Connecticut Passes Law Enhancing Captive Insurance Flexibility

Connecticut has enacted Public Act No. 24-138, a new law that provides more flexibility to captive insurance companies.

"With the signing of Public Act No. 24-138, Connecticut continues to uphold a supportive and competitive landscape for captive insurance," Connecticut Insurance Department Commissioner Andrew Mais said.

He continued, "We recognize the evolving insurance and risk management needs of businesses, and our recent legislative advancements, combined with the state's expertise and innovation, reinforce Connecticut's position as a premier domicile for captives."

Effective October 1, 2024, the act allows protected cells of sponsored captive insurance companies to convert into new captives, such as special purpose financial captives, pure captives, risk retention groups, agency captives, industrial insured captives, and association captives. This enables businesses initially insured through a protected cell to form a new captive and convert their assets, benefits, obligations, and liabilities without affecting the original protected cells.

State Senator Jorge Cabrera, co-chair of the Insurance and Real Estate Committee, said, "This new law allows our growing captive insurance industry to expand even more. Other sections of the law strengthen the Insurance Department's response to and investigation of violations of state insurance laws as well as redefining 'small employer' for insurance purposes."

State Representative Kerry Wood, co-chair of the Insurance and Real Estate Committee, added, "I'm proud to be part of Connecticut's unique environment where the legislature, regulators, and industry are working cohesively to create a strong and robust atmosphere for the captive insurance industry to thrive. Our committee has been actively engaged in encouraging innovation and growth in this sector, which is a result of this legislation."

Public Act No. 24-138 builds on previous legislative achievements, including allowing captives to accept and transfer risks through parametric contracts, reducing minimum capital requirements based on risk profiles, and waiving examinations for well-governed pure captives.