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Property and casualty insurance coverage firms’ selections to withdraw from sure strains of enterprise, in jurisdictions reminiscent of California and Florida, has garnered quite a lot of consideration in latest months. The Connecticut Division of Insurance coverage (the “Division”) just lately printed a bulletin clarifying its expectations for prior discover from property & casualty carriers when planning to exit a line of enterprise or discontinue a subline of enterprise. The brand new bulletin [1] rescinds and replaces a previous bulletin, [2] extending the bulletin’s attain concerning location-based discrimination and “agency-facing functions and different know-how, processes (e.g., referrals to underwriters) or communications to producers.”
Background
Within the curiosity of minimizing market disruptions, most states require insurance coverage carriers to offer discover to the regulator earlier than a provider exits a line of enterprise. Connecticut requires 60-days prior written discover. [3] This requirement applies not solely to withdrawal from main strains of enterprise, but additionally sublines; as an example, if a provider continues writing the auto line however chooses to withdraw from faculty buses or taxis, withdrawal from the subline would require prior discover to the Division. Moreover, if a provider plans to terminate producer appointments consistent with a deliberate discontinuance, the provider shall “renew all affected contracts of insurance coverage written by the affected producers for a interval of 18 months from the date such motion takes place.” [4] These necessities apply to each admitted carriers and licensed nonadmitted carriers. These necessities have been communicated in Bulletin PC-34 (December 20, 2000) now rescinded and changed by Bulletin PC-34-23 which incorporates these necessities and expands upon them.
Company-Dealing with Apps
The brand new bulletin expands the attain of the prior bulletin by together with agency-facing functions. As an illustration, if a provider have been to close down an app whereby it interacted with producers leading to a considerable discount in a line or subline, such discount can be considered as successfully withdrawing from the road or subline requiring prior written discover to the Division. The brand new bulletin additional communicates the Division’s concern that carriers could fail to handle underwriting errors in agency-facing apps or use agency-level edits to require underwriting referrals for enterprise that meets the provider’s filed underwriting pointers. Such motion by carriers could invite investigation by the Division, and if decided to be routine observe, decided to be an unfair commerce observe in violation of Connecticut Insurance coverage Regulation.
Location Discrimination
The brand new bulletin informs carriers that they “should think about whether or not such motion could represent unfair discrimination” citing to Conn. Businesses Regs. § 38a-824-3 which prohibits refusing to concern or renew owners’ insurance policies “solely due to the truth that the chance is situated in a specific city space or neighborhood, metropolis or city.” This regulation additional prohibits carriers from “refusing to concern, refusing to resume, canceling, or limiting the quantity or provisions of protection” solely because of the age of the construction, situation of adjoining or close by properties, or substantial disparity between alternative value and market worth. Reference to the placement discrimination regulation was not included within the prior bulletin. Its inclusion within the new bulletin may signify the Division’s heightened consideration at the moment.
Conclusion
Like different states, Connecticut is worried in regards to the potential disruptions to the insurance coverage market when carriers withdraw from the market. By increasing the attain of the bulletin on withdrawal from property & casualty enterprise strains or sublines, the Division has communicated its concern that carriers could also be quietly exiting enterprise strains or sublines by winding down their use of agency-facing apps and thus clarifying that such exercise requires prior written discover. The particular inclusion of location discrimination within the new bulletin additional communicates the Division’s considerations of disruptions to {the marketplace} as carriers withdraw from particular strains or sublines of enterprise, adversely impacting particular communities.
[1] Conn. Ins. Dept., Bulletin PC-34-23, Discover to Commissioner of Intent to Discontinue or Considerably Cut back a Line or Subline of Enterprise, September 19, 2023.
[2] Conn. Ins. Dept., Bulletin PC-34, Discover to Commissioner of Intent To Discontinue Line of Enterprise, up to date and reissued December 20, 2000.
[3] Conn. Gen. Stat. § 38a-44.
[4] Conn. Gen. Stat. § 38a-709.
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