2019 Connecticut General Statutes
Title 38a - Insurance
Chapter 698c - Risk Retention Groups
Section 38a-250 - (Formerly Sec. 38-530). Definitions.

For purposes of this section and sections 38a-251 to 38a-266, inclusive:

(1) “Completed operations liability” means liability arising out of the installation, maintenance or repair of any product at a site that is not owned or controlled by any person who hires an independent contractor to perform that work, and shall include liability for activities that are completed or abandoned before the date of the occurrence giving rise to the liability;

(2) “Doing business” means effecting any of the following acts in this state by mail or otherwise: (A) The making of or proposing to make, as an insurer, an insurance contract; (B) the making of or proposing to make, as guarantor or surety, any contract of guaranty or suretyship as a vocation and not merely incidental to any other legitimate business or activity of the guarantor or surety; (C) the taking or receiving of any application for insurance; (D) the receiving or collection of any premium, commission, membership fees, assessments, dues or other consideration for any insurance or any party thereof; (E) the issuance or delivery of contracts of insurance to residents of this state or to persons authorized to do business in this state; (F) directly or indirectly acting as an agent for or otherwise representing or aiding on behalf of another any person or insurer in the solicitation, negotiation, procurement or effectuation of insurance or renewals thereof or in the dissemination of information as to coverage or rates, or forwarding of applications, or delivery of policies or contracts, or inspection of risks, a filing of rates or investigation or adjustment of claims or losses or in the transaction of matters subsequent to effectuation of the contract and arising out of it, or in any other manner representing or assisting a person or insurer in the transaction of insurance with respect to subjects of insurance resident, located or to be performed in this state; (G) the doing of or proposing to do any insurance business in substance equivalent to any of the foregoing in a manner designed to evade the provisions of the general statutes relating to insurance; and (H) any other transactions of business in this state by an insurer. The venue of an act committed by mail is at the point where the matter transmitted by mail is delivered and takes effect;

(3) “Domicile”, for purposes of determining the state in which a purchasing group is domiciled, means (A) for a corporation, the state in which the purchasing group is incorporated, and (B) for an unincorporated entity, the state of its principal place of business;

(4) “Hazardous financial condition” means that, based on its present or reasonably anticipated financial condition, a risk retention group is unlikely to be able (A) to meet obligations to policyholders with respect to known claims and reasonably anticipated claims, or (B) to pay other obligations in the normal course of business;

(5) “Insurance” means primary insurance, excess insurance, reinsurance, surplus lines insurance and any other arrangement for shifting and distributing risk that is determined to be insurance under applicable state or federal law;

(6) “Liability” means legal liability for damages, including costs of defense, legal costs and fees, and other claims expenses, because of injuries to other persons, damage to their property or other damage or loss to such other persons resulting from or arising out of (A) any business, whether profit or nonprofit, trade, product, services, including professional services, premises or operations, or (B) any activity of any state or local government or any agency or political subdivision thereof. “Liability” does not include personal risk liability and an employer’s liability with respect to its employees other than legal liability under the Federal Employers’ Liability Act, 45 USC 51 et seq.;

(7) “NAIC” means the National Association of Insurance Commissioners;

(8) “Personal risk liability” means liability for damages because of injury to any person, damage to property or other loss or damage resulting from any personal, familial or household responsibilities or activities, rather than from responsibilities or activities referred to in subdivision (6) of this section;

(9) “Plan of operation or a feasibility study” means an analysis that presents the expected activities and results of a risk retention group including, at a minimum, (A) for each state in which it intends to operate, the coverages, deductibles, coverage limits, rates and rating classification systems for each line of insurance the group intends to offer, (B) historical and expected loss experience of the proposed members and national experience of similar exposures to the extent that this experience is reasonably available, (C) pro forma financial statements and projections, (D) appropriate opinions by an independent member of the American Academy of Actuaries, including a determination of minimum premium or participation levels required to commence operations and to prevent a hazardous financial condition, (E) information sufficient to verify that its members are engaged in businesses or activities similar or related with respect to the liability to which such members are exposed by virtue of any related, similar or common business, trade, product, services, premises or operations, (F) identification of management, underwriting and claims procedures, marketing methods, managerial oversight methods, investment policies and reinsurance agreements, (G) identification of each state in which the risk retention group has obtained, or sought to obtain, a charter and license, and a description of its status in each such state, and (H) such other matters as may be prescribed by the commissioner of the state in which the risk retention group is chartered for liability insurance companies authorized by the insurance laws of that state;

(10) “Product liability” means liability for damages because of any personal injury, death, emotional harm, consequential economic damage, or property damage, including damages resulting from loss of use of property, arising out of the manufacture, design, importation, distribution, packaging, labeling, lease or sale of a product. “Product liability” does not include the liability of any person for those damages if the product involved was in the possession of such a person when the incident giving rise to the claim occurred;

(11) “Purchasing group” means any group that: (A) Has as one of its purposes the purchase of liability insurance on a group basis; (B) purchases such insurance only for its group members and only to cover their similar or related liability exposure, as described in subparagraph (C) of this subdivision; (C) is composed of members whose businesses or activities are similar or related with respect to the liability to which members are exposed by virtue of any related, similar or common business, trade, product, services, premises or operations; and (D) is domiciled in any state;

(12) “Risk retention group” means any corporation or other limited liability association: (A) Whose primary activity consists of assuming and spreading all, or any portion, of the liability exposure of its group members; (B) that is organized for the primary purpose of conducting the activity described under subparagraph (A) of this subdivision; (C) that (i) is chartered and licensed as a liability insurance company under the laws of a state and authorized to engage in the business of insurance under the laws of such state, or (ii) before January 1, 1985, was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before said date, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of such state, except that any such group shall be considered to be a risk retention group only if it has been engaged in business continuously since such date and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability, as such terms were defined in the Product Liability Risk Retention Act of 1981, 15 USC 3901 et seq., before the date of the enactment of the Liability Risk Retention Act of 1986; (D) that does not exclude any person from membership in the group solely to provide for members of such a group a competitive advantage over such a person; (E) that (i) has as its owners only persons who comprise the membership of the risk retention group and who are provided insurance by such group, or (ii) has as its sole owner an organization that has as its members only persons who comprise the membership of the risk retention group, and as its owners only persons who comprise the membership of the risk retention group and who are provided insurance by such group; (F) whose members are engaged in businesses or activities similar or related with respect to the liability to which such members are exposed by virtue of any related, similar or common business, trade, product, services, premises or operations; (G) whose activities do not include the provision of insurance other than (i) liability insurance for assuming and spreading all or any portion of the similar or related liability exposure of its group members, and (ii) reinsurance with respect to the similar or related liability exposure of any other risk retention group, or any member of such other group, that is engaged in businesses or activities so that such group or member meets the requirement described in subparagraph (F) of this subdivision for membership in the risk retention group that provides such reinsurance; and (H) the name of which includes the phrase “Risk Retention Group”;

(13) “State” means any state of the United States or the District of Columbia.

(P.A. 87-135, S. 1, 18; P.A. 89-33, S. 1; P.A. 93-239, S. 25; P.A. 16-206, S. 2; P.A. 17-15, S. 16–18.)

History: P.A. 89-33 deleted the definition of “located” and renumbered the remaining Subdivs. as necessary; Sec. 38-530 transferred to Sec. 38a-250 in 1991; P.A. 93-239 redefined “plan of operation or a feasibility study” to include information sufficient to verify the membership, businesses and activities with respect to the liability to which such members are exposed due to business, services trade or product, identification of various policies and procedures utilized, identification of states where insurer has sought or obtained charter and license and other information prescribed by commissioner of state where chartered and made technical corrections for statutory consistency; P.A. 16-206 added new Subdiv. (7) defining “NAIC”, redesignated existing Subdivs. (7) to (12) as Subdivs. (8) to (13), amended redesignated Subdiv. (9) to add “for each state in which it intends to operate,” in Subpara. (A), and made technical changes; P.A. 17-15 made technical changes in Subdivs. (1), (5), (12)(B) and (12)(E)(ii).