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PIACT legislative roundup—2008 session
Resource kit 06104
By Matthew F. Guilbault, Esq.
The Professional Insurance Agents of Connecticut represent more than 500 independent insurance agents who employ more than 3,500 individuals throughout the state, working together to service the personal and business insurance needs of consumers. Independent agents are sensitive to consumers' needs because agents' businesses and livelihoods are premised on dealing with the public on a daily basis and building professional relationships. PIACT, as an association, is interested in not only insurance issues but also the current economic trends in the state of Connecticut and their subsequent effect on insurance consumers and their business operations.
This legislative position paper is meant to outline how PIACT is striving to protect a healthy, competitive insurance climate in Connecticut. It is imperative for independent agents to work closely with the members of the General Assembly and representatives from other industries in order to shape and develop creative legislative proposals that concern not only insurance issues but also other matters that affect the way Connecticut's citizens live and work. PIACT is sincerely committed to these goals, and we look forward to seeing them to fruition by working with our members and the legislators who represent them throughout the 2008 legislative session.
| Chris C. Wilson CIC, CLU, CPCU | Tim Russell, CPCU |
| PIACT President | Legislative Chairman |
Loss run reports from insurance companies
PIACT supports Raised House Bill 5153 which seeks to reduce the time it takes to receive loss-run reports from insurance companies. A loss run is a list provided by an insurance company to an insurance consumer which shows the past loss experience of the insurance consumer. In order to shop successfully for insurance coverage, an insurance consumer needs to be able to show potential insurers proof of their past loss experience.
The single biggest problem many insurance agents face in quoting commercial business is obtaining loss runs. Moreover, companies currently servicing these nonrenewed or canceled accounts have no incentive to offer assistance.
The changes proposed in this bill would be particularly beneficial to commercial insureds that are looking to replace coverage. It would give additional time to those requesting loss information to seek out and obtain alternative (and quite possibly lower premium) policies and reduce the possibility of a lapse in coverage.
Although in some instances, current Law (Section 38a-326) provides these reports along side the notice of nonrenewal or cancellation, these instances are restricted to commercial automobile and general liability insurance policies that are cancelled upon 60 days' notice. Moreover, in a select number of instances, current law allows insurers up to 60 days after the receipt of a written request to provide these reports. (Section 38a-324) It is in these instances (when an insurer is only required to give 10 days' notice of cancellation) that the risk of a lapse in coverage is highest and, therefore, timely provision of these reports most critical.
This bill addresses these issues by applying these protections to all commercial policies (not just commercial auto and general liability) as well as implementing additional protections when the policy is cancelled by the insured, or insurer on 10 days' notice.
A 10-day rule would provide better turn-around time, which becomes crucial in achieving certain placements and in coping with current market conditions. With this change, Connecticut follows the lead of a number of other states that are reducing their statutory time limits.
Motor vehicle repairs
PIACT opposes Raised Senate Bill 288 because it may unintentionally harm the state's consumers by prohibiting insurance agents from recommending reputable repair facilities if asked. In part, the bill amends C.G.S. Section 38a-354 in a way that would prohibit an insurance company, agent or adjuster from recommending that an insured use a specific person for the provision of automobile physical damage repairs, even if asked by an insured. Current law already prohibits companies, agents and adjusters from requiring any insured to use a specific person for the provision of automobile physical damage repairs, automobile glass replacement, glass repair service or glass products.
Because the phrase “recommend, request or require” is broadly defined to include “any act to influence a customer's decision …,” Raised Bill No. 288 would hamper an insurance agent's ability to advise their clients to the best of their ability. The bill's current wording could prevent an agent from even making a suggestion in response to an inquiry from a customer.
An insurance agent is quite often the first person that a customer will ask such a question. Agents are often particularly qualified to recommend a reputable auto repair shop, and barring them from making a suggestion would only serve to prevent the state's insurance consumers from getting their agents' best advice.
Therefore, PIACT does not oppose the other provisions of Raised Bill No. 288, but must ask you to oppose the bill due to the wording of Sections 2(b) & (c).Interstate Insurance Product Regulation Compact
PIACT supports Raised Bill No. 164 because it would allow states to cooperate on multi-state or national issues while retaining state control. An interstate compact is a contract between states that allows states to cooperate on multi-state or national issues while retaining state control. Interstate compacts are specifically mentioned in the U.S. Constitution. Although historically used to address border disputes and water rights, the use of interstate compacts has expanded significantly in recent decades to cover tax issues, drivers' licensing and vehicle registration, environmental issues, emergency management and other issues. Over 200 interstate compacts currently exist, and on average every state belongs to at least 25 compacts.
The Interstate Insurance Product Regulation Compact which to date has been adopted by 30 member states representing half of the premium volume nationwide, created the Interstate Insurance Product Regulation Commission (IIPRC)—a public entity treated as an instrumentality of the compacting member states. The IIPRC provides the states with a vehicle to: 1) develop uniform national product standards that will afford a high level of protection to consumers of life insurance, annuities, disability income and long-term care insurance products; 2) establish a central point of filing for these insurance products; and 3) thoroughly review product filings and make regulatory decisions according to the uniform product standards.
The Compact is a proactive speed-to-market initiative implemented by its member states to provide for increased and cost-effective insurance choices in support of a competitive and modern financial marketplace. Moreover, the standards and operations of the IIPRC uphold strong consumer protections as the hallmark of state-based regulation and membership in the IPRC allows state insurance departments to efficiently re-allocate department resources originally utilized for product review toward other regulatory operations, including a focus on important market conduct.
Importantly, member states may opt-out of a uniform product standard if it does not meet the needs of the state. A state legislature must enact the Compact model statute through legislation in order for a state to join the IIPRC. Under the Compact law, the IIPRC created a Legislative Committee comprised of eight member state legislators appointed by the National Conference of State Legislatures and the National Conference of Insurance Legislators which works as an active partner to monitor the operations of the IIPRC and make recommendations. The IIPRC also is required to give notice to all member state legislatures before any product standards can be adopted; and file an annual report with the governors and legislatures of its member states. Additionally, state legislatures may opt-out of a uniform standard for any product line at any time through legislation. The adoption of the Interstate Insurance Product Regulation Compact will allow states to continue to work together to protect U.S. insurance consumers and support state-based insurance regulation.
Increasing the financial responsibility limits for motor vehicles
PIACT supports Raised H.B. No. 5515 which incorporates changes that would bring Connecticut's statutory minimums up to par with the majority of the other states.
Section 14-112(a) of Connecticut's statutes sets forth the minimum amounts of insurance coverage for bodily injury and property damage required in order to obtain a driver's license or register a vehicle. These coverage amounts, which have been embedded in the state's laws since 1949 and have undergone several changes, are due to be updated once again. The property damage limit, for example, was raised from $1,000 to $5,000 in 1967, and from $5,000 to $10,000 in 1983. An inherent problem with including a dollar amount in a statute is that the amount quickly can become outdated. Inflation surely has not slowed down since 1983, the last time the property damage limit was increased, so logic dictates that the limit should be increased accordingly. The other limits are similarly outdated, and should be increased to the levels suggested in this bill.
When two vehicles are involved in an accident and the driver of the vehicle that caused the accident has purchased the statutory minimum limit, the driver of the other vehicle may not fully recover damages that exceed that minimum limit unless the innocent driver purchased first-party physical damage insurance. In the absence of this insurance, the only recourse will be against the negligent driver, who likely has limited assets. Clearly, not every accident results in damages of more than $10,000, but the rising average cost of a vehicle on the road today means that the $10,000 threshold is reached much more often in the event of an accident. Claims follow insureds and can sometimes lead to increased premiums.
While it is true that raising the statutory minimums will mean increased premiums up front for the policyholder, the increase should be minimal. For instance, an increase in the property damage limit from $10,000 to $25,000 would typically result in a single-digit percentage increase in premium. This is a manageable amount to pay in order to provide additional protection, and it would not lead to any discernable increase in uninsured drivers on the road. PIACT understands that anything that results in increased costs for consumers can be a sensitive subject, but many years have passed since Connecticut's limits were increased. For all the foregoing reasons, PIACT urges the committee to support Raised H.B. No. 5515. 3/08
