Sec. 38a-866. (Formerly Sec. 38-309). Assessments.
Sec. 38a-866. (Formerly Sec. 38-309). Assessments. (a) For the purpose of providing the funds necessary to carry out the powers and duties of the association, the
board of directors shall assess the member insurers, separately for each account, at such
times and for such amounts as the board finds necessary. The association shall establish
a due date for each assessment which shall be at least thirty days after the association
has provided the member notice of the assessment. Each member insurer shall pay
interest on any late payment at the rate of one per cent per month, or any portion thereof,
from the due date to the date of payment.
(b) There shall be two classes of assessments, as follows: (1) Class A assessments
shall be made for the purpose of meeting administrative costs and other general expenses
not related to a particular impaired or insolvent insurer; (2) Class B assessments shall
be authorized and called to the extent necessary to carry out the powers and duties of
the association under section 38a-865 with regard to an impaired or insolvent insurer.
(c) (1) The amount of any Class A assessment shall be determined by the board
and may be authorized and called on a pro-rata or non-pro-rata basis. If an assessment
is made on a pro-rata basis, the board may provide that the assessment be credited against
future Class B assessments. The amount of any Class B assessment shall be allocated
for assessment purposes among the accounts pursuant to an allocation formula which
may be based on the premiums or reserves of the impaired or insolvent insurer or any
other standard that the board, in its sole discretion, deems as being fair and reasonable
under the circumstances.
(2) Class B assessments against member insurers for each account and subaccount
shall be in the proportion that the premiums received on business in this state by each
assessed member insurer on policies or contracts covered by each account for the three
most recent calendar years for which information is available preceding the year in
which the insurer became insolvent or, in the case of an assessment with respect to an
impaired insurer, the three most recent calendar years for which information is available
preceding the year in which the insurer became impaired bear to such premiums received
on business in this state for those calendar years by all assessed member insurers.
(3) Assessments for funds to meet the requirements of the association with respect
to an impaired or insolvent insurer shall not be authorized or called until necessary to
implement the purposes of sections 38a-858 to 38a-875, inclusive. Classification of
assessments under subsection (b) of this section and computation of assessments under
this subsection shall be made with a reasonable degree of accuracy, recognizing that
exact determinations may not always be possible. The association shall notify each
member insurer of its anticipated pro-rata share of an authorized assessment that is not
yet called not later than one hundred eighty days after the association authorizes the
assessment.
(d) The association may abate or defer, in whole or in part, the assessment of a
member insurer if, in the opinion of the board, payment of the assessment would endanger the ability of the member insurer to fulfill its contractual obligations. In the event
an assessment against a member insurer is abated, or deferred in whole or in part, the
amount by which such assessment is abated or deferred may be assessed against the
other member insurers in a manner consistent with the basis for assessments set forth
in this section. Once the conditions that caused a deferral have been removed or rectified,
the member insurer shall pay all assessments that were deferred pursuant to a repayment
plan approved by the association.
(e) (1) (A) Subject to the provisions of subparagraph (B) of this subdivision, the
total of all assessments authorized by the association with respect to a member insurer
for each subaccount of the life insurance and annuity account and for the health insurance
account shall not in any one calendar year exceed two per cent of such insurer's average
annual premiums received in this state on the policies and contracts covered by the
subaccount or account during the three calendar years preceding the year in which the
insurer became an impaired or insolvent insurer. (B) If two or more assessments are
authorized in one calendar year with respect to insurers that become impaired or insolvent in different calendar years, the average annual premiums for purposes of the aggregate assessment percentage shall be equal and limited to the higher of the three-year
average annual premium for the applicable subaccount or account as calculated pursuant
to this section. (C) If the maximum assessment, together with the other assets of the
association in any account, does not provide in any one year in either account an amount
sufficient to carry out the responsibilities of the association, the necessary additional
funds shall be assessed as soon thereafter as permitted by sections 38a-858 to 38a-875,
inclusive.
(2) The board may provide in the plan of operation a method of allocating funds
among claims, whether relating to one or more impaired insurers, when the maximum
assessment will be insufficient to cover anticipated claims.
(3) If the maximum assessment for any subaccount of the life insurance and annuity
account in any one year does not provide an amount sufficient to carry out the responsibilities of the association, then pursuant to subdivision (2) of subsection (c) of this
section, the board shall access the other subaccounts of the life insurance and annuity
account for the necessary additional amount, subject to the maximum stated in subdivision (1) of this subsection.
(f) The board may, by an equitable method as established in the plan of operation,
refund to member insurers, in proportion to the contribution of each insurer to that
account, the amount by which the assets of the account exceed the amount the board
finds is necessary to carry out during the coming year the obligations of the association
with regard to that account, including assets accruing from assignment, subrogation,
net realized gains and income from investments. A reasonable amount may be retained
in any account to provide funds for the continuing expenses of the association and for
future losses if refunds are impractical.
(g) It shall be proper for any member insurer, in determining its premium rates and
policy owner dividends as to any kind of insurance within the scope of sections 38a-858 to 38a-875, inclusive, to consider the amount reasonably necessary to meet its
assessment obligations under said sections.
(h) (1) Each insurer paying an assessment under sections 38a-858 to 38a-875, inclusive, may offset one hundred per cent of the amount of such assessment against its
premium tax liability to this state under chapter 207. Such offset shall be taken over a
period of the five successive tax years following the year of payment of the assessment,
at the rate of twenty per cent per year of the assessment paid to the association. Each
insurer to which has been refunded by the association, pursuant to subsection (f) of this
section, all or a portion of an assessment previously paid to the association by the insurer
shall be required to pay to the Department of Revenue Services an amount equal to the
total amount that has been claimed as an offset against the premiums tax liability on the
premiums tax return or returns, as the case may be, filed by such insurer and that is
attributable to such refunded assessment, provided the amount required to be paid to
said department shall not exceed the amount of the refunded assessment. If the amount
of the refunded assessment exceeds the total amount that has been claimed as an offset
against the premiums tax liability on the premiums tax return or returns filed by such
insurer and that is attributable to such refunded assessment, such excess may not be
claimed as an offset against the premiums tax liability on a premiums tax return or
returns filed by such insurer or, if the offset has been transferred to another person
pursuant to subdivision (2) of this subsection, by such other person. For purposes of
this subdivision, if the offset has been transferred to another person pursuant to subdivision (2) of this subsection, the total amount that has been claimed as an offset against
the premiums tax liability on the premiums tax return or returns filed by such insurer
includes the total amount that has been claimed as an offset against the premiums tax
liability on the premiums tax return or returns filed by such other person. The association
shall promptly notify the Commissioner of Revenue Services of the name and address
of the insurers to which such refunds have been made, the amount of such refunds, and
the date on which such refunds were mailed to each such insurer. If the amount that an
insurer is required to pay to the Department of Revenue Services has not been so paid
on or before the forty-fifth day after the date of mailing of such refunds, the insurer shall
be liable for interest on such amount at the rate of one per cent per month, or fraction
thereof, from such forty-fifth day to the date of payment.
(2) An insurer, in this subdivision called "the transferor", may transfer any offset
provided under subdivision (1) of this subsection to an affiliate, as defined in section 38a-1, of the transferor. Any such transfer of the offset by the transferor, and any subsequent
transfer or transfers of the same offset, shall not affect the obligation of the transferor
to pay to the Department of Revenue Services any sums which are acquired by refund
from the association pursuant to subsection (f) of this section and which are required
to be paid to the Department of Revenue Services pursuant to subdivision (1) of this
subsection. Such offset may be taken by any transferee only against the transferee's
premium tax liability to this state under chapter 207. The Commissioner of Revenue
Services shall not allow such offset to a transferee against its premium tax liability unless
the transferor, the affiliate to which the offset was originally transferred, each subsequent
transferor and each subsequent transferee have filed such information as may be required
on forms provided by said commissioner with respect to any such transfer or transfers
on or before the due date of the premium tax return on which such offset would have
been taken by the transferor, if no transfer had been made by the transferor.
(i) (1) A member insurer that wishes to protest all or part of an assessment shall
pay when due the full amount of the assessment as set forth in the notice provided by
the association. The payment shall be available to meet association obligations during
the pendency of the protest or any subsequent appeal. Payment shall be accompanied
by a written statement that (A) the payment is made under protest, and (B) includes a
brief statement of the grounds for the protest. (2) Not later than sixty days following
the payment of an assessment under protest by a member insurer, the association shall
notify the member insurer in writing of its determination with respect to the protest
unless the association notifies the member insurer that additional time is required to
resolve the issues raised by the protest. (3) Not later than thirty days after a final decision
has been made, the association shall notify the protesting member insurer in writing of
the final decision. (4) Not later than sixty days after receipt of notice of the final decision,
the protesting member insurer may appeal the final action to the commissioner. (5) In
the alternative to rendering a final decision with respect to a protest based on a question
regarding the assessment base, the association may refer protests to the commissioner
for a final decision, with a recommendation from the association. (6) If the protest or
appeal on the assessment is upheld, the amount paid in error or excess shall be returned
to the member company. Interest on a refund due a protesting member shall be paid at
the rate actually earned by the association.
(j) The association may request information from member insurers in order to aid
in the exercise of its power under this section and member insurers shall promptly comply
with such request.
(1972, P.A. 280, S. 9; P.A. 78-58, S. 2; P.A. 81-101, S. 9; P.A. 88-76, S. 9, 10; P.A. 93-239, S. 8; P.A. 00-174, S. 50,
76, 83; P.A. 01-67, S. 5; June Sp. Sess. P.A. 01-6, S. 42, 43, 85; P.A. 02-24, S. 14; P.A. 03-225, S. 15; P.A. 04-17, S. 2.)
History: P.A. 78-58 authorized making Class A assessments on non pro rata basis in Subsec. (c)(1) and removed
Class A assessments from provisions of Subsec. (c)(2); P.A. 81-101 deleted Subsec. (h) re certificates of contribution and
relettered Subsec. (i) as (h), substituting "this chapter" for reference to repealed Subsec. (h); P.A. 88-76 amended Subsecs.
(d) and (e) revising the methods by which the association may assess member insurers and subaccounts for amounts abated
or deferred; Sec. 38-309 transferred to Sec. 38a-866 in 1991; P.A. 93-239 amended Subsec. (h) re refunds paid due to
offset assessments made to the Connecticut Life and Health Insurance Guaranty Association from the insurer's premium
tax liability; P.A. 00-174 amended Subsec. (h) to require specific details from the association in reports to the Department
of Revenue Services re refunds under Subsec. (f), to provide for interest on late payments under this section, to allow 100%
of an assessment to be offset from the premium tax liability, to require the offset to be taken over five years and to allow
transfer of the offset to an affiliate, effective May 26, 2000, and applicable to income years commencing on and after
January 1, 2000, and to refunds made on or after July 1, 2000; P.A. 01-67 amended Subsec. (a) to delete provision re 30
days' written notice of assessments and substitute requirement that association establish a due date for assessment and to
require insurers to pay interest on any late payment, amended Subsecs. (b) and (c) to delete provisions re Class C assessments,
provide for two classes of assessments and revise provisions re assessments, amended Subsec. (d) to add provisions re
repayment of deferrals, amended Subsec. (e) to designate provisions of Subdiv. (1) as Subparas. (A) and (C), revising
Subpara. (A) and adding Subpara. (B) re two or more assessments in one calendar year, amended Subsec. (f) to substitute
"account" for "amount" and insert "assignment" and "subrogation" re asset accrual, deleted Subsec. (h)(2) allowing an
insurer to transfer any offset, added new Subsec. (i) re insurer protests of assessments and new Subsec. (j) re requests for
information from member insurers, and made technical and conforming changes in Subsecs. (b), (c), (e) and (h); June Sp.
Sess. P.A. 01-6 amended Subsec. (h)(1) to delete former provisions re offset assessments paid to association against
premium tax liability, add provisions to specify procedures for tax treatment of refunds of assessments of association
members, change "thirtieth day" to "forty-fifth day" and make a technical change, effective July 1, 2001, and would have
amended Subsec. (h)(2) to add procedures for the transfer to affiliates of tax offsets for association members, effective
July 1, 2001, and applicable to calendar years commencing on or after January 1, 2001, but failed to take effect, subdivision
(2) having been previously deleted by P.A. 01-67; P.A. 02-24 amended Subsec. (h) to add "each" to "such insurer" re
mailing of refunds; P.A. 03-225 amended Subsec. (h) to designate existing provisions as Subdiv. (1), make technical
changes therein and add new Subdiv. (2) re transfer of certain offsets, effective July 9, 2003, and applicable to calendar
years commencing on or after January 1, 2001; P.A. 04-17 amended Subsec. (c)(1) to delete $150 limit on all non-pro-rata assessments per member insurer.