28 April 2014

Captive insurance bill brings Connecticut up to speed

The Connecticut senate has passed legislation to modernise Connecticut’s captive law, allowing branch captives with a physical presence to be set up in the state.

At present, Connecticut law allows a captive to be licensed and domiciled in the state and to handle life insurance, annuity, health insurance and commercial risk insurance business.

The new legislation, effective as of 1st October, states:

A branch captive insurance company may be established in this state to write in this state only insurance or reinsurance of the employee benefit business of its parent and affiliated companies that are subject to the employee retirement income security act of 1974, as amended from time to time. No branch captive insurance company shall do any insurance business in this state unless it maintains a principal place of business for its branch operations in this state.

The bill also specifies that no captive insurance company may provide personal risk insurance, as defined in section 38a-663, for private passenger motor vehicle or homeowners insurance coverage or any component thereof.

State Senator Joseph Crisco, senate chair of the insurance and real estate committee, explains: “Even though we are the number one insurance state in the country, for a long time Connecticut was not involved in the captive insurance industry. In recent years it became apparent to our committee that we needed to dive in to this market.”

Crisco continues, “Captive insurance means more revenue for the state, an improved business climate and more jobs. It’s a win-win situation for everybody.”