PIACT Discusses 2004 Insurance Issues with Commissioner

January 23, 2004

The Professional Insurance Agents of Connecticut Inc. met with Insurance Commissioner Susan Cogswell and her staff late last week to discuss issues affecting the industry during the upcoming legislative session.

The PIACT noted that one of its main goals this year is for insurance companies to warn commercial policyholders when changes are made to policies upon renewal. “In Connecticut, some insurers fail to provide any notice to an insured, even when significant changes are made to policies, such as changes in coverage or when an exclusion is added to a policy,” stated PIACT President-elect Jeffrey D. Parmenter, CIC, CPCU, ARM. “We want to make certain our customers have the appropriate amount of time to react to changes made to their policies.”

The bulletin noted: “if a policy renewal results in an increase in premium of 10 percent or more, insurers are required to send a premium billing notice to the insured.” Comparing this with other states the PIACT observed that they also require “conditional renewal” notices to be sent to policyholders for any changes in coverage terms and amounts. “Without advance warning, customers have little chance to shop for alternatives if they are unhappy with changes their company makes to their policy,” Parmenter continued. “We were pleased that the Insurance Department agreed to meet with us and we hope this issue will be addressed this year.”

PIACT also discussed credit scoring with the Department. It expressed concern that “some insurers in Connecticut may use a potential commercial insured’s credit score as the sole reason for denying an application. Although the department has issued guidelines that explicitly prohibit this practice for personal lines customers, no guidelines have been given for commercial lines business.” The department said it has been made aware of the practice and addresses it on a case-by-case basis.

Other topics including health savings accounts, an optional federal charter for insurance companies and licensing also were discussed. In particular, the use of medical savings accounts was approved legislatively in Connecticut just this past year. However, the recent federal Medicare reform pre-empted all state laws on the topic and halted the use of such accounts in favor of the new “health savings account,” which is subject to different rules. As a result, there has been talk in insurance circles about how policies designed for use in conjunction with federally authorized savings accounts can be approved for use once again, and whether the Legislature will address the situation.

“Although Connecticut’s legislative session is shorter this year due to elections, we expect a good amount of insurance-related issues to come to the fore,” Parmenter indicated. “We are pleased that Commissioner Cogswell is open to hearing our members’ interests and hope for her support in Hartford.”

“It was a productive meeting,” Cogswell observed. “We plan on holding regular meetings to discuss agent concerns.”

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