Connecticut 2024 2024 Regular Session

Connecticut House Bill HB05503 Comm Sub / Analysis

Filed 06/13/2024

                    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 24-138—sHB 5503 
Commerce Committee 
Insurance and Real Estate Committee 
 
AN ACT CONCERNING IN SURANCE MARKET CONDU CT AND 
INSURANCE LICENSING, THE INSURANCE DEPARTMENT'S 
TECHNICAL CORRECTION S AND OTHER REVISION S TO THE 
INSURANCE STATUTES A ND CAPTIVE INSURANCE 
 
TABLE OF CONTENTS: 
 
§§ 1 & 2 — INSURANCE COMMISSIONER’S ENFORCEMENT 
AUTHORITY 
Allows the insurance commissioner to impose restitution, with interest, when someone violates the 
state’s insurance laws, regulations, or commissioner orders; allows the commissioner to ask the 
attorney general to apply for a court order enforcing insurance laws and commissioner orders or 
providing restitution with interest 
§ 3 — 30 DAYS TO TURN OVER DOCUMENTS 
Sets a 30-day deadline to comply with an Insurance Department request to provide documents 
related to an investigation 
§§ 4 & 5 — EXPIRATION DATE FOR CERTAIN INITIAL LICENSES 
Revises the expiration date for initial licenses issued to motor vehicle damage appraisers and 
casualty claims adjusters from June 30 in an odd-numbered year to two years after the licensee’s 
birthday preceding the license’s issuance 
§ 6 — GENERAL INSURANCE ASSESSMENT PROCE SS 
Removes the Office of the Healthcare Advocate from the Insurance Department’s annual process 
of assessing carriers for the general insurance assessment 
§§ 7, 8 & 12 — ELECTRONIC FILINGS IN LIEU OF PAPER FILINGS 
Removes requirements that insurers file copies of annual financial statements and audited 
financial reports with the insurance commissioner, allowing electronic filings to the NAIC to 
suffice 
§ 9 — NON-ENGLISH INSURANCE DOCUMENTS AN D TRANSLATIONS 
Requires insurers who file policies in a non-English language to certify that they comply with 
readable language requirements and bear the risks associated with any translations; allows the 
insurance commissioner to hire translation services at the insurer’s cost 
§ 10 — PHARMACY BENE FIT MANAGER REPORT DUE DA TE 
Moves up the annual due date for PBMs to report rebate information to the insurance 
commissioner by one month; requires the commissioner to give the PBMs a copy of his annual  O L R P U B L I C A C T S U M M A R Y 
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report to the Insurance and Real Estate Committee at least 10 days before it is due to the 
committee 
§ 11 — SMALL EMPLOYER DEFINITION 
Beginning January 1, 2025, updates the state’s definition of “small employer” in the health 
insurance statutes to mean having no more than 50 employees 
§ 13 — INDEPENDENT REVIEW ORGANIZATION A CCREDITATION 
PERIOD 
Extends the accreditation approval or reapproval period for independent review organizations 
from two to three years 
§§ 14 & 15 — CAPTIVE INSURER CONVERSION OF PROTECTED CELLS 
Allows a captive insurer’s protected cell to convert into a new protected cell, incorporated cell, or 
captive insurance company without any impact on the protected cell’s assets, rights, benefits, 
obligations, and liabilities 
§ 16 — COVERED CONNECTICUT PROGRAM 
Requires the Covered Connecticut program to include only in-network providers and services, 
unless the insurance commissioner determines the health carrier’s network is inadequate 
§§ 17 & 18 — CONNECTICUT CLEARINGHOUSE REPEALED 
Repeals a requirement that the Health Reinsurance Association develop the Connecticut 
Clearinghouse on health insurance policies available in the state 
 
SUMMARY: This act makes numerous unrelated changes to insurance statutes, as 
summarized in the section-by-section analysis below. 
EFFECTIVE DATE: October 1, 2024, unless otherwise stated below. 
 
§§ 1 & 2 — INSURANCE COMMISSIONER’S ENFORCEMENT AUTHORITY 
 
Allows the insurance commissioner to impose restitution, with interest, when someone violates the 
state’s insurance laws, regulations, or commissioner orders; allows the commissioner to ask the 
attorney general to apply for a court order enforcing insurance laws and commissioner orders or 
providing restitution with interest 
 
By law, the insurance commissioner must administer and enforce the laws on 
insurance companies and health care centers (i.e., HMOs). Relatedly, the law grants 
him the reasonable and necessary powers to protect the public interest. 
The act explicitly allows the commissioner to order restitution of any amount 
obtained in violation of the state’s insurance laws, regulations, or commissioner 
orders, plus interest as allowed under another state law. This is generally 10% 
interest per year (CGS § 37-3a). 
The act also allows the commissioner to ask the attorney general to apply to 
Superior Court for an order (1) restraining and enjoining a person from violating 
any Title 38a provision (i.e., the insurance laws); (2) enforcing any commissioner-
imposed order, penalty, or remedy; or (3) for restitution, with interest, for the  O L R P U B L I C A C T S U M M A R Y 
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amount the person obtained in violation of the insurance laws. (Under existing law, 
the commissioner may already ask the attorney general to apply to Superior Court 
for a permanent or temporary order restraining a person from violating the 
insurance laws (CGS § 38a-16(b)).) 
Additionally, state law allows the commissioner to enforce the insurance laws, 
and impose a penalty or remedy authorized by them, against any person even if the 
person’s license or registration has been surrendered or has lapsed. The act also 
allows him to take these actions if the person’s license or registration has been 
revoked. 
 
§ 3 — 30 DAYS TO TURN OVER DOCUMEN TS 
 
Sets a 30-day deadline to comply with an Insurance Department request to provide documents 
related to an investigation 
 
By law, the insurance commissioner may conduct investigations and hearings 
on any matter under the insurance laws. He may, among other things, order the 
production of books, records, papers, or documents for an investigation. 
The act requires that anyone who receives a request to produce books, records, 
papers, or documents comply with the order within 30 days after the date of the 
order. By law, if a person refuses to comply, the commissioner may ask the Superior 
Court to order compliance. 
 
§§ 4 & 5 — EXPIRATION DATE FOR CERTAIN INITIAL LICENSES 
 
Revises the expiration date for initial licenses issued to motor vehicle damage appraisers and 
casualty claims adjusters from June 30 in an odd-numbered year to two years after the licensee’s 
birthday preceding the license’s issuance 
 
Under prior law, initial licenses for motor vehicle damage appraisers and 
casualty claim adjusters expired on June 30 of the odd-numbered year following 
the license issuance, unless revoked or suspended earlier. The act changes this 
expiration date to two years after the licensee’s birthday preceding the date the 
license was issued, unless it was already revoked or suspended. By law, a licensee 
may renew the license every two years at the insurance commissioner’s discretion 
with payment of the required renewal fees.  
 
§ 6 — GENERAL INSURANCE ASSESSMENT PROCESS 
 
Removes the Office of the Healthcare Advocate from the Insurance Department’s annual process 
of assessing carriers for the general insurance assessment 
 
By law, domestic insurers and HMOs pay an annual assessment to the Insurance 
Department to cover the expenses of the Insurance Department, Office of the 
Healthcare Advocate, and Office of Health Strategy, among other things.  
Under prior law, the insurance commissioner and the Office of the Healthcare 
Advocate assessed the entities following a process set in state law. The act removes 
the Office of the Healthcare Advocate from this process, leaving the insurance  O L R P U B L I C A C T S U M M A R Y 
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commissioner to manage the assessment process. 
It also makes technical and conforming changes. 
 
§§ 7, 8 & 12 — ELECTRONIC FILINGS IN LIEU OF PAPER FILINGS 
 
Removes requirements that insurers file copies of annual financial statements and audited 
financial reports with the insurance commissioner, allowing electronic filings to the NAIC to 
suffice 
 
Prior law required domestic insurers, HMOs, and fraternal benefit societies to 
file copies of annual financial statements and audited financial reports with the 
insurance commissioner as well as electronically with the National Association of 
Insurance Commissioners (NAIC). The act eliminates the requirement to submit 
these to the commissioner. Instead, it deems the companies’ electronic submissions 
to the NAIC to have been filed with the commissioner. 
 
§ 9 — NON-ENGLISH INSURANCE DOCUMENTS AN D TRANSLATIONS 
 
Requires insurers who file policies in a non-English language to certify that they comply with 
readable language requirements and bear the risks associated with any translations; allows the 
insurance commissioner to hire translation services at the insurer’s cost 
 
By law, insurance policies filed with the Insurance Department must meet 
certain readability standards (e.g., Flesch reading ease scores and print 
specifications). As under prior law, the act allows insurers to file policies in any 
language. The insurer must certify that the policy complies with the readability 
standards or is translated from a policy that complies. 
The act allows the insurance commissioner to hire a translation service to 
review a non-English-language policy filed by an insurer. The insurer that filed the 
policy must pay the cost of the translation. Alternatively, the commissioner may 
require the insurer to provide an English-translated copy of the policy and a 
certification as to the translation’s accuracy. The act requires the insurer to accept 
all risks associated with a translation. 
The act also allows the commissioner to adopt implementing regulations. 
 
§ 10 — PHARMACY BENE FIT MANAGER REPORT DUE DATE 
 
Moves up the annual due date for PBMs to report rebate information to the insurance 
commissioner by one month; requires the commissioner to give the PBMs a copy of his annual 
report to the Insurance and Real Estate Committee at least 10 days before it is due to the 
committee 
 
By law, each pharmacy benefit manager (PBM) must annually file a report on 
prescription drug rebates with the insurance commissioner. Under prior law, the 
report was due by March 1. The act moves up the due date to February 1, beginning 
in 2025.  
The law also requires the commissioner to report annually to the Insurance and 
Real Estate Committee by March 1 on the PBMs’ rebate reports. Under prior law,  O L R P U B L I C A C T S U M M A R Y 
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the commissioner had to give the PBMs an advanced copy of this report by 
February 1 annually. The act instead requires him to provide the copy at least 10 
days before he reports to the committee. 
EFFECTIVE DATE: January 1, 2025 
 
§ 11 — SMALL EMPLOYER DEFINITION 
 
Beginning January 1, 2025, updates the state’s definition of “small employer” in the health 
insurance statutes to mean having no more than 50 employees 
 
Beginning January 1, 2025, the act defines “small employer” under the health 
insurance laws to mean an employer with an average of at least one and no more 
than 50 employees on business days in the prior calendar year and at least one 
employee on the first day of the group health insurance plan year. 
Prior law extended the definition to employers with an average of no more than 
100 employees, except that the insurance commissioner could postpone that 
definition to be consistent with the federal Affordable Care Act. (The commissioner 
did so in Insurance Bulletin HC-106 (2015). So, in practice, the small employer 
definition has been no more than an average of 50 employees since before 2016.) 
 
§ 13 — INDEPENDENT REVIEW ORGANIZATION A CCREDITATION 
PERIOD 
 
Extends the accreditation approval or reapproval period for independent review organizations 
from two to three years 
 
By law, the insurance commissioner maintains a list of accredited independent 
review organizations available to conduct regular or expedited external reviews of 
health insurance grievances. The act extends the accreditation period from two 
years under prior law to three. As under existing law, if the commissioner 
determines that an organization no longer meets the minimum requirements for 
accreditation, he must end its approval and remove it from the list of approved 
organizations. 
 
§§ 14 & 15 — CAPTIVE INSURER CONVERSION OF PROTECTED CELLS 
 
Allows a captive insurer’s protected cell to convert into a new protected cell, incorporated cell, or 
captive insurance company without any impact on the protected cell’s assets, rights, benefits, 
obligations, and liabilities 
 
Captive Insurer 
 
Generally, a captive insurer is an insurance company formed to insure or 
reinsure the risks of its owners, parent company, or affiliated company. The law 
allows several different types of captive insurers to be licensed and operate in the 
state, including a sponsored captive insurer. 
A sponsored captive insurer is an insurance company (1) for which one or more 
sponsors provide the minimum paid-in capital and surplus, (2) that insures its  O L R P U B L I C A C T S U M M A R Y 
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participants through separate participant contracts, and (3) that funds its liability to 
each participant through protected cells and separates each cell’s assets from that 
of other cells and the captive insurer as a whole. PA 23-15 allowed these protected 
cells to establish, with the insurance commissioner’s prior written approval, 
separate accounts and allocate assets to them, subject to certain requirements. 
 
Conversion of Protected Cell Allowed 
 
The act allows sponsored captive insurers to convert protected or incorporated 
protected cells into one of the following other insurance company structures or 
types of accounts: 
1. a single protected or incorporated protected cell; 
2. a new sponsored captive insurer (including those licensed as a special 
purpose financial captive insurer); 
3. a new special purpose financial captive, pure captive, agency captive, 
industrial insured captive, or association captive insurer; or 
4. a new risk retention group. 
Any conversion is deemed to (1) be a continuation of the cell’s existence, with 
all of its assets, rights, benefits, obligations, and liabilities, and (2) occur without 
any transfer or assignment of these assets, rights, benefits, obligations, and 
liabilities and without creating any reversionary interest in or impairment of them. 
The act specifies that the conversion does not limit any rights or protections 
applicable to the cell or the sponsored captive that existed before the conversion. 
 
Conversion Process 
 
Under the act, a sponsored captive must apply to the insurance commissioner 
and receive his prior written approval for the conversion. Additionally, the act 
subjects the conversion to the existing laws regulating captives and the sponsored 
captive insurer’s plan of operation approved by the commissioner, without 
affecting the converted cell’s assets, rights, benefits, obligations, and liabilities.  
For cells that convert into an incorporated protected cell or a new captive insurer 
or risk retention group, the conversion must follow all existing business corporation 
or limited liability company laws that apply to the newly formed business or legal 
entity. 
 
§ 16 — COVERED CONNECTICUT PROGRAM 
 
Requires the Covered Connecticut program to include only in-network providers and services, 
unless the insurance commissioner determines the health carrier’s network is inadequate 
 
By law, the Covered Connecticut program provides eligible individuals with 
health insurance, including dental benefits and non-emergency medical transport, 
at no out-of-pocket cost to them. 
The act requires that the program only include in-network providers and 
services, unless the insurance commissioner determines the health carrier’s network 
is inadequate. Eligible individuals will only receive the benefits and cost-sharing  O L R P U B L I C A C T S U M M A R Y 
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subsidies available under the program if they use in-network providers or facilities. 
 
§§ 17 & 18 — CONNECTICUT CLEARINGHOUSE REPEALED 
 
Repeals a requirement that the Health Reinsurance Association develop the Connecticut 
Clearinghouse on health insurance policies available in the state 
 
Prior law required the Health Reinsurance Association to develop the 
Connecticut Clearinghouse as a resource for individuals and small employers to get 
information on health insurance policies and plans available in the state. The act 
repeals this requirement. (The clearinghouse has largely been replaced by the health 
insurance exchange, Access Health CT.) 
EFFECTIVE DATE: Upon passage