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2009 PIACT legislative wrap-up
Resource kit 06006
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
SB 530 was proposed in late January, and sought to establish a state-funded natural catastrophe fund. PIACT submitted a letter in opposition explaining the problems that could flow from such a proposal. As eventually drafted, the bill did not attempt to establish such a fund, but merely sought to commission a study examining the feasibility of establishing a natural catastrophe fund to provide reinsurance to the private market.
Sales tax
Raised Bill 6349 was introduced in an attempt to help close the state's fiscal shortfalls by amending the state's tax code to make professional, insurance, occupational or personal-service transactions subject to the sales tax. The PIACT takeaway from this proposal was that the proposed tax on the sale of insurance policies was unworkable and shortsighted. PIACT recognized the many problems with this proposal as it was drafted and immediately authored a letter of opposition offering detailed objections to the bill. In response to widespread criticism, the bill did not advance beyond the public hearing stage.
Homeowners
SB 291 proposed restricting an insurer from refusing to issue personal risk insurance policies for homeowners who own a dog that has bitten a person, an issue that has popped up and been considered by legislatures across the Northeast recently. This bill did not flatly bar an insurer from considering the presence of a dog that may have bitten someone in underwriting a homeowners policy, but did prevent an insurer from refusing to write, renew or otherwise issue a homeowners policy solely on the basis of the presence in the household of a dog that has bitten a person or another animal. The bill did give the insurer the option of allowing the homeowner to elect to omit the dog from the policy or purchase a separate rider for the dog. PIACT opposed this bill, and offered written testimony related to the bill. The bill was referred to the Judiciary Committee in early April, and did not move. However, that particular action was not the end of the road for this language or concept; HB 5436, which ostensibly clarified the value of the replacement value of a guide dog or assistance dog under a property damage provision in an
Interstate Insurance Product Regulation Compact
To PIACT's disappointment, SB 456 which seeks to make Connecticut the 36th state to join the National Association of Insurance Commissioners' Interstate Insurance Product Regulation Compact did not get past the public hearing stage in late January. PIACT has long supported this bill which seeks to bring uniformity and efficiency to the way insurance products are filed, reviewed and approved and allows consumers to have faster access to competitive insurance products in an ever-changing global marketplace. PIACT also sees adoption of this legislation as vital to show progress toward an improved national, state-based system of insurance regulation, a move that diminishes the effectiveness of arguments describing the need for a federal insurance regulator.
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:
- whether required insurance is included in the lease for no additional charge;
- that, if required insurance is not included in the lease or there is an additional charge for obtaining insurance through the leaseholder, the consumer may purchase the insurance from any insurer, subject to the leaseholder's right to reject for reasonable cause; and
- that insurance the leaseholder offers may duplicate coverage a consumer's personal insurance policies already provide.
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:
- shortens the time period an insurer has to pay a claim from 60 to 30 days;
- allows an insured person and the insurer to agree in writing to a partial claim payment in advance of final claim adjudication, which does not affect the 30-day time period for total payment;
- requires an insurer to reduce the total amount due to an insured by the amount of any advance partial payment made; and
- increases the statute of limitations for filing a lawsuit with respect to a claim under the policy from 12 to 18 months after sustaining a loss.
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:
- if the premiums charged for the policy reflect projected savings from the exclusion; and
- until the federal terrorism insurance program expires.
(The commissioner has adopted the definition of terrorism used in the 2007 federal law reauthorizing the federal program.)
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