Connecticut Gov. Ned Lamont has signed into law a bill designed to bolster the captive insurance industry in the state by, among other things, allowing captives to accept and transfer risks through parametric contracts.
The law takes effect Oct. 1.
Public Act 23-15 (also SB 1038), which introduces several changes to Connecticut’s captive insurance laws, will increase support and flexibility for captives, owners and service providers, according to a statement issued Friday by the Connecticut Department of Insurance.
The parametric coverage provision under the new law gives businesses a more efficient and customized method to mitigate risks that are difficult to insure in the commercial market, the department said.
The new law also provides greater flexibility for protected cells by enabling them to establish separate accounts to address businesses’ specific needs.
This structure aligns with the risk management needs of cell participants and ensures assets and liabilities within each account are protected, the department said.
The law also allows captives that have stopped doing business and have no remaining liabilities to apply for a certificate of dormancy that will exempt owners from paying Connecticut’s minimum premium tax.
The exemption reduces the financial burden on owners during inactive periods and means captives can be reactivated when market conditions or insurance needs change, the department said.
