At a Glance
THOMAS R. SULLIVAN, Commissioner
Office of the Insurance Commissioner Established – 1865
Insurance Department Established – 1871
Statutory authority – CGS Title 38a
Mailing address – P.O. Box 816
Hartford, CT 06142-0816
Central Office – 153 Market Street,
Hartford, CT 06103
Number of employees – 149
Recurring operating expenses – $21,976,103.21 – Fiscal Year 2007 - 2008
Organizational structure – Administrative Division; Consumer Services Division; Financial Regulation Division; Legal Division; Licensing Division; Life and Health Division; and Property and Casualty Division.
The mission of the Connecticut Insurance
Department is to serve consumers in a professional and timely manner by
providing assistance and information to the public and to policy makers, by
regulating the insurance industry in a fair and efficient manner which promotes
a competitive and financially sound insurance market for consumers, and by
enforcing the insurance laws to ensure that consumers are treated fairly and
are protected from unfair practices.
The insurance laws administered by the Insurance Department are set forth in Title 38a of the Connecticut General Statutes. They are divided into 28 chapters, each addressing a separate area of insurance regulation and insurance-related entities and products.
Services Division consists of the Consumer Affairs Unit, the Market
Conduct Unit and the recently combined Fraud Licensee Investigative and
Compliance Unit. The Division maintains
an active outreach program to properly inform and educate consumers on
insurance matters. The outreach program
focused on senior groups, small business owners, health fairs, and medical
providers. During fiscal year 2007-2008,
outreach programs continued to include military personnel by including
presentations held at the U.S. Naval Submarine Base in
The Consumer Affairs Unit receives, reviews, and responds to complaints and inquiries from Connecticut residents concerning insurance-related problems, and serves as a mediator in claim disputes to determine if statutory requirements and contractual obligations within the Commissioner’s jurisdiction have been met. During fiscal year 2007 - 2008, the unit responded to almost 6,000 formal complaints, handled over 21,000 phone calls, and provided consumer education though distribution of over 1,200 informational pamphlets and booklets. As a direct result of this Unit’s involvement, $1,713,103 was recovered by Connecticut consumers during the fiscal year.
The Market Conduct Unit conducts on-site examinations of insurers’ and licensed producers’ books and records as they relate to coverage written for Connecticut citizens and commercial enterprises. Additionally, the unit monitors the conduct of medical utilization review companies to ensure that they operate in compliance with the Managed Care Act and other applicable statutes and regulations.
The Fraud Licensee Investigative and Compliance Unit was recently combined from resources within the department to provide focus and synergy in our investigative and fraud efforts. This unit receives complaints alleging fraud committed against insurers, individual licensees (agents), as well as health plans, and, as appropriate, refers such allegations for criminal investigation or for regulatory or civil action. It also handles the licensing and investigation of Bail Bonds activity, Medical Discount Plans, Pharmacy Benefit Managers, Preferred Provider Networks and Viatical Insurers for compliance with our statutes, while issuing licenses and registrations to conduct these businesses where warranted. This Unit facilitates the efforts of the insurance industry, law enforcement, and federal or state officials in the investigation and prosecution of insurance fraud committed in Connecticut.
The Financial Regulation Division monitors the financial condition of domestic and foreign insurance companies, health care centers and fraternal benefit societies authorized to do business in Connecticut. The analysis and compliance staff accesses 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 timely identification of potential solvency concerns, and facilitate earlier regulatory intervention.
Actuarial staff are currently assigned within the various divisions 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 statutorily required information. Actuaries also participate in on-site examinations of insurance companies. The actuaries are responsible for examining the rates filed for all life, health, and property/casualty insurance companies to ensure compliance with Connecticut statutory requirements.
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 in Connecticut, which sell insurance products, provide insurance consulting services, and 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 statutory requirements 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 Health Management Organization (HMO) policies. The Division provides technical assistance to other divisions, agencies, and the Legislature; promulgates regulations; and takes enforcement action against carriers regarding non-compliance issues.
The primary responsibility of the Property and 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.
The Insurance Department committed to improving communications with the consumer, during the fiscal year 2007-2008. A key objective in accomplishing this goal was to redesign the Department website, making it more consumer-focused. The new website, launched in February 2008, is a success and provides consumers with information they need to make informed insurance decisions.
During fiscal year 2007-2008, Consumer Affairs Unit staff worked with the Centers for Medicare and Medicaid Services (CMS) to share agent complaint information from seniors regarding agent misrepresentation and inappropriate marketing practices, related to Medicare Advantage cases.
Partnership with the American Arbitration Association was coordinated to allow referrals of auto cases that fall outside the jurisdiction of the Insurance Department. Additionally, Consumer Affairs unit works together with the American Arbitration Association on cases where there is an overlap.
to the computer database completed this fiscal year, improved communications
with consumers through Phone Manager and
Throughout the year, Consumer Affairs Unit representatives met with staff members from the FAIR Plan to coordinate implementation of Coastal Market Assistance Plan (C-MAP) program designed to provide an alternative market for property insurance for those consumers within designated coastal areas.
The Consumer Services Divisions outreach program educated the community on insurance matters, reviewed complaint files involving medical necessity, and represented the Insurance Department on a number of committees. The outreach programs assisted consumers in getting the proper information to make timely and informed decisions on what coverage would best meet their needs.
During fiscal year 2007-2008, development of the Department’s new automated “Connecticut Regulatory Information System” (CRIS) continued. Document imaging is a central component of this system, and as of the end of the fiscal year, over 13 months of consumer complaint files are maintained and sent on an electronic basis. Also during this year, development of the web component of CRIS continued. Implementing the system’s web component and completing the automation of all divisions within the Insurance Department are the goals for the next fiscal year.
The Market Conduct Unit activities recovered $1,968,729 in fines as a result of comprehensive Market Conduct examinations and investigations and utilization review surveys, during the 2007-2008 fiscal year. In addition, the Department reached the largest regulatory settlement agreement in its history ($2,100,000) as a collaborative effort of the Market Conduct Unit, Consumer Affairs Unit, and the Legal Division.
The Financial Regulation Division submitted an interim accreditation review report for the year ending December 2007and received successful results. The Agency’s five-year accreditation review is currently scheduled for February 2009. In anticipation of this on-site review, the Department requested a pre-accreditation review, conducted in April, which received positive feedback and very good overall rating.
Two new Health Care Centers were formed and licensed during June in conjunction with the launch of the Charter Oak Health Plan.
The Financial Regulation Division completed review and approval of five mergers or acquisitions of control of Connecticut domiciled insurers. Throughout the year, the Division actively supervised one financially distressed Connecticut domestic insurer, keeping them on track and solvent.
The Legal Division, during Fiscal Year 2007-2008, promulgated two regulations and assisted Department divisions in 208 administrative enforcement proceedings or stipulated settlements that resulted in the assessment of $4,217,893 in fines and penalties. The Division also supported 52 insurance rate hearings and participated in five hearings under the Connecticut Insurance Holding Act regarding the merger or acquisition of control of a Connecticut domiciled insurer.
The Licensing Division, effective January 2007, implemented the birthday based license renewal program as mandated by Public Act 05-266. The new program allows for a more efficient and organized use of resources and brings the Division into compliance with the national uniformity standards. The Licensing Division also implemented an electronic non-resident producer license application process through National Insurance Producer Registry. The program significantly accelerates the application process resulting in greater efficiency.
In October 2007, 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 (HMO) for the Department of Social Services’ report card for Medicare Risk Plans in Connecticut.
The Life and Health Division processed approximately 12,000 rate and form filings, including electronic submissions through the System for Electronic Rates and Form Filings. In addition, licenses were issued or renewed to 124 utilization review companies.
The Property and Casualty (P&C) Division received over 4,500 insurance program filings of rates, rules, and forms in fiscal year 2007-2008. The Division began the fiscal year with a backlog of over 3,300 filings, since that time the backlog has been reduced nearly 60% to 1,400 filings. This was accomplished through the addition of two staff as well as changes in processes and review procedures. The Division also assessed its current processes and developed the following activities:
The Division has also been working with the industry through the existing FAIR plan to implement the provisions of PA-07-77, which granted the Insurance Commissioner authority to establish a Coastal Market Assistance Plan (C-MAP). This plan was finalized and announced to the industry and agents on July 14, 2008.
The Division conducted a survey for coastal Commercial Habitational Properties (CHP) in August of 2007 to determine if there was a market availability issue with this line of business. Overall, based on survey findings, there did not appear to be a coastal availability issue for Commercial Habitational Properties (CHP).
As required by Public Act 05-275, the Division submitted the first annual Connecticut Medical Malpractice Insurance Report to the legislature.
The Division has been working with the Information Technology Department to develop a new “Web-based” medical malpractice-reporting tool. The goal is to have the tool up and operational during the third quarter of 2008.
Information Reported as Required by State Statute
As reported by the Financial Regulation Division, as of July 1, 2007, there were 1,181 insurance companies licensed in Connecticut. Of that total, 116 were domiciled in the state of Connecticut. The Financial Regulation Division reviewed the applications of 65 insurers applying for licensure during the fiscal year. Of the 65 applications reviewed, 49 were licensed and 16 were rejected and/or withdrawn. In addition, 16 companies ceased to be licensed through dissolution, merger, or voluntary surrender of their certificates of authority. As of June 30, 2008, there were 1,214 insurance companies licensed and authorized to transact business in Connecticut.
During fiscal year 2007-2008, 17 on-site examinations of Connecticut domiciled insurers were completed. As of June 30, 2008, there were 22 examinations in progress.
The following table indicates calendar year 2007 direct premiums written in Connecticut:
Life, Health and Annuities $23,782,307,189
Property and Casualty Lines 6,673,218,640
Health Care Centers 2,674,279,719
Fraternal Benefit Societies 32,159,358
Surplus Lines 383,063,854
Risk Retention Groups 76,001,286
Pools and Associations 149,180,244
Total Premiums Written $33,924,511,150
In March 2008, the Life and Health Division prepared and submitted a report to the Governor and General Assembly regarding the Insurance Commissioner’s responsibility 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 2008, the Division reported to the Governor and General Assembly that no managed care organizations failed to file any data as required by Public Act 97-99 and Public Act 99-177.
The following information is provided in accordance with Conn. Gen. Stat. § 38a-13:
During fiscal year 2007-2008, the Insurance Commissioner served as the receiver of two domestic property and casualty insurance companies.
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 surety company that issued commercial and contract surety and fidelity bonds. CSC’s principal offices were in Hartford, Connecticut and were 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, showed assets of $6,152,664.20 and liabilities of $14,675,211.20. CSC and its corporate affiliates operated as an integrated organization, sharing office space, personnel and cash management systems. 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. In December 2005, the Liquidator made an interim partial distribution of assets to certain Class 3 claimants holding allowed claims and paid $219,757.32 to creditors residing in Arizona, Connecticut, Oregon and South Carolina, thereby paying their claims in full. In addition, the Liquidator paid an interim partial distribution of 30% of the allowed claim to creditors residing in Alaska, California, Florida, Iowa, Louisiana, Maryland, Missouri, Nebraska, New Jersey, New Mexico, Ohio, Oklahoma, Pennsylvania, Texas, Vermont, Washington, and Quebec, Canada. This partial interim distribution totaled $302,282.18.
On August 15, 2006, the Superior Court granted the Liquidator’s Motion for Allowance of the Commonwealth of Pennsylvania Public Utility Commission Bond Claim. On September 26, 2006, the Superior Court granted the Liquidator’s Sixth Motion for Allowance of Claims. On October 26, 2006, the Superior Court granted the Liquidator’s Motion for Approval of Distribution of Assets to Certain Class 3 Claimants. This order authorized the Liquidator to pay 100 percent of the amount of allowed Class 3 claims held by Claimants (except for claimants that resided in states where the insurance department failed to return a deposit). In October 2006, the Liquidator entered into an agreement with the Massachusetts Insurance Commissioner for the release and transfer of the CSC $500,000 security deposit held by Massachusetts. The Liquidator received the deposit in November. On November 30, 2006, the Superior Court granted the Liquidator’s Seventh Motion for Disallowance of Claims. In November 2006, the Liquidator filed her 2005 U.S. Corporation Income Tax Return – Consolidated (Form 1120) and her 2005 Form 990 tax return with the I.R.S. On December 15, 2006, the Liquidator entered into an Agreement with the U.S. Department of Justice which waives the U.S. government’s recourse against the Liquidator for federal claims except with respect to four claims filed by the U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau originally totaling $361,308.44 but which have been allowed in a total amount of $114,192.89. On December 21, 2006, the Liquidator made her distribution to 377 Class 3 claimants in payment of their claims totaling approximately $741,000 and, when combined with the partial distribution to them in 2005, represented 100 percent of their allowed policyholder level claim against the CSC estate. On January 22, 2007, the I.R.S. granted the Liquidator’s Application for Recognition of Exemption from U.S. income taxes (Form 1024) effective January 1, 2002.
On October 31, 2007, the Superior Court entered an order granting the Liquidator’s Seventh Motion for Allowance of Claims. On November 28, 2007, the Court entered an order granting the Liquidator’s Eight Motion for Allowance of Claims, which approved allowance of 21 Class 6 and Class 8 claims. On February 20, 2008, the Superior Court entered orders approving the CSC Liquidator’s Eight Motion for Disallowance of Claims and Ninth Motion for Allowance of Claims. On May 14, 2008, the Court entered an order approving the Liquidator’s Tenth Motion for Allowance of Claims. On May 15, 2008, the Liquidator filed his 2007 consolidated federal tax income tax return for Connecticut Surety Corporation and its Subsidiaries, in Liquidation (Form 1120) with the IRS, as well as the 2007 Return for Organization Exempt from Income Tax (Form 990) for CSC. As of May 10, 2008, 1,244 proofs of claim of various classes of claims were filed with the Liquidator. On June 4, 2008, the Liquidator issued claim checks to the remaining class 3 policyholder claimants. On June 24, 2008, the Court held a hearing and entered orders approving the Liquidator’s Ninth Motion for Disallowance of Claims, approving the Liquidator’s final claims report, the administrative claim of the Insurance Department, and the Liquidator’s Sixth Report dated May 19, 2008, detailing the status of the liquidation proceedings. The consolidated balance sheet of CSC and the CSC Affiliates as of March 31, 2008, shows a deficiency of assets over liabilities of $9,280,060.74, with total assets of $3,908,814.68 and total liabilities of $13,188,875.42.
The Department's website (http://www.ct.gov/cid) continues as 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 September 7, 2007, the Superior Court, upon the fifth motion of the Trustee, entered an order disallowing claims. On September 15, 2007, the 2006 federal and state income tax returns for CMLT and CMIC were filed (Forms 1041, 1120-PC and CT-1120). On October 30, 2007, the Trustee and the United States of America executed a Release Agreement which provided for the release and discharge the Trustee and the CMIC estate from any and all liability under 31 U.S.C. § 3713(b) in connection with the administration of the Covenant estate, except for possible claims for federal taxes and claims based on fraud or criminal conduct, reflecting the fact that CMIC did not write any insurance policies for the benefit of the U.S. or any of its agencies and that no claims had been filed with the Trustee by the U.S. or any of its agencies. The Trustee by year end 2007, has made determinations with respect to the classification of all claims and has completed a thorough review of all proofs of claim filed with the CMIC estate that were classified in classes 1, 2, 3, 4, 5 and 6. The Trustee has not made claim determinations with respect to claims that were classified below Class 6 because there are insufficient assets to pay such claims. On January 31, 2008, the Superior Court, upon the fourth motion of the Trustee, entered an order allowing claims and upon the sixth motion of the Trustee, entered an order disallowing claims. On February 20, 2008, the Superior Court approved the Trustee’s Report to the Court for the Year Ending June 30, 2007. The June 30, 2007, balance sheet of the Covenant Mutual Liquidation Trust, as reflected in the Report, shows a deficiency of assets over liabilities of $9,254,065.51, with total assets of $13,663,082.21 and total liabilities of $22,917,147.72. On March 19, 2008, the Superior Court, upon the fifth motion of the Trustee, entered an order allowing claims. On May 27, 2008, the 2007 federal and state income tax returns for CMLT and CMIC were filed (Forms 1041, 1120-PC and CT-1120). The assets of the CMLT estate have been marshaled. On June 24, 2008, the Superior Court, on motion of the Trustee, held a hearing and entered an order approving the final claims report, dissolution of the Covenant Mutual Liquidating Trust, discharge of the Trustee and other relief. Holders of allowed class 1 claims for administrative expenses and allowed class 2 claims of guaranty associations have been paid at 100% of the allowed amounts. To date, holders of allowed class 3 policyholder claims have been paid at 75% and will ultimately receive 100% payment of the allowed amounts. It is estimated that holders of allowed class 6 general creditor claims will be paid approximately 18% of the allowed amounts. The Trustee hopes to complete implementation of the Court’s order authorizing closure of the CMIC estate by year end (i.e. final distributions to creditors, final tax returns, dissolution of the trust and escheat of remaining funds, destroy certain documents and transfer custody of other documents to the Department, file a certificate of closure with the Court).