Connecticut Insurance Guaranty Association Act

§ 38a-836. - Short title: Connecticut Insurance Guaranty Association Act.
§ 38a-837. - Application of chapter.
§ 38a-838. - Definitions.
§ 38a-839. - Connecticut Insurance Guaranty Association created. Membership. Function. Accounts.
§ 38a-840. - Board of directors. Selection. Reimbursement for expenses.
§ 38a-841. - Obligations and rights of association. Limitations. Assessments. Investigation of claims. Right to intervene in court proceedings.
§ 38a-842. - Plan of operation.
§ 38a-843. - Insolvent insurers. Penalty. Petition to show cause.
§ 38a-844. - Assignment of rights under policy. Receiver or liquidator bound by settlements. Preservation of rights of association. Right of recovery.
§ 38a-845. - Exhaustion of rights under policy prior to claim against association. Claims recoverable from more than one association. Persons required to exhaust rights under governmental insurance or guaranty program.
§ 38a-846. - Detection and prevention of insurer insolvencies.
§ 38a-847. - Association subject to examination and regulation by commissioner. Annual financial report.
§ 38a-848. - Exemption from fees and taxes. Exception.
§ 38a-849. - Rates and premiums to include recoupment of assessments.
§ 38a-850. - No liability for action taken in performance of powers and duties. No liability for failure to act.
§ 38a-851. - Association rights in proceedings to which insolvent insurer is party. Access to insolvent insurer`s records.
§ 38a-852. - Prohibited unfair trade practice.
§ 38a-853. - Regulations.
§ 38a-854 to 38a-857 - Reserved.
§ 38a-836. - Short title: Connecticut Insurance Guaranty Association Act.
Sections 38a-836 to 38a-853, inclusive, shall be known and may be cited as the "Connecticut Insurance Guaranty Association Act."
§ 38a-837. - Application of chapter.

Sections 38a-836 to 38a-853, inclusive, shall apply to all kinds of direct insurance, except:

1) Life, annuity, health or disability insurance;

2) Mortgage guaranty, financial guaranty or other forms of insurance offering protection against investment risks;

3) Fidelity or surety or any bonding obligations;

4) Credit insurance, vendors' single interest insurance, or collateral protection insurance or any similar insurance protecting the interests of a creditor out of a creditor-debtor transaction;

5) Insurance of warranties or service contracts, including insurance that provides for the repair, replacement or service of goods or property, or indemnification for repair, replacement or service, for the operational or structural failure of the goods or property due to a defect in materials, workmanship or normal wear and tear, or that provides reimbursement for the liability incurred by the issuer of agreements or service contracts that provide such benefits;

6) Title insurance;

7) Ocean marine insurance;

8) Any transaction or combination of transactions between a person, including affiliates of such person, and an insurer, including affiliates of such insurer, which involves the transfer of investment or credit risk unaccompanied by transfer of insurance risk;

9) Any insurance provided by or guaranteed by government; or

10) Flood insurance pursuant to the federal Flood Disaster Protection Act of 1973, as amended, 42 USC. § 4001, et seq.

§ 38a-838. - Definitions.

The following terms as used in sections 38a-836 to 38a-853, inclusive, unless the context otherwise requires or a different meaning is specifically prescribed, shall have the following meanings:

1) "Account" means any one of the three accounts created by section 38a-839;

2) "Affiliate" means any affiliate, as defined in section 38a-1, of an insolvent insurer;

3) "Association" means the Connecticut Insurance Guaranty Association created under section 38a-839;

4) "Commissioner" means the Insurance Commissioner;

(5) (A) "Covered claim" means an unpaid claim, including, but not limited to, one for unearned premiums, that arises out of and is within the coverage and subject to the applicable limits of an insurance policy to which sections 38a-836 to 38a-853, inclusive, apply, if such insurer becomes an insolvent insurer or such claim was assumed as a direct obligation by an insurer that becomes an insolvent insurer, where such obligation was assumed through a merger or an acquisition, pursuant to an acquisition of assets and assumption of liabilities or pursuant to an assumption reinsurance transaction, and (i) the claimant or insured is a resident of this state at the time of the insured event, or (ii) the claim is a first party claim for damage to property with a permanent location in this state.  For the purposes of this subparagraph, the residence of a claimant or an insured that is not an individual shall be the state in which such claimant''s or insured''s principal place of business is located at the time of the insured event.

(B) "Covered claim" does not include (i) any claim by or for the benefit of any reinsurer, insurer, insurance pool or underwriting association, as subrogation recoveries or otherwise, provided a claim for any such amount, asserted against a person insured under a policy issued by an insurer that has become an insolvent insurer, that, if it were not a claim by or for the benefit of a reinsurer, insurer, insurance pool or underwriting association, would be a "covered claim", may be filed directly with the receiver of the insolvent insurer but in no event shall any such claim be asserted against the insured of such insolvent insurer, (ii) any claim by or on behalf of an individual who is neither a citizen of the United States nor an alien legally resident in the United States at the time of the insured event, or an entity other than an individual whose principal place of business is not in the United States at the time of the insured event, and it arises out of an accident, occurrence, offense, act, error or omission that takes place outside of the United States, or a loss to property normally located outside of the United States or, if a workers'' compensation claim, it arises out of employment outside of the United States, (iii) any claim by or on behalf of a person who is not a resident of this state, other than a claim for compensation or any other benefit that arises out of and is within the coverage of a workers'' compensation policy, against an insured whose net worth at the time the policy was issued or at any time thereafter exceeded twenty-five million dollars, provided an insured''s net worth for purposes of this section and section 38a-844 shall be deemed to include the aggregate net worth of the insured and all of its subsidiaries as calculated on a consolidated basis, (iv) any claim by or on behalf of an affiliate of the insolvent insurer at the time the policy was issued or at the time of the insured event, (v) any claim arising out of a policy issued by an insurer that was not licensed to transact insurance in this state at the time the policy was issued, when it assumed the obligation for the covered claim or when the insured event occurred, (vi) any amount due under any policy originally issued by a surplus lines carrier, risk retention group, self insurer or group self-insurer, (vii) any obligation assumed by an insolvent insurer after the commencement of any delinquency proceeding, as defined in section 38a-905, involving the insolvent insurer or the original insurer, unless it would have been a covered claim absent such assumption, or (viii) any obligation assumed by an insolvent insurer in a transaction in which the original insurer remains separately liable;

     (6) "Insolvent insurer" means an insurer (A) (i) licensed to transact insurance in this state at the time the policy was issued, when it assumed the obligation for the covered claim or when the insured event occurred, and (ii) against which a final order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction in the insurer''s state of domicile; (B) that is (i) the legal successor of an insurer that was licensed to transact insurance in this state either at the time the policy was issued or when the insured event occurred, by reason of a merger, provided such merger is approved by an insurance regulator having jurisdiction over such merger, and (ii) against which a final order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction in the insurer;s state of domicile; or (C) that (i) succeeds to the policy obligations of an insurer that was licensed to transact insurance in this state either at the time the policy was issued or when the insured event occurred, by reason of a division whereby policies issued by such licensed insurer are transferred to an insurer, provided such division is approved (I) in a jurisdiction that allows such division, and (II) by an insurance regulator having jurisdiction over such division, and (ii) against which a final order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction in the succeeding insurer''s state of domicile. "Insolvent insurer" shall not be construed to mean any insurer with respect to which an order, decree, judgment or finding of insolvency, whether permanent or temporary in nature, or order of rehabilitation or conservation has been issued by a court of competent jurisdiction prior to October 1, 1971;



7) "Member insurer" means any person who (A) writes any kind of insurance to which sections 38a-836 to 38a-853, inclusive, apply under section 38a-837, including, but not limited to, the exchange of reciprocal or interinsurance contracts, and (B) is licensed to transact insurance in this state. An insurer shall cease to be a member insurer effective on the day following the termination or expiration of its license to transact the kinds of insurance to which said sections 38a-836 to 38a-853, inclusive, apply, however such insurer shall remain liable as a member insurer for any obligations, including obligations for assessments levied prior to the termination or expiration of the insurer''s license and for assessments levied after the termination or expiration which relate to any insurer which became an insolvent insurer prior to the termination or expiration of such insurer''s license. In the case of such insurer, the average of its net direct written premium for the five calendar years prior to expiration or termination of its license, whether or not the insurer has net direct written premium in the year preceding such expiration or termination, shall be used as its assessment base for any year following such expiration or termination in which the insurer has no direct written premium;

8) "Net direct written premiums" means direct gross premiums written in this state on insurance policies to which sections 38a-836 to 38a-853, inclusive, apply, less return premiums thereon and dividends paid or credited to policyholders on such direct business, provided the term "net direct written premiums" shall not include premiums on any contract between insurers or reinsurers;

9) "Person" means an individual, corporation, partnership, association, joint stock company, business trust, limited liability company, unincorporated organization, voluntary organization, governmental entity or other legal entity;

10) "Residence" means, when used in reference to a corporation, its principal place of business;

11) "United States" has the meaning assigned to it by section 38a-1.


§ 38a-839. - Connecticut Insurance Guaranty Association created. Membership. Function. Accounts.

There is created a nonprofit unincorporated legal entity to be known as the Connecticut Insurance Guaranty Association. All insurers defined as member insurers in section 38a-838 shall be members of said association as a condition of their authority to transact insurance in this state. Said association shall perform its functions under a plan of operation established and approved under section 38a-842 and shall exercise its powers through a board of directors established under section 38a-840. For the purposes of administration and assessment, said association shall be divided into three separate accounts:  

1) The workers' compensation insurance account; 

2) the automobile insurance account; and  

3) an account for all other insurance to which sections 38a-836 to 38a-853, inclusive, apply.

§ 38a-840. - Board of directors. Selection. Reimbursement for expenses.
A) The board of directors of said association shall consist of not less than five nor more than nine persons serving terms as established in the plan of operation under section 38a-842. The members of the board of directors shall be selected by member insurers subject to the approval of the commissioner. Vacancies on the board shall be filled for the remaining period of the term by a majority vote of the remaining members, subject to the approval of the commissioner. If no members are selected within sixty days after October 1, 1971, the commissioner may appoint the initial members of the board of directors.

B) In approving selections to said board, the commissioner shall consider among other things whether all member insurers are fairly represented.

C) Members of said board shall receive no compensation as such but shall be reimbursed from the assets of said association for actual and necessary expenses incurred by them in carrying out their official duties as members of the board of directors.

§ 38a-841. - Obligations and rights of association. Limitations. Assessments. Investigation of claims. Right to intervene in court proceedings.

(a) Said association shall: (1) Be obligated to the extent of the covered claims existing prior to the determination of insolvency or the entry of a final a final order of liquidation with a finding of insolvency, as applicable, and arising within thirty days after the determination of insolvency or the entry of such order, or before the policy expiration date if less than thirty days after the determination or the entry of such order, or before the insured replaces the policy or causes its cancellation, if the insured does so within thirty days after such determination or entry of such order, provided such obligation shall be limited as follows: (A) With respect to covered claims for unearned premiums, to one-half of the unearned premium on any policy, subject to a maximum of two thousand dollars per policy; (B) with respect to covered claims other than for unearned premiums, such obligation shall include only that amount of each such claim that is in excess of one hundred dollars and is less than (i) three hundred thousand dollars for claims arising under policies of insurers determined to be insolvent prior to October 1, 2007, (ii) four hundred thousand dollars for claims arising under policies of insurers determined to be insolvent on or after October 1, 2007, and prior to October 1, 2015, and (iii) five hundred thousand dollars for claims arising under policies of insurers against which a final order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction in the insurer''s state of domicile on or after October 1, 2015.  Said association shall pay the full amount of any such claim arising out of a workers'' compensation policy, provided in no event shall said association be obligated (I) to any claimant in an amount in excess of the obligation of the insolvent insurer under the policy form or coverage from which the claim arises, or (II) for any claim filed with the association after the expiration of two years from the date of the declaration of insolvency unless such claim arose out of a workers'' compensation policy and was timely filed in accordance with section 31-294c; 

(2) Be deemed the insurer to the extent of its obligations on the covered claims and to such extent shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent; 

(3) Allocate claims paid and expenses incurred among the three accounts, created by section 38a-839, separately, and assess member insurers separately (A) in respect of each such account for such amounts as shall be necessary to pay the obligations of said association under subdivision (1) of this subsection subsequent to an insolvency; (B) the expenses of handling covered claims subsequent to an insolvency; (C) the cost of examinations under section 38a-846; and (D) such other expenses as are authorized by sections 38a-836 to 38a-853, inclusive. The assessments of each member insurer shall be in the proportion that the net direct written premiums of such member insurer for the calendar year preceding the assessment on the kinds of insurance in such account bears to the net direct written premiums of all member insurers for the calendar year preceding the assessment on the kinds of insurance in such account. Each member insurer shall be notified of its assessment not later than thirty days before it is due. No member insurer may be assessed in any year on any account an amount greater than two per cent of that member insurer''s net direct written premiums for the calendar year preceding the assessment on the kinds of insurance in said account, provided if, at the time an assessment is levied on the all other insurance account, as defined in subdivision (3) of section 38a-839, the board of directors finds that at least fifty per cent of the total net direct written premiums of a member insurer and all its affiliates, for the year on which such assessment is based, were from policies issued or delivered in Connecticut, on risks located in this state, such member insurer shall be assessed only on such member insurer''s net direct written premium that is attributable to the kind of insurance that gives rise to each covered claim. If the maximum assessment, together with the other assets of said association in any account, does not provide in any one year in any account an amount sufficient to make all necessary payments from that account, the funds available may be prorated and the unpaid portion shall be paid as soon thereafter as funds become available. Said association may defer, in whole or in part, the assessment of any member insurer if the assessment would cause the member insurer''s financial statement to reflect amounts of capital or surplus less than the minimum amounts required for a certificate of authority by any jurisdiction in which the member insurer is authorized to transact insurance, provided during the period of deferment, no dividends shall be paid to shareholders or policyholders. Deferred assessments shall be paid when such payment will not reduce capital or surplus below the minimum amounts required for a certificate of authority. Such payments shall be refunded to those insurers receiving greater assessments because of such deferment or, at the election of the insurer, be credited against future assessments. Each member insurer serving as a servicing facility may set off against any assessment, authorized payments made on covered claims and expenses incurred in the payment of such claims by such member insurer if they are chargeable to the account in respect of which the assessment is made; 

(4) Investigate claims brought against said association and adjust, compromise, settle, and pay covered claims to the extent of said association''s obligations and deny all other claims. The association shall pay claims in any order it deems reasonable including, but not limited to, payment in the order of receipt or by classification. It may review settlements, releases and judgments to which the insolvent insurer or its insureds were parties to determine the extent to which such settlements, releases and judgments may be properly contested;

(5) Notify such persons as the commissioner may direct under subdivision (1) of subsection (b) of section 38a-843, as amended by this act; 

(6) Handle claims through its employees or through one or more insurers or other persons designated by said association as servicing facilities, provided such designation of a servicing facility is approved by the commissioner and may be declined by a member insurer; 

(7) Reimburse each such servicing facility for obligations of said association paid by such facility and for expenses incurred by such facility while handling claims on behalf of said association and shall pay such other expenses of said association as are authorized by sections 38a-836 to 38a-853, inclusive.

B) Said association may:

1) Employ or retain such persons as are necessary to handle claims and perform other duties of said association;

2) borrow such funds as may be necessary from time to time to effect the purposes of sections 38a-836 to 38a-853, inclusive, in accord with the plan of operation under section 38a-842;

3) sue or be sued;

4) intervene as a matter of right as a party in any proceeding before any court in this state that has jurisdiction over an insolvent insurer, as defined in section 38a-838;

5) negotiate and become a party to such contracts as are necessary to carry out the purpose of sections 38a-386 to 38a-853, inclusive;

6) perform such other acts as are necessary or proper to effectuate the purpose of said sections;

7) refund to the member insurers in proportion to the contribution of each such member insurer to that account, that amount by which the assets of the account exceed the liabilities, if, at the end of any calendar year, the board of directors finds that the assets of said association in any account exceed the liabilities of that account as estimated by the board of directors for the coming year.

C) 1) Each insurer paying an assessment under sections 38a-836 to 38a-853, inclusive, may offset one hundred per cent of the amount of such assessment against its premium tax liability to this state under chapter 207. Such offset shall be taken over a period of the five successive tax years following the year of payment of the assessment, at the rate of twenty per cent per year of the assessment paid to the association. Each insurer to which has been refunded by the association, pursuant to subsection (B) of this section, all or a portion of an assessment previously paid to the association by the insurer shall be required to pay to the Department of Revenue Services an amount equal to the total amount that has been claimed as an offset against the premiums tax liability on the premiums tax return or returns, as the case may be, filed by such insurer and that is attributable to such refunded assessment, provided the amount required to be paid to said department shall not exceed the amount of the refunded assessment. If the amount of the refunded assessment exceeds the total amount that has been claimed as an offset against the premiums tax liability on the premiums tax return or returns filed by such insurer and that is attributable to such refunded assessment, such excess may not be claimed as an offset against the premiums tax liability on a premiums tax return or returns filed by such insurer or, if the offset has been transferred to another person pursuant to subdivision (2) of this subsection, by such other person. For purposes of this subsection, if the offset has been transferred to another person pursuant to subdivision (2) of this subsection, the total amount that has been claimed as an offset against the premiums tax liability on the premiums tax return or returns filed by such insurer includes the total amount that has been claimed as an offset against the premiums tax liability on the premiums tax return or returns filed by such other person. The association shall promptly notify the Commissioner of Revenue Services of the name and address of the insurers to which such refunds have been made, the amount of such refunds and the date on which such refunds were mailed to such insurer. If the amount that an insurer is required to pay to the Department of Revenue Services has not been so paid on or before the forty-fifth day after the date of mailing of such refunds, the insurer shall be liable for interest on such amount at the rate of one per cent per month or fraction thereof from such forty-fifth day to the date of payment.

2) An insurer, in this subparagraph called "the transferor", may transfer any offset provided under subdivision (1) of this subsection to an affiliate, as defined in section 38a-1, of the transferor. Any such transfer of the offset by the transferor and any subsequent transfer or transfers of the same offset shall not affect the obligation of the transferor to pay to the Department of Revenue Services any sums which are acquired by refund from the association pursuant to subsection (B) of this section and which are required to be paid to the Department of Revenue Services pursuant to subdivision (1) of this subsection. Such offset may be taken by any transferee only against the transferee''s premium tax liability to this state under chapter 207. The Commissioner of Revenue Services shall not allow such offset to a transferee against its premium tax liability unless the transferor, the affiliate to which the offset was originally transferred, each subsequent transferor and each subsequent transferee have filed such information as may be required on forms provided by said commissioner with respect to any such transfer or transfers on or before the due date of the premium tax return on which such offset would have been taken by the transferor if no transfer had been made by the transferor.

§ 38a-842. - Plan of operation.

a) 1)  Said association shall submit to the commissioner a plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of said association. The plan of operation and any amendments thereto shall become effective upon approval in writing by the commissioner.  

2) If said association fails to submit a suitable plan of operation within ninety days following October 1, 1971, or if at any time thereafter said association fails to submit suitable amendments to the plan, the commissioner shall, after notice and hearing, adopt and promulgate such reasonable regulations as are necessary or advisable to effectuate the provisions of sections 38a-836 to 38a-853, inclusive. Such regulations shall continue in force until modified by the commissioner or superseded by a plan submitted by said association and approved by the commissioner.

B) All member insurers shall comply with the plan of operation.

C) The plan of operation shall:

1) Establish the procedures whereby all the powers and duties of said association under section 38a-841 shall be performed;

2) establish procedures for handling the assets of said association;

3) establish the number, the terms of office and the amount and method of reimbursing members of the board of directors under section 38a-840;

4) establish procedures by which claims may be filed with said association and establish acceptable forms of proof of covered claims. Notice of claims to the receiver or liquidator of the insolvent insurer shall be deemed notice to said association or its agent and a list of such claims shall be periodically submitted to said association or similar organization having a like function to that of said association in another state by the receiver or liquidator;

5) establish regular places and times for meetings of the board of directors;

6) establish procedures for records to be kept of all financial transactions of said association, its agents, and the board of directors;

7) provide that any member insurer aggrieved by any final action or decision of said association may appeal to the commissioner within thirty days after such action or decision;

8) establish the procedures whereby selections for the board of directors shall be submitted to the commissioner;

9) contain such additional provisions as may be necessary or proper for the execution of the powers and duties of said association under sections 38a-836 to 38a-853, inclusive.

D) The plan of operation may delegate any or all powers and duties of said association, except those under subdivision (3) of subsection (A) of section 38a-841 and subdivision (2) of subsection (b) of section 38a-841, to a corporation, association, or other organization which performs or will perform functions similar to those of said association, or its equivalent having a like function to that of said association, in two or more states. Such a corporation, association or organization shall be reimbursed by said association as a servicing facility would be reimbursed and shall be paid by said association for its performance of any other functions of said association. Any delegation under this subsection shall take effect only with the approval of both the board of directors and the commissioner, and may be made only to a corporation, association, or organization which extends protection not substantially less favorable and effective than that provided by sections 38a-836 to 38a-853, inclusive.

§ 38a-843. - Insolvent insurers. Penalty. Petition to show cause.

(a) The commissioner shall: (1) Notify said association of the existence of an insolvent insurer, and notify the chairman of the Workers' Compensation Commission and the State Treasurer of the existence of an insolvent workers' compensation insurer, not later than three days after the commissioner receives notice of any such insolvency; (2) upon request of the board of directors, provide said association with a statement of the net direct written premiums of each member insurer.

(b) The commissioner may: (1) Require that said association notify those persons insured by the insolvent insurer, and any other interested parties, of the entry of a final order of liquidation with a finding of insolvency and of their rights under sections 38a-836 to 38a-853, inclusive. Such notification shall be by mail sent to their last known address, where available, provided if sufficient information for such notification by mail is not available, notice by publication in a newspaper of general circulation shall be sufficient to satisfy the requirements of this subsection; (2) suspend or revoke, after notice and hearing, the certificate of authority to transact insurance in this state of any member insurer that fails to pay an assessment when due or which fails to comply with said plan of operation. In lieu of such suspension or revocation, the commissioner may levy a fine on any member insurer that fails to pay an assessment when due, provided no such fine shall exceed five per cent of the unpaid assessment per month, and provided no fine shall be less than five hundred dollars per month; (3) revoke the designation of any servicing facility if the commissioner finds claims are being handled unsatisfactorily.


c) Any person aggrieved by any final action or order of the commissioner under sections 38a-836 to 38a-853, inclusive, may, not later than thirty days from the date of such action or order, petition the superior court for the judicial district of Hartford to require the commissioner to show cause why said action or order should not be reversed or eliminated, and, if said court finds that the action or order of the commissioner was arbitrary and unjustified it shall take such action in the premises as may seem equitable. The pendency of any such petitions to show cause shall act as a stay of execution of any such order. Petitions under this section shall be privileged in respect of trial assignment.

§ 38a-844. - Assignment of rights under policy. Receiver or liquidator bound by settlements. Preservation of rights of association. Right of recovery.

A) Any person recovering any moneys under sections 38a-836 to 38a-853, inclusive, shall be deemed to have assigned his rights under the policy to said association to the extent of his recovery from said association. Every insured or claimant seeking the protection of said sections shall cooperate with said association to the same extent as such person would have been required to cooperate with the insolvent insurer. Said association shall have no cause of action against any insured of the insolvent insurer for any sums it has paid out to such insured except such causes of action as the insolvent insurer would have had if such sums had been paid by the insolvent insurer. In the case of an insolvent insurer operating on a plan with assessment liability, payments of claims of said association shall not operate to reduce the liability of insured's to the receiver, liquidator, or statutory successor for unpaid assessments.

B) The receiver, liquidator, or statutory successor of an insolvent insurer shall be bound by determinations of covered claim eligibility under sections 38a-836 to 38a-853, inclusive, and by settlements of claims made by said association or any similar organization having a like function to that of said association in another state. The court having jurisdiction shall grant such claims priority equal to that to which the claimant would have been entitled in the absence of said sections 38a-836 to 38a-853, inclusive, against the assets of the insolvent insurer. The expenses of said association or any similar organization having a like function to that of said association in handling claims shall be accorded the same priority as the receiver's or liquidator's expenses.

C) Said association shall periodically file with the receiver or Liquidator of the insolvent insurer statements of the covered claims paid by said association, the expenses paid for the processing of covered claims paid or contested and estimates of anticipated claims on said association, and expenses of processing such claims which shall preserve the rights of said association against the assets of the insolvent insurer.

D) 1) Except as provided in subdivision (2) of this subsection, the association shall have the right to recover from the following persons the amount of any covered claim paid on behalf of such person pursuant to sections 38a-836 to 38a-853, inclusive: (A) Any person who is an affiliate of the insolvent insurer and whose liability obligations to other persons are satisfied in whole or in part by payments made under this chapter; and (B) any insured whose net worth on December thirty-first of the year next preceding the date the insurer becomes an insolvent insurer exceeds fifty million dollars and whose liability obligations to other persons are satisfied in whole or in part by payments made under said sections. For purposes of this subdivision, "insured" does not include a municipality, as defined in section 7-148, or the Second Injury Fund, established in section 31-354. 

2) The association shall have no right to recover pursuant to subdivision (1) of this subsection from any nonprofit corporation organized to deliver health services and social services to meet the needs of the elderly, that is incorporated in this state and qualified as a Section 501(c)(3) organization under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, for any amount of covered claims paid on behalf of such corporation on or after December 1, 2001, provided the insolvent insurer was declared insolvent prior to May 27, 2008. Any amounts recovered by the association prior to May 27, 2008 from any such nonprofit corporation or affiliate of such nonprofit corporation shall not be required to be reimbursed to such nonprofit corporation or affiliate of such nonprofit corporation.

§ 38a-845. - Exhaustion of rights under policy prior to claim against association. Claims recoverable from more than one association. Persons required to exhaust rights under governmental insurance or guaranty program.
A) Any person having a claim against an insurer under any provision in an insurance policy, other than a policy of an insolvent insurer, which is also a covered claim under sections 38a-836 to 38a-853, inclusive, shall exhaust first his rights under such policy. Any amount payable on a covered claim under said sections shall be reduced by the amount recoverable under the claimant's insurance policy or chapter 568.

B) Any person having a claim which may be recovered under more than one insurance guaranty association or its equivalent having a like function to that of said association shall seek recovery first from the association operating in the area of the residence of the insured except that (1) if it is a first party claim for damage to property with a permanent location, such person shall seek recovery first from the association operating in the location of the property, and (2) if it is a workers' compensation claim, such person shall seek recovery first from the association operating in the area of residence of the claimant. Any recovery under sections 38a-836 to 38a-853, inclusive, shall be reduced by the amount recoverable from any other insurance guaranty association or its equivalent having a like function to that of said association. [Editors' Note: (2) (B) applicable to claims filed on or after 05/23/2003]

C) Any person having a claim under any governmental insurance or guaranty program which such claim is also a covered claim shall be required to first exhaust his rights under such program. Any amount payable on a covered claim under sections 38a-836 to 38a-853, inclusive, shall be reduced by any amount recoverable under such program.

§ 38a-846. - Detection and prevention of insurer insolvencies.
To aid in the detection and prevention of insurer insolvencies:

1) The board of directors, upon majority vote, shall notify the commissioner of any information which it may have indicating any member insurer may be insolvent or in a financial condition hazardous to its policyholders or the public.

2) The board of directors may, upon majority vote, request that the commissioner order an examination of any member insurer which the board in good faith believes may be in a financial condition hazardous to its policyholders or the public. Within thirty days of the receipt of such request, the commissioner shall begin such examination. The examination may be conducted as a National Association of Insurance Commissioners examination or may be conducted by the commissioner or by such persons as the commissioner may designate. The cost of such examination shall be paid by said association. In no event shall such examination report be released to the board of directors prior to its release to the public, provided this shall not preclude the commissioner from complying with subdivision (3) of this section. The commissioner shall notify the board of directors when the examination is completed. The request for an examination shall be kept on file by the commissioner but it shall not be open to public inspection prior to the release of the examination report to the public.

3) The commissioner shall report to the board of directors when he has reasonable cause to believe that any member insurer examined or being examined at the request of the board of directors may be insolvent or in a financial condition hazardous to its policyholders or the public.

4) The board of directors may, upon majority vote, make reports and recommendations to the commissioner and the chief insurance regulatory official in any jurisdiction upon any matter germane to the solvency, liquidation, rehabilitation or conservation of any member insurer. Such reports and recommendations shall not be considered public documents.

5) The board of directors may, upon majority vote, make recommendations to the commissioner and any other public official in any jurisdiction for the detection and prevention of insurer insolvencies.

6) At the request of the commissioner, the board of directors shall, at the conclusion of any insurer insolvency in which said association was obligated to pay any covered claim, prepare a report on the history and causes of such insolvency, based on the information available to said association, and submit such report to the commissioner.

§ 38a-847. - Association subject to examination and regulation by commissioner. Annual financial report.
Said association shall be subject to examination and regulation by the commissioner. The board of directors shall submit, not later than March thirtieth of each year, a financial report for the preceding calendar year in a form approved by the commissioner.
§ 38a-848. - Exemption from fees and taxes. Exception.
Said association shall be exempt from payment of all fees and all taxes levied by the state or any of its subdivisions provided it shall not be exempt from the payment of real or personal property taxes.
§ 38a-849. - Rates and premiums to include recoupment of assessments.
(Repealed)
§ 38a-850. - No liability for action taken in performance of powers and duties. No liability for failure to act.
There shall be no liability on the part of and no cause of action of any nature shall arise against any member insurer, said association or its agents or employees, the board of directors, or any person serving as an alternate or substitute representative of any director or the commissioner or his representatives for any action taken or any failure to act by them in the performance of their powers and duties under sections 38a-836 to 38a-853, inclusive.
§ 38a-851. - Association rights in proceedings to which insolvent insurer is party. Access to insolvent insurer`s records.
a) All proceedings in which an insolvent insurer is a party or is obligated to defend an insured as a party in any court in this state shall be stayed for up to six months and for such additional time thereafter as may be determined by the court from the date of declaration of insolvency or from the time an ancillary proceeding is instituted in the state, whichever is later, to permit proper defense by said association of all pending causes of action in the case. Whenever any covered claims arise from a judgment under any decision, verdict or finding based on the default of an insolvent insurer or based on such insolvent insurer's failure to defend an insured, said association, either on its own behalf or on behalf of such insured, may apply to have such judgment, order, decision, verdict or finding set aside by the same court or administrator that made such judgment, order, decision, verdict or finding and said association may defend against any such claim on the merits of the case.

b) The liquidator, receiver or statutory successor of an insolvent insurer covered by sections 38a-836 to 38a-853, inclusive, shall permit access by the board or its authorized representative to such insolvent insurer's records which the board determines are necessary for the board to carry out its functions under said sections 38a-836 to 38a853, inclusive, with regard to covered claims. The liquidator, receiver or statutory successor shall provide the board or its representative with copies of such records upon the request of the board.

§ 38a-852. - Prohibited unfair trade practice.
It shall be a prohibited unfair trade practice and a violation of section 38a-815 for any person to make use in any manner of the protection afforded by sections 38a-836 to 38a853, inclusive, in the solicitation, negotiation, procurement or effectuation of insurance provided, this section shall not apply to the distribution of any publication approved by the commissioner and describing the general purposes and current limitations of sections 38a-836 to 38a-853, inclusive. Violations of this section shall be subject to the provisions of section 38a-817.
§ 38a-853. - Regulations.
The commissioner may promulgate such reasonable regulations as he deems necessary to carry out the intent of sections 38a-836 to 38a-853, inclusive. Such regulations may include definitions of the kinds of insurance specified in section 38a-837.
§ 38a-854 to 38a-857 - Reserved.
Reserved for future use.