 |
|
     |
|
 |
|
 |
 |
 |
 |
|
 |
|
 |
|
 |
|
 |
|
 |
||||||||||||
2013 PIACT legislative wrap-up
Resource kit 06006
By Campbell H. Wallace, Esq.
The 2013 Connecticut legislative session ended on June 6, 2013, and a host of noteworthy insurance bills saw action.
Surplus-lines affidavit
Signed into law by Gov. Dan Malloy on June 21, 2013, as Public Act 13-171, H.B.6379, is a significant legislative win for the Professional Insurance Agents of Connecticut Inc. and the state’s insurance producers. PIACT, in response to conversations held at its Legislative Committee and board of directors meetings worked with the Connecticut Surplus Lines Association in crafting this legislation. The law, which took effect immediately, removes the requirement that the surplus-lines placement form include an affidavit (which necessarily entails being notarized) and allows it to be a sworn statement.
The new law also provides for quarterly electronic filings, requires the type of policy and disclosure of the location of the property if the policy placed is for real-property coverage. Finally, the bill further requires the broker to submit the signed statement to the commissioner electronically on Feb. 15, May 15, Aug. 15 and Nov. 15 annually. On July 25, 2013, the Connecticut Insurance Department released Bulletin SL-4, which offers guidance to producers on the procedures for submitting the sworn statement, as well as a sample of the newly revised form.
Certificates of insurance
Unfortunately, H.B.6476, another PIACT-priority bill, wasn’t passed this session. This bill sought to regulate the often unfair, unreasonable and dangerous demands for certificates of insurance that purport to amend or alter the underlying policy. The bill also addressed the increasing demands placed on producers to sign off on certificates that attest that a policy will respond in specific ways to future events. The bill, which sought to codify existing departmental guidance on one aspect of the issue, while addressing other pernicious market behavior was advanced out of the Insurance and Judiciary committees, but died on the House calendar. PIACT has begun to gather specific supporting data on this issue and will press for reconsideration of this measure next year.
Cat-loss cancellation and like-kind replacement bill
H.B.6380 was signed into law as Public Act 13-138, and this legislation makes a number of noteworthy changes related to catastrophe loss-related issues. First and foremost, the bill prohibits an “insurer from declining, canceling or failing to renew a homeowners insurance policy solely due to a loss incurred as a result of a catastrophic event.” The insurer is not considered to have canceled, if it offers coverage through an affiliated insurer.
As described in the bill’s official statement, it also “prohibits an insurer from:
- canceling or failing to renew a homeowners policy, or
- increasing its premium if this action is based solely on inquiries made on the policy or a claim filed under it that resulted in a payment by the insurer of less than $500 or in no loss coverage payment. The prohibition does not apply if the insured filed more than one claim resulting from a noncatastrophic event in the three policy years immediately preceding that resulted in a loss coverage payment by the insurer.”
Next, the bill requires that, in the event that the materials used to replace an item do not match the surrounding area, the policy must make the surrounding areas match the “quality and kind of the replaced item.” Finally, the bill adds protections to the law governing public adjuster contracts.
Flex-rating law extensionAlso signed into law on June 21, 2013, was H.B.5926, (Public Act 13-167), a bill which, as described in its summary “extends the sunset date for the ‘flex rating’ law for personal risk insurance (e.g., home, auto, marine or umbrella) from July 1, 2013, to July 1, 2015. It also adds a territorial cap of no more than 15 percent. This permits an insurer to ‘file and use’ its flex-rate filing of no more than a 6 percent statewide average change while ensuring that no individual rate territory increases by more than 15 percent.” As originally proposed, the bill would have narrowed the amount of allowable change from 6 percent to 3 percent, a move opposed by insurance carrier groups and the CID alike. The bill, which does not apply to nonadmitted products, took effect immediately.
Mediation program
A bill that facilitated the creation of a mediation program to resolve disputes between claimants and companies following catastrophe events was signed into law. H.B.6549 (Public Act 13-148) allows the CID to create a mediation program, when following a catastrophic event (when the governor has declared a state of emergency), there arises a dispute greater than $5,000, deductible aside. The program would apply to personal risk insurance (excluding personal auto), condominium master policies and condominium unit owners’ association policies. The program does not apply to NFIP policies or policies where the coverage is in dispute.
Family medical leave insurance task force
H.B.6553, which established a task force to study family medical leave insurance, was signed into law June 24, 2014, as Special Act 13-13. The measure shall “study the feasibility of establishing an insurance program to provide short-term benefits to workers who are unable to work due to:
- pregnancy or the birth of a child;
- a nonwork-related illness or injury; or
- the need to care for a seriously ill child, spouse or parent.”
The task force shall present its findings no later than Oct. 1, 2014.
Noncompete agreements
The Legislature also passed H.B.6658, as Public Act 13-309, which is a more restrained version of an earlier proposal affecting noncompete agreements. The original bill sought to codify parts of the state’s common law regarding these agreements, and also added language explicitly allowing an employee aggrieved by a supposed violation of their rights related to such an agreement to sue, and recover damages and attorneys’ fees.
The bill limits the scope of its restrictions to situations when an employer is merged with or acquired by another firm, and in the language of the bill “as a result of such merger or acquisition an employee of the employer is presented with a noncompete agreement as a condition of continued employment with the employer. Any such noncompete agreement entered into, renewed or extended on or after Oct. 1, 2013, between the employer and employee shall be void, unless prior to entering into the agreement, the employer provides the employee with a written copy of the agreement and in a reasonable period of time, of not less than seven calendar days, to consider the merits of entering into the agreement.”
Social-media passwords
Finally, a bill that was a hot issue of the session at one time, S.B.159, died on the Senate calendar. The bill sought to prevent employers from demanding a current or prospective employee disclose his or her social-media account passwords, and from retaliating against employees who file a complaint about a violation of the bill.
Minimum wage
On May 30, 2013, Gov. Dan Malloy signed S.B.371 into law. The broad details of the bill are that it incrementally increases Connecticut’s minimum wage to $9 per hour by January 2015. In supporting the bill, Gov. Malloy stated, “This change will make it just a little easier for working people in our state without adversely impacting the business community.”
Driver’s licenses for undocumented immigrants
Public Act 13-89 (formerly known as H.B.6495) allows for the issuance of drivers’ licenses to undocumented immigrants. Connecticut joins Illinois and Oregon in adopting similar measures. In the course of the lengthy debate about the bill, questions were raised regarding the implementation of the measure, such as verifying the authenticity of the foreign documents used to identify the applicant, and the costs to the state’s Department of Motor Vehicles. The bill is expected to cost $1.3 million to implement in its first year, offset by first-year revenues of $1.5 million.
Glass bill
H.B.5072 passed both houses and was signed by Gov. Malloy as Public Act 13-67. This legislation requires an auto glass claims representative or an insurer’s third-party claims administrator to inform the insured that they “have the right to choose a licensed glass shop where the damage to your motor vehicle will be repaired. If you have a preference, please let us know.” The act further “bars insurance companies or their representatives from:
- specifying who an insured uses for automotive glass work, or
- stating that glass work will either be delayed or not guaranteed unless performed by a glass shop participating in an insurance company-established glass work program.”
CID consumer protection bill
A CID-backed bill (S.B.1031), which saw early action and Senate passage, died on the House calendar. The bill sought to grant the CID additional oversight and enforcement power over certain insurance market misconduct. Of specific note, it looked to allow the department to demand the payment of restitution, or the amount of an uninsured claim from a producer who has:
- improperly withheld, misappropriated or converted any money or property received in the course of doing an insurance business; or
- admitted to or been found to have committed any insurance unfair trade practice or fraud; and used fraudulent, coercive or dishonest practices, or demonstrated incompetence, untrustworthiness or financial irresponsibility in the conduct of business in Connecticut or elsewhere.
Workers’ compensation for witnesses
S.B.823 died on the Senate calendar. This bill would have extended workers’ compensation eligibility to certain employees who witnessed the death or maiming of another party on the job. This bill was introduced following the Sandy Hook shooting in December. The bill revives debate about the so-called “mental-mental” coverage, which was eliminated in the state in 1993, following widespread reports of abuse.
911 responses
Substitute bill H.B.6015, had no further action. It dealt with charges for 911 responses. Originally, this bill sought to prevent a municipality from charging a fee for providing emergency services resulting from a 911 call. The amended bill allowed for the charging of fees in response to an emergency service call, but prohibited charging fees for the 911 call itself.
Cooperation with regulators
S.B.1093 makes a number of changes to various sections of the insurance statutes. As explained in the bill’s statement these changes include authorizing increased cooperation with other regulators, increasing flexibility regarding captive insurers and mandating quarterly electronic excess-and-surplus affidavit filings. This bill was calendared for a vote in the House, but had no further action.
S.B.812 was recommitted to committee, but saw no further action. The bill, proposed to have a producer included on the board of the CT health exchange. On Feb. 5, 2013, PIACT submitted a comment supporting the bill which seeks to add a producer to the health exchange board of directors. As stated in testimony, PIACT recognizes that there are likely to be many purchasers who will at various times patronize the exchange, and at other times patronize producers, and having a producer’s voice and experience on the board is essential to the exchange serving all of Connecticut’s health insurance purchasers.
Underwriting
S.B.863, which had no further action, prohibited the use of marital status, age, gender or education level as a factor in insurance underwriting. 7/13
