HB 5503 — AN ACT CONCERNING INSURANCE MARKET CONDUCT AND INSURANCE LICENSING, THE INSURANCE DEPARTMENT'S TECHNICAL CORRECTIONS AND OTHER REVISIONS TO THE INSURANCE STATUTES AND CAPTIVE INSURANCE.

(4) improperly withholding, misappropriating or converting any moneys or properties received in the course of doing an insurance business;

(5) intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance;

(6) having been convicted of a felony;

(7) having admitted or been found to have committed any insurance unfair trade practice or fraud;

(8) using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere;

(9) having an insurance producer license, or itsequivalent, denied, suspended or revoked in any other state, province, district or territory;

(10) forging another's name to an application for insurance or to any document related to an insurance transaction;

(11) improperly using notes or any other reference material to complete an examination for an insurance license;

(12) knowingly accepting insurance business from an individual who is not licensed;

(13) failing to comply with an administrative or court order imposing a child support obligation;

or (14) failing to pay state income tax or comply with any administrative or court order directing payment of state income tax.

(b) If the action by the commissioner is to nonrenew a license or to Public Act No.

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5503 deny an application for a license, the commissioner shall notify the applicant or licensee and advise, in writing, the applicant or licensee of the reason for the denial or nonrenewal of the applicant's or licensee's license.

The applicant or licensee may make written demand upon the commissioner, not later than thirty days after the notice, for a hearing before the commissioner to determine the reasonableness of the commissioner's action.

The hearing shall be held not later than twenty days after receipt of such request and shall be held pursuant to section 38a-19.

(c) The license of a business entity may be suspended, revoked or refused if the commissioner finds, after hearing, that an individual licensee's violation was known or should have been known by one or more of the partners, officers or managers acting on behalf of the partnership or corporation and the violation was neither reported to the commissioner nor corrective action taken.

(d) In addition to or in lieu of any applicable denial, suspension or revocation of a license, a person may, after hearing, be subject to a civil fine pursuant to section 38a-774.

(e) The commissioner shall retain the authority to enforce the provisions of, and impose any penalty or remedy authorized by, this title against any person who is under investigation for or charged with a violation of this title even if the person's license or registration has been surrendered, revoked or has lapsed by operation of law.

(f) Unless otherwise provided in the provisions of this title, the Attorney General may, at the request of the commissioner, apply to the Superior Court for an order:

(1) Temporarily or permanently restraining and enjoining any person from violating any provision of this title, (2) enforcing any order, penalty or remedy imposed by the commissioner, or (3) providing restitution against any person for any sums shown by the commissioner to have been obtained by such person in violation of Public Act No.

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5503 any such provision of this title.

Sec.

3.

(a)(1)TheInsuranceCommissionerorthecommissioner'sauthorized representative may, as often as the commissioner deems necessary, conduct investigations and hearings in aid of any investigation on any sHB5503matter /under Filethe No.provisions of this title.

644 4 sHB5503 File No.

644 matter under the provisions of this title.

3.4.

(a)Public NoAct personNo. shall act as an appraiser for motor vehicle physical damage claims on behalf of any insurance company or firm or corporation engaged in the adjustment or appraisal of motor vehicle claims unless such person has first secured a license from the Insurance Commissioner, and has paid the license fee specified in section 38a-11, for each two-year period or fraction thereof.

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5503 (a) No person shall act as an appraiser for motor vehicle physical damage claims on behalf of any insurance company or firm or corporation engaged in the adjustment or appraisal of motor vehicle claims unless such person has first secured a license from the Insurance Commissioner, and has paid the license fee specified in section 38a-11, for each two-year period or fraction thereof.

Any sHB5503[such /license Fileissued No.by the commissioner shall be in force until the thirtieth day of June in each odd-numbered year] initial license issued by the commissioner to an appraiser for motor vehicle physical damage claims shall expire two years after the date of the licensee's birthday that preceded the date the license was issued unless sooner revoked or suspended.

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644 [such license issued by the commissioner shall be in force until the thirtieth day of June in each odd-numbered year] initial license issued by the commissioner to an appraiser for motor vehicle physical damage claims shall expire two years after the date of the licensee's birthday that preceded the date the license was issued unless sooner revoked or suspended.

4.5.

Subsection (a) of section 38a-792 of the general statutes is repealedandthefollowingrepealed andthefollowing issubstituted inlieuthereof(EffectiveOctober 1, 2024):

Any [such license issued by the commissioner shall be in force until June thirtieth in each odd- numbered year] initial license issued to an adjuster of casualty claims shallPublic expireAct twoNo. years after the date of the licensee's birthday that preceded the date the license was issued unless sooner revoked or suspended.

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5503 shall expire two years after the date of the licensee's birthday that preceded the date the license was issued unless sooner revoked or suspended.

sHB5503Sec. / File No.

6446. 6 sHB5503 File No.

644 Sec.

5.

(1) A statement that includes (A) the amount appropriated to the Insurance Department, the Office of the Healthcare Advocate and the Office of Health Strategy from the Insurance Fund established under section 38a-52a for the fiscal year beginning July first of the same year, (B) the cost of fringe benefits for departmentPublic andAct officeNo. personnel for such year, as estimated by the Comptroller, (C) the estimated expenditures on behalf of the department and the offices from the Capital Equipment Purchase Fund pursuant to section 4a-9 for such year, not including such estimated expendituresmade on behalfof theHealthSystemsPlanning Unit of the Office of Health Strategy, and (D) the amount appropriated to the Department of Aging and Disability Services for the fall prevention program established in section 17a-859 from the Insurance Fund for the fiscal year;

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5503 department and office personnel for such year, as estimated by the Comptroller, (C) the estimated expenditures on behalf of the department and the offices from the Capital Equipment Purchase Fund pursuant to section 4a-9 for such year, not including such estimated expendituresmade on behalfof theHealthSystemsPlanning Unit of the Office of Health Strategy, and (D) the amount appropriated to the Department of Aging and Disability Services for the fall prevention program established in section 17a-859 from the Insurance Fund for the fiscal year;

and (3) the proposed assessment against that company or entity, calculated in accordance with the provisions of subsection (c) of this section, provided for the purposes of this calculation the amount appropriated to the Insurance Department, the Office of the Healthcare Advocate and the Office of Health Strategy from the Insurance Fund plus the cost of sHB5503fringe /benefits Filefor No.department and office personnel and the estimated expenditures on behalf of the department and [the office] such offices from the Capital Equipment Purchase Fund pursuant to section 4a-9, not including such expenditures made on behalf of the Health Systems Planning Unit of the Office of Health Strategy shall be deemed to be the actual expenditures of the department and [the office] such offices, and the amount appropriated to the Department of Aging and Disability Services from the Insurance Fund for the fiscal year for the fall prevention program established in section 17a-859 shall be deemed to be the actual expenditures for the program.

644(c) 7(1) sHB5503The Fileproposed assessments for each domestic insurance company or other domestic entity shall be calculated by (A) allocating twenty per cent of the amount to be paid under section 38a-47 among the domestic entities organized under sections 38a-199 to 38a-209, inclusive, and 38a-214 to 38a-225, inclusive, in proportion to their respective shares of the total taxes and charges imposed under chapter Public Act No.

64424-138 fringe7 benefits for department and office personnel and the estimated expenditures on behalf of the34 departmentSubstitute andHouse [theBill office]No. such offices from the Capital Equipment Purchase Fund pursuant to section 4a-9, not including such expenditures made on behalf of the Health Systems Planning Unit of the Office of Health Strategy shall be deemed to be the actual expenditures of the department and [the office] such offices, and the amount appropriated to the Department of Aging and Disability Services from the Insurance Fund for the fiscal year for the fall prevention program established in section 17a-859 shall be deemed to be the actual expenditures for the program.

(c)5503 (1) The proposed assessments for each domestic insurance company or other domestic entity shall be calculated by (A) allocating twenty per cent of the amount to be paid under section 38a-47 among the domestic entities organized under sections 38a-199 to 38a-209, inclusive, and 38a-214 to 38a-225, inclusive, in proportion to their respective shares of the total taxes and charges imposed under chapter 207 on such entities on business done in this state during the preceding calendaryear,and(B)allocatingeightypercentoftheamounttobepaid under section 38a-47 among all domestic insurance companies and domestic entities other than those organized under sections 38a-199 to 38a-209, inclusive, and 38a-214 to 38a-225, inclusive, in proportion to their respective shares of the total taxes and charges imposed under chapter 207 on such domestic insurance companies and domestic entities on business done in this state during the preceding calendar year, providedifthereare no domesticentitiesorganizedunder sections 38a-199 to 38a-209, inclusive, and 38a-214 to 38a-225, inclusive, at the time of assessment, one hundred per cent of the amount to be paid under section 38a-47 shall be allocated among such domestic insurance companies and domestic entities.

(2) When the amount any such company or entity is assessed pursuant to this section exceeds twenty-five per cent of the actual expenditures of the Insurance Department, the Office of the Healthcare Advocate and the Office of Health Strategy from the Insurance Fund, such excess amount shall not be paid by such company or entity but sHB5503rather /shall Filebe No.assessed against and paid by all other such companies and entities in proportion to their respective shares of thetotaltaxes and chargesimposedunderchapter207onbusinessdoneinthisstateduring the preceding calendar year, except that for purposes of any assessment made to fund payments to the Department of Public Health to purchase vaccines, such company or entity shall be responsible for its share of the costs, notwithstanding whether its assessment exceeds twenty-five per cent of the actual expenditures of the Insurance Department, the Office of the Healthcare Advocate and the Office of Health Strategy from the Insurance Fund.

644The 8provisions sHB5503of Filethis subdivision shall not be applicable to any corporation [which] that has converted to a domestic mutual insurance company pursuant to section 38a-155 upon the effective date of any public act [which] that amends said section to modify or remove any restriction on the business such a company may Public Act No.

64424-138 rather8 shall be assessed against and paid by all other such companies and entities in proportion to their respective shares of thetotaltaxes34 andSubstitute chargesimposedunderchapter207onbusinessdoneinthisstateduringHouse theBill precedingNo. calendar year, except that for purposes of any assessment made to fund payments to the Department of Public Health to purchase vaccines, such company or entity shall be responsible for its share of the costs, notwithstanding whether its assessment exceeds twenty-five per cent of the actual expenditures of the Insurance Department, the Office of the Healthcare Advocate and the Office of Health Strategy from the Insurance Fund.

The5503 provisions of this subdivision shall not be applicable to any corporation [which] that has converted to a domestic mutual insurance company pursuant to section 38a-155 upon the effective date of any public act [which] that amends said section to modify or remove any restriction on the business such a company may engage in, for purposes of any assessment due from such company on and after such effective date.

Each domestic insurance company or other domestic entity shall pay to the Insurance Commissioner on or before October thirty- sHB5503firstanamountequaltofiftypercentofitsassessmentadjustedtoreflect /any Filecredit No.or amount due from the preceding fiscal year as determined by the commissioner under subsection (g) of this section.

644Each 9domestic sHB5503insurance Filecompany or other domestic entity shall pay to the Insurance Commissioner on or before the following April thirtieth, the remaining fifty per cent of its assessment.] [(f)] (e) On or before September first, annually, for each fiscal year, [ending after July 1, 1990,] the Insurance Commissioner, [and the Healthcare Advocate,] after receiving any objections to the proposed assessments and making such adjustments as in [their] the commissioner's opinion may be indicated, shall assess each such Public Act No.

64424-138 firstanamountequaltofiftypercentofitsassessmentadjustedtoreflect9 anyof credit34 orSubstitute amountHouse dueBill fromNo. the preceding fiscal year as determined by the commissioner under subsection (g) of this section.

Each5503 domestic insurance company or other domestic entity shall pay to the Insurance Commissioner on or before the following April thirtieth, the remaining fifty per cent of its assessment.] [(f)] (e) On or before September first, annually, for each fiscal year, [ending after July 1, 1990,] the Insurance Commissioner, [and the Healthcare Advocate,] after receiving any objections to the proposed assessments and making such adjustments as in [their] the commissioner's opinion may be indicated, shall assess each such domestic insurance company or other domestic entity an amount equal to its proposed assessment as so adjusted.

[and the Healthcare Advocate.] Immediately following the close of the fiscal year, the Insurance Commissioner [and the Healthcare Advocate] shall recalculate the proposed assessment for each domestic insurance company or other domestic entity in accordance with subsection (c) of this section using the actual sHB5503expenditures /made Fileduring No.the fiscal year by the Insurance Department, the Office of the Healthcare Advocate and the Office of Health Strategy from the Insurance Fund, the actual expenditures made on behalf of the department and the offices from the Capital Equipment Purchase Fund pursuant to section 4a-9, not including such expenditures made on behalf of the Health Systems Planning Unit of the Office of Health Strategy, and the actual expenditures for the fall prevention program.

644On 10or sHB5503before FileJuly thirty-first, annually, the Insurance Commissioner [and the Healthcare Advocate] shall render to each such domestic Public Act No.

64424-138 expenditures10 made during the fiscal year by the Insurance Department, the Office of the34 HealthcareSubstitute AdvocateHouse andBill theNo. Office of Health Strategy from the Insurance Fund, the actual expenditures made on behalf of the department and the offices from the Capital Equipment Purchase Fund pursuant to section 4a-9, not including such expenditures made on behalf of the Health Systems Planning Unit of the Office of Health Strategy, and the actual expenditures for the fall prevention program.

On5503 or before July thirty-first, annually, the Insurance Commissioner [and the Healthcare Advocate] shall render to each such domestic insurance company and other domestic entity a statement showing the difference between their respective recalculated assessments and the amount they have previously paid.

6.7.

(a) (1) Each domestic insurance company or domestic health care center shall, annually, on or before the first day of March, submit to the sHB5503commissioner, /[and] Fileby electronically [to] filing with the National Association of Insurance Commissioners, a true and complete report, signed and sworn to by its president or a vice president, and secretary or an assistant secretary, of its financial condition on the thirty-first day of December next preceding, prepared in accordance with the National Association of Insurance Commissioners annual statement instructions Public Act No.

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6445503 commissioner, [and] by electronically [to] filing with the National Association of Insurance Commissioners, a true and complete report, signed and sworn to by its president or a vice president, and secretary or an assistant secretary, of its financial condition on the thirty-first day of December next preceding, prepared in accordance with the National Association of Insurance Commissioners annual statement instructions handbook and following those accounting procedures and practices prescribed by the National Association of Insurance Commissioners accounting practices and procedures manual, subject to any deviations in form and detail as may be prescribed by the commissioner.

7.8.

An electronically filed true and complete report timely submitted to the National Association of Insurance Commissioners [does not exempt a domestic insurance company or a domestic health care center from timely filing a true and sHB5503complete /paper Filecopy No.to thecommissioner]shallbedeemedto have been submitted to the commissioner in accordance with the provisions of this section.

644Public 12Act sHB5503 File No.

64424-138 complete12 paperof copy34 toSubstitute thecommissioner]shallbedeemedtoHouse haveBill beenNo. submitted to the commissioner in accordance with the provisions of this section.

5503 Sec.

8.9.

or (3) sHB5503is /the Fileresult of language which is used to conform to the requirements Public Act No.

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6445503 is the result of language which is used to conform to the requirements of any state or federal law, regulation or governmental agency.

(g) The commissioner may adopt regulations, in accordance with the provisionsPublic ofAct chapterNo. 54, to implement the provisions of this section.

sHB550324-138 /14 Fileof 34 Substitute House Bill No.

6445503 14provisions sHB5503of Filechapter No.54, to implement the provisions of this section.

644 Sec.

9.10.

(c) All information submitted to the commissioner pursuant to subsectionPublic (a)Act ofNo. this section shall be exempt from disclosure under the Freedom of Information Act, as defined in section 1-200, except to the extent such information is included on an aggregated basis in the report required by subsection (d) of this section.

The24-138 commissioner15 shallof not34 sHB5503Substitute /House FileBill No.

6445503 15subsection sHB5503(a) Fileof No.this section shall be exempt from disclosure under the Freedom of Information Act, as defined in section 1-200, except to the extent such information is included on an aggregated basis in the report required by subsection (d) of this section.

644The commissioner shall not disclose information submitted pursuant to subdivision (1) of subsection (a) of this section, or information submitted pursuant to subdivision (2) of said subsection in a manner that (1) is likely to compromise the financial, competitive or proprietary nature of such information, or (2) would enable a third party to identify a health care plan, health carrier, pharmacy benefits manager, pharmaceutical manufacturer, or the value of a rebate provided for a particular outpatient prescription drug or therapeutic class of outpatient prescription drugs.

(f) The commissioner may adopt regulations, in accordance with the provisionsPublic ofAct chapterNo. 54, to implement the provisions of this section.

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5503 provisions of chapter 54, to implement the provisions of this section.

10.

Section 38a-556 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) There is hereby created a nonprofit legal entity to be known as the Health Reinsurance Association.

All insurers, health care centers and sHB5503 / File No.

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644 self-insurers doing business in the state, as a condition to their authority to transact the applicable kinds of health insurance defined in section 38a-551, shall be members of the association.

The association shall perform its functions under a plan of operation established and approved under subsection (b) of this section, and shall exercise its powers through a board of directors established under this section.

(b) (1) The board of directors of the association shall be made up of nine individuals selected by participating members, subject to approval by the commissioner, two of whom shall be appointed by the commissioner on or before July 1, 1993, to represent health care centers.

To select the initial board of directors, and to initially organize the association, the commissioner shall give notice to all members of the time and place of the organizational meeting.

In determining voting rights at the organizational meeting each member shall be entitled to vote in person or proxy.

The vote shall be a weighted vote based upon thenethealthinsurancepremiumderivedfromthisstateintheprevious calendar year.

If the board of directors is not selected within sixty days after notice of the organizational meeting, the commissioner may appoint the initial board.

In approving or selecting members of the board, the commissioner may consider, among other things, whether all members are fairly represented.

Members of the board may be reimbursed from the moneys of theassociation for expenses incurred by them as members, but shall not otherwise be compensated by the association for their services.

(2) The board shall submit to the commissioner a plan of operation for the association necessary or suitable to assure the fair, reasonable and equitable administration of the association.

The plan of operation shall become effective upon approval in writing by the commissioner.

Such plan shall continue in force until modified by the commissioner or superseded by a plan submitted by the board and approved by the commissioner.

The plan of operation shall:

(A) Establish procedures for the handling and accounting of assets and moneys of the association;(B) establish regular times and places for meetings of the board of directors;

(C) establish procedures for records to be kept of all financial sHB5503 / File No.

644 17 sHB5503 File No.

644 transactions,andfortheannualfiscalreportingtothecommissioner;(D) establish procedures whereby selections for the board of directors shall be made and submitted to the commissioner;

(E) establish procedures to amend, subject to the approval of the commissioner, the plan of operations;

(F) establish procedures for the selection of an administrator and set forth the powers and duties of the administrator;

(G) contain additional provisions necessary or proper for the execution of the powers and duties of the association;

and (H) contain additional provisions necessary for the association to establish health insurance plansthat qualify asacceptablecoverageinaccordance withthePension Benefit Guaranty Corporation and other state or federal programs that may be established.

(c) The association shall have the general powers and authority granted under the laws of this state to carriers to transact the kinds of insurance defined under section 38a-551, and in addition thereto, the specificauthority to:

(1)Enter into contractsnecessary or proper to carry out the provisions and purposes of this section and sections 38a-551 and [38a-556a] 38a-557 to 38a-559, inclusive;

(2) sue or be sued, including taking any legal actions necessary or proper for recovery of any assessments for, on behalf of, or against participating members;

(3) take such legal action as necessary to avoid the payment of improper claims against the association or the coverage provided by or through the association;

(4) establish, with respect to health insurance provided by or on behalf of the association, appropriate rates, scales of rates, rate classifications and rating adjustments, such rates not to be unreasonable in relation to the coverage provided and the operational expenses of the association;

(5) administer any type of reinsurance program, for or on behalf of participating members;

(6) pool risks among participating members;

(7) issue policies of insurance required or permitted by this section and sections 38a-551 and [38a-556a] 38a-557 to 38a-559, inclusive, in its own name or on behalf of participating members;

(8) administer separate pools, separate accounts or other plans as deemed appropriate for separate members or groups of members;

(9) operate and administer any combination of plans, pools, reinsurance arrangements or other mechanisms as deemed appropriate to best sHB5503 / File No.

644 18 sHB5503 File No.

644 accomplish the fair and equitable operation of the association;

(10) set limits on the amounts of reinsurance that may be ceded to the association by its members;

(11) appoint from among participating members appropriate legal, actuarial andother committees as necessary to provide technical assistance in the operation of the association, policy and other contract design, and any other function within the authority of the association;

(12) apply for and accept grants, gifts and bequests of fundsfromotherstates,federalandinterstateagenciesandindependent authorities, private firms, individuals and foundations for the purpose of carrying out its responsibilities.

Any such funds received shall be deposited in the General Fund and shall be credited to a separate nonlapsing account within the GeneralFund for the HealthReinsurance Association and may be used by the Health Reinsurance Association in the performance of its duties;

and (13) perform such other duties and responsibilities as may be required by state or federal law or permitted by state or federal law and approved by the commissioner.

(d) Rates for coverage issued by or through the association shall not be excessive, inadequate or unfairly discriminatory.

All rates shall be promulgated by the association through an actuarial committee consisting of five persons who are members of the American Academy of Actuaries, shall be filed with the commissioner and may be disapproved within sixty days after the filing thereof if excessive, inadequate or unfairly discriminatory.

(e) (1) Following the close of each fiscal year, the administrator shall determine the net premiums, reinsurance premiums less administrative expense allowance, the expense of administration pertaining to the reinsurance operations of the association and the incurred losses for the year.

Any net loss shall be assessed to all participating members in proportion to their respective shares of the total health insurance premiums earned in this state during the calendar year, or with paid losses in the year, coinciding with or ending during the fiscal year of the association or on any other equitable basis as may be provided in the plan of operations.

For self-insured members of the association, health insurance premiumsearnedshallbeestablishedby dividing theamount sHB5503 / File No.

644 19 sHB5503 File No.

644 of paid health losses for the applicable period by eighty-five per cent.

Net gains, if any, shall be held at interest to offset future losses or allocated to reduce future premiums.

(2) Any net loss to the association represented by the excess of its actual expenses of administering policies issued by the association over the applicable expense allowance shall be separately assessed to those participating members who do not elect to administer their plans.

All assessments shall be on an equitable formula established by the board.

(3) The association shall conduct periodic audits to assure the general accuracy of the financial data submitted to the association and the association shall have an annual audit of its operations by an independent certified public accountant.

The annual audit shall be filed withthecommissionerforhisreviewandtheassociationshallbesubject to the provisions of section 38a-14.

(f)Allpolicyformsissuedbyorthroughtheassociationshallconform in substance to prototype forms developed by the association, shall in all other respects conform to the requirements of this section and sections 38a-551 and [38a-556a] 38a-557 to 38a-559, inclusive, and shall be approved by the commissioner.

The commissioner may disapprove any such form if it contains a provision or provisions that are unfair or deceptive or that encourage misrepresentation of the policy.

(g) Unless otherwise permitted by the plan of operation, the association shall not issue, reissue or continue in force health care plan coverage with respect to any person who is already covered under an individual or group health care plan, or who is sixty-five years of age or older and eligible for Medicare or who is not a resident of this state.

(h) Benefits payable under a health care plan insured by or reinsured through the association shall be paid net of all other health insurance benefits paid or payable through any other source, and net of all health insurance coverages provided by or pursuant to any other state or federal law including Title XVIII of the Social Security Act, Medicare, but excluding Medicaid.

sHB5503 / File No.

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644 (i) There shall be no liability on the part of and no cause of action of any nature shall arise against any carrier or its agents or its employees, the Health Reinsurance Association or its agents or its employees or the residual market mechanism established under the provisions of section 38a-557 or its agents or its employees, or the commissioner or the commissioner's representatives for any action taken by them in the performance of their duties under this section and sections 38a-551 and [38a-556a] 38a-557 to 38a-559, inclusive.

This provision shall not apply to the obligations of a carrier, a self-insurer, the Health Reinsurance Association or the residual market mechanism for payment of benefits provided under a health care plan.

Sec.

(4) (A) "Small employer" means (i) prior to January 1, 2016, an employer that employed an average of at least one but not more than fifty employees on business days during the preceding calendar year and employs at least one employee on the first day of the group health insurance plan year, [and] (ii) on and after January 1, 2016, and prior to January 1, 2025, an employer that employed an average of at least one but not more than one hundred employees on business days during the preceding calendar year and employs at least one employee on the first day of the group health insurance plan year, [exceptexcept the commissioner may postpone said January 1, 2016, date to be consistent with any such postponement made by the Secretary of the United States Department of Health and Human Services under the Patient Protection and Affordable Care Act, P.L.

111-148, as amended from time to time]time, and (iii) on and after January 1, 2025, an employer that employed an average of at least one but not more than fifty employees on business days during the preceding calendar year and employs at least one employee on the first day of the group health insurance plan year.

sHB5503(B) /(i) FileFor No.purposes of subparagraph (A) of this subdivision, the number of employees shall be determined by adding (I) the number of full-time employees for each month who work a normal work week of thirty hours or more, and (II) the number of full-time equivalent employees, calculated for each month by dividing by one hundred twenty the aggregate number of hours worked for such month by employees who work a normal work week of less than thirty hours, and averaging such total for the calendar year.

644Public 21Act sHB5503 File No.

64424-138 (B)17 (i) For purposes of subparagraph34 (A)Substitute ofHouse thisBill subdivision,No. the number of employees shall be determined by adding (I) the number of full-time employees for each month who work a normal work week of thirty hours or more, and (II) the number of full-time equivalent employees, calculated for each month by dividing by one hundred twenty the aggregate number of hours worked for such month by employees who work a normal work week of less than thirty hours, and averaging such total for the calendar year.

5503 (ii) If an employer was not in existence throughout the preceding calendar year, the number of employees shall be based on the average number of employees that such employer reasonably expects to employ in the current calendar year.

An electronically filed true and complete report filed in accordance with section 38a-53a that is timely submitted to the National Association of Insurance Commissioners shall [not exempt a sHB5503domestic /society Filefrom No.timely filing a true and complete paper copy with the commissioner] be deemed to have been submitted to the commissioner in accordance with the provisions of this section.

644 22 sHB5503 File No.

644 domestic society from timely filing a true and complete paper copy with the commissioner] be deemed to have been submitted to the commissioner in accordance with the provisions of this section.

Subsection (b) of section 38a-591l of the general statutes is repealed andthefollowing issubstituted inlieuthereof(EffectiveOctober 1,Public 2024):Act No.

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5503 1, 2024):

(1) "Affiliated company" means any company in the same corporate system as a parent, an industrial insured or a member organization by sHB5503virtue /of Filecommon No.ownership, control, operation or management.

644(2) 23"Agency sHB5503captive Fileinsurance company" means a captive insurance Public Act No.

64424-138 virtue19 of common34 ownership,Substitute control,House operationBill orNo. management.

(2)5503 "Agency captive insurance company" means a captive insurance company that:

sHB5503Public /Act File No.

64424-138 2420 sHB5503of File34 Substitute House Bill No.

6445503 (5) "Association captive insurance company" means any company that insures risks of the member organizations of an association, and includes a company that also insures risks of such member organizations' affiliated companies or of the association.

(A)Public Who,Act (i) in the case of a pure captive insurance company, is not inthecorporatesystemofaparentandtheparent'saffiliatedcompanies, (ii)inthecase ofanindustrialinsured captive insurance company,is not sHB5503 / File No.

64424-138 2521 sHB5503of File34 Substitute House Bill No.

6445503 (A) Who, (i) in the case of a pure captive insurance company, is not inthecorporatesystemofaparentandtheparent'saffiliatedcompanies, (ii)inthecase ofanindustrialinsured captive insurance company,is not in the corporate system of an industrial insured and the industrial insured's affiliated companies, or (iii) in the case of a sponsored captive insurance company, is not in the corporate system of a participant and the participant's affiliated companies;

(15)Public "IncorporatedAct protectedNo. cell" means a protected cell that is established as a corporation or a limited liability company, separate from the sponsored captive insurance company with which it has entered into a participant contract.

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5503 (15) "Incorporated protected cell" means a protected cell that is established as a corporation or a limited liability company, separate from the sponsored captive insurance company with which it has entered into a participant contract.

sHB5503(A) /Who Fileprocures No.the insurance of any risk or risks by use of the services of a full-time employee acting as an insurance manager or buyer;

644 26 sHB5503 File No.

644 (A) Who procures the insurance of any risk or risks by use of the services of a full-time employee acting as an insurance manager or buyer;

(17) "Industrial insured captive insurance company" means any company that insures risks of the industrial insureds that comprise an industrialinsuredgroup,andincludesaindustrialinsuredgroup, andincludesa company that also insuresrisks of such industrial insureds' affiliated companies.

(19)Public "InsuranceAct securitization"No. or "securitization" means a transaction or a group of related transactions, which may include capital market offerings, that are effected through related risk transfer instruments and facilitating administrative agreements, in which all or part of the result of such transaction is used to fund a special purpose financial captive insurance company's obligations under a reinsurance contract with a ceding insurer and by which:

(A)24-138 A23 specialof purpose34 financialSubstitute captiveHouse insuranceBill company directly sHB5503 / File No.

6445503 27(19) sHB5503"Insurance Filesecuritization" No.or "securitization" means a transaction or a group of related transactions, which may include capital market offerings, that are effected through related risk transfer instruments and facilitating administrative agreements, in which all or part of the result of such transaction is used to fund a special purpose financial captive insurance company's obligations under a reinsurance contract with a ceding insurer and by which:

644(A) A special purpose financial captive insurance company directly or indirectly obtains proceeds through the issuance of securities by such company or any other person;

or (B)Public MembershipAct interestsNo. of a pure captive insurance company organized as a nonprofit corporation or as a limited liability company.

24-138 24 of 34 Substitute House Bill No.

5503 (B) Membership interests of a pure captive insurance company organized as a nonprofit corporation or as a limited liability company.

(24) "Participant contract" means a contract entered into by a sponsored captive insurance company and a participant by which the sHB5503sponsored /captive Fileinsurance No.company insures the risks of the participant and limits the losses of each such participant to its pro rata share of the assets of one or more protected cells identified in such participant contract.

644(25) 28"Protected sHB5503cell" Filemeans No.a separate account established by a sponsored captive insurance company, in which assets are maintained for oneor more participantsinaccordance withthetermsofone ormore participant contracts to fund the liability of the sponsored captive insurance company assumed on behalf of such participants as set forth in such participant contracts.

644 sponsored captive insurance company insures the risks of the participant and limits the losses of each such participant to its pro rata share of the assets of one or more protected cells identified in such participant contract.

(25) "Protected cell" means a separate account established by a sponsored captive insurance company, in which assets are maintained for oneor more participantsinaccordance withthetermsofoneormore participant contracts to fund the liability of the sponsored captive insurance company assumed on behalf of such participants as set forth in such participant contracts.

(28) "Risk retention group" means a captive insurance company organized under the laws of this state pursuant to the federal Liability RiskPublic Retention Act ofNo. 1986, 15 USC 3901 et seq., as amended from time to time, as a stock insurer or mutual corporation, a reciprocal or other limited liability entity.

24-138 25 of 34 Substitute House Bill No.

5503 Risk Retention Act of 1986, 15 USC 3901 et seq., as amended from time to time, as a stock insurer or mutual corporation, a reciprocal or other limited liability entity.

sHB5503(31) /"Special Filepurpose No.financial captive insurance company security" means a security issued by (A) a special purpose financial captive insurance company, or (B) a third party, the proceeds of which are obtained directly or indirectly by a special purpose financial captive insurance company.

644 29 sHB5503 File No.

644 (31) "Special purpose financial captive insurance company security" means a security issued by (A) a special purpose financial captive insurance company, or (B) a third party, the proceeds of which are obtained directly or indirectly by a special purpose financial captive insurance company.

and (C)Public ThatAct fundsNo. its liability to each participant through one or more protected cells and segregates the assets of each protected cell from the assets of other protected cells and from the assets of the sponsored captive insurance company's general account.

24-138 26 of 34 Substitute House Bill No.

5503 (C) That funds its liability to each participant through one or more protected cells and segregates the assets of each protected cell from the assets of other protected cells and from the assets of the sponsored captive insurance company's general account.

sHB5503(A) /Single Fileprotected No.cell or incorporated protected cell;

644 30 sHB5503 File No.

644 (A) Single protected cell or incorporated protected cell;

(2)Public AnyAct suchNo. conversion of a protected cell or incorporated protected cell, in accordance with subdivision (1) of this subsection, shall be subject to the provisions of sections 38a-91aa to 38a-91xx, inclusive, of the general statutes, as amended by this act, as applicable, and such sponsored captive insurance company's plan of operation approved by the commissioner, without affecting such converted protected cell's or incorporated protected cell's assets, rights, benefits, obligations and liabilities.

24-138 27 of 34 Substitute House Bill No.

5503 (2) Any such conversion of a protected cell or incorporated protected cell, in accordance with subdivision (1) of this subsection, shall be subject to the provisions of sections 38a-91aa to 38a-91xx, inclusive, of the general statutes, as amended by this act, as applicable, and such sponsored captive insurance company's plan of operation approved by the commissioner, without affecting such converted protected cell's or incorporated protected cell's assets, rights, benefits, obligations and liabilities.

Any such conversion of a protected cell or incorporated sHB5503protected /cell Fileshall No.be deemed to occur without any transfer or assignment of such cell's assets, rights, benefits, obligations or liabilities, and without the creation of any reversionary interest in, or impairment of, any such assets, rights, benefits, obligations or liabilities.

644 31 sHB5503 File No.

644 protected cell shall be deemed to occur without any transfer or assignment of such cell's assets, rights, benefits, obligations or liabilities, and without the creation of any reversionary interest in, or impairment of, any such assets, rights, benefits, obligations or liabilities.

(d) Any protected cell or incorporated protected cell that converts intoPublic anAct incorporatedNo. protected cell, a new captive insurance company or riskretentiongroup,inaccordance withtheprovisionsofthissection, shall perform such conversion in accordance with chapter 601 or 613 of the general statutes, as applicable, or in accordance with any such provisions of the general statutes applicable to the formation of any other type of legal entity permissible under the laws of this state, as applicable.

24-138 28 of 34 Substitute House Bill No.

5503 into an incorporated protected cell, a new captive insurance company or riskretentiongroup,inaccordance withtheprovisionsofthissection, shall perform such conversion in accordance with chapter 601 or 613 of the general statutes, as applicable, or in accordance with any such provisions of the general statutes applicable to the formation of any other type of legal entity permissible under the laws of this state, as applicable.

Section 19a-754c of the general statutes is amended by adding subsection (f) as follows (Effective October 1, 2024):

(NEW)(f)Notwithstandinganyprovisionofthissection,theCovered Connecticut program shall only include in-network health care providers and in-network services, unless the health carrier's network is deemed by the Insurance Commissioner to be inadequate.

Benefits described in subsection (b) of this section and cost-sharing available to all eligible individuals pursuant to subdivision (1) of subsection (b) of this section shall only apply if such eligible individuals use in-network health care providers or in-network facilities.

Sec.

17.

Section 38a-556 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) There is hereby created a nonprofit legal entity to be known as the Health Reinsurance Association.

All insurers, health care centers and self-insurers doing business in the state, as a condition to their authority to transact the applicable kinds of health insurance defined in section 38a-551, shall be members of the association.

The association shall perform its functions under a plan of operation established and approved under subsection (b) of this section, and shall exercise its powers through a board of directors established under this section.

(b) (1) The board of directors of the association shall be made up of nine individuals selected by participating members, subject to approval Public Act No.

24-138 29 of 34 Substitute House Bill No.

5503 by the commissioner, two of whom shall be appointed by the commissioner on or before July 1, 1993, to represent health care centers.

To select the initial board of directors, and to initially organize the association, the commissioner shall give notice to all members of the time and place of the organizational meeting.

In determining voting rights at the organizational meeting each member shall be entitled to vote in person or proxy.

The vote shall be a weighted vote based upon thenethealthinsurancepremiumderivedfromthisstateintheprevious calendar year.

If the board of directors is not selected within sixty days after notice of the organizational meeting, the commissioner may appoint the initial board.

In approving or selecting members of the board, the commissioner may consider, among other things, whether all members are fairly represented.

Members of the board may be reimbursed from the moneys of theassociation for expenses incurred by them as members, but shall not otherwise be compensated by the association for their services.

(2) The board shall submit to the commissioner a plan of operation for the association necessary or suitable to assure the fair, reasonable and equitable administration of the association.

The plan of operation shall become effective upon approval in writing by the commissioner.

Such plan shall continue in force until modified by the commissioner or superseded by a plan submitted by the board and approved by the commissioner.

The plan of operation shall:

(A) Establish procedures for the handling and accounting of assets and moneys of the association;(B) establish regular times and places for meetings of the board of directors;

(C) establish procedures for records to be kept of all financial transactions,andfortheannualfiscalreportingtothecommissioner;(D) establish procedures whereby selections for the board of directors shall be made and submitted to the commissioner;

(E) establish procedures to amend, subject to the approval of the commissioner, the plan of operations;

(F) establish procedures for the selection of an administrator and set forth the powers and duties of the administrator;

(G) contain Public Act No.

24-138 30 of 34 Substitute House Bill No.

5503 additional provisions necessary or proper for the execution of the powers and duties of the association;

and (H) contain additional provisions necessary for the association to establish health insurance plansthat qualify asacceptablecoverageinaccordance withthePension Benefit Guaranty Corporation and other state or federal programs that may be established.

(c) The association shall have the general powers and authority granted under the laws of this state to carriers to transact the kinds of insurance defined under section 38a-551, and in addition thereto, the specificauthority to:

(1)Enter into contractsnecessary or proper to carry out the provisions and purposes of this section and sections 38a-551 and [38a-556a] 38a-557 to 38a-559, inclusive;

(2) sue or be sued, including taking any legal actions necessary or proper for recovery of any assessments for, on behalf of, or against participating members;

(3) take such legal action as necessary to avoid the payment of improper claims against the association or the coverage provided by or through the association;

(4) establish, with respect to health insurance provided by or on behalf of the association, appropriate rates, scales of rates, rate classifications and rating adjustments, such rates not to be unreasonable in relation to the coverage provided and the operational expenses of the association;

(5) administer any type of reinsurance program, for or on behalf of participating members;

(6) pool risks among participating members;

(7) issue policies of insurance required or permitted by this section and sections 38a-551 and [38a-556a] 38a-557 to 38a-559, inclusive, in its own name or on behalf of participating members;

(8) administer separate pools, separate accounts or other plans as deemed appropriate for separate members or groups of members;

(9) operate and administer any combination of plans, pools, reinsurance arrangements or other mechanisms as deemed appropriate to best accomplish the fair and equitable operation of the association;

(10) set limits on the amounts of reinsurance that may be ceded to the association by its members;

(11) appoint from among participating Public Act No.

24-138 31 of 34 Substitute House Bill No.

5503 members appropriate legal, actuarial andother committees as necessary to provide technical assistance in the operation of the association, policy and other contract design, and any other function within the authority of the association;

(12) apply for and accept grants, gifts and bequests of fundsfromotherstates,federalandinterstateagenciesandindependent authorities, private firms, individuals and foundations for the purpose of carrying out its responsibilities.

Any such funds received shall be deposited in the General Fund and shall be credited to a separate nonlapsing account within the GeneralFund for the HealthReinsurance Association and may be used by the Health Reinsurance Association in the performance of its duties;

and (13) perform such other duties and responsibilities as may be required by state or federal law or permitted by state or federal law and approved by the commissioner.

(d) Rates for coverage issued by or through the association shall not be excessive, inadequate or unfairly discriminatory.

All rates shall be promulgated by the association through an actuarial committee consisting of five persons who are members of the American Academy of Actuaries, shall be filed with the commissioner and may be disapproved within sixty days after the filing thereof if excessive, inadequate or unfairly discriminatory.

(e) (1) Following the close of each fiscal year, the administrator shall determine the net premiums, reinsurance premiums less administrative expense allowance, the expense of administration pertaining to the reinsurance operations of the association and the incurred losses for the year.

Any net loss shall be assessed to all participating members in proportion to their respective shares of the total health insurance premiums earned in this state during the calendar year, or with paid losses in the year, coinciding with or ending during the fiscal year of the association or on any other equitable basis as may be provided in the plan of operations.

For self-insured members of the association, health insurance premiumsearnedshallbeestablishedby dividing theamount Public Act No.

24-138 32 of 34 Substitute House Bill No.

5503 of paid health losses for the applicable period by eighty-five per cent.

Net gains, if any, shall be held at interest to offset future losses or allocated to reduce future premiums.

(2) Any net loss to the association represented by the excess of its actual expenses of administering policies issued by the association over the applicable expense allowance shall be separately assessed to those participating members who do not elect to administer their plans.

All assessments shall be on an equitable formula established by the board.

(3) The association shall conduct periodic audits to assure the general accuracy of the financial data submitted to the association and the association shall have an annual audit of its operations by an independent certified public accountant.

The annual audit shall be filed withthecommissionerforhisreviewandtheassociationshallbesubject to the provisions of section 38a-14.

(f)Allpolicyformsissuedbyorthroughtheassociationshallconform in substance to prototype forms developed by the association, shall in all other respects conform to the requirements of this section and sections 38a-551 and [38a-556a] 38a-557 to 38a-559, inclusive, and shall be approved by the commissioner.

The commissioner may disapprove any such form if it contains a provision or provisions that are unfair or deceptive or that encourage misrepresentation of the policy.

(g) Unless otherwise permitted by the plan of operation, the association shall not issue, reissue or continue in force health care plan coverage with respect to any person who is already covered under an individual or group health care plan, or who is sixty-five years of age or older and eligible for Medicare or who is not a resident of this state.

(h) Benefits payable under a health care plan insured by or reinsured through the association shall be paid net of all other health insurance benefits paid or payable through any other source, and net of all health Public Act No.

24-138 33 of 34 Substitute House Bill No.

5503 insurance coverages provided by or pursuant to any other state or federal law including Title XVIII of the Social Security Act, Medicare, but excluding Medicaid.

(i) There shall be no liability on the part of and no cause of action of any nature shall arise against any carrier or its agents or its employees, the Health Reinsurance Association or its agents or its employees or the residual market mechanism established under the provisions of section 38a-557 or its agents or its employees, or the commissioner or the commissioner's representatives for any action taken by them in the performance of their duties under this section and sections 38a-551 and [38a-556a] 38a-557 to 38a-559, inclusive.

This provision shall not apply to the obligations of a carrier, a self-insurer, the Health Reinsurance Association or the residual market mechanism for payment of benefits provided under a health care plan.

Sec.

18.

(Effective from passage) ThisApproved actJune shall6, take2024 effectPublic asAct followsNo. and shall amend the following sections:

Section24-138 134 Octoberof 1,34 2024 38a-8 Sec.

2 October 1, 2024 38a-16 Sec.

3 October 1, 2024 38a-790(a) Sec.

4 October 1, 2024 38a-792(a) Sec.

5 October 1, 2024 38a-48 Sec.

6 October 1, 2024 38a-53(a) Sec.

7 October 1, 2024 38a-54(a) Sec.

8 October 1, 2024 38a-297 Sec.

9 January 1, 2025 38a-479ppp Sec.

10 from passage 38a-556 sHB5503 / File No.

644 32 sHB5503 File No.

644 Sec.

11 October 1, 2024 38a-564(4) Sec.

12 October 1, 2024 38a-614(1) Sec.

13 October 1, 2024 38a-591l(b) Sec.

14 October 1, 2024 38a-91aa Sec.

15 October 1, 2024 New section Sec.

16 from passage Repealer section INS Joint Favorable Subst.

sHB5503 / File No.

644 33 sHB5503 File No.

644 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

Agency Affected Fund-Effect FY 25 $ FY 26 $ Insurance Dept.

GF - Potential Minimal Minimal Revenue Gain Insurance Dept.

GF - Revenue -2.4 million 2.4 million Impact Department of Revenue Services GF - Potential Minimal Minimal Revenue Gain Note:

GF=General Fund Municipal Impact:

None Explanation The bill makes various unrelated changes to the insurance statutes, resulting in the fiscal impacts below.

Section 1 allows for a penalty of up to $100,000 to be enforced, which may result inarevenue gaintotheGeneralFund;however,thepotential revenue gain is anticipated to be minimal because fines imposed by the Insurance Department (DOI) under current law are typically paid without the type of legal action permitted by the bill.

Sections 3 and 4 change the license renewal timing for motor vehicle physical damage appraisers and casualty claims adjusters, which is anticipated to shift approximately $2.4 million in General Fund renewal fee revenue from FY 25 to FY 26 (and from odd to even numbered years in the out years to the extent at least the same number of licensees continue to renew).

The revenue shift associated with existing licensees sHB5503 / File No.

644 34 sHB5503 File No.

644 that continue to renew is estimated to be approximately $2.4 million.

1 The amount of shift associated with new licensees will depend on the timing of their birthdates and initial licensures.

Licensees currently pay DOI the $80 renewal fee for the period th ending June 30 in each odd-numbered year (e.g., 2025).

Under the bill, new initial licensees after October 1, 2024 will pay the renewal fee on their birthday every other year.

DOI intends to shift all licensees to the birthday-date expiration schedule, which the department has the discretion to do under the bill, with existing licensees renewing in the months following October 1, 2024.

This will result in renewal fee revenue from the $80 renewal fee being incurred more evenly between odd and even numbered years and does not change the amount of license fee revenue the Insurance Department collects over a two-year period.

Sections 14 and 15 allow sponsored captive insurance companies to convert a protected cellinto anew captive insurance company or certain other entities.

This may attract new captives to Connecticut or lead existing protected cells to become separate captives.

To the extent this flexibility for captives leads additional captives to be established in the state, the bill could result in a General Fund revenue gain beginning as early as FY 25 to DOI, for each new captive, from:

(1) application and formationfeesof$1,050,(2)afeeforinitiallicenseof$375,and(3)annual license renewal fees in subsequent fiscal years of $375.

To the extent new captives are established, the section may also result in a revenue gain to the General Fund from insurance premium taxes beginning in FY 25.

According to DOI there are currently 24 protected cells within According to the Insurance Department, there are currently 5,874 licensed motor vehicle physical damage appraisers and 116,392 licensed casualty claims adjusters.

Under current law, fee revenue will total approximately $9.8 million in FY 25 if all licensees renew.

Under the bill, 25% of existing licensees are assumed to pay renewal fees based on birthdays between July 1, 2025 and September 30, 2025, with that $2.4 million in fee revenue being paid in FY 26.

2According to DOI, there are 42 captive insurance companies fully licensed and currently writing business in Connecticut.

sHB5503 / File No.

644 35 sHB5503 File No.

644 sponsored captives.

To the extent existing protected cells are converted into new captives, there will be a minimal General Fund revenue gain to DOI associated with those entities paying separate $375 license fees annually.

A converted captive would not pay an initial application fee .

The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to inflation, the timing of applications and renewals of motor vehicle physical damage appraiser and casualty claims adjuster licenses, and the amount of any new captive insurers established and their written premiums.

sHB5503 / File No.

644 36 sHB5503 File No.

644 OLR Bill Analysis sHB 5503 AN ACT CONCERNING INSURANCE MARKET CONDUCT AND INSURANCE LICENSING, THE INSURANCE DEPARTMENT'S TECHNICAL CORRECTIONS AND OTHER REVISIONS TO THE INSURANCE STATUTES AND CAPTIVE INSURANCE.

TABLE OF CONTENTS:

SUMMARY § 1 — INSURANCE COMMISSIONER’S ENFORCEMENT AUTHORITY Allows the insurance commissioner to impose restitution, with interest, when someone violates the state’s insurance laws, regulations, or commissioner orders;

allows the commissioner to ask the attorney general to file a court action to enforce the laws, regulations, or commissioner orders, impose a fine of up to $100,000 per violation, or order restitution with interest § 2 — 30 DAYS TO TURN OVER DOCUMENTS RequiresanyonerequestedtoprovidetheInsuranceDepartmentwith documents related to an investigation to comply within 30 days after the request §§ 3 & 4 — EXPIRATION DATE FOR CERTAIN INITIAL LICENSES Revises the expiration date for initial licenses issued to motor vehicle damage appraisers and casualty claims adjusters from June 30 in an odd-numbered year to two years after the licensee’s birthday that came before the license was issued § 5 — GENERAL INSURANCE ASSESSMENT PROCESS Removes the Office of the Healthcare Advocate from the Insurance Department’s annual process of assessing carriers for the general insurance assessment §§ 6, 7 & 12 — ELECTRONIC FILINGS IN LIEU OF PAPER FILINGS Removes requirements that insurers file copies of annual financial statements and audited financial reports with the insurance commissioner, allowing electronic filings to the NAIC to suffice sHB5503 / File No.

644 37 sHB5503 File No.

644 § 8 — NON-ENGLISH INSURANCE DOCUMENTS AND TRANSLATIONS Requires insurers who file policies in a non-English language to certify that they comply with readable language requirements and bear the risks associated with any translations;

allows the insurance commissioner to hire translation services at the insurer’s cost § 9 — PHARMACY BENEFIT MANAGER REPORT DUE DATE Moves up the annual due date for PBMs to report rebate information to the insurance commissioner by one month;

requires the commissioner to give the PBMs a copy of his annual report to the Insurance and Real Estate Committee by 10 days before it is due to the committee §§ 10 & 16 — CONNECTICUT CLEARINGHOUSE REPEALED Repeals a requirement that the Health Reinsurance Association develop the Connecticut Clearinghouse on health insurance policies available in the state § 11 — SMALL EMPLOYER DEFINITION BeginningJanuary1,2025,updatesthedefinitionof“smallemployer” in the health insurance statutes to mean having no more than 50 employees § 13 — INDEPENDENT REVIEW ORGANIZATION ACCREDITATION PERIOD Extends the accreditation approval or reapproval period for independent review organizations from two to three years §§ 14 & 15 — CAPTIVE INSURER CONVERSION OF PROTECTED CELLS Allows a captive insurer’s protected cell to convert into a new protected cell, incorporated cell, or captive insurance company without any impact on the protected cell’s assets, rights, benefits, obligations, and liabilities BACKGROUND SUMMARY This bill makes numerous unrelated changes to insurance statutes, as summarized in the section-by-section analysis below.

EFFECTIVE DATE:

October 1, 2024, unless otherwise stated below.

sHB5503 / File No.

644 38 sHB5503 File No.

644 § 1 — INSURANCE COMMISSIONER’S ENFORCEMENT AUTHORITY Allows the insurance commissioner to impose restitution, with interest, when someone violates the state’s insurance laws, regulations, or commissioner orders;

allows the commissioner to ask the attorney general to file a court action to enforce the laws, regulations, or commissioner orders, impose a fine of up to $100,000 per violation, or order restitution with interest By law, the insurance commissioner must administer and enforce the laws regarding insurance companies and health care centers (i.e., HMOs).

Relatedly, the law grants him the reasonable and necessary powers to protect the public interest.

The bill explicitly allows the commissioner to order restitution of any amount obtained in violation of the state’s insurance laws, regulations, or commissioner orders, plus interest as allowed under another state law.

This is generally 10% interest per year (CGS § 37-3a).

Additionally, whenever the commissioner finds and can show that a person has violated, or is about to violate, the state’s insurance laws, regulations, or commissioner orders, the bill allows him to ask the attorney general to bring an action in Hartford Superior Court for an injunction (permanent or temporary), restraining order, or other appropriate order;

a penalty of up to $100,000 per violation;

or restitution, with interest, for the amount the person obtained in violation of the laws, regulations, or commissioner orders.

The commissioner isnot requiredto post abondinany court actionbrought.

And if the commissioner prevails in court, the court may also order the state’s costs be paid as part of its order.

(Under existing law, the commissioner may already request the attorney general to apply to Superior Court for a permanent or temporary order restraining a person from violating the insurance laws (CGS § 38a-16(b)).) § 2 — 30 DAYS TO TURN OVER DOCUMENTS Requires anyone requested to provide the Insurance Department with documents related to an investigation to comply within 30 days after the request By law, the insurance commissioner may conduct investigations and hearings on any matter under the insurance laws.

He may, among other things, order the production of books, records, papers, or documents for sHB5503 / File No.

644 39 sHB5503 File No.

644 an investigation.

The bill requires that anyone who receives a request for the production of books, records, papers, or documents comply with the order within 30 days after the date of the order.

By law, if a person refuses to comply, the commissioner may ask the Superior Court to order compliance.

§§ 3 & 4 — EXPIRATION DATE FOR CERTAIN INITIAL LICENSES Revises the expiration date for initial licenses issued to motor vehicle damage appraisers and casualty claims adjusters from June 30 in an odd-numbered year to two years after the licensee’s birthday that came before the license was issued Under current law, initial licenses for motor vehicle damage appraisers and casualty claim adjusters expire on the June 30 in an odd- numbered year following the license issuance, unless sooner revoked or suspended.

The bill changes this expiration date to be two years after the licensee’s birthday that came before the date the license was issued, unless it was already revoked or suspended.

By law, a licensee may renew the license every two years at the insurance commissioner’s discretion with payment of the required renewal fees.

§ 5 — GENERAL INSURANCE ASSESSMENT PROCESS Removes the Office of the Healthcare Advocate from the Insurance Department’s annual process of assessing carriers for the general insurance assessment By law, domestic insurers and HMOs pay an annual assessment to the Insurance Department to cover the expenses of the Insurance Department, Office of the Healthcare Advocate, and Office of Health Strategy, among other things.

Under current law, the insurance commissioner and the Office of the Healthcare Advocate assess the entities following a process set in state law.

The bill removes the Office of the Healthcare Advocate from this process, leaving the insurance commissioner to manage the assessment process.

It also makes technical and conforming changes.

§§ 6, 7 & 12 — ELECTRONIC FILINGS IN LIEU OF PAPER FILINGS sHB5503 / File No.

644 40 sHB5503 File No.

644 Removes requirements that insurers file copies of annual financial statements and audited financial reports with the insurance commissioner, allowing electronic filings to the NAIC to suffice Current law requires domestic insurers, HMOs, and fraternal benefit societies to file copies of annual financial statements and audited financial reports with the insurance commissioner as well as electronically with the National Association of Insurance Commissioners (NAIC).

The bill eliminates the requirement to submit these to the commissioner.

Instead, it deems the companies’ electronic submissions to the NAIC, as required by law, to have been filed with the commissioner.

§ 8 — NON-ENGLISH INSURANCE DOCUMENTS AND TRANSLATIONS Requires insurers who file policies in a non-English language to certify that they comply with readable language requirements and bear the risks associated with any translations;

allows the insurance commissioner to hire translation services at the insurer’s cost By law, insurance policies filed with the Insurance Department must meet certain readability standards (e.g., Flesch reading ease scores and print specifications).Asunder current law,the billallows insurerstofile policies in any language.

The insurer must certify that the policy complies with the readability standards or is translated from a policy that complies.

The bill allows the insurance commissioner to hire a translation service to review a non-English-language policy filed by an insurer.

The insurer that filed the policy must pay the cost of the translation.

Alternatively, the commissioner may require the insurer to provide an English translated copy of the policy and a certification as to the accuracy of the translation.

The bill requires the insurer to accept all risk associated with a translation.

The bill also allows the commissioner to adopt implementing regulations.

§ 9 — PHARMACY BENEFIT MANAGER REPORT DUE DATE Moves up the annual due date for PBMs to report rebate information to the insurance commissioner by one month;

requires the commissioner to give the PBMs a copy of his sHB5503 / File No.

644 41 sHB5503 File No.

644 annual report to the Insurance and Real Estate Committee by 10 days before it is due to the committee By law, each pharmacy benefit manager (PBM) must file a report annually with the insurance commissioner concerning prescription drug rebates.

Under current law, the report is due by March 1.

The bill moves up the due date to February 1, beginning in 2025.

ThelawalsorequiresthecommissionertoreporttotheInsuranceand Real Estate Committee, annually by March 1, an aggregation of the PBMs’ rebate reports.

Under current law, the commissioner must give the PBMs an advanced copy of this report by February 1 annually.

The bill instead requires him to give them the advanced copy by 10 days before he reports to the committee.

EFFECTIVE DATE:

January 1, 2025 §§ 10 & 16 — CONNECTICUT CLEARINGHOUSE REPEALED Repeals a requirement that the Health Reinsurance Association develop the Connecticut Clearinghouse on health insurance policies available in the state Current law requires the Health Reinsurance Association to develop the Connecticut Clearinghouse as a resource for individuals and small employers to get information on health insurance policies and plans available in the state.

The bill repeals this requirement.

(The clearinghouse has largely been replaced by the health insurance exchange, Access Health CT.) EFFECTIVE DATE:

Upon passage § 11 — SMALL EMPLOYER DEFINITION Beginning January 1, 2025, updates the definition of “small employer” in the health insurance statutes to mean having no more than 50 employees Beginning January 1, 2025, the bill defines “small employer” for purposes of the health insurance laws to mean an employer with an average of at least one and no more than 50 employees on business days in the prior calendar year and at least one employee on the first day of the group health insurance plan year.

Current law extends the definition to no more than 100 employees, sHB5503 / File No.

644 42 sHB5503 File No.

644 except that the insurance commissioner may postpone that definition to be consistent with the federal Affordable Care Act.

The commissioner did that in Insurance Bulletin HC-106 (2015).

So, in practice, the small employer definition has been no more than 50 employees since before 2016.

The bill removes the commissioner’s authority to postpone the change in definition.

As a result, under the bill, from October 1, 2024, to December 31, 2024, a small employer is one that has no more than 100 employees.

This means plans covering between 50 and 100 employees must comply with the laws affecting small employers for a three-month period (e.g., rating requirements, mandatory benefits).

§ 13 — INDEPENDENT REVIEW ORGANIZATION ACCREDITATION PERIOD Extends the accreditation approval or reapproval period for independent review organizations from two to three years By law, the insurance commissioner maintains a list of accredited independent review organizations that are available to conduct regular or expedited external reviews of health insurance grievances.

Under current law, an accreditation lasts two years.

The bill extends this to three years.

As under existing law, if the commissioner determines that an organization no longer meets the minimum requirements for accreditation, he must end its approval and remove it from the list of approved organizations.

§§ 14 & 15 — CAPTIVE INSURER CONVERSION OF PROTECTED CELLS Allows a captive insurer’s protected cell to convert into a new protected cell, incorporated cell, or captive insurance company without any impact on the protected cell’s assets, rights, benefits, obligations, and liabilities Captive Insurer Generally, a captive insurer is an insurance company formed to insure or reinsure the risks of its owners, parent company, or affiliated company.

The law allows several different types of captive insurers to be licensed and operate in the state, including a sponsored captive insurer.

sHB5503 / File No.

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644 A sponsored captive insurer is an insurance company (1) for which oneormoresponsorsprovidetheminimumpaid-incapital andsurplus, (2) that insures its participants through separate participant contracts, and (3) that funds its liability to each participant through protected cells and separates each cell’s assets from that of other cells and the captive insurer as a whole.

PA 23-15 allowed these protected cells to establish, with the insurance commissioner’s prior written approval, separate accounts and allocate assets to them, subject to certain requirements.

Conversion of Protected Cell Allowed The bill allows sponsored captive insurers to convert protected or incorporated protected cells into one of the following other insurance company structures or types of accounts:

1.

a single protected or incorporated protected cell;

2.

a new sponsored captive insurer (including those licensed as a special purpose financial captive insurer);

3.

a new special purpose financial captive, pure captive, agency captive, industrial insured captive, or association captive insurer;

or 4.

a new risk retention group.

Any conversion is deemed to (1) be a continuation of the cell’s existence, with all of its assets, rights, benefits, obligations, and liabilities, and (2) occur without any transfer or assignment of these assets, rights, benefits, obligations, and liabilities and without creating any reversionary interest in or impairment of them.

The bill specifies that the conversion does not limit any rights or protections applicable to the cell or the sponsored captive that existed prior to the conversion.

Conversion Process Under the bill, a sponsored captive must apply to the insurance commissioner and receive his prior written approval for the conversion.

Additionally, the bill subjects the conversion to the existing laws sHB5503 / File No.

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644 regulating captives and the sponsored captive insurer’s plan of operation approved by the commissioner, without affecting the converted cell’s assets, rights, benefits, obligations, and liabilities.

For cells that convert into an incorporated protected cell or a new captive insurer or risk retention group, the conversion must follow all existing business corporation or limited liability company laws that are applicable to the newly formed business or legal entity.

BACKGROUND Legislative History The House referred the bill (File 378) to the Insurance and Real Estate Committee, which reported a substitute that replaced the underlying bill’s study of workforce shortages and workforce development with various insurance-related provisions.

Related Bill SB 372 (File 570), favorably reported by the Appropriations Committee, among other things, limits the type of domestic insurance entities required to pay the portion of the general insurance assessment that supports the budgets of the Office of the Healthcare Advocate and the Office of Health Strategy.

COMMITTEE ACTION Commerce Committee Joint Favorable Yea 21 Nay 3 (03/21/2024) Insurance and Real Estate Committee Joint Favorable Substitute Yea 12 Nay 0 (04/23/2024) sHB5503 / File No.

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