Connecticut House Bill HB05856

Connecticut 2015 Regular Session

• Introduced: 1/21/15
• Refer: 1/21/15

Caption

An Act Permitting Employers To Purchase Indemnity Insurance Policies To Satisfy Collateral Obligations.

Impact

If enacted, this legislation could significantly alter the way employers in the state handle their collateral obligations. By permitting the use of indemnity insurance policies, employers may find a more manageable and potentially less costly method of meeting their compliance requirements. This change is expected to streamline processes related to financial assurances, making it easier for businesses to operate without the limitations imposed by letters of credit.

Summary

House Bill 05856 aims to amend the general statutes in the state to allow employers the option of purchasing indemnity insurance policies as a means to fulfill their collateral obligations. This includes obligations related to workers' compensation and self-insurance, which are often traditionally satisfied through a letter of credit. The bill proposes to provide greater flexibility for employers in managing their financial obligations, potentially reducing the regulatory burden associated with maintaining the necessary collateral in the form of a letter of credit.

Contention

Nonetheless, the bill is not without its points of contention. There may be concerns regarding the adequacy of indemnity insurance policies in covering the obligations intended to be satisfied. Critics might argue that allowing such a substitution could expose employees and claimants to risks if the indemnity insurance fails to cover eventual liabilities adequately. Thus, the discussions surrounding this bill could revolve around the reliability of indemnity insurance compared to the traditional requirements of a letter of credit.