Connecticut’s captive insurance market on the rise

Connecticut DOI’s Fenhua Liu briefs Captive International on a year of exciting developments for the state’s captive insurance sector.

Connecticut’s captive insurance market is gaining momentum, with new licences being issued and innovative coverage solutions emerging. That’s the view of Fenhua Liu, the state’s chief captive insurance regulator, who has been instrumental in driving the industry’s growth.

“Our location, expertise, efficiency, and low fees are attracting many captives to be in Connecticut.” Fenhua Liu

Liu, who has been with the Connecticut Department of Insurance for over a decade, reflected on the progress Connecticut has made, especially over the last few years.

“We are improving, and I can see the new momentum,” Liu stated. “A lot of things are going on in Connecticut.” In 2024, the state licensed four captives, with two more on the way, signalling a notable shift in activity compared to previous years.

“Usually, companies wait until the year-end to help company formation, but this year has been different,” she added. While Connecticut is still relatively small compared to some top domiciles, Liu believes the potential for growth is substantial. “We are growing tremendously. We have a lot of attention, a lot of questions, and plenty of enquiries.”

One notable example of this shift is the decision by a captive owner to merge two captives from other states into a Connecticut-based captive. “They chose us instead of other domiciles, and that’s consistent,” Liu explained. This kind of trend illustrates how companies are beginning to recognise the advantages of doing business in Connecticut.

Addressing new risks

In addition to traditional coverage options, Connecticut’s captive market is increasingly becoming a hub for innovative insurance products. “There are some new coverages, for example, medical stop-loss, climate risk, cyber risk, supply chain, and property coverages,” Liu said, highlighting the evolving nature of the market.

Captive insurance allows companies to tailor their risk management strategies, and industries that face unique challenges—such as healthcare, transportation, and agriculture—are turning to captives for solutions.

“Many small employer associations are studying these options, particularly for addressing increasing healthcare costs,” Liu noted, pointing out that certain industries are struggling to find affordable and adequate commercial insurance. “Farmers are looking for solutions, the trucking industry is exploring this area, and even financing companies are showing interest.”

One of the key developments has been the introduction of new cell entities in the captive market. “So far this year, we have three new cell entities, and many more are in the pipeline,” Liu shared. These cells provide a flexible structure for companies that want to create tailored risk management solutions without forming a full-fledged captive insurance company.

Legislative support and strategic advantage

A principal driver of this growth is the support from the state’s leadership and the industry. Liu emphasised the importance of having a supportive legislative environment: “We passed new legislative changes in the past three years and we have a lot of support from legislators because of the momentum.”

This growing support from the public and private sectors has created a favourable environment for captive insurance in Connecticut. Organisations such as the Connecticut Captive Insurance Association (CTCIA) are playing a role in building industry engagement.

Another factor working in Connecticut’s favour is its strategic location. “We are very close to New York City and Boston, and that’s an advantage,” Liu noted. While some large domiciles have been leading in the captive insurance industry for decades, Connecticut offers unique logistical advantages that could attract more captives in the future.

A busy year 

The state’s annual Connecticut Captive Insurance Forum has played a role in boosting the state’s profile within the industry. “The forum was held in April this year, in conjunction with InsurTech Hartford and CTCIA. We had a lot of very good speakers from the industry, and people were so impressed,” Liu said. Despite its being the first time the event was held, the forum attracted over 110 attendees, a clear indication of growing interest.

Connecticut is already planning next year’s event, which is set for April 28, 2025. “We’re planning for more attendees and more success,” Liu said, adding that some high-profile speakers have expressed interest in participating again.

The growing reputation of the forum reflects the state’s rising profile in the captive insurance sector. “They enthusiastically reached out to us to be involved with this event,” Liu emphasised, signalling that the industry is beginning to take notice of what Connecticut has to offer.

Overcoming challenges and looking ahead

Despite the momentum there are still challenges ahead, Liu acknowledged. Connecticut is working to encourage companies to return from offshore domiciles where many US companies have traditionally established their captives.

“We have some challenges because the business has been done already, the connections have been made,” Liu explained. “It takes more time, effort, and even money to bring them back.”

The state is focused on retaining Connecticut-based companies that might otherwise choose to go offshore or to other US domiciles. Liu emphasised the importance of presenting a clear cost-benefit analysis to convince companies that staying in Connecticut is a better option.

“We need to make more effort to persuade them,” she said.

Overall, Liu is optimistic about Connecticut’s future in the captive insurance industry. “We are growing, and the momentum is here. Our location, expertise, efficiency, and low fees are attracting many captives to be in Connecticut.” She highlighted the responsiveness and support of the state’s insurance department under the leadership of Insurance Commissioner Andrew Mais.

“As Connecticut continues to build on its successes and expand its captive insurance offerings, we remain confident that the state has the potential to become a major player in the industry,” said Commissioner Mais, who is also the NAIC president.

“We have the advantage to grow, and the potential to succeed,” he concluded.

Fenhua Liu is Connecticut’s chief captive insurance regulator. She can be contacted at: fenhua.liu@ct.gov

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