(a) Each insurance company authorized or permitted to do business in this state and each residual market mechanism established pursuant to section 38a-329 shall report to the Insurance Commissioner (1) any failure on the part of an insurance producer or surplus lines broker to remit premiums for policies or endorsements issued to insureds directly or through the producer within thirty days following the due date of the account of the producer with the company, its state agent or managing general agent, or (2) whenever a check issued by such producer to the company or residual market mechanism is returned for insufficient funds or otherwise dishonored and remains outstanding fifteen days following receipt of such return.

(b) If, upon investigation of a report concerning a failure to remit premiums, the commissioner determines that a producer has received premiums directly or indirectly from insureds and has failed to remit them to the proper company, its state agent or managing general agent, he may, following a hearing as specified in section 38a-774, suspend or revoke the license of the producer. Upon receipt of a report concerning a dishonored check or upon dishonor of any check, draft or other remittance upon presentment of payment, from a producer to the Insurance Department, the commissioner shall notify the producer issuing such check, draft or other remittance of the report. If an arrangement for payment of such funds is not made to the satisfaction of the commissioner by the producer within fifteen days of receipt of such notice, the license of the producer shall be automatically suspended. Within sixty days of receipt of such notice the producer may make written demand upon the commissioner for a hearing to show cause why the suspension should be terminated. Such hearing shall be held within thirty days from the date of receipt of the written demand. If by the end of the sixty-day demand period no hearing has been demanded, the license of the producer shall be revoked. The commissioner may institute procedures for the restoration of the licensee’s insurance accounts to best protect the interests of all parties concerned.

(c) The commissioner may adopt such reasonable regulations as the commissioner deems necessary for the implementation of this section and specifically to provide procedures for continuing, terminating or restoring the licenses affected.

(1967, P.A. 250; P.A. 77-614, S. 163, 610; P.A. 80-482, S. 289, 348; P.A. 86-36; P.A. 89-63; P.A. 90-243, S. 39; P.A. 94-39, S. 7; 94-160, S. 8, 24; P.A. 95-136, S. 4, 8; P.A. 14-235, S. 56; P.A. 15-187, S. 2; P.A. 17-15, S. 81.)

History: P.A. 77-614 placed insurance commissioner within the department of business regulation and made insurance department a division within that department, effective January 1, 1979; P.A. 80-482 restored insurance commissioner and division to prior independent status and abolished the department of business regulation; P.A. 86-36 provided that the insurance company and the agent or broker shall each conduct upon the request of the commissioner, an audit of the disputed accounts, the results of which shall be sent to the commissioner, who may then conduct further investigations; P.A. 89-63 required residual market mechanisms to report failure of agent or broker to remit premiums, required a report be made when a check issued by an agent or broker to a company or residual market mechanism is returned for insufficient funds and remains outstanding 15 days, provided for automatic suspension of license if no arrangement for payment of outstanding sum is made to the satisfaction of the commissioner and deleted provisions requiring companies, agents and brokers to conduct audits upon the commissioner’s request; P.A. 90-243 made technical changes and divided section into Subsecs.; Sec. 38-92a transferred to Sec. 38a-712 in 1991; P.A. 94-39 added the phrase “or otherwise dishonored” to trigger the reporting requirement when a check issued by an agent or broker to a company or residual market mechanism is dishonored for any reason; P.A. 94-160 substituted “producer” for “agent or broker” to accurately reflect the modernization and nomenclature of the industry and added “or otherwise dishonored” as a criteria to report when a check issued by a producer is returned for insufficient funds or otherwise dishonored, effective January 1, 1996; P.A. 95-136 added provision in Subsec. (b) to require the Insurance Commissioner to notify a producer of a dishonored check when such check is presented to the state Insurance Department and added provision regarding the suspension of a producer and the subsequent revocation of license, if a producer fails to make arrangements for the payment of funds related to a dishonored check or fails to demand a hearing to show cause why such suspension should be terminated, effective January 1, 1996; (Revisor’s note: In 1999 a repetition of “suspended.” in Subsec. (b) before the phrase “Within sixty days of ...” was deleted editorially by the Revisors to correct a clerical error); P.A. 14-235 amended Subsec. (a) to replace reference to excess line broker with reference to surplus lines broker and make a technical change; P.A. 15-187 amended Subsec. (b) by replacing “dishonor of a check issued by a producer to the Insurance Department of the state of Connecticut,” with “dishonor of any check, draft or other remittance upon presentment of payment, from a producer to the Insurance Department,” and making a conforming change; P.A. 17-15 made a technical change in Subsec. (c).