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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance explores the challenges presented by today's business and economic upheaval, as well as the hardening insurance market, and what it means for the captive insurance industry.

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Connecticut Agency Captive Bill Sent to Governor for Signature

Connecticut State Seal
May 16, 2018

Connecticut's General Assembly recently passed Senate Bill 377 (SB 377), authorizing agency captive insurance companies. Specifically, the bill states that agency captives are owned or controlled by licensed insurance agents or producers to insure risks that are sold, solicited, or negotiated through the captive's owners or controllers. Also, the bill does not allow an agency captive to insure risks covered by a health insurance plan.

The bill authorizes the commissioner to require the following of an agency captive's insured risks.

  • Fronted by an insurer authorized in any state (not just Connecticut)

  • Reinsured by a reinsurer authorized or approved in Connecticut

  • Secured by a trust or funded by an irrevocable letter of credit from an approved bank

Stephen DiCenso, president of the Connecticut Captive Insurance Association (CCIA), said, "The CCIA is very pleased with the passing of SB 377. It continues to demonstrate the on-going productive and collaborative relationship between the CT legislature, captive program division of the CT Insurance Department, and CCIA. CCIA believes it will aid the numerous existing CT-based alternative market insurers, as well as other insurers, who currently write agency captive business in other domiciles to now form new agency captives in CT, and even potentially re-domesticate existing agency captive business to CT to the extent desired."

The bill, passed on May 9 and effective July 1, 2018, has been sent to the office of Governor Dannel P. Malloy for signature.

See the full Act here.

Agency Captive

Certain domiciles allow a captive to insure up to 100 percent unrelated business. In these cases, the captive could be owned by an investor (generally an insurer, insurance agency, or broker). Such captives are used to reinsure "program business," meaning selected preferred risks from the insurer's, agent's, or broker's book of business, from one particular group of customers. The original insured is not a party to this reinsurance arrangement. The purpose of the captive is to allow the agent to earn underwriting profits if it produces good business.

The above excerpt was taken from Kathryn A. Westover, Captives and the Management of Risk, 3rd edition, © 2000–2018 International Risk Management Institute, Inc. (IRMI). All rights reserved. Find out more here, or access your existing copy in ReferenceConnect or

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