Connecticut General Statutes
Chapter 704c - Insurers Rehabilitation and Liquidation Act and Termination of Domestic Life Insurance Companies
Section 38a-935. (Formerly Sec. 38-453). - Recovery of premiums owed. Penalty. Appeals.

(a)(1) A producer, premium finance company or any other person, other than the insured, responsible for the payment of a premium shall pay any unpaid collected premium including any amount representing commissions held by such person at the time of the entry of the liquidation order, whether earned or unearned based on the termination of coverage under section 38a-921, and any unpaid earned premium, all as shown on the records of the insurer. A producer, premium finance company or any other person shall have no obligation to pay an uncollected unpaid unearned premium to the liquidator. (2) The liquidator shall also have the right to recover from any person other than the insured, responsible for the payment of a premium, any unearned commission actually paid or credited to such person based on the termination of coverage under section 38a-921. Credits or set-offs or both shall not be allowed to a producer or premium finance company, or any other person against unpaid premium due the insurer for any amounts advanced to the insurer by such person on behalf of, but in the absence of a payment by, the insured, or for any other amount paid by such person to any other person after the entry of the order of liquidation. (3) An insured shall pay, either directly to the liquidator or to any agent who has paid or is obligated to pay the liquidator on behalf of the insured, any unpaid earned premium or retrospectively rated premium due the insurer based on the termination of coverage under section 38a-921. Premium on surety business shall be deemed earned at inception if no policy term can be determined. All other premium shall be deemed earned and shall be prorated over the determined policy term, regardless of any provision in the bond, guaranty, contract or other agreement. If a claim for losses incurred under a policy is approved by the court under subsection (b) of section 38a-945, then all premium for the full policy term shall be deemed earned. (4) Any person who collected premium, or financed premium under a premium finance contract, that is due the insurer in liquidation shall be deemed to hold that premium in trust as a fiduciary for the benefit of the insurer and to have availed himself of the laws of this state, regardless of any provision in any agency contract or other agreement. (5) Any premium finance company shall be obligated to pay any amounts due the insurer from premium finance contracts, whether the premium is earned or unearned. The liquidator has the right to collect any unpaid financed premium directly from the premium finance company, by taking an assignment of the underlying premium finance contracts, or directly from the insured who is a party to the premium finance contract.

(b) Upon satisfactory evidence of a violation of this section by a person other than an insured, the commissioner may require any of the following: (1) Suspend or revoke or refuse to renew the licenses of such offending party or parties; or (2) impose a penalty of not more than two thousand five hundred dollars for each act in violation of this section by said party or parties.
(c) Before the commissioner takes any action as set forth in subsection (b) of this section, he shall give written notice to the person, company, association, or exchange accused of violating the law, stating specifically the nature of the alleged violation, and fixing a time and place, at least ten days thereafter, when a hearing on the matter shall be held. After such hearing, or upon failure of the accused to appear at such hearing, the commissioner, if he shall find such violation, shall impose such of the penalties under subsection (b) of this section as he deems advisable.
(d) Any person aggrieved by the action of the commissioner in revoking, suspending or refusing to grant a license or in imposing a fine may appeal therefrom in accordance with the provisions of section 4-183, except venue for such appeal shall be in the judicial district of Hartford.
(P.A. 79-382, S. 33; P.A. 88-230, S. 1, 12; P.A. 90-50, S. 2, 3; 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 95-220, S. 4–6; P.A. 96-193, S. 32, 36; P.A. 98-214, S. 16; P.A. 08-178, S. 48.)
History: P.A. 90-50 amended Subsec. (a) to allow recovery of collected premium and any unpaid earned premium at the time of insolvency, to require that any entity responsible for premium payment on behalf of the insured shall not be required to pay an uncollected unpaid unearned premium to the liquidator and to allow an insured to recover any part of an unearned premium which represents commission actually paid or credited; Sec. 38-453 transferred to Sec. 38a-935 in 1991; P.A. 96-193 amended Subsec. (a) to substitute “producer” for “agent” and “broker”, effective June 3, 1996; P.A. 98-214 amended Subsec. (a) to insert Subdiv. designators, to include “any amount representing commissions” re unpaid collected premium, to add “based on the termination of coverage under section 38a-921” re such premium, to delete right of insured to recover any part of an unearned premium, to add as Subdiv. (2) power of liquidator to recover from any person other than the insured, responsible for payment of a premium, any unearned commission based on the termination of coverage under Sec. 38a-921, to prohibit certain credits or set-offs, to specify in Subdiv. (3) that insured's payment be either directly to the liquidator or to any agent who has paid or is obligated to pay the liquidator on behalf of the insured, including any retrospectively rated premium due the insurer, to delete “at the time of the declaration of insolvency, as shown on the records of the insurer”, and replace with “based on the termination of coverage under section 38a-921”, to add provision in Subdiv. (3) re when premium on surety business and other premium shall be deemed earned and re claim for losses approved by court, to add new Subdiv. (4) re person who collected or financed premium that is due the insurer in liquidation, and to add new Subdiv. (5) re obligation of premium finance companies, amended Subsec. (b) to insert “by a person other than an insured” re a violation of section, deleted existing language in Subsec. (d) and substituted with language re appeals, and made technical changes throughout section (Revisor's note: P.A. 88-230, 90-98, 93-142 and 95-220 authorized substitution of “judicial district of Hartford” for “judicial district of Hartford-New Britain” in public and special acts of the 1998 regular and special sessions of the General Assembly, effective September 1, 1998; P.A. 08-178 amended Subsec. (b) by making technical changes and increasing maximum penalty from $1,000 to $2,500 per violation.

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