2015 Connecticut General Statutes
Title 38a - Insurance
Chapter 704a - Insurance Guaranty Funds
Section 38a-838 - (Formerly Sec. 38-275). Definitions.

The following terms as used in sections 38a-836 to 38a-853, inclusive, unless the context otherwise requires or a different meaning is specifically prescribed, shall have the following meanings:

(1) “Account” means any one of the three accounts created by section 38a-839;

(2) “Affiliate” means any affiliate, as defined in section 38a-1, of an insolvent insurer;

(3) “Association” means the Connecticut Insurance Guaranty Association created under section 38a-839;

(4) “Commissioner” means the Insurance Commissioner;

(5) (A) “Covered claim” means an unpaid claim, including, but not limited to, one for unearned premiums, that arises out of and is within the coverage and subject to the applicable limits of an insurance policy to which sections 38a-836 to 38a-853, inclusive, apply, if such insurer becomes an insolvent insurer or such claim was assumed as a direct obligation by an insurer that becomes an insolvent insurer, where such obligation was assumed through a merger or an acquisition, pursuant to an acquisition of assets and assumption of liabilities or pursuant to an assumption reinsurance transaction, and (i) the claimant or insured is a resident of this state at the time of the insured event, or (ii) the claim is a first party claim for damage to property with a permanent location in this state. For the purposes of this subparagraph, the residence of a claimant or an insured that is not an individual shall be the state in which such claimant’s or insured’s principal place of business is located at the time of the insured event.

(B) “Covered claim” does not include (i) any claim by or for the benefit of any reinsurer, insurer, insurance pool or underwriting association, as subrogation recoveries or otherwise, provided a claim for any such amount, asserted against a person insured under a policy issued by an insurer that has become an insolvent insurer, that, if it were not a claim by or for the benefit of a reinsurer, insurer, insurance pool or underwriting association, would be a “covered claim”, may be filed directly with the receiver of the insolvent insurer but in no event shall any such claim be asserted against the insured of such insolvent insurer, (ii) any claim by or on behalf of an individual who is neither a citizen of the United States nor an alien legally resident in the United States at the time of the insured event, or an entity other than an individual whose principal place of business is not in the United States at the time of the insured event, and it arises out of an accident, occurrence, offense, act, error or omission that takes place outside of the United States, or a loss to property normally located outside of the United States or, if a workers’ compensation claim, it arises out of employment outside of the United States, (iii) any claim by or on behalf of a person who is not a resident of this state, other than a claim for compensation or any other benefit that arises out of and is within the coverage of a workers’ compensation policy, against an insured whose net worth at the time the policy was issued or at any time thereafter exceeded twenty-five million dollars, provided an insured’s net worth for purposes of this section and section 38a-844 shall be deemed to include the aggregate net worth of the insured and all of its subsidiaries as calculated on a consolidated basis, (iv) any claim by or on behalf of an affiliate of the insolvent insurer at the time the policy was issued or at the time of the insured event, (v) any claim arising out of a policy issued by an insurer that was not licensed to transact insurance in this state at the time the policy was issued, when it assumed the obligation for the covered claim or when the insured event occurred, (vi) any amount due under any policy originally issued by a surplus lines carrier, risk retention group, self-insurer or group self-insurer, (vii) any obligation assumed by an insolvent insurer after the commencement of any delinquency proceeding, as defined in section 38a-905, involving the insolvent insurer or the original insurer, unless it would have been a covered claim absent such assumption, or (viii) any obligation assumed by an insolvent insurer in a transaction in which the original insurer remains separately liable;

(6) “Insolvent insurer” means an insurer (A) (i) licensed to transact insurance in this state at the time the policy was issued, when it assumed the obligation for the covered claim or when the insured event occurred, and (ii) against which a final order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction in the insurer’s state of domicile; (B) that is (i) the legal successor of an insurer that was licensed to transact insurance in this state either at the time the policy was issued or when the insured event occurred, by reason of a merger, provided such merger is approved by an insurance regulator having jurisdiction over such merger, and (ii) against which a final order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction in the insurer’s state of domicile; or (C) that (i) succeeds to the policy obligations of an insurer that was licensed to transact insurance in this state either at the time the policy was issued or when the insured event occurred, by reason of a division whereby policies issued by such licensed insurer are transferred to an insurer, provided such division is approved (I) in a jurisdiction that allows such division, and (II) by an insurance regulator having jurisdiction over such division, and (ii) against which a final order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction in the succeeding insurer’s state of domicile. “Insolvent insurer” shall not be construed to mean any insurer with respect to which an order, decree, judgment or finding of insolvency, whether permanent or temporary in nature, or order of rehabilitation or conservation has been issued by a court of competent jurisdiction prior to October 1, 1971;

(7) “Member insurer” means any person who (A) writes any kind of insurance to which sections 38a-836 to 38a-853, inclusive, apply under section 38a-837, including, but not limited to, the exchange of reciprocal or interinsurance contracts, and (B) is licensed to transact insurance in this state. An insurer shall cease to be a member insurer effective on the day following the termination or expiration of its license to transact the kinds of insurance to which said sections 38a-836 to 38a-853, inclusive, apply, however such insurer shall remain liable as a member insurer for any obligations, including obligations for assessments levied prior to the termination or expiration of the insurer’s license and for assessments levied after the termination or expiration which relate to any insurer which became an insolvent insurer prior to the termination or expiration of such insurer’s license. In the case of such insurer, the average of its net direct written premium for the five calendar years prior to expiration or termination of its license, whether or not the insurer has net direct written premium in the year preceding such expiration or termination, shall be used as its assessment base for any year following such expiration or termination in which the insurer has no direct written premium;

(8) “Net direct written premiums” means direct gross premiums written in this state on insurance policies to which sections 38a-836 to 38a-853, inclusive, apply, less return premiums thereon and dividends paid or credited to policyholders on such direct business, provided the term “net direct written premiums” shall not include premiums on any contract between insurers or reinsurers;

(9) “Person” means an individual, corporation, partnership, association, joint stock company, business trust, limited liability company, unincorporated organization, voluntary organization, governmental entity or other legal entity;

(10) “Residence” means, when used in reference to a corporation, its principal place of business;

(11) “United States” has the meaning assigned to it by section 38a-1.

(1971, P.A. 466, S. 3; P.A. 77-614, S. 163, 610; P.A. 80-482, S. 321, 345, 348; P.A. 81-83, S. 1; P.A. 87-290, S. 1, 8; P.A. 88-76, S. 2, 10; P.A. 90-243, S. 151; P.A. 97-125, S. 2, 9; P.A. 03-49, S. 1; P.A. 04-174, S. 5; P.A. 05-140, S. 2; P.A. 15-171, S. 1.)

History: P.A. 77-614 placed insurance commissioner within the department of business regulation and made insurance department a division within that department, effective January 1, 1979; P.A. 80-482 restored insurance commissioner and division to prior independent status and abolished the department of business regulation; P.A. 81-83 added Subdiv. (9) defining “residence” and replaced “authorized” with “licensed” in Subdiv. (5); P.A. 87-290 added definitions of “affiliate”, “claimant”, and “United States”, and amended the definition of “covered claim” to limit its application to nonresidents of this state, renumbering previous Subdivs. as necessary; P.A. 88-76 clarified the definition of “covered claim”; P.A. 90-243 amended the definitions for “affiliate”, “affiliated”, “person” and “United States”; Sec. 38-275 transferred to Sec. 38a-838 in 1991; P.A. 97-125 amended Subdiv. (4) re time when a claimant files a claim, amended Subdiv. (6)(c) to require the claim to be a first party claim for damage to property with a permanent location and to exclude any claim by or for the benefit of any reinsurer, insurance pool or underwriting association, amended Subdiv. (8) re when an insurer ceases to be a member and such member’s liability for obligations and amended Subdiv. (10) to redefine “person”, effective July 1, 1997; P.A. 03-49 redefined “affiliate” and “covered claim”, deleted former Subdiv. (4) re definition of “claimant”, redesignated existing Subdivs. (5) to (12) as Subdivs. (4) to (11) and made technical changes, effective May 23, 2003, and applicable to claims filed on or after that date; P.A. 04-174 amended Subdiv. (6)(B) to insert clause (i) designator and add new clause (ii) to include the legal successor of the insolvent insurer in the event of merger; P.A. 05-140 redefined “covered claim” in Subdiv. (5) and “insolvent insurer” in Subdiv. (6), effective June 24, 2005, and applicable to insolvencies occurring on or after that date; P.A. 15-171 amended Subdivs. (5) and (6) to redefine “covered claim” and “insolvent insurer” and to make technical changes.