2009 PIACT legislative wrap-up
By Campbell H. Wallace, Esq.
Connecticut's legislative session adjourned on June 4, 2009, closing a session which saw the consideration of a number of bills of interest to the insurance industry, but was marked by the failure to adopt a new budget. The failure to adopt a budget was seen as evidence that, despite proclamations of substantial change coming to Hartford, much of the Legislature's dysfunction remained; underscoring many people's disappointment at the lack of a budget deal, the burden of achieving which will be shouldered in special session.
Among the bills that were considered (as reflected in the PIACT legislative hotlist) were some watched with concern by Professional Insurance Agents of Connecticut Inc.
Natural catastrophe fund
Interstate Insurance Product Regulation Compact
A number of other bills which would have instituted wide-ranging changes to Connecticut's insurance landscape were considered, but did not pass.
Auto. Among those was HB 6444. Originally, this bill sought to make two significant changes to Connecticut's auto insurance landscape. The bill sought to impose a restriction on the use of credit information in insurance underwriting. The bill's other main provision sought to change the current law's 75 percent/ 25 percent territorial/statewide rating weighting, (a provision which means that the base rate for an auto insurance policy must give 75 percent weight to the territory's loss cost data and 25 percent weight to the statewide average loss cost data) to 50 percent/50 percent weighting. After opposition by numerous trade groups, the credit-scoring provision was modified to permit an insurer to use a “financial history measurement program” only when underwriting or developing rates for new personal risk insurance policies. It would prohibit insurers from using credit history when renewing a policy, unless the policyholder asks or the program's results would have the effect of reducing the insured's premium. Despite these changes, and passage in the House, the bill did not pass in the Senate by the end of session.
Workers' compensation. Other bills watched by the industry, and which did not see approval by the Legislature, included SB 1024 which, as originally drafted, would have established a state workers' compensation program, as well as SB 763 a troubling bill which would have allowed a private cause of action for unfair claim settlement practices without the necessity of showing a general business practice on the part of an insurer.
Finally, although not necessarily directly insurance related, HB 6187 the paid-sick leave bill, was watched by business owners across the state. The bill would have required most employers with 50 or more employees in the state to provide their employees with paid-sick leave once the employee has worked a certain number of hours. Despite a last-minute, late-night final push for the bill's passage in the Senate, the needed votes did not materialize and the measure did not go forward.
A number of other insurance-related bills were passed, and have either already been signed into law, or are expected to be, shortly. The following is a brief recap of other bills of interest, and their status at the end of the legislative session.
Auto. HB 6280 was passed by both houses and is currently listed as being in concurrence, and awaiting Gov. Rell's signature to become a public act. This bill grants a two-year extension to Connecticut's flex-rating law. In short, this continues the law which allows insurers to “file and use” rate adjustments, within a cumulative plus or minus 6 percent annual statewide band. While many in the industry applauded the reauthorization of this competition-stimulating bill, some commentators bemoaned the Legislature's decision to not remove the sunset provision.
SB 894 also was passed and is listed as being in concurrence. This bill requires an automobile liability insurer to disclose the limits applicable under a policy it issued within 30 days after receiving a written request for disclosure. The request must be made by, or on behalf of, a person alleging bodily injury or death resulting from a motor vehicle collision involving a person the insurer's private-passenger automobile policy covers. The disclosure must be in writing and indicate all coverage the insurer provides to the insured, including any applicable umbrella or excess liability insurance.
The bill requires that a letter from an attorney licensed to practice in Connecticut or an affidavit from the person alleging to have suffered injury as a result of the accident accompany a written request for the policy limits and include certain information. The written request for disclosure must be sent by certified mail directed to the insurance adjuster or to the insurance company at its last-known principal place of business.
SB 895 was signed into law as Public Act 09-72 in late May to require an auto insurer issuing a new automobile liability insurance policy to disclose: the availability of, premium for and description of, underinsured motorist conversion coverage. The description must be made in a conspicuous manner with the informed consent form.
The bill also requires an insurer that chooses to subrogate under the terms of an automobile liability insurance policy to include a demand for any collision deductible paid by the insured, unless the insured requests it not be included. The insurer must share subrogation recoveries with the insured on a proportionate basis.
Leases. HB 6448 was signed into law as Public Act 09-134. The bill requires a leaseholder to conspicuously disclose:
Standard Fire Insurance Policy. Also passing was HB 6447, signed into law as Public Act 09-164. The bill's stated purpose is to reduce the waiting period when a fire loss claim is payable after submittal of proof of such loss, to extend the period during which a suit or action may be commenced for recovery of a claim, and to specify that a master policy purchased by a condominium association is not excluded from coverage of insured perils caused by terrorism.
This bill makes numerous changes to the standard fire insurance policy that insurers, by law, must write in the state. Specifically, it:
The bill requires a condominium master insurance policy to cover a loss caused, directly or indirectly, by terrorism, as the insurance commissioner defines it, until the federal terrorism risk program expires. Under current law, commercial risk policies, including those issued to a condo association, may exclude coverage for such a loss:
(The commissioner has adopted the definition of terrorism used in the 2007 federal law reauthorizing the federal program.)
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