Sec. 38a-685. (Formerly Sec. 38-201hh). Premium discount for motorcyclists
completing novice or advanced training course. Any insurer who delivers or issues
for delivery in this state liability insurance policies for motorcycles shall offer a premium
discount on any such policy to any principal operator of a motorcycle who submits to
such insurer proof of successful completion of the novice or advanced motorcycle training course offered by the Department of Transportation or other entity approved by
the Commissioner of Motor Vehicles in accordance with section 14-40a. A minimum
discount of ten per cent shall be applicable to premium charges for any such policy
delivered, issued for delivery or renewed on or after October 1, 1987, such discount to
be applicable for a period of five years from the original effective date of the discount.
Such course shall be completed within one year prior to the initial application of the
discount or, for subsequent applications of the discount, within one year prior to the
expiration of the current discount period. If proof of successful completion of such
course is submitted during the term of a policy, any premium modification shall become
effective upon the next renewal. The discount provided by this section shall not be
applicable to physical damage insurance coverage for motorcycles.
(P.A. 87-168; P.A. 11-213, S. 48.)
History: Sec. 38-201hh transferred to Sec. 38a-685 in 1991; P.A. 11-213 amended premium discount provision to add
motorcycle operators who complete training course offered by other entity approved by Commissioner of Motor Vehicles,
effective January 1, 2012.
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Sec. 38a-686. (Formerly Sec. 38-201v). Standards for the making and use of
rates re personal risk insurance. Limitations on use of credit history and financial
history measurement programs. Regulations. The following standards, methods and
criteria shall apply to the making and use of rates pertaining to personal risk insurance:
(a) Rates shall not be excessive, inadequate or unfairly discriminatory.
(1) A rate in a competitive market is not excessive. A rate in a noncompetitive
market including a rate for insurance provided pursuant to sections 38a-328, 38a-329
and 38a-670 is excessive if it is unreasonably high for the insurance provided.
(2) No rate shall be held inadequate unless (A) it is unreasonably low for the insurance provided, and (B) continued use of it would endanger solvency of the insurer, or
unless (C) such rate is unreasonably low for the insurance provided and the use of such
rate by the insurer using same has, or, if continued will have, the effect of destroying
competition or creating a monopoly.
(b) In determining whether rates comply with the excessiveness standard in a noncompetitive market under subdivision (1) of subsection (a) of this section, the inadequacy standard under subdivision (2) of subsection (a) of this section and the requirement
that rates not be unfairly discriminatory, the following criteria shall apply:
(1) Consideration may be given, to the extent possible, to past and prospective loss
experience within and outside this state, to conflagration and catastrophe hazards, to a
reasonable margin for underwriting profit and contingencies, to past and prospective
expenses both country-wide and those specially applicable to this state, to investment
income earned or realized by insurers both from their unearned premium and loss reserve
funds, and to all other factors, including judgment factors, deemed relevant within and
outside this state and in the case of fire insurance rates, consideration may be given to
the experience of the fire insurance business during the most recent five-year period for
which such experience is available. Consideration may be given in the making and use
of rates to dividends, savings or unabsorbed premium deposits allowed or returned by
insurers to their policyholders, members or subscribers.
(2) (A) The systems of expense provisions included in the rates for use by an insurer
or group of insurers may differ from those of other insurers or groups of insurers to
reflect the operating methods of any such insurer or group with respect to any kind of
insurance, or with respect to any subdivision or combination thereof.
(B) (i) With respect to private passenger nonfleet automobile insurance, an insurer
shall not allocate as flat dollar amounts to base rates: (I) Producer commissions; (II)
premium taxes; (III) underwriting profits; or (IV) contingencies.
(ii) With respect to private passenger nonfleet automobile insurance, an insurer
shall allocate as flat dollar amounts to base rates: (I) At least ninety per cent of general
expenses, including administration and overhead costs; (II) at least ninety per cent of
other acquisition costs for marketing and agent field offices, which may be allocated
over the expected life of such insurer's policies; and (III) miscellaneous taxes, licenses
and fees.
(iii) Each insurer shall allocate such flat dollar amounts set forth in subparagraph
(B)(ii) of this subdivision after any classification factors set forth in subdivisions (3) to
(5), inclusive, of this subsection have been applied to base rates.
(3) Risks may be grouped by classifications for the establishment of rates and minimum premiums, provided that with respect to private passenger nonfleet automobile
insurance, any change in territorial classifications shall be subject to prior approval by
the Insurance Commissioner, and provided no surcharge on any motor vehicle liability
or physical damage insurance premium shall be assigned for (A) any accident involving
only property damage of one thousand dollars or less, (B) the first accident involving
only property damage of more than one thousand dollars which would otherwise result
in a surcharge to the policy of the insured, within the experience period set forth in the
insurer's safe driver classification plan, (C) any violation of section 14-219 unless such
violation results in the suspension or revocation of the operator's license under section
14-111b, (D) less than three violations of section 14-218a within any one-year period,
(E) any accident caused by an operator other than the named insured, a relative residing
in the named insured's household, or a person who customarily operates the insured
vehicle, (F) the first or second accident within the current experience period in relation
to which the insured was not convicted of a moving traffic violation and was not at fault,
or (G) any motor vehicle infraction. Subparagraph (G) of this subdivision shall not be
applicable to any plan established pursuant to section 38a-329. Classification rates may
be modified to produce rates for individual risks in accordance with rating plans that
provide for recognition of variations in hazards or expense provisions or both. Such
rating plans may include application of the judgment of the insurer and may measure
any differences among risks that can be demonstrated to have a probable effect upon
losses or expenses.
(4) Each rating plan for private passenger nonfleet automobile insurance that includes territorial classifications shall assign a weight of seventy-five per cent to individual territorial loss cost indication and twenty-five per cent to the state-wide average loss
cost indication.
(5) Each rating plan shall establish appropriate eligibility criteria for determining
significant risks that are to qualify under the plan. Rating plans that comply with the
provisions of this subdivision shall be deemed to produce rates that are not unfairly
discriminatory.
(6) With respect to personal risk insurance, an insurer shall not use an applicant's
or insured's credit history as a factor in underwriting or rating except in accordance
with this subdivision. For the purposes of this section, "credit history" means any credit-related information derived from or found in a credit report or credit scoring program
or provided in an application for personal risk insurance, and "financial history measurement program" means a program that uses an applicant's credit history to measure such
applicant's risk of loss.
(A) An insurer shall file with the commissioner any financial history measurement
program it uses to underwrite or rate risks for personal risk insurance. Such filing shall
(i) include a description of the program, (ii) identify the characteristics used in such
program from which a measurement is derived, (iii) include the rules and procedures
of such program, and (iv) include an explanation of the impact of credit information
and items of public record on insurance rates over time. Such program shall not unfairly
discriminate among applicants or produce rates that are excessive for the risk assumed.
Any filing made pursuant to this subparagraph shall be considered a trade secret for the
purposes of section 1-210.
(B) (i) An insurer that uses a financial history measurement program shall submit
to the commissioner documentation that demonstrates the correlation between such
program and the expected risk of loss, and how such program impacts consumers (I) in
urban territories, versus consumers in nonurban territories, and (II) based on consumers'
ages. The commissioner may request the insurer to provide a financial history measurement for a set of test examples that reflect various characteristics.
(ii) An insurer that uses a financial history measurement program shall disclose to
each applicant for personal risk insurance, in writing, by telephone, by electronic mail
or orally, at the time of application that the applicant's credit history may be used in the
underwriting or rating of such applicant's policy, and that the applicant has the right to
request, in writing, that the insurer consider, during its underwriting or rating process
or during a review requested by such applicant of a rate quote, an extraordinary life
circumstance, as set forth in subparagraph (D) of this subdivision, if such applicant's
credit history has been adversely impacted by such extraordinary life circumstance and
such extraordinary life circumstance occurred within three years before the date of the
application. In addition, such insurer shall provide to each purchaser of such policy, not
later than the date of issuance of such policy, a written disclosure that includes: (I) The
name, address, telephone number and toll-free telephone number, if applicable, of the
insurer; (II) detailed information about how the insurer uses credit information to underwrite or rate such policies; and (III) a summary of consumer protections regarding the
use of credit, in a form determined by the commissioner. Such written disclosure shall
be printed in reasonably conspicuous type and be provided by the insurer electronically,
by mail or by hand delivery.
(C) (i) An insurer may use a financial history measurement program to underwrite
or rate risks only (I) for new personal risk insurance policies, or (II) upon renewal,
either at the request of an insured or if such use reduces the premium for the insured in
accordance with the insurer's filed rates and rules.
(ii) An insurer shall not use the following characteristics in a financial history measurement program: (I) The number of credit inquiries in an applicant's or insured's
credit report or credit history; (II) the applicant's or insured's use of a particular type
of credit card, debit card or charge card; (III) the applicant's or insured's total available
line of credit; (IV) any disputed credit information while such dispute is under review
by a credit reporting company, provided such information is identified in an applicant's
or insured's credit report or credit history as being in dispute; (V) collection accounts
identified with a medical industry code in the applicant's or insured's credit report or
credit history; and (VI) the applicant's or insured's lack of credit history, unless the
insurer treats the applicant or insured as if such applicant or insured had neutral credit
information, as defined by the insurer.
(iii) A financial history measurement program shall give the same weight to an
applicant's or insured's purchase or financing of a specific item regardless of the type
of item purchased or financed.
(D) (i) Upon written request by an applicant, an insurer shall consider, during its
underwriting or rating process or during a review requested by such applicant of a rate
quote, an extraordinary life circumstance of such applicant if such extraordinary life
circumstance occurred within three years before the date of application. If such insurer
determines that such applicant's credit history has been adversely impacted by such
extraordinary life circumstance, such insurer shall grant a reasonable exception to such
insurer's rates, rating classifications or underwriting rules for such applicant. As used
in this subparagraph, "extraordinary life circumstance" means (I) a catastrophic illness
or injury, (II) divorce, (III) the death of a spouse, child or parent, (IV) the involuntary
loss of employment for more than three consecutive months, (V) identity theft, (VI)
total or other loss that makes a home uninhabitable, (VII) other circumstances as may
be adopted in regulations by the commissioner, in accordance with chapter 54, or (VIII)
any other circumstance an insurer may choose to recognize.
(ii) An insurer may require the applicant to provide reasonable, independently verifiable written documentation of the extraordinary life circumstance and the effect of
such extraordinary life circumstance on such applicant's credit report or credit history.
Any such documentation shall be kept confidential by the insurer.
(iii) If the insurer grants an exception pursuant to subparagraph (D)(i) of this subdivision, the insurer shall (I) consider only credit information that is not affected by the
extraordinary life circumstance, or (II) treat the applicant as if such applicant had neutral
or better than neutral credit information, as defined by the insurer.
(iv) An insurer shall not be deemed to be out of compliance with any provision of
the general statutes or regulations adopted thereunder concerning underwriting, rating
or rate filing solely on the basis of the granting of an exception pursuant to this subparagraph.
(E) (i) If an insurer takes an adverse action that is due at least in part to the information contained in an applicant's or insured's credit report, such insurer shall disclose to
such applicant or insured: (I) That such adverse action was based on the credit report
of such insured or applicant; (II) that such applicant or insured is entitled to a free
copy of such credit report and where such report can be obtained; (III) the types of
extraordinary life circumstances set forth in subparagraph (D) of this subdivision; and
(IV) the procedures for an applicant to inform the insurer of an extraordinary life circumstance and to submit any required documentation pursuant to subparagraph (D) of this
subdivision.
(ii) For the purposes of this subdivision, an "adverse action" means (I) the denial
of coverage to an applicant or insured or the offering of restricted coverage, (II) the
offering of a higher rate, (III) the assignment of an applicant or insured to a higher rate
tier or to a higher-priced company within an insurer group, or (IV) any other action that
adversely impacts an applicant or insured due to the financial history measurement
program.
(F) After an insurer's financial history measurement program has been in effect
for two years, the commissioner may require such insurer to submit a report to the
commissioner on the use of such program in the state. Such report shall include information that demonstrates that such program results in rates that are supported by the data and
that are not unfairly discriminatory, and an analysis of consumer complaints submitted in
writing or by electronic mail to the insurer resulting from such insurer's use of a financial
history measurement program, such that is sufficient to identify the basis for the complaints and any subsequent insurer action.
(c) Notwithstanding the provisions of subsections (a) and (b) of this section, no
rate shall include any adjustment designed to recover underwriting or operating losses
incurred out-of-state.
(d) Not later than January 1, 2012, the commissioner shall adopt regulations, in
accordance with the provisions of chapter 54, to implement the provisions of this section
and the most current guidelines and bulletins issued by the Insurance Department and
in effect that pertain to territorial classifications.
(P.A. 82-353, S. 5, 26; P.A. 84-165, S. 2; P.A. 85-45, S. 1; P.A. 86-254; P.A. 88-73, S. 4; P.A. 89-114, S. 2; 89-192,
S. 2; 89-193, S. 2; P.A. 10-7, S. 1, 2; P.A. 11-19, S. 16.)
History: P.A. 82-353, S. 5, effective July 1, 1983; P.A. 84-165 amended Subsec. (b)(3) to increase minimum damage
requirement for premium surcharges from $300 to $600; P.A. 85-45 amended Subsec. (b)(3) to prohibit any premium
surcharge based on an accident caused by someone other than the named insured, a resident relative or a customary operator
of the vehicle; P.A. 86-254 added Subsec. (b)(3)(E), prohibiting surcharge for "any motor vehicle infraction", provided
such prohibition shall not apply to plan established pursuant to Sec. 38-185l; P.A. 88-73 amended Subsec. (b)(3) to increase
minimum property damage requirement for premium surcharges from $600 to $1,000; P.A. 89-114 added Subsec. (c)
providing that no rate shall include any adjustment designed to recover underwriting or operating losses incurred out-of-state and redesignated former Subsec. (b)(5) as Subsec. (d); P.A. 89-192 added a new Subpara. in Subsec. (b)(3) providing
that no surcharge may be assigned on an automobile insurance policy for the first or second accident within the current
experience period in which the insured was not convicted of a moving traffic violation and was not at fault and relettered
the remaining Subparas.; P.A. 89-193 added new Subpara. in Subsec. (b)(3) providing that no surcharge on an automobile
insurance policy may be assigned for the first accident involving only property damage of more than $1,000 which would
otherwise result in a surcharge to the policy of the insured, within a certain experience period and relettered the remaining
Subparas.; Sec. 38-201v transferred to Sec. 38a-686 in 1991 (Revisor's note: In 1995 in Subsec. (a)(1) the word "sections"
was substituted editorially by the Revisors for the word "section" before the reference to "38a-328, 38a-329 and 38a-670"
for consistency of statutory reference); P.A. 10-7 amended Subsec. (b) to redesignate existing Subdiv. (2) as Subdiv. (2)(A),
add Subdiv. (2)(B) re flat dollar amount allocations to base rates for private passenger nonfleet automobile insurance, add
new Subdiv. (4) re territorial classifications for private passenger nonfleet automobile insurance, redesignate existing
Subdiv. (4) as Subdiv. (5) and make technical changes and amended Subsec. (d) to require commissioner to adopt regulations
to implement provisions of section and department guidelines and bulletins pertaining to territorial classifications, effective
January 1, 2011, and amended Subsec. (b) to add Subdiv. (6) re use of credit history as a factor in underwriting personal
risk insurance, effective July 1, 2011; P.A. 11-19 made a technical change in Subsec. (b)(6)(D)(iii), effective July 1, 2011.
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Sec. 38a-688a. Rate filing re personal risk insurance. Powers of commissioner.
(a) Notwithstanding the requirements of sections 38a-389 and 38a-688 with respect to
personal risk insurance with the exception of residual market rates, and on and after
July 1, 2006, and until July 1, 2013, an insurer may file a rate with the Insurance Commissioner pursuant to this section and such rate shall take effect the date it is filed provided
the rate provides for an overall state-wide rate increase or decrease of not more than six
per cent in the aggregate for all coverages that are subject to the filing. The six per cent
limit shall not apply on an individual insured basis. Not more than one filing may be
made by an insurer pursuant to this section within any twelve-month period unless the
filing, when combined with one or more filings made by the insurer within the preceding
twelve months, does not result in an overall state-wide increase or decrease of more
than six per cent in the aggregate for all coverages that are subject to the filing.
(b) A filing that does not meet the criteria set forth in subsection (a) of this section
shall be subject to sections 38a-389 and 38a-688 unless the filing is otherwise exempt
from said sections.
(c) A filing submitted pursuant to subsection (a) of this section shall be deemed to
comply with the requirements of this chapter, except that the commissioner shall have
the authority to determine whether the filing is inadequate or unfairly discriminatory.
In the event the commissioner determines that the filing is inadequate or unfairly discriminatory, the commissioner shall issue a written order specifying in detail the reasons
why the filing is inadequate or unfairly discriminatory. The order shall indicate a future
date on which the filing shall no longer be effective. An order by the commissioner
pursuant to this subsection that is issued more than thirty days after the date the rate is
filed with the commissioner shall be prospective only and shall not affect any contract
issued or made before the effective date of the order.
(d) No rate increase that meets the criteria set forth in subsection (a) of this section
may be implemented with respect to an individual policy in effect on the date of the
filing unless the increase is applicable no earlier than the date of policy renewal and the
insurer provides notice of the increase to the insured pursuant to section 38a-323.
(P.A. 06-104, S. 2; P.A. 09-217, S. 1; P.A. 11-253, S. 1.)
History: P.A. 06-104 effective July 1, 2006; P.A. 09-217 amended Subsec. (a) to extend filing date from July 1, 2009,
to July 1, 2011, effective July 8, 2009; P.A. 11-253 amended Subsec. (a) to extend filing date to July 1, 2013, effective
July 13, 2011.
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