Sec. 38a-323. (Formerly Sec. 38-185w). Notice of nonrenewal and premium billing for personal and commercial risk policies. Applicable to surplus lines insurers. Good faith effort as market conduct exa
Sec. 38a-323. (Formerly Sec. 38-185w). Notice of nonrenewal and premium
billing for personal and commercial risk policies. Applicable to surplus lines insurers. Good faith effort as market conduct examination criterion. (a) No insurer shall
refuse to renew any policy which is subject to the requirements of sections 38a-663 to
38a-696, inclusive, unless such insurer or its agent sends, by registered or certified mail
or by mail evidenced by a certificate of mailing, or delivers to the named insured, at the
address shown in the policy, at least sixty days' advance notice of its intention not to
renew. The notice of intent not to renew shall state or be accompanied by a statement
specifying the reason for such nonrenewal. This section shall not apply: (1) In case of
nonpayment of premium; (2) if the insured fails to pay any advance premium required
by the insurer for renewal, provided, notwithstanding the failure of an insurer to comply
with this subsection, with respect to automobile liability insurance policies the policy
shall terminate on the effective date of any other insurance policy with respect to any
automobile designated in both policies; or (3) if the policy is transferred from the insurer
to an affiliate of such insurer for another policy with no interruption of coverage and
contains the same terms, conditions and provisions, including policy limits, as the transferred policy, except that the insurer to which the policy is transferred shall not be
prohibited from applying its rates and rating plans at the time of renewal. With respect
to an automobile or homeowners policy, each insurer that sends or delivers a notice of
nonrenewal pursuant to this subsection shall use the same method to send or deliver
such notice to any third party designated pursuant to section 38a-323a.
(b) (1) On or before September 30, 1987, a premium billing notice for any policy
subject to the requirements of sections 38a-663 to 38a-696, inclusive, except a workers'
compensation policy, shall be mailed or delivered to the insured by the insurer or its
agent not less than forty-five days in advance of the renewal date or the anniversary
date of the policy. On or after October 1, 1987, such notice shall be so mailed or delivered
to the insured not less than thirty days in advance of the policy's renewal or anniversary
date, except that on or after October 1, 1998, such notice shall not be required for a
commercial risk policy if the premium for the ensuing policy period is to increase less
than ten per cent on an annual basis. The premium billing notice shall be based on the
rates and rules applicable to the ensuing policy period and shall include a notice of
transfer when the policy has been transferred from an insurer to an affiliate of such
insurer pursuant to the provisions of subdivision (3) of subsection (a) of this section.
The provisions of this subsection shall apply to any such policy for which the annual
premium was less than fifty thousand dollars for the preceding annual policy period.
(2) For purposes of any commercial risk policy subject to the requirements of sections 38a-663 to 38a-696, inclusive, except a workers' compensation policy, the mailing
or delivery of a premium billing notice by an insurer's managing general agent, in
accordance with the provisions of subdivision (1) of this subsection, shall constitute
compliance by such insurer with said subdivision.
(c) Failure of the insurer or its agent to provide the insured with the required notice
of nonrenewal or premium billing shall entitle the insured to: (1) Renewal of the policy
for a term of not less than one year, and (2) the privilege of pro-rata cancellation at the
lower of the current or previous year rates if exercised by the insured within sixty days
from the renewal date or anniversary date. Renewal of a policy shall not constitute a
waiver or estoppel with respect to grounds for cancellation which existed before the
effective date of such renewal.
(d) Notwithstanding the provisions of subsection (b) of this section, the advance
notice period for any premium billing notice shall be at least sixty days for any liability
insurance policy wherein a municipality is the named insured.
(e) Notwithstanding the provisions of subsection (a) of this section, the advance
notice period for any refusal to renew any professional liability policy shall be at least
ninety days.
(f) (1) No surplus lines insurer shall be deemed eligible to write coverage for risks
as provided in sections 38a-741 to 38a-744, inclusive, 38a-777, and 38a-794, unless
such surplus lines insurer complies with the requirements of this section. (2) Notwithstanding the provisions of subsection (b) of this section, premium billing notices shall
be provided by any surplus lines insurer to the insured at least sixty days in advance of
the renewal or anniversary date of the policy. Notices of nonrenewal or premium billing
required by this section shall be provided by the surplus lines insurer or its duly authorized representative to the insured. (3) Notwithstanding the provisions of subsection (c)
of this section, failure of any surplus lines insurer to provide the insured with the required
notice of nonrenewal or premium billing shall entitle the insured to an extension of the
policy for a period of ninety days after the renewal or anniversary date of such policy,
provided if the surplus lines insurer fails to provide the required notice on or before the
renewal or anniversary date of such policy, the provisions of subsection (c) of this section
shall apply. In the event of such a ninety-day extension of coverage, the premium for
the extended period of coverage shall be the current rate or the previous rate, whichever
is lower.
(g) For purposes of any market conduct examination performed pursuant to section
38a-15, the Insurance Commissioner may find an insurer to be in compliance with the
requirements of this section upon a determination that such insurer made a good faith
effort to so comply.
(P.A. 85-156, S. 1; P.A. 86-98, S. 1; P.A. 87-175, S. 1, 4; P.A. 88-82, S. 1; P.A. 96-124, S. 1, 2; P.A. 98-213; P.A. 01-113, S. 32, 42; 01-174, S. 9; P.A. 02-60, S. 5; P.A. 06-109, S. 2.)
History: P.A. 86-98 amended Subsec. (a) to increase the notice requirement for nonrenewals from 30 to 60 days,
amended Subsec. (b) to increase the premium billing notice requirement from 30 to 45 days until October 1, 1987, and to
broaden the applicability of the section to policies with annual premiums of less than $50,000, and added Subsec. (d)
establishing a 60-day premium billing notice requirement for municipal liability insurance policies; P.A. 87-175 added
Subsec. (e), making the notice requirements of the section applicable to surplus lines insurers, with certain modifications;
P.A. 88-82 inserted new Subsec. (e) requiring a 90-day advance notice period for any refusal to renew any professional
liability policy, relettering prior Subsecs. as necessary (this provision was formerly contained in Sec. 38-370b which was
repealed by the same act); Sec. 38-185w transferred to Sec. 38a-323 in 1991; P.A. 96-124 added Subsec. (b)(2) re commercial-risk-policy billing practices, and added new Subsec. (g) re market conduct examinations to let the commissioner find
compliance based on an insurer's good faith effort; P.A. 98-213 amended Subdiv. (b)(1) to create an exception from the
45-day notice requirement for commercial risk policies if the premium is to increase less than 10% on an annual basis;
P.A. 01-113 amended Subsec. (f) to delete reference to Sec. 38a-795, effective September 1, 2002; P.A. 01-174 substituted
reference to Sec. 38a-696 for Sec. 38a-697 in Subsecs. (a) and (b); P.A. 02-60 amended Subsec. (a) to require nonrenewal
notices for an automobile or homeowners policy to be sent to any third party designated pursuant to Sec. 38a-323a, substitute
"sends" for "shall send" and "delivers" for "deliver" and delete "On or after October 1, 1986"; P.A. 06-109 added Subsec.
(a)(3) re exception from notice of intent not to renew requirement if policy is transferred from insurer to affiliate of insurer
for another policy, and amended Subsec. (b)(1) to require premium billing notice to include notice of transfer when policy
has been transferred from insurer to affiliate of insurer.
Annotations to former section 38-185w:
Cited. 42 CA 177.
Annotations to present section:
Cited. 42 CA 177.
Subsec. (a):
Sixty-day advance notice of intent not to renew is not applicable because insurer did not want to cancel the policy
through nonrenewal-insurer made an offer of renewal that was rejected because it was not accepted by payment of the
renewal premium. 48 CS 460.