Connecticut Senate Bill SB00395

Connecticut 2014 Regular Session

• Introduced: 3/5/14
• Refer: 3/5/14

Caption

An Act Authorizing Domestic Surplus Lines Insurers And The Insurance Department's Financial Regulatory Oversight Of Insurance Companies.

Impact

The bill specifically impacts the state's statutes concerning how premiums from nonadmitted insurance are taxed and how insurance companies report their financial status. A significant aspect of the bill is the implementation of a 4% premium tax that all surplus lines insurers must pay on the gross premiums charged. This ensures that all nonadmitted insurance transacted through surplus lines brokers contributes to state revenue and that there are mechanisms in place to oversee compliance with these financial regulations. Furthermore, it empowers the Insurance Commissioner to create regulatory standards for surplus lines brokers and insurers, thereby standardizing practices within the industry.

Summary

SB00395, known as An Act Authorizing Domestic Surplus Lines Insurers And The Insurance Department's Financial Regulatory Oversight Of Insurance Companies, aims to amend existing insurance regulations to permit domestic insurers to write surplus lines insurance policies in the state. This act seeks to enhance the Insurance Department's regulatory authority over these insurers and includes changes that require them to adhere to specific financial rules, including maintaining adequate capital reserves to protect against insolvency. The effective date for these changes is set for July 1, 2014.

Contention

While the bill aims to streamline and enhance regulatory oversight, there are notable concerns regarding the effectiveness of this oversight and the ability of small domestic insurers to compete under these new regulations. Some stakeholders argue that the imposed tax and regulatory framework could limit the availability of affordable insurance options, particularly for niche markets that rely on surplus lines insurers for coverage that traditional insurers may not provide. There is an ongoing debate about striking the right balance between regulatory oversight and ensuring insurers can operate effectively within the state.