Connecticut insurance producers: What to know when carriers exit a line of business 

As the insurance marketplace in Connecticut continues to evolve, PIACT has received reports from members across the state of carriers discontinuing or substantially reducing writing certain lines of coverage.  

During this time, it’s vital that Connecticut insurance producers are aware of important regulatory requirements that carriers must follow when they decide to exit or significantly reduce business in a particular line of insurance, such as personal lines.  

The Connecticut Insurance Department has reinforced these obligations through Bulletin PC-34-23 and statutory requirements. 

What you need to know 

Carrier notification to the insurance commissioner. Under Connecticut General Statute § 38a-44, any admitted or nonadmitted insurer in Connecticut that plans to discontinue or substantially reduce its writings in a line or subline of property/casualty insurance must: 

• Notify the insurance commissioner in writing by registered or certified mail at least 60 days before any initial notice of cancellation or nonrenewal is delivered or mailed to policyholders. 

• Notices also should be sent electronically to the CID Property/Casualty Division. 

This notice requirement also extends to carrier actions that effectively reduce writings through the use of: 

• agency-facing applications; 

• technology tools and processes (such as underwriting referrals); and 

• producer communications that impede new business or renewals. 

If you are uncertain whether an action constitutes a discontinuance or substantial reduction, the CID advises erring on the side of caution and consulting with the department. 

Impact on producer appointments and book of business. If a carrier discontinues or substantially reduces a line or subline, and terminates producer appointments as part of that action, additional protections for producers are triggered under Connecticut law, including: 

• Carriers must permit the renewal of all contracts of insurance written by the affected producers for a minimum of 18 months following the producer’s termination. 

• Carriers must provide the producer with at least 90 days’ written notice before terminating any agency contract unless the termination is for nonpayment of monies owed. 

• During the 90-day notice period, the producer may not bind or write new business without specific carrier approval. 

• Carriers must continue paying renewal commissions at the same rates the producer received prior to termination. 

These protections ensure that policyholders experience minimal disruption and that producers have sufficient time to transition their affected business. 

Market conduct and fair practices 

The CID also has made clear that any misuse of underwriting technology or practices that create a de facto market withdrawal—without the proper notices—could lead to regulatory examination and enforcement actions for unfair trade practices. 

Further, carriers must avoid actions that result in unfair discrimination against risks based solely on geographic location. 

It’s important for both insurers and producers to stay informed and follow these requirements to help ensure a fair marketplace and protect consumers. Producers should stay alert for any signs that a carrier may be scaling back a line of business and take steps to confirm that all necessary regulatory requirements are being met. 

If you have any concerns or questions regarding a carrier’s actions or your responsibilities, you are encouraged to contact PIA or the CID’s Property/Casualty Division. 

For more information on policyholder protections in Connecticut click here.