Connecticut Expands Captive Insurance Flexibility Under New Law

Connecticut has enacted Public Act No. 25-130, a new law designed to give captive insurance companies more operational flexibility and enhance the state's support for the sector. The law was signed by Governor Ned Lamont and announced by Andrew N. Mais, commissioner of the Connecticut Insurance Department.

"With the signing of Public Act No. 25-130, Connecticut shows its continued commitment to maintaining a business-friendly and competitive environment for captives," Mr. Mais said. "We understand the evolving risk management needs of businesses, and these updates, combined with the state's expertise and focus on innovation, reinforce Connecticut's position as a leading domicile for captives."

The changes take effect on October 1, 2025, and apply to all types of captive insurers domiciled in the state, including pure captives, sponsored captives, special purpose financial captives, agency captives, industrial insured captives, and association captives.

Under the new law, these entities will be allowed to convert into protected cells, pending approval by the insurance commissioner. Sponsored captives will also be able to sell, transfer, or assign a protected cell—including its assets and obligations—to another new or existing sponsored captive, if proper approvals are obtained. Additionally, the commissioner will have authority to isolate an insolvent protected cell and convert it into either a new protected cell or a standalone captive without losing its existing assets, rights, or liabilities.

"These updates demonstrate our commitment to giving businesses greater flexibility and practical tools to manage risk," said Fenhua Liu, captive division director at the Connecticut Insurance Department. "By listening to industry needs and adapting, we help ensure Connecticut remains a trusted and forward-looking home for captives of all sizes."

The new act follows a series of legislative reforms in Connecticut aimed at modernizing captive regulation. Recent updates include allowing captives to enter into parametric risk transfer contracts, reducing capital requirements based on risk, and permitting protected cells to convert into standalone captives. These initiatives reflect the state's focus on regulatory innovation and flexibility.