On July 16, 2024, the Connecticut Department of Insurance (the “Department”) issued a press release announcing that Governor Ned Lamont has signed Public Act No. 24-138, “An Act Concerning Insurance Market Conduct and Insurance Licensing, the Insurance Department’s Technical Corrections and Other Revisions to the Insurance Statutes and Captive Insurance”, (the “Act”) into law. According to the Department, the Act furthers Connecticut’s commitment to the captive insurance industry, and the “new legislation underscores Connecticut’s dedication to fostering a business-friendly regulatory environment that promotes innovation and supports the growth of captive insurance companies.”

Effective October 1, 2024, the Act permits “[a]ny sponsored captive insurance company, including a sponsored captive insurance company licensed as a special purpose financial captive insurance company…upon application…and with the [insurance] commissioner’s prior written approval, convert one or more protected cells or incorporated protected cells….” Conn. Uncodified H.B. 5503 § 15(a). Protected cells of a sponsored captive insurance company can convert into a new captive, such as a “sponsored captive…special purpose financial captive…pure captive…risk retention group…agency captive…industrial insured captive…[or] association captive….” Conn. Uncodified H.B. 5503 § 15(a)(1). Moreover, the Department states that, under the Act, “[b]usinesses initially insured through a protected cell can now form a new captive and convert their assets, benefits, obligations, and liabilities from the protected cell into the new captive [and t]his conversion occurs without affecting the assets, rights, benefits, obligations, and liabilities of the protected cells.”

Finally, the Department is of the view that the Act “builds on the legislative achievements of 2022 and 2023, which included changes such as 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 [and t]hese efforts have positioned Connecticut as a leading domicile for captive insurance, offering innovative solutions and increased flexibility for captives.”

Read the full text of Public Act No. 24-138.