Connecticut lawmakers to consider captive changes

The Connecticut House Insurance and Real Estate Committee will hold a public hearing Tuesday on a proposed bill that would give businesses greater flexibility to convert captive insurers to protected cell companies.

The measure would also expand the Connecticut Insurance Department’s ability to regulate captive insurers.

H.B. 6433, proposed by the department and introduced Thursday, would allow the regulator to apply a general penalty to captive insurers for violating captive laws.

Under the proposed legislation, Connecticut-domiciled captive insurers could convert into one or more unincorporated protected cells with the insurance commissioner’s prior written approval “without affecting the converted captive insurance company’s assets, rights, benefits, obligations, or liabilities.”

Any protected cell could be sold, transferred, assigned or conveyed to a new or existing sponsored captive insurance company, according to the measure.

The bill would also allow the insurance commissioner to separate insolvent protected cells from the sponsored captive insurance company and address the insolvency separate from the financial condition of the sponsored captive.

The proposed changes, which would take effect Oct. 1., are similar to captive laws in other top domiciles, such as Vermont.

Connecticut Governor Ned Lamont last year signed into law Public Act No. 24-138, which allowed protected cells of sponsored captive insurance companies to convert into captives.