2023 Connecticut General Statutes › Title 38a - Insurance › Chapter 704 - Unfair and Prohibited Practices › Section 38a-825. (Formerly Sec. 38-59). - Premium rebate or other special favor. Permissible benefits for value-added products or services.

(a) For the purposes of this section, “customer” means an applicant, certificate holder, insured, potential insured or potential certificate holder.
(b) Except as provided in subsection (c) or (d) of this section:
(1) No insurance company doing business in this state, attorney, producer or any other person shall pay or allow, or offer to pay or allow, as inducement to insurance, any rebate of premium payable on the policy, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement not specified in the policy of insurance; and
(2) No person shall:
(A) Receive or accept from any insurance company, attorney, producer or any other person, as inducement to insurance, any rebate of premium payable on the policy, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement not specified in the policy of insurance; or
(B) Be excused from testifying or from producing any books, papers, contracts, agreements or documents, at the trial of any other person charged with the violation of any provision of this section or of section 38a-446, on the ground that such testimony or evidence may tend to incriminate such person, provided such person shall not be prosecuted for any act concerning which such person is compelled to so testify or produce documentary or other evidence unless such prosecution is for perjury committed in so testifying.
(c) (1) An insurance company doing business in this state, attorney, producer or any other person may offer or provide to a customer in this state, at no cost or a reduced cost, a value-added product or service that is not specified in the customer's insurance policy if:
(A) Such value-added product or service:
(i) Relates to the insurance coverage provided under the customer's insurance policy; and
(ii) Is primarily designed to:
(I) Provide loss mitigation or loss control;
(II) Reduce claim costs or claim settlement costs;
(III) Provide education about liability risks or risk of loss to persons or property;
(IV) Monitor or assess risk, identify sources of risk or develop strategies for eliminating or reducing risk;
(V) Enhance health;
(VI) Enhance financial wellness through items including, but not limited to, education and financial planning services;
(VII) Provide post-loss services;
(VIII) Incentivize behavioral changes to improve the health, or reduce the risk of death or disability, of a customer; or
(IX) Assist in the administration of employee or retiree benefit insurance coverage;
(B) The cost to the insurance company, attorney, producer or other person offering or providing such value-added product or service for the customer is, in the opinion of the commissioner, reasonable in comparison to the customer's premiums or insurance coverage;
(C) The insurance company, attorney, producer or other person offering or providing such value-added product or service ensures that the customer receives contact information to assist the customer with questions regarding such value-added product or service;
(D) Such value-added product or service is offered and provided in a manner that, in the opinion of the commissioner, is not unfairly discriminatory; and
(E) The availability of such value-added product or service is based on documented and objective criteria, which the insurance company, attorney, producer or other person offering or providing such value-added product or service shall maintain and produce to the commissioner upon the commissioner's request for said criteria.
(2) If an insurance company doing business in this state, attorney, producer or other person does not have sufficient evidence to demonstrate to the commissioner that a value-added product or service satisfies the criteria established in subparagraph (A) of subdivision (1) of this subsection, but believes, in good faith, that the value-added product or service satisfies said criteria, the insurance company, attorney, producer or other person may offer and provide such value-added product or service to customers in this state as part of a pilot or testing program for not more than one year, provided:
(A) Such value-added product or service is offered and provided to customers in a manner that, in the opinion of the commissioner, is not unfairly discriminatory; and
(B) Such insurance company, attorney, producer or other person:
(i) Provides advance notice to the commissioner, in a form and manner prescribed by the commissioner, that such insurance company, attorney, producer or other person intends to commence such pilot or testing program; and
(ii) Shall not commence such pilot or testing program if the commissioner notifies such insurance company, attorney, producer or other person, in a form and manner prescribed by the commissioner and not later than twenty-one days after the commissioner receives notice pursuant to subparagraph (B)(i) of this subdivision, that the commissioner has determined such insurance company, attorney, producer or other person shall not commence such pilot or testing program.
(d) An insurance company doing business in this state, attorney, producer or any other person may offer or give a noncash gift, item or service to or on behalf of a customer:
(1) In connection with the marketing, sale, purchase or retention of a contract of insurance, provided:
(A) The cost of the noncash gift, item or service does not exceed an amount that the commissioner, in the commissioner's discretion, deems reasonable per policy year per term;
(B) The offer is made in a manner that, in the commissioner's opinion, is not unfairly discriminatory; and
(C) The customer is not required to purchase, continue to purchase or renew an insurance policy in exchange for the noncash gift, item or service; or
(2) To a commercial or institutional customer in connection with the marketing, purchase or retention of a contract of insurance, provided:
(A) The cost of the noncash gift, item or service is, in the commissioner's opinion, reasonable in comparison to the premium or proposed premium of the contract of insurance;
(B) The cost of the noncash gift, item or service is not included in any amount charged to another person;
(C) The offer is made in a manner that, in the commissioner's opinion, is not unfairly discriminatory; and
(D) The customer is not required to purchase, continue to purchase or renew an insurance policy in exchange for the noncash gift, item or service.
(e) No insurance company doing business in this state, attorney, producer or any other person, shall:
(1) Offer or provide insurance as an inducement to purchase another policy; or
(2) Use the word “free”, the phrase “no cost” or any word or phrase of similar import in any advertisement.
(f) The commissioner may adopt regulations, in accordance with the provisions of chapter 54, to carry out the purposes of this section.
(1949 Rev., S. 6083; P.A. 96-193, S. 21, 36; P.A. 22-106, S. 1.)
History: Sec. 38-59 transferred to Sec. 38a-825 in 1991; P.A. 96-193 substituted “producer” for “agent, subagent or broker”, effective June 3, 1996; P.A. 22-106 added Subsec. (a) to define “customer”, added Subsec. (b), designated existing provisions as Subdivs. (1), (2)(A) and (2)(B) and made technical and conforming changes in same, added Subsec. (c) re criteria for acceptable value-added products or services and pilot or testing program, added Subsec. (d) re criteria for acceptable noncash gifts, items or services, added Subsec. (e) re prohibition of offer or issuance of insurance as inducement to purchase another policy and prohibition of the word “free”, “no cost” or other similar phrase in advertisements and added Subsec. (f) re the commissioner may adopt regulations to carry out the provisions of this section.
See Sec. 38a-816 re unfair practices.
Annotation to former section 38-59:
Claim that act which permitted filing of rating plan in which individual insurer's judgment as to expense provisions or hazards of a particular risk may reflect cost of providing coverage and, in turn, the amount of the premium, amounts to rebating, held invalid. 153 C. 465, 477.