At a Glance
SUSAN F. COGSWELL, Commissioner
Office of the Insurance Commissioner Established – 1865
Insurance Department Established – 1871
Statutory authority – CGS Title 38a
Central office – 153 Market Street
Hartford, CT 06142-0816
Number of employees – 132
Recurring operating expenses – $18,154,186
Organizational structure – Administrative Division; Computer Systems Support; Consumer Affairs Division; Financial Regulation Division; Licensing Division; Life and Health Division; Market Conduct Division; Property and Casualty Division.
It is the mission of the Insurance Department to protect Connecticut consumers by administering and enforcing insurance laws. The agency accomplishes this goal by ensuring the financial reliability and responsibility of all regulated entities.
The Financial Regulation Division monitors the financial condition of domestic and foreign companies, health care centers, and fraternal benefit societies authorized to do business in Connecticut. Financial statements and other information required to be filed by statute are analyzed, and on-site examinations are conducted to ensure that the entities remain solvent and capable of meeting their contractual obligations to policyholders and claimants. The analysis and compliance staff access financial information directly from the National Association of Insurance Commissioners’ (NAIC) database and, in many instances, the field examination staff can electronically access company data files to perform substantive testing. The Division has a priority-based approach to analysis and examination that is designed to provide a timely identification of potential solvency concerns, facilitating earlier regulatory intervention.
The actuarial staff is currently assigned within the various divisions. Procedures are in place to ensure that actuarial input is provided to various department functions and procedures. The actuarial staff participates in the analysis of the financial statements and other information required to be filed by statute, and in on-site examinations of insurance companies to insure the ongoing solvency of these entities. The actuaries are also responsible for examining the policies and rates filed for all life, health and property/casualty insurance companies to ensure compliance with Connecticut statutory requirements.
The Consumer Affairs Division receives, reviews and responds to complaints and inquiries from Connecticut residents concerning insurance-related problems. During Fiscal Year 2002-2003, 13,361 formal complaints were logged into the Division’s computer database. Additionally, the Division responded to 3,647 requests for informational pamphlets and booklets. The Division publishes two lists ranking insurance companies by comparing the number of complaints related to the premium dollars. One ranks automobile insurers and the other ranks health insurers. Consumer Affairs also conducted a number of outreach programs designed to focus on, respond to and educate consumers on insurance matters. During Fiscal Year 2002-2003, the outreach program continued to focus on senior groups, Hispanic groups, small business owners, health fairs and medical providers. During the year, the Division’s outreach representatives spoke to more than 3,000 Connecticut residents.
The Legal Division directs the receivership and guaranty fund activities of the Insurance Department, and provides legal advice and related services to the Commissioner and the seven divisions of the Insurance Department on a broad spectrum of issues that arise in regulating the insurance industry. The legal staff also drafts, monitors and analyzes legislation; drafts and promulgates regulations; and participates in department hearings involving rates, license enforcement, and acquisitions of domestic insurance companies.
The Licensing Division is responsible for licensing professionals to ensure the quality and integrity of individuals and organizations licensed in Connecticut to sell insurance products, provide insurance consulting service, or adjust insurance claims. The Licensing Division meets this benchmark by developing and maintaining up-to-date standards and educational programs for all licensees.
The Life and Health Division reviews policy form and rate filings for all life and health insurance products to ensure compliance with Connecticut General Statutes and regulations. The Division oversees the external appeals process and the expedited review process for managed care organizations; licenses utilization review companies; and publishes a managed care report card. It also publishes lists of carriers offering Medicare supplement, long-term care, small employer group health, individual health and HMO policies. The Division works with the Legal Division to promulgate regulations and take enforcement action against carriers regarding non-compliance issues. The Division maintains information on Preferred Provider Networks that are required to register with the Department.
The Market Conduct Division performs examinations of insurance companies, health care centers, fraternal benefit societies, and medical utilization review companies doing business in Connecticut to analyze the treatment of Connecticut policyholders and claimants. In order to provide protection to the insurance consumer, the Division also investigates allegations of improper conduct against individual licensees and pursues administrative action when warranted.
The primary responsibility of the Property Casualty Division is to examine property and casualty insurance rates, rules, policy forms, and underwriting guidelines to ensure that the insurance products sold in Connecticut by licensed carriers comply with Connecticut statutory requirements. This is accomplished through review, analysis, oversight and approval of insurance company programs covering home and automobile insurance; business property and liability; medical, legal and other professional liability; and workers’ compensation insurance. The Division also oversees the operation of assigned risk plans for automobile, property and workers’ compensation insurance.
During Fiscal Year 2002-2003, Consumer Affairs staff met with members of the state of Connecticut Medical Societies, Hospital Association, the HMO Association and other interested parties to address medical provider concerns about HMO specialty contractors.
Throughout the year, Consumer Affairs representatives met with members of CHOICES and federal government agencies to coordinate distribution of information regarding those insurance-related products in which they have jurisdiction over, i.e., Medicare and self-insured plans.
The Consumer Affairs Division’s medical/social outreach program educated the medical community on insurance matters, reviewed complaint files involving medical necessity and represented the Insurance Department on a number of committees, including Birth-to-Three, Children with Special Health Care Needs, the Diabetes Educational Committee, the HUSKY Plan and the Connecticut Medical Managed Care Council.
The Legal Division, during Fiscal Year 2002-2003, promulgated three regulations; assisted Department divisions in 66 administrative enforcement proceedings or stipulated settlements that resulted in the assessment of $1,204,694.95 in fines and penalties; assisted with 48 insurance rate hearings; and participated in three hearings under the Connecticut Insurance Holding Company Act regarding the merger or the acquisition of control of a Connecticut domiciled insurer.
The Insurance Department, in conjunction with the Connecticut General Assembly, enacted a new Producer Licensing Law, effective September 1, 2002. The new law is consistent with a model adopted by the National Association of Insurance Commissioners (NAIC) and encourages multi-state commerce and efficiencies through uniformity and reciprocity.
The Licensing Division participates in an effort to allow insurance licensees, insurance companies and the public to access insurance license information online through the Connecticut Licensing Information Center (CLIC). This allows consumers to view the name, license number, type, termination date and authority of licenses.
In October 2002, the Life and Health Division published the annual managed care report card, A Comparison of Managed Care Organizations in Connecticut. The Division also surveyed health maintenance organizations for the Department of Social Services’ report card for Medicare Risk Plans in Connecticut. The number of external appeal requests continues to increase each year. In 2002, there were 94 requests for external review, 33 of which reversed the denials of the utilization review companies. The Division processed approximately 14,000 rate and form filings, including electronic submissions through the System for Electronic Rates and Form Filings. In addition, licenses were issued or renewed to 120 utilization review companies. Under new legislation, 76 Preferred Provider Networks now register with the Department.
The Market Conduct Division opened 60 examinations of Property/Casualty, Life and Health and Utilization Review companies, and 166 investigations involving individual licensees. A total of 64 Administrative Actions resulted in $1,086,000 in fines, and 29 other actions including revocations, surrenders, and probations or cancellations of insurance licenses.
The Property and Casualty Division has been involved in the implementation of the federal Terrorism Risk Insurance Act and is working with all concerned parties on medical malpractice insurance. The Division approved an overall +2.2 percent rate level change for workers’ compensation insurance for employers in the voluntary market and an increase of +6.6 percent in the assigned risk plan in Connecticut. The Division received approximately 4,000 insurance program filings of rates, rules and forms in 2002.
As reported by the Financial Regulation Division, as of July 1, 2003 there were 1,191 insurance companies licensed in Connecticut. Of that total, 131 were domiciled in the state of Connecticut. The applications of 59 insurers applying for admissions were reviewed in Fiscal Year 2002-2003. Of the 59 applications reviewed, 43 were licensed and 16 were rejected and/or withdrawn. In addition, 28 companies ceased to be licensed through dissolution, merger or voluntary surrender of their certificates of authority. As of June 30, 2003, 1,206 insurers were authorized to transact business in Connecticut. During Fiscal Year 2002-2003, 20 on-site examinations of Connecticut domiciled insurers were completed. As of June 30, 2003, there were 22 examinations in progress. Insurers included life-health insurance companies, property casualty companies, title insurance companies, fraternal benefit societies, health maintenance organizations, life insurance departments of savings banks and reinsurance companies.
The following table indicates calendar year 2002 direct premiums written in Connecticut:
Life, Health and Annuities $16,894,916,346
Property and Casualty Lines 5,768,199,812
Health Care Centers 2,428,321,779
Fraternal Benefit Societies 35,239,546
Surplus Lines 325,147,529
Risk Retention Groups 43,026,708
Pools and Associations 106,742,899
Total Premiums Written $25,744,348,143
In March 2003 the Life and Health Division prepared a report that was submitted to the Governor and to the General Assembly regarding the Commissioner’s responsibilities concerning managed care organizations. This report included a summary of quality assurance plans, potential modifications to the consumer report card, market conduct activity, a summary of complaints filed with the Department, a summary of violations, and a summary of issues discussed regarding managed care at public forums. In June 2003 the Division reported to the Governor and General Assembly that no managed care organizations failed to file any data as required by PA 97-99 and PA 99-177.
The following information is provided in accordance with Conn. Gen. Stat. § 38a-13:
During Fiscal Year 2002-2003, the Insurance Commissioner served as the receiver of five domestic insurance companies: three property and casualty insurers, one life and health insurer, and one health care center. In addition, the Insurance Commissioner served as ancillary receiver of two property and casualty insurers domiciled in Massachusetts.
The Connecticut Surety Company -- The Insurance Commissioner was appointed Rehabilitator of The Connecticut Surety Company ("CSC”) by the Superior Court on February 6, 2002. CSC was a Connecticut domiciled property and casualty insurance company based in Hartford, Connecticut and was licensed to transact the business of insurance in Connecticut and 25 other states and the District of Columbia. On May 17, 2002, the Superior Court entered an Order of Liquidation which declared CSC insolvent and appointed the Insurance Commissioner Liquidator of CSC. The Liquidator was directed to take possession of the assets of CSC and to administer them under the supervision of the Superior Court. All policies and contracts of insurance or bonds issued by CSC were cancelled by the Liquidation Order. Promptly after the issuance of the Liquidation Order, the CSC Liquidator mailed notice of the Liquidation Order to all known creditors of CSC, together with a copy of a proof of claim and directions to file with the Liquidator any and all claims against CSC on or before November 15, 2002. On May 16, 2003, the Liquidator filed her First Report with the Superior Court and noted therein that approximately 1,094 proofs of claim were filed with the Liquidator and that the CSC balance sheet as of March 31, 2003 shows assets of $6,152,664.20 and liabilities of $14,675,211.20. As a result of the management and shareholders’ abandonment of CSC’s corporate parent, Connecticut Surety Corporation, and its corporate affiliates, the Liquidator determined that the affairs of CSC’s affiliated entities should be wound-up as part of the receivership proceedings of CSC. The CSC Affiliates consist of the following companies: The Connecticut Surety Company, Connecticut Surety Corporation, Connecticut Surety Insurance Agency, Inc., Funds Management, Inc., Connecticut Surety Insurance Agency of Arizona, Inc., Bonds II Surety Group, Inc., and Connecticut Surety Insurance Agency of Nevada, Inc., (collectively, the “CSC Affiliates”). On May 29, 2003, the Superior Court granted the Liquidator’s Motion for Substantive Consolidation of CSC and its affiliates and entered an Order for Substantive Consolidation, which joined the CSC Affiliates in the pending liquidation proceedings. The Order for Substantive Consolidation directed the Liquidator to take possession of the assets of each of the CSC Affiliates and to administer the assets jointly along with the assets of CSC under the supervision of the Superior Court. The Liquidator promptly gave notice to persons interested in the CSC Affiliates of the Order for Substantive Consolidation and August 29, 2003 deadline for the filing of claims against the estates of the CSC Affiliates. The Department's website www.ct.gov/cid is a source for news and information regarding the liquidation of CSC and the CSC Affiliates.
Covenant Mutual Insurance Company -- The Insurance Commissioner was appointed Rehabilitator of Covenant Mutual Insurance Company ("Covenant") on March 1, 1993. Covenant was a Connecticut domiciled insurer established in 1831 and was licensed to do business in 31 states. On May 4, 1994, the Superior Court entered an Order (“Confirmation Order”) confirming a Plan of Rehabilitation of Covenant. The Confirmation Order, among other things, (i) confirmed the Covenant Plan of Rehabilitation (“Plan”), (ii) declared Covenant insolvent as of the date of the Confirmation Order, (iii) directed that the assets and liabilities comprising Covenant’s estate be liquidated as provided in the Plan; and (iv) established a December 31, 1994 Bar Date for the filing of claims against the Covenant estate. On December 12, 2002, the Trustee filed her Report with the Superior Court. As reflected in the Report, the June 30, 2002 balance sheet of the Covenant Mutual Liquidation Trust shows a deficiency of assets over liabilities of $9,394,715.11, with total assets of $13,835,065.11 and total liabilities of $23,229,780.22.
First Connecticut Life Insurance Company -- The Insurance Commissioner was appointed Rehabilitator of First Connecticut Life Insurance Company (“FCLIC”) by the Connecticut Superior Court on April 2, 1996. FCLIC was based in Torrington, Connecticut and commenced business in 1991. FCLIC was licensed only in Connecticut, and immediately prior to its rehabilitation proceedings, offered health, dental, short-term disability, Medicare excess, major medical and prescription drug benefits to employer groups or multiple employer trusts. On May 23, 1996, at the request of the Rehabilitator, the Superior Court ordered that FCLIC be placed in liquidation. In doing so, the Court further ordered that any and all claims against FCLIC be presented to the Liquidator on or before December 31, 1996, in order to share in the distribution of the assets of FCLIC. Of the 351 proofs of claim filed with the Liquidator prior to the claim bar date, 234 claims were filed by FCLIC policyholders; the Connecticut Life and Health Insurance Guaranty Association has paid all but a few of these claims, and those that have been denied by CLHIGA, were denied on the basis that they were not covered by FCLIC’s policies. On July 22, 2002, the Liquidator and Arthur Andersen LLP (“Andersen”) entered into a Settlement Agreement, which resolved the claims between the Liquidator and Andersen and disposed of two lawsuits initiated by the Liquidator. The first lawsuit alleged certain claims against Andersen arising in connection of Andersen’s audits of the financial statements of FCLIC for the years 1992, 1993 and 1994. The second lawsuit alleged that certain payments by FCLIC to Andersen were impermissible preferential payments. Pursuant to the Settlement Agreement, Andersen, without admitting any liability or wrongdoing, paid $2,000,000 to the Liquidator and the Liquidator caused the lawsuits to be dismissed with prejudice. On June 9, 2003, the Liquidator filed her Seventh Financial Report with the Superior Court, which described the FCLIC receivership activities. As reflected in the Report, the December 31, 2002 balance sheet of the FCLIC receivership shows a deficiency of assets over liabilities of $5,231,988.65, with total assets of $14,179,543.04 and total liabilities of $19,411,531.69. On June 30, 2003, the Liquidator filed with the Court a motion for the entry of an order approving: (a) a compromise of a claim; (b) the Liquidator’s claims report and distribution to creditors; and (c) the procedures for any remaining administrative claims.
Westbrook Insurance Company -- On July 17, 1997, the Superior Court appointed the Insurance Commissioner Rehabilitator of Westbrook Insurance Company (“Westbrook”), a Connecticut domiciled property and casualty insurance company which had its principal office in Wallingford, Connecticut. Westbrook was incorporated in 1994 and licensed only in Connecticut; it underwrote direct insurance and reinsurance on auto liability and auto physical damage risks. Westbrook is a wholly owned subsidiary of Home State Holdings, Inc. (“HSH”) and part of an affiliated group of property casualty insurance companies (the “Home State Group”) domiciled in the states of New York, New Jersey, Pennsylvania, and Georgia. The Rehabilitator determined that it was in the best interest of policyholders, creditors, and the public to sell Westbrook’s ongoing business and transfer Westbrook’s claim handling functions to financially reliable parties. Accordingly, the Rehabilitator entered into a Policy Acquisition Agreement and a Reinsurance Agreement dated as of August 15, 1997 with Eagle Insurance Company (“Eagle”), whereby Eagle assumed all of the obligations of Westbrook under all direct policies issued by Westbrook for losses with dates of accidents on and after August 15, 1997. In order to ensure the continued handling of claims on Westbrook policies arising out of accidents prior to August 15, 1997, the Rehabilitator entered into a Claims Service Agreement dated August 15, 1997 with Material Damage Adjustment Corp. (“MDA”), an affiliate of Eagle. During this period, the Rehabilitator arranged for Westbrook to transfer to First Security Insurance Company of Hartford performance of all services it provided to the company as its reinsurer of certain commercial auto business, including the collection of premium and the adjustment and payment of claims. On October 26, 1998, the Superior Court granted the petition of the Rehabilitator and ordered that Westbrook be placed into liquidation and appointed the Insurance Commissioner Liquidator of Westbrook. The claim bar date set by the Court for filing proofs of claim was January 31, 1999. The Receiver filed with the Superior Court her Seventh Accounting on November 12, 2002. On August 20, 2002, the Liquidator made a distribution of the estate in the amount of $1,058,071.10 to claimants whose claims have been previously allowed by the Court. The amount distributed to each claimant was equal to 100 percent of the allowed amount of each claimant’s claim falling within Class One through Class Five and 75 percent of the allowed amount of any claim six claim. On February 27, 2003, the Superior Court issued an order approving (A) the Liquidator’s claims report and final distributions to creditors, (B) establishment of reserves, (C) administrative claim procedures, and (D) procedures for the retention and/or destruction of records. Pursuant to this Order, Class 6 claimants receive the remainder of their allowed claims in full, the Class Seven claim is paid in full and Class Eight claims receive pro rata distributions in accordance with their allowed amounts, if all preceding classes have been paid in full. The Liquidator will make distributions to all claimants within 90 days following the date the Liquidator shall have determined to her satisfaction that there are not other adverse claims or interests against the estate that would be prejudiced by such distribution, including claims of the United States of America.
Suburban Health Plan, Inc. -- On May 20, 1999, the Superior Court entered a Stipulated Order of Liquidation declaring Suburban Health Plan, Inc. (“Suburban”) to be insolvent and appointed the Insurance Commissioner Liquidator of Suburban. Suburban was an HMO based in Shelton, Connecticut which served more than 8,000 members, and was an affiliate of Griffin Hospital in Derby, Connecticut. On May 30, 2003, the Liquidator filed her Fourth Accounting with the Superior Court, which provided a detailed report on the receivership activities, including claims administration, the marshalling of assets, the investigation into the causes of Suburban’s insolvency, and the resolution of claims against Suburban's former management, PricewaterhouseCoopers and KPMG-Peat Marwick. At the end of Fiscal Year 2002-2003, the Liquidator was in the process of completing the winding-up of the affairs of Suburban’s estate. Suburban’s balance sheet as of April 30, 2003, reflected $2,082,383.47 in assets and $9,707,117.31 in liabilities.
On April 26, 1989, the Insurance Commissioner was appointed ancillary receiver of American Mutual Liability Insurance Company ("AMLICO") and American Mutual Insurance Company of Boston ("AMI"), both domiciled in Massachusetts and placed in liquidation on March 9, 1989. The ancillary receiver has to date, distributed assets from the AMLICO and AMI receivership estates to the Connecticut Insurance Guaranty Association (“CIGA”) in the total amount of $20,000,000 and $4,000,000, respectively, as early access distributions for the administrative expenses, claims and claims handling expenses CIGA had incurred for covered policy obligations in connection with the AMLICO and AMI insolvencies. On October 4, 2002, the Ancillary Receiver filed with the Superior Court her Plan of Liquidation of Connecticut Assets of AMLICO and AMI (the “Plan”). The Plan provides for the payment of the expenses of administering the companies’ estates and also provides for the payment of claims by policyholders that are Connecticut residents or claims by claimants against policyholders that are Connecticut residents. The Plan also provides for the payment of the claims and loss adjustment expenses of the Connecticut insurance guaranty associations. The Plan further provides that after the payment of the foregoing claims and the establishment of reserves for disputed claims and administrative expenses, all remaining funds are to be transferred to the Massachusetts domiciliary receiver. The Superior the Court entered an order approving the Plan on November 21, 2002. On February 21, 2003, the Superior Court entered an order authorizing the payment of certain allowed Class Two claims under and pursuant to the Plan. These claims, totaled $805,225.03 and $142,098.53 for AMLICO and AMI, respectively, and were paid by the Ancillary Receiver on April 30, 2003. On May 9, 2003, the Ancillary filed with the Superior Court her Second Motion for Disallowance and Allowance of Claims. As of June 9, 2003, the AMLICO and AMI ancillary receiverships had assets of $22,541,777.68 and $2,092,372.32, respectively.