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General Assembly Substitute Bill No. 5503
February Session, 2024
AN ACT CONCERNING INSURANCE MARKET CONDUCT AND
INSURANCE LICENSING, THE INSURANCE DEPARTMENT'S
TECHNICAL CORRECTIONS AND OTHER REVISIONS TO THE
INSURANCE STATUTES AND CAPTIVE INSURANCE.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Section 38a-8 of the 2024 supplement to the general statutes 1
is repealed and the following is substituted in lieu thereof (Effective 2
October 1, 2024): 3
(a) The commissioner shall see that all laws respecting insurance 4
companies and health care centers are faithfully executed and shall 5
administer and enforce the provisions of this title. The commissioner 6
shall have all powers specifically granted, and all further powers that 7
are reasonable and necessary to enable the commissioner to protect the 8
public interest in accordance with the duties imposed by this title, 9
including, but not limited to, the power to order restitution of any sums 10
obtained in violation of any provision of this title, or any regulation or 11
order adopted or issued pursuant to this title by the commissioner, plus 12
interest at the rate set forth in section 37-3a. The commissioner shall pay 13
to the Treasurer all the fees that the commissioner receives. The 14
commissioner may administer oaths in the discharge of the 15
commissioner's duties. 16 Substitute Bill No. 5503
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(b) The commissioner shall recommend to the General Assembly 17
changes that, in the commissioner's opinion, should be made in the laws 18
relating to insurance. 19
(c) In addition to the specific regulations that the commissioner is 20
required to adopt, the commissioner may adopt such further 21
regulations, in accordance with the provisions of chapter 54, as are 22
reasonable and necessary to implement the provisions of this title. 23
(d) The commissioner shall develop a program of periodic review to 24
ensure compliance by the Insurance Department with the minimum 25
standards established by the National Association of Insurance 26
Commissioners for effective financial surveillance and regulation of 27
insurance companies operating in this state. The commissioner shall 28
adopt regulations, in accordance with the provisions of chapter 54, 29
pertaining to the financial surveillance and solvency regulation of 30
insurance companies and health care centers as are reasonable and 31
necessary to obtain or maintain the accreditation of the Insurance 32
Department by the National Association of Insurance Commissioners. 33
The commissioner shall maintain as confidential any confidential 34
documents or information received from the National Association of 35
Insurance Commissioners, or the International Association of Insurance 36
Supervisors, or any documents or information received from state or 37
federal insurance, banking or securities regulators or similar regulators 38
in a foreign country that are confidential in such jurisdictions. The 39
commissioner may share any information, including confidential 40
information, with the National Association of Insurance 41
Commissioners, the International Association of Insurance Supervisors, 42
or state or federal insurance, banking or securities regulators or similar 43
regulators in a foreign country, provided the commissioner determines 44
that such entities agree to maintain the same level of confidentiality in 45
their jurisdictions as is available in this state. At the expense of a 46
domestic, alien or foreign insurer, the commissioner may engage the 47
services of attorneys, actuaries, accountants and other experts not 48
otherwise part of the commissioner's staff as may be necessary to assist 49
the commissioner in the financial analysis of the insurer, the review of 50 Substitute Bill No. 5503
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the insurer's license applications, and the review of transactions within 51
a holding company system involving an insurer domiciled in this state. 52
No duties of a person employed by the Insurance Department on 53
November 1, 2002, shall be performed by such attorney, actuary, 54
accountant or expert. 55
(e) The commissioner shall establish a program to reduce costs and 56
increase efficiency through the use of electronic methods to transmit 57
documents, including policy form and rate filings, to and from insurers 58
and the Insurance Department. The commissioner may sit as a member 59
of the board of a consortium organized by or in association with the 60
National Association of Insurance Commissioners for the purpose of 61
coordinating a system for electronic rate and form filing among state 62
insurance departments and insurers. 63
(f) The commissioner shall maintain as confidential information 64
obtained, collected or prepared in connection with examinations, 65
inspections or investigations, and complaints from the public received 66
by the Insurance Department, if such records are protected from 67
disclosure under federal law or state statute or, in the opinion of the 68
commissioner, such records would disclose, or would reasonably lead 69
to the disclosure of: (1) Investigative information the disclosure of which 70
would be prejudicial to such investigation, until such time as the 71
investigation is concluded; or (2) personal, financial or medical 72
information concerning a person who has filed a complaint or inquiry 73
with the Insurance Department, without the written consent of the 74
person or persons to whom the information pertains. 75
(g) The commissioner may, in the commissioner's discretion, engage 76
the services of such third-party actuaries, professionals and specialists 77
that the commissioner deems necessary to assist the commissioner in 78
reviewing any rate, form or similar filing submitted to the commissioner 79
pursuant to this title. The cost of such services shall be borne by the 80
person who submitted such rate, form or similar filing to the 81
commissioner. 82 Substitute Bill No. 5503
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(h) The commissioner shall promote the development and growth of, 83
and employment opportunities within, the insurance industry in the 84
state. 85
(i) (1) Whenever the commissioner finds that any person has engaged 86
in or is about to engage in any act, practice or omission that constitutes, 87
or will constitute, a violation of any section of this title, or any regulation 88
or order adopted or issued by the commissioner implementing the 89
provisions of this title, the Attorney General may, at the request of the 90
commissioner, bring an action in the superior court for the judicial 91
district of Hartford for an order: (A) Enjoining such act, practice or 92
omission. Upon a showing by the commissioner that such person has 93
engaged in or is about to engage in any such act, practice or omission, 94
the court may issue a permanent or temporary injunction, restraining 95
order or other order, as appropriate. The commissioner shall not be 96
required to post a bond in such action; (B) imposing a penalty not to 97
exceed one hundred thousand dollars per violation against any such 98
person found by the commissioner to have violated any such section, 99
regulation or order; or (C) providing restitution against such person for 100
any sums shown by the commissioner to have been obtained by such 101
person in violation of any such section, regulation or order, plus interest 102
at the rate set forth in section 37-3a. 103
(2) Whenever the commissioner prevails in any action brought under 104
this subsection, the court may allow to the state any costs of such action. 105
Sec. 2. Section 38a-16 of the general statutes is repealed and the 106
following is substituted in lieu thereof (Effective October 1, 2024): 107
(a) (1) The Insurance Commissioner or the commissioner's authorized 108
representative may, as often as the commissioner deems necessary, 109
conduct investigations and hearings in aid of any investigation on any 110
matter under the provisions of this title. Pursuant to any such 111
investigation or hearing, the commissioner or the commissioner's 112
authorized representative may issue data calls, subpoenas, administer 113
oaths, compel testimony, order the production of books, records, papers 114 Substitute Bill No. 5503
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and documents, and examine books and records. Any person in receipt 115
of an order from the commissioner or the commissioner's authorized 116
representative for the production of books, records, papers or 117
documents shall comply with the order not later than thirty calendar 118
days after the date of such order. If any person refuses to allow the 119
examination of books and records, to appear, to testify or to produce 120
any book, record, paper or document when so ordered, a judge of the 121
Superior Court, upon application of the commissioner or the 122
commissioner's authorized representative, may make such order as may 123
be appropriate to aid in the enforcement of this section. 124
(2) Data provided in response to a data call under this section shall 125
not be subject to disclosure under section 1-210. 126
(b) The Attorney General, at the request of the commissioner, is 127
authorized to apply in the name of the state of Connecticut to the 128
Superior Court for an order temporarily or permanently restraining and 129
enjoining any person from violating any provision of this title. 130
Sec. 3. Subsection (a) of section 38a-790 of the general statutes is 131
repealed and the following is substituted in lieu thereof (Effective October 132
1, 2024): 133
(a) No person shall act as an appraiser for motor vehicle physical 134
damage claims on behalf of any insurance company or firm or 135
corporation engaged in the adjustment or appraisal of motor vehicle 136
claims unless such person has first secured a license from the Insurance 137
Commissioner, and has paid the license fee specified in section 38a-11, 138
for each two-year period or fraction thereof. The license shall be applied 139
for as provided in section 38a-769. The commissioner may waive the 140
requirement for examination in the case of any applicant for a motor 141
vehicle physical damage appraiser's license who is a nonresident of this 142
state and who holds an equivalent license from any other state. Any 143
[such license issued by the commissioner shall be in force until the 144
thirtieth day of June in each odd-numbered year] initial license issued 145
by the commissioner to an appraiser for motor vehicle physical damage 146 Substitute Bill No. 5503
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claims shall expire two years after the date of the licensee's birthday that 147
preceded the date the license was issued unless sooner revoked or 148
suspended. The license may, in the discretion of the commissioner, be 149
renewed biennially upon payment of the fee specified in section 38a-11. 150
The commissioner may adopt reasonable regulations concerning 151
standards for qualification, suspension or revocation of such licenses 152
and the methods by which licensees shall conduct their business. 153
Sec. 4. Subsection (a) of section 38a-792 of the general statutes is 154
repealed and the following is substituted in lieu thereof (Effective October 155
1, 2024): 156
(a) (1) No person may act as an adjuster of casualty claims for any 157
insurance company or firm or corporation engaged in the adjustment of 158
casualty claims unless such person has first secured a license from the 159
commissioner, and has paid the license fee specified in section 38a-11, 160
for each two-year period or fraction thereof. Application for such license 161
shall be made as provided in section 38a-769. Any [such license issued 162
by the commissioner shall be in force until June thirtieth in each odd-163
numbered year] initial license issued to an adjuster of casualty claims 164
shall expire two years after the date of the licensee's birthday that 165
preceded the date the license was issued unless sooner revoked or 166
suspended. The [person] licensee may, at the discretion of the 167
commissioner, renew the license biennially thereafter upon payment of 168
the fee specified in section 38a-11. 169
(2) The commissioner may waive the examination required under 170
section 38a-769, in the case of any applicant for a casualty claims 171
adjuster's license that (A) is a nonresident of this state or has its principal 172
place of business in another state, and holds an equivalent license from 173
any other state, or (B) at any time within two years next preceding the 174
date of application has been licensed in this state under a license of the 175
same type as the license applied for. 176
Sec. 5. Section 38a-48 of the general statutes is repealed and the 177
following is substituted in lieu thereof (Effective October 1, 2024): 178 Substitute Bill No. 5503
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(a) On or before June thirtieth, annually, the Commissioner of 179
Revenue Services shall render to the Insurance Commissioner a 180
statement certifying the amount of taxes or charges imposed on each 181
domestic insurance company or other domestic entity under chapter 207 182
on business done in this state during the preceding calendar year. The 183
statement for local domestic insurance companies shall set forth the 184
amount of taxes and charges before any tax credits allowed as provided 185
in subsection (a) of section 12-202. 186
(b) On or before July thirty-first, annually, the Insurance 187
Commissioner [and the Office of the Healthcare Advocate] shall render 188
to each domestic insurance company or other domestic entity liable for 189
payment under section 38a-47: (1) A statement that includes (A) the 190
amount appropriated to the Insurance Department, the Office of the 191
Healthcare Advocate and the Office of Health Strategy from the 192
Insurance Fund established under section 38a-52a for the fiscal year 193
beginning July first of the same year, (B) the cost of fringe benefits for 194
department and office personnel for such year, as estimated by the 195
Comptroller, (C) the estimated expenditures on behalf of the 196
department and the offices from the Capital Equipment Purchase Fund 197
pursuant to section 4a-9 for such year, not including such estimated 198
expenditures made on behalf of the Health Systems Planning Unit of the 199
Office of Health Strategy, and (D) the amount appropriated to the 200
Department of Aging and Disability Services for the fall prevention 201
program established in section 17a-859 from the Insurance Fund for the 202
fiscal year; (2) a statement of the total taxes imposed on all domestic 203
insurance companies and domestic insurance entities under chapter 207 204
on business done in this state during the preceding calendar year; and 205
(3) the proposed assessment against that company or entity, calculated 206
in accordance with the provisions of subsection (c) of this section, 207
provided for the purposes of this calculation the amount appropriated 208
to the Insurance Department, the Office of the Healthcare Advocate and 209
the Office of Health Strategy from the Insurance Fund plus the cost of 210
fringe benefits for department and office personnel and the estimated 211
expenditures on behalf of the department and [the office] such offices 212 Substitute Bill No. 5503
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from the Capital Equipment Purchase Fund pursuant to section 4a-9, 213
not including such expenditures made on behalf of the Health Systems 214
Planning Unit of the Office of Health Strategy shall be deemed to be the 215
actual expenditures of the department and [the office] such offices, and 216
the amount appropriated to the Department of Aging and Disability 217
Services from the Insurance Fund for the fiscal year for the fall 218
prevention program established in section 17a-859 shall be deemed to 219
be the actual expenditures for the program. 220
(c) (1) The proposed assessments for each domestic insurance 221
company or other domestic entity shall be calculated by (A) allocating 222
twenty per cent of the amount to be paid under section 38a-47 among 223
the domestic entities organized under sections 38a-199 to 38a-209, 224
inclusive, and 38a-214 to 38a-225, inclusive, in proportion to their 225
respective shares of the total taxes and charges imposed under chapter 226
207 on such entities on business done in this state during the preceding 227
calendar year, and (B) allocating eighty per cent of the amount to be paid 228
under section 38a-47 among all domestic insurance companies and 229
domestic entities other than those organized under sections 38a-199 to 230
38a-209, inclusive, and 38a-214 to 38a-225, inclusive, in proportion to 231
their respective shares of the total taxes and charges imposed under 232
chapter 207 on such domestic insurance companies and domestic 233
entities on business done in this state during the preceding calendar 234
year, provided if there are no domestic entities organized under sections 235
38a-199 to 38a-209, inclusive, and 38a-214 to 38a-225, inclusive, at the 236
time of assessment, one hundred per cent of the amount to be paid 237
under section 38a-47 shall be allocated among such domestic insurance 238
companies and domestic entities. 239
(2) When the amount any such company or entity is assessed 240
pursuant to this section exceeds twenty-five per cent of the actual 241
expenditures of the Insurance Department, the Office of the Healthcare 242
Advocate and the Office of Health Strategy from the Insurance Fund, 243
such excess amount shall not be paid by such company or entity but 244
rather shall be assessed against and paid by all other such companies 245
and entities in proportion to their respective shares of the total taxes and 246 Substitute Bill No. 5503
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charges imposed under chapter 207 on business done in this state during 247
the preceding calendar year, except that for purposes of any assessment 248
made to fund payments to the Department of Public Health to purchase 249
vaccines, such company or entity shall be responsible for its share of the 250
costs, notwithstanding whether its assessment exceeds twenty-five per 251
cent of the actual expenditures of the Insurance Department, the Office 252
of the Healthcare Advocate and the Office of Health Strategy from the 253
Insurance Fund. The provisions of this subdivision shall not be 254
applicable to any corporation [which] that has converted to a domestic 255
mutual insurance company pursuant to section 38a-155 upon the 256
effective date of any public act [which] that amends said section to 257
modify or remove any restriction on the business such a company may 258
engage in, for purposes of any assessment due from such company on 259
and after such effective date. 260
(d) For purposes of calculating the amount of payment under section 261
38a-47, as well as the amount of the assessments under this section, the 262
"total taxes imposed on all domestic insurance companies and other 263
domestic entities under chapter 207" shall be based upon the amounts 264
shown as payable to the state for the calendar year on the returns filed 265
with the Commissioner of Revenue Services pursuant to chapter 207; 266
with respect to calculating the amount of payment and assessment for 267
local domestic insurance companies, the amount used shall be the taxes 268
and charges imposed before any tax credits allowed as provided in 269
subsection (a) of section 12-202. 270
[(e) On or before September thirtieth, annually, for each fiscal year 271
ending prior to July 1, 1990, the Insurance Commissioner and the 272
Healthcare Advocate, after receiving any objections to the proposed 273
assessments and making such adjustments as in their opinion may be 274
indicated, shall assess each such domestic insurance company or other 275
domestic entity an amount equal to its proposed assessment as so 276
adjusted. Each domestic insurance company or other domestic entity 277
shall pay to the Insurance Commissioner on or before October thirty-278
first an amount equal to fifty per cent of its assessment adjusted to reflect 279
any credit or amount due from the preceding fiscal year as determined 280 Substitute Bill No. 5503
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by the commissioner under subsection (g) of this section. Each domestic 281
insurance company or other domestic entity shall pay to the Insurance 282
Commissioner on or before the following April thirtieth, the remaining 283
fifty per cent of its assessment.] 284
[(f)] (e) On or before September first, annually, for each fiscal year, 285
[ending after July 1, 1990,] the Insurance Commissioner, [and the 286
Healthcare Advocate,] after receiving any objections to the proposed 287
assessments and making such adj ustments as in [their] the 288
commissioner's opinion may be indicated, shall assess each such 289
domestic insurance company or other domestic entity an amount equal 290
to its proposed assessment as so adjusted. Each domestic insurance 291
company or other domestic entity shall pay to the Insurance 292
Commissioner (1) [on or before June 30, 1990, and] on or before June 293
thirtieth, annually, [thereafter,] an estimated payment against its 294
assessment for the following year equal to twenty-five per cent of its 295
assessment for the fiscal year ending such June thirtieth, (2) on or before 296
September thirtieth, annually, twenty-five per cent of its assessment 297
adjusted to reflect any credit or amount due from the preceding fiscal 298
year as determined by the commissioner under subsection [(g)] (f) of this 299
section, and (3) on or before the following December thirty-first and 300
March thirty-first, annually, each domestic insurance company or other 301
domestic entity shall pay to the Insurance Commissioner the remaining 302
fifty per cent of its proposed assessment to the department in two equal 303
installments. 304
[(g)] (f) If the actual expenditures for the fall prevention program 305
established in section 17a-859 are less than the amount allocated, the 306
Commissioner of Aging and Disability Services shall notify the 307
Insurance Commissioner. [and the Healthcare Advocate.] Immediately 308
following the close of the fiscal year, the Insurance Commissioner [and 309
the Healthcare Advocate] shall recalculate the proposed assessment for 310
each domestic insurance company or other domestic entity in 311
accordance with subsection (c) of this section using the actual 312
expenditures made during the fiscal year by the Insurance Department, 313
the Office of the Healthcare Advocate and the Office of Health Strategy 314 Substitute Bill No. 5503
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from the Insurance Fund, the actual expenditures made on behalf of the 315
department and the offices from the Capital Equipment Purchase Fund 316
pursuant to section 4a-9, not including such expenditures made on 317
behalf of the Health Systems Planning Unit of the Office of Health 318
Strategy, and the actual expenditures for the fall prevention program. 319
On or before July thirty-first, annually, the Insurance Commissioner 320
[and the Healthcare Advocate] shall render to each such domestic 321
insurance company and other domestic entity a statement showing the 322
difference between their respective recalculated assessments and the 323
amount they have previously paid. On or before August thirty-first, the 324
Insurance Commissioner, [and the Healthcare Advocate,] after 325
receiving any objections to such statements, shall make such 326
adjustments which in their opinion may be indicated, and shall render 327
an adjusted assessment, if any, to the affected companies. Any such 328
domestic insurance company or other domestic entity may pay to the 329
Insurance Commissioner the entire assessment required under this 330
subsection in one payment when the first installment of such assessment 331
is due. 332
[(h)] (g) If any assessment is not paid when due, a penalty of twenty-333
five dollars shall be added thereto, and interest at the rate of six per cent 334
per annum shall be paid thereafter on such assessment and penalty. 335
[(i)] (h) The Insurance Commissioner shall deposit all payments 336
made under this section with the State Treasurer. On and after June 6, 337
1991, the moneys so deposited shall be credited to the Insurance Fund 338
established under section 38a-52a and shall be accounted for as expenses 339
recovered from insurance companies. 340
Sec. 6. Subsection (a) of section 38a-53 of the general statutes is 341
repealed and the following is substituted in lieu thereof (Effective October 342
1, 2024): 343
(a) (1) Each domestic insurance company or domestic health care 344
center shall, annually, on or before the first day of March, submit to the 345
commissioner, [and] by electronically [to] filing with the National 346 Substitute Bill No. 5503
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Association of Insurance Commissioners, a true and complete report, 347
signed and sworn to by its president or a vice president, and secretary 348
or an assistant secretary, of its financial condition on the thirty-first day 349
of December next preceding, prepared in accordance with the National 350
Association of Insurance Commissioners annual statement instructions 351
handbook and following those accounting procedures and practices 352
prescribed by the National Association of Insurance Commissioners 353
accounting practices and procedures manual, subject to any deviations 354
in form and detail as may be prescribed by the commissioner. An 355
electronically filed report in accordance with section 38a-53a that is 356
timely submitted to the National Association of Insurance 357
Commissioners shall [not exempt a domestic insurance company or 358
domestic health care center from timely filing a true and complete paper 359
copy with the commissioner] be deemed to have been submitted to the 360
commissioner in accordance with the provisions of this section. 361
(2) Each accredited reinsurer, as defined in subdivision (1) of 362
subsection (c) of section 38a-85, and assuming insurance company, as 363
provided in section 38a-85, shall file an annual report in accordance with 364
the provisions of section 38a-85. 365
Sec. 7. Subsection (a) of section 38a-54 of the general statutes is 366
repealed and the following is substituted in lieu thereof (Effective October 367
1, 2024): 368
(a) Each domestic insurance company, domestic health care center or 369
domestic fraternal benefit society doing business in this state shall have 370
an annual audit conducted by an independent certified public 371
accountant and shall annually file an audited financial report with the 372
commissioner, and electronically to the National Association of 373
Insurance Commissioners on or before the first day of June for the year 374
ending the preceding December thirty-first. An electronically filed true 375
and complete report timely submitted to the National Association of 376
Insurance Commissioners [does not exempt a domestic insurance 377
company or a domestic health care center from timely filing a true and 378
complete paper copy to the commissioner] shall be deemed to have been 379 Substitute Bill No. 5503
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submitted to the commissioner in accordance with the provisions of this 380
section. 381
Sec. 8. Section 38a-297 of the general statutes is repealed and the 382
following is substituted in lieu thereof (Effective October 1, 2024): 383
(a) For the purposes of sections 38a-295 to 38a-300, inclusive, a policy 384
shall be deemed readable if: (1) The text achieves a minimum score of 385
forty-five on the Flesch reading ease test as computed in section 38a-298 386
or an equivalent score on any other test comparable in result and 387
approved by the commissioner, (2) it is printed, except for specification 388
pages, schedules and tables, in not less than ten-point type, one-point 389
leaded, of a height and style specified by the commissioner in 390
regulations adopted in accordance with the provisions of chapter 54, (3) 391
it uses layout and spacing which separate the paragraphs from each 392
other and from the border of the paper, (4) it has section titles captioned 393
in boldface type or which otherwise stand out significantly from the 394
text, (5) it avoids the use of unnecessarily long, complicated or obscure 395
words, sentences, paragraphs or constructions, (6) the style, 396
arrangement and overall appearance of the policy give no undue 397
prominence to any portion of the text of the policy or to any 398
endorsements or riders and (7) it contains a table of contents or an index 399
of the principal sections of the policy, if the policy has more than three 400
thousand words or if the policy has more than three pages. To be 401
deemed readable, each policy of individual health insurance shall 402
include a separate outline of coverage showing the major coverage, 403
benefit, exclusion and renewal provisions of the policy in readily 404
understandable terms, provided the policy shall take precedence over 405
the outline of coverage. 406
(b) The commissioner may authorize a lower score than the Flesch 407
reading ease score required in subsection (a) whenever [he] the 408
commissioner finds that a lower score (1) will provide a more accurate 409
reflection of the readability of a policy form; (2) is warranted by the 410
nature of a particular policy form or type or class of policy forms; or (3) 411
is the result of language which is used to conform to the requirements 412 Substitute Bill No. 5503
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of any state or federal law, regulation or governmental agency. 413
(c) Filings subject to this section shall be accompanied by a 414
certification signed by an officer of the insurer stating that it meets the 415
requirements of subsection (a) of this section. Such certification shall 416
state that the policy meets the minimum reading ease score on the test 417
used or that the score is lower than the minimum required but should 418
be approved in accordance with subsection (b) of this section. The 419
commissioner may require the submission of further information to 420
verify any certification. 421
(d) Filings subject to this section may be filed with the commissioner 422
in any language. Any non-English-language policy shall be deemed to 423
be in compliance with subsection (a) of this section if the insurer certifies 424
that such policy [is translated from an English-language policy that] 425
complies with [said] subsection (a) of this section or is translated from a 426
policy that complies with subsection (a) of this section. 427
(e) The commissioner may engage the services of any translation 428
service, as needed, to review any non-English-language policy filed 429
with the commissioner pursuant to this section, the cost of which shall 430
be borne by the insurer that submits such filing. 431
(f) (1) For any insurer that files a non-English-language policy with 432
the commissioner, the commissioner may require that such insurer 433
either (A) provide an English translated copy of such policy and a 434
certification as to the accuracy of such translated copy of such policy, or 435
(B) pay all costs associated with the translation of such policy in 436
accordance with the provisions of subsection (e) of this section. 437
(2) Any insurer shall accept all risk associated with any translation of 438
such insurer's non-English-language policy in accordance with 439
subdivision (1) of this subsection and subsection (e) of this section. 440
(g) The commissioner may adopt regulations, in accordance with the 441
provisions of chapter 54, to implement the provisions of this section. 442 Substitute Bill No. 5503
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Sec. 9. Section 38a-479ppp of the general statutes is repealed and the 443
following is substituted in lieu thereof (Effective January 1, 2025): 444
(a) Not later than [March 1, 2021] February 1, 2025, and annually 445
thereafter, each pharmacy benefits manager shall file a report with the 446
commissioner for the immediately preceding calendar year. The report 447
shall contain the following information for health carriers that 448
delivered, issued for delivery, renewed, amended or continued health 449
care plans that included a pharmacy benefit managed by the pharmacy 450
benefits manager during such calendar year: 451
(1) The aggregate dollar amount of all rebates concerning drug 452
formularies used by such health carriers that such manager collected 453
from pharmaceutical manufacturers that manufactured outpatient 454
prescription drugs that (A) were covered by such health carriers during 455
such calendar year, and (B) are attributable to patient utilization of such 456
drugs during such calendar year; and 457
(2) The aggregate dollar amount of all rebates, excluding any portion 458
of the rebates received by such health carriers, concerning drug 459
formularies that such manager collected from pharmaceutical 460
manufacturers that manufactured outpatient prescription drugs that (A) 461
were covered by such health carriers during such calendar year, and (B) 462
are attributable to patient utilization of such drugs by covered persons 463
under such health care plans during such calendar year. 464
(b) The commissioner shall establish a standardized form for 465
reporting information pursuant to subsection (a) of this section after 466
consultation with pharmacy benefits managers. The form shall be 467
designed to minimize the administrative burden and cost of reporting 468
on the department and pharmacy benefits managers. 469
(c) All information submitted to the commissioner pursuant to 470
subsection (a) of this section shall be exempt from disclosure under the 471
Freedom of Information Act, as defined in section 1-200, except to the 472
extent such information is included on an aggregated basis in the report 473
required by subsection (d) of this section. The commissioner shall not 474 Substitute Bill No. 5503
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disclose information submitted pursuant to subdivision (1) of 475
subsection (a) of this section, or information submitted pursuant to 476
subdivision (2) of said subsection in a manner that (1) is likely to 477
compromise the financial, competitive or proprietary nature of such 478
information, or (2) would enable a third party to identify a health care 479
plan, health carrier, pharmacy benefits manager, pharmaceutical 480
manufacturer, or the value of a rebate provided for a particular 481
outpatient prescription drug or therapeutic class of outpatient 482
prescription drugs. 483
(d) Not later than [March 1, 2022] March 1, 2025, and annually 484
thereafter, the commissioner shall submit a report, in accordance with 485
section 11-4a, to the joint standing committee of the General Assembly 486
having cognizance of matters relating to insurance. The report shall 487
contain (1) an aggregation of the information submitted to the 488
commissioner pursuant to subsection (a) of this section for the 489
immediately preceding calendar year, and (2) such other information as 490
the commissioner, in the commissioner's discretion, deems relevant for 491
the purposes of this section. Not later than [February 1, 2022, and 492
annually thereafter] ten days prior to the submission of the annual 493
report pursuant to the provisions of this subsection, the commissioner 494
shall provide each pharmacy benefits manager and any third party 495
affected by submission of [a] such report required by this subsection 496
with a written notice describing the content of the report. 497
(e) The commissioner may impose a penalty of not more than seven 498
thousand five hundred dollars on a pharmacy benefits manager for each 499
violation of this section. 500
(f) The commissioner may adopt regulations, in accordance with the 501
provisions of chapter 54, to implement the provisions of this section. 502
Sec. 10. Section 38a-556 of the general statutes is repealed and the 503
following is substituted in lieu thereof (Effective from passage): 504
(a) There is hereby created a nonprofit legal entity to be known as the 505
Health Reinsurance Association. All insurers, health care centers and 506 Substitute Bill No. 5503
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self-insurers doing business in the state, as a condition to their authority 507
to transact the applicable kinds of health insurance defined in section 508
38a-551, shall be members of the association. The association shall 509
perform its functions under a plan of operation established and 510
approved under subsection (b) of this section, and shall exercise its 511
powers through a board of directors established under this section. 512
(b) (1) The board of directors of the association shall be made up of 513
nine individuals selected by participating members, subject to approval 514
by the commissioner, two of whom shall be appointed by the 515
commissioner on or before July 1, 1993, to represent health care centers. 516
To select the initial board of directors, and to initially organize the 517
association, the commissioner shall give notice to all members of the 518
time and place of the organizational meeting. In determining voting 519
rights at the organizational meeting each member shall be entitled to 520
vote in person or proxy. The vote shall be a weighted vote based upon 521
the net health insurance premium derived from this state in the previous 522
calendar year. If the board of directors is not selected within sixty days 523
after notice of the organizational meeting, the commissioner may 524
appoint the initial board. In approving or selecting members of the 525
board, the commissioner may consider, among other things, whether all 526
members are fairly represented. Members of the board may be 527
reimbursed from the moneys of the association for expenses incurred by 528
them as members, but shall not otherwise be compensated by the 529
association for their services. 530
(2) The board shall submit to the commissioner a plan of operation 531
for the association necessary or suitable to assure the fair, reasonable 532
and equitable administration of the association. The plan of operation 533
shall become effective upon approval in writing by the commissioner. 534
Such plan shall continue in force until modified by the commissioner or 535
superseded by a plan submitted by the board and approved by the 536
commissioner. The plan of operation shall: (A) Establish procedures for 537
the handling and accounting of assets and moneys of the association; (B) 538
establish regular times and places for meetings of the board of directors; 539
(C) establish procedures for records to be kept of all financial 540 Substitute Bill No. 5503
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transactions, and for the annual fiscal reporting to the commissioner; (D) 541
establish procedures whereby selections for the board of directors shall 542
be made and submitted to the commissioner; (E) establish procedures to 543
amend, subject to the approval of the commissioner, the plan of 544
operations; (F) establish procedures for the selection of an administrator 545
and set forth the powers and duties of the administrator; (G) contain 546
additional provisions necessary or proper for the execution of the 547
powers and duties of the association; and (H) contain additional 548
provisions necessary for the association to establish health insurance 549
plans that qualify as acceptable coverage in accordance with the Pension 550
Benefit Guaranty Corporation and other state or federal programs that 551
may be established. 552
(c) The association shall have the general powers and authority 553
granted under the laws of this state to carriers to transact the kinds of 554
insurance defined under section 38a-551, and in addition thereto, the 555
specific authority to: (1) Enter into contracts necessary or proper to carry 556
out the provisions and purposes of this section and sections 38a-551 and 557
[38a-556a] 38a-557 to 38a-559, inclusive; (2) sue or be sued, including 558
taking any legal actions necessary or proper for recovery of any 559
assessments for, on behalf of, or against participating members; (3) take 560
such legal action as necessary to avoid the payment of improper claims 561
against the association or the coverage provided by or through the 562
association; (4) establish, with respect to health insurance provided by 563
or on behalf of the association, appropriate rates, scales of rates, rate 564
classifications and rating adjustments, such rates not to be unreasonable 565
in relation to the coverage provided and the operational expenses of the 566
association; (5) administer any type of reinsurance program, for or on 567
behalf of participating members; (6) pool risks among participating 568
members; (7) issue policies of insurance required or permitted by this 569
section and sections 38a-551 and [38a-556a] 38a-557 to 38a-559, 570
inclusive, in its own name or on behalf of participating members; (8) 571
administer separate pools, separate accounts or other plans as deemed 572
appropriate for separate members or groups of members; (9) operate 573
and administer any combination of pl ans, pools, reinsurance 574 Substitute Bill No. 5503
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arrangements or other mechanisms as deemed appropriate to best 575
accomplish the fair and equitable operation of the association; (10) set 576
limits on the amounts of reinsurance that may be ceded to the 577
association by its members; (11) appoint from among participating 578
members appropriate legal, actuarial and other committees as necessary 579
to provide technical assistance in the operation of the association, policy 580
and other contract design, and any other function within the authority 581
of the association; (12) apply for and accept grants, gifts and bequests of 582
funds from other states, federal and interstate agencies and independent 583
authorities, private firms, individuals and foundations for the purpose 584
of carrying out its responsibilities. Any such funds received shall be 585
deposited in the General Fund and shall be credited to a separate 586
nonlapsing account within the General Fund for the Health Reinsurance 587
Association and may be used by the Health Reinsurance Association in 588
the performance of its duties; and (13) perform such other duties and 589
responsibilities as may be required by state or federal law or permitted 590
by state or federal law and approved by the commissioner. 591
(d) Rates for coverage issued by or through the association shall not 592
be excessive, inadequate or unfairly discriminatory. All rates shall be 593
promulgated by the association through an actuarial committee 594
consisting of five persons who are members of the American Academy 595
of Actuaries, shall be filed with the commissioner and may be 596
disapproved within sixty days after the filing thereof if excessive, 597
inadequate or unfairly discriminatory. 598
(e) (1) Following the close of each fiscal year, the administrator shall 599
determine the net premiums, reinsurance premiums less administrative 600
expense allowance, the expense of administration pertaining to the 601
reinsurance operations of the association and the incurred losses for the 602
year. Any net loss shall be assessed to all participating members in 603
proportion to their respective shares of the total health insurance 604
premiums earned in this state during the calendar year, or with paid 605
losses in the year, coinciding with or ending during the fiscal year of the 606
association or on any other equitable basis as may be provided in the 607
plan of operations. For self-insured members of the association, health 608 Substitute Bill No. 5503
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insurance premiums earned shall be established by dividing the amount 609
of paid health losses for the applicable period by eighty-five per cent. 610
Net gains, if any, shall be held at interest to offset future losses or 611
allocated to reduce future premiums. 612
(2) Any net loss to the association represented by the excess of its 613
actual expenses of administering policies issued by the association over 614
the applicable expense allowance shall be separately assessed to those 615
participating members who do not elect to administer their plans. All 616
assessments shall be on an equitable formula established by the board. 617
(3) The association shall conduct periodic audits to assure the general 618
accuracy of the financial data submitted to the association and the 619
association shall have an annual audit of its operations by an 620
independent certified public accountant. The annual audit shall be filed 621
with the commissioner for his review and the association shall be subject 622
to the provisions of section 38a-14. 623
(f) All policy forms issued by or through the association shall conform 624
in substance to prototype forms developed by the association, shall in 625
all other respects conform to the requirements of this section and 626
sections 38a-551 and [38a-556a] 38a-557 to 38a-559, inclusive, and shall 627
be approved by the commissioner. The commissioner may disapprove 628
any such form if it contains a provision or provisions that are unfair or 629
deceptive or that encourage misrepresentation of the policy. 630
(g) Unless otherwise permitted by the plan of operation, the 631
association shall not issue, reissue or continue in force health care plan 632
coverage with respect to any person who is already covered under an 633
individual or group health care plan, or who is sixty-five years of age or 634
older and eligible for Medicare or who is not a resident of this state. 635
(h) Benefits payable under a health care plan insured by or reinsured 636
through the association shall be paid net of all other health insurance 637
benefits paid or payable through any other source, and net of all health 638
insurance coverages provided by or pursuant to any other state or 639
federal law including Title XVIII of the Social Security Act, Medicare, 640 Substitute Bill No. 5503
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but excluding Medicaid. 641
(i) There shall be no liability on the part of and no cause of action of 642
any nature shall arise against any carrier or its agents or its employees, 643
the Health Reinsurance Association or its agents or its employees or the 644
residual market mechanism established under the provisions of section 645
38a-557 or its agents or its employees, or the commissioner or the 646
commissioner's representatives for any action taken by them in the 647
performance of their duties under this section and sections 38a-551 and 648
[38a-556a] 38a-557 to 38a-559, inclusive. This provision shall not apply 649
to the obligations of a carrier, a self-insurer, the Health Reinsurance 650
Association or the residual market mechanism for payment of benefits 651
provided under a health care plan. 652
Sec. 11. Subdivision (4) of section 38a-564 of the general statutes is 653
repealed and the following is substituted in lieu thereof (Effective October 654
1, 2024): 655
(4) (A) "Small employer" means (i) prior to January 1, 2016, an 656
employer that employed an average of at least one but not more than 657
fifty employees on business days during the preceding calendar year 658
and employs at least one employee on the first day of the group health 659
insurance plan year, [and] (ii) on and after January 1, 2016, and prior to 660
January 1, 2025, an employer that employed an average of at least one 661
but not more than one hundred employees on business days during the 662
preceding calendar year and employs at least one employee on the first 663
day of the group health insurance plan year, [except the commissioner 664
may postpone said January 1, 2016, date to be consistent with any such 665
postponement made by the Secretary of the United States Department 666
of Health and Human Services under the Patient Protection and 667
Affordable Care Act, P.L. 111-148, as amended from time to time] and 668
(iii) on and after January 1, 2025, an employer that employed an average 669
of at least one but not more than fifty employees on business days 670
during the preceding calendar year and employs at least one employee 671
on the first day of the group health insurance plan year. "Small 672
employer" does not include a sole proprietorship that employs only the 673 Substitute Bill No. 5503
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sole proprietor or the spouse of such sole proprietor. 674
(B) (i) For purposes of subparagraph (A) of this subdivision, the 675
number of employees shall be determined by adding (I) the number of 676
full-time employees for each month who work a normal work week of 677
thirty hours or more, and (II) the number of full-time equivalent 678
employees, calculated for each month by dividing by one hundred 679
twenty the aggregate number of hours worked for such month by 680
employees who work a normal work week of less than thirty hours, and 681
averaging such total for the calendar year. 682
(ii) If an employer was not in existence throughout the preceding 683
calendar year, the number of employees shall be based on the average 684
number of employees that such employer reasonably expects to employ 685
in the current calendar year. 686
(C) All persons treated as a single employer under Section 414 of the 687
Internal Revenue Code of 1986, or any subsequent corresponding 688
internal revenue code of the United States, as amended from time to 689
time, shall be considered a single employer for purposes of this 690
subdivision. 691
Sec. 12. Subdivision (1) of section 38a-614 of the general statutes is 692
repealed and the following is substituted in lieu thereof (Effective October 693
1, 2024): 694
(1) Each domestic society transacting business in this state shall, 695
annually, on or before the first day of March, unless the commissioner 696
has extended such time for cause shown, file with the commissioner, 697
and electronically to the National Association of Insurance 698
Commissioners, a true and complete statement of its financial condition, 699
transactions and affairs for the preceding calendar year and pay the fee 700
specified in section 38a-11 for filing such annual statement. The 701
statement shall be in general form and context as approved by the 702
National Association of Insurance Commissioners for fraternal benefit 703
societies and as supplemented by additional information required by 704
the commissioner. An electronically filed true and complete report filed 705 Substitute Bill No. 5503
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in accordance with section 38a-53a that is timely submitted to the 706
National Association of Insurance Commissioners shall [not exempt a 707
domestic society from timely filing a true and complete paper copy with 708
the commissioner] be deemed to have been submitted to the 709
commissioner in accordance with the provisions of this section. 710
Sec. 13. Subsection (b) of section 38a-591l of the general statutes is 711
repealed and the following is substituted in lieu thereof (Effective October 712
1, 2024): 713
(b) (1) Any independent review organization seeking to conduct 714
external reviews and expedited external reviews under section 38a-591g 715
shall submit the application form for approval or reapproval, as 716
applicable, to the commissioner and shall include all documentation 717
and information necessary for the commissioner to determine if the 718
independent review organization satisfies the minimum qualifications 719
established under this section. 720
(2) An approval or reapproval shall be effective for [two] three years, 721
unless the commissioner determines before the expiration of such 722
approval or reapproval that the independent review organization no 723
longer satisfies the minimum qualifications established under this 724
section. 725
(3) Whenever the commissioner determines that an independent 726
review organization has lost its accreditation or no longer satisfies the 727
minimum requirements established under this section, the 728
commissioner shall terminate the approval of the independent review 729
organization and remove the independent review organization from the 730
list of approved independent review organizations specified in 731
subdivision (2) of subsection (a) of this section. 732
Sec. 14. Section 38a-91aa of the general statutes is repealed and the 733
following is substituted in lieu thereof (Effective October 1, 2024): 734
As used in this section, sections 38a-91bb to 38a-91uu, inclusive, [and] 735
sections 38a-91ww, [and] 38a-91xx and section 15 of this act: 736 Substitute Bill No. 5503
LCO 24 of 33
(1) "Affiliated company" means any company in the same corporate 737
system as a parent, an industrial insured or a member organization by 738
virtue of common ownership, control, operation or management. 739
(2) "Agency captive insurance company" means a captive insurance 740
company that: 741
(A) Is owned or directly or indirectly controlled by one or more 742
insurance agents or insurance producers licensed in accordance with 743
sections 38a-702a to 38a-702r, inclusive; 744
(B) Only insures against risks covered by insurance policies sold, 745
solicited or negotiated through the insurance agents or insurance 746
producers that own or control such captive insurance company; and 747
(C) Does not insure against risks covered by any health insurance 748
policy or plan. 749
(3) "Alien captive insurance company" means any insurance 750
company formed to write insurance business for its parent and affiliated 751
companies and licensed pursuant to the laws of an alien jurisdiction that 752
imposes statutory or regulatory standards on companies transacting the 753
business of insurance in such jurisdiction that the commissioner deems 754
to be acceptable. 755
(4) "Association" means any legal association of individuals, 756
corporations, limited liability companies, partnerships, associations or 757
other entities, where the association itself or some or all of the member 758
organizations: 759
(A) Directly or indirectly own, control or hold with power to vote all 760
of the outstanding voting securities or other voting interests of an 761
association captive insurance company incorporated as a stock insurer; 762
(B) Have complete voting control over an association captive 763
insurance company incorporated as a mutual corporation or formed as 764
a limited liability company; or 765 Substitute Bill No. 5503
LCO 25 of 33
(C) Constitute all of the subscribers of an association captive 766
insurance company formed as a reciprocal insurer. 767
(5) "Association captive insurance company" means any company 768
that insures risks of the member organizations of an association, and 769
includes a company that also insures risks of such member 770
organizations' affiliated companies or of the association. 771
(6) "Branch business" means any insurance business transacted in this 772
state by a branch captive insurance company. 773
(7) "Branch captive insurance company" means any alien captive 774
insurance company or foreign captive insurance company licensed by 775
the commissioner to transact the business of insurance in this state 776
through a business unit with a principal place of business in this state. 777
(8) "Branch operations" means any business operations in this state of 778
a branch captive insurance company. 779
(9) "Captive insurance company" means any (A) pure captive 780
insurance company, agency captive insurance company, association 781
captive insurance company, industrial insured captive insurance 782
company, risk retention group, sponsored captive insurance company 783
or special purpose financial captive insurance company that is 784
domiciled in this state and formed or licensed under the provisions of 785
this section and sections 38a-91bb to 38a-91tt, inclusive, or (B) branch 786
captive insurance company. 787
(10) "Ceding insurer" means an insurance company, approved by the 788
commissioner and licensed or otherwise authorized to transact the 789
business of insurance or reinsurance in its state or country of domicile, 790
that cedes risk to a special purpose financial captive insurance company 791
pursuant to a reinsurance contract. 792
(11) "Commissioner" means the Insurance Commissioner. 793
(12) "Controlled unaffiliated business" means any person: 794 Substitute Bill No. 5503
LCO 26 of 33
(A) Who, (i) in the case of a pure captive insurance company, is not 795
in the corporate system of a parent and the parent's affiliated companies, 796
(ii) in the case of an industrial insured captive insurance company, is not 797
in the corporate system of an industrial insured and the industrial 798
insured's affiliated companies, or (iii) in the case of a sponsored captive 799
insurance company, is not in the corporate system of a participant and 800
the participant's affiliated companies; 801
(B) Who, (i) in the case of a pure captive insurance company, has an 802
existing contractual relationship with a parent or one of the parent's 803
affiliated companies, (ii) in the case of an industrial insured captive 804
insurance company, has an existing contractual relationship with an 805
industrial insured or one of the industrial insured's affiliated companies, 806
or (iii) in the case of a sponsored captive insurance company, has an 807
existing contractual relationship with a participant or one of the 808
participant's affiliated companies; and 809
(C) Whose risks are managed by a pure captive insurance company, 810
an industrial insured captive insurance company or a sponsored captive 811
insurance company, as applicable, in accordance with section 38a-91qq. 812
(13) "Excess workers' compensation insurance" means, in the case of 813
an employer that has insured or self-insured its workers' compensation 814
risks in accordance with applicable state or federal law, insurance in 815
excess of a specified per-incident or aggregate limit established by the 816
commissioner. 817
(14) "Foreign captive insurance company" means any insurance 818
company formed to write insurance business for its parent and affiliated 819
companies and licensed pursuant to the laws of a foreign jurisdiction 820
that imposes statutory or regulatory standards on companies 821
transacting the business of insurance in such jurisdiction that the 822
commissioner deems to be acceptable. 823
(15) "Incorporated protected cell" means a protected cell that is 824
established as a corporation or a limited liability company, separate 825
from the sponsored captive insurance company with which it has 826 Substitute Bill No. 5503
LCO 27 of 33
entered into a participant contract. 827
(16) "Industrial insured" means an insured: 828
(A) Who procures the insurance of any risk or risks by use of the 829
services of a full-time employee acting as an insurance manager or 830
buyer; 831
(B) Whose aggregate annual premiums for insurance on all risks total 832
at least twenty-five thousand dollars; and 833
(C) Who has at least twenty-five full-time employees. 834
(17) "Industrial insured captive insurance company" means any 835
company that insures risks of the industrial insureds that comprise an 836
industrial insured group, and includes a company that also insures risks 837
of such industrial insureds' affiliated companies. 838
(18) "Industrial insured group" means any group of industrial 839
insureds that collectively: 840
(A) Directly or indirectly own, control or hold with power to vote all 841
of the outstanding voting securities or other voting interests of an 842
industrial insured captive insurance company incorporated as a stock 843
insurer; 844
(B) Have complete voting control over an industrial insured captive 845
insurance company incorporated as a mutual corporation or formed as 846
a limited liability company; or 847
(C) Constitute all of the subscribers of an industrial insured captive 848
insurance company formed as a reciprocal insurer. 849
(19) "Insurance securitization" or "securitization" means a transaction 850
or a group of related transactions, which may include capital market 851
offerings, that are effected through related risk transfer instruments and 852
facilitating administrative agreements, in which all or part of the result 853
of such transaction is used to fund a special purpose financial captive 854 Substitute Bill No. 5503
LCO 28 of 33
insurance company's obligations under a reinsurance contract with a 855
ceding insurer and by which: 856
(A) A special purpose financial captive insurance company directly 857
or indirectly obtains proceeds through the issuance of securities by such 858
company or any other person; or 859
(B) A person provides, for the benefit of a special purpose financial 860
captive insurance company, one or more letters of credit or other assets 861
that the commissioner has authorized such company to treat as 862
admitted assets for purposes of its annual report. "Insurance 863
securitization" or "securitization" does not include the issuance of a 864
letter of credit for the benefit of the commissioner to satisfy all or part of 865
a special purpose financial captive insurance company's capital and 866
surplus requirements under section 38a-91dd. 867
(20) "Member organization" means any individual, corporation, 868
limited liability company, partnership, association or other entity that 869
belongs to an association. 870
(21) "Mutual corporation" means a corporation organized without 871
stockholders and includes a nonprofit corporation with members. 872
(22) "Parent" means any individual, corporation, limited liability 873
company, partnership or other entity that directly or indirectly owns, 874
controls or holds with power to vote more than fifty per cent of the 875
outstanding voting: 876
(A) Securities of a pure captive insurance company organized as a 877
stock insurer; or 878
(B) Membership interests of a pure captive insurance company 879
organized as a nonprofit corporation or as a limited liability company. 880
(23) "Participant" means any association, corporation, limited liability 881
company, partnership, trust or other entity, and any affiliated company 882
or controlled unaffiliated business thereof, that is insured by a 883
sponsored captive insurance company pursuant to a participant 884 Substitute Bill No. 5503
LCO 29 of 33
contract. 885
(24) "Participant contract" means a contract entered into by a 886
sponsored captive insurance company and a participant by which the 887
sponsored captive insurance company insures the risks of the 888
participant and limits the losses of each such participant to its pro rata 889
share of the assets of one or more protected cells identified in such 890
participant contract. 891
(25) "Protected cell" means a separate account established by a 892
sponsored captive insurance company, in which assets are maintained 893
for one or more participants in accordance with the terms of one or more 894
participant contracts to fund the liability of the sponsored captive 895
insurance company assumed on behalf of such participants as set forth 896
in such participant contracts. 897
(26) "Pure captive insurance company" means any company that 898
insures risks of its parent and affiliated companies or controlled 899
unaffiliated business. 900
(27) "Reinsurance contract" means a contract entered into by a special 901
purpose financial captive insurance company and a ceding insurer by 902
which the special purpose financial captive insurance company agrees 903
to provide reinsurance to the ceding insurer for risks associated with the 904
ceding insurer's insurance or reinsurance business. 905
(28) "Risk retention group" means a captive insurance company 906
organized under the laws of this state pursuant to the federal Liability 907
Risk Retention Act of 1986, 15 USC 3901 et seq., as amended from time 908
to time, as a stock insurer or mutual corporation, a reciprocal or other 909
limited liability entity. 910
(29) "Security" has the same meaning as provided in section 36b-3 and 911
includes any form of debt obligation, equity, surplus certificate, surplus 912
note, funding agreement, derivative or other financial instrument that 913
the commissioner designates as a security for purposes of this section 914
and sections 38a-91bb to 38a-91tt, inclusive. 915 Substitute Bill No. 5503
LCO 30 of 33
(30) "Special purpose financial captive insurance company" means a 916
company that is licensed by the commissioner in accordance with 917
section 38a-91bb. 918
(31) "Special purpose financial captive insurance company security" 919
means a security issued by (A) a special purpose financial captive 920
insurance company, or (B) a third party, the proceeds of which are 921
obtained directly or indirectly by a special purpose financial captive 922
insurance company. 923
(32) "Sponsor" means any association, corporation, limited liability 924
company, partnership, trust or other entity that is approved by the 925
commissioner to organize and operate a sponsored captive insurance 926
company and to provide all or part of the required unimpaired paid-in 927
capital and surplus. 928
(33) "Sponsored captive insurance company" means a captive 929
insurance company: 930
(A) In which the minimum required unimpaired paid-in capital and 931
surplus are provided by one or more sponsors; 932
(B) That insures risks of its participants only through separate 933
participant contracts; and 934
(C) That funds its liability to each participant through one or more 935
protected cells and segregates the assets of each protected cell from the 936
assets of other protected cells and from the assets of the sponsored 937
captive insurance company's general account. 938
(34) "Surplus note" means an unsecured subordinated debt obligation 939
possessing characteristics consistent with the National Association of 940
Insurance Commissioners Statement of Statutory Accounting Principles 941
No. 41, as amended from time to time, and as modified or supplemented 942
by the commissioner. 943
Sec. 15. (NEW) (Effective October 1, 2024) (a) (1) Any sponsored captive 944
insurance company, including a sponsored captive insurance company 945 Substitute Bill No. 5503
LCO 31 of 33
licensed as a special purpose financial captive insurance company, may, 946
upon application of such sponsored captive insurance company and 947
with the commissioner's prior written approval, convert one or more 948
protected cells or incorporated protected cells into a: 949
(A) Single protected cell or incorporated protected cell; 950
(B) New sponsored captive insurance company; 951
(C) New sponsored captive insurance company licensed as a special 952
purpose financial captive insurance company; 953
(D) New special purpose financial captive insurance company; 954
(E) New pure captive insurance company; 955
(F) New risk retention group; 956
(G) New agency captive insurance company; 957
(H) New industrial insured captive insurance company; or 958
(I) New association captive insurance company. 959
(2) Any such conversion of a protected cell or incorporated protected 960
cell, in accordance with subdivision (1) of this subsection, shall be 961
subject to the provisions of sections 38a-91aa to 38a-91xx, inclusive, of 962
the general statutes, as amended by this act, as applicable, and such 963
sponsored captive insurance company's plan of operation approved by 964
the commissioner, without affecting such converted protected cell's or 965
incorporated protected cell's assets, rights, benefits, obligations and 966
liabilities. 967
(b) Any conversion of a protected cell or incorporated protected cell 968
shall be deemed to be a continuation of such protected cell's or 969
incorporated protected cell's existence together with all of such 970
protected cell's or incorporated protected cell's assets, rights, benefits, 971
obligations and liabilities, as (1) a new protected cell or incorporated 972
protected cell, (2) a sponsored captive insurance company, (3) a 973 Substitute Bill No. 5503
LCO 32 of 33
sponsored captive insurance company licensed as a special purpose 974
financial captive insurance company, (4) a pure captive insurance 975
company, (5) a risk retention group, (6) an industrial insured captive 976
insurance company, or (7) an association captive insurance company, as 977
applicable. Any such conversion of a protected cell or incorporated 978
protected cell shall be deemed to occur without any transfer or 979
assignment of such cell's assets, rights, benefits, obligations or liabilities, 980
and without the creation of any reversionary interest in, or impairment 981
of, any such assets, rights, benefits, obligations or liabilities. 982
(c) Any conversion of a protected cell or incorporated protected cell 983
shall not be construed to limit any rights or protections applicable to 984
such converted protected cell or incorporated protected cell or 985
applicable to such sponsored captive insurance company or sponsored 986
captive insurance company licensed as a special purpose financial 987
captive insurance company, as applicable, that existed immediately 988
prior to the date of such conversion. 989
(d) Any protected cell or incorporated protected cell that converts 990
into an incorporated protected cell, a new captive insurance company 991
or risk retention group, in accordance with the provisions of this section, 992
shall perform such conversion in accordance with chapter 601 or 613 of 993
the general statutes, as applicable, or in accordance with any such 994
provisions of the general statutes applicable to the formation of any 995
other type of legal entity permissible under the laws of this state, as 996
applicable. 997
Sec. 16. Section 38a-556a of the general statutes is repealed. (Effective 998
from passage) 999
This act shall take effect as follows and shall amend the following
sections:
Section 1 October 1, 2024 38a-8
Sec. 2 October 1, 2024 38a-16
Sec. 3 October 1, 2024 38a-790(a)
Sec. 4 October 1, 2024 38a-792(a) Substitute Bill No. 5503
LCO 33 of 33
Sec. 5 October 1, 2024 38a-48
Sec. 6 October 1, 2024 38a-53(a)
Sec. 7 October 1, 2024 38a-54(a)
Sec. 8 October 1, 2024 38a-297
Sec. 9 January 1, 2025 38a-479ppp
Sec. 10 from passage 38a-556
Sec. 11 October 1, 2024 38a-564(4)
Sec. 12 October 1, 2024 38a-614(1)
Sec. 13 October 1, 2024 38a-591l(b)
Sec. 14 October 1, 2024 38a-91aa
Sec. 15 October 1, 2024 New section
Sec. 16 from passage Repealer section
INS Joint Favorable Subst.