PA 18-151—sSB 377

Insurance and Real Estate Committee


SUMMARY: Existing law allows several different types of captive insurance companies to be licensed and domiciled in Connecticut, including pure captives, sponsored captives, and risk retention groups. This act creates a new type of captive insurer, called an agency captive, which allows licensed insurance agents and producers to insure against risks covered by the policies they sell. Generally, a captive insurer is an insurance company formed to insure or reinsure the risks of its owners or parent or affiliated company.

Under the act, an “agency captive insurance company” is a type of captive insurance company that (1) is owned or controlled by licensed insurance agents or producers; (2) insures only against commercial risks covered by insurance policies sold, solicited, or negotiated through its owners or controllers; and (3) does not insure against any risks covered by a health insurance plan.

By law, captive insurers are subject to certain licensing, reporting, and regulatory requirements, in addition to capital and surplus minimums and premium tax provisions. The act generally subjects agency captive insurers to these requirements.

The act also makes technical changes.

EFFECTIVE DATE: July 1, 2018



The act allows an agency captive insurer to incorporate as a (1) stock insurer with its capital divided into shares and held by stockholders, (2) nonprofit corporation, or (3) manager-managed limited liability company.

Unimpaired Paid-In Capital and Surplus

Existing law requires captive insurance companies to maintain a minimum amount of unimpaired and paid-in capital and surplus in order to obtain a license from the insurance commissioner. Under the act an agency captive insurer must maintain at least $500,000 in unimpaired paid-in capital and surplus as a condition of licensure.

By law, the insurance commissioner, at her discretion, may allow any type of captive insurer, except a risk retention group, to maintain less than the statutorily required unimpaired paid-in capital and surplus. In doing so, the commissioner must consider the type, volume, and nature of the insurer or reinsurerʼs business (CGS 38a-91dd(c)).

Licensed in Good Standing

The act requires an agent or producer that owns or controls an agency captive insurer to be licensed in good standing in Connecticut and any other state in which he or she is licensed as an agent or producer.


The act establishes disclosure requirements for agency captive insurers. Specifically, it requires them to disclose to:

1. each commercial policy holder, in writing and in a form and manner the insurance commissioner prescribes, any limitations, rights, and obligations the captive holds or is subject to as a result of its affiliation with the insurance agents and producers that own or control it and

2. the insurance commissioner, at her discretion, the commercial policies the insurer covers.

Risk Security Arrangements

The act authorizes the commissioner to require agency captive insurers to obtain security arrangements that secure or otherwise insure their risk. Specifically, the commissioner may require all risks insured by an agency captive insurer to be:

1. fronted by an insurer authorized in any state to issue the same type of insurance as the captive;

2. reinsured by a reinsurer authorized or approved to conduct business in Connecticut;

3. secured by a trust established in the United States, in a form and upon terms the commissioner approves, for the benefit of policy holders and claimants; or

4. funded by (a) an irrevocable letter of credit, from a bank and in a form and upon terms the commissioner approves, or (b) another commissioner-approved arrangement.

Under the act, the commissioner may require an agency captive insurer to increase the funding of any of the above security arrangements.