2023 Connecticut General Statutes › Title 38a - Insurance › Chapter 704a - Insurance Guaranty Funds › Section 38a-866. (Formerly Sec. 38-309). - Assessments.

(a) For the purpose of providing the funds necessary to carry out the powers and duties of the association, the board of directors shall assess the member insurers, separately for each account, at such times and for such amounts as the board finds necessary. The association shall establish a due date for each assessment which shall be at least thirty days after the association has provided the member notice of the assessment. Each member insurer shall pay interest on any late payment at the rate of one per cent per month, or any portion thereof, from the due date to the date of payment.
(b) There shall be two classes of assessments, as follows:
(1) Class A assessments shall be made for the purpose of meeting administrative costs and other general expenses not related to a particular impaired or insolvent insurer; and
(2) Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under section 38a-865 with regard to an impaired or insolvent insurer.
(c) (1) The amount of any Class A assessment shall be determined by the board and may be authorized and called on a pro-rata or non-pro-rata basis. If an assessment is made on a pro-rata basis, the board may provide that the assessment be credited against future Class B assessments.
(2) (A) The amount of any Class B assessment, except for any assessment related to long-term care insurance, shall be allocated for assessment purposes between the accounts and among the subaccounts of the life insurance and annuity account pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer or any other standard that the board, in its sole discretion, deems as being fair and reasonable under the circumstances.
(B) The amount of the Class B assessment for long-term care insurance written by the impaired or insolvent insurer shall be allocated according to a methodology included in the plan of operation and approved by the commissioner. The methodology shall provide for fifty per cent of the assessment to be allocated to accident and health member insurers and fifty per cent to be allocated to life and annuity member insurers.
(3) Class B assessments against member insurers for each account and subaccount shall be in the proportion that the premiums received on business in this state by each assessed member insurer on policies or contracts covered by each account for the three most recent calendar years for which information is available preceding the year in which the member insurer became insolvent or, in the case of an assessment with respect to an impaired insurer, the three most recent calendar years for which information is available preceding the year in which the member insurer became impaired bear to such premiums received on business in this state for those calendar years by all assessed member insurers.
(4) Assessments for funds to meet the requirements of the association with respect to an impaired or insolvent insurer shall not be authorized or called until necessary to implement the purposes of sections 38a-858 to 38a-875, inclusive. Classification of assessments under subsection (b) of this section and computation of assessments under this subsection shall be made with a reasonable degree of accuracy, recognizing that exact determinations may not always be possible. The association shall notify each member insurer of its anticipated pro-rata share of an authorized assessment that is not yet called not later than one hundred eighty days after the association authorizes the assessment.
(d) The association may abate or defer, in whole or in part, the assessment of a member insurer if, in the opinion of the board, payment of the assessment would endanger the ability of the member insurer to fulfill its contractual obligations. In the event an assessment against a member insurer is abated, or deferred in whole or in part, the amount by which such assessment is abated or deferred may be assessed against the other member insurers in a manner consistent with the basis for assessments set forth in this section. Once the conditions that caused a deferral have been removed or rectified, the member insurer shall pay all assessments that were deferred pursuant to a repayment plan approved by the association.
(e) (1) (A) Subject to the provisions of subparagraph (B) of this subdivision, the total of all assessments authorized by the association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the health account shall not in any one calendar year exceed two per cent of such insurer's average annual premiums received in this state on the policies and contracts covered by the subaccount or account during the three calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.
(B) If two or more assessments are authorized in one calendar year with respect to member insurers that become impaired or insolvent in different calendar years, the average annual premiums for purposes of the aggregate assessment percentage shall be equal and limited to the higher of the three-year average annual premium for the applicable subaccount or account as calculated pursuant to this section.
(C) If the maximum assessment, together with the other assets of the association in any account, does not provide in any one year in either account an amount sufficient to carry out the responsibilities of the association, the necessary additional funds shall be assessed as soon thereafter as permitted by sections 38a-858 to 38a-875, inclusive.
(2) The board may provide in the plan of operation a method of allocating funds among claims, whether relating to one or more impaired insurers, when the maximum assessment will be insufficient to cover anticipated claims.
(3) If the maximum assessment for any subaccount of the life insurance and annuity account in any one year does not provide an amount sufficient to carry out the responsibilities of the association, then pursuant to subdivision (3) of subsection (c) of this section, the board shall access the other subaccounts of the life insurance and annuity account for the necessary additional amount, subject to the maximum stated in subdivision (1) of this subsection.
(f) The board may, by an equitable method as established in the plan of operation, refund to member insurers, in proportion to the contribution of each member insurer to that account, the amount by which the assets of the account exceed the amount the board finds is necessary to carry out during the coming year the obligations of the association with regard to that account, including assets accruing from assignment, subrogation, net realized gains and income from investments. A reasonable amount may be retained in any account to provide funds for the continuing expenses of the association and for future losses if refunds are impractical.
(g) It shall be proper for any member insurer, in determining its premium rates and policy owner dividends as to any kind of insurance or health care center business within the scope of sections 38a-858 to 38a-875, inclusive, to consider the amount reasonably necessary to meet its assessment obligations under said sections.
(h) (1) Each member insurer paying an assessment under sections 38a-858 to 38a-875, inclusive, may offset one hundred per cent of the amount of such assessment against its premium tax liability to this state under chapter 207. Such offset shall be taken over a period of the five successive tax years following the year of payment of the assessment, at the rate of twenty per cent per year of the assessment paid to the association. Each member insurer to which has been refunded by the association, pursuant to subsection (f) of this section, all or a portion of an assessment previously paid to the association by the member insurer shall be required to pay to the Department of Revenue Services an amount equal to the total amount that has been claimed as an offset against the premiums tax liability on the premiums tax return or returns, as the case may be, filed by such insurer and that is attributable to such refunded assessment, provided the amount required to be paid to said department shall not exceed the amount of the refunded assessment. If the amount of the refunded assessment exceeds the total amount that has been claimed as an offset against the premiums tax liability on the premiums tax return or returns filed by such member insurer and that is attributable to such refunded assessment, such excess may not be claimed as an offset against the premiums tax liability on a premiums tax return or returns filed by such insurer or, if the offset has been transferred to another person pursuant to subdivision (2) of this subsection, by such other person. For purposes of this subdivision, if the offset has been transferred to another person pursuant to subdivision (2) of this subsection, the total amount that has been claimed as an offset against the premiums tax liability on the premiums tax return or returns filed by such insurer includes the total amount that has been claimed as an offset against the premiums tax liability on the premiums tax return or returns filed by such other person. The association shall promptly notify the Commissioner of Revenue Services of the name and address of the member insurers to which such refunds have been made, the amount of such refunds, and the date on which such refunds were mailed to each such insurer. If the amount that a member insurer is required to pay to the Department of Revenue Services has not been so paid on or before the forty-fifth day after the date of mailing of such refunds, the insurer shall be liable for interest on such amount at the rate of one per cent per month, or fraction thereof, from such forty-fifth day to the date of payment.
(2) A member insurer, in this subdivision called “the transferor”, may transfer any offset provided under subdivision (1) of this subsection to an affiliate, as defined in section 38a-1, of the transferor. Any such transfer of the offset by the transferor, and any subsequent transfer or transfers of the same offset, shall not affect the obligation of the transferor to pay to the Department of Revenue Services any sums which are acquired by refund from the association pursuant to subsection (f) of this section and which are required to be paid to the Department of Revenue Services pursuant to subdivision (1) of this subsection. Such offset may be taken by any transferee only against the transferee's premium tax liability to this state under chapter 207. The Commissioner of Revenue Services shall not allow such offset to a transferee against its premium tax liability unless the transferor, the affiliate to which the offset was originally transferred, each subsequent transferor and each subsequent transferee have filed such information as may be required on forms provided by said commissioner with respect to any such transfer or transfers on or before the due date of the premium tax return on which such offset would have been taken by the transferor, if no transfer had been made by the transferor.
(i) (1) A member insurer that wishes to protest all or part of an assessment shall pay when due the full amount of the assessment as set forth in the notice provided by the association. The payment shall be available to meet association obligations during the pendency of the protest or any subsequent appeal. Payment shall be accompanied by a written statement that (A) the payment is made under protest, and (B) includes a brief statement of the grounds for the protest.
(2) Not later than sixty days following the payment of an assessment under protest by a member insurer, the association shall notify the member insurer in writing of its determination with respect to the protest unless the association notifies the member insurer that additional time is required to resolve the issues raised by the protest.
(3) Not later than thirty days after a final decision has been made, the association shall notify the protesting member insurer in writing of the final decision.
(4) Not later than sixty days after receipt of notice of the final decision, the protesting member insurer may appeal the final action to the commissioner.
(5) In the alternative to rendering a final decision with respect to a protest based on a question regarding the assessment base, the association may refer protests to the commissioner for a final decision, with a recommendation from the association.
(6) If the protest or appeal on the assessment is upheld, the amount paid in error or excess shall be returned to the member insurer. Interest on a refund due a protesting member insurer whose protest or appeal was upheld shall be paid at the rate actually earned by the association.
(j) The association may request information from member insurers in order to aid in the exercise of its power under this section and member insurers shall promptly comply with such request.
(1972, P.A. 280, S. 9; P.A. 78-58, S. 2; P.A. 81-101, S. 9; P.A. 88-76, S. 9, 10; P.A. 93-239, S. 8; P.A. 00-174, S. 50, 76, 83; P.A. 01-67, S. 5; June Sp. Sess. P.A. 01-6, S. 42, 43, 85; P.A. 02-24, S. 14; P.A. 03-225, S. 15; P.A. 04-17, S. 2; P.A. 18-13, S. 7.)
History: P.A. 78-58 authorized making Class A assessments on non pro rata basis in Subsec. (c)(1) and removed Class A assessments from provisions of Subsec. (c)(2); P.A. 81-101 deleted Subsec. (h) re certificates of contribution and relettered Subsec. (i) as (h), substituting “this chapter” for reference to repealed Subsec. (h); P.A. 88-76 amended Subsecs. (d) and (e) revising the methods by which the association may assess member insurers and subaccounts for amounts abated or deferred; Sec. 38-309 transferred to Sec. 38a-866 in 1991; P.A. 93-239 amended Subsec. (h) re refunds paid due to offset assessments made to the Connecticut Life and Health Insurance Guaranty Association from the insurer's premium tax liability; P.A. 00-174 amended Subsec. (h) to require specific details from the association in reports to the Department of Revenue Services re refunds under Subsec. (f), to provide for interest on late payments under this section, to allow 100% of an assessment to be offset from the premium tax liability, to require the offset to be taken over five years and to allow transfer of the offset to an affiliate, effective May 26, 2000, and applicable to income years commencing on and after January 1, 2000, and to refunds made on or after July 1, 2000; P.A. 01-67 amended Subsec. (a) to delete provision re 30 days' written notice of assessments and substitute requirement that association establish a due date for assessment and to require insurers to pay interest on any late payment, amended Subsecs. (b) and (c) to delete provisions re Class C assessments, provide for two classes of assessments and revise provisions re assessments, amended Subsec. (d) to add provisions re repayment of deferrals, amended Subsec. (e) to designate provisions of Subdiv. (1) as Subparas. (A) and (C), revising Subpara. (A) and adding Subpara. (B) re two or more assessments in one calendar year, amended Subsec. (f) to substitute “account” for “amount” and insert “assignment” and “subrogation” re asset accrual, deleted Subsec. (h)(2) allowing an insurer to transfer any offset, added new Subsec. (i) re insurer protests of assessments and new Subsec. (j) re requests for information from member insurers, and made technical and conforming changes in Subsecs. (b), (c), (e) and (h); June Sp. Sess. P.A. 01-6 amended Subsec. (h)(1) to delete former provisions re offset assessments paid to association against premium tax liability, add provisions to specify procedures for tax treatment of refunds of assessments of association members, change “thirtieth day” to “forty-fifth day” and make a technical change, effective July 1, 2001, and would have amended Subsec. (h)(2) to add procedures for the transfer to affiliates of tax offsets for association members, effective July 1, 2001, and applicable to calendar years commencing on or after January 1, 2001, but failed to take effect, subdivision (2) having been previously deleted by P.A. 01-67; P.A. 02-24 amended Subsec. (h) to add “each” to “such insurer” re mailing of refunds; P.A. 03-225 amended Subsec. (h) to designate existing provisions as Subdiv. (1), make technical changes therein and add new Subdiv. (2) re transfer of certain offsets, effective July 9, 2003, and applicable to calendar years commencing on or after January 1, 2001; P.A. 04-17 amended Subsec. (c)(1) to delete $150 limit on all non-pro-rata assessments per member insurer; P.A. 18-13 amended Subsec. (c) by redesignating existing provisions in Subdiv. (1) re amount of Class B assessment as new Subdiv. (2)(A) and amended same by adding provision re exception for assessment related to long-term care insurance, replacing “among” with “between” and adding “and among the subaccounts of the life insurance and annuity account”, adding Subpara. (B) re amount of Class B assessment for long-term care insurance written by impaired or insolvent insurer in new Subdiv. (2), and redesignating existing Subdivs. (2) and (3) as Subdivs. (3) and (4), amended Subsec. (g) by adding “or health care center business”, amended Subsec. (i)(6) by adding “insurer whose protest or appeal was upheld” and replacing “member company” with “member insurer”, replaced “insurer” with “member insurer”, and made technical and conforming changes, effective July 1, 2018, and applicable to impairments and insolvencies occurring on or after said date.