Bill Text: CT HB05366 | 2014 | General Assembly | Introduced

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Bill Title: An Act Concerning Certain Surplus Lines Insurance Policies And The Duties Of Surplus Lines Insurance Brokers.

Spectrum: Committee Bill

Status: (Introduced - Dead) 2014-03-07 - Public Hearing 03/11 [HB05366 Detail]

Download: Connecticut-2014-HB05366-Introduced.html

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General Assembly		Raised Bill No. 5366
February Session, 2014		LCO No. 796
		*00796_______INS*
Referred to Committee on INSURANCE AND REAL ESTATE
Introduced by:
(INS)

AN ACT CONCERNING CERTAIN SURPLUS LINES INSURANCE POLICIES AND THE DUTIES OF SURPLUS LINES INSURANCE BROKERS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 38a-308 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

(a) (1) No policy or contract of fire insurance shall be made, issued or delivered by any admitted or nonadmitted insurer or any agent or representative thereof, on any property in this state, unless it conforms as to all provisions, stipulations, agreements and conditions with the form of policy set forth in section 38a-307, except that a policy or contract of fire insurance for a commercial property made, issued or delivered by a nonadmitted insurer or any agent or representative thereof may provide for replacement costs with materials other than like kind and quality or define "depreciation" differently than as set forth in section 38a-307, or both.

(2) There shall be printed at the head of such policy the name of the insurer or insurers issuing the policy, the location of the home office thereof, a statement showing whether such insurer or insurers are stock or mutual corporations or are reciprocal insurers or Lloyd's underwriter, provided any company organized under special charter provisions may so indicate upon its policy and may add a statement of the plan under which it operates in this state, and there may be added thereon such device or devices as the insurer or insurers issuing such policy desire. Such policy shall be clearly designated on the back of the form as "The Standard Fire Insurance Policy of the State of Connecticut"; and this designation may include the names of such other states as have adopted this standard form.

(3) The standard fire insurance policy provided for in section 38a-307 need not be used for effecting reinsurance between insurers. If the policy is issued by a mutual, cooperative or reciprocal insurer having special regulations with respect to the payment by the policyholder of assessments, such regulations shall be printed upon the policy and any such insurer may print upon the policy such regulations as are appropriate to or required by its form of organization. Insurers issuing the standard fire insurance policy pursuant to section 38a-307 are authorized to affix thereto or include therein a written statement that the policy does not cover loss or damage caused by nuclear reaction or nuclear radiation or radioactive contamination, all whether directly or indirectly resulting from an insured peril under such policy; provided nothing herein contained shall be construed to prohibit the attachment to any such policy of an endorsement or endorsements specifically assuming coverage for loss or damage caused by nuclear reaction or nuclear radiation or radioactive contamination.

(b) Any policy or contract that includes, either on an unspecified basis as to coverage or for an indivisible premium, coverage against the peril of fire and substantial coverage against other perils need not comply with the provisions of subsection (a) of this section, provided: (1) Such policy or contract shall afford coverage, with respect to the peril of fire, not less than the substantial equivalent of the coverage afforded by said standard fire insurance policy; (2) except as provided under subdivision (1) of subsection (a) of this section for a policy or contract of fire insurance for a commercial property made, issued or delivered by a surplus lines insurer or any agent or representative thereof, the following provisions in said standard fire insurance policy are incorporated therein without change: (A) Mortgagee interests and obligations, (B) the definitions of actual cash value and depreciation, (C) the time period for when a loss is payable after proof of loss, and (D) the time period for when a suit or action for the recovery of a claim may be commenced; (3) such policy or contract is complete as to all of its terms without reference to any other document; and (4) the commissioner is satisfied that such policy or contract complies with the provisions hereof. The provisions of this subsection shall apply to any such policy or contract issued or renewed on or after July 1, 2012.

(c) None of the provisions of this section shall apply to policies of automobile or aircraft physical damage insurance or to policies of inland marine insurance.

(d) The provisions of section 38a-346 shall apply in the event of cancellation of a policy issued pursuant to this chapter.

(e) Any policies made, issued or delivered through a fire, liability and allied lines underwriting facility established by the Insurance Commissioner pursuant to section 38a-328 shall not be subject to the cancellation of policy provisions or notice of cancellation requirements of section 38a-307, provided such policies comply with any regulation adopted by the Insurance Commissioner pursuant to subsection (a) of section 38a-328.

Sec. 2. Section 38a-741 of the 2014 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

(a) The commissioner shall maintain on a current basis a list of those lines of insurance or their components for which coverages are believed by the commissioner to be generally unavailable from licensed insurers. The commissioner shall republish the list and make it available to all licensees every six months. Any person may request in writing that the commissioner add or remove a line of insurance or its component from the current list at the next publication of the list. The commissioner's determinations of lines of insurance or their components to be added to or removed from the list shall not be subject to chapter 54, provided, prior to making determinations, the commissioner shall provide opportunity for comments from interested persons.

(b) (1) When any policy of insurance is procured or renewed under the authority of such license providing a line of insurance or its component that does not, on the effective date of coverage, appear on the current published list, both the licensee and the insured shall write signed statements setting forth facts showing that such licensee and such insured were unable after diligent effort to procure, from any authorized insurer or insurers, the full amount of insurance required to protect the interest of such insured, and further showing (A) that the amount of insurance procured from [an unauthorized] a nonadmitted insurer or insurers is only the excess over the amount so procurable from authorized insurers, (B) the type of policy, and (C) if such policy is for real property, the location of such property. Such licensee shall file such signed statements in electronic format with the commissioner on February fifteenth, May fifteenth, August fifteenth and November fifteenth of each year.

(2) The provisions of subdivision (1) of this subsection shall not apply to any policy of insurance procured under the authority of such license for an insured that is an exempt commercial purchaser, as defined in Section 527 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, P.L. 111-203, as amended from time to time, provided (A) the surplus lines broker has disclosed to such exempt commercial purchaser that such insurance may or may not be available from an authorized insurer, that may provide greater protection with more regulatory oversight, and (B) such exempt commercial purchaser has subsequently requested such broker, in writing, to procure such policy from [an unauthorized] a nonadmitted insurer.

(c) A licensee shall not procure from a nonadmitted insurer a homeowners insurance policy for one-to-four-unit owner-occupied residential real property if such policy (1) provides for replacement costs with materials other than like kind and quality, or (2) defines "actual cash value" or "depreciation" differently than as set forth in section 38a-307.

Sec. 3. Section 38a-740 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

The commissioner may, by regulation adopted in accordance with chapter 54: (1) Establish such proper standards as [he may deem] the commissioner deems necessary to guide surplus lines brokers procuring any such policy of insurance, as is permitted under subsection (a) of section 38a-794, from any such [unauthorized] nonadmitted insurer; (2) require any [unauthorized] nonadmitted insurer from which any surplus lines broker has procured or intends to procure any policy of insurance, as is permitted under subsection (a) of section 38a-794, to file with [him] the commissioner such evidence and in such form as [he may prescribe] the commissioner prescribes so as to enable [him] the commissioner to establish the financial stability, qualifications and general suitability of such [unauthorized] nonadmitted insurer to issue any policy of insurance through any surplus lines broker, under section 38a-794; and (3) establish such reasonable filing fees as may be necessary to defray the cost [to him] of examining evidence filed with [him by an unauthorized] the commissioner by a nonadmitted insurer either voluntarily or pursuant to the provisions of this section.

Sec. 4. Section 38a-742 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

The licensee shall keep a complete and separate record of all policies procured from [unauthorized] nonadmitted insurers under such license. Such records shall be open to the examination of the commissioner at all reasonable times and shall show: (1) The exact amount of each kind of insurance permitted under sections 38a-741 to 38a-744, inclusive, as amended by this act, and 38a-794 that has been procured for each insured; (2) the gross premiums charged by the insurers for each kind of insurance permitted under section 38a-794; (3) the amount of each kind of premiums of insurance permitted by section 38a-794 [which] that were returned to each insured; (4) the name of the insurer or insurers [which] that issued each of such policies; (5) the effective dates of such policies; and (6) the terms for which they were issued.

This act shall take effect as follows and shall amend the following sections:
Section 1	October 1, 2014	38a-308
Sec. 2	October 1, 2014	38a-741
Sec. 3	October 1, 2014	38a-740
Sec. 4	October 1, 2014	38a-742

Statement of Purpose:

To permit surplus lines insurance policies for commercial property to deviate from certain replacement cost and depreciation requirements and to provide that surplus lines insurance policies homeowners include such cost and depreciation requirements.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]