HB 6391 — AN ACT CONCERNING THE INSURANCE DEPARTMENT'S RECOMMENDATIONS REGARDING THE GENERAL STATUTES.

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718 business purposes in accordance with their relative importance to such licensee's business objectives and risk strategy;

(viii)Public RegularAct testingNo. and monitoring of systems and procedures to detect actual and attempted attacks on, or intrusions into, information systems;

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6391 (viii) Regular testing and monitoring of systems and procedures to detect actual and attempted attacks on, or intrusions into, information systems;

and (xi) Development, implementation and maintenance of procedures sHB6391for /the Filesecure No.disposal of nonpublic information in any format.

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718 for the secure disposal of nonpublic information in any format.

(A) Require the licensee's executive management or [its] such executive management's delegates to develop, implement and maintain suchPublic licensee'sAct informationNo. security program.

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6391 such licensee's information security program.

(C) If a licensee's executive management delegates any of [its] such executive management's responsibilities under subparagraph (A) or (B) sHB6391of /this Filesubdivision, No.[it] such executive management shall oversee the development, implementation and maintenance of the licensee's information security program prepared by the delegate or delegates, and shall receive a report from such delegate or delegates that satisfies the requirements established in subparagraph (B) of this subdivision.

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718 of this subdivision, [it] such executive management shall oversee the development, implementation and maintenance of the licensee's information security program prepared by the delegate or delegates, and shall receive a report from such delegate or delegates that satisfies the requirements established in subparagraph (B) of this subdivision.

and (B) Not later than October 1, [2021] 2022, each licensee shall require each of such licensee's third-party service providers to implement appropriate administrative, technical and physical measures to protect and secure the information systems that are, and nonpublic information that is, accessible to, or held by, such licensee's third-party service providers.Public Act No.

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6391 providers.

(8)IncidentResponsePlan.(A)Exceptasprovidedinsubdivision(10) of this subsection, each licensee shall, as part of such licensee's information security program, establish a written incident response plan that is designed to promptly respond to, and recover from, any cybersecurity event that compromises the confidentiality, integrity or availability of nonpublic information that is in such licensee's possession, custody or control, such licensee's information systems or sHB6391the /continuing Filefunctionality No.of any aspect of such licensee's business or operations.

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718 the continuing functionality of any aspect of such licensee's business or operations.

(vi)Public IdentificationAct ofNo. requirements for the remediation of any identified weaknesses in information systems and associated controls;

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6391 (vi) Identification of requirements for the remediation of any identified weaknesses in information systems and associated controls;

Except as provided in subdivision (10) of this subsection, each insurer, health care center or fraternal benefit society domiciled in this state shall submit to the Insurance Commissioner a written statement, not later than [February] April fifteenth, annually, certifying that such insurer, health care center or fraternal benefit society is in compliance with the requirementssetforthinthissubsection.requirementssetforthinthissubsection.[Eachinsurershall]Adomestic insurer, health care center or fraternal benefit society that is a member of an insurance holding company system, as defined in section 38a-129, may submit one statement to the Insurance Commissioner on behalf of other domestic insurers, health care centers or fraternal benefit societies that are members of the same insurance holding company system, not later than April fifteenth, annually, certifying that such domestic members of the insurance holding company system are in compliance with the requirements set forth in this subsection.

[Eachinsurershall]Adomestic insurer, health care center or fraternal benefit society that is a member of an insurance holding company system, as defined in section 38a-129, may submit one statement to the Insurance Commissioner on behalf of other domestic insurers, health care centers or fraternal benefit societies that are members of the same insurance holding company system, not later than April fifteenth, annually, certifying that such domestic sHB6391 / File No.

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718 members of the insurance holding company system are in compliance with the requirements set forth in this subsection.

To the extent an insurer, health care center or fraternal benefit society has identified areas, systems or processes that require material improvement, updating or redesign, the insurer, health care center or fraternal benefit society shall, either directlyPublic orAct throughNo. an affiliate, document such identification and the remedial efforts planned and underway to address such areas, systems or processes.

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6391 directly or through an affiliate, document such identification and the remedial efforts planned and underway to address such areas, systems or processes.

104-191, as amended from time to time, and has established and maintains an information security sHB6391program /pursuant Fileto No.said act and the rules, regulations, procedures or guidelines established thereunder, shall be deemed to have satisfied the requirements of this subsection, provided such licensee is in compliance therewith and submits to the Insurance Commissioner, not later than April fifteenth, annually, a written statement certifying such licensee's compliance therewith;

718(iii) sHB6391Each Fileemployee, agent, representative or designee of a licensee, who is also a licensee, shall be exempt from the provisions of this subsection and need not develop its own information security program Public Act No.

71821-157 program14 pursuant to said act and the rules, regulations, procedures or guidelines established thereunder, shall be deemed to have satisfied the requirements of this62 subsection,Substitute providedHouse suchBill licenseeNo. is in compliance therewith and submits to the Insurance Commissioner, not later than April fifteenth, annually, a written statement certifying such licensee's compliance therewith;

(iii)6391 Each employee, agent, representative or designee of a licensee, who is also a licensee, shall be exempt from the provisions of this subsection and need not develop its own information security program to the extent that such employee, agent representative or designee is covered by the other licensee's information security program;

sHB6391(A) /Determine Filewhether No.the cybersecurity event occurred;

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718 (A) Determine whether the cybersecurity event occurred;

(ii) Identify the nonpublic information, if any, that may have been involvedPublic inAct suchNo. cybersecurity event;

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6391 involved in such cybersecurity event;

sHB6391(i) /A Fileconsumer No.residing in this state;

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718 (i) A consumer residing in this state;

or (B)Public TheAct licenseeNo. reasonably believes that the nonpublic information involved in the cybersecurity event is of two hundred fifty or more consumers residing in this state and:

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6391 (B) The licensee reasonably believes that the nonpublic information involved in the cybersecurity event is of two hundred fifty or more consumers residing in this state and:

sHB6391(vi) /Whether Filesuch licensee has filed a police report or notified any Public Act No.

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7186391 (vi) Whether such licensee has filed a police report or notified any regulatory, government or law enforcement agency, and, if so, when such licensee filed such report or provided such notice;

Each licensee shall comply with all applicablePublic provisionsAct of section 36a-701b, and provide to the Insurance sHB6391 / File No.

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7186391 applicable provisions of section 36a-701b, and provide to the Insurance Commissioner a copy of the notice that such licensee sends to consumers pursuant to said section, if any, if such licensee is required to notify the commissioner pursuant to subdivision (1) of this subsection.

(ii) Each ceding insurer that has a direct contractual relationship with thePublic consumersAct affectedNo. by a cybersecurity event shall fulfill the consumer notification requirements imposed under section 36a-701b andanyothernotificationrequirementsrelatingtoacybersecurityevent imposed under this section.

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7186391 sHB6391the Fileconsumers No.affected by a cybersecurity event shall fulfill the consumer notification requirements imposed under section 36a-701b andanyothernotificationrequirementsrelatingtoacybersecurityevent imposed under this section.

718 (B) (i) In the case of a cybersecurity event involving nonpublic information that is in the possession, custody or control of a third-party service provider ofa licensee, whenthe licensee isacting as anassuming insurer, including an assuming insurer that isdomiciled in another state or jurisdiction, the assuming insurer shall notify its affected ceding insurers and the insurance regulatory official of its state of domicile not later than seventy-two hours after such assuming insurer received notice from the third-party service provider disclosing that the cybersecurity event occurred.

(1) The Insurance Commissioner shall havePublic powerAct toNo. examine and investigate into the affairs of a licensee to determine whether the licensee is, or has been, engaged in conduct in this state that violates the provisions of this section.

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6391 have power to examine and investigate into the affairs of a licensee to determine whether the licensee is, or has been, engaged in conduct in this state that violates the provisions of this section.

sHB6391(2) /Whenever Filethe No.Insurance Commissioner has reason to believe that a licensee is, or has been, engaged in conduct in this state that violates the provisions of this section, the commissioner shall issue and serve upon the licensee:

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718 (2) Whenever the Insurance Commissioner has reason to believe that a licensee is, or has been, engaged in conduct in this state that violates the provisions of this section, the commissioner shall issue and serve upon the licensee:

(B) The Insurance Commissioner may, after holding a hearing pursuant to subparagraph (A) of this subdivision, take any action that is necessary or appropriate to enforce the provisions of this section and, in addition to or in lieu of suspending, revoking or refusing to reissue or renew any license, certificate of registration or authorization to operatePublic theAct commissionerNo. has issued, or may issue, to the licensee, impose on such licensee a civil penalty of not more than fifty thousand dollars for each violation of the provisions of this section.

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6391 operate the commissioner has issued, or may issue, to the licensee, impose on such licensee a civil penalty of not more than fifty thousand dollars for each violation of the provisions of this section.

(1) (A) Except as provided in subparagraph (B) of this subdivision, documents, materials and other information in the sHB6391possession, /custody Fileor No.control of the Insurance Department and furnished to the department by a licensee, or an employee or agent of a licensee acting on behalf of the licensee, pursuant to subdivision (9) of subsection (c) of this section or subparagraph (A)(ii), (A)(iii), (A)(iv), (A)(v), (A)(viii), (A)(x) or (A)(xi) of subdivision (2) of subsection (e) of this section, or obtained by the commissioner in an investigation or examination conducted pursuant to subsection (f) of this section, shall be confidential by law, privileged, not subject to disclosure under section 1-210, not subject to subpoena, and not subject to discovery or admission into evidence in any private civil action.

718(B) sHB6391The FileInsurance No.Commissioner is authorized to use all documents, materialsandotherinformationinfurtheranceofany regulatoryorlegal actions brought as a part of the commissioner's duties.

718 possession, custody or control of the Insurance Department and furnished to the department by a licensee, or an employee or agent of a licensee acting on behalf of the licensee, pursuant to subdivision (9) of subsection (c) of this section or subparagraph (A)(ii), (A)(iii), (A)(iv), (A)(v), (A)(viii), (A)(x) or (A)(xi) of subdivision (2) of subsection (e) of this section, or obtained by the commissioner in an investigation or examination conducted pursuant to subsection (f) of this section, shall be confidential by law, privileged, not subject to disclosure under section 1-210, not subject to subpoena, and not subject to discovery or admission into evidence in any private civil action.

(B) The Insurance Commissioner is authorized to use all documents, materialsandotherinformationinfurtheranceofanyregulatoryorlegal actions brought as a part of the commissioner's duties.

(A)SharePublic documents,Act materialsandotherNo. information,including,but not limited to, confidential and privileged documents, materials and other information subject to subdivision (1) of this subsection, with other state, federal and international regulatory agencies, the National Association of Insurance Commissioners and the affiliates and subsidiaries of said association, the Attorney General and other state, federal or international law enforcement authorities, provided the recipient of such documents, materials or other information agrees, in writing, to maintain the confidentiality and privileged status of such documents, materials or other information;

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7186391 sHB6391(A)Share Filedocuments, No.materialsandother information,including,but not limited to, confidential and privileged documents, materials and other information subject to subdivision (1) of this subsection, with other state, federal and international regulatory agencies, the National Association of Insurance Commissioners and the affiliates and subsidiaries of said association, the Attorney General and other state, federal or international law enforcement authorities, provided the recipient of such documents, materials or other information agrees, in writing, to maintain the confidentiality and privileged status of such documents, materials or other information;

718 (B) Receive documents, materials and other information, including, but not limited to, otherwise confidential and privileged documents, materials and other information, from the National Association of Insurance Commissioners and the affiliates and subsidiaries of said association, the Attorney General and other domestic or foreign regulatory or law enforcement officials, provided the commissioner shall maintain as confidential and privileged all documents, materials and other information that the commissioner receives with notice or an understanding that such documents or materials are, or such other information is, confidential or privileged under the laws of the jurisdiction that is the source of such documents, materials or other information;

(4)Public NoAct waiverNo. of any applicable privilege or claim of confidentiality in a document, material or other information shall occur as a result of any disclosure of the document, material or other information to the Insurance Commissioner pursuant to this section, or as a result of any sharing of such document, material or other information authorized under subdivision (3) of this subsection.

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6391 (4) No waiver of any applicable privilege or claim of confidentiality in a document, material or other information shall occur as a result of any disclosure of the document, material or other information to the Insurance Commissioner pursuant to this section, or as a result of any sharing of such document, material or other information authorized under subdivision (3) of this subsection.

(6) All documents, materials and other information provided to, and sHB6391in /the Filepossession, No.custody or control of, the National Association of Insurance Commissioners or a third-party consultant or vendor pursuant to this section shall be confidential by law, privileged, not be subject to disclosure under section 1-210, not subject to subpoena, and not subject to discovery or admission into evidence in any private civil action.

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718 in the possession, custody or control of, the National Association of Insurance Commissioners or a third-party consultant or vendor pursuant to this section shall be confidential by law, privileged, not be subject to disclosure under section 1-210, not subject to subpoena, and not subject to discovery or admission into evidence in any private civil action.

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 expenditures made during the fiscal year by the Insurance Department, thePublic OfficeAct ofNo. 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.

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6391 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.

Any such domestic insurance company or other domestic entity may pay to the Insurance sHB6391Commissioner /the Fileentire No.assessment required under this subsection in one payment when the first installment of such assessment is due.

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718 Commissioner the entire assessment required under this subsection in one payment when the first installment of such assessment is due.

[(2) (A) All requests for external review or expedited external review shall be accompanied by a filing fee of twenty-five dollars, except that no covered person or covered person's authorized representative shall pay more than seventy-five dollars in a calendar year for such covered person.Public Act No.

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6391 person.

[(4)] (3) An external review decision, whether such review is a sHB6391standard /external Filereview No.or an expedited external review, shall be binding on the health carrier or a self-insured governmental plan and the covered person, except to the extent such health carrier or covered person has other remedies available under federal or state law.

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718 standard external review or an expedited external review, shall be binding on the health carrier or a self-insured governmental plan and the covered person, except to the extent such health carrier or covered person has other remedies available under federal or state law.

[(6)] (5)Eachindependent revieworganizationshallmaintainwritten recordsPublic asAct setNo. forth in subsection (e) of section 38a-591m.

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6391 records as set forth in subsection (e) of section 38a-591m.

sHB6391(A) /The Filefollowing No.statement or a statement in substantially similar language:

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718 (A) The following statement or a statement in substantially similar language:

(i)Public IfAct theNo. covered person has a medical condition for which the time period for completion of an expedited internal review of a grievance involving an adverse determination would seriously jeopardize the life or health of the covered person or would jeopardize the covered person's ability to regain maximum function, the covered person or the covered person's authorized representative may (I) file a request for an expedited external review, or (II) file a request for an expedited external review if the adverse determination involves a denial of coverage based on a determination that the recommended or requested health care service or treatment is experimental or investigational and the covered person's treating health care professional certifies in writing that such recommended or requested health care service or treatment would be significantly less effective if not promptly initiated;

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6391 (i) If the covered person has a medical condition for which the time period for completion of an expedited internal review of a grievance involving an adverse determination would seriously jeopardize the life or health of the covered person or would jeopardize the covered person's ability to regain maximum function, the covered person or the covered person's authorized representative may (I) file a request for an expedited external review, or (II) file a request for an expedited external review if the adverse determination involves a denial of coverage based on a determination that the recommended or requested health care service or treatment is experimental or investigational and the covered person's treating health care professional certifies in writing that such recommended or requested health care service or treatment would be significantly less effective if not promptly initiated;

sHB6391(C) /For Filea No.notice related to a final adverse determination, a statement informing the covered person that:

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718 (C) For a notice related to a final adverse determination, a statement informing the covered person that:

or (ii) If the final adverse determination concerns (I) an admission, availabilityPublic ofAct care,No. continued stay or health care service for which the covered person received emergency services but has not been discharged from a facility, the covered person or the covered person's authorized representative may file a request for an expedited external review, or (II) a denial of coverage based on a determination that the recommended or requested health care service or treatment is experimental or investigational and the covered person's treating health care professional certifies in writing that such recommended or requested health care service or treatment would be significantly less effective if not promptly initiated, the covered person or the covered person's authorized representative may file a request for an expedited external review;

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6391 availability of care, continued stay or health care service for which the covered person received emergency services but has not been discharged from a facility, the covered person or the covered person's authorized representative may file a request for an expedited external review, or (II) a denial of coverage based on a determination that the recommended or requested health care service or treatment is experimental or investigational and the covered person's treating health care professional certifies in writing that such recommended or requested health care service or treatment would be significantly less effective if not promptly initiated, the covered person or the covered person's authorized representative may file a request for an expedited external review;

(ii) As part of any forms provided under subparagraph (D)(i) of this subdivision, an authorization form or other document approved by the commissioner that complies with the requirements of 45 CFR 164.508, as amended from time to time, by which the covered person shall sHB6391authorizethehealthcarrierandthecoveredperson'streatinghealthcare /professionaltorelease,transferorotherwisedivulge,inaccordancewith Filesections No.38a-975 to 38a-999a, inclusive, the covered person's protected health information including medical records for purposes of conducting an external review or an expedited external review;

718(E) sHB6391A Filestatement that the covered person or the covered person's authorized representative may request, free of charge, copies of all documents, communications, information and evidence regarding the Public Act No.

71821-157 authorizethehealthcarrierandthecoveredperson'streatinghealthcare29 professionalto release,transferorotherwisedivulge,inaccordancewith sections 38a-975 to 38a-999a, inclusive, the covered person's protected health information including medical records for purposes of conducting62 anSubstitute externalHouse reviewBill orNo. an expedited external review;

(E)6391 A statement that the covered person or the covered person's authorized representative may request, free of charge, copies of all documents, communications, information and evidence regarding the adverse determination or the final adverse determination that were not previously provided to the covered person or the covered person's authorized representative.

or (II) The denial of coverage is based on a determination that the recommended or requested health care service or treatment is experimental or investigational and the covered person's treating health sHB6391care /professional Filecertifies No.in writing that such recommended or requested health care service or treatment would be significantly less effective if not promptly initiated;

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718 care professional certifies in writing that such recommended or requested health care service or treatment would be significantly less effective if not promptly initiated;

or (B)Public AAct finalNo. adverse determination if:

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6391 (B) A final adverse determination if:

(e) (1) Not later than one hundred twenty calendar days after a covered personor a coveredperson'sauthorizedrepresentativereceives sHB6391a /notice Fileof No.an adverse determination or a final adverse determination, the covered person or the covered person's authorized representative may file a request for anexternalreviewor anexpedited externalreview with the commissioner in accordance with this section.

718(2) sHB6391Not Filelater than one business day after the commissioner receives a Public Act No.

71821-157 a31 notice of an62 adverseSubstitute determinationHouse orBill aNo. final adverse determination, the covered person or the covered person's authorized representative may file a request for anexternalreviewor anexpedited externalreview with the commissioner in accordance with this section.

(2)6391 (A) Not later than one business day after the commissioner receives a request that is complete, the commissioner shall:

(B) The health care service that is the subject of the adverse determination or the final adverse determination is a covered service sHB6391under /the Filecovered person's health benefit plan but for the health carrier's determination that the health care service is not covered because [it] the health care service does not meet the health carrier's Public Act No.

71821-157 sHB639132 Fileof 62 Substitute House Bill No.

7186391 under the covered person's health benefit plan but for the health carrier's determination that the health care service is not covered because [it] the health care service does not meet the health carrier's requirementsformedicalnecessity,appropriateness,healthcare setting, level of care or effectiveness;

or (II) Is a licensed, board certified or board eligible health care sHB6391professional /qualified Fileto practice in the area of medicine appropriate to Public Act No.

71821-157 sHB639133 Fileof 62 Substitute House Bill No.

7186391 professional qualified to practice in the area of medicine appropriate to treat the covered person's condition and has certified in writing that scientifically valid studies using accepted protocols demonstrate that thehealthcareserviceortreatmentrequestedbythecoveredpersonthat is the subject of the adverse determination or the final adverse determination is likely to be more beneficial to the covered person than any available standard health care services or treatments;

For an external review, the health carrier shall include in such notice (i) a statement that the covered person or the coveredPublic person'sAct authorized representative may submit, not later than sHB6391 / File No.

71821-157 sHB639134 Fileof 62 Substitute House Bill No.

7186391 covered person's authorized representative may submit, not later than five business days after the covered person or the covered person's authorized representative, as applicable, received such notice, additional information in writing to the assigned independent review organization that such organization shall consider when conducting the external review, and (ii) where and how such additional information is to be submitted.

[(D)] (E) Notwithstanding a health carrier's initial determination that a request for an external review or an expedited external review is ineligible for review, the commissioner may determine, pursuant to the terms of the covered person's health benefit plan, that such request is eligiblePublic forAct suchNo. review and assign an independent review organization to conduct such review.

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6391 eligible for such review and assign an independent review organization to conduct such review.

sHB6391[(f) /(1) FileWhenever No.the commissioner is notified pursuant to subparagraph (A) of subdivision (4) of subsection (e) of this section that a request is eligible for externalreview or expedited external review,the commissioner shall, not later than one business day after receiving such notice for an external review or one calendar day after receiving such notice for an expedited external review:

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718 [(f) (1) Whenever the commissioner is notified pursuant to subparagraph (A) of subdivision (4) of subsection (e) of this section that a request is eligible for externalreview or expedited external review,the commissioner shall, not later than one business day after receiving such notice for an external review or one calendar day after receiving such notice for an expedited external review:

For an external review, the commissioner shall include in such notice (i) a statement that the covered person or the covered person's authorized representative may submit, not later than five business days after the covered person or the covered person's authorized representative, as applicable,receivedsuchnotice,additionalinformationinwritingtothe assigned independent review organization that such organization shall consider when conducting the external review, and (ii) where and how suchadditionalinformationisto besubmitted.Ifadditionalinformation is submitted later thanfive business days after the coveredpersonor the coveredPublic person'sauthorizedrepresentative,Act asapplicable,receivedsuch notice, the independent review organization may, but shall not be required to, accept and consider such additional information.] [(2)] (f) (1) Not later than five business days for an external review or one calendar day for an expedited external review, after the health sHB6391 / File No.

71821-157 sHB639136 Fileof 62 Substitute House Bill No.

7186391 covered person'sauthorizedrepresentative, asapplicable,receivedsuch notice, the independent review organization may, but shall not be required to, accept and consider such additional information.] [(2)] (f) (1) Not later than five business days for an external review or one calendar day for an expedited external review, after the health carrier [receives notice of the name of the assigned independent review organization from the commissioner] accepts the external review or expedited external review, the health carrier or its designee utilization review company shall provide to the assigned independent review organization the documents and any information such health carrier or utilization review company considered in making the adverse determination or the final adverse determination.

(g) (1) The assigned independent review organization shall review all thePublic informationAct andNo. documents received pursuant to subsection (f) of thissection.Inreachingadecision,theindependentrevieworganization shall not be bound by any decisions or conclusions reached during the health carrier's utilization review process.

(2)21-157 Not37 later than one business day after receiving any information submitted by the covered person or the covered person's authorized representative pursuant to subparagraph (B) of subdivision62 [(1)]Substitute (4)House ofBill subsection [(f)] (e) of this section, the independent review organization sHB6391 / File No.

7186391 sHB6391the Fileinformation No.and documents received pursuant to subsection (f) of thissection.Inreachingadecision,theindependentrevieworganization shall not be bound by any decisions or conclusions reached during the health carrier's utilization review process.

718(2) Not later than one business day after receiving any information submitted by the covered person or the covered person's authorized representative pursuant to subparagraph (B) of subdivision [(1)] (4) of subsection [(f)] (e) of this section, the independent review organization shall forward such information to the health carrier.

(h) In addition to the documents and information received pursuant to subsection (f) of this section, the independent review organization shall consider, to the extent the documents or information are available andPublic theAct independentNo. review organization considers them appropriate, the following in reaching a decision:

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6391 and the independent review organization considers them appropriate, the following in reaching a decision:

(4) The terms of coverage under the covered person's health benefit sHB6391plan /to Fileensure No.that the independent review organization's decision is not contrary to the terms of coverage under such health benefit plan;

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718 plan to ensure that the independent review organization's decision is not contrary to the terms of coverage under such health benefit plan;

(A) For external reviews, forty-five calendar days after such organization receives the assignment from the commissioner to conduct suchPublic review;Act No.

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6391 such review;

(C) For expedited external reviews, except as specified under subparagraph (D) of this subdivision, as expeditiously as the covered person's medical condition requires, but not later than forty-eight hours after such organization receives the assignment from the commissioner to conduct such review or seventy-two hours after such organization receives such assignment if any portion of such forty-eight-hour period sHB6391falls /on Filea No.weekend;

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718 falls on a weekend;

and (E) For expedited external reviews involving a determination that the recommended or requested health care service or treatment is experimentalorexperimentalorinvestigational,asexpeditiouslyasthecoveredperson's investigational,asexpeditiouslyasthecoveredperson's medical condition requires, but not later than five calendar days after such organization receives the assignment from the commissioner to conduct such review.

(B) The date the independent review organization received the assignmentPublic fromAct theNo. commissioner to conduct the review;

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6391 assignment from the commissioner to conduct the review;

and (H) For a review involving a determination that the recommended or sHB6391requested /health Filecare No.service or treatment is experimental or investigational:

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718 requested health care service or treatment is experimental or investigational:

and (v)Public InformationAct onNo. whether the clinical peer's rationale for the opinion is based on the documents and information set forth in subsection (f) of this section.

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6391 (v) Information on whether the clinical peer's rationale for the opinion is based on the documents and information set forth in subsection (f) of this section.

sHB6391[(2)] /(B) FileSubsection No.(c) of this section;

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718 [(2)] (B) Subsection (c) of this section;

(2) Credit shall be allowed under subsection (b), (c) or (d) of this section only as respects cessions of those kinds or classes of business which the assuming insurer is licensed or otherwise permitted to write orPublic assumeAct initsstateofdomicile,or,inthecaseNo. ofaUnitedStatesbranch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance.

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6391 or assume initsstateofdomicile,or,inthe case ofaUnitedStatesbranch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance.

To be eligible for accreditation, an insurer shall (A) file with the commissioner evidence of its submission to this state's jurisdiction, (B) submit to this state's authority to examine its books and records, (C) be licensed to transact insurance or reinsurance in at least one state, or in the case of a United States branch of an alien assuming insurer is entered through and licensed to transact insurance or reinsurance in at least one state, (D) file annually with the commissioner a copy of its annual statement filed with the insurance department of its state of sHB6391domicile /and Filea No.copy of its most recent audited financial statement, and (E) demonstrate to the satisfaction of the commissioner that it has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from a domestic insurer.

718 sHB6391 File No.

718 domicile and a copy of its most recent audited financial statement, and (E) demonstrate to the satisfaction of the commissioner that it has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from a domestic insurer.

(2) Each accredited reinsurer doing business in this state shall, annually, on or before the first day of March, submit to the commissioner, by electronically filing with the National Association of Insurance Commissioners, a true and complete report, signed and swornPublic toAct byNo. 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.

21-157 43 of 62 Substitute House Bill No.

6391 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.

The requirement of subdivision (1) of sHB6391this /subsection Fileshall No.not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.

718 sHB6391 File No.

718 this subsection shall not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.

The assuming insurer shall (A) report annually to the commissioner informationPublic substantiallyAct theNo. same as that required to be reported in the National Association of Insurance Commissioners' Annual Statement form by licensed insurers, to enable the commissioner to determine the sufficiency of the trust fund, and (B) submit to, and pay the expenses of, examination of its books and records by the commissioner.

21-157 44 of 62 Substitute House Bill No.

6391 information substantially the same as that required to be reported in the National Association of Insurance Commissioners' Annual Statement form by licensed insurers, to enable the commissioner to determine the sufficiency of the trust fund, and (B) submit to, and pay the expenses of, examination of its books and records by the commissioner.

sHB6391(B) /(i) FileThe No.trust shall be subject to examination by the commissioner and shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust.

718(ii) sHB6391Not Filelater than March first, annually, the trustee of the trust shall (I) report to the commissioner, in writing, the balance and a list of the investments of the trust at the end of the preceding calendar year, and (II) certify to the commissioner the date of termination of the trust, if so Public Act No.

71821-157 (B)45 (i)of The62 trustSubstitute shallHouse beBill subjectNo. to examination by the commissioner and shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust.

(ii)6391 Not later than March first, annually, the trustee of the trust shall (I) report to the commissioner, in writing, the balance and a list of the investments of the trust at the end of the preceding calendar year, and (II) certify to the commissioner the date of termination of the trust, if so planned,orthatthetrustwillnotexpirepriortothefollowingDecember thirty-first.

The minimum required surplus shall not be sHB6391reduced /to Filean No.amount less than thirty per cent of the assuming insurer's liabilities attributable to reinsurance ceded by domestic and foreign ceding insurers covered by the trust.

718 sHB6391 File No.

718 reduced to an amount less than thirty per cent of the assuming insurer's liabilities attributable to reinsurance ceded by domestic and foreign ceding insurers covered by the trust.

(i)Public (I)Act ForNo. reinsurance ceded under a reinsurance agreement with an inception date prior to January 1, 1993, and not amended or renewed after said date, the trust shall consist of a trusteed account with funds in an amount not less than such underwriters' several insurance and reinsurance liabilities attributable to business written in the United States;

21-157 46 of 62 Substitute House Bill No.

6391 (i) (I) For reinsurance ceded under a reinsurance agreement with an inception date prior to January 1, 1993, and not amended or renewed after said date, the trust shall consist of a trusteed account with funds in an amount not less than such underwriters' several insurance and reinsurance liabilities attributable to business written in the United States;

and (iv) Not later than ninety days after its financial statements are due to be filed with the group's domiciliary insurance regulatory official, the group shall provide to the commissioner an annual certification by the group's domiciliary insurance regulatory official of the solvency of each sHB6391underwriter /who Fileis No.a member of the group or, if such certification is not provided by the group's domiciliary insurance regulatory official, financial statements prepared by independent public accountants of each such underwriter.

718Public sHB6391Act File No.

71821-157 underwriter47 who is a member of the62 groupSubstitute or,House ifBill suchNo. certification is not provided by the group's domiciliary insurance regulatory official, financial statements prepared by independent public accountants of each such underwriter.

6391 (C) In the case of a group of incorporated underwriters under common administration:

(f) (1) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is certified in accordance with section 38a-85a by the commissioner as a reinsurer in this state and such certified reinsurer maintains security in a form and amounts set forth in subdivision (3) of subsection (e) of this section or, for a multibeneficiary trust set forth in sHB6391subdivision /(2) Fileof No.subsection (e) of section 38a-85a, in accordance with the provisions of subdivision (2) of subsection (e) of section 38a-85a.

718Public sHB6391Act File No.

71821-157 subdivision48 (2) of subsection62 (e)Substitute ofHouse sectionBill 38a-85a,No. in accordance with the provisions of subdivision (2) of subsection (e) of section 38a-85a.

6391 (2) If the security is not sufficient with respect to obligations incurred by a certified reinsurer, the commissioner shall reduce the credit allowed by an amount proportionate to the deficiency and may impose further reductions in the credit allowed if the commissioner finds there is a material risk that such obligations will not be paid in full when due.

or (iii) A qualified jurisdiction, as determined by the commissioner pursuant to subsection (c) of section 38a-85a, which is not otherwise described insubparagraph(A)(i)or (A)(ii)ofthissubdivisionandwhich meets certain additional requirements, consistent with the terms and sHB6391Public /Act File No.

71821-157 sHB639149 Fileof 62 Substitute House Bill No.

7186391 conditions of in-force covered agreements, as specified by the commissioner in regulations adopted in accordance with the provisions of chapter 54.

(ii) The assuming insurer shall consent in writing to the jurisdiction of the courts of this state and to the appointment of the commissioner as agentPublic forAct serviceNo. of process.

21-157 50 of 62 Substitute House Bill No.

6391 agent for service of process.

Nothing in this provision shall limit, or in sHB6391anywayalter,thecapacityofpartiestoareinsuranceagreementtoagree /to Filealternative No.dispute resolution mechanisms, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws;

718 sHB6391 File No.

718 anywayalter,thecapacityofpartiestoareinsuranceagreementtoagree to alternative dispute resolution mechanisms, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws;

Such security shall be in a form consistent with the provisions of subsection (f) of this section and sections 38a-85a and 38a- 86 and as specified in regulations adopted by the commissioner in accordance with the provisions of chapter 54.

(E) The assuming insurer or its legal successor shall provide, if requestedPublic byAct theNo. commissioner, on behalf of itself and any legal predecessors, certain documentation to the commissioner, as specified by the commissioner in regulation.

(F)21-157 The51 assuming insurer shall maintain a practice of prompt62 paymentSubstitute ofHouse claimsBill under reinsurance agreements, pursuant to criteria sHB6391 / File No.

7186391 sHB6391requested Fileby No.the commissioner, on behalf of itself and any legal predecessors, certain documentation to the commissioner, as specified by the commissioner in regulation.

718(F) The assuming insurer shall maintain a practice of prompt payment of claims under reinsurance agreements, pursuant to criteria set forth in regulation.

(B) The commissioner may remove a jurisdiction from the list of reciprocal jurisdictions upon a determination that the jurisdiction no longer meets the requirements of a reciprocal jurisdiction, in accordance withPublic aAct processNo. set forth in regulations adopted by the commissioner pursuant to chapter 54, except that the commissioner shall not remove from the list a reciprocal jurisdiction as defined under subparagraphs (A)(i) and (A)(ii) of subdivision (1) of this subsection.

21-157 52 of 62 Substitute House Bill No.

6391 with a process set forth in regulations adopted by the commissioner pursuant to chapter 54, except that the commissioner shall not remove from the list a reciprocal jurisdiction as defined under subparagraphs (A)(i) and (A)(ii) of subdivision (1) of this subsection.

sHB6391(3) /The Filecommissioner No.shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this subsection and to which cessions shall be granted credit in accordance with this subsection.

718 sHB6391 File No.

718 (3) The commissioner shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this subsection and to which cessions shall be granted credit in accordance with this subsection.

(B)Public IfAct anNo. assuming insurer's eligibility is revoked, no credit for reinsurance may be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into prior to the date of revocation, except to the extent that the assuming insurer's obligations under the contract are secured in a form acceptable to the commissioner and consistent with the provisions of section 38a-86.

(5)21-157 If53 subject to a legal process of rehabilitation,62 liquidationSubstitute orHouse conservation,Bill as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the sHB6391 / File No.

7186391 sHB6391(B) FileIf No.an assuming insurer's eligibility is revoked, no credit for reinsurance may be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into prior to the date of revocation, except to the extent that the assuming insurer's obligations under the contract are secured in a form acceptable to the commissioner and consistent with the provisions of section 38a-86.

718(5) If subject to a legal process of rehabilitation, liquidation or conservation, as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding ceded liabilities.

(B)Public NothingAct inNo. this subsection shall authorize an assuming insurer to withdraw or reduce the security provided under any reinsurance agreement except as permitted by the terms of the agreement.

21-157 54 of 62 Substitute House Bill No.

6391 (B) Nothing in this subsection shall authorize an assuming insurer to withdraw or reduce the security provided under any reinsurance agreement except as permitted by the terms of the agreement.

[(g)] (h) Credit shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of subsection (b), (c), (d),(e), [or](f)or (g)of(g) of thissectionbut only withrespect to theinsurance of risks located in jurisdictions where such reinsurance is required by applicable law or regulation of that jurisdiction.

sHB6391[(h)] /(i) FileIf No.the assuming insurer is not licensed, accredited or certified to transact insurance or reinsurance in this state, the credit permitted by subsection (d) or (e) of this section shall not be allowed unless the assuming insurer agrees (1) that in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, shall (A) submit to the jurisdiction of any court of competent jurisdiction in any state of the United States, (B) comply with all requirements necessary to give such court jurisdiction, and (C) abide by the final decision of such court or any appellate court in the event of an appeal, and (2) to designate the commissioner or a designated attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding company.

718 sHB6391 File No.

718 [(h)] (i) If the assuming insurer is not licensed, accredited or certified to transact insurance or reinsurance in this state, the credit permitted by subsection (d) or (e) of this section shall not be allowed unless the assuming insurer agrees (1) that in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, shall (A) submit to the jurisdiction of any court of competent jurisdiction in any state of the United States, (B) comply with all requirements necessary to give such court jurisdiction, and (C) abide by the final decision of such court or any appellate court in the event of an appeal, and (2) to designate the commissioner or a designated attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding company.

[(i)] (j) If the assuming insurer does not meet the requirements of subsection (b), (c), [or] (d) or (g) of this section, the credit permitted by subsectionPublic (e)Act orNo. (f) of this section shall not be allowed unless the assuming insurer agrees to the following conditions in the trust instrument:

21-157 55 of 62 Substitute House Bill No.

6391 subsection (e) or (f) of this section shall not be allowed unless the assuming insurer agrees to the following conditions in the trust instrument:

(2) The trust assets shall be distributed by and claims filed with and sHB6391valued /by Filethe No.insurance regulatory official with principal regulatory oversight of the trust in accordance with the laws of the trust's state of domicile that are applicable to the liquidation of domestic insurance companies;

718 sHB6391 File No.

718 valued by the insurance regulatory official with principal regulatory oversight of the trust in accordance with the laws of the trust's state of domicile that are applicable to the liquidation of domestic insurance companies;

[(j)](k) (1) (A) The commissioner may suspendor revoke aareinsurer's reinsurer's accreditation or certification if, after notice and hearing, the commissionerPublic findsAct suchNo. reinsurer no longer meets therequirements for accreditation or certification.

21-157 56 of 62 Substitute House Bill No.

6391 commissioner finds such reinsurer no longer meets therequirements for accreditation or certification.

or sHB6391(C) /The Filecommissioner No.finds that immediate action is required to protect the public and a court of competent jurisdiction has not stayed the commissioner's action.

718 sHB6391 File No.

718 (C) The commissioner finds that immediate action is required to protect the public and a court of competent jurisdiction has not stayed the commissioner's action.

(B) If a reinsurer's accreditation or certification is revoked, no credit shallbeallowedunder thissectiononandafter theeffective date ofsuch revocation, except to the extent that such reinsurer's obligations under such contract are secured in accordance with the provisions of subsectionPublic (e)Act ofNo. section 38a-85a or section 38a-86.

21-157 57 of 62 Substitute House Bill No.

6391 subsection (e) of section 38a-85a or section 38a-86.

Such insurer shall notify the commissioner not later than thirty days after (A) reinsurance recoverables from any single assuming insurer or group of affiliated assuming insurers exceed fifty per cent of the domestic ceding insurer's last reported surplus to policyholders, or (B) the domestic cedinginsurerdeterminesthatreinsurancerecoverablesfromanysingle assuming insurer or group of affiliated assuming insurers are likely to sHB6391exceed /such Filelimit. No.

718 sHB6391 File No.

718 exceed such limit.

Any such notice shall demonstrate that the exposure is safely managed by the domesticPublic cedingAct insurer.No.

21-157 58 of 62 Substitute House Bill No.

6391 domestic ceding insurer.

sHB6391Sec. / File No.

718 sHB6391 File No.

718 Sec.

(b) (1) The commissioner may adopt regulations in accordance with the provisions of chapter 54 to establish, in addition to the requirements of sections 38a-85, as amended by this act, and 38a-86, requirements relating to or setting forth (A) the valuation of assets or reserve credits, (B) the circumstances under which credit will be reduced or eliminated, and (C) the amounts and forms of security supporting reinsurance agreementsPublic relatingAct toNo. (i) life insurance policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits, (ii) universal lifeinsurancepolicieswithprovisionsthatpermitapolicyholdertokeep such policy in force over a secondary guarantee period, (iii) variable annuities with guaranteed death or living benefits, (iv) long-term care insurance policies, or (v) any other life insurance, health insurance or annuity products for which the National Association of Insurance Commissioners adopts model regulatory credit for reinsurance requirements.

21-157 59 of 62 Substitute House Bill No.

6391 agreements relating to (i) life insurance policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits, (ii) universal lifeinsurancepolicieswithprovisionsthatpermitapolicyholdertokeep such policy in force over a secondary guarantee period, (iii) variable annuities with guaranteed death or living benefits, (iv) long-term care insurance policies, or (v) any other life insurance, health insurance or annuity products for which the National Association of Insurance Commissioners adopts model regulatory credit for reinsurance requirements.

and] [(B)] (4) [Shall] Any regulation adopted pursuant to this subsection shall not apply to cessions to an assuming insurer [(i)] that (A) meets the sHB6391conditions /set Fileforth in subsection (g) of section 38a-85, as amended by this act, (B) is certified as a reinsurer in accordance with the provisions of section 38a-85a, or [(ii) (I) that] (C) maintains at least two hundred fifty million dollars in capital and surplus, determined in accordance with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, including all amendments adopted by the National Association of Insurance Commissioners and excluding the impact of any permitted or prescribed practices, and [(II)] (i) is Public Act No.

71821-157 sHB639160 Fileof 62 Substitute House Bill No.

7186391 conditions set forth in subsection (g) of section 38a-85, as amended by this act, (B) is certified as a reinsurer in accordance with the provisions of section 38a-85a, or [(ii) (I) that] (C) maintains at least two hundred fifty million dollars in capital and surplus, determined in accordance with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, including all amendments adopted by the National Association of Insurance Commissioners and excluding the impact of any permitted or prescribed practices, and [(II)] (i) is licensedinatleasttwenty-sixstates,or(ii)islicensedinatleasttenstates and licensed or accredited in a total of at least thirty-five states.

sHB6391(2) /The Filefees No.received by the commissioner pursuant to subdivision (1) of this subsection shall be dedicated to conducting the examinations under said subdivision (1) and shall be deposited in the account established under subdivision (3) of this subsection.

718Public sHB6391Act File No.

71821-157 (2)61 The fees received by the commissioner pursuant to subdivision (1) of this62 subsectionSubstitute shallHouse beBill dedicatedNo. to conducting the examinations under said subdivision (1) and shall be deposited in the account established under subdivision (3) of this subsection.

6391 (3) There is established an account to be known as the "surety bail bond agent examination account", which shall be a separate account within the Insurance Fund established under section 38a-52a.

ThisApproved actJuly shall12, take2021 effectPublic asAct followsNo. and shall amend the following sections:

Section21-157 162 Julyof 1,62 2021 19a-7p(b) and (c) Sec.

2 from passage 38a-12 Sec.

3 from passage 38a-38(b) to (g) Sec.

4 July 1, 2021 38a-48(g) Sec.

5 October 1, 2021 38a-591g Sec.

6 October 1, 2021 38a-85 Sec.

7 October 1, 2021 38a-25(a)(9) Sec.

8 October 1, 2021 38a-92m(a)(2)(C) Sec.

9 October 1, 2021 38a-88(b) Sec.

10 October 1, 2021 38a-660(k) Sec.

11 October 1, 2021 38a-660m sHB6391 / File No.

718 sHB6391 File No.

718 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 22 $ FY 23 $ Insurance Dept.

GF - Potential Minimal Minimal Revenue Gain Insurance Dept.

IF - Net Savings 2,550 3,400 Note:

GF=General Fund;

IF=Insurance Fund Municipal Impact:

None Explanation The bill makes a variety of changes to the insurance statutes that result in the fiscal impacts described below.

Section 1 results in a potential minimal revenue gain to the General Fund from additional penalties and fines related to the Public Health Fee.

Under the bill, the Insurance Commissioner may assess a civil fine of up to $15,000 on insurers and HMO's that intentionally misrepresent thenumber ofcoveredlivesunder their policies.The billalso establishes a late filing feeof$100 per day.AstheInsurance Department (DOI)does not have issues withthe accurate andtimely submissionby insurers and HMO's for the Public Health Fee, there is minimal, if any, new revenue anticipated from these provisions.

Sections 2 and 3 make technical changes to the insurance data security law and repeal a reporting requirement for the Insurance Commissioner, both of which have no fiscal impact.

For the annual report being repealed, neither the information it is intended to report about nor the report itself has been submitted in recent years.

Section 4 allows domestic insurance companies to pay their entire sHB6391 / File No.

718 59 sHB6391 File No.

718 share of the Insurance Fund General Assessment at the first payment date rather than quarterly, which may bring forward some Insurance Fund revenue but does not change the total revenue amount to be received by the fund.

Section 5 results in a net savings for DOI of approximately $3,400 per year due to the elimination of the $25 external review application fee because the agency currently spends more on fee administration than it gains in revenue.

For example, DOI collected $5,759 in such fees in 2020 but had to return fees worth $3,800 because the fee is waived in certain cases.

The resulting fee revenue in 2020 of $1,959 was more than offset by the $5,340 incurred by DOI in administrative costs for the handling of initial and returned checks.

The FY 22 fiscal impact reflects nine months of net savings.

Sections 6 to 9 eliminate reinsurance collateral requirements for “reciprocal” reinsurers in certain jurisdictions to bring Connecticut into compliance with agreements signed at the national level with the European Union and the United Kingdom.

These provisions are not anticipated to have a fiscal impact, as DOI has the necessary staff and expertise to implement the changes and update regulations in accordance with the bill.

Sections 10 and 11 make changes related to the regulation of surety bailbondagents,includingpreventinglicenseesfromdelayingpayment of the annual licensing fee.

These changes have no fiscal impact as they do not change the annual licensing fee collected but rather prevent a delay in such payments (currently licensees are able to delay renewal payment by several months) and the Insurance Commissioner already sends expiration date reminders.

Additionally, there is no anticipated fiscal impact from establishing continuing education requirements for surety bail bond agents, as permitted under the bill, because any such program would likely be structured so that licensees incur any costs.

According to DOI, they incur a cost of $10 per check for initial fees and $20 per check for refunds.

sHB6391 / File No.

718 60 sHB6391 File No.

718 House "A" adds the credit for reinsurance and surety bail bond agent provisions and does not change the fiscal impact of the bill.

The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to the amount of applications for external review and any penalties related to the Public Health Fee assessed.

Sources:

Connecticut Insurance Department sHB6391 / File No.

718 61 sHB6391 File No.

718 OLR Bill Analysis sHB 6391 (as amended by House "A")* AN ACT CONCERNING THE INSURANCE DEPARTMENT'S RECOMMENDATIONS REGARDING THE GENERAL STATUTES.

SUMMARY This bill:

1.

changes the adverse determination process, including (a) eliminating a filing fee for external and expedited external adverse determination reviews and (b) requiring health carriers, and not the commissioner, to notify covered individuals about these reviews (§ 5);

2.

makesseveralchangestotheInsuranceDataSecurityLaw,which generally requires insurers and other entities regulated by the insurance department to inform the department and insureds of cybersecurity breaches, including by (a) clarifying that the law’s scope is limited to breaches of nonpublic information;

(b) delaying implementation of several provisions by one year;

(c) imposing deadlines by which certain exempt entities must submit certification to the commissioner;

and (d) changing which entities must notify the commissioner and insureds, and the circumstances under which they must do so (§ 3);

3.

requires health care centers (i.e., HMOs) and insurers to provide documentation to the insurance commissioner, upon his request, substantiating the number of lives they cover or insure as annually reported and allows the commissioner to fine HMOs and insurers (a) who fail to comply by the statutory deadline or (b) if he finds data discrepancies not attributable to good faith mistakes (§ 1);

sHB6391 / File No.

718 62 sHB6391 File No.

718 4.

aligns Connecticut’s insurance laws with the National Association of Insurance Commissioners’ (NAIC) 2019 amendments to its “Credit for Reinsurance Model Law,” to (a) avoid federal preemption and (b) conform to agreements between the United States and the European Union and United Kingdom, which were entered into pursuant to federal law (§§ 6- -9);

5.

changestheinsurance statutesrelatingtosuretybailbondagents, including by (a) establishing an automatic license expiration process for when a surety bail bond agent fails to pay the required annual $450 examination fee;

(b) changing when money in the surety bail bond examination account is transferred to the General Fund at the end of the calendar year, instead of the end of the fiscal year;

and (c) authorizing the insurance commissioner to adopt regulations establishing continuing education requirements for surety bail bond agents (§§ 10 & 11);

6.

repeals a requirement for the insurance commissioner to annually submit a report to the Insurance and Real Estate Committee containing information he has received related to (a) fires caused by arson, (b) workers’ compensation fraud unit quarterly reports, (c) motor vehicle insurance fraud, and (d) health insurance fraud (§ 2);

and 7.

allows insurers, in their discretion, to pay the insurance fund assessment at once when the first installment is due on June 30, instead of quarterly (§ 4).

(By law, the insurance department assesses domestic insurers to fund the department, Office of Health Strategy, Office of Healthcare Advocate, and the Department of Rehabilitation Services’ fall prevention program.) The bill also makes numerous minor, technical, and conforming changes.

*House Amendment “A” adds the credit for reinsurance (§§ 6-9) and surety bail bond agent (§§ 10 & 11) provisions.

sHB6391 / File No.

718 sHB6391 File No.

718 EFFECTIVE DATE:

July 1, 2021, except the provisions changing the data security law and repealing the insurance commissioner reporting requirement are effective upon passage, and the adverse determination, credit for reinsurance, and surety bail bond agent provisions are effective October 1, 2021.

§ 5 — EXTERNAL REVIEW PROCESS Filing Fee The bill eliminates the $25 filing fee that must accompany a request for an external or expedited external adverse determination review.

Under current law, the fee is (1) waived if the commissioner finds the covered person is indigent or unable to pay, and (2) returned if the review is overturned.

Process and Deadlines The bill requires the commissioner to assign an independent review organization (IRO) within one business day after receiving a complete request for expedited external adverse determination review, instead of one calendar day after it.

Existing law requires him to meet this same deadline for external adverse determination reviews that are not expedited.

The bill also requires health carriers, instead of the commissioner, to notify covered individuals or their representatives of (1) an accepted external or expedited external adverse determination request and (2) where and how to send additional information.

The bill also requires health carriers to notify the commissioner.

By law, a covered person or their representative must be notified that they may submit additional information to theIRO within five business days.

An IRO must consider any information it receives in this timeframe and may consider information received after it.

(Existing law requires carriers to notify the commissioner and the covered individual of whether the review is accepted within one business day.) Lastly, thebillrequires healthcarriersto providethenecessary health informationtotheIROwithinfivebusinessdays(foranexternalreview) sHB6391 / File No.

718 64 sHB6391 File No.

718 or one calendar day (for an expedited external review), beginning when they accept the review instead of when they receive the IRO’s name from the commissioner.

§ 3 — DATA SECURITY LAW The bill makes several changes to the state Insurance Data Security Law (CGS § 38a-38).

Applicability The bill clarifies that the insurance data security law only applies to cyber security events resulting in unauthorized access to nonpublic, rather than any, information.

Under current law, “nonpublic information” is information that is not publicly available and that:

1.

concerns a consumer’s name, number, or other identifiable information that can identify a consumer when used in combination with an access or security code to a consumer’s financial account;

account, credit, or debit card number;

biometric records;

driver’s license or nondriver identification number;

or Social Security number;

2.

would materially impact a licensee’s business, operation, or security if disclosed or used without authorization;

or 3.

iscreatedorderivedfromaconsumerorhealthcareproviderand concerns behavioral, mental, or physical health, or health care services or payments.

Under the bill, nonpublic information is electronic data and information that meets the above criteria.

As under existing law, nonpublic information excludes a consumer’s age or gender.

The bill also explicitly applies the law’s requirements to fraternal benefit societies, interlocal risk management agencies, or employers’ mutualassociations.

(These organizationsare exempt fromcertainother insurance laws.) But it exempts from the law any Superior Court commissioner acting as a title agent.

sHB6391 / File No.

718 65 sHB6391 File No.

718 New York Requirement Compliance.

Under current law, licensees that comply with another jurisdiction approved by the commissioner and annually submit to the commissioner a written statement certifying compliance are deemed to have satisfied data security requirements.

The bill limits this so that only licensees that comply with New York’s Cybersecurity Requirements for Financial Services Companies regulations (23 NYCRR 500) are deemed to have satisfied the law’s requirements.

The bill also moves the deadline for the annual written statement from February 15 to April 15.

Annual Certification The bill requires domiciled health care centers and fraternal benefit societies, including those that are part of an insurance holding company system, to comply with the law’s annual certification, record retention, and remediation requirements.

Certification and Record Retention.

By law, insurers and others covered by the bill and law must submit to the commissioner a written statement certifying that the insurer has complied with the law’s risk assessment and information security program provisions.

Each applicable entity must maintain all supporting documents for examination, including data, records, and schedules, for at least five years after submitting its certification.

For all covered entities, the bill requires this certification by April 15, instead of February 15.

The bill also allows a domestic insurer, HMO, or fraternal benefit society that is a member of an insurance holding company system to submit one certification statement on behalf of all the holding company members.

Remediation.

Existing law requires insurers that identify areas, processes, or systems that require material improvements, redesigns, or updates to (1) document and identify the remediation efforts planned and underway and (2) make the documents available to the commissioner on request.

The bill extends this requirement to HMOs and fraternal benefit societies and specifies that companies may comply sHB6391 / File No.

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718 directly or through an affiliate.

Delayed Implementation The bill delays by one year, until October 1, 2021, the deadline for insurers and other covered entities to implement an information security program.

By law, information security programs must, among other things, (1) contain administrative, technical, and physical safeguards to protect nonpublic information and the company’s information systems and (2) define, and periodically reevaluate, a schedule for retaining nonpublic information and a mechanism to destroy this information when it is no longer needed.

It also delays, by one year, until October 1, 2022, the date by which insurers and other covered entities must require third-party service providers to implement appropriate measures to protect data and nonpublic information.

It also delays, by one year, the period during which certain small licensees are exempt from the law’s requirements.

Current law exempts (1) from October 1, 2020, to September 30, 2021, licensees with fewer than 20 employees and (2) after October 1, 2021, licensees with fewer than 10 employees.

Under the bill, the exempt periods are October 1, 2021, to September 30, 2022, and after October 1, 2022, respectively.

HIPAA Certification Licenseessubjectto,andthatcertifytothecommissionertheycomply with, the federal Health Insurance Portability and Accountability Act are deemed to have satisfied the state data security requirements.

The bill requires this certification to be submitted annually by April 15.

Cyber Security Event Notification Current law requires licensees to notify the commissioner within threebusinessdaysafteracybersecurityeventandreportcertainrelated information.

The bill specifies that a licensee must notify the commissioner within three business days after first determining that a cybersecurity event occurred and correspondingly adds the date on sHB6391 / File No.

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It also requires the licensee to report the total number of consumers residing in Connecticut that, to the licensee’s knowledge at the time of the report, are impacted by the cybersecurity event.

Current law requires a licensee to report the total number of impacted Connecticut consumers.

Under current law, certain licensed insurance producers and domestic insurers must notify the insurance commissioner of a cyber security event if they:

1.

reasonably believe that the nonpublic information involved in the cybersecurity event affects at least 250 Connecticut residents and 2.

(a) must send a cybersecurity notice to any governing, regulatory, or supervisory body under federal or state law or (b) it is reasonably likely the cybersecurity event will materially harm a Connecticut consumer or the licensee’s business.

The bill establishes different reporting requirements for domestic insurers and Connecticut insurance producers.

These entities must report a cybersecurity event if it is reasonably likely that the event will materially harm a Connecticut consumer or the licensee’s business.

The bill extends existing notification requirements to any licensee that:

1.

reasonably believes that the nonpublic information involved in the cybersecurity event affects at least 250 Connecticut residents and 2.

(a) must send a cybersecurity notice to any governing, regulatory, or supervisory body under federal or state law or (b) it is reasonably likely the cybersecurity event will materially harm any Connecticut consumer or the licensee’s business.

sHB6391 / File No.

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Under the bill, it begins with the first day after a licensee has actual knowledge of a cybersecurity event, instead of when they become aware of it.

Confidential Information Bylaw,materialandotherinformationprovidedtothecommissioner is confidential and privileged, and exempt from disclosure under the state’s Freedom of Information Act and any subpoena or discovery in a private cause of action.

However, the commissioner may share this information with certain other parties, including the National Association of Insurance Commissioners (NAIC).

The bill extends this confidentiality to all materials and information provided to, or in custody or control of, NAIC or a third-party consultant.

Commissioner Authority The bill allows the commissioner to, after a hearing, take any action necessary or appropriate to enforce thelaw’s provisions.By law,he may suspendorrevokealicenseandimposeacivilfine,amongotheractions.

§ 1 — REPORTING REQUIREMENTS AND PENALTIES By law, all domestic HMOs and insurers must report annually to the commissioner on the number of Connecticut lives they insure or enroll.

This data is used to calculate the public health fee they must pay.

The bill allows the commissioner to require each HMO or insurer, or any other appropriate person, to submit any records the HMO, insurer, or person possesses that were used to prepare the annual report.

The bill allows the commissioner to assess an insurer or HMO a civil fine of up to $15,000 if he determines that there is a discrepancy, other than in good faith, between the actual number of covered lives and the reported number.

By law, anyone aggrieved by a commissioner’s decision may request a hearing and, if necessary, appeal the decision to Superior Court under the Uniform Administrative Procedure Act (CGS § 38a-19).

sHB6391 / File No.

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These provisions are applicable to HMOs and insurers that provide policies covering (1) basic hospital expenses;

(2) basic medical-surgical expenses;

(3)major medicalexpenses;or (4)hospital ormedicalservices, including those provided under an HMO plan.

§§ 6-9 — CREDIT FOR REINSURANCE The bill aligns Connecticut’s insurance laws with the National Association of Insurance Commissioners’ (NAIC) 2019 amendments to its “Credit for Reinsurance Model Law.” It does so to (1) avoid federal preemption and (2) conform to agreements between the United States and the European Union and United Kingdom (together, the “covered agreements”), which were entered into pursuant to federal law.

These agreements eliminate collateral requirementsas a condition for entering into a reinsurance agreement with a Connecticut-domiciled insurer or allowing the insurer to recognize credit for reinsurance.

Under existing state law,aninsurer may count reinsurance asa credit for an asset or a reduction for a liability on certain financial statements, including annual reports to the insurance commissioner, if the reinsurer meets specified statutory requirements pertaining to minimum surplus, licensing, filing, and examinations.

Reinsurance is a transaction in which an insurance company transfers a portion of risk (the ceding insurer) to another insurance company (the assuming insurer or reinsurer) so that a large loss does not fall on any one company.

The bill specifies that, in general, credit for reinsurance is allowed only with respect to cessions for the kinds or classes of business which the assuming insurer is licensed or permitted to write or assume in its domiciliary state or, if it is an insurer in another country (i.e., alien insurer), the state in which it is licensed to transact insurance or reinsurance.

sHB6391 / File No.

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718 The bill also allows credit for reinsurance when the reinsurance is ceded to an assuming insurer that meets newly specified criteria as described below.

The assuming insurer must comply with any related regulations the commissioner adopts.

The bill requires the commissioner to publish a list of assuming insurers that meet all conditions set forth in statute and to which cessions will be granted credit for reinsurance.

It authorizes him to revoke or suspend an assuming insurer’s eligibility in accordance with regulations if the insurer no longer meets the statutory requirements.

After a suspension or revocation, no credit for reinsurance is generally allowed, except to the extent that they have been secured in accordance with state law.

Requirements for Assuming Insurers The bill allows credit for reinsurance when the reinsurance is ceded to anassuming insurer that meetsspecifiedcriteria.Credit may betaken for reinsurance agreements entered into, amended, or renewed on or after October 1, 2021, and only for losses incurred on or after the later of when the assuming insurer meets all requirements and the agreement’s effective date.

The bill requires an assuming insurer to have its head office or be domiciled in, as applicable, and licensed in, a reciprocal jurisdiction.

A “reciprocal jurisdiction” is (1) a non-U.S.

jurisdiction subject to a covered agreement;

(2) an NAIC-accredited U.S.

jurisdiction;

or (3) a qualified jurisdiction that meets requirements consistent with the covered agreements, as specified in regulations the commissioner adopts.

The bill requires the commissioner to publish a list of reciprocal jurisdictions, for which he must consider NAIC’s list of reciprocal jurisdictions.

It authorizes him to remove a jurisdiction from his list if it no longer meets the requirements of a reciprocal jurisdiction.

Under the bill, an assuming insurer, among other things, must maintain minimum capital and surplus, or its equivalent, and a minimum solvency or capital ratio, all of which the commissioner is to sHB6391 / File No.

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If the assuming insurer is an association, it also must maintain a central fund with a balance in amounts set forth in regulations.

The bill requires the assuming insurer’s supervisory authority to confirm annually to the commissioner that the insurer complies with these requirements.

Under the bill, an assuming insurer must also give the commissioner certain assurances in a manner the commissioner specifies in regulations, including that it will:

1.

give prompt notice if it falls below the minimum requirements or if any regulatory action is taken against it for serious noncompliance with applicable law;

2.

consent to the jurisdiction of the state’s courts and appoint the commissioner as agent for service of process, but parties to a reinsurance agreement may agree to alternative dispute resolution mechanisms, so long as they are enforceable under applicable laws;