House Bill No. 7020

Public Act No. 99-145

An Act Concerning Insurance Binders on Residential Property and Technical Corrections to the Insurance Statutes.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subsection (b) of section 14-15b of the general statutes is repealed and the following is substituted in lieu thereof:

(b) "Rental motor vehicle" means a private passenger motor vehicle as defined in subsection [(g)] (e) of section 38a-363, which is not the subject of a lease with the option to purchase where the lessee has the right to possession.

Sec. 2. Subdivision (1) of subsection (b) of section 38a-9 of the general statutes is repealed and the following is substituted in lieu thereof:

(b) (1) The Division of Consumer Affairs shall provide an independent arbitration procedure for the settlement of disputes between claimants and insurance companies concerning automobile physical damage and automobile property damage liability claims in which liability and coverage are not in dispute. Such procedure shall apply only to disputes involving private passenger motor vehicles as defined in subsection [(g)] (e) of section 38a-363. Any company licensed to write private passenger automobile insurance, including collision, comprehensive and theft, in this state shall participate in the arbitration procedure. The commissioner shall appoint an administrator for such procedure. Only those disputes in which attempts at mediation by the Division of Consumer Affairs have failed shall be accepted as arbitrable. The referral of the complaint to arbitration shall be made by the Insurance Department examiner who investigated the complaint. Each party to the dispute shall pay a filing fee of twenty dollars. The insurance company shall pay the consumer the undisputed amount of the claim upon written notification from the department that the complaint has been referred to arbitration. Such payment shall not affect any right of the consumer to pursue the disputed amount of the claim.

Sec. 3. Subsection (b) of section 38a-335 of the general statutes is repealed and the following is substituted in lieu thereof:

(b) Each automobile liability insurance policy issued, renewed, amended or endorsed on or after October 1, 1988, and covering a private passenger motor vehicle as defined in subsection [(g)] (e) of section 38a-363, shall contain or have attached thereto a conspicuous statement specifying whether the policy provides liability, collision or comprehensive coverage for damage to a rented private passenger motor vehicle and, where the policy provides such coverage, the limit of coverage provided and whether any deductible amount applies.

Sec. 4. Section 38a-465 of the general statutes is repealed and the following is substituted in lieu thereof:

As used in subsection (a) of section 38a-11, sections 38a-465 to 38a-465m, inclusive, and subdivision [(19)] (20) of section 38a-816:

(1) "Certificate" means any certificate of group life insurance.

(2) "Commissioner" means the Insurance Commissioner.

(3) "Financing entity" means any participant, or any transferee of or successor to the interest of a participant, in any financing transaction.

(4) "Financing transaction" means any transaction in which financing is obtained for the purchase, acquisition, transfer or other assignment of one or more viatical settlement contracts, viaticated policies or interests in such contracts or policies, including, but not limited to, any secured or unsecured financing, any securitization transaction or any securities offering which is registered or exempt from registration under federal and applicable state securities law, or in which one or more viatical settlement contracts, viaticated policies or interests therein are sold, assigned, transferred, pledged, hypothecated or otherwise disposed of.

(5) "Participant" means an underwriter, placement agent, lender, purchaser of securities, credit enhancer or other participant, other than a viatical settlement provider, in any financing transaction.

(6) "Person" means any natural or artificial entity, including, but not limited to, any individual, partnership, association, trust or corporation.

(7) "Viatical settlement agent" means any person who is an authorized agent of a licensed viatical settlement provider, and any subagent or other representative of such agent, who acts or aids in any manner in the solicitation of a viatical settlement on behalf of such viatical settlement provider. Viatical settlement agent shall not include (A) a viatical settlement provider, viatical settlement broker or financing entity, (B) an attorney, accountant, financial planner or any person exercising a power of attorney granted by a viator, (C) any person who is retained to represent a viator and whose compensation is paid by or at the discretion of the viator regardless of whether the viatical settlement is consummated or (D) a credit union, employer or association which provides information relating to viatical settlements to its members or employees. A viatical settlement agent is deemed to represent only the viatical settlement provider.

(8) "Viatical settlement broker" means any person who, for a fee, commission or other valuable consideration, advertises or advises a person on the availability of a viatical settlement, introduces viators to viatical settlement providers, and offers or attempts to negotiate viatical settlements between a viator and one or more viatical settlement providers. Viatical settlement broker shall not include (A) an attorney, accountant or financial planner retained to represent a viator and whose compensation is paid by or at the discretion of the viator, (B) a viatical settlement provider, viatical settlement agent or financing entity, or (C) a credit union, employer or association which provides information relating to viatical settlements to its members or employees. A viatical settlement broker is deemed to represent only the viator's interests and shall owe a fiduciary duty to the viator to act according to the viator's instructions and in the viator's best interests.

(9) "Viatical settlement contract" means a written agreement entered into between a viatical settlement provider and a viator which establishes the terms and conditions of a viatical settlement.

(10) "Viatical settlement provider" means a person who enters into one or more viatical settlement contracts. Viatical settlement provider shall not include: (A) Any bank, as defined in section 36a-2, credit union as defined in said section, or other licensed lending institution which takes an assignment of a life insurance policy as collateral for a loan; (B) the issuer of a life insurance policy providing accelerated benefits pursuant to section 38a-457; (C) a viator's adult family member, including, but not limited to, a parent, child, spouse, brother, sister, grandfather, grandmother, uncle, aunt, cousin, mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law or daughter-in-law who has not entered into a viatical settlement contract during the period of twelve months immediately preceding the date of the viatical settlement contract in question; or (D) any financing entity.

(11) "Viaticated policy" means any life insurance policy or certificate which has been acquired by a viatical settlement provider pursuant to a viatical settlement contract.

(12) "Viator" means the owner of a life insurance policy, or a holder of a certificate, which policy or certificate insures the life of an individual with a catastrophic or life-threatening illness or condition and who enters or seeks to enter into a viatical settlement contract. Viator shall not include a viatical settlement provider, viatical settlement agent, viatical settlement broker or financing entity.

(13) "Viatical settlement" means a transaction between a viator and a viatical settlement provider in which the viatical settlement provider pays compensation or other value in return for the viator's assignment, transfer, sale, devise or bequest to the viatical settlement provider of the ownership of or the death benefit payable under a life insurance policy or a certificate.

Sec. 5. Subsection (a) of section 38a-465a of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Except as otherwise provided in [subsection (a) of section 38a-11, sections 38a-465 to 38a-465m, inclusive, and subdivision (19) of section 38a-816,] this part, no person may act as a viatical settlement provider or viatical settlement broker until he is licensed by the commissioner pursuant to this section, except that any person who holds a resident or nonresident insurance producer license pursuant to chapter 702 may act as a viatical settlement broker, and shall be subject to the provisions of subsection (a) of section 38a-11, sections 38a-465 to 38a-465m, inclusive, and subdivision [(19)] (20) of section 38a-816, as if such person is a licensed viatical settlement broker.

Sec. 6. Section 38a-465b of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The commissioner may deny a license application, or suspend, revoke or refuse to renew the license of any viatical settlement provider or viatical settlement broker if the commissioner determines that:

(1) There was a material misrepresentation in the license application or in other information submitted to the commissioner;

(2) The licensee, or any partner, key manager, director, officer or majority stockholder of the licensee has been convicted of a felony, is subject to a final administrative action to suspend or revoke a license granted by the chief insurance regulatory official of another state, or is otherwise shown to be untrustworthy or incompetent to act as a viatical settlement provider or viatical settlement broker; or

(3) The licensee has wilfully violated any of the provisions of [subsection (a) of section 38a-11, sections 38a-465 to 38a-465m, inclusive, and subdivision (19) of section 38a-816] this part.

(b) Before the commissioner denies a license application, or suspends, revokes or refuses to renew the license of a viatical settlement provider or viatical settlement broker, the commissioner shall hold a hearing in accordance with the provisions of chapter 54. Hearings may be held by the commissioner or by any person designated by the commissioner. Whenever a person other than the commissioner acts as the hearing officer, he shall submit to the commissioner a memorandum of his findings and recommendations upon which the commissioner may base his decision.

(c) In addition to denying a license application, or suspending, revoking or refusing to renew a license, the commissioner may assess a fine of up to one thousand dollars against a viatical settlement provider for each wilful violation by the viatical settlement provider of any provision of [subsection (a) of section 38a-11, sections 38a-465 to 38a-465m, inclusive, and subdivision (19) of section 38a-816,] this part or regulations adopted pursuant to [said sections] this part.

(d) In addition to denying a license application, or suspending, revoking or refusing to renew a license, the commissioner may assess a fine of up to one thousand dollars against a viatical settlement broker if:

(1) Such viatical settlement broker has knowingly received a commission or other payment or benefit from a viatical settlement provider who is unlicensed in this state in connection with a viatical settlement contract entered into with a viator resident in this state;

(2) Such viatical settlement broker has defrauded, misled or mistreated viators; or

(3) Such viatical settlement broker has wilfully violated [a] any provision of [subsection (a) of section 38a-11,] sections 38a-465 to 38a-465m, inclusive, [and subdivision (19) of section 38a-816,] or regulations adopted pursuant to said sections.

Sec. 7. Section 38a-465c of the general statutes is repealed and the following is substituted in lieu thereof:

No viatical settlement provider, viatical settlement broker or viatical settlement agent may use any form of viatical settlement contract or disclosure statement in this state when dealing with a viator unless such form has been filed with and approved by the commissioner. Any viatical settlement contract or disclosure statement filed with the commissioner shall be deemed approved by the commissioner unless, not later than sixty days after filing, the commissioner sends, by first class mail, a notice of disapproval to the party that made the filing. The commissioner may disapprove a viatical settlement contract or disclosure statement, if he finds any provision in said form is unreasonable, fails to comply with the provisions of [subsection (a) of section 38a-11,] sections 38a-465 to 38a-465m, inclusive, [and subdivision (19) of section 38a-816,] or is misleading to viators or the public.

Sec. 8. Section 38a-465e of the general statutes is repealed and the following is substituted in lieu thereof:

(a) In response to a complaint concerning a license or in connection with the review of an application for a license pursuant to section 38a-465a, the commissioner may examine the business and affairs of any licensee or applicant for a license.

(b) Licensees shall maintain records of each viatical settlement and, subject to the provisions of section 38a-465d, such records shall be available, during reasonable business hours, to the commissioner for inspection for the three-year period following the insured's death. Subject to the provisions of said section, the commissioner shall also have the authority to order any licensee or applicant to produce any records, books, files or other information reasonably necessary to ascertain whether the licensee or applicant is acting or has acted in violation of any provision of [subsection (a) of section 38a-11,] sections 38a-465 to 38a-465m, inclusive, [and subdivision (19) of section 38a-816,] or of any regulations adopted pursuant to said sections. The licensee or applicant shall pay all expenses incurred by the commissioner in conducting any inspection or examination.

Sec. 9. Subsection (d) of section 38a-465g of the general statutes is repealed and the following is substituted in lieu thereof:

(d) A viatical settlement contract shall be null and void if the viatical settlement proceeds payable pursuant to said contract are not received by the viator or the viator's designee strictly in accordance with the terms of the viatical settlement contract and the provisions of [subsection (a) of section 38a-11,] sections 38a-465 to 38a-465m, inclusive. [, and subdivision (19) of section 38a-816.]

Sec. 10. Subsection (h) of section 38a-465g of the general statutes is repealed and the following is substituted in lieu thereof:

(h) Nothing in [subsection (a) of section 38a-11,] sections 38a-465 to 38a-465m, inclusive, [and subdivision (19) of section 38a-816,] shall be construed to authorize the commissioner to determine or authorize the amount to be paid by a licensed viatical settlement provider to a viator, viatical settlement broker or viatical settlement agent pursuant to or in connection with a viatical settlement contract.

Sec. 11. Section 38a-465j of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Nothing in [subsection (a) of section 38a-11,] sections 38a-465 to 38a-465m, inclusive, [and subdivision (19) of section 38a-816,] shall be construed to require a financing entity to obtain a viatical settlement provider license or viatical settlement broker license pursuant to section 38a-465a.

(b) Nothing in [subsection (a) of section 38a-11,] sections 38a-465 to 38a-465m, inclusive, [and subdivision (19) of section 38a-816,] shall be construed to restrict any person from receiving a fee, commission or other valuable consideration for services rendered in connection with any financing transaction.

(c) Nothing in [subsection (a) of section 38a-11,] sections 38a-465 to 38a-465m, inclusive, [and subdivision (19) of section 38a-816,] shall be construed to require notice to the commissioner of, or restrict an insurance company from investing or participating in or purchasing any securities issued in, any financing transaction.

Sec. 12. Section 38a-465k of the general statutes is repealed and the following is substituted in lieu thereof:

No viatical settlement provider may sell, assign, transfer or pledge a viaticated policy except to a viatical settlement provider licensed pursuant to section 38a-465a, or a person not required to be licensed under [subsection (a) of section 38a-11,] sections 38a-465 to 38a-465m, inclusive. [, and subdivision (19) of section 38a-816.]

Sec. 13. Section 38a-465m of the general statutes is repealed and the following is substituted in lieu thereof:

The commissioner may adopt regulations, in accordance with the provisions of chapter 54, to implement the provisions of [subsection (a) of section 38a-11,] sections 38a-465 to 38a-465l, inclusive. [, and subdivision (19) of section 38a-816.]

Sec. 14. Subsection (d) of section 1-84 of the general statutes is repealed and the following is substituted in lieu thereof:

(d) No public official or his employee or state employee or his employee shall agree to accept, or be a member or employee of a partnership, association, professional corporation or sole proprietorship which partnership, association, professional corporation or sole proprietorship agrees to accept any employment, fee or other thing of value, or portion thereof, for appearing, agreeing to appear, or taking any other action on behalf of another person before the Department of Banking, the Claims Commissioner, the Office of Health Care Access, the Insurance Department, the office within the Department of Consumer Protection that carries out the duties and responsibilities of sections 30-2 to 30-68m, inclusive, the Department of Motor Vehicles, the [State Insurance Purchasing Board] State Insurance and Risk Management Board, the Department of Environmental Protection, the Department of Public Utility Control, the Connecticut Siting Council, the Division of Special Revenue within the Department of Revenue Services, the Gaming Policy Board within the Department of Revenue Services or the Connecticut Real Estate Commission; provided this shall not prohibit any such person from making inquiry for information on behalf of another before any of said commissions or commissioners if no fee or reward is given or promised in consequence thereof. For the purpose of this subsection, partnerships, associations, professional corporations or sole proprietorships refer only to such partnerships, associations, professional corporations or sole proprietorships which have been formed to carry on the business or profession directly relating to the employment, appearing, agreeing to appear or taking of action provided for in this subsection. Nothing in this subsection shall prohibit any employment, appearing, agreeing to appear or taking action before any municipal board, commission or council. Nothing in this subsection shall be construed as applying (1) to the actions of any teaching or research professional employee of a public institution of higher education if such actions are not in violation of any other provision of this chapter, (2) to the actions of any other professional employee of a public institution of higher education if such actions are not compensated and are not in violation of any other provision of this chapter, (3) to any member of a board or commission who receives no compensation other than per diem payments or reimbursement for actual or necessary expenses, or both, incurred in the performance of his duties or (4) to any member or director of a quasi-public agency. Notwithstanding the provisions of this subsection to the contrary, a legislator, an officer of the General Assembly or part-time legislative employee may be or become a member or employee of a firm, partnership, association or professional corporation which represents clients for compensation before agencies listed in this subsection, provided the legislator, officer of the General Assembly or part-time legislative employee shall take no part in any matter involving the agency listed in this subsection and shall not receive compensation from any such matter. Receipt of a previously established salary, not based on the current or anticipated business of the firm, partnership, association or professional corporation involving the agencies listed in this subsection, shall be permitted.

Sec. 15. Subdivision (1) of subsection (d) of section 2c-2b of the general statutes is repealed and the following is substituted in lieu thereof:

(1) [State Insurance Purchasing Board] State Insurance and Risk Management Board, established under section 4a-19.

Sec. 16. Subsection (a) of section 4-20 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The [State Insurance Purchasing Board] State Insurance and Risk Management Board shall, not later than October 1, 1974, and quadrennially thereafter, set the penalties of the bonds of the following officers, having due regard for the duties and responsibilities of said officers, for four-year terms concurrent with their respective terms of office: The Secretary of the State and those department heads listed in section 4-5. Said officers shall, before entering upon the performance of the duties of their office, give their official bonds in the penalty fixed by the board. The premium for said bonds shall be paid by the state.

Sec. 17. Subsection (a) of section 4-54 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The management of such funds may be under the control of students or employees other than those adjudged mentally ill but shall be under the supervision of the administrative head of the institution or agency, except that such funds shall be under the total control of students under conditions hereinafter provided. The person acting as treasurer of any such fund shall be bonded in an amount determined by the [State Insurance Purchasing Board] State Insurance and Risk Management Board.

Sec. 18. Subsection (c) of section 4-57a of the general statutes is repealed and the following is substituted in lieu thereof:

(c) The management of such funds shall be under the supervision of the Commissioner of Correction. The person acting as treasurer of any such fund shall be bonded in an amount determined by the [State Insurance Purchasing Board] State Insurance and Risk Management Board.

Sec. 19. Section 4-61ll of the general statutes is repealed and the following is substituted in lieu thereof:

Each state agency may provide benefits or reimbursements to volunteers, within the limits of its available appropriations, as follows: [(a)] (1) Meals may be furnished without charge; [(b)] (2) lodging may be furnished temporarily to regular service volunteers without charge; [(c)] (3) transportation reimbursements, including parking fees, automobile mileage, bus and taxi fares, may be furnished. Such reimbursements, when provided, shall be furnished at the same rate as provided for state employees in accordance with section 5-141c; [(d)] (4) use of state vehicles for the performance of official state agency duties; [(e)] (5) liability insurance, purchased through the [State Insurance Purchasing Board] State Insurance and Risk Management Board, to cover all volunteers to the same extent as may be provided for its salaried employees; and [(f)] (6) optional staff development training to enhance individual skills.

Sec. 20. Section 20-311d of the general statutes is repealed and the following is substituted in lieu thereof:

The chairman of the commission shall be bonded under the provisions of section 4-20, in such sum as the [State Insurance Purchasing Board] State Insurance and Risk Management Board may prescribe, with the condition that the chairman faithfully perform the duties of his office and account for all funds received pursuant to such office.

Sec. 21. Section 20-505 of the general statutes is repealed and the following is substituted in lieu thereof:

The chairman of the commission shall be bonded under the provisions of section 4-20, in such sum as the [State Insurance Purchasing Board] State Insurance and Risk Management Board may prescribe, with the condition that the chairman faithfully perform the duties of his office and account for all funds received pursuant to such office.

Sec. 22. Section 38a-309 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Binders or other contracts for temporary insurance may be made, orally or in writing, for a period which shall not exceed sixty days, and shall be deemed to include all the terms of [such] a standard fire insurance policy and all such applicable endorsements, approved by the commissioner, as are designated in such contract of temporary insurance, except that the cancellation clause of such standard fire insurance policy, and the clause thereof specifying the hour of the day at which the insurance shall commence, may be superseded by the express terms of such contract of temporary insurance.

(b) Notwithstanding the provisions of subsection (a) of this section, no person shall, at the time of title closing for a loan secured by a one-to-four-family residential property, refuse to accept a written binder issued by an insurer, or a duly authorized representative of an insurer, licensed to do business in this state, as evidence that hazard insurance has been procured for the mortgaged premises. The commissioner may require such binders to contain any additional information to permit such binders to comply with the reasonable requirements of the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation for the purchase of mortgage loans. Nothing in this section shall be construed to prohibit a person from requiring the borrower to also furnish a receipt indicating that the annual or instalment premium on such insurance policy has been paid for twelve months following the date of closing, or for less than twelve months at the option of the person.

Sec. 23. This act shall take effect from its passage.

Approved June 8, 1999

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