§ 38a-916 — (Formerly Sec. 38-434). Powers and duties of the rehabilitator. Advisory committees.

Connecticut § 38a-916

• Jurisdiction: Connecticut
• Title 38a: Insurance
• Ch. 704c: Insurers Rehabilitation and Liquidation Act and Termination of Domestic Life Insurance Companies

Text

(a) The commissioner as rehabilitator may appoint one or more special deputies, who shall have all the powers and responsibilities of the rehabilitator granted under this section, and notwithstanding any provision of law, including chapters 55a and 67, the commissioner may employ such counsel, clerks and assistants as deemed necessary. The compensation of the special deputy, counsel, clerks and assistants and all expenses of taking possession of the insurer and of conducting the proceedings shall be fixed by the commissioner, with the approval of the court and shall be paid out of the funds or assets of the insurer. The persons appointed under this section shall serve at the pleasure of the commissioner. The commissioner, as rehabilitator, may, with the approval of the court, appoint an advisory committee of policyholders, claimants or other creditors including guaranty associations should such a committee be deemed necessary, except that the decision to appoint an advisory committee shall be at the sole discretion of the commissioner, and the committee shall serve at the pleasure of the commissioner and shall serve without compensation and without reimbursement for expenses. No other committee of any nature shall be appointed by the commissioner or the court in rehabilitation proceedings conducted under sections 38a-903 to 38a-961, inclusive. (b) In the event that the property of the insurer does not contain sufficient cash or liquid assets to defray the costs incurred, the commissioner may advance the costs so incurred out of any appropriation for the maintenance of the Insurance Department. Any amounts so advanced for expenses of administration shall be repaid to the commissioner for the use of the Insurance Department out of the first available money of the insurer. (c) The rehabilitator may take such action as he deems necessary or appropriate to reform and revitalize the insurer. He shall have all the powers of the directors, officers and managers, whose authority shall be suspended, except as they are redelegated by the rehabilitator. He shall have full power to direct and manage, to hire and discharge employees subject to any contract rights they may have and to deal with the property and business of the insurer. (d) If it appears to the rehabilitator that there has been criminal or tortious conduct, or breach of any contractual or fiduciary obligation detrimental to the insurer by any officer, manager, producer, employee or other person, he may pursue all appropriate legal remedies on behalf of the insurer. (e) If the rehabilitator determines that reorganization, consolidation, conversion, reinsurance, merger or other transformation of the insurer is appropriate, he shall prepare a plan to effect such changes. Upon application of the rehabilitator for approval of the plan, and after such notice and hearing as the court may prescribe, the court may either approve or disapprove the plan proposed, or may modify it and approve it as modified. Any plan approved under this section shall be, in the judgment of the court, fair and equitable to all parties concerned. If the plan is approved, the rehabilitator shall carry out the plan. In the case of a life insurer, the plan proposed may include the imposition of liens upon the policies of the company, if all rights of shareholders are first relinquished. A plan for a life insurer may also propose imposition of a moratorium upon loan and cash surrender rights under policies, for such period and to such an extent as may be necessary. (f) The rehabilitator shall have the power pursuant to sections 38a-928 and 38a-929 to avoid fraudulent transfers, and may exercise any of the powers under section 38a-923 as necessary or appropriate, except that in the case of a life insurer, the rehabilitator of such an insurer may, as part of a court-approved plan of rehabilitation, modify or restructure the policies or contracts of insurance. In the event the rehabilitator proposes to modify or restructure the policies or contracts of insurance, the rehabilitator may, with the concurrence of the court, approve payment of certain expenses incurred by an advisory committee appointed pursuant to subsection (a) of this section, the expenses to be limited to the reasonable and necessary expenses incurred in obtaining an expert evaluation of the effect upon policyholders of any proposed modification or restructuring of policies or contracts of insurance. (g) The enumeration, in this section, of the powers and authority of the rehabilitator shall not be construed as a limitation upon the rehabilitator, nor shall it exclude in any manner the right to do other acts not specifically enumerated or otherwise provided for, as may be necessary or appropriate for the accomplishment of or in the aid of the purpose of rehabilitation.

Legislative History

(P.A. 79-382, S. 14; P.A. 80-482, S. 4, 345, 348; P.A. 92-93, S. 12; P.A. 96-193, S. 31, 36; P.A. 98-214, S. 10; P.A. 10-5, S. 45.) History: P.A. 80-482 abolished the department of business regulation and restored its division of insurance as an independent department (as it was prior to creation of business regulation department in P.A. 77-614); Sec. 38-434 transferred to Sec. 38a-916 in 1991; P.A. 92-93 amended Subsec. (a) to add provision re commissioner's appointment of an advisory committee, created new Subsec. (b) using language taken from old Subsec. (a) re insufficient cash or liquid assets, relettered the remaining Subsecs. as necessary and made technical corrections for statutory consistency; P.A. 96-193 amended Subsec. (d) to substitute “producer” for “agent” and “broker”, effective June 3, 1996; P.A. 98-214 amended Subsec. (a) to notwithstand any contrary provision of law, including chapters 55a and 67, to make the decision to appoint an advisory committee be at the sole discretion of the commissioner, and to delete compensation for “reasonable travel and per diem living expenses”, substituted “the” for “said” in Subsec. (b), amended Subsec. (f) to allow rehabilitator to exercise powers under Sec. 38a-923, with exception re a life insurer, and to allow rehabilitator to, with concurrence of court, approve payment of certain advisory committee expenses if the rehabilitator proposes to modify or restructure policies or contracts, and added new Subsec. (g) re the enumeration of powers and authority not to be construed as a limitations on the rehabilitator; P.A. 10-5 made a technical change in Subsec. (a), effective May 5, 2010. Subsec. (c): Commissioner is legally empowered to participate in and control insurer's business activities whenever its solvency is threatened. 47 CS 202.