Nonadmitted market process bill passes Connecticut state Legislature, PIACT priority

June 26, 2023

The top legislative priority for PIACT—during the 2023 legislative session—was the passage of legislation that would make small, but critical changes to the process for placing insurance policies in the nonadmitted marketplace. That legislation, H.B.6621, successful passed the Connecticut Legislature earlier this month.

Whether it was removing the notarization requirements on affidavits or this most recent effort, PIACT has advocated for surplus-lines reforms in the state for years. Your association has been working on this issue for several sessions, and the legislation has evolved over time.

An unexpected journey

The journey this legislation took is a good illustration of some of the hurdles a bill, even an innocuous one, can face prior to passage.

It started as an idea that was raised during a PIACT Government Affairs meeting. The idea was to remove some of the administrative red tape that comes with placing business in the in nonadmitted marketplace.

The original goal was to exclude certain excess-lines transactions from the diligent-effort requirement. To that end, PIACT drafted legislation, found sponsors and it had the bill introduced during the 2022 legislative session.

Unfortunately, the bill faced opposition from the Connecticut Insurance Department. The CID expressed concerns that as written the legislation would roll back important consumer protections. While respectively disagreeing with the CID position, PIACT volunteer board members went to work to reach a compromise with the CID.

That compromise came to fruition with the passage of H.B.6621. This legislation makes changes to the process of placing risks in the nonadmitted marketplace.

Then and now

Under current law, insurance producers are required to make a “diligent effort” before placing business in the nonadmitted marketplace. This diligent effort includes submitting signed statements to demonstrate the producer’s attempts to find coverage in the admitted marketplace without success. These statements must be filed with the CID.

If the governor signs H.B.6621 into law, the process will change. Under the legislation, insurance producers still would be required to make a diligent effort to place business in the admitted market, but the requirement to prepare a signed statement and submit it to the CID has been removed.

Instead, insurance producers would be required to keep on file documentation concerning the diligent effort made to procure the insurance and information concerning each policy placed in the surplus-lines market.

This bill will now be sent to Gov. Ned Lamont for his consideration. If signed, the bill would go into effect on Sunday, Oct. 1, 2023.

Bradford J. Lachut, Esq.
PIA Northeast

Bradford J. Lachut, Esq., joined PIA as government affairs counsel for the Government & Industry Affairs Department in 2012 and then, after a four-month leave, he returned to the association in 2018 as director of government & industry affairs responsible for all legal, government relations and insurance industry liaison programs for the five state associations. Prior to PIA, Brad worked as an attorney for Steven J. Baum PC, in Amherst, and as an associate attorney for the law office of James Morris in Buffalo. He also spent time serving as senior manager of government affairs as the Buffalo Niagara Partnership, a chamber of commerce serving the Buffalo, N.Y., region, his hometown. He received his juris doctorate from Buffalo Law School and his Bachelor of Science degree in Government and Politics from Utica College, Utica, N.Y. Brad is an active Mason and Shriner.

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