Connecticut State Regulations & NAIC Insurance Law
Licensing
Any individual applying for a Connecticut resident producer’s license must be at least 18 years old and be a resident of Connecticut prior to submitting an application.
Pre-licensing course and exam
Connecticut requires a prelicensing course approved by the Commissioner of at least 20 hours for each line of insurance applied for (Conn. Gen. Stat. § 38a-702e).
The passing score on Connecticut’s producer examinations is 70% (Pearson VUE, State of Connecticut Insurance Candidate Handbook).
Fingerprints/background check
The Connecticut Insurance Department does not require fingerprints or a background check for most licenses, including the producer license; the exception is a surety bail bond license (Connecticut Insurance Department).
Controlled business
Controlled business is insurance written on the producer’s own life, property or interests, or on those of the producer’s family, employer or a business the producer controls. A producer may insure themselves and their family, but a license exists to sell insurance to the public, so states generally restrict obtaining or using a license principally to write controlled business.
Non-resident license
A producer licensed in another state can obtain a Connecticut nonresident license without taking Connecticut’s examination. Under the NAIC’s Producer Licensing Model Act, which most states have adopted in some form, a nonresident receives the license if the person:
- Is currently licensed as a resident, and in good standing, in the home state
- Has applied (the home-state application or the Uniform Application) and paid the fees
- Lives in a home state that grants nonresident licenses to residents of this state on the same basis (reciprocity)
Under the same model, a producer who moves to another state files a change of address, with certification from the new home state, within 30 days. A licensed producer who moves into a state applies for a resident license there within 90 days and does not repeat prelicensing education or the examination for lines already held.
Temporary license
Most states allow the insurance regulator to issue a temporary license, without an examination, when one is needed to keep an insurance business serviced. Typical cases are:
- The surviving spouse or personal representative of a producer who dies or becomes disabled, to allow time to sell the business or train new people
- A member or employee of a business entity producer, on the death or disability of its designated producer
- The designee of a producer entering active military service
The regulator may limit what a temporary licensee may do and may require a licensed sponsor who takes responsibility for the temporary licensee’s acts.
Connecticut may issue a temporary producer license for up to 180 days without an examination, in cases such as the death or disability of a producer (Conn. Gen. Stat. § 38a-702j).
Military service
A Connecticut producer who cannot comply with license renewal procedures because of military service or another extenuating circumstance, such as a long-term medical disability, may request a waiver of those procedures (Conn. Gen. Stat. § 38a-702f(d)).
Renewal and reinstatement
A producer license stays in effect only while the producer renews it on schedule: paying the renewal fee and completing continuing education by the due date.
An initial Connecticut producer license expires two years after the producer’s birthday that preceded its issue (Conn. Gen. Stat. § 38a-784).
A producer who misses the deadline and lets the license lapse may be able to reinstate it without retaking the examination.
A producer who lets a license lapse may reinstate it without a new examination within 12 months after the renewal fee’s due date, but a penalty of double the unpaid renewal fee applies (Conn. Gen. Stat. § 38a-702f©).
Continuing Education
All states, including Connecticut, have continuing education requirements that must be met to renew any major lines (life, health, property, liability) insurance license. Individuals licensed in the state of Connecticut must complete continuing education prior to renewing their license. The number of hours required is set by state law and published by the state insurance department.
Notice of change of name or address
A Connecticut licensee must notify the Insurance Commissioner in writing within 30 days of a change of business, residence or e-mail address (Conn. Gen. Stat. § 38a-771(a)).
The model also requires a producer to report to the regulator within 30 days any administrative action taken against the producer in another state or by another government agency, counted from the final disposition, and any criminal prosecution in any jurisdiction, counted from the initial pretrial hearing date. A producer who does business under any name other than their legal name must notify the regulator before using it.
Company Regulations
An insurance company must be authorized by the Insurance Department to conduct business in Connecticut. To receive a license, the company applies to the Commissioner, naming the lines of business it seeks to write, and files a certified copy of its charter or articles of association, evidence that it has complied with the laws of the jurisdiction where it is organized, and a statement of its financial condition, together with whatever evidence of its correctness the Commissioner requires (Conn. Gen. Stat. § 38a-41(a)).
Capital and Surplus Requirement
A company that has been authorized to conduct insurance business in Connecticut must maintain minimum standards as a corporation. The certificate of authority will allow the insurer to conduct business in the state only if it maintains the minimum capital or permanent surplus required.
Duties of the Insurance Commissioner
The Connecticut Insurance Commissioner is an executive officer in the Connecticut state government. The Commissioner is head of the Connecticut Insurance Department, which regulates the state’s insurance industry. Insurance commissioners are appointed by the Governor subject to confirmation by the legislature. The Commissioner serves at the Governor’s pleasure for four-year terms beginning on the first day of March in the year of the appointment.
The Commissioner is responsible for establishing and enforcing regulations in the Connecticut insurance market in a manner that protects consumers and encourages economic development.
Those duties include:
-
Investigate all claims and complaints of legal violations relating to insurance.
-
If the Commissioner finds that laws have been violated, the findings and supporting documents may be referred for criminal prosecution.
-
Monitor transactions of all companies including domestic, foreign, and alien insurance companies.
-
The Commissioner must examine each domestic insurer at least once every five years (Conn. Gen. Stat. § 38a-14(h)).
-
Audit the books and records of any resident producer as frequently as necessary.
-
Collect all fees associated with producers and insurers.
-
Determine and administer fines associated with violations for insurers and producers.
-
Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.
-
Approve documentation used by insurance companies such as forms and rates.
The Commissioner also supervises the financial condition of insurance companies to ensure their solvency and the market conduct of companies and deals with complaints against companies for illegal conduct or regulatory noncompliance.
Suspend, Revoke or Non-renew
The Commissioner has the authority to suspend, revoke, or refuse to renew a license for:
-
Providing false information on the application for an insurance license.
-
Omitting any relevant information on an application that would have disqualified the individual from being eligible to receive a license.
-
Being found guilty of a violation or the noncompliance of insurance regulations and laws…
-
Committing fraud while attempting to obtain an insurance license.
-
Improperly withholding, misappropriating or converting any money or property received in the course of doing insurance business.
-
Providing false information in reference to the terms and conditions of an insurance contract.
-
Having been convicted of a felony.
-
Having admitted or been found to have committed any insurance unfair trade practice or fraud.
-
Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.
-
Having had a prior insurance license revoked or suspended in a state other than Connecticut.
-
Using another person’s identity and forging their name on an insurance application.
-
Being found guilty of using unethical practices or cheating on an examination for an insurance license.
Cease and Desist
If, after a hearing, the Commissioner finds that a person has engaged in an unfair method of competition or an unfair or deceptive act or practice in the business of insurance, the Commissioner issues an order requiring the person to cease and desist (Conn. Gen. Stat. § 38a-817). The recipient of a cease and desist order has not had his/her registration suspended or revoked, but is required to stop or limit the activity addresses in the order.
Hearing and penalties
A person facing action by the Commissioner is entitled to notice and an opportunity for a hearing, within time limits set by Connecticut law, and may ask a court to review the final order.
A producer may demand a hearing in writing within 30 days after notice that the Commissioner denied or refused to renew a license, and the hearing must be held within 20 days of the request (Conn. Gen. Stat. § 38a-702k(b)).
A violation of the insurance laws can bring a civil penalty in addition to action against a license. State law sets the maximum, usually per violation and often with a cap on the total, and a higher tier commonly applies to a violation that was knowing or flagrant. Some violations are also crimes.
In addition to or instead of suspending or revoking a license, the Commissioner may impose a fine of up to $5,000 (Conn. Gen. Stat. § 38a-774).
Unfair Claims Settlement Practices
Under the NAIC’s model act, these practices are violations when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.
-
The intentional obstruction and delay of claims payment or the delay of a claims investigation is a violation of regulation.
-
Neglecting to provide a prompt response and written explanation of insurance policy terms, conditions, and laws related to the contract are examples of unfair claims settlement practices.
-
Failure to provide claims without launching a thorough investigation is a violation of regulation.
-
Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of regulation.
-
Denying a claim without conducting a thorough investigation.
-
Attempting to settle a claim for less than fair market value.
Policy forms
Insurers file their policy forms with the Commissioner.
A life insurance or annuity policy form may not be used in Connecticut until it has been filed with and approved by the Commissioner (Conn. Gen. Stat. § 38a-430(a)).
If a policy provision conflicts with Connecticut law, the policy is read as amended to conform to the law.
Record maintenance
A producer keeps records of each transaction (the policies placed, the insureds, the premiums received and any changes) and makes them available for the Commissioner’s inspection.
Fraudulent Producer Representation
An insurance producer who represents to the public that he/she is licensed to conduct insurance business in Connecticut, but has not passed the appropriate licensing examination is in violation of regulation. Any means of public communication using advertisements, letterheads, circulars, business cards, and other methods of representation are included in the definition of impersonating a licensed producer.
A producer found guilty of conducting business in Connecticut in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.
Misrepresentation
-
Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited.
-
Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.
-
Providing inaccurate or incomplete information for the purpose of inducing, or tending to induce, the lapse, exchange, conversion, forfeiture, or surrender of a policy is a violation as well (twisting).
False advertising
Making, publishing or circulating an advertisement, announcement or statement about the business of insurance that is untrue, deceptive or misleading is an unfair trade practice under state law, based on the NAIC’s model act. The medium does not matter: the rule reaches newspapers, magazines, radio and television, and also notices, circulars, pamphlets, letters, posters and any other way of placing the statement before the public. The model act’s test is whether the statement is untrue, deceptive or misleading, not whether the person meant to deceive.
Defamation
Defamation of an insurer is an unfair trade practice under state law, based on the NAIC’s model act: making, publishing or circulating an oral or written statement that is false, or maliciously critical of or derogatory to the financial condition of an insurer, and that is calculated to injure that insurer or any other person engaged in the business of insurance. Spreading an untrue rumor that a competing insurer is about to fail is the classic example.
Boycott, Coercion and Intimidation
Entering into an agreement to commit, or by concerted action committing, any act of boycott, coercion or intimidation that results or tends to result in unreasonable restraint of, or monopoly in, the business of insurance is prohibited.
False Financial Statements
Any licensed producer who makes false statements containing any information that involves inaccurate material facts or false statements on an application for insurance is in violation of the state’s unfair trade practices law.
Illegal inducements
Offering anything of value not specified in the policy (money, a service, a favor or a gift) as an inducement to buy insurance is prohibited unless state law expressly allows it, and any agreement made as part of the sale must be written into the policy.
Connecticut prohibits an insurer, producer or anyone else from giving or offering any rebate of premium, or any other valuable consideration not specified in the policy, as an inducement to insurance, apart from exceptions the statute lists (Conn. Gen. Stat. § 38a-825(b)).
A producer may give a customer a noncash gift, item or service whose cost does not exceed an amount the Commissioner considers reasonable per policy year (Conn. Gen. Stat. § 38a-825(d)).
Unfair discrimination
Unfair discrimination is treating people or risks that present the same hazard differently. The NAIC’s model act, on which state unfair trade practices laws are based, prohibits:
- Unfair discrimination between individuals of the same class and equal expectation of life in life insurance and annuity rates, dividends, benefits or terms
- Unfair discrimination between individuals of the same class and essentially the same hazard in health insurance premiums, benefits or terms
- Refusing, limiting or canceling coverage because of a person’s sex, marital status, race, religion or national origin
- In property and casualty insurance, refusing or limiting coverage solely because of a risk’s geographic location, unless sound underwriting and actuarial principles justify it, or solely because the applicant or insured is physically or mentally impaired
Many states also expressly forbid refusing or limiting coverage solely because a person is blind or partially blind.
Errors & Omissions
Errors & Omissions (E&O) insurance is a type of professional liability insurance that protects insurance agents if they are sued for negligent performance of their duties. E&O only covers honest mistakes resulting in (financial) damage to customers/prospects. There is no coverage for violation of insurance regulation.
Rebating
Connecticut licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance.
Sharing Commission
The splitting or sharing of commissions with a licensed producer is allowed. Both parties must be licensed in the line of business in which the proposed commission is to be split. Under the NAIC’s model act, a commission may also be paid to an insurance agency, or to a person who does not sell, solicit or negotiate insurance.
Twisting
Providing false information or expressing derogatory ideas about the financial conditions of a competitor company with the intent to lapse or surrender an existing policy is a violation of the law. Any written or oral statements used to induce the lapse, termination, exchange, or surrender of an insurance contract based on inaccurate information is prohibited.
Under the NAIC’s model act, twisting is a misrepresentation made to induce a policyholder to lapse, forfeit, surrender, exchange or convert a policy. A false or maliciously critical statement about a competing insurer’s finances, made to injure it, is defamation.
Unfair Marketing Practices
The Insurance Department is responsible for establishing minimum standards for the full and fair disclosure of policy content. They also require the standardization and simplification of the terms used to describe insurance coverage. Advertising may not involve the following:
-
Any statement or implication that policies are approved, or that the financial condition of a company is endorsed, by any government agency or by any independent group, individual, organization or society, unless that is the fact.
-
Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.
Gramm-Leach Bliley Act (GLBA)
This law repealed the Glass-Steagall Act of 1933, allowing consolidation of commercial banks, investment institutions and insurance companies. GLBA established a framework of responsibilities of federal and state regulators for these financial industries. It permits financial services companies to merge and engage in a variety of new business activities, including insurance, while attempting to address the regulatory issues raised by such combinations.
McCarran-Ferguson Act
Federal law signed in 1945 in which Congress declared that the insurance industry would be regulated at the state level. Grants insurers a limited exemption from federal antitrust legislation. Since 2021 the exemption does not cover the business of health insurance, apart from narrow activities such as sharing historical loss data (15 U.S.C. § 1013©).
National Association of Insurance Commissioners (NAIC)
The U.S. standard-setting and regulatory support organization is created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.
Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA, 15 U.S.C. 1681) regulates consumer reporting agencies and the use of consumer reports, such as credit reports, MIB records and investigative reports, including in insurance underwriting.
- When an insurer requests an investigative consumer report, it must disclose that to the consumer within 3 days of the request
- When an insurer takes adverse action based on a consumer report, it must notify the consumer and identify the reporting agency. The consumer then has 60 days to request a free copy of the report and may dispute inaccurate information
Privacy Act of 1974
The federal Privacy Act of 1974 governs how federal agencies handle personal information. It does not apply to private insurers. An insurer’s use of an applicant’s personal information is governed by the FCRA, the Gramm-Leach-Bliley Act and state insurance privacy law.
Under Connecticut’s insurance privacy law, an authorization signed with an application, a reinstatement or a request to change benefits is valid for no longer than 30 months for life, health or disability insurance, or one year for property or casualty insurance (Conn. Gen. Stat. § 38a-981).
Telemarketing
The National Do Not Call Registry is a list of telephone numbers whose owners do not want to receive telemarketing calls. Telemarketers may not call registered numbers without the person’s permission or an established business relationship, and unsolicited sales calls:
- May be made only between 8 a.m. and 9 p.m. in the recipient’s local time under federal rules; Connecticut’s own law is narrower, limiting sales calls to consumers in Connecticut to between 9 a.m. and 8 p.m. local time (Conn. Gen. Stat. § 42-288a©)
- Must disclose the caller’s identity, the company the caller represents and that the purpose is a sale
CAN-SPAM
A commercial email must:
- Be identified clearly as an advertisement
- Carry accurate header information and a subject line that is not deceptive
- Include the sender’s valid physical postal address
- Offer a way to opt out, and the sender must honor an opt-out within 10 business days
Insurance guaranty association
Every state has a property and casualty insurance guaranty association that pays covered claims when a member insurer becomes insolvent. Insurers licensed to write the covered lines in the state must belong to it, and it is funded by assessments on its members.
The Connecticut Insurance Guaranty Association pays no more than $500,000 on a covered claim against an insurer ordered into liquidation on or after October 1, 2015 (Conn. Gen. Stat. § 38a-841).
Auto insurance state minimum
A state’s financial responsibility law sets the minimum liability an auto policy must carry, written as a split limit: the first number is bodily injury liability per person, the second bodily injury liability per accident, and the third property damage liability per accident, each in thousands of dollars.
Connecticut’s minimum auto liability limits are 25/50/25: $25,000 for bodily injury to one person, $50,000 for bodily injury to more than one person in an accident, and $25,000 for property damage (Conn. Gen. Stat. § 14-112(a)).