Connecticut’s insurance department has put forward Senate Bill 188: An Act Concerning Captive Insurance Companies (SB 188), in order to adjust the current captive legislation.
The department is asking that the state legislature consider a number of statutory modifications that will enhance the captive insurance industry’s capabilities in Connecticut and ease the re-domestication process.
SB 188 contains updates to existing captive statutes, including the clarification of the definition of private passenger motor vehicle insurance provided by a captive insurance company, and provisions and processes for the transfer of domicile (re-domestication) for captive insurance companies.
Discretionary authority for evaluating credit for existing reinsurance placements made by re-domiciling captive insurance companies was also raised, while the department has requested updates to the rules regarding the establishment and purpose of a branch captive insurance company, and clarification of the applicability of holding company legislation to captives.
It was not until 2011 that legislature was passed which enabled the formation and operation of captive insurance companies in the state. The introduction of this legislation resulted in four captive companies domesticating in Connecticut, with a total annual written premium of $54 million and total assets of $118 million.
According to the insurance department, many more captives have been applying for entry and it is hoped that the proposed updates will cause this list to grow—thus improving the economic health of the state as a whole.
Further amendments proposed for SB 188 are intended to allow for the alignment of the Connecticut General Statutes with NAIC model acts, relating specifically to risk retention groups (RRGs) domiciling in Connecticut.
The first amendment relates to the application of the risk based capital model act to RRGs, and the second amendment relates to the producer controlled property/casualty insurer model act. Both of these amendments will provide additional consumer-oriented regulatory requirements and scrutiny to RRGs forming and licensing in Connecticut
