On October 27, 2011, Governor Dannel P. Malloy of Connecticut, signed Public Act No. 11-1, “An Act Promoting Economic Growth and Job Creation in the State” (“The Act”). The Act taking effect on July 1, 2012 revises Connecticut’s existing captive insurance laws to make the state a more attractive domicile for captive insurance companies.
Among the changes, The Act includes a first-year tax credit for newly established captives in the amount of $7,500.00, a more fully developed provision on what constitutes “common ownership and control” for the purposes of aggregating tax liability, and the express recognition of different types of captive entities. The Act also broadens the types of insurable losses eligible for recovery by the captive to include, “any kind of loss, damage, or liability properly a subject of insurance, if such insurance is not prohibited by law or is not disapproved by the commissioner as being contrary to public policy.”
Connecticut’s revisions are modeled after Vermont’s regulations. Vermont is currently the most popular domicile for captive insurers in the United States, with more than 900 captives formed under its laws. Connecticut’s Insurance Commissioner, Thomas Leonard has endorsed the new laws and believes the changes will encourage captives to move to Connecticut, saying, the “updated captive law reinforces the State of Connecticut’s position as the insurance capital of the United States and through professional and consistent regulation, the Insurance Department will make certain that Connecticut-based captives will be noted for their quality and financial stability.”
The Act, signed into law approximately one year ago, has already seen two captives move there domiciles to Connecticut. The first captive to make the move was Thomson Reuters Risk Management Inc., changing domiciles from Delaware in early August 2012. Stanley Black and Decker was the second captive to change its domicile to Connecticut, moving from Vermont on September 13, 2012.
The changes to Connecticut’s captive insurance laws and the support of the Insurance Commissioner, Thomas Leonard will surely help Connecticut become the principle state for captive insurers seeking favorable regulations and policies.