Sec. 38a-916. (Formerly Sec. 38-434). Powers and duties of the rehabilitator. Advisory committees.
Sec. 38a-916. (Formerly Sec. 38-434). Powers and duties of the rehabilitator.
Advisory committees. (a) The commissioner as rehabilitator may appoint one or more
special deputies, who shall have all the powers and responsibilities of the rehabilitator
granted under this section, and notwithstanding any contrary provision of law, including
chapters 55a and 67, the commissioner may employ such counsel, clerks and assistants
as deemed necessary. The compensation of the special deputy, counsel, clerks and assistants and all expenses of taking possession of the insurer and of conducting the proceedings shall be fixed by the commissioner, with the approval of the court and shall be paid
out of the funds or assets of the insurer. The persons appointed under this section shall
serve at the pleasure of the commissioner. The commissioner, as rehabilitator, may, with
the approval of the court, appoint an advisory committee of policyholders, claimants or
other creditors including guaranty associations should such a committee be deemed
necessary, except that the decision to appoint an advisory committee shall be at the sole
discretion of the commissioner, and the committee shall serve at the pleasure of the
commissioner and shall serve without compensation and without reimbursement for
expenses. No other committee of any nature shall be appointed by the commissioner or
the court in rehabilitation proceedings conducted under sections 38a-903 to 38a-961,
inclusive.
(b) In the event that the property of the insurer does not contain sufficient cash or
liquid assets to defray the costs incurred, the commissioner may advance the costs so
incurred out of any appropriation for the maintenance of the Insurance Department. Any
amounts so advanced for expenses of administration shall be repaid to the commissioner
for the use of the Insurance Department out of the first available money of the insurer.
(c) The rehabilitator may take such action as he deems necessary or appropriate to
reform and revitalize the insurer. He shall have all the powers of the directors, officers
and managers, whose authority shall be suspended, except as they are redelegated by
the rehabilitator. He shall have full power to direct and manage, to hire and discharge
employees subject to any contract rights they may have and to deal with the property
and business of the insurer.
(d) If it appears to the rehabilitator that there has been criminal or tortious conduct,
or breach of any contractual or fiduciary obligation detrimental to the insurer by any
officer, manager, producer, employee or other person, he may pursue all appropriate
legal remedies on behalf of the insurer.
(e) If the rehabilitator determines that reorganization, consolidation, conversion,
reinsurance, merger or other transformation of the insurer is appropriate, he shall prepare
a plan to effect such changes. Upon application of the rehabilitator for approval of the
plan, and after such notice and hearing as the court may prescribe, the court may either
approve or disapprove the plan proposed, or may modify it and approve it as modified.
Any plan approved under this section shall be, in the judgment of the court, fair and
equitable to all parties concerned. If the plan is approved, the rehabilitator shall carry
out the plan. In the case of a life insurer, the plan proposed may include the imposition
of liens upon the policies of the company, if all rights of shareholders are first relinquished. A plan for a life insurer may also propose imposition of a moratorium upon
loan and cash surrender rights under policies, for such period and to such an extent as
may be necessary.
(f) The rehabilitator shall have the power pursuant to sections 38a-928 and 38a-929
to avoid fraudulent transfers, and may exercise any of the powers under section 38a-923 as necessary or appropriate, except that in the case of a life insurer, the rehabilitator
of such an insurer may, as part of a court-approved plan of rehabilitation, modify or
restructure the policies or contracts of insurance. In the event the rehabilitator proposes
to modify or restructure the policies or contracts of insurance, the rehabilitator may,
with the concurrence of the court, approve payment of certain expenses incurred by an
advisory committee appointed pursuant to subsection (a) of this section, the expenses
to be limited to the reasonable and necessary expenses incurred in obtaining an expert
evaluation of the effect upon policyholders of any proposed modification or restructuring of policies or contracts of insurance.
(g) The enumeration, in this section, of the powers and authority of the rehabilitator
shall not be construed as a limitation upon the rehabilitator, nor shall it exclude in any
manner the right to do other acts not specifically enumerated or otherwise provided for,
as may be necessary or appropriate for the accomplishment of or in the aid of the purpose
of rehabilitation.
(P.A. 79-382, S. 14; P.A. 80-482, S. 4, 345, 348; P.A. 92-93, S. 12; P.A. 96-193, S. 31, 36; P.A. 98-214, S. 10.)
History: P.A. 80-482 abolished the department of business regulation and restored its division of insurance as an
independent department (as it was prior to creation of business regulation department in P.A. 77-614); Sec. 38-434 transferred to Sec. 38a-916 in 1991; P.A. 92-93 amended Subsec. (a) to add provision re commissioner's appointment of an
advisory committee, created new Subsec. (b) using language taken from old Subsec. (a) re insufficient cash or liquid assets,
relettered the remaining Subsecs. as necessary and made technical corrections for statutory consistency; P.A. 96-193
amended Subsec. (d) to substitute "producer" for "agent" and "broker", effective June 3, 1996; P.A. 98-214 amended
Subsec. (a) to notwithstand any contrary provision of law, including chapters 55a and 67, to make the decision to appoint
an advisory committee be at the sole discretion of the commissioner, and to delete compensation for "reasonable travel
and per diem living expenses", substituted "the" for "said" in Subsec. (b), amended Subsec. (f) to allow rehabilitator to
exercise powers under Sec. 38a-923, with exception re a life insurer, and to allow rehabilitator to, with concurrence of
court, approve payment of certain advisory committee expenses if the rehabilitator proposes to modify or restructure
policies or contracts, and added new Subsec. (g) re the enumeration of powers and authority not to be construed as a
limitations on the rehabilitator.
Subsec. (c):
Commissioner is legally empowered to participate in and control insurer's business activities whenever its solvency is
threatened. 47 CS 202.