2015 Connecticut General Statutes
Title 38a - Insurance
Chapter 704a - Insurance Guaranty Funds
Section 38a-844 - (Formerly Sec. 38-281). Assignment of rights under policy. Receiver or liquidator bound by settlements. Preservation of rights of association. Right of recovery.

(a) Any person recovering any moneys under sections 38a-836 to 38a-853, inclusive, shall be deemed to have assigned his rights under the policy to said association to the extent of his recovery from said association. Every insured or claimant seeking the protection of said sections shall cooperate with said association to the same extent as such person would have been required to cooperate with the insolvent insurer. Said association shall have no cause of action against any insured of the insolvent insurer for any sums it has paid out to such insured except such causes of action as the insolvent insurer would have had if such sums had been paid by the insolvent insurer. In the case of an insolvent insurer operating on a plan with assessment liability, payments of claims of said association shall not operate to reduce the liability of insureds to the receiver, liquidator, or statutory successor for unpaid assessments.

(b) The receiver, liquidator, or statutory successor of an insolvent insurer shall be bound by determinations of covered claim eligibility under sections 38a-836 to 38a-853, inclusive, and by settlements of claims made by said association or any similar organization having a like function to that of said association in another state. The court having jurisdiction shall grant such claims priority equal to that to which the claimant would have been entitled in the absence of said sections 38a-836 to 38a-853, inclusive, against the assets of the insolvent insurer. The expenses of said association or any similar organization having a like function to that of said association in handling claims shall be accorded the same priority as the receiver’s or liquidator’s expenses.

(c) Said association shall periodically file with the receiver or liquidator of the insolvent insurer statements of the covered claims paid by said association, the expenses paid for the processing of covered claims paid or contested and estimates of anticipated claims on said association, and expenses of processing such claims which shall preserve the rights of said association against the assets of the insolvent insurer.

(d) (1) Except as provided in subdivision (2) of this subsection, the association shall have the right to recover from the following persons the amount of any covered claim paid on behalf of such person pursuant to sections 38a-836 to 38a-853, inclusive: (A) Any person who is an affiliate of the insolvent insurer and whose liability obligations to other persons are satisfied in whole or in part by payments made under this chapter; and (B) any insured whose net worth on December thirty-first of the year next preceding the date the insurer becomes an insolvent insurer exceeds fifty million dollars and whose liability obligations to other persons are satisfied in whole or in part by payments made under said sections. For purposes of this subdivision, “insured” does not include a municipality, as defined in section 7-148, or the Second Injury Fund, established in section 31-354.

(2) The association shall have no right to recover pursuant to subdivision (1) of this subsection from any nonprofit corporation organized to deliver health services and social services to meet the needs of the elderly, that is incorporated in this state and qualified as a Section 501(c)(3) organization under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, for any amount of covered claims paid on behalf of such corporation on or after December 1, 2001, provided the insolvent insurer was declared insolvent prior to May 27, 2008. Any amounts recovered by the association prior to May 27, 2008, from any such nonprofit corporation or affiliate of such nonprofit corporation shall not be required to be reimbursed to such nonprofit corporation or affiliate of such nonprofit corporation.

(1971, P.A. 466, S. 9; P.A. 81-83, S. 4; P.A. 87-290, S. 4, 8; P.A. 97-125, S. 4, 9; P.A. 03-182, S. 1; P.A. 04-10, S. 9; P.A. 05-199, S. 12; P.A. 08-96, S. 1; P.A. 10-5, S. 43.)

History: P.A. 81-83 required that association file statements of expenses paid for processing paid or contested claims in Subsec. (3); P.A. 87-290 added Subsec. (4) describing the persons from whom the association has the right to recover; Sec. 38-281 transferred to Sec. 38a-844 in 1991; P.A. 97-125 made a technical change in Subsec. (1) and amended Subsec. (2) re determinations of covered claim eligibility and settlements of claims made by the association, effective July 1, 1997; P.A. 03-182 amended Subdiv. (4) to make technical changes and provide that “insured” does not include a municipality, as defined in Sec. 7-148, effective June 26, 2003; P.A. 04-10 made technical changes in Subdiv. (4) (Revisor’s note: In 2005, a provision in Subdiv. (4) defining “insured”, added by P.A. 03-182 and inadvertently omitted from P.A. 04-10, was reinstated editorially by the Revisors); P.A. 05-199 amended Subsec. (4) to exclude the Second Injury Fund from the definition of “insured”, effective July 1, 2006; P.A. 08-96 amended Subsec. (4) by adding provisions that exclude certain nonprofit corporations from association’s right of recovery and by making conforming changes, effective May 27, 2008; P.A. 10-5 made technical changes, effective May 5, 2010.

Cited. 217 C. 371.