O F F I C E O F L E G I S L A T I V E R E S E A R C H
P U B L I C A C T S U M M A R Y
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PA 21-137—sSB 841
Insurance and Real Estate Committee
Judiciary Committee
AN ACT CONCERNING TH E INSURANCE DEPARTME NT’S
RECOMMENDED CHANGES TO THE INSURANCE STATUTES
SUMMARY: This act makes a number of unrelated changes in the insurance
statutes concerning (1) insurers’ use of genetic testing results, (2) the cancellation
of homeowners insurance policies, (3) loss ratio requirements for credit insurance
policies, and (4) insurance producer prelicensure education requirements.
The act prohibits certain insurance entities from requesting, requiring,
purchasing, or using direct-to-consumer genetic testing results without the tested
individual’s written consent. It also prohibits the entities from conditioning rates,
coverage, or other insurance terms on (1) an individual undergoing genetic testing
or (2) the genetic testing results of the individual’s family members unless the
results are in his or her medical records. The act makes a violation of these
provisions a Connecticut Unfair Insurance Practices Act (CUIPA) violation (see
BACKGROUND) (§§ 1-3).
The act also codifies existing Insurance Department administrative policy for
homeowners insurance policy cancellations. It requires insurers to notify
consumers of a cancellation, establishes the cancellation process and timeframes,
and specifies permissible cancellation reasons (§ 4).
Additionally, the act establishes a loss ratio requirement for credit life and
credit accident and health insurance policies of at least 50%, and requires the
insurance commissioner to adopt related regulations (§§ 5 & 6). “Loss ratio”
means annual incurred claims divided by earned premiums.
Lastly, the act reduces, from 40 to 20, the number of course study hours an
insurance producer license applicant must complete before sitting for a license
examination (§ 7). This conforms with the National Association of Insurance
Commissioners’ uniform licensing standards.
EFFECTIVE DATE: October 1, 2021, except the provisions on canceling
homeowners insurance policies are effective July 1, 2021.
§§ 1-3 — GENETIC TESTING RESULTS
The act prohibits insurers, health care centers (i.e., HMOs), and fraternal
benefit societies from requesting, requiring, purchasing, or using direct-to-
consumer genetic testing results without the tested individual’s informed written
consent. This applies to the issuance, withholding, extension, or renewal of
annuities and life, credit life or accident, disability, long-term care, accidental
injury, specified disease, and hospital indemnity insurance policies.
The act also prohibits insurers, HMOs, and fraternal benefit societies from O L R P U B L I C A C T S U M M A R Y
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conditioning rates, the issuance or renewal of coverage or benefits, or other
insurance terms on (1) a requirement or agreement that an individual undergo
genetic testing or (2) the genetic testing results of the individual’s family
members unless the results are in his or her medical records.
The act makes a violation of the above provisions a CUIPA violation. (CUIPA
already prohibits insurers, HMOs, and fraternal benefit societies that issue health
insurance policies from refusing to insure, limiting coverage, or charging a
different rate based on genetic information (CGS § 38a-816(19)).)
§ 4 — HOMEOWNERS INSURANCE CANCELLATION
The act codifies existing Insurance Department administrative policy for
homeowners insurance policy cancellations. It outlines the process and
timeframes for insurers to notify consumers of a cancellation and specifies the
permissible cancellation reasons.
Cancellation Process, Timeframes, and Reasons
Under the act, if an insurer wants to cancel a policy for premium nonpayment,
it must send a written cancellation notice to the named insured at least 10 days
before the cancellation’s effective date. The notice must disclose that (1) the
insured can avoid cancellation by paying the premium before the effective date
and (2) any excess premium will be refunded to the insured upon request.
If a policy is not a renewal policy and has been in effect for fewer than 60
days, and the insurer wants to cancel it for a reason other than premium
nonpayment, the insurer must send a written cancellation notice to the named
insured at least 30 days before the cancellation’s effective date. The notice must
disclose the cancellation reason, the effective date, and that any excess premium
will be refunded to the insured upon request.
If a policy is not a renewal policy and has been in effect for at least 60 days or
is a renewal policy, and the insurer wants to cancel it for either (1) fraud or
misrepresentation of a material fact by the insured in obtaining the insurance that
would have caused the insurer to not issue or renew the policy or (2) any physical
change in the covered property that materially increases a hazard insured against,
then the insurer must send a written cancellation notice to the named insured at
least 30 days before the cancellation’s effective date. The notice must include the
effective date and that any excess premium will be refunded to the insured upon
request. (Under the act, an insurer may cancel such a policy only for these
specified reasons or premium nonpayment.)
Cancellation Method
Under the act, a homeowners insurance policy cancellation notice is effective
only if the insurer sends it to the named insured by registered or certified mail or
mail evidenced by a certificate of mailing. But if the insured agrees, the insurer
may send a cancellation notice electronically and evidenced by a delivery receipt. O L R P U B L I C A C T S U M M A R Y
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Policy Transfer to Affiliate
Under the act, an insurer does not have to issue a cancellation notice if it
transfers a policy to an affiliate with no interruption of coverage and no changes
in coverage terms. However, the new insurer may apply its rates and rating plans
at renewal.
Insured May Cancel Anytime in Writing
The act specifies that a named insured under a homeowners insurance policy
may cancel the policy anytime by sending the insurer a written notice with the
cancellation effective date.
§§ 5 & 6 — LOSS RATIO REQUIREMENT FOR CREDIT INSURANCE
The act establishes a loss ratio requirement for credit life and credit accident
and health insurance policies of at least 50%.
Under prior law, the insurance commissioner had to disapprove a credit
insurance policy form (e.g., policy, certificate, application, rider) if the rates
charged, by reasonable assumptions, were excessive in relation to the benefits
provided. The act instead requires him to disapprove a policy form if the rates
charged, by reasonable assumptions and as determined according to benchmark
loss ratio calculations, are excessive in relation to the benefits provided.
The act also requires the commissioner to disapprove a policy form that does
not comply with the loss ratio requirement. However, he may approve a premium
rate deviation for a policy.
The act requires the commissioner to adopt regulations that reflect the above
requirements.
BACKGROUND
Connecticut Unfair Insurance Practices Act
CUIPA prohibits engaging in unfair or deceptive acts or practices in the
business of insurance. It authorizes the insurance commissioner to conduct
investigations and hearings, issue cease and desist orders, impose fines, revoke or
suspend licenses, and order restitution for per se violations (i.e., violations
specifically listed in statute). The law also allows the commissioner to ask the
attorney general to seek injunctive relief in Superior Court if he believes someone
is engaging in other unfair or deceptive acts not specifically defined in statute.
Fines may be up to (1) $5,000 per violation to a $50,000 maximum or (2)
$25,000 per violation to a $250,000 maximum in any six-month period if the
violation was knowingly committed. The law also imposes a fine of up to
$50,000, in addition to or in lieu of a license suspension or revocation, for
violating a cease and desist order.