CT
Connecticut House Bill HB05374

Connecticut 2020 Regular Session

Connecticut House Bill HB05374 Compare Versions

Only one version of the bill is available at this time.
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55 General Assembly Raised Bill No. 5374
66 February Session, 2020
77 LCO No. 2099
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1010 Referred to Committee on INSURANCE AND REAL ESTATE
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1313 Introduced by:
1414 (INS)
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1919 AN ACT EXEMPTING CER TAIN INSUREDS FROM THE INSURANCE
2020 PREMIUM TAX.
2121 Be it enacted by the Senate and House of Representatives in General
2222 Assembly convened:
2323
2424 Section 1. Section 38a-91aa of the general statutes is repealed and the 1
2525 following is substituted in lieu thereof (Effective July 1, 2020): 2
2626 As used in sections 38a-91aa to 38a-91tt, inclusive, [and] sections 38a-3
2727 91ww and 38a-91xx, and section 2 of this act: 4
2828 (1) "Affiliated company" means any company in the same corporate 5
2929 system as a parent, an industrial insured or a member organization by 6
3030 virtue of common ownership, control, operation or management. 7
3131 (2) "Agency captive insurance company" means a captive insurance 8
3232 company that: 9
3333 (A) Is owned or directly or indirectly controlled by one or more 10
3434 insurance agents or insurance producers licensed in accordance with 11
3535 sections 38a-702a to 38a-702r, inclusive; 12
3636 (B) Only insures against risks covered by insurance policies sold, 13 Raised Bill No. 5374
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4242 solicited or negotiated through the insurance agents or insurance 14
4343 producers that own or control such captive insurance company; and 15
4444 (C) Does not insure against risks covered by any health insurance 16
4545 policy or plan. 17
4646 (3) "Alien captive insurance company" means any insurance 18
4747 company formed to write insurance business for its parent and affiliated 19
4848 companies and licensed pursuant to the laws of an alien jurisdiction that 20
4949 imposes statutory or regulatory standards on companies transacting the 21
5050 business of insurance in such jurisdiction that the commissioner deems 22
5151 to be acceptable. 23
5252 (4) "Association" means any legal association of individuals, 24
5353 corporations, limited liability companies, partnerships, associations or 25
5454 other entities that has been in continuous existence for at least one year, 26
5555 where the association itself or some or all of the member organizations: 27
5656 (A) Directly or indirectly own, control or hold with power to vote all 28
5757 of the outstanding voting securities or other voting interests of an 29
5858 association captive insurance company incorporated as a stock insurer; 30
5959 (B) Have complete voting control over an association captive 31
6060 insurance company incorporated as a mutual corporation or formed as 32
6161 a limited liability company; or 33
6262 (C) Constitute all of the subscribers of an association captive 34
6363 insurance company formed as a reciprocal insurer. 35
6464 (5) "Association captive insurance company" means any company 36
6565 that insures risks of the member organizations of an association, and 37
6666 includes a company that also insures risks of such member 38
6767 organizations' affiliated companies or of the association. 39
6868 (6) "Branch business" means any insurance business transacted in this 40
6969 state by a branch captive insurance company. 41
7070 (7) "Branch captive insurance company" means any alien captive 42 Raised Bill No. 5374
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7676 insurance company licensed by the commissioner to transact the 43
7777 business of insurance in this state through a business unit with a 44
7878 principal place of business in this state. 45
7979 (8) "Branch operations" means any business operations in this state of 46
8080 a branch captive insurance company. 47
8181 (9) "Captive insurance company" means any (A) pure captive 48
8282 insurance company, agency captive insurance company, association 49
8383 captive insurance company, industrial insured captive insurance 50
8484 company, risk retention group, sponsored captive insurance company 51
8585 or special purpose financial captive insurance company that is 52
8686 domiciled in this state and formed or licensed under the provisions of 53
8787 sections 38a-91aa to 38a-91tt, inclusive, or (B) branch captive insurance 54
8888 company. 55
8989 (10) "Ceding insurer" means an insurance company, approved by the 56
9090 commissioner and licensed or otherwise authorized to transact the 57
9191 business of insurance or reinsurance in its state or country of domicile, 58
9292 that cedes risk to a special purpose financial captive insurance company 59
9393 pursuant to a reinsurance contract. 60
9494 (11) "Commissioner" means the Insurance Commissioner. 61
9595 (12) "Controlled unaffiliated business" means any person: 62
9696 (A) Who, (i) in the case of a pure captive insurance company, is not 63
9797 in the corporate system of a parent and the parent's affiliated companies, 64
9898 or (ii) in the case of an industrial insured captive insurance company, is 65
9999 not in the corporate system of an industrial insured and the industrial 66
100100 insured's affiliated companies; 67
101101 (B) Who, (i) in the case of a pure captive insurance company, has an 68
102102 existing contractual relationship with a parent or one of the parent's 69
103103 affiliated companies, or (ii) in the case of an industrial insured captive 70
104104 insurance company, has an existing contractual relationship with an 71
105105 industrial insured or one of the industrial insured's affiliated companies; 72 Raised Bill No. 5374
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111111 and 73
112112 (C) Whose risks are managed by a pure captive insurance company 74
113113 or an industrial insured captive insurance company, as applicable, in 75
114114 accordance with section 38a-91qq. 76
115115 (13) "Excess workers' compensation insurance" means, in the case of 77
116116 an employer that has insured or self-insured its workers' compensation 78
117117 risks in accordance with applicable state or federal law, insurance in 79
118118 excess of a specified per-incident or aggregate limit established by the 80
119119 commissioner. 81
120120 (14) "Incorporated protected cell" means a protected cell that is 82
121121 established as a corporation or a limited liability company, separate 83
122122 from the sponsored captive insurance company with which it has 84
123123 entered into a participant contract. 85
124124 (15) "Industrial insured" means an insured: 86
125125 (A) Who procures the insurance of any risk or risks by use of the 87
126126 services of a full-time employee acting as an insurance manager or 88
127127 buyer; 89
128128 (B) Whose aggregate annual premiums for insurance on all risks total 90
129129 at least twenty-five thousand dollars; and 91
130130 (C) Who has at least twenty-five full-time employees. 92
131131 (16) "Industrial insured captive insurance company" means any 93
132132 company that insures risks of the industrial insureds that comprise an 94
133133 industrial insured group, and includes a company that also insures risks 95
134134 of such industrial insureds' affiliated companies. 96
135135 (17) "Industrial insured group" means any group of industrial 97
136136 insureds that collectively: 98
137137 (A) Directly or indirectly own, control or hold with power to vote all 99
138138 of the outstanding voting securities or other voting interests of an 100 Raised Bill No. 5374
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144144 industrial insured captive insurance company incorporated as a stock 101
145145 insurer; 102
146146 (B) Have complete voting control over an industrial insured captive 103
147147 insurance company incorporated as a mutual corporation or formed as 104
148148 a limited liability company; or 105
149149 (C) Constitute all of the subscribers of an industrial insured captive 106
150150 insurance company formed as a reciprocal insurer. 107
151151 (18) "Insurance securitization" or "securitization" means a transaction 108
152152 or a group of related transactions, which may include capital market 109
153153 offerings, that are effected through related risk transfer instruments and 110
154154 facilitating administrative agreements, in which all or part of the result 111
155155 of such transaction is used to fund a special purpose financial captive 112
156156 insurance company's obligations under a reinsurance contract with a 113
157157 ceding insurer and by which: 114
158158 (A) A special purpose financial captive insurance company directly 115
159159 or indirectly obtains proceeds through the issuance of securities by such 116
160160 company or any other person; or 117
161161 (B) A person provides, for the benefit of a special purpose financial 118
162162 captive insurance company, one or more letters of credit or other assets 119
163163 that the commissioner has authorized such company to treat as 120
164164 admitted assets for purposes of its annual report. "Insurance 121
165165 securitization" or "securitization" does not include the issuance of a 122
166166 letter of credit for the benefit of the commissioner to satisfy all or part of 123
167167 a special purpose financial captive insurance company's capital and 124
168168 surplus requirements under section 38a-91dd. 125
169169 (19) "Member organization" means any individual, corporation, 126
170170 limited liability company, partnership, association or other entity that 127
171171 belongs to an association. 128
172172 (20) "Mutual corporation" means a corporation organized without 129
173173 stockholders and includes a nonprofit corporation with members. 130 Raised Bill No. 5374
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179179 (21) "Parent" means any individual, corporation, limited liability 131
180180 company, partnership or other entity that directly or indirectly owns, 132
181181 controls or holds with power to vote more than fifty per cent of the 133
182182 outstanding voting: 134
183183 (A) Securities of a pure captive insurance company organized as a 135
184184 stock insurer; or 136
185185 (B) Membership interests of a pure captive insurance company 137
186186 organized as a nonprofit corporation or as a limited liability company. 138
187187 (22) "Participant" means any association, corporation, limited liability 139
188188 company, partnership, trust or other entity, and any affiliated company 140
189189 thereof, that is insured by a sponsored captive insurance company 141
190190 pursuant to a participant contract. 142
191191 (23) "Participant contract" means a contract entered into by a 143
192192 sponsored captive insurance company and a participant by which the 144
193193 sponsored captive insurance company insures the risks of the 145
194194 participant and limits the losses of each such participant to its pro rata 146
195195 share of the assets of one or more protected cells identified in such 147
196196 participant contract. 148
197197 (24) "Protected cell" means a separate account established by a 149
198198 sponsored captive insurance company, in which assets are maintained 150
199199 for one or more participants in accordance with the terms of one or more 151
200200 participant contracts to fund the liability of the sponsored captive 152
201201 insurance company assumed on behalf of such participants as set forth 153
202202 in such participant contracts. 154
203203 (25) "Pure captive insurance company" means any company that 155
204204 insures risks of its parent and affiliated companies or controlled 156
205205 unaffiliated business. 157
206206 (26) "Reinsurance contract" means a contract entered into by a special 158
207207 purpose financial captive insurance company and a ceding insurer by 159
208208 which the special purpose financial captive insurance company agrees 160 Raised Bill No. 5374
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214214 to provide reinsurance to the ceding insurer for risks associated with the 161
215215 ceding insurer's insurance or reinsurance business. 162
216216 (27) "Risk retention group" means a captive insurance company 163
217217 organized under the laws of this state pursuant to the federal Liability 164
218218 Risk Retention Act of 1986, 15 USC 3901 et seq., as amended from time 165
219219 to time, as a stock insurer or mutual corporation, a reciprocal or other 166
220220 limited liability entity. 167
221221 (28) "Security" has the same meaning as provided in section 36b-3 and 168
222222 includes any form of debt obligation, equity, surplus certificate, surplus 169
223223 note, funding agreement, derivative or other financial instrument that 170
224224 the commissioner designates as a security for purposes of sections 38a-171
225225 91aa to 38a-91tt, inclusive. 172
226226 (29) "Special purpose financial captive insurance company" means a 173
227227 company that is licensed by the commissioner in accordance with 174
228228 section 38a-91bb. 175
229229 (30) "Special purpose financial captive insurance company security" 176
230230 means a security issued by (A) a special purpose financial captive 177
231231 insurance company, or (B) a third party, the proceeds of which are 178
232232 obtained directly or indirectly by a special purpose financial captive 179
233233 insurance company. 180
234234 (31) "Sponsor" means any association, corporation, limited liability 181
235235 company, partnership, trust or other entity that is approved by the 182
236236 commissioner to organize and operate a sponsored captive insurance 183
237237 company and to provide all or part of the required unimpaired paid-in 184
238238 capital and surplus. 185
239239 (32) "Sponsored captive insurance company" means a captive 186
240240 insurance company: 187
241241 (A) In which the minimum required unimpaired paid-in capital and 188
242242 surplus are provided by one or more sponsors; 189
243243 (B) That insures risks of its participants only through separate 190 Raised Bill No. 5374
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249249 participant contracts; and 191
250250 (C) That funds its liability to each participant through one or more 192
251251 protected cells and segregates the assets of each protected cell from the 193
252252 assets of other protected cells and from the assets of the sponsored 194
253253 captive insurance company's general account. 195
254254 (33) "Surplus note" means an unsecured subordinated debt obligation 196
255255 possessing characteristics consistent with the National Association of 197
256256 Insurance Commissioners Statement of Statutory Accounting Principles 198
257257 No. 41, as amended from time to time, and as modified or supplemented 199
258258 by the commissioner. 200
259259 Sec. 2. (NEW) (Effective July 1, 2020) Notwithstanding any provision 201
260260 of the general statutes, an insured shall be exempt from all taxes, interest 202
261261 and penalties due under section 38a-277 of the general statutes for any 203
262262 taxable period beginning on or after July 1, 2016, if the insured is: 204
263263 (1) (A) A town, city, borough, consolidated town and city, 205
264264 consolidated town and borough, regional school district, board of 206
265265 education or regional educational service center in this state; or 207
266266 (B) An association, or a member organization of an association, that 208
267267 limits its membership to the entities described in subparagraph (A) of 209
268268 this subdivision; and 210
269269 (2) Insured by an association captive insurance company that (A) 211
270270 insures risks of the member organizations of the association described 212
271271 in subparagraph (B) of subdivision (1) of this section, or (B) insures the 213
272272 risks of such member organizations and such association. 214
273273 This act shall take effect as follows and shall amend the following
274274 sections:
275275
276276 Section 1 July 1, 2020 38a-91aa
277277 Sec. 2 July 1, 2020 New section
278278 Raised Bill No. 5374
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284284 Statement of Purpose:
285285 To exempt certain insureds insured by an association captive insurance
286286 company from the insurance premium tax.
287287 [Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
288288 that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
289289 underlined.]
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