Legislation mandates notice requirements for insurance policy cancellations in Connecticut

On March 27, 2025, the Connecticut State Legislature introduced House Bill 6981, aimed at reforming insurance policy cancellation procedures. The bill seeks to enhance consumer protections by establishing clearer guidelines for insurers regarding the cancellation of policies, particularly focusing on notification requirements.

Key provisions of House Bill 6981 stipulate that insurers must provide written cancellation notices to policyholders under specific circumstances. For policies that are not renewal policies and have been active for fewer than sixty days, insurers are required to notify the named insured at least ten days prior to cancellation for nonpayment of premiums. This notice must inform the insured of their right to avoid cancellation by paying the outstanding premium. In cases of cancellation for reasons other than nonpayment, a thirty-day notice is mandated, detailing the reason for cancellation and the effective date.

For policies that have been in effect for at least sixty days or are renewal policies, the bill requires a similar ten-day notice for nonpayment and mandates that the insurer must provide a written explanation for cancellation, ensuring transparency in the process. Additionally, the bill emphasizes the obligation of insurers to refund any excess premium upon request from the insured.

The introduction of House Bill 6981 has sparked notable discussions among lawmakers and stakeholders. Proponents argue that the bill is essential for protecting consumers from abrupt policy cancellations, which can leave individuals vulnerable, especially in critical situations. Critics, however, express concerns about the potential administrative burden on insurers and the implications for premium pricing.

The economic implications of the bill could be significant, as enhanced consumer protections may lead to increased operational costs for insurers, which could, in turn, affect premium rates. Socially, the bill aims to provide peace of mind to policyholders, ensuring they are not caught off guard by sudden cancellations.

As the legislative process unfolds, experts suggest that the bill could set a precedent for similar consumer protection measures in other states. The outcome of House Bill 6981 will likely influence the broader conversation around insurance regulations and consumer rights in Connecticut and beyond. The next steps will involve committee reviews and potential amendments as lawmakers weigh the benefits and challenges of the proposed changes.