurance or general liability insurance is nonrenewed or cancelled for whatever reason by the insured or by the insurer, the insurer shall furnish the insured with written reports for the insured portion of the period beginning four years prior to the nonrenewal or cancellation date and ending six months prior to that date. Such reports shall include the following: (1) Each policy number; (2) each period of coverage provided; (3) evidence that the reports are furnished by the insurer; (4) written premiums; (5) pricing information as specified by regulations adopted pursuant to subsection (c) of this section and modifications used if requested by the insured; and (6) a detailed listing of incurred losses. If the policy is nonrenewed or cancelled by the insurer for reasons other than those permitting cancellation upon ten days' notice under section 38a-324, such reports shall be provided to the insured first named in the policy or the insured's authorized [agent or broker] PRODUCER, not later than the date of notice of nonrenewal or cancellation. If the policy is nonrenewed or cancelled by the insured or cancelled by the insurer for any reason for which ten days' notice of cancellation is required under section 38a-324, such reports shall be provided within sixty days of receipt of the written request from the insured first named in the policy or the insured's authorized [agent or broker] PRODUCER. If subsequent reports updating the required information are needed to properly rate or to obtain insurance coverage with a different insurer, such reports shall be furnished by the prior insurer within sixty days of receipt of a written request from the insured first named in the policy or the insured's authorized [agent or broker] PRODUCER.

Sec. 10. Subsection (a) of section 38a-329 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) After consultation with insurance carriers authorized to issue property and casualty policies in this state, the Insurance Commissioner shall establish and approve a reasonable plan or plans to provide insurance coverage for applicants for such property and casualty policies who are in good faith entitled to but unable to procure such policies through ordinary methods. Any such plan concerning automobile insurance shall (1) offer for all participants, including owners and lessees of commercial vehicles registered with the Department of Motor Vehicles as provided in section 14-12, AS AMENDED the minimal liability coverage mandated by law and physical damage coverage, fire, theft and collision, with or without deductibles, (2) include a careful driver credit rule providing for reduced rates, approved by the commissioner prior to their implementation, for eligible drivers insured through the plan, (3) provide for a governing committee composed of ten voting members, selected in accordance with the plan of operation, to operate such plan, provided eight members shall be representatives of insurance carriers participating in the plan and one member each shall be representatives of the Professional Insurance Agents of Connecticut and the Independent Insurance Agents Association of Connecticut or their successor organizations, (4) provide for a service fee of thirty-five dollars which [an agent or broker] A PRODUCER may charge on each initial policy with an insured, (5) provide that the minimum down payment for such policies shall be twenty-five per cent of the annual premium and that the minimum earned premium shall be equal to the down payment, and that the policy shall not be terminated until the later of (A) the date of completion of the period covered by the premium down payment or (B) the date of cancellation as determined pursuant to section 38a-343, (6) provide for a limited assignment distribution system permitting insurers to enter into agreements with other mutually agreeable insurers to transfer their applicants under such plan to such insurers, and (7) offer to all participants liability coverage for private passenger nonfleet motor vehicles of (A) up to two hundred fifty thousand dollars per person and five hundred thousand dollars per accident for bodily injury or death and one hundred thousand dollars per accident for property damage, or (B) in lieu thereof a single limit of liability of five hundred thousand dollars against claims for bodily injury or death and property damage. When any such plan has been approved all such insurance carriers shall subscribe thereto and participate therein. Any applicant for any such policy, any person insured under any such plan and any insurance carrier affected may appeal to the Insurance Commissioner from any ruling or decision of the manager or committee designated to operate such plan. The provisions of section 38a-19 shall be applicable to any such applicant, person or insurance carrier aggrieved by any adverse order or decision rendered by the Insurance Commissioner upon such appeal.

Sec. 11. Subdivision (4) of section 38a-341 of the general statutes is repealed and the following is substituted in lieu thereof:

(4) "Declination" means: (A) With respect to [an agent or a broker] A PRODUCER, denial in whole or in part of an applicant's written request for coverage; failure to submit within a reasonable period of time a completed, written application for coverage to a specific insurer which the [agent] PRODUCER represents or with which the [broker] PRODUCER has an account and which is requested in writing by the applicant; placement of a risk with a residual market, an unauthorized insurer, or an insurer which specializes in substandard risks; or refusal to provide, upon written request, an application for coverage; (B) with respect to an insurer which conducts its business through independent licensed insurance [agents or brokers] PRODUCERS, refusal to issue a policy after receipt of a completed, written application for coverage from [an agent] A PRODUCER who represents it or from a [broker] PRODUCER with whom it has an account; or (C) with respect to an insurer other than one specified in subparagraph (B), refusal to issue a policy after receipt of a completed, written application, or refusal to provide, upon written request, an application for coverage.

Sec. 12. Section 38a-435 of the general statutes is repealed and the following is substituted in lieu thereof:

The Insurance Commissioner may make regulations governing the sale or offer of sale of life insurance products, including annuities, when such sale or offer involves the replacement of existing policies or contracts or the borrowing on or lapsing of such existing policies or contracts. Such regulations may prescribe (a) the form in which such offer or proposal should be made; (b) the form of notice to the insurance companies involved; (c) the questions to be contained in application forms for life insurance products pertaining to existing insurance, and (d) the form of notice to the purchaser. The commissioner may suspend or revoke the license of any insurance [agent or broker] PRODUCER violating any such regulation.

Sec. 13. Section 38a-446 of the general statutes is repealed and the following is substituted in lieu thereof:

No life insurance company doing business in this state shall make or permit any distinction or discrimination in favor of individuals between insurants of the same class and expectation of life in the amount or payment of premiums or rates charged for policies of life or endowment insurance, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contracts it makes; nor shall any such company or any [agent, subagent, broker] PRODUCER or other person make any contract of insurance or agreement as to such contract other than is plainly expressed in the policy issued thereon.

Sec. 14. Section 38a-567 of the general statutes is repealed and the following is substituted in lieu thereof:

Health insurance plans and insurance arrangements covering small employers and insurers [, agents and brokers] AND PRODUCERS marketing such plans and arrangements shall be subject to the following provisions:

(1) (A) Any such plan or arrangement shall be renewable with respect to all eligible employees or dependents at the option of the small employer, policyholder or contractholder, as the case may be, except: (i) For nonpayment of the required premiums by the small employer, policyholder or contractholder; (ii) for fraud or misrepresentation of the small employer, policyholder or contractholder or, with respect to coverage of individual insured, the insureds or their representatives; (iii) for noncompliance with plan or arrangement provisions; (iv) when the number of insureds covered under the plan or arrangement is less than the number of insureds or percentage of insureds required by participation requirements under the plan or arrangement; or (v) when the small employer, policyholder or contractholder is no longer actively engaged in the business in which it was engaged on the effective date of the plan or arrangement. (B) Renewability of coverage may be effected by either continuing in effect a plan or arrangement covering a small employer or by substituting upon renewal for the prior plan or arrangement the plan or arrangement then offered by the carrier that most closely corresponds to the prior plan or arrangement and is available to other small employers. Such substitution shall only be made under conditions approved by the commissioner. A carrier may substitute a plan or arrangement as stated above only if the carrier effects the same substitution upon renewal for all small employers previously covered under the particular plan or arrangement, unless otherwise approved by the commissioner. The substitute plan or arrangement shall be subject to the rating restrictions specified in this section on the same basis as if no substitution had occurred, except for an adjustment based on coverage differences. (C) Notwithstanding the provisions of this subdivision, any such plan or arrangement, or any coverage provided under such plan or arrangement may be rescinded for fraud, material misrepresentation or concealment by an applicant, employee, dependent or small employer. (D) Any individual who was not a late enrollee at the time of his or her enrolment and whose coverage is subsequently rescinded shall be allowed to reenroll as of a current date in such plan or arrangement subject to any preexisting condition or other provisions applicable to new enrollees without previous coverage. On and after the effective date of such individual's reenrolment, the small employer carrier may modify the premium rates charged to the small employer for the balance of the current rating period and for future rating periods, to the level determined by the carrier as applicable under the carrier's established rating practices had full, accurate and timely underwriting information been supplied when such individual initially enrolled in the plan. The increase in premium rates allowed by this provision for the balance of the current rating period shall not exceed twenty-five per cent of the small employer's current premium rates. Any such increase for the balance of said current rating period shall not be subject to the rate limitation specified in subdivision (6) of this section. The rate limitation specified in this section shall otherwise be fully applicable for the current and future rating periods. The modification of premium rates allowed by this subdivision shall cease to be permitted for all plans and arrangements on the first rating period commencing on or after July 1, 1995. (2) Except in the case of a late enrollee who has failed to provide evidence of insurability satisfactory to the insurer, the plan or arrangement may not exclude any eligible employee or dependent who would otherwise be covered under such plan or arrangement on the basis of an actual or expected health condition of such person. No plan or arrangement may exclude an eligible employee or eligible dependent who, on the day prior to the initial effective date of the plan or arrangement, was covered under the small employer's prior health insurance plan or arrangement pursuant to workers' compensation, continuation of benefits pursuant to federal extension requirements established by the Consolidated Omnibus Budget Reconciliation Act of 1985 (P.L. 99-2721, as amended) or other applicable laws. The employee or dependent must request coverage under the new plan or arrangement on a timely basis and such coverage shall terminate in accordance with the provisions of the applicable law. (3) (A) For rating periods commencing on or after October 1, 1993, and prior to July 1, 1994, the premium rates charged or offered for a rating period for all plans and arrangements may not exceed one hundred thirty-five per cent of the base premium rate for all plans or arrangements. (B) For rating periods commencing on or after July 1, 1994, and prior to July 1, 1995, the premium rates charged or offered for a rating period for all plans or arrangements may not exceed one hundred twenty per cent of the base premium rate for such rating period. The provisions of this subdivision shall not apply to any small employer who employs more than twenty-five eligible employees. (4) For rating periods commencing on or after October 1, 1993, and prior to July 1, 1995, the percentage increase in the premium rate charged to a small employer, who employs not more than twenty-five eligible employees, for a new rating period may not exceed the sum of: (A) The percentage change in the base premium rate measured from the first day of the prior rating period to the first day of the new rating period; (B) An adjustment of the small employer's premium rates for the prior rating period, and adjusted pro rata for rating periods of less than one year, due to the claim experience, health status or duration of coverage of the employees or dependents of the small employer, such adjustment (i) not to exceed ten per cent annually for the rating periods commencing on or after October 1, 1993, and prior to July 1, 1994, and (ii) not to exceed five per cent annually for the rating periods commencing on or after July 1, 1994, and prior to July 1, 1995; and (C) Any adjustments due to change in coverage or change in the case characteristics of the small employer, as determined from the small employer carrier's applicable rate manual. (5) (A) With respect to plans or arrangements issued on or after July 1, 1995, the premium rates charged or offered to small employers shall be established on the basis of a community rate, adjusted to reflect one or more of the following classifications: (i) Age, provided age brackets of less than five years shall not be utilized; (ii) Gender; (iii) Geographic area, provided an area smaller than a county shall not be utilized; (iv) Industry, provided the rate factor associated with any industry classification shall not vary from the arithmetic average of the highest and lowest rate factors associated with all industry classifications by greater than fifteen per cent of such average, and provided further, the rate factors associated with any industry shall not be increased by more than five per cent per year; (v) Group size, provided the highest rate factor associated with group size shall not vary from the lowest rate factor associated with group size by a ratio of greater than 1.25 to 1.0; and (vi) Family composition, provided the small employer carrier shall utilize only one or more of the following billing classifications: (a) Employee; (b) employee plus family; (c) employee and spouse; (d) employee and child; (e) employee plus one dependent; and (f) employee plus two or more dependents. (B) The small employer carrier shall quote premium rates to small employers after receipt of all demographic rating classifications of the small employer group. No small employer carrier may inquire regarding health status or claims experience of the small employer or its employees or dependents prior to the quoting of a premium rate. (C) The provisions of subparagraphs (A) and (B) of this subdivision shall apply to plans or arrangements issued on or after July 1, 1995. The provisions of subparagraphs (A) and (B) of this subdivision shall apply to plans or arrangements issued prior to July 1, 1995, as of the date of the first rating period commencing on or after that date, but no later than July 1, 1996. (6) For any small employer plan or arrangement on which the premium rates for employee and dependent coverage or both, vary among employees, such variations shall be based solely on age and other demographic factors permitted under subparagraph (A) of subdivision (5) of this section and such variations may not be based on health status, claim experience, or duration of coverage of specific enrollees. Except as otherwise provided in subdivision (1) of this section, any adjustment in premium rates charged for a small employer plan or arrangement to reflect changes in case characteristics prior to the end of a rating period shall not include any adjustment to reflect the health status, medical history or medical underwriting classification of any new enrollee for whom coverage begins during the rating period. (7) For rating periods commencing prior to July 1, 1995, in any case where a small employer carrier utilized industry classification as a case characteristic in establishing premium rates, the rate factor associated with any industry classification shall not vary from the arithmetical average of the highest and lowest rate factors associated with all industry classifications by greater than fifteen per cent of such average. (8) Differences in base premium rates charged for health benefit plans by a small employer carrier shall be reasonable and reflect objective differences in plan design, not including differences due to the nature of the groups assumed to select particular health benefit plans. (9) For rating periods commencing prior to July 1, 1995, in any case where an insurer issues or offers a policy or contract under which premium rates for a specific small employer are established or adjusted in part based upon the actual or expected variation in claim costs or actual or expected variation in health conditions of the employees or dependents of such small employer, the insurer shall make reasonable disclosure of such rating practices in solicitation and sales materials utilized with respect to such policy or contract. (10) If a small employer carrier denies coverage to a small employer, the small employer carrier shall promptly offer the small employer the opportunity to purchase a special health care plan or a small employer health care plan, as appropriate. If a small employer carrier or any [licensed agent, or broker] PRODUCER representing that carrier fails, for any reason, to offer such coverage as requested by a small employer, that small employer carrier shall promptly offer the small employer an opportunity to purchase a special health care plan or a small employer health care plan, as appropriate. (11) No small employer carrier [, agent or broker] OR PRODUCER shall, directly or indirectly, engage in the following activities: (A) Encouraging or directing small employers to refrain from filing an application for coverage with the small employer carrier because of the health status, claims experience, industry, occupation or geographic location of the small employer, except the provisions of this subparagraph shall not apply to information provided by a small employer carrier [, agent or broker] OR PRODUCER to a small employer regarding the carrier's established geographic service area or a restricted network provision of a small employer carrier; or (B) Encouraging or directing small employers to seek coverage from another carrier because of the health status, claims experience, industry, occupation or geographic location of the small employer. (12) No small employer carrier shall, directly or indirectly, enter into any contract, agreement or arrangement with [an agent or broker] A PRODUCER that provides for or results in the compensation paid to [an agent or broker] A PRODUCER for the sale of a health benefit plan to be varied because of the health status, claims experience, industry, occupation or geographic area of the small employer. A small employer carrier shall provide reasonable compensation, as provided under the plan of operation of the program, to [an agent or broker] A PRODUCER, if any, for the sale of a special or a small employer health care plan. No small employer carrier shall terminate, fail to renew or limit its contract or agreement of representation with [an agent or broker] A PRODUCER for any reason related to the health status, claims experience, occupation, or geographic location of the small employers placed by the [agent or broker] PRODUCER with the small employer carrier. (13) No small employer carrier or [agent or broker] PRODUCER shall induce or otherwise encourage a small employer to separate or otherwise exclude an employee from health coverage or benefits provided in connection with the employee's employment. (14) Denial by a small employer carrier of an application for coverage from a small employer shall be in writing and shall state the reasons for the denial. (15) No small employer carrier or [agent or broker] PRODUCER shall disclose (A) to a small employer the fact that any or all of the eligible employees of such small employer have been or will be reinsured with the pool, or (B) to any eligible employee or dependent the fact that he has been or will be reinsured with the pool. (16) If a small employer carrier enters into a contract, agreement or other arrangement with another party to provide administrative, marketing or other services related to the offering of health benefit plans to small employers in this state, the other party shall be subject to the provisions of this section. (17) The commissioner may adopt regulations in accordance with the provisions of chapter 54 setting forth additional standards to provide for the fair marketing and broad availability of health benefit plans to small employers. (18) Each small employer carrier shall maintain at its principle place of business a complete and detailed description of its rating practices and renewal underwriting practices, including information and documentation that demonstrates that its rating methods and practices are based upon commonly accepted actuarial assumptions and are in accordance with sound actuarial principles. Each small employer carrier shall file with the commissioner annually, on or before March fifteenth, an actuarial certification certifying that the carrier is in compliance with this part and that the rating methods have been derived using recognized actuarial principles consistent with the provisions of sections 38a-564 to 38a-573, inclusive AS AMENDED. Such certification shall be in a form and manner and shall contain such information, as determined by the commissioner. A copy of the certification shall be retained by the small employer carrier at its principle place of business. Any information and documentation described in this subdivision but not subject to the filing requirement shall be made available to the commissioner upon his request. Except in cases of violations of sections 38a-564 to 38a-573, inclusive, AS AMENDED the information shall be considered proprietary and trade secret information and shall not be subject to disclosure by the commissioner to persons outside of the department except as agreed to by the small employer carrier or as ordered by a court of competent jurisdiction. (19) The commissioner may suspend all or any part of this section relating to the premium rates applicable to one or more small employers for one or more rating periods upon a filing by the small employer carrier and a finding by the commissioner that either the suspension is reasonable in light of the financial condition of the carrier or that the suspension would enhance the efficiency and fairness of the marketplace for small employer health insurance. (20) For rating periods commencing prior to July 1, 1995, a small employer carrier shall quote premium rates to any small employer within thirty days after receipt by the carrier of such employer's completed application. (21) Any violation of subdivisions (10) to (16), inclusive, and any regulations established under subdivision (17) of this section shall be an unfair and prohibited practice under sections 38a-815 to 38a-831, inclusive AS AMENDED BY THIS ACT.

Sec. 15. Section 38a-709 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Any insurance company authorized to transact fire or casualty business in this state shall, upon termination of [an agent's] A PRODUCER'S appointment by said company, permit the renewal of all contracts of insurance written by such [agent] PRODUCER for a period of eighteen months from the date of such termination, as determined by the individual underwriting requirements of said company, provided, in the event of any contract not meeting such underwriting requirements, the company shall give the [agent] PRODUCER sixty days' notice of its intention not to renew said contract, and provided further that such period of time may be reduced, in whole or in part, as the commissioner may deem necessary for the purpose of adequately protecting the insured or securing the solvency of such company.

(b) No insurance agency contract entered into in this state, by a licensed insurer with an insurance [agent] PRODUCER licensed under section 38a-769, shall be terminated by the licensed insurer APPOINTING SUCH PRODUCER unless the licensed insurer upon terminating such contract shall give not less than ninety days' written notice in advance to the other party unless the contract shall be terminated by the licensed insurer for failure of the [licensed insurance agent] PRODUCER, after receiving a written demand, to pay over moneys due to such insurer, provided during said ninety-day period after any such notice, the [licensed insurance agent] PRODUCER shall not write or bind any new business on behalf of the licensed insurer without the specific written approval by such insurer of such business.

(c) Any insurance company renewing contracts of insurance in accordance with this section shall pay commissions for such renewals to the terminated [agent] PRODUCER in the same amount as had been paid to him on similar policies during the twelve months immediately preceding the notice of termination.

(d) The provisions of this section shall not apply to any contract with [an agent] A PRODUCER for the sale of life or accident and health insurance.

Sec. 16. Section 38a-710 of the general statutes is repealed and the following is substituted in lieu thereof:

No company shall cancel or amend the contract of an independent insurance [agent] PRODUCER for property or casualty insurance, solely because of adverse underwriting experience for the two years preceding the date of such cancellation or amendment on such lines of insurance for which the company requires submission of an application for approval or for which the company accepts without approval policies issued by its [licensed agents] APPOINTED PRODUCERS, if the information on any such application or on the company copy of any policy issued by [a licensed agent] AN APPOINTED PRODUCER is substantially complete and not intentionally or substantially incorrect or misleading. In calculating the average loss ratio for purposes of determining adverse underwriting experience for such preceding two years, reserves against claims pending shall not be included.

Sec. 17. Section 38a-807 of the general statutes is repealed and the following is substituted in lieu thereof:

An insurer [, agent or broker] OR PRODUCER issuing a policy under a mass marketing plan shall, prior to the issuance of such policy, make a full and fair disclosure to the prospective insured of all the conditions and other terms of the policy to be issued, including but not limited to such items as rates, type and extent of coverage, benefits, duration of coverage and services to the insured.

Sec. 18. Section 38a-815 of the general statutes, as amended by section 149 of public act 95-79, is repealed and the following is substituted in lieu thereof:

No person shall engage in this state in any trade practice which is defined in section 38a-816 AS AMENDED BY SECTION 19 OF THIS ACT as, or determined pursuant to sections 38a-817 AS AMENDED and 38a-818 to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance, nor shall any domestic insurance company engage outside of this state in any act or practice defined in subsections (1) to (12), inclusive, of section 38a-816 AS AMENDED BY SECTION 19 OF THIS ACT. The commissioner shall have power to examine the affairs of every person engaged in the business of insurance in this state in order to determine whether such person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice prohibited by sections 38a-815 to 38a-819, inclusive AS AMENDED BY THIS ACT. When used in said sections, "person" means any individual, corporation, limited liability company, association, partnership, reciprocal exchange, interinsurer, Lloyd's insurer, fraternal benefit society and any other legal entity engaged in the business of insurance, including [agents, brokers] PRODUCERS and adjusters.

Sec. 19. Subdivision (8) of section 38a-816 of the general statutes, as amended by section 3 of public act 95-193, is repealed and the following is substituted in lieu thereof:

(8) Misrepresentation in insurance applications. Making false or fraudulent statements or representations on or relative to an application for an insurance policy, for the purpose of obtaining a fee, commission, money or other benefit from any insurers, [agent, broker] PRODUCER or individual.

Sec. 20. Subdivision (11) of section 38a-816 of the general statutes, as amended by section 3 of public act 95-193 and section 150 of public act 95-79, is repealed and the following is substituted in lieu thereof:

(11) Favored agent or insurer: Coercion of debtors. (a) No person may (i) require, as a condition precedent to the lending of money or extension of credit, or any renewal thereof, that the person to whom such money or credit is extended or whose obligation the creditor is to acquire or finance, negotiate any policy or contract of insurance through a particular insurer or group of insurers or [agent or broker] PRODUCER or group of [agents or brokers] PRODUCERS; (ii) unreasonably disapprove the insurance policy provided by a borrower for the protection of the property securing the credit or lien; or (iii) require directly or indirectly that any borrower, mortgagor, purchaser, insurer, [broker or agent] PRODUCER pay a separate charge, in connection with the handling of any insurance policy required as security for a loan on real estate or pay a separate charge to substitute the insurance policy of one insurer for that of another; (iv) use or disclose information resulting from a requirement that a borrower, mortgagor or purchaser furnish insurance of any kind on real property being conveyed or used as collateral security to a loan, when such information is to the advantage of the mortgagee, vendor or lender, or is to the detriment of the borrower, mortgagor, purchaser, insurer or the [agent or broker] PRODUCER complying with such a requirement. (b) (i) Subsection (a) (iii) does not include the interest which may be charged on premium loans or premium advancements in accordance with the security instrument. (ii) For purposes of subsection (a) (ii), such disapproval shall be deemed unreasonable if it is not based solely on reasonable standards uniformly applied, relating to the extent of coverage required and the financial soundness and the services of an insurer. Such standards shall not discriminate against any particular type of insurer, nor shall such standards call for the disapproval of an insurance policy because such policy contains coverage in addition to that required. (iii) The commissioner may investigate the affairs of any person to whom this subsection applies to determine whether such person has violated this subsection. If a violation of this subsection is found, the person in violation shall be subject to the same procedures and penalties as are applicable to other provisions of section 38a-815, AS AMENDED BY SECTION 18 OF THIS ACT subsections (b) and (e) of section 38a-817 AS AMENDED and this section. (iv) For purposes of this section, "person" includes any individual, corporation, limited liability company, association, partnership or other legal entity.

Sec. 21. Section 38a-825 of the general statutes is repealed and the following is substituted in lieu thereof:

No insurance company doing business in this state, or attorney, [agent, subagent or broker] PRODUCER or any other person shall pay or allow, or offer to pay or allow, as inducement to insurance, any rebate of premium payable on the policy, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement not specified in the policy of insurance. No person shall receive or accept from any company, or attorney, [agent, subagent, broker] PRODUCER or any other person, as inducement to insurance, any such rebate of premium payable on the policy, or any special favor or advantage in the dividends or other benefit to accrue thereon, or any valuable consideration or inducement not specified in the policy of insurance. No person shall be excused from testifying or from producing any books, papers, contracts, agreements or documents, at the trial of any other person charged with the violation of any provision of this section or of section 38a-446, AS AMENDED BY SECTION 13 OF THIS ACT on the ground that such testimony or evidence may tend to incriminate him, but no person shall be prosecuted for any act concerning which he is compelled to so testify or produce documentary or other evidence, except for perjury committed in so testifying.

Sec. 22. Section 38a-826 of the general statutes is repealed and the following is substituted in lieu thereof:

No insurance company, [agent or broker] PRODUCER or any other person, copartnership or corporation shall make or issue, or cause to be made or issued, any written or oral statements, misrepresenting or making incomplete comparisons regarding the terms or conditions or benefits contained in any policy or contract of insurance, legally issued by any insurance company licensed to transact business in this state, for the purpose of inducing or attempting to induce the owner of such policy or contract of insurance to forfeit or surrender such policy or contract of insurance or allow it to lapse for the purpose of replacing such policy or contract of insurance with another. Any person who violates any provision of this section shall be fined not more than five hundred dollars or imprisoned not more than thirty days or both.

Sec. 23. Section 38a-831 of the general statutes is repealed and the following is substituted in lieu thereof:

No authorized insurer and no representative of such insurer shall employ or avail itself of the facilities of any person, firm or corporation engaged in the credit card business to solicit or negotiate any contracts of insurance from credit cardholders who reside in this state, unless such authorized insurer is licensed to issue policies of life or accident and health insurance and has a [licensed insurance agent] PRODUCER as [agent] PRODUCER of record in this state for such purposes, and no such person, firm or corporation shall, on behalf of such insurer, utilize his or its credit card facility or organization to solicit or negotiate such contracts of insurance from credit cardholders who reside in this state. The solicitation and negotiation prohibited by this section shall include transmittal of applications for insurance, premium rate schedules, circulars, letters or sales literature pertaining to such insurance to credit cardholders or prospective credit cardholders who reside in this state. "Credit card business", as used in this section, means the business of extending credit to persons who are holders of credit cards issued by the credit card facility or organization entitling the holder to pay the charges for purchases or other transactions through the credit card facility or organization. The provisions of this section shall not be construed to prevent any person from financing insurance premiums through the facilities of any credit card organization including the credit card facilities of any national or state bank or other properly organized lending institution, or the solicitation or negotiation of any insurance contract (1) protecting the cardholder against liability or loss arising from the theft or loss of his credit card, (2) insuring the payment of all or any part of present or future debts owed to the credit card organization in case of the death, disability or unemployment of the cardholder, (3) insuring any collateral for such debts against casualty or other loss or damage or (4) otherwise insuring the debtor-creditor relationship between the cardholder and the credit card organization.

Sec. 24. Section 38a-880 of the general statutes is repealed and the following is substituted in lieu thereof:

The Insurance Department shall establish and maintain a Brokered Transactions Guaranty Fund from which any resident aggrieved by an action of an insurance [agent acting as an insurance broker or an insurance broker] PRODUCER duly licensed in this state under section 38a-769, or an unlicensed person acting as an [agent or broker] PRODUCER engaged in the business of insurance, concerning the business of insurance, by reason of the embezzlement of money or property, or the unlawful obtainment of money or property from any person by false pretenses, artifice, trickery or forgery, or by reason of any fraud, misrepresentation or deceit, by or on the part of any such [agent or broker] PRODUCER or unlicensed person acting as [an agent or broker] A PRODUCER engaged in the business of insurance, excluding the failure in performance of contractual obligations due to the impairment of an insurer, may recover, upon approval by the department of an application brought pursuant to section 38a-884, AS AMENDED BY SECTION 28 OF THIS ACTcompensation in an amount not exceeding in the aggregate the sum of ten thousand dollars.

Sec. 25. Section 38a-881 of the general statutes is repealed and the following is substituted in lieu thereof:

Any individual who is licensed as an insurance broker or an insurance agent on October 1, 1989, shall pay a fee of ten dollars which shall be credited to the Brokered Transactions Guaranty Fund. Any individual who receives an insurance broker's license or an insurance agent's license for the first time PRIOR TO THE EFFECTIVE DATE OF THIS ACT OR AN INSURANCE PRODUCER'S LICENSE FOR THE FIRST TIME ON OR AFTER THE EFFECTIVE DATE OF THIS ACT shall pay a fee of ten dollars, in addition to all other fees payable, to be credited to the Brokered Transactions Guaranty Fund.

Sec. 26. Subsection (b) of section 38a-882 of the general statutes is repealed and the following is substituted in lieu thereof:

(b) If, at any time, the amount deposited in the Brokered Transactions Guaranty Fund is under one hundred thousand dollars, the department, in its discretion, may assess all persons licensed as insurance [agents or insurance brokers] PRODUCERS a fee not to exceed ten dollars which shall be credited to such guaranty fund.

Sec. 27. Section 38a-883 of the general statutes is repealed and the following is substituted in lieu thereof:

No application to recover compensation under sections 38a-880 to 38a-889, inclusive, AS AMENDED BY THIS ACT which might subsequently result in an order for collection from such guaranty fund shall be brought later than two years from the action of an insurance [agent acting as an insurance broker or an insurance broker] PRODUCER duly licensed in this state under section 38a-769, or an unlicensed person acting as [an agent or broker] A PRODUCER engaged in the business of insurance, by reason of the embezzlement of money or property, or the unlawful obtainment of money or property from any person by false pretenses, artifice, trickery or forgery, or by reason of any fraud, misrepresentation or deceit by or on the part of any such [agent or broker] PRODUCER or unlicensed person acting as [an agent or broker] A PRODUCER engaged in the business of insurance, excluding the failure in performance of contractual obligations due to the impairment of an insurer.

Sec. 28. Section 38a-884 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Any person aggrieved under section 38a-880 AS AMENDED BY SECTION 24 OF THIS ACT may apply to the Insurance Department for an order directing payment out of such guaranty fund subject to the limitations stated in said section and the limitations specified in this section.

(b) The department shall proceed upon such application in a summary manner, after giving reasonable notice to such [agent or broker] PRODUCER pursuant to section 38a-774, AS AMENDED or to an unlicensed person acting as [an agent or broker] A PRODUCER engaged in the business of insurance, alleged to have caused the aggrieved person's loss or damages and, upon the hearing thereof, the aggrieved person shall be required to show: (1) He is not a spouse of the debtor, or the personal representative of such spouse; (2) he is aggrieved by the action of such insurance [agent acting as an insurance broker or such insurance broker] PRODUCER duly licensed in this state under section 38a-769, or that he is aggrieved by the action of such unlicensed person acting as [an agent or broker] A PRODUCER engaged in the business of insurance, by reason of the embezzlement of money or property, or the unlawful obtainment of money or property by false pretenses, artifice, trickery or forgery, or by reason of any fraud, misrepresentation or deceit; and (3) the aggrieved person's loss or damages are equivalent to either the amount of unearned premium or the expense of obtaining duplicate coverage, or the amount of unpaid claims in conformance with the aggrieved person's insurance contract applying any deductibles, copayment requirements or exclusions.

(c) The commissioner shall make an order requiring payment from the Brokered Transactions Guaranty Fund of whatever sum he shall find to be payable upon the claim, pursuant to the provisions of and in accordance with the limitations contained in this section and section 38a-880, AS AMENDED BY SECTION 24 OF THIS ACT if the commissioner is satisfied, upon the hearing, of the truth of all matters required to be shown by the aggrieved person by subsection (b) of this section.

(d) The payment from such fund of any amount in settlement of a claim against a licensed insurance [broker, insurance agent] PRODUCER or an unlicensed person acting as [an agent or broker] A PRODUCER engaged in the business of insurance pursuant to an order under subsection (c), shall constitute cause for the suspension or revocation of any license issued by the commissioner or for the imposition of a fine pursuant to section 38a-774 AS AMENDED and for an order of restitution to the fund in the amount it has paid, and such [broker, agent] PRODUCER or unlicensed person shall not be eligible to apply for a license until he has repaid in full, plus interest at a rate to be determined by the department and which shall reflect current market rates, the amount paid from such guaranty fund on his account. A discharge in bankruptcy shall not relieve a person from the penalties and disabilities provided in this subsection.

(e) If, at any time, the money deposited in such guaranty fund is insufficient to satisfy any duly authorized claim or portion thereof, the department shall, when sufficient money has been deposited in such guaranty fund, satisfy such unpaid claims or portions thereof, in the order that such claims or portions thereof were originally filed, plus accumulated interest at the rate of four per cent a year.

Sec. 29. Section 38a-887 of the general statutes is repealed and the following is substituted in lieu thereof:

When the commissioner has caused to be paid from such guaranty fund any sum to the aggrieved person, the department shall be subrogated to all of the rights of the aggrieved person up to the amount paid, and the aggrieved person shall assign all of his right, title and interest in the claim. By accepting payment from the guaranty fund the aggrieved person shall agree to cooperate with the department in any action it takes against the licensed insurance [broker, insurance agent] PRODUCER or unlicensed person acting as [an agent or broker] A PRODUCER engaged in the business of insurance. Any amount and interest recovered by the department shall be deposited to such guaranty fund.

Sec. 30. Subsection (c) of section 38a-906 of the general statutes, as amended by sections 4 and 5 of public act 95-220, is repealed and the following is substituted in lieu thereof:

(c) In addition to other grounds for jurisdiction provided by the law of this state, a court of this state having jurisdiction of the subject matter has jurisdiction over a person served pursuant to the provisions of the general statutes pertaining to an action brought by the receiver of a domestic insurer or an alien insurer domiciled in this state: (1) If the person served is obligated to the insurer in any way as an incident to any [agency or brokerage] PRODUCER arrangement that may exist or has existed between the insurer and the [agent or broker] PRODUCER, in any action on or incident to the obligation; or (2) if the person served is a reinsurer who has at any time entered into a contract of reinsurance with an insurer against which a delinquency proceeding has been instituted, or is [an agent or broker] A PRODUCER of or for the reinsurer, in any action on or incident to the reinsurance contract; or (3) if the person served is or has been an officer, manager, trustee, organizer, promoter, or person in a position of comparable authority or influence in an insurer against which a rehabilitation or liquidation order is in effect when the action is commenced, in any action resulting from such a relationship with the insurer; or (4) if the person served is or was at the time of the institution of the delinquency proceeding against the insurer holding assets in which the receiver claims an interest on behalf of the insurer, in any action concerning the assets; or (5) if the person served is obligated to the insurer, in any way, in any action on or incident to the obligation.

Sec. 31. Subsection (d) of section 38a-916 of the general statutes is repealed and the following is substituted in lieu thereof:

(d) If it appears to the rehabilitator that there has been criminal or tortious conduct, or breach of any contractual or fiduciary obligation detrimental to the insurer by any officer, manager, [agent, broker] PRODUCER, employee or other person, he may pursue all appropriate legal remedies on behalf of the insurer.

Sec. 32. Subsection (a) of section 38a-935 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) [An agent, broker] A PRODUCER, premium finance company, or any other person, other than the insured, responsible for the payment of a premium shall be obligated to pay any unpaid collected premium held by such person at the time of the declaration of insolvency, whether earned or unearned, and any unpaid earned premium, all as shown on the records of the insurer. [An agent, broker] A PRODUCER, premium finance company or any other person shall have no obligation to pay an uncollected unpaid unearned premium to the liquidator. The insured shall have the right to recover from such person any part of an unearned premium that represents commission actually paid or credited to such person. Credits or set-offs or both shall not be allowed to [an agent, broker] A PRODUCER, or premium finance company for any amounts advanced to the insurer by the [agent, broker,] PRODUCER or premium finance company on behalf of, but in the absence of a payment by, the insured. An insured shall be obligated to pay any unpaid earned premium due the insurer at the time of the declaration of insolvency, as shown on the records of the insurer.

Sec. 33. Section 38a-770 of the general statutes is repealed and the following is substituted in lieu thereof:

Whenever the Insurance Commissioner receives an application for an initial license or license renewal, pursuant to the requirements of sections 38a-702 to 38a-718, inclusive, 38a-731 to 38a-735, inclusive, 38a-741 to 38a-745, inclusive, 38a-769, 38a-771 to 38a-777, inclusive, 38a-783, 38a-786, 38a-790, 38a-792, 38a-794 and 38a-795, which is [incomplete or is] not accompanied by the required fees, the commissioner shall return such application together with all accompanying fees [, excluding examination and filing fees to the applicant for correction and resubmittal. All examination and filing fees are earned upon submission to the Insurance Department.] WHENEVER THE INSURANCE COMMISSIONER RECEIVES AN APPLICATION ACCOMPANIED BY THE REQUIRED FEES ACCEPTED BY THE COMMISSIONER, ALL EXAMINATION AND FILING FEES ARE DEEMED EARNED.

Sec. 34. Subdivision (13) of section 38a-402 of the general statutes is repealed and the following is substituted in lieu thereof:

(13) "Title agent" or "agent" means any person authorized in writing by a title insurer to (A) solicit title insurance business, (B) collect premiums, (C) determine the insurability of a risk in accordance with underwriting rules and standards prescribed by the title insurer or (D) issue policies of the title insurer. Title agent does not include officers or employees of a title insurer. NO PERSON MAY ACT AS A TITLE AGENT UNLESS HE IS A COMMISSIONER OF THE SUPERIOR COURT IN GOOD STANDING, EXCEPT ANY INDIVIDUAL WHO HELD A VALID TITLE INSURANCE LICENSE ON OR BEFORE JUNE 12, 1984.

Sec. 35. Section 38a-413 of the general statutes is repealed and the following is substituted in lieu thereof:

[Except as otherwise provided in the general statutes or any special act, no person shall act as a title agent unless licensed in accordance with the provisions of section 38a-769.] TITLE INSURERS AND TITLE INSURANCE AGENTS SHALL NOT BE SUBJECT TO THE PROVISIONS OF SECTIONS 38a-704 AND 38a-769.

Sec. 36. This act shall take effect from its passage.

Approved June 3, 1996. Effective June 3, 1996.

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