CID bulletin: Carriers’ responsibilities when they discontinue, reduce line of business

September 28, 2023

In the insurance industry, rules, laws and regulations play a vital role in ensuring fairness and transparency. For insurance companies operating in Connecticut’s admitted and nonadmitted marketplaces, staying compliant with the law is not only a legal obligation, but a way to safeguard the interests of consumers, agents and insurers, while maintaining credibility and a level playing field in the insurance market.

Recently, the Connecticut Insurance Department issued Bulletin PC 34-23, which focuses on the actions insurance carriers need to take when they discontinue or reduce a line or subline of business.

Let’s explore how this bulletin changes current practices, and its impacts on insurance agents.

What is Bulletin PC 34-23?

Bulletin PC 34-23 purports to remind insurance carriers about the requirement outlined in Connecticut General Statute Section 38a-44. The statute requires any admitted or nonadmitted carriers intending to discontinue or substantially reduce writing a line or subline of insurance to inform the CID commissioner at least 60 days before initial cancellation notices or nonrenewal letters are delivered to insureds via written notice.

The bulletin directs insurers to ensure that any agency-facing applications, other technology, processes, or communications to producers do not have the effect of discontinuing or reducing their involvement in a line or subline of insurance, without first satisfying the requirement set forth in Connecticut General Statute Section 38a-44.

The bulletin further advises insurers that if an insurer plans to terminate producer appointments because of a discontinuation or substantial reduction in a line or subline of insurance, the insurer must comply with Connecticut General Statute Section 38a-709 and renew all affected contracts of insurance written by the affected producers for a period of 18 months from the date such action takes effect.

What will change?

Bulletin PC 34-23 aims to change the following current practices:

  1. Reminding insurance carriers of their duties to notify the department at least 60 days in advance of communicating with insureds about cancellation or nonrenewal notices.
  2. Ensuring that agency-customer facing applications, other technology, processes, or communications, to producers do not have the effect of discontinuing or substantially reducing writing a line or subline of insurance.
  3. Reminds insurers of their duty to renew all affected insurance contracts of insureds written by terminated producers for 18 months from the date of termination.

What does this mean for independent insurance agents?

Insurance producers around the state have experienced insurance carriers taking both overt and covert actions to reduce their exposure in the state.

While this new bulletin does not prevent carrier action, it will make it more difficult for insurance carriers to take covert steps against insurance producers.

Now insurance carriers must notify the CID if they take certain actions like reducing commissions or pulling rates from comparative rating software. This new level of oversight will ensure the CID stays informed on carrier actions across the state.

Theophilus Alexander
PIA Northeast | + posts

Theophilus W. Alexander joined PIA Northeast as a government & industry affairs specialist for the Government & Industry Affairs Department in 2023. Prior to joining PIA, Theo had served in both houses of the New York State Legislature. Previously, he worked as a legislative analyst for Hon. New York State Sen. Samra G. Brouk, D-55, and he served at the New York State Assembly, as a policy analyst with New York Assembly Program & Counsel. Theo received his Bachelor of Arts degree in Politics from Ithaca College in Ithaca, N.Y.

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