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PIACT 2013-14 legislative wrap-up
Resource kit 06006
By Campbell H. Wallace, Esq.
The Connecticut Legislature’s 2013-14 regular session adjourned on May 7, 2014. Legislators considered a variety of auto, homeowners and property/casualty issues. PIACT was active again this session, tracking a wide range of insurance-related bills, and advocating for the interests of producers across the state.
Certificates of insurance—top legislative priority a win for PIACT
On June 3, 2014, Gov. Dannel P. Malloy signed Public Act 14-74 (formerly H.B.5248) into law, clearing the way for it to take effect on Oct. 1, 2014. This bill, PIACT’s highest 2014 legislative priority, codifies aspects of existing Connecticut Insurance Department guidance and, more importantly, further expands these protections to restrict other dangerous practices that erode the reliability of coverage representations and puts producers in the crosshairs of coverage disputes.
As described in the bill’s summary, it would make it illegal to do the following:
- prepare, deliver or issue a certificate of insurance that includes false or misleading information;
- prepare an amendment to a certificate or deliver or issue a new certificate unless it accurately reflects the underlying insurance policy;
- represent that a certificate confers new or additional rights to anyone beyond those covered by the underlying policy;
- represent that amending a certificate will amend or extend the coverage provided by the underlying policy;
- require or request another person to perform any of the acts specified above; or
- prepare, issue, demand or require an opinion letter or other correspondence, in addition to or in lieu of a certificate, that is inconsistent with the bill, but the insurer or producer may prepare or issue an addendum to the certificate to explain the coverage provided by the underlying policy.
The bill also prohibits a certificate from including a warranty that the underlying policy complies with the insurance or indemnification requirements of a contract. Referring in a certificate to a contract number or description will not be construed to be such a warranty.
Remarking on the governor’s signing of this PIACT top-priority bill, PIACT President Peter Frascarelli, CPIA, said, “It allows diligent and responsible professional, independent insurance agents to refuse to issue inaccurate certificates of insurance without being put in an awkward position in which they may be perceived as not helping their clients.”
In response to its members’ concerns, PIACT took the lead on this initiative and was instrumental in drafting this legislation, securing its introduction and, with the dedicated grassroots efforts of its association membership, seeing it passed and signed into law. At the beginning of this year’s session, in support of H.B.5248, PIACT submitted testimony to the Connecticut Joint Insurance Committee in March 2013. In its testimony, PIACT reported that its members have received numerous requests from private parties and government instrumentalities to issue certificates or similar documents that offer commentary about the policy, or certify how the policy will react in certain conditions. “The passage of this law represents the culmination of years of work by PIACT to protect agents and brokers from misleading and impossible certificate requests,” said Frascarelli.
Auto insurance bills
Uninsured motorist coverage
H.B.5061, provides uninsured motorist coverage to a named insured or a household member of the named insured for damages arising from being struck as a pedestrian during the theft of an insured vehicle. It was signed into law by the governor on June 4, 2014, as Public Act 14-71.
Electronic I.D. cards
Another auto insurance-related bill, H.B.5252, which would permit an automobile insurance identification card to be provided electronically, was moved out of committee, and was placed on a House calendar, with no further action.
Reduction of uninsured/underinsured motor payments
S.B.280 was adopted as Public Act 14-20 on May 7, 2014. As described in the bill’s summary, it “prohibits insurers from reducing uninsured and underinsured motor-vehicle insurance coverage payments by amounts paid by, or on behalf of, a tortfeasor (i.e., person at fault) for 1) bodily injury to anyone other than people insured by the policy under which the claim is made, or 2) property damage. Thus, the insurer can reduce the coverage payment by amounts a tortfeasor paid for bodily injury to a person insured by the policy.
Insurance-industry competitiveness
Insurance company organization/restructuring
On June 6, 2014, Gov. Malloy signed H.B.5053 into law as Public Act 14-123. The bill entitled, “An Act Strengthening Connecticut’s Insurance Industry Competitiveness,” makes changes to the laws governing the operation and reorganizations of insurance companies. The bill addresses the process of a mutual company reorganizing itself into a stock company owned by a mutual-holding company. The bill details this process and sets procedures for all the necessary steps in this restructuring, including the creation and approval of the plan, stock offerings and transfers, etc. The bill further touches upon the process by which an alien insurer may establish a branch in Connecticut. The CGA provides a full analysis online at http://1.usa.gov/1iybtf V. H.B.5053.
National model standards
S.B.185, S.B.188 and S.B.194 were model bills, the passage of which was pursued by the Connecticut Insurance Department to conform the state’s laws to model national standards.
Life insurance/NAIC Valuation ManualS.B.185, as analyzed by the CGA at http://1.usa.gov/1j3zh1i, addresses the state’s life-insurance market. It was signed into law as Public Act 14-195 on June 12, 2014, and took effect upon passage. It changes actuarial practices by having the state adopt the National Association of Insurance Commissioners’ changes to the Standard Valuation and Nonforfeiture Laws and the use of the NAIC Valuation Manual.
Captive insurers
S.B.188 was signed into law as Public Act 14-6, the provisions of which take effect on Oct. 1, 2014. The law, analyzed by the CGA at http://1.usa.gov/1nvMak1, makes changes to the state’s existing laws regarding captive insurers by facilitating the process of captive insurance companies forming in, or transferring domicile to, Connecticut. The new law explicitly bars a captive insurer from writing personal-risk insurance for private-passenger motor vehicle or homeowners insurance.
Domestic insurers
S.B.194 was signed into law on June 6, 2014, as Public Act 14-107, and takes effect Jan. 1, 2015. The bill, analyzed by the CGA at http://1.usa.gov/1fU7RKC, enacts NAIC’s requirements for domestic insurers to establish and maintain a risk-management framework and to file Own Risk and Solvency Assessment reports.
International insurance groups
S.B.196, which would authorize the insurance commissioner’s oversight of internationally active insurance groups and establish requirements for the determination or acknowledgment of group-wide supervisors. The bill was placed on House calendar with no further action.
Windstorm and catastrophe bills
Coastal homeowners/flood insurance
H.B.5502, having been a focus of attention since its introduction in March, this bill was analyzed in the April Reporter and summarized by the Connecticut General Assembly. This legislation amends a number of provisions in the existing law. It was signed into law by Gov. Dannel P. Malloy on June 11, 2014, as Public Act 14-175. The law’s many provisions take effect on various dates. The section that prohibits insurers from refusing to issue or renew a homeowners insurance policy solely because the insured has not installed permanent storm shutters takes effect on Oct. 1, 2014, and removes the requirement that the storm shutters be permanent. Another important provision of this legislation that took effect upon signature exempts flood insurance policies from the diligent effort/signed statement. A full listing of the effective dates of the provisions of this law are listed here.
Homeowners weather losses
S.B.278, would have prohibited an insurer from canceling, nonrenewing, declining or raising premiums on a homeowners policy solely because of a loss caused by adverse weather, and not any negligence of the insured. PIACT met with the chairs of the General Assembly Joint Insurance Committee, Rep. Robert W. Megna, D-97, and Sen. Joseph J. Crisco Jr., D-17, before the Diamond Club Reception to analyze and discuss the bill’s impact on the market. The bill was placed on the Senate calendar with no further action.
Workplace/employment bills
Minimum wage
S.B.32, which raises Connecticut’s minimum wage to $10.10 by Jan. 1, 2017, was signed by the governor on March 27, 2014. The legislation, known as Public Act 14-1, raises the minimum wage in steps, starting with a boost to $9.15 by Jan. 1, 2015, and $9.65 by Jan. 1, 2016. The law makes Connecticut the first state in the nation to adopt the $10.10 minimum wage, a number supported by President Obama, who has signaled his interest in Congress making a $10.10 minimum wage the national standard. Opponents and supporters of the law offered criticisms echoing those they made the last time the minimum wage was raised in the state in 2013. This new law takes effect July 1, 2014.
Eligible family members for medical leave
H.B.5283 would amend the state’s existing family and medical leave law to expand the class of eligible family members for which care can be taken to include the employee’s sibling, grandparent and grandchild. It was referred to the House, where there was no further action.
Paid-sick leave
Another important legislative achievement this year was the revision of the state’s Paid Sick Leave Law, H.B. 5269, which was signed into law as Public Act 14-128. This legislation will “1) clarify that all manufacturers are exempt from the paid-sick leave law, 2) allow employers to administer paid-sick leave on the same annual basis as other benefits, and 3) allow employers to determine their number of employees in the same manner as for the purposes of the state’s Family and Medical Leave Act.” The highlights of the legislation, as described in the Office of Labor Relations summary, are that employers with greater than 50 employees must grant paid sick leave according to a start date corresponding to a calendar of the business’s choosing, rather than on Jan. 1, as previously required. Additionally, the bill changes the manner in which the 50-employee threshold is determined; it also regulates certain measures a business might take to avoid falling into the law’s requirements, such as firing or shifting employees between locations.
Unemployed discrimination
Other employment-related bills considered but eventually not adopted include H.B.5054 and H.B.5274, which would have assisted job seekers by prohibiting various types of discrimination against currently unemployed job seekers.
While H.B.5054 was part of a larger package of reforms to be implemented along with Gov. Malloy’s budget recommendations, and H.B.5274 stood alone, both would prevent employers seeking workers from using a person’s status as unemployed as a disqualifying factor. The two bills varied on the scopes of their various prohibitions, but both would have precluded a prospective employer from advertising that only employed people were eligible for openings. Both of these bills made it out of their originating committees, however, died awaiting further action.
Low-income retirement savings program
Another bill PIACT tracked that did not become law was S.B.249, which would create a state-administered retirement savings program for certain low-income workers. This bill, as stated in the OLR summary, would create “the Connecticut Retirement Security Trust Fund to provide a public retirement plan for certain private-sector employees, who are automatically enrolled in the plan unless they opt out.” Groups scrutinizing the bill observed that the plan would put the state in competition with the many private sector entities already providing similar services.
Other insurance-related bills
Electronic posting of policies
S.B.391 sought to allow insurers to post electronic copies of their policies online. PIACT offered testimony on this legislation, which can be accessed here. The bill was placed on the Senate calendar, but had no further action.
Producer on board of health exchange
Another notable bill seeing progress was S.B.15, which would add an insurance producer to the board of directors of the Connecticut health insurance exchange. The bill, following a public hearing and committee scrutiny now is listed on the Senate calendar. PIACT supports this common-sense measure.
Long-term care applications
S.B.9, was signed by the governor on May 8, 2014, as Public Act 14-8, which requires the provision of substantial disclosures at the time of application for a long-term care policy. 7/14
