Committee hears testimony supporting bill to modernize captive insurance rules

The Insurance and Real Estate Committee on an unspecified date heard testimony supporting House Bill 64‑33, which the Connecticut Insurance Department says would modernize state rules for captive insurers and give regulators tools to address insolvency in protected cells.

Commissioner Andrew Mays of the Connecticut Insurance Department told the committee the bill would "increase the department's ability to regulate captive insurers and provide flexibility to captive insurance owners." He described how a protected‑cell structure operates and said the bill would let a captive convert to an unincorporated protected cell "without any impact on the assets, rights, benefits, obligations, and liabilities of the captive insurance company." He also described two regulatory enhancements in the proposal: a technical correction to include captive insurance companies within the state's general penalty statute and a provision to let the department address the insolvency of an individual protected cell independently of the sponsored captive core.

Industry witnesses urged passage. Michael Maglaras, principal and chairman of Michael Maglaras & Company, described his firm's long experience with captives and said the bill "will modernize the protected cell structure in Connecticut, make us competitive, and continue to promote our leadership on a worldwide basis." Maglaras said Connecticut domiciled captives have been used for the crumbling‑foundation program and told the committee his firm's work has restored equity for 1,067 families; he also said that program created about 225 construction jobs. He said he endorsed the bill "without reservation."

Committee members asked how frequently insolvency of protected cells has occurred elsewhere and about the bill's language clarifying a sponsor definition; Commissioner Mays said national examples likely exist and stressed a state policy of being both competitive and strictly regulated. Representative questions and industry replies focused on protecting consumers while keeping Connecticut attractive to captive business.

The bill as explained would allow (1) conversion flexibility to unincorporated protected cells, (2) sale, transfer, or assignment of protected cells without affecting their assets or liabilities, and (3) strengthened regulator remedies tied to the general penalty statute and the department's ability to address an insolvent protected cell separately from a sponsored core. No formal committee vote was recorded in the hearing transcript excerpts provided.

Looking ahead, witnesses urged the committee to consider the role captives in addressing climate risks and property coverage availability, saying modernization now would position Connecticut to serve businesses facing increased frequency of flooding and other weather events.