State of Connecticut
Domicile of the Year—Highly Commended
Connecticut is the answer
With more than 200 years of insurance experience behind it, Connecticut is well-versed in the needs of captive owners. Leland Holcomb of AdvanceCT and Susan Winkler of Connecticut Insurance and Financial Services report.
“The commitment of Connecticut’s state leaders, regulators and state legislature to support and foster the growth of captives is second to none.”
Susan Winkler
Connecticut Insurance and Financial Services
Leland Holcomb
AdvanceCT
Since 1810, when the first US insurance company was founded in Hartford, Connecticut, the state has maintained a strong and well-earned reputation as the insurance capital of the world.
Over the years, many state agencies, service providers and associations such as the Connecticut Captive Insurance Association have volunteered their time, energy, and efforts to go even further in promoting the domicile and nurturing the captive industry—for example, sponsoring, coordinating or speaking at annual captive conferences in the City of Stamford.
Andrew Mais, commissioner at the Connecticut Insurance Department (CID), said: “As the insurance capital of the world, Connecticut is the only state with every resource in one place: commercial insurance, captives and insurtech, modern captive laws, and friendly and experienced captive regulators and service providers.”
More specific to captive insurers who need flexible regulations, the CID has a dedicated team of experienced captive regulators who have consistently showed their commitment to captive owners and service providers. In 2012, Marsh Captive Solutions brought its first captive, Thomson Reuters Risk Management to Connecticut, followed by SBD Insurance.
Michael Serrichio, managing director of Marsh Captive Solutions, noted that “having worked closely with the CID on captives since 2011, the expert staff have proven to be responsive, knowledgeable, and effective. Connecticut has shown its steadfast commitment to, and support of, the captive industry”.
Modern laws and low fees
Today, Connecticut is the number one state for insurance professionals and maintains the highest concentration of insurance employees and actuaries in the US. Approximately 1,500 insurance companies write over $40 billion in premiums in Connecticut and are available to captives for fronting, reinsuring and professional services.
Whether it be through our state-of-the art captive insurance law, our robust base of experienced and responsive captive regulators and service providers, or low captive insurance costs at the centre of insurance in the US, Connecticut has become the domicile of choice when it comes to innovative, creative, and flexible captive solutions to the self-insurance of risk across all business sectors.
Our captive laws are modern, and fees are low. The commissioner of the CID has the appropriate level of discretion to regulate captives according to their unique risk profiles.
State law allows almost all types of captives and offers extremely competitive regulatory fees. Notably, there are no other filing fees beyond a one-time $800 application fee, a $375 annual licensing fee, and nominal fees paid to the Connecticut Secretary of the State’s office for corporate filings.
The CID has completed four pure captive examinations without charging fees. While captives need to file premium taxes with the Connecticut Department of Revenue Services, there is a unique $7,500 credit against the first year of premium taxes.
A dedicated regulator
The CID has a dedicated team of in-house career examiners, accountants, actuaries, and attorneys for reviews and approvals. They understand complex captive structures.
If consultants were used to assist regulators, the costs would be passed on to the captive owners—something Connecticut avoids, thereby also saving time for captive owners.
Connecticut’s Captive Insurance Division is managed by regulators with decades of experience who provide consistent, responsive, and customer-focused services to the captive industry. It also makes quick decisions and processes requests efficiently using a principled and risk-based regulatory approach.
Our CID has modernised the captive application process and shortened the turnaround time for all requests. Even in situations where captive or service-provider applications do not comply with Connecticut captive insurance laws, regulators outline their reasons and suggest realistic solutions.
We understand that captives are different from commercial carriers. The protection needs of the insureds are different from the commercial market and, as a result, need to be regulated differently.
Moreover, the market is hardening, and the pandemic continues.
Captives are necessary to fill commercial insurance gaps, increase capacity, and reduce insurance costs.
“Captives and commercial carriers need to collaborate, not compete, to provide seamless solutions that address the evolving challenges to business,” says Fenhua Liu, director of the Captive Insurance Division of the CID.
Captives need to be responsive and cutting edge to fill insurance gaps, smooth pricing, and meet the insurance demands of high-tech businesses and innovative products.
Calling Connecticut home
Many offshore captives were formed before Connecticut passed business-friendly captive legislation or brought on full-time captive experienced regulators.
While excellent service providers live in Connecticut, evolving federal tax reforms, international taxation rules or proposals, and burdensome reporting requirements are discouraging US owners from keeping subsidiary captives offshore.
Moving captives onshore can avoid offshore regulatory fees, filing fees and some taxes (such as federal excise taxes), and save approval, travel time, and expenses.
Certain captives and coverages, such as employee benefits and federal-sponsored terrorism coverages, need to be provided onshore. In recent years, six large captives have effectively re-domesticated from offshore, or other domiciles, to Connecticut.
The commitment of Connecticut’s state leaders, regulators and state legislature to support and foster the growth of captives is second to none. We know that captives bring more jobs, capital, and business activities to the state.
Joseph Tucciarone, founder and principal of the National Network of Accountants, says: “It’s been a great experience working with the state on the ‘Re-Imagining Business Insurance’ initiative to promote collaborative insurance solutions for businesses.”
“The CID has proven to be a responsive, understanding, and progressive captive regulator that holds all captive applicants to high standards, while doing their best to ensure growth and support in the industry. We look forward to working with the CID on new captive opportunities.”
Connecticut’s captive regulators are capable and flexible with modern captive law, and we plan to fine-tune state captive statues to meet the needs of captive owners. Connecticut is a prime location for captives both geographically and situationally. It has a celebrated insurance history and a vibrant culture of innovation ready to meet all needs.
The Captive Insurance Division of the Connecticut Insurance Department can be contacted here
Leland Holcomb is the director of business development at AdvanceCT. He can be contacted at: lholcomb@advancect.org Susan Winkler is the vice president and executive director at Connecticut Insurance and Financial Service (CT IFS). She can be contacted at: swinkler@connecticutifs.com AdvanceCT and CT IFS are nonprofit entities and collaborate with the Connecticut Insurance Department to promote the state through business development and recruitment efforts including for captives.
