Sec. 38a-72. (Formerly Sec. 38-93). Financial requirements to license an insurance company.
Sec. 38a-72. (Formerly Sec. 38-93). Financial requirements to license an insurance company. (a) No property or casualty insurance company and no life insurance
company shall be licensed initially to do business in this state unless the company complies with the following minimum capital and minimum surplus requirements to write
these specified lines of insurance:
Stock Insurance Companies
CapitalSurplus
Health$ 500,000$ 500,000
Life1,000,0002,000,000
Liability500,000500,000
Fidelity and Surety500,000500,000
Financial Guaranty15,000,00060,000,000
Marine500,000250,000
Mortgage Guaranty2,000,0002,000,000
Property500,000250,000
Workers' Compensation500,000500,000
Title500,000500,000
Residual Value2,000,0001,000,000
Reinsurance
(Property and Casualty)
2,000,000
2,000,000
Reinsurance (Life)1,000,0002,000,000
Mutual Insurance Companies
Surplus
Health$ 1,000,000
Life3,000,000
Liability1,000,000
Fidelity and Surety1,000,000
Financial Guaranty75,000,000
Marine750,000
Mortgage Guaranty4,000,000
Property750,000
Workers' Compensation1,000,000
Title1,000,000
Residual Value3,000,000
Reinsurance
(Property and Casualty)
4,000,000
Reinsurance (Life)3,000,000
(b) Except with respect to the transaction of life and health insurance, companies
desiring to transact more than one of the above forms of insurance shall meet the total
minimum requirements, as to capital and surplus, of all forms to be transacted except
that a company transacting all lines permitted to be combined need have no more than
two million dollars capital and two million dollars surplus in the aggregate. Companies
that transact both life and health insurance need have no more than one million dollars
capital and two million dollars surplus in the aggregate. The commissioner may license
any such company to write additional forms of insurance when the amount of capital
and surplus of such company is sufficient by recognized insurance standards to protect
the public interest. The commissioner may also license any mutual insurance company
to write any or all forms of insurance when the surplus of such company is at least as
great as the capital and surplus requirements for companies with capital stock.
(c) No alien property, marine or casualty insurance company shall be licensed to
transact business in this state unless it furnishes a certificate showing that it has, for the
protection of all policyholders, a cash deposit with the Treasurer of this state, or with
the proper officer of some other state, of not less than the minimum capital and surplus
requirements for similar foreign insurance companies or seven hundred and fifty thousand dollars, whichever amount is less; nor unless it has a trusteed surplus, as defined
in section 38a-74, at least as great as the minimum capital and surplus requirements for
similar foreign insurance companies.
(d) No insurance company shall be licensed to transact business in this state or
remain so licensed unless (1) its surplus funds bear a reasonable relationship to its liabilities based upon the type, volume and nature of insurance business transacted, and (2)
risk-based capital related to its total adjusted capital is adequate for the types of business
transacted. As used in this section, "total adjusted capital" means the sum of capital and
surplus of an insurer, its asset valuation reserves, and any other item in the nature of
capital as deemed appropriate by the commissioner. "Risk-based capital" means the
capital and surplus adjusted to recognize the level of risk inherent in its business, including (A) risk with respect to the insurer's assets, (B) the risk of adverse insurance experience with respect to the insurer's liabilities and obligations, (C) the interest rate risk
with respect to the insurer's business, and (D) all other business risks and such other
relevant risks as the commissioner may determine. The commissioner shall adopt such
reasonable regulations, in accordance with the provisions of chapter 54, as are deemed
proper to implement the purposes of this section, including but not limited to, provisions
concerning: The preparation and filing of reports by insurers of risk-based capital levels
and the calculation thereof; the preparation and filing of comprehensive financial plans
when such capital levels are reduced below minimum threshold levels; the confidentiality of such reports and plans; and the regulatory corrective actions the commissioner
may take in the event minimum risk-based capital levels are not maintained, or the
insurer's financial plans filed with the commissioner are deficient, or the insurer fails
to otherwise comply with the provisions of the regulations promulgated.
(e) An insurer licensed in this state and issuing or reinsuring in this state policies
of financial guaranty insurance, as defined in subdivision (1) of section 38a-92a shall,
notwithstanding the provisions of subsection (a) of this section, be deemed to meet the
combined capital and surplus requirements for transacting financial guaranty insurance
business during the period between October 1, 1993, and July 1, 1995, if it has combined
capital and surplus of forty-five million dollars, which includes paid-in capital of at least
two million five hundred thousand dollars. On or after July 1, 1995, every licensed
financial guaranty insurance corporation must fully comply with the requirements of
subsection (a) of this section.
(1949 Rev., S. 6097-6100; 1951, 1953, 1955, S. 2824d; 1967, P.A. 382; P.A. 76-110; P.A. 79-376, S. 57; P.A. 90-243,
S. 46; P.A. 92-112, S. 6, 35; P.A. 93-57, S. 5; 93-136, S. 17; 93-239, S. 17; P.A. 94-39, S. 1; P.A. 96-227, S. 3; P.A. 98-79, S. 1; P.A. 00-30, S. 3, 4, 14.)
History: 1967 act divided section into Subsecs., raised capital requirement for transacting fire or marine insurance or
accident and health insurance from $250,000 to $5090,000, for liability insurance from $300,000 to $500,000 and for
fidelity and surety business from $400,000 to $500,000 and required paid-in surplus of $250,000 for fire and marine
insurance and $500,000 for other lines where previously surplus must equal 50% or more of minimum required capital in
Subsec. (a) and added exception to requirements for companies transacting all lines in Subsec. (b); P.A. 76-110 imposed
capital requirements for transacting workmen's compensation insurance, title insurance and mortgage guaranty insurance
and required surplus of $2,000,000 for mortgage guaranty insurance in Subsec. (a) and raised required capital and surplus
for companies transacting all lines in Subsec. (b) from $1,500,000 to $2,000,000 each; P.A. 79-376 replaced "workmen's
compensation" with "workers' compensation"; P.A. 90-243 changed the minimum financial requirements for licensing
new property, casualty and life insurance companies, specified exceptions with respect to life and health insurance re total
combined financial capital and surplus and added Subsec. (d) requiring that company's surplus funds must bear a reasonable
relationship to its liabilities in order to obtain or retain its license; Sec. 38-93 transferred to Sec. 38a-72 in 1991; P.A. 92-112 amended Subsec. (d) to require insurers to have sufficient surplus funds based upon the type, volume and nature of
the insurance business transacted in order to secure or retain licensing; P.A. 93-57 amended Subsec. (d) to require that
risk-based capital of an insurer be related to the total adjusted capital adequate for the type of business the insurer transacts
and defined "risk-based capital" and "total adjusted capital"; P.A. 93-136 amended tables in Subsec. (a) to include the
minimum required capital and surplus for companies transacting financial guaranty insurance and added a new Subsec.
(e) re the minimum required combined capital and surplus requirements for financial guaranty insurance insurers for the
period between October 1, 1993, and July 1, 1995; P.A. 93-239 amended Subsec. (b) to eliminate the reduction of certain
capital and surplus requirements; P.A. 94-39 made technical revisions to correct a grammatical error; P.A. 96-227 amended
Subsec. (a) to correct the minimum surplus for stock financial guaranty companies from $600,000,000 to $60,000,000;
P.A. 98-79 added capital and minimum surplus requirements for residual value insurance, property casualty reinsurance
and life reinsurance; P.A. 00-30 amended Subsec. (b) to delete "paid-in" and "net" re surplus, and made technical changes
for purposes of gender neutrality and amended Subsec. (d) to delete "statutory" re "capital and surplus", effective January
1, 2001.