Connecticut Updates Its Captive Insurance Law

Connecticut Governor Ned Lamont signed into law legislation updating the state’s law governing captive insurance and allowing new types of captives.

Captives are owned by one or more businesses to insure their business risks., Effective October 1, 2025, the act introduces several updates to Connecticut’s captive insurance framework:

• Allows different types of captive insurers, including pure captives, sponsored captives, special purpose financial captives, agency captives, industrial insured captives, and association captives, to convert into protected cells with the insurance commissioner’s approval.
• Permits sponsored captive insurers, with the necessary consent and approval, to sell, transfer, or assign a protected cell and its related assets and obligations to another new or existing sponsored captive.
• Authorizes the insurance commissioner to separate an insolvent protected cell and convert it into a new protected cell or standalone captive, while keeping its assets, rights, and obligations intact.

The updates give businesses “greater flexibility and practical tools to manage risk,” according to Fenhua Liu, captive director at the Connecticut Insurance Department.

The new legislation builds on reforms passed in recent years, including enabling captives to engage in parametric risk transfer contracts, reducing minimum capital requirements based on risk, and allowing protected cells to convert into standalone captives.

Connecticut’s captive insurance industry has been growing. The industry added nine captive insurers in 2024 for a 17% increase over 2023. In addition, the state insurance department approved 17 new captive protected cells in 2024, a 64% growth over 2023. Protected cells operate as separate entities allowing individual businesses to manage their risks independently within a single sponsored captive insurer. This brought the total number of captive risk-bearing entities to 100.

Topics Connecticut