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Connecticut House Bill HB05503

Connecticut 2024 Regular Session

Connecticut House Bill HB05503 Compare Versions

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5+General Assembly Substitute Bill No. 5503
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6-Public Act No. 24-138
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912 AN ACT CONCERNING INSURANCE MARKET CONDUCT AND
1013 INSURANCE LICENSING, THE INSURANCE DEPARTMENT'S
1114 TECHNICAL CORRECTIONS AND OTHER REVISIONS TO THE
1215 INSURANCE STATUTES AND CAPTIVE INSURANCE.
1316 Be it enacted by the Senate and House of Representatives in General
1417 Assembly convened:
1518
16-Section 1. Subsection (a) of section 38a-8 of the 2024 supplement to
17-the general statutes is repealed and the following is substituted in lieu
18-thereof (Effective October 1, 2024):
19-(a) The commissioner shall see that all laws respecting insurance
20-companies and health care centers are faithfully executed and shall
21-administer and enforce the provisions of this title. The commissioner
22-shall have all powers specifically granted, and all further powers that
23-are reasonable and necessary to enable the commissioner to protect the
24-public interest in accordance with the duties imposed by this title,
25-including, but not limited to, the power to order restitution of any sums
26-obtained in violation of any provision of this title, or any regulation or
27-order adopted or issued pursuant to this title by the commissioner, plus
28-interest at the rate set forth in section 37-3a. The commissioner shall pay
29-to the Treasurer all the fees that the commissioner receives. The
30-commissioner may administer oaths in the discharge of the
31-commissioner's duties. Substitute House Bill No. 5503
19+Section 1. Section 38a-8 of the 2024 supplement to the general statutes 1
20+is repealed and the following is substituted in lieu thereof (Effective 2
21+October 1, 2024): 3
22+(a) The commissioner shall see that all laws respecting insurance 4
23+companies and health care centers are faithfully executed and shall 5
24+administer and enforce the provisions of this title. The commissioner 6
25+shall have all powers specifically granted, and all further powers that 7
26+are reasonable and necessary to enable the commissioner to protect the 8
27+public interest in accordance with the duties imposed by this title, 9
28+including, but not limited to, the power to order restitution of any sums 10
29+obtained in violation of any provision of this title, or any regulation or 11
30+order adopted or issued pursuant to this title by the commissioner, plus 12
31+interest at the rate set forth in section 37-3a. The commissioner shall pay 13
32+to the Treasurer all the fees that the commissioner receives. The 14
33+commissioner may administer oaths in the discharge of the 15
34+commissioner's duties. 16 Substitute Bill No. 5503
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33-Public Act No. 24-138 2 of 34
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35-Sec. 2. Section 38a-702k of the general statutes is repealed and the
36-following is substituted in lieu thereof (Effective October 1, 2024):
37-(a) The commissioner may place on probation, suspend, revoke or
38-refuse to issue or renew an insurance producer's license or may levy a
39-civil penalty in accordance with the provisions of this title, or may take
40-any combination of such actions, for any one or more of the following
41-causes: (1) Providing incorrect, misleading, incomplete or materially
42-untrue information in the license application; (2) violating any insurance
43-laws, or violating any regulation, subpoena or order of the
44-commissioner or of another state's commissioner; (3) obtaining or
45-attempting to obtain a license through misrepresentation or fraud; (4)
46-improperly withholding, misappropriating or converting any moneys
47-or properties received in the course of doing an insurance business; (5)
48-intentionally misrepresenting the terms of an actual or proposed
49-insurance contract or application for insurance; (6) having been
50-convicted of a felony; (7) having admitted or been found to have
51-committed any insurance unfair trade practice or fraud; (8) using
52-fraudulent, coercive or dishonest practices, or demonstrating
53-incompetence, untrustworthiness or financial irresponsibility in the
54-conduct of business in this state or elsewhere; (9) having an insurance
55-producer license, or its equivalent, denied, suspended or revoked in any
56-other state, province, district or territory; (10) forging another's name to
57-an application for insurance or to any document related to an insurance
58-transaction; (11) improperly using notes or any other reference material
59-to complete an examination for an insurance license; (12) knowingly
60-accepting insurance business from an individual who is not licensed;
61-(13) failing to comply with an administrative or court order imposing a
62-child support obligation; or (14) failing to pay state income tax or
63-comply with any administrative or court order directing payment of
64-state income tax.
65-(b) If the action by the commissioner is to nonrenew a license or to Substitute House Bill No. 5503
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39+(b) The commissioner shall recommend to the General Assembly 17
40+changes that, in the commissioner's opinion, should be made in the laws 18
41+relating to insurance. 19
42+(c) In addition to the specific regulations that the commissioner is 20
43+required to adopt, the commissioner may adopt such further 21
44+regulations, in accordance with the provisions of chapter 54, as are 22
45+reasonable and necessary to implement the provisions of this title. 23
46+(d) The commissioner shall develop a program of periodic review to 24
47+ensure compliance by the Insurance Department with the minimum 25
48+standards established by the National Association of Insurance 26
49+Commissioners for effective financial surveillance and regulation of 27
50+insurance companies operating in this state. The commissioner shall 28
51+adopt regulations, in accordance with the provisions of chapter 54, 29
52+pertaining to the financial surveillance and solvency regulation of 30
53+insurance companies and health care centers as are reasonable and 31
54+necessary to obtain or maintain the accreditation of the Insurance 32
55+Department by the National Association of Insurance Commissioners. 33
56+The commissioner shall maintain as confidential any confidential 34
57+documents or information received from the National Association of 35
58+Insurance Commissioners, or the International Association of Insurance 36
59+Supervisors, or any documents or information received from state or 37
60+federal insurance, banking or securities regulators or similar regulators 38
61+in a foreign country that are confidential in such jurisdictions. The 39
62+commissioner may share any information, including confidential 40
63+information, with the National Association of Insurance 41
64+Commissioners, the International Association of Insurance Supervisors, 42
65+or state or federal insurance, banking or securities regulators or similar 43
66+regulators in a foreign country, provided the commissioner determines 44
67+that such entities agree to maintain the same level of confidentiality in 45
68+their jurisdictions as is available in this state. At the expense of a 46
69+domestic, alien or foreign insurer, the commissioner may engage the 47
70+services of attorneys, actuaries, accountants and other experts not 48
71+otherwise part of the commissioner's staff as may be necessary to assist 49
72+the commissioner in the financial analysis of the insurer, the review of 50 Substitute Bill No. 5503
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69-deny an application for a license, the commissioner shall notify the
70-applicant or licensee and advise, in writing, the applicant or licensee of
71-the reason for the denial or nonrenewal of the applicant's or licensee's
72-license. The applicant or licensee may make written demand upon the
73-commissioner, not later than thirty days after the notice, for a hearing
74-before the commissioner to determine the reasonableness of the
75-commissioner's action. The hearing shall be held not later than twenty
76-days after receipt of such request and shall be held pursuant to section
77-38a-19.
78-(c) The license of a business entity may be suspended, revoked or
79-refused if the commissioner finds, after hearing, that an individual
80-licensee's violation was known or should have been known by one or
81-more of the partners, officers or managers acting on behalf of the
82-partnership or corporation and the violation was neither reported to the
83-commissioner nor corrective action taken.
84-(d) In addition to or in lieu of any applicable denial, suspension or
85-revocation of a license, a person may, after hearing, be subject to a civil
86-fine pursuant to section 38a-774.
87-(e) The commissioner shall retain the authority to enforce the
88-provisions of, and impose any penalty or remedy authorized by, this
89-title against any person who is under investigation for or charged with
90-a violation of this title even if the person's license or registration has
91-been surrendered, revoked or has lapsed by operation of law.
92-(f) Unless otherwise provided in the provisions of this title, the
93-Attorney General may, at the request of the commissioner, apply to the
94-Superior Court for an order: (1) Temporarily or permanently restraining
95-and enjoining any person from violating any provision of this title, (2)
96-enforcing any order, penalty or remedy imposed by the commissioner,
97-or (3) providing restitution against any person for any sums shown by
98-the commissioner to have been obtained by such person in violation of Substitute House Bill No. 5503
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102-any such provision of this title.
103-Sec. 3. Section 38a-16 of the general statutes is repealed and the
104-following is substituted in lieu thereof (Effective October 1, 2024):
105-(a) (1) The Insurance Commissioner or the commissioner's authorized
106-representative may, as often as the commissioner deems necessary,
107-conduct investigations and hearings in aid of any investigation on any
108-matter under the provisions of this title. Pursuant to any such
109-investigation or hearing, the commissioner or the commissioner's
110-authorized representative may issue data calls, subpoenas, administer
111-oaths, compel testimony, order the production of books, records, papers
112-and documents, and examine books and records. Any person in receipt
113-of an order from the commissioner or the commissioner's authorized
114-representative for the production of books, records, papers or
115-documents shall comply with the order not later than thirty calendar
116-days after the date of such order. If any person refuses to allow the
117-examination of books and records, to appear, to testify or to produce
118-any book, record, paper or document when so ordered, a judge of the
119-Superior Court, upon application of the commissioner or the
120-commissioner's authorized representative, may make such order as may
121-be appropriate to aid in the enforcement of this section.
122-(2) Data provided in response to a data call under this section shall
123-not be subject to disclosure under section 1-210.
124-(b) The Attorney General, at the request of the commissioner, is
125-authorized to apply in the name of the state of Connecticut to the
126-Superior Court for an order temporarily or permanently restraining and
127-enjoining any person from violating any provision of this title.
128-Sec. 4. Subsection (a) of section 38a-790 of the general statutes is
129-repealed and the following is substituted in lieu thereof (Effective October
130-1, 2024): Substitute House Bill No. 5503
77+the insurer's license applications, and the review of transactions within 51
78+a holding company system involving an insurer domiciled in this state. 52
79+No duties of a person employed by the Insurance Department on 53
80+November 1, 2002, shall be performed by such attorney, actuary, 54
81+accountant or expert. 55
82+(e) The commissioner shall establish a program to reduce costs and 56
83+increase efficiency through the use of electronic methods to transmit 57
84+documents, including policy form and rate filings, to and from insurers 58
85+and the Insurance Department. The commissioner may sit as a member 59
86+of the board of a consortium organized by or in association with the 60
87+National Association of Insurance Commissioners for the purpose of 61
88+coordinating a system for electronic rate and form filing among state 62
89+insurance departments and insurers. 63
90+(f) The commissioner shall maintain as confidential information 64
91+obtained, collected or prepared in connection with examinations, 65
92+inspections or investigations, and complaints from the public received 66
93+by the Insurance Department, if such records are protected from 67
94+disclosure under federal law or state statute or, in the opinion of the 68
95+commissioner, such records would disclose, or would reasonably lead 69
96+to the disclosure of: (1) Investigative information the disclosure of which 70
97+would be prejudicial to such investigation, until such time as the 71
98+investigation is concluded; or (2) personal, financial or medical 72
99+information concerning a person who has filed a complaint or inquiry 73
100+with the Insurance Department, without the written consent of the 74
101+person or persons to whom the information pertains. 75
102+(g) The commissioner may, in the commissioner's discretion, engage 76
103+the services of such third-party actuaries, professionals and specialists 77
104+that the commissioner deems necessary to assist the commissioner in 78
105+reviewing any rate, form or similar filing submitted to the commissioner 79
106+pursuant to this title. The cost of such services shall be borne by the 80
107+person who submitted such rate, form or similar filing to the 81
108+commissioner. 82 Substitute Bill No. 5503
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134-(a) No person shall act as an appraiser for motor vehicle physical
135-damage claims on behalf of any insurance company or firm or
136-corporation engaged in the adjustment or appraisal of motor vehicle
137-claims unless such person has first secured a license from the Insurance
138-Commissioner, and has paid the license fee specified in section 38a-11,
139-for each two-year period or fraction thereof. The license shall be applied
140-for as provided in section 38a-769. The commissioner may waive the
141-requirement for examination in the case of any applicant for a motor
142-vehicle physical damage appraiser's license who is a nonresident of this
143-state and who holds an equivalent license from any other state. Any
144-[such license issued by the commissioner shall be in force until the
145-thirtieth day of June in each odd-numbered year] initial license issued
146-by the commissioner to an appraiser for motor vehicle physical damage
147-claims shall expire two years after the date of the licensee's birthday that
148-preceded the date the license was issued unless sooner revoked or
149-suspended. The license may, in the discretion of the commissioner, be
150-renewed biennially upon payment of the fee specified in section 38a-11.
151-The commissioner may adopt reasonable regulations concerning
152-standards for qualification, suspension or revocation of such licenses
153-and the methods by which licensees shall conduct their business.
154-Sec. 5. Subsection (a) of section 38a-792 of the general statutes is
155-repealed and the following is substituted in lieu thereof (Effective October
156-1, 2024):
157-(a) (1) No person may act as an adjuster of casualty claims for any
158-insurance company or firm or corporation engaged in the adjustment of
159-casualty claims unless such person has first secured a license from the
160-commissioner, and has paid the license fee specified in section 38a-11,
161-for each two-year period or fraction thereof. Application for such license
162-shall be made as provided in section 38a-769. Any [such license issued
163-by the commissioner shall be in force until June thirtieth in each odd-
164-numbered year] initial license issued to an adjuster of casualty claims Substitute House Bill No. 5503
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113+(h) The commissioner shall promote the development and growth of, 83
114+and employment opportunities within, the insurance industry in the 84
115+state. 85
116+(i) (1) Whenever the commissioner finds that any person has engaged 86
117+in or is about to engage in any act, practice or omission that constitutes, 87
118+or will constitute, a violation of any section of this title, or any regulation 88
119+or order adopted or issued by the commissioner implementing the 89
120+provisions of this title, the Attorney General may, at the request of the 90
121+commissioner, bring an action in the superior court for the judicial 91
122+district of Hartford for an order: (A) Enjoining such act, practice or 92
123+omission. Upon a showing by the commissioner that such person has 93
124+engaged in or is about to engage in any such act, practice or omission, 94
125+the court may issue a permanent or temporary injunction, restraining 95
126+order or other order, as appropriate. The commissioner shall not be 96
127+required to post a bond in such action; (B) imposing a penalty not to 97
128+exceed one hundred thousand dollars per violation against any such 98
129+person found by the commissioner to have violated any such section, 99
130+regulation or order; or (C) providing restitution against such person for 100
131+any sums shown by the commissioner to have been obtained by such 101
132+person in violation of any such section, regulation or order, plus interest 102
133+at the rate set forth in section 37-3a. 103
134+(2) Whenever the commissioner prevails in any action brought under 104
135+this subsection, the court may allow to the state any costs of such action. 105
136+Sec. 2. Section 38a-16 of the general statutes is repealed and the 106
137+following is substituted in lieu thereof (Effective October 1, 2024): 107
138+(a) (1) The Insurance Commissioner or the commissioner's authorized 108
139+representative may, as often as the commissioner deems necessary, 109
140+conduct investigations and hearings in aid of any investigation on any 110
141+matter under the provisions of this title. Pursuant to any such 111
142+investigation or hearing, the commissioner or the commissioner's 112
143+authorized representative may issue data calls, subpoenas, administer 113
144+oaths, compel testimony, order the production of books, records, papers 114 Substitute Bill No. 5503
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168-shall expire two years after the date of the licensee's birthday that
169-preceded the date the license was issued unless sooner revoked or
170-suspended. The [person] licensee may, at the discretion of the
171-commissioner, renew the license biennially thereafter upon payment of
172-the fee specified in section 38a-11.
173-(2) The commissioner may waive the examination required under
174-section 38a-769, in the case of any applicant for a casualty claims
175-adjuster's license that (A) is a nonresident of this state or has its principal
176-place of business in another state, and holds an equivalent license from
177-any other state, or (B) at any time within two years next preceding the
178-date of application has been licensed in this state under a license of the
179-same type as the license applied for.
180-Sec. 6. Section 38a-48 of the general statutes is repealed and the
181-following is substituted in lieu thereof (Effective October 1, 2024):
182-(a) On or before June thirtieth, annually, the Commissioner of
183-Revenue Services shall render to the Insurance Commissioner a
184-statement certifying the amount of taxes or charges imposed on each
185-domestic insurance company or other domestic entity under chapter 207
186-on business done in this state during the preceding calendar year. The
187-statement for local domestic insurance companies shall set forth the
188-amount of taxes and charges before any tax credits allowed as provided
189-in subsection (a) of section 12-202.
190-(b) On or before July thirty-first, annually, the Insurance
191-Commissioner [and the Office of the Healthcare Advocate] shall render
192-to each domestic insurance company or other domestic entity liable for
193-payment under section 38a-47: (1) A statement that includes (A) the
194-amount appropriated to the Insurance Department, the Office of the
195-Healthcare Advocate and the Office of Health Strategy from the
196-Insurance Fund established under section 38a-52a for the fiscal year
197-beginning July first of the same year, (B) the cost of fringe benefits for Substitute House Bill No. 5503
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201-department and office personnel for such year, as estimated by the
202-Comptroller, (C) the estimated expenditures on behalf of the
203-department and the offices from the Capital Equipment Purchase Fund
204-pursuant to section 4a-9 for such year, not including such estimated
205-expenditures made on behalf of the Health Systems Planning Unit of the
206-Office of Health Strategy, and (D) the amount appropriated to the
207-Department of Aging and Disability Services for the fall prevention
208-program established in section 17a-859 from the Insurance Fund for the
209-fiscal year; (2) a statement of the total taxes imposed on all domestic
210-insurance companies and domestic insurance entities under chapter 207
211-on business done in this state during the preceding calendar year; and
212-(3) the proposed assessment against that company or entity, calculated
213-in accordance with the provisions of subsection (c) of this section,
214-provided for the purposes of this calculation the amount appropriated
215-to the Insurance Department, the Office of the Healthcare Advocate and
216-the Office of Health Strategy from the Insurance Fund plus the cost of
217-fringe benefits for department and office personnel and the estimated
218-expenditures on behalf of the department and [the office] such offices
219-from the Capital Equipment Purchase Fund pursuant to section 4a-9,
220-not including such expenditures made on behalf of the Health Systems
221-Planning Unit of the Office of Health Strategy shall be deemed to be the
222-actual expenditures of the department and [the office] such offices, and
223-the amount appropriated to the Department of Aging and Disability
224-Services from the Insurance Fund for the fiscal year for the fall
225-prevention program established in section 17a-859 shall be deemed to
226-be the actual expenditures for the program.
227-(c) (1) The proposed assessments for each domestic insurance
228-company or other domestic entity shall be calculated by (A) allocating
229-twenty per cent of the amount to be paid under section 38a-47 among
230-the domestic entities organized under sections 38a-199 to 38a-209,
231-inclusive, and 38a-214 to 38a-225, inclusive, in proportion to their
232-respective shares of the total taxes and charges imposed under chapter Substitute House Bill No. 5503
149+and documents, and examine books and records. Any person in receipt 115
150+of an order from the commissioner or the commissioner's authorized 116
151+representative for the production of books, records, papers or 117
152+documents shall comply with the order not later than thirty calendar 118
153+days after the date of such order. If any person refuses to allow the 119
154+examination of books and records, to appear, to testify or to produce 120
155+any book, record, paper or document when so ordered, a judge of the 121
156+Superior Court, upon application of the commissioner or the 122
157+commissioner's authorized representative, may make such order as may 123
158+be appropriate to aid in the enforcement of this section. 124
159+(2) Data provided in response to a data call under this section shall 125
160+not be subject to disclosure under section 1-210. 126
161+(b) The Attorney General, at the request of the commissioner, is 127
162+authorized to apply in the name of the state of Connecticut to the 128
163+Superior Court for an order temporarily or permanently restraining and 129
164+enjoining any person from violating any provision of this title. 130
165+Sec. 3. Subsection (a) of section 38a-790 of the general statutes is 131
166+repealed and the following is substituted in lieu thereof (Effective October 132
167+1, 2024): 133
168+(a) No person shall act as an appraiser for motor vehicle physical 134
169+damage claims on behalf of any insurance company or firm or 135
170+corporation engaged in the adjustment or appraisal of motor vehicle 136
171+claims unless such person has first secured a license from the Insurance 137
172+Commissioner, and has paid the license fee specified in section 38a-11, 138
173+for each two-year period or fraction thereof. The license shall be applied 139
174+for as provided in section 38a-769. The commissioner may waive the 140
175+requirement for examination in the case of any applicant for a motor 141
176+vehicle physical damage appraiser's license who is a nonresident of this 142
177+state and who holds an equivalent license from any other state. Any 143
178+[such license issued by the commissioner shall be in force until the 144
179+thirtieth day of June in each odd-numbered year] initial license issued 145
180+by the commissioner to an appraiser for motor vehicle physical damage 146 Substitute Bill No. 5503
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236-207 on such entities on business done in this state during the preceding
237-calendar year, and (B) allocating eighty per cent of the amount to be paid
238-under section 38a-47 among all domestic insurance companies and
239-domestic entities other than those organized under sections 38a-199 to
240-38a-209, inclusive, and 38a-214 to 38a-225, inclusive, in proportion to
241-their respective shares of the total taxes and charges imposed under
242-chapter 207 on such domestic insurance companies and domestic
243-entities on business done in this state during the preceding calendar
244-year, provided if there are no domestic entities organized under sections
245-38a-199 to 38a-209, inclusive, and 38a-214 to 38a-225, inclusive, at the
246-time of assessment, one hundred per cent of the amount to be paid
247-under section 38a-47 shall be allocated among such domestic insurance
248-companies and domestic entities.
249-(2) When the amount any such company or entity is assessed
250-pursuant to this section exceeds twenty-five per cent of the actual
251-expenditures of the Insurance Department, the Office of the Healthcare
252-Advocate and the Office of Health Strategy from the Insurance Fund,
253-such excess amount shall not be paid by such company or entity but
254-rather shall be assessed against and paid by all other such companies
255-and entities in proportion to their respective shares of the total taxes and
256-charges imposed under chapter 207 on business done in this state during
257-the preceding calendar year, except that for purposes of any assessment
258-made to fund payments to the Department of Public Health to purchase
259-vaccines, such company or entity shall be responsible for its share of the
260-costs, notwithstanding whether its assessment exceeds twenty-five per
261-cent of the actual expenditures of the Insurance Department, the Office
262-of the Healthcare Advocate and the Office of Health Strategy from the
263-Insurance Fund. The provisions of this subdivision shall not be
264-applicable to any corporation [which] that has converted to a domestic
265-mutual insurance company pursuant to section 38a-155 upon the
266-effective date of any public act [which] that amends said section to
267-modify or remove any restriction on the business such a company may Substitute House Bill No. 5503
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185+claims shall expire two years after the date of the licensee's birthday that 147
186+preceded the date the license was issued unless sooner revoked or 148
187+suspended. The license may, in the discretion of the commissioner, be 149
188+renewed biennially upon payment of the fee specified in section 38a-11. 150
189+The commissioner may adopt reasonable regulations concerning 151
190+standards for qualification, suspension or revocation of such licenses 152
191+and the methods by which licensees shall conduct their business. 153
192+Sec. 4. Subsection (a) of section 38a-792 of the general statutes is 154
193+repealed and the following is substituted in lieu thereof (Effective October 155
194+1, 2024): 156
195+(a) (1) No person may act as an adjuster of casualty claims for any 157
196+insurance company or firm or corporation engaged in the adjustment of 158
197+casualty claims unless such person has first secured a license from the 159
198+commissioner, and has paid the license fee specified in section 38a-11, 160
199+for each two-year period or fraction thereof. Application for such license 161
200+shall be made as provided in section 38a-769. Any [such license issued 162
201+by the commissioner shall be in force until June thirtieth in each odd-163
202+numbered year] initial license issued to an adjuster of casualty claims 164
203+shall expire two years after the date of the licensee's birthday that 165
204+preceded the date the license was issued unless sooner revoked or 166
205+suspended. The [person] licensee may, at the discretion of the 167
206+commissioner, renew the license biennially thereafter upon payment of 168
207+the fee specified in section 38a-11. 169
208+(2) The commissioner may waive the examination required under 170
209+section 38a-769, in the case of any applicant for a casualty claims 171
210+adjuster's license that (A) is a nonresident of this state or has its principal 172
211+place of business in another state, and holds an equivalent license from 173
212+any other state, or (B) at any time within two years next preceding the 174
213+date of application has been licensed in this state under a license of the 175
214+same type as the license applied for. 176
215+Sec. 5. Section 38a-48 of the general statutes is repealed and the 177
216+following is substituted in lieu thereof (Effective October 1, 2024): 178 Substitute Bill No. 5503
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271-engage in, for purposes of any assessment due from such company on
272-and after such effective date.
273-(d) For purposes of calculating the amount of payment under section
274-38a-47, as well as the amount of the assessments under this section, the
275-"total taxes imposed on all domestic insurance companies and other
276-domestic entities under chapter 207" shall be based upon the amounts
277-shown as payable to the state for the calendar year on the returns filed
278-with the Commissioner of Revenue Services pursuant to chapter 207;
279-with respect to calculating the amount of payment and assessment for
280-local domestic insurance companies, the amount used shall be the taxes
281-and charges imposed before any tax credits allowed as provided in
282-subsection (a) of section 12-202.
283-[(e) On or before September thirtieth, annually, for each fiscal year
284-ending prior to July 1, 1990, the Insurance Commissioner and the
285-Healthcare Advocate, after receiving any objections to the proposed
286-assessments and making such adjustments as in their opinion may be
287-indicated, shall assess each such domestic insurance company or other
288-domestic entity an amount equal to its proposed assessment as so
289-adjusted. Each domestic insurance company or other domestic entity
290-shall pay to the Insurance Commissioner on or before October thirty-
291-first an amount equal to fifty per cent of its assessment adjusted to reflect
292-any credit or amount due from the preceding fiscal year as determined
293-by the commissioner under subsection (g) of this section. Each domestic
294-insurance company or other domestic entity shall pay to the Insurance
295-Commissioner on or before the following April thirtieth, the remaining
296-fifty per cent of its assessment.]
297-[(f)] (e) On or before September first, annually, for each fiscal year,
298-[ending after July 1, 1990,] the Insurance Commissioner, [and the
299-Healthcare Advocate,] after receiving any objections to the proposed
300-assessments and making such adjustments as in [their] the
301-commissioner's opinion may be indicated, shall assess each such Substitute House Bill No. 5503
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305-domestic insurance company or other domestic entity an amount equal
306-to its proposed assessment as so adjusted. Each domestic insurance
307-company or other domestic entity shall pay to the Insurance
308-Commissioner (1) [on or before June 30, 1990, and] on or before June
309-thirtieth, annually, [thereafter,] an estimated payment against its
310-assessment for the following year equal to twenty-five per cent of its
311-assessment for the fiscal year ending such June thirtieth, (2) on or before
312-September thirtieth, annually, twenty-five per cent of its assessment
313-adjusted to reflect any credit or amount due from the preceding fiscal
314-year as determined by the commissioner under subsection [(g)] (f) of this
315-section, and (3) on or before the following December thirty-first and
316-March thirty-first, annually, each domestic insurance company or other
317-domestic entity shall pay to the Insurance Commissioner the remaining
318-fifty per cent of its proposed assessment to the department in two equal
319-installments.
320-[(g)] (f) If the actual expenditures for the fall prevention program
321-established in section 17a-859 are less than the amount allocated, the
322-Commissioner of Aging and Disability Services shall notify the
323-Insurance Commissioner. [and the Healthcare Advocate.] Immediately
324-following the close of the fiscal year, the Insurance Commissioner [and
325-the Healthcare Advocate] shall recalculate the proposed assessment for
326-each domestic insurance company or other domestic entity in
327-accordance with subsection (c) of this section using the actual
328-expenditures made during the fiscal year by the Insurance Department,
329-the Office of the Healthcare Advocate and the Office of Health Strategy
330-from the Insurance Fund, the actual expenditures made on behalf of the
331-department and the offices from the Capital Equipment Purchase Fund
332-pursuant to section 4a-9, not including such expenditures made on
333-behalf of the Health Systems Planning Unit of the Office of Health
334-Strategy, and the actual expenditures for the fall prevention program.
335-On or before July thirty-first, annually, the Insurance Commissioner
336-[and the Healthcare Advocate] shall render to each such domestic Substitute House Bill No. 5503
221+(a) On or before June thirtieth, annually, the Commissioner of 179
222+Revenue Services shall render to the Insurance Commissioner a 180
223+statement certifying the amount of taxes or charges imposed on each 181
224+domestic insurance company or other domestic entity under chapter 207 182
225+on business done in this state during the preceding calendar year. The 183
226+statement for local domestic insurance companies shall set forth the 184
227+amount of taxes and charges before any tax credits allowed as provided 185
228+in subsection (a) of section 12-202. 186
229+(b) On or before July thirty-first, annually, the Insurance 187
230+Commissioner [and the Office of the Healthcare Advocate] shall render 188
231+to each domestic insurance company or other domestic entity liable for 189
232+payment under section 38a-47: (1) A statement that includes (A) the 190
233+amount appropriated to the Insurance Department, the Office of the 191
234+Healthcare Advocate and the Office of Health Strategy from the 192
235+Insurance Fund established under section 38a-52a for the fiscal year 193
236+beginning July first of the same year, (B) the cost of fringe benefits for 194
237+department and office personnel for such year, as estimated by the 195
238+Comptroller, (C) the estimated expenditures on behalf of the 196
239+department and the offices from the Capital Equipment Purchase Fund 197
240+pursuant to section 4a-9 for such year, not including such estimated 198
241+expenditures made on behalf of the Health Systems Planning Unit of the 199
242+Office of Health Strategy, and (D) the amount appropriated to the 200
243+Department of Aging and Disability Services for the fall prevention 201
244+program established in section 17a-859 from the Insurance Fund for the 202
245+fiscal year; (2) a statement of the total taxes imposed on all domestic 203
246+insurance companies and domestic insurance entities under chapter 207 204
247+on business done in this state during the preceding calendar year; and 205
248+(3) the proposed assessment against that company or entity, calculated 206
249+in accordance with the provisions of subsection (c) of this section, 207
250+provided for the purposes of this calculation the amount appropriated 208
251+to the Insurance Department, the Office of the Healthcare Advocate and 209
252+the Office of Health Strategy from the Insurance Fund plus the cost of 210
253+fringe benefits for department and office personnel and the estimated 211
254+expenditures on behalf of the department and [the office] such offices 212 Substitute Bill No. 5503
337255
338-Public Act No. 24-138 11 of 34
339256
340-insurance company and other domestic entity a statement showing the
341-difference between their respective recalculated assessments and the
342-amount they have previously paid. On or before August thirty-first, the
343-Insurance Commissioner, [and the Healthcare Advocate,] after
344-receiving any objections to such statements, shall make such
345-adjustments which in their opinion may be indicated, and shall render
346-an adjusted assessment, if any, to the affected companies. Any such
347-domestic insurance company or other domestic entity may pay to the
348-Insurance Commissioner the entire assessment required under this
349-subsection in one payment when the first installment of such assessment
350-is due.
351-[(h)] (g) If any assessment is not paid when due, a penalty of twenty-
352-five dollars shall be added thereto, and interest at the rate of six per cent
353-per annum shall be paid thereafter on such assessment and penalty.
354-[(i)] (h) The Insurance Commissioner shall deposit all payments
355-made under this section with the State Treasurer. On and after June 6,
356-1991, the moneys so deposited shall be credited to the Insurance Fund
357-established under section 38a-52a and shall be accounted for as expenses
358-recovered from insurance companies.
359-Sec. 7. Subsection (a) of section 38a-53 of the general statutes is
360-repealed and the following is substituted in lieu thereof (Effective October
361-1, 2024):
362-(a) (1) Each domestic insurance company or domestic health care
363-center shall, annually, on or before the first day of March, submit to the
364-commissioner, [and] by electronically [to] filing with the National
365-Association of Insurance Commissioners, a true and complete report,
366-signed and sworn to by its president or a vice president, and secretary
367-or an assistant secretary, of its financial condition on the thirty-first day
368-of December next preceding, prepared in accordance with the National
369-Association of Insurance Commissioners annual statement instructions Substitute House Bill No. 5503
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371-Public Act No. 24-138 12 of 34
259+from the Capital Equipment Purchase Fund pursuant to section 4a-9, 213
260+not including such expenditures made on behalf of the Health Systems 214
261+Planning Unit of the Office of Health Strategy shall be deemed to be the 215
262+actual expenditures of the department and [the office] such offices, and 216
263+the amount appropriated to the Department of Aging and Disability 217
264+Services from the Insurance Fund for the fiscal year for the fall 218
265+prevention program established in section 17a-859 shall be deemed to 219
266+be the actual expenditures for the program. 220
267+(c) (1) The proposed assessments for each domestic insurance 221
268+company or other domestic entity shall be calculated by (A) allocating 222
269+twenty per cent of the amount to be paid under section 38a-47 among 223
270+the domestic entities organized under sections 38a-199 to 38a-209, 224
271+inclusive, and 38a-214 to 38a-225, inclusive, in proportion to their 225
272+respective shares of the total taxes and charges imposed under chapter 226
273+207 on such entities on business done in this state during the preceding 227
274+calendar year, and (B) allocating eighty per cent of the amount to be paid 228
275+under section 38a-47 among all domestic insurance companies and 229
276+domestic entities other than those organized under sections 38a-199 to 230
277+38a-209, inclusive, and 38a-214 to 38a-225, inclusive, in proportion to 231
278+their respective shares of the total taxes and charges imposed under 232
279+chapter 207 on such domestic insurance companies and domestic 233
280+entities on business done in this state during the preceding calendar 234
281+year, provided if there are no domestic entities organized under sections 235
282+38a-199 to 38a-209, inclusive, and 38a-214 to 38a-225, inclusive, at the 236
283+time of assessment, one hundred per cent of the amount to be paid 237
284+under section 38a-47 shall be allocated among such domestic insurance 238
285+companies and domestic entities. 239
286+(2) When the amount any such company or entity is assessed 240
287+pursuant to this section exceeds twenty-five per cent of the actual 241
288+expenditures of the Insurance Department, the Office of the Healthcare 242
289+Advocate and the Office of Health Strategy from the Insurance Fund, 243
290+such excess amount shall not be paid by such company or entity but 244
291+rather shall be assessed against and paid by all other such companies 245
292+and entities in proportion to their respective shares of the total taxes and 246 Substitute Bill No. 5503
372293
373-handbook and following those accounting procedures and practices
374-prescribed by the National Association of Insurance Commissioners
375-accounting practices and procedures manual, subject to any deviations
376-in form and detail as may be prescribed by the commissioner. An
377-electronically filed report in accordance with section 38a-53a that is
378-timely submitted to the National Association of Insurance
379-Commissioners shall [not exempt a domestic insurance company or
380-domestic health care center from timely filing a true and complete paper
381-copy with the commissioner] be deemed to have been submitted to the
382-commissioner in accordance with the provisions of this section.
383-(2) Each accredited reinsurer, as defined in subdivision (1) of
384-subsection (c) of section 38a-85, and assuming insurance company, as
385-provided in section 38a-85, shall file an annual report in accordance with
386-the provisions of section 38a-85.
387-Sec. 8. Subsection (a) of section 38a-54 of the general statutes is
388-repealed and the following is substituted in lieu thereof (Effective October
389-1, 2024):
390-(a) Each domestic insurance company, domestic health care center or
391-domestic fraternal benefit society doing business in this state shall have
392-an annual audit conducted by an independent certified public
393-accountant and shall annually file an audited financial report with the
394-commissioner, and electronically to the National Association of
395-Insurance Commissioners on or before the first day of June for the year
396-ending the preceding December thirty-first. An electronically filed true
397-and complete report timely submitted to the National Association of
398-Insurance Commissioners [does not exempt a domestic insurance
399-company or a domestic health care center from timely filing a true and
400-complete paper copy to the commissioner] shall be deemed to have been
401-submitted to the commissioner in accordance with the provisions of this
402-section. Substitute House Bill No. 5503
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406-Sec. 9. Section 38a-297 of the general statutes is repealed and the
407-following is substituted in lieu thereof (Effective October 1, 2024):
408-(a) For the purposes of sections 38a-295 to 38a-300, inclusive, a policy
409-shall be deemed readable if: (1) The text achieves a minimum score of
410-forty-five on the Flesch reading ease test as computed in section 38a-298
411-or an equivalent score on any other test comparable in result and
412-approved by the commissioner, (2) it is printed, except for specification
413-pages, schedules and tables, in not less than ten-point type, one-point
414-leaded, of a height and style specified by the commissioner in
415-regulations adopted in accordance with the provisions of chapter 54, (3)
416-it uses layout and spacing which separate the paragraphs from each
417-other and from the border of the paper, (4) it has section titles captioned
418-in boldface type or which otherwise stand out significantly from the
419-text, (5) it avoids the use of unnecessarily long, complicated or obscure
420-words, sentences, paragraphs or constructions, (6) the style,
421-arrangement and overall appearance of the policy give no undue
422-prominence to any portion of the text of the policy or to any
423-endorsements or riders and (7) it contains a table of contents or an index
424-of the principal sections of the policy, if the policy has more than three
425-thousand words or if the policy has more than three pages. To be
426-deemed readable, each policy of individual health insurance shall
427-include a separate outline of coverage showing the major coverage,
428-benefit, exclusion and renewal provisions of the policy in readily
429-understandable terms, provided the policy shall take precedence over
430-the outline of coverage.
431-(b) The commissioner may authorize a lower score than the Flesch
432-reading ease score required in subsection (a) whenever [he] the
433-commissioner finds that a lower score (1) will provide a more accurate
434-reflection of the readability of a policy form; (2) is warranted by the
435-nature of a particular policy form or type or class of policy forms; or (3)
436-is the result of language which is used to conform to the requirements Substitute House Bill No. 5503
297+charges imposed under chapter 207 on business done in this state during 247
298+the preceding calendar year, except that for purposes of any assessment 248
299+made to fund payments to the Department of Public Health to purchase 249
300+vaccines, such company or entity shall be responsible for its share of the 250
301+costs, notwithstanding whether its assessment exceeds twenty-five per 251
302+cent of the actual expenditures of the Insurance Department, the Office 252
303+of the Healthcare Advocate and the Office of Health Strategy from the 253
304+Insurance Fund. The provisions of this subdivision shall not be 254
305+applicable to any corporation [which] that has converted to a domestic 255
306+mutual insurance company pursuant to section 38a-155 upon the 256
307+effective date of any public act [which] that amends said section to 257
308+modify or remove any restriction on the business such a company may 258
309+engage in, for purposes of any assessment due from such company on 259
310+and after such effective date. 260
311+(d) For purposes of calculating the amount of payment under section 261
312+38a-47, as well as the amount of the assessments under this section, the 262
313+"total taxes imposed on all domestic insurance companies and other 263
314+domestic entities under chapter 207" shall be based upon the amounts 264
315+shown as payable to the state for the calendar year on the returns filed 265
316+with the Commissioner of Revenue Services pursuant to chapter 207; 266
317+with respect to calculating the amount of payment and assessment for 267
318+local domestic insurance companies, the amount used shall be the taxes 268
319+and charges imposed before any tax credits allowed as provided in 269
320+subsection (a) of section 12-202. 270
321+[(e) On or before September thirtieth, annually, for each fiscal year 271
322+ending prior to July 1, 1990, the Insurance Commissioner and the 272
323+Healthcare Advocate, after receiving any objections to the proposed 273
324+assessments and making such adjustments as in their opinion may be 274
325+indicated, shall assess each such domestic insurance company or other 275
326+domestic entity an amount equal to its proposed assessment as so 276
327+adjusted. Each domestic insurance company or other domestic entity 277
328+shall pay to the Insurance Commissioner on or before October thirty-278
329+first an amount equal to fifty per cent of its assessment adjusted to reflect 279
330+any credit or amount due from the preceding fiscal year as determined 280 Substitute Bill No. 5503
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440-of any state or federal law, regulation or governmental agency.
441-(c) Filings subject to this section shall be accompanied by a
442-certification signed by an officer of the insurer stating that it meets the
443-requirements of subsection (a) of this section. Such certification shall
444-state that the policy meets the minimum reading ease score on the test
445-used or that the score is lower than the minimum required but should
446-be approved in accordance with subsection (b) of this section. The
447-commissioner may require the submission of further information to
448-verify any certification.
449-(d) Filings subject to this section may be filed with the commissioner
450-in any language. Any non-English-language policy shall be deemed to
451-be in compliance with subsection (a) of this section if the insurer certifies
452-that such policy [is translated from an English-language policy that]
453-complies with [said] subsection (a) of this section or is translated from a
454-policy that complies with subsection (a) of this section.
455-(e) The commissioner may engage the services of any translation
456-service, as needed, to review any non-English-language policy filed
457-with the commissioner pursuant to this section, the cost of which shall
458-be borne by the insurer that submits such filing.
459-(f) (1) For any insurer that files a non-English-language policy with
460-the commissioner, the commissioner may require that such insurer
461-either (A) provide an English translated copy of such policy and a
462-certification as to the accuracy of such translated copy of such policy, or
463-(B) pay all costs associated with the translation of such policy in
464-accordance with the provisions of subsection (e) of this section.
465-(2) Any insurer shall accept all risk associated with any translation of
466-such insurer's non-English-language policy in accordance with
467-subdivision (1) of this subsection and subsection (e) of this section.
468-(g) The commissioner may adopt regulations, in accordance with the Substitute House Bill No. 5503
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470-Public Act No. 24-138 15 of 34
335+by the commissioner under subsection (g) of this section. Each domestic 281
336+insurance company or other domestic entity shall pay to the Insurance 282
337+Commissioner on or before the following April thirtieth, the remaining 283
338+fifty per cent of its assessment.] 284
339+[(f)] (e) On or before September first, annually, for each fiscal year, 285
340+[ending after July 1, 1990,] the Insurance Commissioner, [and the 286
341+Healthcare Advocate,] after receiving any objections to the proposed 287
342+assessments and making such adj ustments as in [their] the 288
343+commissioner's opinion may be indicated, shall assess each such 289
344+domestic insurance company or other domestic entity an amount equal 290
345+to its proposed assessment as so adjusted. Each domestic insurance 291
346+company or other domestic entity shall pay to the Insurance 292
347+Commissioner (1) [on or before June 30, 1990, and] on or before June 293
348+thirtieth, annually, [thereafter,] an estimated payment against its 294
349+assessment for the following year equal to twenty-five per cent of its 295
350+assessment for the fiscal year ending such June thirtieth, (2) on or before 296
351+September thirtieth, annually, twenty-five per cent of its assessment 297
352+adjusted to reflect any credit or amount due from the preceding fiscal 298
353+year as determined by the commissioner under subsection [(g)] (f) of this 299
354+section, and (3) on or before the following December thirty-first and 300
355+March thirty-first, annually, each domestic insurance company or other 301
356+domestic entity shall pay to the Insurance Commissioner the remaining 302
357+fifty per cent of its proposed assessment to the department in two equal 303
358+installments. 304
359+[(g)] (f) If the actual expenditures for the fall prevention program 305
360+established in section 17a-859 are less than the amount allocated, the 306
361+Commissioner of Aging and Disability Services shall notify the 307
362+Insurance Commissioner. [and the Healthcare Advocate.] Immediately 308
363+following the close of the fiscal year, the Insurance Commissioner [and 309
364+the Healthcare Advocate] shall recalculate the proposed assessment for 310
365+each domestic insurance company or other domestic entity in 311
366+accordance with subsection (c) of this section using the actual 312
367+expenditures made during the fiscal year by the Insurance Department, 313
368+the Office of the Healthcare Advocate and the Office of Health Strategy 314 Substitute Bill No. 5503
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472-provisions of chapter 54, to implement the provisions of this section.
473-Sec. 10. Section 38a-479ppp of the general statutes is repealed and the
474-following is substituted in lieu thereof (Effective January 1, 2025):
475-(a) Not later than [March 1, 2021] February 1, 2025, and annually
476-thereafter, each pharmacy benefits manager shall file a report with the
477-commissioner for the immediately preceding calendar year. The report
478-shall contain the following information for health carriers that
479-delivered, issued for delivery, renewed, amended or continued health
480-care plans that included a pharmacy benefit managed by the pharmacy
481-benefits manager during such calendar year:
482-(1) The aggregate dollar amount of all rebates concerning drug
483-formularies used by such health carriers that such manager collected
484-from pharmaceutical manufacturers that manufactured outpatient
485-prescription drugs that (A) were covered by such health carriers during
486-such calendar year, and (B) are attributable to patient utilization of such
487-drugs during such calendar year; and
488-(2) The aggregate dollar amount of all rebates, excluding any portion
489-of the rebates received by such health carriers, concerning drug
490-formularies that such manager collected from pharmaceutical
491-manufacturers that manufactured outpatient prescription drugs that (A)
492-were covered by such health carriers during such calendar year, and (B)
493-are attributable to patient utilization of such drugs by covered persons
494-under such health care plans during such calendar year.
495-(b) The commissioner shall establish a standardized form for
496-reporting information pursuant to subsection (a) of this section after
497-consultation with pharmacy benefits managers. The form shall be
498-designed to minimize the administrative burden and cost of reporting
499-on the department and pharmacy benefits managers.
500-(c) All information submitted to the commissioner pursuant to Substitute House Bill No. 5503
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504-subsection (a) of this section shall be exempt from disclosure under the
505-Freedom of Information Act, as defined in section 1-200, except to the
506-extent such information is included on an aggregated basis in the report
507-required by subsection (d) of this section. The commissioner shall not
508-disclose information submitted pursuant to subdivision (1) of
509-subsection (a) of this section, or information submitted pursuant to
510-subdivision (2) of said subsection in a manner that (1) is likely to
511-compromise the financial, competitive or proprietary nature of such
512-information, or (2) would enable a third party to identify a health care
513-plan, health carrier, pharmacy benefits manager, pharmaceutical
514-manufacturer, or the value of a rebate provided for a particular
515-outpatient prescription drug or therapeutic class of outpatient
516-prescription drugs.
517-(d) Not later than [March 1, 2022] March 1, 2025, and annually
518-thereafter, the commissioner shall submit a report, in accordance with
519-section 11-4a, to the joint standing committee of the General Assembly
520-having cognizance of matters relating to insurance. The report shall
521-contain (1) an aggregation of the information submitted to the
522-commissioner pursuant to subsection (a) of this section for the
523-immediately preceding calendar year, and (2) such other information as
524-the commissioner, in the commissioner's discretion, deems relevant for
525-the purposes of this section. Not later than [February 1, 2022, and
526-annually thereafter] ten days prior to the submission of the annual
527-report pursuant to the provisions of this subsection, the commissioner
528-shall provide each pharmacy benefits manager and any third party
529-affected by submission of [a] such report required by this subsection
530-with a written notice describing the content of the report.
531-(e) The commissioner may impose a penalty of not more than seven
532-thousand five hundred dollars on a pharmacy benefits manager for each
533-violation of this section.
534-(f) The commissioner may adopt regulations, in accordance with the Substitute House Bill No. 5503
373+from the Insurance Fund, the actual expenditures made on behalf of the 315
374+department and the offices from the Capital Equipment Purchase Fund 316
375+pursuant to section 4a-9, not including such expenditures made on 317
376+behalf of the Health Systems Planning Unit of the Office of Health 318
377+Strategy, and the actual expenditures for the fall prevention program. 319
378+On or before July thirty-first, annually, the Insurance Commissioner 320
379+[and the Healthcare Advocate] shall render to each such domestic 321
380+insurance company and other domestic entity a statement showing the 322
381+difference between their respective recalculated assessments and the 323
382+amount they have previously paid. On or before August thirty-first, the 324
383+Insurance Commissioner, [and the Healthcare Advocate,] after 325
384+receiving any objections to such statements, shall make such 326
385+adjustments which in their opinion may be indicated, and shall render 327
386+an adjusted assessment, if any, to the affected companies. Any such 328
387+domestic insurance company or other domestic entity may pay to the 329
388+Insurance Commissioner the entire assessment required under this 330
389+subsection in one payment when the first installment of such assessment 331
390+is due. 332
391+[(h)] (g) If any assessment is not paid when due, a penalty of twenty-333
392+five dollars shall be added thereto, and interest at the rate of six per cent 334
393+per annum shall be paid thereafter on such assessment and penalty. 335
394+[(i)] (h) The Insurance Commissioner shall deposit all payments 336
395+made under this section with the State Treasurer. On and after June 6, 337
396+1991, the moneys so deposited shall be credited to the Insurance Fund 338
397+established under section 38a-52a and shall be accounted for as expenses 339
398+recovered from insurance companies. 340
399+Sec. 6. Subsection (a) of section 38a-53 of the general statutes is 341
400+repealed and the following is substituted in lieu thereof (Effective October 342
401+1, 2024): 343
402+(a) (1) Each domestic insurance company or domestic health care 344
403+center shall, annually, on or before the first day of March, submit to the 345
404+commissioner, [and] by electronically [to] filing with the National 346 Substitute Bill No. 5503
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536-Public Act No. 24-138 17 of 34
537406
538-provisions of chapter 54, to implement the provisions of this section.
539-Sec. 11. Subdivision (4) of section 38a-564 of the general statutes is
540-repealed and the following is substituted in lieu thereof (Effective October
541-1, 2024):
542-(4) (A) "Small employer" means (i) prior to January 1, 2016, an
543-employer that employed an average of at least one but not more than
544-fifty employees on business days during the preceding calendar year
545-and employs at least one employee on the first day of the group health
546-insurance plan year, [and] (ii) on and after January 1, 2016, and prior to
547-January 1, 2025, an employer that employed an average of at least one
548-but not more than one hundred employees on business days during the
549-preceding calendar year and employs at least one employee on the first
550-day of the group health insurance plan year, except the commissioner
551-may postpone said January 1, 2016, date to be consistent with any such
552-postponement made by the Secretary of the United States Department
553-of Health and Human Services under the Patient Protection and
554-Affordable Care Act, P.L. 111-148, as amended from time to time, and
555-(iii) on and after January 1, 2025, an employer that employed an average
556-of at least one but not more than fifty employees on business days
557-during the preceding calendar year and employs at least one employee
558-on the first day of the group health insurance plan year. "Small
559-employer" does not include a sole proprietorship that employs only the
560-sole proprietor or the spouse of such sole proprietor.
561-(B) (i) For purposes of subparagraph (A) of this subdivision, the
562-number of employees shall be determined by adding (I) the number of
563-full-time employees for each month who work a normal work week of
564-thirty hours or more, and (II) the number of full-time equivalent
565-employees, calculated for each month by dividing by one hundred
566-twenty the aggregate number of hours worked for such month by
567-employees who work a normal work week of less than thirty hours, and
568-averaging such total for the calendar year. Substitute House Bill No. 5503
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570-Public Act No. 24-138 18 of 34
409+Association of Insurance Commissioners, a true and complete report, 347
410+signed and sworn to by its president or a vice president, and secretary 348
411+or an assistant secretary, of its financial condition on the thirty-first day 349
412+of December next preceding, prepared in accordance with the National 350
413+Association of Insurance Commissioners annual statement instructions 351
414+handbook and following those accounting procedures and practices 352
415+prescribed by the National Association of Insurance Commissioners 353
416+accounting practices and procedures manual, subject to any deviations 354
417+in form and detail as may be prescribed by the commissioner. An 355
418+electronically filed report in accordance with section 38a-53a that is 356
419+timely submitted to the National Association of Insurance 357
420+Commissioners shall [not exempt a domestic insurance company or 358
421+domestic health care center from timely filing a true and complete paper 359
422+copy with the commissioner] be deemed to have been submitted to the 360
423+commissioner in accordance with the provisions of this section. 361
424+(2) Each accredited reinsurer, as defined in subdivision (1) of 362
425+subsection (c) of section 38a-85, and assuming insurance company, as 363
426+provided in section 38a-85, shall file an annual report in accordance with 364
427+the provisions of section 38a-85. 365
428+Sec. 7. Subsection (a) of section 38a-54 of the general statutes is 366
429+repealed and the following is substituted in lieu thereof (Effective October 367
430+1, 2024): 368
431+(a) Each domestic insurance company, domestic health care center or 369
432+domestic fraternal benefit society doing business in this state shall have 370
433+an annual audit conducted by an independent certified public 371
434+accountant and shall annually file an audited financial report with the 372
435+commissioner, and electronically to the National Association of 373
436+Insurance Commissioners on or before the first day of June for the year 374
437+ending the preceding December thirty-first. An electronically filed true 375
438+and complete report timely submitted to the National Association of 376
439+Insurance Commissioners [does not exempt a domestic insurance 377
440+company or a domestic health care center from timely filing a true and 378
441+complete paper copy to the commissioner] shall be deemed to have been 379 Substitute Bill No. 5503
571442
572-(ii) If an employer was not in existence throughout the preceding
573-calendar year, the number of employees shall be based on the average
574-number of employees that such employer reasonably expects to employ
575-in the current calendar year.
576-(C) All persons treated as a single employer under Section 414 of the
577-Internal Revenue Code of 1986, or any subsequent corresponding
578-internal revenue code of the United States, as amended from time to
579-time, shall be considered a single employer for purposes of this
580-subdivision.
581-Sec. 12. Subdivision (1) of section 38a-614 of the general statutes is
582-repealed and the following is substituted in lieu thereof (Effective October
583-1, 2024):
584-(1) Each domestic society transacting business in this state shall,
585-annually, on or before the first day of March, unless the commissioner
586-has extended such time for cause shown, file with the commissioner,
587-and electronically to the National Association of Insurance
588-Commissioners, a true and complete statement of its financial condition,
589-transactions and affairs for the preceding calendar year and pay the fee
590-specified in section 38a-11 for filing such annual statement. The
591-statement shall be in general form and context as approved by the
592-National Association of Insurance Commissioners for fraternal benefit
593-societies and as supplemented by additional information required by
594-the commissioner. An electronically filed true and complete report filed
595-in accordance with section 38a-53a that is timely submitted to the
596-National Association of Insurance Commissioners shall [not exempt a
597-domestic society from timely filing a true and complete paper copy with
598-the commissioner] be deemed to have been submitted to the
599-commissioner in accordance with the provisions of this section.
600-Sec. 13. Subsection (b) of section 38a-591l of the general statutes is
601-repealed and the following is substituted in lieu thereof (Effective October Substitute House Bill No. 5503
602443
603-Public Act No. 24-138 19 of 34
444+LCO 13 of 33
604445
605-1, 2024):
606-(b) (1) Any independent review organization seeking to conduct
607-external reviews and expedited external reviews under section 38a-591g
608-shall submit the application form for approval or reapproval, as
609-applicable, to the commissioner and shall include all documentation
610-and information necessary for the commissioner to determine if the
611-independent review organization satisfies the minimum qualifications
612-established under this section.
613-(2) An approval or reapproval shall be effective for [two] three years,
614-unless the commissioner determines before the expiration of such
615-approval or reapproval that the independent review organization no
616-longer satisfies the minimum qualifications established under this
617-section.
618-(3) Whenever the commissioner determines that an independent
619-review organization has lost its accreditation or no longer satisfies the
620-minimum requirements established under this section, the
621-commissioner shall terminate the approval of the independent review
622-organization and remove the independent review organization from the
623-list of approved independent review organizations specified in
624-subdivision (2) of subsection (a) of this section.
625-Sec. 14. Section 38a-91aa of the general statutes is repealed and the
626-following is substituted in lieu thereof (Effective October 1, 2024):
627-As used in this section, sections 38a-91bb to 38a-91uu, inclusive, [and]
628-sections 38a-91ww, [and] 38a-91xx and section 15 of this act:
629-(1) "Affiliated company" means any company in the same corporate
630-system as a parent, an industrial insured or a member organization by
631-virtue of common ownership, control, operation or management.
632-(2) "Agency captive insurance company" means a captive insurance Substitute House Bill No. 5503
446+submitted to the commissioner in accordance with the provisions of this 380
447+section. 381
448+Sec. 8. Section 38a-297 of the general statutes is repealed and the 382
449+following is substituted in lieu thereof (Effective October 1, 2024): 383
450+(a) For the purposes of sections 38a-295 to 38a-300, inclusive, a policy 384
451+shall be deemed readable if: (1) The text achieves a minimum score of 385
452+forty-five on the Flesch reading ease test as computed in section 38a-298 386
453+or an equivalent score on any other test comparable in result and 387
454+approved by the commissioner, (2) it is printed, except for specification 388
455+pages, schedules and tables, in not less than ten-point type, one-point 389
456+leaded, of a height and style specified by the commissioner in 390
457+regulations adopted in accordance with the provisions of chapter 54, (3) 391
458+it uses layout and spacing which separate the paragraphs from each 392
459+other and from the border of the paper, (4) it has section titles captioned 393
460+in boldface type or which otherwise stand out significantly from the 394
461+text, (5) it avoids the use of unnecessarily long, complicated or obscure 395
462+words, sentences, paragraphs or constructions, (6) the style, 396
463+arrangement and overall appearance of the policy give no undue 397
464+prominence to any portion of the text of the policy or to any 398
465+endorsements or riders and (7) it contains a table of contents or an index 399
466+of the principal sections of the policy, if the policy has more than three 400
467+thousand words or if the policy has more than three pages. To be 401
468+deemed readable, each policy of individual health insurance shall 402
469+include a separate outline of coverage showing the major coverage, 403
470+benefit, exclusion and renewal provisions of the policy in readily 404
471+understandable terms, provided the policy shall take precedence over 405
472+the outline of coverage. 406
473+(b) The commissioner may authorize a lower score than the Flesch 407
474+reading ease score required in subsection (a) whenever [he] the 408
475+commissioner finds that a lower score (1) will provide a more accurate 409
476+reflection of the readability of a policy form; (2) is warranted by the 410
477+nature of a particular policy form or type or class of policy forms; or (3) 411
478+is the result of language which is used to conform to the requirements 412 Substitute Bill No. 5503
633479
634-Public Act No. 24-138 20 of 34
635480
636-company that:
637-(A) Is owned or directly or indirectly controlled by one or more
638-insurance agents or insurance producers licensed in accordance with
639-sections 38a-702a to 38a-702r, inclusive;
640-(B) Only insures against risks covered by insurance policies sold,
641-solicited or negotiated through the insurance agents or insurance
642-producers that own or control such captive insurance company; and
643-(C) Does not insure against risks covered by any health insurance
644-policy or plan.
645-(3) "Alien captive insurance company" means any insurance
646-company formed to write insurance business for its parent and affiliated
647-companies and licensed pursuant to the laws of an alien jurisdiction that
648-imposes statutory or regulatory standards on companies transacting the
649-business of insurance in such jurisdiction that the commissioner deems
650-to be acceptable.
651-(4) "Association" means any legal association of individuals,
652-corporations, limited liability companies, partnerships, associations or
653-other entities, where the association itself or some or all of the member
654-organizations:
655-(A) Directly or indirectly own, control or hold with power to vote all
656-of the outstanding voting securities or other voting interests of an
657-association captive insurance company incorporated as a stock insurer;
658-(B) Have complete voting control over an association captive
659-insurance company incorporated as a mutual corporation or formed as
660-a limited liability company; or
661-(C) Constitute all of the subscribers of an association captive
662-insurance company formed as a reciprocal insurer. Substitute House Bill No. 5503
481+LCO 14 of 33
663482
664-Public Act No. 24-138 21 of 34
483+of any state or federal law, regulation or governmental agency. 413
484+(c) Filings subject to this section shall be accompanied by a 414
485+certification signed by an officer of the insurer stating that it meets the 415
486+requirements of subsection (a) of this section. Such certification shall 416
487+state that the policy meets the minimum reading ease score on the test 417
488+used or that the score is lower than the minimum required but should 418
489+be approved in accordance with subsection (b) of this section. The 419
490+commissioner may require the submission of further information to 420
491+verify any certification. 421
492+(d) Filings subject to this section may be filed with the commissioner 422
493+in any language. Any non-English-language policy shall be deemed to 423
494+be in compliance with subsection (a) of this section if the insurer certifies 424
495+that such policy [is translated from an English-language policy that] 425
496+complies with [said] subsection (a) of this section or is translated from a 426
497+policy that complies with subsection (a) of this section. 427
498+(e) The commissioner may engage the services of any translation 428
499+service, as needed, to review any non-English-language policy filed 429
500+with the commissioner pursuant to this section, the cost of which shall 430
501+be borne by the insurer that submits such filing. 431
502+(f) (1) For any insurer that files a non-English-language policy with 432
503+the commissioner, the commissioner may require that such insurer 433
504+either (A) provide an English translated copy of such policy and a 434
505+certification as to the accuracy of such translated copy of such policy, or 435
506+(B) pay all costs associated with the translation of such policy in 436
507+accordance with the provisions of subsection (e) of this section. 437
508+(2) Any insurer shall accept all risk associated with any translation of 438
509+such insurer's non-English-language policy in accordance with 439
510+subdivision (1) of this subsection and subsection (e) of this section. 440
511+(g) The commissioner may adopt regulations, in accordance with the 441
512+provisions of chapter 54, to implement the provisions of this section. 442 Substitute Bill No. 5503
665513
666-(5) "Association captive insurance company" means any company
667-that insures risks of the member organizations of an association, and
668-includes a company that also insures risks of such member
669-organizations' affiliated companies or of the association.
670-(6) "Branch business" means any insurance business transacted in this
671-state by a branch captive insurance company.
672-(7) "Branch captive insurance company" means any alien captive
673-insurance company or foreign captive insurance company licensed by
674-the commissioner to transact the business of insurance in this state
675-through a business unit with a principal place of business in this state.
676-(8) "Branch operations" means any business operations in this state of
677-a branch captive insurance company.
678-(9) "Captive insurance company" means any (A) pure captive
679-insurance company, agency captive insurance company, association
680-captive insurance company, industrial insured captive insurance
681-company, risk retention group, sponsored captive insurance company
682-or special purpose financial captive insurance company that is
683-domiciled in this state and formed or licensed under the provisions of
684-this section and sections 38a-91bb to 38a-91tt, inclusive, or (B) branch
685-captive insurance company.
686-(10) "Ceding insurer" means an insurance company, approved by the
687-commissioner and licensed or otherwise authorized to transact the
688-business of insurance or reinsurance in its state or country of domicile,
689-that cedes risk to a special purpose financial captive insurance company
690-pursuant to a reinsurance contract.
691-(11) "Commissioner" means the Insurance Commissioner.
692-(12) "Controlled unaffiliated business" means any person: Substitute House Bill No. 5503
693514
694-Public Act No. 24-138 22 of 34
515+LCO 15 of 33
695516
696-(A) Who, (i) in the case of a pure captive insurance company, is not
697-in the corporate system of a parent and the parent's affiliated companies,
698-(ii) in the case of an industrial insured captive insurance company, is not
699-in the corporate system of an industrial insured and the industrial
700-insured's affiliated companies, or (iii) in the case of a sponsored captive
701-insurance company, is not in the corporate system of a participant and
702-the participant's affiliated companies;
703-(B) Who, (i) in the case of a pure captive insurance company, has an
704-existing contractual relationship with a parent or one of the parent's
705-affiliated companies, (ii) in the case of an industrial insured captive
706-insurance company, has an existing contractual relationship with an
707-industrial insured or one of the industrial insured's affiliated companies,
708-or (iii) in the case of a sponsored captive insurance company, has an
709-existing contractual relationship with a participant or one of the
710-participant's affiliated companies; and
711-(C) Whose risks are managed by a pure captive insurance company,
712-an industrial insured captive insurance company or a sponsored captive
713-insurance company, as applicable, in accordance with section 38a-91qq.
714-(13) "Excess workers' compensation insurance" means, in the case of
715-an employer that has insured or self-insured its workers' compensation
716-risks in accordance with applicable state or federal law, insurance in
717-excess of a specified per-incident or aggregate limit established by the
718-commissioner.
719-(14) "Foreign captive insurance company" means any insurance
720-company formed to write insurance business for its parent and affiliated
721-companies and licensed pursuant to the laws of a foreign jurisdiction
722-that imposes statutory or regulatory standards on companies
723-transacting the business of insurance in such jurisdiction that the
724-commissioner deems to be acceptable. Substitute House Bill No. 5503
517+Sec. 9. Section 38a-479ppp of the general statutes is repealed and the 443
518+following is substituted in lieu thereof (Effective January 1, 2025): 444
519+(a) Not later than [March 1, 2021] February 1, 2025, and annually 445
520+thereafter, each pharmacy benefits manager shall file a report with the 446
521+commissioner for the immediately preceding calendar year. The report 447
522+shall contain the following information for health carriers that 448
523+delivered, issued for delivery, renewed, amended or continued health 449
524+care plans that included a pharmacy benefit managed by the pharmacy 450
525+benefits manager during such calendar year: 451
526+(1) The aggregate dollar amount of all rebates concerning drug 452
527+formularies used by such health carriers that such manager collected 453
528+from pharmaceutical manufacturers that manufactured outpatient 454
529+prescription drugs that (A) were covered by such health carriers during 455
530+such calendar year, and (B) are attributable to patient utilization of such 456
531+drugs during such calendar year; and 457
532+(2) The aggregate dollar amount of all rebates, excluding any portion 458
533+of the rebates received by such health carriers, concerning drug 459
534+formularies that such manager collected from pharmaceutical 460
535+manufacturers that manufactured outpatient prescription drugs that (A) 461
536+were covered by such health carriers during such calendar year, and (B) 462
537+are attributable to patient utilization of such drugs by covered persons 463
538+under such health care plans during such calendar year. 464
539+(b) The commissioner shall establish a standardized form for 465
540+reporting information pursuant to subsection (a) of this section after 466
541+consultation with pharmacy benefits managers. The form shall be 467
542+designed to minimize the administrative burden and cost of reporting 468
543+on the department and pharmacy benefits managers. 469
544+(c) All information submitted to the commissioner pursuant to 470
545+subsection (a) of this section shall be exempt from disclosure under the 471
546+Freedom of Information Act, as defined in section 1-200, except to the 472
547+extent such information is included on an aggregated basis in the report 473
548+required by subsection (d) of this section. The commissioner shall not 474 Substitute Bill No. 5503
725549
726-Public Act No. 24-138 23 of 34
727550
728-(15) "Incorporated protected cell" means a protected cell that is
729-established as a corporation or a limited liability company, separate
730-from the sponsored captive insurance company with which it has
731-entered into a participant contract.
732-(16) "Industrial insured" means an insured:
733-(A) Who procures the insurance of any risk or risks by use of the
734-services of a full-time employee acting as an insurance manager or
735-buyer;
736-(B) Whose aggregate annual premiums for insurance on all risks total
737-at least twenty-five thousand dollars; and
738-(C) Who has at least twenty-five full-time employees.
739-(17) "Industrial insured captive insurance company" means any
740-company that insures risks of the industrial insureds that comprise an
741-industrial insured group, and includes a company that also insures risks
742-of such industrial insureds' affiliated companies.
743-(18) "Industrial insured group" means any group of industrial
744-insureds that collectively:
745-(A) Directly or indirectly own, control or hold with power to vote all
746-of the outstanding voting securities or other voting interests of an
747-industrial insured captive insurance company incorporated as a stock
748-insurer;
749-(B) Have complete voting control over an industrial insured captive
750-insurance company incorporated as a mutual corporation or formed as
751-a limited liability company; or
752-(C) Constitute all of the subscribers of an industrial insured captive
753-insurance company formed as a reciprocal insurer. Substitute House Bill No. 5503
551+LCO 16 of 33
754552
755-Public Act No. 24-138 24 of 34
553+disclose information submitted pursuant to subdivision (1) of 475
554+subsection (a) of this section, or information submitted pursuant to 476
555+subdivision (2) of said subsection in a manner that (1) is likely to 477
556+compromise the financial, competitive or proprietary nature of such 478
557+information, or (2) would enable a third party to identify a health care 479
558+plan, health carrier, pharmacy benefits manager, pharmaceutical 480
559+manufacturer, or the value of a rebate provided for a particular 481
560+outpatient prescription drug or therapeutic class of outpatient 482
561+prescription drugs. 483
562+(d) Not later than [March 1, 2022] March 1, 2025, and annually 484
563+thereafter, the commissioner shall submit a report, in accordance with 485
564+section 11-4a, to the joint standing committee of the General Assembly 486
565+having cognizance of matters relating to insurance. The report shall 487
566+contain (1) an aggregation of the information submitted to the 488
567+commissioner pursuant to subsection (a) of this section for the 489
568+immediately preceding calendar year, and (2) such other information as 490
569+the commissioner, in the commissioner's discretion, deems relevant for 491
570+the purposes of this section. Not later than [February 1, 2022, and 492
571+annually thereafter] ten days prior to the submission of the annual 493
572+report pursuant to the provisions of this subsection, the commissioner 494
573+shall provide each pharmacy benefits manager and any third party 495
574+affected by submission of [a] such report required by this subsection 496
575+with a written notice describing the content of the report. 497
576+(e) The commissioner may impose a penalty of not more than seven 498
577+thousand five hundred dollars on a pharmacy benefits manager for each 499
578+violation of this section. 500
579+(f) The commissioner may adopt regulations, in accordance with the 501
580+provisions of chapter 54, to implement the provisions of this section. 502
581+Sec. 10. Section 38a-556 of the general statutes is repealed and the 503
582+following is substituted in lieu thereof (Effective from passage): 504
583+(a) There is hereby created a nonprofit legal entity to be known as the 505
584+Health Reinsurance Association. All insurers, health care centers and 506 Substitute Bill No. 5503
756585
757-(19) "Insurance securitization" or "securitization" means a transaction
758-or a group of related transactions, which may include capital market
759-offerings, that are effected through related risk transfer instruments and
760-facilitating administrative agreements, in which all or part of the result
761-of such transaction is used to fund a special purpose financial captive
762-insurance company's obligations under a reinsurance contract with a
763-ceding insurer and by which:
764-(A) A special purpose financial captive insurance company directly
765-or indirectly obtains proceeds through the issuance of securities by such
766-company or any other person; or
767-(B) A person provides, for the benefit of a special purpose financial
768-captive insurance company, one or more letters of credit or other assets
769-that the commissioner has authorized such company to treat as
770-admitted assets for purposes of its annual report. "Insurance
771-securitization" or "securitization" does not include the issuance of a
772-letter of credit for the benefit of the commissioner to satisfy all or part of
773-a special purpose financial captive insurance company's capital and
774-surplus requirements under section 38a-91dd.
775-(20) "Member organization" means any individual, corporation,
776-limited liability company, partnership, association or other entity that
777-belongs to an association.
778-(21) "Mutual corporation" means a corporation organized without
779-stockholders and includes a nonprofit corporation with members.
780-(22) "Parent" means any individual, corporation, limited liability
781-company, partnership or other entity that directly or indirectly owns,
782-controls or holds with power to vote more than fifty per cent of the
783-outstanding voting:
784-(A) Securities of a pure captive insurance company organized as a
785-stock insurer; or Substitute House Bill No. 5503
786586
787-Public Act No. 24-138 25 of 34
587+LCO 17 of 33
788588
789-(B) Membership interests of a pure captive insurance company
790-organized as a nonprofit corporation or as a limited liability company.
791-(23) "Participant" means any association, corporation, limited liability
792-company, partnership, trust or other entity, and any affiliated company
793-or controlled unaffiliated business thereof, that is insured by a
794-sponsored captive insurance company pursuant to a participant
795-contract.
796-(24) "Participant contract" means a contract entered into by a
797-sponsored captive insurance company and a participant by which the
798-sponsored captive insurance company insures the risks of the
799-participant and limits the losses of each such participant to its pro rata
800-share of the assets of one or more protected cells identified in such
801-participant contract.
802-(25) "Protected cell" means a separate account established by a
803-sponsored captive insurance company, in which assets are maintained
804-for one or more participants in accordance with the terms of one or more
805-participant contracts to fund the liability of the sponsored captive
806-insurance company assumed on behalf of such participants as set forth
807-in such participant contracts.
808-(26) "Pure captive insurance company" means any company that
809-insures risks of its parent and affiliated companies or controlled
810-unaffiliated business.
811-(27) "Reinsurance contract" means a contract entered into by a special
812-purpose financial captive insurance company and a ceding insurer by
813-which the special purpose financial captive insurance company agrees
814-to provide reinsurance to the ceding insurer for risks associated with the
815-ceding insurer's insurance or reinsurance business.
816-(28) "Risk retention group" means a captive insurance company
817-organized under the laws of this state pursuant to the federal Liability Substitute House Bill No. 5503
589+self-insurers doing business in the state, as a condition to their authority 507
590+to transact the applicable kinds of health insurance defined in section 508
591+38a-551, shall be members of the association. The association shall 509
592+perform its functions under a plan of operation established and 510
593+approved under subsection (b) of this section, and shall exercise its 511
594+powers through a board of directors established under this section. 512
595+(b) (1) The board of directors of the association shall be made up of 513
596+nine individuals selected by participating members, subject to approval 514
597+by the commissioner, two of whom shall be appointed by the 515
598+commissioner on or before July 1, 1993, to represent health care centers. 516
599+To select the initial board of directors, and to initially organize the 517
600+association, the commissioner shall give notice to all members of the 518
601+time and place of the organizational meeting. In determining voting 519
602+rights at the organizational meeting each member shall be entitled to 520
603+vote in person or proxy. The vote shall be a weighted vote based upon 521
604+the net health insurance premium derived from this state in the previous 522
605+calendar year. If the board of directors is not selected within sixty days 523
606+after notice of the organizational meeting, the commissioner may 524
607+appoint the initial board. In approving or selecting members of the 525
608+board, the commissioner may consider, among other things, whether all 526
609+members are fairly represented. Members of the board may be 527
610+reimbursed from the moneys of the association for expenses incurred by 528
611+them as members, but shall not otherwise be compensated by the 529
612+association for their services. 530
613+(2) The board shall submit to the commissioner a plan of operation 531
614+for the association necessary or suitable to assure the fair, reasonable 532
615+and equitable administration of the association. The plan of operation 533
616+shall become effective upon approval in writing by the commissioner. 534
617+Such plan shall continue in force until modified by the commissioner or 535
618+superseded by a plan submitted by the board and approved by the 536
619+commissioner. The plan of operation shall: (A) Establish procedures for 537
620+the handling and accounting of assets and moneys of the association; (B) 538
621+establish regular times and places for meetings of the board of directors; 539
622+(C) establish procedures for records to be kept of all financial 540 Substitute Bill No. 5503
818623
819-Public Act No. 24-138 26 of 34
820624
821-Risk Retention Act of 1986, 15 USC 3901 et seq., as amended from time
822-to time, as a stock insurer or mutual corporation, a reciprocal or other
823-limited liability entity.
824-(29) "Security" has the same meaning as provided in section 36b-3 and
825-includes any form of debt obligation, equity, surplus certificate, surplus
826-note, funding agreement, derivative or other financial instrument that
827-the commissioner designates as a security for purposes of this section
828-and sections 38a-91bb to 38a-91tt, inclusive.
829-(30) "Special purpose financial captive insurance company" means a
830-company that is licensed by the commissioner in accordance with
831-section 38a-91bb.
832-(31) "Special purpose financial captive insurance company security"
833-means a security issued by (A) a special purpose financial captive
834-insurance company, or (B) a third party, the proceeds of which are
835-obtained directly or indirectly by a special purpose financial captive
836-insurance company.
837-(32) "Sponsor" means any association, corporation, limited liability
838-company, partnership, trust or other entity that is approved by the
839-commissioner to organize and operate a sponsored captive insurance
840-company and to provide all or part of the required unimpaired paid-in
841-capital and surplus.
842-(33) "Sponsored captive insurance company" means a captive
843-insurance company:
844-(A) In which the minimum required unimpaired paid-in capital and
845-surplus are provided by one or more sponsors;
846-(B) That insures risks of its participants only through separate
847-participant contracts; and Substitute House Bill No. 5503
625+LCO 18 of 33
848626
849-Public Act No. 24-138 27 of 34
627+transactions, and for the annual fiscal reporting to the commissioner; (D) 541
628+establish procedures whereby selections for the board of directors shall 542
629+be made and submitted to the commissioner; (E) establish procedures to 543
630+amend, subject to the approval of the commissioner, the plan of 544
631+operations; (F) establish procedures for the selection of an administrator 545
632+and set forth the powers and duties of the administrator; (G) contain 546
633+additional provisions necessary or proper for the execution of the 547
634+powers and duties of the association; and (H) contain additional 548
635+provisions necessary for the association to establish health insurance 549
636+plans that qualify as acceptable coverage in accordance with the Pension 550
637+Benefit Guaranty Corporation and other state or federal programs that 551
638+may be established. 552
639+(c) The association shall have the general powers and authority 553
640+granted under the laws of this state to carriers to transact the kinds of 554
641+insurance defined under section 38a-551, and in addition thereto, the 555
642+specific authority to: (1) Enter into contracts necessary or proper to carry 556
643+out the provisions and purposes of this section and sections 38a-551 and 557
644+[38a-556a] 38a-557 to 38a-559, inclusive; (2) sue or be sued, including 558
645+taking any legal actions necessary or proper for recovery of any 559
646+assessments for, on behalf of, or against participating members; (3) take 560
647+such legal action as necessary to avoid the payment of improper claims 561
648+against the association or the coverage provided by or through the 562
649+association; (4) establish, with respect to health insurance provided by 563
650+or on behalf of the association, appropriate rates, scales of rates, rate 564
651+classifications and rating adjustments, such rates not to be unreasonable 565
652+in relation to the coverage provided and the operational expenses of the 566
653+association; (5) administer any type of reinsurance program, for or on 567
654+behalf of participating members; (6) pool risks among participating 568
655+members; (7) issue policies of insurance required or permitted by this 569
656+section and sections 38a-551 and [38a-556a] 38a-557 to 38a-559, 570
657+inclusive, in its own name or on behalf of participating members; (8) 571
658+administer separate pools, separate accounts or other plans as deemed 572
659+appropriate for separate members or groups of members; (9) operate 573
660+and administer any combination of pl ans, pools, reinsurance 574 Substitute Bill No. 5503
850661
851-(C) That funds its liability to each participant through one or more
852-protected cells and segregates the assets of each protected cell from the
853-assets of other protected cells and from the assets of the sponsored
854-captive insurance company's general account.
855-(34) "Surplus note" means an unsecured subordinated debt obligation
856-possessing characteristics consistent with the National Association of
857-Insurance Commissioners Statement of Statutory Accounting Principles
858-No. 41, as amended from time to time, and as modified or supplemented
859-by the commissioner.
860-Sec. 15. (NEW) (Effective October 1, 2024) (a) (1) Any sponsored captive
861-insurance company, including a sponsored captive insurance company
862-licensed as a special purpose financial captive insurance company, may,
863-upon application of such sponsored captive insurance company and
864-with the commissioner's prior written approval, convert one or more
865-protected cells or incorporated protected cells into a:
866-(A) Single protected cell or incorporated protected cell;
867-(B) New sponsored captive insurance company;
868-(C) New sponsored captive insurance company licensed as a special
869-purpose financial captive insurance company;
870-(D) New special purpose financial captive insurance company;
871-(E) New pure captive insurance company;
872-(F) New risk retention group;
873-(G) New agency captive insurance company;
874-(H) New industrial insured captive insurance company; or
875-(I) New association captive insurance company. Substitute House Bill No. 5503
876662
877-Public Act No. 24-138 28 of 34
663+LCO 19 of 33
878664
879-(2) Any such conversion of a protected cell or incorporated protected
880-cell, in accordance with subdivision (1) of this subsection, shall be
881-subject to the provisions of sections 38a-91aa to 38a-91xx, inclusive, of
882-the general statutes, as amended by this act, as applicable, and such
883-sponsored captive insurance company's plan of operation approved by
884-the commissioner, without affecting such converted protected cell's or
885-incorporated protected cell's assets, rights, benefits, obligations and
886-liabilities.
887-(b) Any conversion of a protected cell or incorporated protected cell
888-shall be deemed to be a continuation of such protected cell's or
889-incorporated protected cell's existence together with all of such
890-protected cell's or incorporated protected cell's assets, rights, benefits,
891-obligations and liabilities, as (1) a new protected cell or incorporated
892-protected cell, (2) a sponsored captive insurance company, (3) a
893-sponsored captive insurance company licensed as a special purpose
894-financial captive insurance company, (4) a pure captive insurance
895-company, (5) a risk retention group, (6) an industrial insured captive
896-insurance company, or (7) an association captive insurance company, as
897-applicable. Any such conversion of a protected cell or incorporated
898-protected cell shall be deemed to occur without any transfer or
899-assignment of such cell's assets, rights, benefits, obligations or liabilities,
900-and without the creation of any reversionary interest in, or impairment
901-of, any such assets, rights, benefits, obligations or liabilities.
902-(c) Any conversion of a protected cell or incorporated protected cell
903-shall not be construed to limit any rights or protections applicable to
904-such converted protected cell or incorporated protected cell or
905-applicable to such sponsored captive insurance company or sponsored
906-captive insurance company licensed as a special purpose financial
907-captive insurance company, as applicable, that existed immediately
908-prior to the date of such conversion.
909-(d) Any protected cell or incorporated protected cell that converts Substitute House Bill No. 5503
665+arrangements or other mechanisms as deemed appropriate to best 575
666+accomplish the fair and equitable operation of the association; (10) set 576
667+limits on the amounts of reinsurance that may be ceded to the 577
668+association by its members; (11) appoint from among participating 578
669+members appropriate legal, actuarial and other committees as necessary 579
670+to provide technical assistance in the operation of the association, policy 580
671+and other contract design, and any other function within the authority 581
672+of the association; (12) apply for and accept grants, gifts and bequests of 582
673+funds from other states, federal and interstate agencies and independent 583
674+authorities, private firms, individuals and foundations for the purpose 584
675+of carrying out its responsibilities. Any such funds received shall be 585
676+deposited in the General Fund and shall be credited to a separate 586
677+nonlapsing account within the General Fund for the Health Reinsurance 587
678+Association and may be used by the Health Reinsurance Association in 588
679+the performance of its duties; and (13) perform such other duties and 589
680+responsibilities as may be required by state or federal law or permitted 590
681+by state or federal law and approved by the commissioner. 591
682+(d) Rates for coverage issued by or through the association shall not 592
683+be excessive, inadequate or unfairly discriminatory. All rates shall be 593
684+promulgated by the association through an actuarial committee 594
685+consisting of five persons who are members of the American Academy 595
686+of Actuaries, shall be filed with the commissioner and may be 596
687+disapproved within sixty days after the filing thereof if excessive, 597
688+inadequate or unfairly discriminatory. 598
689+(e) (1) Following the close of each fiscal year, the administrator shall 599
690+determine the net premiums, reinsurance premiums less administrative 600
691+expense allowance, the expense of administration pertaining to the 601
692+reinsurance operations of the association and the incurred losses for the 602
693+year. Any net loss shall be assessed to all participating members in 603
694+proportion to their respective shares of the total health insurance 604
695+premiums earned in this state during the calendar year, or with paid 605
696+losses in the year, coinciding with or ending during the fiscal year of the 606
697+association or on any other equitable basis as may be provided in the 607
698+plan of operations. For self-insured members of the association, health 608 Substitute Bill No. 5503
910699
911-Public Act No. 24-138 29 of 34
912700
913-into an incorporated protected cell, a new captive insurance company
914-or risk retention group, in accordance with the provisions of this section,
915-shall perform such conversion in accordance with chapter 601 or 613 of
916-the general statutes, as applicable, or in accordance with any such
917-provisions of the general statutes applicable to the formation of any
918-other type of legal entity permissible under the laws of this state, as
919-applicable.
920-Sec. 16. Section 19a-754c of the general statutes is amended by adding
921-subsection (f) as follows (Effective October 1, 2024):
922-(NEW) (f) Notwithstanding any provision of this section, the Covered
923-Connecticut program shall only include in-network health care
924-providers and in-network services, unless the health carrier's network is
925-deemed by the Insurance Commissioner to be inadequate. Benefits
926-described in subsection (b) of this section and cost-sharing available to
927-all eligible individuals pursuant to subdivision (1) of subsection (b) of
928-this section shall only apply if such eligible individuals use in-network
929-health care providers or in-network facilities.
930-Sec. 17. Section 38a-556 of the general statutes is repealed and the
931-following is substituted in lieu thereof (Effective from passage):
932-(a) There is hereby created a nonprofit legal entity to be known as the
933-Health Reinsurance Association. All insurers, health care centers and
934-self-insurers doing business in the state, as a condition to their authority
935-to transact the applicable kinds of health insurance defined in section
936-38a-551, shall be members of the association. The association shall
937-perform its functions under a plan of operation established and
938-approved under subsection (b) of this section, and shall exercise its
939-powers through a board of directors established under this section.
940-(b) (1) The board of directors of the association shall be made up of
941-nine individuals selected by participating members, subject to approval Substitute House Bill No. 5503
701+LCO 20 of 33
942702
943-Public Act No. 24-138 30 of 34
703+insurance premiums earned shall be established by dividing the amount 609
704+of paid health losses for the applicable period by eighty-five per cent. 610
705+Net gains, if any, shall be held at interest to offset future losses or 611
706+allocated to reduce future premiums. 612
707+(2) Any net loss to the association represented by the excess of its 613
708+actual expenses of administering policies issued by the association over 614
709+the applicable expense allowance shall be separately assessed to those 615
710+participating members who do not elect to administer their plans. All 616
711+assessments shall be on an equitable formula established by the board. 617
712+(3) The association shall conduct periodic audits to assure the general 618
713+accuracy of the financial data submitted to the association and the 619
714+association shall have an annual audit of its operations by an 620
715+independent certified public accountant. The annual audit shall be filed 621
716+with the commissioner for his review and the association shall be subject 622
717+to the provisions of section 38a-14. 623
718+(f) All policy forms issued by or through the association shall conform 624
719+in substance to prototype forms developed by the association, shall in 625
720+all other respects conform to the requirements of this section and 626
721+sections 38a-551 and [38a-556a] 38a-557 to 38a-559, inclusive, and shall 627
722+be approved by the commissioner. The commissioner may disapprove 628
723+any such form if it contains a provision or provisions that are unfair or 629
724+deceptive or that encourage misrepresentation of the policy. 630
725+(g) Unless otherwise permitted by the plan of operation, the 631
726+association shall not issue, reissue or continue in force health care plan 632
727+coverage with respect to any person who is already covered under an 633
728+individual or group health care plan, or who is sixty-five years of age or 634
729+older and eligible for Medicare or who is not a resident of this state. 635
730+(h) Benefits payable under a health care plan insured by or reinsured 636
731+through the association shall be paid net of all other health insurance 637
732+benefits paid or payable through any other source, and net of all health 638
733+insurance coverages provided by or pursuant to any other state or 639
734+federal law including Title XVIII of the Social Security Act, Medicare, 640 Substitute Bill No. 5503
944735
945-by the commissioner, two of whom shall be appointed by the
946-commissioner on or before July 1, 1993, to represent health care centers.
947-To select the initial board of directors, and to initially organize the
948-association, the commissioner shall give notice to all members of the
949-time and place of the organizational meeting. In determining voting
950-rights at the organizational meeting each member shall be entitled to
951-vote in person or proxy. The vote shall be a weighted vote based upon
952-the net health insurance premium derived from this state in the previous
953-calendar year. If the board of directors is not selected within sixty days
954-after notice of the organizational meeting, the commissioner may
955-appoint the initial board. In approving or selecting members of the
956-board, the commissioner may consider, among other things, whether all
957-members are fairly represented. Members of the board may be
958-reimbursed from the moneys of the association for expenses incurred by
959-them as members, but shall not otherwise be compensated by the
960-association for their services.
961-(2) The board shall submit to the commissioner a plan of operation
962-for the association necessary or suitable to assure the fair, reasonable
963-and equitable administration of the association. The plan of operation
964-shall become effective upon approval in writing by the commissioner.
965-Such plan shall continue in force until modified by the commissioner or
966-superseded by a plan submitted by the board and approved by the
967-commissioner. The plan of operation shall: (A) Establish procedures for
968-the handling and accounting of assets and moneys of the association; (B)
969-establish regular times and places for meetings of the board of directors;
970-(C) establish procedures for records to be kept of all financial
971-transactions, and for the annual fiscal reporting to the commissioner; (D)
972-establish procedures whereby selections for the board of directors shall
973-be made and submitted to the commissioner; (E) establish procedures to
974-amend, subject to the approval of the commissioner, the plan of
975-operations; (F) establish procedures for the selection of an administrator
976-and set forth the powers and duties of the administrator; (G) contain Substitute House Bill No. 5503
977736
978-Public Act No. 24-138 31 of 34
737+LCO 21 of 33
979738
980-additional provisions necessary or proper for the execution of the
981-powers and duties of the association; and (H) contain additional
982-provisions necessary for the association to establish health insurance
983-plans that qualify as acceptable coverage in accordance with the Pension
984-Benefit Guaranty Corporation and other state or federal programs that
985-may be established.
986-(c) The association shall have the general powers and authority
987-granted under the laws of this state to carriers to transact the kinds of
988-insurance defined under section 38a-551, and in addition thereto, the
989-specific authority to: (1) Enter into contracts necessary or proper to carry
990-out the provisions and purposes of this section and sections 38a-551 and
991-[38a-556a] 38a-557 to 38a-559, inclusive; (2) sue or be sued, including
992-taking any legal actions necessary or proper for recovery of any
993-assessments for, on behalf of, or against participating members; (3) take
994-such legal action as necessary to avoid the payment of improper claims
995-against the association or the coverage provided by or through the
996-association; (4) establish, with respect to health insurance provided by
997-or on behalf of the association, appropriate rates, scales of rates, rate
998-classifications and rating adjustments, such rates not to be unreasonable
999-in relation to the coverage provided and the operational expenses of the
1000-association; (5) administer any type of reinsurance program, for or on
1001-behalf of participating members; (6) pool risks among participating
1002-members; (7) issue policies of insurance required or permitted by this
1003-section and sections 38a-551 and [38a-556a] 38a-557 to 38a-559,
1004-inclusive, in its own name or on behalf of participating members; (8)
1005-administer separate pools, separate accounts or other plans as deemed
1006-appropriate for separate members or groups of members; (9) operate
1007-and administer any combination of plans, pools, reinsurance
1008-arrangements or other mechanisms as deemed appropriate to best
1009-accomplish the fair and equitable operation of the association; (10) set
1010-limits on the amounts of reinsurance that may be ceded to the
1011-association by its members; (11) appoint from among participating Substitute House Bill No. 5503
739+but excluding Medicaid. 641
740+(i) There shall be no liability on the part of and no cause of action of 642
741+any nature shall arise against any carrier or its agents or its employees, 643
742+the Health Reinsurance Association or its agents or its employees or the 644
743+residual market mechanism established under the provisions of section 645
744+38a-557 or its agents or its employees, or the commissioner or the 646
745+commissioner's representatives for any action taken by them in the 647
746+performance of their duties under this section and sections 38a-551 and 648
747+[38a-556a] 38a-557 to 38a-559, inclusive. This provision shall not apply 649
748+to the obligations of a carrier, a self-insurer, the Health Reinsurance 650
749+Association or the residual market mechanism for payment of benefits 651
750+provided under a health care plan. 652
751+Sec. 11. Subdivision (4) of section 38a-564 of the general statutes is 653
752+repealed and the following is substituted in lieu thereof (Effective October 654
753+1, 2024): 655
754+(4) (A) "Small employer" means (i) prior to January 1, 2016, an 656
755+employer that employed an average of at least one but not more than 657
756+fifty employees on business days during the preceding calendar year 658
757+and employs at least one employee on the first day of the group health 659
758+insurance plan year, [and] (ii) on and after January 1, 2016, and prior to 660
759+January 1, 2025, an employer that employed an average of at least one 661
760+but not more than one hundred employees on business days during the 662
761+preceding calendar year and employs at least one employee on the first 663
762+day of the group health insurance plan year, [except the commissioner 664
763+may postpone said January 1, 2016, date to be consistent with any such 665
764+postponement made by the Secretary of the United States Department 666
765+of Health and Human Services under the Patient Protection and 667
766+Affordable Care Act, P.L. 111-148, as amended from time to time] and 668
767+(iii) on and after January 1, 2025, an employer that employed an average 669
768+of at least one but not more than fifty employees on business days 670
769+during the preceding calendar year and employs at least one employee 671
770+on the first day of the group health insurance plan year. "Small 672
771+employer" does not include a sole proprietorship that employs only the 673 Substitute Bill No. 5503
1012772
1013-Public Act No. 24-138 32 of 34
1014773
1015-members appropriate legal, actuarial and other committees as necessary
1016-to provide technical assistance in the operation of the association, policy
1017-and other contract design, and any other function within the authority
1018-of the association; (12) apply for and accept grants, gifts and bequests of
1019-funds from other states, federal and interstate agencies and independent
1020-authorities, private firms, individuals and foundations for the purpose
1021-of carrying out its responsibilities. Any such funds received shall be
1022-deposited in the General Fund and shall be credited to a separate
1023-nonlapsing account within the General Fund for the Health Reinsurance
1024-Association and may be used by the Health Reinsurance Association in
1025-the performance of its duties; and (13) perform such other duties and
1026-responsibilities as may be required by state or federal law or permitted
1027-by state or federal law and approved by the commissioner.
1028-(d) Rates for coverage issued by or through the association shall not
1029-be excessive, inadequate or unfairly discriminatory. All rates shall be
1030-promulgated by the association through an actuarial committee
1031-consisting of five persons who are members of the American Academy
1032-of Actuaries, shall be filed with the commissioner and may be
1033-disapproved within sixty days after the filing thereof if excessive,
1034-inadequate or unfairly discriminatory.
1035-(e) (1) Following the close of each fiscal year, the administrator shall
1036-determine the net premiums, reinsurance premiums less administrative
1037-expense allowance, the expense of administration pertaining to the
1038-reinsurance operations of the association and the incurred losses for the
1039-year. Any net loss shall be assessed to all participating members in
1040-proportion to their respective shares of the total health insurance
1041-premiums earned in this state during the calendar year, or with paid
1042-losses in the year, coinciding with or ending during the fiscal year of the
1043-association or on any other equitable basis as may be provided in the
1044-plan of operations. For self-insured members of the association, health
1045-insurance premiums earned shall be established by dividing the amount Substitute House Bill No. 5503
774+LCO 22 of 33
1046775
1047-Public Act No. 24-138 33 of 34
776+sole proprietor or the spouse of such sole proprietor. 674
777+(B) (i) For purposes of subparagraph (A) of this subdivision, the 675
778+number of employees shall be determined by adding (I) the number of 676
779+full-time employees for each month who work a normal work week of 677
780+thirty hours or more, and (II) the number of full-time equivalent 678
781+employees, calculated for each month by dividing by one hundred 679
782+twenty the aggregate number of hours worked for such month by 680
783+employees who work a normal work week of less than thirty hours, and 681
784+averaging such total for the calendar year. 682
785+(ii) If an employer was not in existence throughout the preceding 683
786+calendar year, the number of employees shall be based on the average 684
787+number of employees that such employer reasonably expects to employ 685
788+in the current calendar year. 686
789+(C) All persons treated as a single employer under Section 414 of the 687
790+Internal Revenue Code of 1986, or any subsequent corresponding 688
791+internal revenue code of the United States, as amended from time to 689
792+time, shall be considered a single employer for purposes of this 690
793+subdivision. 691
794+Sec. 12. Subdivision (1) of section 38a-614 of the general statutes is 692
795+repealed and the following is substituted in lieu thereof (Effective October 693
796+1, 2024): 694
797+(1) Each domestic society transacting business in this state shall, 695
798+annually, on or before the first day of March, unless the commissioner 696
799+has extended such time for cause shown, file with the commissioner, 697
800+and electronically to the National Association of Insurance 698
801+Commissioners, a true and complete statement of its financial condition, 699
802+transactions and affairs for the preceding calendar year and pay the fee 700
803+specified in section 38a-11 for filing such annual statement. The 701
804+statement shall be in general form and context as approved by the 702
805+National Association of Insurance Commissioners for fraternal benefit 703
806+societies and as supplemented by additional information required by 704
807+the commissioner. An electronically filed true and complete report filed 705 Substitute Bill No. 5503
1048808
1049-of paid health losses for the applicable period by eighty-five per cent.
1050-Net gains, if any, shall be held at interest to offset future losses or
1051-allocated to reduce future premiums.
1052-(2) Any net loss to the association represented by the excess of its
1053-actual expenses of administering policies issued by the association over
1054-the applicable expense allowance shall be separately assessed to those
1055-participating members who do not elect to administer their plans. All
1056-assessments shall be on an equitable formula established by the board.
1057-(3) The association shall conduct periodic audits to assure the general
1058-accuracy of the financial data submitted to the association and the
1059-association shall have an annual audit of its operations by an
1060-independent certified public accountant. The annual audit shall be filed
1061-with the commissioner for his review and the association shall be subject
1062-to the provisions of section 38a-14.
1063-(f) All policy forms issued by or through the association shall conform
1064-in substance to prototype forms developed by the association, shall in
1065-all other respects conform to the requirements of this section and
1066-sections 38a-551 and [38a-556a] 38a-557 to 38a-559, inclusive, and shall
1067-be approved by the commissioner. The commissioner may disapprove
1068-any such form if it contains a provision or provisions that are unfair or
1069-deceptive or that encourage misrepresentation of the policy.
1070-(g) Unless otherwise permitted by the plan of operation, the
1071-association shall not issue, reissue or continue in force health care plan
1072-coverage with respect to any person who is already covered under an
1073-individual or group health care plan, or who is sixty-five years of age or
1074-older and eligible for Medicare or who is not a resident of this state.
1075-(h) Benefits payable under a health care plan insured by or reinsured
1076-through the association shall be paid net of all other health insurance
1077-benefits paid or payable through any other source, and net of all health Substitute House Bill No. 5503
1078809
1079-Public Act No. 24-138 34 of 34
810+LCO 23 of 33
1080811
1081-insurance coverages provided by or pursuant to any other state or
1082-federal law including Title XVIII of the Social Security Act, Medicare,
1083-but excluding Medicaid.
1084-(i) There shall be no liability on the part of and no cause of action of
1085-any nature shall arise against any carrier or its agents or its employees,
1086-the Health Reinsurance Association or its agents or its employees or the
1087-residual market mechanism established under the provisions of section
1088-38a-557 or its agents or its employees, or the commissioner or the
1089-commissioner's representatives for any action taken by them in the
1090-performance of their duties under this section and sections 38a-551 and
1091-[38a-556a] 38a-557 to 38a-559, inclusive. This provision shall not apply
1092-to the obligations of a carrier, a self-insurer, the Health Reinsurance
1093-Association or the residual market mechanism for payment of benefits
1094-provided under a health care plan.
1095-Sec. 18. Section 38a-556a of the general statutes is repealed. (Effective
1096-from passage)
812+in accordance with section 38a-53a that is timely submitted to the 706
813+National Association of Insurance Commissioners shall [not exempt a 707
814+domestic society from timely filing a true and complete paper copy with 708
815+the commissioner] be deemed to have been submitted to the 709
816+commissioner in accordance with the provisions of this section. 710
817+Sec. 13. Subsection (b) of section 38a-591l of the general statutes is 711
818+repealed and the following is substituted in lieu thereof (Effective October 712
819+1, 2024): 713
820+(b) (1) Any independent review organization seeking to conduct 714
821+external reviews and expedited external reviews under section 38a-591g 715
822+shall submit the application form for approval or reapproval, as 716
823+applicable, to the commissioner and shall include all documentation 717
824+and information necessary for the commissioner to determine if the 718
825+independent review organization satisfies the minimum qualifications 719
826+established under this section. 720
827+(2) An approval or reapproval shall be effective for [two] three years, 721
828+unless the commissioner determines before the expiration of such 722
829+approval or reapproval that the independent review organization no 723
830+longer satisfies the minimum qualifications established under this 724
831+section. 725
832+(3) Whenever the commissioner determines that an independent 726
833+review organization has lost its accreditation or no longer satisfies the 727
834+minimum requirements established under this section, the 728
835+commissioner shall terminate the approval of the independent review 729
836+organization and remove the independent review organization from the 730
837+list of approved independent review organizations specified in 731
838+subdivision (2) of subsection (a) of this section. 732
839+Sec. 14. Section 38a-91aa of the general statutes is repealed and the 733
840+following is substituted in lieu thereof (Effective October 1, 2024): 734
841+As used in this section, sections 38a-91bb to 38a-91uu, inclusive, [and] 735
842+sections 38a-91ww, [and] 38a-91xx and section 15 of this act: 736 Substitute Bill No. 5503
843+
844+
845+LCO 24 of 33
846+
847+(1) "Affiliated company" means any company in the same corporate 737
848+system as a parent, an industrial insured or a member organization by 738
849+virtue of common ownership, control, operation or management. 739
850+(2) "Agency captive insurance company" means a captive insurance 740
851+company that: 741
852+(A) Is owned or directly or indirectly controlled by one or more 742
853+insurance agents or insurance producers licensed in accordance with 743
854+sections 38a-702a to 38a-702r, inclusive; 744
855+(B) Only insures against risks covered by insurance policies sold, 745
856+solicited or negotiated through the insurance agents or insurance 746
857+producers that own or control such captive insurance company; and 747
858+(C) Does not insure against risks covered by any health insurance 748
859+policy or plan. 749
860+(3) "Alien captive insurance company" means any insurance 750
861+company formed to write insurance business for its parent and affiliated 751
862+companies and licensed pursuant to the laws of an alien jurisdiction that 752
863+imposes statutory or regulatory standards on companies transacting the 753
864+business of insurance in such jurisdiction that the commissioner deems 754
865+to be acceptable. 755
866+(4) "Association" means any legal association of individuals, 756
867+corporations, limited liability companies, partnerships, associations or 757
868+other entities, where the association itself or some or all of the member 758
869+organizations: 759
870+(A) Directly or indirectly own, control or hold with power to vote all 760
871+of the outstanding voting securities or other voting interests of an 761
872+association captive insurance company incorporated as a stock insurer; 762
873+(B) Have complete voting control over an association captive 763
874+insurance company incorporated as a mutual corporation or formed as 764
875+a limited liability company; or 765 Substitute Bill No. 5503
876+
877+
878+LCO 25 of 33
879+
880+(C) Constitute all of the subscribers of an association captive 766
881+insurance company formed as a reciprocal insurer. 767
882+(5) "Association captive insurance company" means any company 768
883+that insures risks of the member organizations of an association, and 769
884+includes a company that also insures risks of such member 770
885+organizations' affiliated companies or of the association. 771
886+(6) "Branch business" means any insurance business transacted in this 772
887+state by a branch captive insurance company. 773
888+(7) "Branch captive insurance company" means any alien captive 774
889+insurance company or foreign captive insurance company licensed by 775
890+the commissioner to transact the business of insurance in this state 776
891+through a business unit with a principal place of business in this state. 777
892+(8) "Branch operations" means any business operations in this state of 778
893+a branch captive insurance company. 779
894+(9) "Captive insurance company" means any (A) pure captive 780
895+insurance company, agency captive insurance company, association 781
896+captive insurance company, industrial insured captive insurance 782
897+company, risk retention group, sponsored captive insurance company 783
898+or special purpose financial captive insurance company that is 784
899+domiciled in this state and formed or licensed under the provisions of 785
900+this section and sections 38a-91bb to 38a-91tt, inclusive, or (B) branch 786
901+captive insurance company. 787
902+(10) "Ceding insurer" means an insurance company, approved by the 788
903+commissioner and licensed or otherwise authorized to transact the 789
904+business of insurance or reinsurance in its state or country of domicile, 790
905+that cedes risk to a special purpose financial captive insurance company 791
906+pursuant to a reinsurance contract. 792
907+(11) "Commissioner" means the Insurance Commissioner. 793
908+(12) "Controlled unaffiliated business" means any person: 794 Substitute Bill No. 5503
909+
910+
911+LCO 26 of 33
912+
913+(A) Who, (i) in the case of a pure captive insurance company, is not 795
914+in the corporate system of a parent and the parent's affiliated companies, 796
915+(ii) in the case of an industrial insured captive insurance company, is not 797
916+in the corporate system of an industrial insured and the industrial 798
917+insured's affiliated companies, or (iii) in the case of a sponsored captive 799
918+insurance company, is not in the corporate system of a participant and 800
919+the participant's affiliated companies; 801
920+(B) Who, (i) in the case of a pure captive insurance company, has an 802
921+existing contractual relationship with a parent or one of the parent's 803
922+affiliated companies, (ii) in the case of an industrial insured captive 804
923+insurance company, has an existing contractual relationship with an 805
924+industrial insured or one of the industrial insured's affiliated companies, 806
925+or (iii) in the case of a sponsored captive insurance company, has an 807
926+existing contractual relationship with a participant or one of the 808
927+participant's affiliated companies; and 809
928+(C) Whose risks are managed by a pure captive insurance company, 810
929+an industrial insured captive insurance company or a sponsored captive 811
930+insurance company, as applicable, in accordance with section 38a-91qq. 812
931+(13) "Excess workers' compensation insurance" means, in the case of 813
932+an employer that has insured or self-insured its workers' compensation 814
933+risks in accordance with applicable state or federal law, insurance in 815
934+excess of a specified per-incident or aggregate limit established by the 816
935+commissioner. 817
936+(14) "Foreign captive insurance company" means any insurance 818
937+company formed to write insurance business for its parent and affiliated 819
938+companies and licensed pursuant to the laws of a foreign jurisdiction 820
939+that imposes statutory or regulatory standards on companies 821
940+transacting the business of insurance in such jurisdiction that the 822
941+commissioner deems to be acceptable. 823
942+(15) "Incorporated protected cell" means a protected cell that is 824
943+established as a corporation or a limited liability company, separate 825
944+from the sponsored captive insurance company with which it has 826 Substitute Bill No. 5503
945+
946+
947+LCO 27 of 33
948+
949+entered into a participant contract. 827
950+(16) "Industrial insured" means an insured: 828
951+(A) Who procures the insurance of any risk or risks by use of the 829
952+services of a full-time employee acting as an insurance manager or 830
953+buyer; 831
954+(B) Whose aggregate annual premiums for insurance on all risks total 832
955+at least twenty-five thousand dollars; and 833
956+(C) Who has at least twenty-five full-time employees. 834
957+(17) "Industrial insured captive insurance company" means any 835
958+company that insures risks of the industrial insureds that comprise an 836
959+industrial insured group, and includes a company that also insures risks 837
960+of such industrial insureds' affiliated companies. 838
961+(18) "Industrial insured group" means any group of industrial 839
962+insureds that collectively: 840
963+(A) Directly or indirectly own, control or hold with power to vote all 841
964+of the outstanding voting securities or other voting interests of an 842
965+industrial insured captive insurance company incorporated as a stock 843
966+insurer; 844
967+(B) Have complete voting control over an industrial insured captive 845
968+insurance company incorporated as a mutual corporation or formed as 846
969+a limited liability company; or 847
970+(C) Constitute all of the subscribers of an industrial insured captive 848
971+insurance company formed as a reciprocal insurer. 849
972+(19) "Insurance securitization" or "securitization" means a transaction 850
973+or a group of related transactions, which may include capital market 851
974+offerings, that are effected through related risk transfer instruments and 852
975+facilitating administrative agreements, in which all or part of the result 853
976+of such transaction is used to fund a special purpose financial captive 854 Substitute Bill No. 5503
977+
978+
979+LCO 28 of 33
980+
981+insurance company's obligations under a reinsurance contract with a 855
982+ceding insurer and by which: 856
983+(A) A special purpose financial captive insurance company directly 857
984+or indirectly obtains proceeds through the issuance of securities by such 858
985+company or any other person; or 859
986+(B) A person provides, for the benefit of a special purpose financial 860
987+captive insurance company, one or more letters of credit or other assets 861
988+that the commissioner has authorized such company to treat as 862
989+admitted assets for purposes of its annual report. "Insurance 863
990+securitization" or "securitization" does not include the issuance of a 864
991+letter of credit for the benefit of the commissioner to satisfy all or part of 865
992+a special purpose financial captive insurance company's capital and 866
993+surplus requirements under section 38a-91dd. 867
994+(20) "Member organization" means any individual, corporation, 868
995+limited liability company, partnership, association or other entity that 869
996+belongs to an association. 870
997+(21) "Mutual corporation" means a corporation organized without 871
998+stockholders and includes a nonprofit corporation with members. 872
999+(22) "Parent" means any individual, corporation, limited liability 873
1000+company, partnership or other entity that directly or indirectly owns, 874
1001+controls or holds with power to vote more than fifty per cent of the 875
1002+outstanding voting: 876
1003+(A) Securities of a pure captive insurance company organized as a 877
1004+stock insurer; or 878
1005+(B) Membership interests of a pure captive insurance company 879
1006+organized as a nonprofit corporation or as a limited liability company. 880
1007+(23) "Participant" means any association, corporation, limited liability 881
1008+company, partnership, trust or other entity, and any affiliated company 882
1009+or controlled unaffiliated business thereof, that is insured by a 883
1010+sponsored captive insurance company pursuant to a participant 884 Substitute Bill No. 5503
1011+
1012+
1013+LCO 29 of 33
1014+
1015+contract. 885
1016+(24) "Participant contract" means a contract entered into by a 886
1017+sponsored captive insurance company and a participant by which the 887
1018+sponsored captive insurance company insures the risks of the 888
1019+participant and limits the losses of each such participant to its pro rata 889
1020+share of the assets of one or more protected cells identified in such 890
1021+participant contract. 891
1022+(25) "Protected cell" means a separate account established by a 892
1023+sponsored captive insurance company, in which assets are maintained 893
1024+for one or more participants in accordance with the terms of one or more 894
1025+participant contracts to fund the liability of the sponsored captive 895
1026+insurance company assumed on behalf of such participants as set forth 896
1027+in such participant contracts. 897
1028+(26) "Pure captive insurance company" means any company that 898
1029+insures risks of its parent and affiliated companies or controlled 899
1030+unaffiliated business. 900
1031+(27) "Reinsurance contract" means a contract entered into by a special 901
1032+purpose financial captive insurance company and a ceding insurer by 902
1033+which the special purpose financial captive insurance company agrees 903
1034+to provide reinsurance to the ceding insurer for risks associated with the 904
1035+ceding insurer's insurance or reinsurance business. 905
1036+(28) "Risk retention group" means a captive insurance company 906
1037+organized under the laws of this state pursuant to the federal Liability 907
1038+Risk Retention Act of 1986, 15 USC 3901 et seq., as amended from time 908
1039+to time, as a stock insurer or mutual corporation, a reciprocal or other 909
1040+limited liability entity. 910
1041+(29) "Security" has the same meaning as provided in section 36b-3 and 911
1042+includes any form of debt obligation, equity, surplus certificate, surplus 912
1043+note, funding agreement, derivative or other financial instrument that 913
1044+the commissioner designates as a security for purposes of this section 914
1045+and sections 38a-91bb to 38a-91tt, inclusive. 915 Substitute Bill No. 5503
1046+
1047+
1048+LCO 30 of 33
1049+
1050+(30) "Special purpose financial captive insurance company" means a 916
1051+company that is licensed by the commissioner in accordance with 917
1052+section 38a-91bb. 918
1053+(31) "Special purpose financial captive insurance company security" 919
1054+means a security issued by (A) a special purpose financial captive 920
1055+insurance company, or (B) a third party, the proceeds of which are 921
1056+obtained directly or indirectly by a special purpose financial captive 922
1057+insurance company. 923
1058+(32) "Sponsor" means any association, corporation, limited liability 924
1059+company, partnership, trust or other entity that is approved by the 925
1060+commissioner to organize and operate a sponsored captive insurance 926
1061+company and to provide all or part of the required unimpaired paid-in 927
1062+capital and surplus. 928
1063+(33) "Sponsored captive insurance company" means a captive 929
1064+insurance company: 930
1065+(A) In which the minimum required unimpaired paid-in capital and 931
1066+surplus are provided by one or more sponsors; 932
1067+(B) That insures risks of its participants only through separate 933
1068+participant contracts; and 934
1069+(C) That funds its liability to each participant through one or more 935
1070+protected cells and segregates the assets of each protected cell from the 936
1071+assets of other protected cells and from the assets of the sponsored 937
1072+captive insurance company's general account. 938
1073+(34) "Surplus note" means an unsecured subordinated debt obligation 939
1074+possessing characteristics consistent with the National Association of 940
1075+Insurance Commissioners Statement of Statutory Accounting Principles 941
1076+No. 41, as amended from time to time, and as modified or supplemented 942
1077+by the commissioner. 943
1078+Sec. 15. (NEW) (Effective October 1, 2024) (a) (1) Any sponsored captive 944
1079+insurance company, including a sponsored captive insurance company 945 Substitute Bill No. 5503
1080+
1081+
1082+LCO 31 of 33
1083+
1084+licensed as a special purpose financial captive insurance company, may, 946
1085+upon application of such sponsored captive insurance company and 947
1086+with the commissioner's prior written approval, convert one or more 948
1087+protected cells or incorporated protected cells into a: 949
1088+(A) Single protected cell or incorporated protected cell; 950
1089+(B) New sponsored captive insurance company; 951
1090+(C) New sponsored captive insurance company licensed as a special 952
1091+purpose financial captive insurance company; 953
1092+(D) New special purpose financial captive insurance company; 954
1093+(E) New pure captive insurance company; 955
1094+(F) New risk retention group; 956
1095+(G) New agency captive insurance company; 957
1096+(H) New industrial insured captive insurance company; or 958
1097+(I) New association captive insurance company. 959
1098+(2) Any such conversion of a protected cell or incorporated protected 960
1099+cell, in accordance with subdivision (1) of this subsection, shall be 961
1100+subject to the provisions of sections 38a-91aa to 38a-91xx, inclusive, of 962
1101+the general statutes, as amended by this act, as applicable, and such 963
1102+sponsored captive insurance company's plan of operation approved by 964
1103+the commissioner, without affecting such converted protected cell's or 965
1104+incorporated protected cell's assets, rights, benefits, obligations and 966
1105+liabilities. 967
1106+(b) Any conversion of a protected cell or incorporated protected cell 968
1107+shall be deemed to be a continuation of such protected cell's or 969
1108+incorporated protected cell's existence together with all of such 970
1109+protected cell's or incorporated protected cell's assets, rights, benefits, 971
1110+obligations and liabilities, as (1) a new protected cell or incorporated 972
1111+protected cell, (2) a sponsored captive insurance company, (3) a 973 Substitute Bill No. 5503
1112+
1113+
1114+LCO 32 of 33
1115+
1116+sponsored captive insurance company licensed as a special purpose 974
1117+financial captive insurance company, (4) a pure captive insurance 975
1118+company, (5) a risk retention group, (6) an industrial insured captive 976
1119+insurance company, or (7) an association captive insurance company, as 977
1120+applicable. Any such conversion of a protected cell or incorporated 978
1121+protected cell shall be deemed to occur without any transfer or 979
1122+assignment of such cell's assets, rights, benefits, obligations or liabilities, 980
1123+and without the creation of any reversionary interest in, or impairment 981
1124+of, any such assets, rights, benefits, obligations or liabilities. 982
1125+(c) Any conversion of a protected cell or incorporated protected cell 983
1126+shall not be construed to limit any rights or protections applicable to 984
1127+such converted protected cell or incorporated protected cell or 985
1128+applicable to such sponsored captive insurance company or sponsored 986
1129+captive insurance company licensed as a special purpose financial 987
1130+captive insurance company, as applicable, that existed immediately 988
1131+prior to the date of such conversion. 989
1132+(d) Any protected cell or incorporated protected cell that converts 990
1133+into an incorporated protected cell, a new captive insurance company 991
1134+or risk retention group, in accordance with the provisions of this section, 992
1135+shall perform such conversion in accordance with chapter 601 or 613 of 993
1136+the general statutes, as applicable, or in accordance with any such 994
1137+provisions of the general statutes applicable to the formation of any 995
1138+other type of legal entity permissible under the laws of this state, as 996
1139+applicable. 997
1140+Sec. 16. Section 38a-556a of the general statutes is repealed. (Effective 998
1141+from passage) 999
1142+This act shall take effect as follows and shall amend the following
1143+sections:
1144+
1145+Section 1 October 1, 2024 38a-8
1146+Sec. 2 October 1, 2024 38a-16
1147+Sec. 3 October 1, 2024 38a-790(a)
1148+Sec. 4 October 1, 2024 38a-792(a) Substitute Bill No. 5503
1149+
1150+
1151+LCO 33 of 33
1152+
1153+Sec. 5 October 1, 2024 38a-48
1154+Sec. 6 October 1, 2024 38a-53(a)
1155+Sec. 7 October 1, 2024 38a-54(a)
1156+Sec. 8 October 1, 2024 38a-297
1157+Sec. 9 January 1, 2025 38a-479ppp
1158+Sec. 10 from passage 38a-556
1159+Sec. 11 October 1, 2024 38a-564(4)
1160+Sec. 12 October 1, 2024 38a-614(1)
1161+Sec. 13 October 1, 2024 38a-591l(b)
1162+Sec. 14 October 1, 2024 38a-91aa
1163+Sec. 15 October 1, 2024 New section
1164+Sec. 16 from passage Repealer section
1165+
1166+INS Joint Favorable Subst.
10971167