Source: https://www.cga.ct.gov/2017/SUM/2017SUM00198-R02HB-07183-SUM.htm
Timestamp: 2019-08-21 22:30:31
Document Index: 492969341

Matched Legal Cases: ['§ 2', '§ 1', '§ 4', '§ 10', '§ 31', '§ 32', '§ 1', '§ 2', '§ 3', '§ 4', '§ 5', '§ 6', '§ 7', '§ 8', '§ 38', '§ 9', '§ 10', '§ 11', '§ 31', '§ 32']

AN ACT CONCERNING CAPTIVE INSURANCE COMPANIES, SHORT-TERM CARE INSURANCE, PERSONAL AND COMMERCIAL RISK INSURANCE, PREFERRED PROVIDER NETWORKS, AND MAKING MINOR AND TECHNICAL CHANGES TO CERTAIN INSURANCE-RELATED STATUTES
PA 17-198—sHB 7183
SUMMARY: This act makes various changes in insurance laws. Among other things, it:
1. allows the insurance commissioner to waive capital and paid-in surplus requirements for certain captive insurers and lowers the minimum surplus requirements for sponsored captives (§ 2),
2. establishes “dormant captive insurers” and allows them to apply for a certificate of dormancy (§ 1),
3. establishes group short-term care insurance policies (§ 4),
4. increases the financial solvency requirements for preferred provider networks (PPNs) (§ 10),
5. requires dental and vision insurance carriers to follow network adequacy requirements (§ 31), and
6. requires the insurance commissioner to credit overpayments of public health and health and welfare fees (§§ 32 & 33).
It also makes other minor, technical, and conforming changes.
EFFECTIVE DATE: Various; see below.
§ 1 — DORMANT CAPTIVE INSURERS
Under the act, a “dormant captive insurer” is a pure, sponsored, or industrial insured captive insurer that has stopped transacting insurance business and has no insurance liabilities associated with insurance policies issued, before, during, or after it files an application for a certificate of dormancy. Generally, a captive insurer is an insurance company or entity formed to insure or reinsure the risk of its owner, parent company, or affiliated company.
The act allows a dormant captive insurer domiciled in Connecticut to apply for a certificate of dormancy from the insurance commissioner. A certificate of dormancy must be renewed every two years and is void if the dormant captive insurer fails to renew the certificate or conducts insurance business.
Certificate of Dormancy
The act requires a dormant captive insurer that receives a certificate of dormancy to (1) possess and maintain unimpaired paid-in capital and surplus of at least $25,000 and (2) pay the applicable license renewal fee. (Renewal license fees are set by law and vary based on license type.)
Under the act, a dormant captive insurer, by March 15 annually, must also submit to the commissioner a report on its financial condition in a form and manner she prescribes. The report must be verified by two executive officers.
§ 2 — UNIMPAIRED PAID-IN CAPITAL AND SURPLUS FOR SPONSORED CAPTIVE INSURERS
The act reduces, from $500,000 to $225,000, the amount of unimpaired and paid-in capital and surplus a sponsored captive insurer must maintain to obtain a license from the insurance commissioner. By law, a “sponsored captive insurer” is a captive insurance company (1) in which the minimum paid-in capital and surplus is provided by one or more sponsors, (2) that insures its participants through separate participant contracts, and (3) that funds its liability to each participant through protected cells and separates each cellʼs assets from the assets of other cells and the captive insurer as a whole.
The act also allows the commissioner, at her discretion, to allow any type of captive insurer, except a risk retention group, to maintain less than the statutorily required unimpaired paid-in capital and surplus. In doing so, the commissioner must consider the type, volume, and nature of the insurer or reinsurerʼs business. (A “risk retention group” is a captive insurer formed under the federal Liability Risk Retention Act.)
§ 3 — SPONSORED CAPTIVES
The act establishes additional processes for maintaining the independence of separate “cells” during the conservation, rehabilitation, or liquidation of a sponsored captive insurer. In general, these situations are governed by the state Insurers Rehabilitation and Liquidation Act.
By law, a sponsored captive insurer funds its liability to each participant through protected cells, with each cellʼs assets independent of those of other cells. Under the act, a sponsored captive insurerʼs assets and liabilities must, at all times during a conservation, rehabilitation, or liquidation, be kept separate from the assets and liabilities of other protected cells or the sponsored captive insurer. Under prior law, cells had to be independent to the extent the commissioner determined they were separable.
The act also prohibits a sponsored captive insurerʼs general account assets from being used to pay any expense or claim attributable solely to one or more of its protected cells unless the sponsor consents and the commissioner has granted prior written approval. If a sponsored captive insurerʼs general account assets are used to pay such expenses, the sponsor cannot be required to contribute additional capital and surplus to the captiveʼs general account. Under the act, the (1) sponsor must satisfy the minimum capital and surplus required to maintain its license and (2) sponsored captive insurerʼs capital and surplus must be available at all times to pay its expenses or claims.
Under the act, a sponsored captive insurerʼs creditor has recourse against any assets attributable to a protected cell if it is a creditor of that cell. But a creditor of a protected cell does not have recourse against assets attributable to another cell or in the captiveʼs general account.
Under the act, a sponsored captive insurerʼs obligation to a creditor extends only to the protected cellʼs assets, and not to any other cellʼs assets or the sponsored captive insurerʼs general account. If a sponsored captive insurer has an obligation relating solely to its general account, a creditor is entitled to recourse only against that account.
The act also specifies that establishing protected cells, by itself, does not constitute (1) fraudulent conveyance, (2) evidence of intent to defraud creditors, or (3) the conduct of business by a sponsored captive insurer for any other fraudulent purposes.
§ 4 — SHORT-TERM CARE INSURANCE POLICIES
The act establishes group short-term care insurance policies and creates filing, disclosure, and other requirements identical to those currently required of individual short-term care policies. These policies provide coverage for 300 days or less, on an expense-incurred, indemnity, or prepaid basis, for necessary care or treatment of an injury, illness, or loss of functional capacity provided by a certified or licensed health care provider in a setting other than an acute care hospital. They do not include policies primarily providing (1) supplemental Medicare coverage or (2) coverage for basic medical-surgical expenses, hospital confinement indemnities, major medical expenses, disability income protection, accidents only, specified accidents, or limited benefits.
The act requires insurers and other entities (i.e., fraternal benefit societies, hospital service corporations, medical service corporations, and HMOs) to file copies of short-term care insurance policy forms, risk classifications, and premium rates with the insurance commissioner before delivering or issuing them to Connecticut residents. It also requires the insurance commissioner to adopt regulations establishing review procedures for the forms. (“Forms” include applications, policies, certificates, riders, and endorsements.)
Disapproving of Forms
Under the act, the commissioner must disapprove any forms that (1) do not comply with the law, (2) contain unfair or deceptive provisions, or (3) contain provisions that misrepresent the policy. In such cases, she must notify the insurer in writing, specifying the reasons for her disapproval and ordering that no short-term care insurer deliver or issue a Connecticut policy on, or containing, the disapproved form. Any insurer aggrieved by the commissionerʼs order may request a hearing within 30 daysʼ after receiving it, as under existing law.
Approval of Rate Filings
The act requires the commissioner to adopt regulations stating that rates cannot be excessive, inadequate, or unfairly discriminatory. Filed rates are not effective until the commissioner approves them in accordance with these regulations, and she may disapprove rates that fail to meet these standards.
The act prohibits insurers and other issuing entities from issuing or delivering a short-term care policy or certificate without first providing, at the time of solicitation or application, a full and fair written disclosure of the policyʼs or certificateʼs benefits and limitations. For short-term care policies with premium rate revisions or rate schedule increases, the disclosure must also include:
1. a statement, in at least 12-point bold face type, that the policy does not provide long-term care insurance coverage and is not a long-term care insurance policy or certificate or a Connecticut Partnership for Long-Term Care insurance policy or certificate;
2. a statement that the policy or certificate may be subject to future rate increases, including an explanation of potential future premium rate revisions and the policyholderʼs or certificate holderʼs options in such a case; and
3. the premium rate or rate schedule applicable to the applicant until the issuer files a request with the commissioner for a premium rate or rate schedule revision.
Applicants must sign an acknowledgment, at the time of the application, that the insurer or other issuing entity has disclosed this information. If the application method does not allow for a signature (e.g., an electronic application), the applicant must sign an acknowledgement when the policy or certificate is delivered.
In addition to regulations for policy forms and rate standards, the act also requires the commissioner to adopt short-term care insurance regulations on (1) permissible loss ratios and exclusionary periods, (2) the circumstances in which a policy or certificate is renewable, and (3) the benefits payable in relation to an insuredʼs other insurance coverage.
The act prohibits insurers and other entities from refusing to accept or reimburse short-term care insurance claims submitted by, or prepared with the help of, a managed residential community solely because the community submits or prepares the claim. Upon an insuredʼs written request, these issuing entities must also (1) disclose to an insuredʼs managed residential community the insuredʼs coverage eligibility and (2) provide the community with a copy of an initial claim acceptance or denial at the same time they provide one to the insured.
§ 5 — HEALTH CARE CENTERS
The act allows health care centers (i.e., HMOs) to offer health care services (1) directly or indirectly or (2) by methods permitted under the federal Health Maintenance Organization Act unless otherwise determined by regulation. Prior law required HMOs to provide care (1) directly or indirectly and (2) by methods permitted by the federal act unless otherwise determined by regulation. The federal act, among other things, requires payments by insureds to be fixed without regard to the frequency, extent, or kind of health service received. Thus, this act allows HMOs to charge coinsurance.
§ 6 — PERSONAL AND COMMERCIAL RISK INSURANCE DISCLOSURES
Under the act, an insurer renewing a personal or commercial risk insurance policy with terms less favorable than an insuredʼs current policy must send a conditional renewal notice clearly identifying any reduction in coverage limits and any added or revised coverage provisions that reduce coverage or increase deductibles. The notice must be sent by registered or certified mail, or proven by a certificate of mailing, to the address shown in the policy at least 60 days before renewal.
§ 7 — COMMUTATION OF REINSURANCE AGREEMENTS
By law, an insurer in hazardous financial condition or that meets certain other criteria may be placed under the insurance commissionerʼs supervision. If the supervised insurer is liquidated, the court-appointed liquidator (e.g., the commissioner) may void certain transfers that unfairly benefit some creditors over others, as long as the transfers are made:
1. within one year of the liquidation date or
2. for insurers already subject to a rehabilitation order, within two years of the rehabilitation petition or one year from the liquidation petition, whichever is shorter.
Under the act, transfers under commutations of reinsurance agreements approved by the commissioner or her designee may not be voided. A commutation of a reinsurance agreement eliminates all present and future reinsurance obligations between the parties.
§§ 8 & 34 — INSURERS REHABILITATION AND LIQUIDATION ACT (IRLA) AND REPEALER
The act repeals an outdated provision (CGS § 38a-18) and allows the commissioner to take possession of an insurer in certain situations, including insolvency, pursuant to the IRLA. IRLA generally provides more detailed procedures for when and how the commissioner can supervise, rehabilitate, or liquidate an insurance company.
§ 9 — ANNUAL MALPRACTICE CLOSED CLAIM REPORT DUE DATE
The act delays the deadline, from March 15 to June 30, for the commissionerʼs annual medical malpractice closed claims report to the Insurance and Real Estate Committee.
§ 10 — PREFERRED PROVIDER NETWORK (PPN) SOLVENCY AND LICENSING
The act increases the financial solvency requirements for a PPN by requiring that it maintain (a) a minimum net worth of $500,000, instead of $250,000, and (b) at least four months, instead of two months, worth of payments to participating providers.
By law, a PPN pays claims for the delivery of health care services; accepts financial risk for doing so; and establishes, operates, or maintains an arrangement or contract with providers relating to the services the providers render and the amounts they are paid. It does not include a managed care organization, workersʼ compensation preferred provider organization, independent practice association, physician hospital organization, clinical laboratory, or pharmacy benefits manager.
By law, a PPN conducting business in Connecticut must maintain a specified minimum net worth. Prior law required it to maintain either (1) the greater of $250,000 or 8% of its annual expenditures or (2) another amount the insurance commissioner determined. The act increases the required dollar amount from $250,000 to $500,000.
The law also requires a PPN to maintain or arrange for a letter of credit, bond, surety, reinsurance, reserve, or other financial security acceptable to the commissioner for paying outstanding amounts owed to participating providers. Prior law required this to be the greater of:
1. two months of payments owed to participating providers based on the two months within the past year with the greatest amounts owed,
2. the actual outstanding amount owed to participating providers, or
3. another amount the commissioner determined.
The act increases the first condition to four months of payments owed based on the four months within the past year with the greatest amounts owed.
The act also requires (1) PPNs to apply to be licensed by the insurance commissioner annually by May 1, instead of March 1, and (2) the commissioner to issue or renew PPN licenses annually by July 1, instead of May 1.
§§ 11-30 — TECHNICAL CHANGES
The act makes technical and conforming changes throughout the HMO laws to specify that all HMOs are subject to all the laws in Chapter 698a, Part I, of the general statutes, including laws concerning insolvency.
§ 31 — DENTAL AND VISION CARRIERSʼ NETWORK ADEQUACY
The act requires dental and vision carriers to abide by network adequacy requirements. These previously applied only to certain health carriers.
Network Adequacy Requirements
Prior law excluded dental and vision carriers from certain network adequacy requirements. The act changes the definition of “health benefit plan” to include dental and vision carriers, thus requiring them to, among other things, (1) establish and maintain adequate provider networks to assure that all covered benefits are accessible to covered individuals without unreasonable travel or delay and (2) ensure that covered individuals have access to emergency services at all times. Additionally, dental and vision carriers must provide benefits at the in-network level of coverage when a nonparticipating provider performs covered services for a covered individual because a participating provider is not available in the network. The commissioner must review and determine the sufficiency of the provider network.
§§ 32 & 33 — OVERPAYMENT OF PUBLIC HEALTH AND HEALTH AND WELFARE FEES
By law, domestic insurers and HMOs must annually, by February 1, pay to the insurance commissioner a public health fee. These fees are used to pay for certain Department of Public Health programs, including needle and syringe exchange and breast and cervical cancer detection and treatment. In addition, domestic insurers and HMOs, third-party administrators, and exempt insurers must pay annually, by February 1, a health and welfare fee to the commissioner. These fees are used to provide vaccines and antibiotics, among other things.
Under the act, the commissioner must credit an overpayment towards the respective fee due the next fiscal year if the entity (1) overpaid by more than $5,000 and (2) notifies the commissioner by June 1 of the overpayment amount, providing sufficient evidence to prove it overpaid.
The commissioner must, within 90 days of receiving the notice and supporting evidence, determine and notify the entity of whether it overpaid. Under the act, failure to notify the commissioner by June 1 constitutes a waiver of any claim against the state for overpayment. The act specifies that it does not prohibit or limit an entityʼs appeal rights.
EFFECTIVE DATE: Upon passage and applicable to any fee due on or after February 1, 2017.